land titles cases 5

7/25/2019 Land Titles Cases 5

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Republic of the Philippines

SUPREME COURT

Manila

EN BANC

G.R. No. L-8936 October 2, 1915

CONSUELO LEGARDA, with her husband MAURO PRIETO,plaintiffs-appellants,vs.

N.M. SALEEBY,defendant-appellee.

Singson, Ledesma and Lim for appellants.

D.R. Williams for appellee.

JOHNSON,J.:

From the record the following facts appear:

First. That the plaintiffs and the defendant occupy, as owners, adjoining lots in the district of Ermita in the city of Manila.

Second. That there exists and has existed a number of years a stone wall between the said lots. Said wall is located on

the lot of the plaintiffs.

Third. That the plaintiffs, on the 2d day of March, 1906, presented a petition in the Court of Land Registration for the

registration of their lot. After a consideration of said petition the court, on the 25th day of October, 1906, decreed that

the title of the plaintiffs should be registered and issued to them the original certificate provided for under the torrens

system. Said registration and certificate included the wall.

Fourth. Later the predecessor of the defendant presented a petition in the Court of Land Registration for the registration

of the lot now occupied by him. On the 25th day of March, 1912, the court decreed the registration of said title and

issued the original certificate provided for under the torrens system. The description of the lot given in the petition of

the defendant also included said wall.

Fifth. Several months later (the 13th day of December, 1912) the plaintiffs discovered that the wall which had been

included in the certificate granted to them had also been included in the certificate granted to the defendant .They

immediately presented a petition in the Court of Land Registration for an adjustment and correction of the error

committed by including said wall in the registered title of each of said parties. The lower court however, without notice

to the defendant, denied said petition upon the theory that, during the pendency of the petition for the registration of

the defendant's land, they failed to make any objection to the registration of said lot, including the wall, in the name of

the defendant.

Sixth. That the land occupied by t he wall is registered in the name of each of the owners of the adjoining lots. The wall is

not a joint wall.

Under these facts, who is the owner of the wall and the land occupied by it?

The decision of the lower court is based upon the theory that the action for the registration of the lot of the defendant

was a judicial proceeding and that the judgment or decree was binding upon all parties who did not appear and oppose

it. In other words, by reason of the fact that the plaintiffs had not opposed the registration of that part of the lot on


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which the wall was situate they had lost it, even though it had been theretofore registered in their name. Granting that

theory to be correct one, and granting even that the wall and the land occupied by it, in fact, belonged to the defendant

and his predecessors, then the same theory should be applied to the defendant himself. Applying that theory to him, he

had already lost whatever right he had therein, by permitting the plaintiffs to have the same registered in their name,

more than six years before. Having thus lost hid right, may he be permitted to regain it by simply including it in a petition

for registration? The plaintiffs having secured the registration of their lot, including the wall, were they obliged to

constantly be on the alert and to watch all the proceedings in the land court to see that some one else was not having al

or a portion of the same, registered? If that question is to be answered in the affirmative, then the whole scheme and

purpose of the torrens system of land registration must fail. The real purpose of that system is to quiet tit le to land; toput a stop forever to any question of the legality of the title, except claims which were noted at the time of registration,

in the certificate, or which may arise subsequent thereto. That being the purpose of the law, it would seem that onc e a

title is registered the owner may rest secure, without the necessity of waiting in the portals of the court, or sitting in the

"mirador de su casa," to avoid the possibility of losing his land. Of course, it can not be denied that the proceeding for

the registration of land under the torrens system is judicial (Escueta vs. .Director of Lands, 16 Phil. Rep., 482). It is

clothed with all the forms of an action and the result is final and binding upon all the world. It is an action in rem.

(Escueta vs.Director of Lands (supra); Grey Alba vs.De la Cruz, 17 Phil. rep., 49 Roxas vs.Enriquez, 29 Phil. Rep., 31;

Tyler vs.Judges, 175 Mass., 51 American Land Co.vs.Zeiss, 219 U.S., 47.)

While the proceeding is judicial, it involves more in its consequences than does an ordinary action. All the world are

parties, including the government. After the registration is complete and final and there exists no fraud, there are no

innocent third parties who may claim an interest. The rights of all the world are foreclosed by the decree of registration.

The government itself assumes the burden of giving notice to all parties. To permit persons who are parties in the

registration proceeding (and they are all the world) to again litigate the same questions, and to again cast doubt upon

the validity of the registered title, would destroy the very purpose and intent of the law. The registration, under the

torrens system, does not give the owner any better title than he had. If he does not already have a perfect title, he can

not have it registered. Fee simple titles only may be registered. The certificate of registration accumulates in open

document a precise and correct statement of the exact status of the fee held by its owner. The certificate, in the

absence of fraud, is the evidence of title and shows exactly the real interest of its owner. The title once registered, with

very few exceptions, should not thereafter be impugned, altered, changed, modified, enlarged, or diminished, except in

some direct proceeding permitted by law. Otherwise all security in registered titles would be lost. A registered ti tle can

not be altered, modified, enlarged, or diminished in a collateralproceeding and not even by a direct proceeding, after

the lapse of the period prescribed by law.

For the difficulty involved in the present case the Act (No. 496) providing for the registration of titles under the torrens

system affords us no remedy. There is no provision in said Act giving the parties relief under conditions like the present.

There is nothing in the Act which indicates who should be the owner of land which has been registered in the name of

two different persons.

The rule, we think, is well settled that the decree ordering the registration of a particular parcel of land is a bar to future

litigation over the same between the same parties .In view of the fact that all the world are parties, it must follow that

future litigation over the title is forever barred; there can be no persons who are not parties to the action. This, we think

is the rule, except as to rights which are noted in the certificate or which arise subsequently, and with certain other

exceptions which need not be dismissed at present. A title once registered can not be defeated, even by an adverse,open, and notorious possession. Registered title under the torrens system can not be defeated by prescription (section

46, Act No. 496). The title, once registered, is notice to the world. All persons must take notice. No one can plead

ignorance of the registration.

The question, who is the owner of land registered in the name of two different persons, has been presented to the

courts in other jurisdictions. In some jurisdictions, where the "torrens" system has been adopted, the difficulty has been

settled by express statutory provision. In others it has been settled by the courts. Hogg, in his excellent discussion of the

"Australian Torrens System," at page 823, says: "The general rule is that in the case of two certificates of title, purporting

to include the same land, the earlier in date prevails, whether the land comprised in the latter certificate be wholly, or

only in part, comprised in the earlier certificate. (Oelkers vs.Merry, 2 Q.S.C.R., 193; Miller vs.Davy, 7 N.Z.R., 155;


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Lloyd vs.Myfield, 7 A.L.T. (V.) 48; Stevens vs.Williams, 12 V.L. R., 152; Register of Titles, vs.Esperance Land Co., 1 W.A.R

118.)" Hogg adds however that, "if it can be very clearly ascertained by the ordinary rules of construction relating to

written documents, that the inclusion of the land in the certificate of title of prior date is a mistake, the mistake may be

rectified by holding the latter of the two certificates of title to be conclusive." (See Hogg on the "Australian torrens

System," supra,and cases cited. See also the excellent work of Niblack in his "Analysis of the Torrens System," page 99.)

Niblack, in discussing the general question, said: "Where two certificates purport to include the same land the earlier in

date prevails. ... In successive registrations, where more than one certificate is issued in respect of a particular estate o r

interest in land, the person claiming under the prior certificates is entitled to the estate or interest; and that person is

deemed to hold under the prior certificate who is the holder of, or whose claim is derived directly or indirectly from theperson who was the holder of the earliest certificate issued in respect thereof. While the acts in this country do not

expressly cover the case of the issue of two certificates for the same land, they provide that a registered owner shall

hold the title, and the effect of this undoubtedly is that where two certificates purport to include the same registered

land, the holder of the earlier one continues to hold the title" (p. 237).

Section 38 of Act No. 496, provides that; "It (the decree of registration) shall be conclusive upon and against al l persons,

including the Insular Government and all the branches thereof, whether mentioned by name in the application, notice,

or citation, or included in the general description "To all whom it may concern." Such decree shall not be opened by

reason of the absence, infancy, or other disability of any person affected thereby, nor by any proceeding in any court for

reversing judgments or decrees; subject, however, to the right of any person deprived of land or of any estate or interest

therein by decree of registration obtained byfraud to file in the Court of Land Registration a petition for review

within one year after entry of the decree (of registration), provided no innocent purchaser for value has acquired an

interest.

