land ti finals

8/10/2019 Land Ti Finals

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[G.R. No. 138053. May 31, 2000]

CORNELIO M. ISAGUIRRE, petit ioner, vs. FELICITAS DE LARA, respondent .

D E C I S I O N

GONZAGA-REYES, J .:

In this petition for review on certiorari under Rule 45 of the 1997 Revised Rules of Civil Procedure, petitioner Cornelio M. Isaguirreassails the October 5, 1998 decision

[1] of the Court of Appeals

[2]and its Resolution promulgated on March 5, 1999.

The antecedent facts of the present case are as follows:

Alejandro de Lara was the original applicant-claimant for a Miscellaneous Sales Application over a parcel of land identified asportion of Lot 502, Guianga Cadastre, filed with the Bureau of Lands on January 17, 1942 and with an area of 2,342 square meters.Upon his death, Alejandro de Lara was succeeded by his wife - respondent Felicitas de Lara, as claimant. On November 19, 1954,the Undersecretary of Agriculture and Natural Resources amended the sales application to cover only 1,600 square meters. Then,on November 3, 1961, by virtue of a decision rendered by the Secretary of Agriculture and Natural Resources dated November 19,1954, a subdivision survey was made and the area was further reduced to 1,000 square meters. On this lot stands a two-storyresidential-commercial apartment declared for taxation purposes under TD 43927 in the name of respondent’s sons - Apolonio andRodolfo, both surnamed de Lara.

Sometime in 1953, respondent obtained several loans from the Philippine National Bank. When she encountered financialdifficulties, respondent approached petitioner Cornelio M. Isaguirre, who was married to her niece, for assistance. On February 10,1960, a document denominated as "Deed of Sale and Special Cession of Rights and Interests" was executed by respondent andpetitioner, whereby the former sold a 250 square meter portion of Lot No. 502, together with the two-story commercial andresidential structure standing thereon, in favor of petitioner, for and in consideration of the sum of P5,000.

Sometime in May, 1968, Apolonio and Rodolfo de Lara filed a complaint against petitioner for recovery of ownership and possessionof the two-story building.

[3] However, the case was dismissed for lack of jurisdiction.

On August 21, 1969, petitioner filed a sales application over the subject property on the basis of the deed of sale. His applicationwas approved on January 17, 1984, resulting in the issuance of Original Certificate of Title No. P-11566 on February 13, 1984, inthe name of petitioner. Meanwhile, the sales application of respondent over the entire 1,000 square meters of subject property(including the 250 square meter portion claimed by petitioner) was also given due course, resulting in the issuance of OriginalCertificate of Title No. P-13038 on June 19, 1989, in the name of respondent.

[4]

Due to the overlapping of titles, petitioner filed an action for quieting of title and damages with the Regional Trial Court of Davao Cityagainst respondent on May 17, 1990. The case was docketed as Civil Case No. 20124-90. After trial on the merits, the trial courtrendered judgment on October 19, 1992, in favor of petitioner, declaring him to be the lawful owner of the disputed property.However, the Court of Appeals reversed the trial court’s decision, holding that the transaction entered into by the parties, asevidenced by their contract, was an equitable mortgage, not a sale.

[5] The appellate court’s decision was based on the inadequacy

of the consideration agreed upon by the parties, on its finding that the payment of a large portion of the "purchase price" was madeafter the execution of the deed of sale in several installments of minimal amounts; and finally, on the fact that petitioner did not takesteps to confirm his rights or to obtain title over the property for several years after the execution of the deed of sale. As aconsequence of its decision, the appellate court also declared Original Certificate of Title No.P-11566 issued in favor of petitioner tobe null and void. On July 8, 1996, in a case docketed as G. R. No. 120832, this Court affirmed the decision of the Court of Appealsand on September 11, 1996, we denied petitioner’s motion for reconsideration.

On May 5, 1997, respondent filed a motion for execution with the trial court, praying for the immediate delivery of possession of thesubject property, which motion was granted on August 18, 1997. On February 3, 1998, respondent moved for a writ of possession,invoking our ruling in G. R. No. 120832. Petitioner opposed the motion, asserting that he had the right of retention over the property

until payment of the loan and the value of the improvements he had introduced on the property. On March 12, 1998, the trial courtgranted respondent’s motion for writ of possession. Petitioner’s motion for reconsideration was denied by the trial court on May 21,1998. Consequently, a writ of possession dated June 16, 1998, together with the Sheriff’s Notice to Vacate dated July 7, 1998, wereserved upon petitioner.

Petitioner filed with the Court of Appeals a special civil action for certiorari and prohibition with prayer for a temporary restrainingorder or preliminary injunction to annul and set aside the March 12, 1998 and May 21, 1998 orders of the trial court, including thewrit of possession dated June 16, 1998 and the sheriff’s notice to vacate dated July 7, 1998.

[6]

The appellate court summarized the issues involved in the case as follows: (1) whether or not the mortgagee in an equitablemortgage has the right to retain possession of the property pending actual payment to him of the amount of indebtedness by the

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mortgagor; and (b) whether or not petitioner can be considered a builder in good faith with respect to the improvements he made onthe property before the transaction was declared to be an equitable mortgage.

The Court of Appeals held that petitioner was not entitled to retain possession of the subject property. It said that -

… the mortgagee merely has to annotate his claim at the back of the certificate of title in order to protect hisrights against third persons and thereby secure the debt. There is therefore no necessity for him to actually

possess the property. Neither should a mortgagee in an equitable mortgage fear that the contract relied upon isnot registered and hence, may not operate as a mortgage to justify its foreclosure. In Feliza Zubiri v. LucioQuijano, 74 Phil 47, it was ruled "that when a contract x x x is held as an equitable mortgage, the same shall begiven effect as if it had complied with the formal requisites of mortgage. x x x by its very nature the lien therebycreated ought not to be defeated by requiring compliance with the formalities necessary to the validity of avoluntary real estate mortgage, as long as the land remains in the hands of the petitioner (mortgagor) and therights of innocent parties are not affected."

Proceeding from the foregoing, petitioner’s imagined fears that his lien would be lost by surrenderingpossession are unfounded.

In the same vein, there is nothing to stop the mortgagor de Lara from acquiring possession of the propertypending actual payment of the indebtedness to petitioner. This does not in anyway endanger the petitioner’sright to security since, as pointed out by private respondents, the petitioner can always have the equitablemortgage annotated in the Certificate of Title of private respondent and pursue the legal remedies for thecollection of the alleged debt secured by the mortgage. In this case, the remedy would be to foreclose the

mortgage upon failure to pay the debt within the required period.

It is unfortunate however, that the Court of Appeals, in declaring the transaction to be an equitable mortgagefailed to specify in its Decision the period of time within which the private respondent could settle her account,since such period serves as the reckoning point by which foreclosure could ensue. As it is, petitioner is now in adilemma as to how he could enforce his rights as a mortgagee. ...

Hence, this Court, once and for all resolves the matter by requiring the trial court to determine the amount oftotal indebtedness and the period within which payment shall be made.

Petitioner’s claims that he was a builder in good faith and entitled to reimbursement for the improvements he introduced upon theproperty were rejected by the Court of Appeals. It held that petitioner knew, or at least had an inkling, that there was a defect or flawin his mode of acquisition. Nevertheless, the appellate court declared petitioner to have the following rights:

…He is entitled to reimbursement for the necessary expenses which he may have incurred over the property, inaccordance with Art. 526 and Art. 452 of the Civil Code. Moreover, considering that the transaction was merelyan equitable mortgage, then he is entitled to payment of the amount of indebtedness plus interest, and in theevent of non-payment to foreclose the mortgage. Meanwhile, pending receipt of the total amount of debt, privaterespondent is entitled to possession over the disputed property.

The case was finally disposed of by the appellate court in the following manner:

WHERFORE, the Petition is hereby DISMISSED, and this case is ordered remanded to the Regional Trial Courtof Davao City for further proceedings, as follows:

1) The trial court shall determine –

a) The period within which the mortgagor must pay his total amount of indebtedness.

b) The total amount of indebtedness owing the petitioner-mortgagee plus interest computed from the time whenthe judgment declaring the contract to be an equitable mortgage became final.

c) The necessary expenses incurred by petitioner over the property.[7]

On March 5, 1999, petitioner’s motion for reconsideration was denied by the appellate court.[8]

Hence, the present appeal whereinpetitioner makes the following assignment of errors:











A.......THE HONORABLE COURT OF APPEALS ERRED IN NOT RULING THAT THE RTC ACTED WITHOUTOR IN EXCESS OF ITS JURISDICTION OR WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACKOR EXCESS OF JURISDICTION IN ISSUING A WRIT OF POSSESSION IN FAVOR OF RESPONDENT.

A.1......The RTC patently exceeded the scope of its authority and acted with grave abuse of discretion inordering the immediate delivery of possession of the Property to respondent as said order exceeded theparameters of the final and executory decision and constituted a variance thereof.

B.......THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER IS NOT ENTITLEDTO THE POSSESSION OF THE PROPERTY PRIOR TO THE PAYMENT OF RESPONDENT’S MORTGAGELOAN.

C.......THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT PETITIONER WAS NOT ABUILDER IN GOOD FAITH.

D.......THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT PETITIONER IS ENTITLED TOINTEREST COMPUTED ONLY FROM THE TIME WHEN THE JUDGMENT DECLARING THE CONTRACT TOBE AN EQUITABLE MORTGAGE BECAME FINAL.

[9]

Basically, petitioner claims that he is entitled to retain possession of the subject property until payment of the loan and the value ofthe necessary and useful improvements he made upon such property.

[10] According to petitioner, neither the Court of Appeals’

decision in G.R. CV No. 42065 nor this Court’s decision in G.R. No. 120832 ordered immediate delivery of possession of the subject

property to respondent.

The dispositive portion of the March 31, 1995 decision of the Court of Appeals in G.R. CV No. 42065, which was affirmed by thisCourt, provides that –

IN VIEW OF ALL THE FOREGOING, the judgment appealed from is REVERSED and SET ASIDE and a newone entered: (1) dismissing the complaint; (2) declaring the "Document of Sale and Special Cession of Rightsand Interests" (Exhibit B) dated February 10, 1960, to be an equitable mortgage not a sale; (3) upholding thevalidity of OCT No. P-13038 in the name of Felicitas de Lara; and (3) declaring null and void OCT No. P-11566in the name of plaintiff Cornelio Isaguirre. All other counterclaims for damages are likewise dismissed. Costsagainst the appellee.

[11]

Petitioner argues that the abovementioned decision merely settled the following matters: (1) that the transaction between petitionerand respondent was not a sale but an equitable mortgage; (2) that OCT No. P-13038 in the name of respondent is valid; and (3) thatOCT No. P-11566 in the name of petitioner is null and void. Since the aforementioned decision did not direct the immediate ouster

of petitioner from the subject property and the delivery thereof to respondent, the issuance of the writ of possession by the trial courton June 16, 1998 constituted an unwarranted modification or addition to the final and executory decision of this Court in G.R. No.120832.

[12]

We do not agree with petitioner’s contentions. On the contrary, the March 31, 1995 decision of the appellate court, which wasaffirmed by this Court on July 8, 1996, served as more than adequate basis for the issuance of the writ of possession in favor ofrespondent since these decisions affirmed respondent’s title over the subject property. As the sole owner, respondent has the rightto enjoy her property, without any other limitations than those established by law.

[13] Corollary to such right, respondent also has the

right to exclude from the possession of her property any other person to whom she has not transmitted such property.[14]

It is true that, in some instances, the actual possessor has some valid rights over the property enforceable even against the ownerthereof, such as in the case of a tenant or lessee.

[15] Petitioner anchors his own claim to possession upon his declared status as a

mortgagee. In his Memorandum, he argues that –

4.8 It was respondent who asserted that her transfer of the Property to petitioner was by way of an equitable

mortgage and not by sale. After her assertion was sustained by the Courts, respondent cannot now ignore ordisregard the legal effects of such judicial declaration regarding the nature of the transaction.

xxx......xxx......xxx

4.13 Having delivered possession of the Property to petitioner as part of the constitution of the equitablemortgage thereon, respondent is not entitled to the return of the Property unless and until the mortgage loan isdischarged by full payment thereof. Petitioner’s right as mortgagee to retain possession of the Property so longas the mortgage loan remains unpaid is further supported by the rule that a mortgage may not be extinguishedeven though then mortgagor-debtor may have made partial payments on the mortgage loan:































"Art. 2089. A pledge or mortgage is indivisible, even though the debt may be divided amongthe successors in interest of the debtor or the creditor.

"Therefore, the debtor’s heir who has paid a part of the debt cannot ask for theproportionate extinguishment of the pledge or mortgage as long as the debt is notcompletely satisfied.

"Neither can the creditor’s heir who has received his share of the debt return the pledge orcancel the mortgage, to the prejudice of the other heirs who have not been paid."

(Emphasis supplied.)


4.14 ......To require petitioner to deliver possession of the Property to respondent prior to the full payment of thelatter’s mortgage loan would be equivalent to the cancellation of the mortgage. Such effective cancellationwould render petitioner’s rights ineffectual and nugatory and would constitute unwarranted judicial interference.


4.16 The fact of the present case show that respondent delivered possession of the Property to petitioner upon

the execution of the Deed of Absolute Sale and Special Cession of Rights and Interest dated 10 February 1960.Hence, transfer of possession of the Property to petitioner was an essential part of whatever agreement theparties entered into, which, in this case, the Supreme Court affirmed to be an equitable mortgage.


4.19 Petitioner does not have the mistaken notion that the mortgagee must be in actual possession of themortgaged property in order to secure the debt. However, in this particular case, the delivery of possession ofthe Property was an integral part of the contract between petitioner and respondent. After all, it was supposedto be a contract of sale. If delivery was not part of the agreement entered into by the parties in 1960, why didrespondent surrender possession thereof to petitioner in the first place?

4.20 Now that the Courts have ruled that the transaction was not a sale but a mortgage, petitioner’s entitlementto the possession of the Property should be deemed as one of the provisions of the mortgage, considering thatat the time the contract was entered into, possession of the Property was likewise delivered to petitioner. Thus,

until respondent has fully paid her mortgage loan, petitioner should be allowed to retain possession of thesubject property.[16]

Petitioner’s position lacks sufficient legal and factual moorings.

A mortgage is a contract entered into in order to secure the fulfillment of a principal obligation.[17]

It is constituted by recording thedocument in which it appears with the proper Registry of Property, although, even if it is not recorded, the mortgage is neverthelessbinding between the parties.

[18] Thus, the only right granted by law in favor of the mortgagee is to demand the execution and the

recording of the document in which the mortgage is formalized.[19]

As a general rule, the mortgagor retains possession of themortgaged property since a mortgage is merely a lien and title to the property does not pass to the mortgagee.

[20] However, even

though a mortgagee does not have possession of the property, there is no impairment of his security since the mortgage directlyand immediately subjects the property upon which it is imposed, whoever the possessor may be, to the fulfillment of the obligationfor whose security it was constituted.

[21] If the debtor is unable to pay his debt, the mortgage creditor may institute an action to

foreclose the mortgage, whether judicially or extrajudicially, whereby the mortgaged property will then be sold at a public auct ionand the proceeds therefrom given to the creditor to the extent necessary to discharge the mortgage loan. Apparently, petitioner ’scontention that "[t]o require [him] … to deliver possession of the Property to respondent prior to the full payment of the latter’s

mortgage loan would be equivalent to the cancellation of the mortgage" is without basis. Regardless of its possessor, the mortgagedproperty may still be sold, with the prescribed formalities, in the event of the debtor’s default in the payment of his loan obligation.

Moreover, this Court cannot find any justification in the records to uphold petitioner’s contention that respondent deliveredpossession of the subject property upon the execution of the "Deed of Sale and Special Cession of Rights and Interests" onFebruary 10, 1960 and that the transfer of possession to petitioner must therefore be considered an essential part of the agreementbetween the parties. This self-serving assertion of petitioner was directly contradicted by respondent in herpleadings.

[22] Furthermore, nowhere in the Court of Appeals’ decisions promulgated on March 31, 1995 (G.R. CV No. 42065) and on

October 5, 1998 (G.R. SP No. 48310), or in our own decision promulgated on July 8, 1996 (G.R. No. 120832) was it everestablished that the mortgaged properties were delivered by respondent to petitioner.































In Alvano v. Batoon,[23]

this Court held that "[a] simple mortgage does not give the mortgagee a right to the possession of theproperty unless the mortgage should contain some special provision to that effect." Regrettably for petitioner, he has not presentedany evidence, other than his own gratuitous statements, to prove that the real intention of the parties was to allow him to enjoypossession of the mortgaged property until full payment of the loan.

Therefore, we hold that the trial court correctly issued the writ of possession in favor of respondent. Such writ was but a necessaryconsequence of this Court’s r uling in G.R. No. 120832 affirming the validity of the original certificate of title (OCT No. P-13038) in thename of respondent Felicitas de Lara, while at the same time nullifying the original certificate of title (OCT No. P-11566) in the name

of petitioner Cornelio Isaguirre. Possession is an essential attribute of ownership; thus, it would be redundant for respondent to goback to court simply to establish her right to possess subject property. Contrary to petitioner’s claims, the issuance of the writ ofpossession by the trial court did not constitute an unwarranted modification of our decision in G.R. No. 120832, but rather, was anecessary complement thereto.

[24] It bears stressing that a judgment is not confined to what appears upon the face of the decision,

but also those necessarily included therein or necessary thereto.[25]

With regard to the improvements made on the mortgaged property, we confirm the Court of Appeals’ characterization of petitioneras a possessor in bad faith. Based on the factual findings of the appellate court, it is evident that petitioner knew from the verybeginning that there was really no sale and that he held respondent’s property as mere security for the payment of the loanobligation. Therefore, petitioner may claim reimbursement only for necessary expenses; however, he is not entitled toreimbursement for any useful expenses

[26] which he may have incurred.

[27]

Finally, as correctly pointed out by the Court of Appeals, this case should be remanded to the Regional Trial Court of Davao City fora determination of the total amount of the loan, the necessary expenses incurred by petitioner, and the period within whichrespondent must pay such amount.

[28] However, no interest is due on the loan since there has been no express stipulation in

writing.

[29]

WHEREFORE, the assailed Decision of the Court of Appeals dated October 5, 1998 and its Resolution dated March 5, 1999 arehereby AFFIRMED. Respondent is entitled to delivery of possession of the subject property. This case is hereby REMANDED to thetrial court for determination of the amount of the loan, the necessary expenses incurred by petitioner and the period within which therespondent must pay the same.

SPOUSES BIENVENIDO R. MACADANGDANG and VIRGINIA C. MACADANGDANG, pet i t ioners vs . SPOUSES RAMONMARTINEZ and GLORIA F. MARTINEZ, respondents.

D E C I S I O N

CORONA, J .:

Petitioners, spouses Bienvenido and Virginia Macadangdang (Macadangdang spouses), assail the October 25, 2001

decision[1]

of the Court of Appeals in CA-G.R. CV No. 32018, modifying the November 13, 1990 decision[2]

of Branch 149 of theMakati Regional Trial Court in Civil Case No. 88-796.

The present controversy involves a house and lot in Lot 6, Block 22-A, Phase 5-A, Parkhomes Subdivision, Tunasan,Muntinlupa, Metro Manila, covered by TCT No. 146553 in the name of Emma A. Omalin.

On December 20, 1986, the Macadangdang spouses offered to buy the subject property from Omalin for P380,000 oninstallment basis.

On the same date, the Macadangdang spouses made a downpayment of P5,000 through the broker, Sto. Nino RealtyServices, Inc. On January 3, 1987, they paid another P175,000. Thereafter, Omalin executed a deed of sale with mortgage datedJanuary 5, 1987. The deed provided for the payment of the balance of P200,000 in three installments.

The Macadangdang spouses took possession of the house and lot on January 18, 1987. On April 22, 1987, theypaid P60,000 and on October 1, 1987, another P30,000. After the Macadangdangs had paid a total of P270,000, the parties agreedthat the balance of P110,000 was to be paid upon delivery of the TCT.

On January 29, 1988, Omalin executed a deed of absolute sale in favor of the Macadangdang spouses. However, the latterdid not pay the P110,000 balance because Omalin failed to deliver the TCT. It turned out that the property was mortgaged toprivate respondent spouses Ramon and Gloria Martinez (Martinez spouses).

It appears that on March 5, 1987, a certain Atty. Paterno Santos, a broker, offered to mortgage the subject property to theMartinez spouses for P200,000. Atty. Santos was in possession of a ―clean‖ TCT No. 146553 and a fire insurance policy coveringsaid property. The spouses Martinez accepted the mortgage with interest at 36% p.a. and duly recorded it at the Registry of Deedsof Makati. The proper annotation was made at the back of the title.

From September 1987 to March 9, 1988, Omalin paid the monthly interest of P6,000 but failed to pay the subsequent interestfrom April 1988 to October 1989 amounting to P114,000.






















