Cases in Land Titles

III. Legal Basis and Nature of land registration

a. Regalian Doctrine
-Concept
[G.R. No. 167707, October 08, 2008]
THE SECRETARY OF THE DEPARTMENT OF ENVIRONMENT AND NATURAL
RESOURCES, THE REGIONAL EXECUTIVE DIRECTOR, DENR-REGION VI,
REGIONAL TECHNICAL DIRECTOR FOR LANDS, LANDS MANAGEMENT
BUREAU, REGION VI PROVINCIAL ENVIRONMENT AND NATURAL RESOURCES
OFFICER OF KALIBO, AKLAN, REGISTER OF DEEDS, DIRECTOR OF LAND
REGISTRATION AUTHORITY, DEPARTMENT OF TOURISM SECRETARY,
DIRECTOR OF PHILIPPINE TOURISM AUTHORITY, PETITIONERS, VS. MAYOR
JOSE S. YAP, LIBERTAD TALAPIAN, MILA Y. SUMNDAD, AND ANICETO YAP, IN
THEIR BEHALF AND IN BEHALF OF ALL THOSE SIMILARLY SITUATED,
RESPONDENTS.
G.R. NO. 173775
DR. ORLANDO SACAY AND WILFREDO GELITO, JOINED BY THE
LANDOWNERS OF BORACAY SIMILARLY SITUATED NAMED IN A LIST, ANNEX
"A" OF THIS PETITION, PETITIONERS, VS. THE SECRETARY OF THE
DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES, THE REGIONAL
TECHNICAL DIRECTOR FOR LANDS, LANDS MANAGEMENT BUREAU, REGION
VI, PROVINCIAL ENVIRONMENT AND NATURAL RESOURCES OFFICER,
KALIBO, AKLAN, RESPONDENTS.
DECISION
REYES, R.T., J.:
AT stake in these consolidated cases is the right of the present occupants of
Boracay Island to secure titles over their occupied lands.
There are two consolidated petitions. The first is G.R. No. 167707, a petition for
review on certiorari of the Decision[1] of the Court of Appeals (CA) affirming that[2]
of the Regional Trial Court (RTC) in Kalibo, Aklan, which granted the petition for
declaratory relief filed by respondents-claimants Mayor Jose Yap, et al. and ordered
the survey of Boracay for titling purposes. The second is G.R. No. 173775, a petition

for prohibition, mandamus, and nullification of Proclamation No. 1064[3] issued by

President Gloria Macapagal-Arroyo classifying Boracay into reserved forest and
agricultural land.
The Antecedents
G.R. No. 167707
Boracay Island in the Municipality of Malay, Aklan, with its powdery white sand
beaches and warm crystalline waters, is reputedly a premier Philippine tourist
destination. The island is also home to 12,003 inhabitants[4] who live in the boneshaped island's three barangays.[5]
On April 14, 1976, the Department of Environment and Natural Resources (DENR)
approved the National Reservation Survey of Boracay Island,[6] which identified
several lots as being occupied or claimed by named persons.[7]
On November 10, 1978, then President Ferdinand Marcos issued Proclamation No.
1801[8] declaring Boracay Island, among other islands, caves and peninsulas in the
Philippines, as tourist zones and marine reserves under the administration of the
Philippine Tourism Authority (PTA). President Marcos later approved the issuance of
PTA Circular 3-82[9] dated September 3, 1982, to implement Proclamation No.
1801.
Claiming that Proclamation No. 1801 and PTA Circular No 3-82 precluded them from
filing an application for judicial confirmation of imperfect title or survey of land for
titling purposes, respondents-claimants
Mayor Jose S. Yap, Jr., Libertad Talapian, Mila Y. Sumndad, and Aniceto Yap filed a
petition for declaratory relief with the RTC in Kalibo, Aklan.
In their petition, respondents-claimants alleged that Proclamation No. 1801 and PTA
Circular No. 3-82 raised doubts on their right to secure titles over their occupied
lands. They declared that they themselves, or through their predecessors-ininterest, had been in open, continuous, exclusive, and notorious possession and
occupation in Boracay since June 12, 1945, or earlier since time immemorial. They
declared their lands for tax purposes and paid realty taxes on them.[10]
Respondents-claimants posited that Proclamation No. 1801 and its implementing
Circular did not place Boracay beyond the commerce of man. Since the Island was
classified as a tourist zone, it was susceptible of private ownership. Under Section
48(b) of Commonwealth Act (CA) No. 141, otherwise known as the Public Land Act,
they had the right to have the lots registered in their names through judicial
confirmation of imperfect titles.

The Republic, through the Office of the Solicitor General (OSG), opposed the petition
for declaratory relief. The OSG countered that Boracay Island was an unclassified
land of the public domain. It formed part of the mass of lands classified as "public
forest," which was not available for disposition pursuant to Section 3(a) of
Presidential Decree (PD) No. 705 or the Revised Forestry Code,[11] as amended.
The OSG maintained that respondents-claimants' reliance on PD No. 1801 and PTA
Circular No. 3-82 was misplaced. Their right to judicial confirmation of title was
governed by CA No. 141 and PD No. 705. Since Boracay Island had not been
classified as alienable and disposable, whatever possession they had cannot ripen
into ownership.
During pre-trial, respondents-claimants and the OSG stipulated on the following
facts: (1) respondents-claimants were presently in possession of parcels of land in
Boracay Island; (2) these parcels of land were planted with coconut trees and other
natural growing trees; (3) the coconut trees had heights of more or less twenty (20)
meters and were planted more or less fifty (50) years ago; and (4) respondentsclaimants declared the land they were occupying for tax purposes.[12]
The parties also agreed that the principal issue for resolution was purely legal:
whether Proclamation No. 1801 posed any legal hindrance or impediment to the
titling of the lands in Boracay. They decided to forego with the trial and to submit
the case for resolution upon submission of their respective memoranda.[13]
The RTC took judicial notice[14] that certain parcels of land in Boracay Island, more
particularly Lots 1 and 30, Plan PSU-5344, were covered by Original Certificate of
Title No. 19502 (RO 2222) in the name of the Heirs of Ciriaco S. Tirol. These lots
were involved in Civil Case Nos. 5222 and 5262 filed before the RTC of Kalibo, Aklan.
[15] The titles were issued on August 7, 1933.[16]
RTC and CA Dispositions
On July 14, 1999, the RTC rendered a decision in favor of respondents-claimants,
with a fallo reading:
WHEREFORE, in view of the foregoing, the Court declares that Proclamation No.
1801 and PTA Circular No. 3-82 pose no legal obstacle to the petitioners and those
similarly situated to acquire title to their lands in Boracay, in accordance with the
applicable laws and in the manner prescribed therein; and to have their lands
surveyed and approved by respondent Regional Technical Director of Lands as the
approved survey does not in itself constitute a title to the land.
SO ORDERED.[17]

The RTC upheld respondents-claimants' right to have their occupied lands titled in
their name. It ruled that neither Proclamation No. 1801 nor PTA Circular No. 3-82
mentioned that lands in Boracay were inalienable or could not be the subject of
disposition.[18] The Circular itself recognized private ownership of lands.[19] The
trial court cited Sections 87[20] and 53[21] of the Public Land Act as basis for
acknowledging private ownership of lands in Boracay and that only those forested
areas in public lands were declared as part of the forest reserve.[22]
The OSG moved for reconsideration but its motion was denied.[23] The Republic
then appealed to the CA.
On December 9, 2004, the appellate court affirmed in toto the RTC decision,
disposing as follows:
WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us
DENYING the appeal filed in this case and AFFIRMING the decision of the lower
court.[24]
The CA held that respondents-claimants could not be prejudiced by a declaration
that the lands they occupied since time immemorial were part of a forest reserve.
Again, the OSG sought reconsideration but it was similarly denied.[25] Hence, the
present petition under Rule 45.
G.R. No. 173775
On May 22, 2006, during the pendency of G.R. No. 167707, President Gloria
Macapagal-Arroyo issued Proclamation No. 1064[26] classifying Boracay Island into
four hundred (400) hectares of reserved forest land (protection purposes) and six
hundred twenty-eight and 96/100 (628.96) hectares of agricultural land (alienable
and disposable). The Proclamation likewise provided for a fifteen-meter buffer zone
on each side of the centerline of roads and trails, reserved for right-of-way and
which shall form part of the area reserved for forest land protection purposes.
On August 10, 2006, petitioners-claimants Dr. Orlando Sacay,[27] Wilfredo Gelito,
[28] and other landowners[29] in Boracay filed with this Court an original petition
for prohibition, mandamus, and nullification of Proclamation No. 1064.[30] They
allege that the Proclamation infringed on their "prior vested rights" over portions of
Boracay. They have been in continued possession of their respective lots in Boracay
since time immemorial. They have also invested billions of pesos in developing their
lands and building internationally renowned first class resorts on their lots.[31]
Petitioners-claimants contended that there is no need for a proclamation
reclassifying Boracay into agricultural land. Being classified as neither mineral nor
timber land, the island is deemed agricultural pursuant to the Philippine Bill of 1902
and Act No. 926, known as the first Public Land Act.[32] Thus, their possession in

the concept of owner for the required period entitled them to judicial confirmation of
imperfect title.
Opposing the petition, the OSG argued that petitioners-claimants do not have a
vested right over their occupied portions in the island. Boracay is an unclassified
public forest land pursuant to Section 3(a) of PD No. 705. Being public forest, the
claimed portions of the island are inalienable and cannot be the subject of judicial
confirmation of imperfect title. It is only the executive department, not the courts,
which has authority to reclassify lands of the public domain into alienable and
disposable lands. There is a need for a positive government act in order to release
the lots for disposition.
On November 21, 2006, this Court ordered the consolidation of the two petitions as
they principally involve the same issues on the land classification of Boracay Island.
[33]
Issues
G.R. No. 167707
The OSG raises the lone issue of whether Proclamation No. 1801 and PTA Circular
No. 3-82 pose any legal obstacle for respondents, and all those similarly situated, to
acquire title to their occupied lands in Boracay Island.[34]
G.R. No. 173775
Petitioners-claimants hoist five (5) issues, namely:
I.
AT THE TIME OF THE ESTABLISHED POSSESSION OF PETITIONERS IN CONCEPT OF
OWNER OVER THEIR RESPECTIVE AREAS IN BORACAY, SINCE TIME IMMEMORIAL OR
AT THE LATEST SINCE 30 YRS. PRIOR TO THE FILING OF THE PETITION FOR
DECLARATORY RELIEF ON NOV. 19, 1997, WERE THE AREAS OCCUPIED BY THEM
PUBLIC AGRICULTURAL LANDS AS DEFINED BY LAWS THEN ON JUDICIAL
CONFIRMATION OF IMPERFECT TITLES OR PUBLIC FOREST AS DEFINED BY SEC. 3a,
PD 705?
II.
HAVE PETITIONERS OCCUPANTS ACQUIRED PRIOR VESTED RIGHT OF PRIVATE
OWNERSHIP OVER THEIR OCCUPIED PORTIONS OF BORACAY LAND, DESPITE THE
FACT THAT THEY HAVE NOT APPLIED YET FOR JUDICIAL CONFIRMATION OF
IMPERFECT TITLE?

III.
IS THE EXECUTIVE DECLARATION OF THEIR AREAS AS ALIENABLE AND DISPOSABLE
UNDER SEC 6, CA 141 [AN] INDISPENSABLE PRE-REQUISITE FOR PETITIONERS TO
OBTAIN TITLE UNDER THE TORRENS SYSTEM?
IV.

IS THE ISSUANCE OF PROCLAMATION 1064 ON MAY 22, 2006, VIOLATIVE OF THE

PRIOR VESTED RIGHTS TO PRIVATE OWNERSHIP OF PETITIONERS OVER THEIR
LANDS IN BORACAY, PROTECTED BY THE DUE PROCESS CLAUSE OF THE
CONSTITUTION OR IS PROCLAMATION 1064 CONTRARY TO SEC. 8, CA 141, OR SEC.
4(a) OF RA 6657.
V.

CAN RESPONDENTS BE COMPELLED BY MANDAMUS TO ALLOW THE SURVEY AND TO

APPROVE THE SURVEY PLANS FOR PURPOSES OF THE APPLICATION FOR TITLING OF
THE LANDS OF PETITIONERS IN BORACAY?[35] (Underscoring supplied)
In capsule, the main issue is whether private claimants (respondents-claimants in
G.R. No. 167707 and petitioners-claimants in G.R. No. 173775) have a right to
secure titles over their occupied portions in Boracay. The twin petitions pertain to
their right, if any, to judicial confirmation of imperfect title under CA No. 141, as
amended. They do not involve their right to secure title under other pertinent laws.
Our Ruling
Regalian Doctrine and power of the executive
to reclassify lands of the public domain
Private claimants rely on three (3) laws and executive acts in their bid for judicial
confirmation of imperfect title, namely: (a) Philippine Bill of 1902[36] in relation to
Act No. 926, later amended and/or superseded by Act No. 2874 and CA No. 141;[37]
(b) Proclamation No. 1801[38] issued by then President Marcos; and (c)
Proclamation No. 1064[39] issued by President Gloria Macapagal-Arroyo. We shall
proceed to determine their rights to apply for judicial confirmation of imperfect title
under these laws and executive acts.
But first, a peek at the Regalian principle and the power of the executive to
reclassify lands of the public domain.

The 1935 Constitution classified lands of the public domain into agricultural, forest
or timber.[40] Meanwhile, the 1973 Constitution provided the following divisions:
agricultural, industrial or commercial, residential, resettlement, mineral, timber or
forest and grazing lands, and such other classes as may be provided by law,[41]
giving the government great leeway for classification.[42] Then the 1987
Constitution reverted to the 1935 Constitution classification with one addition:
national parks.[43] Of these, only agricultural lands may be alienated.[44] Prior to
Proclamation No. 1064 of May 22, 2006, Boracay Island had never been expressly
and administratively classified under any of these grand divisions. Boracay was an
unclassified land of the public domain.
The Regalian Doctrine dictates that all lands of the public domain belong to the
State, that the State is the source of any asserted right to ownership of land and
charged with the conservation of such patrimony.[45] The doctrine has been
consistently adopted under the 1935, 1973, and 1987 Constitutions.[46]
All lands not otherwise appearing to be clearly within private ownership are
presumed to belong to the State.[47] Thus, all lands that have not been acquired
from the government, either by purchase or by grant, belong to the State as part of
the inalienable public domain.[48] Necessarily, it is up to the State to determine if
lands of the public domain will be disposed of for private ownership. The
government, as the agent of the state, is possessed of the plenary power as the
persona in law to determine who shall be the favored recipients of public lands, as
well as under what terms they may be granted such privilege, not excluding the
placing of obstacles in the way of their exercise of what otherwise would be ordinary
acts of ownership.[49]
Our present land law traces its roots to the Regalian Doctrine. Upon the Spanish
conquest of the Philippines, ownership of all lands, territories and possessions in the
Philippines passed to the Spanish Crown.[50] The Regalian doctrine was first
introduced in the Philippines through the Laws of the Indies and the Royal Cedulas,
which laid the foundation that "all lands that were not acquired from the
Government, either by purchase or by grant, belong to the public domain."[51]
The Laws of the Indies was followed by the Ley Hipotecaria or the Mortgage Law of
1893. The Spanish Mortgage Law provided for the systematic registration of titles
and deeds as well as possessory claims.[52]
The Royal Decree of 1894 or the Maura Law[53] partly amended the Spanish
Mortgage Law and the Laws of the Indies. It established possessory information as
the method of legalizing possession of vacant Crown land, under certain conditions
which were set forth in said decree.[54] Under Section 393 of the Maura Law, an
informacion posesoria or possessory information title,[55] when duly inscribed in
the Registry of Property, is converted into a title of ownership only after the lapse of

twenty (20) years of uninterrupted possession which must be actual, public, and
adverse,[56] from the date of its inscription.[57] However, possessory information
title had to be perfected one year after the promulgation of the Maura Law, or until
April 17, 1895. Otherwise, the lands would revert to the State.[58]
In sum, private ownership of land under the Spanish regime could only be founded
on royal concessions which took various forms, namely: (1) titulo real or royal grant;
(2) concesion especial or special grant; (3) composicion con el estado or adjustment
title; (4) titulo de compra or title by purchase; and (5) informacion posesoria or
possessory information title.[59]
The first law governing the disposition of public lands in the Philippines under
American rule was embodied in the Philippine Bill of 1902.[60] By this law, lands of
the public domain in the Philippine Islands were classified into three (3) grand
divisions, to wit: agricultural, mineral, and timber or forest lands.[61] The act
provided for, among others, the disposal of mineral lands by means of absolute
grant (freehold system) and by lease (leasehold system).[62] It also provided the
definition by exclusion of "agricultural public lands."[63] Interpreting the meaning of
"agricultural lands" under the Philippine Bill of 1902, the Court declared in Mapa v.
Insular Government:[64]
x x x In other words, that the phrase "agricultural land" as used in Act No. 926
means those public lands acquired from Spain which are not timber or mineral
lands. x x x[65] (Emphasis Ours)
On February 1, 1903, the Philippine Legislature passed Act No. 496, otherwise
known as the Land Registration Act. The act established a system of registration by
which recorded title becomes absolute, indefeasible, and imprescriptible. This is
known as the Torrens system.[66]
Concurrently, on October 7, 1903, the Philippine Commission passed Act No. 926,
which was the first Public Land Act. The Act introduced the homestead system and
made provisions for judicial and administrative confirmation of imperfect titles and
for the sale or lease of public lands. It permitted corporations regardless of the
nationality of persons owning the controlling stock to lease or purchase lands of the
public domain.[67] Under the Act, open, continuous, exclusive, and notorious
possession and occupation of agricultural lands for the next ten (10) years
preceding July 26, 1904 was sufficient for judicial confirmation of imperfect title.[68]
On November 29, 1919, Act No. 926 was superseded by Act No. 2874, otherwise
known as the second Public Land Act. This new, more comprehensive law limited
the exploitation of agricultural lands to Filipinos and Americans and citizens of other
countries which gave Filipinos the same privileges. For judicial confirmation of title,
possession and occupation en concepto dueo since time immemorial, or since July
26, 1894, was required.[69]

After the passage of the 1935 Constitution, CA No. 141 amended Act No. 2874 on
December 1, 1936. To this day, CA No. 141, as amended, remains as the existing
general law governing the classification and disposition of lands of the public
domain other than timber and mineral lands,[70] and privately owned lands which
reverted to the State.[71]
Section 48(b) of CA No. 141 retained the requirement under Act No. 2874 of
possession and occupation of lands of the public domain since time immemorial or
since July 26, 1894. However, this provision was superseded by Republic Act (RA)
No. 1942,[72] which provided for a simple thirty-year prescriptive period for judicial
confirmation of imperfect title. The provision was last amended by PD No. 1073,[73]
which now provides for possession and occupation of the land applied for since June
12, 1945, or earlier.[74]
The issuance of PD No. 892[75] on February 16, 1976 discontinued the use of
Spanish titles as evidence in land registration proceedings.[76] Under the decree, all
holders of Spanish titles or grants should apply for registration of their lands under
Act No. 496 within six (6) months from the effectivity of the decree on February 16,
1976. Thereafter, the recording of all unregistered lands[77] shall be governed by
Section 194 of the Revised Administrative Code, as amended by Act No. 3344.
On June 11, 1978, Act No. 496 was amended and updated by PD No. 1529, known
as the Property Registration Decree. It was enacted to codify the various laws
relative to registration of property.[78] It governs registration of lands under the
Torrens system as well as unregistered lands, including chattel mortgages.[79]
A positive act declaring land as alienable and disposable is required. In keeping with
the presumption of State ownership, the Court has time and again emphasized that
there must be a positive act of the government, such as an official proclamation,
[80] declassifying inalienable public land into disposable land for agricultural or
other purposes.[81] In fact, Section 8 of CA No. 141 limits alienable or disposable
lands only to those lands which have been "officially delimited and classified."[82]
The burden of proof in overcoming the presumption of State ownership of the lands
of the public domain is on the person applying for registration (or claiming
ownership), who must prove that the land subject of the application is alienable or
disposable.[83] To overcome this presumption, incontrovertible evidence must be
established that the land subject of the application (or claim) is alienable or
disposable.[84] There must still be a positive act declaring land of the public domain
as alienable and disposable. To prove that the land subject of an application for
registration is alienable, the applicant must establish the existence of a positive act
of the government such as a presidential proclamation or an executive order; an
administrative action; investigation reports of Bureau of Lands investigators; and a
legislative act or a statute.[85] The applicant may also secure a certification from

the government that the land claimed to have been possessed for the required
number of years is alienable and disposable.[86]
In the case at bar, no such proclamation, executive order, administrative action,
report, statute, or certification was presented to the Court. The records are bereft of
evidence showing that, prior to 2006, the portions of Boracay occupied by private
claimants were subject of a government proclamation that the land is alienable and
disposable. Absent such well-nigh incontrovertible evidence, the Court cannot
accept the submission that lands occupied by private claimants were already open
to disposition before 2006. Matters of land classification or reclassification cannot
be assumed. They call for proof.[87]
Ankron and De Aldecoa did not make the whole of Boracay Island, or portions of it,
agricultural lands. Private claimants posit that Boracay was already an agricultural
land pursuant to the old cases Ankron v. Government of the Philippine Islands
(1919)[88] and De Aldecoa v. The Insular Government (1909).[89] These cases were
decided under the provisions of the Philippine Bill of 1902 and Act No. 926. There is
a statement in these old cases that "in the absence of evidence to the contrary, that
in each case the lands are agricultural lands until the contrary is shown."[90]
Private claimants' reliance on Ankron and De Aldecoa is misplaced. These cases did
not have the effect of converting the whole of Boracay Island or portions of it into
agricultural lands. It should be stressed that the Philippine Bill of 1902 and Act No.
926 merely provided the manner through which land registration courts would
classify lands of the public domain. Whether the land would be classified as timber,
mineral, or agricultural depended on proof presented in each case.
Ankron and De Aldecoa were decided at a time when the President of the Philippines
had no power to classify lands of the public domain into mineral, timber, and
agricultural. At that time, the courts were free to make corresponding classifications
in justiciable cases, or were vested with implicit power to do so, depending upon the
preponderance of the evidence.[91] This was the Court's ruling in Heirs of the Late
Spouses Pedro S. Palanca and Soterranea Rafols Vda. De Palanca v. Republic,[92] in
which it stated, through Justice Adolfo Azcuna, viz.:
x x x Petitioners furthermore insist that a particular land need not be formally
released by an act of the Executive before it can be deemed open to private
ownership, citing the cases of Ramos v. Director of Lands and Ankron v. Government
of the Philippine Islands.
xxxx
Petitioner's reliance upon Ramos v. Director of Lands and Ankron v. Government is
misplaced. These cases were decided under the Philippine Bill of 1902 and the first
Public Land Act No. 926 enacted by the Philippine Commission on October 7, 1926,

under which there was no legal provision vesting in the Chief Executive or President
of the Philippines the power to classify lands of the public domain into mineral,
timber and agricultural so that the courts then were free to make corresponding
classifications in justiciable cases, or were vested with implicit power to do so,
depending upon the preponderance of the evidence.[93]
To aid the courts in resolving land registration cases under Act No. 926, it was then
necessary to devise a presumption on land classification. Thus evolved the dictum
in Ankron that "the courts have a right to presume, in the absence of evidence to
the contrary, that in each case the lands are agricultural lands until the contrary is
shown."[94]
But We cannot unduly expand the presumption in Ankron and De Aldecoa to an
argument that all lands of the public domain had been automatically reclassified as
disposable and alienable agricultural lands. By no stretch of imagination did the
presumption convert all lands of the public domain into agricultural lands.
If We accept the position of private claimants, the Philippine Bill of 1902 and Act No.
926 would have automatically made all lands in the Philippines, except those
already classified as timber or mineral land, alienable and disposable lands. That
would take these lands out of State ownership and worse, would be utterly
inconsistent with and totally repugnant to the long-entrenched Regalian doctrine.
The presumption in Ankron and De Aldecoa attaches only to land registration cases
brought under the provisions of Act No. 926, or more specifically those cases
dealing with judicial and administrative confirmation of imperfect titles. The
presumption applies to an applicant for judicial or administrative conformation of
imperfect title under Act No. 926. It certainly cannot apply to landowners, such as
private claimants or their predecessors-in-interest, who failed to avail themselves of
the benefits of Act No. 926. As to them, their land remained unclassified and, by
virtue of the Regalian doctrine, continued to be owned by the State.
In any case, the assumption in Ankron and De Aldecoa was not absolute. Land
classification was, in the end, dependent on proof. If there was proof that the land
was better suited for non-agricultural uses, the courts could adjudge it as a mineral
or timber land despite the presumption. In Ankron, this Court stated:
In the case of Jocson vs. Director of Forestry (supra), the Attorney-General admitted
in effect that whether the particular land in question belongs to one class or another
is a question of fact. The mere fact that a tract of land has trees upon it or has
mineral within it is not of itself sufficient to declare that one is forestry land and the
other, mineral land. There must be some proof of the extent and present or future
value of the forestry and of the minerals. While, as we have just said, many
definitions have been given for "agriculture," "forestry," and "mineral" lands, and
that in each case it is a question of fact, we think it is safe to say that in order to be
forestry or mineral land the proof must show that it is more valuable for the forestry

or the mineral which it contains than it is for agricultural purposes. (Sec. 7, Act No.
1148.) It is not sufficient to show that there exists some trees upon the land or that
it bears some mineral. Land may be classified as forestry or mineral today, and, by
reason of the exhaustion of the timber or mineral, be classified as agricultural land
tomorrow. And vice-versa, by reason of the rapid growth of timber or the discovery
of valuable minerals, lands classified as agricultural today may be differently
classified tomorrow. Each case must be decided upon the proof in that particular
case, having regard for its present or future value for one or the other purposes. We
believe, however, considering the fact that it is a matter of public knowledge that a
majority of the lands in the Philippine Islands are agricultural lands that the courts
have a right to presume, in the absence of evidence to the contrary, that in each
case the lands are agricultural lands until the contrary is shown. Whatever the land
involved in a particular land registration case is forestry or mineral land must,
therefore, be a matter of proof. Its superior value for one purpose or the other is a
question of fact to be settled by the proof in each particular case. The fact that the
land is a manglar [mangrove swamp] is not sufficient for the courts to decide
whether it is agricultural, forestry, or mineral land. It may perchance belong to one
or the other of said classes of land. The Government, in the first instance, under the
provisions of Act No. 1148, may, by reservation, decide for itself what portions of
public land shall be considered forestry land, unless private interests have
intervened before such reservation is made. In the latter case, whether the land is
agricultural, forestry, or mineral, is a question of proof. Until private interests have
intervened, the Government, by virtue of the terms of said Act (No. 1148), may
decide for itself what portions of the "public domain" shall be set aside and reserved
as forestry or mineral land. (Ramos vs. Director of Lands, 39 Phil. 175; Jocson vs.
Director of Forestry, supra)[95] (Emphasis ours)
Since 1919, courts were no longer free to determine the classification of lands from
the facts of each case, except those that have already became private lands.[96]
Act No. 2874, promulgated in 1919 and reproduced in Section 6 of CA No. 141, gave
the Executive Department, through the President, the exclusive prerogative to
classify or reclassify public lands into alienable or disposable, mineral or forest.96-a
Since then, courts no longer had the authority, whether express or implied, to
determine the classification of lands of the public domain.[97]
Here, private claimants, unlike the Heirs of Ciriaco Tirol who were issued their title in
1933,[98] did not present a justiciable case for determination by the land
registration court of the property's land classification. Simply put, there was no
opportunity for the courts then to resolve if the land the Boracay occupants are now
claiming were agricultural lands. When Act No. 926 was supplanted by Act No. 2874
in 1919, without an application for judicial confirmation having been filed by private
claimants or their predecessors-in-interest, the courts were no longer authorized to
determine the property's land classification. Hence, private claimants cannot bank
on Act No. 926.

We note that the RTC decision[99] in G.R. No. 167707 mentioned Krivenko v.
Register of Deeds of Manila,[100] which was decided in 1947 when CA No. 141,
vesting the Executive with the sole power to classify lands of the public domain was
already in effect. Krivenko cited the old cases Mapa v. Insular Government,[101] De
Aldecoa v. The Insular Government,[102] and Ankron v. Government of the
Philippine Islands.[103]
Krivenko, however, is not controlling here because it involved a totally different
issue. The pertinent issue in Krivenko was whether residential lots were included in
the general classification of agricultural lands; and if so, whether an alien could
acquire a residential lot. This Court ruled that as an alien, Krivenko was prohibited
by the 1935 Constitution[104] from acquiring agricultural land, which included
residential lots. Here, the issue is whether unclassified lands of the public domain
are automatically deemed agricultural.
Notably, the definition of "agricultural public lands" mentioned in Krivenko relied on
the old cases decided prior to the enactment of Act No. 2874, including Ankron and
De Aldecoa.[105] As We have already stated, those cases cannot apply here, since
they were decided when the Executive did not have the authority to classify lands
as agricultural, timber, or mineral.
Private claimants' continued possession under Act No. 926 does not create a
presumption that the land is alienable. Private claimants also contend that their
continued possession of portions of Boracay Island for the requisite period of ten
(10) years under Act No. 926[106] ipso facto converted the island into private
ownership. Hence, they may apply for a title in their name.
A similar argument was squarely rejected by the Court in Collado v. Court of
Appeals.[107] Collado, citing the separate opinion of now Chief Justice Reynato S.
Puno in Cruz v. Secretary of Environment and Natural Resources,107-a ruled:
"Act No. 926, the first Public Land Act, was passed in pursuance of the provisions of
the Philippine Bill of 1902. The law governed the disposition of lands of the public
domain. It prescribed rules and regulations for the homesteading, selling and
leasing of portions of the public domain of the Philippine Islands, and prescribed the
terms and conditions to enable persons to perfect their titles to public lands in the
Islands. It also provided for the "issuance of patents to certain native settlers upon
public lands," for the establishment of town sites and sale of lots therein, for the
completion of imperfect titles, and for the cancellation or confirmation of Spanish
concessions and grants in the Islands." In short, the Public Land Act operated on the
assumption that title to public lands in the Philippine Islands remained in the
government; and that the government's title to public land sprung from the Treaty
of Paris and other subsequent treaties between Spain and the United States. The
term "public land" referred to all lands of the public domain whose title still
remained in the government and are thrown open to private appropriation and

settlement, and excluded the patrimonial property of the government and the friar
lands."
Thus, it is plain error for petitioners to argue that under the Philippine Bill of 1902
and Public Land Act No. 926, mere possession by private individuals of lands creates
the legal presumption that the lands are alienable and disposable.[108] (Emphasis
Ours)
Except for lands already covered by existing titles, Boracay was an unclassified land
of the public domain prior to Proclamation No. 1064. Such unclassified lands are
considered public forest under PD No. 705. The DENR[109] and the National
Mapping and Resource Information Authority[110] certify that Boracay Island is an
unclassified land of the public domain.
PD No. 705 issued by President Marcos categorized all unclassified lands of the
public domain as public forest. Section 3(a) of PD No. 705 defines a public forest as
"a mass of lands of the public domain which has not been the subject of the present
system of classification for the determination of which lands are needed for forest
purpose and which are not." Applying PD No. 705, all unclassified lands, including
those in Boracay Island, are ipso facto considered public forests. PD No. 705,
however, respects titles already existing prior to its effectivity.
The Court notes that the classification of Boracay as a forest land under PD No. 705
may seem to be out of touch with the present realities in the island. Boracay, no
doubt, has been partly stripped of its forest cover to pave the way for commercial
developments. As a premier tourist destination for local and foreign tourists,
Boracay appears more of a commercial island resort, rather than a forest land.
Nevertheless, that the occupants of Boracay have built multi-million peso beach
resorts on the island;[111] that the island has already been stripped of its forest
cover; or that the implementation of Proclamation No. 1064 will destroy the island's
tourism industry, do not negate its character as public forest.
Forests, in the context of both the Public Land Act and the Constitution[112]
classifying lands of the public domain into "agricultural, forest or timber, mineral
lands, and national parks," do not necessarily refer to large tracts of wooded land or
expanses covered by dense growths of trees and underbrushes.[113] The discussion
in Heirs of Amunategui v. Director of Forestry[114] is particularly instructive:
A forested area classified as forest land of the public domain does not lose such
classification simply because loggers or settlers may have stripped it of its forest
cover. Parcels of land classified as forest land may actually be covered with grass or
planted to crops by kaingin cultivators or other farmers. "Forest lands" do not have
to be on mountains or in out of the way places. Swampy areas covered by
mangrove trees, nipa palms, and other trees growing in brackish or sea water may
also be classified as forest land. The classification is descriptive of its legal nature or
status and does not have to be descriptive of what the land actually looks like.

Unless and until the land classified as "forest" is released in an official proclamation
to that effect so that it may form part of the disposable agricultural lands of the
public domain, the rules on confirmation of imperfect title do not apply.[115]
(Emphasis supplied)
There is a big difference between "forest" as defined in a dictionary and "forest or
timber land" as a classification of lands of the public domain as appearing in our
statutes. One is descriptive of what appears on the land while the other is a legal
status, a classification for legal purposes.[116] At any rate, the Court is tasked to
determine the legal status of Boracay Island, and not look into its physical layout.
Hence, even if its forest cover has been replaced by beach resorts, restaurants and
other commercial establishments, it has not been automatically converted from
public forest to alienable agricultural land.
Private claimants cannot rely on Proclamation No. 1801 as basis for judicial
confirmation of imperfect title. The proclamation did not convert Boracay into an
agricultural land. However, private claimants argue that Proclamation No. 1801
issued by then President Marcos in 1978 entitles them to judicial confirmation of
imperfect title. The Proclamation classified Boracay, among other islands, as a
tourist zone. Private claimants assert that, as a tourist spot, the island is susceptible
of private ownership.

Proclamation No. 1801 or PTA Circular No. 3-82 did not convert the whole of Boracay
into an agricultural land. There is nothing in the law or the Circular which made
Boracay Island an agricultural land. The reference in Circular No. 3-82 to "private
lands"[117] and "areas declared as alienable and disposable"[118] does not by itself
classify the entire island as agricultural. Notably, Circular No. 3-82 makes reference
not only to private lands and areas but also to public forested lands. Rule VIII,
Section 3 provides:
No trees in forested private lands may be cut without prior authority from the PTA.
All forested areas in public lands are declared forest reserves. (Emphasis supplied)
Clearly, the reference in the Circular to both private and public lands merely
recognizes that the island can be classified by the Executive department pursuant
to its powers under CA No. 141. In fact, Section 5 of the Circular recognizes the then
Bureau of Forest Development's authority to declare areas in the island as alienable
and disposable when it provides:
Subsistence farming, in areas declared as alienable and disposable by the Bureau of
Forest Development.
Therefore, Proclamation No. 1801 cannot be deemed the positive act needed to
classify Boracay Island as alienable and disposable land. If President Marcos
intended to classify the island as alienable and disposable or forest, or both, he
would have identified the specific limits of each, as President Arroyo did in
Proclamation No. 1064. This was not done in Proclamation No. 1801.

The Whereas clauses of Proclamation No. 1801 also explain the rationale behind the
declaration of Boracay Island, together with other islands, caves and peninsulas in
the Philippines, as a tourist zone and marine reserve to be administered by the PTA
- to ensure the concentrated efforts of the public and private sectors in the
development of the areas' tourism potential with due regard for ecological balance
in the marine environment. Simply put, the proclamation is aimed at administering
the islands for tourism and ecological purposes. It does not address the areas'
alienability.[119]
More importantly, Proclamation No. 1801 covers not only Boracay Island, but sixtyfour (64) other islands, coves, and peninsulas in the Philippines, such as Fortune
and Verde Islands in Batangas, Port Galera in Oriental Mindoro, Panglao and
Balicasag Islands in Bohol, Coron Island, Puerto Princesa and surrounding areas in
Palawan, Camiguin Island in Cagayan de Oro, and Misamis Oriental, to name a few.
If the designation of Boracay Island as tourist zone makes it alienable and
disposable by virtue of Proclamation No. 1801, all the other areas mentioned would
likewise be declared wide open for private disposition. That could not have been,
and is clearly beyond, the intent of the proclamation.
It was Proclamation No. 1064 of 2006 which positively declared part of Boracay as
alienable and opened the same to private ownership. Sections 6 and 7 of CA No.
141[120] provide that it is only the President, upon the recommendation of the
proper department head, who has the authority to classify the lands of the public
domain into alienable or disposable, timber and mineral lands.[121]
In issuing Proclamation No. 1064, President Gloria Macapagal-Arroyo merely
exercised the authority granted to her to classify lands of the public domain,
presumably subject to existing vested rights. Classification of public lands is the
exclusive prerogative of the Executive Department, through the Office of the
President. Courts have no authority to do so.[122] Absent such classification, the
land remains unclassified until released and rendered open to disposition.[123]
Proclamation No. 1064 classifies Boracay into 400 hectares of reserved forest land
and 628.96 hectares of agricultural land. The Proclamation likewise provides for a
15-meter buffer zone on each side of the center line of roads and trails, which are
reserved for right of way and which shall form part of the area reserved for forest
land protection purposes.
Contrary to private claimants' argument, there was nothing invalid or irregular,
much less unconstitutional, about the classification of Boracay Island made by the
President through Proclamation No. 1064. It was within her authority to make such
classification, subject to existing vested rights.

Proclamation No. 1064 does not violate the Comprehensive Agrarian Reform Law.
Private claimants further assert that Proclamation No. 1064 violates the provision of
the Comprehensive Agrarian Reform Law (CARL) or RA No. 6657 barring conversion
of public forests into agricultural lands. They claim that since Boracay is a public
forest under PD No. 705, President Arroyo can no longer convert it into an
agricultural land without running afoul of Section 4(a) of RA No. 6657, thus:
SEC. 4. Scope. - The Comprehensive Agrarian Reform Law of 1988 shall cover,
regardless of tenurial arrangement and commodity produced, all public and private
agricultural lands as provided in Proclamation No. 131 and Executive Order No. 229,
including other lands of the public domain suitable for agriculture.
More specifically, the following lands are covered by the Comprehensive Agrarian
Reform Program:
(a) All alienable and disposable lands of the public domain devoted to or suitable for
agriculture. No reclassification of forest or mineral lands to agricultural lands shall
be undertaken after the approval of this Act until Congress, taking into account
ecological, developmental and equity considerations, shall have determined by law,
the specific limits of the public domain.
That Boracay Island was classified as a public forest under PD No. 705 did not bar
the Executive from later converting it into agricultural land. Boracay Island still
remained an unclassified land of the public domain despite PD No. 705.
In Heirs of the Late Spouses Pedro S. Palanca and Soterranea Rafols v. Republic,
[124] the Court stated that unclassified lands are public forests.
While it is true that the land classification map does not categorically state that the
islands are public forests, the fact that they were unclassified lands leads to the
same result. In the absence of the classification as mineral or timber land, the land
remains unclassified land until released and rendered open to disposition.[125]
(Emphasis supplied)
Moreover, the prohibition under the CARL applies only to a "reclassification" of land.
If the land had never been previously classified, as in the case of Boracay, there can
be no prohibited reclassification under the agrarian law. We agree with the opinion
of the Department of Justice[126] on this point:
Indeed, the key word to the correct application of the prohibition in Section 4(a) is
the word "reclassification." Where there has been no previous classification of public
forest [referring, we repeat, to the mass of the public domain which has not been
the subject of the present system of classification for purposes of determining which
are needed for forest purposes and which are not] into permanent forest or forest
reserves or some other forest uses under the Revised Forestry Code, there can be
no "reclassification of forest lands" to speak of within the meaning of Section 4(a).
Thus, obviously, the prohibition in Section 4(a) of the CARL against the
reclassification of forest lands to agricultural lands without a prior law delimiting the
limits of the public domain, does not, and cannot, apply to those lands of the public

domain, denominated as "public forest" under the Revised Forestry Code, which
have not been previously determined, or classified, as needed for forest purposes in
accordance with the provisions of the Revised Forestry Code.[127]
Private claimants are not entitled to apply for judicial confirmation of imperfect title
under CA No. 141. Neither do they have vested rights over the occupied lands under
the said law. There are two requisites for judicial confirmation of imperfect or
incomplete title under CA No. 141, namely: (1) open, continuous, exclusive, and
notorious possession and occupation of the subject land by himself or through his
predecessors-in-interest under a bona fide claim of ownership since time
immemorial or from June 12, 1945; and (2) the classification of the land as alienable
and disposable land of the public domain.[128]
As discussed, the Philippine Bill of 1902, Act No. 926, and Proclamation No. 1801 did
not convert portions of Boracay Island into an agricultural land. The island remained
an unclassified land of the public domain and, applying the Regalian doctrine, is
considered State property.
Private claimants' bid for judicial confirmation of imperfect title, relying on the
Philippine Bill of 1902, Act No. 926, and Proclamation No. 1801, must fail because of
the absence of the second element of alienable and disposable land. Their
entitlement to a government grant under our present Public Land Act presupposes
that the land possessed and applied for is already alienable and disposable. This is
clear from the wording of the law itself.[129] Where the land is not alienable and
disposable, possession of the land, no matter how long, cannot confer ownership or
possessory rights.[130]
Neither may private claimants apply for judicial confirmation of imperfect title under
Proclamation No. 1064, with respect to those lands which were classified as
agricultural lands. Private claimants failed to prove the first element of open,
continuous, exclusive, and notorious possession of their lands in Boracay since June
12, 1945.
We cannot sustain the CA and RTC conclusion in the petition for declaratory relief
that private claimants complied with the requisite period of possession.
The tax declarations in the name of private claimants are insufficient to prove the
first element of possession. We note that the earliest of the tax declarations in the
name of private claimants were issued in 1993. Being of recent dates, the tax
declarations are not sufficient to convince this Court that the period of possession
and occupation commenced on June 12, 1945.
Private claimants insist that they have a vested right in Boracay, having been in
possession of the island for a long time. They have invested millions of pesos in
developing the island into a tourist spot. They say their continued possession and

investments give them a vested right which cannot be unilaterally rescinded by

Proclamation No. 1064.
The continued possession and considerable investment of private claimants do not
automatically give them a vested right in Boracay. Nor do these give them a right to
apply for a title to the land they are presently occupying. This Court is
constitutionally bound to decide cases based on the evidence presented and the
laws applicable. As the law and jurisprudence stand, private claimants are ineligible
to apply for a judicial confirmation of title over their occupied portions in Boracay
even with their continued possession and considerable investment in the island.
One Last Note
The Court is aware that millions of pesos have been invested for the development of
Boracay Island, making it a by-word in the local and international tourism industry.
The Court also notes that for a number of years, thousands of people have called
the island their home. While the Court commiserates with private claimants' plight,
We are bound to apply the law strictly and judiciously. This is the law and it should
prevail. Ito ang batas at ito ang dapat umiral.
All is not lost, however, for private claimants. While they may not be eligible to
apply for judicial confirmation of imperfect title under Section 48(b) of CA No. 141,
as amended, this does not denote their automatic ouster from the residential,
commercial, and other areas they possess now classified as agricultural. Neither will
this mean the loss of their substantial investments on their occupied alienable
lands. Lack of title does not necessarily mean lack of right to possess.
For one thing, those with lawful possession may claim good faith as builders of
improvements. They can take steps to preserve or protect their possession. For
another, they may look into other modes of applying for original registration of title,
such as by homestead[131] or sales patent,[132] subject to the conditions imposed
by law.
More realistically, Congress may enact a law to entitle private claimants to acquire
title to their occupied lots or to exempt them from certain requirements under the
present land laws. There is one such bill[133] now pending in the House of
Representatives. Whether that bill or a similar bill will become a law is for Congress
to decide.
In issuing Proclamation No. 1064, the government has taken the step necessary to
open up the island to private ownership. This gesture may not be sufficient to
appease some sectors which view the classification of the island partially into a
forest reserve as absurd. That the island is no longer overrun by trees, however,
does not becloud the vision to protect its remaining forest cover and to strike a

healthy balance between progress and ecology. Ecological conservation is as

important as economic progress.
To be sure, forest lands are fundamental to our nation's survival. Their promotion
and protection are not just fancy rhetoric for politicians and activists. These are
needs that become more urgent as destruction of our environment gets prevalent
and difficult to control. As aptly observed by Justice Conrado Sanchez in 1968 in
Director of Forestry v. Munoz:[134]
The view this Court takes of the cases at bar is but in adherence to public policy
that should be followed with respect to forest lands. Many have written much, and
many more have spoken, and quite often, about the pressing need for forest
preservation, conservation, protection, development and reforestation. Not without
justification. For, forests constitute a vital segment of any country's natural
resources. It is of common knowledge by now that absence of the necessary green
cover on our lands produces a number of adverse or ill effects of serious
proportions. Without the trees, watersheds dry up; rivers and lakes which they
supply are emptied of their contents. The fish disappear. Denuded areas become
dust bowls. As waterfalls cease to function, so will hydroelectric plants. With the
rains, the fertile topsoil is washed away; geological erosion results. With erosion
come the dreaded floods that wreak havoc and destruction to property - crops,
livestock, houses, and highways - not to mention precious human lives. Indeed, the
foregoing observations should be written down in a lumberman's decalogue.[135]
WHEREFORE, judgment is rendered as follows:
The petition for certiorari in G.R. No. 167707 is GRANTED and the Court of Appeals
Decision in CA-G.R. CV No. 71118 REVERSED AND SET ASIDE.
The petition for certiorari in G.R. No. 173775 is DISMISSED for lack of merit.
SO ORDERED.

REPUBLIC OF THE PHILIPPINES,

Petitioner,

G.R. No. 151910

Present:

- versus -

PUNO, C.J., Chairperson,

SANDOVAL-GUTIERREZ,
CORONA,
AZCUNA, and
GARCIA, JJ.

LUDOLFO V. MUOZ,
Respondent.

Promulgated:

October 15, 2007

x ---------------------------------------------------------------------------------------- x
DECISION
AZCUNA, J.:
Before this Court is a Petition for Review on Certiorari, under Rule 45 of the 1997
Rules of Civil Procedure, seeking to set aside the August 29, 2001 Decision[1] of the
Court of Appeals (CA) in CA-G.R. CV No. 58170, as well as its January 29, 2002
Resolution, which affirmed the October 3, 1997 Decision[2] of the Regional Trial
Court (RTC) of Ligao, Albay, Branch 13, granting the application for land registration
of respondent Ludolfo V. Muoz.
The following facts prompted the present controversy.
On June 14, 1996, respondent filed an Application for Registration of Title of a parcel
of residential land before the RTC of Ligao, Albay containing an area of 1,986 square
meters situated, bounded, and described as follows:
A PARCEL OF LAND (Lot No. 2276 of the Cadastral Survey of Ligao) with the building
and improvements thereon, situated in the Barrio of Bagonbayan, Municipality of
Ligao, Province of Albay. Bounded on the S., along line 1-2, by Lot No. 2277, Ligao
Cadastre; on the W., along Line 2-3, by Mabini Street; on the N., and E., along lines
3-4-5-6-4-7, by Lot 2284; and on the S., along line 7-8, by Lot 2281; and along line
8-1, by Lot 2278 all of Ligao Cadastre, containing an area of ONE THOUSAND NINE
HUNDRED EIGHTY SIX (1,986) square meters.[3]

In his application for registration, respondent averred that no mortgage or

encumbrance of any kind affects his property and that no other person has an
interest, legal or equitable, on the subject lot. Respondent further declared that the
property was acquired by donation inter vivos, executed by the spouses Apolonio R.
Muoz and Anastacia Vitero on November 18, 1956, and that the spouses and their

predecessors-in-interest have been in possession thereof since time immemorial for

more than 70 years.
On November 7, 1996, petitioner Republic of the Philippines, through the Office of
the Solicitor General (OSG), opposed the application on the following grounds:
(1)
That neither the applicant nor his predecessors-in-interest have been in
open, continuous, exclusive and notorious possession and occupation of the land in
question since June 12, 1945 or prior thereto (Sec. 48[b], C.A. 141 as amended by
P.D. 1073).
(2)
That the muniment/s of title and/or the tax payment/s receipt/s of
application/s, if any, attached to or alleged in the application, do not constitute
competent and sufficient evidence of a bona fide acquisition of the lands acquired
for or his open, continuous, exclusive and notorious possession and occupation
thereof in the concept of owner since June 12, 1945 or prior thereto. Said
muniment/s of title as well as the title do not appear to be genuine and that the tax
declaration/s and/or tax payment receipt/s indicate the pretended possession of
application to be of recent vintage.
(3)
That the claim of ownership in fee simple on the basis of Spanish title or
grant can no longer be availed of by the applicant who has failed to file an
appropriate application for registration within the period of six (6) months from
February 16, 1976 as required by P.D. No. 892. From the records, it appears that the
instant application was recently filed.
(4)
That the parcel applied for is part of the public domain belonging to the
Republic of the Philippines not subject to private appropriation.
(5)
That this application was filed beyond December 31, 1987, the period set
forth under Sec. 2, P.D. No. 1073 and therefore, is filed out of time.[4]

In respondents Answer to Opposition, he professed that the land in question

is a residential lot originally owned and possessed by Paulino Pulvinar and Geronimo
Lozada. Sometime in April 1917, Pulvinar sold his share of the unregistered land to
the spouses Muoz and Vitero, respondents parents. In June 1920, Lozada likewise
sold his remaining part to the parents of respondent. Thereafter, the ownership and
possession of the property were consolidated by the spouses and declared for
taxation purposes in the name of Muoz in 1920. Furthermore, it was stated that
during the cadastral survey conducted in Ligao, Albay in 1928, the land was
designated as Lot No. 2276, as per Survey Notification Card issued to Muoz dated
October 2, 1928. Finally, respondent contended that from 1920 up to 1996, the time
of application, the land taxes for the property had been fully paid.

On February 6, 1997, an Order of General Default[5] was entered by the trial court
against the whole world except for the government and a certain Alex Vasquez, who
appeared during the scheduled initial hearing stating that he would file an
opposition to the application.
In the Opposition[6] filed by Vasquez dated February 19, 1997, he declared that he
owns parcels of land, Lot Nos. 2284-A-2 and 2275, adjoining that of the subject
matter of the application. He added that certain portions of his lands are included in
the application as respondents concrete fence is found within the area of his lots.
Respondent, in his answer to the opposition,[7] alleged that his property, Lot No.
2276, is covered by a technical description, duly certified correct by the Bureau of
Lands and approved for registration by the Land Registration Authority (LRA), which
specified the exact areas and boundaries of Lot No. 2276. Granting that there is an
encroachment to the oppositors adjoining land, respondent reasoned that it is not
for the court a quo, sitting as a Land Registration Court, to entertain the opposition
because the case should be ventilated in a separate proceeding as an ordinary civil
case.
During the trial, respondent was presented as the sole witness. Respondent, who
was 81 years old at that time, testified that he acquired the property in 1956 when
his parents donated the same to him.[8] He presented as Exhibit H[9] Tax
Declaration No. 048-0267, evidencing the payment of realty taxes for Lot No. 2276
in 1997. A Certification from the Office of the Municipal Treasurer[10] was likewise
introduced by the respondent showing the payment of real estate taxes from 1956
up to the year 1997. He further declared that the property is a residential land with
improvements such as a house made of solid materials and fruit-bearing trees. In
1957, respondent told the court that he constructed a concrete wall surrounding the
entire property. Respondent also narrated that he grew up on the subject lot and
spent his childhood days in the area.[11]
On cross-examination, respondent claimed that he has six brothers and sisters,
none of whom are claiming any interest over the property.[12]
On June 16, 1997, the trial court noted[13] a Report[14] submitted by the Director
of Lands, which informed the court that as per records of the Land Management
Bureau in Manila, Lot No. 2276, CAD-239 is covered by Free Patent Application No.
10-2-664 of Anastacia Vitero.
The RTC rendered a Decision dated October 3, 1997 granting the application for
registration. The dispositive portion of the decision reads:
WHEREFORE, decision is hereby rendered finding the petitioner entitled to
registration. Accordingly, after the finality of this decision, let a decree and,

thereafter the corresponding certificate of title over Lot No. 2276 of the Ligao
Cadastre as delimited by the Technical Description, Annex A-2 of the application,
together with the improvements thereon, issue in the name of LUDOLFO Y. MUOZ,
of legal age, Filipino citizen, married to JOSEFINA PALENCIA, of Mabini Street,
Barangay Tinago, Municipality of Ligao, Province of Albay.
Conformably with the above findings, as prayed for by the Director, Department of
Registration, Land Registration Authority in his Report dated March 6, 1997, the
application, if any, in Cad. Case No. 53, Cadastral Record No. 1404 is hereby
ordered dismissed.
The opposition of Alex Vasquez for lack of merit is hereby ordered dismissed.
Let copy of this Decision be furnished the Office of the Solicitor General, Provincial
Prosecutor of Albay, Oppositor Alez Vasquez and Petitioner.
SO ORDERED.[15]

On appeal, petitioner argued that the trial court did not acquire jurisdiction over the
subject lot because: (1) the notice of initial hearing was not timely filed; (2) the
applicant failed to present the original tracing cloth plan of the property sought to
be registered during the trial; and (3) the applicant failed to present evidence that
the land is alienable and disposable.
Subsequently, the CA affirmed the decision of the court a quo. The appellate court
explained that there was conclusive proof that the jurisdictional requirement of due
notice had been complied with as mandated under Section 24 of Presidential Decree
No. 1529. Furthermore, the failure to present in evidence the tracing cloth plan of
the subject property did not deprive the lower court of its jurisdiction to act on the
application in question. Lastly, the CA ruled that respondent need not adduce
documentary proof that the disputed property had been declared alienable and
disposable for the simple reason that the lot had once been covered by free patent
application; hence, this alone is conclusive evidence that the property was already
declared by the government as open for public disposition.
The petitioner, through the OSG, raises the following grounds for the petition:
I.
THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE TRIAL COURT HAS NOT
ACQUIRED JURISDICTION OVER THE CASE.
II.

PRIVATE RESPONDENT HAS NOT PROVEN BY COMPETENT EVIDENCE THAT THE

PROPERTY IS ALIENABLE AND DISPOSABLE PROPERTY OF THE PUBLIC DOMAIN.[16]
Anent the first issue, petitioner maintains that the failure to present the
original tracing cloth plan is a fatal omission which necessarily affected the trial
courts jurisdiction to proceed with the case.
It bears stressing that the constructive seizure of land accomplished by
posting of notices and processes upon all persons mentioned in notices by means of
publication and sending copies to said persons by registered mail in effect gives the
court jurisdiction over the lands sought to be registered.[17]
While petitioner correctly contends that the submission in evidence of the
original tracing cloth plan is a mandatory and even a jurisdictional requirement, this
Court has recognized instances of substantial compliance with this rule.[18] It is
true that the best evidence to identify a piece of land for registration purposes is
the original tracing cloth plan from the Bureau of Lands, but blueprint copies and
other evidence could also provide sufficient identification.[19] In the present
application for registration, respondent submitted, among other things, the
following supporting documents: (1) a blueprint copy of the survey plan[20]
approved by the Bureau of Lands; and (2) the technical descriptions[21] duly
verified and approved by the Director of Lands.
The Court held in Recto v. Republic[22] that the blueprint copy of the cloth
plan together with the lots technical description duly certified as to their
correctness by the Bureau of Lands are adequate to identify the land applied for
registration, thus
On the first challenge, the petitioner invokes the case of Director of Lands v.
Reyes, where it was held that the original tracing cloth plan of the land applied for
which must be approved by the Director of Lands was a statutory requirement of
mandatory character for the identification of the land sought to be registered. As
what was submitted was not the tracing cloth plan but only the blueprint copy of
the survey plan, the respondent court should have rejected the same as insufficient.
We disagree with this contention. The Court of Appeals was correct when it
observed that in that case the applicant in effect had not submitted anything at all
to identify the subject property because the blueprint presented lacked the
approval of the Director of Lands. By contrast
In the present case, there was considerable compliance with the requirement
of the law as the subject property was sufficiently identified with the presentation of
blueprint copy of Plan AS-06-000002 (San Pedro v. Director of Lands, CA-G.R. No.
65332-R, May 28, 1981). It should be noted in this connection that the Bureau of

Lands has certified to the correctness of the blueprint copy of the plan including the
technical description that go with it. Hence, we cannot ignore the fact, absent in the
Reyes case, that applicant has provided ample evidence to establish the identity of
the subject property. (Emphasis supplied)
x x x.[23]
Moreover, if the survey plan is approved by the Director of Lands and its
correctness has not been overcome by clear, strong and convincing evidence, the
presentation of the tracing cloth plan may be dispensed with.[24] All the evidence
on record sufficiently identified the property as the one applied for by respondent,
and containing the corresponding metes and bounds as well as area. Consequently,
the original tracing cloth plan need not be presented in evidence.[25]
Anent the second issue, petitioner stresses that in proving the alienable and
disposable nature of the property, there has to be a certification from the
Department of Environment and Natural Resources and Community Environment
and Natural Resources Office (CENRO).
The CA is of the opinion that respondent need not adduce documentary
proofs that the disputed property has been declared alienable and disposable
because of the fact that it had once been covered by Free Patent Application No. 102-664 in the name of respondents mother, which was unfortunately not acted upon
by the proper authorities. The CA declares that this is proof enough that the
property was declared by the government as open for public disposition. This
contention was adopted by the respondent both in his Comment and Memorandum
filed before the Court.
Notwithstanding all the foregoing, the Court cannot sustain the argument of
respondent that the subject property was already declared alienable and disposable
land.
Petitioner is correct when it remarked that it was erroneous for the appellate
court to assume that the property in question is alienable and disposable based only
on the Report dated May 21, 1997 of the Director of Lands indicating that the land
involved in said case described as Lot 2276, CAD-239 is covered by Free Patent
Application No. 10-2-664 of Anastacia Vitero.
It must be pointed out that in its Report[26] dated March 6, 1997, the LRA
stated that:
3.
This Authority is not in a position to verify whether or not the parcel
of land subject of registration is already covered by land patent, previously
approved isolated survey and is within forest zone.

WHEREFORE, to avoid duplication in the issuance of titles covering the same parcel
of land and the issuance of titles for lands within the forest zone which have not
been released and classified as alienable, the foregoing is respectfully submitted to
the Honorable Court with the recommendation that the Lands Management Bureau,
Manila, Community Environment and Natural Resources Office, Lands Management
Sector and Forest Management Bureau, all in Legazpi City, be ordered to submit a
report to the Court on the status of the land applied for, to determine whether or
not said land or any portion thereof, is already covered by land patent, previously
approved isolated survey and is within the forest zone and that should the instant
application be given due course, the application in Cad. Case No. 53, Cadastral
Record No. 1404 with respect to Lot 2276 be dismissed.[27]
Noteworthy is the fact that neither the Director of Lands nor the LRA attested that
the land subject of this proceeding is alienable or disposable.
For clarity, applications for confirmation of imperfect title must be able to prove the
following: (1) that the land forms part of the alienable and disposable agricultural
lands of the public domain; and (2) that they have been in open, continuous,
exclusive and notorious possession and occupation of the same under a bona fide
claim of ownership either since time immemorial or since June 12, 1945.[28]
Commonwealth Act No. 141, also known as the Public Land Act, remains to this day
the existing general law governing the classification and disposition of lands of the
public domain, other than timber and mineral lands.[29] Section 6 of CA No. 141
empowers the President to classify lands of the public domain into alienable and
disposable lands of the public domain, which prior to such classification are
inalienable and outside the commerce of man. Section 7 of CA No. 141 authorizes
the President to declare what lands are open to disposition or concession. Section
8 of CA No. 141 states that the government can declare open for disposition or
concession only lands that are officially delimited and classified.
Under the Regalian doctrine embodied in our Constitution, all lands of the public
domain belong to the State, which is the source of any asserted right to ownership
of land. Therefore, all lands not appearing to be clearly within private ownership are
presumed to belong to the State. Accordingly, public lands not shown to have been
reclassified or released as alienable agricultural land or alienated to a private
person by the State remain part of the alienable public domain.[30]
As already well-settled in jurisprudence, no public land can be acquired by private
persons without any grant, express or implied, from the government; and it is
indispensable that the person claiming title to public land should show that his title
was acquired from the State or any other mode of acquisition recognized by law.[31]
To prove that the land subject of an application for registration is alienable, the

applicant must establish the existence of a positive act of the government such as a
presidential proclamation or an executive order; an administrative action;
investigation reports of Bureau of Lands investigators; and a legislative act or a
statute.[32] The applicant may also secure a certification from the Government that
the land applied for is alienable and disposable.[33]
In the present case, respondent failed to submit a certification from the proper
government agency to prove that the land subject for registration is indeed
alienable and disposable. A CENRO certificate, which respondent failed to secure,
could have evidenced the alienability of the land involved.
Considering that respondent has failed to convince this Court of the alienable and
disposable character of the land applied for, the Court cannot approve the
application for registration.
WHEREFORE, the instant petition is GRANTED. Accordingly, the decision
dated August 29, 2001 of the Court of Appeals in CA-G.R. CV No. 58170, as
reiterated in its resolution of January 29, 2002, is REVERSED and SET ASIDE, and
the application for registration filed by respondent Ludolfo V. Muoz is DENIED.
No costs.
SO ORDERED.

RURAL BANK OF ANDA, INC., Petitioner,

- versus
ROMAN CATHOLIC ARCHBISHOP OF LINGAYEN- DAGUPAN,
Respondent.
G.R. No. 155051
Promulgated:
May 29, 2007

DECISION
CARPIO, J.:

The Case
This is a petition for review[1] of the Decision[2] dated 15 October 2001 and
the Resolution dated 23 August 2002 of the Court of Appeals in CA-G.R. CV No.
66478.

The Facts
The lot in dispute, Cadastral Lot 736 (Lot 736), is located in the Poblacion of
Binmaley, Pangasinan. Lot 736 has a total area of about 1,300 square meters and is
part of Lot 3. Cadastral Lot 737 and Lot 739 also form part of Lot 3. Cadastral Lot
737 is known as Imeldas Park, while on Lot 739 is a waiting shed for commuters.
Lot 3 is bounded on the north by Lot 1 of Plan II-5201-A and on the south by the
national road. In front of Lot 736 is the building of Mary Help of Christians Seminary
(seminary) which is on Lot 1.
Lot 1 of Plan II-5201-A, which adjoins Lot 3 on the north, is titled in the name
of respondent Roman Catholic Archbishop of Lingayen (respondent) under Transfer
Certificate of Title No. 6375 (TCT 6375). An annotation on TCT 6375 states that the
ownership of Lot 3 is being claimed by both respondent and the Municipality of
Binmaley.
In 1958, the Rector of the seminary ordered the construction of the fence
separating Lot 736 from the national road to prevent the caretelas from parking
because the smell of horse manure was already bothering the priests living in the
seminary.[3] The concrete fence enclosing Lot 736 has openings in the east, west,
and center and has no gate. People can pass through Lot 736 at any time of the day.
[4]
On 22 December 1997, the Sangguniang Bayan of Binmaley, Pangasinan,
passed and approved Resolution Nos. 104[5] and 105.[6] Resolution No. 104
converted Lot 736 from an institutional lot to a commercial lot. Resolution No. 105
authorized the municipal mayor to enter into a contract of lease for 25 years with
the Rural Bank of Anda over a portion of Lot 736 with an area of 252 square meters.
[7]
In December 1997, Fr. Arenos, the director of the seminary, discovered that a
sawali fence was being constructed enclosing a portion of Lot 736. In January 1998,
the Municipal Mayor of Binmaley, Rolando Domalanta (Mayor Domalanta), came to
the seminary to discuss the situation. Mayor Domalanta and Fr. Arenos agreed that
the construction of the building for the Rural Bank of Anda should be stopped.

On 24 March 1998, respondent requested Mayor Domalanta to remove the

sawali fence and restore the concrete fence. On 20 May 1998, Mayor Domalanta
informed respondent that the construction of the building of the Rural Bank of Anda
would resume but that he was willing to discuss with respondent to resolve the
problem concerning Lot 736.
On 1 June 1998, respondent filed a complaint for Abatement of Illegal
Constructions, Injunction and Damages with Writ of Preliminary Injunction in the
Regional Trial Court of Lingayen, Pangasinan. On 24 August 1998, the trial court
ordered the issuance of a writ of preliminary injunction.
On 4 January 2000, the trial court rendered a decision, the dispositive portion
of which reads:
WHEREFORE, in the light of the foregoing, judgment is hereby rendered in
favor of the plaintiff [Roman Catholic Archbishop of Lingayen-Dagupan]:
1.

Making the writ of preliminary injunction permanent;

2.
Ordering the defendants to cause to be restored the concrete wall with iron
railings, to cause to be removed the sawali fence, both at the expense of the
defendants, jointly and severally, and
3.
Condemning the defendants to pay jointly and severally, to the plaintiff the
amount of P25,000.00 as litigation expenses, attorneys fees in the amount of
P50,000.00 and the costs of this suit.
SO ORDERED.[8]

On appeal, the Court of Appeals affirmed the decision with the modification
that the awards of litigation expenses, attorneys fees, and costs should be deleted.
The Court of Appeals subsequently denied the motion for reconsideration of the
Municipality of Binmaley and the Rural Bank of Anda.

The Ruling of the Trial Court

The trial court found that Lot 736 is not covered by any Torrens title either in
the name of respondent or in the name of the Municipality of Binmaley. The trial
court held that Lot 736 is public in nature. Since Lot 736 is property of public
dominion, it is outside the commerce of man. Thus, the Sangguniang Bayan of

Binmaley, Pangasinan exceeded its authority when it adopted Resolution Nos. 104
and 105 converting Lot 736 from an institutional lot to a commercial lot and
authorizing the municipal mayor to enter into a contract of lease for 25 years with
the Rural Bank of Anda over a 252 square meter portion of Lot 736 .

The Ruling of the Court of Appeals

The Court of Appeals agreed with the trial court that Lot 736 is property of
public dominion and is used by the public as a pathway. Respondent and the
Municipality of Binmaley are mere claimants with no sufficient evidence to prove
their ownership of Lot 736. The Court of Appeals held that property of public
dominion is intended for the common welfare and cannot be the object of
appropriation either by the state or by private persons. Since Lot 736 is for public
use, it is a property of public dominion and it is not susceptible of private ownership.
Thus, Resolution Nos. 104 and 105 are void for being enacted beyond the powers of
the Sangguniang Bayan of Binmaley. The contract of lease between the
Municipality of Binmaley and the Rural Bank of Anda is therefore void.
The Court of Appeals also ruled that since neither the respondent nor the
Municipality of Binmaley owns Lot 736, there is no basis for the monetary awards
granted by the trial court.

The Issue
The issue in this case is whether Resolution Nos. 104 and 105 of the
Sangguniang Bayan of Binmaley are valid.

The Ruling of the Court

The petition has no merit.
Both respondent and the Municipality of Binmaley admit that they do not
have title over Lot 736. The Assistant Chief of the Aggregate Survey Section of the
Land Management Services in Region I testified that no document of ownership for
Lot 736 was ever presented to their office.[9]
Respondent claims Lot 736 based on its alleged open, continuous, adverse,
and uninterrupted possession of Lot 736. However, the records reveal otherwise.
Even the witnesses for respondent testified that Lot 736 was used by the people as
pathway, parking space, and playground.[10]

On the other hand, the Municipality of Binmaley alleged that it is the sole
claimant of Lot 736 based on the Property Identification Map, Tax Mapping Control
Roll of the Municipality of Binmaley, and the Lot Data Computation in the name of
the Municipality of Binmaley. However, these documents merely show that the
Municipality of Binmaley is a mere claimant of Lot 736. In fact, the chief of Survey
Division of the Department of Environment and Natural Resources, San Fernando
City, La Union testified that the cadastral survey[11] of Lot 736, which was surveyed
for the Municipality of Binmaley in 1989, had not been approved.[12] The cadastral
survey was based on the Lot Data Computation[13] of Lot 736 which was likewise
contracted by the Municipality of Binmaley in 1989.
The records show that Lot 736 is used as a pathway going to the school, the
seminary, or the church, which are all located on lots adjoined to Lot 736.[14] Lot
736 was also used for parking and playground.[15] In other words, Lot 736 was used
by the public in general.
Both respondent and the Municipality of Binmaley failed to prove their right
over Lot 736. Since Lot 736 has never been acquired by anyone through purchase
or grant or any other mode of acquisition, Lot 736 remains part of the public
domain and is owned by the state. As held in Hong Hok v. David:[16]
There being no evidence whatever that the property in question was ever acquired
by the applicants or their ancestors either by composition title from the Spanish
Government or by possessory information title or by any other means for the
acquisition of public lands, the property must be held to be public domain. For it is
well settled that no public land can be acquired by private persons without any
grant, express or implied, from the government. It is indispensable then that there
be a showing of a title from the state or any other mode of acquisition recognized
by law. The most recent restatement of the doctrine, found in an opinion of Justice
J.B.L. Reyes follows: The applicant, having failed to establish his right or title over
the northern portion of Lot No. 463 involved in the present controversy, and there
being no showing that the same has been acquired by any private person from the
Government, either by purchase or by grant, the property is and remains part of the
public domain.

This is in accordance with the Regalian doctrine which holds that the state
owns all lands and waters of the public domain.[17] Thus, under Article XII, Section
2 of the Constitution: All lands of the public domain, waters, minerals, coal,
petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or
timber, wildlife, flora and fauna, and other natural resources are owned by the
state.

Municipal corporations cannot appropriate to themselves public or

government lands without prior grant from the government.[18] Since Lot 736 is
owned by the state, the Sangguniang Bayan of Binmaley exceeded its authority in
passing Resolution Nos. 104 and 105. Thus, Resolution Nos. 104 and 105 are void
and consequently, the contract of lease between the Municipality of Binmaley and
the Rural Bank of Anda over a portion of Lot 736 is also void.

WHEREFORE, we DENY the petition. We AFFIRM the Decision dated 15

October 2001 and the Resolution dated 23 August 2002 of the Court of Appeals.

SO ORDERED.

[G.R. No. 135385. December 6, 2000]

ISAGANI CRUZ and CESAR EUROPA, petitioners, vs. SECRETARY OF
ENVIRONMENT AND NATURAL RESOURCES, SECRETARY OF BUDGET AND
MANAGEMENT and CHAIRMAN and COMMISSIONERS OF THE NATIONAL
COMMISSION ON INDIGENOUS PEOPLES, respondents.
HON. JUAN M .FLAVIER, HON. PONCIANO BENNAGEN, BAYANI ASCARRAGA,
EDTAMI MANSAYANGAN, BASILIO WANDAG, EVELYN DUNUAN, YAOM
TUGAS, ALFREMO CARPIANO, LIBERATO A. GABIN, MATERNIDAD M. COLAS,
NARCISA M. DALUPINES, BAI KIRAM-CONNIE SATURNO, BAE MLOMOBEATRIZ T. ABASALA, DATU BALITUNGTUNG-ANTONIO D. LUMANDONG,
DATU MANTUMUKAW TEOFISTO SABASALES, DATU EDUAARDO BANDA,
DATU JOEL UNAD, DATU RAMON BAYAAN, TIMUAY JOSE ANOY, TIMUAY
MACARIO D. SALACAO, TIMUAY EDWIN B. ENDING, DATU SAHAMPONG
MALANAW VI, DATU BEN PENDAO CABIGON, BAI NANAPNAY-LIZA SAWAY,
BAY INAY DAYA-MELINDA S. REYMUNDO, BAI TINANGHAGA HELINITA T.
PANGAN, DATU MAKAPUKAW ADOLINO L. SAWAY, DATU MAUDAYAWCRISPEN SAWAY, VICKY MAKAY, LOURDES D. AMOS, GILBERT P. HOGGANG,
TERESA GASPAR, MANUEL S. ONALAN, MIA GRACE L. GIRON, ROSEMARIE G.
PE, BENITO CARINO, JOSEPH JUDE CARANTES, LYNETTE CARANTES-VIVAL,
LANGLEY SEGUNDO, SATUR S. BUGNAY, CARLING DOMULOT, ANDRES
MENDIOGRIN, LEOPOLDO ABUGAN, VIRGILIO CAYETANO, CONCHITA G.
DESCAGA, LEVY ESTEVES, ODETTE G. ESTEVEZ, RODOLFO C. AGUILAR,
MAURO VALONES, PEPE H. ATONG, OFELIA T. DAVI, PERFECTO B.
GUINOSAO, WALTER N. TIMOL, MANUEL T. SELEN, OSCAR DALUNHAY, RICO
O. SULATAN, RAFFY MALINDA, ALFREDO ABILLANOS, JESSIE ANDILAB,
MIRLANDO H. MANGKULINTAS, SAMIE SATURNO, ROMEO A. LINDAHAY,
ROEL S. MANSANG-CAGAN, PAQUITO S. LIESES, FILIPE G. SAWAY, HERMINIA

S. SAWAY, JULIUS S. SAWAY, LEONARDA SAWAY, JIMMY UGYUB, SALVADOR

TIONGSON, VENANCIO APANG, MADION MALID, SUKIM MALID, NENENG
MALID, MANGKATADONG AUGUSTO DIANO, JOSEPHINE M. ALBESO,
MORENO MALID, MARIO MANGCAL, FELAY DIAMILING, SALOME P. SARZA,
FELIPE P. BAGON, SAMMY SALNUNGAN, ANTONIO D. EMBA, NORMA
MAPANSAGONOS, ROMEO SALIGA, SR., JERSON P. GERADA, RENATO T.
BAGON, JR., SARING MASALONG, SOLEDAD M. GERARDA, ELIZABETH L.
MENDI, MORANTE S. TIWAN, DANILO M. MALUDAO, MINORS MARICEL
MALID, represented by her father CORNELIO MALID, MARCELINO M.
LADRA, represented by her father MONICO D. LADRA, JENNYLYN MALID,
represented by her father TONY MALID, ARIEL M. EVANGELISTA,
represented by her mother LINAY BALBUENA, EDWARD M. EMUY, SR.,
SUSAN BOLANIO, OND, PULA BATO BLAAN TRIBAL FARMERS
ASSOCIATION, INTER-PEOPLES EXCHANGE, INC. and GREEN FORUMWESTERN VISAYAS, intervenors.
COMMISSION ON HUMAN RIGHTS, intervenor.
IKALAHAN INDIGENOUS PEOPLE and HARIBON FOUNDATION FOR THE
CONSERVATION OF NATURAL RESOURCES, INC., intervenor.
RESOLUTION
PER CURIAM:
Petitioners Isagani Cruz and Cesar Europa brought this suit for prohibition and
mandamus as citizens and taxpayers, assailing the constitutionality of certain
provisions of Republic Act No. 8371 (R.A. 8371), otherwise known as the Indigenous
Peoples Rights Act of 1997 (IPRA), and its Implementing Rules and Regulations
(Implementing Rules).
In its resolution of September 29, 1998, the Court required respondents to
comment.[1] In compliance, respondents Chairperson and Commissioners of the
National Commission on Indigenous Peoples (NCIP), the government agency created
under the IPRA to implement its provisions, filed on October 13, 1998 their
Comment to the Petition, in which they defend the constitutionality of the IPRA and
pray that the petition be dismissed for lack of merit.
On October 19, 1998, respondents Secretary of the Department of Environment and
Natural Resources (DENR) and Secretary of the Department of Budget and
Management (DBM) filed through the Solicitor General a consolidated Comment.
The Solicitor General is of the view that the IPRA is partly unconstitutional on the
ground that it grants ownership over natural resources to indigenous peoples and
prays that the petition be granted in part.
On November 10, 1998, a group of intervenors, composed of Sen. Juan Flavier, one
of the authors of the IPRA, Mr. Ponciano Bennagen, a member of the 1986
Constitutional Commission, and the leaders and members of 112 groups of

indigenous peoples (Flavier, et. al), filed their Motion for Leave to Intervene. They
join the NCIP in defending the constitutionality of IPRA and praying for the dismissal
of the petition.
On March 22, 1999, the Commission on Human Rights (CHR) likewise filed a Motion
to Intervene and/or to Appear as Amicus Curiae. The CHR asserts that IPRA is an
expression of the principle of parens patriae and that the State has the
responsibility to protect and guarantee the rights of those who are at a serious
disadvantage like indigenous peoples. For this reason it prays that the petition be
dismissed.
On March 23, 1999, another group, composed of the Ikalahan Indigenous People
and the Haribon Foundation for the Conservation of Natural Resources, Inc.
(Haribon, et al.), filed a motion to Intervene with attached Comment-in-Intervention.
They agree with the NCIP and Flavier, et al. that IPRA is consistent with the
Constitution and pray that the petition for prohibition and mandamus be dismissed.
The motions for intervention of the aforesaid groups and organizations were
granted.
Oral arguments were heard on April 13, 1999. Thereafter, the parties and
intervenors filed their respective memoranda in which they reiterate the arguments
adduced in their earlier pleadings and during the hearing.
Petitioners assail the constitutionality of the following provisions of the IPRA and its
Implementing Rules on the ground that they amount to an unlawful deprivation of
the States ownership over lands of the public domain as well as minerals and other
natural resources therein, in violation of the regalian doctrine embodied in Section
2, Article XII of the Constitution:
(1) Section 3(a) which defines the extent and coverage of ancestral domains, and
Section 3(b) which, in turn, defines ancestral lands;
(2) Section 5, in relation to section 3(a), which provides that ancestral domains
including inalienable public lands, bodies of water, mineral and other resources
found within ancestral domains are private but community property of the
indigenous peoples;
(3) Section 6 in relation to section 3(a) and 3(b) which defines the composition of
ancestral domains and ancestral lands;
(4) Section 7 which recognizes and enumerates the rights of the indigenous
peoples over the ancestral domains;

(5) Section 8 which recognizes and enumerates the rights of the indigenous peoples
over the ancestral lands;
(6) Section 57 which provides for priority rights of the indigenous peoples in the
harvesting, extraction, development or exploration of minerals and other natural
resources within the areas claimed to be their ancestral domains, and the right to
enter into agreements with nonindigenous peoples for the development and
utilization of natural resources therein for a period not exceeding 25 years,
renewable for not more than 25 years; and
(7) Section 58 which gives the indigenous peoples the responsibility to maintain,
develop, protect and conserve the ancestral domains and portions thereof which are
found to be necessary for critical watersheds, mangroves, wildlife sanctuaries,
wilderness, protected areas, forest cover or reforestation.[2]
Petitioners also content that, by providing for an all-encompassing definition of
ancestral domains and ancestral lands which might even include private lands
found within said areas, Sections 3(a) and 3(b) violate the rights of private
landowners.[3]

In addition, petitioners question the provisions of the IPRA defining the powers and
jurisdiction of the NCIP and making customary law applicable to the settlement of
disputes involving ancestral domains and ancestral lands on the ground that these
provisions violate the due process clause of the Constitution.[4]
These provisions are:
(1) sections 51 to 53 and 59 which detail the process of delineation and recognition
of ancestral domains and which vest on the NCIP the sole authority to delineate
ancestral domains and ancestral lands;
(2) Section 52[i] which provides that upon certification by the NCIP that a particular
area is an ancestral domain and upon notification to the following officials, namely,
the Secretary of Environment and Natural Resources, Secretary of Interior and Local
Governments, Secretary of Justice and Commissioner of the National Development
Corporation, the jurisdiction of said officials over said area terminates;
(3) Section 63 which provides the customary law, traditions and practices of
indigenous peoples shall be applied first with respect to property rights, claims of
ownership, hereditary succession and settlement of land disputes, and that any
doubt or ambiguity in the interpretation thereof shall be resolved in favor of the
indigenous peoples;

(4) Section 65 which states that customary laws and practices shall be used to
resolve disputes involving indigenous peoples; and
(5) Section 66 which vests on the NCIP the jurisdiction over all claims and disputes
involving rights of the indigenous peoples.[5]
Finally, petitioners assail the validity of Rule VII, Part II, Section 1 of the NCIP
Administrative Order No. 1, series of 1998, which provides that the administrative
relationship of the NCIP to the Office of the President is characterized as a lateral
but autonomous relationship for purposes of policy and program coordination.
They contend that said Rule infringes upon the Presidents power of control over
executive departments under Section 17, Article VII of the Constitution.[6]
Petitioners pray for the following:
(1) A declaration that Sections 3, 5, 6, 7, 8, 52[I], 57, 58, 59, 63, 65 and 66 and
other related provisions of R.A. 8371 are unconstitutional and invalid;
(2) The issuance of a writ of prohibition directing the Chairperson and
Commissioners of the NCIP to cease and desist from implementing the assailed
provisions of R.A. 8371 and its Implementing Rules;
(3) The issuance of a writ of prohibition directing the Secretary of the Department
of Environment and Natural Resources to cease and desist from implementing
Department of Environment and Natural Resources Circular No. 2, series of 1998;
(4) The issuance of a writ of prohibition directing the Secretary of Budget and
Management to cease and desist from disbursing public funds for the
implementation of the assailed provisions of R.A. 8371; and
(5) The issuance of a writ of mandamus commanding the Secretary of Environment
and Natural Resources to comply with his duty of carrying out the States
constitutional mandate to control and supervise the exploration, development,
utilization and conservation of Philippine natural resources.[7]
After due deliberation on the petition, the members of the Court voted as follows:
Seven (7) voted to dismiss the petition. Justice Kapunan filed an opinion, which the
Chief Justice and Justices Bellosillo, Quisumbing, and Santiago join, sustaining the
validity of the challenged provisions of R.A. 8371. Justice Puno also filed a separate
opinion sustaining all challenged provisions of the law with the exception of Section
1, Part II, Rule III of NCIP Administrative Order No. 1, series of 1998, the Rules and
Regulations Implementing the IPRA, and Section 57 of the IPRA which he contends
should be interpreted as dealing with the large-scale exploitation of natural

resources and should be read in conjunction with Section 2, Article XII of the 1987
Constitution. On the other hand, Justice Mendoza voted to dismiss the petition
solely on the ground that it does not raise a justiciable controversy and petitioners
do not have standing to question the constitutionality of R.A. 8371.
Seven (7) other members of the Court voted to grant the petition. Justice
Panganiban filed a separate opinion expressing the view that Sections 3 (a)(b), 5, 6,
7 (a)(b), 8, and related provisions of R.A. 8371 are unconstitutional. He reserves
judgment on the constitutionality of Sections 58, 59, 65, and 66 of the law, which he
believes must await the filing of specific cases by those whose rights may have
been violated by the IPRA. Justice Vitug also filed a separate opinion expressing the
view that Sections 3(a), 7, and 57 of R.A. 8371 are unconstitutional. Justices Melo,
Pardo, Buena, Gonzaga-Reyes, and De Leon join in the separate opinions of Justices
Panganiban and Vitug.
As the votes were equally divided (7 to 7) and the necessary majority was not
obtained, the case was redeliberated upon. However, after redeliberation, the
voting remained the same. Accordingly, pursuant to Rule 56, Section 7 of the Rules
of Civil Procedure, the petition is DISMISSED.
Attached hereto and made integral parts thereof are the separate opinions of
Justices Puno, Vitug, Kapunan, Mendoza, and Panganiban.
SO ORDERED.

Section 2, Article XII of the 1987 Constitution

Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and
other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife,
flora and fauna, and other natural resources are owned by the State. With the
exception of agricultural lands, all other natural resources shall not be alienated.
The exploration, development, and utilization of natural resources shall be under
the full control and supervision of the State. The State may directly undertake such
activities, or it may enter into co-production, joint venture, or production-sharing
agreements with Filipino citizens, or corporations or associations at least sixty per
centum of whose capital is owned by such citizens. Such agreements may be for a
period not exceeding twenty-five years, renewable for not more than twenty-five
years, and under such terms and conditions as may be provided by law. In cases of
water rights for irrigation, water supply fisheries, or industrial uses other than the
development of water power, beneficial use may be the measure and limit of the
grant.

The State shall protect the nation's marine wealth in its archipelagic waters,
territorial sea, and exclusive economic zone, and reserve its use and enjoyment
exclusively to Filipino citizens.
The Congress may, by law, allow small-scale utilization of natural resources by
Filipino citizens, as well as cooperative fish farming, with priority to subsistence
fishermen and fish- workers in rivers, lakes, bays, and lagoons.
The President may enter into agreements with foreign-owned corporations involving
either technical or financial assistance for large-scale exploration, development, and
utilization of minerals, petroleum, and other mineral oils according to the general
terms and conditions provided by law, based on real contributions to the economic
growth and general welfare of the country. In such agreements, the State shall
promote the development and use of local scientific and technical resources.
The President shall notify the Congress of every contract entered into in accordance
with this provision, within thirty days from its execution.

Native Title; Exception to the Regalian Doctrine

CARINO v. INSULAR GOVERNMENT OF PHILIPPINE ISLANDS, 212 U.S. 449
(1909)
212 U.S. 449
MATEO CARINO, Plff. in Err., v. INSULAR GOVERNMENT OF THE PHILIPPINE
ISLANDS.
No. 72.
Argued January 13, 1909.
Decided February 23, 1909.
[212 U.S. 449, 450] Messrs. Frederic R. Coudert, Howard Thayer
Kingsbury, Charles C. Cohn, D. R. Williams, and Paul Fuller for plaintiff in
error.
[212 U.S. 449, 453]
defendant in error.

Solicitor General Hoyt and Paul Charlton for

[212 U.S. 449, 455]

Mr. Justice Holmes delivered the opinion of the court:

This was an application to the Philippine court of land registration for the
registration of certain land. The application was granted by the court on March 4,
1904. An appeal was taken to the court of first instance of the province of Benguet,
on behalf of the government of the Philippines, and also on behalf of the United
States, those governments having taken possession of the property for public and
military purposes. The court of first instance found the facts and dismissed the
application upon grounds of law. This judgment was affirmed by the supreme court
(7 Philippine, 132 ), and the case then was brought here by writ of error.
The material facts found are very few. The applicant and plaintiff in error is an Igorot
of the province of Benguet, where the land lies. For more than fifty years before the
treaty of [212 U.S. 449, 456] Paris, April 11, 1899 [30 Stat. at L. 1754], as far back
as the findings go, the plaintiff and his ancestors had held the land as owners. His
grandfather had lived upon it, and had maintained fences sufficient for the holding
of cattle, according to the custom of the country, some of the fences, it seems,
having been of much earlier date. His father had cultivated parts and had used
parts for pasturing cattle, and he had used it for pasture in his turn. They all had
been recognized as owners by the Igorots, and he had inherited or received the land
from his father, in accordance with Igorot custom. No document of title, however,
had issued from the Spanish Crown, and although, in 1893-1894, and again in 18961897, he made application for one under the royal decrees then in force, nothing
seems to have come of it, unless, perhaps, information that lands in Benguet could
not be conceded until those to be occupied for a sanatorium, etc., had been
designated,-a purpose that has been carried out by the Philippine government and
the United States. In 1901 the plaintiff filed a petition, alleging ownership, under the
mortgage law, and the lands were registered to him, that process, however,
establishing only a possessory title, it is said.
Before we deal with the merits, we must dispose of a technical point. The
government has spent some energy in maintaining that this case should have been
brought up by appeal, and not by writ of error. We are of opinion, however, that the
mode adopted was right. The proceeding for registration is likened to bills in equity
to quiet title, but it is different in principle. It is a proceeding in rem under a statute
of the type of the Torrens act, such as was discussed in Tyler v. Registration Ct.
Judges, 175 Mass. 71, 51 L.R.A. 433, 55 N. E. 812. It is nearer to law than to equity,
and is an assertion of legal title; but we think it unnecessary to put it into either
pigeon hole. A writ of error is the general method of bringing cases to this court, an
appeal the exception, confined to equity in the main. There is no reason for not
applying the general rule to this case. Ormsby v. Webb, 134 U.S. 47, 65 , 33 S. L. ed.
805, 812, 10 Sup. Ct. Rep. 478; Campbell v. Porter, 162 U.S. 478 , 40 L. ed. 1044, 16
Sup. Ct. Rep. 871; Metropolitan R. Co. v. District of Columbia ( Metropolitan R. Co. v.
Macfarland) 195 U.S. 322 , 49 L. ed. 219, 25 Sup. Ct. Rep. 28. [212 U.S. 449, 457]
Another preliminary matter may as well be disposed of here. It is suggested that,
even if the applicant have title, he cannot have it registered, because the Philippine

Commission's act No. 926, of 1903, excepts the province of Benguet among others
from its operation. But that act deals with the acquisition of new titles by
homestead entries, purchase, etc., and the perfecting of titles begun under the
Spanish law. The applicant's claim is that he now owns the land, and is entitled to
registration under the Philippine Commission's act No. 496, of 1902, which
established a court for that purpose with jurisdiction 'throughout the Philippine
archipelago,' 2, and authorized in general terms applications to be made by persons
claiming to own the legal estate in fee simple, as the applicant does. He is entitled
to registration if his claim of ownership can be maintained.
We come, then, to the question on which the case was decided below,- namely,
whether the plaintiff owns the land. The position of the government, shortly stated,
is that Spain assumed, asserted, and had title to all the land in the Philippines
except so far as it saw fit to permit private titles to be acquired; that there was no
prescription against the Crown, and that, if there was, a decree of June 25, 1880,
required registration within a limited time to make the title good; that the plaintiff's
land was not registered, and therefore became, if it was not always, public land;
that the United States succeeded to the title of Spain, and so that the plaintiff has
no rights that the Philippine government is bound to respect.
If we suppose for the moment that the government's contention is so far correct
that the Crown of Spain in form asserted a title to this land at the date of the treaty
of Paris, to which the United States succeeded, it is not to be assumed without
argument that the plaintiff's case is at an end. It is true that Spain, in its earlier
decrees, embodied the universal feudal theory that all lands were held from the
Crown, and perhaps the general attitude of conquering nations toward people not
recognized as entitled to the treatment accorded to those [212 U.S. 449, 458] in
the same zone of civilization with themselves. It is true, also, that, in legal theory,
sovereignty is absolute, and that, as against foreign nations, the United States may
assert, as Spain asserted, absolute power. But it does not follow that, as against the
inhabitants of the Philippines, the United States asserts that Spain had such power.
When theory is left on one side, sovereignty is a question of strength, and may vary
in degree. How far a new sovereign shall insist upon the theoretical relation of the
subjects to the head in the past, and how far it shall recognize actual facts, are
matters for it to decide.
The province of Benguet was inhabited by a tribe that the Solicitor General, in his
argument, characterized as a savage tribe that never was brought under the civil or
military government of the Spanish Crown. It seems probable, if not certain, that the
Spanish officials would not have granted to anyone in that province the registration
to which formerly the plaintiff was entitled by the Spanish laws, and which would
have made his title beyond question good. Whatever may have been the technical
position of Spain, it does not follow that, in the view of the United States, he had
lost all rights and was a mere trespasser when the present government seized his

land. The argument to that effect seems to amount to a denial of native titles
throughout an important part of the island of Luzon, at least, for the want of
ceremonies which the Spaniards would not have permitted and had not the power
to enforce.
The acquisition of the Philippines was not like the settlement of the white race in the
United States. Whatever consideration may have been shown to the North American
Indians, the dominant purpose of the whites in America was to occupy the land. It is
obvious that, however stated, the reason for our taking over the Philippines was
different. No one, we suppose, would deny that, so far as consistent with paramount
necessities, our first object in the internal administration of the islands is to do
justice to the natives, not to exploit their country for private gain. By the organic act
of July 1, 1902, chap. 1369, 12, 32 Stat. at L. 691, all the property and rights
acquired there by the [212 U.S. 449, 459] United States are to be administered 'for
the benefit of the inhabitants thereof.' It is reasonable to suppose that the attitude
thus assumed by the United States with regard to what was unquestionably its own
is also its attitude in deciding what it will claim for its own. The same statute made
a bill of rights, embodying the safeguards of the Constitution, and, like the
Constitution, extends those safeguards to all. It provides that 'no law shall be
enacted in said islands which shall deprive any person of life, liberty, or property
without due process of law, or deny to any person therein the equal protection of
the laws.' 5. In the light of the declaration that we have quoted from 12, it is hard to
believe that the United States was ready to declare in the next breath that 'any
person' did not embrace the inhabitants of Benguet, or that it meant by 'property'
only that which had become such by ceremonies of which presumably a large part
of the inhabitants never had heard, and that it proposed to treat as public land what
they, by native custom and by long association,-one of the profoundest factors in
human thought,-regarded as their own.
It is true that, by 14, the government of the Philippines is empowered to enact rules
and prescribe terms for perfecting titles to public lands where some, but not all,
Spanish conditions had been fulfilled, and to issue patents to natives for not more
than 16 hectares of public lands actually occupied by the native or his ancestors
before August 13, 1898. But this section perhaps might be satisfied if confined to
cases where the occupation was of land admitted to be public land, and had not
continued for such a length of time and under such circumstances as to give rise to
the understanding that the occupants were owners at that date. We hesitate to
suppose that it was intended to declare every native who had not a paper title a
trespasser, and to set the claims of all the wilder tribes afloat. It is true again that
there is excepted from the provision that we have quoted as to the administration of
the property and rights acquired by the United States, such land and property as
shall be designated by the President for military or other reser- [212 U.S. 449, 460]
vations, as this land since has been. But there still remains the question what
property and rights the United States asserted itself to have acquired.

Whatever the law upon these points may be, and we mean to go no further than the
necessities of decision demand, every presumption is and ought to be against the
government in a case like the present. It might, perhaps, be proper and sufficient to
say that when, as far back as testimony or memory goes, the land has been held by
individuals under a claim of private ownership, it will be presumed to have been
held in the same way from before the Spanish conquest, and never to have been
public land. Certainly in a case like this, if there is doubt or ambiguity in the Spanish
law, we ought to give the applicant the benefit of the doubt. Whether justice to the
natives and the import of the organic act ought not to carry us beyond a subtle
examination of ancient texts, or perhaps even beyond the attitude of Spanish law,
humane though it was, it is unnecessary to decide. If, in a tacit way, it was assumed
that the wild tribes of the Philippines were to be dealt with as the power and
inclination of the conqueror might dictate, Congress has not yet sanctioned the
same course as the proper one 'for the benefit of the inhabitants thereof.'
If the applicant's case is to be tried by the law of Spain, we do not discover such
clear proof that it was bad by that law as to satisfy us that he does not own the
land. To begin with, the older decrees and laws cited by the counsel for the plaintiff
in error seem to indicate pretty clearly that the natives were recognized as owning
some lands, irrespective of any royal grant. In other words, Spain did not assume to
convert all the native inhabitants of the Philippines into trespassers or even into
tenants at will. For instance, Book 4, title 12, Law 14 of the Recopilacion de Leyes de
las Indias, cited for a contrary conclusion in Valenton v. Murciano, 3 Philippine, 537,
while it commands viceroys and others, when it seems proper, to call for the
exhibition of grants, directs them to confirm those who hold by good grants or justa
prescripcion. It is true that it [212 U.S. 449, 461] begins by the characteristic
assertion of feudal overlordship and the origin of all titles in the King or his
predecessors. That was theory and discourse. The fact was that titles were admitted
to exist that owed nothing to the powers of Spain beyond this recognition in their
books.
Prescription is mentioned again in the royal cedula of October 15, 1754, cited in 3
Philippine, 546: 'Where such possessors shall not be able to produce title deeds, it
shall be sufficient if they shall show that ancient possession, as a valid title by
prescription.' It may be that this means possession from before 1700; but, at all
events, the principle is admitted. As prescription, even against Crown lands, was
recognized by the laws of Spain, we see no sufficient reason for hesitating to admit
that it was recognized in the Philippines in regard to lands over which Spain had
only a paper sovereignty.
The question comes, however, on the decree of June 25, 1880, for the adjustment of
royal lands wrongfully occupied by private individuals in the Philippine Islands. This
begins with the usual theoretic assertion that, for private ownership, there must

have been a grant by competent authority; but instantly descends to fact by

providing that, for all legal effects, those who have been in possession for certain
times shall be deemed owners. For cultivated land, twenty years, uninterrupted, is
enough. For uncultivated, thirty. Art. 5. So that, when this decree went into effect,
the applicant's father was owner of the land by the very terms of the decree. But, it
is said, the object of this law was to require the adjustment or registration
proceedings that it described, and in that way to require every one to get a
document of title or lose his land. That purpose may have been entertained, but it
does not appear clearly to have been applicable to all. The regulations purport to
have been made 'for the adjustment of royal lands wrongfully occupied by private
individuals.' (We follow the translation in the government's brief.) It does not appear
that this land ever was royal land or wrongfully occupied. In Article 6 it is provided
that 'interested parties not included within the two preceding [212 U.S. 449, 462]
articles [the articles recognizing prescription of twenty and thirty years] may
legalize their possession, and thereby acquire the full ownership of the said lands,
by means of adjustment proceedings, to be conducted in the following manner.' This
seems, by its very terms, not to apply to those declared already to be owners by
lapse of time. Article 8 provides for the case of parties not asking an adjustment of
the lands of which they are unlawfully enjoying the possession, within one year, and
threatens that the treasury 'will reassert the ownership of the state over the lands,'
and will sell at auction such part as it does not reserve. The applicant's possession
was not unlawful, and no attempt at any such proceedings against him or his father
ever was made. Finally, it should be noted that the natural construction of the
decree is confirmed by the report of the council of state. That report puts forward as
a reason for the regulations that, in view of the condition of almost all property in
the Philippines, it is important to fix its status by general rules, on the principle that
the lapse of a fixed period legalizes completely all possession; recommends in two
articles twenty and thirty years, as adopted in the decree; and then suggests that
interested parties not included in those articles may legalize their possession and
acquire ownership by adjustment at a certain price.
It is true that the language of arts. 4 and 5 attributes title to those 'who may prove'
possession for the necessary time, and we do not overlook the argument that this
means may prove in registration proceedings. It may be that an English
conveyancer would have recommended an application under the foregoing decree,
but certainly it was not calculated to convey to the mind of an Igorot chief the
notion that ancient family possessions were in danger, if he had read every word of
it. The words 'may prove' (acrediten), as well, or better, in view of the other
provisions, might be taken to mean when called upon to do so in any litigation.
There are indications that registration was expected from all, but none sufficient to
show that, for want of it, ownership actually gained would be lost. [212 U.S. 449,
463] The effect of the proof, wherever made, was not to confer title, but simply to
establish it, as already conferred by the decree, if not by earlier law. The royal
decree of February 13, 1894, declaring forfeited titles that were capable of

adjustment under the decree of 1880, for which adjustment had not been sought,
should not be construed as a confiscation, but as the withdrawal of a privilege. As a
matter of fact, the applicant never was disturbed. This same decree is quoted by
the court of land registration for another recognition of the common-law prescription
of thirty years as still running against alienable Crown land.
It will be perceived that the rights of the applicant under the Spanish law present a
problem not without difficulties for courts of a different legal tradition. We have
deemed it proper on that account to notice the possible effect of the change of
sovereignty and the act of Congress establishing the fundamental principles now to
be observed. Upon a consideration of the whole case we are of opinion that law and
justice require that the applicant should be granted what he seeks, and should not
be deprived of what, by the practice and belief of those among whom he lived, was
his property, through a refined interpretation of an almost forgotten law of Spain.
Judgment reversed.
b. Torrens system registration
i. Meaning
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.
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 22 centares; 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 in the
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 of 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 the 23rd 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 in question, 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 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 of the 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 all persons, 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 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 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 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 fraud to 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 on Australian 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 characteristics of actual as
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 our statutes, 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 means of 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 his 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 been fully 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.

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 land whose 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.)
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 in
rem. (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.
ii. Purpose
G.R. No. L-8936

October 2, 1915

CONSUELO LEGARDA, with her husband MAURO PRIETO, plaintiffsappellants,

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 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 all, 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 title to land; to put 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 once 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 title can not be altered, modified, enlarged, or diminished in a
collateral proceeding 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; 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 or 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 the person 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 all 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 by fraud 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 any reason, 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
any reason, 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 person acquiring it, who first inscribes it in the registry. This
rule, of course, presupposes that each of the vendees or purchasers 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) they
became 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 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 the subsequent 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, or any
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.)
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 fide purchaser? May there be a bona
fide purchaser of said land, bona fide in 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 than that 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.
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.

iii. Infeasibility

SM PRIME HOLDINGS, INC.,

Petitioner,
- versus ANGELA V. MADAYAG,
Respondent.

G.R. No. 164687

February 12, 2009

DECISION
NACHURA, J.:

This is a petition for review on certiorari of the Decision[1] of the Court of Appeals
(CA) dated March 19, 2004 and Resolution dated July 15, 2004, which set aside the
lower courts order to suspend the proceedings on respondents application for land
registration.
On July 12, 2001, respondent Angela V. Madayag filed with the Regional Trial Court
(RTC) of Urdaneta, Pangasinan an application for registration of a parcel of land with
an area of 1,492 square meters located in Barangay Anonas, Urdaneta City,
Pangasinan.[2] Attached to the application was a tracing cloth of Survey Plan Psu-01008438, approved by the Land Management Services (LMS) of the Department of
Environment and Natural Resources (DENR), Region 1, San Fernando City.
On August 20, 2001, petitioner SM Prime Holdings, Inc., through counsel, wrote the
Chief, Regional Survey Division, DENR, Region I, demanding the cancellation of the
respondents survey plan because the lot encroached on the properties it recently
purchased from several lot owners and that, despite being the new owner of the
adjoining lots, it was not notified of the survey conducted on June 8, 2001. [3]
Petitioner then manifested its opposition to the respondents application for
registration. The Republic of the Philippines, through the Office of the Solicitor
General, and the heirs of Romulo Visperas also filed their respective oppositions.
On February 6, 2002, petitioner filed its formal opposition. Petitioner alleged that it
had recently bought seven parcels of land in Barangay Anonas, Urdaneta,
delineated as Lots B, C, D, E, G, H and I in Consolidation-Subdivision Plan No. (LRC)
Pcs-21329, approved by the Land Registration Commission on August 26, 1976, and
previously covered by Survey Plan No. Psu-236090 approved by the Bureau of Lands
on December 29, 1970. These parcels of land are covered by separate certificates
of title, some of which are already in the name of the petitioner while the others are
still in the name of the previous owners.

On February 20, 2002, the RTC declared a general default, except as to the
petitioner, the Republic, and the heirs of Romulo Visperas. Thereafter, respondent
commenced the presentation of evidence.
Meanwhile, acting on petitioners request for the cancellation of the respondents
survey plan, DENR Assistant Regional Executive Director for Legal Services and
Public Affairs, Allan V. Barcena, advised the petitioner to file a petition for
cancellation in due form so that the DENR could properly act on the same.
[4]
Accordingly, petitioner formally filed with the DENR a petition [5] for cancellation of
the survey plan sometime in March 2002, alleging the following grounds:
I.
THERE IS NO SUCH THING AS ALIENABLE OR DISPOSABLE PROPERTY WHICH IS THE
SUBJECT LOT IN THIS CASE
II.
NO NOTICE WAS MADE UPON PETITIONER (AS ADJOINING LANDOWNER AND WHO
BEARS INTEREST OVER THE SUBJECT LOT) MUCH LESS THE OWNERS OF ADJOINING
LANDS.
III.
THE CIRCUMSTANCES EVIDENTLY SHOW THAT BAD FAITH AND/OR MALICE
ATTENDED THE APPROVAL OF (PLAN WITH PSU NO. 01-008438). [6]

On July 17, 2002, petitioner filed an Urgent Motion to Suspend Proceedings [7] in the
land registration case, alleging that the court should await the DENR resolution of
the petition for the cancellation of the survey plan as the administrative case is
prejudicial to the determination of the land registration case.
On October 8, 2002, the RTC issued an Order granting the motion, thus:
WHEREFORE, PREMISES CONSIDERED, the Court hereby GRANTS the instant motion
and suspends the proceedings herein. In the meantime, and until receipt by this
Court of a copy of the resolution of the petition for cancellation by the DENR, the
instant case is hereby ARCHIVED.
SO ORDERED.[8]

Emphasizing that a survey plan is one of the mandatory requirements in land

registration proceedings, the RTC agreed with the petitioner that the cancellation of
the survey plan would be prejudicial to the petition for land registration. [9]
On February 13, 2003, the RTC denied the respondents motion for reconsideration
of its order.[10] Respondent thereafter filed a petition for certiorari with the CA
assailing the order suspending the proceedings.
On March 19, 2004, finding that the RTC committed grave abuse of discretion in
suspending the proceedings, the CA granted the petition for certiorari, thus:
WHEREFORE, premises considered, the instant petition is hereby GRANTED. The
challenged Orders dated October 8, 2002 and February 13, 2003 of the respondent
Court are declared NULL and VOID.

The Court a quo is directed to continue the proceedings until its final determination.
No pronouncement as to costs.
SO ORDERED.[11]

The CA ratiocinated that the survey plan which was duly approved by the DENR
should be accorded the presumption of regularity, and that the RTC has the power
to hear and determine all questions arising from an application for registration. [12]
On July 15, 2004, the CA issued a Resolution [13] denying the petitioners motion for
reconsideration. Petitioner was, thus, compelled to file this petition for review,
ascribing the following errors to the CA:
I.
THE COURT OF APPEALS COMMITTED MANIFEST ERROR IN NOT
FINDING THAT THE SUSPENSION OF THE PROCEEDINGS IN THE LAND REGISTRATION
CASE IS LEGAL AND PROPER PENDING THE DETERMINATION AND RESOLUTION OF
THE ADMINISTRATIVE CASE BEFORE THE DEPARTMENT OF ENVIRONMENT AND
NATURAL RESOURCES-REGION 1.
II.
THE COURT OF APPEALS COMMITTED MANIFEST ERROR IN FAILING TO
FIND THAT THE ASSAILED ORDERS OF THE LOWER COURT HAVE PROPER AND
SUFFICIENT BASES IN FACT AND IN LAW.
III.
THE COURT OF APPEALS COMMITTED MANIFEST ERROR IN HOLDING
THAT THE LOWER COURT HAS ACTED WITH GRAVE ABUSE OF DISCRETION IN
SUSPENDING THE PROCEEDINGS AND ARCHIVING THE CASE.
IV.
THE COURT OF APPEALS COMMITTED MANIFEST ERROR IN FAILING TO
FIND THAT THE FILING OF THE PETITION FOR CERTIORARI, UNDER RULE 65 OF THE
REVISED RULES OF CIVIL PROCEDURE, IS NOT THE ONLY PLAIN, SPEEDY AND
ADEQUATE REMEDY IN THE ORDINARY COURSE OF LAW ON THE PART OF HEREIN
RESPONDENT.[14]

The petition has no merit.

Petitioner contends that, since the respondents cause of action in the land
registration case depends heavily on the survey plan, it was only prudent for the
RTC to suspend the proceedings therein pending the resolution of the petition for
cancellation of the survey plan by the DENR.[15] It, therefore, insists that recourse to
a petition for certiorari was not proper considering that respondent was not
arbitrarily deprived of her right to prosecute her application for registration. [16]

Undeniably, the power to stay proceedings is an incident to the power inherent in

every court to control the disposition of the cases in its dockets, with economy of
time and effort for the court, counsel and litigants. But courts should be mindful of
the right of every party to a speedy disposition of his case and, thus, should not be
too eager to suspend proceedings of the cases before them. Hence, every order
suspending proceedings must be guided by the following precepts: it shall be done
in order to avoid multiplicity of suits and prevent vexatious litigations, conflicting
judgments, confusion between litigants and courts, [17] or when the rights of parties
to the second action cannot be properly determined until the questions raised in the
first action are settled.[18] Otherwise, the suspension will be regarded as an arbitrary
exercise of the courts discretion and can be corrected only by a petition
for certiorari.
None of the circumstances that would justify the stay of proceedings is present. In
fact, to await the resolution of the petition for cancellation would only delay the
resolution of the land registration case and undermine the purpose of land
registration.
The fundamental purpose of the Land Registration Law (Presidential Decree No.
1529) is to finally settle title to real property in order to preempt any question on
the legality of the title except claims that were noted on the certificate itself at the
time of registration or those that arose subsequent thereto. Consequently, once the
title is registered under the said law, owners can rest secure on their ownership and
possession.[19]
Glaringly, the petition for cancellation raises practically the very same issues that
the herein petitioner raised in its opposition to the respondents application for
registration. Principally, it alleges that the survey plan should be cancelled because
it includes portions of the seven properties that it purchased from several
landowners, which properties are already covered by existing certificates of title.
Petitioner posits that it is the DENR that has the sole authority to decide the validity
of the survey plan that was approved by the LMS. [20] It cites Section 4(15), Chapter
1, Title XIV, Administrative Code of 1987 which provides that the DENR shall
(15) Exercise (of) exclusive jurisdiction on the management and disposition of all
lands of the public domain and serve as the sole agency responsible for
classification, sub-classification, surveying and titling of lands in consultation with
appropriate agencies.

However, respondent argues that the land registration court is clothed with
adequate authority to resolve the conflicting claims of the parties, and that even if
the DENR cancels her survey plan, the land registration court is not by duty bound

to dismiss the application for registration based solely on the cancellation of the
survey plan.[21]
Without delving into the jurisdiction of the DENR to resolve the petition for
cancellation, we hold that, as an incident to its authority to settle all questions over
the title of the subject property, the land registration court may resolve the
underlying issue of whether the subject property overlaps the petitioners properties
without necessarily having to declare the survey plan as void.
It is well to note at this point that, in its bid to avoid multiplicity of suits and to
promote the expeditious resolution of cases, Presidential Decree (P.D.) No. 1529
eliminated the distinction between the general jurisdiction vested in the RTC and
the latters limited jurisdiction when acting merely as a land registration court. Land
registration courts, as such, can now hear and decide even controversial and
contentious cases, as well as those involving substantial issues. [22] When the law
confers jurisdiction upon a court, the latter is deemed to have all the necessary
powers to exercise such jurisdiction to make it effective. [23] It may, therefore, hear
and determine all questions that arise from a petition for registration.
In view of the nature of a Torrens title, a land registration court has the duty to
determine whether the issuance of a new certificate of title will alter a valid and
existing certificate of title.[24] An application for registration of an already titled land
constitutes a collateral attack on the existing title, [25] which is not allowed by law.
[26]
But the RTC need not wait for the decision of the DENR in the petition to cancel
the survey plan in order to determine whether the subject property is already titled
or forms part of already titled property. The court may now verify this allegation
based on the respondents survey plan vis--vis the certificates of title of the
petitioner and its predecessors-in-interest. After all, a survey plan precisely serves
to establish the true identity of the land to ensure that it does not overlap a parcel
of land or a portion thereof already covered by a previous land registration, and to
forestall the possibility that it will be overlapped by a subsequent registration of any
adjoining land.[27]
Should the court find it difficult to do so, the court may require the filing of
additional papers to aid in its determination of the propriety of the application,
based on Section 21 of P.D. No. 1529:
SEC. 21. Requirement of additional facts and papers; ocular inspection. The court
may require facts to be stated in the application in addition to those prescribed by
this Decree not inconsistent therewith and may require the filing of any additional
papers.

The court may also directly require the DENR and the Land Registration Authority to
submit a report on whether the subject property has already been registered and
covered by certificates of title, like what the court did in Carvajal v. Court of
Appeals.[28] In that case, we commended such move by

the land registration court for being in accordance with the purposes of the Land
Registration Law.[29]
WHEREFORE, premises considered, the petition is DENIED. The Court of Appeals
Decision dated March 19, 2004 and Resolution dated July 15, 2004 areAFFIRMED.
The Regional Trial Court of Urdaneta, Pangasinan is DIRECTED to continue with the
proceedings in L.R.C. Case No. U-1134 and to resolve the same with dispatch.
SO ORDERED.

CAMILO F. BORROMEO,
Petitioner,
- versus ANTONIETTA O. DESCALLAR,
Respondent.

G.R. No. 159310

Promulgated:
February 24, 2009

DECISION
PUNO, C.J.:
What are the rights of an alien (and his successor-in-interest) who acquired
real properties in the country as against his former Filipina girlfriend in whose sole
name the properties were registered under the Torrens system?
The facts are as follows:
Wilhelm Jambrich, an Austrian, arrived in the Philippines in 1983 after he was
assigned by his employer, Simmering-Graz Panker A.G., an Austrian company, to
work at a project in Mindoro. In 1984, he transferred to Cebu and worked at the
Naga II Project of the National Power Corporation. There, he met respondent
Antonietta Opalla-Descallar, a separated mother of two boys who was working as a
waitress at St. Moritz Hotel. Jambrich befriended respondent and asked her to tutor
him in English. In dire need ofadditional income to support her children, respondent
agreed. The tutorials were held in Antoniettas residence at a squatters area
in Gorordo Avenue.
Jambrich and respondent fell in love and decided to live together in a rented house
in Hernan Cortes, Mandaue City. Later, they transferred to their own house and lots
at Agro-Macro Subdivision, Cabancalan, Mandaue City. In the Contracts to Sell
dated November 18, 1985[1] and March 10, 1986[2] covering the properties, Jambrich
and respondent were referred to as the buyers. A Deed of Absolute Sale dated
November 16, 1987[3] was likewise issued in their favor. However, when the Deed
of Absolute Sale was presented for registration before the Register of Deeds,
registration was refused on the ground that Jambrich was an alien and could not
acquire alienable lands of the public domain. Consequently, Jambrichs name was
erased from the document. But it could be noted that his signature remained on

the left hand margin of page 1, beside respondents signature as buyer on page 3,
and at the bottom of page 4 which is the last page. Transfer Certificate of Title
(TCT) Nos. 24790, 24791 and 24792 over the properties were issued in respondents
name alone.
Jambrich also formally adopted respondents two sons in Sp. Proc. No. 39-MAN,
[4]
and per Decision of the Regional Trial Court of Mandaue City dated May 5, 1988.[5]
However, the idyll lasted only until April 1991. By then, respondent found a new
boyfriend while Jambrich began to live with another woman in Danao City. Jambrich
supported respondents sons for only two months after the break up.
Jambrich met petitioner Camilo F. Borromeo sometime in 1986. Petitioner was
engaged in the real estate business. He also built and repaired speedboats as a
hobby. In 1989, Jambrich purchased an engine and some accessories for his boat
from petitioner, for which he became indebted to the latter for
about P150,000.00. To pay for his debt, he sold his rights and interests in the AgroMacro properties to petitioner for P250,000, as evidenced by a Deed of Absolute
Sale/Assignment.[6] On July 26, 1991, when petitioner sought to register the deed
of assignment, he discovered that titles to the three lots have been transferred in
the name of respondent, and that the subject property has already been
mortgaged.
On August 2, 1991, petitioner filed a complaint against respondent for recovery of
real property before the Regional Trial Court of Mandaue City. Petitioner alleged that
the Contracts to Sell dated November 18, 1985 and March 10, 1986 and the Deed of
Absolute Sale dated November 16, 1987 over the properties which identified both
Jambrich and respondent as buyers do not reflect the true agreement of the parties
since respondent did not pay a single centavo of the purchase price and was not in
fact a buyer; that it was Jambrich alone who paid for the properties using his
exclusive funds; that Jambrich was the real and absolute owner of the properties;
and, that petitioner acquired absolute ownership by virtue of the Deed of Absolute
Sale/Assignment dated July 11, 1991 which Jambrich executed in his favor.
In her Answer, respondent belied the allegation that she did not pay a single
centavo of the purchase price. On the contrary, she claimed that she solely and
exclusively used her own personal funds to defray and pay for the purchase price of
the subject lots in question, and that Jambrich, being an alien, was prohibited to
acquire or own real property in the Philippines.
At the trial, respondent presented evidence showing her alleged financial capacity
to buy the disputed property with money from a supposed copra
business. Petitioner, in turn, presented Jambrich as his witness and documentary
evidence showing the substantial salaries which Jambrich received while still
employed by the Austrian company, Simmering-Graz Panker A.G.
In its decision, the court a quo found
Evidence on hand clearly show that at the time of the purchase and acquisition of
[the] properties under litigation that Wilhelm Jambrich was still working and earning
much. This fact of Jambrich earning much is not only supported by documentary
evidence but also by the admission made by the defendant Antoniet[t]a Opalla. So

that, Jambrichs financial capacity to acquire and purchase the

properties . . . is not disputed.[7]
x x x
On the other hand, evidence . . . clearly show that before defendant met Jambrich
sometime in the latter part of 1984, she was only working as a waitress at the St.
Moritz Hotel with an income ofP1,000.00 a month and was . . . renting and living
only in . . . [a] room at . . . [a] squatter area at Gorordo Ave., Cebu City; that
Jambrich took pity of her and the situation of her children that he offered her a
better life which she readily accepted. In fact, this miserable financial situation of
hers and her two children . . . are all stated and reflected in the Child Study Report
dated April 20, 1983 (Exhs. G and G-1) which facts she supplied to the Social
Worker who prepared the same when she was personally interviewed by her in
connection with the adoption of her two children by Wilhelm Jambrich. So that, if
such facts were not true because these are now denied by her . . . and if it was also
true that during this time she was already earning as much as P8,000.00
to P9,000.00 as profit per month from her copra business, it would be highly
unbelievable and impossible for her to be living only in such a miserable condition
since it is the observation of this Court that she is not only an extravagant but also
an expensive person and not thrifty as she wanted to impress this Court in order to
have a big saving as clearly shown by her actuation when she was already
cohabiting and living with Jambrich that according to her . . . the allowance
given . . . by him in the amount of $500.00 a month is not enough to maintain the
education and maintenance of her children.[8]
This being the case, it is highly improbable and impossible that she could
acquire the properties under litigation or could contribute any amount for
their acquisition which according to her is worth more than P700,000.00 when
while she was working as [a] waitress at St. Moritz Hotel
earning P1,000.00 a month as salary and tips of more or less P2,000.00
she could not even provide [for] the daily needs of her family so much so
that it is safe to conclude that she was really in financial distress when
she met and accepted the offer of Jambrich to come and live with him
because that was a big financial opportunity for her and her children who
were already abandoned by her husband.[9]
x x x
The only probable and possible reason why her name appeared and was included in
[the contracts to sell dated November 18, 1985 and March 10, 1986 and finally, the
deed of absolute sale dated November 16, 1987] as buyer is because as observed
by the Court, she being a scheming and exploitive woman, she has taken advantage
of the goodness of Jambrich who at that time was still bewitched by her beauty,
sweetness, and good attitude shown by her to him since he could still very well

provide for everything she needs, he being earning (sic) much yet at that time. In
fact, as observed by this Court, the acquisition of these properties under litigation
was at the time when their relationship was still going smoothly and harmoniously.
[10]
[Emphasis supplied.]
The dispositive portion of the Decision states:
WHEREFORE, . . . Decision is hereby rendered in favor of the plaintiff and against
the defendant Antoniet[t]a Opalla by:
1) Declaring plaintiff as the owner in fee simple over the residential house of strong
materials and three parcels of land designated as Lot Nos. 1, 3 and 5 which are
covered by TCT Nos. 24790, 24791 and 24792 issued by the Register of Deeds of
Mandaue City;
2) Declaring as null and void TCT Nos. 24790, 24791 and 24792 issued in the name
of defendant Antoniet[t]a Descallar by the Register of Deeds of Mandaue City;
3) Ordering the Register of Deeds of Mandaue City to cancel TCT Nos. 24790,
24791 and 24792 in the name of defendant Antoniet[t]a Descallar and to issue new
ones in the name of plaintiff Camilo F. Borromeo;
4) Declaring the contracts now marked as Exhibits I, K and L as avoided
insofar as they appear to convey rights and interests over the properties in question
to the defendant Antoniet[t]a Descallar;
5) Ordering the defendant to pay plaintiff attorneys fees in the amount
of P25,000.00 and litigation expenses in the amount of P10,000.00; and,
6) To pay the costs.[11]
Respondent appealed to the Court of Appeals. In a Decision dated April 10, 2002,
[12]
the appellate court reversed the decision of the trial court. In ruling for the
respondent, the Court of Appeals held:
We disagree with the lower courts conclusion. The circumstances involved in the
case cited by the lower court and similar cases decided on by the Supreme Court
which upheld the validity of the title of the subsequent Filipino purchasers are
absent in the case at bar. It should be noted that in said cases, the title to the
subject property has been issued in the name of the alien transferee (Godinez et al.,
vs. Fong Pak Luen et al., 120 SCRA 223 citing Krivenko vs. Register of Deeds of
Manila, 79 Phils. 461; United Church Board for World Ministries vs. Sebastian, 159
SCRA 446, citing the case of Sarsosa Vda. De Barsobia vs. Cuenco, 113 SCRA 547;
Tejido vs. Zamacoma, 138 SCRA 78). In the case at bar, the title of the subject
property is not in the name of Jambrich but in the name of defendant-

appellant. Thus, Jambrich could not have transferred a property he has no title
thereto.[13]
Petitioners motion for reconsideration was denied.
Hence, this petition for review.
Petitioner assigns the following errors:
I.
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN
DISREGARDING RESPONDENTS JUDICIAL ADMISSION AND OTHER OVERWHELMING
EVIDENCE ESTABLISHING JAMBRICHS PARTICIPATION, INTEREST AND OWNERSHIP
OF THE PROPERTIES IN QUESTION AS FOUND BY THE HONORABLE TRIAL COURT.
II.
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN HOLDING
THAT JAMBRICH HAS NO TITLE TO THE PROPERTIES IN QUESTION AND MAY NOT
THEREFORE TRANSFER AND ASSIGN ANY RIGHTS AND INTERESTS IN FAVOR OF
PETITIONER.
III.
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN REVERSING
THE WELL-REASONED DECISION OF THE TRIAL COURT AND IN IMPOSING DOUBLE
COSTS AGAINST HEREIN PETITIONER (THEN, PLAINTIFF-APPELLEE). [14]
First, who purchased the subject properties?
The evidence clearly shows, as pointed out by the trial court, who between
respondent and Jambrich possesses the financial capacity to acquire the properties
in dispute. At the time of the acquisition of the properties in 1985 to 1986, Jambrich
was gainfully employed at Simmering-Graz Panker A.G., an Austrian company. He
was earning an estimated monthly salary of P50,000.00. Then, Jambrich was
assigned to Syria for almost one year where his monthly salary was
approximately P90,000.00.
On the other hand, respondent was employed as a waitress from 1984 to 1985 with
a monthly salary of not more than P1,000.00. In 1986, when the parcels of land
were acquired, she was unemployed, as admitted by her during the pre-trial
conference. Her allegations of income from a copra business were
unsubstantiated. The supposed copra business was actually the business of her
mother and their family, with ten siblings. She has no license to sell copra, and had
not filed any income tax return. All the motorized bancas of her mother were lost to
fire, and the last one left standing was already scrap. Further, the Child Study
Report[15] submitted by the Department of Social Welfare and Development (DSWD)
in the adoption proceedings of respondents two sons by Jambrich disclosed that:
Antonietta tried all types of job to support the children until she was accepted as a
waitress at St. Moritz Restaurant in 1984. At first she had no problem with money
because most of the customers of St. Moritz are (sic) foreigners and they gave good
tips but towards the end of 1984 there were no more foreigners coming because of
the situation in the Philippines at that time. Her financial problem started then. She
was even renting a small room in a squatters area in Gorordo Ave., Cebu City. It was
during her time of great financial distress that she met Wilhelm Jambrich who later
offered her a decent place for herself and her children. [16]

The DSWD Home Study Report[17] further disclosed that:

[Jambrich] was then at the Restaurant of St. Moritz when he saw Antonietta
Descallar, one of the waitresses of the said Restaurants. He made friends with the
girl and asked her to tutor him in [the] English language. Antonietta accepted the
offer because she was in need of additional income to support [her] 2 young
children who were abandoned by their father. Their session was agreed to be
scheduled every afternoon at the residence of Antonietta in the squatters area
in Gorordo Avenue, Cebu City. The Austrian was observing the situation of the family
particularly the children who were malnourished. After a few months sessions, Mr.
Jambrich offered to transfer the family into a decent place. He told Antonietta that
the place is not good for the children. Antonietta who was miserable and financially
distressed at that time accepted the offer for the sake of the children. [18]
Further, the following additional pieces of evidence point to Jambrich as the source
of fund used to purchase the three parcels of land, and to construct the house
thereon:
(1)
Respondent Descallar herself affirmed under oath, during her re-direct
examination and during the proceedings for the adoption of her minor children, that
Jambrich was the owner of the properties in question, but that his name was deleted
in the Deed of Absolute Sale because of legal constraints. Nonetheless, his
signature remained in the deed of sale, where he signed as buyer.
(2)
The money used to pay the subject parcels of land in installments was in
postdated checks issued by Jambrich. Respondent has never opened any account
with any bank. Receipts of the installment payments were also in the name of
Jambrich and respondent.
(3)
In 1986-1987, respondent lived in Syria with Jambrich and her two children for
ten months, where she was completely under the support of Jambrich.
(4)
Jambrich executed a Last Will and Testament, where he, as owner,
bequeathed the subject properties to respondent.
Thus, Jambrich has all authority to transfer all his rights, interests and participation
over the subject properties to petitioner by virtue of the Deed of Assignment he
executed on July 11, 1991.
Well-settled is the rule that this Court is not a trier of facts. The findings of fact of
the trial court are accorded great weight and respect, if not finality by this Court,
subject to a number of exceptions. In the instant case, we find no reason to disturb
the factual findings of the trial court. Even the appellate court did not controvert
the factual findings of the trial court. They differed only in their conclusions of law.
Further, the fact that the disputed properties were acquired during the couples
cohabitation also does not help respondent. The rule that co-ownership applies to a
man and a woman living exclusively with each other as husband and wife without
the benefit of marriage, but are otherwise capacitated to marry each other, does
not apply.[19] In the instant case, respondent was still legally married to another
when she and Jambrich lived together. In such an adulterous relationship, no coownership exists between the parties. It is necessary for each of the partners to

prove his or her actual contribution to the acquisition of property in order to be able
to lay claim to any portion of it. Presumptions of co-ownership and equal
contribution do not apply.[20]
Second, we dispose of the issue of registration of the properties in the name of
respondent alone. Having found that the true buyer of the disputed house and lots
was the Austrian Wilhelm Jambrich, what now is the effect of registration of the
properties in the name of respondent?
It is settled that registration is not a mode of acquiring ownership. [21] It is only a
means of confirming the fact of its existence with notice to the world at large.
[22]
Certificates of title are not a source of right. The mere possession of a title does
not make one the true owner of the property. Thus, the mere fact that respondent
has the titles of the disputed properties in her name does not necessarily,
conclusively and absolutely make her the owner. The rule on indefeasibility of title
likewise does not apply to respondent. A certificate of title implies that the title is
quiet,[23] and that it is perfect, absolute and indefeasible. [24] However, there are
well-defined exceptions to this rule, as when the transferee is not a holder in good
faith and did not acquire the subject properties for a valuable consideration. [25] This
is the situation in the instant case. Respondent did not contribute a single centavo
in the acquisition of the properties. She had no income of her own at that time, nor
did she have any savings. She and her two sons were then fully supported by
Jambrich.
Respondent argued that aliens are prohibited from acquiring private land. This is
embodied in Section 7, Article XII of the 1987 Constitution, [26] which is basically a
reproduction of Section 5, Article XIII of the 1935 Constitution, [27] and Section 14,
Article XIV of the 1973 Constitution.[28] The capacity to acquire private land is
dependent on the capacity to acquire or hold lands of the public
domain. Private land may be transferred only to individuals or entities qualified to
acquire or hold lands of the public domain. Only Filipino citizens or corporations at
least 60% of the capital of which is owned by Filipinos are qualified to acquire or
hold lands of the public domain. Thus, as the rule now stands, the fundamental law
explicitly prohibits non-Filipinos from acquiring or holding title to private lands,
except only by way of legal succession or if the acquisition was made by a former
natural-born citizen.[29]
Therefore, in the instant case, the transfer of land from Agro-Macro Development
Corporation to Jambrich, who is an Austrian, would have been declared invalid if
challenged, had not Jambrich conveyed the properties to petitioner who is a Filipino
citizen. In United Church Board for World Ministries v. Sebastian,[30] the
Court reiterated the consistent ruling in a number of cases [31] that if land is invalidly
transferred to an alien who subsequently becomes a Filipino citizen or transfers it to
a Filipino, the flaw in the original transaction is considered cured and the title of the
transferee is rendered valid. Applying United Church Board for World
Ministries, the trial court ruled in favor of petitioner, viz.:
[W]hile the acquisition and the purchase of (sic) Wilhelm Jambrich of the properties
under litigation [were] void ab initio since [they were] contrary to the Constitution of

the Philippines, he being a foreigner, yet, the acquisition of these properties by

plaintiff who is a Filipino citizen from him, has cured the flaw in the original
transaction and the title of the transferee is valid.
The trial court upheld the sale by Jambrich in favor of petitioner and ordered the
cancellation of the TCTs in the name of respondent. It declared petitioner as owner
in fee simple of the residential house of strong materials and three parcels of land
designated as Lot Nos. 1, 3 and 5, and ordered the Register of Deeds of Mandaue
City to issue new certificates of title in his name. The trial court likewise ordered
respondent to pay petitioner P25,000 as attorneys fees and P10,000 as litigation
expenses, as well as the costs of suit.
We affirm the Regional Trial Court.
The rationale behind the Courts ruling in United Church Board for World
Ministries, as reiterated in subsequent cases, [32] is this since the ban on aliens is
intended to preserve the nations land for future generations of Filipinos, that aim is
achieved by making lawful the acquisition of real estate by aliens who became
Filipino citizens by naturalization or those transfers made by aliens to Filipino
citizens. As the property in dispute is already in the hands of a qualified person, a
Filipino citizen, there would be no more public policy to be protected. The objective
of the constitutional provision to keep our lands in Filipino hands has been achieved.
IN VIEW WHEREOF, the petition is GRANTED. The Decision of the Court of
Appeals in C.A. G.R. CV No. 42929 dated April 10, 2002 and its Resolution dated July
8, 2003 are REVERSED and SET ASIDE. The Decision of
the Regional Trial Court of Mandaue City in Civil Case No. MAN-1148 is REINSTATED.
SO ORDERED.

2. Exception to Indefeasibilty
G.R. No. 119682 January 21, 1999
FRANCISCO BAGUIO, petitioner,
vs.
REPUBLIC OF THE PHILIPPINES, RICARDO T. MICHAEL, in his capacity as
Heir-Successor of WILLIAM MICHAEL, SR., and as President of MICHAEL
SLIPWAYS, INC., and COURT OF APPEALS, respondent.
MENDOZA, J.:
This is a petition for review of the decision of the Court of Appeals 1 affirming the
decision of the Regional Trial Court, Branch 28, of Mandaue City, nullifying Free
Patent No. 7757 and Original Certificate of Title No. 0-15457 issued in the name of
petitioner Francisco Baguio.
The patent and certificate of title cover a parcel of land, consisting of 5,870 sq. m.,
in Catarman, Liloan, Cebu. Known as Lot 1426, Case 2, Pls. 823, the land was
declared by the government public land in 1963.

The evidence shows that, on August 2, 1963, private respondent Ricardo Michael's
predecessor-in-interest, William Michael, filed with the Bureau of Lands an
application for foreshore lease of the land. The application was recommended for
approval by the land investigator who also recommended that the applicant be
granted a provisional permit to occupy the land for one year from October 4, 1963
to October 3, 1964.
On October 8, 1963, by virtue of a permit granted to him by the Bureau of Lands,
William Michael made some reclamation on the land, built a fence around the
premises, and constructed a bridge over a portion which was under water. Upon the
expiration of the permit on October 4, 1964, the Highways District Engineer
recommended to the Director of Lands that the land be leased to Michael. On the
other hand, the land investigator recommended granting Michael the authority to
survey the foreshore land in view of the completion of the reclamation made by him
on the premises. On February 25, 1968, Michael filed a miscellaneous sales
application covering the reclaimed foreshore land.
On November 9, 1976, petitioner Baguio applied to the Bureau of Lands for a free
patent covering the same land. In his application, petitioner stated that the land
was agricultural land and not claimed or occupied by any other person and that he
had been in actual and continuous possession and cultivation of the same. On the
basis of these representations, a free patent was issued to him and, on January 10,
1978. Original Certificate of Title No. 0-15457 was issued in his name by the
Register of Deeds of Cebu.
On April 6, 1978, petitioner demanded payment of rentals from William Michael for
the use of the land occupied by Michael Slipways Inc.. On August 4, 1981, petitioner
filed an opposition to Michael's miscellaneous sales application covering the land on
the ground that he was the registered owner thereof.
William Michael in turn protested the issuance by the Bureau of Lands of a free
patent to petitioner. He claimed that he had been in actual possession of the land
since 1963 and that he had introduced substantial improvements thereon.
On February 16, 1989, upon the recommendation of the Land Management Bureau
of the Department of Environment and Natural Resources, the government,
represented by the Director of Lands, filed a petition for cancellation of title and/or
reversion of land against petitioner Baguio and the Register of Deeds of Cebu. The
case case was filed in the Regional Trial Court of Mandaue City which granted
private respondent Ricardo Michael leave to intervene as heir and successor-ininterest of William Michael and as president of Michael Slipways, Inc.
On July 20, 1992, the trial court rendered a decision canceling the free patent and
the certificate of title of petitioner Baguio, ordering the reversion of the land to the
public domain, and declaring private respondent Michael the true and lawful
occupant of the land. The trial court ruled that the false statements made by
petitioner Baguio in his application for free patent had the effect of ipso
facto canceling the free patent and the title of petitioner.
Petitioner appealed to the Court of Appeals which, on February 28, 1995, affirmed
the decision of the trial court. Hence, this petition for review.

Petitioner contends that .

1. The public respondent erred in not declaring that respondent Republic
of the Philippines action was already barred by prescription.
2. Granting arguendo that respondent's action was not barred by
prescription, nonetheless, the Regional Trial Court, erred in finding that
petitioner "acted in bad faith and procured the issuance of the Free
Patent (VII-I)-7757 and the Original Certificate of Title No. 0-15457
through fraud and misrepresentation.
3. Granting arguendo that respondent Republic's action should prosper,
nonetheless, the Regional Trial Court erred in "(d)eclaring intervenor
(private respondent herein) as the true and lawful possessor and
occupant of the land subject of the intervention.
4. The Regional Trial court erred in finding that the land in question is a
foreshore land.
We find these contentions to be without merit.
First. It is true that, once a patent is registered and the corresponding certificate of
title is issued, the land covered by them ceases to be part of the public domain and
becomes private property, and the Torrens Title issued pursuant to the patent
becomes indefeasible upon the expiration of one year from the date of issuance of
such patent. 2 However, as held in Director of Lands v. De Luna, 3 even after the
lapse of one year, the State may still bring an action under 101 4 of Commonwealth
Act No. 141 for the reversion to the public domain of land which has been
fraudulently granted to private individuals. 5 Such action is not barred by
prescription, and this is settled law. 6
Indeed, the indefeasibility of a certificate of title cannot be invoked by one who
procured the title by means of fraud. 7 Public policy demands that one who obtains
title to public land through fraud should not be allowed to benefit therefrom. 8
Second. Petitioner contends that the trial court erred in finding that he was guilty of
fraud in procuring the issuance of the free patent and the corresponding certificate
of title. He insists that what he stated in his application for free patent (that the
subject land is agricultural land not claimed or occupied by persons other than
himself and that he had been in actual and continuous possession and cultivation of
the same) were all true. He also assails the finding of the trial court that the subject
land is foreshore land.
Petitioner puts in issue the findings of fact of the trial court. But the only errors
which are reviewable by this Court in a petition for review on certiorari of a decision
of the Court of Appeals are those allegedly committed by the latter court and not
those of the trial court. Petitioner's assignment of errors is thus misplaced, and for
this reason, the petition should be dismissed. Furthermore, only questions of law
may be raised in a petition for review oncertiorari. In the absence of any showing of
lack of basis for the conclusions made by the Court of Appeals, this Court wiill not
disturb the factual findings of the appellate court. 9 In this case, petitioner has not
shown that the decision of the Court of Appeals is not supported by substantial

evidence so as to justify this Court in departing from the general rule which regards
the findings of the appellate court as final.
At any rate, we have decided to consider the issues raised insofar as they are
pertinent to the appellate court's decision in order to put them to rest once and for
all.
In his free patent application, petitioner declared under oath that the land in
question was an agricultural land not claimed or occupied by any other person; that
he had continuously possessed and occupied it; and that he had introduced
improvements thereon. These declarations constitute fraud and misrepresentation.
The government has proven that, contrary to these allegations, as early as
September 2, 1963, i.e., thirteen (13) years before the alleged entry of petitoner on
the land, private respondent's predecessor-in-interest, William Michaell, had already
filed a foreshore lease application over the same; that on February 25, 1968.
William Michael filed a miscellaneous sales application over the land; that since
1963 up to the present, private respondent has been continuously in possession of
the land on which he has been operating a drydocking service under the style of
Michael Slipways, Inc.; and that private respondent Ricardo Michael had made
improvements thereon consisting of the reclamation of a portion of the land, the
construction of the fence thereon, and the construction of a bridge over a portion
under water. In addition, it has been duly established that the land in question is
foreshore land, not agrcultural. The fact that the land is being used by private
respondent Ricardo Michael in his drydocking operations is evidence that the land is
foreshore land. Moreover, there would have been no need to reclaim a portion of the
land if it had not been under seawater.
Petitioner is guilty of making false statements in his application for a free patent
thus justifying the annulment of his title. Sec. 91 of C.A. No. 141 (Public Land Act)
provides:
The statements made in the application shall be considered as essential conditions
and parts of any concession, title, or permit issued on the basis of such application,
and any false statement therein or omission of facts altering, changing or modifying
the consideration of the facts set forth in such statements, and any subsequent
modification, alteration, or change of the material facts set forth in the application
shall ipso facto produce the cancellation of the concession, title or permit granted. It
shall be the duty of the Director of Lands, from time to time and whenever he may
deem it advisable; to make the necessary investigations for the purpose of
ascertaining whether the material facts set out in the application are true, or
whether they continue to exist and are maintained and preserved in good faith, and
for the purpose of such investigation, the Director of Lands is hereby empowered to
issue subpuenas and subpoenas duces tecum and, if necessary, to obtain
compulsory process from the courts. In every investigation made in accordance with
this section, the existence of bad faith, fraud, concealment, or fraudulent and illegal
modification of essential facts shall be presumed if the grantee or possessor of the
land shall refuse or fail to obey a subpoena or subpoena duces tecumlawfully issued
by the Director of Land or his authorized delegates or agents, or shall refuse or fail

to give direct and specific answers to pertinent questions, and on the basis of such
presumption, an order of cancellation may issue without further proceedings.
As already stated, the indefeasibility of a title does not attach to titles secured by
fraud and misrepresentation. The registration of a patent under the Torrens System
merely confirms the registrant's title. It does not vest title where there is none
because registration under this system is not a mode of acquiring ownership. 10
Third. Petitioner assails the trial court's finding, as affirmed by the appellate court,
that private respondent Michael is the true and lawfull possessor of the subject land.
He argues that private respondent, being a mere heir and successor-in-interest of
William Michael and not the person who filed the foreshore lease and the
miscellaneous sales applications, has no right to the land in dispute.
Suffice it to state that it was clearly proven that William Michael had already been in
possession of the land under a provisional permit to occupy the same in 1963.
Petitioner applied for a free patent only in 1976, thirteen (13) years later. In
addition, William Michael had filed a sales application covering the land in 1968, i.e.,
eight (8) years before petitioner filed his free patent application. The trial court and
the Court of Appeals, therefore, correctly held William Michael and private
respondent Ricardo Michael to be the true and rightful possessors of the land in
question. The fact that private respondent Michael is merely the successor of the
original foreshore lease and sales applicant, William Michael, does not make him
any less entitled to the possession of the land. Sec. 105 of the Public Land Act
provides that, in case of his death, the original applicant shall be succeeded in his
rights and obligations by his legal heirs with respect to the land applied for or
leased. 11
WHEREFORE, the decision of the Court of Appeals is AFFIRMED.
SO ORDERED.1wphi1.nt

G.R. No. 140243. December 14, 2000]

MARILYN C. PASCUA, petitioner, vs. HON. COURT OF APPEALS, THE PEOPLE
OF THE PHILIPPINES, respondents.
DECISION
MELO, J.:
What constitutes a valid promulgation in absentia? In case of such promulgation,
when does the accused's right to appeal accrue?
Before us is a petition that calls for a ruling on the aforestated issues, particularly
seeking the reversal of the decision of the Court of Appeals dated June 17, 1999 and
its order dated September 28, 1999 denying reconsideration. The Court of Appeals
dismissed the petition for certiorari under Rule 65 filed by petitioner which
questioned the legality of the orders dated June 22, 1998 and October 8, 1998

issued by Branch 153 of the Regional Trial Court of the National Capital Judicial
Region stationed in Pasig City.
The antecedent facts may be briefly chronicled as follows:
Petitioner was charged under 26 Informations for violation of Batas Pambansa Blg.
22. The Informations alleged that in 1989, petitioner issued 26 Philippine National
Bank (PNB) checks to apply on account or for value in favor of Lucita Lopez with the
knowledge that at the time of issue, petitioner did not have sufficient funds in or
credit with the drawee bank for the payment of the face value of the checks in full.
Upon presentment of the subject checks, they were dishonored by the drawee bank
for having been drawn against insufficient funds and against a closed account.
After trial, a judgment of conviction was rendered on February 17, 1998, disposing:
WHEREFORE, the Court finds the accused, MARILYN C. PASCUA, GUILTY beyond
reasonable doubt of twenty six (26) counts of Violation of Batas Pambansa Bilang
22, and hereby sentences her to suffer ONE (1) YEAR imprisonment in each case
and to pay the private complainant, LUCITA LOPEZ in the sum of SIX HUNDRED FIVE
THOUSAND PESOS (P605,000.00), Philippine Currency without subsidiary
imprisonment in case of insolvency.
SO ORDERED.
(p. 41, Rollo.)
The judgment was initially scheduled for promulgation on March 31, 1998.
However, considering that the presiding judge was on leave, the promulgation was
reset to May 5, 1998.
When the case was called on May 5, 1998, Public Prosecutor Rogelio C. Sescon and
defense counsel Atty. Marcelino Arias appeared and manifested their readiness for
the promulgation of judgment, although the latter intimated that petitioner would
be late. Hence, the case was set for second call. After the lapse of two hours,
petitioner still had not appeared. The trial court again asked the public prosecutor
and the defense counsel if they were ready for the promulgation of judgment. Both
responded in the affirmative. The dispositive portion of the decision was thus read
in open court. Afterwards, the public prosecutor, the defense counsel, and private
complainant Lucita Lopez, acknowledged receipt of their respective copies of the
subject decision by signing at the back of the original copy of the decision on file
with the record of the case.

Forthwith, the public prosecutor moved for the forfeiture of the cash bond posted by
petitioner as well as for the issuance of a warrant for her arrest. Acting on the
motion, the trial court issued, also on May 5, 1998, the following order:
When this case was called for the promulgation of judgment, the accused failed to
appear despite due notice. Upon motion of the Public Prosecutor, that the cash bond
posted for her provisional liberty be forfeited in favor of the government, being welltaken, the same is hereby granted. Likewise, let a warrant of arrest be issued
against her.
SO ORDERED.
(p. 42, Rollo.)
No motion for reconsideration or notice of appeal was filed by petitioner within 15
days from May 5, 1998.
On June 8, 1998, a notice of change of address was filed by petitioner with the trial
court, sent through a private messengerial firm. On the same date, without
terminating the services of her counsel of record, Atty. Marcelino Arias, the one who
received the copy of the judgment of conviction, petitioner, assisted by another
counsel, Atty. Rolando Bernardo, filed an urgent omnibus motion to lift warrant of
arrest and confiscation of bail bond, as well as to set anew the promulgation of the
subject decision on the following allegations: that petitioner failed to appear before
the trial court on the scheduled date of promulgation (May 5, 1998) because she
failed to get the notices sent to her former address at No. 21 La Felonila St., Quezon
City; that she had no intention of evading the processes of the trial court; that in
February 1998, she transferred residence to Olongapo City by reason of an
ejectment case filed against her by her landlord concerning her former residence in
Quezon City; and that due to the abrupt dislocation of their family life as a result of
the transfer of their residence to Olongapo City, there were important matters that
she overlooked such as the filing of a notice of change of address to inform the trial
court of her new place of residence.
The motion was set for hearing on June 11, 1998 but on said date, neither petitioner
nor assisting counsel was present. On June 22, 1998, petitioner filed a notice of
appeal. The Office of the City Prosecutor of Pasig filed its comment on the motion
for reconsideration arguing that: the promulgation of the subject decision was made
by the trial court on May 5, 1998 in the presence of the accused's (herein
petitioner's) counsel; that the subject decision is already final and executory, there
having been no appeal interposed by the accused within the reglementary period;
that there is no such thing as repromulgation of a decision; that before the accused
could ask for relief from the trial court, she, being a convict, should submit herself
first to the lawful order thereof, that is, to surrender to the police authorities.

On June 22, 1998, the trial court issued an order denying petitioner's urgent
omnibus motion and notice of appeal for lack of merit, mentioning that its February
17, 1998 decision had already become final and executory. Petitioner moved for
reconsideration, this time assisted by another lawyer, Atty. Romulo San Juan. The
motion was set for hearing on July 8, 1998 but on said hearing date, neither
petitioner nor Atty. San Juan appeared. Instead, Atty. Porfirio Bautista appeared as
collaborating counsel of Atty. San Juan. When asked if he knew petitioner's counsel
of record, Atty. Bautista could not answer.
On July 17, 1998, Attys. San Juan and Bautista as counsel for petitioner, filed a
motion for inhibition of the presiding judge. The motion was set for hearing on July
28, 1998. Once again, petitioner failed to appear although Atty. Bautista did. On
October 8, 1998, the trial court denied petitioner's motion for reconsideration and
inhibition.
On December 14, 1998, petitioner filed a petition for certiorari under Rule 65 of the
1997 Rules of Civil Procedure with the Court of Appeals praying for the nullification
of the June 22, 1998 and October 8, 1998 orders of the trial court. At first, the Court
of Appeals issued a resolution dated December 29, 1998 dismissing the petition for
certiorari, for failure to contain an explanation why the respondent therein was not
personally served a copy of the petition. However, upon reconsideration, said
petition was reinstated.
After an exchange of pleadings, on June 17, 1999, the Court of Appeals issued the
decision assailed herein. Petitioner moved for reconsideration, but to no avail.
Hence, the instant petition on the basis of the following grounds: (1) that petitioner
was not properly notified of the date of promulgation and therefore, there was no
valid promulgation; hence petitioner's period to appeal has not commenced; (2)
that the promulgation in absentia of the judgment against petitioner was not made
in the manner set out in the last paragraph of Section 6, Rule 120 of the 1985 Rules
on Criminal Procedure which then provided that promulgation in absentia shall
consist in the recording of the judgment in the criminal docket and a copy thereof
shall be served upon the accused or counsel; (3) that the decision of the trial court
is contrary to applicable laws and that it disregarded factual evidence and instead
resorted to make a conclusion based on conjectures, presumptions, and
misapprehension of facts.
The resolution of the instant petition is dependent on the proper interpretation of
Section 6, Rule 120 of the 1985 Rules on Criminal Procedure, which provides:
Section 6. Promulgation of judgment --The judgment is promulgated by reading the
same in the presence of the accused and any judge of the court in which it was

rendered. However, if the conviction is for a light offense, the judgment may be
pronounced in the presence of his counsel or representative. When the judge is
absent or outside of the province or city, the judgment may be promulgated by the
clerk of court.
If the accused is confined or detained in another province or city, the judgment may
be promulgated by the executive judge of the Regional Trial Court having
jurisdiction over the place of confinement or detention upon request of the court
that rendered the judgment. The court promulgating the judgment shall have
authority to accept the notice of appeal and to approve the bail bond pending
appeal.
The proper clerk of court shall give notice to the accused personally or through his
bondsman or warden and counsel, requiring him to be present at the promulgation
of the decision. In case the accused fails to appear thereat the promulgation shall
consist in the recording of the judgment in the criminal docket and a copy thereof
shall be served upon the accused or counsel. If the judgment is for conviction and
the accuseds failure to appear was without justifiable cause, the court shall further
order the arrest of the accused, who may appeal within fifteen (15) days from notice
of the decision to him or his counsel. (Italics supplied)
Incidentally, Section 6, Rule 120 of the Revised Rules of Criminal Procedure which
took effect December 1, 2000 adds more requirements but retains the essence of
the former Section 6, to wit:
Section 6. Promulgation of judgment. The judgment is promulgated by reading it in
the presence of the accused and any judge of the court in which it was rendered.
However, if the conviction is for a light offense the judgment may be pronounced in
the presence of his counsel or representative. When the judge is absent or outside
the province or city, the judgment may be promulgated by the clerk of court.
If the accused is confined or detained in another province or city the judgment may
be promulgated by the executive judge of the Regional Trial Court having
jurisdiction over the place of confinement or detention upon request of the court
which rendered the judgment. The court promulgating the judgment shall have
authority to accept the notice of appeal and to approve the bail bond pending
appeal; provided, that if the decision of the trial court convicting the accused
changed the nature of the offense from non-bailable to bailable, the application for
bail can only be filed and resolved by the appellate court.
The proper clerk of court shall give notice to the accused personally or through his
bondsman or warden and counsel, requiring him to be present at the promulgation
of the decision. If the accused was tried in absentia because he jumped bail or
escaped from prison, the notice to him shall be served at his last known address.

In case the accused fails to appear at the scheduled date of promulgation of

judgment despite notice, the promulgation shall be made by recording the judgment
in the criminal docket and serving him a copy thereof at his last known address or
thru his counsel.
If the judgment is for conviction and the failure of the accused to appear was
without justifiable cause, he shall lose the remedies available in these Rules against
the judgment and the court shall order his arrest. Within fifteen (15) days from
promulgation of judgment however, the accused may surrender and file a motion
for leave of court to avail of these remedies. He shall state the reasons for his
absence at the scheduled promulgation and if he proves that his absence was for a
justifiable cause, he shall be allowed to avail of said remedies within fifteen (15)
days from notice. (Italics supplied)
Promulgation of judgment is an official proclamation or announcement of the
decision of the court (Jacinto, Sr., Commentaries and Jurisprudence on the Revised
Rules of Court [Criminal Procedure], 1994 ed., p. 521). In a criminal case,
promulgation of the decision cannot take place until after the clerk receives it and
enters it into the criminal docket. It follows that when the judge mails a decision
through the clerk of court, it is not promulgated on the date of mailing but after the
clerk of court enters the same in the criminal docket (Ibid., citing People v. Court of
Appeals, 52 O.G. 5825 [1956]).
According to the first paragraph of Section 6 of the aforesaid Rule (of both the 1985
and 2000 versions), the presence in person of the accused at the promulgation of
judgment is mandatory in all cases except where the conviction is for a light
offense, in which case the accused may appear through counsel or representative.
Under the third paragraph of the former and present Section 6, any accused,
regardless of the gravity of the offense charged against him, must be given notice
of the promulgation of judgment and the requirement of his presence. He must
appear in person or in the case of one facing a conviction for a light offense,
through counsel or representative. The present Section 6 adds that if the accused
was tried in absentia because he jumped bail or escaped from prison, notice of
promulgation shall be served at his last known address.
Significantly, both versions of said section set forth the rules that become operative
if the accused fails to appear at the promulgation despite due notice: (a)
promulgation shall consist in the recording of the judgment in the criminal docket
and a copy thereof shall be served upon the accused at his last known address or
through his counsel; and (b) if the judgment is for conviction, and the accused's
failure to appear was without justifiable cause, the court shall further order the
arrest of the accused.

Here lies the difference in the two versions of the section. The old rule
automatically gives the accused 15 days from notice (of the decision) to him or his
counsel within which to appeal. In the new rule, the accused who failed to appear
without justifiable cause shall lose the remedies available in the Rules against the
judgment. However, within 15 days from promulgation of judgment, the accused
may surrender and file a motion for leave of court to avail of these remedies. He
shall state in his motion the reasons for his absence at the scheduled promulgation
and if he proves that his absence was for a justifiable cause, he shall be allowed to
avail of said remedies within 15 days from notice.
It thus appears that the judgment in a criminal case must be promulgated in the
presence of the accused, except where it is for a light offense, in which case it may
be pronounced in the presence of his counsel or representative (Dimson v. Elepao,
99 Phil. 733 [1956]), and except where the judgment is for acquittal, in which case
the presence of the accused is not necessary (Cea, etc., et al. v. Cinco, et al., 96
Phil. 31 [1954]). Notably, one of the conditions of the bail given for the provisional
liberty of an accused in a criminal case is that he shall surrender himself (or the
bondsman shall surrender the accused) for execution of the final judgment (Section
2[d], Rule 114, Revised Rules of Criminal Procedure). Thus, it follows that it is the
responsibility of the accused to make himself available to the court upon
promulgation of a judgment of conviction, and such presence is secured by his bail
bond. This amplifies the need for the presence of the accused during the
promulgation of a judgment of conviction, especially if it is for a grave offense.
Obviously, a judgment of conviction cannot be executed --and the sentence meted
to the accused cannot be served --without his presence. Besides, where there is no
promulgation of the judgment, the right to appeal does not accrue (People v. ]
aranilla, 55 SCRA 565 [1974]).
Jurisprudence further dictates that the absence of counsel during the promulgation
will not result in a violation of any substantial right of the accused, and will not
affect the validity of the promulgation of the judgment (Bernardo v. Abeto, CA-G. R.
No. 6076, 31 January 1940; Gonzales v. Judge, 186 SCRA 101 [1990]).
In the vintage case of Cea, etc., et al. v. Cinco, et al (supra), the Court citing U. S. v.
Beecham, (28 Phil. 258 [1914]), stated the reasons for requiring the attendance of
the accused in case of conviction for a grave or less grave offense, to wit:
...The common law required, when any corporal punishment was to be inflicted on
the defendant, that he should be personally present before the court at the time of
pronouncing the sentence. (1 Chitty's Crim. Law [5th Am. ed.], 693, 696.) Reasons
given for this are, that the defendant may be identified by the court as the real
party adjudged to be punished (Holt, 399); that the defendant may have a chance
to plead or move in arrest of judgment (King vs. Speke, 3 Salk., 358); that he may
have an opportunity to say what he can say why judgment should not be given

against him (2 Hale's Pleas of the Crown, 401, 402); and that the example of the
defendants, who have been guilty of misdemeanors of a gross and public kind,
being brought up for the animadversion of the court and the open denunciation of
punishment, may tend to deter others from the commission of similar offenses
(Chitty's Crim. Law [5th ed.], 693, 696) ***.
Nevertheless, as mentioned above, regardless of the gravity of the offense,
promulgation of judgment in absentia is allowed under the Rules. The only essential
elements for its validity are: (a) that the judgment be recorded in the criminal
docket; and (b) that a copy thereof shall be served upon the accused or counsel.
Let us examine the validity of the May 5, 1998 promulgation which took place in the
case at bar. The dispositive portion of the decision convicting petitioner was read in
open court, after which the public prosecutor, the defense counsel Atty. Marcelino
Arias, and private complainant Lucita Lopez, acknowledged receipt of their
respective copies of the decision by affixing their signatures at the back of the
original of the decision on file with the record of the case. Atty. Arias failed to file a
notice of appeal within fifteen days from receipt of the decision. Is it proper to rule
that the period within which to file an appeal has lapsed?
In Florendo v. Court of Appeals (239 SCRA 325 [1994]), the facts are parallel to
those of the instant case. We held In the case at bench, a copy of the judgment was served to the counsel of petitioner
on June 15, 1992; therefore, he had only up to June 30, 1992 within which to appeal.
The notice of appeal filed on July 6, 1992 was clearly out of time.
It is presumed that official duties are regularly performed and that the proceedings
are made of record. This serves as a substantial compliance with the procedural
requirement of the recording of the judgment in the criminal docket of the court. At
any rate, petitioner does not question non-compliance of the requirement of the
recording of the judgment in the criminal docket.
(At p. 329.)
Petitioner's first argument is devoid of merit. In the first place, her non- receipt of
the notice of promulgation was due to her own failure to immediately file a notice of
change of address with the trial court, which she clearly admitted. Besides,
promulgation could be properly done even in her absence, subject to the service of
a copy of the decision upon her or her counsel and the recording of the judgment in
the criminal docket.
However, in line with petitioner's second argument, petitioner has presented
evidence sufficient to controvert the presumption of regularity of performance of

official duty as regards the procedural requirement of the recording of the judgment
in the criminal docket of the court. Attached to the petition is a piece of evidence
that cannot be ignored by this Court -- a certification dated October 26, 1998 signed
by the Clerk of Court of the Regional Trial Court of Pasig, which reads:
TO WHOM IT MAY CONCERN:
THIS IS TO CERTIFY that this Office has not yet been furnished, as of this date, with
copies of the decisions in Criminal Cases Nos. 85283-306 and 86064-65, entitled
People of the Philippines versus Marilyn C. Pascua, which were assigned to Branch
153 of this Court.
This certification is issued upon request of Romulo D. San Juan and Porfirio Bautista,
both counsels for the accused.
City of Pasig, October 26, 1998, 1:30 p.m.
(Sgd.) GREGORIO P. SUBONG, JR.
Administrative Officer I In-Charge
Criminal Cases Unit
(Sgd.) GRACE S. BELVIS
Clerk of Court
(p. 61, Record.)
We take judicial notice of said certification and hold that in view thereof, we cannot
presume substantial compliance with the requirement of recording a judgment in
the criminal docket. And in the absence of such compliance, there can be no valid
promulgation. Without the same, the February 17, 1998 decision could not attain
finality and become executory. This means that the 15-day period within which to
interpose an appeal did not even commence.
What is the significance of the recording of the judgment with the criminal docket of
the court? By analogy, let us apply the principles of civil law on registration.
To register is to record or annotate. American and Spanish authorities are
unanimous on the meaning of the term to register as "to enter in a register; to
record formally and distinctly; to enroll; to enter in a list" (Po Sun Tun vs. Prize and
Provincial Government of Leyte, 54 Phil. 192 [1929]). In general, registration refers
to any entry made in the books of the registry, including both registration in its

ordinary and strict sense, and cancellation, annotation, and even the marginal
notes. In strict acceptation, it pertains to the entry made in the registry which
records solemnly and permanently the right of ownership and other real rights
(Ibid.). Simply stated, registration is made for the purpose of notification (Paras,
Civil Code of the Philippines, Vol. II, 1989 ed., p. 653, citing Bautista vs. Dy Bun
Chin, 49 O.G. 179 [1952]).
Registration is a mere ministerial act by which a deed, contract, or instrument is
sought to be inscribed in the records of the Office of the Register of Deeds and
annotated at the back of the certificate of title covering the land subject of the
deed, contract, or instrument. Being a ministerial act, it must be performed in any
case and, if it is not done, it may be ordered performed by a court of justice (Cruz,
The Law of Public Officers, 1997 ed., p. 102). In fact, the public officer having this
ministerial duty has no choice but to perform the specific action which is the
particular duty imposed by law. Its purpose is to give notice thereof to all persons.
It operates as a notice of the deed, contract, or instrument to others, but neither
adds to its validity nor converts an invalid instrument into a valid one between the
parties. If the purpose of registration is merely to give notice, then questions
regarding the effects or invalidity of instruments are expected to be decided after,
not before, registration. It must follow as a necessary consequence that registration
must first be allowed, and validity or effect of the instruments litigated afterwards
(Seron vs. Hon. Rodriguez, etc., and Seron, 110 Phil.. 548 [1960]; Gurbax Singh
Pabla & Co., et al. vs. Reyes, et al., 92 Phil. 177 [1952]; Register of Deeds of Manila
vs. Tinoco Vda. De Cruz, 95 Phil. 818 [1954]; Samanilla vs. Cajucom, et al., 107 Phil.
432 [1960]).
Applying the above-mentioned principles to the instant case, we are prompted to
further examine the provisions on promulgation in absentia.
As held in Florendo vs. Court of Appeals (supra), the rules allow promulgation of
judgment in absentia to obviate the situation where juridical process could be
subverted by the accused jumping bail. But the Rules also provide measures to
make promulgation in absentia a formal and solemn act so that the absent accused,
wherever he may be, can be notified of the judgment rendered against him. As
discussed earlier, the sentence imposed by the trial court cannot be served in the
absence of the accused. Hence, all means of notification must be done to let the
absent accused know of the judgment of the court. And the means provided by the
Rules are: (1) the act of giving notice to all persons or the act of recording or
registering the judgment in the criminal docket (which Section 6 incidentally
mentions first showing its importance; and (2) the act of serving a copy thereof
upon the accused (at his last known address) or his counsel. In a scenario where
the whereabouts of the accused are unknown (as when he is at large), the recording
satisfies the requirement of notifying the accused of the decision wherever he may
be.

Thus, on May 5, 1998, although the second kind of notification was satisfied when
defense counsel Atty. Arias received a copy of the February 17, 1998 decision, the
solemn and operative act of recording was not done, making the promulgation in
absentia invalid. This being so, the period to appeal did not begin to run.
The next matter we have to consider is the effect of the service of a copy of the
judgment upon petitioner, who admits having received a copy thereof on June 17,
1998. Did the 15-day period to appeal begin to run on said date of receipt?
We rule in the negative. Petitioner's later receipt of the copy of the decision does
not in any way cure an invalid promulgation. And even if said decision be recorded
in the criminal docket later, such piece-meal compliance with the Rules will still not
validate the May 5, 1998 promulgation which was invalid at the time it was
conducted. The express mention in the provision of both requirements for a valid
promulgation in absentia clearly means that they indeed must concur.
Finally, as regards the third argument, we agree with the Solicitor General that
matters of sufficiency of evidence may not be passed upon in the herein
proceedings. The instant petition assails the Court of Appeals' decision dated June
17, 1999 and its order dated September 28, 1999 both of which concern the orders
of the trial court dated June 22, 1998 and October 8, 1998, in essence ruling that
petitioner's notice of appeal dated June 19, 1998 was filed out of time. The petition
is not directed against February 17, 1998 decision of the trial court which convicted
petitioner on 26 counts of violation of Batas Pambansa Blg. 22. Hence, this is not
the proper time to rule on the merits of Criminal Cases No. 85283-306/86064-65.
There is, rather, a need to remand the matter to the trial court for proper
promulgation of its decision. Significantly, it is not what petitioner describes as
"repromulgation" since promulgation was not validly made, and hence, as if not
conducted. The requisites of the remedy of appeal shall then apply from that point.
WHEREFORE, the instant petition is hereby GRANTED. The June 17, 1999 decision
and the September 28, 1999 order of the Court of Appeals are hereby set aside.
The instant case is hereby remanded to the trial court for proper promulgation of its
decision in accordance with Section 6, Rule 120 of the Revised Rules of Criminal
Procedure.
SO ORDERED.

CARMELITA FUDOT,
Petitioner,
- versus
CATTLEYA LAND, INC.,

G.R. No. 171008

Respondent.
September 13, 2007
DECISION
TINGA, J.:
For resolution is a petition that seeks to nullify the Decision[1] and
Resolution[2] of the Court of Appeals dated 28 April 2005 and 11 January 2006,
respectively, in C.A.G.R. CV No. 73025 which declared respondent as having a
better right over a parcel of land located in Doljo, Panglao, Bohol.

The facts, as culled from the records, follow.

Sometime in July 1992, Cattleya Land, Inc. (hereinafter referred to as
respondent) asked someone to check, on its behalf, the titles of nine (9) lots, the
subject land included, which it intended to buy from the spouses Troadio and
Asuncion Tecson. Finding no defect on the titles, respondent purchased the nine
lots through a Deed of Conditional Sale on 6 November 1992. Subsequently, on 30
August 1993, respondent and the Tecsons executed a Deed of Absolute Sale over
the same properties. The Deed of Conditional Sale and the Deed of Absolute Sale
were registered with the Register of Deeds on 06 November 1992 and 04 October
1993, respectively.[3] The Register of Deeds, Atty. Narciso dela Serna, refused to
actually annotate the deed of sale on the titles because of the existing notice of
attachment in connection with Civil Case No. 3399 pending before the Regional Trial
Court of Bohol.[4] The attachment was eventually cancelled by virtue of a
compromise agreement between the Tecsons and their attaching creditor which was
brokered by respondent. Titles to six (6) of the nine (9) lots were issued, but the
Register of Deeds refused to issue titles to the remaining three (3) lots , because the
titles covering the same were still unaccounted for.
On 23 January 1995, petitioner presented for registration before the Register
of Deeds the owners copy of the title of the subject property, together with the
deed of sale purportedly executed by the Tecsons in favor of petitioner on 19
December 1986. On the following day, respondent sent a letter of
protest/opposition to petitioners application. Much to its surprise, respondent
learned that the Register of Deeds had already registered the deed of sale in favor
of petitioner and issued a new title in her name.[5]
On 5 May 1995, respondent filed its Complaint[6] for Quieting Of Title &/Or
Recovery Of Ownership, Cancellation Of Title With Damages before the Regional
Trial Court of Tagbilaran City.[7] On 26 June 1995, Asuncion filed a complaint-in-

intervention, claiming that she never signed any deed of sale covering any part of
their conjugal property in favor of petitioner. She averred that her signature in
petitioners deed of sale was forged thus, said deed should be declared null and
void.[8] She also claimed that she has discovered only recently that there was an
amorous relationship between her husband and petitioner.[9]
Petitioner, for her part, alleged in her answer[10] that the spouses Tecson had sold
to her the subject property for P20,000.00 and delivered to her the owners copy of
the title on 26 December 1986. She claims that she subsequently presented the
said title to the Register of Deeds but the latter refused to register the same
because the property was still under attachment.
On 31 October 2001, the trial court rendered its decision:[11] (i) quieting the
title or ownership of the subject land in favor of respondent; (ii) declaring the deed
of sale between petitioner and spouses Tecson invalid; (iii) ordering the registration
of the subject land in favor of respondent; (iv) dismissing respondents claim for
damages against the Register of Deeds for insufficiency of evidence; (v) dismissing
Asuncions claim for damages against petitioner for lack of factual basis; and (vi)
dismissing petitioners counterclaim for lack of the required preponderance of
evidence.[12]
According to the trial court, respondent had recorded in good faith the deed
of sale in its favor ahead of petitioner. Moreover, based on Asuncions convincing
and unrebutted testimony, the trial court concluded that the purported signature of
Asuncion in the deed of sale in favor of petitioner was forged, thereby rendering
the sale void.[13]
Petitioner sought recourse to the Court of Appeals, arguing in the main that
the rule on double sale was applicable to the case. The appellate court, however,
dismissed her appeal, holding that there was no double sale because the alleged
sale to petitioner was null and void in view of the forgery of Asuncions purported
signature in the deed. The appellate court noted that petitioner failed to rebut
Asuncions testimony despite opportunities to do so.[14] Moreover, even if there
was double sale, according to the appellate court, respondents claim would still
prevail since it was able to register the second sale in its favor in good faith, had
made inquiries before it purchased the lots, and was informed that the titles were
free from encumbrance except the attachment on the property due to Civil Case No.
3399.[15]
Petitioner sought reconsideration of the decision but the Court of Appeals
denied her motion for reconsideration for lack of merit.[16]
Petitioner thus presents before this Court the following issues for resolution:

I.
BETWEEN 2 BUYERS OF REGISTERED LAND, WHO HAS THE BETTER RIGHT-IS IT THE
FIRST BUYER WHO WAS GIVEN THE OWNERS DUPLICATE TCT TOGETHER WITH A
DEED OF SALE IN 1986, OR THE SECOND BUYER IN 1992 WITH ONLY A DEED OF
SALE.
II.
IS A BUYER OF REGISTERED LAND WHO DID NOT DEMAND OR REQUIRE THE
DELIVERY OF THE OWNERS DUPLICATE TCT A BUYER IN GOOD FAITH.
III.
II.
IN SUBSEQUENT REGISTRATION OF REGISTERED LANDS, AS BY SALE, WHICH
LAW SHALL GOVERN, ARTICLE 1455 OF CIVIL CODE OR P.D. 1529 OR TORRENS
SYSTEM.[17]

Petitioner avers that she was the first buyer in good faith and even had in her
possession the owners copy of the title so much so that she was able to register the
deed of sale in her favor and caused the issuance of a new title in her name. She
argues that the presentation and surrender of the deed of sale and the owners copy
carried with it the conclusive authority of Asuncion Tecson which cannot be
overturned by the latters oral deposition.[18]
Petitioner claims that respondent did not demand nor require delivery of the
owners duplicate title from the spouses Tecson, neither did it investigate the
circumstances surrounding the absence of the title. These indicate respondents
knowledge of a defect in the title of the spouses and, thus, petitioner concludes
that respondent was not a buyer in good faith.[19]
Finally, petitioner insists that the applicable law in this case is P.D. No. 1529, a
special law dealing precisely with the registration of registered lands or any
subsequent sale thereof, and not Article 1544 of the Civil Code which deals with
immovable property not covered by the Torrens System.[20]
Respondent points out, on one hand, that petitioners first two issues which present
an inquiry on who has a better right or which one is a buyer in good faith, are
questions of fact not proper in a petition for review. The third issue, on the other
hand, is ostensibly a question of law which had been unsuccessfully raised below.
[21]
Respondent maintains that there is no room to speak of petitioner as a buyer in
good faith since she was never a buyer in the first place, as her claim is based on a

null and void deed of sale, so the court a quo found. Respondent also asserts that
its status as a buyer in good faith was established and confirmed in the
proceedings before the two courts below.[22]
Lastly, respondent argues that P.D. No. 1529 finds no application in the instant case.
The production of the owners duplicate certificate x x x being conclusive authority
from the registered owner is only true as between the registration applicant and
the register of deeds concerned, but never to third parties. Such conclusive
authority, respondent adds, is only for the Register of Deeds to enter a new
certificate or to make a memorandum of registration in accordance with such
instrument. It cannot cure the fatal defect that the instrument from which such
registration was effected is null and void ab initio, respondent concludes.[23]
The petition is bereft of merit.
Petitioners arguments, which rest on the assumption that there was a double
sale, must fail.
In the first place, there is no double sale to speak of. Art. 1544 of the Civil
Code,[24] which provides the rule on double sale, applies only to a situation where
the same property is validly sold to different vendees. In this case, there is only
one sale to advert to, that between the spouses Tecson and respondent.
In Remalante v. Tibe,[25] this Court ruled that the Civil Law provision on
double sale is not applicable where there is only one valid sale, the previous sale
having been found to be fraudulent. Likewise, in Espiritu and Apostol v. Valerio,[26]
where the same parcel of land was purportedly sold to two different parties, the
Court held that despite the fact that one deed of sale was registered ahead of the
other, Art. 1544 of the Civil Code will not apply where said deed is found to be a
forgery, the result of this being that the right of the other vendee should prevail.
The trial court declared that the sale between the spouses Tecson and
petitioner is invalid, as it bears the forged signature of Asuncion. Said finding is
based on the unrebutted testimony of Asuncion and the trial courts visual analysis
and comparison of the signatures in her Complaint-in-Intervention and the
purported deed of sale. This finding was upheld by the Court of Appeals, as it ruled
that the purported sale in petitioners favor is null and void, taking into account
Asuncions unrefuted deposition. In particular, the Court of Appeals noted
petitioners failure to attend the taking of the oral deposition and to give written
interrogatories. In short, she did not take the necessary steps to rebut Asuncions
definitive assertion.
The congruence of the wills of the spouses is essential for the valid
disposition of conjugal property.[27] Thus, under Article 166 of the Civil Code[28]

which was still in effect on 19 December 1986 when the deed of sale was
purportedly executed, the husband cannot generally alienate or encumber any real
property of the conjugal partnership without the wifes consent.
In this case, following Article 173[29] of the Civil Code, on 26 June 1995, or
eight and a half years (8 ) after the purported sale to petitioner, Asuncion filed her
Complaint-in-Intervention seeking the nullification thereof, and while her marriage
with Troadio was still subsisting. Both the Court of Appeals and the trial court found
Asuncions signature in the deed of sale to have been forged, and consequently,
the deed of sale void for lack of marital consent. We find no reason to disturb the
findings of the trial court and the Court of Appeals. Findings of fact of lower courts
are deemed conclusive and binding upon the Supreme Court subject to certain
exceptions,[30] none of which are present in this case. Besides, it has long been
recognized in our jurisprudence that a forged deed is a nullity and conveys no title.
[31]
Petitioner argues she has a better right over the property in question, as the
holder of and the first one to present, the owners copy of the title for the issuance
of a new TCT. The Court is not persuaded.
The act of registration does not validate petitioners otherwise void contract.
Registration is a mere ministerial act by which a deed, contract, or instrument is
sought to be inscribed in the records of the Office of the Register of Deeds and
annotated at the back of the certificate of title covering the land subject of the
deed, contract, or instrument. While it operates as a notice of the deed, contract, or
instrument to others, it does not add to its validity nor converts an invalid
instrument into a valid one as between the parties,[32] nor amounts to a
declaration by the state that the instrument is a valid and subsisting interest in the
land.[33] The registration of petitioners void deed is not an impediment to a
declaration by the courts of its invalidity.
Even assuming that there was double sale in this case, petitioner would still
not prevail. The pertinent portion of Art. 1544 provides:
Art. 1544. x x x.
Should it be immovable property, the ownership shall belong to the person
acquiring it who in good faith first recorded it in the Registry of Property.
x x x x.

In interpreting this provision, the Court declared that the governing principle
is primus tempore, potior jure (first in time, stronger in right). Knowledge gained by

the first buyer of the second sale cannot defeat the first buyers rights, except
where the second buyer registers in good faith the second sale ahead of the first as
provided by the aforequoted provision of the Civil Code. Such knowledge of the first
buyer does not bar him from availing of his rights under the law, among them to
register first his purchase as against the second buyer. However, knowledge gained
by the second buyer of the first sale defeats his rights even if he is first to register
the second sale, since such knowledge taints his prior registration with bad faith.
[34] It is thus essential, to merit the protection of Art. 1544, second paragraph,
that the second realty buyer must act in good faith in registering his deed of sale.
[35]
We agree with the trial court and the Court of Appeals that respondent was a
buyer in good faith, having purchased the nine (9) lots, including the subject lot,
without any notice of a previous sale, but only a notice of attachment relative to a
pending civil case. In fact, in its desire to finally have the title to the properties
transferred in its name, it persuaded the parties in the said case to settle the same
so that the notice of attachment could be cancelled.
Relevant to the discussion are the following provisions of P.D. No. 1529:
Sec. 51. Conveyance and other dealings by registered owner. An owner of
registered land may convey, mortgage, lease, charge or otherwise deal with the
same in accordance with existing laws. He may use such forms of deeds,
mortgages, lease or other voluntary instruments as are sufficient in law. But no
deed, mortgage, lease or other voluntary instrument, except a will purporting to
convey or affect registered land shall take effect as a conveyance or bind the land,
but shall operate only as a contract between the parties and as evidence of
authority to the Register of Deeds to make Registration.
The act of registration shall be the operative act to convey or affect the land insofar
as third persons are concerned, and in all cases under this Decree, the registration
shall be made in the office of the Register of Deeds for the province or city where
the land lies. (Emphasis supplied)

Sec. 52. Constructive notice upon registration.Every conveyance, mortgage,

lease, lien attachment, order, judgment, instrument or entry affecting registered
land shall, if registered, filed or entered in the office of the Register of Deeds for the
province or city where the land to which it relates lies, be constructive notice to all
persons from the time of such registering, filing or entering.

It has been held that between two transactions concerning the same parcel
of land, the registered transaction prevails over the earlier unregistered right. The
act of registration operates to convey and affect the registered land so that a bona
fide purchaser of such land acquires good title as against a prior transferee, if such
prior transfer was unrecorded.[36] As found by the courts a quo, respondent was
able to register its purchase ahead of petitioner. It will be recalled that respondent
was able to register its Deed of Conditional Sale with the Register of Deeds as early
as 6 November 1992, and its Deed of Absolute Sale on 14 October 1993. On the
other hand, petitioner was able to present for registration her deed of sale and
owners copy of the title only on 23 January 1995, or almost nine years after the
purported sale. Why it took petitioner nine (9) years to present the deed and the
owners copy, she had no credible explanation; but it is clear that when she finally
did, she already had constructive notice of the deed of sale in respondents favor.
Without a doubt, respondent had acquired a better title to the property.
Finally, anent petitioners claim that P.D. No. 1529 applies to registered lands
or any subsequent sale thereof, while Art. 1544 of the Civil Code applies only to
immovable property not covered by the Torrens System, suffice it to say that this
quandary has already been answered by an eminent former member of this Court,
Justice Jose Vitug, who explained that the registration contemplated under Art.
1544 has been held to refer to registration under P.D. No. 1529, thus:
The registration contemplated under Art. 1544 has been held to refer to registration
under Act 496 Land Registration Act (now PD 1529) which considers the act of
registration as the operative act that binds the land (see Mediante v. Rosabal, 1 O.G.
[12] 900, Garcia v. Rosabal, 73 Phil 694). On lands covered by the Torrens System,
the purchaser acquires such rights and interest as they appear in the certificate of
title, unaffected by any prior lien or encumbrance not noted therein. The purchaser
is not required to explore farther than what the Torrens title, upon its face, indicates.
The only exception is where the purchaser has actual knowledge of a flaw or defect
in the title of the seller or of such liens or encumbrances which, as to him, is
equivalent to registration (see Sec. 39, Act 496; Bernales v. IAC, G.R. 75336, 18
October 1988; Hernandez vs. Sales, 69 Phil 744; Tajonera s. Court of Appeals, L26677, 27 March 1981) (Emphasis supplied)[37]

WHEREFORE, the petition is DENIED. The assailed decision and resolution of the
Court of Appeals are affirmed. Costs against petitioner.

SO ORDERED.

iv. Registration
1. Meaning
G.R. No. L-31346 December 28, 1929
PO SUN TUN, plaintiff-appellant,
vs.
W. S. PRICE and THE PROVINCIAL GOVERNMENT OF LEYTE, defendantsappellees.
Vicente Sotto for appellant.
Kapunan and Kapunan for appellee Price.
Attorney-General Jaranilla for the Provincial Government of Leyte.

MALCOLM, J.:
The undisputed facts in this case are the following:
On November 29, 1921, Gabino Barreto P. Po Ejap was the owner of a certain parcel
of land situated in the municipality of Tacloban, Province of Leyte. On the date
mentioned, he sold the land to Po Tecsi for the sum of P8,000. On June 21, 1923, Po
mortgaged the land to W. S. Price in the amount of P17,000. The mortgage was duly
noted in the office of the register of deeds of Leyte on August 18th of the same
year. On December 17, 1924, Po executed a deed of sale of the land to Price in
consideration of P17,000. This sale was recorded with the register of deeds on
January 22, 1925. Price in turn, with the consent of his wife, sold the land on
February 16, 1927, to the Province of Leyte for P20,570.
In connection with the above facts, it should further be stated that when the
Tacloban Cadastral Case was before the courts in 1918, this land was claimed by
Gabino Barreto P. Po Ejap acting through his agent, Po Tecsi, but subsequently on
motion the names of Mr. and Mrs. Price were substituted as claimants. On March 17,
1927, the original certificate of title was issued in the name of the spouses Price.
Later, the proper transfer certificate of title was provided for the Province of Leyte.
Returning again to the original date of November 29, 1921, on that date Po Tecsi
gave a general power of attorney including the right to sell to Gabino Barreto P. Po
Ejap. Acting under this power, Gabino sold the land on November 22, 1923, for
P8,000 to Jose H. Katigbak. On this document there appears on the upper right-hand
margin the following: "Register of Deeds, Received, Dec. 15, 1923, Province of
Leyte." In turn Jose H. Katigbak transferred the property to Po Sun Tun on October
12, 1927, for P8,000.

Further explaining the relationship of the parties, it should be taken into

consideration that Gabino Barreto P. Po Ejap and Po Tecsi, between whom was the
original transaction and between whom was the provision made for the power of
attorney, are brothers. Gabino Barreto P. Po Ejap and Po Sun Tun, the first the
original vendor, and the latter the person to whom the property eventually returned
pursuant to the power of attorney, are father and son. As to the possession of the
property, it has been under the control of Price and the Provincial Government of
Leyte and has not been under the material control of Po Sun Tun.
Predicated on these facts, Po Sun Tun began an action in the Court of First Instance
of Leyte to gain the possession of the property and to secure damages in the
amount of P3,600. Judge Causing sitting in first instance decided the case on the
pleadings and the evidence, absolving the defendants W. S. Prince and the Province
of Leyte from the complaint, with costs against the plaintiff. The principal error
assigned on appeal by the plaintiff in connection with this judgment is that the trial
judge erred in finding that the deed, Exhibit D, in favor of Jose H. Katigbak had not
been registered in the corresponding registry of property.
The provision of law relied upon by the trial judge as authority for his decision was
the second paragraph of article 1473 of the Civil Code, which provides that if the
same thing should have been sold to different vendees, "Si fuere inmueble, la
propiedad pertenecera al adquirente que antes la haya inscrito en el Registro," or,
as translated by Fisher, "Should it be real property, it shall belong to the purchaser
who first recorded it in the Registry of Deeds." Recalling that the deed of Po Tecsi to
Price was duly registered on January 22, 1925, and that thereafter a Torrens title
was obtained in the name of Price, and that the deed of Gabino Barreto P. Po Ejap to
Jose H. Katigbak has noted on it "Register of Deeds, Received, Dec. 15, 1923,
Province of Leyte," can it be said that within the meaning of the law this latter deed
was ever recorded?
We are clearly of the opinion that it was not. The law and the authorities are
overwhelmingly demonstrative of this statement. The mere presentation to the
office of the register of deeds of a document on which acknowledgment of receipt is
written is not equivalent to recording or registering the real property. Escriche says
that registration, in its juridical aspect, must be understood as the entry made in a
book or public registry of deeds. (See Altavas, Land Registration in the Philippine
Islands, 2d ed., p. 151.) Soler and Castello in their Diccionario de Legislacion
Hipotecaria y Notarial, vol. II, p. 185, state:
Registration in general, as the law uses the word, means any entry made in the
books of the Registry, including both registration in its ordinary and strict sense, and
cancellation, annotation, and even the marginal notes. In its strick acceptation, it is

the entry made in the Registry which records solemnly and permanently the right of
ownership and other real rights.
The American authorities conform in this respect to the Spanish authorities for the
term "To register" it has been said that it means to "enter in a register; to record
formally and distinctly; to enroll; to enter in a list" (Reck vs. Phoenix Ins. Co. [1889],
7 N. Y. Suppl., 492; 54 Hun., 637; Harriman vs. Woburn Electric Light Co. [1895], 163
Mass., 85). If any doubt remained on the subject, it would be dispelled by turning to
Act No. 2837 amendatory of section 194 of the Administrative Code, and recalling
that it is therein provided that "No instrument or deed establishing, transmitting,
acknowledging, modifying or extinguishing rights with respect to real estate not
registered under the provisions of Act Numbered Four hundred and ninety-six,
entitled "The Land Registration," and its amendments, shall be valid, except as
between the parties thereto, until such instrument or deed has been registered, in
the manner hereinafter prescribed, in the office of the register of deeds for the
province or city where the real estate lies." (There follows in the law the
requirements regarding the books which it is the duty of the register of deeds to
keep and use.)
It results as a matter of course since the deed made by Gabino Barreto P. Po Ejap in
favor of Jose H. Katigbak was not only not first recorded in the registry of deeds but
never legally so recorded, and since the purchaser who did record his deed was
Price, who secured a Torrens title and transferred the same to the Province of Leyte,
that Po Sun Tun, the holder of a defeasible title, has no legal rights as against Price
and the Province of Leyte, the holders of indefeasible titles. Also, if necessary, it
could be ruled that within the meaning of section 38 of the Land Registration Law,
Price and the Province of Leyte are innocent purchasers for value of the disputed
property.
Finding the judgment appealed from to be correct from all points of view, it will be
affirmed, with the costs of this instance against the appellant.

2. Concept
WILFREDO T. VAGILIDAD
and LOLITA A. VAGILIDAD,
Petitioners,
- versus
GABINO VAGILIDAD, JR.
and DOROTHY VAGILIDAD,
Respondents.
DECISION

G.R. No. 161136

November 16, 2006

PUNO, J.:
This is a Petition for Review on Certiorari of the Decision[1] and Resolution[2]
of the Court of Appeals in CA-G.R. No. CV-68318 dated March 19, 2003 and
November 13, 2003, respectively, reversing and setting aside the decision of the
Regional Trial Court of Antique, Sixth Judicial Region, Branch II, in Civil Case No.
2825 dated January 26, 1999.
The facts are stated in the assailed Decision[3] of the appellate court, viz.:
A parcel of land, Lot No. 1253, situated in Atabay, San Jose, Antique, measuring
4,280 square meters, was owned by Zoilo [Labiao] (hereafter ZOILO) as per Original
Certificate of Title No. RO-2301 issued on March 3, 1931. Sometime in 1931, ZOILO
died. Subsequently, on May 12, 1986, Loreto Labiao (hereafter LORETO), son of
ZOILO, sold to Gabino Vagilidad Jr. (hereafter GABINO JR.) a portion of Lot No. 1253
(hereafter Lot 1253-B), measuring 1,604 square meters as evidenced by the Deed of
Absolute Sale executed by LORETO.
In view of the death of ZOILO, his children, LORETO, Efren Labiao (hereafter EFREN)
and Priscilla Espanueva (hereafter PRISCILLA) executed an Extrajudicial x x x
Settlement of Estate dated January 20, 1987, adjudicating the entire Lot No. 1253,
covering 4,280 square meters, to LORETO. On January 29, 1987, Transfer Certificate
of Title (TCT) No. T-16693 was issued in favor of LORETO, EFREN and PRISCILLA, but
on even date, TCT No. T-16693 was cancelled and TCT No. T-16694, covering the
said property, was issued in the name of LORETO alone.
On July 31, 1987, GABINO JR., as petitioner, filed a Petition for the Surrender of TCT
No. T-16694, covering Lot No. 1253, with the Regional Trial Court of San Jose City,
Sixth Judicial Region, against LORETO, docketed as Cadastral Case No. 87-731-A.
The plaintiff alleged that, being the owner of x x x Lot No. 1253-B, under TCT No. T16694, by virtue of the sale that took place on May 12, 1986, he is entitled to ask
for the surrender of the owners copy of TCT No. T-16694 to the Register of Deeds of
Antique in order to effect the transfer of title to the name of the petitioner. However,
as per motion of both counsels[,] since the parties seemed to have already reached
an amicable settlement without the knowledge of their counsels, the trial court
issued an Order dated March 21, 1994 sending the case to the archives.
On September 21, 1988, [GABINO JR.] paid real estate taxes on the land he bought
from LORETO as per Tax Declaration No. 1038 where the property was specified as
Lot No. 1253-B. GABINO JR. thereafter sold the same lot to Wilfredo Vagilidad
(hereafter WILFREDO) as per Deed of Absolute Sale dated December 7, 1989. On
even date, Deed of Absolute Sale of a Portion of Land involving the opt-described
property was also executed by LORETO in favor of WILFREDO. The aforementioned
deeds, which were both executed on December 7, 1989 [and] notarized by Atty.
Warloo Cardenal[,] [appear] to have been given the same entry number in his

notarial books as both contained the designation Document No. 236, Page No. 49,
Book No. XI, Series of 1989[.]
Corollarily, on February 14, 1990, the sale of Lot No. 1253-B to WILFREDO was
registered with the Registry of Deeds of the Province of Antique under Entry No.
180425. Consequently, TCT No. T-18023, cancelling TCT No. 16694, was issued in
favor of WILFREDO pursuant to the Deed of Absolute Sale dated December 7, 1989.
On October 24, 1991, spouses WILFREDO and LOLITA obtained a loan from the
Philippine National Bank (PNB for brevity) in the amount of P150,000.00 and
mortgaged Lot No. 1253-B as collateral of the said loan and the transaction was
inscribed at the back of TCT No. 18023 as Entry No. 186876. Subsequently, the xxx
real estate mortgage was cancelled under Entry No. 191053 as per inscription dated
November 17, 1992 in xxx TCT No. 18023.
Subsequently, WILFREDO obtained another loan from Development Bank of the
Philippines (DBP for brevity) in the amount of P200,000.00 and mortgaged Lot No.
1253-B as collateral of the xxx loan and the transaction was inscribed at the back of
TCT No. 18023 as Entry No. 196268. The said loan was paid and, consequently, the
mortgage was cancelled as Entry No. 202500.
On September 29, 1995, spouses GABINO and Ma. Dorothy Vagilidad
(hereafter DOROTHY), as plaintiffs, filed a Complaint for Annulment of Document,
Reconveyance and Damages, with the Regional Trial Court of Antique, Sixth Judicial
Region, Branch 11, against spouses WILFREDO and Lolita Vagilidad (hereafter
LOLITA), docketed as Civil Case No. 2825. The plaintiffs claimed that they are the
lawful owners of Lot No. 1253-B which was sold to him by LORETO in 1986. They
alleged that [GABINO JR.] is a nephew of defendant WILFREDO. They likewise raised
that when GABINO SR. died, defendant WILFREDO requested GABINO JR. to transfer
the ownership of Lot No. 1253-B in defendant WILFREDOs name for loaning
purposes with the agreement that the land will be returned when the plaintiffs need
the same. They added that, pursuant to the mentioned agreement, plaintiff GABINO
JR., without the knowledge and consent of his spouse, DOROTHY, executed the Deed
of Sale dated December 7, 1989 in favor of defendant WILFREDO receiving nothing
as payment therefor. They pointed out that after defendant WILFREDO was able to
mortgage the property, plaintiffs demanded the return of the property but the
defendants refused to return the same. The plaintiffs claimed that the same
document is null and void for want of consideration and the same does not bind the
non-consenting spouse. They likewise prayed that the defendant be ordered to pay
the plaintiffs not less than P100,000.00 as actual and moral damages, P10,000.00
as attorneys fees and P5,000.00 as litigation expenses.
For their part, the defendants, on January 15, 1996, filed their Answer, denying the
material allegations of the plaintiffs. Defendants claimed that they are the lawful

owners of Lot No. 1253-B. They alleged that LORETO, with conformity of his wife,
sold to them Lot No. 1253 on December 7, 1989 for P5,000.00 and the transaction
was registered with the Register of Deeds of the Province of Antique under Entry No.
180425. They added that, subsequently, TCT No. T-18023, covering Lot No. 1253-B,
was issued in favor of the defendants. Hence, they claimed that the plaintiffs be
directed to pay the defendants P200,000.00 as moral damages, P50,000.00 as
exemplary damages, P20,000.00 as attorneys fees and P30,000.00 for litigation
expenses.[4]
The trial court ruled in favor of petitioners WILFREDO and LOLITA and held
that LORETO did not validly convey Lot No. 1253-B to GABINO, JR. on May 12, 1986
since at that time, the heirs of ZOILO had not partitioned Lot No. 1253.[5] It ruled
that LORETO could only sell at that time his aliquot share in the inheritance. He
could not have sold a divided part thereof designated by metes and bounds. Thus, it
held that LORETO remained the owner of the subject lot when he sold it to
WILFREDO on December 7, 1989. It further found that there was no proof that
WILFREDO knew of the sale that took place between LORETO and GABINO, JR. on
May 12, 1986. The dispositive portion of the decision states:
WHEREFORE, in view of the foregoing pronouncements and a preponderance
of evidence, judgment is hereby rendered:
1.
FINDING the defendants WILFREDO VAGILIDAD and LOLITA
VAGILIDAD to have duly acquired ownership of Lot No. 1253-B containing an area of
1,604 square meters, more or less, situated in San Jose, Antique;
2.
SUSTAINING the validity of Transfer Certificate of Title No. T-18023
covering the subject Lot No. 1253-B and issued in the name of the defendant
WILFREDO VAGILIDAD, married to the defendant LOLITA VAGILIDAD;
3.
DISMISSING the complaint of the plaintiffs GABINO VAGILIDAD, JR.
and MA. DOROTHY VAGILIDAD, as well as the counterclaims of the defendants
WILFREDO VAGILIDAD and LOLITA VAGILIDAD and of the defendants LORETO LABIAO
and FRANCISCA LABIAO; and
4.

PRONOUNCING no cost.[6]

GABINO, JR. and DOROTHY filed an appeal with the Court of Appeals. The
appellate court reversed and set aside the decision of the court a quo, viz.:
WHEREFORE, premises considered, the Decision dated January 26, 1999 of
the Regional Trial Court of Antique, Sixth Judicial Region, Branch 11, in Civil Case No.
2825, is hereby REVERSED and SET ASIDE and a new one is entered: (1) declaring
the Deed of Absolute Sale [of Portion of Land] dated December 7, 1989 executed by
appellee LORETO in favor of appellee WILFREDO null and void; (2) ordering the

defendants-appellees WILFREDO and LOLITA to reconvey Lot No. 1253-B to

plaintiffs-appellants GABINO, JR. and DOROTHY; and (3)
ordering the defendants-appellees to pay the plaintiffs-appellants P100,000.00 as
moral damages, P10,000.00 as attorneys fees and P5,000.00 as litigation expenses.
[7]
The appellate court ruled that the sale made by LORETO in favor of GABINO, JR. on
May 12, 1986 is valid. The rights of LORETO to succession are transmitted from the
moment of ZOILOs death in 1931. Thus, when LORETO sold the 1,604-square meter
portion of Lot No. 1253 to GABINO JR., he already had the right as co-owner to his
share to Lot No. 1253, even if at that time the property had not yet been
partitioned. Consequently, the sale made by LORETO in favor of WILFREDO on
December 7, 1989 is void because LORETO and FRANCISCA were no longer the
owners of Lot No. 1253-B as of that time. The appellate court also held WILFREDO
and LOLITA liable for moral damages for falsifying the fictitious deeds of sale on
December 7, 1989.
WILFREDO and LOLITA moved for reconsideration but the motion was denied
in the questioned Resolution dated November 13, 2003. Hence, this petition for
review on certiorari raising the following errors:
I
THE HONORABLE COURT OF APPEALS ERRED IN NOT APPLYING ARTICLE 1349 AND
ARTICLE 1460 OF THE NEW CIVIL CODE IN THE CASE AT BAR.
II
THE HONORABLE COURT OF APPEALS ERRED IN NOT APPLYING THE PROVISION OF
ARTICLE 1544 OF THE NEW CIVIL CODE AND THE DOCTRINE OF DOUBLE SALE THAT
THE BUYER WHO IS IN POSSESSION OF THE TORRENS TITLE AND HAD THE DEED OF
SALE REGISTERED MUST PREVAIL.
III
THE HONORABLE COURT OF APPEALS ERRED IN NOT APPLYING ARTICLE 1391 OF
THE NEW CIVIL CODE AND THE DOCTRINE THAT IN CASE OF FRAUD, ACTION FOR
RECONVEYANCE MUST BE BROUGHT WITHIN FOUR (4) YEARS FROM THE DISCOVERY
OF THE FRAUD.
IV
THE HONORABLE COURT OF APPEALS ERRED IN AWARDING PRIVATE RESPONDENT
MORAL DAMAGES, ATTORNEYS FEES AND LITIGATION EXPENSES.[8]

We deny the petition.

I
First, petitioners contend that the Deed of Absolute Sale between LORETO
and GABINO, JR. does not have a determinate object. They anchor their claim on the
following discrepancies: (1) the object of the Deed of Absolute Sale between
LORETO and GABINO, JR. is Lot No. 1253 with an area of 1,604 square meters; (2)
the object of the Deed of Absolute Sale of Portion of Land between LORETO and
WILFREDO is a portion of Lot No. 1253, known as Lot No. 1253-B, also with an area
of 1,604 square meters;[9] (3) the Deed of Absolute Sale between LORETO and
GABINO, JR. shows that its object, Lot No. 1253, is not registered under the Land
Registration Act nor under the Spanish Mortgage Law; and (4) the property subject
of this action, Lot No. 1253-B, was taken from Lot No. 1253 containing an area of
4,280 square meters previously registered in the name of ZOILO under Original
Certificate of Title (OCT) No. RO-2301.[10] With these discrepancies, petitioners
contend that either the Deed of Absolute Sale between LORETO and GABINO, JR.
does not have a determinate object or that Lot No. 1253-B, the subject parcel, is not
the object thereof. Hence, absent a determinate object, the contract is void. They
rely on Articles 1349 and 1460 of the Civil Code, viz.:
Art. 1349.
The object of every contract must be determinate, as to its
kind. The fact that the quantity is not determinate shall not be an obstacle to the
existence of the contract, provided it is possible to determine the same, without the
need of a new contract between the parties.

Art. 1460.
A thing is determinate when it is particularly designated or
physically segregated from all others of the same class.
The requisite that a thing be determinate is satisfied if at the time the
contract is entered into, the thing is capable of being made determinate without the
necessity of a new or further agreement between the parties.

Petitioners err. The evidence on record shows that Lot No. 1253-B, the subject
parcel, and the lot described as Lot No. 1253 in the Deed of Absolute Sale of May
12, 1986 between LORETO and GABINO, JR., are the same. In the Deed of Absolute
Sale, Lot No. 1253 is described, viz.:
A parcel of land (Lot No. 1253 of the Cadastral Survey of San Jose), with the
improvements thereon. Bounded on the North [by] 1254 and 1255; on the South by
road; on the East by 1253 and road on the West by 1240-Angel Salazar; containing
an area of 1,604 square meters more or less declared under Tax Declaration No.
4159.[11]

In the Deed of Absolute Sale of Portion of Land of December 7, 1989 between

LORETO and WILFREDO, the subject parcel is described, viz.:
A parcel of land (Lot No. 1253. Ap-06-00271) of the Cadastral Survey of San
Jose, LRC Cad. Rec. No. 936), situated at Atabay, San Jose, Antique. Bounded on the
N. and E. along lines 1-2-3 by lot 1255; San Jose Cadastre; on the S. along line 3-4
by Road; on the W. along line 4-5 by Lot 1240; San Jose Cadastre; and on the N.
along line 5-1 by Lot 1254, San Jose Cadastre containing an area of [Four] Thousand
Two Hundred Eighty (4,280) square meters, more or less.
of which a portion of land subject of this sale is hereinbelow (sic) particularly
described as follows, to wit:
A portion of Lot No. 1253-B of the Cadastral Survey of San Jose, situated at
Atabay, San Jose, Antique. Bounded on the North by Lot No. 1254; South by Road;
West by Lot 1253-A; and on the East by Lot No. 1253-C; containing an area of 1,604
square meters, more or less.[12]

The description of Lot No. 1253, the object of the Deed of Absolute Sale, as
not registered under Act No. 196[,] otherwise known as the Land Registration Act,
nor under the Spanish Mortgage Law[13] is a stray description of the subject
parcel. It is uncorroborated by any evidence in the records. This description solely
appears on the Deed of Absolute Sale and the discrepancy was not explained by
LORETO who signed the Deed of Absolute Sale as vendor. LORETO does not, in fact,
deny the existence of the Deed of Absolute Sale. He merely counters that the Deed
of Absolute Sale was purportedly a mortgage. However, LORETOs claim that it was
one of mortgage is clearly negated by a Certification[14] issued by the Bureau of
Internal Revenue dated May 12, 1986. It certified that LORETO was not required to
pay the capital gains tax on the transfer of Lot No. 1253 to GABINO, JR. because the
property was classified as an ordinary asset.
To be sure, petitioners could have easily shown that LORETO owned
properties other than Lot No. 1253 to bolster their claim that the object of the Deed
of Absolute Sale was different from Lot No. 1253-B which is the object described in
the Deed of Absolute Sale of Portion of Land. They did not proffer any evidence.
The trial court itself comprehensively traced the origin of Lot No. 1253-B. It
clearly demonstrated that the subject parcel was originally part of the registered lot
of ZOILO. It also showed how the subject parcel was eventually bounded by Lot No.
1253-A on the West and by Lot No. 1253-C on the East, as the lot would be later
described in the Deed of Absolute Sale of Portion of Land.

The trial court found that ZOILO previously owned Lot No. 1253 under OCT
No. RO-2301 issued on March 3, 1931. On November 14, 1986, Entry No. 167922
was inscribed in the certificate of title, per Order dated March 30, 1978 of Judge Noli
Ma. Cortes of the then Court of First Instance of Antique, stating that it was a
reconstituted certificate of title.[15] Lot No. 1253 was subdivided by virtue of a
subdivision plan dated June 19, 1987. On January 20, 1987, an Extrajudicial
Settlement of Estate executed by LORETO, EFREN and PRISCILLA was entered as
Entry No. 170722. The OCT of ZOILO was cancelled by TCT No. T-16693 in the
names of LORETO, EFREN and PRISCILLA on January 29, 1987. TCT No. T-16693 was
cancelled on the same day by TCT No. T-16694 in the name of LORETO alone. The
TCT was partially cancelled by the issuance of TCTs covering Lot Nos. 1253-A, 1253C and 1253-D. The TCT of Lot No. 1253-B was issued in the name of WILFREDO
married to LOLITA on February 15, 1990. WILFREDOs TCT No. T-18023 appears to
be a transfer from LORETOs TCT No. T-16694.
II
Next, petitioners contend that the appellate court should have upheld the title
of WILFREDO under Article 1544 of the Civil Code and the doctrine of double sale
where the buyer who is in possession of the Torrens Title must prevail.[16] First,
petitioners title was issued pursuant to the purported Deed of Absolute Sale of
Portion of Land dated December 7, 1989. Second, WILFREDO did not see any
encumbrance at the back of the title of the subject lot when he purchased it from
LORETO on December 7, 1989. Thus, since he is not bound to go beyond the
certificate of title, he has acquired the subject property in due course and in good
faith.
We disagree. Article 1544 of the Civil Code states, viz.:
Art.
1544. If the same thing should have been sold to different vendees,
the ownership shall be transferred to the person who may have first taken
possession thereof in good faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person
acquiring it who in good faith recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person
who in good faith was first in the possession; and, in the absence thereof, to the
person who presents the oldest title, provided there is good faith.

Petitioners reliance on Article 1544 is misplaced. While title to the property was
issued in WILFREDOs name on February 15, 1990, the following circumstances
show that he registered the subject parcel with evident bad faith.

First, the Deed of Absolute Sale of Portion of Land dated December 7, 1989 between
LORETO and WILFREDO is tainted with blatant irregularities. It is a fact that the
Deed of Absolute Sale of Portion of Land and the Deed of Absolute Sale between
GABINO, JR. and WILFREDO are of even date. Both Deeds had the same object Lot
No. 1253-B. Both deeds were notarized by Atty. Warloo Cardenal and bear the same
entry in his notarial register: Document No. 236, Page No. 49, Book No. XI, Series of
1989.
Second, the testimony of a disinterested witness, Febe Mabuhay, established the
irregularity. Mabuhay used to work as secretary for Atty. Cardenal and co-signed as
witness in both Deeds. She stated that Atty. Cardenal instructed her to prepare the
two documents in the last week of November 1989. She was present when GABINO,
JR. signed the Deed of Absolute Sale. She testified that after GABINO, JR. left,
LORETO and his wife FRANCISCA arrived and signed the Deed of Absolute Sale of
Portion of Land.[17] The Decision of the court a quo further states, viz.:
[Mabuhay testified that when she prepared the two documents, she] noticed
the similarity of Lot No. 1253 as technically described in both documents but she
did not call the attention of Atty. Warlo[o] Cardenal. [She likewise stated that Atty.
Cardenal] specifically instructed her to assign the same document number to the
two documents notarized on December 7, 1989.[18]
Third, the testimony of Atty. Ernesto Estoya, then Clerk of Court of the
Regional Trial Court of Antique, supports the claim that there was bad faith in the
execution of the Deed of Absolute Sale of Portion of Land. Atty. Estoya brought the
notarial record of Atty. Cardenal for the year 1989 pursuant to a subpoena. He
stated that he had not brought both Deeds as required in the subpoena because
Doc. No. 236; Page No. 49; Book No. XI; Series of 1989 as entered in the notarial
register of Atty. Cardenal could not be found in the files. He further explained that
the last document on page 48 of the notarial register of Atty. Cardenal is Document
No. 235, while the first document on page 49 is Document No. 239, leaving three
unexplained gaps for document numbers 236, 237 and 238. Atty. Estoya stated that
he was not the one who received the 1989 notarial register of Atty. Cardenal when
the latter surrendered it since he assumed office only in 1994.[19]
Fourth, we give credence to the testimony of GABINO, JR. that LORETO and
WILFREDO had employed the scheme to deprive him and his wife of their lawful title
to the subject property. The facts speak for themselves. WILFREDO knew that he
could not use the Deed of Absolute Sale executed in his favor by GABINO, JR.
because the latter had no title to transfer. Without a title, WILFREDO could not use
the subject property as collateral for a bank loan. Hence, LORETO, who had refused
to surrender the title to GABINO, JR. and in whose name the land remained
registered, had to execute the Deed of Absolute Sale of Portion of Land in favor of
WILFREDO. Hence, it was convenient for WILFREDO to deny the existence of the
Deed of Absolute Sale of December 7, 1989 between him and GABINO, JR. But the

evidence on record shows that after he was able to register the subject property in
his name on February 15, 1990, WILFREDO used the title as collateral in the loans
that he contracted with the Philippine National Bank on October 24, 1991 and the
Development Bank of the Philippines on December 1, 1993. This supports the claim
of GABINO, JR. that WILFREDO needed the lot for loaning purposes.
With these corroborating circumstances and the following irrefragable documents
on record, the evidence preponderates in favor of GABINO, JR. One, he acquired Lot
No.1253-B from LORETO on May 12, 1986[20] by virtue of the Deed of Absolute
Sale. Two, the Bureau of Internal Revenue issued a Certification, also on May 12,
1986, for the exemption from the payment of capital gains tax when LORETO sold to
him the subject parcel. Three, GABINO, JR. paid the real estate tax on the subject
parcel in 1987. Four, he filed a Petition for the Surrender of LORETOs title on July
31, 1987 so he could transfer the title of the property in his name.
Petitioners likewise err in their argument that the contract of sale between
LORETO and GABINO, JR. is void on the ground that at the time of the sale on May
12, 1986, LORETO had a right to dispose only an aliquot part of the yet undivided
property of ZOILO. The subject parcel, being an inherited property, is subject to the
rules of co-ownership under the Civil Code.
Co-ownership is the right of common dominion which two or more persons
have in a spiritual part of a thing, not materially or physically divided.[21] Before
the partition of the property held in common, no individual or co-owner can claim
title to any definite portion thereof. All that the co-owner has is an ideal or abstract
quota or proportionate share in the entire property.[22]

LORETO sold the subject property to GABINO, JR. on May 12, 1986 as a coowner. LORETO had a right, even before the partition of the property on January 19,
1987,[23] to transfer in whole or in part his undivided interest in the lot even
without the consent of his co-heirs. This right is absolute in accordance with the
well-settled doctrine that a co-owner has full ownership of his pro-indiviso share and
has the right to alienate, assign or mortgage it, and substitute another person for its
enjoyment.[24] Thus, what GABINO, JR. obtained by virtue of the sale on May 12,
1986 were the same rights as the vendor LORETO had as co-owner, in an ideal
share equivalent to the consideration given under their transaction.[25]
LORETO sold some 1,604 square meters of Lot No. 1253 to GABINO, JR.
Consequently, when LORETO purportedly sold to WILFREDO on December 7, 1989
the same portion of the lot, he was no longer the owner of Lot No. 1253-B. Based on
the principle that no one can give what he does not have,[26] LORETO could not
have validly sold to WILFREDO on December 7, 1989 what he no longer had. As
correctly pointed out by the appellate court, the sale made by LORETO in favor of

WILFREDO is void as LORETO did not have the right to transfer the ownership of the
subject property at the time of sale.
III
Petitioners contend that since the subdivision plan of Lot No. 1253 was only
approved on January 19, 1987, the appellate court can not presume
that the aliquot part of LORETO was the parcel designated as Lot 1253-B.[27]
Petitioners err. The mere fact that LORETO sold a definite portion of the coowned lot by metes and bounds before partition does not, per se, render the sale a
nullity. We held in Lopez v. Vda. De Cuaycong[28] that the fact that an agreement
purported to sell a concrete portion of a co-owned property does not render the sale
void, for it is well-established that the binding force of a contract must be
recognized as far as it is legally possible to do so.[29]
In the case at bar, the contract of sale between LORETO and GABINO, JR. on
May 12, 1986 could be legally recognized. At the time of sale, LORETO had an
aliquot share of one-third of the 4,280-square meter property or some 1,426[30]
square meters but sold some 1,604 square meters to GABINO, JR. We have ruled
that if a co-owner sells more than his aliquot share in the property, the sale will
affect only his share but not those of the other co-owners who did not consent to
the sale.[31] Be that as it may, the co-heirs of LORETO waived all their rights and
interests over Lot No. 1253 in favor of LORETO in an Extrajudicial Settlement of
Estate dated January 20, 1987. They declared that they have previously received
their respective shares from the other estate of their parents ZOILO and
PURIFICACION.[32] The rights of GABINO, JR. as owner over Lot No. 1253-B are thus
preserved. These rights were not effectively transferred by LORETO to WILFREDO in
the Deed of Absolute Sale of Portion of Land. Nor were these rights alienated from
GABINO, JR. upon the issuance of the title to the subject property in the name of
WILFREDO. Registration of property is not a means of acquiring ownership.[33] Its
alleged incontrovertibility cannot be successfully invoked by WILFREDO because
certificates of title cannot be used to protect a usurper from the true owner or be
used as a shield for the commission of fraud.[34]
IV
On the issue of prescription, petitioners contend that the appellate court
failed to apply the rule that an action for reconveyance based on fraud prescribes
after the lapse of four years.[35] They cite Article 1391[36] of the Civil Code and the
case of Gerona v. De Guzman.[37]
We disagree. This Court explained in Salvatierra v. Court of Appeals,[38] viz.:
An action for reconveyance based on an implied or constructive trust must
perforce prescribe in ten years and not otherwise. A long line of decisions of this
Court, and of very recent vintage at that, illustrates this rule. Undoubtedly, it is now
well-settled that an action for reconveyance based on an implied or constructive

trust prescribes in ten years from the issuance of the Torrens title over the property.
The only discordant note, it seems, is Balbin v. Medalla, which states that the
prescriptive period for a reconveyance action is four years. However, this variance
can be explained by the erroneous reliance on Gerona v. de Guzman. But in Gerona,
the fraud was discovered on June 25, 1948, hence Section 43(3) of Act No. 190 was
applied, the New Civil Code not coming into effect until August 30, 1950 xxx. It must
be stressed, at this juncture, that Article 1144 and Article 1456 are new provisions.
They have no counterparts in the old Civil Code or in the old Code of Civil Procedure,
the latter being then resorted to as legal basis of the four-year prescriptive period
for an action for reconveyance of title of real property acquired under false
pretenses.[39]
[Thus,] under the present Civil Code, xxx just as an implied or constructive
trust is an offspring of xxx Art. 1456, xxx so is the corresponding obligation to
reconvey the property and the title thereto in favor of the true owner. In this
context, and vis--vis prescription, Article 1144 of the Civil Code is applicable[, viz.:]
Art. 1144.
The following actions must be brought within ten years from
the time the right of action accrues:

1)

Upon a written contract;

2)
Upon an obligation created by law;
3)
Upon a judgment.[40] (emphases supplied)

Thus, in the case at bar, although the TCT of WILFREDO became indefeasible after
the lapse of one year from the date of registration, the attendance of fraud in its
issuance created an implied trust in favor of GABINO, JR. under Article 1456[41] of
the Civil Code. Being an implied trust, the action for reconveyance of the subject
property therefore prescribes within a period of ten years from February 15, 1990.
Thus, when respondents filed the instant case with the court a quo on September
26, 1995, it was well within the prescriptive period.
V
On the issue of damages, petitioners contend that the grant is erroneous and
the alleged connivance between Atty. Cardenal and WILFREDO lacks basis.
We disagree. The evidence on record is clear that petitioners committed bad
faith in the execution of the purported Deed of Absolute Sale of Portion of Land
dated December 7, 1989 between LORETO and WILFREDO. As stated by the
appellate court, viz.:
xxxx From the series of events, it can be reasonably inferred that appellees
WILFREDO, LORETO and Atty. Cardenal connived in attempting to deprive appellants
of Lot No. 1253-B, hence, the appellants entitlement to moral damages. Further, it

is a well-settled rule that attorneys fees are allowed to be awarded if the claimant
is compelled to litigate with third persons or to incur expenses to protect his interest
by reason of an unjustified act or omission of the party for whom it is sought. xxxx
To protect themselves, the appellants engaged the services of counsel and incurred
expenses in the course of litigation. Hence, we deem it equitable to award
attorneys fees to the appellant xxx.[42]
IN VIEW WHEREOF, the petition is DENIED. The assailed Decision and
Resolution of the Court of Appeals in CA-G.R. No. CV-68318 dated March 19, 2003
and November 13, 2003, respectively, are AFFIRMED in toto. Costs against
petitioners.
SO ORDERED.

[G.R. No. 170528, August 26, 2008]

HEIRS OF JULIAN TIRO, PETITIONERS, VS. PHILIPPINE ESTATES
CORPORATION, RESPONDENTS.
DECISION
CHICO-NAZARIO, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court,
assailing the Decision[1] dated 1 July 2005, rendered by the Court of Appeals in CAG.R. CV No. 78582, which affirmed the Decision[2] dated 16 April 2002 of the
Regional Trial Court (RTC), Branch 54, Lapu-Lapu City, in Civil Case No. 4824-L
dismissing petitioners' complaint and declaring the respondent as the owner of the
disputed property.
Petitioners Guillerma Tiro, Dominga Tiro Nunez and Maximo Tiro filed before the RTC
a Complaint for Quieting of Title against respondent Philippine Estates Corporation,
a corporation duly organized and existing under the laws of the Philippines. The
complaint was docketed as Civil Case No. 4824-L. Petitioners alleged that they are
the children of the late Julian Tiro and the authorized representatives of the Heirs of
the late Pedro Tiro. Both decedents were purportedly, during their lifetime, the
lawful absolute and registered owners of the disputed land as evidenced by Original
Certificate of Title (OCT) No. RO-1121.[3] The disputed property is herein described
as follows:
A parcel of land (Lot 2914 of the Cadastral Survey of Opon, L.R.C. Record No. 1003)
situated in the Barrio of Marigondon, Municipality of Opon, Province of Cebu, Island
of Mactan x x x; containing an area of EIGHT THOUSAND ONE HUNDRED TWENTY
(8,120) SQUARE METERS.[4]

Petitioners averred that they and their predecessors-in-interest had been in actual
possession of the disputed land since time immemorial until they were prevented
from entering the same by persons claiming to be the new owners sometime in
1995. After examining the records found in the Office of the Register of Deeds of
Lapu-Lapu City, they discovered that OCT No. RO-1121 had already been cancelled
as early as 1969 and that the subject property, after several other transfers, was
presently registered in the name of respondent under Transfer Certificate of Title
(TCT) No. 35672.[5]
The records in the Office of the Register of Deeds showed each transfer involving
the disputed land. Petitioners learned that OCT No. RO-1121, registered in the
names of Julian and Pedro Tiro, was cancelled on 10 September 1969. In its place,
TCT No. 2848 was issued in favor of Spouses Julio Baba and Olimpia Mesa. The
registration of the disputed property in favor of the Spouses Baba was supported by
two documents: (1) an Extrajudicial Declaration of Heir and Confirmation of Sale[6]
dated 20 August 1969, executed by Maxima Ochea (Ochea), claiming to be the only
surviving heir of Julian and Pedro Tiro, wherein she confirmed and ratified an alleged
sale of the subject land made before World War II by Julian and Pedro Tiro in favor of
Spouses Bibiano Amores and Isabel Digno; and (2) another document entitled "Deed
of Confirmation,[7]" also dated 20 August 1969, executed by the Spouses Amores,
wherein they verified that they subsequently transferred the disputed property to
the Spouses Baba sometime in 1947.
On 20 June 1979, TCT No. 2848 was cancelled to give way to the issuance of TCT
No. 9415 in the name of Spouses Ronaldo Velayo and Leonor Manuel, after the
Spouses Baba sold the disputed property to them.[8] Subsequently, the same
property was sold by the Spouses Velayo to Pacific Rehouse Corporation, as a
consequence of which TCT No. 9415 was cancelled and TCT No. 30186 was issued in
the name of the latter on 16 February 1995.[9] Finally, on 25 October 1996,
following the sale of the disputed land to respondent, TCT No. 30186 was cancelled
and TCT No. 35672 was issued in its name.[10]
Petitioners averred that Ochea, who executed the document "Extrajudicial
Declaration of Heir and Confirmation of Sale," which resulted in the cancellation of
OCT No. RO-1121 in the name of Julian and Pedro Tiro, was not in any way related to
Julian and Pedro Tiro. It was the petitioners' contention that since Ochea was not an
heir of the original registered owners, she had no right to cause the transfer of the
disputed property and, thus, her transfer and all subsequent transfers of said
property, including that made to respondent, were invalid.[11] Instead of presenting
documents to evidence their relationship to the decedents Julian and Pedro Tiro,
petitioners offered the testimonies of petitioners Maximo Tiro[12] and his son-in-law
Joveniano Diasana.[13] Finally, the petitioners prayed that all the transactions
emanating from the "Extrajudicial Declaration of Heirs and Confirmation of Sale,"
executed by Maxima Ochea, be declared void, including the transfer made in favor

of the respondent; that the title which was issued in the name of respondent be
cancelled; and that the property be restored and registered in the name of the
petitioners.[14]
In its Answer dated 10 February 1998, respondent claimed that its predecessor-ininterest Pacific Rehouse Corporation acquired the subject land from the Spouses
Velayo, the registered owners of the property who were also in possession of the
same at the time of the sale. There was nothing in the title or any circumstances
during the sale that would indicate any defect in the Spouses Velayo's title to the
property. Respondent pointed out that 27 years had elapsed since the cancellation
of OCT No. RO-1121 before petitioners asserted their rights over the disputed land.
Moreover, petitioners' predecessors-in-interest Julian and Pedro Tiro did not question
the cancellation of their title to the property during their lifetimes. Hence,
respondent argued that petitioners' action for quieting of title was barred by laches
and prescription.[15]
To support its allegations, respondent presented TCT No. 2914 in the name of the
Spouses Velayo as proof that they were the registered owners of the disputed
property at the time they sold it to Pacific Rehouse Corporation.[16] Additionally,
respondent presented a Decision[17] dated 28 June 1994 in Civil Case No. R-1202,
entitled Spouses Velayo v. Spouses Tiro, rendered by the Municipal Trial Court (MTC)
of Lapu-Lapu City to further prove that the Spouses Velayo were also in possession
of the disputed property at the time of its sale to Pacific Rehouse Corporation. Civil
Case No. R-1202 was a case for Forcible Entry with Writ of Preliminary Mandatory
Injunction, and in its Decision dated 28 June 1994, the MTC declared the Spouses
Velayo the rightful possessors of the subject property and ordered petitioner
Maximo Tiro and his co-defendant spouse to vacate the portion of the property
which they forcibly entered on 7 May 1994. Respondent likewise presented the
Deed of Sale[18] dated 4 October 1994 executed by the Spouses Velayo in favor of
Pacific Rehouse Corporation; the Deed of Transfer[19] dated 23 October 1996
executed by Pacific Rehouse Corporation in favor of respondent; and various tax
declarations issued in the names of the Spouses Baba, Spouses Velayo, Pacific
Rehouse Corporation, and respondent during the years that each of them claimed
ownership over the disputed property.[20]
On 16 April 2002, the RTC issued a Decision[21] in Civil Case No. 4824-L dismissing
petitioners' Complaint. The trial court noted that petitioners' claims of filiation to
Julian and Pedro Tiro were not supported by documents. The testimonies of
petitioners' witnesses were also inconsistent as to the location of the disputed land,
as well as the number of Pedro Tiro's children. The RTC stressed that even
assuming that petitioners were heirs of the late Julian and Pedro Tiro, and Maxima
Ochea was in no way related to them, petitioners' claims had already prescribed,
considering that the Complaint was filed more than ten years since the registration
of the disputed property in the name of the Spouses Baba in 1969. Petitioners'

allegation that they were in continuous possession of the subject property until
1995 was also belied by the Decision dated 28 June 1994 of the MTC in Civil Case
No. R-1202, ordering petitioners to vacate the disputed property, which they forcibly
entered, and to restore possession to the Spouses Velayo. Lastly, the RTC ruled that
respondent was an innocent purchaser for value who relied on the correctness of
the certificate of title in the name of the vendor.
Petitioners filed a Notice of Appeal on 2 May 2002 questioning the 16 April 2002
Decision of the RTC. The petitioners filed with the Court of Appeals an appeal
docketed as CA-G.R. CV No. 78582, questioning the decision rendered by the trial
court.
However, instead of filing an Appellants' Brief as required by the Court of Appeals,
petitioners filed before the Court of Appeals in CA-G.R. CV No. 78582 a Motion to
Grant New Trial Pursuant to Section 1, Rule 53,[22] on 8 January 2004. They
attached as annexes to their motion the following documents to prove that Julian
Tiro was their father: (1) Certificates of Baptism of Pastor Tiro and Dominga Tiro;[23]
(2) marriage contract of Dominga Tiro;[24] (3) Certificate of Marriage of Guillerma
Tiro;[25] (4) Certification of Marriage of Pastor Tiro;[26] and (5) Certificate of
Baptism of Victoria Tiro.[27] In a Resolution[28] dated 5 August 2004, the appellate
court denied the motion.
In its Decision dated 1 July 2005, the Court of Appeals likewise denied the
petitioners' appeal in CA-G.R. CV No. 78582 and affirmed the RTC Decision dated 16
April 2002 in Civil Case No. 4824-L. The appellate court found that petitioners failed
to prove that they were the heirs of Julian and Pedro Tiro. It also took into account
the fact that during their lifetime, Julian and Pedro Tiro never questioned the
transactions which affected their land. The Court of Appeals gave significant weight
to the respondent's statements that it had acquired the subject property from the
registered owners, supported by the registered titles that were presented in court.
Thus, the Court of Appeals held that even assuming that the first few transfers
turned out to be fraudulent, the transfer to respondent, a purchaser in good faith,
may be the root of a valid title.[29]
Petitioners filed a Motion for Reconsideration dated 25 July 2005,[30] which the
Court of Appeals denied in a Resolution dated 28 October 2005.[31]
Hence, the present Petition, in which petitioners make the following assignment of
errors:
I
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT THE
ACT OF THE REGISTER (sic) OF DEEDS OF REGISTERING A CLEARLY VOID AND

UNREGISTRABLE DOCUMENT CONFERS NO VALID TITLE ON THE PRESENTOR AND

HIS SUCCESSORS-IN-INTEREST.
II
THE COURT OF APPEALS GRAVELY ERRED IN NOT APPLYING THE DOCTRINE IN
SPOUSES SANTIAGO, ET AL. VS. COURT OF APPEALS, ET AL., G.R. [NO.] 103959,
AUGUST 21, 1997 WHEREBY IT IS HELD [THAT] "THE TORRENS SYSTEM DOES NOT
CREATE OR VEST TITLE. IT ONLY CONFIRMS AND RECORDS TITLE ALREADY
EXISTING AND VESTED. IT DOES NOT PROTECT A USURPER FROM THE TRUE
OWNER NOR CAN IT BE A SHIELD IN THE COMMISSION OF FRAUD. WHERE ONE
DOES NOT HAVE ANY RIGHTFUL CLAIM OVER A REAL PROPERTY, THE TORRENS
SYSTEM OF REGISTRATION CONFIRM[S] OR RECORD[S] NOTHING.[32]
This Petition lacks merit.
Petitioners' main contention is, since Ochea was not even related to either Julian or
Pedro Tiro, the "Declaration of Heir and Confirmation of Sale" which she executed
could not have resulted in the cancellation of OCT No. RO-1121 in the names of
Julian and Pedro Tiro. They further argue that since the initial transfer of the
disputed land was fraudulent, therefore, all the subsequent transfers, including that
made to respondent, were all invalid.
Petitioners' arguments are unfounded.
Insofar as a person who has fraudulently obtained property is concerned, the
consequently fraudulent registration of the property in the name of such person
would not be sufficient to vest in him or her title to the property. Certificates of title
merely confirm or record title already existing and vested. The indefeasibility of the
torrens title should not be used as a means to perpetrate fraud against the rightful
owner of real property. Good faith must concur with registration because,
otherwise, registration would be an exercise in futility.[33] However, where good
faith is established, as in the case of an innocent purchaser for value, a forged
document may become the root of a valid title.[34]
A person is considered in law as an innocent purchaser for value when he buys the
property of another, without notice that some other person has a right or an interest
in such property, and pays a full price for the same at the time of such purchase, or
before he has notice of the claims or interest of some other person in the property.
A person dealing with registered land may safely rely on the correctness of the
certificate of title of the vendor/transferor, and the law will in no way oblige him to
go behind the certificate to determine the condition of the property. The courts
cannot disregard the rights of innocent third persons, for that would impair or erode
public confidence in the torrens system of land registration. Thus, a title procured

by fraud or misrepresentation can still be the source of a completely legal and valid
title if the same is in the hands of an innocent purchaser for value.[35]
In the present case, respondent was clearly an innocent purchaser for value. It
purchased the disputed property from Pacific Rehouse Corporation, along with other
parcels of land for a valuable consideration, i.e., shares of common stock of
respondent with a value of P148,100,400.00. Pacific Rehouse Corporation, in turn,
purchased the property from Spouses Velayo, also for valuable consideration in the
amount of P1,461,600.00. The certificates of title of Pacific Rehouse Corporation
and the Spouses Velayo were clean and appeared valid on their face, and there was
nothing therein which should have put the respondent on its guard of some defect
in the previous registered owners' title to the disputed property. In addition to their
certificate of title, the Spouses Velayo even presented to Pacific Rehouse
Corporation a copy of the MTC Decision dated 28 June 1994 in Civil Case No. R-1202
ordering petitioners to vacate the disputed property, which they forcibly entered,
and to restore possession thereof to the Spouses Velayo. The said Decision
supported the Spouses Velayo's claim of title to the disputed property.
In Spouses Chu, Sr. v. Benelda Estate Development Corporation,[36] this Court
pronounced that it is crucial that a complaint for annulment of title must allege that
the purchaser was aware of the defect in the title, so that the cause of action
against him or her will be sufficient. Failure to do so, as in the case at bar, is fatal
for the reason that the court cannot render a valid judgment against the purchaser
who is presumed to be in good faith in acquiring said property. Failure to prove,
much less impute, bad faith to said purchaser who has acquired a title in his or her
favor would make it impossible for the court to render a valid judgment thereon,
due to the indefeasibility and conclusiveness of his or her title.
In this case, petitioners directed all allegations of bad faith solely at Ochea. The
property in question had already been the subject of five succeeding transfers to
persons who were not accused of having purchased the same in bad faith.
Petitioners' attempt, therefore, to have respondent's certificate of title to the
disputed property annulled, must fail.
In Veloso v. Court of Appeals,[37] this Court enunciated that a title issued to an
innocent purchaser and for value cannot be revoked on the basis that the deed of
sale was falsified, if he had no knowledge of the fraud committed. The Court also
provided the person prejudiced with the following recourse:
Even granting for the sake of argument, that the petitioner's signature was falsified
and consequently, the power of attorney and the deed of sale were null and void,
such fact would not revoke the title subsequently issued in favor of private
respondent Aglaloma. In Tenio-Obsequio v. Court of Appeals, it was held, viz:
"The right of an innocent purchaser for value must be respected and protected,
even if the seller obtained his title through fraud. The remedy of the person

prejudiced is to bring an action for damages against those who caused or employed
the fraud, and if the latter are insolvent, an action against the Treasurer of the
Philippines may be filed for recovery of damages against the Assurance Fund."
(Emphasis supplied.)
Petitioners cite Sps. Santiago v. Court of Appeals.[38] In Santiago, the plaintiff and
the defendants were the parties to the void contract of sale of the disputed
property. The contract was considered simulated for lack of consideration and given
the fact that defendants failed to take possession of the subject property. For this
reason, the Court did not hesitate to cancel the certificates of title in the
defendants' names, since they were found not to be the rightful owners of the
property. More importantly, the defendants were not innocent purchasers for value,
since they were privy to the nullity of the contract of sale covering the property.
Santiago is clearly inapplicable to the present case. Respondent herein who paid
adequate consideration for the disputed land, took possession of the same, and is
already the fifth transferee following the allegedly fraudulent initial transfer of the
land, cannot be placed in the same position as a vendor who was a party to a
simulated sale of a real property.

IN VIEW OF THE FOREGOING, the instant Petition is DENIED. The assailed Decision
of the Court of Appeals in CA-G.R. CV No. 78582, promulgated on 1 July 2005, is
AFFIRMED. Costs against petitioners.
SO ORDERED.

DINAH C. CASTILLO,
Petitioner,
- versusANTONIO M. ESCUTIN, AQUILINA A. MISTAS, MARIETTA L. LINATOC, AND
THE HONORABLE COURT OF APPEALS,
Respondents.
G.R. No. 171056
March 13, 2009
DECISION

CHICO-NAZARIO, J.:

Before this Court is a Petition for Review on Certiorari [1] under Rule 45 of the Rules
of Court filed by petitioner Dinah C. Castillo seeking the reversal and setting aside
of the Decision,[2] dated 18 October 2005, of the Court of Appeals in CA-G.R. SP No.
90533, as well as the Resolution,[3] dated 11 January 2006 of the same court
denying reconsideration of its afore-mentioned Decision. The Court of Appeals, in
its assailed Decision, affirmed the Joint Resolution[4] dated 28 April 2004 and Joint
Order[5] dated 20 June 2005 of the Office of the Deputy Ombudsman for Luzon in
OMB-L-A-03-0573-F and OMB-L-C-03-0728-F, dismissing petitioner Dinah C. Castillos
complaint for grave misconduct and violation of Section 3(e) of Republic Act No.
3019, the Anti-Graft and Corrupt Practices Act, as amended, against respondent
public officers Antonio M. Escutin (Escutin), Aquilina A. Mistas (Mistas) and Marietta
L. Linatoc (Linatoc), together with private individuals Lauro S. Leviste II (Leviste) and
Benedicto L. Orense (Orense).
Petitioner is a judgment creditor of a certain Raquel K. Moratilla (Raquel), married to
Roel Buenaventura. In the course of her search for properties to satisfy the
judgment in her favor, petitioner discovered that Raquel, her mother Urbana Kalaw
(Urbana), and sister Perla K. Moratilla (Perla), co-owned Lot 13713, a parcel of land
consisting of 15,000 square meters, situated at Brgy. Bugtongnapulo, Lipa City,
Batangas, and covered by Tax Declaration No. 00449.
Petitioner set about verifying the ownership of Lot 13713. She was able to secure
an Order[6] dated 4 March 1999 issued by Secretary Horacio R. Morales, Jr. of the
Department of Agrarian Reform (DAR) approving the application of Summit Point
Golf & Country Club, Inc. for conversion of several agricultural landholdings,
including Lot 13713 owned by Perla K. Mortilla, et al. and covered by Tax
Declaration No. 00449, to residential, commercial, and recreational uses. She was
also able to get from the Office of the City Assessor, Lipa City, a Certification[7]
stating that Lot 13713, covered by Tax Declaration No. 00554-A, was in the name of
co-owners Raquel, Urbana, and Perla; and a certified true copy of Tax Declaration
No. 00554-A itself.[8] Lastly, the Register of Deeds of Lipa City issued a
Certification[9] attesting that Lot 13713 in the name of co-owners Raquel, Urbana,
and Perla, was not covered by a certificate of title, whether judicial or patent, or
subject to the issuance of a Certificate of Land Ownership Award or patent under
the Comprehensive Agrarian Reform Program.
Only thereafter did petitioner proceed to levy on execution Lot 13713, and the
public auction sale of the same was scheduled on 14 May 2002. Sometime in May
2002, before the scheduled public auction sale, petitioner learned that Lot 13713
was inside the Summit Point Golf and Country Club Subdivision owned by Summit
Point Realty and Development Corporation (Summit Realty). She immediately went
to the Makati City office of Summit Realty to meet with its Vice President, Orense.
However, she claimed that Orense did not show her any document to prove
ownership of Lot 13713 by Summit Realty, and even threatened her that the owners

of Summit Realty, the Leviste family, was too powerful and influential for petitioner
to tangle with.
The public auction sale pushed through on 14 May 2002, and petitioner bought
Raquels 1/3 pro-indiviso share in Lot 13713.
On 4 June 2002, petitioner had the following documents, on her acquisition of
Raquels 1/3 pro-indiviso share in Lot 13713, recorded in the Primary Entry Book and
Registration Book of the Register of Deeds of Lipa City in accordance with Act No.
3344[10]: (a) Notice of Levy;[11] (b) Certificate of Sale;[12] (c) Affidavit of
Publication;[13] and (d) Writ of Execution.[14]
Subsequently, petitioner was issued by the City Assessor of Lipa City Tax
Declaration No. 00942-A,[15] indicating that she owned 5,000 square meters of Lot
13713, while Urbana and Perla owned the other 10,000 square meters.
When petitioner attempted to pay real estate taxes for her 5,000-square-meter
share in Lot 13713, she was shocked to find out that, without giving her notice, her
Tax Declaration No. 00942-A was cancelled. Lot 13713 was said to be encompassed
in and overlapping with the 105,648 square meter parcel of land known as Lot 1-B,
covered by Transfer Certificate of Title (TCT) No. 129642[16] and Tax Declaration No.
00949-A,[17] both in the name of Francisco Catigbac (Catigbac). The reverse side
of TCT No. 129642 bore three entries, reflecting the supposed sale of Lot 1-B to
Summit Realty, to wit:
ENTRY NO. 184894: SPECIAL POWER OF ATTORNEY: In favor of LEONARDO YAGIN:
For purposes more particularly stipulated in the contract ratified before Atty. Ernesto
M. Vergara of Lipa City as per Doc. No. 639; Page No. 29; Book No. LXXVI; Series of
1976.
Date of instrument 2-6-1976
Date of inscription 6-26-2002 at 11:20 a.m.
ENTRY NO. 185833: SALE IN FAVOR OF SUMMIT POINT REALTY & DEVELOPMENT
CORP:
ENTRY NO. 185834: BIR CLEARANCE: Of the parcel of land described in this cert. of
title is hereby sold and cancelled TCT No. 134609(SN-6672938) Vol. 671-A, having
been issued by virtue of the aforesaid instrument ratified before Perfecto L.
Dimayuga, Notary Public for Makati City as per Doc. No. 148; Page 31, Book No.
LXVII, Series of 2002.
Date of instrument: July 22, 2002
Date of inscription: July 25, 2002 at 2:30 P.M.[18]

On 25 July 2002, at 2:30 p.m., TCT No. 129642 in the name of Catigbac was
cancelled and TCT No. T-134609 in the name of Summit Realty was issued in its
place.
The foregoing incidents prompted petitioner to file a Complaint Affidavit[19] before
the Office of the Deputy Ombudsman for Luzon charging several public officers and
private individuals as follows:
32.
I respectfully charge that on or about the months of June 2002 and July 2002
and onwards in Lipa City, Atty. Antonio M. [Escutin], the Register of Deeds of Lipa
City[;] Aquilina A. Mistas, the Local Assessment Operations Officer III of the City
Assessors Office of Lipa City[;] Marietta Linatoc, Records Clerk, Office of the City
Assessor of Lipa City, who are public officers and acting in concert and conspiring
with Lauro S. Leviste II and Benedicto L. Orense, Executive Vice-President and VicePresident, respectively[,] of Summit Point Realty and Development Corporation x x x
while in the discharge of their administrative functions did then and there
unlawfully, through evident bad faith, gross inexcusable negligence and with
manifest partiality towards Summit caused me injury in the sum of P20,000,000.00
by cancelling my TD #00942-A in the Office of the City Assessor of Lipa City and
instead issuing in the name of Francisco Catigbac TC #00949-A when aforesaid
personalities well knew that TCT No. 129642 was already cancelled and therefore
not legally entitled to a new tax declaration thereby manifestly favoring Summit
Point Realty and Development Corporation who now appears to be the successor-ininterest of Francisco Catigbac, all to my damage and prejudice.[20] (Emphasis ours.)
Petitioners Complaint Affidavit gave rise to simultaneous administrative and
preliminary (criminal) investigations, docketed as OMB-L-A-03-0573-F and OMB-L-C03-0728-F, respectively.
Petitioner pointed out several irregularities in the circumstances surrounding the
alleged sale of Lot 1-B to Summit Realty and in the documents evidencing the same.
The supposed Deed of Absolute Sale in favor of Summit Realty executed on 22 July
2002 by Leonardo Yagin (Yagin), as Catigbacs attorney-in-fact, appeared to be a
one-way street. It did not express the desire of Summit Realty, as vendee, to
purchase Lot 1-B or indicate its consent and conformity to the terms of the Deed.
No representative of Summit Realty signed the left margin of each and every page
of said Deed. It also did not appear from the Deed that a representative of Summit
Realty presented himself before the Notary Public who notarized the said document.
The Tax Identification Numbers of Yagin, as vendor, and Summit Realty, as vendee,
were not stated in the Deed.
Petitioner also averred that, being a corporation, Summit Realty could only act
through its Board of Directors. However, when the Deed of Absolute Sale of Lot 1-B

was presented for recording before the Register of Deeds, it was not accompanied
by a Secretarys Certificate attesting to the existence of a Board Resolution which
authorized said purchase by Summit Realty. There was no entry regarding such a
Secretarys Certificate and/or Board Resolution, whether on TCT No. 129642 or TCT
No. T-134609. A Secretarys Certificate eventually surfaced, but it was executed
only on 30 July 2002, five days after TCT No. T-134609 in the name of Summit
Realty was already issued.
The Deed of Absolute Sale was presented before and recorded by the Register of
Deeds of Lipa City on 25 July 2002 at 2:30 p.m., at exactly the same date and time
TCT No. T-134609 was issued to Summit Realty. Petitioner theorizes that for this to
happen, TCT No. T-134609 was already prepared and ready even before the
presentation for recording of the Deed of Absolute Sale before the Register of
Deeds.
Moreover, Catigbac had long been dead and buried. The agency Catigbac
supposedly executed in favor of Yagin was extinguished by Catigbacs death. Thus,
petitioner argued, Yagin no longer had authority to execute on 22 July 2002 the
Deed of Absolute Sale of Lot 1-B in favor of Summit Realty, making the said Deed
null and void ab initio.
Petitioner asserted that Summit Realty was well-aware of Catigbacs death, having
acknowledged the same in LRC Case No. 00-0376, the Petition for Issuance of New
Owners Duplicate of TCT No. 181 In Lieu of Lost One, filed by Summit Realty before
the Regional Trial Court (RTC) of Lipa City. During the ex parte presentation of
evidence in the latter part of 2000, Orense testified on behalf of Summit Realty that
Catigbacs property used to form part of a bigger parcel of land, Lot 1 of Plan Psu12014, measuring 132,975 square meters, covered by TCT No. 181 in the name of
Catigbac; after Catigbacs death, Lot 1 was informally subdivided into several parts
among his heirs and/or successors-in-interest, some of whom again transferred their
shares to other persons; Summit Realty separately bought subdivided parts of Lot
181 from their respective owners, with a consolidated area of 105,648 square
meters, and identified as Lot 1-B after survey; despite the subdivision and transfer
of ownership of Lot 1, TCT No. 181 covering the same was never cancelled; and the
owners duplicate of TCT No. 181 was lost and the fact of such loss was annotated
at the back of the original copy of TCT No. 181 with the Registry of Deeds.
Subsequently, in an Order[21] dated 3 January 2001, the RTC granted the Petition in
LRC Case No. 00-0376 and directed the issuance of a new owners duplicate of TCT
No. 181 in the name of Catigbac, under the same terms and condition as in its
original form.
Petitioner further cast doubt on the acts undertaken by Summit Realty in connection
with Catigbacs property, purportedly without legal personality and capacity. The
Special Power of Attorney dated 6 February 1976 granted Yagin the right to sue on

behalf of Catigbac, yet it was Summit Realty which instituted LRC Case No. 00-0376,
and Yagin had no participation at all in said case. Likewise, it was not Yagin, but
Orense, who, through a letter[22] dated 27 June 2001, requested the cancellation of
TCT No. 181 covering Lot 1 and the issuance of a new certificate of title for Lot 1-B.
Hence, it was Orenses request which resulted in the issuance of TCT No. 129642 in
the name of Catigbac, later cancelled and replaced by TCT No. T-134609 in the
name of Summit Realty.
Lastly, petitioner questioned why, despite the cancellation of TCT No. 129642 in the
name of Catigbac and the issuance in its place of TCT No. T-134609 in the name of
Summit Realty, it was the former cancelled title which was used as basis for
canceling petitioners Tax Declaration No. 00942-A. Tax Declaration No. 00949-A
was thus still issued in the name of Catigbac, instead of Summit Realty.
Piecing everything together, petitioner recounted in her Complaint Affidavit the
alleged scheme perpetrated against her and the involvement therein of each of the
conspirators:
28.
Summit Point Realty and Development Corporation went into action right
after I paid Orense a visit sometime May 2002. Summit resurrected from the grave.
(sic) Francisco Catigbac whom they knew to be long dead to face possible litigation.
This is the height of malice and bad faith on the part of Summit through its Lauro
Leviste II, the Executive Vice President and Benedicto Orense, the Vice President. I
had only in my favor a tax declaration to show my interest and ownership over the
5, 000 sq.m. of the subject parcel of land. Evidently, Leviste and Orense came to
the desperate conclusion that they needed a TCT which is a far better title than any
tax declaration.
Both then methodically commenced their evil and illegal scheme by causing on June
26, 2002 at 11:20 a.m. the inscription with the Register of Deeds of Lipa City of a
purported Special Power of Attorney in favor of Leonardo Yagin (Annex I). Next,
the Deed of Absolute Sale (Annex J) was made the following month in order to
make it appear that Yagin unilaterally sold to Summit the subject parcel of land
purportedly belonging to Francisco Catigbac. Since the latter was already dead and
realizing that the agency was already extinguished, Annex J was not signed or
executed by Leviste or Orense. This fact however did not deter the two from
securing a BIR clearance on July 25, 2002. Also, on this same day, July 25, 2002,
Annex J was presented to Atty. [Escutin] at 2:30 p.m. simultaneously, at exactly
the same time of 2:30 p.m. TCT No. T-134609 in Summits name was issued by Atty.
[Escutin] WITHOUT benefit of the submission of the necessary documentation such
as the Board Resolution, DAR Clearance, Revenue Tax Receipts for documentary
stamps, real property tax clearance, proof of payment of transfer tax, tax
declaration, articles of incorporation, SEC certification, license to sell and/or
certificate of registration by HLURB, etc. Without the total and lightning speed

cooperation of Atty. [Escutin] to close his eyes to the total absence of said vital
documents, the desperately needed TCT to erase my interest and ownership would
not have come into existence. Atty. [Escutin] had indeed acted in concert and in
conspiracy with Leviste and Orense in producing Annex H and Annex K.
29.
Thereafter, Leviste and Orense utilized the already cancelled TCT No.
129642 in the name of Francisco Catigbac to be the basis in seeking the
cancellation of TD #00942A in my name (Annex F). The Tax Mapping Division of
the Office of City Assessor of Lipa City opined that my 5,000 sq.m. was (sic) part
and parcel of the 105,648 sq.m. covered by TCT No. 129642. A photocopy of the
Certification from said division is hereto marked and attached as Annex P, hereof.
Aquilina Mistas, the Local Assessment Operations Officer III of the Office of the City
Assessor of Lipa City then conveniently caused the disappearance of my Notice of
Levy and other supporting documents which she had personally received from me
on March 13, 2002. For her part of the conspiracy likewise, Marietta Linatoc,
Records Clerk, forthwith cancelled by TD#00942-A and in lieu thereof she issued TD
#00949-A in the name of Francisco Catigbac. I dare say so because Mistas and
Linatoc were presented a cancelled TCT as basis for obliterating my 5,000 sq.m.
The fact of cancellation is clearly stated on the posterior side of TCT No. 129642.
Both can read. But the two nevertheless proceeded with dispatch in canceling my
TD, though they had ample time and opportunity to reject the request of Summit
who is not even the registered owner appearing on TCT No. 129642. Francisco
Catigbac could not have been in front of Mistas and Linatoc because he was already
six feet below the ground. Mistas and Linatoc could have demanded presentation of
the document authorizing Summit in requesting for the cancellation of my TD. Also,
they could have demanded from Summit any document transferring my interest and
ownership in favor of a third party. Or, at least, they could have annotated in Tax
Declaration No. 00949-A the fact that I bought my 5,000 sq.m. from a public auction
sale duly conducted by the court sheriff. Alternatively, Linatoc and Mistas should
have advised Summit to the effect that since they already appear to be the owners
of the subject parcel of land, the new tax declaration should bear their name
instead. Mistas and Linatoc indeed conspired with Summit in the illegal and
unwarranted cancellation of my TD and in covering up the behind-the-scenes
activities of Summit by making it appear that it was Francisco Catigbac who caused
the cancellation. Even Leonardo Yagin, the alleged attorney-in-fact did not appear
before Mistas and Linatoc. Yagin could not have appeared because he is rumored to
be long dead. The aforementioned acts of the two benefitted (sic) Summit through
their manifest partiality, evident bad faith and/or gross inexcusable negligence.
Perhaps, there is some truth to the rumor that Yagin is dead because he does not
even have a TIN in the questioned Deed of Absolute Sale. If indeed Yagin is already
dead or inexistent[,] the allged payment of the purchase price of P5,282,400.00 on
July 25, 2002 is a mere product of the fertile imagination of Orense and Leviste. To
dispute this assertion[,] the live body of Leonardo Yagin must be presented by
Orense and Leviste.[23]

After filing her Affidavit Complaint, petitioner attempted to have the Sheriffs
Deed of Final Sale/Conveyance of her 5,000 square meter pro-indiviso share in Lot
13713 registered with the Register of Deeds of Lipa City. She also sought the
annotation of her Affidavit of Adverse Claim on the said 5,000 square meters on TCT
No. T-134609 of Summit Realty.
Escutin, the Register of Deeds of Lipa City, relying on the finding of Examiner
Juanita H. Sta. Ana (Sta. Ana), refused to have the Sheriffs Deed of Final
Sale/Conveyance registered, since:
The Sheriffs Deed of Final Sale/Conveyance is a Mode of Transfers (sic)
ownership in favor of the Plaintiff, [Dinah] C. Castillo, (sic) However[,] it happen (sic)
that the presented Tax Declaration [No.] 00942-A is already transfer (sic) in the
name of the said [Dinah] C. Castillo, therefore[,] the registration of Sheriff (sic) Final
Sale is no longer necessary.[24]

Escutin likewise denied petitioners request to have her Affidavit of Adverse Claim
annotated on TCT No. T-134609 on the following grounds:
1.
The claimants (sic) rights or interest is not adverse to the registered owner.
The registered owner is Summit Point Realty and Development Corporation under
Transfer Certificate of Title No. T-134609 of the Registry of Deeds for Lipa City.
2.
The records of the Registry reveals that the source of the rights or interest of
the adverse claimant is by virtue of a Levy on Execution by the Regional Trial Court
Fourth Judicial Region, Branch 30, San Pablo City, in Civil Case No. SP-4489 (1996),
[Dinah] C. Castillo vs. Raquel Buenaventura. The registered owner, Summit Point
Realty and Development Corporation nor its predecessor-in-interest are not the
judgment debtor or a party in the said case. Simply stated, there is no privity of
contract between them (Consulta No. 1044 and 1119). If ever, her adverse claim is
against Raquel Buenaventura, the judgment debtor who holds no title over the
property.[25]

Escutin did mention, however, that petitioner may elevate en consulta to the Land
Registration Authority (LRA) the denial of her request for registration of the Sheriffs
Deed of Final Sale/Conveyance and annotation of her adverse claim on TCT No. T134609. This petitioner did on 3 July 2003.
While her Consulta was pending before the LRA, petitioner filed a Supplemental
Complaint Affidavit[26] and a Second Supplemental Complaint Affidavit[27] with the

Office of the Deputy Ombudsman for Luzon, bringing to its attention the
aforementioned developments. In her Second Supplemental Complaint Affidavit,
petitioner prayed that Sta. Ana be included as a co-respondent in OMB-L-A-03-0573F and OMB-L-C-03-0728-F, averring that the latters actuation deprived petitioner of
a factual basis for securing a new title in her favor over her 5,000 square meter proindiviso share in Lot 13713, because the public auction sale of the said property to
her could never become final without the registration of the Sheriffs Deed.
The persons charged in OMB-L-A-03-0573-F and OMB-L-C-03-0728-F filed their
respective Counter-Affidavits.
Respondent Escutin clarified in his Counter Affidavit that TCT No. T-134609 reflected
the same date and time of entry of the Deed of Absolute Sale between Yagin (as
Catigbacs attorney-in-fact) and Summit Realty, i.e., 25 July 2002 at 2:30 p.m., in
accordance with Section 56[28] of Presidential Decree No. 1529, otherwise known
as the Property Registration Decree. He emphasized that his duty as Register of
Deeds to register the Deed of Absolute Sale presented before him was purely
ministerial. If the document was legal and in due form, and there was nothing
mutilated or irregular on its face, the Register of Deeds had no authority to inquire
into its intrinsic validity based upon proofs aliunde. It was not true that he allowed
the registration of the Deed of Absolute Sale notwithstanding the absence of the
required documents supporting the application for registration thereof. On the
contrary, all the required documents such as the DAR Clearance, Bureau of Internal
Revenue (BIR) Certificate Authorizing Registration (CAR), Real Property Tax, Transfer
Tax, Secretarys Certificate and Articles of Incorporation of Summit Realty were
submitted. While it was true that the Secretarys Certificate did not accompany the
Deed of Absolute Sale upon the presentation of the latter for registration, Section
117 of the Property Registration Decree gives the party seeking registration five
days to comply with the rest of the requirements; and only if the party should still
fail to submit the same would it result in the denial of the registration. The License
to Sell and the Housing and Land Use Regulatory Board Registration of Summit
Realty are only required when a subdivision project is presented for registration.
The use of TINs in certain documents is a BIR requirement. The BIR itself did not
require from Yagin as vendor his TIN in the Deed of Absolute Sale, and issued the
CAR even in the absence thereof. The Register of Deeds, therefore, was only bound
by the CAR. As to the Certification earlier issued by the Register of Deeds of Lipa
City attesting that Lot 13713 in the name of co-owners Raquel, Urbana, and Perla,
was not covered by any certificate of title, Escutin explained that the Register of
Deeds was not technically equipped to determine whether a cadastral lot number
was within a titled property or not. Lastly, Escutin denied conspiring or participating
in the cancellation of petitioners Tax Declaration No. 00942-A for, as Register of
Deeds, he was not concerned with the issuance (or cancellation) of tax declarations.

