G.R. No. L-19545 April 18, 1975 PHILIPPINE SUBURBAN DEVELOPMENT CORPORATION, petitioner, vs. THE AUDITOR GENERAL, PEDRO M. GIMENEZ, respondent. ANTONIO, J.: Appeal by certiorari from the decision dated December 11, 1961, of then Auditor General Pedro M. Gimenez, disallowing the request of petitioner for the refund of real estate tax in the amount of P30,460.90 paid to the Provincial Treasurer of Bulacan. The facts of the case are as follows: On June 8, 1960, at a meeting with the Cabinet, the President of the Philippines, acting on the reports of the Committee created to survey suitable lots for relocating squatters in Manila and suburbs, and of the Social Welfare Administrator together with the recommendation of the Manager of the Government Service Insurance System, approved in principle the acquisition by the People's Homesite and Housing Corporation of the unoccupied portion of the Sapang Palay Estate in Sta. Maria, Bulacan for relocating the squatters who desire to settle north of Manila, and of another area either in Las Pias or Paraaque, Rizal, or Bacoor, Cavite for those who desire to settle south of Manila. The project was to be financed through the flotation of bonds under the charter of the PHHC in the amount of P4.5 million, the same to be absorbed by the Government Service Insurance System. The President, through the Executive Secretary, informed the PHHC of such approval by letter bearing the same date (Annex "B"). On June 10, 1960, the Board of Directors of the PHHC passed Resolution No. 700 (Annex "C") authorizing the purchase of the unoccupied portion of the Sapang Palay Estate at P0.45 per square meter "subject to the following conditions precedent: t.hqw 1. That the confirmation by the OEC and the President of the purchase price of P0.45 per sq. m. shall first be secured, pursuant to OEC Memorandum Circular No. 114, dated May 6, 1957. 2. That the portion of the estate to be acquired shall first be defined and delineated. 3. That the President of the Philippines shall first provide the PHHC with the necessary funds to effect the purchase and development of this property from the proposed P4.5 million bond issue to be absorbed by the GSIS. 4. That the contract of sale shall first be approved by the Auditor General pursuant to Executive Order dated February 3, 1959. 5. The vendor shall agree to the dismissal with prejudice of Civil Case No. Q-3332 C.F.I. Quezon City, entitled "Phil. Suburban Dev. Corp. V. Ortiz, et al." On July 13, 1960, the President authorized the floating of bonds under Republic Act Nos. 1000 and 1322 in the amount of P7,500,000.00 to be absorbed by the GSIS, in order to finance the acquisition by the PHHC of the entire Sapang Palay Estate at a price not to exceed P0.45 per sq. meter. On December 29,1960, after an exchange of communications, Petitioner Philippine Suburban Development Corporation, as owner of the unoccupied portion of the Sapang Palay Estate (specifically two parcels covered by TCT Nos. T-23807 and T-23808), and the People's Homesite and Housing Corporation, entered into a contract embodied in a public instrument entitled "Deed of Absolute Sale" (Annex "F") whereby the former conveyed unto the latter the two parcels of land abovementioned, under the following terms and conditions, among others: t.hqw 1. That for and in consideration of the sum of THREE MILLION THREE HUNDRED EIGHTY-SIX THOUSAND TWO HUNDRED TWENTY THREE (P3,386,223.00) PESOS, Philippine currency, to be paid by the VENDEE to the herein VENDOR in the manner outlined hereinbelow, the VENDOR by these presents does hereby sell, transfer and convey by way of absolute sale unto the VENDEE, its successors, administrators or assigns, the above described two (2) parcels of land, together with all the improvements existing thereon; 2. That the payment of the consideration mentioned in paragraph 1 above shall be made as follows: (a) The vendee is presently negotiating or securing from the GOVERNMENT SERVICE INSURANCE SYSTEM, by virtue of a directive of the President of the Philippines, a loan for the purchase of the above described two (2) parcels of land in anticipation of the purchase by the said GOVERNMENT SERVICE INSURANCE SYSTEM of the bonds to be floated by the National Government to enable the VENDEE to make this purchase, and from whatever amount may be granted as loan by the GOVERNMENT SERVICE INSURANCE SYSTEM to the VENDEE, ONE MILLION SEVEN HUNDRED TEN THOUSAND (P1,710,000.00) PESOS shall be retained by the said VENDEE for the purpose of paying and clearing the existing lien annotated at the back of the aforesaid Transfer Certificates of Title Nos. T-23807 and T-23808, said payment to be made directly to the MORTGAGEES and the difference shall be paid to the VENDOR, provided that this first payment shall not be less than ONE MILLION SEVEN HUNDRED TEN THOUSAND (P1,710,000.00) PESOS and the VENDOR is hereby

constituted as Attorney-in-fact and authorized to receive from, and the GOVERNMENT SERVICE INSURANCE SYSTEM is directed to pay the balance of the loan direct to the herein VENDOR chargeable against VENDEE's loan from the GOVERNMENT SERVICE INSURANCE SYSTEM; provided, however, That should this amount be more than sufficient to cover the said mortgage lien, the VENDEE shall pay the difference to the VENDOR; and provided, further, That the VENDOR shall take charge of the preparation and registration of the documents necessary in clearing the above referred to mortgage lien, with the understanding that the expenses for preparation, notarization, registration, including documentary stamps, and other expenses for the cancellation of said mortgage lien shall be for the account of the VENDOR and shall be advanced by the VENDEE to the VENDOR; (b) That out of the sum of P1,710,000.00 to be retained by the VENDEE mentioned in the immediately preceding paragraph 2(a) for the purpose of discharging the said mortgage lien, the VENDEE shall deduct and further retain or keep as a trust fund the amount of FORTY THOUSAND (P40,000) PESOS, Philippine Currency, to answer for the remaining Notice of Lis Pendens annotated at the back of Transfer Certificate of Title Nos. T-23807 and T-23808 until such lien shall have been discharged or cancelled, the VENDEE binding itself to deliver forthwith the said amount of P40,000.00 unto the successful party involved in said Notice of Lis Pendens; (c) The remaining balance of the total consideration in the amount of ONE MILLION SIX HUNDRED SEVENTY-SIX THOUSAND TWO HUNDRED TWENTY-THREE PESOS (P1,676,223.00), Philippine Currency, or whatever amount is not paid by virtue of the first payment mentioned in paragraph (a) above, shall be paid by the VENDEE unto the VENDOR immediately upon the VENDEE's obtaining sufficient funds from proceeds of bonds floated by the VENDEE or the Government for the purchase of the properties subject of this transaction; provided, however, That full and complete payment of the balance mentioned in this particular paragraph 2(c) shall be made or paid by the VENDEE within a period of sixty (60) days from date of delivery of title by the VENDOR in the name of the VENDEE; and provided, further, That this sixty (60) days period may be extended for another period of sixty (60) days upon written request by the VENDEE at least five (5) days prior to the expiration of the said sixty (60) days period. Should there be instituted any legal action, however, for the collection of any amounts due from the VENDEE in favor of the VENDOR, the VENDEE binds itself to pay unto the VENDOR a sum equivalent to twenty-five (25%) per centum of the total balance due from the, VENDEE in favor of the VENDOR as and by way of attorney's fees, and the costs of suit; 3. That the VENDOR hereby warrants to defend the title and ownership of the VENDEE to the two (2) parcels of land above described from any claim or claims of third parties whomsoever; (4.) That all expenses for the preparation and notarization of this document shall be for the account of the VENDOR; provided, however, That registration and issuance of certificates of title in the name of the VENDEE shall be for the account of the VENDEE." (Annex "F") The above document was not registered in the Office of the Register of Deeds until March 14, 1961, due to the fact, petitioner claims, that the PHHC could not at once advance the money needed for registration expenses. In the meantime, the Auditor General, to whom a copy of the contract had been submitted for approval in conformity with Executive Order No. 290, expressed objections thereto and requested a re-examination of the contract, in view of the fact that from 1948 to December 20, 1960, the entire hacienda was assessed at P131,590.00, and reassessed beginning December 21, 1960 in the greatly increased amount of P4,898,110.00. Said objections were embodied in a letter to the President, dated January 9, 1961, but this notwithstanding, the President, through the Executive Secretary, approved the Deed of Absolute Sale on February 1, 1961. It appears that as early as the first week of June, 1960, prior to the signing of the deed by the parties, the PHHC acquired possession of the property, with the consent of petitioner, to enable the said PHHC to proceed immediately with the construction of roads in the new settlement and to resettle the squatters and flood victims in Manila who were rendered homeless by the floods or ejected from the lots which they were then occupying (Annexes "D" and "D-1"). On April 12, 1961, the Provincial Treasurer of Bulacan requested the PHHC to withhold the amount of P30,099.79 from the purchase price to be paid by it to the Philippine Suburban Development Corporation. Said amount represented the realty tax due on the property involved for the calendar year 1961 (Annex "G"). Petitioner, through the PHHC, paid under protest the abovementioned amount to the Provincial Treasurer of Bulacan and thereafter, or on June 13, 1961, by letter, requested then Secretary of Finance Dominador Aytona to order a refund of the amount so paid. Petitioner claimed that it ceased to be the owner of the land in question upon the execution of the Deed of Absolute Sale on December 29, 1960. Upon recommendation of the Provincial Treasurer of Bulacan, said request was denied by the Secretary of Finance in a letter-decision dated August 22, 1961. Pertinent portions of this decision are quoted hereunder: t.hqw .... the records show that the deed of sale executed on December 29, 1960 ... was approved by the President upon favorable recommendation of the Cabinet and the Committee created for the purpose of surveying suitable lots which may be acquired for relocating squatters in Manila on February 1, 1961 only and that said instrument of sale was registered with the Register of Deeds on March 14, 1961. That Corporation, as vendor, maintains that in view of the execution of the deed of sale on December 29, 1960 it ceased to be the owner of the property involved and that consequently it was under no obligation to pay the real property tax thereon effective January 1, 1961. In support of its stand, that Corporation cites Article 1498 of the New Civil Code of the