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The Macadangdang spouses filed a criminal case for estafa against Omalin and a combined action for specific performance,annulment of contract and damages against the spouses Martinez and Omalin.

After trial, the Makati RTC rendered a decision in favor of the Macadangdang spouses:

WHEREFORE, in view of the foregoing, judgment is rendered as follows:

1. The defendants Emma A. Omalin, Ramon Martinez and Gloria Martinez are hereby ordered to deliver to theplaintiffs the owner’s duplicate copy of TCT No. 146553, free from the encumbrance under Entry No. 30110 ofthe Register of Deeds of Makati, upon plaintiffs’ payment of the balance of P100.000.

2. The defendant Emma A. Omalin is hereby ordered to pay plaintiffs the amount of P30,000 as moral damagesand P20,000 as attorney’s fees and costs of suit.

[3]

On appeal, however, the appellate court modified the decision of the Makati RTC:

Considering that defendant Omalin remains to be the owner of the property despite the existence of a valid mortgage, she has the right to sell it.Hence, we rule that the sale in favor of plaintiffs-appellee is likewise valid, subject to the right of defendants-appellants to foreclose the property

for failure of defendant Omalin to pay her indebtedness.

xxx xxx xxx

WHEREFORE, the appealed decision is MODIFIED. A new one is hereby entered:

1. Declaring defendants-appellants Ramon and Gloria Martinez as mortgagees in good faith.

2. Declaring the deed of sale with mortgage in favor of plaintiffs-appellees Bienvenido and Virginia Macadangdang as valid and orderingthem to pay defendant Omalin the balance of the price in the sum of P110,000.

3. Ordering defendants-appellants to deliver the owner‟s duplicate copy of TCT No. 146553 to plaintiffs-appellees, subject to the existingencumbrance and the right of defendants-appellants to foreclose the property should defendant Omalin fail to pay her obligation.

4. Ordering defendant Emma A. Omalin to pay plaintiffs-appellees the amount of P30,000 as moral damages and P20,000 as attorney‟s feesand costs of suit.

The Macadangdang spouses are now before the Court with the following assignments of error:

FIRST ASSIGNED ERROR

THE COURT OF APPEALS‟ “DECISION” OPENLY DISREGARDED AND OVERTURNED EXISTING JURISPRUDENCE INVOLVING

SIMILAR FACTS.

SECOND ASSIGNED ERROR

UNLESS REVERSED AND/OR MODIFIED, THE COURT OF APPEALS‟ DECISION, IF EVENTUALLY IMPLEMENTED, MIGHT GIVERISE TO ABSURD RESULTS.

THIRD ASSIGNED ERROR

THE COURT OF APPEALS GRAVELY ERRED IN REVERSING THE TRIAL COURT‟S DECISION DATED NOVEMBER 13, 1990.[4]

The petition lacks merit.

The subject matter of the instant petition involves registered land. Unlike the case of unregistered land, in which an earlierinstrument, be it sale or mortgage, prevails over a latter one, and the registration of any one of them is immaterial,

[5] with respect to

registered land, the rule is different. Between two transactions concerning the same parcel of land, the registered transactionprevails over the earlier unregistered right.

[6] The act of registration operates to convey and affect the registered land so that a

bonafide purchaser of such land acquires good title as against a prior transferee, if such prior transfer was unrecorded.[7]

Sections 51 and 52 of PD 1529, otherwise known as the Property Registration Decree, are pertinent:























Sec. 51. Conveyance and other dealings by registered owner. – An owner of registered land may convey, mortgage, lease, charge or otherwise

deal with the same in accordance with existing laws. He may use such forms of deeds, mortgages, lease or other voluntary instruments as aresufficient in law. But no deed, mortgage, lease or other voluntary instrument, except a will purporting to convey or affect registered land 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 Register

of Deeds to make Registration.

The act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned, and in all cases under this

Decree, the registration shall be made in the office of the Register of Deeds for the province or city where the land lies.

Sec. 52. Constructive notice upon registration. – Every conveyance, mortgage, lease, lien attachment, order, judgment, instrument or entry

affecting registered land shall, if registered, filed or entered in the office of the Register of Deeds for the province or city where the land to whichit relates lies, be constructive notice to all persons from the time of such registering, filing or entering.

It is clear from the foregoing that the registration of the deed is the effectual act which binds the land insofar as third personsare concerned. Prior registration of a lien creates a preference as the act of registration is the operative act that conveys and affectsthe land.

[8] Considering that the prior sale of the subject property to the Macadangdang spouses was not registered, it was the

registered mortgage to the spouses Martinez that was valid and effective. For sure, it was binding on Omalin and, for that matter,even on the Macadangdang spouses, the parties to the prior sale.

The rule on prior registration is subject only to one exception, that is, when a party has knowledge of a prior existing interestwhich is unregistered at the time he acquires a right to the same land, his knowledge of that prior unregistered interest has the effectof registration as to him.

[9]

The Martinez spouses claimed they had never met the Macadangdang spouses and were unaware that Omalin had already

sold the property to them. Hence, the appellate court declared the Martinez spouses as mortgagees in good faith and innocentmortgagees for value.

An innocent mortgagee for value is akin to an innocent purchaser for value. The phrase ―innocent purchaser for value‖ isdeemed to include an innocent lessee, mortgagee or other (beneficiary of an) encumbrance for value.

[10] An innocent purchaser for

value is one who buys the property of another without notice that some other person has a right to or interest in such property andpays a full and fair price for the same at the time of such purchase or before he has notice of the claim of another person .

[11] As a

general rule, where the certificate of title is in the name of the vendor when the land is sold, the vendee for value has the right to relyon what appears on the face of the title and is not obligated to look beyond what appears on the face of the certificate of title of thevendor. As an exception, the vendee is required to make the necessary inquiries if there is anything in the certificate of title whichraises any cloud or vice in the ownership of the property.

[12] Otherwise, his mere refusal to believe that such defect exists, or his

willful disregard of the possibility of the existence of a defect in his vendor’s title will not make him an innocent purchaser for value ifit afterwards develops that the title is in fact defective, and it appears that he had such notice of the defect as would have led to itsdiscovery had he acted with that measure of precaution which may reasonably be required of a prudent man in a like situation.

[13]

Nothing on record shows that the title of Omalin, the mortgagor, was flawed when it was presented to the spouses Martinez.Their reliance on the title was therefore reasonable and correct. They were in no way obliged to go beyond the TCT to determine

the legal condition of the property since there was nothing that should have aroused their suspicion about any defect or problemabout the title.

Where innocent third persons rely on the lack of defect of a certificate of title and acquire rights over the property, the Courtcannot disregard such rights. Otherwise, public confidence in the certificate of title and ultimately, in the entire Torrens system willbe impaired, for every one dealing with registered property will have to inquire at every instance whether the title has been regularlyor irregularly issued.

[14]

On this note, being innocent registered mortgagees for value, the Martinez spouses acquired a superior right over theproperty.

Accordingly, we find no reversible error by the appellate court in upholding the existing encumbrance over the subject propertyacquired by the Macadangdang spouses, in declaring the spouses Martinez as mortgagees in good faith and in recognizing theirright to foreclose on the mortgage should Omalin fail to pay her obligation.

The assailed decision of the appellate court is neither absurd nor unjust. The registered mortgage contract of the Martinezspouses has given them the superior right, not as owners but only as mortgagees. Consequently, they are entitled to be paid the

amounts due them under the real estate mortgage registered in their favor. In the event Omalin, as mortgagor, fails to pay themortgage obligation or, should any party, for that matter, who may have an interest in the mortgaged property like the petitionersherein fail to redeem it from the mortgagees, the latter, as declared by the Court of Appeals, may enforce their rights against theproperty by foreclosing on the mortgage, regardless of who its owner may be, considering that the registered mortgage attaches tothe property.

WHEREFORE, the instant petition is hereby DENIED and the October 25, 2001 decision of the Court of Appeals in CA-G.R.CV No. 32018 is AFFIRMED.

Costs against petitioners.































SPS. WILLIAM and JULIE LIM, SPS. EDGAR and JUDY LIM, STEVENS C. LIM, EDWIN C. LIM, JOSEPH C. LIM, RAFAEL Y.CHUATOCO, TERESITA Y. CHUATOCO and the REGISTER OF DEEDS MANILA, pet i t ioners, vs. EDUARDO,JORGE, FELIPE and FRANCISCO, all surnamed CHUATOCO,respondents.

D E C I S I O N

TINGA, J .:

Petitioners assail the Decision[1]

of the Court of Appeals, ordering herein petitioners Lim (Spouses Willim and Julie Lim,Spouses Edgar and Judy Lim, Stevens C. Lim, Edwin C. Lim and Joseph C. Lim) to reconvey to the extent of four -fifths (4/5) of theproperty in dispute to the respondents and directing all petitioners (the Lims, Rafael Y. Chuatoco and Tereista Y. Chuatoco) to payto respondents moral damages in the amount of P100,000.00 and attorney’s fees in the amount of P50,000.00.

As culled from the records, the factual antecedents which spawned the filing of the instant petition follow.

Spouses Jose Chuatoco and Leoncia Yap were the registered owners of a 365-square meter land with improvements locatedat Calle Veronica St., Binondo, Manila. On the property, the spouses established the Binondo Maternity Hospital and School ofMidwifery, reserving the building’s second floor as the family residence.

In November 1972, Jose died. His wife Leoncia and five sons—Eduardo, Jorge, Rafael, Felipe and Francisco (hereinrespondents) proceeded to execute a deed of adjudication and partition. On 20 January 1981, Transfer Certificate of Title (TCT) No.13935 in the name of the spouses Jose and Leoncia was replaced by TCT No. 142406 in the names of Leoncia and their children.Soon thereafter, Leoncia died. Jorge then took over as sole administrator of the school until 1984 when he was joined in this task byRafael’s wife, Teresita.

Respondents alleged that their brother Rafael had in the meantime succeeded in obtaining title to the property in his ownname by using a fictitious deed of sale dated 27 February 1979, purportedly executed by them and their deceased mother Leonciain favor of Rafael. It would later be claimed by respondents that their signatures, as they appeared on the deed of sale, were forged.On 15 April 1982, TCT No. 142406 was cancelled and TCT No. 148821 was issued in the name of Rafael.

In 1986, respondent Jorge Chuatoco allegedly discovered that the title to the property had been transferred to Rafael’s nameand in order to protect his interest as well as those of his brothers who were then residing in the United States, he convinced Rafaelto surrender the certificate of title to him for safekeeping and Rafael agreed. However, on 8 May 1986, Rafael through his wife fileda petition for reconstitution of the owner’s duplicate of TCT No. 148821, alleging therein that their owner’s duplicate of the title hadbeen lost.

After obtaining the reconstituted title, Rafael, acting through his wife and attorney-in-fact, Teresita, executed a Deed of Absolute Sale dated 6 June 1986 to petitioners Lim covering the disputed property for the sum of P600,000.00. The Limssubsequently caused the cancellation of TCT No. 148821 in the name of Rafael and TCT No. 169859 was issued in their names.

In 1991, after the Lims refused to heed the demands of respondents for the reconveyance of the property, a complaint wasfiled with the Regional Trial Court (RTC), Branch 22, of Manila. Respondents prayed for the declaration of nullity of the deed of

sale[2]

purportedly executed by them in favor of Rafael, as well as the deed of sale[3]

executed by Rafael in favor of the Lims; thecancellation of TCT No. 169859 in the name of the Lims; and for the return of the property to them.

Traversing the complaint, the Lims in their Answer with Compulsory Counterclaim[4]

averred that the property they purchasedfrom Rafael had already been sold to the latter by Leoncia and respondents sometime in 1979, and that upon execution the deed ofsale in favor of Rafael became the exclusive owner thereof. They alleged that respondents were fully aware of the sale of theproperty to them and some of respondents who lived in the premises voluntarily vacated the place right after the execution of thedeed of sale in their favor. Citing respondents’ failure to question the registration of the property in Rafael’s name for quite a longperiod of time and the subsequent sale thereof to them, the Lims averred that at most, respondents’ claim over the property shouldbe deemed barred by laches and estoppel.

On the other hand, Rafael and Teresita filed their Answer ,[5]

denying the material allegations of the complaint. Theyasseverated that the property had been sold to Rafael by Leoncia and respondents herein two years prior to Leoncia’s death in1981. They argued that respondents have no cause of action against them and assuming that they have, the cause of action isalready barred by prescription.

Assessing the evidence before it, the RTC rendered its Decision[6]

on 21 November 2000 dismissing the complaint. It

declared that the deed of sale dated 27 February 1979 was void only with respect to the undivided shares of Eduardo, Jorge, andFelipe Chuatoco, whose signatures on the questioned deed were proven to be forged. However, the trial court ruled that since theproperty was already titled in the name of Rafael before it was sold to petitioners, the latter had the right to rely upon what appearedon the certificate of title otherwise the efficacy and conclusiveness of the Torrens Certificate of Title would be rendered illusory. Thetrial court also debunked respondents’ contention that they had no knowledge of the sale of the property to the Lims in view of theiradmission that in 1989 they met with Jaime Lim, the father of petitioners, and asked the latter to return the property to them and inexchange, they would return the price paid by the Lims for the property.

The Court of Appeals in its now assailed Decision[7]

reversed the trial court’s decision. The appellate court found that the Limswere not buyers in good faith as the evidence showed that in 1985 the Lims went to the United States to make an offer to buy theproperty to Eduardo, Francisco, and Rafael. This effort of the Lims to negotiate with the Chuatoco brothers was met with initialreluctance by Eduardo, the eldest of the siblings, and the latter then instructed Jaime Lim to make a formal offer for the property.

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The court also noted Jaime’s testimony that he saw the title to the property in the name of Rafael only in 1986 when he start ednegotiating with Teresita but he should have realized that while the title of Rafael was issued in 1982, the Chuatocos were stilltreating the property under their collective ownership.

The appellate court disagreed with the trial court’s conclusion that the Chuatocos were a ware of the deed of sale in favor ofRafael in 1979 and did not do anything about it until after the property was sold to the Lims. It ruled that the conclusion failed toconsider that Rafael had assured his brothers that he would hold the title in trust for them and downplayed the fact that the brothersnever intended to relinquish their interest in the property. Thus, the appellate court ordered the Lims to reconvey the property to therespondents to the extent of four-fifths (4/5) thereof and to pay respondents moral damages and attorney’s fees.

Petitioners raise the following errors allegedly committed by the appellate court:

I.

THE COURT OF APPEALS ERRED AS A MATTER OF LAW AND JURISPRUDENCE IN NOT HOLDING THAT THE LIMS AREBUYERS IN GOOD FAITH AND FOR VALUE, HENCE THEY ARE PROTECTED BY LAW.

II.

THE COURT OF APPEALS ERRED IN MAKING THE LIMS SOLIDARILY LIABLE TO PAY RESPONDENTS MORAL DAMAGES ANDATTORNEY‟S FEES.

[8]

Petitioners impute error on the Court of Appeals in holding that they were not buyers in good faith and for value. They argue

that they were not required to go beyond the four corners of the certificate of title to ascertain its authenticity and regularity becausethere was nothing on it that would have put them on notice of any defect in their seller’s title. Still, they saw it fit to go to the Registerof Deeds to make further verification on the actual ownership of the property. They stressed that as innocent purchasers for valuethey were entitled to protection under the law.

Petitioners likewise pounce on respondents’ delay in seeking legal redress despite the fact that they had knowledge of thetransfer of the title in Rafael’s name as early as 1981 . They argued that respondents should be deemed estopped by laches fromdisputing their ownership of the property because they filed their action only in 1991.

Respondents, on the other hand, point out that the issue of whether petitioners were buyers in good faith is one of fact and notof law and the instant petition deserves to be dismissed. At any rate, they cite several facts and circumstances which should haveput petitioners on guard and required them to make further inquiries regarding the ownership of the property.

Among others, they argue that the Lims had initially negotiated for the sale of the property with them but after failing to obtaina favorable response, the Lims instead saw an opportunity of acquiring the property by buying it directly from Rafael despite theLims’ actual knowledge that the property was owned by them in common. They claim that the Lims should have been put on guardby the fact that the property was titled solely in the name of Rafael, despite the fact that the annotations appearing on TCT No.142406 indicated that all of Leoncia’s sons are the beneficiaries of the property. They also note the alleged haste in the sa le of the

property to petitioners only one day after the order of reconstitution of Rafael’s title was issued by the trial court, and the fact thattitle to the property was issued only two years after the date of the Deed of Sale.

Respondents also rebuff petitioners’ contention that their action is barred by laches arguing that the moment they learned thatRafael sold the property, they lost no time and asked him to explain his side. The delay in filing the action, if any, was merelybecause Rafael had assured them that he was holding the title in trust for all his brothers and Rafael in fact surrendered theduplicate original of the certificate of title to Jorge. They add that since Rafael’s reconstituted title was obtained by fraud, the same isvoid, and did not transmit valid and legal title to petitioners.

Both the RTC and the Court of Appeals concluded that forgery had attended the execution of the Deed of Sale, albeit invarying degrees. The Court is persuaded by the appellate court’s conclusion that all of the signatures therein were forged, a nd not

just that of Eduardo, Jorge, and Felipe. The RTC had declared that the forgeries of these three signatures had been established bythe document examiner of the National Bureau of Investigation (NBI) .

[9] While the NBI expert had not formed an opinion on the

genuineness of the signatures of Leoncia and Francisco, it was merely because the specimen signatures submitted to him wereinsufficient. However, the Court of Appeals correctly ruled that even in the absence of expert testimony, the falsity of the signaturesof Leoncia and Francisco had been sufficiently established by Francisco’s direct repudiation of his signature, as well as the denialsby Eduardo and Jorge of their mother’s signature.

While the testimony of a person, disavowing the genuineness of his signature may seem self-serving at first blush, such asthat proferred by Francisco, it cannot be ignored that such person is in the best position to know whether or not the signature on thecheck was his, and averments he would have on the matter, if adjudged as truthful, deserve primacy in consideration .

[10] On the

other hand, the denials of Eduardo and Jorge of their mother’s signature may be properly appreciated in evidence, as Section 50,Rule 130 allows the opinion of an ordinary witness to be received in evidence regarding a handwriting with which he has sufficientfamiliarity.

[11] The appellate court committed no error in ruling that Eduardo would probably be the most reliable witness to testify on

the handwriting of his mother because he had worked closely with and exchanged papers and communications with Leoncia on aregular basis, the latter being then the administrator of the properties left by Jose.

The fraudulent registration of the property in Rafael’s name using the forged deed of sale is not sufficient to vest title to theentire property in him. Settled is the rule that a certificate is not conclusive evidence of title;

[12] registration does not vest title, it is























merely evidence of such title over a particular property.[13]

Certificates of title merely confirm or record title already existing andvested. They cannot be used to protect a usurper from the true owner, nor can they be used as a shield for the commission offraud, nor to permit one to enrich himself at the expense of others .

[14] The Torrens sytem has never been recognized as a mode of

acquiring ownership.[15]

However, it is a familiar doctrine that a forged or fraudulent document may become the root of a valid title ,[16]

if the propertyhas already been transferred from the name of the owner to that of the forger. This doctrine serves to emphasize that a person whodeals with registered property in good faith will acquire good title from a forger and be absolutely protected by a Torrens t itle. In thefinal analysis, the resolution of this case depends on whether the petitioners are purchasers in good faith.

In analyzing this question, the initial premise should be that the Lims had acted in good faith and therefore they are innocentpurchasers for value. As previously held:

Guided by previous decisions of this Court, good faith consists in the possessor's belief that the person from whom he received the thing was theowner of the same and could convey his title. Good faith, while it is always to be presumed in the absence of proof to the contrary, requires a well

founded belief that the person from whom title was received was himself the owner of the land, with the right to convey it. There is good faithwhere there is an honest intention to abstain from taking any unconscientious advantage from another. Otherwise stated, good faith is the opposite

of fraud and it refers to the state of mind which is manifested by the acts of the individual concerned.[17]

Consistently, this Court has ruled that every person dealing with registered land may safely rely on the correctness of thecertificate of title issued therefor and the law will in no way oblige him to go beyond the certificate to determine the condition of theproperty. A person is charged with notice only of such burdens and claims as are annotated on the title .

[18] Thus, where there is

nothing in the certificate of title to indicate any cloud or vice in the ownership of the property, or any encumbrance thereon, thepurchaser is not required to explore further than what the Torrens Title upon its face indicates in quest for any hidden defects or

inchoate right that may subsequently defeat his right thereto.

[19]

This presumption receives primacy in consideration, given the fact that the Court of Appeals and the RTC arrive at whollydisparate conclusions on this question of fact. The Cour t of Appeals disagreed with the RTC’s conclusion that the Lims wereinnocent purchasers for value, based on circumstances which we now proceed to review. It is settled that this Court has to inquireinto questions of fact if the courts below have conflicting findings.