Respondent Mistas, the Assistant City Assessor for Administration of the Office of
the City Assessor, Lipa City, disputed petitioners allegations that she personally
received from petitioner copies of the Notice of Levy and other supporting
documents, and that she caused the disappearance thereof. Although she admitted
that said documents were shown to her by petitioner, she referred petitioner to the
Receiving Clerk, Lynie Reyes, who accordingly received the same. Mistas maintained
that she was not the custodian of records of the Office and she should not be held
responsible for the missing documents. She opined that petitioners documents
could have been among those misplaced or destroyed when the Office of the City
Assessor was flooded with water leaking from the toilet of the Office of the City
Mayor. As Assistant City Assessor for Administration, Mistas identified her main
function to be the control and management of all phases of administrative matters
and support. She had no hand in the cancellation of petitioners Tax Declaration No.
00942-A, and the issuance of Catigbacs Tax Declaration No. 00949-A for such
function pertained to another division over which she did not exercise authority.
Thus, it was also not within her function or authority to demand the presentation of
certain documents to support the cancellation of petitioners Tax Declaration No.
00942-A or to cause the annotation of petitioners interest on Catigbacs Tax
Declaration No. 00949-A.
Respondent Linatoc averred that as Local Assessment Operation Officer II of the
Office of the City Assessor, Lipa City, she was in charge of safekeeping and updating
the North District Records. With respect to the transfer of a tax declaration from
one name to another, her duty was limited only to the act of preparing the new tax
declaration and assigning it a number, in lieu of the cancelled tax declaration. It
was a purely ministerial duty. She had no authority to demand the presentation of
any document or question the validity of the transfer. Neither was it within her
jurisdiction to determine whether petitioners interest should have been annotated
on Catigbacs Tax Declaration No. 00949-A. Examining the documents presented in
support of the transfer of the tax declaration to anothers name was a function
belonging to other divisions of the Office of the City Assessors. The flow of work,
the same as in any other ordinary transaction, mandated her to cancel petitioners
Tax Declaration No. 00942-A, and to prepare and release Catigbacs Tax Declaration
No. 00949-A after the transfer had been reviewed and approved by other divisions
of the Office. It was also not true that TCT No. 129642 in the name of Catigbac was
already cancelled when it was presented before the Office of the City Assessors; the
photocopy of said certificate of title with the Office bore no mark of cancellation.
Leviste and Orense, the private individuals charged with the respondent public
officers, admitted that they were corporate officers of Summit Realty. They related
that Summit Realty bought a parcel of land measuring 105,648 square meters, later
identified as Lot 1-B, previously included in TCT No. 181, then specifically covered
by TCT No. 129642, both in the name of Catigbac. As a result of such purchase,
ownership of Lot 1-B was transferred from Catigbac to Summit Realty. Summit

Realty had every reason to believe in good faith that said property was indeed
owned by Catigbac on the basis of the latters certificate of title over the same.
Catigbacs right as registered owner of Lot 1-B under TCT No. 181/No. 129642, was
superior to petitioners, which was based on a mere tax declaration. Leviste and
Orense rebutted petitioners assertion that the Deed of Absolute Sale between
Yagin, as Catigbacs attorney-in-fact, and Summit Realty was a one-way street.
The Deed was actually signed on the left margin by both Yagin and the
representative of Summit Realty. The inadvertent failure of the representative of
Summit Realty to sign the last page of the Deed and of both parties to indicate their
TINs therein did not invalidate the sale, especially since the Deed was signed by
witnesses attesting to its due execution. Questions as regards the scope of
Catigbacs Special Power of Attorney in favor of Yagin and the effectivity of the same
after Catigbacs death can only be raised in an action directly attacking the title of
Summit Realty over Lot 1-B, and not in an administrative case and/or preliminary
investigation before the Ombudsman, which constituted a collateral attack against
said title. Leviste and Orense further explained that since the owners duplicate of
TCT No. 181 was lost and was judicially ordered replaced only on 3 January 2001,
entries/inscriptions were necessarily made thereon after said date. As to Orenses
failure to show petitioner any document proving ownership of Lot 1-B by Summit
Realty when the latter paid him a visit, it was not due to the lack of such
documents, but because of petitioners failure to establish her right to peruse the
same. Orense also denied ever threatening petitioner during their meeting. Finally,
according to Leviste and Orense, petitioners allegations were based on mere
conjectures and unsupported by evidence. That particular acts were done or not
done by certain public officials was already beyond the control of Leviste and
Orense, and just because they benefited from these acts did not mean that they
had a hand in the commission or omission of said public officials.
After more exchange of pleadings, OMB-L-A-03-0573-F and OMB-L-C-03-0728-F were
finally submitted for resolution.
In a Joint Resolution[29] dated 28 April 2004, the Office of the Deputy Ombudsman
for Luzon gave more credence to respondent Escutins defenses, as opposed to
petitioners charges against him:
Going to the charges against respondent Escutin, he convincingly explained that he
allowed the registration of the allegedly defective Deed of Sale because he, as
Register of Deeds, has no power to look into the intrinsic validity [of] the contract
presented to him for registration, owing to the ministerial character of his function.
Moreover, as sufficiently explained by said respondent, all the documents required
for the registration of the Deed of Sale were submitted by the applicant.
We likewise find said respondents explanation satisfactory that Section 56 of P.D.
1529 mandates that the TCT bear the date of registration of the instrument on

which the said TCTs issuance was based. It is for this reason that TCT 134609
bears the same date and time as the registration of the Deed of Absolute Sale,
which deed served as basis for its issuance.
As to his denial to register [herein petitioners] Affidavit of Adverse Claim and
Sheriffs Certificate of Final Sale, through the issuance by the Registry of Deeds
Examiner Juanita H. Sta. Ana, of the 29 June 2003 Order denying registration
thereof, such matter had been raised by herein [petitioner] in a letter-consulta to
the Administrator of the Land Registration Authority (LRA) on 03 July 2003. As the
criminal and administrative charges respecting this issue is premised, in part, on a
matter still pending with the LRA, we find it premature to make a finding on the
same.
It is for the same reason that we deny the motion contained in the Second
Supplemental Complaint Affidavit praying for the inclusion, as additional
respondent, of Juanita H. Sta. Ana, who is impleaded solely on the basis of having
signed, by authority of Escutin, the 29 July 2003 Order of denial of [petitioners]
application for registration.
Finally, respondent Escutin was able to successfully demonstrate, through Consulta
2103 dated 25 July 1994, wherein the denial of registration by the Examiner of the
Registry of Deeds of Quezon City was upheld by the LRA Administrator, that the (sic)
it was practice in the different Registries that Examiners are given authority by the
Register to sign letters of denial.[30]

The Office of the Deputy Ombudsman for Luzon declared in the same Joint
Resolution that there was no basis to hold respondents Mistas and Linatoc
administratively or criminally liable:
In this respect, this Office notes that while [herein petitioner] alleges that Aquilina
Mistas caused the disappearance of the Notice of Levy and other supporting
documents received from [petitioner] on 13 March 2003 when she applied for the
issuance of a Tax Declaration in her favor, she did not present her receiving copy
thereof showing that it was Mistas who received said documents from her. Neither
did she show that Mistas is the employee responsible for record safekeeping.
Next, we find, as convincingly answered, the allegation that respondent Marietta
Linatoc cancelled Tax Declaration No. 00942-A and issued Tax Declaration 00949-Q
(sic) on the basis of a cancelled Transfer Certificate of Title upon the behest of
Summit [Realty], which was not the registered owner of the property.
Respondent Linatoc, meeting squarely [petitioners] allegation, admits having
physically cancelled Tax Declaration No. 00942-A and having prepared a new

declaration covering the same property in Catigbacs [name], as mandated by the

flow of work in the City Assessors Office. However, she denies having the authority
or discretion to evaluate the correctness and sufficiency of the documents
supporting the application for the issuance of the Tax Declaration, arguing that her
official function is limited to the physical preparation of a new tax declaration, the
assignment of a new tax declaration number and the cancellation of the old tax
declaration, after the application had passed the other divisions of the City
Assessors Office.
Verily, [petitioner] failed to establish that respondent Mistas and Linatoc, are the
ones officially designated to receive applications for issuance of Tax Declaration,
evaluate the sufficiency of the documents supporting such applications, and on the
basis of the foregoing recommend or order the cancellation of an existing Tax
Declaration and direct the annotation of any fact affecting the property and direct
the issuance of a new tax declaration covering the same property.
In fact, there is even a discrepancy as to the official designation of said
respondents. While [petitioner] impleads Mistas, in her capacity as Local
Assessment Officer, and Linatoc, in her capacity as Records Clerk, Mistas, in her
counter-affidavit, alleges a different designation, i.e., Assistant City Assessor for
Administration, while Linatoc claims to be the Local Assessment Operation Officer II
of the City Assessors Office.
With the scope of work of said respondents not having been neatly defined by
[petitioner], this Office cannot make a definitive determination of their liability for
Grave Misconduct and violation of Section 3(e) of R.A. No. 3019, which charges both
relate to the performance or discharge of Mistas and Linatocs official duties.[31]

Neither did the Office of the Deputy Ombudsman for Luzon find any probable cause
to criminally charge private individuals Leviste and Orense for the following reasons:
Anent private respondents, with the alleged conspiracy to unlawfully cause the
transfer of the title of [herein petitioners] property to Summit sufficiently explained
by respondent Register of Deeds, such allegation against private respondents loses
a legal leg to stand on.
Inasmuch as [petitioner] was not able to sufficiently outline the official functions of
respondents Mistas and Linatoc to pin down their specific accountabilities, the
imputation that private respondent (sic) conspired with said public respondents
respecting the cancellation of Tax Declaration No. 00942-A is likewise stripped of
any factual and legal bases.[32]

As to whether petitioner was indeed unlawfully deprived of her 5,000 square meter
property, which issue comprised the very premise of OMB-L-A-03-0573-F and OMB-LC-03-0728-F, the Office of the Deputy Ombudsman for Luzon ruled that such matter
was not within its jurisdiction and should be raised in a civil action before the courts
of justice.
In the end, the Office of the Ombudsman decreed:
WHEREFORE premises considered, it is respectfully recommended that : (1) the
administrative case against public respondents ANTONIO M. ESCUTIN, AQUILINA A.
MISTAS and MARIETA L. LINATOC be DISMISSED, for lack of substantial evidence;
and (2) the criminal case against the same respondents including private
respondent LAURO S. LEVISTE II and BENEDICTO L. ORENSE, be DISMISSED, for lack
of probable cause.[33]

In a Joint Order[34] dated 20 June 2005, the Office of the Deputy Ombudsman for
Luzon denied petitioners Motion for Reconsideration.
The Office of the Deputy Ombudsman for Luzon, in its Joint Order, took notice of the
Resolution dated 17 December 2002 of the LRA in Consulta No. 3483, which
involved circumstances similar to those in petitioners case. The LRA distinguished
between two systems of land registration: one is the Torrens system for registered
lands under the Property Registration Decree, and the other is the system of
registration for unregistered land under Act No. 3344 (now Section 113 of the
Property Registration Decree). These systems are separate and distinct from each
other. For documents involving registered lands, the same should be recorded
under the Property Registration Decree. The registration, therefore, of an
instrument under the wrong system produces no legal effect. Since it appeared that
in Consulta No. 3483, the registration of the Kasulatan ng Sanglaan, the Certificate
of Sale and the Affidavit of Consolidation was made under Act No. 3344, it did not
produce any legal effect on the disputed property, because the said property was
already titled when the aforementioned documents were executed and presented
for registration, and their registration should have been made under the Property
Registration Decree.
Furthermore, the Office of the Deputy Ombudsman for Luzon, in the same Joint
Order, took into account petitioners withdrawal of her appeal en consulta before
the LRA of the denial by the Register of Deeds of her request for registration of the
Sheriffs Deed of Final Sale/Conveyance and Affidavit of Adverse Claim, which
prompted the LRA Administrator to declare the consulta moot and academic. For
want of a categorical declaration on the registerability of petitioners documents
from the LRA, the competent authority to rule on the said matter, there could be no

basis for a finding that respondent public officers could be held administratively or
criminally liable for the acts imputed to them.
Petitioner sought recourse from the Court of Appeals by filing a Petition for Review
under Rule 43 of the Rules of Court challenging the 28 April 2004 Joint Resolution
and 20 June 2005 Joint Order of the Office of the Deputy Ombudsman for Luzon.[35]
The appeal was docketed as CA-G.R. SP No. 90533.
The Court of Appeals promulgated its Decision[36] on 18 October 2005, also finding
no reason to administratively or criminally charge respondents. Essentially, the
appellate court adjudged that petitioner can not impute corrupt motives to
respondents acts:
Without evidence showing that respondents received any gift, money or other payoff or that they were induced by offers of such, the Court cannot impute any taint of
direct corruption in the questioned acts of respondents. Thus, any indication of
intent to violate the laws or of flagrant disregard of established rule may be negated
by respondents honest belief that their acts were sanctioned under the provisions
of existing law and regulations. Such is the situation in the case at bar. Respondent
Register of Deeds acted in the honest belief that the agency recognized by the court
in LRC Case No. 00-0376 between the registered owner Francisco Catigbac and
Leonardo Yagin subsisted with respect to the conveyance or sale of Lot 1 to Summit
as the vendee, and that the Special Power of Attorney and Deed of Absolute Sale
presented as evidence during said proceedings are valid and binding. Hence,
respondent Escutin was justified in believing that there is no legal infirmity or defect
in registering the documents and proceeding with the transfer of title of Lot 1 in the
name of the new owner Summit. On the other hand, respondent Linatoc could not
be held administratively liable for effecting the cancellation in the course of ordinary
flow of work in the City Assessors Office after the documents have undergone the
necessary evaluation and verification by her superiors.[37]

The Court of Appeals referred to the consistent policy of the Supreme Court not to
interfere with the exercise by the Ombudsman of his investigatory power. If the
Ombudsman, using professional judgment, finds the case dismissible, the Court
shall respect such findings, unless clothed with grave abuse of discretion. The
appellate court pronounced that there was no grave abuse of discretion on the part
of the Office of the Deputy Ombudsman for Luzon in dismissing petitioners
Complaint Affidavit against respondents.
Hence, the dispositive portion of the Decision of the Court of Appeals reads:
WHEREFORE, premises considered, the present petition is hereby DISMISSED for
lack of merit. The challenged Joint Resolution dated April 28, 2004 and Joint Order

dated June 20, 2005 in OMB-L-A-03-0573-F and OMB-L-C-03-0728-F are hereby

AFFIRMED.[38]

In its Resolution dated 11 January 2006, the Court of Appeals denied petitioners
Motion for Reconsideration for failing to present new matter which the appellate
court had not already considered in its earlier Decision.
Petitioner now comes before this Court via the instant Petition for Review on
Certiorari, with the following assignment of errors:
I.
THE HONORABLE COURT OF APPEALS PATENTLY ERRED IN AFFIRMING THE
CANCELLATION OF THE TAX DECLARATION 00942 OF PETITIONER IN VIOLATION OF
SECTION 109 OF PRESIDENTIAL DECREE 1529, OTHERWISE KNOWN AS THE
PROPERTY REGISTRATION ACT (sic);
II.
THE HONORABLE COURT OF APPEALS PATENTLY ERRED IN RULING THAT
RESPONDENTS COULD NOT BE HELD ADMINISTRATIVELY LIABLE FOR UNDULY
FAVORING SUMMIT TO THE DAMAGE AND PREJUDICE OF PETITIONER.[39]

The Petition at bar is without merit.

As to the first issue, petitioner invokes Section 109 of the Property, Registration
Decree which provides:
SEC. 109. Notice and replacement of lost duplicate certificate. In case of loss or
theft of an owners duplicate certificate of title, due notice under oath shall be sent
by the owner or by someone in his behalf to the Register of Deeds of the province or
city where the land lies as soon as the loss or theft is discovered. If a duplicate
certificate is lost or destroyed, or cannot be produced by a person applying for the
entry of a new certificate to him or for the registration of any new instrument, a
sworn statement of the fact of such loss or destruction may be filed by the
registered owner or other person in interest and registered.
Upon the petition of the registered owner or other person in interest, the court may,
after notice and due hearing, direct the issuance of a new duplicate certificate,
which shall contain a memorandum of the fact that it is issued in place of the lost
duplicate certificate, but shall in all respects be entitled to like faith and credit as

the original duplicate, and shall thereafter be regarded as such for all purposes of
this decree.

Petitioner argues that the RTC, in LRC Case No. 00-0376, only ordered the issuance
of a new owners duplicate of TCT No. 181 in lieu of the lost one. However,
respondents did not only issue a new owners duplicate of TCT No. 181, but also
cancelled petitioners Tax Declaration No. 00942-A and issued in its place Tax
Declaration No. 00949-A in the name of Catigbac. Respondents did not even
annotate petitioners existing right over 5,000 square meters of Lot 1-B or notify
petitioner of the cancellation of her Tax Declaration No. 00942-A. Petitioner
maintains that a new owners duplicate of title is not a mode of acquiring
ownership, nor is it a mode of losing one. Under Section 109 of the Property
Registration Decree, the new duplicate of title was issued only to replace the old; it
cannot cancel existing titles.
Petitioners position on this issue rests on extremely tenuous arguments and
befuddled reasoning.
Before anything else, the Court must clarify that a title is different from a certificate
of title. Title is generally defined as the lawful cause or ground of possessing that
which is ours. It is that which is the foundation of ownership of property, real or
personal.[40] Title, therefore, may be defined briefly as that which constitutes a
just cause of exclusive possession, or which is the foundation of ownership of
property.[41] Certificate of title, on the other hand, is a mere evidence of
ownership; it is not the title to the land itself.[42] Under the Torrens system, a
certificate of title may be an Original Certificate of Title, which constitutes a true
copy of the decree of registration; or a Transfer Certificate of Title, issued
subsequent to the original registration.
Summit Realty acquired its title to Lot 1-B, not from the issuance of the new owners
duplicate of TCT No. 181, but from its purchase of the same from Yagin, the
attorney-in-fact of Catigbac, the registered owner of the said property. Summit
Realty merely sought the issuance of a new owners duplicate of TCT No. 181 in the
name of Catigbac so that it could accordingly register thereon the sale in its favor of
a substantial portion of Lot 1 covered by said certificate, later identified as Lot 1-B.
Catigbacs title to Lot 1-B passed on by sale to Summit Realty, giving the latter the
right to seek the separation of the said portion from the rest of Lot 1 and the
issuance of a certificate of title specifically covering the same. This resulted in the
issuance of TCT No. 129642 in the name of Catigbac, covering Lot 1-B, which was
subsequently cancelled and replaced by TCT No. T-134609 in the name of Summit
Realty.

Petitioners reliance on Section 109 of the Property Registration Decree is totally

misplaced. It provides for the requirements for the issuance of a lost duplicate
certificate of title. It cannot, in any way, be related to the cancellation of
petitioners tax declaration.
The cancellation of petitioners Tax Declaration No. 00942-A was not because of the
issuance of a new owners duplicate of TCT No. 181, but of the fact that Lot 1-B,
which encompassed the 5,000 square meters petitioner lays claim to, was already
covered by TCT No. 181 (and subsequently by TCT No. 129642) in the name of
Catigbac. A certificate of title issued is an absolute and indefeasible evidence of
ownership of the property in favor of the person whose name appears therein. It is
binding and conclusive upon the whole world.[43] All persons must take notice, and
no one can plead ignorance of the registration.[44] Therefore, upon presentation of
TCT No. 129642, the Office of the City Assessor must recognize the ownership of Lot
1-B by Catigbac and issue in his name a tax declaration for the said property. And
since Lot 1-B is already covered by a tax declaration in the name of Catigbac,
accordingly, any other tax declaration for the same property or portion thereof in
the name of another person, not supported by any certificate of title, such that of
petitioner, must be cancelled; otherwise, the City Assessor would be twice collecting
a realty tax from different persons on one and the same property.
As between Catigbacs title, covered by a certificate of title, and petitioners title,
evidenced only by a tax declaration, the former is evidently far superior and is, in
the absence of any other certificate of title to the same property, conclusive and
indefeasible as to Catigbacs ownership of Lot 1-B. Catigbacs certificate of title is
binding upon the whole world, including respondent public officers and even
petitioner herself. Time and again, the Court has ruled that tax declarations and
corresponding tax receipts cannot be used to prove title to or ownership of a real
property inasmuch as they are not conclusive evidence of the same.[45] Petitioner
acquired her title to the 5,000 square meter property from Raquel, her judgment
debtor who, it is important to note, likewise only had a tax declaration to evidence
her title. In addition, the Court of Appeals aptly observed that, [c]uriously, as to
how and when petitioners alleged predecessor-in-interest, Raquel K. Moratilla and
her supposed co-owners acquired portions of Lot 1 described as Lot 13713 stated in
TD No. 00449, petitioner had so far remained utterly silent.[46]
Petitioners allegations of defects or irregularities in the sale of Lot 1-B to Summit
Realty by Yagin, as Catigbacs attorney-in-fact, are beyond the jurisdiction of the
Office of the Deputy Ombudsman for Luzon to consider. It must be remembered
that Summit Realty had already acquired a certificate of title, TCT No. T-134609, in
its name over Lot 1-B, which constitutes conclusive and indefeasible evidence of its
ownership of the said property and, thus, cannot be collaterally attacked in the
administrative and preliminary investigations conducted by the Office of the
Ombudsman for Luzon. Section 48 of the Property Registration Decree categorically

provides that a certificate of title shall not be subject to collateral attack. It cannot
be altered, modified, or cancelled except in a direct proceeding in accordance with
law. For this same reason, the Court has no jurisdiction to grant petitioners prayer
in the instant Petition for the cancellation of TCT No. T-134609 in the name of
Summit Realty.
Which now brings the Court to the second issue raised by petitioner on the
administrative liability of respondents.
Before the Court proceeds to tackle this issue, it establishes that petitioners
Complaint Affidavit before the Office of the Ombudsman for Luzon gave rise to two
charges: (1) OMB-L-A-03-0573-F involved the administrative charge for Gross
Misconduct against respondent public officers; and (2) OMB-L-C-03-0728-F
concerned the criminal charge for violation of Section 3(e) of the Anti-Graft and
Corrupt Practices Act[47] against respondent public officers and private individuals
Leviste and Orense. The Office of the Deputy Ombudsman for Luzon, affirmed by
the Court of Appeals, dismissed both charges. In the Petition at bar, petitioner only
assails the dismissal of the administrative charge for grave misconduct against
respondent public officers. Since petitioner did not raise as an issue herein the
dismissal by the Office of the Deputy Ombudsman for Luzon, affirmed by the Court
of Appeals, of the criminal charge against respondent public officers for violation of
Section 3(e) of the Anti-Graft and Corrupt Practices Act, the same became final and
executory.[48]
In Domingo v. Quimson,[49] the Court adopted the well-written report and
recommendation of its Clerk of Court on the administrative matter then pending and
involving the charge of gross or serious misconduct:
"Under Section 36, par. (b) [1] of PD No. 807, otherwise known as the Civil Service
Decree of the Philippines, 'misconduct' is a ground for disciplinary action. And under
MC No. 8, S. 1970, issued by the Civil Service Commission on July 28, 1970, which
sets the 'Guidelines in the Application of Penalties in Administrative Cases and other
Matters Relative Thereto,' the administrative offense of 'grave misconduct' carries
with it the maximum penalty of dismissal from the service (Sec. IV-C[3], MC No. 8, S.
1970). But the term 'misconduct' as an administrative offense has a well defined
meaning. It was defined in Amosco vs. Judge Magno, Adm. Mat. No. 439-MJ, Res.
September 30, 1976, as referring 'to a transgression of some established and
definite rule of action, more particularly, unlawful behavior or gross negligence by
the public officer.' It is a misconduct 'such as affects the performance of his duties
as an officer and not such only as effects his character as a private individual.' In
the recent case of Oao vs. Pabato, etc., Adm. Mat. No. 782-MJ, Res. July 29, 1977,
the Court defined 'serious misconduct' as follows:

Hence, even assuming that the dismissal of the case is erroneous, this would be
merely an error of judgment and not serious misconduct. The term `serious
misconduct is a transgression of some established and definite rule of action more
particularly, unlawful behavior of gross negligence by the magistrate. It implies a
wrongful intention and not a mere error of judgment. For serious misconduct to
exist, there must be reliable evidence showing that the judicial acts complained of
were corrupt or inspired by intention to violate the law, or were a persistent
disregard of well-known legal rules. We have previously ruled that negligence and
ignorance on the part of a judge are inexcusable if they imply a manifest injustice
which cannot be explained by a reasonable interpretation. This is not so in the case
at bar. (Italics supplied.)

To reiterate, for grave misconduct to exist, there must be reliable evidence showing
that the acts complained of were corrupt or inspired by an intention to violate the
law, or were a persistent disregard of well-known legal rules. Both the Office of the
Deputy Ombudsman for Luzon and the Court of Appeals found that there was no
sufficient evidence to substantiate petitioners charge of grave misconduct against
respondents. For this Court to reverse the rulings of the Office of the Deputy
Ombudsman for Luzon and the Court of Appeals, it must necessarily review the
evidence presented by the parties and decide on a question of fact. Once it is clear
that the issue invites a review of the evidence presented, the question posed is one
of fact.[50]
Factual issues are not cognizable by this Court in a Petition for Review under Rule 45
of the Rules of Court. In order to resolve this issue, the Court would necessarily
have to look into the probative value of the evidence presented in the proceedings
below. It is not the function of the Court to reexamine or reevaluate the evidence all
over again. This Court is not a trier of facts, its jurisdiction in these cases being
limited to reviewing only errors of law that may have been committed by the lower
courts or administrative bodies performing quasi-judicial functions. It should be
emphasized that findings made by an administrative body, which has acquired
expertise, are accorded not only respect but even finality by the Court. In
administrative proceedings, the quantum of evidence required is only substantial.
[51]
Absent a clear showing of grave abuse of discretion, the Court shall not disturb
findings of fact. The Court cannot weigh once more the evidence submitted, not
only before the Ombudsman, but also before the Court of Appeals. Under Section
27 of Republic Act No. 6770, findings of fact by the Ombudsman are conclusive, as
long as they are supported by substantial evidence.[52] Substantial evidence is the
amount of relevant evidence which a reasonable mind might accept as adequate to
justify a conclusion.[53]

The Court finds no reason to disturb the finding of the Office of the Deputy
Ombudsman for Luzon and the Court of Appeals that respondents did not commit
gross misconduct. Evident from the 28 April 2004 Joint Resolution of the former and
the 18 October 2005 Decision of the latter is that they arrived at such findings only
after a meticulous consideration of the evidence submitted by the parties.
Respondents were able to clearly describe their official functions and to convincingly
explain that they had only acted in accordance therewith in their dealings with
petitioner and/or her documents. Respondents also enjoy in their favor the
presumption of regularity in the performance of their official duty. The burden of
proving otherwise by substantial evidence falls on petitioner, who failed to
discharge the same.
From the very beginning, petitioner was unable to identify correctly the positions
held by respondents Mistas and Linatoc at the Office of the City Assessor. How then
could she even assert that a particular action was within or without their jurisdiction
to perform? While it may be true that petitioner should have at least been notified
that her Tax Declaration No. 00942-A was being cancelled, she was not able to
establish that such would be the responsibility of respondents Mistas or Linatoc.
Moreover, petitioner did not present statutory, regulatory, or procedural basis for
her insistence that respondents should have done or not done a particular act. A
perfect example was her assertion that respondents Mistas and Linatoc should have
annotated her interest on Tax Declaration No. 00949-A in the name of Catigbac.
However, she failed to cite any law or rule which authorizes or recognizes the
annotation of an adverse interest on a tax declaration. Finally, absent any reliable
evidence, petitioners charge that respondents conspired with one another and with
corporate officers of Summit Realty is nothing more than speculation, surmise, or
conjecture. Just because the acts of respondents were consistently favorable to
Summit Realty does not mean that there was a concerted effort to cause petitioner
prejudice. Respondents actions were only consistent with the recognition of the
title of Catigbac over Lot 1-B, transferred by sale to Summit Realty, registered under
the Torrens system, and accordingly evidenced by certificates of title.
WHEREFORE, premises considered, the instant Petition for Review is hereby DENIED.
The Decision dated 18 October 2005 and Resolution dated 11 January 2006 of the
Court of Appeals in CA-G.R. SP No. 90533 are hereby AFFIRMED in toto. Costs
against the petitioner Dinah C. Castillo.
SO ORDERED.
3. Nature (section 2 PD 1529)
Section 2. Nature of registration proceedings; jurisdiction of courts.
Judicial proceedings for the registration of lands throughout the

Philippines shall be in rem and shall be based on the generally accepted

principles underlying the Torrens system.
i.

In rem vs In Personam

Jurisdiction matters: the difference between in rem and in personam

proceedings
Posted on October 17, 2010 by Eapen Thampy
1 Comment
Both civil and criminal forfeiture proceedings are brought under a variety of
frameworks. It is important to understand the differences between the frameworks,
because they have important implications for how the forfeiture proceeding
functions. Here I describe the jurisdictional component of the forfeiture proceeding.
There are two types of jurisdiction here: in personam and in rem. In personam
(literally, against the person) proceedings identify a person individual as party to
the lawsuit. In both civil and criminal in personam proceedings, the case is filed
against a person who is listed in the pleading caption (ie, Roe v. Wade, or People v.
Bowen). This places the individual under the courts jurisdiction and allows the court
to lodge a judgment implicating the individual.
In rem (literally, against the thing) proceedings allow the court to obtain
jurisdiction against the property, not the wrongdoer, under the fiction that the
property is literally guilty of a crime. In of itself, this is a strange presumption,
because it presumes criminality. I read this as fundamentally unfair, because the
presumption of criminality is simply that: a presumption. The subject of an in rem
proceeding is the property itself, and is reflected in the pleading caption (ie, United
States v. 404 N. 10th St., or One 2011 BMW v. Virginia). In this proceeding, notice is
supposed to be served to all persons who have an interest in the property; they may
then file a response as a claimant, and be heard in a proceeding where the court
decides which party has the better claim to the property.
In my next post Ill develop the description of the legal theories further and discuss
the methods of forfeiture: summary, administrative, criminal, and civil forfeitures.
ii.
Requisites acquisition of Jurisdiction in an in rem proceeding

G.R. No. 113549 July 5, 1996

REPUBLIC OF THE PHILIPPINES, (Represented by the DIRECTOR OF LANDS),
petitioner,
vs.

COURT OF APPEALS and HEIRS OF LUIS RIBAYA, namely, ANDREA RIBAYA

BUENVIAJE, LUIS RIBAYA, ANTONIA RIBAYA-CONDE, and JOHN DOE RIBAYA,
all represented by ANDREA RIBAYA BUENVIAJE as Administratrix of the
Estate of Luis Ribaya, respondents.

DAVIDE, JR., J.:p

Petitioner seeks the reversal of the Resolution 1 of 24 January 1994 of the Court of
Appeals in CA-G.R. CV No. 17351, which set aside its earlier decision 2 of 9 January
1991. The latter affirmed the decision 3 of 11 November 1987 of the Regional Trial
Court (RTC), Branch 7, Legazpi City, in Civil Case No. 6198 which declared null and
void an original certificate of title issued pursuant to a decree and a decision in a
land registration case decided on 18 September 1925.
After the private respondents filed their Comment and the petitioner their Reply, we
gave due course to the petition and required the parties to submit their respective
memoranda.
The Court of Appeals' reversal was primarily due to its disagreement with the trial
court's findings of fact. Hence, such removes this case from the general rule that
factual findings of the Court of Appeals bind us in a petition for review under Rule
45 of the Rules of Court. 4 We are thus compelled to review the factual antecedents.
From the decisions of the trial court and the Court of Appeals and the pleadings of
the parties, the following were established:
On the basis of the private respondents' exhibits, 5 on 9, 10, 12-16, 23, 24, 26, and
27 July 1920, a parcel of land located in the barrio of Magragondong, Municipality of
Ligao, Province of Albay, was survived for the spouses Luis Ribaya and Agustina
Revatoris (hereinafter the spouses Ribaya) by Telesforo Untalan, a Bureau of Lands
surveyor. The parcel of land was found to comprise an area of 25,542,603 square
meters. The survey plan was denominated as Plan II-13961 and allegedly approved
by the Acting Director of Lands on 3 January 1922. However, as noted by the Court
of Appeals in its 9 January 1991 1 decision, 6 these exhibits do not at all show the
surveyor's signature. Moreover, its per Land Classification Map No. 871 of the
Bureau of Forestry, the above parcel of land was considered part of the public forest
and released for disposition only on 31 December 1930. 7
In 1925, the spouses Ribaya applied for registration and confirmation of title of the
lot covered by Plan II-13961 before the then Court of First Instance (CFI) of Albay.
The case was docketed as LRC Case No. 52, G.L.R.O. Record No. 26050. Notice of
the application and hearing thereof were published in the 17 March 1925 issue of

the Official Gazette, 8 and in its decision of 18 September 1925, 9 the CFI granted
the said application.
Sometime later, or on 18-21 November and 23-30 November 1925, a resurvey of
the parcel of land covered by Plan II-13961 was conducted at the instance of the
spouses Ribaya. This gave rise to Plan II-13961-Amd., which embraced, inter alia,
four different parcels of land with an aggregate area of only 10,975,022 square
meters, instead of the original 25,542,603 square meters. Plan II-13961-Amd.
appeared to have been approved by the Director of Lands on 26 February 1926. 10
The application was not amended to reflect the resurvey and the amended plan was
not published.
On 31 July 1926, the corresponding decree of registration was issued, 11 while on
19 August 1926, Original Certificate of Title (OCT) No. 3947 covering the four lots
embraced by Plan II-13961-Amd. was issued in the names of the spouses Ribaya. 12
On 11 September 1958, OCT No. 3947 was administratively reconstituted from the
owner's duplicate copy thereof and the reconstituted title was denominated as OCT
No. P0-10848 (3947). 13
In 1964, the heirs of Luis Ribaya (herein private respondents) received
compensation from the Foreign Claims Settlement Commission of the United States
for damages sustained by the land during the war. 14
In 1968, pursuant to a deed of partition executed by the private respondents herein,
the land covered by OCT No. RO-10848 (3947) was subdivided per Subdivision Plan
LRC Psd-96075, approved on 16 December 1968. 15 Then, OCT No. RO-10848
(3947) was cancelled and separate Transfer Certificates of Title (TCT) were issued to
the private respondents. 16
In a letter dated 6 January 1977, sixty-two (62) farmers occupying the land 17 and
claiming ownership thereof, requested the Director of Lands to institute an action to
annul OCT No. RO-10848 (3947). 18 Finding merit in the request, herein petitioner
filed a verified complaint, dated 17 August 1978, with the CFI (now Regional Trial
Court) of Albay, Branch V, for the declaration of nullity of OCT No. 3947, OCT No.
RO-10848 (3947), and all subsequent titles emanating from the original title, viz.,
TCT Nos. T-31333 to T-31358, inclusive. The case was docketed as Civil Case No.
6198.
The petitioner claimed therein that OCT No. 3947 was obtained through fraud and
that the land registration court did not acquire jurisdiction over the land for lack of
republication of the amended plan, neither did the spouses-applicants comply with
Section 45 (],) of Act No. 2874. 19 The petitioner further alleged that at the time the

petition for registration was filed, the land covered therein was forest land, and
therefore, inalienable.
On 27 October 1979, the aforementioned 62 farmers filed a complaint-inintervention and prayed that the land revert to the petitioner and their titles over
the portions respectively occupied by them confirmed.
In its decision of 11 November 1987, 20 the Regional Trial Court (RTC) held for the
petitioner as follows:
WHEREFORE, decision is hereby rendered as follows:
1.
Declaring Original Certificate of Title No. 3947 and administratively
reconstituted Original Certificate of Title No. RO-10848 (3947) as null and void ab
initio and without force and effect;
2.
Declaring separate Transfer Certificates of Title, to wit: T-31333, T-31334, T31335, T-31336, T-31337, T-31338, T-31339, T-31340, T-31341, T-31342, T-31343, T31344, T-31345, T-31346, T-31347, T-31348, T-31349, T-31350, T-31351, T-31352, T31353, T-31354, T-31355, T-31356, T-31357 and T-31358, emanating from OCT No.
3947 and OCT No. RO-10848 (3947), all issued to the heirs of Luis Ribaya and
Agustina Revatoris, as likewise null and void and without force and effect.
3.
Ordering [respondents] Heirs of Luis Ribaya and Agustina Revatoris to
surrender their copy of OCT No. RO-10848 (3947) as well as their separate transfer
certificates of title to the Register of Deeds of Albay, who (sic) is thereafter directed
or ordered to cancel the same.
4.
Ordering the reversion of the land to [petitioner] Republic of the Philippines,
as alienable and disposable land of the public domain.
5.

And ordering the dismissal of the counterclaim.

The trial court found that at the time the spouses Ribaya filed their petition for
registration, the land was already classified as alienable and disposable agricultural
land; however, the then CFI, as a land registration court, did not acquire jurisdiction
over the said lot due to lack of publication or republication in the Official Gazette of
Plan II-13961-Amd., which was the basis of the decree of registration and OCT No.
3947. Consequently, said OCT No. 3947 and its derivative titles were void. 21 In so
finding, it relied on Fewkes vs. Vasquez, 22 where it was held that any amendment
or alteration in the description of the land after its publication and decree of
registration was not permissible unless coupled with republication.

The trial court likewise ruled that there was no evidence that the possession of the
spouses Ribaya and their predecessors-in-interests was open, continuous, and
adverse under a bona fide claim of ownership for the required number of years;
moreover, they failed to present any tax declarations. It then concluded that the
said spouses may have occupied portions of the land at a later time, but not in the
concept of bona fide owners, for mere casual cultivation and raising of cattle on the
land did not constitute "possession" as contemplated by law. 23
The private respondents appealed to the Court of Appeals (CA-G.R. CV No. 17351),
which, in its decision 24 of 9 January 1991, affirmed in toto the appealed decision of
the trial court. The appellate court further pointed out another reason why the
registration in favor of the applicants was invalid, thus:
[W]hen [the] spouses [Luis Ribaya and Agustina Revatoris] applied for registration
thereof in their names said land was still part of the public forest. The land was
released for public disposition only on December 31, 1930 as shown by the Land
Classification Map No. 871 of the Bureau of Forestry (Exhs. K, K-5). Consequently,
OCT No. 3947 as reconstituted by OCT No. RO-10848 is void ab initio.
It is well-settled that lands of the public domain classified as forest or timber lands,
are incapable of registration in the names of private persons and their inclusion in a
title nullifies the title (Director of Lands vs. Reyes, 68 SCRA 177 and cases cited
therein.) 25
In refuting the claim of the private respondents that publication of the amended
survey plan was unnecessary in light of the decision of this Court in Benin vs.
Tuazon, 26 the Court of Appeals held that the facts in Benin were different. In Benin,
an approved survey plan was submitted before the property was decreed for
registration, while in the present case:
[T]he land was decreed for registration on September 18, 1925 while its survey was
performed sometime in November and December 1925. The amended survey plan
(plan II-13961-Amd.) thereof was approved by the Director of Lands on February 26,
1926. In other words, the survey plan (plan II-13961-Amd.) of the land in the instant
case was approved when the land was already decreed for registration. . . . 27
There was then, the Court of Appeals concluded, a violation of Sections 23 and 26 of
Act No. 496. 28
The private respondents seasonably moved for a reconsideration of this decision.
In its resolution 29 of 24 January 1994, the Court of Appeals granted the motion for
reconsideration and set aside its decision of 9 January 1991, reversed that of the
trial court of 11 November 1987, and dismissed the complaint and the complaint-in-

intervention in Civil Case No. 6198 of Branch 7 of the RTC of Legazpi City. In
overturning its previous decision, the Court of Appeals ruled that OCT No. 3947 "is
conclusive upon and against all persons, including the Government and all its
branches (Sec. 38, Act No. 496) as to all matters contained therein (Sec. 47, Act No.
496). One (1) year after its transcription which is the date of its effectivity (Sec. 42,
Act No. 496), said certificate of title became incontrovertible (Sec. 38, Act No. 496)."
30
It further applied the presumption of regularity in the grant of the land applied for
by the spouses Ribaya, and even extended said presumption to their compliance
with all conditions required by law, in particular, their "open, continuous, exclusive
and notorious possession and occupation of the land under a bona fide claim of
ownership since July 26, 1894." It thus burdened the Republic "to prove otherwise."
31
It likewise ruled that the failure of the spouses Ribaya to present tax receipts was
not fatal, and that although they actually lived in Gas, Albay, such did not negate
the character of their possession for "[p]ossession in the eyes of the law does not
mean that a men has to have his feet on every square meter of ground before he
can be said that he is in possession." 32
The Court of Appeals also rejected the application of the Fewkes case and applied,
instead, the decision in Benin, where this Court held that republication could be
dispensed with in an amendment in the application or in the survey plan, where
such amendment consisted of the exclusion of a portion covered by the original
application and the original survey plan as published. Accordingly, the land
registration court retained its jurisdiction.
Finally, the Court of Appeals withdrew its earlier finding that the land in question still
formed part of the public forest at the time of the application for registration. It
asserted, instead, that there was insufficient basis to conclude that a parcel of land
only became open to disposition on the basis of the date of approval of the land
classification map, because such approval may have been made later by authority
of a prior executive declaration. 33
Unsatisfied, the petitioner filed the instant petition and asserts that: (1) the
indefeasibility of title does not lie against the State in an action for reversion of
land; (2) the spouses-applicants failed to prove possession of the land for the period
required by law, and the evidence shows that their possession was not open,
continuous, exclusive, and notorious under a bona fide claim of ownership; (3) the
amended survey plan was not published; (4) the land covered by OCT No. 3947 was
then part of the forest land, hence, inalienable; and (5) the accuracy of the land
survey was doubtful. 34

In their Comment, the private respondents allege that the petition merely raises
factual matters and argue that OCT No. 3947 is absolutely incontestable,
considering that the land was no longer part of the public forest when it was
decreed in favor of their parents. They further contend, invoking Benin, that the
issue of republication is inapplicable since the publication of the original survey plan
was already had in compliance with law. Moreover, possession of the land by their
parents, the spouses-applicants, was duly proven, i.e., donations of portions thereof
in favor of the government and the compensation they received from the Foreign
Claims Settlement Commission of the United States for damages sustained by the
land during the war sufficiently proved that they were the legitimate owners of the
land. Finally, the original survey plan could no longer be questioned by the
petitioner. 35
As the Court sees it, only two relevant issues need be resolved, to wit:
1.
Whether the Republic of the Philippines is barred by prescription to bring the
action for annulment of OCT No. 3947 and all its derivative certificates of title; and
2.
Whether the land registration court acquired jurisdiction over the four parcels
of land subject of the amended survey plan (Plan II-13961-Amd.) and covered by the
decree issued on 31 July 1926 by the General Land Registration Office pursuant to
the decision of the said court of 18 September 1925.
As to the first issue, we find that the Court of Appeals erred in holding that OCT No.
3947 was, to repeat:
[C]onclusive upon and against all persons, including the Government and all its
branches (Sec. 38, Act No. 496) as to all matters contained therein (Sec. 47, Act No.
496). One (1) year after its transcription which is the date of its effectivity (Sec. 42,
Act No. 496), said certificate of title became incontrovertible (Sec. 38, Act No. 496).
36
First, the one-year period provided for in Section 38 of Act No. 496 merely refers to
a petition for review and is reckoned from the entry of the decree. In the second
place, there are other remedies available to an aggrieved party after the said oneyear period, e.g., reconveyance, covered by Section 65 of Act No. 496 which, inter
alia, provides that "in all cases of registration procured by fraud, the owner may
pursue all his legal and equitable remedies against the parties to such fraud,
without prejudice, however, to the rights of any innocent holder for value of a
certificate of title." 37 Likewise, an action for damages is sanctioned in cases where
the property has been transferred to an innocent purchaser for value, which may be
filed within four years from discovery of the fraud. 38 Recourse may also be had
against the Assurance Fund. 39

Finally, prescription never lies against the State for the reversion of property which
is part of the public forest or of a forest reservation which was registered in favor of
any party. Then too, public land registered under the Land Registration Act may be
recovered by the State at any time. In Republic vs. Animas, 40 we ruled:
Public land fraudulently included in patents or certificates of title may be recovered
or reverted to the state in accordance with Section 101 of the Public Land Act.
Prescription does not lie against the state in such cases for the Statute of
Limitations does not run against the state. The right of reversion or reconveyance to
the state is not barred by prescription.
We therefore hold that since the land applied for by the spouses Ribaya was part of
the public forest and released only on 31 December 1930, 41 the land registration
court acquired no jurisdiction over the land, which was not yet alienable and
disposable. Hence, the State's action to annul the certificates of title issued
thereunder and for the reversion of the land is not barred by prescription.
Anent the second issue, we hold that the land registration court in LRC Case No. 52,
G.L.R.O. Record No. 26050 never acquired jurisdiction over the land covered by
either the original plan (Plan II-13961) or the amended plan (Plan II-13961-Amd.) for
lack of sufficient publication of the first and total want of publication of the second.
As found by both the trial court in Civil Case No. 6198 and the Court of Appeals, the
notice of the hearing of application of the spouses Ribaya for the registration of the
land covered by the original plan was published in the 17 March 1925 issue of the
Official Gazette. In short, there was only one publication thereof. Section 31 of Act
No. 496, the governing law then, required two publications. Hence, the decision of
18 September 1925 of the land registration court was void for want of the required
publications. The requirement of dual publication is one of the essential bases of the
jurisdiction of the registration court; 42 it is a jurisdictional requisite. 43 Land
registration is a proceeding in rem and jurisdiction in rem cannot be acquired unless
there be constructive seizure of the land through publication and service of notice.
44
Worse, the decision of 18 September 1925 was entirely based on an alleged original
survey plan. The fact remains, however, that in November of that year that original
plan was amended (Plan II-13961-Amd.) and the amended plan was not published at
all. There is no evidence that the court amended its decision to conform to the
amended plan, neither is there a showing that the parties even attempted
publication thereof. However, the decree that was subsequently issued was based
on the amended plan insofar as the four lots were concerned.
A decree of registration is required to recite the description of the land. 45 On the
basis of the decree, OCT No. 3947 was issued. It follows then that the land

registration court may have attended its decision to conform to the amended plan
for the four lots which ultimately found their way into the decree issued by the
General Land Registration Office, and finally, into OCT No. 3947. Whether it did so or
not and the General Land Registration Office merely adjusted the decree to conform
to the amended plan, such aims were fatally flawed due to the absence of
publication of the amended plan. As such, the land registration court acquired no
jurisdiction over the land embraced by the amended plan.
The Court of Appeals in its challenged resolution of 24 January 1994 and the private
respondents, however, maintain that the publication of the amended plan was
unnecessary under our pronouncements in Benin vs. Tuazon. 46 This case reiterates
our rulings in Philippine Manufacturing Co. vs. Imperial, 47 Juan and Chuongco vs.
Ortiz, 48 Bank of the Philippine Islands vs. Acuna, 49 Lichauco vs. Herederos de
Corpus, 50 and Director of Lands vs. Benitez, 51 that only where the original survey
plan is amended during the registration proceedings, by the addition of land not
previously included in the original plan, should publication be made in order to
confer jurisdiction on the court to order the registration of the area added after the
publication of the original plan. Conversely, if the amendment does not involve an
addition, but on the contrary, a reduction of the original area that was published, no
new publication is required.
Reliance on Benin and its predecessors is misplaced. In the first place, the
amendment of the original survey plan for the land applied for by the spouses
Ribaya was made after the land registration court rendered its decision. It follows
then that a re-opening of the case was indispensable; however, no such re-opening
appears to have been done therein. Second, as earlier shown, the land registration
court acquired no jurisdiction over the land covered by the original plan because of
insufficient publication in the Official Gazette. Third, it has not been sufficiently
shown that the four parcels of land covered by OCT No. 3947, which are based on
the amended plan, are but a small part of the same land covered by the original
survey plan. This conclusion is thoroughly discussed below.
In the 24 January 1994 resolution of the Court of Appeals, it found the original areas
covered by Plan II-13961 to be 25,542,603 square meters and the four parcels of
land embraced in the amended plan, Plan II-13961-Amd., to be in the aggregate of
10,975,022 square meters. Thus:
In the case at bar, in 1925, the spouses Ribaya sought for a judicial confirmation of
imperfect or incomplete title of the land described as follows:
Parcel of Land (plan II-13961) containing an area of 25,542,603 square meters, with
the buildings and improvements thereon, situated in the Barrio Magragondong,
Municipality of Ligao, Province of Albay, P.I. . . . (Emphasis supplied).

Said 25,542,603 square meter land was surveyed on July 9, 10, 12-16, 23, 24, 26
and 27, 1920 by Telesforo Untalan, a surveyor of the Bureau of Lands which survey
was approved by the Acting Director of Lands on January 3, 1922. (Exh. 6).
The notice of application and hearing of the land as aforedescribed, was published
in the March 17, 1925 issue of the Official Gazette (Exhs. J and J-1).
The land registration court issued a decision in favor of the spouses Ribaya on
September 18, 1925 but for a smaller parcel of land than the 25,542,603 square
meters are applied for. On November 23 and 30, 1925, said smaller parcel of land
was surveyed by Land Surveyor Wenceslao Manuel, and was approved by the
Director of Lands on February 26, 1926 as Plan II-13961-Amd. (Exh. H and series).
Plan II-13961-Amd. embraced 4 parcels of land in the aggregate area of 10,975,022
square meters separately described as follows:
1.
A parcel of land (Lot No. 1 Plan II-13961-Amd.), containing an area of
3,318,454 square meters, more or less;
2.
A parcel of land (Lot No. 2 Plan II-13961-Amd.), containing an area of
1,575,195 square meters, more or less;
3.
A parcel of land (Lot No. 3 Plan II-13961-Amd.), containing an area of
4,844,205 square meters, more or less;
4.
A parcel of land (Lot No. 4 Plan II-13961-Amd.), containing an area of
1,237,368 square meters, more or less. 52
This was also its finding in its earlier decision of 9 January 1991. 53
In their Comment of 30 May 1994, the private respondents do not, for obvious
reasons, dispute such finding and so they not only quoted it therein, 54 they also
explicitly assert that:
The undisputed facts are that the original plan of the land applied for which was
published in the Official Gazette contained an area of 25,542,603 square meters.
The land actually embraced in the decree of registration contained only 10,975,022
square meters. 55 (emphasis supplied).
In hectares, the 25,542,603 square meters means Two Thousand Five Hundred and
Fifty Four Hectares, two ares, and six hundred and three centares (2,554 has., 2
ares, and 603 centares); and the 10,975,022 square meters means one thousand
and ninety seven hectares, five ares, and twenty-two centares (1,097 has., 5 ares,
and 22 centares).

However, the trial court is somewhat confused as to the area of the land covered by
Plan II-13961, as well as that covered by the amended plan (Plan II-13961-Amd.).
Thus:
[A]nd on March 7, 1978 Land Investigator Selecio San Felipe wrote the Director of
Lands that the report of the ocular inspection and investigation conducted on May
14, 15 and 16, 1977 was true and correct, . . . that Plan II-13961-Amd., Sheet no. 1,
surveyed for Luis Ribaya, with an area of 489.3649 hectares, located at
Magragondong, Ligao, Albay, was surveyed on November 18-21, December 8-9,
1925 by Private Land Surveyor Wenceslao Manuel, and was approved by the
Director of Lands on February 26, 1926 (Exhibits G, G-1 and G-2 for plaintiff and
Exhibits GG, GG-1 and GG-2 for Intervenors); that Plan II-13961-Amd., Sheet no. 2,
surveyed for Luis Ribaya, with an area of 608.1373 hectares, located at
Magragondong, Ligao, Albay, was surveyed on November 23-30, 1925 by Private
Land Surveyor Wenceslao Manuel, and was approved by the Director of Lands on
February 26, 1926 (Exhibits H, H-1 and H-2 for plaintiff and Exhibits HH, HH-1 and
HH-2 for intervenors); . . . that Original Certificate of Title No. RO-10848 (3947)
covers 4 parcels of land, to wit: Lot No. 1, plan II-13961-Amd.), containing an area of
3,318.454 square meters more or less, Lot No. 2, plan II-13961-Amd.), containing an
area of 1,575.195 square meters more or less, Lot No. 3, plan II-13961-Amd.),
containing an area of 4,844.005 square meters more or less, and Lot No. 4, plan II13961-Amd.), containing an area of 1,237.368 square meters more or less, with a
total of 10,975.022 square meters more or less; . . . that plan II-13961 of property
as surveyed for Luis Ribaya, situated in the barrio of Magragondong, Municipality of
Ligao, province of Albay, containing an area of 25,542.603 square meters, was
surveyed on July 9, 10, 12-16, 23, 24, 26 and 27, 1920 in accordance with Section
45 of Act 2874 by Telesforo Untalan, a surveyor of the Bureau of Lands, and the said
plan was approved by the Acting Director of Lands on January 3, 1922 (Exhibits 6
and 6-A). . . . 56 (emphasis supplied)
Note that instead of a comma (,) before the last three digits in the areas of the four
lots covered by the amended plan, as well as the areas embraced in the original
plan, the trial court placed a period (.). The change from a comma to a period is of
vital significance. For, translated into hectares, the 25,542.603 square meters would
be only Two (2) hectares, five (5) ares, and five hundred and forty-two (542)
centares; and the aggregate of 10,975.022 square meters for the four lots
embraced in Plan II-13961-Amd. would be one (1) hectare and nine hundred
seventy-five (975) centares.
Indeed, the disagreement between the Court of Appeals and the trial court as to the
land area of the original survey plan (Plan II-13961), i.e., whether it was 25,542,603
square meters, (twenty-five million, five hundred and forty-two thousand and six
hundred three square meters) as found by the former, or 25,542.603 square meters

(twenty-five thousand, five hundred forty-two point six hundred and three square
meters) as found by the latter, only shows the unreliability of the original plan
sought to be established through Exhibits "6" and "6-A." The Court of Appeals itself
so found it to be in its decision of 9 January 1991 because these exhibits did not
show that the survey plan was signed by the surveyor. Thus:
Although the trial court said so (decision, p. 4) its basis, which is (original) plan II13961 (Exhs. 6, 6-A), did not indubitably establish the same. In the first place, said
original plan (plan II-13961) does not bear the signature of the surveyor thereof,
thereof casting doubt on its genuiness and due execution. . . . 57 (emphasis
supplied).
Such doubt gains strength if we consider that if indeed the area embraced therein
was that found by the Court of Appeals, i.e., 25,542,603 square meters - with a
comma before the last three digits - it would have been physically impossible to
finish the survey thereof in only eleven days (9, 10, 12-16, 23, 24, 26, and 27 July
1920). Plainly, the present-day sophisticated survey instruments were not then
available. Furthermore, the trial court indicated in its findings of fact that in addition
to the four lots covered by OCT No. 3947, there were other large tracts covered by
the amended survey plan (Plan II-13961-Amd.), viz.:
[T]hat Plan II-13961-Amd., Sheet no. 1, surveyed for Luis Ribaya, with an area of
489.3649 hectares, located at Magragondong, Ligao, Albay, . . . (Exhibits G, G-1 and
G-2 for plaintiff and Exhibits GG, GG-1 and GG-2 for Intervenors); that Plan II-13961
Amd., Sheet no. 2, surveyed for Luis Ribaya, with an area of 608.1373 hectares,
located at Magragondong, Ligao, Albay, . . . (Exhibits H, H-1 and H-2 for plaintiff and
Exhibits HH, HH-1 and HH-2 for intervenors); 58 (emphasis supplied)
The disagreement between the trial court and the Court of Appeals cannot be
definitely resolved because no reliable copy of the original Plan II-13961 was
presented. Exhibits "6" and "6-A" are a machine copy of the blueprint of the said
Plan, which is not the best evidence under Section 3, Rule 130 of the Rules of Court.
They are, at most, secondary evidence, which are inadmissible for failure of the
offeror to prove any of the exceptions provided therein and to establish the
conditions for their admissibility. Even if they are admitted, they have no probative
value.
Clearly then, there is absence of factual basis to conclude that the four parcels of
land included in OCT No. 3947 are but a part of the land covered by the original plan
(Plan II-13961).
WHEREFORE, the petition is GRANTED. The challenged resolution of 24 January
1994 of the respondent Court of Appeals in CA-G.R. CV No. 17351 is SET ASIDE,
while its decision therein of 9 January 1991 affirming in toto that of Branch 7 of the

Regional Trial Court of Legaspi City of 11 November 1987 in Civil Case No. 6198 is
REINSTATED and AFFIRMED.
Costs against the private respondents.
SO ORDERED.
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.
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 22 centares; 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 in the
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 of 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 the 23rd 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 in question, 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 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 of the 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 all persons, 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 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 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 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 fraud to 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 on Australian 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 characteristics of actual as
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 our statutes, 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 means of 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 his 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 been fully 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.
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 land whose 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.)
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 in
rem. (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.

G.R. No. L-46439 April 24, 1984

ANDREA M. MOSCOSO, petitioner,
vs.
COURT OF APPEALS and MAXIMINA L. MORON, respondents.
Jesus B. Velasco for petitioner.
Custodio P. Caete for private respondent.

GUERRERO, J.:+.wph!1
Petition for review on certiorari of the decision of the defunct Court of Appeals 1
(now the Intermediate Appellate Court) in CAGR No. 52187-B entitled "Application
for Land Registration Under Act No. 496-Andrea M. Moscoso, applicant-appellant
versus Maximina L. Moron, et al., oppositors-appellees" which affirmed the
judgment of the Court of First Instance of Tacloban City in Land Registration Case
No. N 134.
Sometime on March 22, 1966, petitioner applied for land registration of a 1,147
square meters residential lot situated in the poblacion of the municipality of Palo,
province of Leyte, bounded and described in Survey Plan Psu-54699 of the then
General Land Registration Office as verified and approved under date June 16, 1927.
Her application substantially stated that petitioner is the owner in fee simple of the
land and improvements thereon as her acquisition by inheritance from her father,
the late Pascual Monge y Vigera who died on June 9, 1950, and that the same parcel
of land is her share in a partial partition of estate she and her brothers and sisters
executed on May 22, 1964 at Palo, Leyte (Exhibit "K"); that she and her
predecessors in interest have been in continuous, public, actual and adverse
possession of the land applied for since time immemorial until the present; that at
the last assessment for taxation, said lot was assessed in her name under Tax
Declaration No. 28260 dated May 24, 1964 (Exhibit H and that the taxes are fully
paid up to the current year; that to the best of her knowledge and belief, there is no
incumbrance or any kind whatsoever affecting said land nor any other person
having interest therein, legal or equitable, in posession, remainder, reversion or
expectancy; and that the land is now being rented by lessees of the applicant,
namely, Angel Encenares, Olanda Bribe, Timoteo Noblejas, Felisa Adre, Celestina
Solana, Baltazar Collado, all of Palo, Leyte.

After due publication of the Notice of Initial Hearing of the petition in the Official
Gazette, Vol. 62, Nos. 46 and 47, issues dated November 14 and 21, 1966 (Exhibit
"C"), only the Highway District Engineer of Leyte as public oppositors, and
Concordia Lanuncia, Flaviano L. Marchadesch, Jr., and herein private respondent
Maximina L. Moron as private oppositors appeared for the initial hearing before the
trial court.
The trial court summarily dismissed the opposition of the Highway District Engineer
who merely sought to secure a reservation for a road right-of-way in favor of the
national government in view of petitioner's willingness to annotate the same on the
certificate of title which might issue. The opposition of the private parties thus
remained.
The written opposition substantially allege that they, including one Mrs. Apolonia L.
Marchadesch who died in 1963 and survived by her only issue, oppositor Flaviano L.
Marchadesch, are the illegitimate children of the late Zenona Lanuncia and the
recognized natural children of the late Pascual Monge who died in 1950 and father
of applicant Andrea M. Moscoso; that the late Zenona Lanuncia, from the age of
three, became a protegee of the late spouses, Saturnino Monge and Isidra Vigera
Monge, letigimate parents of Pascual Monge and Juan Monge, now deceased; that
Isidra Vigera Monge was the original owner of the parcel of land applied for; that
Isidra Monge, long before she died on April 15, 1915, and after Pascual Monge
legally got married to the mother of the applicant and brother and sisters, and in
order to provide a home and subsistence to the oppositors, their sister and mother,
all of which are girls, effected a verbal partition of her lands with her sons, Pascual,
Juan and with the herein oppositor, who were already at their teens, which, by virtue
of said partition, the land herein applied for registration passed to the hands of the
oppositors for their home; that the oppositors have no knowledge that this parcel of
land forms part of the inheritance of the applicant and of a partial partition among
the applicant and her brother and sisters; that the oppositors have, if not legal, an
equitable title to the land as judged from the circumstances surrounding the
oppositors' case; they deny the allegation that applicant and her predecessors in
interest have been in continuous, public, actual and adverse possession of the land
from time immemorial, the truth being that the oppositors exercised exclusive
dominion over the land and are in actual and continuous possession over it from
time immemorial to the present and that should the verbal partition effected before
the death of Isidra Vigera Monge in 1915 being insufficient to pass title to the
oppositor, then by virtue of acquisitive prescription caused by the open, continuous,
uninterrupted, peaceful and adverse possession in favor of oppositors, they are
entitled to the land invoking the benefits of Chapter VIII of Commonwealth Act No.
141. 2
Upon the termination of the hearing on the merits, the Hon. Jesus N. Borromeo, then
Presiding Judge of the CFI, Tacloban City, rendered his decision dated December 22,

1971, directing that the title over the land should not be registered exclusively in
the name of the applicant since "it has been overwhelmingly established by them
(the private oppositors) that they and their sister Apolonia, who died in 1963, are
the children of Zenona Lanuncia and Pascual Monge resulting from the relations
between the two prior to the marriage of the latter with Guadalupe Oliver, mother of
herein petitioner and her brothers, Elpidio, Salvador, Remedios, Ruperto, and
Abelardo (deceased), all surnamed Monge. 3 Hence, the judgment decreed: t.
hqw
IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered ordering the
registration of title over the parcel of land situated in the poblacion of the
municipality of Palo, Province of Leyte, as described in the Plan Psu-54699, Exhibit
"E", and the technical description Exhibit "F", in the name of the co-ownership of:
(1) Andrea M. Moscoso, Filipino citizen, of legal age, married to Salvador Moscoso,
with postal address at Bupsong, Antique for three-fourth (3/4) share; (2) Concordia
Lanuncia, Filipino citizen, of legal age, single, and a resident of Palo, Leyte, for onetwelfth (1/12) share; (3) Maximina L. Moron, Filipino citizen, of legal age, married,
and a resident of Palo, Leyte, for (1/12) share; and, (4) Flaviano L. Marchadesch, Jr.,
son of the late Apolonia L. Marchadesch, for one-twelfth (1/12) share, subject to a
reservation of a road right-of-way in favor of the Government of the Republic of the
Philippines.
After this judgment shall have become final, let the corresponding decree of
registration be issued.
SO ORDERED. 4
The trial court ruled that the verbal donation made by Isidra Vigera Vda, de Monge
in favor of Zenona Lanuncia and the latter's daughters by Pascual Monge because
they are of weaker sex, was ineffectual to transmit title of ownership over the land
in question and that their adverse claim of ownership even under extraordinary
prescription of over thirty years could not favor them because such claim is
disputable due to their failure to declare the property for tax purposes in their name
after the death of Isidra Monge. The trial court, however, gave significant weight to
the carbon copy of a power of attorney executed and signed by the late Pascual
Monge on February 11, 1945 (Exhibit "2", "2-A" to "2-C" in favor of Maximina L.
Moron, wherein he stated that Maximins is his daughter and appointed her as his
Attorney-in-Fact to transact with the United States Armed Forces in the Philippines in
his behalf for the collection of rentals and other war damage claims due and
payable to him. The court ruled that the power of attorney was an authentic writing
wherein Maximina Lanuncia was voluntarily recognized as the daughter of Pascual
Monge. As found by the trial court thus, t.hqw

Precisely, it would appear that, in his power of attorney executed on February 11,
1945 in favor of Maximina L. Moron, Exhibit "2", Pascual Monge stated that
Maximina is his daughter. The contention of petitioner that said power of attorney
was fraudulently altered in order to inse therein the words "my daughter . . ." does
not seem to be well-taken because, from an examination of the document, the
Court does not notice concrete indications of alteration having been made in order
to suit the ends of the herein oppositors.
Thus, the Court is of the view that the late Pascual Monge, who had no impediment
to marry Zenona Lanuncia when Maximina was conceived (Art. 119, Old Civil Code;
Art, 269, New Civil Code) had voluntarily recognized Maximina Lanuncia Moron as
his child when in his power of attorney executed on February 11, 1945, he
mentioned her as his daughter. ... 5
Petitioner assailed the Court's decision in his motion for reconsideration, contending
that the disposition of the estate should be governed by the Old Civil Code (Spanish
Civil Code of 1889) since he died on June 9, 1950 while the New Civil Code took
effect only on August, 1950; that assuming that the New Civil Code applies in the
case at bar the power of attorney (Exhibit "2") is not an authentic document to
support voluntary recognition because the words "my daughter" reveals a clear sign
of erasure and is a product of falsification as presented in the rebuttal testimony of
her brother Elpidio Monge and that said document is not even a public document
because it was merely acknowledged by the Municipal Mayor of Palo, Leyte who had
no authority to authenticate writings as public documents which could be done only
by a notary public.
Acting upon the aforesaid motion for reconsideration, the Court modified its decision
in the Order dated May 25, 1972 with the following dispositive portion: t.hqw
IN VIEW OF THE FOREGOING, the judgment of December 22, 1971 is hereby
amended in the sense that the Court hereby orders the registration of title over the
parcel of land situated in the poblacion of the municipality of Palo, Province of Leyte,
as described in the Plan Psu-54699, Exhibit "E", and the technical description Exhibit
"F" in the name of the co- ownership of (1) Andrea M. Moscoso, Filipino citizen, of
legal age, married to Salvador Moscoso, with postal address at Bugasong, Antique,
for 13/14 share; and (2) Maximina L. Moron for for share, subject to the reservation
of a road right-of-way in favor of the government of the Philippines.
After this judgment shall have become final, let the corresponding decree of
registration be issued.
SO ORDERED.1wph1.t

Not satisfied with the amended judgment, petitioner elevated the case to the
defunct Court of Appeals which affirmed the judgment of the lower court. Hence,
the instant petition before Us.
Petitioner assigns practically the same errors allegedly committed by the trial court
which were presented before the respondent Court of Appeals, to wit: t.hqw
I.
The lower court erred in holding that Pascual Monge voluntarily recognized
Maximina Lanuncia Moron as his natural child by virtue of the power of attorney
(Exhibit "2") executed by him in favor of the latter.
II.
The lower court erred in holding that said power of attorney (Exhibit "2") is
not materially altered when in fact it was erased to suit the ends of the oppositors.
III.
The lower court erred in appreciating said power of attorney (Exhibit "2") as a
public document.
IV.
The lower court erred in making judicial pronouncements that Maximina
Lanuncia Moron as the acknowledged natural child of Pascual Monge conferring
upon her legal right to inherit from the whole estate of the late Pascual Monge who
died on June 9, 1950 when her claim over the land subject of this land registration
proceeding is that it was given to their mother Zenona Lanuncia by Isidra Vigera
and for their long continuous possession acquired the same by acquisitive
prescription.
V.
The lower court erred in making judicial pronouncement of recognition
without a formal complaint, hearing on the merit and neither has Maximina
Lanuncia Moron the status of a continuous possession of a natural child.
VI.
The lower court erred in ordering the registration of the land applied for
registration in favor of the applicant, Andrea M. Moscoso, only 13/14 share and to
oppositor Maximina Lanuncia Moron 1/14 share in co-ownership.
The principal or decisive issue to be resolved herein is whether or not oppositorappellee Maximina L. Moron had been acknowledged by her illegitimate father,
Pascual Monge (now deceased) in view of which, as held by the trial court and
affirmed by the respondent appellate court, being an acknowledged natural
daughter, she would be entitled to 1/14 share in the land in question as her
inheritance. In resolving this issue, We are guided and must comply with the wellestablished rule that findings of fact of the Court of Appeals may not be reviewed by
the Supreme Court in an appeal by certiorari where such findings are ably
supported by substantial evidence on record, the same being binding, final and
conclusive. 6

Hence, the finding of the appellate court that the power of attorney, Exhibit "2", was
not materially altered before the same was presented to the court below; that it is
"more likely that a mistake was committed in the preparation thereof; that the
person who typed the document had to make a slight erasure and correction in
typing correctly the word "daughter" and that t e power of attorney, as corrected,
was then given to Pascual Monge and Maximina L. Moron for their signature. As
such, the correction cannot be considered a deliberate alteration or falsification as
depicted by appellant", is a finding of fact which cannot be disturbed. We agree with
the court that said power of attorney is an authentic writing wherein the father,
Pascual Monge, voluntarily recognized Maximina L. Moron as his daughter, and since
Pascual Monge had the legal capacity to contract marriage at the time of the
conception, Maximina is a natural child, entitled to share in the inheritance of the
property in question.
It may be so as argued by the petitioner that where the findings of the Court of
Appeals are contrary to those of the trial court, a minute scrutiny by the Supreme
Court is in order and resort to the duly proven evidence becomes necessary, citing
Gonlalez vs. CA, G.R. No. 37453, May 25, 1979, 90 SCRA 183 and cases cited
therein. We have in fact noted that the trial court found no alteration in the power of
attorney, Exhibit "2", when it ruled that "from an examination of the document, the
court does not notice concrete indication of alteration having been made therein in
order to suit the ends of the herein oppositor." (Decision, pp. 21-22, Record on
Appeal), whereas respondent appellate court held that "(w)e find it more likely that
a mistake was committed in the preparation of the power of attorney that the
person who typed the document had to make a slight erasure and correction in
typing correctly the word "daughter" and that the power of attorney, as corrected
was then given to Pascual Monge and Maximina L. Moron for their signature. As
such, correction cannot be considered a deliberate falsification, as depicted by
appellant. "(CA Decision, p. 8)
We have indeed scrutinized minutely the documentary evidence in question, Exhibit
"2", as We have ordered the elevation of the original records before Us. We affirm
the holding of the appellate court that "What clearly appears to be the case, upon
clear examination, is that there is no erasure of the portion whereon "my" was
typed. If, really, such 14-letter word was erased and in lieu thereof the word
"daughter" was typed or superimposed, the erasure would be very noticeable and
visible as the word "daughter", which is shorter by six letters, cannot fully cover the
space occupied by 1, administratrix". This could be easily seen by the naked eye
when the document, as in the instant case, was executed more than 25 years ago
and has turned yellow with age. But this is not the case." There is no inconsistency
between the two findings of the trial and appellate courts. Both support the
authenticity of the document in ruling that there was no deliberate falsification,
which We uphold.

Petitioner's contention that the Court of First Instance, acting as a land registration
court, has no jurisdiction to pass upon the issue whether the oppositor is the
acknowledged natural child of Pascual Monge, is untenable. We have a number of
cases that answer petitioner's position. Thus, in the case of Florentino vs.
Encarnacion, G.R. No. L-27697, Sept. 30,1977, 79 SCRA 193, 204-205, We ruled: t.
hqw
Petitioner-appellants' third assignment of error is not well taken. Firstly, the
otherwise rigid rule that the jurisdiction of the Land Registration Court, being special
and limited in character and proceedings thereon summary in nature, does not
extend to cases involving issues properly litigable in other independent suits or
ordinary civil actions, has time and again been relaxed in special and exceptional
circumstances, (See Government of P.I. vs. Serafica, 61 Phil. 93 (1934); Caoibes vs.
Sison, 102 Phil. 19 (1957); Luna vs. Santos, 102 Phil. 588 (1957); Cruz vs. Tan, 93
Phil. 348 (1953); Gurbax Singh Pabla and Co. vs. Reyes, 92 Phil. 117 (1952)). From
these cases, it may be gleaned and gathered that the peculiarity of the exceptions
is based not alone on the fact that the Land Registration Courts are likewise the
same Courts of First Instance, but also the following premises: (1) Mutual consent of
the parties or their acquiescence in submitting the aforesaid issues for the
determination by the court in the registration proceedings; (2) Full opportunity given
to the parties in the presentation of their respective sides of the issues and of the
evidence in support thereto; (3) Consideration by the court that the evidence
already of record is sufficient and adequate for rendering a decision upon these
issues. (Aglipay vs. De Los Reyes, L-12776, March 23, 1960) ...
Upon a scrutiny of the proceedings in the trial court, We find that petitioner filed a
Motion for New Trial and/or Reconsideration wherein she assailed the ruling of the
trial court that based upon Exhibit "2", the power of attorney, the oppositor was an
acknowledged natural child of the late Pascual Monge and entitled to a portion of
the land subject of the land registration proceedings. She claimed that the
document was not authentic and not a public document. In effect, petitioner
acquiesced in submitting the issue as to the status of the oppositor as an
acknowledged natural child entitled to successional rights and had the full
opportunity to dispute the authenticity of the document in question as in fact,
applicant's brother, Elpidio Monge, gave rebuttal testimony to support petitioner's
theory that the document was a product of a falsification, which the trial court did
not believe. Moreover, the court considered and deemed the evidence already of
record sufficient and adequate for rendering a decision upon the issue thus raised.
In doing so, We find no abuse of discretion committed by the trial court.
In addition, considerations of speedy justice and avoidance of multiplicity of suits
impel Us to hold and rule that under the facts of the case at bar, the trial court,
acting as a land registration court, may adjudicate the land sought to be registered
to either or both of the applicant and oppositor, in whole or in part, based on

evidence submitted to the court showing that the party has proper title for
registration. (Section 37, Act 496.)
In any event, as the Supreme Court said in Nicanor T. Santos vs. Rosa Ganayo, L31854, Sept. 9. 1972, 116 SCRA 431, "Whether a particular matter should be
resolved by the Court of First Instance in the exercise of its general jurisdiction or of
its limited jurisdiction as a special court (Probate, Land Registration, etc.) is in
reality not a jurisdictional question. It is in essence a procedural question involving a
mode of p- practice which may be waived." In meeting the issue raised by the
oppositor as to her status as an acknowledged natural child as a result of her
voluntary recognition appearing in Exhibit "2", the oppositor (now the petitioner
herein) had waived the procedural question and she may not be allowed to raise the
same in the present petition.
The proceedings for the registration of title to land under the Torrens system is an
action in rem not in personam hence, personal notice to all claimants of the res is
not necessary to give the court jurisdiction to deal with and dispose of the res, and
neither may lack of such personal notice vitiate or invalidate the decree or title
issued in a registration proceeding, for the State, as sovereign over the land
situated within it, may provide for the adjudication of title in a proceeding in rem or
in the nature of a proceeding in rem which shall be binding upon all persons, known
or unknown. (City of Manila vs. Lack et al., 19 Phil. 324, 337; Roxas vs. Enriquez, 29
Phil. 31; Director of Lands vs. Roman Catholic Archbishop of Manila, 41 Phil. 120;
Aguilar vs. Caogdan, 105 Phil. 661).
Under the above doctrine, petitioner's assailment that "(t)he judicial pronouncement
(referring to the holding that the oppositor Maximins L. Moron is the acknowledged
natural child of Pascual Monge) which will become conclusive and far-reaching and
in effect binds the other heirs of Pascual Monge consisting of the brothers and
sisters as well as the nephews and nieces of the petitioner who are not parties in
this prayer proceedings " is untenable.
Earlier, We have affirmed the ruling of the appellate court that Exhibit "2" which is
the power of attorney is an authentic writing wherein the father, Pascual Monge,
voluntarily recognized Maximina L. Moron as his daughter, applying the provisions
of Article 278, New Civil Code, which provides that recognition shall be made in the
record of birth, a will, a statement before a court of record, or in any authentic
writing. We apply Article 278, New Civil Code retroactively to the case of Maximina
L. Moron although she was born before the effectivity of the New Civil Code in view
of the provisions of Article 2260 of the New Civil Code, which states: t.hqw
Art. 2260.
The voluntary recognition of a natural child shall take place according
to this Code, even if the child was born before the effectivity of this body of laws.

The reason for giving retroactive effect to Article 2260 is indicated in the Report of
the Code Commission, page 169, thus: "The liberalized mode of recognition is in
harmony with the aim of the proposed code to do justice to illegitimate children.
Hence, its retroactive effect." (See Civil Code Annotated by Padilla, Vol. VII, 1975
Ed., p. 709).
In Caridad Cruz Vda. de Sy-Quia vs. Court of Appeals and Jose Pedro Reynaldo SyQuia, G.R. No. 62283, Nov. 25, 1983, the Supreme Court squarely held: t.hqw
... Article 2260 of (the Civil Code of the Philippines) provides that 'the voluntary
recognition of a natural child shall take place according to this Code, even if the
child was born before the effectivity of this body of laws' or before August 30, 1950.
Hence, Article 278 may be given retroactive effect (p. 169, Report of the Code
Commission, 7 Padilla, Civil Code, 1975 Ed., p. 709).
Under the Spanish Civil Code of 1889, an acknowledged natural child is entitled
to ... "3. To receive the hereditary portion determined by this Code." (Article 134).
This hereditary portion is fixed under Article 840 which states: t.hqw
Art. 840. When the testator leaves legitimate children or descendants, and also
natural children, legally acknowledged, each of the latter shall be entitled to onehalf of the portion pertaining to each of the legitimate children who have not
received any betterment, provided that it may be included within the freely
disposable portion, from which it must be taken after the burial and funeral
expenses have been paid.
The same share which is one-half of the legitime of each of the legitimate children
or descendants is given to each of the acknowledged natural children under Article
895 of the New Civil Code, which reads: t.hqw
Art. 895. The legitime of each of the acknowledged natural children and each of the
natural children by legal fiction shall consist of one-half of the legitime of each of
the legitimate children or descendants.
The final adjudication made by the trial court in its Order dated May 25, 1975
(affirmed by the Court of Appeals) directed the registration of the land in question in
the name of the co-ownership of petitioner Andrea M. Moscoso for 13/14 share and
Maximina L. Moron, the oppositor, for 1/14 share in view of the court's realization
that no documentary evidence was presented to prove that the other oppositors,
Concordia Lanuncia and Apolonia Lanuncia (decease) and mother of oppositor
Flaviano Marchadesch, Jr. were acknowledged by Pascual Monge, In the interest of
justice, We must modify the above sharing in order to give the legal share of the
oppositor as an acknowledged natural child.

Since there are six (6) legitimate children including the petitioner Andrea M.
Moscoso who had previously acquired the shares of her five (5) co-heirs, and one (1)
acknowledged natural child, the oppositor Maximina L. Moron, herein private
respondent who is entitled to one-half (1/2) the share of each of the legitimate
children (Article 840, Spanish Civil Code; Article 895, New Civil Code), the proper
sharing should be 12/13 to Andrea M. Moscoso and 1/13 to Maximina L. Moron.
WHEREFORE, IN VIEW OF THE FOREGOING, the decision appealed from is hereby
MODIFIED in the sense that the adjudication of the land subject of the land
registration proceedings shall be in the co-ownership of petitioner-applicant Andrea
M. Moscoso for 12/13 share and to oppositor-private respondent Maximina L. Moron
for 1/13 share. In all other aspects, the decision appealed from is hereby AFFIRMED.
Costs against petitioner.
SO ORDERED.1wph1.t
4. Two systems of registration
a. Cases
ECILIA AMODIA VDA. DE MELENCION, VENERANDA AMODIA, FELIPE
AMODIA, EUTIQUIO AMODIA and GO KIM CHUAN,
Petitioners,
- versus HONORABLE COURT OF APPEALS and
AZNAR BROTHERS REALTY COMPANY,
Respondents.
G.R. No. 148846
Promulgated:
September 25, 2007
DECISION
NACHURA, J.:

Before this Court is a Petition for Review on Certiorari[1] under Rule 45 of the
Rules of Civil Procedure seeking the reversal of the Court of Appeals (CA)
Decision[2] dated March 30, 2001 and praying that the Decision[3] of the Regional
Trial Court (RTC) of Lapu-Lapu City, dated February 18, 1993, be upheld.
The Facts

The subject property is a 30,351 square meter parcel of land (subject

property) particularly denominated as Lot No. 3368, located at Suba-basbas,
Marigondon, Lapu-Lapu City, Cebu, and part of a total area of 30,777 square
meters covered by Transfer Certificate of Title (TCT) No. 20626[4] (entire property)
in the name of the late petitioner Go Kim Chuan (Go Kim Chuan).[5]
The entire property was originally owned by Esteban Bonghanoy[6] who had
only one child, Juana Bonghanoy-Amodia,[7] mother of the late Leoncia Amodia and
petitioners Cecilia Amodia Vda. de Melencion, Veneranda Amodia, Felipe Amodia,
and Eutiquio Amodia[8] (the Amodias). The entire property was brought under the
operation of the Torrens System.[9] However, the title thereto was lost during the
Second World War.
On July 10, 1964, the Amodias allegedly executed an Extra-Judicial Partition of
Real Estate with Deed of Absolute Sale[10] whereby they extra-judicially settled the
estate of Esteban Bonghanoy and conveyed the subject property to respondent
Aznar Brothers Realty Company (AZNAR) for a consideration of P10,200.00. On
August 10, 1964, the said Extra-Judicial Partition of Real Estate with Deed of
Absolute Sale was registered under Act 3344[11] as there was no title on file at
the Register of Deeds of Lapu-Lapu
City (Register of Deeds). Thereafter, AZNAR made some improvements and
constructed a beach house thereon.
On February 18, 1989, petitioners Cecilia Amodia Vda. de Melencion,
Veneranda Amodia, Felipe Amodia and Eutiquio Amodia[12] (petitioners Amodias)
executed a Deed of Extra-Judicial Settlement with Absolute Sale,[13] conveying the
subject property in favor of Go Kim Chuan for and in consideration of P70,000.00.
The lost title covering the subject property was reconstituted pursuant to Republic
Act (RA) No. 26.[14] A reconstituted title particularly designated as Original
Certificate of Title (OCT) No. RO-2899 was issued in the name of Esteban
Bonghanoy[15] and, subsequently, a derivative title (TCT No. 20626) was issued in
the name of Go Kim Chuan on December 1, 1989. Thereafter, Go Kim Chuan
exercised control and dominion over the subject property in an adverse and
continuous manner and in the concept of an owner.
On February 14, 1990, AZNAR wrote a letter[16] to petitioners Amodias asking
the latter to withdraw and/or nullify the sale entered into between them and Go Kim
Chuan. On the same date, a Notice of Adverse Claim[17] was annotated by AZNAR
on TCT No. 20626. Because petitioners did not heed AZNAR's demand, on April 25,
1990, AZNAR filed a case against petitioners Amodias and Go Kim Chuan for
Annulment of Sale and Cancellation of TCT No. 20626[18] alleging that the sale to
Go Kim Chuan was an invalid second sale of the subject property which had earlier
been sold to it. Petitioners Amodias denied that they executed the Extra-Judicial

Partition of Real Estate with Deed of Absolute Sale in favor of AZNAR, claiming that
their purported signatures thereon were forged.[19] Trial on the merits ensued.
The RTC's Decision

On February 18, 1993, the RTC dismissed AZNAR's complaint and declared Go
Kim Chuan as the real owner of the subject property. The RTC ratiocinated that the
signatures of the Amodias in the Extra-Judicial Partition of Real Estate with Deed of
Absolute Sale executed in favor of AZNAR were found by the document examiner of
the Philippine Constabulary (PC) Crime Laboratory to be forged, thus, the said deed
did not convey anything in favor of AZNAR. Moreover, the subject property had been
brought under the Land Registration Act; hence, all transactions involving the same
should have complied with the said law. Finally, the RTC held that AZNAR failed to
show that Go Kim Chuan acquired the subject property in bad faith.
Aggrieved, AZNAR appealed the RTC Decision to the CA.[20]
The CA's Decision
On March 30, 2001, the CA rendered a Decision holding that the Extra-Judicial
Partition of Real Estate with Deed of Absolute Sale executed by the Amodias in favor
of AZNAR was registered ahead of the Deed of Extra-Judicial Settlement with
Absolute Sale in favor of Go Kim Chuan, thus, pursuant to Article 1544 of the New
Civil Code, the former deed should be given preference over the latter; that
AZNAR's adverse claim was annotated earlier than the execution of the Deed of
Extra-Judicial Settlement with Absolute Sale in favor of Go Kim Chuan; hence, the
latter should have respected said adverse claim and should have made inquiries as
to possible defects that may exist in the title over the subject property; and that in
the absence of a final determination by a court of proper jurisdiction on the alleged
forged signatures of the Amodias in the Extra-Judicial Partition of Real Estate with
Deed of Absolute Sale, the finding of the document examiner was insufficient for the
RTC to rule in favor of the petitioners.
The CA disposed of the case in this wise:
WHEREFORE, premises considered, the assailed decision dated February 18, 1993 of
the Regional Trial Court of Lapu-Lapu City, Branch 27, in Civil Case No. 2254-L is
hereby REVERSED and SET ASIDE and a new one is hereby entered as follows:
(1) Declaring plaintiff-appellant Aznar Brothers Realty Company as the real owner
of the land in question;

(2)
Declaring both the Deed of Extra-judicial Settlement with Absolute Sale dated
February 1, 1989 executed by Felipe Amodia, Cecilia Amodia, Veneranda A. Ibag
and Eustaquio Amodia in favor of Go Kim Chuan and the Transfer Certificate of
Title No. 20626 in the name of Go Kim Chuan as NULL AND VOID;
(3)
Ordering Go Kim Chuan to deliver to the aforesaid plaintiff-appellant the
possession of the land in question and to execute a registrable deed of conveyance
of the subject property to the said plaintiff-appellant.
No costs.
SO ORDERED.[21]
Petitioners filed a Motion for Reconsideration[22] which the CA denied in its
Resolution[23] dated June 5, 2001.
Hence, this Petition based on the following grounds:
I
Lot 3368 was already a registered land under Act 496, thus, the registration by
respondent of the Deed of Sale in 1964 under Act 3344 produces no legal effect
whatsoever;

II
Even assuming arguendo that the lot in question was duly registered under Act
3344 as an unregistered land, it is without prejudice to better rights and the
provision of Article 1544 of the New Civil Code would be inapplicable;
III
The Honorable Court of Appeals erred in holding that an adverse claim was already
existing at the time the subject land was sold to petitioner Go Kim Chuan; on the
contrary, the latter had purchased the said land in good faith and for value, without
notice of any fact that would reasonably impel a closer inquiry as to the possibility
of a defect in the vendor's title; and

IV
The Court of Appeals has misapplied the case of Heirs of Severa Gregorio v. CA, 300
SCRA 565, cited in support of its ruling that the court a quo committed error in

appreciating the testimony of an expert witness as to the forgery of the first Deed of
Sale.[24]

In its Comment[25] dated September 18, 2001, AZNAR argued, among

others, that the Petition is dismissible because the Verification and Certification of
Non-forum Shopping were not signed by all the petitioners, invoking this Court's
Decision in the case of Loquias v. Office of the Ombudsman,[26] and that the
same were signed only by one April Socorro Go, daughter of the late Go Kim Chuan,
who did not even appear to be authorized to file the instant case in behalf of the
other petitioners.
In their Reply[27] dated October 22, 2001, petitioners contended that April
Socorro Go is one of the legitimate children and an heir of the late Go Kim Chuan
and, as such, she has personal knowledge of the truth of the facts alleged in the
Petition. Petitioners submitted that they substantially complied with the Rules of
Court by attaching the required Verification and Certification of Non-Forum
Shopping and since the same are required simply to facilitate and promote the
orderly administration of justice, compliance therewith should not be imposed with
absolute literalness.
On December 19, 2001, petitioners, through counsel, filed a Motion[28] for
Leave to Admit Amended Petition[29] for Review on Certiorari (Amended Petition).
Petitioners manifested that they were seeking to correct a defect in the designation
of parties and prayed that the Heirs of Go Kim Chuan, namely, Estrella S. Go, Sonia
Beth Go-Reynes, Daryl Go, and April Socorro Go be impleaded as petitioners instead
of the earlier designated petitioners, Cecilia Amodia Vda. de Melencion, Veneranda
Amodia, Felipe Amodia, Eutiquio Amodia, and Go Kim Chuan. Counsel for petitioners
admitted that he inadvertently included the petitioners Amodias in the initial
Petition for Review on Certiorari (Original Petition), as they were parties before the
RTC and CA. The counsel also manifested that he was only representing the Heirs of
Go Kim Chuan in this case. Lastly, he claimed that other than the substitution of the
original petitioners, both the Original Petition and Amended Petition uniformly raised
the same issues and should be given due course in the greater interest of justice
and that the instant Motion was not interposed for delay.
Per directive of the Court,[30] AZNAR filed its Comment[31] on the said
motion wherein AZNAR manifested that it had no serious objection to the admission
of the Amended Petition if the same was intended merely to implead the Heirs of Go
Kim Chuan as petitioners. However, AZNAR interposed strong opposition to the
Amended Petition's admission since the names of the petitioners Amodias were
deleted without their written consent.

In their Reply,[32] the Heirs of Go Kim Chuan, through counsel, claimed that
petitioners Amodias were excluded from the Amended Petition because they can no
longer be located despite diligent efforts exerted by counsel. The counsel claims
that after the rendition of the assailed CA Decision, he sent several letters to
petitioners Amodias but they did not reply; hence, the Heirs of Go Kim Chuan, left
with no choice, filed the instant case before this Court on their own.
The Court issued a Resolution[33] dated September 16, 2002 giving due
course to the Petition and requiring the parties to submit their respective
Memoranda.
In their Memorandum,[34] petitioners Heirs of Go Kim Chuan reiterate the
same issues raised in the Original Petition and the Amended Petition. They argue
that Act 3344 only refers to transactions affecting lands or interests therein not
previously registered under the Spanish Mortgage Law or under the Torrens system;
that if AZNAR could not have registered the sale in 1964 under Act 496 because the
title over the subject property was lost, AZNAR should have availed itself of the
remedy of reconstitution; that registration under Act 3344 is without legal effect and
could not operate as constructive notice to petitioners and third persons, hence,
may not be used as basis for the application of Art. 1544 of the New Civil Code; that
the Notice of Adverse Claim of AZNAR was annotated on TCT No. 20626 only on
February 14, 1990 after the execution of the Deed of Extra-Judicial Settlement with
Absolute Sale in favor of Go Kim Chuan on February 18, 1989, hence, the CA erred
when it held that Go Kim Chuan was not a buyer in good faith for supposedly having
knowledge of such adverse claim; and that the doctrine laid down in Heirs of Severa
Gregorio v. CA[35] is inapplicable since it referred to a case wherein the original
copy of the document under review was not produced in evidence while in the
instant case, the original copy of the Extra-Judicial Partition of Real Estate with Deed
of Absolute Sale executed by the Amodias in favor of AZNAR was presented before
the trial court judge.
On the other hand, in its Memorandum,[36] AZNAR maintains that the Original
Petition is dismissible because the Verification and Certification of Non-Forum
Shopping thereof were not signed by all the petitioners. AZNAR further claims that
the Amended Petition was filed in order to cure a fatal defect which should not be
countenanced by this Court. AZNAR also contends that Go Kim Chuan was a buyer
in bad faith as he had prior constructive notice that the subject property was sold to
AZNAR because the sale was registered with the Register of Deeds under Act 3344;
that the 1964 sale was registered under Act 3344 because the subject property was
not actually covered by a Torrens title at the time; that there was no other mode of
registration except under Act 3344; that Go Kim Chuan had to wait for the
reconstitution of the lost title, hence, it could not be said that he examined any
certificate of title and could feign ignorance of the sale in favor of AZNAR; that the
second sale did not transfer the subject property to Go Kim Chuan since it was no

longer within the vendors' power to convey; that with respect to the issue of
forgery, the finding of the document examiner is not conclusive; and that such issue
was belied by petitioner Veneranda Amodia herself when she declared that the
negotiated sale in 1964 between AZNAR and the Amodias was not consummated
because the latter did not receive the full consideration for the subject property.
Before resolving the main issues raised, the Court shall first deal with an
apparent procedural lapse in this case.
Counsel for petitioners filed a Motion for Leave to Admit Amended Petition for
Review on Certiorari in order to implead the Heirs of the late Go Kim Chuan as the
new petitioners and to delete the names of petitioners Amodias because they could
no longer be located. Said petitioners sought the relaxation of the rules so that in
the interest of justice, the case can be decided on the merits. AZNAR opposes the
Amended Petition because it was allegedly filed to cure a fatal defect in the original
petition non-compliance with the rules on Verification and Certification of NonForum Shopping.
In this regard, the case of Iglesia ni Cristo v. Ponferrada[37] is instructive, viz.:
The purpose of verification is simply to secure an assurance that the
allegations of the petition (or complaint) have been made in good faith; or are true
and correct, not merely speculative. This requirement is simply a condition affecting
the form of pleadings, and noncompliance therewith does not necessarily render it
fatally defective. Indeed, verification is only a formal, not a jurisdictional
requirement.
The issue in the present case is not the lack of verification but the
sufficiency of one executed by only one of plaintiffs. This Court held in Ateneo de
Naga University v. Manalo, that the verification requirement is deemed substantially
complied with when, as in the present case, only one of the heirs-plaintiffs, who has
sufficient knowledge and belief to swear to the truth of the allegations in the
petition (complaint), signed the verification attached to it. Such verification is
deemed sufficient assurance that the matters alleged in the petition have been
made in good faith or are true and correct, not merely speculative.
The same liberality should likewise be applied to the certification against
forum shopping. The general rule is that the certification must be signed by all
plaintiffs in a case and the signature of only one of them is insufficient. However,
the Court has also stressed in a number of cases that the rules on forum shopping
were designed to promote and facilitate the orderly administration of justice and
thus should not be interpreted with such absolute literalness as to subvert its own
ultimate and legitimate objective. The rule of substantial compliance may be
availed of with respect to the contents of the certification. This is because the
requirement

of strict compliance with the provisions merely underscores its mandatory

nature in that the certification cannot be altogether dispensed with or its
requirements completely disregarded.

Thus, we held in Iglesia ni Cristo that the commonality of interest is material and
crucial to relaxation of the Rules.
In the case at bench, the petitioners in the Amended Petition are Heirs of the
late Go Kim Chuan. They represent their predecessor-in-interest in whose favor a
title was issued covering the subject property and said title is sought to be canceled
by AZNAR. Clearly, there is presence of the commonality of interest referred to in
Iglesia ni Cristo. Under the circumstances, the rules may be reasonably and
liberally construed to avoid a patent denial of substantial justice, because it cannot
be denied that the ends of justice are better served when cases are determined on
the merits after all parties are given full opportunity to ventilate their causes and
defenses rather than on technicality or some procedural imperfections.[38]
The Issues
We now proceed to the merits of the case. From the issues raised, there are
ultimately two questions that require resolution:
First, did the CA misapply the doctrine in Heirs of Severa Gregorio v. CA in
ruling that the RTC committed an error in appreciating the testimony of an expert
witness as to the forgery of the Extra-Judicial Partition of Real Estate with Deed of
Absolute Sale?
Second, who between Go Kim Chuan and AZNAR has the better right over the
subject property?
We resolve the first question in the negative.
Forgery cannot be presumed. It must be proved by clear, positive and
convincing evidence and the burden of proof rests on the party alleging forgery.
Handwriting experts are usually helpful in the examination of forged documents
because of the technical procedure involved in analyzing them. But 1resort to these
experts is not mandatory or indispensable. A finding of forgery does not depend
entirely on the testimonies of handwriting experts, because the judge must conduct
an independent examination of the questioned signature in order to arrive at a
reasonable conclusion as to its authenticity.[39]
The RTC's finding with respect to the issue of forgery reads:

After a thorough study of the pleadings and evidence of the parties, the court
finds that preponderance of evidence heavily tilts in favor of the defendants. The
document relied upon by the plaintiff in its claim of ownership over the land in
question, the extrajudicial partition and sale, has been found by the document
examiner of the PC Crime Laboratory to be a forgery. Being a forgery, said
document conveyed nothing in favor of the plaintiff. Hence, plaintiff's claim of
ownership over the same has no more leg to stand on. x x x[40]

While it is true that the original document was produced before the RTC, the
finding of forgery relies wholly on the testimony of the document examiner. It falls
short of the required independent examination to be conducted by the trial court
judge. Other than the statement of the document examiner, the RTC decision
contains no other basis to support its conclusion
of the existence of forgery. Accordingly, the CA was correct in rejecting the RTCs
finding and in applying the doctrine laid down in the case of Heirs of Severa
Gregorio v. CA.
However, we resolve the second question in favor of Go Kim Chuan.
Without doubt, we have here a case of double sale of registered land. Apropos
is Article 1544 of the New Civil Code which provides:
ART. 1544.
If the same thing should have been sold to different vendees, the
ownership shall be transferred to the person who may have first taken possession
thereof in good faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person
acquiring it who in good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in
good faith was first in the possession; and, in the absence thereof, to the person
who presents the oldest title, provided there is good faith.
We have already ruled that the registration contemplated in this provision
refers to registration under the Torrens System, which considers the act of
registration as the operative act[41] that gives validity to the transfer or creates a
lien upon the land.[42] This rule precisely applies to cases involving conflicting
rights over registered property and those of innocent transferees who relied on the
clean title of the properties.[43] Thus, we held that registration must be done in the
proper registry in order to bind the same.[44]

In the case at bench, it is uncontroverted that the subject property was under
the operation of the Torrens System even before the respective conveyances to
AZNAR and Go Kim Chuan were made. AZNAR knew of this, and admits this as fact.
Yet, despite this knowledge, AZNAR registered the sale in its favor under Act 3344
on the contention that at the time of sale, there was no title on file. We are not
persuaded by such a lame excuse.
Act 3344 provides for the system of recording of transactions or claims over
unregistered real estate[45] without prejudice to a third party with a better right.
[46] But if the land is registered under the Land Registration Act (and therefore has
a Torrens Title), and it is sold and the sale is registered not under the Land
Registration Act but under Act 3344, as amended, such sale is not considered
registered, as the term is used under Art. 1544 of the New Civil Code.[47]
In this case, since the Extra-Judicial Partition of Real Estate with Deed of
Absolute Sale in favor of AZNAR was registered under Act No. 3344 and not under
Act No. 496, the said document is deemed not registered.[48] Rather, it was the
sale in favor of Go Kim Chuan which was registered under Act No. 496.
AZNAR insists that since there was no Torrens title on file in 1964, insofar as
the vendors, AZNAR, and the Register of Deeds are concerned, the subject property
was unregistered at the time. The contention is untenable. The fact that the
certificate of title over the registered land is lost does not convert it into
unregistered land. After all, a certificate of title is merely an evidence of ownership
or title over the particular property described therein.[49] This Court agrees with the
petitioners that AZNAR should have availed itself of the legal remedy of
reconstitution of the lost certificate of title, instead of registration under Act 3344.
We note that in Aznar Brothers Realty Company v. Aying,[50] AZNAR, beset with the
similar problem of a lost certificate of title over a registered land, sought the
reconstitution thereof. It is unfortunate that, in the instant case, despite the sale of
the subject property way back in 1964 and the existence of the remedy of
reconstitution at that time, AZNAR opted to register the same under the improper
registry (Act 3344) and allowed such status to lie undisturbed. From 1964 to 1989,
AZNAR did not bother to have the lost title reconstituted or even have the subject
property declared under its name for taxation purposes. Vigilantibus, non
dormientibus, jura subveniunt. Laws must come to the assistance of the vigilant, not
of the sleepy.[51]
Although it is obvious that Go Kim Chuan registered the sale in his favor under
Act 496 while AZNAR did not, we still cannot make an outright award of the subject
property to the petitioners solely on that basis. For the law is clear: mere
registration of title is not enough. Good faith must accompany the registration.
Thus, to be able to enjoy priority status, the second purchaser must be in
good faith, i.e., he must have no knowledge of the previous alienation of the

property by the vendor to another. Notably, what is important for this purpose is
not whether the second buyer is a buyer in good faith, but whether he registers the
second sale in good faith, meaning, he does so without knowledge of any defect in
the title over the property sold. [52]
To fully resolve the second question, therefore, it is imperative that we
determine whether Go Kim Chuan was a registrant in good faith.
The CA found that AZNAR registered its Notice of Adverse Claim ahead of the
Deed of Extra-Judicial Settlement with Absolute Sale in favor of Go Kim Chuan.
Because of this, the CA declared that Go Kim Chuan was not a buyer in good faith,
because he should have respected such adverse claim or, at least, inquired into the
validity thereof.
We do not agree.
While factual issues are not within the province of this Court, as it is not a trier
of facts and is not required to examine the oral and documentary evidence de novo,
this Court has the authority to review and, in proper cases, reverse the factual
findings of lower courts in the following instances: (a) when the findings of fact of
the trial court are in conflict with those of the appellate court; (b) when the
judgment of the appellate court is based on a misapprehension of facts; and, (c)
when the appellate court manifestly overlooked certain relevant facts which, if
properly considered, would justify a different conclusion.[53]
The instant case falls squarely within the foregoing exceptions.
Concededly, inscription of an adverse claim serves as a warning to third
parties dealing with a piece of real property that someone claims an interest therein
or that there is a right superior to that of the titled owner.[54] However, as pointed
out by petitioners and as admitted by AZNAR, the Notice of Adverse Claim was
annotated on TCT No. 20626 only on February 4, 1990, after the lost certificate of
title was reconstituted and after the issuance of said TCT in the name of Go Kim
Chuan on December 1, 1989. It is, therefore, absurd to say that Go Kim Chuan
should be bound by
an adverse claim which was not previously annotated on the lost title or on the new
one, or be shackled by a claim which he did not have any knowledge of.
Citing Santiago v. Court of Appeals,[55] AZNAR contends that even if the
adverse claim was annotated on TCT No. 20626 only on February 4, 1990, the prior
registration of the sale in its favor under Act 3344 served as constructive notice to
Go Kim Chuan and thus negates the latter's claim of good faith, since the Court held
in that case, Registration, however, by the first buyer under Act 3344 can have the

effect of constructive notice to the second buyer that can defeat his right as such
buyer in good faith.
AZNAR's reliance on Santiago is misplaced. In Santiago, the first buyers
registered the sale under the Torrens System, as can be inferred from the issuance
of the TCT in their names. There was no registration under Act 3344. Conversely,
in the instant case, AZNAR registered the sale in its favor under Act 3344 despite its
full knowledge that the subject property is under the operation of the Torrens
System. To repeat, there can be no constructive notice to the second buyer through
registration under Act 3344 if the property is registered under the Torrens system.
[56]
Moreover, before buying the subject property, Go Kim Chuan made
verifications with the Office of the City Assessor of Lapu-Lapu City and the Register
of Deeds. He likewise visited the premises of the subject property and found that
nobody interposed any adverse claim against the Amodias. After he decided to buy
the subject property, he paid all taxes in arrears, caused the publication of the Deed
of Extra-Judicial Settlement with Absolute Sale in a newspaper of general
circulation, caused the reconstitution of the lost certificate of title and caused the
issuance of the assailed TCT in his name.[57] Given these antecedents, good faith
on the part of Go Kim Chuan cannot be doubted.
We also note that AZNAR's complaint for cancellation of title contains no
allegation that the (second) purchaser was aware of defects in his title. In the
absence of such an allegation and proof of bad faith, it would be grossly
inappropriate for this Court to render judgment against the purchaser who had
already acquired title not only because of lack of evidence, but also because of the
indefeasibility and conclusiveness of such title.[58]
Finally, it is worth stressing that the Torrens system was adopted in this
country because it was believed to be the most effective measure to guarantee the
integrity of land titles and to insure their indefeasibility once the claim of ownership
is established and recognized. If a person purchases a piece of land on the
assurance that the seller's title thereto is valid, he should not run the risk of losing
his acquisition. If this were permitted, public confidence in the system would be
eroded and land transactions would have to be attended by complicated and not
necessarily conclusive investigations and proof of ownership.[59]
WHEREFORE, the instant petition for review is GRANTED. The Decision of the
Court of Appeals in CA-G.R. CV No. 51814 is REVERSED and SET ASIDE. The Decision
of the Regional Trial Court of Lapu-Lapu City, Branch 27, in Civil Case No. 2254-L, is
REINSTATED. No costs.
SO ORDERED.

REPUBLIC OF THE PHILIPPINES, Represented by MACTAN-CEBU

INTERNATIONAL AIRPORT AUTHORITY (MCIAA),
Petitioner,
- vesus HEIRS OF FRANCISCA DIGNOS-SORONO, namely: TEODORO SORONO, LUCIO
SORONO, JR., ARSENIO T. SORONO, RODULFO S. OLIVAR, ALFONSA T.
SORONO, CONSTANCIO S. LUMONGSOD, EULALIA S. LIMPANGOG, and
FLORENCIA S. BAGUIO; HEIRS OF JUAN L. AMISTOSO,[1] namely: MARIO L.
AMISTOSO, LYN-LYN AMISTOSO, ALLAN L. AMISTOSO, RAQUEL S.
AMISTOSO, EUFRONIO S. AMISTOSO, JR., and ROGELIO S. AMISTOSO;
HEIRS OF BRIGILDA D. AMISTOSO, namely: VICTOR A. YAGONG, HEDELIZA
A. YAGONG, and CIRIACA A. YAGONG; HEIRS OF PASTOR DIGNOS; HEIRS OF
ISABEL DIGNOS, namely: DR. NAPOLEON A. AMORES, VICENTE A.
BASMAYOR, DOMINGO A. BASMAYOR, and LYDIA A. BASMAYOR; HEIRS OF
DONATA DIGNOS, namely: TRINIDAD D. FUENTES, NICASIA D. FUENTES,
and IRINEO D. FUENTES; HEIRS OF SEGUNDA DIGNOS, namely: HONORATA
D. CORTES and BENIGNO D. CORTES; HEIRS OF GREGORIA DIGNOS,
namely: RITA D. FUENTES and JOSE D. FUENTES; HEIRS OF DOMINGO
FUENTES, namely: CIRILA P. DIGNOS and BASILIO P. DIGNOS; and HEIR OF
ISABELO DIGNOS, namely: TERESITA R. DIGNOS,[2]
Respondents.
G.R. No. 171571
Promulgated:
March 24, 2008
DECISION
CARPIO MORALES, J.:
Assailed via petition for review on certiorari is the April 23, 2005 decision of
the Court of Appeals[3] affirming that of the Regional Trial Court (RTC) of Lapu-lapu
City, Branch 54.[4]
Lot Nos. 2296 and 2316 of the Cadastral Survey of Opon, Lapu-lapu City were
adjudicated on December 7, 1929 by the then Court of First Instance of Cebu in
favor of the following in four equal shares:
a) Francisca Dignos, married to Blas Sorono share in the two lots;
b) Tito Dignos, married to Candida Torrebillas share in the two lots;

c) Isabel Dignos, married to Fabiano Amores;

Donata Dignos, married to Estanislao Fuentes;
Segunda Dignos, married to Demetrio Cortes;
Gregoria Dignos, married to Severo Fuentes;
Domingo Dignos, married to Venturada Potot; and
Isabelo Dignos, married to Petronilla Gamallo share in the two lots; and
d) Silveria Amistuoso, married to Melecio Tumulak;
Mario Amistuoso, married to Rufina Tampus;
Juan Amistuoso, married to Narcisa Cosef;
Brigilda Amistuoso, married to Casimiro Yagong; and
Pastor Amistuoso, widower share in the two lots.[5]

It appears that the two lots were not partitioned by the adjudicatees.
It appears further that the heirs of Tito Dignos, who, as reflected above, was
awarded share in the two lots, sold for P2,565.59 the entire two lots to the then
Civil Aeronautics Administration (CAA) via a public instrument entitled Extrajudicial
Settlement and Sale executed on October 11, 1957, without the knowledge of
respondents whose predecessors-in-interest were the adjudicatees of the rest of the
portion of the two lots.[6]
In 1996, CAAs successor-in-interest, the Mactan Cebu International Airport
Authority (MCIAA), erected a security fence traversing Lot No. 2316 and relocated a
number of families, who had built their dwellings within the airport perimeter, to a
portion of said lot to enhance airport security in line with the standards set by the
International Civil Aviation Organization and the Federal Aviation Authority.
MCIAA later caused the issuance in its name of Tax Declaration No. 00548 covering
Lot No. 2296 and Tax Declaration No. 00568 covering Lot No. 2316.
Respondents soon asked the agents of MCIAA to cease giving third persons
permission to occupy the lots but the same was ignored.
Respondents thereupon filed on January 8, 1996 a Complaint for Quieting of
Title, Legal Redemption with Prayer for a Writ of Preliminary Injunction against
MCIAA before the RTC of Lapu-lapu City,[7] alleging that the existence of the tax
declarations would cast a cloud on their valid and existing titles to the lots. They
alleged that corresponding original certificates of title in favor of the decreed
owners were . . . issued but the same could no longer be found and located, and in
all probability, were lost during the Second World War.[8] (This claim was not
specifically denied by petitioner in its Answer with Counterclaim.)[9]

Respondents further alleged that neither they nor their predecessors-in-interests

sold, alienated or disposed of their shares in the lots of which they have been in
continuous peaceful possession.
Respondents furthermore alleged that neither petitioner nor its predecessor-ininterest had given them any written notice of its acquisition of the share of Tito
Dignos.
Respondents thus prayed as follows:
1) Upon the filing of this complaint, that a restraining order be issued enjoining the
defendant and any of its officers, agents, employees, and any third person acting on
their behest, to desist from occupying their portions of Lots 2296 and 2316, Opon
Cadastre, and upon due notice and hearing, to issue the corresponding writ of
preliminary injunction for the same purpose;
2) To declare the tax declarations of the defendant or any of its predecessors-ininterests covering Lots 2296 and 2316, Opon Cadastre, to be null and void:
3) To grant unto the plaintiffs the right of preemption in the sale of the one-fourth
share of Tito Dignos in the above-mentioned parcels of land under the provisions of
Articles 1620 and 1623 of the Civil Code;
4) To order the defendant to reimburse plaintiffs the sum of P10,000.00 acceptance
fee, the sums of P1,000.00 per appearance fee, the sum of P10,000.00 for costs of
litigation;
5) To order the defendant to pay the plaintiffs the sum of P100,000.00 for moral
damages.
Plaintiffs further pray for such orders as may be just and equitable under the
premises.[10] (Underscoring supplied)

Republic of the Philippines, represented by the MCIAA (hereafter petitioner), in its

Answer with Counterclaim,[11] maintained that from the time the lots were sold to
its predecessor-in-interest CAA, it has been in open, continuous, exclusive, and
notorious possession thereof; through acquisitive prescription, it had acquired valid
title to the lots since it was a purchaser in good faith and for value; and assuming
arguendo that it did not have just title, it had, by possession for over 30 years,
acquired ownership thereof by extraordinary prescription.
At all events, petitioner contended that respondents action was barred by estoppel
and laches.

The trial court found for respondents. It held that respondents and their
predecessors-in-interest were in peaceful and continuous possession of their shares
in the lots, and were disturbed of such possession only in 1996 when petitioner put
up the security fence that traversed Lot No. 2316 and relocated families that had
built their houses within the airport perimeter to a portion of said lot.
On petitioners claim that it had acquired ownership by extraordinary prescription,
the trial court brushed it aside on the ground that registered lands cannot be the
subject of acquisitive prescription.
Neither, held the trial court, had respondents action prescribed, as actions for
quieting of title cannot prescribe if the plaintiffs are in possession of the property in
question, as in the case of herein respondents.
On petitioners defense of laches, the trial court also brushed the same aside in light
of its finding that respondents, who have long been in possession of the lots, came
to know of the sale only in 1996. The trial court added that respondents could not
be charged with constructive notice of the 1957 Extrajudicial Settlement and Sale of
the lots to CAA as it was erroneously registered under Act No. 3344,[12] the law
governing recording of instruments or deeds relating to real estate which are not
registered under the Torrens system. The subject lots being registered, the trial
court found, the registration of the deed should have been made under Act No. 496,
[13] the applicable law in 1957. In fine, the trial court held that the registration of
the deed under Act No. 3344 did not operate as constructive notice to the whole
world.[14]
Concluding, the trial court held that the questioned sale was valid only with respect
to Tito Dignos share of the lots, and that the sale thereof was subject to the right
of legal redemption by respondents following Article 1088 of the Civil Code, reading:
Should any of the heirs sell his hereditary rights to a stranger before partition, any
or all of the co-heirs may be subrogated to the rights of the purchaser by
reimbursing him for the price of the sale, provided they do so within the period of
one month from the time they were notified in writing of the sale by the vendor.

In light of its finding that the heirs of Tito Dignos did not give notice of the sale to
respondents, the trial court held that the period for legal redemption had not yet
lapsed; and the redemption price should be of the purchase price paid by the CAA
for the two lots.
The trial court thus disposed:

WHEREFORE, all premises considered, the Court rules in favor of plaintiffs and
hence renders judgment:
a) Declaring Tax Declarations Nos. 00915 and 00935, as well as all other tax
declarations covering Lot 2296 and Lot 2316 under the names of the Civil
Aeronautics Administration, the Bureau of Air Transportation and the defendant
Mactan Cebu International Airport Authority, as null and void and directing the City
Assessor of Lapu-Lapu City to cancel them;
b) Declaring the Extrajudicial Settlement and Sale affecting Lot 2296 and Lot 2316
(Exhibit H for plaintiffs) as void and ineffective as regards the three-fourth[s] (3/4)
shares of plaintiffs in both lots and declaring the herein plaintiffs as owners of such
three fourth[s] shares and;
c) Ordering the defendant to resell to plaintiffs for a total price of Six Hundred forty
Pesos (P640.00) the one-fourth (1/4) shares in Lot 2296 and Lot 2316 it had
purchased from the heirs of the late Tito Dignos in 1957;
No pronouncement as to costs.
SO ORDERED. [15]

As priorly stated, the Court of Appeals affirmed the trial courts decision.
Hence, the present petition for review on certiorari which proffers the following
GROUNDS FOR ALLOWANCE OF THE PETITION
THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE TRIAL COURTS
DECISION WHEN RESPONDENTS NO LONGER HAVE ANY RIGHT TO RECOVER LOTS
2296 AND 2316 DUE TO THE PRIOR SALE THEREOF TO THE REPUBLIC AND UPON
THE EQUITABLE GROUNDS OF ESTOPPEL AND LACHES.[16]

The petition fails.

Article 493 of the Civil Code provides:
Each co-owner shall have the full ownership of his part and of the fruits and benefits
pertaining thereto, and he may therefore alienate, assign or mortgage it, and even
substitute another person in its enjoyment, except when personal rights are
involved. But the effect of the alienation of the mortgage, with respect to the co-

owners, shall be limited to the portion which may be allotted to him in the division
upon the termination of the co-ownership.

Apropos is the following pertinent portion of this Courts decision in Bailon-Casilao v.

CA:
As early as 1923, this Court has ruled that even if a co-owner sells the whole
property as his, the sale will affect only his own share but not those of the other coowners who did not consent to the sale [Punsalan v. Boon Liat, 44 Phil. 320 (1923)].
This is because under the aforementioned codal provision, the sale or other
disposition affects only his undivided share and the transferee gets only what would
correspond to his grantor in the partition of the thing owned in common. [Ramirez v.
Bautista, 14 Phil. 528 (1909)]. Consequently, by virtue of the sales made by Rosalia
and Gaudencio Bailon which are valid with respect to their proportionate shares,
and the subsequent transfers which culminated in the sale to private respondent
Celestino Afable, the said Afable thereby became a co-owner of the disputed parcel
of land as correctly held by the lower court since the sales produced the effect of
substituting the buyers in the enjoyment thereof [Mainit v. Bandoy, 14 Phil. 730
(1910)].
From the foregoing, it may be deduced that since a co-owner is entitled to sell his
undivided share, a sale of the entire property by one co-owner without the consent
of the other co-owners is not null and void. However, only the rights of the coowner-seller are transferred, thereby making the buyer a co-owner of the property.
[17] (Emphasis and underscoring supplied)

Petitioners predecessor-in-interest CAA thus acquired only the rights pertaining to

the sellers-heirs of Tito Dignos, which is only undivided share of the two lots.
Petitioners insistence that it acquired the property through acquisitive
prescription, if not ordinary, then extraordinary, does not lie. The trial courts
discrediting thereof is well taken. It bears emphasis at this juncture that in the
Extrajudicial Settlement and Sale forged by CAA and Tito Dignos heirs in 1957, the
following material portions thereof validate the claim of respondents that the two
lots were registered:
xxxx
4. That since the Original Transfer Certificate of Title of the above-mentioned
property/ies has/have been lost and/or destroyed, or since the said lot/s is/are
covered by Cadastral Case No. 19, and a decree issued on March 19, 1930, bearing
Decree No./s 474824 & 474825, and the VENDEE hereby binds itself to reconstitute

said title/s at its own expense and that the HEIRS-VENDORS, their heirs, successors
and assigns bind themselves to help in the reconstitution of title so that the said
lot/s may be registered in the name of the VENDEE in accordance with law[.][18]
xxxx
The trial courts discrediting of petitioners invocation of laches and prescription of
action is well-taken too.
As for petitioners argument that the redemption price should be of the
prevailing market value, not of the actual purchase price, since, so it claims, (1)
they received just compensation for the property at the time it was purchased by
the Government; and, (2) the property, due to improvements introduced by
petitioner in its vicinity, is now worth several hundreds of millions of pesos,[19] the
law is not on its side. Thus, Article 1088 of the Civil Code provides:
Should any of the heirs sell his hereditary rights to a stranger before the partition,
any or all of the co-heirs may be subrogated to the rights of the purchaser by
reimbursing him for the price of the sale, provided they do so within the period of
one month from the time they were notified in writing of the sale by the vendor.
(Emphasis and underscoring supplied)

The Court may take judicial notice of the increase in value of the lots. As
mentioned earlier, however, the heirs of Tito Dignos did not notify respondents
about the sale. At any rate, since the Extrajudicial Settlement and Sale stipulates,
thus:
That the HEIRS-VENDORS, their heirs, assigns and successors, undertake and agree
to warrant and defend the possession and ownership of the property/ies herein sold
against any and all just claims of all persons whomsoever and should the VENDEE
be disturbed in its possession, to prosecute and defend the same in the Courts of
Justice[20] (Emphasis and underscoring supplied),

petitioner is not without any remedy. This decision is, therefore, without prejudice
to petitioners right to seek redress against the vendors-heirs of Tito Dignos and
their successors-in-interest.
WHEREFORE, the petition is, in light of the foregoing disquisition, DENIED.
SO ORDERED.
5. Effect of registration

G.R. No. L-8936

October 2, 1915

CONSUELO LEGARDA, with her husband MAURO PRIETO, plaintiffsappellants,

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 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 all, 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 title to land; to put 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 once 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 title can not be altered, modified, enlarged, or diminished in a
collateral proceeding 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; 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 or 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 the person 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 all 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 by fraud 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 any reason, 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
any reason, 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 person acquiring it, who first inscribes it in the registry. This
rule, of course, presupposes that each of the vendees or purchasers 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) they
became 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 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 the subsequent 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, or any

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.)
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 fide purchaser? May there be a bona
fide purchaser of said land, bona fide in 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 than that 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.

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.

GUARANTEED HOMES, INC.,

Petitioner,

G.R. No. 171531

- versus HEIRS OF MARIA P. VALDEZ (EMILIA V. YUMUL and VICTORIA

V. MOLINO), HEIRS OF SEVERINA P. TUGADE (ILUMINADA and
LEONORA P. TUGADE, HEIRS OF
ETANG P. GATMIN (LUDIVINA G.
DELA CRUZ (by and through ALFONSO G. DELA CRUZ), HILARIA G.
COBERO and ALFREDO G. COBERO) and SIONY G. TEPOL (by and through
ELENA T. RIVAS and ELESIO TEPOL, JR.), AS HEIRS OF DECEDENT PABLO
January 30, 2009
Respondents.
DECISION
TINGA, J.:

This is a petition for review[1] under Rule 45 of the Rules of Court of the Court
of Appeals Decision dated 22 March 2005[2] and Resolution dated 9 February
2006[3] in CA-G.R. CV No. 67462. The Court of Appeals reversed the 12 November
1999 Order of the Regional Trial Court (RTC) of Olongapo City, Branch 73[4] which
granted the motion to dismiss filed by Guaranteed Homes, Inc. (petitioner). The
appellate court denied petitioners motion for reconsideration.
The factual antecedents are as follows:
Respondents, who are the descendants of Pablo Pascua (Pablo), filed a complaint
seeking reconveyance of a parcel of land with an area of 23.7229 hectares situated
in Cabitaugan, Subic, Zambales and covered by Original Certificate of Title (OCT)
No. 404 in the name of Pablo.[5] In the alternative, the respondents prayed that
damages be awarded in their favor.[6]
OCT No. 404[7] was attached as one of the annexes of respondents complaint. It
contained several annotations in the memorandum of encumbrances which showed
that the property had already been sold by Pablo during his lifetime to Alejandria
Marquinez and Restituto Morales. Respondents also attached copies of the following
documents as integral parts of their complaint: Transfer Certificate of Title (TCT) No.
T-8241,[8] TCT No. T-8242,[9] TCT No. T-10863,[10] the Extrajudicial Settlement of a
Sole Heir and Confirmation of Sales[11] executed by Cipriano Pascua, Sr. (Cipriano),
and the Deed of Sale with Mortgage[12] between spouses Albino Rodolfo and Fabia
Rodolfo (spouses Rodolfo) and petitioner.
In their complaint,[13] respondents alleged that Pablo died intestate sometime in
June 1945 and was survived by his four children, one of whom was the deceased
Cipriano.[14] On 13 February 1967, Cipriano executed a document denominated as
Extrajudicial Settlement of a Sole Heir and Confirmation of Sales,[15] wherein he
declared himself as the only heir of Pablo and confirmed the sales made by the
decedent during his lifetime, including the alleged sale of the disputed property to
spouses Rodolfo.
Respondents likewise averred that on the following day 14 February 1967, TCT No.
T-8241[16] was issued in the name of Cipriano without OCT No. 404 having been
cancelled.[17] However, TCT No. T-8241 was not signed by the Register of Deeds.
On the same day, TCT No. T-8242 was issued in the name of the spouses Rodolfo
and TCT No. T-8241 was thereby cancelled.[18] Subsequently, on 31 October 1969,
the spouses Rodolfo sold the disputed property to petitioner by virtue of a Deed of
Sale with Mortgage. Consequently, on 5 November 1969, TCT No. T-8242 was
cancelled and TCT No. T-10863[19] was issued in the name of petitioner.[20]

It was further averred in the complaint that Jorge Pascua, Sr., son of Cipriano,
filed on 24 January 1997 a petition before the RTC of Olongapo City, Branch 75, for
the issuance of a new owners duplicate of OCT No. 404, docketed as Other Case
No. 04-0-97.[21] The RTC denied the petition.[22] The trial court held that petitioner
was already the owner of the land, noting that the failure to annotate the
subsequent transfer of the property to it at the back of OCT No. 404 did not affect
its title to the property.
Petitioner filed a motion to dismiss[23] the complaint on the grounds that the action
is barred by the Statute of Limitations, more than 28 years having elapsed from the
issuance of TCT No. T-10863 up to the filing of the complaint, and that the complaint
states no cause of action as it is an innocent purchaser for value, it having relied on
the clean title of the spouses Rodolfo.
Impleaded as defendants, the heirs of Cipriano filed an answer to the complaint in
which they denied knowledge of the existence of the extrajudicial settlement
allegedly executed by Cipriano and averred that the latter, during his lifetime, did
not execute any document transferring ownership of the property.[24]
The Register of Deeds and the National Treasurer filed, through the Office of the
Solicitor General, an answer averring that the six (6)-year period fixed in Section
102 of Presidential Decree (P.D.) No. 1529 for the filing of an action against the
Assurance Fund had long prescribed since the transfer of ownership over the
property was registered through the issuance of TCT No. T-10863 in favor of
petitioner as early as 1969. They also claimed that respondents have no cause of
action against the Assurance Fund since they were not actually deprived of
ownership over the property, as they could have recovered the property had it not
been for their inaction for over 28 years.[25]
The RTC granted petitioners motion to dismiss.[26] Noting that respondents
had never claimed nor established that they have been in possession of the
property and that they did not present any evidence to show that petitioner has not
been in possession of the property either, the RTC applied the doctrine that an
action to quiet title prescribes where the plaintiff is not in possession of the
property.

The trial court found that the complaint per its allegations presented a case of
implied or constructive trust on the part of Cipriano who had inaccurately claimed to
be the sole heir of Pablo in the deed of extrajudicial settlement of estate which led
to the issuance of TCT No. T- 8241 in his favor. As the prescriptive period for
reconveyance of a fraudulently registered real property is ten (10) years reckoned
from the date of the issuance of the title, the trial court held that the action for
reconveyance had already prescribed with the lapse of more than 28 years from the

issuance of TCT No. T-10863 on 5 November 1969 as of the filing of the complaint
on 21 November 1997.
The RTC added that it is an enshrined rule that even a registered owner of
property may be barred from recovering possession of property by virtue of laches.
The RTC further held that petitioner had the right to rely on TCT No. T- 8242 in
the name of spouses Rodolfo. Petitioner is not obliged to go beyond the title
considering that there were no circumstances surrounding the sale sufficient to put
it into inquiry.
Concerning the Assurance Fund, the RTC held that the claim against it had
long prescribed since Section 102 of P.D. No. 1529 provides for a six-year period
within which a plaintiff may file an action against the fund and in this case the
period should be counted from the time of the issuance of the challenged TCT No. T10863 on 5 November 1969 and thus expired in 1975.

Undaunted, respondents appealed to the Court of Appeals.[27]

The Court of Appeals reversed the RTCs order.[28] In ordering the
reinstatement of the complaint, the appellate court ruled that the averments in
respondents complaint before the RTC make out a case for quieting of title which
has not prescribed. Respondents did not have to prove possession over the property
since petitioner as the movant in a motion to dismiss hypothetically admitted the
truth of the allegations in the complaint. The appellate court found that possession
over the property was sufficiently alleged in the complaint which stated that
neither petitioner nor the Rodolfo spouses ever had possession of the disputed
property as a number of the Pascua heirs either had been (still are) in actual,
continuous and adverse possession thereof or had been enjoying (still are enjoying)
the use thereof.[29] By the same token, laches had not set in, the Court of Appeals
added.
The appellate court further held that the ruling of the RTC that petitioner is an
innocent purchaser for value is contrary to the allegations in respondents
complaint.
Hence, the present petition for review.
The sole issue before this Court revolves around the propriety of the RTCs
granting of the motion to dismiss and conversely the tenability of the Court of
Appeals reversal of the RTCs ruling.
The petition is meritorious.

It is well-settled that to sustain a dismissal on the ground that the complaint states
no cause of action, the insufficiency of the cause of action must appear on the face
of the complaint, and the test of the sufficiency of the facts alleged in the complaint
to constitute a cause of action is whether or not, admitting the facts alleged, the
court could render a valid judgment upon the same in accordance with the prayer
of the complaint. For the purpose, the motion to dismiss must hypothetically
admit the truth of the facts alleged in the complaint.[30] The admission, however, is
limited only to all material and relevant facts which are well pleaded in the
complaint.[31]
The factual allegations in respondents complaint should be considered in
tandem with the statements and inscriptions on the documents attached to it as
annexes or integral parts. In a number of cases, the Court held that in addition to
the complaint, other pleadings submitted by the parties should be considered in
deciding whether or not the complaint should be dismissed for lack of cause of
action.[32] Likewise, other facts not alleged in the complaint may be considered
where the motion to dismiss was heard with the submission of evidence, or if
documentary evidence admitted by stipulation discloses facts sufficient to defeat
the claim.[33] For while the court must accept as true all well pleaded facts in the
complaint, the motion does not admit allegations of which the court will take judicial
notice are not true, nor does the rule apply to legally impossible facts, nor to facts
inadmissible in evidence, nor to facts which appear by record or document included
in the pleadings to be unfounded.[34]
In the case at bar, the trial court conducted a hearing on the motion to
dismiss. At the hearing, the parties presented documentary evidence. Among the
documents marked and offered in evidence are the annexes of the complaint.[35]
Based on the standards set by this Court in relation to the factual allegations
and documentary annexes of the complaint as well as the exhibits offered at the
hearing of the motion to dismiss, the inescapable conclusion is that respondents
complaint does not state a cause of action against petitioner.
Firstly, the complaint does not allege any defect with TCT No. T-8242 in the name of
the spouses Rodolfo, who were petitioners predecessors-in-interest, or any
circumstance from which it could reasonably be inferred that petitioner had any
actual knowledge of facts that would impel it to make further inquiry into the title of
the spouses Rodolfo.[36] It is basic that a person dealing with registered property
need not go beyond, but only has to rely on, the title of his predecessor-in-interest.
Since "the act of registration is the operative act to convey or affect the land
insofar as third persons are concerned, it follows that where there is nothing in the
certificate of title to indicate any cloud or vice in the ownership of the property, or
any encumbrance thereon, the purchaser is not required to explore farther than

what the Torrens title upon its face indicates in quest for any hidden defect or
inchoate right that may subsequently defeat his right thereto. If the rule were
otherwise, the efficacy and conclusiveness of the certificate of title which the
Torrens system seeks to insure would entirely be futile and nugatory. The public
shall then be denied of its foremost motivation for respecting and observing the
Torrens system of registration. In the end, the business community stands to be
inconvenienced and prejudiced immeasurably.[37]
Contrary to the assertion of respondents, OCT No. 404 was expressly cancelled by
TCT No. T-8241. The alleged non-signature by the Register of Deeds Soliman
Achacoso, , does not affect the validity of TCT No. T-8241 since he signed TCT No. T8242 and issued both titles on the same day. There is a presumption of regularity in
the performance of official duty. The presumption is further bolstered by the fact
that TCT No. T-8241 was certified to be on file with the Registry of Deeds and
registered in the name of Cipriano. It is enough that petitioner had examined the
latest certificate of title which in this case was issued in the name of the immediate
transferor, the spouses Rodolfo. The purchaser is not bound by the original
certificate but only by the certificate of title of the person from whom he had
purchased the property.[38]
Secondly, while the Extrajudicial Settlement of a Sole Heir and Confirmation of Sales
executed by Cipriano alone despite the existence of the other heirs of Pablo, is not
binding on such other heirs, nevertheless, it has operative effect under Section 44
of the Property Registration Decree, which provides that:
SEC. 44. Statutory Liens Affecting Title. Every registered owner receiving a
certificate of title in pursuance of a decree of registration, and every subsequent
purchaser of registered land taking a certificate of title for value and in good faith,
shall hold the same free from all encumbrances except those noted on said
certificate and any of the following encumbrances which may be subsisting, namely:
x x x x
Even assuming arguendo that the extrajudicial settlement was a forgery, the Court
still has to uphold the title of petitioner. The case law is that although generally a
forged or fraudulent deed is a nullity and conveys no title, there are instances when
such a fraudulent document may become the root of a valid title.[39] And one such
instance is where the certificate of title was already transferred from the name of
the true owner to the forger, and while it remained that way, the land was
subsequently sold to an innocent purchaser. For then, the vendee had the right to
rely upon what appeared in the certificate.[40]
The Court cannot give credence to respondents claims that the Extrajudicial
Settlement of a Sole Heir and Confirmation of Sales was not registered and that OCT
No. 404 was not cancelled by the Register of Deeds. The Register of Deeds of

Zambales certified that the extrajudicial settlement was recorded on 14 February

1967, per Entry No. 18590. This is in compliance with Section 56 of Act No. 496,
[41] the applicable law at the time of registration, which provides that:
Sec. 56. Each register of deeds shall keep an entry book in which he shall enter in
the order of their reception all deeds and other voluntary instruments, and all copies
of writs and other process filed with him relating to registered land. He shall note in
such book the year, month, day, hour, and minute of reception of all instruments, in
the order in which they are received. They shall be regarded as registered from the
time so noted, and the memorandum of each instrument when made on the
certificate of title to which it refers shall bear the same date. [Emphasis supplied]

Registration in the public registry is notice to the whole world. Every conveyance,
mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting
registered land shall be, if registered, filed or entered in the Office of the Register of
Deeds of the province or city where the land to which it relates lies, be constructive
notice to all persons from the time of such registering, filing or entering.[42]
Thirdly, respondents cannot make out a case for quieting of title since OCT No. 404
had already been cancelled. Respondents have no title to anchor their complaint on.
[43] Title to real property refers to that upon which ownership is based. It is the
evidence of the right of the owner or the extent of his interest, by which means he
can maintain control and, as a rule, assert right to exclusive possession and
enjoyment of the property.[44]
Moreover, there is nothing in the complaint which specified that the respondents
were in possession of the property. They merely alleged that the occupants or
possessors are others not defendant Spouses Rodolfo[45] who could be anybody,
and that the property is in actual possession of a number of the Pascua heirs[46]
who could either be the respondents or the heirs of Cipriano. The admission of the
truth of material and relevant facts well pleaded does not extend to render a
demurrer an admission of inferences or conclusions drawn therefrom, even if
alleged in the pleading; nor mere inferences or conclusions from
facts not stated; nor conclusions of law; nor matters of evidence; nor
surplusage and irrelevant matters.[47]
The other heirs of Pablo should have filed an action for reconveyance based on
implied or constructive trust within ten (10) years from the date of registration of
the deed or the date of the issuance of the certificate of title over the property.[48]
The legal relationship between Cipriano and the other heirs of Pablo is governed by
Article 1456 of the Civil Code which provides that if a property is acquired through

mistake or fraud, the person obtaining it is, by force of law, considered a trustee of
an implied trust for the benefit of the person from whom the property comes.
From the above discussion, there is no question that petitioner is an innocent
purchaser for value; hence, no cause of action for cancellation of title will lie against
it.[49] The RTC was correct in granting petitioners motion to dismiss.
Lastly, respondents claim against the Assurance Fund also cannot prosper. Section
101 of P.D. No. 1529 clearly provides that the Assurance Fund shall not be liable for
any loss, damage or deprivation of any right or interest in land which may have
been caused by a breach of trust, whether express, implied or constructive. Even
assuming arguendo that they are entitled to claim against the Assurance Fund, the
respondents claim has already prescribed since any action for compensation
against the Assurance Fund must be brought within a period of six (6) years from
the time the right to bring such action first occurred, which in this case was in 1967.
WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals in CAG.R. CV No. 67462 is REVERSED and SET ASIDE. The 12 November 1999 Order of
the Regional Trial Court of Olongapo City, Branch 73 in Civil Case No. 432-097 is
REINSTATED.
SO ORDERED.
RABAJA RANCH DEVELOPMENT CORPORATION,
Petitioner,
- versus AFP RETIREMENT AND SEPARATION BENEFITS SYSTEM,
Respondent.
G.R. No. 177181

July 7, 2009
DECISION
NACHURA, J.:

Before this Court is a Petition[1] for Review on Certiorari under Rule 45 of the
Rules of Civil Procedure, seeking the reversal of the Court of Appeals (CA)
Decision[2] dated June 29, 2006, which reversed and set aside the Decision[3] of
the Regional Trial Court (RTC) of Pinamalayan, Oriental Mindoro, Branch 41, dated
June 3, 2004.

The Facts
Petitioner Rabaja Ranch Development Corporation (petitioner), a domestic
corporation, is a holder of Transfer Certificate of Title (TCT) No. T-88513[4] covering
the subject property particularly identified as Lot 395, Pls 47, with an area of
211,372 square meters more or less, and located at Barangay (Brgy.) Conrazon,
Bansud, Bongabon, Oriental Mindoro (subject property).
Respondent Armed Forces of the Philippines Retirement and Separation
Benefits System (AFP-RSBS) is a government corporation, which manages the
pension fund of the Armed Forces of the Philippines (AFP), and is duly organized
under Presidential Decree (P.D.) No. 361,[5] as amended by P.D. No. 1656[6]
(respondent). Respondent is a holder of TCT No. T-51382[7] covering the same
subject property.
On September 1, 1998, petitioner filed a Complaint[8] for Quieting of Title
and/or Removal of Cloud from Title before the RTC. Trial on the merits ensued.
Petitioner averred that on September 6, 1955, Free Patent No. V-19535[9]
(Free Patent) was issued in the name of Jose Castromero (Jose). On June 1, 1982,
the Free Patent was registered, and Original Certificate of Title (OCT) No. P-2612[10]
covering the subject property was issued in the name of Jose. Sometime in the first
half of 1982, Jose sold the subject property to Spouses Sigfriedo and Josephine
Veloso[11] (spouses Veloso), and TCT No. T-17104[12] was issued in favor of the
latter. Spouses Veloso, in turn, sold the subject property to petitioner for the sum of
P634,116.00 on January 17, 1997,[13] and TCT No. T-88513 was issued in
petitioners name. Petitioner alleged that it was the lawful owner and possessor of
the subject property.
Traversing the complaint, respondent, in its Answer,[14] claimed that its title
over the subject property was protected by the Torrens system, as it was a buyer in
good faith and for value; and that it had been in continuous possession of the
subject property since November 1989, way ahead of petitioner's alleged
possession in February 1997.
Respondent stated that on April 30, 1966, Homestead Patent No. 113074
(Homestead Patent) was issued in the name of Charles Soguilon (Charles). On May
27, 1966, the Homestead Patent was registered[15] and OCT No. RP-110 (P-6339)
[16] was issued in Charles's name, covering the same property. On October 18,
1982, Charles sold the subject property to JMC Farm Incorporated (JMC), which was
then issued TCT No. 18529.[17] On August 30, 1985, JMC obtained a loan from
respondent in the amount of P7,000,000.00, with real estate mortgage over several
parcels of land including the subject property.[18] JMC failed to pay; hence, after

extra-judicial foreclosure and public sale, respondent, being the highest bidder,
acquired the subject property and was issued TCT No. T-51382 in its name.
Respondent contended that from the time it was issued a title, it took possession of
the subject property until petitioner disturbed respondent's possession thereof
sometime in 1997. Thus, respondent sent petitioner a Demand Letter[19] asking
the latter to vacate the subject property. Petitioner replied that it was not aware of
respondent's claim.[20] Presently, the subject property is in the possession of the
petitioner.[21]
The RTC's Ruling
On June 3, 2004, the RTC ruled in favor of the petitioner on the ground that
petitioner's title emanated from a title older than that of the respondent. Moreover,
the RTC held that there were substantial and numerous infirmities in the Homestead
Patent of Charles. The RTC found that there was no record in the Bureau of Lands
that Charles was a homestead applicant or a grantee of Homestead Patent No.
113074. Upon inquiry, the RTC also found that a similar Homestead Patent bearing
No. V-113074 was actually issued in favor of one Mariano Costales over a parcel of
land with an area of 8.7171 hectares and located in Bunawan, Agusan in Mindanao,
per Certification[22] issued by the Lands Management Bureau dated February 18,
1998. Thus, the RTC held that Charles's Homestead Patent was fraudulent and
spurious, and respondent could not invoke the protection of the Torrens system,
because the system does not protect one who committed fraud or
misrepresentation and holds title in bad faith. The RTC disposed of the case in this
wise:
IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered in favor of the
plaintiff and against the defendant, as follows:
1.
DECLARING as valid OCT No. P-2612, in the name of Jose Castromero, and
the subsequent TCT No. T-17104
in the name of the spouses, Siegfriedo A.
Veloso and
Josephine Sison Veloso and TCT No. T-88513, in the
name of
plaintiff Rabaja Ranch & Development
Corporation;
2.
DECLARING plaintiff as the true and lawful owner of the
question covered by TCT No. T-88513;

lot in

3.
DECLARING as null and void OCT No. RP-110 (P-6339),
in the name of
Charles Soguilon and its derivative titles, TCT No. T18529 registered in the
name of J.M.C.
Farm Incorporated and TCT No. T-51392, in the name of the
defendant AFP Retirement Separation and Benefits
System;
4.
DIRECTING the Register of Deeds, City of Calapan,
Oriental Mindoro, to
cancel TCT No. T-51392, in the
name of defendant
AFP Retirement Separation

&
Deeds;

Benefits System and its registration from the Records of the Registry of

5.
NO PRONOUNCEMENT as to damages and attorney's
defendant's counterclaim is hereby dismissed. No Cost.

fees for plaintiff and

SO ORDERED.

Aggrieved, respondent appealed to the CA.[23]

The CA's Ruling

On June 29, 2006, the CA reversed and set aside the RTC's Decision upon the
finding that Charles's Homestead Patent was earlier registered than Jose's Free
Patent. The CA held that Jose slept on his rights, and thus, respondent had a better
right over the subject property. Further, the CA opined that while it is interesting to
note that petitioner's claim that Homestead Patent No. V-113074 was issued to
Mariano Costales, per Certification issued by the Lands Management Bureau, there
is nothing on record which would show that said Homestead Patent No. V-113074
and Homestead Patent No. 113074 granted to Charles were one and the same.
Petitioner filed a Motion for Reconsideration,[24] which the CA, however,
denied in its Resolution[25] dated March 26, 2007.

The Issues
Hence, this Petition based on the following grounds:
a) The CA decided a question of substance not in accordance with existing law
and jurisprudence.
b) The CA Decision was based on a gross misapprehension or nonapprehension of facts.
Petitioner asseverates that Homestead Patent No. 113074 is not found in the
files of the Land Management Bureau, nor does Charles's name appear as an
applicant or a patentee; that, similarly, Homestead Patent No. V-113074 was
actually issued to Mariano Costales over a parcel of land in Mindanao and not in
Mindoro; that, being fake and spurious, Charles's Homestead Patent is void ab initio

and, as such, does not produce or transmit any right; that the CA completely
ignored the RTC's factual findings based on documentary and testimonial evidence,
particularly of the invalidity and infirmities of the Homestead Patent; that said
Homestead Patent does not legally exist, hence, is not registrable; that respondent's
assertion -- that since the issuance of the Homestead Patent in 1966, records and
documents have not been properly kept -- should be discarded, as petitioner's Free
Patent which was issued way back in 1955 is still intact and is of record; that a
Homestead Patent, being a contract between the Government and the grantee,
must bear the consent of the Government; and, Charles's Homestead Patent being a
simulation, cannot transmit any right; that the earlier registration of the Homestead
Patent has no legal effect, as the same is merely simulated; and that OCT No. No.
RP-110 (P-6339) and all derivative titles issued, including respondent's title, are
null and void.
Petitioner submits that it has a better right over the subject property than
respondent.[26]
Respondent takes issue with petitioners claim that the Homestead Patent is
spurious or fake, the same being a question of fact not proper in a petition for
review on certiorari before this Court. Respondent also posits that the factual
findings of the CA are conclusive and binding on this Court, as such findings are
based on record; that respondent has a better right over the subject property
because only the certified copy and not the original copy of the Free Patent was
transcribed and registered with the Register of Deeds of Calapan, Oriental Mindoro;
that the Homestead Patent was duly transcribed on May 27, 1966, way ahead of the
registration of the Free Patent on June 1, 1982; that the CA was correct in ruling that
Section 122[27] of Act No. 496 (The Land Registration Act) as amended by Section
103[28] of P.D. No. 1529 (The Property Registration Decree) provides that
registration of the Patent with the Register of Deeds is the operative act to affect
and convey the land; and that the fact that the Homestead Patent was duly
registered, said Patent became indefeasible as a Torrens Title. Moreover, respondent
avers that the petitioner failed to prove by preponderance of evidence that the
Homestead Patent is spurious or fake. Respondent maintains that it is the Free
Patent which is spurious since what was registered was only the certified and not
the original copy of the Free Patent.[29]
The issues may, thus, be summed up in the sole question of
WHETHER OR NOT RESPONDENT'S TITLE WHICH ORIGINATED FROM A FAKE AND
SPURIOUS HOMESTEAD PATENT, IS SUPERIOR TO PETITIONER'S TITLE WHICH
ORIGINATED FROM A VALID AND EXISTING FREE PATENT.[30]

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

Our Ruling

The instant Petition is bereft of merit.

While this Court, is not a trier of facts and is not required to examine or
contrast the oral and documentary evidence de novo, nonetheless, it may review
and, in proper cases, reverse the factual findings of lower courts when the findings
of fact of the trial court are in conflict with those of the appellate court.[31] In this
case, we see the need to review the records.
The special circumstances attending this case cannot be disregarded. Two
certificates of title were issued covering the very same property, deriving their
respective authorities from two different special patents granted by the
Government. The Free Patent was issued to Jose on September 6, 1955 as opposed
to the Homestead Patent which was issued to Charles on April 30, 1966. The latter
was registered on May 27, 1966, ahead of the former which was registered only on
June 1, 1982. Each patent generated a certificate of title issued to a different set of
individuals. Over the years, the subject property was eventually sold to the
contending parties herein, who both appear to be buyers in good faith and for value.
Petitioner now seeks relief before this Court on the main contention that the
registered Homestead Patent from which respondent derived its title, is fake and
spurious, and is, therefore, void ab initio because it was not issued, at all, by the
Government.
We are not convinced.
Our ruling in Republic v. Guerrero,[32] is instructive:
Fraud is of two kinds: actual or constructive. Actual or positive fraud proceeds
from an intentional deception practiced by means of the misrepresentation or
concealment of a material fact. Constructive fraud is construed as a fraud because
of its detrimental effect upon public interests and public or private confidence, even
though the act is not done with an actual design to commit positive fraud or injury
upon other persons.
Fraud may also be either extrinsic or intrinsic. Fraud is regarded as intrinsic where
the fraudulent acts pertain to an issue involved in the original action, or where the
acts constituting the fraud were or could have been litigated therein. The fraud is
extrinsic if it is employed to deprive parties of their day in court and thus prevent
them from asserting their right to the property registered in the name of the
applicant.

The distinctions assume significance because only actual and extrinsic fraud had
been accepted and is contemplated by the law as a ground to review or reopen a
decree of registration. Thus, relief is granted to a party deprived of his interest in
land where the fraud consists in a deliberate misrepresentation that the lots are not
contested when in fact they are; or in willfully misrepresenting that there are no
other claims; or in deliberately failing to notify the party entitled to notice; or in
inducing him not to oppose an application; or in misrepresenting about the identity
of the lot to the true owner by the applicant causing the former to withdraw his
application. In all these examples, the overriding consideration is that the fraudulent
scheme of the prevailing litigant prevented a party from having his day in court or
from presenting his case. The fraud, therefore, is one that affects and goes into the
jurisdiction of the court.
We have repeatedly held that relief on the ground of fraud will not be granted where
the alleged fraud goes into the merits of the case, is intrinsic and not collateral, and
has been controverted and decided. Thus, we have underscored the denial of relief
where it appears that the fraud consisted in the presentation at the trial of a
supposed forged document, or a false and perjured testimony, or in basing the
judgment on a fraudulent compromise agreement, or in the alleged fraudulent acts
or omissions of the counsel which prevented the petitioner from properly presenting
the case.[33]

No actual and extrinsic fraud existed in this case. In our jurisdiction, fraud is
never presumed.[34] Mere allegations of fraud are not enough. Intentional acts to
deceive and deprive another of his right, or in some manner, injure him must be
specifically alleged and proved.[35] The burden of proof rests on petitioner, and the
petitioner failed to discharge the burden. Petitioner did not convincingly show that
the Homestead Patent issued to Charles is indeed spurious. More importantly,
petitioner failed to prove that respondent took part in the alleged fraud which dated
back as early as 1966 when Charles supposedly secured the fake and spurious
Homestead Patent.
In Estate of the Late Jesus S. Yujuico v. Republic,[36] citing Republic v. Court of
Appeals,[37] this Court stressed the fact that it was never proven that private
respondent St. Jude was a party to the fraud that led to the increase in the area of
the property after it was sub-divided. In the same case, citing Republic v. Umali,[38]
we held that, in a reversion case, even if the original grantee of a patent and title
has obtained the same through fraud, reversion will no longer prosper as the land
had become private land and the fraudulent acquisition cannot affect the titles of
innocent purchasers for value.
This conclusion rests very firmly on Section 32 of P.D. No. 1529, which states:

SECTION 32. Review of decree of registration; Innocent purchaser for value.

The decree of registration shall not be reopened or revised by reason of absence,
minority, or other disability of any person adversely affected thereby, nor by any
proceeding in any court for reversing judgment, subject, however, to the right of
any person, including the government and the branches thereof, deprived of land or
of any estate or interest therein by such adjudication or confirmation of title
obtained by actual fraud, to file in the proper Court of First Instance a petition for
reopening and review of the decree of registration not later than one year from and
after the date of the entry of such decree of registration, but in no case shall such
petition be entertained by the court where an innocent purchaser for value has
acquired the land or an interest therein whose rights may be prejudiced. Whenever
the phrase "innocent purchaser for value" or an equivalent phrase occurs in this
Decree, it shall be deemed to include an innocent lessee, mortgagee, or other
encumbrancer for value.
Upon the expiration of said period of one year, the decree of registration and
the certificate of title issued shall become incontrovertible. Any person aggrieved by
such decree of registration in any case may pursue his remedy by action for
damages against the applicant or any other person responsible for the fraud.
(Underscoring ours)

Settled is the rule that no valid TCT can issue from a void TCT, unless an
innocent purchaser for value had intervened. An innocent purchaser for value is one
who buys the property of another, without notice that some other person has a right
to or interest in the property, for which a full and fair price is paid by the buyer at
the time of the purchase or before receipt of any notice of the claims or interest of
some other person in the property. The protection given to innocent purchasers for
value is necessary to uphold a certificate of title's efficacy and conclusiveness,
which the Torrens system ensures.[39]
Clearly, respondent is an innocent purchaser in good faith and for value. Thus,
as far as respondent is concerned, TCT No. 18529, shown to it by JMC, was free from
any flaw or defect that could give rise to any iota of doubt that it was fake and
spurious, or that it was derived from a fake or spurious Homestead Patent. Likewise,
respondent was not under any obligation to make an inquiry beyond the TCT itself
when, significantly, a foreclosure sale was conducted and respondent emerged as
the highest bidder.
In Republic v. Court of Appeals,[40] this Court distinguished a Homestead
Patent from a Free Patent, to wit:

Homestead Patent and Free Patent are some of the land patents granted by
the government under the Public Land Act. While similar, they are not exactly the
same. A Homestead Patent is one issued to: any citizen of this country; over the age
of 18 years or the head of a family; who is not the owner of more than twenty-four
(24) hectares of land in the Philippines or has not had the benefit of any gratuitous
allotment of more than twenty-four (24) hectares of land since the occupation of the
Philippines by the United States. The applicant must show that he has complied with
the residence and cultivation requirements of the law; must have resided
continuously for at least one year in the municipality where the land is situated; and
must have cultivated at least one-fifth of the land applied for.
On the other hand, a Free Patent may be issued where the applicant is a
natural-born citizen of the Philippines; not the owner of more than twelve (12)
hectares of land; that he has continuously occupied and cultivated, either by
himself or through his predecessors-in-interests, a tract or tracts of agricultural
public lands subject to disposition for at least 30 years prior to the effectivity of
Republic Act No. 6940; and that he has paid the real taxes thereon while the same
has not been occupied by any person.[41]
It bears stressing that a Homestead Patent, once registered under the Land
Registration Act, becomes as indefeasible as a Torrens Title.[42] Verily, Section 103
of P.D. No. 1529 mandates the registration of patents, and such registration is the
operative act to convey the land to the patentee, thus:
Sec. 103.
. . . . . The deed, grant, patent or instrument of conveyance
from the Government to the grantee shall not take effect as a conveyance or bind
the land but shall operate only as a contract between the Government and the
grantee and as evidence of authority to the Register of Deeds to make registration.
It is the act of registration that shall be the operative act to affect and convey the
land, and in all cases under this Decree, registration shall be made in the office of
the Register of Deeds of the province or city where the land lies. The fees for
registration shall be paid by the grantee. After due registration and issuance of the
certificate of title, such land shall be deemed to be registered land to all intents and
purposes under this Decree. (Emphasis supplied)
The Torrens system is not a mode of acquiring titles to lands; it is merely a
system of registration of titles to lands. However, justice and equity demand that
the titleholder should not be made to bear the unfavorable effect of the mistake or
negligence of the State's agents, in the absence of proof of his complicity in a fraud
or of manifest damage to third persons. The real purpose of the Torrens system is to
quiet title to land and put a stop forever to any question as to the legality of the
title, except claims that were noted in the certificate at the time of the registration
or that may arise subsequent thereto. Otherwise, the integrity of the Torrens

system shall forever be sullied by the ineptitude and inefficiency of land registration
officials, who are ordinarily presumed to have regularly performed their duties.[43]
The general rule that the direct result of a previous void contract cannot be
valid will not apply in this case as it will directly contravene the Torrens system of
registration. Where innocent third persons, relying on the correctness of the
certificate of title thus issued, acquire rights over the property, this Court cannot
disregard such rights and order the cancellation of the certificate. The effect of such
outright cancellation will be to impair public confidence in the certificate of title. The
sanctity of the Torrens system must be preserved; otherwise, everyone dealing with
the property registered under the system will have to inquire in every instance as to
whether the title had been regularly or irregularly issued, contrary to the evident
purpose of the law. Every person dealing with the registered land may safely rely
on the correctness of the certificate of title issued therefor,
and the law will, in no way, oblige him to go behind the certificate to determine the
condition of the property.[44]
Respondent's transfer certificate of title, having been derived from the
Homestead Patent which was registered under the Torrens system on May 27, 1966,
was thus vested with the habiliments of indefeasibility.
WHEREFORE, the instant Petition is DENIED and the assailed Court of Appeals
Decision is AFFIRMED. No costs.
SO ORDERED.

6. Jurisdiction ( Sec 2 PD 1529)

Courts of First Instance shall have exclusive jurisdiction over all applications for
original registration of title to lands, including improvements and interests therein,
and over all petitions filed after original registration of title, with power to hear and
determine all questions arising upon such applications or petitions. The court
through its clerk of court shall furnish the Land Registration Commission with two
certified copies of all pleadings, exhibits, orders, and decisions filed or issued in
applications or petitions for land registration, with the exception of stenographic
notes, within five days from the filing or issuance thereof.

C. Cases
[G.R. No. 147928. January 11, 2005]

EMMANUEL F. CONCEPCION, HEIRS OF JESUS F. CONCEPCION, Namely:

BETTY CONCEPCION and JIMMY CONCEPCION; and HEIRS OF REGINO F.
CONCEPCION, JR. Namely: ROSARIO VDA. DE CONCEPCION and JERNIE
CONCEPCION, petitioners, vs. HEIRS OF JOSE F. CONCEPCION, Namely:
ANTONIO CONCEPCION, LOURDES C. WATTS and IDA C. HORVAT, (and HON.
COURT OF APPEALS), respondents.
DECISION
GARCIA, J.:

Under consideration is this petition for review on certiorari under Rule 45 of the
Rules of Court to nullify and set aside the decision dated November 27, 2000 of the
Court of Appeals in CA-G.R. CV No. 28665, dismissing, for lack of merit, the appeal
thereto taken by the herein petitioners contra an earlier order dated January 22,
1988 of the Regional Trial Court, Branch V, Cebu City, then sitting as a land
registration court.

All the parties in this case are descendants of the late spouses Regino Concepcion,
Sr. and Concepcion Famador. Petitioner Emmanuel is a son of the late spouses while
the other petitioners Betty, Jimmy, Rosario and Jernie (all surnamed Concepcion)
and the respondents Antonio Concepcion, Lourdes C. Watts and Ida C. Horvat are
grandchildren of the spouses.

The deceased spouses Regino Concepcion, Sr. and Concepcion Famador had seven
children namely: Jose (father of respondents Antonio Concepcion, Lourdes Watts and
Ida Horvat), Jesus (father of petitioners Betty Concepcion and Jimmy Concepcion),
Maria, Vicente, Regino, Jr. (father of petitioners Rosario Vda. De Concepcion and
Jernie Concepcion), Elena and Emmanuel. During their marriage, the couple
acquired the following real properties:

1. A parcel of land situated at Zulueta Street, Cebu City containing an area of 110
sq. meters, more or less, and with an assessed value of P11,000.00 hereinafter
referred to as the Zulueta property, the realty involved in this case;

2. A parcel of agricultural land situated at Pit-os, Cebu City, now known as Lot No.
10110, covered by Tax Dec. No. 007441, with an assessed value of P2,732.00;

3. A parcel of agricultural land also situated at Pit-os, Cebu City, now known as Lot
No. 10132, covered by Tax Dec. No. III-05158, with an assessed value of P740.00;
and

4. A parcel of agricultural land likewise situated at Pit-os, Cebu City, now known as
Lot No. 10129 and covered by Tax Dec. No. 23728 with an assessed value of
P223.00.

Regino, Sr. died in 1944. Ten (10) years later or in 1954, his wife, Concepcion
Famador, also passed away. Upon the latters death, she left a will[1] disposing of
all her paraphernal properties as well as her share in the conjugal partnership of
gains.

The will was subjected to probate in Special Proceedings No. 1257-R of the then
Court of First Instance of Cebu City. Jose, one of the sons of the late spouses and
father of the herein respondents, contested the probate on the ground that the
disposition made therein impaired his legitime.

Eventually, the will was allowed probate. However, on July 6, 1960, the probate
court motu proprio dismissed the probate proceedings because Jesus, as the
estates executor, neglected to perform his duties after the will was probated.
Consequently, the probate court was not able to adjudicate to the heirs their
respective shares in the estate.

On account thereof, Jose filed a complaint for partition with damages against his six
(6) brothers and sisters before the then Court of First Instance of Cebu, Branch XIII,
thereat docketed as Civil Case No. R-13850. In a decision[2] dated August 10, 1978,
said court rendered judgment as follows:

IN VIEW OF THE FOREGOING, judgment is hereby rendered:

1.
Declaring the plaintiff (i.e., Jose) entitled to a share of 1,183.57 square meters
as his legitime from his mothers estate and 1,829 square meters as his intestate
share from the estate of Regino Concepcion, Sr.;

2.
Ordering defendants Regino, Jesus and Emmanuel Concepcion to contribute
proportionately to the completion of plaintiffs legitime.

3.
Confirming the titles of the additional defendants over the properties
conveyed to them.

SO ORDERED. (Emphasis supplied)

The decision became final and executory as no appeal was taken there from by the
herein petitioners. Thereafter, the same court (CFI-Cebu, Branch XIII) issued a writ
of execution[3] dated February 23, 1982. However, the writ was returned
unsatisfied. Hence, on February 12, 1987, said court issued an alias writ of
execution.[4] To this, a Sheriffs Report was submitted stating, among others, that
the writ of execution is only partially complied with pending the turn over of the
share of the plaintiff (Jose) by the defendants (Jesus, Regino, Jr. and Emmanuel).

Inasmuch as the herein respondents have not yet complied with the aforementioned
August 10, 1978 decision of CFI-Cebu, Branch XIII, the same court issued an Order
dated 27 May 1987[5], directing its branch sheriff Candido A. Gadrinab to execute
a deed of conveyance covering the Zulueta property in favor of Jose.

Complying with the above, Sheriff Gadrinab executed a Deed of Conveyance over
the Zulueta property in favor of Jose. Unfortunately, when Jose presented the same
deed for registration, the Register of Deeds required him to surrender the owners
duplicate copy of TCT No. T-52227 covering the Zulueta property, which title was
then in the possession of the petitioners. Despite demands, petitioners refused
delivery of the title.

Hence, Jose filed with the Regional Trial Court at Cebu City, Branch V, then sitting as
a land registration court, a Petition for the Cancellation of TCT No. T-52227. In an
Order dated January 22, 1988[6], said court granted Joses petition thus:

WHEREFORE, the foregoing premises considered, defendant Mr. Jesus F. Concepcion,

defendant in Civil Case No. R-13850, is hereby ordered to surrender and/or deliver
to the Register of Deeds of the City of Cebu the owners copy of TCT No. 52227
covering Lot No. 204-B-SWO-24914 [Zulueta property] within ten (10) days after this
Order becomes final and executory.

SO ORDERED.

There from, herein petitioners went to the Court of Appeals via an ordinary appeal in
CA-G.R. CV No. 28665.

As stated at the threshold hereof, the Court of Appeals, in the herein assailed
decision dated November 27, 2000,[7] dismissed the appeal for lack of merit.

Petitioners are now with us via the present recourse, on their following submissions:

I.

THE DECISION OF THE HONORABLE COURT OF APPEALS IN CA G.R.-CV NO. 28665

AND SUBJECT HEREOF IS A TOTAL DEPARTURE FROM ESTABLISHED DOCTRINES,
EXPRESS LEGAL PROVISIONS AND PRINCIPLES OF LAW; THUS SAID APPELLATE
COURT, IN SUSTAINING THE FINAL ORDER OF THE TRIAL COURT, GRAVELY ABUSED
ITS DISCRETION TANTAMOUNT TO A WANT, IF NOT TOTAL LACK, OF JURISDICTION;

II.

THE HONORABLE COURT OF APPEALS ALSO REVERSIBLY ERRED AND GRAVELY

ABUSED ITS DISCRETION IN IGNORING AND DEFYING THE OVERWHELMING
EVIDENCE FOR PETITIONERS (OPPOSITORS-APPELLANTS THEREAT) WHICH SHOW
THE GLARING VIOLATION OF SAID COURT IN ITS DECISION OVER THE BASIC RIGHTS
OF HEREIN PETITIONERS.

It is petitioners thesis that the cadastral court (RTC, Cebu City, Branch V), had no
authority to order the surrender and/or delivery to the respondents of the owners
copy of TCT No. T-52227 covering the Zulueta property, because the parcel of land
subject thereof had been devised to them by their common ascendant, the late
Concepcion Famador, as indicated in her will.

The pivotal issue, then, is whether or not the Court of Appeals erred in dismissing
petitioners appeal in CA-G.R. CV 28665, thereby effectively sustaining the cadastral
courts order dated January 22, 1988.[8]

We resolve the issue in the affirmative.

Before going any further, we find it necessary to speak herein on the jurisdiction of
cadastral courts in the light of what transpired in this case prior to the issuance of
the questioned order of January 22, 1988.

The pleadings before us disclose that in the proceedings before the cadastral court,
petitioners filed an opposition claiming that the action of Sheriff Gadrinab in levying
the Zulueta property was with grave abuse of authority since said property is not
within the scope of the dispositive portion of the decision dated August 10, 1978 of
CFI-Cebu, Branch XIII, in Civil Case No. R-13850.

In dismissing said opposition and in eventually ordering the surrender and/or

delivery of the title covering the Zulueta property, the cadastral court explained in
its same order of January 22, 1988:

The matters brought out by the oppositors in their written opposition are not within
the province of this Court to resolve, acting as a Cadastral Court with special and

limited jurisdiction. Oppositors complaint on the way the decision in said civil case
was executed must be brought before the Court which tried the civil case and which
have already resolved the issue of ownership between the parties therein,

a view evidently shared by the Court of Appeals in its impugned decision of

November 27, 2000.

In Junio vs. De Los Santos and Register of Deeds of Pangasinan,[9] we made clear
the following:

[d]octrinal jurisprudence holds that the Court of First Instance (now the Regional
Trial Court), as a Land Registration Court, can hear cases otherwise litigable only in
ordinary civil actions, since the Court of First Instance are at the same time, [c]ourts
of general jurisdiction and could entertain and dispose of the validity or invalidity of
respondents adverse claim, with a view to determining whether petitioner is
entitled or not to the relief that he seeks. (Emphasis supplied)

In Ligon vs. Court of Appeals,[10] we even went further by saying:

Under Sec. 2 of P.D. 1529, it is now provided that Courts of First Instance (now
Regional Trial Courts) shall have exclusive jurisdiction over all applications for
original registration of titles to lands, including improvements and interest therein
and over all petitions filed after original registration of title, with power to hear and
determine all questions arising upon such applications or petitions. The above
provision has eliminated the distinction between the general jurisdiction vested in
the regional trial court and the limited jurisdiction conferred upon it by the former
law when acting merely as a cadastral court. Aimed at avoiding multiplicity of suits
the change has simplified registration proceedings by conferring upon the regional
trial courts the authority to act not only on applications for original registration but
also over all petitions filed after original registration of title, with power to hear and
determine all questions arising upon such applications or petitions. (Emphasis
supplied)

Clear it is from the foregoing that both the cadastral court and the Court of Appeals
gravely erred in holding that the former is without jurisdiction to entertain and
resolve the opposition thereat filed by the petitioners.

Be that as it may, it is, to us, improper for the cadastral court to issue its order of
January 22, 1988, directing the petitioners to surrender and/or deliver the title
covering the Zulueta property. That order is void and definitely without force and
effect.

As it were, said order is premised on an earlier order issued on May 27, 1987 by the
RTC-Cebu (former CFI-Cebu) Branch XIII in its Civil Case No. R-13850, which latter
order is very much challenged by the herein petitioners. Accordingly, the propriety
or validity of the cadastral courts order of January 22, 1988 is, in turn, dependent
on the propriety or validity of the order dated May 27, 1987 of RTC-Cebu, Branch
XIII, in Civil Case No. R-13850.

It is undisputed that the August 10, 1978 decision of RTC-Cebu, Branch XIII, in the
main case (Civil Case No. R-13850) has long become final and executory. In fact, a
writ of execution as well as two (2) alias writs of execution have been previously
issued by the same court. It was the non-satisfaction of these writs that prompted
said court to issue its order dated May 27, 1987, directing Branch Sheriff Gadrinab
to execute a deed of conveyance on the Zulueta property in favor of Jose
Concepcion.

By issuing its order of May 27, 1987, RTC-Cebu, Branch XIII, sought to amend its
August 10, 1978 decision. We must emphasize, however, that there is nothing in
the August 10, 1978 decision of said court which authorizes the surrender and/or
delivery of the title covering the Zulueta property. It merely required the
defendants therein to contribute proportionately to the completion of the plaintiffs
legitime. In fact, said court has previously denied a Motion for Projected Partition
and Execution of Judgment filed before it by the respondents precisely because,
according to it, to allow partition of the Zulueta property will in effect amend or
alter the decision (referring to its earlier decision dated August 10, 1978) which has
long become final and executory.

The subsequent issuance of the order dated May 27, 1987 which amends the final
and executory decision dated August 10, 1978 cannot be allowed. We have
repeatedly held that a judgment that has become final and executory can no longer
be amended or corrected except for clerical errors and mistakes. This rule holds
true regardless of whether the modification is to be made by the magistrate who
rendered the judgment or by an appellate tribunal which reviewed the same.[11]

Doubtless, then, the order dated May 27, 1987 of RTC-Cebu, Branch XIII, in Civil
Case No. R-13850 is a nullity.

And because a spring cannot rise higher than its source, it follows that the cadastal
courts order of January 22, 1988 which merely seeks to implement the earlier void
order dated May 27, 1987 in Civil Case No. R-13850 is infected with the same nullity.

WHEREFORE, the instant petition is hereby GRANTED and the assailed decision
dated November 27, 2000 of the Court of Appeals VACATED and SET ASIDE.

SO ORDERED.

G.R. No. L-19615

December 24, 1964

IN THE MATTER OF THE APPLICATION FOR REGISTRATION OF LAND.

LEONOR DE LOS ANGELES, FEDERICO DE LOS ANGELES, ET AL., applicantsappellants,
vs.
ISIDORO O. SANTOS, ANTONIO ASTUDILLO, ET AL., THE DIRECTOR OF
LANDS and THE PROVINCE OF RIZAL, oppositors-appellees.

Antonio G. Ibarra and H. I. Benito for other oppositors-appellees.

Jose W. Diokno for applicants-appellants
Office of the Solicitor General for oppositors-appellees Director of Lands and
Province of Rizal.

BENGZON, JP, J.:

Squarely before this Court in this appeal is the important and fundamental question
of whether a land registration court which has validly acquired jurisdiction over a

parcel of land for registration of title thereto could be divested of said jurisdiction by
a subsequent administrative act consisting in the issuance by the Director of Lands
of a homestead patent covering the same parcel of land.

The court a quo held in effect that it could be, as it dismissed the application to
register title to the land in its order brought here on appeal.

On November 21, 1959 an application for registration of title to 12 parcels of land in

Ampid San Mateo Rizal was filed in the Court of First Instance of Rizal by Leonor de
los Angeles and seven co-applicants. Among other things it alleged that "applicants
are owners pro-indiviso and in fee simple of the aforesaid land."

The required notices were given in which May 27, 1960 was set for the initial
hearing. On March 3, 1960 the Director of Lands filed an opposition stating that the
land "is a portion of the public domain". The Province of Rizal also interposed an
opposition on May 24, 1960, asserting "the required 3.00 meters strips of public
easement" on lots along Ampid River and a creek.

At the initial hearing on May 27, 1960 an order of general default was issued except
as against the Director of Lands, the Province of Rizal and eleven private oppositors
who appeared therein. On July 10, 1960 the aforesaid private oppositors, Julio
Hidalgo among them, filed their written opposition claiming they "are the lawful
owners of the parcels of land in question for having acquired homestead patents
over said lots".

On July 25, 1961 a "Report" was filed in court by the Land Registration
Commissioner, stating:

1. That the parcel of land described as Lot 11 of plan Psu-158857, applied for in the
above-entitled land registration case, is a portion of that described on plan Psu148997, previously patented on June 12, 1961 under Patent No. 95856 in the name
of Julio Hidalgo; and

2. That Case No. N-2671, LRC Record No. N-18332, was set for hearing on May 27,
1960 but no decision has as yet been received by this Commissioner.

WHEREFORE, it is respectfully recommended to this Honorable Court that Case No.

N-2671, LRC Record No. N-18332, be dismissed with respect to Lot 11 of plan Psu158857 only, giving due course, however, to the other lots in the application.

Acting thereon, the court required applicants in its order of July 29, 1961, to show
cause why their application should not be dismissed as to Lot 11 (10.6609
hectares). On August 15, 1961 applicants filed an "opposition to motion to dismiss".
But on September 18, 1961 the court issued an order dismissing the application
with respect to Lot 11 "without prejudice on the part of applicants to pursue the
corresponding remedy in any ordinary action". After a motion for reconsideration
was filed and denied, applicants appealed to this Court.

As lone assignment of error it is alleged that "the lower, court grievously erred in
dismissing the application for registration as regards Lot No. 11, over which a
homestead patent was issued by the Director of Lands during the pendency of the
registration proceeding". (Emphasis supplied.)

To start with, it is well settled that the Director of Lands' jurisdiction, administrative
supervision and executive control extend only over lands of the public domain and
not to lands already of private ownership. (Susi vs. Razon, 48 Phil. 424; Vital vs.
Anore 53 O.G. 3739; Republic vs. Heirs of Carle L-12485, July 31, 1959; Director of
Lands vs. De Luna, L-1441, Nov. 23, 1960.) Accordingly, a homestead patent issued
by him over land not of the public domain is a nullity, devoid of force and effect
against the owner (Zarate vs. Director of Lands, 34 Phil. 416; Vital vs. Anore supra).

Now, in the land registration proceedings applicants contended that as of November

21, 1959 the date they applied for registration they were already "owners proindiviso and in fee simple of the aforesaid land". As a result, if applicants were to
successfully prove this averment, and thereby show their alleged registrable title to
the land, it could only result in the finding that when Julio Hidalgo's homestead
patent was issued over Lot 11 on June 12, 1961 said lot was no longer public. The
land registration court, in that event, would have to order a decree of title issued in
applicants' favor and declare the aforesaid homestead patent a nullity which vested
no title in the patentee as against the real owners (Rodriguez vs. Director of Lands,

31 Phil. 273; Zarate vs. Director of Lands, supra; Lacaste vs. Director of Lands, 63
Phil. 654).

Since the existence or non-existence of applicants' registrable title to Lot 11 is

decisive of the validity or nullity of the homestead patent issued as aforestated on
said lot the court a quo's jurisdiction in the land registration proceedings could not
have been divested by the homestead patent's issuance.

Proceedings for land registration are in rem whereas proceedings for acquisition of
homestead patent are not (De los Reyes vs. Razon, 38 Phil. 480; Philippine National
Bank vs. Ortiz Luis, 53 Phil. 649). A homestead patent, therefore, does not finally
dispose of the public or private character of the land as far as courts upon
proceedings in rem are concerned (De los Reyes vs. Razon, supra). Applicants
should thus be given opportunity to prove registrable title to Lot 11.

WHEREFORE, we hereby set aside the orders appealed from and remand the case to
the court a quo for further proceedings, without costs. So ordered.
7. Venue
a. Real actions
b. Personal actions
8. Parties

9. Title vs Certificate of Title

a. Distinction
G.R. No. L-56232 June 22, 1984
ABELARDO CRUZ (deceased) substituted by Heirs Consuelo C. Cruz, Claro
C. Cruz and Stephen C. Cruz, per Resolution, petitioners,
vs.
LEODEGARIA CABANA, TEOFILO LEGASPI , ILUMINADA CABANA and THE
HONOR- ABLE COURT OF APPEALS,* respondents.
Nazareno, Azada, Sabado & Dizon for petitioners.
Felixberto N. Boquiren for respondents.
TEEHANKEE, J.:

The Court affirms the questioned decision of the now defunct Court of Appeals
which affirmed that of the Court of First Instance of Quezon Province, but directs
that the seller, respondent Leodegaria Cabana who sold the property in question
twice, first to her co-respondents Teofilo Legaspi and Iluminada Cabana and later to
petitioner Abelardo Cruz (now deceased), should reimburse to petitioner's heirs the
amounts of P2,352.50, which the late petitioner Abelardo Cruz paid to the Philippine
National Bank to discharge the mortgage obligation of said respondent Leodegaria
Cabana in favor of said bank, and of P3,397.50, representing the amount paid by
said Abelardo Cruz to her as consideration of the sale with pacto de retro of the
subject property.
This is a simple case of double sale of real property. Respondent appellate court in
its decision of August 13, 1980 stated the background facts and resolved the issue
in favor of defendants- appellees, first buyers- respondents herein, and against
plaintiff-appellant Abelardo Cruz, petitioner herein (substituted by his heirs), as
follows:
Defendants' evidence shows that on October 21, 1968, defendant Leodegaria
Cabana sold the land in question to defendants-spouses Teofilo Legaspi and
Iluminada Cabana (Exh. 1). The said defendants-spouses attempted to register the
deed of sale but said registration was not accomplished because they could not
present the owner's duplicate of title which was at that time in the possession of the
PNB as mortgage.
Likewise, when plaintiff tried to register the deed of sale executed by Leodegaria
Cabana on September 3, 1970, said plaintiff was informed that the owner thereof
had sold the land to defendants-spouses on October 21, 1968. Plaintiff was able to
register the land in his name on February 9, 1971 (Exh. A). With the admission of
both parties that the land in question was sold to two persons, the main issue to be
resolved in this appeal is as to who of said vendees has a better title to said land.
There is no dispute that the land in question was sold with right of repurchase on
June 1, 1965 to defendants- spouses Teofilo Legaspi and Iluminada Cabana (Exh. 1).
The said document 'Bilihang Muling Mabibili' stipulated that the land can be
repurchased by the vendor within one year from December 31, 1966 (see par. 5,
Exh. 1).lwphl@it Said land was not repurchased and in the meantime, however,
said defendants-spouses took possession of the land.
Upon request of Leodegaria Cabana, the title of the land was lent to her in order to
mortgage the property to the Philippine National Bank. Said title was, forthwith,
deposited with the PNB. On October 21, 1968, defendant Leodegaria Cabana sold
the land by way of absolute sale to the defendants- spouses (Exh. 2). However, on

November 29, 1968 defendant sold the same property to herein plaintiff and the
latter was able to register it in his name.
The transaction in question is governed by Article 1544 of the Civil Code. True it is
that the plaintiff was able to register the sale in his name but was he in good faith in
doing so?
While the title was registered in plaintiff- appellant's name on February 9, 1971
(Exh. A), it appears that he knew of the sale of the land to defendants-spouses
Legaspi as he was informed in the Office of the Register of Deeds of Quezon. It
appears that the defendants-spouses registered their document of sale on May 13,
1965 under Primary Entry No. 210113 of the Register of Deeds (Exh. 2).
Under the foregoing circumstances, the right of ownership and title to the land must
be resolved in favor of the defendants- spouses Legaspi on three counts. First, the
plaintiff-appellant was not in good faith in registering the title in his name.
Consistent is the jurisprudence in this jurisdiction that in order that the provisions of
Article 1544 of the new Civil Code may be invoked, it is necessary that the
conveyance must have been made by a party who has an existing right in the thing
and the power to dispose of it (10 Manresa 170, 171). It cannot be set up by a
second purchaser who comes into possession of the property that has already been
acquired by the first purchaser in full dominion (Bautista vs. Sison, 39 Phil. 615), this
not withstanding that the second purchaser records his title in the public registry, if
the registration be done in bad faith, the philosophy underlying this rule being that
the public records cannot be covered into instruments of fraud and oppression by
one who secures an inscription therein in bad faith (Chupinghong vs. Borreros, 7 CA
Rep. 699).
A purchaser who has knowledge of fact which would put him upon inquiry and
investigation as to possible defects of the title of the vendor and fails to make such
inquiry and investigation, cannot claim that he is a purchaser in good faith.
Knowledge of a prior transfer of a registered property by a subsequent purchaser
makes him a purchaser in bad faith and his knowledge of such transfer vitiates his
title acquired by virtue of the latter instrument of conveyance which creates no
right as against the first purchaser (Reylago vs. Jarabe, L-20046, March 27, 1968, 22
SCRA 1247).
In the second place, the defendants-spouses registered the deed of absolute sale
ahead of plaintiff- appellant. Said spouses were not only able to obtain the title
because at that time, the owner's duplicate certificate was still with the Philippine
National Bank.
In the third place, defendants-spouses have been in possession all along of the land
in question. If immovable property is sold to different vendees, the ownership shall

belong to the person acquiring it who in good faith first recorded it in the registry of
property; and should there be no inscription, the ownership shall pertain to the
person who in good faith was first in the possession (Soriano, et al. vs. The Heirs of
Domingo Magali et al., L-15133 , July 31, 1963, 8 SCRA 489). Priority of possession
stands good in favor of herein defendants-spouses (Evangelista vs. Abad, [CA] 36
O.G. 2913; Sanchez vs. Ramos, 40 Phil. 614, Quimson vs, Rosete, 87 Phil. 159).
The Court finds that in this case of double sale of real property, respondent
appellate court, on the basis of the undisputed facts, correctly applied the
provisions of Article 1544 of the Civil Code that
Art. 1544.
If the same thing should have been sold to different vendees, the
ownership shall be transferred to the person who may have first taken possession
thereof in good faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person
acquiring it who in good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in
good faith was first in the possession; and, in the absence thereof, to the person
who presents the oldest title, provided there is good faith.
There is no question that respondents-spouses Teofilo Legaspi and Iluminada
Cabana were the first buyers, first on June 1, 1965 under a sale with right of
repurchase and later on October 21, 1968 under a deed of absolute sale and that
they had taken possession of the land sold to them; that petitioner was the second
buyer under a deed of sale dated November 29, 1968, which to all indications,
contrary to the text, was a sale with right of repurchase for ninety (90) days. 1
There is no question either that respondents legaspi spouses were the first and the
only ones to be in possession of the subject property.
Said respondents spouses were likewise the first to register the sale with right of
repurchase in their favor on May 13, 1965 under Primary Entry No. 210113 of the
Register of Deeds. They could not register the absolute deed of sale in their favor
and obtain the corresponding transfer certificate of title because at that time the
seller's duplicate certificate was still with the bank. But there is no question, and the
lower courts so found conclusively as a matter of fact, that when petitioner Cruz
succeeded in registering the later sale in his favor, he knew and he was informed of
the prior sale in favor of respondents-spouses. Respondent appellate court correctly
held that such "knowledge of a prior transfer of a registered property by a
subsequent purchaser makes him a purchaser in bad faith and his knowledge of
such transfer vitiates his title acquired by virtue of the latter instrument of
conveyance which creates no right as against the first purchaser."

As the Court held in Carbonell vs. Court of Appeals 2 "it is essential that the buyer of
realty must act in good faith in registering his deed of sale to merit the protection of
the second paragraph of [the above quoted] Article 1544." As the writer stressed in
his concurring opinion therein, "(T)he governing principle here is prius tempore,
potior jure (first in time, stronger in right). Knowledge gained by the first buyer of
the second sale cannot defeat the first buyer's rights except only as provided by the
Civil Code and that is where the second buyer first registers in good faith the
second sale ahead of the first. Such knowledge of the first buyer does not bar her
from availing of her rights under the law, among them, to register first her purchase
as against the second buyer. But in converso knowledge gained by the second
buyer of the first sale defeats his rights even if he is first to register the second sale,
since such knowledge taints his prior registration with bad faith. This is the price
exacted by Article 1544 of the Civil Code for the second buyer being able to
displace the first buyer; that before the second buyer can obtain priority over the
first, he must show that he acted in good faith throughout (i.e. in ignorance of the
first sale and of the first buyer's rights) from the time of acquisition until the title
is transferred to him by registration or failing registration, by delivery of possession.
The second buyer must show continuing good faith and innocence or lack of
knowledge of the first sale until his contract ripens into full ownership through prior
registration as provided by law."
Petitioner's prayer for alternative relief for reimbursement of the amount of
P2,352.50 paid by him to the bank to discharge the existing mortgage on the
property and of the amount of P3,397.50 representing the price of the second sale
are well taken insofar as the seller Leodegaria Cabana is concerned. These amounts
have been received by the said seller Leodegaria Cabana on account of a void
second sale and must be duly reimbursed by her to petitioner's heirs, but the
Legaspi spouses cannot be held liable therefor since they had nothing to do with the
said second sale nor did they receive any benefit therefrom. Petitioner's claim for
reimbursement of the amount of P102.58 as real estate taxes paid on the property
is not well taken because the respondents Legaspi spouses had been paying the
real estate taxes on the same property since June 1, 1969. 4
ACCORDINGLY, the appealed judgment of respondent appellate court, upholding
respondents-spouses Teofilo Legaspi and Iluminada Cabana as the true and rightful
owners of the property in litigation and ordering the issuance of a new title with the
cancellation as null and void of Title No. T- 99140 obtained by petitioner Abelardo C.
Cruz, is hereby affirmed in toto. In accordance with the partial grant of petitioner's
prayer for alternative relief as stated in the preceding paragraph hereof, the Court
hereby orders and sentences respondent Leodegaria Cabana to reimburse and pay
to petitioner's heirs the total sum of P5,750.00.

b. Types of Certificate of Title

i.
ii.

Original Certificate
Transfer certificate Title

IV. Land registration commission and its registries of deeds (Chapter II,
Sections 4-13)
1. Land Registration Authority (Section 6, PD 1529; Section 28, Chapter
9, Title III, book IV, E.O. 292)
2. Administrator
a. Functions
b. Ministerial Duty of the LRA to issue decrees.
G.R. No. 77770

December 15, 1988

ATTY. JOSE S. GOMEZ, DELFINA GOMEZ ESTRADA, ENRIQUITA GOMEZ

OXCIANO, BENITA GOMEZ GARLITOS, REYNALDO GOMEZ ESPEJO, ARMANDO
GOMEZ, ERLINDA GOMEZ GUICO, EUGENIA GOMEZ CALICDAN, AZUCENA
GOMEZ ORENCIA, TEODORO S. GOMEZ, JR., and ALEJO S. GOMEZ (now
deceased) represented by his wife, LETICIA Y. GOMEZ, and children,
namely, MARGIE GOMEZ GOB, JACINTO Y. GOMEZ, ALEJO Y. GOMEZ, JR., and
MARY ANN Y. GOMEZ, petitioners,
vs.
HON. COURT OF APPEALS, HON. PEDRO G. ADUCAYEN Judge Regional Trial
Court, San Carlos City (Pangasinan) Branch LVI, HON. CHIEF, LAND
REGISTRATION COMMISSION, Quezon City, Metro Manila, and SILVERIO G.
PEREZ, Chief, Division of Original Registration, Land Registration
Commission, Quezon City, Metro Manila, respondents.

PADILLA, J.:
The present case originated with the filing by petitioners on 30 August 1968 in the
Court of First Instance (now Regional Trial Court) of San Carlos City, Pangasinan, of
an application for registration of several lots situated in Bayambang, Pangasinan.
The lots applied for were Lots Nos. 1, 2, 3, 4, 5, 6, 7, 8, 9, 1 0, 11 and 12 of Plan
Psu-54792 Amd.-2. The lots were among those involved in the case of Government
of the Philippine Islands vs. Abran, 1 wherein this Court declared Consolacion M.
Gomez owner of certain lots in Sitio Poponto Bayambang, Pangasinan. Petitioners
are the heirs of Teodoro Y. Gomez (father of Consolacion) who, together with
Consolacion's son, Luis Lopez, inherited from her parcels of land when Consolacion
Gomez died intestate. Petitioners alleged that after the death of Teodoro Y. Gomez,
they became the absolute owners of the subject lots by virtue of a Quitclaim

executed in their favor by Luis Lopez. The lots (formerly portions of Lots 15,16, 34
and 41 covered by Plan Ipd-92) were subdivided into twelve lotsLots Nos. 1, 2, 3,
4, 5, 6, 7, 8, 9, 10, 11 and 12. The subdivision plan was duly approved by the
Bureau of Lands on 30 November 1963. Petitioners agreed to allocate the lots
among themselves.
After notice and publication, and there being no opposition to the application, the
trial court issued an order of general default. On 5 August 1981, the court rendered
its decision adjudicating the subject lots in petitioners' favor. 2
On 6 October 1981, the trial court issued an order 3 expressly stating that the
decision of 5 August 1981 had become final and directed the Chief of the General
Land Registration Office to issue the corresponding decrees of registration over the
lots adjudicated in the decision of 5 August 1981.
On 11 July 1984, respondent Silverio G. Perez, Chief of the Division of Original
Registration, Land Registration Commission (now known as the National Land Titles
and Deeds Registration Administration), submitted a report to the court a quo
stating that Lots 15, 16, 34 and 41 of Ipd-92 were already covered by homestead
patents issued in 1928 and 1929 and registered under the Land Registration Act. He
recommended that the decision of 5 August 1981, and the order of 6 October 1981
be set aside. Petitioners opposed the report, pointing out that no opposition was
raised by the Bureau of Lands during the registration proceedings and that the
decision of 5 August 1981 should be implemented because it had long become final
and executory.
After hearing, the lower court rendered a second decision on 25 March 1985 setting
aside the decision dated 5 August 1981 and the order dated 6 October 1981 for the
issuance of decrees. 4 Petitioners moved for reconsideration but the motion was
denied by respondent judge on 6 August 1985 for lack of merit. 5
Petitioners filed a petition for certiorari and mandamus with this Court which in turn
referred the petition to the Court of Appeals. 6
On 17 September 1986, the appellate court rendered judgment, 7 dismissing the
petition and stating, among others, thus
In resum, prior to the issuance of the decree of registration, the respondent Judge
has still the power and control over the decision he rendered. The finality of an
adjudication of land in a registration or cadastral case takes place only after the
expiration of the one-year period after entry of the final decree of registration (Afalla
vs. Rosauro, 60 Phil. 622; Valmonte vs. Nable, 85 Phil. 256; Capio vs. Capio, 94 Phil.
113). When the respondent Judge amended his decision after the report of the
respondent officials of the Land Registration office had shown that homestead

patents had already been issued on some of the lots, respondents cannot be faulted
because land already granted by homestead patent can no longer be the subject of
another registration (Manalo vs. Lukban, et al., 48 Phil. 973).
WHEREFORE, in view of the foregoing, We resolve to DISMISS the petition for lack of
merit.
SO ORDERED.
Petitioners' motion for reconsideration was denied by the appellate court in its
Resolution dated 10 March 1987. 8 Hence, this recourse.
Several issues are raised by petitioners in this petition. The more important issues
before the Court are: (a) whether or not respondent Judge had jurisdiction to issue
the decision of 25 March 1985 which set aside the lower court's earlier decision of 5
August 1981 and the order of 6 October 1981; (b) whether or not the respondents
Acting Land Registration Commissioner and Engr. Silverio Perez, Chief, Division of
Original Registration, Land Registration Commission, have no alternative but to
issue the decrees of registration pursuant to the decision of 5 August 1981 and the
order for issuance of decrees, dated 6 October 1981, their duty to do so being
purely ministerial; (c) whether or not "the law of the case" is the decision in
Government of the Philippine Islands v. Abran, supra, which held that the lands
adjudicated to Consolacion Gomez were not public lands, and therefore they could
not have been acquired by holders of homestead titles as against petitioners herein.
It is not disputed that the decision dated 5 August 1981 had become final and
executory. Petitioners vigorously maintain that said decision having become final, it
may no longer be reopened, reviewed, much less, set aside. They anchor this claim
on section 30 of P.D. No. 1529 (Property Registration Decree) which provides that,
after judgment has become final and executory, the court shall forthwith issue an
order to the Commissioner of Land Registration for the issuance of the decree of
registration and certificate of title. Petitioners contend that section 30 should be
read in relation to section 32 of P.D. 1529 in that, once the judgment becomes final
and executory under section 30, the decree of registration must issue as a matter of
course. This being the law, petitioners assert, when respondent Judge set aside in
his decision, dated 25 March 1985, the decision of 5 August 1981 and the order of 6
October 1981, he clearly acted without jurisdiction.
Petitioners' contention is not correct. Unlike ordinary civil actions, the adjudication
of land in a cadastral or land registration proceeding does not become final, in the
sense of incontrovertibility until after the expiration of one (1) year after the entry of
the final decree of registration. 9 This Court, in several decisions, has held that as
long as a final decree has not been entered by the Land Registration Commission
(now NLTDRA) and the period of one (1) year has not elapsed from date of entry of

such decree, the title is not finally adjudicated and the decision in the registration
proceeding continues to be under the control and sound discretion of the court
rendering it. 10
Petitioners contend that the report of respondent Silverio Perez should have been
submitted to the court a quo before its decision became final. But were we to
sustain this argument, we would be pressuring respondent land registration officials
to submit a report or study even if haphazardly prepared just to beat the
reglementary deadline for the finality of the court decision. As said by this Court in
De los Reyes vs. de Villa: 11
Examining section 40, we find that the decrees of registration must be stated in
convenient form for transcription upon the certificate of title and must contain an
accurate technical description of the land. This requires technical men. Moreover, it
frequently occurs that only portions of a parcel of land included in an application are
ordered registered and that the limits of such portions can only be roughly indicated
in the decision of the court. In such cases amendments of the plans and sometimes
additional surveys become necessary before the final decree can be entered. That
can hardly be done by the court itself; the law very wisely charges the Chief
Surveyor of the General Land Registration Office with such duties (Administrative
Code, section 177).

Thus, the duty of respondent land registration officials to render reports is not
limited to the period before the court's decision becomes final, but may extend
even after its finality but not beyond the lapse of one (1) year from the entry of the
decree.
Petitioners insist that the duty of the respondent land registration officials to issue
the decree is purely ministerial. It is ministerial in the sense that they act under the
orders of the court and the decree must be in conformity with the decision of the
court and with the data found in the record, and they have no discretion in the
matter. However, if they are in doubt upon any point in relation to the preparation
and issuance of the decree, it is their duty to refer the matter to the court. They act,
in this respect, as officials of the court and not as administrative officials, and their
act is the act of the court. 12 They are specifically called upon to "extend assistance
to courts in ordinary and cadastral land registration proceedings ." 13
The foregoing observations resolve the first two (2) issues raised by petitioners.
Petitioners next contend that "the law of the case" is found in Government of the
Philippine Islands vs. Abran, et al., supra, where it was decided by this Court that
the lands of Consolacion M. Gomez, from whom petitioners derive their ownership
over the lots in question, were not public lands. A reading of the pertinent and

dispositive portions of the aforesaid decision will show, however, that the lots earlier
covered by homestead patents were not included among the lands adjudicated to
Consolacion M. Gomez. The decision states:
With respect to the portions of land covered by homestead certificates of title, we
are of opinion that such certificates are sufficient to prevent the title to such portion
from going to appellants aforesaid, for they carry with them preponderating
evidence that the respective homesteaders held adverse possession of such
portions, dating back to 1919 or 1920, accordingly to the evidence, and the said
appellants failed to object to that possession in time. (Emphasis supplied)
Wherefore modifying the judgment appealed from, it is hereby ordered that the lots
respectively claimed by Agustin V. Gomez, Consolacion M. Gomez, and Julian
Macaraeg, be registered in their name, with the exclusion of the portions covered by
the homestead certificates ... . (Emphasis supplied.) 14
The report of respondent land registration officials states that the holders of the
homestead patents registered the lots in question in the years 1928 and 1929. The
decision in Government of the Philippine Islands vs. Abran was promulgated on 31
December 1931. Hence, the subject lots are specifically excluded from those
adjudicated by the aforesaid decision to Consolacion M. Gomez.
It is a settled rule that a homestead patent, once registered under the Land
Registration Act, becomes indefeasible and incontrovertible as a Torrens title, and
may no longer be the subject of an investigation for determination or judgment in
cadastral proceeding. 15
The aforecited case of Government vs. Abran, therefore, is not "the law of the case",
for the lots in question were not private lands of Consolacion M. Gomez when
homestead patents were issued over them in 1928-1929. There is sufficient proof to
show that Lots 15, 16, 34 and 41 of Ipd-92 were already titled lands way back in
1928 and 1929 as shown by Annexes "A", "B", "C", and "D" of respondents'
Memorandum. 16
Lastly, petitioners claim that if the decision of 5 August 1981 of the lower court is
sustained, the homestead title holders may still vindicate their rights by filing a
separate civil action for cancellation of titles and for reconveyance in a court of
ordinary civil jurisdiction. Conversely, the same recourse may be resorted to by
petitioners. "(T)he true owner may bring an action to have the ownership or title to
land judicially settled, and if the allegations of the plaintiff that he is the true owner
of the parcel of land granted as free patent and described in the Torrens title and
that the defendant and his predecessor-in-interest were never in possession of the
parcel of land and knew that the plaintiff and his predecessor-in-interest have been
in possession thereof be established, then the court in the exercise of its equity

jurisdiction, without ordering the cancellation of the Torrens title issued upon the
patent, may direct the defendant, the registered owner, to reconvey the parcel of
land to the plaintiff who has been found to be the true owner thereof." 17
WHEREFORE, the petition is DENIED. The appealed decision of the Court of Appeals
is AFFIRMED. Costs against the petitioners-appellants.
SO ORDERED.

FIDELA R. ANGELES,
Petitioner,
- versus THE SECRETARY OF JUSTICE, THE ADMINISTRATOR, LAND REGISTRATION
AUTHORITY, THE REGISTER OF DEEDS OF QUEZON CITY, and SENATOR
TEOFISTO T. GUINGONA, JR.,
Respondents.
G. R. No. 142549
March 9, 2010
DECISION

LEONARDO-DE CASTRO, J.:

The property involved in this case is covered by Original Certificate of Title (OCT)
No. 994, which encompasses One Thousand Three Hundred Forty-Two (1,342)
hectares of the Maysilo Estate, previously described by this Court En Banc as a
vast tract of land [that] stretches over three cities, comprising an area larger than
the sovereign states of Monaco and the Vatican.[1] What we have before us now is
touted as one of the biggest and most extensive land-grabbing incidents in recent
history.[2]
The existence of several cases already decided by this Court dealing with this
infamous estate has made the job of deciding this particular petition easy, on one
hand, as there are cases squarely on point and at the outset, applicable; but
complicated, on the other hand, as such applicability must be determined with
thoroughness and accuracy to come up with a just, equitable, and fair conclusion to
a controversy that has now lasted for almost forty-five (45) years.
Submitted for Decision is a petition for mandamus seeking respondents Secretary of
Justice, the Administrator of the Land Registration Authority (LRA), and the Register
of Deeds of Quezon City to comply with the Order[3] dated January 8, 1998 issued

by the Regional Trial Court (RTC) of Caloocan City in Civil Case No. C-424, entitled
Bartolome Rivera, et al. v. Isabel Gil de Sola, et al. (the RTC Order), which was
issued a Certificate of Finality on March 12, 1998.
On May 3, 1965, petitioner, together with other individuals, all of them claiming to
be the heirs of a certain Maria de la Concepcion Vidal, and alleging that they are
entitled to inherit her proportional share in the parcels of land located in Quezon
City and in the municipalities of Caloocan and Malabon, Province of Rizal,
commenced a special civil action for partition and accounting of the property
otherwise known as Maysilo Estate covered by OCT No. 994, allegedly registered on
April 19, 1917 with the Registry of Deeds of Caloocan City. This was docketed as
Civil Case No. C-424 in the RTC of Caloocan City, Branch 120.
Some of said alleged heirs were able to procure Transfer Certificates of Title (TCTs)
over portions of the Maysilo Estate. They also had led this Court to believe that OCT
No. 994 was registered twice, thus, in Metropolitan Waterworks and Sewerage
Systems (MWSS) v. Court of Appeals,[4] reiterated in Heirs of Luis J. Gonzaga v.
Court Of Appeals,[5] the Court held that OCT No. 994 dated April 19, 1917, and not
May 3, 1917, was the valid title by virtue of the prior registration rule.
In the RTC Order sought to be implemented, Judge Jaime D. Discaya granted the
partition and accounting prayed for by plaintiffs in that case; directed the respective
Registers of Deeds of Caloocan City and Quezon City to issue transfer certificates of
title in the names of all the co-owners, including petitioner, for twelve (12) parcels
of land with an aggregate area of One Hundred Five Thousand and Nine Hundred
Sixty-Nine square meters (105,969 sq. m.), more or less; and ordered that said
parcels of land be sold, subject to the confirmation of the Court, and the proceeds
be divided among the plaintiffs in proportion to their respective interests in the
property.
The dispositive portion of said Order reads as follows:
WHEREFORE, premises considered, the recommendation of the Commissioners in
their Joint Commissioners Report dated October 21, 1997 and Supplemental
Commissioners Report dated December 30, 1997 that the following lots with
transfer certificates of title to be issued by the Register of Deeds of Caloocan City in
the names of all co-owners be sold and the proceeds thereof divided among
themselves in proportion to their respective interest in the property, is approved.
The Register of Deeds of Caloocan City and of Quezon City are hereby directed to
issue transfer certificates of title in the names of all the co-owners for the following
lots, namely:
xxxx

Any sale of above-mentioned lots shall be subject to confirmation by this Court

pursuant to Section 11, Rule 69 of the Rules of Civil Procedure.[6]

Petitioner alleges that the respective Registers of Deeds of Caloocan City and
Quezon City refused to comply with the RTC Order because they were still awaiting
word from the LRA Administrator before proceeding. Counsel for petitioner then
requested the LRA Administrator to direct said Registers of Deeds to comply with
the Order.
The LRA Administrator, Mr. Alfredo R. Enriquez, sent counsel for petitioner a letterreply[7] dated March 27, 2000, with two attachments: 1) the 1st Indorsement[8]
dated September 22, 1997 (the 1st Indorsement) issued by then Department of
Justice (DOJ) Secretary Teofisto T. Guingona, Jr. (respondent Guingona), and 2) LRA
Circular No. 97-11[9] issued to all Registers of Deeds. The letter-reply reads in part:
We regret to inform you that your request cannot be granted in view of the directive
of the Department of Justice in its 1st Indorsement dated 22 September 1997, copy
enclosed, as a result of the inquiry conducted by the Composite Fact-Finding
Committee (created under DOJ Department Order No. 137) finding that there is only
one OCT No. 994 which was issued by the Rizal Register of Deeds on 3 May 1917
(and not on 19 April 1919) pursuant to Decree No. 36455 in Land Registration Case
No. 4429. Pursuant to this DOJ directive, this Authority issued LRA Circular No. 9711 to all Registers of Deeds, copy attached, stating the following:
xxxx
In compliance with the DOJ directive, this Authority, in its 1st Indorsement dated 27
March 1998, x x x had recommended to the Office of the Solicitor General the filing
of an appropriate pleading relative to the said Order dated 8 January 1998.
The findings of the DOJ on OCT No. 994 are in fact sustained by the Senate
Committee on Justice and Human Rights and Urban Planning in its Senate
Committee Report No. 1031 dated 25 May 1998 x x x.[10] (Emphasis ours.)

The LRA Administrator likewise wrote that in Senate Committee Report No. 1031
dated May 25, 1998, the Senate Committees on Justice and Human Rights and
Urban Planning came up with the following findings:
i.
There is only one Original Certificate of Title (OCT) No. 994 and this was
issued or registered on May 3, 1917[.]

ii.
The [OCT] No. 994 dated April 19, 1917 is non-existent. It was a fabrication
perpetrated by Mr. Norberto Vasquez, Jr., former Deputy Registrar of Deeds of
Caloocan City.
iii. The alleged surviving heirs could not have been the true and legal heirs of the
late Maria de la Concepcion Vidal as government findings showed the physical and
genetic impossibility of such relationship[.]
iv. Mr. Norberto Vasquez, Jr., former Deputy Registrar of Deeds of Caloocan City,
acted maliciously, fraudulently and in bad faith, by issuing certifications and/or
written statements to the effect that OCT No. 994 was issued or registered on April
19, 1917 when in truth and in fact it was issued or registered on May 3, 1917.
v.
Atty. Yolanda O. Alfonso, Registrar of Deeds of Caloocan City, likewise acted
maliciously, fraudulently and in bad faith, when she signed the TCTs issued in the
name of Eleuteria Rivera which bear a wrong date of the registration of OCT No.
994. Malice was evident because she had previously issued certificates of title in
the names of other individuals which were derived from OCT No. 994 dated May 3,
1917 and she had in fact questioned the falsity of April 19, 1917 as the correct date
of the registration of OCT No. 994.[11] (Underscoring in the original.)

The letter-reply further stated that OCT No. 994 was intact and was being kept in
the LRA to prevent its alteration and tampering. We quote the last portion of said
letter-reply:
As found by the Senate Committees, the mess caused by the former Register of
Deeds and Deputy Register of Deeds in making it appear that OCT No. 994 was
issued in 19 April 1917, thus giving the wrong impression that there were two (2)
OCT No. 994, resulted in the double, if not multiple, issuance of transfer certificates
of title covering the subdivided portions of the Maysilo Estate, including the parcels
of land mentioned in the subject Order dated 8 January 1998. Our Authority, as the
protector of the integrity of the Torrens title is mandated to prevent anomalous
titling of real properties and put a stop to further erode the confidence of the public
in the Torrens system of land registration.
With due respect, the Order dated 8 January 1998 which directs the issuance of
transfer certificates of title as direct transfer from OCT No. 994, suffers from certain
deficiencies, to wit: OCT No. 994 had long been cancelled totally by the issuance of
various certificates of title in the names of different persons; and that the plan and
descriptions of the lands were not based on a subdivision plan duly approved by the
proper government agency but merely sketch plans, in violation of Section 50 of PD
1529. Obviously, compliance with the Order will result to duplication of certificates
of title covering land previously registered in the names of other persons. Besides,

in MWSS vs. CA, the Supreme Court did not declare the nullity of the certificates of
title which emanated from OCT No. 994 issued on 3 May 1917. It merely invalidates
the title of MWSS and recognizes as valid the title of Jose B. Dimson. There was no
such declaration as to the various transfer certificates of title emanating from OCT
No. 994. Under the law, there must be a separate action in court for the declaration
of nullity of certificates of title pursuant to the due process clause of the
Constitution.
As observed by the Supreme Court in Republic vs. Court of Appeals (94 SCRA 874),
there are too many fake titles being peddled around and it behooves every official
of the government whose functions concern the issuance of legal titles to see to it
that this plague that has made a mockery of the Torrens system is eradicated right
now through their loyalty, devotion, honesty and integrity, in the interest of our
country and people at large.[12]

Petitioner avers that respondent Guingona, in issuing the 1st Indorsement,[13]

made a substantive modification of the ruling made by this Court in MWSS v. Court
of Appeals and Heirs of Luis Gonzaga v. Court of Appeals. She further avers that
[n]ot even the Secretary of Justice has the power or authority to set aside or alter
an established ruling made by the highest Court of the land. According to
petitioner, respondent Guingona claimed to have made his own finding that there is
only one OCT No. 994 which was issued by the Register of Deeds of Rizal on May 3,
1917, and not on April 19, 1917, and this finding is a reversal of the decisions of this
Court on what is the valid OCT No. 994. Petitioner contends that [t]he rule is well
settled that once a decision becomes final[,] the Court can no longer amend,
modify, much less set aside the same and that respondent Guingona usurped
judicial functions and did a prohibited act which rendered the Order of no effect.[14]
Petitioner claims that respondent Guingona was the one who caused the issuance
by the LRA Administrator of Circular No. 97-11 dated October 3, 1997, which had
the same legal effect on other cases similarly situated without hearing or notice to
the parties-in-interest, and that this was contemptuous and contumacious and calls
for condemnation and reproof of the highest degree.[15]
Petitioner alleges that compliance with a final judicial order is a purely ministerial
duty, that she and her co-plaintiffs in Civil Case No. C-424 cannot avail of the
benefits granted to them by the Order, and that she has no plain, speedy and
adequate remedy in the ordinary course of law, other than this action.
In his Comment,[16] respondent Guingona raises the following grounds for denial of
the petition:

1.
Petitioner has no cause of action against respondent Guingona in that the
latter is no longer the Secretary of Justice.
2.
The issuance of the 1st Indorsement dated September 22, 1997 was pursuant
to the report dated August 27, 1997 made by the committee created by
Department Order No. 137 dated April 23, 1997 after conducting an independent
fact-finding investigation. It did not in any way alter or modify any judgment of this
Honorable Court.
3.
Petitioner was not denied due process as her rights, if any, under the Order
dated January 18, 1998 were not yet in existence at the time the 1st Indorsement
was issued.
4.

Mandamus is not the appropriate remedy to enforce claims of damages.[17]

Respondent Guingona contends that he was no longer the Secretary of Justice,

therefore, he did not anymore possess the mandatory duties being compelled to be
performed in this case by way of a writ of mandamus; he had no more duty
resulting from the said position and could not perform an act that pertained to said
duty, even if he wanted to; and since he did not have the powers and duties of the
Secretary of Justice, he was therefore not a real party-in-interest in this case.
Respondent Guingona avers that he was prompted to issue DOJ Department Order
No. 137 dated April 13, 1997 creating a committee due to several complaints
received by the Office of the Secretary of Justice in February 1997. Among others,
the complaints prayed for the investigation of certain actions taken by the LRA
officials and personnel in connection with transactions involving the Maysilo Estate.
According to him, the committee was tasked for the purpose of initiating a factfinding inquiry:
(1) to ascertain the circumstances surrounding the issuance of original
Certificate(s) of Title (OCT) No. 994 of the Registry of Deeds of Rizal purporting to
cover a mass of land encompassing Malabon, Caloocan City and Quezon City as well
as the issuance and regularity of Transfer Certificates of Titles (TCTs) derived
therefrom; (2) in the event of a finding of the irregular issuance of any such [TCTs],
(a) to determine the involvement of and to recommend the actions to be taken
against person(s) and/or officials and employees of this Department or its agencies
who may appear to have participated therein, and (b) to recommend the
administrative and/or judicial actions, if any, that may directly be undertaken by this
Department, the Office of the Solicitor General, the Land Registration Authority, and
other units and attached agencies of this Department, with respect to such
irregularly issued Transfer Certificates of Title, taking into account the final decisions
of the courts affecting the Maysilo Estate.[18]

Respondent Guingona contends that it can be gleaned from the purpose of the
creation of the committee that its fact-finding investigation was merely
administrative to formulate and recommend policies, procedures and courses of
action which the DOJ, the LRA, the Office of the Solicitor General and other agencies
of the DOJ can adopt with regard to the problem of the proliferation of fake land
titles, including those that relate to the Maysilo Estate. He alleges that based on
this committees report dated August 27, 1997, he issued the subject 1st
Indorsement which spelled out the policies, procedures, and courses of action which
the LRA, an agency under the DOJ, must follow not only with respect to OCT No. 994
and its derivative titles covering the Maysilo Estate but to all other original or
transfer certificates of title as well. He contends that the 1st Indorsement was
merely an administrative issuance of the DOJ; thus, it could not be said that it
altered or supplanted any judgment of this Court.
Respondent Guingona further states that the 1st Indorsement dated September 22,
1997 was issued long before the Order dated January 18, 1998, thus it could not be
said that petitioner was denied due process as her rights and interests were nonexistent at that time. Furthermore, respondent Guingona alleges that petitioner
was accorded due process when the LRA Administrator gave an opportunity to
petitioners counsel to present petitioners case to the LRA legal staff. Respondent
Guingona claims that such opportunity to be heard satisfies the requirements of due
process, as the essence of due process is simply the opportunity to be heard. [19]
With regard to the claim for damages, respondent Guingona argues that it is a
factual issue which the petitioner must prove in the course of a trial where
petitioners claim for damages can be fully litigated. This Honorable Court,
however, is not a trier of facts. Such being the case, it is inappropriate for petitioner
to include in her petition for mandamus a claim for damages the amount of which
she did not even specify. As it is, such claim should be denied by this Honorable
Court. There is also no showing that petitioner paid the required docket fees for her
claims for damages. On this score alone, such a claim should be outrightly
dismissed.[20]
In her Reply,[21] petitioner contends that former DOJ Secretary Guingona has to be
named as private respondent because he was the cause of public respondents
failure to comply with their ministerial duty. A private respondent is the person
interested in sustaining the proceedings in the court; and it shall be the duty of such
private respondent to appear and defend, both in his own behalf and in behalf of the
public respondents affected by the proceedings x x x. He is not charged with any
improper act, but he is a necessary party as the grant of relief prayed for by
petitioner shall require private respondents active participation. [22]

Anent private respondents argument that the 1st Indorsement did not in any way
alter or modify any judgment of this Honorable Court, petitioner counters that the
1st Indorsement and pertinent acts of private respondent x x x resulted in the
altering or supplanting of a judgment of this Court. The complaints praying that an
investigation be conducted on the irregular issuance of titles in the Maysilo Estate
were made to the private respondent by parties who held titles derived from OCT
No. 994 on May 3, 1917, after the Supreme Court had rendered its decision in MWSS
v. Court of Appeals and Heirs of Gonzaga v. Court of Appeals.
Petitioner argues that contrary to private respondents claim, she is entitled to file a
petition for mandamus as she and her co-plaintiffs in Civil Case No. C-424 has been
suffering from damages and losses incapable of quantification, because of the
wrongful act of the respondents. Petitioner cites the following provisions of the
Rules of Court in support of her argument:

RULE 65
xxxx
SECTION 9. Service and enforcement of order or judgment. A certified copy of the
judgment rendered in accordance with the last preceding section shall be served
upon the court, quasi-judicial agency, tribunal, corporation, board, officer or person
concerned in such manner as the court may direct, and disobedience thereto shall
be punished as contempt. An execution may issue for any damages or costs
awarded in accordance with Section 1 of Rule 39.

RULE 39
SECTION 1. Execution upon final judgments or orders. Execution shall issue as a
matter of right, on motion, upon a judgment or order that disposes of the action or
proceeding upon the expiration of the period to appeal therefrom if no appeal has
been duly perfected.
If the appeal has been duly perfected and finally resolved, the execution may
forthwith be applied for in the court of origin, on motion of the judgment obligee,
submitting therewith certified true copies of the judgment or judgments or final
order or orders sought to be enforced and of the entry thereof, with notice to the
adverse party.
The appellate court may, on motion in the same case, when the interest of justice
so requires, direct the court of origin to issue the writ of execution.

Petitioner avers that private respondent seemed to assume a function that did not
belong to the Executive Department, because he had caused the issuance of an LRA
Circular that forbade compliance with a court order that had already become final
and executory. Petitioner likewise avers that the doctrine of separation of powers
called for each branch of government to be left alone to discharge its functions
within its jurisdiction, as it saw fit.[23]
Public respondents Secretary of Justice, the Administrator of the Land Registration
Authority, and the Register of Deeds of Quezon City filed their Comment[24] on
November 16, 2000.
Public respondents claim that petitioner and her coplaintiffs are not the rightful owners of the property subject of said complaint for
partition. Their allegation in the complaint that they are the heirs and successorsin-interest of the late Maria de la Concepcion Vidal, co-owner of the parcels of land
described in OCT No. 994, and are therefore entitled to the proportionate share,
ownership, and possession of the parcels of land described in paragraphs XI to XV of
the complaint, is an untrue statement made with intent to deceive. This is because
the findings embodied in the Report of the Fact Finding Committee created by the
DOJ, which are the result of the joint undertaking of the Department proper, the
Office of the Solicitor General, and the LRA, support the conclusion that petitioner
and her co-plaintiffs are not entitled to the issuance of new transfer certificates of
title in their names.[25]
Public respondents claim the following as facts:
The DOJ Report became the subject of [a] Senate investigation. On May 25, 1998,
the Honorable Senate of the Tenth Congress of the Republic of the Philippines
reached the conclusion that petitioner and her co-plaintiffs are not and cannot be
true heirs of the late Maria de la Concepcion Vidal (par. 3, p. 33, Senate Report). x x
x.
As early as 1917, subject property of the instant case had already been partitioned
and divided among the true owners, namely, Gonzalo Tuason y Patino, Jose Rato y
Tuason, Luis Vidal y Tuason, Concepcion Vidal y Tuason, Pedro Baos, Maria de la
Concepcion Vidal, Trinidad Jurado, Bernardino Hernandez, Esperanza Tuason Chua
Jap, Isabel Tuason Chua, Juan Jose Tuason de la Paz, Maria Teresa Tuason y de la Paz,
Mariano Severo Tuason y de la Paz, Demetrio Asuncion Tuason y de la Paz, Augusto
Hoberto Tuason y de la Paz, Maria Soterrana Tuason y de la Paz, Benito Legarda y de
la Paz, Consuelo Legarda y de la Paz, Rita Legarda y de la Paz, Benito Legarda y
Tuason, Emilia Tuason y Patio, Maria Rocha de Despujols, Sofia OFarrell y Patio,
German Franco y Gonzales, Concepcion Franco y Gonzales, Domingo Franco y
Gonzales, Guillerma Ferrer y Tuason, Vicente Ferrer y Tuason, Josefa Tuason vda. de
Flores, and heirs of Filemon Tuazon in proportion to their respective shares, as

evidenced by the document entitled PROYECTO DE PARTICION DE LA HACIENDA DE

MAYSILO (PARTITION PLAN OF HACIENDA MAYSILO) consisting of fifty-two (52) pages
which is attached as Annex D, and its faithful translation into English consisting of
forty-nine (49) pages attached as Annex E, and both made integral parts hereof.
As a result of said partition, transfer certificates of titles covering the same subject
parcels of land were legally issued in the names of above-enumerated true owners.
The Register of Deeds of Quezon City and Caloocan City, through the undersigned
counsel, filed the aforestated Motion for Reconsideration of the questioned Order of
the lower court.
The resolution of said motion and other incidents in related cases pending before
the lower court has been held in abeyance to await the resolution by higher courts
of other cases involving the Maysilo Estate.[26]

We are thus faced with the issue of whether public respondents unlawfully
neglected to perform their duties by their refusal to issue the questioned transfer
certificates of title to petitioner and her co-plaintiffs (in Civil Case No. C-424) or
have unlawfully excluded petitioner from the use and enjoyment of whatever
claimed right, as would warrant the issuance of a writ of mandamus against said
public respondents.
Considering the factual background and recent jurisprudence related to this
controversy as will be discussed below, we find that it was not unlawful for public
respondents to refuse compliance with the RTC Order, and the act being requested
of them is not their ministerial duty; hence, mandamus does not lie and the petition
must be dismissed.
Rule 65 of the 1997 Rules of Civil Procedure provides:
SECTION 3. Petition for mandamus. When any tribunal, corporation, board, officer
or person unlawfully neglects the performance of an act which the law specifically
enjoins as a duty resulting from an office, trust, or station, or unlawfully excludes
another from the use and enjoyment of a right or office to which such other is
entitled, and there is no other plain, speedy and adequate remedy in the ordinary
course of law, the person aggrieved thereby may file a verified petition in the proper
court, alleging the facts with certainty and praying that judgment be rendered
commanding the respondent, immediately or at some other time to be specified by
the court, to do the act required to be done to protect the rights of the petitioner,
and to pay the damages sustained by the petitioner by reason of the wrongful acts
of the respondent.

It is settled that mandamus is employed to compel the performance, when refused,

of a ministerial duty, but not to compel the performance of a discretionary duty.
Mandamus will not issue to enforce a right which is in substantial dispute or to
which a substantial doubt exists.[27] It is nonetheless likewise available to compel
action, when refused, in matters involving judgment and discretion, but not to direct
the exercise of judgment or discretion in a particular way or the retraction or
reversal of an action already taken in the exercise of either.[28]
Therefore, we must look into the alleged right of petitioner and see if compliance
with the RTC Order is compellable by mandamus; or, in the alternative, find out if
substantial doubt exists to justify public respondents refusal to comply with said
Order. Did public respondents have sufficient legal basis to refuse to grant
petitioners request?
In this regard, we find our discussion in Laburada v. Land Registration Authority[29]
instructive, to wit:
That the LRA hesitates in issuing a decree of registration is understandable. Rather
than a sign of negligence or nonfeasance in the performance of its duty, the LRA's
reaction is reasonable, even imperative. Considering the probable duplication of
titles over the same parcel of land, such issuance may contravene the policy and
the purpose, and thereby destroy the integrity, of the Torrens system of registration.
xxxx
x x x Likewise, the writ of mandamus can be awarded only when the petitioners'
legal right to the performance of the particular act which is sought to be compelled
is clear and complete. Under Rule 65 of the Rules of Court, a clear legal right is a
right which is indubitably granted by law or is inferable as a matter of law. If the
right is clear and the case is meritorious, objections raising merely technical
questions will be disregarded. But where the right sought to be enforced is in
substantial doubt or dispute, as in this case, mandamus cannot issue.[30]
(Emphasis ours.)
As can be gleaned from the above discussion, the issuance by the LRA officials of a
decree of registration is not a purely ministerial duty in cases where they find that
such would result to the double titling of the same parcel of land. In the same vein,
we find that in this case, which involves the issuance of transfer certificates of title,
the Register of Deeds cannot be compelled by mandamus to comply with the RTC
Order since there were existing transfer certificates of title covering the subject
parcels of land and there was reason to question the rights of those requesting for
the issuance of the TCTs. Neither could respondent LRA Administrator be mandated
by the Court to require the Register of Deeds to comply with said Order, for we find

merit in the explanations of respondent LRA Administrator in his letter-reply that

cites the 1st Indorsement issued by respondent Guingona, LRA Circular No. 97-11,
and Senate Committee Report No. 1031, as reasons for his refusal to grant
petitioners request.[31] There was, therefore, sufficient basis for public
respondents to refuse to comply with the RTC Order, given the finding, contained in
the cited documents, that OCT No. 994 dated April 19, 1917, on which petitioner
and her co-plaintiffs in the civil case clearly anchored their rights, did not exist.
It is important to emphasize at this point that in the recent case resolved by this
Court En Banc in 2007, entitled Manotok Realty, Inc. v. CLT Realty Development
Corporation[32] (the 2007 Manotok case), as well as the succeeding resolution[33]
in the same case dated March 31, 2009 (the 2009 Manotok case), the controversy
surrounding the Maysilo Estate and the question of the existence of another OCT
No. 994 have been finally laid to rest. All other cases involving said estate and OCT
No. 994, such as the case at bar, are bound by the findings and conclusions set
forth in said resolutions.
As stated earlier, petitioner anchors her claim on previous cases decided by this
Court[34] which have held that there are two existing OCT No. 994, dated
differently, and the one from which she and her co-plaintiffs (in Civil Case No. C424) derived their rights was dated earlier, hence, was the superior title.
Regrettably, petitioners claim no longer has a leg to stand on. As we held in the
2007 Manotok case:
The determinative test to resolve whether the prior decision of this Court should be
affirmed or set aside is whether or not the titles invoked by the respondents are
valid. If these titles are sourced from the so-called OCT No. 994 dated 17 April 1917,
then such titles are void or otherwise should not be recognized by this Court. Since
the true basic factual predicate concerning OCT No. 994 which is that there is only
one such OCT differs from that expressed in the MWSS and Gonzaga decisions, said
rulings have become virtually functus officio except on the basis of the "law of the
case" doctrine, and can no longer be relied upon as precedents.[35]

Specifically, petitioner cannot anymore insist that OCT No. 994 allegedly issued on
April 19, 1917 validly and actually exists, given the following conclusions made by
this Court in the 2007 Manotok case:
First, there is only one OCT No. 994. As it appears on the record, that mother title
was received for transcription by the Register of Deeds on 3 May 1917, and that
should be the date which should be reckoned as the date of registration of the title.
It may also be acknowledged, as appears on the title, that OCT No. 994 resulted
from the issuance of the decree of registration on [19] April 1917, although such

date cannot be considered as the date of the title or the date when the title took
effect.
Second. Any title that traces its source to OCT No. 994 dated [19] April 1917 is void,
for such mother title is inexistent. The fact that the Dimson and CLT titles made
specific reference to an OCT No. 994 dated [19] April 1917 casts doubt on the
validity of such titles since they refer to an inexistent OCT. x x x.
Third. The decisions of this Court in MWSS v. Court of Appeals and Gonzaga v. Court
of Appeals cannot apply to the cases at bar, especially in regard to their recognition
of an OCT No. 994 dated 19 April 1917, a title which we now acknowledge as
inexistent. Neither could the conclusions in MWSS or Gonzaga with respect to an
OCT No. 994 dated 19 April 1917 bind any other case operating under the factual
setting the same as or similar to that at bar.[36] (Emphases supplied.)

To be sure, this Court did not merely rely on the DOJ and Senate reports regarding
OCT No. 994. In the 2007 Manotok case, this Court constituted a Special Division of
the Court of Appeals to hear the cases on remand, declaring as follows:
Since this Court is not a trier of fact[s], we are not prepared to adopt the findings
made by the DOJ and the Senate, or even consider whether these are admissible as
evidence, though such questions may be considered by the Court of Appeals upon
the initiative of the parties. x x x The reports cannot conclusively supersede or
overturn judicial decisions, but if admissible they may be taken into account as
evidence on the same level as the other pieces of evidence submitted by the
parties. The fact that they were rendered by the DOJ and the Senate should not, in
itself, persuade the courts to accept them without inquiry. The facts and arguments
presented in the reports must still undergo judicial scrutiny and analysis, and
certainly the courts will have the discretion to accept or reject them.
There are many factual questions looming over the properties that could only be
threshed out in the remand to the Court of Appeals. x x x.
xxxx
The Special Division is tasked to hear and receive evidence, conclude the
proceedings and submit to this Court a report on its findings and recommended
conclusions within three (3) months from finality of this Resolution.[37]

Thus, in the 2009 Manotok case, this Court evaluated the evidence engaged in by
said Special Division, and adopted the latters conclusions as to the status of the
original title and its subsequent conveyances. This case affirmed the earlier finding

that there is only one OCT No. 994, the registration date of which had already been
decisively settled as 3 May 1917 and not 19 April 1917 and categorically concluded
that OCT No. 994 which reflects the date of 19 April 1917 as its registration date is
null and void.
In the case at bar, petitioner is the last surviving co-plaintiff in Civil Case No. C-424
originally filed on May 3, 1965. The records bear several attempts of different
individuals to represent her as counsel, a matter that could be attributed to her
advanced age and potential access to a vast sum of money, should she get a
favorable decision from this case. It appears, however, that the partition and
accounting of a portion of the Maysilo Estate that she and her co-plaintiffs prayed
for can no longer prosper because of the conclusive findings quoted above that the
very basis of their claim, a second, albeit earlier registered, OCT No. 994, does not
exist.
The requirements under Rule 65 for the issuance of the writ of mandamus not
having been proven by petitioner to exist, we dismiss the petition for lack of merit.
WHEREFORE, premises considered, the petition is hereby DISMISSED.
SO ORDERED.

3. Register of Deeds
a. Functions
i.
Section 10, PD 1529
Section 10. General functions of Registers of Deeds. The office of
the Register of Deeds constitutes a public repository of records of
instruments affecting registered or unregistered lands and chattel
mortgages in the province or city wherein such office is situated.
It shall be the duty of the Register of Deeds to immediately register
an instrument presented for registration dealing with real or
personal property which complies with all the requisites for
registration. He shall see to it that said instrument bears the proper
documentary and science stamps and that the same are properly
canceled. If the instrument is not registerable, he shall forthwith
deny registration thereof and inform the presentor of such denial in
writing, stating the ground or reason therefor, and advising him of
his right to appeal by consulta in accordance with Section 117 of
this Decree.
ii.
G.R. No. L-3970

October 29, 1952

GURBAX SINGH PABLA & CO., GURBAX SINGH PABLA, BELA SINGH PABLA,
OJAGAR SINGH, DHARAM SINGH, TALOK SINGH and CIPRIANO TAN ENG
KIAT, petitioners-appellees,
vs.
HERMOGENES REYES and TEODORA TANTOCO, respondents-appellants.
The facts are stated in the opinion of the Court.
Jose N. Buendia for appellants.
Eliseo Caunca for appellees.
LABRADOR, J.:
This is an appeal prosecuted by the respondents-appellants against an order of the
Court of First Instance of Manila dated November 29, 1949, compelling them to
surrender owner's duplicates of Transfer Certificates of Title Nos. 8071 and 8072, so
that the contract of lease entered into between petitioners-appellees and the owner
of the land covered by said certificates of title be annotated thereon. John Tan Chin
Eng is the owner of the land covered by the above-mentioned certificates of title,
and on July 23, 1948, he entered into a contract (Exhibit A) with the petitionerappellees, under the terms of which petitioners-appellees were to construct thereon
a three-story building of concrete and of strong materials valued at from P80,000 to
P90,000. The contract also provided that the building shall become the exclusive
property of the owner of the land, but that the petitioner-appellees were to occupy,
hold, or possess it as lessees for a period of three years and six months from its
completion, without paying any rentals therefor, the sum spent in the construction
being considered as the rentals; that after the above period of three years and six
months petitioners-appellees were to continue occupying the said building for
another two years at a monthly rental of P2,000. This contract of lease was filed and
registered in the office of the Register of Deeds of Manila on August 10, 1948, under
Primary Entry No. 3352, Volume 15. At the time that the contract was entered into
there was an existing mortgage over the land in favor of Jose Calvo and Carlos
Calvo for the sum of P110,000. This mortgage in favor of the Calvos was cancelled,
and a new mortgage was executed by the owner in favor of respondents-appellants
herein, Honorable Hermogenes Reyes and his spouse Teodora Tantoco, dated March
8, 1949, which was registered on the same date in the office of the Register of
Deeds of Manila under Primary Entry No. 5014. On May 14, 1949, the original
contract of lease, Exhibit A, was amended by Exh. C, by virtue of which the period
under which the lessees were to hold any occupy the property without rentals was
extended to seven years and four months, and the rental for the additional two
years thereafter reduced to P1,148. This amended contract of lease, Exhibit C, was
also registered in the office of the Register of Deeds of Manila under Primary Entry
No. 5014, Volume 16, on May 20, 1949.

On May 25, 1949, counsel for petitioners-appellees wrote respondents-appellants

requesting them to allow him to take the certificates of title to the office of the
Register of Deeds of Manila for the annotation of the contracts of lease entered into
by the owner with them (Exhibit D), and on May 27, 1949, the son of respondentsappellants acknowledged receipt of the said letter but informed counsel for the
petitioner-appellees that the request could not be granted without the written
consent of the owner of the certificates of title (Exhibit E). On June 16, 1949,
respondents-appellants' son wrote the owner of the land (Exhibit M) demanding the
payment of the overdue interest on the mortgage with the following statement:
. . . For this reason, I wish to request that you come over to my office before 12:00
noon to pay the said interest before we can deliver your Transfer Certificate of Title
to Atty. Manuel P. Calanog who will take charge of registering the lease contract
between Mr. Singh Pabla and your goodself.
On June 3, 1949, the petitioners-appellees filed a motion in the Court of First
Instance of Manila praying that an order issue to the owner for the delivery of the
owner's duplicates of transfer certificates of title Nos. 8071 and 8072 to the
petitioners in order that the Register of Deeds of Manila may be able to make the
annotation thereon of the contract of lease, Exhibit A, and its amendment, Exhibit C.
Against this petition Hermogenes Reyes and Teodora Tantoco filed an opposition,
alleging that they had no knowledge whatsoever of the contract of lease, Exhibit A,
or of its amendments, Exhibit C, and that the execution of the amendment, Exhibit
C, violated the express provision of the mortgage, to the effect that the owner could
not sell, assign, or encumber the mortgaged premises without the written consent
of the mortgages. It is to be noted that with respect to the original contract of lease,
Exhibit A, no allegation is made in the opposition of the respondents-appellants that
they were not aware of the existence of the contract, Exhibit A, their only allegation
being that the only annotation on the certificates of title at the time they entered
into the contract of mortgage was the mortgage in favor of Jose Calvo and Carlos
Calvo. It is also to be noted that respondents-appellants do not deny an express
allegation of paragraph 13 of the amended petition to the effect that notice was
given to the public by a big sign board placed on the premises while the building
was under construction that petitioners-appellees are the owners of the building.
The amended petition further states, without denial on the part of the respondentsappellants, that as early as October 9, 1948, the Register of Deeds of Manila had
demanded in writing from the owner of the land the submission of his duplicate
certificates of title Nos. 8071 and 8072 in order that the lease executed by him in
favor of the petitioners-appellees may be given due course. At the hearing of the
motion no oral evidence was submitted; only documentary evidence was presented.
Thereafter the Court of First Instance of Manila issued the order already mentioned
above, directing respondents to surrender the certificates of title to the Register of
Deeds of Manila in order that petitioners-appellees' contract of lease may be noted

thereon. It expressly found that respondents-appellants had knowledge of the lease

contract, Exhibit A, but that respondents' deed of mortgage of March 8, 1949, has
priority over petitioner's amended contract of lease, Exhibit C. As regards the
(supposed) prohibition contained in the contract of mortgage, the court held that
the prohibition gives a right of foreclosure; in other words, that in spite of the
prohibition the amended contract of lease, Exhibit C, may not be considered as null
and void.
In this court on appeal claim is made on behalf of the respondents-appellants that
the court a quo erred in holding that respondents-appellants had knowledge of the
contract of lease, Exhibit A; that it erred in holding that Tirso T. Reyes is the
attorney-in-fact of the respondents-appellants; that it erred in ordering the
registration of the contract of lease, Exhibit A; and that it erred in not holding that
the registration of the contracts, Exhibits A and C, will prejudice the rights and
interest of respondents-appellants.
It should be noted that all that the petitioners demand or pray for is the surrender of
the titles to the Register of Deeds so that their contracts of lease, Exhibits A and C,
may be noted thereon. The only issue, therefore, is whether petitioners have a right
to have said deeds registered. It is not denied that the contracts have been
executed by the registered owner of the land, or that they have been lawfully
executed, or that they have all the qualities of registerable documents. Indeed, the
owner is agreeable to the registration. The objections interposed by respondents,
who are mortgagees merely, that they had no knowledge of the contract of lease, or
that their mortgage has priority, or that they will be prejudiced, are beside the
issue.
The purpose of registering an instrument is to give notice thereof to all persons
(section 51, Act No. 496); it is not intended by the proceedings for registration to
seek to destroy or otherwise affect already registered rights over the land,
subsisting or existing at the time of the registration. The rights of these parties, who
have registered their rights, are not put in issue when an instrument is subsequently
presented for registration; nor are its effects on other instruments previously
registered put in issue by the procedure of registration. Thus, the objections raised
by respondents-appellants that they had no knowledge of the contract of lease,
Exhibit A, before the property was mortgaged to them, or that the same violates
their contract of mortgage with the owner of the land these are not passed upon
by the order for the registration of petitioners-appellees' contract of lease. The
objections, as well as the relative rights of all parties who have registered their
deeds, shall be decided in the proper suit or proceeding when the opportune
occasion arises; but they are not now in issue, nor may they be adjudicated upon,
simply because petitioners-appellees have applied for the registration of their
contract of lease.

The impropriety and inconvenience of proceeding to determine completely and in

advance all the possible consequences of a document, upon all parties affected
thereby, in the proceeding for its registration becomes apparent when, as in this
case, important and complicated questions of fact and of law were presented by the
respondents-appellants about their alleged lack of knowledge of the contracts of
lease and the invalidity thereof. The court a quo passed upon vital issues of fact
upon the motion and the opposition thereto, and upon the documents, letters, and
receipts presented, without any other evidence than the above. Yet the question of
knowledge is mainly a question of fact and requires inquiry into many and
complicated circumstances, which can not be satisfactorily shown except by
testimony.
On the other hand, the supposed invalidity of the contracts of lease is no valid
objection to their registration, because invalidity is no proof of their non-existence
or a valid excuse for denying their registration. The law on registration does not
require that only valid instruments shall be registered. How can parties affected
thereby be supposed to know their invalidity before they become aware, actually or
constructively, of their existence or of their provisions? If the purpose of registration
is merely to give notice, then questions regarding the effect or invalidity of
instruments are expected to be decided after, not before, registration. It must follow
as a necessary consequence that registration must first be allowed, and validity or
effect litigated afterwards.
The foregoing, however, must not be understood as an absolute and invariable rule
of procedure, for parties may, by mutual consent, submit issues for determination at
the time of the proceeding to register a document. But the court should only
proceed therewith (determination of the issues) upon giving all the parties
concerned sufficient opportunity to present their respective sides and the evidence
in support thereof, and that if this can not be done, the determination of the issues
should be reserved in a subsequent proceeding and the registration of the
document ordered.
In accordance with the above opinion, we find that the issues raised by
respondents-appellants, namely, that the contracts of lease, Exhibits A and C, are
invalid because they violate the contracts of mortgage executed in favor of the
owner of the land, that Tirso T. Reyes is not the attorney-in-fact of the respondentsappellants, and that the respondents-appellants had no knowledge of the execution
of the contract of lease, Exhibits A and C these issues were not properly
investigated because respondents-appellants did not have the opportunity to
present evidence thereon and did not even present copy of their mortgage at the
hearing, and the trial court decided the questions without full and complete
investigation. The ruling of the trial court on the above issues should, therefore, be
set aside and their determination reserved in a proper proceeding.

Wherefore, the opposition to the motion for the surrender of the certificates of title
to the Register of Deeds of Manila is overruled, and the order appealed from, in so
far as it orders the surrender of the certificates of title for the registration of the
contracts of lease, is hereby affirmed, but the other rulings are reversed, and the
other issues raised by respondents-appellants reserved for determination in a
proper proceeding. With costs against the respondents-appellants.
iii.

G.R. No. L-20611

May 8, 1969

AURELIO BALBIN and FRANCISCO BALBIN, petitioners,

vs.
REGISTER OF DEEDS OF ILOCOS SUR, respondent.
Vicente Llanes for petitioners.
Office of the Solicitor General for respondent.
Manuel A. Argel for respondents third parties affected.
MAKALINTAL, J.:
Appeal from the resolution of the Commissioner of Land Registration in LRC
Consulta No. 366.
On November 15, 1961 petitioners presented to the register of deeds of Ilocos
Sur a duplicate copy of the registered owner's certificate of title (OCT No. 548) and
an instrument entitled "Deed of Donation inter-vivos," with the request that the
same be annotated on the title. Under the terms of the instrument sought to be
annotated one Cornelio Balbin, registered owner of the parcel of land described in
OCT No. 548, appears to have donated inter-vivos an undivided two-thirds (/)
portion thereof in favor of petitioners. The entire area of the land is 11.2225
hectares.
The register of deeds denied the requested annotation for being "legally
defective or otherwise not sufficient in law." It appears that previously annotated in
the memorandum of encumbrances on the certificate are three separate sales of
undivided portions of the land earlier executed by Cornelio Balbin in favor of three
different buyers. The pertinent entries read:
Entry No. 5658.

Sales.

Sale for the sum of P400.00 executed by the registered owner, conveying an
undivided portion of an area of 3,710 square meters only in favor of Florentino

Gabayan, this Original Certificate of Title No. 548 is hereby cancelled with respect to
said area of 3,710 square meters and in lieu thereof, the name of the vendee ... is
hereby substituted to succeed to all rights, participation in interest of the vendor. ...
Date of Instrument:
xxx

xxx

Entry No. 5659.

January 25, 1955, ...

xxx
Sale of portion.

Sale for the sum of P100.00 executed by the registered owner, conveying an
undivided portion of an area of 16,713 square meters in favor of Roberto Bravo, this
Original Certificate of Title No. 548 is hereby cancelled with respect to said
undivided portion ... and in lieu thereof the name of the vendee ... is hereby
substituted to succeed to all rights, participation and interest of the vendor ...
Date of Instrument:
Entry No. 5660.

June 9, 1953. ...

Sale of portion.

Sale for the sum of P400.00 executed by the registered owner, conveying an
undivided portion of an area of 15,000 square meters in favor of Juana Gabayan,
this Certificate of Title No. 548 is hereby cancelled with respect to said undivided
portion ... and in lieu thereof the name of the vendee ... is hereby substituted to
succeed to all rights, participation and interest of the vendor ...
Date of Instrument:

February 12, 1952. ...

The final part of the annotations referring to the abovementioned sales

contains an additional memorandum stating that "three co-owner's duplicate
certificates of title No. 548 have been issued (by the register of deeds of Ilocos Sur)
in the name of Florentino Gabayan, Roberto Bravo and Juana Gabayan upon verbal
request of Mr. Andres Cabeldo, Notary Public of Caoayan, I. Sur, for and in the name
of the vendees, this 5th day of January, 1956 at Vigan, I. Sur." Mainly because these
three other co-owner's copies of the certificate of title No. 548 had not been
presented by petitioners, the Register of Deeds refused to make the requested
annotation.
Unsatisfied, petitioners referred the matter to the Commissioner of Land
Registration, who subsequently upheld the action of the Register of Deeds in a
resolution dated April 10, 1962. With respect to the principal point in controversy,
the Commissioner observed:

(1) It appears that the donor is now merely a co-owner of the property
described in the Original Certificate of Title No. 548, having previously sold
undivided portions thereof on three different occasions in favor of three different
buyers. Consequently, aside from the owner's duplicate issued to Cornelio Balbin,
there are now three co-owner's duplicates which are presumably in the possession
of the three buyers. Accordingly, in addition to the owner's duplicate of Original
Certificate of Title No. 548, the three co-owner's duplicates must likewise be
surrendered. The claim of counsel for the donees that the issuance of the three coowner's duplicates was unauthorized is beside the point. Unless and until a court of
competent jurisdiction rules to the contrary, these titles are presumed to have been
lawfully issued.lawphi1.et
Without presenting those three (3) other duplicates of the title, petitioners
would want to compel annotation of the deed of donation upon the copy in their
possession, citing section 55 of Act 496, which provides that "the production of the
owner's duplicate certificate of title whenever any voluntary instrument is presented
for registration shall be conclusive authority from the registered owner to the
register of deeds to make a memorandum of registration in accordance with such
instrument." Under this provision, according to petitioners, the presentation of the
other copies of the title is not required, first, because it speaks of "registered owner"
and not one whose claim to or interest in the property is merely annotated on the
title, such as the three vendees-co-owners in this case; and secondly, because the
issuance of the duplicate copies in their favor was illegal or unauthorized.
We find no merit in petitioners' contention. Section 55, supra, obviously
assumes that there is only one duplicate copy of the title in question, namely, that
of the registered owner himself, such that its production whenever a voluntary
instrument is presented constitutes sufficient authority from him for the register of
deeds to make the corresponding memorandum of registration. In the case at bar,
the three other copies of the title were in existence, presumably issued under
section 43 * of Act 496. As correctly observed by the Land Registration
Commissioner, petitioners' claim that the issuance of those copies was unauthorized
or illegal is beside the point, its legality being presumed until otherwise declared by
a court of competent jurisdiction. There being several copies of the same title in
existence, it is easy to see how their integrity may be adversely affected if an
encumbrance, or an outright conveyance, is annotated on one copy and not on the
others. The law itself refers to every copy authorized to be issued as a duplicate of
the original, which means that both must contain identical entries of the
transactions, particularly voluntary ones, affecting the land covered by the title. If
this were not so, if different copies were permitted to carry differing annotations,
the whole system of Torrens registration would cease to be reliable.
One other ground relied upon by the Land Registration Commissioner in
upholding the action taken by the Register of Deeds of Ilocos Sur is that since the

property subject of the donation is presumed conjugal, that is, property of the
marriage of the donor, Cornelio Balbin, and his deceased wife, Nemesia Mina, "there
should first be a liquidation of the partnership before the surviving spouse may
make such a conveyance." This legal conclusion may appear too general and
sweeping in its implications, for without a previous settlement of the partnership a
surviving spouse may dispose of his aliquot share or interest therein subject of
course to the result of future liquidation. Nevertheless, it is not to be denied that, if
the conjugal character of the property is assumed, the deed of donation executed
by the husband, Cornelio Balbin, bears on its face an infirmity which justified the
denial of its registration, namely, the fact that the two-thirds portion of said
property which he donated was more than his one-half share, not to say more than
what remained of such share after he had sold portions of the same land to three
other parties.
It appears that there is a case pending in the Court of First Instance of Ilocos
Sur (CC No. 2221), wherein the civil status of the donor Cornelio Balbin and the
character of the land in question are in issue, as well as the validity of the different
conveyances executed by him. The matter of registration of the deed of donation
may well await the outcome of that case, and in the meantime the rights of the
interested parties could be protected by filing the proper notices of lis pendens.
IN VIEW OF THE FOREGOING, the decisions of the Register of Deeds of Ilocos
Sur and that of the Commissioner of Land Registration are affirmed. No
pronouncement as to costs.

iv.
v.

Instances where the Registry of Deeds may Deny registration

Remedy

G.R. No. L-22486

March 20, 1968

TEODORO ALMIROL, petitioner-appellant,

vs.
THE REGISTER OF DEEDS OF AGUSAN, respondent-appellee.
Tranquilino O. Calo, Jr. for petitioner-appellant.
Office of the Solicitor General for respondent-appellee.
CASTRO, J.:
On June 28, 1961 Teodoro Almirol purchased from Arcenio Abalo a parcel of
land situated in the municipality of Esperanza, province of Agusan, and covered by
original certificate of title P-1237 in the name of "Arcenio Abalo, married to Nicolasa
M. Abalo." Sometime in May, 1962 Almirol went to the office of the Register of

Deeds of Agusan in Butuan City to register the deed of sale and to secure in his
name a transfer certificate of title. Registration was refused by the Register of
Deeds upon the following grounds, inter alia, stated in his letter of May 21, 1962:
1. That Original Certificate of Title No. P-1237 is registered in the name of Arcenio
Abalo, married to Nicolasa M. Abalo, and by legal presumption, is considered
conjugal property;
2. That in the sale of a conjugal property acquired after the effectivity of the New
Civil Code it is necessary that both spouses sign the document; but
3. Since, as in this case, the wife has already died when the sale was made, the
surviving husband can not dispose of the whole property without violating the
existing law (LRC Consulta No. 46 dated June 10, 1958).
To effect the registration of the aforesaid deed of absolute Sale, it is
necessary that the property be first liquidated and transferred in the name of the
surviving spouse and the heirs of the deceased wife by means of extrajudicial
settlement or partition and that the consent of such other heir or heirs must be
procured by means of another document ratifying this sale executed by their father.
In view of such refusal, Almirol went to the Court of First Instance of Agusan
on a petition for mandamus (sp. civ. case 151), to compel the Register of Deeds to
register the deed of sale and to issue to him the corresponding transfer certificate of
title, and to recover P5,000 in moral damages and P1,000 attorney's fees and
expenses of litigation. It is Almirol's assertion that it is but a ministerial duty of the
respondent to perform the acts required of him, and that he (Almirol) has no other
plain, speedy and adequate remedy in the ordinary course of law.
In his answer with counterclaim for P10,000 damages, the respondent
reiterated the grounds stated in his letter of May 21, 1962, averred that the
petitioner has "other legal, plain, speedy and adequate remedy at law by appealing
the decision of the respondent to the Honorable Commissioner of Land
Registration," and prayed for dismissal of the petition.
In its resolution of October 16, 1963 the lower court, declaring that
"mandamus does not lie . . . because the adequate remedy is that provided by
Section 4 of Rep. Act 1151", dismissed the petition, with costs against the petitioner.
Hence the present appeal by Almirol.
The only question of law tendered for resolution is whether mandamus will lie
to compel the respondent to register the deed of sale in question.

Although the reasons relied upon by the respondent evince a sincere desire
on his part to maintain inviolate the law on succession and transmission of rights
over real properties, these do not constitute legal grounds for his refusal to register
the deed. Whether a document is valid or not, is not for the register of deeds to
determine; this function belongs properly to a court of competent jurisdiction.1
Whether the document is invalid, frivolous or intended to harass, is not the
duty of a Register of Deeds to decide, but a court of competent jurisdiction. (Gabriel
vs. Register of Deeds of Rizal, et al., L-17956, Sept. 30, 1953).
. . . the supposed invalidity of the contracts of lease is no valid objection to
their registration, because invalidity is no proof of their non-existence or a valid
excuse for denying their registration. The law on registration does not require that
only valid instruments shall be registered. How can parties affected thereby be
supposed to know their invalidity before they become aware, actually or
constructively, of their existence or of their provisions? If the purpose of registration
is merely to give notice, then questions regarding the effect or invalidity of
instruments are expected to be decided after, not before, registration. It must follow
as a necessary consequence that registration must first be allowed, and validity or
effect litigated afterwards. (Gurbax Singh Pablo & Co. vs. Reyes and Tantoco, 92
Phil. 182-183).
Indeed, a register of deeds is entirely precluded by section 4 of Republic Act
1151 from exercising his personal judgment and discretion when confronted with
the problem of whether to register a deed or instrument on the ground that it is
invalid. For under the said section, when he is in doubt as to the proper step to be
taken with respect to any deed or other instrument presented to him for
registration, all that he is supposed to do is to submit and certify the question to the
Commissioner of Land Registration who shall, after notice and hearing, enter an
order prescribing the step to be taken on the doubtful question. Section 4 of R.A.
1151 reads as follows:
Reference of doubtful matters to Commissioner of Land Registration. When
the Register of Deeds is in doubt with regard to the proper step to be taken or
memorandum to be made in pursuance of any deed, mortgage, or other instrument
presented to him for registration, or where any party in interest does not agree with
the Register of Deeds with reference to any such matter, the question shall be
submitted to the Commissioner of Land Registration either upon the certification of
the Register of Deeds, stating the question upon which he is in doubt, or upon the
suggestion in writing by the party in interest; and thereupon the Commissioner,
after consideration of the matter shown by the records certified to him, and in case
of registered lands, after notice to the parties and hearing, shall enter an order
prescribing the step to be taken or memorandum to be made. His decision in such
cases shall be conclusive and binding upon all Registers of Deeds: Provided, further,

That when a party in interest disagrees with the ruling or resolution of the
Commissioner and the issue involves a question of law, said decision may be
appealed to the Supreme Court within thirty days from and after receipt of the
notice thereof.
The foregoing notwithstanding, the court a quo correctly dismissed the
petition for mandamus. Section 4 abovequoted provides that "where any party in
interest does not agree with the Register of Deeds . . . the question shall be
submitted to the Commissioner of Land Registration," who thereafter shall "enter an
order prescribing the step to be taken or memorandum to be made," which shall be
"conclusive and binding upon all Registers of Deeds." This administrative remedy
must be resorted to by the petitioner before he can have recourse to the courts.
ACCORDINGLY, the Resolution of the lower court of October 16, 1969, is
affirmed, at petitioner's cost.1wph1.t

Section 117. Procedure. When the Register of Deeds is in doubt with regard to
the proper step to be taken or memorandum to be made in pursuance of any deed,
mortgage or other instrument presented to him for registration, or where any party
in interest does not agree with the action taken by the Register of Deeds with
reference to any such instrument, the question shall be submitted to the
Commissioner of Land Registration by the Register of Deeds, or by the party in
interest thru the Register of Deeds.
Where the instrument is denied registration, the Register of Deeds shall notify the
interested party in writing, setting forth the defects of the instrument or legal
grounds relied upon, and advising him that if he is not agreeable to such ruling, he
may, without withdrawing the documents from the Registry, elevate the matter by
consulta within five days from receipt of notice of the denial of registration to the
Commissioner of Land Registration.
The Register of Deeds shall make a memorandum of the pending consulta on the
certificate of title which shall be canceled motu proprio by the Register of Deeds
after final resolution or decision thereof, or before resolution, if withdrawn by
petitioner.
The Commissioner of Land Registration, considering the consulta and the records
certified to him after notice to the parties and hearing, shall enter an order
prescribing the step to be taken or memorandum to be made. His resolution or
ruling in consultas shall be conclusive and binding upon all Registers of Deeds,
provided, that the party in interest who disagrees with the final resolution, ruling or
order of the Commissioner relative to consultas may appeal to the Court of Appeals
within the period and in manner provided in Republic Act No. 5434.

vi.

Effect of Registration of an Invalid Instrument

CARMELITA FUDOT,
Petitioner,

G.R. No. 171008

- versus TINGA, and

CATTLEYA LAND, INC.,
Respondent.
Promulgated:
September 13, 2007
DECISION
TINGA, J.:
For resolution is a petition that seeks to nullify the Decision[1] and
Resolution[2] of the Court of Appeals dated 28 April 2005 and 11 January 2006,
respectively, in C.A.G.R. CV No. 73025 which declared respondent as having a
better right over a parcel of land located in Doljo, Panglao, Bohol.

The facts, as culled from the records, follow.

Sometime in July 1992, Cattleya Land, Inc. (hereinafter referred to as
respondent) asked someone to check, on its behalf, the titles of nine (9) lots, the
subject land included, which it intended to buy from the spouses Troadio and
Asuncion Tecson. Finding no defect on the titles, respondent purchased the nine
lots through a Deed of Conditional Sale on 6 November 1992. Subsequently, on 30
August 1993, respondent and the Tecsons executed a Deed of Absolute Sale over
the same properties. The Deed of Conditional Sale and the Deed of Absolute Sale
were registered with the Register of Deeds on 06 November 1992 and 04 October
1993, respectively.[3] The Register of Deeds, Atty. Narciso dela Serna, refused to
actually annotate the deed of sale on the titles because of the existing notice of
attachment in connection with Civil Case No. 3399 pending before the Regional Trial
Court of Bohol.[4] The attachment was eventually cancelled by virtue of a
compromise agreement between the Tecsons and their attaching creditor which was
brokered by respondent. Titles to six (6) of the nine (9) lots were issued, but the
Register of Deeds refused to issue titles to the remaining three (3) lots , because the
titles covering the same were still unaccounted for.

On 23 January 1995, petitioner presented for registration before the Register

of Deeds the owners copy of the title of the subject property, together with the
deed of sale purportedly executed by the Tecsons in favor of petitioner on 19
December 1986. On the following day, respondent sent a letter of
protest/opposition to petitioners application. Much to its surprise, respondent
learned that the Register of Deeds had already registered the deed of sale in favor
of petitioner and issued a new title in her name.[5]
On 5 May 1995, respondent filed its Complaint[6] for Quieting Of Title &/Or
Recovery Of Ownership, Cancellation Of Title With Damages before the Regional
Trial Court of Tagbilaran City.[7] On 26 June 1995, Asuncion filed a complaint-inintervention, claiming that she never signed any deed of sale covering any part of
their conjugal property in favor of petitioner. She averred that her signature in
petitioners deed of sale was forged thus, said deed should be declared null and
void.[8] She also claimed that she has discovered only recently that there was an
amorous relationship between her husband and petitioner.[9]
Petitioner, for her part, alleged in her answer[10] that the spouses Tecson had sold
to her the subject property for P20,000.00 and delivered to her the owners copy of
the title on 26 December 1986. She claims that she subsequently presented the
said title to the Register of Deeds but the latter refused to register the same
because the property was still under attachment.
On 31 October 2001, the trial court rendered its decision:[11] (i) quieting the
title or ownership of the subject land in favor of respondent; (ii) declaring the deed
of sale between petitioner and spouses Tecson invalid; (iii) ordering the registration
of the subject land in favor of respondent; (iv) dismissing respondents claim for
damages against the Register of Deeds for insufficiency of evidence; (v) dismissing
Asuncions claim for damages against petitioner for lack of factual basis; and (vi)
dismissing petitioners counterclaim for lack of the required preponderance of
evidence.[12]
According to the trial court, respondent had recorded in good faith the deed
of sale in its favor ahead of petitioner. Moreover, based on Asuncions convincing
and unrebutted testimony, the trial court concluded that the purported signature of
Asuncion in the deed of sale in favor of petitioner was forged, thereby rendering
the sale void.[13]
Petitioner sought recourse to the Court of Appeals, arguing in the main that
the rule on double sale was applicable to the case. The appellate court, however,
dismissed her appeal, holding that there was no double sale because the alleged
sale to petitioner was null and void in view of the forgery of Asuncions purported
signature in the deed. The appellate court noted that petitioner failed to rebut
Asuncions testimony despite opportunities to do so.[14] Moreover, even if there

was double sale, according to the appellate court, respondents claim would still
prevail since it was able to register the second sale in its favor in good faith, had
made inquiries before it purchased the lots, and was informed that the titles were
free from encumbrance except the attachment on the property due to Civil Case No.
3399.[15]
Petitioner sought reconsideration of the decision but the Court of Appeals
denied her motion for reconsideration for lack of merit.[16]
Petitioner thus presents before this Court the following issues for resolution:
I.
BETWEEN 2 BUYERS OF REGISTERED LAND, WHO HAS THE BETTER RIGHT-IS IT THE
FIRST BUYER WHO WAS GIVEN THE OWNERS DUPLICATE TCT TOGETHER WITH A
DEED OF SALE IN 1986, OR THE SECOND BUYER IN 1992 WITH ONLY A DEED OF
SALE.
II.
IS A BUYER OF REGISTERED LAND WHO DID NOT DEMAND OR REQUIRE THE
DELIVERY OF THE OWNERS DUPLICATE TCT A BUYER IN GOOD FAITH.
III.
II.
IN SUBSEQUENT REGISTRATION OF REGISTERED LANDS, AS BY SALE, WHICH
LAW SHALL GOVERN, ARTICLE 1455 OF CIVIL CODE OR P.D. 1529 OR TORRENS
SYSTEM.[17]

Petitioner avers that she was the first buyer in good faith and even had in her
possession the owners copy of the title so much so that she was able to register the
deed of sale in her favor and caused the issuance of a new title in her name. She
argues that the presentation and surrender of the deed of sale and the owners copy
carried with it the conclusive authority of Asuncion Tecson which cannot be
overturned by the latters oral deposition.[18]
Petitioner claims that respondent did not demand nor require delivery of the
owners duplicate title from the spouses Tecson, neither did it investigate the
circumstances surrounding the absence of the title. These indicate respondents
knowledge of a defect in the title of the spouses and, thus, petitioner concludes
that respondent was not a buyer in good faith.[19]
Finally, petitioner insists that the applicable law in this case is P.D. No. 1529, a
special law dealing precisely with the registration of registered lands or any

subsequent sale thereof, and not Article 1544 of the Civil Code which deals with
immovable property not covered by the Torrens System.[20]
Respondent points out, on one hand, that petitioners first two issues which present
an inquiry on who has a better right or which one is a buyer in good faith, are
questions of fact not proper in a petition for review. The third issue, on the other
hand, is ostensibly a question of law which had been unsuccessfully raised below.
[21]
Respondent maintains that there is no room to speak of petitioner as a buyer in
good faith since she was never a buyer in the first place, as her claim is based on a
null and void deed of sale, so the court a quo found. Respondent also asserts that
its status as a buyer in good faith was established and confirmed in the
proceedings before the two courts below.[22]
Lastly, respondent argues that P.D. No. 1529 finds no application in the instant case.
The production of the owners duplicate certificate x x x being conclusive authority
from the registered owner is only true as between the registration applicant and
the register of deeds concerned, but never to third parties. Such conclusive
authority, respondent adds, is only for the Register of Deeds to enter a new
certificate or to make a memorandum of registration in accordance with such
instrument. It cannot cure the fatal defect that the instrument from which such
registration was effected is null and void ab initio, respondent concludes.[23]
The petition is bereft of merit.
Petitioners arguments, which rest on the assumption that there was a double
sale, must fail.
In the first place, there is no double sale to speak of. Art. 1544 of the Civil
Code,[24] which provides the rule on double sale, applies only to a situation where
the same property is validly sold to different vendees. In this case, there is only
one sale to advert to, that between the spouses Tecson and respondent.
In Remalante v. Tibe,[25] this Court ruled that the Civil Law provision on
double sale is not applicable where there is only one valid sale, the previous sale
having been found to be fraudulent. Likewise, in Espiritu and Apostol v. Valerio,[26]
where the same parcel of land was purportedly sold to two different parties, the
Court held that despite the fact that one deed of sale was registered ahead of the
other, Art. 1544 of the Civil Code will not apply where said deed is found to be a
forgery, the result of this being that the right of the other vendee should prevail.
The trial court declared that the sale between the spouses Tecson and
petitioner is invalid, as it bears the forged signature of Asuncion. Said finding is

based on the unrebutted testimony of Asuncion and the trial courts visual analysis
and comparison of the signatures in her Complaint-in-Intervention and the
purported deed of sale. This finding was upheld by the Court of Appeals, as it ruled
that the purported sale in petitioners favor is null and void, taking into account
Asuncions unrefuted deposition. In particular, the Court of Appeals noted
petitioners failure to attend the taking of the oral deposition and to give written
interrogatories. In short, she did not take the necessary steps to rebut Asuncions
definitive assertion.
The congruence of the wills of the spouses is essential for the valid
disposition of conjugal property.[27] Thus, under Article 166 of the Civil Code[28]
which was still in effect on 19 December 1986 when the deed of sale was
purportedly executed, the husband cannot generally alienate or encumber any real
property of the conjugal partnership without the wifes consent.
In this case, following Article 173[29] of the Civil Code, on 26 June 1995, or
eight and a half years (8 ) after the purported sale to petitioner, Asuncion filed her
Complaint-in-Intervention seeking the nullification thereof, and while her marriage
with Troadio was still subsisting. Both the Court of Appeals and the trial court found
Asuncions signature in the deed of sale to have been forged, and consequently,
the deed of sale void for lack of marital consent. We find no reason to disturb the
findings of the trial court and the Court of Appeals. Findings of fact of lower courts
are deemed conclusive and binding upon the Supreme Court subject to certain
exceptions,[30] none of which are present in this case. Besides, it has long been
recognized in our jurisprudence that a forged deed is a nullity and conveys no title.
[31]
Petitioner argues she has a better right over the property in question, as the
holder of and the first one to present, the owners copy of the title for the issuance
of a new TCT. The Court is not persuaded.
The act of registration does not validate petitioners otherwise void contract.
Registration is a mere ministerial act by which a deed, contract, or instrument is
sought to be inscribed in the records of the Office of the Register of Deeds and
annotated at the back of the certificate of title covering the land subject of the
deed, contract, or instrument. While it operates as a notice of the deed, contract, or
instrument to others, it does not add to its validity nor converts an invalid
instrument into a valid one as between the parties,[32] nor amounts to a
declaration by the state that the instrument is a valid and subsisting interest in the
land.[33] The registration of petitioners void deed is not an impediment to a
declaration by the courts of its invalidity.
Even assuming that there was double sale in this case, petitioner would still
not prevail. The pertinent portion of Art. 1544 provides:

Art. 1544. x x x.
Should it be immovable property, the ownership shall belong to the person
acquiring it who in good faith first recorded it in the Registry of Property.
x x x x.

In interpreting this provision, the Court declared that the governing principle
is primus tempore, potior jure (first in time, stronger in right). Knowledge gained by
the first buyer of the second sale cannot defeat the first buyers rights, except
where the second buyer registers in good faith the second sale ahead of the first as
provided by the aforequoted provision of the Civil Code. Such knowledge of the first
buyer does not bar him from availing of his rights under the law, among them to
register first his purchase as against the second buyer. However, knowledge gained
by the second buyer of the first sale defeats his rights even if he is first to register
the second sale, since such knowledge taints his prior registration with bad faith.
[34] It is thus essential, to merit the protection of Art. 1544, second paragraph,
that the second realty buyer must act in good faith in registering his deed of sale.
[35]
We agree with the trial court and the Court of Appeals that respondent was a
buyer in good faith, having purchased the nine (9) lots, including the subject lot,
without any notice of a previous sale, but only a notice of attachment relative to a
pending civil case. In fact, in its desire to finally have the title to the properties
transferred in its name, it persuaded the parties in the said case to settle the same
so that the notice of attachment could be cancelled.
Relevant to the discussion are the following provisions of P.D. No. 1529:
Sec. 51. Conveyance and other dealings by registered owner. An owner of
registered land may convey, mortgage, lease, charge or otherwise deal with the
same in accordance with existing laws. He may use such forms of deeds,
mortgages, lease or other voluntary instruments as are sufficient in law. But no
deed, mortgage, lease or other voluntary instrument, except a will purporting to
convey or affect registered land shall take effect as a conveyance or bind the land,
but shall operate only as a contract between the parties and as evidence of
authority to the Register of Deeds to make Registration.
The act of registration shall be the operative act to convey or affect the land insofar
as third persons are concerned, and in all cases under this Decree, the registration
shall be made in the office of the Register of Deeds for the province or city where
the land lies. (Emphasis supplied)

Sec. 52. Constructive notice upon registration.Every conveyance, mortgage,

lease, lien attachment, order, judgment, instrument or entry affecting registered
land shall, if registered, filed or entered in the office of the Register of Deeds for the
province or city where the land to which it relates lies, be constructive notice to all
persons from the time of such registering, filing or entering.

It has been held that between two transactions concerning the same parcel
of land, the registered transaction prevails over the earlier unregistered right. The
act of registration operates to convey and affect the registered land so that a bona
fide purchaser of such land acquires good title as against a prior transferee, if such
prior transfer was unrecorded.[36] As found by the courts a quo, respondent was
able to register its purchase ahead of petitioner. It will be recalled that respondent
was able to register its Deed of Conditional Sale with the Register of Deeds as early
as 6 November 1992, and its Deed of Absolute Sale on 14 October 1993. On the
other hand, petitioner was able to present for registration her deed of sale and
owners copy of the title only on 23 January 1995, or almost nine years after the
purported sale. Why it took petitioner nine (9) years to present the deed and the
owners copy, she had no credible explanation; but it is clear that when she finally
did, she already had constructive notice of the deed of sale in respondents favor.
Without a doubt, respondent had acquired a better title to the property.
Finally, anent petitioners claim that P.D. No. 1529 applies to registered lands
or any subsequent sale thereof, while Art. 1544 of the Civil Code applies only to
immovable property not covered by the Torrens System, suffice it to say that this
quandary has already been answered by an eminent former member of this Court,
Justice Jose Vitug, who explained that the registration contemplated under Art.
1544 has been held to refer to registration under P.D. No. 1529, thus:
The registration contemplated under Art. 1544 has been held to refer to registration
under Act 496 Land Registration Act (now PD 1529) which considers the act of
registration as the operative act that binds the land (see Mediante v. Rosabal, 1 O.G.
[12] 900, Garcia v. Rosabal, 73 Phil 694). On lands covered by the Torrens System,
the purchaser acquires such rights and interest as they appear in the certificate of
title, unaffected by any prior lien or encumbrance not noted therein. The purchaser
is not required to explore farther than what the Torrens title, upon its face, indicates.
The only exception is where the purchaser has actual knowledge of a flaw or defect
in the title of the seller or of such liens or encumbrances which, as to him, is
equivalent to registration (see Sec. 39, Act 496; Bernales v. IAC, G.R. 75336, 18

October 1988; Hernandez vs. Sales, 69 Phil 744; Tajonera s. Court of Appeals, L26677, 27 March 1981) (Emphasis supplied)[37]

WHEREFORE, the petition is DENIED. The assailed decision and resolution of the
Court of Appeals are affirmed. Costs against petitioner.