It will be noted, from said section, that the "decree of registration" shall not be opened, for anyreason, in any

court,except for fraud,and not even for fraud, after the lapse of one year. If then the decree of registration can not be

opened for anyreason, except for fraud, in a direct proceeding for that purpose, may such decree be opened or set

aside in a collateral proceeding by including a portion of the land in a subsequent certificate or decree of registration?

We do not believe the law contemplated that a person could be deprived of his registered title in that way.

We have in this jurisdiction a general statutory provision which governs the right of the ownership of land when the

same is registered in the ordinary registry in the name of two persons. Article 1473 of the Civil Code provides, among

other things, that when one piece of real property had been sold to two different persons it shall belong to the personacquiring it, who first inscribes it in the registry. This rule, of course, presupposes that each of the vendees or p urchasers

has acquired title to the land. The real ownership in such a case depends upon priority of registration. While we do not

now decide that the general provisions of the Civil Code are applicable to the Land Registration Act, even though we see

no objection thereto, yet we think, in the absence of other express provisions, they should have a persuasive influence

in adopting a rule for governing the effect of a double registration under said Act. Adopting the rule which we believe to

be more in consonance with the purposes and the real intent of the torrens system, we are of the opinion and so decree

that in case land has been registered under the Land Registration Act in the name of two different persons, the earlier in

date shall prevail.

In reaching the above conclusion, we have not overlooked the forceful argument of the appellee. He says, among other

things; "When Prieto et al. were served with notice of the application of Teus (the predecessor of the defendant) theybecame defendants in a proceeding wherein he, Teus, was seeking to foreclose their right, and that of orders, to the

parcel of land described in his application. Through their failure to appear and contest his right thereto, and the

subsequent entry of a default judgment against them, they became irrevocably bound by the decree adjudicating such

land to Teus. They had their day in court and can not set up their own omission as ground for impugning the validity of a

judgment duly entered by a court of competent jurisdiction. To decide otherwise would be to hold that lands with

torrens titles are above the law and beyond the jurisdiction of the courts".

As was said above, the primary and fundamental purpose of the torrens system is to quiet title. If the holder of a

certificate cannot rest secure in this registered title then the purpose of the law is defeated. If those dealing with

registered land cannot rely upon the certificate, then nothing has been gained by the registration and the expense


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incurred thereby has been in vain. If the holder may lose a strip of his registered land by the method adopted in the

present case, he may lose it all. Suppose within the six years which elapsed after the plaintiff had secured their title, they

had mortgaged or sold their right, what would be the position or right of the mortgagee or vendee? That mistakes are

bound to occur cannot be denied, and sometimes the damage done thereby is irreparable. It is the duty of the courts to

adjust the rights of the parties under such circumstances so as to minimize such damages, taking into consideration al of

the conditions and the diligence of the respective parties to avoid them. In the present case, the appellee was the first

negligent (granting that he was the real owner, and if he was not the real owner he can not complain) in not opposing

the registration in the name of the appellants. He was a party-defendant in an action for the registration of the lot in

question, in the name of the appellants, in 1906. "Through his failure to appear and to oppose such registration, and thesubsequent entry of a default judgment against him, he became irrevocably bound by the decree adjudicating such land

to the appellants. He had his day in court and should not be permitted to set up his own omissions as the ground for

impugning the validity of a judgment duly entered by a court of competent jurisdiction." Granting that he was the owner

of the land upon which the wall is located, his failure to oppose the registration of the same in the name of the

appellants, in the absence of fraud, forever closes his mouth against impugning the validity of that judgment. There is no

more reason why the doctrine invoked by the appellee should be applied to the appellants than to him.

We have decided, in case of double registration under the Land Registration Act, that the owner of the earliest

certificate is the owner of the land. That is the rule between original parties. May this rule be applied to successive

vendees of the owners of such certificates? Suppose that one or the other of the parties, before the error is discovered,

transfers his original certificate to an "innocent purchaser." The general rule is that the vendee of land has no greater

right, title, or interest than his vendor; that he acquires the right which his vendor had, only. Under that rule the vendee

of the earlier certificate would be the owner as against the vendee of the owner of the later certificate.

We find statutory provisions which, upon first reading, seem to cast some doubt upon the rule that the vendee acquires

the interest of the vendor only. Sections 38, 55, and 112 of Act No. 496 indicate that the vendee may acquire rights and

be protected against defenses which the vendor would not. Said sections speak of available rights in favor of third

parties which are cut off by virtue of the sale of the land to an "innocent purchaser." That is to say, persons who had had

a right or interest in land wrongfully included in an original certificate would be unable to enforce such rights against an

"innocent purchaser," by virtue of the provisions of said sections. In the present case Teus had his land, including the

wall, registered in his name. He subsequently sold the same to the appellee. Is the appellee an "innocent purchaser," as

that phrase is used in said sections? May those who have been deprived of their land by reason of a mistake in the

original certificate in favor of Teus be deprived of their right to the same, by virtue of the sale by him to the appellee?Suppose the appellants had sold their lot, including the wall, to an "innocent purchaser," would such purchaser be

included in the phrase "innocent purchaser," as the same is used in said sections? Under these examples there would be

two innocent purchasers of the same land, is said sections are to be applied .Which of the two innocent purchasers, if

they are both to be regarded as innocent purchasers, should be protected under the provisions of said sections? These

questions indicate the difficulty with which we are met in giving meaning and effect to the phrase "innocent purchaser,"

in said sections.

May the purchaser of land which has been included in a "second original certificate" ever be regarded as an "innocent

purchaser," as against the rights or interest of the owner of the first original certificate, his heirs, assigns, or vendee? The

first original certificate is recorded in the public registry. It is never issued until it is recorded. The record notice to all the

world. All persons are charged with the knowledge of what it contains. All persons dealing with the land so recorded, orany portion of it, must be charged with notice of whatever it contains. The purchaser is charged with notice of every fact

shown by the record and is presumed to know every fact which the record discloses .This rule is so well established that

it is scarcely necessary to cite authorities in its support (Northwestern National Bank vs.Freeman, 171 U.S., 620, 629;

Delvin on Real Estate, sections 710, 710 [a]).

When a conveyance has been properly recorded such record is constructive notice of its contents and all interests, legal

and equitable, included therein. (Grandin vs. Anderson, 15 Ohio State, 286, 289; Orvis vs.Newell, 17 Conn., 97;

Buchanan vs.Intentional Bank, 78 Ill., 500; Youngs vs.Wilson, 27 N.Y., 351; McCabe vs.Grey, 20 Cal., 509;

Montefiore vs.Browne, 7 House of Lords Cases, 341.)


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Under the rule of notice, it is presumed that the purchaser has examined every instrument of record affecting the title.

Such presumption is irrebutable. He is charged with notice of every fact shown by the record and is presumed to know

every fact which an examination of the record would have disclosed. This presumption cannot be overcome by proof of

innocence or good faith. Otherwise the very purpose and object of the law requiring a record would be destroyed. Such

presumption cannot be defeated by proof of want of knowledge of what the record contains any more than one may be

permitted to show that he was ignorant of the provisions of the law. The rule that all persons must take notice of the

facts which the public record contains is a rule of law. The rule must be absolute. Any variation would lead to endless

confusion and useless litigation.

While there is no statutory provision in force here requiring that original deeds of conveyance of real property be

recorded, yet there is a rule requiring mortgages to be recorded. (Arts. 1875 and 606 of the Civil Code.) The record of a

mortgage is indispensable to its validity. (Art .1875.) In the face of that statute would the courts allow a mortgage to be

valid which had not been recorded, upon the plea of ignorance of the statutory provision, when third parties were

interested? May a purchaser of land, subsequent to the recorded mortgage, plead ignorance of its existence, and by

reason of such ignorance have the land released from such lien? Could a purchaser of land, after the recorded mortgage,

be relieved from the mortgage lien by the plea that he was a bona fidepurchaser? May there be a bona fidepurchaser

of said land, bona fidein the sense that he had no knowledge of the existence of the mortgage? We believe the rule that

all persons must take notice of what the public record contains in just as obligatory upon all persons as the rule that all

men must know the law; that no one can plead ignorance of the law. The fact that all men know the law is contrary to

the presumption. The conduct of men, at times, shows clearly that they do not know the law. The rule, however, is

mandatory and obligatory, notwithstanding. It would be just as logical to allow the defense of ignorance of the existence

and contents of a public record.