[20]

The Court of Appeals noted that in 1985:

[T]he Lims went to the United States on purpose to offer to buy the property from the Chuatoco brothers, Eduardo, Francisco and Rafael. The

efforts of the Lims to negotiate with the brothers was met with initial reluctance by Eduardo, the eldest of the siblings, and then by his final

instruction to Jaime Lim to make a formal offer to the family. If we follow Jaime‟s testimony that he saw the title the next year when he wasnegotiating with Teresita, he would have seen that Rafael‟s title was issued way back in 1982. He could put two and two together and realize that

even as the title to the property was already in Rafael‟s name, the Chuatocos were treating it under their collective ownership. A reasonably

prudent and careful person would have under these circumstances taken steps to make further inquiry into the actual ownership of the property. Ifthe Lims had done so, they would have found out that Rafael‟s title was fake and that the true owners of the property were still the hei rs of Jose

and Leoncia Chuatoco.[21]

Apparently, the Court of Appeals concluded that in 1985, the Lims were already intent on purchasing the property, evenembarking on a trip to the United States for that purpose. However, there is nothing in the records that indicates that the Lims hadgone to the United States precisely for that purpose. Even Francisco Chuatoco, testifying as to the alleged meeting in the UnitedStates, claimed that the Lims had been there on vacation.

[22]

This circumstance proves material given the appreciation made by the Court of Appeals that the Lims had purposely gone tothe United States as the eldest of the Chuatoco brothers who purportedly owned the properties, Eduardo, was a residentthereof .

[23] If such were the case, then credence could be adduced to the claim that the Lims had known that the Chuatocos

collectively owned the property and that the consent of Eduardo to the sale thereof was essential. However, given the fact that theLims did not go to the United States on purpose to meet with Eduardo, but were apparently only there on vacation, it becomes lessclear that their frame of mind at that time was that the Chuatoco siblings owned the property.

Thus, even though the Lims apparently concede having met with Eduardo in the United States in 1985,[24]

it is not evident thatthey did so with the intent of negotiating with Eduardo, with the perception that he was the co-owner of the property whose consentwas indispensable to the sale. The Court is less prepared than the Court of Appeals to deem with any conclusiveness the fact of this

meeting. Indeed, it is rather bothersome that this was the only circumstance, flimsy and self-serving as it is, drawn upon by theCourt of Appeals to conclude that the Lims were not innocent purchasers in good faith. Certainly, the presumption of good faithcannot be overcome by haphazard conjectures premised on a disputed fact.

Given the failure to establish that the Lims had known the Chuatoco siblings as the collective owners of the property prior to1986, it was error on the Court of Appeals to declare that Jaime should have become suspicious enough when he discovered a yearafter his visit to the United States that title over the property had been issued way back in 1982 to Rafael. There was no demand onthe part of the Lims that they become privy to whatever arrangements or transfers the Chuatocos may have had among themselves.The Lims had no obligation to look beyond the face of the Torrens title.



















































Section 39 of the Land Registration Act, as amended, is explicit that "every person receiving a certificate of title in pursuance of a decree of

registration, and every subsequent purchaser of registered land who takes certificate of tit le for value in good faith shall hold the same free of allencumbrance except those noted on said certificate...."

It has been held:

Every person dealing with registered land may safely rely on the correctness of the certificate of title issued therefor and the law will in no way

oblige him to go behind the certificate to determine the condition of the property.

Thus, in order that a purchaser may be considered a purchaser in good faith, it is enough that he examine[s] the latest certificate of title.

In line with this principle, all that Tajonera had to do was to examine his transferor's title which was then in the name of Juanita David. He did not

have to go behind this title and scrutinize each and every title that preceded it.

Not being required under the law to check on the validity of the sale to the original buyer and being without knowledge of any defect in the title

appearing on its face, Tajonera falls under the definition of a purchaser in good faith and entitled to protection under the Land Registration Act.[25]

It likewise does not escape our attention that the Lims nonetheless exerted efforts beyond a facial examination of the title toverify the ownership thereof. As admitted by respondents, William and Edgar Lim, along with Atty. Apolonio Rivera, went to theRegister of Deeds of Manila to verify Rafael’s claim over the property, and saw therein the Deed of Sale executed by responde ntsand their mother in favor of Rafael, as well as the certificates of title. They discovered that indeed, TCT No. 148821 was issuedsolely in the name of Rafael, canceling TCT No. 142406 issued in the name of Leoncia Chuatoco and her sons.

Respondents make issue of the fact that TCT No. 142406 has an annotation of an encumbrance noting the probate of the willof Leoncia Chuatoco dated in 1952 and denominating her children as the heirs to the said property. Such probate proceeding wasan ante mortem probate undertaken during the lifetime of Leoncia Chuatoco,

[26] and it should be remembered that an order of

probate is conclusive only as to the due execution and capacity of the testator, and not the status and rights of persons to inherit. Itcannot be denied that during her lifetime, and notwithstanding her probated will, Leoncia had the capacity to dispose of her sharesin her property, as the rights thereto of her heirs remain inchoate until the time of her death, which is the only instance whensuccession to her properties opens.

Respondents also argue that TCT No. 142406 in the name of the Chuatocos was released only on 20 January 1981, while thedeed of sale was dated February of 1979. Had there truly been a deed of sale, according to respondents, then why was theannotation of Leoncia’s last will and testament still carried over in the title issued in 1981? This fact is understandable, consideringthat the deed of sale was registered only in 1982, or after the issuance of TCT No. 142406. Prior to such registration of the deed ofsale, there would not have been cause for the Register of Deeds to cancel this annotation of Leoncia’s last will and testamen t. Infact, the registration of this deed of sale caused the cancellation of TCT No. 142406 and the corresponding issuance of TCT No.148821 in the name of Rafael.

The Court of Appeals, in disputing the validity of the deed of sale, makes reference to the fact that the deed of sale wasregistered only in 1982, or three years after its execution and one year after the death of Leoncia. Respondents cite thiscircumstance in further maintaining that the Lims should have been sufficiently alerted as to the validity of the transfer, so as torequire the Lims to inquire from the respondents on this matter.

If we adopt this suggestion, however practical it may sound, it would unduly raise the legal bar by which an innocentpurchaser for value will be adjudged. The general rule remains that the purchaser is not obligated to look beyond the title. This longentrenched rule cannot be dispensed with by the occasion of a mere shadow of a doubt. It may be gainsaid that there is nothingunusually suspicious with the mere fact that a deed of transfer or conveyance over titled property is registered three years after theexecution of the deed. In fact, there is nothing in our land registration law that requires the registration or recording of such deedswithin a definite prescribed period of time. The only legal effect of such non-registration is that implied under Section 51 of theProperty Registration Decree, which provides that the act of registration becomes the operative act to convey or affect the landinsofar as third persons are concerned, though prior to registration, it operates as a contract between the parties and as evidence ofauthority to the Register of Deeds to make registration.

[27]

Thus, the mere fact that the deed of sale was recorded with the Register of Deeds only three years after its date of executiondid not, in itself, impugn the validity of the instrument. Those aspects of the deed of sale which did affect its validity, involving as

they did the forgery of the signatures thereupon, could not have been ascertained by the Lims upon examination of the deed of sale.In fact, it required a full blown trial and the testimony of NBI experts, among others, to conclusively rule that the signatures on thedeed of sale were forged.

Moreover, even as the deed of sale was subsequently proven a forgery, the Lims had every reason to rely upon it due to thefact that it is a notarized document. Notarized documents, as public documents, are entitled to full faith and credit upon these facewhen appreciated by the courts,

[28] and so much more when relied upon by the layman.

Thus, when the Lims endeavored to look beyond the title shown to them by Teresita Chuatoco, they discovered at theRegistry of Deeds the following: (1) cancelled TCT No. 142406 which while in the name of Leoncia and her sons, was cancelled byreason of the registration of a deed of sale in favor of Rafael; (2) existing TCT No. 148821, in the name of Rafael and deriving fromthe cancelled TCT No. 142406; and (3) the deed of sale dated February of 1979 and duly notarized on 27 February 1979. These



















three documents are public documents imbued with the presumption of regularity. There is no inconsistency with these documentsand the dates of conveyance evidenced therein, as well as with the identities of the parties effecting the conveyance.

Accordingly, the Court concludes that the Lims were innocent purchasers for value, as the allegation to the contrary is basedmerely on conjecture and, therefore, cannot overcome the presumption of good faith. In fact, a good deal of respondents’ claims onthis matter rest upon the proposition that the Lims should have known that the transfer to Rafael was not valid, rather than proof ofactual knowledge of its supposed invalidity. We are satisfied that the Lims had exerted perhaps a greater effort than that required bylaw to ascertain the validity of TCT No. 148821, and that nothing on the face of the documents they examined should have led toindubitable knowledge that TCT No. 148821 was derived from an infirm or spurious source.

It may not be a pleasant task for the Court to uphold the effects of a transaction that is rooted in falsity. Yet whateversympathies may be judicially appreciated for the deceived party must be balanced in deference to the protection afforded by law tothe innocent purchaser for value. If such innocence or good faith is established by the evidence, or insufficiently rebutted by thedisputant, then the corresponding duty of the Court is simply to affirm the rights of the purchaser in good faith. It is mischief atworse, and error at least, for a court to misread or inflate the facts to justify a ruling for the defrauded party, no matter how wrongedhe or she may be. Relief for such injury should be obtainable instead in a proper proceeding against the malfeasant transferor, andnot the innocent transferee.

The other significantly debated proposition in this petition is whether the Chuatoco siblings had actually known wellbeforehand before the sale to the Lims that the property had been transferred in the name of Rafael. In light of our previousdisquisitions, there is no need to delve into this question, as it will not affect the central question as to whether the Lims wereinnocent purchasers for value. This matter may be relevant in possible litigation that may be lodged against Rafael by his siblings inrelation to the fraudulent transfer of the property, but is of no moment for the matter currently at hand.

WHEREFORE, the instant petition is hereby GRANTED. The appealed Decision of the Court of Appeals SeventeenthDivision, is hereby REVERSED, and the Decision of the Regional Trial Court of Manila, Branch 22 is REINSTATED. Costs against

respondents.

MIGUEL CUENCO, Substituted by MARIETTA C. CUYEGKENG, petit ioner, vs. CONCEPCION CUENCO Vda. DEMANGUERRA, respondent .

D E C I S I O N

PANGANIBAN, J. :

Inasmuch as the facts indubitably and eloquently show an implied trust in favor of respondent, the Court of Appeals did not errin affirming the Decision of the Regional Trial Court ordering petitioner to convey the subject property to her. That Decision satisfiedthe demands of justice and prevented unjust enrichment.

The Case

Before us is a Petition for Review[1]

under Rule 45 of the Rules of Court, challenging the August 22, 2001 Decision[2]

of theCourt of Appeals (CA) in CA-GR CV No. 54852. The assailed Decision disposed as follows:

“WHEREFORE, the decision appealed from is AFFIRMED.”[3]

On the other hand, the Regional Trial Court (RTC) Decision affirmed by the CA disposed as follows:

“WHEREFORE, considering that this action is essentially one for reconveyance or enforcement of a trust, judgment is hereby rendered ordering

the substituted defendant Marietta Cuenco Cuyegkeng to reconvey or transfer, in a duly registrable public instrument, Lot No 903-A-6 under TCT No. 113781 of the Registry of Deeds of Cebu City, of the Banilad Estate with an area of 834 square meters, in favor of plaintiff Concepcion

Cuenco Vda. De Manguerra; or should the substituted defendant, for one reason or another, fail to execute the necessary instrument once thedecision becomes final, the Clerk of Court of this Court (RTC) is hereby instructed, in accordance with the Rules of Court, to prepare and execute

the appropriate and requisite conveyance and instrument in favor of herein plaintiff which, in either case, shall be registered with the Office of the

Register of Deeds of Cebu City.

Without costs in this instance.”[4]

The Facts

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The facts were summarized by the appellate court as follows:

“On September 19, 1970, the [respondent] filed the initiatory complaint herein for specific performance against her uncle [Petitioner] MiguelCuenco which averred, inter alia that her father, the late Don Mariano Jesus Cuenco (who became Senator) and said [petitioner] formed the

„Cuenco and Cuenco Law Offices‟; that on or around August 4, 1931, the Cuenco and Cuenco Law Offices served as lawyers in two (2) casesentitled „Valeriano Solon versus Zoilo Solon‟ (Civil Case 9037) and „Valeriano Solon versus Apolonia Solon‟ (Civil Case 9040) involving a

dispute among relatives over ownership of lot 903 of the Banilad Estate which is near the Cebu Provincial Capitol; that records of said cases

indicate the name of the [petitioner] alone as counsel of record, but in truth and in fact, the real lawyer behind the success of said cases was the

influential Don Mariano Jesus Cuenco; that after winning said cases, the awardees of Lot 903 subdivided said lot into three (3) parts as follows:

Lot 903-A: 5,000 [square meters]: Mariano Cuenco‟s attorney‟s fees Lot 903-B: 5,000 [square meters]: Miguel Cuenco‟s attorney‟s fees

Lot 903-C: 54,000 [square meters]: Solon‟s retention

“That at the time of distribution of said three (3) lots in Cebu, Mariano Jesus Cuenco was actively pr acticing law in Manila, and so he entrustedhis share (Lot 903-A) to his brother law partner (the [petitioner]); that on September 10, 1938, the [petitioner] was able to obtain in his own name

a title for Lot 903-A (Transfer Certificate of Title [TCT] RT-6999 [T-21108]); that he was under the obligation to hold the title in trust for his

brother Mariano‟s children by first marriage; that sometime in 1947, the Cuenco family was anticipating Mariano‟s second marr iage, and so on

February 1, 1947, they partitioned Lot 903-A into six (6) sub-lots (Lots 903-A-1 to 903-A-6) to correspond to the six (6) children of Mariano‟s

first marriage (Teresita, Manuel, Lourdes, Carmen, Consuelo, and Concepcion); that the [petitioner] did not object nor oppose the partition plan;that on June 4, 1947, the [petitioner] executed four (4) deeds of donation in favor of Mariano‟s four (4) children: Teresita, Manuel, Lourdes, and

Carmen, pursuant to the partition plan (per notary documents 183, 184, 185, 186, Book III, Series 1947 of Cebu City Notary Public Candido

Vasquez); that on June 24, 1947, the [petitioner] executed the fifth deed of donation in favor of Mariano‟s fifth child – Consuelo (per notary

document 214, Book III, Series 1947 of Cebu City Notary Public Candido Vasquez) (Exhibits „2‟ to „5‟); that said five (5) deeds of donation leftout Mariano‟s sixth child – Concepcion – who later became the [respondent] in this case; that in 1949, [respondent] occupied and fenced a

portion of Lot 903-A-6 for taxation purposes (Exhibit „F‟, Exhibit „6‟); that she also paid the taxes thereon (Exhibit „G‟); that her father died onFebruary 25, 1964 with a Last Will and Testament; that the pertinent portion of her father‟s Last Will and Testament bequeath s the lot.

„… near the Cebu provincial capitol, which were my attorney‟s fees from my clients, Victoria Rallos and Zoilo Solon, respectively – have already

long been disposed of, and distributed by me, through my brother, Miguel, to all my said children in the first marriage;‟

“That on June 3, 1966, the [petitioner] wrote a letter petitioning the Register of Deeds of Cebu to transfer Lot 903-A-6 to his name on the ground

that Lot 903-A-6 is a portion of Lot 903-A; that on April 6, 1967, the [respondent] requested the Register of Deeds to annotate an affidavit of

adverse claim against the [petitioner‟s] TCT RT-6999 (T-21108) which covers Lot 903-A; that on June 3, 1967, the Register of Deeds issuedTCT 35275 covering Lot 903-A-6 in the name of the [petitioner] but carrying the earlier annotation of adverse claim; that in 1969, the [petitioner]

tore down the wire fence which the [respondent] constructed on Lot 903-A-6 which compelled the latter to institute the instant complaint dated

August 20, 1970 on September 19, 1970.

“On December 5, 1970, the answer with counterclaim dated December 3, 1970 of [petitioner] Miguel Cuenco was filed where he al leged that hewas the absolute owner of Lot 903-A-6; that this lot was a portion of Lot 903-A which in turn was part of Lot 903 which was the subject matterof litigation; that he was alone in defending the cases involving Lot 903 without the participation of his brother Mariano Cuenco; that he donated

five (5) of the six (6) portions of Lot 903-A to the five (5) children of his brother Mariano out of gratitude for the love and care they exhibited to

him (Miguel) during the time of his long sickness; that he did not give or donate any portion of the lot to the [respondent] because she nevervisited him nor took care of him during his long sickness; that he became critically ill on February 11, 1946 and was confined at the Singian‟s

Clinic in Manila and then transferred to Cebu where he nearly died in 1946; that his wife Fara Remia Ledesma Cuenco had an operation on

January 1951 and was confined at the University of Santo Tomas Hospital and John Hopkins Hospital in the United States; that two of hischildren died at the University of Santo Tomas Hospital in 1951 and 1952; and that his wife was blind for many months due to malignant

hypertension but [respondent] never remembered her nor did she commiserate with him and his wife in their long period of sorrow.

“[Petitioner] Miguel Cuenco took the witness stand as early as September 13, 1974. His self-conducted direct examination lasted until 1985, the

last one on November 22, 1985. Unfortunately, he died[5]

before he was able to submit himself for cross-examination and so his testimony had to

be stricken off the record. His only surviving daughter, Marietta Cuyegkeng, stood as the substitute [petitioner] in this case. She testified that she

purchased Lot 903-A-6 (the property subject matter of this case) from her late father sometime in 1990 and constructed a house thereon in thesame year; that she became aware of this case because her late father used to commute to Cebu City to attend to this case; and that Lot 903-A-6 is

in her name per Transfer Certificate of Title #113781 of the Registry of Deeds for Cebu.”

[6]

Ruling of the Court of Appeals

The CA found respondent’s action not barred by res judicata, because there was ―no identity of causes of action between thePetition for cancellation of adverse claim in L.R.C. Records 5988 and the Complaint for specific performance to resolve the issue ofownership in Civil Case No. R-11891.‖











The appellate court further found no reason to disturb the findings of the t rial court that respondent ―has the legal right ofownership over lot 903-A-6.‖ The CA ruled that the subject land ―is part of the attorney’s fees of Don Mariano Cuenco, predecessor -in-interest of [Respondent] Concepcion Cuenco vda. de Manguerra and [petitioner] merely holds such property in trust for [her], histitle there[to] notwithstanding.‖

Finally, the CA held that the right of action of respondent ―has not yet prescribed as she was in possession of the lot in disputeand the prescriptive period to file the case commences to run only from the time she acquired knowledge of an adverse claim over[her] possession.‖

Hence, this Petition.[7]

The Issues

In her Memorandum, petitioner raises the following issues for our consideration:

“I.

On question of law, the Court of Appeals failed to consider facts of substance and significance which, if considered, will show that the

preponderance of evidence is in favor of the petitioner.

“II.

On question of law, the Court of Appeals failed to appreciate the proposition that, contrary to the position taken by the trial court, noconstructive or implied trust exists between the parties, and neither is the action one for reconveyance based upon a constructive or implied

trust.

“III.

On question of law, the Court of Appeals erred in not finding that even where implied trust is admitted to exist the respondent‟s action forrelief is barred by laches and prescription.

“IV.

On question of law, the trial court and the appellate court erred in expunging from the records the testimony of Miguel Cuenco.”[8]

This Court’s Ruling

The Petition has no merit.

First Issue:Evaluat ion of Evidence

Petitioner asks us to appreciate and weigh the evidence offered in support of the finding that Lot 903-A-6 constituted a part ofMariano Cuenco’s share in the attorney’s fees. In other words, she seeks to involve us in a reevaluation of the veracity andprobative value of the evidence submitted to the lower court. What she wants us to do is contrary to the dictates of Rule 45 that onlyquestions of law may be raised and resolved in a petition for review. ―Absent any whimsical or capricious exercise of judgment, andunless the lack of any basis for the conclusions made by the lower courts be amply demonstrated, the Supreme Court will notdisturb such factual findings.‖

[9]

As a rule, findings of fact of the Court of Appeals affirming those of the trial court are binding and conclusive. Normally, suchfactual findings are not disturbed by this Court, to which only questions of law may be raised in an appeal by certiorari.

[10] This Court

has consistently ruled that these questions ―must involve no examination of the probative value of the evidence presented by thelitigants or any of them.‖

[11] Emphasizing the difference between the two types of question, it has explained that ―there is a question

of law in a given case when the doubt or difference arises as to what the law is pertaining to a certain state of facts, and there is aquestion of fact when the doubt arises as the truth or the falsity of alleged facts.‖

[12]

Indeed, after going over the records of the present case, we are not inclined to disturb the factual findings of the trial and theappellate courts, just because of the insistent claim of petitioner. His witnesses allegedly testified that Civil Case No. 9040 involvingLot 903 had not been handled by Mariano for defendants therein -- Apolonia Solon, Zoilo Solon, et al. It has sufficiently been



























proven, however, that these defendants were represented by the Cuenco and Cuenco Law Office, composed of Partners MarianoCuenco and Miguel Cuenco.