SO ORDERED.

V. Original Registration ( Chapter III, Sections 14-38)

a. Who may apply : Section 14
i.
Initiator of Action
ii.
Effect of Co-ownership
1. Sales with Right to Repurchase
2. Trusts
iii.
Who may apply
a. Requisite for Registration

[G.R. No. 144057. January 17, 2005]

REPUBLIC OF THE PHILIPPINES, petitioner, vs. THE HONORABLE COURT OF
APPEALS and CORAZON NAGUIT, respondents.
DECISION
TINGA, J.:
This is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil
Procedure, seeking to review the Decision[1] of the Sixth Division of the Court of
Appeals dated July 12, 2000 in CA-G.R. SP No. 51921. The appellate court affirmed
the decisions of both the Regional Trial Court (RTC),[2] Branch 8, of Kalibo, Aklan
dated February 26, 1999, and the 7th Municipal Circuit Trial Court (MCTC)[3] of
Ibajay-Nabas, Aklan dated February 18, 1998, which granted the application for
registration of a parcel of land of Corazon Naguit (Naguit), the respondent herein.
The facts are as follows:
On January 5, 1993, Naguit, a Filipino citizen, of legal age and married to Manolito S.
Naguit, filed with the MCTC of Ibajay-Nabas, Aklan, a petition for registration of title
of a parcel of land situated in Brgy. Union, Nabas, Aklan. The parcel of land is
designated as Lot No. 10049, Cad. 758-D, Nabas Cadastre, AP 060414-014779,

and contains an area of 31,374 square meters. The application seeks judicial
confirmation of respondents imperfect title over the aforesaid land.
On February 20, 1995, the court held initial hearing on the application. The public
prosecutor, appearing for the government, and Jose Angeles, representing the heirs
of Rustico Angeles, opposed the petition. On a later date, however, the heirs of
Rustico Angeles filed a formal opposition to the petition. Also on February 20, 1995,
the court issued an order of general default against the whole world except as to
the heirs of Rustico Angeles and the government.
The evidence on record reveals that the subject parcel of land was originally
declared for taxation purposes in the name of Ramon Urbano (Urbano) in 1945
under Tax Declaration No. 3888 until 1991.[4] On July 9, 1992, Urbano executed a
Deed of Quitclaim in favor of the heirs of Honorato Maming (Maming), wherein he
renounced all his rights to the subject property and confirmed the sale made by his
father to Maming sometime in 1955 or 1956.[5] Subsequently, the heirs of Maming
executed a deed of absolute sale in favor of respondent Naguit who thereupon
started occupying the same. She constituted Manuel Blanco, Jr. as her attorney-infact and administrator. The administrator introduced improvements, planted trees,
such as mahogany, coconut and gemelina trees in addition to existing coconut trees
which were then 50 to 60 years old, and paid the corresponding taxes due on the
subject land. At present, there are parcels of land surrounding the subject land
which have been issued titles by virtue of judicial decrees. Naguit and her
predecessors-in-interest have occupied the land openly and in the concept of owner
without any objection from any private person or even the government until she
filed her application for registration.
After the presentation of evidence for Naguit, the public prosecutor manifested that
the government did not intend to present any evidence while oppositor Jose
Angeles, as representative of the heirs of Rustico Angeles, failed to appear during
the trial despite notice. On September 27, 1997, the MCTC rendered a decision
ordering that the subject parcel be brought under the operation of the Property
Registration Decree or Presidential Decree (P.D.) No. 1529 and that the title thereto
registered and confirmed in the name of Naguit.[6]
The Republic of the Philippines (Republic), thru the Office of the Solicitor General
(OSG), filed a motion for reconsideration. The OSG stressed that the land applied for
was declared alienable and disposable only on October 15, 1980, per the
certification from Regional Executive Director Raoul T. Geollegue of the Department
of Environment and Natural Resources, Region VI.[7] However, the court denied the
motion for reconsideration in an order dated February 18, 1998.[8]

Thereafter, the Republic appealed the decision and the order of the MCTC to the
RTC, Kalibo, Aklan, Branch 8. On February 26, 1999, the RTC rendered its decision,
dismissing the appeal.[9]
Undaunted, the Republic elevated the case to the Court of Appeals via Rule 42 of
the 1997 Rules of Civil Procedure. On July 12, 2000, the appellate court rendered a
decision dismissing the petition filed by the Republic and affirmed in toto the
assailed decision of the RTC.
Hence, the present petition for review raising a pure question of law was filed by the
Republic on September 4, 2000.[10]
The OSG assails the decision of the Court of Appeals contending that the appellate
court gravely erred in holding that there is no need for the governments prior
release of the subject lot from the public domain before it can be considered
alienable or disposable within the meaning of P.D. No. 1529, and that Naguit had
been in possession of Lot No. 10049 in the concept of owner for the required period.
[11]
Hence, the central question for resolution is whether is necessary under Section
14(1) of the Property Registration Decree that the subject land be first classified as
alienable and disposable before the applicants possession under a bona fide claim
of ownership could even start.
The OSG invokes our holding in Director of Lands v. Intermediate Appellate
Court[12] in arguing that the property which is in open, continuous and exclusive
possession must first be alienable. Since the subject land was declared alienable
only on October 15, 1980, Naguit could not have maintained a bona fide claim of
ownership since June 12, 1945, as required by Section 14 of the Property
Registration Decree, since prior to 1980, the land was not alienable or disposable,
the OSG argues.
Section 14 of the Property Registration Decree, governing original registration
proceedings, bears close examination. It expressly provides:
SECTION 14. Who may apply. The following persons may file in the proper Court of
First Instance an application for registration of title to land, whether personally or
through their duly authorized representatives:
(1) those who by themselves or through their predecessors-in-interest have been in
open, continuous, exclusive and notorious possession and occupation of alienable
and disposable lands of the public domain under a bona fide claim of ownership
since June 12, 1945, or earlier.

(2) Those who have acquired ownership over private lands by prescription under
the provisions of existing laws.
....
There are three obvious requisites for the filing of an application for registration of
title under Section 14(1) that the property in question is alienable and disposable
land of the public domain; that the applicants by themselves or through their
predecessors-in-interest have been in open, continuous, exclusive and notorious
possession and occupation, and; that such possession is under a bona fide claim of
ownership since June 12, 1945 or earlier.
Petitioner suggests an interpretation that the alienable and disposable character of
the land should have already been established since June 12, 1945 or earlier. This is
not borne out by the plain meaning of Section 14(1). Since June 12, 1945, as used
in the provision, qualifies its antecedent phrase under a bonafide claim of
ownership. Generally speaking, qualifying words restrict or modify only the words
or phrases to which they are immediately associated, and not those distantly or
remotely located.[13] Ad proximum antecedents fiat relation nisi impediatur
sentencia.
Besides, we are mindful of the absurdity that would result if we adopt petitioners
position. Absent a legislative amendment, the rule would be, adopting the OSGs
view, that all lands of the public domain which were not declared alienable or
disposable before June 12, 1945 would not be susceptible to original registration, no
matter the length of unchallenged possession by the occupant. Such interpretation
renders paragraph (1) of Section 14 virtually inoperative and even precludes the
government from giving it effect even as it decides to reclassify public agricultural
lands as alienable and disposable. The unreasonableness of the situation would
even be aggravated considering that before June 12, 1945, the Philippines was not
yet even considered an independent state.
Instead, the more reasonable interpretation of Section 14(1) is that it merely
requires the property sought to be registered as already alienable and disposable at
the time the application for registration of title is filed. If the State, at the time the
application is made, has not yet deemed it proper to release the property for
alienation or disposition, the presumption is that the government is still reserving
the right to utilize the property; hence, the need to preserve its ownership in the
State irrespective of the length of adverse possession even if in good faith.
However, if the property has already been classified as alienable and disposable, as
it is in this case, then there is already an intention on the part of the State to
abdicate its exclusive prerogative over the property.

This reading aligns conformably with our holding in Republic v. Court of Appeals.[14]
Therein, the Court noted that to prove that the land subject of an application for
registration is alienable, an applicant must establish the existence of a positive act
of the government such as a presidential proclamation or an executive order; an
administrative action; investigation reports of Bureau of Lands investigators; and a
legislative act or a statute.[15] In that case, the subject land had been certified by
the DENR as alienable and disposable in 1980, thus the Court concluded that the
alienable status of the land, compounded by the established fact that therein
respondents had occupied the land even before 1927, sufficed to allow the
application for registration of the said property. In the case at bar, even the
petitioner admits that the subject property was released and certified as within
alienable and disposable zone in 1980 by the DENR.[16]
This case is distinguishable from Bracewell v. Court of Appeals,[17] wherein the
Court noted that while the claimant had been in possession since 1908, it was only
in 1972 that the lands in question were classified as alienable and disposable. Thus,
the bid at registration therein did not succeed. In Bracewell, the claimant had filed
his application in 1963, or nine (9) years before the property was declared alienable
and disposable. Thus, in this case, where the application was made years after the
property had been certified as alienable and disposable, the Bracewell ruling does
not apply.
A different rule obtains for forest lands,[18] such as those which form part of a
reservation for provincial park purposes[19] the possession of which cannot ripen
into ownership.[20] It is elementary in the law governing natural resources that
forest land cannot be owned by private persons. As held in Palomo v. Court of
Appeals,[21] forest land is not registrable and possession thereof, no matter how
lengthy, cannot convert it into private property, unless such lands are reclassified
and considered disposable and alienable.[22] In the case at bar, the property in
question was undisputedly classified as disposable and alienable; hence, the ruling
in Palomo is inapplicable, as correctly held by the Court of Appeals.[23]
It must be noted that the present case was decided by the lower courts on the basis
of Section 14(1) of the Property Registration Decree, which pertains to original
registration through ordinary registration proceedings. The right to file the
application for registration derives from a bona fide claim of ownership going back
to June 12, 1945 or earlier, by reason of the claimants open, continuous, exclusive
and notorious possession of alienable and disposable lands of the public domain.
A similar right is given under Section 48(b) of the Public Land Act, which reads:
Sec. 48. The following described citizens of the Philippines, occupying lands of the
public domain or claiming to own any such land or an interest therein, but those
titles have not been perfected or completed, may apply to the Court of First

Instance of the province where the land is located for confirmation of their claims
and the issuance of a certificate of title therefor, under the Land Registration Act, to
wit:
xxx

xxx

xxx

(b) Those who by themselves or through their predecessors in interest have been in
open, continuous, exclusive, and notorious possession and occupation of
agricultural lands of the public domain, under a bona fide claim of acquisition of
ownership, for at least thirty years immediately preceding the filing of the
application for confirmation of title except when prevented by war or force majeure.
These shall be conclusively presumed to have performed all the conditions essential
to a Government grant and shall be entitled to a certificate of title under the
provisions of this chapter.
When the Public Land Act was first promulgated in 1936, the period of possession
deemed necessary to vest the right to register their title to agricultural lands of the
public domain commenced from July 26, 1894. However, this period was amended
by R.A. No. 1942, which provided that the bona fide claim of ownership must have
been for at least thirty (30) years. Then in 1977, Section 48(b) of the Public Land Act
was again amended, this time by P.D. No. 1073, which pegged the reckoning date at
June 12, 1945. This new starting point is concordant with Section 14(1) of the
Property Registration Decree.
Indeed, there are no material differences between Section 14(1) of the Property
Registration Decree and Section 48(b) of the Public Land Act, as amended. True, the
Public Land Act does refer to agricultural lands of the public domain, while the
Property Registration Decree uses the term alienable and disposable lands of the
public domain. It must be noted though that the Constitution declares that
alienable lands of the public domain shall be limited to agricultural lands.[24]
Clearly, the subject lands under Section 48(b) of the Public Land Act and Section
14(1) of the Property Registration Decree are of the same type.
Did the enactment of the Property Registration Decree and the amendatory P.D. No.
1073 preclude the application for registration of alienable lands of the public
domain, possession over which commenced only after June 12, 1945? It did not,
considering Section 14(2) of the Property Registration Decree, which governs and
authorizes the application of those who have acquired ownership of private lands
by prescription under the provisions of existing laws.
Prescription is one of the modes of acquiring ownership under the Civil Code.[25]
There is a consistent jurisprudential rule that properties classified as alienable
public land may be converted into private property by reason of open, continuous
and exclusive possession of at least thirty (30) years.[26] With such conversion,

such property may now fall within the contemplation of private lands under
Section 14(2), and thus susceptible to registration by those who have acquired
ownership through prescription. Thus, even if possession of the alienable public land
commenced on a date later than June 12, 1945, and such possession being been
open, continuous and exclusive, then the possessor may have the right to register
the land by virtue of Section 14(2) of the Property Registration Decree.
The land in question was found to be cocal in nature, it having been planted with
coconut trees now over fifty years old.[27] The inherent nature of the land but
confirms its certification in 1980 as alienable, hence agricultural. There is no
impediment to the application of Section 14(1) of the Property Registration Decree,
as correctly accomplished by the lower courts.
The OSG posits that the Court of Appeals erred in holding that Naguit had been in
possession in the concept of owner for the required period. The argument begs the
question. It is again hinged on the assertionshown earlier to be unfoundedthat
there could have been no bona fide claim of ownership prior to 1980, when the
subject land was declared alienable or disposable.
We find no reason to disturb the conclusion of both the RTC and the Court of
Appeals that Naguit had the right to apply for registration owing to the continuous
possession by her and her predecessors-in-interest of the land since 1945. The basis
of such conclusion is primarily factual, and the Court generally respects the factual
findings made by lower courts. Notably, possession since 1945 was established
through proof of the existence of 50 to 60-year old trees at the time Naguit
purchased the property as well as tax declarations executed by Urbano in 1945.
Although tax declarations and realty tax payment of property are not conclusive
evidence of ownership, nevertheless, they are good indicia of the possession in the
concept of owner for no one in his right mind would be paying taxes for a property
that is not in his actual or at least constructive possession. They constitute at least
proof that the holder has a claim of title over the property. The voluntary declaration
of a piece of property for taxation purposes manifests not only ones sincere and
honest desire to obtain title to the property and announces his adverse claim
against the State and all other interested parties, but also the intention to
contribute needed revenues to the Government. Such an act strengthens ones
bona fide claim of acquisition of ownership.[28]
Considering that the possession of the subject parcel of land by the respondent can
be traced back to that of her predecessors-in-interest which commenced since 1945
or for almost fifty (50) years, it is indeed beyond any cloud of doubt that she has
acquired title thereto which may be properly brought under the operation of the
Torrens system. That she has been in possession of the land in the concept of an
owner, open, continuous, peaceful and without any opposition from any private

person and the government itself makes her right thereto undoubtedly settled and
deserving of protection under the law.
WHEREFORE, foregoing premises considered, the assailed Decision of the Court of
Appeals dated July 12, 2000 is hereby AFFIRMED. No costs.
SO ORDERED.
G.R. No. 162243

December 3, 2009

HON. HEHERSON ALVAREZ substituted by HON. ELISEA G. GOZUN, in her

capacity as Secretary of the Department of Environment and Natural
Resources, Petitioner,
vs.
PICOP RESOURCES, INC., Respondent.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 164516
PICOP RESOURCES, INC., Petitioner,
vs.
HON. HEHERSON ALVAREZ substituted by HON. ELISEA G. GOZUN, in her
capacity as Secretary of the Department of Environment and Natural
Resources Respondent.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 171875
THE HON. ANGELO T. REYES (formerly Hon. Elisea G. Gozun), in his capacity
as Secretary of the Department of Environment and Natural Resources
(DENR), Petitioner,
vs.
PAPER INDUSTRIES CORP. OF THE PHILIPPINES (PICOP), Respondent.
RESOLUTION
CHICO-NAZARIO, J.:
The cause of action of PICOP Resources, Inc. (PICOP) in its Petition for Mandamus
with the trial court is clear: the government is bound by contract, a 1969 Document
signed by then President Ferdinand Marcos, to enter into an Integrated Forest
Management Agreement (IFMA) with PICOP. Since the remedy of mandamus lies

only to compel an officer to perform a ministerial duty, and since the 1969
Document itself has a proviso requiring compliance with the laws and the
Constitution, the issues in this Motion for Reconsideration are the following: (1)
firstly, is the 1969 Document a contract enforceable under the Non-Impairment
Clause of the Constitution, so as to make the signing of the IFMA a ministerial duty?
(2) secondly, did PICOP comply with all the legal and constitutional requirements for
the issuance of an IFMA?
To recall, PICOP filed with the Department of Environment and Natural Resources
(DENR) an application to have its Timber License Agreement (TLA) No. 43 converted
into an IFMA. In the middle of the processing of PICOPs application, however, PICOP
refused to attend further meetings with the DENR. Instead, on 2 September 2002,
PICOP filed before the Regional Trial Court (RTC) of Quezon City a Petition for
Mandamus1 against then DENR Secretary Heherson T. Alvarez. PICOP seeks the
issuance of a privileged writ of mandamus to compel the DENR Secretary to sign,
execute and deliver an IFMA to PICOP, as well as to
[I]ssue the corresponding IFMA assignment number on the area covered by the
IFMA, formerly TLA No. 43, as amended; b) to issue the necessary permit allowing
petitioner to act and harvest timber from the said area of TLA No. 43, sufficient to
meet the raw material requirements of petitioners pulp and paper mills in
accordance with the warranty and agreement of July 29, 1969 between the
government and PICOPs predecessor-in-interest; and c) to honor and respect the
Government Warranties and contractual obligations to PICOP strictly in accordance
with the warranty and agreement dated July 29, [1969] between the government
and PICOPs predecessor-in-interest. x x x.2
On 11 October 2002, the RTC rendered a Decision granting PICOPs Petition for
Mandamus, thus:
WHEREFORE, premises considered, the Petition for Mandamus is hereby GRANTED.
The Respondent DENR Secretary Hon. Heherson Alvarez is hereby ordered:
1. to sign, execute and deliver the IFMA contract and/or documents to PICOP and
issue the corresponding IFMA assignment number on the area covered by the IFMA,
formerly TLA No. 43, as amended;
2. to issue the necessary permit allowing petitioner to act and harvest timber from
the said area of TLA No. 43, sufficient to meet the raw material requirements of
petitioners pulp and paper mills in accordance with the warranty and agreement of
July 29, 1969 between the government and PICOPs predecessor-in-interest; and

3. to honor and respect the Government Warranties and contractual obligations to

PICOP strictly in accordance with the warranty and agreement dated July 29, 1999
(sic) between the government and PICOPs predecessor-in-interest (Exhibits "H", "H1" to "H-5", particularly the following:
a) the area coverage of TLA No. 43, which forms part and parcel of the government
warranties;
b) PICOP tenure over the said area of TLA No. 43 and exclusive right to cut, collect
and remove sawtimber and pulpwood for the period ending on April 26, 1977; and
said period to be renewable for [an]other 25 years subject to compliance with
constitutional and statutory requirements as well as with existing policy on timber
concessions; and
c) The peaceful and adequate enjoyment by PICOP of the area as described and
specified in the aforesaid amended Timber License Agreement No. 43.
The Respondent Secretary Alvarez is likewise ordered to pay petitioner the sum of
P10 million a month beginning May 2002 until the conversion of TLA No. 43, as
amended, to IFMA is formally effected and the harvesting from the said area is
granted.3
On 25 October 2002, the DENR Secretary filed a Motion for Reconsideration.4 In a
10 February 2003 Order, the RTC denied the DENR Secretarys Motion for
Reconsideration and granted PICOPs Motion for the Issuance of Writ of Mandamus
and/or Writ of Mandatory Injunction.5 The fallo of the 11 October 2002 Decision was
practically copied in the 10 February 2003 Order, although there was no mention of
the damages imposed against then DENR Secretary Alvarez.6 The DENR Secretary
filed a Notice of Appeal7 from the 11 October 2002 Decision and the 10 February
2003 Order.
On 19 February 2004, the Seventh Division of the Court of Appeals affirmed8 the
Decision of the RTC, to wit:
WHEREFORE, the appealed Decision is hereby AFFIRMED with modification that the
order directing then DENR Secretary Alvarez "to pay petitioner-appellee the sum of
P10 million a month beginning May, 2002 until the conversion to IFMA of TLA No.
43, as amended, is formally effected and the harvesting from the said area is
granted" is hereby deleted. 9
Challenging the deletion of the damages awarded to it, PICOP filed a Motion for
Partial Reconsideration10 of this Decision, which was denied by the Court of Appeals
in a 20 July 2004 Resolution.11

The DENR Secretary and PICOP filed with this Court separate Petitions for Review of
the 19 February 2004 Court of Appeals Decision. These Petitions were docketed as
G.R. No. 162243 and No. 164516, respectively. These cases were consolidated with
G.R. No. 171875, which relates to the lifting of a Writ of Preliminary Injunction
enjoining the execution pending appeal of the foregoing Decision.
On 29 November 2006, this Court rendered the assailed Decision on the
Consolidated Petitions:
WHEREFORE, the Petition in G.R. No. 162243 is GRANTED. The Decision of the Court
of Appeals insofar as it affirmed the RTC Decision granting the Petition for
Mandamus filed by Paper Industries Corp. of the Philippines (PICOP) is hereby
REVERSED and SET ASIDE. The Petition in G.R. No. 164516 seeking the reversal of
the same Decision insofar as it nullified the award of damages in favor of PICOP is
DENIED for lack of merit. The Petition in G.R. No. 171875, assailing the lifting of the
Preliminary Mandatory Injunction in favor of the Secretary of Environment and
Natural Resources is DISMISSED on the ground of mootness.12
On 18 January 2006, PICOP filed the instant Motion for Reconsideration, based on
the following grounds:
I.
THE HONORABLE COURT ERRED IN HOLDING THAT THE CONTRACT WITH
PRESIDENTIAL WARRANTY SIGNED BY THE PRESIDENT OF THE REPUBLIC ON 29 JUNE
1969 ISSUED TO PICOP IS A MERE PERMIT OR LICENSE AND IS NOT A CONTRACT,
PROPERTY OR PROPERTY RIGHT PROTECTED BY THE DUE PROCESS CLAUSE OF THE
CONSTITUTION
II.
THE EVALUATION OF PICOPS MANAGEMENT OF THE TLA 43 NATURAL FOREST
CLEARLY SHOWED SATISFACTORY PERFORMANCE FOR KEEPING THE NATURAL
FOREST GENERALLY INTACT AFTER 50 YEARS OF FOREST OPERATIONS. THIS
COMPLETES THE REQUIREMENT FOR AUTOMATIC CONVERSION UNDER SECTION 9
OF DAO 99-53.
III.
WITH DUE RESPECT, THE HONORABLE COURT, IN REVERSING THE FINDINGS OF
FACTS OF THE TRIAL COURT AND THE COURT OF APPEALS, MISAPPRECIATED THE
EVIDENCE, TESTIMONIAL AND DOCUMENTARY, WHEN IT RULED THAT:
i.

PICOP FAILED TO SUBMIT A FIVE-YEAR FOREST PROTECTION PLAN AND A SEVENYEAR REFORESTATION PLAN FOR THE YEARS UNDER REVIEW.
ii.
PICOP FAILED TO COMPLY WITH THE PAYMENT OF FOREST CHARGES.
iii.
PICOP DID NOT COMPLY WITH THE REQUIREMENT FOR A CERTIFICATION FROM THE
NCIP THAT THE AREA OF TLA 43 DOES NOT OVERLAP WITH ANY ANCESTRAL
DOMAIN.
iv.
PICOP FAILED TO HAVE PRIOR CONSULTATION WITH AND APPROVAL FROM THE
SANGUNIAN CONCERNED, AS REQUIRED BY SECTION 27 OF THE REPUBLIC ACT NO.
7160, OTHERWISE KNOWN AS THE LOCAL GOVERNMENT CODE OF 1991.
v.
PCIOP FAILED TO SECURE SOCIAL ACCEPTABILITY UNDER PRESIDENTIAL DECREE NO.
1586.
IV
THE MOTIVATION OF ALVAREZ IN RECALLING THE CLEARANCE FOR AUTOMATIC
CONVERSION HE ISSUED ON 25 OCTOBER 2001 WAS NOT DUE TO ANY
SHORTCOMING FROM PICOP BUT DUE TO HIS DETERMINATION TO EXCLUDE 28,125
HECTARES FROM THE CONVERSION AND OTHER THINGS.
On 15 December 2008, on Motion by PICOP, the Third Division of this Court resolved
to refer the consolidated cases at bar to the Court en banc. On 16 December 2008,
this Court sitting en banc resolved to accept the said cases and set them for oral
arguments. Oral arguments were conducted on 10 February 2009.
PICOPs Cause of Action: Matters PICOP Should Have Proven to Be Entitled to a Writ
of Mandamus
In seeking a writ of mandamus to compel the issuance of an IFMA in its favor, PICOP
relied on a 29 July 1969 Document, the so-called Presidential Warranty approved by
then President Ferdinand E. Marcos in favor of PICOPs predecessor-in-interest, Bislig

Bay Lumber Company, Inc. (BBLCI). PICOPs cause of action is summarized in

paragraphs 1.6 and 4.19 of its Petition for Mandamus:
1.6 Respondent Secretary impaired the obligation of contract under the said
Warranty and Agreement of 29 July 1969 by refusing to respect the tenure; and its
renewal for another twenty five (25) years, of PICOP over the area covered by the
said Agreement which consists of permanent forest lands with an aggregate area of
121,587 hectares and alienable and disposable lands with an aggregate area of
approximately 21,580 hectares, and petitioners exclusive right to cut, collect and
remove sawtimber and pulpwood therein and the peaceful and adequate enjoyment
of the said area as described and specified in petitioners Timber License Agreement
(TLA) No. 43 guaranteed by the Government, under the Warranty and Agreement of
29 July 1969.13
4.19 Respondent is in violation of the Constitution and has impaired the obligation
of contract by his refusal to respect: a) the tenurial rights of PICOP over the forest
area covered by TLA No. 43, as amended and its renewal for another twenty five
(25) years; b) the exclusive right of PICOP to cut, collect and remove sawtimber and
pulpwood therein; and c) PICOPs peaceful and adequate enjoyment of the said area
which the government guaranteed under the Warranty and Agreement of 29 July
1969.14
The grounds submitted by PICOP in its Petition for Mandamus are as follows:
I
Respondent secretary has unlawfully refused and/or neglected to sign and execute
the IFMA contract of PICOP even as the latter has complied with all the legal
requirements for the automatic conversion of TLA No. 43, as amended, into an IFMA.
II
Respondent Secretary acted with grave abuse of discretion and/or in excess of
jurisdiction in refusing to sign and execute PICOPs IFMA contract, notwithstanding
that PICOP had complied with all the requirements for Automatic Conversion under
DAO 99-53, as in fact Automatic Conversion was already cleared in October, 2001,
and was a completed process.
III
Respondent Secretary has impaired the obligation of contract under a valid and
binding warranty and agreement of 29 July 1969 between the government and
PICOPs predecessor-in-interest, by refusing to respect: a) the tenure of PICOP, and
its renewal for another twenty five (25) years, over the TLA No.43 area covered by

said agreement; b) the exclusive right to cut, collect and remove sawtimber and
pulpwood timber; and c) the peaceful and adequate enjoyment of the said area.
IV
As a result of respondent Secretarys unlawful refusal and/or neglect to sign and
deliver the IFMA contract, and violation of the constitutional rights of PICOP against
non-impairment of the obligation of contract (Sec. 10, Art. III, 1997 [sic]
Constitution), PICOP suffered grave and irreparable damages.15
Petitions for Mandamus are governed by Rule 65 of the Rules of Court, Section 3 of
which provides:
SEC. 3. Petition for mandamus.When any tribunal, corporation, board, officer or
person unlawfully neglects the performance of an act which the law specifically
enjoins as a duty resulting from an office, trust, or station, or unlawfully excludes
another from the use and enjoyment of a right or office to which such other is
entitled, and there is no other plain, speedy and adequate remedy in the ordinary
course of law, the person aggrieved thereby may file a verified petition in the proper
court, alleging the facts with certainty and praying that judgment be rendered
commanding the respondent, immediately or at some other time to be specified by
the court, to do the act required to be done to protect the rights of the petitioner,
and to pay the damages sustained by the petitioner by reason of the wrongful acts
of the respondent. (Emphasis supplied.)
PICOP is thus asking this Court to conclude that the DENR Secretary is specifically
enjoined by law to issue an IFMA in its favor. An IFMA, as defined by DENR
Administrative Order (DAO) No. 99-53,16 is [A] production-sharing contract entered into by and between the DENR and a
qualified applicant wherein the DENR grants to the latter the exclusive right to
develop, manage, protect and utilize a specified area of forestland and forest
resource therein for a period of 25 years and may be renewed for another 25-year
period, consistent with the principle of sustainable development and in accordance
with an approved CDMP, and under which both parties share in its produce.17
PICOP stresses the word "automatic" in Section 9 of this DAO No. 99-53:
Sec. 9. Qualifications of Applicants. The applicants for IFMA shall be:
(a) A Filipino citizen of legal age; or,
(b) Partnership, cooperative or corporation whether public or private, duly
registered under Philippine laws.

However, in the case of application for conversion of TLA into IFMA, an automatic
conversion after proper evaluation shall be allowed, provided the TLA holder shall
have signified such intention prior to the expiry of the TLA, PROVIDED further, that
the TLA holder has showed satisfactory performance and have complied in the
terms of condition of the TLA and pertinent rules and regulations. (Emphasis
supplied.)18
This administrative regulation provision allowing automatic conversion after proper
evaluation can hardly qualify as a law, much less a law specifically enjoining the
execution of a contract. To enjoin is "to order or direct with urgency; to instruct with
authority; to command."19 "Enjoin is a mandatory word, in legal parlance, always;
in common parlance, usually."20 The word "allow," on the other hand, is not
equivalent to the word "must," and is in no sense a command.21
As an extraordinary writ, the remedy of mandamus lies only to compel an officer to
perform a ministerial duty, not a discretionary one; mandamus will not issue to
control the exercise of discretion of a public officer where the law imposes upon him
the duty to exercise his judgment in reference to any manner in which he is required
to act, because it is his judgment that is to be exercised and not that of the court.22
The execution of agreements, in itself, involves the exercise of discretion.
Agreements are products of negotiations and mutual concessions, necessitating
evaluation of their provisions on the part of both parties. In the case of the IFMA, the
evaluation on the part of the government is specifically mandated in the aforequoted Section 3 of DAO No. 99-53. This evaluation necessarily involves the
exercise of discretion and judgment on the part of the DENR Secretary, who is
tasked not only to negotiate the sharing of the profit arising from the IFMA, but also
to evaluate the compliance with the requirements on the part of the applicant.
Furthermore, as shall be discussed later, the period of an IFMA that was merely
automatically converted from a TLA in accordance with Section 9, paragraph 2 of
DAO No. 99-53 would only be for the remaining period of the TLA. Since the TLA of
PICOP expired on 26 April 2002, the IFMA that could have been granted to PICOP via
the automatic conversion provision in DAO No. 99-53 would have expired on the
same date, 26 April 2002, and the PICOPs Petition for Mandamus would have
become moot.
This is where the 1969 Document, the purported Presidential Warranty, comes into
play. When PICOPs application was brought to a standstill upon the evaluation that
PICOP had yet to comply with the requirements for such conversion, PICOP refused
to attend further meetings with the DENR and instead filed a Petition for Mandamus,
insisting that the DENR Secretary had impaired the obligation of contract by his
refusal to respect: a) the tenurial rights of PICOP over the forest area covered by

TLA No. 43, as amended, and its renewal for another twenty-five (25) years; b) the
exclusive right of PICOP to cut, collect and remove sawtimber and pulpwood therein;
and c) PICOPs peaceful and adequate enjoyment of the said area which the
government guaranteed under the Warranty and Agreement of 29 July 1969. 23
PICOP is, thus, insisting that the government is obligated by contract to issue an
IFMA in its favor because of the 1969 Document.
A contract, being the law between the parties, can indeed, with respect to the State
when it is a party to such contract, qualify as a law specifically enjoining the
performance of an act. Hence, it is possible that a writ of mandamus may be issued
to PICOP, but only if it proves both of the following:
1) That the 1969 Document is a contract recognized under the non-impairment
clause; and
2) That the 1969 Document specifically enjoins the government to issue the IFMA.
If PICOP fails to prove any of these two matters, the grant of a privileged writ of
mandamus is not warranted. This was why we pronounced in the assailed Decision
that the overriding controversy involved in the Petition was one of law.24 If PICOP
fails to prove any of these two matters, more significantly its assertion that the
1969 Document is a contract, PICOP fails to prove its cause of action.25 Not even
the satisfactory compliance with all legal and administrative requirements for an
IFMA would save PICOPs Petition for Mandamus.
The reverse, however, is not true. The 1969 Document expressly states that the
warranty as to the tenure of PICOP is "subject to compliance with constitutional and
statutory requirements as well as with existing policy on timber concessions." Thus,
if PICOP proves the two above-mentioned matters, it still has to prove compliance
with statutory and administrative requirements for the conversion of its TLA into an
IFMA.
Exhaustion of Administrative Remedies
PICOP uses the same argument that the government is bound by contract to
issue the IFMA in its refusal to exhaust all administrative remedies by not
appealing the alleged illegal non-issuance of the IFMA to the Office of the President.
PICOP claimed in its Petition for Mandamus with the trial court that:
1.10 This petition falls as an exception to the exhaustion of administrative remedies.
The acts of respondent DENR Secretary complained of in this petition are patently
illegal; in derogation of the constitutional rights of petitioner against nonimpairment of the obligation of contracts; without jurisdiction, or in excess of

jurisdiction or so capriciously as to constitute an abuse of discretion amounting to

excess or lack of jurisdiction; and moreover, the failure or refusal of a high
government official such as a Department head from whom relief is brought to act
on the matter was considered equivalent to exhaustion of administrative remedies
(Sanoy v. Tantuico, 50 SCRA 455 [1973]), and there are compelling and urgent
reasons for judicial intervention (Bagatsing v. Ramirez, 74 SCRA 306 [1976]).
Thus, if there has been no impairment of the obligation of contracts in the DENR
Secretarys non-issuance of the IFMA, the proper remedy of PICOP in claiming that it
has complied with all statutory and administrative requirements for the issuance of
the IFMA should have been with the Office of the President. This makes the issue of
the enforceability of the 1969 Document as a contract even more significant.
The Nature and Effects of the Purported 29 July 1969 Presidential Warranty
Base Metals Case
PICOP challenges our ruling that the 1969 Document is not a contract. Before we
review this finding, however, it must be pointed out that one week after the assailed
Decision, another division of this Court promulgated a Decision concerning the very
same 1969 Document. Thus, in PICOP Resources, Inc. v. Base Metals Mineral
Resources Corporation,26 five other Justices who were still unaware of this
Divisions Decision,27 came up with the same conclusion as regards the same issue
of whether former President Marcoss Presidential Warranty is a contract:
Finally, we do not subscribe to PICOPs argument that the Presidential Warranty
dated September 25, 1968 is a contract protected by the non-impairment clause of
the 1987 Constitution.
An examination of the Presidential Warranty at once reveals that it simply reassures
PICOP of the governments commitment to uphold the terms and conditions of its
timber license and guarantees PICOPs peaceful and adequate possession and
enjoyment of the areas which are the basic sources of raw materials for its wood
processing complex. The warranty covers only the right to cut, collect, and remove
timber in its concession area, and does not extend to the utilization of other
resources, such as mineral resources, occurring within the concession.
The Presidential Warranty cannot be considered a contract distinct from PTLA No. 47
and FMA No. 35. We agree with the OSGs position that it is merely a collateral
undertaking which cannot amplify PICOPs rights under its timber license. Our
definitive ruling in Oposa v. Factoran that a timber license is not a contract within
the purview of the non-impairment clause is edifying. We declared:

Needless to say, all licenses may thus be revoked or rescinded by executive action.
It is not a contract, property or a property right protected by the due process clause
of the Constitution. In Tan vs. Director of Forestry, this Court held:
"x x x A timber license is an instrument by which the State regulates the utilization
and disposition of forest resources to the end that public welfare is promoted. A
timber license is not a contract within the purview of the due process clause; it is
only a license or a privilege, which can be validly withdrawn whenever dictated by
public interest or public welfare as in this case.
A license is merely a permit or privilege to do what otherwise would be unlawful,
and is not a contract between the authority, federal, state, or municipal, granting it
and the person to whom it is granted; neither is it a property or a property right, nor
does it create a vested right; nor is it taxation' (C.J. 168). Thus, this Court held that
the granting of license does not create irrevocable rights, neither is it property or
property rights (People vs. Ong Tin, 54 O.G. 7576). x x x"
We reiterated this pronouncement in Felipe Ysmael, Jr. & Co., Inc. vs. Deputy
Executive Secretary:
"x x x Timber licenses, permits and license agreements are the principal
instruments by which the State regulates the utilization and disposition of forest
resources to the end that public welfare is promoted. And it can hardly be gainsaid
that they merely evidence a privilege granted by the State to qualified entities, and
do not vest in the latter a permanent or irrevocable right to the particular
concession area and the forest products therein. They may be validly amended,
modified, replaced or rescinded by the Chief Executive when national interests so
require. Thus, they are not deemed contracts within the purview of the due process
of law clause [See Sections 3(ee) and 20 of Pres. Decree No. 705, as amended. Also,
Tan v. Director of Forestry, G.R. No. L-24548, October 27, 1983, 125 SCRA 302]."
Since timber licenses are not contracts, the non-impairment clause, which reads:
"SEC. 10. No law impairing the obligation of contracts shall be passed."
cannot be invoked.
The Presidential Warranty cannot, in any manner, be construed as a contractual
undertaking assuring PICOP of exclusive possession and enjoyment of its concession
areas. Such an interpretation would result in the complete abdication by the State in
favor of PICOP of the sovereign power to control and supervise the exploration,
development and utilization of the natural resources in the area.28

The Motion for Reconsideration was denied with finality on 14 February 2007. A
Second Motion for Reconsideration filed by PICOP was denied on 23 May 2007.
PICOP insists that the pronouncement in Base Metals is a mere obiter dictum, which
would not bind this Court in resolving this Motion for Reconsideration. In the oral
arguments, however, upon questioning from the ponente himself of Base Metals, it
was agreed that the issue of whether the 1969 Document is a contract was
necessary in the resolution of Base Metals:
JUSTICE TINGA:
And do you confirm that one of the very issues raised by PICOP in that case [PICOP
Resources Inc. v. Base Metal Mineral Resources Corporation] revolves around its
claim that a Presidential Warranty is protected by the non-impairment c[l]ause of
the Constitution.
ATTY. AGABIN:
Yes, I believe that statement was made by the Court, your Honor.
JUSTICE TINGA:
Yes. And that claim on the part of PICOP necessarily implies that the Presidential
Warranty according to PICOP is a contract protected by the non-impairment clause.
ATTY. AGABIN:
Yes, Your Honor.
JUSTICE TINGA:
Essentially, the PICOP raised the issue of whether the Presidential Warranty is a
contract or not.
ATTY. AGABIN:
Yes, Your Honor.
JUSTICE TINGA:
And therefore any ruling on the part of the Court on that issue could not be an
obiter dictum.
ATTY. AGABIN:

Your Honor, actually we believe that the basic issue in that case was whether or not
Base Metals could conduct mining activities underneath the forest reserve allotted
to PICOP and the Honorable Court ruled that the Mining Act of 1995 as well as the
Department Order of DENR does not disallow mining activity under a forest reserve.
JUSTICE TINGA:
But it was PICOP itself which raised the claim that a Presidential Warranty is a
contract. And therefore be, should be protected on the under the non-impairment
clause of the Constitution.
ATTY. AGABIN:
Yes, Your Honor. Except that
JUSTICE TINGA:
So, how can you say now that the Court merely uttered, declared, laid down an
obiter dictum in saying that the Presidential Warranty is not a contract, and it is not
being a contract, it is not prohibited by the non-impairment clause.
ATTY. AGABIN:
This Honorable Court could have just ruled, held that the mining law allows mining
activities under a forest reserve without deciding on that issue that was raised by
PICOP, your Honor, and therefore we believe.
JUSTICE TINGA:
It could have been better if PICOP has not raised that issue and had not claimed
that the Presidential Warranty is not a contract.
ATTY. AGABIN:
Well, that is correct, your Honor except that the Court could have just avoided that
question. Because
JUSTICE TINGA:
Why[?]
ATTY. AGABIN:

It already settled the issue, the basic issue.

JUSTICE TINGA:
Yes, because the Court in saying that merely reiterated a number of rulings to the
effect that the Presidential Warranty, a Timber License for that matter is not a
contract protected by the non-impairment laws.
ATTY. AGABIN:
Well, it is our submission, your Honor, that it is obiter because, that issue even a
phrase by PICOP was not really fully argued by the parties for the Honorable Court
and it seems from my reading at least it was just an aside given by the Honorable
Court to decide on that issue raised by PICOP but it was not necessary to the
decision of the court.
JUSTICE TINGA:
It was not necessary[?]
ATTY. AGABIN:
To the decision of the Court.
JUSTICE TINGA:
It was.
ATTY. AGABIN:
It was not necessary.
JUSTICE TINGA:
It was.
ATTY. AGABIN:
Yes.
JUSTICE TINGA:
And PICOP devoted quite a number of pages in [its] memorandum to that issue and
so did the Court [in its Decision].

ATTY. AGABIN:
Anyway, your Honor, we beg the Court to revisit, not to29
Interpretation of the 1969 Document That Would Be in Harmony with the
Constitution
To remove any doubts as to the contents of the 1969 Document, the purported
Presidential Warranty, below is a complete text thereof:
Republic of the Philippines
Department of Agriculture and Natural Resources
OFFICE OF THE SECRETARY
Diliman, Quezon City
D-53, Licenses (T.L.A. No. 43)
Bislig Bay Lumber Co., Inc.
(Bislig, Surigao)
July 29, 1969
Bislig Bay Lumber Co., Inc.
[unreadable word] Bldg.
Makati, Rizal
S i r s:
This has reference to the request of the Board of Investments through its Chairman
in a letter dated July 16, 1969 for a warranty on the boundaries of your concession
area under Timber License Agreement No. 43, as amended.
We are made to understand that your company is committed to support the first
large scale integrated wood processing complex hereinafter called: "The Project")
and that such support will be provided not only in the form of the supply of
pulpwood and other wood materials from your concession but also by making
available funds generated out of your own operations, to supplement PICOPs
operational sources of funds and other financial arrangements made by him. In
order that your company may provide such support effectively, it is understood that
you will call upon your stockholders to take such steps as may be necessary to
effect a unification of managerial, technical, economic and manpower resources
between your company and PICOP.

It is in the public interest to promote industries that will enhance the proper
conservation of our forest resources as well as insure the maximum utilization
thereof to the benefit of the national economy. The administration feels that the
PICOP project is one such industry which should enjoy priority over the usual logging
operations hitherto practiced by ordinary timber licensees: For this reason, we are
pleased to consider favorably the request.
We confirm that your Timber License Agreement No. 43, as amended (copy of which
is attached as Annex "A" hereof which shall form part and parcel of this warranty)
definitely establishes the boundary lines of your concession area which consists of
permanent forest lands with an aggregate area of 121,587 hectares and alienable or
disposable lands with an aggregate area of approximately 21,580 hectares.
We further confirm that your tenure over the area and exclusive right to cut, collect
and remove sawtimber and pulpwood shall be for the period ending on April 26,
1977; said period to be renewable for other 25 years subject to compliance with
constitutional and statutory requirements as well as with existing policy on timber
concessions.
The peaceful and adequate enjoyment by you of your area as described and
specified in your aforesaid amended Timber License Agreement No. 43 is hereby
warranted provided that pertinent laws, regulations and the terms and conditions of
your license agreement are observed.
Very truly yours,
(Sgd.) FERNANDO LOPEZ
Secretary of Agriculture
and Natural Resources
Encl.:
RECOMMENDED BY:
(Sgd.) JOSE VIADO
Acting Director of Forestry
APPROVED:
(Sgd.) FERDINAND E. MARCOS
President of the Philippines
ACCEPTED:

BISLIG BAY LBR. CO., INC.

By:
(Sgd.) JOSE E. SORIANO
President
PICOP interprets this document in the following manner:
6.1 It is clear that the thrust of the government warranty is to establish a particular
area defined by boundary lines of TLA No. 43 for the PICOP Project. In consideration
for PICOPs commitment to pursue and establish the project requiring huge
investment/funding from stockholders and lending institutions, the government
provided a warranty that ensures the continued and exclusive right of PICOP to
source its raw materials needs from the forest and renewable trees within the areas
established.
6.2 As a long-term support, the warranty covers the initial twenty five (25) year
period and is renewable for periods of twenty five (25) years provided the project
continues to exist and operate. Very notably, the wording of the Presidential
Warranty connotes that for as long as the holder complies with all the legal
requirements, the term of the warranty is not limited to fifty (50) years but other
twenty five (25) years.
6.3 Note must be made that the government warranted that PICOPs tenure over
the area and exclusive right to cut, collect and remove saw timber and pulpwood
shall be for the period ending on 26 April 1977 and said period to be renewable for
other 25 years subject to "compliance with constitutional and statutory
requirements as well as existing policy on timber requirements". It is clear that the
renewal for other 25 years, not necessarily for another 25 years is guaranteed. This
explains why on 07 October 1977, TLA No. 43, as amended, was automatically
renewed for another period of twenty five (25) years to expire on 26 April 2002.30
PICOPs interpretation of the 1969 Document cannot be sustained. PICOPs claim
that the term of the warranty is not limited to fifty years, but that it extends to other
fifty years, perpetually, violates Section 2, Article XII of the Constitution which
provides:
Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and
other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife,
flora and fauna, and other natural resources are owned by the State. With the
exception of agricultural lands, all other natural resources shall not be alienated.
The exploration, development, and utilization of natural resources shall be under
the full control and supervision of the State. The State may directly undertake such

activities, or it may enter into co-production, joint venture, or production-sharing

agreements with Filipino citizens, or corporations or associations at least sixty per
centum of whose capital is owned by such citizens. Such agreements may be for a
period not exceeding twenty-five years, renewable for not more than twenty-five
years, and under such terms and conditions as may be provided by law. In cases of
water rights for irrigation, water supply fisheries, or industrial uses other than the
development of water power, beneficial use may be the measure and limit of the
grant.
Mr. Justice Dante O. Tingas interpretation of the 1969 Document is much more in
accord with the laws and the Constitution. What one cannot do directly, he cannot
do indirectly. Forest lands cannot be alienated in favor of private entities. Granting
to private entities, via a contract, a permanent, irrevocable, and exclusive
possession of and right over forest lands is tantamount to granting ownership
thereof. PICOP, it should be noted, claims nothing less than having exclusive,
continuous and uninterrupted possession of its concession areas,31 where all other
entrants are illegal,32 and where so-called "illegal settlers and squatters" are
apprehended.33
IFMAs are production-sharing agreements concerning the development and
utilization of natural resources. As such, these agreements "may be for a period not
exceeding twenty-five years, renewable for not more than twenty-five years, and
under such terms and conditions as may be provided by law." Any superior
"contract" requiring the State to issue TLAs and IFMAs whenever they expire clearly
circumvents Section 2, Article XII of the Constitution, which provides for the only
permissible schemes wherein the full control and supervision of the State are not
derogated: co-production, joint venture, or production-sharing agreements within
the time limit of twenty-five years, renewable for another twenty-five years.
On its face, the 1969 Document was meant to expire on 26 April 2002, upon the
expiration of the expected extension of the original TLA period ending on 26 April
1977:
We further confirm that your tenure over the area and exclusive right to cut, collect
and remove sawtimber and pulpwood shall be for the period ending on April 26,
1977; said period to be renewable for other 25 years subject to compliance with
constitutional and statutory requirements as well as with existing policy on timber
concessions.1avvphi1
Any interpretation extending the application of the 1969 Document beyond 26 April
2002 and any concession that may be granted to PICOP beyond the said date would
violate the Constitution, and no amount of legal hermeneutics can change that.
Attempts of PICOP to explain its way out of this Constitutional provision only led to
absurdities, as exemplified in the following excerpt from the oral arguments:

JUSTICE CARPIO:
The maximum trend of agreement to develop and utilize natural resources like
forest products is 25 years plus another 25 years or a total of 50 years correct?
ATTY. AGABIN
Yes, Your Honor.
JUSTICE CARPIO:
That is true for the 1987, 1973, 1935 Constitution, correct?
ATTY. AGABIN:
Yes, Your Honor.
JUSTICE CARPIO:
The TLA here, TLA 43, expired, the first 25 years expired in 1977, correct?
ATTY. AGABIN:
Yes, Your Honor.
JUSTICE CARPIO:
And it was renewed for another 25 years until 2002, the 50th year?
ATTY. AGABIN:
Yes, Your Honor.
JUSTICE CARPIO:
Now, could PICOP before the end of the 50th year lets say in 2001, one year before
the expiration, could it have asked for an extension of another 25 years of its TLA
agreement[?]
ATTY. AGABIN:
I believe so, Your Honor.

JUSTICE CARPIO:
But the Constitution says, maximum of fifty years. How could you ask for another 25
years of its TLA.
ATTY. AGABIN:
Well, your Honor, we believe on a question like this, this Honorable Court should
balance the interest.
JUSTICE CARPIO:
The Constitution is very clear, you have only a maximum of 50 years, 25 plus
another 25. PICOP could never have applied for an extension, for a third 25-year
term whether under the 1935 Constitution, the 1973 Constitution and the 1987
Constitution, correct?
ATTY. AGABIN:
Your Honor, except that we are invoking the warranty, the terms of the warranty.
JUSTICE CARPIO:
Can the warranty prevail over the Constitution?
ATTY. AGABIN:
Well, it is a vested right, your Honor.
JUSTICE CARPIO:
Yes, but whatever it is, can it prevail over the Constitution?
ATTY. AGABIN:
The Constitution itself provides that vested rights should be .
JUSTICE CARPIO:
If it is not in violation of specific provision of the Constitution. The Constitution says,
25 years plus another 25 years, thats the end of it. You mean to say that a
President of the Philippines can give somebody 1,000 years license?
ATTY. AGABIN:

Well, that is not our position, Your Honor. Because our position is that .
JUSTICE CARPIO:
My question is, what is the maximum term, you said 50 years. So, my next question
is, can PICOP apply for an extension of another 25 years after 2002, the 50th year?
ATTY. AGABIN:
Yes, based on the contract of warranty, Your Honor, because the contract of
warranty.
JUSTICE CARPIO:
But in the PICOP license it is very clear, it says here, provision 28, it says the license
agreement is for a total of 50 years. I mean it is very simple, the President or even
Congress cannot pass a law extending the license, whatever kind of license to
utilize natural resources for more than fifty year[s]. I mean even the law cannot do
that. It cannot prevail over the Constitution. Is that correct, Counsel?
ATTY. AGABIN:
It is correct, Your Honor, except that in this case, what is actually our application is
that the law provides for the conversion of existing TLA into IFMA.
JUSTICE CARPIO:
So, they file the petition for conversion before the end of the 50th year for IFMA.
ATTY. AGABIN:
Yes, Your Honor.
JUSTICE CARPIO:
But IFMA is the same, it is based on Section 2, Article 12 of the Constitution,
develop and utilize natural resources because as you said when the new
constitution took effect we did away with the old licensing regime, we have now coproduction, a production sharing, joint venture, direct undertaking but still the same
developing and utilizing the natural resources, still comes from section 2, Art. 12 of
the Constitution. It is still a license but different format now.
ATTY. AGABIN:

It is correct, Your Honor, except that the regimes of joint venture, co-production and
production sharing are what is referred to in the constitution, Your Honor, and still
covered
JUSTICE CARPIO:
Yes, but it is covered by same 25 year[s], you mean to say people now can
circumvent the 50 year maximum term by calling their TLA as IFMA and after fifty
years calling it ISMA, after another 50 years call it MAMA.
ATTY. AGABIN:
Yes, Your Honor. Because
JUSTICE CARPIO:
It can be done.
ATTY. AGABIN:
That is provided for by the department itself.34
PICOP is, in effect, arguing that the DENR issued DAO No. 99-53 in order to provide
a way to circumvent the provisions of the Constitution limiting agreements for the
utilization of natural resources to a maximum period of fifty years. Official duties
are, however, disputably considered to be regularly performed,35 and good faith is
always presumed.
DAO No. 99-53 was issued to change the means by which the government enters
into an agreement with private entities for the utilization of forest products. DAO No.
99-53 is a late response to the change in the constitutional provisions on natural
resources from the 1973 Constitution, which allowed the granting of licenses to
private entities,36 to the present Constitution, which provides for co-production,
joint venture, or production-sharing agreements as the permissible schemes
wherein private entities may participate in the utilization of forest products. Since
the granting of timber licenses ceased to be a permissible scheme for the
participation of private entities under the present Constitution, their operations
should have ceased upon the issuance of DAO No. 99-53, the rule regulating the
schemes under the present Constitution. This would be iniquitous to those with
existing TLAs that would not have expired yet as of the issuance of DAO No. 99-53,
especially those with new TLAs that were originally set to expire after 10 or even 20
or more years. The DENR thus inserted a provision in DAO No. 99-53 allowing these
TLA holders to finish the period of their TLAs, but this time as IFMAs, without the

rigors of going through a new application, which they have probably just gone
through a few years ago.
Such an interpretation would not only make DAO No. 99-53 consistent with the
provisions of the Constitution, but would also prevent possible discrimination
against new IFMA applicants:
ASSOCIATE JUSTICE DE CASTRO:
I ask this question because of your interpretation that the period of the IFMA, if your
TLA is converted into IFMA, would cover a new a fresh period of twenty-five years
renewable by another period of twenty-five years.
DEAN AGABIN:
Yes, Your Honor.
ASSOCIATE JUSTICE DE CASTRO:
Dont you think that will, in effect, be invidious discrimination with respect to other
applicants if you are granted a fresh period of twenty-five years extendible to
another twenty-five years?
DEAN AGABIN:
I dont think it would be, Your Honor, considering that the IFMA is different regime
from the TLA. And not only that, there are considerations of public health and
ecology which should come into play in this case, and which we had explained in
our opening statement and, therefore the provision of the Constitution on the
twenty-five limits for renewal of co-production, joint venture and production sharing
agreements, should be balanced with other values stated in the Constitution, like
the value of balanced ecology, which should be in harmony with the rhythm of
nature, or the policy of forest preservation in Article XII, Section 14 of the
Constitution. These are all important policy considerations which should be
balanced against the term limits in Article II of the Constitution.
ASSOCIATE JUSTICE DE CASTRO:
The provision of this Administrative Order regarding automatic conversion may be
reasonable, if, I want to know if you agree with me, if we limit this automatic
conversion to the remaining period of the TLA, because in that case there will be a
valid ground to make a distinction between those with existing TLA and those who
are applying for the first time for IFMA?

DEAN AGABIN:
Well, Your Honor, we beg to disagree, because as I said TLAs are completely
different from IFMA. The TLA has no production sharing or co-production agreement
or condition. All that the licensee has to do is, to pay forest charges, taxes and other
impositions from the local and national government. On the other hand, the IFMAs
contained terms and conditions which are completely different, and that they either
impose co-production, production sharing or joint venture terms. So its a
completely different regime, Your Honor.
ASSOCIATE JUSTICE DE CASTRO:
Precisely, that is the reason why there should be an evaluation of what you
mentioned earlier of the development plan.
DEAN AGABIN:
Yes, Your Honor.
ASSOCIATE JUSTICE DE CASTRO:
So it will be reasonable to convert a TLA into an IFMA without considering the
development plan submitted by other applicants or the development plan itself of
one seeking conversion into IFMA if it will only be limited to the period, the original
period of the TLA. But once you go beyond the period of the TLA, then you will be,
the DENR is I think should evaluate the different proposals of the applicants if we
are thinking of a fresh period of twenty-five years, and which is renewable under the
Constitution by another twenty-five years. So the development plan will be
important in this case, the submission of the development plan of the different
applicants must be considered. So I dont understand why you mentioned earlier
that the development plan will later on be a subject matter of negotiation between
the IFMA grantee and the government. So it seems that it will be too late in the day
to discuss that if you have already converted the TLA into IFMA or if the government
has already granted the IFMA, and then it will later on study the development plan,
whether it is viable or not, or it is sustainable or not, and whether the development
plan of the different applicants are, are, which of the development plan of the
different applicants is better or more advantageous to the government.37
PICOP insists that the alleged Presidential Warranty, having been signed on 29 July
1969, could not have possibly considered the limitations yet to be imposed by
future issuances, such as the 1987 Constitution. However, Section 3, Article XVIII of
said Constitution, provides:

Section 3. All existing laws, decrees, executive orders, proclamations, letters of

instructions, and other executive issuances not inconsistent with this Constitution
shall remain operative until amended, repealed, or revoked.
In the recent case Sabio v. Gordon,38 we ruled that "(t)he clear import of this
provision is that all existing laws, executive orders, proclamations, letters of
instructions and other executive issuances inconsistent or repugnant to the
Constitution are repealed."
When a provision is susceptible of two interpretations, "the one that will render
them operative and effective and harmonious with other provisions of law"39 should
be adopted. As the interpretations in the assailed Decision and in Mr. Justice Tingas
ponencia are the ones that would not make the subject Presidential Warranty
unconstitutional, these are what we shall adopt.
Purpose of the 1969 Document: Assurance That the Boundaries of Its Concession
Area Would Not Be Altered Despite the Provision in the TLA that the DENR Secretary
Can Amend Said Boundaries
In the assailed Decision, we ruled that the 1969 Document cannot be considered a
contract that would bind the government regardless of changes in policy and the
demands of public interest and social welfare. PICOP claims this conclusion "did not
take into consideration that PICOP already had a valid and current TLA before the
contract with warranty was signed in 1969."40 PICOP goes on: "The TLA is a license
that equips any TLA holder in the country for harvesting of timber. A TLA is signed
by the Secretary of the DANR now DENR. The Court ignored the significance of the
need for another contract with the Secretary of the DANR but this time with the
approval of the President of the Republic."41 PICOP then asks us: "If PICOP/BBLCI
was only an ordinary TLA holder, why will it go through the extra step of securing
another contract just to harvest timber when the same can be served by the TLA
signed only by the Secretary and not requiring the approval of the President of the
Republic(?)"42
The answer to this query is found in TLA No. 43 itself wherein, immediately after the
boundary lines of TLA No. 43 were established, the following conditions were given:
This license is granted to the said party of the second part upon the following
express conditions:
I. That authority is granted hereunder to the party of the second part43 to cut,
collect or remove firewood or other minor forest products from the area embraced
in this license agreement except as hereinafter provided.

II. That the party of the first part44 may amend or alter the description of the
boundaries of the area covered by this license agreement to conform with official
surveys and that the decision of the party of the first part as to the exact location of
the said boundaries shall be final.
III. That if the party of the first part deems it necessary to establish on the ground
the boundary lines of the area granted under this license agreement, the party of
the second part shall furnish to the party of the first part or its representatives as
many laborers as it needs and all the expenses to be incurred on the work including
the wages of such laborers shall be paid by the party of the second part.45
Thus, BBLCI needed an assurance that the boundaries of its concession area, as
established in TLA No. 43, as amended, would not be altered despite this provision.
Hence, BBLCI endeavored to obtain the 1969 Document, which provides:
We confirm that your Timber License Agreement No. 43, as amended (copy of which
is attached as Annex "A" hereof which shall form part and parcel of this warranty)
definitely establishes the boundary lines of your concession area which consists of
permanent forest lands with an aggregate area of 121,587 hectares and alienable or
disposable lands with an aggregate area of approximately 21,580 hectares.
We further confirm that your tenure over the area and exclusive right to cut, collect
and remove sawtimber and pulpwood shall be for the period ending on April 26,
1977; said period to be renewable for other 25 years subject to compliance with
constitutional and statutory requirements as well as with existing policy on timber
concessions.
The peaceful and adequate enjoyment by you of your area as described and
specified in your aforesaid amended Timber License Agreement No. 43 is hereby
warranted provided that pertinent laws, regulations and the terms and conditions of
your license agreement are observed.46
In Koa v. Court of Appeals,47 we ruled that a warranty is a collateral undertaking
and is merely part of a contract. As a collateral undertaking, it follows the principal
wherever it goes. When this was pointed out by the Solicitor General, PICOP
changed its designation of the 1969 Document from "Presidential Warranty" or
"government warranty" in all its pleadings prior to our Decision, to "contract with
warranty" in its Motion for Reconsideration. This, however, is belied by the
statements in the 29 July 1969 Document, which refers to itself as "this warranty."
Re: Allegation That There Were Mutual Contract Considerations
Had the 29 July 1969 Document been intended as a contract, it could have easily
said so. More importantly, it could have clearly defined the mutual considerations of

the parties thereto. It could have also easily provided for the sanctions for the
breach of the mutual considerations specified therein. PICOP had vigorously argued
that the 1969 Document was a contract because of these mutual considerations,
apparently referring to the following paragraph of the 1969 Document:
We are made to understand that your company is committed to support the first
large scale integrated wood processing complex hereinafter called: "The Project")
and that such support will be provided not only in the form of the supply of
pulpwood and other wood materials from your concession but also by making
available funds generated out of your own operations, to supplement PICOPs
operational surces (sic) of funds and other financial arrangements made by him. In
order that your company may provide such support effectively, it is understood that
you will call upon your stockholders to take such steps as may be necessary to
effect a unification of managerial, technical, economic and manpower resources
between your company and PICOP.1avvphi1
This provision hardly evinces a contract consideration (which, in PICOPs
interpretation, is in exchange for the exclusive and perpetual tenure over 121,587
hectares of forest land and 21,580 hectares of alienable and disposable lands). As
elucidated by PICOP itself in bringing up the Investment Incentives Act which we
shall discuss later, and as shown by the tenor of the 1969 Document, the latter
document was more of a conferment of an incentive for BBLCIs investment rather
than a contract creating mutual obligations on the part of the government, on one
hand, and BBLCI, on the other. There was no stipulation providing for sanctions for
breach if BBLCIs being "committed to support the first large scale integrated wood
processing complex" remains a commitment. Neither did the 1969 Document give
BBLCI a period within which to pursue this commitment.
According to Article 1350 of the Civil Code, "(i)n onerous contracts the cause is
understood to be, for each contracting party, the prestation or promise of a thing or
service by the other."48 Private investments for ones businesses, while indeed
eventually beneficial to the country and deserving to be given incentives, are still
principally and predominantly for the benefit of the investors. Thus, the "mutual"
contract considerations by both parties to this alleged contract would be both for
the benefit of one of the parties thereto, BBLCI, which is not obligated by the 1969
Document to surrender a share in its proceeds any more than it is already required
by its TLA and by the tax laws.
PICOPs argument that its investments can be considered as contract consideration
derogates the rule that "a license or a permit is not a contract between the
sovereignty and the licensee or permittee, and is not a property in the constitutional
sense, as to which the constitutional proscription against the impairment of
contracts may extend." All licensees obviously put up investments, whether they
are as small as a tricycle unit or as big as those put up by multi-billion-peso

corporations. To construe these investments as contract considerations would be to

abandon the foregoing rule, which would mean that the State would be bound to all
licensees, and lose its power to revoke or amend these licenses when public interest
so dictates.
The power to issue licenses springs from the States police power, known as "the
most essential, insistent and least limitable of powers, extending as it does to all
the great public needs."49 Businesses affecting the public interest, such as the
operation of public utilities and those involving the exploitation of natural resources,
are mandated by law to acquire licenses. This is so in order that the State can
regulate their operations and thereby protect the public interest. Thus, while these
licenses come in the form of "agreements," e.g., "Timber License Agreements," they
cannot be considered contracts under the non-impairment clause.50
PICOP found this argument "lame," arguing, thus:
43. It is respectfully submitted that the aforesaid pronouncement in the Decision is
an egregious and monumental error.
44. The Decision could not dismiss as "preposterous" the mutual covenants in the
Presidential Warranty which calls for a huge investment of Php500 million at that
time in 1969 out of which Php268,440,000 raised from domestic foreign lending
institution to establish the first large scale integrated wood processing complex in
the Philippines.
45. The Decision puts up a lame explanation that "all licensees put up investments
in pursuing their business"
46. Now there are about a hundred timber licenses issued by the Government thru
the DENR, but these are ordinary timber licenses which involve the mere cutting of
timber in the concession area, and nothing else. Records in the DENR shows that no
timber licensee has put up an integrated large wood processing complex in the
Philippines except PICOP.51
PICOP thus argues on the basis of quantity, and wants us to distinguish between the
investment of the tricycle driver and that of the multi-billion corporation. However,
not even billions of pesos in investment can change the fact that natural resources
and, therefore, public interest are involved in PICOPs venture, consequently
necessitating the full control and supervision by the State as mandated by the
Constitution. Not even billions of pesos in investment can buy forest lands, which is
practically what PICOP is asking for by interpreting the 1969 Document as a
contract giving it perpetual and exclusive possession over such lands. Among all
TLA holders in the Philippines, PICOP has, by far, the largest concession area at

143,167 hectares, a land area more than the size of two Metro Manilas.52 How can
it not expect to also have the largest investment?
Investment Incentives Act
PICOP then claims that the contractual nature of the 1969 Document was brought
about by its issuance in accordance with and pursuant to the Investment Incentives
Act. According to PICOP:
The conclusion in the Decision that to construe PICOPs investments as a
consideration in a contract would be to stealthily render ineffective the principle
that a license is not a contract between the sovereignty and the licensee is so
flawed since the contract with the warranty dated 29 July 1969 was issued by the
Government in accordance with and pursuant to Republic Act No. 5186, otherwise
known as "The Investment Incentives Act."53
PICOP then proceeds to cite Sections 2 and 4(d) and (e) of said act:
Section 2. Declaration of Policy To accelerate the sound development of the
national economy in consonance with the principles and objectives of economic
nationalism, and in pursuance of a planned, economically feasible and practicable
dispersal of industries, under conditions which will encourage competition and
discharge monopolies, it is hereby declared to be the policy of the state to
encourage Filipino and foreign investments, as hereinafter set out, in projects to
develop agricultural, mining and manufacturing industries which increase national
income most at the least cost, increase exports, bring about greater economic
stability, provide more opportunities for employment, raise the standards of living of
the people, and provide for an equitable distribution of wealth. It is further declared
to be the policy of the state to welcome and encourage foreign capital to establish
pioneer enterprises that are capital intensive and would utilize a substantial amount
of domestic raw materials, in joint venture with substantial Filipino capital,
whenever available.
Section 4. Basic Rights and Guarantees. All investors and enterprises are entitled
to the basic rights and guarantees provided in the constitution. Among other rights
recognized by the Government of the Philippines are the following:
xxxx
d) Freedom from Expropriation. There shall be no expropriation by the government
of the property represented by investments or of the property of enterprises except
for public use or in the interest of national welfare and defense and upon payment
of just compensation. x x x.

e) Requisition of Investment. There shall be no requisition of the property

represented by the investment or of the property of enterprises, except in the event
of war or national emergency and only for the duration thereof. Just compensation
shall be determined and paid either at the time of requisition or immediately after
cessation of the state of war or national emergency. Payments received as
compensation for the requisitioned property may be remitted in the currency in
which the investment was originally made and at the exchange rate prevailing at
the time of remittance, subject to the provisions of Section seventy-four of republic
Act Numbered Two hundred sixty-five.
Section 2 speaks of the policy of the State to encourage Filipino and foreign
investments. It does not speak of how this policy can be implemented.
Implementation of this policy is tackled in Sections 5 to 12 of the same law,54 which
PICOP failed to mention, and for a good reason. None of the 24 incentives
enumerated therein relates to, or even remotely suggests that, PICOPs proposition
that the 1969 Document is a contract.
PICOP could indeed argue that the enumeration is not exclusive. Certainly, granting
incentives to investors, whether included in the enumeration or not, would be an
implementation of this policy. However, it is presumed that whatever incentives
may be given to investors should be within the bounds of the laws and the
Constitution. The declaration of policy in Section 2 cannot, by any stretch of the
imagination, be read to provide an exception to either the laws or, heaven forbid,
the Constitution. Exceptions are never presumed and should be convincingly
proven. Section 2 of the Investment Incentives Act cannot be read as exempting
investors from the Constitutional provisions (1) prohibiting private ownership of
forest lands; (2) providing for the complete control and supervision by the State of
exploitation activities; or (3) limiting exploitation agreements to twenty-five years,
renewable for another twenty-five years.
Section 4(d) and (e), on the other hand, is a recognition of rights already
guaranteed under the Constitution. Freedom from expropriation is granted under
Section 9 of Article III55 of the Constitution, while the provision on requisition is a
negative restatement of Section 6, Article XII.56
Refusal to grant perpetual and exclusive possession to PICOP of its concession area
would not result in the expropriation or requisition of PICOPs property, as these
forest lands belong to the State, and not to PICOP. This is not changed by PICOPs
allegation that:
Since it takes 35 years before the company can go back and harvest their residuals
in a logged-over area, it must be assured of tenure in order to provide an
inducement for the company to manage and preserve the residuals during their
growth period. This is a commitment of resources over a span of 35 years for each

plot for each cycle. No company will undertake the responsibility and cost involved
in policing, preserving and managing residual forest areas until it were sure that it
had firm title to the timber.57
The requirement for logging companies to preserve and maintain forest areas,
including the reforestation thereof, is one of the prices a logging company must pay
for the exploitation thereof. Forest lands are meant to be enjoyed by countless
future generations of Filipinos, and not just by one logging company. The
requirements of reforestation and preservation of the concession areas are meant to
protect them, the future generations, and not PICOP. Reforestation and preservation
of the concession areas are not required of logging companies so that they would
have something to cut again, but so that the forest would remain intact after their
operations. That PICOP would not accept the responsibility to preserve its
concession area if it is not assured of tenure thereto does not speak well of its
corporate policies.
Conclusion
In sum, PICOP was not able to prove either of the two things it needed to prove to
be entitled to a Writ of Mandamus against the DENR Secretary. The 1969 Document
is not a contract recognized under the non-impairment clause and, even if we
assume for the sake of argument that it is, it did not enjoin the government to issue
an IFMA in 2002 either. These are the essential elements in PICOPs cause of action,
and the failure to prove the same warrants a dismissal of PICOPs Petition for
Mandamus, as not even PICOPs compliance with all the administrative and
statutory requirements can save its Petition now.
Whether PICOP Has Complied with the Statutory and Administrative Requirements
for the Conversion of the TLA to an IFMA
In the assailed Decision, our ruling was based on two distinct grounds, each one
being sufficient in itself for us to rule that PICOP was not entitled to a Writ of
Mandamus: (1) the 1969 Document, on which PICOP hinges its right to compel the
issuance of an IFMA, is not a contract; and (2) PICOP has not complied with all
administrative and statutory requirements for the issuance of an IFMA.
When a court bases its decision on two or more grounds, each is as authoritative as
the other and neither is obiter dictum.58 Thus, both grounds on which we based our
ruling in the assailed Decision would become judicial dictum, and would affect the
rights and interests of the parties to this case unless corrected in this Resolution on
PICOPs Motion for Reconsideration. Therefore, although PICOP would not be entitled
to a Writ of Mandamus even if the second issue is resolved in its favor, we should
nonetheless resolve the same and determine whether PICOP has indeed complied
with all administrative and statutory requirements for the issuance of an IFMA.

While the first issue (on the nature of the 1969 Document) is entirely legal, this
second issue (on PICOPs compliance with administrative and statutory
requirements for the issuance of an IFMA) has both legal and factual sub-issues.
Legal sub-issues include whether PICOP is legally required to (1) consult with and
acquire an approval from the Sanggunian concerned under Sections 26 and 27 of
the Local Government Code; and (2) acquire a Certification from the National
Commission on Indigenous Peoples (NCIP) that the concession area does not overlap
with any ancestral domain. Factual sub-issues include whether, at the time it filed
its Petition for Mandamus, PICOP had submitted the required Five-Year Forest
Protection Plan and Seven-Year Reforestation Plan and whether PICOP had paid all
forest charges.
For the factual sub-issues, PICOP invokes the doctrine that factual findings of the
trial court, especially when upheld by the Court of Appeals, deserve great weight.
However, deserving of even greater weight are the factual findings of administrative
agencies that have the expertise in the area of concern. The contentious facts in
this case relate to the licensing, regulation and management of forest resources,
the determination of which belongs exclusively to the DENR:
SECTION 4. Mandate. The Department shall be the primary government agency
responsible for the conservation, management, development and proper use of the
countrys environment and natural resources, specifically forest and grazing lands,
mineral resources, including those in reservation and watershed areas, and lands of
the public domain, as well as the licensing and regulation of all natural resources as
may be provided for by law in order to ensure equitable sharing of the benefits
derived therefrom for the welfare of the present and future generations of
Filipinos.59
When parties file a Petition for Certiorari against judgments of administrative
agencies tasked with overseeing the implementation of laws, the findings of such
administrative agencies are entitled to great weight. In the case at bar, PICOP could
not have filed a Petition for Certiorari, as the DENR Secretary had not yet even
determined whether PICOP should be issued an IFMA. As previously mentioned,
when PICOPs application was brought to a standstill upon the evaluation that PICOP
had yet to comply with the requirements for the issuance of an IFMA, PICOP refused
to attend further meetings with the DENR and instead filed a Petition for Mandamus
against the latter. By jumping the gun, PICOP did not diminish the weight of the
DENR Secretarys initial determination.
Forest Protection and Reforestation Plans

The Performance Evaluation Team tasked to appraise PICOPs performance on its

TLA No. 43 found that PICOP had not submitted its Five-Year Forest Protection Plan
and its Seven-Year Reforestation Plan.60
In its Motion for Reconsideration, PICOP asserts that, in its Letter of Intent dated 28
August 2000 and marked as Exhibit L in the trial court, there was a reference to a
Ten-Year Sustainable Forest Management Plan (SFMP), in which a Five-Year Forest
Protection Plan and a Seven-Year Reforestation Plan were allegedly incorporated.
PICOP submitted a machine copy of a certified photocopy of pages 50-67 and 104110 of this SFMP in its Motion for Reconsideration. PICOP claims that the existence
of this SFMP was repeatedly asserted during the IFMA application process.61
Upon examination of the portions of the SFMP submitted to us, we cannot help but
notice that PICOPs concept of forest protection is the security of the area against
"illegal" entrants and settlers. There is no mention of the protection of the wildlife
therein, as the focus of the discussion of the silvicultural treatments and the SFMP
itself is on the protection and generation of future timber harvests. We are
particularly disturbed by the portions stating that trees of undesirable quality shall
be removed.
However, when we required the DENR Secretary to comment on PICOPs Motion for
Reconsideration, the DENR Secretary did not dispute the existence of this SFMP, or
question PICOPs assertion that a Ten-Year Forest Protection Plan and a Ten-Year
Reforestation Plan are already incorporated therein. Hence, since the agency tasked
to determine compliance with IFMA administrative requirements chose to remain
silent in the face of allegations of compliance, we are constrained to withdraw our
pronouncement in the assailed Decision that PICOP had not submitted a Five-Year
Forest Protection Plan and a Seven-Year Reforestation Plan for its TLA No. 43. As
previously mentioned, the licensing, regulation and management of forest resources
are the primary responsibilities of the DENR.62
The compliance discussed above is, of course, only for the purpose of determining
PICOPs satisfactory performance as a TLA holder, and covers a period within the
subsistence of PICOPs TLA No. 43. This determination, therefore, cannot prohibit
the DENR from requiring PICOP, in the future, to submit proper forest protection and
reforestation plans covering the period of the proposed IFMA.
Forest Charges
In determining that PICOP did not have unpaid forest charges, the Court of Appeals
relied on the assumption that if it were true that PICOP had unpaid forest charges, it
should not have been issued an approved Integrated Annual Operation Plan (IAOP)
for the year 2001-2002 by Secretary Alvarez himself.63

In the assailed Decision, we held that the Court of Appeals had been selective in its
evaluation of the IAOP, as it disregarded the part thereof that shows that the IAOP
was approved subject to several conditions, not the least of which was the
submission of proof of the updated payment of forest charges from April 2001 to
June 2001.64 We also held that even if we considered for the sake of argument that
the IAOP should not have been issued if PICOP had existing forestry accounts, the
issuance of the IAOP could not be considered proof that PICOP had paid the same.
Firstly, the best evidence of payment is the receipt thereof. PICOP has not presented
any evidence that such receipts were lost or destroyed or could not be produced in
court.65 Secondly, the government cannot be estopped by the acts of its officers. If
PICOP has been issued an IAOP in violation of the law, allegedly because it may not
be issued if PICOP had existing forestry accounts, the government cannot be
estopped from collecting such amounts and providing the necessary sanctions
therefor, including the withholding of the IFMA until such amounts are paid.
We therefore found that, as opposed to the Court of Appeals findings, which were
based merely on estoppel of government officers, the positive and categorical
evidence presented by the DENR Secretary was more convincing with respect to the
issue of payment of forestry charges:
1. Forest Management Bureau (FMB) Senior Forest Management Specialist (SFMS)
Ignacio M. Evangelista testified that PICOP had failed to pay its regular forest
charges covering the period from 22 September 2001 to 26 April 2002 in the total
amount of P15,056,054.0566 PICOP also allegedly paid late most of its forest
charges from 1996 onwards, by reason of which, PICOP is liable for a surcharge of
25% per annum on the tax due and interest of 20% per annum which now amounts
to P150,169,485.02.67 Likewise, PICOP allegedly had overdue and unpaid
silvicultural fees in the amount of P2,366,901.00 as of 30 August 2002.68 Summing
up the testimony, therefore, it was alleged that PICOP had unpaid and overdue
forest charges in the sum of P167,592,440.90 as of 10 August 2002.69
2. Collection letters were sent to PICOP, but no official receipts are extant in the
DENR record in Bislig City evidencing payment of the overdue amount stated in the
said collection letters.70 There were no official receipts for the period covering 22
September 2001 to 26 April 2002.
We also considered these pieces of evidence more convincing than the other ones
presented by PICOP:
1. PICOP presented the certification of Community Environment and Natural
Resources Office (CENRO) Officer Philip A. Calunsag, which refers only to PICOPs
alleged payment of regular forest charges covering the period from 14 September
2001 to 15 May 2002.71 We noted that it does not mention similar payment of the

penalties, surcharges and interests that PICOP incurred in paying late several forest
charges, which fact was not rebutted by PICOP.
2. The 27 May 2002 Certification by CENRO Calunsag specified only the period
covering 14 September 2001 to 15 May 2002 and the amount of P53,603,719.85
paid by PICOP without indicating the corresponding volume and date of production
of the logs. This is in contrast to the findings of SFMS Evangelista, which cover the
period from CY 1996 to 30 August 2002 and includes penalties, interests, and
surcharges for late payment pursuant to DAO 80, series of 1987.
3. The 21 August 2002 PICOP-requested certification issued by Bill Collector Amelia
D. Arayan, and attested to by CENRO Calunsag himself, shows that PICOP paid only
regular forest charges for its log production covering 1 July 2001 to 21 September
2001. However, there were log productions after 21 September 2001, the regular
forest charges for which have not been paid, amounting to P15,056,054.05.72 The
same certification shows delayed payment of forest charges, thereby corroborating
the testimony of SFMS Evangelista and substantiating the imposition of penalties
and surcharges.
In its Motion for Reconsideration, PICOP claims that SFMS Evangelista is assigned to
an office that has nothing to do with the collection of forest charges, and that he
based his testimony on the Memoranda of Forest Management Specialist II (FMS II)
Teofila Orlanes and DENR, Bislig City Bill Collector Amelia D. Arayan, neither of
whom was presented to testify on his or her Memorandum. PICOP also submitted an
Addendum to Motion for Reconsideration, wherein it appended certified true copies
of CENRO Summaries with attached Official Receipts tending to show that PICOP
had paid a total of P81,184,747.70 in forest charges for 10 January 2001 to 20
December 2002, including the period during which SFMS Evangelista claims PICOP
did not pay forest charges (22 September 2001 to 26 April 2002).
Before proceeding any further, it is necessary for us to point out that, as with our
ruling on the forest protection and reforestation plans, this determination of
compliance with the payment of forest charges is exclusively for the purpose of
determining PICOPs satisfactory performance on its TLA No. 43. This cannot bind
either party in a possible collection case that may ensue.
An evaluation of the DENR Secretarys position on this matter shows a heavy
reliance on the testimony of SFMS Evangelista, making it imperative for us to strictly
scrutinize the same with respect to its contents and admissibility.
PICOP claims that SFMS Evangelistas office has nothing to do with the collection of
forest charges. According to PICOP, the entity having administrative jurisdiction over
it is CENRO, Bislig City by virtue of DENR Administrative Order No. 96-36, dated 20
November 1996, which states:

1. In order for the DENR to be able to exercise closer and more effective
supervision, management and control over the forest resources within the areas
covered by TLA No. 43, PTLA No. 47 and IFMA No. 35 of the PICOP Resources, Inc.,
(PRI) and, at the same time, provide greater facility in the delivery of DENR services
to various publics, the aforesaid forest holdings of PRI are hereby placed under the
exclusive jurisdiction of DENR Region No. XIII with the CENR Office at Bislig, Surigao
del Sur, as directly responsible thereto. x x x.
We disagree. Evangelista is an SFMS assigned at the Natural Forest Management
Division of the FMB, DENR. In Evangelistas aforementioned affidavit submitted as
part of his direct examination, Evangelista enumerated his duties and functions as
SFMS:
1. As SFMS, I have the following duties and functions:
a) To evaluate and act on cases pertaining to forest management referred to in the
Natural forest Management Division;
b) To monitor, verify and validate forest management and related activities by
timber licences as to their compliance to approved plans and programs;
c) To conduct investigation and verification of compliance by timber
licenses/permittees to existing DENR rules and regulations;
d) To gather field data and information to be used in the formulation of forest
policies and regulations; and
e) To perform other duties and responsibilities as may be directed by superiors.73
PICOP also alleges that the testimony of SFMS Evangelista was based on the
aforementioned Memoranda of Orlanes and Arayan and that, since neither Orlanes
nor Arayan was presented as a witness, SFMS Evangelistas testimony should be
deemed hearsay. SFMS Evangelistas 1 October 2002 Affidavit,74 which was offered
as part of his testimony, provides:
2. Sometime in September, 2001 the DENR Secretary was furnished a copy of forest
Management Specialist II (FMS II) Teofila L. Orlanes Memorandum dated September
24, 2001 concerning unopaid forest charges of PICOP. Attached to the said
Memorandum was a Memorandum dated September 19, 2001 of Amelia D. Arayan,
Bill collector of the DENR R13-14, Bislig City. Copies of the said Memoranda are
attached as Annexes 1 and 2, respectively.
3. The said Memoranda were referred to the FMB Director for appropriate action.

4. Thus, on August 5, 2002, I was directed by the FMB Director to proceed to Region
13 to gather forestry-related data and validate the report contained in the
Memoranda of Ms. Orlanes and Arayan.
5. On August 6, 2002, I proceeded to DENR Region 13 in Bislig City. A copy of my
Travel Order is attached as Annex 3.
6. Upon my arrival at CENRO, Bislig, surigao del Sur, I coordinated with CENRO
Officer Philip A. Calunsag and requested him to make available to me the records
regarding the forest products assessments of PICOP.
7. After I was provided with the requested records, I evaluated and collected the
data.
8. After the evaluation, I found that the unpaid forest charges adverted to in the
Memoranda of Mr. Orlanes and Arayan covering the period from May 8, 2001 to July
7, 2001 had already been paid but late. I further found out that PICOP had not paid
its forest charges covering the period from September 22, 2001 to April 26, 2002 in
the total amount of P15,056,054.05.
9. I also discovered that from 1996 up to august 30, 2002, PICOP paid late some of
its forest charges in 1996 and consistently failed to pay late its forest charges from
1997 up to the present time.
10. Under Section 7.4 of DAO No. 80 Series of 197\87 and Paragraph (4a), Section
10 of BIR revenue Regulations No. 2-81 dated November 18, 1980, PICOP is
mandated to pay a surcharge of 25% per annum of the tax due and interest of 20%
per annum for late payment of forest charges.
11. The overdue unpaid forest charges of PICOP as shown in the attached tabulation
marked as Annex 4 hereof is P150,169,485.02. Likewise, PICOP has overdue and
unpaid silvicultural fees in the amount of P2,366,901.00 from 1996 to the present.
12. In all, PICOP has an outstanding and overdue total obligation of
P167,592,440.90 as of August 30, 2002 based on the attached tabulation which is
marked as Annex 5 hereof.75
Clearly, SFMS Evangelista had not relied on the Memoranda of Orlanes and Arayan.
On the contrary, he traveled to Surigao del Sur in order to verify the contents of
these Memoranda. SFMS Evangelista, in fact, revised the findings therein, as he
discovered that certain forest charges adverted to as unpaid had already been paid.

This does not mean, however, that SFMS Evangelistas testimony was not hearsay. A
witness may testify only on facts of which he has personal knowledge; that is, those
derived from his perception, except in certain circumstances allowed by the
Rules.76 Otherwise, such testimony is considered hearsay and, hence, inadmissible
in evidence.77
SFMS Evangelista, while not relying on the Memoranda of Orlanes and Arayan,
nevertheless relied on records, the preparation of which he did not participate in.78
These records and the persons who prepared them were not presented in court,
either. As such, SFMS Evangelistas testimony, insofar as he relied on these records,
was on matters not derived from his own perception, and was, therefore, hearsay.
Section 44, Rule 130 of the Rules of Court, which speaks of entries in official records
as an exception to the hearsay rule, cannot excuse the testimony of SFMS
Evangelista. Section 44 provides:
SEC. 44. Entries in official records. Entries in official records made in the
performance of his duty by a public officer of the Philippines, or by a person in the
performance of a duty specially enjoined by law, are prima facie evidence of the
facts therein stated.
In Africa v. Caltex,79 we enumerated the following requisites for the admission of
entries in official records as an exception to the hearsay rule: (1) the entries were
made by a public officer or a private person in the performance of a duty; (2) the
performance of the duty is especially enjoined by law; (3) the public officer or the
private person had sufficient knowledge of the facts stated by him, which must have
been acquired by him personally or through official information.
The presentation of the records themselves would, therefore, have been admissible
as an exception to the hearsay rule even if the public officer/s who prepared them
was/were not presented in court, provided the above requisites could be adequately
proven. In the case at bar, however, neither the records nor the persons who
prepared them were presented in court. Thus, the above requisites cannot be
sufficiently proven. Also, since SFMS Evangelista merely testified based on what
those records contained, his testimony was hearsay evidence twice removed, which
was one step too many to be covered by the official-records exception to the
hearsay rule.
SFMS Evangelistas testimony of nonpayment of forest charges was, furthermore,
based on his failure to find official receipts corresponding to billings sent to PICOP.
As stated above, PICOP attached official receipts in its Addendum to Motion for
Reconsideration to this Court. While this course of action is normally irregular in
judicial proceedings, we merely stated in the assailed Decision that "the DENR
Secretary has adequately proven that PICOP has, at this time, failed to comply with

administrative and statutory requirements for the conversion of TLA No. 43 into an
IFMA,"80 and that "this disposition confers another chance to comply with the
foregoing requirements."81
In view of the foregoing, we withdraw our pronouncement that PICOP has unpaid
forestry charges, at least for the purpose of determining compliance with the IFMA
requirements.
NCIP Certification
The Court of Appeals held that PICOP need not comply with Section 59 of Republic
Act No. 8371, which requires prior certification from the NCIP that the areas affected
do not overlap with any ancestral domain before any IFMA can be entered into by
the government. According to the Court of Appeals, Section 59 should be
interpreted to refer to ancestral domains that have been duly established as such
by the continuous possession and occupation of the area concerned by indigenous
peoples since time immemorial up to the present. The Court of Appeals held that
PICOP had acquired property rights over TLA No. 43 areas, being in exclusive,
continuous and uninterrupted possession and occupation of these areas since 1952
up to the present.
In the assailed Decision, we reversed the findings of the Court of Appeals. Firstly,
the Court of Appeals ruling defies the settled jurisprudence we have mentioned
earlier, that a TLA is neither a property nor a property right, and that it does not
create a vested right.82
Secondly, the Court of Appeals resort to statutory construction is misplaced, as
Section 59 of Republic Act No. 8379 is clear and unambiguous:
SEC. 59. Certification Precondition. All departments and other governmental
agencies shall henceforth be strictly enjoined from issuing, renewing or granting
any concession, license or lease, or entering into any production-sharing
agreement, without prior certification from the NCIP that the area affected does not
overlap with any ancestral domain. Such certification shall only be issued after a
field-based investigation is conducted by the Ancestral Domains Office of the area
concerned: Provided, That no certification shall be issued by the NCIP without the
free and prior informed and written consent of the ICCs/IPs concerned: Provided,
further, That no department, government agency or government-owned or
controlled corporation may issue new concession, license, lease, or production
sharing agreement while there is a pending application for a CADT: Provided, finally,
That the ICCs/IPs shall have the right to stop or suspend, in accordance with this
Act, any project that has not satisfied the requirement of this consultation process.

PICOP had tried to put a cloud of ambiguity over Section 59 of Republic Act No.
8371 by invoking the definition of Ancestral Domains in Section 3(a) thereof,
wherein the possesssion by Indigenous Cultural Communities/Indigenous Peoples
(ICCs/IPs) must have been continuous to the present. However, we noted the
exception found in the very same sentence invoked by PICOP:
a) Ancestral domains Subject to Section 56 hereof, refers to all areas generally
belonging to ICCs/IPs comprising lands, inland waters, coastal areas, and natural
resources therein, held under a claim of ownership, occupied or possessed by
ICCs/IPs, by themselves or through their ancestors, communally or individually since
time immemorial, continuously to the present except when interrupted by war, force
majeure or displacement by force, deceit, stealth or as a consequence of
government projects or any other voluntary dealings entered into by government
and private individuals/corporations, and which are necessary to ensure their
economic, social and cultural welfare. It shall include ancestral lands, forests,
pasture, residential, agricultural, and other lands individually owned whether
alienable and disposable or otherwise, hunting grounds, burial grounds, worship
areas, bodies of water, mineral and other natural resources, and lands which may
no longer be exclusively occupied by ICCs/IPs but from which they traditionally had
access to for their subsistence and traditional activities, particularly the home
ranges of ICCs/IPs who are still nomadic and/or shifting cultivators;
Ancestral domains, therefore, remain as such even when possession or occupation
of these areas has been interrupted by causes provided under the law, such as
voluntary dealings entered into by the government and private
individuals/corporations. Consequently, the issuance of TLA No. 43 in 1952 did not
cause the ICCs/IPs to lose their possession or occupation over the area covered by
TLA No. 43.
Thirdly, we held that it was manifestly absurd to claim that the subject lands must
first be proven to be part of ancestral domains before a certification that the lands
are not part of ancestral domains can be required, and invoked the separate opinion
of now Chief Justice Reynato Puno in Cruz v. Secretary of DENR83:
As its subtitle suggests, [Section 59 of R.A. No. 8371] requires as a precondition for
the issuance of any concession, license or agreement over natural resources, that a
certification be issued by the NCIP that the area subject of the agreement does not
lie within any ancestral domain. The provision does not vest the NCIP with power
over the other agencies of the State as to determine whether to grant or deny any
concession or license or agreement. It merely gives the NCIP the authority to ensure
that the ICCs/IPs have been informed of the agreement and that their consent
thereto has been obtained. Note that the certification applies to agreements over
natural resources that do not necessarily lie within the ancestral domains. For those
that are found within the said domains, Sections 7(b) and 57 of the IPRA apply.

PICOP rejects the entire disposition of this Court on the matter, relying on the
following theory:
84. It is quite clear that Section 59 of R.A. 8371 does not apply to the automatic
conversion of TLA 43 to IFMA.
First, the automatic conversion of TLA 43 to an IFMA is not a new project. It is a
mere continuation of the harvesting process in an area that PICOP had been
managing, conserving and reforesting for the last 50 years since 1952. Hence any
pending application for a CADT within the area, cannot affect much less hold back
the automatic conversion. That the government now wishes to change the tenurial
system to an IFMA could not change the PICOP project, in existence and operating
for the last 30 (sic) years, into a new one.84
PICOPs position is anything but clear. What is clearly provided for in Section 59 is
that it covers "issuing, renewing or granting (of) any concession, license or lease, or
entering into any production sharing agreement." PICOP is implying that, when the
government changed the tenurial system to an IFMA, PICOPs existing TLA would
just be upgraded or modified, but would be the very same agreement, hence,
dodging the inclusion in the word "renewing." However, PICOP is conveniently
leaving out the fact that its TLA expired in 2002. If PICOP really intends to pursue
the argument that the conversion of the TLA into an IFMA would not create a new
agreement, but would only be a modification of the old one, then it should be willing
to concede that the IFMA expired as well in 2002. An automatic modification would
not alter the terms and conditions of the TLA except when they are inconsistent
with the terms and conditions of an IFMA. Consequently, PICOPs concession period
under the renewed TLA No. 43, which is from the year 1977 to 2002, would remain
the same.
PICOP cannot rely on a theory of the case whenever such theory is beneficial to it,
but refute the same whenever the theory is damaging to it. In the same way, PICOP
cannot claim that the alleged Presidential Warranty is "renewable for other 25
years" and later on claim that what it is asking for is not a renewal. Extensions of
agreements must necessarily be included in the term renewal. Otherwise, the
inclusion of "renewing" in Section 59 would be rendered inoperative.
PICOP further claims:
85. Verily, in interpreting the term "held under claim of ownership," the Supreme
Court could not have meant to include claims that had just been filed and not yet
recognized under the provisions of DENR Administrative Order No. 2 Series of 1993,
nor to any other community / ancestral domain program prior to R.A. 8371.

xxxx
87. One can not imagine the terrible damage and chaos to the country, its
economy, its people and its future if a mere claim filed for the issuance of a CADC or
CADT will already provide those who filed the application, the authority or right to
stop the renewal or issuance of any concession, license or lease or any productionsharing agreement. The same interpretation will give such applicants through a
mere application the right to stop or suspend any project that they can cite for not
satisfying the requirements of the consultation process of R.A. 8371. If such
interpretation gets enshrined in the statures of the land, the unscrupulous and the
extortionists can put any ongoing or future project or activity to a stop in any part of
the country citing their right from having filed an application for issuance of a CADC
or CADT claim and the legal doctrine established by the Supreme Court in this
PICOP case.85
We are not sure whether PICOPs counsels are deliberately trying to mislead us, or
are just plainly ignorant of basic precepts of law. The term "claim" in the phrase
"claim of ownership" is not a document of any sort. It is an attitude towards
something. The phrase "claim of ownership" means "the possession of a piece of
property with the intention of claiming it in hostility to the true owner."86 It is also
defined as "a partys manifest intention to take over land, regardless of title or
right."87 Other than in Republic Act No. 8371, the phrase "claim of ownership" is
thoroughly discussed in issues relating to acquisitive prescription in Civil Law.
Before PICOPs counsels could attribute to us an assertion that a mere attitude or
intention would stop the renewal or issuance of any concession, license or lease or
any production-sharing agreement, we should stress beforehand that this attitude
or intention must be clearly shown by overt acts and, as required by Section 3(a),
should have been in existence "since time immemorial, continuously to the present
except when interrupted by war, force majeure or displacement by force, deceit,
stealth or as a consequence of government projects or any other voluntary dealings
entered into by government and private individuals/corporations."
Another argument of PICOP involves the claim itself that there was no overlapping:
Second, there could be no overlapping with any Ancestral Domain as proven by the
evidence presented and testimonies rendered during the hearings in the Regional
Trial Court. x x x.
x x x x.
88. The DENR issued a total of 73 CADCs as of December 11, 1996. The DENR
Undersecretary for Field Operations had recommended another 11 applications for
issuance of CADCs. None of the CADCs overlap the TLA 43 area.

89. However former DENR Secretary Alvarez, in a memorandum dated 13

September, 2002 addressed to PGMA, insisted that PICOP had to comply with the
requirement to secure a Free and Prior Informed Concent because CADC 095 was
issued covering 17,112 hectares of TLA 43.
90. This CADC 095 is a fake CADC and was not validly released by the DENR. While
the Legal Department of the DENR was still in the process of receiving the filings for
applicants and the oppositors to the CADC application, PICOP came across filed
copies of a CADC 095 with the PENRO of Davao Oriental as part of their application
for a Community Based Forest Management Agreement (CBFMA). Further research
came across the same group filing copies of the alleged CADC 095 with the Mines
and Geosciences Bureau in Davao City for a mining agreement application. The two
applications had two different versions of the CADCs second page. One had Mr.
Romeo T. Acosta signing as the Social reform Agenda Technical Action Officer, while
the other had him signing as the Head, Community-Based Forest Management
Office. One had the word "Eight" crossed out and "Seven" written to make it appear
that the CADC was issued on September 25, 1997, the other made it appear that
there were no alterations and the date was supposed to be originally 25 September
1997.
What is required in Section 59 of Republic Act No. 8379 is a Certification from the
NCIP that there was no overlapping with any Ancestral Domain. PICOP cannot claim
that the DENR gravely abused its discretion for requiring this Certification, on the
ground that there was no overlapping. We reiterate that it is manifestly absurd to
claim that the subject lands must first be proven to be part of ancestral domains
before a certification that they are not can be required. As discussed in the assailed
Decision, PICOP did not even seek any certification from the NCIP that the area
covered by TLA No. 43, subject of its IFMA conversion, did not overlap with any
ancestral domain.88
Sanggunian Consultation and Approval
While PICOP did not seek any certification from the NCIP that the formers
concession area did not overlap with any ancestral domain, PICOP initially sought to
comply with the requirement under Sections 26 and 27 of the Local Government
Code to procure prior approval of the Sanggunians concerned. However, only one of
the many provinces affected approved the issuance of an IFMA to PICOP.
Undaunted, PICOP nevertheless submitted to the DENR the purported resolution89
of the Province of Surigao del Sur indorsing the approval of PICOPs application for
IFMA conversion, apparently hoping either that the disapproval of the other
provinces would go unnoticed, or that the Surigao del Sur approval would be treated
as sufficient compliance.

Surprisingly, the disapproval by the other provinces did go unnoticed before the RTC
and the Court of Appeals, despite the repeated assertions thereof by the Solicitor
General. When we pointed out in the assailed Decision that the approval must be by
all the Sanggunians concerned and not by only one of them, PICOP changed its
theory of the case in its Motion for Reconsideration, this time claiming that they are
not required at all to procure Sanggunian approval.
Sections 2(c), 26 and 27 of the Local Government Code provide:
SEC. 2. x x x.
xxxx
(c) It is likewise the policy of the State to require all national agencies and offices to
conduct periodic consultations with appropriate local government units,
nongovernmental and peoples organizations, and other concerned sectors of the
community before any project or program is implemented in their respective
jurisdictions.
SEC. 26. Duty of National Government Agencies in the Maintenance of Ecological
Balance. It shall be the duty of every national agency or government-owned or
controlled corporation authorizing or involved in the planning and implementation of
any project or program that may cause pollution, climatic change, depletion of nonrenewable resources, loss of crop land, rangeland, or forest cover, and extinction of
animal or plant species, to consult with the local government units,
nongovernmental organizations, and other sectors concerned and explain the goals
and objectives of the project or program, its impact upon the people and the
community in terms of environmental or ecological balance, and the measures that
will be undertaken to prevent or minimize the adverse effects thereof.
SEC. 27. Prior Consultations Required. No project or program shall be implemented
by government authorities unless the consultations mentioned in Sections 2(c) and
26 hereof are complied with, and prior approval of the sanggunian concerned is
obtained: Provided, That occupants in areas where such projects are to be
implemented shall not be evicted unless appropriate relocation sites have been
provided, in accordance with the provisions of the Constitution.
As stated in the assailed Decision, the common evidence of the DENR Secretary and
PICOP, namely, the 31 July 2001 Memorandum of Regional Executive Director (RED)
Elias D. Seraspi, Jr., enumerated the local government units and other groups which
had expressed their opposition to PICOPs application for IFMA conversion:

7. During the conduct of the performance evaluation of TLA No. 43 issues

complaints against PRI were submitted thru Resolutions and letters. It is important
that these are included in this report for assessment of what are their worth, viz:
xxxx
7.2 Joint Resolution (unnumbered), dated March 19, 2001 of the Barangay Council
and Barangay Tribal Council of Simulao, Boston, Davao Oriental (ANNEX F) opposing
the conversion of TLA No. 43 into IFMA over the 17,112 hectares allegedly covered
with CADC No. 095.
7.3 Resolution Nos. 10, s-2001 and 05, s-2001 (ANNEXES G & H) of the Bunawan
Tribal Council of Elders (BBMTCE) strongly demanding none renewal of PICOP TLA.
They claim to be the rightful owner of the area it being their alleged ancestral land.
7.4 Resolution No. 4, S-2001 of Sitio Linao, San Jose, Bislig City (ANNEX I) requesting
not to renew TLA 43 over the 900 hectares occupied by them.
7.5 Resolution No. 22, S-2001 (ANNEX J) of the Sanguniang Bayan, Lingig, Surigao
del Sur not to grant the conversion of TLA 43 citing the plight of former employees
of PRI who were forced to enter and farm portion of TLA No. 43, after they were laid
off.
7.6 SP Resolution No. 2001-113 and CDC Resolution Nos. 09-2001 of the
Sanguniang Panglungsod of Bislig City (ANNEXES K & L) requesting to exclude the
area of TLA No. 43 for watershed purposes.
7.7 Resolution No. 2001-164, dated June 01, 2001 (ANNEX M) Sanguniang
Panglungsod of Bislig City opposing the conversion of TLA 43 to IFMA for the reason
that IFMA do not give revenue benefits to the City.90
PICOP had claimed that it complied with the Local Government Code requirement of
obtaining prior approval of the Sanggunian concerned by submitting a purported
resolution91 of the Province of Surigao del Sur indorsing the approval of PICOPs
application for IFMA conversion. We ruled that this cannot be deemed sufficient
compliance with the foregoing provision. Surigao del Sur is not the only province
affected by the area covered by the proposed IFMA. As even the Court of Appeals
found, PICOPs TLA No. 43 traverses the length and breadth not only of Surigao del
Sur but also of Agusan del Sur, Compostela Valley and Davao Oriental.92
On Motion for Reconsideration, PICOP now argues that the requirement under
Sections 26 and 27 does not apply to it:

97. PICOP is not a national agency. Neither is PICOP government owned or

controlled. Thus Section 26 does not apply to PICOP.
98. It is very clear that Section 27 refers to projects or programs to be implemented
by government authorities or government-owned and controlled corporations.
PICOPs project or the automatic conversion is a purely private endevour. First the
PICOP project has been implemented since 1969. Second, the project was being
implemented by private investors and financial institutions.
99. The primary government participation is to warrant and ensure that the PICOP
project shall have peaceful tenure in the permanent forest allocated to provide raw
materials for the project. To rule now that a project whose foundations were
commenced as early as 1969 shall now be subjected to a 1991 law is to apply the
law retrospectively in violation of Article 4 of the Civil Code that laws shall not be
applied retroactively.
100. In addition, under DAO 30, Series of 1992, TLA and IFMA operations were not
among those devolved function from the National Government / DENR to the local
government unit. Under its Section 03, the devolved function cover only:
a) Community Based forestry projects.
b) Communal forests of less than 5000 hectares
c) Small watershed areas which are sources of local water supply.93
We have to remind PICOP again of the contents of Section 2, Article XII of the
Constitution:
Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and
other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife,
flora and fauna, and other natural resources are owned by the State. With the
exception of agricultural lands, all other natural resources shall not be alienated.
The exploration, development, and utilization of natural resources shall be under
the full control and supervision of the State. The State may directly undertake such
activities, or it may enter into co-production, joint venture, or production-sharing
agreements with Filipino citizens, or corporations or associations at least sixty per
centum of whose capital is owned by such citizens. Such agreements may be for a
period not exceeding twenty-five years, renewable for not more than twenty-five
years, and under such terms and conditions as may be provided by law. In cases of
water rights for irrigation, water supply, fisheries, or industrial uses other than the
development of water power, beneficial use may be the measure and limit of the
grant.

All projects relating to the exploration, development and utilization of natural

resources are projects of the State. While the State may enter into co-production,
joint venture, or production-sharing agreements with Filipino citizens, or
corporations or associations at least sixty per centum of whose capital is owned by
these citizens, such as PICOP, the projects nevertheless remain as State projects
and can never be purely private endeavors.
Also, despite entering into co-production, joint venture, or production-sharing
agreements, the State remains in full control and supervision over such projects.
PICOP, thus, cannot limit government participation in the project to being merely its
bouncer, whose primary participation is only to "warrant and ensure that the PICOP
project shall have peaceful tenure in the permanent forest allocated to provide raw
materials for the project."
PICOP is indeed neither a national agency nor a government-owned or controlled
corporation. The DENR, however, is a national agency and is the national agency
prohibited by Section 27 from issuing an IFMA without the prior approval of the
Sanggunian concerned. As previously discussed, PICOPs Petition for Mandamus can
only be granted if the DENR Secretary is required by law to issue an IFMA. We,
however, see here the exact opposite: the DENR Secretary was actually prohibited
by law from issuing an IFMA, as there had been no prior approval by all the other
Sanggunians concerned.
As regards PICOPs assertion that the application to them of a 1991 law is in
violation of the prohibition against the non-retroactivity provision in Article 4 of the
Civil Code, we have to remind PICOP that it is applying for an IFMA with a term of
2002 to 2027. Section 2, Article XII of the Constitution allows exploitation
agreements to last only "for a period not exceeding twenty-five years, renewable for
not more than twenty-five years." PICOP, thus, cannot legally claim that the
projects term started in 1952 and extends all the way to the present.
Finally, the devolution of the project to local government units is not required before
Sections 26 and 27 would be applicable. Neither Section 26 nor 27 mentions such a
requirement. Moreover, it is not only the letter, but more importantly the spirit of
Sections 26 and 27, that shows that the devolution of the project is not required.
The approval of the Sanggunian concerned is required by law, not because the local
government has control over such project, but because the local government has
the duty to protect its constituents and their stake in the implementation of the
project. Again, Section 26 states that it applies to projects that "may cause
pollution, climatic change, depletion of non-renewable resources, loss of crop land,
rangeland, or forest cover, and extinction of animal or plant species." The local
government should thus represent the communities in such area, the very people
who will be affected by flooding, landslides or even climatic change if the project is

not properly regulated, and who likewise have a stake in the resources in the area,
and deserve to be adequately compensated when these resources are exploited.
Indeed, it would be absurd to claim that the project must first be devolved to the
local government before the requirement of the national government seeking
approval from the local government can be applied. If a project has been devolved
to the local government, the local government itself would be implementing the
project. That the local government would need its own approval before
implementing its own project is patently silly.
EPILOGUE AND DISPOSITION
PICOPc cause of action consists in the allegation that the DENR Secretary, in not
issuing an IFMA, violated its constitutional right against non-impairment of
contracts. We have ruled, however, that the 1969 Document is not a contract
recognized under the non-impairment clause, much less a contract specifically
enjoining the DENR Secretary to issue the IFMA. The conclusion that the 1969
Document is not a contract recognized under the non-impairment clause has even
been disposed of in another case decided by another division of this Court, PICOP
Resources, Inc. v. Base Metals Mineral Resources Corporation,94 the Decision in
which case has become final and executory. PICOPs Petition for Mandamus should,
therefore, fail.
Furthermore, even if we assume for the sake of argument that the 1969 Document
is a contract recognized under the non-impairment clause, and even if we assume
for the sake of argument that the same is a contract specifically enjoining the DENR
Secretary to issue an IFMA, PICOPs Petition for Mandamus must still fail. The 1969
Document expressly states that the warranty as to the tenure of PICOP is "subject to
compliance with constitutional and statutory requirements as well as with existing
policy on timber concessions." Thus, if PICOP proves the two above-mentioned
matters, it still has to prove compliance with statutory and administrative
requirements for the conversion of its TLA into an IFMA.
While we have withdrawn our pronouncements in the assailed Decision that (1)
PICOP had not submitted the required forest protection and reforestation plans, and
that (2) PICOP had unpaid forestry charges, thus effectively ruling in favor of PICOP
on all factual issues in this case, PICOP still insists that the requirements of an NCIP
certification and Sanggunian consultation and approval do not apply to it. To affirm
PICOPs position on these matters would entail nothing less than rewriting the
Indigenous Peoples Rights Act and the Local Government Code, an act simply
beyond our jurisdiction.
WHEREFORE, the Motion for Reconsideration of PICOP Resources, Inc. is DENIED.

SO ORDERED.

HEIRS OF MARIO MALABANAN,

Petitioner
- versus

G.R. No. 179987

REPUBLIC OF THE PHILIPPINES,

Respondent.
April 29, 2009
DECISION
TINGA, J.:
One main reason why the informal sector has not become formal is that
from Indonesia to Brazil, 90 percent of the informal lands are not titled and
registered. This is a generalized phenomenon in the so-called Third World. And it
has many consequences.

xxx
The question is: How is it that so many governments, from Suharto's in Indonesia to
Fujimori's in Peru, have wanted to title these people and have not been able to do
so effectively? One reason is that none of the state systems in Asia or Latin America
can gather proof of informal titles. In Peru, the informals have means of proving
property ownership to each other which are not the same means developed by the
Spanish legal system. The informals have their own papers, their own forms of
agreements, and their own systems of registration, all of which are very clearly
stated in the maps which they use for their own informal business transactions.
If you take a walk through the countryside, from Indonesia to Peru, and you walk by
field after field--in each field a different dog is going to bark at you. Even dogs know
what private property is all about. The only one who does not know it is the
government. The issue is that there exists a "common law" and an "informal law"
which the Latin American formal legal system does not know how to recognize.
- Hernando De Soto[1]

This decision inevitably affects all untitled lands currently in possession of persons
and entities other than the Philippine government. The petition, while unremarkable
as to the facts, was accepted by the Court en banc in order to provide definitive
clarity to the applicability and scope of original registration proceedings under
Sections 14(1) and 14(2) of the Property Registration Decree. In doing so, the Court
confronts not only the relevant provisions of the Public Land Act and the Civil Code,
but also the reality on the ground. The countrywide phenomenon of untitled lands,
as well as the problem of informal settlement it has spawned, has unfortunately
been treated with benign neglect. Yet our current laws are hemmed in by their own
circumscriptions in addressing the phenomenon. Still, the duty on our part is
primarily to decide cases before us in accord with the Constitution and the legal
principles that have developed our public land law, though our social obligations
dissuade us from casting a blind eye on the endemic problems.
I.
On 20 February 1998, Mario Malabanan filed an application for land
registration covering a parcel of land identified as Lot 9864-A, Cad-452-D, Silang
Cadastre,[2] situated in Barangay Tibig, Silang Cavite, and consisting of 71,324
square meters. Malabanan claimed that he had purchased the property from
Eduardo Velazco,[3] and that he and his predecessors-in-interest had been in open,
notorious, and continuous adverse and peaceful possession of the land for more
than thirty (30) years.
The application was raffled to the Regional Trial Court of (RTC) CaviteTagaytay City, Branch 18. The Office of the Solicitor General (OSG) duly designated
the Assistant Provincial Prosecutor of Cavite, Jose Velazco, Jr., to appear on behalf of
the State.[4] Apart from presenting documentary evidence, Malabanan himself and
his witness, Aristedes Velazco, testified at the hearing. Velazco testified that the
property was originally belonged to a twenty-two hectare property owned by his
great-grandfather, Lino Velazco. Lino had four sons Benedicto, Gregorio, Eduardo
and Estebanthe fourth being Aristedess grandfather. Upon Linos death, his four
sons inherited the property and divided it among themselves. But by 1966,
Estebans wife, Magdalena, had become the administrator of all the properties
inherited by the Velazco sons from their father, Lino. After the death of Esteban and
Magdalena, their son Virgilio succeeded them in administering the properties,
including Lot 9864-A, which originally belonged to his uncle, Eduardo Velazco. It was
this property that was sold by Eduardo Velazco to Malabanan.[5]
Assistant Provincial Prosecutor Jose Velazco, Jr. did not cross-examine Aristedes
Velazco. He further manifested that he also [knew] the property and I affirm the
truth of the testimony given by Mr. Velazco.[6] The Republic of the Philippines
likewise did not present any evidence to controvert the application.

Among the evidence presented by Malabanan during trial was a Certification dated
11 June 2001, issued by the Community Environment & Natural Resources Office,
Department of Environment and Natural Resources (CENRO-DENR), which stated
that the subject property was verified to be within the Alienable or Disposable land
per Land Classification Map No. 3013 established under Project No. 20-A and
approved as such under FAO 4-1656 on March 15, 1982.[7]
On 3 December 2002, the RTC rendered judgment in favor of Malabanan, the
dispositive portion of which reads:
WHEREFORE, this Court hereby approves this application for registration and thus
places under the operation of Act 141, Act 496 and/or P.D. 1529, otherwise known
as Property Registration Law, the lands described in Plan Csd-04-0173123-D, Lot
9864-A and containing an area of Seventy One Thousand Three Hundred Twenty
Four (71,324) Square Meters, as supported by its technical description now forming
part of the record of this case, in addition to other proofs adduced in the name of
MARIO MALABANAN, who is of legal age, Filipino, widower, and with residence at
Munting Ilog, Silang, Cavite.
Once this Decision becomes final and executory, the corresponding decree of
registration shall forthwith issue.
SO ORDERED.

The Republic interposed an appeal to the Court of Appeals, arguing that Malabanan
had failed to prove that the property belonged to the alienable and disposable land
of the public domain, and that the RTC had erred in finding that he had been in
possession of the property in the manner and for the length of time required by law
for confirmation of imperfect title.
On 23 February 2007, the Court of Appeals rendered a Decision[8] reversing the RTC
and dismissing the application of Malabanan. The appellate court held that under
Section 14(1) of the Property Registration Decree any period of possession prior to
the classification of the lots as alienable and disposable was inconsequential and
should be excluded from the computation of the period of possession. Thus, the
appellate court noted that since the CENRO-DENR certification had verified that the
property was declared alienable and disposable only on 15 March 1982, the
Velazcos possession prior to that date could not be factored in the computation of
the period of possession. This interpretation of the Court of Appeals of Section 14(1)
of the Property Registration Decree was based on the Courts ruling in Republic v.
Herbieto.[9]

Malabanan died while the case was pending with the Court of Appeals;[10] hence, it
was his heirs who appealed the decision of the appellate court. Petitioners, before
this Court, rely on our ruling in Republic v. Naguit,[11] which was handed down just
four months prior to Herbieto. Petitioners suggest that the discussion in Herbieto
cited by the Court of Appeals is actually obiter dictum since the Metropolitan Trial
Court therein which had directed the registration of the property had no jurisdiction
in the first place since the requisite notice of hearing was published only after the
hearing had already begun. Naguit, petitioners argue, remains the controlling
doctrine, especially when the property in question is agricultural land. Therefore,
with respect to agricultural lands, any possession prior to the declaration of the
alienable property as disposable may be counted in reckoning the period of
possession to perfect title under the Public Land Act and the Property Registration
Decree.

The petition was referred to the Court en banc,[12] and on 11 November 2008, the
case was heard on oral arguments. The Court formulated the principal issues for the
oral arguments, to wit:
1.
In order that an alienable and disposable land of the public domain may be
registered under Section 14(1) of Presidential Decree No. 1529, otherwise known as
the Property Registration Decree, should the land be classified as alienable and
disposable as of June 12, 1945 or is it sufficient that such classification occur at any
time prior to the filing of the applicant for registration provided that it is established
that the applicant has been in open, continuous, exclusive and notorious possession
of the land under a bona fide claim of ownership since June 12, 1945 or earlier?
2.
For purposes of Section 14(2) of the Property Registration Decree may a
parcel of land classified as alienable and disposable be deemed private land and
therefore susceptible to acquisition by prescription in accordance with the Civil
Code?
3.
May a parcel of land established as agricultural in character either because
of its use or because its slope is below that of forest lands be registrable under
Section 14(2) of the Property Registration Decree in relation to the provisions of the
Civil Code on acquisitive prescription?
4.
Are petitioners entitled to the registration of the subject land in their names
under Section 14(1) or Section 14(2) of the Property Registration Decree or both?
[13]
Based on these issues, the parties formulated their respective positions.

With respect to Section 14(1), petitioners reiterate that the analysis of the Court in
Naguit is the correct interpretation of the provision. The seemingly contradictory
pronouncement in Herbieto, it is submitted, should be considered obiter dictum,
since the land registration proceedings therein was void ab initio due to lack of
publication of the notice of initial hearing. Petitioners further point out that in
Republic v. Bibonia,[14] promulgated in June of 2007, the Court applied Naguit and
adopted the same observation that the preferred interpretation by the OSG of
Section 14(1) was patently absurd. For its part, the OSG remains insistent that for
Section 14(1) to apply, the land should have been classified as alienable and
disposable as of 12 June 1945. Apart from Herbieto, the OSG also cites the
subsequent rulings in Buenaventura v. Republic,[15] Fieldman Agricultural Trading v.
Republic[16] and Republic v. Imperial Credit Corporation,[17] as well as the earlier
case of Director of Lands v. Court of Appeals.[18]
With respect to Section 14(2), petitioners submit that open, continuous, exclusive
and notorious possession of an alienable land of the public domain for more than 30
years ipso jure converts the land into private property, thus placing it under the
coverage of Section 14(2). According to them, it would not matter whether the land
sought to be registered was previously classified as agricultural land of the public
domain so long as, at the time of the application, the property had already been
converted into private property through prescription. To bolster their argument,
petitioners cite extensively from our 2008 ruling in Republic v. T.A.N. Properties.[19]

The arguments submitted by the OSG with respect to Section 14(2) are more
extensive. The OSG notes that under Article 1113 of the Civil Code, the acquisitive
prescription of properties of the State refers to patrimonial property, while Section
14(2) speaks of private lands. It observes that the Court has yet to decide a case
that presented Section 14(2) as a ground for application for registration, and that
the 30-year possession period refers to the period of possession under Section 48(b)
of the Public Land Act, and not the concept of prescription under the Civil Code. The
OSG further submits that, assuming that the 30-year prescriptive period can run
against public lands, said period should be reckoned from the time the public land
was declared alienable and disposable.
Both sides likewise offer special arguments with respect to the particular factual
circumstances surrounding the subject property and the ownership thereof.
II.
First, we discuss Section 14(1) of the Property Registration Decree. For a full
understanding of the provision, reference has to be made to the Public Land Act.
A.

Commonwealth Act No. 141, also known as the Public Land Act, has, since its
enactment, governed the classification and disposition of lands of the public
domain. The President is authorized, from time to time, to classify the lands of the
public domain into alienable and disposable, timber, or mineral lands.[20] Alienable
and disposable lands of the public domain are further classified according to their
uses into (a) agricultural; (b) residential, commercial, industrial, or for similar
productive purposes; (c) educational, charitable, or other similar purposes; or (d)
reservations for town sites and for public and quasi-public uses.[21]
May a private person validly seek the registration in his/her name of alienable and
disposable lands of the public domain? Section 11 of the Public Land Act
acknowledges that public lands suitable for agricultural purposes may be disposed
of by confirmation of imperfect or incomplete titles through judicial
legalization.[22] Section 48(b) of the Public Land Act, as amended by P.D. No.
1073, supplies the details and unmistakably grants that right, subject to the
requisites stated therein:
Sec. 48. The following described citizens of the Philippines, occupying lands of the
public domain or claiming to own any such land or an interest therein, but whose
titles have not been perfected or completed, may apply to the Court of First
Instance of the province where the land is located for confirmation of their claims
and the issuance of a certificate of title therefor, under the Land Registration Act, to
wit:
xxx
(b)
Those who by themselves or through their predecessors in interest have
been in open, continuous, exclusive, and notorious possession and occupation of
alienable and disposable lands of the public domain, under a bona fide claim of
acquisition of ownership, since June 12, 1945, or earlier, immediately preceding the
filing of the application for confirmation of title except when prevented by war or
force majeure. These shall be conclusively presumed to have performed all the
conditions essential to a Government grant and shall be entitled to a certificate of
title under the provisions of this chapter.

Section 48(b) of Com. Act No. 141 received its present wording in 1977 when
the law was amended by P.D. No. 1073. Two significant amendments were
introduced by P.D. No. 1073. First, the term agricultural lands was changed to
alienable and disposable lands of the public domain. The OSG submits that this
amendment restricted the scope of the lands that may be registered.[23] This is not
actually the case. Under Section 9 of the Public Land Act, agricultural lands are a
mere subset of lands of the public domain alienable or open to disposition.

Evidently, alienable and disposable lands of the public domain are a larger class
than only agricultural lands.
Second, the length of the requisite possession was changed from possession
for thirty (30) years immediately preceding the filing of the application to
possession since June 12, 1945 or earlier. The Court in Naguit explained:
When the Public Land Act was first promulgated in 1936, the period of possession
deemed necessary to vest the right to register their title to agricultural lands of the
public domain commenced from July 26, 1894. However, this period was amended
by R.A. No. 1942, which provided that the bona fide claim of ownership must have
been for at least thirty (30) years. Then in 1977, Section 48(b) of the Public Land Act
was again amended, this time by P.D. No. 1073, which pegged the reckoning date at
June 12, 1945. xxx

It bears further observation that Section 48(b) of Com. Act No, 141 is virtually
the same as Section 14(1) of the Property Registration Decree. Said Decree codified
the various laws relative to the registration of property, including lands of the public
domain. It is Section 14(1) that operationalizes the registration of such lands of the
public domain. The provision reads:

SECTION 14. Who may apply. The following persons may file in the proper Court of
First Instance an application for registration of title to land, whether personally or
through their duly authorized representatives:
(1)
those who by themselves or through their predecessors-in-interest have been
in open, continuous, exclusive and notorious possession and occupation of alienable
and disposable lands of the public domain under a bona fide claim of ownership
since June 12, 1945, or earlier.

Notwithstanding the passage of the Property Registration Decree and the inclusion
of Section 14(1) therein, the Public Land Act has remained in effect. Both laws
commonly refer to persons or their predecessors-in-interest who have been in
open, continuous, exclusive and notorious possession and occupation of alienable
and disposable lands of the public domain under a bona fide claim of ownership
since June 12, 1945, or earlier. That circumstance may have led to the impression
that one or the other is a redundancy, or that Section 48(b) of the Public Land Act
has somehow been repealed or mooted. That is not the case.
The opening clauses of Section 48 of the Public Land Act and Section 14 of the
Property Registration Decree warrant comparison:

Sec. 48 [of the Public Land Act]. The following described citizens of the Philippines,
occupying lands of the public domain or claiming to own any such land or an
interest therein, but whose titles have not been perfected or completed, may apply
to the Court of First Instance of the province where the land is located for
confirmation of their claims and the issuance of a certificate of title therefor, under
the Land Registration Act, to wit:
xxx
Sec. 14 [of the Property Registration Decree]. Who may apply. The following
persons may file in the proper Court of First Instance an application for registration
of title to land, whether personally or through their duly authorized representatives:
xxx
It is clear that Section 48 of the Public Land Act is more descriptive of the nature of
the right enjoyed by the possessor than Section 14 of the Property Registration
Decree, which seems to presume the pre-existence of the right, rather than
establishing the right itself for the first time. It is proper to assert that it is the Public
Land Act, as amended by P.D. No. 1073 effective 25 January 1977, that has primarily
established the right of a Filipino citizen who has been in open, continuous,
exclusive, and notorious possession and occupation of alienable and disposable
lands of the public domain, under a bona fide claim of acquisition of ownership,
since June 12, 1945 to perfect or complete his title by applying with the proper
court for the confirmation of his ownership claim and the issuance of the
corresponding certificate of title.

Section 48 can be viewed in conjunction with the afore-quoted Section 11 of the

Public Land Act, which provides that public lands suitable for agricultural purposes
may be disposed of by confirmation of imperfect or incomplete titles, and given the
notion that both provisions declare that it is indeed the Public Land Act that
primarily establishes the substantive ownership of the possessor who has been in
possession of the property since 12 June 1945. In turn, Section 14(a) of the Property
Registration Decree recognizes the substantive right granted under Section 48(b) of
the Public Land Act, as well provides the corresponding original registration
procedure for the judicial confirmation of an imperfect or incomplete title.
There is another limitation to the right granted under Section 48(b). Section
47 of the Public Land Act limits the period within which one may exercise the right
to seek registration under Section 48. The provision has been amended several
times, most recently by Rep. Act No. 9176 in 2002. It currently reads thus:

Section 47. The persons specified in the next following section are hereby granted
time, not to extend beyond December 31, 2020 within which to avail of the benefits
of this Chapter: Provided, That this period shall apply only where the area applied
for does not exceed twelve (12) hectares: Provided, further, That the several periods
of time designated by the President in accordance with Section Forty-Five of this Act
shall apply also to the lands comprised in the provisions of this Chapter, but this
Section shall not be construed as prohibiting any said persons from acting under
this Chapter at any time prior to the period fixed by the President.[24]
Accordingly under the current state of the law, the substantive right granted
under Section 48(b) may be availed of only until 31 December 2020.
B.
Despite the clear text of Section 48(b) of the Public Land Act, as amended and
Section 14(a) of the Property Registration Decree, the OSG has adopted the position
that for one to acquire the right to seek registration of an alienable and disposable
land of the public domain, it is not enough that the applicant and his/her
predecessors-in-interest be in possession under a bona fide claim of ownership
since 12 June 1945; the alienable and disposable character of the property must
have been declared also as of 12 June 1945. Following the OSGs approach, all
lands certified as alienable and disposable after 12 June 1945 cannot be registered
either under Section 14(1) of the Property Registration Decree or Section 48(b) of
the Public Land Act as amended. The absurdity of such an implication was discussed
in Naguit.
Petitioner suggests an interpretation that the alienable and disposable character of
the land should have already been established since June 12, 1945 or earlier. This is
not borne out by the plain meaning of Section 14(1). Since June 12, 1945, as used
in the provision, qualifies its antecedent phrase under a bonafide claim of
ownership. Generally speaking, qualifying words restrict or modify only the words
or phrases to which they are immediately associated, and not those distantly or
remotely located.[25] Ad proximum antecedents fiat relation nisi impediatur
sentencia.
Besides, we are mindful of the absurdity that would result if we
adopt petitioners position. Absent a legislative amendment, the rule would be,
adopting the OSGs view, that all lands of the public domain which were not
declared alienable or disposable before June 12, 1945 would not be susceptible to
original registration, no matter the length of unchallenged possession by the
occupant. Such interpretation renders paragraph (1) of Section 14 virtually
inoperative and even precludes the government from giving it effect even as it
decides to reclassify public agricultural lands as alienable and disposable. The
unreasonableness of the situation would even be aggravated considering that

before June 12, 1945, the Philippines was not yet even considered an independent
state.
Accordingly, the Court in Naguit explained:
[T]he more reasonable interpretation of Section 14(1) is that it merely requires the
property sought to be registered as already alienable and disposable at the time the
application for registration of title is filed. If the State, at the time the application is
made, has not yet deemed it proper to release the property for alienation or
disposition, the presumption is that the government is still reserving the right to
utilize the property; hence, the need to preserve its ownership in the State
irrespective of the length of adverse possession even if in good faith. However, if
the property has already been classified as alienable and disposable, as it is in this
case, then there is already an intention on the part of the State to abdicate its
exclusive prerogative over the property.

The Court declares that the correct interpretation of Section 14(1) is that which was
adopted in Naguit. The contrary pronouncement in Herbieto, as pointed out in
Naguit, absurdly limits the application of the provision to the point of virtual inutility
since it would only cover lands actually declared alienable and disposable prior to
12 June 1945, even if the current possessor is able to establish open, continuous,
exclusive and notorious possession under a bona fide claim of ownership long
before that date.
Moreover, the Naguit interpretation allows more possessors under a bona fide claim
of ownership to avail of judicial confirmation of their imperfect titles than what
would be feasible under Herbieto. This balancing fact is significant, especially
considering our forthcoming discussion on the scope and reach of Section 14(2) of
the Property Registration Decree.
Petitioners make the salient observation that the contradictory passages from
Herbieto are obiter dicta since the land registration proceedings therein is void ab
initio in the first place due to lack of the requisite publication of the notice of initial
hearing. There is no need to explicitly overturn Herbieto, as it suffices that the
Courts acknowledgment that the particular line of argument used therein
concerning Section 14(1) is indeed obiter.
It may be noted that in the subsequent case of Buenaventura,[26] the Court, citing
Herbieto, again stated that [a]ny period of possession prior to the date when the
[s]ubject [property was] classified as alienable and disposable is inconsequential
and should be excluded from the computation of the period of possession That
statement, in the context of Section 14(1), is certainly erroneous. Nonetheless, the
passage as cited in Buenaventura should again be considered as obiter. The
application therein was ultimately granted, citing Section 14(2). The evidence

submitted by petitioners therein did not establish any mode of possession on their
part prior to 1948, thereby precluding the application of Section 14(1). It is not even
apparent from the decision whether petitioners therein had claimed entitlement to
original registration following Section 14(1), their position being that they had been
in exclusive possession under a bona fide claim of ownership for over fifty (50)
years, but not before 12 June 1945.
Thus, neither Herbieto nor its principal discipular ruling Buenaventura has any
precedental value with respect to Section 14(1). On the other hand, the ratio of
Naguit is embedded in Section 14(1), since it precisely involved situation wherein
the applicant had been in exclusive possession under a bona fide claim of ownership
prior to 12 June 1945. The Courts interpretation of Section 14(1) therein was
decisive to the resolution of the case. Any doubt as to which between Naguit or
Herbieto provides the final word of the Court on Section 14(1) is now settled in favor
of Naguit.
We noted in Naguit that it should be distinguished from Bracewell v. Court of
Appeals[27] since in the latter, the application for registration had been filed before
the land was declared alienable or disposable. The dissent though pronounces
Bracewell as the better rule between the two. Yet two years after Bracewell, its
ponente, the esteemed Justice Consuelo Ynares-Santiago, penned the ruling in
Republic v. Ceniza,[28] which involved a claim of possession that extended back to
1927 over a public domain land that was declared alienable and disposable only in
1980. Ceniza cited Bracewell, quoted extensively from it, and following the mindset
of the dissent, the attempt at registration in Ceniza should have failed. Not so.
To prove that the land subject of an application for registration is alienable, an
applicant must establish the existence of a positive act of the government such as a
presidential proclamation or an executive order; an administrative action;
investigation reports of Bureau of Lands investigators; and a legislative act or a
statute.
In this case, private respondents presented a certification dated November 25,
1994, issued by Eduardo M. Inting, the Community Environment and Natural
Resources Officer in the Department of Environment and Natural Resources Office in
Cebu City, stating that the lots involved were "found to be within the alienable and
disposable (sic) Block-I, Land Classification Project No. 32-A, per map 2962 4-I555
dated December 9, 1980." This is sufficient evidence to show the real character of
the land subject of private respondents application. Further, the certification enjoys
a presumption of regularity in the absence of contradictory evidence, which is true
in this case. Worth noting also was the observation of the Court of Appeals stating
that:

[n]o opposition was filed by the Bureaus of Lands and Forestry to contest the
application of appellees on the ground that the property still forms part of the public
domain. Nor is there any showing that the lots in question are forestal land....
Thus, while the Court of Appeals erred in ruling that mere possession of public land
for the period required by law would entitle its occupant to a confirmation of
imperfect title, it did not err in ruling in favor of private respondents as far as the
first requirement in Section 48(b) of the Public Land Act is concerned, for they were
able to overcome the burden of proving the alienability of the land subject of their
application.
As correctly found by the Court of Appeals, private respondents were able to prove
their open, continuous, exclusive and notorious possession of the subject land even
before the year 1927. As a rule, we are bound by the factual findings of the Court of
Appeals. Although there are exceptions, petitioner did not show that this is one of
them.[29]

Why did the Court in Ceniza, through the same eminent member who
authored Bracewell, sanction the registration under Section 48(b) of public domain
lands declared alienable or disposable thirty-five (35) years and 180 days after 12
June 1945? The telling difference is that in Ceniza, the application for registration
was filed nearly six (6) years after the land had been declared alienable or
disposable, while in Bracewell, the application was filed nine (9) years before the
land was declared alienable or disposable. That crucial difference was also stressed
in Naguit to contradistinguish it from Bracewell, a difference which the dissent seeks
to belittle.
III.
We next ascertain the correct framework of analysis with respect to Section
14(2). The provision reads:

SECTION 14. Who may apply. The following persons may file in the proper Court
of First Instance an application for registration of title to land, whether personally or
through their duly authorized representatives:
xxx
(2)
Those who have acquired ownership over private lands by prescription under
the provisions of existing laws.

The Court in Naguit offered the following discussion concerning Section 14(2), which
we did even then recognize, and still do, to be an obiter dictum, but we
nonetheless refer to it as material for further discussion, thus:
Did the enactment of the Property Registration Decree and the amendatory P.D. No.
1073 preclude the application for registration of alienable lands of the public
domain, possession over which commenced only after June 12, 1945? It did not,
considering Section 14(2) of the Property Registration Decree, which governs and
authorizes the application of those who have acquired ownership of private lands
by prescription under the provisions of existing laws.
Prescription is one of the modes of acquiring ownership under the Civil Code.[[30]]
There is a consistent jurisprudential rule that properties classified as alienable
public land may be converted into private property by reason of open, continuous
and exclusive possession of at least thirty (30) years.[[31]] With such conversion,
such property may now fall within the contemplation of private lands under
Section 14(2), and thus susceptible to registration by those who have acquired
ownership through prescription. Thus, even if possession of the alienable public land
commenced on a date later than June 12, 1945, and such possession being been
open, continuous and exclusive, then the possessor may have the right to register
the land by virtue of Section 14(2) of the Property Registration Decree.
Naguit did not involve the application of Section 14(2), unlike in this case
where petitioners have based their registration bid primarily on that provision, and
where the evidence definitively establishes their claim of possession only as far
back as 1948. It is in this case that we can properly appreciate the nuances of the
provision.
A.
The obiter in Naguit cited the Civil Code provisions on prescription as the
possible basis for application for original registration under Section 14(2).
Specifically, it is Article 1113 which provides legal foundation for the application. It
reads:
All things which are within the commerce of men are susceptible of prescription,
unless otherwise provided. Property of the State or any of its subdivisions not
patrimonial in character shall not be the object of prescription.

It is clear under the Civil Code that where lands of the public domain are
patrimonial in character, they are susceptible to acquisitive prescription. On the
other hand, among the public domain lands that are not susceptible to acquisitive

prescription are timber lands and mineral lands. The Constitution itself proscribes
private ownership of timber or mineral lands.
There are in fact several provisions in the Civil Code concerning the acquisition of
real property through prescription. Ownership of real property may be acquired by
ordinary prescription of ten (10) years,[32] or through extraordinary prescription of
thirty (30) years.[33] Ordinary acquisitive prescription requires possession in good
faith,[34] as well as just title.[35]
When Section 14(2) of the Property Registration Decree explicitly provides that
persons who have acquired ownership over private lands by prescription under the
provisions of existing laws, it unmistakably refers to the Civil Code as a valid basis
for the registration of lands. The Civil Code is the only existing law that specifically
allows the acquisition by prescription of private lands, including patrimonial
property belonging to the State. Thus, the critical question that needs affirmation is
whether Section 14(2) does encompass original registration proceedings over
patrimonial property of the State, which a private person has acquired through
prescription.
The Naguit obiter had adverted to a frequently reiterated jurisprudence holding that
properties classified as alienable public land may be converted into private property
by reason of open, continuous and exclusive possession of at least thirty (30) years.
[36] Yet if we ascertain the source of the thirty-year period, additional
complexities relating to Section 14(2) and to how exactly it operates would emerge.
For there are in fact two distinct origins of the thirty (30)-year rule.
The first source is Rep. Act No. 1942, enacted in 1957, which amended Section
48(b) of the Public Land Act by granting the right to seek original registration of
alienable public lands through possession in the concept of an owner for at least
thirty years.
The following-described citizens of the Philippines, occupying lands of the public
domain or claiming to own any such lands or an interest therein, but whose titles
have not been perfected or completed, may apply to the Court of First Instance of
the province where the land is located for confirmation of their claims and the
issuance of a certificate of title therefor, under the Land Registration Act, to wit:
xxx

xxx

xxx

(b) Those who by themselves or through their predecessors in interest have been in
open, continuous, exclusive and notorious possession and occupation of agricultural
lands of the public domain, under a bona fide claim of acquisition of ownership, for
at least thirty years immediately preceding the filing of the application for
confirmation of title, except when prevented by war or force majeure. These shall be

conclusively presumed to have performed all the conditions essential to a

Government grant and shall be entitled to a certificate of title under the provisions
of this Chapter. (emphasis supplied)[37]

This provision was repealed in 1977 with the enactment of P.D. 1073, which made
the date 12 June 1945 the reckoning point for the first time. Nonetheless,
applications for registration filed prior to 1977 could have invoked the 30-year rule
introduced by Rep. Act No. 1942.
The second source is Section 14(2) of P.D. 1529 itself, at least by implication, as it
applies the rules on prescription under the Civil Code, particularly Article 1113 in
relation to Article 1137. Note that there are two kinds of prescription under the Civil
Codeordinary acquisitive prescription and extraordinary acquisitive prescription,
which, under Article 1137, is completed through uninterrupted adverse
possession for thirty years, without need of title or of good faith.
Obviously, the first source of the thirty (30)-year period rule, Rep. Act No. 1942,
became unavailable after 1977. At present, the only legal basis for the thirty (30)year period is the law on prescription under the Civil Code, as mandated under
Section 14(2). However, there is a material difference between how the thirty (30)year rule operated under Rep. Act No. 1942 and how it did under the Civil Code.
Section 48(b) of the Public Land Act, as amended by Rep. Act No. 1942, did not refer
to or call into application the Civil Code provisions on prescription. It merely set
forth a requisite thirty-year possession period immediately preceding the application
for confirmation of title, without any qualification as to whether the property should
be declared alienable at the beginning of, and continue as such, throughout the
entire thirty-(30) years. There is neither statutory nor jurisprudential basis to assert
Rep. Act No. 1942 had mandated such a requirement,[38] similar to our earlier
finding with respect to the present language of Section 48(b), which now sets 12
June 1945 as the point of reference.
Then, with the repeal of Rep. Act No. 1942, the thirty-year possession period as
basis for original registration became Section 14(2) of the Property Registration
Decree, which entitled those who have acquired ownership over private lands by
prescription under the provisions of existing laws to apply for original registration.
Again, the thirty-year period is derived from the rule on extraordinary prescription
under Article 1137 of the Civil Code. At the same time, Section 14(2) puts into
operation the entire regime of prescription under the Civil Code, a fact which does
not hold true with respect to Section 14(1).
B.

Unlike Section 14(1), Section 14(2) explicitly refers to the principles on prescription
under existing laws. Accordingly, we are impelled to apply the civil law concept of
prescription, as set forth in the Civil Code, in our interpretation of Section 14(2).
There is no similar demand on our part in the case of Section 14(1).
The critical qualification under Article 1113 of the Civil Code is thus: [p]roperty of
the State or any of its subdivisions not patrimonial in character shall not be the
object of prescription. The identification what consists of patrimonial property is
provided by Articles 420 and 421, which we quote in full:
Art. 420. The following things are property of public dominion:
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and
bridges constructed by the State, banks, shores, roadsteads, and others of similar
character;
(2) Those which belong to the State, without being for public use, and are intended
for some public service or for the development of the national wealth.
Art. 421. All other property of the State, which is not of the character stated in the
preceding article, is patrimonial property
It is clear that property of public dominion, which generally includes property
belonging to the State, cannot be the object of prescription or, indeed, be subject of
the commerce of man.[39] Lands of the public domain, whether declared alienable
and disposable or not, are property of public dominion and thus insusceptible to
acquisition by prescription.
Let us now explore the effects under the Civil Code of a declaration by the
President or any duly authorized government officer of alienability and disposability
of lands of the public domain. Would such lands so declared alienable and
disposable be converted, under the Civil Code, from property of the public dominion
into patrimonial property? After all, by connotative definition, alienable and
disposable lands may be the object of the commerce of man; Article 1113 provides
that all things within the commerce of man are susceptible to prescription; and the
same provision further provides that patrimonial property of the State may be
acquired by prescription.
Nonetheless, Article 422 of the Civil Code states that [p]roperty of public dominion,
when no longer intended for public use or for public service, shall form part of the
patrimonial property of the State. It is this provision that controls how public
dominion property may be converted into patrimonial property susceptible to
acquisition by prescription. After all, Article 420 (2) makes clear that those property
which belong to the State, without being for public use, and are intended for some

public service or for the development of the national wealth are public dominion
property. For as long as the property belongs to the State, although already
classified as alienable or disposable, it remains property of the public dominion if
when it is intended for some public service or for the development of the national
wealth.
Accordingly, there must be an express declaration by the State that the public
dominion property is no longer intended for public service or the development of
the national wealth or that the property has been converted into patrimonial.
Without such express declaration, the property, even if classified as alienable or
disposable, remains property of the public dominion, pursuant to Article 420(2), and
thus incapable of acquisition by prescription. It is only when such alienable and
disposable lands are expressly declared by the State to be no longer intended for
public service or for the development of the national wealth that the period of
acquisitive prescription can begin to run. Such declaration shall be in the form of a
law duly enacted by Congress or a Presidential Proclamation in cases where the
President is duly authorized by law.
It is comprehensible with ease that this reading of Section 14(2) of the Property
Registration Decree limits its scope and reach and thus affects the registrability
even of lands already declared alienable and disposable to the detriment of the
bona fide possessors or occupants claiming title to the lands. Yet this interpretation
is in accord with the Regalian doctrine and its concomitant assumption that all lands
owned by the State, although declared alienable or disposable, remain as such and
ought to be used only by the Government.
Recourse does not lie with this Court in the matter. The duty of the Court is to apply
the Constitution and the laws in accordance with their language and intent. The
remedy is to change the law, which is the province of the legislative branch.
Congress can very well be entreated to amend Section 14(2) of the Property
Registration Decree and pertinent provisions of the Civil Code to liberalize the
requirements for judicial confirmation of imperfect or incomplete titles.
The operation of the foregoing interpretation can be illustrated by an actual
example. Republic Act No. 7227, entitled An Act Accelerating The Conversion Of
Military Reservations Into Other Productive Uses, etc., is more commonly known as
the BCDA law. Section 2 of the law authorizes the sale of certain military
reservations and portions of military camps in Metro Manila, including Fort Bonifacio
and Villamor Air Base. For purposes of effecting the sale of the military camps, the
law mandates the President to transfer such military lands to the Bases Conversion
Development Authority (BCDA)[40] which in turn is authorized to own, hold and/or
administer them.[41] The President is authorized to sell portions of the military
camps, in whole or in part.[42] Accordingly, the BCDA law itself declares that the
military lands subject thereof are alienable and disposable pursuant to the

provisions of existing laws and regulations governing sales of government

properties.[43]
From the moment the BCDA law was enacted the subject military lands have
become alienable and disposable. However, said lands did not become patrimonial,
as the BCDA law itself expressly makes the reservation that these lands are to be
sold in order to raise funds for the conversion of the former American bases at Clark
and Subic.[44] Such purpose can be tied to either public service or the
development of national wealth under Article 420(2). Thus, at that time, the lands
remained property of the public dominion under Article 420(2), notwithstanding
their status as alienable and disposable. It is upon their sale as authorized under the
BCDA law to a private person or entity that such lands become private property and
cease to be property of the public dominion.

C.
Should public domain lands become patrimonial because they are declared as such
in a duly enacted law or duly promulgated proclamation that they are no longer
intended for public service or for the development of the national wealth, would the
period of possession prior to the conversion of such public dominion into patrimonial
be reckoned in counting the prescriptive period in favor of the possessors? We rule
in the negative.
The limitation imposed by Article 1113 dissuades us from ruling that the
period of possession before the public domain land becomes patrimonial may be
counted for the purpose of completing the prescriptive period. Possession of public
dominion property before it becomes patrimonial cannot be the object of
prescription according to the Civil Code. As the application for registration under
Section 14(2) falls wholly within the framework of prescription under the Civil Code,
there is no way that possession during the time that the land was still classified as
public dominion property can be counted to meet the requisites of acquisitive
prescription and justify registration.
Are we being inconsistent in applying divergent rules for Section 14(1) and Section
14(2)? There is no inconsistency. Section 14(1) mandates registration on the basis of
possession, while Section 14(2) entitles registration on the basis of prescription.
Registration under Section 14(1) is extended under the aegis of the Property
Registration Decree and the Public Land Act while registration under Section 14(2) is
made available both by the Property Registration Decree and the Civil Code.
In the same manner, we can distinguish between the thirty-year period under
Section 48(b) of the Public Land Act, as amended by Rep. Act No. 1472, and the
thirty-year period available through Section 14(2) of the Property Registration

Decree in relation to Article 1137 of the Civil Code. The period under the former
speaks of a thirty-year period of possession, while the period under the latter
concerns a thirty-year period of extraordinary prescription. Registration under
Section 48(b) of the Public Land Act as amended by Rep. Act No. 1472 is based on
thirty years of possession alone without regard to the Civil Code, while the
registration under Section 14(2) of the Property Registration Decree is founded on
extraordinary prescription under the Civil Code.
It may be asked why the principles of prescription under the Civil Code should
not apply as well to Section 14(1). Notwithstanding the vaunted status of the Civil
Code, it ultimately is just one of numerous statutes, neither superior nor inferior to
other statutes such as the Property Registration Decree. The legislative branch is
not bound to adhere to the framework set forth by the Civil Code when it enacts
subsequent legislation. Section 14(2) manifests a clear intent to interrelate the
registration allowed under that provision with the Civil Code, but no such intent
exists with respect to Section 14(1).
IV.
One of the keys to understanding the framework we set forth today is seeing
how our land registration procedures correlate with our law on prescription, which,
under the Civil Code, is one of the modes for acquiring ownership over property.
The Civil Code makes it clear that patrimonial property of the State may be
acquired by private persons through prescription. This is brought about by Article
1113, which states that [a]ll things which are within the commerce of man are
susceptible to prescription, and that [p]roperty of the State or any of its
subdivisions not patrimonial in character shall not be the object of prescription.
There are two modes of prescription through which immovables may be
acquired under the Civil Code. The first is ordinary acquisitive prescription, which,
under Article 1117, requires possession in good faith and with just title; and, under
Article 1134, is completed through possession of ten (10) years. There is nothing in
the Civil Code that bars a person from acquiring patrimonial property of the State
through ordinary acquisitive prescription, nor is there any apparent reason to
impose such a rule. At the same time, there are indispensable requisitesgood faith
and just title. The ascertainment of good faith involves the application of Articles
526, 527, and 528, as well as Article 1127 of the Civil Code,[45] provisions that
more or less speak for themselves.
On the other hand, the concept of just title requires some clarification. Under
Article 1129, there is just title for the purposes of prescription when the adverse
claimant came into possession of the property through one of the modes recognized

by law for the acquisition of ownership or other real rights, but the grantor was not
the owner or could not transmit any right. Dr. Tolentino explains:
Just title is an act which has for its purpose the transmission of ownership, and
which would have actually transferred ownership if the grantor had been the owner.
This vice or defect is the one cured by prescription. Examples: sale with delivery,
exchange, donation, succession, and dacion in payment.[46]
The OSG submits that the requirement of just title necessarily precludes the
applicability of ordinary acquisitive prescription to patrimonial property. The major
premise for the argument is that the State, as the owner and grantor, could not
transmit ownership to the possessor before the completion of the required period of
possession.[47] It is evident that the OSG erred when it assumed that the grantor
referred to in Article 1129 is the State. The grantor is the one from whom the person
invoking ordinary acquisitive prescription derived the title, whether by sale,
exchange, donation, succession or any other mode of the acquisition of ownership
or other real rights.
Earlier, we made it clear that, whether under ordinary prescription or extraordinary
prescription, the period of possession preceding the classification of public dominion
lands as patrimonial cannot be counted for the purpose of computing prescription.
But after the property has been become patrimonial, the period of prescription
begins to run in favor of the possessor. Once the requisite period has been
completed, two legal events ensue: (1) the patrimonial property is ipso jure
converted into private land; and (2) the person in possession for the periods
prescribed under the Civil Code acquires ownership of the property by operation of
the Civil Code.
It is evident that once the possessor automatically becomes the owner of the
converted patrimonial property, the ideal next step is the registration of the
property under the Torrens system. It should be remembered that registration of
property is not a mode of acquisition of ownership, but merely a mode of
confirmation of ownership.[48]
Looking back at the registration regime prior to the adoption of the Property
Registration Decree in 1977, it is apparent that the registration system then did not
fully accommodate the acquisition of ownership of patrimonial property under the
Civil Code. What the system accommodated was the confirmation of imperfect title
brought about by the completion of a period of possession ordained under the
Public Land Act (either 30 years following Rep. Act No. 1942, or since 12 June 1945
following P.D. No. 1073).
The Land Registration Act[49] was noticeably silent on the requisites for alienable
public lands acquired through ordinary prescription under the Civil Code, though it

arguably did not preclude such registration.[50] Still, the gap was lamentable,
considering that the Civil Code, by itself, establishes ownership over the patrimonial
property of persons who have completed the prescriptive periods ordained therein.
The gap was finally closed with the adoption of the Property Registration Decree in
1977, with Section 14(2) thereof expressly authorizing original registration in favor
of persons who have acquired ownership over private lands by prescription under
the provisions of existing laws, that is, the Civil Code as of now.
V.
We synthesize the doctrines laid down in this case, as follows:
(1) In connection with Section 14(1) of the Property Registration Decree,
Section 48(b) of the Public Land Act recognizes and confirms that those who by
themselves or through their predecessors in interest have been in open, continuous,
exclusive, and notorious possession and occupation of alienable and disposable
lands of the public domain, under a bona fide claim of acquisition of ownership,
since June 12, 1945 have acquired ownership of, and registrable title to, such lands
based on the length and quality of their possession.
(a)
Since Section 48(b) merely requires possession since 12 June 1945 and does
not require that the lands should have been alienable and disposable during the
entire period of possession, the possessor is entitled to secure judicial confirmation
of his title thereto as soon as it is declared alienable and disposable, subject to the
timeframe imposed by Section 47 of the Public Land Act.[51]
(b)
The right to register granted under Section 48(b) of the Public Land Act is
further confirmed by Section 14(1) of the Property Registration Decree.
(2) In complying with Section 14(2) of the Property Registration Decree,
consider that under the Civil Code, prescription is recognized as a mode of acquiring
ownership of patrimonial property. However, public domain lands become only
patrimonial property not only with a declaration that these are alienable or
disposable. There must also be an express government manifestation that the
property is already patrimonial or no longer retained for public service or the
development of national wealth, under Article 422 of the Civil Code. And only when
the property has become patrimonial can the prescriptive period for the acquisition
of property of the public dominion begin to run.
(a)
Patrimonial property is private property of the government. The person
acquires ownership of patrimonial property by prescription under the Civil Code is
entitled to secure registration thereof under Section 14(2) of the Property
Registration Decree.

(b)
There are two kinds of prescription by which patrimonial property may be
acquired, one ordinary and other extraordinary. Under ordinary acquisitive
prescription, a person acquires ownership of a patrimonial property through
possession for at least ten (10) years, in good faith and with just title. Under
extraordinary acquisitive prescription, a persons uninterrupted adverse possession
of patrimonial property for at least thirty (30) years, regardless of good faith or just
title, ripens into ownership.
B.
We now apply the above-stated doctrines to the case at bar.
It is clear that the evidence of petitioners is insufficient to establish that
Malabanan has acquired ownership over the subject property under Section 48(b) of
the Public Land Act. There is no substantive evidence to establish that Malabanan or
petitioners as his predecessors-in-interest have been in possession of the property
since 12 June 1945 or earlier. The earliest that petitioners can date back their
possession, according to their own evidencethe Tax Declarations they presented
in particularis to the year 1948. Thus, they cannot avail themselves of registration
under Section 14(1) of the Property Registration Decree.

Neither can petitioners properly invoke Section 14(2) as basis for registration.
While the subject property was declared as alienable or disposable in 1982, there is
no competent evidence that is no longer intended for public use service or for the
development of the national evidence, conformably with Article 422 of the Civil
Code. The classification of the subject property as alienable and disposable land of
the public domain does not change its status as property of the public dominion
under Article 420(2) of the Civil Code. Thus, it is insusceptible to acquisition by
prescription.
VI.
A final word. The Court is comfortable with the correctness of the legal doctrines
established in this decision. Nonetheless, discomfiture over the implications of
todays ruling cannot be discounted. For, every untitled property that is occupied in
the country will be affected by this ruling. The social implications cannot be
dismissed lightly, and the Court would be abdicating its social responsibility to the
Filipino people if we simply levied the law without comment.
The informal settlement of public lands, whether declared alienable or not, is
a phenomenon tied to long-standing habit and cultural acquiescence, and is
common among the so-called Third World countries. This paradigm powerfully
evokes the disconnect between a legal system and the reality on the ground. The

law so far has been unable to bridge that gap. Alternative means of acquisition of
these public domain lands, such as through homestead or free patent, have

proven unattractive due to limitations imposed on the grantee in the encumbrance

or alienation of said properties.[52] Judicial confirmation of imperfect title has
emerged as the most viable, if not the most attractive means to regularize the
informal settlement of alienable or disposable lands of the public domain, yet even
that system, as revealed in this decision, has considerable limits.
There are millions upon millions of Filipinos who have individually or
exclusively held residential lands on which they have lived and raised their families.
Many more have tilled and made productive idle lands of the State with their hands.
They have been regarded for generation by their families and their communities as
common law owners. There is much to be said about the virtues of according them
legitimate states. Yet such virtues are not for the Court to translate into positive law,
as the law itself considered such lands as property of the public dominion. It could
only be up to Congress to set forth a new phase of land reform to sensibly regularize
and formalize the settlement of such lands which in legal theory are lands of the
public domain before the problem becomes insoluble. This could be accomplished,
to cite two examples, by liberalizing the standards for judicial confirmation of
imperfect title, or amending the Civil Code itself to ease the requisites for the
conversion of public dominion property into patrimonial.
Ones sense of security over land rights infuses into every aspect of well-being not
only of that individual, but also to the persons family. Once that sense of security is
deprived, life and livelihood are put on stasis. It is for the political branches to bring
welcome closure to the long pestering problem.
WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals
dated 23 February 2007 and Resolution dated 2 October 2007 are AFFIRMED. No
pronouncement as to costs.
SO ORDERED.
[G.R. No. 175746, March 12, 2008]
CHARLES L. ONG, Petitioner, vs. REPUBLIC OF THE PHILIPPINES,
Respondent.
DECISION
YNARES-SATIAGO, J.:

This petition for review on certiorari assails the April 25, 2006 Decision[1] of the
Court of Appeals in CA-G.R. CV No. 76085, which reversed and set aside the January
16, 2002 Decision[2] of the Municipal Trial Court of Mangaldan, Pangasinan in Land
Registration Case No. 99-023, and the November 20, 2006 Resolution [3] which
denied petitioners motion for reconsideration.
The antecedent facts are as follows.
On July 1, 1999, petitioner Charles L. Ong (petitioner) in his behalf and as duly
authorized representative of his brothers, namely, Roberto, Alberto and Cesar, filed
an Application for Registration of Title[4] over Lot 15911 (subject lot) situated in
Barangay Anolid, Mangaldan, Pangasinan with an area of five hundred seventy four
(574) square meters, more or less. They alleged that they are the co-owners of the
subject lot; that the subject lot is their exclusive property having acquired the same
by purchase from spouses Tony Bautista and Alicia Villamil on August 24, 1998; that
the subject lot is presently unoccupied; and that they and their predecessors-ininterest have been in open, continuous and peaceful possession of the subject lot in
the concept of owners for more than thirty (30) years.
After due notice and publication, only respondent Republic of the Philippines
(respondent), represented by the Office of the Solicitor General, opposed the
application for registration of title. Respondent asserted that neither applicants nor
their predecessors-in-interest have been in open, continuous, exclusive and
notorious possession and occupation of the subject lot since June 12, 1945 or earlier
as required by Section 48(b) of Commonwealth Act No. 141, as amended by
Presidential Decree (P.D.) No. 1073; that applicants failed to adduce any muniment
of title to prove their claims; that the tax declaration appended to the application
does not appear genuine and merely shows pretended possession of recent vintage;
that the application was filed beyond the period allowed under P.D. No. 892; and
that the subject lot is part of the public domain which cannot be the subject of
private appropriation.
On January 16, 2002, the trial court rendered a Decision in favor of petitioner and
his brothers, viz:
The foregoing evidences presented by the applicant indubitably established
sufficient basis to grant the applicant (sic) for registration. Originally, the whole
parcel of land was owned by spouses Teofilo Abellara and Abella Charmine who
acquired the same by virtue of a Deed of Sale from Cynthia Cacho, Agustin Cacho,
Jr., Jasmin Cacho, Jover Cacho and Lauro Cacho. Later, they sold the same parcel of
land to spouses Tony C. Villamil and Alicia Bautista, who in turn sold the same land
to herein applicants.
The same parcel of land has been declared in the name of the applicant and her
predecessors-in-interest and its taxes has (sic) been religiously paid.

The said circumstances further show that the possession and ownership of the
applicant and her (sic) predecessors-in- interest over the same parcel of land has
(sic) been continuous and peaceful under bona fide claim of ownership before the
filing of the instant application for registration on [July 1, 1999].
WHEREFORE, after confirming the Order of General Default, the Court hereby orders
and decrees the registration of a parcel of land as shown on plan ap-01-004897
approved by the Bureau of Land(s) situated in Barangay Anolid, Mangaldan,
Pangasinan, containing an area of Five Hundred Seventy Four (574) square meters,
subject of the application for registration of title, in accordance with Presidential
Decree No. 1529, in favor of CHARLIE L. ONG in his behalf and as representative of
his brothers namely, ROBERTO L. ONG, ALBERTO L. ONG and CESAR L. ONG.
Furnish copies of this Decision to the Office of the Solicitor General, Makati City,
Metro Manila, the Office of the Provincial Prosecutor, Dagupan City, Atty. Celestino
Domingo Jr., the Office of the Land Registration Authority, Quezon City, as well as
the applicant.
SO ORDERED.[5]
Aggrieved, respondent appealed to the Court of Appeals which rendered the
assailed Decision, the dispositive portion of which reads:
WHEREFORE, the instant appeal is GRANTED. Accordingly, the decision of the court
a quo granting the application for registration of title of applicants-appellees is
REVERSED and SET ASIDE. No pronouncement as to costs.
SO ORDERED.[6]
In reversing the decision of the trial court, the Court of Appeals found that the
subject lot is part of the alienable and disposable lands of the public domain. Thus,
it was incumbent upon petitioner to prove that they possessed the subject lot in the
nature and for the duration required by law. However, petitioner failed to prove that
he or his predecessors-in-interest have been in adverse possession of the subject lot
in the concept of owner since June 12, 1945 or earlier as mandated by Section 14(1)
of P.D. 1529. It noted that the earliest tax declaration which petitioner presented is
dated 1971. Consequently, petitioner could not fairly claim possession of the land
prior to 1971. Neither was petitioner able to prove that he or his predecessors-ininterest actually occupied the subject lot prior to the filing of the application. Thus,
the trial court erred in granting the application for registration of title over the
subject lot.
Hence, this petition raising the following issues:
WHETHER OR NOT PETITIONER, TOGETHER WITH HIS BROTHERS, NAMELY, ROBERTO
L. ONG, ALBERTO L. ONG AND CEZAR L. ONG, HAVE REGISTRABLE OWNERSHIP

OVER THE REAL PROPERTY SUBJECT MATTER OF LAND REGISTRATION CASE NO. 99023, AND
WHETHER OR NOT THE FINDINGS AND CONCLUSION OF THE FORMER SPECIAL
FOURTH DIVISION OF THE COURT OF APPEALS THAT THE SUBJECT REAL PROPERTY IS
A PUBLIC LAND IS CORRECT.[7]
The petition lacks merit.
Section 14(1) of P.D. 1529 (Property Registration Decree), as amended, provides

SEC. 14. Who may apply. The following persons may file in the proper Court of First
Instance an application for registration of title to land, whether personally or
through their duly authorized representatives:
(1) Those who by themselves or through their predecessors-in-interest have been in
open, continuous, exclusive and notorious possession and occupation of alienable
and disposable lands of the public domain under a bona fide claim of ownership
since June 12, 1945, or earlier.
Thus, pursuant to the aforequoted provision of law, applicants for registration of title
must prove: (1) that the subject land forms part of the disposable and alienable
lands of the public domain, and (2) that they have been in open, continuous,
exclusive and notorious possession and occupation of the same under a bona fide
claim of ownership since June 12, 1945, or earlier.[8] These requisites involve
questions of fact which are not proper in a petition for review on certiorari. Factual
findings of the court a quo are generally binding on this Court except for certain
recognized exceptions, as is the case here, where the trial court and the Court of
Appeals arrived at conflicting findings.[9] After a careful review of the records, we
sustain the findings and conclusions of the Court of Appeals.
There is no dispute that the subject lot is classified as alienable and disposable land
of the public domain. The Report[10] dated January 17, 2000 of the Bureau of Lands
stated that the subject lot is within the alienable and disposable zone as classified
under Project 50 L.C. Map No. 698 and released and classified as such on November
21, 1927.[11] This finding is, likewise, embodied in the Report[12] dated January 7,
1999 of the Department of Environment and Natural Resources Community
Environment and Natural Resources Office (DENR-CENRO) and the blue print
Copy[13] of the plan covering the subject lot. However, petitioner failed to prove
that he or his predecessors-in-interest have been in open, continuous, exclusive and
notorious possession and occupation of the subject lot since June 12, 1945 or
earlier.
The records show that petitioner and his brothers bought the subject lot from
spouses Tony Bautista and Alicia Villamil on August 24, 1998,[14] who in turn
purchased the same from spouses Teofilo Abellera and Abella Sarmen on January

16, 1997.[15] The latter bought the subject lot from Cynthia, Agustin Jr., Jasmin,
Omir and Lauro, all surnamed Cacho, on July 10, 1979.[16] The earliest tax
declaration which was submitted in evidence was Tax Declaration No. 25606[17]
issued in 1971 in the names of spouses Agustin Cacho and Eufrosinia Baustista.
While tax declarations are not conclusive proof of ownership, they constitute good
indicia of possession in the concept of owner and a claim of title over the subject
property.[18] Even if we were to tack petitioners claim of ownership over the
subject lot to that of their alleged predecessors-in-interest, spouses Agustin Cacho
and Eufrosinia Baustista in 1971, still this would fall short of the required possession
from June 12, 1945 or earlier.
Further, as correctly pointed by the Court of Appeals, possession alone is not
sufficient to acquire title to alienable lands of the public domain because the law
requires possession and occupation. As held in Republic v. Alconaba:[19]
The law speaks of possession and occupation. Since these words are separated by
the conjunction and, the clear intention of the law is not to make one synonymous
with the other. Possession is broader than occupation because it includes
constructive possession. When, therefore, the law adds the word occupation, it
seeks to delimit the all encompassing effect of constructive possession. Taken
together with the words open, continuous, exclusive and notorious, the word
occupation serves to highlight the fact that for an applicant to qualify, his
possession must not be a mere fiction. Actual possession of a land consists in the
manifestation of acts of dominion over it of such a nature as a party would naturally
exercise over his own property.[20]
Petitioner admitted that after he and his brothers bought the subject lot from
spouses Tony Bautista and Alicia Villamil in 1998, neither he nor his brothers
actually occupied the subject lot.[21] No improvements were made thereon and the
most that they did was to visit the lot on several occasions.[22] Petitioners
predecessor-in-interest, Tony Bautista testified that he and his wife never actually
occupied the subject lot from the time they bought the same from spouses Teofilo
Abellera and Abella Sarmen in 1997.[23] Aside from these two testimonies, no other
evidence was presented to establish the character of the possession of the subject
lot by petitioners other alleged predecessors-in-interest. Clearly, petitioners
evidence failed to establish specific acts of ownership to substantiate the claim that
he and his predecessors-in-interest possessed and occupied the subject lot in the
nature and duration required by law.
The burden of proof in land registration cases rests on the applicant who must show
by clear, positive and convincing evidence that his alleged possession and
occupation of the land is of the nature and duration required by law.[24]
Unfortunately, petitioners evidence do not constitute the well-nigh
incontrovertible evidence necessary in cases of this nature.[25] Accordingly, the
Court of Appeals did not err in reversing the Decision of the trial court and in
denying his application for registration of title over the subject lot.

WHEREFORE, in view of the foregoing, the petition is DENIED. The April 25, 2006
Decision of the Court of Appeals in CA-G.R. CV No. 76085 which reversed and set
aside the January 16, 2002 Decision of the Municipal Trial Court of Mangaldan,
Pangasinan in Land Registration Case No. 99-023, and the November 20, 2006
Resolution denying the motion for reconsideration, are AFFIRMED.
Costs against petitioner.
SO ORDERED.
3. Section 14 (2)
4. Section 14 (3)
a. Accession
b. Accretion
c.
G.R. No. L-39248
May 7, 1976
REPUBLIC OF THE PHILIPPINES, represented by the DIRECTOR OF LANDS,
plaintiff-appellee,
vs.
HEIRS OF LUISA VILLA ABRILLE, defendant-appellant, LAND REGISTRATION
COMMISSIONER and THE REGISTER OF DEEDS OF DAVAO CITY, defendants.
Solicitor General Estelito P. Mendoza, Assistant Solicitor General Octavio
R. Ramirez and Atty. Baltazar Llamas plaintiff-appellee.
Jose R. Madrazo, Jr. for defendant-appellant.
Gregorio Bilog, Jr. for defendant Land Registration Commissioner.

ESGUERRA, J.:
This case was originally appealed to the Court of Appeals where it was docketed as
CA-G.R. No. 47438-R. The Court of Appeals certified it to this Court for final
consideration and resolution of the pure question of law involved.
The factual background of the case is as follows:

On May 9, 1969, a Complaint for Annulment of Certificate of Title was filed by the
Republic of the Philippines (represented by the Director of Lands), with the Court of
First Instance of Davao, Branch 1, alleging, among others, the following:
3.
That defendant Commissioner of Land Registration and defendant Register of
Deeds of Davao City whose Offices are at Espaa Extension, Quezon City and Davao
City, respectively. "(are included in this complaint, the first being the public Official
charged under the law with the approval )." subdivision surveys of private lands
while the second is the Official vested with the authority to issue certificates of
titles, pursuant to the provisions of Act 496, as amended, otherwise known as the
Land Registration Law;
4.
That defendant Estate of Luisa Villa Abrille (now Heirs of Luisa Villa Abrille) is
the owner of a parcel of land in the City of Davao containing an area of FIVE
HUNDRED TWENTY FIVE THOUSAND SIX HUNDRED FIFTY TWO SQUARE METERS
(525.652), more or less, under Transfer Certificate of Title No. T-1439 of the Registry
of Deeds of Davao City, issued in her name;
5.
That deceased Luisa Villa Abrille during her lifetime caused the subdivision of
the aforesaid parcel of land into two lots designated as Lots Nos. 379-B-2-B-1 and
379-B-2-B-2 under subdivision plan (LRC) Psd-69322 which was approved by the
Land Registration Commissioner on March 17,1967;
6.
That under Subdivision Plan (LRC) Psd-69322, Lot No. 379- B-2-B-1 contains
an area of 30,100 Square Meters while Lot No. 379-B-2B-2 contains an area of
577,679 Square Meters or a total area of 607,779 Square Meters, which is 82,127
Square Meters more than the original area covered in Transfer Certificate of Title No.
T-1439 in the name of said defendant Luisa Villa Abrille;
7.
That on March 27, 1967 or ten days after the approval by the Land
Registration Commissioner, said Luisa Villa Abrille was able to secure an order from
the Court of First Instance of Davao in LRC (GLRO) Doc. No. 9969, directing the
Register of Deeds for the City of Davao and Province of Davao, to correct the area of
Certificate of Title No. T-1439 and thereafter to cancel the same and issue in lieu
thereof TCT Nos. T-18886 and T-18887;
8.
That on March 30, 1967, the Register of Deeds concerned registered Lot 379B-2-B-1 and issued TCT No. 18886 therefor, in the name of Luisa Villa Abrille and on
the same date registered Lot No. 379-B-2-B-2 and issued TCT No. 18887 in the name
of Luisa Villa Abrille;
9.
That the registration of Lot No. 379-B-2-B-2, which includes the
aforementioned excess area of 82,127 Square Meters, was not in accordance with

law for lack of the required notice and publication as prescribed in Act 496, as
amended, otherwise known as the Land Registration Law;
10.
That the excess or enlarged area of 82,127 Square Meters as a result of the
approval of the subdivision survey (LRC) Psd-69322 was formerly a portion of the
Davao River which dried up by reason of the change of course of the said Davao
River; hence a land belonging to the public domain; and
11.
That as a consequence thereof, Transfer Certificate of Title No. 18887 which
covers Lot No. 379-B-2-B-2 of Subdivision Survey (LRC) Psd-69322, wherein the
excess area of land belong to the public domain (not private land) is null and void
ab initio.
On June 10, 1969, defendant Register of Deeds of Davao- City filed her answer
averring that she, "in the performance of her ministerial duty, honestly and in good
faith effected the registration of Subdivision Lot No. 379-B-2-B-1 and Lot No. 379B-2B-2 and the issuance of corresponding TCT No. 18886 and TCT No. 18887 therefor,
respectively, in view of the approval of the Land Registration Commissioner of
Subdivision Plan (LRC) Psd-69322, and in view of the Order of the Court of First
Instance of Davao to correct the area in Certificate of Title No. T-1439, to cancel the
same and to issue in lieu thereof TCT Nos. T-18886 and T-18887".
On July 2, 1969, herein defendant-appellants filed their answer admitting the
allegations contained in paragraphs 1, 3, 4, 5 and 7 of the complaint; that they
admit the increase in area of the land of their predecessor but that the increase in
area of the land was acceded to and concurred in by the defendant, Land
Registration Commissioner, and the same was duly noted and approved by the
Court of First Instance of Davao; that they admit the issuance of TCT Nos. T-18886
and T-18887 out of Certificate of Title No. T- 1439 in the name of their predecessorin-interest Luisa Villa Abrille but that TCT No. T-18886 had been cancelled and in lieu
thereof, TCT No. T-19077 was issued in favor of Gaudencio Consunji, and, TCT No. T18887 had likewise been cancelled and several Transfer Certificates of Title were
issued thereunder; that the subject increase of area was made in accordance with
law and existing jurisprudence; and that Luisa Villa Abrille, predecessor-in-interest of
herein defendant-appellant, as riparian owner was entitled under the law to claim,
as she did, the increase or excess in area of her original land as her own.
On August 12, 1969, defendant Commissioner of Land Registration prays for a
judgment on the pleadings and avers in his answer that he has no knowledge of the
subject matter of the complaint since the subdivision plan involved therein was
approved by the then Commissioner of Land Registration, Antonio Noblejas; and
that on February 19, 1968, the then Commissioner of Land Registration, Antonio
Noblejas, issued LRC Circular No. 167 directing the Register of Deeds throughout the
Philippines to, among others, deny the registration of subdivision plans with

increased or expanded areas and to withhold the issuance of the corresponding

titles, or if the plans have already been registered and the titles issued, to recall the
titles and to take appropriate steps for their cancellation.
Some private persons, as actual possessors and occupants, tried to intervene in the
case as movant-intervenors but they were denied standing in court by the trial court
in its order of August 16,1969.
On January 6, 1970, the parties litigants submitted in court their "Agreed Stipulation
of Facts" and pray that judgment be rendered by the trial court on their case based
on their stipulation of facts. The "Agreed Stipulation of Facts" of the parties reads as
follows:
COME NOW the parties assisted by their respective attorneys, and unto the
Honorable Court, most respectfully submit the following stipulation of facts and
allege:
1.
That Lot 379-B-2-B was originally registered on June 28, 1916 in the Registry
Book of the Register of Deeds of Zamboanga as Vol. A27, Page 40 under Original
Certificate of Title No. 5609, Case No. 1, G.L.R.O. Rec. No. 317, in the name of
Francisco Villa Abrille Lim Juna, father of Luisa Villa Abrille;
2.
That upon the death of the original owner, the said property was inherited by
Luisa Villa Abrille and Transfer Certificate of Title No. T-1439 was issued in the name
of said Luisa Villa Abrille;
3.
That subsequently, by virtue of an approved subdivision plan Psd-69322 by
the defendant, Land Registration Commissioner, Transfer Certificate of Title Nos. T18886 and 18887 were issued by the defendant, Register of Deeds of Davao, copy
of which subdivision plan is hereto attached as Annex "A", and made integral part
hereof;
4.
That Transfer Certificate of Title No. T-18886 was subsequently cancelled by
virtue of deed of sale, and Transfer Certificate of Title No. T-19077 was issued in the
name of Gaudencio Consunji a purchaser in good faith and for value;
5.
That the said subdivision plan Annex "A" was also approved by the Court of
First Instance of Davao, Branch IV, through an Order dated March 27, 1967, copy of
which order is hereto attached as Annex "B" and made part hereof;
6.
That the said Order Annex "B" was issued by the Court of First Instance of
Davao, Branch IV, on the strength of the Report of the defendant, Land Registration
Commissioner, copy of which report is hereto attached as Annex "C" and made
integral part hereof;

7.
That much later on, Transfer Certificate of Title No. T-18887 was by virtue of
an Order of the Court of First Instance, Branch 1, in Special Proceedings No. 1357,
entitled: In the Matter of the Testate Estate of Luisa Villa Abrille, approving a project
of partition cancelled, and in lieu thereof, the following Transfer Certificates of Title
were issued to the following named persons, to wit:
(a)

T-20690 - Huang Siu Sin;

(b)

T-20692 - Huang Siu Sin;

(c)

T-20701 - Josefino Huang;

(d)

T-20702 - Josefino Huang;

(e)

T-20703 - Josefino Huang;

(f)

T-20732 Huang Siu Sin, et al.;

(g)

T-20733 - Huang Siu Sin, et al.;

(h)

T-20713 - Miguel Huang;

(i)

T-23015 - Miguel Huang;

(j)

T-20725 - Milagros Huang;

(k)

T-20726 - Milagros Huang;

which certificates of title were issued on the basis of a subdivision plan LRC Psd71236 duly approved by the defendant, Land Registration Commissioner, copy of
which subdivision plan (LRC) Psd-71236 is hereto attached as Annex "D" and made
integral part hereof;
8.
That the parties admit that there was an increase in the area of Lot 379-B-2B, but the same was with the knowledge of the defendant, Land Registration
Commissioner and the court of First Instance of Davao, Branch IV;
9.
That the parties admit that no registered owner has been affected or
prejudiced in the increase in area as only Luisa Villa Abrille as the registered owner
holds property adjacent to the parcel of land in question;
10.
That the portion of land subject of the increase adjoins Lot 379-B-2-B and
abuts the Davao River;

11.
That the parcel of land subject of the increase is fully planted with coconuts,
bananas and other seasonal crops by the defendants, through their predecessor-ininterest;
12.
That the increase in area could have taken place very long time ago as the
coconuts planted thereon had long been fruit bearing;
13.
That Transfer Certificate of Title No. 18886 does not contain any portion of
the increase in area;
14.
That of the certificates of title issued based under subdivision plan (LRC) Psd71236, only Transfer Certificates of Title Nos. T- 20725; T-20701; T-20713; and T20690 contain the increase in area; while all the other certificates of title issued
under subdivision plan (LRC) Psd-71236 do not contain any increase in area;
15.
That the parties agree that the issuance of the Order Annex "B" was without
notice to the Director of Lands.
The trial court thereafter rendered its decision dated January 27, 1970, which reads
as follows:
This is an ordinary civil action for annulment of certificate of title instituted by the
Republic of the Philippines, represented by the Director of Lands, against the Estate
of Luisa Abrille, represented by Huang Siu Sin, Administrator, the Land Registration
Commissioner and the Register of Deeds of the City of Davao. Because the residue
of the intestate estate of Luisa Villa Abrille had been divided among Huang Siu Sin,
Josefino Huang, Milagros Huang, Miguel Huang and lap Tong Ha, heirs, they were
directed to appear and to substitute for the intestate estate and they did.
The parties submitted the following stipulation of facts:
xxx

xxx

xxx

The increase in area of the land covered by Original Certificate of Title No. 5609 of
the Register of Deeds of Davao in the name of Francisco Villa Abrille Lim Juna and
subsequently by Transfer Certificate of Title No. T. 1439 in the name of Luisa Villa
Abrille and finally, based on subdivision plan (LRC) Psd-71236, by Transfer
Certificates of Title Nos. T-20725 in the name of Milagros Huang, T20701 in the
name of Josefino Huang, T-20713 in the name of Miguel Huang and T-20690 in the
name of Huang Siu Sin, is from 525,652 square meters to 607,779 square meters,
or 82,127 square meters.

The remedy sought by defendant heirs of Luisa Villa Abrille in order to include the
increase in area was a petition for approval of Subdivision Plan (LRC) Psd-79322
recommended by the Commissioner of Land Registration in his Report, and for
issuance of new title under Section 44, Act 496, as amended, filed with this court,
which was assigned to Branch IV.
Even pursuant to Section 44 of Act 496 under which the aforesaid remedy was
sought, notice before the hearing is required. The parties admit that there was no
notice to the persons interested, including the Director of Lands, before the petition
was heard.
Worse, the increase in area could not have been included in Transfer Certificates of
Title Nos. T-20725, T-20701, T-20713 and T-20690 even assuming arguendo that the
same belonged to the owner of the land to which it is adjacent by the simple
expediency of a petition for approval of subdivision plan and issuance of new titles,
because a subdivision of a registered land under Section 44 of Act 496 does not
authorize the inclusion of land or area not embraced in the titled or in excess of
what is stated in the title. And the approval by the Court of such subdivision plan
does not lend validity to it. The subdivision must be limited to the area stated in the
title. Neither amendment of the title under Section 112 of Act 496 would be a valid
remedy 1.
The heirs of Luisa Villa Abrille.. owners of the adjacent estate, might have acquired
a registrable title to the land in question but to bring it under the operation of the
Land Registration Act, a petition for registration under Act 496 should have been
filed. More so when the title acquired is by continuous possession for at least 30
years under a claim of ownership And even assuming that the land is an accretion,
the fact that the riparian estate is registered does not bring ipso facto effect its
accretion thereto under the operation of the Land Registration Act. No decree of
registration of the land based upon final judgment promulgated by a court of
competent jurisdiction after due publication, notice and hearing, has been issued by
the Commissioner of Land Registration and transcribed by the Register of Deeds of
Davao in the registry, for the reason that no initial or original registration
proceedings have been instituted by the owner. And the only way by which a title to
the land in question can be issued for the first time is for the Land Registration
Commissioner to issue a decree of registration based upon final judgment rendered
by a court of competent jurisdiction after trial.
WHEREFORE, judgment is hereby rendered cancelling Transfer Certificates of Title
Nos. T-20725, T-20701, T-20713 and T-20690 and directing the Register of Deeds of
Davao to issue new certificates of title in lieu thereof after the portions consisting of
82,127 square meters, the land involved, shall have been segregated therefrom in
accordance with law.

Not satisfied with the judgment of the trial court, defendant Heirs of Luisa Villa
Abrille brought the case on appeal to the Court of Appeals. The Court of Appeals,
however, in its Resolution dated July 22, 1974, certified the case (CA-G.R. No.
47438-R) to this Court for consideration and final disposition.
Defendant-appellant maintains that the lower court erred in holding the approval of
Subdivision Plan (LRC) Psd-69322 of no legal effect merely on ground of lack of
notice to interested persons, and in ordering the cancellation of Certificates of Title
Nos. T-20725, T-20701, T-20713 and T-20690. It is the contention of the defendantappellant that since the government agencies having to do with lands know all the
time the increase in area in subdivision plan Psd-69322, and the government
agencies concerned tolerated if not abetted the ultimate inclusion of the involved
increase in area, defendant-appellant should not be made to suffer the effect of the
allegedly wrong procedure or step taken in the approval of the aforementioned
subdivision plan. Besides, defendant-appellant claims that it is their honest belief
that the legal remedy taken by them in seeking the approval of their subdivision
plan concerned was well within the law, particularly the provision of Section 44 of
Act 496, as amended.
Plaintiff-appellee, on the other hand, maintains that the approval of the subdivision
plan, with the increase in area, by the defendant-appellant Land Registration
Commission does not lend validity to the said subdivision plan; and that the
issuance of the four transfer certificates of title (Nos. T-20725, T-20701, T-20713 and
T-20690) over the increased area in question is improper and invalid
notwithstanding the conformity of the Land Registration Commissioner and the
subsequent order of the Court of First Instance of Davao, Branch IV, approving the
subdivision plan concerned, as the required giving of notice to all parties interested
in defendant-appellant's petition for approval of subdivision plan was not at all
followed,
Before Us, therefore, for consideration and final resolution, in order to arrive at a
judicious disposition of the case at bar, is whether or not the lower court erred in
ordering the cancellation of Transfer Certificates of Title Nos. T-20725, T-20701, T20713 and T-20690 which cover the increased area in question totalling 82,127
square meters.
After a careful and thorough deliberation of the matter in controversy, We are of the
opinion and so hold that the lower court acted correctly in ordering the cancellation
of Transfer Certificates of Title Nos. T-20725, T-20701, T-20713 and T-20690 which
admittedly covered the increased area of 82,127 square meters under Subdivision
Plan (LRC) Psd-71236 (and formerly under Psd-69322) for the City of Davao.
Certainly, the step taken by defendant-appellant in petitioning the court for the
approval of their Subdivision Plan (LRC) Psd-69322 and then Psd-71236 to include

the questioned increased area of 82,127 square meters is, to say the least,
unwarranted and irregular. This is so, for the increased area in question, which is not
a registered land but formerly a river bed, is so big as to give allowance for a mere
mistake in area of the original registration of the tracts of land of the defendantappellant formerly belonging to and registered in the name of their grandfather,
Francisco Villa Abrille Lim Juna. In order to bring this increase in area, which the
parties admitted to have been a former river bed of the Davao River, under the
operation and coverage of the Land Registration Law, Act 496, proceedings in
registrations of land title should have been filed Instead of an ordinary approval of
subdivision plan.
It should be remembered that recourse under Section 44 of Act 496, which the
predecessor-in-interest (Luisa Villa Abrille) of the herein defendant-appellant took, is
good only insofar as it covers previously registered lands. In the instant case, part of
the tracts of land, particularly the area of 82,127 square meters, has not yet been
brought under the operation of the Torrens System. Worse still, the approval of
Subdivision Plans (LRC) Psd-69322 and Psd-71236 was without notice to all parties
in interest, more particularly the Director of Lands. For an applicant to have his
imperfect or incomplete title or claim to a land to be originally registered under Act
496, the following requisites should all be satisfied:
1.

Survey of land by the Bureau of Lands or a duly licensed private surveyor;

2.

Filing of application for registration by the applicant;

3.

Setting of the date for the initial hearing of the application by the Court;

4.
Transmittal of the application and the date of initial hearing together with all
the documents or other evidences attached thereto by the Clerk of Court to the
Land Registration Commission;
5.
Publication of a notice of the filing of the application and date and place of
the hearing in the Official Gazette;
6.
Service of notice upon contiguous owners, occupants and those known to
have interests in the property by the sheriff;
7.
Filing of answer to the application by any person whether named in the notice
or not;
8.

Hearing of the case by the Court;

9.

Promulgation of judgment by the Court;

10.
Issuance of the decree by the Court declaring the decision final and
instructing the Land Registration Commission to issue a decree of confirmation and
registration;
11.

Entry of the decree of registration in the Land Registration Commission;

12.
Sending of copy of the decree of registration to the corresponding Register of
Deeds, and
13.
Transcription of the decree of registration in the registration book and the
issuance of the owner's duplicate original certificate of title to the applicant by the
Register of Deeds, upon payment of the prescribed fees.
Hence, with the foregoing requisites not having been complied with, the lower court
committed no error in its appealed decision dated January 27, 1970.
WHEREFORE, the judgment appealed from is hereby affirmed in toto.
No special pronouncement as to costs.
SO ORDERED.

G.R. No. L-17652

June 30, 1962

IGNACIO GRANDE, ET AL., petitioners,

vs.
HON. COURT OF APPEALS, DOMINGO CALALUNG, and ESTEBAN CALALUNG,
respondents.
Bartolome Guirao and Antonio M. Orara for petitioners.
Gonzales and Fernandez for respondents.
BARRERA, J.:
This is an appeal taken by petitioners Ignacio, Eulogia, Alfonso, Eulalia, and Sofia
Grande, from the decision of the Court of Appeals (CA-G.R. No. 25169-R) reversing
that of the Court of First Instance of Isabela (Civil Case No. 1171), and dismissing
petitioners' action against respondents Domingo and Esteban Calalung, to quiet title

to and recover possession of a parcel of land allegedly occupied by the latter

without petitioners' consent.
The facts of the case, which are undisputed, briefly are: Petitioners are the owners
of a parcel of land, with an area of 3.5032 hectares, located at barrio Ragan,
municipality of Magsaysay (formerly Tumauini), province of Isabela, by inheritance
from their deceased mother Patricia Angui (who inherited it from her parents Isidro
Angui and Ana Lopez, in whose name said land appears registered, as shown by
Original Certificate of Title No. 2982, issued on June 9, 1934). Said property is
identified as Lot No. 1, Plan PSU-83342. When it was surveyed for purposes of
registration sometime in 1930, its northeastern boundary was the Cagayan River
(the same boundary stated in the title). Since then, and for many years thereafter, a
gradual accretion on the northeastern side took place, by action of the current of
the Cagayan River, so much so, that by 1958, the bank thereof had receded to a
distance of about 105 meters from its original site, and an alluvial deposit of 19,964
square meters (1.9964 hectares), more or less, had been added to the registered
area (Exh. C-1).
On January 25, 1958, petitioners instituted the present action in the Court of First
Instance of Isabela against respondents, to quiet title to said portion (19,964 square
meters) formed by accretion, alleging in their complaint (docketed as Civil Case No.
1171) that they and their predecessors-in-interest, were formerly in peaceful and
continuous possession thereof, until September, 1948, when respondents entered
upon the land under claim of ownership. Petitioners also asked for damages
corresponding to the value of the fruits of the land as well as attorney's fees and
costs. In their answer (dated February 18, 1958), respondents claim ownership in
themselves, asserting that they have been in continuous, open, and undisturbed
possession of said portion, since prior to the year 1933 to the present.
After trial, the Court of First Instance of Isabela, on May 4, 1959, rendered a decision
adjudging the ownership of the portion in question to petitioners, and ordering
respondents to vacate the premises and deliver possession thereof to petitioners,
and to pay to the latter P250.00 as damages and costs. Said decision, in part, reads:
It is admitted by the parties that the land involved in this action was formed by the
gradual deposit of alluvium brought about by the action of the Cagayan River, a
navigable river. We are inclined to believe that the accretion was formed on the
northeastern side of the land covered by Original Certificate of Title No. 2982 after
the survey of the registered land in 1931, because the surveyors found out that the
northeastern boundary of the land surveyed by them was the Cagayan River, and
not the land in question. Which is indicative of the fact that the accretion has not
yet started or begun in 1931. And, as declared by Pedro Laman, defendant witness
and the boundary owner on the northwest of the registered land of the plaintiffs, the
accretion was a little more than one hectare, including the stony portion, in 1940 or

1941. Therefore, the declarations of the defendant Domingo Calalung and his
witness, Vicente C. Bacani, to the effect that the land in question was formed by
accretion since 1933 do not only contradict the testimony of defendants' witness
Pedro Laman, but could not overthrow the incontestable fact that the accretion with
an area of 4 hectare more or less, was formed in 1948, reason for which, it was only
declared in that same year for taxation purposes by the defendants under Tax Dec.
No. 257 (Exh. "2") when they entered upon the land. We could not give credence to
defendants' assertion that Tax Dec. No. 257 (Exh. "2") cancelled Tax Dee. No. 28226
(Exh. "1"), because Exh. "2" says that "tax under this declaration begins with the
year 1948. But, the fact that defendants declared the land for taxation purposes
since 1948, does not mean that they become the owner of the land by mere
occupancy, for it is a new provision of the New Civil Code that ownership of a piece
of land cannot be acquired by occupation (Art. 714, New Civil Code). The land in
question being an accretion to the mother or registered land of the plaintiffs, the
accretion belongs to the plaintiffs (Art. 457, New Civil Code; Art. 366, Old Civil
Code). Assuming arguendo, that the accretion has been occupied by the defendants
since 1948, or earlier, is of no moment, because the law does not require any act of
possession on the part of the owner of the riparian owner, from the moment the
deposit becomes manifest (Roxas v. Tuason, 9 Phil. 408; Cortez v. City of Manila, 10
Phil. 567). Further, no act of appropriation on the part of the reparian owner is
necessary, in order to acquire ownership of the alluvial formation, as the law does
not require the same (3 Manresa, C.C., pp. 321-326).
This brings us now to the determination of whether the defendants, granting that
they have been in possession of the alluvium since 1948, could have acquired the
property by prescription. Assuming that they occupied the land in September, 1948,
but considering that the action was commenced on January 25, 1958, they have not
been in possession of the land for ten (10) years; hence, they could not have
acquired the land by ordinary prescription (Arts. 1134 and 1138, New Civil Code).
Moreover, as the alluvium is, by law, part and parcel of the registered property, the
same may be considered as registered property, within the meaning of Section 46
of Act No. 496: and, therefore, it could not be acquired by prescription or adverse
possession by another person.
Unsatisfied, respondents appealed to the Court of Appeals, which rendered, on
September 14, 1960, the decision adverted to at the beginning of this opinion,
partly stating:
That the area in controversy has been formed through a gradual process of
alluvium, which started in the early thirties, is a fact conclusively established by the
evidence for both parties. By law, therefore, unless some superior title has
supervened, it should properly belong to the riparian owners, specifically in
accordance with the rule of natural accession in Article 366 of the old Civil Code
(now Article 457), which provides that "to the owner of lands adjoining the banks of

rivers, belongs the accretion which they gradually receive from the effects of the
current of the waters." The defendants, however, contend that they have acquired
ownership through prescription. This contention poses the real issue in this case.
The Court a quo, has resolved it in favor of the plaintiffs, on two grounds: First, since
by accession, the land in question pertains to the original estate, and since in this
instance the original estate is registered, the accretion, consequently, falls within
the purview of Section 46 of Act No. 496, which states that "no title to registered
land in derogation to that of the registered owner shall be acquired by prescription
or adverse possession"; and, second, the adverse possession of the defendant
began only in the month of September, 1948, or less than the 10-year period
required for prescription before the present action was instituted.
As a legal proposition, the first ground relied upon by the trial court, is not quite
correct. An accretion to registered land, while declared by specific provision of the
Civil Code to belong to the owner of the land as a natural accession thereof, does
not ipso jure become entitled to the protection of the rule of imprescriptibility of title
established by the Land Registration Act. Such protection does not extend beyond
the area given and described in the certificate. To hold otherwise, would be
productive of confusion. It would virtually deprive the title, and the technical
description of the land given therein, of their character of conclusiveness as to the
identity and area of the land that is registered. Just as the Supreme Court, albeit in a
negative manner, has stated that registration does not protect the riparian owner
against the erosion of the area of his land through gradual changes in the course of
the adjoining stream (Payatas Estate Development Co. v. Tuason, 53 Phil. 55), so
registration does not entitle him to all the rights conferred by Land Registration Act,
in so far as the area added by accretion is concerned. What rights he has, are
declared not by said Act, but by the provisions of the Civil Code on accession: and
these provisions do not preclude acquisition of the addition area by another person
through prescription. This Court has held as much in the case of Galindez, et al. v.
Baguisa, et al., CA-G.R. No. 19249-R, July 17, 1959.
We now proposed to review the second ground relied upon by the trial court,
regarding the length of time that the defendants have been in possession. Domingo
Calalung testified that he occupied the land in question for the first time in 1934,
not in 1948 as claimed by the plaintiffs. The area under occupancy gradually
increased as the years went by. In 1946, he declared the land for purposes of
taxation (Exhibit 1). This tax declaration was superseded in 1948 by another
(Exhibit 2), after the name of the municipality wherein it is located was changed
from Tumauini to Magsaysay. Calalung's testimony is corroborated by two witnesses,
both owners of properties nearby. Pedro Laman, 72 years of age, who was Municipal
president of Tumauini for three terms, said that the land in question adjoins his own
on the south, and that since 1940 or 1951, he has always known it to be in the
peaceful possession of the defendants. Vicente C. Bacani testified to the same

effect, although, he said that the defendants' possession started sometime in 1933
or 1934. The area thereof, he said, was then less than one hectare.
We find the testimony of the said witnesses entitled to much greater weight and
credence than that of the plaintiff Pedro Grande and his lone witness, Laureana
Rodriguez. The first stated that the defendants occupied the land in question only in
1948; that he called the latter's attention to the fact that the land was his, but the
defendants, in turn, claimed that they were the owners, that the plaintiffs did not
file an action until 1958, because it was only then that they were able to obtain the
certificate of title from the surveyor, Domingo Parlan; and that they never declared
the land in question for taxation purposes or paid the taxes thereon. Pedro Grande
admitted that the defendants had the said land surveyed in April, 1958, and that he
tried to stop it, not because he claimed the accretion for himself and his coplaintiffs, but because the survey included a portion of the property covered by their
title. This last fact is conceded by the defendants who, accordingly, relinquished
their possession to the part thus included, containing an area of some 458 square
meters.1wph1.t
The oral evidence for the defendants concerning the period of their possession
from 1933 to 1958 is not only preponderant in itself, but is, moreover, supported
by the fact that it is they and not the plaintiffs who declared the disputed property
for taxation, and by the additional circumstance that if the plaintiff had really been
in prior possession and were deprived thereof in 1948, they would have
immediately taken steps to recover the same. The excuse they gave for not doing
so, namely, that they did not receive their copy of the certificate of title to their
property until 1958 for lack of funds to pay the fees of the surveyor Domingo Parlan,
is too flimsy to merit any serious consideration. The payment of the surveyor's fees
had nothing to do with their right to obtain a copy of the certificate. Besides, it was
not necessary for them to have it in their hands, in order to file an action to recover
the land which was legally theirs by accession and of which, as they allege, they
had been illegally deprived by the defendants. We are convinced, upon
consideration of the evidence, that the latter, were really in possession since 1934,
immediately after the process of alluvion started, and that the plaintiffs woke up to
their rights only when they received their copy of the title in 1958. By then,
however, prescription had already supervened in favor of the defendants.
It is this decision of the Court of Appeals which petitioners seek to be reviewed by
us.
The sole issue for resolution in this case is whether respondents have acquired the
alluvial property in question through prescription.
There can be no dispute that both under Article 457 of the New Civil Code and
Article 366 of the old, petitioners are the lawful owners of said alluvial property, as

they are the registered owners of the land which it adjoins. The question is whether
the accretion becomes automatically registered land just because the lot which
receives it is covered by a Torrens title thereby making the alluvial property
imprescriptible. We agree with the Court of Appeals that it does not, just as an
unregistered land purchased by the registered owner of the adjoining land does not,
by extension, become ipso facto registered land. Ownership of a piece of land is one
thing, and registration under the Torrens system of that ownership is quite another.
Ownership over the accretion received by the land adjoining a river is governed by
the Civil Code. Imprescriptibility of registered land is provided in the registration
law. Registration under the Land Registration and Cadastral Acts does not vest or
give title to the land, but merely confirms and thereafter protects the title already
possessed by the owner, making it imprescriptible by occupation of third parties.
But to obtain this protection, the land must be placed under the operation of the
registration laws wherein certain judicial procedures have been provided. The fact
remain, however, that petitioners never sought registration of said alluvial property
(which was formed sometime after petitioners' property covered by Original
Certificate of Title No. 2982 was registered on June 9, 1934) up to the time they
instituted the present action in the Court of First Instance of Isabela in 1958. The
increment, therefore, never became registered property, and hence is not entitled
or subject to the protection of imprescriptibility enjoyed by registered property
under the Torrens system. Consequently, it was subject to acquisition through
prescription by third persons.
The next issue is, did respondents acquire said alluvial property through acquisitive
prescription? This is a question which requires determination of facts: physical
possession and dates or duration of such possession. The Court of Appeals, after
analyzing the evidence, found that respondents-appellees were in possession of the
alluvial lot since 1933 or 1934, openly, continuously and adversely, under a claim of
ownership up to the filing of the action in 1958. This finding of the existence of
these facts, arrived at by the Court of Appeals after an examination of the evidence
presented by the parties, is conclusive as to them and can not be reviewed by us.
The law on prescription applicable to the case is that provided in Act 190 and not
the provisions of the Civil Code, since the possession started in 1933 or 1934 when
the pertinent articles of the old Civil Code were not in force and before the
effectivity of the new Civil Code in 1950. Hence, the conclusion of the Court of
Appeals that the respondents acquired alluvial lot in question by acquisitive
prescription is in accordance with law.
The decision of the Court of Appeals under review is hereby affirmed, with costs
against the petitioners. So ordered.

G.R. No. L-12958

May 30, 1960

FAUSTINO IGNACIO, applicant-appellant,

vs.
THE DIRECTOR OF LANDS and LAUREANO VALERIANO, oppositorsappellees.
Acting Assistant Solicitor General Pacifico P. de Castro and Solicitor Crispin
V. Bautista for appellee Director of Lands.
Benjamin H. Aquino for appellee Laureano Veleriano.
MONTEMAYOR, J.:
Faustino Ignacio is appealing the decision of the Court of First Instance of Rizal,
dismissing his application for the registration of a parcel of land.
On January 25, 1950, Ignacio filed an application for the registration of a parcel of
land (mangrove), situated in barrio Gasac, Navotas, Rizal, with an area of 37,877
square meters. Later, he amended his application by alleging among others that he
owned the parcel applied for by right of accretion. To the application, the Director of
Lands, Laureano Valeriano and Domingo Gutierrez filed oppositions. Gutierrez later
withdrew his opposition. The Director of Lands claimed the parcel applied for as a
portion of the public domain, for the reason that neither the applicant nor his
predecessor-in-interest possessed sufficient title thereto, not having acquired it
either by composition title from the Spanish government or by possessory
information title under the Royal Decree of February 13, 1894, and that he had not
possessed the same openly, continuously and adversely under a bona fide claim of
ownership since July 26, 1894. In his turn, Valeriano alleged he was holding the land
by virtue of a permit granted him by the Bureau of Fisheries, issued on January 13,
1947, and approved by the President.
It is not disputed that the land applied for adjoins a parcel owned by the applicant
which he had acquired from the Government by virtue of a free patent title in 1936.
It has also been established that the parcel in question was formed by accretion and
alluvial deposits caused by the action of the Manila Bay which boarders it on the
southwest. Applicant Ignacio claims that he had occupied the land since 1935,
planting it with api-api trees, and that his possession thereof had been continuous,
adverse and public for a period of twenty years until said possession was distributed
by oppositor Valeriano.
On the other hand, the Director of Lands sought to prove that the parcel is foreshore
land, covered by the ebb and flow of the tide and, therefore, formed part of the
public domain.

After hearing, the trial court dismissed the application, holding that the parcel
formed part of the public domain. In his appeal, Ignacio assigns the following errors:
I. The lower court erred in holding that the land in question, altho an accretion to
the land of the applicant-appellant, does not belong to him but forms part of the
public domain.
II. Granting that the land in question forms part of the public domain, the lower
court nevertheless erred in not declaring the same to be the necessary for any
public use or purpose and in not ordering in the present registration proceedings.
III. The lower court erred in not holding that the land in question now belongs to the
applicant-appellant by virtue of acquisitive prescription, the said land having ceased
to be of the public domain and became the private or patrimonial property of the
State.
IV. The lower court erred in not holding that the oppositor Director of Lands is now in
estoppel from claiming the land in question as a land of the public domain.
Appellant contends that the parcel belongs to him by the law of accretion, having
been formed by gradual deposit by action of the Manila Bay, and he cites Article
457 of the New Civil Code (Article 366, Old Civil Code), which provides that:
To the owners of lands adjoining the banks of rivers belong the accretion which they
gradually receive from the effects of the current of the waters.
The article cited is clearly inapplicable because it refers to accretion or deposits on
the banks of rivers, while the accretion in the present case was caused by action of
the Manila Bay.
Appellant next contends that Articles 1, 4 and 5 of the Law of Waters are not
applicable because they refer to accretions formed by the sea, and that Manila Bay
cannot be considered as a sea. We find said contention untenable. A bay is a part of
the sea, being a mere indentation of the same:
Bay. An opening into the land where the water is shut in on all sides except at the
entrance; an inlet of the sea; an arm of the sea, distinct from a river, a bending or
curbing of the shore of the sea or of a lake. 7 C.J. 1013-1014 (Cited in Francisco,
Philippine Law of Waters and Water Rights p. 6)
Moreover, this Tribunal has some cases applied the Law of Waters on Lands
bordering Manila Bay. (See the cases of Ker & Co. vs. Cauden, 6 Phil., 732, involving
a parcel of land bounded on the sides by Manila Bay, where it was held that such
land formed by the action of the sea is property of the State; Francisco vs.

Government of the P.I., 28 Phil., 505, involving a land claimed by a private person
and subject to the ebb and flow of the tides of the Manila Bay).
Then the applicant argues that granting that the land in question formed part of the
public domain, having been gained from the sea, the trial court should have
declared the same no longer necessary for any public use or purpose, and
therefore, became disposable and available for private ownership. Article 4 of the
Law of Waters of 1866 reads thus:
ART. 4. Lands added to the shores by accretions and alluvial deposits caused by the
action of the sea, form part of the public domain. When they are no longer washed
by the waters of the sea and are not necessary for purposes of public utility, or for
the establishment of special industries, or for the coastguard service, the
Government shall declare them to be the property of the owners of the estates
adjacent thereto and as increment thereof.
Interpreting Article 4 of the Law of Waters of 1866, in the case of Natividad vs.
Director of Lands, (CA) 37 Off. Gaz., 2905, it was there held that:
Article 4 of the Law of Waters of 1866 provides that when a portion of the shore is
no longer washed by the waters of the sea and is not necessary for purposes of
public utility, or for the establishment of special industries, or for coastguard
service, the government shall declare it to be the property of the owners of the
estates adjacent thereto and as an increment thereof. We believe that only the
executive and possibly the legislative departments have the authority and the
power to make the declaration that any land so gained by the sea, is not necessary
for purposes of public utility, or for the establishment of special industries, on for
coast-guard service. If no such declaration has been made by said departments, the
lot in question forms part of the public domain. (Natividad vs. Director of Lands,
supra.)
The reason for this pronouncement, according to this Tribunal in the case of Vicente
Joven y Monteverde vs. Director of Lands, 93 Phil., 134, (cited in Velayo's Digest, VI.
I, p. 52).
. . . is undoubtedly that the courts are neither primarily called upon, nor indeed in a
position to determine whether any public land are to be used for the purposes
specified in Article 4 of the Law of Waters.
Consequently, until a formal declaration on the part of the Government, through the
executive department or the Legislature, to the effect that the land in question is no
longer needed for coast guard service, for public use or for special industries, they
continue to be part of the public domain, not available for private appropriation or
ownership.

Appellant next contends that he had acquired the parcel in question through
acquisitive prescription, having possessed the same for over ten years. In answer,
suffice it to say that land of the public domain is not subject to ordinary prescription.
In the case of Insular Government vs. Aldecoa & Co., 19 Phil., 505 this Court said:
The occupation or material possession of any land formed upon the shore by
accretion, without previous permission from the proper authorities, although the
occupant may have held the same as owner for seventeen years and constructed a
wharf on the land, is illegal and is a mere detainer, inasmuch as such land is outside
of the sphere of commerce; it pertains to the national domain; it is intended for
public uses and for the benefit of those who live nearby.
We deem it unnecessary to discuss the other points raised in the appeal.
In view of the foregoing, the appealed decision is hereby affirmed, with costs.

G.R. No. 68166

February 12, 1997

HEIRS OF EMILIANO NAVARRO, petitioner,

vs.
INTERMEDIATE APPELLATE COURT & HEIRS OF SINFOROSO PASCUAL,
respondents.

HERMOSISIMA, JR., J.:

Unique is the legal question visited upon the claim of an applicant in a Land
Registration case by oppositors thereto, the Government and a Government lessee,
involving as it does ownership of land formed by alluvium.
The applicant owns the property immediately adjoining the land sought to be
registered. His registered property is bounded on the east by the Talisay River, on
the west by the Bulacan River, and on the north by the Manila Bay. The Talisay River
and the Bulacan River flow down towards the Manila Bay and act as boundaries of
the applicant's registered land on the east and on the west.
The land sought to be registered was formed at the northern tip of the applicant's
land. Applicant's registered property is bounded on the north by the Manila Bay.

The issue: May the land sought to be registered be deemed an accretion in the
sense that it naturally accrues in favor of the riparian owner or should the land be
considered as foreshore land?
Before us is a petition for review of: (1) the decision 1 and (2) two subsequent
resolutions 2 of the Intermediate Appellate Court 3 (now the Court of Appeals) in
Land Registration Case No. N-84, 4 the application over which was filed by private
respondents' predecessor-in-interest, Sinforoso Pascual, now deceased, before the
Court of First Instance 5 (now the Regional Trial Court) of Balanga, Bataan.
There is no dispute as to the following facts:
On October 3, 1946, Sinforoso Pascual, now deceased, filed an application for
foreshore lease covering a tract of foreshore land in Sibocon, Balanga, Bataan,
having an area of approximately seventeen (17) hectares. This application was
denied on January 15, 1953. So was his motion for reconsideration.
Subsequently, petitioners' predecessor-in-interest, also now deceased, Emiliano
Navarro, filed a fishpond application with the Bureau of Fisheries covering twenty
five (25) hectares of foreshore land also in Sibocon, Balanga, Bataan. Initially, such
application was denied by the Director of Fisheries on the ground that the property
formed part of the public domain. Upon motion for reconsideration, the Director of
Fisheries, on May 27, 1958, gave due course to his application but only to the extent
of seven (7) hectares of the property as may be certified by the Bureau of Forestry
as suitable for fishpond purposes.
The Municipal Council of Balanga, Bataan, had opposed Emiliano Navarro's
application. Aggrieved by the decision of the Director of Fisheries, it appealed to the
Secretary of Natural Resources who, however, affirmed the grant. The then
Executive Secretary, acting in behalf of the President of the Philippines, similarly
affirmed the grant.
On the other hand, sometime in the early part of 1960, Sinforoso Pascual flied an
application to register and confirm his title to a parcel of land, situated in Sibocon,
Balanga, Bataan, described in Plan Psu-175181 and said to have an area of 146,611
square meters. Pascual claimed that this land is an accretion to his property,
situated in Barrio Puerto Rivas, Balanga, Bataan, and covered by Original Certificate
of Title No. 6830. It is bounded on the eastern side by the Talisay River, on the
western side by the Bulacan River, and on the northern side by the Manila Bay. The
Talisay River as well as the Bulacan River flow downstream and meet at the Manila
Bay thereby depositing sand and silt on Pascual's property resulting in an accretion
thereon. Sinforoso Pascual claimed the accretion as the riparian owner.

On March 25, 1960, the Director of Lands, represented by the Assistant Solicitor
General, filed an opposition thereto stating that neither Pascual nor his
predecessors-in-interest possessed sufficient title to the subject property, the same
being a portion of the public domain and, therefore, it belongs to the Republic of the
Philippines. The Director of Forestry, through the Provincial Fiscal, similarly opposed
Pascual's application for the same reason as that advanced by the Director of Lands.
Later on, however, the Director of Lands withdrew his opposition. The Director of
Forestry become the sole oppositor.
On June 2, 1960, the court a quo issued an order of general default excepting the
Director of Lands and the Director of Forestry.
Upon motion of Emiliano Navarro, however, the order of general default was lifted
and, on February 13, 1961, Navarro thereupon filed an opposition to Pascual's
application. Navarro claimed that the land sought to be registered has always been
part of the public domain, it being a part of the foreshore of Manila Bay; that he was
a lessee and in possession of a part of the subject property by virtue of a fishpond
permit issued by the Bureau of Fisheries and confirmed by the Office of the
President; and that be bad already converted the area covered by the lease into a
fishpond.
During the pendency of the land registration case, that is, on November 6, 1960,
Sinforoso Pascual filed a complaint for ejectment against Emiliano Navarro, one
Marcelo Lopez and their privies, alleged by Pascual to have unlawfully claimed and
possessed, through stealth, force and strategy, a portion of the subject property
covered by Plan Psu-175181. The defendants in the case were alleged to have built
a provisional dike thereon: thus they have thereby deprived Pascual of the premises
sought to be registered. This, notwithstanding repeated demands for defendants to
vacate the property.
The case was decided adversely against Pascual. Thus, Pascual appealed to the
Court of First Instance (now Regional Trial Court) of Balanga, Bataan, the appeal
having been docketed as Civil Case No. 2873. Because of the similarity of the
parties and the subject matter, the appealed case for ejectment was consolidated
with the land registration case and was jointly tried by the court a quo.
During the pendency of the trial of the consolidated cases, Emiliano Navarro died on
November 1, 1961 and was substituted by his heirs, the herein petitioners.
Subsequently, on August 26, 1962, Pascual died and was substituted by his heirs,
the herein private respondents.

On November 10, 1975, the court a quo rendered judgment finding the subject
property to be foreshore land and, being a part of the public domain, it cannot be
the subject of land registration proceedings.
The decision's dispositive portion reads:
WHEREFORE, judgment is rendered:
(1)
Dismissing plaintiff [private respondent] Sinforoso Pascual's complaint for
ejectment in Civil Case No. 2873;
(2)
Denying the application of Sinforoso Pascual for land registration over the
land in question; and
(3)
Directing said Sinforoso Pascual, through his heirs, as plaintiff in Civil Case
No. 2873 and as applicant in Land Registration Case No. N-84 to pay costs in both
instances." 6
The heirs of Pascual appealed and, before the respondent appellate court, assisted
the following errors:
1.
The lower court erred in not finding the land in question as an accretion by
the action of the Talisay and Bulacan Rivers to the land admittedly owned by
applicants-appellants [private respondents].
2.

The lower court erred in holding that the land in question is foreshore land.

3.
The lower court erred in not ordering the registration of the land in
controversy in favor of applicants-appellants [private respondents].
4.
The lower court erred in not finding that the applicants-appellants [private
respondents] are entitled to eject the oppositor-appellee [petitioners]. 7
On appeal, the respondent court reversed the findings of the court a quo and
granted the petition for registration of the subject property but excluding therefrom
fifty (50) meters from corner 2 towards corner 1; and fifty meters (50) meters from
corner 5 towards corner 6 of the Psu-175181.
The respondent appellate court explained the reversal in this wise:
The paramount issue to be resolved in this appeal as set forth by the parties in their
respective briefs is whether or not the land sought to be registered is accretion or
foreshore land, or, whether or not said land was formed by the action of the two
rivers of Talisay and Bulacan or by the action of the Manila Bay. If formed by the

action of the Talisay and Bulacan rivers, the subject land is accretion but if formed
by the action of the Manila Bay then it is foreshore land.
xxx

xxx

xxx

It is undisputed that applicants-appellants [private respondents] owned the land

immediately adjoining the land sought to be registered. Their property which is
covered by OCT No. 6830 is bounded on the east by the Talisay River, on the west
by the Bulacan River, and on the north by the Manila Bay. The Talisay and Bulacan
rivers come from inland flowing downstream towards the Manila Bay. In other words,
between the Talisay River and the Bulacan River is the property of applicants with
both rivers acting as the boundary to said land and the flow of both rivers meeting
and emptying into the Manila Bay. The subject land was formed at the tip or apex of
appellants' [private respondents'] land adding thereto the land now sought to be
registered.
This makes this case quite unique because while it is undisputed that the subject
land is immediately attached to appellants' [private respondents'] land and forms
the tip thereof, at the same time, said land immediately faces the Manila Bay which
is part of the sea. We can understand therefore the confusion this case might have
caused the lower court, faced as it was with the uneasy problem of deciding
whether or not the subject land was formed by the action of the two rivers or by the
action of the sea. Since the subject land is found at the shore of the Manila Bay
facing appellants' [private respondents'] land, it would be quite easy to conclude
that it is foreshore and therefore part of the patrimonial property of the State as the
lower court did in fact rule . . . .
xxx

xxx

xxx

It is however undisputed that appellants' [private respondents'] land lies between

these two rivers and it is precisely appellants' [private respondents'] land which acts
as a barricade preventing these two rivers to meet. Thus, since the flow of the two
rivers is downwards to the Manila Bay the sediments of sand and silt are deposited
at their mouths.
It is, therefore, difficult to see how the Manila Bay could have been the cause of the
deposit thereat for in the natural course of things, the waves of the sea eat the land
on the shore, as they suge [sic] inland. It would not therefore add anything to the
land but instead subtract from it due to the action of the waves and the wind. It is
then more logical to believe that the two rivers flowing towards the bay emptied
their cargo of sand, silt and clay at their mouths, thus causing appellants' [private
respondents'] land to accumulate therein.

However, our distinguished colleage [sic], Mr. Justice Serrano, do [sic] not seem to
accept this theory and stated that the subject land arose only when . . . . Pascual
planted "palapat" and "bakawan" trees thereat to serve as a boundary or strainer.
But we do not see how this act of planting trees by Pascual would explain how the
land mass came into being. Much less will it prove that the same came from the
sea. Following Mr. Justice Serrano's argument that it were the few trees that acted
as strainers or blocks, then the land that grew would have stopped at the place
where the said trees were planted. But this is not so because the land mass went far
beyond the boundary, or where the trees were planted.
On the other hand, the picture-exhibits of appellants [private respondents] clearly
show that the land that accumulated beyond the so- called boundary, as well as the
entire area being applied for is dry land, above sea level, and bearing innumerable
trees . . . The existence of vegetation on the land could only confirm that the soil
thereat came from inland rather than from the sea, for what could the sea bring to
the shore but sand, pebbles, stones, rocks and corrals? On the other hand, the two
rivers would be bringing soil on their downward flow which they brought along from
the eroded mountains, the lands along their path, and dumped them all on the
northern portion of appellants' [private respondents'] land.
In view of the foregoing, we have to deviate from the lower court's finding. While it
is true that the subject land is found at the shore of the Manila Bay fronting
appellants' [private respondents'] land, said land is not foreshore but an accretion
from the action of the Talisay and Bulacan rivers. In fact, this is exactly what the
Bureau of Lands found out, as shown in the following report of the Acting Provincial
Officer, Jesus M. Orozco, to wit:
"Upon ocular inspection of the land subject of this registration made on June 11,
1960, it was found out that the said land is . . . . sandwitched [sic] by two big rivers .
. . . These two rivers bring down considerable amount of soil and sediments during
floods every year thus raising the soil of the land adjoining the private property of
the applicant [private respondents]. About four-fifth [sic] of the area applied for is
now dry land whereon are planted palapat trees thickly growing thereon. It is the
natural action of these two rivers that has caused the formation of said land . . . .
subject of this registration case. It has been formed, therefore, by accretion. And
having been formed by accretion, the said land may be considered the private
property of the riparian owner who is the applicant herein [private
respondents] . . . .
In view of the above, the opposition hereto filed by the government should be
withdrawn, except for the portion recommended by the land investigator in his
report dated May 2, 1960, to be excluded and considered foreshore. . . ."

Because of this report, no less than the Solicitor General representing the Bureau of
Lands withdrew his opposition dated March 25, 1960, and limited "the same to the
northern portion of the land applied for, compromising a strip 50 meters wide along
the Manila Bay, which should be declared public land as part of the foreshore" . . . .
8
Pursuant to the aforecited decision, the respondent appellate court ordered the
issuance of the corresponding decree of registration in the name of private
respondents and the reversion to private respondents of the possession of the
portion of the subject property included in Navarro's fishpond permit.
On December 20, 1978, petitioners filed a motion for reconsideration of the
aforecited decision. The Director of Forestry also moved for the reconsideration of
the same decision. Both motions were opposed by private respondents on January
27, 1979.
On November 21, 1980, respondent appellate court promulgated a resolution
denying the motion for reconsideration filed by the Director of Forestry. It, however,
modified its decision, to read, viz:
(3). Ordering private oppositors Heirs of Emiliano Navarro to vacate that portion
included in their fishpond permit covered by Plan Psu-175181 and hand over
possession of said portion to applicants-appellants, if the said portion is not within
the strip of land fifty (50) meters wide along Manila Bay on the northern portion of
the land subject of the registration proceedings and which area is more particularly
referred to as fifty (50) meters from corner 2 towards corner 1; and fifty (50) meters
from corner 5 towards corner 6 of Plan Psu-175181. . . . 9
On December 15, 1980, we granted the Solicitor General, acting as counsel for the
Director of Forestry, an extension of time within which to file in this court, a petition
for review of the decision dated November 29, 1978 of the respondent appellate
court and of the aforecited resolution dated November 21, 1980.
Thereafter, the Solicitor General, in behalf of the Director of Forestry, filed a petition
for review entitled, "The Director of Forestry vs. the Court of Appeals." 10 We,
however, denied the same in a minute resolution dated July 20, 1981, such petition
having been prematurely filed at a time when the Court of Appeals was yet to
resolve petitioners' pending motion to set aside the resolution dated November 21,
1980.
On October 9, 1981, respondent appellate court denied petitioners' motion for
reconsideration of the decision dated November 29, 1978.

On October 17, 1981, respondent appellate court made an entry of judgment

stating that the decision dated November 29, 1978 had become final and executory
as against herein petitioners as oppositors in L.R.C. Case No. N-84 and Civil Case
No. 2873 of the Court of First Instance (now the Regional Trial Court) of Balanga,
Bataan.
On October 26, 1981, a second motion for reconsideration of the decision dated
November 29, 1978 was filed by petitioners' new counsel.
On March 26, 1982, respondent appellate court issued a resolution granting
petitioners' request for leave to file a second motion for reconsideration.
On July 13, 1984, after hearing, respondent appellate court denied petitioners'
second motion for reconsideration on the ground that the same was filed out of
time, citing Rule 52, Section 1 of the Rules of Court which provides that a motion for
reconsideration shall be made ex-parte and filed within fifteen (15) days from the
notice of the final order or judgment.
Hence this petition where the respondent appellate court is imputed to have
palpably erred in appreciating the fact of the case and to have gravely misapplied
statutory and case law relating to accretion, specifically, Article 457 of the Civil
Code.
We find no merit in the petition.
The disputed property was brought forth by both the withdrawal of the waters of
Manila Bay and the accretion formed on the exposed foreshore land by the action of
the sea which brought soil and sand sediments in turn trapped by the palapat and
bakawan trees planted thereon by petitioner Sulpicio Pascual in 1948
Anchoring their claim of ownership on Article 457 of the Civil Code, petitioners
vigorously argue that the disputed 14-hectare land is an accretion caused by the
joint action of the Talisay and Bulacan Rivers which run their course on the eastern
and western boundaries, respectively, of petitioners' own tract of land.
Accretion as a mode of acquiring property under said Article 457, requires the
concurrence of the following requisites: (1) that the accumulation of soil or sediment
be gradual and imperceptible; (2) that it be the result of the action of the waters of
the river; and (3) that the land where the accretion takes place is adjacent to the
bank of the river. 11 Accretion is the process whereby the soil is deposited, while
alluvium is the soil deposited on the estate fronting the river bank 12; the owner of
such estate is called the riparian owner. Riparian owners are, strictly speaking,
distinct from littoral owners, the latter being owners of lands bordering the shore of
the sea or lake or other tidal waters. 13 The alluvium, by mandate of Article 457 of

the Civil Code, is automatically owned by the riparian owner from the moment the
soil deposit can be seen 14 but is not automatically registered property, hence,
subject to acquisition through prescription by third persons 15.
Petitioners' claim of ownership over the disputed property under the principle of
accretion, is misplaced.
First, the title of petitioners' own tract of land reveals its northeastern boundary to
be Manila Bay. Petitioners' land, therefore, used to adjoin, border or front the Manila
Bay and not any of the two rivers whose torrential action, petitioners insist, is to
account for the accretion on their land. In fact, one of the petitioners, Sulpicio
Pascual, testified in open court that the waves of Manila Bay used to hit the
disputed land being part of the bay's foreshore but, after he had planted palapat
and bakawan trees thereon in 1948, the land began to
rise. 16
Moreover, there is no dispute as to the location of: (a) the disputed land; (b)
petitioners' own tract of land; (c) the Manila Bay; and, (d) the Talisay and Bulacan
Rivers. Petitioners' own land lies between the Talisay and Bulacan Rivers; in front of
their land on the northern side lies now the disputed land where before 1948, there
lay the Manila Bay. If the accretion were to be attributed to the action of either or
both of the Talisay and Bulacan Rivers, the alluvium should have been deposited on
either or both of the eastern and western boundaries of petitioners' own tract of
land, not on the northern portion thereof which is adjacent to the Manila Bay. Clearly
lacking, thus, is the third requisite of accretion, which is, that the alluvium is
deposited on the portion of claimant's land which is adjacent to the river bank.
Second, there is no dispute as to the fact that petitioners' own tract of land adjoins
the Manila Bay. Manila Bay is obviously not a river, and jurisprudence is already
settled as to what kind of body of water the Manila Bay is. It is to be remembered
that we held that:
Appellant next contends that . . . . Manila Bay cannot be considered as a sea. We
find said contention untenable. A bay is part of the sea, being a mere indentatiom of
the same:
"Bay. An opening into the land where the water is shut in on all sides except at
the entrance; an inlet of the sea; an arm of the sea, distinct from a river, a bending
or curbing of the shore of the sea or of a lake. " 7 C.J. 1013-1014." 17
The disputed land, thus, is an accretion not on a river bank but on a sea bank, or on
what used to be the foreshore of Manila Bay which adjoined petitioners' own tract of
land on the northern side. As such, the applicable law is not Article 457 of to Civil
Code but Article 4 of the Spanish Law of Waters of 1866.

The process by which the disputed land was formed, is not difficult to discern from
the facts of the case. As the trial court correctly observed:
A perusal of the survey plan . . . . of the land subject matter of these cases shows
that on the eastern side, the property is bounded by Talisay River, on the western
side by Bulacan River, on the southern side by Lot 1436 and on the northern side by
Manila Bay. It is not correct to state that the Talisay and Bulacan Rivers meet a
certain portion because the two rivers both flow towards Manila Bay. The Talisay
River is straight while the Bulacan River is a little bit meandering and there is no
portion where the two rivers meet before they end up at Manila Bay. The land which
is adjacent to the property belonging to Pascual cannot be considered an accretion
[caused by the action of the two rivers].
Applicant Pascual . . . . has not presented proofs to convince the Court that the land
he has applied for registration is the result of the settling down on his registered
land of soil, earth or other deposits so as to be rightfully be considered as an
accretion [caused by the action of the two rivers]. Said Art. 457 finds no
applicability where the accretion must have been caused by action of the bay. 18
The conclusion formed by the trial court on the basis of the aforegoing observation
is that the disputed land is part of the foreshore of Manila Bay and therefore, part of
the public domain. The respondent appellate court, however, perceived the fact that
petitioners' own land lies between the Talisay and Bulacan Rivers, to be basis to
conclude that the disputed land must be an accretion formed by the action of the
two rivers because petitioners' own land acted as a barricade preventing the two
rivers to meet and that the current of the two rivers carried sediments of sand and
silt downwards to the Manila Bay which accumulated somehow to a 14-hectare land.
These conclusions, however, are fatally incongruous in the light of the one
undisputed critical fact: the accretion was deposited, not on either the eastern or
western portion of petitioners' land where a river each runs, but on the northern
portion of petitioners' land which adjoins the Manila Bay. Worse, such conclusions
are further eroded of their practical logic and consonance with natural experience in
the light of Sulpicio Pascual's admission as to having planted palapat and bakawan
trees on the northern boundary of their own land. In amplification of this, plainly
more reasonable and valid are Justice Mariano Serrano's observations in his
dissenting opinion when he stated that:
As appellants' (titled) land . . . . acts as a barricade that prevents the two rivers to
meet, and considering the wide expanse of the boundary between said land and the
Manila Bay, measuring some 593.00 meters . . . . it is believed rather farfetched for
the land in question to have been formed through "sediments of sand and salt [sic] .
. . . deposited at their [rivers'] mouths." Moreover, if "since the flow of the two rivers
is downwards to the Manila Bay the sediments of sand and silt are deposited at their

mouths," why then would the alleged cargo of sand, silt and clay accumulate at the
northern portion of appellants' titled land facing Manila Bay instead of merely at the
mouths and banks of these two rivers? That being the case, the accretion formed at
said portion of appellants' titled [land] was not caused by the current of the two
rivers but by the action of the sea (Manila Bay) into which the rivers empty.
The conclusion . . . . is not supported by any reference to the evidence which, on the
contrary, shows that the disputed land was formed by the action of the sea. Thus,
no less than Sulpicio Pascual, one of the heirs of the original applicant, testified on
cross-examination that the land in dispute was part of the shore and it was only in
1948 that he noticed that the land was beginning to get higher after he had planted
trees thereon in
1948. . . . .
. . . . it is established that before 1948 sea water from the Manila Bay at high tide
could reach as far as the dike of appellants' fishpond within their titled property,
which dike now separates this titled property from the land in question. Even in
1948 when appellants had already planted palapat and bakawan trees in the land
involved, inasmuch as these trees were yet small, the waves of the sea could still
reach the dike. This must be so because in . . . . the survey plan of the titled
property approved in 1918, said titled land was bounded on the north by Manila Bay.
So Manila Bay was adjacent to it on the north. It was only after the planting of the
aforesaid trees in 1948 that the land in question began to rise or to get higher in
elevation.
The trees planted by appellants in 1948 became a sort of strainer of the sea water
and at the same time a kind of block to the strained sediments from being carried
back to the sea by the very waves that brought them to the former shore at the end
of the dike, which must have caused the shoreline to recede and dry up eventually
raising the former shore leading to the formation of the land in question." 19
In other words, the combined and interactive effect of the planting of palapat and
bakawan trees, the withdrawal of the waters of Manila Bay eventually resulting in
the drying up of its former foreshore, and the regular torrential action of the waters
of Manila Bay, is the formation of the disputed land on the northern boundary of
petitioners' own tract of land.
The disputed property is an accretion on a sea bank, Manila Bay being an inlet or an
arm of the sea; as such, the disputed property is, under Article 4 of the Spanish Law
of Waters of 1866, part of the public domain
At the outset, there is a need to distinguish between Manila Bay and Laguna de Bay.
While we held in the case of Ignacio v. Director of Lands and

Valeriano 20 that Manila Bay is considered a sea for purposes of determining which
law on accretion is to be applied in multifarious situations, we have ruled differently
insofar as accretions on lands adjoining the Laguna de Bay are concerned.
In the cases of Government of the P.I v. Colegio de San Jose 21, Republic v. Court of
Appeals 22, Republic v. Alagad 23, and Meneses v. Court of
Appeals 24, we categorically ruled that Laguna de Bay is a lake the accretion on
which, by the mandate of Article 84 of the Spanish Law of Waters of 1866, belongs
to the owner of the land contiguous thereto.
The instant controversy, however, brings a situation calling for the application of
Article 4 of the Spanish Law of Waters of 1866, the disputed land being an accretion
on the foreshore of Manila Bay which is, for all legal purposes, considered a sea.
Article 4 of the Spanish Law of Waters of August 3, 1866 provides as follows:
Lands added to the shores by accretions and alluvial deposits caused by the action
of the sea, form part of the public domain. When they are no longer washed by the
waters of the sea and are not necessary for purposes of public utility, or for the
establishment of special industries, or for the coast-guard service, the Government
shall declare them to be the property of the owners of the estates adjacent thereto
and as increment thereof.
In the light of the aforecited vintage but still valid law, unequivocal is the public
nature of the disputed land in this controversy, the same being an accretion on a
sea bank which, for all legal purposes, the foreshore of Manila Bay is. As part of the
public domain, the herein disputed land is intended for public uses, and "so long as
the land in litigation belongs to the national domain and is reserved for public uses,
it is not capable of being appropriated by any private person, except through
express authorization granted in due form by a competent authority." 25 Only the
executive and possibly the legislative departments have the right and the power to
make the declaration that the lands so gained by action of the sea is no longer
necessary for purposes of public utility or for the cause of establishment of special
industries or for coast guard services. 26 Petitioners utterly fail to show that either
the executive or legislative department has already declared the disputed land as
qualified, under Article 4 of the Spanish Law of Waters of 1866, to be the property of
petitioners as owners of the estates adjacent thereto.
WHEREFORE, the instant Petition for Review is hereby DENIED and DISMISSED.
Costs against petitioners.
SO ORDERED.

4. Section 14 (4)
5. Land Acquisition by a Private Corporation
a. Section 3, Article XII, 1987 Constitution
b. Purpose of Prohibition
i.
G.R. No. 73002

December 29, 1986

THE DIRECTOR OF LANDS, petitioner,

vs.
INTERMEDIATE APPELLATE COURT and ACME PLYWOOD & VENEER CO. INC.,
ETC., respondents.
D. Nacion Law Office for private respondent.

NARVASA, J.:
The Director of Lands has brought this appeal by certiorari from a judgment of the
Intermediate Appellate Court affirming a decision of the Court of First Instance of
Isabela, which ordered registration in favor of Acme Plywood & Veneer Co., Inc. of
five parcels of land measuring 481, 390 square meters, more or less, acquired by it
from Mariano and Acer Infiel, members of the Dumagat tribe.
The registration proceedings were for confirmation of title under Section 48 of
Commonwealth Act No. 141 (The Public Land Act). as amended: and the appealed
judgment sums up the findings of the trial court in said proceedings in this wise:
1.
That Acme Plywood & Veneer Co. Inc., represented by Mr. Rodolfo Nazario is a
corporation duly organized in accordance with the laws of the Republic of the
Philippines and registered with the Securities and Exchange Commission on
December 23, 1959;
2.
That Acme Plywood & Veneer Co. Inc., represented by Mr. Rodolfo Nazario can
acquire real properties pursuant to the provisions of the Articles of Incorporation
particularly on the provision of its secondary purposes (paragraph (9), Exhibit 'M-l');
3.
That the land subject of the Land Registration proceeding was ancestrally
acquired by Acme Plywood & Veneer Co., Inc., on October 29, 1962, from Mariano
Infiel and Acer Infiel, both members of the Dumagat tribe and as such are cultural
minorities;

4.
That the constitution of the Republic of the Philippines of 1935 is applicable
as the sale took place on October 29, 1962;
5.
That the possession of the Infiels over the land relinquished or sold to Acme
Plywood & Veneer Co., Inc., dates back before the Philippines was discovered by
Magellan as the ancestors of the Infiels have possessed and occupied the land from
generation to generation until the same came into the possession of Mariano Infiel
and Acer Infiel;
6.
That the possession of the applicant Acme Plywood & Veneer Co., Inc., is
continuous, adverse and public from 1962 to the present and tacking the possession
of the Infiels who were granted from whom the applicant bought said land on
October 29, 1962, hence the possession is already considered from time
immemorial.
7.
That the land sought to be registered is a private land pursuant to the
provisions of Republic Act No. 3872 granting absolute ownership to members of the
non-Christian Tribes on land occupied by them or their ancestral lands, whether with
the alienable or disposable public land or within the public domain;
8.
That applicant Acme Plywood & Veneer Co. Inc., has introduced more than
Forty-Five Million (P45,000,000.00) Pesos worth of improvements, said
improvements were seen by the Court during its ocular investigation of the land
sought to be registered on September 18, 1982;
9.
That the ownership and possession of the land sought to be registered by the
applicant was duly recognized by the government when the Municipal Officials of
Maconacon, Isabela, have negotiated for the donation of the townsite from Acme
Plywood & Veneer Co., Inc., and this negotiation came to reality when the Board of
Directors of the Acme Plywood & Veneer Co., Inc., had donated a part of the land
bought by the Company from the Infiels for the townsite of Maconacon Isabela (Exh.
'N') on November 15, 1979, and which donation was accepted by the Municipal
Government of Maconacon, Isabela (Exh. 'N-l'), during their special session on
November 22, 1979.
The Director of Lands takes no issue with any of these findings except as to the
applicability of the 1935 Constitution to the matter at hand. Concerning this, he
asserts that, the registration proceedings have been commenced only on July 17,
1981, or long after the 1973 Constitution had gone into effect, the latter is the
correctly applicable law; and since section 11 of its Article XIV prohibits private
corporations or associations from holding alienable lands of the public domain,
except by lease not to exceed 1,000 hectares (a prohibition not found in the 1935
Constitution which was in force in 1962 when Acme purchased the lands in question
from the Infiels), it was reversible error to decree registration in favor of Acme

Section 48, paragraphs (b) and (c), of Commonwealth Act No. 141, as amended,
reads:
SEC. 48.
The following described citizens of the Philippines, occupying lands of
the public domain or claiming to own any such lands or an interest therein, but
whose titles have not been perfected or completed, may apply to the Court of First
Instance of the province where the land is located for confirmation of their claims,
and the issuance of a certificate of title therefor, under the Land Registration Act, to
wit:
xxx

xxx

xxx

(b)
Those who by themselves or through their predecessors-in-interest have been
in open, continuous, exclusive and notorious possession and occupation of
agricultural lands of the public domain, under a bona fide claim of acquisition or
ownership, for at least thirty years immediately preceding the filing of the
application for confirmation of title except when prevented by war or force majeure.
These shall be conclusively presumed to have performed all the conditions essential
to a Government grant and shall be entitled to a certificate of title under the
provisions of this chapter.
(c)
Members of the National Cultural minorities who by themselves or through
their predecessors-in-interest have been in open. continuous, exclusive and
notorious possession and occupation of lands of the public domain suitable to
agriculture, whether disposable or not, under a bona fide claim of ownership for at
least 30 years shall be entitled to the rights granted in subsection (b) hereof.
The Petition for Review does not dispute-indeed, in view of the quoted findings of
the trial court which were cited and affirmed by the Intermediate Appellate Court, it
can no longer controvert before this Court-the fact that Mariano and Acer Infiel,
from whom Acme purchased the lands in question on October 29, 1962, are
members of the national cultural minorities who had, by themselves and through
their progenitors, possessed and occupied those lands since time immemorial, or for
more than the required 30-year period and were, by reason thereof, entitled to
exercise the right granted in Section 48 of the Public Land Act to have their title
judicially confirmed. Nor is there any pretension that Acme, as the successor-ininterest of the Infiels, is disqualified to acquire and register ownership of said lands
under any provisions of the 1973 Constitution other than Section 11 of its Article XIV
already referred to.
Given the foregoing, the question before this Court is whether or not the title that
the Infiels had transferred to Acme in 1962 could be confirmed in favor of the latter
in proceedings instituted by it in 1981 when the 1973 Constitution was already in

effect, having in mind the prohibition therein against private corporations holding
lands of the public domain except in lease not exceeding 1,000 hectares.
The question turns upon a determination of the character of the lands at the time of
institution of the registration proceedings in 1981. If they were then still part of the
public domain, it must be answered in the negative. If, on the other hand, they were
then already private lands, the constitutional prohibition against their acquisition by
private corporations or associations obviously does not apply.
In this regard, attention has been invited to Manila Electric Company vs. CastroBartolome, et al, 1 where a similar set of facts prevailed. In that case, Manila
Electric Company, a domestic corporation more than 60% of the capital stock of
which is Filipino-owned, had purchased in 1947 two lots in Tanay, Rizal from the
Piguing spouses. The lots had been possessed by the vendors and, before them, by
their predecessor-in-interest, Olimpia Ramos, since prior to the outbreak of the
Pacific War in 1941. On December 1, 1976, Meralco applied to the Court of First
Instance of Rizal, Makati Branch, for confirmation of title to said lots. The court,
assuming that the lots were public land, dismissed the application on the ground
that Meralco, a juridical person, was not qualified to apply for registration under
Section 48(b) of the Public Land Act which allows only Filipino citizens or natural
persons to apply for judicial confirmation of imperfect titles to public land. Meralco
appealed, and a majority of this Court upheld the dismissal. It was held that:
..., the said land is still public land. It would cease to be public land only upon the
issuance of the certificate of title to any Filipino citizen claiming it under section
48(b). Because it is still public land and the Meralco, as a juridical person, is
disqualified to apply for its registration under section 48(b), Meralco's application
cannot be given due course or has to be dismissed.
Finally, it may be observed that the constitutional prohibition makes no distinction
between (on the one hand) alienable agricultural public lands as to which no
occupant has an imperfect title and (on the other hand) alienable lands of the public
domain as to which an occupant has on imperfect title subject to judicial
confirmation.
Since section 11 of Article XIV does not distinguish, we should not make any
distinction or qualification. The prohibition applies to alienable public lands as to
which a Torrens title may be secured under section 48(b). The proceeding under
section 48(b) 'presupposes that the land is public' (Mindanao vs. Director of Lands,
L-19535, July 30, 1967, 20 SCRA 641, 644).
The present Chief Justice entered a vigorous dissent, tracing the line of cases
beginning with Carino in 1909 2 thru Susi in 1925 3 down to Herico in 1980, 4 which
developed, affirmed and reaffirmed the doctrine that open, exclusive and

undisputed possession of alienable public land for the period prescribed by law
creates the legal fiction whereby the land, upon completion of the requisite period
ipso jure and without the need of judicial or other sanction, ceases to be public land
and becomes private property. That said dissent expressed what is the better
and, indeed, the correct, view-becomes evident from a consideration of some of the
principal rulings cited therein,
The main theme was given birth, so to speak, in Carino involving the
Decree/Regulations of June 25, 1880 for adjustment of royal lands wrongfully
occupied by private individuals in the Philippine Islands. It was ruled that:
It is true that the language of articles 4 and 5 5 attributes title to those 'who may
prove' possession for the necessary time and we do not overlook the argument that
this means may prove in registration proceedings. It may be that an English
conveyancer would have recommended an application under the foregoing decree,
but certainly it was not calculated to convey to the mind of an Igorot chief the
notion that ancient family possessions were in danger, if he had read every word of
it. The words 'may prove' (acrediten) as well or better, in view of the other
provisions, might be taken to mean when called upon to do so in any litigation.
There are indications that registration was expected from all but none sufficient to
show that, for want of it, ownership actually gained would be lost. The effect of the
proof, wherever made, was not to confer title, but simply to establish it, as already
conferred by the decree, if not by earlier law. ...
That ruling assumed a more doctrinal character because expressed in more
categorical language, in Susi:
.... In favor of Valentin Susi, there is, moreover, the presumption juris et de jure
established in paragraph (b) of section 45 of Act No. 2874, amending Act No. 926,
that all the necessary requirements for a grant by the Government were complied
with, for he has been in actual and physical possession, personally and through his
predecessors, of an agricultural land of the public domain openly, continuously,
exclusively and publicly since July 26, 1984, with a right to a certificate of title to
said land under the provisions of Chapter VIII of said Act. So that when Angela
Razon applied for the grant in her favor, Valentin Susi had already acquired, by
operation of law not only a right to a grant, but a grant of the Government, for it is
not necessary that a certificate of title should be issued in order that said grant may
be sanctioned by the courts, an application therefore is sufficient, under the
provisions of section 47 of Act No. 2874. If by a legal fiction, Valentin Susi had
acquired the land in question by a grant of the State, it had already ceased to be of
the public domain and had become private property, at least by presumption, of
Valentin Susi, beyond the control of the Director of Lands. Consequently, in selling
the land in question of Angela Razon, the Director of Lands disposed of a land over

which he had no longer any title or control, and the sale thus made was void and of
no effect, and Angela Razon did not thereby acquire any right. 6
Succeeding cases, of which only some need be mentioned, likeof Lacaste vs.
Director of Lands, 7 Mesina vs. Vda. de Sonza, 8 Manarpac vs. Cabanatuan, 9 Miguel
vs. Court of Appeals 10 and Herico vs. Dar, supra, by invoking and affirming the Susi
doctrine have firmly rooted it in jurisprudence.
Herico, in particular, appears to be squarely affirmative: 11
.... Secondly, under the provisions of Republic Act No. 1942, which the respondent
Court held to be inapplicable to the petitioner's case, with the latter's proven
occupation and cultivation for more than 30 years since 1914, by himself and by his
predecessors-in-interest, title over the land has vested on petitioner so as to
segregate the land from the mass of public land. Thereafter, it is no longer
disposable under the Public Land Act as by free patent. ....
xxx

xxx

xxx

As interpreted in several cases, when the conditions as specified in the foregoing

provision are complied with, the possessor is deemed to have acquired, by
operation of law, a right to a grant, a government grant, without the necessity of a
certificate of title being issued. The land, therefore, ceases to be of the public
domain and beyond the authority of the Director of Lands to dispose of. The
application for confirmation is mere formality, the lack of which does not affect the
legal sufficiency of the title as would be evidenced by the patent and the Torrens
title to be issued upon the strength of said patent. 12
Nothing can more clearly demonstrate the logical inevitability of considering
possession of public land which is of the character and duration prescribed by
statute as the equivalent of an express grant from the State than the dictum of the
statute itself 13 that the possessor(s) "... shall be conclusively presumed to have
performed all the conditions essential to a Government grant and shall be entitled
to a certificate of title .... " No proof being admissible to overcome a conclusive
presumption, confirmation proceedings would, in truth be little more than a
formality, at the most limited to ascertaining whether the possession claimed is of
the required character and length of time; and registration thereunder would not
confer title, but simply recognize a title already vested. The proceedings would not
originally convert the land from public to private land, but only confirm such a
conversion already affected by operation of law from the moment the required
period of possession became complete. As was so well put in Carino, "... (T)here are
indications that registration was expected from all, but none sufficient to show that,
for want of it, ownership actually gained would be lost. The effect of the proof,

wherever made, was not to confer title, but simply to establish it, as already
conferred by the decree, if not by earlier law."
If it is accepted-as it must be-that the land was already private land to which the
Infiels had a legally sufficient and transferable title on October 29, 1962 when Acme
acquired it from said owners, it must also be conceded that Acme had a perfect
right to make such acquisition, there being nothing in the 1935 Constitution then in
force (or, for that matter, in the 1973 Constitution which came into effect later)
prohibiting corporations from acquiring and owning private lands.
Even on the proposition that the land remained technically "public" land, despite
immemorial possession of the Infiels and their ancestors, until title in their favor was
actually confirmed in appropriate proceedings under the Public Land Act, there can
be no serious question of Acmes right to acquire the land at the time it did, there
also being nothing in the 1935 Constitution that might be construed to prohibit
corporations from purchasing or acquiring interests in public land to which the
vendor had already acquired that type of so-called "incomplete" or "imperfect" title.
The only limitation then extant was that corporations could not acquire, hold or
lease public agricultural lands in excess of 1,024 hectares. The purely accidental
circumstance that confirmation proceedings were brought under the aegis of the
1973 Constitution which forbids corporations from owning lands of the public
domain cannot defeat a right already vested before that law came into effect, or
invalidate transactions then perfectly valid and proper. This Court has already held,
in analogous circumstances, that the Constitution cannot impair vested rights.
We hold that the said constitutional prohibition 14 has no retroactive application to
the sales application of Binan Development Co., Inc. because it had already
acquired a vested right to the land applied for at the time the 1973 Constitution
took effect.
That vested right has to be respected. It could not be abrogated by the new
Constitution. Section 2, Article XIII of the 1935 Constitution allows private
corporations to purchase public agricultural lands not exceeding one thousand and
twenty-four hectares. Petitioner' prohibition action is barred by the doctrine of
vested rights in constitutional law.
xxx

xxx

xxx

The due process clause prohibits the annihilation of vested rights. 'A state may not
impair vested rights by legislative enactment, by the enactment or by the
subsequent repeal of a municipal ordinance, or by a change in the constitution of
the State, except in a legitimate exercise of the police power'(16 C.J.S. 1177-78).
xxx

xxx

xxx

In the instant case, it is incontestable that prior to the effectivity of the 1973
Constitution the right of the corporation to purchase the land in question had
become fixed and established and was no longer open to doubt or controversy.
Its compliance with the requirements of the Public Land Law for the issuance of a
patent had the effect of segregating the said land from the public domain. The
corporation's right to obtain a patent for the land is protected by law. It cannot be
deprived of that right without due process (Director of Lands vs. CA, 123 Phil.
919).<re||an1w> 15
The fact, therefore, that the confirmation proceedings were instituted by Acme in its
own name must be regarded as simply another accidental circumstance, productive
of a defect hardly more than procedural and in nowise affecting the substance and
merits of the right of ownership sought to be confirmed in said proceedings, there
being no doubt of Acme's entitlement to the land. As it is unquestionable that in the
light of the undisputed facts, the Infiels, under either the 1935 or the 1973
Constitution, could have had title in themselves confirmed and registered, only a
rigid subservience to the letter of the law would deny the same benefit to their
lawful successor-in-interest by valid conveyance which violates no constitutional
mandate.
The Court, in the light of the foregoing, is of the view, and so holds, that the
majority ruling in Meralco must be reconsidered and no longer deemed to be
binding precedent. The correct rule, as enunciated in the line of cases already
referred to, is that alienable public land held by a possessor, personally or through
his predecessors-in-interest, openly, continuously and exclusively for the prescribed
statutory period (30 years under The Public Land Act, as amended) is converted to
private property by the mere lapse or completion of said period, ipso jure. Following
that rule and on the basis of the undisputed facts, the land subject of this appeal
was already private property at the time it was acquired from the Infiels by Acme.
Acme thereby acquired a registrable title, there being at the time no prohibition
against said corporation's holding or owning private land. The objection that, as a
juridical person, Acme is not qualified to apply for judicial confirmation of title under
section 48(b) of the Public Land Act is technical, rather than substantial and, again,
finds its answer in the dissent in Meralco:
6.
To uphold respondent judge's denial of Meralco's application on the
technicality that the Public Land Act allows only citizens of the Philippines who are
natural persons to apply for confirmation of their title would be impractical and
would just give rise to multiplicity of court actions. Assuming that there was a
technical error not having filed the application for registration in the name of the
Piguing spouses as the original owners and vendors, still it is conceded that there is
no prohibition against their sale of the land to the applicant Meralco and neither is

there any prohibition against the application being refiled with retroactive effect in
the name of the original owners and vendors (as such natural persons) with the end
result of their application being granted, because of their indisputable acquisition of
ownership by operation of law and the conclusive presumption therein provided in
their favor. It should not be necessary to go through all the rituals at the great cost
of refiling of all such applications in their names and adding to the overcrowded
court dockets when the Court can after all these years dispose of it here and now.
(See Francisco vs. City of Davao)
The ends of justice would best be served, therefore, by considering the applications
for confirmation as amended to conform to the evidence, i.e. as filed in the names
of the original persons who as natural persons are duly qualified to apply for formal
confirmation of the title that they had acquired by conclusive presumption and
mandate of the Public Land Act and who thereafter duly sold to the herein
corporations (both admittedly Filipino corporations duly qualified to hold and own
private lands) and granting the applications for confirmation of title to the private
lands so acquired and sold or exchanged.
There is also nothing to prevent Acme from reconveying the lands to the Infiels and
the latter from themselves applying for confirmation of title and, after issuance of
the certificate/s of title in their names, deeding the lands back to Acme. But this
would be merely indulging in empty charades, whereas the same result is more
efficaciously and speedily obtained, with no prejudice to anyone, by a liberal
application of the rule on amendment to conform to the evidence suggested in the
dissent in Meralco.
While this opinion seemingly reverses an earlier ruling of comparatively recent
vintage, in a real sense, it breaks no precedent, but only reaffirms and reestablished, as it were, doctrines the soundness of which has passed the test of
searching examination and inquiry in many past cases. Indeed, it is worth noting
that the majority opinion, as well as the concurring opinions of Chief Justice
Fernando and Justice Abad Santos, in Meralco rested chiefly on the proposition that
the petitioner therein, a juridical person, was disqualified from applying for
confirmation of an imperfect title to public land under Section 48(b) of the Public
Land Act. Reference to the 1973 Constitution and its Article XIV, Section 11, was
only tangential limited to a brief paragraph in the main opinion, and may, in that
context, be considered as essentially obiter. Meralco, in short, decided no
constitutional question.
WHEREFORE, there being no reversible error in the appealed judgment of the
Intermediate Appellate Court, the same is hereby affirmed, without costs in this
instance.
SO ORDERED.

G.R. No. 180067

June 30, 2009

REPUBLIC OF THE PHILIPPINES, Petitioner,

vs.
IGLESIA NI CRISTO, Trustee and APPLICANT, with its Executive Minister
ERAO MANALO as Corporate Sole Respondent.
DECISION
VELASCO, JR., J.:
The Case
In this Petition for Review on Certiorari under Rule 45, the Republic of the Philippines
assails the October 11, 2007 Decision1 of the Court of Appeals (CA) in CA-G.R. CV
No. 85348, which affirmed the April 26, 2005 Decision2 of the Municipal Circuit Trial
Court (MCTC) in Paoay-Currimao, Ilocos Norte, in Land Registration Case No. 762-C
for Application for Registration of Title, entitled Iglesia Ni Cristo, Trustee and
Applicant with its Executive Minister Erao Manalo as Corporate Sole v. Republic of
the Philippines as oppositor.
The Facts
Subject of the instant controversy is Lot No. 3946 of the Currimao Cadastre,
particularly described as follows:
A parcel of land (Plan Swo-I-001047, L.R.C. Rec. No. ______) situated in the Barrio of
Baramban, Municipality of Currimao, Province of Ilocos Norte, Island of Luzon.
Bounded on the SE., along line 1-2 by the National Road (20.00 m. wide); on the SW.
& NW., along lines 2-3-4 by lot 3946, Cads-562-D, Currimao Cadastral Sketching,
Bernardo Badanguio; on the NE., along line 4-1 by lot 3947, portion, Cads-562-D;
(Pacita B. Lazaro) and lot 3948, Pacita B. Lazaro, Cads-562-D, Currimao Cadastral
Sketching x x x containing an area of FOUR THOUSAND TWO HUNDRED AND ONE
(4201) SQUARE METERS. x x x
On November 19, 1998, Iglesia Ni Cristo (INC), represented by Erao G. Manalo, as
corporate sole, filed its Application for Registration of Title before the MCTC in
Paoay-Currimao. Appended to the application were the sepia or tracing cloth of plan
Swo-1-001047, the technical description of subject lot,3 the Geodetic Engineers
Certificate,4 Tax Declaration No. (TD) 5080265 covering the subject lot, and the
September 7, 1970 Deed of Sale6 executed by Bernardo Bandaguio in favor of INC.