In view, therefore, of the foregoing rules of law, may the purchaser of land from the owner of the second original

certificate be an "innocent purchaser," when a part or all of such land had theretofore been registered in the name of

another, not the vendor? We are of the opinion that said sections 38, 55, and 112 should not be applied to such

purchasers. We do not believe that the phrase "innocent purchaser should be applied to such a purchaser. He cannot be

regarded as an "innocent purchaser" because of the facts contained in the record of the first original certificate. The rule

should not be applied to the purchaser of a parcel of land the vendor of which is not the owner of the original certificate,

or his successors. He, in nonsense, can be an "innocent purchaser" of the portion of the land included in another earlier

original certificate. The rule of notice of what the record contains precludes the idea of innocence. By reason of the prior

registry there cannot be an innocent purchaser of land included in a prior original certificate and in a name other thanthat of the vendor, or his successors. In order to minimize the difficulties we think this is the safe rule to establish. We

believe the phrase "innocent purchaser," used in said sections, should be limited only to cases where unregistered land

has been wrongfully included in a certificate under the torrens system. When land is once brought under the torrens

system, the record of the original certificate and all subsequent transfers thereof is notice to all the world. That being

the rule, could Teus even regarded as the holder in good fifth of that part of the land included in his certificate of the

appellants? We think not. Suppose, for example, that Teus had never had his lot registered under the torrens system.

Suppose he had sold his lot to the appellee and had included in his deed of transfer the very strip of land now in

question. Could his vendee be regarded as an "innocent purchaser" of said strip? Would his vendee be an "innocent

purchaser" of said strip? Certainly not. The record of the original certificate of the appellants precludes the possibility.

Has the appellee gained any right by reason of the registration of the strip of land in the name of his vendor? Applying

the rule of notice resulting from the record of the title of the appellants, the question must be answered in the negative.We are of the opinion that these rules are more in harmony with the purpose of Act No. 496 than the rule contended for

by the appellee. We believe that the purchaser from the owner of the later certificate, and his successors, should be

required to resort to his vendor for damages, in case of a mistake like the present, rather than to molest the holder of

the first certificate who has been guilty of no negligence. The holder of the first original certificate and his successors

should be permitted to rest secure in their title, against one who had acquired rights in conflict therewith and who had

full and complete knowledge of their rights. The purchaser of land included in the second original certificate, by reason

of the facts contained in the public record and the knowledge with which he is charged and by reason of his negligence,

should suffer the loss, if any, resulting from such purchase, rather than he who has obtained the first certificate and who

was innocent of any act of negligence.


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The foregoing decision does not solve, nor pretend to solve, all the difficulties resulting from double registration under

the torrens system and the subsequent transfer of the land. Neither do we now attempt to decide the effect of the

former registration in the ordinary registry upon the registration under the torrens system. We are inclined to the view,

without deciding it, that the record under the torrens system, supersede all other registries. If that view is correct then it

will be sufficient, in dealing with land registered and recorded alone. Once land is registered and recorded under the

torrens system, that record alone can be examined for the purpose of ascertaining the real status of the title to the land.

It would be seen to a just and equitable rule, when two persons have acquired equal rights in the same thing, to hold

that the one who acquired it first and who has complied with all the requirements of the law should be protected.

In view of our conclusions, above stated, the judgment of the lower court should be and is hereby revoked. The record is

hereby returned to the court now having and exercising the jurisdiction heretofore exercised by the land court, with

direction to make such orders and decrees in the premises as may correct the error heretofore made in including the

land in the second original certificate issued in favor of the predecessor of the appellee, as well as in all other duplicate

certificates issued.

Without any findings as to costs, it is so ordered.

Arellano, C.J., Torrens, and Araullo, JJ., concur.

Separate Opinions

TRENT,J., dissenting:

I dissent.

In cases of double or overlapping registration, I am inclined to agree with the reasoning and authority on which it is held

in the majority opinion (first) that the original holder of the prior certificate is entitled to the land as against the orig inal

holder of the later certificate, where there has been no transfer of t itle by either party to an innocent purchaser; both,

as is shown in the majority opinion, being at fault in permitting the double registration to take place; (second) that an

innocent purchaser claiming under the prior certificate is entitled to the land as against the original holder of the later

certificate, and also as against innocent purchasers from the holder of the later certificate; the innocent purchaser being

in no wise at fault in connection with the issuance of the later certificate.

But I am of opinion that neither the authorities cited, nor the reasoning of the majority opinion sustains the propositionthat the original holder of the prior certificate is entitled to the land as against an innocent purchaser from the holder of

the later certificate.

As to the text-book authorities cited in the majority opinion, it is sufficient to say that the rules laid down by both Hogg

and Niblack are mere general rules, admittedly subject to exception, and of course of no binding force or authority

where the reasoning upon which these rules are based is applicable to the facts developed in a particular case.

In its last analysis the general rule laid down in the majority opinion rests upon the proposition set forth in the last page

of the opinion wherein it is said that "it would seem to be a just and equitable rule, when two persons have acquired


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equal rights in the same thing, to hold that the one who acquired it first and who has complied with all the requirements

of the law should be protected." The rule, as applied to the matter in hand, may be stated as follows: It would seem to

be a just and equitable rule when two persons have acquired separate and independent registered titles to the same

land, under the Land Registration Act, to hold that the one who first acquired registered title and who has complied with

all the requirements of the law in that regard should be protected, in the absence of any express statutory provision to

the contrary.

Thus stated I have no quarrel with the doctrine as a statement of thegeneral ruleto be applied in cases of double or

overlapping registration under the Land Registration Act; for it is true as stated in the majority opinion that in theadjudication and registration of titles by the Courts of Land Registration "mistakes are bound to occur, and sometimes

the damage done thereby is irreparable;" and that in the absence of statutory provisions covering such cases, "it is the

duty of the courts to adjust the rights of the parties, under such circumstances, so as to minimize such damages, taking

into consideration all of the conditions, and the diligence of the respective parties to avoid them."

But like most such general rules, it has its exceptions and should not be applied in a case wherein the reasons on which

it is based do not exist, or in cases wherein still more forceful reasons demand the application of a contrary rule.

The general rule relied upon in the majority opinion is a mere application of a well settled equity rule that: "Where

conflicting equities are otherwise equal in merit, that which first occurred will be given the preference." But it is

universally laid down by all the courts which have had occasion to apply this equity rule that "it should be the last test

resorted to," and that "it never prevails when any other equitable ground for preference exists." (See19 Cent. Dig., tit.

Equity, par. 181; and may cases cited in 16 Cyc., 139, note 57.) It follows that the general rules, that in cases of double or

overlapping registration the earlier certificate should be protected, ought not to prevail so as to deprive an innocent

purchaser under the later certificate of his title of the earlier certificate contributed to the issuance of the later

certificate. Hence the holder of the earlier certificate of title should not be heard to invoke the"just and equitable

rule"as laid down in the majority opinion, in order to have his own title protected and the title of an innocent purchaser

of a later certificate cancelled or annulled, in any case wherein it appears that the holder of the later certificate was

wholly without fault, while the holder of the issuance of the later certificate, in that he might have prevented its

issuance by merely entering his appearance in court in response to lawful summons personally served upon him in the

course of the proceedings for the issuance of the second certificate, and pleading his superior rights under the earlier

certificate, instead of keeping silent and by his silence permitting a default judgment to be entered against him

adjudicating title in favor of the second applicant.

The majority opinion clearly recognizes the soundness of the principles I am contending for by reasoning (with which I

am inclined to agree) whereby it undertakes to demonstrate that as between the original holders of the double or

overlapping registration the general rule should prevail, because both such original parties must held to have been fault

and, their equities being equal, preference should be given to the earlier title.

The majority opinion further recognizes the soundness of my contention by the reasoning whereby it undertakes to

sustain the application of the general rule in favor of the original holder of the earlier certificate against purchasers from

the original holder of the later certificate, by an attempt to demonstrate that such purchasers can in no event be held to

beinnocent purchasers;because, as it is said, negligence may and should always be imputed to such a purchaser, so that

in no event can he claim to be without fault when it appears that the lands purchased by him from the holder of a dulyregistered certificate of title are included within the bounds of the lands described in a certificate of title of an earlier

date.