Philippines which provides that "when the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred" and Article 1496 of the same Code which states that "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 the vendee." On the other hand, the Provincial Treasurer contends that, as under the Land Registration Act (Act No. 496) the Philippine Suburban Development Corporation is still the owner of the property until the deed of sale covering the same has been actually registered, the vendor is still liable to the payment of real property tax for the calendar year 1961. It is now claimed in this appeal that the Auditor General erred in disallowing the refund of the real estate tax in the amount of P30,460.90 because aside from the presumptive delivery of the property by the execution of the deed of sale on December 29, 1960, the possession of the property was actually delivered to the vendee prior to the sale, and, therefore, by the transmission of ownership to the vendee, petitioner has ceased to be the owner of the property involved, and, consequently, under no obligation to pay the real property tax for the year 1961. Respondent, however, argues that the presumptive delivery of the property under Article 1498 of the Civil Code does not apply because of the requirement in the contract that the sale shall first be approved by the Auditor General, pursuant to the Executive Order dated February 3, 1959 and later by the President, and that the petitioner should register the deed and secure a new title in the name of the vendee before the government can be compelled to pay the balance of P1,676,223.00 of the purchase price. Respondent further contends that since the property involved is a land registered under the Land Registration Act (Act No. 496), until the deed of sale has been actually registered, the vendor remains as the owner of the said property, and, therefore, liable for the payment of real property tax. We find the petition meritorious. I . It cannot be denied that the President of the Philippines, on June 8, 1960, at his Cabinet meeting, approved and authorized the purchase by the national government, through the PHHC, of the unoccupied portion of the property of petitioner; that on June 10, 1960, the PHHC, acting pursuant to the aforecited approval of the President, passed its Resolution No. 700 approving and authorizing the purchase of the unoccupied portion of said property; and that after the PHHC took possession of the aforementioned property on the first week of June, 1960 to use it as a resettlement area for squatters and flood victims from Manila and suburbs, the President of the Philippines at his Cabinet meeting on June 13, 1960, approved and authorized the purchase by the PHHC of the entire property consisting of 752.4940 hectares, instead of only the unoccupied portion thereof as was previously authorized. Considering the aforementioned approval and authorization by the President of the Philippines of the specific transaction in question, and the fact that the contract here involved which is for a special purpose to meet a special situation was entered into precisely to implement the Presidential directive, the prior approval by the Auditor General envisioned by Administrative Order No. 290, dated February 3, 1959, would therefore, not be necessary. As We held in Federation of the United NAMARCO Distributors v. National Marketing Corporation, 1 the approval by the Auditor General contemplated by Administrative Order No. 290 dated February 3, 1959, refers to contracts in general, ordinarily entered into by government offices and government-owned or controlled corporations, and not to a contract for a special purpose, to meet a special situation and entered into in implementation of a Presidential directive to solve and emergency. In other words, where the contract already bears the approval of the President, the action of the Auditor General would no longer be necessary because under the said Administrative Order, the President has, at any rate, the final say. II Under the civil law, delivery (tradition) as a mode of transmission of ownership maybe actual (real tradition) or constructive (constructive tradition). 2 When the sale of real property is made in a public instrument, the execution thereof is equivalent to the delivery of the thing object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred. 3 In other words, there is symbolic delivery of the property subject of the sale by the execution of the public instrument, unless from the express terms of the instrument, or by clear inference therefrom, this was not the intention of the parties. Such would be the case, for instance, when a certain date is fixed for the purchaser to take possession of the property subject of the conveyance, or where, in case of sale by installments, it is stipulated that until the last installment is made, the title to the property should remain with the vendor, or when the vendor reserves the right to use and enjoy the properties until the gathering of the pending crops, 4 or where the vendor has no control over the thing sold at the moment of the sale, and, therefore, its material delivery could not have been made. 5 In the case at bar, there is no question that the vendor had actually placed the vendee in possession and control over the thing sold, even before the date of the sale. The condition that petitioner should first register the deed of sale and secure a new title in the name of the vendee before the latter shall pay the balance of the purchase price, did not preclude the transmission of ownership. In the absence of an express stipulation to the contrary, the payment of the

purchase price of the good is not a condition, precedent to the transfer of title to the buyer, but title passes by the delivery of the goods. 6 III . We fail to see the merit in respondent's insistence that, although possession was transferred to the vendee and the deed of sale was executed in a public instrument on December 29, l960, the vendor still remains as owner of the property until the deed of sale is actually registered with the Office of the Register of Deeds, because the land sold is registered under the Torrens System. In a long line of cases already decided by this Court, the constant doctrine has been that, as between the parties to a contract of sale, registration is not necessary to make it valid and effective, for actual notice is equivalent to registration. 7 Indeed, Section 50 of the Land Registration Act provides that, even without the act of registration, a deed purporting to convey or affect registered land shall operate as a contract between the parties. The registration is intended to protect the buyer against claims of third persons arising from subsequent alienations by the vendor, and is certainly not necessary to give effect to the deed of sale, as between the parties to the contract. 8 The case of Vargas v. Tancioco, 9 cited by respondent, refers to a case involving conflicting rights over registered property and those of innocent transferees who relied on the clean titles of the properties in question. It is, therefore, not relevant to the case at bar. In the case at bar, no rights of third persons are involved, much less is there any subsequent alienation of the same property. It is undisputed that the property is in the possession of the vendee, even as early as the first week of June, 1960, or six (6) months prior to the execution of the Deed of Absolute Sale on December 29, 1960. Since the delivery of possession, coupled with the execution of the Deed of Absolute Sale, had consummated the sale and transferred the title to the purchaser, 10 We, therefore, hold that the payment of the real estate tax after such transfer is the responsibility of the purchaser. However, in the case at bar, the purchaser PHHC is a government entity not subject to real property tax. 11 WHEREFORE, the appealed decision is hereby reversed, and the real property tax paid under protest to the Provincial Treasurer of Bulacan by petitioner Philippine Suburban Development Corporation, in the amount of P30,460,90, is hereby ordered refunded. Without any pronouncement as to costs. G.R. No. L-33397 June 22, 1984 ROMEO F. EDU, in his capacity as Commissioner of Land Transportation, EDUARDO DOMINGO, CARLOS RODRIGUEZ and PATRICIO YAMBAO in their capacity as ANCAR Agents, petitioners, vs. HONORABLE AMADOR E. GOMEZ, in his capacity as Judge of the Court of First Instance of Manila, Branch 1, THE SHERIFF of Quezon City, and LUCILA ABELLO, respondents. RELOVA, J.: Subject matter of this case is a 1968 model Volkswagen, bantam car, Engine No. H-5254416, Chassis No. 118673654, allegedly owned by Lt. Walter A. Bala of Clark Airbase, Angeles City, under whose name the car was allegedly registered on May 19, 1970 at the Angeles City Land Transportation Commission Agency, under File No. 2B-7281. The Office of the Commission on Land Transportation received a report on August 25, 1970 from the Manila Adjustment Company that the abovementioned car was stolen on June 29, 1970 from the residence of Lt. Bala, at 63 Makiling Street, Plaridel Subdivision, Angeles City. Petitioners Eduardo Domingo, Carlos Rodriguez, and Patricio Yambao, agents of Anti-Carnapping Unit (ANCAR) of the Philippine Constabulary, on detail with the Land Transportation Commission, on February 2, 1971, recognized subject car in the possession of herein private respondent Lucila Abello and immediately seized and impounded the car as stolen property. Likewise, herein petitioner Romeo F. Edu, then Commissioner of Land Transportation, seized the car pursuant to Section 60 of Republic Act 4136 which empowers him to seize the motor vehicle for delinquent registration aside from his implicit power deducible from Sec. 4(5), Sec. 5 and 31 of said Code, "to seize motor vehicles fraudulently or otherwise not properly registered." On February 15, 1971, herein private respondent Lucila Abello filed a complaint for replevin with damages in respondent court, docketed as Civil Case No. 82215, impleading herein petitioners, praying for judgment, among others, to order the sheriff or other proper officer of the court to take the said property (motor vehicle) into his custody and to dispose of it in accordance with law. On February 18, 1971, respondent judge of the then Court of First Instance of Manila issued the order for the seizure of the personal property. Solicitor Vicente Torres, appearing for the herein petitioners, submits that the car in question legally belongs to Lt. Walter A. Bala under whose name it is originally registered at Angeles City Land Transportation Commission Agency; that it was stolen from him and, upon receipt by the Land Transportation Commissioner of the report on the theft case and that the car upon being recognized by the agents of the ANCAR in the possession of private respondent Lucila Abello, said agents seized the car and impounded it as stolen vehicle. With respect to the replevin filed by private respondent Lucila Abello, respondent Court of First Instance Judge found that the car in question was acquired by Lucila Abello by purchase from its registered owner, Marcelino Guansing, for the valuable consideration of