The Republic, through the Office of the Solicitor General (OSG), entered its
appearance and deputized the Provincial Prosecutor of Laoag City to appear on its
behalf. It also filed an Opposition to INCs application.
The Ruling of the Cadastral Court
After the required jurisdictional publication, notification, and posting, hearing
ensued where the INC presented three testimonial witnesses,7 the MCTC, acting as
cadastral court, rendered its Decision on April 26, 2005, granting INCs application.
The decretal portion reads:
Wherefore, the application for registration is hereby granted. Upon finality of this
decision, let an Order be issued directing the Land Registration Authority to register
and issue an Original Certificate of Title to the applicant Iglesia Ni Cristo, as
Corporation Sole, with official address at No. 1 Central Avenue, New Era, Diliman
Quezon City.
SO ORDERED.
The cadastral court held that based on documentary and testimonial evidence, the
essential requisites for judicial confirmation of an imperfect title over the subject lot
have been complied with.
It was established during trial that the subject lot formed part of a bigger lot owned
by one Dionisio Sabuco. On February 23, 1952, Sabuco sold a small portion of the
bigger lot to INC which built a chapel on the lot. Saturnino Sacayanan, who was born
in 1941 and became a member of INC in 1948, testified to the sale by Sabuco and
the erection of the small chapel by INC in 1952. Subsequently, Sabuco sold the
bigger lot to Bernardo Badanguio less the small portion where the INC chapel was
built.
Badanguio in 1954 then declared the entire bigger lot he purchased from Sabuco for
tax purposes and was issued TD 006114.8 In 1959, Badanguio also sold a small
portion of the bigger lot to INC for which a Deed of Absolute Sale9 was executed on
January 8, 1959. Jaime Alcantara, the property custodian of INC, testified to the
purchases constituting the subject lot and the issuance of TDs covering it as
declared by INC for tax purposes. Thus, these two purchases by INC of a small
portion of the bigger lot originally owned by Sabuco, who inherited it from his
parents and later sold it to Badanguio, constituted the subject lot.
On September 7, 1970, a Deed of Sale was executed by Badanguio in favor of INC
formally ceding and conveying to INC the subject lot which still formed part of the
TD of the bigger lot under his name. This was testified to by Teofilo Tulali who
became a tenant of the bigger lot in 1965 and continued to be its tenant under

Badanguio. Tulali testified further that the ownership and possession of Sabuco and
Badanguio of the bigger lot were never disturbed.
Subsequently, TD 648510 was issued in 1970 in the name of INC pursuant to the
September 7, 1970 Deed of Sale. This was subsequently replaced by TD No.
40605611 in 1974, TD 508026 in 1980, and TD 605153 in 1985.
For the processing of its application for judicial confirmation of title, subject Lot No.
3946 of the Currimao Cadastre was surveyed and consisted of 4,201 square meters.
With the presentation of the requisite sepia or tracing cloth of plan Swo-1-001047,
technical description of the subject lot, Geodetic Engineers Certificate, and Report
given by the City Environment and Natural Resources Office special investigator
showing that the subject lot is within alienable and disposable public zone, the
MCTC found and appreciated the continuous possession by INC of the subject lot for
over 40 years after its acquisition of the lot. Besides, it noted that Badanguio and
Sabuco, the predecessors-in-interest of INC, were never disturbed in their
possession of the portions they sold to INC constituting the subject lot.
Aggrieved, the Republic seasonably interposed its appeal before the CA, docketed
as CA-G.R. CV No. 85348.
The Ruling of the CA
On October 11, 2007, the appellate court rendered the assailed Decision affirming
the April 26, 2005 MCTC Decision. The fallo reads:
WHEREFORE, the foregoing considered, the instant appeal is hereby DENIED and
the assailed decision AFFIRMED in toto.
SO ORDERED.
In denying the Republics appeal, the CA found that the documentary and
testimonial evidence on record sufficiently established the continuous, open, and
peaceful possession and occupation of the subject lot in the concept of an owner by
INC of more than 40 years and by its predecessors-in-interest prior to the
conveyance of the lot to INC.
Hence, we have this petition.
The Issue
THE COURT OF APPEALS ERRED ON A QUESTION OF LAW IN AFFIRMING THE [MCTC]
DECISION GRANTING THE APPLICATION FOR LAND REGISTRATION DESPITE
EVIDENCE THAT THE LAND WAS DECLARED ALIENABLE AND DISPOSABLE LAND OF

THE PUBLIC DOMAIN ONLY ON MAY 16, 1993, OR FIVE (5) YEARS BEFORE THE FILING
OF THE APPLICATION FOR REGISTRATION ON NOVEMBER 19, 1998.12
The Courts Ruling
May a judicial confirmation of imperfect title prosper when the subject property has
been declared as alienable only after June 12, 1945? This is the sole issue to be
resolved.
The petition is bereft of merit. The sole issue raised is not novel.
The Republics Contention
The Republic contends that subject Lot No. 3946 was certified as alienable and
disposable land of the public domain only on May 16, 1993. Relying on Republic v.
Herbieto,13 it argues that prior to said date, the subject lot remained to be of the
public dominion or res publicae in nature incapable of private appropriation, and,
consequently, INC and its predecessors-in-interests possession and occupation
cannot confer ownership or possessory rights and "any period of possession prior to
the date when the lot was classified as alienable and disposable is inconsequential
and should be excluded in the computation of the period of possession."14
The Republic maintains further that since the application was filed only on
November 19, 1998 or a scant five years from the declaration of the subject lot to
be alienable and disposable land on May 16, 1993, INCs possession fell short of the
30-year period required under Section 48(b) of Commonwealth Act No. (CA) 141,
otherwise known as the Public Land Act.
The Argument of INC
Respondent INC counters that the Court has already clarified this issue in Republic v.
Court of Appeals (Naguit case), in which we held that what is merely required by
Sec. 14(1) of Presidential Decree No. (PD) 1529, otherwise known as the Property
Registration Decree, is that the "property sought to be registered [is] already
alienable and disposable at the time of the application for registration of title is
filed."15 Moreover, INC asserts that the Herbieto pronouncement quoted by the
Republic cannot be considered doctrinal in that it is merely an obiter dictum, stated
only after the case was dismissed for the applicants failure to comply with the
jurisdictional requirement of publication.
Necessity of declaration of public agricultural land as alienable and disposable
It is well-settled that no public land can be acquired by private persons without any
grant, express or implied, from the government, and it is indispensable that the

persons claiming title to a public land should show that their title was acquired from
the State or any other mode of acquisition recognized by law.16 In the instant case,
it is undisputed that the subject lot has already been declared alienable and
disposable by the government on May 16, 1993 or a little over five years before the
application for registration was filed by INC.
Conflicting rulings in Herbieto and Naguit
It must be noted that this Court had conflicting rulings in Naguit and Herbieto, relied
on by the parties contradictory positions.
Herbieto essentially ruled that reckoning of the possession of an applicant for
judicial confirmation of imperfect title is counted from the date when the lot was
classified as alienable and disposable, and possession before such date is
inconsequential and must be excluded in the computation of the period of
possession. This ruling is very stringent and restrictive, for there can be no
perfection of title when the declaration of public agricultural land as alienable and
disposable is made after June 12, 1945, since the reckoning of the period of
possession cannot comply with the mandatory period under Sec. 14(1) of PD 1529.
In Naguit, this Court held a less stringent requirement in the application of Sec.
14(1) of PD 1529 in that the reckoning for the period of possession is the actual
possession of the property and it is sufficient for the property sought to be
registered to be already alienable and disposable at the time of the application for
registration of title is filed.
A review of subsequent and recent rulings by this Court shows that the
pronouncement in Herbieto has been applied to Buenaventura v. Republic,17
Republic v. Diloy,18 Ponciano, Jr. v. Laguna Lake Development Authority,19 and
Preciosa v. Pascual.20 This Courts ruling in Naguit, on the other hand, has been
applied to Republic v. Bibonia.21
Core issue laid to rest in Heirs of Mario Malabanan v. Republic
In Heirs of Mario Malabanan v. Republic (Malabanan),22 the Court upheld Naguit and
abandoned the stringent ruling in Herbieto.
Sec. 14(1) of PD 1529 pertinently provides:
SEC. 14. Who may apply.The following persons may file in the proper Court of First
Instance [now Regional Trial Court] an application for registration of title to land,
whether personally or through their duly authorized representatives:

(1) Those who by themselves or through their predecessors-in-interest have been in

open, continuous, exclusive and notorious possession and occupation of alienable
and disposable lands of the public domain under a bona fide claim of ownership
since June 12, 1945, or earlier.
In declaring that the correct interpretation of Sec. 14(1) of PD 1529 is that which
was adopted in Naguit, the Court ruled that "the more reasonable interpretation of
Sec. 14(1) of PD 1529 is that it merely requires the property sought to be registered
as already alienable and disposable at the time the application for registration of
title is filed."
The Court in Malabanan traced the rights of a citizen to own alienable and
disposable lands of the public domain as granted under CA 141, otherwise known as
the Public Land Act, as amended by PD 1073, and PD 1529. The Court observed that
Sec. 48(b) of CA 141 and Sec. 14(1) of PD 1529 are virtually the same, with the
latter law specifically operationalizing the registration of lands of the public domain
and codifying the various laws relative to the registration of property. We cited
Naguit and ratiocinated:
Despite the clear text of Section 48(b) of the Public Land Act, as amended and
Section 14(a) of the Property Registration Decree, the OSG has adopted the position
that for one to acquire the right to seek registration of an alienable and disposable
land of the public domain, it is not enough that the applicant and his/her
predecessors-in-interest be in possession under a bona fide claim of ownership
since 12 June 1945; the alienable and disposable character of the property must
have been declared also as of 12 June 1945. Following the OSGs approach, all lands
certified as alienable and disposable after 12 June 1945 cannot be registered either
under Section 14(1) of the Property Registration Decree or Section 48(b) of the
Public Land Act as amended. The absurdity of such an implication was discussed in
Naguit.
Petitioner suggests an interpretation that the alienable and disposable character of
the land should have already been established since June 12, 1945 or earlier. This is
not borne out by the plain meaning of Section 14(1). "Since June 12, 1945," as used
in the provision, qualifies its antecedent phrase "under a bonafide claim of
ownership." Generally speaking, qualifying words restrict or modify only the words
or phrases to which they are immediately associated, and not those distantly or
remotely located. Ad proximum antecedents fiat relation nisi impediatur
sentencia.lavvphi1.net
Besides, we are mindful of the absurdity that would result if we adopt petitioners
position. Absent a legislative amendment, the rule would be, adopting the OSGs
view, that all lands of the public domain which were not declared alienable or
disposable before June 12, 1945 would not be susceptible to original registration, no

matter the length of unchallenged possession by the occupant. Such interpretation

renders paragraph (1) of Section 14 virtually inoperative and even precludes the
government from giving it effect even as it decides to reclassify public agricultural
lands as alienable and disposable. The unreasonableness of the situation would
even be aggravated considering that before June 12, 1945, the Philippines was not
yet even considered an independent state.
Accordingly, the Court in Naguit explained:
[T]he more reasonable interpretation of Section 14(1) is that it merely requires the
property sought to be registered as already alienable and disposable at the time the
application for registration of title is filed. If the State, at the time the application is
made, has not yet deemed it proper to release the property for alienation or
disposition, the presumption is that the government is still reserving the right to
utilize the property; hence, the need to preserve its ownership in the State
irrespective of the length of adverse possession even if in good faith. However, if
the property has already been classified as alienable and disposable, as it is in this
case, then there is already an intention on the part of the State to abdicate its
exclusive prerogative over the property.
The Court declares that the correct interpretation of Section 14(1) is that which was
adopted in Naguit. The contrary pronouncement in Herbieto, as pointed out in
Naguit, absurdly limits the application of the provision to the point of virtual inutility
since it would only cover lands actually declared alienable and disposable prior to
12 June 1945, even if the current possessor is able to establish open, continuous,
exclusive and notorious possession under a bona fide claim of ownership long
before that date.
Moreover, the Naguit interpretation allows more possessors under a bona fide claim
of ownership to avail of judicial confirmation of their imperfect titles than what
would be feasible under Herbieto. This balancing fact is significant, especially
considering our forthcoming discussion on the scope and reach of Section 14(2) of
the Property Registration Decree.
Petitioners make the salient observation that the contradictory passages from
Herbieto are obiter dicta since the land registration proceedings therein is void ab
initio in the first place due to lack of the requisite publication of the notice of initial
hearing. There is no need to explicitly overturn Herbieto, as it suffices that the
Courts acknowledgment that the particular line of argument used therein
concerning Section 14(1) is indeed obiter.
Naguit as affirmed in Malabanan more in accord with the States policy

Moreover, we wish to emphasize that our affirmation of Naguit in Malabananas

regards the correct interpretation of Sec. 14(1) of PD 1529 relative to the reckoning
of possession vis--vis the declaration of the property of the public domain as
alienable and disposableis indeed more in keeping with the spirit of the Public
Land Act, as amended, and of PD 1529. These statutes were enacted to conform to
the States policy of encouraging and promoting the distribution of alienable public
lands to spur economic growth and remain true to the ideal of social justice.23 The
statutes requirements, as couched and amended, are stringent enough to
safeguard against fraudulent applications for registration of title over alienable and
disposable public land. The application of the more stringent pronouncement in
Herbieto would indeed stifle and repress the States policy.
Finally, the Court in Malabanan aptly synthesized the doctrine that the period of
possession required under Sec. 14(1) of PD 1527 is not reckoned from the time of
the declaration of the property as alienable and disposable, thus:
We synthesize the doctrines laid down in this case, as follows:
(1) In connection with Section 14(1) of the Property Registration Decree, Section
48(b) of the Public Land Act recognizes and confirms that "those who by themselves
or through their predecessors in interest have been in open, continuous, exclusive,
and notorious possession and occupation of alienable and disposable lands of the
public domain, under a bona fide claim of acquisition of ownership, since June 12,
1945" have acquired ownership of, and registrable title to, such lands based on the
length and quality of their possession.
(a) Since Section 48(b) merely requires possession since 12 June 1945 and does not
require that the lands should have been alienable and disposable during the entire
period of possession, the possessor is entitled to secure judicial confirmation of his
title thereto as soon as it is declared alienable and disposable, subject to the
timeframe imposed by Section 47 of the Public Land Act.
(b) The right to register granted under Section 48(b) of the Public Land Act is further
confirmed by Section 14(1) of the Property Registration Decree.
INC entitled to registrable right over subject lot
With the resolution of the core issue, we find no error in the findings of the courts a
quo that INC had indeed sufficiently established its possession and occupation of
the subject lot in accordance with the Public Land Act and Sec. 14(1) of PD 1529,
and had duly proved its right to judicial confirmation of imperfect title over subject
lot.

As a rule, the findings of fact of the trial court when affirmed by the CA are final and
conclusive on, and cannot be reviewed on appeal by, this Court as long as they are
borne out by the record or are based on substantial evidence. The Court is not a
trier of facts, its jurisdiction being limited to reviewing only errors of law that may
have been committed by the lower courts.24 This is applicable to the instant case.
The possession of INC has been established not only from 1952 and 1959 when it
purchased the respective halves of the subject lot, but is also tacked on to the
possession of its predecessors-in-interest, Badanguio and Sabuco, the latter
possessing the subject lot way before June 12, 1945, as he inherited the bigger lot,
of which the subject lot is a portion, from his parents. These possessions and
occupationfrom Sabuco, including those of his parents, to INC; and from Sabuco to
Badanguio to INChad been in the concept of owners: open, continuous, exclusive,
and notorious possession and occupation under a bona fide claim of acquisition of
property. These had not been disturbed as attested to by respondents witnesses.
WHEREFORE, this petition is hereby DENIED. Accordingly, the October 11, 2007 CA
Decision in CA-G.R. CV No. 85348 is hereby AFFIRMED IN TOTO.
No costs.
SO ORDERED.

i.

b. Judicial Confirmation of imperfect or incomplete titles.

Section 48 (b) of the public Act, CA 141

ii.
G.R. No. L-24066

December 9, 1925

VALENTIN SUSI, plaintiff-appellee,

vs.
ANGELA RAZON and THE DIRECTOR OF LANDS, defendants. THE DIRECTOR
OF LANDS, appellant.
Acting Attorney-General Reyes for appellant.
Monico R. Mercado for appellee.

VILLA-REAL, J.:
This action was commenced in the Court of First Instance of Pampanga by a
complaint filed by Valentin Susi against Angela Razon and the Director of Lands,
praying for judgment: (a) Declaring plaintiff the sole and absolute owner of the

parcel of land described in the second paragraph of the complaint; (b) annulling the
sale made by the Director of Lands in favor of Angela Razon, on the ground that the
land is a private property; (c) ordering the cancellation of the certificate of title
issued to said Angela Razon; and (d) sentencing the latter to pay plaintiff the sum of
P500 as damages, with the costs.
For his answer to the complaint, the Director of Lands denied each and every
allegation contained therein and, as special defense, alleged that the land in
question was a property of the Government of the United States under the
administration and control of the Philippine Islands before its sale to Angela Razon,
which was made in accordance with law.
After trial, whereat evidence was introduced by both parties, the Court of First
Instance of Pampanga rendered judgment declaring the plaintiff entitled to the
possession of the land, annulling the sale made by the Director of Lands in favor of
Angela Razon, and ordering the cancellation of the certificate of title issued to her,
with the costs against Angela Razon. From this judgment the Director of Lands took
this appeal, assigning thereto the following errors, to wit: (1) The holding that the
judgment rendered in a prior case between the plaintiff and defendant Angela
Razon on the parcel of land in question is controlling in this action; (2) the holding
that plaintiff is entitled to recover the possession of said parcel of land; the
annulment of the sale made by the Director of Lands to Angela Razon; and the
ordering that the certificate of title issued by the register of deeds of the Province of
Pampanga to Angela Razon by virtue of said sale be cancelled; and (3) the denial of
the motion for new trial filed by the Director of Lands.
The evidence shows that on December 18, 1880, Nemesio Pinlac sold the land in
question, then a fish pond, tho Apolonio Garcia and Basilio Mendoza for the sum of
P12, reserving the right to repurchase the same (Exhibit B). After having been in
possession thereof for about eight years, and the fish pond having been destroyed,
Apolonio Garcia and Basilio Mendoza, on September 5, 1899, sold it to Valentin Susi
for the sum of P12, reserving the right to repurchase it (Exhibit A). Before the
execution of the deed of sale, Valentin Susi had already paid its price and sown
"bacawan" on said land, availing himself of the firewood gathered thereon, with the
proceeds of the sale of which he had paid the price of the property. The possession
and occupation of the land in question, first, by Apolonio Garcia and Basilio
Mendoza, and then by Valentin Susi has been open, continuous, adverse and public,
without any interruption, except during the revolution, or disturbance, except when
Angela Razon, on September 13, 1913, commenced an action in the Court of First
Instance of Pampanga to recover the possession of said land (Exhibit C), wherein
after considering the evidence introduced at the trial, the court rendered judgment
in favor of Valentin Susi and against Angela Razon, dismissing the complaint (Exhibit
E). Having failed in her attempt to obtain possession of the land in question through
the court, Angela Razon applied to the Director of Lands for the purchase thereof on

August 15, 1914 (Exhibit C). Having learned of said application, Valentin Susi filed
and opposition thereto on December 6, 1915, asserting his possession of the land
for twenty-five years (Exhibit P). After making the proper administrative
investigation, the Director of Lands overruled the opposition of Valentin Susi and
sold the land to Angela Razon. By virtue of said grant the register of deeds of
Pampanga, on August 31, 1921, issued the proper certificate of title to Angela
Razon. Armed with said document, Angela Razon required Valentin Susi to vacate
the land in question, and as he refused to do so, she brought and action for forcible
entry and detainer in the justice of the peace court of Guagua, Pampanga, which
was dismissed for lack of jurisdiction, the case being one of title to real property
(Exhibit F and M). Valentin Susi then brought this action.
With these facts in view, we shall proceed to consider the questions raised by the
appellant in his assignments of error.lawphi1.net
It clearly appears from the evidence that Valentin Susi has been in possession of the
land in question openly, continuously, adversely, and publicly, personally and
through his predecessors, since the year 1880, that is, for about forty-five years.
While the judgment of the Court of First Instance of Pampanga against Angela Razon
in the forcible entry case does not affect the Director of Lands, yet it is controlling
as to Angela Razon and rebuts her claim that she had been in possession thereof.
When on August 15, 1914, Angela Razon applied for the purchase of said land,
Valentin Susi had already been in possession thereof personally and through his
predecessors for thirty-four years. And if it is taken into account that Nemesio Pinlac
had already made said land a fish pond when he sold it on December 18, 1880, it
can hardly be estimated when he began to possess and occupy it, the period of time
being so long that it is beyond the reach of memory. These being the facts, the
doctrine laid down by the Supreme Court of the United States in the case of Cario
vs. Government of the Philippine Islands (212 U. S., 449 1), is applicable here. In
favor of Valentin Susi, there is, moreover, the presumption juris et de jure
established in paragraph (b) of section 45 of Act No. 2874, amending Act No. 926,
that all the necessary requirements for a grant by the Government were complied
with, for he has been in actual and physical possession, personally and through his
predecessors, of an agricultural land of the public domain openly, continuously,
exclusively and publicly since July 26, 1894, with a right to a certificate of title to
said land under the provisions of Chapter VIII of said Act. So that when Angela
Razon applied for the grant in her favor, Valentin Susi had already acquired, by
operation of law, not only a right to a grant, but a grant of the Government, for it is
not necessary that certificate of title should be issued in order that said grant may
be sanctioned by the courts, an application therefore is sufficient, under the
provisions of section 47 of Act No. 2874. If by a legal fiction, Valentin Susi had
acquired the land in question by a grant of the State, it had already ceased to be
the public domain and had become private property, at least by presumption, of
Valentin Susi, beyond the control of the Director of Lands. Consequently, in selling

the land in question to Angela Razon, the Director of Lands disposed of a land over
which he had no longer any title or control, and the sale thus made was void and of
no effect, and Angela Razon did not thereby acquire any right.
The Director of Lands contends that the land in question being of the public domain,
the plaintiff-appellee cannot maintain an action to recover possession
thereof.lawphi1.net
If, as above stated, the land, the possession of which is in dispute, had already
become, by operation of law, private property of the plaintiff, there lacking only the
judicial sanction of his title, Valentin Susi has the right to bring an action to recover
possession thereof and hold it.
For the foregoing, and no error having been found in the judgment appealed from,
the same is hereby affirmed in all its parts, without special pronouncement as to
costs. So ordered.
iii.
G.R. No. 144057

January 17, 2005

REPUBLIC OF THE PHILIPPINES, petitioner,

vs.
THE HONORABLE COURT OF APPEALS and CORAZON NAGUIT, respondents.
DECISION
TINGA, J.:
This is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil
Procedure, seeking to review the Decision1 of the Sixth Division of the Court of
Appeals dated July 12, 2000 in CA-G.R. SP No. 51921. The appellate court affirmed
the decisions of both the Regional Trial Court (RTC),2 Branch 8, of Kalibo, Aklan
dated February 26, 1999, and the 7th Municipal Circuit Trial Court (MCTC)3 of IbajayNabas, Aklan dated February 18, 1998, which granted the application for
registration of a parcel of land of Corazon Naguit (Naguit), the respondent herein.
The facts are as follows:
On January 5, 1993, Naguit, a Filipino citizen, of legal age and married to Manolito S.
Naguit, filed with the MCTC of Ibajay-Nabas, Aklan, a petition for registration of title
of a parcel of land situated in Brgy. Union, Nabas, Aklan. The parcel of land is
designated as Lot No. 10049, Cad. 758-D, Nabas Cadastre, AP 060414-014779,
and contains an area of 31,374 square meters. The application seeks judicial
confirmation of respondents imperfect title over the aforesaid land.

On February 20, 1995, the court held initial hearing on the application. The public
prosecutor, appearing for the government, and Jose Angeles, representing the heirs
of Rustico Angeles, opposed the petition. On a later date, however, the heirs of
Rustico Angeles filed a formal opposition to the petition. Also on February 20, 1995,
the court issued an order of general default against the whole world except as to
the heirs of Rustico Angeles and the government.
The evidence on record reveals that the subject parcel of land was originally
declared for taxation purposes in the name of Ramon Urbano (Urbano) in 1945
under Tax Declaration No. 3888 until 1991.4 On July 9, 1992, Urbano executed a
Deed of Quitclaim in favor of the heirs of Honorato Maming (Maming), wherein he
renounced all his rights to the subject property and confirmed the sale made by his
father to Maming sometime in 1955 or 1956.5 Subsequently, the heirs of Maming
executed a deed of absolute sale in favor of respondent Naguit who thereupon
started occupying the same. She constituted Manuel Blanco, Jr. as her attorney-infact and administrator. The administrator introduced improvements, planted trees,
such as mahogany, coconut and gemelina trees in addition to existing coconut trees
which were then 50 to 60 years old, and paid the corresponding taxes due on the
subject land. At present, there are parcels of land surrounding the subject land
which have been issued titles by virtue of judicial decrees. Naguit and her
predecessors-in-interest have occupied the land openly and in the concept of owner
without any objection from any private person or even the government until she
filed her application for registration.
After the presentation of evidence for Naguit, the public prosecutor manifested that
the government did not intend to present any evidence while oppositor Jose
Angeles, as representative of the heirs of Rustico Angeles, failed to appear during
the trial despite notice. On September 27, 1997, the MCTC rendered a decision
ordering that the subject parcel be brought under the operation of the Property
Registration Decree or Presidential Decree (P.D.) No. 1529 and that the title thereto
registered and confirmed in the name of Naguit.6
The Republic of the Philippines (Republic), thru the Office of the Solicitor General
(OSG), filed a motion for reconsideration. The OSG stressed that the land applied for
was declared alienable and disposable only on October 15, 1980, per the
certification from Regional Executive Director Raoul T. Geollegue of the Department
of Environment and Natural Resources, Region VI.7 However, the court denied the
motion for reconsideration in an order dated February 18, 1998.81awphi1.nt
Thereafter, the Republic appealed the decision and the order of the MCTC to the
RTC, Kalibo, Aklan, Branch 8. On February 26, 1999, the RTC rendered its decision,
dismissing the appeal.9

Undaunted, the Republic elevated the case to the Court of Appeals via Rule 42 of
the 1997 Rules of Civil Procedure. On July 12, 2000, the appellate court rendered a
decision dismissing the petition filed by the Republic and affirmed in toto the
assailed decision of the RTC.
Hence, the present petition for review raising a pure question of law was filed by the
Republic on September 4, 2000.10
The OSG assails the decision of the Court of Appeals contending that the appellate
court gravely erred in holding that there is no need for the governments prior
release of the subject lot from the public domain before it can be considered
alienable or disposable within the meaning of P.D. No. 1529, and that Naguit had
been in possession of Lot No. 10049 in the concept of owner for the required
period.11
Hence, the central question for resolution is whether is necessary under Section
14(1) of the Property Registration Decree that the subject land be first classified as
alienable and disposable before the applicants possession under a bona fide claim
of ownership could even start.
The OSG invokes our holding in Director of Lands v. Intermediate Appellate Court12
in arguing that the property which is in open, continuous and exclusive possession
must first be alienable. Since the subject land was declared alienable only on
October 15, 1980, Naguit could not have maintained a bona fide claim of ownership
since June 12, 1945, as required by Section 14 of the Property Registration Decree,
since prior to 1980, the land was not alienable or disposable, the OSG argues.
Section 14 of the Property Registration Decree, governing original registration
proceedings, bears close examination. It expressly provides:
SECTION 14. Who may apply. The following persons may file in the proper Court of
First Instance an application for registration of title to land, whether personally or
through their duly authorized representatives:
(1) those who by themselves or through their predecessors-in-interest have been in
open, continuous, exclusive and notorious possession and occupation of alienable
and disposable lands of the public domain under a bona fide claim of ownership
since June 12, 1945, or earlier.
(2) Those who have acquired ownership over private lands by prescription under the
provisions of existing laws.
....

There are three obvious requisites for the filing of an application for registration of
title under Section 14(1) that the property in question is alienable and disposable
land of the public domain; that the applicants by themselves or through their
predecessors-in-interest have been in open, continuous, exclusive and notorious
possession and occupation, and; that such possession is under a bona fide claim of
ownership since June 12, 1945 or earlier.
Petitioner suggests an interpretation that the alienable and disposable character of
the land should have already been established since June 12, 1945 or earlier. This is
not borne out by the plain meaning of Section 14(1). "Since June 12, 1945," as used
in the provision, qualifies its antecedent phrase "under a bonafide claim of
ownership." Generally speaking, qualifying words restrict or modify only the words
or phrases to which they are immediately associated, and not those distantly or
remotely located.13 Ad proximum antecedents fiat relation nisi impediatur
sentencia.
Besides, we are mindful of the absurdity that would result if we adopt petitioners
position. Absent a legislative amendment, the rule would be, adopting the OSGs
view, that all lands of the public domain which were not declared alienable or
disposable before June 12, 1945 would not be susceptible to original registration, no
matter the length of unchallenged possession by the occupant. Such interpretation
renders paragraph (1) of Section 14 virtually inoperative and even precludes the
government from giving it effect even as it decides to reclassify public agricultural
lands as alienable and disposable. The unreasonableness of the situation would
even be aggravated considering that before June 12, 1945, the Philippines was not
yet even considered an independent state.
Instead, the more reasonable interpretation of Section 14(1) is that it merely
requires the property sought to be registered as already alienable and disposable at
the time the application for registration of title is filed. If the State, at the time the
application is made, has not yet deemed it proper to release the property for
alienation or disposition, the presumption is that the government is still reserving
the right to utilize the property; hence, the need to preserve its ownership in the
State irrespective of the length of adverse possession even if in good faith.
However, if the property has already been classified as alienable and disposable, as
it is in this case, then there is already an intention on the part of the State to
abdicate its exclusive prerogative over the property.
This reading aligns conformably with our holding in Republic v. Court of Appeals .14
Therein, the Court noted that "to prove that the land subject of an application for
registration is alienable, an applicant must establish the existence of a positive act
of the government such as a presidential proclamation or an executive order; an
administrative action; investigation reports of Bureau of Lands investigators; and a
legislative act or a statute."15 In that case, the subject land had been certified by

the DENR as alienable and disposable in 1980, thus the Court concluded that the
alienable status of the land, compounded by the established fact that therein
respondents had occupied the land even before 1927, sufficed to allow the
application for registration of the said property. In the case at bar, even the
petitioner admits that the subject property was released and certified as within
alienable and disposable zone in 1980 by the DENR.16
This case is distinguishable from Bracewell v. Court of Appeals,17 wherein the Court
noted that while the claimant had been in possession since 1908, it was only in
1972 that the lands in question were classified as alienable and disposable. Thus,
the bid at registration therein did not succeed. In Bracewell, the claimant had filed
his application in 1963, or nine (9) years before the property was declared alienable
and disposable.1awphi1.nt Thus, in this case, where the application was made
years after the property had been certified as alienable and disposable, the
Bracewell ruling does not apply.
A different rule obtains for forest lands,18 such as those which form part of a
reservation for provincial park purposes19 the possession of which cannot ripen into
ownership.20 It is elementary in the law governing natural resources that forest
land cannot be owned by private persons. As held in Palomo v. Court of Appeals,21
forest land is not registrable and possession thereof, no matter how lengthy, cannot
convert it into private property, unless such lands are reclassified and considered
disposable and alienable.22 In the case at bar, the property in question was
undisputedly classified as disposable and alienable; hence, the ruling in Palomo is
inapplicable, as correctly held by the Court of Appeals.23
It must be noted that the present case was decided by the lower courts on the basis
of Section 14(1) of the Property Registration Decree, which pertains to original
registration through ordinary registration proceedings. The right to file the
application for registration derives from a bona fide claim of ownership going back
to June 12, 1945 or earlier, by reason of the claimants open, continuous, exclusive
and notorious possession of alienable and disposable lands of the public domain.
A similar right is given under Section 48(b) of the Public Land Act, which reads:
Sec. 48. The following described citizens of the Philippines, occupying lands of the
public domain or claiming to own any such land or an interest therein, but those
titles have not been perfected or completed, may apply to the Court of First
Instance of the province where the land is located for confirmation of their claims
and the issuance of a certificate of title therefor, under the Land Registration Act, to
wit:
xxx xxx xxx

(b) Those who by themselves or through their predecessors in interest have been in
open, continuous, exclusive, and notorious possession and occupation of
agricultural lands of the public domain, under a bona fide claim of acquisition of
ownership, for at least thirty years immediately preceding the filing of the
application for confirmation of title except when prevented by war or force majeure.
These shall be conclusively presumed to have performed all the conditions essential
to a Government grant and shall be entitled to a certificate of title under the
provisions of this chapter.
When the Public Land Act was first promulgated in 1936, the period of possession
deemed necessary to vest the right to register their title to agricultural lands of the
public domain commenced from July 26, 1894. However, this period was amended
by R.A. No. 1942, which provided that the bona fide claim of ownership must have
been for at least thirty (30) years. Then in 1977, Section 48(b) of the Public Land Act
was again amended, this time by P.D. No. 1073, which pegged the reckoning date at
June 12, 1945. This new starting point is concordant with Section 14(1) of the
Property Registration Decree.
Indeed, there are no material differences between Section 14(1) of the Property
Registration Decree and Section 48(b) of the Public Land Act, as amended. True, the
Public Land Act does refer to "agricultural lands of the public domain," while the
Property Registration Decree uses the term "alienable and disposable lands of the
public domain." It must be noted though that the Constitution declares that
"alienable lands of the public domain shall be limited to agricultural lands."24
Clearly, the subject lands under Section 48(b) of the Public Land Act and Section
14(1) of the Property Registration Decree are of the same type.
Did the enactment of the Property Registration Decree and the amendatory P.D. No.
1073 preclude the application for registration of alienable lands of the public
domain, possession over which commenced only after June 12, 1945? It did not,
considering Section 14(2) of the Property Registration Decree, which governs and
authorizes the application of "those who have acquired ownership of private lands
by prescription under the provisions of existing laws."
Prescription is one of the modes of acquiring ownership under the Civil Code.25
There is a consistent jurisprudential rule that properties classified as alienable
public land may be converted into private property by reason of open, continuous
and exclusive possession of at least thirty (30) years.26 With such conversion, such
property may now fall within the contemplation of "private lands" under Section
14(2), and thus susceptible to registration by those who have acquired ownership
through prescription. Thus, even if possession of the alienable public land
commenced on a date later than June 12, 1945, and such possession being been
open, continuous and exclusive, then the possessor may have the right to register
the land by virtue of Section 14(2) of the Property Registration Decree.

The land in question was found to be cocal in nature, it having been planted with
coconut trees now over fifty years old.27 The inherent nature of the land but
confirms its certification in 1980 as alienable, hence agricultural. There is no
impediment to the application of Section 14(1) of the Property Registration Decree,
as correctly accomplished by the lower courts.l^vvphi1.net
The OSG posits that the Court of Appeals erred in holding that Naguit had been in
possession in the concept of owner for the required period. The argument begs the
question. It is again hinged on the assertionshown earlier to be unfoundedthat
there could have been no bona fide claim of ownership prior to 1980, when the
subject land was declared alienable or disposable.
We find no reason to disturb the conclusion of both the RTC and the Court of
Appeals that Naguit had the right to apply for registration owing to the continuous
possession by her and her predecessors-in-interest of the land since 1945. The basis
of such conclusion is primarily factual, and the Court generally respects the factual
findings made by lower courts. Notably, possession since 1945 was established
through proof of the existence of 50 to 60-year old trees at the time Naguit
purchased the property as well as tax declarations executed by Urbano in 1945.
Although tax declarations and realty tax payment of property are not conclusive
evidence of ownership, nevertheless, they are good indicia of the possession in the
concept of owner for no one in his right mind would be paying taxes for a property
that is not in his actual or at least constructive possession. They constitute at least
proof that the holder has a claim of title over the property. The voluntary declaration
of a piece of property for taxation purposes manifests not only ones sincere and
honest desire to obtain title to the property and announces his adverse claim
against the State and all other interested parties, but also the intention to
contribute needed revenues to the Government. Such an act strengthens ones
bona fide claim of acquisition of ownership.28
Considering that the possession of the subject parcel of land by the respondent can
be traced back to that of her predecessors-in-interest which commenced since 1945
or for almost fifty (50) years, it is indeed beyond any cloud of doubt that she has
acquired title thereto which may be properly brought under the operation of the
Torrens system. That she has been in possession of the land in the concept of an
owner, open, continuous, peaceful and without any opposition from any private
person and the government itself makes her right thereto undoubtedly settled and
deserving of protection under the law.
WHEREFORE, foregoing premises considered, the assailed Decision of the Court of
Appeals dated July 12, 2000 is hereby AFFIRMED. No costs.
SO ORDERED.

[G.R. No. 156117. May 26, 2005]

REPUBLIC OF THE PHILIPPINES, petitioner, vs. JEREMIAS AND DAVID
HERBIETO, respondents.
DECISION
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari, under Rule 45 of the 1997
Rules of Civil Procedure, seeking the reversal of the Decision of the Court of Appeals
in CA-G.R. CV No. 67625, dated 22 November 2002,[1] which affirmed the Judgment
of the Municipal Trial Court (MTC) of Consolacion, Cebu, dated 21 December 1999,
[2] granting the application for land registration of the respondents.
Respondents in the present Petition are the Herbieto brothers, Jeremias and David,
who filed with the MTC, on 23 September 1998, a single application for registration
of two parcels of land, Lots No. 8422 and 8423, located in Cabangahan,
Consolacion, Cebu (Subject Lots). They claimed to be owners in fee simple of the
Subject Lots, which they purchased from their parents, spouses Gregorio Herbieto
and Isabel Owatan, on 25 June 1976.[3] Together with their application for
registration, respondents submitted the following set of documents:
(a)
Advance Survey Plan of Lot No. 8422, in the name of respondent Jeremias;
and Advance Survey Plan of Lot No. 8423, in the name of respondent David;[4]
(b)

The technical descriptions of the Subject Lots;[5]

(c)
Certifications by the Department of Environment and Natural Resources
(DENR) dispensing with the need for Surveyors Certificates for the Subject Lots;[6]
(d)
Certifications by the Register of Deeds of Cebu City on the absence of
certificates of title covering the Subject Lots;[7]
(e)
Certifications by the Community Environment and Natural Resources Office
(CENRO) of the DENR on its finding that the Subject Lots are alienable and
disposable, by virtue of Forestry Administrative Order No. 4-1063, dated 25 June
1963;[8]
(f)
Certified True Copies of Assessment of Real Property (ARP) No.
941800301831, in the name of Jeremias, covering Lot No. 8422, issued in 1994; and
ARP No. 941800301833, in the name of David, covering Lot No. 8423, also issued in
1994;[9] and

(g)
Deed of Definite Sale executed on 25 June 1976 by spouses Gregorio Herbieto
and Isabel Owatan selling the Subject Lots and the improvements thereon to their
sons and respondents herein, Jeremias and David, for P1,000. Lot No. 8422 was
sold to Jeremias, while Lot No. 8423 was sold to David.[10]
On 11 December 1998, the petitioner Republic of the Philippines (Republic) filed an
Opposition to the respondents application for registration of the Subject Lots
arguing that: (1) Respondents failed to comply with the period of adverse
possession of the Subject Lots required by law; (2) Respondents muniments of title
were not genuine and did not constitute competent and sufficient evidence of bona
fide acquisition of the Subject Lots; and (3) The Subject Lots were part of the public
domain belonging to the Republic and were not subject to private appropriation.[11]
The MTC set the initial hearing on 03 September 1999 at 8:30 a.m.[12] All owners of
the land adjoining the Subject Lots were sent copies of the Notice of Initial Hearing.
[13] A copy of the Notice was also posted on 27 July 1999 in a conspicuous place on
the Subject Lots, as well as on the bulletin board of the municipal building of
Consolacion, Cebu, where the Subject Lots were located.[14] Finally, the Notice was
also published in the Official Gazette on 02 August 1999[15] and The Freeman
Banat News on 19 December 1999.[16]
During the initial hearing on 03 September 1999, the MTC issued an Order of
Special Default,[17] with only petitioner Republic opposing the application for
registration of the Subject Lots. The respondents, through their counsel, proceeded
to offer and mark documentary evidence to prove jurisdictional facts. The MTC
commissioned the Clerk of Court to receive further evidence from the respondents
and to submit a Report to the MTC after 30 days.
On 21 December 1999, the MTC promulgated its Judgment ordering the registration
and confirmation of the title of respondent Jeremias over Lot No. 8422 and of
respondent David over Lot No. 8423. It subsequently issued an Order on 02
February 2000 declaring its Judgment, dated 21 December 1999, final and
executory, and directing the Administrator of the Land Registration Authority (LRA)
to issue a decree of registration for the Subject Lots.[18]
Petitioner Republic appealed the MTC Judgment, dated 21 December 1999, to the
Court of Appeals.[19] The Court of Appeals, in its Decision, dated 22 November
2002, affirmed the appealed MTC Judgment reasoning thus:
In the case at bar, there can be no question that the land sought to be registered
has been classified as within the alienable and disposable zone since June 25, 1963.
Article 1113 in relation to Article 1137 of the Civil Code, respectively provides that
All things which are within the commerce of men are susceptible of prescription,
unless otherwise provided. Property of the State or any of its subdivisions of

patrimonial character shall not be the object of prescription and that Ownership
and other real rights over immovables also prescribe through uninterrupted adverse
possession thereof for thirty years, without need of title or of good faith.
As testified to by the appellees in the case at bench, their parents already acquired
the subject parcels of lands, subject matter of this application, since 1950 and that
they cultivated the same and planted it with jackfruits, bamboos, coconuts, and
other trees (Judgment dated December 21, 1999, p. 6). In short, it is undisputed
that herein appellees or their predecessors-in-interest had occupied and possessed
the subject land openly, continuously, exclusively, and adversely since 1950.
Consequently, even assuming arguendo that appellees possession can be reckoned
only from June 25, 1963 or from the time the subject lots had been classified as
within the alienable and disposable zone, still the argument of the appellant does
not hold water.
As earlier stressed, the subject property, being alienable since 1963 as shown by
CENRO Report dated June 23, 1963, may now be the object of prescription, thus
susceptible of private ownership. By express provision of Article 1137, appellees
are, with much greater right, entitled to apply for its registration, as provided by
Section 14(4) of P.D. 1529 which allows individuals to own land in any manner
provided by law. Again, even considering that possession of appelless should only
be reckoned from 1963, the year when CENRO declared the subject lands alienable,
herein appellees have been possessing the subject parcels of land in open,
continuous, and in the concept of an owner, for 35 years already when they filed the
instant application for registration of title to the land in 1998. As such, this court
finds no reason to disturb the finding of the court a quo.[20]
The Republic filed the present Petition for the review and reversal of the Decision of
the Court of Appeals, dated 22 November 2002, on the basis of the following
arguments:
First, respondents failed to establish that they and their predecessors-in-interest had
been in open, continuous, and adverse possession of the Subject Lots in the concept
of owners since 12 June 1945 or earlier. According to the petitioner Republic,
possession of the Subject Lots prior to 25 June 1963 cannot be considered in
determining compliance with the periods of possession required by law. The Subject
Lots were classified as alienable and disposable only on 25 June 1963, per CENROs
certification. It also alleges that the Court of Appeals, in applying the 30-year
acquisitive prescription period, had overlooked the ruling in Republic v. Doldol,[21]
where this Court declared that Commonwealth Act No. 141, otherwise known as the
Public Land Act, as amended and as it is presently phrased, requires that possession
of land of the public domain must be from 12 June 1945 or earlier, for the same to
be acquired through judicial confirmation of imperfect title.

Second, the application for registration suffers from fatal infirmity as the subject of
the application consisted of two parcels of land individually and separately owned
by two applicants. Petitioner Republic contends that it is implicit in the provisions of
Presidential Decree No. 1529, otherwise known as the Property Registration Decree,
as amended, that the application for registration of title to land shall be filed by a
single applicant; multiple applicants may file a single application only in case they
are co-owners. While an application may cover two parcels of land, it is allowed
only when the subject parcels of land belong to the same applicant or applicants (in
case the subject parcels of land are co-owned) and are situated within the same
province. Where the authority of the courts to proceed is conferred by a statute and
when the manner of obtaining jurisdiction is mandatory, it must be strictly complied
with or the proceedings will be utterly void. Since the respondents failed to comply
with the procedure for land registration under the Property Registration Decree, the
proceedings held before the MTC is void, as the latter did not acquire jurisdiction
over it.
I
Jurisdiction
Addressing first the issue of jurisdiction, this Court finds that the MTC had no
jurisdiction to proceed with and hear the application for registration filed by the
respondents but for reasons different from those presented by petitioner Republic.
A.
The misjoinder of causes of action and parties does not affect the jurisdiction
of the MTC to hear and proceed with respondents application for registration.
Respondents filed a single application for registration of the Subject Lots even
though they were not co-owners. Respondents Jeremias and David were actually
seeking the individual and separate registration of Lots No. 8422 and 8423,
respectively.
Petitioner Republic believes that the procedural irregularity committed by the
respondents was fatal to their case, depriving the MTC of jurisdiction to proceed
with and hear their application for registration of the Subject Lots, based on this
Courts pronouncement in Director of Lands v. Court of Appeals,[22] to wit:
. . . In view of these multiple omissions which constitute non-compliance with the
above-cited sections of the Act, We rule that said defects have not invested the
Court with the authority or jurisdiction to proceed with the case because the
manner or mode of obtaining jurisdiction as prescribed by the statute which is
mandatory has not been strictly followed, thereby rendering all proceedings utterly
null and void.

This Court, however, disagrees with petitioner Republic in this regard. This
procedural lapse committed by the respondents should not affect the jurisdiction of
the MTC to proceed with and hear their application for registration of the Subject
Lots.
The Property Registration Decree[23] recognizes and expressly allows the following
situations: (1) the filing of a single application by several applicants for as long as
they are co-owners of the parcel of land sought to be registered;[24] and (2) the
filing of a single application for registration of several parcels of land provided that
the same are located within the same province.[25] The Property Registration
Decree is silent, however, as to the present situation wherein two applicants filed a
single application for two parcels of land, but are seeking the separate and
individual registration of the parcels of land in their respective names.
Since the Property Registration Decree failed to provide for such a situation, then
this Court refers to the Rules of Court to determine the proper course of action.
Section 34 of the Property Registration Decree itself provides that, [t]he Rules of
Court shall, insofar as not inconsistent with the provisions of this Decree, be
applicable to land registration and cadastral cases by analogy or in a suppletory
character and whenever practicable and convenient.
Considering every application for land registration filed in strict accordance with the
Property Registration Decree as a single cause of action, then the defect in the joint
application for registration filed by the respondents with the MTC constitutes a
misjoinder of causes of action and parties. Instead of a single or joint application for
registration, respondents Jeremias and David, more appropriately, should have filed
separate applications for registration of Lots No. 8422 and 8423, respectively.
Misjoinder of causes of action and parties do not involve a question of jurisdiction
of the court to hear and proceed with the case.[26] They are not even accepted
grounds for dismissal thereof.[27] Instead, under the Rules of Court, the misjoinder
of causes of action and parties involve an implied admission of the courts
jurisdiction. It acknowledges the power of the court, acting upon the motion of a
party to the case or on its own initiative, to order the severance of the misjoined
cause of action, to be proceeded with separately (in case of misjoinder of causes of
action); and/or the dropping of a party and the severance of any claim against said
misjoined party, also to be proceeded with separately (in case of misjoinder of
parties).
The misjoinder of causes of action and parties in the present Petition may have
been corrected by the MTC motu propio or on motion of the petitioner Republic. It is
regrettable, however, that the MTC failed to detect the misjoinder when the
application for registration was still pending before it; and more regrettable that the
petitioner Republic did not call the attention of the MTC to the fact by filing a motion

for severance of the causes of action and parties, raising the issue of misjoinder
only before this Court.
B.
Respondents, however, failed to comply with the publication requirements
mandated by the Property Registration Decree, thus, the MTC was not invested with
jurisdiction as a land registration court.
Although the misjoinder of causes of action and parties in the present Petition did
not affect the jurisdiction of the MTC over the land registration proceeding, this
Court, nonetheless, has discovered a defect in the publication of the Notice of Initial
Hearing, which bars the MTC from assuming jurisdiction to hear and proceed with
respondents application for registration.
A land registration case is a proceeding in rem,[28] and jurisdiction in rem cannot
be acquired unless there be constructive seizure of the land through publication and
service of notice.[29]
Section 23 of the Property Registration Decree requires that the public be given
Notice of the Initial Hearing of the application for land registration by means of (1)
publication; (2) mailing; and (3) posting. Publication of the Notice of Initial Hearing
shall be made in the following manner:
1.

By publication.

Upon receipt of the order of the court setting the time for initial hearing, the
Commissioner of Land Registration shall cause a notice of initial hearing to be
published once in the Official Gazette and once in a newspaper of general
circulation in the Philippines: Provided, however, that the publication in the Official
Gazette shall be sufficient to confer jurisdiction upon the court. Said notice shall be
addressed to all persons appearing to have an interest in the land involved
including the adjoining owners so far as known, and to all whom it may concern.
Said notice shall also require all persons concerned to appear in court at a certain
date and time to show cause why the prayer of said application shall not be
granted.
Even as this Court concedes that the aforequoted Section 23(1) of the Property
Registration Decree expressly provides that publication in the Official Gazette shall
be sufficient to confer jurisdiction upon the land registration court, it still affirms its
declaration in Director of Lands v. Court of Appeals[30] that publication in a
newspaper of general circulation is mandatory for the land registration court to
validly confirm and register the title of the applicant or applicants. That Section 23
of the Property Registration Decree enumerated and described in detail the
requirements of publication, mailing, and posting of the Notice of Initial Hearing,
then all such requirements, including publication of the Notice in a newspaper of

general circulation, is essential and imperative, and must be strictly complied with.
In the same case, this Court expounded on the reason behind the compulsory
publication of the Notice of Initial Hearing in a newspaper of general circulation,
thus
It may be asked why publication in a newspaper of general circulation should be
deemed mandatory when the law already requires notice by publication in the
Official Gazette as well as by mailing and posting, all of which have already been
complied with in the case at hand. The reason is due process and the reality that
the Official Gazette is not as widely read and circulated as newspaper and is
oftentimes delayed in its circulation, such that the notices published therein may
not reach the interested parties on time, if at all. Additionally, such parties may not
be owners of neighboring properties, and may in fact not own any other real estate.
In sum, the all encompassing in rem nature of land registration cases, the
consequences of default orders issued against the whole world and the objective of
disseminating the notice in as wide a manner as possible demand a mandatory
construction of the requirements for publication, mailing and posting.[31]
In the instant Petition, the initial hearing was set by the MTC, and was in fact held,
on 03 September 1999 at 8:30 a.m. While the Notice thereof was printed in the
issue of the Official Gazette, dated 02 August 1999, and officially released on 10
August 1999, it was published in The Freeman Banat News, a daily newspaper
printed in Cebu City and circulated in the province and cities of Cebu and in the rest
of Visayas and Mindanao, only on 19 December 1999, more than three months after
the initial hearing.

Indubitably, such publication of the Notice, way after the date of the initial hearing,
would already be worthless and ineffective. Whoever read the Notice as it was
published in The Freeman Banat News and had a claim to the Subject Lots was
deprived of due process for it was already too late for him to appear before the MTC
on the day of the initial hearing to oppose respondents application for registration,
and to present his claim and evidence in support of such claim. Worse, as the
Notice itself states, should the claimant-oppositor fail to appear before the MTC on
the date of initial hearing, he would be in default and would forever be barred from
contesting respondents application for registration and even the registration decree
that may be issued pursuant thereto. In fact, the MTC did issue an Order of Special
Default on 03 September 1999.
The late publication of the Notice of Initial Hearing in the newspaper of general
circulation is tantamount to no publication at all, having the same ultimate result.
Owing to such defect in the publication of the Notice, the MTC failed to
constructively seize the Subject Lots and to acquire jurisdiction over respondents
application for registration thereof. Therefore, the MTC Judgment, dated 21

December 1999, ordering the registration and confirmation of the title of

respondents Jeremias and David over Lots No. 8422 and 8423, respectively; as well
as the MTC Order, dated 02 February 2000, declaring its Judgment of 21 December
1999 final and executory, and directing the LRA Administrator to issue a decree of
registration for the Subject Lots, are both null and void for having been issued by
the MTC without jurisdiction.
II
Period of Possession
Respondents failed to comply with the required period of possession of the Subject
Lots for the judicial confirmation or legalization of imperfect or incomplete title.
While this Court has already found that the MTC did not have jurisdiction to hear
and proceed with respondents application for registration, this Court nevertheless
deems it necessary to resolve the legal issue on the required period of possession
for acquiring title to public land.
Respondents application filed with the MTC did not state the statutory basis for
their title to the Subject Lots. They only alleged therein that they obtained title to
the Subject Lots by purchase from their parents, spouses Gregorio Herbieto and
Isabel Owatan, on 25 June 1976. Respondent Jeremias, in his testimony, claimed
that his parents had been in possession of the Subject Lots in the concept of an
owner since 1950.[32]
Yet, according to the DENR-CENRO Certification, submitted by respondents
themselves, the Subject Lots are within Alienable and Disposable, Block I, Project
No. 28 per LC Map No. 2545 of Consolacion, Cebu certified under Forestry
Administrative Order No. 4-1063, dated June 25, 1963. Likewise, it is outside KotkotLusaran Mananga Watershed Forest Reservation per Presidential Proclamation No.
932 dated June 29, 1992.[33] The Subject Lots are thus clearly part of the public
domain, classified as alienable and disposable as of 25 June 1963.
As already well-settled in jurisprudence, no public land can be acquired by private
persons without any grant, express or implied, from the government;[34] and it is
indispensable that the person claiming title to public land should show that his title
was acquired from the State or any other mode of acquisition recognized by law.[35]
The Public Land Act, as amended, governs lands of the public domain, except timber
and mineral lands, friar lands, and privately-owned lands which reverted to the
State.[36] It explicitly enumerates the means by which public lands may be
disposed, as follows:

(1)
(2)
(3)
(4)
(a)
(b)

For homestead settlement;

By sale;
By lease;
By confirmation of imperfect or incomplete titles;
By judicial legalization; or
By administrative legalization (free patent).[37]

Each mode of disposition is appropriately covered by separate chapters of the Public

Land Act because there are specific requirements and application procedure for
every mode.[38] Since respondents herein filed their application before the MTC,
[39] then it can be reasonably inferred that they are seeking the judicial
confirmation or legalization of their imperfect or incomplete title over the Subject
Lots.
Judicial confirmation or legalization of imperfect or incomplete title to land, not
exceeding 144 hectares,[40] may be availed of by persons identified under Section
48 of the Public Land Act, as amended by Presidential Decree No. 1073, which reads

Section 48. The following-described citizens of the Philippines, occupying lands of

the public domain or claiming to own any such lands or an interest therein, but
whose titles have not been perfected or completed, may apply to the Court of First
Instance of the province where the land is located for confirmation of their claims
and the issuance of a certificate of title thereafter, under the Land Registration Act,
to wit:
(a) [Repealed by Presidential Decree No. 1073].
(b) Those who by themselves or through their predecessors-in-interest have been in
open, continuous, exclusive, and notorious possession and occupation of
agricultural lands of the public domain, under a bona fide claim of acquisition of
ownership, since June 12, 1945, or earlier, immediately preceding the filing of the
applications for confirmation of title, except when prevented by war or force
majeure. These shall be conclusively presumed to have performed all the
conditions essential to a Government grant and shall be entitled to a certificate of
title under the provisions of this chapter.
(c) Members of the national cultural minorities who by themselves or through their
predecessors-in-interest have been in open, continuous, exclusive and notorious
possession and occupation of lands of the public domain suitable to agriculture
whether disposable or not, under a bona fide claim of ownership since June 12, 1945
shall be entitled to the rights granted in subsection (b) hereof.

Not being members of any national cultural minorities, respondents may only be
entitled to judicial confirmation or legalization of their imperfect or incomplete title
under Section 48(b) of the Public Land Act, as amended. Section 48(b), as
amended, now requires adverse possession of the land since 12 June 1945 or
earlier. In the present Petition, the Subject Lots became alienable and disposable
only on 25 June 1963. Any period of possession prior to the date when the Subject
Lots were classified as alienable and disposable is inconsequential and should be
excluded from the computation of the period of possession; such possession can
never ripen into ownership and unless the land had been classified as alienable and
disposable, the rules on confirmation of imperfect title shall not apply thereto.[41] It
is very apparent then that respondents could not have complied with the period of
possession required by Section 48(b) of the Public Land Act, as amended, to acquire
imperfect or incomplete title to the Subject Lots that may be judicially confirmed or
legalized.
The confirmation of respondents title by the Court of Appeals was based on the
erroneous supposition that respondents were claiming title to the Subject Lots under
the Property Registration Decree. According to the Decision of the Court of Appeals,
dated 22 November 2002, Section 14(4) of the Property Registration Decree allows
individuals to own land in any other manner provided by law. It then ruled that the
respondents, having possessed the Subject Lots, by themselves and through their
predecessors-in-interest, since 25 June 1963 to 23 September 1998, when they filed
their application, have acquired title to the Subject Lots by extraordinary
prescription under Article 1113, in relation to Article 1137, both of the Civil Code.
[42]
The Court of Appeals overlooked the difference between the Property Registration
Decree and the Public Land Act. Under the Property Registration Decree, there
already exists a title which is confirmed by the court; while under the Public Land
Act, the presumption always is that the land applied for pertains to the State, and
that the occupants and possessors only claim an interest in the same by virtue of
their imperfect title or continuous, open, and notorious possession.[43] As
established by this Court in the preceding paragraphs, the Subject Lots respondents
wish to register are undoubtedly alienable and disposable lands of the public
domain and respondents may have acquired title thereto only under the provisions
of the Public Land Act.
However, it must be clarified herein that even though respondents may acquire
imperfect or incomplete title to the Subject Lots under the Public Land Act, their
application for judicial confirmation or legalization thereof must be in accordance
with the Property Registration Decree, for Section 50 of the Public Land Act reads
SEC. 50. Any person or persons, or their legal representatives or successors in
right, claiming any lands or interest in lands under the provisions of this chapter,

must in every case present an application to the proper Court of First Instance,
praying that the validity of the alleged title or claim be inquired into and that a
certificate of title be issued to them under the provisions of the Land Registration
Act.[44]
Hence, respondents application for registration of the Subject Lots must have
complied with the substantial requirements under Section 48(b) of the Public Land
Act and the procedural requirements under the Property Registration Decree.
Moreover, provisions of the Civil Code on prescription of ownership and other real
rights apply in general to all types of land, while the Public Land Act specifically
governs lands of the public domain. Relative to one another, the Public Land Act
may be considered a special law[45] that must take precedence over the Civil Code,
a general law. It is an established rule of statutory construction that between a
general law and a special law, the special law prevails Generalia specialibus non
derogant.[46]
WHEREFORE, based on the foregoing, the instant Petition is GRANTED. The Decision
of the Court of Appeals in CA-G.R. CV No. 67625, dated 22 November 2002, is
REVERSED. The Judgment of the MTC of Consolacion, Cebu in LRC Case No. N-75,
dated 21 December 1999, and its Order, dated 02 February 2000 are declared NULL
AND VOID. Respondents application for registration is DISMISSED.
SO ORDERED.

[G.R. No. 155450, August 06, 2008]

REPUBLIC OF THE PHILIPPINES REPRESENTED BY THE REGIONAL
EXECUTIVE DIRECTOR, DEPARTMENT OF ENVIRONMENT AND NATURAL
RESOURCES, REGIONAL OFFICE NO. 2, PETITIONER, VS. COURT OF
APPEALS, HEIRS OF ANTONIO CARAG AND VICTORIA TURINGAN, THE
REGISTER OF DEEDS OF CAGAYAN, AND THE COURT OF FIRST INSTANCE OF
CAGAYAN, RESPONDENTS.
DECISION
CARPIO, J.:
The Case
This is a petition for review[1] of the 21 May 2001[2] and 25 September 2002[3]
Resolutions of the Court of Appeals in CA-G.R. SP No. 47965. The

21 May 2001 Resolution dismissed petitioner Republic of the Philippines' (petitioner)

amended complaint for reversion, annulment of decree, cancellation and
declaration of nullity of titles. The 25 September 2002 Resolution denied petitioner's
motion for reconsideration.
The Facts
On 2 June 1930, the then Court of First Instance of Cagayan (trial court) issued
Decree No. 381928[4] in favor of spouses Antonio Carag and Victoria Turingan
(spouses Carag), predecessors-in-interest of private respondents Heirs of Antonio
Carag and Victoria Turingan (private respondents), covering a parcel of land
identified as Lot No. 2472, Cad. 151, containing an area of 7,047,673 square meters
(subject property), situated in Tuguegarao, Cagayan. On 19 July 1938, pursuant to
said Decree, the Register of Deeds of Cagayan issued Original Certificate of Title No.
11585[5] (OCT No. 11585) in the name of spouses Carag.
On 2 July 1952, OCT No. 11585 was cancelled to discharge the encumbrance
expressly stated in Decree No. 381928. Two transfer certificates of title were issued:
Transfer Certificate of Title No. T-1277,[6] issued in the name of the Province of
Cagayan, covering Lot 2472-B consisting of 100,000 square meters and Transfer
Certificate of Title No. T-1278,[7] issued in the name of the private respondents,
covering Lot 2472-A consisting of 6,997,921 square meters.
On 19 May 1994, Bienvenida Taguiam Vda. De Dayag and others filed with the
Regional Office No. 2 of the Department of Environment and Natural Resources
(DENR), Tuguegarao, Cagayan, a letter-petition requesting the DENR to initiate the
filing of an action for the annulment of Decree No. 381928 on the ground that the
trial court did not have jurisdiction to adjudicate a portion of the subject property
which was allegedly still classified as timber land at the time of the issuance of
Decree No. 381928.
The Regional Executive Director of the DENR created an investigating team to
conduct ground verification and ocular inspection of the subject property.
The investigating team reported that:
A) The portion of Lot 2472 Cad-151 as shown in the Plan prepared for spouses
Carag, and covered under LC Project 3-L of Tuguegarao, Cagayan, was found to be
still within the timberland area at the time of the issuance of the Decree and O.C.T.
of the spouses Antonio Carag and Victoria Turingan, and the same was only released
as alienable and disposable on February 22, 1982, as certified by USEC Jose G. Solis
of the NAMRIA on 27 May 1994.

B) Petitioner Bienvenida Taguiam Vda. De Dayag and others have possessed and
occupied by themselves and thru their predecessors-in-interest the portion of Lot
2472 Cad-151, covered by LC Project 3-L of LC Map 2999, since time immemorial.[8]
Thus, the investigating team claimed that "a portion of Lot 2472 Cad-151" was "only
released as alienable and disposable on 22 February 1982."
In a Memorandum dated 9 September 1996, the Legal Division of the Land
Management Bureau recommended to the Director of Lands that an action for the
cancellation of OCT No. 11585, as well as its derivative titles, be filed with the
proper court. The Director of Lands approved the recommendation.
On 10 June 1998, or 68 years after the issuance of Decree No. 381928, petitioner
filed with the Court of Appeals a complaint for annulment of judgment, cancellation
and declaration of nullity of titles[9] on the ground that in 1930 the trial court had
no jurisdiction to adjudicate a portion of the subject property, which portion consists
of 2,640,000 square meters (disputed portion). The disputed portion was allegedly
still classified as timber land at the time of issuance of Decree No. 381928 and,
therefore, was not alienable and disposable until 22 February 1982 when the
disputed portion was classified as alienable and disposable.
On 19 October 1998, private respondents filed a motion to dismiss.[10] Private
respondents alleged that petitioner failed to comply with Rule 47 of the Rules of
Court because the real ground for the complaint was mistake, not lack of
jurisdiction, and that petitioner, as a party in the original proceedings, could have
availed of the ordinary remedies of new trial, appeal, petition for relief or other
appropriate remedies but failed to do so. Private respondents added that petitioner
did not attach to the complaint a certified true copy of the decision sought to be
annulled. Private respondents also maintained that the complaint was barred by the
doctrines of res judicata and law of the case and by Section 38 of Act No. 496.[11]
Private respondents also stated that not all the heirs of spouses Carag were brought
before the Court of Appeals for an effective resolution of the case. Finally, private
respondents claimed that the real party in interest was not petitioner but a certain
Alfonso Bassig, who had an ax to grind against private respondents.[12]
On 3 March 1999, petitioner filed an amended complaint for reversion, annulment of
decree, cancellation and declaration of nullity of titles.[13]
The Ruling of the Court of Appeals
On 21 May 2001, the Court of Appeals dismissed the complaint because of lack of
jurisdiction over the subject matter of the case. The Court of Appeals declared:
The rule is clear that such judgments, final orders and resolutions in civil actions
which this court may annul are those which the "ordinary remedies of new trial,
appeal, petition for relief or other appropriate remedies are no longer available."

The Amended Complaint contains no such allegations which are jurisdictional

neither can such circumstances be divined from its allegations. Furthermore, such
actions for Annulment may be based only on two (2) grounds: extrinsic fraud and
lack of jurisdiction. Neither ground is alleged in the Amended Complaint which is for
Reversion/Annulment of Decree, Cancellation and Declaration of Nullity of Titles. It
merely alleges that around 2,640,000 square meters of timberland area within Lot
2472 Cad. 151, had been erroneously included in the title of the Spouses Antonio
Carag and Victoria Turingan under Decree No. 381928 and O.C.T. No. 11585 issued
on June 2, 1930 and July 19, 1938, respectively; that hence, such adjudication
and/or Decree and Title covering a timberland area is null and void ab initio under
the provisions of the 1935, 1973 and 1987 Constitutions.
Finally, it is clear that the issues raised in the Amended Complaint as well as those
in the Motion to dismiss are factual in nature and should be threshed out in the
proper trial court in accordance with Section 101 of the Public Land Act.[14]
(Citations omitted)
Petitioner filed a motion for reconsideration. In its 25 September 2002 Resolution,
the Court of Appeals denied the motion for reconsideration.
Hence, this petition.
The Issues
Petitioner raises the following issues:
Whether the allegations of the complaint clearly stated that the ordinary remedies
of new trial, appeal, petition for relief and other appropriate remedies are no longer
available;
Whether the amended complaint clearly alleged the ground of lack of jurisdiction;
Whether the Court of Appeals may try the factual issues raised in the amended
complaint and in the motion to dismiss;
Whether the then Court of First Instance of Cagayan had jurisdiction to adjudicate a
tract of timberland in favor of respondent spouses Antonio Carag and Victoria
Turingan;
Whether the fact that the Director of Lands was a party to the original proceedings
changed the nature of the land and granted jurisdiction to the then Court of First
Instance over the land;
Whether the doctrine of res judicata applies in this case; and
Whether Section 38 of Act No. 496 is applicable in this case.

The Ruling of the Court

While the Court of Appeals erred in dismissing the complaint on procedural grounds,
we will still deny the petition because the complaint for annulment of decree has no
merit.
Petitioner Complied with Rule 47 of the Rules of Court
First, the Court of Appeals ruled that petitioner failed to allege either of the grounds
of extrinsic fraud or lack of jurisdiction in the complaint for annulment of decree.
[15]
We find otherwise. In its complaint and amended complaint, petitioner stated:
11. In view of the fact that in 1930 or in 1938, only the Executive Branch of the
Government had the authority and power to declassify or reclassify land of the
public domain, the Court did not, therefore, have the power and authority to
adjudicate in favor of the spouses Antonio Carag and Victoria Turingan the said tract
of timberland, portion of the Lot 2472 Cad-151, at the time of the issuance of the
Decree and the Original Certificate of Title of the said spouses; and such
adjudication and/or Decree and Title issued covering the timberland area is null and
void ab initio considering the provisions of the 1935, 1973 and 1987 Philippine
constitution.
xxxx
15. The issuance of Decree No. 381928 and O.C.T. No. 11585 in the name of
spouses Antonio Carag and Victoria Turingan, and all the derivative titles thereto in
the name of the Heirs and said spouses, specifically with respect to the inclusion
thereto of timberland area, by the then Court of First Instance (now the Regional
Trial Court), and the Register of Deeds of Cagayan is patently illegal and erroneous
for the reason that said Court and/or the Register of Deeds of Cagayan did not have
any authority or jurisdiction to decree or adjudicate the said timberland area of Lot
2472 Cad-151, consequently, the same are null and void ab initio, and of no force
and effect whatsoever.[16] (Emphasis supplied; citations omitted)
Petitioner clearly alleged in the complaint and amended complaint that it was
seeking to annul Decree No. 381928 on the ground of the trial court's lack of
jurisdiction over the subject land, specifically over the disputed portion, which
petitioner maintained was classified as timber land and was not alienable and
disposable.
Second, the Court of Appeals also dismissed the complaint on the ground of
petitioner's failure to allege that the "ordinary remedies of new trial, appeal, petition
for relief or other appropriate remedies are no longer available."

In Ancheta v. Ancheta,[17] we ruled:

In a case where a petition for annulment of judgment or final order of the RTC filed
under Rule 47 of the Rules of Court is grounded on lack of jurisdiction over the
person of the defendant/respondent or over the nature or subject of the action, the
petitioner need not allege in the petition that the ordinary remedy of new trial or
reconsideration of the final order or judgment or appeal therefrom are no longer
available through no fault of her own. This is so because a judgment rendered or
final order issued by the RTC without jurisdiction is null and void and may be
assailed any time either collaterally or in a direct action or by resisting such
judgment or final order in any action or proceeding whenever it is invoked, unless
barred by laches.[18]
Since petitioner's complaint is grounded on lack of jurisdiction over the subject of
the action, petitioner need not allege that the ordinary remedies of new trial,
appeal, petition for relief or other appropriate remedies are no longer available
through no fault of petitioner.
Third, the Court of Appeals ruled that the issues raised in petitioner's complaint
were factual in nature and should be threshed out in the proper trial court in
accordance with Section 101 of the Public Land Act.[19]
Section 6, Rule 47 of the Rules of Court provides:
SEC. 6. Procedure. - The procedure in ordinary civil cases shall be observed. Should
a trial be necessary, the reception of evidence may be referred to a member of the
court or a judge of a Regional Trial Court.
Therefore, the Court of Appeals may try the factual issues raised in the complaint
for the complete and proper determination of the case.
However, instead of remanding the complaint to the Court of Appeals for further
proceedings, we shall decide the case on the merits.
Complaint for Annulment of Decree Has No Merit
Petitioner contends that the trial court had no jurisdiction to adjudicate to spouses
Carag the disputed portion of the subject property. Petitioner claims that the
disputed portion was still classified as timber land, and thus not alienable and
disposable, when Decree No. 381928 was issued in 1930. In effect, petitioner admits
that the adjacent 4,407,673 square meters of the subject property, outside of the
disputed portion, were alienable and disposable in 1930. Petitioner argues that in
1930 or in 1938, only the Executive Branch of the Government, not the trial courts,
had the power to declassify or reclassify lands of the public domain.
Lack of jurisdiction, as a ground for annulment of judgment, refers to either lack of
jurisdiction over the person of the defending party or over the subject matter of the

claim.[20] Jurisdiction over the subject matter is conferred by law and is determined
by the statute in force at the time of the filing of the action.[21]
Under the Spanish regime, all Crown lands were per se alienable. In Aldecoa v.
Insular Government,[22] we ruled:
From the language of the foregoing provisions of law, it is deduced that, with the
exception of those comprised within the mineral and timber zone, all lands owned
by the State or by the sovereign nation are public in character, and per se alienable
and, provided they are not destined to the use of the public in general or reserved
by the Government in accordance with law, they may be acquired by any private or
juridical person x x x[23] (Emphasis supplied)
Thus, unless specifically declared as mineral or forest zone, or reserved by the State
for some public purpose in accordance with law, all Crown lands were deemed
alienable.
In this case, petitioner has not alleged that the disputed portion had been declared
as mineral or forest zone, or reserved for some public purpose in accordance with
law, during the Spanish regime or thereafter. The land classification maps[24]
petitioner attached to the complaint also do not show that in 1930 the disputed
portion was part of the forest zone or reserved for some public purpose. The
certification of the National Mapping and Resources Information Authority, dated 27
May 1994, contained no statement that the disputed portion was declared and
classified as timber land.[25]
The law prevailing when Decree No. 381928 was issued in 1930 was Act No. 2874,
[26] which provides:
SECTION 6. The Governor-General, upon the recommendation of the Secretary of
Agriculture and Natural Resources, shall from time to time classify the lands of the
public domain into (a) Alienable or disposable
(b) Timber and
(c) Mineral lands
and may at any time and in a like manner transfer such lands from one class to
another, for the purposes of their government and disposition.
Petitioner has not alleged that the Governor-General had declared the disputed
portion of the subject property timber or mineral land pursuant to Section 6 of Act
No. 2874.
It is true that Section 8 of Act No. 2874 opens to disposition only those lands which
have been declared alienable or disposable. Section 8 provides:

SECTION 8. Only those lands shall be declared open to disposition or concession

which have been officially delimited and classified and, when practicable, surveyed,
and which have not been reserved for public or quasi-public uses, not appropriated
by the Government, nor in any manner become private property, nor those on
which a private right authorized and recognized by this Act or any other valid law
may be claimed, or which, having been reserved or appropriated, have ceased to be
so. However, the Governor-General may, for reasons of public interest, declare lands
of the public domain open to disposition before the same have had their boundaries
established or been surveyed, or may, for the same reasons, suspend their
concession or disposition by proclamation duly published or by Act of the
Legislature. (Emphasis supplied)
However, Section 8 provides that lands which are already private lands, as well as
lands on which a private claim may be made under any law, are not covered by the
classification requirement in Section 8 for purposes of disposition. This exclusion in
Section 8 recognizes that during the Spanish regime, Crown lands were per se
alienable unless falling under timber or mineral zones, or otherwise reserved for
some public purpose in accordance with law.
Clearly, with respect to lands excluded from the classification requirement in
Section 8, trial courts had jurisdiction to adjudicate these lands to private parties.
Petitioner has not alleged that the disputed portion had not become private
property prior to the enactment of Act No. 2874. Neither has petitioner alleged that
the disputed portion was not land on which a private right may be claimed under
any existing law at that time.
In Republic of the Philippines v. Court of Appeals,[27] the Republic sought to annul
the judgment of the Court of First Instance (CFI) of Rizal, sitting as a land
registration court, because when the application for land registration was filed in
1927 the land was alleged to be unclassified forest land. The Republic also alleged
that the CFI of Rizal had no jurisdiction to determine whether the land applied for
was forest or agricultural land since the authority to classify lands was then vested
in the Director of Lands as provided in Act Nos. 926[28] and 2874. The Court ruled:
We are inclined to agree with the respondent that it is legally doubtful if the
authority of the Governor General to declare lands as alienable and disposable
would apply to lands that have become private property or lands that have been
impressed with a private right authorized and recognized by Act 2874 or any valid
law. By express declaration of Section 45 (b) of Act 2874 which is quoted above,
those who have been in open, continuous, exclusive and notorious possession and
occupation of agricultural lands of the public domain under a bona fide claim of
acquisition of ownership since July 26, 1894 may file an application with the Court of
First Instance of the province where the land is located for confirmation of their
claims and these applicants shall be conclusively presumed to have performed all
the conditions essential to a government grant and shall be entitled to a certificate
of title. When the land registration court issued a decision for the issuance of a

decree which was the basis of an original certificate of title to the land, the court
had already made a determination that the land was agricultural and that the
applicant had proven that he was in open and exclusive possession of the subject
land for the prescribed number of years. It was the land registration court which had
the jurisdiction to determine whether the land applied for was agricultural, forest or
timber taking into account the proof or evidence in each particular case. (Emphasis
supplied)
As with this case, when the trial court issued the decision for the issuance of Decree
No. 381928 in 1930, the trial court had jurisdiction to determine whether the subject
property, including the disputed portion, applied for was agricultural, timber or
mineral land. The trial court determined that the land was agricultural and that
spouses Carag proved that they were entitled to the decree and a certificate of title.
The government, which was a party in the original proceedings in the trial court as
required by law, did not appeal the decision of the trial court declaring the subject
land as agricultural. Since the trial court had jurisdiction over the subject matter of
the action, its decision rendered in 1930, or 78 years ago, is now final and beyond
review.
The finality of the trial court's decision is further recognized in Section 1, Article XII
of the 1935 Constitution which provides:
SECTION 1. All agricultural, timber, and mineral lands of the public domain, waters,
minerals, coal, petroleum, and other mineral oils, all forces of potential energy, and
other natural resources of the Philippines belong to the State, and their disposition,
exploitation, development, or utilization shall be limited to citizens of the
Philippines, or to corporations or associations at least sixty per centum of the
capital of which is owned by such citizens, subject to any existing right, grant, lease,
or concession at the time of the inauguration of the Government established under
this Constitution. (Emphasis supplied)
Thus, even as the 1935 Constitution declared that all agricultural, timber and
mineral lands of the public domain belong to the State, it recognized that these
lands were "subject to any existing right, grant, lease or concession at the time of
the inauguration of the Government established under this Constitution."[29] When
the Commonwealth Government was established under the 1935 Constitution,
spouses Carag had already an existing right to the subject land, including the
disputed portion, pursuant to Decree No. 381928 issued in 1930 by the trial court.
WHEREFORE, we DENY the petition. We DISMISS petitioner Republic of the
Philippines' complaint for reversion, annulment of decree, cancellation and
declaration of nullity of titles for lack of merit.
SO ORDERED.

G.R. No. 181502

February 2, 2010

FLORENCIA G. DIAZ, Petitioner,

vs.
REPUBLIC of the PHILIPPINES, Respondent.
RESOLUTION
CORONA, J.:
This is a letter-motion praying for reconsideration (for the third time) of the June 16,
2008 resolution of this Court denying the petition for review filed by petitioner
Florencia G. Diaz.
Petitioners late mother, Flora Garcia (Garcia), filed an application for registration of
a vast tract of land1 located in Laur, Nueva Ecija and Palayan City in the then Court
of First Instance (CFI), Branch 1, Nueva Ecija on August 12, 1976.2 She alleged that
she possessed the land as owner and worked, developed and harvested the
agricultural products and benefits of the same continuously, publicly and adversely
for more or less 26 years.
The Republic of the Philippines, represented by the Office of the Solicitor General
(OSG), opposed the application because the land in question was within the Fort
Magsaysay Military Reservation (FMMR), established by virtue of Proclamation No.
237 (Proclamation 237)3 in 1955. Thus, it was inalienable as it formed part of the
public domain.
Significantly, on November 28, 1975, this Court already ruled in Director of Lands v.
Reyes4 that the property subject of Garcias application was inalienable as it formed
part of a military reservation. Moreover, the existence of Possessory Information
Title No. 216 (allegedly registered in the name of a certain Melecio Padilla on March
5, 1895), on which therein respondent Paraaque Investment and Development
Corporation anchored its claim on the land, was not proven. Accordingly, the decree
of registration issued in its favor was declared null and void.
Reyes notwithstanding, the CFI ruled in Garcias favor in a decision5 dated July 1,
1981.
The Republic eventually appealed the decision of the CFI to the Court of Appeals
(CA). In its decision6 dated February 26, 1992, penned by Justice Vicente V.
Mendoza (Mendoza decision),7 the appellate court reversed and set aside the
decision of the CFI. The CA found that Reyes was applicable to petitioners case as it
involved the same property.

The CA observed that Garcia also traced her ownership of the land in question to
Possessory Information Title No. 216. As Garcias right to the property was largely
dependent on the existence and validity of the possessory information title the
probative value of which had already been passed upon by this Court in Reyes, and
inasmuch as the land was situated inside a military reservation, the CA concluded
that she did not validly acquire title thereto.
During the pendency of the case in the CA, Garcia passed away and was substituted
by her heirs, one of whom was petitioner Florencia G. Diaz.81avvphi1
Petitioner filed a motion for reconsideration of the Mendoza decision. While the
motion was pending in the CA, petitioner also filed a motion for recall of the records
from the former CFI. Without acting on the motion for reconsideration, the appellate
court, with Justice Mendoza as ponente, issued a resolution9 upholding petitioners
right to recall the records of the case.
Subsequently, however, the CA encouraged the parties to reach an amicable
settlement on the matter and even gave the parties sufficient time to draft and
finalize the same.
The parties ultimately entered into a compromise agreement with the Republic
withdrawing its claim on the more or less 4,689 hectares supposedly outside the
FMMR. For her part, petitioner withdrew her application for the portion of the
property inside the military reservation. They filed a motion for approval of the
amicable settlement in the CA.10
On June 30, 1999, the appellate court approved the compromise agreement.11 On
January 12, 2000, it directed the Land Registration Administration to issue the
corresponding decree of registration in petitioners favor.12
However, acting on a letter written by a certain Atty. Restituto S. Lazaro, the OSG
filed a motion for reconsideration of the CA resolution ordering the issuance of the
decree of registration. The OSG informed the appellate court that the tract of land
subject of the amicable settlement was still within the military reservation.
On April 16, 2007, the CA issued an amended resolution (amended resolution)13
annulling the compromise agreement entered into between the parties. The
relevant part of the dispositive portion of the resolution read:
ACCORDINGLY, the Court resolves to:
(1) x x x x x x
(2) x x x x x x

(3) x x x x x x
(4) x x x x x x
(5) x x x x x x
(6) REVERSE the Resolution dated June 30, 1999 of this Court approving the
Amicable Settlement dated May 18, 1999 executed between the Office of the
Solicitor General and Florencia Garcia Diaz[;]
(7) ANNUL and SET ASIDE the Amicable Settlement dated May 18, 1999 executed
between the Office of the Solicitor General and Florencia Garcia Diaz; the said
Amicable Settlement is hereby DECLARED to be without force and effect;
(8) GRANT the Motion for Reconsideration filed by the Office of the Solicitor General
and, consequently, SET ASIDE the Resolution dated January 12, 2000 which ordered,
among other matters, that a certificate of title be issued in the name of plaintiffappellee Florencia Garcia Diaz over the portion of the subject property in
consonance with the Amicable Settlement dated May 18, 1999 approved by the
Court in its Resolution dated June 30, 1999;
(9) SET ASIDE the Resolution dated June 30, 1999 approving the May 18, 1999
Amicable Settlement and the Resolution dated September 20, 1999 amending the
aforesaid June 30, 1999 Resolution; and
(10) REINSTATE the Decision dated February 26, 1992 dismissing applicant-appellee
Diaz registration herein.
SO ORDERED.
(Emphasis supplied)
Petitioner moved for reconsideration. For the first time, she assailed the validity of
the Mendoza decision the February 26, 1992 decision adverted to in the CAs
amended resolution. She alleged that Justice Mendoza was the assistant solicitor
general during the initial stages of the land registration proceedings in the trial
court and therefore should have inhibited himself when the case reached the CA.
His failure to do so, she laments, worked an injustice against her constitutional right
to due process. Thus, the Mendoza decision should be declared null and void. The
motion was denied.14
Thereafter, petitioner filed a petition for review on certiorari15 in this Court. It was
denied for raising factual issues.16 She moved for reconsideration.17 This motion
was denied with finality on the ground that there was no substantial argument

warranting a modification of the Courts resolution. The Court then ordered that no
further pleadings would be entertained. Accordingly, we ordered entry of judgment
to be made in due course.18
Petitioner, however, insisted on filing a motion to lift entry of judgment and motion
for leave to file a second motion for reconsideration and to refer the case to the
Supreme Court en banc.19 The Court denied20 it considering that a second motion
for reconsideration is a prohibited pleading.21 Furthermore, the motion to refer the
case to the banc was likewise denied as the banc is not an appellate court to which
decisions or resolutions of the divisions may be appealed.22 We reiterated our
directive that no further pleadings would be entertained and that entry of judgment
be made in due course.
Not one to be easily deterred, petitioner wrote identical letters, first addressed to
Justice Leonardo A. Quisumbing (then Acting Chief Justice) and then to Chief Justice
Reynato S. Puno himself.23 The body of the letter, undoubtedly in the nature of a
third motion for reconsideration, is hereby reproduced in its entirety:
This is in response to your call for "Moral Forces" in order to "redirect the destiny of
our country which is suffering from moral decadence," that to your mind, is the
problem which confronts us. (Inquirer, January 15, 2009, page 1)[.]
I recently lost my case with the Supreme Court, G.R. N[o]. 181502, and my lawyer
has done all that is humanly possible to convince the court to take a second look at
the miscarriage of justice that will result from the implementation of the DISMISSAL
in a MINUTE RESOLUTION of our Petition for Review.
Pending before your Division (First Division) is a last plea for justice so that the case
may be elevated to the Supreme Court en banc. I hope the Court exercises utmost
prudence in resolving the last plea. For ready reference, a copy of the Motion is
hereto attached as Annex "A".
The issue that was brought before the Honorable Supreme Court involves the
Decision of then Justice Vicente Mendoza of the Court of Appeals, which is NULL and
VOID, ab initio.
It is null and void because destiny placed Hon. Justice Vicente Mendoza in a position
in which it became possible for him to discharge the minimum requirement of due
process, [i.e.] the ability of the court to render "impartial justice," because Mr.
Justice Mendoza became the ponente of the Court of Appeals Decision, reversing
the findings of the trial court, notwithstanding the fact that he, as Assistant Solicitor
General, was the very person who appeared on behalf of the Republic, as the
oppositor in the very same land registration proceedings in which he lost.

In other words, he discharged the duties of prosecutor and judge in the very same
case.
In the case of the "Alabang Boys[,]" the public was outraged by the actions of Atty.
Verano who admitted having prepared a simple resolution to be signed by the
Secretary of Justice.
In my case, the act complained of is the worst kind of violation of my constitutional
right. It is simply immoral, illegal and unconstitutional, for the prosecutor to
eventually act as the judge, and reverse the very decision in which he had lost.
If leaked to the tri-media[,] my case will certainly evoke even greater spite from the
public, and put the Supreme Court in bad light. I must confess that I was tempted to
pursue such course of action. I however believe that such an action will do more
harm than good, and even destroy the good name of Hon. Justice Mendoza.
I fully support your call for "moral force" that will slowly and eventually lead our
country to redirect its destiny and escape from this moral decadence, in which we
all find ourselves.
I am content with the fact that at least, the Chief Justice continues to fight the dark
forces that surround us everyday.
I only ask that the Supreme Court endeavor to ensure that cases such as mine do
not happen again, so that the next person who seeks justice will not experience the
pain and frustration that I suffered under our judicial system.
Thank you, and more power to you, SIR. (Emphasis in the original).
The language of petitioners letter/motion is unmistakable. It is a thinly veiled threat
precisely worded and calculated to intimidate this Court into giving in to her
demands to honor an otherwise legally infirm compromise agreement, at the risk of
being vilified in the media and by the public.
This Court will not be cowed into submission. We deny petitioners letter/third
motion for reconsideration.
APPLICABILITY OF REYES
The Court agrees with the Republics position that Reyes is applicable to this case.
To constitute res judicata, the following elements must concur:
(1) the former judgment or order must be final;

(2) the judgment or order must be on the merits;

(3) it must have been rendered by a court having jurisdiction over the subject
matter and parties; and
(4) there must be between the first and second actions, identity of parties, of
subject matter, and of causes of action. 24
The first three requisites have undoubtedly been complied with. However, petitioner
takes exception to the fourth requisite, particularly on the issue of identity of
parties. In her petition for review filed in this Court, she contends that since the
applicants in the two cases are different, the merits of the two cases should,
accordingly, be determined independently of each other.25
This contention is erroneous.
The facts obtaining in this case closely resemble those in Aquino v. Director of
Lands.26 In that case, Quintin Taedo endeavored to secure title to a considerable
tract of land by virtue of his possession thereof under CA 141. When the case
eventually reached this Court, we affirmed the trial courts decision to dismiss the
proceedings as the property in question was part of the public domain. Quintins
successor-in-interest, Florencia Taedo, who despite knowledge of the proceedings
did not participate therein, thereafter sold the same property to Benigno S. Aquino.
The latter sought to have it registered in his name. The question in that case, as
well as in this one, was whether our decision in the case in which another person
was the applicant constituted res judicata as against his successors-in-interest.
We ruled there, and we so rule now, that in registration cases filed under the
provisions of the Public Land Act for the judicial confirmation of an incomplete and
imperfect title, an order dismissing an application for registration and declaring the
land as part of the public domain constitutes res judicata, not only against the
adverse claimant, but also against all persons.27
We also declared in Aquino that:
From another point of view, the decision in the first action has become the "law of
the case" or at least falls within the rule of stare decisis. That adjudication should be
followed unless manifestly erroneous. It was taken and should be taken as the
authoritative view of the highest tribunal in the Philippines. It is indispensable to the
due administration of justice especially by a court of last resort that a question once
deliberately examined and decided should be considered as settled and closed to
further argument. x x x28

Be that as it may, the fact is that, even before the CFI came out with its decision in
favor of petitioner on July 1, 1981, this Court, in Reyes, already made an earlier
ruling on November 28, 1975 that the disputed realty was inalienable as it formed
part of a military reservation. Thus, petitioners argument that the findings of fact of
the trial court on her registrable title are binding on us on the principle that
findings of fact of lower courts are accorded great respect and bind even this Court
is untenable. Rather, it was incumbent upon the court a quo to respect this Courts
ruling in Reyes, and not the other way around.
However, despite having been apprised of the Court's findings in Reyes (which
should have been a matter of judicial notice in the first place), the trial court still
insisted on its divergent finding and disregarded the Court's decision in Reyes,
declaring the subject land as forming part of a military reservation, and thus outside
the commerce of man.
By not applying our ruling in Reyes, the trial judge virtually nullified the decision of
this Court and therefore acted with grave abuse of discretion.29 Notably, a
judgment rendered with grave abuse of discretion is void and does not exist in legal
contemplation.30
All lower courts, especially the trial court concerned in this case, ought to be
reminded that it is their duty to obey the decisions of the Supreme Court. A conduct
becoming of inferior courts demands a conscious awareness of the position they
occupy in the interrelation and operation of our judicial system. As eloquently
declared by Justice J.B. L. Reyes, "There is only one Supreme Court from whose
decision all other courts should take their bearings."31
ACQUISITION OF PRIVATE RIGHTS
Petitioner, however, argues that Proclamation 237 itself recognizes that its
effectivity is "subject to private rights, if any there be."
By way of a background, we recognized in Reyes that the property where the
military reservation is situated is forest land. Thus:
Before the military reservation was established, the evidence is inconclusive as to
possession, for it is shown by the evidence that the land involved is largely
mountainous and forested. As a matter of fact, at the time of the hearing, it was
conceded that approximately 13,957 hectares of said land consist of public forest. x
x x (Emphasis supplied)32
Concomitantly, we stated therein, and we remind petitioner now, that forest lands
are not registrable under CA 141.

[E]ven more important, Section 48[b] of CA No. 141, as amended, applies

exclusively to public agricultural land. Forest lands or area covered with forest are
excluded. It is well-settled that forest land is incapable of registration; and its
inclusion in a title, whether such title be one issued using the Spanish sovereignty
or under the present Torrens system of registration, nullifies the title. (Emphasis
supplied).33
However, it is true that forest lands may be registered when they have been
reclassified as alienable by the President in a clear and categorical manner (upon
the recommendation of the proper department head who has the authority to
classify the lands of the public domain into alienable or disposable, timber and
mineral lands)34 coupled with possession by the claimant as well as that of her
predecessors-in-interest. Unfortunately for petitioner, she was not able to produce
such evidence. Accordingly, her occupation thereof, and that of her predecessors-ininterest, could not have ripened into ownership of the subject land. This is because
prior to the conversion of forest land as alienable land, any occupation or
possession thereof cannot be counted in reckoning compliance with the thirty-year
possession requirement under Commonwealth Act 141 (CA 141) or the Public Land
Act.35 This was our ruling in Almeda v. CA.36 The rules on the confirmation of
imperfect titles do not apply unless and until the land classified as forest land is
released through an official proclamation to that effect. Then and only then will it
form part of the disposable agricultural lands of the public domain.37
Coming now to petitioners contention that her "private rights" to the property,
meaning her and her predecessors possession thereof prior to the establishment of
the FMMR, must be respected, the same is untenable. As earlier stated, we had
already recognized the same land to be public forest even before the FMMR was
established. To reiterate:
Before the military reservation was established, the evidence is inconclusive as to
possession, for it is shown by the evidence that the land involved is largely
mountainous and forested. As a matter of fact, at the time of the hearing, it was
conceded that approximately 13,957 hectares of said land consist of public forest. x
xx
Therefore, even if possession was for more than 30 years, it could never ripen to
ownership.
But even assuming that the land in question was alienable land before it was
established as a military reservation, there was nevertheless still a dearth of
evidence with respect to its occupation by petitioner and her predecessors-ininterest for more than 30 years. In Reyes, we noted:

Evidently, Melecio Padilla, having died on February 9, 1900, barely five (5) years
after the inscription of the informacion possessoria, could not have converted the
same into a record of ownership twenty (20) years after such inscription, pursuant
to Article 393 of the Spanish Mortgage Law.
xxx
During the lifetime of Melecio Padilla, only a small portion thereof was cleared and
cultivated under the kaingin system, while some portions were used as grazing
land. After his death, his daughter, Maria Padilla, caused the planting of vegetables
and had about forty (40) tenants for the purpose. During the Japanese occupation,
Maria Padilla died. x x x
xxx
A mere casual cultivation of portions of the land by the claimant, and the raising
thereon of cattle, do not constitute possession under claim of ownership. In that
sense, possession is not exclusive and notorious as to give rise to a presumptive
grant from the State. While grazing livestock over land is of course to be considered
with other acts of dominion to show possession, the mere occupancy of land by
grazing livestock upon it, without substantial inclosures, or other permanent
improvements, is not sufficient to support a claim of title thru acquisitive
prescription. The possession of public land, however long the period may have
extended, never confers title thereto upon the possessor because the statute of
limitations with regard to public land does not operate against the State unless the
occupant can prove possession and occupation of the same under claim of
ownership for the required number of years to constitute a grant from the State.38
xxx
Furthermore, the fact that the possessory information title on which petitioner also
bases her claim of ownership was found to be inexistent in Reyes,39 thus rendering
its probative value suspect, further militates against granting her application for
registration.
NULLITY OF COMPROMISE AGREEMENT
On the compromise agreement between the parties, we agree with the CA that the
same was null and void.
An amicable settlement or a compromise agreement is in the nature of a contract
and must necessarily comply with the provisions of Article 1318 of the New Civil
Code which provides:

Art. 1318. There is no contract unless the following requisites concur:

(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established.
Petitioner was not able to provide any proof that the consent of the Republic,
through the appropriate government agencies, i.e. the Department of Environment
and Natural Resources, Land Management Bureau, Land Registration Authority, and
the Office of the President, was secured by the OSG when it executed the
agreement with her.40 The lack of authority on the part of the OSG rendered the
compromise agreement between the parties null and void because although it is the
duty of the OSG to represent the State in cases involving land registration
proceedings, it must do so only within the scope of the authority granted to it by its
principal, the Republic of the Philippines.41
In this case, although the OSG was authorized to appear as counsel for respondent,
it was never given the specific or special authority to enter into a compromise
agreement with petitioner. This is in violation of the provisions of Rule 138 Section
23, of the Rules of Court which requires "special authority" for attorneys to bind
their clients.
Section 23. Authority of attorneys to bind clients. Attorneys have authority to bind
their clients in any case by any agreement in relation thereto made in writing, and
in taking appeals, and in all matters of ordinary judicial procedure. But they cannot,
without special authority, compromise their clients litigation, or receive anything in
discharge of a clients claim but the full amount in cash. (Emphasis supplied).
Moreover, the land in question could not have been a valid subject matter of a
contract because, being forest land, it was inalienable. Article 1347 of the Civil Code
provides:
Art. 1347. All things which are not outside the commerce of men, including future
things, may be the object of a contract. All rights which are not intransmissible may
also be the object of contracts.
No contract may be entered into upon future inheritance except in cases expressly
authorized by law.
All services which are not contrary to law, morals, good customs, public order or
public policy may likewise be the object of a contract. (Emphasis supplied)

Finally, the Court finds the cause or consideration of the obligation contrary to law
and against public policy. The agreement provided that, in consideration of
petitioners withdrawal of her application for registration of title from that portion of
the property located within the military reservation, respondent was withdrawing its
claim on that part of the land situated outside said reservation. The Republic could
not validly enter into such undertaking as the subject matter of the agreement was
outside the commerce of man.
PETITIONERS CONTEMPT OF COURT
This Court, being the very institution that dispenses justice, cannot reasonably be
expected to just sit by and do nothing when it comes under attack.
That petitioners letter-motion constitutes an attack against the integrity of this
Court cannot be denied. Petitioner started her letter innocently enough by stating:
This is in response to your call for "Moral Forces" in order to "redirect the destiny of
our country which is suffering from moral decadence," that to your mind, is the
problem which confronts us. (Inquirer, January 15, 2009, page 1)[.]
It, however, quickly progressed into a barely concealed resentment for what she
perceived as this Courts failure to exercise "utmost prudence" in rendering
"impartial justice" in deciding her case. Petitioner recounted:
I recently lost my case with the Supreme Court, G.R. N[o]. 181502, and my lawyer
has done all that is humanly possible to convince the court to take a second look at
the miscarriage of justice that will result from the implementation of the DISMISSAL
in a MINUTE RESOLUTION of our Petition for Review.
Pending before your Division (First Division) is a last plea for justice so that the case
may be elevated to the Supreme Court en banc. I hope the Court exercises utmost
prudence in resolving the last plea. For ready reference, a copy of the Motion is
hereto attached as Annex "A".
The issue that was brought before the Honorable Supreme Court involves the
Decision of then Justice Vicente Mendoza of the Court of Appeals, which is NULL and
VOID, ab initio.
It is null and void because destiny placed Hon. Justice Vicente Mendoza in a position
in which it became possible for him to discharge the minimum requirement of due
process, [i.e.] the ability of the court to render "impartial justice," because Mr.
Justice Mendoza became the ponente of the Court of Appeals Decision, reversing
the findings of the trial court, notwithstanding the fact that he, as Assistant Solicitor
General, was the very person who appeared on behalf of the Republic, as the

oppositor in the very same land registration proceedings in which he lost. (Emphasis
supplied).
Petitioner then indirectly hints that, when push comes to shove, she has no choice
but to expose the irregularity concerning the Mendoza decision to the media. This is
evident in her arrogant declaration that:
If leaked to the tri-media[,] my case will certainly evoke even greater spite from the
public, and put the Supreme Court in bad light.
But she hastens to add in the same breath that:
I must confess that I was tempted to pursue such course of action. I however
believe that such an action will do more harm than good, and even destroy the good
name of Hon. Justice Mendoza.
Petitioner ends her letter by taking this Court to task:
. . . endeavor to ensure that cases such as mine do not happen again, so that the
next person who seeks justice will not experience the pain and frustration that I
suffered under our judicial system.
When required to show cause why she should not be cited for contempt for her
baseless charges and veiled threats, petitioner answered:
xxx
The Letter of January 26, 2009 is not a "veiled threat[.] It was written in response to
the call of the Chief Justice for a moral revolution. Juxtaposed against the factual
backdrop of the "Alabang Boys" case and the Meralco [c]ase, involving Mr. Justice
Jose L. Sabio which also enjoyed wide publicity over the tri-media, petitioner felt
that the facts of the said cases pale in comparison to the facts of her case where
the lawyer of her opponent eventually became justice of the appellate court and
ended up reversing the very decision in which he lost, in clear violation of her
[c]onstitutional [r]ight to fundamental fair play for no contestant in any litigation
can ever serve as a judge without transgression of the due process clause. This is
basic.
Petitioner confesses that she may have been emotional in the delivery of her piece,
because correctly or incorrectly[,] she believes they are irrefutable. If in the course
of that emotional delivery, she has offended your honors sensibilities, she is ready
for the punishment, and only prays that his Court temper its strike with compassion
as her letter to the Chief Justice was never written with a view of threatening the
Court.

xxx
Petitioner wrote the Chief Justice in order to obtain redress and correction of the
inequity bestowed upon her by destiny. It was never meant as a threat.
The Court now puts an end to petitioners irresponsible insinuations and threats of
"going public" with this case. We are not blind to petitioners clever and foxy
interplay of threats alternating with false concern for the reputation of this Court.
It is well to remind petitioner that the Court has consistently rendered justice with
neither fear nor favor. The disposition in this case was arrived at after a careful and
thorough deliberation of the facts of this case and all the matters pertaining thereto.
The records of the case, in fact, show that all the pertinent issues raised by
petitioner were passed upon and sufficiently addressed by the appellate court and
this Court in their respective resolutions.
As to petitioners complaint regarding this Courts denial of her petition through a
mere minute resolution (which allegedly deprived her of due process as the Court
did not issue a full-blown decision stating the facts and applicable jurisprudence),
suffice it to say that the Court is not duty-bound to issue decisions or resolutions
signed by the justices all the time. It has ample discretion to formulate ponencias,
extended resolutions or even minute resolutions issued by or upon its authority,
depending on its evaluation of a case, as long as a legal basis exists. When a
minute resolution (signed by the Clerk of Court upon orders of the Court) denies or
dismisses a petition or motion for reconsideration for lack of merit, it is understood
that the assailed decision or order, together with all its findings of fact and legal
conclusions, are deemed sustained.42
Furthermore, petitioner has doggedly pursued her case in this Court by filing three
successive motions for reconsideration, including the letter-motion subject of this
resolution. This, despite our repeated warnings that "no further pleadings shall be
entertained in this case." Her unreasonable persistence constitutes utter defiance of
this Courts orders and an abuse of the rules of procedure. This, alongside her thinly
veiled threats to leak her case to the media to gain public sympathy although the
tone of petitioners compliance with our show-cause resolution was decidedly
subdued compared to her earlier letters constitutes contempt of court.
In Republic v. Unimex,43 we held:
A statement of this Court that no further pleadings would be entertained is a
declaration that the Court has already considered all issues presented by the parties
and that it has adjudicated the case with finality. It is a directive to the parties to
desist from filing any further pleadings or motions. Like all orders of this Court, it

must be strictly observed by the parties. It should not be circumvented by filing

motions ill-disguised as requests for clarification.
A FEW OBSERVATIONS
If petitioner was, as she adamantly insists, only guarding her constitutional right to
due process, then why did she question the validity of the Mendoza decision late in
the proceedings, that is, only after her motion for reconsideration in the CA (for its
subsequent annulment of the compromise agreement) was denied? It is obvious
that it was only when her case became hopeless that her present counsel frantically
searched for some ground, any ground to resuscitate his clients lost cause,
subsequently raising the issue. This is evident from a statement in her petition to
this Court that:
It is this fresh discovery by the undersigned counsel of the nullity of the proceedings
of the Court of Appeals that places in doubt the entire proceedings it previously
conducted, which led to the rendition of the February 26, 1992 Decision, a fact that
escaped the scrutiny of applicant for registration Flora L. Garcia, as well as her
lawyer, Atty. Cayetano Dante Diaz, who died in 1993, and the late Justice Fernando
A. Santiago, who stood as counsel for Flora L. Garcias successor-in-interest, herein
petitioner, Florencia G. Garcia.44 (Emphasis supplied).
The above cited statement does not help petitioners cause at all. If anything, it only
proves how desperate the case has become for petitioner and her counsel.
WHEREFORE, the letter-motion dated January 26, 2009 of petitioner is NOTED and is
hereby treated as a third motion for reconsideration. The motion is DENIED
considering that a third motion for reconsideration is a prohibited pleading and the
plea utterly lacks merit.
Petitioner is found GUILTY of contempt of court. Accordingly, a FINE of Five Thousand
Pesos is hereby imposed on her, payable within ten days from receipt of this
resolution. She is hereby WARNED that any repetition hereof shall be dealt with
more severely.
Treble costs against petitioner.
SO ORDERED.
G.R. Nos. L-31666, L-31667 and L-31668 April 30, 1979
LEPANTO CONSOLIDATED MINING COMPANY, petitioner,
vs.

MANUEL DUMYUNG, THE REGISTER OF DEEDS OF BAGUIO CITY, and the

COURT OF FIRST INSTANCE OF BAGUIO CITY (BRANCH I), respondents.
LEPANTO CONSOLIDATED MINING COMPANY, petitioner,
vs.
FORTUNATO DUMYUNG, THE REGISTER OF DEEDS OF BAGUIO CITY , and
the COURT OF FIRST INSTANCE OF BAGUIO CITY (BRANCH I), respondents.
LEPANTO CONSOLIDATED MINING COMPANY, petitioner,
vs.
DUMYUNG BONAYAN, THE REGISTER OF DEEDS OF BAGUIO CITY, and the
COURT OF FIRST INSTANCE OF BAGUIO CITY (BRANCH I), respondents.
Sycip, Salazar, Luna, Manalo & Feliciano, Jesus B. Santos and Hill &
Associates for petitioner.
Floro B. Bugnosen for private respondents.

FERNANDEZ, J.:
This is a petition to review the order of the Court of First Instance of Baguio City,
Branch I, dismissing the three complaints for annulment of titles in Civil Cases Nos.
1068, 1069 and 1070 entitled "Republic of the Philippines, Plaintiff, versus, Manuel
Dumyung, et al., Defendants, Lepanto Consolidated Mining Company, Intervenor"
for being without merit. 1
The Republic of the Philippines, represented by the Director of Lands, commenced in
the Court of First Instance of Baguio City Civil Cases Nos. 1068, 1069 and 1070 for
annulment of Free Patents Nos. V-152242, V-155050 and V-152243, and of the
corresponding Original Certificates of Title Nos. P-208, P-210 and P-209, on the
ground of misrepresentation and false data and informations furnished by the
defendants, Manuel Dumyung, Fortunate Dumyung and Dumyung Bonayan,
respectively. the land embraced in the patents and titles are Identified as Lots 1, 2
and 3 of survey plan Psu-181763 containing a total area of 58.4169 hectares, more
or less, and situated in the Municipal District of Mankayan, Sub-province of Benguet,
Mountain Province. The Register of Deeds of Baguio City was made a formal party
defendant.
The complaints in Civil Cases Nos. 1068, 1069 and 1070 are all dated September
22, 196 l. 2
The defendants filed their respective answers. 3

The Lepanto Consolidated Mining Company, petitioner herein, filed motions for
intervention dated February 5, 1962 in the three (3) civil cases 4 which were
granted. 5
The complaints in intervention alleged that a portion of the titled lands in
question-.ion is within the intervenor's ordinary timber license No. 140-'62 dated
July 7, 1961 expiring and up for renewal on June 30, 1962 and another portion of
said lands is embraced in its mineral claims. 6
The defendants in the three (3) civil cases filed an amended joint answer with
counterclaim to the complaint in intervention. 7 The said amended joint answer was
admitted in an order dated September 10, 1972. 8
Before the hearing on the merits of the three (3) civil cases, the plaintiff, Republic of
the Philippines represented by the Director of Lands, filed in the Court of First
Instance of Baguio City three (3) criminal cases for falsification of public document.
9, docketed as Criminal Cases Nos. 2358, 2359 and 2360, against the defendants
Manuel Dumyung, Fortunato Dumyung and Dumyung Bonayan, private respondents
herein, for allegedly making untrue statements in their applications for free patents
over the lands in question. The proceedings on the three (3) civil cases were
suspended pending the outcome of the criminal cases.
After the presentation of evidence by the prosecution in the three (3) criminal cases,
the defense filed a motion to dismiss the same on the ground that the accused had
complied with all the legal requirements in the acquisition of their patents which
were duly issued by the Director of Lands and that they are not guilty of the alleged
falsification of public documents.
In an order dated December 6, 1967, the trial court sustained the theory of the
defense and dismissed the three (3) criminal cases, with costs de officio, for
insufficiency of evidence to sustain the conviction of the three (3) accused. 9
Thereupon, the defendants filed a motion to dismiss dated October 12, 1968 in Civil
Cases Nos. 1068, 1069 and 1070 on the following grounds: (1) extinction of the
penal action carries with it the extinction of the civil action when the extinction
proceeds from a declaration that the fact from which the civil might arise did not
exist; (2) the decision of the trial court acquitting the defendants of the crime
charged renders these civil cases moot and academic, (3) the trial court has no
jurisdiction to order cancellation of the patents issued by the Director of Lands; (4)
the certificates of title in question can no longer be assailed; and (5) the intervenor
Lepanto has no legal interest in the subject matter in litigation. 10

The Court of First Instance of Baguio, Branch I, dismissed the three (3) civil cases
because:
After a careful examination and deliberation of the MOTION TO DISMISS, these civil
cases filed by the defendants as well as the two OPPOSITIONS TO MOTION TO
DISMISS filed by both plaintiff and intervenor Lepanto Consolidated Mining Company
and the of all the three civil cases, it clearly shows that upon the issuance of said
Free Patents on November 26, 1960, the same were duly registered with the office
of the Register of Deeds of Baguio and Benguet, pursuant to the provisions of Sec.
122 of Act 496, as amended, and consequently, these properties became the
private properties of the defendants, under the operation of Sec. 38 of said Act;
hence, these titles enjoy the same privileges and safeguards as Torrens titles
(Director of Lands vs. Heirs of Ciriaco Carle, G. R. No. L-12485, July 31, 1964). It is
therefore clear that OCT Nos. P-208, P-209 and P-210 belonging to the defendants
are now indefeasible and this Court has no power to disturb such indefeasibility of
said titles, let alone cancel the same.
The records of this case further disclose that the defendants are ignorant natives of
Benguet Province and are members of the so-called Cultural Minorities of Mountain
Province, who are the same persons accused in the dismissed criminal cases, based
on the same grounds. It should be noted that these cases fall squarely under Sec. 3
of Rule III of the New Rules of Court. 11
They plaintiff, Republic of the Philippines represented by the Director of Lands, and
the intervenor, Lepanto Consolidated Mining Company,, filed separate motions for
reconsideration of the order dismissing Civil Cases Nos. 1068, 1069 and 1070. 12
Both motion for reconsideration were denied by the trial court. 13 Thereupon the
intervenor, Lepanto Consolidated Mining Company, filed the instant petition.
The petitioner assigns the following errors:
I
THE LOWER COURT ERRED IN HOLDING THAT THE ORIGINAL CERTIFICATE OF TITLE
OF PRIVATE RESPONDENTS WERE 'INDEFEASIBLE' SIMPLY BECAUSE THEY WERE
ISSUED PURSUANT TO THE REGISTRATION OF THE FREE PATENTS OF THE PRIVATE
RESPONDENTS.
II
THE LOWER COURT ERRED IN HOLDING THAT THE PRIVATE RESPONDENTS ARE
ENTITLED TO THE BENEFITS OF REPUBLIC ACT NO. 3872.
III

THE LOWER COURT ERRED IN HOLDING THAT THE ACQUITTAL OF THE PRIVATE
RESPONDENTS IN THE CRIMINAL CASES FOR FALSIFICATION OF PUBLIC DOCUMENTS
BARRED THE CIVIL ACTIONS FOR ANNULMENT OF THE FREE PATENTS AND
CANCELLATION OF THE ORIGINAL CERTIFICATES OF TITLE OF THE PRIVATE
RESPONDENTS. 14
Timber and mineral lands are not alienable or disposable. The pertinent provisions
of the Public Land Act, Commonwealth Act No. 141, provide:
Sec. 2.
The provisions of this Act shall apply to the lands of the public domain;
but timber and mineral lands shag be governed by special laws and nothing in this
Act provided shall be understood or construed to change or modify the
administration and disposition of the lands commonly called 'friar lands' and those
which being privately owned, have reverted to or become the property of the
Commonwealth of the Philippines, which administration and disposition shall be
governed by the laws at present in force or which may hereafter be enacted.
Sec. 6.
The President, upon the recommendation of the Secretary of
Agriculture and Commerce, shall from time to time classify the lands of the public
domain into
(a)

Alienable or disposable,

(b)

Timber, and

(c)

Mineral lands,

and may at any time and in a like manner transfer such lands from one class to
another, for the purposes of their administration and disposition.
The principal factual issue raised by the plaintiff, Republic of the Philippines
represented by the Director of Lands, and the intervenor, petitioner herein, is that
the lands covered by the patents and certificates of title are timber lands and
mineral lands and, therefore, not alienable. Without receiving evidence, the trial
court dismissed the three (3) cases on the ground that upon the issuance of the free
patents on November 26, 1960, said patents were duly registered in the Office of
the Registry of Deeds of Baguio pursuant to Section 122 of Act 496, as amended,
and said properties became the private properties of the defendants under the
operation of Section 38 of the Land Registration Act. The trial court concluded that
these titles enjoy the same privileges and safeguards as the torrens title, and
Original Certificates of Title Nos. P-208, P-209 and P-210 of the defendants are now
indefeasible.

In its order denying the motion for reconsideration the trial court said,
On the ground of lack of jurisdiction on the part of the Director of Lands to dispose
of the properties since they are within the forest zone, the court finds Republic Act
No. 3872, to clear this point. Section 1, amending Section 44 of the Land Act in its
second paragraph states:
A member of the national cultural, minorities who has continuously occupied and
cultivated, either by himself or through his predecessors-in- interest, a tract or
tracts of land, whether disposable or not since July 4, 1955, shall be entitled to the
right granted in the preceding paragraph of this section: PROVIDED, that at the time
he files his free patent application, he is not the owner of any real property secured
or disposable under this provision of the Public Land Law.
The 'preceding paragraph' refers to the right of a person to have a free patent
issued to him, provided he is qualified, which in this case the Director of Lands has
the jurisdiction to dispose, whether the land be disposable or not. This provision of
law, certainly, applies to herein defendants. The reason for this law is explicit and
could very well be seen from its EXPLANATORY NOTE, which reads:
'Because of the aggresiveness of our more enterprising Christian brothers in
Mindanao, Mountain Province, and other places inhabited by members of the
National Cultural Minorities, there has be-en an exodus of the poor and less
fortunate non-christians from their ancestral homes during the t ten years to the
fastnesses of the wilderness where they have settled in peace on portions of
agricultural lands, unfortunately, in most cases, within the forest zones. But this is
not the end of the tragedy of the national cultural minorities. Because of the grant
of pasture leases or permits to the more agressive Christians, these National
Cultural Minorities who have settled in the forest zones for the last ten years have
been harassed and jailed or threatened with harassment and imprisonment.
The thesis behind the additional paragraph to Section 44 of the Public Land Act is to
give the national culture, minorities a fair chance to acquire lands of the public
domain' ...
It is for this reason that is, to give these national cultural minorities who were
driven from their ancestral abodes, a fair chance to acquire lands of the public
domain that Republic Act 3872 was passed. This is the new government policy on
liberation of the free patent provisions of the Public Land Act emphasizing more
consideration to and sympathy on the members of the national cultural minorities,
which our courts of justice must uphold. 15

The trial court assumed without any factual basis that the private respondents are
entitled to the benefits of Republic Act 3872. The pertinent provision of Republic Act
No, 3872 reads:
SECTION 1. A new paragraph is hereby added 1--o Section 44 of Commonwealth
Act Numbered One Hundred-d forty-one, to read as follows:
SEC. 44.
Any natural-born citizen of the Philippines who is not the owner of more
than twenty-four hectares and who since July fourth, ninth hundred and twenty-six
or prior thereto, has continuously occupied and cultivated, either by, himself' or
through his predecessors-in-interest. a tract or tracts of agricultural public lands
subject to disposition- or who shall have paid the real estate tax thereon while the
same has, not been occupied by any person shall be entitled, under the provision of
this chapter, to have a free patent issued to him for such tract or tracts of such land
not to exceed twenty-four hectares.
A member of the national cultural minorities who has continuously occupied and
cultivated, either by himself or through his predecessors-in- interest, a tract or
tracts of land, whether disposable or not since July 4, 1955, shall be entitled to the
right granted in the preceding paragraph of this section: Provided, That at the time
he files his free patent application he is not the owner of any real property secured
or disposable under this provision of the Public Land Law.
There is no evidence that the private respondents are members of the National
Cultural Minorities; that they have continously occupied and cultivated either by
themselves or through their predecessors-in-interest the lands in question since July
4, 1955; and that they are not the owner of any land secured or disposable under
the Public Land Act at the time they filed the free patent applications. These
qualifications must be established by evidence. Precisely, the intervenor, petitioner
herein, claims that it was in possession of the lands in question when the private
respondents applied for free patents thereon.
It was premature for the trial court to rule on whether or not the titles based on the
patents awarded to the private respondents have become indefeasible. It is well
settled that a certificate of title is void when it covers property of public domain
classified as forest or timber and mineral lands. Any title issued on non-disposable
lots even in the hands of alleged innocent purchaser for value, shall be cancelled.
16 In Director of lands vs. Abanzado 17 this Court said:
4.
To complete the picture, reference may be made to the learned and scholarly
opinion of Justice Sanchez in Director of Forestry v. Muoz, a 1968 decision. After a
review of Spanish legislation, he summarized the present state of the law thus: 'If a
Spanish title covering forest land is found to be invalid, that land is public forest
land, is part of the public domain, and cannot be appropriated. Before private

interests have intervened, the government may decide for i what Portions of the
public domain shall be set aside and reserved as forest land. Possession of forest
lands, however long, cannot ripen into private ownership.' Nor is this all He
reiterated the basic state objective on the matter in clear and penetrating language:
'The view this Court takes of the cages at bar is but in adherence to public policy
that should be followed with respect to forest lands. many have written much, and
many more have spoken, and quite often, above the pressing need for forest
preservation, conservation. protection, development and reforestation. Not without
justification For, forests constitute a vital segment of any country's natural
resources. It is of common knowledge by now that absence of the necessary green
cover on our lands produces a number Of adverse or ill effects of serious
proportions. Without the trees, watersheds dry up; rivers and lakes which they
supply are emptied of their contents. The fish disappears. Denuded areas become
dust bowls. As waterfalls cease to function, so will hydroelectric plants. With the
rains, the fertile topsoil is washed away; geological erosion results. With erosion
come the dreaded floods that wreak havoc and destruction to property crops,
livestock, houses and highways not to mention precious human lives, ...'
The acquittal of the private respondents in the criminal cases for falsification is not
a bar to the civil cases to cancel their titles. The only issue in the criminal cases for
falsification was whether there was evidence beyond reasonable doubt that the
private respondents had committed the acts of falsification alleged in the
informations. The factual issues of whether or not the lands in question are timber
or mineral lands and whether or not the private respondents are entitled to the
benefits of Republic Act No. 3872 were not in issue in the criminal case.
There is need to remand these cases to the trial court for the reception of evidence
on (1) whether or not the lands in question are timber and mineral lands; and (2)
whether the private respondents belong to the cultural minorities and are qualified
under Republic Act 3872 to be issued free patents on said lands.
WHEREFORE, the order dismissing Civil Cases Nos. 1968, 1969 and 1970 of the
Court of First Instance of Baguio City is hereby set aside and said cases are
remanded to the trial court for further proceedings, without pronouncement as to
costs.
SO ORDERED.

c. Registration under the Indigenous Peoples Right Act

d. Forms and Contents
i. What to File
ii. Where to file

iii.

Steps in Bringing a land under the Torrens System

iv.

Amendments of Area

v. Survey of the land

G.R. No. 166577 : February 3, 2010

SPOUSES MORRIS CARPO and SOCORRO CARPO, Petitioners, vs. AYALA
LAND, INCORPORATED, Respondent.
DECISION
LEONARDO-DE CASTRO, J.:
In the instant petition for review on certiorari under Rule 45 of the Rules of Court,
petitioners seek to set aside and annul the Decision1cralaw dated December 22,
2003 of the Court of Appeals (CA) in CA-G.R. CV No. 61784, which reversed and set
aside the Summary Judgment2cralaw dated December 22, 1998 of the Regional
Trial Court (RTC) of Las Pias City, Branch 255. Also subject of the present petition is
the CA Resolution3cralaw dated December 16, 2004 which denied the motion for
reconsideration of the earlier decision.
A summary of the facts, as culled from the records of the case, follows:
On February 16, 1995, petitioner spouses Morris and Socorro Carpo (Carpos) filed a
Complaint for Quieting of Title4cralaw with the RTC of Makati City against Ayala
Corporation, Ayala Property Ventures Corporation (APVC), and the Register of Deeds
of Las Pias, docketed as Civil Case No. 95-292.
In their Complaint, the Carpos claimed to be the owners of a 171,209-square meter
parcel of land covered by Transfer Certificate of Title (TCT) No. 296463 issued in
their names.5cralaw They further alleged that Ayala Corporation was claiming to
have titles (specifically, TCT Nos. 125945, T-4366, T-4367 and T-4368) over the
property covered by the Carpos TCT No. 296463 and that Ayala Corporation had
made such property its equity contribution in APVC to be developed into a
residential subdivision. Attached as annexes to the complaint were photocopies of:

(a) TCT No. 296463 issued on August 13, 1970 in the name of the Carpos, covering
a parcel of land (Lot 3, plan Psu-56007) located in the Barrio of Almanza, Las Pias
with an area of 171,309 square meters;
(b) TCT No. 125945 issued on April 6, 1988 in the name of Ayala Corporation,
covering a parcel of land (Lot 3, Plan Psu-80886) located in Bo. Tindig na Manga, Las
Pias with an area of 171,309 square meters;
(c) TCT No. T-4367 issued on May 18, 1988 in the name of Ayala Corporation,
covering a parcel of land (Lot 2, plan Psu-47035) located in the Sitio of May Kokak,
Bo. of Almanza, Las Pias with an area of 218,523 square meters; and
(d) TCT No. T-4368 issued on May 18, 1988 in the name of Ayala Corporation,
covering a parcel of land (Lot 3, plan Psu-47035) located in the Sitio of May Kokak,
Bo. of Almanza, Las Pias with an area of 155,345 square meters.
No copy of TCT No. T-4366 was attached to the complaint.
According to the complaint, TCT Nos. 125945, T-4366, T-4367 and T-4368 and their
derivatives "appear to have been issued in the name of Ayala and purport to cover
and embrace the Carpo's property or portion thereof duly covered registered under
the already indefeasible and incontrovertible TCT [No.] 296463 are inherently invalid
and enforceable (sic) for not being the duly issued derivatives of the Carpos
title."6cralaw The Carpos additionally applied for a restraining order and writ of
preliminary injunction to enjoin Ayala Corporation and APVC from doing construction
and development works on the properties in purported violation of the Carpos
rights.
The complaint prayed that the trial court render judgment:
(1) canceling and declaring void TCT Nos. 125945, T-4366, T-4367, T-4368 and all
alleged derivatives thereof, issued in the name of Ayala Corporation and/or APVC
over the properties or portion thereof embraced in the Carpos TCT No. 296463 and
issuing a writ of possession in favor of the Carpos and/or ordering Ayala Corporation
and APVC to surrender to the Carpos the properties or portion thereof being
occupied by the said corporations under inherently invalid or void titles; (2)
declaring TCT No. 296463 issued in their names as valid and the Carpos as the
owners of the property described therein "including the parcels of land being
claimed and occupied by Ayala [Corporation] and APVC withou[t] valid and
enforceable titles"; and (3) ordering Ayala Corporation and APVC to pay jointly and
severally the amount of P100,000 as attorney's fees plus costs of suit and litigation
expenses.7cralaw

On March 10, 1995, before defendants could file an answer, petitioners filed an
Amended Complaint, impleading respondent Ayala Land, Incorporated (ALI) in lieu
of Ayala Corporation after purportedly verifying with the Register of Deeds of Las
Pias that the title to the subject property was registered in the name of ALI and not
Ayala Corporation.8cralaw
On October 12, 1995 and January 12, 1996, ALI filed its Answer with Counterclaims
and Opposition to Application for Restraining Order and Writ of Preliminary
Injunction9cralaw and Pre-trial Brief with Motion to Admit Amended
Answer,10cralaw respectively.
In its Amended Answer, ALI alleged that APVC no longer exists having been merged
with ALI in 1991. ALI pointed out that the areas covered by TCT Nos. T-4366, T-4367,
and T-4368 do not overlap with the Carpos claimed property and the dispute
pertained only to the land covered by the Carpos TCT No. 296463 and TCT No. T5333 in the name of Las Pias Ventures, Inc. (LPVI) which was derived from TCT No.
125945 in the name of Ayala Corporation. It appeared that Ayala Corporation
contributed the property to LPVI and LPVI had, in turn, also merged with ALI.
Further, ALI alleged that it is the true owner of the property covered by TCT No. T5333 as it traces back its title to Original Certificate of Title (OCT) No. 242 issued in
1950 while the Carpos title was derived from OCT No. 8575 issued only in 1970. ALI
also claimed the Carpos complaint was barred by res judicata in view of the 1941
decision of this Court in Guico v. San Pedro11cralaw which upheld the ownership of
a certain Eduardo Guico over the subject property as Lot 3, of Psu-80886 over the
claim of a certain Florentino Baltazar who was asserting ownership of the same
under his plan, Psu-56007.
During the pendency of the case, ALI secured a title in its own name, TCT No. T41262, over the property previously covered by TCT No. T-5333.12cralaw
In the Order13cralaw dated March 6, 1996, the Makati RTC ruled that the present
case was an action in rem and directed the transfer of the case to the RTC of Las
Pias where the disputed property is located. The case was thereafter assigned to
Branch 255 of the Las Pias RTC and docketed as Civil Case No. 96-0082.
On December 17, 1996, ALI filed a Motion for Summary Judgment on the ground
that there was allegedly no genuine issue as to any material fact and the only issue
for the court to resolve was a purely legal one which of the two (2) titles should
be accorded priority. According to ALI, the parties were relying on their respective
TCTs, and since ALI admittedly traces its title to OCT No. 242 which was issued more
than twenty (20) years earlier than the Carpos predecessor's title (OCT No. 8575),
its title is, thus, superior. Expectedly, the Carpos filed an opposition to the motion
for summary judgment, arguing that there were "genuine issues and controversies
to be litigated."

In an Order dated April 7, 1997, the RTC denied ALI's motion for summary judgment.
This denial was challenged in a petition for certiorari with the CA in CA-G.R. SP No.
44243.
In a decision14cralaw dated September 25, 1997, the CA granted ALI's petition and
ordered the RTC to render a summary judgment. Both parties moved for
reconsideration of the CA Decision. ALI filed a motion for partial reconsideration,
entreating the CA itself to render the summary judgment in the interest of judicial
economy and on a claim that the sole issue was legal. The Carpos, in their motion,
insisted that there were genuine issues in this case that must be threshed out in a
trial. Both motions were denied in the CA Resolution dated January 12,
1998.15cralaw
Both parties elevated the matter to this Court in separate petitions for review on
certiorari . In G.R. No. 132259, ALI assailed the CA's refusal to render a summary
judgment, while in G.R. No. 132440, the Carpos assailed the CA's ruling that trial
was unnecessary.
In separate minute Resolutions,16cralaw the Court denied both petitions. Both
parties motions for reconsideration were likewise denied.
Accordingly, the RTC rendered a Summary Judgment dated December 22, 1998,
finding the Carpos title superior to that of ALI and ruling, thus:
Upon the other hand, this Court is not inclined to concur with Ayala's claim of the
validity of its TCT No. T-5333 and alleged OCT No. 242 absent of any admission to
that effect by the plaintiffs in their complaint. A reading of the defendant's answer
reveals that OCT No. 242 covers the property surveyed under SWO, but the
pleadings on file fail to allege that the same was approved by the Director of the
Bureau of Lands, thereby justifying this court to be skeptical of the validity of the
issuance of OCT No. 242. In original land registration cases, it is mandatory that the
application should be accompanied by a survey plan of the property applied for
registration, duly approved by the Director of the Bureau of Lands. A survey plan
without the approval of the Director of the Bureau of Lands has the character of
being of dubious origin and it is not therefore worthy of being accepted as evidence.
The property being claimed by the defendant ALI, allegedly registered under OCT
No. 242, is shown to have been surveyed under SWO and not bearing the approval
of the Director of the Bureau of Lands. Any title issued emanating from a survey
plan without the approval of the Director of the Bureau of Lands is tainted with
irregularity and therefore void, as ruled in Republic Cement Corporation vs. Court of
Appeals, et al., 198 SCRA 734. In the said case, the Supreme Court held: "That
unless a survey plan is duly approved by the Director of Lands the same is of
dubious value and is not acceptable as evidence. Indubitably, therefore, the

reported survey and its alleged results are not entitled to credit and should be
rejected."
The submission of the plan is a statutory requirement of mandatory character and
unless the plan and its technical description are duly approved by the Director of
Lands, the same are not of much value (Republic vs. Vera, 120 SCRA 210). In
another case, it was ruled that the Land Registration Commission has no authority
to approve original survey plans (Director of Lands, et al. vs. Honorable Salvador
Reyes, et al., 68 SCRA 177).
Evidently, the SWO survey of the property which defendant ALI claimed to have
been originated from OCT No. 242 had not been approved by the Director of the
Bureau of Lands, but was apparently prepared and approved by the then Land
Registration Commissioner and under the law, the same is void.
It will also be noted that aside from the admissions made by defendant ALI in its
answer, it clearly appears in its title TCT No. T-5333 that the date of survey was on
July 28, 1930. Plaintiffs property covered by TCT No. 296463 was surveyed on
January 4-6, 1927. This means that plaintiffs predecessor-in-interest had claimed
ownership of the property ahead of that of defendant ALI's predecessor-in-interest.
The principle of prior registration cannot be applied in this case because the land
previously surveyed cannot anymore be the subject of another survey, and there is
already a record of a prior survey in the Bureau of Lands. This is precisely the
reason why the survey plan has to be approved by the Director of the Bureau of
Lands. This must be the reason why the later survey in favor of Ayala's predecessorin-interest did not anymore bear the approval of the Director of Lands because had
it been submitted for approval, the records of the Bureau of Lands will show that an
earlier survey of the same land had already been made and approved by the
Director of the Bureau of Lands.
Evidently, Ayala's claim of superiority of its title over that of the plaintiffs cannot
therefore be sustained. Be that as it may, the fact that cannot be disputed on the
basis of Ayala's answer is its admission that SWO survey without the approval of the
Director of the Bureau of Lands was submitted in the alleged registration
proceedings, rendering the decree and the title issued thereunder to be tainted with
irregularity and therefore void.
WHEREFORE, in the light of the foregoing and the prevailing jurisprudence on the
matter, judgment is hereby rendered:
(a) Declaring TCT No. 296463 in the name of the plaintiffs Spouses Morris G. Carpo
and Socorro R. Carpo as valid and legal, and superior to that of defendant Ayala's
TCT No. T-5333;

(b) Declaring TCT No. T-5333, TCT No. 125945, TCT No. T-6055, TCT No. 4366, TCT
No. 4367 and TCT No. 4368 and their derivatives as null and void;
(c) Ordering the defendant Ayala Land, Inc. to pay the sum of P100,000.00 as
attorney's fees; and
(d) To pay the costs.17cralaw
On January 5, 1999, ALI filed a notice of appeal but the same was dismissed by the
CA in a Resolution18cralaw dated May 14, 1999 for failure to pay the full amount of
docket fees. In its motion for reconsideration, ALI pointed out that it paid the full
amount assessed by the cash clerk on duty at the RTC Las Pias. The motion was
also denied, prompting ALI to file with this Court a petition for review docketed as
G.R. No. 140162. Finding ALI's petition meritorious, the Court, in a Decision19cralaw
dated November 22, 2000, reversed the CA's dismissal of ALI's appeal and
remanded the same to the CA for further proceedings.
On December 22, 2003, the CA rendered the herein challenged decision in favor of
ALI, the dispositive portion of which reads as follows:
FOR THE FOREGOING DISQUISITIONS, the instant appeal is GRANTED, the assailed
Summary Judgment of the Regional Trial Court of Las Pias, Branch 255, dated
December 22, 1998, is hereby REVERSED and SET ASIDE, and a new one is
rendered as follows:
(1) TCT No. 41262, formerly TCT No. T-5333, in the name of defendant-appellant
Ayala Land, Incorporated is hereby declared to be the VALID title to the subject
property;
(2) TCT No. 296463 issued in the name of plaintiffs-appellees is declared to be NULL
and VOID;
(3) The concerned Register of Deeds is hereby ORDERED to cancel plaintiffsappellees TCT No. 296463, and any and all titles issued covering the subject
property, for being spurious and void, and of no force and effect.20cralaw
The Carpos filed their motion for reconsideration but the same was denied by the
CA in its Resolution dated December 16, 2004. Hence, the instant petition for review
filed by Socorro Carpo and the heirs of Morris Carpo.21cralaw The Petition contained
the following assignment of errors:
A THE COURT OF APPEALS ERRED IN DECLARING THAT THE TITLE OF RESPONDENT
IS VALID EVEN WITHOUT THE REQUISITE SURVEY PLAN APPROVED BY THE DIRECTOR
OF LANDS.

B. THE COURT OF APPEALS ERRED IN DECLARING PETITIONERS GUILTY OF LACHES

AND PRESCRIPTION.
C. THE COURT OF APPEALS ERRED IN DECLARING THAT THE RTC "RELIED HEAVILY"
ON AN ALLEGED "ADMISSION" BY RESPONDENT OF THE VALIDITY OF THE TITLE OF
PETITIONERS OVER THE DISPUTED PARCEL OF LAND.
D. THE COURT OF APPEALS ERRED IN DECLARING THAT THERE IS RES JUDICATA
AGAINST PETITIONERS BASED ON THE CASE OF GUICO V. SAN PEDRO, ET AL., 72
PHIL 415, WITHOUT PROPER DETERMINATION OF WHETHER THE FACTS IN SAID
CASE ARE DIRECTLY APPLICABLE TO THIS CASE AND WHETHER THE ELEMENTS OF
RES JUDICATA ARE PRESENT.22cralaw
Petitioners prayed that this Court render a decision: (a) reversing and setting aside
the CA Decision dated December 22, 2003 and Resolution dated December 16,
2004; (b) reinstating and affirming in toto the RTC's Summary Judgment dated
December 22, 1998; or in the alternative (c) remanding the case to the RTC for
further proceedings.
After a thorough review of the records, we deny the petition and concur with the CA
that the Summary Judgment rendered by the trial court should be reversed and set
aside.
Preliminary discussion regarding subject matter of the controversy
At the outset, it should be noted that the trial court in its Summary Judgment
declared null and void (a) TCT No. T-5333 (and its antecedent, TCT No. [125945] T6055A) covering a parcel of land with an area of 171,309 square meters; (b) TCT No.
T-4366 with a land area of 254,085 square meters; (c) TCT No. T-4367 with a land
area of 218,523 square meters; and (d) TCT No. T-4368 with a land area of 155,345
square meters, despite the lack of evidence of identity of the properties described in
TCT Nos. T-4366, T-4367 and T-4368 with the property covered by the Carpos TCT
No. 296463 or any portion of said property claimed by petitioners. This was grievous
and palpable error on the part of the trial court considering that the property being
claimed by the Carpos under their TCT No. 296463 had an area of only 171,309
square meters and the total area of the properties in the titles invalidated by the
trial court was 799,262 square meters.
It must be emphasized that in CA-G.R. SP No. 44243, involving the same parties, the
CA ruled that:

On the other hand, defendant ALI, in its responsive pleading did not deny the
existence of a title in the name of the plaintiffs/private respondents. Instead, it
alleged:
"14. The parcel of land described in TCT No. 296463, issued in the name of the
plaintiffs, completely overlaps the property covered by ALI's TCT No. T-5333. But
TCT No. T-296463 traces itself to OCT No. 8575 which was issued on August 12,
1970, long after OCT No. 242 (the title from which ALI's TCT No. T-5333 was derived)
was issued on May 9, 1950 (on the basis of Decree of Registration No. 2917, Record
No. 43516). Hence, ALI's TCT No. T-5333 is superior to TCT No. 296463. xxx."
This is an admission that the private respondents have a title to the property in
question, and that the property described in private respondents TCT No. 296463
completely overlaps the title of petitioner ALI. This fact is further substantiated by
an affidavit of Jose Rizal Mercado, a Geodetic Engineer who, after attesting to his
qualifications, competence and experience, declared under oath:
"9. In connection with the subject case, Affiant was requested to find out, based on
the technical descriptions in their respective titles, if the lots described in the title of
plaintiffs, TCT No. 296463, overlaps the lots of ALI covered by TCT No. 41262
(formerly, TCT No. T-5333 of LPVI, and, more previously, TCT No. T (125945) 6055-A,
in the name of Ayala Corporation), TCT No. 4366, TCT No. 4367 and TCT No. 4368, x
x x.
9.1. To accomplish this task, Affiant resorted to the plotting of the technical
descriptions found in the plaintiffs and ALI's respective titles. The standard
operating procedure, adopted by Affiant in this particular instance, in plotting
properties is to study the technical description in the titles and at the same time, to
get all the available survey plans described in the titles for reference.
9.2. To evidence this plotting that Affiant conducted, Affiant prepared a Sketch Plan
reflecting Plaintiffs title vis-a-vis ALI's title. Attached hereto as Annex "G" is an
original copy of the Sketch Plan prepared by the Affiant.
9.3. The orange-shaded portion on the Sketch Plan indicates the area covered by
the title of the plaintiffs and it is clearly shown in this plan that plaintiffs claimed
property entirely overlaps ALI's property delineated in TCT No. T-41262. Plaintiffs
claimed property (Lot 3, PSU-56007) is in fact identical to ALI's lot (Lot 3, PSU80886).
9.4. The blue, pink and green lines on the Sketch Plan indicate the boundaries of
ALI's TCT Nos. 4366, 4367 and 4368, respectively, and it is clearly shown that these
do not overlap with plaintiffs claimed property."

The Sketch Plan attached thereto clearly indicates the overlapping and identical
boundaries between the private respondents TCT No. 296463 and petitioner's TCT
No. 125945, (formerly TCT No. T-5333).23cralaw In addition to the affidavit of the
Geodetic Engineer, the petitioner likewise attached to its Motion for Summary
Judgment copies of the following titles:
xxxx
In contrast, the private respondents never controverted the petitioner's allegation
that their (private respondents) title, TCT No. 296463 traces its origin to OCT No.
8575, issued on August 12, 1970, while that of the petitioner has its origin in OCT
No. 242, issued on May 9, 1950. Moreover, the private respondents attached no
supporting document to its Opposition to the Motion for Summary Judgment.
Thus, as matters stand, the requisites for the grant of summary judgment appear to
have been satisfied xxx.
xxxx
Since the existence of two titles over the same property, as well as the fact of
overlapping of the technical descriptions of the two titles are admitted in the
pleadings, and substantiated by the supporting documents attached by the
defendant-movant (petitioner herein) to its Motion for Summary Judgment, there is
no genuine issue as to any material fact. If at all, the sole issue is a legal one, to wit:
whose title (as to the conflicting ones) is superior and must be upheld.This issue
may be decided on the basis of the affidavits and supporting documents submitted
by the parties, as well as the applicable law and jurisprudence on the matter. In
other words, there need not be a protracted trial thereon, since all that the trial
court should do is to apply the law to the issue, taking into consideration the
documents attached by the parties in their respective pleadings and/or submitted
together with the motion or the opposition thereto. The same is true with the other
defenses raised by the petitioner in its responsive pleading, to wit: res judicata,
prescription and laches which may likewise be resolved without going to
trial.24cralaw (Emphasis and underscoring supplied.)
The foregoing CA decision became final and executory after the separate petitions
for review filed with this Court by the parties were denied with finality. The parties,
and even the trial court, were bound by the CA's factual finding therein that the only
lots whose technical descriptions overlap are those covered by the Carpos TCT No.
296463 and ALI's TCT No. T-5333 which later became TCT No. T-41262. There was
simply no basis for the trial court to invalidate all the ALI titles mentioned in the
complaint.

The incorrectness of this sweeping invalidation of ALI titles in the Summary

Judgment is even more evident in the case of TCT No. T-4367 (Lot 2, plan Psu47035) and TCT No. T-4368 (Lot 3, plan Psu-47035). Petitioners claims with respect
to these properties are already barred by res judicata. In Realty Sales Enterprise,
Inc. v. Intermediate Appellate Court,25cralaw petitioner Morris Carpo already
asserted his purported ownership of these two properties based on a transfer
certificate of title with the same survey plan number (Psu-56007) as TCT No.
296463. However, in Realty, his claim was discredited by the Court when it held that
Realty Sales Enterprise, Inc. (Realty), ALI's predecessor in interest,26cralaw is the
one with valid title to these properties. The relevant portions of the Realty Decision
are quoted here:
Two (2) adjacent parcels of land located in Almanza, Las Pias, Metro Manila, having
an aggregate area of 373,868 sq. m., situated in the vicinity of the Ayala Alabang
Project and BF Homes Paraaque are covered by three (3) distinct sets of Torrens
titles to wit:
1) TCT No. 20408 issued on May 29, 1975 in the name of Realty Sales Enterprise,
Inc., which was derived from OCT No. 1609, issued on May 21, 1958, pursuant to
Decree No. N-63394 in LRC Cases Nos. 657, 758 and 976, GLRO Record Nos. N29882, N-33721 and N-43516, respectively.
2) TCT No. 303961 issued on October 13, 1970 in the name of Morris G. Carpo,
which was derived from OCT No. 8629, issued on October 13, 1970 pursuant to
decree No. N-131349 in LRC Case No. N-11-M (N-6217), GLRO Record No. N-32166.
3) TCTs Nos. 333982 and 333985, issued on July 27, 1971 in the name of Quezon
City Development and Financing Corporation, derived from OCT No. 8931 which was
issued on July 27, 1971 pursuant to LRC Case No. P-206 GLRO Record No. N-31777.
On December 29, 1977, Morris Carpo filed a complaint with the Court of First
Instance of Rizal, Branch XXIII, presided over by Judge Rizalina Bonifacio Vera
(hereafter referred to as Vera Court), for "declaration of nullity of Decree No. N63394 and TCT No. 20408." Named defendants were Realty Sales Enterprise, Inc.,
Macondray Farms, Inc. and the Commissioner of Land Registration. x x x.
xxxx
In the case at bar, it appears that it was Estanislao Mayuga, father of Dominador
Mayuga, predecessor-in-interest of Realty, who originally filed on June 24, 1927 a
registration proceeding docketed as LRC Case No. 657, GLRO Record No. N-29882 in
the Court of First Instance of Rizal to confirm his title over parcels of land described
as Lots 1, 2 and 3, Plan Psu-47035. (Lots 2 and 3 are the subject of the instant
litigation among Carpo, Realty and QCDFC.) Case No. 657 was jointly tried with two

other cases, LRC Case No. 976, GLRO Record No. 43516 filed by Eduardo Guico and
LRC Case No. 758, GLRO Record No. 33721 filed by Florentino Baltazar, as the three
cases involved identical parcels of land, and identical applicants/oppositors.
xxxx
Carpo bought the disputed property from the Baltazars, the original registered
owners, by virtue of a deed executed before Iluminada Figueroa, Notary Public of
Manila dated October 9, 1970. x x x.
xxxx
The Baltazars, predecessors-in-interest of Carpo are heirs of Florentino Baltazar, an
oppositor in the original application filed by Estanislao Mayuga in 1927. As stated
earlier, the CFI-Rizal confirmed the title of Estanislao to Lots 1, 2 and 3 of Plan Psu47035 "desestimando oposicion de Florentino Baltazar . . . con respeto a dichos
lotes . . ." As such successors of Florentino, they could not pretend ignorance of the
land registration proceedings over the disputed parcels of land earlier initiated by
Eduardo Guico, Florentino Baltazar and Estanislao Mayuga, as when as the decisions
rendered therein.
Moreover, it is not disputed that the title in the name of Dominador Mayuga, from
whom Realty derived its title, was issued in 1958, or twelve years before the
issuance of the title in the name of the Baltazars in 1970.
In this jurisdiction, it is settled that "(t)he general rule is that in the case of two
certificates of title, purporting to include the same land, the earlier in date prevails
x x x. In successive registrations, where more than one certificate is issued in
respect of a particular estate or interest in land, the person claiming under the prior
certificate 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 the person who was the holder of the earliestcertificate issued in
respect thereof x x x."27cralaw (Emphasis and underscoring ours; citations
omitted.)
We now discuss each assignment of error raised in the petition.
First Assignment of Error
Petitioners alleged that the CA erred in declaring that the title of respondent is valid
even without the requisite survey plan approved by the Director of the Bureau of
Lands.

Petitioners clearly misunderstood or deliberately misread the CA's ruling on this

point. It is the CA's view that the trial court's pronouncement that OCT No. 242 was
issued without an approved survey plan was unwarranted in view of the
presumption of regularity that said title enjoys.
We cannot but agree with the CA on this point upon perusing the following portion
of the Summary Judgment:
Upon the other hand, this Court is not inclined to concur with Ayala's claim of the
validity of its TCT No. T-5333 and alleged OCT No. 242 absent of any admission to
that effect by the plaintiffs in their complaint. A reading of the defendant's answer
reveals that OCT No. 242 covers the property surveyed under SWO, but the
pleadings on file fail to allege that the same was approved by the Director of the
Bureau of Lands, thereby justifying this court to be skeptical of the validity of the
issuance of OCT No. 242. In original land registration cases, it is mandatory that the
application should be accompanied by a survey plan of the property applied for
registration, duly approved by the Director of the Bureau of Lands. A survey plan
without the approval of the Director of the Bureau of Lands has the character of
being of dubious origin and it is not therefore worthy of being accepted as evidence.
The property being claimed by the defendant ALI, allegedly registered under OCT
No. 242, is shown to have been surveyed under SWO and not bearing the approval
of the Director of the Bureau of Lands. Any title issued emanating from a survey
plan without the approval of the Director of the Bureau of Lands is tainted with
irregularity and therefore void, as ruled in Republic Cement Corporation vs. Court of
Appeals, et al., 198 SCRA 734. In the said case, the Supreme Court held: "That
unless a survey plan is duly approved by the Director of Lands the same is of
dubious value and is not acceptable as evidence. Indubitably, therefore, the
reported survey and its alleged results are not entitled to credit and should be
rejected."
The submission of the plan is a statutory requirement of mandatory character and
unless the plan and its technical description are duly approved by the Director of
Lands, the same are not of much value (Republic vs. Vera, 120 SCRA 210). In
another case, it was ruled that the Land Registration Commission has no authority
to approve original survey plans (Director of Lands, et al. vs. Honorable Salvador
Reyes, et al., 68 SCRA 177).
Evidently, the SWO survey of the property which defendant ALI claimed to have
been originated from OCT No. 242 had not been approved by the Director of the
Bureau of Lands, but was apparently prepared and approved by the then Land
Registration Commissioner and under the law, the same is void.28cralaw
To begin with, a perusal of the defendant's answer or amended answer would show
that, contrary to the trial court's allusions thereto, there is no admission on the part

of ALI that OCT No. 242 was issued without a survey plan that was duly approved by
the Director of the Bureau of Lands. There is likewise no evidence on record to
support the trial court's finding that the survey plan submitted to support the
issuance of OCT No. 242 in the 1950 land registration proceedings was approved
only by the Land Registration Commissioner and not by the Director of the Bureau
of Lands.
It would appear the trial court came to the conclusion that OCT No. 242 was issued
without a duly approved survey plan simply because the notation "SWO" appeared
in the technical description of the said title which was attached to the answer and
due to ALI's failure to allege in its pleadings that the survey plan submitted in
support of the issuance of OCT No. 242 was approved by the Director of the Bureau
of Lands.29cralaw
It is incomprehensible how the trial court could conclude that the survey plan
mentioned in OCT No. 242 was unapproved by the appropriate authority all from the
notation "SWO" which appeared beside the survey plan number on the face of the
title or from a failure to allege on the part of ALI that a duly approved survey plan
exists. We quote with approval the discussion of the CA on this point:
Pursuant to the foregoing, the court a quo erred when, in ruling that the validity of
OCT No. 242 is dubious, it gave emphasis to defendant-appellant's failure to allege
that the survey plan of OCT No. 242 was duly approved by the Director of the
Bureau of Lands. It is admitted that a survey plan is one of the requirements for the
issuance of decrees of registration, but upon the issuance of such decree, it can
most certainly be assumed that said requirement was complied with by ALI's
original predecessor-in-interest at the time the latter sought original registration of
the subject property. Moreover, the land registration court must be assumed to have
carefully ascertained the propriety of issuing a decree in favor of ALI's predecessorin-interest, under the presumption of regularity in the performance of official
functions by public officers. The court upon which the law has conferred jurisdiction,
is deemed to have all the necessary powers to exercise such jurisdiction, and to
have exercised it effectively.This is as it should be, because once a decree of
registration is made under the Torrens system, and the time has passed within
which that decree may be questioned the title is perfect and cannot later on be
questioned. There would be no end to litigation if every litigant could, by repeated
actions, compel a court to review a decree previously issued by another court fortyfive (45) years ago. The very purpose of the Torrens system would be destroyed if
the same land may be subsequently brought under a second action for registration,
as what the court a quo did when it faulted ALI's failure to allege that its
predecessor-in-interest submitted a survey plan approved by the Director of the
Bureau of Lands in the original land registration case.

The Court need not emphasize that it is not for ALI to allege in its pleadings, much
less prove, that its predecessor-in-interest complied with the requirements for the
original registration of the subject property. A party dealing with a registered land
need not go beyond the Certificate of Title to determine the true owner thereof so
as to guard or protect his or her interest. Hence, ALI was not required to go beyond
what appeared in the transfer certificate of title in the name of its immediate
transferor. It may rely solely, as it did, on the correctness of the certificate of title
issued for the subject property and the law will in no way oblige it to go behind the
certificate of title to determine the condition of the property. This is the fundamental
nature of the Torrens System of land registration, to give the public the right to rely
upon the face of a Torrens certificate of title and to dispense with the need of
inquiring further.30cralaw (Underscoring ours; citations omitted.)
It cannot be gainsaid that the issuance of OCT No. 242 was a result of the
registration decree of the Court of First Instance of Rizal, pursuant to land
registration proceedings in Case No. 976. In the absence of proof to the contrary,
OCT No. 242 and its derivatives, including ALI's TCT No. T-41262, enjoy the
presumption of regularity and ALI need not allege or prove that its title was
regularly issued. That is precisely the nature of such a presumption, it dispenses
with proof. Rule 131, Section 3 of the Rules of Court provides:
Section 3. Disputable presumptions . The following presumptions are satisfactory if
uncontradicted, but may be contradicted and overcome by other evidence:
xxxx
(m) That official duty has been regularly performed;
(n) That a court, or judge acting as such, whether in the Philippines or elsewhere,
was acting in the lawful exercise of jurisdiction;
(o) That all the matters within an issue raised in a case were laid before the court
and passed upon by it; and in like manner that all matters within an issue raised in a
dispute submitted for arbitration were laid before the arbitrators and passed upon
by them; x x x.
Thus, we held in Herce, Jr. v. Municipality of Cabuyao, Laguna31:
In the absence of evidence to the contrary, the Ordinary Decree Book, LRC (CLR)
Rec. No. 6763, showing that Decree No. 4244 was issued on March 3, 1911, is
presumed to have been regularly issued by the accountable public officers who
enjoy the legal presumption of regularity in the performance of their functions.
Thus, the proceedings that led to the issuance of Decree No. 4244 in favor of the

Municipality of Cabuyao cannot be overturned without any countervailing proof to

the contrary. In the words of Tichangco v. Enriquez:32cralaw
To overturn this legal presumption carelessly more than 90 years since the
termination of the case will not only endanger judicial stability, but also violate the
underlying principle of the Torrens system. Indeed, to do so would reduce the
vaunted legal indefeasibility of Torrens titles to meaningless verbiage. (Emphasis
supplied.)
The presumption of regularity enjoyed by the registration decree issued in Case No.
976 and OCT No. 242 includes the presumption that all the requisites for the
issuance of a valid title had been complied with. ALI need not allege or prove that a
duly approved survey plan accompanied the issuance of OCT No. 242 in 1950
because it is presumed. It is the party who seeks to overcome the presumption who
would have the burden to present adequate and convincing evidence to the
contrary. This, petitioners did not even attempt to do.
We cannot accept petitioners proposition that they did not have the burden of proof
of showing the irregularity of ALI's title since the burden of proof purportedly did not
shift to them since no full-blown trial was conducted by the RTC.
This specious argument deserves scant credit. Rule 131, Section 1 of the Rules of
Court provides:
Section 1. Burden of proof. Burden of proof is the duty of a party to present
evidence on the facts in issue necessary to establish his claim or defense by the
amount of evidence required by law.
With the filing of the complaint, petitioners should already have alleged all the
bases of their cause of action, particularly their allegation that ALI's title is null and
void and that such title should be cancelled. However, a scrutiny of the complaint
would show that petitioners never alleged the purported lack of an approved survey
plan as a defect of ALI's title. All that the complaint alleged is that ALI's titles should
be declared void for not being derivatives of the Carpos title. Implicit in that
allegation is that petitioners were relying solely on the supposed priority of their
own title over ALI's. It stands to reason then that ALI did not have to allege in its
Answer that its mother title, OCT No. 242, was supported by a duly approved survey
plan when petitioners did not raise the same as an issue in their complaint or in any
other pleading filed with the trial court.
Indubitably, in view of the CA's Decision in CA-G.R. SP No. 44243, this controversy
has been reduced to the sole substantive issue of which between the two titles,
purporting to cover the same property, deserves priority. This is hardly a novel
issue. As petitioners themselves are aware, in Realty, it was held that:

In this jurisdiction, it is settled that "(t)he general rule is that in the case of two
certificates of title, purporting to include the same land, the earlier in date prevails
x x x. In successive registrations, where more than one certificate is issued in
respect of a particular estate or interest in land, the person claiming under the prior
certificate 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 the person who was the holder of the earliest certificate issued in
respect thereof x x x."33cralaw (Emphasis supplied.)
In Degollacion v. Register of Deeds of Cavite,34cralaw we held that "[w] here two
certificates of title purport to include the same land, whether wholly or partly, the
better approach is to trace the original certificates from which the certificates of
title were derived."
In all, we find that the CA committed no reversible error when it applied the
principle "Primus Tempore, Portior Jure" (First in Time, Stronger in Right) in this case
and found that ALI's title was the valid title having been derived from the earlier
OCT.

Second Assignment of Error

Petitioners contend that it is error on the part of the CA to rule that their cause of
action has been barred by prescription and laches. According to them, since the
OCT from which ALI derived its title is void for want of a duly approved survey plan,
their cause of action did not prescribe. However, as discussed above, the conclusion
of the trial court that OCT No. 242 is void was not sufficiently borne out by the
evidence on record. Verily, the premise upon which petitioners build their theory of
imprescriptibility of their action did not exist.
In sum, we find no reason to disturb the CA's finding that:
As previously emphasized, OCT No. 242 of ALI's predecessor-in-interest was issued
on May 7, 1950, or forty-five (45) years before plaintiffs-appellees filed their
complaint on March 10, 1995. As such, it is the Court's firmly held view that
plaintiffs-appellees claim is barred not only by prescription, but also by laches.
Aside from the fact that OCT No. 242 had become incontrovertible after the lapse of
one (1) year from the time a decree of registration was issued, any action for
reconveyance that plaintiffs-appellees could have availed of is also barred. Although
plaintiffs-appellees complaint was for quieting of title, it is in essence an action for
reconveyance based on an implied or constructive trust, considering that plaintiffsappellees were alleging in said complaint that there was a serious mistake, if not

fraud, in the issuance of OCT No. 242 in favor of ALI's predecessor-in-interest. It is

now well-settled that an action for reconveyance, which is a legal remedy granted
to a landowner whose property has been wrongfully or erroneously registered in
another's name, must be filed within ten years from the issuance of the title, since
such issuance operates as a constructive notice. Since ALI's title is traced to an OCT
issued in 1950, the ten-year prescriptive period expired in 1960.
By laches is meant the negligence or omission to assert a right within a reasonable
time, warranting a presumption that the party entitled to assert it either has
abandoned it or declined to assert it. It does not involve mere lapse or passage of
time, but is principally an impediment to the assertion or enforcement of a right,
which has become under the circumstances inequitable or unfair to permit. In the
instant case, plaintiffs-appellees, as well as their predecessor-in-interest, have not
shown that they have taken judicial steps to nullify OCT No. 242, from which ALI's
title was derived, for forty-five (45) years. To allow them to do so now, and if
successful, would be clearly unjust and inequitable to those who relied on the
validity of said OCT, the innocent purchasers for value, who are protected by the
precise provisions of P.D. 1529, thus:
"SECTION 32. Review of decree of registration; Innocent purchaser for value The
decree of registration shall not be reopened or revised xxx subject, however, to the
right of any person xxx to file in the proper Court of First Instance a petition for
reopening and review of the decree of registration not later than one year from and
after the date of entry of such decree of registration, but in no case shall such
petition be entertained by the court where an innocent purchaser for value has
acquired the land or an interest therein, whose rights may be prejudiced. Whenever
the phrase innocent purchaser for value or an equivalent phrase occurs in this
Decree, it shall be deemed to include and innocent lessee, mortgagee or other
encumbrances for value."35cralaw

Third Assignment of Error

The next assigned error involves the question of whether the trial court, in
rendering the Summary Judgment, indeed relied heavily on the alleged admission
made by ALI on the validity of Carpos title, as declared by the CA. Specifically, the
CA stated as follows:
In its assailed decision, the court a quo relied heavily on the alleged admission by
ALI in it[s] Answer of the existence and validity of plaintiffs-appellees title. We have
read the pertinent pleading and We find ALI's statement to be of no moment.
Nowhere in ALI's statement was there an admission of the validity of plaintiffsappellees title. x x x.

The Court cannot comprehend where and how the court a quo could have gotten
the impression that ALI was admitting not only the existence, but also the validity of
plaintiffs-appellees certificate of title. x x x.36cralaw
An examination of the Summary Judgment of the trial court would readily show that
indeed the trial court relied on ALI's supposed admission of the existence of Carpos
title in ruling which of the conflicting titles was valid. Pertinently, the trial court
merely declared:
The existence of plaintiffs TCT No. 296463 has been admitted by defendant Ayala in
its answer to have been originated from OCT No. 8575 which was issued on August
12, 1970. It is very significant that defendant ALI admitted it in its answer that OCT
No. 8575 and plaintiffs TCT No. 296463 both originated from Decree No. 131141
issued on October 15, 1969 in the name of Apolonio Sabater as Annex "G" to
defendant ALI's answer. This admission made by the defendant in its answer is
conclusive upon it. It cannot therefore take position contrary to or inconsistent with
its answer, and the facts are to be taken as true (Westminister High School vs. Sto.
Domingo, et al., G.R. No. 12666 R-July 5, 1955; McDaniel vs. Apacible, 44 Phil. 248255).
Upon the other hand, this Court is not inclined to concur with Ayala's claim of the
validity of its TCT No. T-5333 and alleged OCT No. 242 absent of any admission to
that effect by the plaintiffs in their complaint. x x x.37cralaw
Although the Summary Judgment did not expressly state that ALI admitted the
validity of Carpos title with its admission of the said title's existence, that is the
unmistakable import of the trial court's statements that ALI's admission of the
existence of Carpo's title "are conclusive upon it" and bars ALI from taking a
"position contrary to or inconsistent with its answer" followed by the statement that
the trial court is "not inclined to concur with Ayala's claim of validity of its TCT No. T5333 and alleged OCT No. 242, absent of (sic) any admission to that effect by the
plaintiffs." This is yet another non sequitur argument on the part of the trial court
which the CA correctly pointed out in its own Decision.
Fourth Assignment of Error
As to the issue of res judicata, the Court of Appeals ruled that the decision in the
case of Guico v. San Pedro38cralaw was binding on the Carpos as it proceeded to
discuss, thus:
In Guico vs. San Pedro, the Supreme Court resolved the conflicting claims over a
tract of land situated in barrio Tindig na Manga, Paraaque, Rizal, which was
subdivided into eleven (11) lots. The subject land was sought to be registered by a

certain Eduardo C. Guico on the basis of an accompanying plan Psu-80886, which

interestingly is also the basis of ALI's TCT No. T-5333, now TCT No. 41262. Guico's
application was opposed by, among others, Florentino Baltazar, on the basis of plan
Psu 56007, under which plaintiffs-appellees title was derived.
It appears that Lots 2 and 3 were adjudicated to Guico on the basis of Psu-80886
(Lot 3 is the subject matter of the instant case), Lot 10 in favor of Baltazar on the
basis of Psu 56007, under which plaintiffs-appellees title was based, and the rest to
the heirs of Narciso Mayuga. While Baltazar claimed Lot 3 on the basis of his Psu56007, his claim was rejected and the Lot was adjudicated to Guico on the basis of
his Psu-80886.
It is clear, therefore, that whatever claim plaintiffs-appellees have on the subject
property on the basis of Lot 3 Psu-56007, through their predecessor-in-interest,
Florentino Baltazar, the same had been clearly and finally denied by the Supreme
Court in Guico vs. San Pedro.
For res judicata to apply, four requisites must be met: (1) the former judgment or
order must be final; (2) it must be a judgment or an order on the merits; (3) it must
have been rendered by a court having jurisdiction over the subject matter and the
parties; and (4) there must be, between the first and the second actions, identity of
parties, of subject matter and of cause of action. Plaintiffs-appellees only have
objections with respect to the fourth requisite, offering the lame excuse that it is not
bound by such decision, there being no identity of parties in Guico vs. San Pedro
and the instant case.39cralaw
We agree with petitioners that it is not apparent from an examination of Guico and
the evidence on record that indeed the predecessors-in-interest of ALI and the
Carpos with respect to the subject property are Eduardo Guico and Florentino
Baltazar, especially since the parties respective OCTs were not issued in these
persons names but rather a certain Alberto Yaptinchay and Apolonio Sabater. It
cannot be categorically said that there was identity of parties between the Guico
case and the instant case. Clearly, one of the elements of res judicata, i.e. , that
there must be, between the first and the second actions, identity of parties, is
lacking. In any event, the CA's questioned Decision had sufficient basis in fact and
law even without relying on the Guico case.
In conclusion, we find that the Court of Appeals committed no reversible error in
setting aside the patently erroneous Summary Judgment of the trial court.
WHEREFORE, the petition is DENIED. The Court of Appeals Decision dated December
22, 2003 and the Resolution dated December 16, 2004 are hereby AFFIRMED.
SO ORDERED.

vi.
Presentation of additional facts
e. Publication , Opposition and Default (Section 23)
i.Notice and initial hearing
G.R. No. 102858 July 28, 1997
THE DIRECTOR OF LANDS, petitioner,
vs.
COURT OF APPEALS and TEODORO ABISTADO, substituted by MARGARITA,
MARISSA, MARIBEL, ARNOLD and MARY ANN, all surnamed ABISTO,
respondents.

PANGANIBAN, J.:
Is newspaper publication of the notice of initial hearing in an original land
registration case mandatory or directory?
Statement of the Case
The Court of Appeals ruled that it was merely procedural and that the failure to
cause such publication did not deprive the trial court of its authority to grant the
application. But the Solicitor General disagreed and thus filed this petition to set
aside the Decision 1 promulgated on July 3, 1991 and the subsequent Resolution 2
promulgated on November 19, 1991 by Respondent Court of Appeals 3 in CA-G.R.
CV No. 23719. The dispositive portion of the challenged Decision reads: 4
WHEREFORE, premises considered, the judgment of dismissal appealed from is
hereby set aside, and a new one entered confirming the registration and title of
applicant, Teodoro Abistado, Filipino, a resident of Barangay 7, Poblacion Mamburao,
Occidental Mindoro, now deceased and substituted by Margarita, Marissa, Maribel,
Arnold and Mary Ann, all surnamed Abistado, represented by their aunt, Miss Josefa
Abistado, Filipinos, residents of Poblacion Mamburao, Occidental Mindoro, to the
parcel of land covered under MSI (IV-A-8) 315-D located in Poblacion Mamburao,
Occidental Mindoro.
The oppositions filed by the Republic of the Philippines and private oppositor are
hereby dismissed for want of evidence.
Upon the finality of this decision and payment of the corresponding taxes due on
this land, let an order for the issuance of a decree be issued.

The Facts
On December 8, 1986, Private Respondent Teodoro Abistado filed a petition for
original registration of his title over 648 square meters of land under Presidential
Decree (PD) No. 1529. 5 The application was docketed as Land Registration Case
(LRC) No. 86 and assigned to Branch 44 of the Regional Trial Court of Mamburao,
Occidental Mindoro. 6 However, during the pendency of his petition, applicant died.
Hence, his heirs Margarita, Marissa, Maribel, Arnold and Mary Ann, all surnamed
Abistado represented by their aunt Josefa Abistado, who was appointed their
guardian ad litem, were substituted as applicants.
The land registration court in its decision dated June 13, 1989 dismissed the petition
"for want of jurisdiction." However, it found that the applicants through their
predecessors-in-interest had been in open, continuous, exclusive and peaceful
possession of the subject land since 1938.
In dismissing the petition, the trial court reasoned: 7
. . . However, the Court noted that applicants failed to comply with the provisions of
Section 23 (1) of PD 1529, requiring the Applicants to publish the notice of Initial
Hearing (Exh. "E") in a newspaper of general circulation in the Philippines. Exhibit
"E" was only published in the Official Gazette (Exhibits "F" and "G"). Consequently,
the Court is of the well considered view that it has not legally acquired jurisdiction
over the instant application for want of compliance with the mandatory provision
requiring publication of the notice of initial hearing in a newspaper of general
circulation.
The trial court also cited Ministry of Justice Opinion No. 48, Series of 1982, which in
its pertinent portion provides: 8
It bears emphasis that the publication requirement under Section 23 [of PD 1529]
has a two-fold purpose; the first, which is mentioned in the provision of the
aforequoted provision refers to publication in the Official Gazette, and is
jurisdictional; while the second, which is mentioned in the opening clause of the
same paragraph, refers to publication not only in the Official Gazette but also in a
newspaper of general circulation, and is procedural. Neither one nor the other is
dispensable. As to the first, publication in the Official Gazette is indispensably
necessary because without it, the court would be powerless to assume jurisdiction
over a particular land registration case. As to the second, publication of the notice
of initial hearing also in a newspaper of general circulation is indispensably
necessary as a requirement of procedural due process; otherwise, any decision that
the court may promulgate in the case would be legally infirm.

Unsatisfied, private respondents appealed to Respondent Court of Appeals which, as

earlier explained, set aside the decision of the trial court and ordered the
registration of the title in the name of Teodoro Abistado.
The subsequent motion for reconsideration was denied in the challenged CA
Resolution dared November 19, 1991.
The Director of Lands represented by the Solicitor General thus elevated this
recourse to us. This Court notes that the petitioner's counsel anchored his petition
on Rule 65. This is an error. His remedy should be based on Rule 45 because he is
appealing a final disposition of the Court of Appeals. Hence, we shall treat his
petition as one for review under Rule 45, and not for certiorari under Rule 65. 9
The Issue
Petitioner alleges that Respondent Court of Appeals committed "grave abuse of
discretion" 10 in holding
. . . that publication of the petition for registration of title in LRC Case No. 86 need
not be published in a newspaper of general circulation, and in not dismissing LRC
Case No. 86 for want of such publication.
Petitioner points out that under Section 23 of PD 1529, the notice of initial hearing
shall be "published both in the Official Gazette and in a newspaper of general
circulation." According to petitioner, publication in the Official Gazette is "necessary
to confer jurisdiction upon the trial court, and . . . in . . . a newspaper of general
circulation to comply with the notice requirement of due process." 11
Private respondents, on the other hand, contend that failure to comply with the
requirement of publication in a newspaper of general circulation is a mere
"procedural defect." They add that publication in the Official Gazette is sufficient to
confer jurisdiction. 12
In reversing the decision of the trial court, Respondent Court of Appeals ruled: 13
. . . although the requirement of publication in the Official Gazette and in a
newspaper of general circulation is couched in mandatory terms, it cannot be
gainsaid that the law also mandates with equal force that publication in the Official
Gazette shall be sufficient to confer jurisdiction upon the court.
Further, Respondent Court found that the oppositors were afforded the opportunity
"to explain matters fully and present their side." Thus, it justified its disposition in
this wise: 14

. . . We do not see how the lack of compliance with the required procedure
prejudiced them in any way. Moreover, the other requirements of: publication in the
Official Gazette, personal notice by mailing, and posting at the site and other
conspicuous places, were complied with and these are sufficient to notify any party
who is minded to make any objection of the application for registration.
The Court's Ruling
We find for petitioner.
Newspaper Publication Mandatory
The pertinent part of Section 23 of Presidential Decree No. 1529 requiring
publication of the notice of initial hearing reads as follows:
Sec. 23.
Notice of initial hearing, publication, etc. The court shall, within five
days from filing of the application, issue an order setting the date and hour of the
initial hearing which shall not be earlier than forty-five days nor later than ninety
days from the date of the order.
The public shall be given notice of initial hearing of the application for land
registration by means of (1) publication; (2) mailing; and (3) posting.
1.

By publication.

Upon receipt of the order of the court setting the time for initial hearing, the
Commissioner of Land Registration shall cause a notice of initial hearing to be
published once in the Official Gazette and once in a newspaper of general
circulation in the Philippines: Provided, however, that the publication in the Official
Gazette shall be sufficient to confer jurisdiction upon the court. Said notice shall be
addressed to all persons appearing to have an interest in the land involved
including the adjoining owners so far as known, and "to all whom it may concern."
Said notice shall also require all persons concerned to appear in court at a certain
date and time to show cause why the prayer of said application shall not be
granted.
xxx

xxx

xxx

Admittedly, the above provision provides in clear and categorical terms that
publication in the Official Gazette suffices to confer jurisdiction upon the land
registration court. However, the question boils down to whether, absent any
publication in a newspaper of general circulation, the land registration court can
validly confirm and register the title of private respondents.

We answer this query in the negative. This answer is impelled by the demands of
statutory construction and the due process rationale behind the publication
requirement.
The law used the term "shall" in prescribing the work to be done by the
Commissioner of Land Registration upon the latter's receipt of the court order
setting the time for initial hearing. The said word denotes an imperative and thus
indicates the mandatory character of a statute. 15 While concededly such literal
mandate is not an absolute rule in statutory construction, as its import ultimately
depends upon its context in the entire provision, we hold that in the present case
the term must be understood in its normal mandatory meaning. In Republic vs.
Marasigan, 16 the Court through Mr. Justice Hilario G. Davide, Jr. held that Section
23 of PD 1529 requires notice of the initial hearing by means of (1) publication, (2)
mailing and (3) posting, all of which must be complied with. "If the intention of the
law were otherwise, said section would not have stressed in detail the requirements
of mailing of notices to all persons named in the petition who, per Section 15 of the
Decree, include owners of adjoining properties, and occupants of the land." Indeed,
if mailing of notices is essential, then by parity of reasoning, publication in a
newspaper of general circulation is likewise imperative since the law included such
requirement in its detailed provision.
It should be noted further that land registration is a proceeding in rem. 17 Being in
rem, such proceeding requires constructive seizure of the land as against all
persons, including the state, who have rights to or interests in the property. An in
rem proceeding is validated essentially through publication. This being so, the
process must strictly be complied with. Otherwise, persons who may be interested
or whose rights may be adversely affected would be barred from contesting an
application which they had no knowledge of. As has been ruled, a party as an owner
seeking the inscription of realty in the land registration court must prove by
satisfactory and conclusive evidence not only his ownership thereof but the identity
of the same, for he is in the same situation as one who institutes an action for
recovery of realty. 18 He must prove his title against the whole world. This task,
which rests upon the applicant, can best be achieved when all persons concerned
nay, "the whole world" who have rights to or interests in the subject property are
notified and effectively invited to come to court and show cause why the application
should not be granted. The elementary norms of due process require that before the
claimed property is taken from concerned parties and registered in the name of the
applicant, said parties must be given notice and opportunity to oppose.
It may be asked why publication in a newspaper of general circulation should be
deemed mandatory when the law already requires notice by publication in the
Official Gazette as well as by mailing and posting, all of which have already been
complied with in the case at hand. The reason is due process and the reality that
the Official Gazette is not as widely read and circulated as newspapers and is

oftentimes delayed in its circulation, such that the notices published therein may
not reach the interested parties on time, if at all. Additionally, such parties may not
be owners of neighboring properties, and may in fact not own any other real estate.
In sum, the all-encompassing in rem nature of land registration cases, the
consequences of default orders issued against the whole world and the objective of
disseminating the notice in as wide a manner as possible demand a mandatory
construction of the requirements for publication, mailing and posting.
Admittedly, there was failure to comply with the explicit publication requirement of
the law. Private respondents did not proffer any excuse; even if they had, it would
not have mattered because the statute itself allows no excuses. Ineludibly, this
Court has no authority to dispense with such mandatory requirement. The law is
unambiguous and its rationale clear. Time and again, this Court has declared that
where the law speaks in clear and categorical language, there is no room for
interpretation, vacillation or equivocation; there is room only for application. 19
There is no alternative. Thus, the application for land registration filed by private
respondents must be dismissed without prejudice to reapplication in the future,
after all the legal requisites shall have been duly complied with.
WHEREFORE, the petition is GRANTED and the assailed Decision and Resolution are
REVERSED and SET ASIDE. The application of private respondent for land
registration is DISMISSED without prejudice. No costs.
SO ORDERED.
ii.
iii.
iv.

Publication
Posting
Proof required in Registration proceedings

REPUBLIC OF THE PHILIPPINES,

Petitioner,
-versusAVELINO R. DELA PAZ, ARSENIO R. DELA PAZ, JOSE R. DELA PAZ, and
GLICERIO R. DELA PAZ, represented by JOSE R. DELA PAZ,
Respondents.
G.R. No. 171631
November 15, 2010
DECISION

PERALTA, J.:

Before this Court is a petition for review on certiorari under Rule 45 of the
Rules of Court seeking to set aside the Decision[1] of the Court of Appeals (CA),
dated February 15, 2006, in CA-G.R. CV No. 84206, which affirmed the Decision[2]
of the Regional Trial Court (RTC) of Pasig City, Branch 167, in LRC Case No. N-11514,
granting respondents application for registration and confirmation of title over a
parcel of land located in Barangay Ibayo, Napindan, Taguig, Metro Manila.
The factual milieu of this case is as follows:
On November 13, 2003, respondents Avelino R. dela Paz, Arsenio R. dela Paz,
Jose R. dela Paz, and Glicerio R. dela Paz, represented by Jose R. dela Paz (Jose), filed
with the RTC of Pasig City an application for registration of land[3] under Presidential
Decree No. 1529 (PD 1529) otherwise known as the Property Registration Decree.
The application covered a parcel of land with an area of 25,825 square meters,
situated at Ibayo, Napindan, Taguig, Metro Manila, described under survey Plan
Ccn-00-000084, (Conversion Consolidated plan of Lot Nos. 3212 and 3234, MCADM
590-D, Taguig Cadastral Mapping). Together with their application for registration,
respondents submitted the following documents: (1) Special power of attorney
showing that the respondents authorized Jose dela Paz to file the application; (2)
Conversion Consolidated plan of Lot Nos. 3212 and 3234, MCADM 590-D, Taguig
Cadastral Mapping (Ccn-00-000084) with the annotation that the survey is inside
L.C. Map No. 2623 Proj. No. 27-B classified as alienable/disposable by the Bureau of
Forest Development, Quezon City on January 03, 1968; (3) Technical Descriptions of
Ccn-00-000084; (4) Geodetic Engineer's Certificate; (5) Tax Declaration No. FL-01801466; (6) Salaysay ng Pagkakaloob dated June 18, 1987; (7) Sinumpaang Pahayag
sa Paglilipat sa Sarili ng mga Pagaari ng Namatay dated March 10, 1979; (8)
Certification that the subject lots are not covered by any land patent or any public
land appilcation; and (9) Certification by the Office of the Treasurer, Municipality of
Taguig, Metro Manila, that the tax on the real property for the year 2003 has been
paid.
Respondents alleged that they acquired the subject property, which is an
agricultural land, by virtue of Salaysay ng Pagkakaloob[4] dated June 18, 1987,
executed by their parents Zosimo dela Paz and Ester dela Paz (Zosimo and Ester),
who earlier acquired the said property from their deceased parent Alejandro dela
Paz (Alejandro) by virtue of a Sinumpaang Pahayag sa Paglilipat sa Sarili ng mga
Pag-aari ng Namatay[5] dated March 10, 1979. In their application, respondents
claimed that they are co-owners of the subject parcel of land and they have been in
continuous, uninterrupted, open, public, adverse possession of the same, in the
concept of owner since they acquired it in 1987. Respondents further averred that
by way of tacking of possession, they, through their predecessors-in-interest have
been in open, public, adverse, continuous, and uninterrupted possession of the
same, in the concept of an owner even before June 12, 1945, or for a period of more
than fifty (50) years since the filing of the application of registration with the trial

court. They maintained that the subject property is classified as alienable and
disposable land of the public domain.
The case was set for initial hearing on April 30, 2004. On said date,
respondents presented documentary evidence to prove compliance with the
jurisdictional requirements of the law.
Petitioner Republic of the Philippines (Republic), through the Office of the Solicitor
General (OSG), opposed the application for registration on the following grounds,
among others: (1) that neither the applicants nor their predecessors-in-interest
have been in open, continuous, exclusive and notorious possession and occupation
of the land in question for a period of not less than thirty (30) years; (2) that the
muniments of title, and/or the tax declarations and tax payments receipts of
applicants, if any, attached to or alleged in the application, do not constitute
competent and sufficient evidence of bona fide acquisition of the land applied for;
and (3) that the parcel of land applied for is a portion of public domain belonging to
the Republic not subject to private appropriation. Except for the Republic, there was
no other oppositor to the application.
On May 5, 2004, the trial court issued an Order of General Default[6] against
the whole world except as against the Republic. Thereafter, respondents presented
their evidence in support of their application.
In its Decision dated November 17, 2004, the RTC granted respondents'
application for registration of the subject property. The dispositive portion of the
decision states:
WHEREFORE, affirming the order of general default hereto entered, judgment is
hereby rendered AFFIRMING and CONFIRMING the title of AVELINO R. DELA PAZ,
Arsenio R. dela Paz, Jose R. dela Paz and Glicerio R. dela Paz, all married and
residents of and with postal address at No. 65 Ibayo, Napindan, Taguig, Metro
Manila, over a parcel of land described and bounded under Plan Ccn-00-000084
(consolidation of Lots No. 3212 and 3234, Mcadm-590-D, Taguig, Cadastral Mapping,
containing Twenty-Five Thousand Eight Hundred Twenty-Five (25,825) Square
Meters, more or less, situated at Barangay Ibayo, Napindan, Taguig, Metro Manila,
under the operation of P.D. 1529, otherwise known as the Property Registration
Decree.
After the decision shall have been become final and executory and, upon payment
of all taxes and other charges due on the land, the order for the issuance of a
decree of registration shall be accordingly undertaken.
SO ORDERED.[7]

Aggrieved by the Decision, petitioner filed a Notice of Appeal.[8] The CA, in

its Decision dated February 15, 2006, dismissed the appeal and affirmed the
decision of the RTC. The CA ruled that respondents were able to show that they
have been in continuous, open, exclusive and notorious possession of the subject
property through themselves and their predecessors-in-interest. The CA found that
respondents acquired the subject land from their predecessors-in-interest, who have
been in actual, continuous, uninterrupted, public and adverse possession in the
concept of an owner since time immemorial. The CA, likewise, held that respondents
were able to present sufficient evidence to establish that the subject property is
part of the alienable and disposable lands of the public domain. Hence, the instant
petition raising the following grounds:
I
THE COURT OF APPEALS ERRED IN AFFIRMING THE TRIAL COURT'S ORDER
GRANTING RESPONDENTS' APPLICATION FOR REGISTRATION OF THE SUBJECT LOT
CONSIDERING THAT THE EVIDENCE ON RECORD FAILED TO ESTABLISH THAT
RESPONDENTS HAVE BEEN IN OPEN, CONTINUOUS, EXCLUSIVE AND NOTORIOUS
POSSESSION OF THE SUBJECT LOT IN THE CONCEPT OF AN OWNER.
II
THE COURT OF APPEALS ERRED IN ORDERING THE REGISTRATION OF THE SUBJECT
LOT IN RESPONDENTS' NAME CONSIDERING THAT NO EVIDENCE WAS FORMALLY
OFFERED TO PROVE THAT THE SAME IS WITHIN THE ALIENABLE AND DISPOSABLE
AREA OF THE PUBLIC DOMAIN.[9]

In its Memorandum, petitioner claims that the CA's findings that respondents
and their predecessors-in-interest have been in open, uninterrupted, public, and
adverse possession in the concept of owners, for more than fifty years or even
before June 12, 1945, was unsubstantiated. Respondents failed to show actual or
constructive possession and occupation over the subject land in the concept of an
owner. Respondents also failed to establish that the subject property is within the
alienable and disposable portion of the public domain. The subject property
remained to be owned by the State under the Regalian Doctrine.
In their Memorandum, respondents alleged that they were able to present
evidence of specific acts of ownership showing open, notorious, continuous and
adverse possession and occupation in the concept of an owner of the subject land.
To prove their continuous and uninterrupted possession of the subject land, they
presented several tax declarations, dated 1949, 1966, 1974, 1979, 1980, 1985,
1991, 1994 and 2000, issued in the name of their predecessors-in-interest. In
addition, respondents presented a tax clearance issued by the Treasurer's Office of
the City of Taguig to show that they are up to date in their payment of real property
taxes. Respondents maintain that the annotations appearing on the survey plan of
the subject land serves as sufficient proof that the land is within the alienable and

disposable portion of the public domain. Finally, respondents assert that the issues
raised by the petitioner are questions of fact which the Court should not consider in
a petition for review under Rule 45.
The petition is meritorious.
In petitions for review on certiorari under Rule 45 of the Revised Rules of
Court, this Court is limited to reviewing only errors of law, not of fact, unless the
factual findings complained of are devoid of support by the evidence on record, or
the assailed judgment is based on a misapprehension of facts.[10] It is not the
function of this Court to analyze or weigh evidence all over again, unless there is a
showing that the findings of the lower court are totally devoid of support or are
glaringly erroneous as to constitute palpable error or grave abuse of discretion.[11]
In the present case, the records do not support the findings made by the CA that the
subject land is part of the alienable and disposable portion of the public domain.
Section 14 (1) of PD 1529, otherwise known as the Property Registration
Decree provides:
SEC. 14. Who may apply. - The following persons may file in the proper Court of First
Instance an application for registration of title to land, whether personally or
through their duly authorized representatives:
(1) Those who by themselves or through their predecessors-in-interest have been in
open, continuous, exclusive and notorious possession and occupation of alienable
and disposable lands of the public domain under a bona fide claim of ownership
since June 12, 1945, or earlier.

From the foregoing, respondents need to prove that (1) the land forms part
of the alienable and disposable land of the public domain; and (2) they, by
themselves or through their predecessors-in-interest, have been in open,
continuous, exclusive, and notorious possession and occupation of the subject land
under a bona fide claim of ownership from June 12, 1945 or earlier.[12] These the
respondents must prove by no less than clear, positive and convincing evidence.
[13]
Under the Regalian doctrine, which is embodied in our Constitution, all lands
of the public domain belong to the State, which is the source of any asserted right
to any ownership of land. All lands not appearing to be clearly within private
ownership are presumed to belong to the State. Accordingly, public lands not shown
to have been reclassified or released as alienable agricultural land, or alienated to a
private person by the State, remain part of the inalienable public domain.[14] The

burden of proof in overcoming the presumption of State ownership of the lands of

the public domain is on the person applying for registration (or claiming ownership),
who must prove that the land subject of the application is alienable or disposable.
To overcome this presumption, incontrovertible evidence must be established that
the land subject of the application (or claim) is alienable or disposable.[15]
To support its contention that the land subject of the application for
registration is alienable, respondents presented survey Plan Ccn-00-000084[16]
(Conversion Consolidated plan of Lot Nos. 3212 & 3234, MCADM 590-D, Taguig
Cadastral Mapping) prepared by Geodetic Engineer Arnaldo C. Torres with the
following annotation:
This survey is inside L.C. Map No. 2623 Proj. No. 27-B clasified as
alienable/disposable by the Bureau of Forest Development, Quezon City on Jan. 03,
1968.
Respondents' reliance on the afore-mentioned annotation is misplaced.
In Republic v. Sarmiento,[17] the Court ruled that the notation of the surveyorgeodetic engineer on the blue print copy of the conversion and subdivision plan
approved by the Department of Environment and Natural Resources (DENR) Center,
that this survey is inside the alienable and disposable area, Project No. 27-B. L.C.
Map No. 2623, certified on January 3, 1968 by the Bureau of Forestry, is insufficient
and does not constitute incontrovertible evidence to overcome the presumption that
the land remains part of the inalienable public domain.
Further, in Republic v. Tri-plus Corporation,[18] the Court held that:
In the present case, the only evidence to prove the character of the subject lands as
required by law is the notation appearing in the Advance Plan stating in effect that
the said properties are alienable and disposable. However, this is hardly the kind of
proof required by law. To prove that the land subject of an application for
registration is alienable, an applicant must establish the existence of a positive act
of the government, such as a presidential proclamation or an executive order, an
administrative action, investigation reports of Bureau of Lands investigators, and a
legislative act or statute. The applicant may also secure a certification from the
Government that the lands applied for are alienable and disposable. In the case at
bar, while the Advance Plan bearing the notation was certified by the Lands
Management Services of the DENR, the certification refers only to the technical
correctness of the survey plotted in the said plan and has nothing to do whatsoever
with the nature and character of the property surveyed. Respondents failed to
submit a certification from the proper government agency to prove that the lands
subject for registration are indeed alienable and disposable.

Furthermore, in Republic of the Philippines v. Rosila Roche,[19] the Court

held that the applicant bears the burden of proving the status of the land. In this
connection, the Court has held that he must present a certificate of land
classification status issued by the Community Environment and Natural Resources
Office (CENRO), or the Provincial Environment and Natural Resources Office (PENRO)
of the DENR. He must also prove that the DENR Secretary had approved the land
classification and released the land as alienable and disposable, and that it is within
the approved area per verification through survey by the CENRO or PENRO. Further,
the applicant must present a copy of the original classification approved by the
DENR Secretary and certified as true copy by the legal custodian of the official
records. These facts must be established by the applicant to prove that the land is
alienable and disposable.
Clearly, the surveyor's annotation presented by respondents is not the kind of
proof required by law to prove that the subject land falls within the alienable and
disposable zone. Respondents failed to submit a certification from the proper
government agency to establish that the subject land are part of the alienable and
disposable portion of the public domain. In the absence of incontrovertible evidence
to prove that the subject property is already classified as alienable and disposable,
we must consider the same as still inalienable public domain.[20]
Anent respondents possession and occupation of the subject property, a
reading of the records failed to show that the respondents by themselves or through
their predecessors-in-interest possessed and occupied the subject land since June
12, 1945 or earlier.
The evidence submitted by respondents to prove their possession and
occupation over the subject property consists of the testimonies of Jose and Amado
Geronimo (Amado), the tenant of the adjacent lot. However, their testimonies failed
to establish respondents predecessors-in-interest' possession and occupation of
subject property since June 12, 1945 or earlier. Jose, who was born on March 19,
1939,[21] testified that since he attained the age of reason he already knew that
the land subject of this case belonged to them.[22] Amado testified that he was a
tenant of the land adjacent to the subject property since 1950,[23] and on about
the same year, he knew that the respondents were occupying the subject land.[24]
Jose and Amado's testimonies consist merely of general statements with no
specific details as to when respondents' predecessors-in-interest began actual
occupancy of the land subject of this case. While Jose testified that the subject land
was previously owned by their parents Zosimo and Ester, who earlier inherited the
property from their parent Alejandro, no clear evidence was presented to show
Alejandro's mode of acquisition of ownership and that he had been in possession of
the same on or before June 12, 1945, the period of possession required by law. It is
a rule that general statements that are mere conclusions of law and not factual

proof of possession are unavailing and cannot suffice.[25] An applicant in a land

registration case cannot just harp on mere conclusions of law to embellish the
application but must impress thereto the facts and circumstances evidencing the
alleged ownership and possession of the land.[26]
Respondents earliest evidence can be traced back to a tax declaration issued
in the name of their predecessors-in-interest only in the year 1949. At best,
respondents can only prove possession since said date. What is required is open,
exclusive, continuous and notorious possession by respondents and their
predecessors-in-interest, under a bona fide claim of ownership, since June 12, 1945
or earlier.[27] Respondents failed to explain why, despite their claim that their
predecessors-in interest have possessed the subject properties in the concept of an
owner even before June 12, 1945, it was only in 1949 that their predecessors-ininterest started to declare the same for purposes of taxation. Well settled is the rule
that tax declarations and receipts are not conclusive evidence of ownership or of
the right to possess land when not supported by any other evidence. The fact that
the disputed property may have been declared for taxation purposes in the names
of the applicants for registration or of their predecessors-in-interest does not
necessarily prove ownership. They are merely indicia of a claim of ownership.[28]

The foregoing pieces of evidence, taken together, failed to paint a clear picture that
respondents by themselves or through their predecessors-in-interest have been in
open, exclusive, continuous and notorious possession and occupation of the subject
land, under a bona fide claim of ownership since June 12, 1945 or earlier.
Evidently, since respondents failed to prove that (1) the subject property was
classified as part of the disposable and alienable land of the public domain; and (2)
they and their predecessors-in-interest have been in open, continuous, exclusive,
and notorious possession and occupation thereof under a bonafide claim of
ownership since June 12, 1945 or earlier, their application for confirmation and
registration of the subject property under PD 1529 should be denied.
WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals
dated February 15, 2006, in CA-G.R. CV No. 84206, affirming the Decision of the
Regional Trial Court of Pasig City, Branch 167, in LRC Case No. N-11514, is
REVERSED and SET ASIDE. The application for registration and confirmation of title
filed by respondents Avelino R. dela Paz, Arsenio R. dela Paz, Jose R. dela Paz, and
Glicerio R. dela Paz, as represented by Jose R. dela Paz, over a parcel of land, with a
total area of twenty-five thousand eight hundred twenty-five (25,825) square meters
situated at Barangay Ibayo, Napindan, Taguig, Metro Manila, is DENIED.
SO ORDERED.

v.
vi.

Opposing Application
Persons Deemed to have Legal Standing
1. Private persons may not oppose in behalf of the
government
2. Opposition by government

[G.R. No. 167215, October 08, 2008]

REPUBLIC OF THE PHILIPPINES, PETITIONER, VS. HEIRS OF EVARISTO
TIOTIOEN, RESPONDENTS.
DECISION
LEONARDO-DE CASTRO, J.:
Before us is a Petition for Review on Certiorari filed by the Republic of the
Philippines, represented by the Department of Environment and Natural Resources
and the Office of the Solicitor General (OSG), seeking to set aside a part of the
Decision[1] dated February 15, 2005 of the Court of Appeals (CA) in CA-G.R. SP No.
71358 insofar as it sustained the denial of the Notice of Appeal[2] filed on January
11, 2002 by the petitioner from the Decision[3] dated August 30, 2001 of Branch 63
of the Regional Trial Court (RTC) of La Trinidad, Benguet, in Land Registration Case
(LRC) No. 93-LRC-0008.
LRC No. 93-LRC-0008 involves the second application filed by Evaristo Tiotioen on
September 6, 1993 for judicial confirmation and registration under the Torrens
System of two parcels of land denominated as Lot Nos. 1 and 2 of Plan PSU-230646,
situated in Pico, La Trinidad, Benguet, with an aggregate area of 180,488 square
meters. Evaristo Tiotioen was substituted by his heirs in the case when he died on
June 21, 1997. Santiago A. Santiago, the Municipality of La Trinidad, Benguet, and
the petitioner opposed the aforesaid application.
In a Notice of Appearance[4] dated October 20, 1994, the OSG formally requested
that its appearance be entered as counsel for the petitioner and that all notices of
hearings, orders, resolutions and decision be served to the OSG at its given address.
The said notice of appearance informed the court that the OSG authorized the
Provincial Prosecutor of Benguet to appear in the case, subject to the conditions
quoted hereunder:
The Provincial Prosecutor, La Trinidad, Benguet, is authorized to appear in this case,
and therefore, should also be furnished notices of hearing, orders, resolutions,
decisions and other processes. However, as the Solicitor General retains supervision
and control of the representation in this case and has to approve withdrawal of the
case, non-appeal, or other actions which appear to compromise the interest of the

Government, only notices of orders, resolutions, and decisions served on him will
bind the party represented.
The petitioner filed its Opposition[5] dated October 20, 1994 and Supplemental
Opposition[6] dated June 20, 1995 on the ground that the parcels of land, applied
for registration by the respondents, belong to the communal forest of La Trinidad,
Benguet, and are therefore inalienable land of the public domain, which have not
been classified and considered as disposable and alienable.
After trial, the land registration court rendered its Decision dated August 30, 2001
which granted the application. The dispositive portion of the decision reads:
WHEREFORE, the Court, finding that the Applicants have shown their adverse,
continuous and notorious possession and in the concept of owners of the land
applied for since time immemorial, and thus their title thereto is proper to be
confirmed, and is hereby confirmed.
The applicants, namely: NICOLAS TIOTIOEN, single; ILDEFONSO TIOTIOEN, married
to Adelaida Tiotioen; CONCEPCION TIOTIOEN-DIAZ, married; NANCY TIOTIOENOGOY, married and FILOMENA TIOTIOEN-DULNUAN, married; all of legal age,
Filipinos and residents of Pico, La Trinidad, Benguet are hereby declared owners pro
indiviso of a parcel of land situated at Pico, La Trinidad, Benguet containing an area
of ONE HUNDRED TWENTY THREE THOUSAND NINE HUNDRED THIRTY FIVE
(123,935) SQUARE METERS for Lot 1 and FIFTY SIX THOUSAND FIVE HUNDRED FIFTY
THREE (56,553) SQUARE METERS for Lot 2. The subject land is particularly
described in the Original Tracing Cloth Plan (Exh. "AA-1"), Survey Plan (Exh. "A"),
and in the Technical Description (Exhs. "B" & "B-2), subject to the claim of oppositor
Santiago A. Santiago as per agreement with the applicants and when the decision
becomes final and executory, let a final decree be issued for the issuance of title
accordingly.
SO ORDERED.
The petitioner and the municipality received their respective notices of the abovementioned decision on September 6 and 7, 2001. The municipality filed its Motion
for Reconsideration thereto on September 20, 2001. The petitioner, on the other
hand, filed a Motion and Manifestation[7] on October 5, 2001 adopting the said
motion of the municipality.
In the Resolution[8] dated December 6, 2001, the land registration court denied for
lack of merit the motion for reconsideration of the municipality and declared the
same as pro forma because the issues cited were already passed upon in the
decision sought for reconsideration. The municipality filed its notice of appeal on the
following day it received its notice of the said resolution. The OSG was not furnished
by the land registration court with a copy of this resolution but it was informed of
the said resolution only by the provincial prosecutor on January 4, 2002[9], through

a Letter[10] dated December 19, 2001. Consequently, the OSG filed its subject
notice of appeal for the petitioner on January 11, 2002.
The land registration court denied the notice of appeal of the municipality on the
ground that the latter's pro forma motion for reconsideration did not interrupt the
reglementary period to appeal. The petitioner's notice of appeal was also denied
supposedly for having been filed out of time[11].
The petitioner sought the reconsideration of the denial of its notice of appeal which
was again denied by the land registration court in an Order[12] dated April 23,
2002, quoted hereunder:
ORDER
For resolution is the Motion for Reconsideration filed by the Office of the Solicitor
General (OSG) of the Order of the Court dated January 29, 2002 denying their Notice
of Appeal having been filed beyond the reglementary period.
Be it noted that the OSG received the Decision dated August 30, 2001 on
September 06, 2001 and filed its Notice of Appeal on January 11, 2002. Conformably
with Section 3, Rule 41 of the Rules of Civil Procedure, prescribing a 15-day appeal
period, the last day for the perfection of an appeal by OSG should have been on the
21st day of September 2001. Per se, it was filed beyond the reglementary period for
which to perfect an appeal.
It is well-settled in our jurisdiction that the right to appeal is a statutory right and a
party who seeks to avail of the right must comply with the rules. These rules,
particularly the statutory requirement for perfecting an appeal within the
reglementary period laid down by law, must be strictly followed as they are
considered indispensable interdictions against needless delays and for orderly
discharge of judicial business (Ben Sta. Rita v. C.A., et al., G.R. No. 119891, August
21, 1995).
In view of the foregoing, the Court finds no convincing and logical reasons to
reconsider its Order dated January 29, 2002 and hereby denies the Motion for
Reconsideration. [Emphasis supplied]
The municipality and petitioner separately assailed before the CA the orders of the
land registration court denying their respective notices of appeal. The CA granted
the petition filed by the municipality and gave due course to its appeal but denied
the one filed by the petitioner. The CA pointed out that the petitioner filed its motion
and manifestation adopting the adverted motion for reconsideration of the
municipality beyond the reglementary period to file an appeal and, thus, the
decision of the land registration court already attained finality insofar as the
petitioner was concerned. The "strong grounds" alleged by the petitioner were
likewise rejected by the CA which explained and ruled as follows:

The merit impressed in petitioner Republic of the Philippines ' position is, however,
more apparent than real. Notwithstanding the studied avoidance of direct
references thereto, the fact remains that the Solicitor General received its copy of
the 30 August 2001 decision rendered in the case on 6 September 2001 and thus
only had until the 21st of the same month to either move for a reconsideration of
said decision or perfect an appeal therefrom. There is, therefore, no gainsaying the
ineluctable fact that the selfsame decision had already attained finality as against
petitioner Republic of the Philippines by the time the Office of the Provincial
Prosecutor of Benguet filed the 4 October 2001 manifestation adopting petitioner
municipality's motion for reconsideration.
It thus matters little that the Office of the Provincial Prosecutor of Benguet appears
to have been duly furnished with a copy of the aforesaid 6 December 2001
resolution on December 10, 2001 or that it only informed the Office of the Solicitor
General of said adverse ruling through the 19 December 2001 missive the latter
received on January 4, 2002. The rule that copies or orders and decisions served on
the deputized counsel, acting as agent or representative of the Office of the Solicitor
General, are not binding until they are actually received by the latter has little
application where, as in the case at bench, said office had been duly furnished a
copy of the decision in the main case which, for reasons it alone can explain, it
allowed to attain finality. Under the factual and legal milieu of the case, public
respondent cannot be faulted with grave abuse of discretion tantamount to lack of
or excess of jurisdiction for denying the 10 January 2002 Notice of Appeal filed by
the Office of the Solicitor General way beyond the reglementary period for
petitioner Republic of the Philippines' appeal.
Neither are we, finally, swayed by the strong grounds petitioner Republic of the
Philippines purportedly has to pursue an appeal from public respondent's 30 August
2001 decision. Except on jurisdictional grounds, correction of a lower court's
decision could, for one, only be done by regular appeal within the period allowed by
law. Our perusal of the grounds cited by petitioner Republic of the Philippines , for
another, yielded nothing which had not yet been raised and will once again be
raised by petitioner municipality.
WHEREFORE, the petition filed by petitioner Municipality of La Trinidad, Benguet is
GRANTED and the assailed 23 January 2002 order and 30 April 2002 resolution are,
accordingly, NULLIFIED and SET ASIDE. In lieu thereof, another is entered GIVING
DUE COURSE to said petitioner's appeal.
The petition filed by the Office of the Solicitor General for and in behalf of petitioner
Republic of the Philippines is, however, DENIED for lack of merit. [Emphasis
supplied]
Hence, the present petition for review on certiorari.

The petitioner claims that the OSG, as its principal counsel in the subject land
registration case, is entitled to be furnished with copies of orders, notices, and
decision of the trial court, and that the date of service of such copies to the OSG is
the reckoning period in counting the timeliness of its appeal[13]. The petitioner
contends that the OSG was not furnished with a notice of the Order [Resolution]
dated December 6, 2001 of the land registration court which denied the adverted
motion for reconsideration of the municipality. The prescribed period within which to
file petitioner's appeal did not commence to run and, therefore, its notice of appeal
should not be treated as filed out of time.
The petitioner prays in the alternative that issues of procedure should be set aside
and its appeal should be given due course alleging again the "strong grounds" that
it has adduced against the decision of the land registration court.
In their Comment[14] and Memorandum[15], the respondents contend that the
appellate court correctly denied the notice of appeal of the petitioner for having
been filed out of time. They stress the fact that the petitioner received the adverted
decision of the trial court on September 6, 2001 and that the petitioner filed its
notice of appeal thereto only on January 11, 2002 which is way beyond the
prescribed period under the Rules of Court.
We find merit in the petition.
The relevant facts involving the procedural issues in this case are undisputed. The
petitioner and the municipality received a notice of the adverted decision of the
land registration court on September 6 and 7, 2001, respectively. The municipality
timely filed its motion for reconsideration of the said judgment on September 20,
2001. The provincial prosecutor adopted this motion for reconsideration of the
municipality on October 5, 2001 which was beyond the fifteen-day period counted
from receipt of the petitioner of a copy of the decision. The land registration court
denied the said motion for reconsideration of the municipality in its Resolution
dated December 6, 2001. The OSG was not furnished with a notice of such
resolution. The OSG was informed by the provincial prosecutor of such denial on
January 4, 2002 when it received the Letter dated December 19, 2001 of the
Provincial Prosecutor. The OSG filed the subject notice of appeal for the petitioner
only on January 11, 2002 which the land registration court denied for having been
filed way beyond the fifteen-day reglementary period to appeal which the said court
reckoned from September 6, 2001. The CA affirmed the land registration court's
denial of the subject notice of appeal of the petitioner but gave due course to the
appeal of the municipality.
In deciding this case, this Court is guided by the settled doctrine that the belated
filing of an appeal by the State, or even its failure to file an opposition, in a land
registration case because of the mistake or error on the part of its officials or agents

does not deprive the government of its right to appeal from a judgment of the court.
In Director of Lands v. Medina[16], we said:
Considering the foregoing, the lower court gravely abused its discretion in
dismissing the appeal of the government on the basis of what it perceived as a
procedural lapse. The lower court should be reminded that the ends of substantial
justice should be the paramount consideration in any litigation or proceeding. As
this Court ruled in Republic v. Associacion Benevola de Cebu, "to dismiss the
Republic's appeal merely on the alleged ground of late filing is not proper
considering the merits of the case" and to ignore the evidence presented by the
provincial fiscal in behalf of the Director of Forestry which constituted the crux of
the government's case "would defeat the time-honored Constitutional precepts and
the Regalian doctrine that all lands of the public domain belong to the State, and
that the State is the source of any asserted right to ownership in land and charged
with the conservation of such patrimony."
In Heirs of Marina C. Regalado v. Republic[17], we ruled:
The failure of the Republic to file any opposition or answer to the application for
registration, despite receipt of notice thereof, did not deprive its right to appeal the
RTC decision.
Relative to the allegation that the Director of Lands or that the government did not
oppose the application of herein respondent, as in fact on December 26, 1969 an
order of general default was issued by the court against the whole world, suffice it
to say that as stated by this court in Luciano vs. Estrella, 34 SCRA 769, 'it is a well
known and settled rule in our jurisdiction that the Republic, or its government, is
usually not estopped by mistake or error on the part of its officials or agents.' And,
in an earlier case, Republic vs. Philippine Rabbit Bus Lines, Inc., 32 SCRA 211, 'there
was an enunciation of such a principle in this wise: 'Thus did the lower court, as
pointed out by the then Solicitor General, conclude that the government was bound
by the mistaken interpretation arrived at by the national treasurer and the auditor
general.' It would consider estoppel as applicable. That is not the law. Estoppel does
not lie. [Emphasis supplied]
Moreover, we have advised the lower courts, under exceptional circumstances, to
be "cautious about not depriving of a party of the right to appeal and that every
party litigant should be afforded the amplest opportunity for the proper and just
determination of his cause free from the constraints of technicalities."[18] In
Tanenglian v. Lorenzo, et al.,[19] we recognized the importance of the facts and
issues involved and gave due course to an appeal despite that it was the wrong
mode of appeal and that it was even filed beyond the reglementary period to do so,
thus:
We have not been oblivious to or unmindful of the extraordinary situations that
merit liberal application of the Rules, allowing us, depending on the circumstances,
to set aside technical infirmities and give due course to the appeal. In cases where
we dispense with the technicalities, we do not mean to undermine the force and
effectivity of the periods set by law. In those rare cases where we did not stringently

apply the procedural rules, there always existed a clear need to prevent the
commission of a grave injustice. Our judicial system and the courts have always
tried to maintain a healthy balance between the strict enforcement of procedural
laws and the guarantee that every litigant be given the full opportunity for the just
and proper disposition of his cause.
xxx xxx xxx
In Sebastian v. Morales, we ruled that rules of procedure must be faithfully followed
except only when, for persuasive reasons, they may be relaxed to relieve a litigant
of an injustice not commensurate with his failure to comply with the prescribed
procedure, thus:
[C]onsidering that the petitioner has presented a good cause for the proper and just
determination of his case, the appellate court should have relaxed the stringent
application of technical rules of procedure and yielded to consideration of
substantial justice.
The Court has allowed some meritorious cases to proceed despite inherent
procedural defects and lapses. This is in keeping with the principle that rules of
procedure are mere tools designed to facilitate the attainment of justice and that
strict and rigid application of rules which would result in technicalities that tend to
frustrate rather than promote substantial justice must always be avoided. It is a far
better and more prudent cause of action for the court to excuse a technical lapse
and afford the parties a review of the case to attain the ends of justice, rather than
dispose of the case on technicality and cause grave injustice to the parties, giving a
false impression of speedy disposal of cases while actually resulting in more delay,
if not a miscarriage of justice.
The vast tracts of land involved in this case are claimed by the petitioner to be a
protected watershed area, which allegedly preserves the main source of water of
the Municipality of La Trinidad. Relative thereto, the petitioner raises substantial
factual and legal issues which should be decided on their merit instead of being
summarily disposed of based on a technicality.
WHEREFORE, in view of the foregoing, the instant petition is hereby GRANTED. The
assailed decision of the appellate court is hereby PARTIALLY MODIFIED so as to give
due course to the Notice of Appeal filed on January 11, 2002 by the petitioner from
the Decision dated August 30, 2001 of Branch 63 of the RTC of La Trinidad, Benguet,
in Land Registration Case (LRC) No. 93-LRC-0008.
SO ORDERED.

vii.
2.

Issuance of decree
1. When judgement becomes final

G.R. No. 77770

December 15, 1988

ATTY. JOSE S. GOMEZ, DELFINA GOMEZ ESTRADA, ENRIQUITA GOMEZ

OXCIANO, BENITA GOMEZ GARLITOS, REYNALDO GOMEZ ESPEJO, ARMANDO
GOMEZ, ERLINDA GOMEZ GUICO, EUGENIA GOMEZ CALICDAN, AZUCENA
GOMEZ ORENCIA, TEODORO S. GOMEZ, JR., and ALEJO S. GOMEZ (now
deceased) represented by his wife, LETICIA Y. GOMEZ, and children,
namely, MARGIE GOMEZ GOB, JACINTO Y. GOMEZ, ALEJO Y. GOMEZ, JR., and
MARY ANN Y. GOMEZ, petitioners,
vs.
HON. COURT OF APPEALS, HON. PEDRO G. ADUCAYEN Judge Regional Trial
Court, San Carlos City (Pangasinan) Branch LVI, HON. CHIEF, LAND
REGISTRATION COMMISSION, Quezon City, Metro Manila, and SILVERIO G.
PEREZ, Chief, Division of Original Registration, Land Registration
Commission, Quezon City, Metro Manila, respondents.

PADILLA, J.:
The present case originated with the filing by petitioners on 30 August 1968 in the
Court of First Instance (now Regional Trial Court) of San Carlos City, Pangasinan, of
an application for registration of several lots situated in Bayambang, Pangasinan.
The lots applied for were Lots Nos. 1, 2, 3, 4, 5, 6, 7, 8, 9, 1 0, 11 and 12 of Plan
Psu-54792 Amd.-2. The lots were among those involved in the case of Government
of the Philippine Islands vs. Abran, 1 wherein this Court declared Consolacion M.
Gomez owner of certain lots in Sitio Poponto Bayambang, Pangasinan. Petitioners
are the heirs of Teodoro Y. Gomez (father of Consolacion) who, together with
Consolacion's son, Luis Lopez, inherited from her parcels of land when Consolacion
Gomez died intestate. Petitioners alleged that after the death of Teodoro Y. Gomez,
they became the absolute owners of the subject lots by virtue of a Quitclaim
executed in their favor by Luis Lopez. The lots (formerly portions of Lots 15,16, 34
and 41 covered by Plan Ipd-92) were subdivided into twelve lotsLots Nos. 1, 2, 3,
4, 5, 6, 7, 8, 9, 10, 11 and 12. The subdivision plan was duly approved by the
Bureau of Lands on 30 November 1963. Petitioners agreed to allocate the lots
among themselves.
After notice and publication, and there being no opposition to the application, the
trial court issued an order of general default. On 5 August 1981, the court rendered
its decision adjudicating the subject lots in petitioners' favor. 2

On 6 October 1981, the trial court issued an order 3 expressly stating that the
decision of 5 August 1981 had become final and directed the Chief of the General
Land Registration Office to issue the corresponding decrees of registration over the
lots adjudicated in the decision of 5 August 1981.
On 11 July 1984, respondent Silverio G. Perez, Chief of the Division of Original
Registration, Land Registration Commission (now known as the National Land Titles
and Deeds Registration Administration), submitted a report to the court a quo
stating that Lots 15, 16, 34 and 41 of Ipd-92 were already covered by homestead
patents issued in 1928 and 1929 and registered under the Land Registration Act. He
recommended that the decision of 5 August 1981, and the order of 6 October 1981
be set aside. Petitioners opposed the report, pointing out that no opposition was
raised by the Bureau of Lands during the registration proceedings and that the
decision of 5 August 1981 should be implemented because it had long become final
and executory.
After hearing, the lower court rendered a second decision on 25 March 1985 setting
aside the decision dated 5 August 1981 and the order dated 6 October 1981 for the
issuance of decrees. 4 Petitioners moved for reconsideration but the motion was
denied by respondent judge on 6 August 1985 for lack of merit. 5
Petitioners filed a petition for certiorari and mandamus with this Court which in turn
referred the petition to the Court of Appeals. 6
On 17 September 1986, the appellate court rendered judgment, 7 dismissing the
petition and stating, among others, thus
In resum, prior to the issuance of the decree of registration, the respondent Judge
has still the power and control over the decision he rendered. The finality of an
adjudication of land in a registration or cadastral case takes place only after the
expiration of the one-year period after entry of the final decree of registration (Afalla
vs. Rosauro, 60 Phil. 622; Valmonte vs. Nable, 85 Phil. 256; Capio vs. Capio, 94 Phil.
113). When the respondent Judge amended his decision after the report of the
respondent officials of the Land Registration office had shown that homestead
patents had already been issued on some of the lots, respondents cannot be faulted
because land already granted by homestead patent can no longer be the subject of
another registration (Manalo vs. Lukban, et al., 48 Phil. 973).
WHEREFORE, in view of the foregoing, We resolve to DISMISS the petition for lack of
merit.
SO ORDERED.

Petitioners' motion for reconsideration was denied by the appellate court in its
Resolution dated 10 March 1987. 8 Hence, this recourse.
Several issues are raised by petitioners in this petition. The more important issues
before the Court are: (a) whether or not respondent Judge had jurisdiction to issue
the decision of 25 March 1985 which set aside the lower court's earlier decision of 5
August 1981 and the order of 6 October 1981; (b) whether or not the respondents
Acting Land Registration Commissioner and Engr. Silverio Perez, Chief, Division of
Original Registration, Land Registration Commission, have no alternative but to
issue the decrees of registration pursuant to the decision of 5 August 1981 and the
order for issuance of decrees, dated 6 October 1981, their duty to do so being
purely ministerial; (c) whether or not "the law of the case" is the decision in
Government of the Philippine Islands v. Abran, supra, which held that the lands
adjudicated to Consolacion Gomez were not public lands, and therefore they could
not have been acquired by holders of homestead titles as against petitioners herein.
It is not disputed that the decision dated 5 August 1981 had become final and
executory. Petitioners vigorously maintain that said decision having become final, it
may no longer be reopened, reviewed, much less, set aside. They anchor this claim
on section 30 of P.D. No. 1529 (Property Registration Decree) which provides that,
after judgment has become final and executory, the court shall forthwith issue an
order to the Commissioner of Land Registration for the issuance of the decree of
registration and certificate of title. Petitioners contend that section 30 should be
read in relation to section 32 of P.D. 1529 in that, once the judgment becomes final
and executory under section 30, the decree of registration must issue as a matter of
course. This being the law, petitioners assert, when respondent Judge set aside in
his decision, dated 25 March 1985, the decision of 5 August 1981 and the order of 6
October 1981, he clearly acted without jurisdiction.
Petitioners' contention is not correct. Unlike ordinary civil actions, the adjudication
of land in a cadastral or land registration proceeding does not become final, in the
sense of incontrovertibility until after the expiration of one (1) year after the entry of
the final decree of registration. 9 This Court, in several decisions, has held that as
long as a final decree has not been entered by the Land Registration Commission
(now NLTDRA) and the period of one (1) year has not elapsed from date of entry of
such decree, the title is not finally adjudicated and the decision in the registration
proceeding continues to be under the control and sound discretion of the court
rendering it. 10
Petitioners contend that the report of respondent Silverio Perez should have been
submitted to the court a quo before its decision became final. But were we to
sustain this argument, we would be pressuring respondent land registration officials
to submit a report or study even if haphazardly prepared just to beat the

reglementary deadline for the finality of the court decision. As said by this Court in
De los Reyes vs. de Villa: 11
Examining section 40, we find that the decrees of registration must be stated in
convenient form for transcription upon the certificate of title and must contain an
accurate technical description of the land. This requires technical men. Moreover, it
frequently occurs that only portions of a parcel of land included in an application are
ordered registered and that the limits of such portions can only be roughly indicated
in the decision of the court. In such cases amendments of the plans and sometimes
additional surveys become necessary before the final decree can be entered. That
can hardly be done by the court itself; the law very wisely charges the Chief
Surveyor of the General Land Registration Office with such duties (Administrative
Code, section 177).

Thus, the duty of respondent land registration officials to render reports is not
limited to the period before the court's decision becomes final, but may extend
even after its finality but not beyond the lapse of one (1) year from the entry of the
decree.
Petitioners insist that the duty of the respondent land registration officials to issue
the decree is purely ministerial. It is ministerial in the sense that they act under the
orders of the court and the decree must be in conformity with the decision of the
court and with the data found in the record, and they have no discretion in the
matter. However, if they are in doubt upon any point in relation to the preparation
and issuance of the decree, it is their duty to refer the matter to the court. They act,
in this respect, as officials of the court and not as administrative officials, and their
act is the act of the court. 12 They are specifically called upon to "extend assistance
to courts in ordinary and cadastral land registration proceedings ." 13
The foregoing observations resolve the first two (2) issues raised by petitioners.
Petitioners next contend that "the law of the case" is found in Government of the
Philippine Islands vs. Abran, et al., supra, where it was decided by this Court that
the lands of Consolacion M. Gomez, from whom petitioners derive their ownership
over the lots in question, were not public lands. A reading of the pertinent and
dispositive portions of the aforesaid decision will show, however, that the lots earlier
covered by homestead patents were not included among the lands adjudicated to
Consolacion M. Gomez. The decision states:
With respect to the portions of land covered by homestead certificates of title, we
are of opinion that such certificates are sufficient to prevent the title to such portion
from going to appellants aforesaid, for they carry with them preponderating
evidence that the respective homesteaders held adverse possession of such

portions, dating back to 1919 or 1920, accordingly to the evidence, and the said
appellants failed to object to that possession in time. (Emphasis supplied)
Wherefore modifying the judgment appealed from, it is hereby ordered that the lots
respectively claimed by Agustin V. Gomez, Consolacion M. Gomez, and Julian
Macaraeg, be registered in their name, with the exclusion of the portions covered by
the homestead certificates ... . (Emphasis supplied.) 14
The report of respondent land registration officials states that the holders of the
homestead patents registered the lots in question in the years 1928 and 1929. The
decision in Government of the Philippine Islands vs. Abran was promulgated on 31
December 1931. Hence, the subject lots are specifically excluded from those
adjudicated by the aforesaid decision to Consolacion M. Gomez.
It is a settled rule that a homestead patent, once registered under the Land
Registration Act, becomes indefeasible and incontrovertible as a Torrens title, and
may no longer be the subject of an investigation for determination or judgment in
cadastral proceeding. 15
The aforecited case of Government vs. Abran, therefore, is not "the law of the case",
for the lots in question were not private lands of Consolacion M. Gomez when
homestead patents were issued over them in 1928-1929. There is sufficient proof to
show that Lots 15, 16, 34 and 41 of Ipd-92 were already titled lands way back in
1928 and 1929 as shown by Annexes "A", "B", "C", and "D" of respondents'
Memorandum. 16
Lastly, petitioners claim that if the decision of 5 August 1981 of the lower court is
sustained, the homestead title holders may still vindicate their rights by filing a
separate civil action for cancellation of titles and for reconveyance in a court of
ordinary civil jurisdiction. Conversely, the same recourse may be resorted to by
petitioners. "(T)he true owner may bring an action to have the ownership or title to
land judicially settled, and if the allegations of the plaintiff that he is the true owner
of the parcel of land granted as free patent and described in the Torrens title and
that the defendant and his predecessor-in-interest were never in possession of the
parcel of land and knew that the plaintiff and his predecessor-in-interest have been
in possession thereof be established, then the court in the exercise of its equity
jurisdiction, without ordering the cancellation of the Torrens title issued upon the
patent, may direct the defendant, the registered owner, to reconvey the parcel of
land to the plaintiff who has been found to be the true owner thereof." 17
WHEREFORE, the petition is DENIED. The appealed decision of the Court of Appeals
is AFFIRMED. Costs against the petitioners-appellants.
SO ORDERED.

3.
G.R. No. 159595

January 23, 2007

REPUBLIC OF THE PHILIPPINES, Petitioner,

vs.
LOURDES ABIERA NILLAS, Respondent.
DECISION
TINGA, J.:
The central question raised in this Petition for Review is whether prescription or
laches may bar a petition to revive a judgment in a land registration case. It is a
hardly novel issue, yet petitioner Republic of the Philippines (Republic) pleads that
the Court rule in a manner that would unsettle precedent. We deny certiorari and
instead affirm the assailed rulings of the courts below.
The facts bear little elaboration. On 10 April 1997, respondent Lourdes Abiera Nillas
(Nillas) filed a Petition for Revival of Judgment with the Regional Trial Court (RTC) of
Dumaguete City. It was alleged therein that on 17 July 1941, the then Court of First
Instance (CFI) of Negros Oriental rendered a Decision Adicional in Expediente
Cadastral No. 14, captioned as El Director De Terrenos contra Esteban Abingayan y
Otros.1 In the decision, the CFI, acting as a cadastral court, adjudicated several lots,
together with the improvements thereon, in favor of named oppositors who had
established their title to their respective lots and their continuous possession
thereof since time immemorial and ordered the Chief of the General Land
Registration Office, upon the finality of the decision, to issue the corresponding
decree of registration.2 Among these lots was Lot No. 771 of the Sibulan Cadastre,
which was adjudicated to Eugenia Calingacion (married to Fausto Estoras) and
Engracia Calingacion, both residents of Sibulan, Negros Oriental.3
Nillas further alleged that her parents, Serapion and Josefina A. Abierra, eventually
acquired Lot No. 771 in its entirety. By way of a Deed of Absolute Sale dated 7
November 1977, Engracia Calingacion sold her undivided one-half (1/2) share over
Lot No. 771 to the Spouses Abierra, the parents of Nillas. On the other hand, the
one-half (1/2) share adjudicated to Eugenia Calingacion was also acquired by the
Spouses Abierra through various purchases they effected from the heirs of Eugenia
between the years 1975 to 1982. These purchases were evidenced by three
separate Deeds of Absolute Sale all in favor of the Spouses Abierra.4
In turn, Nillas acquired Lot No. 771 from her parents through a Deed of Quitclaim
dated 30 June 1994. Despite these multiple transfers, and the fact that the Abierra
spouses have been in open and continuous possession of the subject property since

the 1977 sale, no decree of registration has ever been issued over Lot No. 771
despite the rendition of the 1941 CFI Decision. Thus, Nillas sought the revival of the
1941 Decision and the issuance of the corresponding decree of registration for Lot
No. 771. The records do not precisely reveal why the decree was not issued by the
Director of Lands, though it does not escape attention that the 1941 Decision was
rendered a few months before the commencement of the Japanese invasion of the
Philippines in December of 1941.
No responsive pleading was filed by the Office of the Solicitor General (OSG),
although it entered its appearance on 13 May 1997 and simultaneously deputized
the City Prosecutor of Dumaguete City to appear whenever the case was set for
hearing and in all subsequent proceedings.5
Trial on the merits ensued. The RTC heard the testimony of Nillas and received her
documentary evidence. No evidence was apparently presented by the OSG. On 26
April 2000, the RTC rendered a Decision6 finding merit in the petition for revival of
judgment, and ordering the revival of the 1941 Decision, as well as directing the
Commissioner of the Land Registration Authority (LRA) to issue the corresponding
decree of confirmation and registration based on the 1941 Decision.1avvphi1.net
The OSG appealed the RTC Decision to the Court of Appeals, arguing in main that
the right of action to revive judgment had already prescribed. The OSG further
argued that at the very least, Nillas should have established that a request for
issuance of a decree of registration before the Administrator of the LRA had been
duly made. The appeal was denied by the appellate court in its Decision7 dated 24
July 2003. In its Decision, the Court of Appeals reiterated that the provisions of
Section 6, Rule 39 of the Rules of Court, which impose a prescriptive period for
enforcement of judgments by motion, refer to ordinary civil actions and not to
"special" proceedings such as land registration cases. The Court of Appeals also
noted that it would have been especially onerous to require Nillas to first request
the LRA to comply with the 1941 decision considering that it had been established
that the original records in the 1941 case had already been destroyed and could no
longer be reconstructed.
In the present petition, the OSG strongly argues that contrary to the opinion of the
Court of Appeals, the principles of prescription and laches do apply to land
registration cases. The OSG notes that Article 1144 of the Civil Code establishes
that an action upon judgment must be brought within ten years from the time the
right of action accrues.8 Further, Section 6 of Rule 39 of the 1997 Rules of Civil
Procedure establishes that a final and executory judgment or order may be
executed on motion within five (5) years from the date of its entry, after which time
it may be enforced by action before it is barred by statute of limitations.9 It bears
noting that the Republic does not challenge the authenticity of the 1941 Decision, or

Nillas's acquisition of the rights of the original awardees. Neither does it seek to
establish that the property is inalienable or otherwise still belonged to the State.
The OSG also extensively relies on two cases, Shipside Inc. v. Court of Appeals10
and Heirs of Lopez v. De Castro.11 Shipside was cited since in that case, the Court
dismissed the action instituted by the Government seeking the revival of judgment
that declared a title null and void because the judgment sought to be revived had
become final more than 25 years before the action for revival was filed. In Shipside,
the Court relied on Article 1144 of the Civil Code and Section 6, Rule 39 of the 1997
Rules of Civil Procedure in declaring that extinctive prescription did lie. On the other
hand, Heirs of Lopez involved the double registration of the same parcel of land,
and the subsequent action by one set of applicants for the issuance of the decree of
registration in their favor seven (7) years after the judgment had become final. The
Court dismissed the subsequent action, holding that laches had set in, it in view of
the petitioners' omission to assert a right for nearly seven (7) years.
Despite the invocation by the OSG of these two cases, there exists a more general
but definite jurisprudential rule that favors Nillas and bolsters the rulings of the
lower courts. The rule is that "neither laches nor the statute of limitations applies to
a decision in a land registration case."12
The most extensive explanation of this rule may be found in Sta. Ana v. Menla,13
decided in 1961, wherein the Court refuted an argument that a decision rendered in
a land registration case wherein the decree of registration remained unissued after
26 years was already "final and enforceable." The Court, through Justice Labrador,
explained:
We fail to understand the arguments of the appellant in support of the assignment
[of error], except insofar as it supports his theory that after a decision in a land
registration case has become final, it may not be enforced after the lapse of a
period of 10 years, except by another proceeding to enforce the judgment or
decision. Authority for this theory is the provision in the Rules of Court to the effect
that judgment may be enforced within 5 years by motion, and after five years but
within 10 years, by an action (Sec. 6, Rule 39). This provision of the Rules refers to
civil actions and is not applicable to special proceedings, such as a land registration
case. This is so because a party in a civil action must immediately enforce a
judgment that is secured as against the adverse party, and his failure to act to
enforce the same within a reasonable time as provided in the Rules makes the
decision unenforceable against the losing party. In special proceedings[,] the
purpose is to establish a status, condition or fact; in land registration proceedings,
the ownership by a person of a parcel of land is sought to be established. After the
ownership has been proved and confirmed by judicial declaration, no further
proceeding to enforce said ownership is necessary, except when the adverse or

losing party had been in possession of the land and the winning party desires to
oust him therefrom.
Furthermore, there is no provision in the Land Registration Act similar to Sec. 6, Rule
39, regarding the execution of a judgment in a civil action, except the proceedings
to place the winner in possession by virtue of a writ of possession. The decision in a
land registration case, unless the adverse or losing party is in possession, becomes
final without any further action, upon the expiration of the period for perfecting an
appeal. x x x
x x x x There is nothing in the law that limits the period within which the court may
order or issue a decree. The reason is xxx that the judgment is merely declaratory
in character and does not need to be asserted or enforced against the adverse
party. Furthermore, the issuance of a decree is a ministerial duty both of the judge
and of the Land Registration Commission; failure of the court or of the clerk to issue
the decree for the reason that no motion therefor has been filed can not prejudice
the owner, or the person in whom the land is ordered to be registered.14
The doctrine that neither prescription nor laches may render inefficacious a decision
in a land registration case was reiterated five (5) years after Sta. Ana, in Heirs of
Cristobal Marcos, etc., et al. v. De Banuvar, et al.15 In that case, it was similarly
argued that a prayer for the issuance of a decree of registration filed in 1962
pursuant to a 1938 decision was, among others, barred by prescription and laches.
In rejecting the argument, the Court was content in restating with approval the
above-cited excerpts from Sta. Ana. A similar tack was again adopted by the Court
some years later in Rodil v. Benedicto.16 These cases further emphasized, citing
Demoran v. Ibanez, etc., and Poras17 and Manlapas and Tolentino v. Llorente,18
respectively, that the right of the applicant or a subsequent purchaser to ask for the
issuance of a writ of possession of the land never prescribes.19
Within the last 20 years, the Sta. Ana doctrine on the inapplicability of the rules on
prescription and laches to land registration cases has been repeatedly affirmed.
Apart from the three (3) cases mentioned earlier, the Sta. Ana doctrine was
reiterated in another three (3) more cases later, namely: Vda. de Barroga v.
Albano,20 Cacho v. Court of Appeals,21 and Paderes v. Court of Appeals.22 The
doctrine of stare decisis compels respect for settled jurisprudence, especially absent
any compelling argument to do otherwise. Indeed, the apparent strategy employed
by the Republic in its present petition is to feign that the doctrine and the cases that
spawned and educed it never existed at all. Instead, it is insisted that the Rules of
Court, which provides for the five (5)-year prescriptive period for execution of
judgments, is applicable to land registration cases either by analogy or in a
suppletory character and whenever practicable and convenient.23 The Republic
further observes that Presidential Decree (PD) No. 1529 has no provision on

execution of final judgments; hence, the provisions of Rule 39 of the 1997 Rules of
Civil Procedure should apply to land registration proceedings.
We affirm Sta. Ana not out of simple reflex, but because we recognize that the
principle enunciated therein offers a convincing refutation of the current arguments
of the Republic.
Rule 39, as invoked by the Republic, applies only to ordinary civil actions, not to
other or extraordinary proceedings not expressly governed by the Rules of Civil
Procedure but by some other specific law or legal modality such as land registration
cases. Unlike in ordinary civil actions governed by the Rules of Civil Procedure, the
intent of land registration proceedings is to establish ownership by a person of a
parcel of land, consistent with the purpose of such extraordinary proceedings to
declare by judicial fiat a status, condition or fact. Hence, upon the finality of a
decision adjudicating such ownership, no further step is required to effectuate the
decision and a ministerial duty exists alike on the part of the land registration court
to order the issuance of, and the LRA to issue, the decree of registration.
The Republic observes that the Property Registration Decree (PD No. 1529) does not
contain any provision on execution of final judgments; hence, the application of Rule
39 of the 1997 Rules of Civil Procedure in suppletory fashion. Quite the contrary, it
is precisely because PD No. 1529 does not specifically provide for execution of
judgments in the sense ordinarily understood and applied in civil cases, the reason
being there is no need for the prevailing party to apply for a writ of execution in
order to obtain the title, that Rule 39 of the 1997 Rules of Civil Procedure is not
applicable to land registration cases in the first place. Section 39 of PD No. 1529
reads:
SEC. 39. Preparation of Decree and Certificate of Title. - After the judgment directing
the registration of title to land has become final, the court shall, within fifteen days
from entry of judgment, issue an order directing the Commissioner to issue the
corresponding decree of registration and certificate of title. The clerk of court shall
send, within fifteen days from entry of judgment, certified copies of the judgment
and of the order of the court directing the Commissioner to issue the corresponding
decree of registration and certificate of title, and a certificate stating that the
decision has not been amended, reconsidered, nor appealed, and has become final.
Thereupon, the Commissioner shall cause to be prepared the decree of registration
as well as the original and duplicate of the corresponding original certificate of title.
The original certificate of title shall be a true copy of the decree of registration. The
decree of registration shall be signed by the Commissioner, entered and filed in the
Land Registration Commission. The original of the original certificate of title shall
also be signed by the Commissioner and shall be sent, together with the owners
duplicate certificate, to the Register of Deeds of the city or province where the
property is situated for entry in his registration book.

The provision lays down the procedure that interposes between the rendition of the
judgment and the issuance of the certificate of title. No obligation whatsoever is
imposed by Section 39 on the prevailing applicant or oppositor even as a
precondition to the issuance of the title. The obligations provided in the Section are
levied on the land court (that is to issue an order directing the Land Registration
Commissioner to issue in turn the corresponding decree of registration), its clerk of
court (that is to transmit copies of the judgment and the order to the
Commissioner), and the Land Registration Commissioner (that is to cause the
preparation of the decree of registration and the transmittal thereof to the Register
of Deeds). All these obligations are ministerial on the officers charged with their
performance and thus generally beyond discretion of amendment or review.
The failure on the part of the administrative authorities to do their part in the
issuance of the decree of registration cannot oust the prevailing party from
ownership of the land. Neither the failure of such applicant to follow up with said
authorities can. The ultimate goal of our land registration system is geared towards
the final and definitive determination of real property ownership in the country, and
the imposition of an additional burden on the owner after the judgment in the land
registration case had attained finality would simply frustrate such goal.
Clearly, the peculiar procedure provided in the Property Registration Law from the
time decisions in land registration cases become final is complete in itself and does
not need to be filled in. From another perspective, the judgment does not have to
be executed by motion or enforced by action within the purview of Rule 39 of the
1997 Rules of Civil Procedure.
Following these premises, it can even be posited that in theory, there would have
been no need for Nillas, or others under similar circumstances, to file a petition for
revival of judgment, since revival of judgments is a procedure derived from civil
procedure and proceeds from the assumption that the judgment is susceptible to
prescription. The primary recourse need not be with the courts, but with the LRA,
with whom the duty to issue the decree of registration remains. If it is sufficiently
established before that body that there is an authentic standing judgment or order
from a land registration court that remains unimplemented, then there should be no
impediment to the issuance of the decree of registration. However, the Court sees
the practical value of necessitating judicial recourse if a significant number of years
has passed since the promulgation of the land court's unimplemented decision or
order, as in this case. Even though prescription should not be a cause to bar the
issuance of the decree of registration, a judicial evaluation would allow for a
thorough examination of the veracity of the judgment or order sought to be
effected, or a determination of causes other than prescription or laches that might
preclude the issuance of the decree of registration.

What about the two cases cited by the Republic, Shipside and Heirs of Lopez? Even
though the Court applied the doctrines of prescription and laches in those cases, it
should be observed that neither case was intended to overturn the Sta. Ana
doctrine, nor did they make any express declaration to such effect. Moreover, both
cases were governed by their unique set of facts, quite distinct from the general
situation that marked both Sta. Ana and the present case.
The judgment sought belatedly for enforcement in Shipside did not arise from an
original action for land registration, but from a successful motion by the Republic
seeking the cancellation of title previously adjudicated to a private landowner. While
one might argue that such motion still arose in a land registration case, we note
that the pronouncement therein that prescription barred the revival of the order of
cancellation was made in the course of dispensing with an argument which was
ultimately peripheral to that case. Indeed, the portion of Shipside dealing with the
issue of prescription merely restated the provisions in the Civil Code and the Rules
of Civil Procedure relating to prescription, followed by an observation that the
judgment sought to be revived attained finality 25 years earlier. However, the Sta.
Ana doctrine was not addressed, and perhaps with good reason, as the significantly
more extensive rationale provided by the Court in barring the revival of judgment
was the fact that the State no longer held interest in the subject property, having
divested the same to the Bases Conversion Development Authority prior to the filing
of the action for revival. Shipside expounds on this point, and not on the
applicability of the rules of prescription.
Notably, Shipside has attained some measure of prominence as precedent on still
another point, relating to its pronouncements relating to the proper execution of the
certification of non-forum shopping by a corporation. In contrast, Shipside has not
since been utilized by the Court to employ the rules on prescription and laches on
final decisions in land registration cases. It is worth mentioning that since Shipside
was promulgated in 2001, the Court has not hesitated in reaffirming the rule in Sta.
Ana as recently as in the middle of 2005 in the Paderes case.
We now turn to Heirs of Lopez, wherein the controlling factual milieu proved even
more unconventional than that in Shipside. The property involved therein was the
subject of two separate applications for registration, one filed by petitioners therein
in 1959, the other by a different party in 1967. It was the latter who was first able to
obtain a decree of registration, this accomplished as early as 1968.24 On the other
hand, the petitioners were able to obtain a final judgment in their favor only in
1979, by which time the property had already been registered in the name of the
other claimant, thus obstructing the issuance of certificate of title to the petitioners.
The issues of prescription and laches arose because the petitioners filed their action
to enforce the 1979 final judgment and the cancellation of the competing title only
in 1987, two (2) years beyond the five (5)-year prescriptive period provided in the
Rules of Civil Procedure. The Court did characterize the petitioners as guilty of

laches for the delay in filing the action for the execution of the judgment in their
favor, and thus denied the petition on that score.
Heirs of Lopez noted the settled rule that "when two certificates of title are issued to
different persons covering the same land in whole or in part, the earlier in date
must prevail x x x," and indeed even if the petitioners therein were somehow able
to obtain a certificate of title pursuant to the 1979 judgment in their favor, such title
could not have stood in the face of the earlier title. The Court then correlated the
laches of the petitioners with their pattern of behavior in failing to exercise due
diligence to protect their interests over the property, marked by their inability to
oppose the other application for registration or to seek enforcement of their own
judgment within the five (5) -year reglementary period.
Still, a close examination of Heirs of Lopez reveals an unusual dilemma that negates
its application as precedent to the case at bar, or to detract from Sta. Ana as a
general rule for that matter. The execution of the judgment sought for belated
enforcement in Heirs of Lopez would have entailed the disturbance of a different
final judgment which had already been executed and which was shielded by the
legal protection afforded by a Torrens title. In light of those circumstances, there
could not have been a "ministerial duty" on the part of the registration authorities to
effectuate the judgment in favor of the petitioners in Heirs of Lopez. Neither could it
be said that their right of ownership as confirmed by the judgment in their favor was
indubitable, considering the earlier decree of registration over the same property
accorded to a different party. The Sta. Ana doctrine rests upon the general
presumption that the final judgment, with which the corresponding decree of
registration is homologous by legal design, has not been disturbed by another ruling
by a co-extensive or superior court. That presumption obtains in this case as well.
Unless that presumption is overcome, there is no impediment to the continued
application of Sta. Ana as precedent.25
We are not inclined to make any pronouncements on the doctrinal viability of
Shipside or Heirs of Lopez concerning the applicability of the rules of prescription or
laches in land registration cases. Suffice it to say, those cases do not operate to
detract from the continued good standing of Sta. Ana as a general precedent that
neither prescription nor laches bars the enforcement of a final judgment in a land
registration case, especially when the said judgment has not been reversed or
modified, whether deliberately or inadvertently, by another final court ruling. This
qualifier stands not so much as a newly-carved exception to the general rule as it
does as an exercise in stating the obvious.
Finally, the Republic faults the Court of Appeals for pronouncing that the 1941
Decision constituted res judicata that barred subsequent attacks to the adjudicates
title over the subject property. The Republic submits that said decision would
operate as res judicata only after the decree of registration was issued, which did

not happen in this case. We doubt that a final decisions status as res judicata is the
impelling ground for its very own execution; and indeed res judicata is more often
invoked as a defense or as a factor in relation to a different case altogether. Still,
this faulty terminology aside, the Republics arguments on this point do not
dissuade from our central holding that the 1941 Decision is still susceptible to
effectuation by the standard decree of registration notwithstanding the delay
incurred by Nillas or her predecessors-in-interest in seeking its effectuation and the
reasons for such delay, following the prostracted failure of the then Land
Registration Commissioner to issue the decree of registration. In this case, all that
Nillas needed to prove was that she had duly acquired the rights of the original
adjudicates her predecessors-in-interest-in order to entitle her to the decree of
registration albeit still in the names of the original prevailing parties who are her
predecessors-in interest. Both the trial court and the
Court of Appeals were satisfied that such fact was proven, and the Republic does
not offer any compelling argument to dispute such proof.
WHEREFORE, the Petition is DENIED. No pronouncement as to costs.
SO ORDERED.
4.Writ of possession and writ of demolition
G.R. No. L-25660 February 23, 1990
LEOPOLDO VENCILAO, MAURO RENOBLAS, TELESFORO BALONDIA, FELIX
ABANDULA, FAUSTO GABAISEN, ISIDORO ELIVERA, RAYMUNDO BONGATO,
MARTIN ROLLON, EUSTAQUIO MEDANA, DOROTEO ELIVERA, FRANCISCO
PAGAURA, MACARIO GEPALAGO, GREGORIO ITAOC, ALEJANDRO RENOBLAS,
SIMEON BARBARONA, GREGORIO RENOBLAS, FRANCISCO ASOY, TEOFILA
GUJELING, FABIAN VILLAME, VICENTE OMUSORA, PEDRO BALORIA,
GREGORIO ITAOC, TERESITA ITAOC, FAUSTINO ITAOC, FORTUNATO ITAOC,
FLORENTINA GEMENTIZA, RESTITUTA OMUSORA, ZOILA OMUSORA, FELISA
OMUSORA, ROBERTO HAGANAS, FELISA HAGANAS, FERMIN HAGANAS,
VICTORIANO HAGANAS, JULIA SEVILLA, ROMAN MATELA, MARCELA
MATELA, DELFIN MATELA, PELAGIO MATELA, ROBERTA MATELA, PROCOPIO
CABANAS and SERAFINA CABANAS, plaintiff-appellants,
vs.
TEODORO VANO, JOSE REYES, ROSARIO REYES, SALUD OGILVE BELTRAN,
AMALIA R. OGILVE, FLORA VDA. DE COROMINAS, JESUSA REYES, LOURDES
COROMINAS MUNOZ, JUAN COROMINAS, LOURDES C. SAMSON CEBALLOS,
SOLEDAD C. SAMSON RAMA, DOLORES V. GARCES FALCON, JAIME GARCES,
JOAQUIN REYES, and PEDRO RE R. LUSPO, defendants- appellees.

G.R. No. L-32065 February 23,1990

LEOPOLDO VENCILAO, SOFRONIO ROLLON, AURELIO ELIVERA, FRANCISCO
PAGAORA, MARTIN ROLLON, GRACIANO MAHINAY, GERARDO ELIVERA,
GREGORIO ITAOC, ISIDRO ELIVERA, DEMOCRITO ELIVERA, FAUSTO
GABAISIN, ALBINO RENOBLAS, EUSTAQUIO MENDANIA, SIMEON
BARBARONA, TELESFORO BALONDA, FELIX ABANDOLA, SATURNINA
GEPILAGO, TEOFILA GOHILING, TOMAS REAMBONANSA, MARCOS
HAGANAS, PASTOR ASNA and MAURO RENOBLAS, petitioners,
vs.
HONORABLE PAULINO S. MARQUEZ, Judge, Court of First Instance of Bohol,
Branch 1, and MARIANO OGILVE, et. al., respondents.
G.R. No. L-33677 February 23, 1990
LEOPOLDO VENCILAO, SOFRONIO ROLLON, AURELIO ELIVERA, FRANCISCO
PAGAORA, MARTIN ROLLON, GRACIANO MAHINAY, GERARDO ELIVERA,
GREGORIO ITAOC, ISIDRO ELIVERA, DEMOCRITO ELIVERA, FAUSTO
GABAISIN, ALBINO RENOBLAS, EUSTAQUIO MENDANIA, SIMEON
BARBARONA, TELESFORO BALONDA, FELIX ABANDOLA, SATURNINA
GEPILAGO, TEOFILA GOHILING, TOMAS REAMBONANSA, MARCOS
NAGANAS, PASTOR ASNA and MAURO RENOBLAS, petitioners,
vs.
HONORABLE PAULINO S. MARQUEZ, Judge, Court of First Instance of Bohol,
Branch 1, The Provincial Sheriff, Province of Bohol, and MARIANO OGILVE,
et. al., respondents.
Lord Marapao and Lorenzo A. Lopena for petitioners.
Roque R. Luspo for respondents.

MEDIALDEA, J.:
On February 7, 1974, We resolved to allow the consolidation of these three cases,
considering that they involve the same parties and parcels of land: (1) G.R. No. L25660---this is an appeal from the order of the Court of First Instance of Bohol (now
Regional Trial Court) 1 dated May 12,1964 dismissing the cases of some of the
plaintiffs-appellants and its order dated August 25, 1965 denying the motion for
reconsideration and the motion to declare the defendants- appellees in default; (2)
G.R. No. L32065---this is a petition for certiorari of the order of the Court of First
Instance of Bohol dated May 14, 1970 directing the execution of its prior order
dated May 6, 1969 finding petitioners guilty of contempt; (3) G.R. No. L-33677--- this

is a petition for certiorari with mandamus and prohibition of the order of the Court of
First Instance of Bohol dated June 2, 1971 directing the demolition of the houses of
the petitioners.
On February 15, 1988, We resolved to require the parties to manifest whether or not
they are still interested in prosecuting these cases, or supervening events have
transpired which render these cases moot and academic or otherwise substantially
affect the same. On March 25, 1988, the petitioners filed an ex parte manifestation
that they are still very much interested in the just prosecution of these cases.
The antecedent facts are as follows:
G.R. No. 25660
On April 1, 1950, the heirs of the late Juan Reyes filed an application for registration
of the parcels of land allegedly inherited by them from Juan Reyes, in Land
Registration Case No. 76, L.R.C. Record No. N-4251. On July 26,1951, administratrix
Bernardina Vda. de Luspo filed an amended application for registration. After
hearing, the land was registered under Original Certificate of Title No. 400 (pp. 8485, Record on Appeal; p. 7, Rollo).
On October 9, 1962, a complaint for reconveyance of real properties with damages
and preliminary injunction, Civil Case No. 1533, (pp. 2-19, Record n Appeal; p. 7,
Rollo) was filed by plaintiffs-appellants before the Court of First Instance of Bohol. It
was alleged that they are the lawful owners of their respective parcels of land
including the improvements thereon either by purchase or inheritance and have
been in possession publicly, continuously, peacefully and adversely under the
concept of owners for more than thirty (30) years tacked with the possession of
their predecessors-in-interest. However, those parcels of land were included in the
parcels of land applied for registration by the heirs of Juan Reyes, either by mistake
or fraud and with the intention of depriving them of their rights of ownership and
possession without their knowledge, not until the last part of 1960 when the
defendants-appellees, through their agents, attempted to enter those parcels of
land claiming that they now belong to the heirs of Juan Reyes. To the complaint, the
defendants-appellees moved to dismiss on two grounds (pp. 19-22, Record on
Appeal; p. 7, Rollo), namely: (1) for lack of cause of action and (2) the cause of
action is barred by prior judgment.
On July 20, 1963, the court a quo issued an order denying defendants-appellees'
motion to dismiss (pp. 29-30, Record on Appeal; p. 7, Rollo). However, acting on the
motion to set aside such order (pp. 31-32, Record on Appeal; p. 7, Rollo), on May 12,
1964, the same court issued another order reversing itself partially (p. 56, Record
on Appeal; p. 7, Rollo), the dispositive portion of which reads:

WHEREFORE, the cases herein of the plaintiffs Alejandro Renoblas, Fausto Cabaisan,
Fabian Villame, Gregorio Ita-oc, Faustino Ita-oc, Fortunato Ita-oc, Roberto Haganas,
Felisa Haganas, Fermin Haganas, Victorians Haganas, Julia Sevilla, Ramon Matela,
Roberto Matela, Procopio Cabaas and Vicente Amosora are hereby dismissed on
the ground of res adjudicata with these plaintiffs paying proportionately eighteenth
forty one (18/41) of the costs, but the petition to dismiss the case of the rest of the
plaintiffs is hereby denied.
SO ORDERED.
On May 28,1964, the plaintiffs-appellants whose cases were dismissed filed a
motion for reconsideration (pp. 57- 58, Record on Appeal; p. 7, Rollo). On July 24,
1964, the plaintiffs-appellants whose cases were not dismissed filed a motion to
declare the defendants-appellees in default for failure to file their answer with the
time prescribed by law (pp. 68-75, Record on Appeal; p. 7, Rollo). On the other
hand, defendants-appellees filed their opposition to the motion for reconsideration
praying that the complaint as regards the rest of the plaintiffs-appellants be likewise
dismissed (pp. 75-80, Record on Appeal; p. 7 Rollo).
On August 25, 1965, the court a quo issued an order in connection therewith (pp.
82-98, Record on Appeal; p. 7, Rollo) denying all motions.
The case is now before Us with the following as assignments of errors (p. 3, Brief for
the Plaintiffs-Appellants; p. 9, Rollo), to wit:
I
THE TRIAL COURT ERRED IN DISMISSING THE CASES OF THE PLAINTIFFSAPPELLANTS WHOSE NAMES ARE ALREADY MENTIONED ABOVE ON THE ALLEGED
GROUND THAT THEIR CASES ARE BARRED BY A PRIOR JUDGMENT OF RES
ADJUDICATA.
II
THE TRIAL COURT ERRED IN DENYING THE MOTION OF THE PLAINTIFFS-APPELLANTS
WHOSE CASES ARE NOT DISMISSED TO DECLARE THE DEFENDANTS-APPELLEES IN
DEFAULT FOR HAVING FAILED TO FILE THEIR ANSWER WITHIN THE TIME PRESCRIBED
BY LAW.
On August 12, 1966, a resolution was issued by this Court dismissing the appeal as
regards the second issue because the order appealed from was merely
interlocutory, hence, not appealable (pp. 35-38, Rollo).

On August 17, 1988, petitioners Alex Abandula, Mauro Renoblas, Simeon Barbarona,
Fabian Villame, Macario Gepalago, Eustaquio Medana, Julia Sevilla, Gregorio Itaoc,
Francisco Asoy and Martin Rollon filed a motion to withdraw their appeal on the
ground that they are now the absolute owners and possessors of their respective
parcels of land subject of Civil Case No. 1533.
The appeal is not impressed with merit.
The plaintiffs-appellants claim that no evidence was presented by the defendantsappellees that they (plaintiffs-appellants) were notified of the date of the trial on the
merits of the application for registration nor were they given copies of the decision
of the trial court. Likewise, they contend that res judicata is not applicable in an
action for reconveyance.
The allegations that no evidence was presented by the defendants-appellees that
plaintiffs-appellants were notified of the date of the trial on the merits of the
application for registration nor were they given copies of the decision of the trial
court are new issues. It is a well-settled rule that, except questions on jurisdiction,
no question will be entertained on appeal unless it has been raised in the court
below and it is within the issues made by the parties in their pleadings (Cordero vs.
Cabral, G.R. No. 36789, July 25, 1983, 123 SCRA 532). The other contention that res
judicata is not applicable in an action for reconveyance is not plausible. The
principle of res judicata applies to all cases and proceedings, including land
registration and cadastral proceedings (Republic vs. Estenzo, G.R. No. L-35376,
September 11, 1980, 99 SCRA 65; Paz vs. Inandan 75 Phil. 608; Penaloza vs. Tuazon,
22 Phil. 303).
It is a settled rule that a final judgment or order on the merits, rendered by a court
having jurisdiction of the subject matter and of the parties, is conclusive in a
subsequent case between the same parties and their successors in interest
litigating upon the same thing and issue, regardless of how erroneous it may be. In
order, therefore, that there may be res judicata, the following requisites must be
present: (a) The former judgment must be final; (b) it must have been rendered by a
court having jurisdiction of the subject matter and of the parties; (c) it must be a
judgment on the merits; and (d) there must be, between the first and the second
actions, identity of parties, of subject matter, and of cause of action (San Diego vs.
Cardona, 70 Phil. 281; Ramos vs. Pablo, G.R. No. 53692, Nov. 26,1986, 146 SCRA
24).
The underlying philosophy of the doctrine of res judicata is that parties should not
be permitted to litigate the same issue more than once and when a right or fact has
been judicially tried and determined by a court of competent jurisdiction, so long as
it remains unreversed, it should be conclusive upon the parties and those in privity
with them in law or estate (Sy Kao vs. Court of Appeals, G.R. No. 61752, Sept.

28,1984,132 SCRA 302). The doctrine of res judicata is an old axiom of law, dictated
by wisdom and sanctified by age, and is founded on the broad principle that it is to
the interest of the public that there should be an end to litigation by the same
parties and their privies over a subject once fully and fairly adjudicated. Interest
republicae ut sit finis litium (Carandang vs. Venturanza, G.R. No. L41940, Nov.
21,1984,133 SCRA 344). To ignore the principle of res judicata would be to open the
door to endless litigations by continuous determination of issues without end
(Catholic Vicar Apostolic of the Mountain Province vs. Court of Appeals, et al., G.R.
Nos. 80294- 95, Sept. 21, 1988, 165 SCRA 515).
Thus, when a person is a party to a registration proceeding or when notified he does
not want to participate and only after the property has been adjudicated to another
and the corresponding title has been issued files an action for reconveyance, to give
due course to the action is to nullify registration proceedings and defeat the
purpose of the law.
In dismissing the cases of some of the petitioners, the court a quo meticulously
discussed the presence of all the elements of res judicata (pp. 36-38; pp. 42-54,
Record on Appeal; p. 7; Rollo):
There is no question that in that Registration Proceedings, LRC Record No. N-4251,
Land Registration Case No. N-76, the Court of First Instance of the province of Bohol
had jurisdiction of the subject matter, that said court had rendered a judgment on
the merit that was terminated in the Court of Appeals since December, 1958, and
that decision is now final with a decree of registration over the parcels of land
described in the application issued to the applicants.
The subject matter (the parcels of land) now claimed by the plaintiffs in this case at
bar are the same, or at least part of the parcels already adjudicated registration in
that registration case to the persons, some of them are made defendants in this
case before us. The cause of action between the two cases are the same, ownership
of these parcels of land, though the forms of action are different, one is an ordinary
Land Registration and the other is reconveyance.
'It is settled that notwithstanding the difference in the form of two actions, the
doctrine of res adjudicata will apply where it appears that the parties in effect were
litigating for the same thing. A party can not, by varying the form of action, escape
the effects of res adjudicata (Aguirre vs. Atienza, L-10665, Aug. 30, 1958; Geronimo
vs. Nava No. L-1 21 1 1, Jan. 31, 1959; Labarro vs. Labateria et al., 28 O.G. 4479).
'Well settled is the rule that a party can not by varying the form of action, or
adopting a different method of presenting his case, escape the operation of the
principle that one and the same cause of action shall not be twice litigated between

the same parties or their privies. (Francisco vs. Blas, et al., No. L-5078; Cayco, et al.,
vs. Cruz, et al., No. L-1 2663, Aug. 21, 1959).
'Accordingly, a final judgment in an ordinary civil action, determining the ownership
of certain lands is res adjudicata in a registration proceeding where the parties and
property are the same as in the former case (Paz vs. Inandan 75 Phil. 608; Penaloza
vs. Tuason, 22 Phil. 303).'
xxx

xxx

xxx

But are there identities of parties in this case before us and the former registration
proceedings? Identity of parties means that the parties in the second case must be
the same parties in the first case, or at least, must be successors in interest by title
subsequent to the commencement of the former action or proceeding, or when the
parties in the subsequent case are heirs (Chua Tan vs. Del Rosario, 57 Phil. 411;
Martinez vs. Franco, 51 Phil. 487-1 Romero vs. Franco, 54 Phil. 744; Valdez, et a]. vs.
Penida No. L- 3467, July 30, 1951).
xxx

xxx

xxx

Returning our attention to the case at bar, and with in mind the principles of res
adjudicata above-quoted, we noticed that many of the plaintiffs were not oppositors
in the former registration case, but many are children of the former oppositors. In
such a case we have to determine the case of every plaintiff, if the former decision
in the land registration case is conclusive and binding upon him.
xxx

xxx

xxx

The defendants had proven that the adjoining owners and claimants of the parcels
of land object of registration proceeding had been notified when the land was
surveyed. These persons notified according to the surveyor's certificate, Exhibit "B"
were as follows: Cipriano Samoya, Fausto Baguisin, Silveria Pahado, Enojario Laroda,
Alejandro Renoblas, Heirs of Gregorio Lofranco, Julian Villame, Pedro Itaoc, Adriano
Toloy, Bartolome Omosura, Marcelina Asilon, Gregorio Baguinang, et al., Nicolas
Omosura, Simon Lagrimas, et al., Martin Quinalayo, Gorgonio Baquinang, Demetrio
Asolan, Catalino Orellena, Heirs of Catalina Palves, Manuel Mondano, Angel
Mondano, Victoriano Balolo, Eugenio del Rosario, Verinici Bayson, Felomino Ruiz,
Apolonio Horbeda, and Mun. of Calape.
The following persons were notified by the Chief of the Land Registration Office of
the initial hearing (Exhibit "J") of the registration proceedings enjoining them to
appear on June 16,1952, at 8:30 a.m., before the Court of First Instance of Bohol to
show cause why the prayer of said application should not be granted: the Solicitor
General, the Director of Lands, the Director of Public Works and the Director of

Forestry, Manila; the Provincial Governor, the Provincial Fiscal and the District
Engineer, Tagbilaran, Bohol; the Municipal Mayor, Gorgonio Baguinang, Demetrio
Azocan, Catalino Orellena, Manuel Mondano, Angel Mondano, Victoriano Bolalo,
Eugenio del Rosario, Verinici Bayson, Filomeno Ruiz, Apolonio Horboda, the Heirs of
Gregorio Lofranco, Julian Villame, Pedro Itaoc, Adriano Toloy, Bartolome Omosura,
Marcelina Asilom, Gregorio Baguinang, Nicolas Omosura, Simon Lagrimas and
Martin Quinalayo, Calape, Bohol; the heirs of Catalino Polvos, Fausto Baguisin,
Cipriano Samoya, Silveria Pohado, Enojario, Laroda, Alejandro Renoblas and Leoncio
Barbarona, Antequera Bohol.
And after the application had been filed and published in accordance with law the
following persons represented by Atty. Conrado D. Marapao filed opposition to that
registration proceeding: Felipe Cubido, Simon Lagrimas, Simeon Villame, Felix
Lacorte, Victor Omosura, Germana Gahil, Anastacio Orillosa, Enerio Omosura,
Valeriano Tuloy, Cipriano Sanoya, Pablo Dumadag, Andres Reimbuncia, Roman
Reimbuncia, Celedonio Cabanas, Moises Cabanas, Calixto Gohiting, Gervasio Sevilla,
Pedro Omosura, Daniel Itaoc, Luis Omosura, Bartolome Omusura, Nicasio Omosura,
Calixto Sevilla, Teodora Omosura, Jose Sabari, Silverio Lacorte, Silverio Tuloy,
Gertrudes Sevilla, Teodora Sevilla, Magno Orillosa, Gervacia Sevilla, Marcos
Hagonas, Eleuterio Pandas, Pablo Omosura, Fabian Villame, Teodoro Omosura,
Magdalina Asilom, Mauricio Matela, Marciano Ordada, Eusebio Omosura, and
Gregorio Repelle, (Exhibit "E"), Atty. Juna V. Balmaseda in representation of the
Bureau of Lands, and Asst. Fiscal Norberto M. Gallardo in representation of the
Municipality of Calape.
Plaintiffs Mauro Renoblas and Gregorio Renoblas are children of plaintiff Alejandro
Renoblas. Plaintiff Telesforo Balanda is son-in-law of Alejandro, being the husband of
Juliana Renoblas, daughter of Alejandro. Plaintiff Alejandro Renoblas was not one of
the oppositors in the registration proceedings, but he was notified of the initial
healing of that registration case and by the surveyor that surveyed the land object
of registration (Exhibit J-Movant). Therefore, the decision of the land registration
proceeding is binding upon him and his case is dismissed on the ground of res
adjudicata with costs.
xxx

xxx

xxx

Plaintiff Fausto Cabaisan was notifed by the surveyor and that notice of the initial
hearing. And though he was not an oppositor, the former land registration
proceeding is binding on him. Therefore, this case is dismissed in so far as Fausto
Cabaisan is concerned with costs.
xxx

xxx

xxx

Plaintiffs Gregorio Ita-oc, Teresita Ita-oc, Faustino Ita-oc and Fortunate Ita-oc are
children of Daniel Ita-oc, one of the oppositors in the registration proceedings. They
claim parcel No. 10 described in paragraph 2 of the complaint. Gregorio Ita-oc
testified that his land was inherited by said plaintiffs' mother from her father, Pio
Sevilla. The evidence on record (Exhibits J-3, J- 4, J-5). However (sic), shows that the
land is declared in the name of Daniel Ita-oc, a former oppositor in the registration
case. Hence, these plaintiffs are successors-in-interest of Daniel Ita-oc, and,
therefore, are bound by the decision in that registration case. Their case, therefore,
is dismissed, with costs.
"Plaintiffs Roberto Haganas, Felisa Haganas, Fermin Haganas and Victoriano
Haganas are children of Marcos Haganas, a former oppositor in the registration
case. Marcos testified that his claim before was only two hectares, while the claim of
his children is seven hectares, which come from his wife, not from him. These
plaintiffs claim two parcels, one under Tax Declaration No. R-4452, and Tax
Declaration No. R-8456. It appears that Tax Declaration No. R-4452 (Exhibit M) is in
the name of Marcos Haganas and the land described under Tax Declaration No. R8456 was bought by the spouses Marcos Haganas and Tomasa Sevilla from
Gertrudis Sevilla in 1956 (Exhibit M-3), who was an oppositor in the registration
proceeding. Therefore, plaintiffs Roberto Haganas, Felisa Haganas, Fermin Haganas,
and Victoriano Haganas are successors-in-interest to properties in which the
decision in the registration case is conclusive and binding to their predecessors-ininterest. Hence, their case here is dismissed with costs.
Plaintiff Julia Sevilla is the wife of Marcelo Matela, who was the oppositor in the
registration proceedings. Plaintiffs Roman Matela, Marcela Matela, Delfin Matela,
and Roberta Matela are their children. She has no son by the name of Pelagic. Julia
testified that the land now claimed by her children came from her father Pio Sevilla.
The land that was claimed by Mauricio Matela as oppositor was in his name under
Tax Declaration No. 5099. This is the same land now claimed by plaintiffs Julia
Sevilla, Ramon Matela, Marcela Matela, Delfin Matela, and Roberta Matela (Exhibit
0-4). These plaintiffs are successors-in-interest of Mauricio Matela, who is bound by
the decision in that land proceeding wherein he was the oppositor. Therefore, the
case of these plaintiffs are dismissed with costs.
Plaintiff Procopia Cabanas was the wife of Andres Reambonancia, oppositor in the
land registration proceedings. She claims parcel No. 20 described in paragraph 2 of
the complaint bearing Tax Declaration No. R-8121. It appears that this land is
declared in the name of Andres Reambonancia (Exhibit N-3) who, as oppositor in the
land registration case, is bound by the decision of that case. Therefore, the case of
plaintiff Procopia Cabanas as successor-in-interest to Andres Reambonancia, is
hereby dismissed, with costs.

Plaintiff Vicente Amosora is the son of Enerio Amosora and Florencia Gahil both
oppositors in the former registration case. The land claimed by plaintiff Vicente
Amosora is described as parcel No. 24 of paragraph 2 of the complaint under Tax
Declaration No. R-6107, under the name of his father Enerio Amosora. Since Enerio
Amosora was an oppositor in the former land registration of which this land was a
part, the decision of that land registration case is conclusive and binding not only to
Enerio Amosora, but also to his successor-in-interest, plaintiff Vicente Amosora,
whose case therefore, is dismissed with costs.
G.R. No. L-32065
Upon the death of administratrix Bernardina Vda. de Luspo, Transfer Certificate of
Title No. 3561 was issued in the name of Pedro R. Luspo and Transfer Certificate of
Title No. 3562 was issued in the name of several persons (p. 36, Rollo).
A writ of possession dated November 6, 1959, a first alias writ of possession dated
January 6, 1961, and a second alias writ of possession dated July 2, 1966 were
issued by the trial court against the petitioners. A sample of the guerilla-like, hide
and seek tactics employed by the petitioners was proved by the official report of the
deputy sheriff dated January 21 1960. Another evidence of petitioners' refusal to
sign and to vacate was a certification dated July 22, 1966 and the Sheriffs return
dated October 25, 1966.
On March 29, 1967, a petition for contempt was filed by Mariano Ogilve, who is one
of the registered owners of the parcel of land covered by Transfer Certificate of Title
No. 3562, against the petitioners for refusing to vacate the land occupied by them
and for refusing to sign the Sheriffs return.
On May 6, 1969, the court a quo issued a resolution, the dispositive portion of which
reads (p. 47, Rollo):
FOR ALL THE FOREGOING CONSIDERATION, make it of record that Procopia
Reambonansa voluntarily left the land and dropped out from the case; the charge of
contempt against Alejandro Renoblas (who died) is dismissed and each of the
remaining 22 respondents are hereby found guilty of contempt under Sec. 3-b of
Rule 71 and are hereby sentenced each to pay a fine of One Hundred Pesos,
authorizing the Constabulary Detachment at or near Candungao Calape Bohol to
collect the same and to transmit the money to the Clerk of this Court, with
subsidiary imprisonment in case of insolvency at the rate of one day for every P2.50
or fraction of a day, the said Constabulary Detachment to effect the commitment if
any of them is unable to pay the fine. The fingerprints of each of these 22
respondents shall also be taken by the constabulary and filed with the record of this
case.