Given as attorney’s fees was one hectare of Lot 903, of which two five -thousand square meter portions were identified as Lot903-A and Lot 903-B. That only Miguel handled Civil Case No. 9040 does not mean that he alone is entitled to the attorney’s fees inthe said cases. ―When a client employs the services of a law firm, he does not employ the services of the lawyer who is assigned topersonally handle the case. Rather, he employs the entire law firm.‖

[13] Being a partner in the law firm, Mariano -- like Miguel -- was

likewise entitled[14]

to a share in the attorney’s fees from the firm’s clients. Hence, the lower courts’ finding that Lot 903-A was a partof Mariano Cuenco’s attorney’s fees has ample support.

Second Issue:Impl ied Trust

Petitioner then contends that no constructive or implied trust exists between the parties.

A trust is a legal relationship between one having an equitable ownership in a property and another having legal title to it.[15]

Trust relations between parties may either be express or implied.[16]

Express trusts are created by the direct and positive actsof the parties, indicated through some writing, deed, will, or words evidencing an intention to create a trust.

[17] On the other hand,

implied trusts are those that, ―without being express, are deducible from the nature of the transaction as matters of intent[;] or whichare superinduced on the transaction by operation of law as a matter of equity, independently of the particular intention of theparties. Implied trusts may either be resulting or constructive trusts, both coming into being by operation of law.‖

[18]

Resulting trusts are presumed to have been contemplated by the parties and are based on the equitable doctrine thatvaluable consideration, not legal title, determines the equitable title or interest .

[19] These trusts arise from the nature of or the

circumstances involved in a transaction,[20]

whereby legal title becomes vested in one person, who is obligated in equity to hold thattitle for the benefit of another.

Constructive trusts are ―created by the construction of equity in order to satisfy the demands of justice and prevent unjustenrichment. They arise contrary to intention against one who, by fraud, duress or abuse of confidence, obtains or holds the legalright to property which he ought not, in equity and good conscience, to hold.‖

[21]

A review of the records shows that indeed there is an implied trust between the parties.

Although Lot 903- A was titled in Miguel’s name, the circumstances surrounding the acquisition and the subsequent partialdispositions of this property eloquently speak of the intent that the equitable or beneficial ownership of the property should belong toMariano and his heirs.

First , Lot 903-A was one half of the one-hectare portion of Lot 903 given as attorney’s fees by a client of the law firm ofPartners Miguel and Mariano Cuenco. It constituted the latter’s share in the attorney’s fees and thus equitably belonged to him, ascorrectly found by the CA. That Lot 903-A had been titled in the name of Miguel gave rise to an implied trust between him andMariano, specifically, the former holds the property in trust for the latter. In the present case, it is of no moment that the implied trustarose from the circumstance -- a share in the attorney’s fees -- that does not categorically fall under Articles 1448 to 1456 of the

Civil Code. The cases of implied trust enumerated therein ―does not exclude others established by the general law of trust.‖[22]

Second , from the time it was titled in his name in 1938,[23]

Lot 903-A remained undivided and untouched[24]

by Miguel. Only onFebruary 3, 1947, did Lourdes Cuenco,

[25] upon the instruction of Mariano, have it surveyed and subdivided into six almost equal

portions -- 903-A-1 to 903-A-6. Each portion was specifically allocated to each of the six children of Mariano with his first wife.[26]

Third , Miguel readily surrendered his Certificate of Title[27]

and interposed no objection[28]

to the subdivision and the allocationof the property to Mariano’s six children, including Concepcion.

Fourth, Mariano’s children, including Concepcion,[29]

were the ones who shouldered the expenses incurred for the subdivisionof the property.

Fifth, after the subdivision of the property, Mariano’s children -- including Concepcion[30]

-- took possession of their respectiveportions thereof.

Sixth, the legal titles to five portions of the property were transferred via a gratuitous deed of conveyance to Mariano’s fivechildren, following the allocations specified in the subdivision plan prepared for Lourdes Cuenco.

[31]

With respect to Lot 903-A-6 in particular, the existence of Concepcion’s equitable ownership thereof is bolstered, not just bythe above circumstances, but also by the fact that respondent fenced the portion allocated to her and planted trees thereon.

[32]

More significantly, she also paid real property taxes on Lot 903-A-6 yearly, from 1956 until 1969[33]

-- the year when she wasdispossessed of the property. ―Although tax declarations or realty tax payments of property are not conclusive evidence ofownership, nevertheless, they are good indicia of possession in the concept of owner, for no one in his right mind would be payingtaxes for a property that is not in his actual or at least constructive possession.‖

[34] Such realty tax payments constitute proof that the

holder has a claim of title over the property.

Tellingly, Miguel started paying real property taxes on Lot 903-A-6 only on April 4, 1964,[35]

after the death of Mariano.[36]

Thisfact shows that it was only in that year that he was emboldened to claim the property as his own and to stop recognizing Mariano’s,



































































































and subsequently Concepcion’s, ownership rights over it. It was only by then that the one who could have easily refuted his claimhad already been silenced by death. Such a situation cannot be permitted to arise, as will be explained below.

Estoppel

From the time Lot 903- A was subdivided and Mariano’s six children -- including Concepcion -- took possession as owners oftheir respective portions, no whimper of protest from petitioner was heard until 1963. By his acts as well as by his omissions, Miguelled Mariano and the latter’s heirs, including Concepcion, to believe that Petitioner Cuenco respected the ownership rights of respondent over Lot 903-A-6. That Mariano acted and relied on Miguel’s tacit recognition of his ownership thereof is evident fr omhis will, executed in 1963, which states:

“I hereby make it known and declare that x x x all properties which my first wife and I had brought to, or acquired during our marriage, or which

I had acquired during the years I was a widower – including jewelry, war damage compensation, and two other lots also located at Cebu City, onenear the South-Western University and the other near the Cebu provincial capitol, which were my attorney’s fees from my clients, Victoria

Rallos and Zoilo Solon, respectively – have already long been disposed of, and distributed by me, through my brother, Miguel, to all my

said six children in the first marriage .”[37]

(emphasis supplied)

Indeed, as early as 1947, long before Mariano made his will in 1963, Lot 903-A -- situated along Juana Osmeña Extension,Kamputhaw, Cebu City,

[38] near the Cebu Provincial Capitol -- had been subdivided and distributed to his six children in his first

marriage. Having induced him and his heirs to believe that Lot 903-A-6 had already been distributed to Concepcion as her own,

petitioner is estopped from asserting the contrary and claiming ownership thereof.

The principle of estoppel in pais applies when -- by one’s acts, representations, admissions, or silence when there is a need tospeak out -- one, intentionally or through culpable negligence, induces another to believe certain facts to exist; and the latterrightfully relies and acts on such belief, so as to be prejudiced if the former is permitted to deny the existence of those facts.

[39]

Third Issue:Laches

Petitioner claims that respondent’s action is already barred by laches.

We are not persuaded. Laches is negligence or omission to assert a right within a reasonable time, warranting a presumptionthat the party entitled to it has either abandoned or declined to assert it.

[40] In the present case, respondent has persistently asserted

her right to Lot 903-A-6 against petitioner.

Concepcion was in possession as owner of the property from 1949 to 1969.[41]

When Miguel took steps to have it separatelytitled in his name, despite the fact that she had the owner’s duplicate copy of TCT No. RT -6999 -- the title covering the entire Lot903-A -- she had her adverse claim annotated on the title in 1967. When petitioner ousted her from her possession of the lot bytearing down her wire fence in 1969,[42] she commenced the present action on September 19, 1970,[43] to protect and assert herrights to the property. We find that she cannot be held guilty of laches, as she did not sleep on her rights.

Fourth Issue:Expunging of Test imon y

Petitioner Cuyegkeng questions the expunging of the direct testimony of Miguel Cuenco. Respondent points out that thisissue was not raised before the CA. Neither had petitioner asked the trial court to reconsider its Order expunging the testimony.Hence, this issue cannot for the first time be raised at this point of the appeal. Issues, arguments and errors not adequately andseriously brought below cannot be raised for the first time on appeal.

[44] ―Basic considerations of due process impel this rule.‖

[45]

WHEREFORE, the Petition is DENIED, and the assailed Decision AFFIRMED. Costs against petitioner.

G.R. No. 169681 November 5, 2009

THE ESTATE OF PEDRO C. GONZALES and HEIRS OF PEDRO C. GONZALES, Petitioners,vs.THE HEIRS OF MARCOS PEREZ, Respondents.

D E C I S I O N

PERALTA, J. :

This resolves the instant Petition for Review on Certiorari under Rule 45 of the Rules of Court praying for the nullification of theDecision

1 of the Court of Appeals (CA) dated April 25, 2005 in CA-G.R. CV No. 60998 and its Resolution

2 dated September 14,




























http://www.lawphil.net/judjuris/juri2009/nov2009/gr_169681_2009.html#fnt1



















2005. The challenged Decision of the CA reversed and set aside the judgment of the Regional Trial Court (RTC) of Marikina City,Branch 272 in Civil Case No. 94-57-MK while its assailed Resolution denied petitioners' motion for reconsideration.

The antecedent facts are as follows:

The former Municipality of Marikina in the Province of Rizal (now City of Marikina, Metro Manila) used to own a parcel of landlocated in Barrio Concepcion of the said municipality covered by Original Certificate of Title (OCT) No. 629

3 of the Register of Deeds

of Rizal. The said property was subdivided into three (3) lots, namely, lots A, B and C, per subdivision plan (LRC) Psd-4571.4

On January 14, 1966, the Municipal Council of Marikina passed Resolution No. 9, series of 1966 which authorized the sale throughpublic bidding of Municipal Lots A and C.

On April 25, 1966, a public bidding was conducted wherein Pedro Gonzales was the highest bidder. Two days thereafter, or on April27, 1966, the Municipal Council of Marikina issued Resolution No. 75 accepting the bid of Pedro. Thereafter, a deed of sale wasexecuted in favor of the latter which was later forwarded to the Provincial Governor of Rizal for his approval. The Governor,however, did not act upon the said deed.

Sometime in September 1966, Pedro sold to Marcos Perez a portion of Lot C, denominated as Lot C-3, which contains an area of375 square meters. The contract of sale was embodied in a Deed of Sale

5 which, however, was not notarized. To segregate the

subject property from the remaining portions of Lot C, Marcos had the same surveyed wherein a technical description of the subjectlot was prepared by a surveyor .

6

Subsequently, Pedro and Marcos died.

On February 7, 1992, the Municipality of Marikina, through its then Mayor Rodolfo Valentino, executed a Deed of Absolute Transferof Real Property over Lots A and C in favor of the Estate of Pedro C. Gonzales.

7 On June 25, 1992, Transfer Certificate of Title

(TCT) No. 223361, covering Lot C, was issued in the name of the said estate.8

Subsequently, herein petitioners executed an extra-judicial partition wherein Lot C was subdivided into three lots. As a result of thesubdivision, new titles were issued wherein the 370-square-meter portion of Lot C-3 is now denominated as Lot C-1 and is coveredby TCT No. 244447

9 and the remaining 5 square meters of the subject lot (Lot C-3) now forms a portion of another lot denominated

as Lot C-2 and is now covered by TCT No. 244448.10

On October 1, 1992, herein respondents sent a demand letter to one of herein petitioners asking for the reconveyance of the subjectproperty.

11 However, petitioners refused to reconvey the said lot. As a consequence, respondents filed an action for "Annulment

and/or Rescission of Deed of Absolute Transfer of Real Property x x x and for Reconveyance with Damages."12

On February 2, 1998, the RTC rendered its Decision with the following dispositive portion:

WHEREFORE, foregoing premises, judgment is hereby rendered as follows:

1. DISMISSING the complaint subject of the case in caption for lack of merit;

2. DECLARING VALID both Transfer Certificates of Title Nos. 244447 and 244448 issued by the Register of Deeds ofMarikina;

3. DISMISSING the defendants' counterclaim.

No pronouncement as to costs.

SO ORDERED.13

The RTC ruled that since the Deed of Sale executed between Pedro and Marcos was not notarized, the same is considered voidand of no effect. In addition, the trial court also held that Pedro became the owner of the subject lot only on February 7, 1992; assuch, he could not have lawfully transferred ownership thereof to Marcos in 1966.

Herein respondents appealed the RTC Decision to the CA contending that the RTC erred in relying only on Articles 1356 and 1358of the Civil Code. Instead, respondents assert that the RTC should also have applied the provisions of Articles 1357, 1403 (2), 1405and 1406 of the same Code.















































On April 25, 2005, the CA rendered its presently assailed Decision disposing as follows:

WHEREFORE, premises considered, the instant Appeal is hereby GRANTED and the assailed Decision dated February 2, 1998is REVERSED and SET ASIDE. TCT No. 244447 and partially, TCT No. 244448, with respect to five (5) square meters, aredeclared NULL and VOID and defendants-appellees are ordered to reconvey in favor of the plaintiffs-appellants the subject propertycovered by said Transfer Certificates of Title (five square meters only with respect to TCT No. 244448). The trial court's dismissal ofdefendants-appellees' counterclaim is, however, AFFIRMED.

SO ORDERED.14

The CA held that a sale of real property, though not consigned in a public instrument, is nevertheless valid and binding among theparties and that the form required in Article 1358 of the Civil Code is not essential to the validity or enforceability of the transactionsbut only for convenience.

Petitioners filed a motion for reconsideration, but the same was denied by the CA in its Resolution of September 14, 2005 on theground that the said motion was filed out of time.

Hence, the present petition with the following assignment of errors:

WITH DUE RESPECT TO THE HONORABLE COURT OF APPEALS, ITS FINDINGS OF FACT RUN COUNTER TO THOSE OFTHE TRIAL COURT, THUS, IT HAS DECIDED THE CASE IN A WAY NOT IN ACCORD WITH LAW AND JURISPRUDENCE.

WITH DUE RESPECT, THE ALLEGED DEED OF SALE IS SUSPECT AND RIDDEN WITH INCONSISTENCIES. IN FACT, THELOWER COURT HELD THAT THE DEED OF SALE FAILED TO MEET THE SOLEMNITY REQUIREMENTS PROVIDED UNDERTHE LAW FOR ITS VALIDITY.

WITH DUE RESPECT, THE COURT OF APPEALS ERRED IN DISREGARDING THE FINDINGS OF FACT AND THE APPLICATION OF LAW BY THE REGIONAL TRIAL COURT THAT UNDER THE PURPORTED DEED OF SALE THE VENDORCOULD NOT HAVE TRANSFERRED OWNERSHIP.

15

In their first and last assigned errors, petitioners contend that Marcos, who is respondents' predecessor-in-interest, could not havelegally bought the disputed parcel of land from petitioners' predecessor-in-interest, Pedro, in September 1966 because, during thattime, Pedro had not yet acquired ownership of the subject lot. Petitioners' assertion is based on the premise that as of February 29,1968, the Deed of Sale between Pedro and the Municipality of Marikina was still subject to approval by the Provincial Governor ofRizal, as required under Section 2196 of the Revised Administrative Code. Considering that on the supposed date of sale in favor ofMarcos, the requisite approval of the Provincial Governor was not yet secured, petitioners conclude that Pedro could not beconsidered as the owner of the subject property and, as such, he did not yet possess the right to transfer ownership thereof and,

thus, could not have lawfully sold the same to Marcos.

The Court does not agree.

Section 2196 of the Revised Administrative Code provides:

SECTION 2196. Execution of deeds. – When the government of a municipality is a party to a deed or an instrument which conveysreal property or any interest therein or which creates a lien upon the same, such deed or instrument shall be executed on behalf ofthe municipal government by the mayor, upon resolution of the council, with the approval of the governor.

In Municipality of Camiling v. Lopez ,16

the Court found occasion to expound on the nature and effect of the provincial governor'spower to approve contracts entered into by a municipal government as provided for under Section 2196 of the Revised

Administrative Code. The Court held, thus:

x x x The approval by the provincial governor of contracts entered into and executed by a municipal council, as required in [S]ection2196 of the Revised Administrative Code, is part of the system of supervision that the provincial government exercises over themunicipal governments. It is not a prohibition against municipal councils entering into contracts regarding municipal propertiessubject of municipal administration or control. It does not deny the power, right or capacity of municipal councils to enter into suchcontracts; such power or capacity is recognized. Only the exercise thereof is subject to supervision by approval or disapproval, i.e.,contracts entered in pursuance of the power would ordinarily be approved if entered into in good faith and for the best interests ofthe municipality; they would be denied approval if found illegal or unfavorable to public or municipal interest. The absence of theapproval, therefore, does not per se make the contracts null and void.

17

This pronouncement was later reiterated in Pechueco Sons Company v. Provincial Board of Antique,18

where the Court ruled moreemphatically that:























In other words, as regards the municipal transactions specified in Section 2196 of the Revised Administrative Code, the ProvincialGovernor has two courses of action to take – either to approve or disapprove the same. And since absence of such approvaldoes not necessarily render the contract entered into by the municipality null and void, the transaction remains voidableuntil such time when by subsequent unfavorable action of the governor, for reasons of public interest, the contract isthereby invalidated.

19

It is clear from the above-quoted pronouncements of the Court that, pending approval or disapproval by the Provincial Governor of acontract entered into by a municipality which falls under the provisions of Section 2196 of the Revised Administrative Code, such

contract is considered voidable. In the instant case, there is no showing that the contract of sale entered into between Pedro and theMunicipality of Marikina was ever acted upon by the Provincial Governor. Hence, consistent with the rulings enunciated above, thesubject contract should be considered voidable. Voidable or annullable contracts, before they are set aside, are existent, valid, andbinding, and are effective and obligatory between the parties.

20

In the present case, since the contract was never annulled or set aside, it had the effect of transferring ownership of the subjectproperty to Pedro. Having lawfully acquired ownership of Lots A and C, Pedro, in turn, had the full capacity to transfer ownership ofthese parcels of land or parts thereof, including the subject property which comprises a portion of Lot C.

It is wrong for petitioners to argue that it was only on June 25, 1992, when TCT No. 223361 covering Lot C was issued in the nameof the estate of Pedro, that he became the owner thereof.

Article 1496 of the Civil Code provides:

The ownership of the thing sold is acquired by the vendee from the moment it is delivered to him in any of the ways specified in Articles 1497 to 1501, or in any other manner signifying an agreement that the possession is transferred from the vendor to thevendee.

In conjunction with the above-stated provision, Article 1497 of the Civil Code states that:

The thing sold shall be understood as delivered when it is placed in the control and possession of the vendee.

In the present case, there is no dispute that Pedro took control and possession of the said lot immediately after his bid was acceptedby the Municipal Government of Marikina. In fact, herein petitioners, in their Answer with Compulsory Counterclaim admit that bothPedro and Marcos, together with their respective heirs, were already occupying the subject property even before the same was soldto Pedro and that, after buying the same, Pedro allowed Marcos and his family to stay thereon.

21 This only shows that upon

perfection of the contract of sale between the Municipality of Marikina and Pedro, the latter acquired ownership of the subjectproperty by means of delivery of the same to him.

Hence, the issuance of TCT No. 223361, as well as the execution of the Deed of Absolute Transfer of Real Property on February 7,1992 by the Municipal Mayor of Marikina, could not be considered as the operative acts which transferred ownership of Lot C toPedro. Pedro already acquired ownership of the subject property as early as 1966 when the same was delivered to him by theMunicipality of Marikina, and the execution of the Deed of Absolute Transfer of Real Property as well as the consequent issuance ofTCT No. 223316 are simply a confirmation of such ownership.1avvphi1

It may not be amiss to point out at this juncture that the Deed of Absolute Transfer of Real Property executed by the Mayor ofMarikina was no longer subject to approval by the Provincial Governor of Rizal because Marikina already became part of MetroManila on November 7, 1975.

22 On December 8, 1996, Marikina became a chartered city.

23

In their second assignment of error, petitioners question the authenticity and due execution of the Deed of Sale executed by Pedroin favor of Marcos. Petitioners also argue that even assuming that Pedro actually executed the subject Deed of Sale, the same isnot valid because it was not notarized as required under the provisions of Articles 1403 and 1358 of the Civil Code.

The Court is not persuaded.

The RTC, in its abbreviated discussion of the questions raised before it, did not touch on the issue of whether the Deed of Salebetween Pedro and Marcos is authentic and duly executed. However, the CA, in its presently assailed Decision, adequatelydiscussed this issue and ruled as follows:

x x x In the present case, We are convinced that plaintiffs-appellants [herein respondents] have substantially proven that Pedro,indeed, sold the subject property to Marcos for P9,378.75. The fact that no receipt was presented to prove actual payment ofconsideration, in itself, the absence of receipts, or any proof of consideration, would not be conclusive since consideration is alwayspresumed. Likewise, the categorical statement in the trial court of Manuel P. Bernardo, one of the witnesses in the Deed of Sale,that he himself saw Pedro sign such Deed lends credence. This was corroborated by another witness, Guillermo Flores. Althoughthe defendants-appellees [herein petitioners] are assailing the genuineness of the signatures of their parents on the said Deed, they























presented no evidence of the genuine signatures of their parents as would give this Court a chance to scrutinize and compare it withthe assailed signatures. Bare allegations, unsubstantiated by evidence, are not equivalent to proof under our Rules.