At considerable length the majority opinion (in reliance upon the general rule laid down under the various systems of

land registration, other than those based on the torrens system) insists that a purchaser of land land duly registered in

the Land Registration Court, is charged with notice of the contents of each and every one of the thousands and tens of

thousands of certificates of registry on file in the land registry office, so that negligence may be imputedto him if he

does not ascertain that all or any part of the land purchased by him is included within the boundary lines of any one of

the thousands or tens of thousands of tracts of land whose original registry bears an earlier date than the date of the

original registry of the land purchased by him. It is contended that he cannot claim to be without fault should he buy


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such land because, as it is said, it was possible for him to discover that the land purchased by him had been made the

subject of double or overlapping registration by a comparison of the description and boundary lines of the thousands of

tracts and parcels of land to be found in the land registry office.

But such ruling goes far to defeat one of the principal objects sought to be attained by the introduction and adoption of

the so-called torrens system for the registration of land. The avowed intent of that system of land registration is to

relieve the purchase of registered lands from the necessity of looking farther than the certificate of title of the vendor in

order that he may rest secure as to the validity of the title to the lands conveyed to him. And yet it is said in the majorit y

opinion that he ischarged with noticeof the contents of every other certificate of title in the office of the registrar sothat his failure to acquaint himself with its contents may be imputed to him as negligence.

If the rule announced in the majority opinion is to prevail, the new system of land registration, instead of making

transfers of real estate simple, expenditious and secure, and instead of avoiding the necessity for expensive and oftimes

uncertain searches of the land record and registries, in order to ascertain the true condition of the title before purchase,

will, in many instances, add to the labor, expense and uncertainty of any attempt by a purchaser to satisfy himself as to

the validity of the title to lands purchased by him.

As I have said before, one of the principal objects, if not the principal object, of the torrens system of land registration

upon which our Land Registration Act is avowedly modelled is to facilitate the transfer of real estate. To that end the

Legislature undertakes to relieve prospective purchasers and all others dealing in registered lands from the necessity of

looking farther than the certificate of title to such lands furnished by the Court of Land Registration, and I cannot,

therefore, give my consent to a ruling which charges a purchaser or mortgage of registered lands with notice of the

contents of every other certificate of title in the land registry, so that negligence and fault may be imputed to him should

he be exposed to loss or damages as a result of the lack of such knowledge.

Suppose a prospective purchaser of lands registered under the Land Registration Act desires to avoid the imputation of

negligence in the event that, unknown to him, such lands have been made the subject of double or overlapping

registration, what course should he pursue? What measures should he adopt in order to search out the information with

notice of which he is charged? There are no indexes to guide him nor is there anything in the record or the certificate of

title of the land he proposes to buy which necessarily or even with reasonable probability will furnish him a clue as to

the fact of the existence of such double or overlapping registration. Indeed the only course open to him, if he desires to

assure himself against the possibility of double or overlapping registration, would even seem to be a careful, laboriousand extensive comparison of the registered boundary lines contained in the certificate of title of the tract of land he

proposes to buy with those contained in all the earlier certificates of title to be found in the land registry. Assuredly it

was never the intention of the author of the new Land Registration Act to impose such a burden on a purchaser of duly

registered real estate, under penalty that a lack of the knowledge which might thus be acquired may be imputed to him

by this court as negligence in ruling upon the respective equities of the holders of lands which have been the subject of

double or overlapping registration.

On the other hand, I think that negligence and fault may fairly be imputed to a holder of a registered certificate of title

who stood supinely by and let a default judgment be entered against him, adjudicating all or any part of his registered

lands to another applicant, if it appears that he was served with notice or had actual notice of the pendency of the

proceedings in the Court of Land Registration wherein such default judgment was entered.

The owner of land who enjoys the benefits secured to him by its registry in the Court of Land Registration may

reasonably be required to appear and defend his title when he has actual notice that proceedings are pending in that

court wherein another applicant, claiming the land as his own, is seeking to secure its registry in his name. All that is

necessary for him to do is to enter his appearance in those proceedings, invite the court's attention to the certificate of

title registered in his name, and thus, at the cost of the applicant, avoid all the damage and inconvenience flowing from

the double or overlapping registration of the land in question. There is nothing in the new system of land registration

which seems to render it either expedient or necessary to relieve a holder of a registered title of the duty of appearing

and defending that title, when he has actual notice that it is being attacked in a court of competent jurisdiction, and if,

as a result of his neglect or failure so to do, his lands become subject to double or overlapping registration, he should


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not be permitted to subject an innocent purchaser, holding under the later certificate, to all the loss and damage

resulting from the double or overlapping registration, while he goes scot free and holds the land under a manifest

misapplication of the equitable rule that "where conflicting equities are otherwise equal in merit, that which first

accrued will be given the preference." It is only where both or neither of the parties are at fault that the rule is properly

applicable as between opposing claimants under an earlier and a later certificate of registry to the same land.

Of course all that is said in the briefs of counsel and the majority opinion as to the right of the holder of a certificate to

rest secure in his registered title so that those dealing with registered lands can confidently rely upon registry

certificates thereto is equally forceful by way of argument in favor of the holder of one or the other certificate in case ofdouble or overlapping registration. The problem is to determine which of the certificate holders is entitled to the land.

The decision of that question in favor of either one must necessarily have the effect of destroying the value of the

registered title of the other and to that extent shaking the public confidence in the value of the whole system for the

registration of lands. But, in the language of the majority opinion, "that mistakes are bound to occur cannot be denied

and sometimes the damage done thereby is irreparable. It is the duty of the courts to adjust the rights of the parties

under such circumstances so as to minimize the damages, taking into consideration all the conditions and the diligence

of the respective parties to avoid them."lawphil.net

It will be observed that I limit the exception to the general equitable rule, as laid down in the majority opinion, to case

wherein the holder of the earlier certificate of title has actual notice of the pendency of the proceedings in the course of

which the latter certificate of title was issued, or to cases in which he has received personal notice of the pendency of

those proceedings. Unless he has actual notice of the pendency of such proceedings I readily agree with the reasoning of

the majority opinion so far as it holds that negligence, culpable negligence, should not be imputed to him for failure to

appear and defend his title so as to defeat his right to the benefit of the equitable rule. It is true that the order of

publication in such cases having been duly complied with, all the world is charged with notice thereof, but it does not

necessarily follow that, in the absence of actual notice, culpable negligence in permitting a default judgment to be

entered against him may be imputed to the holder of the earlier certificate so as to defeat his right to the land under the

equitable rule favoring the earlier certificate. Such a holding would have the effect (to quote the language of the

majority opinion) of requiring the holder of a certificate of title to wait indefinitely "in the portals of the court" and to sit

in the "mirador de su casa" in order to avoid the possibility of losing his lands; and I agree with the writer of the majority

opinion that to do so would place an unreasonable burden on the holders of such certificate, which was not

contemplated by the authors of the Land Registration Act. But no unreasonable burden is placed upon the holder of a

registered title by a rule which imputes culpable negligence to him when he sits supinely by and lets a judgment indefault be entered against him adjudicating title to his lands in favor of another applicant, despite the fact that he has

actual knowledge of the pendency of the proceedings in which such judgment is entered and despite the fact that he has

been personally served with summons to appear and default his title.

"Taking into consideration all of the conditions and the diligence of the respective parties," it seems to me that there is

no "equality in merit" between the conflicting equities set up by an innocent purchaser who acquires title to the land

under a registered certificate, and the holder of an earlier certificate who permitted a default judgment to be entered

against him, despite actual notice of the pendency of the proceedings in the course of which the later certificate was

issued.

I am convinced, furthermore, that aside from the superior equities of the innocent purchaser in cases such as that nowunder discussion, there are strong reasons of convenience and public policy which militate in favor of the recognition of

his title rather than that of the holder of the earlier title.

One ruling exposes all persons purchasing or dealing in registered lands to unknown, unspecified and uncertain dangers,

to guard against which all such persons will be put to additional cost, annoyance and labor on every occasion when any

transaction is had with regard to such lands; while the other ruling tends to eliminate consequences so directly adverse

to the purpose and object for which the land registration law was enacted, and imposes no burden upon any holder of a

certificate of registered lands other than that of defending his title on those rare, definite and specific occasions wherein

he has actual notice that his title is being challenged in a Court of Land Registration, a proceeding in which the cost and

expense is reduced to the minimum by the conclusive character of his certificate of title in support of his claim of


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ownership. Furthermore, judgment against the innocent purchaser and in favor of the holder of the earlier certificate in

a case such as that under consideration must inevitably tend to increase the danger of double or overlapping

registrations by encouraging holders of registered titles, negligently or fraudulently and conclusively, to permit default

judgments to be entered against them adjudicating title to all or a part of their registered lands in favor of other

applicants, despite actual notice of the pendency of judicial proceedings had for that purpose, and this, without adding

in any appreciable degree to the security of thir titles, and merely to save them the very slight trouble or inconvenience

incident to an entry of appearance in the court in which their own titles were secured, and inviting attention to the fact

that their right, title and ownership in the lands in questions has already been conclusively adjudicated.