It is so ordered.
On June 4, 1969, the petitioners filed a motion for reconsideration of the aforestated
resolution whereas Ogilve filed an opposition thereto.
On February 14, 1970, the motion for reconsideration was denied. On March 18,
1970, another motion for reconsideration was filed by petitioners on the ground of
pendency of the action for reconveyance in Civil Case No. 1533 and their appeal in
G.R. No. L-25660. On May 14, 1970, the court a quo ordered the proper officers to
actually execute the resolution dated May 6, 1969.
Hence, the present petition.
Petitioners raise the following issues:
I
THAT THE SAID RESPONDENT JUDGE ERRED IN ISSUING A WRIT OF POSSESSION
WITHOUT ANY COMPLAINT FILED IN COURT FOR FORCIBLE ENTRY AND DETAINER,
NOR FOR RECOVERY OF OWNERSHIP AND POSSESSION OF THE PARCELS OF LAND IN
QUESTION AGAINST THE HEREIN PETITIONERS.
II
THAT THE HONORABLE RESPONDENT JUDGE ERRED IN ISSUING A WRIT OF
POSSESSION AGAINST THE PETITIONERS HEREIN, WHO WERE NOT PARTIES TO THE
REGISTRATION PROCEEDING AND WHO WERE NOT DEFEATED OPPOSITORS OF THE
SAID APPLICATION FOR REGISTRATION.
The petition is impressed with merit.
Petitioners contend that they were not claimants-oppositors nor defeated oppositors
in the said land registration case, as their names do not appear in the amended
application for registration; that they have occupied the subject parcels of land for
more than thirty (30) years which began long before the filing of the application for
registration; and that after the hearing of the registration case, they continued in
possession of the said land.
In a registration case, the judgment confirming the title of the applicant and
ordering its registration in his name necessarily carried with it the delivery of
possession which is an inherent element of the right of ownership. The issuance of
the writ of possession is, therefore, sanctioned by existing laws in this jurisdiction
and by the generally accepted principle upon which the administration of justice
rests (Romasanta et. al. vs. Platon, 34 O.G. No. 76; Abulocion et. al. vs. CFI of Iloilo,

et. al., 100 Phil. 554 [1956]). A writ of possession may be issued not only against
the person who has been defeated in a registration case but also against anyone
unlawfully and adversely occupying the land or any portion thereof during the land
registration proceedings up to the issuance of the final decree (Demorar vs. Ibaez,
et al., 97 Phil 72 [1955]).
The petitioners' contention that they have been in possession of the said land for
more than thirty (30) years which began long before the filing of the application for
registration and continued in possession after the hearing of the registration case,
worked against them. It was a virtual admission of their lack of defense. Thus, the
writs of possession were properly issued against them.
However, We do not subscribe to the ruling of the court a quo that petitioners are
guilty of contempt. Under Section 8 (d) of Rule 19, Rules of Court, if the judgment
be for the delivery of the possession of real property, the writ of execution must
require the sheriff or other officer to whom it must be directed to deliver the
possession of the property, describing it, to the party entitled thereto. This means
that the sheriff must dispossess or eject the losing party from the premises and
deliver the possession thereof to the winning party. If subsequent to such
dispossession or ejectment the losing party enters or attempts to enter into or upon
the real property, for the purpose of executing acts of ownership or possession, or in
any manner disturbs the possession of the person adjudged to be entitled thereto,
then and only then may the loser be charged with and punished for contempt
(Quizon vs. Philippine National Bank, et. al., 85 Phil. 459). According to this section,
it is exclusively incumbent upon the sheriff to execute, to carry out the mandates of
the judgment in question, and in fact, it was he himself, and he alone, who was
ordered by the trial judge who rendered that judgment, to place the respondents in
possession of the land. The petitioners in this case had nothing to do with that
delivery of possession, and consequently, their refusal to effectuate the writ of
possession, is entirely officious and impertinent and therefore could not hinder, and
much less prevent, the delivery being made, had the sheriff known how to comply
with his duty. It was solely due to the latter's fault, and not to the disobedience of
the petitioners' that the judgment was not duly executed. For that purpose, the
sheriff could even have availed himself of the public force, had it been necessary to
resort thereto (see United States v. Ramayrat 22 Phil. 183).
G.R. No. L-33677
On March 22,1971, Mariano Ogilve filed a Motion for a Writ of Demolition which was
granted by the trial court on April 5, 1971 (pp. 42-43, Rollo) against those who were
adjudged guilty of contempt. On April 29, 1971, the petitioners filed an urgent
motion for reconsideration of said order. On June 2, 1971, the trial court issued
another order, the dispositive portion of which reads (p. 48, Rollo):

WHEREFORE, in the absence of writ of preliminary injunction Deputy Provincial

Sheriff Pedro Aparece must not only take P.C. soldiers with him but also carpenters
to effect the demolition, the carpenters being at the expense of the Luspo.
IT IS SO ORDERED.
Hence, the present petition.
The issue here is whether or not the respondent judge acted without or in excess of
his jurisdiction, or with grave abuse of discretion and thus excluded the herein
petitioners from the use and enjoyment of their right to which they are entitled
when he (respondent judge) issued the order of demolition on April 5, 1971 and
again on June 2, 1971 (p. 107, Rollo).
On July 14, 1971, this Court issued a temporary restraining order (p. 51, Rollo).
The petition is not impressed with merit.
The petitioners allege that the respondent-judge cannot issue a writ of demolition
pending the resolution of G.R. No. L-32065.
We rule that the petition in G.R. No. L-32065 was not a bar to the issuance of the
writ of demolition. It is significant to note that the subject matter of the petition in
G.R. No. L-32065 is the order dated May 14, 1970 directing the execution of the
prior order dated May 6, 1969 finding petitioners guilty of contempt and not the
writs of possession themselves. Thus, the respondent Judge correctly issued the
writs of demolition. In Meralco vs. Mencias, 107 Phil 1071, We held:
[I]f the writ of possession issued in a land registration proceeding implies the
delivery of possession of the land to the successful litigant therein (Demorar vs.
Ibanez, 97 Phil. 72; Pasay Estate Company vs. Del Rosario, et al., 11 Phil. 391;
Manlapas vs. Llorente 48 Phil. 298), a writ of demolition must, likewise, issue,
especially considering that the latter writ is but a complement of the former which,
without said writ of demolition, would be ineffective.
xxx

xxx

xxx

[The issuance of the writ of demolition] is reasonably necessary to do justice to

petitioner who is being deprived of the possession of the lots in question, by reason
of the continued refusal of respondent ...... to remove his house thereon and restore
possession of the promises to petitioner.
ACCORDINGLY, judgment is hereby rendered as follows:

1)
In G.R. No. L-25660, the appeal is DENIED and the orders of the Court of First
Instance dated May 12, 1964 and August 25, 1965 are AFFIRMED; the motion to
withdraw the appeal of some of the plaintiffs-appellants is GRANTED;
2)
In G.R. No. L-32065, the petition is GRANTED and the resolution of the Court
of First Instance dated May 14, 1970 is SET ASIDE; and
3) In G.R. No. L-33677, the petition is DISMISSED and the order of the Court of First
Instance dated June 2, 1971 is AFFIRMED. The temporary restraining order is
LIFTED.
SO ORDERED.
5. Possesion of third persons after issuance of final decree, Remedy
6. Consequence of Refusal to Vacate
viii.

When OCT takes effect

MANOTOK REALTY, INC. and

MANOTOK ESTATE CORPORATION,
Petitioners,
- versus CLT REALTY DEVELOPMENT
CORPORATION,
Respondent.

ARANETA INSTITUTE OF AGRICULTURE, INC.,

Petitioner,

G.R. No. 123346

December 14, 2007

G.R. No. 134385

- versus -

HEIRS OF JOSE B. DIMSON, REPRESENTED BY

HIS COMPULSORY HEIRS: HIS SURVIVING
SPOUSE, ROQUETA R. DIMSON AND THEIR
CHILDREN, NORMA AND CELSA TIRADO, ALSON
AND VIRGINIA DIMSON, LINDA AND CARLOS
LAGMAN, LERMA AND RENE POLICAR, AND
ESPERANZA R. DIMSON; REGISTER OF DEES OF
MALABON,
Respondents.

RESOLUTION

TINGA, J.:
The stability of the countrys Torrens system is menaced by the infestation of
fake land titles and deeds. Any decision of this Court that breathes life into spurious
or inexistent titles all but contributes to the blight. On the contrary, the judicial
devotion is towards purging the system of illicit titles, concomitant to our base task
as the ultimate citadel of justice and legitimacy.
These two petitions[1] involve properties covered by Original Certificate of
Title (OCT) No. 994 which in turn encompasses 1,342 hectares of the Maysilo Estate.
[2] The vast tract of land stretches over three (3) cities, comprising an area larger
than the sovereign states of Monaco and the Vatican.[3] Despite their prime
location within Metropolitan Manila, the properties included in
OCT No. 994 have been beset by controversy and sullied by apparent fraud, cloudy
titles and shady transfers. It may as well be renamed the Land of Caveat Emptor.
The controversy attending the lands of OCT No. 994 has not eluded this
Court. Since 1992, our findings and ruling in MWSS v. Court of Appeals[4] have
stood as the Rosetta Stone in deciphering claims emanating from OCT No. 994, as
was done in Gonzaga v. Court of Appeals,[5] and in the Courts Decision dated 29
November 2005 (2005 Decision) in these cases.[6] Yet in the course of resolving
these motions for reconsideration came the revelation that OCT No. 994 was lost in
translation following MWSS. Certain immutable truths reflected on the face of OCT
No. 994 must emerge and gain vitality, even if we ruffle feathers in the process.
I.
A recapitulation of the facts, which have already been extensively narrated in
the 2005 Decision, is in order. For clarity, we narrate separately the antecedent
facts in G.R. Nos. 123346 and 134385.
A. G.R. No. 123346, Manotok Realty, Inc.
and Manotok Estate Corporation, vs.
CLT Realty Development Corporation

On 10 August 1992, CLT Realty Development Corporation (CLT) sought to recover

from Manotok Realty, Inc. and Manotok Estate Corporation (Manotoks) the
possession of Lot 26 of the Maysilo Estate in an action filed before the Regional Trial
Court of Caloocan City, Branch 129.[7]

CLTs claim was anchored on Transfer Certificate of Title (TCT) No. T-177013 issued
in its name by the Caloocan City Register of Deeds, which title in turn was derived
from Estelita Hipolito (Hipolito) by virtue of a Deed of Sale with Real Estate
Mortgage dated 10 December 1988. Hipolitos title emanated from Jose Dimsons
(Dimson) TCT No. R-15169, a title issued pursuant to an order of the Court of First
Instance (CFI) of Caloocan City, Branch 33. Dimsons title appears to have been
sourced from OCT No. 994.[8]
For their part, the Manotoks challenged the validity of the title relied on by CLT,
claiming that Dimsons title, the proximate source of CLTs title, was irregularly
issued and, hence, the same and subsequent titles flowing therefrom are likewise
void. The Manotoks asserted their ownership over Lot 26 and claimed that they
derived it from several awardees and/or vendees of the National Housing Authority.
[9] The Manotok title likewise traced as its primary source OCT No. 994 which, on 9
September 1918, was transferred to Alejandro Ruiz and Mariano Leuterio who
had previously acquired

the property on 21 August 1918 by virtue of an Escritura de Venta executed by

Don Tomas Arguelles and Don Enrique Llopis.[10] On 3 March 1920, Ruiz and
Leuterio sold the property to Francisco Gonzalez who held title thereto until 22
August 1938 when the property was transferred to Jose Leon Gonzalez, Consuelo
Susana Gonzalez, Juana Francisca Gonzalez, Maria Clara Gonzalez, Francisco Felipe
Gonzalez and Concepcion Maria Gonzalez under TCT No. 35486. The lot was then,
per annotation dated 21 November 1946, subdivided into seven (7) parcels each in
the name of each of the Gonzalezes.[11]
The trial court, ruling for CLT, adopted the factual findings and conclusions arrived
at by the majority commissioners appointed to resolve the conflict of titles. It was
established that the entire Maysilo Estate was registered under Act No. 496 by
virtue of which OCT No. 994 was issued by the Register of Deeds of Rizal;[12] that
Lot 26 was transferred to CLT by Hipolito whose title was derived from the Dimson
title and that on the basis of the technical descriptions of the property appearing in
the Manotok titles, the latters property indeed encroached on the property
described in CLTs title.[13]

The Manotoks appealed to the Court of Appeals, which affirmed the decision of the
trial court.[14] Their motion for reconsideration having been denied,[15] they filed a
petition for review with the Supreme Court, ascribing error to the appellate court in
upholding the trial courts decision which decided the case on the basis of the
majority commissioners report and overlooked relevant facts in the minority
commissioners report.[16]

B. G.R. No. 134385, Araneta Institute

of Agriculture, Inc. v. Heirs of
Jose B. Dimson, et. al.

On 18 December 1979, Dimson filed with the then CFI of Rizal, Branch 33, Caloocan
City a complaint for recovery of possession and damages against Araneta Institute
of Agriculture, Inc. (Araneta). Dimson alleged that he was the absolute owner of part
of the Maysilo Estate in Malabon covered by TCT No. R-15169 of the Registry of
Deeds of Caloocan City. Alleging that Araneta had been illegally occupying the land
and that the latter refused to vacate the same despite repeated demands, he
prayed that Araneta be ordered to vacate the same and remove all improvements
thereon and to return full possession thereof to him. Araneta for its part admitted
occupancy of the disputed land by constructing some buildings thereon and
subdividing portions thereof in the exercise of its right as absolute owner. He
alleged that Dimsons title to the subject land was void and hence he had no cause
of action.[17]
The trial court ruled for Dimson in its Decision dated 28 May 1993 with these
findings: first, there were inherent technical infirmities or defects in the titles that
formed each link in the chain of ownership that culminated in the Manotok title, i.e.,
that the technical descriptions in the titles were written in Spanish whereas those in
the alleged mother title, OCT No. 994, were in English, which, an abnormal state
that deviated from the usual practice in the issuance of titles; and second, it was
established procedure to indicate in the certificate of title, whether original or
transfer certificate, the date of the original survey of the mother title together with
the succeeding date of subdivision or consolidation. Thus, the absence of the
original survey dates of OCT No. 994 on Manotoks chain of titles, the trial court
added, should mean that OCT No. 994 was not the mother title not only because
the original survey dates were different but also because the original survey date
must always be earlier than the issue date of the original title. OCT No. 994 was
issued on May 3, 1917 which was much ahead of the survey date indicated in the
succeeding titles, which is December 22, 1917.[18]
Undaunted, Araneta interposed an appeal to the Court of Appeals which, on
30 May 1997, affirmed the lower courts

decision.[19] In so holding, the appellate court declared that the title of Araneta to
the disputed land is a nullity. It noted that Dimsons TCT No. R-15169 was derived
from OCT No. 994 registered on April 19, 1917 and that the same was obtained by
Dimson simultaneously with other titles, viz: TCT Nos. 15166, 15167, and 15168 by
virtue of the Decision dated October 13, 1977 and Order dated October 18, 1977, in

Special Proceedings No. C-732. It was also pointed out that Aranetas TCT No.
13574 and 21343 were both derived from OCT No. 994 registered on May 3, 1917
which was previously declared null and void by the Supreme Court in Metropolitan
Waterworks and Sewerage System v. Court of Appeals.[20]
Araneta then filed a petition for review with the Supreme Court attributing error to
the Court of Appeals in failing to recognize that it had a better right of possession
over the property than did Dimson.[21]
As both petitions involved interrelated challenges against the validity of the parties
separate titles to portions of the greater Maysilo Estate, they, along with G.R. No.
148767[22], were consolidated per Resolutions dated 21 April 1999 and 6 March
2002. Also in 2002, the Republic of the Philippines sought and was allowed
intervention in these cases.

On 29 November 2005, the Third Division of the Court rendered the 2005 Decision,
[23] the dispositive portion of which reads:
WHEREFORE, the instant petitions are DENIED and the assailed Decisions and
Resolution of the Court of Appeals are hereby AFFIRMED in toto. Costs against
petitioners.
SO ORDERED.[24]

The Court acknowledged that the paramount question raised in the petitions is
whether the titles issued in the name of Dimson and of CLT are valid. Noting that
this question is one purely of fact, the Court held that the same was beyond its
power to determine and so, the factual findings of the trial courts in these cases as
affirmed by the Court of Appeals must be accorded the highest degree of respect
and not disturbed at all.
Nonetheless, the Court proceeded to discuss the absence of merit in the petitions.
First, particularly with respect to G.R. No. 123346, the Court upheld the validity of
the trial courts adoption of the commissioners majority report as part of the
decision inasmuch as the same is allowed by Section 11, Rule 32 of the Rules of
Court and that a case of overlapping titles absolutely necessitates the assistance of
experts in the field of geodetic engineering who, on account of their experience and
expertise, are in a better position to determine which of the contending titles is
valid. For this reason, the Court emphasized, the trial court may well rely on
their findings and conclusions. Second, the Court pointed out that the titles of

respondents in all three cases were derived from OCT No. 994 of the Registry of
Deeds of Caloocan City registered on 19 April 1917. However, because the validity
of said mother title was upheld by the Court itself in MWSS and reiterated in Heirs of
Gonzaga, the Court chose not to delve anymore into the correctness of the said
decisions which had already attained finality and immutability.
The Manotoks and Araneta duly filed their respective motions for reconsideration.
On 5 June 2006, the cases were elevated to the Court en banc, which heard oral
arguments on 1 August 2006. The Court formulated the issues for oral argument,
thus:
From the above petitions, the following principal issues are gathered:
I.
Which of the Certificates of Title of the contending parties are valid:
A.

Petitioners titles:

1.
Transfer Certificate of Title (TCT) Nos. 7528, 7762, 8012, 9866, C-17272,
21107, 21485, 26405, 26406, 26407, 33904, 34255, C-35267, 41956, 63268,
55896, T-1214528, 163902 and 165119 in the name of Manotok Realty, Inc., and
TCT No. T-232568 in the name of Manotok Estate Corporation;
2.
TCT Nos. 737 and 13574 in the name of Araneta Institute of Agriculture; and
3.
TCT Nos. T-158373 and T-158374 in the name of Sto. Nio Kapitbahayan
Association, Inc.
All these titles were derived from Original Certificate of Title (OCT) No. 994
registered on May 3, 1917 in the Registry of Deeds of Caloocan City covering Lot 26
of the Maysilo Estate, same city.

B.

Respondents Title:

1.
2.
3.

TCT No. T-177013 in the name of CLT Realty Development Corporation;

TCT No. R-15169 in the name of Jose B. Dimson; and
TCT No. T-1770 in the name of CLT Realty Development Corporation/

All these titles were derived from OCT No. 994 registered earlier, or on April 19,
1917, covering the same Lot No. 26 of the Maysilo Estate.

II.
Can this Court still overturn at this point its Decision in Metropolitan Water
Works and Sewerage Systems (MWSS) v. Court of Appeals (G.R. No. 103558,
November 17, 1992) and Heirs of Luis J. Gonzaga v. Court of Appeals (G.R. No.
96259, September 3, 1996) sustaining the validity of OCT No. 994 registered on
April 19, 1917 and nullify the same OCT No. 994 registered later, or on May 3, 1917?
III.
How will the Reports of the Department of Justice and the Senate FactFinding Committee, not presented in evidence before the trial courts concluding that
the valid title is OCT No. 994 registered on May 3, 1917, affect the disposition of
these cases?
Will it be necessary to remand these cases to the trial courts to determine
which of the Certificates of Title are valid? If so, which trial court?[25]

A crucial fact emerged during the oral arguments. The Republic, through the
Solicitor General,[26] strenuously argued that contrary to the supposition reflected
in the Advisory, there was, in fact, only one OCT No. 994.

x x x In this particular case, it appears that on December 3, 1912, the Court of Land
Registration, the Judge Norberto Romualdez presiding, acting on Land Registration
Case No. 4429 rendered judgment ordering the GLRO to issue a decree. Pursuant
to this order, the GLRO prepared Decree No. 36455 and issued the same on April
19, 1917 at 9:00 oclock in the morning, at Manila, Philippines. It may be observed
that at the face of the OCT 994 which was then on file at the Registry of Deeds of
Caloocan and now kept in the LRA, the following entry can be seen. Received for
transcription at the Office of the Register of Deeds for the province of Rizal this 3rd
day of May 1917 at 7:30 a.m. Obviously, April 19, 1917 is not the date of inscription
or the date of transcription of the decree into the Original Certificate of Title. It
appears that the transcription of the decree was done on the date it was received
by the Register of Deeds of Rizal on May 3, 1917. There is no other date to speak
of. In the records of the Land Registration Authority, there is only one OCT 994, on
its face appears the date of transcript, May 3, 1917. The validity then of all
subsequent titles tracing their origin from OCT 994 should be tested in the light of
these set of facts. x x x[27]

On the other hand, the counsel for CLT stated during the same oral argument that
he had seen a photocopy of an OCT No. 994 that was dated 19 April 1917,[28] and
manifested that he could attach the same to CLTs memorandum.[29] At the same
time, on even date, the Court directed the Solicitor General and counsel for CLT to
submit to the Court certified true copies of the Original Certificate of Title No. 994
dated May 3 1917 and April 19, 1917, respectively, on or before Friday, August 4,
2006.[30]
In response to this directive, both the Solicitor General and the counsel for CLT
submitted their separate Compliance to this Court, with their respective copies of
OCT No. 994 attached thereto. Both copies of OCT No. 994 submitted by the
Solicitor General and CLT indicate on their face that the decree of registration issued
on 19 April 1917 was received for transcription at the office of the Register of Deeds
for the Province of Rizal on 3 May 1917. Indeed, there is no evident variance
between the copies of OCT No. 994 submitted by the OSG and CLT, and CLT admits
just as much in its Memorandum dated 3 September 2006.[31]
The claim of the Solicitor General that there is only one OCT No. 994 was duly
confirmed though belatedly by CLT itself. Even the ponente of the 2005 Decision has
recognized this fact, as indicated in her present Dissenting Opinion. The emergence
of such fact, contrary as it is to the crucial predicate underlying the issues
presented in the Courts Advisory, has changed the essence and complexion of the
controversy. The key to grant or deny the motions for reconsideration is the answer
to the question: which is the true date of OCT No. 994, 17 April 1917 or 3 May
1917?

II.
We turn to the date of OCT No. 994 as reflected in the quoted portion of the certified
true copy thereof submitted by the Republic of the Philippines:[32]

Therefore, it is ordered by the Court that said land be registered in accordance

with the provisions of the Land Registration Act in the name of said xxx
Witness: the Honorable Norberto Romualdez, Associate Judge of said Court,
the 3rd day of December, A.D. nineteen hundred and twelve.
Issued at Manila, P.I., the 19th day of April A.D. 1917 at 9:00 A.M.

ATTEST: ENRIQUE ALTAVAS

Chief of the Land Registration Office of Justice

Received for transcription at the office of the Register of Deeds for the
Province of P.I. this third day of May, nineteen hundred and seventeen at 7:30 A.M.
(emphasis supplied)

As evident on the face of OCT No. 994, the decree of registration was issued on 19
April 1917, and actually received for transcription by the Register of Deeds on 3
May 1917. Interestingly, even as CLT admits that there is only one OCT No. 994,
that which the Solicitor General had presented to the Court,[33] it maintains that
the OCT should be deemed registered as of the date of issuance of the decree of
registration, 19 April 1917, instead of the date it was received for transcription by
the Register of Deeds on 3 May 1917. The argument is based on the theory that it is
the decree of registration [that] produces legal effects, though it is entered
before the transmittal of the same for transcription at the Register of Deeds.[34]
This argument marks a radical departure from CLTs earlier theory that there were
two OCTs No. 994, one dated 19 April 1917 and the other 3 May 2007, a theory
which was likewise reflected in the Courts earlier Advisory on the issues prior to the
oral argument.[35] Yet the argument smacks of plain sophistry.
The process involved is what this Court called the method of giving a paper
title.[36] It is spelled out in detail in Sections 41 and 42 of Act No. 496, otherwise
known as the Land Registration Act:
SEC. 41. Immediately upon the entry of the decree of registration the clerk shall
send a certified copy thereof, under the seal of the court, to the register of deeds for
the province, or provinces, or city in which the land lies, and the register of deeds
shall transcribe the decree in a book to be- called the 'registration book,' in which a
leaf, or leaves, in consecutive order, shall be devoted exclusively to each title. The
entry made by the register of deeds in this book in each case shall be the original
certificate of title, and shall be signed by him and sealed
with the seal of the court. All certificates of title shall be numbered consecutively,
beginning with number one. The register of deeds shall in each case make an exact
duplicate of the original certificate, including the seal, but putting on it the words
'Owner's duplicate certificate,' and deliver the same to the owner or to his attorney
duly authorized. In case of a variance between the owner's duplicate certificate and
the original certificate the original shall prevail. The certified copy of the decree of
registration shall be filed and numbered by the register of deeds with a reference
noted on it to the place of record of the original certificate of title: Provided,
however, That when an application includes land lying in more than one province, or

one province and the city of Manila, the court shall cause the part lying in each
province or in the city of Manila to be described separately by metes and bounds in
the decree of registration, and the clerk shall send to the register of deeds for each
province, or the city of Manila, as the case may be, a copy of the decree containing
a description of the land within that province or city, and the register of deeds shall
register the same and issue an owner's duplicate therefor, and thereafter for all
matters pertaining to registration under this Act the portion in each province or city
shall be treated as a separate parcel of land.
SEC. 42. The certificate first registered in pursuance of the decree of registration in
regard to any parcel of land shall be entitled in the registration book 'Original
certificate of title, entered pursuant to decree of the Court of Land Registration,
dated at' (stating time and place of entry of decree and the number of case). This
certificate shall take effect upon the date of the transcription of the decree.
Subsequent certificates relating to the same land shall be in like form, but shall be
entitled 'Transfer from number' (the number of the next previous certificate relating
to the same land), and also the words 'Originally registered' (date, volume, and
page of registration.")

With the plain language of the law as mooring, this Court in two vintage and sound
rulings made it plain that the original certificate of title is issued on the date the
decree of registration is transcribed. In the first ruling, it was held that there is a
marked distinction between the entry of the decree and the entry of the certificate
of title; the entry of the decree is made by the chief clerk of the land registration
and the entry of the certificate of title is made by the register of deeds.[37] Such
difference is highlighted by Sec. 31 of Act No. 496 as it provides that the certificate
of title is issued in pursuance of the decree of registration. In the second, it was
stressed that what stands as the certificate of the title is the transcript of the decree
of registration made by the registrar of deeds in the registry.[38]
Otherwise stated, what is actually issued by the register of deeds is the certificate
of title itself, not the decree of registration, as he is precisely the recipient from the
land registration office of the decree for transcription to the certificate as well as the
transcriber no less. Since what is now acknowledged as the authentic OCT No. 994
indicates that it was received for transcription by the Register of Deeds of Rizal on 3
May 1917, it is that date that is the date of registration since that was when he was
able to transcribe the decree in the registration book, such entry made in the book
being the original certificate of title.[39] Moreover, it is only after the transcription
of the decree by the register of deeds that the certificate of title is to take effect.
The textbook writers and authorities on Land Registration are unanimous on the
matter. The late Commissioner Antonio Noblejas, widely acknowledged as the
leading authority on the subject during his time, wrote, thus:

Immediately upon the issuance and entry of the decree of registration, the Registrar
of Land Titles transcribes the same in the registry book called the Registration
Book and issues an owners duplicate certificate of title to the applicant upon
payment by him of the necessary registration fees. The entry made by the Registrar
of Land Titles in his registry book is actually the original copy of the original
certificate of title and shall be signed by him and sealed with the seal of the Court
and of his office. Pursuant to Rep. Act No. 113, the Registrar of Land Titles may now
use only the seal of his office, dispensing with the court seal.[40]
Professor Florencio Ponce, who was also once Register of Deeds of Quezon City and
Deputy Register of Deeds of Manila, was of the same conviction:
A decree of registration is an order issued under the signature of the Commissioner
of Land Registration (formerly Chief, G.L.R.O.) in the name of the Judge to the fact
that the land described therein is registered in the name of the applicant or
oppositor or claimant as the case maybe. When this is transcribed or spread in toto
in the registration book and signed by the register of deeds, the page on which the
transcription is made become the original certificate of title, more commonly
called the Torrens title.
xxx
The land becomes a registered land only upon the transcription of the decree
in the original registration book by the register of deeds, the date and time of such
transcription being set forth in the process and certified to at the foot of each entry
or certificate of title.

xxx
The issuance of the original and owners duplicate certificates are basic for the valid
existence of the title. Issuance of additional copies are permissive and their nonexistence does not affect the status of title. A certificate of title is deemed as
regularly issued with the issuance of the original copy and owners duplicate.[41]
So was Professor Francisco Ventura:
Immediately upon the issuance and entry of the decree of registration,
the Commissioner of Land Registration sends a certified copy thereof, under seal of
the said office, to the Register of Deeds of the province where the land lies, and the
register of Deeds transcribes the decree in a book, called the Registration Book, in
which a leaf, or leaves, in consecutive order should be devoted exclusively to each

title. The entry made by the Register of Deeds in said book constitutes the original
certificate of title and is signed by him and sealed with the seal of his office.[42]
The same view came from Professor Narciso Pea, also a former Assistant
Commissioner of the Land Registration Commission and Acting Register of Deeds of
Manila, as he wrote, thus:
Thus, Section 42 of Act No. 496 provides that the certificate first
registered in pursuance of the decree of registration in regard to any parcel of land
shall be entitled in the registration book Original Certificate of Title, entered
pursuant to decree of the Court of Land Registration, dated at (stating time and
place of entry of decree and the number of the case). This certificate shall take
effect upon the date of the transcription of the decree. Subsequent certificates
relating to the same land shall be in like form, but shall be entitled. Transfer from
number (the number of the next previous certificate relating to the same land),
and also the words Originally registered (date, volume, and page of registration).
[43]

The dissent has likewise suggested that the variance between these two dates is
ultimately inconsequential. It cannot be so for otherwise, the recent decision of the
Court in Alfonso v. Office of the President[44] would simply be wrong. In Alfonso, the
Court precisely penalized Alfonso, the former register of deeds of Caloocan because
she acquiesced to the change of the date of registration of OCT No. 994, as
reflected in several subsequent titles purportedly derived from that mother title,
from 3 May 1917 to 19 April 1917. If indeed the difference in dates were
inconsequential, then it should not have really mattered that Mrs. Alfonso, as
found by the Court, had invariably issued certificates of title, reflecting either the 19
April or 3 May date, a circumstance which, the Court concluded, was irregular. But if
the Court were to accede to the dissent and agree that it did not really matter
whether the date of registration of OCT No. 994 was 3 May or 19 April, then poor
Mrs. Alfonso should be spared of the penalty of dismissal from the service which the
Court had already affirmed.
III.
Even the dissent does not insist, as the 2005 Decision did, that there is an OCT No.
994 registered or dated 19 April 1917. This new stance squarely contravenes or
deviates from the following unequivocal pronouncement in the 2005 Decision:

We noted in the beginning of this Decision that the issue in all these three (3) cases
involves the validity of the parties' overlapping titles. The titles of the respondents
in these cases were derived from OCT No. 994 of the Registry of Deeds of Caloocan

City registered on April 19, 1917. The validity of such mother title has already been
upheld by this Court in G.R. No. 103558, MWSS v. Court of Appeals, et al. dated
November 17, 1992 earlier cited in the assailed Decisions. Significantly, the ruling in
MWSS was reiterated in G.R. No. 96259, Heirs of Luis J. Gonzaga v. Court of Appeals
dated September 3, 1996.
We cannot delve anymore into the correctness of the Decision of this Court in
MWSS. The said Decision, confirming the validity of OCT No. 994 issued on April 19,
1917 from which the titles of the respondents in the cases at bar were derived, has
long become final and executory. Nothing is more settled in law than that once a
judgment attains finality it becomes immutable and unalterable. It may no longer
be modified in any respect, even if the modification is meant to correct what is
perceived to be an
erroneous conclusion of fact or law, and regardless of whether the modification is
attempted to be made by the court rendering it or by the highest court of the land.
[45]

This new conclusion likewise differs from what the Court had to say regarding
OCT No. 994 dated April 19, 1917 in the adverted MWSS v. Court of Appeals[46]
decision:
It must be observed that the title of petitioner MWSS was a transfer from TCT No.
36957 which was derived from OCT No. 994 registered on May 3, 1917. Upon the
other hand, private respondents' title was derived from the same OCT No. 994 but
dated April 19, 1917. Where two certificates (of title) 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 or interest in land, the
person claiming under the prior certificate is entitled to the estate or interest; and
the person is deemed to hold under the prior certificate who is the holder of, or
whose claim is derived directly or indirectly from the person who was the holder of
the earliest certificate issued in respect thereof. Hence, in point of priority of
issuance, private respondents' title prevails over that of petitioner MWSS.[47]
Four years later, the Court promulgated the Gonzaga v. Court of Appeals[48]
decision, which essentially reaffirmed foregoing factual pronouncements made in
MWSS.
Notwithstanding the emerging error in fact that informed the MWSS and
Gonzaga decisions, the dissent now claims that said decisions confirmed the
validity of the OCT No. 994 issued on April 19, 1917. But if we examine MWSS
closely, it appears to be beset with semantic confusion. We make the following
relevant references from that decision, presented sequentially:

(1) Jose B. Dimson was the registered owner of a parcel land situated in
Balintawak, Kalookan City with an area of 213,012 square meters, more or less, and
covered by TCT No. C-15167 which was registered on June 8, 1978. Said parcel of
land was originally Lot 28 of the Maysilo Estate (OCT) No. 994 which was registered
on April 19, 1917 pursuant to Decree No. 36455 issued in Land Registration Case
No. 4429.[49]
(2) Although petitioner's title was issued in 1940, it will be noted that petitioner's
title over Lots 2693 and 2695 both with an area of 599 square meters was based on
the Cadastral Survey of Caloocan City, Cadastral Case No. 34, while private
respondents' title was derived from OCT No. 994 issued on April 19, 1917;[50]
(3) It must be observed that the title of petitioner MWSS was a transfer from TCT
No. 36957 which was derived from OCT No. 994 registered on May 3, 1917. Upon
the other hand, private respondent's title was derived from the same OCT No. 994
but dated April 19, 1917;[51]
(4) Lastly, a certificate is not conclusive evidence of title if it is shown that the
same land had already been registered and an earlier certificate for the same is in
existence. 5 Since the land in question has already been registered under OCT No.
994 dated April 19, 1917, the subsequent registration of the same land on May 3,
1917 is null and void;[52]
In one (1) out of the four (4) times that reference was made to the mother title of
Dimson in MWSS, it was OCT No. 994 issued on April 19, 1917 which is the
language preferred by the dissent since it hews to the date of issuance of the
decree of registration in the authentic OCT No. 994. However, the same decision
inconsistently refers to it also as OCT No. 994 registered on April 19, 1917, dated
April 19, 1917, and registered under OCT No. 994 dated April 19, 1917. Notably,
the context of MWSS in making the final citation, registered under OCT No. 994
dated April 19, 1917, was to point out that as a result the subsequent registration
of the same land on May 3, 1917 is null and void; hence, no other conclusion can
be reached than that the Court deemed Dimsons mother title as having been
registered on a date earlier than 3 May 1917.
Since the dissent and even CLT now acknowledge that there is only one OCT No.
994 which was registered by the Registry of Deeds of Rizal on 3 May 1917, the
earlier factual finding in MWSS is indefensible. MWSS recognized an OCT No. 994
registered on 19 April 1917, a title that never existed and, even assuming that it did
exist, is now acknowledged as spurious.
Gonzaga primarily relied on the ruling of the Court in MWSS upon a finding that the
case involved facts that are exactly the same as those that we have passed and
ruled upon in the [MWSS case]. The title which was affirmed by the Court in

Gonzaga, TCT No. C-26806 in the name of Lilia Sevilla, was a transfer from Original
Certificate of Title (OCT) No. 994 which was registered on April 19, 1917 pursuant to
Decree No. 36455.[53] It was further observed by the Court that on the one hand,
[therein] petitioners titles indicate original registration to have been made on May
3, 1917, but on the other hand, private respondents title indicates original
registration to have been made on April 19, 1917.[54]
It was the title originally registered on 19 April 1917 which was made to prevail in
Gonzaga, following MWSS. Since there is no OCT No. 994 originally registered on 19
April 1917, as now acknowledged, it follows that Gonzaga, like MWSS, is no longer
reliable as well.
The argument has been raised by the ponente of the 2005 Decision that the 3 May
1917 OCT No. 994 must be distinguished from OCT No. 994 dated May 3, 1917
involved in the MWSS and Gonzaga cases because the former title was based on
the Cadastral Survey of Kalookan City under Cadastral Case No. 34, also covering
the Maysilo Estate. It is elemental to note that assuming said 3 May OCT was
somehow flawed because it was based on Cadastral Case No. 34, it does not mean
that the so-called 17 April 1917 OCT No. 994 is valid or had existed in the first
place. Since even the dissent now discounts the existence of the so-called 17 April
1917 OCT No. 994, it should necessarily follow that any title that is sourced from the
17 April 1917 OCT is void. Such conclusion is inescapable whatever questions there
may be about the veracity of the 3 May 1917 OCT based on Cadastral Case No. 34.
It would be especially incoherent for the Court to reiterate MWSS and Gonzaga
when they effectuated the OCT No. 994 registered on 19 April 1917 and
acknowledge at the same time that the same OCT never existed, the genuine OCT
No. 994 being that which was registered on 3 May 1917. We need not go as far as to
revive the MWSS or Gonzaga decisions, but certainly we can decline to infuse
further validity to their erroneous basic premise that there was an OCT No. 994
registered on 19 April 1917. The dissent proposes that we perpetuate the erroneous
premise even as the error is plainly acknowledged, a stance that will not serve the
Court well should it prevail.
Moreover, the two cases should not bind the parties in the petitions now before us.
Undisputedly, the two cases involved different parcels of land. The present
petitioners could not be bound by the decisions in the two cases, as they were not
parties thereto and and their properties were not involved therein. As we very
recently reaffirmed, it is basic that no man shall be affected by any proceeding to
which he is a stranger, and strangers to a case are not bound by judgment rendered
by the court.[55]
We can take instruction from the tack previously taken by this Court in dealing with
municipalities created by executive orders. Beginning with Pelaez v. Auditor

General,[56] the Court declared as a general principle that the President had no
power to create municipalities through executive orders. However, instead of
nullifying the creation of all municipalities created in the same manner, the Court
only annulled those municipalities whose creation was specifically attacked in the
petition filed by then-Vice President
Pelaez.[57] With respect to the other municipalities which were not
annulled in Pelaez, the Court would, in the next few decades, annul only the
municipalities which were specifically challenged in petitions raised before the
Court.[58] However, after the adoption of the Local Government Code of 1991 that
gave statutory recognition to the de facto municipalities which had not yet been
annulled, the Court started to affirm the legal existence of such municipalities.[59]
As in Pelaez, the operative effect of the doctrines pronounced in MWSS and
Gonzaga can extend only to the parties and properties involved in said cases, even
if it can be argued that the rights involving other parties and properties are afflicted
with inconsistency as regards the legal rulings therein, similar to the municipalities
created which though created by void executive orders were not however annulled.
Yet with the emergence of a new factthe enactment of the Local Government Code
vis--vis Pelaez, or the present acknowledgment that only the 3 May 1917 OCT No.
994 exists vis--vis MWSS and Gonzagasubsequent rulings would be informed
primarily by the new developments, rather than by the previous precedents that
were not able to take into account the true or new factual premises.
IV.
The determinative test to resolve whether the prior decision of this Court
should be affirmed or set aside is whether or not the titles invoked by the
respondents are valid. If these titles are sourced from the so-called OCT No. 994
dated 17 April 1917, then such titles are void or otherwise should not be recognized
by this Court. Since the true basic factual predicate concerning OCT No. 994 which
is that there is only one such OCT differs from that expressed in the MWSS and
Gonzaga decisions, said rulings have become virtually functus officio except on the
basis of the law of the case doctrine, and can no longer be relied upon as
precedents.
This approach immensely differs from that preferred by the 2005 Decision
and the dissenting view, which dwells in the main on the alleged flaws in the titles
held by the Manotoks and Araneta, without making a similar inquiry into the titles
held by CLT and the Heirs of Dimson. Since the decision in favor of CLT and the Heirs
of Dimson was ultimately grounded on a factual predicate now acknowledged as
erroneous, it follows that the primary focus should have been whether the titles
held by CLT and the Dimsons are valid and with force and effect. To that end, we
need only examine the titles relied upon by CLT and the Dimsons.

In the Manotok petition, CLT had originally filed a complaint for annulment of
the titles in the name of the Manotoks, alleging that it was the registered owner of
Lot 26 of the Maysilo Estate covered by TCT No. T-177013 of the Registry of Deeds
of Caloocan City. Reproduced below is what appears on the face of TCT No. T177013:[60]
IT IS FURTHER CERTIFIED that said land was originally registered on the 19th day of
April, in the year, nineteen hundred and seventeen in the Registration Book of the
Office of the Register of Deeds of Rizal, Volume 36455, page ____, as Original
Certificate of Title No. 994, pursuant to Decree No. 36455 issued in L.R.C. ____
Record No. _____in the name of ___________.
This certificate is a transfer from Trans. Certificate of Title No. R-17994/T-89, which
is cancelled by virtue hereof in so far as the above-described land is concerned.
Entered at City of Kalookan
Philippines, on the 15th day of March
In the year nineteen hundred and
eighty-nine at 19:48 a.m.
CLT further alleged that it derived TCT No. T-177013 on 10 December 1988
from Estelita Hipolito whose title, TCT No. R-17994, is depicted, thus:[61]
IT IS FURTHER CERTIFIED that said land was originally registered on the 19th day of
April, in the year nineteen hundred and seventeen in the Registration Book of the
Office of the Register of Deeds of Rizal, Volume NA, page NA, as Original Certificate
of Title No. 994, pursuant to Decree No. 36455 issued in L.R.C. Case No. 4429,
Record No. ________.
This certificate is a transfer from Transfer Certificate of Title No. R15166/T-75, which is cancelled by virtue hereof in so far as the above-described
land is concerned.
Entered at the City of Caloocan
Philippines, on the 12th day of December
in the year nineteen hundred and seventyeight at 3:30 p.m.
Dimsons original complaint for recovery of possession against Araneta was
founded on the claim that he was the absolute owner of a parcel of land located at
Malabon, comprising fifty (50) hectares of the Maysilo Estate covered by TCT No. R15169 of the Registry of Deeds of Caloocan City. Said TCT No. R-15169 is
reproduced below:[62]

IT IS FURTHER CERTIFIED that said land was originally registered on the 19th day of
April, in the year nineteen hundred and seventeen, in the Registration Book of the
Office of the Register of Deeds of Rizal, Volume NA, page___ , Original Certificate of
Title No. 994, pursuant to Decree No. 36455, issued in LRC Case No. 4429, Record
No. __
This Certificate is a transfer from Original Certificate of Title No.
[illegible] which is cancelled by virtue hereof in so far as the above-described land is
concerned.
Entered at Caloocan City
Philippines, on the 8th day of June
in the year nineteen hundred and
seventy-eight at 10:34 a.m.

It is evident from all three titlesCLTs, Hipolitos and Dimsonsthat the properties
they purport to cover were originally registered on the 19th day April, in the year
nineteen hundred and seventeen in the Registration Book of the Office of the
Register of Deeds of Rizal. Note, as earlier established, there is no such OCT No.
994 originally registered on 19 April 1917.
The conclusion is really simple. On their faces, none of these three titles can be
accorded recognition simply because the original title commonly referred to therein
never existed. To conclude otherwise would constitute deliberate disregard of the
truth. These titles could be affirmed only if it can be proven that OCT No. 994
registered on 19 April 1917 had actually existed. CLT and the Dimsons were given
the opportunity to submit such proof before this Court, but they did not. In fact, CLT
has specifically manifested that the OCT No. 994 they concede as true is also the
one which the Office of Solicitor General submitted as true, and that is OCT No. 994
issued on 3 May 1917.
Given this essential clarification, there is no sense in affirming the 2005 Decision
which sustained the complaints for annulment of title and/or recovery of possession
filed by CLT and the Dimson when their causes of action are both founded on an
inexistent mother title. How can such actions prosper at all even to the extent of
dispossessing the present possessors with title?
The dissent is hard-pressed in defending the so-called 19 April 1917 OCT from which
the Dimson and CLT titles are sourced. As earlier mentioned, the focus is instead
placed on the purported flaws of the titles held by the Manotoks and Araneta
notwithstanding that said parties swere the defendants before the lower court and,

therefore, the burden of proof did not lie on them. The established legal principle in
actions for annulment or reconveyance of title is that a party seeking it should
establish not merely by a preponderance of evidence but by clear and convincing
evidence that the land sought to be reconveyed is his.[63] In an action to recover,
the property must be identified, and the plaintiff must rely on the strength of his
title and not on the weakness of the defendant's claim.[64]
V.
The dissenting view perceives a material difference between the present
acknowledgment of the validity of OCT No. 994 dated 3 May 1917 and the titles
involved in the Gonzaga and MWSS cases. It dwells on the fact that the titles
debunked in the MWSS and Gonzaga cases, which find origination from OCT No. 994
dated 3 May 1917, seem to have been derived from Cadastral Case No. 34 also
covering the Maysilo Estate. It is in fact the theory of the dissent that there are, in
effect, two competing sources of title the OCT No. 994 dated 3 May 1917 arising
from the issuance of Decree No. 36455 in Land Registration Case No. 4429; and OCT
No. 994 dated 3 May 1917 based on the Cadastral Survey of Caloocan City in
Cadastral Case No. 34. It is further opined that the registration of lands pursuant to
Cadastral Case No. 34, even if the date of such registration is 3 May 1917, is void
since such registration could not supplant the earlier decision of the land
registration court.
The supposition blatantly runs counter to long-established principles in land cases.
Had it been adopted by the Court, the effect would have been to precipitate the
utter astonishment of legal scholars, professionals and students alike.
The reality that cadastral courts may have jurisdiction over lands already registered
in ordinary land registration cases was acknowledged by this Court in Pamintuan v.
San Agustin.[65] Such jurisdiction is limited to the necessary correction of technical
errors in the description of the lands, provided such corrections do not impair the
substantial rights of the registered owner, and that such jurisdiction cannot operate
to deprive a registered owner of his title.[66] It was further clarified in Timbol v.
Diaz[67] that the limited jurisdiction of the cadastral court over such lands even
extends to the determination of which one of the several conflicting registered
titles shall prevail[, as such] power would seem to be necessary for a complete
settlement of the title to the land, the express purpose of cadastral proceedings,
and must therefore be considered to be within the jurisdiction of the court in such
proceedings.[68]
The question raised in Sideco v. Aznar[69] concerned the validity of an order of a
cadastral court directing the issuance of new certificates of title in the name of
Sideco and his children, at Sidecos own prayer, over land previously registered in
the name of Crispulo

Sideco. This Court ruled that such order was valid and did not amount to a
readjudication of the title. After the cadastral proceedings therein had been
initiated, the chief surveyor had reported to the cadastral court that the land was
covered by a decree in a land registration proceeding and registered in the name of
Sideco; the surveyor recommended that the title be cancelled and a new one issued
in the names of such persons as the court may determine. In ruling that the new
titles were valid, the Court stated that [t]he proceedings did not in any way purport
to reexamine the title already issued, or to readjudicate the title of the land. They
were precisely predicated on the finality of the title already issued, because it was
the registered owner who was asked to express his desire with respect thereto, and
the courts order precisely followed the petition of the registered owner.[70]
The eminent U.P. law professor Francisco Ventura, himself a former Register of
Deeds, explains why cadastral courts have jurisdiction to order the issuance of new
titles in place of the title issued under voluntary registration proceedings:
Inasmuch as the land is identified in the plan by cadastral number, it is necessary
that a new title be issued, giving the lot its cadastral number in accordance with the
cadastral survey. This does not mean that the court has the power to alter the
decree entered in the previous registration proceeding. The court cannot change or
modify the said decree. It does not adjudicate the title anew. It simply deals with
the certificate of title. This is for the
convenience of the landowner because it is easier for him to identify his property
inasmuch as all the lands brought under the cadastral survey are designated by
cadastral numbers.[71]

What is prohibited in a cadastral proceeding is the registration of land, already

issued in the name of a person, in the name of another, divesting the registered
owner of the title already issued in his favor, or the making of such changes in the
title as to impair his substantial rights.[72] Yet such prohibition does not mean that
the cadastral court will not have jurisdiction over the action involving the previously
registered land, as explained in Pamintuan and Timbol, or that the cadastral court
may not issue a new title at all even if it would not impair the rights of the
previously registered owner, as emphasized in Sideco. The dissent contents itself
with the simplistic conclusion that because there was a cadastral case covering the
Maysilo Estate from which the titles emanated, such titles could not have been
valid. It is clear that there could be such titles issued, and they would be valid for so
long as they do not impair the rights of the original registrant to whom OCT No. 994
dated 3 May 1917 was issued.

VI.

From these premises, the Court is able to make the following binding conclusions.
First, there is only one OCT No. 994. As it appears on the record, that mother title
was received for transcription by the Register of Deeds on 3 May 1917, and that
should be the date which should be reckoned as the date of registration of the title.
It may also be acknowledged, as appears on the title, that OCT No. 994 resulted
from the issuance of the decree of registration on 17 April 1917, although such date
cannot be considered as the date of the title or the date when the title took effect.
Second. Any title that traces its source to OCT No. 994 dated 17 April 1917 is
void, for such mother title is inexistent. The fact that the Dimson and CLT titles
made specific reference to an OCT No. 994 dated 17 April 1917 casts doubt on the
validity of such titles since they refer to an inexistent OCT. This error alone is, in
fact, sufficient to invalidate the Dimson and CLT claims over the subject property if
singular reliance is placed by them on the dates appearing on their respective titles.
Third. The decisions of this Court in MWSS v. Court of Appeals and Gonzaga v. Court
of Appeals cannot apply to the cases at bar, especially in regard to their recognition
of an OCT No. 994 dated 19 April 1917, a title which we now acknowledge as
inexistent. Neither could the conclusions in MWSS or Gonzaga with respect to an
OCT No. 994 dated 19 April 1917 bind any other case operating under the factual
setting the same as or similar to that at bar.
With these conclusions, what then is the proper course of action to take with
respect to the pending motions for reconsideration? Considering that CLT and the
Dimsons clearly failed to meet the burden of proof reposed in them as plaintiffs in
the action for annulment of title and recovery of possession, there is a case to be
made for ordering the dismissal of their original complaints before the trial court.
However, such solution may not satisfactorily put to rest the controversy
surrounding the Maysilo Estate.
More pertinently, after the instant petitions were filed with this Court, the
Republic of the Philippines, through the OSG, had sought to intervene. The Republic
did not participate as a party when these cases were still before the trial courts and
the Court of Appeals. While the Republic had originally prayed for the grant of the
petitions filed by all the petitioners in these consolidated cases, instead it presently
seeks of the Court the promulgation of a new ruling upholding the validity of OCT
No. 994 issued[73] or registered[74] on May 3, 1917. Rather than suggest whether
the petitions be granted or denied, the OSG argues that after a declaration from this
Court that it is the 3 May 1917 mother title that is valid, a remand of this case to
the Court of Appeals, to settle which among the private parties derived their titles
from the existing OCT 994, is proper[75]

Notably, both the Manotoks and Araneta are amenable to the remand of the
petition, albeit under differing qualifications. The Manotoks submit that there should
be a remand to the court of origin, consolidating all the present petitions, and that a
full trial be conducted by the trial court.[76] On the other hand, Araneta proposes
four (4) options for the Court to consider: (1) the dismissal of the original complaint
filed by Dimson; (2) a ruling granting Aranetas appeal and dismissing Dimsons
complaint, but at the same time remanding the case to a new division of the Court
of Appeals for factual determination pursuant to Section 6, Rule 47 of the Rules of
Court; (3) the suspension of the resolution of the present motion for reconsideration
while the case is remanded to the Court of Appeals for factual determination; or (4)
the remand of the proceedings to the Court of Appeals for the reception of further
evidence, particularly the Senate and DOJ Reports, pursuant to Section 6, Rule 47 of
the Rules of Court, and the consequent resolution by the appellate court of the
instant petitions.
The OSG observes that during the oral arguments on the motion for reconsideration,
then Chief Justice Panganiban suggested that a remand may be required to
determine the status of the original title.[77] Considering that the genuine OCT No.
994 is that issued on/ registered on/dated 3 May 1917, a remand would be
appropriate to determine which of the parties, if any, derived valid title from the
said genuine OCT No. 994. On the one hand, the appreciation of facts is beyond the
province of this Court, since it is not a trier of fact[78] as well as not capacitated to
appreciate evidence at the first instance. On the other hand, the Court of Appeals
has the competence to engage in that undertaking.
Under Section 6 of Rule 46, which is applicable to original cases for certiorari,[79]
the Court may, whenever necessary to resolve factual issues, delegate the
reception of the evidence on such issues to any of its members or to an appropriate
court, agency or office.[80] The delegate need not be the body that rendered the
assailed decision.
The Court of Appeals generally has the authority to review findings of fact.[81] Its
conclusions as to findings of fact are generally accorded great respect by this Court.
It is a body that is fully capacitated and has a surfeit of experience in appreciating
factual matters, including documentary evidence.
In fact, the Court had actually resorted to referring a factual matter pending
before it to the Court of Appeals. In Republic v. Court
of Appeals,[82] this Court commissioned the former Thirteenth Division

of the Court of Appeals to hear and receive evidence on the controversy, more
particularly to determine the actual area reclaimed by the Republic Real Estate
Corporation, and the areas of the Cultural Center Complex which are open spaces

and/or areas reserved for certain purposes, determining in the process the validity
of such postulates and the respective measurements of the areas referred to.[83]
The Court of Appeals therein received the evidence of the parties and rendered a
Commissioners Report shortly thereafter.[84] Thus, resort to the Court of Appeals
is not a deviant procedure.
The provisions of Rule 32 should also be considered as governing the grant of
authority to the Court of Appeals to receive evidence in the present case. Under
Section 2, Rule 32 of the Rules of Court, a court may, motu proprio, direct a
reference to a commissioner when a question of fact, other than upon the
pleadings, arises upon motion or otherwise, in any stage of a case, or for carrying a
judgment or order into effect.[85] The order of reference can be limited exclusively
to receive and report evidence only, and the commissioner may likewise rule upon
the admissibility of evidence.[86] The commissioner is likewise mandated to submit
a report in writing to the court upon the matters submitted to him by the order of
reference.[87] In Republic, the commissioners report formed the basis of the final
adjudication by the Court on the matter. The same result can obtain herein.
VII.
The OSG likewise adverts to the findings reached in the respective investigations
and reports by the Department of Justice and the Philippine Senate, components of
the two other co-equal branches of the government. Both the DOJ Report dated 28
August 1997 and the Senate Report dated 25 May 1998 conclude that there is only
one (1) OCT No. 994 issued or registered on 3 May 1997. The OSG argues that the
contents of both of these reports may be considered as evidence. It also points out,
with basis, that these reports may be taken judicial notice of by this Court, following
Section 1, Rule 129 of the Rules of Court. Indeed, it cannot be disputed that these
reports fall within the ambit of the official acts of the legislative [and] executive
departments.[88]
It bears noting that the DOJ and Senate Reports were rendered on 28 August 1997
and 25 May 1998 respectively. They were issued some years after the trial courts
had promulgated their respective decisions in the Manotok and Araneta cases, and
even after the Court of Appeals handed down its decision against the Manotoks
which is assailed in its present petition.[89] In Aranetas case, the Court of Appeals
had first ruled against Araneta in its Decision dated 30 May 1997, or just shortly
before the rendition of the DOJ and Senate Reports.
Since this Court is not a trier of fact, we are not prepared to adopt the findings
made by the DOJ and the Senate, or even consider whether these are admissible as
evidence, though such questions may be considered by the Court of Appeals upon
the initiative of the parties. The Court, in the 2005 Decision, refused to take into
account

the reports on the regrettable premise that they could somehow override the
judicial decisions earlier arrived at.[90] The reports cannot conclusively supersede
or overturn judicial decisions, but if admissible they may be taken into account as
evidence on the same level as the other pieces of evidence submitted by the
parties. The fact that they were rendered by the DOJ and the Senate should not, in
itself, persuade the courts to accept them without inquiry. The facts and arguments
presented in the reports must still undergo judicial scrutiny and analysis, and
certainly the courts will have the discretion to accept or reject them.

There are many factual questions looming over the properties that could only be
threshed out in the remand to the Court of Appeals. The Manotoks and Araneta
advert to certain factual allegations relating to their titles and backstories to
advance their respective positions. Still, if it indeed emerges from the determination
of the Court of Appeals on remand that notwithstanding the clear flaws of the title of
respondents the titles of petitioners are cut from the same counterfeit cloth, then
the Republic of the Philippines, an intervenor in these cases, is armed anyway with
any and all appropriate remedies to safeguard the legitimate owners of the
properties in question.
VIII.
The definitive conclusions reached by the Court thus far in these cases are
spelled out in Part VI of this Resolution. Said conclusions serve to guide the Court of
Appeals in hearing these cases on remand.
The Court hereby constitutes a Special Division of the Court of Appeals to
hear these cases on remand. The Special Division shall be composed of three
Associate Justices of the Court of Appeals, namely; Justice Josefina Guevara-Salonga
as Chairperson; Justice Lucas Bersamin as Senior Member; and Associate Justice
Japar B. Dimaampao as Junior Member.
The Special Division is tasked to hear and receive evidence, conclude the
proceedings and submit to this Court a report on its findings and recommended
conclusions within three (3) months from finality of this Resolution.
In ascertaining which of the conflicting claims of title should prevail, the Special
Division is directed to make the following determinations based on the evidence
already on record and such other evidence as may be presented at the proceedings
before it, to wit:
i.
Which of the contending parties are able to trace back their claims of title to
OCT No. 994 dated 3 May 1917?

ii. Whether the imputed flaws in the titles of the Manotoks and Araneta, as
recounted in the 2005 Decision, are borne by the evidence? Assuming they are, are
such flaws sufficient to defeat the claims of title of the Manotoks and Araneta?
iii. Whether the factual and legal bases of 1966 Order of Judge Muoz-Palma and the
1970 Order of Judge Sayo are true and valid. Assuming they are, do these orders
establish a superior right to the subject properties in favor of the Dimsons and CLT
as opposed to the claims of Araneta and the Manotoks?
iv. Whether any of the subject properties had been the subject of expropriation
proceedings at any point since the issuance of OCT No. 994 on 3 May 1917, and if
so what are those proceedings, what are the titles acquired by the Government and
whether any of the parties is able to trace its title to the title acquired by the
Government through expropriation.
v. Such other matters necessary and proper in ascertaining which of the conflicting
claims of title should prevail.

WHEREFORE, the instant cases are hereby REMANDED to the Special Division
of the Court of Appeals for further proceedings in accordance with Parts VI, VII and
VIII of this Resolution.
SO ORDERED.
G.R. No. 123346

March 31, 2009

MANOTOK REALTY, INC. and MANOTOK ESTATE CORPORATION, Petitioners,

vs.
CLT REALTY DEVELOPMENT, CORPORATION, Respondent.
G.R. No. 134385

March 31, 2009

ARANETA INSTITUTE OF AGRI-CULTURE, INC., Petitioner,

vs.
HEIRS OF JOSE B. DIMSON, REPRESENTED BY HIS COMPULSORY HEIRS: HIS
SURVIVING SPOUSE, ROQUETA R. DIMSON AND THEIR CHILDREN, NORMA
AND CELSA TIRADO, ALSON AND VIRGINIA DIMSON, LINDA AND CARLOS
LAGMAN, LERMA AND RENE POLICAR, AND ESPERANZA R. DIMSON; AND
THE REGISTER OF DEEDS OF MALABON, Respondents.
RESOLUTION
TINGA, J.:

In the Courts Resolution dated 14 December 2007,1 the Court constituted a Special
Division of the Court of Appeals to hear the instant case on remand. The Special
Division was composed of three Associate Justices of the Court of Appeals, with
Justice Josefina Guevara-Salonga as Chairperson; Justice Lucas Bersamin as Senior
Member; and Associate Justice Japar B. Dimaampao as Junior Member. We instructed
the Special Division to proceed as follows:
The Special Division is tasked to hear and receive evidence, conclude the
proceedings and submit to this Court a report on its findings and recommended
conclusions within three (3) months from finality of this Resolution.
In ascertaining which of the conflicting claims of title should prevail, the Special
Division is directed to make the following determinations based on the evidence
already on record and such other evidence as may be presented at the proceedings
before it, to wit:
i. Which of the contending parties are able to trace back their claims of title to OCT
No. 994 dated 3 May 1917?
ii. Whether the imputed flaws in the titles of the Manotoks and Araneta, as
recounted in the 2005 Decision, are borne by the evidence? Assuming they are, are
such flaws sufficient to defeat the claims of title of the Manotoks and Araneta?
iii. Whether the factual and legal bases of 1966 Order of Judge Muoz-Palma and the
1970 Order of Judge Sayo are true and valid. Assuming they are, do these orders
establish a superior right to the subject properties in favor of the Dimsons and CLT
as opposed to the claims of Araneta and the Manotoks?
iv. Whether any of the subject properties had been the subject of expropriation
proceedings at any point since the issuance of OCT No. 994 on 3 May 1917, and if
so what are those proceedings, what are the titles acquired by the Government and
whether any of the parties is able to trace its title to the title acquired by the
Government through expropriation.
v. Such other matters necessary and proper in ascertaining which of the conflicting
claims of title should prevail.
WHEREFORE, the instant cases are hereby REMANDED to the Special Division of the
Court of Appeals for further proceedings in accordance with Parts VI, VII and VIII of
this Resolution.
SO ORDERED.2

The Special Division proceeded to conduct hearings in accordance with the

Resolution. The parties to these cases, namely CLT Realty Development Corporation
(CLT), Manotok Realty Inc. and Manotok Estate Corporation (the Manotoks), the
Heirs of Jose B. Dimson (Heirs of Dimson), and Araneta Institute of Agriculture, Inc.
(Araneta), were directed by the Special Division to present their respective evidence
to the Court of Appeals. Thereafter, the Special Division rendered a 70-page Report3
(Report) on 26 November 2008. The Special Division submitted the sealed Report to
this Court.
Before taking action on the Report itself, we dispose of a preliminary matter. On
February 17, 2009, the Manotoks filed a motion beseeching that copies of the report
be furnished the parties "so that they may submit their comments and objections
thereon in accord with the principle contained in Sec. 10, Rule 32 of the Rules of
Court." We deny the motion.
It is incorrect to presume that the earlier referral of these cases to the Court of
Appeals for reception of evidence was strictly in accordance with Rule 32. Notably,
Section 1 of said Rule authorizes the referral of the case to a commissioner "by
written consent of both parties," whereas in the cases at bar, the Court did not
endeavor to secure the consent of the parties before effectuating the remand to the
Court of Appeals. Nonetheless, our earlier advertence to Rule 32 remains proper
even if the adopted procedure does not hew strictly to that Rule, owing to our power
under Section 6, Rule 135 to adopt any suitable process or mode of proceeding
which appears conformable to the spirit of the Rules to carry into effect all auxiliary
processes and other means necessary to carry our jurisdiction into effect.
Moreover, furnishing the parties with copies of the Sealed Report would not serve
any useful purpose. It would only delay the promulgation of the Courts action on
the Sealed Report and the adjudication of these cases. In any event, the present
Resolution quotes extensively from the sealed Report and discusses its other
substantive segments which are not quoted.
The Report is a commendably exhaustive and pellucid analysis of the issues referred
to the Special Division. It is a more than adequate basis for this Court to make the
following final dispositions in these cases.
I.
We adopt the succeeding recital of operative antecedents made by the Special
Division in its Report.
THE PROCEDURAL ANTECEDENTS
DIMSON v. ARANETA

CA-G.R. CV. NO. 41883 & CA-G.R. SP No. 34819

[SC-G.R. No. 134385]
On 18 December 1979, DIMSON filed with the then Court of First Instance ["CFI"] of
Rizal a complaint for Recovery of Possession and Damages against ARANETA. On 7
May 1980, DIMSON amended his complaint and included Virgilio L. Enriquez
["ENRIQUEZ"] as his co-plaintiff.
In said Amended Complaint, DIMSON claimed that he is the absolute owner of a 50hectare land located in Bo. Potrero, Malabon, Metro Manila covered by TCT No. R15169, [Lot 25-A-2] of the Caloocan Registry of Deeds. Allegedly, DIMSON had
transferred the subject property to ENRIQUEZ by way of an absolute and irrevocable
sale on 14 November 1979. Unfortunately though, DIMSON and ENRIQUEZ
discovered that the subject property was being occupied by ARANETA wherein an
"agricultural school house" is erected and that despite repeated demands, the latter
refused to vacate the parcel of land and remove the improvements thereon.
ARANETA, for its part, refuted said allegations and countered that it is the absolute
owner of the land being claimed by DIMSON and that the real properties in the
Araneta Compound are "properly documented and validly titled." It maintained that
it had been in possession of the subject parcel of land since 1974. For this reason,
the claims of DIMSON and ENRIQUEZ were allegedly barred by prescription.
During the trial, counsel for ARANETA marked in evidence, among others,
certifications from the Land Registration Commission attesting that TCTs Nos. 13574
and 26538, covering the disputed property, are in the names of ARANETA and Jose
Rato, respectively. ARANETA also offered TCT No. 7784 in evidence to prove that it is
the registered owner of the land described therein.
On 28 May 1993, the trial court rendered a Decision upholding the title of DIMSON
over the disputed property xxx
Undaunted, ARANETA interposed an appeal to the Court of Appeals, docketed as CAG.R. CV No. 41883, which was later consolidated with CA-GR. SP No. 34819 in view
of the inter-related issues of the two cases.
In its 30 May 1997 Decision, the Court of Appeals, in CA-G.R. CV No. 41883,
sustained the RTC Decision in favor of DIMSON finding that the title of ARANETA to
the disputed land in a nullity. In CA-GR. SP No. 34819, the Court of Appeals likewise
invalidated the titles of ARANETA, relying on the Supreme Court ruling in
Metropolitan Waterworks and Sewerage System v. Court of Appeals, which declared
null and void the certificates of title derived from OCT No. 994 registered on 3 may
1917. It was also held that ARANETA failed to sufficiently show that the Order

sought to be nullified was obtained through extrinsic fraud that would warrant the
annulment thereof.
Dissatisfied still, ARANETA filed a Motion for Reconsideration And/Or New Trial
espousing therein as basis for its entreaty the various letters from different
government agencies and Department order No. 137 of the Department of Justice,
among others.
On 16 July 1998, the various Motions of ARANETA were denied by the Court of
Appeals. Nonetheless, the Court ordered DIMSON to maintain status quo until the
finality of the aforesaid judgment.
Consequently, ARANETA filed a petition before the Supreme Court. Refuting the
factual finding of the trial court and the Court of Appeals, ARANETA contended that
there in only one OCT 994 covering the Maysilo Estate issued on 3 May 1917
pursuant to the Decree No. 36455 issued by the Court of Land Registration on 19
April 1917 and added that there were subsequent certifications issued by the
government officials, notably from the LRS, the DOJ Committee Report and the
Senate Committees Joint Report which attested that there is only one OCT 994, that
which had been issued on 3 May 1917.1avvphi1
CLT v. MANOTOK
CA-G.R. CV. No. 45255
[SC-G.R. No. 123346]
On 10 August 1992, CLT filed with the Regional Trial Court ["RTC"] A COMPLAINT FOR
Annulment of Transfer Certificates of Title, Recovery of Possession and Damages
against the MANOTOKS and the Registry of Deeds of Metro Manila District II
(Calookan City, Metro Manila) ["CALOOCAN RD"].
In its Complaint, CLT alleged that it is the registered owner of Lot 26 of the Maysilo
Estate located in Caloocan City and covered by Transfer Certificate of Title No. T177013, a derivative title of OCT No. 994. As a basis of its proprietary claim, CLT
averred that on 10 December 1988, it had acquired Lot 26 from its former
registered owner, Estelita I. Hipolito ["HIPOLITO"], by virtue of a Deed of Sale with
Real Estate Mortgage. HIPOLITOs title was , in turn, a direct transfer from DIMSON,
the registered owner of TCT No. 15166, the latter having acquired the same by
virtue of a Court Order dated 13 June 1966 issued by the Court of First Instance of
Rizal in Civil Case No. 4557.
On the other hand, the MANOTOKS maintained the validity of their titles, which were
all derivatives of OCT No. 994 covering over twenty (20) parcels of land located over
a portion of Lot 26 in the Maysilo Estate. In substance, it was contented that the

title of CLT was an offspring of an ineffective grant of an alleged undisputed portion

of Lot 26 by way of attorneys fees to its predecessor-in- interest, Jose B. Dimson.
The MANOTOKS, in this connection, further contended that the portion of Lot 26,
subject of the present controversy, had long been disposed of in favor of Alejandro
Ruiz and Mariano Leuterio and hence, there was nothing more in said portion of Lot
26 that could have been validly conveyed to Dimson.
Tracing the legitimacy of their certificates of titles, the MANOTOKS alleged that TCT
No. 4210, which cancelled OCT No. 994, had been issued in the names of Alejandro
Ruiz and Mariano Leuterio on Sept ember 1918 by virtue of an Escritura De Venta
executed by Don Tomas Arguelles and Don Enrique Lopes on 21 August 1918. TCT
No. 4210 allegedly covered an approximate area of 19,565.43 square meters of Lot
26. On even date, TCT No. 4211 was transferred to Francisco Gonzales on the
strength of an Escritura de Venta dated 3 March 1920 for which TCT No. T-5261,
covering an area of 871,982 square meters was issued in the name of one Francisco
Gonzales, married to Rufina Narciso.
Thereafter, TCT No. T-35485, canceling TCT No. T-5261, was issued to Rufina Narcisa
Vda. de Gonzales which was later replaced with the names of Gonzales six (6)
children. The property was then subdivided and as a result of which, seven (7)
certificates of titles were issued, six (6),under the names of each of the children
while the remaining title was held by all of them as co-owners.
Eventually, the properties covered by said seven certificates of title were
expropriated by the Republic of the Philippines. These properties were then later
subdivided by the National Housing Authority ["NHA"], into seventy-seven (77) lots
and thereafter sold to qualified vendees. As it turned out, a number of said vendees
sold nineteen (19) of these lots to Manotok Realty, Inc. while one (1) lot was
purchased by the Manotok Estate Corporation.
During the pre-trial conference, the trial court, upon agreement of the parties,
approved the creation of a commission composed of three commissioners tasked to
resolve the conflict in their respective titles. Accordingly, the created Commission
convened on the matter in dispute.
On 8 October 1993, Ernesto Erive and Avelino San Buenaventura submitted an
exhaustive Joint Final Report ["THE MAJORITY REPORT"] finding that there were
inherent technical infirmities or defects on the face of TCT No. 4211, from which the
MANOTOKS derived their titles (also on TCT No. 4210), TCT No. 5261 and TCT No.
35486. Teodoro Victoriano submitted his Individual Final Report ["THE MINORITY
REPORT"] dated 23 October 1993.

After the conduct of a hearing on these reports, the parties filed their respective
comments/objections thereto. Upon order of the trial court, the parties filed their
respective memoranda.
Adopting the findings contained in the Majority Report, the RTC, on 10 May 1994,
rendered a Decision, in favor of CLT and ordered, among others, the cancellation of
the certificates of title issued in the name of the MANOTOKS.
The MANOTOKS elevated the adverse RTC Decision on appeal before the Court of
Appeals. In its Decision dated 28 September 1995, the Court of Appeals affirmed the
RTC Decision, except as to the award of damages which was deleted. The
MANOTOKS then moved for reconsideration, but said motion was denied by said
appellate court in its Resolution dated 8 January 1996. After the denial of their
Motion for Reconsideration, the MANOTOKS filed a Petition for Review before the
Supreme Court.
PROCEEDINGS BEFORE THE SUPREME COURT
Before the Supreme Court, the Petitioners for Review, separately filed by the
MANOTOKS, ARANETA and Sto. Nio Kapitbahayan Association, Inc., ["STO. NIO"],
were consolidated.
Also submitted for consideration of the Supreme Court were the report of the Fact
Finding Committee dated 28 August 1997 and the Senate Committee Report No.
1031 dated 25 May 1998 which concluded that there was only one OCT No. 994
issued, transcribed and registered on 3 May 1917.
THE SUPREME COURT DECISION
In its Decision dated 29 November 2005 ["THE SUPREME COURT 2005 DECISION"],
the Supreme Court, through its Third Division, affirmed the RTC Decision and
Resolutions of the Court of Appeals, which declared the titles of CLT and DIMSON as
valid.
In invalidating the respective titles of the MANOTOKS and ARANETA, the Supreme
Court, in turn, relied on the factual and legal findings of the trial courts, which had
heavily hinged on the imputed flaws in said titles. Considering that these trial court
findings had been affirmed by the Court of Appeals, the Supreme Court highlighted
the fact that the same were accorded the highest degree of respect and, generally,
should not be disturbed on appeal.
Emphasis was also made on the settled rule that because the Supreme Court was
not a trier of facts, it was not within its function to review factual issues and

examine, evaluate or weigh the probative value of the evidence presented by the
parties.
THE SUPEME COURT RESOLUTION
Expectedly, the MANOTOKS and ARANETA filed their respective Motions for
Reconsideration of the Supreme Court 2005 Decision.
Resolving said motions for reconsideration, with the Office of the Solicitor General
["OSG"] intervening on behalf of the Republic, the Supreme Court, in its Resolution
of 14 December 2007 ["THE SUPREME CCOURT 2007 RESOLUTION"] reversed and
nullified its 2005 Decision and categorically invalidated OCT No. 994 dated 19 April
1917, which was the basis of the propriety claims of CLT and DIMSON. However, the
Supreme Court resolved to remand the cases to this Special Division of the Court of
Appeals for reception of evidence.
To guide the proceedings before this Special Division of the Court of Appeals, the
Supreme Court made the following binding conclusions:
"First, there is only one OCT 994. As it appears on the record, that mother title was
received for transcription by the Register of Deeds on 3 May 1917, and that should
be the date which should be reckoned as the ate of registration of the title. It may
also be acknowledged, as appears on the title, that OCT No. 994 resulted from the
issuance of the decree of registration on (19)* April 1917, although such dated
cannot be considered as the date of the title or the date when the title took effect.
Second. Any title that traces its source to OCT No. 994 dated (19) April 1917 is void,
for such mother title is inexistent. The fact that the Dimson and CLT titles made
specific reference to an OCT No. 994 dated (19) April 1917 casts doubt on the
validity of such titles since they refer to an inexistent OCT. This error alone is, in
fact, sufficient to invalidate the Dimson and CLT claims over the subject property if
singular reliance is placed by them on the dates appearing on their respective titles.
Third. The decision of this Court in MWSS v. Court of Appeals and Gonzaga v. Court
of Appeals cannot apply to the cases at bar, especially in regard to their recognition
of an OCT No. 994 dated 19 April 1917, a title which we now acknowledge as
inexistent. Neither could the conclusions in MWSS or Gonzaga with respect to an
OCT No. 994 dated 19 April 1917 bind any other case operating under the factual
setting the same as or similar to that at bar.4
II.

The parties were afforded the opportunity to present their evidence before the
Special Division. The Report names the evidence submitted to the Special Division
for its evaluation:
CLT EVIDENCE
In its Offer of Evidence,5 CLT adopted the documentary exhibits and testimonial
evidence of witnesses submitted in the case filed by CLT against STO. NIO in Civil
Case No. C-15491, ["CLT-STO NIO CASE"]. These pieces of evidence include,
among others, the Majority and Minority Reports, the Formal Offer of Evidence in the
presentation of the evidence-in-chief and rebuttal evidence in the CLT-STO NIO
CASE consisting of various certificates of titles, plans by geodetic engineer, tax
declarations, chemistry report, specimen signatures and letters of correspondence.
MANOTOKS EVIDENCE
The MANOTOKS sought admission of the following evidence: Senate and DOJ
Committee Reports; certificates of title issued to them and their vendees/assignees,
i.e., Republic of the Philippines, the Gonzalezes, Alejandro Ruiz and Mariano
Leuterio, Isabel Gil del Sola and Estelita Hipolito; deeds of absolute sale; contracts
to sell; tax declarations and real property tax receipts; the Formal Officer of
Evidence of Philville Development & Housing Corporation; ["PHILVILLE"], in Civil
Case No. 15045; this Court of Appeals Decision in CA-G.R. CV. No. 52606 between
CLT and PHILVILLE; the Orders of Judge Palma dated 13 June 1966 and 16 August
1966 in Case No. 4557 and the billing statements of SSHG Law Office. They also
submitted in evidence the Affidavits and Supplemental Affidavits of Rosa R. Manotok
and Luisa T. Padora; Affidavits of Atty. Felix B. Lerio, Atty. Ma. P.G. Ongkiko and
Engineer Jose Marie P. Bernabe; a copy of a photograph of BM No. 9; certified true
copy of coordinates and reference point of L.M. No. 1 and BM No. 1 to 10 of Piedad
Estate and TCT No. 177013 of CLT.6
DIMSON EVIDENCE
In their Consolidated Formal Offer of Evidence,7 DIMSON submitted the previous
decisions and resolutions passed relative to these cases, various certifications of
different government agencies, OCT 994, subdivision plan of Lot 25-A-2,
observations of Geodetic Engineer Reggie P. Garcia showing the relative positions of
properties within Lot 25-A; the Novation of Contract/Deed of Sale and Mortgage
dated 15 January 1948 between Rato, Don Salvador Araneta and Araneta Institute
of Agriculture; copies of various certificates of titles to dispute some of the titles
held by ARANETA; several letter-requests and official receipts.
ARANETA EVIDENCE

ARANETA, in turn, offered in evidence various certificates of title, specifically, OCT

No. 994, TCT No. 8692; TCT No. 21857; TCT No. 26538; TCT No. 26539; TCT No.
(7784)-738 and TCT no. 13574. It also marked in evidence the certified true copies
of Decree No. 36577; the DOJ and Senate Reports; letters of correspondence to the
Land Registration Commission and the Register of Deeds of Malabon City; survey
plans of Lot 25-A and TCT r-15169 of Dimson and; the affidavit of Engineer Felino M.
Cortez and his curriculum vitae. ARANETA also offered the certified true copy of TCT
No. 6196 in the name of Victoneta, Inc.; TCT No. 13574 in the name of ARANETA;
certifications issued by Atty. Josephine H. Ponciano, Acting Register of Deeds of
Malabon city-Navotas; certified true copy of Judge Palmas Order dated 16 August
1966 in Case No. 4557; Circular No. 17 (which pertains to the rules on reconstitution
of titles as of 19 February 1947) and its official receipt and; the owners duplicate
copy of OCT No. 994.89
III.
We now turn to the evaluation of the evidence engaged in by the Special Division.
To repeat, the Special Division was tasked to determine the following issues based
on the evidence:
i. Which of the contending parties are able to trace back their claims to Original
Certificate of Title (OCT) No. 994 dated 3 May 1917:
ii. Whether the respective imputed flaws in the titles of the Manotoks and Araneta,
as recounted in the Supreme Court 2005 Decision, are borne by the evidence.
Assuming they are, are such flaws sufficient to defeat said claims?
iii. Whether the factual and legal bases of the 1966 Order of Judge Muoz-Palma and
the 1970 Order of Judge Sayo are true and valid. Assuming they are, do these
orders establish a superior right to the subject properties in favor of the Dimsons
and CLT as opposed to the claims of the Araneta and the Manotoks?
iv. Whether any of the subject properties had been the subject of expropriation
proceedings at any point since the issuance of OCT No. 994 on 3 May 1917, and if
so, what are those proceedings, what are the titles acquired by the Government,
and is any of the parties able to trace its title acquired by the government through
expropriation?
v. Such other matters necessary and proper in ascertaining which of the conflicting
claims of title should prevail.
The ultimate purpose of the inquiry undertaken by the Court of Appeals was to
ascertain which of the four groups of claimants were entitled to claim ownership
over the subject properties to which they claimed title thereto. One set of properties

was disputed between CLT and the Manotoks, while the other set was disputed
between Araneta and the Heirs of Dimson.
As can be gleaned from the Report, Jose Dimson was able to obtain an order in 1977
issued by Judge Marcelino Sayo of the Court of First Instance (CFI) of Caloocan City
on the basis of which he was able to register in his name properties belonging to the
Maysilo Estate. Judge Sayos order in turn was sourced from a 1966 Order issued by
Judge (later Supreme Court Associate Justice) Cecilia Muoz-Palma of the CFI of
Rizal. Dimsons titles reflected, as their mother title, OCT No. 994 dated 19 April
1917.10 Among these properties was a fifty (50)-hectare property covered by
Transfer Certificate of Title (TCT) No. 151169, which apparently overlapped with the
property of Araneta covered by TCT No. 13574 and 26538.11 Araneta was then and
still is in possession of the property. The Araneta titles state, as their mother title,
OCT No. 994 dated 3 May 1917. Consequently, Dimson filed an action for recovery
of possession against Araneta.
Another property in Dimsons name, apparently taken from Lot 26 of the Maysilo
Estate, was later sold to Estelita Hipolito, who in turn sold the same to CLT. Said
property was registered by CLT under TCT No. T-177013, which also reflected, as its
mother title, OCT No. 994 dated 19 April 1917.12 Said property claimed by CLT
encroached on property covered by titles in the name of the Manotoks. The
Manotoks traced their titles to TCT Nos. 4210 and 4211, both issued in 1918 and
both reflecting, as their mother title, OCT No. 994 dated 3 May 1917.1avvphi1
It is evident that both the Heirs of Dimson and CLT had primarily relied on the
validity of OCT No. 994 dated 19 April 1917 as the basis of their claim of ownership.
However, the Court in its 2007 Resolution held that OCT No. 994 dated 19 April
1917 was inexistent. The proceedings before the Special Division afforded the Heirs
of Dimson and CLT alike the opportunity to prove the validity of their respective
claims to title based on evidence other than claims to title the inexistent 19 April
1917 OCT No. 994. Just as much was observed by the Special Division:
Nonetheless, while the respective certificates of title of DIMSON and CLT refer to
OCT 994 issued on 19 April 1917 and that their previous postulations in the present
controversies had been anchored on the supposed validity of their titles, that which
emanated from OCT 994 of 19 April 1917, and conversely the invalidity of the 3 May
1917 OCT 994, the Supreme Court has yet again allowed them to substantiate their
claims on the basis of other evidentiary proofs:
Otherwise stated, both DIMSON and CLT bear the onus of proving in this special
proceedings, by way of the evidence already presented before and such other forms
of evidence that are not yet of record, that either there had only been an error in
the course of the transcription or registration of their derivative titles, or that other

factual and legal bases existed to validate or substantiate their titles aside from the
OCT No. 994 issued on 19 April 1917.13
Were they able to discharge such burden?
A.
We begin with the Heirs of Dimson. The Special Division made it clear that the Heirs
of Dimson were heavily reliant on the OCT No. 994 dated 19 April 1917.
[DIMSON], on the strength of Judge Sayos Order dated 18 October dated 18
October 1977, was issued separate certificates of title, i.e., TCT Nos. 15166, 15167,
15168 and 15169, covering portions of the Maysilo Estate. Pertinently, with respect
to TCT No. 15169 of DIMSON, which covers Lot 25-A-2 of the said estate, the
following were inscribed on the face of the instrument.
"IT IS FURTHER CERTIFIED that said land was originally registered on the 19th day of
April in the year nineteen hundred and seventeen in the Registration Book of the
Office of the Register of Deeds of Rizal, Volume NA page NA , as Original Certificate
of Title No. 994 pursuant to Decree No. 36455 issued in L.R.C. Case No. 4429 Record
No. ______
This Certificate is a transfer from Original Certificate of Title No. 994/NA, which is
cancelled by virtue hereof in so far as the above-described land is concerned.14
From the above accounts, it is clear that the mother title of TCT no. 15169, the
certificate of title of DIMSON covering the now disputed Lot 25-A-2, is OCT No. 994
registered on 19 April 1917. Manifestly, the certificate of title issued to DIMSON, and
as a matter of course, the derivative title later issued to CLT, should both be voided
inasmuch as the OCT which they emanated had already been declared inexistent.15
The Special Division noted that the Heirs of Dimson did not offer any explanation
why their titles reflect the erroneous date of 19 April 1917. At the same time, it
rejected CLTs explanation that the transcription of the erroneous date was a
"typographical error."
As can be gleaned from the records, both DIMSON and their successor-in-interest
CLT, had failed to present evidence before this Court to prove that there had been a
mere typographical error in the transcription of their respective titles with regard to
the date of registration of OCT No. 994. CLT specifically harps on this assertion that
there had only been a typographical error in the transcription of its title.16 On the
other hand, while DIMSON had refused to categorically assert that there had been
such a typographical error causing the invalidity of their title, their failure to proffer
any reason or argument which would otherwise justify why their title reflects 19

April 1917 and not 3 May 1917 leads this Court to conclude that they simply had no
basis to support their proprietary claim.
Thus, without proffering any plausible explanation as to what led to the erroneous
entry of the registration dated of OCT 994, DIMSON are left without any recourse
but to substantiate their claim on the basis of other evidence not presented during
the proceedings below, which would effectively prove that they had a valid
proprietary claim over the disputed properties. This is specifically true because
DIMSON had previously placed reliance on the MWSS doctrine to prove the validity
of their title.17
Absent such explanation, the Heirs of Dimson were particularly constrained to rely
on the 1977 Order of Judge Sayo, which was allegedly sourced from the 1966 Order
of Judge Muoz Palma. On that issue, the Special Division made the following
determinations:
It should be recalled that in their appellees brief in CA-G.R.CV No. 41883, therein
appellee Jose Dimson specifically denied the falsity of TCT No. R-15169 alleging that
the contention "is already moot and can be determined by a controlling decision."18
Jose Dimson expounded on his reliance as follows:
"In Metropolitan Waterworks & Sewerage System (for brevity MWSS) case, Jose B.
Dimsons (as private respondent) title TCT No. 15167 issued for Lot 28 on June 8,
1978 derived from OCT No. 994 registered on April 19, 1917, is overlapping with
MWSS title TCT No. 41028 issued on July 29, 1940 derived from the same OCT 994,
registered on May 3, 1917.
(Same facts in the case at bar; Jose B. Dimson (plaintiff-appellee) title TCT No. R15169 issued for Lot 25-A-2, on June 8, 1978, is overlapping with defendantappellants title TCT Nos. 13574 and 21343, not derived from OCT No. 994."19
So viewed, sans any proof of a mechanical error in the transcription or annotation
on their respective certificates of title, the present inquiry then hinges on whether
the Order dated 13 June 1966 issued by then Judge Cecilia Muoz-Palma of the
Court of First Instance of Rizal in Civil Case No. 4557 ["PALMA ORDER"] and Judge
Sayos Order dated 18 October 1977 ["SAYOS 18 OCTOBER 1977 ORDER"], can be
validated and authenticated. It is so since the brunt of the proprietary claims of both
DIMSON and CLT has its roots on said Orders.
Perforce, in consideration of the foregoing, this leads Us to the THIRD ISSUE as
presented by the Supreme Court, to wit:
"Whether the factual and legal bases of Palmas 13 June 1966 Order and Sayos 18
October 1977 Order are true and valid. Assuming they are, do these orders establish

a superior right to the subject properties in favor of the Dimsons and CLT as
opposed to the claims of Araneta and the Manotoks?"
As it is, in contending that their certificates of title could be validly traced from the 3
May 1917 OCT No. 994, DIMSON point out that their title was issued pursuant to a
court order issued by Judge Palma in Case No. 4557 and entered in the
memorandum of Encumbrance of OCT No. 994. DIMSON also insist that TCT Nos.
8692, 21857 and 26538 were mere microfilmed or certified copies and, therefore,
inadmissible. Lastly, DIMSON reiterated the flaws and irregularities which voided the
titles of the ARANETA in the previous proceedings and focused on the burden of
ARANETA to present evidence to defeat their titles.
The foregoing contentions of DIMSON find to factual and legal basis. As we see it,
Sayos 18 October 1977 Order, which apparently confirmed Palmas 13 June 1966
Order, raised serious questions as to the validity of the manner by which it was
arrived at.
It is worthy to note that as early as 25 August 1981, counsel for the ARANETA
applied for a subpoena duces tecum addressed to the Clerk of Court of CFI Pasig for
the production of the records of LRC Case No. 4557 for purposes of determining the
genuineness and authenticity of the signature of Judge Palma and also of her Order
granting the confirmation. A certain Atty. Contreras, Officer-in-Charge of the said
court, appeared and manifested in open court that the records pertaining to the
petition for Substitution of names of Bartolome Rivera, et al. could no longer be
located inasmuch as they had passed hands from one court to another.
What is perplexing to this Court is not only the loss of the entire records of Case No.
4557 but the admission of Judge Sayo that he had not seen the original of the Palma
Order. Neither was the signature of Judge Palma on the Order duly proven because
all that was presented was an unsigned duplicate copy with a stamped notation of
"original signed." Equally perplexing is that while CFI Pasig had a Case No. 4557 on
file, said file pertained not to an LRC case but to a simple civil case.20 Thus:
"Atty. Directo:
The purpose of this subpoena duces tecum is to present your Honor the Order Order
(sic) of Judge Palma in order to determine the genuineness and authenticity of the
signature of Judge Palma in this court order and which order was a basis of a
petition in this court to be confirmed. That is the reason why we want to see the
genuineness of the signature of Judge Palma.
COURT:

No signature of Judge Palma was presented in this court. it was a duplicate copy not
signed. There is a stamp only of original signed.
Atty. Directo:
That is the reason why we want to see the original.
Court:
I did not see the original also. When the records of this case was brought here, I
checked the records, there were so many pages missing and the pages were renumbered but then I saw the duplicate original and there is a certification of a
woman clerk of Court, Atty. Molo.
Atty. Directo:
That is the reason why we want to see this document, we are surprised why it is
missing.
Court:
We are surprised also. You better ask Judge Muoz Palma.
Atty. Contreras:
May I make of record that in verifying our records, we found in our original vault LRC
application no. N-4557 but the applications were certain Feliciano Manuel and Maria
Leao involving Navotas property because I was wondering why they have the same
number. There should be only one.
Atty. Directo:
Aside from that, are there other cases of the same number?
Atty. Contreras:
No, there should be only number for a particular case; that must be a petition after
decree record.
Atty. Ignacio:
This 4557 is not an LRC Case, it is a simple civil case.
xxxxxx

Moreover, both the MANOTOKS and ARANETA insist that Palmas 13 June 1966 Order
had been recalled by a subsequent Order dated 16 August 1966, ["RECALL
ORDER"],21 wherein the trial court dismissed the motion filed by DIMSON on the
courts findings that " x x x whatever portion of the property covered by OCT 994
which has not been disposed of by the previous registered owners have already
been assigned and adjudicated to Bartolome Rivera and his assignees, as a result of
which there is no portion that is left to be given to the herein supposed assignee
Jose Dimson."
However, We are reluctant to recognize the existence and due execution of the
Recall Order considering that its original or even a certified true copy thereof had
not been submitted by either of the two parties relying on it despite having been
given numerous opportunities to do so.
Be that as it may, even if We are to consider that no Recall Order was ever issued
by then Judge Palma, the validity of the DIMSON titles over the properties in the
Maysilo Estate becomes doubtful in light of the fact that the supposed "share" went
beyond what was actually due to Jose Dimson under the Compromise Agreement
with Rivera. It should be recalled that Palmas 13 June 1966 Order approved only
the conveyance to Jose Dimson of "25% of whatever share of Bartolome Rivera has
over Lots 25, 26, 27, 28-B and 29 of OCT 994 x x x subject to availability of
undisposed portion of the said lots."22
In relation to this, We find it significant to note the observations contained in the
Senate Committee Report No. 1031 that, based on the assumption that the value of
the lots were equal, and "(C)onsidering that the share of Maria de la Concepcion
Vidal was only 1-189/1000 percent of the Maysilo Estate, the Riveras who claimed to
be the surviving heirs of Vidal will inherit only 197, 405.26 square meters
(16,602,629.53 m2 x 1.1890%) or 19.7 hectares as their share.23 Even if we are to
base the 25% of Jose Dimson on the 19.7 hectares allotted to the Riveras, it would
appear that Jose Dimson would only be entitled to more or less five (5)hectares of
the Maysilo Estate. Obviously, basing only on TCT No. 15169 of Dimson which
covered a land area of 50 hectares (500,000 square meters),24 it is undisputable
that the total properties eventually transferred to Jose Dimson went over and
beyond his supposed 25% share.
What is more, Palmas 13 June 1966 Order specifically required that "x x x whatever
title is to be issued herein in favor of Jose Dimson, the same shall be based on a
subdivision plan duly certified by the Land Registration Commission as correct and
in accordance with previous orders issued in this proceedings, said plan to be
submitted to this court for final approval.

Interestingly however, despite such requirement, DIMSON did not submit Survey
Plan LRC (GLRO) Rec. No. 4429 SWO-5268 which allegedly was the basis of the
segregation of the lands, if only to prove that the same had been duly approved and
certified correct by the Land Registration Commission. What was submitted before
the RTC and this Court was only the Subdivision Plan of Lot 25-A-2 which notably
does not bear the stamp of approval of the LRC. Even an inspection of the exhibit
for CLT does not bear this Survey Plan, which could have, at the very least, proven
the authenticity of the DIMSON title.
Indeed, We find the absence of this piece of evidence as crucial in proving the
validity of the titles of DIMSON in view of the allegation of contending parties that
since the survey plan upon which the land titles were based contained the notation
"SWO," meaning that the subdivision plan was only a product of a "special work
order," the same could not have passed the LRC. Neither was it duly certified by the
said office.25
In addition, the Special Division took note of other irregularities attending Dimsons
TCT No. R-15169.
[Firstly], OCT No. 994 showed that Lot 25-A of the Maysilo Estate was originally
surveyed on "September 8-27, 1911, October 4-21 and November 17-18, 1911." Yet,
in said TCT No. R-15169, the date of the original survey is reflected as "Sept. 8-27,
1911" and nothing more.26 The variation in date is revealing considering that
DIMSONs titles are all direct transfers from OCT No. 994 and, as such, would have
faithfully adopted the mother lots data. Unfortunately, no explanation for the
variance was ever offered.
Equally worthy of consideration is the fact that TCT No. 15169 indicates that not
only was the date of original registration inexistent, but the remarks thereon tend to
prove that OCT No. 994 had not been presented prior to the issuance of the said
transfer certificate. This manifest from the notations "NA" on the face of DIMSONs
title meaning, "not available." It bears emphasizing that the issuance of a transfer
certificate of title to the purchaser without the production of the owners duplicate is
illegal (Rodriguez v. Llorente, 49 Phil. 826) and does not confer any right to the
purchaser (Philippine National Bank vs. Fernandez, 61 Phil. 448 [1935]). The
Registrar of Deeds must, therefore, deny registration of any deed or voluntary
instrument if the owners duplicate is not presented in connection therewith.
(Director of Lands vs. Addison, 40 Phil. 19 [1926]; Hodges vs. Treasurer of the Phil.
50 Phil. 16 [1927].27
In has also been held that, in cases where transfer certificates of title emanating
from one common original certificate of title were issued on different dates to
different persons or entities covering the same land, it would be safe to conclude
that the transfer certificate issued at an earlier date along the line should prevail,

barring anomaly in the process of registration.28 Thus, "(w)here two certificates

purport to include the same land, the earlier in date prevails. X x x. In successive
registration, where more than one certificate is issued in respect of a particular
estate or interest in land, the person is deemed to hold under the prior certificate
who is the holder or whose claim is derived directly from the person who was the
holder of the earliest certificate issued in respect thereof. x x x"29
xxx
Still another indication of irregularity of the DIMSON title over Lot No. 25-A is that
the issuance of the Sayo Order allegedly confirming the Palma Order was in itself
suspect. Gleaning from the records, DIMSON filed the Motion only on 10 October
1977, or eleven (11) years after obtaining the supposed sanction for the issuance of
titles in this name. Besides, what was lodged by Jose Dimson before the sala of then
Judge Palma was not a simple land registration case wherein the only purpose of
Jose Dimson was to establish his ownership over the subject parcels of land, but, as
reflected in the Palma Order, the subject of the case was the confirmation of Jose
Dimsons claim over the purported rights of Rivera in the disputed properties. The
case did not partake of the nature of a registration proceeding and thus, evidently
did not observe the requirements in land registration cases. Unlike in a land
registration case, therefore, Jose Dimson needed to file an action before Judge Sayo
to seek "confirmation" of Palmas Order dated 13 June 1966.
So viewed the general rule proscribing the application of laches or the statute of
limitations in land registration cases,30 as well as Section 6, Rule 39 of the Rules of
Court, in relation to its provisions on revival of judgment applies only to ordinary
civil actions and not to other or extraordinary proceedings such as land registration
cases, is clearly not applicable in the present case. The legal consequences of
laches as committed by DIMSON and their failure to observe the provisions of Rule
39 should, therefore, find application in this case and thus, the confirmation of
DIMSONs title, if any, should fail.
Parenthetically, the allegations of DIMSON would further show that they derive the
validity of their certificates of title from the decreased Jose Dimsons 25% share in
the alleged hereditary rights of Bartolome Rivera ["RIVERA"] as an alleged grandson
of Maria Concepcion Vidal ["VIDAL"]. However, the records of these cases would
somehow negate the rights of Rivera to claim from Vidal. The Verification Report of
the Land Registration
Commission dated 3 August 1981 showed that Rivera was 65 years old on 17 May
1963 (as gathered from the records of Civil Case Nos. 4429 and 4496).31 It can thus
be deduced that, if Rivera was already 65 years old in 1963, then he must have
been born around 1898. On the other hand, Vidal was only nine (9) years in 1912;
hence, she could have been born only on 1905. This alone creates an unexplained

anomalous, if not ridiculous, situation wherein Vidal, Riveras alleged grandmother,

was seven (7) years younger than her alleged grandson. Serious doubts existed as
to whether Rivera was in fact an heir of Vidal, for him to claim a share in the
disputed portions of the Maysilo Estate.32
These findings are consonant with the observations raised by Justice Renato Corona
in his Concurring and Dissenting Opinion on our 2007 Resolution. To wit:
TCT No. T-177013 covers Lot 26 of the Maysilo Estate with an area of 891,547.43 sq.
m. It was a transfer from TCT No. R-17994 issued in the name of Estelita I. Hipolito.
On the other hand, TCT No. R-17994 was a transfer from TCT No. R-15166 in the
name of Jose B. Dimson which, in turn, was supposedly a direct transfer from OCT
No. 994 registered on April 19, 1917.
Annotations at the back of Hipolito's title revealed that Hipolito acquired ownership
by virtue of a court order dated October 18, 1977 approving the compromise
agreement which admitted the sale made by Dimson in her favor on September 2,
1976. Dimson supposedly acquired ownership by virtue of the order dated June 13,
1966 of the CFI of Rizal, Branch 1 in Civil Case No. 4557 awarding him, as his
attorney's fees, 25% of whatever remained of Lots 25-A, 26, 27, 28 and 29 that
were undisposed of in the intestate estate of the decedent Maria de la Concepcion
Vidal, one of the registered owners of the properties covered by OCT No. 994. This
order was confirmed by the CFI of Caloocan in a decision dated October 13, 1977
and order dated October 18, 1977 in SP Case No. C-732.
However, an examination of the annotation on OCT No. 994, particularly the
following entries, showed:
AP-6665/0-994 Venta: Queda cancelado el presente Certificado en cuanto a una
extencion superficial de 3,052.93 metros cuadrados y 16,512.50 metros cuadrados,
y descrita en el lote no. 26, vendida a favor de Alejandro Ruiz y Mariano P Leuterio,
el primer casado con Deogracias Quinones el Segundo con Josefa Garcia y se ha
expedido el certificado de Titulo No; 4210, pagina 163 Libro T-22.
Fecha del instrumento Agosto 29, 1918
Fecha de la inscripcion September 9, 1918
10.50 AM
AP-6665/0-994 Venta: Queda cancelado el presente Certficado el cuanto a una
extencion superficial de 871,982.00 metros cuadrados, descrita en el lote no. 26,
vendida a favor de Alejandro Ruiz y Mariano P. Leuterio, el primer casado con

Deogracias Quinones el segundo con Josefa Garcia y se ha expedido el certificado

de Titulo No 4211, pagina 164, Libro T-22.
Fecha del instrumento Agosto 25, 1918
Fecha de la inscripcion September 9, 1918
10:50- AM
Based on the description of Lot No. 26 in OCT No. 994, it has an area of 891,547.43
sq. m. which corresponds to the total area sold in 1918 pursuant to the above-cited
entries. Inasmuch as, at the time the order of the CFI of Rizal was made on June 13,
1966, no portion of Lot No. 26 remained undisposed of, there was nothing for the
heirs of Maria de la Concepcion Vidal to convey to Dimson. Consequently, Dimson
had nothing to convey to Hipolito who, by logic, could not transmit anything to CLT.
Moreover, subdivision plan Psd-288152 covering Lot No. 26 of the Maysilo Estate
described in Hipolito's certificate of title was not approved by the chief of the
Registered Land Division as it appeared to be entirely within Pcs-1828, Psd-5079,
Psd-5080 and Psd-15345 of TCT Nos. 4210 and 4211. How Hipolito was able to
secure TCT No. R-17994 was therefore perplexing, to say the least.
All these significant facts were conveniently brushed aside by the trial and appellate
courts. The circumstances called for the need to preserve and protect the integrity
of the Torrens system. However, the trial and appellate courts simply disregarded
them.33
The Court thus adopts these findings of the Special Division on the validity of Jose
Dimsons titles, which he obtained consequent to the 1977 Order of Judge Sayo.
Consequently, we cannot give due legal recognition to any and all titles supposedly
covering the Maysilo Estate obtained by Dimson upon the authority of either the
purported 1966 Order of Judge Muoz-Palma or the 1977 Order of Judge Sayo.
B.
Indubitably, as between the titles of ARANETA and the MANOTOKS and their
predecessors-in-interest, on one hand, and those of DIMSON, on the other, the titles
held by ARANETA and the MANOTOKS must prevail considering that their titles were
issued much earlier than the titles of the latter.
Our findings regarding the titles of Jose Dimson necessarily affect and even
invalidate the claims of all persons who seek to derive ownership from the Dimson
titles. These include CLT, which acquired the properties they laid claim on from

Estelita Hipolito who in turn acquired the same from Jose Dimson. Just as much was
concluded by the Special Division as it evaluated CLTs claims.
For its part, CLT contended that even at the trial court level, it maintained that there
was only one OCT No. 994 from where its claim emanates. It argued that its case
against the MANOTOKS, including that of STO. NIO, was never decided based on
the doctrines laid down in Metropolitan Waterworks and Sewerage System v. Court
of Appeals34 and Heirs of Gonzaga v. Court of Appeals.35
Before this Special Division, CLT insists that the MANOTOKS failed to submit "new"
competent evidence and, therefore, dwelling on the alleged flaws of the MANOTOKs
titles, "the findings and conclusions of the court-appointed commissioners as
adopted by the trial court, then upheld by the Honorable Court in its Decision dated
28 September 1995 and finally affirmed in the Supreme Courts Decision dated 29
November 2005, therefore stand, as there is no reason to disturb them."
Furthermore, CLT contends that the Orders of Judge Palma and Judge Sayo are no
longer open to attack in view of their finality. Lastly, CLT asserts that the properties
covered by the MANOTOKS titles and those covered by the expropriation
proceedings did not property pertain to and were different from Lot 26 owned by
CLT. Thus, it maintains that the MANOTOKS cannot use as basis for the validity of
their titles the expropriation undertaken by the Government as a means of staking
their claims.
To restate, CLT claims the 891,547.43 square meters of land covered by TCT No. T17701336 located in Malabon, Caloocan City and designated as "Lot 26, Maysilo
Estate, LRC Swo-5268." TCT No. T-177013 shows that its mother titles is OCT No.
994 registered on 19 April 1917. Tracing said claim, Estelita Hipoloto executed a
Deed of Sale with Real Estate Mortgage in favor of CLT on 10 December 1988. By
virtue of this transfer, Hipolitos TCT No. R-1799437 was cancelled and in lieu
thereof, CLTs TCT No. 223677/R-17994 of TCT No. R-17994. Hipolito, on the other
hand, was a transferee of the deceased Dimson who was allegedly the registered
owner of the subject land on the basis of TCT No. 15166.
In view of the foregoing disquisitions, invalidating the titles of DIMSON, the title of
CLT should also be declared a nullity inasmuch as the nullity of the titles of DIMSON
necessarily upended CLTs propriety claims. As earlier highlighted, CLT had
anchored its claim on the strength of Hipolitos title and that of DIMSONs TCT No.
15166. Remarkably and curiously though, TCT No. 15166 was never presented in
evidence for purposes of tracing the validity of titles of CLT. On this basis alone, the
present remand proceedings remain damning to CLTs claim of ownership.
Moreover, considering that the land title of CLT carried annotations identical to
those of DIMSON and consequently included the defects in DIMSONs title, the fact

that whatever typographical errors were not at anytime cured by subsequent

compliance with the administrative requirements or subjected to administrative
correction bolsters the invalidity of the CLT title due to its complete and sole
dependence on the void DIMSON title.38
IV.
The task of the Special Division was not limited to assessing the claims of the Heirs
of Dimson and CLT. We likewise tasked the Special Division to ascertain as well the
validity of the titles held by the Manotoks and Araneta, titles which had been
annulled by the courts below. Facially, these titles of the Manotoks and Araneta
reflect, as their valid mother title, OCT No. 994 dated 3 May 1917. Nonetheless,
particular issues were raised as to the validity of the Manotok and Araneta titles
independent of their reliance on the 3 May 1917 OCT No. 994 vis--vis the inexistent
19 April 1917 OCT No. 994.
A.
We begin by evaluating the Araneta titles. The Special Division quoted the
observations of the trial court, which upheld Dimsons claim over that of Araneta,
citing the following perceived flaws of TCT Nos. 26538 and 26539, from which
Araneta derived its titles, thus:
Let us now examine TCT 26538 and TCT 26539 both in the name of Jose Ma. Rato
from where defendant was said to have acquired TCT 13574 and TCT 7784 now TCT
21343 in the name of Araneta and the other documents related thereto:
1) Perusal of TCT 26538 shows that its Decree No. and Record No. are both 4429. In
the same vein, TCT 26539 also shows that it has Decree No. 4429 and Record No.
4429.
However, Decree No. 4429 was issued by the Court of First Instance, Province of
Isabela (Exhibit I) and Record No. 4429, issued for Ordinary Land Registration Case,
was issued on March 31, 1911 in CLR No. 5898, Laguna (Exhibit 8, 8-A Bartolome
Rivera et al.)
How then could TCT No. 26538 and TCT No. 26539 both have Decree No. 4429 and
Record No. 4429, which were issued in Court of First Instance, Province of Isabela
and issued in Laguna, respectively.
2) TCT no. 26538 and TCT No. 26539 in the name of Jose Ma. Rato are not annotated
in the Original Certificate of Title 994, where they were said to have originated.

3) The Escritura de Incorporacion de Philippine Land Improvement Company (Exhibit

I) executed on April 8, 1925 was only registered and was stamped received by the
Office of the Securities and Exchange Commission only April 29, 1953 when the
Deed of Sale & Mortgage was executed on August 23, 1947 (Exh. 5 defendant) and
the Novation of Contract, Deed of Sale and Mortgage executed on November 13,
1947 (Exh. M0. So, that when Philippine Land Improvement was allegedly given a
special power of attorney by Jose Ma. Rato to represent him in the execution of the
said two (2) documents, the said Philippine Land Improvement Company has not yet
been duly registered.
4) TCT 26538 and 26538 and TCT 26539 both in the name of Jose Ma. Rato, both
cancel 21857 which was never presented in Court if only to have a clear tracing
back of the titles of defendant Araneta.
5) If the subject matter of the Deed of Sale & Mortgage (Exhibit 5 defendant) is TCT
26539, why is it that TCT 13574 of defendant Araneta cancels TCT 6196 instead of
TCT 26539. That was never explained. TCT 6196 was not even presented in Court.
6) How come TCT 26538 of Jose Ma. Rato with an area of 593,606.90 was cancelled
by TCT 7784 with an area of only 390,282 sq.m.
7) How was defendant Araneta able to have TCT 7784 issued in its name, when the
registration of the document entitled Novation of Contract, Deed of Sale & Mortgage
(Exhibit M) was suspended/denied (Exhibit N) and no title was received by the
Register of Deeds of Pasig at the time the said document was filed in the said Office
on March 4, 1948 (Exhibit N and N-1).
Under Sec. 55 of Land Registration Act (Act No. 496) now Sec. 53 of Presidential
Decree No. 1529, no new certificate of title shall be entered, no memorandum shall
be made upon any certificate of title by the register of deeds, in pursuance of any
deed or other voluntary instrument, unless the owners duplicate certificate is
presented for such endorsement.
8) The sale by Jose Ma. Rato in favor of defendant Araneta is not reflected on the
Memorandum of Encumbrances of TCT 26538 (Exhibit 7-defendant) meaning that
TCT 26538 still exists and intact except for the encumbrances annotated in the
Memorandum of Encumbrances affecting the said title (Exhibits 16, 16-A and 16-N
David & Santos)
9) In the encumbrances annotated at the back of TCT 26539 (Exhibit 4-defendant)
there appears under entry No. 450 T 6196 Victoneta, Incorporated covering parcel
of land canceling said title (TCT 26539) and TCT 6196 was issued ( x x x) which
could have referred to the Deed (sic) of Sale and Mortgage of 8-23-47 (Exhibit 5defendant) entered before Entry 5170 T-8692 Convenio Philippine Land

Improvement Company, with Date of Instrument: 1-10-29, and Date of Inscription:

9-21-29.
In TCT 26838 this Entry 5170 T-8692 Convenio Philippine Land Improvement
Company (Exhibit 16-J-1) appears, but the document, Novation of Contract, Deed of
Sale & Mortgage dated November 13, 1947 (Exhibit M) does not appear.
Entry marked Exhibit 16-J-1 on TCT 26538 shows only the extent of the value of
P42,000.00 invested by Jose Ma. Rato in the Philippine Land Improvement Company.
Said entry was also entered on TCT 26539.
The Court also wonders why it would seem that all the documents presented by
defendant Araneta are not in possession of said defendant, for according to witness
Zacarias Quintan, the real estate officer of the said defendant Araneta since 1970,
his knowledge of the land now in possession of defendant Araneta was acquired by
him from all its documents marked in evidence which were obtained only lately
when they needed for presentation before this Court.3940
The Special Division then proceeded to analyze these factual contentions, and
ultimately concluded that the Araneta claim to title was wholly valid. We adopt in
full the following factual findings of the Special Division, thus:
As for the proprietary claim of ARANETA, it maintains that it has established by
direct evidence that its titles were validly derived from OCT No. 994 dated 3 May
1917. With regard to the imputed flaws, it asseverates that these were unfounded
and thus, labored to refute all of them. ARANETA further expounded on the nullity of
the Palma and Sayo Orders which was the basis of DIMSONs titles.
The documentary exhibits it proffered traced its certificates of title to OCT No. 994
registered on 3 May 1917. From the titles submitted, its predecessor-in-interest was
Jose Ma. Rato y Tuazon ["RATO"], one of the co-heirs named in OCT No. 994, who
was allotted the share of nine and five hundred twelve one thousandths (9512/1000) percent share of the Maysilo Estate.41 For this reason, to ascertain the
legitimacy of the derivative title of ARANETA, the origin and authenticity of the title
of RATO need to be reassessed.
Verily, attesting to RATOs share on the property, Entry No. 12343/O-994 of the
Owners Duplicate Copy of OCT no. 994, records the following:
"12343/O-994 Auto: Jose Rato y Tuason - - - Queda cancelado el presente
seartificado en cuanto a una estension superficial de 1,405,725.90 metro Cuadrados
mas o menos descrita en el Lote No. 25-A-3, an virtud del auto dictado por el
Juzgado de Primera Instancia de Riza, de fecha 28 de Julio de 1924, y que en au

lugar se had expedido el Certificados de Titulo No. 8692, folio 492 del Tomo T-35 del
Libro de Certicadads de Transferencia.
Date of Instrument Julio 28, 1924.
Date of Inscription Agosto 1, 1024 10:19 a.m.
SGD. GLICERIO OPINION, Register of deeds
Agosto 19, 192442
In accordance with the decree, RATO was issued on 1 August 1924, TCT No. 869243
which covers "Lote No. 25 A-3 del plano del subdivision, parte del Lote No. 25-A,
plano Psu-(not legible), "Hacienda de Maysilo," situado en el Munisipio de Caloocan,
Provincia del Rizal x x x."44 The parcel of land covers an approximate area of "UN
MILLION CUATROCIENTOS CINCO MIL SETECIENTOS VEINTICINCO metros cuadrados
con NOVENTA decimetros cuadrados (1,405,725.90) mas o menos." As reflected
under Entry No. 14517.T-8692,45 the parcel of land covered under this certificate
of title was subdivided into five (5) lots under subdivision plan Psd-6599 as per
Order of the court of First Instance of Rizal. Consequently, TCT Nos. 21855, 21856,
21857, 21858 and 21859 were issued.
Focusing on TCT No. 21857 issued on 23 May 1932, this certificate of title issued in
RATOs name,46 cancelled TCT No. 869247 with respect to the property it covers.
On its face, TCT No. 21857,48 was a derivative of OCT No. 994 registered on 3 May
1917. It covers Lot No. 25 A-3-C of subdivision plan Psd-6589, being a portion of Lot
No. 25-A-3, G.L.R.O Record No. 4429. Thereafter, TCT No. 21857 was cancelled by
TCT No. 2653849 and TCT No. 2653950 which were both issued in the name of Jose
Ma. Rato y Tuazon on 17 September 1934.
With respect to TCT No. 26539, the certificate of title showed that it covered a
parcel of land designated as Section No. 2 of the subdivision plan Psd-10114, being
a portion of Lot 25-A-3-C having an approximate area of 581,872 square meters.51
Thereafter, TCT No. 26539 was cancelled by TCT No. 619652 whose registered
owner appears to be a certain Victoneta, Inc. This parcel of land has an area of
581,872 square meters designated as section No. 2 of subdivision plan Psd-10114,
being a portion of Lot 25-A-3-C.
As shown on its face, TCT No. 6196 issued on 18 October 1947 in the name of
Victoneta, Inc. and its mother title were traced from OCT No. 994 registered on 3
May 1917. Later, TCT No. 6196 was cancelled, and in lieu thereof, TCT No. 13574
was issued in favor of Araneta Institute of Agriculture on 20 May 1949.53 It covers a
parcel of land designated as section No. 2 of subdivision plan Psd-10114, being a
portion of Lot 25-A-3-C. It has an aggregate area of 581,872 square meters.

On the other hand, appearing under Entry No. 16086/T-No. 13574 of TCT No. 6196 is
the following:
"Entry No. 16086/T-No. 13574 SALE in favor of the ARANETA INSTITUTE OF
AGRICULTURE, vendee: Conveying the property described in this certificate of title
which is hereby cancelled and issuing in lieu thereof Transfer Certificate of Title No.
13574, page 74, Book T-345 in the name of the vendee. (Doc. No. 149, page 98,
Book II, S. of 1949 of Notary Public for Manila, Hospicio B. Bias).
Date of Instrument May 18, 1949
Date of the Inscription May 30, 1949 at 11:00 a.m.54
TCT No. 2653855 in turn showed on its face that it covers a parcel of land
designated as Section 1 of subdivision plan Psd-10114 being a portion of Lot 25-A-3C having an area of 592,606.90 square meters.56
On 4 March 1948, TCT No. 26538 was cancelled by TCT No. 7784, which was issued
in favor of Araneta Institute of Agriculture. TCT No. 7784 covers four (4) parcels of
land with an aggregate area of 390,282 square meters.57 It would appear from the
records of CA-G.R. SP No. 34819 consolidated with CA-G.R. CV No. 41883 that TCT
No. 7784 was eventually cancelled by TCT No. 21343.58 As per attachment of
ARANETA in its Answer dated 6 march 1980 filed in Civil Case No. 8050, a mere copy
of TCT No. 21343 showed that it covers a parcel of land designated as Lot 6-B of the
subdivision plan Psd-24962 being a portion of Lot 6, described as plan Psd-21943,
G.L.R.O. Record No. 4429 with an approximate area of 333,377 square meters.59
However, for reasons unknown, a copy of TCT No. 21343, whether original or
certified true copy thereof, was not submitted before this Court.
In summation, ARANETA had shown that RATO, as one of the co-owners of the
property covered by OCT NO. 994, was assigned Lot No. 25-A-3. His evidence of
ownership is reflected on TCT No. 8692 issued in his name. RATO held title to these
parcels of land even after its subdivision in the 1930s. Further subdividing the
property, RATO was again issued TCT No. 21857, and later TCT Nos. 26538 and
26539, still covering Lot No. 25 A-3-C. In all his certificates of title, including those
that ultimately passed ownership to ARANETA, the designation of the lot as either
belonging to or portions of Lot 25-A-3 was retained, thereby proving identity of the
land.
More importantly, the documentary trail of land titles showed that all of them were
derived from OCT No. 994 registered on 3 May 1917. For purposes of tracing
ARANETAs titles to Oct No. 994, it would appear that the evidence presented
ultimately shows a direct link of TCT Nos. 7784 and 13574 to said mother title.

Suffice it to state, the origin and legitimacy of the proprietary claim of ARANETA had
been well substantiated by the evidence on record and on this note, said titles
deserve validation.
Under the guidelines set, we shall now proceed to evaluate the imputed flaws which
had been the previous bases of the trial court in invalidating ARANETAs titles.
One of the flaws observed on the titles of ARANETAs predecessor-in-interest was
that TCT No. 26538 and TCT No. 26539 in Ratos name refer to Decree No. 4429 and
Record No. 4429, as basis of their issuance. This is being questioned inasmuch as
Decree No. 4429 refers to a decree issued by the CFI of Isabela while Record No.
4429 was issued for ordinary Land Registration Case No. 31 March 1911 in CLR No.
5898 of Laguna.
Explaining this discrepancy, ARANETA insisted that the same was a mere
typographical error and did not have any effect on the validity of their title. It
further contended that the number "4429" was the case number of Decree No.
36455 and was used interchangeably as the record number.
This Court finds that the incorrect entry with respect to the Decree and Record
Number appearing on the title of ARANETAs predecessor-in-interest cannot, by
itself, invalidate the titles of ARANETAs predecessors-in-interest and ultimately, that
of ARANETA. To the mind of this Court, the incorrect entries alluded to would not
have the effect of rendering the previous titles void sans any strong showing of
fraudulent or intentional wrongdoing on the part of the person making such entries.
Fraud is never presumed but must be established by clear and convincing
evidence.60 The strongest suspicion cannot sway judgment or overcome the
presumption of regularity. The sea of suspicion has no shore, and the court that
embarks upon it is without rudder or compass.61

The Supreme Court, in Encinas v. National Bookstore, Inc.62 acknowledged that

certain defects on a certificate of title, specifically, the interchanging of numbers,
may occur and "it is certainly believable that such variance in the copying of entries
could be merely a typographical or clerical error." In such cases, citing with approval
the decision of the appellate court, the technical description in the title should
prevail over the record number.63
Thus, what is of utmost importance is that the designation and the technical
description of the land, as stated on the face of the title, had not been shown to be
erroneous or otherwise inconsistent with the source of titles. In ARANETAs case, all
the titles pertaining to Lot No. 25 had been verified to be an offshoot of Decree No.
36455 and are all located in Tinajeros, Malabon. At any rate, despite the incorrect

entries on the title, the properties, covered by the subject certificates of title can
still be determined with sufficient certainty.
It was also opined that TCT No. 26538 and TCT No. 26539 in the name of RATO had
not been annotated on OCT No. 994 from which said titles had supposedly
originated. It should be stressed that what partially cancelled OCT No. 994 with
respect to this subject lot were not TCT Nos. 26538 and 26539 but TCT No. 8692
issued on 1 August 1924. In fact, TCT Nos. 26538 and 26539 are not even the
immediate predecessors of OCT No. 994 but were mere derivatives of TCT No.
21857. Logically therefore, these two certificates of title could not have been
annotated on OCT No. 994, they not being the preceding titles.
In any case, a perusal of OCT No. 994 shows an entry, which pertains to Jose Ma.
Rato but, on account of the physical condition of the copy submitted to this Court,
the entry remains illegible for us to make a definite conclusion.64 On the other
hand, Entry No. 12343/O-994 found on the Owners Duplicate Copy of OCT No. 994
specifically recorded the issuance of TCT No. 8692 over Lot No. 25-A-3.65
The other flaws noted on ARANETAs certificates of title pertained to its failure to
present TCT Nos. 21857, 6196 and 21343. As we have discussed, ARANETA offered
in evidence a certified microfilm copy of TCT No. 21857 and a certified true copy of
TCT No. 6196 marked as Exhibits 5-A1A and 19-A1A, respectively. However, it failed
to submit a copy of said TCT No. 21343. Be that as it may, we will not hasten to
declare void TCT No. 7784 as a consequence of such omission, especially so since
TCT No. 21343 appears to be a mere derivative of TCT No. 7784. Given that the
validity of TCT No. 7784 had been preponderantly proven in these proceedings, the
authenticity of said title must be sustained. Besides, ARANETAs failure to submit
TCT No. 21343 had never been put into issue in these proceedings.
With respect to the difference in the area of more than 200,0000 square meters
between TCT No. 7784 and TCT No. 26538, we find that the trial court failed to
consider the several conveyances of portions of TCT No. 26538 before they finally
passed on to ARANETA. Thus, on the Memorandum of Encumbrance of TCT No.
26538, it is apparent that portions of this piece of land had been sold to various
individuals before the same were transferred to ARANETA on 4 march 1948.
Naturally, since the subject land had been partially cancelled with respect to the
portion disposed of, it could not be expected that the area of TCT No. 26538 will
remain the same at the time of its transfer to ARANETA. Even assuming that the
entire area covered by TCT No. 26538 had been disposed of, this fact alone, cannot
lend us to conclude that the conveyance was irregular. An anomaly exists if the area
covered under the derivative title will be much more than its predecessor-ininterest. Evidently, this is not so in the case before us.

The trial court, relying on Exhibit "N", further asserted that ARANETA should not
have been issued TCT No. 7784 considering that the registration of the Novation of
Contract, deed of Sale & Mortgage was suspended/denied and no title was received
by the Register of Deeds of Pasig at the time the said document was filed in the said
Office on march 4, 1948. A perusal of Exhibit "N" submitted before the trial court,
shows that the suspension or denial was merely conditional considering that the
person seeking registration had give days within which to correct the defects before
final denial thereof. As we see it, the Notice merely contained a warning regarding
the denial of the registration of the voluntary deed but, in no way, did it affect the
vested rights of ARANETA to be land. The fact that the title to the land was
subsequently issued free from any notation of the alluded defect creates a
reasonable presumption that ARANETA was in fact able to comply with the condition
imposed. This is especially true since the notice itself contained a note, "Just
Completed," written across the face of the letter.
Records also reveal the RTCs observation with regard to Aranetas failure to
disprove the result of the plotting made on the subject land (Exhibit K) to the effect
that TCT 26538 overlaps portion of TCT 15159 and TCT 26539 also overlaps the
other portion of said TCT R-15169. The trial court further noted that "TCT R-15169
(Jose Dimson) and TCT 26539 (Jose Rato) and TCT 21343 (Araneta) are overlapping
each other within Lot 25-A. That portion of TCT R-15169 (Jose Dimson) along bearing
distance points to 17 to 18 to 19 to 20 to 21 to 1 and 2 shaded in yellow color in the
Plan is not covered by TCT 21343 (Araneta)."66
Scrutinizing Exhibit "K," it becomes apparent that the said evidence relied upon was
only a private survey conducted by Geodetic Engineer Reggie P. Garcia which had
not been duly approved by the Bureau of Lands and was based only on photocopies
of relevant land titles.67 What is more, said geodetic engineer also failed to
adequately explain his observations, approach and manner of plotting the relative
positions of the lots.68 From all indications, the conclusions reached by said
geodetic engineer were anchored on unfounded generalizations.
Another defect cited on ARANETAs title was the absence of any entry on the
Memorandum of Encumbrances of TCT No. 26538 of the alleged sale between RATO
and ARANETA. As pointed out by ARANETA, the copy of TCT No. 26538 submitted to
the trial court contained entries only up to the year 1947, thus, explaining the (1)
lack of entry with regard to the issuance of TCT No. 7784 in favor of ARANETA
considering that the same was issued a year later and; (2) entry pertaining to
Convenio Philippine Land Improvement Company which was entered way back on
21 August 1929.
Nonetheless, it still cannot be denied that Rato and ARANETA together with Don
Salvador Araneta, entered into a voluntary agreement with the intention of
transferring the ownership of the subject property. Moreover, no conclusion should

have been reached regarding the total cancellation of TCT No. 26538 inasmuch as
TCT No. 7784 cancelled the former certificate of title to the extent only of Three
Hundred Ninety Thousand Two Hundred Eighty Two (390,282) square meters.
Notably also, with the evident intent to discredit and refute the title of ARANETA,
DIMSON submitted TCT Nos. 2653869 and 21857,70 which are both derivatives of
OCT No. 994 registered on 3 May 1917 and cover parcels of land located in
Malabon, Rizal. However, these certificates of title reflect different registered
owners and designation of the land covered.
Pertinently, Exhibit "M-Dimson" relating to TCT No. 26538, registered on 12 June
1952, points to one Angela Bautista de Alvarez as the registered owner of a 240
square meter of land designated as Lot No. 19, Block 14 of the subdivision plan Psd5254 being a portion of Lot No. 7-A-1-A. This certificate of title cancels TCT No.
14112/T-348 and refers to a certain TCT No. 30473 on the inscriptions.
Exhibit "N-Dimson," on the other hand, pertaining to TCT No. 21857 was issued on
30 March 1951 to one Angela I. Tuason de Perez married to Antonio Perez. This
certificate of Title covers a parcel of land described as Lot No. 21, Block 16 of the
consolidation and subdivision plan Pcs-140, G.L.R.O. Record No. 4429. It ahs an area
of 436 square meters and cancels TCT No. 21856.
Exhibit "Q-Dimson"71 consisting of TCT No. 8692 covers two parcels of land
designated as Lot Nos. 1 and 2 of Block No. 44 of the consolidation Subdivision Plan
Pcs-188 with a total area of 3,372 square meters. It was issued to Gregorio Araneta,
Incorporated on 7 May 1948. This certificate of title cancelled TCT No. 46118.
Comparing these titles to those of the ARANETA, it is apparent that no identity of the
land could be found. The Supreme Court, in the case of Alonso v. Cebu City Country
Club, Inc.72 agreeing with the Court of Appeals dissertation in said case, ruled that
there is nothing fraudulent for a certificate of title to bear the same number as
another title to another land. On this score, the Supreme Court elucidated as
follows:
"On the question that TCT No. RT-1310 (T-1151) bears the same number as another
title to another land, we agree with the Court of Appeals that there is nothing
fraudulent with the fact that Cebu Country Club, Inc.s reconstituted title bears the
same number as the title of another parcel of land. This came about because under
General Land Registration Office (GLRO) Circular No. 17, dated February 19, 1947,
and Republic Act No. 26 and Circular No. 6, RD 3, dated August 5, 1946, which were
in force at the time the title was reconstituted on July 26, 1946, the titles issued
before the inauguration of the Philippine Republic were numbered consecutively and
the titles issued after the inauguration were numbered also consecutively starting

with No. 1, so that eventually, the titles issued before the inauguration were
duplicated by titles issued after the inauguration of the Philippine Republic x x x."
Parenthetically, in their Motion for Partial Reconsideration of this Courts Resolution
dated 30 October 2008, DIMSON objected to the admissibility of Exhibits 4-A1A to 7A1A on the ground that ARANETA failed to submit the original copies of these
certificates of title and contended that the "originals" contain different "contents"
from their own Exhibits M, N and Q.73 The fact that the entries contained in
ARANETAs pieces of evidence are different from that of DIMSONs do not
automatically make ARANETAs exhibits inferior replications or a confirmation of
their falsity. Interestingly, the objection regarding the non-submission of the
"original copy" had not been raised by DIMSON in their Comments/Objections to
Consolidated Formal Offer of Evidence (Of Araneta Institute of Agriculture, Inc.).74
In any case, we find the objections unwarranted considering that certified true
copies or certified microfilm copies of Exhibits 4-A1A to 7-A1A had been submitted
by ARANETA in these proceedings.
Lastly, on the alleged non-registration of Philippine Land Improvement Company at
the time the special power of attorney was executed by Jose Ma. Rato to represent
him in the execution of the deed of conveyances, the same only proves that
Philippine Land Improvement Company was not yet registered and this does not go
as far as proving the existence or non-existence of the company at which time it
was executed. In effect, the company was not precluded to enter into contracts and
be bound by them but it will do so at the risk of the adverse effects of nonregistration under the law.
Ultimately, the question of whether the aforesaid certificates of title constitute as
clouds on ARANETAs titles are not for this Court to rule upon for purposes of the
present remand. Needless to state, it is not for the Heirs of Dimson to rely on the
weakness of ARANETAs titles and profit from it. Rather, they should have focused
on the strength of their own titles since it is not within our office to decide in whose
hands the contested lands should go, our task being merely to trace back the
parties claims to OCT No. 994 dated 3 May 1917.75
There is no question that the Araneta titles were derived from OCT No. 994 dated 3
May 1917, particularly from the share of Jose Ma. Rato y Tuazon, one of the co-heirs
named in OCT No. 994. The Special Division correctly assessed, among others, the
reference to Decree No. 4429 and Record No. 4429 in some of the antecedent titles
of Araneta76 as mere clerical errors that could not have invalidated said titles,
"4429" being the case number of Decree No. 36455, and the designation and the
technical description of the land on those titles not having been shown to be
erroneous or variant with the source title. The Special Division also correctly
considered that the trial court had failed to take into account the several
conveyances of TCT No. 26538 before it was ultimately transferred to Araneta in

1948, which explain the difference in area between TCT No. 7784 and TCT No.
26538. The imputed overlap of TCT No. 26538 and TCT No. 26539 with the titles
held by Dimson was based on a private survey which had not been duly approved
by the Bureau of Lands. The alleged absence of any entry on the Memorandum of
Encumbrances of TCT No. 26538 of the sale of the property between Rato and
Araneta did not, according to the Special Division, discount the fact that Rato and
Araneta entered into a voluntary agreement with the intention of transferring the
ownership of the subject property. Finally, the Special Division noted that the titles
derived from OCT No. 994, which Dimson had submitted as evidence to discredit the
Araneta claim, pertain to properties wholly different from those covered by the
Araneta titles.
There is no cause to dispute the factual findings and conclusions of the Special
Division on the validity of the Araneta titles, and we affirm the same.
B.
It appears that the claim to title of the Manotoks is somewhat more controversial.
The Special Division did not discount the fact that there could have been flaws in
some of the intervening titles between the 3 May 1917 OCT No. 994 and the present
titles of the Manotoks. However, the significant event was the expropriation
proceedings undertaken by the Republic of the Philippines sometime in 1947. At
least some of the titles in the name of the Manotoks were sourced from the titles
issued to and subsequently distributed by the Republic. The Special Division
explained the milieu in full:
VALIDITY OF THE MANOTOK TITLES
The notation under Entry No. 6655/O-994, found on page 17 of OCT 994 of the
Owners Duplicate Copy, shows that Lot No. 26 had been a subject of sale in favor of
Alejandro Ruiz and Mariano P. Leuterio.77 The notations reads:
"Ap. 6655/O-994 Venta: Queda Cancelado el presente Certificado en cuanto a una
extension superficial de 3,052.93 Metros cuadrados y 16,512.50 metros Cuadrados
y descrita en elLote No. 26 vendida a favor de Alejandro Ruis y Mariano P. Leuterio,
el primar casado con Diogracias Quinones y el Segundo con Josefa Garcia y se be
expedido el Certificado de Titulo No. 4210, Pagina 163, Libro T-22.
Date of the Instrument Aug. 29, 1918
Date of Inscription Sept. 9, 1918 10:50 a.m.
(GD) L. GARDUNIO, Register of Deeds"

"Ap. 6665/O-994-Venta: Queda Cancelado el presente Cerficiado en cuanto a una

extension superficial de 871,982.00 metros cuadrados, descrita en el Lote No. 26,
vendida a favor de Alejandro Ruiz y Mariano P. Leuterio, el primar casado con
Deogracias Quinones y el Segundo con Josefa Garcia y se be expedido el Certificado
de Titulo No. 4211, Pagina 164, Libro T-No. 22.
Date of Instrument Aug. 21, 1918
Date of Inscription Sept. 9, 1918 10:50 a.m.
(SGD.) L. GARDUNIO, Register of Deeds"
As a result, TCT No. 4211 was cancelled by TCT No. 5261 which was issued in the
name of Francisco Gonzales. Inscribed on the "Memorandum of the Incumbrances
Affecting the Property Described in this Certificate" was the sale executed in favor
of
Francisco Gonzales dated 3 March 1920. Thus, on 6 April 1920, TCT No. 5261 was
issued in the name of Francisco Gonzales.78
On 22 August 1938, TCT No. 5261 was cancelled by TCT No. 35486 in the names of
Jose Gonzales y Narciso married to Maria P. Gutierrez, Consuelo Susana Gonzales y
Narciso married to Alfonso D. Prescilla; Juana Francisco Gonzales y Narciso married
to Fortunato de Leon; Maria Clara Gonzales y Narciso married to Delfin Hilario;
Francisco Felipe Gonzales y Narciso married to Pilar Narciso, and Concepcion Andrea
Gonzales y Narciso married to Melquiades M. Virata, Jr.
Appearing on the "Memorandum" of TCT No. 5261 is NOTA: Ap 2111 which reads as
follows:79
"A/2111 Adjudicado el torreno descrito en este certificado de titulo, a Rufina
Narciso Vda. de Gonzales, a cuenta de la participacion de osia esta en (not legible)
los tienes de la eseledad de genanciales. Habida entre la misma y el finado
Francisco J. Gonzales, per una orden del Hon. Fernando Jugo, Juez del Juzgado de
Primera Instancia de Manila Sala II, dienada el 20 de Septiembre de 19 (not legible),
en el Expidiente de intestado del nombrado Francisco J. Gonzales, No. 49034, se
cancela el presente certificado de tituto y se expide otre a hombre decha Rufina
Narciso, con (not legible) No. 35486, folio 86, Tomo T-168 del libro de transferencias,
archivando se la copia de dicha orden da que se ha heche referencia en al Legajo TNo. 35486.
(SGD) TEODORO GONZALES,
Registrado de Titulos."

The property was later subdivided into seven lots in accordance with subdivision
plan Psd-21154.80 Partitioning the lots among the co-owners, TCT No. 35486 was
eventually cancelled and in lieu thereof six (6) certificates of titles were individually
issued81 to Francisco Gonzaless six (6) children, specifically, TCT Nos. 1368-1373
while TCT No. 1374 was issued in favor of all the children.82
As previously mentioned, the properties covered by TCT Nos. 1368-1374 were
expropriated by the Republic of the Philippines and were eventually subdivided and
sold to various vendees. Eighteen (18) lots were obtained by MRI from the years
1965 to 1974, while it acquired the lot covered by TCT No. 165119 in 1988. On the
other hand, MEC acquired from PhilVille Development Housing Corporation Lot No.
19-B by virtue of Deed of Exchange executed in its favor for which, TCT No. 232568
was issue don 9 May 1991.
The 20 certificates of titles were traced by the MANOTOKS, as follows:
1) TCT No. 7528 registered in the name of MRI covers Lot No. 2 of consolidationsubdivision plan (LRC) Pcs-1828 which has an area of 4,988 square meters. MRI
purchased this lot from one Basilio Caina who was issued TCT No. 7526 which
cancelled TCT Nos. 36657-62 registered in the name of the Republic of the
Philippines.83
2) TCT No. 7762, covering Lot 1-C, was obtained by MRI from one Narcisa
Buenaventura. The Parcel of land has an approximate area of 2,876 square meters.
Buenaventuras ownership was evidenced by TCT No. 7525,84 deriving the same
from TCT No. 36657-63.85
3) TCT No. 8012 in the name of MRI covers Lot No. 12-1 having an area of 20,000
square meters.86 This certificate of title was traced from one Filemon Custodio who
held TCT No. 7792. Custodio was in turn a transferee of Guillermo Rivera, the latter
having been issued TCT No. 7760 by virtue of sale between him and then Peoples
Homesite and Housing Corporation ["PHHC"]. The latter title eventually cancelled
TCT No. 36557-63 of the Republic.87
4) TCT No. 9866 issued to MRI covers Lot No. 21 and has an approximate area of
23,979 square meters. MRIs certificate of title was derived from TCT No. 9854
registered in the name of Filemon Custodio, a transferee of Jose Dionisio, who was
issued TCT No. 9853. Dionisios title in turn cancelled the Republics TCT No. 3665763.88
5) TCT No. 21107 issued to MRI covers Lot 22 with an approximate area of 2,557
square meters. MRI acquired the same by virtue of sale between him and Francisco
Custodio, holder of TCT No. 21040. Francisco Custodio was a transferee of Lorenzo
Caina, registered owner of TCT No. 21039 as evidenced by a Deed of Sale between

Caina and the PHHC, the latters certificate of title canceling TCT No. 36557-63 of
the Republic.89
6) TCT No. 21485 was issued to MRI by virtue of sale between it and Francisco
Custodio, registered owner of TCT No. 21484. The certificate of title covers Lot 20
with an approximate area of 25,276 square meters Custodio was in turn a transferee
of Lorenzo Caina, the latter being the registered owner of TCT No. 21013 by reason
of sale between him and PHHC.90 Under Entry No. 6277/T-21485, it would appear
that portions of the property covered under TCT No. 21485 and TCT No. 232568 had
been subject of an expropriation proceedings to which the Manotok Estate
Corporation, et al. interposed no objections subject to the payment of just
compensation.91
7) TCT Nos. 2640592 and 26406,93 both registered in the name of MRI, cancelled
TCT Nos. 9773 and 9774, respectively. TCT Nos. 9773 and 9774 were registered in
the names of Romulo, Rosalina, Lucila, Felix and Emilia all surnamed Jacinto,
[JACINTOS"], before the same were transferred to MRI by reason of sale in favor of
the latter. The JACINTOS certificates of title were in turn derived from TCT Nos. 8014
and 8015 issued in the name of Filemon Custodio94 Both TCT Nos. 8014 and 8015
cancelled TCT 7792/T-39. However, for purposes of tracing TCT No. 7792/T-39 to the
Republics certificate of titles, this certificate of title was not submitted in evidence.
8) TCT No. 2640795 issued to MRI was traced back to the title of Lourdes Mercado
Cloribel who was the registered owner of TCT No. 8404 by virtue of sale between
the two, thereby transferring ownership to MRI. On the fact of TCT No. 8404, it
would show that it cancelled TCT No. 8013/T41 but there is no showing in whose
name TCT No. 8013 was registered and what certificate of title it cancelled.
9) TCT No. 3390496 of MRI cancelled TCT No. 8017 of Filemon Custodio by virtue of
sale between the latter and MRI.97 We note that TCT No. 8017 cancelled TCT No.
7792/T-39 but there is no showing whether the same could be traced back to the
Republics certificates of title.
10) TCT No. 34255, covering Lot No. 11-Bm, Psd-75797 with an area of 11,000
square meters, reflects MRI as the registered owner. This certificate of title cancels
TCT No. 36557-63 of the Republic.98
11) TCT No. 25487599 bears MRI as the registered owner of Lot 55-A with an area of
approximately 1,910 square meters. This certificate of title cancelled TCT No. 41956
which covers Lot 55, also registered in the name of MRI. It would appear that MRI
acquired the lot covered under TCT No. 41956 from one Joaquin Caina who was the
registered owner of TCT No. 25715 being a vendee of PHHC.100

12) TCT No. 53268 of MRI covered Lot No. 15,101 which was purchased by MRI from
one Maria V. Villacorta who held TCT No. 53155. Villacorta in turn acquired the same
land from one Eufrocina Mackay whose TCT No. 7827 was eventually cancelled by
Villacortas land title.102 It would appear that TCT No. 7827 cancelled TCT No.
7826/T-40 but there is no trace to whom the latter title was registered and what
certificate of title it cancelled.
13) TCT No. 55897 shows MRI as the registered owner of Lot 3 of the consolidationsubdivision plan (LRC) Pcs-1828 of the Maysilo Estate covering an area of more or
less 20,531 square meters. This certificate of title cancelled TCT No. 53122 in the
names of MRI (19,531 square meters) and one Silvestre Domingo (1,000 square
meters). TCT No. 53122 in turn cancelled TCT No. 21347 registered in the names of
Jesus Hipona (19,531 square meters) and Silvestre Domingo (1,000 square meters).
Notably, TCT No. 21347 cancelled TCT No. 21315/T-107 but there is no indication to
whom TCT No. 21315 was registered and what certificate of title it cancelled.103
14) TCT No. C-17272 reflects MRI as the registered owner of Lot 6-C which has an
approximate area of 27,850 square meters. MRIs certificate of title cancelled TCT
No. C-17234 registered in the names of MRI (27,750 square meters), Roberto S.
David (3,0000 square meters) and Jose Madulid (500 square meters). It would
appear that TCT No. C-17234 cancelled TCT No. 53124 registered in the names of
MRI, Spouses Priscila and Antonio Sebastian and Jose Madulid.104 MRI also
submitted in evidence a Deed of Partition between itself, Roberto David and Madulid
thereby subdividing the property into Lots 6-A, 6-B and 6-C as per subdivision plan
(LRC) Psd-277091.105 Again, we note that TCT No. 53124 cancelled TCT No.
21350/T-107 but the records are bereft of any indication what certificate of title it
cancelled and to whom the same was registered.
15) TCT No. C-35267, covering Lot 56-B of subdivision plan (LRC) Psd-292683 with
an approximate area of 9,707 square meters, was a by-product of TCT No. 25146,
also registered in the name of MRI, after the same was subdivided into two lots,
namely, Lot Nos. 56-A and 56-B. TCT No. 25146 cancelled TCT No. 25145 registered
in the name of Quirino Labing-isa by virtue of sale in favor of MRI. In turn, TCT No.
21545 cancelled TCT Nos. (36557) 12836 to (36563) 12842.106
16) TCT No. T-121428, registered in the name of MRI covers Lot No. 5-C of
subdivision plan (LRC) psd-315272 which has an approximate area of 4,650 square
meters. It was previously registered in the names of MRI (4,650 square meters),
Ricardo Cruz (941 square meters) and Conchita Umali (1,000 square meters) under
TCT No. 53123 by order of the Court of First Instance of Rizal, Caloocan City, Branch
XII and as per agreement of the parties in Civil Case No. C-424. TCT No. 53123 in
turn cancelled TCT No. 21346 whose registered owners were Conchita Umali (1,000
square meters), Ricardo Cruz (941 square meters) and Jesus Hipona (4,650 square

meters).107 Like some of the other titles, TCT No. 21346 cancelled TCT No. 21316
but there is no trace of this latter certificate of title.
17) TCT No. 163902, registered in the name of MRI, covers Lot No. 4-B-2 and has an
area of more or less 6,354 square meters and a by-product of TCT No. 9022, also in
the name of MRI, after the same was subdivided under subdivision plan (LRC) Psd334454. TCT No. 9022, in turn, cancelled TCT No. 8994/T-45 registered in the name
of Filemon S. Custodio whose ownership thereon was transferred to MRI by virtue of
a voluntary sale.108 TCT No. 8894 cancelled TCT No. 8846/T-45 but this latter
certificate of title was not submitted in evidence for purposes of tracing back to the
Republics title.
18) TCT No. 165119109 was issued to MRI by virtue of a Deed of Sale between
Spouses Francisca Labing-isa and Juan Ignacio [SPOUSES IGNACIO] and MRI, as a
result of which, TCT No. C-36960 of the SPOUSES IGNACIO was cancelled.110 It
would appear that TCT No. C-39690 cancelled TCT No. 35266/T-173 but TCT No.
35266/T-173 was not submitted in evidence.
19) TCT No. T-232568 of the Manotok Estate Corporation, covering Lot No. 19-B of
subdivision plan Psd-13011152 with an area of 23,206 square meters, was derived
from the certificate of title held by PhiVille Development and Housing Corporation
under TCT No. 197357. MEC acquired the subject parcel of land by virtue of Deed of
Exchange between it and PHILVILLE DATED 9 May 1991.111 TCT No. 197357
cancelled TCT No. 195730/T-974 but there is no trace what certificate of title the
latter title cancelled.
By and large, all the certificates of title submitted by the MANOTOKS, including their
derivative titles, were all traced to OCT No. 994 registered on 3 May 1917. Likewise,
they declared all the lots covered by such titles for taxation purposes. Without
doubt, MRI had successfully traced back some of their certificates of title to the
valid OCT No. 994, they having acquired the lots from some of the vendees of the
PHHC after the same were expropriated by the Republic from the Gonzalezes.
The fact that these lots were subjected to expropriation proceedings sometime in
1947 under Commonwealth Act No. 539 for resale to tenants is beyond question, as
also enunciated by the Supreme Court in Republic of the Philippines v. Jose Leon
Gonzales, et al. To bolster this fact, paragraph "r" of the Majority Report noted that
the seven properties covered by TCT Nos. 1368 to 1374 were expropriated by the
Republic from the Gonzalezes.
The fact that these lots were subjected to expropriation proceedings sometime in
1947 under Commonwealth Act No. 539 for resale to tenants is beyond question, as
also enunciated by the Supreme Court in Republic of the Philippines vs. Jose Leon
Gonzaels, et al. To bolster this fact, paragraph "r" of the Majority Report noted that

the seven properties covered by TCT Nos. 1368 to 1374 were expropriated by the
Peoples Homesite and Housing Corporation which were later consolidated and
subdivided into 77 lots for resale to tenants. No sign of protest was ever raised by
CLT on this point.112
The fact of expropriation is extremely significant, for titles acquired by the State by
way of expropriation are deemed cleansed of whatever previous flaws may have
attended these titles. As Justice Vitug explained in Republic v. Court of Appeals,113
and then Associate Justice (now Chief Justice) Puno reiterated in Reyes v. NHA:114
"In an rem proceeding, condemnation acts upon the property. After condemnation,
the paramount title is in the public under a new and independent title; thus, by
giving notice to all claimants to a disputed title, condemnation proceedings provide
a judicial process for securing better title against all the world than may be obtained
by voluntary conveyance."115 This doctrine was derived from the opinion of then
Chief Judge (now U.S. Supreme Court Justice) Stephen Breyer in Cadorette v.
U.S.,116 which in turn cited the pronouncement of the U.S. Supreme Court in U.S. v.
Carmack117 that "[b]y giving notice to all claimants to a disputed title,
condemnation proceedings provide a judicial process for securing better title
against all the world than may be obtained by voluntary conveyance."118
In annulling the Manotok titles, focus was laid on the alleged defects of TCT No.
4211 issued in September of 1918. However, TCT No. 4211 was issued decades
before the property was expropriated. Thus, any and all defects that may have
attended that particular title would have been purged when the property covered by
it was subsequently acquired by the State through eminent domain. The Special
Division noted as much:
As it is, the validity of most of MRIs certificates of title should be upheld because
they were derived from the Republics valid certificates of title. In fact, some of the
MANOTOKS titles can be traced back to the Governments titles as a result of the
expropriation in 1947.
Relevantly, the titles of the Republic, as the predecessor-in-interest of the
MANOTOKS, are presumed valid by virtue of their acquisition resulting from the
exercise of its inherent power of eminent domain that need not be granted even by
the fundamental law. Thus, the alleged flaws concerning the certificates of title
issued previous to the exercise of the State of its inherent power did not affect or
render invalid the subsequent transfers after the forced sale. Indeed, when land has
been acquired for public use in fee simple unconditionally, either by the exercise of
eminent domain or by purchase, the former owner retains no rights in the land, and
the public use may be abandoned, or the land may be devoted to a different use,
without any impairment of the estate or title acquired or any reversion to the former
owner.119

The Special Division also took exception to the majority report of the Commissioners
(Majority Report) who had been tasked by the trial court to examine the validity of
the Manotok titles. The Majority Report
had arrived at several conclusions with respect to the TCTs from which the Manotok
titles were derived.120 The Special Division, however, concluded that such report
was in fact tainted by the fact that it was determined "outside the scope of the
issues framed and agreed upon by the parties." To wit:
In meeting the issue, the MANOTOKS disproved the "opinion" with regard to the
alleged defects of their titles inasmuch as the majority report submitted before the
trial court was made outside the scope of the tasks which the trial court confined
them to perform. The MANOTOKS also argued that before this proceeding on
remand, CLT failed to introduce evidence of such flaws neither were the concerned
geodetic engineers presented as witnesses. Moreover, the MANOTOKS further
maintained that CLT failed to submit any factual or legal bases to prove the
authenticity and validity of the Palma and Sayo Orders. They insisted that the Palma
Order was a void one for being conditional and having resulted to the issuance of
"duplicate certificates of land title."
With respect to the imputed flaws on the MANOTOKS titles which were based on
the Majority Report, we find that the bases of the alleged defects proceeded from
unreliable sources thus, tainting the veracity of the said report.
The records of the case between CLT and the MANOTOKS reveal that the parties
approved the creation of a commission to resolve only these two issues, to wit:
"x x x
These issues to be resolved by the 3 Commissioners are as follows:
1) Whether or not the property covered by the Transfer Certificates of Title of
defendants pertain to or involve Lot No. 26 of the Maysilo Estate presently titled in
the name of the plaintiff; and
2) Whether or not the property covered by the title of the plaintiff and the property
covered by the titles of the defendants overlap.121
Scrutinizing the Majority Report upon which the trial courts conclusions were based,
it would appear that the findings therein were outside the scope of the issues
framed and agreed upon by the parties. Specifically, the deductions with regard to
the technical infirmities and defects of TCT Nos. 4211, 4210, 5261 and 35486 do not
involve the question of whether or not the subject properties were identified as Lot
No. 26 of the Maysilo estate or whether there was overlapping of titles. Records

bear out that the MANOTOKS took exception to the procedure taken citing therein
the "ultra vires" acts of the two Commissioners.
In addition, the majority report focused on the alleged flaws and inherent technical
defects of TCT Nos. 4211, 5261 and 35486, ranging from the language of the
technical descriptions, absence of subdivision plan, lot number and survey plan.
Evidently, these defects go only as far as the certificates of title issued prior to
those of the Republic. Remarkably, no specific flaw was found on the MANOTOKS
titles indicating any irregularity on their issuance. In fact, the Commissioners who
signed the majority report even concluded that only TCT Nos. 4211, 4210, 5261,
35486, 1368 thru 1324 (sic)122 were irregularly and questionably issued without
any reference to the MANOTOKS certificates of title.123 Otherwise stated, the
imputed flaws affect only those certificates of title issued prior to those registered in
the name of the Republic. No flaw had been specifically identified or established in
the proceedings below, which would taint the titles held by the MANOTOKS in so far
as the regularity of their issuance is concerned.124
At the same time, the Special Division was not prepared to uphold the validity of all
of the Manotok titles. It took issue with the particular titles which could not be
retraced to the titles acquired by the Republic of the Philippines by way of
expropriation.
Although the MANOTOKS had traced their title from the vendees of PHHC, there are,
however, some certificates of title which could not be traced back to the titles
previously held by the Republic specifically, MRIs TCT Nos. 26405 and 26406,
26407, 33904, 53268, 55897, C-17272, T-121428, 163903, 165119 and MECs TCT
No. T-232568. As to these certificates of title, the MANOTOKS failed to make any
specific reference to the preceding certificates of title which they cancelled and to
whose names they were subsequently transferred and registered. Thus, we find no
sufficient basis to make a conclusion as to their origins.125
V.
The Special Division supplied the following precise and concise summary of its
conclusions:
In prcis, the factual milieu of the present controversy and the evidence on record
clearly establish the failure of DIMSON and CLT to substantiate their titles and
overcome the onus of proving that said titles are derivatives of OCT 994 registered
on 3 May 1917, and not 19 April 1917, as what is reflected in their titles. In contrast,
the MANOTOKS and ARANETA, both of which had consistently anchored their
proprietary claims on OCT No. 994 registered on 3 May 1917, have, in this remand
proceeding, been able to support their claims of ownership over the respective
portions of the Maysilo Estate. Except in the case of the MANOTOKS which had

failed to substantiate the validity of some of their certificates of title, the

MANOTOKS and ARANETA presented evidence proving the identity, the extent and
the origin of their titles.
Answering the issues assigned by the Supreme Court relative to the tenability of the
respective imputed flaws in the titles of the MANOTOKS and ARANETA and whether
such flaws are sufficient to defeat said claims, this Court finds that, as discussed
above, such flaws are inconsequential and ineffectual in invalidating the MANOTOKS
and ARANETA titles.
Significantly, since the respective certificates of title of herein contending parties
are contradictory to each other and stand to refute the validity of their opposing
titles, it cannot be gainsaid that said certificates of title have correspondingly been
subjected to dispute on the basis of separate and distinct imputed flaws. Still, the
crucial difference between the imputed flaws allegedly tainting said contending
titles, DIMSON and CLT on one hand, and the MANOTOKS and ARANETA, on the
other, is that the imputed flaws purportedly beleaguering the respective certificates
of title of the MANOTOKS and ARANETA relate to the mechanical and technical
aspect of the transcription of their titles and are therefore inconsequential to the
import and validity thereof. Said imputed flaws do not depart from the fact that the
predecessors-in-interest of the MANOTOKS and ARANETA had been clothed with the
right of ownership over the disputed portions of the Maysilo Estate.
On the other hand, the flaws attending the titles of DIMSON and CLT primarily stem
from infirmities attending or otherwise affecting the very crux of their claim of
ownership. Having derived their titles from RIVERA, whose title is questionable and
dubious to the core, DIMSON and CLT cannot rightly insist on the validity of their
titles. Such flaws are hard to overcome as they delve into the substance of their
proprietary claims. As stated, DIMSON and CLT miserably failed to overcome their
onus and instead opted to hap on the supposed flaws of the adverse parties. For
these reasons, the titles of DIMSON and CLT should be declared a nullity.
xxx
From the foregoing evaluation and in conformity with the Supreme Court 2007
Resolution, this Court arrived at the following conclusions as to the status of the
original title and its subsequent conveyances:
1. As categorically declared by the Supreme Court, there is only one OCT 994, the
registration date of which had already been decisively settled as 3 May 1917 and
not 19 April 1917. OCT 994 which reflects the date of 19 April 1917 as its
registration date is null and void.

2. In view thereof and in addition to other grounds we have already discussed, the
certificates of title of the deceased Jose Dimson and his successor-in-interest, CLT,
having been traced back to OCT 994 dated 19 April 1917, are NULL and VOID and
thus vest no legal right or claim in favor of DIMSON and CLT.
3. The 13 June 1966 Palma Order and the 18 October 1977 Sayo Order, on which
DIMSON and CLT anchor the validity of their respective titles, do not substantiate
their proprietary claims. While the existence of said Orders are admitted, the legal
import thereof nonetheless fails to confer a semblance of legality on the titles of
DIMSON and consequently, of CLT, more so, a superior right to defeat the titles of
the MANOTOKS and ARANETA, respectively.
4. Portions of Lot No. 26 pertinent to this controversy, particularly that being
disputed by the MANOTOKs and CLT, were expropriated by the Republic of the
Philippines sometime in 1947 under Commonwealth Act No. 539 for resale to
tenants. The MANOTOKS, thus as successor-in-interest of the Republic, were able to
establish that some of their certificates of title had indeed originated or were
derived from said expropriated parcels of land.
5. The evidence on record confirm that the certificates of title covering the land
being claimed by ARANETA were derived from OCT NO. 994 registered on 3 May
1917 thereby ultimately showing a direct link of TCT Nos. 7784 and 13574 to said
mother title. By reason of which, that is either belonging to or portions of Lot 25-A-3
as previously owned by RATO, had been well substantiated and proven to be
superior to that of DIMSON.
6. For reasons above-stated and in view of the established rights of ownership of
both the MANOTOKS and ARANETA over the contested properties, we find that the
imputed flaws on their titles cannot defeat the valid claims of the MANOTOKS and
ARANETA over the disputed portions of the Maysilo Estate.126
Inasmuch as we agree with the factual findings and evaluation of the Special
Division, we likewise adopt the above conclusions. As we earlier stated, it was
incumbent on the Heirs of Dimson and/or CLT to establish their claim to title for
reasons other than the fact that OCT No. 994 dated 19 April 1917 is extant. They
failed to do so. It should be noted that the instant cases arose from separate actions
filed by Jose Dimson and CLT seeking the recovery of possession and/or annulment
of title against Araneta and the Manotok Group. Thus, the burden of evidence was
on Dimson and CLT to establish the strength of their respective claims of ownership,
and not merely to rely upon whatever weaknesses in the claims of the Manotoks
and Araneta for their causes of action to prosper. The well-settled legal principle in
actions for annulment or reconveyance of title is that a party seeking it should
establish not merely by a preponderance of evidence but by clear and convincing
evidence that the land sought to be reconveyed is his.127 In an action to recover,

the property must be identified, and the plaintiff must rely on the strength of his
title and not on the weakness of the defendant's claim.128
We now proceed to tackle the recommendations submitted by the Special Division.
They are as follows:
RECOMMENDATIONS
Apropos to said conclusions, this Court hereby respectfully makes the following
recommendations regarding the validity of the conflicting proprietary claims as
interposed by the herein contending parties:
1. To declare with finality that the certificates of title of DIMSON and CLT including
other derivative titles issued to their successors-in-interest, if any, are NULL and
VOID, thus invalidating their legal claims over the subject parcels of land.
2. To declare LEGAL and VALID the proprietary claims the MANOTOKS over the
parcels of land covered by the following certificates of title:
a) TCT No. 7528 registered in the name of MRI covers Lot No. 2 of consolidationsubdivision plan (LRC) Pcs-1828 which has an area of 4,988 square meters.
b) TCT No. 7762 covering Lot 1-C, with an approximate area of 2,287 square meters.
c) TCT No. 8012 covering Lot No. 12-1 having an area of 20,000 square meters.
d) TCT No. 9866 covering Lot No. 21 and has an approximate area of 23,979 square
meters.
e) TCT No. 21107 covering Lot 22 with an approximate area of 2,557 square meters.
f) TCT No. 21485 covering Lot 20 with an approximate area of 25,276 square
meters.
g) TCT No. 34255 covering Lot No. 11-Bm, Psd-75797 with an area of 11,000 square
meters.
h) TCT No. 254875 covering Lot 55-A with an area of approximately 1,910 square
meters.
i) TCT No. C-35267 covering Lot 56-B of subdivision plan (LRC) Psd-292683 with an
approximate area of 9,707 square meters.
With regard to the following certificates of title, namely:

3.A. MANOTOK REALTY INC.

a) TCT No. 26405 covering Lot No. 12-E with an area of 1,0000 square meters.
b) TCT No. 26406 covering Lot No. 12-F with an area of 1,000 square meters.
c) TCT No. 26407 covering Lot No. 12-B with an area of 1,000 square meters.
d) TCT No. 33904 covering Lot No. 12-H with an area of 1,802 square meters.
e) TCT No. 53268 covering Lot No. 15 purchased by MRI from one Maria V. Villacorta
with an approximate area of 3,163 square meters.
f) TCT No. 55897 covering Lot 3 of consolidation-subdivision plan (LRC) Pcs-1828 of
the Maysilo Estate covering an area of more or less 20,531 square meters.
g) TCT No. C-17272 covering Lot 6-C which has an approximate area of 27,850
square meters.
h) TCT No. T-121428 covering Lot No. 5-C of subdivision plan (LRC) psd-315278,
which has an approximate area of 4,650 square meters.
i) TCT No. 163902 covering Lot No. 4-B-2 with an area of more or less 6,354 square
meters allegedly a by-product of TCT No. 9022, which in turn, cancelled TCT No.
8994/T-45 registered in the name of Filemon S Custodio.
j) TCT No. 165119 which allegedly cancelled TCT No. C-36960 of the SPOUSES
IGNACIO by virtue of a Deed of Sale between said Spouses and MRI.
3.B. MANOTOK ESTATE CORPORATION
a) TCT No. T-232568 covering Lot No. 19-B of subdivision plan Psd-13011152 with an
area of 23,206 square meters.
The foregoing certificates of title (3.A and 3.B), failing to make specific references to
the particular certificates of title which they cancelled and in whose name they were
registered, may be declared NULL and VOID, or in the alternative, subject the same
to further technical verification.
4. To declare LEGAL and VALID the title of ARANETA respecting parcels of land
covered by the following certificates of title:

a) TCT No. 13574 covering a parcel of land designated as Section No. 2 of

subdivision plan Psd-10114, being a portion of Lot 25-A-3-C with an aggregate area
of 581,872 square meters;
b) TCT No. 7784 covering four (4) parcels of land with an aggregate area of 390,383
square meters.129
The first, second and fourth recommendations are well taken as they logically arise
from the facts and conclusions, as determined by the Special Division, which this
Court adopts.
The third recommendation that eleven (11) of the titles held by the Manotoks be
declared null and void or subjected to further technical verification warrants some
analysis.
The Court has verified that the titles mentioned in the third recommendation do not,
as stated by the Special Division, sufficiently indicate that they could be traced back
to the titles acquired by the Republic when it expropriated portions of the Maysilo
Estate in the 1940s. On the other hand, the Manotok titles that were affirmed by the
Special Division are traceable to the titles of the Republic and thus have benefited,
as they should, from the cleansing effect the expropriation had on whatever flaws
that attached to the previous titles. However, although the Special Division did not
concede the same benefit to the other Manotok titles named in the third
recommendation, at the same time it did not conclude that such titles were false or
fraudulently acquired. Absent such a finding, we are disinclined to take the ultimate
step of annulling those titles.
Said titles have as their origin what we have acknowledged to be a valid mother
title OCT No. 994 dated 3 May 1917. This is in stark contrast with the titles of CLT,
the oppositors to the Manotoks, which all advert to an inexistent mother title. On
their face, the Manotok titles do not reflect any error or fraud, and certainly the
Special Division do not point to any such flaw in these titles. Nothing on the face of
the titles gives cause for the Court to annul the same.
It is worth mentioning that the Special Division refused to adopt the Majority Report
earlier rendered in the case between the Manotoks and CLT, said report having
exhaustively listed the perceived flaws in the antecedent TCTs from which the
Manotoks derived their claim. The Special Division concluded that such findings had
been reached by the Commissioners in excess of their original mandate and, thus,
ultra vires. Assuming that such flaws were extant, they existed on the titles and
anteceded the expropriation of the properties by the Government. As stated earlier,
such expropriation would have cleansed the titles of the prior flaws. But even if the
Manotok titles enumerated in the third recommendation could not be sourced from
the titles acquired by the Republic through expropriation, still the rejection of the

Majority Report signifies that the flaws adverted to therein could not form the basis
for the annulment of the titles involved. Indeed, the Special Divisions rejection of
the Majority Report further diminishes any ground to annul the Manotok titles
referred to in the third recommendation.
Yet, the Court is cognizant that the inability to trace the Manotok titles specified in
the third recommendation to those titles acquired by the Government through
expropriation puts such titles in doubt somehow. In addition, the Court is aware that
the ground utilized by the Special Division in rejecting the Majority Report that the
determinations were made outside the scope of the issues framed and agreed upon
by the parties -- does not categorically refute the technical findings made therein.
Those circumstances, while insufficient for now to annul the Manotoks titles listed
in the third recommendation, should be sufficiently made public.
Hence, in lieu of annulling the Manotok titles per the Special Divisions third
recommendation, the Court deems it sufficient to require the Registers of Deeds
concerned to annotate this Resolution on said titles so as to sufficiently notify the
public of their unclear status, more particularly the inability of the Manotoks to trace
the titles without any gap back to OCT No. 994 issued on 3 May 1917. If there
should be any cause for the annulment of those titles from a proper partys end,
then let the proper case be instituted before the appropriate court.
WHEREFORE, the Court hereby adopts the Report of the Special Division and issues
the following reliefs:
1) The certificates of title of the DIMSONs and CLT including other derivative titles
issued to their successors-in-interest, if any, are declared NULL and VOID, thus
invalidating their legal claims over the subject parcels of land;
2. The proprietary claims of the MANOTOKS over the parcels of land covered by the
following certificates of title are declared LEGAL and VALID, to wit:
a) TCT No. 7528 registered in the name of MRI covers Lot No. 2 of consolidationsubdivision plan (LRC) Pcs-1828 which has an area of 4,988 square meters.
b) TCT No. 7762 covering Lot 1-C, with an approximate area of 2,287 square meters.
c) TCT No. 8012 covering Lot No. 12-1 having an area of 20,000 square meters.
d) TCT No. 9866 covering Lot No. 21 and having an approximate area of 23,979
square meters.
e) TCT No. 21107 covering Lot 22 with an approximate area of 2,557 square meters.

f) TCT No. 21485 covering Lot 20 with an approximate area of 25,276 square
meters.
g) TCT No. 34255 covering Lot No. 11-Bm, Psd-75797 with an area of 11,000 square
meters.
h) TCT No. 254875 covering Lot 55-A with an area of approximately 1,910 square
meters.
i) TCT No. C-35267 covering Lot 56-B of subdivision plan (LRC) Psd-292683 with an
approximate area of 9,707 square meters.
3) The following certificates of titles in the name of ARANETA are hereby declared
LEGAL and VALID, to wit:
a) TCT No. 13574 covering a parcel of land designated as Section No. 2 of
subdivision plan Psd-10114, being a portion of Lot 25-A-3-C with an aggregate area
of 581,872 square meters;
b) TCT No. 7784 covering four (4) parcels of land with an aggregate area of 390,383
square meters.
4) On the following titles in the name of Manotok Realty, Inc. or Manotok Estate
Corporation, to wit:
a) TCT No. 26405 covering Lot No. 12-E with an area of 1,0000 square meters;
b) TCT No. 26406 covering Lot No. 12-F with an area of 1,000 square meters;
c) TCT No. 26407 covering Lot No. 12-B with an area of 1,000 square meters;
d) TCT No. 33904 covering Lot No. 12-H with an area of 1,802 square meters;
e) TCT No. 53268 covering Lot No. 15 purchased by MRI from one Maria V. Villacorta
with an approximate area of 3,163 square meters;
f) TCT No. 55897 covering Lot 3 of consolidation-subdivision plan (LRC) Pcs-1828 of
the Maysilo Estate covering an area of more or less 20,531 square meters;
g) TCT No. C-17272 covering Lot 6-C which has an approximate area of 27,850
square meters;
h) TCT No. T-121428 covering Lot No. 5-C of subdivision plan (LRC) psd-315278,
which has an approximate area of 4,650 square meters;

i) TCT No. 163902 covering Lot No. 4-B-2 with an area of more or less 6,354 square
meters allegedly a by-product of TCT No. 9022, which in turn, cancelled TCT No.
8994/T-45 registered in the name of Filemon S. Custodio;
j) TCT No. 165119 which allegedly cancelled TCT No. C-36960 of the SPOUSES
IGNACIO by virtue of a Deed of Sale between said spouses and MRI;
k) TCT No. T-232568 covering Lot No. 19-B of subdivision plan Psd-13011152 with an
area of 23,206 square meters.
the Registers of Deeds concerned are ordered to annotate that as determined in the
foregoing Resolution, the registered owners of the said titles "failed to make any
specific reference to the preceding certificates of title which they cancelled and to
whose names they were subsequently transferred and registered," thereby leading
the Supreme Court "to find no sufficient basis to make a conclusion as to their
origins."130
Costs against private respondents.
SO ORDERED.

f. Classifications of Public lands

i.
Who calssifies
ii.
Law Governing classification
iii.
Classification of Lands
iv.
Cases
1.
G.R. No. 83609

October 26, 1989

DIRECTOR OF LANDS, petitioner,

vs.
COURT OF APPEALS, IBARRA BISNAR and AMELIA BISNAR, respondents.
Ibarra L. Bisnar for himself and for and in behalf of co-private respondent
Amelia Bisnar.

GRIO-AQUINO, J.:
Petitioner Director of Lands, through the Solicitor General, seeks a review of the
decision dated May 27, 1988, of the Court of Appeals in CA-G.R. CV No. 66426,

entitled "Ibarra Bisnar, et al. vs. Director of Lands," affirming in toto the decision of
the Court of First Instance of Capiz, granting the private respondents' application for
confirmation and registration of their title to two (2) parcels of land in LRC Cad. Rec.
1256.
In their joint application for registration of title to two (2) parcels of land filed on July
20,1976, the applicants Ibarra and Amelia Bisnar claimed to be the owners in fee
simple of Lots 866 and 870 of the Pilar Cadastre Plan AP-06-000869, respectively
containing an area of 28 hectares (284,424 sq. m.) and 34 hectares (345,385 sq.
m.) situated in barrio Gen. Hizon, Municipality of President Roxas, Province of Capiz
(p. 14, Rollo). The applicants alleged that they inherited those parcels of land (p. 41,
Rollo) and they had been paying the taxes thereon (p. 40, Rollo).
On December 16,1976, the Director of Lands and the Director of the Bureau of
Forest Development, opposed the application on the grounds that:
1.
Neither the applicants nor their predecessors-in-interest possess sufficient
title to acquire ownership in fee simple of the land or lots applied for, the same not
having been acquired by any of the various types of title issued by the Spanish
Government, such as, (1) 'titulo real' or royal grant, (2) the 'concession especial' or
special grant, (3) the 'composicion con el estado titulo' or adjustment title, (4) the
'titulo de compra 'or title by purchase, and (5) the 'informacion possessoria' or
possessory information under the Royal Decree of 13 February 1894, or any other
recognized mode of acquisition of title over realty under pertinent applicable laws.
2.
Neither the applicants nor their predecessors-in-interest have been in open,
continuous, exclusive and notorious possession and occupation of the land in
question for at least thirty (30) years immediately preceding the filing of the
application.
3.
The properties in question are a portion of the public domain belonging to the
Republic of the Philippines, not subject to private appropriation, (pp. 17-19, Record
on Appeal). (pp. 14-15, Rollo.)
On February 24,1977, the applicants filed an amended application, which was
approved on March 14, 1977, and included the following allegation:
Should the Land Registration Act invoked be not applicable to the case, they hereby
apply for the benefits of Chapter 8, Commonwealth Act 141, as amended, as they
and their predecessors-in-interest have been in possession of the land as owners for
more than fifty (50) years. (p. 16, Rollo.)
After hearing, the trial court ordered the registration of the title of the lots in the
names of the applicants, herein private respondents. It found that applicants and

their predecessors- in-interest have been in open, public, continuous, peaceful and
adverse possession of the subject parcels of land under bona fide claims of
ownership for more than eighty (80) years (not only 30) prior to the filing of the
application for registration, introduced improvements on the lands by planting
coconuts, bamboos and other plants, and converted a part of the land into
productive fishponds (p. 68, Rollo).
On appeal, the Appellate Court affirmed the trial court's decision. It held that the
classification of the lots as timberland by the Director of Forestry cannot prevail in
the absence of proof that the said lots are indeed more valuable as forest land than
as agricultural land, citing as authority the case of Ankron vs. Government of the
Philippine Islands (40 Phil. 10). In this petition, the government alleges that:
1.
the classification or reclassification of public lands into alienable or
disposable agricultural land, mineral land or forest land is a prerogative of the
Executive Department of the government and not of the courts;
2.
that possession of forest lands, no matter how long, cannot ripen into private
ownership; and
3.
that an applicant for registration of title has the burden of proving that he
meets the requirements of Section 48 of Com. Act No. 141, as amended. (p. 19,
Rollo.)
The principal issue in this appeal is whether the lots in question may be registered
under Section 48 (b) of CA 141, as amended.
The petition is impressed with merit.
In the case of Bureau of Forestry vs. Court of Appeals, 153 SCRA 351, we ruled:
As provided for under Section 6 of Commonwealth Act 141, which was lifted from
Act 2874, the classification or reclassification of public lands into alienable or
disposable, mineral or forest lands is now a prerogative of the Executive
Department of the government and not the courts. With these rules, there should be
no more room for doubt that it is not the court which determines the classification of
lands of the public domain into agricultural, forest or mineral but the Executive
Branch of the government, through the Office of the President. Hence, it was grave
error and/or abuse of discretion for respondent court to ignore the uncontroverted
facts that (1) the disputed area is within a timberland block, and (2) as certified to
by the then Director of Forestry, the area is needed for forest purposes. (pp. 21-22,
Rollo.)

It bears emphasizing that a positive act of the government is needed to declassify

land which is classified as forest and to convert it into alienable or disposable land
for agricultural or other purposes (Republic vs. Animas, 56 SCRA 499). Unless and
until the land classified as forest is released in an official proclamation to that effect
so that it may form part of the disposable agricultural lands of the public domain,
the rules on confirmation of imperfect title do not apply (Amunategui vs. Director of
Forestry, 126 SCRA 69; Director of Lands vs. Court of Appeals, 129 SCRA 689;
Director of Lands vs. Court of Appeals, 133 SCRA 701; Republic vs. Court of Appeals,
148 SCRA 480; Vallarta vs. Intermediate Appellate Court, 151 SCRA 679).
Thus, possession of forest lands, however long, cannot ripen into private ownership
(Vano vs. Government, 41 Phil. 161 [1920]; Adorable vs. Director of Forestry, 107
Phil. 401 [1960]). A parcel of forest land is within the exclusive jurisdiction of the
Bureau of Forestry and beyond the power and jurisdiction of the cadastral court to
register under the Torrens System (Republic vs. Court of Appeals, 89 SCRA 648;
Republic vs. Vera, 120 SCRA 210 [1983]; Director of Lands vs. Court of Appeals, 129
SCRA 689 [1984]).
Section 48 (b) of Commonwealth Act No. 141, as amended, applies exclusively to
public agricultural land. Forest lands or areas covered with forests are excluded (p.
26, Rollo). We reiterate our ruling in Amunategui that:
In confirmation of imperfect title cases, the applicant shoulders the burden of
proving that he meets the requirements of Section 48, Commonwealth Act No. 141,
as amended by Republic Act 1942. He must overcome the presumption that the
land he is applying for is part of the public domain but that he has an interest
therein sufficient to warrant registration in his name because of an imperfect title
such as those derived from old Spanish grants or that he has had continuous, open
and notorious possession and occupation of agricultural lands of the public domain
under a bona fide claim of acquisition of ownership for at least thirty (30) years
preceding the filing of his application. (Heirs of Amunategui vs. Director of Forestry,
126 SCRA 69.)
WHEREFORE, the appealed decision is reversed and set aside. The application for
registration in LRC Cad. Rec. 1256 of the former Court of First Instance, is hereby
dismissed without costs.
SO ORDERED.
2.
[G.R. No. 155450, August 06, 2008]

REPUBLIC OF THE PHILIPPINES REPRESENTED BY THE REGIONAL

EXECUTIVE DIRECTOR, DEPARTMENT OF ENVIRONMENT AND NATURAL
RESOURCES, REGIONAL OFFICE NO. 2, PETITIONER, VS. COURT OF
APPEALS, HEIRS OF ANTONIO CARAG AND VICTORIA TURINGAN, THE
REGISTER OF DEEDS OF CAGAYAN, AND THE COURT OF FIRST INSTANCE OF
CAGAYAN, RESPONDENTS.
DECISION
CARPIO, J.:
The Case
This is a petition for review[1] of the 21 May 2001[2] and 25 September 2002[3]
Resolutions of the Court of Appeals in CA-G.R. SP No. 47965. The
21 May 2001 Resolution dismissed petitioner Republic of the Philippines' (petitioner)
amended complaint for reversion, annulment of decree, cancellation and
declaration of nullity of titles. The 25 September 2002 Resolution denied petitioner's
motion for reconsideration.
The Facts
On 2 June 1930, the then Court of First Instance of Cagayan (trial court) issued
Decree No. 381928[4] in favor of spouses Antonio Carag and Victoria Turingan
(spouses Carag), predecessors-in-interest of private respondents Heirs of Antonio
Carag and Victoria Turingan (private respondents), covering a parcel of land
identified as Lot No. 2472, Cad. 151, containing an area of 7,047,673 square meters
(subject property), situated in Tuguegarao, Cagayan. On 19 July 1938, pursuant to
said Decree, the Register of Deeds of Cagayan issued Original Certificate of Title No.
11585[5] (OCT No. 11585) in the name of spouses Carag.
On 2 July 1952, OCT No. 11585 was cancelled to discharge the encumbrance
expressly stated in Decree No. 381928. Two transfer certificates of title were issued:
Transfer Certificate of Title No. T-1277,[6] issued in the name of the Province of
Cagayan, covering Lot 2472-B consisting of 100,000 square meters and Transfer
Certificate of Title No. T-1278,[7] issued in the name of the private respondents,
covering Lot 2472-A consisting of 6,997,921 square meters.
On 19 May 1994, Bienvenida Taguiam Vda. De Dayag and others filed with the
Regional Office No. 2 of the Department of Environment and Natural Resources
(DENR), Tuguegarao, Cagayan, a letter-petition requesting the DENR to initiate the
filing of an action for the annulment of Decree No. 381928 on the ground that the
trial court did not have jurisdiction to adjudicate a portion of the subject property

which was allegedly still classified as timber land at the time of the issuance of
Decree No. 381928.
The Regional Executive Director of the DENR created an investigating team to
conduct ground verification and ocular inspection of the subject property.
The investigating team reported that:
A) The portion of Lot 2472 Cad-151 as shown in the Plan prepared for spouses
Carag, and covered under LC Project 3-L of Tuguegarao, Cagayan, was found to be
still within the timberland area at the time of the issuance of the Decree and O.C.T.
of the spouses Antonio Carag and Victoria Turingan, and the same was only released
as alienable and disposable on February 22, 1982, as certified by USEC Jose G. Solis
of the NAMRIA on 27 May 1994.
B) Petitioner Bienvenida Taguiam Vda. De Dayag and others have possessed and
occupied by themselves and thru their predecessors-in-interest the portion of Lot
2472 Cad-151, covered by LC Project 3-L of LC Map 2999, since time immemorial.[8]
Thus, the investigating team claimed that "a portion of Lot 2472 Cad-151" was "only
released as alienable and disposable on 22 February 1982."
In a Memorandum dated 9 September 1996, the Legal Division of the Land
Management Bureau recommended to the Director of Lands that an action for the
cancellation of OCT No. 11585, as well as its derivative titles, be filed with the
proper court. The Director of Lands approved the recommendation.
On 10 June 1998, or 68 years after the issuance of Decree No. 381928, petitioner
filed with the Court of Appeals a complaint for annulment of judgment, cancellation
and declaration of nullity of titles[9] on the ground that in 1930 the trial court had
no jurisdiction to adjudicate a portion of the subject property, which portion consists
of 2,640,000 square meters (disputed portion). The disputed portion was allegedly
still classified as timber land at the time of issuance of Decree No. 381928 and,
therefore, was not alienable and disposable until 22 February 1982 when the
disputed portion was classified as alienable and disposable.
On 19 October 1998, private respondents filed a motion to dismiss.[10] Private
respondents alleged that petitioner failed to comply with Rule 47 of the Rules of
Court because the real ground for the complaint was mistake, not lack of
jurisdiction, and that petitioner, as a party in the original proceedings, could have
availed of the ordinary remedies of new trial, appeal, petition for relief or other
appropriate remedies but failed to do so. Private respondents added that petitioner
did not attach to the complaint a certified true copy of the decision sought to be
annulled. Private respondents also maintained that the complaint was barred by the
doctrines of res judicata and law of the case and by Section 38 of Act No. 496.[11]
Private respondents also stated that not all the heirs of spouses Carag were brought

before the Court of Appeals for an effective resolution of the case. Finally, private
respondents claimed that the real party in interest was not petitioner but a certain
Alfonso Bassig, who had an ax to grind against private respondents.[12]
On 3 March 1999, petitioner filed an amended complaint for reversion, annulment of
decree, cancellation and declaration of nullity of titles.[13]
The Ruling of the Court of Appeals
On 21 May 2001, the Court of Appeals dismissed the complaint because of lack of
jurisdiction over the subject matter of the case. The Court of Appeals declared:
The rule is clear that such judgments, final orders and resolutions in civil actions
which this court may annul are those which the "ordinary remedies of new trial,
appeal, petition for relief or other appropriate remedies are no longer available."
The Amended Complaint contains no such allegations which are jurisdictional
neither can such circumstances be divined from its allegations. Furthermore, such
actions for Annulment may be based only on two (2) grounds: extrinsic fraud and
lack of jurisdiction. Neither ground is alleged in the Amended Complaint which is for
Reversion/Annulment of Decree, Cancellation and Declaration of Nullity of Titles. It
merely alleges that around 2,640,000 square meters of timberland area within Lot
2472 Cad. 151, had been erroneously included in the title of the Spouses Antonio
Carag and Victoria Turingan under Decree No. 381928 and O.C.T. No. 11585 issued
on June 2, 1930 and July 19, 1938, respectively; that hence, such adjudication
and/or Decree and Title covering a timberland area is null and void ab initio under
the provisions of the 1935, 1973 and 1987 Constitutions.
Finally, it is clear that the issues raised in the Amended Complaint as well as those
in the Motion to dismiss are factual in nature and should be threshed out in the
proper trial court in accordance with Section 101 of the Public Land Act.[14]
(Citations omitted)
Petitioner filed a motion for reconsideration. In its 25 September 2002 Resolution,
the Court of Appeals denied the motion for reconsideration.
Hence, this petition.
The Issues
Petitioner raises the following issues:
Whether the allegations of the complaint clearly stated that the ordinary remedies
of new trial, appeal, petition for relief and other appropriate remedies are no longer
available;
Whether the amended complaint clearly alleged the ground of lack of jurisdiction;

Whether the Court of Appeals may try the factual issues raised in the amended
complaint and in the motion to dismiss;
Whether the then Court of First Instance of Cagayan had jurisdiction to adjudicate a
tract of timberland in favor of respondent spouses Antonio Carag and Victoria
Turingan;
Whether the fact that the Director of Lands was a party to the original proceedings
changed the nature of the land and granted jurisdiction to the then Court of First
Instance over the land;
Whether the doctrine of res judicata applies in this case; and
Whether Section 38 of Act No. 496 is applicable in this case.
The Ruling of the Court
While the Court of Appeals erred in dismissing the complaint on procedural grounds,
we will still deny the petition because the complaint for annulment of decree has no
merit.
Petitioner Complied with Rule 47 of the Rules of Court
First, the Court of Appeals ruled that petitioner failed to allege either of the grounds
of extrinsic fraud or lack of jurisdiction in the complaint for annulment of decree.
[15]
We find otherwise. In its complaint and amended complaint, petitioner stated:
11. In view of the fact that in 1930 or in 1938, only the Executive Branch of the
Government had the authority and power to declassify or reclassify land of the
public domain, the Court did not, therefore, have the power and authority to
adjudicate in favor of the spouses Antonio Carag and Victoria Turingan the said tract
of timberland, portion of the Lot 2472 Cad-151, at the time of the issuance of the
Decree and the Original Certificate of Title of the said spouses; and such
adjudication and/or Decree and Title issued covering the timberland area is null and
void ab initio considering the provisions of the 1935, 1973 and 1987 Philippine
constitution.
xxxx
15. The issuance of Decree No. 381928 and O.C.T. No. 11585 in the name of
spouses Antonio Carag and Victoria Turingan, and all the derivative titles thereto in
the name of the Heirs and said spouses, specifically with respect to the inclusion
thereto of timberland area, by the then Court of First Instance (now the Regional
Trial Court), and the Register of Deeds of Cagayan is patently illegal and erroneous

for the reason that said Court and/or the Register of Deeds of Cagayan did not have
any authority or jurisdiction to decree or adjudicate the said timberland area of Lot
2472 Cad-151, consequently, the same are null and void ab initio, and of no force
and effect whatsoever.[16] (Emphasis supplied; citations omitted)
Petitioner clearly alleged in the complaint and amended complaint that it was
seeking to annul Decree No. 381928 on the ground of the trial court's lack of
jurisdiction over the subject land, specifically over the disputed portion, which
petitioner maintained was classified as timber land and was not alienable and
disposable.
Second, the Court of Appeals also dismissed the complaint on the ground of
petitioner's failure to allege that the "ordinary remedies of new trial, appeal, petition
for relief or other appropriate remedies are no longer available."
In Ancheta v. Ancheta,[17] we ruled:
In a case where a petition for annulment of judgment or final order of the RTC filed
under Rule 47 of the Rules of Court is grounded on lack of jurisdiction over the
person of the defendant/respondent or over the nature or subject of the action, the
petitioner need not allege in the petition that the ordinary remedy of new trial or
reconsideration of the final order or judgment or appeal therefrom are no longer
available through no fault of her own. This is so because a judgment rendered or
final order issued by the RTC without jurisdiction is null and void and may be
assailed any time either collaterally or in a direct action or by resisting such
judgment or final order in any action or proceeding whenever it is invoked, unless
barred by laches.[18]
Since petitioner's complaint is grounded on lack of jurisdiction over the subject of
the action, petitioner need not allege that the ordinary remedies of new trial,
appeal, petition for relief or other appropriate remedies are no longer available
through no fault of petitioner.
Third, the Court of Appeals ruled that the issues raised in petitioner's complaint
were factual in nature and should be threshed out in the proper trial court in
accordance with Section 101 of the Public Land Act.[19]
Section 6, Rule 47 of the Rules of Court provides:
SEC. 6. Procedure. - The procedure in ordinary civil cases shall be observed. Should
a trial be necessary, the reception of evidence may be referred to a member of the
court or a judge of a Regional Trial Court.
Therefore, the Court of Appeals may try the factual issues raised in the complaint
for the complete and proper determination of the case.
However, instead of remanding the complaint to the Court of Appeals for further
proceedings, we shall decide the case on the merits.

Complaint for Annulment of Decree Has No Merit

Petitioner contends that the trial court had no jurisdiction to adjudicate to spouses
Carag the disputed portion of the subject property. Petitioner claims that the
disputed portion was still classified as timber land, and thus not alienable and
disposable, when Decree No. 381928 was issued in 1930. In effect, petitioner admits
that the adjacent 4,407,673 square meters of the subject property, outside of the
disputed portion, were alienable and disposable in 1930. Petitioner argues that in
1930 or in 1938, only the Executive Branch of the Government, not the trial courts,
had the power to declassify or reclassify lands of the public domain.
Lack of jurisdiction, as a ground for annulment of judgment, refers to either lack of
jurisdiction over the person of the defending party or over the subject matter of the
claim.[20] Jurisdiction over the subject matter is conferred by law and is determined
by the statute in force at the time of the filing of the action.[21]
Under the Spanish regime, all Crown lands were per se alienable. In Aldecoa v.
Insular Government,[22] we ruled:
From the language of the foregoing provisions of law, it is deduced that, with the
exception of those comprised within the mineral and timber zone, all lands owned
by the State or by the sovereign nation are public in character, and per se alienable
and, provided they are not destined to the use of the public in general or reserved
by the Government in accordance with law, they may be acquired by any private or
juridical person x x x[23] (Emphasis supplied)
Thus, unless specifically declared as mineral or forest zone, or reserved by the State
for some public purpose in accordance with law, all Crown lands were deemed
alienable.
In this case, petitioner has not alleged that the disputed portion had been declared
as mineral or forest zone, or reserved for some public purpose in accordance with
law, during the Spanish regime or thereafter. The land classification maps[24]
petitioner attached to the complaint also do not show that in 1930 the disputed
portion was part of the forest zone or reserved for some public purpose. The
certification of the National Mapping and Resources Information Authority, dated 27
May 1994, contained no statement that the disputed portion was declared and
classified as timber land.[25]
The law prevailing when Decree No. 381928 was issued in 1930 was Act No. 2874,
[26] which provides:
SECTION 6. The Governor-General, upon the recommendation of the Secretary of
Agriculture and Natural Resources, shall from time to time classify the lands of the
public domain into (a) Alienable or disposable

(b) Timber and

(c) Mineral lands
and may at any time and in a like manner transfer such lands from one class to
another, for the purposes of their government and disposition.
Petitioner has not alleged that the Governor-General had declared the disputed
portion of the subject property timber or mineral land pursuant to Section 6 of Act
No. 2874.
It is true that Section 8 of Act No. 2874 opens to disposition only those lands which
have been declared alienable or disposable. Section 8 provides:
SECTION 8. Only those lands shall be declared open to disposition or concession
which have been officially delimited and classified and, when practicable, surveyed,
and which have not been reserved for public or quasi-public uses, not appropriated
by the Government, nor in any manner become private property, nor those on
which a private right authorized and recognized by this Act or any other valid law
may be claimed, or which, having been reserved or appropriated, have ceased to be
so. However, the Governor-General may, for reasons of public interest, declare lands
of the public domain open to disposition before the same have had their boundaries
established or been surveyed, or may, for the same reasons, suspend their
concession or disposition by proclamation duly published or by Act of the
Legislature. (Emphasis supplied)
However, Section 8 provides that lands which are already private lands, as well as
lands on which a private claim may be made under any law, are not covered by the
classification requirement in Section 8 for purposes of disposition. This exclusion in
Section 8 recognizes that during the Spanish regime, Crown lands were per se
alienable unless falling under timber or mineral zones, or otherwise reserved for
some public purpose in accordance with law.
Clearly, with respect to lands excluded from the classification requirement in
Section 8, trial courts had jurisdiction to adjudicate these lands to private parties.
Petitioner has not alleged that the disputed portion had not become private
property prior to the enactment of Act No. 2874. Neither has petitioner alleged that
the disputed portion was not land on which a private right may be claimed under
any existing law at that time.
In Republic of the Philippines v. Court of Appeals,[27] the Republic sought to annul
the judgment of the Court of First Instance (CFI) of Rizal, sitting as a land
registration court, because when the application for land registration was filed in
1927 the land was alleged to be unclassified forest land. The Republic also alleged
that the CFI of Rizal had no jurisdiction to determine whether the land applied for

was forest or agricultural land since the authority to classify lands was then vested
in the Director of Lands as provided in Act Nos. 926[28] and 2874. The Court ruled:
We are inclined to agree with the respondent that it is legally doubtful if the
authority of the Governor General to declare lands as alienable and disposable
would apply to lands that have become private property or lands that have been
impressed with a private right authorized and recognized by Act 2874 or any valid
law. By express declaration of Section 45 (b) of Act 2874 which is quoted above,
those who have been in open, continuous, exclusive and notorious possession and
occupation of agricultural lands of the public domain under a bona fide claim of
acquisition of ownership since July 26, 1894 may file an application with the Court of
First Instance of the province where the land is located for confirmation of their
claims and these applicants shall be conclusively presumed to have performed all
the conditions essential to a government grant and shall be entitled to a certificate
of title. When the land registration court issued a decision for the issuance of a
decree which was the basis of an original certificate of title to the land, the court
had already made a determination that the land was agricultural and that the
applicant had proven that he was in open and exclusive possession of the subject
land for the prescribed number of years. It was the land registration court which had
the jurisdiction to determine whether the land applied for was agricultural, forest or
timber taking into account the proof or evidence in each particular case. (Emphasis
supplied)
As with this case, when the trial court issued the decision for the issuance of Decree
No. 381928 in 1930, the trial court had jurisdiction to determine whether the subject
property, including the disputed portion, applied for was agricultural, timber or
mineral land. The trial court determined that the land was agricultural and that
spouses Carag proved that they were entitled to the decree and a certificate of title.
The government, which was a party in the original proceedings in the trial court as
required by law, did not appeal the decision of the trial court declaring the subject
land as agricultural. Since the trial court had jurisdiction over the subject matter of
the action, its decision rendered in 1930, or 78 years ago, is now final and beyond
review.
The finality of the trial court's decision is further recognized in Section 1, Article XII
of the 1935 Constitution which provides:
SECTION 1. All agricultural, timber, and mineral lands of the public domain, waters,
minerals, coal, petroleum, and other mineral oils, all forces of potential energy, and
other natural resources of the Philippines belong to the State, and their disposition,
exploitation, development, or utilization shall be limited to citizens of the
Philippines, or to corporations or associations at least sixty per centum of the
capital of which is owned by such citizens, subject to any existing right, grant, lease,
or concession at the time of the inauguration of the Government established under
this Constitution. (Emphasis supplied)
Thus, even as the 1935 Constitution declared that all agricultural, timber and
mineral lands of the public domain belong to the State, it recognized that these

lands were "subject to any existing right, grant, lease or concession at the time of
the inauguration of the Government established under this Constitution."[29] When
the Commonwealth Government was established under the 1935 Constitution,
spouses Carag had already an existing right to the subject land, including the
disputed portion, pursuant to Decree No. 381928 issued in 1930 by the trial court.
WHEREFORE, we DENY the petition. We DISMISS petitioner Republic of the
Philippines' complaint for reversion, annulment of decree, cancellation and
declaration of nullity of titles for lack of merit.
SO ORDERED.

THE SECRETARY OF THE DEPARTMENT OF ENVIRONMENT AND NATURAL

RESOURCES, THE REGIONAL EXECUTIVE DIRECTOR, DENR-REGION VI,
REGIONAL TECHNICAL DIRECTOR FOR LANDS, LANDS MANAGEMENT
BUREAU, REGION VI PROVINCIAL ENVIRONMENT AND NATURAL RESOURCES
OFFICER OF KALIBO, AKLAN, REGISTER OF DEEDS, DIRECTOR OF LAND
REGISTRATION AUTHORITY, DEPARTMENT OF TOURISM SECRETARY,
DIRECTOR OF PHILIPPINE TOURISM AUTHORITY, PETITIONERS, VS. MAYOR
JOSE S. YAP, LIBERTAD TALAPIAN, MILA Y. SUMNDAD, AND ANICETO YAP, IN
THEIR BEHALF AND IN BEHALF OF ALL THOSE SIMILARLY SITUATED,
RESPONDENTS.
G.R. NO. 173775
DR. ORLANDO SACAY AND WILFREDO GELITO, JOINED BY THE
LANDOWNERS OF BORACAY SIMILARLY SITUATED NAMED IN A LIST, ANNEX
"A" OF THIS PETITION, PETITIONERS, VS. THE SECRETARY OF THE
DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES, THE REGIONAL
TECHNICAL DIRECTOR FOR LANDS, LANDS MANAGEMENT BUREAU, REGION
VI, PROVINCIAL ENVIRONMENT AND NATURAL RESOURCES OFFICER,
KALIBO, AKLAN, RESPONDENTS.
DECISION
REYES, R.T., J.:
AT stake in these consolidated cases is the right of the present occupants of
Boracay Island to secure titles over their occupied lands.
There are two consolidated petitions. The first is G.R. No. 167707, a petition for
review on certiorari of the Decision[1] of the Court of Appeals (CA) affirming that[2]
of the Regional Trial Court (RTC) in Kalibo, Aklan, which granted the petition for

declaratory relief filed by respondents-claimants Mayor Jose Yap, et al. and ordered
the survey of Boracay for titling purposes. The second is G.R. No. 173775, a petition
for prohibition, mandamus, and nullification of Proclamation No. 1064[3] issued by
President Gloria Macapagal-Arroyo classifying Boracay into reserved forest and
agricultural land.
The Antecedents
G.R. No. 167707
Boracay Island in the Municipality of Malay, Aklan, with its powdery white sand
beaches and warm crystalline waters, is reputedly a premier Philippine tourist
destination. The island is also home to 12,003 inhabitants[4] who live in the boneshaped island's three barangays.[5]
On April 14, 1976, the Department of Environment and Natural Resources (DENR)
approved the National Reservation Survey of Boracay Island,[6] which identified
several lots as being occupied or claimed by named persons.[7]
On November 10, 1978, then President Ferdinand Marcos issued Proclamation No.
1801[8] declaring Boracay Island, among other islands, caves and peninsulas in the
Philippines, as tourist zones and marine reserves under the administration of the
Philippine Tourism Authority (PTA). President Marcos later approved the issuance of
PTA Circular 3-82[9] dated September 3, 1982, to implement Proclamation No.
1801.
Claiming that Proclamation No. 1801 and PTA Circular No 3-82 precluded them from
filing an application for judicial confirmation of imperfect title or survey of land for
titling purposes, respondents-claimants
Mayor Jose S. Yap, Jr., Libertad Talapian, Mila Y. Sumndad, and Aniceto Yap filed a
petition for declaratory relief with the RTC in Kalibo, Aklan.
In their petition, respondents-claimants alleged that Proclamation No. 1801 and PTA
Circular No. 3-82 raised doubts on their right to secure titles over their occupied
lands. They declared that they themselves, or through their predecessors-ininterest, had been in open, continuous, exclusive, and notorious possession and
occupation in Boracay since June 12, 1945, or earlier since time immemorial. They
declared their lands for tax purposes and paid realty taxes on them.[10]
Respondents-claimants posited that Proclamation No. 1801 and its implementing
Circular did not place Boracay beyond the commerce of man. Since the Island was
classified as a tourist zone, it was susceptible of private ownership. Under Section
48(b) of Commonwealth Act (CA) No. 141, otherwise known as the Public Land Act,

they had the right to have the lots registered in their names through judicial
confirmation of imperfect titles.
The Republic, through the Office of the Solicitor General (OSG), opposed the petition
for declaratory relief. The OSG countered that Boracay Island was an unclassified
land of the public domain. It formed part of the mass of lands classified as "public
forest," which was not available for disposition pursuant to Section 3(a) of
Presidential Decree (PD) No. 705 or the Revised Forestry Code,[11] as amended.
The OSG maintained that respondents-claimants' reliance on PD No. 1801 and PTA
Circular No. 3-82 was misplaced. Their right to judicial confirmation of title was
governed by CA No. 141 and PD No. 705. Since Boracay Island had not been
classified as alienable and disposable, whatever possession they had cannot ripen
into ownership.
During pre-trial, respondents-claimants and the OSG stipulated on the following
facts: (1) respondents-claimants were presently in possession of parcels of land in
Boracay Island; (2) these parcels of land were planted with coconut trees and other
natural growing trees; (3) the coconut trees had heights of more or less twenty (20)
meters and were planted more or less fifty (50) years ago; and (4) respondentsclaimants declared the land they were occupying for tax purposes.[12]
The parties also agreed that the principal issue for resolution was purely legal:
whether Proclamation No. 1801 posed any legal hindrance or impediment to the
titling of the lands in Boracay. They decided to forego with the trial and to submit
the case for resolution upon submission of their respective memoranda.[13]
The RTC took judicial notice[14] that certain parcels of land in Boracay Island, more
particularly Lots 1 and 30, Plan PSU-5344, were covered by Original Certificate of
Title No. 19502 (RO 2222) in the name of the Heirs of Ciriaco S. Tirol. These lots
were involved in Civil Case Nos. 5222 and 5262 filed before the RTC of Kalibo, Aklan.
[15] The titles were issued on August 7, 1933.[16]
RTC and CA Dispositions
On July 14, 1999, the RTC rendered a decision in favor of respondents-claimants,
with a fallo reading:
WHEREFORE, in view of the foregoing, the Court declares that Proclamation No.
1801 and PTA Circular No. 3-82 pose no legal obstacle to the petitioners and those
similarly situated to acquire title to their lands in Boracay, in accordance with the
applicable laws and in the manner prescribed therein; and to have their lands
surveyed and approved by respondent Regional Technical Director of Lands as the
approved survey does not in itself constitute a title to the land.

SO ORDERED.[17]
The RTC upheld respondents-claimants' right to have their occupied lands titled in
their name. It ruled that neither Proclamation No. 1801 nor PTA Circular No. 3-82
mentioned that lands in Boracay were inalienable or could not be the subject of
disposition.[18] The Circular itself recognized private ownership of lands.[19] The
trial court cited Sections 87[20] and 53[21] of the Public Land Act as basis for
acknowledging private ownership of lands in Boracay and that only those forested
areas in public lands were declared as part of the forest reserve.[22]
The OSG moved for reconsideration but its motion was denied.[23] The Republic
then appealed to the CA.
On December 9, 2004, the appellate court affirmed in toto the RTC decision,
disposing as follows:
WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us
DENYING the appeal filed in this case and AFFIRMING the decision of the lower
court.[24]
The CA held that respondents-claimants could not be prejudiced by a declaration
that the lands they occupied since time immemorial were part of a forest reserve.
Again, the OSG sought reconsideration but it was similarly denied.[25] Hence, the
present petition under Rule 45.
G.R. No. 173775
On May 22, 2006, during the pendency of G.R. No. 167707, President Gloria
Macapagal-Arroyo issued Proclamation No. 1064[26] classifying Boracay Island into
four hundred (400) hectares of reserved forest land (protection purposes) and six
hundred twenty-eight and 96/100 (628.96) hectares of agricultural land (alienable
and disposable). The Proclamation likewise provided for a fifteen-meter buffer zone
on each side of the centerline of roads and trails, reserved for right-of-way and
which shall form part of the area reserved for forest land protection purposes.
On August 10, 2006, petitioners-claimants Dr. Orlando Sacay,[27] Wilfredo Gelito,
[28] and other landowners[29] in Boracay filed with this Court an original petition
for prohibition, mandamus, and nullification of Proclamation No. 1064.[30] They
allege that the Proclamation infringed on their "prior vested rights" over portions of
Boracay. They have been in continued possession of their respective lots in Boracay
since time immemorial. They have also invested billions of pesos in developing their
lands and building internationally renowned first class resorts on their lots.[31]
Petitioners-claimants contended that there is no need for a proclamation
reclassifying Boracay into agricultural land. Being classified as neither mineral nor

timber land, the island is deemed agricultural pursuant to the Philippine Bill of 1902
and Act No. 926, known as the first Public Land Act.[32] Thus, their possession in
the concept of owner for the required period entitled them to judicial confirmation of
imperfect title.
Opposing the petition, the OSG argued that petitioners-claimants do not have a
vested right over their occupied portions in the island. Boracay is an unclassified
public forest land pursuant to Section 3(a) of PD No. 705. Being public forest, the
claimed portions of the island are inalienable and cannot be the subject of judicial
confirmation of imperfect title. It is only the executive department, not the courts,
which has authority to reclassify lands of the public domain into alienable and
disposable lands. There is a need for a positive government act in order to release
the lots for disposition.
On November 21, 2006, this Court ordered the consolidation of the two petitions as
they principally involve the same issues on the land classification of Boracay Island.
[33]
Issues
G.R. No. 167707
The OSG raises the lone issue of whether Proclamation No. 1801 and PTA Circular
No. 3-82 pose any legal obstacle for respondents, and all those similarly situated, to
acquire title to their occupied lands in Boracay Island.[34]
G.R. No. 173775
Petitioners-claimants hoist five (5) issues, namely:
I.
AT THE TIME OF THE ESTABLISHED POSSESSION OF PETITIONERS IN CONCEPT OF
OWNER OVER THEIR RESPECTIVE AREAS IN BORACAY, SINCE TIME IMMEMORIAL OR
AT THE LATEST SINCE 30 YRS. PRIOR TO THE FILING OF THE PETITION FOR
DECLARATORY RELIEF ON NOV. 19, 1997, WERE THE AREAS OCCUPIED BY THEM
PUBLIC AGRICULTURAL LANDS AS DEFINED BY LAWS THEN ON JUDICIAL
CONFIRMATION OF IMPERFECT TITLES OR PUBLIC FOREST AS DEFINED BY SEC. 3a,
PD 705?
II.
HAVE PETITIONERS OCCUPANTS ACQUIRED PRIOR VESTED RIGHT OF PRIVATE
OWNERSHIP OVER THEIR OCCUPIED PORTIONS OF BORACAY LAND, DESPITE THE

FACT THAT THEY HAVE NOT APPLIED YET FOR JUDICIAL CONFIRMATION OF
IMPERFECT TITLE?
III.
IS THE EXECUTIVE DECLARATION OF THEIR AREAS AS ALIENABLE AND DISPOSABLE
UNDER SEC 6, CA 141 [AN] INDISPENSABLE PRE-REQUISITE FOR PETITIONERS TO
OBTAIN TITLE UNDER THE TORRENS SYSTEM?
IV.

IS THE ISSUANCE OF PROCLAMATION 1064 ON MAY 22, 2006, VIOLATIVE OF THE

PRIOR VESTED RIGHTS TO PRIVATE OWNERSHIP OF PETITIONERS OVER THEIR
LANDS IN BORACAY, PROTECTED BY THE DUE PROCESS CLAUSE OF THE
CONSTITUTION OR IS PROCLAMATION 1064 CONTRARY TO SEC. 8, CA 141, OR SEC.
4(a) OF RA 6657.
V.

CAN RESPONDENTS BE COMPELLED BY MANDAMUS TO ALLOW THE SURVEY AND TO

APPROVE THE SURVEY PLANS FOR PURPOSES OF THE APPLICATION FOR TITLING OF
THE LANDS OF PETITIONERS IN BORACAY?[35] (Underscoring supplied)
In capsule, the main issue is whether private claimants (respondents-claimants in
G.R. No. 167707 and petitioners-claimants in G.R. No. 173775) have a right to
secure titles over their occupied portions in Boracay. The twin petitions pertain to
their right, if any, to judicial confirmation of imperfect title under CA No. 141, as
amended. They do not involve their right to secure title under other pertinent laws.
Our Ruling
Regalian Doctrine and power of the executive
to reclassify lands of the public domain
Private claimants rely on three (3) laws and executive acts in their bid for judicial
confirmation of imperfect title, namely: (a) Philippine Bill of 1902[36] in relation to
Act No. 926, later amended and/or superseded by Act No. 2874 and CA No. 141;[37]
(b) Proclamation No. 1801[38] issued by then President Marcos; and (c)
Proclamation No. 1064[39] issued by President Gloria Macapagal-Arroyo. We shall
proceed to determine their rights to apply for judicial confirmation of imperfect title
under these laws and executive acts.

But first, a peek at the Regalian principle and the power of the executive to
reclassify lands of the public domain.
The 1935 Constitution classified lands of the public domain into agricultural, forest
or timber.[40] Meanwhile, the 1973 Constitution provided the following divisions:
agricultural, industrial or commercial, residential, resettlement, mineral, timber or
forest and grazing lands, and such other classes as may be provided by law,[41]
giving the government great leeway for classification.[42] Then the 1987
Constitution reverted to the 1935 Constitution classification with one addition:
national parks.[43] Of these, only agricultural lands may be alienated.[44] Prior to
Proclamation No. 1064 of May 22, 2006, Boracay Island had never been expressly
and administratively classified under any of these grand divisions. Boracay was an
unclassified land of the public domain.
The Regalian Doctrine dictates that all lands of the public domain belong to the
State, that the State is the source of any asserted right to ownership of land and
charged with the conservation of such patrimony.[45] The doctrine has been
consistently adopted under the 1935, 1973, and 1987 Constitutions.[46]
All lands not otherwise appearing to be clearly within private ownership are
presumed to belong to the State.[47] Thus, all lands that have not been acquired
from the government, either by purchase or by grant, belong to the State as part of
the inalienable public domain.[48] Necessarily, it is up to the State to determine if
lands of the public domain will be disposed of for private ownership. The
government, as the agent of the state, is possessed of the plenary power as the
persona in law to determine who shall be the favored recipients of public lands, as
well as under what terms they may be granted such privilege, not excluding the
placing of obstacles in the way of their exercise of what otherwise would be ordinary
acts of ownership.[49]
Our present land law traces its roots to the Regalian Doctrine. Upon the Spanish
conquest of the Philippines, ownership of all lands, territories and possessions in the
Philippines passed to the Spanish Crown.[50] The Regalian doctrine was first
introduced in the Philippines through the Laws of the Indies and the Royal Cedulas,
which laid the foundation that "all lands that were not acquired from the
Government, either by purchase or by grant, belong to the public domain."[51]
The Laws of the Indies was followed by the Ley Hipotecaria or the Mortgage Law of
1893. The Spanish Mortgage Law provided for the systematic registration of titles
and deeds as well as possessory claims.[52]
The Royal Decree of 1894 or the Maura Law[53] partly amended the Spanish
Mortgage Law and the Laws of the Indies. It established possessory information as
the method of legalizing possession of vacant Crown land, under certain conditions

which were set forth in said decree.[54] Under Section 393 of the Maura Law, an
informacion posesoria or possessory information title,[55] when duly inscribed in
the Registry of Property, is converted into a title of ownership only after the lapse of
twenty (20) years of uninterrupted possession which must be actual, public, and
adverse,[56] from the date of its inscription.[57] However, possessory information
title had to be perfected one year after the promulgation of the Maura Law, or until
April 17, 1895. Otherwise, the lands would revert to the State.[58]
In sum, private ownership of land under the Spanish regime could only be founded
on royal concessions which took various forms, namely: (1) titulo real or royal grant;
(2) concesion especial or special grant; (3) composicion con el estado or adjustment
title; (4) titulo de compra or title by purchase; and (5) informacion posesoria or
possessory information title.[59]
The first law governing the disposition of public lands in the Philippines under
American rule was embodied in the Philippine Bill of 1902.[60] By this law, lands of
the public domain in the Philippine Islands were classified into three (3) grand
divisions, to wit: agricultural, mineral, and timber or forest lands.[61] The act
provided for, among others, the disposal of mineral lands by means of absolute
grant (freehold system) and by lease (leasehold system).[62] It also provided the
definition by exclusion of "agricultural public lands."[63] Interpreting the meaning of
"agricultural lands" under the Philippine Bill of 1902, the Court declared in Mapa v.
Insular Government:[64]
x x x In other words, that the phrase "agricultural land" as used in Act No. 926
means those public lands acquired from Spain which are not timber or mineral
lands. x x x[65] (Emphasis Ours)
On February 1, 1903, the Philippine Legislature passed Act No. 496, otherwise
known as the Land Registration Act. The act established a system of registration by
which recorded title becomes absolute, indefeasible, and imprescriptible. This is
known as the Torrens system.[66]
Concurrently, on October 7, 1903, the Philippine Commission passed Act No. 926,
which was the first Public Land Act. The Act introduced the homestead system and
made provisions for judicial and administrative confirmation of imperfect titles and
for the sale or lease of public lands. It permitted corporations regardless of the
nationality of persons owning the controlling stock to lease or purchase lands of the
public domain.[67] Under the Act, open, continuous, exclusive, and notorious
possession and occupation of agricultural lands for the next ten (10) years
preceding July 26, 1904 was sufficient for judicial confirmation of imperfect title.[68]
On November 29, 1919, Act No. 926 was superseded by Act No. 2874, otherwise
known as the second Public Land Act. This new, more comprehensive law limited
the exploitation of agricultural lands to Filipinos and Americans and citizens of other
countries which gave Filipinos the same privileges. For judicial confirmation of title,

possession and occupation en concepto dueo since time immemorial, or since July
26, 1894, was required.[69]
After the passage of the 1935 Constitution, CA No. 141 amended Act No. 2874 on
December 1, 1936. To this day, CA No. 141, as amended, remains as the existing
general law governing the classification and disposition of lands of the public
domain other than timber and mineral lands,[70] and privately owned lands which
reverted to the State.[71]
Section 48(b) of CA No. 141 retained the requirement under Act No. 2874 of
possession and occupation of lands of the public domain since time immemorial or
since July 26, 1894. However, this provision was superseded by Republic Act (RA)
No. 1942,[72] which provided for a simple thirty-year prescriptive period for judicial
confirmation of imperfect title. The provision was last amended by PD No. 1073,[73]
which now provides for possession and occupation of the land applied for since June
12, 1945, or earlier.[74]
The issuance of PD No. 892[75] on February 16, 1976 discontinued the use of
Spanish titles as evidence in land registration proceedings.[76] Under the decree, all
holders of Spanish titles or grants should apply for registration of their lands under
Act No. 496 within six (6) months from the effectivity of the decree on February 16,
1976. Thereafter, the recording of all unregistered lands[77] shall be governed by
Section 194 of the Revised Administrative Code, as amended by Act No. 3344.
On June 11, 1978, Act No. 496 was amended and updated by PD No. 1529, known
as the Property Registration Decree. It was enacted to codify the various laws
relative to registration of property.[78] It governs registration of lands under the
Torrens system as well as unregistered lands, including chattel mortgages.[79]
A positive act declaring land as alienable and disposable is required. In keeping with
the presumption of State ownership, the Court has time and again emphasized that
there must be a positive act of the government, such as an official proclamation,
[80] declassifying inalienable public land into disposable land for agricultural or
other purposes.[81] In fact, Section 8 of CA No. 141 limits alienable or disposable
lands only to those lands which have been "officially delimited and classified."[82]
The burden of proof in overcoming the presumption of State ownership of the lands
of the public domain is on the person applying for registration (or claiming
ownership), who must prove that the land subject of the application is alienable or
disposable.[83] To overcome this presumption, incontrovertible evidence must be
established that the land subject of the application (or claim) is alienable or
disposable.[84] There must still be a positive act declaring land of the public domain
as alienable and disposable. To prove that the land subject of an application for
registration is alienable, the applicant must establish the existence of a positive act

of the government such as a presidential proclamation or an executive order; an

administrative action; investigation reports of Bureau of Lands investigators; and a
legislative act or a statute.[85] The applicant may also secure a certification from
the government that the land claimed to have been possessed for the required
number of years is alienable and disposable.[86]
In the case at bar, no such proclamation, executive order, administrative action,
report, statute, or certification was presented to the Court. The records are bereft of
evidence showing that, prior to 2006, the portions of Boracay occupied by private
claimants were subject of a government proclamation that the land is alienable and
disposable. Absent such well-nigh incontrovertible evidence, the Court cannot
accept the submission that lands occupied by private claimants were already open
to disposition before 2006. Matters of land classification or reclassification cannot
be assumed. They call for proof.[87]
Ankron and De Aldecoa did not make the whole of Boracay Island, or portions of it,
agricultural lands. Private claimants posit that Boracay was already an agricultural
land pursuant to the old cases Ankron v. Government of the Philippine Islands
(1919)[88] and De Aldecoa v. The Insular Government (1909).[89] These cases were
decided under the provisions of the Philippine Bill of 1902 and Act No. 926. There is
a statement in these old cases that "in the absence of evidence to the contrary, that
in each case the lands are agricultural lands until the contrary is shown."[90]
Private claimants' reliance on Ankron and De Aldecoa is misplaced. These cases did
not have the effect of converting the whole of Boracay Island or portions of it into
agricultural lands. It should be stressed that the Philippine Bill of 1902 and Act No.
926 merely provided the manner through which land registration courts would
classify lands of the public domain. Whether the land would be classified as timber,
mineral, or agricultural depended on proof presented in each case.
Ankron and De Aldecoa were decided at a time when the President of the Philippines
had no power to classify lands of the public domain into mineral, timber, and
agricultural. At that time, the courts were free to make corresponding classifications
in justiciable cases, or were vested with implicit power to do so, depending upon the
preponderance of the evidence.[91] This was the Court's ruling in Heirs of the Late
Spouses Pedro S. Palanca and Soterranea Rafols Vda. De Palanca v. Republic,[92] in
which it stated, through Justice Adolfo Azcuna, viz.:
x x x Petitioners furthermore insist that a particular land need not be formally
released by an act of the Executive before it can be deemed open to private
ownership, citing the cases of Ramos v. Director of Lands and Ankron v. Government
of the Philippine Islands.
xxxx

Petitioner's reliance upon Ramos v. Director of Lands and Ankron v. Government is

misplaced. These cases were decided under the Philippine Bill of 1902 and the first
Public Land Act No. 926 enacted by the Philippine Commission on October 7, 1926,
under which there was no legal provision vesting in the Chief Executive or President
of the Philippines the power to classify lands of the public domain into mineral,
timber and agricultural so that the courts then were free to make corresponding
classifications in justiciable cases, or were vested with implicit power to do so,
depending upon the preponderance of the evidence.[93]
To aid the courts in resolving land registration cases under Act No. 926, it was then
necessary to devise a presumption on land classification. Thus evolved the dictum
in Ankron that "the courts have a right to presume, in the absence of evidence to
the contrary, that in each case the lands are agricultural lands until the contrary is
shown."[94]
But We cannot unduly expand the presumption in Ankron and De Aldecoa to an
argument that all lands of the public domain had been automatically reclassified as
disposable and alienable agricultural lands. By no stretch of imagination did the
presumption convert all lands of the public domain into agricultural lands.
If We accept the position of private claimants, the Philippine Bill of 1902 and Act No.
926 would have automatically made all lands in the Philippines, except those
already classified as timber or mineral land, alienable and disposable lands. That
would take these lands out of State ownership and worse, would be utterly
inconsistent with and totally repugnant to the long-entrenched Regalian doctrine.
The presumption in Ankron and De Aldecoa attaches only to land registration cases
brought under the provisions of Act No. 926, or more specifically those cases
dealing with judicial and administrative confirmation of imperfect titles. The
presumption applies to an applicant for judicial or administrative conformation of
imperfect title under Act No. 926. It certainly cannot apply to landowners, such as
private claimants or their predecessors-in-interest, who failed to avail themselves of
the benefits of Act No. 926. As to them, their land remained unclassified and, by
virtue of the Regalian doctrine, continued to be owned by the State.
In any case, the assumption in Ankron and De Aldecoa was not absolute. Land
classification was, in the end, dependent on proof. If there was proof that the land
was better suited for non-agricultural uses, the courts could adjudge it as a mineral
or timber land despite the presumption. In Ankron, this Court stated:
In the case of Jocson vs. Director of Forestry (supra), the Attorney-General admitted
in effect that whether the particular land in question belongs to one class or another
is a question of fact. The mere fact that a tract of land has trees upon it or has
mineral within it is not of itself sufficient to declare that one is forestry land and the
other, mineral land. There must be some proof of the extent and present or future
value of the forestry and of the minerals. While, as we have just said, many

definitions have been given for "agriculture," "forestry," and "mineral" lands, and
that in each case it is a question of fact, we think it is safe to say that in order to be
forestry or mineral land the proof must show that it is more valuable for the forestry
or the mineral which it contains than it is for agricultural purposes. (Sec. 7, Act No.
1148.) It is not sufficient to show that there exists some trees upon the land or that
it bears some mineral. Land may be classified as forestry or mineral today, and, by
reason of the exhaustion of the timber or mineral, be classified as agricultural land
tomorrow. And vice-versa, by reason of the rapid growth of timber or the discovery
of valuable minerals, lands classified as agricultural today may be differently
classified tomorrow. Each case must be decided upon the proof in that particular
case, having regard for its present or future value for one or the other purposes. We
believe, however, considering the fact that it is a matter of public knowledge that a
majority of the lands in the Philippine Islands are agricultural lands that the courts
have a right to presume, in the absence of evidence to the contrary, that in each
case the lands are agricultural lands until the contrary is shown. Whatever the land
involved in a particular land registration case is forestry or mineral land must,
therefore, be a matter of proof. Its superior value for one purpose or the other is a
question of fact to be settled by the proof in each particular case. The fact that the
land is a manglar [mangrove swamp] is not sufficient for the courts to decide
whether it is agricultural, forestry, or mineral land. It may perchance belong to one
or the other of said classes of land. The Government, in the first instance, under the
provisions of Act No. 1148, may, by reservation, decide for itself what portions of
public land shall be considered forestry land, unless private interests have
intervened before such reservation is made. In the latter case, whether the land is
agricultural, forestry, or mineral, is a question of proof. Until private interests have
intervened, the Government, by virtue of the terms of said Act (No. 1148), may
decide for itself what portions of the "public domain" shall be set aside and reserved
as forestry or mineral land. (Ramos vs. Director of Lands, 39 Phil. 175; Jocson vs.
Director of Forestry, supra)[95] (Emphasis ours)
Since 1919, courts were no longer free to determine the classification of lands from
the facts of each case, except those that have already became private lands.[96]
Act No. 2874, promulgated in 1919 and reproduced in Section 6 of CA No. 141, gave
the Executive Department, through the President, the exclusive prerogative to
classify or reclassify public lands into alienable or disposable, mineral or forest.96-a
Since then, courts no longer had the authority, whether express or implied, to
determine the classification of lands of the public domain.[97]
Here, private claimants, unlike the Heirs of Ciriaco Tirol who were issued their title in
1933,[98] did not present a justiciable case for determination by the land
registration court of the property's land classification. Simply put, there was no
opportunity for the courts then to resolve if the land the Boracay occupants are now
claiming were agricultural lands. When Act No. 926 was supplanted by Act No. 2874
in 1919, without an application for judicial confirmation having been filed by private
claimants or their predecessors-in-interest, the courts were no longer authorized to

determine the property's land classification. Hence, private claimants cannot bank
on Act No. 926.
We note that the RTC decision[99] in G.R. No. 167707 mentioned Krivenko v.
Register of Deeds of Manila,[100] which was decided in 1947 when CA No. 141,
vesting the Executive with the sole power to classify lands of the public domain was
already in effect. Krivenko cited the old cases Mapa v. Insular Government,[101] De
Aldecoa v. The Insular Government,[102] and Ankron v. Government of the
Philippine Islands.[103]
Krivenko, however, is not controlling here because it involved a totally different
issue. The pertinent issue in Krivenko was whether residential lots were included in
the general classification of agricultural lands; and if so, whether an alien could
acquire a residential lot. This Court ruled that as an alien, Krivenko was prohibited
by the 1935 Constitution[104] from acquiring agricultural land, which included
residential lots. Here, the issue is whether unclassified lands of the public domain
are automatically deemed agricultural.
Notably, the definition of "agricultural public lands" mentioned in Krivenko relied on
the old cases decided prior to the enactment of Act No. 2874, including Ankron and
De Aldecoa.[105] As We have already stated, those cases cannot apply here, since
they were decided when the Executive did not have the authority to classify lands
as agricultural, timber, or mineral.
Private claimants' continued possession under Act No. 926 does not create a
presumption that the land is alienable. Private claimants also contend that their
continued possession of portions of Boracay Island for the requisite period of ten
(10) years under Act No. 926[106] ipso facto converted the island into private
ownership. Hence, they may apply for a title in their name.
A similar argument was squarely rejected by the Court in Collado v. Court of
Appeals.[107] Collado, citing the separate opinion of now Chief Justice Reynato S.
Puno in Cruz v. Secretary of Environment and Natural Resources,107-a ruled:
"Act No. 926, the first Public Land Act, was passed in pursuance of the provisions of
the Philippine Bill of 1902. The law governed the disposition of lands of the public
domain. It prescribed rules and regulations for the homesteading, selling and
leasing of portions of the public domain of the Philippine Islands, and prescribed the
terms and conditions to enable persons to perfect their titles to public lands in the
Islands. It also provided for the "issuance of patents to certain native settlers upon
public lands," for the establishment of town sites and sale of lots therein, for the
completion of imperfect titles, and for the cancellation or confirmation of Spanish
concessions and grants in the Islands." In short, the Public Land Act operated on the
assumption that title to public lands in the Philippine Islands remained in the
government; and that the government's title to public land sprung from the Treaty

of Paris and other subsequent treaties between Spain and the United States. The
term "public land" referred to all lands of the public domain whose title still
remained in the government and are thrown open to private appropriation and
settlement, and excluded the patrimonial property of the government and the friar
lands."
Thus, it is plain error for petitioners to argue that under the Philippine Bill of 1902
and Public Land Act No. 926, mere possession by private individuals of lands creates
the legal presumption that the lands are alienable and disposable.[108] (Emphasis
Ours)
Except for lands already covered by existing titles, Boracay was an unclassified land
of the public domain prior to Proclamation No. 1064. Such unclassified lands are
considered public forest under PD No. 705. The DENR[109] and the National
Mapping and Resource Information Authority[110] certify that Boracay Island is an
unclassified land of the public domain.
PD No. 705 issued by President Marcos categorized all unclassified lands of the
public domain as public forest. Section 3(a) of PD No. 705 defines a public forest as
"a mass of lands of the public domain which has not been the subject of the present
system of classification for the determination of which lands are needed for forest
purpose and which are not." Applying PD No. 705, all unclassified lands, including
those in Boracay Island, are ipso facto considered public forests. PD No. 705,
however, respects titles already existing prior to its effectivity.
The Court notes that the classification of Boracay as a forest land under PD No. 705
may seem to be out of touch with the present realities in the island. Boracay, no
doubt, has been partly stripped of its forest cover to pave the way for commercial
developments. As a premier tourist destination for local and foreign tourists,
Boracay appears more of a commercial island resort, rather than a forest land.
Nevertheless, that the occupants of Boracay have built multi-million peso beach
resorts on the island;[111] that the island has already been stripped of its forest
cover; or that the implementation of Proclamation No. 1064 will destroy the island's
tourism industry, do not negate its character as public forest.
Forests, in the context of both the Public Land Act and the Constitution[112]
classifying lands of the public domain into "agricultural, forest or timber, mineral
lands, and national parks," do not necessarily refer to large tracts of wooded land or
expanses covered by dense growths of trees and underbrushes.[113] The discussion
in Heirs of Amunategui v. Director of Forestry[114] is particularly instructive:
A forested area classified as forest land of the public domain does not lose such
classification simply because loggers or settlers may have stripped it of its forest
cover. Parcels of land classified as forest land may actually be covered with grass or
planted to crops by kaingin cultivators or other farmers. "Forest lands" do not have
to be on mountains or in out of the way places. Swampy areas covered by

mangrove trees, nipa palms, and other trees growing in brackish or sea water may
also be classified as forest land. The classification is descriptive of its legal nature or
status and does not have to be descriptive of what the land actually looks like.
Unless and until the land classified as "forest" is released in an official proclamation
to that effect so that it may form part of the disposable agricultural lands of the
public domain, the rules on confirmation of imperfect title do not apply.[115]
(Emphasis supplied)
There is a big difference between "forest" as defined in a dictionary and "forest or
timber land" as a classification of lands of the public domain as appearing in our
statutes. One is descriptive of what appears on the land while the other is a legal
status, a classification for legal purposes.[116] At any rate, the Court is tasked to
determine the legal status of Boracay Island, and not look into its physical layout.
Hence, even if its forest cover has been replaced by beach resorts, restaurants and
other commercial establishments, it has not been automatically converted from
public forest to alienable agricultural land.
Private claimants cannot rely on Proclamation No. 1801 as basis for judicial
confirmation of imperfect title. The proclamation did not convert Boracay into an
agricultural land. However, private claimants argue that Proclamation No. 1801
issued by then President Marcos in 1978 entitles them to judicial confirmation of
imperfect title. The Proclamation classified Boracay, among other islands, as a
tourist zone. Private claimants assert that, as a tourist spot, the island is susceptible
of private ownership.

Proclamation No. 1801 or PTA Circular No. 3-82 did not convert the whole of Boracay
into an agricultural land. There is nothing in the law or the Circular which made
Boracay Island an agricultural land. The reference in Circular No. 3-82 to "private
lands"[117] and "areas declared as alienable and disposable"[118] does not by itself
classify the entire island as agricultural. Notably, Circular No. 3-82 makes reference
not only to private lands and areas but also to public forested lands. Rule VIII,
Section 3 provides:
No trees in forested private lands may be cut without prior authority from the PTA.
All forested areas in public lands are declared forest reserves. (Emphasis supplied)
Clearly, the reference in the Circular to both private and public lands merely
recognizes that the island can be classified by the Executive department pursuant
to its powers under CA No. 141. In fact, Section 5 of the Circular recognizes the then
Bureau of Forest Development's authority to declare areas in the island as alienable
and disposable when it provides:
Subsistence farming, in areas declared as alienable and disposable by the Bureau of
Forest Development.
Therefore, Proclamation No. 1801 cannot be deemed the positive act needed to
classify Boracay Island as alienable and disposable land. If President Marcos
intended to classify the island as alienable and disposable or forest, or both, he

would have identified the specific limits of each, as President Arroyo did in
Proclamation No. 1064. This was not done in Proclamation No. 1801.
The Whereas clauses of Proclamation No. 1801 also explain the rationale behind the
declaration of Boracay Island, together with other islands, caves and peninsulas in
the Philippines, as a tourist zone and marine reserve to be administered by the PTA
- to ensure the concentrated efforts of the public and private sectors in the
development of the areas' tourism potential with due regard for ecological balance
in the marine environment. Simply put, the proclamation is aimed at administering
the islands for tourism and ecological purposes. It does not address the areas'
alienability.[119]
More importantly, Proclamation No. 1801 covers not only Boracay Island, but sixtyfour (64) other islands, coves, and peninsulas in the Philippines, such as Fortune
and Verde Islands in Batangas, Port Galera in Oriental Mindoro, Panglao and
Balicasag Islands in Bohol, Coron Island, Puerto Princesa and surrounding areas in
Palawan, Camiguin Island in Cagayan de Oro, and Misamis Oriental, to name a few.
If the designation of Boracay Island as tourist zone makes it alienable and
disposable by virtue of Proclamation No. 1801, all the other areas mentioned would
likewise be declared wide open for private disposition. That could not have been,
and is clearly beyond, the intent of the proclamation.
It was Proclamation No. 1064 of 2006 which positively declared part of Boracay as
alienable and opened the same to private ownership. Sections 6 and 7 of CA No.
141[120] provide that it is only the President, upon the recommendation of the
proper department head, who has the authority to classify the lands of the public
domain into alienable or disposable, timber and mineral lands.[121]
In issuing Proclamation No. 1064, President Gloria Macapagal-Arroyo merely
exercised the authority granted to her to classify lands of the public domain,
presumably subject to existing vested rights. Classification of public lands is the
exclusive prerogative of the Executive Department, through the Office of the
President. Courts have no authority to do so.[122] Absent such classification, the
land remains unclassified until released and rendered open to disposition.[123]
Proclamation No. 1064 classifies Boracay into 400 hectares of reserved forest land
and 628.96 hectares of agricultural land. The Proclamation likewise provides for a
15-meter buffer zone on each side of the center line of roads and trails, which are
reserved for right of way and which shall form part of the area reserved for forest
land protection purposes.
Contrary to private claimants' argument, there was nothing invalid or irregular,
much less unconstitutional, about the classification of Boracay Island made by the

President through Proclamation No. 1064. It was within her authority to make such
classification, subject to existing vested rights.
Proclamation No. 1064 does not violate the Comprehensive Agrarian Reform Law.
Private claimants further assert that Proclamation No. 1064 violates the provision of
the Comprehensive Agrarian Reform Law (CARL) or RA No. 6657 barring conversion
of public forests into agricultural lands. They claim that since Boracay is a public
forest under PD No. 705, President Arroyo can no longer convert it into an
agricultural land without running afoul of Section 4(a) of RA No. 6657, thus:
SEC. 4. Scope. - The Comprehensive Agrarian Reform Law of 1988 shall cover,
regardless of tenurial arrangement and commodity produced, all public and private
agricultural lands as provided in Proclamation No. 131 and Executive Order No. 229,
including other lands of the public domain suitable for agriculture.
More specifically, the following lands are covered by the Comprehensive Agrarian
Reform Program:
(a) All alienable and disposable lands of the public domain devoted to or suitable for
agriculture. No reclassification of forest or mineral lands to agricultural lands shall
be undertaken after the approval of this Act until Congress, taking into account
ecological, developmental and equity considerations, shall have determined by law,
the specific limits of the public domain.
That Boracay Island was classified as a public forest under PD No. 705 did not bar
the Executive from later converting it into agricultural land. Boracay Island still
remained an unclassified land of the public domain despite PD No. 705.
In Heirs of the Late Spouses Pedro S. Palanca and Soterranea Rafols v. Republic,
[124] the Court stated that unclassified lands are public forests.
While it is true that the land classification map does not categorically state that the
islands are public forests, the fact that they were unclassified lands leads to the
same result. In the absence of the classification as mineral or timber land, the land
remains unclassified land until released and rendered open to disposition.[125]
(Emphasis supplied)
Moreover, the prohibition under the CARL applies only to a "reclassification" of land.
If the land had never been previously classified, as in the case of Boracay, there can
be no prohibited reclassification under the agrarian law. We agree with the opinion
of the Department of Justice[126] on this point:
Indeed, the key word to the correct application of the prohibition in Section 4(a) is
the word "reclassification." Where there has been no previous classification of public
forest [referring, we repeat, to the mass of the public domain which has not been
the subject of the present system of classification for purposes of determining which
are needed for forest purposes and which are not] into permanent forest or forest
reserves or some other forest uses under the Revised Forestry Code, there can be
no "reclassification of forest lands" to speak of within the meaning of Section 4(a).

Thus, obviously, the prohibition in Section 4(a) of the CARL against the
reclassification of forest lands to agricultural lands without a prior law delimiting the
limits of the public domain, does not, and cannot, apply to those lands of the public
domain, denominated as "public forest" under the Revised Forestry Code, which
have not been previously determined, or classified, as needed for forest purposes in
accordance with the provisions of the Revised Forestry Code.[127]
Private claimants are not entitled to apply for judicial confirmation of imperfect title
under CA No. 141. Neither do they have vested rights over the occupied lands under
the said law. There are two requisites for judicial confirmation of imperfect or
incomplete title under CA No. 141, namely: (1) open, continuous, exclusive, and
notorious possession and occupation of the subject land by himself or through his
predecessors-in-interest under a bona fide claim of ownership since time
immemorial or from June 12, 1945; and (2) the classification of the land as alienable
and disposable land of the public domain.[128]
As discussed, the Philippine Bill of 1902, Act No. 926, and Proclamation No. 1801 did
not convert portions of Boracay Island into an agricultural land. The island remained
an unclassified land of the public domain and, applying the Regalian doctrine, is
considered State property.
Private claimants' bid for judicial confirmation of imperfect title, relying on the
Philippine Bill of 1902, Act No. 926, and Proclamation No. 1801, must fail because of
the absence of the second element of alienable and disposable land. Their
entitlement to a government grant under our present Public Land Act presupposes
that the land possessed and applied for is already alienable and disposable. This is
clear from the wording of the law itself.[129] Where the land is not alienable and
disposable, possession of the land, no matter how long, cannot confer ownership or
possessory rights.[130]
Neither may private claimants apply for judicial confirmation of imperfect title under
Proclamation No. 1064, with respect to those lands which were classified as
agricultural lands. Private claimants failed to prove the first element of open,
continuous, exclusive, and notorious possession of their lands in Boracay since June
12, 1945.
We cannot sustain the CA and RTC conclusion in the petition for declaratory relief
that private claimants complied with the requisite period of possession.
The tax declarations in the name of private claimants are insufficient to prove the
first element of possession. We note that the earliest of the tax declarations in the
name of private claimants were issued in 1993. Being of recent dates, the tax
declarations are not sufficient to convince this Court that the period of possession
and occupation commenced on June 12, 1945.

Private claimants insist that they have a vested right in Boracay, having been in
possession of the island for a long time. They have invested millions of pesos in
developing the island into a tourist spot. They say their continued possession and
investments give them a vested right which cannot be unilaterally rescinded by
Proclamation No. 1064.
The continued possession and considerable investment of private claimants do not
automatically give them a vested right in Boracay. Nor do these give them a right to
apply for a title to the land they are presently occupying. This Court is
constitutionally bound to decide cases based on the evidence presented and the
laws applicable. As the law and jurisprudence stand, private claimants are ineligible
to apply for a judicial confirmation of title over their occupied portions in Boracay
even with their continued possession and considerable investment in the island.
One Last Note
The Court is aware that millions of pesos have been invested for the development of
Boracay Island, making it a by-word in the local and international tourism industry.
The Court also notes that for a number of years, thousands of people have called
the island their home. While the Court commiserates with private claimants' plight,
We are bound to apply the law strictly and judiciously. This is the law and it should
prevail. Ito ang batas at ito ang dapat umiral.
All is not lost, however, for private claimants. While they may not be eligible to
apply for judicial confirmation of imperfect title under Section 48(b) of CA No. 141,
as amended, this does not denote their automatic ouster from the residential,
commercial, and other areas they possess now classified as agricultural. Neither will
this mean the loss of their substantial investments on their occupied alienable
lands. Lack of title does not necessarily mean lack of right to possess.
For one thing, those with lawful possession may claim good faith as builders of
improvements. They can take steps to preserve or protect their possession. For
another, they may look into other modes of applying for original registration of title,
such as by homestead[131] or sales patent,[132] subject to the conditions imposed
by law.
More realistically, Congress may enact a law to entitle private claimants to acquire
title to their occupied lots or to exempt them from certain requirements under the
present land laws. There is one such bill[133] now pending in the House of
Representatives. Whether that bill or a similar bill will become a law is for Congress
to decide.
In issuing Proclamation No. 1064, the government has taken the step necessary to
open up the island to private ownership. This gesture may not be sufficient to

appease some sectors which view the classification of the island partially into a
forest reserve as absurd. That the island is no longer overrun by trees, however,
does not becloud the vision to protect its remaining forest cover and to strike a
healthy balance between progress and ecology. Ecological conservation is as
important as economic progress.
To be sure, forest lands are fundamental to our nation's survival. Their promotion
and protection are not just fancy rhetoric for politicians and activists. These are
needs that become more urgent as destruction of our environment gets prevalent
and difficult to control. As aptly observed by Justice Conrado Sanchez in 1968 in
Director of Forestry v. Munoz:[134]
The view this Court takes of the cases at bar is but in adherence to public policy
that should be followed with respect to forest lands. Many have written much, and
many more have spoken, and quite often, about the pressing need for forest
preservation, conservation, protection, development and reforestation. Not without
justification. For, forests constitute a vital segment of any country's natural
resources. It is of common knowledge by now that absence of the necessary green
cover on our lands produces a number of adverse or ill effects of serious
proportions. Without the trees, watersheds dry up; rivers and lakes which they
supply are emptied of their contents. The fish disappear. Denuded areas become
dust bowls. As waterfalls cease to function, so will hydroelectric plants. With the
rains, the fertile topsoil is washed away; geological erosion results. With erosion
come the dreaded floods that wreak havoc and destruction to property - crops,
livestock, houses, and highways - not to mention precious human lives. Indeed, the
foregoing observations should be written down in a lumberman's decalogue.[135]
WHEREFORE, judgment is rendered as follows:
The petition for certiorari in G.R. No. 167707 is GRANTED and the Court of Appeals
Decision in CA-G.R. CV No. 71118 REVERSED AND SET ASIDE.
The petition for certiorari in G.R. No. 173775 is DISMISSED for lack of merit.
SO ORDERED.
g. Non-registrable properties
G.R. No. L-39473 April 30, 1979
REPUBLIC OF THE PHILIPPINES, petitioner,
vs.
HON. COURT OF APPEALS and ISABEL LASTIMADO, respondents.
Eduardo G. Makalintal for private respondent.

MELENCIO-HERRERA, J.:
This is a Petition for Review (Appeal) by certiorari filed by the Republic of the
Philippines from the Decision of the Court of Appeals promulgated on September 30,
1974 in CA-G.R. No. Sp-01504 denying the State's Petition for certiorari and
Mandamus.
Briefly, the facts of the case are as follows:
Private respondent, Isabel Lastimado, filed on September 11, 1967, in the Court of
First Instance of Bataan, Branch I, a Petition for the reopening of cadastral
proceedings over a portion of Lot No. 626 of the Mariveles Cadastre, consisting of
971.0569 hectares, pursuant to Republic Act No. 931, as amended by Republic Act
No. 2061, docketed as Cad. Case No. 19, LRC Cad. Rec. No. 1097. In the absence of
any opposition, whether from the Government or from private individuals, private
respondent was allowed to present her evidence ex-parte. On October 14, 1967, the
trial Court rendered a Decision granting the Petition and adjudicating the land in
favor of private respondent. The trial Court issued an order for the issuance of a
decree of registration on November 20, 1967, and on November 21, 1967, the Land
Registration Commission issued Decree No. N-117573 in favor of private
respondent. Eventually, Original Certificate of Title No. N-144 was also issued in her
favor. Private respondent thereafter subdivided the land into ten lots, and the
corresponding titles. Transfer Certificates of Title Nos. 18905 to 18914 inclusive,
were issued by the Register of Deeds.
On June 3, 1968, or within one year from the entry of the decree of registration,
petitioner filed a Petition for Review pursuant to Sec. 38, Act No. 496, on the ground
of fraud alleging that during the period of alleged adverse possession by private
respondent, said parcel of land was part of the U.S. Military Reservation in Bataan.
which was formally turned over to the Republic of the Philippines only on December
22, 1965, and that the same is inside the public forest of Mariveles, Bataan and,
therefore, not subject to disposition or acquisition under the Public Land Law.
Respondent field an Opposition thereto, which was considered by the trial Court, as
a Motion to Dismiss, and on December 20,1968, said Court (Judge Tito V. Tizon,
presiding) issued an Order dismissing the Petition for Review mainly on the ground
that the Solicitor General had failed to file opposition to the original Petition for
reopening of the cadastral proceedings and was, therefore, estopped from
questioning the decree of registration ordered issued therein. On January 28, 1969,
petitioner moved for reconsideration, which was denied by the trial Court in its
Order dated May 20, 1969, for lack of merit.
Petitioner seasonably filed a Notice of Appeal and a Record on Appeal, which was
objected to by private respondent. On July 15, 1972, or three years later, * the trial

Court (Judge Abraham P. Vera, presiding) refused to give due course to the appeal.
Petitioner filed a Motion for Reconsideration but the trial Court denied it in its Order
of October 14, 1972 on the ground that the proper remedy of petitioner was a
certiorari petition, not an ordinary appeal, and that the Order sought to be appealed
from had long become final and executory as petitioner's Motion for Reconsideration
was pro-forma and did not suspend the running of the reglementary period of
appeal.
On November 9, 1972, petitioner filed a Petition for certiorari and mandamus with
the Court of Appeals claiming that the trial Court gravely abused its discretion,
amounting to lack of jurisdiction when, without the benefit of hearing, it summarily
dismissed the Petition for Review; and since said Petition raised certain issues of
fact which cannot be decided except in a trial on the merits, the dismissal of the
Petition on the basis of private respondent's Opposition, considered as a Motion to
Dismiss, constituted a denial of due process of law. Petitioner then prayed that the
Order of the trial Court, dated December 20, 1968 dismissing the Petition for
Review, be declared null and void, and that said trial Court be directed to give due
course to the Petition for Review; or, in the alternative, to give due course to
petitioner's appeal.
On September 30, 1974, the Court of Appeals upheld the trial Court's dismissal of
the Petition for Review stating:
... We cannot find any allegation in the petition for review which shows that private
respondent had committed fraud against petitioner. Its representations and officials
were duly notified of private respondent's petition for reopening and registration of
title in her name. In said petition, the technical descriptions of the portion of Lot No.
626 of the Mariveles (Bataan) Cadastre, subject-matter of the petition were
expressly stated, the boundaries, specifically delineated. The alleged ground that
the land forms part of a forest land exists at the time petitioner was duly notified of
said petition. Failure to file opposition is in effect, an admission that the petition is
actually not part of a forest land. Indubitably, therefore, no justifiable reason exists
for the annulment of the Order, dated December 20, 1968 (Annex D-Petition) of the
lower court dismissing herein petitioner's petition for review of the decree issued in
favor of private respondent Lastimado. 1
The Court of Appeals then disposed as follows:
WHEREFORE, finding that the respondent Judge has not committed any grave abuse
of discretion amounting to lack of jurisdiction in the issuance of an Order, dated
December 20, 1968 (Annex D-Petition) dismissing herein petitioner's petition for
review, the present petition for review is hereby denied.

The issuance of the writ of mandamus as prayed for in the petition is no longer
necessary as this Court, in the exercise of its appellate jurisdiction and authority to
supervise orderly administration of justice, has already resolved on the merits the
question whether or not the dismissal of the petition for review had been done with
grave abuse of discretion amounting to lack of jurisdiction. 2
From this Decision, petitioner filed the present Petition for Review (Appeal) by
certiorari assigning the following errors to the Court of Appeals and to the trial
Court:
1.
The Lower Court as well as the Court of Appeals erred in finding that there
can be possession, even for the purpose of claiming title, of land which at the time
of possession is subject to a military reservation.
2.
The Lower Court as well as the Court of Appeals erred in finding that such
land which is subject to a government reservation, may appropriately be the subject
of cadastral proceedings, and hence. also of a petition to reopen cadastral
proceedings.
3.
The Lower Court as well as the Court of Appeals erred in finding that a parcel
of land which is part of the public forest is susceptible of occupation and registration
in favor of private individual.
4.
The Lower Court as well as the Court of Appeals erred in not finding that the
Republic of the Philippines is not estopped from questioning the decree of
registration and the title issued pursuant thereto in favor of respondent Lastimado
over the parcel of land in question.
5.
The Lower Court erred in dismissing the petition for review of the Republic of
the Philippines.
6.
The Court of Appeals erred in denying Petitioner's petition for certiorari and
mandamus.
Section 38 of the Land Registration Act (Act 496) provides:
Section 38. Decree of registration, and remedies after entry of decree.
If the court after hearing finds that the applicant or adverse claimant has title as
stated in his application or adverse claim and proper for registration, a decree of
confirmation and 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 of 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 affect 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 by fraud to file in the competent Court of First Instance a petition for
review within one year after entry of the decree provided no innocent purchaser for
value has acquired an interest. ... 3
The essential elements for the allowance of the reopening or review of a decree are:
a) that the petitioner has a real and dominical right; b) that he has been deprived
thereof; c) through fraud; d) that the petition is filed within one year from the
issuance of the decree; and e) that the property has not as yet been transferred to
an innocent purchaser. 4
However, for fraud to justify the review of a decree, it must be extrinsic or collateral
and the facts upon which it is based have not been controverted or resolved in the
case where the judgment sought to be annulled was rendered. 5 The following
ruling spells out the difference between extrinsic and intrinsic fraud:
Extrinsic or collateral fraud, as distinguished from intrinsic fraud, connotes any
fraudulent scheme executed by a prevailing litigant "outside the trial of a case
against the defeated party, or his agents, attorneys or witnesses, whereby said
defeated party is prevented from presenting fully and fairly his side of the case."
But intrinsic fraud takes the form of "acts of a party in a litigation during the trial
such as the use of forged instruments or perjured testimony, which did not affect
the present action of the case, but did prevent a fair and just determination of the
case. 6
The fraud is one that affects and goes into the jurisdiction of the Court. 7
In its Petition for Review filed before the trial Court, petitioner alleged that fraud was
committed by private respondent when she misrepresented that she and her
predecessors-in-interest had been in possession of the land publicly, peacefully,
exclusively and adversely against the whole world as owner for more than forty
years when, in fact, the subject land was in. side the former U.S. Military
Reservation, which was formally turned over to the Republic of the Philippines only
on December 22, 1965, and that she likewise contended that her rights, as derived
from the original and primitive occupants of the land in question, are capable of
judicial confirmation under existing laws, when the truth is, said parcel of land is
within the public forest of Mariveles, Bataan, and is not subject to disposition or
acquisition by private persons under the Public Land Law.

The trial Court ruled, and was upheld by the Court of Appeals, that no fraud was
committed by private respondent, which deprived petitioner of its day in Court as
there was no showing that she was aware of the facts alleged by the Government,
so that she could not have suppressed them with intent to deceive. The trial Court
also noted that petitioner had failed to file an opposition to the reopening of the
cadastral proceedings despite notices sent not only to the Solicitor General as
required by Republic Act No. 931. but to the Bureau of Lands and the Bureau of
Forestry as well. It then concluded that "the remedy granted by section 38 of the
Land Registration Act is designed to give relief to victims of fraud, not to those who
are victims of their own neglect, inaction or carelessness, especially when no
attempt is ever made to excuse or justify the neglect." With the foregoing as the
essential basis, the trial Court dismissed the Petition for Review.
We find reversible error. Although there was an agreement by the parties to submit
for resolution the Opposition to the Petition for Review, which was treated as a
motion to dismiss, the trial Court, in the exercise of sound judicial discretion, should
not have dismissed the Petition outright but should have afforded petitioner an
opportunity to present evidence in support of the facts alleged to constitute actual
and extrinsic fraud committed by private respondent. Thus, in the case of Republic
vs. Sioson, et al., 8 it was held that "the action of the lower Court in denying the
petition for review of a decree of registration filed within one year from entry of the
d without hearing the evidence in support of the allegation and claim that actual
and extrinsic fraud upon which the petition is predicated, is held to be in error,
because the lower Court should have afforded the petitioner an opportunity to prove
it."
If the allegation of petitioner that the land in question was inside the military
reservation at the time it was claimed is true, then, it cannot be the object of any
cadastral p nor can it be the object of reopening under Republic Act No. 931. 9
Similarly, if the land in question, indeed forms part of the public forest, then,
possession thereof, however long, cannot convert it into private property as it is
within the exclusive jurisdiction of the Bureau of Forestry and beyond the power and
jurisdiction of the Cadastral Court to register under the Torrens System. 10
Even assuming that the government agencies can be faulted for inaction and
neglect (although the Solicitor General claims that it received no notice), yet, the
same cannot operate to bar action by the State as it cannot be estopped by the
mistake or error of its officials or agents. 11 Further, we cannot lose sight of the
cardinal consideration that "the State as persona in law is the juridical entity, which
is the source of any asserted right to ownership in land" under basic Constitutional
Precepts, and that it is moreover charged with the conservation of such patrimony.
12

WHEREFORE, the Decision of the Court of Appeals dated September 30, 1974,
dismissing the Petition for certiorari and mandamus filed before it, as well as the
Order of the Court of First Instance of Bataan (Branch I) dated December 20, 1968,
dismissing the Petition for Review, are hereby set aside and the records of this case
hereby ed to the latter Court for further proceedings to enable petitioner to present
evidence in support of its Petition for Review.
No pronouncement as to costs.
SO ORDERED.

G.R. No. 92013

July 25, 1990

SALVADOR H. LAUREL, petitioner,

vs.
RAMON GARCIA, as head of the Asset Privatization Trust, RAUL
MANGLAPUS, as Secretary of Foreign Affairs, and CATALINO MACARAIG, as
Executive Secretary, respondents.
G.R. No. 92047

July 25, 1990

DIONISIO S. OJEDA, petitioner,

vs.
EXECUTIVE SECRETARY MACARAIG, JR., ASSETS PRIVATIZATION TRUST
CHAIRMAN RAMON T. GARCIA, AMBASSADOR RAMON DEL ROSARIO, et al.,
as members of the PRINCIPAL AND BIDDING COMMITTEES ON THE
UTILIZATION/DISPOSITION PETITION OF PHILIPPINE GOVERNMENT
PROPERTIES IN JAPAN, respondents.
Arturo M. Tolentino for petitioner in 92013.

GUTIERREZ, JR., J.:

These are two petitions for prohibition seeking to enjoin respondents, their
representatives and agents from proceeding with the bidding for the sale of the
3,179 square meters of land at 306 Roppongi, 5-Chome Minato-ku Tokyo, Japan
scheduled on February 21, 1990. We granted the prayer for a temporary restraining
order effective February 20, 1990. One of the petitioners (in G.R. No. 92047)
likewise prayes for a writ of mandamus to compel the respondents to fully disclose
to the public the basis of their decision to push through with the sale of the
Roppongi property inspire of strong public opposition and to explain the proceedings

which effectively prevent the participation of Filipino citizens and entities in the
bidding process.
The oral arguments in G.R. No. 92013, Laurel v. Garcia, et al. were heard by the
Court on March 13, 1990. After G.R. No. 92047, Ojeda v. Secretary Macaraig, et al.
was filed, the respondents were required to file a comment by the Court's resolution
dated February 22, 1990. The two petitions were consolidated on March 27, 1990
when the memoranda of the parties in the Laurel case were deliberated upon.
The Court could not act on these cases immediately because the respondents filed a
motion for an extension of thirty (30) days to file comment in G.R. No. 92047,
followed by a second motion for an extension of another thirty (30) days which we
granted on May 8, 1990, a third motion for extension of time granted on May 24,
1990 and a fourth motion for extension of time which we granted on June 5, 1990
but calling the attention of the respondents to the length of time the petitions have
been pending. After the comment was filed, the petitioner in G.R. No. 92047 asked
for thirty (30) days to file a reply. We noted his motion and resolved to decide the
two (2) cases.
I
The subject property in this case is one of the four (4) properties in Japan acquired
by the Philippine government under the Reparations Agreement entered into with
Japan on May 9, 1956, the other lots being:
(1)
The Nampeidai Property at 11-24 Nampeidai-machi, Shibuya-ku, Tokyo which
has an area of approximately 2,489.96 square meters, and is at present the site of
the Philippine Embassy Chancery;
(2)
The Kobe Commercial Property at 63 Naniwa-cho, Kobe, with an area of
around 764.72 square meters and categorized as a commercial lot now being used
as a warehouse and parking lot for the consulate staff; and
(3)
The Kobe Residential Property at 1-980-2 Obanoyama-cho, Shinohara, Nadaku, Kobe, a residential lot which is now vacant.
The properties and the capital goods and services procured from the Japanese
government for national development projects are part of the indemnification to the
Filipino people for their losses in life and property and their suffering during World
War II.