24

In the instant petition, petitioners would have us review the factual determinations of the CA. However, settled is the rule that theCourt is not a trier of facts and only questions of law are the proper subject of a petition for review on certiorari in this Court.

25 While

there are exceptions to this rule,26

the Court finds that the instant case does not fall under any of them. Hence, the Court sees noreason to disturb the findings of the CA, which are supported by evidence on record.

On the question of whether the subject Deed of Sale is invalid on the ground that it does not appear in a public document, Article1358 of the same Code enumerates the acts and contracts that should be embodied in a public document, to wit:

Art. 1358. The following must appear in a public document:

(1) Acts and contracts which have for their object the creation, transmission, modification or extinguishment ofreal rights over immovable property; sales of real property or of an interest therein are governed by Articles 1403,No. 2 and 1405;

(2) The cession, repudiation or renunciation of hereditary rights or of those of the conjugal partnership of gains;

(3) The power to administer property, or any other power which has for its object an act appearing or which should appearin a public document, or should prejudice a third person; and

(4) The cession of actions or rights proceeding from an act appearing in a public document.

All other contracts where the amount involved exceeds five hundred pesos must appear in writing, even a private one. But sales ofgoods, chattels or things in action are governed by Articles 1403, No. 2 and 1405.

On the other hand, pertinent portions of Article 1403 of the Civil Code provide as follows:

Art. 1403. The following contracts are unenforceable, unless they are ratified:

x x x x

(2) Those that do not comply with the Statute of Frauds as set forth in this number. In the following cases an agreement hereaftermade shall be unenforceable by action, unless the same, or some note or memorandum thereof, be in writing, and

subscribed by the party charged, or by his agent; evidence, therefore, of the agreement cannot be received without the writing,or a secondary evidence of its contents:

(a) An agreement that by its terms is not to be performed within a year from the making thereof;

x x x x

(e) An agreement for the leasing for a longer period than one year, or for the sale of real property or of an interest therein; x xx

27

Under Article 1403(2), the sale of real property should be in writing and subscribed by the party charged for it to be enforceable.28

Inthe case before the Court, the Deed of Sale between Pedro and Marcos is in writing and subscribed by Pedro and his wifeFrancisca; hence, it is enforceable under the Statute of Frauds.

However, not having been subscribed and sworn to before a notary public, the Deed of Sale is not a public document and, therefore,does not comply with Article 1358 of the Civil Code.

Nonetheless, it is a settled rule that the failure to observe the proper form prescribed by Article 1358 does not render the acts orcontracts enumerated therein invalid. It has been uniformly held that the form required under the said Article is not essential to thevalidity or enforceability of the transaction, but merely for convenience.

29The Court agrees with the CA in holding that a sale of real

property, though not consigned in a public instrument or formal writing, is, nevertheless, valid and binding among the parties, for thetime-honored rule is that even a verbal contract of sale of real estate produces legal effects between the parties.

30 Stated differently,

although a conveyance of land is not made in a public document, it does not affect the validity of such conveyance. Article 1358does not require the accomplishment of the acts or contracts in a public instrument in order to validate the act or contract but only toinsure its efficacy.

31 Thus, based on the foregoing, the Court finds that the CA did not err in ruling that the contract of sale between

Pedro and Marcos is valid and binding.



































WHEREFORE, the instant petition is DENIED. The assailed Decision and Resolution of the Court of Appeals in CA-G.R. CV No.60998 are AFFIRMED.

PEDRO BONGALON now substituted by FILIPINA BONGALON, pet i t ioner, vs. COURT OF APPEALS, CECILIO BONGALONand AMPARO BONGALON, respondents .

D E C I S I O N

CARPIO, J .:

The Case

This is a petition for review[1]

of the Decision[2]

dated 27 November 1992 of the Court of Appeals and its Resolution dated 23February 2000. The 27 November 1992 Decision reversed the Decision

[3] dated 28 June 1991 of the Regional Trial Court, Branch

17, Tabaco, Albay (―RTC‖) while the 23 February 2000 Resolution denied the motion for reconsideration.

The Facts

Pedro Bongalon, the late husband of petitioner Filipina Bongalon (―petitioner‖), respondents Cecilio Bongalon (―Cecilio‖) and Amparo Bongalon (―Amparo‖) and four

[4] other s are the children of the late Cirila Bonga (―Cirila‖) and Bernabe Bongalon (―Bernabe‖).

Cirila is one of the five children of Rosalia Buenaflor (―Rosalia‖) and Cornelio Bonga (―Cornelio‖). The other children of Ro salia andCornelio are Trinidad Bonga Bobier (―Trinidad‖), Jacoba Bonga Faustino (―Jacoba‖), Emilio Bonga (―Emilio‖) and Benito Bonga(―Benito‖). Jacoba had three children, namely, Conchita Faustino Base (―Conchita‖), Catalina Faustino Conlo (―Catalina‖), and

Leonardo Faustino (―Leonardo‖). Emilio also had three children, namely, Teodora Bonga Bien (―Teodora‖), Francisca BongaCamba (―Francisca‖), and Maxima Bonga Diaz (―Maxima‖). It appears that Jacoba and Emilio predeceased their children.[5]

Rosalia was the owner of Lot No. 525-A in A. A. Berces St., Tabaco, Albay measuring 149 square meters and covered byOriginal Certificate of Title No. RO-17402 (23825) (―OCT No. RO-17402‖) issued in her name. OCT No. RO-17402 was latercancelled and replaced by Transfer Certificate of Title No. T-67656 (―TCT No. T-67656‖) also issued in Rosalia’s name.

[6] Rosalia

died intestate in 1940, survived by her husband and five children.

On 26 July 1943, Trinidad, Conchita, and Teodora executed a Deed of Absolute Sale (―Exhibit 2‖)[7]

conveying to Cirila ―a partof‖ Lot No. 525-A for P100. On the same day, Cirila, and again Trinidad, Conchita, and Teodora, executed a Deed of Absolute Sale(―Exhibit B‖)

[8] conveying to Pedro Bongalon ―a part of‖ Lot No. 525-A also for P100. The same notary public notarized both deeds

of sale on that same day. On 22 February 1971, Cirila executed another Deed of Absolute Sale (―22 February 1971 Deedof Sale‖)

[9] conveying Lot No. 525-A to Amparo for P4,500. Amparo subsequently declared Lot No. 525-A in her name for tax

purposes and paid the real estate taxes in 1977 and 1978. Even before the execution of the 22 February 1971 Deed of Sale, Amparo and her family were already occupying a 32-square meter portion of Lot No. 525-A where her house stands.

[10]

Meanwhile, on 30 January 1979, Pedro Bongalon executed an Extrajudicial Settlement of Estate (―Extrajudicial Settlement‖)declaring that Cirila is the only heir of Rosalia and that he (Pedro Bongalon) is, in turn, the only heir of Cirila. Based on this

Extrajudicial Settlement, Pedro Bongalon secured the cancellation of TCT No. T-67656 and obtained Transfer Certificate of Title No.T-67780 (―TCT No. T-67780‖) issued in his name.

In March 1988, Pedro Bongalon sued respondents in the RT C for ―Quieting of Title, Recovery of Portion of Property andDamages.‖ Pedro Bongalon alleged in his complaint that: (1) he is the registered owner of Lot No. 525-A under TCT No. T-67780;(2) respondents occupied Lot No. 525-A through his tolerance; (3) he had several times asked respondents to vacate Lot No. 525-Abut they refused to do so; and (4) respondents’ occupancy of Lot No. 525 -A and their claim of ownership over the property cast acloud over his title. Pedro Bongalon prayed that the RTC declare his title free of any cloud and order respondents to vacate Lot No.525-A and pay him damages and litigation expenses.

[11]

In their Answer with Counterclaim, respondents denied Pedro Bongalon’s allegations. Respondents claimed that PedroBongalon fraudulently obtained TCT No. T-67780 by executing the Extrajudicial Settlement. Amparo claimed that on the contrary,she is the owner of Lot No. 525-A based on the 22 February 1971 Deed of Sale. As counterclaim, respondents sought thenullification of the Extrajudicial Settlement and of TCT No. T-67780. Respondents also prayed for the award of damages andattorney’s fees.

[12]

During the trial, Pedro Bongalon introduced in evidence other documents to prove his ownership of Lot No. 525-A, such as (1)

Exhibit B and (2) Conchita’s Affidavit dated 22 May 1978(―Exhibit C‖)[13]

confirming the sale under Exhibit B. The RTC admittedthese documents in evidence over the objection of respondents.

For their part, respondents also presented in evidence Exhibit 2 to prove that Cirila owned the entire Lot No. 525-A which shelater sold to Amparo in the 22 February 1971 Deed of Sale.

Before the RTC could render judgment, Amparo died and her surviving spouse and six children substituted for her .[14]

The Trial Court’s Ruling

http://sc.judiciary.gov.ph/jurisprudence/2004/nov2004/142441.htm#_ftn1


























































On 28 June 1991, the RTC rendered judgment (―RTC Decision‖) the dispositive portion of which provides:

WHEREFORE, summing up the evidence, oral and documentary, presented by both parties, Judgment is rendered for the plaintiff a nd against thedefendants.

The Court orders, as it is hereby ordered, that the plaintiff is declared the rightful registered owner of the land consisting of One Hundred Forty

Nine (149) square meters, more or less, located at A. A. Berces St., Tabaco, Albay, under Transfer Certificate of Title No. T-67780, in the name

of Pedro Bongalon, said title is free from defect, flaw and cloud of doubt, therefore, indefeasible.

The defendants are likewise ordered to vacate and to deliver the portion of the land in question they have occupied to the plaintiff peacefully. And

to pay the costs proportionately.[15]

The RTC Decision reads:

From the documentary evidence adduced during the hearing by both parties, it appeared that the real property/land in question was formerly andoriginally owned by Rosalia Buenaflor, covered by Original Certificate of Title No.[RO-17402 (23825)], then to [T-]67656, then to [T-67780],

containing an area of One Hundred Forty Nine (149) square meters, more or less, located at then Taylor Street now A. A. Berces Street, Tabaco,

Albay. Rosalia Buenaflor married Cornelio Bonga and begot children, namely: Cirila, Trinidad, Jacoba, Emilio and Benito, all surnamed

Bonga. Daughter Cirila Bonga got married to Bernabe Bongalon and begot seven (7) children, namely: Pedro, Cecilio, Amparo, Eleuteria and

others, all surnamed Bongalon.

On July 26, 1943, two (2) documents were executed over the same parcel of land, this in question (sic).

First document, Exhibit-“2” defendants, Absolute Deed of Sale was executed and signed by vendors Trinidad Bonga, Conchita Faustino, TeodoraBonga, heirs and children of Rosalia Buenaflor Bonga, [conveying] a part of the property in question xxx in favor of vendee Cirila Bonga

xxx. Said Absolute Deed of Sale was notarized and acknowledged on July 26, 1943 by a notary public and entered as Doc. No. 2, Page 15, Book

No. 1, Series of 1943.

Second document, Exhibit –“B” – plaintiff, Absolute Deed of Sale was executed and signed by vendors Trinidad Bonga, Cirila Bonga, ConchitaB. Faustino (sic) and Teodora Bonga, heirs and children of Rosalia Buenaflor Bonga, [conveying] a part of the property in question in favor of

vendee Pedro Bongalon (son of Cirila Bonga Bongalon), xxxx Said document was notarized and acknowledged on July 26, 1943 by a Notary

Public and entered as Doc. No. 2, Page No. 15, Book No. 1, Series of 1943.

The Exhibit-“2” for the defendants and the Exhibit-“B” for the plaintiff, contained a handwritten insertion, to wit, “a part of” and initialled, which

is unclear, found in the first paragraph, later portion. Both documents are (sic) prepared/executed/signed by the same persons/ signatories,acknowledged and notarized by the same Notary Public, Zosimo R. Almonte. Both documents, Absolute Deed of Sale, printed and expressed

particular same boundaries and description of the whole area which is One Hundred Forty Nine (149) square meters, more or less, but did not

contain expressly the part/portion of said property [sold].

Circumstances surrounding the execution of these two (2) documents is concluded (sic) and construed that Exhibit -“B” for the plaintiff has to be

given weight and effect. This, the entire area of 149 square meters, more or less, is the subject of the sale as Cirila Bonga is now one of the four

(4) vendors. Each vendor shared or owned at least 37 square meters and 25 centimeters of this land in question, to be candid and clear.

In possession of the Deed of Absolute Sale, vendee Pedro Bongalon applied, processed and managed to have the ownership of said propertytransferred in his name by submitting an Affidavit of Confirmation, by Conchita F. Base, one of the vendors, dated May 22, 1978 duly subscribed

and sworn to by Notary Public Julian C. Cargullo, entered as Doc. No. 92, Page No. 21, Book No. VII, Series of 1978 and an Extrajudicial

Settlement of Estate, this is a requirement. Finally, Transfer Certificate of Title No. T-67780 in the name of Pedro Bongalon was issued on[January] 25, 1985. This is an indefeasible title of ownership in favor of the plaintiff.

On February 22, 1971, again Cirila Bonga, vendor again (sic), executed and signed another Deed of Absolute Sale, Exhibit-“1” for thedefendants, in favor of Amparo Bongalon Cortezano, vendee, married to Atenogenes A. Cortezano of the same entire parcel of la nd in question of

149 square meters, more or less, acknowledged and notarized by Notary Public Joel C. Atadero, entered as Doc. No. 1031, Page No. 77, Book

No. VII, Series of 1971. By virtue of this instrument, Cortezano, Amparo procured Tax Declaration No. 0020 in her name declaring the entire149 square meters for taxation purposes for the year 1985 in her name and where a 32 square meters of a house (sic) is constructed thereon.

Exhibit-“1” for the defendants, Deed of Absolute Sale by vendor Cirila Bonga to the latter‟s daughter vendee Amparo Bonga Cortezano isdefective having a flaw or cloud in the rights of an owner. She, Cirila Bonga, is not the only owner of said land. Previously on July 26,

1943 said parcel of land was a subject of Absolute Deed of Sale in favor of Pedro Bongalon, the brother of vendee of Exhibit-“1” Amparo

Bongalon Cortezano, by the rightful owners/vendors of the land in question.

Yet it can be argued that the plaintiff‟s Extrajudicial Settlement of Estate is a defect, a minor one, but what is controlling is Exhibit-“B”, Absolute

Deed of Sale in his favor dated July 26, 1943, and the Affidavit of Confirmation of Conchita F. Base.







xxxx

Considering the evidence, and with careful perusal of the same adduced by both parties at the hearing, the Court honestly believes, so holds and is

of the strong opinion, that the plaintiff‟s cause of action is sufficiently impressed with merit supporting his claim of possession, as well as

ownership of the land.[16]

Respondents appealed to the Court of Appeals.

The Court of Appeals’ Ruling

In its 27 November 1992 Decision, the Court of Appeals reversed the RTC Decision. The Court of Appeals held:

PREDICATED on the evidence and the law in point, the appeal in this case is sufficiently impressed with merit.

IN THE FIRST PLACE, the basis of the complaint filed by the plaintiff-appellee is that he acquired the property in question by inheritance from

his predecessors-in-interest and not by purchase. This fact is shown by the Annotation xxx of the Extrajudicial Settlement of Estate xxx which

was the supporting document that authorized the cancellation of TCT No. T-67656 xxx in the name of the original registered owner RosaliaBuenaflor and the issuance of TCT No. T-67780 in favor of and in the name of plaintiff-appellee Pedro Bongalon. In other words, the

Extrajudicial Settlement of Estate (which is by inheritance) is the basis of both the complaint and the transfer of the certificate of title from the

original owner to the plaintiff-appellee.

SECONDLY, in the trial of the case, what was introduced in evidence were the Deed of Absolute Sale (Exhibit “B”) and the Affidavit of

Confirmation (Exhibit “C”), though these were never alleged in the complaint. What was alleged in the complaint was the ExtrajudicialSettlement of Estate xxx or the mode of inheritance (sic). That is why, the defendants-appellants‟ counsel vigorously objected of (sic) the

admission of Exhibit “B” and Exhibit “C” on the ground that no evidence can be introduced in support of allegation not found in t he pleadings

xxx. Consequently, the trial court should not have admitted Exhibits “B” and “C” as part of the evidence.

THIRDLY, the only ground upon which plaintiff-appellee can base his stand is the Deed of Absolute Sale (Exh. “B”) and the Deed ofConfirmation (Exh. “C”) after suppressing the presentation and submission of xxx the Extrajudicial Settlement of Estate. Since Exhibit “B” and

Exhibit “C” should not have been considered or admitted because the same were not alleged in the complaint xxx, the only remaining issue is

TCT No. T-67780.

FOURTHLY, plaintiff-appellee Pedro Bongalon, as already stated, executed the Extrajudicial Settlement of Estate xxx falsely alleging that the

original registered owner Rosalia Buenaflor and husband were survived by their only daughter Cirila Bonga Bongalon, mother of the plaintiff-

appellee, when in fact Cirila Bonga Bongalon was survived by her seven (7) children namely: Amparo, Cecilio, Eleuterio (sic), Jose, Gloria,Anastacio and Pedro. The first two names are the defendants-appellants and the last one is the plaintiff-appellee. Consequently, the Extrajudicial

Settlement of Estate is tainted with fraud, brazen lies and grave misrepresentation which the lower court recognized as a defect, though a minorone, in view of Exhibit “B” and Exhibit “C”. It is inevitable that the trial court should have correctly nullified TCT No. T-67780 on the

aforecited grounds. For well-settled is the rule that when a party resorts to falsehood to advance his suit, it is presumed that he knows perfectly

well that his cause is groundless and this presumption affects the whole mass of evidence presented by such party xxx.

AFTER a careful review of the entire evidence, We perceive no difficulties in sustaining the validity of defendants-appellants‟ claim or posture.

ACCORDINGLY, in the light of the foregoing disquisitions, the decis ion of the Court a quo is hereby REVERSED and SET ASIDE and a new

one is rendered dismissing the case, with costs against the plaintiff-appellee.[17]

(Capitalization and underlining in the original)

Pedro Bongalon sought reconsideration but the Court of Appeals denied his motion in its 23 February 2000 Resolution.[18]

Hence, this petition.[19]

The Issues

Petitioner raises the following issues for resolution:

I. WHETHER THE COURT OF APPEALS GRAVELY ERRED IN REVERSING THE DECISION OF THE TRIALCOURT;



















II. WHETHER THE DECISION OF THE COURT OF APPEALS IS IN ACCORD WITH THE FACTS, EVIDENCE ANDTHE PERTINENT LAWS, PARTICULARLY THE PROVISIONS OF THE CIVIL CODE ON SALE, POSSESSION

AND OWNERSHIP.[20]

In their Comment, Cecilio and the heirs of Amparo reiterate their prayer to nullify TCT No. T- 67780 and the ExtrajudicialSettlement.

The Ruling of the Court

The petition is partly meritorious.

On the Admiss ib i l i ty of Exhibi ts B and C

It was error for the Court of Appeals to rule that the RTC should not have admitted in evidence Exhibits B and C becausePedro Bongalon failed to allege these documents in his complaint. What was at issue before the RTC, as raised in the pleadingsfiled by the parties, was the ownership of Lot No. 525-A. Pedro Bongalon offered the pieces of evidence in question to support hisclaim of ownership over Lot No. 525-A. The fact that Pedro Bongalon did not mention Exhibits B and C in his complaint is not areason to rule them inadmissible. While TCT No. T-67780 was Pedro Bongalon’s principal proof of ownership, it did not preclude

him from presenting other pieces of evidence to prove his claim. This is especially relevant because of his testimony that heexecuted the Extrajudicial Settlement only because the Register of Deeds of Albay required it for the issuance of TCT No. T-67780.

[21]

The Basis and Extent of Pedro Bongalon’s Interest in Lo t No. 525-A

There is no dispute that Lot No. 525- A was Rosalia’s paraphernal property. Thus, when Rosalia died intestate, she passed onthis piece of property to her surviving spouse Cornelio and their five children, namely, Cirila, Trinidad, Jacoba, Emilio, and Benito.These heirs inherited Lot No. 525-A in co-ownership, at 1/6 undivided share each .

[22] After Cornelio died, his 1/6 undivided share

passed to his surviving five children per stirpes, thus increasing their undivided shares to 1/5 each. The 1/5 undivided share ofJacoba, who apparently predeceased her children Conchita, Catalina, and Leonardo, passed to Jacoba’s children as co -owners inequal shares. Likewise, the undivided 1/5 share of Emilio, who also apparently predeceased his children Teodora, Francisca, and

Maxima, passed to Emilio’s children as co-owners in equal shares.