The cases wherein there is a practical possibility of double or overlapping registration without actual notice to the holder

of the earlier certificate must in the very nature of things to be so rare as to be practically negligible. Double or

overlapping registration almost invariably occurs in relation to lands held by adjoining occupants or claimants. It is

difficult to conceive of a case wherein double registration can take place, in the absence of fraud, without personal

service of notice of the pendency of the proceedings upon the holder of the earlier certificate, the statute requiring such

notice to be served upon the owner or occupant of all lands adjoining those for which application for registration is

made; and the cases wherein an adjoining land owner can, even by the use of fraud, conduct proceedings for the

registration of his land to a successful conclusion without actual notice to the adjoining property owners must be rare

indeed.

In the case at bar the defendant purchased the land in question from the original holder of a certificate of title issued by

the Court of Land Registration, relying upon the records of the Court of Land Registration with reference thereto and

with no knowledge that any part of the land thus purchased was included in an earlier certificate of title issued to the

plaintiff. The plaintiff, the holder of the earlier certificate of title, negligently permitted a default judgment to be entered

against him in the Court of Land Registration, adjudicating part of the lands included in his own certificate of title in

favor of another applicant, from whom the defendant in this action acquired title, and this despite the fact that he was

an adjoining land owner, had actual notice of the pendency of the proceedings and was personally served with

summons to appear and defends his rights in the premises. It seems to me that there can be no reason for doubt as to

the respective merits of the equities of the parties, and further that the judgment of the majority in favor of the plaintiff

will inevitably tend to increase the number of cases wherein registered land owners in the future will fail to appear and

defend their titles when challenged in other proceedings in the Courts of Land Registration, thereby enormously

increasing the possibility and probability of loss and damage to innocent third parties and dealers in registered lands

generally, arising out of erroneous, double or overlapping registration of lands by the Courts of Land Registration.

Carson, J., concurs.


SUPREME COURT

Manila

EN BANC

G.R. No. 5246 September 16, 1910

MANUELA GREY ALBA, ET AL.,petitioners-appellants,

vs.

ANACLETO R. DE LA CRUZ,objector-appellee.

Ramon Salinas, for appellants.

Aniceto G. Reyes, for appellee.


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TRENT,J.:

These petitioners, Manuela, Jose, Juan, and Francisco, surnamed Grey y Alba, are the only heirs of Doa Segunda Alba

Clemente and Honorato Grey, deceased. Remedios Grey y Alba, a sister of the petitioners, was married on the 21st day

of March, 1903, to Vicente Reyes and died on the 13th of July, 1905, without leaving any heirs except her husband. The

four petitioners, as coowners, sought to have registered the following-described property:

A parcel of land situated in the barrio of Talampas, municipality of Baliuag, Province of Bulacan, upon which are

situated three houses and one camarin of light material, having a superficial area of 52 hectares, 51 ares, and 22centares; bounded on the north by the highway (calzada) of Talampas and the lands of Rita Ruiz Mateo; on the

east by the lands of the said Rita Ruiz Mateo, Hermenegildo Prado, Policarpo de Jesus, and a stream called

Sapang Buslut; on the south by the same stream and the lands of the capellania; and on the west by the stream

called Sapang Buslut, and the lands of Vicente de la Cruz, Jose Camacho and Domingo Ruiz Mateo.

This parcel of agricultural land is used for the raising of rice and sugar cane and is assessed at $1,000 United States

currency. The petition, which was filed on the 18th of December, 1906, was accompanied by a plan and technical

description of the above-described parcel of land.

After hearing the proofs presented, the court entered, on the 12th of February, 1908, a decree in accordance with the

provisions of paragraph 6 of section 54 of Act No. 926, directing that the land described in the petitioner be registered inthe names of the four petitioners, as coowners, subject to the usufructuary right of Vicente Reyes, widower of Remedios

Grey.

On the 16th of June, 1908, Anacleto Ratilla de la Cruz filed a motion in the Court of Land Registration asking for a

revision of the case, including the decision, upon the ground that he is the absolute owner of the two parcels of land

which are described in said motion, and which, according to his allegations, are included in the lands decreed to the

petitioners. He alleged that the decree of February 12, 1908, was obtained maliciously and fraudulently by the

petitioners, thereby depriving him of said two parcels of land. He further alleged that he was the absolute owner of the

two parcels of land, having inherited them from his father, Baldomero R. de la Cruz, who had a state grant for the same.

He therefore asked, under the provisions of section 38 of the Land Registration Act (No. 496), a revision o f the case, and

that the said decree be modified so as to exclude the two parcels of land described in said motion. The Land Court upon

this motion reopened the case, and after hearing the additional evidence presented by both parties, rendered, on the23rd of November, 1908, its decision modifying the former decree by excluding from the same the two parcels of land

claimed by Anacleto Ratilla de la Cruz. From this decision and judgment the petitioners appealed and now insist, first,

that the trial court erred in reopening the case and modifying its decree dated the 12th of February, 1908, for the reason

that said decree was not obtained by means of fraud; and, second, that the court erred in holding that the two parcels of

land described in the appellee's motion are not their property.

It was agreed by counsel that the two small parcels now in dispute forma part of the land described in the petition and

were included in the decree of February 12, 1908, and that the petitioners are the owners of the remainder of the land

described in the said decree.

The petitioners inherited this land from their parents, who acquired the same, including the two small parcels inquestion, by purchase, as is evidenced by a public document dated the 26th of November, 1864, duly executed before

Francisco Iriarte, alcalde mayor and judge of the Court of First Instance of the Province of Bulacan.

Baldomero R. de la Cruz, father of the appellee, obtained in march, 1895, a state grant for several parcels of land,

including the two parcels in question. This grant was duly inscribed in the old register of property in Bulacan on the 6th

of April of the same year.

It is admitted that at the time the appellants presented their petition in this case the appellee was occupying the two

parcels of land now in question. It is also admitted that the name of the appellee does not appear in the said petition as

an occupant of the said two parcels. The petitioners insist that the appellee was occupying these parcels as their tenant


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and for this reason they did not include his name in their petition, as an occupant, while the appellee contends that he

was occupying the said parcels as the absolute owner under the estate grant by inheritance.

The court below held that the failure on the part of the petitioners to include the name of the appellee in their petition,

as an occupant of these two parcels of land, was a violation of section 21 of Act No. 496, and that this constituted fraud

within the meaning of section 38 of said Land Registration Act. The trial court further held that the grant from the estate

should prevail over the public document of purchase of 1864.

The mother of the petitioners died on November 15, 1881; their father died prior to that time. Manuela, the oldest ofthe petitioners, was about six years of age when their mother died. So these children were minors when the father of

the appellee obtained the estate grant.

On the 13th of June, 1882, Jose Grey, uncle and representative of the petitioners, who were then minors, rented the

land owned by the petitioners' deceased parents to one Irineo Jose for a period of three years. On the 23d of March,

1895, the said Jose Grey, as the representative of the petitioners, rented the same land for a period of six years to

Baldomero R. de la Cruz, father of the appellee. This rental contract was duly executed in writing. This land was

cultivated during these six years by Baldomero R. de la Cruz and his children, one of whom is the appellee. On the 14th

of December, 1905, Jose Grey, for himself and the other petitioners, rented the same land to Estanislao R. de la Cruz for

a period of two years. Estanislao de la Cruz on entering into this rental contract with Jose Grey did so for himself and his

brothers, one of whom is the appellee. While the appellee admits that his father and brother entered into these rental

contracts and did, in fact, cultivate the petitioners' land, nevertheless he insists that the two small parcels in question

were not included in these contracts. In the rental contract between the uncle of the petitioners and he father of the

appellee the land is not described. In the rental contract between Jose Grey, one of the petitioners, and Estanislao R. de

la Cruz, brother of the appellee, the two small parcels of land in question are included, according to the description

given therein. This was found to be true by the court below, but the said court held that as this contract was made by

Estanislao R. de la Cruz it was not binding upon Anacleto R. de la Cruz, the appellee.