P9,000.00, under the notarial deed of absolute sale, dated August 11, 1970; that she has been in possession thereof since then until February 3, 1971 when the car was seized from her by the petitioners who acted in the belief that it is the car which was originally registered in the name of Lt. Walter A. Bala and from whom it was allegedly stolen sometime in June 1970. Finding for the private respondent, respondent judge held that The complaint at bar is for replevin, or for the delivery of personal property, based on the provisions of Rule 60, Sections 1 and 2 of the Rules of Court. All the requirements of the law are present in the verified averments in the complaint, viz: 1. That plaintiff is the owner of the automobile in question.- petition. 2. That the aforesaid property was seized from her against her will not for a tax assessment or fine pursuant to law, not under a writ of execution or attachment against her properties; 3. That the property is wrongfully detained by the defendants, who allegedly seized it from her on February 3, 1971, "allegedly for the purpose of verifying the same" (see par. 3, Complaint), but have refused since then until now to return the same to the plaintiff. 4. That plaintiff was ready to put up a bond in double the value of the car, and has in fact already put up an P18,000.00 bond to the defendants for the return thereof to the latter, if that shall be the ultimate judgment of the court, and to pay defendants damages that they may incur. The issuance therefore, by this Court of the order of seizure of the said chattel by the sheriff and for the latter to take it into his custody, is precisely pursuant to the existing law, governing the subject. If defendants object to the seizure, the remedy provided for by law is set out in Section 5 of Rule 60 and that is for them to put up a counter-bond for the same amount of P18,000.00, which is double the value of the car in question. Defendants may not ignore the law under the claim that, on complaint of a certain party, the Manila Adjustment Company, they have a right to seize the same as it appears to be the property that was stolen from Lt. Walter A. Bala several months ago. (p. 19, Rollo) There is no merit in the petition considering that the acquirer or the purchaser in good faith of a chattel of movable property is entitled to be respected and protected in his possession as if he were the true owner thereof until a competent court rules otherwise. In the meantime, as the true owner, the possessor in good faith cannot be compelled to surrender possession nor to be required to institute an action for the recovery of the chattel, whether or not an indemnity bond is issued in his favor. The filing of an information charging that the chattel was illegally obtained through estafa from its true owner by the transferor of the bona fide possessor does not warrant disturbing the possession of the chattel against the will of the possessor. Finally, the claim of petitioners that the Commission has the right to seize and impound the car under Section 60 of Republic Act 4136 which reads: Sec. 60. The lien upon motor vehicles. Any balance of fees for registration, re-registration or delinquent registration of a motor vehicle, remaining unpaid and all fines imposed upon any vehicle owner, shall constitute a first lien upon the motor vehicle concerned. is untenable. it is clear from the provision of said Section 60 of Republic Act 4136 that the Commissioner's right to seize and impound subject property is only good for the proper enforcement of lien upon motor vehicles. The Land Transportation Commission may issue a warrant of constructive or actual distraint against motor vehicle for collection of unpaid fees for registration, re-registration or delinquent registration of vehicles. ACCORDINGLY, the petition is hereby DENIED. G.R. No. L-64159 September 10, 1985 CIRCE S. DURAN and ANTERO S. GASPAR, petitioners, vs. INTERMEDIATE APPELLATE COURT, ERLINDA B. MARCELO TIANGCO and RESTITUTO TIANGCO, respondents. RELOVA, J.: The respondent then Court of Appeals rendered judgment, modifying the decision of the then Court of First Instance of Rizal, which reads as follows: (1) the complaint of the plaintiffs (herein petitioners) is hereby DISMISSED;

(2) the defendants-appellants spouses Erlinda B. Marcelo Tiangco and Restituto Tiangco (herein private respondents) are hereby declared the lawful owners of the two (2) parcels of land and all the improvements thereon including the 12-door apartment thereon described in the complaint, in the counterclaim, in the cross-claim, and in the Sheriff's Certificate of Sale; (3) the plaintiffs-appellants and the defendant-appellee Fe S. Duran are hereby ordered to deliver to (the Tiangcos) the two parcels of land and all the improvements thereon including the 12-door apartment thereon, subject matter of the complaint, counterclaim, and cross-claim, and in the Sheriff's Certificate of Sale; (4) the plaintiffs-appellants and the defendant-appellee Fe S. Duran are hereby ordered to pay solidarily to the Tiangcos the sum of Two Thousand Four Hundred Pesos (P2,400) a month from May 16, 1972 until delivery of possession of the properties in question to said Tiangco spouses, representing rentals collected by plaintiffs-appellants and defendant- appellee Fe S. Duran; (5) the plaintiffs-appellants and defendant-appellee Fe S. Duran are hereby ordered to pay solidarily to the spouses Tiangco the sum of Twenty Thousand Pesos (P20,000) as damages for attorney's fees, and the sum of Twenty-Five Thousand Pesos (P25,000) for moral damages, and the costs. (pp. 149-150, Rollo) The antecedent facts showed that petitioner Circe S. Duran owned two (2) parcels of land (Lots 5 and 6, Block A, Psd 32780) covered by Transfer Certificate of Title No. 1647 of the Register of Deeds of Caloocan City which she had purchased from the Moja Estate. She left the Philippines in June 1954 and returned in May 1966. On May 13, 1963, a Deed of Sale of the two lots mentioned above was made in favor of Circe's mother, Fe S. Duran who, on December 3, 1965, mortgaged the same property to private respondent Erlinda B. Marcelo-Tiangco. When petitioner Circe S. Duran came to know about the mortgage made by her mother, she wrote the Register of Deeds of Caloocan City informing the latter that she had not given her mother any authority to sell or mortgage any of her properties in the Philippines. Failing to get an answer from the registrar, she returned to the Philippines. Meanwhile, when her mother, Fe S. Duran, failed to redeem the mortgage properties, foreclosure proceedings were initiated by private respondent Erlinda B. Marcelo Tiangco and, ultimately, the sale by the sheriff and the issuance of Certificate of Sale in favor of the latter. Petitioner Circe S. Duran claims that the Deed of Sale in favor of her mother Fe S. Duran is a forgery, saying that at the time of its execution in 1963 she was in the United States. On the other hand, the adverse party alleges that the signatures of Circe S. Duran in the said Deed are genuine and, consequently, the mortgage made by Fe S. Duran in favor of private respondent is valid. With respect to the issue as to whether the signature of petitioner Circe S. Duran in the Deed of Sale is a forgery or not, respondent appellate court held the same to be genuine because there is the presumption of regularity in the case of a public document and "the fact that Circe has not been able to satisfactorily prove that she was in the United States at the time the deed was executed in 1963. Her return in 1966 does not prove she was not here also in 1963, and that she did not leave shortly after 1963. She should have presented her old passport, not her new one. But even if the signatures were a forgery, and the sale would be regarded as void, still it is Our opinion that the Deed of Mortgage is VALID, with respect to the mortgagees, the defendants-appellants. While it is true that under Art. 2085 of the Civil Code, it is essential that the mortgagor be the absolute owner of the property mortgaged, and while as between the daughter and the mother, it was the daughter who still owned the lots, STILL insofar as innocent third persons are concerned the owner was already the mother (Fe S. Duran) inasmuch as she had already become the registered owner (Transfer Certificates of Title Nos. 2418 and 2419). The mortgagee had the right to rely upon what appeared in the certificate of title, and did not have to inquire further. If the rule were otherwise, the efficacy and conclusiveness of Torrens Certificate of Titles would be futile and nugatory. Thus the rule is simple: the fraudulent and forged document of sale may become the root of a valid title if the certificate has already been transferred from the name of the true owner to the name indicated by the forger (See De la Cruz v. Fable, 35 Phil. 144; Blondeau et al. v. Nano et al., 61 Phil. 625; Fule et al. v. Legare et al., 7 SCRA 351; see also Sec. 55 of Act No. 496, the Land Registration Act). The fact that at the time of the foreclosure sale proceedings (1970-72) the mortgagees may have already known of the plaintiffs' claim is immaterial. What is important is that at the time the mortgage was executed, the mortgagees in good faith actually believed Fe S. Duran to be the owner, as evidenced by the registration of the property in the name of said Fe S. Duran (pp. 146-147, Rollo)." In elevating the judgment of the respondent appellate court to Us for review, petitioners discussed questions of law which, in effect and substance, raised only one issue and that is whether private respondent Erlinda B. Marcelo-Tiangco was a buyer in good faith and for value. 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 the owner of the same and could convey his title (Arriola vs. Gomez dela Serna, 14 Phil. 627). 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 (Santiago vs. Cruz, 19 Phil. 148). There is good faith where there is an honest intention to abstain from taking any unconscientious advantage from another (Fule vs. Legare, 7 SCRA 351). 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. In the case at bar, private respondents, in good faith relied on the certificate of title in the name of Fe S. Duran and as aptly stated by respondent appellate