Under Exhibit 2, Trinidad, Teodora, and Conchita sold to Cirila ―a part‖ of Lot No. 525-A on 26 July 1943.[23]

Since these co-owners could alienate their undivided shares,

[24] they sold under Exhibit 2 their undivided shares in Lot No. 525-A to Cirila. Similarly,

on the same day, Cirila (and again Trinidad, Teodora, and Conchita), executed Exhibit B conveying to Pedro Bongalon a ―part of‖Lot No. 525-A. Thus, Cirila sold to Pedro Bongalon her original 1/5 share and the combined undivided shares of Trinidad, Teodoraand Conchita she earlier acquired under Exhibit 2.

[25] The participation of Trinidad, Teodora and Conchita in Exhibit B, while

superfluous (as they had earlier sold their undivided shares to Cirila), does not detract from the validity of Exhibit B. In sum, PedroBongalon’s interest in Lot No. 525-A covers only the undivided shares of Cirila, Trinidad, Teodora, and Conchita.

Thus, contrary to the RTC Decision, Pedro Bongalon did not acquire ownership of the entire Lot No. 525-A under ExhibitB. As the other co-owners, namely, the heirs of Benito Bongalon, and the other children of Jacoba (Catalina and Leonardo)and Emilio (Francisca and Maxima) did not sign either Exhibit B or Exhibit 2, they remained co-owners of Lot No. 525-A. Whileeach co-owner has full ownership of his part and may alienate it, the alienation affects only the portion which pertains to him in thedivision upon the termination of the co-ownership.

[26]

Neither can petitioner invoke Exhibit C to support her claim that Pedro Bongalon owns the entire Lot No. 525-A. Conchitastated in that document that all the children and descendants of Rosalia (except for Cirila )

[27] sold their respective undivided shares

to Pedro Bongalon under Exhibit B. This statement, however, is obviously false since only Cirila, Trinidad, Teodora and Conchitasigned Exhibit B. The other co-owners of Lot No. 525-A who did not affix their signatures in such document did not sell their sharesto Pedro Bongalon.

On Wh ether the 22 February 1971 Deed of Sale Casts a Cloud on Pedro Bongalon’s Title



































A cloud on title to real property or any interest therein is ―any instrument, record, claim, encumbrance or proceeding which isapparently valid or effective but is in truth and in fact invalid, ineffective, voidable, or unenforceable, and may be prejudicial to saidtitle.‖

[28] The Court finds that the 22 February 1971 Deed of Sale casts a cloud on Pedro Bongalon’s interest over Lot No. 525 -

A. While apparently valid, the 22 February 1971 Deed of Sale is in fact void and prejudicial to the interest of Pedro Bongalon andhis heirs. This document purports to show that Amparo was the owner of such property when in fact she was not. This document isvoid because at the time of its execution, Cirila had no more interest to sell in Lot No. 525-A because she had sold all her interest inthat property to Pedro Bongalon in 1943 under Exhibit B. Thus, Cirila’s other children, including Amparo and Cecilio, cannot claimany interest over Lot No. 525-A, either by contract, in the case of Amparo, or by hereditary rights, in the case of Cecilio. Amparo’s

subsequent declaration of Lot No. 525-A under her name for tax purposes (and her payment of the real estate taxes in 1977 and1978) did not change her status as a stranger to that property. Cecilio and the heirs of Amparo have no right to remain in Lot No.525-A much less construct improvements on that property.

On the Val id i ty of the Extrajudic ia l Sett lement and o f TCT No. T-67780

Respondents squarely raised in the RTC and in the Court of Appeals the issue of the validity of the Extrajudicial Settlementand of TCT No. T-67780. It was thus incumbent upon these courts to resolve this issue. The RTC failed to do so. On the otherhand, the Court of Appeals stated in its 27 November 1992 Decision that the Extrajudicial Settlement contained materialmisrepresentations which nullified TCT No. T-67780. However, the Court of Appeals inexplicably failed to make a ruling on thestatus of these two documents in the dispositive portion of its ruling. This is error. Having taken cognizance of an action for quietingof title, both courts should have ―adjust[ed] all equities of all the parties to the action and determine[d] the status of al l controverted

claims to or against the property.‖

[29]

There is no question that Pedro Bongalon falsely stated in the Extrajudicial Settlement that Cirila was the only heir of Rosalia

and that he (Pedro Bongalon), in turn, was the sole heir of Cirila. As the Court of Appeals correctly noted, this is not a minor defectbut in fact renders the document void. Consequently, TCT No. T-67780, which the Register of Deeds of Albay issued based on theExtrajudicial Settlement, must be cancelled. In Ramirez v. CA ,

[30] also involving a case for quieting of title, this Court annulled

several Transfer Certificates of Title on the ground that they were issued based on void documents.

The cancellation of the Extrajudicial Settlement and TCT No. T-67780 does not deprive Pedro Bongalon or his heirs of theright to maintain this action for quieting of title. Under Article 477 of the Civil Code, it is sufficient that the plaintiff has legal orequitable title to or interest in the real property which is the subject matter of the action. Pedro Bongalon’s acquisition of the sharesof Cirila, Trinidad, Conchita, and Teodora vested him with the necessary legal interest over Lot No. 525-A.

WHEREFORE, we GRANT the petition in part. We SET ASIDE the Decision dated 27 November 1992 and the Resolutiondated 23 February 2000 of the Court of Appeals. We enter a new judgment as follows:

(1) The Deed of Sale dated 22 February 1971 and the Deed of Extrajudicial Settlement dated 30 January 1979are ANNULLED.

(2) Transfer Certificate of Title No. T-67780 is CANCELLED. The Register of Deeds of Albay is ordered to restoreTransfer Certificate of Title No. T-67656 in the name of Rosalia Buenaflor, without prejudice to the issuance ofanother Transfer Certificate of Title in the name of Pedro Bongalon and the other co-owners of Lot No. 525-A,namely, Benito Bongalon, Catalina Faustino Conlo, Leonardo Faustino, Francisca Bonga Camba, and MaximaBonga Diaz.

(3) Respondent Cecilio Bongalon and the heirs of Amparo Bongalon are ordered to vacate Lot No. 525-A and toremove all the improvements they have constructed on Lot No. 525-A.

SO ORDERED.

G.R. No. 162033 May 8, 2009

HEIRS OF TRANQUILINO LABISTE (also known as Tranquilino Laviste) represented by:(1) GERARDO LABISTE, representing the Heirs of Gregorio Labiste;

(2) OBDULLIA LABISTE GABUAN, representing the heirs of Juan Labiste;(3) VICTORIA G. CHIONG, representing the Heirs of Eulalia Labiste;(4) APOLINARIA LABISTE YLAYA, representing the Heirs of Nicolasa Labiste;(5) DEMOSTHENES LABISTE, representing the Heirs of Gervacio Labiste;(6) ALEJANDRA LABISTE; representing the Heirs of SINFROCIO LABISTE, and(7) CLOTILDE LABISTE CARTA, representing the Heirs of Andres Labiste, Petitioners,vs.HEIRS OF JOSE LABISTE, survived by his children,(1) ZACARIAS LABISTE, deceased and survived by his children, namely: CRESENCIA LABISTE and EUFRONIO LABISTE;(2) BERNARDINO LABISTE, deceased and survived by his children, namely: POLICARPIO LABISTE, BONIFACIO LABISTE,FELIX LABISTE, GABINA LABISTE, CAYETANA LABISTE and ISABEL LABISTE;(3) LUCIA LABISTE, deceased and survived by her children, namely: ISAAC LABISTE, GENARO LABISTE, BRAULIA















LABISTE, BRAULIO LABISTE, ASUNCION LABISTE, ALFONSO LABISTE and CLAUDIA LABISTE;(4) EPIFANIO LABISTE and CLAUDIA LABISTE; deceased and survived by his children, namely SILVESTRE LABISTE,PAULA LABISTE and GERARDA LABISTE;(5) ANA LABISTE, deceased and survived by her children, namely: MAXIMO LABISTE, MOISES LABISTE, GERVACIOLABISTE, SATURNINA LABISTE and QUIRINO LABISTE;(6) SEVERO LABISTE, deceased and survived by his children, Namely: FELIX LABISTE, RUFINA LABISTE, SIMPLICIOLABISTE, VICENTE LABISTE and PATRICIO LABISTE, Respondents.

D E C I S I O N

TINGA, J .:

This is a petition for review1 under Rule 45 of the Rules of Court of the Court of Appeals’ Decision dated 30 June 2003

2 in CA-G.R.

CV No. 65829. reversing the decision of the Regional Trial Court (RTC) of Cebu City, Branch 9. The appellate court deniedpetitioners’

3 motion for reconsideration in a Resolution dated 15 January 2004.

The factual antecedents are as follows:

On 29 September 1919, the late Epifanio Labiste (Epifanio), on his own and on behalf of his brothers and sisters who were the heirsof Jose Labiste (Jose), purchased from the Bureau of Lands Lot No. 1054 of the Banilad Friar Lands Estate, with an area of 13,308square meters, located at Guadalupe, Cebu City for P36.00.

4 Subsequently, on 9 June 1924, then Bureau of Lands Director Jorge

B. Vargas executed Deed of Conveyance No. 12536 selling and ceding Lot No. 1054 to Epifanio and his brothers and sisters who

were the heirs of Jose.

5

After full payment of the purchase price but prior to the issuance of the deed of conveyance, Epifanio executed an Affidavit

6 (Affidavit of Epifanio) in Spanish on 10 July 1923 affirming that he, as one of the heirs of Jose, and his uncle and

petitioners’ predecessor -in-interest, Tranquilino Labiste (Tranquilino), then co-owned Lot No. 1054 because the money that waspaid to the government came from the two of them. Tranquilino and the heirs of Jose continued to hold the property jointly.

Sometime in 1928, the Register of Deeds of Cebu City issued Original Certificate of Title No. 3878 for Lot No. 1054. On 2 May 1928,Engineer Espiritu Bunagan (Engr. Bunagan), Deputy Public Land Surveyor, subdivided Lot No. 1054 into two lots: Lot No. 1054-Awith an area of 6,664 square meters for Tranquilino and Lot No. 1054-B with an area of 6,664 square meters for Epifanio. Thesubdivision plan prepared by Engr. Bunagan was approved by Jose P. Dans, Acting Director of Lands on 28 October 1928.

7

Subsequently, on 18 October 1939, the heirs of Tranquilino8 purchased the one-half (1/2) interest of the heirs of Jose

9 over Lot No.

1054 for P300.00, as evidenced by the Calig-onan sa Panagpalit10

executed by the parties in the Visayan dialect. The heirs ofTranquilino immediately took possession of the entire lot.

When World War II broke out, the heirs of Tranquilino fled Cebu City and when they came back they found their homes andpossessions destroyed. The records in the Office of the Register of Deeds, Office of the City Assessor and other government officeswere also destroyed during the war. Squatters have practically overrun the entire property, such that neither petitioners norrespondents possess it.

In October 1993, petitioners learned that one of the respondents,11

Asuncion Labiste, had filed on 17 September 1993 a petition forreconstitution of title over Lot No. 1054. Petitioners opposed the petition at first but by a compromise agreement between the partiesdated 25 March 1994, petitioners withdrew their opposition to expedite the reconstitution process. Under the compromiseagreement, petitioners were to be given time to file a complaint so that the issues could be litigated in an ordinary action and thereconstituted title was to be deposited with the Clerk of Court for a period of sixty (60) days to allow petitioners to file an action forreconveyance and to annotate a notice of lis pendens. The Register of Deeds of Cebu City issued the reconstituted title, TCT No.RT-7853,

12 in the name of "Epifanio Labiste, married to Tomasa Mabitad, his brothers and sisters, heirs of Jose Labiste" on 14

December 1994. However, respondents did not honor the compromise agreement.

Petitioners filed a complaint

13

for annulment of title seeking the reconveyance of property and damages on 13 January 1995,docketed as Civil Case No. CEB-16943, with the RTC of Cebu City. Respondents claimed that the Affidavit of Epifanio and theCalig-onan sa Panagpalit were forgeries and that petitioners’ action had long prescribed or barred by laches.

14

The RTC in a Decision dated 23 August 199915

ruled in favor of petitioners. After evaluating the documents presented by petitioners,the RTC found that they are genuine and authentic as ancient documents and that they are valid and enforceable.

16 Moreover, it

held that the action had not prescribed as the complaint was filed about a year after the reconstitution of the title by respondents.The judicial reconstitution was even opposed by petitioners until a compromise agreement was reached by the parties and approvedby the RTC which ordered the reconstitution. The RTC further held that the reconstituted title did not give any more right torespondents than what their predecessors-in-interest actually had as it is limited to the reconstitution of the certificate as it stood atthe time of its loss or destruction.

17

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On appeal, the Court of Appeals, while affirming petitioners’ right to the property, nevertheless reversed the RTC’s decision on theground of prescription and laches. It affirmed the RTC’s findings that the Affidavit and the Calig-onan sa Panagpalit are genuine andauthentic, and that the same are valid and enforceable documents.

18 Citing Article 1144 of the Civil Code, it held that petitioners’

cause of action had prescribed for the action must be brought within ten (10) years from the time the right of action accrues upon thewritten contract which in this case was when petitioners’ predecessors-in-interest lost possession over the property after World WarII. Also, the lapse of time to file the action constitutes neglect on petitioners’ part so the principle of laches is applicable.

19

Hence, the present petition.

The genuineness and authenticity of the Affidavit of Epifanio and the Calig-onan sa Panagpalit are beyond cavil. As we have ruled ina litany of cases, resort to judicial review of the decisions of the Court of Appeals under Rule 45 is confined only to errors oflaw.

20 The findings of fact by the lower court are conclusive absent any palpable error or arbitrariness.

21 The Court finds no reason

to depart from this principle. Moreover, it is a long settled doctrine that findings of fact of the trial court, when affirmed by the Court of Appeals, are binding upon the Court. It is not the function of the Supreme Court to weigh anew the evidence already passed uponby the Court of Appeals for these are deemed final and conclusive and may not be reviewed on appeal.

22

The sole issue that the Court has to resolve is whether or not petitioners’ cause of action has prescribed.

The Court of Appeals erred in applying the rules on prescription and the principle of laches because what is involved in the presentcase is an express trust.

Trust is the right to the beneficial enjoyment of property, the legal title to which is vested in another. It is a fiduciary relationship that

obliges the trustee to deal with the property for the benefit of the beneficiary.

23

Trust relations between parties may either be expressor implied. An express trust is created by the intention of the trustor or of the parties. An implied trust comes into being by operationof law.

24

Express trusts are created by direct and positive acts of the parties, by some writing or deed, or will, or by words either expressly orimpliedly evincing an intention to create a trust.

25 Under Article 1444 of the Civil Code, "[n]o particular words are required for the

creation of an express trust, it being sufficient that a trust is clearly intended." The Affidavit of Epifanio is in the nature of a trustagreement. Epifanio affirmed that the lot brought in his name was co-owned by him, as one of the heirs of Jose, and his uncleTranquilino. And by agreement, each of them has been in possession of half of the property. Their arrangement was corroboratedby the subdivision plan prepared by Engr. Bunagan and approved by Jose P. Dans, Acting Director of Lands.

As such, prescription and laches will run only from the time the express trust is repudiated. The Court has held that for acquisitiveprescription to bar the action of the beneficiary against the trustee in an express trust for the recovery of the property held in trust itmust be shown that: (a) the trustee has performed unequivocal acts of repudiation amounting to an ouster of the cestui que trust ; (b)such positive acts of repudiation have been made known to the cestui que trust , and (c) the evidence thereon is clear andconclusive.

26http://sc.judiciary.gov.ph/jurisprudence/2007/november2007/148788.htm - _ftn Respondents cannot rely on the fact that

the Torrens title was issued in the name of Epifanio and the other heirs of Jose. It has been held that a trustee who obtains aTorrens title over property held in trust by him for another cannot repudiate the trust by relying on the registration.

27 The rule

requires a clear repudiation of the trust duly communicated to the beneficiary. The only act that can be construed as repudiation waswhen respondents filed the petition for reconstitution in October 1993. And since petitioners filed their complaint in January 1995,their cause of action has not yet prescribed, laches cannot be attributed to them.

It is hornbook doctrine that laches is a creation of equity and i ts application is controlled by equitable considerations. Laches cannotbe used to defeat justice or perpetrate fraud and injustice.

28 Neither should its application be used to prevent the rightful owners of a

property from

recovering what has been fraudulently registered in the name of another.http://sc.judiciary.gov.ph/jurisprudence/2006/mar2006/G.R.No. 157954.htm - _ftn

29 The equitable remedy of laches is, therefore, unavailing in this case.

However, to recover the other half of the property covered by the private Calig-onan sa Panagpalit and to have it registered on thetitle of the property, petitioners should have filed an action to compel

30 respondents, as heirs of the sellers in the contract,

31 to

execute a public deed of sale. A conveyance of land made in a private document does not affect its validity. Article 1358,like itsforerunner Article 1280 of the Civil Code of Spain, does not require the accomplishment of the acts or

contracts in a public instrument in order to validate the act or contract but only to insure its efficacy,32

so that after the existence ofsaid contract has been admitted, the party bound may be compelled to execute the proper document.

33 But even assuming that

such action was filed by petitioners, the same had already prescribed.1avvphi1

It is settled that only laws existing at the time of the execution of a contract are applicable thereto and not later statutes, unless thelatter are specifically intended to have retroactive effect.

34 Consequently, it is the Old Code of Civil Procedure (Act No. 190) which

applies in this case since the Calig-onan sa Panagpalit was executed on 18 October 1939 while the New Civil Code took effect only







































































on 30 August 1950. And section 43 of Act No. 190, like its counterpart Article 1144 of the New Civil Code, provides that action upona written contract must be filed within ten years.

35

WHEREFORE, the petition is PARTIALLY GRANTED. The Decision of the Court of Appeals dated 30 June 2003 in CA-G.R. CV No.65829 is REVERSED and SET ASIDE and the Decision of the Regional Trial Court of Cebu City, Branch 9 dated 23 August 1999 is

REINSTATED with MODIFICATION in petitioners are hereby DECLARED the absolute owners of one-half of Lot No. 1054 or Lot

No. 1054-A under TCT No. RT-7853. The Register of Deeds of Cebu City is hereby ORDERED to CANCEL TCT No. RT-7853 inpart and issue a new Transfer Certificate of Title to petitioners, heirs of Tranquilino Labiste, covering Lot No. 1054-A. No costs.

SO ORDERED.

G.R. No. 168655 July 2, 2010

J. CASIM CONSTRUCTION SUPPLIES, INC., Petitioner,vs.REGISTRAR OF DEEDS OF LAS PIÑAS, Respondent.INTESTATE ESTATE OF BRUNEO F. CASIM, (Purported) Intervenor.

D E C I S I O N

PERALTA, J. :

This is a petition for review under Rule 45 of the Rules of Court, taken directly on a pure question of law from the April 14, 2005Resolution

1 and June 24, 2005 Order

2 issued by the Regional Trial Court (RTC) of Las Piñas City, Branch 253 in Civil Case No. LP-

04-00713 one for cancellation of notice of lis pendens. The assailed Resolution dismissed for lack of jurisdiction the petition filed

by J. Casim Construction Supplies Inc. for cancellation of notice of lis pendens annotated on its certificate of title, whereas theassailed Order denied reconsideration.

The facts follow.

Petitioner, represented herein by Rogelio C. Casim, is a duly organized domestic corporation4 in whose name Transfer Certificate of

Title (TCT) No. 49936,5 covering a 10,715-square meter land was registered. Sometime in 1982, petitioner acquired the covered

property by virtue of a Deed of Absolute Sale6 and as a result the mother title, TCT No. 30459 was cancelled and TCT No. 49936

was issued in its stead.7

On March 22, 2004, petitioner filed with the RTC of Las Piñas City, Branch 253 an original petition for the cancellation of the noticeof lis pendens, as well as of all the other entries of involuntary encumbrances annotated on the original copy of TCT No. 49936.Invoking the inherent power of the trial court to grant relief according to the petition, petitioner prayed that the notice of lis pendensas well as all the other annotations on the said title be cancelled. Petitioner claimed that its owner's duplicate copy of the TCT wasclean at the time of its delivery and that it was surprised to learn later on that the original copy of its TCT, on file with the Register ofDeeds, contained several entries which all signified that the covered property had been subjected to various claims. The subjectnotice of lis pendens is one of such entries.

8 The notations appearing on the title's memorandum of encumbrances are as follows:

Entry No. 81-8334/T-30459 - ADVERSE CLAIM - In an affidavit duly subscribed and sworn to, BRUNO F. CASIM claims, amongother things, that he has the right and interest over the property described herein in accordance with Doc. No. 336; Page No. 69;Book No. 1; s. of 1981 of Not. Pub. of Makati, M.M., Romarie G. Villonco, dated August 4, 1981.