The Reparations Agreement provides that reparations valued at $550 million would
be payable in twenty (20) years in accordance with annual schedules of

procurements to be fixed by the Philippine and Japanese governments (Article 2,

Reparations Agreement). Rep. Act No. 1789, the Reparations Law, prescribes the
national policy on procurement and utilization of reparations and development
loans. The procurements are divided into those for use by the government sector
and those for private parties in projects as the then National Economic Council shall
determine. Those intended for the private sector shall be made available by sale to
Filipino citizens or to one hundred (100%) percent Filipino-owned entities in national
development projects.
The Roppongi property was acquired from the Japanese government under the
Second Year Schedule and listed under the heading "Government Sector", through
Reparations Contract No. 300 dated June 27, 1958. The Roppongi property consists
of the land and building "for the Chancery of the Philippine Embassy" (Annex M-D to
Memorandum for Petitioner, p. 503). As intended, it became the site of the
Philippine Embassy until the latter was transferred to Nampeidai on July 22, 1976
when the Roppongi building needed major repairs. Due to the failure of our
government to provide necessary funds, the Roppongi property has remained
undeveloped since that time.
A proposal was presented to President Corazon C. Aquino by former Philippine
Ambassador to Japan, Carlos J. Valdez, to make the property the subject of a lease
agreement with a Japanese firm - Kajima Corporation which shall construct two
(2) buildings in Roppongi and one (1) building in Nampeidai and renovate the
present Philippine Chancery in Nampeidai. The consideration of the construction
would be the lease to the foreign corporation of one (1) of the buildings to be
constructed in Roppongi and the two (2) buildings in Nampeidai. The other building
in Roppongi shall then be used as the Philippine Embassy Chancery. At the end of
the lease period, all the three leased buildings shall be occupied and used by the
Philippine government. No change of ownership or title shall occur. (See Annex "B"
to Reply to Comment) The Philippine government retains the title all throughout the
lease period and thereafter. However, the government has not acted favorably on
this proposal which is pending approval and ratification between the parties.
Instead, on August 11, 1986, President Aquino created a committee to study the
disposition/utilization of Philippine government properties in Tokyo and Kobe, Japan
through Administrative Order No. 3, followed by Administrative Orders Numbered 3A, B, C and D.
On July 25, 1987, the President issued Executive Order No. 296 entitling non-Filipino
citizens or entities to avail of separations' capital goods and services in the event of
sale, lease or disposition. The four properties in Japan including the Roppongi were
specifically mentioned in the first "Whereas" clause.
Amidst opposition by various sectors, the Executive branch of the government has
been pushing, with great vigor, its decision to sell the reparations properties

starting with the Roppongi lot. The property has twice been set for bidding at a
minimum floor price of $225 million. The first bidding was a failure since only one
bidder qualified. The second one, after postponements, has not yet materialized.
The last scheduled bidding on February 21, 1990 was restrained by his Court. Later,
the rules on bidding were changed such that the $225 million floor price became
merely a suggested floor price.
The Court finds that each of the herein petitions raises distinct issues. The petitioner
in G.R. No. 92013 objects to the alienation of the Roppongi property to anyone while
the petitioner in G.R. No. 92047 adds as a principal objection the alleged unjustified
bias of the Philippine government in favor of selling the property to non-Filipino
citizens and entities. These petitions have been consolidated and are resolved at
the same time for the objective is the same - to stop the sale of the Roppongi
property.
The petitioner in G.R. No. 92013 raises the following issues:
(1)
Can the Roppongi property and others of its kind be alienated by the
Philippine Government?; and
(2)
Does the Chief Executive, her officers and agents, have the authority and
jurisdiction, to sell the Roppongi property?
Petitioner Dionisio Ojeda in G.R. No. 92047, apart from questioning the authority of
the government to alienate the Roppongi property assails the constitutionality of
Executive Order No. 296 in making the property available for sale to non-Filipino
citizens and entities. He also questions the bidding procedures of the Committee on
the Utilization or Disposition of Philippine Government Properties in Japan for being
discriminatory against Filipino citizens and Filipino-owned entities by denying them
the right to be informed about the bidding requirements.
II
In G.R. No. 92013, petitioner Laurel asserts that the Roppongi property and the
related lots were acquired as part of the reparations from the Japanese government
for diplomatic and consular use by the Philippine government. Vice-President Laurel
states that the Roppongi property is classified as one of public dominion, and not of
private ownership under Article 420 of the Civil Code (See infra).
The petitioner submits that the Roppongi property comes under "property intended
for public service" in paragraph 2 of the above provision. He states that being one
of public dominion, no ownership by any one can attach to it, not even by the State.
The Roppongi and related properties were acquired for "sites for chancery,
diplomatic, and consular quarters, buildings and other improvements" (Second Year

Reparations Schedule). The petitioner states that they continue to be intended for a
necessary service. They are held by the State in anticipation of an opportune use.
(Citing 3 Manresa 65-66). Hence, it cannot be appropriated, is outside the
commerce of man, or to put it in more simple terms, it cannot be alienated nor be
the subject matter of contracts (Citing Municipality of Cavite v. Rojas, 30 Phil. 20
[1915]). Noting the non-use of the Roppongi property at the moment, the petitioner
avers that the same remains property of public dominion so long as the government
has not used it for other purposes nor adopted any measure constituting a removal
of its original purpose or use.
The respondents, for their part, refute the petitioner's contention by saying that the
subject property is not governed by our Civil Code but by the laws of Japan where
the property is located. They rely upon the rule of lex situs which is used in
determining the applicable law regarding the acquisition, transfer and devolution of
the title to a property. They also invoke Opinion No. 21, Series of 1988, dated
January 27, 1988 of the Secretary of Justice which used the lex situs in explaining
the inapplicability of Philippine law regarding a property situated in Japan.
The respondents add that even assuming for the sake of argument that the Civil
Code is applicable, the Roppongi property has ceased to become property of public
dominion. It has become patrimonial property because it has not been used for
public service or for diplomatic purposes for over thirteen (13) years now (Citing
Article 422, Civil Code) and because the intention by the Executive Department and
the Congress to convert it to private use has been manifested by overt acts, such
as, among others: (1) the transfer of the Philippine Embassy to Nampeidai (2) the
issuance of administrative orders for the possibility of alienating the four
government properties in Japan; (3) the issuance of Executive Order No. 296; (4) the
enactment by the Congress of Rep. Act No. 6657 [the Comprehensive Agrarian
Reform Law] on June 10, 1988 which contains a provision stating that funds may be
taken from the sale of Philippine properties in foreign countries; (5) the holding of
the public bidding of the Roppongi property but which failed; (6) the deferment by
the Senate in Resolution No. 55 of the bidding to a future date; thus an
acknowledgment by the Senate of the government's intention to remove the
Roppongi property from the public service purpose; and (7) the resolution of this
Court dismissing the petition in Ojeda v. Bidding Committee, et al., G.R. No. 87478
which sought to enjoin the second bidding of the Roppongi property scheduled on
March 30, 1989.
III
In G.R. No. 94047, petitioner Ojeda once more asks this Court to rule on the
constitutionality of Executive Order No. 296. He had earlier filed a petition in G.R.
No. 87478 which the Court dismissed on August 1, 1989. He now avers that the
executive order contravenes the constitutional mandate to conserve and develop

the national patrimony stated in the Preamble of the 1987 Constitution. It also
allegedly violates:
(1)
The reservation of the ownership and acquisition of alienable lands of the
public domain to Filipino citizens. (Sections 2 and 3, Article XII, Constitution;
Sections 22 and 23 of Commonwealth Act 141).itc-asl
(2)
The preference for Filipino citizens in the grant of rights, privileges and
concessions covering the national economy and patrimony (Section 10, Article VI,
Constitution);
(3)
The protection given to Filipino enterprises against unfair competition and
trade practices;
(4)
The guarantee of the right of the people to information on all matters of
public concern (Section 7, Article III, Constitution);
(5)
The prohibition against the sale to non-Filipino citizens or entities not wholly
owned by Filipino citizens of capital goods received by the Philippines under the
Reparations Act (Sections 2 and 12 of Rep. Act No. 1789); and
(6)
The declaration of the state policy of full public disclosure of all transactions
involving public interest (Section 28, Article III, Constitution).
Petitioner Ojeda warns that the use of public funds in the execution of an
unconstitutional executive order is a misapplication of public funds He states that
since the details of the bidding for the Roppongi property were never publicly
disclosed until February 15, 1990 (or a few days before the scheduled bidding), the
bidding guidelines are available only in Tokyo, and the accomplishment of
requirements and the selection of qualified bidders should be done in Tokyo,
interested Filipino citizens or entities owned by them did not have the chance to
comply with Purchase Offer Requirements on the Roppongi. Worse, the Roppongi
shall be sold for a minimum price of $225 million from which price capital gains tax
under Japanese law of about 50 to 70% of the floor price would still be deducted.
IV
The petitioners and respondents in both cases do not dispute the fact that the
Roppongi site and the three related properties were through reparations
agreements, that these were assigned to the government sector and that the
Roppongi property itself was specifically designated under the Reparations
Agreement to house the Philippine Embassy.

The nature of the Roppongi lot as property for public service is expressly spelled
out. It is dictated by the terms of the Reparations Agreement and the corresponding
contract of procurement which bind both the Philippine government and the
Japanese government.
There can be no doubt that it is of public dominion unless it is convincingly shown
that the property has become patrimonial. This, the respondents have failed to do.
As property of public dominion, the Roppongi lot is outside the commerce of man. It
cannot be alienated. Its ownership is a special collective ownership for general use
and enjoyment, an application to the satisfaction of collective needs, and resides in
the social group. The purpose is not to serve the State as a juridical person, but the
citizens; it is intended for the common and public welfare and cannot be the object
of appropration. (Taken from 3 Manresa, 66-69; cited in Tolentino, Commentaries on
the Civil Code of the Philippines, 1963 Edition, Vol. II, p. 26).
The applicable provisions of the Civil Code are:
ART. 419. Property is either of public dominion or of private ownership.
ART. 420. The following things are property of public dominion
(1)
Those intended for public use, such as roads, canals, rivers, torrents, ports
and bridges constructed by the State, banks shores roadsteads, and others of
similar character;
(2)
Those which belong to the State, without being for public use, and are
intended for some public service or for the development of the national wealth.
ART. 421.
All other property of the State, which is not of the character stated in
the preceding article, is patrimonial property.
The Roppongi property is correctly classified under paragraph 2 of Article 420 of the
Civil Code as property belonging to the State and intended for some public service.
Has the intention of the government regarding the use of the property been
changed because the lot has been Idle for some years? Has it become patrimonial?
The fact that the Roppongi site has not been used for a long time for actual
Embassy service does not automatically convert it to patrimonial property. Any such
conversion happens only if the property is withdrawn from public use (Cebu Oxygen
and Acetylene Co. v. Bercilles, 66 SCRA 481 [1975]). A property continues to be part
of the public domain, not available for private appropriation or ownership until there

is a formal declaration on the part of the government to withdraw it from being such
(Ignacio v. Director of Lands, 108 Phil. 335 [1960]).
The respondents enumerate various pronouncements by concerned public officials
insinuating a change of intention. We emphasize, however, that an abandonment of
the intention to use the Roppongi property for public service and to make it
patrimonial property under Article 422 of the Civil Code must be definite
Abandonment cannot be inferred from the non-use alone specially if the non-use
was attributable not to the government's own deliberate and indubitable will but to
a lack of financial support to repair and improve the property (See Heirs of Felino
Santiago v. Lazaro, 166 SCRA 368 [1988]). Abandonment must be a certain and
positive act based on correct legal premises.
A mere transfer of the Philippine Embassy to Nampeidai in 1976 is not
relinquishment of the Roppongi property's original purpose. Even the failure by the
government to repair the building in Roppongi is not abandonment since as earlier
stated, there simply was a shortage of government funds. The recent Administrative
Orders authorizing a study of the status and conditions of government properties in
Japan were merely directives for investigation but did not in any way signify a clear
intention to dispose of the properties.
Executive Order No. 296, though its title declares an "authority to sell", does not
have a provision in its text expressly authorizing the sale of the four properties
procured from Japan for the government sector. The executive order does not
declare that the properties lost their public character. It merely intends to make the
properties available to foreigners and not to Filipinos alone in case of a sale, lease
or other disposition. It merely eliminates the restriction under Rep. Act No. 1789
that reparations goods may be sold only to Filipino citizens and one hundred (100%)
percent Filipino-owned entities. The text of Executive Order No. 296 provides:
Section 1.
The provisions of Republic Act No. 1789, as amended, and of other
laws to the contrary notwithstanding, the above-mentioned properties can be made
available for sale, lease or any other manner of disposition to non-Filipino citizens or
to entities owned by non-Filipino citizens.
Executive Order No. 296 is based on the wrong premise or assumption that the
Roppongi and the three other properties were earlier converted into alienable real
properties. As earlier stated, Rep. Act No. 1789 differentiates the procurements for
the government sector and the private sector (Sections 2 and 12, Rep. Act No.
1789). Only the private sector properties can be sold to end-users who must be
Filipinos or entities owned by Filipinos. It is this nationality provision which was
amended by Executive Order No. 296.

Section 63 (c) of Rep. Act No. 6657 (the CARP Law) which provides as one of the
sources of funds for its implementation, the proceeds of the disposition of the
properties of the Government in foreign countries, did not withdraw the Roppongi
property from being classified as one of public dominion when it mentions Philippine
properties abroad. Section 63 (c) refers to properties which are alienable and not to
those reserved for public use or service. Rep Act No. 6657, therefore, does not
authorize the Executive Department to sell the Roppongi property. It merely
enumerates possible sources of future funding to augment (as and when needed)
the Agrarian Reform Fund created under Executive Order No. 299. Obviously any
property outside of the commerce of man cannot be tapped as a source of funds.
The respondents try to get around the public dominion character of the Roppongi
property by insisting that Japanese law and not our Civil Code should apply.
It is exceedingly strange why our top government officials, of all people, should be
the ones to insist that in the sale of extremely valuable government property,
Japanese law and not Philippine law should prevail. The Japanese law - its coverage
and effects, when enacted, and exceptions to its provision is not presented to the
Court It is simply asserted that the lex loci rei sitae or Japanese law should apply
without stating what that law provides. It is a ed on faith that Japanese law would
allow the sale.
We see no reason why a conflict of law rule should apply when no conflict of law
situation exists. A conflict of law situation arises only when: (1) There is a dispute
over the title or ownership of an immovable, such that the capacity to take and
transfer immovables, the formalities of conveyance, the essential validity and effect
of the transfer, or the interpretation and effect of a conveyance, are to be
determined (See Salonga, Private International Law, 1981 ed., pp. 377-383); and (2)
A foreign law on land ownership and its conveyance is asserted to conflict with a
domestic law on the same matters. Hence, the need to determine which law should
apply.
In the instant case, none of the above elements exists.
The issues are not concerned with validity of ownership or title. There is no question
that the property belongs to the Philippines. The issue is the authority of the
respondent officials to validly dispose of property belonging to the State. And the
validity of the procedures adopted to effect its sale. This is governed by Philippine
Law. The rule of lex situs does not apply.
The assertion that the opinion of the Secretary of Justice sheds light on the
relevance of the lex situs rule is misplaced. The opinion does not tackle the
alienability of the real properties procured through reparations nor the existence in
what body of the authority to sell them. In discussing who are capable of acquiring

the lots, the Secretary merely explains that it is the foreign law which should
determine who can acquire the properties so that the constitutional limitation on
acquisition of lands of the public domain to Filipino citizens and entities wholly
owned by Filipinos is inapplicable. We see no point in belaboring whether or not this
opinion is correct. Why should we discuss who can acquire the Roppongi lot when
there is no showing that it can be sold?
The subsequent approval on October 4, 1988 by President Aquino of the
recommendation by the investigating committee to sell the Roppongi property was
premature or, at the very least, conditioned on a valid change in the public
character of the Roppongi property. Moreover, the approval does not have the force
and effect of law since the President already lost her legislative powers. The
Congress had already convened for more than a year.
Assuming for the sake of argument, however, that the Roppongi property is no
longer of public dominion, there is another obstacle to its sale by the respondents.
There is no law authorizing its conveyance.
Section 79 (f) of the Revised Administrative Code of 1917 provides
Section 79 (f )
Conveyances and contracts to which the Government is a party.
In cases in which the Government of the Republic of the Philippines is a party to
any deed or other instrument conveying the title to real estate or to any other
property the value of which is in excess of one hundred thousand pesos, the
respective Department Secretary shall prepare the necessary papers which,
together with the proper recommendations, shall be submitted to the Congress of
the Philippines for approval by the same. Such deed, instrument, or contract shall
be executed and signed by the President of the Philippines on behalf of the
Government of the Philippines unless the Government of the Philippines unless the
authority therefor be expressly vested by law in another officer. (Emphasis supplied)
The requirement has been retained in Section 48, Book I of the Administrative Code
of 1987 (Executive Order No. 292).
SEC. 48.
Official Authorized to Convey Real Property. Whenever real property
of the Government is authorized by law to be conveyed, the deed of conveyance
shall be executed in behalf of the government by the following:
(1)
For property belonging to and titled in the name of the Republic of the
Philippines, by the President, unless the authority therefor is expressly vested by
law in another officer.

(2)
For property belonging to the Republic of the Philippines but titled in the
name of any political subdivision or of any corporate agency or instrumentality, by
the executive head of the agency or instrumentality. (Emphasis supplied)
It is not for the President to convey valuable real property of the government on his
or her own sole will. Any such conveyance must be authorized and approved by a
law enacted by the Congress. It requires executive and legislative concurrence.
Resolution No. 55 of the Senate dated June 8, 1989, asking for the deferment of the
sale of the Roppongi property does not withdraw the property from public domain
much less authorize its sale. It is a mere resolution; it is not a formal declaration
abandoning the public character of the Roppongi property. In fact, the Senate
Committee on Foreign Relations is conducting hearings on Senate Resolution No.
734 which raises serious policy considerations and calls for a fact-finding
investigation of the circumstances behind the decision to sell the Philippine
government properties in Japan.
The resolution of this Court in Ojeda v. Bidding Committee, et al., supra, did not
pass upon the constitutionality of Executive Order No. 296. Contrary to respondents'
assertion, we did not uphold the authority of the President to sell the Roppongi
property. The Court stated that the constitutionality of the executive order was not
the real issue and that resolving the constitutional question was "neither necessary
nor finally determinative of the case." The Court noted that "[W]hat petitioner
ultimately questions is the use of the proceeds of the disposition of the Roppongi
property." In emphasizing that "the decision of the Executive to dispose of the
Roppongi property to finance the CARP ... cannot be questioned" in view of Section
63 (c) of Rep. Act No. 6657, the Court did not acknowledge the fact that the
property became alienable nor did it indicate that the President was authorized to
dispose of the Roppongi property. The resolution should be read to mean that in
case the Roppongi property is re-classified to be patrimonial and alienable by
authority of law, the proceeds of a sale may be used for national economic
development projects including the CARP.
Moreover, the sale in 1989 did not materialize. The petitions before us question the
proposed 1990 sale of the Roppongi property. We are resolving the issues raised in
these petitions, not the issues raised in 1989.
Having declared a need for a law or formal declaration to withdraw the Roppongi
property from public domain to make it alienable and a need for legislative authority
to allow the sale of the property, we see no compelling reason to tackle the
constitutional issues raised by petitioner Ojeda.
The Court does not ordinarily pass upon constitutional questions unless these
questions are properly raised in appropriate cases and their resolution is necessary

for the determination of the case (People v. Vera, 65 Phil. 56 [1937]). The Court will
not pass upon a constitutional question although properly presented by the record if
the case can be disposed of on some other ground such as the application of a
statute or general law (Siler v. Louisville and Nashville R. Co., 213 U.S. 175, [1909],
Railroad Commission v. Pullman Co., 312 U.S. 496 [1941]).
The petitioner in G.R. No. 92013 states why the Roppongi property should not be
sold:
The Roppongi property is not just like any piece of property. It was given to the
Filipino people in reparation for the lives and blood of Filipinos who died and
suffered during the Japanese military occupation, for the suffering of widows and
orphans who lost their loved ones and kindred, for the homes and other properties
lost by countless Filipinos during the war. The Tokyo properties are a monument to
the bravery and sacrifice of the Filipino people in the face of an invader; like the
monuments of Rizal, Quezon, and other Filipino heroes, we do not expect economic
or financial benefits from them. But who would think of selling these monuments?
Filipino honor and national dignity dictate that we keep our properties in Japan as
memorials to the countless Filipinos who died and suffered. Even if we should
become paupers we should not think of selling them. For it would be as if we sold
the lives and blood and tears of our countrymen. (Rollo- G.R. No. 92013, p.147)
The petitioner in G.R. No. 92047 also states:
Roppongi is no ordinary property. It is one ceded by the Japanese government in
atonement for its past belligerence for the valiant sacrifice of life and limb and for
deaths, physical dislocation and economic devastation the whole Filipino people
endured in World War II.
It is for what it stands for, and for what it could never bring back to life, that its
significance today remains undimmed, inspire of the lapse of 45 years since the war
ended, inspire of the passage of 32 years since the property passed on to the
Philippine government.
Roppongi is a reminder that cannot should not be dissipated ... (Rollo-92047, p.
9)
It is indeed true that the Roppongi property is valuable not so much because of the
inflated prices fetched by real property in Tokyo but more so because of its symbolic
value to all Filipinos veterans and civilians alike. Whether or not the Roppongi and
related properties will eventually be sold is a policy determination where both the
President and Congress must concur. Considering the properties' importance and
value, the laws on conversion and disposition of property of public dominion must
be faithfully followed.

WHEREFORE, IN VIEW OF THE FOREGOING, the petitions are GRANTED. A writ of

prohibition is issued enjoining the respondents from proceeding with the sale of the
Roppongi property in Tokyo, Japan. The February 20, 1990 Temporary Restraining
Order is made PERMANENT.
SO ORDERED.

G.R. No. 133250. July 9, 2002]

FRANCISCO I. CHAVEZ, petitioner, vs. PUBLIC ESTATES AUTHORITY and
AMARI COASTAL BAY DEVELOPMENT CORPORATION, respondents.
DECISION
CARPIO, J.:
This is an original Petition for Mandamus with prayer for a writ of
preliminary injunction and a temporary restraining order. The petition
seeks to compel the Public Estates Authority (PEA for brevity) to
disclose all facts on PEAs then on-going renegotiations with Amari Coastal
Bay and Development Corporation (AMARI for brevity) to reclaim
portions of Manila Bay. The petition further seeks to enjoin PEA from
signing a new agreement with AMARI involving such reclamation.
The Facts
On November 20, 1973, the government, through the Commissioner of Public
Highways, signed a contract with the Construction and Development Corporation of
the Philippines (CDCP for brevity) to reclaim certain foreshore and offshore areas
of Manila Bay. The contract also included the construction of Phases I and II of the
Manila-Cavite Coastal Road. CDCP obligated itself to carry out all the works in
consideration of fifty percent of the total reclaimed land.
On February 4, 1977, then President Ferdinand E. Marcos issued Presidential Decree
No. 1084 creating PEA. PD No. 1084 tasked PEA to reclaim land, including
foreshore and submerged areas, and to develop, improve, acquire, x x x lease and
sell any and all kinds of lands.[1] On the same date, then President Marcos issued
Presidential Decree No. 1085 transferring to PEA the lands reclaimed in the
foreshore and offshore of the Manila Bay[2] under the Manila-Cavite Coastal Road
and Reclamation Project (MCCRRP).
On December 29, 1981, then President Marcos issued a memorandum directing PEA
to amend its contract with CDCP, so that [A]ll future works in MCCRRP x x x shall

be funded and owned by PEA. Accordingly, PEA and CDCP executed a

Memorandum of Agreement dated December 29, 1981, which stated:
(i) CDCP shall undertake all reclamation, construction, and such other works in the
MCCRRP as may be agreed upon by the parties, to be paid according to progress of
works on a unit price/lump sum basis for items of work to be agreed upon, subject
to price escalation, retention and other terms and conditions provided for in
Presidential Decree No. 1594. All the financing required for such works shall be
provided by PEA.
xxx
(iii) x x x CDCP shall give up all its development rights and hereby agrees to cede
and transfer in favor of PEA, all of the rights, title, interest and participation of CDCP
in and to all the areas of land reclaimed by CDCP in the MCCRRP as of December 30,
1981 which have not yet been sold, transferred or otherwise disposed of by CDCP as
of said date, which areas consist of approximately Ninety-Nine Thousand Four
Hundred Seventy Three (99,473) square meters in the Financial Center Area
covered by land pledge No. 5 and approximately Three Million Three Hundred Eighty
Two Thousand Eight Hundred Eighty Eight (3,382,888) square meters of reclaimed
areas at varying elevations above Mean Low Water Level located outside the
Financial Center Area and the First Neighborhood Unit.[3]
On January 19, 1988, then President Corazon C. Aquino issued Special Patent No.
3517, granting and transferring to PEA the parcels of land so reclaimed under the
Manila-Cavite Coastal Road and Reclamation Project (MCCRRP) containing a total
area of one million nine hundred fifteen thousand eight hundred ninety four
(1,915,894) square meters. Subsequently, on April 9, 1988, the Register of Deeds
of the Municipality of Paraaque issued Transfer Certificates of Title Nos. 7309,
7311, and 7312, in the name of PEA, covering the three reclaimed islands known as
the Freedom Islands located at the southern portion of the Manila-Cavite Coastal
Road, Paraaque City. The Freedom Islands have a total land area of One Million
Five Hundred Seventy Eight Thousand Four Hundred and Forty One (1,578,441)
square meters or 157.841 hectares.
On April 25, 1995, PEA entered into a Joint Venture Agreement (JVA for brevity)
with AMARI, a private corporation, to develop the Freedom Islands. The JVA also
required the reclamation of an additional 250 hectares of submerged areas
surrounding these islands to complete the configuration in the Master Development
Plan of the Southern Reclamation Project-MCCRRP. PEA and AMARI entered into the
JVA through negotiation without public bidding.[4] On April 28, 1995, the Board of
Directors of PEA, in its Resolution No. 1245, confirmed the JVA. [5] On June 8, 1995,
then President Fidel V. Ramos, through then Executive Secretary Ruben Torres,
approved the JVA.[6]

On November 29, 1996, then Senate President Ernesto Maceda delivered a privilege
speech in the Senate and denounced the JVA as the grandmother of all scams. As
a result, the Senate Committee on Government Corporations and Public Enterprises,
and the Committee on Accountability of Public Officers and Investigations,
conducted a joint investigation. The Senate Committees reported the results of
their investigation in Senate Committee Report No. 560 dated September 16, 1997.
[7] Among the conclusions of their report are: (1) the reclaimed lands PEA seeks to
transfer to AMARI under the JVA are lands of the public domain which the
government has not classified as alienable lands and therefore PEA cannot alienate
these lands; (2) the certificates of title covering the Freedom Islands are thus void,
and (3) the JVA itself is illegal.
On December 5, 1997, then President Fidel V. Ramos issued Presidential
Administrative Order No. 365 creating a Legal Task Force to conduct a study on the
legality of the JVA in view of Senate Committee Report No. 560. The members of
the Legal Task Force were the Secretary of Justice,[8] the Chief Presidential Legal
Counsel,[9] and the Government Corporate Counsel.[10] The Legal Task Force
upheld the legality of the JVA, contrary to the conclusions reached by the Senate
Committees.[11]
On April 4 and 5, 1998, the Philippine Daily Inquirer and Today published reports
that there were on-going renegotiations between PEA and AMARI under an order
issued by then President Fidel V. Ramos. According to these reports, PEA Director
Nestor Kalaw, PEA Chairman Arsenio Yulo and retired Navy Officer Sergio Cruz
composed the negotiating panel of PEA.
On April 13, 1998, Antonio M. Zulueta filed before the Court a Petition for Prohibition
with Application for the Issuance of a Temporary Restraining Order and Preliminary
Injunction docketed as G.R. No. 132994 seeking to nullify the JVA. The Court
dismissed the petition for unwarranted disregard of judicial hierarchy, without
prejudice to the refiling of the case before the proper court.[12]
On April 27, 1998, petitioner Frank I. Chavez (Petitioner for brevity) as a taxpayer,
filed the instant Petition for Mandamus with Prayer for the Issuance of a Writ of
Preliminary Injunction and Temporary Restraining Order. Petitioner contends the
government stands to lose billions of pesos in the sale by PEA of the reclaimed
lands to AMARI. Petitioner prays that PEA publicly disclose the terms of any
renegotiation of the JVA, invoking Section 28, Article II, and Section 7, Article III, of
the 1987 Constitution on the right of the people to information on matters of public
concern. Petitioner assails the sale to AMARI of lands of the public domain as a
blatant violation of Section 3, Article XII of the 1987 Constitution prohibiting the sale
of alienable lands of the public domain to private corporations. Finally, petitioner

asserts that he seeks to enjoin the loss of billions of pesos in properties of the State
that are of public dominion.
After several motions for extension of time,[13] PEA and AMARI filed their
Comments on October 19, 1998 and June 25, 1998, respectively. Meanwhile, on
December 28, 1998, petitioner filed an Omnibus Motion: (a) to require PEA to
submit the terms of the renegotiated PEA-AMARI contract; (b) for issuance of a
temporary restraining order; and (c) to set the case for hearing on oral argument.
Petitioner filed a Reiterative Motion for Issuance of a TRO dated May 26, 1999,
which the Court denied in a Resolution dated June 22, 1999.
In a Resolution dated March 23, 1999, the Court gave due course to the petition and
required the parties to file their respective memoranda.
On March 30, 1999, PEA and AMARI signed the Amended Joint Venture Agreement
(Amended JVA, for brevity). On May 28, 1999, the Office of the President under
the administration of then President Joseph E. Estrada approved the Amended JVA.
Due to the approval of the Amended JVA by the Office of the President, petitioner
now prays that on constitutional and statutory grounds the renegotiated contract
be declared null and void.[14]
The Issues
The issues raised by petitioner, PEA[15] and AMARI[16] are as follows:
I. WHETHER THE PRINCIPAL RELIEFS PRAYED FOR IN THE PETITION ARE MOOT AND
ACADEMIC BECAUSE OF SUBSEQUENT EVENTS;
II. WHETHER THE PETITION MERITS DISMISSAL FOR FAILING TO OBSERVE THE
PRINCIPLE GOVERNING THE HIERARCHY OF COURTS;
III. WHETHER THE PETITION MERITS DISMISSAL FOR NON-EXHAUSTION OF
ADMINISTRATIVE REMEDIES;
IV. WHETHER PETITIONER HAS LOCUS STANDI TO BRING THIS SUIT;
V. WHETHER THE CONSTITUTIONAL RIGHT TO INFORMATION INCLUDES OFFICIAL
INFORMATION ON ON-GOING NEGOTIATIONS BEFORE A FINAL AGREEMENT;
VI. WHETHER THE STIPULATIONS IN THE AMENDED JOINT VENTURE AGREEMENT
FOR THE TRANSFER TO AMARI OF CERTAIN LANDS, RECLAIMED AND STILL TO BE
RECLAIMED, VIOLATE THE 1987 CONSTITUTION; AND

VII. WHETHER THE COURT IS THE PROPER FORUM FOR RAISING THE ISSUE OF
WHETHER THE AMENDED JOINT VENTURE AGREEMENT IS GROSSLY
DISADVANTAGEOUS TO THE GOVERNMENT.
The Courts Ruling
First issue: whether the principal reliefs prayed for in the petition are moot and
academic because of subsequent events.
The petition prays that PEA publicly disclose the terms and conditions of the ongoing negotiations for a new agreement. The petition also prays that the Court
enjoin PEA from privately entering into, perfecting and/or executing any new
agreement with AMARI.
PEA and AMARI claim the petition is now moot and academic because AMARI
furnished petitioner on June 21, 1999 a copy of the signed Amended JVA containing
the terms and conditions agreed upon in the renegotiations. Thus, PEA has satisfied
petitioners prayer for a public disclosure of the renegotiations. Likewise,
petitioners prayer to enjoin the signing of the Amended JVA is now moot because
PEA and AMARI have already signed the Amended JVA on March 30, 1999.
Moreover, the Office of the President has approved the Amended JVA on May 28,
1999.
Petitioner counters that PEA and AMARI cannot avoid the constitutional issue by
simply fast-tracking the signing and approval of the Amended JVA before the Court
could act on the issue. Presidential approval does not resolve the constitutional
issue or remove it from the ambit of judicial review.
We rule that the signing of the Amended JVA by PEA and AMARI and its approval by
the President cannot operate to moot the petition and divest the Court of its
jurisdiction. PEA and AMARI have still to implement the Amended JVA. The prayer
to enjoin the signing of the Amended JVA on constitutional grounds necessarily
includes preventing its implementation if in the meantime PEA and AMARI have
signed one in violation of the Constitution. Petitioners principal basis in assailing
the renegotiation of the JVA is its violation of Section 3, Article XII of the
Constitution, which prohibits the government from alienating lands of the public
domain to private corporations. If the Amended JVA indeed violates the
Constitution, it is the duty of the Court to enjoin its implementation, and if already
implemented, to annul the effects of such unconstitutional contract.
The Amended JVA is not an ordinary commercial contract but one which seeks to
transfer title and ownership to 367.5 hectares of reclaimed lands and submerged
areas of Manila Bay to a single private corporation. It now becomes more
compelling for the Court to resolve the issue to insure the government itself does

not violate a provision of the Constitution intended to safeguard the national

patrimony. Supervening events, whether intended or accidental, cannot prevent
the Court from rendering a decision if there is a grave violation of the Constitution.
In the instant case, if the Amended JVA runs counter to the Constitution, the Court
can still prevent the transfer of title and ownership of alienable lands of the public
domain in the name of AMARI. Even in cases where supervening events had made
the cases moot, the Court did not hesitate to resolve the legal or constitutional
issues raised to formulate controlling principles to guide the bench, bar, and the
public.[17]
Also, the instant petition is a case of first impression. All previous decisions of the
Court involving Section 3, Article XII of the 1987 Constitution, or its counterpart
provision in the 1973 Constitution,[18] covered agricultural lands sold to private
corporations which acquired the lands from private parties. The transferors of the
private corporations claimed or could claim the right to judicial confirmation of their
imperfect titles[19] under Title II of Commonwealth Act. 141 (CA No. 141 for
brevity). In the instant case, AMARI seeks to acquire from PEA, a public corporation,
reclaimed lands and submerged areas for non-agricultural purposes by purchase
under PD No. 1084 (charter of PEA) and Title III of CA No. 141. Certain undertakings
by AMARI under the Amended JVA constitute the consideration for the purchase.
Neither AMARI nor PEA can claim judicial confirmation of their titles because the
lands covered by the Amended JVA are newly reclaimed or still to be reclaimed.
Judicial confirmation of imperfect title requires open, continuous, exclusive and
notorious occupation of agricultural lands of the public domain for at least thirty
years since June 12, 1945 or earlier. Besides, the deadline for filing applications for
judicial confirmation of imperfect title expired on December 31, 1987.[20]
Lastly, there is a need to resolve immediately the constitutional issue raised in this
petition because of the possible transfer at any time by PEA to AMARI of title and
ownership to portions of the reclaimed lands. Under the Amended JVA, PEA is
obligated to transfer to AMARI the latters seventy percent proportionate share in
the reclaimed areas as the reclamation progresses. The Amended JVA even allows
AMARI to mortgage at any time the entire reclaimed area to raise financing for the
reclamation project.[21]
Second issue: whether the petition merits dismissal for failing to observe the
principle governing the hierarchy of courts.
PEA and AMARI claim petitioner ignored the judicial hierarchy by seeking relief
directly from the Court. The principle of hierarchy of courts applies generally to
cases involving factual questions. As it is not a trier of facts, the Court cannot
entertain cases involving factual issues. The instant case, however, raises
constitutional issues of transcendental importance to the public.[22] The Court can
resolve this case without determining any factual issue related to the case. Also,

the instant case is a petition for mandamus which falls under the original jurisdiction
of the Court under Section 5, Article VIII of the Constitution. We resolve to exercise
primary jurisdiction over the instant case.
Third issue: whether the petition merits dismissal for non-exhaustion of
administrative remedies.
PEA faults petitioner for seeking judicial intervention in compelling PEA to disclose
publicly certain information without first asking PEA the needed information. PEA
claims petitioners direct resort to the Court violates the principle of exhaustion of
administrative remedies. It also violates the rule that mandamus may issue only if
there is no other plain, speedy and adequate remedy in the ordinary course of law.
PEA distinguishes the instant case from Taada v. Tuvera[23] where the Court
granted the petition for mandamus even if the petitioners there did not initially
demand from the Office of the President the publication of the presidential decrees.
PEA points out that in Taada, the Executive Department had an affirmative
statutory duty under Article 2 of the Civil Code[24] and Section 1 of Commonwealth
Act No. 638[25] to publish the presidential decrees. There was, therefore, no need
for the petitioners in Taada to make an initial demand from the Office of the
President. In the instant case, PEA claims it has no affirmative statutory duty to
disclose publicly information about its renegotiation of the JVA. Thus, PEA asserts
that the Court must apply the principle of exhaustion of administrative remedies to
the instant case in view of the failure of petitioner here to demand initially from PEA
the needed information.
The original JVA sought to dispose to AMARI public lands held by PEA, a government
corporation. Under Section 79 of the Government Auditing Code,[26]2 the
disposition of government lands to private parties requires public bidding. PEA was
under a positive legal duty to disclose to the public the terms and conditions for the
sale of its lands. The law obligated PEA to make this public disclosure even without
demand from petitioner or from anyone. PEA failed to make this public disclosure
because the original JVA, like the Amended JVA, was the result of a negotiated
contract, not of a public bidding. Considering that PEA had an affirmative statutory
duty to make the public disclosure, and was even in breach of this legal duty,
petitioner had the right to seek direct judicial intervention.
Moreover, and this alone is determinative of this issue, the principle of exhaustion of
administrative remedies does not apply when the issue involved is a purely legal or
constitutional question.[27] The principal issue in the instant case is the capacity of
AMARI to acquire lands held by PEA in view of the constitutional ban prohibiting the
alienation of lands of the public domain to private corporations. We rule that the
principle of exhaustion of administrative remedies does not apply in the instant
case.

Fourth issue: whether petitioner has locus standi to bring this suit
PEA argues that petitioner has no standing to institute mandamus proceedings to
enforce his constitutional right to information without a showing that PEA refused to
perform an affirmative duty imposed on PEA by the Constitution. PEA also claims
that petitioner has not shown that he will suffer any concrete injury because of the
signing or implementation of the Amended JVA. Thus, there is no actual controversy
requiring the exercise of the power of judicial review.
The petitioner has standing to bring this taxpayers suit because the petition seeks
to compel PEA to comply with its constitutional duties. There are two constitutional
issues involved here. First is the right of citizens to information on matters of public
concern. Second is the application of a constitutional provision intended to insure
the equitable distribution of alienable lands of the public domain among Filipino
citizens. The thrust of the first issue is to compel PEA to disclose publicly
information on the sale of government lands worth billions of pesos, information
which the Constitution and statutory law mandate PEA to disclose. The thrust of the
second issue is to prevent PEA from alienating hundreds of hectares of alienable
lands of the public domain in violation of the Constitution, compelling PEA to comply
with a constitutional duty to the nation.
Moreover, the petition raises matters of transcendental importance to the public. In
Chavez v. PCGG,[28] the Court upheld the right of a citizen to bring a taxpayers suit
on matters of transcendental importance to the public, thus Besides, petitioner emphasizes, the matter of recovering the ill-gotten wealth of
the Marcoses is an issue of transcendental importance to the public. He asserts
that ordinary taxpayers have a right to initiate and prosecute actions questioning
the validity of acts or orders of government agencies or instrumentalities, if the
issues raised are of paramount public interest, and if they immediately affect the
social, economic and moral well being of the people.
Moreover, the mere fact that he is a citizen satisfies the requirement of personal
interest, when the proceeding involves the assertion of a public right, such as in this
case. He invokes several decisions of this Court which have set aside the
procedural matter of locus standi, when the subject of the case involved public
interest.
xxx
In Taada v. Tuvera, the Court asserted that when the issue concerns a public right
and the object of mandamus is to obtain the enforcement of a public duty, the
people are regarded as the real parties in interest; and because it is sufficient that

petitioner is a citizen and as such is interested in the execution of the laws, he need
not show that he has any legal or special interest in the result of the action. In the
aforesaid case, the petitioners sought to enforce their right to be informed on
matters of public concern, a right then recognized in Section 6, Article IV of the
1973 Constitution, in connection with the rule that laws in order to be valid and
enforceable must be published in the Official Gazette or otherwise effectively
promulgated. In ruling for the petitioners' legal standing, the Court declared that the
right they sought to be enforced is a public right recognized by no less than the
fundamental law of the land.
Legaspi v. Civil Service Commission, while reiterating Taada, further declared that
when a mandamus proceeding involves the assertion of a public right, the
requirement of personal interest is satisfied by the mere fact that petitioner is a
citizen and, therefore, part of the general 'public' which possesses the right.
Further, in Albano v. Reyes, we said that while expenditure of public funds may not
have been involved under the questioned contract for the development,
management and operation of the Manila International Container Terminal, public
interest [was] definitely involved considering the important role [of the subject
contract] . . . in the economic development of the country and the magnitude of the
financial consideration involved. We concluded that, as a consequence, the
disclosure provision in the Constitution would constitute sufficient authority for
upholding the petitioner's standing.
Similarly, the instant petition is anchored on the right of the people to information
and access to official records, documents and papers a right guaranteed under
Section 7, Article III of the 1987 Constitution. Petitioner, a former solicitor general, is
a Filipino citizen. Because of the satisfaction of the two basic requisites laid down by
decisional law to sustain petitioner's legal standing, i.e. (1) the enforcement of a
public right (2) espoused by a Filipino citizen, we rule that the petition at bar should
be allowed.
We rule that since the instant petition, brought by a citizen, involves the
enforcement of constitutional rights - to information and to the equitable diffusion
of natural resources - matters of transcendental public importance, the petitioner
has the requisite locus standi.
Fifth issue: whether the constitutional right to information includes official
information on on-going negotiations before a final agreement.
Section 7, Article III of the Constitution explains the peoples right to information on
matters of public concern in this manner:

Sec. 7. The right of the people to information on matters of public concern shall be
recognized. Access to official records, and to documents, and papers pertaining to
official acts, transactions, or decisions, as well as to government research data used
as basis for policy development, shall be afforded the citizen, subject to such
limitations as may be provided by law. (Emphasis supplied)
The State policy of full transparency in all transactions involving public interest
reinforces the peoples right to information on matters of public concern. This
State policy is expressed in Section 28, Article II of the Constitution, thus:
Sec. 28. Subject to reasonable conditions prescribed by law, the State adopts and
implements a policy of full public disclosure of all its transactions involving public
interest. (Emphasis supplied)
These twin provisions of the Constitution seek to promote transparency in policymaking and in the operations of the government, as well as provide the people
sufficient information to exercise effectively other constitutional rights. These twin
provisions are essential to the exercise of freedom of expression. If the
government does not disclose its official acts, transactions and decisions to citizens,
whatever citizens say, even if expressed without any restraint, will be speculative
and amount to nothing. These twin provisions are also essential to hold public
officials at all times x x x accountable to the people,[29] for unless citizens have
the proper information, they cannot hold public officials accountable for anything.
Armed with the right information, citizens can participate in public discussions
leading to the formulation of government policies and their effective
implementation. An informed citizenry is essential to the existence and proper
functioning of any democracy. As explained by the Court in Valmonte v. Belmonte,
Jr.[30]
An essential element of these freedoms is to keep open a continuing dialogue or
process of communication between the government and the people. It is in the
interest of the State that the channels for free political discussion be maintained to
the end that the government may perceive and be responsive to the peoples will.
Yet, this open dialogue can be effective only to the extent that the citizenry is
informed and thus able to formulate its will intelligently. Only when the participants
in the discussion are aware of the issues and have access to information relating
thereto can such bear fruit.
PEA asserts, citing Chavez v. PCGG,[31] that in cases of on-going negotiations the
right to information is limited to definite propositions of the government. PEA
maintains the right does not include access to intra-agency or inter-agency
recommendations or communications during the stage when common assertions
are still in the process of being formulated or are in the exploratory stage.

Also, AMARI contends that petitioner cannot invoke the right at the pre-decisional
stage or before the closing of the transaction. To support its contention, AMARI cites
the following discussion in the 1986 Constitutional Commission:
Mr. Suarez. And when we say transactions which should be distinguished from
contracts, agreements, or treaties or whatever, does the Gentleman refer to the
steps leading to the consummation of the contract, or does he refer to the contract
itself?
Mr. Ople: The transactions used here, I suppose is generic and therefore, it can
cover both steps leading to a contract and already a consummated contract, Mr.
Presiding Officer.
Mr. Suarez: This contemplates inclusion of negotiations leading to the
consummation of the transaction.
Mr. Ople: Yes, subject only to reasonable safeguards on the national interest.
Mr. Suarez: Thank you.[32] (Emphasis supplied)
AMARI argues there must first be a consummated contract before petitioner can
invoke the right. Requiring government officials to reveal their deliberations at the
pre-decisional stage will degrade the quality of decision-making in government
agencies. Government officials will hesitate to express their real sentiments during
deliberations if there is immediate public dissemination of their discussions, putting
them under all kinds of pressure before they decide.
We must first distinguish between information the law on public bidding requires
PEA to disclose publicly, and information the constitutional right to information
requires PEA to release to the public. Before the consummation of the contract,
PEA must, on its own and without demand from anyone, disclose to the public
matters relating to the disposition of its property. These include the size, location,
technical description and nature of the property being disposed of, the terms and
conditions of the disposition, the parties qualified to bid, the minimum price and
similar information. PEA must prepare all these data and disclose them to the
public at the start of the disposition process, long before the consummation of the
contract, because the Government Auditing Code requires public bidding. If PEA
fails to make this disclosure, any citizen can demand from PEA this information at
any time during the bidding process.
Information, however, on on-going evaluation or review of bids or proposals being
undertaken by the bidding or review committee is not immediately accessible under
the right to information. While the evaluation or review is still on-going, there are
no official acts, transactions, or decisions on the bids or proposals. However, once

the committee makes its official recommendation, there arises a definite

proposition on the part of the government. From this moment, the publics right to
information attaches, and any citizen can access all the non-proprietary information
leading to such definite proposition. In Chavez v. PCGG,[33] the Court ruled as
follows:
Considering the intent of the framers of the Constitution, we believe that it is
incumbent upon the PCGG and its officers, as well as other government
representatives, to disclose sufficient public information on any proposed
settlement they have decided to take up with the ostensible owners and holders of
ill-gotten wealth. Such information, though, must pertain to definite propositions of
the government, not necessarily to intra-agency or inter-agency recommendations
or communications during the stage when common assertions are still in the
process of being formulated or are in the exploratory stage. There is need, of
course, to observe the same restrictions on disclosure of information in general, as
discussed earlier such as on matters involving national security, diplomatic or
foreign relations, intelligence and other classified information. (Emphasis supplied)
Contrary to AMARIs contention, the commissioners of the 1986 Constitutional
Commission understood that the right to information contemplates inclusion of
negotiations leading to the consummation of the transaction. Certainly, a
consummated contract is not a requirement for the exercise of the right to
information. Otherwise, the people can never exercise the right if no contract is
consummated, and if one is consummated, it may be too late for the public to
expose its defects.
Requiring a consummated contract will keep the public in the dark until the
contract, which may be grossly disadvantageous to the government or even illegal,
becomes a fait accompli. This negates the State policy of full transparency on
matters of public concern, a situation which the framers of the Constitution could
not have intended. Such a requirement will prevent the citizenry from participating
in the public discussion of any proposed contract, effectively truncating a basic right
enshrined in the Bill of Rights. We can allow neither an emasculation of a
constitutional right, nor a retreat by the State of its avowed policy of full disclosure
of all its transactions involving public interest.
The right covers three categories of information which are matters of public
concern, namely: (1) official records; (2) documents and papers pertaining to
official acts, transactions and decisions; and (3) government research data used in
formulating policies. The first category refers to any document that is part of the
public records in the custody of government agencies or officials. The second
category refers to documents and papers recording, evidencing, establishing,
confirming, supporting, justifying or explaining official acts, transactions or decisions
of government agencies or officials. The third category refers to research data,

whether raw, collated or processed, owned by the government and used in

formulating government policies.
The information that petitioner may access on the renegotiation of the JVA includes
evaluation reports, recommendations, legal and expert opinions, minutes of
meetings, terms of reference and other documents attached to such reports or
minutes, all relating to the JVA. However, the right to information does not compel
PEA to prepare lists, abstracts, summaries and the like relating to the renegotiation
of the JVA.[34] The right only affords access to records, documents and papers,
which means the opportunity to inspect and copy them. One who exercises the
right must copy the records, documents and papers at his expense. The exercise of
the right is also subject to reasonable regulations to protect the integrity of the
public records and to minimize disruption to government operations, like rules
specifying when and how to conduct the inspection and copying.[35]
The right to information, however, does not extend to matters recognized as
privileged information under the separation of powers.[36] The right does not also
apply to information on military and diplomatic secrets, information affecting
national security, and information on investigations of crimes by law enforcement
agencies before the prosecution of the accused, which courts have long recognized
as confidential.[37] The right may also be subject to other limitations that Congress
may impose by law.
There is no claim by PEA that the information demanded by petitioner is privileged
information rooted in the separation of powers. The information does not cover
Presidential conversations, correspondences, or discussions during closed-door
Cabinet meetings which, like internal deliberations of the Supreme Court and other
collegiate courts, or executive sessions of either house of Congress,[38] are
recognized as confidential. This kind of information cannot be pried open by a coequal branch of government. A frank exchange of exploratory ideas and
assessments, free from the glare of publicity and pressure by interested parties, is
essential to protect the independence of decision-making of those tasked to
exercise Presidential, Legislative and Judicial power.[39] This is not the situation in
the instant case.
We rule, therefore, that the constitutional right to information includes official
information on on-going negotiations before a final contract. The information,
however, must constitute definite propositions by the government and should not
cover recognized exceptions like privileged information, military and diplomatic
secrets and similar matters affecting national security and public order.[40]
Congress has also prescribed other limitations on the right to information in several
legislations.[41]

Sixth issue: whether stipulations in the Amended JVA for the transfer to AMARI of
lands, reclaimed or to be reclaimed, violate the Constitution.
The Regalian Doctrine
The ownership of lands reclaimed from foreshore and submerged areas is rooted in
the Regalian doctrine which holds that the State owns all lands and waters of the
public domain. Upon the Spanish conquest of the Philippines, ownership of all
lands, territories and possessions in the Philippines passed to the Spanish Crown.
[42] The King, as the sovereign ruler and representative of the people, acquired and
owned all lands and territories in the Philippines except those he disposed of by
grant or sale to private individuals.
The 1935, 1973 and 1987 Constitutions adopted the Regalian doctrine substituting,
however, the State, in lieu of the King, as the owner of all lands and waters of the
public domain. The Regalian doctrine is the foundation of the time-honored
principle of land ownership that all lands that were not acquired from the
Government, either by purchase or by grant, belong to the public domain.[43]
Article 339 of the Civil Code of 1889, which is now Article 420 of the Civil Code of
1950, incorporated the Regalian doctrine.
Ownership and Disposition of Reclaimed Lands
The Spanish Law of Waters of 1866 was the first statutory law governing the
ownership and disposition of reclaimed lands in the Philippines. On May 18, 1907,
the Philippine Commission enacted Act No. 1654 which provided for the lease, but
not the sale, of reclaimed lands of the government to corporations and individuals.
Later, on November 29, 1919, the Philippine Legislature approved Act No. 2874, the
Public Land Act, which authorized the lease, but not the sale, of reclaimed lands of
the government to corporations and individuals. On November 7, 1936, the
National Assembly passed Commonwealth Act No. 141, also known as the Public
Land Act, which authorized the lease, but not the sale, of reclaimed lands of the
government to corporations and individuals. CA No. 141 continues to this day as
the general law governing the classification and disposition of lands of the public
domain.
The Spanish Law of Waters of 1866 and the Civil Code of 1889
Under the Spanish Law of Waters of 1866, the shores, bays, coves, inlets and all
waters within the maritime zone of the Spanish territory belonged to the public
domain for public use.[44] The Spanish Law of Waters of 1866 allowed the
reclamation of the sea under Article 5, which provided as follows:

Article 5. Lands reclaimed from the sea in consequence of works constructed by

the State, or by the provinces, pueblos or private persons, with proper permission,
shall become the property of the party constructing such works, unless otherwise
provided by the terms of the grant of authority.
Under the Spanish Law of Waters, land reclaimed from the sea belonged to the
party undertaking the reclamation, provided the government issued the necessary
permit and did not reserve ownership of the reclaimed land to the State.
Article 339 of the Civil Code of 1889 defined property of public dominion as follows:
Art. 339. Property of public dominion is
1. That devoted to public use, such as roads, canals, rivers, torrents, ports and
bridges constructed by the State, riverbanks, shores, roadsteads, and that of a
similar character;
2. That belonging exclusively to the State which, without being of general public
use, is employed in some public service, or in the development of the national
wealth, such as walls, fortresses, and other works for the defense of the territory,
and mines, until granted to private individuals.
Property devoted to public use referred to property open for use by the public. In
contrast, property devoted to public service referred to property used for some
specific public service and open only to those authorized to use the property.
Property of public dominion referred not only to property devoted to public use, but
also to property not so used but employed to develop the national wealth. This
class of property constituted property of public dominion although employed for
some economic or commercial activity to increase the national wealth.
Article 341 of the Civil Code of 1889 governed the re-classification of property of
public dominion into private property, to wit:
Art. 341. Property of public dominion, when no longer devoted to public use or to
the defense of the territory, shall become a part of the private property of the
State.
This provision, however, was not self-executing. The legislature, or the executive
department pursuant to law, must declare the property no longer needed for public
use or territorial defense before the government could lease or alienate the
property to private parties.[45]
Act No. 1654 of the Philippine Commission

On May 8, 1907, the Philippine Commission enacted Act No. 1654 which regulated
the lease of reclaimed and foreshore lands. The salient provisions of this law were
as follows:
Section 1. The control and disposition of the foreshore as defined in existing law,
and the title to all Government or public lands made or reclaimed by the
Government by dredging or filling or otherwise throughout the Philippine Islands,
shall be retained by the Government without prejudice to vested rights and without
prejudice to rights conceded to the City of Manila in the Luneta Extension.
Section 2. (a) The Secretary of the Interior shall cause all Government or public
lands made or reclaimed by the Government by dredging or filling or otherwise to
be divided into lots or blocks, with the necessary streets and alleyways located
thereon, and shall cause plats and plans of such surveys to be prepared and filed
with the Bureau of Lands.
(b) Upon completion of such plats and plans the Governor-General shall give notice
to the public that such parts of the lands so made or reclaimed as are not needed
for public purposes will be leased for commercial and business purposes, x x x.
xxx
(e) The leases above provided for shall be disposed of to the highest and best
bidder therefore, subject to such regulations and safeguards as the GovernorGeneral may by executive order prescribe. (Emphasis supplied)
Act No. 1654 mandated that the government should retain title to all lands
reclaimed by the government. The Act also vested in the government control and
disposition of foreshore lands. Private parties could lease lands reclaimed by the
government only if these lands were no longer needed for public purpose. Act No.
1654 mandated public bidding in the lease of government reclaimed lands. Act No.
1654 made government reclaimed lands sui generis in that unlike other public lands
which the government could sell to private parties, these reclaimed lands were
available only for lease to private parties.
Act No. 1654, however, did not repeal Section 5 of the Spanish Law of Waters of
1866. Act No. 1654 did not prohibit private parties from reclaiming parts of the sea
under Section 5 of the Spanish Law of Waters. Lands reclaimed from the sea by
private parties with government permission remained private lands.
Act No. 2874 of the Philippine Legislature

On November 29, 1919, the Philippine Legislature enacted Act No. 2874, the Public
Land Act.[46] The salient provisions of Act No. 2874, on reclaimed lands, were as
follows:
Sec. 6. The Governor-General, upon the recommendation of the Secretary of
Agriculture and Natural Resources, shall from time to time classify the lands of the
public domain into
(a) Alienable or disposable,
(b) Timber, and
(c) Mineral lands, x x x.
Sec. 7. For the purposes of the government and disposition of alienable or
disposable public lands, the Governor-General, upon recommendation by the
Secretary of Agriculture and Natural Resources, shall from time to time declare what
lands are open to disposition or concession under this Act.
Sec. 8. Only those lands shall be declared open to disposition or concession which
have been officially delimited or classified x x x.
xxx
Sec. 55. Any tract of land of the public domain which, being neither timber nor
mineral land, shall be classified as suitable for residential purposes or for
commercial, industrial, or other productive purposes other than agricultural
purposes, and shall be open to disposition or concession, shall be disposed of under
the provisions of this chapter, and not otherwise.
Sec. 56. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the Government by dredging, filling, or other means;
(b) Foreshore;
(c) Marshy lands or lands covered with water bordering upon the shores or banks of
navigable lakes or rivers;
(d) Lands not included in any of the foregoing classes.
x x x.
Sec. 58. The lands comprised in classes (a), (b), and (c) of section fifty-six shall be
disposed of to private parties by lease only and not otherwise, as soon as the
Governor-General, upon recommendation by the Secretary of Agriculture and
Natural Resources, shall declare that the same are not necessary for the public
service and are open to disposition under this chapter. The lands included in class
(d) may be disposed of by sale or lease under the provisions of this Act.
(Emphasis supplied)
Section 6 of Act No. 2874 authorized the Governor-General to classify lands of the
public domain into x x x alienable or disposable[47] lands. Section 7 of the Act

empowered the Governor-General to declare what lands are open to disposition or

concession. Section 8 of the Act limited alienable or disposable lands only to those
lands which have been officially delimited and classified.
Section 56 of Act No. 2874 stated that lands disposable under this title[48] shall be
classified as government reclaimed, foreshore and marshy lands, as well as other
lands. All these lands, however, must be suitable for residential, commercial,
industrial or other productive non-agricultural purposes. These provisions vested
upon the Governor-General the power to classify inalienable lands of the public
domain into disposable lands of the public domain. These provisions also
empowered the Governor-General to classify further such disposable lands of the
public domain into government reclaimed, foreshore or marshy lands of the public
domain, as well as other non-agricultural lands.
Section 58 of Act No. 2874 categorically mandated that disposable lands of the
public domain classified as government reclaimed, foreshore and marshy lands
shall be disposed of to private parties by lease only and not otherwise. The
Governor-General, before allowing the lease of these lands to private parties, must
formally declare that the lands were not necessary for the public service. Act No.
2874 reiterated the State policy to lease and not to sell government reclaimed,
foreshore and marshy lands of the public domain, a policy first enunciated in 1907
in Act No. 1654. Government reclaimed, foreshore and marshy lands remained sui
generis, as the only alienable or disposable lands of the public domain that the
government could not sell to private parties.
The rationale behind this State policy is obvious. Government reclaimed, foreshore
and marshy public lands for non-agricultural purposes retain their inherent potential
as areas for public service. This is the reason the government prohibited the sale,
and only allowed the lease, of these lands to private parties. The State always
reserved these lands for some future public service.
Act No. 2874 did not authorize the reclassification of government reclaimed,
foreshore and marshy lands into other non-agricultural lands under Section 56 (d).
Lands falling under Section 56 (d) were the only lands for non-agricultural purposes
the government could sell to private parties. Thus, under Act No. 2874, the
government could not sell government reclaimed, foreshore and marshy lands to
private parties, unless the legislature passed a law allowing their sale.[49]
Act No. 2874 did not prohibit private parties from reclaiming parts of the sea
pursuant to Section 5 of the Spanish Law of Waters of 1866. Lands reclaimed from
the sea by private parties with government permission remained private lands.
Dispositions under the 1935 Constitution

On May 14, 1935, the 1935 Constitution took effect upon its ratification by the
Filipino people. The 1935 Constitution, in adopting the Regalian doctrine, declared in
Section 1, Article XIII, that
Section 1. All agricultural, timber, and mineral lands of the public domain, waters,
minerals, coal, petroleum, and other mineral oils, all forces of potential energy and
other natural resources of the Philippines belong to the State, and their disposition,
exploitation, development, or utilization shall be limited to citizens of the Philippines
or to corporations or associations at least sixty per centum of the capital of which is
owned by such citizens, subject to any existing right, grant, lease, or concession at
the time of the inauguration of the Government established under this Constitution.
Natural resources, with the exception of public agricultural land, shall not be
alienated, and no license, concession, or lease for the exploitation, development, or
utilization of any of the natural resources shall be granted for a period exceeding
twenty-five years, renewable for another twenty-five years, except as to water
rights for irrigation, water supply, fisheries, or industrial uses other than the
development of water power, in which cases beneficial use may be the measure and
limit of the grant. (Emphasis supplied)
The 1935 Constitution barred the alienation of all natural resources except public
agricultural lands, which were the only natural resources the State could alienate.
Thus, foreshore lands, considered part of the States natural resources, became
inalienable by constitutional fiat, available only for lease for 25 years, renewable for
another 25 years. The government could alienate foreshore lands only after these
lands were reclaimed and classified as alienable agricultural lands of the public
domain. Government reclaimed and marshy lands of the public domain, being
neither timber nor mineral lands, fell under the classification of public agricultural
lands.[50] However, government reclaimed and marshy lands, although subject to
classification as disposable public agricultural lands, could only be leased and not
sold to private parties because of Act No. 2874.
The prohibition on private parties from acquiring ownership of government
reclaimed and marshy lands of the public domain was only a statutory prohibition
and the legislature could therefore remove such prohibition. The 1935 Constitution
did not prohibit individuals and corporations from acquiring government reclaimed
and marshy lands of the public domain that were classified as agricultural lands
under existing public land laws. Section 2, Article XIII of the 1935 Constitution
provided as follows:
Section 2. No private corporation or association may acquire, lease, or hold public
agricultural lands in excess of one thousand and twenty four hectares, nor may any
individual acquire such lands by purchase in excess of one hundred and forty
hectares, or by lease in excess of one thousand and twenty-four hectares, or by
homestead in excess of twenty-four hectares. Lands adapted to grazing, not

exceeding two thousand hectares, may be leased to an individual, private

corporation, or association. (Emphasis supplied)
Still, after the effectivity of the 1935 Constitution, the legislature did not repeal
Section 58 of Act No. 2874 to open for sale to private parties government reclaimed
and marshy lands of the public domain. On the contrary, the legislature continued
the long established State policy of retaining for the government title and ownership
of government reclaimed and marshy lands of the public domain.
Commonwealth Act No. 141 of the Philippine National Assembly
On November 7, 1936, the National Assembly approved Commonwealth Act No.
141, also known as the Public Land Act, which compiled the then existing laws on
lands of the public domain. CA No. 141, as amended, remains to this day the
existing general law governing the classification and disposition of lands of the
public domain other than timber and mineral lands.[51]
Section 6 of CA No. 141 empowers the President to classify lands of the public
domain into alienable or disposable[52] lands of the public domain, which prior to
such classification are inalienable and outside the commerce of man. Section 7 of
CA No. 141 authorizes the President to declare what lands are open to disposition
or concession. Section 8 of CA No. 141 states that the government can declare
open for disposition or concession only lands that are officially delimited and
classified. Sections 6, 7 and 8 of CA No. 141 read as follows:
Sec. 6. The President, upon the recommendation of the Secretary of Agriculture
and Commerce, shall from time to time classify the lands of the public domain into
(a) Alienable or disposable,
(b) Timber, and
(c) Mineral lands,
and may at any time and in like manner transfer such lands from one class to
another,[53] for the purpose of their administration and disposition.
Sec. 7. For the purposes of the administration and disposition of alienable or
disposable public lands, the President, upon recommendation by the Secretary of
Agriculture and Commerce, shall from time to time declare what lands are open to
disposition or concession under this Act.
Sec. 8. Only those lands shall be declared open to disposition or concession which
have been officially delimited and classified and, when practicable, surveyed, and
which have not been reserved for public or quasi-public uses, nor appropriated by
the Government, nor in any manner become private property, nor those on which a
private right authorized and recognized by this Act or any other valid law may be

claimed, or which, having been reserved or appropriated, have ceased to be so. x x

x.
Thus, before the government could alienate or dispose of lands of the public
domain, the President must first officially classify these lands as alienable or
disposable, and then declare them open to disposition or concession. There must
be no law reserving these lands for public or quasi-public uses.
The salient provisions of CA No. 141, on government reclaimed, foreshore and
marshy lands of the public domain, are as follows:
Sec. 58. Any tract of land of the public domain which, being neither timber nor
mineral land, is intended to be used for residential purposes or for commercial,
industrial, or other productive purposes other than agricultural, and is open to
disposition or concession, shall be disposed of under the provisions of this chapter
and not otherwise.
Sec. 59. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the Government by dredging, filling, or other means;
(b) Foreshore;
(c) Marshy lands or lands covered with water bordering upon the shores or banks of
navigable lakes or rivers;
(d) Lands not included in any of the foregoing classes.
Sec. 60. Any tract of land comprised under this title may be leased or sold, as the
case may be, to any person, corporation, or association authorized to purchase or
lease public lands for agricultural purposes. x x x.
Sec. 61. The lands comprised in classes (a), (b), and (c) of section fifty-nine shall be
disposed of to private parties by lease only and not otherwise, as soon as the
President, upon recommendation by the Secretary of Agriculture, shall declare that
the same are not necessary for the public service and are open to disposition under
this chapter. The lands included in class (d) may be disposed of by sale or lease
under the provisions of this Act. (Emphasis supplied)
Section 61 of CA No. 141 readopted, after the effectivity of the 1935 Constitution,
Section 58 of Act No. 2874 prohibiting the sale of government reclaimed, foreshore
and marshy disposable lands of the public domain. All these lands are intended for
residential, commercial, industrial or other non-agricultural purposes. As before,
Section 61 allowed only the lease of such lands to private parties. The government
could sell to private parties only lands falling under Section 59 (d) of CA No. 141, or
those lands for non-agricultural purposes not classified as government reclaimed,
foreshore and marshy disposable lands of the public domain. Foreshore lands,

however, became inalienable under the 1935 Constitution which only allowed the
lease of these lands to qualified private parties.
Section 58 of CA No. 141 expressly states that disposable lands of the public
domain intended for residential, commercial, industrial or other productive purposes
other than agricultural shall be disposed of under the provisions of this chapter and
not otherwise. Under Section 10 of CA No. 141, the term disposition includes
lease of the land. Any disposition of government reclaimed, foreshore and marshy
disposable lands for non-agricultural purposes must comply with Chapter IX, Title III
of CA No. 141,[54] unless a subsequent law amended or repealed these provisions.
In his concurring opinion in the landmark case of Republic Real Estate Corporation v.
Court of Appeals,[55] Justice Reynato S. Puno summarized succinctly the law on this
matter, as follows:
Foreshore lands are lands of public dominion intended for public use. So too are
lands reclaimed by the government by dredging, filling, or other means. Act 1654
mandated that the control and disposition of the foreshore and lands under water
remained in the national government. Said law allowed only the leasing of
reclaimed land. The Public Land Acts of 1919 and 1936 also declared that the
foreshore and lands reclaimed by the government were to be disposed of to private
parties by lease only and not otherwise. Before leasing, however, the GovernorGeneral, upon recommendation of the Secretary of Agriculture and Natural
Resources, had first to determine that the land reclaimed was not necessary for the
public service. This requisite must have been met before the land could be
disposed of. But even then, the foreshore and lands under water were not to be
alienated and sold to private parties. The disposition of the reclaimed land was only
by lease. The land remained property of the State. (Emphasis supplied)
As observed by Justice Puno in his concurring opinion, Commonwealth Act No. 141
has remained in effect at present.
The State policy prohibiting the sale to private parties of government reclaimed,
foreshore and marshy alienable lands of the public domain, first implemented in
1907 was thus reaffirmed in CA No. 141 after the 1935 Constitution took effect. The
prohibition on the sale of foreshore lands, however, became a constitutional edict
under the 1935 Constitution. Foreshore lands became inalienable as natural
resources of the State, unless reclaimed by the government and classified as
agricultural lands of the public domain, in which case they would fall under the
classification of government reclaimed lands.
After the effectivity of the 1935 Constitution, government reclaimed and marshy
disposable lands of the public domain continued to be only leased and not sold to
private parties.[56] These lands remained sui generis, as the only alienable or

disposable lands of the public domain the government could not sell to private
parties.
Since then and until now, the only way the government can sell to private parties
government reclaimed and marshy disposable lands of the public domain is for the
legislature to pass a law authorizing such sale. CA No. 141 does not authorize the
President to reclassify government reclaimed and marshy lands into other nonagricultural lands under Section 59 (d). Lands classified under Section 59 (d) are the
only alienable or disposable lands for non-agricultural purposes that the
government could sell to private parties.
Moreover, Section 60 of CA No. 141 expressly requires congressional authority
before lands under Section 59 that the government previously transferred to
government units or entities could be sold to private parties. Section 60 of CA No.
141 declares that
Sec. 60. x x x The area so leased or sold shall be such as shall, in the judgment of
the Secretary of Agriculture and Natural Resources, be reasonably necessary for the
purposes for which such sale or lease is requested, and shall not exceed one
hundred and forty-four hectares: Provided, however, That this limitation shall not
apply to grants, donations, or transfers made to a province, municipality or branch
or subdivision of the Government for the purposes deemed by said entities
conducive to the public interest; but the land so granted, donated, or transferred to
a province, municipality or branch or subdivision of the Government shall not be
alienated, encumbered, or otherwise disposed of in a manner affecting its title,
except when authorized by Congress: x x x. (Emphasis supplied)
The congressional authority required in Section 60 of CA No. 141 mirrors the
legislative authority required in Section 56 of Act No. 2874.
One reason for the congressional authority is that Section 60 of CA No. 141
exempted government units and entities from the maximum area of public lands
that could be acquired from the State. These government units and entities should
not just turn around and sell these lands to private parties in violation of
constitutional or statutory limitations. Otherwise, the transfer of lands for nonagricultural purposes to government units and entities could be used to circumvent
constitutional limitations on ownership of alienable or disposable lands of the public
domain. In the same manner, such transfers could also be used to evade the
statutory prohibition in CA No. 141 on the sale of government reclaimed and marshy
lands of the public domain to private parties. Section 60 of CA No. 141 constitutes
by operation of law a lien on these lands.[57]

In case of sale or lease of disposable lands of the public domain falling under
Section 59 of CA No. 141, Sections 63 and 67 require a public bidding. Sections 63
and 67 of CA No. 141 provide as follows:
Sec. 63. Whenever it is decided that lands covered by this chapter are not needed
for public purposes, the Director of Lands shall ask the Secretary of Agriculture and
Commerce (now the Secretary of Natural Resources) for authority to dispose of the
same. Upon receipt of such authority, the Director of Lands shall give notice by
public advertisement in the same manner as in the case of leases or sales of
agricultural public land, x x x.
Sec. 67. The lease or sale shall be made by oral bidding; and adjudication shall be
made to the highest bidder. x x x. (Emphasis supplied)
Thus, CA No. 141 mandates the Government to put to public auction all leases or
sales of alienable or disposable lands of the public domain.[58]
Like Act No. 1654 and Act No. 2874 before it, CA No. 141 did not repeal Section 5 of
the Spanish Law of Waters of 1866. Private parties could still reclaim portions of the
sea with government permission. However, the reclaimed land could become
private land only if classified as alienable agricultural land of the public domain
open to disposition under CA No. 141. The 1935 Constitution prohibited the
alienation of all natural resources except public agricultural lands.
The Civil Code of 1950
The Civil Code of 1950 readopted substantially the definition of property of public
dominion found in the Civil Code of 1889. Articles 420 and 422 of the Civil Code of
1950 state that
Art. 420. The following things are property of public dominion:
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and
bridges constructed by the State, banks, shores, roadsteads, and others of similar
character;
(2) Those which belong to the State, without being for public use, and are intended
for some public service or for the development of the national wealth.
x x x.
Art. 422. Property of public dominion, when no longer intended for public use or for
public service, shall form part of the patrimonial property of the State.

Again, the government must formally declare that the property of public dominion is
no longer needed for public use or public service, before the same could be
classified as patrimonial property of the State.[59] In the case of government
reclaimed and marshy lands of the public domain, the declaration of their being
disposable, as well as the manner of their disposition, is governed by the applicable
provisions of CA No. 141.
Like the Civil Code of 1889, the Civil Code of 1950 included as property of public
dominion those properties of the State which, without being for public use, are
intended for public service or the development of the national wealth. Thus,
government reclaimed and marshy lands of the State, even if not employed for
public use or public service, if developed to enhance the national wealth, are
classified as property of public dominion.
Dispositions under the 1973 Constitution
The 1973 Constitution, which took effect on January 17, 1973, likewise adopted the
Regalian doctrine. Section 8, Article XIV of the 1973 Constitution stated that
Sec. 8. All lands of the public domain, waters, minerals, coal, petroleum and other
mineral oils, all forces of potential energy, fisheries, wildlife, and other natural
resources of the Philippines belong to the State. With the exception of agricultural,
industrial or commercial, residential, and resettlement lands of the public domain,
natural resources shall not be alienated, and no license, concession, or lease for the
exploration, development, exploitation, or utilization of any of the natural resources
shall be granted for a period exceeding twenty-five years, renewable for not more
than twenty-five years, except as to water rights for irrigation, water supply,
fisheries, or industrial uses other than the development of water power, in which
cases, beneficial use may be the measure and the limit of the grant. (Emphasis
supplied)
The 1973 Constitution prohibited the alienation of all natural resources with the
exception of agricultural, industrial or commercial, residential, and resettlement
lands of the public domain. In contrast, the 1935 Constitution barred the alienation
of all natural resources except public agricultural lands. However, the term public
agricultural lands in the 1935 Constitution encompassed industrial, commercial,
residential and resettlement lands of the public domain.[60] If the land of public
domain were neither timber nor mineral land, it would fall under the classification of
agricultural land of the public domain. Both the 1935 and 1973 Constitutions,
therefore, prohibited the alienation of all natural resources except agricultural lands
of the public domain.
The 1973 Constitution, however, limited the alienation of lands of the public domain
to individuals who were citizens of the Philippines. Private corporations, even if

wholly owned by Philippine citizens, were no longer allowed to acquire alienable

lands of the public domain unlike in the 1935 Constitution. Section 11, Article XIV of
the 1973 Constitution declared that
Sec. 11. The Batasang Pambansa, taking into account conservation, ecological,
and development requirements of the natural resources, shall determine by law the
size of land of the public domain which may be developed, held or acquired by, or
leased to, any qualified individual, corporation, or association, and the conditions
therefor. No private corporation or association may hold alienable lands of the
public domain except by lease not to exceed one thousand hectares in area nor may
any citizen hold such lands by lease in excess of five hundred hectares or acquire by
purchase, homestead or grant, in excess of twenty-four hectares. No private
corporation or association may hold by lease, concession, license or permit, timber
or forest lands and other timber or forest resources in excess of one hundred
thousand hectares. However, such area may be increased by the Batasang
Pambansa upon recommendation of the National Economic and Development
Authority. (Emphasis supplied)
Thus, under the 1973 Constitution, private corporations could hold alienable lands
of the public domain only through lease. Only individuals could now acquire
alienable lands of the public domain, and private corporations became absolutely
barred from acquiring any kind of alienable land of the public domain. The
constitutional ban extended to all kinds of alienable lands of the public domain,
while the statutory ban under CA No. 141 applied only to government reclaimed,
foreshore and marshy alienable lands of the public domain.
PD No. 1084 Creating the Public Estates Authority
On February 4, 1977, then President Ferdinand Marcos issued Presidential Decree
No. 1084 creating PEA, a wholly government owned and controlled corporation with
a special charter. Sections 4 and 8 of PD No. 1084, vests PEA with the following
purposes and powers:
Sec. 4. Purpose. The Authority is hereby created for the following purposes:
(a) To reclaim land, including foreshore and submerged areas, by dredging, filling or
other means, or to acquire reclaimed land;
(b) To develop, improve, acquire, administer, deal in, subdivide, dispose, lease and
sell any and all kinds of lands, buildings, estates and other forms of real property,
owned, managed, controlled and/or operated by the government;
(c) To provide for, operate or administer such service as may be necessary for the
efficient, economical and beneficial utilization of the above properties.
Sec. 5. Powers and functions of the Authority. The Authority shall, in carrying out
the purposes for which it is created, have the following powers and functions:

(a)To prescribe its by-laws.

xxx
(i) To hold lands of the public domain in excess of the area permitted to private
corporations by statute.
(j) To reclaim lands and to construct work across, or otherwise, any stream,
watercourse, canal, ditch, flume x x x.
xxx
(o) To perform such acts and exercise such functions as may be necessary for the
attainment of the purposes and objectives herein specified. (Emphasis supplied)
PD No. 1084 authorizes PEA to reclaim both foreshore and submerged areas of the
public domain. Foreshore areas are those covered and uncovered by the ebb and
flow of the tide.[61] Submerged areas are those permanently under water
regardless of the ebb and flow of the tide.[62] Foreshore and submerged areas
indisputably belong to the public domain[63] and are inalienable unless reclaimed,
classified as alienable lands open to disposition, and further declared no longer
needed for public service.
The ban in the 1973 Constitution on private corporations from acquiring alienable
lands of the public domain did not apply to PEA since it was then, and until today, a
fully owned government corporation. The constitutional ban applied then, as it still
applies now, only to private corporations and associations. PD No. 1084 expressly
empowers PEA to hold lands of the public domain even in excess of the area
permitted to private corporations by statute. Thus, PEA can hold title to private
lands, as well as title to lands of the public domain.
In order for PEA to sell its reclaimed foreshore and submerged alienable lands of the
public domain, there must be legislative authority empowering PEA to sell these
lands. This legislative authority is necessary in view of Section 60 of CA No.141,
which states
Sec. 60. x x x; but the land so granted, donated or transferred to a province,
municipality, or branch or subdivision of the Government shall not be alienated,
encumbered or otherwise disposed of in a manner affecting its title, except when
authorized by Congress; x x x. (Emphasis supplied)
Without such legislative authority, PEA could not sell but only lease its reclaimed
foreshore and submerged alienable lands of the public domain. Nevertheless, any
legislative authority granted to PEA to sell its reclaimed alienable lands of the public
domain would be subject to the constitutional ban on private corporations from
acquiring alienable lands of the public domain. Hence, such legislative authority
could only benefit private individuals.
Dispositions under the 1987 Constitution

The 1987 Constitution, like the 1935 and 1973 Constitutions before it, has adopted
the Regalian doctrine. The 1987 Constitution declares that all natural resources are
owned by the State, and except for alienable agricultural lands of the public
domain, natural resources cannot be alienated. Sections 2 and 3, Article XII of the
1987 Constitution state that
Section 2. All lands of the public domain, waters, minerals, coal, petroleum and
other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife,
flora and fauna, and other natural resources are owned by the State. With the
exception of agricultural lands, all other natural resources shall not be alienated.
The exploration, development, and utilization of natural resources shall be under
the full control and supervision of the State. x x x.
Section 3. Lands of the public domain are classified into agricultural, forest or
timber, mineral lands, and national parks. Agricultural lands of the public domain
may be further classified by law according to the uses which they may be devoted.
Alienable lands of the public domain shall be limited to agricultural lands. Private
corporations or associations may not hold such alienable lands of the public domain
except by lease, for a period not exceeding twenty-five years, renewable for not
more than twenty-five years, and not to exceed one thousand hectares in area.
Citizens of the Philippines may lease not more than five hundred hectares, or
acquire not more than twelve hectares thereof by purchase, homestead, or grant.
Taking into account the requirements of conservation, ecology, and development,
and subject to the requirements of agrarian reform, the Congress shall determine,
by law, the size of lands of the public domain which may be acquired, developed,
held, or leased and the conditions therefor. (Emphasis supplied)
The 1987 Constitution continues the State policy in the 1973 Constitution banning
private corporations from acquiring any kind of alienable land of the public domain.
Like the 1973 Constitution, the 1987 Constitution allows private corporations to hold
alienable lands of the public domain only through lease. As in the 1935 and 1973
Constitutions, the general law governing the lease to private corporations of
reclaimed, foreshore and marshy alienable lands of the public domain is still CA No.
141.
The Rationale behind the Constitutional Ban
The rationale behind the constitutional ban on corporations from acquiring, except
through lease, alienable lands of the public domain is not well understood. During
the deliberations of the 1986 Constitutional Commission, the commissioners probed
the rationale behind this ban, thus:

FR. BERNAS: Mr. Vice-President, my questions have reference to page 3, line 5

which says:
`No private corporation or association may hold alienable lands of the public
domain except by lease, not to exceed one thousand hectares in area.
If we recall, this provision did not exist under the 1935 Constitution, but this was
introduced in the 1973 Constitution. In effect, it prohibits private corporations from
acquiring alienable public lands. But it has not been very clear in jurisprudence
what the reason for this is. In some of the cases decided in 1982 and 1983, it was
indicated that the purpose of this is to prevent large landholdings. Is that the intent
of this provision?
MR. VILLEGAS: I think that is the spirit of the provision.
FR. BERNAS: In existing decisions involving the Iglesia ni Cristo, there were
instances where the Iglesia ni Cristo was not allowed to acquire a mere 313-square
meter land where a chapel stood because the Supreme Court said it would be in
violation of this. (Emphasis supplied)
In Ayog v. Cusi,[64] the Court explained the rationale behind this constitutional ban
in this way:
Indeed, one purpose of the constitutional prohibition against purchases of public
agricultural lands by private corporations is to equitably diffuse land ownership or to
encourage owner-cultivatorship and the economic family-size farm and to prevent
a recurrence of cases like the instant case. Huge landholdings by corporations or
private persons had spawned social unrest.
However, if the constitutional intent is to prevent huge landholdings, the
Constitution could have simply limited the size of alienable lands of the public
domain that corporations could acquire. The Constitution could have followed the
limitations on individuals, who could acquire not more than 24 hectares of alienable
lands of the public domain under the 1973 Constitution, and not more than 12
hectares under the 1987 Constitution.
If the constitutional intent is to encourage economic family-size farms, placing the
land in the name of a corporation would be more effective in preventing the breakup of farmlands. If the farmland is registered in the name of a corporation, upon the
death of the owner, his heirs would inherit shares in the corporation instead of
subdivided parcels of the farmland. This would prevent the continuing break-up of
farmlands into smaller and smaller plots from one generation to the next.

In actual practice, the constitutional ban strengthens the constitutional limitation on

individuals from acquiring more than the allowed area of alienable lands of the
public domain. Without the constitutional ban, individuals who already acquired the
maximum area of alienable lands of the public domain could easily set up
corporations to acquire more alienable public lands. An individual could own as
many corporations as his means would allow him. An individual could even hide his
ownership of a corporation by putting his nominees as stockholders of the
corporation. The corporation is a convenient vehicle to circumvent the
constitutional limitation on acquisition by individuals of alienable lands of the public
domain.
The constitutional intent, under the 1973 and 1987 Constitutions, is to transfer
ownership of only a limited area of alienable land of the public domain to a qualified
individual. This constitutional intent is safeguarded by the provision prohibiting
corporations from acquiring alienable lands of the public domain, since the vehicle
to circumvent the constitutional intent is removed. The available alienable public
lands are gradually decreasing in the face of an ever-growing population. The most
effective way to insure faithful adherence to this constitutional intent is to grant or
sell alienable lands of the public domain only to individuals. This, it would seem, is
the practical benefit arising from the constitutional ban.
The Amended Joint Venture Agreement
The subject matter of the Amended JVA, as stated in its second Whereas clause,
consists of three properties, namely:
1. [T]hree partially reclaimed and substantially eroded islands along Emilio
Aguinaldo Boulevard in Paranaque and Las Pinas, Metro Manila, with a combined
titled area of 1,578,441 square meters;
2. [A]nother area of 2,421,559 square meters contiguous to the three islands; and
3. [A]t AMARIs option as approved by PEA, an additional 350 hectares more or less
to regularize the configuration of the reclaimed area.[65]
PEA confirms that the Amended JVA involves the development of the Freedom
Islands and further reclamation of about 250 hectares x x x, plus an option
granted to AMARI to subsequently reclaim another 350 hectares x x x.[66]
In short, the Amended JVA covers a reclamation area of 750 hectares. Only 157.84
hectares of the 750-hectare reclamation project have been reclaimed, and the rest
of the 592.15 hectares are still submerged areas forming part of Manila Bay.
Under the Amended JVA, AMARI will reimburse PEA the sum of P1,894,129,200.00
for PEAs actual cost in partially reclaiming the Freedom Islands. AMARI will also
complete, at its own expense, the reclamation of the Freedom Islands. AMARI will

further shoulder all the reclamation costs of all the other areas, totaling 592.15
hectares, still to be reclaimed. AMARI and PEA will share, in the proportion of 70
percent and 30 percent, respectively, the total net usable area which is defined in
the Amended JVA as the total reclaimed area less 30 percent earmarked for
common areas. Title to AMARIs share in the net usable area, totaling 367.5
hectares, will be issued in the name of AMARI. Section 5.2 (c) of the Amended JVA
provides that
x x x, PEA shall have the duty to execute without delay the necessary deed of
transfer or conveyance of the title pertaining to AMARIs Land share based on the
Land Allocation Plan. PEA, when requested in writing by AMARI, shall then cause the
issuance and delivery of the proper certificates of title covering AMARIs Land Share
in the name of AMARI, x x x; provided, that if more than seventy percent (70%) of
the titled area at any given time pertains to AMARI, PEA shall deliver to AMARI only
seventy percent (70%) of the titles pertaining to AMARI, until such time when a
corresponding proportionate area of additional land pertaining to PEA has been
titled. (Emphasis supplied)
Indisputably, under the Amended JVA AMARI will acquire and own a maximum of
367.5 hectares of reclaimed land which will be titled in its name.
To implement the Amended JVA, PEA delegated to the unincorporated PEA-AMARI
joint venture PEAs statutory authority, rights and privileges to reclaim foreshore
and submerged areas in Manila Bay. Section 3.2.a of the Amended JVA states that
PEA hereby contributes to the joint venture its rights and privileges to perform
Rawland Reclamation and Horizontal Development as well as own the Reclamation
Area, thereby granting the Joint Venture the full and exclusive right, authority and
privilege to undertake the Project in accordance with the Master Development
Plan.
The Amended JVA is the product of a renegotiation of the original JVA dated April 25,
1995 and its supplemental agreement dated August 9, 1995.
The Threshold Issue
The threshold issue is whether AMARI, a private corporation, can acquire and own
under the Amended JVA 367.5 hectares of reclaimed foreshore and submerged
areas in Manila Bay in view of Sections 2 and 3, Article XII of the 1987 Constitution
which state that:
Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and
other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife,
flora and fauna, and other natural resources are owned by the State. With the

exception of agricultural lands, all other natural resources shall not be alienated. x x
x.
xxx
Section 3. x x x Alienable lands of the public domain shall be limited to agricultural
lands. Private corporations or associations may not hold such alienable lands of the
public domain except by lease, x x x.(Emphasis supplied)
Classification of Reclaimed Foreshore and Submerged Areas
PEA readily concedes that lands reclaimed from foreshore or submerged areas of
Manila Bay are alienable or disposable lands of the public domain. In its
Memorandum,[67] PEA admits that
Under the Public Land Act (CA 141, as amended), reclaimed lands are classified as
alienable and disposable lands of the public domain:
Sec. 59. The lands disposable under this title shall be classified as follows:
(a)
Lands reclaimed by the government by dredging, filling, or other means;
x x x. (Emphasis supplied)
Likewise, the Legal Task Force[68] constituted under Presidential Administrative
Order No. 365 admitted in its Report and Recommendation to then President Fidel V.
Ramos, [R]eclaimed lands are classified as alienable and disposable lands of the
public domain.[69] The Legal Task Force concluded that
D. Conclusion
Reclaimed lands are lands of the public domain. However, by statutory authority,
the rights of ownership and disposition over reclaimed lands have been transferred
to PEA, by virtue of which PEA, as owner, may validly convey the same to any
qualified person without violating the Constitution or any statute.
The constitutional provision prohibiting private corporations from holding public
land, except by lease (Sec. 3, Art. XVII,[70] 1987 Constitution), does not apply to
reclaimed lands whose ownership has passed on to PEA by statutory grant.
Under Section 2, Article XII of the 1987 Constitution, the foreshore and submerged
areas of Manila Bay are part of the lands of the public domain, waters x x x and
other natural resources and consequently owned by the State. As such, foreshore
and submerged areas shall not be alienated, unless they are classified as
agricultural lands of the public domain. The mere reclamation of these areas by
PEA does not convert these inalienable natural resources of the State into alienable

or disposable lands of the public domain. There must be a law or presidential

proclamation officially classifying these reclaimed lands as alienable or disposable
and open to disposition or concession. Moreover, these reclaimed lands cannot be
classified as alienable or disposable if the law has reserved them for some public or
quasi-public use.[71]
Section 8 of CA No. 141 provides that only those lands shall be declared open to
disposition or concession which have been officially delimited and classified.[72]
The President has the authority to classify inalienable lands of the public domain
into alienable or disposable lands of the public domain, pursuant to Section 6 of CA
No. 141. In Laurel vs. Garcia,[73] the Executive Department attempted to sell the
Roppongi property in Tokyo, Japan, which was acquired by the Philippine
Government for use as the Chancery of the Philippine Embassy. Although the
Chancery had transferred to another location thirteen years earlier, the Court still
ruled that, under Article 422[74] of the Civil Code, a property of public dominion
retains such character until formally declared otherwise. The Court ruled that
The fact that the Roppongi site has not been used for a long time for actual
Embassy service does not automatically convert it to patrimonial property. Any
such conversion happens only if the property is withdrawn from public use (Cebu
Oxygen and Acetylene Co. v. Bercilles, 66 SCRA 481 [1975]. A property continues to
be part of the public domain, not available for private appropriation or ownership
until there is a formal declaration on the part of the government to withdraw it from
being such (Ignacio v. Director of Lands, 108 Phil. 335 [1960]. (Emphasis supplied)
PD No. 1085, issued on February 4, 1977, authorized the issuance of special land
patents for lands reclaimed by PEA from the foreshore or submerged areas of Manila
Bay. On January 19, 1988 then President Corazon C. Aquino issued Special Patent
No. 3517 in the name of PEA for the 157.84 hectares comprising the partially
reclaimed Freedom Islands. Subsequently, on April 9, 1999 the Register of Deeds of
the Municipality of Paranaque issued TCT Nos. 7309, 7311 and 7312 in the name of
PEA pursuant to Section 103 of PD No. 1529 authorizing the issuance of certificates
of title corresponding to land patents. To this day, these certificates of title are still
in the name of PEA.
PD No. 1085, coupled with President Aquinos actual issuance of a special patent
covering the Freedom Islands, is equivalent to an official proclamation classifying
the Freedom Islands as alienable or disposable lands of the public domain. PD No.
1085 and President Aquinos issuance of a land patent also constitute a declaration
that the Freedom Islands are no longer needed for public service. The Freedom
Islands are thus alienable or disposable lands of the public domain, open to
disposition or concession to qualified parties.

At the time then President Aquino issued Special Patent No. 3517, PEA had already
reclaimed the Freedom Islands although subsequently there were partial erosions on
some areas. The government had also completed the necessary surveys on these
islands. Thus, the Freedom Islands were no longer part of Manila Bay but part of the
land mass. Section 3, Article XII of the 1987 Constitution classifies lands of the
public domain into agricultural, forest or timber, mineral lands, and national
parks. Being neither timber, mineral, nor national park lands, the reclaimed
Freedom Islands necessarily fall under the classification of agricultural lands of the
public domain. Under the 1987 Constitution, agricultural lands of the public domain
are the only natural resources that the State may alienate to qualified private
parties. All other natural resources, such as the seas or bays, are waters x x x
owned by the State forming part of the public domain, and are inalienable pursuant
to Section 2, Article XII of the 1987 Constitution.
AMARI claims that the Freedom Islands are private lands because CDCP, then a
private corporation, reclaimed the islands under a contract dated November 20,
1973 with the Commissioner of Public Highways. AMARI, citing Article 5 of the
Spanish Law of Waters of 1866, argues that if the ownership of reclaimed lands
may be given to the party constructing the works, then it cannot be said that
reclaimed lands are lands of the public domain which the State may not
alienate.[75] Article 5 of the Spanish Law of Waters reads as follows:
Article 5. Lands reclaimed from the sea in consequence of works constructed by
the State, or by the provinces, pueblos or private persons, with proper permission,
shall become the property of the party constructing such works, unless otherwise
provided by the terms of the grant of authority. (Emphasis supplied)
Under Article 5 of the Spanish Law of Waters of 1866, private parties could reclaim
from the sea only with proper permission from the State. Private parties could
own the reclaimed land only if not otherwise provided by the terms of the grant of
authority. This clearly meant that no one could reclaim from the sea without
permission from the State because the sea is property of public dominion. It also
meant that the State could grant or withhold ownership of the reclaimed land
because any reclaimed land, like the sea from which it emerged, belonged to the
State. Thus, a private person reclaiming from the sea without permission from the
State could not acquire ownership of the reclaimed land which would remain
property of public dominion like the sea it replaced.[76] Article 5 of the Spanish Law
of Waters of 1866 adopted the time-honored principle of land ownership that all
lands that were not acquired from the government, either by purchase or by grant,
belong to the public domain.[77]
Article 5 of the Spanish Law of Waters must be read together with laws
subsequently enacted on the disposition of public lands. In particular, CA No. 141
requires that lands of the public domain must first be classified as alienable or

disposable before the government can alienate them. These lands must not be
reserved for public or quasi-public purposes.[78] Moreover, the contract between
CDCP and the government was executed after the effectivity of the 1973
Constitution which barred private corporations from acquiring any kind of alienable
land of the public domain. This contract could not have converted the Freedom
Islands into private lands of a private corporation.
Presidential Decree No. 3-A, issued on January 11, 1973, revoked all laws
authorizing the reclamation of areas under water and revested solely in the National
Government the power to reclaim lands. Section 1 of PD No. 3-A declared that
The provisions of any law to the contrary notwithstanding, the reclamation of areas
under water, whether foreshore or inland, shall be limited to the National
Government or any person authorized by it under a proper contract. (Emphasis
supplied)
x x x.
PD No. 3-A repealed Section 5 of the Spanish Law of Waters of 1866 because
reclamation of areas under water could now be undertaken only by the National
Government or by a person contracted by the National Government. Private
parties may reclaim from the sea only under a contract with the National
Government, and no longer by grant or permission as provided in Section 5 of the
Spanish Law of Waters of 1866.
Executive Order No. 525, issued on February 14, 1979, designated PEA as the
National Governments implementing arm to undertake all reclamation projects of
the government, which shall be undertaken by the PEA or through a proper
contract executed by it with any person or entity. Under such contract, a private
party receives compensation for reclamation services rendered to PEA. Payment to
the contractor may be in cash, or in kind consisting of portions of the reclaimed
land, subject to the constitutional ban on private corporations from acquiring
alienable lands of the public domain. The reclaimed land can be used as payment
in kind only if the reclaimed land is first classified as alienable or disposable land
open to disposition, and then declared no longer needed for public service.
The Amended JVA covers not only the Freedom Islands, but also an additional
592.15 hectares which are still submerged and forming part of Manila Bay. There is
no legislative or Presidential act classifying these submerged areas as alienable or
disposable lands of the public domain open to disposition. These submerged areas
are not covered by any patent or certificate of title. There can be no dispute that
these submerged areas form part of the public domain, and in their present state
are inalienable and outside the commerce of man. Until reclaimed from the sea,
these submerged areas are, under the Constitution, waters x x x owned by the

State, forming part of the public domain and consequently inalienable. Only when
actually reclaimed from the sea can these submerged areas be classified as public
agricultural lands, which under the Constitution are the only natural resources that
the State may alienate. Once reclaimed and transformed into public agricultural
lands, the government may then officially classify these lands as alienable or
disposable lands open to disposition. Thereafter, the government may declare
these lands no longer needed for public service. Only then can these reclaimed
lands be considered alienable or disposable lands of the public domain and within
the commerce of man.
The classification of PEAs reclaimed foreshore and submerged lands into alienable
or disposable lands open to disposition is necessary because PEA is tasked under its
charter to undertake public services that require the use of lands of the public
domain. Under Section 5 of PD No. 1084, the functions of PEA include the following:
[T]o own or operate railroads, tramways and other kinds of land transportation, x x
x; [T]o construct, maintain and operate such systems of sanitary sewers as may be
necessary; [T]o construct, maintain and operate such storm drains as may be
necessary. PEA is empowered to issue rules and regulations as may be necessary
for the proper use by private parties of any or all of the highways, roads, utilities,
buildings and/or any of its properties and to impose or collect fees or tolls for their
use. Thus, part of the reclaimed foreshore and submerged lands held by the PEA
would actually be needed for public use or service since many of the functions
imposed on PEA by its charter constitute essential public services.
Moreover, Section 1 of Executive Order No. 525 provides that PEA shall be
primarily responsible for integrating, directing, and coordinating all reclamation
projects for and on behalf of the National Government. The same section also
states that [A]ll reclamation projects shall be approved by the President upon
recommendation of the PEA, and shall be undertaken by the PEA or through a
proper contract executed by it with any person or entity; x x x. Thus, under EO No.
525, in relation to PD No. 3-A and PD No.1084, PEA became the primary
implementing agency of the National Government to reclaim foreshore and
submerged lands of the public domain. EO No. 525 recognized PEA as the
government entity to undertake the reclamation of lands and ensure their
maximum utilization in promoting public welfare and interests.[79] Since large
portions of these reclaimed lands would obviously be needed for public service,
there must be a formal declaration segregating reclaimed lands no longer needed
for public service from those still needed for public service.
Section 3 of EO No. 525, by declaring that all lands reclaimed by PEA shall belong
to or be owned by the PEA, could not automatically operate to classify inalienable
lands into alienable or disposable lands of the public domain. Otherwise, reclaimed
foreshore and submerged lands of the public domain would automatically become

alienable once reclaimed by PEA, whether or not classified as alienable or

disposable.
The Revised Administrative Code of 1987, a later law than either PD No. 1084 or EO
No. 525, vests in the Department of Environment and Natural Resources (DENR for
brevity) the following powers and functions:
Sec. 4. Powers and Functions. The Department shall:
(1) x x x
xxx
(4) Exercise supervision and control over forest lands, alienable and disposable
public lands, mineral resources and, in the process of exercising such control,
impose appropriate taxes, fees, charges, rentals and any such form of levy and
collect such revenues for the exploration, development, utilization or gathering of
such resources;
xxx
(14) Promulgate rules, regulations and guidelines on the issuance of licenses,
permits, concessions, lease agreements and such other privileges concerning the
development, exploration and utilization of the countrys marine, freshwater, and
brackish water and over all aquatic resources of the country and shall continue to
oversee, supervise and police our natural resources; cancel or cause to cancel such
privileges upon failure, non-compliance or violations of any regulation, order, and
for all other causes which are in furtherance of the conservation of natural
resources and supportive of the national interest;
(15) Exercise exclusive jurisdiction on the management and disposition of all lands
of the public domain and serve as the sole agency responsible for classification,
sub-classification, surveying and titling of lands in consultation with appropriate
agencies.[80] (Emphasis supplied)
As manager, conservator and overseer of the natural resources of the State, DENR
exercises supervision and control over alienable and disposable public lands.
DENR also exercises exclusive jurisdiction on the management and disposition of
all lands of the public domain. Thus, DENR decides whether areas under water,
like foreshore or submerged areas of Manila Bay, should be reclaimed or not. This
means that PEA needs authorization from DENR before PEA can undertake
reclamation projects in Manila Bay, or in any part of the country.
DENR also exercises exclusive jurisdiction over the disposition of all lands of the
public domain. Hence, DENR decides whether reclaimed lands of PEA should be
classified as alienable under Sections 6[81] and 7[82] of CA No. 141. Once DENR
decides that the reclaimed lands should be so classified, it then recommends to the

President the issuance of a proclamation classifying the lands as alienable or

disposable lands of the public domain open to disposition. We note that then DENR
Secretary Fulgencio S. Factoran, Jr. countersigned Special Patent No. 3517 in
compliance with the Revised Administrative Code and Sections 6 and 7 of CA No.
141.
In short, DENR is vested with the power to authorize the reclamation of areas under
water, while PEA is vested with the power to undertake the physical reclamation of
areas under water, whether directly or through private contractors. DENR is also
empowered to classify lands of the public domain into alienable or disposable lands
subject to the approval of the President. On the other hand, PEA is tasked to
develop, sell or lease the reclaimed alienable lands of the public domain.
Clearly, the mere physical act of reclamation by PEA of foreshore or submerged
areas does not make the reclaimed lands alienable or disposable lands of the public
domain, much less patrimonial lands of PEA. Likewise, the mere transfer by the
National Government of lands of the public domain to PEA does not make the lands
alienable or disposable lands of the public domain, much less patrimonial lands of
PEA.
Absent two official acts a classification that these lands are alienable or disposable
and open to disposition and a declaration that these lands are not needed for public
service, lands reclaimed by PEA remain inalienable lands of the public domain. Only
such an official classification and formal declaration can convert reclaimed lands
into alienable or disposable lands of the public domain, open to disposition under
the Constitution, Title I and Title III[83] of CA No. 141 and other applicable laws.[84]
PEAs Authority to Sell Reclaimed Lands
PEA, like the Legal Task Force, argues that as alienable or disposable lands of the
public domain, the reclaimed lands shall be disposed of in accordance with CA No.
141, the Public Land Act. PEA, citing Section 60 of CA No. 141, admits that
reclaimed lands transferred to a branch or subdivision of the government shall not
be alienated, encumbered, or otherwise disposed of in a manner affecting its title,
except when authorized by Congress: x x x.[85] (Emphasis by PEA)
In Laurel vs. Garcia,[86] the Court cited Section 48 of the Revised Administrative
Code of 1987, which states that
Sec. 48. Official Authorized to Convey Real Property. Whenever real property of
the Government is authorized by law to be conveyed, the deed of conveyance shall
be executed in behalf of the government by the following: x x x.

Thus, the Court concluded that a law is needed to convey any real property
belonging to the Government. The Court declared that It is not for the President to convey real property of the government on his or her
own sole will. Any such conveyance must be authorized and approved by a law
enacted by the Congress. It requires executive and legislative concurrence.
(Emphasis supplied)
PEA contends that PD No. 1085 and EO No. 525 constitute the legislative authority
allowing PEA to sell its reclaimed lands. PD No. 1085, issued on February 4, 1977,
provides that
The land reclaimed in the foreshore and offshore area of Manila Bay pursuant to
the contract for the reclamation and construction of the Manila-Cavite Coastal Road
Project between the Republic of the Philippines and the Construction and
Development Corporation of the Philippines dated November 20, 1973 and/or any
other contract or reclamation covering the same area is hereby transferred,
conveyed and assigned to the ownership and administration of the Public Estates
Authority established pursuant to PD No. 1084; Provided, however, That the rights
and interests of the Construction and Development Corporation of the Philippines
pursuant to the aforesaid contract shall be recognized and respected.
Henceforth, the Public Estates Authority shall exercise the rights and assume the
obligations of the Republic of the Philippines (Department of Public Highways)
arising from, or incident to, the aforesaid contract between the Republic of the
Philippines and the Construction and Development Corporation of the Philippines.
In consideration of the foregoing transfer and assignment, the Public Estates
Authority shall issue in favor of the Republic of the Philippines the corresponding
shares of stock in said entity with an issued value of said shares of stock (which)
shall be deemed fully paid and non-assessable.
The Secretary of Public Highways and the General Manager of the Public Estates
Authority shall execute such contracts or agreements, including appropriate
agreements with the Construction and Development Corporation of the Philippines,
as may be necessary to implement the above.
Special land patent/patents shall be issued by the Secretary of Natural Resources in
favor of the Public Estates Authority without prejudice to the subsequent transfer to
the contractor or his assignees of such portion or portions of the land reclaimed or
to be reclaimed as provided for in the above-mentioned contract. On the basis of
such patents, the Land Registration Commission shall issue the corresponding
certificate of title. (Emphasis supplied)

On the other hand, Section 3 of EO No. 525, issued on February 14, 1979, provides
that Sec. 3. All lands reclaimed by PEA shall belong to or be owned by the PEA which
shall be responsible for its administration, development, utilization or disposition in
accordance with the provisions of Presidential Decree No. 1084. Any and all income
that the PEA may derive from the sale, lease or use of reclaimed lands shall be used
in accordance with the provisions of Presidential Decree No. 1084.
There is no express authority under either PD No. 1085 or EO No. 525 for PEA to sell
its reclaimed lands. PD No. 1085 merely transferred ownership and administration
of lands reclaimed from Manila Bay to PEA, while EO No. 525 declared that lands
reclaimed by PEA shall belong to or be owned by PEA. EO No. 525 expressly states
that PEA should dispose of its reclaimed lands in accordance with the provisions of
Presidential Decree No. 1084, the charter of PEA.
PEAs charter, however, expressly tasks PEA to develop, improve, acquire,
administer, deal in, subdivide, dispose, lease and sell any and all kinds of lands x x
x owned, managed, controlled and/or operated by the government.[87] (Emphasis
supplied) There is, therefore, legislative authority granted to PEA to sell its lands,
whether patrimonial or alienable lands of the public domain. PEA may sell to
private parties its patrimonial properties in accordance with the PEA charter free
from constitutional limitations. The constitutional ban on private corporations from
acquiring alienable lands of the public domain does not apply to the sale of PEAs
patrimonial lands.
PEA may also sell its alienable or disposable lands of the public domain to private
individuals since, with the legislative authority, there is no longer any statutory
prohibition against such sales and the constitutional ban does not apply to
individuals. PEA, however, cannot sell any of its alienable or disposable lands of the
public domain to private corporations since Section 3, Article XII of the 1987
Constitution expressly prohibits such sales. The legislative authority benefits only
individuals. Private corporations remain barred from acquiring any kind of alienable
land of the public domain, including government reclaimed lands.
The provision in PD No. 1085 stating that portions of the reclaimed lands could be
transferred by PEA to the contractor or his assignees (Emphasis supplied) would
not apply to private corporations but only to individuals because of the
constitutional ban. Otherwise, the provisions of PD No. 1085 would violate both the
1973 and 1987 Constitutions.
The requirement of public auction in the sale of reclaimed lands

Assuming the reclaimed lands of PEA are classified as alienable or disposable lands
open to disposition, and further declared no longer needed for public service, PEA
would have to conduct a public bidding in selling or leasing these lands. PEA must
observe the provisions of Sections 63 and 67 of CA No. 141 requiring public auction,
in the absence of a law exempting PEA from holding a public auction.[88] Special
Patent No. 3517 expressly states that the patent is issued by authority of the
Constitution and PD No. 1084, supplemented by Commonwealth Act No. 141, as
amended. This is an acknowledgment that the provisions of CA No. 141 apply to
the disposition of reclaimed alienable lands of the public domain unless otherwise
provided by law. Executive Order No. 654,[89] which authorizes PEA to determine
the kind and manner of payment for the transfer of its assets and properties, does
not exempt PEA from the requirement of public auction. EO No. 654 merely
authorizes PEA to decide the mode of payment, whether in kind and in installment,
but does not authorize PEA to dispense with public auction.
Moreover, under Section 79 of PD No. 1445, otherwise known as the Government
Auditing Code, the government is required to sell valuable government property
through public bidding. Section 79 of PD No. 1445 mandates that
Section 79. When government property has become unserviceable for any cause,
or is no longer needed, it shall, upon application of the officer accountable therefor,
be inspected by the head of the agency or his duly authorized representative in the
presence of the auditor concerned and, if found to be valueless or unsaleable, it
may be destroyed in their presence. If found to be valuable, it may be sold at public
auction to the highest bidder under the supervision of the proper committee on
award or similar body in the presence of the auditor concerned or other authorized
representative of the Commission, after advertising by printed notice in the Official
Gazette, or for not less than three consecutive days in any newspaper of general
circulation, or where the value of the property does not warrant the expense of
publication, by notices posted for a like period in at least three public places in the
locality where the property is to be sold. In the event that the public auction fails,
the property may be sold at a private sale at such price as may be fixed by the
same committee or body concerned and approved by the Commission.
It is only when the public auction fails that a negotiated sale is allowed, in which
case the Commission on Audit must approve the selling price.[90] The Commission
on Audit implements Section 79 of the Government Auditing Code through Circular
No. 89-296[91] dated January 27, 1989. This circular emphasizes that government
assets must be disposed of only through public auction, and a negotiated sale can
be resorted to only in case of failure of public auction.
At the public auction sale, only Philippine citizens are qualified to bid for PEAs
reclaimed foreshore and submerged alienable lands of the public domain. Private

corporations are barred from bidding at the auction sale of any kind of alienable
land of the public domain.
PEA originally scheduled a public bidding for the Freedom Islands on December 10,
1991. PEA imposed a condition that the winning bidder should reclaim another 250
hectares of submerged areas to regularize the shape of the Freedom Islands, under
a 60-40 sharing of the additional reclaimed areas in favor of the winning bidder.[92]
No one, however, submitted a bid. On December 23, 1994, the Government
Corporate Counsel advised PEA it could sell the Freedom Islands through
negotiation, without need of another public bidding, because of the failure of the
public bidding on December 10, 1991.[93]
However, the original JVA dated April 25, 1995 covered not only the Freedom Islands
and the additional 250 hectares still to be reclaimed, it also granted an option to
AMARI to reclaim another 350 hectares. The original JVA, a negotiated contract,
enlarged the reclamation area to 750 hectares.[94] The failure of public bidding on
December 10, 1991, involving only 407.84 hectares,[95] is not a valid justification
for a negotiated sale of 750 hectares, almost double the area publicly auctioned.
Besides, the failure of public bidding happened on December 10, 1991, more than
three years before the signing of the original JVA on April 25, 1995. The economic
situation in the country had greatly improved during the intervening period.
Reclamation under the BOT Law and the Local Government Code
The constitutional prohibition in Section 3, Article XII of the 1987 Constitution is
absolute and clear: Private corporations or associations may not hold such
alienable lands of the public domain except by lease, x x x. Even Republic Act No.
6957 (BOT Law, for brevity), cited by PEA and AMARI as legislative authority to
sell reclaimed lands to private parties, recognizes the constitutional ban. Section 6
of RA No. 6957 states
Sec. 6. Repayment Scheme. - For the financing, construction, operation and
maintenance of any infrastructure projects undertaken through the build-operateand-transfer arrangement or any of its variations pursuant to the provisions of this
Act, the project proponent x x x may likewise be repaid in the form of a share in the
revenue of the project or other non-monetary payments, such as, but not limited to,
the grant of a portion or percentage of the reclaimed land, subject to the
constitutional requirements with respect to the ownership of the land: x x x.
(Emphasis supplied)
A private corporation, even one that undertakes the physical reclamation of a
government BOT project, cannot acquire reclaimed alienable lands of the public
domain in view of the constitutional ban.

Section 302 of the Local Government Code, also mentioned by PEA and AMARI,
authorizes local governments in land reclamation projects to pay the contractor or
developer in kind consisting of a percentage of the reclaimed land, to wit:
Section 302. Financing, Construction, Maintenance, Operation, and Management of
Infrastructure Projects by the Private Sector. x x x
xxx
In case of land reclamation or construction of industrial estates, the repayment plan
may consist of the grant of a portion or percentage of the reclaimed land or the
industrial estate constructed.
Although Section 302 of the Local Government Code does not contain a proviso
similar to that of the BOT Law, the constitutional restrictions on land ownership
automatically apply even though not expressly mentioned in the Local Government
Code.
Thus, under either the BOT Law or the Local Government Code, the contractor or
developer, if a corporate entity, can only be paid with leaseholds on portions of the
reclaimed land. If the contractor or developer is an individual, portions of the
reclaimed land, not exceeding 12 hectares[96] of non-agricultural lands, may be
conveyed to him in ownership in view of the legislative authority allowing such
conveyance. This is the only way these provisions of the BOT Law and the Local
Government Code can avoid a direct collision with Section 3, Article XII of the 1987
Constitution.
Registration of lands of the public domain
Finally, PEA theorizes that the act of conveying the ownership of the reclaimed
lands to public respondent PEA transformed such lands of the public domain to
private lands. This theory is echoed by AMARI which maintains that the issuance
of the special patent leading to the eventual issuance of title takes the subject land
away from the land of public domain and converts the property into patrimonial or
private property. In short, PEA and AMARI contend that with the issuance of
Special Patent No. 3517 and the corresponding certificates of titles, the 157.84
hectares comprising the Freedom Islands have become private lands of PEA. In
support of their theory, PEA and AMARI cite the following rulings of the Court:
1. Sumail v. Judge of CFI of Cotabato,[97] where the Court held
Once the patent was granted and the corresponding certificate of title was issued,
the land ceased to be part of the public domain and became private property over
which the Director of Lands has neither control nor jurisdiction.
2. Lee Hong Hok v. David,[98] where the Court declared -

After the registration and issuance of the certificate and duplicate certificate of title
based on a public land patent, the land covered thereby automatically comes under
the operation of Republic Act 496 subject to all the safeguards provided therein.

3. Heirs of Gregorio Tengco v. Heirs of Jose Aliwalas,[99] where the Court ruled While the Director of Lands has the power to review homestead patents, he may
do so only so long as the land remains part of the public domain and continues to
be under his exclusive control; but once the patent is registered and a certificate of
title is issued, the land ceases to be part of the public domain and becomes private
property over which the Director of Lands has neither control nor jurisdiction.
4. Manalo v. Intermediate Appellate Court,[100] where the Court held
When the lots in dispute were certified as disposable on May 19, 1971, and free
patents were issued covering the same in favor of the private respondents, the said
lots ceased to be part of the public domain and, therefore, the Director of Lands lost
jurisdiction over the same.
5.Republic v. Court of Appeals,[101] where the Court stated
Proclamation No. 350, dated October 9, 1956, of President Magsaysay legally
effected a land grant to the Mindanao Medical Center, Bureau of Medical Services,
Department of Health, of the whole lot, validly sufficient for initial registration under
the Land Registration Act. Such land grant is constitutive of a fee simple title or
absolute title in favor of petitioner Mindanao Medical Center. Thus, Section 122 of
the Act, which governs the registration of grants or patents involving public lands,
provides that Whenever public lands in the Philippine Islands belonging to the
Government of the United States or to the Government of the Philippines are
alienated, granted or conveyed to persons or to public or private corporations, the
same shall be brought forthwith under the operation of this Act (Land Registration
Act, Act 496) and shall become registered lands.
The first four cases cited involve petitions to cancel the land patents and the
corresponding certificates of titles issued to private parties. These four cases
uniformly hold that the Director of Lands has no jurisdiction over private lands or
that upon issuance of the certificate of title the land automatically comes under the
Torrens System. The fifth case cited involves the registration under the Torrens
System of a 12.8-hectare public land granted by the National Government to
Mindanao Medical Center, a government unit under the Department of Health. The
National Government transferred the 12.8-hectare public land to serve as the site
for the hospital buildings and other facilities of Mindanao Medical Center, which

performed a public service. The Court affirmed the registration of the 12.8-hectare
public land in the name of Mindanao Medical Center under Section 122 of Act No.
496. This fifth case is an example of a public land being registered under Act No.
496 without the land losing its character as a property of public dominion.
In the instant case, the only patent and certificates of title issued are those in the
name of PEA, a wholly government owned corporation performing public as well as
proprietary functions. No patent or certificate of title has been issued to any private
party. No one is asking the Director of Lands to cancel PEAs patent or certificates of
title. In fact, the thrust of the instant petition is that PEAs certificates of title should
remain with PEA, and the land covered by these certificates, being alienable lands
of the public domain, should not be sold to a private corporation.
Registration of land under Act No. 496 or PD No. 1529 does not vest in the registrant
private or public ownership of the land. Registration is not a mode of acquiring
ownership but is merely evidence of ownership previously conferred by any of the
recognized modes of acquiring ownership. Registration does not give the registrant
a better right than what the registrant had prior to the registration.[102] The
registration of lands of the public domain under the Torrens system, by itself, cannot
convert public lands into private lands.[103]
Jurisprudence holding that upon the grant of the patent or issuance of the certificate
of title the alienable land of the public domain automatically becomes private land
cannot apply to government units and entities like PEA. The transfer of the Freedom
Islands to PEA was made subject to the provisions of CA No. 141 as expressly stated
in Special Patent No. 3517 issued by then President Aquino, to wit:
NOW, THEREFORE, KNOW YE, that by authority of the Constitution of the
Philippines and in conformity with the provisions of Presidential Decree No. 1084,
supplemented by Commonwealth Act No. 141, as amended, there are hereby
granted and conveyed unto the Public Estates Authority the aforesaid tracts of land
containing a total area of one million nine hundred fifteen thousand eight hundred
ninety four (1,915,894) square meters; the technical description of which are hereto
attached and made an integral part hereof. (Emphasis supplied)
Thus, the provisions of CA No. 141 apply to the Freedom Islands on matters not
covered by PD No. 1084. Section 60 of CA No. 141 prohibits, except when
authorized by Congress, the sale of alienable lands of the public domain that are
transferred to government units or entities. Section 60 of CA No. 141 constitutes,
under Section 44 of PD No. 1529, a statutory lien affecting title of the registered
land even if not annotated on the certificate of title.[104] Alienable lands of the
public domain held by government entities under Section 60 of CA No. 141 remain
public lands because they cannot be alienated or encumbered unless Congress
passes a law authorizing their disposition. Congress, however, cannot authorize

the sale to private corporations of reclaimed alienable lands of the public domain
because of the constitutional ban. Only individuals can benefit from such law.
The grant of legislative authority to sell public lands in accordance with Section 60
of CA No. 141 does not automatically convert alienable lands of the public domain
into private or patrimonial lands. The alienable lands of the public domain must be
transferred to qualified private parties, or to government entities not tasked to
dispose of public lands, before these lands can become private or patrimonial lands.
Otherwise, the constitutional ban will become illusory if Congress can declare lands
of the public domain as private or patrimonial lands in the hands of a government
agency tasked to dispose of public lands. This will allow private corporations to
acquire directly from government agencies limitless areas of lands which, prior to
such law, are concededly public lands.
Under EO No. 525, PEA became the central implementing agency of the National
Government to reclaim foreshore and submerged areas of the public domain. Thus,
EO No. 525 declares that
EXECUTIVE ORDER NO. 525
Designating the Public Estates Authority as the Agency Primarily Responsible for all
Reclamation Projects
Whereas, there are several reclamation projects which are ongoing or being
proposed to be undertaken in various parts of the country which need to be
evaluated for consistency with national programs;
Whereas, there is a need to give further institutional support to the Governments
declared policy to provide for a coordinated, economical and efficient reclamation of
lands;
Whereas, Presidential Decree No. 3-A requires that all reclamation of areas shall be
limited to the National Government or any person authorized by it under proper
contract;
Whereas, a central authority is needed to act on behalf of the National Government
which shall ensure a coordinated and integrated approach in the reclamation of
lands;
Whereas, Presidential Decree No. 1084 creates the Public Estates Authority as a
government corporation to undertake reclamation of lands and ensure their
maximum utilization in promoting public welfare and interests; and

Whereas, Presidential Decree No. 1416 provides the President with continuing
authority to reorganize the national government including the transfer, abolition, or
merger of functions and offices.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue
of the powers vested in me by the Constitution and pursuant to Presidential Decree
No. 1416, do hereby order and direct the following:
Section 1. The Public Estates Authority (PEA) shall be primarily responsible for
integrating, directing, and coordinating all reclamation projects for and on behalf of
the National Government. All reclamation projects shall be approved by the
President upon recommendation of the PEA, and shall be undertaken by the PEA or
through a proper contract executed by it with any person or entity; Provided, that,
reclamation projects of any national government agency or entity authorized under
its charter shall be undertaken in consultation with the PEA upon approval of the
President.
x x x .
As the central implementing agency tasked to undertake reclamation projects
nationwide, with authority to sell reclaimed lands, PEA took the place of DENR as
the government agency charged with leasing or selling reclaimed lands of the public
domain. The reclaimed lands being leased or sold by PEA are not private lands, in
the same manner that DENR, when it disposes of other alienable lands, does not
dispose of private lands but alienable lands of the public domain. Only when
qualified private parties acquire these lands will the lands become private lands. In
the hands of the government agency tasked and authorized to dispose of alienable
of disposable lands of the public domain, these lands are still public, not private
lands.
Furthermore, PEAs charter expressly states that PEA shall hold lands of the public
domain as well as any and all kinds of lands. PEA can hold both lands of the
public domain and private lands. Thus, the mere fact that alienable lands of the
public domain like the Freedom Islands are transferred to PEA and issued land
patents or certificates of title in PEAs name does not automatically make such
lands private.
To allow vast areas of reclaimed lands of the public domain to be transferred to PEA
as private lands will sanction a gross violation of the constitutional ban on private
corporations from acquiring any kind of alienable land of the public domain. PEA
will simply turn around, as PEA has now done under the Amended JVA, and transfer
several hundreds of hectares of these reclaimed and still to be reclaimed lands to a
single private corporation in only one transaction. This scheme will effectively
nullify the constitutional ban in Section 3, Article XII of the 1987 Constitution which

was intended to diffuse equitably the ownership of alienable lands of the public
domain among Filipinos, now numbering over 80 million strong.
This scheme, if allowed, can even be applied to alienable agricultural lands of the
public domain since PEA can acquire x x x any and all kinds of lands. This will
open the floodgates to corporations and even individuals acquiring hundreds of
hectares of alienable lands of the public domain under the guise that in the hands of
PEA these lands are private lands. This will result in corporations amassing huge
landholdings never before seen in this country - creating the very evil that the
constitutional ban was designed to prevent. This will completely reverse the clear
direction of constitutional development in this country. The 1935 Constitution
allowed private corporations to acquire not more than 1,024 hectares of public
lands.[105] The 1973 Constitution prohibited private corporations from acquiring
any kind of public land, and the 1987 Constitution has unequivocally reiterated this
prohibition.
The contention of PEA and AMARI that public lands, once registered under Act No.
496 or PD No. 1529, automatically become private lands is contrary to existing laws.
Several laws authorize lands of the public domain to be registered under the Torrens
System or Act No. 496, now PD No. 1529, without losing their character as public
lands. Section 122 of Act No. 496, and Section 103 of PD No. 1529, respectively,
provide as follows:
Act No. 496
Sec. 122. Whenever public lands in the Philippine Islands belonging to the x x x
Government of the Philippine Islands are alienated, granted, or conveyed to persons
or the public or private corporations, the same shall be brought forthwith under the
operation of this Act and shall become registered lands.
PD No. 1529
Sec. 103. Certificate of Title to Patents. Whenever public land is by the
Government alienated, granted or conveyed to any person, the same shall be
brought forthwith under the operation of this Decree. (Emphasis supplied)
Based on its legislative history, the phrase conveyed to any person in Section 103
of PD No. 1529 includes conveyances of public lands to public corporations.
Alienable lands of the public domain granted, donated, or transferred to a
province, municipality, or branch or subdivision of the Government, as provided in
Section 60 of CA No. 141, may be registered under the Torrens System pursuant to
Section 103 of PD No. 1529. Such registration, however, is expressly subject to the
condition in Section 60 of CA No. 141 that the land shall not be alienated,

encumbered or otherwise disposed of in a manner affecting its title, except when

authorized by Congress. This provision refers to government reclaimed, foreshore
and marshy lands of the public domain that have been titled but still cannot be
alienated or encumbered unless expressly authorized by Congress. The need for
legislative authority prevents the registered land of the public domain from
becoming private land that can be disposed of to qualified private parties.
The Revised Administrative Code of 1987 also recognizes that lands of the public
domain may be registered under the Torrens System. Section 48, Chapter 12, Book
I of the Code states
Sec. 48. Official Authorized to Convey Real Property. Whenever real property of the
Government is authorized by law to be conveyed, the deed of conveyance shall be
executed in behalf of the government by the following:
(1) x x x
(2) For property belonging to the Republic of the Philippines, but titled in the name
of any political subdivision or of any corporate agency or instrumentality, by the
executive head of the agency or instrumentality. (Emphasis supplied)
Thus, private property purchased by the National Government for expansion of a
public wharf may be titled in the name of a government corporation regulating port
operations in the country. Private property purchased by the National Government
for expansion of an airport may also be titled in the name of the government
agency tasked to administer the airport. Private property donated to a municipality
for use as a town plaza or public school site may likewise be titled in the name of
the municipality.[106] All these properties become properties of the public domain,
and if already registered under Act No. 496 or PD No. 1529, remain registered land.
There is no requirement or provision in any existing law for the de-registration of
land from the Torrens System.
Private lands taken by the Government for public use under its power of eminent
domain become unquestionably part of the public domain. Nevertheless, Section
85 of PD No. 1529 authorizes the Register of Deeds to issue in the name of the
National Government new certificates of title covering such expropriated lands.
Section 85 of PD No. 1529 states
Sec. 85. Land taken by eminent domain. Whenever any registered land, or
interest therein, is expropriated or taken by eminent domain, the National
Government, province, city or municipality, or any other agency or instrumentality
exercising such right shall file for registration in the proper Registry a certified copy
of the judgment which shall state definitely by an adequate description, the
particular property or interest expropriated, the number of the certificate of title,
and the nature of the public use. A memorandum of the right or interest taken shall
be made on each certificate of title by the Register of Deeds, and where the fee

simple is taken, a new certificate shall be issued in favor of the National

Government, province, city, municipality, or any other agency or instrumentality
exercising such right for the land so taken. The legal expenses incident to the
memorandum of registration or issuance of a new certificate of title shall be for the
account of the authority taking the land or interest therein. (Emphasis supplied)
Consequently, lands registered under Act No. 496 or PD No. 1529 are not
exclusively private or patrimonial lands. Lands of the public domain may also be
registered pursuant to existing laws.
AMARI makes a parting shot that the Amended JVA is not a sale to AMARI of the
Freedom Islands or of the lands to be reclaimed from submerged areas of Manila
Bay. In the words of AMARI, the Amended JVA is not a sale but a joint venture with
a stipulation for reimbursement of the original cost incurred by PEA for the earlier
reclamation and construction works performed by the CDCP under its 1973 contract
with the Republic. Whether the Amended JVA is a sale or a joint venture, the fact
remains that the Amended JVA requires PEA to cause the issuance and delivery of
the certificates of title conveying AMARIs Land Share in the name of AMARI.[107]
This stipulation still contravenes Section 3, Article XII of the 1987 Constitution which
provides that private corporations shall not hold such alienable lands of the public
domain except by lease. The transfer of title and ownership to AMARI clearly
means that AMARI will hold the reclaimed lands other than by lease. The transfer
of title and ownership is a disposition of the reclaimed lands, a transaction
considered a sale or alienation under CA No. 141,[108] the Government Auditing
Code,[109] and Section 3, Article XII of the 1987 Constitution.
The Regalian doctrine is deeply implanted in our legal system. Foreshore and
submerged areas form part of the public domain and are inalienable. Lands
reclaimed from foreshore and submerged areas also form part of the public domain
and are also inalienable, unless converted pursuant to law into alienable or
disposable lands of the public domain. Historically, lands reclaimed by the
government are sui generis, not available for sale to private parties unlike other
alienable public lands. Reclaimed lands retain their inherent potential as areas for
public use or public service. Alienable lands of the public domain, increasingly
becoming scarce natural resources, are to be distributed equitably among our evergrowing population. To insure such equitable distribution, the 1973 and 1987
Constitutions have barred private corporations from acquiring any kind of alienable
land of the public domain. Those who attempt to dispose of inalienable natural
resources of the State, or seek to circumvent the constitutional ban on alienation of
lands of the public domain to private corporations, do so at their own risk.
We can now summarize our conclusions as follows:

1. The 157.84 hectares of reclaimed lands comprising the Freedom Islands, now
covered by certificates of title in the name of PEA, are alienable lands of the public
domain. PEA may lease these lands to private corporations but may not sell or
transfer ownership of these lands to private corporations. PEA may only sell these
lands to Philippine citizens, subject to the ownership limitations in the 1987
Constitution and existing laws.
2. The 592.15 hectares of submerged areas of Manila Bay remain inalienable
natural resources of the public domain until classified as alienable or disposable
lands open to disposition and declared no longer needed for public service. The
government can make such classification and declaration only after PEA has
reclaimed these submerged areas. Only then can these lands qualify as agricultural
lands of the public domain, which are the only natural resources the government
can alienate. In their present state, the 592.15 hectares of submerged areas are
inalienable and outside the commerce of man.
3. Since the Amended JVA seeks to transfer to AMARI, a private corporation,
ownership of 77.34 hectares[110] of the Freedom Islands, such transfer is void for
being contrary to Section 3, Article XII of the 1987 Constitution which prohibits
private corporations from acquiring any kind of alienable land of the public domain.
4. Since the Amended JVA also seeks to transfer to AMARI ownership of 290.156
hectares[111] of still submerged areas of Manila Bay, such transfer is void for being
contrary to Section 2, Article XII of the 1987 Constitution which prohibits the
alienation of natural resources other than agricultural lands of the public domain.
PEA may reclaim these submerged areas. Thereafter, the government can classify
the reclaimed lands as alienable or disposable, and further declare them no longer
needed for public service. Still, the transfer of such reclaimed alienable lands of the
public domain to AMARI will be void in view of Section 3, Article XII of the 1987
Constitution which prohibits private corporations from acquiring any kind of
alienable land of the public domain.
Clearly, the Amended JVA violates glaringly Sections 2 and 3, Article XII of the 1987
Constitution. Under Article 1409[112] of the Civil Code, contracts whose object or
purpose is contrary to law, or whose object is outside the commerce of men, are
inexistent and void from the beginning. The Court must perform its duty to
defend and uphold the Constitution, and therefore declares the Amended JVA null
and void ab initio.
Seventh issue: whether the Court is the proper forum to raise the issue of whether
the Amended JVA is grossly disadvantageous to the government.

Considering that the Amended JVA is null and void ab initio, there is no necessity to
rule on this last issue. Besides, the Court is not a trier of facts, and this last issue
involves a determination of factual matters.
WHEREFORE, the petition is GRANTED. The Public Estates Authority and Amari
Coastal Bay Development Corporation are PERMANENTLY ENJOINED from
implementing the Amended Joint Venture Agreement which is hereby declared NULL
and VOID ab initio.
SO ORDERED.
1. Public estates authority
v. Mineral Resources

[G.R. No. 127882. December 1, 2004]

LA BUGAL-BLAAN TRIBAL ASSOCIATION, INC., Represented by its
Chairman FLONG MIGUEL M. LUMAYONG; WIGBERTO E. TAADA;
PONCIANO BENNAGEN; JAIME TADEO; RENATO R. CONSTANTINO JR.;
FLONG AGUSTIN M. DABIE; ROBERTO P. AMLOY; RAQIM L. DABIE; SIMEON
H. DOLOJO; IMELDA M. GANDON; LENY B. GUSANAN; MARCELO L.
GUSANAN; QUINTOL A. LABUAYAN; LOMINGGES D. LAWAY; BENITA P.
TACUAYAN; Minors JOLY L. BUGOY, Represented by His Father UNDERO D.
BUGOY and ROGER M. DADING; Represented by His Father ANTONIO L.
DADING; ROMY M. LAGARO, Represented by His Father TOTING A. LAGARO;
MIKENY JONG B. LUMAYONG, Represented by His Father MIGUEL M.
LUMAYONG; RENE T. MIGUEL, Represented by His Mother EDITHA T.
MIGUEL; ALDEMAR L. SAL, Represented by His Father DANNY M. SAL;
DAISY RECARSE, Represented by Her Mother LYDIA S. SANTOS; EDWARD
M. EMUY; ALAN P. MAMPARAIR; MARIO L. MANGCAL; ALDEN S. TUSAN;
AMPARO S. YAP; VIRGILIO CULAR; MARVIC M.V.F. LEONEN; JULIA REGINA
CULAR, GIAN CARLO CULAR, VIRGILIO CULAR JR., Represented by Their
Father VIRGILIO CULAR; PAUL ANTONIO P. VILLAMOR, Represented by His
Parents JOSE VILLAMOR and ELIZABETH PUA-VILLAMOR; ANA GININA R.
TALJA, Represented by Her Father MARIO JOSE B. TALJA; SHARMAINE R.
CUNANAN, Represented by Her Father ALFREDO M. CUNANAN; ANTONIO
JOSE A. VITUG III, Represented by His Mother ANNALIZA A. VITUG, LEAN D.
NARVADEZ, Represented by His Father MANUEL E. NARVADEZ JR.; ROSERIO
MARALAG LINGATING, Represented by Her Father RIO OLIMPIO A.
LINGATING; MARIO JOSE B. TALJA; DAVID E. DE VERA; MARIA MILAGROS L.
SAN JOSE; Sr. SUSAN O. BOLANIO, OND; LOLITA G. DEMONTEVERDE; BENJIE
L. NEQUINTO;[1] ROSE LILIA S. ROMANO; ROBERTO S. VERZOLA; EDUARDO

AURELIO C. REYES; LEAN LOUEL A. PERIA, Represented by His Father

ELPIDIO V. PERIA;[2] GREEN FORUM PHILIPPINES; GREEN FORUM WESTERN
VISAYAS (GF-WV); ENVIRONMENTAL LEGAL ASSISTANCE CENTER (ELAC);
KAISAHAN TUNGO SA KAUNLARAN NG KANAYUNAN AT REPORMANG
PANSAKAHAN (KAISAHAN);[3] PARTNERSHIP FOR AGRARIAN REFORM and
RURAL DEVELOPMENT SERVICES, INC. (PARRDS); PHILIPPINE PARTNERSHIP
FOR THE DEVELOPMENT OF HUMAN RESOURCES IN THE RURAL AREAS, INC.
(PHILDHRRA); WOMENS LEGAL BUREAU (WLB); CENTER FOR ALTERNATIVE
DEVELOPMENT INITIATIVES, INC. (CADI); UPLAND DEVELOPMENT
INSTITUTE (UDI); KINAIYAHAN FOUNDATION, INC.; SENTRO NG
ALTERNATIBONG LINGAP PANLIGAL (SALIGAN); and LEGAL RIGHTS AND
NATURAL RESOURCES CENTER, INC. (LRC), petitioners, vs. VICTOR O.
RAMOS, Secretary, Department of Environment and Natural Resources
(DENR); HORACIO RAMOS, Director, Mines and Geosciences Bureau (MGBDENR); RUBEN TORRES, Executive Secretary; and WMC (PHILIPPINES),
INC.,[4] respondents.
RESOLUTION
PANGANIBAN, J.:
All mineral resources are owned by the State. Their exploration, development and
utilization (EDU) must always be subject to the full control and supervision of the
State. More specifically, given the inadequacy of Filipino capital and technology in
large-scale EDU activities, the State may secure the help of foreign companies in all
relevant matters -- especially financial and technical assistance -- provided that, at
all times, the State maintains its right of full control. The foreign assistor or
contractor assumes all financial, technical and entrepreneurial risks in the EDU
activities; hence, it may be given reasonable management, operational, marketing,
audit and other prerogatives to protect its investments and to enable the business
to succeed.
Full control is not anathematic to day-to-day management by the contractor,
provided that the State retains the power to direct overall strategy; and to set aside,
reverse or modify plans and actions of the contractor. The idea of full control is
similar to that which is exercised by the board of directors of a private corporation:
the performance of managerial, operational, financial, marketing and other
functions may be delegated to subordinate officers or given to contractual entities,
but the board retains full residual control of the business.
Who or what organ of government actually exercises this power of control on behalf
of the State? The Constitution is crystal clear: the President. Indeed, the Chief
Executive is the official constitutionally mandated to enter into agreements with
foreign owned corporations. On the other hand, Congress may review the action of
the President once it is notified of every contract entered into in accordance with
this [constitutional] provision within thirty days from its execution. In contrast to

this express mandate of the President and Congress in the EDU of natural resources,
Article XII of the Constitution is silent on the role of the judiciary. However, should
the President and/or Congress gravely abuse their discretion in this regard, the
courts may -- in a proper case -- exercise their residual duty under Article VIII.
Clearly then, the judiciary should not inordinately interfere in the exercise of this
presidential power of control over the EDU of our natural resources.
The Constitution should be read in broad, life-giving strokes. It should not be used
to strangulate economic growth or to serve narrow, parochial interests. Rather, it
should be construed to grant the President and Congress sufficient discretion and
reasonable leeway to enable them to attract foreign investments and expertise, as
well as to secure for our people and our posterity the blessings of prosperity and
peace.
On the basis of this control standard, this Court upholds the constitutionality of the
Philippine Mining Law, its Implementing Rules and Regulations -- insofar as they
relate to financial and technical agreements -- as well as the subject Financial and
Technical Assistance Agreement (FTAA).[5]
Background
The Petition for Prohibition and Mandamus before the Court challenges the
constitutionality of (1) Republic Act No. [RA] 7942 (The Philippine Mining Act of
1995); (2) its Implementing Rules and Regulations (DENR Administrative Order No.
[DAO] 96-40); and (3) the FTAA dated March 30, 1995,[6] executed by the
government with Western Mining Corporation (Philippines), Inc. (WMCP).[7]
On January 27, 2004, the Court en banc promulgated its Decision[8] granting the
Petition and declaring the unconstitutionality of certain provisions of RA 7942, DAO
96-40, as well as of the entire FTAA executed between the government and WMCP,
mainly on the finding that FTAAs are service contracts prohibited by the 1987
Constitution.
The Decision struck down the subject FTAA for being similar to service contracts,[9]
which, though permitted under the 1973 Constitution,[10] were subsequently
denounced for being antithetical to the principle of sovereignty over our natural
resources, because they allowed foreign control over the exploitation of our natural
resources, to the prejudice of the Filipino nation.
The Decision quoted several legal scholars and authors who had criticized service
contracts for, inter alia, vesting in the foreign contractor exclusive management and
control of the enterprise, including operation of the field in the event petroleum was
discovered; control of production, expansion and development; nearly unfettered
control over the disposition and sale of the products discovered/extracted; effective

ownership of the natural resource at the point of extraction; and beneficial

ownership of our economic resources. According to the Decision, the 1987
Constitution (Section 2 of Article XII) effectively banned such service contracts.
Subsequently, respondents filed separate Motions for Reconsideration. In a
Resolution dated March 9, 2004, the Court required petitioners to comment thereon.
In the Resolution of June 8, 2004, it set the case for Oral Argument on June 29,
2004.
After hearing the opposing sides, the Court required the parties to submit their
respective Memoranda in amplification of their arguments. In a Resolution issued
later the same day, June 29, 2004, the Court noted, inter alia, the Manifestation and
Motion (in lieu of comment) filed by the Office of the Solicitor General (OSG) on
behalf of public respondents. The OSG said that it was not interposing any
objection to the Motion for Intervention filed by the Chamber of Mines of the
Philippines, Inc. (CMP) and was in fact joining and adopting the latters Motion for
Reconsideration.
Memoranda were accordingly filed by the intervenor as well as by petitioners, public
respondents, and private respondent, dwelling at length on the three issues
discussed below. Later, WMCP submitted its Reply Memorandum, while the OSG -in obedience to an Order of this Court -- filed a Compliance submitting copies of
more FTAAs entered into by the government.
Three Issues Identified by the Court
During the Oral Argument, the Court identified the three issues to be resolved in the
present controversy, as follows:
1. Has the case been rendered moot by the sale of WMC shares in WMCP to
Sagittarius (60 percent of Sagittarius equity is owned by Filipinos and/or Filipinoowned corporations while 40 percent is owned by Indophil Resources NL, an
Australian company) and by the subsequent transfer and registration of the FTAA
from WMCP to Sagittarius?
2. Assuming that the case has been rendered moot, would it still be proper to
resolve the constitutionality of the assailed provisions of the Mining Law, DAO 96-40
and the WMCP FTAA?
3. What is the proper interpretation of the phrase Agreements Involving Either
Technical or Financial Assistance contained in paragraph 4 of Section 2 of Article XII
of the Constitution?
Should the Motion for Reconsideration

Be Granted?
Respondents and intervenors Motions for Reconsideration should be granted, for
the reasons discussed below. The foregoing three issues identified by the Court
shall now be taken up seriatim.
First Issue:
Mootness
In declaring unconstitutional certain provisions of RA 7942, DAO 96-40, and the
WMCP FTAA, the majority Decision agreed with petitioners contention that the
subject FTAA had been executed in violation of Section 2 of Article XII of the 1987
Constitution. According to petitioners, the FTAAs entered into by the government
with foreign-owned corporations are limited by the fourth paragraph of the said
provision to agreements involving only technical or financial assistance for largescale exploration, development and utilization of minerals, petroleum and other
mineral oils. Furthermore, the foreign contractor is allegedly permitted by the FTAA
in question to fully manage and control the mining operations and, therefore, to
acquire beneficial ownership of our mineral resources.
The Decision merely shrugged off the Manifestation by WMPC informing the Court
(1) that on January 23, 2001, WMC had sold all its shares in WMCP to Sagittarius
Mines, Inc., 60 percent of whose equity was held by Filipinos; and (2) that the
assailed FTAA had likewise been transferred from WMCP to Sagittarius.[11] The
ponencia declared that the instant case had not been rendered moot by the transfer
and registration of the FTAA to a Filipino-owned corporation, and that the validity of
the said transfer remained in dispute and awaited final judicial determination.[12]
Patently therefore, the Decision is anchored on the assumption that WMCP had
remained a foreign corporation.
The crux of this issue of mootness is the fact that WMCP, at the time it entered into
the FTAA, happened to be wholly owned by WMC Resources International Pty., Ltd.
(WMC), which in turn was a wholly owned subsidiary of Western Mining Corporation
Holdings Ltd., a publicly listed major Australian mining and exploration company.
The nullity of the FTAA was obviously premised upon the contractor being a foreign
corporation. Had the FTAA been originally issued to a Filipino-owned corporation,
there would have been no constitutionality issue to speak of. Upon the other hand,
the conveyance of the WMCP FTAA to a Filipino corporation can be likened to the
sale of land to a foreigner who subsequently acquires Filipino citizenship, or who
later resells the same land to a Filipino citizen. The conveyance would be validated,
as the property in question would no longer be owned by a disqualified vendee.
And, inasmuch as the FTAA is to be implemented now by a Filipino corporation, it is
no longer possible for the Court to declare it unconstitutional. The case pending in
the Court of Appeals is a dispute between two Filipino companies (Sagittarius and

Lepanto), both claiming the right to purchase the foreign shares in WMCP. So,
regardless of which side eventually wins, the FTAA would still be in the hands of a
qualified Filipino company. Considering that there is no longer any justiciable
controversy, the plea to nullify the Mining Law has become a virtual petition for
declaratory relief, over which this Court has no original jurisdiction.
In their Final Memorandum, however, petitioners argue that the case has not
become moot, considering the invalidity of the alleged sale of the shares in WMCP
from WMC to Sagittarius, and of the transfer of the FTAA from WMCP to Sagittarius,
resulting in the change of contractor in the FTAA in question. And even assuming
that the said transfers were valid, there still exists an actual case predicated on the
invalidity of RA 7942 and its Implementing Rules and Regulations (DAO 96-40).
Presently, we shall discuss petitioners objections to the transfer of both the shares
and the FTAA. We shall take up the alleged invalidity of RA 7942 and DAO 96-40
later on in the discussion of the third issue.
No Transgression of the Constitution
by the Transfer of the WMCP Shares
Petitioners claim, first, that the alleged invalidity of the transfer of the WMCP shares
to Sagittarius violates the fourth paragraph of Section 2 of Article XII of the
Constitution; second, that it is contrary to the provisions of the WMCP FTAA itself;
and third, that the sale of the shares is suspect and should therefore be the subject
of a case in which its validity may properly be litigated.
On the first ground, petitioners assert that paragraph 4 of Section 2 of Article XII
permits the government to enter into FTAAs only with foreign-owned corporations.
Petitioners insist that the first paragraph of this constitutional provision limits the
participation of Filipino corporations in the exploration, development and utilization
of natural resources to only three species of contracts -- production sharing, coproduction and joint venture -- to the exclusion of all other arrangements or
variations thereof, and the WMCP FTAA may therefore not be validly assumed and
implemented by Sagittarius. In short, petitioners claim that a Filipino corporation is
not allowed by the Constitution to enter into an FTAA with the government.
However, a textual analysis of the first paragraph of Section 2 of Article XII does not
support petitioners argument. The pertinent part of the said provision states: Sec.
2. x x x The exploration, development and utilization of natural resources shall be
under the full control and supervision of the State. The State may directly
undertake such activities, or it may enter into co-production, joint venture, or
production-sharing agreements with Filipino citizens, or corporations or associations
at least sixty per centum of whose capital is owned by such citizens. x x x.
Nowhere in the provision is there any express limitation or restriction insofar as

arrangements other than the three aforementioned contractual schemes are

concerned.
Neither can one reasonably discern any implied stricture to that effect. Besides,
there is no basis to believe that the framers of the Constitution, a majority of whom
were obviously concerned with furthering the development and utilization of the
countrys natural resources, could have wanted to restrict Filipino participation in
that area. This point is clear, especially in the light of the overarching constitutional
principle of giving preference and priority to Filipinos and Filipino corporations in the
development of our natural resources.
Besides, even assuming (purely for arguments sake) that a constitutional limitation
barring Filipino corporations from holding and implementing an FTAA actually exists,
nevertheless, such provision would apply only to the transfer of the FTAA to
Sagittarius, but definitely not to the sale of WMCs equity stake in WMCP to
Sagittarius. Otherwise, an unreasonable curtailment of property rights without due
process of law would ensue. Petitioners argument must therefore fail.
FTAA Not Intended
Solely for Foreign Corporation
Equally barren of merit is the second ground cited by petitioners -- that the FTAA
was intended to apply solely to a foreign corporation, as can allegedly be seen from
the provisions therein. They manage to cite only one WMCP FTAA provision that can
be regarded as clearly intended to apply only to a foreign contractor: Section 12,
which provides for international commercial arbitration under the auspices of the
International Chamber of Commerce, after local remedies are exhausted. This
provision, however, does not necessarily imply that the WMCP FTAA cannot be
transferred to and assumed by a Filipino corporation like Sagittarius, in which event
the said provision should simply be disregarded as a superfluity.
No Need for a Separate
Litigation of the Sale of Shares
Petitioners claim as third ground the suspicious sale of shares from WMC to
Sagittarius; hence, the need to litigate it in a separate case. Section 40 of RA 7942
(the Mining Law) allegedly requires the Presidents prior approval of a transfer.
A re-reading of the said provision, however, leads to a different conclusion. Sec.
40. Assignment/Transfer -- A financial or technical assistance agreement may be
assigned or transferred, in whole or in part, to a qualified person subject to the prior
approval of the President: Provided, That the President shall notify Congress of
every financial or technical assistance agreement assigned or converted in

accordance with this provision within thirty (30) days from the date of the approval
thereof.
Section 40 expressly applies to the assignment or transfer of the FTAA, not to the
sale and transfer of shares of stock in WMCP. Moreover, when the transferee of an
FTAA is another foreign corporation, there is a logical application of the requirement
of prior approval by the President of the Republic and notification to Congress in the
event of assignment or transfer of an FTAA. In this situation, such approval and
notification are appropriate safeguards, considering that the new contractor is the
subject of a foreign government.
On the other hand, when the transferee of the FTAA happens to be a Filipino
corporation, the need for such safeguard is not critical; hence, the lack of prior
approval and notification may not be deemed fatal as to render the transfer invalid.
Besides, it is not as if approval by the President is entirely absent in this instance.
As pointed out by private respondent in its Memorandum,[13] the issue of approval
is the subject of one of the cases brought by Lepanto against Sagittarius in GR No.
162331. That case involved the review of the Decision of the Court of Appeals
dated November 21, 2003 in CA-GR SP No. 74161, which affirmed the DENR Order
dated December 31, 2001 and the Decision of the Office of the President dated July
23, 2002, both approving the assignment of the WMCP FTAA to Sagittarius.
Petitioners also question the sale price and the financial capacity of the transferee.
According to the Deed of Absolute Sale dated January 23, 2001, executed between
WMC and Sagittarius, the price of the WMCP shares was fixed at US$9,875,000,
equivalent to P553 million at an exchange rate of 56:1. Sagittarius had an
authorized capital stock of P250 million and a paid up capital of P60 million.
Therefore, at the time of approval of the sale by the DENR, the debt-to-equity ratio
of the transferee was over 9:1 -- hardly ideal for an FTAA contractor, according to
petitioners.
However, private respondents counter that the Deed of Sale specifically provides
that the payment of the purchase price would take place only after Sagittarius
commencement of commercial production from mining operations, if at all.
Consequently, under the circumstances, we believe it would not be reasonable to
conclude, as petitioners did, that the transferees high debt-to-equity ratio per se
necessarily carried negative implications for the enterprise; and it would certainly
be improper to invalidate the sale on that basis, as petitioners propose.
FTAA Not Void,
Thus Transferrable
To bolster further their claim that the case is not moot, petitioners insist that the
FTAA is void and, hence cannot be transferred; and that its transfer does not

operate to cure the constitutional infirmity that is inherent in it; neither will a
change in the circumstances of one of the parties serve to ratify the void contract.
While the discussion in their Final Memorandum was skimpy, petitioners in their
Comment (on the MR) did ratiocinate that this Court had declared the FTAA to be
void because, at the time it was executed with WMCP, the latter was a fully foreignowned corporation, in which the former vested full control and management with
respect to the exploration, development and utilization of mineral resources,
contrary to the provisions of paragraph 4 of Section 2 of Article XII of the
Constitution. And since the FTAA was per se void, no valid right could be
transferred; neither could it be ratified, so petitioners conclude.
Petitioners have assumed as fact that which has yet to be established. First and
foremost, the Decision of this Court declaring the FTAA void has not yet become
final. That was precisely the reason the Court still heard Oral Argument in this case.
Second, the FTAA does not vest in the foreign corporation full control and
supervision over the exploration, development and utilization of mineral resources,
to the exclusion of the government. This point will be dealt with in greater detail
below; but for now, suffice it to say that a perusal of the FTAA provisions will prove
that the government has effective overall direction and control of the mining
operations, including marketing and product pricing, and that the contractors work
programs and budgets are subject to its review and approval or disapproval.
As will be detailed later on, the government does not have to micro-manage the
mining operations and dip its hands into the day-to-day management of the
enterprise in order to be considered as having overall control and direction.
Besides, for practical and pragmatic reasons, there is a need for government
agencies to delegate certain aspects of the management work to the contractor.
Thus the basis for declaring the FTAA void still has to be revisited, reexamined and
reconsidered.
Petitioners sniff at the citation of Chavez v. Public Estates Authority,[14] and Halili v.
CA,[15] claiming that the doctrines in these cases are wholly inapplicable to the
instant case.
Chavez clearly teaches: Thus, the Court has ruled consistently that where a Filipino
citizen sells land to an alien who later sells the land to a Filipino, the invalidity of the
first transfer is corrected by the subsequent sale to a citizen. Similarly, where the
alien who buys the land subsequently acquires Philippine citizenship, the sale is
validated since the purpose of the constitutional ban to limit land ownership to
Filipinos has been achieved. In short, the law disregards the constitutional
disqualification of the buyer to hold land if the land is subsequently transferred to a
qualified party, or the buyer himself becomes a qualified party.[16]

In their Comment, petitioners contend that in Chavez and Halili, the object of the
transfer (the land) was not what was assailed for alleged unconstitutionality.
Rather, it was the transaction that was assailed; hence subsequent compliance with
constitutional provisions would cure its infirmity. In contrast, in the instant case it is
the FTAA itself, the object of the transfer, that is being assailed as invalid and
unconstitutional. So, petitioners claim that the subsequent transfer of a void FTAA
to a Filipino corporation would not cure the defect.
Petitioners are confusing themselves. The present Petition has been filed, precisely
because the grantee of the FTAA was a wholly owned subsidiary of a foreign
corporation. It cannot be gainsaid that anyone would have asserted that the same
FTAA was void if it had at the outset been issued to a Filipino corporation. The FTAA,
therefore, is not per se defective or unconstitutional. It was questioned only
because it had been issued to an allegedly non-qualified, foreign-owned
corporation.
We believe that this case is clearly analogous to Halili, in which the land acquired by
a non-Filipino was re-conveyed to a qualified vendee and the original transaction
was thereby cured. Paraphrasing Halili, the same rationale applies to the instant
case: assuming arguendo the invalidity of its prior grant to a foreign corporation,
the disputed FTAA -- being now held by a Filipino corporation -- can no longer be
assailed; the objective of the constitutional provision -- to keep the exploration,
development and utilization of our natural resources in Filipino hands -- has been
served.
More accurately speaking, the present situation is one degree better than that
obtaining in Halili, in which the original sale to a non-Filipino was clearly and
indisputably violative of the constitutional prohibition and thus void ab initio. In the
present case, the issuance/grant of the subject FTAA to the then foreign-owned
WMCP was not illegal, void or unconstitutional at the time. The matter had to be
brought to court, precisely for adjudication as to whether the FTAA and the Mining
Law had indeed violated the Constitution. Since, up to this point, the decision of
this Court declaring the FTAA void has yet to become final, to all intents and
purposes, the FTAA must be deemed valid and constitutional.[17]
At bottom, we find completely outlandish petitioners contention that an FTAA could
be entered into by the government only with a foreign corporation, never with a
Filipino enterprise. Indeed, the nationalistic provisions of the Constitution are all
anchored on the protection of Filipino interests. How petitioners can now argue that
foreigners have the exclusive right to FTAAs totally overturns the entire basis of the
Petition -- preference for the Filipino in the exploration, development and utilization
of our natural resources. It does not take deep knowledge of law and logic to
understand that what the Constitution grants to foreigners should be equally
available to Filipinos.

Second Issue:
Whether the Court Can Still Decide the Case,
Even Assuming It Is Moot
All the protagonists are in agreement that the Court has jurisdiction to decide this
controversy, even assuming it to be moot.
Petitioners stress the following points. First, while a case becomes moot and
academic when there is no more actual controversy between the parties or no
useful purpose can be served in passing upon the merits,[18] what is at issue in
the instant case is not only the validity of the WMCP FTAA, but also the
constitutionality of RA 7942 and its Implementing Rules and Regulations. Second,
the acts of private respondent cannot operate to cure the law of its alleged
unconstitutionality or to divest this Court of its jurisdiction to decide. Third, the
Constitution imposes upon the Supreme Court the duty to declare invalid any law
that offends the Constitution.
Petitioners also argue that no amendatory laws have been passed to make the
Mining Act of 1995 conform to constitutional strictures (assuming that, at present, it
does not); that public respondents will continue to implement and enforce the
statute until this Court rules otherwise; and that the said law continues to be the
source of legal authority in accepting, processing and approving numerous
applications for mining rights.
Indeed, it appears that as of June 30, 2002, some 43 FTAA applications had been
filed with the Mines and Geosciences Bureau (MGB), with an aggregate area of
2,064,908.65 hectares -- spread over Luzon, the Visayas and Mindanao[19] -applied for. It may be a bit far-fetched to assert, as petitioners do, that each and
every FTAA that was entered into under the provisions of the Mining Act invites
potential litigation for as long as the constitutional issues are not resolved with
finality. Nevertheless, we must concede that there exists the distinct possibility that
one or more of the future FTAAs will be the subject of yet another suit grounded on
constitutional issues.
But of equal if not greater significance is the cloud of uncertainty hanging over the
mining industry, which is even now scaring away foreign investments. Attesting to
this climate of anxiety is the fact that the Chamber of Mines of the Philippines saw
the urgent need to intervene in the case and to present its position during the Oral
Argument; and that Secretary General Romulo Neri of the National Economic
Development Authority (NEDA) requested this Court to allow him to speak, during
that Oral Argument, on the economic consequences of the Decision of January 27,
2004.[20]

We are convinced. We now agree that the Court must recognize the exceptional
character of the situation and the paramount public interest involved, as well as the
necessity for a ruling to put an end to the uncertainties plaguing the mining
industry and the affected communities as a result of doubts cast upon the
constitutionality and validity of the Mining Act, the subject FTAA and future FTAAs,
and the need to avert a multiplicity of suits. Paraphrasing Gonzales v. Commission
on Elections,[21] it is evident that strong reasons of public policy demand that the
constitutionality issue be resolved now.[22]
In further support of the immediate resolution of the constitutionality issue, public
respondents cite Acop v. Guingona,[23] to the effect that the courts will decide a
question -- otherwise moot and academic -- if it is capable of repetition, yet
evading review.[24] Public respondents ask the Court to avoid a situation in which
the constitutionality issue may again arise with respect to another FTAA, the
resolution of which may not be achieved until after it has become too late for our
mining industry to grow out of its infancy. They also recall Salonga v. Cruz Pao,[25]
in which this Court declared that (t)he Court also has the duty to formulate guiding
and controlling constitutional principles, precepts, doctrines or rules. It has the
symbolic function of educating the bench and bar on the extent of protection given
by constitutional guarantees. x x x.
The mootness of the case in relation to the WMCP FTAA led the undersigned
ponente to state in his dissent to the Decision that there was no more justiciable
controversy and the plea to nullify the Mining Law has become a virtual petition for
declaratory relief.[26] The entry of the Chamber of Mines of the Philippines, Inc.,
however, has put into focus the seriousness of the allegations of unconstitutionality
of RA 7942 and DAO 96-40 which converts the case to one for prohibition[27] in the
enforcement of the said law and regulations.
Indeed, this CMP entry brings to fore that the real issue in this case is whether
paragraph 4 of Section 2 of Article XII of the Constitution is contravened by RA 7942
and DAO 96-40, not whether it was violated by specific acts implementing RA 7942
and DAO 96-40. [W]hen an act of the legislative department is seriously alleged to
have infringed the Constitution, settling the controversy becomes the duty of this
Court. By the mere enactment of the questioned law or the approval of the
challenged action, the dispute is said to have ripened into a judicial controversy
even without any other overt act.[28] This ruling can be traced from Taada v.
Angara,[29] in which the Court said:
In seeking to nullify an act of the Philippine Senate on the ground that it
contravenes the Constitution, the petition no doubt raises a justiciable controversy.
Where an action of the legislative branch is seriously alleged to have infringed the
Constitution, it becomes not only the right but in fact the duty of the judiciary to
settle the dispute.

xxx

xxx

xxx

As this Court has repeatedly and firmly emphasized in many cases, it will not shirk,
digress from or abandon its sacred duty and authority to uphold the Constitution in
matters that involve grave abuse of discretion brought before it in appropriate
cases, committed by any officer, agency, instrumentality or department of the
government.[30]
Additionally, the entry of CMP into this case has also effectively forestalled any
possible objections arising from the standing or legal interest of the original parties.
For all the foregoing reasons, we believe that the Court should proceed to a
resolution of the constitutional issues in this case.
Third Issue:
The Proper Interpretation of the Constitutional Phrase
Agreements Involving Either Technical or Financial Assistance
The constitutional provision at the nucleus of the controversy is paragraph 4 of
Section 2 of Article XII of the 1987 Constitution. In order to appreciate its context,
Section 2 is reproduced in full:
Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other
mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora
and fauna, and other natural resources are owned by the State. With the exception
of agricultural lands, all other natural resources shall not be alienated. The
exploration, development and utilization of natural resources shall be under the full
control and supervision of the State. The State may directly undertake such
activities, or it may enter into co-production, joint venture or production-sharing
agreements with Filipino citizens or corporations or associations at least sixty per
centum of whose capital is owned by such citizens. Such agreements may be for a
period not exceeding twenty-five years, renewable for not more than twenty-five
years, and under such terms and conditions as may be provided by law. In cases of
water rights for irrigation, water supply, fisheries, or industrial uses other than the
development of water power, beneficial use may be the measure and limit of the
grant.
The State shall protect the nations marine wealth in its archipelagic waters,
territorial sea, and exclusive economic zone, and reserve its use and enjoyment
exclusively to Filipino citizens.

The Congress may, by law, allow small-scale utilization of natural resources by

Filipino citizens, as well as cooperative fish farming, with priority to subsistence
fishermen and fish-workers in rivers, lakes, bays and lagoons.
The President may enter into agreements with foreign-owned corporations
involving either technical or financial assistance for large-scale exploration,
development, and utilization of minerals, petroleum, and other mineral oils
according to the general terms and conditions provided by law, based on real
contributions to the economic growth and general welfare of the country. In such
agreements, the State shall promote the development and use of local scientific and
technical resources.
The President shall notify the Congress of every contract entered into in
accordance with this provision, within thirty days from its execution.[31]
No Restriction of Meaning by
a Verba Legis Interpretation
To interpret the foregoing provision, petitioners adamantly assert that the language
of the Constitution should prevail; that the primary method of interpreting it is to
seek the ordinary meaning of the words used in its provisions. They rely on rulings
of this Court, such as the following:
The fundamental principle in constitutional construction however is that the
primary source from which to ascertain constitutional intent or purpose is the
language of the provision itself. The presumption is that the words in which the
constitutional provisions are couched express the objective sought to be attained.
In other words, verba legis prevails. Only when the meaning of the words used is
unclear and equivocal should resort be made to extraneous aids of construction and
interpretation, such as the proceedings of the Constitutional Commission or
Convention to shed light on and ascertain the true intent or purpose of the provision
being construed.[32]
Very recently, in Francisco v. The House of Representatives,[33] this Court indeed
had the occasion to reiterate the well-settled principles of constitutional
construction:
First, verba legis, that is, wherever possible, the words used in the Constitution
must be given their ordinary meaning except where technical terms are employed.
x x x.
xxx

xxx

xxx

Second, where there is ambiguity, ratio legis est anima. The words of the
Constitution should be interpreted in accordance with the intent of its framers. x x
x.
xxx

xxx

xxx

Finally, ut magis valeat quam pereat. The Constitution is to be interpreted as a

whole.[34]
For ease of reference and in consonance with verba legis, we reconstruct and
stratify the aforequoted Section 2 as follows:
1. All natural resources are owned by the State. Except for agricultural lands,
natural resources cannot be alienated by the State.
2. The exploration, development and utilization (EDU) of natural resources shall be
under the full control and supervision of the State.
3. The State may undertake these EDU activities through either of the following:
(a) By itself directly and solely
(b) By (i) co-production; (ii) joint venture; or (iii) production sharing agreements with
Filipino citizens or corporations, at least 60 percent of the capital of which is owned
by such citizens
4. Small-scale utilization of natural resources may be allowed by law in favor of
Filipino citizens.
5. For large-scale EDU of minerals, petroleum and other mineral oils, the President
may enter into agreements with foreign-owned corporations involving either
technical or financial assistance according to the general terms and conditions
provided by law x x x.
Note that in all the three foregoing mining activities -- exploration, development and
utilization -- the State may undertake such EDU activities by itself or in tandem with
Filipinos or Filipino corporations, except in two instances: first, in small-scale
utilization of natural resources, which Filipinos may be allowed by law to undertake;
and second, in large-scale EDU of minerals, petroleum and mineral oils, which may
be undertaken by the State via agreements with foreign-owned corporations
involving either technical or financial assistance as provided by law.
Petitioners claim that the phrase agreements x x x involving either technical or
financial assistance simply means technical assistance or financial assistance

agreements, nothing more and nothing else. They insist that there is no ambiguity
in the phrase, and that a plain reading of paragraph 4 quoted above leads to the
inescapable conclusion that what a foreign-owned corporation may enter into with
the government is merely an agreement for either financial or technical assistance
only, for the large-scale exploration, development and utilization of minerals,
petroleum and other mineral oils; such a limitation, they argue, excludes foreign
management and operation of a mining enterprise.[35]
This restrictive interpretation, petitioners believe, is in line with the general policy
enunciated by the Constitution reserving to Filipino citizens and corporations the
use and enjoyment of the countrys natural resources. They maintain that this
Courts Decision[36] of January 27, 2004 correctly declared the WMCP FTAA, along
with pertinent provisions of RA 7942, void for allowing a foreign contractor to have
direct and exclusive management of a mining enterprise. Allowing such a privilege
not only runs counter to the full control and supervision that the State is
constitutionally mandated to exercise over the exploration, development and
utilization of the countrys natural resources; doing so also vests in the foreign
company beneficial ownership of our mineral resources. It will be recalled that
the Decision of January 27, 2004 zeroed in on management or other forms of
assistance or other activities associated with the service contracts of the martial
law regime, since the management or operation of mining activities by foreign
contractors, which is the primary feature of service contracts, was precisely the evil
that the drafters of the 1987 Constitution sought to eradicate.
On the other hand, the intervenor[37] and public respondents argue that the FTAA
allowed by paragraph 4 is not merely an agreement for supplying limited and
specific financial or technical services to the State. Rather, such FTAA is a
comprehensive agreement for the foreign-owned corporations integrated
exploration, development and utilization of mineral, petroleum or other mineral oils
on a large-scale basis. The agreement, therefore, authorizes the foreign
contractors rendition of a whole range of integrated and comprehensive services,
ranging from the discovery to the development, utilization and production of
minerals or petroleum products.
We do not see how applying a strictly literal or verba legis interpretation of
paragraph 4 could inexorably lead to the conclusions arrived at in the ponencia.
First, the drafters choice of words -- their use of the phrase agreements x x x
involving either technical or financial assistance -- does not indicate the intent to
exclude other modes of assistance. The drafters opted to use involving when they
could have simply said agreements for financial or technical assistance, if that was
their intention to begin with. In this case, the limitation would be very clear and no
further debate would ensue.

In contrast, the use of the word involving signifies the possibility of the inclusion
of other forms of assistance or activities having to do with, otherwise related to or
compatible with financial or technical assistance. The word involving as used in
this context has three connotations that can be differentiated thus: one, the sense
of concerning, having to do with, or affecting; two, entailing, requiring,
implying or necessitating; and three, including, containing or
comprising.[38]
Plainly, none of the three connotations convey a sense of exclusivity. Moreover, the
word involving, when understood in the sense of including, as in including
technical or financial assistance, necessarily implies that there are activities other
than those that are being included. In other words, if an agreement includes
technical or financial assistance, there is apart from such assistance -- something
else already in, and covered or may be covered by, the said agreement.
In short, it allows for the possibility that matters, other than those explicitly
mentioned, could be made part of the agreement. Thus, we are now led to the
conclusion that the use of the word involving implies that these agreements with
foreign corporations are not limited to mere financial or technical assistance. The
difference in sense becomes very apparent when we juxtapose agreements for
technical or financial assistance against agreements including technical or
financial assistance. This much is unalterably clear in a verba legis approach.
Second, if the real intention of the drafters was to confine foreign corporations to
financial or technical assistance and nothing more, their language would have
certainly been so unmistakably restrictive and stringent as to leave no doubt in
anyones mind about their true intent. For example, they would have used the
sentence foreign corporations are absolutely prohibited from involvement in the
management or operation of mining or similar ventures or words of similar import.
A search for such stringent wording yields negative results. Thus, we come to the
inevitable conclusion that there was a conscious and deliberate decision to avoid
the use of restrictive wording that bespeaks an intent not to use the expression
agreements x x x involving either technical or financial assistance in an
exclusionary and limiting manner.
Deletion of Service Contracts to
Avoid Pitfalls of Previous Constitutions,
Not to Ban Service Contracts Per Se
Third, we do not see how a verba legis approach leads to the conclusion that the
management or operation of mining activities by foreign contractors, which is the
primary feature of service contracts, was precisely the evil that the drafters of the
1987 Constitution sought to eradicate. Nowhere in the above-quoted Section can
be discerned the objective to keep out of foreign hands the management or

operation of mining activities or the plan to eradicate service contracts as these

were understood in the 1973 Constitution. Still, petitioners maintain that the
deletion or omission from the 1987 Constitution of the term service contracts
found in the 1973 Constitution sufficiently proves the drafters intent to exclude
foreigners from the management of the affected enterprises.
To our mind, however, such intent cannot be definitively and conclusively
established from the mere failure to carry the same expression or term over to the
new Constitution, absent a more specific, explicit and unequivocal statement to that
effect. What petitioners seek (a complete ban on foreign participation in the
management of mining operations, as previously allowed by the earlier
Constitutions) is nothing short of bringing about a momentous sea change in the
economic and developmental policies; and the fundamentally capitalist, freeenterprise philosophy of our government. We cannot imagine such a radical shift
being undertaken by our government, to the great prejudice of the mining sector in
particular and our economy in general, merely on the basis of the omission of the
terms service contract from or the failure to carry them over to the new
Constitution. There has to be a much more definite and even unarguable basis for
such a drastic reversal of policies.
Fourth, a literal and restrictive interpretation of paragraph 4, such as that proposed
by petitioners, suffers from certain internal logical inconsistencies that generate
ambiguities in the understanding of the provision. As the intervenor pointed out,
there has never been any constitutional or statutory provision that reserved to
Filipino citizens or corporations, at least 60 percent of which is Filipino-owned, the
rendition of financial or technical assistance to companies engaged in mining or the
development of any other natural resource. The taking out of foreign-currency or
peso-denominated loans or any other kind of financial assistance, as well as the
rendition of technical assistance -- whether to the State or to any other entity in the
Philippines -- has never been restricted in favor of Filipino citizens or corporations
having a certain minimum percentage of Filipino equity. Such a restriction would
certainly be preposterous and unnecessary. As a matter of fact, financial, and even
technical assistance, regardless of the nationality of its source, would be welcomed
in the mining industry anytime with open arms, on account of the dearth of local
capital and the need to continually update technological know-how and improve
technical skills.
There was therefore no need for a constitutional provision specifically allowing
foreign-owned corporations to render financial or technical assistance, whether in
respect of mining or some other resource development or commercial activity in the
Philippines. The last point needs to be emphasized: if merely financial or technical
assistance agreements are allowed, there would be no need to limit them to largescale mining operations, as there would be far greater need for them in the smallerscale mining activities (and even in non-mining areas). Obviously, the provision in

question was intended to refer to agreements other than those for mere financial or
technical assistance.
In like manner, there would be no need to require the President of the Republic to
report to Congress, if only financial or technical assistance agreements are involved.
Such agreements are in the nature of foreign loans that -- pursuant to Section 20 of
Article VII[39] of the 1987 Constitution -- the President may contract or guarantee,
merely with the prior concurrence of the Monetary Board. In turn, the Board is
required to report to Congress within thirty days from the end of every quarter of
the calendar year, not thirty days after the agreement is entered into.
And if paragraph 4 permits only agreements for loans and other forms of financial,
or technical assistance, what is the point of requiring that they be based on real
contributions to the economic growth and general welfare of the country? For
instance, how is one to measure and assess the real contributions to the
economic growth and general welfare of the country that may ensue from a
foreign-currency loan agreement or a technical-assistance agreement for, say, the
refurbishing of an existing power generating plant for a mining operation
somewhere in Mindanao? Such a criterion would make more sense when applied to
a major business investment in a principal sector of the industry.
The conclusion is clear and inescapable -- a verba legis construction shows that
paragraph 4 is not to be understood as one limited only to foreign loans (or other
forms of financial support) and to technical assistance. There is definitely more to it
than that. These are provisions permitting participation by foreign companies;
requiring the Presidents report to Congress; and using, as yardstick, contributions
based on economic growth and general welfare. These were neither accidentally
inserted into the Constitution nor carelessly cobbled together by the drafters in lip
service to shallow nationalism. The provisions patently have significance and
usefulness in a context that allows agreements with foreign companies to include
more than mere financial or technical assistance.
Fifth, it is argued that Section 2 of Article XII authorizes nothing more than a
rendition of specific and limited financial service or technical assistance by a foreign
company. This argument begs the question To whom or for whom would it be
rendered? or Who is being assisted? If the answer is The State, then it
necessarily implies that the State itself is the one directly and solely undertaking
the large-scale exploration, development and utilization of a mineral resource, so it
follows that the State must itself bear the liability and cost of repaying the financing
sourced from the foreign lender and/or of paying compensation to the foreign entity
rendering technical assistance.
However, it is of common knowledge, and of judicial notice as well, that the
government is and has for many many years been financially strapped, to the point

that even the most essential services have suffered serious curtailments -education and health care, for instance, not to mention judicial services -- have had
to make do with inadequate budgetary allocations. Thus, government has had to
resort to build-operate-transfer and similar arrangements with the private sector, in
order to get vital infrastructure projects built without any governmental outlay.
The very recent brouhaha over the gargantuan fiscal crisis or budget deficit
merely confirms what the ordinary citizen has suspected all along. After the reality
check, one will have to admit the implausibility of a direct undertaking -- by the
State itself -- of large-scale exploration, development and utilization of minerals,
petroleum and other mineral oils. Such an undertaking entails not only humongous
capital requirements, but also the attendant risk of never finding and developing
economically viable quantities of minerals, petroleum and other mineral oils.[40]
It is equally difficult to imagine that such a provision restricting foreign companies
to the rendition of only financial or technical assistance to the government was
deliberately crafted by the drafters of the Constitution, who were all well aware of
the capital-intensive and technology-oriented nature of large-scale mineral or
petroleum extraction and the countrys deficiency in precisely those areas.[41] To
say so would be tantamount to asserting that the provision was purposely designed
to ladle the large-scale development and utilization of mineral, petroleum and
related resources with impossible conditions; and to remain forever and
permanently reserved for future generations of Filipinos.
A More Reasonable Look
at the Charters Plain Language
Sixth, we shall now look closer at the plain language of the Charter and examining
the logical inferences. The drafters chose to emphasize and highlight agreements x
x x involving either technical or financial assistance in relation to foreign
corporations participation in large-scale EDU. The inclusion of this clause on
technical or financial assistance recognizes the fact that foreign business entities
and multinational corporations are the ones with the resources and know-how to
provide technical and/or financial assistance of the magnitude and type required for
large-scale exploration, development and utilization of these resources.
The drafters -- whose ranks included many academicians, economists, businessmen,
lawyers, politicians and government officials -- were not unfamiliar with the
practices of foreign corporations and multinationals.
Neither were they so nave as to believe that these entities would provide
assistance without conditionalities or some quid pro quo. Definitely, as business
persons well know and as a matter of judicial notice, this matter is not just a
question of signing a promissory note or executing a technology transfer

agreement. Foreign corporations usually require that they be given a say in the
management, for instance, of day-to-day operations of the joint venture. They
would demand the appointment of their own men as, for example, operations
managers, technical experts, quality control heads, internal auditors or
comptrollers. Furthermore, they would probably require seats on the Board of
Directors -- all these to ensure the success of the enterprise and the repayment of
the loans and other financial assistance and to make certain that the funding and
the technology they supply would not go to waste. Ultimately, they would also want
to protect their business reputation and bottom lines.[42]
In short, the drafters will have to be credited with enough pragmatism and savvy to
know that these foreign entities will not enter into such agreements involving
assistance without requiring arrangements for the protection of their investments,
gains and benefits.
Thus, by specifying such agreements involving assistance, the drafters
necessarily gave implied assent to everything that these agreements necessarily
entailed; or that could reasonably be deemed necessary to make them tenable and
effective, including management authority with respect to the day-to-day
operations of the enterprise and measures for the protection of the interests of the
foreign corporation, PROVIDED THAT Philippine sovereignty over natural resources
and full control over the enterprise undertaking the EDU activities remain firmly in
the State.
Petitioners Theory Deflated by the
Absence of Closing-Out Rules or Guidelines
Seventh and final point regarding the plain-language approach, one of the practical
difficulties that results from it is the fact that there is nothing by way of transitory
provisions that would serve to confirm the theory that the omission of the term
service contract from the 1987 Constitution signaled the demise of service
contracts.
The framers knew at the time they were deliberating that there were various service
contracts extant and in force and effect, including those in the petroleum industry.
Many of these service contracts were long-term (25 years) and had several more
years to run. If they had meant to ban service contracts altogether, they would
have had to provide for the termination or pretermination of the existing contracts.
Accordingly, they would have supplied the specifics and the when and how of
effecting the extinguishment of these existing contracts (or at least the mechanics
for determining them); and of putting in place the means to address the just claims
of the contractors for compensation for their investments, lost opportunities, and so
on, if not for the recovery thereof.

If the framers had intended to put an end to service contracts, they would have at
least left specific instructions to Congress to deal with these closing-out issues,
perhaps by way of general guidelines and a timeline within which to carry them out.
The following are some extant examples of such transitory guidelines set forth in
Article XVIII of our Constitution:
Section 23. Advertising entities affected by paragraph (2), Section 11 of Article XVI
of this Constitution shall have five years from its ratification to comply on a
graduated and proportionate basis with the minimum Filipino ownership
requirement therein.
xxx xxx

xxx

Section 25. After the expiration in 1991 of the Agreement between the Republic of
the Philippines and the United States of America concerning military bases, foreign
military bases, troops, or facilities shall not be allowed in the Philippines except
under a treaty duly concurred in by the Senate and, when the Congress so requires,
ratified by a majority of the votes cast by the people in a national referendum held
for that purpose, and recognized as a treaty by the other contracting State.
Section 26. The authority to issue sequestration or freeze orders under
Proclamation No. 3 dated March 25, 1986 in relation to the recovery of ill-gotten
wealth shall remain operative for not more than eighteen months after the
ratification of this Constitution. However, in the national interest, as certified by the
President, the Congress may extend such period.
A sequestration or freeze order shall be issued only upon showing of a prima facie
case. The order and the list of the sequestered or frozen properties shall forthwith
be registered with the proper court. For orders issued before the ratification of this
Constitution, the corresponding judicial action or proceeding shall be filed within six
months from its ratification. For those issued after such ratification, the judicial
action or proceeding shall be commenced within six months from the issuance
thereof.
The sequestration or freeze order is deemed automatically lifted if no judicial action
or proceeding is commenced as herein provided. [43]
It is inconceivable that the drafters of the Constitution would leave such an
important matter -- an expression of sovereignty as it were -- indefinitely hanging in
the air in a formless and ineffective state. Indeed, the complete absence of even a
general framework only serves to further deflate petitioners theory, like a childs
balloon losing its air.

Under the circumstances, the logical inconsistencies resulting from petitioners

literal and purely verba legis approach to paragraph 4 of Section 2 of Article XII
compel a resort to other aids to interpretation.
Petitioners Posture Also Negated
by Ratio Legis Et Anima
Thus, in order to resolve the inconsistencies, incongruities and ambiguities
encountered and to supply the deficiencies of the plain-language approach, there is
a need for recourse to the proceedings of the 1986 Constitutional Commission.
There is a need for ratio legis et anima.
Service Contracts Not
Deconstitutionalized
Pertinent portions of the deliberations of the members of the Constitutional
Commission (ConCom) conclusively show that they discussed agreements involving
either technical or financial assistance in the same breadth as service contracts and
used the terms interchangeably. The following exchange between Commissioner
Jamir (sponsor of the provision) and Commissioner Suarez irrefutably proves that
the agreements involving technical or financial assistance were none other than
service contracts.
THE PRESIDENT. Commissioner Jamir is recognized. We are still on Section 3.
MR. JAMIR. Yes, Madam President. With respect to the second paragraph of Section
3, my amendment by substitution reads: THE PRESIDENT MAY ENTER INTO
AGREEMENTS WITH FOREIGN-OWNED CORPORATIONS INVOLVING EITHER
TECHNICAL OR FINANCIAL ASSISTANCE FOR LARGE-SCALE EXPLORATION,
DEVELOPMENT AND UTILIZATION OF NATURAL RESOURCES ACCORDING TO THE
TERMS AND CONDITIONS PROVIDED BY LAW.
MR. VILLEGAS. The Committee accepts the amendment. Commissioner Suarez will
give the background.
MR. JAMIR. Thank you.
THE PRESIDENT. Commissioner Suarez is recognized.
MR. SUAREZ. Thank you, Madam President.
Will Commissioner Jamir answer a few clarificatory questions?
MR. JAMIR. Yes, Madam President.

MR. SUAREZ. This particular portion of the section has reference to what was
popularly known before as service contracts, among other things, is that correct?
MR. JAMIR. Yes, Madam President.
MR. SUAREZ. As it is formulated, the President may enter into service contracts but
subject to the guidelines that may be promulgated by Congress?
MR. JAMIR. That is correct.
MR. SUAREZ. Therefore, that aspect of negotiation and consummation will fall on
the President, not upon Congress?
MR. JAMIR. That is also correct, Madam President.
MR. SUAREZ. Except that all of these contracts, service or otherwise, must be made
strictly in accordance with guidelines prescribed by Congress?
MR. JAMIR. That is also correct.
MR. SUAREZ. And the Gentleman is thinking in terms of a law that uniformly covers
situations of the same nature?
MR. JAMIR. That is 100 percent correct.
MR. SUAREZ. I thank the Commissioner.
MR. JAMIR. Thank you very much.[44]
The following exchange leaves no doubt that the commissioners knew exactly what
they were dealing with: service contracts.
THE PRESIDENT. Commissioner Gascon is recognized.
MR. GASCON. Commissioner Jamir had proposed an amendment with regard to
special service contracts which was accepted by the Committee. Since the
Committee has accepted it, I would like to ask some questions.
THE PRESIDENT. Commissioner Gascon may proceed.
MR. GASCON. As it is proposed now, such service contracts will be entered into by
the President with the guidelines of a general law on service contract to be enacted
by Congress. Is that correct?

MR. VILLEGAS. The Commissioner is right, Madam President.

MR. GASCON. According to the original proposal, if the President were to enter into
a particular agreement, he would need the concurrence of Congress. Now that it
has been changed by the proposal of Commissioner Jamir in that Congress will set
the general law to which the President shall comply, the President will, therefore,
not need the concurrence of Congress every time he enters into service contracts.
Is that correct?
MR. VILLEGAS. That is right.
MR. GASCON. The proposed amendment of Commissioner Jamir is in indirect
contrast to my proposed amendment, so I would like to object and present my
proposed amendment to the body.
xxx xxx

xxx

MR. GASCON. Yes, it will be up to the body.

I feel that the general law to be set by Congress as regard service contract
agreements which the President will enter into might be too general or since we do
not know the content yet of such a law, it might be that certain agreements will be
detrimental to the interest of the Filipinos. This is in direct contrast to my proposal
which provides that there be effective constraints in the implementation of service
contracts.
So instead of a general law to be passed by Congress to serve as a guideline to the
President when entering into service contract agreements, I propose that every
service contract entered into by the President would need the concurrence of
Congress, so as to assure the Filipinos of their interests with regard to the issue in
Section 3 on all lands of the public domain. My alternative amendment, which we
will discuss later, reads: THAT THE PRESIDENT SHALL ENTER INTO SUCH
AGREEMENTS ONLY WITH THE CONCURRENCE OF TWO-THIRDS VOTE OF ALL THE
MEMBERS OF CONGRESS SITTING SEPARATELY.
xxx xxx

xxx

MR. BENGZON. The reason we made that shift is that we realized the original
proposal could breed corruption. By the way, this is not just confined to service
contracts but also to financial assistance. If we are going to make every single
contract subject to the concurrence of Congress which, according to the
Commissioners amendment is the concurrence of two-thirds of Congress voting
separately then (1) there is a very great chance that each contract will be different

from another; and (2) there is a great temptation that it would breed corruption
because of the great lobbying that is going to happen. And we do not want to
subject our legislature to that.
Now, to answer the Commissioners apprehension, by general law, we do not
mean statements of motherhood. Congress can build all the restrictions that it
wishes into that general law so that every contract entered into by the President
under that specific area will have to be uniform. The President has no choice but to
follow all the guidelines that will be provided by law.
MR. GASCON. But my basic problem is that we do not know as of yet the contents
of such a general law as to how much constraints there will be in it. And to my
mind, although the Committees contention that the regular concurrence from
Congress would subject Congress to extensive lobbying, I think that is a risk we will
have to take since Congress is a body of representatives of the people whose
membership will be changing regularly as there will be changing circumstances
every time certain agreements are made. It would be best then to keep in tab and
attuned to the interest of the Filipino people, whenever the President enters into any
agreement with regard to such an important matter as technical or financial
assistance for large-scale exploration, development and utilization of natural
resources or service contracts, the peoples elected representatives should be on
top of it.
xxx xxx

xxx

MR. OPLE. Madam President, we do not need to suspend the session. If

Commissioner Gascon needs a few minutes, I can fill up the remaining time while he
completes his proposed amendment. I just wanted to ask Commissioner Jamir
whether he would entertain a minor amendment to his amendment, and it reads as
follows: THE PRESIDENT SHALL SUBSEQUENTLY NOTIFY CONGRESS OF EVERY
SERVICE CONTRACT ENTERED INTO IN ACCORDANCE WITH THE GENERAL LAW. I
think the reason is, if I may state it briefly, as Commissioner Bengzon said, Congress
can always change the general law later on to conform to new perceptions of
standards that should be built into service contracts. But the only way Congress
can do this is if there were a notification requirement from the Office of the
President that such service contracts had been entered into, subject then to the
scrutiny of the Members of Congress. This pertains to a situation where the service
contracts are already entered into, and all that this amendment seeks is the
reporting requirement from the Office of the President. Will Commissioner Jamir
entertain that?
MR. JAMIR. I will gladly do so, if it is still within my power.
MR. VILLEGAS. Yes, the Committee accepts the amendment.

xxx xxx

xxx

SR. TAN. Madam President, may I ask a question?

THE PRESIDENT. Commissioner Tan is recognized.
SR. TAN. Am I correct in thinking that the only difference between these future
service contracts and the past service contracts under Mr. Marcos is the general law
to be enacted by the legislature and the notification of Congress by the President?
That is the only difference, is it not?
MR. VILLEGAS. That is right.
SR. TAN. So those are the safeguards.
MR. VILLEGAS. Yes. There was no law at all governing service contracts before.
SR. TAN. Thank you, Madam President.[45]
More Than Mere Financial
and Technical Assistance
Entailed by the Agreements
The clear words of Commissioner Jose N. Nolledo quoted below explicitly and
eloquently demonstrate that the drafters knew that the agreements with foreign
corporations were going to entail not mere technical or financial assistance but,
rather, foreign investment in and management of an enterprise involved in largescale exploration, development and utilization of minerals, petroleum, and other
mineral oils.
THE PRESIDENT. Commissioner Nolledo is recognized.
MR. NOLLEDO. Madam President, I have the permission of the Acting Floor Leader
to speak for only two minutes in favor of the amendment of Commissioner Gascon.
THE PRESIDENT. Commissioner Nolledo may proceed.
MR. NOLLEDO. With due respect to the members of the Committee and
Commissioner Jamir, I am in favor of the objection of Commissioner Gascon.
Madam President, I was one of those who refused to sign the 1973 Constitution, and
one of the reasons is that there were many provisions in the Transitory Provisions
therein that favored aliens. I was shocked when I read a provision authorizing

service contracts while we, in this Constitutional Commission, provided for Filipino
control of the economy. We are, therefore, providing for exceptional instances
where aliens may circumvent Filipino control of our economy. And one way of
circumventing the rule in favor of Filipino control of the economy is to recognize
service contracts.
As far as I am concerned, if I should have my own way, I am for the complete
deletion of this provision. However, we are presenting a compromise in the sense
that we are requiring a two-thirds vote of all the Members of Congress as a
safeguard. I think we should not mistrust the future Members of Congress by saying
that the purpose of this provision is to avoid corruption. We cannot claim that they
are less patriotic than we are. I think the Members of this Commission should know
that entering into service contracts is an exception to the rule on protection of
natural resources for the interest of the nation, and therefore, being an exception it
should be subject, whenever possible, to stringent rules. It seems to me that we are
liberalizing the rules in favor of aliens.
I say these things with a heavy heart, Madam President. I do not claim to be a
nationalist, but I love my country. Although we need investments, we must adopt
safeguards that are truly reflective of the sentiments of the people and not mere
cosmetic safeguards as they now appear in the Jamir amendment. (Applause)
Thank you, Madam President.[46]
Another excerpt, featuring then Commissioner (now Chief Justice) Hilario G. Davide
Jr., indicates the limitations of the scope of such service contracts -- they are valid
only in regard to minerals, petroleum and other mineral oils, not to all natural
resources.
THE PRESIDENT. Commissioner Davide is recognized.
MR. DAVIDE. Thank you, Madam President. This is an amendment to the Jamir
amendment and also to the Ople amendment. I propose to delete NATURAL
RESOURCES and substitute it with the following: MINERALS, PETROLEUM AND
OTHER MINERAL OILS. On the Ople amendment, I propose to add: THE
NOTIFICATION TO CONGRESS SHALL BE WITHIN THIRTY DAYS FROM THE EXECUTION
OF THE SERVICE CONTRACT.
THE PRESIDENT. What does the Committee say with respect to the first amendment
in lieu of NATURAL RESOURCES?
MR. VILLEGAS. Could Commissioner Davide explain that?

MR. DAVIDE. Madam President, with the use of NATURAL RESOURCES here, it
would necessarily include all lands of the public domain, our marine resources,
forests, parks and so on. So we would like to limit the scope of these service
contracts to those areas really where these may be needed, the exploitation,
development and exploration of minerals, petroleum and other mineral oils. And so,
we believe that we should really, if we want to grant service contracts at all, limit
the same to only those particular areas where Filipino capital may not be sufficient,
and not to all natural resources.
MR. SUAREZ. Just a point of clarification again, Madam President. When the
Commissioner made those enumerations and specifications, I suppose he
deliberately did not include agricultural land?
MR. DAVIDE. That is precisely the reason we have to enumerate what these
resources are into which service contracts may enter. So, beyond the reach of any
service contract will be lands of the public domain, timberlands, forests, marine
resources, fauna and flora, wildlife and national parks.[47]
After the Jamir amendment was voted upon and approved by a vote of 21 to 10 with
2 abstentions, Commissioner Davide made the following statement, which is very
relevant to our quest:
THE PRESIDENT. Commissioner Davide is recognized.
MR. DAVIDE. I am very glad that Commissioner Padilla emphasized minerals,
petroleum and mineral oils. The Commission has just approved the possible foreign
entry into the development, exploration and utilization of these minerals, petroleum
and other mineral oils by virtue of the Jamir amendment. I voted in favor of the
Jamir amendment because it will eventually give way to vesting in exclusively
Filipino citizens and corporations wholly owned by Filipino citizens the right to utilize
the other natural resources. This means that as a matter of policy, natural
resources should be utilized and exploited only by Filipino citizens or corporations
wholly owned by such citizens. But by virtue of the Jamir amendment, since we feel
that Filipino capital may not be enough for the development and utilization of
minerals, petroleum and other mineral oils, the President can enter into service
contracts with foreign corporations precisely for the development and utilization of
such resources. And so, there is nothing to fear that we will stagnate in the
development of minerals, petroleum and mineral oils because we now allow service
contracts. x x x.[48]
The foregoing are mere fragments of the framers lengthy discussions of the
provision dealing with agreements x x x involving either technical or financial
assistance, which ultimately became paragraph 4 of Section 2 of Article XII of the
Constitution. Beyond any doubt, the members of the ConCom were actually

debating about the martial-law-era service contracts for which they were crafting
appropriate safeguards.
In the voting that led to the approval of Article XII by the ConCom, the explanations
given by Commissioners Gascon, Garcia and Tadeo indicated that they had voted to
reject this provision on account of their objections to the constitutionalization of
the service contract concept.
Mr. Gascon said, I felt that if we would constitutionalize any provision on service
contracts, this should always be with the concurrence of Congress and not guided
only by a general law to be promulgated by Congress.[49] Mr. Garcia explained,
Service contracts are given constitutional legitimization in Sec. 3, even when they
have been proven to be inimical to the interests of the nation, providing, as they do,
the legal loophole for the exploitation of our natural resources for the benefit of
foreign interests.[50] Likewise, Mr. Tadeo cited inter alia the fact that service
contracts continued to subsist, enabling foreign interests to benefit from our natural
resources.[51] It was hardly likely that these gentlemen would have objected so
strenuously, had the provision called for mere technical or financial assistance and
nothing more.
The deliberations of the ConCom and some commissioners explanation of their
votes leave no room for doubt that the service contract concept precisely
underpinned the commissioners understanding of the agreements involving either
technical or financial assistance.
Summation of the
Concom Deliberations
At this point, we sum up the matters established, based on a careful reading of the
ConCom deliberations, as follows:

In their deliberations on what was to become paragraph 4, the framers used

the term service contracts in referring to agreements x x x involving either technical
or financial assistance.

They spoke of service contracts as the concept was understood in the 1973
Constitution.

It was obvious from their discussions that they were not about to ban or
eradicate service contracts.

Instead, they were plainly crafting provisions to put in place safeguards that
would eliminate or minimize the abuses prevalent during the marital law regime. In
brief, they were going to permit service contracts with foreign corporations as

contractors, but with safety measures to prevent abuses, as an exception to the

general norm established in the first paragraph of Section 2 of Article XII. This
provision reserves or limits to Filipino citizens -- and corporations at least 60 percent
of which is owned by such citizens -- the exploration, development and utilization of
natural resources.

This provision was prompted by the perceived insufficiency of Filipino capital

and the felt need for foreign investments in the EDU of minerals and petroleum
resources.

The framers for the most part debated about the sort of safeguards that would
be considered adequate and reasonable. But some of them, having more radical
leanings, wanted to ban service contracts altogether; for them, the provision would
permit aliens to exploit and benefit from the nations natural resources, which they
felt should be reserved only for Filipinos.

In the explanation of their votes, the individual commissioners were heard by

the entire body. They sounded off their individual opinions, openly enunciated their
philosophies, and supported or attacked the provisions with fervor. Everyones
viewpoint was heard.

In the final voting, the Article on the National Economy and Patrimony -including paragraph 4 allowing service contracts with foreign corporations as an
exception to the general norm in paragraph 1 of Section 2 of the same article -- was
resoundingly approved by a vote of 32 to 7, with 2 abstentions.
Agreements Involving Technical
or Financial Assistance Are
Service Contracts With Safeguards
From the foregoing, we are impelled to conclude that the phrase agreements
involving either technical or financial assistance, referred to in paragraph 4, are in
fact service contracts. But unlike those of the 1973 variety, the new ones are
between foreign corporations acting as contractors on the one hand; and on the
other, the government as principal or owner of the works. In the new service
contracts, the foreign contractors provide capital, technology and technical knowhow, and managerial expertise in the creation and operation of large-scale
mining/extractive enterprises; and the government, through its agencies (DENR,
MGB), actively exercises control and supervision over the entire operation.
Such service contracts may be entered into only with respect to minerals, petroleum
and other mineral oils. The grant thereof is subject to several safeguards, among
which are these requirements:

(1)
The service contract shall be crafted in accordance with a general law that will
set standard or uniform terms, conditions and requirements, presumably to attain a
certain uniformity in provisions and avoid the possible insertion of terms
disadvantageous to the country.
(2)
The President shall be the signatory for the government because, supposedly
before an agreement is presented to the President for signature, it will have been
vetted several times over at different levels to ensure that it conforms to law and
can withstand public scrutiny.
(3)
Within thirty days of the executed agreement, the President shall report it to
Congress to give that branch of government an opportunity to look over the
agreement and interpose timely objections, if any.
Use of the Record of the
ConCom to Ascertain Intent
At this juncture, we shall address, rather than gloss over, the use of the framers
intent approach, and the criticism hurled by petitioners who quote a ruling of this
Court:
While it is permissible in this jurisdiction to consult the debates and proceedings of
the constitutional convention in order to arrive at the reason and purpose of the
resulting Constitution, resort thereto may be had only when other guides fail as said
proceedings are powerless to vary the terms of the Constitution when the meaning
is clear. Debates in the constitutional convention are of value as showing the views
of the individual members, and as indicating the reason for their votes, but they
give us no light as to the views of the large majority who did not talk, much less the
mass of our fellow citizens whose votes at the polls gave that instrument the force
of fundamental law. We think it safer to construe the constitution from what
appears upon its face. The proper interpretation therefore depends more on how it
was understood by the people adopting it than in the framers understanding
thereof.[52]
The notion that the deliberations reflect only the views of those members who
spoke out and not the views of the majority who remained silent should be clarified.
We must never forget that those who spoke out were heard by those who remained
silent and did not react. If the latter were silent because they happened not to be
present at the time, they are presumed to have read the minutes and kept abreast
of the deliberations. By remaining silent, they are deemed to have signified their
assent to and/or conformity with at least some of the views propounded or their lack
of objections thereto. It was incumbent upon them, as representatives of the entire
Filipino people, to follow the deliberations closely and to speak their minds on the
matter if they did not see eye to eye with the proponents of the draft provisions.

In any event, each and every one of the commissioners had the opportunity to
speak out and to vote on the matter. Moreover, the individual explanations of votes
are on record, and they show where each delegate stood on the issues. In sum, we
cannot completely denigrate the value or usefulness of the record of the ConCom,
simply because certain members chose not to speak out.
It is contended that the deliberations therein did not necessarily reflect the thinking
of the voting population that participated in the referendum and ratified the
Constitution. Verily, whether we like it or not, it is a bit too much to assume that
every one of those who voted to ratify the proposed Charter did so only after
carefully reading and mulling over it, provision by provision.
Likewise, it appears rather extravagant to assume that every one of those who did
in fact bother to read the draft Charter actually understood the import of its
provisions, much less analyzed it vis--vis the previous Constitutions. We believe
that in reality, a good percentage of those who voted in favor of it did so more out
of faith and trust. For them, it was the product of the hard work and careful
deliberation of a group of intelligent, dedicated and trustworthy men and women of
integrity and conviction, whose love of country and fidelity to duty could not be
questioned.
In short, a large proportion of the voters voted yes because the drafters, or a
majority of them, endorsed the proposed Constitution. What this fact translates to
is the inescapable conclusion that many of the voters in the referendum did not
form their own isolated judgment about the draft Charter, much less about
particular provisions therein. They only relied or fell back and acted upon the
favorable endorsement or recommendation of the framers as a group. In other
words, by voting yes, they may be deemed to have signified their voluntary
adoption of the understanding and interpretation of the delegates with respect to
the proposed Charter and its particular provisions. If its good enough for them,
its good enough for me; or, in many instances, If its good enough for President
Cory Aquino, its good enough for me.
And even for those who voted based on their own individual assessment of the
proposed Charter, there is no evidence available to indicate that their assessment
or understanding of its provisions was in fact different from that of the drafters.
This unwritten assumption seems to be petitioners as well. For all we know, this
segment of voters must have read and understood the provisions of the Constitution
in the same way the framers had, an assumption that would account for the
favorable votes.
Fundamentally speaking, in the process of rewriting the Charter, the members of
the ConCom as a group were supposed to represent the entire Filipino people. Thus,

we cannot but regard their views as being very much indicative of the thinking of
the people with respect to the matters deliberated upon and to the Charter as a
whole.
It is therefore reasonable and unavoidable to make the following conclusion, based
on the above arguments. As written by the framers and ratified and adopted by the
people, the Constitution allows the continued use of service contracts with foreign
corporations -- as contractors who would invest in and operate and manage
extractive enterprises, subject to the full control and supervision of the State -- sans
the abuses of the past regime. The purpose is clear: to develop and utilize our
mineral, petroleum and other resources on a large scale for the immediate and
tangible benefit of the Filipino people.
In view of the foregoing discussion, we should reverse the Decision of January 27,
2004, and in fact now hold a view different from that of the Decision, which had
these findings: (a) paragraph 4 of Section 2 of Article XII limits foreign involvement
in the local mining industry to agreements strictly for either financial or technical
assistance only; (b) the same paragraph precludes agreements that grant to foreign
corporations the management of local mining operations, as such agreements are
purportedly in the nature of service contracts as these were understood under the
1973 Constitution; (c) these service contracts were supposedly deconstitutionalized and proscribed by the omission of the term service contracts
from the 1987 Constitution; (d) since the WMCP FTAA contains provisions permitting
the foreign contractor to manage the concern, the said FTAA is invalid for being a
prohibited service contract; and (e) provisions of RA 7942 and DAO 96-40, which
likewise grant managerial authority to the foreign contractor, are also invalid and
unconstitutional.
Ultimate Test: States Control
Determinative of Constitutionality
But we are not yet at the end of our quest. Far from it. It seems that we are
confronted with a possible collision of constitutional provisions. On the one hand,
paragraph 1 of Section 2 of Article XII explicitly mandates the State to exercise full
control and supervision over the exploration, development and utilization of natural
resources. On the other hand, paragraph 4 permits safeguarded service contracts
with foreign contractors. Normally, pursuant thereto, the contractors exercise
management prerogatives over the mining operations and the enterprise as a
whole. There is thus a legitimate ground to be concerned that either the States full
control and supervision may rule out any exercise of management authority by the
foreign contractor; or, the other way around, allowing the foreign contractor full
management prerogatives may ultimately negate the States full control and
supervision.

Ut Magis Valeat
Quam Pereat
Under the third principle of constitutional construction laid down in Francisco -- ut
magis valeat quam pereat -- every part of the Constitution is to be given effect, and
the Constitution is to be read and understood as a harmonious whole. Thus, full
control and supervision by the State must be understood as one that does not
preclude the legitimate exercise of management prerogatives by the foreign
contractor. Before any further discussion, we must stress the primacy and
supremacy of the principle of sovereignty and State control and supervision over all
aspects of exploration, development and utilization of the countrys natural
resources, as mandated in the first paragraph of Section 2 of Article XII.
But in the next breadth we have to point out that full control and supervision
cannot be taken literally to mean that the State controls and supervises everything
involved, down to the minutest details, and makes all decisions required in the
mining operations. This strained concept of control and supervision over the mining
enterprise would render impossible the legitimate exercise by the contractors of a
reasonable degree of management prerogative and authority necessary and
indispensable to their proper functioning.
For one thing, such an interpretation would discourage foreign entry into large-scale
exploration, development and utilization activities; and result in the unmitigated
stagnation of this sector, to the detriment of our nations development. This
scenario renders paragraph 4 inoperative and useless. And as respondents have
correctly pointed out, the government does not have to micro-manage the mining
operations and dip its hands into the day-to-day affairs of the enterprise in order for
it to be considered as having full control and supervision.
The concept of control[53] adopted in Section 2 of Article XII must be taken to mean
less than dictatorial, all-encompassing control; but nevertheless sufficient to give
the State the power to direct, restrain, regulate and govern the affairs of the
extractive enterprises. Control by the State may be on a macro level, through the
establishment of policies, guidelines, regulations, industry standards and similar
measures that would enable the government to control the conduct of affairs in
various enterprises and restrain activities deemed not desirable or beneficial.
The end in view is ensuring that these enterprises contribute to the economic
development and general welfare of the country, conserve the environment, and
uplift the well-being of the affected local communities. Such a concept of control
would be compatible with permitting the foreign contractor sufficient and
reasonable management authority over the enterprise it invested in, in order to
ensure that it is operating efficiently and profitably, to protect its investments and
to enable it to succeed.

The question to be answered, then, is whether RA 7942 and its Implementing Rules
enable the government to exercise that degree of control sufficient to direct and
regulate the conduct of affairs of individual enterprises and restrain undesirable
activities.
On the resolution of these questions will depend the validity and constitutionality of
certain provisions of the Philippine Mining Act of 1995 (RA 7942) and its
Implementing Rules and Regulations (DAO 96-40), as well as the WMCP FTAA.
Indeed, petitioners charge[54] that RA 7942, as well as its Implementing Rules and
Regulations, makes it possible for FTAA contracts to cede full control and
management of mining enterprises over to fully foreign-owned corporations, with
the result that the State is allegedly reduced to a passive regulator dependent on
submitted plans and reports, with weak review and audit powers. The State does
not supposedly act as the owner of the natural resources for and on behalf of the
Filipino people; it practically has little effective say in the decisions made by the
enterprise. Petitioners then conclude that the law, the implementing regulations,
and the WMCP FTAA cede beneficial ownership of the mineral resources to the
foreign contractor.
A careful scrutiny of the provisions of RA 7942 and its Implementing Rules belies
petitioners claims. Paraphrasing the Constitution, Section 4 of the statute clearly
affirms the States control thus:
Sec. 4. Ownership of Mineral Resources. Mineral resources are owned by the
State and the exploration, development, utilization and processing thereof shall be
under its full control and supervision. The State may directly undertake such
activities or it may enter into mineral agreements with contractors.
The State shall recognize and protect the rights of the indigenous cultural
communities to their ancestral lands as provided for by the Constitution.
The aforequoted provision is substantively reiterated in Section 2 of DAO 96-40 as
follows:
Sec. 2. Declaration of Policy. All mineral resources in public and private lands
within the territory and exclusive economic zone of the Republic of the Philippines
are owned by the State. It shall be the responsibility of the State to promote their
rational exploration, development, utilization and conservation through the
combined efforts of the Government and private sector in order to enhance national
growth in a way that effectively safeguards the environment and protects the rights
of affected communities.

Sufficient Control Over Mining

Operations Vested in the State
by RA 7942 and DAO 96-40
RA 7942 provides for the States control and supervision over mining operations.
The following provisions thereof establish the mechanism of inspection and visitorial
rights over mining operations and institute reportorial requirements in this manner:
1.
Sec. 8 which provides for the DENRs power of over-all supervision and
periodic review for the conservation, management, development and proper use of
the States mineral resources;
2.
Sec. 9 which authorizes the Mines and Geosciences Bureau (MGB) under the
DENR to exercise direct charge in the administration and disposition of mineral
resources, and empowers the MGB to monitor the compliance by the contractor of
the terms and conditions of the mineral agreements, confiscate surety and
performance bonds, and deputize whenever necessary any member or unit of the
Phil. National Police, barangay, duly registered non-governmental organization
(NGO) or any qualified person to police mining activities;
3.
Sec. 66 which vests in the Regional Director exclusive jurisdiction over safety
inspections of all installations, whether surface or underground, utilized in mining
operations.
4.
Sec. 35, which incorporates into all FTAAs the following terms, conditions and
warranties:
(g)
Mining operations shall be conducted in accordance with the provisions of
the Act and its IRR.
(h)

Work programs and minimum expenditures commitments.

xxx xxx

xxx

(k)
Requiring proponent to effectively use appropriate anti-pollution technology
and facilities to protect the environment and restore or rehabilitate mined-out areas.
(l)
The contractors shall furnish the Government records of geologic, accounting
and other relevant data for its mining operation, and that books of accounts and
records shall be open for inspection by the government. x x x.
(m) Requiring the proponent to dispose of the minerals at the highest price and
more advantageous terms and conditions.

(n)

xxx

xxx

xxx

(o)
Such other terms and conditions consistent with the Constitution and with
this Act as the Secretary may deem to be for the best interest of the State and the
welfare of the Filipino people.
The foregoing provisions of Section 35 of RA 7942 are also reflected and
implemented in Section 56 (g), (h), (l), (m) and (n) of the Implementing Rules, DAO
96-40.
Moreover, RA 7942 and DAO 96-40 also provide various stipulations confirming the
governments control over mining enterprises:

The contractor is to relinquish to the government those portions of the

contract area not needed for mining operations and not covered by any declaration
of mining feasibility (Section 35-e, RA 7942; Section 60, DAO 96-40).

The contractor must comply with the provisions pertaining to mine safety,
health and environmental protection (Chapter XI, RA 7942; Chapters XV and XVI,
DAO 96-40).

For violation of any of its terms and conditions, government may cancel an
FTAA. (Chapter XVII, RA 7942; Chapter XXIV, DAO 96-40).

An FTAA contractor is obliged to open its books of accounts and records for
inspection by the government (Section 56-m, DAO 96-40).

An FTAA contractor has to dispose of the minerals and by-products at the

highest market price and register with the MGB a copy of the sales agreement
(Section 56-n, DAO 96-40).

MGB is mandated to monitor the contractors compliance with the terms and
conditions of the FTAA; and to deputize, when necessary, any member or unit of the
Philippine National Police, the barangay or a DENR-accredited nongovernmental
organization to police mining activities (Section 7-d and -f, DAO 96-40).

An FTAA cannot be transferred or assigned without prior approval by the

President (Section 40, RA 7942; Section 66, DAO 96-40).

A mining project under an FTAA cannot proceed to the

construction/development/utilization stage, unless its Declaration of Mining Project
Feasibility has been approved by government (Section 24, RA 7942).


The Declaration of Mining Project Feasibility filed by the contractor cannot be
approved without submission of the following documents:
1. Approved mining project feasibility study (Section 53-d, DAO 96-40)
2. Approved three-year work program (Section 53-a-4, DAO 96-40)
3. Environmental compliance certificate (Section 70, RA 7942)
4. Approved environmental protection and enhancement program (Section 69, RA
7942)
5. Approval by the Sangguniang Panlalawigan/Bayan/Barangay (Section 70, RA
7942; Section 27, RA 7160)
6. Free and prior informed consent by the indigenous peoples concerned, including
payment of royalties through a Memorandum of Agreement (Section 16, RA 7942;
Section 59, RA 8371)

The FTAA contractor is obliged to assist in the

development of its mining community, promotion of the general welfare of its
inhabitants, and development of science and mining technology (Section 57, RA
7942).

The FTAA contractor is obliged to submit reports

(on quarterly, semi-annual or annual basis as the case may be; per Section 270,
DAO 96-40), pertaining to the following:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.

Exploration
Drilling
Mineral resources and reserves
Energy consumption
Production
Sales and marketing
Employment
Payment of taxes, royalties, fees and other Government Shares
Mine safety, health and environment
Land use
Social development
Explosives consumption

An FTAA pertaining to areas within

government reservations cannot be granted without a written clearance from the
government agencies concerned (Section 19, RA 7942; Section 54, DAO 96-40).

An FTAA contractor is required to post a

financial guarantee bond in favor of the government in an amount equivalent to its
expenditures obligations for any particular year. This requirement is apart from the
representations and warranties of the contractor that it has access to all the

financing, managerial and technical expertise and technology necessary to carry

out the objectives of the FTAA (Section 35-b, -e, and -f, RA 7942).

Other reports to be submitted by the

contractor, as required under DAO 96-40, are as follows: an environmental report on
the rehabilitation of the mined-out area and/or mine waste/tailing covered area, and
anti-pollution measures undertaken (Section 35-a-2); annual reports of the mining
operations and records of geologic accounting (Section 56-m); annual progress
reports and final report of exploration activities (Section 56-2).

Other programs required to be submitted by

the contractor, pursuant to DAO 96-40, are the following: a safety and health
program (Section 144); an environmental work program (Section 168); an annual
environmental protection and enhancement program (Section 171).
The foregoing gamut of requirements, regulations, restrictions and limitations
imposed upon the FTAA contractor by the statute and regulations easily overturns
petitioners contention. The setup under RA 7942 and DAO 96-40 hardly relegates
the State to the role of a passive regulator dependent on submitted plans and
reports. On the contrary, the government agencies concerned are empowered to
approve or disapprove -- hence, to influence, direct and change -- the various work
programs and the corresponding minimum expenditure commitments for each of
the exploration, development and utilization phases of the mining enterprise.
Once these plans and reports are approved, the contractor is bound to comply with
its commitments therein. Figures for mineral production and sales are regularly
monitored and subjected to government review, in order to ensure that the products
and by-products are disposed of at the best prices possible; even copies of sales
agreements have to be submitted to and registered with MGB. And the contractor
is mandated to open its books of accounts and records for scrutiny, so as to enable
the State to determine if the government share has been fully paid.
The State may likewise compel the contractors compliance with mandatory
requirements on mine safety, health and environmental protection, and the use of
anti-pollution technology and facilities. Moreover, the contractor is also obligated to
assist in the development of the mining community and to pay royalties to the
indigenous peoples concerned.
Cancellation of the FTAA may be the penalty for violation of any of its terms and
conditions and/or noncompliance with statutes or regulations. This general, allaround, multipurpose sanction is no trifling matter, especially to a contractor who
may have yet to recover the tens or hundreds of millions of dollars sunk into a
mining project.

Overall, considering the provisions of the statute and the regulations just discussed,
we believe that the State definitely possesses the means by which it can have the
ultimate word in the operation of the enterprise, set directions and objectives, and
detect deviations and noncompliance by the contractor; likewise, it has the
capability to enforce compliance and to impose sanctions, should the occasion
therefor arise.
In other words, the FTAA contractor is not free to do whatever it pleases and get
away with it; on the contrary, it will have to follow the government line if it wants to
stay in the enterprise. Ineluctably then, RA 7942 and DAO 96-40 vest in the
government more than a sufficient degree of control and supervision over the
conduct of mining operations.
Section 3(aq) of RA 7942
Not Unconstitutional
An objection has been expressed that Section 3(aq)[55] of RA 7942 -- which allows a
foreign contractor to apply for and hold an exploration permit -- is unconstitutional.
The reasoning is that Section 2 of Article XII of the Constitution does not allow
foreign-owned corporations to undertake mining operations directly. They may act
only as contractors of the State under an FTAA; and the State, as the party directly
undertaking exploitation of its natural resources, must hold through the government
all exploration permits and similar authorizations. Hence, Section 3(aq), in
permitting foreign-owned corporations to hold exploration permits, is
unconstitutional.
The objection, however, is not well-founded. While the Constitution mandates the
State to exercise full control and supervision over the exploitation of mineral
resources, nowhere does it require the government to hold all exploration permits
and similar authorizations. In fact, there is no prohibition at all against foreign or
local corporations or contractors holding exploration permits. The reason is not
hard to see.
Pursuant to Section 20 of RA 7942, an exploration permit merely grants to a
qualified person the right to conduct exploration for all minerals in specified areas.
Such a permit does not amount to an authorization to extract and carry off the
mineral resources that may be discovered. This phase involves nothing but
expenditures for exploring the contract area and locating the mineral bodies. As no
extraction is involved, there are no revenues or incomes to speak of. In short, the
exploration permit is an authorization for the grantee to spend its own funds on
exploration programs that are pre-approved by the government, without any right
to recover anything should no minerals in commercial quantities be discovered. The
State risks nothing and loses nothing by granting these permits to local or foreign

firms; in fact, it stands to gain in the form of data generated by the exploration
activities.
Pursuant to Section 24 of RA 7942, an exploration permit grantee who determines
the commercial viability of a mining area may, within the term of the permit, file
with the MGB a declaration of mining project feasibility accompanied by a work
program for development. The approval of the mining project feasibility and
compliance with other requirements of RA 7942 vests in the grantee the exclusive
right to an MPSA or any other mineral agreement, or to an FTAA.
Thus, the permit grantee may apply for an MPSA, a joint venture agreement, a coproduction agreement, or an FTAA over the permit area, and the application shall be
approved if the permit grantee meets the necessary qualifications and the terms
and conditions of any such agreement. Therefore, the contractor will be in a
position to extract minerals and earn revenues only when the MPSA or another
mineral agreement, or an FTAA, is granted. At that point, the contractors rights
and obligations will be covered by an FTAA or a mineral agreement.
But prior to the issuance of such FTAA or mineral agreement, the exploration permit
grantee (or prospective contractor) cannot yet be deemed to have entered into any
contract or agreement with the State, and the grantee would definitely need to
have some document or instrument as evidence of its right to conduct exploration
works within the specified area. This need is met by the exploration permit issued
pursuant to Sections 3(aq), 20 and 23 of RA 7942.
In brief, the exploration permit serves a practical and legitimate purpose in that it
protects the interests and preserves the rights of the exploration permit grantee
(the would-be contractor) -- foreign or local -- during the period of time that it is
spending heavily on exploration works, without yet being able to earn revenues to
recoup any of its investments and expenditures. Minus this permit and the
protection it affords, the exploration works and expenditures may end up benefiting
only claim-jumpers. Such a possibility tends to discourage investors and
contractors. Thus, Section 3(aq) of RA 7942 may not be deemed unconstitutional.
The Terms of the WMCP FTAA
A Deference to State Control
A perusal of the WMCP FTAA also reveals a slew of stipulations providing for State
control and supervision:
1.
The contractor is obligated to account for the value of production and sale of
minerals (Clause 1.4).

2.
The contractors work program, activities and budgets must be approved by/on
behalf of the State (Clause 2.1).
3.
The DENR secretary has the power to extend the exploration period (Clause
3.2-a).
4.
Approval by the State is necessary for incorporating lands into the FTAA
contract area (Clause 4.3-c).
5.
The Bureau of Forest Development is vested with discretion in regard to
approving the inclusion of forest reserves as part of the FTAA contract area (Clause
4.5).
6.
The contractor is obliged to relinquish periodically parts of the contract area
not needed for exploration and development (Clause 4.6).
7.
A Declaration of Mining Feasibility must be submitted for approval by the State
(Clause 4.6-b).
8.
The contractor is obligated to report to the State its exploration activities
(Clause 4.9).
9.
The contractor is required to obtain State approval of its work programs for the
succeeding two-year periods, containing the proposed work activities and
expenditures budget related to exploration (Clause 5.1).
10. The contractor is required to obtain State approval for its proposed
expenditures for exploration activities (Clause 5.2).
11. The contractor is required to submit an annual report on geological,
geophysical, geochemical and other information relating to its explorations within
the FTAA area (Clause 5.3-a).
12. The contractor is to submit within six months after expiration of exploration
period a final report on all its findings in the contract area (Clause 5.3-b).
13. The contractor, after conducting feasibility studies, shall submit a declaration
of mining feasibility, along with a description of the area to be developed and
mined, a description of the proposed mining operations and the technology to be
employed, and a proposed work program for the development phase, for approval
by the DENR secretary (Clause 5.4).

14. The contractor is obliged to complete the development of the mine, including
construction of the production facilities, within the period stated in the approved
work program (Clause 6.1).
15. The contractor is obligated to submit for approval of the DENR secretary a
work program covering each period of three fiscal years (Clause 6.2).
16. The contractor is to submit reports to the DENR secretary on the production,
ore reserves, work accomplished and work in progress, profile of its work force and
management staff, and other technical information (Clause 6.3).
17. Any expansions, modifications, improvements and replacements of mining
facilities shall be subject to the approval of the secretary (Clause 6.4).
18. The State has control with respect to the amount of funds that the contractor
may borrow within the Philippines (Clause 7.2).
19. The State has supervisory power with respect to technical, financial and
marketing issues (Clause 10.1-a).
20. The contractor is required to ensure 60 percent Filipino equity in the
contractor, within ten years of recovering specified expenditures, unless not so
required by subsequent legislation (Clause 10.1).
21. The State has the right to terminate the FTAA for the contractors unremedied
substantial breach thereof (Clause 13.2);
22. The States approval is needed for any assignment of the FTAA by the
contractor to an entity other than an affiliate (Clause 14.1).
We should elaborate a little on the work programs and budgets, and what they
mean with respect to the States ability to exercise full control and effective
supervision over the enterprise. For instance, throughout the initial five-year
exploration and feasibility phase of the project, the contractor is mandated by
Clause 5.1 of the WMCP FTAA to submit a series of work programs (copy furnished
the director of MGB) to the DENR secretary for approval. The programs will detail
the contractors proposed exploration activities and budget covering each
subsequent period of two fiscal years.
In other words, the concerned government officials will be informed beforehand of
the proposed exploration activities and expenditures of the contractor for each
succeeding two-year period, with the right to approve/disapprove them or require
changes or adjustments therein if deemed necessary.

Likewise, under Clause 5.2(a), the amount that the contractor was supposed to
spend for exploration activities during the first contract year of the exploration
period was fixed at not less than P24 million; and then for the succeeding years, the
amount shall be as agreed between the DENR secretary and the contractor prior to
the commencement of each subsequent fiscal year. If no such agreement is arrived
upon, the previous years expenditure commitment shall apply.
This provision alone grants the government through the DENR secretary a very big
say in the exploration phase of the project. This fact is not something to be taken
lightly, considering that the government has absolutely no contribution to the
exploration expenditures or work activities and yet is given veto power over such a
critical aspect of the project. We cannot but construe as very significant such a
degree of control over the project and, resultantly, over the mining enterprise itself.
Following its exploration activities or feasibility studies, if the contractor believes
that any part of the contract area is likely to contain an economic mineral resource,
it shall submit to the DENR secretary a declaration of mining feasibility (per Clause
5.4 of the FTAA), together with a technical description of the area delineated for
development and production, a description of the proposed mining operations
including the technology to be used, a work program for development, an
environmental impact statement, and a description of the contributions to the
economic and general welfare of the country to be generated by the mining
operations (pursuant to Clause 5.5).
The work program for development is subject to the approval of the DENR secretary.
Upon its approval, the contractor must comply with it and complete the
development of the mine, including the construction of production facilities and
installation of machinery and equipment, within the period provided in the approved
work program for development (per Clause 6.1).
Thus, notably, the development phase of the project is likewise subject to the
control and supervision of the government. It cannot be emphasized enough that
the proper and timely construction and deployment of the production facilities and
the development of the mine are of pivotal significance to the success of the mining
venture. Any missteps here will potentially be very costly to remedy. Hence, the
submission of the work program for development to the DENR secretary for
approval is particularly noteworthy, considering that so many millions of dollars
worth of investments -- courtesy of the contractor -- are made to depend on the
States consideration and action.
Throughout the operating period, the contractor is required to submit to the DENR
secretary for approval, copy furnished the director of MGB, work programs covering
each period of three fiscal years (per Clause 6.2). During the same period (per
Clause 6.3), the contractor is mandated to submit various quarterly and annual

reports to the DENR secretary, copy furnished the director of MGB, on the tonnages
of production in terms of ores and concentrates, with corresponding grades, values
and destinations; reports of sales; total ore reserves, total tonnage of ores, work
accomplished and work in progress (installations and facilities related to mining
operations), investments made or committed, and so on and so forth.
Under Section VIII, during the period of mining operations, the contractor is also
required to submit to the DENR secretary (copy furnished the director of MGB) the
work program and corresponding budget for the contract area, describing the
mining operations that are proposed to be carried out during the period covered.
The secretary is, of course, entitled to grant or deny approval of any work program
or budget and/or propose revisions thereto. Once the program/budget has been
approved, the contractor shall comply therewith.
In sum, the above provisions of the WMCP FTAA taken together, far from
constituting a surrender of control and a grant of beneficial ownership of mineral
resources to the contractor in question, bestow upon the State more than adequate
control and supervision over the activities of the contractor and the enterprise.
No Surrender of Control
Under the WMCP FTAA
Petitioners, however, take aim at Clause 8.2, 8.3, and 8.5 of the WMCP FTAA which,
they say, amount to a relinquishment of control by the State, since it cannot truly
impose its own discretion in respect of the submitted work programs.
8.2. The Secretary shall be deemed to have approved any Work Programme or
Budget or variation thereof submitted by the Contractor unless within sixty (60)
days after submission by the Contractor the Secretary gives notice declining such
approval or proposing a revision of certain features and specifying its reasons
therefor (the Rejection Notice).
8.3.
If the Secretary gives a Rejection Notice, the Parties shall promptly meet and
endeavor to agree on amendments to the Work Programme or Budget. If the
Secretary and the Contractor fail to agree on the proposed revision within 30 days
from delivery of the Rejection Notice then the Work Programme or Budget or
variation thereof proposed by the Contractor shall be deemed approved, so as not
to unnecessarily delay the performance of the Agreement.
8.4.

xxx

xxx

xxx

8.5.
So far as is practicable, the Contractor shall comply with any approved Work
Programme and Budget. It is recognized by the Secretary and the Contractor that
the details of any Work Programmes or Budgets may require changes in the light of

changing circumstances. The Contractor may make such changes without approval
of the Secretary provided they do not change the general objective of any Work
Programme, nor entail a downward variance of more than twenty per centum
(20percent) of the relevant Budget. All other variations to an approved Work
Programme or Budget shall be submitted for approval of the Secretary.
From the provisions quoted above, petitioners generalize by asserting that the
government does not participate in making critical decisions regarding the
operations of the mining firm. Furthermore, while the State can require the
submission of work programs and budgets, the decision of the contractor will still
prevail, if the parties have a difference of opinion with regard to matters affecting
operations and management.
We hold, however, that the foregoing provisions do not manifest a relinquishment of
control. For instance, Clause 8.2 merely provides a mechanism for preventing the
business or mining operations from grinding to a complete halt as a result of
possibly over-long and unjustified delays in the governments handling, processing
and approval of submitted work programs and budgets. Anyway, the provision does
give the DENR secretary more than sufficient time (60 days) to react to submitted
work programs and budgets. It cannot be supposed that proper grounds for
objecting thereto, if any exist, cannot be discovered within a period of two months.
On the other hand, Clause 8.3 seeks to provide a temporary, stop-gap solution in
the event a disagreement over the submitted work program or budget arises
between the State and the contractor and results in a stalemate or impasse, in
order that there will be no unreasonably long delays in the performance of the
works.
These temporary or stop-gap solutions are not necessarily evil or wrong. Neither
does it follow that the government will inexorably be aggrieved if and when these
temporary remedies come into play. First, avoidance of long delays in these
situations will undoubtedly redound to the benefit of the State as well as the
contractor. Second, who is to say that the work program or budget proposed by the
contractor and deemed approved under Clause 8.3 would not be the better or more
reasonable or more effective alternative? The contractor, being the insider, as it
were, may be said to be in a better position than the State -- an outsider looking in
-- to determine what work program or budget would be appropriate, more effective,
or more suitable under the circumstances.
All things considered, we take exception to the characterization of the DENR
secretary as a subservient nonentity whom the contractor can overrule at will, on
account of Clause 8.3. And neither is it true that under the same clause, the DENR
secretary has no authority whatsoever to disapprove the work program. As
Respondent WMCP reasoned in its Reply-Memorandum, the State -- despite Clause

8.3 -- still has control over the contract area and it may, as sovereign authority,
prohibit work thereon until the dispute is resolved. And ultimately, the State may
terminate the agreement, pursuant to Clause 13.2 of the same FTAA, citing
substantial breach thereof. Hence, it clearly retains full and effective control of the
exploitation of the mineral resources.
On the other hand, Clause 8.5 is merely an acknowledgment of the parties need for
flexibility, given that no one can accurately forecast under all circumstances, or
predict how situations may change. Hence, while approved work programs and
budgets are to be followed and complied with as far as practicable, there may be
instances in which changes will have to be effected, and effected rapidly, since
events may take shape and unfold with suddenness and urgency. Thus, Clause 8.5
allows the contractor to move ahead and make changes without the express or
implicit approval of the DENR secretary. Such changes are, however, subject to
certain conditions that will serve to limit or restrict the variance and prevent the
contractor from straying very far from what has been approved.
Clause 8.5 provides the contractor a certain amount of flexibility to meet
unexpected situations, while still guaranteeing that the approved work programs
and budgets are not abandoned altogether. Clause 8.5 does not constitute proof
that the State has relinquished control. And ultimately, should there be
disagreement with the actions taken by the contractor in this instance as well as
under Clause 8.3 discussed above, the DENR secretary may resort to
cancellation/termination of the FTAA as the ultimate sanction.
Discretion to Select Contract
Area Not an Abdication of Control
Next, petitioners complain that the contractor has full discretion to select -- and the
government has no say whatsoever as to -- the parts of the contract area to be
relinquished pursuant to Clause 4.6 of the WMCP FTAA.[56] This clause, however,
does not constitute abdication of control. Rather, it is a mere acknowledgment of
the fact that the contractor will have determined, after appropriate exploration
works, which portions of the contract area do not contain minerals in commercial
quantities sufficient to justify developing the same and ought therefore to be
relinquished. The State cannot just substitute its judgment for that of the
contractor and dictate upon the latter which areas to give up.
Moreover, we can be certain that the contractors self-interest will propel proper and
efficient relinquishment. According to private respondent,[57] a mining company
tries to relinquish as much non-mineral areas as soon as possible, because the
annual occupation fees paid to the government are based on the total hectarage of
the contract area, net of the areas relinquished. Thus, the larger the remaining
area, the heftier the amount of occupation fees to be paid by the contractor.

Accordingly, relinquishment is not an issue, given that the contractor will not want
to pay the annual occupation fees on the non-mineral parts of its contract area.
Neither will it want to relinquish promising sites, which other contractors may
subsequently pick up.
Government Not
a Subcontractor
Petitioners further maintain that the contractor can compel the government to
exercise its power of eminent domain to acquire surface areas within the contract
area for the contractors use. Clause 10.2 (e) of the WMCP FTAA provides that the
government agrees that the contractor shall (e) have the right to require the
Government at the Contractors own cost, to purchase or acquire surface areas for
and on behalf of the Contractor at such price and terms as may be acceptable to
the contractor. At the termination of this Agreement such areas shall be sold by
public auction or tender and the Contractor shall be entitled to reimbursement of
the costs of acquisition and maintenance, adjusted for inflation, from the proceeds
of sale.
According to petitioners, government becomes a subcontractor to the contractor
and may, on account of this provision, be compelled to make use of its power of
eminent domain, not for public purposes but on behalf of a private party, i.e., the
contractor. Moreover, the power of the courts to determine the amount
corresponding to the constitutional requirement of just compensation has allegedly
also been contracted away by the government, on account of the latters
commitment that the acquisition shall be at such terms as may be acceptable to the
contractor.
However, private respondent has proffered a logical explanation for the provision.
[58] Section 10.2(e) contemplates a situation applicable to foreign-owned
corporations. WMCP, at the time of the execution of the FTAA, was a foreign-owned
corporation and therefore not qualified to own land. As contractor, it has at some
future date to construct the infrastructure -- the mine processing plant, the camp
site, the tailings dam, and other infrastructure -- needed for the large-scale mining
operations. It will then have to identify and pinpoint, within the FTAA contract area,
the particular surface areas with favorable topography deemed ideal for such
infrastructure and will need to acquire the surface rights. The State owns the
mineral deposits in the earth, and is also qualified to own land.
Section 10.2(e) sets forth the mechanism whereby the foreign-owned contractor,
disqualified to own land, identifies to the government the specific surface areas
within the FTAA contract area to be acquired for the mine infrastructure. The
government then acquires ownership of the surface land areas on behalf of the
contractor, in order to enable the latter to proceed to fully implement the FTAA.

The contractor, of course, shoulders the purchase price of the land. Hence, the
provision allows it, after termination of the FTAA, to be reimbursed from proceeds of
the sale of the surface areas, which the government will dispose of through public
bidding. It should be noted that this provision will not be applicable to Sagittarius
as the present FTAA contractor, since it is a Filipino corporation qualified to own and
hold land. As such, it may therefore freely negotiate with the surface rights owners
and acquire the surface property in its own right.
Clearly, petitioners have needlessly jumped to unwarranted conclusions, without
being aware of the rationale for the said provision. That provision does not call for
the exercise of the power of eminent domain -- and determination of just
compensation is not an issue -- as much as it calls for a qualified party to acquire
the surface rights on behalf of a foreign-owned contractor.
Rather than having the foreign contractor act through a dummy corporation, having
the State do the purchasing is a better alternative. This will at least cause the
government to be aware of such transaction/s and foster transparency in the
contractors dealings with the local property owners. The government, then, will not
act as a subcontractor of the contractor; rather, it will facilitate the transaction and
enable the parties to avoid a technical violation of the Anti-Dummy Law.
Absence of Provision
Requiring Sale at Posted
Prices Not Problematic
The supposed absence of any provision in the WMCP FTAA directly and explicitly
requiring the contractor to sell the mineral products at posted or market prices is
not a problem. Apart from Clause 1.4 of the FTAA obligating the contractor to
account for the total value of mineral production and the sale of minerals, we can
also look to Section 35 of RA 7942, which incorporates into all FTAAs certain terms,
conditions and warranties, including the following:
(l) The contractors shall furnish the Government records of geologic, accounting
and other relevant data for its mining operation, and that books of accounts and
records shall be open for inspection by the government. x x x
(m) Requiring the proponent to dispose of the minerals at the highest price and
more advantageous terms and conditions.
For that matter, Section 56(n) of DAO 99-56 specifically obligates an FTAA
contractor to dispose of the minerals and by-products at the highest market price
and to register with the MGB a copy of the sales agreement. After all, the provisions

of prevailing statutes as well as rules and regulations are deemed written into
contracts.
Contractors Right to Mortgage
Not Objectionable Per Se
Petitioners also question the absolute right of the contractor under Clause 10.2 (l) to
mortgage and encumber not only its rights and interests in the FTAA and the
infrastructure and improvements introduced, but also the mineral products
extracted. Private respondents do not touch on this matter, but we believe that this
provision may have to do with the conditions imposed by the creditor-banks of the
then foreign contractor WMCP to secure the lendings made or to be made to the
latter. Ordinarily, banks lend not only on the security of mortgages on fixed assets,
but also on encumbrances of goods produced that can easily be sold and converted
into cash that can be applied to the repayment of loans. Banks even lend on the
security of accounts receivable that are collectible within 90 days.[59]
It is not uncommon to find that a debtor corporation has executed deeds of
assignment by way of security over the production for the next twelve months
and/or the proceeds of the sale thereof -- or the corresponding accounts receivable,
if sold on terms -- in favor of its creditor-banks. Such deeds may include authorizing
the creditors to sell the products themselves and to collect the sales proceeds
and/or the accounts receivable.
Seen in this context, Clause 10.2(l) is not something out of the ordinary or
objectionable. In any case, as will be explained below, even if it is allowed to
mortgage or encumber the mineral end-products themselves, the contractor is not
freed of its obligation to pay the government its basic and additional shares in the
net mining revenue, which is the essential thing to consider.
In brief, the alarum raised over the contractors right to mortgage the minerals is
simply unwarranted. Just the same, the contractor must account for the value of
mineral production and the sales proceeds therefrom. Likewise, under the WMCP
FTAA, the government remains entitled to its sixty percent share in the net mining
revenues of the contractor. The latters right to mortgage the minerals does not
negate the States right to receive its share of net mining revenues.
Shareholders Free
to Sell Their Stocks
Petitioners likewise criticize Clause 10.2(k), which gives the contractor authority to
change its equity structure at any time. This provision may seem somewhat
unusual, but considering that WMCP then was 100 percent foreign-owned, any
change would mean that such percentage would either stay unaltered or be

decreased in favor of Filipino ownership. Moreover, the foreign-held shares may

change hands freely. Such eventuality is as it should be.
We believe it is not necessary for government to attempt to limit or restrict the
freedom of the shareholders in the contractor to freely transfer, dispose of or
encumber their shareholdings, consonant with the unfettered exercise of their
business judgment and discretion. Rather, what is critical is that, regardless of the
identity, nationality and percentage ownership of the various shareholders of the
contractor -- and regardless of whether these shareholders decide to take the
company public, float bonds and other fixed-income instruments, or allow the
creditor-banks to take an equity position in the company -- the foreign-owned
contractor is always in a position to render the services required under the FTAA,
under the direction and control of the government.
Contractors Right to Ask
For Amendment Not Absolute
With respect to Clauses 10.4(e) and (i), petitioners complain that these provisions
bind government to allow amendments to the FTAA if required by banks and other
financial institutions as part of the conditions for new lendings. However, we do not
find anything wrong with Clause 10.4(e), which only states that if the Contractor
seeks to obtain financing contemplated herein from banks or other financial
institutions, (the Government shall) cooperate with the Contractor in such efforts
provided that such financing arrangements will in no event reduce the Contractors
obligations or the Governments rights hereunder. The colatilla obviously
safeguards the States interests; if breached, it will give the government cause to
object to the proposed amendments.
On the other hand, Clause 10.4(i) provides that the Government shall favourably
consider any request from [the] Contractor for amendments of this Agreement
which are necessary in order for the Contractor to successfully obtain the
financing. Petitioners see in this provision a complete renunciation of control. We
disagree.
The proviso does not say that the government shall grant any request for
amendment. Clause 10.4(i) only obliges the State to favorably consider any such
request, which is not at all unreasonable, as it is not equivalent to saying that the
government must automatically consent to it. This provision should be read
together with the rest of the FTAA provisions instituting government control and
supervision over the mining enterprise. The clause should not be given an
interpretation that enables the contractor to wiggle out of the restrictions imposed
upon it by merely suggesting that certain amendments are requested by the
lenders.

Rather, it is up to the contractor to prove to the government that the requested

changes to the FTAA are indispensable, as they enable the contractor to obtain the
needed financing; that without such contract changes, the funders would absolutely
refuse to extend the loan; that there are no other sources of financing available to
the contractor (a very unlikely scenario); and that without the needed financing, the
execution of the work programs will not proceed. But the bottom line is, in the
exercise of its power of control, the government has the final say on whether to
approve or disapprove such requested amendments to the FTAA. In short, approval
thereof is not mandatory on the part of the government.
In fine, the foregoing evaluation and analysis of the aforementioned FTAA provisions
sufficiently overturns petitioners litany of objections to and criticisms of the States
alleged lack of control.
Financial Benefits Not
Surrendered to the Contractor
One of the main reasons certain provisions of RA 7942 were struck down was the
finding mentioned in the Decision that beneficial ownership of the mineral resources
had been conveyed to the contractor. This finding was based on the underlying
assumption, common to the said provisions, that the foreign contractor manages
the mineral resources in the same way that foreign contractors in service contracts
used to. By allowing foreign contractors to manage or operate all the aspects of
the mining operation, the above-cited provisions of R.A. No. 7942 have in effect
conveyed beneficial ownership over the nations mineral resources to these
contractors, leaving the State with nothing but bare title thereto.[60] As the WMCP
FTAA contained similar provisions deemed by the ponente to be abhorrent to the
Constitution, the Decision struck down the Contract as well.
Beneficial ownership has been defined as ownership recognized by law and capable
of being enforced in the courts at the suit of the beneficial owner.[61] Blacks Law
Dictionary indicates that the term is used in two senses: first, to indicate the
interest of a beneficiary in trust property (also called equitable ownership); and
second, to refer to the power of a corporate shareholder to buy or sell the shares,
though the shareholder is not registered in the corporations books as the owner.
[62] Usually, beneficial ownership is distinguished from naked ownership, which is
the enjoyment of all the benefits and privileges of ownership, as against possession
of the bare title to property.
An assiduous examination of the WMCP FTAA uncovers no indication that it confers
upon WMCP ownership, beneficial or otherwise, of the mining property it is to
develop, the minerals to be produced, or the proceeds of their sale, which can be
legally asserted and enforced as against the State.

As public respondents correctly point out, any interest the contractor may have in
the proceeds of the mining operation is merely the equivalent of the consideration
the government has undertaken to pay for its services. All lawful contracts require
such mutual prestations, and the WMCP FTAA is no different. The contractor
commits to perform certain services for the government in respect of the mining
operation, and in turn it is to be compensated out of the net mining revenues
generated from the sale of mineral products. What would be objectionable is a
contractual provision that unduly benefits the contractor far in excess of the service
rendered or value delivered, if any, in exchange therefor.
A careful perusal of the statute itself and its implementing rules reveals that neither
RA 7942 nor DAO 99-56 can be said to convey beneficial ownership of any mineral
resource or product to any foreign FTAA contractor.
Equitable Sharing
of Financial Benefits
On the contrary, DAO 99-56, entitled Guidelines Establishing the Fiscal Regime of
Financial or Technical Assistance Agreements aims to ensure an equitable sharing
of the benefits derived from mineral resources. These benefits are to be equitably
shared among the government (national and local), the FTAA contractor, and the
affected communities. The purpose is to ensure sustainable mineral resources
development; and a fair, equitable, competitive and stable investment regime for
the large-scale exploration, development and commercial utilization of minerals.
The general framework or concept followed in crafting the fiscal regime of the FTAA
is based on the principle that the government expects real contributions to the
economic growth and general welfare of the country, while the contractor expects a
reasonable return on its investments in the project.[63]
Specifically, under the fiscal regime, the governments expectation is, inter alia, the
receipt of its share from the taxes and fees normally paid by a mining enterprise.
On the other hand, the FTAA contractor is granted by the government certain fiscal
and non-fiscal incentives[64] to help support the formers cash flow during the most
critical phase (cost recovery) and to make the Philippines competitive with other
mineral-producing countries. After the contractor has recovered its initial
investment, it will pay all the normal taxes and fees comprising the basic share of
the government, plus an additional share for the government based on the options
and formulae set forth in DAO 99-56.
The said DAO spells out the financial benefits the government will receive from an
FTAA, referred to as the Government Share, composed of a basic government
share and an additional government share.

The basic government share is comprised of all direct taxes, fees and royalties, as
well as other payments made by the contractor during the term of the FTAA. These
are amounts paid directly to (i) the national government (through the Bureau of
Internal Revenue, Bureau of Customs, Mines & Geosciences Bureau and other
national government agencies imposing taxes or fees), (ii) the local government
units where the mining activity is conducted, and (iii) persons and communities
directly affected by the mining project. The major taxes and other payments
constituting the basic government share are enumerated below:[65]
Payments to the National Government:

Excise tax on minerals - 2 percent of the gross output of mining operations

Contractor income tax - maximum of 32 percent of taxable income for

corporations

Customs duties and fees on imported capital equipment -the rate is set by the
Tariff and Customs Code (3-7 percent for chemicals; 3-10 percent for explosives; 315 percent for mechanical and electrical equipment; and 3-10 percent for vehicles,
aircraft and vessels

VAT on imported equipment, goods and services 10 percent of value

Royalties due the government on minerals extracted from mineral

reservations, if applicable 5 percent of the actual market value of the minerals
produced

Documentary stamp tax - the rate depends on the type of transaction

Capital gains tax on traded stocks - 5 to 10 percent of the value of the shares

Withholding tax on interest payments on foreign loans -15 percent of the

amount of interest

Withholding tax on dividend payments to foreign stockholders 15 percent of

the dividend

Wharfage and port fees

Licensing fees (for example, radio permit, firearms permit, professional fees)

Other national taxes and fees.

Payments to Local Governments:


Local business tax - a maximum of 2 percent of gross sales or receipts (the
rate varies among local government units)

Real property tax - 2 percent of the fair market value of the property, based
on an assessment level set by the local government

Special education levy - 1 percent of the basis used for the real property tax

Occupation fees - PhP50 per hectare per year; PhP100 per hectare per year if
located in a mineral reservation

Community tax - maximum of PhP10,500 per year

All other local government taxes, fees and imposts as of the effective date of
the FTAA - the rate and the type depend on the local government
Other Payments:

Royalty to indigenous cultural communities, if any 1 percent of gross output

from mining operations

Special allowance - payment to claim owners and surface rights holders

Apart from the basic share, an additional government share is also collected from
the FTAA contractor in accordance with the second paragraph of Section 81 of RA
7942, which provides that the government share shall be comprised of, among
other things, certain taxes, duties and fees. The subject proviso reads:
The Government share in a financial or technical assistance agreement shall
consist of, among other things, the contractors corporate income tax, excise tax,
special allowance, withholding tax due from the contractors foreign stockholders
arising from dividend or interest payments to the said foreign stockholder in case of
a foreign national, and all such other taxes, duties and fees as provided for under
existing laws. (Bold types supplied.)
The government, through the DENR and the MGB, has interpreted the insertion of
the phrase among other things as signifying that the government is entitled to an
additional government share to be paid by the contractor apart from the basic
share, in order to attain a fifty-fifty sharing of net benefits from mining.
The additional government share is computed by using one of three options or
schemes presented in DAO 99-56: (1) a fifty-fifty sharing in the cumulative present
value of cash flows; (2) the share based on excess profits; and (3) the sharing based

on the cumulative net mining revenue. The particular formula to be applied will be
selected by the contractor, with a written notice to the government prior to the
commencement of the development and construction phase of the mining project.
[66]
Proceeds from the government shares arising from an FTAA contract are distributed
to and received by the different levels of government in the following proportions:
National Government
50 percent
Provincial Government
10 percent
Municipal Government
20 percent
Affected Barangays
20 percent
The portion of revenues remaining after the deduction of the basic and additional
government shares is what goes to the contractor.
Governments Share in an
FTAA Not Consisting Solely
of Taxes, Duties and Fees
In connection with the foregoing discussion on the basic and additional government
shares, it is pertinent at this juncture to mention the criticism leveled at the second
paragraph of Section 81 of RA 7942, quoted earlier. The said proviso has been
denounced, because, allegedly, the States share in FTAAs with foreign contractors
has been limited to taxes, fees and duties only; in effect, the State has been
deprived of a share in the after-tax income of the enterprise. In the face of this
allegation, one has to consider that the law does not define the term among other
things; and the Office of the Solicitor General, in its Motion for Reconsideration,
appears to have erroneously claimed that the phrase refers to indirect taxes.
The law provides no definition of the term among other things, for the reason that
Congress deliberately avoided setting unnecessary limitations as to what may
constitute compensation to the State for the exploitation and use of mineral
resources. But the inclusion of that phrase clearly and unmistakably reveals the
legislative intent to have the State collect more than just the usual taxes, duties and
fees. Certainly, there is nothing in that phrase -- or in the second paragraph of
Section 81 -- that would suggest that such phrase should be interpreted as referring
only to taxes, duties, fees and the like.
Precisely for that reason, to fulfill the legislative intent behind the inclusion of the
phrase among other things in the second paragraph of Section 81,[67] the DENR
structured and formulated in DAO 99-56 the said additional government share.
Such a share was to consist not of taxes, but of a share in the earnings or cash flows
of the mining enterprise. The additional government share was to be paid by the
contractor on top of the basic share, so as to achieve a fifty-fifty sharing -- between

the government and the contractor -- of net benefits from mining. In the RamosDeVera paper, the explanation of the three options or formulas[68] -- presented in
DAO 99-56 for the computation of the additional government share -- serves to
debunk the claim that the governments take from an FTAA consists solely of taxes,
fees and duties.
Unfortunately, the Office of the Solicitor General -- although in possession of the
relevant data -- failed to fully replicate or echo the pertinent elucidation in the
Ramos-DeVera paper regarding the three schemes or options for computing the
additional government share presented in DAO 99-56. Had due care been taken by
the OSG, the Court would have been duly apprised of the real nature and particulars
of the additional share.
But, perhaps, on account of the esoteric discussion in the Ramos-DeVera paper, and
the even more abstruse mathematical jargon employed in DAO 99-56, the OSG
omitted any mention of the three options. Instead, the OSG skipped to a side
discussion of the effect of indirect taxes, which had nothing at all to do with the
additional government share, to begin with. Unfortunately, this move created the
wrong impression, pointed out in Justice Antonio T. Carpios Opinion, that the OSG
had taken the position that the additional government share consisted of indirect
taxes.
In any event, what is quite evident is the fact that the additional government share,
as formulated, has nothing to do with taxes -- direct or indirect -- or with duties, fees
or charges. To repeat, it is over and above the basic government share composed
of taxes and duties. Simply put, the additional share may be (a) an amount that will
result in a 50-50 sharing of the cumulative present value of the cash flows[69] of
the enterprise; (b) an amount equivalent to 25 percent of the additional or excess
profits of the enterprise, reckoned against a benchmark return on investments; or
(c) an amount that will result in a fifty-fifty sharing of the cumulative net mining
revenue from the end of the recovery period up to the taxable year in question. The
contractor is required to select one of the three options or formulae for computing
the additional share, an option it will apply to all of its mining operations.
As used above, net mining revenue is defined as the gross output from mining
operations for a calendar year, less deductible expenses (inclusive of taxes, duties
and fees). Such revenue would roughly be equivalent to taxable income or
income before income tax. Definitely, as compared with, say, calculating the
additional government share on the basis of net income (after income tax), the net
mining revenue is a better and much more reasonable basis for such computation,
as it gives a truer picture of the profitability of the company.
To demonstrate that the three options or formulations will operate as intended,
Messrs. Ramos and de Vera also performed some quantifications of the government

share via a financial modeling of each of the three options discussed above. They
found that the government would get the highest share from the option that is
based on the net mining revenue, as compared with the other two options,
considering only the basic and the additional shares; and that, even though
production rate decreases, the government share will actually increase when the
net mining revenue and the additional profit-based options are used.
Furthermore, it should be noted that the three options or formulae do not yet take
into account the indirect taxes[70] and other financial contributions[71] of mining
projects. These indirect taxes and other contributions are real and actual benefits
enjoyed by the Filipino people and/or government. Now, if some of the quantifiable
items are taken into account in the computations, the financial modeling would
show that the total government share increases to 60 percent or higher -- in one
instance, as much as 77 percent and even 89 percent -- of the net present value of
total benefits from the project. As noted in the Ramos-DeVera paper, these results
are not at all shabby, considering that the contractor puts in all the capital
requirements and assumes all the risks, without the government having to
contribute or risk anything.
Despite the foregoing explanation, Justice Carpio still insisted during the Courts
deliberations that the phrase among other things refers only to taxes, duties and
fees. We are bewildered by his position. On the one hand, he condemns the Mining
Law for allegedly limiting the governments benefits only to taxes, duties and fees;
and on the other, he refuses to allow the State to benefit from the correct and
proper interpretation of the DENR/MGB. To remove all doubts then, we hold that the
States share is not limited to taxes, duties and fees only and that the DENR/MGB
interpretation of the phrase among other things is correct. Definitely, this
DENR/MGB interpretation is not only legally sound, but also greatly advantageous to
the government.
One last point on the subject. The legislature acted judiciously in not defining the
terms among other things and, instead, leaving it to the agencies concerned to
devise and develop the various modes of arriving at a reasonable and fair amount
for the additional government share. As can be seen from DAO 99-56, the agencies
concerned did an admirable job of conceiving and developing not just one formula,
but three different formulae for arriving at the additional government share. Each
of these options is quite fair and reasonable; and, as Messrs. Ramos and De Vera
stated, other alternatives or schemes for a possible improvement of the fiscal
regime for FTAAs are also being studied by the government.
Besides, not locking into a fixed definition of the term among other things will
ultimately be more beneficial to the government, as it will have that innate
flexibility to adjust to and cope with rapidly changing circumstances, particularly
those in the international markets. Such flexibility is especially significant for the

government in terms of helping our mining enterprises remain competitive in world

markets despite challenging and shifting economic scenarios.
In conclusion, we stress that we do not share the view that in FTAAs with foreign
contractors under RA 7942, the governments share is limited to taxes, fees and
duties. Consequently, we find the attacks on the second paragraph of Section 81 of
RA 7942 totally unwarranted.
Collections Not Made Uncertain
by the Third Paragraph of Section 81
The third or last paragraph of Section 81[72] provides that the government share in
FTAAs shall be collected when the contractor shall have recovered its pre-operating
expenses and exploration and development expenditures. The objection has been
advanced that, on account of the proviso, the collection of the States share is not
even certain, as there is no time limit in RA 7942 for this grace period or recovery
period.
We believe that Congress did not set any time limit for the grace period, preferring
to leave it to the concerned agencies, which are, on account of their technical
expertise and training, in a better position to determine the appropriate durations
for such recovery periods. After all, these recovery periods are determined, to a
great extent, by technical and technological factors peculiar to the mining industry.
Besides, with developments and advances in technology and in the geosciences, we
cannot discount the possibility of shorter recovery periods. At any rate, the
concerned agencies have not been remiss in this area. The 1995 and 1996
Implementing Rules and Regulations of RA 7942 specify that the period of recovery,
reckoned from the date of commercial operation, shall be for a period not exceeding
five years, or until the date of actual recovery, whichever comes earlier.
Approval of Pre-Operating
Expenses Required by RA 7942
Still, RA 7942 is criticized for allegedly not requiring government approval of preoperating, exploration and development expenses of the foreign contractors, who
are in effect given unfettered discretion to determine the amounts of such
expenses. Supposedly, nothing prevents the contractors from recording such
expenses in amounts equal to the mining revenues anticipated for the first 10 or 15
years of commercial production, with the result that the share of the State will be
zero for the first 10 or 15 years. Moreover, under the circumstances, the
government would be unable to say when it would start to receive its share under
the FTAA.

We believe that the argument is based on incorrect information as well as

speculation. Obviously, certain crucial provisions in the Mining Law were
overlooked. Section 23, dealing with the rights and obligations of the exploration
permit grantee, states: The permittee shall undertake exploration work on the area
as specified by its permit based on an approved work program. The next proviso
reads: Any expenditure in excess of the yearly budget of the approved work
program may be carried forward and credited to the succeeding years covering the
duration of the permit. x x x. (underscoring supplied)
Clearly, even at the stage of application for an exploration permit, the applicant is
required to submit -- for approval by the government -- a proposed work program
for exploration, containing a yearly budget of proposed expenditures. The State has
the opportunity to pass upon (and approve or reject) such proposed expenditures,
with the foreknowledge that -- if approved -- these will subsequently be recorded as
pre-operating expenses that the contractor will have to recoup over the grace
period. That is not all.
Under Section 24, an exploration permit holder who determines the commercial
viability of a project covering a mining area may, within the term of the permit, file
with the Mines and Geosciences Bureau a declaration of mining project feasibility.
This declaration is to be accompanied by a work program for development for the
Bureaus approval, the necessary prelude for entering into an FTAA, a mineral
production sharing agreement (MPSA), or some other mineral agreement. At this
stage, too, the government obviously has the opportunity to approve or reject the
proposed work program and budgeted expenditures for development works on the
project. Such expenditures will ultimately become the pre-operating and
development costs that will have to be recovered by the contractor.
Naturally, with the submission of approved work programs and budgets for the
exploration and the development/construction phases, the government will be able
to scrutinize and approve or reject such expenditures. It will be well-informed as to
the amounts of pre-operating and other expenses that the contractor may
legitimately recover and the approximate period of time needed to effect such a
recovery. There is therefore no way the contractor can just randomly post any
amount of pre-operating expenses and expect to recover the same.
The aforecited provisions on approved work programs and budgets have
counterparts in Section 35, which deals with the terms and conditions exclusively
applicable to FTAAs. The said provision requires certain terms and conditions to be
incorporated into FTAAs; among them, a firm commitment x x x of an amount
corresponding to the expenditure obligation that will be invested in the contract
area and representations and warranties x x x to timely deploy these [financing,
managerial and technical expertise and technological] resources under its
supervision pursuant to the periodic work programs and related budgets x x x, as

well as work programs and minimum expenditures commitments. (underscoring

supplied)
Unarguably, given the provisions of Section 35, the State has every opportunity to
pass upon the proposed expenditures under an FTAA and approve or reject them. It
has access to all the information it may need in order to determine in advance the
amounts of pre-operating and developmental expenses that will have to be
recovered by the contractor and the amount of time needed for such recovery.
In summary, we cannot agree that the third or last paragraph of Section 81 of RA
7942 is in any manner unconstitutional.
No Deprivation of
Beneficial Rights
It is also claimed that aside from the second and the third paragraphs of Section 81
(discussed above), Sections 80, 84 and 112 of RA 7942 also operate to deprive the
State of beneficial rights of ownership over mineral resources; and give them away
for free to private business enterprises (including foreign owned corporations).
Likewise, the said provisions have been construed as constituting, together with
Section 81, an ingenious attempt to resurrect the old and discredited system of
license, concession or lease.
Specifically, Section 80 is condemned for limiting the States share in a mineral
production-sharing agreement (MPSA) to just the excise tax on the mineral product.
Under Section 151(A) of the Tax Code, such tax is only 2 percent of the market
value of the gross output of the minerals. The colatilla in Section 84, the portion
considered offensive to the Constitution, reiterates the same limitation made in
Section 80.[73]
It should be pointed out that Section 80 and the colatilla in Section 84 pertain only
to MPSAs and have no application to FTAAs. These particular statutory provisions
do not come within the issues that were defined and delineated by this Court during
the Oral Argument -- particularly the third issue, which pertained exclusively to
FTAAs. Neither did the parties argue upon them in their pleadings. Hence, this
Court cannot make any pronouncement in this case regarding the constitutionality
of Sections 80 and 84 without violating the fundamental rules of due process.
Indeed, the two provisos will have to await another case specifically placing them in
issue.
On the other hand, Section 112[74] is disparaged for allegedly reverting FTAAs and
all mineral agreements to the old and discredited license, concession or lease
system. This Section states in relevant part that the provisions of Chapter XIV
[which includes Sections 80 to 82] on government share in mineral production-

sharing agreement x x x shall immediately govern and apply to a mining lessee or

contractor. (underscoring supplied) This provision is construed as signifying that
the 2 percent excise tax which, pursuant to Section 80, comprises the government
share in MPSAs shall now also constitute the government share in FTAAs -- as well
as in co-production agreements and joint venture agreements -- to the exclusion of
revenues of any other nature or from any other source.
Apart from the fact that Section 112 likewise does not come within the issues
delineated by this Court during the Oral Argument, and was never touched upon by
the parties in their pleadings, it must also be noted that the criticism hurled against
this Section is rooted in unwarranted conclusions made without considering other
relevant provisions in the statute. Whether Section 112 may properly apply to coproduction or joint venture agreements, the fact of the matter is that it cannot be
made to apply to FTAAs.
First, Section 112 does not specifically mention or refer to FTAAs; the only reason it
is being applied to them at all is the fact that it happens to use the word
contractor. Hence, it is a bit of a stretch to insist that it covers FTAAs as well.
Second, mineral agreements, of which there are three types -- MPSAs, co-production
agreements, and joint venture agreements -- are covered by Chapter V of RA 7942.
On the other hand, FTAAs are covered by and in fact are the subject of Chapter VI,
an entirely different chapter altogether. The law obviously intends to treat them as
a breed apart from mineral agreements, since Section 35 (found in Chapter VI)
creates a long list of specific terms, conditions, commitments, representations and
warranties -- which have not been made applicable to mineral agreements -- to be
incorporated into FTAAs.
Third, under Section 39, the FTAA contractor is given the option to downgrade -to convert the FTAA into a mineral agreement at any time during the term if the
economic viability of the contract area is inadequate to sustain large-scale mining
operations. Thus, there is no reason to think that the law through Section 112
intends to exact from FTAA contractors merely the same government share (a 2
percent excise tax) that it apparently demands from contractors under the three
forms of mineral agreements. In brief, Section 112 does not apply to FTAAs.
Notwithstanding the foregoing explanation, Justices Carpio and Morales maintain
that the Court must rule now on the constitutionality of Sections 80, 84 and 112,
allegedly because the WMCP FTAA contains a provision which grants the contractor
unbridled and automatic authority to convert the FTAA into an MPSA; and should
such conversion happen, the State would be prejudiced since its share would be
limited to the 2 percent excise tax. Justice Carpio adds that there are five MPSAs
already signed just awaiting the judgment of this Court on respondents and
intervenors Motions for Reconsideration. We hold however that, at this point, this
argument is based on pure speculation. The Court cannot rule on mere surmises

and hypothetical assumptions, without firm factual anchor. We repeat: basic due
process requires that we hear the parties who have a real legal interest in the
MPSAs (i.e. the parties who executed them) before these MPSAs can be reviewed, or
worse, struck down by the Court. Anything less than that requirement would be
arbitrary and capricious.
In any event, the conversion of the present FTAA into an MPSA is problematic. First,
the contractor must comply with the law, particularly Section 39 of RA 7942; inter
alia, it must convincingly show that the economic viability of the contract is found
to be inadequate to justify large-scale mining operations; second, it must contend
with the Presidents exercise of the power of State control over the EDU of natural
resources; and third, it will have to risk a possible declaration of the
unconstitutionality (in a proper case) of Sections 80, 84 and 112.
The first requirement is not as simple as it looks. Section 39 contemplates a
situation in which an FTAA has already been executed and entered into, and is
presumably being implemented, when the contractor discovers that the mineral
ore reserves in the contract area are not sufficient to justify large-scale mining, and
thus the contractor requests the conversion of the FTAA into an MPSA. The
contractor in effect needs to explain why, despite its exploration activities, including
the conduct of various geologic and other scientific tests and procedures in the
contract area, it was unable to determine correctly the mineral ore reserves and the
economic viability of the area. The contractor must explain why, after conducting
such exploration activities, it decided to file a declaration of mining feasibility, and
to apply for an FTAA, thereby leading the State to believe that the area could
sustain large-scale mining. The contractor must justify fully why its earlier findings,
based on scientific procedures, tests and data, turned out to be wrong, or were way
off. It must likewise prove that its new findings, also based on scientific tests and
procedures, are correct. Right away, this puts the contractors technical capabilities
and expertise into serious doubt. We wonder if anyone would relish being in this
situation. The State could even question and challenge the contractors
qualification and competence to continue the activity under an MPSA.
All in all, while there may be cogent grounds to assail the aforecited Sections, this
Court -- on considerations of due process -- cannot rule upon them here. Anyway, if
later on these Sections are declared unconstitutional, such declaration will not
affect the other portions since they are clearly separable from the rest.
Our Mineral Resources Not
Given Away for Free by RA 7942
Nevertheless, if only to disabuse our minds, we should address the contention that
our mineral resources are effectively given away for free by the law (RA 7942) in
general and by Sections 80, 81, 84 and 112 in particular.

Foreign contractors do not just waltz into town one day and leave the next, taking
away mineral resources without paying anything. In order to get at the minerals,
they have to invest huge sums of money (tens or hundreds of millions of dollars) in
exploration works first. If the exploration proves unsuccessful, all the cash spent
thereon will not be returned to the foreign investors; rather, those funds will have
been infused into the local economy, to remain there permanently. The benefits
therefrom cannot be simply ignored. And assuming that the foreign contractors are
successful in finding ore bodies that are viable for commercial exploitation, they do
not just pluck out the minerals and cart them off. They have first to build camp
sites and roadways; dig mine shafts and connecting tunnels; prepare tailing ponds,
storage areas and vehicle depots; install their machinery and equipment, generator
sets, pumps, water tanks and sewer systems, and so on.
In short, they need to expend a great deal more of their funds for facilities,
equipment and supplies, fuel, salaries of local labor and technical staff, and other
operating expenses. In the meantime, they also have to pay taxes,[75] duties, fees,
and royalties. All told, the exploration, pre-feasibility, feasibility, development and
construction phases together add up to as many as eleven years.[76] The
contractors have to continually shell out funds for the duration of over a decade,
before they can commence commercial production from which they would
eventually derive revenues. All that money translates into a lot of pump-priming
for the local economy.
Granted that the contractors are allowed subsequently to recover their preoperating expenses, still, that eventuality will happen only after they shall have first
put out the cash and fueled the economy. Moreover, in the process of recouping
their investments and costs, the foreign contractors do not actually pull out the
money from the economy. Rather, they recover or recoup their investments out of
actual commercial production by not paying a portion of the basic government
share corresponding to national taxes, along with the additional government share,
for a period of not more than five years[77] counted from the commencement of
commercial production.
It must be noted that there can be no recovery without commencing actual
commercial production. In the meantime that the contractors are recouping costs,
they need to continue operating; in order to do so, they have to disburse money to
meet their various needs. In short, money is continually infused into the economy.
The foregoing discussion should serve to rid us of the mistaken belief that, since the
foreign contractors are allowed to recover their investments and costs, the end
result is that they practically get the minerals for free, which leaves the Filipino
people none the better for it.