court "[e]ven on the supposition that the sale was void, the general rule that the direct result of a previous illegal contract cannot be valid (on the theory that the spring cannot rise higher than its source) cannot apply here for We are confronted with the functionings of the Torrens System of Registration. The doctrine to follow is simple enough: a fraudulent or forged document of sale may become the ROOT of a valid title if the certificate of title has already been transferred from the name of the true owner to the name of the forger or the name indicated by the forger." (p. 147, Rollo) Thus, where innocent third persons relying on the correctness of the certificate of title issued, acquire rights over the property, the court cannot disregard such rights and order the total cancellation of the certificate for that would impair public confidence in the certificate of title; otherwise everyone dealing with property registered under the torrens system would have to inquire in every instance as to whether the title had been regularly or irregularly issued by the court. Indeed, this is contrary to the evident purpose of the law. 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. Stated differently, an innocent purchaser for value relying on a torrens title issued is protected. A mortgagee has the right to rely on what appears in the certificate of title and, in the absence of anything to excite suspicion, he is under no obligation to look beyond the certificate and investigate the title of the mortgagor appearing on the face of said certificate. Likewise, We take note of the finding and observation of respondent appellate court in that petitioners were guilty of estoppel by laches "in not bringing the case to court within a reasonable period. Antero Gaspar, husband of Circe, was in the Philippines in 1964 to construct the apartment on the disputed lots. This was testified to by Circe herself (tsn., p. 41, Nov. 27, 1973). In the process of construction, specifically in the matter of obtaining a building permit, he could have discovered that the deed of sale sought to be set aside had been executed on May 13, 1963 (the building permit needed an application by the apparent owner of the land, namely, Circe's mother, Fe S. Duran). And then again both plaintiffs could have intervened in the foreclosure suit but they did not. They kept silent until almost the last moment when they finally decided, shortly before the sheriff's sale, to file a third-party claim. Clearly, the plaintiffs can be faulted for their estoppel by laches." (p. 148, Rollo) IN VIEW OF THE FOREGOING, We find the petition without merit and hereby AFFIRMED in toto the decision of respondent appellate court promulgated on August 12, 1981. G.R. No. L-12342 August 3, 1918 A. A. ADDISON, plaintiff-appellant, vs. MARCIANA FELIX and BALBINO TIOCO, defendants-appellees. FISHER, J.: By a public instrument dated June 11, 1914, the plaintiff sold to the defendant Marciana Felix, with the consent of her husband, the defendant Balbino Tioco, four parcels of land, described in the instrument. The defendant Felix paid, at the time of the execution of the deed, the sum of P3,000 on account of the purchase price, and bound herself to pay the remainder in installments, the first of P2,000 on July 15, 1914, and the second of P5,000 thirty days after the issuance to her of a certificate of title under the Land Registration Act, and further, within ten years from the date of such title P10, for each coconut tree in bearing and P5 for each such tree not in bearing, that might be growing on said four parcels of land on the date of the issuance of title to her, with the condition that the total price should not exceed P85,000. It was further stipulated that the purchaser was to deliver to the vendor 25 per centum of the value of the products that she might obtain from the four parcels "from the moment she takes possession of them until the Torrens certificate of title be issued in her favor." It was also covenanted that "within one year from the date of the certificate of title in favor of Marciana Felix, this latter may rescind the present contract of purchase and sale, in which case Marciana Felix shall be obliged to return to me, A. A. Addison, the net value of all the products of the four parcels sold, and I shall obliged to return to her, Marciana Felix, all the sums that she may have paid me, together with interest at the rate of 10 per cent per annum." In January, 1915, the vendor, A. A. Addison, filed suit in Court of First Instance of Manila to compel Marciana Felix to make payment of the first installment of P2,000, demandable in accordance with the terms of the contract of sale aforementioned, on July 15, 1914, and of the interest in arrears, at the stipulated rate of 8 per cent per annum. The defendant, jointly with her husband, answered the complaint and alleged by way of special defense that the plaintiff had absolutely failed to deliver to the defendant the lands that were the subject matter of the sale, notwithstanding the demands made upon him for this purpose. She therefore asked that she be absolved from the complaint, and that, after a declaration of the rescission of the contract of the purchase and sale of said lands, the plaintiff be ordered to refund the P3,000 that had been paid to him on account, together with the interest agreed upon, and to pay an indemnity for the losses and damages which the defendant alleged she had suffered through the plaintiff's non-fulfillment of the contract. The evidence adduced shows that after the execution of the deed of the sale the plaintiff, at the request of the purchaser, went to Lucena, accompanied by a representative of the latter, for the purpose of designating and delivering the lands sold. He was able to designate only two of the four parcels, and more than two-thirds of these two were found

to be in the possession of one Juan Villafuerte, who claimed to be the owner of the parts so occupied by him. The plaintiff admitted that the purchaser would have to bring suit to obtain possession of the land (sten. notes, record, p. 5). In August, 1914, the surveyor Santamaria went to Lucena, at the request of the plaintiff and accompanied by him, in order to survey the land sold to the defendant; but he surveyed only two parcels, which are those occupied mainly by the brothers Leon and Julio Villafuerte. He did not survey the other parcels, as they were not designated to him by the plaintiff. In order to make this survey it was necessary to obtain from the Land Court a writ of injunction against the occupants, and for the purpose of the issuance of this writ the defendant, in June, 1914, filed an application with the Land Court for the registration in her name of four parcels of land described in the deed of sale executed in her favor by the plaintiff. The proceedings in the matter of this application were subsequently dismissed, for failure to present the required plans within the period of the time allowed for the purpose. The trial court rendered judgment in behalf of the defendant, holding the contract of sale to be rescinded and ordering the return to the plaintiff the P3,000 paid on account of the price, together with interest thereon at the rate of 10 per cent per annum. From this judgment the plaintiff appealed. In decreeing the rescission of the contract, the trial judge rested his conclusion solely on the indisputable fact that up to that time the lands sold had not been registered in accordance with the Torrens system, and on the terms of the second paragraph of clause (h) of the contract, whereby it is stipulated that ". . . within one year from the date of the certificate of title in favor of Marciana Felix, this latter may rescind the present contract of purchase and sale . . . ." The appellant objects, and rightly, that the cross-complaint is not founded on the hypothesis of the conventional rescission relied upon by the court, but on the failure to deliver the land sold. He argues that the right to rescind the contract by virtue of the special agreement not only did not exist from the moment of the execution of the contract up to one year after the registration of the land, but does not accrue until the land is registered. The wording of the clause, in fact, substantiates the contention. The one year's deliberation granted to the purchaser was to be counted "from the date of the certificate of title ... ." Therefore the right to elect to rescind the contract was subject to a condition, namely, the issuance of the title. The record show that up to the present time that condition has not been fulfilled; consequently the defendant cannot be heard to invoke a right which depends on the existence of that condition. If in the cross-complaint it had been alleged that the fulfillment of the condition was impossible for reasons imputable to the plaintiff, and if this allegation had been proven, perhaps the condition would have been considered as fulfilled (arts. 1117, 1118, and 1119, Civ. Code); but this issue was not presented in the defendant's answer. However, although we are not in agreement with the reasoning found in the decision appealed from, we consider it to be correct in its result. The record shows that the plaintiff did not deliver the thing sold. With respect to two of the parcels of land, he was not even able to show them to the purchaser; and as regards the other two, more than two-thirds of their area was in the hostile and adverse possession of a third person. The Code imposes upon the vendor the obligation to deliver the thing sold. The thing is considered to be delivered when it is placed "in the hands and possession of the vendee." (Civ. Code, art. 1462.) It is true that the same article declares that the execution of a public instruments is equivalent to the delivery of the thing which is the object of the contract, but, in order that this symbolic delivery may produce the effect of tradition, it is necessary that the vendor shall have had such control over the thing sold that, at the moment of the sale, its material delivery could have been made. It is not enough to confer upon the purchaser the ownership and the right of possession. The thing sold must be placed in his control. When there is no impediment whatever to prevent the thing sold passing into the tenancy of the purchaser by the sole will of the vendor, symbolic delivery through the execution of a public instrument is sufficient. But if, notwithstanding the execution of the instrument, the purchaser cannot have the enjoyment and material tenancy of the thing and make use of it himself or through another in his name, because such tenancy and enjoyment are opposed by the interposition of another will, then fiction yields to reality the delivery has not been effected. As Dalloz rightly says (Gen. Rep., vol. 43, p. 174) in his commentaries on article 1604 of the French Civil code, "the word "delivery" expresses a complex idea . . . the abandonment of the thing by the person who makes the delivery and the taking control of it by the person to whom the delivery is made." The execution of a public instrument is sufficient for the purposes of the abandonment made by the vendor; but it is not always sufficient to permit of the apprehension of the thing by the purchaser. The supreme court of Spain, interpreting article 1462 of the Civil Code, held in its decision of November 10, 1903, (Civ. Rep., vol. 96, p. 560) that this article "merely declares that when the sale is made through the means of a public instrument, the execution of this latter is equivalent to the delivery of the thing sold: which does not and cannot mean that this fictitious tradition necessarily implies the real tradition of the thing sold, for it is incontrovertible that, while its ownership still pertains to the vendor (and with greater reason if it does not), a third person may be in possession of the same thing; wherefore, though, as a general rule, he who purchases by means of a public instrument should be deemed . . . to be the possessor in fact, yet this presumption gives way before proof to the contrary." It is evident, then, in the case at bar, that the mere execution of the instrument was not a fulfillment of the vendors' obligation to deliver the thing sold, and that from such non-fulfillment arises the purchaser's right to demand, as she has demanded, the rescission of the sale and the return of the price. (Civ. Code, arts. 1506 and 1124.)