Date of inscription - Aug. 5, 1981 - 2:55 p.m.

(Sgd) VICTORIANO S. TORRES, Actg. Reg. of Deeds

Entry No. 82-4676/T-49936 - CANCELLATION OF ADVERSE CLAIM inscribed hereon under Entry No. 81-8334/T-30459 inaccordance with Doc. No. 247; Page 50; Book No. CXLI; s. of 1982 of Not. Pub. of Pasay City, M.M., Julian G. Tubig, dated April21, 1982.

Date of inscription - April 21, 1982 - 8:40 a.m.





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Entry No. 82-4678/T-49936 - AFFIDAVIT - In accordance with the affidavit duly executed by the herein registered owners, this title ishereby cancelled and in lieu thereof TCT No. 49936/T-228 has been issued in accordance with Doc. No. 249; Page No. 80; BookNo. CXLI; s. of 1982 of Not. Pub. of Pasay City, M.M., Julian G. Tubig, dated April 21, 1982.

Date of inscription - April 21, 1982 - 8:44 a.m.


Entry No. 81-12423/T-30459 - NOTICE OF LIS PENDENS: By virtue of the notice of Lis Pendens presented and filed by CESAR P.MANALAYSAY, counsel for the plaintiff, notice is hereby given that a petition for review has been commenced and now pending inthe Court of First Instance of Rizal, Branch XXIX, Pasay, M.M, in Civil Case No. LP-9438-P, BRUNEO F. CASIM, Plaintiff, vs. SPS.JESUS A. CASIM & MARGARITA CHAVEZ and Sps. Urbano Nobleza and Cristita J. Nobleza, and Filomena C. Antonio,Defendants, involving the property described herein.

Date of the instrument - Sept. 17, 1981

Date of the inscription - Sept. 18, 1981 - 3:55 p.m.

(Sgd) VICTORIANO S. TORRES, Actg. Reg. of Deeds9

To justify the cancellation, petitioner alleged that the notice of lis pendens, in particular, was a forgery judging from the

inconsistencies in the inscriber's signature as well as from the fact that the notice was entered non-chronologically, that is, the datethereof is much earlier than that of the preceding entry. In this regard, it noted the lack of any transaction record on file with theRegister of Deeds that would support the notice of lis pendens annotation.

10

Petitioner also stated that while Section 59 of Presidential Decree (P.D.) No. 1529 requires the carry-over of subsistingencumbrances in the new issuances of TCTs, petitioner's duplicate copy of the title did not contain any such carry-over, whichmeans that it was an innocent purchaser for value, especially since it was never a party to the civil case referred to in the notice oflis pendens. Lastly, it alludes to the indefeasibility of its title despite the fact that the mother title, TCT No. 30459, might havesuffered from certain defects and constraints.

11

The Intestate Estate of Bruneo F. Casim, representing Bruneo F. Casim, intervened in the instant case and filed aComment/Opposition

12 in which it maintained that the RTC of Las Piñas did not have jurisdiction over the present action, because

the matter of canceling a notice of lis pendens lies within the jurisdiction of the court before which the main action referred to in thenotice is pending. In this regard, it emphasized that the case referred to in the said notice had already attained finality as theSupreme Court had issued an entry of judgment therein and that the RTC of Makati City had ordered execution in that case.

13 It

cited the lack of legal basis for the petition in that nothing in the allegations hints at any of the legal grounds for the cancellation of

notice of lis pendens.14 And, as opposed to petitioner's claim that there was no carry-over of encumbrances made in TCT No. 49936from the mother title TCT No. 30459, the latter would show that it also had the same inscriptions as those found in TCT No. 49936only that they were entered in the original copy on file with the Register of Deeds. Also, as per Certification

15 issued by the Register

of Deeds, petitioner's claim of lack of transaction record could not stand, because the said certification stated merely that thecorresponding transaction record could no longer be retrieved and might, therefore, be considered as either lost or destroyed.

On April 14, 2005, the trial court, ruling that it did not have jurisdiction over the action, resolved to dismiss the petition and declaredthat the action must have been filed before the same court and in the same action in relation to which the annotation of the notice oflis pendens had been sought. Anent the allegation that the entries in the TCT were forged, the trial court pointed out that not only didpetitioner resort to the wrong forum to determine the existence of forgery, but also that forgery could not be presumed merely fromthe alleged non-chronological entries in the TCT but instead must be positively proved. In this connection, the trial court notedpetitioner's failure to name exactly who had committed the forgery, as well as the lack of evidence on which the a llegation could bebased.

16 The petition was disposed of as follows:

IN VIEW OF THE FOREGOING, the instant petition is hereby DISMISSED.

SO ORDERED.17

Petitioner moved for reconsideration,18

but it was denied in the trial court's June 24, 2005 Order .19

Now, raising the purely legal question of whether the RTC of Las Piñas City, Branch 253 has jurisdiction in an original action tocancel the notice of lis pendens annotated on the subject title as an incident in a previous case, petitioner, in this present petition,ascribes error to the trial court in dismissing its petition for cancellation. An action for cancellation of notice of lis pendens, petitionerbelieves, is not always ancillary to an existing main action because a trial court has the inherent power to cause such cancellation,especially in this case that petitioner was never a party to the litigation to which the notice of lis pendens relates.

20 Petitioner further

posits that the trial court has committed an error in declining to rule on the allegation of forgery, especially since there is no



















































transaction record on file with the Register of Deeds relative to said entries. It likewise points out that granting the notice of lispendens has been properly annotated on the title, the fact that its owner's duplicate title is clean suggests that it was never a partyto the civil case referred to in the notice.

21 Finally, petitioner posits that TCT No. 49936 is indefeasible and holds it free from any

liens and encumbrances which its mother title, TCT No. 30459, might have suffered.22

The Intestate Estate of Bruneo F. Casim (intervenor), in i ts Comment on the present petition, reiterates that the court a quo does nothave jurisdiction to order the cancellation of the subject notice of lis pendens because it is only the court exercising jurisdiction over

the property which may order the same that is, the court having jurisdiction over the main action in relation to which the

registration of the notice has been sought. Also, it notes that even on the assumption that the trial court had such jurisdiction, thepetition for cancellation still has no legal basis as petitioner failed to establish the grounds therefor. Also, the subject notice of lispendens was validly carried over to TCT No. 49936 from the mother title, TCT No. 30459.

In its Reply,23

petitioner, in a semantic slur, dealt primarily with the supposed inconsistencies in intervenor's arguments. Yet the coreof its contention is that the non-chronological annotation of the notice stands to be the best evidence of forgery. From this, itadvances the notion that forgery of the notice of lis pendens suffices as a ground for the cancellation thereof which may be availedof in an independent action by the aggrieved party.

The petition is utterly unmeritorious.

Lis pendens which literally means pending suit refers to the jurisdiction, power or control which a court acquires over the

property involved in a suit, pending the continuance of the action, and until final judgment.24

Founded upon public policy andnecessity, lis pendens is intended to keep the properties in litigation within the power of the court until the litigation is terminated,and to prevent the defeat of the judgment or decree by subsequent alienation.

25 Its notice is an announcement to the whole world

that a particular property is in litigation and serves as a warning that one who acquires an interest over said property does so at hisown risk, or that he gambles on the result of the litigation over said property.

26

A notice of lis pendens, once duly registered, may be cancelled by the trial court before which the action involving the property ispending. This power is said to be inherent in the trial court and is exercised only under express provisions of law.

27 Accordingly,

Section 14, Rule 13 of the 1997 Rules of Civil Procedure authorizes the trial court to cancel a notice of lis pendens where it isproperly shown that the purpose of its annotation is for molesting the adverse party, or that it is not necessary to protect the ri ghts ofthe party who caused it to be annotated. Be that as it may, the power to cancel a notice of lis pendens is exercised only underexceptional circumstances, such as: where such circumstances are imputable to the party who caused the annotation; where thelitigation was unduly prolonged to the prejudice of the other party because of several continuances procured by petitioner; where thecase which is the basis for the lis pendens notation was dismissed for non prosequitur on the part of the plaintiff; or where judgmentwas rendered against the party who caused such a notation. In such instances, said notice is deemed ipso facto cancelled.

28

In theorizing that the RTC of Las Piñas City, Branch 253 has the inherent power to cancel the notice of lis pendens that wasincidentally registered in relation to Civil Case No. 2137, a case which had been decided by the RTC of Makati City, Branch 62 and

affirmed by the Supreme Court on appeal, petitioner advocates that the cancellation of such a notice is not always ancillary to amain action.

The argument fails.

From the available records, it appears that the subject notice of lis pendens had been recorded at the instance of Bruneo F. Casim(Bruneo) in relation to Civil Case No. 2137

29 one for annulment of sale and recovery of real property which he filed before the

RTC of Makati City, Branch 62 against the spouses Jesus and Margarita Casim, predecessors-in-interest and stockholders ofpetitioner corporation. That case involved the property subject of the present case, then covered by TCT No. 30459. At the close ofthe trial on the merits therein, the RTC of Makati rendered a decision adverse to Bruneo and dismissed the complaint for lack ofmerit.

30 Aggrieved, Bruneo lodged an appeal with the Court of Appeals, docketed as CA-G.R. CV No. 54204, which reversed and

set aside the trial court's decision.31

Expectedly, the spouses Jesus and Margarita Casim elevated the case to the Supreme Court,docketed as G.R. No. 151957, but their appeal was dismissed for being filed out of time.

32

A necessary incident of registering a notice of lis pendens is that the property covered thereby is effectively placed, until the litigation

attains finality, under the power and control of the court having jurisdiction over the case to which the notice relates.33

In this sense,parties dealing with the given property are charged with the knowledge of the existence of the action and are deemed to take theproperty subject to the outcome of the litigation.

34 It is also in this sense that the power possessed by a trial court to cancel the

notice of lis pendens is said to be inherent as the same is merely ancillary to the main action.35

1avvphi1

Thus, in Vda. de Kilayko v. Judge Tengco,36

Heirs of Maria Marasigan v. Intermediate Appellate Cour t37

and Tanchoco v. Aquino,38

itwas held that the precautionary notice of lis pendens may be ordered cancelled at any time by the court having jurisdiction over themain action inasmuch as the same is merely an incident to the said action. The pronouncement in Heirs of Eugenio Lopez, Sr. v.

Enriquez, citing Magdalena Homeowners Association, Inc. v. Court of Appeals,39

is equally instructive













































































The notice of lis pendens x x x is ordinarily recorded without the intervention of the court where the action is pending. The notice isbut an incident in an action, an extrajudicial one, to be sure. It does not affect the merits thereof. It is intended merely toconstructively advise, or warn, all people who deal with the property that they so deal with it at their own risk, and whatever rightsthey may acquire in the property in any voluntary transaction are subject to the results of the action, and may well be inferior andsubordinate to those which may be finally determined and laid down therein. The cancellation of such a precautionary notice istherefore also a mere incident in the action, and may be ordered by the Court having jurisdiction of it at any given time. x x x

40

Clearly, the action for cancellation of the notice of lis pendens in this case must have been filed not before the court a quo via an

original action but rather, before the RTC of Makati City, Branch 62 as an incident of the annulment case in relation to which itsregistration was sought. Thus, it is the latter court that has jurisdiction over the main case referred to in the notice and it is that samecourt which exercises power and control over the real property subject of the notice.

But even so, the petition could no longer be expected to pursue before the proper forum inasmuch as the decision rendered in theannulment case has already attained finality before both the Court of Appeals and the Supreme Court on the appellate level, unlessof course there exists substantial and genuine claims against the parties relative to the main case subject of the notice of lispendens.

41 There is none in this case. It is thus well to note that the precautionary notice that has been registered relative to the

annulment case then pending before the RTC of Makati City, Branch 62 has served its purpose. With the finality of the decisiontherein on appeal, the notice has already been rendered functus officio. The rights of the parties, as well as of their successors-in-interest, petitioner included, in relation to the subject property, are hence to be decided according the said final decision.

To be sure, petitioner is not altogether precluded from pursuing a specific remedy, only that the suitable course of action legallyavailable is not judicial but rather administrative. Section 77 of P.D. No. 1529 provides the appropriate measure to have a notice oflis pendens cancelled out from the title, that is by presenting to the Register of Deeds, after finality of the judgment rendered in the

main action, a certificate executed by the clerk of court before which the main action was pending to the effect that the case hasalready been finally decided by the court, stating the manner of the disposal thereof. Section 77 materially states:

SEC. 77. Cancellation of lis pendens. - Before final judgment, a notice of lis pendens may be cancelled upon order of the court, afterproper showing that the notice is for the purpose of molesting the adverse party, or that it is not necessary to protect the rights of theparty who caused it to be registered. It may also be cancelled by the Register of Deeds upon verified petition of the party whocaused the registration thereof.

At any time after final judgment in favor of the defendant, or other disposition of the action such as to terminate finally all rights of theplaintiff in and to the land and/or buildings involved, in any case in which a memorandum or notice of lis pendens has beenregistered as provided in the preceding section, the notice of lis pendens shall be deemed cancelled upon the registration of acertificate of the clerk of court in which the action or proceeding was pending stating the manner of disposal thereof.

42

Lastly, petitioner tends to make an issue out of the fact that while the original TCT on file with the Register of Deeds does containthe annotations and notice referred to in this petition, its owner's duplicate copy of the title nevertheless does not reflect the same

non-chronological inscriptions. From this, petitioner submits its puerile argument that the said annotations appearing on the originalcopy of the TCT are all a forgery, and goes on to assert the indefeasibility of its Torrens title as well as its supposed status as aninnocent purchaser for value in good faith. Yet we decline to rule on these assumptions principally because they raise matters thatcall for factual determination which certainly are beyond the competence of the Court to dispose of in this petition.

All told, we find that the RTC of Las Piñas City, Branch 253 has committed no reversible error in issuing the assailed Resolution andOrder dismissing for lack of jurisdiction the petition for cancellation of notice of lis pendens filed by petitioner, and in denyingreconsideration.

WHEREFORE, the petition is DENIED. The April 14, 2005 Resolution and the June 24, 2005 Order issued by the Regional TrialCourt of Las Piñas City, Branch 253, in Civil Case No. LP-04-0071, are hereby AFFIRMED.

SO ORDERED.

G.R. No. 148225 March 3, 2010

CARMEN DEL PRADO, Petitioner,vs.SPOUSES ANTONIO L. CABALLERO and LEONARDA CABALLERO, Respondents.

D E C I S I O N

NACHURA, J .:















This is a petition for review on certiorari of the decision1 of the Court of Appeals (CA) dated September 26, 2000 and its resolution

denying the motion for reconsideration thereof.

The facts are as follows:

In a judgment rendered on February 1, 1985 in Cadastral Case No. N-6 (LRC Rec. No. N-611), Judge Juan Y. Reyes of theRegional Trial Court (RTC) of Cebu City, Branch 14, adjudicated in favor of Spouses Antonio L. Caballero and Leonarda B.

Caballero several parcels of land situated in Guba, Cebu City, one of which was Cadastral Lot No. 11909, the subject of thiscontroversy.

2 On May 21, 1987, Antonio Caballero moved for the issuance of the final decree of registration for their

lots.3 Consequently, on May 25, 1987, the same court, through then Presiding Judge Renato C. Dacudao, ordered the National

Land Titles and Deeds Registration Administration to issue the decree of registration and the corresponding titles of the lots in favorof the Caballeros.

4

On June 11, 1990, respondents sold to petitioner, Carmen del Prado, Lot No. 11909 on the basis of the tax declaration covering theproperty. The pertinent portion of the deed of sale reads as follows:

That we, Spouses ANTONIO L. CABALLERO and LEONARDA B. CABALLERO, Filipinos, both of legal age and residents ofTalamban, Cebu City, Philippines, for and in consideration of the sum of FORTY THOUSAND PESOS (P40,000.00), PhilippineCurrency, paid by CARMEN DEL PRADO, Filipino, of legal age, single and a resident of Sikatuna St., Cebu City, Philippines, thereceipt of which is full is hereby acknowledged, do by these presents SELL, CEDE, TRANSFER, ASSIGN & CONVEY unto the saidCARMEN DEL PRADO, her heirs, assigns and/or successors-in-interest, one (1) unregistered parcel of land, situated at Guba,Cebu City, Philippines, and more particularly described and bounded, as follows:

"A parcel of land known as Cad. Lot No. 11909, bounded as follows:

North : Lot 11903

East : Lot 11908

West : Lot 11910

South : Lot 11858 & 11912

containing an area of 4,000 square meters, more or less, covered by Tax Dec. No. 00787 of the Cebu City Assessor’s Office, CebuCity." of which parcel of land we are the absolute and lawful owners.

Original Certificate of Title (OCT) No. 1305, covering Lot No. 11909, was issued only on November 15, 1990, and entered in the"Registration Book" of the City of Cebu on December 19, 1990.

5 Therein, the technical description of Lot No. 11909 states that said

lot measures about 14,457 square meters, more or less.6

On March 20, 1991, petitioner filed in the same cadastral proceedings a "Petition for Registration of Document Under PresidentialDecree (P.D.) 1529"

7 in order that a certificate of title be issued in her name, covering the whole Lot No. 11909. In the petition,

petitioner alleged that the tenor of the instrument of sale indicated that the sale was for a lump sum or cuerpo cierto, in which case,the vendor was bound to deliver all that was included within said boundaries even when it exceeded the area specified in thecontract. Respondents opposed, on the main ground that only 4,000 sq m of Lot No. 11909 was sold to petitioner. They claimed thatthe sale was not for a cuerpo cierto. They moved for the outright dismissal of the petition on grounds of prescription and lack of

jurisdiction.

After trial on the merits, the court found that petitioner had established a clear and positive right to Lot No. 11909. The intended salebetween the parties was for a lump sum, since there was no evidence presented that the property was sold for a price per unit. Itwas apparent that the subject matter of the sale was the parcel of land, known as Cadastral Lot No. 11909, and not only a portion

thereof .

8

Thus, on August 2, 1993, the court a quo rendered its decision with the following dispositive portion:

WHEREFORE, premises considered, the petition is hereby granted and judgment is hereby rendered in favor of herein petitioner.The Register of Deeds of the City of Cebu is hereby ordered and directed to effect the registration in his office of the Deed of

Absolute Sale between Spouses Antonio Caballero and Leonarda Caballero and Petitioner, Carmen del Prado dated June 11, 1990covering Lot No. 11909 after payment of all fees prescribed by law. Additionally, the Register of Deeds of the City of Cebu is herebyordered to cancel Original Certificate No. 1305 in the name of Antonio Caballero and Leonarda Caballero and the TransferCertificate of Title be issued in the name of Petitioner Carmen del Prado covering the entire parcel of land known as Cadastral LotNo. 11909.

9

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An appeal was duly filed. On September 26, 2000, the CA promulgated the assailed decision, reversing and setting aside thedecision of the RTC.

The CA no longer touched on the character of the sale, because it found that petitioner availed herself of an improper remedy. The"petition for registration of document" is not one of the remedies provided under P.D. No. 1529, after the original registration hasbeen effected. Thus, the CA ruled that the lower court committed an error when it assumed jurisdiction over the petition, whichprayed for a remedy not sanctioned under the Property Registration Decree. Accordingly, the CA disposed, as follows:

IN VIEW OF ALL THE FOREGOING, the appealed decision is REVERSED and SET ASIDE and a new one entered dismissing thepetition for lack of jurisdiction. No pronouncement as to costs.

10

Aggrieved, petitioner filed the instant petition, raising the following issues:

I. WHETHER OR NOT THE COURT OF APPEALS COMMITTED GRAVE ERROR IN MAKING FINDINGS OF FACT CONTRARYTO THAT OF THE TRIAL COURT[;]

II. WHETHER OR NOT THE COURT OF APPEALS COMMITTED GRAVE ERROR IN FAILING TO RULE THAT THE SALE OFTHE LOT IS FOR A LUMP SUM OR CUERPO CIERTO[;]

III. WHETHER OR NOT THE COURT A QUO HAS JURISDICTION OVER THE PETITION FOR REGISTRATION OF THE DEEDOF ABSOLUTE SALE DATED 11 JUNE 1990 EXECUTED BETWEEN HEREIN PETITIONER AND RESPONDENTS[.]

11

The core issue in this case is whether or not the sale of the land was for a lump sum or not.

Petitioner asserts that the plain language of the Deed of Sale shows that it is a sale of a real estate for a lump sum, governed under Article 1542 of the Civil Code.

12 In the contract, it was stated that the land contains an area of 4,000 sq m more or less, bounded on

the North by Lot No. 11903, on the East by Lot No. 11908, on the South by Lot Nos. 11858 & 11912, and on the West by Lot No.11910. When the OCT was issued, the area of Lot No. 11909 was declared to be 14,475 sq m, with an excess of 10,475 sq m. Inaccordance with Article 1542, respondents are, therefore, duty-bound to deliver the whole area within the boundaries stated, withoutany corresponding increase in the price. Thus, petitioner concludes that she is entitled to have the certificate of title, covering thewhole Lot No. 11909, which was originally issued in the names of respondents, transferred to her name.