The two small parcels of land in question were purchased by the parents of the petitioners in 1864, as is evidenced by

the public document of purchase and sale of that year. The same two parcels of land are included in the state grant

issued in favor of Baldomero Ratilla de la Cruz in 1895. This grant was obtained after the death of the petitioners'

parents and while they were minors. So it is clear that the petitioners honestly believed that the appellee was occupying

the said parcels as their lessee at the time they presented their application for registration. They did not act in bad faith,nor with any fraudulent intent, when they omitted to include in their application the name of the appellee as one of the

occupants of the land. They believed that it was not necessary nor required that they include in their application the

names of their tenants. Under these circumstances, did the court below commit an error in reopening this case in June,

1908, after its decree had been entered in February of the same year?

The application for the registration is to be in writing, signed and sworn to by the applicant, or by some person duly

authorized in his behalf. It is to contain an accurate description of the land. It shall contain the name in full and the

address of the applicant, and also the names and addresses of all occupants of land and of all adjoining owners, if

known; and, if not known, it shall state what search has been made to find them. In the form of notice given by statute,

which shall be sworn to, the applicant is required to state and set forth clearly all mortgages or encumbrances affecting

said land, if any, the rights and interests, legal or equitable, in the possession, remainder, reversion, or expectancy of allpersons, with their names in full, together with their place of residence and post office addresses. Upon receipt of the

application the clerk shall cause notice of the filling to be published twice in the Official Gazette. This published notice

shall be directed to all persons appearing to have an interest in the land sought to be registered and to the adjoining

owners, and also "to all whom it may concern." In addition to the notice in the Official Gazette the Land Court shall,

within seven days after said publication, cause a copy of the notice, in Spanish, to be mailed by the clerk to every person

named in the application whose address is known; to cause a duly attested copy of the notice, in Spanish, to be posted

in a conspicuous place on every parcel of land included in the application, and in a conspicuous place on the chief

municipal building of the town in which the land is situated. The court may also cause other or further notice of the

application to be given in such manner and to such persons as it may deem proper. The certificate of the clerk that he

has served the notice as directed by the court by publication or mailing shall be conclusive proof of such service. Within


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the time allowed in the notices, if no person appears and answers, the court may at once, upon motion of the applicant,

no reason to the contrary appearing, order a general default. By the description in the published notice "to all whom it

may concern," and by express provisions of law "all the word are made parties defendant and shall be concluded by the

default an order." If the court, after hearing, finds that the applicant has title, as stated in his application, a decree or

registration shall be entered.

Every decree of registration shall bind the land and quiet title thereto, subject only to the exceptions stated in

the following section. It shall be conclusive upon and against all persons, including the Insular Government, and

all the branches thereof, whether mentioned by name in the application, notice, or citation, or included in thegeneral description "to all whom it may concern." Such decree shall not be opened by reason of the absence,

infancy, or other disability of any person affected thereby, nor by any proceedings in any court for reversing

judgments or decrees; subject, however, to the right of any person deprived of land or of any estate or interest

therein by decree of registration obtained by fraudto file in the Court of Land Registration a petition for review

within one year. . . . (Sec. 38 of Act No. 496.)

The appellee is not included in any of the exceptions named in section 38 referred to above.

It will be seen that the applicant is required to mention not only the outstanding interest which he admits but also all

claims of interest, though denied by him. By express provision of law the world are made parties defendant by the

description in the notice "to all whom it may concern."

Although the appellee, occupying the two small parcels of land in question under the circumstances as we have set forth

was not served with notice, he was made a party defendant by publication; and the entering of a decree on the 12th of

February, 1908, must be held to be conclusive against all persons, including the appellee, whether his (appellee's) name

is mentioned in the application, notice, or citation.

The said decree of February 12, 1908, should not have been opened on account of the absence, infancy, or other

disability of any person affected thereby, and could have been opened only on the ground that the said decree had been

obtained by fraud. That decree was not obtained by fraud on the part of the applicants, inasmuch as they honestly

believed that the appellee was occupying these two small parcels of land as their tenant. One of the petitioner went

upon the premises with the surveyor when the original plan was made.

Proof of constructive fraud is not sufficient to authorize the Court of Land Registration to reopen a case and modify its

decree. Specific, intentional acts to deceive and deprive anther of his right, or in some manner injure him, must be

alleged and proved; that is, there must be actual or positive fraud as distinguished from constructive fraud.

The question as to the meaning of the word "fraud" in the Australian statutes has been frequently raised. Two

distinctions have been noted by the Australian courts; the first is the distinction between the meaning of the word

"fraud" in the sections relating to the conclusive effect of certificates of title, and its meaning in the sections relating to

the protection of bona fide purchasers from registered proprietors. The second is the distinction between "legal,"

"equitable," or "constructive" fraud, and "actual" or "moral" fraud. In none of the groups of the sections of the

Australian statutes relating to the conclusive effect of certificates of title, and in which fraud is referred to, is there any

express indication of the meaning of "fraud," with the sole exception of that of the South Australian group. (Hogg onAustralian Torrens System, p. 834.)

With regard to decisions on the sections relating to the conclusive effect of certificates of title, it has been held

in some cases that the "fraud" there mentioned means actual or moral fraud, not merely constructive or legal

fraud. In other cases "fraud" has been said to include constructive, legal, and every kind of fraud. In other cases,

against, knowledge of other persons' right, and the deliberate acquisition of registered title in the face of such

knowledge, has been held to be "fraud" which rendered voidable the certificates of title so obtained; and

voluntary ignorance is, for this purpose, the same as knowledge. But in none of these three classes of cases was

there absent the element of intention to deprive another of just rights, which constitutes the essential


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characteristics of actualas distinguished from legal-fraud. (Id., p. 835, and cases cited in notes Nos. 85, 86, 87,

88, and 89 at bottom of pages 835 and 836.)

By "fraud" is meant actual fraud-dishonesty of some sort. (Judgment of Privy Council in Assets Co. vs. Mere Roihi, and

Assets Co. vs. Panapa Waihopi, decided in March, 1905, cited by Hogg in his Supplementary Addendum to his work on

Australian Torrens System, supra.) The same meaning should be given to the word "fraud" used in section 38 of our

statutes (Act No. 496).

The question as to whether any particular transaction shows fraud, within the meaning of the word as used in ourstatutes, will in each case be a question of fact. We will not attempt to say what acts would constitutes this kind of fraud

in other cases. This must be determined from the fact an circumstances in each particular case. The only question we are

called upon to determine, and have determined, is whether or not, under the facts and circumstances in this case, the

petitioners did obtain the decree of February 12, 1908, by means of fraud.

It might be urged that the appellee has been deprived of his property without due process of law, in violation of section

5 of the Act of Congress of July 1, 1902, known as the Philippine Bill," which provides "that no law shall be enacted in the

said Islands which shall deprive any person of life, liberty, or property without due process of law."

The Land Registration Act requires that all occupants be named in the petition and given notice by registered mail. This

did not do the appellee any good, as he was not notified; but he was made a party defendant, as we have said, by meansof the publication "to all whom it may concern." If this section of the Act is to be upheld this must be declared to be due

process of law.

Before examining the validity of this part of the Act it might be well to note the history and purpose of what is known as

the "Torrens Land Registration System." This system was introduced in South Australia by Sir Robert Torrens in 1857 and

was there worked out in its practicable form.

The main principle of registration is to make registered titles indefeasible. As we have said, upon the presentation in the

Court of Land Registration of an application for the registration of the title to lands, under this system, the theory of the

law is that all occupants, adjoining owners, adverse claimants, and other interested persons are notified of the

proceedings, and have have a right to appear in opposition to such application. In other words, the proceeding is against

the whole word. This system was evidently considered by the Legislature to be a public project when it passed Act No.

496. The interest of the community at large was considered to be preferred to that of private individuals.

At the close of this nineteenth century, all civilized nations are coming to registration of title to land, because

immovable property is becoming more and more a matter of commercial dealing, and there can be no trade

without security. (Dumas's Lectures, p. 23.)

The registered proprietor will no longer have reasons to fear that he may evicted because hi s vendor had,

unknown to him, already sold the and to a third person. . . The registered proprietor may feel himself protected

against any defect in his vendor's title. (Id., p. 21.)