Of course if the sale had been made under the express agreement of imposing upon the purchaser the obligation to take the necessary steps to obtain the material possession of the thing sold, and it were proven that she knew that the thing was in the possession of a third person claiming to have property rights therein, such agreement would be perfectly valid. But there is nothing in the instrument which would indicate, even implicitly, that such was the agreement. It is true, as the appellant argues, that the obligation was incumbent upon the defendant Marciana Felix to apply for and obtain the registration of the land in the new registry of property; but from this it cannot be concluded that she had to await the final decision of the Court of Land Registration, in order to be able to enjoy the property sold. On the contrary, it was expressly stipulated in the contract that the purchaser should deliver to the vendor one-fourth "of the products ... of the aforesaid four parcels from the moment when she takes possession of them until the Torrens certificate of title be issued in her favor." This obviously shows that it was not forseen that the purchaser might be deprived of her possession during the course of the registration proceedings, but that the transaction rested on the assumption that she was to have, during said period, the material possession and enjoyment of the four parcels of land. Inasmuch as the rescission is made by virtue of the provisions of law and not by contractual agreement, it is not the conventional but the legal interest that is demandable. It is therefore held that the contract of purchase and sale entered into by and between the plaintiff and the defendant on June 11, 1914, is rescinded, and the plaintiff is ordered to make restitution of the sum of P3,000 received by him on account of the price of the sale, together with interest thereon at the legal rate of 6 per annum from the date of the filing of the complaint until payment, with the costs of both instances against the appellant. So ordered. G.R. No. L-21998 November 10, 1975 CALIXTO PASAGUI and FAUSTA MOSAR, plaintiffs-appellants, vs. ESTER T. VILLABLANCA, ZOSIMO VILLABLANCA, EUSTAQUIA BOCAR and CATALINA BOCAR defendants-appellees. ANTONIO, J.: The only issue posed by this appeal is whether or not, from the nature of the action pleaded as appears in the allegations of the complaint, the aforesaid action is one of forcible entry, within the exclusive jurisdiction of the municipal court. . On February 4, 1963, appellants Calixto Pasagui and Fausta Mosar filed a complaint with the Court of First Instance at Tacloban City, alleging that onNovember 15, 1962, for and in consideration of Two Thousand Eight Hundred Pesos (P2,800.00), they bought from appellees Eustaquia Bocar and Catalina Bocar a parcel of agricultural land with an area of 2.6814 hectares, situated in Hamindangon, Pastrana, Leyte; that the corresponding document of sale was executed, notarized on the same date, and recorded in the Registry of Deeds of Tacloban, Leyte on November 16, 1962; that during the first week of February, 1963, defendant spouses Ester T. Villablanca and Zosimo Villablanca, "illegally and without any right, whatsoever, took possession of the above property harvesting coconuts from the coconut plantation thereon, thus depriving plaintiffs" of its possession; that despite demands made by the plaintiffs upon the above-mentioned defendants "to surrender to them the above-described property and its possession" the latter failed or refused to return said parcel of land to the former, causing them damage; and that Eustaquia and Catalina Bocar, vendors of the property, are included defendants in the complaint by virtue of the warranty clause contained in the document of sale. Plaintiffs prayed for a decision ordering defendants to surrender the possession of the parcel of land above-described to them and to pay damages in the amounts specified. . On February 21, 1963, appellees moved to dismiss the complaint on the ground that the Court of First Instance had no jurisdiction over the subject matter, the action being one of forcible entry. Appellants opposed the Motion to Dismiss asserting that the action is not one for forcible entry inasmuch as in the complaint, there is no allegation that the deprivation of possession was effected through "force, intimidation, threat, strategy or stealth." . On May 13, 1963, the trial court issued an order dismissing the complaint for lack of jurisdiction, it appearing from the allegations in the complaint that the case is one for forcible entry which belongs to the exclusive jurisdiction of the Justice of the Peace (now Municipal Court) of Pastrana, Leyte. The first Motion for Reconsideration was denied on May 27, 1963 and the second was likewise denied on July 5, 1963. From the aforementioned orders, appeal on a pure question of law was interposed to this Court. . It is well-settled that what determines the jurisdiction of the municipal court in a forcible entry case is the nature of the action pleaded as appears from the allegations in the complaint. In ascertaining whether or not the action is one of forcible entry within the original exclusive jurisdiction of the municipal court, the averments of the complaint and the character of the relief sought are the ones to be consulted.. 1 . In the case at bar, the complaint does not allege that the plaintiffs were in physical possession of the land and have been deprived of that possession through force, intimidation, threat, strategy, or stealth. It simply avers that plaintiffs-appellants bought on November 12, 1962 from defendants-appellees Eustaquia Bocar and Catalina Bocar the parcel of land in question for the amount of P2,800.00; that a deed of sale was executed, notarized and registered;that "during this first week of February, 1963, defendants Ester T. Villablanca and her husband, Zosimo Villablanca, illegally and without any right whatsoever, took possession of the above described property, harvesting coconuts from the coconut

plantation therein, thus depriving of its possession herein plaintiffs, and causing them damages for the amount of EIGHT HUNDRED PESOS (P800.00)"; that for the purpose of enforcing the vendors' warranty in case of eviction, Eustaquia Bocar and Catalina Bocar were also included as defendants; and, therefore, plaintiffs-appellants pray that a decision be rendered, ordering (a) defendants Ester T. Villablanca and her husband, Zosimo Villablanca, "to surrender the possession of the above described property to said plaintiffs"; (b) defendants Ester T. Villablanca and her husband, Zosimo Villablanca, "to pay to said plaintiffs the amount of EIGHT HUNDRED PESOS (P800.00) as damages for the usurpation by them of said property"; and (c) defendants Eustaquia Bocar and Catalina Bocar "to pay the plaintiffs the amount of P2,800.00, plus incidental expenses, as provided for by Art. 1555 of the Civil Code, in case of eviction or loss of ownership to said above described property on the part of plaintiffs." . It is true that the execution of the deed of absolute sale in a public instrument is equivalent to delivery of the land subject of the sale. 2 This presumptive delivery only holds true when there is no impediment that may prevent the passing of the property from the hands of the vendor into those of the vendee. It can be negated by the reality that the vendees actually failed to obtain material possession of the land subject of the sale.. 3 It appears from the records of the case at bar that plaintiffs-appellants had not acquired physical possession of the land since its purchase on November 12, 1962. As a matter of fact, their purpose in filing the complaint in Civil Case No. 3285 is precisely to "get the possession of the property." 4 In order that an action may be considered as one for forcible entry, it is not only necessary that the plaintiff should allege his prior physical possession of the property but also that he was deprived of his possession by any of the means provided in section 1, Rule 70 of the Revised Rules of Court, namely: force, intimidation, threats, strategy and stealth. For, if the dispossession did not take place by any of these means, the courts of first instance, not the municipal courts, have jurisdictions.. 5 The bare allegation in the complaint that the plaintiff has been "deprived" of the land of which he is and has been the legal owner for a long period has been held to be insufficient. 