We do not agree.

In Esguerra v. Trinidad,13

the Court had occasion to discuss the matter of sales involving real estates. The Court’s pronouncement isquite instructive:

In sales involving real estate, the parties may choose between two types of pricing agreement: a unit price contract wherein thepurchase price is determined by way of reference to a stated rate per unit area (e.g., P1,000 per square meter), or a lump sumcontract which states a full purchase price for an immovable the area of which may be declared based on the estimate or whereboth the area and boundaries are stated (e.g., P1 million for 1,000 square meters, etc.). In Rudolf Lietz, Inc. v. Court of Appeals(478 SCRA 451), the Court discussed the distinction:

"…In a unit price contract, the statement of area of immovable is not conclusive and the price may be reduced or increaseddepending on the area actually delivered. If the vendor delivers less than the area agreed upon, the vendee may oblige the vendorto deliver all that may be stated in the contract or demand for the proportionate reduction of the purchase price if delivery is notpossible. If the vendor delivers more than the area stated in the contract, the vendee has the option to accept only the amountagreed upon or to accept the whole area, provided he pays for the additional area at the contract rate.

x x x x

In the case where the area of an immovable is stated in the contract based on an estimate, the actual area delivered may notmeasure up exactly with the area stated in the contract. According to Article 1542 of the Civil Code, in the sale of real estate, madefor a lump sum and not at the rate of a certain sum for a unit of measure or number, there shall be no increase or decrease of theprice, although there be a greater or less areas or number than that stated in the contract. . . .

x x x x

Where both the area and the boundaries of the immovable are declared, the area covered within the boundaries of the immovableprevails over the stated area. In cases of conflict between areas and boundaries, it is the latter which should prevail. What reallydefines a piece of ground is not the area, calculated with more or less certainty, mentioned in its description, but the boundariestherein laid down, as enclosing the land and indicating its limits. In a contract of sale of land in a mass, it is well established that the



















specific boundaries stated in the contract must control over any statement with respect to the area contained within its boundaries. Itis not of vital consequence that a deed or contract of sale of land should disclose the area with mathematical accuracy. It issufficient if its extent is objectively indicated with sufficient precision to enable one to identify it. An error as to the superficial area isimmaterial. Thus, the obligation of the vendor is to deliver everything within the boundaries, inasmuch as it is the entirety thereof thatdistinguishes the determinate object.

14

The Court, however, clarified that the rule laid down in Article 1542 is not hard and fast and admits of an exception. It held:

A caveat is in order, however. The use of "more or less" or similar words in designating quantity covers only a reasonable excess ordeficiency. A vendee of land sold in gross or with the description "more or less" with reference to its area does not thereby ipso factotake all risk of quantity in the land..

Numerical data are not of course the sole gauge of unreasonableness of the excess or deficiency in area. Courts must consider ahost of other factors. In one case (see Roble v. Arbasa, 414 Phil. 343 [2001]), the Court found substantial discrepancy in area due tocontemporaneous circumstances. Citing change in the physical nature of the property, it was therein established that the excessarea at the southern portion was a product of reclamation, which explained why the land’s technical description in the deed of saleindicated the seashore as its southern boundary, hence, the inclusion of the reclaimed area was declared unreasonable.

15

In the instant case, the deed of sale is not one of a unit price contract. The parties agreed on the purchase price of P40,000.00 for apredetermined area of 4,000 sq m, more or less, bounded on the North by Lot No. 11903, on the East by Lot No. 11908, on theSouth by Lot Nos. 11858 & 11912, and on the West by Lot No. 11910. In a contract of sale of land in a mass, the specificboundaries stated in the contract must control over any other statement, with respect to the area contained within itsboundaries.

161avvphi1

Black’s Law Dictionar y17

defines the phrase "more or less" to mean:

About; substantially; or approximately; implying that both parties assume the risk of any ordinary discrepancy. The words areintended to cover slight or unimportant inaccuracies in quantity, Carter v. Finch, 186 Ark. 954, 57 S.W.2d 408; and are ordinarily tobe interpreted as taking care of unsubstantial differences or differences of small importance compared to the whole number of itemstransferred.

Clearly, the discrepancy of 10,475 sq m cannot be considered a slight difference in quantity. The difference in the area is obviouslysizeable and too substantial to be overlooked. It is not a reasonable excess or deficiency that should be deemed included in thedeed of sale.

We take exception to the avowed rule that this Court is not a trier of facts. After an assiduous scrutiny of the records, we lendcredence to respondents’ claim that they intended to sell only 4,000 sq m of the whole Lot No. 11909, contrary to the findings of the

lower court. The records reveal that when the parties made an ocular inspection, petitioner specifically pointed to that portion of thelot, which she preferred to purchase, since there were mango trees planted and a deep well thereon. After the sale, respondentsdelivered and segregated the area of 4,000 sq m in favor of petitioner by fencing off the area of 10,475 sq m belonging to them.

18

Contracts are the law between the contracting parties. Sale, by its very nature, is a consensual contract, because it is perfected bymere consent. The essential elements of a contract of sale are the following: (a) consent or meeting of the minds, that is, consent totransfer ownership in exchange for the price; (b) determinate subject matter; and (c) price certain in money or its equivalent. Allthese elements are present in the instant case.

19

More importantly, we find no reversible error in the decision of the CA. Petitioner’s recourse, by filing the petition for registration inthe same cadastral case, was improper. It is a fundamental principle in land registration that a certificate of title serves as evidenceof an indefeasible and incontrovertible title to the property in favor of the person whose name appears therein. Such indefeasibilitycommences after one year from the date of entry of the decree of registration.

20 Inasmuch as the petition for registration of

document did not interrupt the running of the period to file the appropriate petition for review and considering that the prescribedone-year period had long since expired, the decree of registration, as well as the certificate of title issued in favor of respondents,had become incontrovertible.

21

WHEREFORE, the petition is DENIED.

G.R. No. 177181 July 7, 2009

RABAJA RANCH DEVELOPMENT CORPORATION, Petitioner,vs.AFP RETIREMENT AND SEPARATION BENEFITS SYSTEM, Respondent.

D E C I S I O N



































NACHURA, J .:

Before this Court is a Petition1 for Review on Certiorari under Rule 45 of the Rules of Civil Procedure, seeking the reversal of the

Court of Appeals (CA) Decision2 dated June 29, 2006, which reversed and set aside the Decision

3of the Regional Trial Court (RTC)

of Pinamalayan, Oriental Mindoro, Branch 41, dated June 3, 2004.

The Facts

Petitioner Rabaja Ranch Development Corporation (petitioner), a domestic corporation, is a holder of Transfer Certificate of Title(TCT) No. T-88513

4 covering the subject property particularly identified as Lot 395, Pls 47, with an area of 211,372 square meters

more or less, and located at Barangay (Brgy.) Conrazon, Bansud, Bongabon, Oriental Mindoro (subject property).

Respondent Armed Forces of the Philippines Retirement and Separation Benefits System (AFP-RSBS) is a government corporation,which manages the pension fund of the Armed Forces of the Philippines (AFP), and is duly organized under Presidential Decree(P.D.) No. 361,

5 as amended by P.D. No. 1656

6 (respondent). Respondent is a holder of TCT No. T-51382

7 covering the same

subject property.

On September 1, 1998, petitioner filed a Complaint8 for Quieting of Title and/or Removal of Cloud from Title before the RTC. Trial on

the merits ensued.

Petitioner averred that on September 6, 1955, Free Patent No. V-195359 (Free Patent) was issued in the name of Jose Castromero

(Jose). On June 1, 1982, the Free Patent was registered, and Original Certificate of Title (OCT) No. P-261210

covering the subject

property was issued in the name of Jose. Sometime in the first half of 1982, Jose sold the subject property to Spouses Sigf riedo andJosephine Veloso

11 (spouses Veloso), and TCT No. T-17104

12 was issued in favor of the latter. Spouses Veloso, in turn, sold the

subject property to petitioner for the sum of P634,116.00 on January 17, 1997,13

and TCT No. T-88513 was issued in petitioner’sname. Petitioner alleged that it was the lawful owner and possessor of the subject property.

Traversing the complaint, respondent, in its Answer ,14

claimed that its title over the subject property was protected by the Torrenssystem, as it was a buyer in good faith and for value; and that it had been in continuous possession of the subject property sinceNovember 1989, way ahead of petitioner's alleged possession in February 1997.

Respondent stated that on April 30, 1966, Homestead Patent No. 113074 (Homestead Patent) was issued in the name of CharlesSoguilon (Charles). On May 27, 1966, the Homestead Patent was registered

15 and OCT No. RP-110 (P-6339)

16 was issued in

Charles's name, covering the same property. On October 18, 1982, Charles sold the subject property to JMC Farm Incorporated(JMC), which was then issued TCT No. 18529.

17 On August 30, 1985, JMC obtained a loan from respondent in the amount

of P7,000,000.00, with real estate mortgage over several parcels of land including the subject property.18

JMC failed to pay; hence,after extra-judicial foreclosure and public sale, respondent, being the highest bidder, acquired the subject property and was issued

TCT No. T-51382 in its name. Respondent contended that from the time it was issued a title, it took possession of the subjectproperty until petitioner disturbed respondent's possession thereof sometime in 1997. Thus, respondent sent petitioner a DemandLetter

19 asking the latter to vacate the subject property. Petitioner replied that it was not aware of respondent's claim.

20 Presently,

the subject property is in the possession of the petitioner .21

The RTC's Ruling

On June 3, 2004, the RTC ruled in favor of the petitioner on the ground that petitioner's title emanated from a title older than that ofthe respondent. Moreover, the RTC held that there were substantial and numerous infirmities in the Homestead Patent of Charles.The RTC found that there was no record in the Bureau of Lands that Charles was a homestead applicant or a grantee of HomesteadPatent No. 113074. Upon inquiry, the RTC also found that a similar Homestead Patent bearing No. V-113074 was actually issued infavor of one Mariano Costales over a parcel of land with an area of 8.7171 hectares and located in Bunawan, Agusan in Mindanao,per Certification

22issued by the Lands Management Bureau dated February 18, 1998. Thus, the RTC held that Charles's Homestead

Patent was fraudulent and spurious, and respondent could not invoke the protection of the Torrens system, because the systemdoes not protect one who committed fraud or misrepresentation and holds title in bad faith. The RTC disposed of the case in thiswise:

IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered in favor of the plaintiff and against the defendant, as follows:

1. DECLARING as valid OCT No. P-2612, in the name of Jose Castromero, and the subsequent TCT No. T-17104 in thename of the spouses, Siegfriedo A. Veloso and Josephine Sison Veloso and TCT No. T-88513, in the name of plaintiffRabaja Ranch & Development Corporation;

2. DECLARING plaintiff as the true and lawful owner of the lot in question covered by TCT No. T-88513;



























































































WHETHER OR NOT RESPONDENT'S TITLE WHICH ORIGINATED FROM A FAKE AND SPURIOUS HOMESTEAD PATENT, ISSUPERIOR TO PETITIONER'S TITLE WHICH ORIGINATED FROM A VALID AND EXISTING FREE PATENT.

30

Simply put, the issue is who, between the petitioner and respondent, has a better right over the subject property.

Our Ruling

The instant Petition is bereft of merit.

While this Court, is not a trier of facts and is not required to examine or contrast the oral and documentary evidence de novo,nonetheless, it may review and, in proper cases, reverse the factual findings of lower courts when the findings of fact of the trialcourt are in conflict with those of the appellate court.

31 In this case, we see the need to review the records.

The special circumstances attending this case cannot be disregarded. Two certificates of title were issued covering the very sameproperty, deriving their respective authorities from two different special patents granted by the Government. The Free Patent wasissued to Jose on September 6, 1955 as opposed to the Homestead Patent which was issued to Charles on April 30, 1966. Thelatter was registered on May 27, 1966, ahead of the former which was registered only on June 1, 1982. Each patent generated acertificate of title issued to a different set of individuals. Over the years, the subject property was eventually sold to the contendingparties herein, who both appear to be buyers in good faith and for value.

Petitioner now seeks relief before this Court on the main contention that the registered Homestead Patent from which respondentderived its title, is fake and spurious, and is, therefore, void ab initio because it was not issued, at all, by the Government.

We are not convinced.

Our ruling in Republic v. Guerrero,32

is instructive:

Fraud is of two kinds: actual or constructive. Actual or positive fraud proceeds from an intentional deception practiced by means ofthe misrepresentation or concealment of a material fact. Constructive fraud is construed as a fraud because of its detrimental effectupon public interests and public or private confidence, even though the act is not done with an actual design to commit positivefraud or injury upon other persons.

Fraud may also be either extrinsic or intrinsic. Fraud is regarded as intrinsic where the fraudulent acts pertain to an issue involved inthe original action, or where the acts constituting the fraud were or could have been litigated therein. The fraud is extrinsic if it isemployed to deprive parties of their day in court and thus prevent them from asserting their right to the property registered in thename of the applicant.

The distinctions assume significance because only actual and extrinsic fraud had been accepted and is contemplated by the law asa ground to review or reopen a decree of registration. Thus, relief is granted to a party deprived of his interest in land where thefraud consists in a deliberate misrepresentation that the lots are not contested when in fact they are; or in willfully misrepresentingthat there are no other claims; or in deliberately failing to notify the party entitled to notice; or in inducing him not to oppose anapplication; or in misrepresenting about the identity of the lot to the true owner by the applicant causing the former to withdraw hisapplication. In all these examples, the overriding consideration is that the fraudulent scheme of the prevailing litigant prevented aparty from having his day in court or from presenting his case. The fraud, therefore, is one that affects and goes into the jurisdictionof the court.

We have repeatedly held that relief on the ground of fraud will not be granted where the alleged fraud goes into the merits of thecase, is intrinsic and not collateral, and has been controverted and decided. Thus, we have underscored the denial of relief where itappears that the fraud consisted in the presentation at the trial of a supposed forged document, or a false and perjured testimony, orin basing the judgment on a fraudulent compromise agreement, or in the alleged fraudulent acts or omissions of the counsel whichprevented the petitioner from properly presenting the case.

33

No actual and extrinsic fraud existed in this case. In our jurisdiction, fraud is never presumed.34

Mere allegations of fraud are notenough. Intentional acts to deceive and deprive another of his right, or in some manner, injure him must be specifically alleged andproved.

35 The burden of proof rests on petitioner, and the petitioner failed to discharge the burden. Petitioner did not convincingly

show that the Homestead Patent issued to Charles is indeed spurious. More importantly, petitioner failed to prove that respondenttook part in the alleged fraud which dated back as early as 1966 when Charles supposedly secured the fake and spuriousHomestead Patent.

In Estate of the Late Jesus S. Yujuico v. Republic,36

citing Republic v. Court of Appeals,37

this Court stressed the fact that it wasnever proven that private respondent St. Jude was a party to the fraud that led to the increase in the area of the property after it wassub-divided. In the same case, citing Republic v. Umali,

38 we held that, in a reversion case, even if the original grantee of a patent







































and title has obtained the same through fraud, reversion will no longer prosper as the land had become private land and thefraudulent acquisition cannot affect the titles of innocent purchasers for value.

This conclusion rests very firmly on Section 32 of P.D. No. 1529, which states:

SECTION 32. Review of decree of registration; Innocent purchaser for value. — The decree of registration shall not be reopened orrevised by reason of absence, minority, or other disability of any person adversely affected thereby, nor by any proceeding i n any

court for reversing judgment, subject, however, to the right of any person, including the government and the branches thereof,deprived of land or of any estate or interest therein by such adjudication or confirmation of title obtained by actual fraud, to file in theproper Court of First Instance a petition for reopening and review of the decree of registration not later than one year from and afterthe date of the entry of such decree of registration, but in no case shall such petition be entertained by the court where an innocentpurchaser for value has acquired the land or an interest therein whose rights may be prejudiced. Whenever the phrase "innocentpurchaser for value" or an equivalent phrase occurs in this Decree, it shall be deemed to include an innocent lessee, mortgagee, orother encumbrancer for value.

Upon the expiration of said period of one year, the decree of registration and the certificate of title issued shall becomeincontrovertible. Any person aggrieved by such decree of registration in any case may pursue his remedy by action for damagesagainst the applicant or any other person responsible for the fraud. (Underscoring ours)

Settled is the rule that no valid TCT can issue from a void TCT, unless an innocent purchaser for value had intervened. An innocentpurchaser for value is one who buys the property of another, without notice that some other person has a right to or interest in theproperty, for which a full and fair price is paid by the buyer at the time of the purchase or before receipt of any notice of the claims orinterest of some other person in the property. The protection given to innocent purchasers for value is necessary to uphold a

certificate of title's efficacy and conclusiveness, which the Torrens system ensures.39

Clearly, respondent is an innocent purchaser in good faith and for value. Thus, as far as respondent is concerned, TCT No. 18529,shown to it by JMC, was free from any flaw or defect that could give rise to any iota of doubt that it was fake and spurious, or that itwas derived from a fake or spurious Homestead Patent. Likewise, respondent was not under any obligation to make an inquirybeyond the TCT itself when, significantly, a foreclosure sale was conducted and respondent emerged as the highest bidder.

In Republic v. Court of Appeals,40

this Court distinguished a Homestead Patent from a Free Patent, to wit:

Homestead Patent and Free Patent are some of the land patents granted by the government under the Public Land Act. Whilesimilar, they are not exactly the same. A Homestead Patent is one issued to: any citizen of this country; over the age of 18 years orthe head of a family; who is not the owner of more than twenty-four (24) hectares of land in the Philippines or has not had the benefitof any gratuitous allotment of more than twenty-four (24) hectares of land since the occupation of the Philippines by the UnitedStates. The applicant must show that he has complied with the residence and cultivation requirements of the law; must have residedcontinuously for at least one year in the municipality where the land is situated; and must have cultivated at least one-fifth of the land

applied for.

On the other hand, a Free Patent may be issued where the applicant is a natural-born citizen of the Philippines; not the owner ofmore than twelve (12) hectares of land; that he has continuously occupied and cultivated, either by himself or through hispredecessors-in-interests, a tract or tracts of agricultural public lands subject to disposition for at least 30 years prior to the effectivityof Republic Act No. 6940; and that he has paid the real taxes thereon while the same has not been occupied by any person.

41

It bears stressing that a Homestead Patent, once registered under the Land Registration Act, becomes as indefeasible as a TorrensTitle.

42 Verily, Section 103 of P.D. No. 1529 mandates the registration of patents, and such registration is the operative act to convey

the land to the patentee, thus:

Sec. 103. . . . . . The deed, grant, patent or instrument of conveyance from the Government to the grantee shall not take effect as aconveyance or bind the land but shall operate only as a contract between the Government and the grantee and as evidence ofauthority to the Register of Deeds to make registration. It is the act of registration that shall be the operative act to affect and conveythe land, and in all cases under this Decree, registration shall be made in the office of the Register of Deeds of the province or city

where the land lies. The fees for registration shall be paid by the grantee. After due registration and issuance of the certificate oftitle, such land shall be deemed to be registered land to all intents and purposes under this Decree. (Emphasis supplied)

The Torrens system is not a mode of acquiring titles to lands; it is merely a system of registration of titles to lands. However, justiceand equity demand that the titleholder should not be made to bear the unfavorable effect of the mistake or negligence of the State'sagents, in the absence of proof of his complicity in a fraud or of manifest damage to third persons. The real purpose of the Torrenssystem is to quiet title to land and put a stop forever to any question as to the legality of the title, except claims that were noted inthe certificate at the time of the registration or that may arise subsequent thereto. Otherwise, the integrity of the Torrens systemshall forever be sullied by the ineptitude and inefficiency of land registration officials, who are ordinarily presumed to have regularlyperformed their duties.

43























The general rule that the direct result of a previous void contract cannot be valid will not apply in this case as it will directlycontravene the Torrens system of registration. Where innocent third persons, relying on the correctness of the certificate of title thusissued, acquire rights over the property, this Court cannot disregard such rights and order the cancellation of the certificate. Theeffect of such outright cancellation will be to impair public confidence in the certificate of title. The sanctity of the Tor rens systemmust be preserved; otherwise, everyone dealing with the property registered under the system will have to inquire in every instanceas to whether the title had been regularly or irregularly issued, contrary to the evident purpose of the law. Every person dealing withthe registered land may safely rely on the correctness of the certificate of title issued therefor,

and the law will, in no way, oblige him to go behind the certificate to determine the condition of the property.44

Respondent's transfer certificate of title, having been derived from the Homestead Patent which was registered under the Torrenssystem on May 27, 1966, was thus vested with the habiliments of indefeasibility.

WHEREFORE, the instant Petition is DENIED and the assailed Court of Appeals Decision is AFFIRMED. No costs.





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