All Businesses Entitled

to Cost Recovery
Let it be put on record that not only foreign contractors, but all businessmen and all
business entities in general, have to recoup their investments and costs. That is
one of the first things a student learns in business school. Regardless of its
nationality, and whether or not a business entity has a five-year cost recovery
period, it will -- must -- have to recoup its investments, one way or another. This is
just common business sense. Recovery of investments is absolutely indispensable
for business survival; and business survival ensures soundness of the economy,
which is critical and contributory to the general welfare of the people. Even
government corporations must recoup their investments in order to survive and
continue in operation. And, as the preceding discussion has shown, there is no
business that gets ahead or earns profits without any cost to it.
It must also be stressed that, though the State owns vast mineral wealth, such
wealth is not readily accessible or transformable into usable and negotiable
currency without the intervention of the credible mining companies. Those
untapped mineral resources, hidden beneath tons of earth and rock, may as well not
be there for all the good they do us right now. They have first to be extracted and
converted into marketable form, and the country needs the foreign contractors
funds, technology and know-how for that.
After about eleven years of pre-operation and another five years for cost recovery,
the foreign contractors will have just broken even. Is it likely that they would at that
point stop their operations and leave? Certainly not. They have yet to make profits.
Thus, for the remainder of the contract term, they must strive to maintain
profitability. During this period, they pay the whole of the basic government share
and the additional government share which, taken together with indirect taxes and
other contributions, amount to approximately 60 percent or more of the entire
financial benefits generated by the mining venture.
In sum, we can hardly talk about foreign contractors taking our mineral resources
for free. It takes a lot of hard cash to even begin to do what they do. And what
they do in this country ultimately benefits the local economy, grows businesses,
generates employment, and creates infrastructure, as discussed above. Hence, we
definitely disagree with the sweeping claim that no FTAA under Section 81 will ever
make any real contribution to the growth of the economy or to the general welfare
of the country. This is not a plea for foreign contractors. Rather, this is a question
of focusing the judicial spotlight squarely on all the pertinent facts as they bear
upon the issue at hand, in order to avoid leaping precipitately to ill-conceived
conclusions not solidly grounded upon fact.
Repatriation of

After-Tax Income
Another objection points to the alleged failure of the Mining Law to ensure real
contributions to the economic growth and general welfare of the country, as
mandated by Section 2 of Article XII of the Constitution. Pursuant to Section 81 of
the law, the entire after-tax income arising from the exploitation of mineral
resources owned by the State supposedly belongs to the foreign contractors, which
will naturally repatriate the said after-tax income to their home countries, thereby
resulting in no real contribution to the economic growth of this country. Clearly, this
contention is premised on erroneous assumptions.
First, as already discussed in detail hereinabove, the concerned agencies have
correctly interpreted the second paragraph of Section 81 of RA 7942 to mean that
the government is entitled to an additional share, to be computed based on any one
of the following factors: net mining revenues, the present value of the cash flows, or
excess profits reckoned against a benchmark rate of return on investments. So it is
not correct to say that all of the after-tax income will accrue to the foreign FTAA
contractor, as the government effectively receives a significant portion thereof.
Second, the foreign contractors can hardly repatriate the entire after-tax income to
their home countries. Even a bit of knowledge of corporate finance will show that
it will be impossible to maintain a business as a going concern if the entire net
profit earned in any particular year will be taken out and repatriated. The net
income figure reflected in the bottom line is a mere accounting figure not
necessarily corresponding to cash in the bank, or other quick assets. In order to
produce and set aside cash in an amount equivalent to the bottom line figure, one
may need to sell off assets or immediately collect receivables or liquidate shortterm investments; but doing so may very likely disrupt normal business operations.
In terms of cash flows, the funds corresponding to the net income as of a particular
point in time are actually in use in the normal course of business operations. Pulling
out such net income disrupts the cash flows and cash position of the enterprise and,
depending on the amount being taken out, could seriously cripple or endanger the
normal operations and financial health of the business enterprise. In short, no sane
business person, concerned with maintaining the mining enterprise as a going
concern and keeping a foothold in its market, can afford to repatriate the entire
after-tax income to the home country.
The States Receipt of Sixty
Percent of an FTAA Contractors
After-Tax Income Not Mandatory
We now come to the next objection which runs this way: In FTAAs with a foreign
contractor, the State must receive at least 60 percent of the after-tax income from

the exploitation of its mineral resources. This share is the equivalent of the
constitutional requirement that at least 60 percent of the capital, and hence 60
percent of the income, of mining companies should remain in Filipino hands.
First, we fail to see how we can properly conclude that the Constitution mandates
the State to extract at least 60 percent of the after-tax income from a mining
company run by a foreign contractor. The argument is that the Charter requires the
States partner in a co-production agreement, joint venture agreement or MPSA to
be a Filipino corporation (at least 60 percent owned by Filipino citizens).
We question the logic of this reasoning, premised on a supposedly parallel or
analogous situation. We are, after all, dealing with an essentially different equation,
one that involves different elements. The Charter did not intend to fix an iron-clad
rule on the 60 percent share, applicable to all situations at all times and in all
circumstances. If ever such was the intention of the framers, they would have spelt
it out in black and white. Verba legis will serve to dispel unwarranted and untenable
conclusions.
Second, if we would bother to do the math, we might better appreciate the impact
(and reasonableness) of what we are demanding of the foreign contractor. Let us
use a simplified illustration. Let us base it on gross revenues of, say, P500. After
deducting operating expenses, but prior to income tax, suppose a mining firm
makes a taxable income of P100. A corporate income tax of 32 percent results in
P32 of taxable income going to the government, leaving the mining firm with P68.
Government then takes 60 percent thereof, equivalent to P40.80, leaving only
P27.20 for the mining firm.
At this point the government has pocketed P32.00 plus P40.80, or a total of P72.80
for every P100 of taxable income, leaving the mining firm with only P27.20. But
that is not all. The government has also taken 2 percent excise tax off the top,
equivalent to another P10. Under the minimum 60 percent proposal, the
government nets around P82.80 (not counting other taxes, duties, fees and
charges) from a taxable income of P100 (assuming gross revenues of P500, for
purposes of illustration). On the other hand, the foreign contractor, which provided
all the capital, equipment and labor, and took all the entrepreneurial risks -receives P27.20. One cannot but wonder whether such a distribution is even
remotely equitable and reasonable, considering the nature of the mining business.
The amount of P82.80 out of P100.00 is really a lot it does not matter that we call
part of it excise tax or income tax, and another portion thereof income from
exploitation of mineral resources. Some might think it wonderful to be able to take
the lions share of the benefits. But we have to ask ourselves if we are really
serious in attracting the investments that are the indispensable and key element in
generating the monetary benefits of which we wish to take the lions share.
Fairness is a credo not only in law, but also in business.

Third, the 60 percent rule in the petroleum industry cannot be insisted upon at all
times in the mining business. The reason happens to be the fact that in petroleum
operations, the bulk of expenditures is in exploration, but once the contractor has
found and tapped into the deposit, subsequent investments and expenditures are
relatively minimal. The crude (or gas) keeps gushing out, and the work entailed is
just a matter of piping, transporting and storing. Not so in mineral mining. The ore
body does not pop out on its own. Even after it has been located, the contractor
must continually invest in machineries and expend funds to dig and build tunnels in
order to access and extract the minerals from underneath hundreds of tons of earth
and rock.
As already stated, the numerous intrinsic differences involved in their respective
operations and requirements, cost structures and investment needs render it highly
inappropriate to use petroleum operations FTAAs as benchmarks for mining FTAAs.
Verily, we cannot just ignore the realities of the distinctly different situations and
stubbornly insist on the minimum 60 percent.
The Mining and the Oil Industries
Different From Each Other
To stress, there is no independent showing that the taking of at least a 60 percent
share in the after-tax income of a mining company operated by a foreign contractor
is fair and reasonable under most if not all circumstances. The fact that some
petroleum companies like Shell acceded to such percentage of sharing does not
ipso facto mean that it is per se reasonable and applicable to non-petroleum
situations (that is, mining companies) as well. We can take judicial notice of the fact
that there are, after all, numerous intrinsic differences involved in their respective
operations and equipment or technological requirements, costs structures and
capital investment needs, and product pricing and markets.
There is no showing, for instance, that mining companies can readily cope with a 60
percent government share in the same way petroleum companies apparently can.
What we have is a suggestion to enforce the 60 percent quota on the basis of a
disjointed analogy. The only factor common to the two disparate situations is the
extraction of natural resources.
Indeed, we should take note of the fact that Congress made a distinction between
mining firms and petroleum companies. In Republic Act No. 7729 -- An Act
Reducing the Excise Tax Rates on Metallic and Non-Metallic Minerals and Quarry
Resources, Amending for the Purpose Section 151(a) of the National Internal
Revenue Code, as amended -- the lawmakers fixed the excise tax rate on metallic
and non-metallic minerals at two percent of the actual market value of the annual
gross output at the time of removal. However, in the case of petroleum, the

lawmakers set the excise tax rate for the first taxable sale at fifteen percent of the
fair international market price thereof.
There must have been a very sound reason that impelled Congress to impose two
very dissimilar excise tax rate. We cannot assume, without proof, that our
honorable legislators acted arbitrarily, capriciously and whimsically in this instance.
We cannot just ignore the reality of two distinctly different situations and stubbornly
insist on going minimum 60 percent.
To repeat, the mere fact that gas and oil exploration contracts grant the State 60
percent of the net revenues does not necessarily imply that mining contracts should
likewise yield a minimum of 60 percent for the State. Jumping to that erroneous
conclusion is like comparing apples with oranges. The exploration, development
and utilization of gas and oil are simply different from those of mineral resources.
To stress again, the main risk in gas and oil is in the exploration. But once oil in
commercial quantities is struck and the wells are put in place, the risk is relatively
over and black gold simply flows out continuously with comparatively less need for
fresh investments and technology.
On the other hand, even if minerals are found in viable quantities, there is still need
for continuous fresh capital and expertise to dig the mineral ores from the mines.
Just because deposits of mineral ores are found in one area is no guarantee that an
equal amount can be found in the adjacent areas. There are simply continuing risks
and need for more capital, expertise and industry all the time.
Note, however, that the indirect benefits -- apart from the cash revenues -- are
much more in the mineral industry. As mines are explored and extracted, vast
employment is created, roads and other infrastructure are built, and other multiplier
effects arise. On the other hand, once oil wells start producing, there is less need
for employment. Roads and other public works need not be constructed
continuously. In fine, there is no basis for saying that government revenues from
the oil industry and from the mineral industries are to be identical all the time.
Fourth, to our mind, the proffered minimum 60 percent suggestion tends to limit
the flexibility and tie the hands of government, ultimately hampering the countrys
competitiveness in the international market, to the detriment of the Filipino people.
This you-have-to-give-us-60-percent-of-after-tax-income-or-we-dont-do- businesswith-you approach is quite perilous. True, this situation may not seem too
unpalatable to the foreign contractor during good years, when international market
prices are up and the mining firm manages to keep its costs in check. However,
under unfavorable economic and business conditions, with costs spiraling skywards
and minerals prices plummeting, a mining firm may consider itself lucky to make
just minimal profits.

The inflexible, carved-in-granite demand for a 60 percent government share may

spell the end of the mining venture, scare away potential investors, and thereby
further worsen the already dismal economic scenario. Moreover, such an
unbending or unyielding policy prevents the government from responding
appropriately to changing economic conditions and shifting market forces. This
inflexibility further renders our country less attractive as an investment option
compared with other countries.
And fifth, for this Court to decree imperiously that the governments share should
be not less than 60 percent of the after-tax income of FTAA contractors at all times
is nothing short of dictating upon the government. The result, ironically, is that the
State ends up losing control. To avoid compromising the States full control and
supervision over the exploitation of mineral resources, this Court must back off from
insisting upon a minimum 60 percent rule. It is sufficient that the State has the
power and means, should it so decide, to get a 60 percent share (or more) in the
contractors net mining revenues or after-tax income, or whatever other basis the
government may decide to use in reckoning its share. It is not necessary for it to do
so in every case, regardless of circumstances.
In fact, the government must be trusted, must be accorded the liberty and the
utmost flexibility to deal, negotiate and transact with contractors and third parties
as it sees fit; and upon terms that it ascertains to be most favorable or most
acceptable under the circumstances, even if it means agreeing to less than 60
percent. Nothing must prevent the State from agreeing to a share less than that,
should it be deemed fit; otherwise the State will be deprived of full control over
mineral exploitation that the Charter has vested in it.
To stress again, there is simply no constitutional or legal provision fixing the
minimum share of the government in an FTAA at 60 percent of the net profit. For
this Court to decree such minimum is to wade into judicial legislation, and thereby
inordinately impinge on the control power of the State. Let it be clear: the Court is
not against the grant of more benefits to the State; in fact, the more the better. If
during the FTAA negotiations, the President can secure 60 percent,[78] or even 90
percent, then all the better for our people. But, if under the peculiar circumstances
of a specific contract, the President could secure only 50 percent or 55 percent, so
be it. Needless to say, the President will have to report (and be responsible for) the
specific FTAA to Congress, and eventually to the people.
Finally, if it should later be found that the share agreed to is grossly
disadvantageous to the government, the officials responsible for entering into such
a contract on its behalf will have to answer to the courts for their malfeasance. And
the contract provision voided. But this Court would abuse its own authority should

it force the governments hand to adopt the 60 percent demand of some of our
esteemed colleagues.
Capital and Expertise Provided,
Yet All Risks Assumed by Contractor
Here, we will repeat what has not been emphasized and appreciated enough: the
fact that the contractor in an FTAA provides all the needed capital, technical and
managerial expertise, and technology required to undertake the project.
In regard to the WMCP FTAA, the then foreign-owned WMCP as contractor
committed, at the very outset, to make capital investments of up to US$50 million
in that single mining project. WMCP claims to have already poured in well over
P800 million into the country as of February 1998, with more in the pipeline. These
resources, valued in the tens or hundreds of millions of dollars, are invested in a
mining project that provides no assurance whatsoever that any part of the
investment will be ultimately recouped.
At the same time, the contractor must comply with legally imposed environmental
standards and the social obligations, for which it also commits to make significant
expenditures of funds. Throughout, the contractor assumes all the risks[79] of the
business, as mentioned earlier. These risks are indeed very high, considering that
the rate of success in exploration is extremely low. The probability of finding any
mineral or petroleum in commercially viable quantities is estimated to be about
1:1,000 only. On that slim chance rides the contractors hope of recouping
investments and generating profits. And when the contractor has recouped its
initial investments in the project, the government share increases to sixty percent of
net benefits -- without the State ever being in peril of incurring costs, expenses and
losses.
And even in the worst possible scenario -- an absence of commercial quantities of
minerals to justify development -- the contractor would already have spent several
million pesos for exploration works, before arriving at the point in which it can make
that determination and decide to cut its losses. In fact, during the first year alone of
the exploration period, the contractor was already committed to spend not less than
P24 million. The FTAA therefore clearly ensures benefits for the local economy,
courtesy of the contractor.
All in all, this setup cannot be regarded as disadvantageous to the State or the
Filipino people; it certainly cannot be said to convey beneficial ownership of our
mineral resources to foreign contractors.
Deductions Allowed by the
WMCP FTAA Reasonable

Petitioners question whether the States weak control might render the sharing
arrangements ineffective. They cite the so-called suspicious deductions allowed
by the WMCP FTAA in arriving at the net mining revenue, which is the basis for
computing the government share. The WMCP FTAA, for instance, allows
expenditures for development within and outside the Contract Area relating to the
Mining Operations,[80] consulting fees incurred both inside and outside the
Philippines for work related directly to the Mining Operations,[81] and the
establishment and administration of field offices including administrative overheads
incurred within and outside the Philippines which are properly allocatable to the
Mining Operations and reasonably related to the performance of the Contractors
obligations and exercise of its rights under this Agreement.[82]
It is quite well known, however, that mining companies do perform some marketing
activities abroad in respect of selling their mineral products and by-products.
Hence, it would not be improper to allow the deduction of reasonable consulting
fees incurred abroad, as well as administrative expenses and overheads related to
marketing offices also located abroad -- provided that these deductions are directly
related or properly allocatable to the mining operations and reasonably related to
the performance of the contractors obligations and exercise of its rights. In any
event, more facts are needed. Until we see how these provisions actually operate,
mere suspicions will not suffice to propel this Court into taking action.
Section 7.9 of the WMCP FTAA
Invalid and Disadvantageous
Having defended the WMCP FTAA, we shall now turn to two defective provisos. Let
us start with Section 7.9 of the WMCP FTAA. While Section 7.7 gives the
government a 60 percent share in the net mining revenues of WMCP from the
commencement of commercial production, Section 7.9 deprives the government of
part or all of the said 60 percent. Under the latter provision, should WMCPs foreign
shareholders -- who originally owned 100 percent of the equity -- sell 60 percent or
more of its outstanding capital stock to a Filipino citizen or corporation, the State
loses its right to receive its 60 percent share in net mining revenues under Section
7.7.
Section 7.9 provides:
The percentage of Net Mining Revenues payable to the Government pursuant to
Clause 7.7 shall be reduced by 1percent of Net Mining Revenues for every 1percent
ownership interest in the Contractor (i.e., WMCP) held by a Qualified Entity.[83]
Evidently, what Section 7.7 grants to the State is taken away in the next breath by
Section 7.9 without any offsetting compensation to the State. Thus, in reality, the

State has no vested right to receive any income from the FTAA for the exploitation
of its mineral resources. Worse, it would seem that what is given to the State in
Section 7.7 is by mere tolerance of WMCPs foreign stockholders, who can at any
time cut off the governments entire 60 percent share. They can do so by simply
selling 60 percent of WMCPs outstanding capital stock to a Philippine citizen or
corporation. Moreover, the proceeds of such sale will of course accrue to the
foreign stockholders of WMCP, not to the State.
The sale of 60 percent of WMCPs outstanding equity to a corporation that is 60
percent Filipino-owned and 40 percent foreign-owned will still trigger the operation
of Section 7.9. Effectively, the State will lose its right to receive all 60 percent of
the net mining revenues of WMCP; and foreign stockholders will own beneficially up
to 64 percent of WMCP, consisting of the remaining 40 percent foreign equity
therein, plus the 24 percent pro-rata share in the buyer-corporation.[84]
In fact, the January 23, 2001 sale by WMCPs foreign stockholder of the entire
outstanding equity in WMCP to Sagittarius Mines, Inc. -- a domestic corporation at
least 60 percent Filipino owned -- may be deemed to have automatically triggered
the operation of Section 7.9, without need of further action by any party, and
removed the States right to receive the 60 percent share in net mining revenues.
At bottom, Section 7.9 has the effect of depriving the State of its 60 percent share
in the net mining revenues of WMCP without any offset or compensation
whatsoever. It is possible that the inclusion of the offending provision was initially
prompted by the desire to provide some form of incentive for the principal foreign
stockholder in WMCP to eventually reduce its equity position and ultimately divest
in favor of Filipino citizens and corporations. However, as finally structured, Section
7.9 has the deleterious effect of depriving government of the entire 60 percent
share in WMCPs net mining revenues, without any form of compensation
whatsoever. Such an outcome is completely unacceptable.
The whole point of developing the nations natural resources is to benefit the Filipino
people, future generations included. And the State as sovereign and custodian of
the nations natural wealth is mandated to protect, conserve, preserve and develop
that part of the national patrimony for their benefit. Hence, the Charter lays great
emphasis on real contributions to the economic growth and general welfare of the
country[85] as essential guiding principles to be kept in mind when negotiating the
terms and conditions of FTAAs.
Earlier, we held (1) that the State must be accorded the liberty and the utmost
flexibility to deal, negotiate and transact with contractors and third parties as it sees
fit, and upon terms that it ascertains to be most favorable or most acceptable under
the circumstances, even if that should mean agreeing to less than 60 percent; (2)
that it is not necessary for the State to extract a 60 percent share in every case and

regardless of circumstances; and (3) that should the State be prevented from
agreeing to a share less than 60 percent as it deems fit, it will be deprived of the full
control over mineral exploitation that the Charter has vested in it.
That full control is obviously not an end in itself; it exists and subsists precisely
because of the need to serve and protect the national interest. In this instance,
national interest finds particular application in the protection of the national
patrimony and the development and exploitation of the countrys mineral resources
for the benefit of the Filipino people and the enhancement of economic growth and
the general welfare of the country. Undoubtedly, such full control can be misused
and abused, as we now witness.
Section 7.9 of the WMCP FTAA effectively gives away the States share of net mining
revenues (provided for in Section 7.7) without anything in exchange. Moreover, this
outcome constitutes unjust enrichment on the part of the local and foreign
stockholders of WMCP. By their mere divestment of up to 60 percent equity in
WMCP in favor of Filipino citizens and/or corporations, the local and foreign
stockholders get a windfall. Their share in the net mining revenues of WMCP is
automatically increased, without their having to pay the government anything for it.
In short, the provision in question is without a doubt grossly disadvantageous to the
government, detrimental to the interests of the Filipino people, and violative of
public policy.
Moreover, it has been reiterated in numerous decisions[86] that the parties to a
contract may establish any agreements, terms and conditions that they deem
convenient; but these should not be contrary to law, morals, good customs, public
order or public policy.[87] Being precisely violative of anti-graft provisions and
contrary to public policy, Section 7.9 must therefore be stricken off as invalid.
Whether the government officials concerned acceded to that provision by sheer
mistake or with full awareness of the ill consequences, is of no moment. It is
hornbook doctrine that the principle of estoppel does not operate against the
government for the act of its agents,[88] and that it is never estopped by any
mistake or error on their part.[89] It is therefore possible and proper to rectify the
situation at this time. Moreover, we may also say that the FTAA in question does
not involve mere contractual rights; being impressed as it is with public interest, the
contractual provisions and stipulations must yield to the common good and the
national interest.
Since the offending provision is very much separable[90] from Section 7.7 and the
rest of the FTAA, the deletion of Section 7.9 can be done without affecting or
requiring the invalidation of the WMCP FTAA itself. Such a deletion will preserve for
the government its due share of the benefits. This way, the mandates of the

Constitution are complied with and the interests of the government fully protected,
while the business operations of the contractor are not needlessly disrupted.
Section 7.8(e) of the WMCP FTAA
Also Invalid and Disadvantageous
Section 7.8(e) of the WMCP FTAA is likewise invalid. It provides thus:
7.8 The Government Share shall be deemed to include all of the following sums:
(a)
all Government taxes, fees, levies, costs, imposts, duties and royalties
including excise tax, corporate income tax, customs duty, sales tax, value added
tax, occupation and regulatory fees, Government controlled price stabilization
schemes, any other form of Government backed schemes, any tax on dividend
payments by the Contractor or its Affiliates in respect of revenues from the Mining
Operations and any tax on interest on domestic and foreign loans or other financial
arrangements or accommodations, including loans extended to the Contractor by its
stockholders;
(b)
any payments to local and regional government, including taxes, fees,
levies, costs, imposts, duties, royalties, occupation and regulatory fees and
infrastructure contributions;
(c)
any payments to landowners, surface rights holders, occupiers, indigenous
people or Claimowners;
(d)
costs and expenses of fulfilling the Contractors obligations to contribute
to national development in accordance with Clause 10.1(i) (1) and 10.1(i) (2);
(e)
an amount equivalent to whatever benefits that may be extended in the
future by the Government to the Contractor or to financial or technical assistance
agreement contractors in general;
(f)
all of the foregoing items which have not previously been offset against
the Government Share in an earlier Fiscal Year, adjusted for inflation. (underscoring
supplied)
Section 7.8(e) is out of place in the FTAA. It makes no sense why, for instance,
money spent by the government for the benefit of the contractor in building roads
leading to the mine site should still be deductible from the States share in net
mining revenues. Allowing this deduction results in benefiting the contractor twice
over. It constitutes unjust enrichment on the part of the contractor at the expense
of the government, since the latter is effectively being made to pay twice for the
same item.[91] For being grossly disadvantageous and prejudicial to the
government and contrary to public policy, Section 7.8(e) is undoubtedly invalid and
must be declared to be without effect. Fortunately, this provision can also easily be
stricken off without affecting the rest of the FTAA.
Nothing Left Over
After Deductions?

In connection with Section 7.8, an objection has been raised: Specified in Section
7.8 are numerous items of deduction from the States 60 percent share. After
taking these into account, will the State ever receive anything for its ownership of
the mineral resources?
We are confident that under normal circumstances, the answer will be yes. If we
examine the various items of deduction listed in Section 7.8 of the WMCP FTAA,
we will find that they correspond closely to the components or elements of the basic
government share established in DAO 99-56, as discussed in the earlier part of this
Opinion.
Likewise, the balance of the governments 60 percent share -- after netting out the
items of deduction listed in Section 7.8 --corresponds closely to the additional
government share provided for in DAO 99-56 which, we once again stress, has
nothing at all to do with indirect taxes. The Ramos-DeVera paper[92] concisely
presents the fiscal contribution of an FTAA under DAO 99-56 in this equation:
Receipts from an FTAA = basic govt share + addl govt share
Transposed into a similar equation, the fiscal payments system from the WMCP FTAA
assumes the following formulation:
Governments 60 percent share in net mining revenues of WMCP = items listed in
Sec. 7.8 of the FTAA + balance of Govt share, payable 4 months from the end of
the fiscal year
It should become apparent that the fiscal arrangement under the WMCP FTAA is
very similar to that under DAO 99-56, with the balance of government share
payable 4 months from end of fiscal year being the equivalent of the additional
government share computed in accordance with the net-mining-revenue-based
option under DAO 99-56, as discussed above. As we have emphasized earlier, we
find each of the three options for computing the additional government share -- as
presented in DAO 99-56 -- to be sound and reasonable.
We therefore conclude that there is nothing inherently wrong in the fiscal regime of
the WMCP FTAA, and certainly nothing to warrant the invalidation of the FTAA in its
entirety.
Section 3.3 of the WMCP
FTAA Constitutional
Section 3.3 of the WMCP FTAA is assailed for violating supposed constitutional
restrictions on the term of FTAAs. The provision in question reads:

3.3 This Agreement shall be renewed by the Government for a further period of
twenty-five (25) years under the same terms and conditions provided that the
Contractor lodges a request for renewal with the Government not less than sixty
(60) days prior to the expiry of the initial term of this Agreement and provided that
the Contractor is not in breach of any of the requirements of this Agreement.
Allegedly, the above provision runs afoul of Section 2 of Article XII of the 1987
Constitution, which states:
Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other
mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora
and fauna, and other natural resources are owned by the State. With the exception
of agricultural lands, all other natural resources shall not be alienated. The
exploration, development and utilization of natural resources shall be under the full
control and supervision of the State. The State may directly undertake such
activities, or it may enter into co-production, joint venture or production-sharing
agreements with Filipino citizens or corporations or associations at least sixty per
centum of whose capital is owned by such citizens. Such agreements may be for a
period not exceeding twenty-five years, renewable for not more than twenty-five
years, and under such terms and conditions as may be provided by law. In cases of
water rights for irrigation, water supply, fisheries, or industrial uses other than the
development of water power, beneficial use may be the measure and limit of the
grant.
The State shall protect the nations marine wealth in its archipelagic waters,
territorial sea, and exclusive economic zone, and reserve its use and enjoyment
exclusively to Filipino citizens.
The Congress may, by law, allow small-scale utilization of natural resources by
Filipino citizens, as well as cooperative fish farming, with priority to subsistence
fishermen and fish-workers in rivers, lakes, bays and lagoons.
The President may enter into agreements with foreign-owned corporations
involving either technical or financial assistance for large-scale exploration,
development, and utilization of minerals, petroleum, and other mineral oils
according to the general terms and conditions provided by law, based on real
contributions to the economic growth and general welfare of the country. In such
agreements, the State shall promote the development and use of local scientific and
technical resources.
The President shall notify the Congress of every contract entered into in
accordance with this provision, within thirty days from its execution.[93]

We hold that the term limitation of twenty-five years does not apply to FTAAs. The
reason is that the above provision is found within paragraph 1 of Section 2 of Article
XII, which refers to mineral agreements -- co-production agreements, joint venture
agreements and mineral production-sharing agreements -- which the government
may enter into with Filipino citizens and corporations, at least 60 percent owned by
Filipino citizens. The word such clearly refers to these three mineral agreements
-- CPAs, JVAs and MPSAs -- not to FTAAs.
Specifically, FTAAs are covered by paragraphs 4 and 5 of Section 2 of Article XII of
the Constitution. It will be noted that there are no term limitations provided for in
the said paragraphs dealing with FTAAs. This shows that FTAAs are sui generis, in a
class of their own. This omission was obviously a deliberate move on the part of the
framers. They probably realized that FTAAs would be different in many ways from
MPSAs, JVAs and CPAs. The reason the framers did not fix term limitations
applicable to FTAAs is that they preferred to leave the matter to the discretion of the
legislature and/or the agencies involved in implementing the laws pertaining to
FTAAs, in order to give the latter enough flexibility and elbow room to meet
changing circumstances.

Note also that, as previously stated, the exploratory phrases of an FTAA lasts up to
eleven years. Thereafter, a few more years would be gobbled up in start-up
operations. It may take fifteen years before an FTAA contractor can start earning
profits. And thus, the period of 25 years may really be short for an FTAA. Consider
too that in this kind of agreement, the contractor assumes all entrepreneurial risks.
If no commercial quantities of minerals are found, the contractor bears all financial
losses. To compensate for this long gestation period and extra business risks, it
would not be totally unreasonable to allow it to continue EDU activities for another
twenty five years.
In any event, the complaint is that, in essence, Section 3.3 gives the contractor the
power to compel the government to renew the WMCP FTAA for another 25 years and
deprives the State of any say on whether to renew the contract.
While we agree that Section 3.3 could have been worded so as to prevent it from
favoring the contractor, this provision does not violate any constitutional limits,
since the said term limitation does not apply at all to FTAAs. Neither can the
provision be deemed in any manner to be illegal, as no law is being violated
thereby. It is certainly not illegal for the government to waive its option to refuse
the renewal of a commercial contract.
Verily, the government did not have to agree to Section 3.3. It could have said No
to the stipulation, but it did not. It appears that, in the process of negotiations, the
other contracting party was able to convince the government to agree to the

renewal terms. Under the circumstances, it does not seem proper for this Court to
intervene and step in to undo what might have perhaps been a possible
miscalculation on the part of the State. If government believes that it is or will be
aggrieved by the effects of Section 3.3, the remedy is the renegotiation of the
provision in order to provide the State the option to not renew the FTAA.
Financial Benefits for Foreigners
Not Forbidden by the Constitution
Before leaving this subject matter, we find it necessary for us to rid ourselves of the
false belief that the Constitution somehow forbids foreign-owned corporations from
deriving financial benefits from the development of our natural or mineral
resources.
The Constitution has never prohibited foreign corporations from acquiring and
enjoying beneficial interest in the development of Philippine natural resources.
The State itself need not directly undertake exploration, development, and
utilization activities. Alternatively, the Constitution authorizes the government to
enter into joint venture agreements (JVAs), co-production agreements (CPAs) and
mineral production sharing agreements (MPSAs) with contractors who are Filipino
citizens or corporations that are at least 60 percent Filipino-owned. They may do
the actual dirty work -- the mining operations.
In the case of a 60 percent Filipino-owned corporation, the 40 percent individual
and/or corporate non-Filipino stakeholders obviously participate in the beneficial
interest derived from the development and utilization of our natural resources.
They may receive by way of dividends, up to 40 percent of the contractors earnings
from the mining project. Likewise, they may have a say in the decisions of the
board of directors, since they are entitled to representation therein to the extent of
their equity participation, which the Constitution permits to be up to 40 percent of
the contractors equity. Hence, the non-Filipino stakeholders may in that manner
also participate in the management of the contractors natural resource
development work. All of this is permitted by our Constitution, for any natural
resource, and without limitation even in regard to the magnitude of the mining
project or operations (see paragraph 1 of Section 2 of Article XII).
It is clear, then, that there is nothing inherently wrong with or constitutionally
objectionable about the idea of foreign individuals and entities having or enjoying
beneficial interest in -- and participating in the management of operations relative
to -- the exploration, development and utilization of our natural resources.
FTAA More Advantageous
Than Other Schemes
Like CPA, JVA and MPSA

A final point on the subject of beneficial interest. We believe the FTAA is a more
advantageous proposition for the government as compared with other agreements
permitted by the Constitution. In a CPA that the government enters into with one or
more contractors, the government shall provide inputs to the mining operations
other than the mineral resource itself.[94]
In a JVA, a JV company is organized by the government and the contractor, with
both parties having equity shares (investments); and the contractor is granted the
exclusive right to conduct mining operations and to extract minerals found in the
area.[95] On the other hand, in an MPSA, the government grants the contractor the
exclusive right to conduct mining operations within the contract area and shares in
the gross output; and the contractor provides the necessary financing, technology,
management and manpower.
The point being made here is that, in two of the three types of agreements under
consideration, the government has to ante up some risk capital for the enterprise.
In other words, government funds (public moneys) are withdrawn from other
possible uses, put to work in the venture and placed at risk in case the venture fails.
This notwithstanding, management and control of the operations of the enterprise
are -- in all three arrangements -- in the hands of the contractor, with the
government being mainly a silent partner. The three types of agreement mentioned
above apply to any natural resource, without limitation and regardless of the size or
magnitude of the project or operations.
In contrast to the foregoing arrangements, and pursuant to paragraph 4 of Section 2
of Article XII, the FTAA is limited to large-scale projects and only for minerals,
petroleum and other mineral oils. Here, the Constitution removes the 40 percent
cap on foreign ownership and allows the foreign corporation to own up to 100
percent of the equity. Filipino capital may not be sufficient on account of the size of
the project, so the foreign entity may have to ante up all the risk capital.
Correlatively, the foreign stakeholder bears up to 100 percent of the risk of loss if
the project fails. In respect of the particular FTAA granted to it, WMCP (then 100
percent foreign owned) was responsible, as contractor, for providing the entire
equity, including all the inputs for the project. It was to bear 100 percent of the risk
of loss if the project failed, but its maximum potential beneficial interest consisted
only of 40 percent of the net beneficial interest, because the other 60 percent is the
share of the government, which will never be exposed to any risk of loss
whatsoever.
In consonance with the degree of risk assumed, the FTAA vested in WMCP the dayto-day management of the mining operations. Still such management is subject to

the overall control and supervision of the State in terms of regular reporting,
approvals of work programs and budgets, and so on.
So, one needs to consider in relative terms, the costs of inputs for, degree of risk
attendant to, and benefits derived or to be derived from a CPA, a JVA or an MPSA
vis--vis those pertaining to an FTAA. It may not be realistically asserted that the
foreign grantee of an FTAA is being unduly favored or benefited as compared with a
foreign stakeholder in a corporation holding a CPA, a JVA or an MPSA. Seen the
other way around, the government is definitely better off with an FTAA than a CPA, a
JVA or an MPSA.
Developmental Policy
on the Mining Industry
During the Oral Argument and in their Final Memorandum, petitioners repeatedly
urged the Court to consider whether mining as an industry and economic activity
deserved to be accorded priority, preference and government support as against,
say, agriculture and other activities in which Filipinos and the Philippines may have
an economic advantage. For instance, a recent US study[96] reportedly examined
the economic performance of all local US counties that were dependent on mining
and 20 percent of whose labor earnings between 1970 and 2000 came from mining
enterprises.
The study -- covering 100 US counties in 25 states dependent on mining -- showed
that per capita income grew about 30 percent less in mining-dependent
communities in the 1980s and 25 percent less for the entire period 1980 to 2000;
the level of per capita income was also lower. Therefore, given the slower rate of
growth, the gap between these and other local counties increased.
Petitioners invite attention to the OXFAM America Reports warning to developing
nations that mining brings with it serious economic problems, including increased
regional inequality, unemployment and poverty. They also cite the final report[97]
of the Extractive Industries Review project commissioned by the World Bank (the
WB-EIR Report), which warns of environmental degradation, social disruption,
conflict, and uneven sharing of benefits with local communities that bear the
negative social and environmental impact. The Report suggests that countries need
to decide on the best way to exploit their natural resources, in order to maximize
the value added from the development of their resources and ensure that they are
on the path to sustainable development once the resources run out.
Whatever priority or preference may be given to mining vis--vis other economic or
non-economic activities is a question of policy that the President and Congress will
have to address; it is not for this Court to decide. This Court declares what the

Constitution and the laws say, interprets only when necessary, and refrains from
delving into matters of policy.
Suffice it to say that the State control accorded by the Constitution over mining
activities assures a proper balancing of interests. More pointedly, such control will
enable the President to demand the best mining practices and the use of the best
available technologies to protect the environment and to rehabilitate mined-out
areas. Indeed, under the Mining Law, the government can ensure the protection of
the environment during and after mining. It can likewise provide for the
mechanisms to protect the rights of indigenous communities, and thereby mold a
more socially-responsive, culturally-sensitive and sustainable mining industry.
Early on during the launching of the Presidential Mineral Industry Environmental
Awards on February 6, 1997, then President Fidel V. Ramos captured the essence of
balanced and sustainable mining in these words:
Long term, high profit mining translates into higher revenues for government, more
decent jobs for the population, more raw materials to feed the engines of
downstream and allied industries, and improved chances of human resource and
countryside development by creating self-reliant communities away from urban
centers.
xxx

xxx

xxx

Against a fragile and finite environment, it is sustainability that holds the key. In
sustainable mining, we take a middle ground where both production and protection
goals are balanced, and where parties-in-interest come to terms.
Neither has the present leadership been remiss in addressing the concerns of
sustainable mining operations. Recently, on January 16, 2004 and April 20, 2004,
President Gloria Macapagal Arroyo issued Executive Orders Nos. 270 and 270-A,
respectively, to promote responsible mineral resources exploration, development
and utilization, in order to enhance economic growth, in a manner that adheres to
the principles of sustainable development and with due regard for justice and
equity, sensitivity to the culture of the Filipino people and respect for Philippine
sovereignty.[98]
REFUTATION OF DISSENTS
The Court will now take up a number of other specific points raised in the dissents
of Justices Carpio and Morales.
1. Justice Morales introduced us to Hugh Morgan, former president and chief
executive officer of Western Mining Corporation (WMC) and former president of the

Australian Mining Industry Council, who spearheaded the vociferous opposition to

the filing by aboriginal peoples of native title claims against mining companies in
Australia in the aftermath of the landmark Mabo decision by the Australian High
Court. According to sources quoted by our esteemed colleague, Morgan was also a
racist and a bigot. In the course of protesting Mabo, Morgan allegedly uttered
derogatory remarks belittling the aboriginal culture and race.
An unwritten caveat of this introduction is that this Court should be careful not to
permit the entry of the likes of Hugh Morgan and his hordes of alleged racist-bigots
at WMC. With all due respect, such scare tactics should have no place in the
discussion of this case. We are deliberating on the constitutionality of RA 7942,
DAO 96-40 and the FTAA originally granted to WMCP, which had been transferred to
Sagittarius Mining, a Filipino corporation. We are not discussing the apparition of
white Anglo-Saxon racists/bigots massing at our gates.
2. On the proper interpretation of the phrase agreements involving either technical
or financial assistance, Justice Morales points out that at times we conveniently
omitted the use of the disjunctive eitheror, which according to her denotes
restriction; hence the phrase must be deemed to connote restriction and limitation.
But, as Justice Carpio himself pointed out during the Oral Argument, the disjunctive
phrase either technical or financial assistance would, strictly speaking, literally
mean that a foreign contractor may provide only one or the other, but not both.
And if both technical and financial assistance were required for a project, the State
would have to deal with at least two different foreign contractors -- one for financial
and the other for technical assistance. And following on that, a foreign contractor,
though very much qualified to provide both kinds of assistance, would nevertheless
be prohibited from providing one kind as soon as it shall have agreed to provide the
other.
But if the Court should follow this restrictive and literal construction, can we really
find two (or more) contractors who are willing to participate in one single project -one to provide the financial assistance only and the other the technical
assistance exclusively; it would be excellent if these two or more contractors
happen to be willing and are able to cooperate and work closely together on the
same project (even if they are otherwise competitors). And it would be superb if no
conflicts would arise between or among them in the entire course of the contract.
But what are the chances things will turn out this way in the real world? To think
that the framers deliberately imposed this kind of restriction is to say that they were
either exceedingly optimistic, or incredibly nave. This begs the question -- What
laudable objective or purpose could possibly be served by such strict and restrictive
literal interpretation?

3. Citing Oposa v. Factoran Jr., Justice Morales claims that a service contract is not a
contract or property right which merits protection by the due process clause of the
Constitution, but merely a license or privilege which may be validly revoked,
rescinded or withdrawn by executive action whenever dictated by public interest or
public welfare.
Oposa cites Tan v. Director of Forestry and Ysmael v. Deputy Executive Secretary as
authority. The latter cases dealt specifically with timber licenses only. Oposa
allegedly reiterated that a license is merely a permit or privilege to do what
otherwise would be unlawful, and is not a contract between the authority, federal,
state or municipal, granting it and the person to whom it is granted; neither is it
property or a property right, nor does it create a vested right; nor is it taxation.
Thus this Court held that the granting of license does not create irrevocable rights,
neither is it property or property rights.
Should Oposa be deemed applicable to the case at bar, on the argument that
natural resources are also involved in this situation? We do not think so. A grantee
of a timber license, permit or license agreement gets to cut the timber already
growing on the surface; it need not dig up tons of earth to get at the logs. In a
logging concession, the investment of the licensee is not as substantial as the
investment of a large-scale mining contractor. If a timber license were revoked, the
licensee packs up its gear and moves to a new area applied for, and starts over;
what it leaves behind are mainly the trails leading to the logging site.
In contrast, the mining contractor will have sunk a great deal of money (tens of
millions of dollars) into the ground, so to speak, for exploration activities, for
development of the mine site and infrastructure, and for the actual excavation and
extraction of minerals, including the extensive tunneling work to reach the ore body.
The cancellation of the mining contract will utterly deprive the contractor of its
investments (i.e., prevent recovery of investments), most of which cannot be pulled
out.
To say that an FTAA is just like a mere timber license or permit and does not involve
contract or property rights which merit protection by the due process clause of the
Constitution, and may therefore be revoked or cancelled in the blink of an eye, is to
adopt a well-nigh confiscatory stance; at the very least, it is downright dismissive of
the property rights of businesspersons and corporate entities that have investments
in the mining industry, whose investments, operations and expenditures do
contribute to the general welfare of the people, the coffers of government, and the
strength of the economy. Such a pronouncement will surely discourage investments
(local and foreign) which are critically needed to fuel the engine of economic growth
and move this country out of the rut of poverty. In sum, Oposa is not applicable.

4. Justice Morales adverts to the supposedly clear intention of the framers of the
Constitution to reserve our natural resources exclusively for the Filipino people. She
then quoted from the records of the ConCom deliberations a passage in which then
Commissioner Davide explained his vote, arguing in the process that aliens ought
not be allowed to participate in the enjoyment of our natural resources. One
passage does not suffice to capture the tenor or substance of the entire extensive
deliberations of the commissioners, or to reveal the clear intention of the framers as
a group. A re-reading of the entire deliberations (quoted here earlier) is necessary if
we are to understand the true intent of the framers.
5. Since 1935, the Filipino people, through their Constitution, have decided that the
retardation or delay in the exploration, development or utilization of the nations
natural resources is merely secondary to the protection and preservation of their
ownership of the natural resources, so says Justice Morales, citing Aruego. If it is
true that the framers of the 1987 Constitution did not care much about alleviating
the retardation or delay in the development and utilization of our natural resources,
why did they bother to write paragraph 4 at all? Were they merely paying lip
service to large-scale exploration, development and utilization? They could have
just completely ignored the subject matter and left it to be dealt with through a
future constitutional amendment. But we have to harmonize every part of the
Constitution and to interpret each provision in a manner that would give life and
meaning to it and to the rest of the provisions. It is obvious that a literal
interpretation of paragraph 4 will render it utterly inutile and inoperative.
6. According to Justice Morales, the deliberations of the Constitutional Commission
do not support our contention that the framers, by specifying such agreements
involving financial or technical assistance, necessarily gave implied assent to
everything that these agreements implicitly entailed, or that could reasonably be
deemed necessary to make them tenable and effective, including management
authority in the day-to-day operations. As proof thereof, she quotes one single
passage from the ConCom deliberations, consisting of an exchange among
Commissioners Tingson, Garcia and Monsod.
However, the quoted exchange does not serve to contradict our argument; it even
bolsters it. Comm. Christian Monsod was quoted as saying: xxx I think we have to
make a distinction that it is not really realistic to say that we will borrow on our own
terms. Maybe we can say that we inherited unjust loans, and we would like to repay
these on terms that are not prejudicial to our own growth. But the general
statement that we should only borrow on our own terms is a bit unrealistic. Comm.
Monsod is one who knew whereof he spoke.
7. Justice Morales also declares that the optimal time for the conversion of an FTAA
into an MPSA is after completion of the exploration phase and just before
undertaking the development and construction phase, on account of the fact that

the requirement for a minimum investment of $50 million is applicable only during
the development, construction and utilization phase, but not during the exploration
phase, when the foreign contractor need merely comply with minimum ground
expenditures. Thus by converting, the foreign contractor maximizes its profits by
avoiding its obligation to make the minimum investment of $50 million.
This argument forgets that the foreign contractor is in the game precisely to make
money. In order to come anywhere near profitability, the contractor must first
extract and sell the mineral ore. In order to do that, it must also develop and
construct the mining facilities, set up its machineries and equipment and dig the
tunnels to get to the deposit. The contractor is thus compelled to expend funds in
order to make profits. If it decides to cut back on investments and expenditures, it
will necessarily sacrifice the pace of development and utilization; it will necessarily
sacrifice the amount of profits it can make from the mining operations. In fact, at
certain less-than-optimal levels of operation, the stream of revenues generated may
not even be enough to cover variable expenses, let alone overhead expenses; this
is a dismal situation anyone would want to avoid. In order to make money, one has
to spend money. This truism applies to the mining industry as well.
8. Mortgaging the minerals to secure a foreign FTAA contractors obligations is
anomalous, according to Justice Morales since the contractor was from the
beginning obliged to provide all financing needed for the mining operations.
However, the mortgaging of minerals by the contractor does not necessarily signify
that the contractor is unable to provide all financing required for the project, or that
it does not have the financial capability to undertake large-scale operations.
Mortgaging of mineral products, just like the assignment (by way of security) of
manufactured goods and goods in inventory, and the assignment of receivables, is
an ordinary requirement of banks, even in the case of clients with more than
sufficient financial resources. And nowadays, even the richest and best managed
corporations make use of bank credit facilities -- it does not necessarily signify that
they do not have the financial resources or are unable to provide the financing on
their own; it is just a manner of maximizing the use of their funds.
9. Does the contractor in reality acquire the surface rights for free, by virtue of the
fact that it is entitled to reimbursement for the costs of acquisition and
maintenance, adjusted for inflation? We think not. The reimbursement is possible
only at the end of the term of the contract, when the surface rights will no longer be
needed, and the land previously acquired will have to be disposed of, in which case
the contractor gets reimbursement from the sales proceeds. The contractor has to
pay out the acquisition price for the land. That money will belong to the seller of
the land. Only if and when the land is finally sold off will the contractor get any
reimbursement. In other words, the contractor will have been cash-out for the
entire duration of the term of the contract -- 25 or 50 years, depending. If we
calculate the cost of money at say 12 percent per annum, that is the cost or

opportunity loss to the contractor, in addition to the amount of the acquisition price.
12 percent per annum for 50 years is 600 percent; this, without any compounding
yet. The cost of money is therefore at least 600 percent of the original acquisition
cost; it is in addition to the acquisition cost. For free? Not by a long shot.
10. The contractor will acquire and hold up to 5,000 hectares? We doubt it. The
acquisition by the State of land for the contractor is just to enable the contractor to
establish its mine site, build its facilities, establish a tailings pond, set up its
machinery and equipment, and dig mine shafts and tunnels, etc. It is impossible
that the surface requirement will aggregate 5,000 hectares. Much of the operations
will consist of the tunneling and digging underground, which will not require
possessing or using any land surface. 5,000 hectares is way too much for the needs
of a mining operator. It simply will not spend its cash to acquire property that it will
not need; the cash may be better employed for the actual mining operations, to
yield a profit.
11. Justice Carpio claims that the phrase among other things (found in the second
paragraph of Section 81 of the Mining Act) is being incorrectly treated as a
delegation of legislative power to the DENR secretary to issue DAO 99-56 and
prescribe the formulae therein on the States share from mining operations. He
adds that the phrase among other things was not intended as a delegation of
legislative power to the DENR secretary, much less could it be deemed a valid
delegation of legislative power, since there is nothing in the second paragraph of
Section 81 which can be said to grant any delegated legislative power to the DENR
secretary. And even if there were, such delegation would be void, for lack of any
standards by which the delegated power shall be exercised.
While there is nothing in the second paragraph of Section 81 which can directly be
construed as a delegation of legislative power to the DENR secretary, it does not
mean that DAO 99-56 is invalid per se, or that the secretary acted without any
authority or jurisdiction in issuing DAO 99-56. As we stated earlier in our Prologue,
Who or what organ of government actually exercises this power of control on
behalf of the State? The Constitution is crystal clear: the President. Indeed, the
Chief Executive is the official constitutionally mandated to enter into agreements
with foreign owned corporations. On the other hand, Congress may review the
action of the President once it is notified of every contract entered into in
accordance with this [constitutional] provision within thirty days from its
execution. It is the President who is constitutionally mandated to enter into FTAAs
with foreign corporations, and in doing so, it is within the Presidents prerogative to
specify certain terms and conditions of the FTAAs, for example, the fiscal regime of
FTAAs -- i.e., the sharing of the net mining revenues between the contractor and the
State.

Being the Presidents alter ego with respect to the control and supervision of the
mining industry, the DENR secretary, acting for the President, is necessarily clothed
with the requisite authority and power to draw up guidelines delineating certain
terms and conditions, and specifying therein the terms of sharing of benefits from
mining, to be applicable to FTAAs in general. It is important to remember that DAO
99-56 has been in existence for almost six years, and has not been amended or
revoked by the President.
The issuance of DAO 99-56 did not involve the exercise of delegated legislative
power. The legislature did not delegate the power to determine the nature, extent
and composition of the items that would come under the phrase among other
things. The legislatures power pertains to the imposition of taxes, duties and fees.
This power was not delegated to the DENR secretary. But the power to negotiate
and enter into FTAAs was withheld from Congress, and reserved for the President.
In determining the sharing of mining benefits, i.e., in specifying what the phrase
among other things include, the President (through the secretary acting in his/her
behalf) was not determining the amount or rate of taxes, duties and fees, but rather
the amount of INCOME to be derived from minerals to be extracted and sold,
income which belongs to the State as owner of the mineral resources. We may say
that, in the second paragraph of Section 81, the legislature in a sense intruded
partially into the Presidents sphere of authority when the former provided that
The Government share in financial or technical assistance agreement shall consist
of, among other things, the contractors corporate income tax, excise tax, special
allowance, withholding tax due from the contractors foreign stockholders arising
from dividend or interest payments to the said foreign stockholder in case of a
foreign national and all such other taxes, duties and fees as provided for under
existing laws. (Italics supplied)
But it did not usurp the Presidents authority since the provision merely included the
enumerated items as part of the government share, without foreclosing or in any
way preventing (as in fact Congress could not validly prevent) the President from
determining what constitutes the States compensation derived from FTAAs. In this
case, the President in effect directed the inclusion or addition of other things, viz.,
INCOME for the owner of the resources, in the governments share, while adopting
the items enumerated by Congress as part of the government share also.
12. Justice Carpios insistence on applying the ejusdem generis rule of statutory
construction to the phrase among other things is therefore useless, and must fall by
the wayside. There is no point trying to construe that phrase in relation to the
enumeration of taxes, duties and fees found in paragraph 2 of Section 81, precisely
because the constitutional power to prescribe the sharing of mining income
between the State and mining companies, to quote Justice Carpio pursuant to an
FTAA is constitutionally lodged with the President, not with Congress. It thus makes

no sense to persist in giving the phrase among other things a restricted meaning
referring only to taxes, duties and fees.
13. Strangely, Justice Carpio claims that the DENR secretary can change the
formulae in DAO 99-56 any time even without the approval of the President, and the
secretary is the sole authority to determine the amount of consideration that the
State shall receive in an FTAA, because Section 5 of the DAO states that xxx any
amendment of an FTAA other than the provision on fiscal regime shall require the
negotiation with the Negotiation Panel and the recommendation of the Secretary for
approval of the President xxx. Allegedly, because of that provision, if an
amendment in the FTAA involves non-fiscal matters, the amendment requires
approval of the President, but if the amendment involves a change in the fiscal
regime, the DENR secretary has the final authority, and approval of the President
may be dispensed with; hence the secretary is more powerful than the President.
We believe there is some distortion resulting from the quoted provision being taken
out of context. Section 5 of DAO 99-56 reads as follows:
Section 5. Status of Existing FTAAs. All FTAAs approved prior to the effectivity of
this Administrative Order shall remain valid and be recognized by the Government:
Provided, That should a Contractor desire to amend its FTAA, it shall do so by filing a
Letter of Intent (LOI) to the Secretary thru the Director. Provided, further, That if the
Contractor desires to amend the fiscal regime of its FTAA, it may do so by seeking
for the amendment of its FTAAs whole fiscal regime by adopting the fiscal regime
provided hereof: Provided, finally, That any amendment of an FTAA other than the
provision on fiscal regime shall require the negotiation with the Negotiating Panel
and the recommendation of the Secretary for approval of the President of the
Republic of the Philippines. (underscoring supplied)
It looks like another case of misapprehension. The proviso being objected to by
Justice Carpio is actually preceded by a phrase that requires a contractor desiring to
amend the fiscal regime of its FTAA, to amend the same by adopting the fiscal
regime prescribed in DAO 99-56 -- i.e., solely in that manner, and in no other.
Obviously, since DAO 99-56 was issued by the secretary under the authority and
with the presumed approval of the President, the amendment of an FTAA by merely
adopting the fiscal regime prescribed in said DAO 99-56 (and nothing more) need
not have the express clearance of the President anymore. It is as if the same had
been pre-approved. We cannot fathom the complaint that that makes the secretary
more powerful than the President, or that the former is trying to hide things from
the President or Congress.
14. Based on the first sentence of Section 5 of DAO 99-56, which states [A]ll FTAAs
approved prior to the effectivity of this Administrative Order shall remain valid and
be recognized by the Government, Justice Carpio concludes that said

Administrative Order allegedly exempts FTAAs approved prior to its effectivity -- like
the WMCP FTAA -- from having to pay the State any share from their mining income,
apart from taxes, duties and fees.
We disagree. What we see in black and white is the statement that the FTAAs
approved before the DAO came into effect are to continue to be valid and will be
recognized by the State. Nothing is said about their fiscal regimes. Certainly, there
is no basis to claim that the contractors under said FTAAs were being exempted
from paying the government a share in their mining incomes.
For the record, the WMCP FTAA is NOT and has never been exempt from paying the
government share. The WMCP FTAA has its own fiscal regime -- Section 7.7 -- which
gives the government a 60 percent share in the net mining revenues of WMCP from
the commencement of commercial production.
For that very reason, we have never said that DAO 99-56 is the basis for claiming
that the WMCP FTAA has a consideration. Hence, we find quite out of place Justice
Carpios statement that ironically, DAO 99-56, the very authority cited to support
the claim that the WMCP FTAA has a consideration, does not apply to the WMCP
FTAA. By its own express terms, DAO 99-56 does not apply to FTAAs executed
before the issuance of DAO 99-56, like the WMCP FTAA. The majoritys position has
allegedly no leg to stand on since even DAO 99-56, assuming it is valid, cannot save
the WMCP FTAA from want of consideration. Even assuming arguendo that DAO 9956 does not apply to the WMCP FTAA, nevertheless, the WMCP FTAA has its own
fiscal regime, found in Section 7.7 thereof. Hence, there is no such thing as want
of consideration here.
Still more startling is this claim: The majority supposedly agrees that the provisions
of the WMCP FTAA, which grant a sham consideration to the State, are void. Since
the majority agrees that the WMCP FTAA has a sham consideration, the WMCP FTAA
thus lacks the third element of a valid contract. The Decision should declare the
WMCP FTAA void for want of consideration unless it treats the contract as an MPSA
under Section 80. Indeed the only recourse of WMCP to save the validity of its
contract is to convert it into an MPSA.
To clarify, we said that Sections 7.9 and 7.8(e) of the WMCP FTAA are provisions
grossly disadvantageous to government and detrimental to the interests of the
Filipino people, as well as violative of public policy, and must therefore be stricken
off as invalid. Since the offending provisions are very much separable from Section
7.7 and the rest of the FTAA, the deletion of Sections 7.9 and 7.8(e) can be done
without affecting or requiring the invalidation of the WMCP FTAA itself, and such
deletion will preserve for government its due share of the 60 percent benefits.
Therefore, the WMCP FTAA is NOT bereft of a valid consideration (assuming for the
nonce that indeed this is the consideration of the FTAA).

SUMMATION
To conclude, a summary of the key points discussed above is now in order.
The Meaning of Agreements Involving
Either Technical or Financial Assistance
Applying familiar principles of constitutional construction to the phrase agreements
involving either technical or financial assistance, the framers choice of words does
not indicate the intent to exclude other modes of assistance, but rather implies that
there are other things being included or possibly being made part of the agreement,
apart from financial or technical assistance. The drafters avoided the use of
restrictive and stringent phraseology; a verba legis scrutiny of Section 2 of Article
XII of the Constitution discloses not even a hint of a desire to prohibit foreign
involvement in the management or operation of mining activities, or to eradicate
service contracts. Such moves would necessarily imply an underlying drastic shift
in fundamental economic and developmental policies of the State. That change
requires a much more definite and irrefutable basis than mere omission of the words
service contract from the new Constitution.
Furthermore, a literal and restrictive interpretation of this paragraph leads to logical
inconsistencies. A constitutional provision specifically allowing foreign-owned
corporations to render financial or technical assistance in respect of mining or any
other commercial activity was clearly unnecessary; the provision was meant to refer
to more than mere financial or technical assistance.
Also, if paragraph 4 permits only agreements for financial or technical assistance,
there would be no point in requiring that they be based on real contributions to the
economic growth and general welfare of the country. And considering that there
were various long-term service contracts still in force and effect at the time the new
Charter was being drafted, the absence of any transitory provisions to govern the
termination and closing-out of the then existing service contracts strongly militates
against the theory that the mere omission of service contracts signaled their
prohibition by the new Constitution.
Resort to the deliberations of the Constitutional Commission is therefore
unavoidable, and a careful scrutiny thereof conclusively shows that the ConCom
members discussed agreements involving either technical or financial assistance in
the same sense as service contracts and used the terms interchangeably. The
drafters in fact knew that the agreements with foreign corporations were going to
entail not mere technical or financial assistance but, rather, foreign investment in
and management of an enterprise for large-scale exploration, development and
utilization of minerals.

The framers spoke about service contracts as the concept was understood in the
1973 Constitution. It is obvious from their discussions that they did not intend to
ban or eradicate service contracts. Instead, they were intent on crafting provisions
to put in place safeguards that would eliminate or minimize the abuses prevalent
during the martial law regime. In brief, they were going to permit service contracts
with foreign corporations as contractors, but with safety measures to prevent
abuses, as an exception to the general norm established in the first paragraph of
Section 2 of Article XII, which reserves or limits to Filipino citizens and corporations
at least 60 percent owned by such citizens the exploration, development and
utilization of mineral or petroleum resources. This was prompted by the perceived
insufficiency of Filipino capital and the felt need for foreign expertise in the EDU of
mineral resources.
Despite strong opposition from some ConCom members during the final voting, the
Article on the National Economy and Patrimony -- including paragraph 4 allowing
service contracts with foreign corporations as an exception to the general norm in
paragraph 1 of Section 2 of the same Article -- was resoundingly and
overwhelmingly approved.
The drafters, many of whom were economists, academicians, lawyers,
businesspersons and politicians knew that foreign entities will not enter into
agreements involving assistance without requiring measures of protection to ensure
the success of the venture and repayment of their investments, loans and other
financial assistance, and ultimately to protect the business reputation of the foreign
corporations. The drafters, by specifying such agreements involving assistance,
necessarily gave implied assent to everything that these agreements entailed or
that could reasonably be deemed necessary to make them tenable and effective -including management authority with respect to the day-to-day operations of the
enterprise, and measures for the protection of the interests of the foreign
corporation, at least to the extent that they are consistent with Philippine
sovereignty over natural resources, the constitutional requirement of State control,
and beneficial ownership of natural resources remaining vested in the State.
From the foregoing, it is clear that agreements involving either technical or financial
assistance referred to in paragraph 4 are in fact service contracts, but such new
service contracts are between foreign corporations acting as contractors on the one
hand, and on the other hand government as principal or owner (of the works),
whereby the foreign contractor provides the capital, technology and technical knowhow, and managerial expertise in the creation and operation of the large-scale
mining/extractive enterprise, and government through its agencies (DENR, MGB)
actively exercises full control and supervision over the entire enterprise.

Such service contracts may be entered into only with respect to minerals, petroleum
and other mineral oils. The grant of such service contracts is subject to several
safeguards, among them: (1) that the service contract be crafted in accordance with
a general law setting standard or uniform terms, conditions and requirements; (2)
the President be the signatory for the government; and (3) the President report the
executed agreement to Congress within thirty days.
Ultimate Test:
Full State Control
To repeat, the primacy of the principle of the States sovereign ownership of all
mineral resources, and its full control and supervision over all aspects of
exploration, development and utilization of natural resources must be upheld. But
full control and supervision cannot be taken literally to mean that the State
controls and supervises everything down to the minutest details and makes all
required actions, as this would render impossible the legitimate exercise by the
contractor of a reasonable degree of management prerogative and authority,
indispensable to the proper functioning of the mining enterprise. Also, government
need not micro-manage mining operations and day-to-day affairs of the enterprise
in order to be considered as exercising full control and supervision.
Control, as utilized in Section 2 of Article XII, must be taken to mean a degree of
control sufficient to enable the State to direct, restrain, regulate and govern the
affairs of the extractive enterprises. Control by the State may be on a macro level,
through the establishment of policies, guidelines, regulations, industry standards
and similar measures that would enable government to regulate the conduct of
affairs in various enterprises, and restrain activities deemed not desirable or
beneficial, with the end in view of ensuring that these enterprises contribute to the
economic development and general welfare of the country, conserve the
environment, and uplift the well-being of the local affected communities. Such a
degree of control would be compatible with permitting the foreign contractor
sufficient and reasonable management authority over the enterprise it has invested
in, to ensure efficient and profitable operation.
Government Granted Full Control
by RA 7942 and DAO 96-40
Baseless are petitioners sweeping claims that RA 7942 and its Implementing Rules
and Regulations make it possible for FTAA contracts to cede full control and
management of mining enterprises over to fully foreign owned corporations.
Equally wobbly is the assertion that the State is reduced to a passive regulator
dependent on submitted plans and reports, with weak review and audit powers and
little say in the decision-making of the enterprise, for which reasons beneficial
ownership of the mineral resources is allegedly ceded to the foreign contractor.

As discussed hereinabove, the States full control and supervision over mining
operations are ensured through the following provisions in RA 7942: Sections 8, 9,
16, 19, 24, 35[(b), (e), (f), (g), (h), (k), (l), (m) and (o)], 40, 57, 66, 69, 70, and
Chapters XI and XVII; as well as the following provisions of DAO 96-40: Sections7[(d)
and (f)], 35(a-2), 53[(a-4) and (d)], 54, 56[(g), (h), (l), (m) and (n)], 56(2), 60, 66,
144, 168, 171 and 270, and also Chapters XV, XVI and XXIV.
Through the foregoing provisions, the government agencies concerned are
empowered to approve or disapprove -- hence, in a position to influence, direct, and
change -- the various work programs and the corresponding minimum expenditure
commitments for each of the exploration, development and utilization phases of the
enterprise. Once they have been approved, the contractors compliance with its
commitments therein will be monitored. Figures for mineral production and sales
are regularly monitored and subjected to government review, to ensure that the
products and by-products are disposed of at the best prices; copies of sales
agreements have to be submitted to and registered with MGB.
The contractor is mandated to open its books of accounts and records for scrutiny,
to enable the State to determine that the government share has been fully paid.
The State may likewise compel compliance by the contractor with mandatory
requirements on mine safety, health and environmental protection, and the use of
anti-pollution technology and facilities. The contractor is also obligated to assist the
development of the mining community, and pay royalties to the indigenous peoples
concerned. And violation of any of the FTAAs terms and conditions, and/or noncompliance with statutes or regulations, may be penalized by cancellation of the
FTAA. Such sanction is significant to a contractor who may have yet to recover the
tens or hundreds of millions of dollars sunk into a mining project.
Overall, the State definitely has a pivotal say in the operation of the individual
enterprises, and can set directions and objectives, detect deviations and noncompliances by the contractor, and enforce compliance and impose sanctions
should the occasion arise. Hence, RA 7942 and DAO 96-40 vest in government
more than a sufficient degree of control and supervision over the conduct of mining
operations.
Section 3(aq) of RA 7942 was objected to as being unconstitutional for allowing a
foreign contractor to apply for and hold an exploration permit. During the
exploration phase, the permit grantee (and prospective contractor) is spending and
investing heavily in exploration activities without yet being able to extract minerals
and generate revenues. The exploration permit issued under Sections 3(aq), 20 and
23 of RA 7942, which allows exploration but not extraction, serves to protect the
interests and rights of the exploration permit grantee (and would-be contractor),
foreign or local. Otherwise, the exploration works already conducted, and

expenditures already made, may end up only benefiting claim-jumpers. Thus,

Section 3(aq) of RA 7942 is not unconstitutional.
WMCP FTAA Likewise Gives the
State Full Control and Supervision
The WMCP FTAA obligates the contractor to account for the value of production and
sale of minerals (Clause 1.4); requires that the contractors work program, activities
and budgets be approved by the State (Clause 2.1); gives the DENR secretary
power to extend the exploration period (Clause 3.2-a); requires approval by the
State for incorporation of lands into the contract area (Clause 4.3-c); requires
Bureau of Forest Development approval for inclusion of forest reserves as part of
the FTAA contract area (Clause 4.5); obligates the contractor to periodically
relinquish parts of the contract area not needed for exploration and development
(Clause 4.6); requires submission of a declaration of mining feasibility for approval
by the State (Clause 4.6-b); obligates the contractor to report to the State the
results of its exploration activities (Clause 4.9); requires the contractor to obtain
State approval for its work programs for the succeeding two year periods,
containing the proposed work activities and expenditures budget related to
exploration (Clause 5.1); requires the contractor to obtain State approval for its
proposed expenditures for exploration activities (Clause 5.2); requires the
contractor to submit an annual report on geological, geophysical, geochemical and
other information relating to its explorations within the FTAA area (Clause 5.3-a);
requires the contractor to submit within six months after expiration of exploration
period a final report on all its findings in the contract area (Clause 5.3-b); requires
the contractor after conducting feasibility studies to submit a declaration of mining
feasibility, along with a description of the area to be developed and mined, a
description of the proposed mining operations and the technology to be employed,
and the proposed work program for the development phase, for approval by the
DENR secretary (Clause 5.4); obligates the contractor to complete the development
of the mine, including construction of the production facilities, within the period
stated in the approved work program (Clause 6.1); requires the contractor to submit
for approval a work program covering each period of three fiscal years (Clause 6.2);
requires the contractor to submit reports to the secretary on the production, ore
reserves, work accomplished and work in progress, profile of its work force and
management staff, and other technical information (Clause 6.3); subjects any
expansions, modifications, improvements and replacements of mining facilities to
the approval of the secretary (Clause 6.4); subjects to State control the amount of
funds that the contractor may borrow within the Philippines (Clause 7.2); subjects to
State supervisory power any technical, financial and marketing issues (Clause 10.1a); obligates the contractor to ensure 60 percent Filipino equity in the contractor
within ten years of recovering specified expenditures unless not so required by
subsequent legislation (Clause 10.1); gives the State the right to terminate the FTAA
for unremedied substantial breach thereof by the contractor (Clause 13.2); requires

State approval for any assignment of the FTAA by the contractor to an entity other
than an affiliate (Clause 14.1).
In short, the aforementioned provisions of the WMCP FTAA, far from constituting a
surrender of control and a grant of beneficial ownership of mineral resources to the
contractor in question, vest the State with control and supervision over practically
all aspects of the operations of the FTAA contractor, including the charging of preoperating and operating expenses, and the disposition of mineral products.
There is likewise no relinquishment of control on account of specific provisions of
the WMCP FTAA. Clause 8.2 provides a mechanism to prevent the mining
operations from grinding to a complete halt as a result of possible delays of more
than 60 days in the governments processing and approval of submitted work
programs and budgets. Clause 8.3 seeks to provide a temporary, stop-gap solution
in case a disagreement between the State and the contractor (over the proposed
work program or budget submitted by the contractor) should result in a deadlock or
impasse, to avoid unreasonably long delays in the performance of the works.
The State, despite Clause 8.3, still has control over the contract area, and it may, as
sovereign authority, prohibit work thereon until the dispute is resolved, or it may
terminate the FTAA, citing substantial breach thereof. Hence, the State clearly
retains full and effective control.
Clause 8.5, which allows the contractor to make changes to approved work
programs and budgets without the prior approval of the DENR secretary, subject to
certain limitations with respect to the variance/s, merely provides the contractor a
certain amount of flexibility to meet unexpected situations, while still guaranteeing
that the approved work programs and budgets are not abandoned altogether. And
if the secretary disagrees with the actions taken by the contractor in this instance,
he may also resort to cancellation/termination of the FTAA as the ultimate sanction.
Clause 4.6 of the WMCP FTAA gives the contractor discretion to select parts of the
contract area to be relinquished. The State is not in a position to substitute its
judgment for that of the contractor, who knows exactly which portions of the
contract area do not contain minerals in commercial quantities and should be
relinquished. Also, since the annual occupation fees paid to government are based
on the total hectarage of the contract area, net of the areas relinquished, the
contractors self-interest will assure proper and efficient relinquishment.
Clause 10.2(e) of the WMCP FTAA does not mean that the contractor can compel
government to use its power of eminent domain. It contemplates a situation in
which the contractor is a foreign-owned corporation, hence, not qualified to own
land. The contractor identifies the surface areas needed for it to construct the
infrastructure for mining operations, and the State then acquires the surface rights

on behalf of the former. The provision does not call for the exercise of the power of
eminent domain (or determination of just compensation); it seeks to avoid a
violation of the anti-dummy law.
Clause 10.2(l) of the WMCP FTAA giving the contractor the right to mortgage and
encumber the mineral products extracted may have been a result of conditions
imposed by creditor-banks to secure the loan obligations of WMCP. Banks lend also
upon the security of encumbrances on goods produced, which can be easily sold
and converted into cash and applied to the repayment of loans. Thus, Clause
10.2(l) is not something out of the ordinary. Neither is it objectionable, because
even though the contractor is allowed to mortgage or encumber the mineral endproducts themselves, the contractor is not thereby relieved of its obligation to pay
the government its basic and additional shares in the net mining revenue. The
contractors ability to mortgage the minerals does not negate the States right to
receive its share of net mining revenues.
Clause 10.2(k) which gives the contractor authority to change its equity structure
at any time, means that WMCP, which was then 100 percent foreign owned, could
permit Filipino equity ownership. Moreover, what is important is that the contractor,
regardless of its ownership, is always in a position to render the services required
under the FTAA, under the direction and control of the government.
Clauses 10.4(e) and (i) bind government to allow amendments to the FTAA if
required by banks and other financial institutions as part of the conditions of new
lendings. There is nothing objectionable here, since Clause 10.4(e) also provides
that such financing arrangements should in no event reduce the contractors
obligations or the governments rights under the FTAA. Clause 10.4(i) provides that
government shall favourably consider any request for amendments of this
agreement necessary for the contractor to successfully obtain financing. There is
no renunciation of control, as the proviso does not say that government shall
automatically grant any such request. Also, it is up to the contractor to prove the
need for the requested changes. The government always has the final say on
whether to approve or disapprove such requests.
In fine, the FTAA provisions do not reduce or abdicate State control.
No Surrender of
Financial Benefits
The second paragraph of Section 81 of RA 7942 has been denounced for allegedly
limiting the States share in FTAAs with foreign contractors to just taxes, fees and
duties, and depriving the State of a share in the after-tax income of the enterprise.
However, the inclusion of the phrase among other things in the second paragraph

of Section 81 clearly and unmistakably reveals the legislative intent to have the
State collect more than just the usual taxes, duties and fees.
Thus, DAO 99-56, the Guidelines Establishing the Fiscal Regime of Financial or
Technical Assistance Agreements, spells out the financial benefits government will
receive from an FTAA, as consisting of not only a basic government share,
comprised of all direct taxes, fees and royalties, as well as other payments made by
the contractor during the term of the FTAA, but also an additional government
share, being a share in the earnings or cash flows of the mining enterprise, so as to
achieve a fifty-fifty sharing of net benefits from mining between the government
and the contractor.
The additional government share is computed using one of three (3) options or
schemes detailed in DAO 99-56, viz., (1) the fifty-fifty sharing of cumulative present
value of cash flows; (2) the excess profit-related additional government share; and
(3) the additional sharing based on the cumulative net mining revenue. Whichever
option or computation is used, the additional government share has nothing to do
with taxes, duties, fees or charges. The portion of revenues remaining after the
deduction of the basic and additional government shares is what goes to the
contractor.
The basic government share and the additional government share do not yet take
into account the indirect taxes and other financial contributions of mining projects,
which are real and actual benefits enjoyed by the Filipino people; if these are taken
into account, total government share increases to 60 percent or higher (as much as
77 percent, and 89 percent in one instance) of the net present value of total
benefits from the project.
The third or last paragraph of Section 81 of RA 7942 is slammed for deferring the
payment of the government share in FTAAs until after the contractor shall have
recovered its pre-operating expenses, exploration and development expenditures.
Allegedly, the collection of the States share is rendered uncertain, as there is no
time limit in RA 7942 for this grace period or recovery period. But although RA 7942
did not limit the grace period, the concerned agencies (DENR and MGB) in
formulating the 1995 and 1996 Implementing Rules and Regulations provided that
the period of recovery, reckoned from the date of commercial operation, shall be for
a period not exceeding five years, or until the date of actual recovery, whichever
comes earlier.
And since RA 7942 allegedly does not require government approval for the preoperating, exploration and development expenses of the foreign contractors, it is
feared that such expenses could be bloated to wipe out mining revenues
anticipated for 10 years, with the result that the States share is zero for the first 10
years. However, the argument is based on incorrect information.

Under Section 23 of RA 7942, the applicant for exploration permit is required to

submit a proposed work program for exploration, containing a yearly budget of
proposed expenditures, which the State passes upon and either approves or rejects;
if approved, the same will subsequently be recorded as pre-operating expenses that
the contractor will have to recoup over the grace period.
Under Section 24, when an exploration permittee files with the MGB a declaration of
mining project feasibility, it must submit a work program for development, with
corresponding budget, for approval by the Bureau, before government may grant an
FTAA or MPSA or other mineral agreements; again, government has the opportunity
to approve or reject the proposed work program and budgeted expenditures for
development works, which will become the pre-operating and development costs
that will have to be recovered. Government is able to know ahead of time the
amounts of pre-operating and other expenses to be recovered, and the approximate
period of time needed therefor. The aforecited provisions have counterparts in
Section 35, which deals with the terms and conditions exclusively applicable to
FTAAs. In sum, the third or last paragraph of Section 81 of RA 7942 cannot be
deemed defective.
Section 80 of RA 7942 allegedly limits the States share in a mineral productionsharing agreement (MPSA) to just the excise tax on the mineral product, i.e., only 2
percent of market value of the minerals. The colatilla in Section 84 reiterates the
same limitation in Section 80. However, these two provisions pertain only to
MPSAs, and have no application to FTAAs. These particular provisions do not come
within the issues defined by this Court. Hence, on due process grounds, no
pronouncement can be made in this case in respect of the constitutionality of
Sections 80 and 84.
Section 112 is disparaged for reverting FTAAs and all mineral agreements to the old
license, concession or lease system, because it allegedly effectively reduces the
government share in FTAAs to just the 2 percent excise tax which pursuant to
Section 80 comprises the government share in MPSAs. However, Section 112
likewise does not come within the issues delineated by this Court, and was never
touched upon by the parties in their pleadings. Moreover, Section 112 may not
properly apply to FTAAs. The mining law obviously meant to treat FTAAs as a breed
apart from mineral agreements. There is absolutely no basis to believe that the law
intends to exact from FTAA contractors merely the same government share (i.e., the
2 percent excise tax) that it apparently demands from contractors under the three
forms of mineral agreements.
While there is ground to believe that Sections 80, 84 and 112 are indeed
unconstitutional, they cannot be ruled upon here. In any event, they are separable;
thus, a later finding of nullity will not affect the rest of RA 7942.

In fine, the challenged provisions of RA 7942 cannot be said to surrender financial

benefits from an FTAA to the foreign contractors.
Moreover, there is no concrete basis for the view that, in FTAAs with a foreign
contractor, the State must receive at least 60 percent of the after-tax income from
the exploitation of its mineral resources, and that such share is the equivalent of the
constitutional requirement that at least 60 percent of the capital, and hence 60
percent of the income, of mining companies should remain in Filipino hands. Even if
the State is entitled to a 60 percent share from other mineral agreements (CPA, JVA
and MPSA), that would not create a parallel or analogous situation for FTAAs. We
are dealing with an essentially different equation. Here we have the old apples and
oranges syndrome.
The Charter did not intend to fix an iron-clad rule of 60 percent share, applicable to
all situations, regardless of circumstances. There is no indication of such an
intention on the part of the framers. Moreover, the terms and conditions of
petroleum FTAAs cannot serve as standards for mineral mining FTAAs, because the
technical and operational requirements, cost structures and investment needs of
off-shore petroleum exploration and drilling companies do not have the remotest
resemblance to those of on-shore mining companies.
To take the position that governments share must be not less than 60 percent of
after-tax income of FTAA contractors is nothing short of this Court dictating upon the
government. The State resultantly ends up losing control. To avoid compromising
the States full control and supervision over the exploitation of mineral resources,
there must be no attempt to impose a minimum 60 percent rule. It is sufficient
that the State has the power and means, should it so decide, to get a 60 percent
share (or greater); and it is not necessary that the State does so in every case.
Invalid Provisions of
the WMCP FTAA
Section 7.9 of the WMCP FTAA clearly renders illusory the States 60 percent share
of WMCPs revenues. Under Section 7.9, should WMCPs foreign stockholders (who
originally owned 100 percent of the equity) sell 60 percent or more of their equity to
a Filipino citizen or corporation, the State loses its right to receive its share in net
mining revenues under Section 7.7, without any offsetting compensation to the
State. And what is given to the State in Section 7.7 is by mere tolerance of WMCPs
foreign stockholders, who can at any time cut off the governments entire share by
simply selling 60 percent of WMCPs equity to a Philippine citizen or corporation.
In fact, the sale by WMCPs foreign stockholder on January 23, 2001 of the entire
outstanding equity in WMCP to Sagittarius Mines, Inc., a domestic corporation at

least 60 percent Filipino owned, can be deemed to have automatically triggered the
operation of Section 7.9 and removed the States right to receive its 60 percent
share. Section 7.9 of the WMCP FTAA has effectively given away the States share
without anything in exchange.
Moreover, it constitutes unjust enrichment on the part of the local and foreign
stockholders in WMCP, because by the mere act of divestment, the local and foreign
stockholders get a windfall, as their share in the net mining revenues of WMCP is
automatically increased, without having to pay anything for it.
Being grossly disadvantageous to government and detrimental to the Filipino
people, as well as violative of public policy, Section 7.9 must therefore be stricken
off as invalid. The FTAA in question does not involve mere contractual rights but,
being impressed as it is with public interest, the contractual provisions and
stipulations must yield to the common good and the national interest. Since the
offending provision is very much separable from the rest of the FTAA, the deletion of
Section 7.9 can be done without affecting or requiring the invalidation of the entire
WMCP FTAA itself.
Section 7.8(e) of the WMCP FTAA likewise is invalid, since by allowing the sums
spent by government for the benefit of the contractor to be deductible from the
States share in net mining revenues, it results in benefiting the contractor twice
over. This constitutes unjust enrichment on the part of the contractor, at the
expense of government. For being grossly disadvantageous and prejudicial to
government and contrary to public policy, Section 7.8(e) must also be declared
without effect. It may likewise be stricken off without affecting the rest of the FTAA.
EPILOGUE
AFTER ALL IS SAID AND DONE, it is clear that there is unanimous agreement in the
Court upon the key principle that the State must exercise full control and
supervision over the exploration, development and utilization of mineral resources.
The crux of the controversy is the amount of discretion to be accorded the
Executive Department, particularly the President of the Republic, in respect of
negotiations over the terms of FTAAs, particularly when it comes to the government
share of financial benefits from FTAAs. The Court believes that it is not
unconstitutional to allow a wide degree of discretion to the Chief Executive, given
the nature and complexity of such agreements, the humongous amounts of capital
and financing required for large-scale mining operations, the complicated
technology needed, and the intricacies of international trade, coupled with the
States need to maintain flexibility in its dealings, in order to preserve and enhance
our countrys competitiveness in world markets.

We are all, in one way or another, sorely affected by the recently reported scandals
involving corruption in high places, duplicity in the negotiation of multi-billion peso
government contracts, huge payoffs to government officials, and other
malfeasances; and perhaps, there is the desire to see some measures put in place
to prevent further abuse. However, dictating upon the President what minimum
share to get from an FTAA is not the solution. It sets a bad precedent since such a
move institutionalizes the very reduction if not deprivation of the States control.
The remedy may be worse than the problem it was meant to address. In any event,
provisions in such future agreements which may be suspected to be grossly
disadvantageous or detrimental to government may be challenged in court, and the
culprits haled before the bar of justice.
Verily, under the doctrine of separation of powers and due respect for co-equal and
coordinate branches of government, this Court must restrain itself from intruding
into policy matters and must allow the President and Congress maximum discretion
in using the resources of our country and in securing the assistance of foreign
groups to eradicate the grinding poverty of our people and answer their cry for
viable employment opportunities in the country.
The judiciary is loath to interfere with the due exercise by coequal branches of
government of their official functions.[99] As aptly spelled out seven decades ago
by Justice George Malcolm, Just as the Supreme Court, as the guardian of
constitutional rights, should not sanction usurpations by any other department of
government, so should it as strictly confine its own sphere of influence to the
powers expressly or by implication conferred on it by the Organic Act.[100] Let the
development of the mining industry be the responsibility of the political branches of
government. And let not this Court interfere inordinately and unnecessarily.
The Constitution of the Philippines is the supreme law of the land. It is the
repository of all the aspirations and hopes of all the people. We fully sympathize
with the plight of Petitioner La Bugal Blaan and other tribal groups, and commend
their efforts to uplift their communities. However, we cannot justify the invalidation
of an otherwise constitutional statute along with its implementing rules, or the
nullification of an otherwise legal and binding FTAA contract.
We must never forget that it is not only our less privileged brethren in tribal and
cultural communities who deserve the attention of this Court; rather, all parties
concerned -- including the State itself, the contractor (whether Filipino or foreign),
and the vast majority of our citizens -- equally deserve the protection of the law and
of this Court. To stress, the benefits to be derived by the State from mining
activities must ultimately serve the great majority of our fellow citizens. They have
as much right and interest in the proper and well-ordered development and
utilization of the countrys mineral resources as the petitioners.

Whether we consider the near term or take the longer view, we cannot
overemphasize the need for an appropriate balancing of interests and needs -- the
need to develop our stagnating mining industry and extract what NEDA Secretary
Romulo Neri estimates is some US$840 billion (approx. PhP47.04 trillion) worth of
mineral wealth lying hidden in the ground, in order to jumpstart our floundering
economy on the one hand, and on the other, the need to enhance our nationalistic
aspirations, protect our indigenous communities, and prevent irreversible ecological
damage.
This Court cannot but be mindful that any decision rendered in this case will
ultimately impact not only the cultural communities which lodged the instant
Petition, and not only the larger community of the Filipino people now struggling to
survive amidst a fiscal/budgetary deficit, ever increasing prices of fuel, food, and
essential commodities and services, the shrinking value of the local currency, and a
government hamstrung in its delivery of basic services by a severe lack of
resources, but also countless future generations of Filipinos.
For this latter group of Filipinos yet to be born, their eventual access to education,
health care and basic services, their overall level of well-being, the very shape of
their lives are even now being determined and affected partly by the policies and
directions being adopted and implemented by government today. And in part by
the this Resolution rendered by this Court today.
Verily, the mineral wealth and natural resources of this country are meant to benefit
not merely a select group of people living in the areas locally affected by mining
activities, but the entire Filipino nation, present and future, to whom the mineral
wealth really belong. This Court has therefore weighed carefully the rights and
interests of all concerned, and decided for the greater good of the greatest number.
JUSTICE FOR ALL, not just for some; JUSTICE FOR THE PRESENT AND THE FUTURE,
not just for the here and now.
WHEREFORE, the Court RESOLVES to GRANT the respondents and the intervenors
Motions for Reconsideration; to REVERSE and SET ASIDE this Courts January 27,
2004 Decision; to DISMISS the Petition; and to issue this new judgment declaring
CONSTITUTIONAL (1) Republic Act No. 7942 (the Philippine Mining Law), (2) its
Implementing Rules and Regulations contained in DENR Administrative Order (DAO)
No. 9640 -- insofar as they relate to financial and technical assistance agreements
referred to in paragraph 4 of Section 2 of Article XII of the Constitution; and (3) the
Financial and Technical Assistance Agreement (FTAA) dated March 30, 1995
executed by the government and Western Mining Corporation Philippines Inc.
(WMCP), except Sections 7.8 and 7.9 of the subject FTAA which are hereby
INVALIDATED for being contrary to public policy and for being grossly
disadvantageous to the government.

SO ORDERED.

G.R. No. L-43938 April 15, 1988

REPUBLIC OF THE PHILIPPINES (DIRECTOR OF FOREST DEVELOPMENT),
petitioner,
vs.
HON. COURT OF APPEALS (THIRD DIVISION) and JOSE Y. DE LA ROSA,
respondents.
G.R. No. L-44081 April 15, 1988
BENGUET CONSOLIDATED, INC., petitioner,
vs.
HON. COURT OF APPEALS, JOSE Y. DE LA ROSA, VICTORIA, BENJAMIN and
EDUARDO, all surnamed DE LA ROSA, represented by their father JOSE Y.
DE LA ROSA, respondents.
G.R. No. L-44092 April 15, 1988
ATOK-BIG WEDGE MINING COMPANY, petitioner,
vs.
HON. COURT OF APPEALS, JOSE Y. DE LA ROSA, VICTORlA, BENJAMIN and
EDUARDO, all surnamed DE LA ROSA, represented by their father, JOSE Y.
DE LA ROSA, respondents.

CRUZ, J.:
The Regalian doctrine reserves to the State all natural wealth that may be found in
the bowels of the earth even if the land where the discovery is made be private. 1 In
the cases at bar, which have been consolidated because they pose a common issue,
this doctrine was not correctly applied.
These cases arose from the application for registration of a parcel of land filed on
February 11, 1965, by Jose de la Rosa on his own behalf and on behalf of his three
children, Victoria, Benjamin and Eduardo. The land, situated in Tuding, Itogon,
Benguet Province, was divided into 9 lots and covered by plan Psu-225009.
According to the application, Lots 1-5 were sold to Jose de la Rosa and Lots 6-9 to
his children by Mamaya Balbalio and Jaime Alberto, respectively, in 1964. 2

The application was separately opposed by Benguet Consolidated, Inc. as to Lots 15, Atok Big Wedge Corporation, as to Portions of Lots 1-5 and all of Lots 6-9, and by
the Republic of the Philippines, through the Bureau of Forestry Development, as to
lots 1-9. 3
In support of the application, both Balbalio and Alberto testified that they had
acquired the subject land by virtue of prescription Balbalio claimed to have received
Lots 1-5 from her father shortly after the Liberation. She testified she was born in
the land, which was possessed by her parents under claim of ownership. 4 Alberto
said he received Lots 6-9 in 1961 from his mother, Bella Alberto, who declared that
the land was planted by Jaime and his predecessors-in-interest to bananas,
avocado, nangka and camote, and was enclosed with a barbed-wire fence. She was
corroborated by Felix Marcos, 67 years old at the time, who recalled the earlier
possession of the land by Alberto's father. 5 Balbalio presented her tax declaration
in 1956 and the realty tax receipts from that year to 1964, 6 Alberto his tax
declaration in 1961 and the realty tax receipts from that year to 1964. 7
Benguet opposed on the ground that the June Bug mineral claim covering Lots 1-5
was sold to it on September 22, 1934, by the successors-in-interest of James Kelly,
who located the claim in September 1909 and recorded it on October 14, 1909.
From the date of its purchase, Benguet had been in actual, continuous and exclusive
possession of the land in concept of owner, as evidenced by its construction of
adits, its affidavits of annual assessment, its geological mappings, geological
samplings and trench side cuts, and its payment of taxes on the land. 8
For its part, Atok alleged that a portion of Lots 1-5 and all of Lots 6-9 were covered
by the Emma and Fredia mineral claims located by Harrison and Reynolds on
December 25, 1930, and recorded on January 2, 1931, in the office of the mining
recorder of Baguio. These claims were purchased from these locators on November
2, 1931, by Atok, which has since then been in open, continuous and exclusive
possession of the said lots as evidenced by its annual assessment work on the
claims, such as the boring of tunnels, and its payment of annual taxes thereon. 9
The location of the mineral claims was made in accordance with Section 21 of the
Philippine Bill of 1902 which provided that:
SEC. 21. All valuable mineral deposits in public lands in the philippine Islands both
surveyed and unsurveyed are hereby declared to be free and open to exploration,
occupation and purchase and the land in which they are found to occupation and
purchase by the citizens of the United States, or of said islands.
The Bureau of Forestry Development also interposed its objection, arguing that the
land sought to be registered was covered by the Central Cordillera Forest Reserve

under Proclamation No. 217 dated February 16, 1929. Moreover, by reason of its
nature, it was not subject to alienation under the Constitutions of 1935 and 1973.
10
The trial court * denied the application, holding that the applicants had failed to
prove their claim of possession and ownership of the land sought to be registered.
11 The applicants appealed to the respondent court, * which reversed the trial court
and recognized the claims of the applicant, but subject to the rights of Benguet and
Atok respecting their mining claims. 12 In other words, the Court of Appeals
affirmed the surface rights of the de la Rosas over the land while at the same time
reserving the sub-surface rights of Benguet and Atok by virtue of their mining
claims.
Both Benguet and Atok have appealed to this Court, invoking their superior right of
ownership. The Republic has filed its own petition for review and reiterates its
argument that neither the private respondents nor the two mining companies have
any valid claim to the land because it is not alienable and registerable.
It is true that the subject property was considered forest land and included in the
Central Cordillera Forest Reserve, but this did not impair the rights already vested in
Benguet and Atok at that time. The Court of Appeals correctly declared that:
There is no question that the 9 lots applied for are within the June Bug mineral
claims of Benguet and the "Fredia and Emma" mineral claims of Atok. The June Bug
mineral claim of plaintiff Benguet was one of the 16 mining claims of James E. Kelly,
American and mining locator. He filed his declaration of the location of the June Bug
mineral and the same was recorded in the Mining Recorder's Office on October 14,
1909. All of the Kelly claims ha subsequently been acquired by Benguet
Consolidated, Inc. Benguet's evidence is that it had made improvements on the June
Bug mineral claim consisting of mine tunnels prior to 1935. It had submitted the
required affidavit of annual assessment. After World War II, Benguet introduced
improvements on mineral claim June Bug, and also conducted geological mappings,
geological sampling and trench side cuts. In 1948, Benguet redeclared the "June
Bug" for taxation and had religiously paid the taxes.
The Emma and Fredia claims were two of the several claims of Harrison registered in
1931, and which Atok representatives acquired. Portions of Lots 1 to 5 and all of
Lots 6 to 9 are within the Emma and Fredia mineral claims of Atok Big Wedge Mining
Company.
The June Bug mineral claim of Benguet and the Fredia and Emma mineral claims of
Atok having been perfected prior to the approval of the Constitution of the
Philippines of 1935, they were removed from the public domain and had become
private properties of Benguet and Atok.

It is not disputed that the location of the mining claim under consideration was
perfected prior to November 15, 1935, when the Government of the Commonwealth
was inaugurated; and according to the laws existing at that time, as construed and
applied by this court in McDaniel v. Apacible and Cuisia (42 Phil. 749), a valid
location of a mining claim segregated the area from the public domain. Said the
court in that case: The moment the locator discovered a valuable mineral deposit on
the lands located, and perfected his location in accordance with law, the power of
the United States Government to deprive him of the exclusive right to the
possession and enjoyment of the located claim was gone, the lands had become
mineral lands and they were exempted from lands that could be granted to any
other person. The reservations of public lands cannot be made so as to include prior
mineral perfected locations; and, of course, if a valid mining location is made upon
public lands afterwards included in a reservation, such inclusion or reservation does
not affect the validity of the former location. By such location and perfection, the
land located is segregated from the public domain even as against the Government.
(Union Oil Co. v. Smith, 249 U.S. 337; Van Mess v. Roonet, 160 Cal. 131; 27 Cyc.
546).
"The legal effect of a valid location of a mining claim is not only to segregate the
area from the public domain, but to grant to the locator the beneficial ownership of
the claim and the right to a patent therefor upon compliance with the terms and
conditions prescribed by law. Where there is a valid location of a mining claim, the
area becomes segregated from the public domain and the property of the locator."
(St. Louis Mining & Milling Co. v. Montana Mining Co., 171 U.S. 650; 655; 43 Law ed.,
320, 322.) "When a location of a mining claim is perfected it has the effect of a
grant by the United States of the right of present and exclusive possession, with the
right to the exclusive enjoyment of all the surface ground as well as of all the
minerals within the lines of the claim, except as limited by the extralateral right of
adjoining locators; and this is the locator's right before as well as after the issuance
of the patent. While a lode locator acquires a vested property right by virtue of his
location made in compliance with the mining laws, the fee remains in the
government until patent issues."(18 R.C.L. 1152) (Gold Creek Mining Corporation v.
Hon. Eulogio Rodriguez, Sec. of Agriculture and Commerce, and Quirico Abadilla,
Director of the Bureau of Mines, 66 Phil. 259, 265-266)
It is of no importance whether Benguet and Atok had secured a patent for as held in
the Gold Creek Mining Corp. Case, for all physical purposes of ownership, the owner
is not required to secure a patent as long as he complies with the provisions of the
mining laws; his possessory right, for all practical purposes of ownership, is as good
as though secured by patent.
We agree likewise with the oppositors that having complied with all the
requirements of the mining laws, the claims were removed from the public domain,

and not even the government of the Philippines can take away this right from them.
The reason is obvious. Having become the private properties of the oppositors, they
cannot be deprived thereof without due process of law. 13
Such rights were not affected either by the stricture in the Commonwealth
Constitution against the alienation of all lands of the public domain except those
agricultural in nature for this was made subject to existing rights. Thus, in its Article
XIII, Section 1, it was categorically provided that:
SEC. 1.
All agricultural, timber and mineral lands of the public domain, waters,
minerals, coal, petroleum and other mineral oils, all forces of potential energy and
other natural resources of the Philipppines belong to the State, and their disposition,
exploitation, development, or utilization shall be limited to citizens of the Philippines
or to corporations or associations at least 60% of the capital of which is owned by
such citizens, subject to any existing right, grant, lease or concession at the time of
the inauguration of the government established under this Constitution. Natural
resources with the exception of public agricultural lands, shall not be alienated, and
no license, concession, or lease for the exploitation, development or utilization of
any of the natural resources shall be granted for a period exceeding 25 years,
except as to water rights for irrigation, water supply, fisheries, or industrial uses
other than the development of water power, in which case beneficial use may be
the measure and the limit of the grant.
Implementing this provision, Act No. 4268, approved on November 8, 1935,
declared:
Any provision of existing laws, executive order, proclamation to the contrary
notwithstanding, all locations of mining claim made prior to February 8, 1935 within
lands set apart as forest reserve under Sec. 1826 of the Revised Administrative
Code which would be valid and subsisting location except to the existence of said
reserve are hereby declared to be valid and subsisting locations as of the date of
their respective locations.
The perfection of the mining claim converted the property to mineral land and
under the laws then in force removed it from the public domain. 14 By such act, the
locators acquired exclusive rights over the land, against even the government,
without need of any further act such as the purchase of the land or the obtention of
a patent over it. 15 As the land had become the private property of the locators,
they had the right to transfer the same, as they did, to Benguet and Atok.
It is true, as the Court of Appeals observed, that such private property was subject
to the "vicissitudes of ownership," or even to forfeiture by non-user or abandonment
or, as the private respondents aver, by acquisitive prescription. However, the

method invoked by the de la Rosas is not available in the case at bar, for two
reasons.
First, the trial court found that the evidence of open, continuous, adverse and
exclusive possession submitted by the applicants was insufficient to support their
claim of ownership. They themselves had acquired the land only in 1964 and
applied for its registration in 1965, relying on the earlier alleged possession of their
predecessors-in-interest. 16 The trial judge, who had the opportunity to consider the
evidence first-hand and observe the demeanor of the witnesses and test their
credibility was not convinced. We defer to his judgment in the absence of a showing
that it was reached with grave abuse of discretion or without sufficient basis. 17
Second, even if it be assumed that the predecessors-in-interest of the de la Rosas
had really been in possession of the subject property, their possession was not in
the concept of owner of the mining claim but of the property as agricultural land,
which it was not. The property was mineral land, and they were claiming it as
agricultural land. They were not disputing the lights of the mining locators nor were
they seeking to oust them as such and to replace them in the mining of the land. In
fact, Balbalio testified that she was aware of the diggings being undertaken "down
below" 18 but she did not mind, much less protest, the same although she claimed
to be the owner of the said land.
The Court of Appeals justified this by saying there is "no conflict of interest"
between the owners of the surface rights and the owners of the sub-surface rights.
This is rather doctrine, for it is a well-known principle that the owner of piece of land
has rights not only to its surface but also to everything underneath and the airspace
above it up to a reasonable height. 19 Under the aforesaid ruling, the land is
classified as mineral underneath and agricultural on the surface, subject to separate
claims of title. This is also difficult to understand, especially in its practical
application.
Under the theory of the respondent court, the surface owner will be planting on the
land while the mining locator will be boring tunnels underneath. The farmer cannot
dig a well because he may interfere with the operations below and the miner cannot
blast a tunnel lest he destroy the crops above. How deep can the farmer, and how
high can the miner, go without encroaching on each other's rights? Where is the
dividing line between the surface and the sub-surface rights?
The Court feels that the rights over the land are indivisible and that the land itself
cannot be half agricultural and half mineral. The classification must be categorical;
the land must be either completely mineral or completely agricultural. In the instant
case, as already observed, the land which was originally classified as forest land
ceased to be so and became mineral and completely mineral once the mining
claims were perfected. 20 As long as mining operations were being undertaken

thereon, or underneath, it did not cease to be so and become agricultural, even if

only partly so, because it was enclosed with a fence and was cultivated by those
who were unlawfully occupying the surface.
What must have misled the respondent court is Commonwealth Act No. 137,
providing as follows:
Sec. 3.
All mineral lands of the public domain and minerals belong to the
State, and their disposition, exploitation, development or utilization, shall be limited
to citizens of the Philippines, or to corporations, or associations, at least 60% of the
capital of which is owned by such citizens, subject to any existing right, grant, lease
or concession at the time of the inauguration of government established under the
Constitution.
SEC. 4. The ownership of, and the right to the use of land for agricultural, industrial,
commercial, residential, or for any purpose other than mining does not include the
ownership of, nor the right to extract or utilize, the minerals which may be found on
or under the surface.
SEC. 5. The ownership of, and the right to extract and utilize, the minerals included
within all areas for which public agricultural land patents are granted are excluded
and excepted from all such patents.
SEC. 6. The ownership of, and the right to extract and utilize, the minerals included
within all areas for which Torrens titles are granted are excluded and excepted from
all such titles.
This is an application of the Regalian doctrine which, as its name implies, is
intended for the benefit of the State, not of private persons. The rule simply
reserves to the State all minerals that may be found in public and even private land
devoted to "agricultural, industrial, commercial, residential or (for) any purpose
other than mining." Thus, if a person is the owner of agricultural land in which
minerals are discovered, his ownership of such land does not give him the right to
extract or utilize the said minerals without the permission of the State to which such
minerals belong.
The flaw in the reasoning of the respondent court is in supposing that the rights
over the land could be used for both mining and non-mining purposes
simultaneously. The correct interpretation is that once minerals are discovered in
the land, whatever the use to which it is being devoted at the time, such use may
be discontinued by the State to enable it to extract the minerals therein in the
exercise of its sovereign prerogative. The land is thus converted to mineral land and
may not be used by any private party, including the registered owner thereof, for
any other purpose that will impede the mining operations to be undertaken therein,

For the loss sustained by such owner, he is of course entitled to just compensation
under the Mining Laws or in appropriate expropriation proceedings. 21
Our holding is that Benguet and Atok have exclusive rights to the property in
question by virtue of their respective mining claims which they validly acquired
before the Constitution of 1935 prohibited the alienation of all lands of the public
domain except agricultural lands, subject to vested rights existing at the time of its
adoption. The land was not and could not have been transferred to the private
respondents by virtue of acquisitive prescription, nor could its use be shared
simultaneously by them and the mining companies for agricultural and mineral
purposes.
WHEREFORE, the decision of the respondent court dated April 30, 1976, is SET
ASIDE and that of the trial court dated March 11, 1969, is REINSTATED, without any
pronouncement as to costs.
SO ORDERED.

iv.
v.
vi.
vii.
viii.
ix.
x.
xi.

Watersheds
Mangrove Swamps
National Parks
Military or Naval Reservations
Lakes
Navigable Rivers
Creeks
Reservations for public and semi-public purposes

h. Remedies
i. Motion for New Trial or Reconsideration (Rule 31, Rules of
Court)
ii. Petition for Relief from Judgement (Rule 38, Rules of Court)
iii. Remedies under the Property Registration Decree, in cases of
Fraudulent registration
1. Petition for review of Decree (Section 23)
ELAND PHILIPPINES, INC.,
Petitioner,
-versusAZUCENA GARCIA, ELINO FAJARDO, and HEIR OF TIBURCIO MALABANAN
named TERESA MALABANAN,
Respondents.
G.R. No. 173289

February 17, 2010

DECISION

PERALTA, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court,
seeking to reverse and set aside the decision[1] dated February 28, 2006 of the
Court of Appeals (CA) in CA-G.R. CV No. 67417, which dismissed the appeal of
petitioner Eland Philippines, Inc. and affirmed the Resolutions dated November 3,
1999 and June 28, 2006 of Branch 18, Regional Trial Court (RTC) of Tagaytay City.
The facts of the case, as shown in the records, are the following:
Respondents Azucena Garcia, Elino Fajardo, and Teresa Malabanan, the heir of
Tiburcio Malabanan, filed a Complaint[2] dated March 2, 1998 for Quieting of Title
with Writ of Preliminary Injunction with the RTC, Branch XVIII, Tagaytay City against
petitioner Eland Philippines, Inc. Respondents claimed that they are the owners, in
fee simple title, of a parcel of land identified as Lot 9250 Cad-355, Tagaytay
Cadastre, Plan Ap-04-008367, situated in Barangay Iruhin, Tagaytay City, containing
an area of Two Hundred Forty-Four Thousand One Hundred Twelve (244,112) square
meters, by occupation and possession under the provisions of Sec. 48 (b)[3] of the
Public Land Law or Commonwealth Act No. 141, as amended.
For having been in continuous, public, and adverse possession as owners of the said
lot for at least thirty years, respondents stated that they were not aware of any
person or entity who had a legal or equitable interest or claim on the same lot until
the time they were requesting that the lot be declared for tax purposes. They found
out that the lot was the subject of a land registration proceeding that had already
been decided by the same court[4] where their complaint was filed. They also
found out that Decree No. N-217313, LRC Record No. N-62686, was already issued
on August 20, 1997 to the petitioner pursuant to the Decision dated June 7, 1994 of
the same court. They averred that they were not notified of the said land
registration case; thus, they claimed the presence of misrepresentation amounting
to actual or extrinsic fraud. Thus, they argued that they were also entitled to a writ
of preliminary injunction in order to restrain or enjoin petitioner, its privies, agents,
representatives, and all other persons acting on its behalf, to refrain from
committing acts of dispossession on the subject lot.
Summons, together with a copy of the complaint, were served on the petitioner on
April 7, 1998. On April 29, 1998, petitioner filed an Entry of Appearance with Motion
for Extension of Time,[5] which the trial court granted[6] for a period of ten (10)
days within which to file a responsive pleading. Petitioner filed a Second Motion for

Extension of Time to File Answer[7] dated April 29, 1998, which the trial court
likewise granted.[8]
Thereafter, petitioner filed a Motion to Dismiss[9] dated May 9, 1998, stating that
the pleading asserting the claim of respondents stated no cause of action, and that
the latter were not entitled to the issuance of a writ of preliminary injunction,
setting the same for hearing on May 21, 1998. On the date of the hearing, the trial
court issued an Order,[10] which granted the respondents ten (10) days from that
day to file a comment, and set the date of the hearing on July 23, 1998.
Respondents filed a Motion to Admit Comment/Opposition to Defendant Eland,[11]
together with the corresponding Comment/Opposition[12] dated June 8, 1998.
On the scheduled hearing of September 23, 1998, the trial court issued an Order,
[13] considering the Motion to Dismiss submitted for resolution due to the nonappearance of the parties and their respective counsels. The said motion was
eventually denied by the trial court in an Order[14] dated September 25, 1998,
ruling that the allegations in the complaint established a cause of action and
enjoined petitioner Eland to file its answer to the complaint within ten (10) days
from receipt of the same. Petitioner then filed two Motions for Extension to File an
Answer.[15]
Petitioner, on November 9, 1998, filed a Motion for Reconsideration[16] of the trial
court's Order dated September 25, 1998, denying the former's Motion to Dismiss.
Again, petitioner filed a Motion for Final Extension of Time to File Answer[17] dated
November 6, 1998. Respondents filed their Comment/Opposition to Motion for
Reconsideration dated November 24, 1998. Subsequently, the trial court denied
petitioner's motion for reconsideration in an Order[18] dated January 11, 1999.
Meanwhile, respondents filed a Motion to Declare Defendant Eland in Default[19]
dated November 17, 1998. On December 4, 1998 Petitioner Eland filed its
Comment (on Plaintiff's Motion to Declare Defendant Eland in Default)[20] dated
December 2, 1998, while respondents filed a Reply to Comment (on Plaintiff's
Motion to Declare Defendant Eland in Default)[21] dated December 29, 1998.
Thereafter, the trial court issued an Order[22] dated January 11, 1999 declaring the
petitioner in default and allowed the respondents to present evidence ex parte.
Petitioner filed a Motion for Reconsideration (of the Order dated 11 January 1999)
[23] dated February 5, 1999 on the trial court's denial of its motion to dismiss and in
declaring it in default. The trial court in an Order[24] dated March 18, 1999, denied
the former and granted the latter. In the same Order, the trial court admitted
petitioner's Answer Ad Cautelam.
Earlier, petitioner filed its Answer Ad Cautelam (With Compulsory Counterclaim)[25]
dated November 12, 1998. Respondents countered by filing a Motion to Expunge
Eland's Answer from the Records[26] dated December 2, 1998. Petitioner filed its

Opposition (to Plaintiff's Motion to Expunge Eland's Answer from the Records)[27]
dated December 21, 1998, as well as a Comment (on Plaintiff's Motion to Expunge
Eland's Answer from the Records)[28] dated January 26, 1999.
Consequently, respondents filed a Motion to Set Presentation of Evidence Ex
Parte[29] dated January 18, 1999, which was granted in an Order[30] dated January
22, 1999.
On January 28, 1999, respondents presented their evidence before the Clerk of
Court of the trial court which ended on February 3, 1999; and, on February 10,
1999, respondents filed their Formal Offer of Evidence.[31] However, petitioner
filed an Urgent Motion to Suspend Plaintiff's Ex Parte Presentation of Evidence[32]
dated February 8, 1999. In that regard, the trial court issued an Order[33] dated
February 11, 1999 directing the Clerk of Court to suspend the proceedings.
On May 14, 1999, respondents filed a Motion for Clarification[34] as to whether or
not the evidence presented ex parte was nullified by the admission of petitioner's
Answer Ad Cautelam. Petitioner filed its Comment[35] dated May 13, 1999 on the
said motion for clarification.

A pre-trial conference was scheduled on May 27, 1999, wherein the parties
submitted their pre-trial briefs.[36] However, petitioner filed a Motion to Suspend
Proceedings[37] dated May 24, 1999 on the ground that the same petitioner had
filed a petition for certiorari with the CA, asking for the nullification of the Order
dated March 18, 1999 of the trial court and for the affirmation of its earlier Order
denying petitioner's Motion to Dismiss. The petition for certiorari was subsequently
denied; and a copy of the Resolution[38] dated June 14, 1999 was received by the
trial court. Hence, in an Order[39] dated July 7, 1999, the trial court ruled that the
reception of evidence already presented by the respondents before the Clerk of
Court remained as part of the records of the case, and that the petitioner had the
right to cross-examine the witness and to comment on the documentary exhibits
already presented. Consequently, petitioner filed a Motion for Reconsideration[40]
dated July 19, 1999, but it was denied by the trial court in an Omnibus Order[41]
dated September 14, 1999.
Eventually, respondents filed a Motion for Summary Judgment[42] dated August 5,
1999, while petitioner filed its Opposition[43] to the Motion dated August 31, 1999.
In its Resolution[44] dated November 3, 1999, the trial court found favor on the
respondents. The dispositive portion of the Resolution reads:
WHEREFORE, premises considered, the motion for summary judgment is hereby
GRANTED and it is hereby adjudged that:

1. Plaintiffs are the absolute owners and rightful possessors of Lot 9250, CAD-355,
Tagaytay Cadastre, subject to the rights of occupancy of the farm workers on the
one-third area thereof;

2. The Judgment dated June 7, 1994 in Land Registration Case No. TG-423 is set
aside and the Decree No. N-217313, LRC Record No. N-62686 dated August 20,
1997 is null and void;
3. The Original Transfer Certificate of Title is ordered to be canceled, as well as tax
declaration covering Lot 9250, Cad-355.
SO ORDERED.

Petitioner appealed the Resolution of the trial court with the CA, which dismissed it
in a Decision dated February 28, 2006, which reads:
WHEREFORE, for lack of merit, the appeal is DISMISSED. The assailed Resolution
dated November 3, 1999, of the RTC, Branch 18, Tagaytay City, in Civil Case No. TG1784, is AFFIRMED. No pronouncement as to cost.
SO ORDERED.
Hence, the present petition.
The grounds relied upon by the petitioner are the following:
5.1 THE COURT OF APPEALS ACTED IN A MANNER NOT IN ACCORD WITH LAW AND
WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT WHEN IT RULED
THAT RESPONDENTS' MOTION FOR SUMMARY JUDGMENT DATED AUGUST 05, 1999
DID NOT VIOLATE THE TEN (10)-DAY NOTICE RULE UNDER SECTION 3, RULE 35 OF
THE 1997 RULES OF CIVIL PROCEDURE.
5.2 THE COURT OF APPEALS ACTED IN A MANNER NOT IN ACCORD WITH LAW AND
WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT WHEN IT RULED
THAT A MOTION FOR SUMMARY JUDGMENT IS PROPER IN AN ACTION FOR QUIETING
OF TITLE.
5.3 THE COURT OF APPEALS ACTED IN A MANNER NOT IN ACCORD WITH LAW AND
WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT WHEN IT RULED
THAT THERE ARE NO GENUINE FACTUAL AND TRIABLE ISSUES IN CIVIL CASE NO. TG1784.

5.4 THE COURT OF APPEALS ACTED IN A MANNER NOT IN ACCORD WITH LAW AND
WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT WHEN IT UPHELD
THE RESOLUTION DATED NOVEMBER 03, 1999 OF THE COURT A QUO, BASED ON
TESTIMONIES OF RESPONDENTS' WITNESSES TAKEN WITHOUT GRANTING HEREIN
PETITIONER THE RIGHT TO CROSS-EXAMINE AND UPON DOCUMENTARY EXHIBITS
PRESENTED BUT NOT ADMITTED AS EVIDENCE.
5.5 THE COURT OF APPEALS ACTED IN A MANNER NOT IN ACCORD WITH LAW AND
WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT WHEN IT UPHELD
THE RESOLUTION DATED NOVEMBER 03, 1999 OF THE COURT A QUO BASED ON
FALSIFIED EVIDENCE.
5.6 THE COURT OF APPEALS ACTED IN A MANNER NOT IN ACCORD WITH LAW AND
WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT WHEN IT FAILED TO
RULE THAT THE COURT A QUO PATENTLY DEPRIVED PETITIONER OF ITS RIGHT TO
DUE PROCESS IN RENDERING ITS SUMMARY JUDGMENT.
5.7 THE COURT OF APPEALS ACTED IN A MANNER NOT IN ACCORD WITH LAW AND
WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT WHEN IT HELD THAT
THE COURT A QUO HAS JURISDICTION TO CANCEL PETITIONER'S ORIGINAL
CERTIFICATE OF TITLE (OCT) NO. 0-660 IN AN ACTION TO QUIET TITLE.

According to the petitioner, a motion for summary judgment must be served at least
ten (10) days before the date set for hearing thereof, and that a hearing must be
held to hear the parties on the propriety of a summary judgment, per Sec. 3 of Rule
35 of the Revised Rules of Court, which was not observed because the petitioner
received a copy of the respondents' motion for summary judgment only on August
20, 1999, or the very same day that the motion was set for hearing. Petitioner
further claims that the trial court never conducted any hearing on the motion for
summary judgment.
Petitioner also argued that a summary judgment is only available to a claimant
seeking to recover upon a claim, counterclaim or cross-claim or to obtain a
declaratory relief, and does not include cases for quieting of title. Furthermore,
petitioner also averred that a summary judgment has no place in a case where
genuine factual and triable issues exist, like in the present case. It added that the
genuine and triable issues were all raised in its Answer Ad Cautelam.
Another ground relied upon by petitioner is its failure to cross-examine the
witnesses for the respondents without fault on its part. It also stated that the trial
court did not issue any order admitting in evidence the documentary exhibits
presented by the respondents. Hence, according to the petitioner, the trial court

gravely erred in relying upon the testimonies of the witnesses for the respondents,
without having the latter cross-examined; and upon the documentary exhibits
presented but not admitted as evidence.
Petitioner further claimed that the trial court based its Resolution dated November
3, 1999 on falsified evidence.
Lastly, petitioner raised the issue that by rendering summary judgment, the trial
court deprived the former of its right to due process.
Respondents, in their Comment[45] dated October 16, 2006, countered the first
issue raised by the petitioner, stating that their filing of the motion for summary
judgment fourteen (14) days before the requested hearing of the same motion was
in compliance with Sec. 3, Rule 35 of the Rules of Court.
As to the second and third issues, respondents argued that petitioner had a
constricted perception of the coverage of the Rules of Summary Judgment, and that
the latter's citation of cases decided by this Court showed the diverse causes of
action that could be the subject matters of summary judgment. Respondents also
posited that petitioner's statements in its Answer Ad Cautelam, although
denominated as Specific Denial, were really general denials that did not comply
with the provisions of Section 10, Rule 8 of the Rules of Court.
Anent the fourth and fifth issues, respondents claimed that despite the opportunity,
or the right allowed in the Order dated July 17, 1999 of the trial court, for the
petitioner to cross-examine respondents' witnesses and to comment on the
documentary evidence presented ex parte after the default order against the same
petitioner, the latter evasively moved to set aside respondents' evidence in order to
suspend further proceedings that were intended to abort the pre-trial conference.
They added that petitioner neglected to avail itself of, or to comply with, the
prescription of the rules found in Rule 35 of the Rules of Court by opting not to avail
itself of the hearing of its opposition to the summary judgment after receiving the
Order dated August 20, 1999; by failing to serve opposing affidavit, deposition or
admission in the records; and by not objecting to the decretal portion of the said
Order dated August 20, 1999, which stated that the motion for summary judgment
has been submitted for resolution without further argument. With regard to the
contention of the petitioner that the trial court wrongly appreciated falsified
evidence, respondents asserted that petitioner's counsel failed to study carefully
the records of the proceedings for the presentation of the evidence ex parte to be
able to know that it was not only a single-day proceeding, and that more than one
witness had been presented. They further averred that the trial court did not only
rely on the photographs of the houses of the occupants of the property in question.

Finally, as to the sixth and seventh issues, respondents asseverated that their
complaint alleged joint causes of action for quieting of title under Art. 476 of the
New Civil Code and for the review of the decree of registration pursuant to Sec. 32
of the Property Registration Decree or P.D. No. 1529, because they are
complimentary with each other.
The petition is impressed with merit.
The basic contention that must be resolved by this Court is the propriety of the
summary judgment in this particular case of quieting of title.

Rule 35 of the 1997 Rules of Civil Procedure provides:

SEC. 1. Summary judgment for claimant. - A party seeking to recover upon a claim,
counterclaim, or cross-claim or to obtain a declaratory relief may, at any time after
the pleading in answer thereto has been served, move with supporting affidavits for
a summary judgment in his favor upon all or any part thereof
SEC. 3. Motion and proceedings thereon. - The motion shall be served at least ten
(10) days before the time specified for the hearing. The adverse party prior to the
day of hearing may serve opposing affidavits. After the hearing, the judgment
sought shall be rendered forthwith if the pleading, depositions, and admissions on
file together with the affidavits, show that, except as to the amount of damages,
there is no genuine issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law.[46]

In the present case, it was the respondents who moved for a summary
judgment.
Petitioner contended that the ten-day notice rule was violated, because the copy of
the motion for summary judgment was served only on August 20, 1999 or on the
same day it was set for hearing. It also added that even if the petitioner received a
copy of the motion only on August 20, 1999, there was no hearing conducted on
that date because the trial court issued an order giving petitioner 10 days within
which to file its comment or opposition.
The above specific contention, however, is misguided. The CA was correct in its
observation that there was substantial compliance with due process. The CA ruled,
as the records show, that the ten-day notice rule was substantially complied with
because when the respondents filed the motion for summary judgment on August 9,
1999, they furnished petitioner with a copy thereof on the same day as shown in the

registry receipt and that the motion was set for hearing on August 20, 1999, or 10
days from the date of the filing thereof.

Due process, a constitutional precept, does not, therefore, always and in all
situations a trial-type proceeding. The essence of due process is found in the
reasonable opportunity to be heard and submit one's evidence in support of his
defense. What the law prohibits is not merely the absence of previous notice, but
the absence thereof and the lack of opportunity to be heard.[47]
Petitioner further argues that summary judgment is not proper in an action for
quieting of title. This particular argument, however, is misplaced. This Court has
already ruled that any action can be the subject of a summary judgment with the
sole exception of actions for annulment of marriage or declaration of its nullity or for
legal separation.[48]
Proceeding to the main issue, this Court finds that the grant of summary judgment
was not proper. A summary judgment is permitted only if there is no genuine issue
as to any material fact and a moving party is entitled to a judgment as a matter of
law. A summary judgment is proper if, while the pleadings on their face appear to
raise issues, the affidavits, depositions, and admissions presented by the moving
party show that such issues are not genuine.[49]
It must be remembered that the non-existence of a genuine issue is the
determining factor in granting a motion for summary judgment, and the movant has
the burden of proving such nonexistence. The trial court found no genuine issue as
to any material fact that would necessitate conducting a full-blown trial. However, a
careful study of the case shows otherwise.
In their motion for summary judgment, the respondents failed to clearly
demonstrate the absence of any genuine issue of fact. They merely reiterated their
averments in the complaint for quieting of title and opposed some issues raised by
the petitioner in its Answer Ad Cautelam, to wit:
Nonetheless, going by the records of the admitted and uncontroverted facts and
facts established there is no more litigious or genuine issue of basic fact to be the
subject of further trial on the merits.
The first defense as to the identity of the subject property, the issue has already
become nil because of not only the lack of seriousness in the allegations but also
because the identity of the subject parcel of land Lot 9250 was proven by the
approved plan Ap-04-008367 that was already presented and offered in evidence as
Exhibit B for the plaintiffs.

The second defense that plaintiffs' claim of the property is barred by prior judgment
rule is unavailing considering that the vital documentary evidence they presented in
Land Registration Case No. TG-423 before this Honorable Court the markings and
descriptions of such documents are stated in the Judgment quoted as follows:
(1)
(2)
(3)
(4)

Tax
Tax
Tax
Tax

Declaration
Declaration
Declaration
Declaration

No.
No.
No.
No.

015224-A (Exhibit Q; x x x.
05019-B (Exhibit R; x x x.
01926-B (Exhibit S; x x x.
GR-007-0007 (Exhibit T x x x.

are the very documentary evidence adopted and relied upon by the plaintiffs in
seeking the review and nullity of the Decree No. 217313 issued on August 20, 1997
under LRC Record No. N-62686 pursuant to the Judgment dated June 7, 1994
rendered by this Honorable Court penned by the acting presiding Judge Eleuterio F.
Guerrero in said Land Registration Case No. TG-423.
On the other hand, as to the gravamen of the claims in the complaint, the plaintiffs
have presented clear and convincing evidence as the well-nigh or almost
incontrovertible evidence of a registerable title to the subject land in the
proceedings conducted on the reception of evidence ex-parte for the plaintiffs
establishing in detail the specifications of continuous, open, exclusive possession as
aspects of acquisitive prescription as confirmed in the affidavit herein attached as
Annex A;

In ruling that there was indeed no genuine issue involved, the trial court merely
stated that:
This Court, going by the records, observed keenly that plaintiffs cause of action for
quieting of title on the disputed parcel of land is based on the alleged fraud in the
substitution of their landholdings of Lot 9250, Cad 355, Tagaytay Cadastre
containing only an area of 244,112 square meters with Lot 9121, Cad 335, Tagaytay
Cadastre, containing only an area of 19,356 square meters. While defendant Eland
in its answer practically and mainly interposed the defenses of: (a) the parcel of
land being claimed by the plaintiffs is not the parcel of land subject matter of Land
Registration Case No. TG-423; (b) the claim of the plaintiffs is barred by prior
judgment of this Court in said Land Registration Case; and (c) plaintiffs' complaint is
barred by the Statute of Limitation since Original Certificate of Title No. 0-660 has
become incontrovertible.
Cross-reference of the above-cited Land Registration Case No. TG-423 that was
decided previously by this Court with the case at bench was imperatively made by
this Court. Being minded that the Court has and can take judicial notice of the said
land registration case, this Court observed that there is no genuine issue of fact to

be tried on the merits. Firstly, because the supposed identity crisis of the
controverted parcel of land covered by the Land Registration Case No. TG-423 with
the subject parcel of land is established by Plan Ap-04-006275 (Exhibit N) LRC
Case No. 423 and by Plan A04 008367 (Exhibit B of the plaintiffs) and the
Technical Description of Lot 9250, Cad 355 (Exhibit B-1 of the plaintiffs).
Secondly, the prior judgment rule cannot be availed of by defendant Eland since not
only intrinsic fraud but extrinsic fraud were alleged in and established by the
records. (Heirs of Manuel Roxas v. Court of Appeals, G. R. No. 1184436, pro. March
21, 1997). Thirdly, it is incontrovertible that the complaint in this case seeking to
review the judgment and annul the decree was filed on March 5, 1998 or within one
(1) year from August 20, 1997 or the date of issuance of Decree No. 217313, LRC
Record No. N-62686, hence, the Original Certificate of Title No. 0-660 issued to
defendant Eland has not attained incontrovertibility. (Heirs of Manuel Roxas v. Court
of Appeals, G.R. No. 118436, prom. March 21, 1997).
Notwithstanding, the issue of possession is a question of fact by the interaction of
the basic pleadings, the observation of this Court is that the plaintiffs were able to
prove by the well-nigh incontrovertible evidence, the aspects of possession in
accordance with Section 48 (b) of Commonwealth Act 141, as amended, as
hereinafter illustrated.

The CA, in affirming the above Resolution of the trial court, propounded thus:
The contention of defendant-appellant is untenable. Summary judgment is not only
limited to solving actions involving money claims. Under Rule 35 of the 1997 Rules
of Court, except as to the amount of damages, when there is no genuine issue as to
any material fact and the moving party is entitled to a judgment as a matter of law,
summary judgment may be allowed. The term genuine issue has been defined as
an issue of fact which calls for the presentation of evidence as distinguished from an
issue which is sham, fictitious, contrived, set up in bad faith and patently
unsubstantial so as not to constitute a genuine issue for trial.
Thus, under the aforecited rule, summary judgment is appropriate when there are
no genuine issues of fact, which call for the presentation of evidence in a full-blown
trial. Thus, even if on their face the pleadings appear to raise issues, but when the
affidavits, depositions and admissions show that such issues are not genuine, then
summary judgment as prescribed by the rules must ensue as a matter of law.
It should be stressed that the court a quo which rendered the assailed resolution in
Civil Case No. TG-1784 was the very court that decided the LRC Case No. TG-423.
Such being the case, the court a quo was privy to all relevant facts and rulings
pertaining to LRC Case No. TG-423 which it considered and applied to this case.

Thus, where all the facts are within the judicial knowledge of the court, summary
judgment may be granted as a matter of right.

On the contrary, in petitioner's Answer Ad Cautelam, genuine, factual and triable

issues were raised, aside from specifically denying all the allegations in the
complaint, thus:
2.

SPECIFIC DENIALS

2.1 Answering defendant specifically denies the allegations contained in paragraphs

1 and 3 of the Complaint insofar as it alleges the personal circumstances of the
plaintiff and one A. F. Development Corporation for lack of knowledge or information
sufficient to form a belief as to the truth thereof.
2.2 Answering defendant specifically denies the allegations contained in paragraphs
4, 5, 6 and 7 of the Complaint for lack of knowledge or information sufficient to form
a belief as to the truth of said allegations. And if the property referred to in said
paragraphs is that parcel of land which was the subject matter of Land Registration
Case No. TG-423 which was previously decided by this Honorable Court with finality,
said allegations are likewise specifically denied for the obvious reason that the said
property had already been adjudged with finality by no less than this Honorable
Court as absolutely owned by herein answering defendant as will be further
discussed hereunder.
2.3 Answering defendant specifically denies the allegations contained in paragraph
8 of the Complaint insofar as it alleged that (u)pon exercise of further
circumspection, counsel for the plaintiffs once followed-up in writing the 1994
request of the plaintiffs to have the subject parcel of land be declared for taxation
purposes and insofar as it is made to appear that parcel of land being claimed by
the plaintiffs is the same parcel of land subject matter of Land Registration Case No.
TG-423 for lack of knowledge or information sufficient to form a belief as to the
truth thereof and for the reason that the names of the herein plaintiffs were never
mentioned during the entire proceedings in said land registration case and by
reason of the Affirmative Allegations contained hereunder.
2.4 Answering defendant specifically denies the allegations contained in paragraphs
9, 10, 10 (a), 10 (b), 10 (c), 10 (d), 10 (e), 10 (f), 10 (g), 10 (h), and 11 for the
reason that there is no showing that the parcel of land being claimed by the plaintiff
is the same parcel of land which was the subject matter of Land Registration Case
No. TG- 423, and in the remote possibility that the parcel of land being claimed by
the plaintiffs is the same as that parcel of land subject of Land Registration Case No.
TG-423, the allegations contained in said paragraphs are still specifically denied for
the reason that no less than the Honorable Court had decided with finality that the

parcel of land is absolutely owned by herein defendant to the exclusion of all other
persons as attested to by the subsequent issuance of an Original Certificate of Title
in favor of answering defendant and for reasons stated in the Affirmative
Allegations.
2.5 Answering defendant specifically denies the allegations contained in paragraph
12 of the Complaint for the obvious reason that it was the plaintiffs who appear to
have been sleeping on their rights considering that up to the present they still do
not have any certificate of title covering the parcel of land they are claiming in the
instant case, while on the part of herein defendant, no less than the Honorable
Court had adjudged with finality that the parcel of land subject matter of Land
Registration Case No. TG-423 is absolutely owned by herein defendant.
2.6 Answering defendant specifically denies the allegations contained in paragraph
13 of the complaint for the reason that defendant has never ladgrabbed any parcel
of land belonging to others, much less from the plaintiffs, and further, answering
defendant specifically denies the allegations therein that plaintiffs engaged the
services of a lawyer for a fee for lack of knowledge r information sufficient to form a
belief as to the truth thereof.
2.7 Answering defendant specifically denies the allegations contained in paragraphs
14, 15, 16, 17 and 18 of the Complaint for lack of knowledge or information
sufficient to form a belief as the truth thereof.
2.8 Answering defendant specifically denies the allegations contained in paragraphs
IV (a) to IV (c) for the reason that, as above-stated, if the parcel of land being
claimed by the plaintiffs is the same as that parcel of land subject matter of Land
Registration Case No. TG-423, this Honorable Court had already decided with finality
that said parcel of land is absolutely owned by herein answering defendant and
additionally, for those reasons stated in defendant's Motion to Dismiss.
2.9 Answering defendant specifically denies the allegations contained in paragraph
IV (d) of the Complaint for lack of knowledge or information sufficient to form a
belief as to the truth thereof.

Special and affirmative defenses were also raised in the same Answer Ad Cautelam,
to wit:
xxxx
4.1 The pleading asserting the claim of the plaintiff states no cause of action as
asserted in the Motion To Dismiss filed by herein answering defendant and for the
reason that there is no evidence whatsoever showing or attesting to the fact that

the parcel of land being claimed by the plaintiffs in the Complaint is the same parcel
of land which was the subject matter of Land Registration Case No. TG-423.
4.2 The complaint was barred by the prior judgment rendered by this Honorable in
Land Registration Case No. TG-423.
4.3 The complaint is barred by the Statute of Limitation in that OCT No. 0-660 had
become incontrovertible by virtue of the Torrens System of Registration; and to
allow plaintiffs to question the validity of answering defendant's title through the
instant complaint would be a collateral of OCT No. 0-660 which is not permissible
under the law.
4.4 Plaintiffs are barred by their own acts and/or omission from filing the present
complaint under the principles of estoppel and laches.
4.5 Plaintiffs does not to the Court with clean hands as they appear to be well aware
of the proceedings in said Land Registration Case No. TG- 423 and inspite of such
knowledge, plaintiffs never bothered to present their alleged claims in the
proceedings.
4.6 Answering defendant has always acted with justice, given everyone his due, and
observed honesty and good faith in his dealings.

Clearly, the facts pleaded by the respondents in their motion for summary judgment
have been duly disputed and contested by petitioner, raising genuine issues that
must be resolved only after a full-blown trial. When the facts as pleaded by the
parties are disputed or contested, proceedings for summary judgment cannot take
the place of trial.[50] In the present case, the petitioner was able to point out the
genuine issues. A genuine issue is an issue of fact that requires the presentation
of evidence as distinguished from a sham, fictitious, contrived or false claim.[51]
It is of utmost importance to remember that petitioner is already the registered
owner (Original Certificate of Title [OCT] No. 0-660 issued by the Register of Deeds)
of the parcel of land in question, pursuant to a decree of registration (Decree No. N217313, LRC Record No. 62686) based on the ruling of the same court that granted
the summary judgment for the quieting of title.
Incidentally, the findings of the trial court contained in the disputed summary
judgment were obtained through judicial notice of the facts and rulings pertaining to
that earlier case (LRC Case No. TG-423) wherein the same trial court ruled in favor
of the petitioner. It is, therefore, disorienting that the same trial court reversed its
earlier ruling, which categorically stated that:

x x x There is overwhelming evidence or proof on record that the vendors listed in

Exhibit HH, with submarkings, are the previous owners of the parcel of land
mentioned in the same deed of sale and aside form the tax declarations covering
the same property (Exhibits Q to T, inclusive), the uncontroverted testimony of
Atty. Ruben Roxas establishes beyond any shadow of doubt that applicant's
(referring to herein defendant-appellant) sellers/predecessors-in-interest are the
grandchildren, great grandchildren and great great grandchildren of the spouses
Lucio Petate and Maria Pobleta Petate, the former owners of the same property,
whose ownership is further bolstered by tax receipts showing payments of realty
taxes (Exhibits U to GG, inclusive, with submarkings).
xxx
On the basis of the foregoing facts and circumstances, and considering that
applicant is a domestic corporation not otherwise disqualified from owning real
properties in the Philippines, this Court finds that applicant has satisfied all the
conditions/requirements essential to the grant of its application pursuant to the
provisions of the Land Registration Law, as amended, inspite of the opposition filed
by the Heirs of the late Doroteo Miranda. Hence, the grant of applicant's petition
appears to be inevitable.
WHEREFORE, this Court hereby approves the instant petition for land registration
and, thus, places under the operation of Act 141, Act 496 and/or P.D. 1529,
otherwise known as the Property Registration Law, the land described in Plan Ap-04006275 and containing an area of Two Hundred Forty-Two Thousand Seven Hundred
Ninety-Four (242,794) square meters, as supported by its technical description now
forming part of the record of this case, in addition to other proofs adduced in the
name of the applicant, ELAND PHILIPPINES, INC., with principal office at No. 43 E.
Rodriguez Ave. (Espaa Extension), Quezon City, Metro Manila.
Once this decision becomes final and executory, the corresponding decree of
registration shall forthwith issue.
SO ORDERED.
By granting the summary judgment, the trial court has in effect annulled its former
ruling based on a claim of possession and ownership of the same land for more than
thirty years without the benefit of a full-blown trial. The fact that the respondents
seek to nullify the original certificate of title issued to the petitioner on the claim
that the former were in possession of the same land for a number of years, is
already a clear indicium that a genuine issue of a material fact exists. This,
together with the failure of the respondents to show that there were no genuine
issues involved, should have been enough for the trial court to give the motion for
summary judgment, filed by respondents, scant consideration. Trial courts have

limited authority to render summary judgments and may do so only when there is
clearly no genuine issue as to any material fact.[52]
Based on the foregoing, this Court deems it necessary to delve briefly on the nature
of the action of quieting of title as applied in this case. This Court's ruling in
Calacala, et al. v. Republic, et al.[53] is instructive on this matter, thus:
To begin with, it bears emphasis that an action for quieting of title is essentially a
common law remedy grounded on equity. As we held in Baricuatro, Jr. vs. CA:[54]
Regarding the nature of the action filed before the trial court, quieting of title is a
common law remedy for the removal of any cloud upon or doubt or uncertainty with
respect to title to real property. Originating in equity jurisprudence, its purpose is to
secure x x x an adjudication that a claim of title to or an interest in property,
adverse to that of the complainant, is invalid, so that the complainant and those
claiming under him may be forever afterward free from any danger of hostile claim.
In an action for quieting of title, the competent court is tasked to determine the
respective rights of the complainant and other claimants, x x x not only to place
things in their proper place, to make the one who has no rights to said immovable
respect and not disturb the other, but also for the benefit of both, so that he who
has the right would see every cloud of doubt over the property dissipated, and he
could afterwards without fear introduce the improvements he may desire, to use,
and even to abuse the property as he deems best xxx.
Under Article 476 of the New Civil Code, the remedy may be availed of only when,
by reason of any instrument, record, claim, encumbrance or proceeding, which
appears valid but is, in fact, invalid, ineffective, voidable, or unenforceable, a cloud
is thereby cast on the complainants title to real property or any interest therein.
The codal provision reads:
Article 476. Whenever there is a cloud on title to real property or any interest
therein, by reason of any instrument, record, claim, encumbrance or proceeding
which is apparently valid or effective but is in truth and in fact invalid, ineffective,
voidable, or unenforceable, and may be prejudicial to said title, an action may be
brought to remove such cloud or to quiet the title.
An action may also be brought to prevent a cloud from being cast upon title to real
property or any interest therein.
In turn, Article 477 of the same Code identifies the party who may bring an action to
quiet title, thus:

Article 477. The plaintiff must have legal or equitable title to, or interest in the real
property which is the subject-matter of the action. He need not be in possession of
said property.
It can thus be seen that for an action for quieting of title to prosper, the plaintiff
must first have a legal, or, at least, an equitable title on the real property subject of
the action and that the alleged cloud on his title must be shown to be in fact invalid.
So it is that in Robles, et al. vs. CA,[55] we ruled:
It is essential for the plaintiff or complainant to have a legal title or an equitable title
to or interest in the real property which is the subject matter of the action. Also, the
deed, claim, encumbrance or proceeding that is being alleged as a cloud on
plaintiffs title must be shown to be in fact invalid or inoperative despite its prima
facie appearance of validity or legal efficacy.
Verily, for an action to quiet title to prosper, two (2) indispensable requisites must
concur, namely: (1) the plaintiff or complainant has a legal or an equitable title to or
interest in the real property subject of the action; and (2) the deed, claim,
encumbrance, or proceeding claimed to be casting cloud on his title must be shown
to be in fact invalid or inoperative despite its prima facie appearance of validity or
legal efficacy.

Respondents, in their Complaint, claim that they have become the owners in feesimple title of the subject land by occupation and possession under the provisions of
Sec. 48 (b) of the Public Land Law or Commonwealth Act No. 141, as amended.
Thus, it appears that the first requisite has been satisfied. Anent the second
requisite, respondents enumerated several facts that would tend to prove the
invalidity of the claim of the petitioner. All of these claims, which would correspond
to the two requisites for the quieting of title, are factual; and, as discussed earlier,
the petitioner interposed its objections and duly disputed the said claims, thus,
presenting genuine issues that can only be resolved through a full-blown trial.
Anent the propriety of the filing of an action for the quieting of title, the
indefeasibility and incontrovertibility of the decree of registration come into
question. Under Sec. 32 of P.D. No. 1529 or the Property Registration Decree:
Section 32. Review of decree of registration; Innocent purchaser for value. The
decree of registration shall not be reopened or revised by reason of absence,
minority, or other disability of any person adversely affected thereby, nor by any
proceeding in any court for reversing judgments, subject, however, to the right of
any person, including the government and the branches thereof, deprived of land or
of any estate or interest therein by such adjudication or confirmation of title
obtained by actual fraud, to file in the proper Court of First Instance a petition for

reopening and review of the decree of registration not later than one year from and
after the date of the entry of such decree of registration, but in no case shall such
petition be entertained by the court where an innocent purchaser for value has
acquired the land or an interest therein, whose rights may be prejudiced. Whenever
the phrase "innocent purchaser for value" or an equivalent phrase occurs in this
Decree, it shall be deemed to include an innocent lessee, mortgagee, or other
encumbrancer for value.
Upon the expiration of said period of one year, the decree of registration and the
certificate of title issued shall become incontrovertible. Any person aggrieved by
such decree of registration in any case may pursue his remedy by action for
damages against the applicant or any other persons responsible for the fraud.

As borne out by the records and undisputed by the parties, OCT No. 0-660 of
petitioner was issued on August 29, 1997 pursuant to a Decree issued on August
20, 1997, while the complaint for the quieting of title in Civil Case No. TG-1784 was
filed and docketed on March 5, 1998; hence, applying the above provisions, it would
seem that the period of one (1) year from the issuance of the decree of registration
has not elapsed for the review thereof. However, a closer examination of the above
provisions would clearly indicate that the action filed, which was for quieting of title,
was not the proper remedy.
Courts may reopen proceedings already closed by final decision or decree
when an application for review is filed by the party aggrieved within one year from
the issuance of the decree of registration.[56] However, the basis of the aggrieved
party must be anchored solely on actual fraud. Shedding light on the matter is a
discussion presented in one of the recognized textbooks on property registration,
[57] citing decisions of this Court, thus:
The right of a person deprived of land or of any estate or interest therein by
adjudication or confirmation of title obtained by actual fraud is recognized by law as
a valid and legal basis for reopening and revising a decree of registration.[58] One
of the remedies available to him is a petition for review. To avail of a petition for
review, the following requisites must be satisfied:
(a) The petitioner must have an estate or interest in the land;
(b) He must show actual fraud in the procurement of the decree of registration;
(c) The petition must be filed within one year from the issuance of the decree by
the Land Registration Authority; and
(d) The property has not yet passed to an innocent purchaser for value.[59]

A mere claim of ownership is not sufficient to avoid a certificate of title obtained

under the Torrens system. An important feature of a certificate of title is its finality.
The proceedings whereby such a title is obtained are directed against all persons,
known or unknown, whether actually served with notice or not, and includes all who
have an interest in the land. If they do not appear and oppose the registration of
their own estate or interest in the property in the name of another, judgment is
rendered against them by default, and, in the absence of fraud, such judgment is
conclusive. If an interest in the land will not by itself operate to vacate a decree of
registration, a fortiori, fraud is not alone sufficient to do so.[60]
As further pointed out in the same book,[61] the petition for review must be filed
within one year from entry of the decree of registration. As written:
As long as a final decree has not been entered by the Land Registration Authority
and period of one year has not elapsed from the date of entry of such decree, the
title is not finally adjudicated and the decision in the registration case continues to
be under the control and sound discretion of the registration court.[62] After the
lapse of said period, the decree becomes incontrovertible and no longer subject to
reopening or review.
Section 32 provides that a petition for review of the decree of registration may be
filed not later than one year from and after the date of entry of such decree of
registration. Giving this provision a literal interpretation, it may at first blush seem
that the petition for review cannot be presented until the final decree has been
entered. However, it has been ruled that the petition may be filed at any time after
the rendition of the court's decision and before the expiration of one year from the
entry of the final decree of registration for, as noted in Rivera v. Moran,[63] there
can be no possible reason requiring the complaining party to wait until the final
decree is entered before urging his claim for fraud.
The one-year period stated in Sec. 32 within which a petition to re-open and review
the decree of registration refers to the decree of registration described in Section
31, which decree is prepared and issued by the Land Registration Administrator.[64]
The provision of Section 31 that every decree of registration shall bind the land,
quiet title thereto, and be conclusive upon and against all persons, including the
national government, and Sec. 32 that the decree shall not be reopened or revised
by reason of absence, minority or other disability or by any proceeding in court,
save only in cases of actual fraud and then only for one year from the entry of the
decree, must be understood as referring to final and unappealable decrees of
registration. A decision or, as it is sometimes called after entry, a decree of a
registration court, does not become final and unappealable until fifteen days after
the interested parties have been notified of its entry, and during that period may be
set aside by the trial judge on motion for new trial, upon any of the grounds stated
in the Rules of Court.[65] An appeal from the decision of the trial court prevents the

judgment from becoming final until that decree is affirmed by the judgment of the
appellate court.[66]
A petition for review under Section 32 is a remedy separate and distinct from a
motion for new trial and the right to the remedy is not affected by the denial of
such a motion irrespective of the grounds upon which it may have been presented.
Thus, where petitioners acquired their interest in the land before any final decree
had been entered, the litigation was therefore in effect still pending and, in these
circumstances, they can hardly be considered innocent purchasers in good faith.
[67]
Where the petition for review of a decree of registration is filed within the one-year
period from entry of the decree, it is error for the court to deny the petition without
hearing the evidence in support of the allegation of actual and extrinsic fraud upon
which the petition is predicated. The petitioner should be afforded an opportunity
to prove such allegation.[68]
In the present case, the one-year period before the Torrens title becomes
indefeasible and incontrovertible has not yet expired; thus, a review of the decree of
registration would have been the appropriate remedy.
Based on the above disquisitions, the other issues raised by the petitioner are
necessarily rendered inconsequential.
WHEREFORE, the petition for review on certiorari of petitioner Eland Philippines,
Inc. is hereby GRANTED, and the decision dated February 28, 2006 of the Court of
Appeals (CA) in CA-G.R. CV No. 67417, which dismissed the appeal of petitioner
Eland Philippines, Inc. and affirmed the resolutions dated November 3, 1999 and
June 28, 2006 of Branch 18, RTC of Tagaytay City, is hereby REVERSED and SET
ASIDE. Consequently, the resolutions dated November 3, 1999 and June 28, 2006
of Branch 18, RTC of Tagaytay City in Civil Case No. TG-1784 are hereby declared
NULL and VOID.
SO ORDERED.
G.R. No. L-27559 May 18, 1972
BERNABE LOPEZ (M.S.A. VI-1-135), MRS. GLORIA D. RAMA, assisted by her
husband FORTUNATO RAMA (M.S.A. VINEW), MELECIO CABIDO (M.S.A. NO.
VI-1-167), SOTERO UBAL (M.S.A. NO. VI-1-2-10), MRS. FELISA VDA. DE
BORJA (M.S.A. VI-1-NEW), JOSE ARQUIZAL (R.P.A. NEW), LEOPOLDO UBAL
(M.S.A. VI-1-NEW), BIENVENIDO GENSIS (M.S.A. VI-1-NEW ), ANGEL
ALEONAR (R.P.A. NEW), MACARIO DE LOS REYES (R.P.A. NEW), DALMACIO
DE LOS REYES (R.P.A. NEW), JULIAN ABING (R.P.A. NEW), FELIPE BANDE

(R.P.A. NEW), ANTONIO SABLE (R.P.A. NEW), ENRIQUE BASCON (R.P.A.

NEW), J. PABALAYA (R.P.A. NEW), ROSARIO EDAO (R.P.A. NEW), PEDRO
PICON (R.P.A. NEW), APOLONIO VILLAMALA (R.P.A. NEW), JUANITA
GASIONG (R.P.A. NEW), GREGORIA DICHOSO (R.P.A. NEW), RODULFO
BACANTI (R.P.A. NEW), TEODORO TABOGON (R.P.A. NEW), CARLOS BACULI
(R.P.A. NEW), CRISANTO BACULI (R.P.A. NEW), BIBIANO CALMA (R.P.A.
NEW), NICASIO PANSACALA, JR., (R.P.A. NEW), PONCIANO YNTONG (R.P.A.
NEW), RESTITUTA CABUCAL (R.P.A. NEW), ANITA MARIQUIT (R.P.A. NEW),
LUCIANO CABARRON (R.P.A. NEW), GREGORIO CANCANO (R.P.A. NEW),
BENEDICTO ALPHABITE (R.P.A. NEW), ESTRELLA PETALCORIN (R.P.A. NEW),
plaintiffs-appellants,
vs.
EMILIO & ALBERTO both surnamed PADILLA as heirs of the late JUAN
PADILLA; the DIRECTOR OF LANDS, Bureau of Lands, Manila; and EDGAR
WOOLBRIGHT, defendants-appellees.
Eleno Andales for plaintiffs-appellants.
Gaudioso C. Villagonzalo, Filemon B. Barria and I. V. Binamira for defendantsappellees.

TEEHANKEE, J.:p
Direct appeal on questions of law from the orders of the Court of First Instance of
Cebu dismissing plaintiffs' complaint.
Plaintiffs' complaint for cancellation of title and injunction with prayer for writ of
preliminary mandatory injunction as filed on June 10, 1966, made the following
allegations, as restated by them in their brief:
That the late Juan Padilla, the predecessor in interest of defendants Emilio Padilla
and Alberto Padilla, was the applicant of a public land under Homestead Application
No. V-6992 filed with the Bureau of Lands on February 28, 1939 (par. 2, complaint;
p. 2, record on appeal); that on December 27, 1965, the heirs of the said Juan
Padilla were issued Original Certificate of Title No. 183 which was transcribed in the
Registration Book of the Province of Cebu pursuant to the provisions of Section 41 of
Act 496 on January 7, 1966, covering Lot Nos. 3986-A, 3986-C, and 3986-F
described therein (par. 3, complaint; pp. 3-4, record on appeal);
That sometime in the year 1958, the plaintiffs began reclaiming the area covered by
the waters across the shores of Mambaling, Cebu City, and as soon as the same
became tenantable, they constructed their dwellings thereon and consequently,

they filed with the Bureau of Lands applications to lease the areas reclaimed and
occupied by them for which they religiously paid the yearly rentals due thereon (par.
4, complaint; p. 4, record on appeal); that some of them also filed with the Bureau
of Lands, miscellaneous sales applications under Republic Act No. 730 considering
the long period of time within which plaintiffs were occupying the land in question in
good faith, openly, continuously, publicly, notoriously and uninterruptedly, which
individual applications are indicated therein (par. 4, supra);
That the said Juan Padilla and later on his heirs, defendants Padillas, succeeded in
obtaining the approval of the Director of Lands of their homestead application
without excluding therefrom the foreshore and marshy lands as well as the areas
reclaimed and occupied by the plaintiffs and covered by plaintiffs' applications to
the great and irreparable damage of said plaintiffs (par. 5, complaint; p. 6, record on
appeal); that the approval by the Director of Lands of the homestead application
aforesaid and the subsequent proceedings leading to the issuance of the homestead
patent in defendants' favor were done without the knowledge of herein plaintiffs
and without consulting the records of the District Land Office in the province and
city of Cebu, thru fraud and misrepresentation of the defendants Padillas (par. 6,
complaint; p. 6, record on appeal); that the late Juan Padilla and later his heirs, the
defendants Padillas, pretended to the Bureau of Lands, Manila, that their
Homestead Application No. V-6992 entirely covered an area of land which they
alone occupied and cultivated, the truth of the matter being that more than half of
the area applied by them for homestead was foreshore, marshy, and covered by the
sea, and a portion of which was reclaimed and occupied by herein plaintiffs long
before the issuance of the patent and title in defendants' favor (par. 7, complaint; p.
6, record on appeal);
That subsequent to the issuance of the patent and title aforesaid through fraud,
deceit and misrepresentation, defendants Padillas sold the land to defendant Edgar
Woolbright in open violation of Section 118 of Commonwealth Act No. 141, as
amended by Commonwealth Act No. 456, as admitted by Edgar Woolbright himself
in his letter dated May 20, 1966 to the District Land Officer, Land District No. VI-I
Bureau of Lands, Cebu City (par. 8, complaint; pp. 6-8, record on appeal);
That the defendants Padillas wrote the plaintiffs demanding that the latter vacate
the premises reclaimed and occupied by the said plaintiffs because said defendants
would bulldoze, level or fill up the same in order to construct improvements
thereon; that defendant Edgar Woolbright has purchased some of the houses within
the portion reclaimed and occupied by said plaintiffs with the evident intent of
destroying them and bulldozing the houses and/or the lot for the purpose of
constructing improvements thereon (par. 9, complaint; p. 8, record on appeal);
That notwithstanding the clear and lawful rights of plaintiffs over their respective
lots as assigned and allocated to them by the Bureau of Lands through its regional

office in Cebu City, Philippines, defendants conspiring and working together

threatened and are still threatening to occupy the premises in question and forcibly
oust plaintiffs from their humble homes, thereby compelling plaintiffs to retain the
professional service of undersigned counsel in the sum of P20,000.00 as attorney
fees (par. 10, complaint; p. 8, record on appeal); that due to the refusal of
defendants to see the side of the plaintiffs, they suffered damages to the tune of
P50,000.00 by way of actual and moral damages (par. 11, complaint; p. 9, record on
appeal); and that plaintiffs will suffer great and irreparable loss and injury in the
event defendants Padillas and Woolbright will proceed to destroy the houses of
plaintiffs and/or bulldoze level or fill up the areas reclaimed and occupied by them,
and in order to obviate the same, plaintiffs pray for the issuance of a Writ of
Preliminary Mandatory Injunction enjoining defendants Padillas and Woolbright or
their representatives an all persons acting under their orders from entering into the
lands reclaimed and occupied by plaintiffs, from destroying and/or bulldozing
plaintiffs' houses, and bulldozing, leveling or filling up the areas aforesaid, while this
case is still pending (par. 12, complaint; p. 9, record on appeal). 1
Plaintiffs accordingly prayed of the lower court to render judgment
1.
Declaring Homestead Patent No. 112448 issued in favor of defendants Emilio
Padilla and Alberto Padilla and its corresponding Original Certificate of Title No. 183
as procured thru actual fraud, deceit and misrepresentation, hence null and void,
and in flagrant violation of Section 118 of Commonwealth Act No. 141, as amended
by Commonwealth Act No. 456;
2.
Ordering the Director of Lands to exclude from the coverage of Homestead
Application No. V-6992 the areas which are strictly foreshore and marshy lands as
well as those portion which are still under the sea;
3.
Ordering the Director of Lands to exclude from the coverage as Homestead
Application No. V-6992 of defendant Padillas that area reclaimed and presently
occupied by plaintiffs as well as ordering said officer to approve the lease and
miscellaneous sales applications of plaintiffs excluding only those portions which
may be needed by the City of Cebu, which sale and lease applications had been
given due course by the Burea of Lands and are still pending action by the same to
date;
4.
While this case is pending, a Writ of Preliminary Mandatory Injunction be
issued enjoining defendants Padillas and Woolbright from
(a)

Entering into the areas reclaimed and presently occupied by plaintiffs;

(b)

Destroying and/or bulldozing plaintiffs' houses;

(c)
Bulldozing, leveling or filling up the areas reclaimed and occupied by
plaintiffs;
(d)
Such act or acts prejudicial to plaintiffs in their occupation and use of the
areas reclaimed and occupied by them;
5.
Making permanent the preliminary mandatory injunction that may be issued
by this Honorable Court;
6.
Sentencing defendants to pay jointly and severally to plaintiffs the sum of
P20,000.00 as attorney's fees and the further sum of P50,000.00 as actual and
moral damages;
7.
Granting such other reliefs and remedies as may be deemed just, proper and
equitable in the premises. 2
Private defendants, in due course filed their answer of June 16, 1966, disclaiming
any intention to bulldoze or destroy plaintiffs' houses and averring that they have
spent money to help those who realized that they were squatting on the land and
accordingly removed their houses. They further set up special defenses in their
answer based on the records of the subject property in the Bureau of Lands, as
follows:
13.
That Juan Padilla in life, applied for a homestead patent, over Lot 3986, Cebu
Cadastre, sometime in 1939. He then took possession of the land, and made
improvements thereon, planted coconut trees, filled up low places, constructed a
small salt bed on the fringes bordering the sea.
14.
The landing American liberation forces made use of the homestead beach;
U.S. tanks, heavy equipment, and trucks passed thru the homestead, and destroyed
the coconut trees, salt beds, and dikes bordering the sea. After liberation, Juan
Padilla and his sons Emilio and Alberto renewed building the dikes, and introduced
improvements to comply with the requirements of the homestead law.
15.
In 1947 Juan Padilla died; the Heirs Emilio and Alberto Padilla were
substituted applicants. They carried on the work, and pushed thru the Homestead
application. In 1948, long before any of the plaintiffs-squatters complainant herein
even ever knew of the homestead, the same was, after due investigation by the
Bureau of Lands, duly approved; and in December 1952, all the requirements of law
having been satisfactorily met, the Director of Lands issued the decree for the
issuance of Patent.
16.
There being delay in the issuance of patent, the Heirs of Juan Padilla filed Civil
Case No. 4041 entitled Heirs of Juan Padilla vs. Director of Lands, for Mandamus,

and the Court of First Instance, thru then Presiding Judge Hon. Edmundo Piccio
decided on November 11, 1955 in favor of the Padillas, and the Director of Lands
was ordered to issue the patent.
17.
The intervention by the City of Cebu, in the Mandamus Civil Case No. 4041
having been dismissed as without merit, said Cebu City filed a separate civil suit for
alleged recovery of title and damages, in Civil Case No. 4877 in 1955. This held up
the issuance of the patent until December 27, 1965, when said case was decided by
the Supreme Court on appeal, affirming the issuance of patent, 3 and pursuant
thereto Original Certificate of Title No. 183 was issued by the Director of Lands in
favor of the Heirs of Juan Padilla.
18.
Answering defendants hereby allege that the decree for the issuance of
patent issued in December 1952 has long since become final, that Original
Certificate of Title No. 183, issued by virtue thereof, and pursuant to the final
judgment by the Hon. Supreme Court is valid, legal, final and indefeasible.
19.
Answering defendants aver that prior to the approval of the Homestead
application in 1948, the Homestead site, Lot 3986 had already been segregated
from the lands of the public domain and especially upon the decree of the issuance
of patent in 1952, the same was being held and possessed as a private property by
the Heirs of Juan Padilla who had vested equitable title thereto, and as such not any
portion thereof is subject to any Application for Revocable Permit (RPA) or
Miscellaneous sale, as all the plaintiffs now pretend to claim to have made such
applications in 1958 and thereafter.
20.
That assuming but not admitting that any such RPA or Miscellaneous Sale
Applications were ever filed in 1958 or thereafter, for any portion of the Homestead,
Lot 3986 O.C.T. No. 183, the same must have been either rejected, unacted or if
accepted such acceptance must necessarily be illegal, null and void, for the Bureau
of Lands or any of its Officers and employees has no right to sell or lease privately
owned estates. 4
Private defendants further filed under date of June 28, 1966 a motion to dismiss the
complaint, asserting that since plaintiffs admit in their complaint that "(a) they are,
as they have been, since 1958, occupying the lots described in the complaint; (b)
that the areas occupied are within the homestead grant of which the defendant
Heirs of Juan Padilla were issued Original Certificate of Title pursuant to a valid
decree, affirmed by the Hon. Supreme Court, now final and indefeasible; (c) that
plaintiffs have never filed any opposition against the issuance of the patent, and
that in open court, they manifested thru counsel they have not instituted any
proceedings against the Land authorities, so therefore have not exhausted the
administrative remedies, a requisite sine qua non prior to instituting a civil action as
required by law," the complaint should be dismissed since plaintiffs not only are

improper parties but have no cause of action against defendants, and the lower
court is without jurisdiction over the subject matter.
After hearing plaintiffs' opposition, the lower court presided by Judge (now appellate
justice) Mateo Canonoy, issued his order of July 13, 1966 dismissing the complaint
with costs against petitioners. The lower court after citing the applicable legal
principles, ruled that "The fact that the plaintiffs herein allege that they have
pending MSA applications over portions of the land in question with the Bureau of
Lands, negates any claim on their part that they own the said portions as their
private property. So, even if they succeed in annulling the title of the respondents to
the property in question, they do not thereby become the owners of the same.
Hence, they have no interest in the land in question which would entitle them to
invoke the protection of the Court. Again, even if this action were to be considered
as one for the reversion of the homestead to the government, it is the Solicitor
General or his representative and not the plaintiffs herein who have the personality
to file the action."
Plaintiffs filed their motion for reconsideration insisting that they had the right under
section 38 of Act 496 within the one-year period therein provided to declare null and
void the homestead patent and Original Certificate of Title issued in pursuance
thereof on December 7, 1965 on the ground that the same were obtained
through fraud and deceit. The lower court denied reconsideration per its order of
August 3, 1966, wherein it ruled that defendants' torrens title was no longer
susceptible to collateral attack through plaintiffs' action and again stressed
plaintiffs' lack of personality or legal interest to assail defendants' title, thus:
It is a rule in this jurisdiction that once a public land has been brought under the
Land Registration Act, the Torrens title issued thereto is indefeasible. It is entitled to
the same regard as one issued in a judicial proceeding. The Torrens title is not
susceptible to collateral attack. The decree (or order of the Director of Lands for the
issuance of the patent in the case of a homestead) may be reviewed under Sec. 38
of the Land Registration Act by filing the appropriate petition within one year from
the issuance of the order for the issuance of the patent. Or an appeal may be taken
to the appellate court within the reglementary period from the decision of the Court;
and in the case of the homestead, the administrative remedies may be pursued.
These are the methods of direct attack.
In the case at bar, this Court sitting as a court of general jurisdiction has no power
to annul the Torrens title issued to the defendant, Woolbright, and others, because
this is an ordinary civil action and it is a collateral attack.
During the discussion of the main motion to dismiss the complaint and the motion
for reconsideration, what is manifest is that the various plaintiffs have filed
Miscellaneous Applications covering various portions of the lots in question. It is not

shown that the applications have already been approved. It is more consistent with
the fact and law to state that the Director of Lands would abstain from acting on the
applications in view of the existence of Torrens title to the land in question, for he is
presumed to know that the property is no longer public land, but private property;
hence the Bureau of Lands would have no jurisdiction over the same.
Hence, this appeal from the lower court's dismissal order. Plaintiffs-appellants
themselves formulate the "fundamental issues" raised by them, as follows:
(1)
Whether or not the case at bar falls within the scope of the provisions of
Section 38 of Act 496, otherwise known as the Land Registration Act.
(2)

Whether or not the plaintiffs are the proper parties to bring the action.

(3)
Whether or not the Court of First Instance of Cebu has jurisdiction over the
subject-matter of the action as well as the power to cancel the patent and title
issued to the defendants on the ground of fraud.
1.
On appellants' first issue, the lower court correctly held that "in ordinary
registration proceedings involving private lands, courts may re-open proceedings
already closed by final decision or decree, only when application for review is filed
by the party aggrieved within one year from the issuance of the decree of
registration. Applied to homesteads the decree of registration corresponds to the
promulgation of the order of the Director of Lands for the issuance of the patent and
not the actual issue of the patent. (Tinio vs. Frances, 21 O.G. 6205; Balboa vs.
Ferales, 51 Phil. 498; Recido, et al., vs. Refaso et al., G.R. No. L-16641, prom. June
24, 1965)." 5
The facts of record, including this Court's own decision of January 30, 1965 in City of
Cebu vs. Padilla, 6 show that the order for the issuance of the patent for the 53,000
square meter homestead lot in question in favor of the Padillas was issued by the
Director of Lands on December 16, 1952, which was upheld by this Court even as
against the adverse claim and opposition of the City of Cebu in said case; the sale
to defendant Woolbright was made on June 2, 1966, and the present action was
filed on June 10, 1966. The lower court accordingly held correctly that "the period
within which to file the action for review of the title and to annul the sale to
Woolbright has already expired," on the strength of the ruling of Recido 7 "that the
patent is deemed issued upon promulgation of the order of the Director of Lands for
the issuance thereof."
2.
On appellants' second issue, the lower court likewise correctly ruled that
plaintiffs could not properly institute the action for cancellation of defendants'
homestead patent No. 112148 and original certificate of title No. 183 issued in
pursuance thereof, since the land clearly had ceased to be public land and private

ownership thereof had vested in favor of defendants Padillas and their transferee
Woolbright. Granting arguendo plaintiffs' allegations of fraud and deceit against
defendants and their alleged preferential right under Republic Act 730 to purchase
the portions of the homestead lot occupied by them in 1958 which they insist
should be deemed conceded for purposes of the motion to dismiss filed by
defendants-appellees section 101 of the Public Land Act vests only in the Solicitor
General or the officer acting in his stead the authority to institute the action on
behalf of the Republic for cancellation of defendants' title and for reversion of the
homestead to the Government. 8 This Court has recognized as exceptions cases
where plaintiff-claimant has sought direct reconveyance from defendant of public
land unlawfully and in breach of trust titled by defendant, on the principle of
enforcement of a constructive trust, but such principle is in no way applicable or
invoked in the case at bar. 9
3.
Appellants' third issue insisting that the lower court has jurisdiction over the
subject matter of the action and authority to cancel defendants' homestead patent
and torrens title, must necessarily fail. As succinctly held by the lower court, the
torrens title issued to defendants in pursuance of the homestead patent is no longer
susceptible to collateral attack through the present action filed by plaintiffs, who as
mere applicants of revocable lease permits or miscellaneous applications of what is
now concededly titled property of private ownership, have no personality or legal
interest in the first place to institute the action, nor to question the sale of the
homestead allegedly within the five-year prohibitory period of section 118 of the
Public Land Act. Since there is no showing that their applications have been
approved by the Director of Lands, who could not be expected to do so knowing that
he has since 1952 decreed the issuance of a patent therefor and the property has
long ceased to be of the public domain, the lower court correctly ruled itself to be
bereft of authority to grant the relief sought by plaintiffs-appellants on the basis of
their lack of a valid cause of action.
ACCORDINGLY, finding no error in the lower court's appealed orders dismissing the
complaint, the same are hereby affirmed. Without pronouncement as to costs.

G.R. No. 94033

May 29, 1995

FELICIANO RAMOS, Substituted by his heirs through VALERIANA VDA. DE

RAMOS, petitioners,
vs.
HONORABLE FRANCISCO C. RODRIGUEZ, Presiding Judge, RTC, Branch 77,
San Mateo, Rizal and LAND REGISTRATION AUTHORITY, respondents.

ROMERO, J.:
Feliciano Ramos applied for the registration of a parcel of land in San Jose,
Rodriguez, Montalban, Rizal, identified as Lot 125-B of subdivision plan Psd-760 with
a total area of 156,485 square meters. Upon his death on April 6, 1982 and during
the pendency of said application, Feliciano was substituted by his heirs, petitioners
herein.
After issuing an order of general default, respondent judge rendered a decision on
July 28, 1988, adjudicating the said lot to the petitioners.
On September 12, 1988, the court a quo issued an Order for Issuance of Decree
stating that the July 28, 1988 decision had become final and directing the
Administrator of National Land Titles and Deeds Registration Administration
(NLTDRA) 1 to comply with Section 39 of Presidential Decree No. 1529, that is, to
prepare the decree and certificate of registration.
Instead of issuing the said decree, NLTDRA Administrator Teodoro G. Bonifacio
submitted a report dated September 26, 1988, which was earlier required by the
court, recommending that the July 28, 1988 decision be set aside after due hearing
because the subject lot was part of Lot 125, Psu-32606 which is already covered by
Transfer Certificate of Title (TCT) No. 8816 issued on October 29, 1924, in case No.
1037 in the name of the Payatas Estate Improvement Company, and which was
assigned Decree No. 1131 on January 31, 1905. Petitioners later claimed that TCT
No. 8816 was fraudulent but they failed to present any evidence in support of such
allegation.
Several settings for the hearing were made before the court in an order dated
February 2, 1990, merely noted the said report. The court opined "that it cannot set
aside its (July 28, 1988) decision on the basis of the report dated September 26,
1988, which was received by this Court on October 10, 1988, after the finality of its
decision." It added that the proper remedy of the government was an action for
annulment of judgment.
Bonifacio filed on March 9, 1990, through the Chief Legal Officer of the Land
Registration Authority (LRA), a motion for reconsideration of the February 2, 1990,
order.
On May 29, 1990, the court a quo issued an order granting the motion for
reconsideration, denying petitioner's application for registration, setting aside its
decision dated July 28, 1988, as well as its order for the issuance of decree dated

September 12, 1988 and denying the petition to re-direct the LRA to issue the
decree of registration. The court noted that the subject lot was already covered by
an existing certificate of title and that no final decree has yet been issued by the
LRA.
Petitioners are now asking the Court to set aside the trial court's May 29, 1990,
order on the strength of the principle of finality of judgments.
This issue has already been settled in a similar case, 2 where the Court declared
that:
. . . Unlike ordinary civil actions, the adjudication of land in a cadastral or land
registration proceeding does not become final, in the sense of incontrovertibility(,)
until after the expiration of one (1) year after (sic) the entry of the final decree of
registration. This Court, in several decisions, has held that as long as a final decree
has not been entered by the Land Registration Commission (now NLTDRA) and the
period of one (1) year has not elapsed from the date of entry of such decree, the
title is not finally adjudicated and the decision in the registration proceeding
continues to be under the control and sound discretion of the court rendering it.
It is also argued by petitioners that the issuance of the decree of registration and
the certificate of title by the LRA is a ministerial duty which follows as a matter of
course the order of the court directing it to issue said decree. This, too, has been
squarely met in Gomez, thus:
Petitioners insist that the duty of the respondent land registration officials to issue
the decree is purely ministerial. It is ministerial in the sense that they act under the
orders of the court and the decree must be in conformity with the decision of the
court and with the data found in the record, and they have no discretion in the
matter. However, if they are in doubt upon any point in relation to the preparation
and issuance of the decree, it is their duty to refer the matter to the court. They act,
in this respect as officials of the court and not as administrative officials, and their
act is the act of the court. They are specifically called upon to "extend assistance to
courts in ordinary and cadastral land registration proceedings."
In the case at bench, Administrator Bonifacio filed his report as an officer of the
court precisely to inform the latter that the NLTDRA cannot comply with the order to
issue a decree because the subject lot sought to be registered was discovered to
have been already decreed and titled in the name of the Payatas Estate. Under
these circumstances, the LRA is not legally obligated to follow the court's order.
This is also one of the reasons why we have to reject the claim of petitioners that
the court's Order for Issuance of Decree is the reckoning point in determining the
timeliness of a petition to re-open or review the decree of registration in view of the

ministerial nature of the LRA's duty. The other reason is that the one-year period
stated in section 32 of P.D. 1529 within which a petition to re-open and review the
decree of registration clearly refers to the decree of registration described in Section
31 of the said P.D., which decree is prepared and issued by the Commissioner of
Land Registration.
Finally, petitioners aver that respondent judge committed grave abuse of discretion
in setting aside the July 28, 1988, decision and the order for issuance of decree
dated September 12, 1988, upon the mere motion for reconsideration filed by the
LRA, not by the Solicitor General, of the February 2, 1990 order.
Under the Administrative Code of 1987, the Solicitor General is bound to
"[r]epresent the Government in all land registration and related proceedings." 3 Add
to this the fact that P.D. 1529 itself, specifically Section 6 thereof which enumerates
the functions of the Commissioner of Land Registration, is bereft of any grant of
power to the LRA or to the Commissioner to make the same representation as the
Office of the Solicitor General in behalf of the government in land registration
proceedings.
The court a quo could not have committed grave abuse of discretion because it was
merely following the earlier recommendation of the LRA which was then acting as
an agent of the court.
Nevertheless, even granting that procedural lapses have been committed in the
proceedings below, these may be ignored by the Court in the interest of substantive
justice. 4 This is especially true when, as in this case, a strict adherence to the rules
would result in a situation where the LRA would be compelled to issue a decree of
registration over land which has already been decreed to and titled in the name of
another.
It must be noted that petitioners failed to rebut the LRA report and only alleged that
the title of the Payatas Estate was spurious, without offering any proof to
substantiate this claim. TCT No. 8816, however, having been issued under the
Torrens system, enjoys the conclusive presumption of validity. As we declared in an
early case, 5 "[t]he very purpose of the Torrens system would be destroyed if the
same land may be subsequently brought under a second action for registration."
The application for registration of the petitioners in this case would, under the
circumstances, appear to be a collateral attack of TCT No. 8816 which is not allowed
under Section 48 of P.D. 1529.
At this point, it may be stated that this controversy could have been avoided had
the proper procedure in land registration cases been observed by both the trial
court, acting as a land registration court and by the LRA, acting as an agent of the
court. The court should have rendered its decision only "after considering the

evidence and the reports of the commissioner of Land Registration and the Director
of Lands," as mandated by Section 29 of P.D. 1529, instead of precipitately
adjudicating the land in question to the applicant and directing the Commissioner to
issue a decree of registration and certificate of title when the report of the LRA was
still forthcoming. On the other hand, if a faster disposition of the proceedings were
really desired, the court could facilely wield the powers of its office in order to
compel the LRA to speed up its investigation, report, and recommendation.
Finally, the Solicitor General is reminded to be more vigilant in handling cases which
his office should, under the law, properly represent.
ACCORDINGLY, the instant petition for review is hereby DENIED, and the order of
respondent court dated May 29, 1990, is AFFIRMED.
SO ORDERED.

G.R. No. L-38387 January 29, 1990

HILDA WALSTROM, petitioner-appellant,
vs.
FERNANDO MAPA, JR., VICTORINO A. MAPA, MARIA C.M. DE GOCO,
FERNANDO MAPA, III, MARIO L. MAPA, and THE REGISTER OF DEEDS OF
THE PROVINCE OF BENGUET, respondents-appellees.
Pelaez, Adriano & Gregrio for petitioner-appellant.
Tomas G. Mapa & Associates for private respondents.

SARMIENTO, J.:
This is a review of the Order dated December 1, 1973 of the then Court of First
Instance of Baguio-Benguet, Branch IV, which dismissed, before trial on the merits,
the petitioner's complaint in Civil Case No. 2434. The concluding portion of the
assailed order states:
This Court is unprepared to consider this case as falling under any of the exceptions
to the rule on exhaustion of administrative remedies because under plaintiffs
allegations, her "Petition for Relief " is still pending resolution by the Secretary of
Agriculture and Natural Resources who may reconsider his action on the matter in
dispute; and, furthermore, an action for annulment of title issued pursuant to a
patent must be initiated by the Director of Lands or at least by his prior authority

and consent (Kabayan (sic) 1 vs. Republic, L-33307, August 30, 1973) who may be
directed by the Secretary for that purpose if plaintiff's "Petition for Relief" is granted
and the previous action reconsidered. The records fail to show that such authority or
consent has been secured by the plaintiff before instituting the present action.
A motion to dismiss of this nature does not affect the jurisdiction of the court but
shows that plaintiff lacks a cause of action. (Commissioner of Immigration vs.
Vamenta, Jr., 45 SCRA 342.) In other words, non-compliance with this requirement
justifies the dismissal for lack of cause of action. (Cruz vs. Del Rosario, 9 SCRA 755.)
WHEREFORE, the Court, finding the motion to dismiss to be in order, hereby orders
the dismissal of the case without pronouncement as to costs.
SO ORDERED. 2
This drawn-out controversy between the parties, which is one of the many cases we
inherited from the pre-EDSA Court, arose from the following facts and proceedings:
I.
(1)
The petitioner alleges that long before World War II, Cacao Dianson,
predecessor-in-interest of Gabriela Walstrom, filed a Free Patent Application (FPA)
for a parcel of land located between what are known as Lots Nos. 1 and 2 of Psu153657. Under the said Free Patent Application, Cacao Dianson was able to secure
on April 10, 1933 the issuance of Free Patent No. 14885 and Original Certificate of
Title No. 1217 in his name.
(2)
On June 9, 1933, Josefa Abaya Mapa, predecessor- in-interest of the private
respondents, filed Miscellaneous Sales Application No. 6439 for a parcel of land
located in barrio Pico, municipality of La Trinidad, Mountain Province.
(3)
According to the petitioner, a public auction of the land subject of Josefa
Abaya Mapa's miscellaneous sales application was held on April 18, 1934. Josefa
Abaya Mapa was the only bidder.
(4)
On May 12, 1934, the Director of Lands awarded Josefa Abaya Mapa a tract of
land with an area of 2,800 square meters which was appraised at P0.05 per square
meter, located in Pico, La Trinidad, Mountain Province, with the following
boundaries: N.- Public Land; S.E. - Public Land; S. - Road; W. - Public Land (not
surveyed) No improvements had been made on the land.
(5)
On June l, 1956, Cacao Dianson filed Free Patent Application No. 3-74
covering Lots Nos. 1, 2, and 3 of Psu-153657, situated in Barrio Beckel, La Trinidad,
Mountain Province, and on the same date he filed with the District Land Office in

Baguio City a letter protesting the construction in April, 1956 by Josefa Abaya Mapa
of a camarin on the parcel of land (described as "portion A") of one of the parcels of
land more specifically, Lot No. 1 of Psu-153657 covered by Dianson's FPA No. 374. 3
(6)
The private respondents counter that this portion being claimed by Dianson,
which is designated as Portion "A" of Lot 1, Psu-153657, was already awarded to
Josefa Abaya Mapa in the public bidding held in 1934.
(7)
On June 17, 1958, the controversy between Cacao Dianson and Josefa Abaya
Mapa with respect to the disputed property was referred to Bureau of Lands
Investigator Antonio Mejia for investigation. After conducting several hearings and
making an ocular inspection of the controverted premises, Mejia submitted his
"Report of Investigation," wherein he stated the following:
FINDINGS OF FACTS
Josefa Abaya Mapa has filed a Miscellaneous Sales Application for a parcel of land
located in Pico, La Trinidad, Mt. Province, on June 9, 1933 and the same was
awarded to her on May 12, 1934. The land has an area of 2800 square meters with
the following boundaries. North Public Land, South-East Public Land, SouthRoad and West Public Land.
The purchase price has been paid in full in 1943 as per Official Receipt No. B1982778 dated November 8, 1943.
The land was first applied for by her husband, Fernando Mapa, but it was later
transferred to Josefa Abaya Mapa.
Cacao Dianson filed a Free Patent Application for the same parcel of land on June 1,
1956, alleging that the said land was first occupied by his father, Dianson, in 1884.
The land has been survey under Psu-153657 on September 10, 1956.
Cacao Dianson is occupying the land and has fenced it. Josefa Abaya Mapa has
constructed a sort of a shack near the land. Terraces were made by Cacao Dianson
in the premises. Cacao Dianson has also constructed a shack inside the land.
No survey appears to have been conducted on the land covered by the
Miscellaneous Sales Application of Josefa Abaya Mapa.
Rodrigo H. Romea conducted a survey on the land. However, Mr. Romea made two
surveys separately. One on the land pointed to her by Josefa Abaya Mapa and the
other, on the land which according to his findings and opinion would be the correct
place of the land covered by the application of Josefa Abaya Mapa.

Lands Investigator Mejia also found that:

During the ocular inspection of the land, it was found out that Mrs. Josefa Abaya
Mapa has constructed a shack near the road. On the other hand, Cacao Dianson has
also constructed a hut in the premises of the said land. In fact, Cacao Dianson was
in a threatening mood against the Mapas during the ocular inspection. Of the
alleged improvements introduced by Mrs. Josefa Abaya Mapa, they were not seen by
the herein Investigator, except the shack constructed by her. However, rice terraces
were found in the premises and other plants, but from the appearance of the said
improvements, it seems to be recently introduced.
This Investigator has searched all the records in the Office of the Bureau of Lands,
Baguio City, but no available records could be found regarding the location of the
land applied for by Josefa Abaya Mapa. A verification of the records, however. show
that Cacao Dianson has sold the land applied for by him to a certain Agripino Farol,
a resident of Davao. 4
(8)
The regional land officer of Dagupan City, in a decision dated August 12,
1964, resolved the controversy between Cacao Dianson and Josefa Abaya Mapa in
this wise:
In view of the foregoing, the undersigned holds and so decides that Free Patent
Application No. 3-74 of Cacao Dianson be, as hereby it is, amended so as to exclude
therefrom Portion "A" of Lot No. 1, Psu-153657, as shown on the sketch drawn at the
back hereof and shall cover only portion "B" of Lot No. 1, Lots 2 and 3 of Psu153657, and the Miscellaneous Sales Application No. 6439 (E -1341) of Josefa Abaya
Mapa shall cover the said portion "A" of Lot No. 1, Psu-153657 and thereafter both
applications shall continue to be given due course. 5
(9)
In the meantime, Cacao Dianson died on August 7, 1964. Nearly two years
later, on July 8,1966, Gabriela Walstrom filed a motion for reconsideration with the
Director of Lands of the decision dated August 12, 1964 of the regional land officer,
claiming that she had acquired the rights and interests of Cacao Dianson to the
subject parcel of land by virtue of a transfer of said rights and interests. by Dianson
to one Agripino Farol who, in turn, transferred the same rights and interests to
Gabriela Walstrom.
(10) On September 9, 1966, the Director of Lands, acting on the motion for
reconsideration filed by Gabriela Walstrom, issued an order setting aside the
decision of August 12, 1964 of the district land officer of Dagupan City.

(11) On November 9, 1966, Josefa Abaya Mapa appealed the order dated
September 9, 1966 of the Director of Lands to the Department of Agriculture and
Natural Resources (DANR).
This became DANR Case No. 3118.
II.
(1)
On July 28, 1967, the DANR Secretary rendered a decision, dismissing Josefa
Abaya Mapa's appeal from the order dated September 9, 1966 of the Director of
Lands.
(2)
On September 21, 1967, the heirs of Josefa Abaya Mapa, through their
judicial administrator, Victorino Mapa, filed a motion for reconsideration of the
decision of the DANR promulgated on July 28, 1967.
(3)
On June 13, 1968, the DANR Secretary Set aside the order of the Director of
Lands dated September 9, 1966 and ordered that the decision of the regional land
officer in Dagupan City dated August 12, 1964 be reinstated and given full force and
effect.
(4)
On July 30, 1968, counsel of Gabriela Walstrom manifested his intention to
file a motion for reconsideration against the DANR order, dated June 13, 1968, but it
was only on September 20, 1968 that a memorandum in support of his motion for
reconsideration was filed.
(5)
On March 4, 1969, DANR Secretary Fernando Lopez promulgated an order
denying the motion for reconsideration of Gabriela Walstrom on two (2) grounds, as
follows:
1.
From the foregoing, it is clear that more than thirty days had elapsed from
the time plaintiff received the order she is seeking to be reconsidered to the time
she manifested any intention to have the same reconsidered. Such being the case,
her motion does not merit any consideration whatsoever for having been filed out of
tune.
2.
Nevertheless, this office reviewed the records of this case in view of the
errors mentioned by movant in her memorandum and the answer thereto filed by
defendant. This office, however does not find any reversible error in its Order of June
13, 1968. 6
(6)
Gabriela Walstrom filed a second motion for reconsideration of the Order of
the DANR dated June 13, 1968. In the meantime Mapa filed a motion for execution
of the said order of DANR.

(7)
The DANR, in its order dated March 24, 1970, denied the second motion for
reconsideration of Walstrom and granted the motion for execution filed by the heirs
of Josefa Abaya Mapa.
(8)
On June 8, 1970, Gabriela Walstrom filed a petition for relief with the DANR.
Before her petition was heard, she died on October 4, 1970. The heirs of Josefa
Abaya Mapa, pursuing the case, filed an answer dated March 29, 1972, to the
petition of Walstrom, stating that:
Preliminary Statement
The land being controverted by Appellee Walstrom was the subject of the
Miscellaneous Sales Application and not a Homestead Patent Application. The
property now being contested by Appellee Walstrom is already titled in the name of
the HEIRS OF JOSEFA ABAYA MAPA, under original Certificate of Title No. P-456 of the
Registry of deeds for the Province of Benguet, pursuant to a Miscellaneous Sales
Patent No. 4487. This property, therefore, is now under the Torrens System.
It is also worthwhile to note that the land in question is only a small portion of the
claim of Cacao Dianson and Walstrom. This is the land in question particularly
designated as Portion "A" of Lot 1, Psu-153657. 7
(Emphasis supplied by petitioner Walstrom)
It was only upon receipt on April 11, 1972 of the above-stated answer of the heirs of
Josefa Abaya Mapa to the petition for relief of the late Gabriela Walstrom, that the
herein petitioner Hilda Walstrom, daughter and successor-in-interest of the late
Gabriela, learned for the first time that the property being contested by Walstrom
was already titled in the name of the heirs of Josefa Abaya Mapa, under Original
Certificate of Title No. P-456 of the Registry of Deeds for the Province of Benguet,
pursuant to Miscellaneous Sales Patent No. 4487. 8
III.
Upon subsequent inquiry with respect to the claim of the heirs of Josefa Abaya Mapa
that the property in dispute in DANR Case No. 3118 had already been titled
pursuant to Miscellaneous Sales Patent No. 4487, the petitioner further became
aware, also for the first time, that Miscellaneous Sales Patent No. 4487 was issued
by the DANR Secretary on July 19,1971 and released for transmittal to the office of
the Register of Deeds for Benguet Province on July 22, 1971; that on September 30,
1971, respondent register of deeds issued Original Certificate of Title No. P-456,
pursuant to Miscellaneous Sales Patent No. 4487; and that on or about November
13, 1971, respondent Fernando Mapa, Jr. transferred the property covered by

Original Certificate of Title No. P-456 to the other heirs of Josefa Abaya Mapa,
namely, defendants Victorino A. Mapa, Jose A. Mapa, Maria C.M. de Goco, Fernando
Mapa III, and Mario L. Mapa, in connection with which transfer, Transfer Certificate
of Title No. T-6644 was issued by the Register of Deeds of Benguet. 9
During all this time, the petition for relief filed by Gabriela Walstrom on June 8, 1970
remained unresolved. In fact, the DANR Secretary issued an order, dated January
9,1972, giving due course to the said petition. According to petitioner Hilda
Walstrom, she was compelled to file an action in the then Court of First Instance of
Baguio-Benguet on July 19, 1972 because the one-year prescriptive period for
seeking judicial relief provided for in Sec. 38 of the Land Registration Act was about
to lapse.
The court a quo dismissed petitioner Hilda Walstrom's petition on the ground of
"failure to exhaust administrative remedy dies."
Hence, this petition.
The petitioner submits two questions:
I.
DID PETITIONER-APPELLEE (sic) REALLY FAIL TO EXHAUST ADMINISTRATIVE
REMEDIES?
II.
IN THE LIGHT OF THE FACT THAT THE DISPUTED MISCELLANEOUS SALES PATENT
WAS ISSUED ON JUNE 19, 1971, DOES THE FACT THAT THE PETITION FOR REVIEW IN
DANR CASE NO. 3118 HAD NOT YET BEEN RESOLVED AS OF JULY 19, 1972,
PRECLUDE PETITIONER-APPELLANT FROM FILING ON SAID DATE (JULY 19,1972) HER
SUIT TO ANNUL SAID SALES PATENT AND THE TORRENS CERTIFICATES OF TITLE
ISSUED BY THE REGISTER OF DEEDS BY VIRTUE THEREOF? 10
Petitioner Hilda Walstrom filed a civil complaint against the respondents praying for
the nullification of the Mapas' sales patent and certificates of title issued by the
register of deeds of Benguet Province 11 under Section 38 of Act 496 or the Land
Registration Act.
The pertinent portions of Section 38 of said Act are quoted as follows:
SEC. 38. Decree of registration and remedies after entry of decree.

If the court after hearing finds that the applicant or adverse claimant has title as
stated in his application or adverse claim and proper for registration, a decree of
confirmation and 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 of 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 by fraud to file in the competent Court of First Instance a petition for
review within one year after entry of the decree provided no innocent purchaser for
value has acquired an interest....
It is the teaching of the foregoing provisions that a decree of registration may be
reopened or reviewed by the proper Regional Trial Court upon the concurrence of
five essential requisites, to wit: (a) that the petitioner has a real and a dominical
right; (b) that he has been deprived thereof;(c) through fraud; (d) that the petition is
filed within one year from the issuance of the decree; and (e) that the property has
not as yet been transferred to an innocent purchaser for value. 12
An examination of the records of the case shows non-concurrence of the essential
elements enumerated above.
The first element is patently not present because the petitioner can not allege that
she has already a real and dominical right to the piece of property in controversy.
The latest order of the DANR Secretary, dated June 13,1968, was to give full force
and effect to the regional land officer's decision, dated August 12, 1964. 13 The
regional land officer held that the petitioner's Free Patent Application No. 3-74 shall
exclude the disputed portion "A" of Lot No. 1, which, instead, shall be included in
the Mapas' Miscellaneous Sales Application.
The second element is also absent since corollary to the aforecited ruling of the
DANR Secretary, the petitioner can not aver that she was deprived of property
because she did not have a real right over portion "A".
Apropos the third element, the records are bereft of any indication that there was
fraud in the issuance of the certificates of title. As matters stand, the prerequisites
have not been complied with. The petitioner's recourse to Section 38 would not
have prospered; accordingly, the respondent court's dismissal of petitioner's
complaint was proper.

We also find that the lower court was correct in holding that the case does not fall
under any of the exceptions to the rule on exhaustion of administrative remedies.
The petitioner herself admits that her petition for relief is still pending resolution by
the Secretary of Agriculture and Natural Resources who may reconsider his action
on the matter in dispute. The petitioner's failure to exhaust administrative remedies
is a flaw which to our mind is fatal to a court review at this time. 14
Instead of invoking Section 38, the petitioner should have pressed for the speedy
resolution of her petition with the DANR. The petitioner avers that since the oneyear prescriptive period for seeking judicial relief provided for in Sec. 38 of the Land
Registration Act was about to lapse, she was compelled to file the action to nullify
said patent. 15 The petitioner's submission is not correct. Her fear of the futility, or
even only inefficacy, of exhausting the administrative remedies granted her by law
is clearly unfounded.
We have ruled before in Amerol vs. Bagumbaran 16 that notwithstanding the
irrevocability of the Torrens title already issued in the name of another person, he
can still be compelled under the law to reconvey the subject property to the rightful
owner. The property registered is deemed to be held in trust for the real owner by
the person in whose name it is registered. After all, the Torrens system was not
designed to shield and protect one who had committed fraud or misrepresentation
and thus holds title in bad faith. 17
In an action for reconveyance, the decree of registration is respected as
incontrovertible. What is sought instead is the transfer of the property, in this case
the title thereof, which has been wrongfully or erroneously registered in another
person's name, to its rightful and legal owner, or to one with a better right. This is
what reconveyance is all about. 18
Yet, the right to seek reconveyance based on an implied or constructive trust is not
absolute nor is it imprescriptible. An action for reconveyance based on an implied or
constructive trust must perforce prescribe in ten years from the issuance of the
Torrens title over the property. 19
We find no reversible error in the challenged order of the trial court.
WHEREFORE, the petition is DENIED. No costs.
SO ORDERED.

e. On Fraud
G.R. No. L-22822

August 30, 1968

GREGORIA PALANCA, petitioner-appellant,

vs.
THE AMERICAN FOOD MANUFACTURING COMPANY and TIBURCIO EVALLE, in
his capacity as Director of Patents, respondents-appellees.
Lopez De Joya, Dimaguila and Hermoso for petitioner-appellant.
Domingo F. de Guzman for respondent-appellee American Food Manufacturing
Company.
Office of the Solicitor General for respondent-appellee Director of Patents.
ZALDIVAR, J.:
On May 14, 1958, petitioner-appellant Gregoria Palanca filed with the Philippine
Patent Office, Department of Commerce and Industry, an application to register the
trademark, "LION and the representation of a lion's head," alleging that she had
been using the trademark since January 5, 1958 on bechin (food seasoning). The
application was opposed by herein respondent-appelee. The American Food
Manufacturing Company, on the ground that petitioner's trademark was similar to
its (respondent's) trademark "LION and representation of a lion" previously adopted
and used by it on the same type of product since August 3, 1953.
After hearing, the Director of Patents, on June 14, 1961, rendered a decision, the
pertinent portion of which reads as follows:
The record of the case consisting of respondent-appellant's1 application, the
testimonies on behalf of the parties with accompanying exhibits and the opposer's2
memorandum have been given careful consideration. There is no memorandum for
respondent-applicant. "There can be no question but that the trademarks and the
goods of the parties are similar. Accordingly the only issue presented is that of
priority of use.
Opposer's record establishes that it has at least since 1957, prior to January 5,
1968, the earliest date of use asserted by respondent-applicant, continuously used
LION and representation thereof, as a trademark for bechin (food seasoning). The
opposer is therefore the prior user while the respondent-applicant is the later user
of substantially the same trademark.
IN VIEW OF THE ABOVE CONSIDERATIONS, the opposition is hereby sustained and
application Serial No. 6321 of Gregoria Palanca is rejected.
The record shows the petitioner's counsel was furnished with copy of the decision
on June 16, 1961.3 No appeal was taken from the decision of the Director of Patents
within the reglementary period from June 16, 1961.

On December 14, 1961, however, herein petitioner-appellant filed with the Patent
Office a petition to set aside the aforementioned judgment of June 14, 1961,
invoking section 2 of Rule 38 of the Rules of Court, alleging fraud and/or negligence
committed by her former counsel, Atty. Bienvenido Medel, in that the latter failed to
file a memorandum before the case was submitted for decision; that she had been
fraudulently kept in total ignorance of the proceedings in the case; that her counsel
had not informed her of the decision thus preventing her from resorting to all the
legal remedies available to her; that she came to known of the decision only about
the latter part of October, 1961, through her friend, Mr. Domingo Adevoso; that she
had evidence to disprove the claim of opposer The American Food Manufacturing
Company that it had been using the same trademark even before 1958; and that
she had evidence to show that the bechin that the opposer sold prior to 1958 were
not of the "Lion" brand but of the "Lion-Tiger" brand, another trademark of opposer.
In its answer to the petition to set aside the judgment, the opposer, herein
respondent-appellee be American Food Manufacturing Company, denied the
allegations of the petition and put up special and affirmative defenses, to wit: that
the petition was filed out of time; that the evidence proposed to be presented was
not new but was already existing and available at the time of the hearing of the
case; and that the decision was not rendered through fraud, accident, mistake, or
excusable negligence, as is contemplated in Section 2 of Rule 38 of the Rules of
Court.
The petition to set aside the judgment was set for hearing, wherein petitionerappellant and a witness, Ricardo Monfero, testified. Witness Monfero testified that
he was the owner of a grocery store in San Pablo City, that the receipts issued to
him by the American Food Manufacturing Company on October 16, 1957 showing
that Lion blue bechin had been sold to his store really referred to Lion-Tiger brand
bechin After this hearing, herein respondent-appellee Director of Patents issued
resolution No. 20, dated October 14, 1963, denying the petition to set aside
judgment, pertinent portions of which resolution reads:
Therefore, from the facts established, no extrinsic or collateral fraud would warrant
the setting aside of the judgment herein already rendered.
This office has also carefully considered the possible value of the evidence
purportedly showing that the Opposer falsified its receipt to be proven through the
testimony of Ricardo Monfero. His testimony is of course, immaterial to the issue
because what should have been proven was the alleged fraud but, inasmuch as the
purpose for his presentation as witness and the nature of his testimony has been
revealed, this Office might as well rule now that such character of evidence can not
be considered as a new evidence which would alter the result of the proceedings.

Her motion for reconsideration of the resolution denying the petition to set aside
judgment having been denied, petitioner-appellant filed a notice of appeal "from the
decision of the Director of Patents to the Supreme Court on the ground that said
decision is not supported by the evidence presented and is contrary to law."
In her brief, petitioner-appellant contends that respondent Director of Patents
committed the following errors:1wph1.t
1. In denying the petition to set aside judgment and resolving that there was no
fraud perpetrated against petitioner-appellant, as contemplated under section 2 of
Rule 38 of the Rules of Court; .
2. In holding that a client is bound even by fraudulent and deliberate lapses of his
counsel;.
3. In holding that the testimony of the petitioner-appellant's witness, Ricardo
Monfero, is immaterial and that it cannot be considered as a newly discovered
evidence which would alter the result of the proceedings;
4. In holding that the prior user of the trademark in question is the respondentappellee, The American Food Manufacturing Company;
5. In giving more credence to the invoices of the respondent company than on the
testimony of the respondent company's customers denying the genuineness and
the truth of the facts contained in said invoices;
6. In not considering the failure of the respondent company to register the
trademark in question earlier than 1958 as negating its claim of its prior use as
early as 1953; and.
7. In rejecting the application for registration of trademark Lion and Representation
in the vetsin food products of petitioner-appellant and in sustaining the opposition
of the respondent company.
We have noted, upon a reading of herein appellant's notice of appeal and appeal
brief, that she does not only question the correctness of the resolution of appellee
Director of Patents denying the petition to set aside the decision of June 14, 1961
but at the same time prays for the reversal of the said decision. We believe that in
this appeal the most that appellant can ask this Court is to pass upon the
correctness of the resolution denying the petition to set aside the decision.
The record shows that the decision proper, which was rendered on June 14, 1961,
had already become final, because counsel for the appellant had been furnished
with copy of said decision on June 16, 1961 and no appeal had been taken from said

decision within the reglementary period. Appellant admits that she had lost
completely her right to appeal from the decision.4 It is a settled rule that notice of
any decision or order of a court to counsel is also notice to the client.5 Appellant
claims that she became aware of the decision only during the last week of October,
1961.6 Indeed she took the proper step when on December 14, 1961 she filed a
petition to set aside the decision upon the alleged ground of fraud pursuant to
Section 2 of Rule 38 of the Rules of Court. That petition to set aside the decision,
however, was denied by the respondent-appellee Director of Patents on October 14,
1963. It is only from this order denying the petition to set aside the decision that
herein appellant can now appeal to this Court, and not from the decision proper
which was rendered on June 14, 1961. We are, therefore, concerned only in
determining whether the respondent-appellee Director of Patents had correctly
denied the petition to set aside the decision of June 14, 1961. In this connection, we
shall dwell only on the first three errors that have been assigned by the petitionerappellant.
Petitioner-appellant, in support of the first three assigned errors which she
discussed jointly, argues that the acts committed by her former counsel, Atty.
Bienvenido Medel, constitute fraud that would warrant the setting aside of the
decision denying her application to register the controverted trademark. These acts,
allegedly, are: his having kept her ignorant of the proceedings of the case; his
having failed to file a memorandum after the hearing of the evidence before the
Patent Office; his having failed to notify her of the adverse decision after receiving
notice of it, of which decision she came to know only after five months from the
time it was rendered; his having intentionally kept himself entirely out of her reach,
thereby causing her to lose the right to appeal in due time and preventing her from
informing counsel of the newly discovered evidence which might have changed the
decision had it been timely presented. Petitioner-appellant also claims that the acts
of her counsel also prevented her from presenting all her case before the Patent
Office and deprived her of other available legal remedies. She claims, furthermore,
that the acts and/or behavior of her counsel cannot be considered honest mistakes,
but are fraudulent and deliberate lapses or omissions on his part, which cannot bind
her as a client. She also claims that the Director of Patents erred in finding that the
testimony of Ricardo Monfero during the hearing on the petition to set aside the
decision was immaterial, because this witness precisely testified that the invoices
relied upon by the Director of Patents in finding that respondent The American Food
Manufacturing Company had been using the trademark at least since 1957 referred
to the trademark "Lion-Tiger" of said respondent and not to the trademark in
question, and so this testimony had directly refuted the basis of the findings of facts
of the respondent Director.
Respondent-appellee Director of Patents, on the other hand, contends that the basic
issue in the petition to set aside the decision of June 14, 1961 is whether there was
fraud, as contemplated in section 2 of Rule 38 of the Rules of Court, to justify the

setting aside of the decision. This respondent-appellee maintains that the acts or
omissions of her counsel, cited by petitioner-appellant as constituting fraud, had not
prevented her from presenting fully her case, such that it could not be said that
there had never been a real contest before the Patent Office regarding the subject
matter of the suit. He further maintains that the acts of petitioner-appellant's
counsel complained of, including the failure to file the memorandum, refer to
procedural matters, and were binding on her. Regarding the merit, of the testimony
of Monfero, respondent-appellee Director of Patents contends that there is no use in
discussing the same because fraud as would warrant the setting aside of the
judgment had not been shown.
We uphold the stand of respondent-appellee Director of Patents.
Section 2 of Rule 38 of the Rules of Court provides that a judgment or order entered
against a party through fraud, accident, mistake or excusable negligence may be
set aside upon proper petition to that effect. Not every kind of fraud, however, is
sufficient ground to set aside a judgment. This Court has held that only extrinsic or
collateral, as distinguished from intrinsic, fraud is a ground for annulling a
judgment.7 Extrinsic fraud refers to any fraudulent act of the successful party in a
litigation which is committed outside the trial of a case against the defeated party,
or his agents, attorneys or witnesses, whereby said defeated party is prevented
from presenting fully and fairly his side of the case. On the other hand, intrinsic
fraud refers to acts of a party in a litigation during the trial, such as the use of
forged instruments on perjured testimony, which did not affect the presentation of
the case, but did prevent a fair and just determination of the case.8 The distinctions
are pointed out in the case of United States v. Throckmorton, 98 U.S. 61, 25 L. Ed.
93, the very case cited by petitioner-appellant where the court said:
Where the unsuccessful party had been prevented from exhibiting fully his case, by
fraud or deception practiced on him by his opponent, as by keeping him away from
court, a false promise of a compromise; or where the defendant never had
knowledge of the suit, being kept in ignorance by the acts of the plaintiff; or where
an attorney fraudulently or without authority assumes to represent a party and
connives at his defeat; or where the attorney regularly employed corruptly sells out
his client's interest to the other side - these, and similar cases which show that
there has never been a real contest in the trial or hearing of the case, are reasons
for which a new suit may be sustained to set aside and annul the former judgment
or decree, and open the case for a new and fair hearing.
xxx

xxx

xxx

On the other hand, the doctrine is equally well settled that the court will not set
aside a judgment because it was founded on a fraudulent instrument, or perjured

evidence, or for any matter which was actually presented and considered in the
judgment assailed.
In this connection, this Court, in the case of Varela vs. Villanueva, etc., et al., 95
Phil. 248, 258, said:.
The rule is that an action to annul a judgment, upon the ground of fraud, will not lie
unless the fraud be extrinsic or collateral and the facts upon which it is based have
not been controverted or resolved in the case where the judgment sought to be
annulled was rendered, and that false testimony or perjury is not a ground for
assailing said judgment, unless the fraud refers to jurisdiction (Labayen vs. TalisaySilay Milling Co., 68 Phil. 376); that fraud has been regarded as extrinsic or
collateral, where it has prevented a party from having a trial or from presenting all
of his case to the court (33 Am. Jur. pp. 230-232). The reason for this rule has been
aptly stated in Almeda, et al. vs. Cruz, 47 Off. Gaz., 1179:
'Fraud to be ground for nullity of a judgment must be extrinsic to the litigation. Were
not this the rule there would be no end to litigations, perjury being of such common
occurrence in trials. In fact, under the opposite rule, the losing party could attack
the judgment at any time by attributing imaginary falsehood to his adversary's
proofs. But the settled law is that judicial determination however erroneous of
matters brought within the court's jurisdiction cannot be invalidated in another
proceeding. It is the business of a party to meet and repel his opponent's perjured
evidence.'
The acts complained of by petitioner-appellant, even if assumed to be true and
fraudulent, were all committed by her own counsel, and not by the successful party
or opponent in the case. Hence, petitioner-appellant had not shown extrinsic fraud
that would warrant the setting aside of the decision.
Negligence, mistake or fraud of one's own attorney is not ground for granting a new
trial. (O'Quinn v. Tate, [Tex.] Civ. App. 187 S.W. 2d 241).
xxx

xxx

xxx

Fraud, such as would authorize the setting aside of the verdict at the instance of the
movant, is fraud of respondent or his counsel. She is not at liberty to avail herself of
the misconduct of her own counsel, for the purpose of annulling the verdict
obtained by respondent. (Ketchem v. Ketchem, 11 S.E. 2d 788).
xxx

xxx

xxx

In order to obtain relief on this ground it must appear that the fraud was practiced
or participated in by the judgment creditor, or his agent or attorney. The fraud must

have been practiced upon the opposite party." (Amuran vs. Aquino, 38 Phil. 29;
Velayo vs. Shell Company of the Philippines, Ltd., G.R. No. L-8883, July 14, 1959.).
The record shows that petitioner-appellant had all the opportunity to present fully
her side of the case before the decision was rendered, because she and her
witnesses. Estrellita Concepcion and Adela Palmario, testified in the case. The
decision in question itself states that "The record of the case consisting of
respondent-applicant's application, the testimonies on behalf of the parties with
accompanying exhibits and the opposer's memorandum have been given careful
consideration."9 The failure to submit a memorandum was also the negligence of
her counsel and could not in any manner be attributed to any fraud or deception
practiced by her opponent.
This Court has held that mistakes of counsel as to the competency of witnesses, the
sufficiency and relevancy of evidence, the proper defense, or the burden of proof,
his failure to introduce certain evidence, or to summon witnesses and to argue the
case, are not proper grounds for a new trial, unless the incompetence of counsel be
so great that his client is prejudiced and prevented from fairly presenting his case.
10
Anent appellant's not having been informed of the adverse decision, this Court has
held that:
The failure of counsel to notify her on time of the adverse judgment to enable her to
appeal therefrom does not constitute excusable negligence. Notice sent to counsel
of record is binding upon the client and the neglect or failure of counsel to inform
him of an adverse judgment resulting in the loss of his right to appeal is not a
ground for setting aside a judgment valid and regular on its face. (Duran v.
Pagarigan, L-12573, Jan. 29, 1960).
xxx

xxx

xxx

Relief under Rule 38 will not be granted to a party who seeks relief from the effects
of a judgment on the ground of fraud, where the loss of the remedy is due to his
own fault or negligence or that of his counsel." (Echevarri v. Velasco, 55 Phil. 570.)
The claim of petitioner-appellant that she had evidence, to disprove the claim of
opposer (herein appellee The American Food Manufacturing Company) that it was
the prior user of the trademark in question, and to show that the receipts issued by
opposer purporting to be in connection with the sale of Lion brand bechin were
falsified, is tantamount to saying that her adversary in this case had presented false
evidence consisting of perjured testimonies and falsified documents. But even
assuming that the evidence presented by respondent-appellee The American Food

Manufacturing Company was false, this circumstance would not constitute extrinsic
fraud, but only intrinsic fraud. This Court, in a number of cases, held:
Assuming that there were falsities on the aspect of the case, they make out merely
intrinsic fraud which, as already noted, is not sufficient to annul a judgment. (Varela
vs. Villanueva, etc., et al., supra).
xxx

xxx

xxx

And we have recently ruled that presentation of false testimony or the concealment
of evidentiary facts does not per se constitute extrinsic fraud, the only kind of fraud
sufficient to annul a court decision. (Cortes vs. Brownell, Jr., etc., et al., 97 Phil. 542,
548).
xxx

xxx

xxx

That the testimony upon which a judgment has been based was false or perjured is
no ground to assail said judgment, unless the fraud refers to jurisdiction" (Labayen,
et al. vs. Talisay-Silay Milling Co., 68 Phil. 376, 383, quoting Scotten vs. Rosenblum,
231 Fed., 357; U.S. vs. Chung Shee, 71 Fed. 277; Giffen vs. Christ's Church, 48 Cal.
A. 151; 191 P. 718; Pratt vs. Griffin, 223 Ill., 349; 79 N.E., 102).
xxx

xxx

xxx

As a general rule, extrinsic or collateral fraud would warrant a court of justice to set
aside or annul a judgment, based on fraud (Labayen, et al. v. Talisay-Silay Milling
Co., G.R. No. 45843, June 30, 1939, L.J. Aug. 15, 1939). In seeking the annulment of
the decision of Civil Case No. 833 (CA-G.R. No. 8085-R), the alleged fraud does not
refer to jurisdiction, but to the admission by the trial court in said case, of
supposedly false or forged documents, which is intrinsic in character. (Velasco, et al.
vs. Velasco, G.R. No. L-15129, June 30, 1961).
We find that respondent-appellee Director of Patents correctly ruled that the
testimony of Ricardo Monfero, a witness presented by the petitioner-appellant
during the hearing on the petition to set aside the decision is immaterial to the
issue of whether or not the decision should be set aside. This witness did not testify
on any matter which would establish extrinsic fraud that would warrant the setting
aside of the decision.
As we have adverted to at the early part of this opinion, this appeal must be treated
only as an appeal from the resolution of respondent-appellee Director of Patents,
dated October 14, 1963, denying the petition to set aside the decision rendered on
June 14, 1961. Having found that respondent Director of Patents committed no error
in denying the petition to set aside the decision, we do not consider it necessary to

discuss the other errors assigned by petitioner-appellant because those other errors
are not pertinent to the appeal now before this Court.
WHEREFORE, the instant appeal is dismissed. The resolution of the Director of
Patents, dated October 14, 1963, denying petitioner-appellant's petition to set aside
the decision, dated June 14, 1961, in Inter Partes Case No. 130 before the Philippine
Patent Office, is affirmed. Costs against petitioner-appellant. It is so ordered.
f. Purchaser in Good Faith
ADORACION ROSALES RUFLOE, ALFREDO RUFLOE and RODRIGO RUFLOE,
Petitioners,
- versus LEONARDA BURGOS, ANITA BURGOS, ANGELITO BURGOS, AMY BURGOS,
ELVIRA DELOS REYES and JULIAN C. TUBIG,
Respondents.
G.R. No. 143573
Promulgated:
January 30, 2009
DECISION
LEONARDO-DE CASTRO, J.:

Under consideration is this petition for review under Rule 45 of the Rules of
Court seeking the reversal and setting aside of the Decision[1] dated January 17,
2000 of the Court of Appeals (CA) in CA-G.R. CV. No. 49939, and its Resolution[2]
dated June 9, 2000, denying petitioners motion for reconsideration.
The assailed decision reversed and set aside the February 10, 1995 decision[3] of
the Regional Trial Court (RTC) at Muntinlupa, Metro Manila, Branch 276,[4] in its Civil
Case No. 90-359, an action for Declaration of Nullity of Contract and Cancellation of
Transfer Certificate of Titles and Damages, commenced by the petitioners against
herein respondents.
The factual antecedents are as follows:
Petitioner Adoracion Rufloe is the wife of Angel Rufloe, now deceased, while copetitioners Alfredo and Rodrigo are their children. During the marriage of Adoracion

and Angel, they acquired a 371-square meter parcel of land located at Barangay
Bagbagan, Muntinlupa, and covered by Transfer Certificate of Title (TCT) No. 406851
which is the subject of the present controversy.
Sometime in 1978, respondent Elvira Delos Reyes forged the signatures of
Adoracion and Angel in a Deed of Sale dated September 8, 1978 to make it appear
that the disputed property was sold to her by the spouses Rufloe. On the basis of
the said deed of sale, Delos Reyes succeeded in obtaining a title in her name, TCT
No. S-74933.
Thus, in November 1979, the Rufloes filed a complaint for damages against Delos
Reyes with the RTC of Pasay City alleging that the Deed of Sale was falsified as the
signatures appearing thereon were forged because Angel Rufloe died in 1974, which
was four (4) years before the alleged sale in favor of Delos Reyes. The complaint
was docketed as Civil Case No. M-7690.[5] They also filed a notice of adverse claim
on November 5, 1979.
On December 4, 1984, during the pendency of Civil Case No. M-7690, Delos
Reyes sold the subject property to respondent siblings Anita, Angelina, Angelito and
Amy (Burgos siblings). A new title, TCT No. 135860, was then issued in their names.
On December 12, 1985, the Burgos siblings, in turn, sold the same property to their
aunt, Leonarda Burgos. However, the sale in favor of Leonarda was not registered.
Thus, no title was issued in her name. The subject property remained in the name
of the Burgos siblings who also continued paying the real estate taxes thereon.
On February 6, 1989, the RTC of Pasay City, Branch 108,[6] rendered its
decision in Civil Case No. M-7690 declaring that the Deed of Sale in favor of Delos
Reyes was falsified as the signatures of the spouses Rufloe had been forged. The
trial court ruled that Delos Reyes did not acquire ownership over the subject
property. Said decision had become final and executory.
Such was the state of things when, on February 8, 1990, in the RTC of Muntinlupa,
the Rufloes filed their complaint for Declaration of Nullity of Contract and
Cancellation of Transfer Certificate of Titles against respondents Leonarda and the
Burgos siblings, and Delos Reyes. In their complaint, docketed as Civil Case No. 90359, the Rufloes basically alleged that inasmuch as the Deed of Sale in favor of
Delos Reyes was falsified, no valid title was ever conveyed to the Burgos siblings.[7]
The Burgos siblings executed a simulated deed of sale in favor of Leonarda knowing
fully well that their title was a nullity.
In their common Answer, respondents maintained that they bought the
property in good faith after they were shown a genuine copy of the title of the

disputed property by Delos Reyes. They also insisted that they were innocent
purchasers in good faith and for value.[8]
On February 10, 1995, the trial court rendered a decision declaring that Leonarda
and the Burgos siblings were not innocent purchasers for value and did not have a
better right to the property in question than the true and legal owners, the Rufloes.
The trial court also held that the subsequent conveyance of the disputed property to
Leonarda by the Burgos siblings was simulated to make it appear that Leonarda was
a buyer in good faith. The trial court then directed the Register of Deeds of Makati,
Rizal to reinstate the title of the spouses Rufloe, and to cancel all other titles
subsequent to the said title particularly TCT No. S-74933 issued to Delos Reyes and
TCT No. 135860 issued to the Burgos siblings.[9]
Respondents interposed an appeal to the CA, whereat the appellate recourse
was docketed as CA-G.R. CV. No. 49939.
As stated at the threshold hereof, the CA, in its decision dated January 17, 2000,
reversed and set aside that of the trial court, declaring in the process that
respondents were purchasers in good faith and for value. In so ruling, the CA
explained:
Measured by this yardstick, defendants-appellants [herein respondents] are
purchasers in good faith and for value. Amado Burgos bought the subject property
(for his children Anita, Angelina, Angelito and Amy) free from any lien or
encumbrance or any notice of adverse claim annotated thereto. He was presented
with a clean title already in the name of the seller. If a person purchases a piece of
land on the assurance that the sellers title thereto is valid, he should not run the
risk of being told later that his acquisition was ineffectual after all. If we were to
void a sale of property covered by a clean and unencumbered torrens title, public
confidence in the Torrens System would be eroded and transactions would have to
be attended by complicated and inconclusive investigations and uncertain proof of
ownership. The consequences would be that land conflicts could proliferate and
become more abrasive, if not violent. (Words in bracket ours).[10]
Their motion for reconsideration having been denied by the CA in its equally
challenged resolution of June 9, 2000, petitioners are now with us via the present
recourse, faulting the CA as follows:
A.
THE HONORABLE COURT OF APPEALS DECIDED THIS CASE IN A WAY NOT IN
ACCORD WITH THE APPLICABLE DECISIONS OF THE HONORABLE SUPREME COURT.
B.
THERE ARE SPECIAL AND IMPORTANT REASONS THAT REQUIRE A REVIEW OF
THE CA DECISION.

C.
THE HONORABLE CA ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING
TO LACK OF JURISDICTION WHEN IT COUNTERMANDED THE FINDINGS OF THE
REGIONAL TRIAL COURT EVEN ON POINTS AND QUESTIONS OF CREDIBILITY.
D.
THE CA JUDGMENT THAT REVERSED THE RTC DECISION IS NOT SUPPORTED BY
THE EVIDENCE ON RECORD AND IS CONTRARY TO ESTABLISHED PRECEDENTS LAID
DOWN BY THE HONORABLE SUPREME COURT.
E.
THE CA ERRED IN LAW IN PRACTICALLY HOLDING THAT A DEAD MAN ANGEL
RUFLOE (ANGEL NEVER SIGNED) VALIDLY DISPOSED OF HIS PROPERTY (A HOUSE
AND LOT COVERED BY A TCT THROUGH A FALSIFIED DEED OF SALE) AFTER HIS
DEATH FOUR (4) YEARS BEFORE THE EXECUTION OF THE DEED.
F.
THE CA ERRED IN LAW IN HOLDING ANITA, ANGELINA, AMY AND ANGELITO
BURGOS AND THEIR SUCCESOR-IN-INTEREST (THEIR AUNT) LEONARDA BURGOS ARE
BUYERS IN GOOD FAITH.
G.
THE CA IGNORED THE PLAIN PROVISIONS OF THE CIVIL CODE THAT IN ALL
CONTRACTUAL, PROPERTY OR OTHER RELATIONS, WHEN ONE OF THE PARTIES IS AT
A DISADVANTAGE ON ACCOUNT OF HIS MORAL DEPENDENCE, IGNORANCE,
INDIGENCE, MENTAL WEAKNESS, TENDER AGE OR OTHER HANDICAP, THE COURT
MUST BE VIGILANT FOR HIS PROTECTION.[11]
In a gist, the issues to be resolved are (1) whether the sale of the subject property
by Delos Reyes to the Burgos siblings and the subsequent sale by the siblings to
Leonarda were valid and binding; and (2) whether respondents were innocent
purchasers in good faith and for value despite the forged deed of sale of their
transferor Delos Reyes.
The issues necessitate an inquiry into the facts. While, as a rule, factual issues are
not within the province of this Court, nonetheless, in light of the conflicting factual
findings of the two (2) courts below, an examination of the facts obtaining in this
case is in order.
The Rufloes aver that inasmuch as the Deed of Sale purportedly executed by them
in favor of Delos Reyes was a forgery, she could not pass any valid right or title to
the Burgos siblings and Leonarda. The Rufloes also contend that since the Burgos
siblings and Leonarda acquired the subject property with notice that another person
has a right to or interest in such property, they cannot be considered innocent
purchasers in good faith and for value.
For their part, the Burgos siblings and Leonarda insist that their title is valid and
binding. They maintain that under the Torrens System, a person dealing with
registered land may safely rely on the correctness on the certificate of title without

the need of further inquiry. For this reason, the Court cannot disregard the right of
an innocent third person who relies on the correctness of the certificate of title even
if the sale is void.
We find merit in the petition.
The issue concerning the validity of the deed of sale between the Rufloes and Delos
Reyes had already been resolved with finality in Civil Case No. M-7690 by the RTC of
Pasay City which declared that the signatures of the alleged vendors, Angel and
Adoracion Rufloe, had been forged.[12] It is undisputed that the forged deed of sale
was null and void and conveyed no title. It is a well-settled principle that no one
can give what one does not have, nemo dat quod non habet. One can sell only
what one owns or is authorized to sell, and the buyer can acquire no more right
than what the seller can transfer legally.[13] Due to the forged deed of sale, Delos
Reyes acquired no right over the subject property which she could convey to the
Burgos siblings. All the transactions subsequent to the falsified sale between the
spouses Rufloe and Delos Reyes are likewise void, including the sale made by the
Burgos siblings to their aunt, Leonarda.
We now determine whether respondents Burgos siblings and Leonarda Burgos were
purchasers in good faith. It has been consistently ruled that a forged deed can
legally be the root of a valid title when an innocent purchaser for value intervenes.
[14]
An innocent purchaser for value is one who buys the property of another
without notice that some other person has a right to or interest in it, and who pays a
full and fair price at the time of the purchase or before receiving any notice of
another persons claim.[15] The burden of proving the status of a purchaser in
good faith and for value lies upon one who asserts that status. This onus probandi
cannot be discharged by mere invocation of the ordinary presumption of good faith.
[16]
As a general rule, every person dealing with registered land, as in this case,
may safely rely on the correctness of the certificate of title issued therefor and will
in no way oblige him to go beyond the certificate to determine the condition of the
property. However, this rule admits of an unchallenged exception:
a person dealing with registered land has a right to rely on the Torrens
certificate of title and to dispense with the need of inquiring further except when
the party has actual knowledge of facts and circumstances that would impel a
reasonably cautious man to make such inquiry or when the purchaser has
knowledge of a defect or the lack of title in his vendor or of sufficient facts to induce
a reasonably prudent man to inquire into the status of the title of the property in
litigation. The presence of anything which excites or arouses suspicion should then

prompt the vendee to look beyond the certificate and investigate the title of the
vendor appearing on the face of said certificate. One who falls within the exception
can neither be denominated an innocent purchaser for value nor a purchaser in
good faith and, hence, does not merit the protection of the law.[17]
The circumstances surrounding this case point to the absolute lack of good
faith on the part of respondents. The evidence shows that the Rufloes caused a
notice of adverse claim to be annotated on the title of Delos Reyes as early as
November 5, 1979.[18] The annotation of an adverse claim is a measure designed
to protect the interest of a person over a piece of real property, and serves as a
notice and warning to third parties dealing with said property that someone is
claiming an interest on the same or may have a better right than the registered
owner thereof. Despite the notice of adverse claim, the Burgos siblings still
purchased the property in question.
Too, at the time the Burgos siblings bought the subject property on December
4, 1984, Civil Case No. M-7690,[19] an action for damages, and Criminal Case No.
10914-P,[20] for estafa, filed by the Rufloes against Delos Reyes, were both pending
before the RTC of Pasay City. This circumstance should have alerted the Burgos
siblings as to the validity of Delos Reyes title and her authority and legal right to
sell the property.
Equally significant is the fact that Delos Reyes was not in possession of the
subject property when she sold the same to the Burgos siblings. It was Amado
Burgos who bought the property for his children, the Burgos siblings. Amado was
not personally acquainted with Delos Reyes prior to the sale because he bought the
property through a real estate broker, a certain Jose Anias, and not from Delos
Reyes herself. There was no showing that Amado or any of the Burgos siblings
exerted any effort to personally verify with the Register of Deeds if Delos Reyes
certificate of title was clean and authentic. They merely relied on the title as shown
to them by the real estate broker. An ordinarily prudent man would have inquired
into the authenticity of the certificate of title, the propertys location and its owners.
Although it is a recognized principle that a person dealing with registered land need
not go beyond its certificate of title, it is also a firmly established rule that where
circumstances exist which would put a purchaser on guard and prompt him to
investigate further, such as the presence of occupants/tenants on the property
offered for sale, it is expected that the purchaser would inquire first into the nature
of possession of the occupants, i.e., whether or not the occupants possess the land
in the concept of an owner. Settled is the rule that a buyer of real property that is in
the possession of a person other than the seller must be wary and should
investigate the rights of those in possession. Otherwise, without such inquiry, the
buyer can hardly be regarded as a buyer in good faith.[21]

In the same vein, Leonarda cannot be categorized as a purchaser in good

faith. Since it was the Rufloes who continued to have actual possession of the
property, Leonarda should have investigated the nature of their possession.
We cannot ascribe good faith to those who have not shown any diligence in
protecting their rights. Respondents had knowledge of facts that should have led
them to inquire and investigate in order to acquaint themselves with possible
defects in the title of the seller of the property. However, they failed to do so. Thus,
Leonarda, as well as the Burgos siblings, cannot take cover under the protection the
law accords to purchasers in good faith and for value. They cannot claim valid title
to the property.
Moreover, the defense of indefeasibility of a Torrens title does not extend to a
transferee who takes it with notice of a flaw in the title of his transferor. To be
effective, the inscription in the registry must have been made in good faith. A
holder in bad faith of a certificate of title is not entitled to the protection of the law,
for the law cannot be used as a shield for fraud.[22]
We quote with approval the following findings of the trial court showing that
the sale between the Burgos siblings and Leonarda is simulated:
1. The sale was not registered, a circumstance which is inconceivable in a
legitimate transfer. A true vendee would not brook any delay in registering the sale
in his favor. Not only because registration is the operative act that effects property
covered by the Torrens System, but also because registration and issuance of new
title to the transferee, enable this transferee to assume domiciliary and possessory
rights over the property. These benefits of ownership shall be denied him if the
titles of the property shall remain in the name of vendor. Therefore, it is
inconceivable as contrary to behavioral pattern of a true buyer and the empirical
knowledge of man to assume that a buyer who invested on the property he bought
would be uninvolved and not endeavor to register the property he bought. The
nonchalance of Leonarda amply demonstrates the pretended sale to her, and the
evident scheme of her brother Amado who invested on the property he bought.
2. Despite the sale of property to Leonarda, the sellers continued paying taxes on
the property from the time they acquired it from Elvira in 1984 up to the present or
a period of ten years. The tax payment receipts remained in the name of Anita and
her siblings, (Exhibits 16 to 16-H). On the other hand, Leonarda does not even
pretend to have paid any tax on the land she allegedly bought in 1985. Even the
Tax Declaration issued in 1988, three years after the sale to her (Leonarda) is still in
the name of her nieces and nephew. These circumstances can only account for the
fact that her nieces and nephew remained the owners of the land and continued
paying taxes thereon.

3. Leonarda never exercised the attributes of ownership. Far from it, she vested
the exercise of domiciliary and possessory rights in her brother Amado the father of
Anita, Angelina, Angelito and Amy, by constituting him with full power including the
ejectment of plaintiffs, to defend and to enter a compromise of any case he may
file. She allowed the children of Amado to remain as the registered owners of the
property without pressing for its transfer to her.
4. And, this simulated sale is the handiwork of Amado who apparently acted
advisedly to make it appear that his sister Leonarda as the second transferee of the
property is an innocent purchaser for value. Since he or his children could not
plausibly assume the stance of a buyer in good faith from the forger Elvira Delos
Reyes, knowing of Elviras defective title, Amado hoped that the entry of his sister
Leonarda, might conjure the image and who might pass off as an innocent
purchaser, specially considering that the notice of adverse claim of the Plaintiffs
which was annotated in Elviras title was not, strangely enough, NOT carried over in
the title of his children, who were made to appear as the sellers to their Aunt
Leonarda. It was a neat chicanery of Amado to bring the property out of the reach
of Plaintiffs thru a series of transfers involving a third party, to make her appear as
an innocent purchaser for value. His sister could be manipulated to evict or oust
the real owners from their own property thru a documentary manipulation.
Unfortunately, his scheme has not passed unnoticed by a discerning and impartial
evaluator, like this court. The Municipal Court of Muntinlupa in Civil Case No. 17446
has even established that Amados children Anita and others are buyers in bad faith
who knew of the defective title of their transferor Elvira Delos Reyes, the forger, as
aforestated.
These circumstances taken altogether would show that the sale, which occurred
between Leonarda and the Burgos siblings, was simply a scheme designed to
cleanse the title passed on to them by the forger Delos Reyes. Respondents had to
resort to this strategy because they were fully aware that their title, having
originated from the forged deed of sale of Delos Reyes, was not a clean and valid
title. The trial court explained, thus:
And, this simulated sale is the handiwork of Amado who apparently acted
advisedly to make it appear that his sister Leonarda as the second transferee of the
property is an innocent purchaser for value. Since he or his children could not
plausibly assume the stamp of a buyer in good faith from the forger Elvira Delos
Reyes, knowing Elviras defective title, Amado had hoped that the entry of his sister
Leonarda, might conjure the image and might pass off as an innocent purchaser.
xxx. It was a neat chicanery of Amado to bring the property out of the reach of
plaintiffs [herein petitioners] thru a series of transfers involving a third party, to
make her appear as an innocent purchaser for value. Unfortunately, his scheme has
not passed unnoticed by a discerning and impartial evaluator, like this Court.[23]
(Words in bracket ours)

Patently, the Burgos siblings were not innocent purchasers for value and the
simulated sale to Leonarda did not remove the defect in their title.

Accordingly, we sustain the trial courts award of P20,000.00 as moral damages,

P50,000.00 as exemplary damages, and P50,000.00 as attorneys fees.[24]
However, the actual damages in the amount of P134,200.00 should be deleted. In
view of this Courts ruling that the property rightfully belongs to petitioners and
must be restored to them, there is no more basis for the award of said actual
damages to the Rufloes.

WHEREFORE, the petition for review is hereby GRANTED. The assailed

decision and resolution of the Court of Appeals in CA-G.R. CV. No. 49939 are
REVERSED and SET ASIDE. Accordingly, the decision of the trial court is hereby
REVIVED, except the award of actual damages which must be deleted.
SO ORDERED.
SPS. ERNESTO V. YU AND
ELSIE ONG YU
Petitioners,
- versus BALTAZAR N. PACLEB
(Substituted by ANTONIETA S.
PACLEB, LORNA PACLEBGUERRERO, FLORENCIO C.
PACLEB, and MYRLA C. PACLEB),
Respondents.

G.R. No. 172172

Promulgated :

February 24, 2009

DECISION
PUNO, C.J.:
Before the Court is a Petition filed under Rule 45 of the Rules of Court
assailing: (i) the Decision[1] dated August 31, 2005 of the Court of Appeals in CAG.R. CV No. 78629 setting aside the Decision[2] dated December 27, 2002 of the
Regional Trial Court in Civil Case No. 1325-96; and (ii) the Resolution[3] dated April
3, 2006 of the Court of Appeals denying reconsideration of the said decision.

The facts are well established.

Respondent Baltazar N. Pacleb and his late first wife, Angelita Chan, are the
registered owners of an 18,000-square meter parcel of land in Barrio Langcaan,
Dasmarias, Cavite, covered by Transfer Certificate of Title (TCT) No. T-118375[4]
(Langcaan Property).
In 1992, the Langcaan Property became the subject of three (3) documents
purporting to transfer its ownership. On February 27, 1992, a Deed of Absolute
Sale[5] was entered into between Spouses Baltazar N. Pacleb and Angelita Chan
and Rebecca Del Rosario. On May 7, 1992, a Deed of Absolute Sale[6] was entered
into between Rebecca Del Rosario and Ruperto L. Javier (Javier). On November 10,
1992, a Contract to Sell[7] was entered into between Javier and petitioner spouses
Ernesto V. Yu and Elsie Ong Yu. In their contract, petitioner spouses Yu agreed to pay
Javier a total consideration of P900,000. Six hundred thousand pesos (P600,000)
(consisting of P200,000 as previous payment and P400,000 to be paid upon
execution of the contract) was acknowledged as received by Javier and P300,000
remained as balance. Javier undertook to deliver possession of the Langcaan
Property and to sign a deed of absolute sale within thirty (30) days from execution
of the contract.
All the aforementioned sales were not registered.
On April 23, 1993, petitioner spouses Yu filed with the Regional Trial Court of
Imus, Cavite, a Complaint[8] for specific performance and damages against Javier,
docketed as Civil Case No. 741-93, to compel the latter to deliver to them ownership
and possession, as well as title to the Langcaan Property. In their Complaint, they
alleged that Javier represented to them that the Langcaan Property was not
tenanted. However, after they already paid P200,000 as initial payment and
entered into an Agreement dated September 11, 1992 for the sale of the Langcaan
Property, they discovered it was tenanted by Ramon C. Pacleb (Ramon).[9]
Petitioner spouses demanded the cancellation of their agreement and the return of
their initial payment. Thereafter, petitioner spouses and Javier verified from Ramon
if he was willing to vacate the property and the latter was agreeable. Javier then
promised to make arrangements with Ramon to vacate the property and to pay the
latter his disturbance compensation. Hence, they proceeded to enter into a
Contract to Sell canceling the Agreement mentioned. However, Javier failed to
comply with his obligations.
Javier did not appear in the proceedings and was declared in default. On
September 8, 1994, the trial court rendered a Decision,[10] the dispositive portion
of which reads:
WHEREFORE, judgment is hereby rendered for the plaintiff and against the
defendant based on the sale of subject parcel of land to the former who is entitled

thereby to the ownership and possession thereof from the said defendant who is
further directed to pay damages of Thirty Thousand Pesos (P30,000.00) including
attorneys fees and expenses incurred by the plaintiff in this case as a consequence.
The defendant is further directed to deliver the certificate of title of the land to the
plaintiff who is entitled to it as transferee and new owner thereof upon payment by
the plaintiff of his balance of the purchase price in the sum of Three Hundred
Thousand Pesos (P300,000.00) with legal interest from date.
SO ORDERED.
The said Decision and its Certificate of Finality[11] were annotated on TCT No.
T-118375 as Entry No. 2676-75[12] and Entry No. 2677-75,[13] respectively.
On March 10, 1995, petitioner spouses and Ramon and the latters wife,
Corazon Bodino, executed a Kusangloob na Pagsasauli ng Lupang Sakahan at
Pagpapahayag ng Pagtalikod sa Karapatan.[14] Under the said agreement,
petitioner spouses paid Ramon the amount of P500,000 in exchange for the waiver
of his tenancy rights over the Langcaan Property.
On October 12, 1995, respondent filed a Complaint[15] for annulment of deed
of sale and other documents arising from it, docketed as Civil Case No. 1199-95. He
alleged that the deed of sale purportedly executed between him and his late first
wife and Rebecca Del Rosario was spurious as their signatures thereon were
forgeries. Respondent moved to have summons served upon Rebecca Del Rosario
by publication since the latters address could not be found. The trial court,
however, denied his motion.[16] Respondent then moved to dismiss the case, and
the trial court granted the motion in its Order[17] dated April 11, 1996, dismissing
the case without prejudice.
Meanwhile, on November 23, 1995, petitioner spouses filed an action for forcible
entry against respondent with the Municipal Trial Court (MTC). They alleged that
they had prior physical possession of the Langcaan Property through their trustee,
Ramon, until the latter was ousted by respondent in September 1995. The MTC
ruled in favor of petitioner spouses, which decision was affirmed by the Regional
Trial Court.[18] However, the Court of Appeals set aside the decisions of the lower
courts and found that it was respondent who had prior physical possession of the
property as shown by his payment of real estate taxes thereon.[19]
On May 29, 1996, respondent filed the instant case for removal of cloud from title
with damages to cancel Entry No. 2676-75 and Entry No. 2677-75, the annotated
Decision in Civil Case No. 741-93 and its Certificate of Finality, from the title of the
Langcaan Property.[20] Respondent alleged that the deed of sale between him and
his late first wife and Rebecca Del Rosario, who is not known to them, could not

have been possibly executed on February 27, 1992, the date appearing thereon. He
alleged that on said date, he was residing in the United States[21] and his late first
wife, Angelita Chan, died twenty (20) years ago.[22]
On May 28, 1997, during the pendency of the instant case before the trial
court, respondent died without having testified on the merits of his case. Hence, he
was substituted by his surviving spouse, Antonieta S. Pacleb, and Lorna PaclebGuerrero, Florencio C. Pacleb and Myrla C. Pacleb representing the children with the
first wife.[23]
On December 27, 2002, the trial court dismissed respondents case and held
that petitioner spouses are purchasers in good faith.[24] The trial court ratiocinated
that the dismissal of respondents complaint for annulment of the successive sales
at his instance sealed the regularity of the purchase[25] by petitioner spouses
and that he in effect admits that the said salewas valid and in order.[26]
Further, the trial court held that the Decision in Civil Case No. 741-93 on petitioner
spouses action for specific performance against Javier is already final and can no
longer be altered. Accordingly, the trial court ordered the cancellation of TCT No. T118375 in the name of respondent and the issuance of a new title in the name of
petitioner spouses. The trial court also ordered the heirs of respondent and all
persons claiming under them to surrender possession of the Langcaan Property to
petitioner spouses.
On appeal by respondent, the Court of Appeals reversed and set aside the
decision of the trial court.[27] The Court of Appeals ruled that petitioner spouses
are not purchasers in good faith and that the Decision in Civil Case No. 741-93 did
not transfer ownership of the Langcaan Property to them. Accordingly, the appellate
court ordered the cancellation of the annotation of the Decision in Civil Case No.
741-93 on the title of the Langcaan Property. The Court of Appeals denied
reconsideration of said decision.[28]
Hence, this Petition.
Two issues are involved in the instant petition. The first is whether petitioner
spouses are innocent purchasers for value and in good faith. The second is whether
ownership over the Langcaan Property was properly vested in petitioner spouses by
virtue of the Decision in Civil Case No. 741-93.
Petitioner spouses argue that they are purchasers in good faith. Further, they
contend that the Court of Appeals erred in finding that: Ramon told him [Ernesto V.
Yu] that the property is owned by his father, Baltazar, and that he is the mere
caretaker thereof[29] since Ramon clarified that his father was the former owner of
the Langcaan Property. In support of their stance, they cite the following testimony
of petitioner Ernesto V. Yu:

Atty. Abalos: Mr. Witness, you testified during the direct that you acquired the
subject property from one Ruperto Javier, when for the first time have you come to
know Mr. Ruperto Javier?
A:
I first came to know him in the year 1992 when he was
accompanied by Mr. Kalagayan. He showed me some papers to the office.
Q:

Do you know the exact date Mr. Witness?

A:

I forgot the exact date, maam.

Q:

More or less can you estimate what month?

A:

Sometime in February or March 1992.

Q:
When you said that the subject property was offered to you for sale,
what did you do Mr. Witness, in preparation for a transaction?
A:
I asked my lawyer Atty. Florencio Paredes to check and verify the
Deed of Sale.
Q:
And after Atty. Florencio Paredes verified the document you decided
to buy the property?
A:

No, maam. We visited the place.

Q:

When was that?

A:
I could not remember the exact date but I visited the place and I met
the son, Ramon Pacleb. I went there in order to verify if the property is existing.
When I verified that the property is existing Mr. Javier visited me again to follow-up
what decision I have but I told him that I will wait for my lawyers advi[c]e.
Q:

Mr. Witness, what particular instruction did you give to your lawyer?

A:

To verify the title and the documents.

Court:

Documents for the title?

A:

Yes, Your Honor.

Atty. Abalos:
registered?

When you were able to get the title in whose name the title was

A:

It was registered in the name of the older Pacleb.

Court:
By the way Mr. Witness, when you said you met Ramon Pacleb the
son of the owner of the property, was he residing there or he was (sic) just went
there? When you visited the property did you find him to be residing in that
property?
A:

No, Your Honor.

Atty. Abalos: You mean to say Mr. Witness, you just met Mr. Ramon Pacleb in the
place at the time you went there?
A:
No, maam. He went to my office with Mr. Kalagayan. He was
introduced to me at the Kelly Hardware. I do not know Mr. Ruperto Javier. He told
me that there is a property that [is] tenanted and occupied by the son Ramon
Pacleb after that I went with them to visit the place. On (sic) there he introduced
me [to] Mr. Ramon Pacleb the caretaker of the property and I told them that I will
still look at the property and he gave me some documents and that (sic) documents
I gave it to my lawyer for verification.
Q:
You said that Mr. Ruperto Javier went to your office with Mr.
Kalagayan, so the first time you visited the property you did not see Mr. Ramon
Pacleb there?
A:
No, maam. When I went there I met Ramon Pacleb the caretaker
and he was the one who showed the place to us.
Q:
Mr. Witness, since you visited the place you were able to see the
allege[d] caretaker Mr. Ramon Pacleb, did you ask him regarding the property or the
whereabouts of the registered owner, did you ask him?
A:
When Ruperto introduced me to Mr. Ramon Pacleb he told me that
he is the son of the owner and he is the caretaker and his father is in the States. He
showed me the place, I verified and I saw the monuments and I told him I will come
back to check the papers and if it is okay I will bring with me the surveyor.
Q:
Could you estimate Mr. Witness, more or less what was the month
when you were able to talk to Mr. Ramon Pacleb?
A:

I am not sure but it was morning of February.

Q:

So it was in February, Mr. Witness?

A:

I am not sure if February or March.

Q:

But definitely

A:

Before I purchased the property I checked the property.

Q:
But that was definitely after Mr. Ruperto offered to you for sale the
subject property?
xxx
Atty. Abalos: Okay, Mr. Witness, you said that you talked to Mr. Ramon Pacleb and
he told you that his father is the owner of the property?
A:
He told me that property is their former property and it was owned
by them. Now, he is the tenant of the property.[30] (Emphasis ours)

Petitioner spouses conclude that based on their personal inspection of the property
and the representations of the registered tenant thereon, they had no reason to
doubt the validity of the deeds of absolute sale since these were duly notarized.
Consequently, the alleged forgery of Angelita Chans signature is of no moment
since they had no notice of any claim or interest of some other person in the
property despite their diligent inquiry.
We find petitioner spouses contentions without merit.
At the outset, we note that in petitioner Ernesto V. Yus testimony, he stated
that he inspected the Langcaan Property and talked with the tenant, Ramon, before
he purchased the same. However, in his Complaint for specific performance and
damages which he filed against Javier, he alleged that it was only after he had
entered into an Agreement for the sale of the property and his initial payment of
P200,000 that he discovered that the property was indeed being tenanted by
Ramon who lives in the said farm, viz.:
8.
Sometime on September 11, 1992, defendant came again to the Office of
plaintiff reiterating his offer to sell said Lot No. 6853-D, containing an area of 18,000
square meters, at P75.00 per square meters (sic). Defendant manifested to the
plaintiff that if his offer is acceptable to the plaintiff, he binds and obligates himself
to pay the capital gains of previous transactions with the BIR and register subject
Lot No. 6853-D in his name (defendant). On these conditions, plaintiff accepted the
offer and made [the] initial payment of TWO HUNDRED THOUSAND PESOS
(P200,000.00) to defendant by issuance and delivery of plaintiffs personal check.
9.
Sometime on September 11, 1992, plaintiff and defendant signed an
AGREEMENT on the sale of Lot No. 6853-D of the subdivision plan (LRC) Psd-282604,

containing an area of 18,000 square meters, more or less, located at Bo. Langcaan,
Municipality of Dasmarinas, Province of Cavite, at a selling price of P75.00 per
square meter. A xerox copy of this AGREEMENT signed by the parties thereto is
hereto attached and marked as ANNEX D of this complaint.
10.
Thereafter, however, plaintiff and defendant, with their surveyor
discovered that subject Lot No. 6853-D offered for sale to the plaintiff is indeed
being tenanted by one RAMON PACLEB who lives in the said farm.
11.
In view of the foregoing developments, plaintiff informed defendant that
he wanted the Agreement be cancelled and for the defendant to return the sum of
TWO HUNDRED THOUSAND PESOS (P200,000.00).[31] (Emphasis supplied)
This inconsistency casts grave doubt as to whether petitioner spouses personally
inspected the property before purchasing it.
More importantly, however, several facts should have put petitioner spouses on
inquiry as to the alleged rights of their vendor, Javier, over the Langcaan Property.
First, it should be noted that the property remains to be registered in the name of
respondent despite the two (2) Deeds of Absolute Sale[32] purporting to transfer
the Langcaan Property from respondent and his late first wife, Angelita Chan, to
Rebecca Del Rosario then from the latter to Javier. Both deeds were not even
annotated in the title of the Langcaan Property.
Second, a perusal of the two deeds of absolute sale reveals that they were executed
only about two (2) months apart and that they contain identical provisions.
Third, it is undisputed that the Langcaan Property is in the possession of Ramon, the
son of the registered owner. Regardless of the representations given by the latter,
this bare fact alone should have made petitioner spouses suspicious as to the
veracity of the alleged title of their vendor. Moreover, as noted by the Court of
Appeals, petitioner spouses could have easily verified the true status of the
Langcaan Property from Ramons wife, since the latter is their relative, as averred in
paragraph 13 of their Answer in Civil Case No. 1199-95.[33] The case law is well
settled, viz.:
The law protects to a greater degree a purchaser who buys from the registered
owner himself. Corollarily, it requires a higher degree of prudence from one who
buys from a person who is not the registered owner, although the land object of the
transaction is registered. While one who buys from the registered owner does not
need to look behind the certificate of title, one who buys from one who is not the
registered owner is expected to examine not only the certificate of title but all

factual circumstances necessary for him to determine if there are any flaws in the
title of the transferor, or in his capacity to transfer the land.
This Court has consistently applied the stricter rule when it comes to deciding the
issue of good faith of one who buys from one who is not the registered owner, but
who exhibits a certificate of title.[34] (Emphasis supplied)
Finally, as correctly pointed out by the Court of Appeals, the dismissal of Civil Case
No. 1199-95 (the action to annul the successive sales of the property) cannot serve
to validate the sale to petitioner spouses since the dismissal was ordered because
Rebecca Del Rosario and Javier could no longer be found. Indeed, the dismissal was
without prejudice.
Based on the foregoing, therefore, petitioner spouses cannot be considered as
innocent purchasers in good faith.
We now go to the second issue.
Petitioner spouses argue that the decision of the Regional Trial Court in Civil
Case No. 741-93 as to the rightful owner of the Langcaan Property is conclusive and
binding upon respondent even if the latter was not a party thereto since it involved
the question of possession and ownership of real property, and is thus not merely
an action in personam but an action quasi in rem.
In Domagas v. Jensen,[35] we distinguished between actions in personam and
actions quasi in rem.
The settled rule is that the aim and object of an action determine its character.
Whether a proceeding is in rem, or in personam, or quasi in rem for that matter, is
determined by its nature and purpose, and by these only. A proceeding in personam
is a proceeding to enforce personal rights and obligations brought against the
person and is based on the jurisdiction of the person, although it may involve his
right to, or the exercise of ownership of, specific property, or seek to compel him to
control or dispose of it in accordance with the mandate of the court. The purpose of
a proceeding in personam is to impose, through the judgment of a court, some
responsibility or liability directly upon the person of the defendant. Of this character
are suits to compel a defendant to specifically perform some act or actions to fasten
a pecuniary liability on him. An action in personam is said to be one which has for
its object a judgment against the person, as distinguished from a judgment against
the propriety (sic) to determine its state. It has been held that an action in
personam is a proceeding to enforce personal rights or obligations; such action is
brought against the person.
xxx

On the other hand, a proceeding quasi in rem is one brought against persons
seeking to subject the property of such persons to the discharge of the claims
assailed. In an action quasi in rem, an individual is named as defendant and the
purpose of the proceeding is to subject his interests therein to the obligation or loan
burdening the property. Actions quasi in rem deal with the status, ownership or
liability of a particular property but which are intended to operate on these
questions only as between the particular parties to the proceedings and not to
ascertain or cut off the rights or interests of all possible claimants. The judgments
therein are binding only upon the parties who joined in the action.

Civil Case No. 741-93 is an action for specific performance and damages filed
by petitioner spouses against Javier to compel performance of the latters
undertakings under their Contract to Sell. As correctly held by the Court of Appeals,
its object is to compel Javier to accept the full payment of the purchase price, and to
execute a deed of absolute sale over the Langcaan Property in their favor. The
obligations of Javier under the contract to sell attach to him alone, and do not
burden the Langcaan Property.[36]
We have held in an unbroken string of cases that an action for specific performance
is an action in personam.[37] In Cabutihan v. Landcenter Construction and
Development Corporation,[38] we ruled that an action for specific performance
praying for the execution of a deed of sale in connection with an undertaking in a
contract, such as the contract to sell, in this instance, is an action in personam.
Being a judgment in personam, Civil Case No. 741-93 is binding only upon the
parties properly impleaded therein and duly heard or given an opportunity to be
heard.[39] Therefore, it cannot bind respondent since he was not a party therein.
Neither can respondent be considered as privy thereto since his signature and that
of his late first wife, Angelita Chan, were forged in the deed of sale.
All told, we affirm the ruling of the Court of Appeals finding that, as between
respondent and petitioner spouses, respondent has a better right over the Langcaan
Property as the true owner thereof.
IN VIEW WHEREOF, the petition is DENIED. The decision of the Court of Appeals is
affirmed. Costs against petitioners.
SO ORDERED.
Spouses DANILO and
ALBERTA DOMINGO, and
EDUARDO QUITEVES,

G.R. No. 157701

Petitioners,
- versus
GUILLERMO REED,
Respondent.

Promulgated:

December 9, 2005
x -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- x
DECISION
PANGANIBAN, J.:

When dealing with registered land, prospective buyers are normally not required by
law to inquire further than what appears on the face of the Torrens certificate of title
on file with the Register of Deeds. Equally settled is the principle, however, that
purchasers cannot close their eyes to known facts that should put a reasonable
person on guard; they cannot subsequently claim to have acted in good faith, in the
belief that there was no defect in the vendors certificate of title. Their mere refusal
to face up to that possibility will not make them innocent purchasers for value, if it
later becomes apparent that the title was indeed defective, and that they would
have discovered the fact, had they acted with the measure of precaution required of
a prudent person in a like situation.
The Case
Before us is a Petition for Review[1] on Certiorari under Rule 45 of the Rules of
Court, seeking to reverse the August 27, 2002 Decision[2] and the March 20, 2003
Resolution[3] of the Court of Appeals (CA) in CA-GR CV No. 59544. The dispositive
part of the Decision reads as follows:
WHEREFORE, the decision appealed from is REVERSED and SET ASIDE.
The deeds of sale executed by Lolita Reed in favor of [herein
Petitioner-]spouses Danilo Domingo and Alberta Domingo and Eduardo Quiteves
over portions of the subject property covered by TCT No. 58195 registered in the
name of Lolita R. Reed, married to Guillermo Reed, are declared NULL and VOID.
The Register of Deeds of Pasig City is ordered to cancel TCT Nos. 84565 and
84567 issued in the names of [Petitioners] Eduardo Quiteves and spouses Danilo
Domingo and Alberta Domingo, respectively, covering the portions of the subject
property sold to them by Lolita Reed, and to reinstate TCT No. 58195 in the name of

Lolita Reed, married to Guillermo Reed, insofar as the same covers the portions of
the subject property sold to said [petitioners].[4]

The assailed Resolution denied petitioners Motion for Reconsideration.

The Facts
The facts were summarized by the CA as follows:
[Respondent] Guillermo Reed was an overseas contract worker from 1978 to 1986
and came home only for short vacations. He purchased from the Government
Service Insurance System [GSIS] on installment basis a 166 square meter property
located at MRR Road, Mangahan, Pasig. Because he was working abroad, it was his
wife, Lolita Reed, who paid the consideration to the GSIS. On July 9, 1986, TCT No.
58195 covering said property was issued by the Registry of Deeds for the Province
of Rizal, Metro Manila District II in the name of Lolita Reed, married to Guillermo
Reed. Guillermo Reed had allowed his brother, Dominador, and the latters wife,
Luz, to stay in the house constructed on his property.
In December, 1991, Dominador and Luz Reed were summoned to the barangay in
connection with the complaint for ejectment filed against them by Eduardo
Quiteves, who claimed to be the owner of the lot where their house stands.
Dominador and Luz informed Guillermo of the complaint filed against them.
Guillermo accompanied Dominador and Luz to the barangay, where they met
Eduardo Quiteves and Alberta Domingo, who both claimed ownership of the subject
property. Guillermo denied having sold his property.
In view of the claims of Eduardo Quiteves and Alberta Domingo that they bought
the subject property, Guillermo Reed made a verification with the Register of Deeds
of Pasig. Guillermo discovered that his title over the subject property had been
cancelled and he was able to secure copies of the following documents, to wit:
1. Special Power of Attorney, dated July 8, 1986, allegedly executed by him
authorizing his wife, Lolita Reed, to sell the subject property or a portion thereof;
2. Deed of Sale of a Portion of Residential Land, dated July 14, 1986, executed by
Lolita Reed in favor of Danilo Domingo, married to Alberta Q. Domingo covering
41.50 square meter portion of subject property;
3. Absolute Deed of Sale of a Portion of Residential Land, dated July 22, 1987,
executed by Lolita Reed, as vendor and attorney-in-fact of Guillermo Reed, in favor
of Natividad R. Villanera, married to Ardaniel Villanera, covering 41.50 square meter
portion of subject property;

4. Deed of Sale of a Portion of a Residential Land, dated January 10, 1989,

executed by Lolita Reed, for herself and as attorney-in-fact, in favor of Eduardo
Quiteves covering 86 square meter portion of subject property;
5. TCT No. 84565 in the name of Eduardo Quiteves;
6. TCT No. 84566 in the name of spouses Ardaniel and Natividad Villanera; and
7. TCT No. 84567 in the name of spouses Danilo and Alberta Domingo.
On March 8, 1994, Guillermo Reed filed a complaint for reconveyance of property
against Lolita Reed, spouses Ardaniel and Natividad Villanera, spouses Danilo and
Alberta Domingo, Eduardo Quiteves and the Register of Deeds of Pasig, Metro
Manila alleging that his wife, Lolita Reed, from whom he had been estranged,
conspiring with the other [petitioners], except the Register of Deeds of Pasig,
caused the preparation of a special power of attorney, dated July 8, 1986, wherein it
was made to appear that he authorized his wife to sell the subject property; that he
did not sign the special power of attorney nor appear before the notary public
because he was working abroad; that the special power of attorney was not
submitted to the Regional Trial Court [(RTC)] in Pasig City by Notary Public Macario
C. Cruz, as stated in the letter dated April 1, 1993 of Clerk of Court Grace S. Belvis;
and that spouses Villanera and Domingo and Eduardo Quiteves are purchasers in
bad faith because they knew, at the time they transacted with Lolita Reed, that he
was working abroad and estranged from the latter.
An [A]nswer to the complaint was filed by [Petitioners] Eduardo Quiteves and
spouses Danilo and Alberta Domingo alleging that the sale of the subject property
to them by Lolita Reed was valid inasmuch as Guillermo Reed gave his written
consent thereto, as shown in a letter dated July 26, 1986; that in a proceeding
before the [b]arangay [c]hairman, Guillermo Reed admitted that he personally
signed the special power of attorney; that they have the right to rely on the
presumption of regularity of the notarized special power of attorney; and that they
are buyers in good faith and for value.
Per Sheriffs Return, Lolita Reed was not served with summons as she is no longer
residing at the given address while spouses Ardaniel and Natividad Villanera were
served with summons through Mrs. Alberta Domingo.
After trial on the merits, the court a quo rendered judgment, the dispositive portion
of which reads:
WHEREFORE, in view of the foregoing, the Court hereby renders judgment in favor
of x x x Sps. Ardaniel & Natividad Villanera, Sps. Alberto (sic) & Dominga (sic)

Domingo, Eduardo Quiteves and the Register of Deeds of Pasig, Metro Manila, and
against [respondent] Guillermo Reed and orders the DISMISSAL of the present case
for lack of merit.
No pronouncement as to cost.[5]

Ruling of the Court of Appeals

The Court of Appeals reversed the trial court. First, it should be clear that the CA
ruling concerned two transactions entered into by Petitioner-Intervenor Lolita Reed.
The first transaction involved
the sale she executed in favor of Spouses Danilo and Alberta Domingo. To them she
sold a portion of the subject property covered by TCT No. 58195; it measured 41.5
square meters and was located at the southwest section. The second sale was
effected by the same vendor, this time in favor of Eduardo Quiteves; it covered 86
square meters at the northern portion of the same property. Because of these
transactions, the vendees were able to have certificates of titles issued in their
respective names.
A third sale was made in favor of Spouses Ardaniel and Natividad Villanera. The CA
ruled, however, that they had not been validly served any summons. Consequently,
the trial court did not acquire jurisdiction over their persons; hence, its Decision
would not affect their rights.
Second, the CA held that the vendees were not purchasers for value in good faith.
It found that Spouses Danilo and Alberta Domingo had entered into the Contract of
Sale involving conjugal property without actually seeing any Special Power of
Attorney (SPA) authorizing Lolita Reed to convey the property for and on behalf of
the conjugal partnership. Also, the fact that the Deed of Sale executed by them did
not even mention any SPA showing that Respondent Guillermo Reed had consented
to the sale of the conjugal property rendered the transaction questionable.
As for Eduardo Quiteves, he was faulted by the CA for not having inquired into and
investigated the authenticity and validity of the SPA shown to him by Lolita,
evidencing her husbands alleged consent to the sale of their conjugal property.
The appellate court opined that Quiteves should have been put on guard, since the
acknowledgment portion of the document stated that only Lolita had appeared
before the lawyer who had notarized it. Also, considering that it had been issued
two years before the property was offered to Quiteves, he should have taken steps
to verify the validity of the document and to find out the whereabouts of Guillermo,
who had allegedly executed it.

Finally, the CA found that the SPA, from which Lolita had derived her authority to sell
the property, was a forgery. The appellate court gave credence to the consistent
denial of Guillermo that he had signed the document. It did not accept the
Minutes[6] of the barangay meeting, containing his alleged admission that he had
signed the SPA. Furthermore, the CA gave weight to the Certification[7] issued by
the Office of the Clerk of Court of the Regional Trial Court (RTC) of Pasig that the
alleged SPA notarized by Atty. Macario Cruz was not the same document submitted
to that office.
Consequently, the CA declared the Deeds of Sale executed by Lolita in favor of
Spouses Danilo and Alberta Domingo and Eduardo Quiteves null and void. It also
ordered the cancellation of the Transfer Certificates of Titles (TCTs) issued in their
favor; and the reinstatement of TCT No. 58195 in the name of Lolita Reed, married
to Guillermo Reed, insofar as it covered the portions of the property sold to
petitioners.
Hence, this Petition.[8]
The Issues

Petitioners submit the following issues for this Courts resolution:

I.
Whether the case for reconveyance filed by respondent against petitioners
sans the trial courts acquisition of jurisdiction over the person of Lolita Reed, an
indispensable party, can prosper.
II.
Whether entrenched jurisprudence assigns the onus probandi, or burden of
proof, showing forgery to the respondent after having asserted the same in his
complaint.
III. Whether the case of Voluntad vs. Dizon, 313 SCRA 210-211 (26 August 1999),
utilized as basis to find petitioners not purchasers in good faith can apply to the
case at bench.
IV. Whether the case of Veloso vs. Court of Appeals, 260 SCRA 594-595 (21
August 1996) is apt to the case at bench.
V.
Whether the established doctrine, i.e., trial courts are in a better position to
determine questions involving credibility having heard the witnesses and having
observed their deportment and manner of testifying during the trial, was applied by
the Court of Appeals to the case.

VI. Whether the finding, assuming without admitting, that respondents signature
was falsified the right of petitioners, without any evidence as co-conspirators of
Lolita Reed in the forgery and as purchasers in good faith over the subject
properties, can be adversely affected.[9]

For her part, petitioner-intervenor submits the following:

I.
Whether the conveyance of subject property in favor of Petitioners Danilo and
Alberta Domingo and Eduardo Quiteves is valid considering that the same was
executed by Petitioner-intervenor Lolita Reed and the proceeds arising therefrom
were utilized to purchase things necessary for the support of family including
education of petitioner-intervenors and Guillermo Reeds common children
pursuant to Article 161 of the Civil Code in relation to Article 115 of the same Code.
II.
Whether Guillermo Reed can recover the one-half (1/2) share of the conjugal
partnership despite that he had already donated the same to his and Lolita Reeds
common children pursuant to Article 162 of the Civil Code.[10]
The long-winded issues presented by petitioners and petitioner-intervenor can be
reduced to one procedural and three main questions. The three main issues to be
resolved are as follows: 1) whether the Special Power of Attorney is authentic; 2)
whether Lolita Reeds justification for selling the subject property is tenable; and 3)
whether petitioners are buyers in good faith. As to the procedural matter, this Court
will resolve whether jurisdiction over the person of Lolita has been acquired.