6 It is true that the mere act of a trespasser in unlawfully entering the land, planting himself on the ground and excluding therefrom the prior possessor would imply the use of force. In the case at bar, no such inference could be made as plaintiffs-appellants had not claimed that they were in actual physical possession of the property prior to the entry of the Villablancas. Moreover, it is evident that plaintiffs-appellants are not only seeking to get the possession of the property, but as an alternative cause of action, they seek the return of the price and payment of damages by the vendors "in case of eviction or loss of ownership" of the said property. It is, therefore, not the summary action of forcible entry within the context of the Rules. . WHEREFORE, the order of dismissal is hereby set aside, and the case remanded to the court a quo for further proceedings. Costs against defendants-appellees. . G.R. No. L-31789 June 29, 1972 ANTONIO R. BANZON and ROSA BALMACEDA, petitioners, vs. HON. FERNANDO CRUZ, Spouses PEDRO CARDENAS and LEONILA BALUYOT and ASSOCIATED INSURANCE & SURETY COMPANY, INC. represented by INSURANCE COMMISSIONER in her capacity as LIQUIDATOR OF ASSOCIATED INSURANCE & SURETY COMPANY, INC., respondents. TEEHANKEE, J.:p An original action to enjoin respondent court from forcing a writ of possession and order of demolition over one of two Caloocan City lots originally owned by petitioners- spouses pending the outcome of their suit for reconveyance of said lots from private respondents. Sometime in 1952, Maximo Sta. Maria obtained crop loans from the Philippine National Bank (hereinafter referred as the bank). Respondent Associated Insurance & Surety Co., Inc. (hereinafter referred to as Associated) acted as surety of Sta. Maria, filing surety bonds in favor of the bank to answer for prompt repayment of the loans. Petitioner Antonio R. Banzon and Emilio Ma. Naval in turn acted as indemnitors of Associated and were obligated to indemnify and hold harmless Associated from any liability thus acting as surety of the loan. Sta. Maria failed to pay his obligations to the bank, which accordingly demanded payment from Associated as surety. Instead of paying the bank, Associated filed a complaint dated November 19, 1956 with the Court of First Instance of Manila 1 against debtor Sta. Maria and indemnitors Banzon and Naval, alleging that the outstanding obligations of Sta. Maria with the bank guaranteed by it amounted to P6,100.00, P9,346.44 and P14,811.32, or a total of P30,257.86, excluding interest. On December 11, 1957, the said court rendered judgment ordering Sta. Maria, Banzon and Naval "to pay jointly and severally unto plaintiff for the benefit of the Philippine National Bank" the amounts mentioned above, with interest thereon at 12% per annum, P593.76 for premiums and documentary stamps due, and 15% attorney's fees, "the 15% and the interest to be paid for the benefit only of the plaintiff." What happened thereafter is narrated in the decision of this Court rendered on November 29, 1968 in the appeal instituted by petitioner Banzon and his spouse, co- petitioner Rosa Balmaceda, from a subsequent action of Associated in the Court of First Instance of Rizal wherein the Rizal court ordered Banzon to surrender for cancellation his owner's duplicates of titles to his two Caloocan City lots which had been levied upon and purchased at the execution sale by Associated in supposed satisfaction of the Manila court's judgment, docketed as Case L-23971 of this Court, entitled Associated Ins. & Surety Co. Inc. plaintiff-appellee vs. Antonio Banzon and Rosa Balmaceda, defendants-appellants, 2 as follows:

As the above decision 3 became final and executory, the corresponding writ of execution was issued and levy was made upon the properties of the judgment debtor Antonio R. Banzon covered by Transfer Certificates of Title Nos. 39685 and 53759 issued in his name by the Register of Deeds of Rizal. The first covered a parcel of land containing an area of 650 square meters situated in Barrio Calaanan, Caloocan, Rizal, and the second, another parcel of 650 square meters situated in the same barrio of the same municipality. After the proceedings required by law in connection with execution sales, the aforesaid properties were sold, the judgment creditor, Associated Insurance and Surety Co., Inc., having been the highest bidder, for the total sum of P41,000.00. The Sheriff of Rizal issued in its favor the corresponding certificate of sale dated June 27, 1957, which was duly registered on June 30, 1959. As the period of redemption expired on June 20, 1960 without the judgment debtor or any proper party having exercised it, the judgment creditor and purchaser obtained in due time the corresponding final certificate of sale, which was likewise duly registered. In view of the foregoing, herein petitioner-appellee made demands upon Antonio R. Banzon to deliver to it the owner's duplicate of Certificate of Title Nos. 39685 and 53759 mentioned heretofore, but the latter refused to do so. As a result it filed in the Court of First Instance of Rizal in Case No. 3885, G.L.R.O. Record No. 11267, a petition for an order directing Antonio R. Banzon to present his owner's duplicate of Certificae of Title Nos. 89685 and 53759 to the Register of Deeds of Rizal for cancellation, and for another order directing the Register of Deeds of Rizal to cancel said duplicates and to issue new transfer certificates of title covering the properties in the name of petitioner. Banzon filed his opposition to the petition claiming mainly that (1) the decision of the Court of First Instance of Manila in Civil Case No. 31237 was void as far as he was concerned because he had never been summoned in connection therewith, an that (2) the levy and sale of the properties covered by the petition were likewise void because they were conjugal properties belonging to him and his wife, Rosa Balmaceda. After a hearing on the motion and opposition mentioned above, the lower court, on February 7, 1961, rendered a decision whose dispositive portion is as follows: "In view of the foregoing, judgment is hereby rendered in favor of the petitioner granting the relief prayed for. The oppositors are hereby ordered to surrender to the Register of Deeds of Rizal the Certificate of Title in question for cancellation and let a new one be issued in the name of the petitioner." In this appeal interposed by them, the Banzons seek a reversal of the above decision upon the same grounds relied upon in their opposition filed in the lower court. 4 This Court in its decision of November 29, 1968 affirmed the decision of the trial court, relying upon the lower court's findings on Banzon's failure to substantiate his claims which "would amount to a deprivation of (Banzon's) property without due process of law" had he but discharged his burden of proof, thus: With respect to appellant's contention that Antonio R. Banzon had not been duly served with summons in connection with Civil Case No. 31237 of the Court of First Instance of Manila, it is enough for us to quote here the pertinent portions of the well-considered decision of the lower court "With respect to the first contention of oppositors, the latter in effect contends that not having been served by summons, Antonio Banzon never became a party defendant to the aforesaid civil case and hence not bound by any judgment rendered therein. It is erroneous on the part of the petitioner to contend that the objection as to lack of jurisdiction on the defendant's person has been waived for said waiver applies only when summons has been served although defectively, such as one not served by the proper officer. If the contention of the oppositor were true, that is, no summons was ever served upon him and that he was completely unaware of the proceedings in the civil case aforementioned, the properties in question could not be levied upon for that would amount to a deprivation of oppositor's property without due process of law. "The burden, however, rests upon the oppositors to prove that there was in fact no service of summons and this, the court believes, the oppositors have failed to substantiate with sufficient evidence. It is a fundamental rule that the regularity of all official actions and proceedings will be presumed until the contrary is proved. In said civil case No. 31237, the records show, particularly the answer and the motion to dismiss, that the proceedings were conducted by counsel in behalf of all the defendants therein including the oppositor, Antonio Banzon. The presumption therefore, of the regularity of the proceedings as against said defendant will be maintained including the fact that either summons was duly served or that the defendant Banzon voluntarily appeared in court without such summons. It is therefore incumbent upon the oppositors to rebut this presumption with competent and proper evidence such as the return made by the sheriff who served the summons in question. This, however, the oppositors have not met. "Moreover, the circumstances of the case all the more bear out the strength of this presumption when it considered that the oppositor Antonio Banzon received a notice of execution and levy of these properties and notice of the sale of the same at public auction. Had the oppositors have been prejudiced by being deprived of due process, they should have filed either a third party claim upon the property levied or an injunction proceeding to prevent its sale at public auction, nor would they have allowed the consummation of the sale and the lapse of one year within which the redemption would have been exercised. These facts gravely militate against the merits of the opposition, not only insofar as it strengthens the aforesaid presumption of regularity, but also insofar as they are indicative of the fact that the properties