The following summary of benefits of the system of registration of titles, made by Sir Robert Torrens, has beenfully justified in its use:

First. It has substituted security for insecurity.

Second. It has reduced the costs of conveyances from pounds to shillings, and the time occupied from months to

days.

Third. It has exchanged brevity and clearness for obscurity and verbiage.


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Fourth. It has so simplified ordinary dealings that he who has mastered the "three R's" can transact his own

conveyancing.

Fifth. It affords protection against fraud.

Sixth. It has restored to their just value many estates held under good holding titles, but depreciated in

consequence of some blur or technical defect, and has barred the reoccurrence of any similar faults. (Sheldon on

Land Registration, pp. 75, 76.)

The boldest effort to grapple with the problem of simplification of title to land was made by Mr. (afterwards Sir

Robert) Torrens, a layman, in South Australia in 1857. . . . In the Torrens system title by registration takes the

place of "title by deeds"of the system under the "general" law. A sale of land, for example, is effected by a

registered transfer, upon which a certificate of title is issued. The certificate is guaranteed by statute, and, with

certain exceptions, constitutes indefeasible title to the land mentioned therein. Under the old system the same

sale would be effected by a conveyance, depending for its validity, apart from intrinsic flaws, on the correctness

of a long series of prior deeds, wills, etc. . . . The object of the Torrens system, them, is to do away with the delay

uncertainty, and expense of the old conveyancing system. (Duffy & Eagleson on The Transfer of Land Act, 1890,

pp. 2, 3, 5, 7.)

By "Torrens" system generally are meant those systems of registration of transactions with interest in landwhose declared object . . . is, under governmental authority, to establish and certify to the ownership of an

absolute and indefeasible title to realty, and to simplify its transfer. (Hogg on Australian Torrens system,supra,

pp. 1, 2.)

Compensation for errors from assurance funds is provided in all countries in which the Torrens system has been enacted

Cases of error no doubt will always occur. The percentage of errors, as compared with the number of registered dealings

in Australia, is very small. In New South Wales there were, in 1889, 209, 894 registered dealings, the average risk of error

being only 2 cents for each dealing. In Queensland the risk of error was only 1 cents, the number of registered

dealings being 233,309. In Tasmania and in Western Australia not a cent was paid for compensation for errors during the

whole time of operation, (Dumas's Lectures, supra, p. 96.) This system has been adopted in various countries of the

civilized world, including some of the States of the American Union, and practical experience has demonstrated that it

has been successful as a public project.

The validity of some of the provisions of the statutes adopting the Torrens system has been the subject of judicial

decision in the courts of the United States. (People vs. Chase, 165 Ill., 527; State vs. Guilbert, 56 Ohio St., 575; People vs.

Simon, 176 Ill., 165; Tyler vs. Judges, 175 Mass., 71.)

Act No. 496 of the Philippine Commission, known as the "Land Registration Act," was copied substantially from the

Massachussetts law of 1898.

The Illinois and Massachusetts statutes were upheld by the supreme courts of those States.

It is not enough to show a procedure to be unconstitutional to say that we never heard of it before. (Tyler vs.Judges, supra; Hurtado vs. California, 110 U. S., 516.)

Looked at either from the point of view of history or of the necessary requirements of justice, a proceeding in

rem dealing with a tangible res may be instituted and carried to judgment without personal service upon

claimants within the State or notice by name to those outside of it, and not encounter any provision of either

constitution. Jurisdiction is secured by the power of the court over the res. As we have said, such a proceeding

would be impossible, were this not so, for it hardly would do to make a distinction between the constitutional

rights of claimants who were known and those who were not known to the plaintiff, when the proceeding is to

bar all. (Tyler vs. Judges, supra.)


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This same doctrine is annunciated in Pennoyer vs. Neff (95 U. S., 714); The Mary (9 Cranch, 126); Mankin vs. Chandler (2

Brock., 125); Brown vs. Levee Commission (50 Miss., 468); 2 Freeman, Judgments, 4th ed., secs. 606, 611.

If the technical object of the suit is to establish a claim against some particular person, with a judgment which

generally, in theory at least, binds his body, or to bar some individual claim or objection, so that only certain

persons are entitled to be heard in defense, the action is in personam, although it may concern the right to or

possession of a tangible thing. If, on the other hand, the object is to bar indifferently all who might be minded to

make an objection of any sort against the right sought to be established, and if anyone in the world has a right

to be heard on the strenght of alleging facts which, if true, show an inconsistent interest, the proceeding is inrem. (Tyler vs. Judges, supra.)

In the case of Hamilton vs. Brown (161 U. S., 256) a judgment of escheat was held conclusive upon persons notified by

advertisement to all persons interested. In this jurisdiction, by the provisions of the Code of Civil Procedure, Act No. 190,

a decree allowing or disallowing a will binds everybody, although the only notice of the proceedings given is by general

notice to all persons interested.

The supreme court Massachusetts, in the case of Tyler vs. Judges (supra), did not rest its judgment as to the conclusive

effect of the decree upon the ground that the State has absolute power to determine the persons to whom a man's

property shall go at his death, but upon the characteristics of a proceeding in rem. So we conclude that the proceedings

had in the case at bar, under all the facts and circumstances, especially the absolute lack on the part of the petitioners of

any dishonest intent to deprive the appellee of any right, or in any way injure him, constitute due process of law.

As to whether or not the appellee can succesfully maintain an action under the provisions of sections 101 and 102 of the

Land Registration Act (secs. 2365, 2366, Compilation) we do not decide.

For these reasons we are of the opinion, and so hold, that the judgment appealed from should be, and the same is

hereby reversed and judgment entered in favor of the petitioners in conformity with the decree of the lower court of

February 12, 1908, without special ruling as to costs. It is so ordered.

Arellano, C.J., Torres, Johnson and Moreland, JJ.,concur.


SUPREME COURT

Manila

FIRST DIVISION

G.R. No. 114299 September 24, 1999

TRADERS ROYAL BANK, petitioner,

vs.

HON. COURT OF APPEALS, PATRIA, RUBY ANN, MARGARITA, ROSARIO, CYNTHIA, LINDA JOY, all surnamed CAPAY and

RAMON A. GONZALES,respondents.

G.R. No. 118862 September 24, 1999


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PATRIA, RUBY ANN, MARGARITA, ROSARIO, CYNTHIA, LINDA JOY, all surnamed CAPAY, and RAMON A.

GONZALES, petitioners,

vs.

SPS. HONORATO D. SANTOS and MARIA CRISTINA S. SANTOS, SPS. CECILIO L. PE and JOSEFINA L. PE, FLORA LARON

WESCOMBE, SPS. TELESFORO P. ALFELOR II and LIZA R. ALFELOR, SPS. DEAN RODERICK FERNANDO and LAARNI

MAGDAMO FERNANDO, REMEDIOS OCA, DEVELOPMENT BANK OF THE PHILIPPINES and TRADERS ROYAL

BANK, respondents.

KAPUNAN,J.:

The present controversy has its roots in a mortgage executed by the spouses Maximo and Patria Capay in favor of

Traders Royal Bank (TRB) pursuant to a loan extended by the latter to the former. The mortgage covered several

properties, including a parcel of land, the subject of the present

dispute. 1The loan became due on January 8, 1964 and the same having remained unpaid, TRB instituted extra-judicial

foreclosure proceedings upon the mortgaged property.

To prevent the property's sale by public auction, the Capays, on September 22, 1966, filed a petition for prohibition with

preliminary injunction (Civil Case No. Q-10453) before the Court of First Instance (CFI) of Rizal, alleging that themortgage was void since they did not receive the proceeds of the loan. The trial court initially granted the Capays' prayer

for preliminary injunction.

On March 17, 1967, the Capays caused to be filed in the Register of Deeds of Baguio City a notice of lis pendensover the

disputed property. Said notice was entered in the Day Book, as well as in the Capays' certificate of title.

Subsequently, the injunction issued by the trial court was lifted thus allowing the foreclosure sale to proceed.

Foreclosure proceedings were initiated and on October 17, 1968, the property was sold to TRB which was the highest

bidder at the auction sale. A sheriff certificate of sale was issued in its name on the same day. On February 25, 1970, the

property was consolidated in the name of TRB, the sole bidder in the sale. TCT No. T-6595 in the name of the Capay

spouses was then cancelled and a new one, TCT No. T-16272, 2was entered in the bank's name. The notice of lis

pendens, however, was not carried over in the certificate of title issued in the name TRB.