levied upon are not conjugal property or even if they were that the debt involved was one which redound to the benefit of the family for which the conjugal partnership may be held liable." Appellants' second contention namely, that the properties now in question are their conjugal properties, is belied by the record before us which shows that Transfer Certificate of Title Nos. 39685 and 53759 were issued in the name of Antonio R. Banzon. Moreover, there is no sufficient evidence in the record to show that the properties were acquired during appellants' marriage. IN VIEW OF ALL THE FOREGOING, the decision appealed from is hereby affirmed, with costs. 5 It has now been exposed that notwithstanding the judgment of December 11, 1957 obtained from the Manila court by Associated and executed by it against petitioner Banzon as indemnitor " for the benefit of the Philippine National Bank," and which judgment it obtained and executed on the representation to the said court that the bank was exacting payment from it as surety of the debtor Sta. Maria's loans, and that it was therefore enforcing Banzon's undertaking as indemnitor in turn to indemnify it, that it never discharged its liability as surety to the bank nor ever made any payment to the bank, whether in money or property, to discharge Sta. Maria's outstanding obligations as guaranteed by it. As will be shown later, this suit of Associated against Banzon as indemnitor and the execution against him of the judgment obtained in trust "for the benefit of the PhiIippine National Bank" were absolutely premature and uncalled for, since Article 2071 of the Civil Code permits the surety, even before having paid, to proceed only "against the principal debtor ... (4) when the debt has become demandable, by reason of the expiration of the period for payment" and that "the action of the guarantor is to obtain release from the guaranty, or to demand a security that shall protect him from any proceedings by the creditor and from the danger of insolvency of the debtor." In fact, since the bank failed to exact payment from Associated as surety of the debtor Maximo Sta. Maria's matured obligations, the bank itself filed on February 10, 1961, its own complaint with the Court of First Instance of Pampanga against principal debtor Maximo Sta. Maria, his six brothers and sisters (who had executed a special power of attorney in Sta. Maria's favor to mortgage a 16-hectare parcel of land jointly owned by all of them as security also for the bank's loans), and Associated itself, surety, as defendants, for the collection of the outstanding obligations due from the principal debtor, Maximo Sta. Maria. After trial, the court ordered all the defendants jointly and severally to pay the bank the outstanding amounts due on the crop loans to Sta. Maria, which as of that much later date, August 20, 1963, amounted only to P6,100.00 and P9,346.44 or a total of P15,446.44, exclusive of interests. It should be noted therefore, that the debtor Sta. Maria had been making payments all along to the bank on account of his crop loans so much so that by 1963, the total principal due and amount outstanding thereon amounted only to P15,446.44. This amounts to practically one-half of the advance judgment for the total amount of P30,257.86, excluding interests, obtained by Associated six (6) years earlier in 1957 against Banzon " for the benefit of the Philippine National Bank" allegedly as the amount due from Sta. Maria and which Associated as surety would have to pay the bank, and which as it turns out, Associated never paid to the bank. These facts and figures are of record in this Court's decision of August 29, 1969, in Philippine National Bank vs. Sta. Maria, et al.," wherein it is further recorded that "(D)efendant Maximo Sta. Maria and his surety, defendant Associated Insurance & Surety Co., Inc. who did not resist the action, did not appeal the judgment (sentencing all defendants jointly and severally to pay the bank the above referred to principal amount of P15,446.44, excluding interests)." This Court sustained the appeal taken by the debtor Maximo Sta. Maria's brothers and sisters, and reversed the lower court's judgment against them, as follows: ... This appeal has been taken by his six brothers and sisters, defendants-appellants who reiterate in their brief their main contention in their Answer to the complaint that under the special power of attorney, Exh. E, they had not given their brother, Maximo, the authority to borrow money but only to mortgage the real estate jointly owned by them; and that if they are liable at all, their liability should not go beyond the value of the property which they had authorized to be given as security for the loans obtained by Maximo. In their answer, defendants-appellants had further contended that they did not benefit whatsoever from the loans, and that the plaintiff bank's only recourse against them is to foreclose on the property which they had authorized Maximo to mortgage. We find the appeal of defendants-appellants, except for defendant Valeriana Sta. Maria who had executed another special power of attorney, Exh. E-1, expressly authorizing Maximo to borrow money on her behalf, to be well taken. 1. Plaintiff bank has not made out a cause of action against defendants-appellants (except Valeriana), so as to hold them liable for the unpaid balances of the loans obtained by Maximo under the chattel mortgages executed by him in his own name alone. xxx xxx xxx 6. Finally, as to the 10% award of attorney's fees, this Court believes that considering the resources of plaintiff bank and the fact that the principal debtor, Maximo Sta. Maria, had not contested the suit, an award of five (5%) per cent of the balance due on the principal, exclusive of interests, i.e., a balance of P6,100.00 on the first cause of action

and a balance of P9,846.44 on the second cause of action, per the bank's statements of August 20, 1968, (Exhs. Q-1 and BB-1 respectively) should be sufficient. WHEREFORE, the judgment of the trial court against defendant-appellants Emeteria, Teofilo, Quintin, Rosario and Leonila, all surnamed Sta. Maria is hereby reversed and set aside, with costs in both instances against plaintiff. The judgment against defendant-appellant Valeriana Sta. Maria is modified in that her liability is held to be joint and not solidary, and the award of attorney's fees is reduced as set forth in the preceding paragraph, without costs in this instance. The bank thus collected directly from its debtor Sta. Maria the amounts owing to it, with Associated never having put in one centavo. Per the bank's letter dated February 20, 1970 to Associated, it informed Associated that the amounts of its judgment credit against judgment defendants in the aforementioned case terminated by this Court's decision of August 29, 1969, "had already been satisfied as of February 16, 1970 by virtue of the payment made by and thru the Provincial Sheriff of Bataan on the proceeds of the extra-judicial sale of the mortgaged properties of defendants Sta. Marias," in view of which "we (Philippine National Bank) have now released the Associated Insurance & Surety Co., Inc. of its joint obligation with Maximo Sta. Maria et al. in the aforementioned case." 7 This should have put an end to the matter and Banzon's two lots therefore restored fully to his ownership, but for certain complications involving the intervention of the other private respondents, the spouses Pedro Cardenas and Leonila Baluyot, and Associated's own unjustifiable actions, as shall presently be seen. According to the Banzons' petition at bar, sometime in 1965, even before ownership over the two parcels of land belonging to the Banzons could be consolidated in the name of Associated (since the judgment was " for the benefit of the Philippine National Bank" and it had not discharged its surety's liability to the bank), Associated "in clear collusion and confederation with (respondent) Pedro Cardenas, allowed and permitted the latter to execute and levy one of the two parcels of land (that covered by T.C.T. No. 39685-Rizal, Lot 6, Block No. 176 of subdivision plan Psd-2896, G.L.R.O. Rec. No. 11267) for a judgment debt of P5,100.00 (of Associated in favor of Cardenas) 8 notwithstanding that the property in question was worth P130,000.00 more or less, and further notwithstanding the fact that said respondent (Associated) knew the property was merely being held in trust by it for the benefit of the Philippine National Bank and therefore, not being the legal owner thereof, it cannot validly dispose of it in any manner." 9 Respondent Cardenas being allegedly the lone bidder in the auction sale for execution of his P5,100.00-judgment against Associated was awarded the property in full satisfaction of his judgment, and eventually succeeded in having Banzon's title cancelled and a new one, T.C.T. No. 8567-Caloocan City issued thereto in his name, notwithstanding that Associated's right thereto was still sub-judice in Associated vs. Banzon, to be resolved much later yet by this Court's decision of November 29, 1968. Associated made no move to question or challenge this action of Cardenas, notwithstanding an order for its liquidation and dissolution issued on December 31, 1965 by the Court of First Instance of Manila and eventually affirmed by this Court per resolution of June 20, 1968 in G.R. No. L-38934. Nor did Associated make any effort to resist execution on said property of Banzon's, knowing as it did that its interest in said property was impressed with a trust character since the clear tenor and intent of the judgment granted against Banzon nominally in its favor but expressly " for the benefit of the Philippine National Bank" was to make the execution and operation of the judgment contingent or conditioned upon Associated's being made or compelled to pay the bank, which contingency never materialized. The Cardenas spouses thereafter filed with the Court of First Instance of Rizal, Caloocan City Branch XII, Reg. Case No. C-211 (LRC Case No. 112167) entitled "Pedro Cardenas, et al., petitioners vs. Antonio Banzon, et al., respondents," to secure possession from the Banzons of the lot covered by T.C.T. No. 8567. A writ of possession was issued in said case on May 21, 1965, but the enforcement thereof was held in abeyance in view of the filing with the same court of Civil Case No. C-531 entitled "Antonio Banzon, et al. vs. Pedro Cardenas and Leonila Baluyot, Associated Insurance and Surety Co., Inc. and Benito Macrohon." Banzon's complaint in Civil Case No. C-531 was, however, dismissed on August 6, 1969, on the ground that "the matter of the legality of the transfer of ownership of the property in question from the plaintiff to the Associated Insurance & Surety Co., Inc., has been upheld by the Supreme Court in its decision promulgated on November 29, 1968, and consequently the transfer to the spouses Pedro Cardenas and Leonila Baluyot must perforce be considered also as valid and legal." Consequently, respondent Cardenas filed a motion on October 13, 1969, in Case No. C-211 for the issuance of an alias writ of possession; this was granted on October 23, 1969. The alias writ was served on Banzon, who refused to vacate the premises and to remove the improvements thereon. In view of this, an order was issued on December 9, 1969, for the issuance of a writ of demolition, but its enforcement was held in abeyance because a temporary restraining order, later changed to a writ of preliminary injunction, was issued by the Court of Appeals on December 13, 1969, in view of the filing by the Banzons with the said appellate court of a petition for injunction. 10 On February 28, 1970 the Court of Appeals rendered judgment dismissing the petition because it found the same to be allegedly "merely a device to prevent the execution of a final judgment by the filing of a new suit based upon the same grounds which have already been interposed and passed upon in the case where the final judgment had already been rendered ... ." Cardenas thereafter filed a motion for the enforcement of the order of demolition and writ of possession previously issued in Reg. Case No. C-211. On March 13, 1970, Judge Fernando A. Cruz of the Court of First Instance of Rizal, Caloocan City Branch XII, issued an order granting the motion. 11 On March 13, 1970, the Banzons having learned of the bank's release of Associated as of February 20,1970, supra, accordingly filed a complaint for reconveyance and damages with the Court of First Instance of Manila against