Thereafter, the Capays filed with the CFI a supplemental complaint praying for the recovery of the property with

damages and attorney's fees. Trial in Civil Case No. Q-10453 proceeded and, on October 3, 1977, the CFI rendered its

decision declaring the mortgage void for want of consideration. The CFI ordered, among other things, the cancellation of

TCT No. T-16272 in the name of TRB and the issuance of new certificates of title in the name of the Capay spouses.

TRB appealed to the Court of Appeals. While the case was pending in the Court of Appeals, TRB on March 17, 1982 sold

the land to Emelita Santiago in whose name a new certificate of title, TCT No. 33774, 3was issued, also, without any

notice of lis pendensannotated thereon. Santiago in turn divided the land into six (6) lots and sold these to Marcial

Alcantara, Armando Cruz and Artemio Sanchez, who became co-owners thereof. 4Alcantara and his co-owners

developed the property and thereafter sold the six (6) lots to seperate buyers who issued seperate titles, again, bearingno notice of lis pendens. 5

On July 30, 1982, the Court of Appeals rendered its decision modifying the decision of the trial court as to the award of

damages but affirming the same in all other respects.

For having been filed out of time and for lack of merit, the petition for certiorarifiled by TRB before this Court 6was

denied in a Resolution dated September 12, 1983. TRB's motion for reconsideration was similarly denied in a Resolution

dated October 12, 1983. The Court's September 12, 1983 Resolution having become final and executory on November 9,

1983, the trial court issued a writ of execution directing the Register of Deeds of Baguio City to cancel TCT No. 16272 in

the name of TRB, and to issue a new one in the name of the Capay spouses.


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Said writ, however, could not be implemented because of the successive subsequent transfers of the subdivided

property to buyers who obtained separate titles thereto. Thus, a complaint for recovery of possession ownership dated

8 June 1985 was filed before the Quezon City Regional Trial Court against TRB and the subsequent transferees of the

property, the respondents in G.R. No. 118862 (hereinafter, "the non-bank respondents"). Plaintiffs in said case were

Patria Capay, her children by Maximo 7who succeeded him upon his death on August 25, 1976, and Ramon Gonzales,

counsel of the spouses in Civil Case No. Q-10453 who become co-owner of the property to the extent of 35% thereof as

his attorney's fees (collectively, "the Capays"). On March 27, 1991, the trial court rendered its decision, the dispositive

portion of which states:

WHEREFORE, judgment is hereby rendered in favor of the plaintiffs against the defendants and

ordering the Register of Deeds for Baguio to cancel TCT No. T-36177, Books 198, Page 177 in the

names of defendants Spouses Honorato D. Santos and Maria Cristina Santos; to cancel TCT No.

36707, Book 201, Page 107 in the names of defendant Spouses Cecilio Pe and Josefina L. Pe; to

cancel TCT No. T-36051, Book 198, Page 51 in the name of Flora Laron Wescombe, married to

Kevin Lind Wescombe (now deceased); to cancel TCT No. 36147, Book 198, page 147 in the

names of Spouses Telesforo P. Alfelor II and Liza R. Alfelor; to cancel TCT No. T-36730, Book 201,

Page 130 in the names of Spouses Dean Roderick Fernando and Laarni Magdamo Fernando; to

cancel TCT No. 37437, Book 205, Page 37 in the name of Remedios Oca, and issue new ones free

from all liens and encumbrances, together with all the improvements therein in the names of

plaintiffs sharingpro indiviso as follows: 35% to Ramon A. Gonzales, married to Lilia Y. Gonzales,

of legal age, with postal address at 23 Sunrise Hill, New Manila, Quezon City 37.92% to Patria B.

Capay, of legal age, widow, Filipino; 5.41% each to Ruby Ann Capay, of legal age, Filipino married

to Pokka Vainio, Finnish citizen; Chona Margarita Capay, of legal age, Filipino, married to Waldo

Flores; Rosario Capay of legal age, Filipino, married to Jose Cuaycong, Jr.; Cynthia Capay, of legal

age, Filipino, married to Raul Flores; Linda Joy Capay, of legal age, Filipino, married to Pedro

Duran, all with postal address at 37 Sampaguita St., Capitolville Subd., Bacolod City, ordering

said defendants to vacate the premises in question and restoring plaintiffs thereto and for

defendant Traders Royal Bank to pay each of the plaintiffs moral damages in the amount of

P100,000.00, P40,000.00 in exemplary damages and P40,000.00 as attorney's fees, all with legal

interest from the filing of the complaint, with costs against defendants.

SO ORDERED. 8

TRB and the non-bank respondents appealed to the Court of Appeals. In a Decision promulgated on February 24, 1994 in

CA-G.R. CV No. 33920, the appellate court affirmed the decision of the trial court in toto. 9It ruled that the non-bank

respondents cannot be considered as purchasers for value and in good faith, having purchased the property subsequent

to the action in Civil Case No. Q-10453 and that while the notice of lis pendenswas not carried over to TRB's certificate

of title, as well as to the subsequent transferees' titles, it was entered in the Day Book which is sufficient to constitute

registration and notice to all persons of such adverse claim, citing the cases of Villasor vs. Camon, 10Levin vs.

Bass11and Director of Lands vs. Reyes. 12

As regard TRB, the Court of Appeals said that the bank was in bad faith when it sold the property knowing that it was

under the litigation and without informing the buyer of that fact.

On April 26, 1994, TRB filed with this Court a petition for review to set aside the CA decision, docketed herein as G.R. No

114299, invoking the following grounds:

I.

THE RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE AND SERIOUS

ERROR OF LAW IN PROMULGATING THE DISPUTED DECISION AND THEREBY DECIDED A

QUESTION OF SUBSTANCE WHOLLY CONTRARY TO SETTLED JURISPRUDENCE AND


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TOTALLY NOT IN ACCORD WITH APPLICABLE DECISION OF THIS HONORABLE SUPREME

COURT.

II.

THE RESPONDENT HONORABLE COURT OF APPEALS HAS COMMITTED SO GRAVE AND

SERIOUS ERRORS OF LAW IN SANCTIONING A DEPARTURE FROM THE USUAL AND

ACCEPTED COURSE OF JUDICIAL PROCEEDING AS TO CALL FOR THE EXERCISE OF THE

POWER OF BY THIS HONORABLE SUPREME COURT.

a) The public respondent has plainly and manifestly acted whimsically, arbitrarily,

capriciously, with grave abuse of discretion, in excess of jurisdiction tantamount to lack

of jurisdiction.

xxx xxx xxx

b) The public respondent erred in not finding that it was not the fault of petitioner when

the notice of lis pendenswas not carried over to its new title.

xxx xxx xxx

c) The public respondent erred in not finding that PD No. 1271 had legally caused the

invalidation of the Capay's property and the subsequent validation of TRB's title over

the same property was effective even as against the Capays. 13

Meanwhile, the non-bank respondents moved for a reconsideration of the Court of Appeals' decision. Convinced of the

movants' arguments, the Court of Appeals in a Resolution promulgated on August 10, 1994 granted the motion for

reconsideration and dismissed the complaint as against them. The dispositive portion of the resolution states:

ACCORDINGLY, in view of the foregoing disquisitions and finding merit in the motion for reconsideration

the same is hereby GRANTED. Consequently, the decision of this Court, promulgated on February 24,

1994, is hereby RECONSIDERED. The complaint filed against defendants-appellants with the court a

quois hereby ordered DISMISSED, and the certificate of titles originally issued to them in their individual

names are hereby ordered restored and duly respected. We make no pronouncement as to costs.

SO ORDERED. 14

The Capays thus filed with this Court a petition for review, docketed as G.R. No. 118862 to set aside the resolution of the

Court of Appeals raising the following errors:

I

THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW HOLDING THAT TUAZON VS.REYES, 48 PHIL. 814 ANDRIVERA VS. MORAN, 48 PHIL. 836 ARE NOT APPLICABLE HEREOF, WHILE PINO

VS. COURT OF APPEALS, 198 SCRA 436, IS APPLICABLE.

II

THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW HOLDING THATATUN VS.

MUNOZ, 97 PHIL. 762 AND LAROZA VS. GUIA, 134 SCRA 34, ARE NOT APPLICABLE.

III


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