respondents Associated and the Cardenas spouses. 12 In their complaint, the Banzons impute bad faith, collusion and confederation between Associated and the Cardenases with regard to the latter's prematurely obtaining T.C.T. No. 8567 covering one of Banzon's lots in their name. The Banzons therein alleged for the first time their new cause of action based on the subsequent development that the Philippine National Bank had collected directly on February 16, 1970 from the principal debtor Sta. Maria the loan guaranteed by Associated (which amounted only to a principal of P15,446.44 as of August, 1963, excluding interests or just one-half of the premature judgment for P30,257.88 excluding interests obtained by Associated six (6) years earlier in 1957 against Banzon in trust and for the benefit of the bank allegedly as the amount owed by Sta. Maria and to be discharged by Associated, which Associated never discharged); 12a and that the bank, per its letter of February 20, 1970 had therefore absolutely released Associated of any liability on its surety undertaking. 12b The Banzons therefore prayed for the return and reconveyance of their two parcels of land covered by T.C.T. No. 8567 (in Cardenas' name) and No. 53759 (still in Banzon's name), in discharge of Associated's implied trust not to unjustly enrich itself and appropriate Banzon's properties at absolutely no cost to itself. On March 16, 1970, the Sheriff of Caloocan City served upon the Banzons copy of the aforesaid order giving them until March 20, 1970, within which to deliver possession of the parcel of land covered by T.C.T. No. 8567, and to remove the improvements thereon; otherwise, the said sheriff would proceed to enforce the same. Petitioners Banzons therefore came to this Court on March 20, 1970, by means of the present petition for injunction. At petitioners' instance, the Court on March 24, 1970 restrained respondents and their representatives from enforcing the questioned writ of execution and order of demolition, and respondent Associated from disposing in any manner of its alleged rights and interests over the two lots in question. Respondents Cardenas spouses filed in due course their Answer dated April 2, 1970, admitting in effect the antecedents of the case as recited above, citing even this Court's decision of November 29, 1968 in Associated vs. Banzon, supra, which affirmed the money judgment in favor of Associated " for the benefit of the Philippine National Bank" 13 but alleging that ownership to one parcel (Lot 6, Block 176 covered by T.C.T. No. 8567) "has already absolutely and irrevocably vested in herein respondent Pedro Cardenas." 14 Said respondents further averred that "there is no longer anything that may be restrained," since per the sheriff's return of March 23, 1970, he enforced on said date respondent court's writ of possession and demolition order and demolished all the improvements erected in the premises. 15 To this petitioners countered that "the special deputy sheriff of Rizal did succeed in demolishing the building erected on that lot in question. This he did notwithstanding the fact that he has been duly informed by petitioner Banzon of the existence of a restraining order in this case. However, after accomplishing his purpose, he and his men left the premises." 16 Most relevant, however, was a pleading entitled "Explanation and Manifestation" dated April 25, 1970 filed by Atty. Feliberto Castillo, as former counsel for Associated "in the interest of justice and in the name of truth and as an officer of the Court," wherein with respect to the summons for Associated received by his law office, he manifests: 3. That he is entertaining a serious doubt whether he could still represent the Associated Insurance & Surety Co., Inc. in view of the fact that in Civil Case No. 56995 of the Court of First Instance of Manila, entitled "Republic of the Philippines, represented by the Insurance Commissioner vs. Associated Insurance Surety Co., Inc." the said Court of First Instance of Manila ordered the liquidation and dissolution of this surety company, which was appealed to the Court of Appeals, CA-G. R. No. 37985-R but affirmed the decision of the Court of First Instance of Manila in a decision promulgated on January 3, 1968, which was appealed again by the Associated Insurance & Surety Co., Inc to the Honorable Tribunal, G.R. No. L-29834, also affirming the decision of the Court of Appeals by denying the petition for writ of certiorari in its resolution of June 20, 1968, and therefore, since then, the decision of the Court of First Instance of Manila ordering the liquidation and dissolution of the Associate Insurance & Surety Co., Inc. became final and executory, an thereafter, the Insurance Commissioner demanded the surrender of books, documents and other papers of this surety company, an as a matter of fact, books, documents and other papers salvaged were already surrendered to the Insurance Commissioner for liquidation of this company, so that by virtue thereof, the Insurance Commissioner being the liquidator appointed by the court to liquidate the Associated Insurance & Surety Co., Inc., is now the legal representative of this surety company to whom a copy of this paper will be furnished." 17 In his "Explanation and Manifestation," Atty. Castillo further states that his law office was the counsel for Associated in the cases involved in these proceedings, viz., Civil Case No. 31237 of the Court of First Instance of Manila, Case No. 3885, G.L.R.O. Record No. 11267 of the Court of First Instance of Rizal, for consolidation in Associated's favor of T.C.T. No. 29685-Rizal and T.C.T. No. 53759-Rizal, and in G.R. No. L-23971 of the Supreme Court, Associated vs. Banzon, supra, affirming on November 29, 1968 the Rizal court's judgment for consolidation; and That since Associated was ordered liquidated and dissolved by the Manila court of first instance in Civil Case No. 56995, as affirmed by the Court of Appeals in CA-G.R. No. 37985-R, which became final upon this Court's denial of review per its resolution of June 20, 1968 in G.R. No. L-28934, the Insurance Commissioner as the appointed liquidator of Associated is the legal representative thereof who may duly act for Associated and upon whom summons should be served; That even before the promulgation of the Supreme Court decision on November 29, 1968 in Associated vs. Banzon he, as counsel for Associated, never attempted to secure new titles for his said client, considering that its ownership over the parcel of land covered by them was then "still sub judice;"

That even after the promulgation of the said Supreme Court decision, he never attempted to secure new titles for his client, because by that time Associated had already been ordered dissolved and liquidated, hence, to be represented in all instances by the Insurance Commissioner as liquidator; That he wonders how respondent Pedro Cardenas was able to secure T.C.T. No. 8567 (formerly T.C.T. No. 39685-Rizal) in his name in 1965, when Associated, which really owed Cardenas a certain sum, could only secure new titles over the parcels of land after not before November 29, 1968, when the Supreme Court's decision in G.R. No. L-23971 was promulgated; and that in his opinion, the issuance to respondent Cardenas of T.C.T. No. 8567 was "fraudulent and irregular for being without basis when the same was issued, so that the register of deeds of Caloocan City committed some sort of mistakes or negligence in issuing this title to respondent Pedro Cardenas, and as such, this T.C.T. No. 8567 is null and void and without force and effect and calls for an investigation of the guilty parties responsible for the issuance of this T.C.T. No. 8567 in the name of respondent Pedro Cardenas, who might have committed some falsifications;" (for indeed how could Cardenas cause title to said lot to be transferred to Associated for him in turn levy against it for his P5,100.00 judgment against Associated when Associated's case against Banzon for such transfer and consolidation of title was then still pending appeal before this Court, and Associated's judgment against Banzon was one of trust, expressly therein declared to be "for the benefit of the Philippine National Bank?") 18 and That "anybody who will attempt to offer the said parcel of land for sale would be committing a crime as the position of the same belongs exclusively to the