This Courts Ruling

The Petition and the Petition-in-Intervention have no merit.

Procedural Issue:
Jurisdiction over the Person

On the procedural question, petitioners contend that, for this case to stand, the RTC
should have first acquired jurisdiction over the person of Lolita Reed -- an allegedly
indispensable party. Petitioners argue that, since she had not been served any
summons, the trial court never acquired jurisdiction over her; consequently, there

can be no final determination of this controversy. Thus, they contend, the case
should have never proceeded in the first place.
This Court need not engage itself in a discussion of whether Lolita is an
indispensable party. Although the RTC may not have acquired jurisdiction over her
because she had not been served any summons, she has already voluntarily
appeared before this Court when she filed a Petition-in-Intervention.[11] Thus,
jurisdiction over her has been acquired, and she is bound by any decision
emanating from this Court.
The Rules of Court provide that the defendants voluntary appearance in the action
shall be equivalent to service of summons.[12] In fact, Lolita never questioned the
Supreme Courts alleged lack of jurisdiction over her. That she recognizes and
accepts it is shown by her voluntary appearance before this Court and her decision
to participate in this appeal. Her actions render the alleged lack of jurisdiction moot
and binds her to the outcome of this case. There should be no more obstacle to the
progress of this case.
We do not see any need to remand this case to the trial court to allow it to receive
evidence on the factual allegations of Lolita. As it stands now, this Court is in a
position to rule on the merits of this case. Primarily, Lolita vouches for the
authenticity of the Special Power of Attorney that she showed to petitioners when
the Deeds of Sale were executed. Significantly, she relies on the same documents
already presented by the other parties during the trial. Based on the arguments
proffered and the evidence on record, this Court can now render a determination of
the SPAs authenticity, which is one of the main issues to be resolved here, as
earlier adverted to.
First Main Issue:
Authenticity of the
Special Power of Attorney

Prior to determining whether petitioners are buyers in good faith, the essential
question to be answered is whether the Special Power of Attorney relied upon by the
parties was indeed authentic. Petitioners maintained before the courts below that it
had not been proven to be a forgery, so it was presumably authentic. The CA,
however, held otherwise. We agree.
Most telling is the admission of Lolita that she merely sent an already typewritten
SPA to her husband, who was then working in the Middle East.[13] She further
admits that when it was brought back by her brother-in-law, it had already been
signed by Guillermo.[14] Thus, it is clear that she never saw him sign it.
Furthermore, she does not have any actual knowledge of whether he even saw the
typewritten document, much less signed it.

It then becomes dubious whether the witnesses affixed their signatures to the SPA
to attest that it had been signed in their presence by the principal and the attorneyin-fact. How could they have attested to the signing, when the principal denied it,
while the attorney-in-fact admitted having merely sent it to the Middle East for the
principals signature?
This fact further explains why Notary Public Macario Cruz, in the acknowledgment
portion of the document, stated that only Lolita Reed had appeared before him. But
Atty. Cruz should have known better. Obviously, since an SPA was being notarized,
there should have been two parties to that document -- the principal and the agent
who was being constituted as attorney-in-fact.
A document should not be notarized unless the persons who are executing it are the
very same ones who are personally appearing before the notary public. The affiants
should be present to attest to the truth of the contents of the document[15] and to
enable the notary to verify the genuineness of their signature.[16] Notaries public
are enjoined from notarizing a fictitious or spurious document. In fact, it is their
duty to demand that the document presented to them for notarization be signed in
their presence.[17] Their function is, among others, to guard against illegal deeds.
Notarization is not an empty, meaningless and routinary act.[18] It converts a
private document into a public instrument, making it admissible in evidence without
the necessity of preliminary proof of its authenticity and due execution.[19]
In not giving credence to the SPA, the Court agrees with the CA, which held thus:
[T]he same [special power of attorney] was not reported by Atty. Macario Cruz as
having been notarized by him. Thus, in a letter dated April 1, 1993 addressed to
Luz Reed, Grace S. Belvis, Clerk of Court, Regional Trial Court, Pasig stated that it
was not the special power of attorney dated July 8, 1986 and recorded as Doc. 326,
Page No. 66, Book No. XV, Series of 1986 in the notarial report of Atty. Macario Cruz
which was submitted by the latter to the court. x x x.[20]

Guillermo Reed has consistently denied having signed the document. Moreover,
together with his witness,[21] he has denied other documents allegedly showing
that he admitted having signed it. Thus, we do not find any cogent reason to
disturb the CAs findings, as follows:
The alleged admission of Guillermo Reed before the Barangay Chairman that he
signed the special power of attorney, as shown in the minutes of the meeting
prepared by Barangay Secretary, does not appear to be credible. Guillermo Reed

has consistently denied having signed the special power of attorney. In fact, he was
not confronted during his cross-examination, of said minutes of the meeting in the
barangay, where he met Eduardo Quiteves and Alberta Domingo for the first time,
despite his insistence that the subject property still belongs to him. Moreover, on
rebuttal, Dominador Reed, whose signature appears in the minutes of the meeting,
testified that he affixed his signature on a small piece of paper to show that he
attended the meeting and there were no entries therein regarding the alleged
admission of Guillermo Reed that he signed the special power of attorney; and that
Guillermo Reed stated in said meeting that his property is not for sale. x x x.[22]

Petitioners insist that an expert witness, such as one from the National Bureau of
Investigation (NBI), should have been presented to show that respondents
signature was forged. But even without expert testimony, the questionable
circumstances surrounding the execution of the SPA already casts serious doubt on
its genuineness. As shown earlier, there is a plethora of factual details that point to
its falsity.

Additionally, the CA noted the date July 8, 1986, on the SPA authorizing Lolita to
sell the property covered by TCT No. 58195, issued by the Registry of Deeds of
Rizal, District II, Metro Manila. As of that date, however, TCT No. 58195 was not yet
in existence, because it was issued only on the following day, July 9, 1986.[23]
All the foregoing circumstances successfully challenge the integrity, genuineness,
and veracity of the questioned document. Petitioners, therefore, cannot take refuge
in the presumption of regularity of public documents, a presumption that has been
clearly rebutted in this case.
Second Main Issue:
Justification for the Sale
of the Conjugal Property
Lolita Reed argues that, even on the assumption that the SPA was indeed a forgery,
she was still justified in effecting a sale without her husbands consent. We are not
persuaded. In addition to the fact that her rights over the property were merely
inchoate prior to the liquidation of the conjugal partnership,[24] there was
absolutely no proof to her allegations that she used the proceeds of the sale to
purchase necessities for the maintenance and support of the family.[25] Having
failed to establish any of these circumstances, she may not unilaterally bind the
conjugal assets.

Additionally, the Civil Code provisions she cited pertain to what the conjugal
partnership is liable for. They do not specifically refer to whether the actual
transactions entered into by either spouse can validly bind the conjugal partnership.
The issues addressed by this Court in this case involve the essential formalities
determining the validity of contracts entered into by either the husband or the wife
for and on behalf of the partnership.
As to the assertions of Lolita regarding an alleged donation by respondent in favor
of their children, this matter is irrelevant to the disputed sales. We need not
belabor the point. Besides, it would mean that she should have sold the subject
property not only in her name, but for and on behalf of her children as co-owners of
the property. To accept her contention is to open a whole gamut of issues that are
not the subject of this appeal.
Third Main Issue:
Buyers in Good Faith
The final question to be resolved is whether petitioners were buyers in good faith.
An innocent purchaser for value is one who buys the property of another without
notice that some other person has a right to or interest in that same property, and
who pays a full and fair price at the time of the purchase or before receiving any
notice of another persons claim.[26]
The honesty of intention that constitutes good faith implies freedom from
knowledge of circumstances that ought to put a prudent person on inquiry. Good
faith consists in the belief of the possessors that the persons from whom they
received the thing are its rightful owners who could convey their title.[27] Good
faith, while always presumed in the absence of proof to the contrary, requires this
well-founded belief.
When dealing with land that is registered and titled, as in this case, buyers are not
required by the law to inquire further than what the Torrens certificate of title
indicates on its face.[28] It is also settled, however, that purchasers cannot close
their eyes to known facts that should put a reasonable person on guard. They
cannot subsequently claim to have acted in good faith in the belief that there was
no defect in the vendors certificate of title.[29] Their mere refusal to face up to
that possibility will not make them innocent purchasers for value, if it later becomes
clear that the title was indeed defective, and that they would have discovered the
fact, had they acted with the measure of precaution required of a prudent person in
a like situation.[30]
Thus, the presence of anything that excites or arouses suspicion should then prompt
the vendee to look beyond the vendors certificate and investigate the title
appearing on the face of that certificate.[31] A vendee who does not do so cannot

be denominated either as an innocent purchaser for value or as a purchaser in good

faith and, hence, does not merit the protection of the law.
The circumstances surrounding this case debunk the presumption of good faith on
the part of petitioners. To begin with, it was clear to them that, at the time of the
sales, Lolita was married to Respondent Guillermo Reed; and that the property in
question was part of their conjugal partnership. As to Spouses Domingo, the CA
found thus:
Alberta Domingo admitted that the subject property belongs to the conjugal
partnership of spouses Guillermo and Lolita Reed; that the Reed spouses were no
longer living together as husband and wife when the property was sold to her and
her husband by Lolita Reed; and that Guillermo Reed was in Saudi Arabia. x x
x.[32]

The Deed of Sale[33] executed between the Domingo spouses and Lolita Reed
clearly stated that what was being sold was her share in the conjugal property.
Despite their knowledge of this fact, the couple did not inquire about her authority
to sell any portion of the property. According to Alberta Domingo, Lolita told her
that the latter had been authorized by Guillermo to sell the property. When they
executed the Deed of Sale, however, Lolita allegedly showed no special power of
attorney. Alberta merely relied on the formers
verbal claim of having been authorized to sell the property, and that the sale would
bind the conjugal partnership.
Neither was there any mention in the Deed of Sale that Lolita had the authority to
sell the property, and that respondent had consented to the sale. In short, there
was no mention of the SPA that she allegedly possessed. Interestingly, the
statement in the Deed that the subject of the sale corresponded to her share in the
conjugal assets is not equivalent to her claim that she was authorized by her
husband to sell them.
Lolitas authority to sell the subject property and to bind respondent was not
questioned by Petitioner Quiteves, although he claimed to be close to respondent,
who was a classmates father. The findings of the CA clearly demonstrate that
factual circumstances present in this case should have made Quiteves inquire about
Lolitas authority to sell the property. The CA negated the claim of good faith, as
follows:
x x x. [H]e [Quiteves] should have noticed in the acknowledgement portion of the
special power of attorney the statement that only Lolita Reed appeared before Atty.
Cruz, who notarized the special power of attorney. Considering that the special
power of attorney is dated July 8, 1986 and it was only two years later that the

subject property was offered to him by Lolita Reed, Eduardo should have taken
steps to verify the whereabouts of Guillermo Reed and inquire as to whether the
special power of attorney was still valid. Had Eduardo made the necessary
verification from the daughter of Guillermo Reed, he could have been informed that
Guillermo Reed was estranged from Lolita Reed, that Guillermo Reed returned home
in 1986 and where the latter was staying. Eduardo could [have then] contacted
Guillermo Reed and inquired from the latter about the authenticity of the special
power of attorney. Likewise, the admission of Atty. Cruz in the acknowledgement
portion of the special power of attorney that only Lolita Reed appeared before him
should have put Eduardo on guard and he should have consulted a lawyer other
than the one who notarized the special power of attorney as to the validity thereof.
x x x.[34]

Indeed, Quiteves should not have closed his eyes to these facts that should have
made him even more vigilant, as any other reasonable person would have been.
Petitioners complain that the CA imposed on them a task too tedious, such as to
pry on whether respondent was estranged from Lolita Reed.[35] They miss the
whole point. What was required of them by the appellate court, which we affirm,
was merely to investigate -- as any prudent vendee should -- the authority of Lolita
to sell the property and to bind the partnership. They had knowledge of facts that
should have led them to inquire and to investigate, in order to acquaint themselves
with possible defects in her title. The law requires them to act with the diligence of
a prudent person; in this case, their only prudent course of action was to investigate
whether respondent had indeed given his consent to the sale and authorized his
wife to sell the property.
Petitioners finally argue that, on the assumption that the Special Power of Attorney
was forged, there was still no proof that the forgery had resulted from a conspiracy
between them and Lolita. Thus, they conclude that the titles issued in their favor
cannot be revoked. We disagree. Petitioners argument would stand if only they
have been found to be innocent purchasers for value.
WHEREFORE, the Petition and the Petition-in-Intervention are hereby DENIED. Costs
against petitioners.
SO ORDERED.

G.R. No. 70623

June 30, 1987

ST. DOMINIC CORPORATION, petitioner,

vs.

THE INTERMEDIATE APPELLATE COURT, HON. RICARDO P. TENSUAN, RTC

BRANCH LXXXIII, QUEZON CITY FRANCISCA B. BUSTAMANTE, FLAVIANO
BUSTAMANTE, CARLOS ROBES, ADALIA FRANCISCO and AURORA
FRANCISCO, respondents.
No. L-48630

June 30, 1987

FLAVIANO BUSTAMANTE and FRANCISCA B. BUSTAMANTE, petitioners,

vs.
HON ULPIANO SARMIENTO, as Presiding Judge of the Court of First
Instance of Rizal, Branch IX, sitting in Quezon City, RODOLFO ESPINELI,
personally and as "Special Sheriff" appointed by respondent Judge
Sarmiento, AURORA B. FRANCISCO, and ST. DOMINIC CORPORATION,
respondents.

GUTIERREZ, JR., J.:

Arising from a common set of facts, these petitions are before us for concurrent
disposition.
G.R. No. 70623 entitled "St. Dominic Corporation v. The Intermediate Appellate
Court. et al." is a petition to review on certiorari the decision of the respondent
appellate court, dated January 31, 1985 in AC-G. R. SP No. 00513 entitled "Francisca
B. Bustamante, et al., v. Hon. Ricardo P. Tensuan, et al.," which set aside the orders
of the then Court of First Instance of Rizal at Quezon City, in Civil Case No. Q-11895,
as well as the resolution dated April 16, 1985 denying the petitioner's motion for
reconsideration.
On the other hand, G.R. No. L-48630, is a petition for certiorari assailing the order of
respondent Judge Ulpiano Sarmiento, dated April 27, 1976, directing the issuance of
a writ of possession against the petitioners covering the same property involved in
G.R. No. 70623.
The facts are not disputed.
On February 27, 1968, Civil Case No. Q-11895 entitled Ricardo Castulo and Juan V.
Ebreo v. Carlos Robes and wife Adalia Francisco and People's Homesite and Housing
Corporation" was filed seeking the cancellation of Transfer Certificate of Title No.
83783 in the name of the spouses Carlos Robes and Adaha Francisco, covering Lot
No. 8, Block 101 of the Malaya Subdivision, People's Homesite and Housing
Corporation (PHHC). The original complaint was superseded by an amended
complaint filed on February 24, 1969.

It appears that sometime in 1961, the PHHC awarded the property in question to
one Cristobal Santiago, Jr., in whose favor a final deed of sale was executed and
Transfer Certificate of Title (TCT) No. 83783 was issued.
Subsequently, the Robes spouses mortgaged the realty to the Manufacturer's Bank
and Trust Company. The mortgage lien was duly annotated on TCT 84387 on
February 9, 1965.
Thereafter, on February 2, 1968, Civil Case No. Q- 1 1895 was filed.
Claiming legal interest in the property, the Bustamante spouses were allowed to
intervene in the case.
On March 25, 1968, a notice of lis pendens was annotated on TCT 84387 at the
instance of the Bustamante spouses.
For failure of the Robes' spouses to pay the mortgage obligation, the Manufacturer's
Bank and Trust Company foreclosed the lot and caused the same to be sold at
public auction on December 14, 1974.
The property was purchased by Aurora Francisco in whose favor a certificate of sale
was issued. The levy on execution was annotated on TCT 84387 on March 16, 1974.
No redemption of said property was effected. Thus, on March 5, 1976, TCT 84387 in
the name of the Robes spouseswas cancelled and in heu thereof, TCT 217192 was
issued to Aurora Francisco on the same date. The notice of lis pendens on the title
of the Robes spouses, however, was not carried over to TCT 217192.
On April 20, 1976, before the sale of the land to St. Dominic, Aurora Francisco
applied for a writ of possession in LRC Case No. 851 (76) before Branch IX of the
then Court of First Instance of Rizal in Quezon City.
On April 27, 1976, said court issued the writ of possession.
The lower court (Branch IX, Court of First Instance of Rizal) having stood firm in the
grant of the writ of possession and having denied the motion to quash the same,
the Bustamante spouses filed with this Court a petition for certiorari, docketed as
G.R. No. L-48630 entitled "Flaviano Bustamante, et al., v. Hon. Sarmiento, etc., et
al.", now before us for resolution.
On September 15, 1976, Aurora Francisco sold the property to petitioner, St.
Dominic Corporation. Consequently, TCT 222337 was issued to petitioner

corporation. As earlier stated, no notice of any lien or encumbrance appears on the

title.
Meanwhile, Civil Case No. Q-11895 proceeded to judgment. The dispositive portion
of the decision reads:
WHEREFORE, all the foregoing premises considered, judgment is hereby rendered
as follows:
(a)
declaring null and void the allocation and sale of PHHC (now NHA) to
defendant Cristobal Santiago, Jr., of Lot 8, Block 101 of subdivision plan Psd-88807,
and cancelling Transfer Certifirate of Title No. 83783 issued therefor in his name;
(b)
declaring null and void and without force and effect the sale of said lot by
Cristobal Santiago, Jr., to spouses Adalia Francisco and Carlos Robes, and cancelling
Transfer Certificate of Title No. 84387 issued therefor in their names;
(c)
directing defendant PHHC (now NHA), to prgcess the application to purchase
said subject lot filed by intervenor Francisco Banzon Bustamante and to execute or
cause to be executed the requisite documents for the award of said lot to her.
The complaint praying that an award of the subject lot be ordered made in Lavor of
plaintiffs Ricardo S. Castulo and Juan V. Ebreo, is hereby dismissed for lack of
showing that they or either of them ever filed the requisite application to purchase
the same. All other counterclaims are hereby dismissed for lack of merit. (Annex
"A". p. 26, Rollo G.R. No. 70623).
When the judgment became final, the Bustamante spouses applied for a writ of
execution.
On June 29, 1982, Presiding Judge Tensuan issued an order granting the application
for a writ of execution with the qualification, however, that "said writ may not be
enforced and/or implemented as against the St. Dominic Corporation."
The Bustamante spouses moved for a reconsideration, arguing that the order of the
court dated June 29, 1982 in effect amended a final and executory judgment in
violation of law. In an order dated November 26, 1982, Judge Tensuan denied the
motion. Whereupon, the Bustamante spouses filed a petition for certiorari and
mandamus docketed as AC-G.R. SP No. 00513, before the Intermediate Appellate
Court. Herein petitioner, St. Dominic Corporation and Aurora Francisco who were not
parties to Civil Case No. Q-11895, were made respondents in the petition
questioning the orders of Judge Tensuan exempting the petitioner corporation from
the enforcement of the trial court's judgment and denying reconsideration thereof.

On January 31, 1985, the Intermediate Appellate Court rendered judgment. The
dispositive portion of the decision reads:
WHEREFORE, the writs of certiorari and mandamus prayed for are granted; the
orders of September 24, 1982 and November 26, 1982 complained of are hereby
set aside; and the respondent Judge is hereby ordered to cause the issuance of a
writ of execution in strict conformity with the dispositive portion of the final and
executory decision in subject Civil Case No. Q-11895. Costs against the private
respondents. (p. 55, Rollo-G.R. No. 70623)
On February 18, 1985, the petitioner filed its motion for reconsideration and on
February 18, 1985, Aurora Francisco followed suit. In a minute resolution dated April
16, 1985, both motions were denied by the respondent appellate court. Thus, the
petition filed by St. Dominic Corporation in G.R. No. 70623.
The appellate court's ruling in AC-G.R. SP No. 00513 is tainted with error.
The trial court's statement exempting from execution one not a party to the case
nor privy to the interests of the parties therein, from the effects of its
pronouncements, cannot be considered an amendment of its final and executory
judgment in Civil Case No. Q- 1 1895.
Justice Lino M. Patajo's dissent in AC-G.R. SP No. 00513 is clear and to the point
elucidating the correct doctrine thus:
I believe that respondent Court cannot be held as having abused its discretion or
exceeded its jurisdiction in issuing the questioned orders. I find no merit in the
contention of petitioners that in so providing in said orders that its decision should
not be enforced or executed against St. Dominic, respondent Court had actually
amended its decision which had already become final. Respondent Court was
merely applying the provision of Rule 39, Section 49(b) which provides that the
decision of the Court in cases other than those provided for in sub-paragraph (a) of
said section (judgment against specific thing, probate of a will, administration of the
estate of a deceased person, or in respect to the personal, political, or legal
condition or status of a particular person or his relationship to another) is conclusive
only between the parties and their successors-ininterest by title subsequent to the
commencement of the action. .... (Annex "H". p. 58, Rollo-70323)
Indeed, a judgment cannot bind persons who are not parties to the action (Vda. de
Sengbengco v. Arellano, 1 SCRA 711; Hanopol v. Pilapil, 7 SCRA 452; and Hollero v.
Court of Appeals, 1 1 SCRA 3 1 0). It is elementary that strangers to a case are not
bound by the judgment rendered by the court (Bien v. Sunga, 117 SCRA 249) and
such judgment is not available as an adjurtication either against or in favor of such
other person. A decision of a court will not operate to divest the rights of a person

who has not and has never been a party to a litigation, either as plaintiff or
defendant (Granados v. Monton, 86 Phil., 42). Verily, execution of a judgment can
only be issued against one who is a party to the action, and not against one who,
not being a party in the case, has not yet had his day in court (City of Bacolod, et
al., v. Hon. Enriquez, et al., 101 Phil., 644; Tayson v. Angeles v. Icasiano, et al., 83
Phil., 921; Manza v. Hon. Vicente Santiago, etc., 96 Phil., 938; and Angara v.
Gorospe, et al., 101 Phil., 79).
It is clear from the records that petitioner St. Dominic Corporation had never been
impleaded as a party to Civil Case No. Q-11895 filed by Ricardo Castulo and Juan V.
Ebreo. The complaint had for its purpose the nullification of the award to Cristobal
Santiago, Jr., and the subsequent sale between Santiago and the spouses Adalia
Francisco and Carlos Robes. Such proceedings neither involved nor affected St.
Dominic Corporation. Judgment therein was directed only against the titles of
Cristobal Santiago, Jr., and the Robes spouses. The trial court could not execute the
same against the petitioner as to deprive it of its property without due process of
law. This is what the trial court made explicit in its order of execution. Its decision
could not reach the petitioner's rights. Yet, the respondent appellate court declined
to pass upon this principal issue in a rather ambiguous ruling.
In its decision the Court of Appeals held:
Decidedly, the present certiorari and mandamus proceedings is not the appropriate
forum for the determination of the legal effect, if any there be, of the aforesaid final
and executory judgment nullifying or declaring the nullity of the sale of subject
property in question by Cristobal Santiago, Jr., to spouses Adalia Francisco and
Carlos Robes and cancelling TCT No. T-83783 in their names, on the alleged
subsequent auction sale to respondent Aurora Francisco and from the latter to St.
Dominic Corporation over the same property involved in said judgment. ...Whether
or not the foreclosure proceedings, auction sale and subsequent transactions had
on subject property during the pendency of the litigation thereover in the court
below are subject to the outcome of said case, need not be passed upon in this
disposition. What We are concerned with here are the assailed orders of the
respondent court. ... (Annex "H", p. 55, Rollo 70623).
The determination of whether or not the foreclosure proceedings, auction sale, and
subsequent transactions had on the subject property, during the pendency of the
litigation are subject to the outcome of said case bears heavily on the issues at
hand. The answer is determinative of whether or not the trial court's order of
execution should affect or be issued against the petitioner.
Anent the effect of the trial court's judgment on the mortgagee bank's rights and on
the foreclosure of the property in question, this Court has held that where a Torrens
title was issued as a result of regular land registration proceedings and was in the

name of the mortgagor when given as a security for a bank loan, the subsequent
declaration of said title as null and void is not a ground for nullifying the mortgage
rights of the bank which had acted in good faith (Philippine National Cooperative
Bank v. Carandang-Villalon, 139 SCRA 570). As a matter of fact, there are instances
when even a fraudulent and forged document of sale may become the root of a
valid title if the certificate had already been transferred from the name of the true
owner to the name indicated by the forger (Duran v. Intermediate Appellate Court,
138 SCRA 489). Here, there is no forgery or fraud involved.
A mortgagee has the right to rely on what appears on the face of the certificate of
title. In the absence of anything to excite suspicion, it is under no obligation to look
beyond the certificate and investigate the title of the mortgagor appearing on the
face of said certificate. There is no showing in the records that the mortgagee bank
was aware of any shadow affecting the title of the mortgaged property when it was
mortgaged. As will be explained later, the intervenors are only prospective
awardees of the disputed lot. They are not the owners. They have no title to the
land.
The main purpose of the Torrens System is to avoid possible conflicts of title to real
estate, and to facilitate transactions relative thereto by giving the public the right to
rely upon the face of a Torrens certificate of title and to dispense with the need of
inquiring further, except when the party concerned had actual knowledge of facts
and circumstances that should impel a reasonably cautious man to make such
further inquiry (Pascua v. Capuyoc, 77 SCRA 78). Thus, where innocent third persons
relying on the correctness of the certificate of title thus issued, acquire rights over
the property, the court cannot disregard such rights (Director of Land v. Abache, et
al., 73 Phil. 606). The lien of the petitioner, an innocent mortgagee for value must
be respected and protected (Blanco v. Esquierdo, 110 Phil., 494).
The title to the property given as security to the Manufacturer's Bank and Trust Co.,
by the spouses Robes was valid, regular, and free from any lien or encumbrance.
The mortgage was executed prior to the institution of Civil Case No. Q-11895, thus
establishing it as a lien superior to whatever claims the plaintiffs therein may have
as a result of the subsequent litigation. An inquiry beyond the face of the
mortgagor's title would certainly have yielded no flaw at that time. This being so,
the adverse claim in Civil Case No. Q-11895 could not affect the rights of the
mortgagee. The fact that the foreclosure of the mortgage and the subsequent
auction sale were effected after the annotation of the adverse claim is of no
moment. The foreclosure sale retroacts to the date of registration of the mortgage
(Bank of the Philippine Islands v. Noblejas, 105 Phil., 418).
A person who takes a mortgage in good faith and for a valuable consideration, the
record showing a clear title in the mortgagor, will be protected against any
equitable titles to the premises or equitable claims on the title, in favor of third

persons, of which he had no notice, actual or constructive. The protection extends

to a purchaser at a Sheriff's sale under proceedings on the mortgage although such
purchaser had notice of the alleged equity (59 CJS, Sec. 233, pp. 303-304).
Any subsequent lien or encumbrance annotated at the back of the certificate of title
cannot in any way prejudice the mortgage previously registered and the lots subject
thereto pass to the purchaser at public auction free from any lien or encumbrance
(Gonzalo Puyat & Sons, Inc., v. Philippine National Bank, 4 SCRA 1257). Otherwise,
the value of the mortgage could be easily destroyed by a subsequent record of an
adverse claim, for no one would purchase at a foreclosure sale if found by the
posterior claim (Bank of the Philippine Island v. Noblejas, supra). Aurora Francisco's
title, as a purchaser at the auction sale of the property in question, cannot be bound
by the adverse claims of the plaintiffs in Civil Case No. Q-11895. This is even more
true with petitioner St. Dominic Corporation which had acquired title from Aurora
Francisco without any notice or flaw.
Upon proper foreclosure of a first mortgage, all liens subordinate to the mortgage
are likewise foreclosed. The foreclosure as well as the sale of the property were
annotated on the title to the property, then still in the name of Adalia Francisco and
Carlos Robes. Such annotation serves as constructive notice to the parties having
any claim or nterest in the property to exercise their right of redemption or to
participate in the foreclosure sale. Certainly, there was an opportunity for the
claimants in Civil Case No. Q-1 1895 to acquire the property at issue. St. Dominic's
rights can no longer be disturbed.
It should also be noted that the intervenors in Civil Case Q-11895 possess no
enforceable lien over the property in question. They are merely prospective
awardees of the realty. The right they assert is purely speculative. No vested rights
exist in their favor. The award of the disputed lot to Cristobal Santiago, Jr. may have
been declared improper. As to who should get the lot, according to law, still lies in
the discretion of the PHHC. No assurance is given that the lot would be awarded to
the claimants-intervenors. The decision in Civil Case Q-11895 may be deemed
correct insofar as it called for a processing of the Bustamante claim but erroneous
when it assumed that after processing, the award would be in the spouses' favor.
However, the PHHC is now estopped by circumstances from making any further
award. As earlier stated, the lower court cannot order the execution of the decision
as against the petitioner and, thereby, cancel St. Dominic's title in favor of a future
unknown person. It cannot disregard the rights already vested in petitioner St.
Dominic. To do so would impair confidence in certificates of titles and orderly
processes of law. Among the guarantees of the Torrens system is that it renders title
indefeasible. Section 31, Presidential Decree 1529, The Land Registration Act,
provides: "The decree of registration shall bind the land and quiet title thereto,
subject only to the exceptions or liens as may be provided by law. It shall be

conclusive upon and against all persons, including the National Government and all
branches thereof whether mentioned by name in the application or notice, the same
being included in the general description "to all of whom it may concern". " This
provision is applicable under the facts of this case.
In its petition in G.R. No. 70623, petitioner St. Dominic "prays most earnestly for
such and any other relief as this Honorable Court, in its far greater wisdom, may
deem just, equitable and proper in the premises, such as the dismissal of the
petition in G.R. No. L-48630."
Petitioners Bustamante in G.R. No. L-48630, assail the grant ex parte by the trial
court of the writ of possession over the property, likewise the subject of G.R. No.
70623, in favor of Aurora Francisco. It is alleged that a court has no jurisdiction,
power, and authority to eject a third person who is not a party to the foreclosure
proceedings or mortgage by a mere writ of possession summarily issued in a
foreclosure suit.
Respondent St. Dominic Corporation moved and was allowed to intervene as
successor-in-interest by purchase to all the rights, title, and interest of respondent
Francisco over the lot in question.
Section 6 of Act No. 3135, as amended by Act 4118, the law that regulates the
methods of affecting extrajudicial foreclosure of mortgage makes applicable
Sections 464 to 466 of the Code of Civil Procedure, now sections 29 to 31 and 35 of
Rule 39 of the Revised Rules which provide: "If no redemption be made within
twelve (12) months after the sale, the purchaser, or his assignee, is entitled to a
conveyance and possession of the property ..., " and "The possession of the
property shall be given to the purchaser or last redemptioner by the officer unless a
third person is actually holding the property adversely to the judgment debtor."
Petitioners capitalize on this last proviso of the law.
On this point, the trial court held, and We quote with approval that:
The Court is aware of the limitation that writ of possession may not issue when the
property is in the possession of a third party who holds the property adverse to the
buyer in the foreclosure sale. But, by their express admission in their motion,
movants are merely 'occupants-applicants' for the purchase of the land from the
defunct PHHC. Under such claim which is, at best inchoate, we cannot refuse to
grant the writ of possession prayed for; to do so, would be to becloud the integrity
of the torrens title, and it would be in derogation of its indefeasibility.
xxx

xxx

xxx

In the instant case, the property involved is covered by a certificate of title. It has
passed through different owners until it was bought by petitioner, Aurora Francisco,
at a public auction sale by reason of the foreclosure of the mortgage in the property
and subsequently sold by said Aurora Francisco to intervenor St. Dominic. And
movants here, would like us to quash the writ of possession we issued, on the
ground that the same was issued upon an ex parte petition is permitted and allowed
by virtue of Act 3135, and on the allegation that movants "have been in possession
of the subject property since 1962 as occupants-applicants for the purchase thereof
from the defendant PHHC ... " (p. 3, Motion to Quash) which, as we said above is a
matter of expectancy (inchoate) and should not be allowed to prevail over the clean
title of the petitioner and/or intervenor herein. (pp. 73-74, Rollo-G.R. No. 48630).
Indeed, the rules contemplate a situation where a third party holds the property by
adverse title or right such as a coowner, tenant or usufructuary. In such cases, a
grant of a writ of possession, would be denial of such third person's rights without
giving them their day in court. Especially, where question of title is involved, the
matter would well be threshed out in a separate action and not in a motion for a
writ of possession. But such is not the state of affairs in the case at bar.
The right of the respondent to the possession of the property is clearly unassailable.
It is founded on the right of ownership. As the purchaser of the properties in the
foreclosure sale, and to which the respective titles thereto have already been
issued, the petitioner's rights over the property has become absolute, vesting upon
it the right of possession of the property which the court must aid in affecting its
delivery. After such delivery, the purchaser becomes the absolute owner of the
property. As we said in Tan Soo Huat u. Ongwico (63 Phil., 746), the deed of
conveyance entitled the purchaser to have and to hold the purchased property. This
means, that the purchaser is entitled to go immediately upon the real property, and
that it is the sheriff's inescapable duty to place him in such possession. (Philippine
National Bank v. Adil, 118 SCRA 110). With more reason that the said writ of
possession should be granted Aurora Francisco or, in her stead, St. Dominic
Corporation in the light of our pronouncements in G.R. No. 70623. Ownership has
been consolidated in St. Dominic's favor. There being no clear title or right
enforceable by the Bustamante spouses, a writ of execution or a writ of possession,
may issue in favor of Aurora Francisco and/or St. Dominic Corporation.
Be it noted that as the trial court had said "the writ of possession issued by us has
been complied with and satisfied," meaning to say that the movants vacated the
property. But in the hearing held in this case, it has been admitted by the parties
that the movants retumed to the land in question and constructed again thereon
their respective uses. This being so, the movants must vacate and remove from the
disputed premises whatever they have built or constructed thereon. The writ of
possession issued and enforced may no longer be quashed.

WHEREFORE, judgment is hereby rendered in G.R. No. 70623, GRANTING the

petition of ST. DOMINIC CORPORATION. The decision of the Intermediate Appellate
Court, now Court of Appeals, dated January 31, 1985 in ACG.R. SP No. 00513 and its
resolution dated April 16, 1985, are REVERSED and SET ASIDE. The writ of execution
issued by the trial court in Civil Case No. Q-11895, with the qualification excluding
the petitioner, is in accord with the facts and the applicable law and is accordingly
sustained as correct. However, the decision of the trial court directing the PHHC
(now NHA) to process the application of Francisco Banzon Bustamante to purchase
the property in question and to execute the requisite documents for the award of
said lot to her having been rendered ineffective by circumstances supervening in
Civil Case No. Q-11895, the writ of execution issued by the court a quo therefore is
hereby declared without force and effect.
G.R. No. L-48630 is DISMISSED for lack of merit.
SO ORDERED.

2. Action for Reconveyance

a. Section 53 and 96
b. Cases:

HEIRS OF MAXIMO LABANON,

G.R. No. 160711
represented by ALICIA LABANON
CAEDO and the PROVINCIAL
ASSESSOR OF COTABATO,
Petitioners,
- versus HEIRS OF CONSTANCIO
LABANON, represented by
ALBERTO MAKILANG,
Respondents.
August 14, 2004
DECISION
VELASCO, JR., J.:
The Case
This Petition for Review on Certiorari under Rule 45 seeks the recall and nullification
of the May 8, 2003 Decision[1] of the Court of Appeals (CA) in CA-G.R. CV No. 65617
entitled Heirs of Constancio Labanon represented by Alberto Makilang v. Heirs of

Maximo Labanon represented by Alicia Labanon Caedo and the Provincial Assessor
of Cotabato, which reversed the August 18, 1999 Decision[2] of the Kidapawan City,
Cotabato Regional Trial Court (RTC), Branch 17, in Civil Case No. 865. Likewise
assailed is the October 13, 2003 Resolution[3] which disregarded petitioners Motion
for Reconsideration.
The Facts
The CA culled the facts this way:
During the lifetime of Constancio Labanon, prior to the outbreak of WWII, he
settled upon a piece of alienable and disposable public agricultural land situated at
Brgy. Lanao, Kidapawan, Cotabato x x x. Constancio cultivated the said lot and
introduced permanent improvements that still exist up to the present. Being of very
limited educational attainment, he found it difficult to file his public land application
over said lot. Constancio then asked his brother, Maximo Labanon who was better
educated to file the corresponding public land application under the express
agreement that they will divide the said lot as soon as it would be feasible for them
to do so. The offer was accepted by Maximo. During the time of the application it
was Constancio who continued to cultivate the said lot in order to comply with the
cultivation requirement set forth under Commonwealth Act 141, as amended, on
Homestead applications. After which, on June 6, 1941, due to industry of
Constancio, Homestead Application No. 244742 (E-128802) of his brother Maximo
was approved with Homestead Patent No. 67512. Eventually, Original Certificate of
Title No. P-14320 was issued by the Register of Deeds of Cotabato over said lot in
favor of Maximo Labanon.
On February 11, 1955, Maximo Labanon executed a document denominated as
Assignment of Rights and Ownership and docketed as Doc. No. 20; Page No. 49;
Book No. V; Series of 1955 of the Notarial Register of Atty. Florentino Kintanar. The
document was executed to safeguard the ownership and interest of his brother
Constancio Labanon. Pertinent portion of which is reproduced as follows:
That I, MAXIMO LABANON, of legal age, married to Anastacia Sagarino, and a
resident of Kidapawan, Cotabato, for and in consideration of the expenses incurred
by my elder brother CONSTANCIO LABANON also of legal age, Filipino, widower and
a resident of Kidapawan, Cotabato, for the clearing, cultivation and improvements
on the eastern portion xxx Lot No. 1, Blk. 22, Pls-59 xxx which expenses have been
incurred by my said brother xxx before the outbreak of the last world war xxx I do
hereby assign transfer and convey my rights to, interests in and ownership on the
said eastern portion of said Lot No. 1, Block 22, Pls-59 ONE HUNDRED (100 M)
ALONG THE NATIONAL HIGHWAY, (DAVAO-COTABATO ROAD) by TWO HUNDRED
FIFTY METERS (250 M) going inside the land to cover an area of TWO AND ONE HALF
HECTARES (25,000 SQ. M.), more or less, adjoining the school site of barrio Lanao,

Kidapawan, Cotabato, to the said CONSTANCIO LABANON, his heirs and assigns, can
freely occupy for his own use and benefit xxx.
IN WITNESS WHEREFOF, I have hereunto set my hand this 11th day of February
1995 at Kidapawan, Cotabato.
(SGD) MAXIMO LABANON
With my marital consent.
(SGD) ANASTACIA SAGARINO
(Wife) (p.16, rollo)
On April 25, 1962, Maximo Labanon executed a sworn statement reiterating his
desire that his elder brother Constancio, his heirs and assigns shall own the eastern
portion of the Lot, pertinent portion of which reads:
That I am the same and identical person who is a homestead applicant (HA224742, E-128802) of a tract of land which is covered by Homestead Patent No.
67512 dated June 6, 1941, known as Lot No. 1, Block 22, Pls-59, situated in [B]arrio
Lanao, Municipality of Kidapawan, Province of Cotabato, Philippines, and containing
an area of 5.0000 hectares, more or less;
That I am the same and identical person who executed a deed of ASSIGNMENT
OF RIGHTS AND OWNERSHIP in favor of my brother Constancio Labanon, now
deceased, now for his heirs, for the eastern half portion of the land above described,
and which deed was duly notarized by notary public Florentino P. Kintanar on
February 11, 1955 at Kidapawan, Cotabato and entered in his Notarial Register as
Doc. No. 20, Page No. 49, Book No. V, Series of 1955; and
That in order that I and the Heirs of Constancio Labanon will exercise our
respective rights and ownership over the aforementioned lot, and to give force and
effect to said deed of assignment, I hereby, by these presents, request the
Honorable Director of Lands and the Land Title Commission to issue a separate title
in my favor covering the western half portion of the aforementioned lot and to the
Heirs of Constancio Labanon a title for the eastern half portion thereof.
IN WITNESS THEREOF, I have hereunto set my hand this 25th day of April, 1962,
at Pikit, Cotabato, Philippines. (p. 9, records)
After the death of Constancio Labanon, his heirs executed an [e]xtra-judicial
settlement of estate with simultaneous sale over the aforesaid eastern portion of
the lot in favor of Alberto Makilang, the husband of Visitacion Labanon, one of the
children of Constancio. Subsequently, the parcel of land was declared for taxation
purposes in the name of Alberto under TD No. 11593. However, in March 1991, the

defendants heirs of Maximo Labanon namely, Alicia L. Caniedo, Leopoldo Labanon,

Roberto Nieto and Pancho Labanon, caused to be cancelled from the records of the
defendant Provincial Assessor of Cotabato the aforesaid TD No. 11593 and the
latter, without first verifying the legality of the basis for said cancellation, did cancel
the same. x x x Further, after discovering that the defendant-heirs of Maximo
Labanon were taking steps to deprive the heirs of Constancio Labanon of their
ownership over the eastern portion of said lot, the latter, thru Alberto Makilang,
demanded the owners copy of the certificate of title covering the aforesaid Lot to
be surrendered to the Register of Deeds of Cotabato so that the ownership of the
heirs of Constancio may be fully effected but the defendants refused and still
continue to refuse to honor the trust agreement entered into by the deceased
brothers. x x x[4]
Thus, on November 12, 1991, petitioners filed a complaint[5] for Specific
Performance, Recovery of Ownership, Attorneys Fees and Damages with Writ of
Preliminary Injunction and Prayer for Temporary Restraining Order against
respondents docketed as Civil Case No. 865 before the Kidapawan City RTC. After
hearing, the trial court rendered its August 18, 1999 Decision, the decretal portion
of which reads:
Wherefore, prescinding from the foregoing facts and considerations the Court
finds and so holds that the [defendant-heirs] of Maximo Labanon represented by
Alicia Labanon Caniedo have proved by preponderance of evidence that they are
entitled to the reliefs set forth in their answer and consequently judgment is hereby
rendered as follows:
1.
Ordering the dismissal of the complaint against the Heirs of Maximo
Labanon represented by Alicia Labanon Caniedo for lack of merit;
2.
Ordering the dismissal of the case against the Provincial Assessor. The
claim of the plaintiff is untenable, because the duties of the Provincial Assessor are
ministerial. Moreover, the presumption of regularity in the performance of his duty
is in his favor;
3.
Ordering the plaintiff to pay the defendants the amount of P20,000.00
as exemplary damages, P10,000.00 for Attorneys Fees, P500.00 per appearance in
Court; and
4.

To pay the costs of this suit.

IT IS SO ORDERED.[6]
Aggrieved, respondents elevated the adverse judgment to the CA which
issued the assailed May 8, 2003 Decision in CA-G.R. CV No. 65617, the fallo of which
states:

WHEREFORE, the appeal is hereby GRANTED for being meritorious. The assailed
decision of the Regional Trial Court is hereby REVERSED and SET ASIDE and a new
one is hereby entered as follows:
1)
Recognizing the lawful possession of the plaintiffs-appellants
eastern portion of the property in dispute;

over the

2)
Declaring the plaintiffs-appellants as owners of the eastern portion of the
property by reason of lawful possession;
3)
Ordering the Provincial Assessor to reinstate TD No. 11593 and declaring TD
No. 243-A null and void;
4)
Ordering the defendants-appellees to pay the plaintiffs-appellants the
amount of P20,000 as moral damages, P10,000 for attorneys fees, P500.00 per
appearance in Court and
5)

To pay the costs of the suit.

SO ORDERED.

The Issues
Surprised by the turn of events, petitioners brought this petition before us
raising the following issues, to wit:
1. Whether or not Original Certificate of Title No. 41320 issued on
April 10,
1975 in the name of MAXIMO LABANON be now
considered indefeasible and
conclusive; and
2. Whether or not the Trust Agreement allegedly made by
Labanon and Maximo Labanon prescribed.[7]

The Courts Ruling

The petition must fail.
First Issue
Respondents are not precluded from challenging the validity of
Original Certificate of Title No. P-41320

Constancio

Petitioners argue that respondents can no longer question Maximo Labanons

ownership of the land after its registration under the principle of indefeasibility of a
Transfer Certificate of Title (TCT).
Such argument is inaccurate.
The principle of indefeasibility of a TCT is embodied in Section 32 of
Presidential Decree No. (PD) 1529, amending the Land Registration Act, which
provides:
Section 32. Review of decree of registration; Innocent purchaser for value. The
decree of registration shall not be reopened or revised by reason of absence,
minority, or other disability of any person adversely affected thereby, nor by any
proceeding in any court for reversing judgments, subject, however, to the right of
any person, including the government and the branches thereof, deprived of land or
of any estate or interest therein by such adjudication or confirmation of title
obtained by actual fraud, to file in the proper Court of First Instance a petition for
reopening and review of the decree of registration not later than one year from and
after the date of the entry of such decree of registration, but in no case shall such
petition be entertained by the court where an innocent purchaser for value has
acquired the land or an interest therein, whose rights may be prejudiced. Whenever
the phrase innocent purchaser for value or an equivalent phrase occurs in this
Decree, it shall be deemed to include an innocent lessee, mortgagee, or other
encumbrancer for value.
Upon the expiration of said period of one year, the decree of registration and the
certificate of title issued shall become incontrovertible. Any person aggrieved by
such decree of registration in any case may pursue his remedy by action for
damages against the applicant or any other persons responsible for the fraud.

Contrary to petitioners interpretation, the aforequoted legal provision does

not totally deprive a party of any remedy to recover the property fraudulently
registered in the name of another. Section 32 of PD 1529 merely precludes the
reopening of the registration proceedings for titles covered by the Torrens System,
but does not foreclose other remedies for the reconveyance of the property to its
rightful owner. As elaborated in Heirs of Clemente Ermac v. Heirs of Vicente Ermac:
While it is true that Section 32 of PD 1529 provides that the decree of registration
becomes incontrovertible after a year, it does not altogether deprive an aggrieved
party of a remedy in law. The acceptability of the Torrens System would be impaired,
if it is utilized to perpetuate fraud against the real owners.[8]

A more succinct explanation is found in Vda. De Recinto v. Inciong, thus:

The mere possession of a certificate of title under the Torrens system does not
necessarily make the possessor a true owner of all the property described therein
for he does not by virtue of said certificate alone become the owner of the land
illegally included. It is evident from the records that the petitioner owns the portion
in question and therefore the area should be conveyed to her. The remedy of the
land owner whose property has been wrongfully or erroneously registered in
another's name is, after one year from the date of the decree, not to set aside the
decree, but, respecting the decree as incontrovertible and no longer open to review,
to bring an ordinary action in the ordinary court of justice for reconveyance or, if the
property has passed into the hands of an innocent purchaser for value, for
damages.[9] (Emphasis supplied.)

Undeniably, respondents are not precluded from recovering the eastern portion of
Original Certificate of Title (OCT) No. P-14320, with an area subject of the
Assignment of Rights and Ownership previously owned by their father, Constancio
Labanon. The action for Recovery of Ownership before the RTC is indeed the
appropriate remedy.

Second Issue
The trust agreement between Maximo Labanon and Constancio Labanon may still
be enforced
Former Vice-President and Senator Arturo Tolentino, a noted civilist, explained the
nature and import of a trust:
Trust is the legal relationship between one person having an equitable
ownership in property and another person owning the legal title to such property,
the equitable ownership of the former entitling him to the performance of certain
duties and the exercise of certain powers by the latter.[10]

This legal relationship can be distinguished from other relationships of a fiduciary

character, such as deposit, guardianship, and agency, in that the trustee has legal
title to the property.[11] In the case at bench, this is exactly the relationship
established between the parties.

Trusts are classified under the Civil Code as either express or implied. Such
classification determines the prescriptive period for enforcing such trust.
Article 1444 of the New Civil Code on express trust provides that [n]o
particular words are required for the creation of an express trust, it being sufficient
that a trust is clearly intended.
Civil law expert Tolentino further elucidated on the express trust, thus:
No particular form of words or conduct is necessary for the manifestation of
intention to create a trust. It is possible to create a trust without using the word
trust or trustee. Conversely, the mere fact that these words are used does not
necessarily indicate an intention to create a trust. The question in each case is
whether the trustor manifested an intention to create the kind of relationship which
to lawyers is known as trust. It is immaterial whether or not he knows that the
relationship which he intends to create is called a trust, and whether or not he
knows the precise characteristics of the relationship which is called a trust.[12]

Correlatively, we ruled in Estate of Edward Miller Grimm v. Estate of Charles Parsons

and Patrick C. Parsons, that:
An express trust is created by the direct and positive acts of the parties, by
some writing or deed or by words evidencing an intention to create a trust; the use
of the word trust is not required or essential to its constitution, it being sufficient
that a trust is clearly intended.[13]

In the instant case, such intention to institute an express trust between Maximo
Labanon as trustee and Constancio Labanon as trustor was contained in not just one
but two written documents, the Assignment of Rights and Ownership as well as
Maximo Labanons April 25, 1962 Sworn Statement. In both documents, Maximo
Labanon recognized Constancio Labanons ownership and possession over the
eastern portion of the property covered by OCT No. P-14320, even as he recognized
himself as the applicant for the Homestead Patent over the land. Thus, Maximo
Labanon maintained the title over the property while acknowledging the true
ownership of Constancio Labanon over the eastern portion of the land. The
existence of an express trust cannot be doubted nor disputed.
On the issue of prescription, we had the opportunity to rule in Bueno v. Reyes that
unrepudiated written express trusts are imprescriptible:
While there are some decisions which hold that an action upon a trust is
imprescriptible, without distinguishing between express and implied trusts, the

better rule, as laid down by this Court in other decisions, is that prescription does
supervene where the trust is merely an implied one. The reason has been expressed
by Justice J.B.L. Reyes in J.M. Tuason and Co., Inc. vs. Magdangal, 4 SCRA 84, 88, as
follows:
Under Section 40 of the old Code of Civil Procedure, all actions for recovery of real
property prescribed in 10 years, excepting only actions based on continuing or
subsisting trusts that were considered by section 38 as imprescriptible. As held in
the case of Diaz v. Gorricho, L-11229, March 29, 1958, however, the continuing or
subsisting trusts contemplated in section 38 of the Code of Civil Procedure referred
only to express unrepudiated trusts, and did not include constructive trusts (that are
imposed by law) where no fiduciary relation exists and the trustee does not
recognize the trust at all.[14]

This principle was amplified in Escay v. Court of Appeals this way: Express trusts
prescribe 10 years from the repudiation of the trust (Manuel Diaz, et al. vs. Carmen
Gorricho et al., 54 0.G. p. 8429, Sec. 40, Code of Civil Procedure).[15]
In the more recent case of Secuya v. De Selma, we again ruled that the prescriptive
period for the enforcement of an express trust of ten (10) years starts upon the
repudiation of the trust by the trustee.[16]
In the case at bar, Maximo Labanon never repudiated the express trust instituted
between him and Constancio Labanon. And after Maximo Labanons death, the trust
could no longer be renounced; thus, respondents right to enforce the trust
agreement can no longer be restricted nor prejudiced by prescription.
It must be noted that the Assignment of Rights and Ownership and Maximo
Labanons Sworn Statement were executed after the Homestead Patent was applied
for and eventually granted with the issuance of Homestead Patent No. 67512 on
June 6, 1942. Evidently, it was the intent of Maximo Labanon to hold the title over
the land in his name while recognizing Constancio Labanons equitable ownership
and actual possession of the eastern portion of the land covered by OCT No. P14320.
In addition, petitioners can no longer question the validity of the positive declaration
of Maximo Labanon in the Assignment of Rights and Ownership in favor of the late
Constancio Labanon, as the agreement was not impugned during the formers
lifetime and the recognition of his brothers rights over the eastern portion of the lot
was further affirmed and confirmed in the subsequent April 25, 1962 Sworn
Statement.

Section 31, Rule 130 of the Rules of Court is the repository of the settled
precept that [w]here one derives title to property from another, the act,
declaration, or omission of the latter, while holding the title, in relation to the
property, is evidence against the former. Thus, petitioners have accepted the
declaration made by their predecessor-in-interest, Maximo Labanon, that the
eastern portion of the land covered by OCT No. P-14320 is owned and possessed by
and rightfully belongs to Constancio Labanon and the latters heirs. Petitioners
cannot now feign ignorance of such acknowledgment by their father, Maximo.
Lastly, the heirs of Maximo Labanon are bound to the stipulations embodied in the
Assignment of Rights and Ownership pursuant to Article 1371 of the Civil Code that
contracts take effect between the parties, assigns, and heirs.
Petitioners as heirs of Maximo cannot disarrow the commitment made by their
father with respect to the subject property since they were merely subrogated to
the rights and obligations of their predecessor-in-interest. They simply stepped into
the shoes of their predecessor and must therefore recognize the rights of the heirs
of Constancio over the eastern portion of the lot. As the old adage goes, the spring
cannot rise higher than its source.
WHEREFORE, the petition is DENIED. The May 8, 2003 CA Decision and October 13,
2003 Resolution in CA-G.R. CV No. 65617 are AFFIRMED with the modifications that
the Kidapawan City, Cotabato RTC, Branch 17 is directed to have OCT No. P-14320
segregated and subdivided by the Land Management Bureau into two (2) lots based
on the terms of the February 11, 1955 Assignment of Rights and Ownership
executed by Maximo Labanon and Constancio Labanon; and after approval of the
subdivision plan, to order the Register of Deeds of Kidapawan City, Cotabato to
cancel OCT No. P-14320 and issue one title each to petitioners and respondents
based on the said subdivision plan.
Costs against petitioners.
SO ORDERED.

G.R. No. 148147

February 16, 2007

JESSIE GASATAYA, Petitioner,

vs.
EDITHA MABASA, Respondent.
DECISION
CORONA, J.:

Before us is an appeal by certiorari under Rule 45 of the 1997 Rules of Civil

Procedure assailing the decision1 of the Court of Appeals (CA) in CA-G.R. CV No.
55055 which, in turn, affirmed the decision of the Regional Trial Court (RTC) of Lanao
del Norte, Branch 7.2
The facts follow.
Respondent Editha Mabasas father, Buenaventura Mabasa, was granted a
homestead patent on Lots 279, 272 and 972 located in Lala, Lanao del Norte.
Buenaventura Mabasa mortgaged these lots to secure a loan from the Development
Bank of the Philippines (DBP). Because of his failure to pay his indebtedness, DBP
foreclosed on the lots and sold them at public auction where it emerged as the
highest bidder. DBP then obtained titles to the lots: Lot 279 under TCT No. T-2247
and consolidated Lots 272 and 972 under TCT No. T-2448.
When Buenaventura Mabasa died, respondents siblings authorized her to negotiate
with DBP for the repurchase of the lots. DBP allowed respondent to reacquire the
foreclosed properties through a deed of conditional sale for P25,875.3
Subsequently, respondent entered into an agreement with petitioners father, Sabas
Gasataya, for the latter to assume payment of her obligation to DBP. They further
agreed that Sabas Gasataya would take possession of the lots for 20 years and
develop them into a fishpond. As consideration thereof, respondent received
P10,000 cash, in addition to the P25,000 that Sabas Gasataya had to pay DBP on
her behalf.
Upon representation by Sabas Gasataya that respondents obligation to DBP had
already been settled, they entered into another agreement denominated as "Deed
of Sale of Fishpond Lands with Right to Repurchase."
Eight years after the execution of the above deed of sale with right to repurchase,
respondent discovered that Sabas Gasataya had stopped paying DBP. As a result,
DBP revoked her right to repurchase the subject lots.1awphi1.net
DBP later on held a public auction of the properties where petitioner participated
and bid the highest price of P27,200. Eventually, he acquired titles to the lots for
which he was issued TCT No. T-11720 in lieu of TCT No. T-2447 (Lot 279) and TCT
No. T-11721 for TCT No. T-2448 (Lots 272 and 972).
Respondent then filed a complaint in the RTC for reconveyance of titles of lands with
damages4 against petitioner and Sabas Gasataya (Gasatayas). She claimed that the
latter deliberately reneged on his commitment to pay DBP to: (1) revoke her right to

repurchase the lots under the deed of conditional sale and (2) subject the properties
to another public auction where petitioner could bid.
Petitioner and his father denied the allegations saying that the deed of conditional
sale assumed by the latter from respondent was rendered ineffective by DBPs
refusal to accept payments thereon.
The trial court ruled in favor of respondent finding that the Gasatayas failed to
controvert her claim that they defrauded her just so petitioner could acquire the lots
at public auction.5 According to the trial court, the Gasatayas failed to prove that
DBP indeed rejected payments from Sabas Gasataya. The trial court ruled:
WHEREFORE, judgment is hereby rendered in favor of the [respondent] and against
[the Gasatayas] ordering [them] to wit:
a. Ordering [petitioner] to reconvey to [respondent] TCT. No.[T-11720] and TCT No.
T-11721, both of the Registry of Deeds for the Province of Lanao del Norte, upon
tender to and receipt by [petitioner] of the amount of P37,200.00 Philippine money;
b. Ordering the Registrar of Deeds for the Province of Lanao del Norte to procure
and cause the transfer and registration of the aforesaid transfer certificates of title
in favor and in the name of herein [respondent] Editha S. Mabasa;
c. Ordering [the Gasatayas] to cede, transfer and reconvey to [respondent] the
physical possession and occupancy of Lot 279, 272 and Lot 972as covered by the
aforesaid certificates of title;
d. Ordering [the Gasatayas] to pay [respondent] the sum of P5,000.00 for attorneys
fees; P5,000.00 as litigation expenses;
e. Ordering [the Gasatayas] to pay costs of this proceeding[s].
SO ORDERED.6
Petitioner and his father appealed to the CA which affirmed the RTCs decision and
dismissed their appeal for lack of merit. The CA declared:
The contention of [respondent] that [the Gasatayas] deliberately chose not to pay
DBP as agreed, in order for them to acquire said properties in a fraudulent and
treacherous manner, was not fully controverted by [them]. [The Gasatayas] failed to
produce evidence to support their defenses.
xxx xxx xxx

Moreover, [the Gasatayas] are in possession of said land[s] by virtue of a Deed of

Sale with a Right to Repurchase and not because the DBP granted it to them[T]o
facilitate their acquisition of the land in question, [they] deliberately defaulted in
the payment of the assumed obligation to the damage and prejudice of
[respondent]. Consequently, the lands in question were subjected to public bidding
wherein [petitioner] participated and eventually won[the Gasatayas] committed a
breach of trust amounting to fraud which would warrant an action for
reconveyance.7
Petitioner alone came to us via this appeal by certiorari seeking the reversal of the
CA decision.
Before us, petitioner contests the CA decision affirming the trial courts order to
reconvey his titles on the disputed lots to respondent who, according to him, is not
the owner thereof.
We affirm the CA.
Reconveyance is available not only to the legal owner of a property but also to the
person with a better right than the person under whose name said property was
erroneously registered.8 While respondent is not the legal owner of the disputed
lots, she has a better right than petitioner to the contested lots on the following
grounds: first, the deed of conditional sale executed by DBP vested on her the right
to repurchase the lots and second, her right to repurchase them would have
subsisted had they (the Gasatayas) not defrauded her.
The trial courts findings, as affirmed by the CA, that petitioner and his father
deceived respondent to acquire the disputed lots bind us. Well-settled is the rule
that factual conclusions of the trial court deserve respect and become irrefutable
especially when affirmed by the CA.9 Absent any evidence that the CA overlooked
salient matters that could justify a reversal of the outcome of this case, we decline
to disturb such factual conclusions.
Petitioner, however, insists that respondent had no right to the disputed lots since
the conditional sale agreement where such right was based had long been cancelled
by DBP. According to petitioner, a void and inexistent deed cannot override his right
as registered owner of the lots.
We disagree.
Petitioner cannot discredit the deed of conditional sale just so he can to keep his
titles to the lots. Petitioner should be reminded that DBP revoked respondents right
to repurchase the lots under said deed because of the deceitful maneuverings that

he and his father employed. If we were to sustain petitioners argument, then we

would, in effect, reward him for his misdeed.
Neither can this Court uphold petitioners contention that his titles are unsullied on
the mere fact that he purchased the properties at public auction. Fraud overthrows
the presumption that the public sale was attended with regularity. The public sale
did not vest petitioner with any valid title to the properties since it was but the
consequence of his and his fathers fraudulent schemes.
The registration of the properties in petitioners name did not obliterate the fact that
fraud preceded and facilitated such registration. Actual or positive fraud proceeds
from an intentional deception practiced by means of misrepresentation of material
facts,10 which in this case was the conscious representation by petitioners father
(Sabas Gasataya) that respondents obligation to DBP had already been settled. It is
fraud to knowingly omit or conceal a fact, upon which benefit is obtained, to the
prejudice of another.11 Consequently, fraud is a ground for reconveyance.12
Moreover, the law only protects an innocent purchaser for value and not one who
has knowledge of and participation in the employment of fraud. An innocent
purchaser for value is one who buys the property of another without notice that
some other person has a right to or interest in that same property, and who pays a
full and fair price at the time of the purchase or before receiving any notice of
another persons claim.13 Obviously, petitioner was not an innocent purchaser for
value.
As a final point, the Court takes significant note of the fact that respondents father
originally acquired the subject lots through homestead grant. Commonwealth Act
141 (Public Land Act) aims to confine and preserve to the homesteader and his kin
the homestead lots. We, therefore, agree with the CAs disquisition that courts
should "lend a stout shoulder to help keep a homestead in the homesteaders
family" for the stern reality cannot be belied that "homesteaders and their families
are generally in the lower stratum of life" and most likely, when they alienate the
homestead, it is "out of dire necessity."14 According to the CA, desperation does not
allow much of a choice, hence homesteaders and their kin should be given every
opportunity to repurchase their homestead.
WHEREFORE, the assailed decision of the Court of Appeals in CA-G.R. CV No. 55055
is hereby AFFIRMED.
Costs against petitioner.
SO ORDERED.
G.R. No. L-26127 June 28, 1974

(Civil Case No. 3621)

VICTOR BENIN, ET AL., plaintiffs-appellees,
vs.
MARIANO SEVERO TUASON y DE LA PAZ, ET AL., defendants. J. M. TUASON
& CO., INC., defendant-appellant.
G.R. No. L-26128 June 28, 1974
(Civil Case No. 3622)
JUAN ALCANTARA, ET AL., plaintiffs-appellees,
vs.
MARIANO SEVERO TUASON y DE LA PAZ, ET AL., defendants. J.M. TUASON
& CO., INC., defendant-appellant.
G.R. No. L-26129 June 28, 1974
(Civil Case No. 3623)
DIEGO PILI, ET AL., plaintiffs-appellees,
vs.
MARIANO SEVERO TUASON y DE LA PAZ, ET AL., defendants. J.M. TUASON
& CO., INC., defendant-appellant.
Jose Palarca Law Offices for plaintiffs-appellees.
Manuel O. Chan & Rodolfo M. Caluag for defendant-appellant.

ZALDIVAR, J.:p
Appeal from the decision, dated January 18, 1965, of the Court of First Instance of
Rizal, the Hon. Judge Eulogio Mencias, presiding in Civil Cases Nos. 3621, 3622, and
3623. 1
On May 19, 1955 three sets of plaintiffs filed three separate complaints containing
substantially the same allegations. 2
In Civil Case No. 3621, the plaintiffs alleged that they were the owners and
possessors of the three parcels of agricultural lands, described in paragraph V of the
complaint, located in the barrio of La Loma (now barrio of San Jose) in the

municipality (now city) of Caloocan, province of Rizal, having an aggregate area of

approximately 278,928 square meters; that they inherited said parcels of land from
their ancestor Sixto Benin, who in turn inherited the same from his father, Eugenio
Benin; that they and their predecessors in interest had possessed these three
parcels of land openly, adversely, and peacefully, cultivated the same and
exclusively enjoyed the fruits harvested therefrom; that Eugenio Benin, plaintiff's
grandfather, had said parcels of land surveyed on March 4 and 6, 1894, that during
the cadastral survey by the Bureau of Lands of the lands in Barrio San Jose in 1933
Sixto Benin and herein plaintiffs claim the ownership over said parcels of land; that
they declared said lands for taxation purposes in 1940 under Tax Declaration No.
2429; that after the outbreak of the last World War, or sometime in 1942 and
subsequently thereafter, evacuees from Manila and other places, after having
secured the permission of the plaintiffs, constructed their houses thereon and paid
monthly rentals to plaintiffs.
In Civil Case No. 3622 the plaintiffs alleged that they were the owners and
possessors of two parcels of agricultural land, described in paragraph V of the
complaint, located in the Barrio of La Loma (now Barrio San Jose) in the municipality
of Caloocan, province of Rizal, having an aggregate area of approximately 148,118
square meters; that these parcels of land were inherited by them from their
deceased father Bonoso Alcantara, who in turn inherited the same from his father,
Juan Alcantara; that plaintiffs Juan Alcantara and Jose Alcantara were the children of
Bonoso Alcantara; that these two brothers inherited the land from their father, and
they and their predecessors in interest had been in open, adverse and continuous
possession of the same, planting therein palay and other agricultural products and
exclusively enjoying said products; that on March 28, 1894 plaintiffs' grandfather,
Juan Alcantara, had said lands surveyed; that during the cadastral survey by the
Bureau of Lands of the lands in Barrio San Jose in 1933 Bonoso Alcantara and the
plaintiffs filed and registered their claims of ownership over said lands; that
plaintiffs had said lands declared for taxation purposes under Tax Declaration No.
2390, of Quezon City; that after the outbreak of the last World War, or sometime in
1942 and subsequently thereafter, evacuees from Manila and other places, after
having secured permission from plaintiffs, settled and constructed their houses on
said lands and plaintiffs collected monthly rentals from them.
In Civil Case No. 3623, plaintiffs alleged that they are the owners and possessors of
a parcel of agricultural land located in the Barrio of La Loma (now San Jose),
municipality of Caloocan, province of Rizal, having an area of approximately 62,481
square meters; that this parcel of land was inherited by plaintiffs from their ancestor
Candido Pili who in turn inherited the same from his parents; that Candido Pili and
his predecessors in interest owned, possessed, occupied and cultivated the said
parcel of land from time immemorial; that upon the death of Candido Pili his
children Luisa Pili, Pascual Pili, Diego Pili and Manuel Pili succeeded to the ownership
and possession and cultivation of said land; that plaintiffs and their predecessors in

interest, as owners and possessors of said land, had openly, adversely and
continuously cultivated the land, planting thereon palay and other agricultural
products and enjoying exclusively the products harvested therefrom; that during his
lifetime, Candido Pili ordered the survey of said land sometime on March 11, 1894,
and when the cadastral survey of said land was conducted by the Bureau of Lands
in 1933 Candido Pili and plaintiffs filed and registered their claim of ownership over
the said parcel of land; that plaintiffs had the land declared for taxation purposes
under Tax Declaration No. 2597, Quezon City, Philippines; that after the outbreak of
the last World War, or sometime in 1942 and subsequently thereafter, evacuees
from Manila and other places, after securing permission from plaintiffs, settled and
constructed their houses in said land and plaintiffs collected monthly rentals from
their lessees or tenants.
The plaintiffs in these three civil cases uniformly alleged, in their respective
complaint, that sometime in the year 1951 while they were enjoying the peaceful
possession of their lands, the defendants, particularly the defendant J.M. Tuason and
Co. Inc., through their agents and representatives, with the aid of armed men, by
force and intimidation, using bulldozers and other demolishing equipment, illegally
entered and started defacing, demolishing and destroying the dwellings and
constructions of plaintiffs' lessees, as well as the improvements consisting of rice
paddies (pilapiles), bamboos and fruit trees, and permanent improvements such as
old roads, old bridges and other permanent landmarks within and outside the lands
in question, disregarding the objections of plaintiffs, and as a result plaintiffs were
deprived of the rentals received from their lessees; that plaintiffs made inquiries
regarding the probable claim of defendants, and in 1953 they discovered for the
first time that their lands, as described in their respective complaint, had either
been fraudulently or erroneously included, by direct or constructive fraud, in what
appears as Parcel No. 1 (known as Santa Mesa Estate) in Original Certificate of Title
No. 735 of the Land Records of the province of Rizal in the names of the original
applicants for registration, now defendants, Mariano Severo Tuason y de la Paz,
Teresa Eriberta Tuason y de la Paz, Juan Jose Tuason y de la Paz, Demetrio Asuncion
Tuason y de la Paz, and Augusto Huberto Tuason y de la Paz.
The plaintiffs in each of the three complaints also alleged that the registered owners
mentioned in Original Certificate of Title No. 735 had applied for the registration of
two parcels of land (known as the Santa Mesa Estate and the Diliman Estate),
located in the municipalities of Caloocan and San Juan del Monte, province of Rizal,
of which parcel No. 1 (Santa Mesa Estate) contained an area of 8,798,617 square
meters; that the registration proceedings were docketed as LRC No. 7681 of the
Court of Land Registration; that the application for registration in LRC No. 7681,
containing the boundaries, technical descriptions and areas of parcel No. 1 (Santa
Mesa Estate) and parcel No. 2 (Diliman Estate) was published in the Official Gazette;
that before the decision was handed down in LRC No. 7681, the area, boundaries
and technical descriptions of parcel No. 1 were altered and amended; that the

amendments and alterations, which were made after the publication of the original
application, were never published; that on March 7, 1914 a decision was rendered in
LRC No. 7681 based on the amended plan; that pursuant to the decision of March 7,
1914 a decree of registration was issued on July 6, 1914, known as Decree No.
17431, decreeing the registration in the names of the applicants of the two parcels
of land (Santa Mesa Estate and Diliman Estate); that the decision dated March 7,
1914 in LRC No. 7681 is null and void because the Land Registration Court had no
jurisdiction to render the decision for lack of publication; that Decree No. 17431
issued pursuant to the decision of March 7, 1914 in LRC No. 7681 is likewise null and
void from the beginning, because it was issued pursuant to a void decision and
because the boundaries, technical descriptions and areas appearing in the decree
are different and not identical with the boundaries, technical descriptions and areas
in the application for registration as published in the Official Gazette; that the area
of parcel No. 1 as mentioned in Decree No. 17431 is bigger than the area of parcel
No. 1 appearing in the application for registration as published in the Official
Gazette; that Original Certificate of Title No. 735, referring to parcel 1 (Santa Mesa
Estate), is also null and void from the beginning because it was issued pursuant to a
void decree of registration; that the area, boundaries and technical description of
Parcel No. 1 appearing in Decree of Registration No. 17431 and in the Original
Certificate of Title No. 735 are different from the area, boundaries and technical
description appearing in the application for registration as published in the Official
Gazette; that the plaintiffs had not been notified of the proceedings in LRC No. 7681
although the applicants knew, or could have known, by the exercise of necessary
diligence, the names and addresses of the plaintiffs and their predecessors in
interest who were then, and up to the time the complaints were filed, in possession
and were cultivating the lands described in paragraph V of their respective
complaint; and that during, before, and even after the issuance of Original
Certificate of Title No. 735 the defendants had tacitly recognized the ownership of
the plaintiffs over their respective lands because said defendants had never
disturbed the possession and cultivation of the lands by the plaintiffs until the year
1951; and that all transfer certificates of title issued subsequently, based on
Original Certificate of Title No. 735, are also null and void. 3
The plaintiffs in each of the three cases prayed the court: (1) to declare them
owners and entitled to the possession of the parcel, or parcels, of land described in
their respective complaint, as the case may be; (2) to revoke the decision of the
Court of Land Registration, dated March 7, 1914 in LRC No. 7681, and to declare
Decree No. 17431, dated July 6, 1914 null and void from the beginning with respect
to Parcel No. 1(Santa Mesa Estate) in Original Certificate of Title No. 735 which
include the lands of the plaintiffs; (3) to declare Original Certificate of Title No. 735,
particularly as it refers to Parcel No. 1 (Santa Mesa Estate) also null and void; (4) to
declare null and void all transfer certificates of titles issued by the Register of Deeds
of Rizal and of Quezon City subsequent to, and based on, Original Certificate of Title
No. 735; (5) to order the defendants, in the event Original Certificate of Title No.

735 is declared valid, to reconvey and transfer title over the land described in their
respective complaint in favor of the plaintiffs in each case, as the case may be; (6)
to order the defendants to pay the plaintiffs the market value of the lands in
question in case of defendants' inability to reconvey the same; (7) to order the
defendants to pay damages to the plaintiffs; (8) to issue a writ of preliminary
injunction against the defendants, their lawyers, their agents and representatives
from disturbing the ownership and possession of the plaintiffs during the pendency
of these cases.
The plaintiffs, in the three cases, were allowed by the trial court to litigate as
paupers.
Only defendant J.M. Tuason & Co., Inc. was actually served with summons. The other
defendants were ordered summoned by publication in accordance with Sections 16
and 17 of the Rules of Court. Only defendant J.M. Tuason & Co., Inc. appeared. The
other defendants were all declared in default.
On June 23, 1955 defendant J.M. Tuason & Co., Inc. filed a motion to dismiss in each
of the three cases. This motion to dismiss was denied by the trial court on July 20,
1955.
On July 18, 1955 the trial court issued an order granting the writ of preliminary
injunction prayed for by the plaintiffs in their complaints. The preliminary injunction,
however, was lifted by order of the trial court on October 3, 1955, upon the posting
by defendant J.M. Tuason & Co., Inc. of bonds in the total amount of P14,000.00
pursuant to the order of the court of September 26, 1955.
On August 11, 1955 defendant J.M. Tuason & Co., Inc. filed in the three cases a
motion for reconsideration of the order of July 20, 1955 denying the motion to
dismiss. This motion for reconsideration was denied by order of the court of
September 26, 1955.

On November 29, 1955 defendant J.M. Tuason & Co., Inc. filed an answer in each of
the three cases. In its answer, this defendant, among others, specifically denied
plaintiffs' claim of ownership of the lands involved in each case. The answer
contains special and affirmative defenses, to wit: (1) that the plaintiffs' cause of
action is barred by prior judgment and res judicata in view of the judgment of the
Court of First Instance of Rizal in its Civil Case No. Q-156 which was subsequently
elevated to the Supreme Court as G.R. No. L-4998, in which latter case the Supreme
Court affirmed in toto the order of the lower court dismissing the case; (2) that the
complaints failed to state facts sufficient to constitute a cause of action against the
defendants; (3) that the plaintiffs' action, assuming that their complaints state
sufficient cause of action, had prescribed either under Act No. 496 or under statutes

governing prescription of action; (4) that defendant J.M. Tuason & Co., Inc. is a buyer
in good faith and for valuable consideration of the parcels of land involved in the
three cases; (5) that the registration proceedings had in LRC No. 7681 instituted by
the defendant's predecessors in interest was in accordance with law, and the
requirements for a valid registration of title were complied with. By way of
counterclaim the defendant prayed that the plaintiffs be ordered to pay damages as
therein specified.
The plaintiffs, amended their complaints in the three cases, by including additional
parties as plaintiffs, and the amended complaints were admitted by the trial court.
The defendant, J.M. Tuason & Co., Inc., filed a manifestation that it was reproducing
and realleging its answers to the original complaints as its answers to the amended
complaints in view of the fact that the amendments to the complaints consist
merely in the inclusion of additional indispensable as well as necessary partiesplaintiffs. 4
On June 7, 1962, after the plaintiffs had presented their evidence, defendant J.M.
Tuason & Co., Inc. presented a motion to dismiss the cases upon grounds that (1)
the actions were barred by the statute of limitations; (2) that the actions barred by a
prior judgment; and (3) that plaintiffs had not presented any evidence to prove their
claim of ownership. The defendant later filed a motion to withdraw the third ground
of its motion to dismiss. The plaintiffs filed their opposition to the motion to dismiss,
as well as to the motion of defendant to withdraw its third ground to dismiss. The
trial court, in an order dated December 3, 1962, granted defendant's motion to
withdraw the third ground of its motion to dismiss but denied the motion to dismiss.
5
After trial, on January 18, 1965, the lower court rendered a decision for the three
cases, the dispositive portion of which reads as follows:
WHEREFORE, IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered in
favor of the Plaintiffs and against the Defendants as follows:
A Declaring that the decision, the decree and the title issued in LRC No. 7681, are
null and void, ab initio, and of no effect whatsoever;
B Declaring that Original Certificate of Title No. 735 found on page 136 Vol. A-7 of
the Registration Book of Rizal is null and void from the very beginning (and) of no
effect whatsoever;
C Declaring that all Transfer Certificates of Title emanating or allegedly derived
from Original Certificate of Title No. 735 of the Province of Rizal are likewise null and
void;

D Declaring that the plaintiff in Civil Cases Nos. 3621, 3622 and 3623 are the
owners and entitled to the possession of the parcels of land claimed and described
in paragraph V of their respective complaints;
E Ordering the defendants and all persons claiming under them to vacate and
restore to the plaintiffs the possesion of the parcels of land described in paragraph
V of the complaint in Civil Case No. 3621 and indicated as Parcel A, Parcel B and
Parcel C, in SWO-40187 (Exh. "UU" and Exh. "VV");
F Ordering the defendants and all persons claiming under them to vacate and
restore to the plaintiffs the possession of the parcels of land described in paragraph
V of the complaint in Civil Case No. 3623 and indicated as Parcel D and Parcel F, in
SWO-40187 (Exh. "UU" and Exh. 'VV");
G Ordering the Defendants and all persons claiming under them to vacate and
restore to the plaintiffs the possession of the parcels of land described in paragraph
V of the complaint in Civil Case No. 3623 and indicated in Parcel E, in SWO-491187
(Exh. "UU and Exh. "VV");
H Ordering the defendants to pay plaintiffs in Civil Case No. 3621 the sum of
P600.00 a month as actual damages for uncollected rentals from 1951 until such
possession is restored to them;
I Ordering the defendants to pay the plaintiffs in Civil Case No. 3623 the sum of
P600.00 a month, as actual damages for uncollected rentals from 1951 until such
possession is restored to them;.
J Ordering the defendants to pay the plaintiffs in Civil Case No. 3623 the sum of
P150.00 a month as actual damages for uncollected rentals from 1951 until such
possession is restored to them; .
K Ordering the defendants to pay the costs; .
L The defendants' counterclaim is hereby declared dismissed for lack of merit." 6
A motion for new trial was filed by defendant J.M. Tuason & Co., Inc. on January 30,
1965. However, before the motion for new trial was resolved by the court, said
defendant, on February 11, 1965, filed a notice of appeal to this Court and an
appeal bond, and on February 12, 1965 he filed the record on appeal. 7 The record
on appeal, after it had been corrected and amended, as ordered and/or authorized
by the trial court, was approved on September 29, 1965. 8
Appellant J.M. Tuason & Co. Inc., in this appeal, contends that the trial court
committed the following errors:

I. The lower court erred in holding that the Land Registration Court in GLRO No.
7681 lacked or was without jurisdiction to issue decree No. 17431 for the alleged
reason that:
(1)

The amendment to the original plan was not published;

(2)
The description of Parcel 1 in the decree is not identical with the description
of Parcel 1 as applied for and as published in the Official Gazette;
(3)

Parcel 1 as decreed is bigger in area than Parcel 1 as applied for;

(4)

A. Bonifacio Road is the only boundary on the West of Parcel 1.

II. The trial court erred in finding that the transcription of the decree No. 17431 was
not in accordance with the law and that, therefore, said OCT 735 was a complete
nullity and the land remains unregistered.
III. The trial court erred in taking cognizance of these cases despite its lack of
jurisdiction to hear and decide the same.
IV. The trial court erred in not dismissing these cases on the grounds of prescription
and laches, and in denying the motions to dismiss filed on said grounds.
V. The trial court erred in not dismissing these cases on the ground of res judicata
and in denying the motion to dismiss filed on said ground.
VI. The trial court erred in declaring null and void all certificates of title emanating
from OCT 735.
VII. The trial court erred in holding that J.M. Tuason & Co., Inc. is not a purchaser in
good faith and for value.
VIII. The trial court erred in awarding ownership of the lands claimed by, and in
awarding damages to, the appellees.
IX. The trial court erred in denying and in dismissing appellant's counterclaim and in
sentencing appellant to pay the costs of these suits.
As stated by the trial court in its decision, "These cases involve the validity of the
decision and the decree issued in LRC No. 7681 resulting in the issuance of Title No.
735, and the ownership and possession of several parcels of land, claimed by the
plaintiffs in their respective complaints...."

The lower court, summarizing its findings, among others, concluded that: (1) the
decision and the decree in LRC No. 7681 are null and void ab initio, having been
rendered without jurisdiction; (2) Original Certificate of Title No. 735 issued pursuant
to the decree in LRC No. 7681 is null and void, having been issued pursuant to a
void degree; (3) Original Certificate of Title No. 735 is null and void because the No.
17431 in LRC No. 7681, assuming the degree to be valid, had not been inscribed in
accordance with the provisions of Section 41 of Act 496; (4) all Transfer Certificates
of Title allegedly emanating and derived from the void Original Certificate of Title
No. 735 are likewise null and void; and (5) the plaintiffs in these three civil are the
owners and entitled to the possession of the parcels of land described in their
respective complaints.
We have carefully examined and studied the voluminous records, and the numerous
documentary evidence, of these three cases, and We find that the conclusions of
the trial court are not supported by the evidence and the applicable decisions of this
Court.
The Original Certificate of Title No. 735 that had been declared null and void ab
initio by the trial court covers two big parcels of land, mentioned in said title as
Parcel 1, having an area of 8,778,644.10 square meters more or less, known as the
Santa Mesa Estate; and Parcel 2, having an area of 15,961,246 square meters more
or less, known as the Diliman Estate. The three parcels of land involved in Civil Case
No. 3621, having an aggregate area of 278,853 square meters, more or less; the
two parcels of land involved in Civil Case No. 3622 having an aggregate area of
154,119.7 square meters, more or less; and the one parcel of land involved in Civil
Case No. 3623, having an area of 62,481 square meters, more or less, are all
included in the area of Parcel 1. 9 The trial court, in its decision, states that the
identity of the parcels of land claimed by the plaintiffs is not disputed and that both
the plaintiffs and the defendant admit that the parcels of land litigated are found
within the boundaries of the present Sta. Mesa Heights Subdivision (Parcel 1)
covered by Original Certificate of Title No. 735. 10 It is shown in the survey plans,
presented by both the plaintiffs and the defendant, that the six parcels of lands
involved in these three cases are located at the northwestern portion of Parcel 1.
(Exhs. UU, VV; and Exh. 29).
The records show, and it is established by the evidence, that sometime in 1911
Mariano Severo Tuason y de la Paz, Teresa Eriberta Tuason y de la Paz, Juan Jose
Tuason y de la Paz, Demetrio Asuncion Tuason y de la Paz, and Augusto Huberto
Tuason y de la Paz, filed with the Court of Land Registration an application for the
registration of their title over two parcels of land, designated in the survey plans
accompanying the application as Parcel 1 with an area of 8,798,617 square meters,
and Parcel 2 with an area of 16,254,037 square meters. The application was
docketed as LRC No. 7681. There was another application covering three other
parcels of land, docketed as LRC No. 7680. The application in LRC No. 7681 was set

for hearing on November 20, 1911 (Exh. X). The application and the notice of
hearing, containing the technical descriptions of the two parcels of land applied for,
were published in the issue of the Official Gazette of October 25, 1911 (Exh. YY). On
November 20, 1911 the Court of Land Registration issued an order of general
default against the whole world except the Insular Government, the Director of
Lands and the municipalities of Caloocan and San Juan del Monte (Exh. 28). On
December 23, 1911 the court issued an order authorizing the amendment of the
plan in LRC No. 7681 (Exh. 23). November 11, 1913 the applicants and the
Government entered into an agreement whereby the Government agreed to
withdraw its opposition to the application for registration of title over the portion
known as Hacienda Diliman (Parcel 2) on condition that the roads existing on said
tract of land be allowed to remain, and it was further agreed "that the issuance, of
the title to applicants shall be made subject to all the exceptions established by
Section 39 of Act 496 as amended by Section 1 of Act 2011" (Exh. 21). On
December 29, 1913 the Court of Land Registration rendered a decision (Exh. 24) in
both LRC No. 7680 and LRC No. 7681 which, among others, stated that during the
registration proceedings the plans accompanying the two applications were
amended in order to exclude certain areas that were the subject of opposition, that
the order of general default was confirmed, that the Chief of the Surveyor's Division
of the Court of Land Registration was ordered to submit a report as to whether or
not the new (amended) plans had included lands which were not by the original
plans, and whether or not the new plans had excluded the lands that had already
been covered by the decree in LRC No. 3563. The decision further stated that in the
event that the new plans did not include new parcels of land and that the lands that
were the subject of the proceedings in LRC No. 3563 had been excluded, an
additional decision would be made decreeing the adjudication and registration of
the lands that were the subject of the registration proceedings in favor of the
applicants, as follows: To Mariano Severo Tuason y de la Paz, two sixths (2/6)
undivided portion to Teresa Eriberta Tuason y de la Paz, one sixth (1/6) undivided
portion; to Juan Jose Tuason y de la Paz, one sixth (1/6) undivided portion; to
Demetrio Asuncion Tuason y de la Paz, one sixth (1/6)undivided portion; and to
Augusto Huberto Tuason y de la Paz, one sixth (1/6) undivided portion.
In compliance with the order contained in the decision of December 29, 1913, the
Chief of the Survey Division of the Court of Land Registration, on January 24, 1914,
submitted a report (Exh. 22) to the court which, among others, stated that the new
plan of Parcel 1 in LRC No. 7681 did not include any land that had not been
previously included in the original plan.
On March 7, 1914 the Court of Land Registration rendered a supplemental decision
declaring that, on the basis of the decision of December 29, 1913 and of the report
of the Surveyor of Court of Land Registration, the applicants Mariano Severo Tuason
y de la Paz and others were the owners of the land applied for, as described in the
amended plan, in the proportion mentioned in the decision, and ordering that the

land applied for be registered in the names of the applicants and that a decree of
registration be issued in accordance with the decision and the amended plan. On
March 27, 1914 the Chief of the Survey Division addressed a communication to the
registration court, in connection with LRC No. 7681, suggesting that the decision of
the court of March 7, 1914 be modified such that the decree of registration be
based upon the original plan as published and not upon the amended plan (Exh. Z3). The Court of Land Registration did not follow the recommendation of the Chief of
the Survey Division. On July 6, 1914 Decree of Registration No. 17431 was issued by
the Chief of the General Land Registration Office pursuant to the decision of the
Court of Land Registration of March 7, 1914 in LRC No. 7681. The decree contains
the technical description of the two parcels of land in accordance with the plan as
amended. It appears in the decree that Parcel 1 has an area of 8,798,644.10 square
meters, more or less, or an increase of 27.10 square meters over the area of
8,798,617 square meters that was stated in the application for registration and in
the notice of hearing which were published in the Official Gazette of October 25,
1911; and that Parcel 2 has an area of 15,961,246 square meters, more or less, or a
decrease of 292,791 square meters from the area of 16,254,037 square meters that
was stated in the application and in the notice of hearing that were published in the
Official Gazette (Exhs. 25 and YY). All in all, there is a decrease of 292,763.90
square meters in the aggregate area of the two parcels of land sought to be
registered.
Subsequently, on July 8, 1914, the Register of Deeds of the province of Rizal issued
Original Certificate of Title No. 735 in the names of the applicants, Mariano Severo
Tuason y de la Paz, Teresa Eriberta Tuason y de la Paz, Juan Jose Tuason y de la Paz,
Demetrio Asuncion Tuason y de la Paz, and Augusto Huberto Tuason y de la Paz
(Exh. 30).
1. We shall now deal with the first error assigned by the appellant.
The lower court declared Original Certificate of Title No. 735 null and void ab initio
because, according to said court, that title was based on Decree of Registration No.
17431 in LRC No. 7681 that was null and void, said decree having been issued
pursuant to a decision of the Court of Land Registration in LRC No. 7681 which had
no jurisdiction to render said decision.
As We have adverted to, Original Certificate of Title No. 735 covers two big parcels
of land: Parcel 1, known as the Santa Mesa Estate, and Parcel 2, known as the
Diliman Estate. The records show that these two parcels of land had been
subdivided into numerous lots, and most of those lots had sold to numerous parties
Parcel 1 having been converted into a subdivision known as the Santa Mesa
Heights Subdivision, and the lots had been sold to private individual and entities,
such that in that subdivision now are located the National Orthopedic Hospital, the
station of Pangasinan Transportation Co. (Pantranco), Sto. Domingo Church, Lourdes

Church and others. Necessarily, as a result of the sales of the lots into which Parcel
1 was subdivided, transfer certificates of title were issued to the purchasers of the
lots, and these transfer certificates of title were based upon transfer certificates of
title that emanated from Original Certificate of Title No. 735. The trial court declared
null and void all transfer certificates of title emanating, or derived, from Original
Certificate of No. 735.
The decision of the trial court declaring null and void ab initio Original Certificate of
Title No. 735 would invalidate the title over the entire area included in Parcel 1
which admittedly includes the six parcels of land claimed by the plaintiffs-and also
the title over the entire area included in Parcel 2. Let it be noted that Parcel 1 has an
area of 8,798,644.10 square meters, more or less, and Parcel 2 has an area of
15,961,246 square meters, more or less; while the six parcels of land claimed by the
plaintiffs have an aggregate area of only 495,453.7 square meters, more or less. In
other words, the area of the six parcels of land claimed by the plaintiffs is only a
little over two per cent (2%) of the aggregate area of Parcel 1 and Parcel 2. But the
decision of the trial court nullified Original Certificate of Title No. 785, without any
qualification.
The trial court held that the Court of Land Registration had no jurisdiction to render
the decision in LRC No. 7681 because during the registration proceedings, after the
original application and notice of hearing had been duly published, the plan of
Parcel 1 was amended and no publication regarding the amended plan was made.
The trial court pointed out that the area and the description of Parcel 1 in Decree of
Registration No. 17431 are not identical with the area and description of Parcel 1
applied for and published in the Official Gazette. The trial court stressed on the
point that publication is one of the essential bases of the jurisdiction of the court to
hear and decide an application for registration and to order the issuance of a decree
of registration, as provided in Act 496 (Land Registration Act).
We believe that the lower court erred when it held that the Land Registration Court
was without jurisdiction to render the decision in LRC No. 7681. Under Section 23 of
Act 496, the registration court may allow, or order, an amendment of the
application for registration when it appears to the court that the amendment is
necessary and proper. Under Section 24 of the same act the court may at any time
order an application to be amended by striking out one or more parcels or by
severance of the application. The amendment may be made in the application or in
the survey plan, or in both, since the application and the survey plan go together. If
the amendment consists in the inclusion in the application for registration of an area
or parcel of land not previously included in the original application, as published, a
new publication of the amended application must be made. The purpose of the new
publication is to give notice to all persons concerned regarding the amended
application. Without a new publication the registration court can not acquire
jurisdiction over the area or parcel of land that is added to the area covered by the

original application, and the decision of the registration court would be a nullity
insofar as the decision concerns the newly included land. 11 The reason is because
without a new publication, the law is infringed with respect to the publicity that is
required in registration proceedings, and third parties who have not had the
opportunity to present their claim might be prejudiced in their rights because of
failure of notice. 12 But if the amendment consists in the exclusion of a portion of
the area covered by the original application and the original plan as previously
published, a new publication is not necessary. 13 In the latter case, the jurisdiction
of the court over the remaining area is not affected by the failure of a new
publication. 14
In the case at bar We find that the original plan covering Parcel 1 and Parcel 2 that
accompanied the application for registration in LRC No. 7681 was amended in order
to exclude certain areas that were the subject of opposition, or which were the
subject of another registration case; and the Chief of the Survey Division of the
Court of Land Registration was ordered to determine whether the amended plan
included lands or areas not included in the original plan. In compliance with the
order of the registration court said Chief of the Survey Division informed the court
that no new parcels were included in the new (or amended) plan. Thus, in the
decision of the Court of Land Registration in LRC Nos. 7680 and 7681, dated
December 29, 1913 (Exh. 24), We read the following:
Despues de las notificaciones y avisos de las dos solicitudes en ambos expedientes,
se enmendaron los planos unidos a los mismos para excluir ciertas porciones que
habian sido objeto de oposicion.
xxx

xxx

xxx

POR TANTO, ratificando como por la presente se ratifica la declaracion de rebeldia

general, se ordena:
"1.o Que el Jefe de la Division de Agrimensores de este Tribunal terreno que no haya
sido comprendido en los planos originales ...." 15
On January 24, 1914, the Chief of the Survey Division of the Court of Land
Registration made a report to the court (Exh. 22), from which the report We read the
following:.
Cumpliendo lo mandado por el Tribunal en el No. 1 de la parte dispositiva de su
Decision de fecha 29 de Diciembre proximo pasado, el que suscribe, despues de un
detenido estudio de los planos unidos a los Expedientes arriba citados, tiene el
honor de informar:

1.o Que los nuevos planos presentados por los solicitantes corresponden a las
parcelas 1.a 2.a, y 3.a, del Expedients No. 7680 y a la 1.a parcela del No. 7681, que
son las mismas a que se refiere el plano Exhibito A del No. 7680.
xxx

xxx

xxx

4.
Que los nuevos planos presentados de las parcelas 1.a, 2.a y 3.a del
Expediente 7680, y de la 1.a del 7681 no incluyen terreno alguno que no haya sido
comprendido en los planos originales. 16
And so, in the supplemental decision of the Court of Land Registration in LRC No.
7681, dated March 7, 1914 (Exh. 24-A), the report of the Chief of the Survey
Division was taken into consideration and the court ordered the registration of the
lands applied for by the applicants as described in the amended plan ("como esta
descrito en el plano enmendado"). It is thus shown that the amended plan in LRC
No. 7681 did not cover parcels, or areas, that were not previously included in the
original plan which accompanied the application that had been published in the
Official Gazette. There was, therefore, no necessity for a new publication of the
amended plan in order to vest the Court of Land Registration with jurisdiction to
hear and decide the application for registration in LRC No. 7681 and to order the
issuance of Decree of Registration No. 17431 upon which Original Certificate of Title
No. 735 was based.
Way back in 1933, this Court had occasion to rule on the validity of the very same
Original Certificate of Title No. 735 which the trial court had declared null and void
in the three cases now before this Court. In the case of the Bank of the Philippine
Islands vs. Acua (59 Phil. 183) the validity of Original Certificate of Title No. 735
was assailed by the appellants (Pascual Acua and others) precisely upon the
ground that during the registration proceedings, which brought about the issuance
of Original Certificate of Title No. 735, the original plan of the applicants was
ordered amended, and no new publication was made of the amended plan and so it
was urged that the registration court did not have jurisdiction to order the issuance
of the decree of registration in favor of the applicants. The action in this case was
instituted by the Bank of the Philippine Islands as receiver of the Tuason Entail for
the purpose, among others, of recovering from Pascual Acua and others certain
lands included in the Santa Mesa and Diliman hacienda located in the barrios of
Bagobantay and Diliman, in the municipalities of Caloocan and San Juan del Monte
Province of Rizal. Upon hearing, the Court of First Instance of Rizal declared that
none of the defendants owned any part of the land in controversy. On appeal, this
Court observed that the character in which the plaintiff sued was not open to
question, and the material facts were as follows: The heirs of the Tuason estate,
referred to as the Tuason Entail, held a Torrens title to a tract of land with an area of
about 1,600 hectares located in the province of Rizal. This property was then
covered by Transfer Certificate of Title No. 3792 issued in lieu of older certificates

dating from July 8, 1914. This Transfer Certificate of Title No. 3792 emanated from
Or Certificate of Title No. 735. 17 The appellants precisely sought to nullify the title
of the heirs of the Tuason estate, which emanated from Original Certificate of Title
No. 735, upon the ground, as now urged by the appellees in the three cases at bar,
that during the registration proceedings the original plan of the lands known as the
Sta. Mesa and Diliman was amended, and no publication was made of the amended
plan. Regarding the question of the non-publication of the amended plan, this Court
said:
Among the arguments made by the appellants of the Bagobantay group, it is
alleged that the Torrens title relied by the plaintiff is void, and in support of this
contention it stated that, during the course of the registration proceedings, an order
was made by the court for the amendment of the applicants and that this order was
not followed by new publication, wherefore, it is supposed the court was without
jurisdiction to decree the title to the applicants. In this connection reliance is placed
upon the doctrine stated in the Philippine Manufacturing Co. vs. Imperial (49 Phil.
122). But the brief for the appellants fails to call attention to the fact that the rule
stated in the case cited has reference to an amendment of the plan by which
additional land, different from that included in the original survey is intended to be
brought within the process of registration. In the case before us, the order referred
to was for the exclusion of certain portions of the land covered by the original
survey, and the doctrine of the case cited cannot apply. Apart from this it does not
appear that the portion intended to be excluded comprehended any part of the land
which had been usurped. 18
The appellees, however, asserts that the case of the Bank of the Philippine Islands
vs. Acua, supra, is not applicable to the three cases now before this Court because
what was involved in said case was Parcel 2 of Original Certificate of Title No. 735,
and not Parcel 1 which is the land involved in these cases. This assertion of the
appellees is not correct. The decision in that case states that the action was
instituted by the Bank of the Philippine Islands, as receiver of the Tuason Entail, for
the purpose, among others, of recovering from Pascual Acua and others "certain
lands contained in the Sta. Mesa and Diliman Hacienda located in the barrios of
Bagobantay and Diliman in the municipalities of Caloocan and San Juan del Monte."
19 But what matters is the doctrine that was laid down by this Court in that case
that is: that when the original survey plan is amended, after the publication of the
application in order to include land not previously included in the original survey, a
new publication of the amended plan is necessary in order to confer jurisdiction
upon the registration court to order the registration of the land that is added to
what was included in the original survey plan. The ruling of this Court in the Bank of
the Philippine Islands case has a decisive application in the three cases now before
this Court.

The trial court laid stress on the point that publication of the amended plan of Parcel
1 should have been made because it appears in the Decree of Registration No.
17431, and as reproduced in Original Certificate of Title No. 735, that the area of
said parcel is "bigger" than the area stated in the application as published in the
Official Gazette; and, also, that the boundaries of Parcel 1 stated in the decree are
not identical with the boundaries stated in the application as published in the
Official Gazette. We paid particular attention on this point of the lower court's
decision, and our impression is that the trial court had exploited certain minor
discrepancies between the description of Parcel 1 in the decree of registration and
its description in the original application, in order to bolster its ruling that "to render
a decision on the amended plan, boundary descriptions, and additional lands
comprised within Parcel 1 in Decree No. 17431, a republication of such amended
plan, boundary description, technical description and additional areas is necessary
to confer jurisdiction upon the Court." 20
Oddly enough, when the lower court said that the area of Parcel 1 in the decree of
registration is bigger than the area of Parcel 1 in the application as published, it did
not mention the fact that the difference in area is only 27.10 square meters. We
believe that this difference of 27.10 square meters is too minimal to be of decisive
consequence in the determination of the validity of Original Certificate of Title No.
735. It was error on the part of the lower court to lay stress on this circumstance
and made it a basis for ruling that because in the amended plan there is this
increase in area as compared to the area appearing in the application as published,
the Land Registration Court did not have jurisdiction to render the decision
decreeing the registration of Parcel 1 in LRC No. 7681. The Chief of the Survey
Division of the Court of Land Registration, in his report to the court of January 24,
1914 (Exh. 22), stated that the new plan of Parcel 1 did not include any land that
was not included in the original plan. That report was made precisely in compliance
with the order of the registration court, in the decision of December 29, 1913 in LRC
No. 7681, to inform the court "si los nuevos planos incluyen o no terreno que no
haya sido comprendido en los planos originales". That report was submitted by the
Chief Surveyor "despues de un detenido estudio de los planos unidos a los
expedientes". Under the foregoing circumstances, our inference is that the area of
27.10 square meters was already included in the original plan, and that the
computation of the area in the original survey must have been inaccurate; and the
error was corrected in the recomputation of the area when the amended plan was
prepared. We made a careful study and comparison of the technical description of
Parcel 1 appearing in the application as published, and the technical description
appearing in Decree of Registration No. 17431 (Exhs. 19, 19-A and Z-6), and We
accept the explanation of counsel for the appellant that this seeming increase of
27.10 square meters had been brought about "by the fact that when the
amendment of the plan was made, the distances and bearings in a few points along
the southwestern boundary (Please see Exh. 19) were brought to the nearest
millimeter and to the nearest second respectively; whereas, the computation of the

survey in the original plan was to the nearest decimeter and to the nearest minute
only". 21 We believe that this very slight increase of 27.10 square meters would not
justify the conclusion of the lower court that "the amended plan ... included
additional lands which were not originally included in Parcel 1 as published in the
Official Gazette." It being undisputed that Parcel 1 has an area of more than
8,798,600 square meters (or 879.86 hectares), We believe that this difference of
27.10 square meters, between the computation of the area when the original plan
was made and the computation of the area when the amended plan was prepared,
can not be considered substantial as would affect the identity of Parcel 1.
Moreover, no evidence was presented to identify this area of 27.10 square meters,
nor to show its location, in relation to the entire area of Parcel 1. The appellees did
not even attempt to show that this excess area of 27.10 square meters is included
within the parcels that they are claiming. We cannot, therefore; consider this area of
27.10 square meters as an area that was separate and distinct from, and was added
to, the land that was covered by the original survey plan, such that the publication
of the amended plan would be necessary in order that the registration court could
acquire jurisdiction over that area. As We have pointed out, this increase of 27.10
square meters was simply the result of the recomputation of the area when the
original plan was amended. There is no showing that the recomputation is incorrect.
Neither is there a showing that this small area of 27.10 square meters belongs to
any person and that person had been deprived of his property, or had failed to
claim that particular area because of the non-publication of the amended plan. On
the other hand, there is the report of the Chief of the Survey Division of the Court of
Land Registration (Exh. 22) stating that the amended plan of Parcel 1 in LRC No.
7681 did not include any land which was not included in the original plan.
It is the settled rule in this jurisdiction that only in cases where the original survey
plan is amended during the registration proceedings by the addition of lands not
previously included in the original plan should publication be made in order to
confer jurisdiction on the court to order the registration of the area that was added
after the publication of the original plan. 22
The settled rule, further, is that once the registration court had acquired jurisdiction
over a certain parcel, or parcels, of land in the registration proceedings in virtue of
the publication of the application, that jurisdiction attaches to the land or lands
mentioned and described in the application. If it is later shown that the decree of
registration had included land or lands not included in the original application as
published, then the registration proceedings and the decree of registration must be
declared null and void in so far but only in so far as the land not included in the
publication is concerned. This is so, because the court did not acquire jurisdiction
over the land not included in the publication-the publication being the basis: of the
jurisdiction of the court. But the proceedings and the decree of registration, relating
to the lands that were included in the publication, are valid. Thus, if it is shown that

a certificate of title had been issued covering lands where the registration court had
no jurisdiction, the certificate of title is null and void insofar as it concerns the land
or lands over which the registration court had not acquired jurisdiction. 23
And so in the three cases now before this Court, even granting that the registration
court had no jurisdiction over the increased area of 27.10 square meters (as alleged
by appellees), the most that the lower court could have done was to nullify the
decree and the certificate of title insofar as that area of 27.10 square meters is
concerned, if that area can be identified. But, certainly, the lower court could not
declare, and should not have declared, null and void the whole proceedings in LRC
No. 7681; and, certainly, the lower court erred in declaring null and void ab initio
Original Certificate of Title 735 which covers not only the supposed excess area of
27.10 square meters but also the remaining area of 8,798,617 square meters of
Parcel 1 and the entire area of 15,961,246 square meters of Parcel 2. The trial court,
in its decision, declared Original Certificate of Title No. 735 "null and void from the
very beginning and of no effect whatsoever", without any qualification. This
declaration by the lower court, if sanctioned by this Court and given effect, would
nullify the title that covers two big parcels of land (Parcels 1 and 2) that have a total
area of 24,759,890.10 square meters, or almost 2,476 hectares. And not only that.
The trial court declared null and void all transfer certificates of title that are derived,
or that emanated, from Original Certificate of Title No. 735, regardless of whether
those transfer certificates of title are the results of transactions done in good faith
and for value by the holder of those transfer certificates of title.
It must be noted that the appellees in the present cases claim six parcels that have
an area of some 495,453.7 square meters (about 49.5 hectares), whereas the
combined area of Parcel 1 and Parcel 2 is 24,759,890.10 square meters (about
2,476 hectares). It must also be noted that both Parcel 1 and Parcel 2 have been
subdivided into numerous lots (Exhs. 14 and 14-B) which have already been
acquired by numerous persons and/or entities that are now holding certificates of
title which can be traced back to Original Certificate of Title No. 735. The decision of
the lower court, however, would render useless Original Certificate of Title No. 735
and all transfer certificates of title emanating, or derived, therefrom. The decision of
the lower court would certainly prejudice the rights of the persons, both natural and
juridical, who had acquired portions of Parcel 1 and Parcel 2, relying on the doctrine
of the indefeasibility of Torrens title. The decision of the lower court would, indeed,
prejudice the rights of persons who are not parties in the present cases. And this is
so, because the trial court, in its decision, did not adhere to the applicable decisions
of this Court in resolving the pertinent issues in these cases.
Another reason mentioned by the lower court to support its ruling that Decree of
Registration No. 17431 is null and void is that the description of Parcel 1 in the
decree of registration is different from the description of the same parcel in the
notice of hearing of the original application for registration as published in the

Official Gazette. The different description that appears in the decree of registration,
according to the lower court, is an amendment to the Original survey plan that
accompanied the application and the amended survey plan should have been
republished; and because there was no such republication the registration court was
without jurisdiction to issue the decree of registration. The lower court also
committed an error in making this ruling. We find that the lower court incorrectly
laid stress on differences in the names of the owners, and on differences in the
designations, of the lands that adjoin Parcel 1 along its southwestern boundary. We
find, however, that these differences are well explained in the record.
In the notice of hearing in LRC No. 7681 (Exhibits YY and YY-2) the boundaries of
Parcel 1 are stated as follows:
Bounded on the N. by property of Rosario Negrao and others (Maysilo Estate); E. by
the San Juan River; SW. by Parcel 3, properties of Benito Legarda, Hospital de San
Juan de Dios, by Parcel 2, Santa Clara Monastery, by Parcel 1; and W. by a road,
Cementerio del Norte and the Roman Catholic Church.
As described in Decree of Registration No. 17431 (Exh. 25), the boundaries of Parcel
1 are as follows:
PARCEL 1. Bounded on the N. by property of Rosario Negrao y Escobar, et al.,
(Maysilo Estate): On the E. by San Juan River; on the SW. by properties of Mariano
Severo Tuason y de la Paz, et al., Benito Legarda, Hospital de San Juan de Dios and
C.W. Rosenstock & Co.; and on the W. by a road, Cementerio del Norte and property
of the Roman Catholic Church ...
It will thus be noted that the boundaries of Parcel 1 on the northern, eastern, and
western sides, as they appear in the notice of hearing that was published and in
Decree of Registration No. 17431, are the same. It is in the southwestern boundary
where there appear some differences in the names of the owners, or in the
designations, of the adjoining lands. Thus, in the published notice of hearing, it
appears that the names of the owners, or the designations, of the lands that bound
Parcel 1 (of LRC No. 7681) on the Southwest are parcel 3, properties of Benito
Legarda, Hospital de San Juan de Dios, parcel 2, Monasterio de Santa Clara and
parcel 1; while in the decree of registration it appears that the lands that bound
Parcel 1 (of LRC No. 7681) on the Southwest are the properties of Mariano Severo
Tuason y de la Paz, et al., Benito Legarda, Hospital de San Juan de Dios and C.W.
Rosenstock & Co. Upon a careful examination of the records, We find that the lands
that adjoin Parcel 1 at its southwestern boundary, as indicated in the notice of
hearing that was published in the Official Gazette, are the same lands that are
indicated in the decree of registration as the lands that adjoin Parcel 1 at its
southwestern boundary. There is simply a change in the names of the owners or in
the designations, of the lands. We find that parcels 3, 2 and 1, appearing as the

boundary lands on the southwestern side of Parcel 1 in LRC No. 7681, as published,
are in fact parcels of land that are owned, and had been applied for registration, by
Mariano Severo Tuason y de la Paz, et al. in LRC No. 7680. This LRC No. 7680 was
heard and decided jointly with LRC No. 7681 by the Land Registration Court (Exh.
24). These parcels 3, 2 and 1 of LRC No. 7680, being lands owned by Mariano
Severo Tuason y de la Paz, et al., it may as well be stated in the decree of
registration that those lands on the southwestern side of Parcel 1 in LRC No. 7681
are the properties of Mariano Severo Tuason y de la Paz, et al., instead of
designating them as parcel 3, parcel 2, and parcel 1 (of LRC 1680). And so, what
appears in Decree of Registration No. 17431 as the properties of Mariano Severo
Tuason y de la Paz, et al., at the southwestern side of Parcel 1 are no other than
those very parcels 3, 2 and 1 that appear in the notice of hearing as the lands that
bound Parcel 1 on the southwest.
In the description of Parcel 1 as published, it appears that one of the boundaries on
the southwestern side is Santa Clara Monastery, while in the decree of registration
the words "Santa Clara Monastery" do not appear but, instead, are replaced by the
words "C. W. Rosenstock & Co." It will be remembered that during the registration
proceedings the plan of Parcel 1 was ordered amended, and the surveyor, who
prepared the amended plan must have found that what used to be the property of
the Santa Clara Monastery at the time of the original Survey was already the
property of C. W. Rosenstock & Co. when the amended plan was prepared. This can
simply mean that there was a change of ownership from Santa Clara Monastery to
C.W. Rosenstock & Co. It must be considered that the original survey took place
from December, 1910 to June, 1911 (Exhibits 18 and 19), while the registration case
was decided on March 7, 1914.
Under Section 40 of Act 496, the decree of registration "shall contain a description
of the land as finally determined by the court." Evidently, the Court of Land
Registration acted in consonance with this provision of the law when, in its decision
in LRC 7681, it took into consideration the actual description of Parcel 1 as shown in
the amended survey plan, and when it disregarded the recommendation of the
Chief of the Survey Division, dated March 27, 1914, that the decision of the court of
March 7, 1914 "be based upon the original plans, as published, and not upon the
amended plan." It may well be said that Decree of Registration N. 17431 simply
contains the correct area of Parcel 1 and the correct names of the owners of the
lands that bound Parcel 1 in LRC No. 1681 as of the time when the decision of the
land registration court was rendered.
In this connection, the following pronouncement of this Court in the case of
Domingo vs. Ongsiako, 55 Phil. 361, 373-4, is pertinent:
We may further observe that underlying the contention of the plaintiffs is the idea
that errors in the plans nullify the decrees of registration. This is erroneous. It is the

land and not the plan which is registered. Prior to the enactment of Act No. 1875,
practically all plans for land registration were defective especially in regard to errors
of closures and areas, but so far no such errors have been permitted to affect the
validity of the decrees. If the boundaries of the land registered can be determined,
the technical description in the certificate of title may be corrected without
cancelling the decree. Such corrections have been made in this case by approved
surveys which embrace all of the land here in question. To nullify and cancel final
decrees merely by reason of faulty technical descriptions would lead to chaos.
We have taken note of the fact that the six parcels of land that are claimed by the
plaintiffs in the three cases now before this Court are on the northwestern portion of
Parcel 1 (parcels labelled A, B, C, D, E and F, in Exh. UU; and Exhs. 17, 29 and 29-B).
They are far from the southwestern boundary. The circumstance, therefore,
regarding the dissimilarity in the names of the owners, or the designations, of the
lands that adjoin the southwestern side of Parcel 1 is of no moment insofar as the
lots claimed by appellees are concerned. What matters is that the lots claimed by
the appellees are included in Parcel 1 of LRC No. 1681 and are located at the
northwestern portion of said Parcel 1. Indeed, it was error on the part of the lower
court to make as one of the bases in declaring Decree of Registration No. 17431 and
Original Certificate of Title No. 735 null and void and of no effect whatsoever the
aforestated dissimilarities in the names of the owners, or in the designations, of the
lands on the southwestern side of Parcel 1, because those dissimilarities are well
explained in the records of these cases.
The lower court committed still another error when it made the finding that the only
boundary of Parcel 1 on the western side is "A. Bonifacio road" and then declared
that the lands situated west of the A. Bonifacio road were never the subject of the
registration proceedings in LRC No. 7681. The lower court declared the lands west of
A. Bonifacio road as unregistered lands and awarded the ownership of those lands
to the plaintiffs in Civil Cases Nos. 3621 and 3622 (appellees in G.R. Nos. L-26127
and L-26128). This finding of the lower court is contrary to the evidence presented
by the parties in these cases. Both the appellees and the appellant submitted as
their evidence the notice of hearing of the application as published in the Official
Gazette (Exhibit X, YY and YY-2; and Exhibit 26) and the decree of registration No.
17431 (Exhibit Y, and Exh. 25) wherein are clearly stated that the boundaries of
Parcel 1 on the West are: (1) a road, (2) Cementerio del Norte and (3) Roman
Catholic Church (Exhs. Z-6, UU, and Exhs. 6, 18, 19 and 20). But the lower court
considered the A. Bonifacio road as the only boundary on the West, and ignored the
two other boundaries on the West that are mentioned both in the notice of hearing
as published and in the decree of registration. The sketches and the survey plans,
forming part of the evidence on record, show that the road, labelled as "A.
Bonifacio", goes alongside the western boundary of Parcel 1 (separating Parcel 1
and the Cementerio del Norte), until it reaches a point where it traverses the
northwestern portion of Parcel 1, such that from the point where it enters the area

of Parcel 1 what is left as the boundaries on the western side are the Cementerio del
Norte and the Roman Catholic Church (Exhibits UU, VV, 17, 19 and 29). Ignoring the
existence of the Cementerio del Norte and the Roman Catholic Church as the other
boundaries of Parcel 1 on the West, the lower court declared that the lands west of
the A. Bonifacio road, which form part of the lands that are claimed by the plaintiffs
in Civil Cases Nos. 3621 and 3622, are outside the boundary of Parcel 1 on the west
and that those particular areas had remained as unregistered lands and are not
covered by Original Certificate of Title No. 735. This finding of the lower court is
contrary to the very admission of the appellees in these three cases that all the
lands (six parcels in all) that they claim are included in the area of Parcel 1
mentioned in Original Certificate of Title No. 735. In paragraph XIV of the original, as
well as in the amended complaint, in each of these three cases, the plaintiffs
alleged that the lands that they claim "had either been fraudulently or erroneously
included ... in Parcel 1 (known as Santa Mesa Estate) of the Original Certificate of
Title No. 735 of the Land Records of the Province of Rizal." 24 In their appeal brief,
the appellees categorically stated that "Both the appellees and the appellant admit
that these parcels of land claimed by the plaintiffs in these three (3) civil cases are
located within Parcel 1 (Santa Mesa Estate) covered by Original Certificate of Title
No. 735". 25 In the pre-trial order of the lower court of December 18, 1957, it was
stated that the parcels of land litigated in these are portions of the lands covered by
OCT No. 735. 26 The lower court itself, at the earlier part of its decision, stated that
"both the plaintiffs and the defendants admit that the parcels of land litigated in
Civil Cases Nos. 3621, 3622 and 3623 are found within the boundaries of the
present Santa Mesa Heights Subdivision covered by Original Certificate of Title No.
735" 27 The appellees in these two cases had never asserted that part of the lands
that they claim are outside the boundaries of Parcel 1, nor did they assert that part
of the lands that they claim have remained unregistered and not covered by
Original Certificate of Title No. 735. The lower court had made a finding not only
contrary to the evidence of the appellees but even more than what the appellees
asked when it said in its decision that the western boundary of Parcel 1 is only the
A. Bonifacio road and that the lands claimed by the appellees west of this road had
never been registered. This Court certainly can not give its approval to the findings
and rulings of the lower court that are patently erroneous.
2. The lower court also erred when it declared Original Certificate of Title No. 735
null and void upon the ground that the decree of registration was not transcribed in
the Registration Book in accordance with the provisions of Section 41 of Act 496. In
its decision, the lower court said:
During the trial, the Book of Original Certificate of Title was brought to the Court.
The Court had occasion to see and examine the `ENTRY' made in the Registration
Book. The Court found that the Face of the Title which, under ordinary
circumstances, should be Page 1 is found as Page 2. The sheet containing the
technical description which should be page 2 is Page 1. The FACE of the Title, which

should have been Page 1, contained the last portion of the description of the land
described in the decree. The sheet containing the bulk of the description of the
lands decreed should have been Page 2. The so-called Original Certificate of Title
No. 735 found on Page 138, Book A-7 of the Register of Deeds of Rizal is, therefore,
null and void because the provisions of Section 41 of the Land Registration Law
have not been complied with. Said Section requires that the entry in the
Registration Book must be a transcription of the Decree and the paging should
consist of a leaf or leaves in consecutive order .... 28
The pertinent provisions of Section 41 of Act 496 reads, as follows:
SEC. 41.
Immediately after final decision by the court directing the registration
of any property, the clerk shall send a certified copy of such decision to the Chief of
the General Land Registration Office, who shall prepare the decree in accordance
with section forty of Act numbered four hundred and ninety-six, and he shall forward
a certified copy of said decree to the register of deeds of the province or city in
which the property is situated. The register of deeds shall transcribe the decree in a
book to be called the "Registration Book" in which a leaf, or leaves in consecutive
order, shall be devoted exclusively to each title. The entry made by the register of
deeds in this book in each case shall be the original certificate of title, and shall be
signed by him and sealed with the seal of his office....
The pertinent provisions of Section 40 of Act 496 reads, as follows:
SEC. 40.
Every decree of registration shall bear the day of the year, hour, and
minute of its entry, and shall be signed by the clerk. It shall state whether the owner
is married or unmarried, and if married, the name of the husband or wife. If the
owner is under disability, it shall state the nature of the disability, and if a minor,
shall state his age. It shall contain a description of the land as finally determined by
the court , . . The decree shall be stated in a convenient form for transcription upon
the certificates of title hereinafter mentioned.
Section 29 of Act 496 provides that as soon as the decree of title has been
registered in the office of the register of deeds, as provided in Section forty-one, the
property included in said decree shall become registered land under the Act. Section
42 of Act 496 provides that the certificate shall take effect upon the date of the
transcription of the decree.
This Court has held that as defined in Section 41 of Act 496, the certificate of title is
the transcript of the decree of registration made by the register of deeds in the
registry. 29
The appellant presented as evidence a photostat of Original Certificate of Title No.
735, as found in the Registration Book in the office of the register of deeds of Rizal

(Exhibit 50). 30 We have examined this document very carefully, and We find that it
is a copy of the original that satisfies all the requirements of a valid Torrens title as
provided for in Sections 40 and 41 of Act 496.
On the face, or on the first page, of this title, there is the certification of the Chief of
the Land Registration Office that the decree of registration was registered in Manila
on July 6, 1914 at 7:41 a.m.; and the certification of the Register of Deeds of Rizal
that the decree was received for transcription in his office on July 8, 1914 at 3:30
P.M. It is also stated on the face of this title that it was entered pursuant to Decree
No. 17431 of the Court of Land Registration, dated at Manila on the 7th day of
March 1914, in Case No. 7681 of said court. The names of the declared owners,
their civil status, their spouses if married, and their respective interest or share in
the lands covered by the title are stated on the face of this title. We have noted that
the technical descriptions of the lands (Parcels 1 and 2) covered by the title are
copied on the sheets constituting the title. We have compared the technical
descriptions of Parcels 1 and 2 as they appear on this photostat of Original
Certificate of Title No. 735 (Exhibit 50) with the technical descriptions of these lands
as they appear in the decree of registration (Exhibit Y for the plaintiffs, and Exhibit
25 for the defendant), and We find that the technical descriptions appearing on the
title are the complete and faithful reproduction, or transcription, of the technical
descriptions appearing in the decree of registration.
We have noted what the lower court found, that the technical descriptions of Parcels
1 and 2 do not begin on the face, or on the first page, of this title, as a technical
description is ordinarily copied on the certificate of title. What appears on the face
of this title is the last part of the technical description of Parcel 2. The technical
descriptions of Parcels 1 and 2 begin on the second page and end on the first page.
This circumstance, that is, that the technical descriptions of Parcels 1 and 2 do not
begin on the face, or on the first page, of the title, is the basis of the lower court in
ruling that the decree of registration was not transcribed in the registration book in
accordance with Section 41 of Act 496, and so Original Certificate of Title No. 735 is
null and void. We have noted, however, that in its decision the lower court made no
mention that in the transcription of the decree in the registration book any of the
data that is required in Section 40 of Act 496 to be included had been omitted. We
have also noted and this fact is undenied that the technical descriptions of
Parcels 1 and 2 as they appear in Decree of Registration No. 17431 are fully and
faithfully transcribed on the photostat of Original Certificate of Title No. 735 (Exhibit
50). There is no showing that the manner of transcribing the decree, as it appears
on that photostat, was done for a fraudulent purpose, or was done in order to
mislead. Considering that the decree of registration is fully transcribed in the
Registration Book, and also as copied in Original Certificate of Title No. 735, the
circumstance that the beginning of the technical descriptions is not found on the
face, or on the first page, of Original Certificate of Title No. 735 is not a ground to
nullify the said certificate of title. We agree with the lower court that the

transcription of the technical descriptions should begin, or should have been

started, on the face, or on the first page, of the title. We hold, however, that the fact
that this was not so done in the case of Original Certificate of Title No. 735 should
not be taken as a factor in determining the validity of Original Certificate of Title No.
735. This defect in the manner of transcribing the technical descriptions should be
considered as a formal, and not a substantial, defect. What matters is that the
original certificate of title contains the full transcription of the decree of registration,
and that the required data provided for in Section 40 of Act 496 are stated in the
original certificate of title. The lower court made a literal construction of the
provisions of Section 41 of Act 496 and strictly applied its construction in the
determination of the validity of Original Certificate of Title No. 735. We believe that
the provisions of Section 41 of Act 496 should be interpreted liberally, in keeping
with Section 123 of said Act which provides that "This Act shall be construed
liberally so far as may be necessary for the purpose of effecting its general intent."
If We adopt a literal construction of the provisions of Section 41 of Act 496, as was
done by the lower court, such that the defect in the manner or form of transcribing
the decree in the registration book would render null and void the original certificate
of title, then it can happen that the validity or the invalidity of a certificate of title
would depend on the register of deeds, or on the personnel in the office of the
register of deeds. The register of deeds, or an employee in his office, can wittingly
or unwittingly render useless a decree of registration regularly issued pursuant to a
decision of a registration court and thus nullify by the error that he commits in the
transcription of the decree in the Registration Book an original certificate of title
that has been existing for years. This strict interpretation or construction of Section
41 of Act 496 would certainly not promote the purpose of the Land Registration Law
(Act 496), which generally are to ascertain once and for all the absolute title over a
given landed property 31; to make, so far as it is possible, a certificate of title issued
by the court to the owner of the land absolute proof of such title 32; to quiet title to
land and to put a stop forever to any question of legality of title 33; and to decree
that land title shall be final, irrevocable and
indisputable. 34
We, therefore, hold that the formal defect in the transcription of Decree of
Registration No. 17431 in the Registration Book did not render null and void Original
Certificate of Title No. 735. Consequently, We declare that the two parcels of land
(Parcel 1 which includes the lands claimed by the appellees, and Parcel 2) covered
by Original Certificate of Title No. 735 are properly registered under the Torrens
System of registration.
3. The principal issue that has to be resolved in the present appeal is whether or not
the lower court had correctly declared that "Original Certificate of Title No. 735 ... is
null and void from the very beginning and of no effect whatsoever. 35

In the preceding discussions, We have held that the lower court erred when it
declared null and void Original Certificate of Title No. 735. We have found that the
registration proceedings that brought about the decree of registration upon which
was based the issuance of Original Certificate of Title No. 735 were in accordance
with the provisions of Act 496, as amended. We have held that the Land
Registration Court that ordered the issuance of the decree of registration had
jurisdiction to hear and decide the application for registration filed by Mariano
Severo, Teresa Eriberta, Juan Jose, Demetrio Asuncion, and Augusto Huberto, all
surnamed Tuason y de la Paz. The records show that the notice of hearing of the
application, which embodied the technical descriptions of the two parcels of land
(Parcel 1, known as the Sta. Mesa Estate, and Parcel 2, known as the Diliman
Estate), was duly published as required by law. The records show that the hearing
on the application was regularly held, and that the registration court had seen to it
that no land which was not included in the original survey plan and not covered by
the original application was made the subject of the registration proceedings. We
have found that the decree of registration was properly issued by the Land
Registration Office pursuant to the decision of the Land Registration Court, and that
said decree of registration was fully transcribed in the Registration Book in the office
of the Register of Deeds of the province of Rizal. We have found also that the six
parcels of land that are claimed by the appellees. in the three cases now before Us
are all included in Parcel 1 that is covered by Original Certificate of Title No. 735.
In view of Our findings and conclusion that Original Certificate of Title No. 735 was
issued in accordance with the provisions of Act 496, and that the six parcels of land
that are claimed by the appellees in the present cases are covered by said
certificate of title, what is left for this Court to decide is whether or not the
appellees still have any legal right over the six parcels of land that they claim.
Let it be noted that, as maintained by counsel for the appellees, the action of the
appellees is principally to recover the ownership and possession of the six parcels of
land mentioned and described in their complaints. The appellees would accomplish
their objective through alternative ways: (1) secure the nullification of the decision
of the Land Registration Court in LRC No. 6781, the nullification of the Decree of
Registration No. 17431 and the nullification of Original Certificate of Title No. 735;
(2) if they fail in their efforts to secure the desired nullifications, with Original
Certificate of Title No. 735 being considered valid and effective, they seek the
reconveyance to them by the defendants named in their complaints, including
herein appellant J.M. Tuason & Co., Inc., of the six parcels of land that they claim;
and (3) if they cannot secure a reconveyance, they seek to secure payment to them
by the defendants named in their complaints of the actual value of the six parcels of
land that they claim.
It appears to Us that the appellees are not sure of their stand, or have not adopted
a definite stand, in asserting the rights that they claim.

It is the settled rule that a party seeking the reconveyance to him of his land that he
claims had been wrongly registered in the name of another person must recognize
the validity of the certificate of title of the latter. It is also the rule that a
reconveyance may only take place if the land that is claimed to be wrongly
registered is still registered in the name of the person who procured the wrongful
registration. No action for reconveyance can take place as against a third party who
had acquired title over the registered property in good faith and for value. And if no
reconveyance can be made, the value of the property registered may be demanded
only from the person (or persons) who procured the wrongful registration in his
name. 36
The lower court accepted, and sustained, the assertion of the appellees that the
proceedings in LRC No. 7681 of the Court of Land Registration were null and void
and that Original Certificate of Title No. 735 is null and void ab initio and of no
effect. The trial court even went to the extent of declaring that some of the parcels
of land claimed by the appellees in Civil Cases Nos. 3621 and 3622 (now G.R. Nos.
L-26127 and L-26128 before this Court) were not covered by Original Certificate of
Title No. 735. The lower court forthwith declared the appellees the owners of the
parcels of land claimed by them, as described in their complaints. Strangely
enough, the lower court, upon declaring Original Certificate of Title No. 735 null and
void, did not make any statement, or observation, regarding the status or situation
of the remaining lands (Parcels 1 and 2) covered by Original Certificate of Title No.
735 after adjudicating to the appellees the six parcels of land claimed by them in
their complaints.
In the present appeal counsel for the appellees had maintained, and has
endeavored to show, that the lower court was correct in annulling Original
Certificate of Title No. 735 and in adjudicating in favor of the appellees the
ownership and possession of the six parcels of land claimed by them in their
complaints.
But, as hereinbefore held by Us, the lower court erred in declaring Original
Certificate of Title No. 735 void and of no effect. We have held that Original
Certificate of Title No. 735 was issued as a result of the registration proceedings in
LRC No, 7681 which was regular and that said certificate of title is valid and
effective. The proceedings in LRC 7681 being in rem, the decree of registration
issued pursuant to the decision rendered in said registration case bound the lands
covered by the decree and quieted title thereto, and is conclusive upon and against
all persons, including the government and all the branches thereof, whether
mentioned by name in the application, notice or citation, or included in the general
inscription "To whom it may concern", and such decree will 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 judgment or decree. Such decree may

only be reopened if any person deprived of land or of any estate or interest therein
by decree of registration obtained by fraud would file in the competent court of first
instance a petition for review within one year after entry of the decree, provided no
innocent purchaser for value had acquired an interest on the land, and upon the
expiration of said period of one year, the decree, or the certificate of title issued
pursuant to the decree, is incontrovertible (See. 38, Act 496). In the case now
before Us, the Decree of Registration No. 17431 in LRC 7681 was entered on July 8,
1914. It is undisputed that no person had filed any petition for review of the decree
of registration in LRC 7681 within the period of one year from July 8, 1914. That
decree of registration, and Original Certificate of Title No. 735 issued pursuant
thereto, therefore, had been incontrovertible since July 9, 1915.
Moreover, innocent purchases for value had acquired interest in the lands covered
by Original Certificate of Title No. 735. 37
The Original Certificate of Title No. 735 was issued on July 8, 1914 in the names of
the original an applicants for registration, namely, Mariano Tuason y de la Paz,
Teresa Eriberta Tuason y de la Paz, Juan Jose Tuason y de la Paz, Demetrio Asuncion
Tuason y de la Paz and Augusta Huberto Tuason y de la Paz. Herein appellant J.M.
Tuason & Co., Inc. is not one of those who were registered as the original owners
mentioned in Original Certificate of Title No. 735. When the original complaints were
filed in these three cases in the Court of First Instance of Rizal the parties named
defendants in each of the three cases were Mariano Severo Tuason y de la Paz,
Teresa Eriberta Tuason y de la Paz, Juan Jose Tuason y de la Paz, Demetrio Asuncion
Tuason y de la Paz, Augusta Huberto Tuason y de la Paz, the heirs of each one of
these defendants (without naming them), and J.M. Tuason & Co., Inc. Of all the
defendants named in the three complaints only defendant J.M. Tuason & Co., Inc.
appeared and filed its answer to the complaints. All the other defendants did not
appear, and so they were all declared in default. 38 It had to happen that way
because as of the time when the three complaints were filed on May 19, 1955 the
ownership of Parcel 1 that was originally covered by Original Certificate of Title No.
735 had already passed to defendant J.M. Tuason & Co., Inc. In fact this defendant
had caused Parcel 1 to be subdivided and had sold the subdivision lots.
The records show that Parcel 1 in Original Certificate of Title No. 735 was part of the
properties of the Mayorasgo Tuason (Tuason Entail) which became involved in a
litigation in the Court of First Instance of Manila. 39 During the pendency of the case
the properties of the Mayorasgo Tuason were administered by the Bank of the
Philippine Islands as the judicial receiver. In the order of the Court of First Instance
of Manila, dated May 5, 1938, in Civil Case No. 24803, the Bank of the Philippine
Islands, as receiver, was authorized, directed and ordered to execute, upon
payment to it of the sum of P763,925.75, a deed of transfer and assignment in favor
of the Heirs of D. Tuason, Inc. of the property covered by Transfer Certificate of Title
No. 31997, which was originally Parcel 1 included in Original Certificate of Title No.

735 (Exh. 13-B). On June 13, 1938 the receiver Bank of the Philippine Islands
executed the deed of transfer and assignment (Exh. 13-A). Transfer Certificate of
Title No. 34853 of the Register of Deeds of Rizal was forthwith issued in the name of
the Heirs of D. Tuason, Inc. (Exhs. 12-b and 36). The deed of transfer and
assignment was approved by the court in an order dated June 17, 1938. This
conveyance to the Heirs of D. Tuason, Inc. took place at a time when the Supreme
Court had already decided the case of Bank of the Philippine Islands vs. Acua (59
Phil. 183) wherein this Court upheld the validity of Original Certificate of Title No.
735 and also the validity of the transfer certificate of title emanating therefrom. 40
The circumstances attending the acquisition by the Heirs of D. Tuason, Inc. of the
land covered by Transfer Certificate of Title No. 31997 which was formerly Parcel
1 covered by Original Certificate of Title No. 735 clearly indicate that said
corporation acquired its title in a regular transaction as purchaser in good faith and
for value. On June 15, 1938 the Heirs of D. Tuason, Inc. in turn sold the same
property to J.M. Tuason & Co., Inc., and Transfer Certificate of Title No. 35073 was
issued in the name of the latter (Exhs. 12-c and 37).
The lower court declared that herein appellant J.M. Tuason & Co., Inc. was a
purchaser in bad faith. We do not find any evidence in the record that would sustain
such a finding of the lower court. One reason given by the lower court in declaring
appellant J.M. Tuason & Co., Inc. a purchaser in bad faith is the fact that the
incorporators of the Heirs of D. Tuason, Inc. and the incorporators of J. M. Tuason &
Co., Inc. were practically the same persons belonging to the same Tuason family. We
do not see anything wrong if some incorporators of the Heirs of D. Tuason Inc. are
also incorporators of the J.M. Tuason & Co., Inc. During these days when businesses
are promoted, operated, and managed, through corporate entities, it is not
surprising to see two or more corporations organized by the same persons or group
of persons with different purposes, for different lines of business and with distinct or
separate assets and interests. Besides, as has been shown, the Heirs of D. Tuason,
Inc. acquired the land (Parcel 1 in Original Certificate of Title No. 735) from the Bank
of the Philippine Islands, the receiver of the properties of the Mayorasgo Tuason, in
a sale that was authorized, and subsequently approved, by the court. The Heirs of
D. Tuason, Inc. paid the sum of P763,950.80 for the property. Certainly if the Heirs of
D. Tuason, Inc. had acquired the land originally covered by Original Certificate of
Title No. 735 in a transaction that was authorized by the court, for a valuable
consideration, thereby acquiring a good title over the property as a purchaser in
good faith and for value, the title that it transferred to J. M. Tuason & Co., Inc. when
it sold same property to the latter was also a good title, and J.M. Tuason & Co., Inc.
was also a purchaser in good faith and for value even if it appears that the
incorporators of the two corporations belong to the same Tuason family. The records
of these cases are bereft of any evidence which would indicate that the sale of
Parcel 1 in question by the Heirs of D. Tuason, Inc. to J. M. Tuason & Co., Inc. was
fraudulent.

Another reason given by the lower court in declaring appellant J.M. Tuason & Co.,
Inc. a buyer in bad faith is that when said appellant bought Parcel 1 originally
covered by Original Certificate of Title No. 735 it was aware of the fact that the
appellees or their predecessors in interest were in possession of, and were
cultivating, the six parcels of land that they now claim in these cases. The
conclusion of the lower court is too strained. It should be remembered that the
registered property bought by J.M. Tuason & Co., Inc. had an area of some 879
hectares. It could happen that certain relatives or ancestors of appellees had been
squatting on some portions of the land and claimed certain areas as their own, to
the extent of having the areas claimed by them declared for taxation purposes in
their names. Thus the appellees presented in evidence tax declarations that appear
to have taken effect as of 1941. We have noted, however, that at the back of those
tax declarations are written the words "This parcel is a duplicate of the land under
Tax No. 764-J. M. Tuason & Co., Inc." (Exhs. E-Alcantara, F-Alcantara, FF-1-Benin, GGBenin, HH-Benin, BBB-Pili, and BBB-1-Pili). 41 These annotations simply reveal that
when the predecessors of the appellees had those tax declarations made to cover
the lands that they claim, those lands were already included in the tax declaration
of appellant J. M. Tuason & Co., Inc. Appellant J. M. Tuason & Co., Inc. had been
exercising, and asserting, its proprietary rights over the lands in question after it
bought the same from the Heirs of D. Tuason, Inc. 42 This is borne by the statement
in the order, dated September 26, 1955, issued by Judge Juan P. Enriquez who at the
time was presiding the branch of the Court of First Instance of Rizal where these
three were pending, as follows:
3.
It having been shown that J. M. Tuason & Co. had title covering the land in
question which they are subdividing into small lots for sale and in view of the
observation under paragraph 2 hereof the Court finds that there is no justifiable
reason to maintain the writ of preliminary injunction that has been issued. This is
particularly true in Civil Case No. 2622, defendants having secured a final judgment
against plaintiffs Juan Alcantara and Jose Alcantara for ejectment before the
Municipal court of Quezon City; and such injunction would annul the order of the
execution issued by the Quezon City courts. It should be noted that the herein
plaintiffs at the beginning pleaded to the Court that the area on which their
respective houses stand be not touched and their possession thereof be respected
by defendant J. M. & Co. In other words, each plaintiff is merely asking for about 250
square meters each which represents the land on which the house stands and their
immediate yard, and not the whole land covered by these three or 68 hectares. On
the other hand, the Court requires J. M. Tuason & Co. to put up a bond of P2,000 in
favor of each of the defendant (sic) to answer for whatever damages he may suffer
by reason of the continuance during the action of the acts complained
of. 43

Besides, the possession by the appellees, either by themselves or through their

predecessors in interest, if there was such possession at all, would be unavailing
against title holder of a Torrens certificate of title covering the parcels Of lands now
in question. From July 8, 1914 when Certificate of Title No. 735 was issued, no
possession by any person of any portion of the lands covered by said original
certificate of title, or covered by a subsequent transfer certificate of title derived
from said original certificate of title, could defeat the title of the registered owner of
the lands covered by the certificate of title. In this connection, let it be noted that
appellant J. M. Tuason & Co., Inc. became the registered owner of Parcel 1, which
was originally covered by Original Certificate of Title No. 735, only on June 15, 1938,
or almost 24 years after Original Certificate of Title No. 735 was issued.
It can well be said that J. M. Tuason & Co., Inc. had relied on the title of the Heirs of
D. Tuason, Inc. when it bought the land covered by Transfer Certificate of Title
No.34853, and the Heirs of D. Tuason, Inc. likewise had relied on the title of the
Mayorasgo Tuason (Mariano Severo Tuason y de la Paz, et al.) when it bought the
land covered by Transfer Certificate of Title No. 31997 from the judicial receiver,
duly authorized and approved by the court. We, therefore, can not agree with the
lower court when it declared appellant J. M. Tuason & Co., Inc. a purchaser on bad
faith.
The evidence shows that appellant J. M. Tuason & Co., Inc. had converted the land
originally covered by Original Certificate of Title No. 735, including the six parcels
claimed by appellees into a subdivision, and numerous persons and entities had
purchased the subdivision lots, and the purchasers in turn were issued transfer
certificates of title covering the lots that they bought, based on the transfer
certificate of title in the name of J. M Tuason & Co., Inc. The buyers of the lots relied
upon the certificate of title in the name of J. M. Tuason & Co., Inc. and because they
paid for the lots they certainly are purchasers in good faith and for value. The
purchasers of these lots have built thereon residential houses, office buildings,
shops, hospital, even churches. But the lower court, disregarding these
circumstances, declared null and void all transfer certificates of title that emanated,
or that were derived, from Original Certificate of Title No. 735. This is a grave error
committed by the lower court. And the error is compounded when the lower court
ordered appellant J. M. Tuason & Co., Inc. and all those claiming under said
appellant, to vacate and restore to the appellees the possession of the parcels of
lands that are claimed by them in the present cases. The possessors of the lots
comprised within the six parcels of land in question, and who hold certificates of
title covering the lots that they bought, are not parties in the present cases, and yet
the decision of the lower court would annul their titles and compel them to give up
the possession of their properties. To give effect to the decision of the lower court is
to deprive persons of their property without due process of law. 44 The decision of
the lower court would set at naught the settled doctrine that the holder of a

certificate of title who acquired the property covered by the title in good faith and
for value can rest assured that his title is perfect and incontrovertible. 45
In view of the foregoing discussions, it is obvious that the action of the appellees in
the three cases now before this Court must fail..
It has been shown that appellant J. M. Tuason & Co., Inc. had acquired a valid title
over the land which includes the six parcels that are claimed by the appellees. The
fact, that the predecessors in interest of the appellees or any person, for that
matter had not filed a petition for the review of the decree of registration in LRC
No. 7681 within a period of one year from July 8, 1914 when the decree of
registration was issued, is a circumstance that had forever foreclosed any
proceeding for the review of said decree. As We have adverted to, that decree of
registration had become incontrovertible. An action, similar to one brought by the
appellees in each of the present cases, which attack collaterally the said decree of
registration cannot be entertained. 46 Neither may the action of the appellees for
reconveyance of the lands in question be entertained because such action had
already prescribed, barred by laches, considering that Original Certificate of Title
No. 735 had been issued way back in 1914 and the complaint in the present cases
were filed only on May 19, 1955, or after a lapse of some 41 years. Moreover, as of
the time when these complaints were filed the six parcels of land claimed by the
appellees are no longer covered by the certificate of title in the names of the
persons who procured the original registration of those lands. The title to Parcel 1,
which includes the six parcels of land claimed by the appellees, had passed to the
hands parties who were innocent purchase for value. This Parcel 1 which was one of
the two parcels originally covered by Original Certificate of Title No. 735, was
subsequently covered by Transfer Certificate of Title No. 31997. As has been shown,
this Parcel 1 was part of the properties of the Mayorasgo Tuason and it was
conveyed by order of the court in Civil Case No. 24803 of the Court of First Instance
of Manila to the Heirs of D. Tuason, Inc., and the latter in turn conveyed the same to
J. M. Tuason & Co., Inc. Transfer Certificate of Title No. 34853 in the name of the
Heirs of D. Tuason, Inc. was cancelled and transfer Certificate of Title No. 35073 was
issued in the name of J. M. Tuason & Co., Inc. It has also been shown that J. M.
Tuason & Co., Inc. had converted Parcel 1 to a subdivision. Numerous persons and
entities bought those subdivision lots, and to those buyers were issued transfer
certificates of title covering the lots that they acquired. It is very clear, therefore,
that an action for reconveyance cannot prosper against appellant J. M. Tuason & Co.,
much less against the registered owners of the lots that form parts of the six parcels
of land that are claimed by the appellees. 47
Neither may the appellees have a cause of Action for damages against appellant J.
M. Tuason & Co., Inc., considering that said appellant is not one of the original
registered owners that procured the registration of the land. There is no evidence
that J. M. Tuason & Co., Inc. had anything to do with the registration proceedings

which brought about the issuance of Original Certificate of Title No. 735 even
supposing that the registration was procured fraudulently.
4. Numerous cases have been decided by this Court, dealing on questions regarding
the validity and ineffectiveness of Original Certificate of Title No. 735. The rulings of
this Court in those cases are necessarily relevant to, and of decisive bearing in, the
resolution of the issues involved in the three cases now at bar.
(a) We have earlier cited the case of the Bank of the Philippine Islands vs. Acua (59
Phil., 183), where the jurisdiction of the Court of Land Registration that issued the
decree which was the basis of Original Certificate of Title No. 735 was questioned,
and this Court upheld the jurisdiction of the registration court and categorically
pronounced the validity of Original Certificate of Title No. 735.
(b) There is the case of Jose Alcantara, et al., versus Mariano Tuason y de la Paz, et
al. (G.R. No. L-4998, Mar. 13, 1953, 92 Phil. 796), where this Court declared that
Original Certificate of Title No. 735 is incontrovertible and is conclusive against all
persons claiming, either by themselves or by their predecessors in interest, rights
over the lands covered by said certificate of title.
We find that the Alcantara case is intimately related to the three cases at bar, and
the rulings of this Court in that former case are of decisive application to these
three cases.
On August 29, 1950 a complaint was filed in the Court of First Instance of Rizal
(Quezon City Branch) by Jose Alcantara, Elias Benin, Pascual Pili, Alejandro de Dios,
Tomas Bagagonio, Quintina Sandoval, and Tomasa Lazaro against Mariano Tuason y
de la Paz, Heirs of Mariano Tuason, J. M. Tuason & Co., Inc. and Gregorio Araneta,
Inc. This case was docketed as Civil Case No. Q-156. It will be noted that three of
the plaintiffs in Civil Case No. Q-156, namely, Jose Alcantara, Elias Benin, and
Pascual Pili, are among the original plaintiffs in the three cases now before this
Court; Elias Benin, in Civil Case No. 3621; Jose Alcantara, in Civil Case No. 3622; and
Pascual Pili, in Civil Case No. 3623. Jose Alcantara, Elias Benin and Pascual Pili, as
plaintiffs in that Civil Case No. Q-156 claimed that they were the lawful owners of
six (of the ten) parcels of land described in paragraph 2 of their complaint Jose
Alcantara claiming two parcels, Elias Benin claiming three parcels, and Pascual Pili
claiming one parcel. Substantially, it is alleged in the complaint 48 that each
plaintiff, by himself and by his predecessors in interest, as lawful owner, had been in
the actual, open and continuous possession of his own respective parcel, or parcels,
of land from time immemorial until January 1950 when the defendants by force and
by the use of armed men started to convert their lands into a subdivision; that on
July 8, 1914 the defendants had obtained Original Certificate of Title No. 735 over a
parcel of land which included the lands possessed by them (plaintiffs) and which
they and their ancestors had been enjoying as owners, for more than thirty years

before the issuance of the title; that the silence and inaction of the defendants since
the date of their original certificate of title showed that said certificate of title did
not express the status of the their claim to the said parcels, that plaintiffs were not
given formal notice by the defendants of the registration of the lands, such that
defendants' certificate of title No. 735 was not in accordance with law, and that
defendants did not have proper title for registration to the parcels of land owned by
the plaintiffs, as described in the complaint; and that because the certificate of title
issued by the register of deeds was still in the names of the defendants, successors
in interest of the Tuasons y de la Paz, and has not passed to innocent parties for
valuable consideration, the conveyance of the same to the plaintiffs was in order.
The plaintiffs prayed that therein defendants be ordered to execute deeds of
conveyance of the parcels of land described in their complaint in favor of the
plaintiffs, that the defendants' certificate of title be cancelled and the corresponding
certificate be ordered issued in the names of the plaintiffs. We quote from the
decision:
The material allegations of the complaint are: that plaintiffs are owners of the
parcels of land set forth in their complaint, which parcels are situated along
Bonifacio street, barrio of San Jose, Quezon City, and that they have been in actual,
open, and continuous possession and enjoyment thereof without molestation from
defendants from time immemorial to the present; that on July 8, 1914, defendants
obtained a certificate of title (No. 735) over a parcel of land, which included the
lands by plaintiffs, and which they and their ancestors had been enjoying as owners
more than 30 years before the issuance of said title; that on June 23, 1950,
defendants caused the removal of two houses of plaintiffs on the land; and that
defendants did not file any action against plaintiffs before the inclusion of the lands
in their title, in violation of the "due process of law" clause of the Constitution. There
are other allegations which really are arguments of legal discussion, thus: that
defendants could not acquire title by the registration proceedings against the lawful
holder, especially without formal notice, because registration is to confirm title, not
to acquire it; that the silence of the defendants since the issuance of their title
shows that this does not express the lawful status of their claim, etc. The
defendants moved to dismiss the complaint on the ground that it states no of action
and that, if it does, the same is barred by the statute of limitations. The court
sustained this motion on the second ground. Subsequently, plaintiffs filed an
amended complaint with the same substantial allegations, but with new ones, i.e.,
that it was in January, 1950, that they learned that their lands were included in the
registration proceedings which culminated in the issuance of defendants' title; that
defendants never claimed ownership to the lands, but directly or indirectly allowed
plaintiffs to continue exercising their rights of ownership over the same. This
amended complaint was denied admission, and the motion for the reconsideration
of the order of dismiss was also denied. Hence the appeal.
In affirming the order of the lower court dismissing the complaint, this Court held:

Without considering whether the trial court's refusal to admit the amended
complaint is erroneous or not we are constrained to hold that the dismissal of the
action, even with the amended complaint is a basis thereof, is correct. From the
allegations of both the original and amended complaints, it appears that the
defendants are holders of a certificate of title issued on July 8, 1914 as a
consequence of registration proceedings. There is no allegation in both original and
amended complaints that the plaintiffs were not notified, or were not aware, of the
registration proceedings. It is presumed, therefore, that as occupants proper notices
thereof were served on them and that they were aware of said proceedings. If this is
so, then the plaintiffs, who were, or whose predecessors in interest were, on the
land during the registration proceedings, were bound by said proceedings. The
latter are in rem and bind the whole world, whether served with notice personally or
not. (Grey Alba vs. De la Cruz, 17 Phil., 49). And the decree of registration, in
pursuance of which defendants' title was issued, binds the land and quiets title
thereto, and is conclusive against the plaintiffs. (Section 38, Land Registration Act).
The supposed right of plaintiffs by reason of their alleged continued possession for
thirty years was, therefore, destroyed fully and completely by the registration
proceedings, and their supposed ignorance of the inclusion of the lands can not
exclude them from the effects of the registration proceedings, and the supposed
conduct of defendants in allowing plaintiffs to continue on the land after registration
can not serve as basis of any title or right thereto, because acts of a possessory
character by tolerance of an owner does not constitute possession (Article 1942,
Spanish Civil Code), and because no title to registered land in derogation to that of
the registered owner shall be acquired by prescription or adverse possession
(Section 46, Land Registration Act).
Thus, in the Alcantara case, as in the Bank of the Philippine Island vs. Acua case,
supra, this Court upheld the validity of the registration proceedings which
culminated in the issuance of Original Certificate of Title No. 735. This Court
declared that "the decree of registration, in pursuance of which defendants' title
was issued, binds the land and quiets title thereto and is conclusive against the
plaintiffs." In other words, in virtue of that decision, the plaintiffs in Civil Case No. Q156, among them Jose Alcantara, Elias Benin and Pascual Pili, and their successorsin-interest, could no longer question the validity of Original Certificate of Title No.
735, nor claim any right of ownership over any portion of the land that is covered by
said certificate of title.
But Elias Benin, Jose Alcantara, and Pascual Pili again came to court to claim
ownership over portions of the land covered by Original Certificate of Title No. 735.
On May 19, 1955 Elias Benin, joined by his brother Victor Benin and his sister Marta
Benin, filed Civil Case No. 3621; Jose Alcantara joined by his brother Juan Alcantara,
filed Civil Case No. 3622; and Pascual Pili, joined by his sister Luisa Pili, filed Civil

Case No. 3623. These are the three cases which originated in the Court of First
Instance of Rizal (Quezon City Branch) which are now before this Court on appeal.
In the earlier part of this decision, We have pointed out that the complaints in these
three cases had been amended so as to include as parties plaintiffs all the heirs of
the persons who were alleged to be the owners of the parcels of land claimed by the
plaintiffs in each case. Thus, the complaint in Civil Case No. 3621 was amended to
include all the heirs of Sixto Benin, the alleged owner of the three parcels of land
described in the complaint and the common predecessor in interest of all the
plaintiffs in the case. The complaint in Civil Case No. 3622 was amended to include
all the heirs of Bonoso Alcantara, the alleged owner of the two parcels of land
described in the complaint and the common predecessor in interest of all the
plaintiffs in the case. The complaint in Civil Case No. 3623 was amended to include
all the heirs of Candido Pili, the alleged owner of the one parcel of land described in
the complaint and the common predecessor in interest of all the plaintiffs in the
case.
In those three cases, in the court below, herein appellant J.M. Tuason & Co., Inc.
(defendant therein) filed a motion to dismiss upon the principal ground "that the
cause of action (assuming there is one) is barred by prior judgment, or by the
statute of limitation". In its motion to dismiss J.M. Tuason & Co., Inc. contended that
the decision of the Supreme Court in the Alcantara case is a bar to the action of the
plaintiffs in Civil Cases Nos. 3621, 3622 and 3623 of the Court of the First Instance
of Rizal. The lower court, however, denied the motion to dismiss. In its answer to
the complaint in each of these three cases, J.M. Tuason & Co., Inc. set up as
affirmative defenses the very grounds of its motion to dismiss. After the plaintiffs
had closed their direct evidence, J.M. Tuason & Co., Inc. filed another motion to
dismiss upon the ground that the action was barred by the statute of limitations and
by a prior judgment, and that the plaintiffs had not presented evidence to prove
their claim of ownership. This second motion to dismiss was also denied by the
lower court. 49
In its decision, which is now on appeal before this Court, the lower court held that
the decision in the Alcantara case was not a bar to the action in these three cases,
ruling that there is no identity, of the parties, of the subject matter, and of the
cause of action, between Civil Case No. Q-156, on the one hand, and Civil Cases
Nos. 3621, 3622, and 3623, on the other.
It is now contended by appellant J.M. Tuason & Co. Inc., in the present appeal, that
"the trial court erred in not dismissing these cases on the ground of res judicata and
in denying the motion to dismiss filed on said ground." 50
Does the judgment in the aforementioned Alcantara case operate as a bar to the
action of the appellees in the three cases at bar?

In order that the rule of res judicata may apply, the following requisites must be
present: (a) the former judgment must be final; (b) it must have been rendered by a
court having jurisdiction of the subject-matter and of the parties; (c) it must be a
judgment on the merits; and (d) there must be, between the first and the second
actions, identity of parties, of subject-matter, and of cause of action (San Diego vs.
Cardona, 70 Phil. 281-283).
We find that the judgment in Civil Case No. Q-156 (G.R. No. L-4998) is a final
judgment on the merits that was rendered by a court having jurisdiction over the
subject matter and over the parties. The only requisite for res judicata which we
have to determine is whether between Civil Case Q-156 (G.R. No. 4998), on the one
hand, and Civil Cases Nos. 8621, 3622 and 3623 (G.R. Nos. L-26127, 26128 and
26129), on the other, there is identity of parties, of subject matter and of cause of
action.
In our examination of the records and the evidence, We find that there is identity of
subject matter. In the lower court's pretrial order dated December 18, 1957, which
was based on the agreement of the parties, it is stated
That the parcels of land in litigation in Case No. Q-156 are substantially identical to
the same parcels of land litigated in them cases Nos. 3621, 8622 and
3623. 51
We also find that there is identity of cause of action. It is apparent, upon reading the
original complaint (Exhibit 1) in Civil Case Q-156 and the decision in the Alcantara
case (G.R. No. L-4998), that the cause of action in Civil Case Q-156 was based on
the alleged fact that the defendants had dispossessed and deprived the plaintiff
therein of the parcels of land described in the complaint, which were claimed by the
plaintiffs as their own and of which they had been in actual, open and continuous
possession from time immemorial, and that said lands were wrongly included in
Certificate of Title No. 735 that was obtained by the defendants. In the three cases
at bar, plaintiffs (now appellees) also complain of having been dispossessed and
deprived by the defendants of the parcels of land of which they were absolute
owners and possessors, by themselves and through their predecessors in interest,
since time immemorial and that their said lands wrongly included in Parcel 1 of
Original Certificate of Title No. 735 that was obtained by the defendants. In Civil
Case No. Q-156, on the one hand, and in the three cases now at bar, on the other,
the plaintiffs therein seek the nullification of Original Certificate of Title No. 735, and
the reconveyance to them of the parcels of land that they claim as theirs. 52 It
appears clear to Us that in Civil Case No. Q-156 and in the three cases at bar, the
object or purpose of the plaintiffs is to recover the ownership and possession of the
same parcels of land.

As far as the parties are concerned, We find that there is no exact identity of parties
between Civil Case No. Q-156, on the one hand, and Civil Cases Nos. 3621, 3622
and 3623, on the other. It appears that of the plaintiffs in Civil Cases Nos. 3621,
3622 and 3623 only Elias Benin, Jose Alcantara and Pascual Pili were plaintiffs in
Civil Case No. Q-156. In Civil Case No. Q-156, the defendants were Mariano Tuason y
de la Paz, Heirs of Mariano Tuason, J.M. Tuason & Co., Inc. and Gregorio Araneta,
Inc., while in Civil Cases Nos. 3621, 3622 and 3623 the defendants were Mariano
Severo, Teresa Eriberta, Juan Jose, Demetrio Asuncion, Augusta Huberto, all
surnamed Tuason y de la Paz (the persons appearing as registered owners in
Original Certificate of Title No. 735), their heirs, and J.M. Tuason and Co., Inc. We
find that the natural persons surnamed Tuason, and the heirs, refer to the persons
who belong to the Tuason family that secured the registration of Parcel 1 in Original
Certificate of Title No. 735. The defendant Gregorio Araneta Inc. in Civil Case No. Q156 is the administrator of the Tuason properties. So, the parties defendants in all
these cases are practically the same. We find, however, that in Civil Case No. Q-156
as well as in Civil Cases Nos. 3621, 3622 and 3623, it was the defendant J. M.
Tuason & Co., Inc. that actually controverted the claims of the plaintiffs.
After a careful study, We are of the considered view that the judgment in the
Alcantara case is a bar to the action of the plaintiffs who are the heirs of Elias Benin
in Civil Case No. 3621 (G.R. No. 26127), of plaintiff Jose Alcantara in Civil Case No.
3622 (G.R. No. 26128), and of plaintiff Pascual Pili in Civil Case No. 3623 (G. R. No.
26129) under the doctrine of res adjudicata. We are likewise of the considered view
that the decision in the Alcantara case would serve to rule out the action of the
other plaintiffs in Civil Cases Nos. 3621, 3622 and 3623 under the doctrine of stare
decisis.
In Civil Case No. 3621 the original plaintiffs were Victor Benin, Marta Benin, and
Elias Benin--two brothers and a sister. In the amended complaint it was alleged that
these three original plaintiffs had another brother, and another sister, namely
Esteban Benin and Felipa Benin. But because all the five Benin brothers and sisters
died, they were all substituted by their heirs, such that as of the time when Civil
Case No. 3621 was decided the plaintiffs were: (1) the heirs of Victor Benin; (2) the
heirs of Marta Benin; (3) the heirs of Elias Benin; (4) the heirs of Esteban Benin, and
(5) the heirs of Felipa Benin.
In Civil Case No. 3622 the original plaintiffs were Juan Alcantara and Jose Alcantara.
Juan Alcantara died, and he was substituted by his heirs, such that as of the time
Civil Case No. 3622 was decided the plaintiffs were: (1) the heirs of Juan Alcantara,
and (2) Jose A. Alcantara.
In Civil Case No. 3623 the original plaintiffs were Pascual Pili and Luisa Pili. In the
amended complaint, it was alleged that Luisa Pili and Pascual Pili had two brothers
who were already dead, namely, Diego Pili and Manuel Pili, so they were substituted

by their heirs. Luisa Pili died, and she was substituted by her heirs, such that as of
the time Civil Case No. 3623 was decided, the plaintiffs were: (1) the heirs of Diego
Pili; (2) the heirs of Manuel Pili; (3) the heirs of Luisa Pili, and (4) Pascual Pili.
It would thus appear that of the plaintiffs in Civil Case No. 3621 Elias Benin is the
only one who was a plaintiff in Civil Case No. Q-156; of the plaintiffs in Civil Case No.
3622 Jose E. Alcantara, who is still living, is the only one who was a plaintiff in Civil
Case No. Q-156; of the plaintiffs in Civil Case No. 3623 Pascual Pili, who is still living,
is the only one who was a plaintiff in Civil Case No. Q-156.
It being Our finding that the judgment in Civil Case No. Q-156 (G.R. No. L-4998-the
Alcantara case) is a final judgment on the merits that was rendered by a court that
had jurisdiction over the subject matter and over the parties, and that there is
identity of subject matter and cause of action between Civil Case No. Q-156, on the
one hand, and Civil Cases Nos. 3621, 3622, and 3623, on the other; and it
appearing that Elias Benin is a party-plaintiff both in Civil Case Q-156 and Civil Case
No. 3621; that Jose Alcantara is a party-plaintiff in both Civil Case No. Q-156 and
Civil Case No. 3622; that Pascual Pili is a party-plaintiff in both Civil Case No. Q-156
and Civil Case No. 3623; and that the defendants in Civil Case No. Q-156 and in Civil
Cases Nos. 3621, 3622 and 3623 are practically the same persons and/or entities,
We hold that the doctrine of bar by a previous judgment or res adjudicata squarely
applies to Elias Benin, or to his heirs and successors in interest in Civil Case No.
3621; to Jose Alcantara and his heirs or successors in interest in Civil Case No. 3622;
and to Pascual Pili and his heirs or successors in interest in Civil Case No. 3623. 53
We now consider the case of the other plaintiffs in Civil Cases Nos. 3621, 3622 and
3623.
It will be noted that in Civil Case No. 3621 the plaintiffs base their claim of
ownership of the three parcels of land described in the complaint on their being
heirs or successors in interest of Sixto Benin who died in 1936. In Civil Case No.
3622 the plaintiffs base their claim of ownership over the two parcels of land
described in their complaint on their being the heirs and successors in interest of
Bonoso Alcantara who died in 1934. In Civil Case No. 3623 the plaintiffs base their
claim of ownership of the one parcel of land described in their complaint on their
being the heirs and successors in interest of Candido Pili who died in 1931.
When Jose Alcantara, Elias Benin and Pascual Pili, alleged in their complaint in Civil
Case No. Q-156 (which was filed in 1950) that they were the owners of the parcels
of land specified in their complaint, having inherited the same from their ancestors
and had been in possession of the same from time immemorial, each was claiming
a right as an heir of Bonoso Alcantara, Sixto Benin, and Candido Pili, respectively.
Similarly, in Civil Cases Nos. 3621, 3622 and 3623, the source of the rights claimed
by the plaintiffs Jose Alcantara, Elias Benin and Pascual Pili and all the other

plaintiffs were their respective ancestor, or predecessor in interest, namely Bonoso

Alcantara, Sixto Benin and Candido Pili, as the case may be.
Inasmuch as Sixto Benin died in 1936, Bonoso Alcantara died in 1934, and Candido
Pili died in 1931, it is obvious that during all the time when the registration
proceedings in LRC No. 7681 were taking place before the Court of Land
Registration, which culminated in the issuance of Original Certificate of Title No. 735
on July 8, 1914, Sixto Benin, Bonoso Alcantara and Candido Pili were living. The
records show that no one of these three persons, or their representative, had filed
any opposition to the application for registration in said LRC 7681, nor did any one
of them, or their representative, file any petition for review of the decree of
registration No. 17431 that was issued in said LRC No. 7681.
It is Our view, therefore, that the decision of this Court, in G.R. No. L-4998, which
affirmed the order of the Court of First Instance of Rizal dismissing the complaint of
Jose Alcantara, Elias Benin and Pascual Pili (along with four other plaintiffs) in Civil
Case No. Q-156 should apply not only against the heirs, of Elias Benin, against Jose
Alcantara, and against Pascual Pili, as plaintiffs in Civil Cases Nos. 3621, 3622 and
3623, respectively, but also against all the other plaintiffs in those cases. We find
that the plaintiffs in Civil Case No. 3621 do not claim a right which is different from
that claimed by Elias Benin in Civil Case No. Q-156. Likewise, the plaintiffs in Civil
Case No. 3622 do not claim a right different from that claimed by Jose Alcantara in
Civil Case No Q-156. And, also, the plaintiffs in Civil Case No. 3623 do not claim a
right different from that claimed by Pascual Pili in Civil Case No. Q-156. They all
claim the same right, based on the alleged ownership of their respective common
predecessor in interest in Civil Case No. 3621 the common predecessor in
interest being Sixto Benin; in Civil Case No. 3622 the common predecessor in
interest being Bonoso Alcantara; and in Civil Case No. 3623 the common
predecessor in interest being Candido Pili. In Civil Case No. Q-156 Elias Benin based
his claim of ownership upon the ownership of his predecessor in interest who
necessarily must be Sixto Benin; Jose Alcantara, upon the ownership of his
predecessor in interest who necessarily must be Bonoso Alcantara; and Pascual Pili,
upon the ownership of his predecessor in interest who necessarily must be Candido
Pili. It follows, therefore, that the decision of this Court in G.R. No. L-4998 (Civil Case
No. Q-156), which held untenable the cause of action of the successors in interest,
of Sixto Benin, of Bonoso Alcantara and of Candido Pili, to recover the ownership
and possession of any land covered by Original Certificate of Title No. 735, would
also foreclose a similar cause of action of all other persons who claim to be
successors in interest of Sixto Benin, of Bonoso Alcantara and of Candido Pili over
any land covered by said certificate of title. As We have adverted to, Sixto Benin
died in 1936, Bonoso Alcantara died in 1934, and Candido Pili died in 1931. These
three predecessors in interest of the appellees died long after the issuance of
Original Certificate of Title No. 735, which took place on July 8, 1914.

And so, even if there are plaintiffs (now appellees) in these three cases who are not
privies to plaintiffs Jose Alcantara, Elias Benin, and Pascual Pili in Civil Case No. Q156 (G.R. No. L-4998 the Alcantara case) and were not parties in that case, still
the ruling of this Court in that former case, to the effect that therein plaintiffs or
their predecessors in interest were bound by the proceedings in the registration
court which culminated in the issuance of Original Certificate of Title No. 735, holds
and applies to those plaintiffs in these three cases, because the claim of ownership
of these plaintiffs is based on the same predecessors in interest of plaintiffs Jose
Alcantara, Elias Benin and Pascual Pili in said Civil Case No. Q-156. 54 It may well be
said that the interests of the appellees in G.R. No. L-26127 (Civil Case No. 3621)
who claim rights as heirs or successors in interest of Sixto Benin were represented
by Elias Benin in Civil Case No. Q-156 (G.R. No. L-4998); the appellees in G.R. No.
26128 (Civil Case No. 3622) who claim rights as heirs or successors in interest of
Bonoso Alcantara were represented by Jose Alcantara in Civil Case No. Q-156 (G.R.
No. L-4998); the appellees in G.R. No. 26129 (Civil Case No. 3623) who claim rights
as heirs or successors in interest of Candido Pili were represented by Pascual Pili in
Civil Case No. Q-156 (G.R. No. L-4998).
(c) In the case of Albina Santiago, et al. vs. J.M. Tuason & Co., Inc. (G.R. No. L-14223,
November 23, 1960) 55, where Original Certificate of Title No. 735, was also in
question, this Court ruled on issues akin to the issues involved in the three cases
now at bar. Albina Santiago and her co-plaintiffs filed a complaint in the Court of
First Instance of Quezon City, docketed as Civil Case No. Q-2918, against J. M.
Tuason & Co. Inc. alleging, substantially, that their ancestor, Inocencio Santiago,
was the owner of a parcel of land, evidenced by a document (attached to their
complaint as Annex A) issued by the Spanish government on May 12, 1848 56; that
Inocencio Santiago had since then been in possession of the aforesaid land as
owner, publicly, continuously and adversely until his death, when his two children,
Isaias and Albina, succeeded and continued to own and possess said land pro
indiviso in the same character as that of their predecessor that upon the death of
Isaias Santiago his one-half share of the land was inherited by his eleven children
who, together with their aunt Albina, continued to own and possess the land in the
same character as that of their predecessors; that Albina and her co-plaintiffs came
to know that J.M. Tuason & Co., Inc. had previously filed in the Court of First Instance
of Quezon City Civil Case No. Q-27 for "quieting of title and recovery of possession"
against five of the children of Isaias Santiago involving the parcel of land of which
they were co-owners; that J.M. Tuason & Co., Inc. had claimed that parcel to be part
of the land covered by its Transfer Certificate of Title No. 119; that the judgment in
Civil. Case No. Q-27, in which they (Albina Santiago, et al.) were never impleaded as
parties, had already become
final 57; that J.M. Tuason & Co., Inc. had executed the judgment against them,
excluding and rusting them from the enjoyment and possession of the land. Albina
and her co-plaintiffs also alleged that Transfer Certificate of Title No. 119 (37679) of
J.M. Tuason & Co., Inc., as well as Original Certificate of Title No. 735 from which the

former was derived, did not include the parcel claimed by them; that even granting
that Transfer Certificate of Title No. 119 included the parcel claimed by them the
inclusion of that parcel in the certificate of title of J.M. Tuason & Co., Inc. was done
through fraud because they, nor their predecessors, were not actually notified of the
registration proceedings. As ground for cancellation of the certificate of title of J.M.
Tuason & Co., Inc. Albina Santiago and her co-plaintiffs further alleged that the
technical description in Original Certificate of Title No. 735 had been falsified to
include areas never brought within the jurisdiction of the Land Registration Court,
since they were areas not included in the application and publication in the
registration proceedings; that long before the predecessors of J.M. Tuason & Co., Inc.
applied for, and secured, registration of the land which included their parcel of land
they had already acquired ownership thereof not only by the document, Annex A of
their complaint, but also by acquisitive prescription. Albina Santiago and her coplaintiffs prayed, that J.M. Tuason & Co., Inc. be ordered to desist from enforcing
Civil Case No. Q-27 against them; that a resurvey be ordered to determine whether
or not Transfer Certificate of Title No. 119 (37679) included the land described in
their complaint; that a reconveyance to them be ordered of whatever portion of the
land claimed by them may be found included in transfer Certificate of Title No. 119;
that Transfer Certificate of Title No. 119 and Original Certificate of Title No. 735 be
ordered cancelled and substituted with a new certificate of title embracing only
those lands included in the application, publication and/or decree in LRC No. 7681 of
the Court of Land Registration.
Upon motion of defendant J.M. Tuason & Co., Inc., the Court of First Instance of
Quezon City dismissed the complaint of Albina Santiago, et al., upon the grounds
that there was no cause of action, that the case was barred by a prior judgment in
Civil Case No. Q-27 which was affirmed by the Supreme Court in G.R. No. L-5079,
and that the action of the plaintiffs, if they had any, had prescribed.
This Court affirmed the order of the lower court dismissing the complaint of Albina
Santiago and her co-plaintiffs. 58 Regarding the contention of Albina Santiago and
her co-plaintiffs that the judgment in the previous case (Civil Case No. Q-27,
affirmed in G.R. No. L-5079) would not operate as res judicata against them because
they were not parties in that suit, and that they did not derive their title from the
defendants in the previous suit, this Court held:
We agree with appellants that the decision in the preceding suit to quiet title,
prosecuted by the appellee Tuason & Co. against other heirs of Ynocencio Santiago
(99 Phil., 615; 50 Off. Gaz. 11, 5727), can not constitute res judicata against these
appellants who were not parties to that suit and do not derive their title from the
defendants in the previous litigation (Rule 39, sec. 44 (b). There is authority for the
proposition that a judgment may be made binding in a subsequent litigation upon
one who, although not a formal party to a previous suit, has actually conducted or
controlled the action or defense therein (65 ALR 1134), or who was adequately

represented in such previous litigation; but no clear proof of the existence of such
exceptional circumstance is before us in the present case. On the other hand, the
rule is that co-owners are not privies inter se in relation to the property owned in
common.
xxx

xxx

xxx

But granting that the plaintiffs-appellants herein are not privies of the defendants
Santiago in the former litigation over this same property (S.C.G.R. No.
L-5079), still the pronouncement of this Court, made in the former case, to the
effect that the Spanish document (Annex A) issued in favor of Ynocencio Santiago
(ancestor of appellants herein) was neither a titulo de informacion posesoria nor a
title by composicion con el estado, and, therefore, vested no ownership over the
land therein described in favor of Ynocencio Santiago, holds and applies to herein
appellants, since the quality or the legal effect of the document does not depend
upon the person who invoke it.
If the late Ynocencio Santiago did not become the owner of the disputed property by
virtue of the document Annex A, then appellants herein, as heirs of Ynocencio have
not acquired such ownership either. It follows that the first and second causes of
action of their complaint, predicated as they are on the assumption that such
ownership and its consequential rights resulted from Annex A, must necessarily fail.
Not being owners, they can complain of no invasion of dominical rights.
It will thus be noted that in the aforementioned decision in the Santiago case, even
if Albina Santiago and her co-plaintiffs were not considered privies to the
defendants in Civil Case No. Q-27, and even if they were not parties in that previous
case, this Court nevertheless applied to them the judgment (G. R. No. L-5079) in
that previous case where it was pronounced that the document, Annex A of the
complaint of Albina Santiago, et al., was neither a titulo de informacion posesoria
nor a title by composision con el estado, and it did not establish the right of
ownership of their predecessor in interest, Inocencio Santiago, Albina Santiago and
her co-plaintiffs had based their claim of ownership on that document (Annex A). 59
This Court held in that previous case that the document was unavailing against
Transfer Certificate of Title No. 119 of J. M. Tuason & Co., Inc. and against Original
Certificate of Title No. 735.
And so, following the logic of this Court in its decision in the Santiago case, in the
three cases at bar We hold that even if the plaintiffs in Civil Case No. 3621, except
the heirs of Elias Benin, are not privies to Elias Benin and were not parties in Civil
Case No. Q-156; even if the plaintiffs in Civil Case No. 3622, except Jose Alcantara,
are not privies to Jose Alcantara and were not parties in Civil Case No. Q-156; and
even if the plaintiffs in Civil Case No. 3623, except Pascual Pili, are not privies to
Pascual Pili and were not parties in Civil Case No. Q156, still the pronouncement of

this Court in the judgment in that previous case (G.R. No. L-4998), to the effect that
the plaintiffs in that case and their predecessors in interest were bound by the
registration proceedings which culminated in the issuance of Original Certificate of
Title No. 735, holds and applies to all the plaintiffs (now appellees) in these three
cases. In that judgment this Court ruled out, or did not sustain, the rights claimed
by the predecessors in interest of herein appellees over the land covered by Original
Certificate of Title No. 735. These appellees, therefore, have not succeeded to any
right that can derrogate the validity and conclusiveness of Original Certificate of
Title No. 735, and of the certificates of title that are derived from said original
certificate of title.
Coming back to the Santiago case, as regards the contention of Albina Santiago and
her co-plaintiffs that the registration proceedings which resulted in the issuance of
Original Certificate of Title No. 735 were irregular and fraudulent, this Court held:
(T)he mere fact that appellants herein were not personally notified of the
registration proceedings that resulted in a decree of registration of title in favor of
the Tuasons in 1914 does not constitute in itself a case of fraud that would
invalidate the decree. The registration proceedings, as proceedings in rem, operate
as against the whole world and the decree issued therein is conclusive adjudication
of the ownership of the lands registered, not only against those parties who
appeared in such proceedings but also against parties who were summoned by
publication but did not appear. The registration by the appellee's predecessors-ininterest freed the lands from claims and liens of whatever character that existed
against the lands prior to the issuance of the certificates of title, except those noted
in the certificate and legal encumbrances saved by law (Yumol vs. Rivera and Dizon,
64 Phil. 13, 17 and cases cited therein). In addition, there being no allegation that
the registered owners procured the non-appearance of appellants at the registration
proceedings, and very much more than one year having elapsed from the issuance
of the decree of registration in 1914, neither revocation of such decree nor a decree
of reconveyance are obtainable any more.
Regarding the claim of Albina Santiago and her co-plaintiffs that they had acquired
title by prescription over the parcel of land claimed by them, this Court held:
It follows also that the allegation of prescriptive title in favor of plaintiffs does not
suffice to establish a cause of action. If such prescription was completed before the
registration of the land in favor of the Tuasons, the resulting prescriptive title was
cut off and extinguished by the decree of registration. If, on the contrary, the
prescription was either begun or completed after the decree of registration, it
conferred no title because, by express provision of law, prescription cannot operate
against the registered owner (Act 496, section 46).

Thus, in this Santiago case, as in the Alcantara case, this Court declared conclusive
and indefeasible Original Certificate of Title No. 735 which was issued as a result of
the registration proceedings in L.R.C. No. 7681 of the Court of Land Registration.
There are many other cases where this Court has made a similar pronouncement
regarding Original Certificate of Title No. 735. 60
In view of the findings, and the rulings, that We have hereinbefore made, it follows
that, as contended by the appellant, the lower court also erred when it declared the
appellees the owners of the lands claimed by them and in awarding damages to
them, in these three cases. 61
We consider it unnecessary to rule on the counterclaim of appellant J.M. Tuason &
Co., Inc., for damages and attorneys fees against the appellees 62, considering, as
the records show, that the appellees are persons who are not in a position to pay
damages in any form. 63 We believe that the appellees had filed their complaints in
the honest, but mistaken, belief that they have a good cause of action against the
appellant corporation and not because they meant to embarrass or humiliate the
persons who are identified or connected with the appellant.
WHEREFORE, the joint decision of the Court of First Instance of Rizal (Quezon City
Branch) in Civil Cages Nos. 3621, 3622 and 3623, appealed from, is reversed and
set aside. The bond filed by appellant in the three cases in the court below for the
lifting of the writ of preliminary injunction is ordered cancelled. No pronouncement
as to costs.
IT IS SO ORDERED.

DATU KIRAM SAMPACO, substituted by HADJI SORAYA S. MACABANDO,

Petitioner,
- versus HADJI SERAD MINGCA LANTUD,
Respondent.
G.R. No. 163551
Promulgated:
July 18, 2011
DECISION

PERALTA, J.:

This is a petition for review on certiorari of the Court of Appeals Decision dated
August 15, 2003 in CA-G.R. CV No. 63801 and its Resolution dated May 13, 2004,
denying petitioners motion for reconsideration.
The facts, as stated by the Court of Appeals, are as follows:
On September 14, 1984, respondent Hadji Serad Mingca Lantud, the plaintiff in the
lower court, filed an action to quiet title with damages[1] with the Regional Trial
Court (RTC) of Lanao del Sur, Branch 8, Marawi City (trial court), against petitioner
Datu Kiram Sampaco (deceased), the defendant in the lower court, who has been
substituted by his heirs, represented by Hadji Soraya Sampaco-Macabando.[2]
Respondent alleged in his Complaint[3] that he is the owner in fee simple of a
parcel of residential lot located at Marinaut, Marawi City, with an area of 897 square
meters covered by Original Certificate of Title (OCT) No. P-658. On August 25, 1984,
petitioner Datu Kiram Sampaco, through his daughter Soraya Sampaco-Macabando
with several armed men, forcibly and unlawfully entered his property and destroyed
the nursery buildings, cabbage seedlings and other improvements therein worth
P10,000.00. On August 30, 1984, Barangay Captain Hadji Hassan Abato and his
councilmen prepared and issued a decision[4] in writing stating that petitioner Datu
Kiram Sampaco is the owner of the subject parcel of land. Respondent stated that
the acts of petitioner and the said decision of the Barangay Captain may cast a
cloud over or otherwise prejudice his title. Respondent stated that he and his
predecessors-in-interest have been in open, public and exclusive possession of the
subject property. He prayed that the acts of petitioner and the decision of Barangay
Captain Hadji Hassan Abato and his councilmen be declared invalid, and that
petitioner be ordered to pay respondent damages in the amount of P10,000.00 and
attorneys fees.
In his Answer,[5] defendant Datu Kiram Sampaco, petitioner herein, denied the
material allegations of the Complaint. Petitioner asserted that he and his
predecessors-in-interest are the ones who had been in open, public, continuous, and
exclusive possession of the property in dispute. Petitioner alleged that OCT No. P658 was secured in violation of laws and through fraud, deception and
misrepresentation, considering that the subject parcel of land is a residential lot
and the title issued is a free patent. Moreover, respondent and his predecessors-ininterest had never taken actual possession or occupied the land under litigation. On
the contrary, petitioner has all the evidence of actual possession and ownership of
permanent improvements and other plants on the land in dispute.
Petitioner filed a counterclaim for actual and moral damages, and attorney's fees for
the unfounded complaint and prayed for its dismissal. He also sought the

cancellation of respondents OCT No. P-658 and the reconveyance of the subject
parcel of land.

During the trial, respondent Hadji Lantud testified that he acquired the subject lot
from his grandmother, Intumo Pagsidan, a portion thereof from his grandmothers
helper, Totop Malacop, pursuant to a court decision after litigating with him.[6]
Respondent had been residing on the lot for more than 30 years, applied for a title
thereto and was issued OCT No. P-658.[7] He paid the corresponding real estate
taxes for the land.[8] He planted assorted trees and plants on the lot like bananas,
jackfruits, coconuts and others.[9] He testified that he was not aware of the alleged
litigation over the lot before Barangay Captain Hadji Hassan Abato, although he was
furnished a copy of the decision.[10]
On the other hand, petitioner Datu Kiram Sampaco testified that the land under
litigation is only a portion of the 1,800 square meters of land that he inherited in
1952 from his father, Datu Sampaco Gubat.[11] Since then, he had been in adverse
possession and ownership of the subject lot, cultivating and planting trees and
plants through his caretaker Hadji Mustapha Macawadib.[12] In 1962, he mortgaged
the land (1,800 square meters) with the Development Bank of the Philippines,
Ozamis branch.[13] He declared the land (1,800 square meters) for taxation
purposes[14] and paid real estate taxes, and adduced in evidence the latest Tax
Receipt No. 1756386 dated September 15, 19[9]3.[15] Petitioner presented four
corroborating witnesses as regards his possession of the subject property.
After trial on the merits, the trial court rendered a Decision on March 31, 1999 in
favor of petitioner, the dispositive portion of which reads:
WHEREFORE, premises considered the court is of the opinion and so holds that the
preponderance of evidence is in favor of the defendant and against the plaintiff.
Judgment is hereby rendered as follows:
1.
Dismissing plaintiffs complaint for lack of merit;
2.
Declaring Original Certificate of Title No. P-658 (Exh. A) null and void and
of no legal effect;
3.
Declaring the defendant the absolute or true owner and possessor of the
land in dispute; and
4.
Ordering the plaintiff to pay the defendant the sum of P10,000.00 for
attorneys fees plus P500.00 per appearance.[16]

The trial court held that the issuance of respondents title, OCT No. P-658, was
tainted with fraud and irregularities and the title is, therefore, spurious; hence, it is
null and void, and without any probative value. The finding of fraud was based on:

(1) the Certification issued by Datu Samra Andam, A/Adm. Assistant II, Natural
Resources District No. XII-3, Marawi City, stating that the data contained in
respondents title were verified and had no record in the said office; (2) the said
Certification was not refuted or rebutted by respondent; (3) while free patents are
normally issued for agricultural lands, respondents title is a free patent title issued
over a residential land as the lot is described in the Complaint as a residential lot;
and (4) Yusoph Lumampa, an employee of the local Bureau of Lands, to whom
respondent allegedly entrusted the paperwork of the land titling, was not presented
as a witness.
Moreover, the trial court stated that respondent failed to establish with competent
and credible evidence that he was in prior possession of the subject property. No
corroborative witness was presented to further prove his prior possession.
On the other hand, the trial court stated that petitioner offered documentary
evidence, consisting of a contract of real estate mortgage of the subject property,
tax declarations, an official tax receipt, and testimonial evidence to prove that he
had been in open, public, continuous, and lawful possession of the subject property
in the concept of owner.
Respondent appealed the decision of the trial court to the Court of Appeals.
On August 15, 2003, the Court of Appeals rendered a Decision reversing the
decision of the trial court, the dispositive portion of which reads:
WHEREFORE:
1.
The appeal is granted and the appealed judgment is hereby totally REVERSED.
2.
To quiet his title, plaintiff-appelant Hadji Serad Mingca Lantud is confirmed the
owner of the parcel of land covered by Original Certificate of Title No. P-658;
3.
The defendant-appellee is ordered to pay P50,000.00 as attorneys fees to the
plaintiff-appellant; and
4.
Costs against the defendant-appellee.[17]
Petitioners motion for reconsideration was denied by the Court of Appeals in its
Resolution[18] dated May 13, 2004.
The Court of Appeals held that there is no controversy that respondent is a holder of
a Torrens title; hence, he is the owner of the subject property. The appellate court
stressed that Section 47[19] of the Land Registration Act (Act No. 496) provides that
the certificate of title covering registered land shall be received as evidence in all
courts of the Philippines and shall be conclusive as to all matters stated therein.
The Court of Appeals stated that the Torrens title has three attributes: (1) a Torrens
title is the best evidence of ownership over registered land and, unless annulled in
an appropriate proceeding, the title is conclusive on the issue of ownership; (2) a

Torrens title is incontrovertible and indefeasible upon the expiration of one year
from the date of the entry of the decree of registration;[20] and (3) a Torrens title is
not subject to collateral attack.[21]
The Court of Appeals held that petitioners counterclaim filed on October 15, 1984
for cancellation of respondents original certificate of title issued on May 22, 1981
was filed beyond the statutory one-year period; hence, petitioners title had become
indefeasible, and cannot be affected by the decision made by Barangay Captain
Hadji Hassan Abato and his councilmen. Moreover, the appellate court held that
petitioners prayer for the cancellation of respondents title, OCT No. P-658, through
a counterclaim included in his Answer is a collateral attack, which the law does not
allow, citing Cimafranca v. Court of Appeals[22] and Natalia Realty Corporation v.
Valdez.[23]
The allegation of fraud in securing OCT No. P-658 on the ground that the property in
dispute is a residential lot and not subject of a free patent was not given weight by
the appellate court as it was supported only by testimonial evidence that did not
show how (by metes and bounds) and why the property in dispute could not have
been the subject of a free patent. The appellate court stated that a mere
preponderance of evidence is not adequate to prove fraud;[24] it must be
established by clear and convincing evidence.
The Court of Appeals also noted that petitioner claimed that the subject property is
only part of his larger property. Although petitioner introduced proof of payment of
the real estate taxes of the said property, as well as a previous mortgage of the
property, petitioner did not show that the disputed property is part of his larger
property. Hence, the appellate court stated that under such circumstances, it cannot
rule that petitioner owned the land under litigation, since petitioner failed to show
that it is part of his larger property.
The Court of Appeals did not award actual and moral damages, because
respondent failed to prove the amount of any actual damages sustained, and the
instances enumerated under Article 2219 of the Civil Code warranting the award of
moral damages were not present.

However, the Court of Appeals awarded attorney's fees in the amount of

P50,000.00, considering that respondent was forced to incur expenses to protect his
right through the action to quiet title.
Petitioner filed this petition raising the following issues:
I

THE COURT OF APPEALS MISERABLY FAILED TO CONSIDER THE FACT THAT THE
TORRENS TITLE INVOLVED HEREIN WAS ISSUED PURSUANT TO A FREE PATENT
WHICH COULD NOT BE VALIDLY ISSUED OVER A PRIVATE LAND.
II
THE COURT OF APPEALS ERRED IN DISREGARDING THE FACT THAT AS CERTIFIED TO
BY THE BUREAU OF LANDS ITSELF NO SUCH FREE PATENT OVER THE SUBJECT LAND
WAS ISSUED BY IT; HENCE, SAID FREE PATENT IS SPURIOUS.
III
THE COURT OF APPEALS ERRED IN REVERSING THE DECISION OF THE TRIAL COURT
THAT THE SUBJECT LOT HAD LONG BEEN OWNED, POSSESSED AND CULTIVATED BY
THE DEFENDANT (PETITIONER HEREIN) OR HIS PREDECESSORS-IN-INTEREST SINCE
TIME IMMEMORIAL IN THE CONCEPT OF AN OWNER.
IV
THE COURT OF APPEALS ERRED IN RULING THAT THE PETITIONERS COUNTERCLAIM
FOR CANCELLATION OF RESPONDENTS TITLE IS BARRED.
V
THE COURT OF APPEALS ERRED IN RULING THAT THE COUNTERCLAIM IN THE
INSTANT CASE IS A COLLATERAL ATTACK ON RESPONDENT-PLAINTIFFS TITLE.
VI
THE COURT OF APPEALS ERRED IN DENYING PETITIONERS MOTION FOR
RECONSIDERATION.[25]

The main issue is whether or not the Court of Appeals erred in sustaining the
validity of OCT No. P-658 and confirming respondent as owner of the property in
dispute.
Petitioner contends that the Court of Appeals erred in disregarding the fact that the
Torrens title was issued to respondent by virtue of a free patent covering a
residential lot that is private land as it has been acquired by petitioner through
open, public, continuous and lawful possession of the land in the concept of owner.
Petitioner thus prayed for the cancellation of respondents title and the
reconveyance of the subject property. Hence, the Court of Appeals erred in
declaring that the subject lot belongs to respondent.
The contention is without merit.

The Torrens title is conclusive evidence with respect to the ownership of the land
described therein, and other matters which can be litigated and decided in land
registration proceedings.[26] Tax declarations and tax receipts cannot prevail over a
certificate of title which is an incontrovertible proof of ownership.[27] An original
certificate of title issued by the Register of Deeds under an administrative
proceeding is as indefeasible as a certificate of title issued under judicial
proceedings.[28] However, the Court has ruled that indefeasibility of title does not
attach to titles secured by fraud and misrepresentation.[29]
In this case, petitioner alleged in his Answer to respondents Complaint in the trial
court that respondents title, OCT No. P-658, was secured in violation of the law and
through fraud, deception and misrepresentation, because the subject parcel of land
is a residential lot, which cannot be subject of a free patent, since only agricultural
lands are subject of a free patent.
The trial court found that [t]he lot under litigation as clearly described in the
complaint is a residential lot and a free patent title thereto cannot validly be
issued. This finding was one of the bases for the trial courts declaration that the
issuance of OCT was tainted with fraud and irregularities and is, therefore, spurious;
thus, OCT No. P-658 is null and void.
It should be pointed out that the allegation in the Complaint that the land is
residential was made only by respondent, but the true classification of the disputed
land as residential was not shown to have been made by the President, upon
recommendation by the Secretary of Environment and Natural Resources, pursuant
to Section 9 of Commonwealth Act No. 141, otherwise known as The Public Land
Act.[30] Hence, the trial court erred in concluding that there was fraud in the
issuance of respondents free patent title on the ground that it covered residential
land based only on the Complaint which stated that the property was residential
land when it was not shown that it was the President who classified the disputed
property as residential, and OCT No. P-658 itself stated that the free patent title
covered agricultural land. It has been stated that at present, not only agricultural
lands, but also residential lands, have been made available by recent legislation for
acquisition by free patent by any natural born Filipino citizen.[31] Nevertheless, the
fact is that in this case, the free patent title was granted over agricultural land as
stated in OCT No. P-658.
Moreover, petitioner contends in his petition that the Certification[32] dated July 24,
1987 issued by Datu Samra I. Andam, A/Adm. Assistant II, Natural Resources District
No. XII-3, Bureau of Lands, Marawi City, certifying that the data contained in OCT
No. P-658 in respondents name had no records in the said office, showed that
respondents Torrens title was spurious.
The Court holds that the certification, by itself, is insufficient to prove the alleged
fraud. Fraud and misrepresentation, as grounds for cancellation of patent and

annulment of title, should never be presumed, but must be proved by clear and
convincing evidence, mere preponderance of evidence not being adequate.[33]
Fraud is a question of fact which must be proved.[34] The signatory of the
certification, Datu Samra Andam, A/Adm. Assistant II, Natural Resources District No.
XII-3, Marawi City, was not presented in court to testify on the due issuance of the
certification, and to testify on the details of his certification, particularly the reason
why the said office had no records of the data contained in OCT No. P-658 or to
testify on the fact of fraud, if any.
Thus, the Court holds that the evidence on record is insufficient to prove that fraud
was committed in the issuance of respondents Torrens title. Hence, respondents
Torrens title is a valid evidence of his ownership of the land in dispute.
On the other hand, petitioner claims ownership of the subject lot, which is merely a
portion of a larger property (1,800 square meters) that he allegedly inherited from
his father in 1952, by virtue of open, public and continuous possession of the land in
the concept of owner making it petitioners private property. Hence, petitioner
prays for reconveyance of the said property.
Article 434 of the Civil Code governs an action for reconveyance, thus:
Art. 434. In an action to recover, the property must be identified, and the plaintiff
must rely on the strength of his title and not on the weakness of the defendants
claim.

Under Article 434 of the Civil Code, to successfully maintain an action to recover
the ownership of a real property, the person who claims a better right to it must
prove two (2) things: first, the identity of the land claimed; and second, his title
thereto.[35]
In regard to the first requisite, in an accion reinvindicatoria, the person who claims
that he has a better right to the property must first fix the identity of the land he is
claiming by describing the location, area and boundaries thereof.[36]
In this case, petitioner claims that the property in dispute is part of his larger
property. However, petitioner failed to identify his larger property by providing
evidence of the metes and bounds thereof, so that the same may be compared with
the technical description contained in the title of respondent, which would have
shown whether the disputed property really formed part of petitioners larger
property. The appellate court correctly held in its Resolution dated May 13, 2004
that petitioners claim is solely supported by testimonial evidence, which did not
conclusively show the metes and bounds of petitioners larger property in relation to
the metes and bounds of the disputed property; thus, there is no sufficient evidence

on record to support petitioners claim that the disputed property is part of his
larger property.
In regard to the second requisite of title to property, both petitioner and respondent
separately claim that they are entitled to ownership of the property by virtue of
open, public, continuous and exclusive possession of the same in the concept of
owner. Petitioner claims that he inherited the subject property from his father in
1952, while respondent claims that he acquired the property from his grandmother
Intumo Pagsidan, a portion thereof from his grandmothers helper Totop Malacop
pursuant to a court decision after litigating with him.[37] Respondent has OCT No.
P-658 to prove his title to the subject property, while petitioner merely claims that
the property is already his private land by virtue of his open, public, continuous
possession of the same in the concept of owner.
The Court holds that petitioner failed to prove the requisites of reconveyance as he
failed to prove the identity of his larger property in relation to the disputed property,
and his claim of title by virtue of open, public and continuous possession of the
disputed property in the concept of owner is nebulous in the light of a similar claim
by respondent who holds a free patent title over the subject property. As stated in
Ybaez v. Intermediate Appellate Court,[38] it is relatively easy to declare and claim
that one owns and possesses public agricultural land, but it is entirely a different
matter to affirmatively declare and to prove before a court of law that one actually
possessed and cultivated the entire area to the exclusion of other claimants who
stand on equal footing under the Public Land Act (Commonwealth Act No. 141, as
amended) as any other pioneering claimants.
Further, petitioner contends that the Court of Appeals erred in ruling that
petitioners counterclaim is time-barred, since the one-year prescriptive period does
not apply when the person seeking annulment of title or reconveyance is in
possession of the lot, citing Heirs of Simplicio Santiago v. Heirs of Mariano E.
Santiago.[39] Petitioner also contends that the Court of Appeals erred in ruling that
the counterclaim in this case is a collateral attack on respondents title, citing
Cimafranca v. Intermediate Appellate Court.[40] Petitioner cites the case of Heirs of
Simplicio Santiago v. Heirs of Mariano E. Santiago,[41] which held that a
counterclaim can be considered a direct attack on the title.
The Court notes that the case of Cimafranca v. Intermediate Appellate Court,[42]
cited by the Court of Appeals to support its ruling that the prayer for the
cancellation of respondents title through a counterclaim included in petitioners
Answer is a collateral attack on the said title, is inapplicable to this case. In
Cimafranca, petitioners therein filed a complaint for Partition and Damages, and
respondents therein indirectly attacked the validity of the title involved in their
counterclaim. Hence, the Court ruled that a Torrens title cannot be attacked
collaterally, and the issue on its validity can be raised only in an action expressly
instituted for that purpose.

Here, the case cited by petitioner, Heirs of Simplicio Santiago v. Heirs of Mariano E.
Santiago, declared that the one-year prescriptive period does not apply when the
party seeking annulment of title or reconveyance is in possession of the lot, as well
as distinguished a collateral attack under Section 48 of PD No. 1529 from a direct
attack, and held that a counterclaim may be considered as a complaint or an
independent action and can be considered a direct attack on the title, thus:
The one-year prescriptive period, however, does not apply when the person seeking
annulment of title or reconveyance is in possession of the lot. This is because the
action partakes of a suit to quiet title which is imprescriptible. In David v. Malay, we
held that a person in actual possession of a piece of land under claim of ownership
may wait until his possession is disturbed or his title is attacked before taking steps
to vindicate his right, and his undisturbed possession gives him the continuing right
to seek the aid of a court of equity to ascertain and determine the nature of the
adverse claim of a third party and its effect on his title.
xxxx
Section 48 of P.D. 1529, the Property Registration Decree, provides that a
certificate of title shall not be subject to collateral attack and cannot be altered,
modified, or canceled except in a direct proceeding. An action is an attack on a title
when the object of the action is to nullify the title, and thus challenge the judgment
or proceeding pursuant to which the title was decreed. The attack is direct when
the object of an action is to annul or set aside such judgment, or enjoin its
enforcement. On the other hand, the attack is indirect or collateral when, in an
action to obtain a different relief, an attack on the judgment or proceeding is
nevertheless made as an incident thereof.
x x x A counterclaim can be considered a direct attack on the title. In Development
Bank of the Philippines v. Court Appeals, we ruled on the validity of a certificate of
title despite the fact that the nullity thereof was raised only as a counterclaim. It
was held that a counterclaim is considered a complaint, only this time, it is the
original defendant who becomes the plaintiff. It stands on the same footing and is
to be tested by the same rules as if it were an independent action. x x x[43]

The above ruling of the court on the definition of collateral attack under Section 48
of P.D. No. 1529 was reiterated in Leyson v. Bontuyan,[44] Heirs of Enrique Diaz v.
Virata,[45] Arangote v. Maglunob,[46] and Catores v. Afidchao.[47]

Based on the foregoing, the Court holds that petitioners counterclaim for
cancellation of respondents title is not a collateral attack, but a direct attack on the

Torrens title of petitioner. However, the counterclaim seeking for the cancellation of
title and reconveyance of the subject property has prescribed as petitioner has not
proven actual possession and ownership of the property due to his failure to prove
the identity of his larger property that would show that the disputed property is a
part thereof, and his claim of title to the subject property by virtue of open, public
and continuous possession in the concept of owner is nebulous in the light of a
similar claim by respondent who holds a Torrens title to the subject property.
Respondents original certificate of title was issued on May 22, 1981, while the
counterclaim was filed by petitioner on October 15, 1984, which is clearly beyond
the one-year prescriptive period.
In fine, the Court of Appeals did not err in confirming that respondent is the owner
of the parcel of land covered by OCT No. P-658.
WHEREFORE, the petition is DENIED. The Court of Appeals decision dated August
15, 2003, and its Resolution dated May 13, 2004 in CA-G.R. CV No. 63801, are
hereby AFFIRMED.
No costs.
SO ORDERED.

c. Where to file

REPUBLIC OF THE PHILIPPINES,

Petitioner,

- versus -

HON. MAMINDIARA P. MANGOTARA, in his capacity as Presiding Judge of

the Regional Trial Court, Branch 1, Iligan City, Lanao del Norte, and MARIA
CRISTINA FERTILIZER CORPORATION, and the PHILIPPINE NATIONAL BANK,
Respondents,
x-----------------------x
LAND TRADE REALTY CORPORATION,
Petitioner,

- versus -

NATIONAL POWER CORPORATION and NATIONAL TRANSMISSION

CORPORATION (TRANSCO),
Respondents,
x-----------------------x
NATIONAL POWER CORPORATION,
Petitioner,

- versus -

HON. COURT OF APPEALS (Special Twenty-Third Division, Cagayan de Oro

City), and LAND TRADE REALTY CORPORATION,
Respondents,
x-----------------------x
REPUBLIC OF THE PHILIPPINES,
Petitioner,

versus -

DEMETRIA CACHO, represented by alleged Heirs DEMETRIA CONFESOR

VIDAL and/or TEOFILO CACHO, AZIMUTH INTERNATIONAL DEVELOPMENT
CORPORATION and LAND TRADE REALTY CORPORATION,
Respondents.
x-----------------------x
NATIONAL TRANSMISSION CORPORATION,
Petitioner,

- versus -

HON. COURT OF APPEALS (Special Twenty-Third Division, Cagayan de Oro

City), and LAND TRADE REALTY CORPORATION as represented by Atty. Max
C. Tabimina,
Respondents,
x-----------------------x
LAND TRADE REALTY CORPORATION,
Petitioner,

- versus DEMETRIA CONFESOR VIDAL and AZIMUTH INTERNATIONAL DEVELOPMENT

CORPORATION,
Respondents,
x-----------------------x
TEOFILO CACHO and/or ATTY. GODOFREDO CABILDO,
Petitioner,
- versus
DEMETRIA CONFESOR VIDAL and AZIMUTH INTERNATIONAL DEVELOPMENT
CORPORATION,
Respondents.
G.R. No. 170375
G.R. No. 170505
G.R. Nos. 173355-56
G.R. No. 173401
G.R. Nos. 173563-64
G.R. No. 178779
G.R. No. 178894
July 7, 2010
DECISION
LEONARDO-DE CASTRO, J.:
Before the Court are seven consolidated Petitions for Review on Certiorari and
a Petition for Certiorari under Rules 45 and 65 of the Rules of Court, respectively,
arising from actions for quieting of title, expropriation, ejectment, and reversion,
which all involve the same parcels of land.
In G.R. No. 170375, the Republic of the Philippines (Republic), by way of
consolidated Petitions for Review on Certiorari and for Certiorari under Rules 45 and
65 of the Rules of Court, respectively, seeks to set aside the issuances of Judge
Mamindiara P. Mangotara (Judge Mangotara) of the Regional Trial Court, Branch 1
(RTC-Branch 1) of Iligan City, Lanao del Norte, in Civil Case No. 106, particularly,
the: (1) Resolution[1] dated July 12, 2005 which, in part, dismissed the Complaint
for Expropriation of the Republic for the latters failure to implead indispensable
parties and forum shopping; and (2) Resolution[2] dated October 24, 2005, which
denied the Partial Motion for Reconsideration of the Republic.

G.R. Nos. 178779 and 178894 are two Petitions for Review on Certiorari under Rule
45 of the Rules of Court, where Landtrade Realty Corporation (LANDTRADE), Teofilo
Cacho, and/or Atty. Godofredo Cabildo assail the Decision[3] dated January 19, 2007
and Resolution[4] dated July 4, 2007 of the Court of Appeals in CA-G.R. CV No.
00456. The Court of Appeals affirmed the Decision[5] dated July 17, 2004 of the
Regional Trial Court, Branch 3 (RTC-Branch 3) of Iligan City, Lanao del Norte, in Civil
Case No. 4452, granting the Petition for Quieting of Title, Injunction and Damages
filed by Demetria Vidal and Azimuth International Development Corporation
(AZIMUTH) against Teofilo Cacho and Atty. Godofredo Cabildo.
G.R. No. 170505 is a Petition for Review on Certiorari under Rule 45 of the
Rules of Court in which LANDTRADE urges the Court to reverse and set aside the
Decision[6] dated November 23, 2005 of the Court of Appeals in CA-G.R. SP Nos.
85714 and 85841. The appellate court annulled several issuances of the Regional
Trial Court, Branch 5 (RTC-Branch 5) of Iligan City, Lanao del Norte, and its sheriff, in
Civil Case No. 6613, specifically, the: (1) Order[7] dated August 9, 2004 granting the
Motion for Execution Pending Appeal of LANDTRADE; (2) Writ of Execution[8] dated
August 10, 2004; (3) two Notices of Garnishment[9] both dated August 11, 2004,
and (4) Notification[10] dated August 11, 2004. These issuances of the RTC-Branch
5 allowed and/or enabled execution pending appeal of the Decision[11] dated
February 17, 2004 of the Municipal Trial Court in Cities (MTCC), Branch 2 of Iligan
City, Lanao del Norte, favoring LANDTRADE in Civil Case No. 11475-AF, the
ejectment case said corporation instituted against the National Power Corporation
(NAPOCOR) and the National Transmission Corporation (TRANSCO).
G.R. Nos. 173355-56 and 173563-64 are two Petitions for Certiorari and
Prohibition under Rule 65 of the Rules of Court with prayer for the immediate
issuance of a Temporary Restraining Order (TRO) and/or Writ of Preliminary
Injunction filed separately by NAPOCOR and TRANSCO. Both Petitions seek to annul
the Resolution[12] dated June 30, 2006 of the Court of Appeals in the consolidated
cases of CA-G.R. SP Nos. 00854 and 00889, which (1) granted the Omnibus Motion
of LANDTRADE for the issuance of a writ of execution and the designation of a
special sheriff for the enforcement of the Decision[13] dated December 12, 2005 of
the RTC-Branch 1 in Civil Case No. 6613, and (2) denied the applications of
NAPOCOR and TRANSCO for a writ of preliminary injunction to enjoin the execution
of the same RTC Decision. The Decision dated December 12, 2005 of RTC-Branch 1
in Civil Case No. 6613 affirmed the Decision dated February 17, 2004 of the MTCC in
Civil Case No. 11475-AF, favoring LANDTRADE.
G.R. No. 173401 involves a Petition for Review on Certiorari under Rule 45 of the
Rules of Court filed by the Republic, which raises pure questions of law and seeks
the reversal of the following issuances of the Regional Trial Court, Branch 4 (RTCBranch 4) of Iligan City, Lanao del Norte, in Civil Case No. 6686, an action for
cancellation of titles and reversion: (1) Order[14] dated December 13, 2005

dismissing the Complaint in Civil Case No. 6686; and (2) Order[15] dated May 16,
2006, denying the Motion for Reconsideration of the Republic.
I
THE PRECEDING CASES
The consolidated seven cases have for their common genesis the 1914 case of
Cacho v. Government of the United States[16] (1914 Cacho case).
The 1914 Cacho Case
Sometime in the early 1900s, the late Doa Demetria Cacho (Doa Demetria)
applied for the registration of two parcels of land: (1) Lot 1 of Plan II-3732, the
smaller parcel with an area of 3,635 square meters or 0.36 hectares (Lot 1); and (2)
Lot 2 of Plan II-3732, the larger parcel with an area of 378,707 square meters or
37.87 hectares (Lot 2). Both parcels are situated in what was then the Municipality
of Iligan, Moro Province, which later became Sitio Nunucan, then Brgy. Suarez, in
Iligan City, Lanao del Norte. Doa Demetrias applications for registration were
docketed as GLRO Record Nos. 6908 and 6909.
The application in GLRO Record No. 6908 covered Lot 1, the smaller parcel of land.
Doa Demetria allegedly acquired Lot 1 by purchase from Gabriel Salzos (Salzos).
Salzos, in turn, bought Lot 1 from Datto Darondon and his wife Alanga, evidenced by
a deed of sale in favor of Salzos signed solely by Alanga, on behalf of Datto
Darondon.
The application in GLRO Record No. 6909 involved Lot 2, the bigger parcel of land.
Doa Demetria purportedly purchased Lot 2 from Datto Bunglay. Datto Bunglay
claimed to have inherited Lot 2 from his uncle, Datto Anandog, who died without
issue.
Only the Government opposed Doa Demetrias applications for registration on the
ground that the two parcels of land were the property of the United States and
formed part of a military reservation, generally known as Camp Overton.
On December 10, 1912, the land registration court (LRC) rendered its Decision in
GLRO Record Nos. 6908 and 6909.
Based on the evidence, the LRC made the following findings in GLRO Record No.
6908:
6th. The court is convinced from the proofs that the small parcel of land sold by the
Moro woman Alanga was the home of herself and her husband, Darondon, and was
their conjugal property; and the court so finds.

xxxx
As we have seen, the deed on which applicants title to the small parcel rests, is
executed only by the Moro woman Alanga, wife of Datto Darondon, which is not
permitted either by the Moro laws or the Civil Code of the Philippine Islands. It
appears that the husband of Alanga, Datto Darondon, is alive yet, and before
admitting this parcel to registration it is ordered that a deed from Datto Darondon,
husband of Alanga, be presented, renouncing all his rights in the small parcel of
land object of Case No. 6908, in favor of the applicant.[17] (Emphases supplied.)

In GLRO Record No. 6909, the LRC observed and concluded that:
A tract of land 37 hectares in area, which is the extent of the land under discussion,
is larger than is cultivated ordinarily by the Christian Filipinos. In the Zamboanga
cadastral case of thousands of parcels now on trial before this court, the average
size of the parcels is not above 3 or 4 hectares, and the court doubts very much if a
Moro with all his family could cultivate as extensive a parcel of land as the one in
question. x x x
xxxx
The court is also convinced from the proofs that the small portion in the southern
part of the larger parcel, where, according to the proofs, Datto Anandog had his
house and where there still exist some cocos and fruit trees, was the home of the
said Moro Datto Anandog; and the court so finds. As to the rest of the large parcel
the court does not find the title of Datto Bunglay established. According to his own
declaration his residence on this land commenced only a few days before the sale.
He admitted that the coco trees he is supposed to have planted had not yet begun
to bear fruit at the time of the sale, and were very small. Datto Duroc positively
denies that Bunglay lived on the land, and it clearly appears that he was not on the
land when it was first occupied by the military. Nor does Datto Bunglay claim to
have planted the three mango trees by the roadside near point 25 of the plan. The
court believes that all the rest of this parcel, not occupied nor cultivated by Datto
Anandog, was land claimed by Datto Duroc and also by Datto Anandog and possibly
by other dattos as a part of their general jurisdiction, and that it is the class of land
that Act No. 718 prohibits the sale of, by the dattos, without the express approval of
the Government.
It is also found that Datto Bunglay is the nephew of Dato Anandog, and that the
Moro woman Alanga, grantor of the small parcel, is the sister of Datto Anandog, and
that he died without issue.

xxxx
It appears also that according to the provisions of the Civil Code as also the
provisions of the Luwaran Code of the Moros, the Moro woman Alanga has an
interest in the portion of land left by her deceased brother, Datto Anandog. By
article LXXXV, section 3, of the Luwaran Code, it will be seen that the brothers and
sisters of a deceased Moro inherit his property to the exclusion of the more distant
relatives. Therefore Datto Bunglay had no legal interest whatever in the land to sell
to the applicant, Doa Demetria Cacho. But the Moro woman, Alanga, having
appeared as a witness for the applicant without having made any claim to the land,
the court finds from this fact that she has ratified the sale made by her nephew.
The court therefore finds that the applicant Doa Demetria Cacho is owner of the
portion of land occupied and planted by the deceased Datto Anandog in the
southern part of the large parcel object of expediente No. 6909 only; and her
application as to all the rest of the land solicited in said case is denied. And it is
ordered that a new survey of the land be made and a corrected plan be presented,
excluding all the land not occupied and cultivated by Datto Anandog; that said
survey be made and the corrected plan presented on or before the 30th day of
March, 1913, with previous notice to the commanding general of the Division of the
Philippines.
On the 8th day of December, the court was at Camp Overton and had another
ocular inspection of the land for the purpose of fixing the limits of the part
cultivated by Datto Anandog, so often mentioned herein, with previous notice to the
applicant and her husband and representative, Seor Dionisio Vidal. Having arrived
late, Seor Vidal did not assist in the ocular inspection, which was fixed for 3
oclock, p.m. of the day mentioned. But the court, nevertheless, set stakes marking
the N.E., S.E., and S.W. corners of the land found to have been cultivated by the
deceased Anandog. The N.E. limit of said land is a brook, and the N.W. corner is the
point where the brook intersects the shore line of the sea, the other corners
mentioned being marked with pine stakes. And it is ordered that the new survey be
made in accordance with the points mentioned, by tracing four straight lines
connecting these four points. Between the portion cultivated by Datto Anandog and
the mouth of the River Agus there is a high steep hill and the court does not believe
it possible to cultivate said hill, it being covered with rocks and forest.[18]
(Emphases supplied.)

The LRC additionally decreed at the end of its December 10, 1912 Decision:
It is further ordered that one-half of the costs of the new survey be paid by the
applicant and the other half by the Government of the United States, and that the
applicant present the corresponding deed from Datto Darondon on or before the

above-mentioned 30th day of March, 1913. Final decision in these cases is reserved
until the presentation of the said deed and the new plan.[19]

Apparently dissatisfied with the foregoing LRC judgment, Doa Demetria appealed
to this Court. In its Decision dated December 10, 1914, the Court affirmed in toto
the LRC Decision of December 10, 1912, well satisfied that the findings of fact of the
court below were fully sustained by the evidence adduced during trial.
Eighty-three years later, in 1997, the Court was again called upon to settle a
matter concerning the registration of Lots 1 and 2 in the case of Cacho v. Court of
Appeals[20] (1997 Cacho case).
The 1997 Cacho Case
On June 29, 1978, Teofilo Cacho (Teofilo), claiming to be the late Doa Demetrias
son and sole heir, filed before the RTC a petition for reconstitution of two original
certificates of title (OCTs), docketed under the original GLRO Record Nos. 6908 and
6909.
Teofilos petition was opposed by the Republic, National Steel Corporation (NSC),
and the City of Iligan.
Acting on the motion for judgment on demurrer to evidence filed by the Republic
and NSC, the RTC initially dismissed Teofilos petition for reconstitution of titles
because there was inadequate evidence to show the prior existence of the titles
sought to be restored. According to the RTC, the proper remedy was a petition for
the reconstitution of decrees since it is undisputed that in Cases No. 6908 and
6909, Decrees No. 10364 and 18969, respectively, were issued. Teofilo sought
leave of court for the filing and admission of his amended petition, but the RTC
refused. When elevated to this Court in Cacho v. Mangotara, docketed as G.R. No.
85495, the Court resolved to remand the case to the RTC, with an order to the said
trial court to accept Teofilos amended petition and to hear it as one for re-issuance
of decrees.
In opposing Teofilos petition, the Republic and NSC argued that the same suffered
from jurisdictional infirmities; that Teofilo was not the real party-in-interest; that
Teofilo was guilty of laches; that Doa Demetria was not the registered owner of the
subject parcels of land; that no decrees were ever issued in Doa Demetrias name;
and that the issuance of the decrees was dubious and irregular.
After trial, on June 9, 1993, the RTC rendered its Decision granting Teofilos petition
and ordering the reconstitution and re-issuance of Decree Nos. 10364 and 18969.
The RTC held that the issuance of Decree No. 10364 in GLRO No. 6908 on May 9,

1913 and Decree No. 18969 in GLRO Record No. 6909 on July 8, 1915 was
sufficiently established by the certifications and testimonies of concerned officials.
The original issuance of these decrees presupposed a prior judgment that had
become final.
On appeal, the Court of Appeals reversed the RTC Decision dated June 9, 1993 and
dismissed the petition for re-issuance of Decree Nos. 10364 and 18969 because: (1)
re-issuance of Decree No. 18969 in GLRO Record No. 6909 could not be made in the
absence of the new survey ordered by this Court in the 1914 Cacho case; (2) the
heir of a registered owner may lose his right to recover possession of the property
and title thereto by laches; and (3) Teofilo failed to establish his identity and
existence and that he was a real party-in-interest.
Teofilo then sought recourse from this Court in the 1997 Cacho case. The Court
reversed the judgment of the Court of Appeals and reinstated the decision of the
RTC approving the re-issuance of Decree Nos. 10364 and 18969. The Court found
that such decrees had in fact been issued and had attained finality, as certified by
the Acting Commissioner, Deputy Clerk of Court III, Geodetic Engineer, and Chief of
Registration of the then Land Registration Commission, now National Land Titles and
Deeds Registration Administration (NALTDRA). The Court further reasoned that:
[T]o sustain the Court of Appeals ruling as regards requiring petitioners to fulfill the
conditions set forth in Cacho vs. U.S. would constitute a derogation of the doctrine
of res judicata. Significantly, the issuance of the subject decrees presupposes a
prior final judgment because the issuance of such decrees is a mere ministerial act
on part of the Land Registration Commission (now the NALTDRA), upon presentation
of a final judgment. It is also worth noting that the judgment in Cacho vs. U.S. could
not have acquired finality without the prior fulfillment of the conditions in GLRO
Record No. 6908, the presentation of the corresponding deed of sale from Datto
Dorondon on or before March 30, 1913 (upon which Decree No. 10364 was issued
on May 9, 1913); and in GLRO Record No. 6909, the presentation of a new survey
per decision of Judge Jorge on December 10, 1912 and affirmed by this Court on
December 10, 1914 (upon which Decree No. 18969 was issued on July 8, 1915).
Requiring the submission of a new plan as a condition for the re-issuance of
the decree would render the finality attained by the Cacho vs. U.S. case nugatory,
thus, violating the fundamental rule regarding res judicata. It must be stressed that
the judgment and the resulting decree are res judicata, and these are binding upon
the whole world, the proceedings being in the nature of proceedings in rem.
Besides, such a requirement is an impermissible assault upon the integrity and
stability of the Torrens System of registration because it also effectively renders the
decree inconclusive.[21]

As to the issue of laches, the Court referred to the settled doctrine that laches
cannot bar the issuance of a decree. A final decision in land registration cases can
neither be rendered inefficacious by the statute of limitations nor by laches.
Anent the issue of the identity and existence of Teofilo and he being a real party-ininterest, the Court found that these were sufficiently established by the records.
The Court relied on Teofilos Affidavit of Adjudication as Doa Demetrias sole heir,
which he executed before the Philippine Consulate General in Chicago, United
States of America (U.S.A.); as well as the publication in the Times Journal of the fact
of adjudication of Doa Demetrias estate. Teofilo also appeared personally before
the Vice Consul of the Philippine Consulate General in Chicago to execute a Special
Power of Attorney in favor of Atty. Godofredo Cabildo (Atty. Cabildo) who
represented him in this case. The Court stressed that the execution of public
documents is entitled to the presumption of regularity and proof is required to assail
and controvert the same.
In the Resolution dated July 28, 1997,[22] the Court denied the Motions for
Reconsideration of the Republic and NSC.
As a result of the 1997 Cacho case, the decrees of registration were re-issued
bearing new numbers and OCTs were issued for the two parcels of land in Doa
Demetrias name. OCT No. 0-1200 (a.f.) was based on re-issued Decree No. N219464 in GLRO Record No. 6908, while OCT No. 0-1201 (a.f.) was based on reissued Decree No. N-219465 in GLRO Record No. 6909.
II
THE ANTECENT FACTS
OF THE PETITIONS AT BAR

The dispute over Lots 1 and 2 did not end with the termination of the 1997 Cacho
case. Another four cases involving the same parcels of land were instituted before
the trial courts during and after the pendency of the 1997 Cacho case. These cases
are: (1) the Expropriation Case, G.R. No. 170375; (2) the Quieting of Title Case, G.R.
Nos. 178779 and 178894; (3) the Ejectment or Unlawful Detainer Case, G.R. No.
170505 (execution pending appeal before the RTC) and G.R. Nos. 173355-56 and
173563-64 (execution pending appeal before the Court of Appeals); and (4) the
Cancellation of Titles and Reversion Case, G.R. No. 173401. These cases proceeded
independently of each other in the courts a quo until they reached this Court via the
present Petitions. In the Resolution[23] dated October 3, 2007, the Court
consolidated the seven Petitions considering that they either originated from the
same case or involved similar issues.
Expropriation Case

(G.R. No. 170375)

The Complaint for Expropriation was originally filed on August 15, 1983 by the
Iron and Steel Authority (ISA), now the NSC, against Maria Cristina Fertilizer
Corporation (MCFC), and the latters mortgagee, the Philippine National Bank (PNB).
The Complaint was docketed as Civil Case No. 106 and raffled to RTC-Branch 1,
presided over by Judge Mangotara.
ISA was created pursuant to Presidential Decree No. 2729[24] dated August
9, 1973, to strengthen, develop, and promote the iron and steel industry in the
Philippines. Its existence was extended until October 10, 1988.
On November 16, 1982, during the existence of ISA, then President Ferdinand E.
Marcos issued Presidential Proclamation No. 2239,[25] reserving in favor of ISA a
parcel of land in Iligan City, measuring 302,532 square meters or 30.25 hectares, to
be devoted to the integrated steel program of the Government. MCFC occupied
certain portions of this parcel of land. When negotiations with MCFC failed, ISA was
compelled to file a Complaint for Expropriation.
When the statutory existence of ISA expired during the pendency of Civil Case No.
106, MCFC filed a Motion to Dismiss the case alleging the lack of capacity to sue of
ISA. The RTC-Branch 1 granted the Motion to Dismiss in an Order dated November
9, 1988. ISA moved for reconsideration or, in the alternative, for the substitution of
the Republic as plaintiff in Civil Case No. 106, but the motion was denied by RTCBranch 1. The dismissal of Civil Case No. 106 was affirmed by the Court of Appeals,
thus, ISA appealed to this Court. In Iron and Steel Authority v. Court of Appeals[26]
(ISA case), the Court remanded the case to RTC-Branch 1, which was ordered to
allow the substitution of the Republic for ISA as plaintiff. Entry of Judgment was
made in the ISA case on August 31, 1998. In an Order[27] dated November 16,
2001, the RTC-Branch 1 allowed the substitution of the Republic for ISA as plaintiff in
Civil Case No. 106.
Alleging that Lots 1 and 2 involved in the 1997 Cacho case encroached and
overlapped the parcel of land subject of Civil Case No. 106, the Republic filed with
the RTC-Branch 1 a Motion for Leave to File Supplemental Complaint dated October
7, 2004 and to Admit the Attached Supplemental Complaint dated September 28,
2004[28] seeking to implead in Civil Case No. 106 Teofilo Cacho and Demetria Vidal
and their respective successors-in-interest, LANDTRADE and AZIMUTH.
MCFC opposed the Motion for leave to file and to admit the Supplemental
Complaint on the ground that the Republic was without legal personality to file the
same because ISA was the plaintiff in Civil Case No. 106. MCFC argued that the
Republic failed to move for the execution of the decision in the ISA case within the
prescriptive period of five years, hence, the only remedy left was for the Republic to

file an independent action to revive the judgment. MCFC further pointed out that
the unreasonable delay of more than six years of the Republic in seeking the
substitution and continuation of the action for expropriation effectively barred any
further proceedings therein on the ground of estoppel by laches.
In its Reply, the Republic referred to the Order dated November 16, 2001 of the RTCBranch 1 allowing the substitution of the Republic for ISA.
In an Order dated April 4, 2005, the RTC-Branch 1 denied the Motion of the
Republic for leave to file and to admit its Supplemental Complaint. The RTC-Branch
1 agreed with MCFC that the Republic did not file any motion for execution of the
judgment of this Court in the ISA case. Since no such motion for execution had
been filed, the RTC-Branch 1 ruled that its Order dated November 16, 2001, which
effected the substitution of the Republic for ISA as plaintiff in Civil Case No. 106,
was an honest mistake. The Republic filed a Motion for Reconsideration of the April
4, 2005 Order of the RTC-Branch 1.
MCFC then filed a Motion to Dismiss Civil Case No. 106 for: (1) failure of the
Republic to implead indispensable parties because MCFC insisted it was not the
owner of the parcels of land sought to be expropriated; and (2) forum shopping
considering the institution by the Republic on October 13, 2004 of an action for the
reversion of the same parcels subject of the instant case for expropriation.
Judge Mangotara of RTC-Branch 1 issued a Resolution[29] on July 12, 2005,
denying for lack of merit the Motion for Reconsideration of the Order dated April 4,
2005 filed by the Republic, and granting the Motion to Dismiss Civil Case No. 106
filed by MCFC. Judge Mangotara justified the dismissal of the Expropriation Case
thus:
What the Republic seeks [herein] is the expropriation of the subject parcels of land.
Since the exercise of the power of eminent domain involves the taking of private
lands intended for public use upon payment of just compensation to the owner x x
x, then a complaint for expropriation must, of necessity, be directed against the
owner of the land subject thereof. In the case at bar, the decision of the Supreme
Court in Cacho v. Government of the United States x x x, decreeing the registration
of the subject parcels of land in the name of the late Doa Demetria Cacho has long
attained finality and is conclusive as to the question of ownership thereof. Since
MCFC, the only defendant left in this case, is not a proper party defendant in this
complaint for expropriation, the present case should be dismissed.
This Court notes that the Republic [has filed reversion proceedings] dated
September 27, 2004, involving the same parcels of land, docketed as Case No. 6686
pending before the Regional Trial Court of Lanao del Norte, Iligan City Branch 4.
[The Republic], however, did not state such fact in its Verification and Certification

of Non-Forum Shopping attached to its Supplemental Complaint dated September

28, 2004. [It is therefore] guilty of forum shopping. Moreover, considering that in
the Reversion case, [the Republic] asserts ownership over the subject parcels of
land, it cannot be allowed to take an inconsistent position in this expropriation case
without making a mockery of justice.[30]

The Republic filed a Motion for Reconsideration of the Resolution dated July
12, 2005, insofar as it dismissed Civil Case No. 106, but said Motion was denied by
Judge Mangatora in a Resolution[31] dated October 24, 2005.
On January 16, 2006, the Republic filed with this Court the consolidated
Petition for Review on Certiorari and Petition for Certiorari under Rules 45 and 65 of
the Rules of Court, respectively, docketed as G.R. No. 170375.
The Quieting of Title Case
(G.R. Nos. 178779 and 178894)

Demetria Vidal (Vidal) and AZIMUTH filed on November 18, 1998, a Petition[32] for
Quieting of Title against Teofilo, Atty. Cabildo, and the Register of Deeds of Iligan
City, which was docketed as Civil Case No. 4452 and raffled to RTC-Branch 3.
In the Petition, Vidal claimed that she, and not Teofilo, was the late Doa Demetrias
sole surviving heir, entitled to the parcels of land covered by OCT Nos. 0-1200 (a.f.)
and 0-1201 (a.f.). She averred that she is the daughter of Francisco Cacho Vidal
(Francisco) and Fidela Arellano Confesor. Francisco was the only child of Don
Dionisio Vidal and Doa Demetria.
AZIMUTH, for its part, filed the Petition as Vidals successor-in-interest with respect
to a 23-hectare portion of the subject parcels of land pursuant to the Memorandum
of Agreement dated April 2, 1998 and Deed of Conditional Conveyance dated
August 13, 2004, which Vidal executed in favor of AZIMUTH.
Teofilo opposed the Petition contending that it stated no cause of action because
there was no title being disturbed or in danger of being lost due to the claim of a
third party, and Vidal had neither legal nor beneficial ownership of the parcels of
land in question; that the matter and issues raised in the Petition had already been
tried, heard, and decided by the RTC of Iligan City and affirmed with finality by this
Court in the 1997 Cacho case; and that the Petition was barred by the Statute of
Limitations and laches.
LANDTRADE, among other parties, was allowed by the RTC-Branch 3 to intervene in
Civil Case No. 4452. LANDTRADE alleged that it is the owner of a portion of the

subject parcels of land, measuring 270,255 square meters or about 27.03 hectares,
which it purportedly acquired through a Deed of Absolute Sale dated October 1,
1996 from Teofilo, represented by Atty. Cabildo. LANDTRADE essentially argued that
Vidal's right as heir should be adjudicated upon in a separate and independent
proceeding and not in the instant Quieting of Title Case.
During the pre-trial conference, the parties manifested that there was no possibility
of any amicable settlement among them.
Vidal and AZIMUTH submitted testimonial and documentary evidence during the
trial before the RTC-Branch 3. Teofilo and Atty. Cabildo failed to present any
evidence as they did not appear at all during the trial, while LANDTRADE was
declared by the RTC-Branch 3 to have waived its right to present evidence on its
defense and counterclaim.
On July 17, 2004, the RTC-Branch 3 rendered its Decision[33] in Civil Case No. 4452
in favor of Vidal and AZIMUTH, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of the petitioners and against
the respondents and intervenors:
1) DECLARING:
a.) Petitioner Demetria C. Vidal the sole surviving heir of the late Doa Demetria
Cacho;
b.) Petitioner Demetria C. Vidal alone has the hereditary right to and interest in the
Subject Property;
c.) Petitioner Azimuth International Development Corporation is the successor-ininterest of petitioner Demetria C. Vidal to a portion of the Subject Property to the
extent provided in their 2 April 1998 Memorandum of Agreement and 13 August
1998 Deed of Conditional Conveyance;
d.) Respondent Teofilo Cacho is not a son or heir of the late Dona Demetria Cacho;
and
e.) Respondent Teofilo Cacho, Godofredo Cabildo and any of their
transferees/assignees have no valid right to or interest in the Subject Property.
2) ORDERING:
a.) Respondent Register of Deeds of Iligan City, and any other person acting in his
behalf, stop, cease and desist:
i) From accepting or registering any affidavit of self- adjudication or any other
document executed by respondents Teofilo Cacho, Godofredo Cabildo and/or any
other person which in any way transfers the title to the Subject Property from Dona

Demetria Cacho to respondent Teofilo Cacho, Godofredo Cabildo and/or any of their
transferees/assignees, including the intervenors.
ii) From cancelling the OCTs or any certificate of title over the Subject Property in
the name of Demetria Cacho or any successor certificate of title, and from issuing
new certificates of title in the name of respondents Teofilo Cacho, Godofredo Cabildo
their transferees/assignees, including the intervenors.
b) Respondents Teofilo Cacho, Godofredo Cabildo, their transferees/assignees, and
any other person acting in their behalf, to stop, cease and desist:
i) From executing, submitting to any Register of Deeds, or registering or causing to
be registered therein, any affidavit of self-adjudication or any other document which
in any way transfers title to the Subject Property from Demetria Cacho to
respondents Teofilo Cacho, Godofredo Cabildo and/or any of their
transferees/assignees, including the intervenors.
ii) From canceling or causing the cancellation of OCTs or any certificate of title over
the Subject Property in the name of Demetria Cacho or any successor certificate of
title, and from issuing new certificates of title in the name of respondent Teofilo
Cacho, Godofredo Cabildo and/or any of their transferees/assignees, including the
intervenors.
iii) From claiming or representing in any manner that respondent Teofilo Cacho is the
son or heir of Demetria Cacho or has rights to or interest in the Subject Property.
3) ORDERING respondents Teofilo Cacho and Atty. Godofredo Cabildo to pay
petitioners, jointly and severally, the following:
a) For temperate damages
b) For nominal damages
c) For moral damages
d) For exemplary damages
e) For attorney's fees (ACCRA
f) For Attorney's fees
(Atty. Voltaire Rovira)
g) For litigation expenses

P 80,000.00
P 60,000.00
P500,000.00
P 500,000.00
Law)-P1,000,000.00
P500,000.00
-

P300,000.00

For lack of factual and legal basis, the counterclaim of Teofilo Cacho and Atty.
Godofredo Cabildo is hereby dismissed.
Likewise, the counterclaim of intervenor IDD/Investa is dismissed for lack of basis as
the petitioners succeeded in proving their cause of action.
On the cross-claim of intervenor IDD/Investa, respondents Teofilo Cacho and Atty.
Godofredo Cabildo are ORDERED to pay IDD/Investa, jointly and severally, the
principal sum of P5,433,036 with 15% interest per annum.

For lack of legal basis, the counterclaim of Intervenor Landtrade Realty

Development Corporation is dismissed.
Likewise, Intervenor Manguera's counterclaim is dismissed for lack of legal basis.
[34]

The joint appeal filed by LANDTRADE, Teofilo, and Atty. Cabildo with the Court of
Appeals was docketed as CA-G.R. CV No. 00456. The Court of Appeals, in its
Decision[35] of January 19, 2007, affirmed in toto the Decision dated July 17, 2004
of the RTC-Branch 3.
According to the Court of Appeals, the RTC-Branch 3 did not err in resolving the
issue on Vidals status, filiation, and hereditary rights as it is determinative of the
issue on ownership of the subject properties. It was indubitable that the RTCBranch 3 had jurisdiction over the person of Teofilo and juridical personality of
LANDTRADE as they both filed their Answers to the Petition for Quieting of Title
thereby voluntarily submitting themselves to the jurisdiction of said trial court.
Likewise, the Petition for Quieting of Title is in itself within the jurisdiction of the
RTC-Branch 3. Hence, where there is jurisdiction over the person and subject
matter, the resolution of all other questions arising in the case is but an exercise by
the court of its jurisdiction. Moreover, Teofilo and LANDTRADE were guilty of
estoppel by laches for failing to assail the jurisdiction of the RTC-Branch 3 at the first
opportunity and even actively participating in the trial of the case and seeking
affirmative reliefs.

In addition, the Court of Appeals held that the 1997 Cacho case only determined the
validity and efficacy of the Affidavit of Adjudication that Teofilo executed before the
Philippine Consulate General in the U.S.A. The decision of this Court in the 1997
Cacho case, which had become final and executory, did not vest upon Teofilo
ownership of the parcels of land as it merely ordered the re-issuance of a lost
duplicate certificate of title in its original form and condition.
The Court of Appeals agreed in the finding of the RTC-Branch 3 that the evidence on
record preponderantly supports Vidals claim of being the granddaughter and sole
heiress of the late Doa Demetria. The appellate court further adjudged that Vidal
did not delay in asserting her rights over the subject parcels of land. The
prescriptive period for real actions over immovables is 30 years. Vidals rights as
Doa Demetrias successor-in-interest accrued upon the latters death in 1974, and
only 24 years thereafter, in 1998, Vidal already filed the present Petition for
Quieting of Title. Thus, Vidals cause of action had not yet prescribed. And, where

the action was filed within the prescriptive period provided by law, the doctrine of
laches was also inapplicable.
LANDTRADE, Teofilo, and Atty. Cabildo filed separate Motions for
Reconsideration of the January 19, 2007 Decision of the Court of Appeals, which
were denied in the July 4, 2007 Resolution[36] of the same court.
On August 24, 2007, LANDTRADE filed with this Court a Petition for Review on
Certiorari under Rule 45 of the Rules of Court, which was docketed as G.R. No.
178779. On September 6, 2007, Teofilo and Atty. Cabildo filed their own Petition for
Review on Certiorari under Rule 45 of the Rules of Court, which was docketed as
G.R. No. 178894.
The Ejectment or Unlawful Detainer Case
(G.R. Nos. 170505, 173355-56, and 173563-64)
Three Petitions before this Court are rooted in the Unlawful Detainer Case instituted
by LANDTRADE against NAPOCOR and TRANSCO.
On August 9, 1952, NAPOCOR took possession of two parcels of land in Sitio
Nunucan, Overton, Fuentes, Iligan City, denominated as Lots 2029 and 2043,
consisting of 3,588 square meters (or 0.36 hectares) and 3,177 square meters (or
0.32 hectares), respectively. On Lot 2029, NAPOCOR constructed its power substation, known as the Overton Sub-station, while on Lot 2043, it built a warehouse,
known as the Agus 7 Warehouse, both for the use of its Agus 7 Hydro-Electric Power
Plant. For more than 30 years, NAPOCOR occupied and possessed said parcels of
land pursuant to its charter, Republic Act No. 6395.[37] With the enactment in 2001
of Republic Act No. 9136, otherwise known as the Electric Power Industry Reform Act
(EPIRA), TRANSCO assumed the functions of NAPOCOR with regard to electrical
transmissions and took over possession of the Overton Sub-station.
Claiming ownership of the parcels of land where the Overton Sub-station and Agus
7 Warehouse are located, LANDTRADE filed with the MTCC on April 9, 2003 a
Complaint for Unlawful Detainer against NAPOCOR and TRANSCO, which was
docketed as Civil Case No. 11475-AF.
In its Complaint, LANDTRADE alleged that it acquired from Teofilo, through Atty.
Cabildo, two parcels of land at Sitio Nunucan, Overton, Fuentes, Brgy. Maria Cristina,
Iligan City, with a combined area of 270,255 square meters or around 27.03
hectares, as evidenced by a Deed of Absolute Sale[38] dated October 1, 1996.
Certain portions of said parcels of land were being occupied by the Overton Substation and Agus 7 Warehouse of NAPOCOR and TRANSCO, through the tolerance of
LANDTRADE. Upon failure of NAPOCOR and TRANSCO to pay rentals or to vacate
the subject properties after demands to do so, LANDTRADE filed the present

Complaint for Unlawful Detainer, plus damages in the amount of P450,000.00 as

yearly rental from date of the first extra-judicial demand until NAPOCOR and
TRANSCO vacate the subject properties.
In their separate Answers, NAPOCOR and TRANSCO denied the material allegations
in the Complaint and countered, by way of special and affirmative defenses, that
the Complaint was barred by res judicata; that the MTCC has no jurisdiction over the
subject matter of the action; and that LANDTRADE lacked the legal capacity to sue.
On February 17, 2004, the MTCC rendered its Decision[39] in favor of LANDTRADE.
The MTCC disposed:
WHEREFORE, premises considered, judgment is hereby rendered in favor of
Plaintiff Land Trade Realty Corporation represented by Atty. Max C. Tabimina and
against defendant National Power Corporation represented by its President, Mr.
Rogelio M. Murga and co-defendant TRANSCO represented by its President Dr. Allan
T. Ortiz and Engr. Lorrymir A. Adaza, Manager, NAPOCOR-Mindanao, Regional
Center, Ma. Cristina, Iligan City, ordering:
1. Defendants National Power Corporation and TRANSCO, their agents or
representatives or any person/s acting on its behalf or under its authority to vacate
the premises;
2. Defendants NAPOCOR and TRANSCO to pay Plaintiff jointly and solidarily:
a. Php500,000.00 a month representing fair rental value or compensation since June
29, 1978 until defendant shall have vacated the premises;
b. Php20,000.00 for and as attorneys fees and
c. Cost of suit.
Execution shall issue immediately upon motion, unless an appeal has been
perfected and the defendant to stay execution files a sufficient supersedeas bond,
approved by this Court and executed in favor of the plaintiff, to pay the rents,
damages, and costs accruing down to the time of judgment appealed from, and
unless, during the pendency of the appeal, defendants deposit with the appellate
court the amount of P500,000.00 per month, as reasonable value of the use and
occupancy of the premises for the preceding month or period on or before the tenth
day of each succeeding month or period.[40]

NAPOCOR and TRANSCO seasonably filed a Joint Notice of Appeal. Their appeal,
docketed as Civil Case No. 6613, was initially assigned to the RTC-Branch 5,
presided over by Judge Maximino Magno Libre (Judge Libre).

LANDTRADE filed on June 24, 2004 a Motion for Execution, asserting that NAPOCOR
and TRANSCO had neither filed a supersedeas bond with the MTCC nor periodically
deposited with the RTC the monthly rental for the properties in question, so as to
stay the immediate execution pending appeal of the MTCC judgment. However, the
said Motion failed to comply with the required notice of hearing under Rule 15,
Section 5 of the Rules of Court. LANDTRADE then filed a Motion to Withdraw and/or
Replace Notice of Hearing.
NAPOCOR and TRANSCO filed on July 13, 2004 a Joint Motion to Suspend
Proceedings citing Amagan v. Marayag,[41] in which the Court ruled that if
circumstances should require, the proceedings in an ejectment case may be
suspended in whatever stage it may be found. Since LANDTRADE anchors its right
to possession of the subject parcels of land on the Deed of Sale executed in its favor
by Teofilo on October 1, 1996, the ejectment case should be held in abeyance
pending the resolution of other cases in which title over the same properties are in
issue, i.e., (1) Civil Case No. 6600, the action for the annulment of the Deed of Sale
dated October 1, 1996 filed by Teofilo against LANDTRADE pending before the RTCBranch 4; and (2) Civil Case No. 4452, the Quieting of Title Case filed by Vidal and
AZIMUTH against Teofilo and Atty. Cabildo pending before the RTC-Branch 3.
LANDTRADE filed on July 19, 2004 another Motion for Execution, which was heard
together with the Joint Motion to Suspend Proceedings of NAPOCOR and TRANSCO.
After said hearing, the RTC-Branch 5 directed the parties to file their memoranda on
the two pending Motions.
LANDTRADE, in its Memorandum, maintained that the pendency of Civil Case No.
4452, the Quieting of Title Case, should not preclude the execution of the MTCC
judgment in the Unlawful Detainer Case because the issue involved in the latter was
only the material possession or possession de facto of the parcels of land in
question. LANDTRADE also reported that Civil Case No. 6600, the action for
annulment of the Deed of Sale dated October 1, 1996 instituted by Teofilo, was
already dismissed given that the RTC-Branch 4 had approved the Compromise
Agreement executed between LANDTRADE and Teofilo.
NAPOCOR and TRANSCO likewise filed their respective Memoranda.
Subsequently, NAPOCOR filed a Supplement to its Memorandum to bring to the
attention of the RTC-Branch 5 the Decision rendered on July 17, 2004 by the RTCBranch 3 in Civil Case No. 4452, the Quieting of Title Case, categorically declaring
Teofilo, the predecessor-in-interest of LANDTRADE, as having no right at all to the
subject parcels of land. Resultantly, the right of LANDTRADE to the two properties,
which merely emanated from Teofilo, was effectively declared as non-existent too.
On August 4, 2004, the RTC-Branch 5 issued an Order[42] denying the Joint Motion
to Suspend Proceedings of NAPOCOR and TRANSCO. The RTC held that the

pendency of other actions involving the same parcels of land could not stay
execution pending appeal of the MTCC judgment because NAPOCOR and TRANSCO
failed to post the required bond and pay the monthly rentals.
Five days later, on August 9, 2004, the RTC-Branch 5 issued another Order[43]
granting the Motion of LANDTRADE for execution of the MTCC judgment pending
appeal.
The next day, on August 10, 2004, the Acting Clerk of Court, Atty. Joel M. Macaraya,
Jr., issued a Writ of Execution Pending Appeal[44] which directed Sheriff IV Alberto
O. Borres (Sheriff Borres) to execute the MTCC Decision dated February 17, 2004.
A day later, on August 11, 2004, Sheriff Borres issued two Notices of
Garnishment[45] addressed to PNB and Land Bank of the Philippines in Iligan City,
garnishing all the goods, effects, stocks, interests in stocks and shares, and any
other personal properties belonging to NAPOCOR and TRANSCO which were being
held by and under the possession and control of said banks. On even date, Sheriff
Borres also issued a Notification[46] to NAPOCOR and TRANSCO for them to vacate
the subject parcels of land; and to pay LANDTRADE the sums of (a)
P156,000,000.00, representing the total fair rental value for the said properties,
computed at P500,000.00 per month, beginning June 29, 1978 until June 29, 2004,
or for a period of 26 years, and (b) P20,000.00 as attorney's fees.
Thereafter, NAPOCOR and TRANSCO each filed before the Court of Appeals in
Cagayan de Oro City a Petition for Certiorari, under Rule 65 of the Rules of Court,
with prayer for the issuance of a TRO and writ of preliminary injunction. The
Petitions, docketed as CA-G.R. SP Nos. 85174 and 85841, were eventually
consolidated.
The Court of Appeals issued on August 18, 2004 a TRO[47] enjoining the
enforcement and implementation of the Order of Execution and Writ of Execution
Pending Appeal of the RTC-Branch 5 and Notices of Garnishment and Notification of
Sheriff Borres.
The Court of Appeals, in its Decision[48] dated November 23, 2005, determined that
public respondents did commit grave abuse of discretion in allowing and/or effecting
the execution of the MTCC judgment pending appeal, since NAPOCOR and TRANSCO
were legally excused from complying with the requirements for a stay of execution
specified in Rule 70, Section 19 of the Rules of Court, particularly, the posting of a
supersedeas bond and periodic deposits of rental payments. The decretal portion of
said appellate court Decision states:
ACCORDINGLY, the two petitions at bench are GRANTED; the Order dated 9 August
2004, the Writ of Execution Pending Appeal dated 10 August 2004, the two Notices

of Garnishment dated 11 August 2004, and the Notification dated 11 August 2004,
are ANNULLED and SET ASIDE.[49]

Displeased, LANDTRADE elevated the case to this Court on January 10, 2006 via a
Petition for Review on Certiorari under Rule 45 of the Rules of Court, which was
docketed as G.R. No. 170505.
In the meantime, with the retirement of Judge Libre and the inhibition[50] of Judge
Oscar Badelles, the new presiding judge of RTC-Branch 5, Civil Case No. 6613 was
re-raffled to the RTC-Branch 1, presided over by Judge Mangotara. The RTC-Branch
1 promulgated on December 12, 2005 a Decision[51] in Civil Case No. 6613 which
affirmed in toto the February 17, 2004 Decision of the MTCC in Civil Case No. 11475AF favoring LANDTRADE.
NAPOCOR and TRANSCO filed with the RTC-Branch 1 twin Motions, namely:
(1) Motion for Reconsideration of the Decision dated December 12, 2005; and (2)
Motion for Inhibition of Judge Mangotara. The RTC-Branch 1 denied both Motions in
a Resolution dated January 30, 2006.
NAPOCOR and TRANSCO filed with the Court of Appeals separate Petitions for
Review with prayer for TRO and/or a writ of preliminary injunction, which were
docketed as CA-G.R. SP Nos. 00854 and 00889, respectively. In a Resolution dated
March 24, 2006, the Court of Appeals granted the prayer for TRO of NAPOCOR and
TRANSCO.
With the impending lapse of the effectivity of the TRO on May 23, 2006,
NAPOCOR filed on May 15, 2006 with the Court of Appeals a Manifestation and
Motion praying for the resolution of its application for preliminary injunction.
On May 23, 2006, the same day the TRO lapsed, the Court of Appeals granted
the motions for extension of time to file a consolidated comment of LANDTRADE.
Two days later, LANDTRADE filed an Omnibus Motion seeking the issuance of (1) a
writ of execution pending appeal, and (2) the designation of a special sheriff in
accordance with Rule 70, Section 21 of the Rules of Court.
In a Resolution[52] dated June 30, 2006, the Court of Appeals granted the
Omnibus Motion of LANDTRADE and denied the applications for the issuance of a
writ of preliminary injunction of NAPOCOR and TRANSCO. In effect, the appellate
court authorized the execution pending appeal of the judgment of the MTCC,
affirmed by the RTC-Branch 1, thus:
IN LIGHT OF THE ABOVE DISQUISITIONS, this Court resolves to grant the
[LANDRADE]s omnibus motion for execution pending appeal of the decision

rendered in its favor which is being assailed in these consolidated petitions for
review. Accordingly, the [NAPOCOR and TRANSCOs] respective applications for
issuance of writ of preliminary injunction are both denied for lack of factual and
legal bases. The Municipal Trial Court in Cities, Branch 2, Iligan City, which at
present has the custody of the records of the case a quo, is hereby ordered to cause
the immediate issuance of a writ of execution relative to its decision dated 17
February 2004 in Civil Case No. 11475-AF.[53]

On July 20, 2006, NAPOCOR filed with this Court a Petition for Certiorari and
Prohibition under Rule 65 of the Rules of Court with an urgent plea for a TRO,
docketed as G.R. No. 173355-56. On August 2, 2006, TRANSCO filed with this Court
its own Petition for Certiorari, docketed as G.R. No. 173563-64.
On July 21, 2006, NAPOCOR filed an Urgent Motion for the Issuance of a TRO in G.R.
No. 173355-56. In a Resolution[54] dated July 26, 2006, the Court granted the
Motion of NAPOCOR and issued a TRO,[55] effective immediately, which enjoined
public and private respondents from implementing the Resolution dated June 30,
2006 of the Court of Appeals in CA-G.R. SP Nos. 00854 and 00889 and the Decision
dated February 17, 2004 of the MTCC in Civil Case No. 11475-AF.
On July 31, 2006, Vidal and AZIMUTH filed a Motion for Leave to Intervene and
to Admit Attached Comment-in-Intervention, contending therein that Vidal was the
lawful owner of the parcels of land subject of the Unlawful Detainer Case as
confirmed in the Decision dated July 17, 2004 of the RTC-Branch 3 in Civil Case No.
4452. In a Resolution dated September 30, 2006, the Court required the parties to
comment on the Motion of Vidal and AZIMUTH, and deferred action on the said
Motion pending the submission of such comments.
The Cancellation of Titles and Reversion Case
(G.R. No. 173401)

On October 13, 2004, the Republic filed a Complaint for the Cancellation of OCT
Nos. 0-1200 (a.f.) and 0-1201 (a.f.) and Reversion against the late Doa Demetria,
represented by her alleged heirs, Vidal and/or Teofilo, together with AZIMUTH and
LANDTRADE. The Complaint, docketed as Civil Case No. 6686, was raffled to the
RTC-Branch 4.
The Republic sought the cancellation of OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.) and
the reversion of the parcels of land covered thereby to the Government based on
the following allegations in its Complaint, under the heading Cause of Action:

5.
On October 15, 1998, Original Certificates of Title (OCTs) Nos. 0-1200 (a.f.)
and 0-1201 (a.f.) were issued in the name of Demetria Cacho, widow, now
deceased consisting of a total area of Three Hundred Seventy-Eight Thousand
Seven Hundred and Seven (378,707) square meters and Three Thousand Seven
Hundred Thirty-Five (3,635) square meters, respectively, situated in Iligan City, x x x
xxxx
6.
The afore-stated titles were issued in implementation of a decision rendered
in LRC (GLRO) Record Nos. 6908 and 6909 dated December 10, 1912, as affirmed
by the Honorable Supreme Court in Cacho v. Government of the United States, 28
Phil. 616 (December 10, 1914),
7.
The decision in LRC (GLRO) Record Nos. 6908 and 6909, upon which the
titles were issued, did not grant the entire area applied for therein. x x x
xxxx
9.
As events turned out, the titles issued in connection with LRC (GLRO) Record
Nos. 6908 and 6909 i.e. OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.) cover property
MUCH LARGER in area than that granted by the land registration court in its
corresponding decision, supra.
10.
While the LRC Decision, as affirmed by the Honorable Supreme Court,
granted only the southern part of the 37.87 hectare land subject of LRC (GLRO)
Record Case No. 6909, the ENTIRE 37.87 hectares is indicated as the property
covered by OCT 0-1200 (a.f.). Worse, OCT No. 0-1200 (a.f.) made reference to Case
No. 6908 as basis thereof, yet, the decision in said case is clear:
(i)
The parcel object of Case No. 6908 is small (Cacho vs. Government
of the United States, 28 Phil. 616, p. 619)
(ii)
The parcel of land claimed by the applicant in Case No. 6909 is the
bigger of two parcels and contains 37.87 hectares
11.
More significantly, the technical description in Original Certificate of Title No.
0-1200 (a.f.) specifies the date of survey as August 31 to September 1, 1910,
which is EARLIER than the date the Supreme Court, in Cacho supra, resolved LRC
(GLRO) Record No. 6909 (involving 37.87 hectares). In resolving the application
involving the 37.87 hectares, the Honorable Supreme Court declared that only the
southern part of the 37.87 hectare property applied for is granted and that a new
survey specifying the southern part thereof should be submitted. Accordingly,
any survey involving the granted southern part should bear a date subsequent to
the December 10, 1914 Supreme Court decision. x x x

xxxx
12.
The Honorable Supreme Court further declared that the Decision in LRC
(GLRO) Record No. 6909 was reserved:
Final decision in these case is reserved until the presentation of the new plan.
(28 Phil. 616, p. 631; Underscoring supplied)
In other words, as of December 10, 1914, when the Honorable Supreme Court
rendered its Decision on appeal in LRC (GLRO) Record No. 6909, final decision of
the case was still reserved until the presentation of a new plan. The metes and
bounds of OCT No. 0-1200 (a.f.) could not have been the technical description of the
property granted by the court described as the southern part of the large parcel
object of expediente 6909 only (Cacho vs. Government of the United States, 28
Phil. 617, 629). As earlier stated, the technical description appearing in said title
was the result of a survey conducted in 1910 or before the Supreme Court decision
was rendered in 1914.
13.
In the same vein, Original Certificate of Title No. 0-1201 (a.f.)
specifies LRC (GLRO) Record No. 6909 as the basis thereof (see front page of OCT
No. 0-1201 (a.f.)). Yet, the technical description makes, as its reference, Lot 1, Plan
II-3732, LR Case No. 047, LRC (GLRO) Record No. 6908 (see page 2 of said title). A
title issued pursuant to a decision may only cover the property subject of the case.
A title cannot properly be issued pursuant to a decision in Case 6909, but whose
technical description is based on Case 6908.
14.
The decision in LRC (GLRO) Record Nos. 6908 and 6909 has become
final and executory, and it cannot be modified, much less result in an increased area
of the property decreed therein.
xxxx
16.
In sum, Original Certificates of Title Nos. 0-1200 (a.f.) and 0-1201
(a.f.), as issued, are null and void since the technical descriptions vis--vis the areas
of the parcels of land covered therein went beyond the areas granted by the land
registration court in LRC (GLRO) Record Nos. 6908 and 6909.[56]

Vidal and AZIMUTH filed a Motion to Dismiss dated December 23, 2004 on the
grounds that (1) the Republic has no cause of action; (2) assuming arguendo that
the Republic has a cause of action, its Complaint failed to state a cause of action;
(3) assuming arguendo that the Republic has a cause of action, the same is barred
by prior judgment; (4) assuming further that the Republic has a cause of action, the

same was extinguished by prescription; and (4) the Republic is guilty of forum
shopping.
Upon motion of the Republic, the RTC-Branch 4 issued an Order[57] dated October
4, 2005, declaring LANDTRADE and Teofilo, as represented by Atty. Cabildo, in
default since they failed to submit their respective answers to the Complaint despite
the proper service of summons upon them.
LANDTRADE subsequently filed its Answer with Compulsory Counterclaim dated
September 28, 2005. It also moved for the setting aside and reconsideration of the
Order of Default issued against it by the RTC-Branch 4 on October 20, 2005.
On December 13, 2005, the RTC-Branch 4 issued an Order[58] dismissing the
Complaint of the Republic in Civil Case No. 6686, completely agreeing with Vidal
and AZIMUTH.
The RTC-Branch 4 reasoned that the Republic had no cause of action because there
was no showing that the late Doa Demetria committed any wrongful act or
omission in violation of any right of the Republic. Doa Demetria had sufficiently
proven her ownership over the parcels of land as borne in the ruling of the LRC in
GLRO Record Nos. 6908 and 6909. On the other hand, the Republic had no more
right to the said parcels of land. The Regalian doctrine does not apply in this case
because the titles were already issued to Doa Demetria and segregated from the
mass of the public domain.
The RTC-Branch 4 likewise held that the Republic failed to state a cause of action in
its Complaint. The arguments of the Republic i.e., the absence of a new survey
plan and deed, the titles covered properties with much larger area than that
granted by the LRC had been answered squarely in the 1997 Cacho case. Also,
the Complaint failed to allege that fraud had been committed in having the titles
registered and that the Director of Lands requested the reversion of the subject
parcels of land.
The RTC-Branch 4 was convinced that the Complaint was barred by res judicata
because the 1914 Cacho case already decreed the registration of the parcels of land
in the late Doa Demetrias name and the 1997 Cacho case settled that there was
no merit in the argument that the conditions imposed in the first case have not
been complied with.
The RTC-Branch 4 was likewise persuaded that the cause of action or remedy of the
Republic was lost or extinguished by prescription pursuant to Article 1106 of the
Civil Code and Section 32 of Presidential Decree No. 1529, otherwise known as the
Land Registration Decree, which prescribes a one-year period within which to file an
action for the review of a decree of registration.

Finally, the RTC-Branch 4 found the Republic guilty of forum shopping because there
is between this case, on one hand, and the 1914 and 1997 Cacho cases, on the
other, identity of parties, as well as rights asserted and reliefs prayed for, as the
contending parties are claiming rights of ownership over the same parcels of land.
The Republic filed a Motion for Reconsideration of the dismissal of its Complaint but
the same was denied by the RTC-Branch 4 in its Order[59] dated May 16, 2006.
Assailing the Orders dated December 13, 2005 and May 16, 2006 of the RTC-Branch
4, the Republic filed on August 11, 2006 a Petition for Review on Certiorari under
Rule 45 of the Rules of Court, which was docketed as G.R. No. 173401.
III
ISSUES AND DISCUSSIONS
Expropriation Case
(G.R. No. 170375)
The Republic, in its consolidated Petitions challenging the Resolutions dated July 12,
2005 and October 24, 2005 of the RTC-Branch 1 in Civil Case No. 106, made the
following assignment of errors:
RESPONDENT JUDGE GRAVELY ERRED IN ORDERING THE DISMISSAL OF THE
EXPROPRIATION COMPLAINT IN CIVIL CASE NO. 106 CONSIDERING THAT:
(a) THE NON-JOINDER OF PARTIES IS NOT A GROUND FOR THE DISMISSAL OF AN
ACTION PURSUANT TO SECTION 11, RULE 3 OF THE 1997 RULES OF CIVIL
PROCEDURE;
(b) AN EXPROPRIATION PROCEEDING IS AN ACTION QUASI IN REM WHEREIN THE
FACT THAT THE OWNER OF THE PROPERTY IS MADE A PARTY TO THE ACTION IS NOT
ESSENTIALLY INDISPENSABLE;
(c) PETITIONER DID NOT COMMIT ANY FORUM SHOPPING WITH THE FILING OF THE
REVERSION COMPLAINT DOCKETED AS CIVIL CASE NO. 6686 WHICH IS PENDING
BEFORE BRANCH 4 OF THE REGIONAL TRIAL COURT OF ILIGAN CITY.[60]

Filing of consolidated petitions under both Rules 45 and 65

At the outset, the Court notes that the Republic filed a pleading with the
caption Consolidated Petitions for Review on Certiorari (Under Rule 45) and
Certiorari (Under Rule 65) of the Rules of Court. The Republic explains that it filed

the Consolidated Petitions pursuant to Metropolitan Waterworks and Sewerage

System (MWSS) v. Court of Appeals[61] (MWSS case).
The reliance of the Republic on the MWSS case to justify its mode of appeal is
misplaced, taking the pronouncements of this Court in said case out of context.
The issue in the MWSS case was whether a possessor in good faith has the
right to remove useful improvements, and not whether consolidated petitions under
both Rules 45 and 65 of the Rules of Court can be filed. Therein petitioner MWSS
simply filed an appeal by certiorari under Rule 45 of the Rules of Court, but named
the Court of Appeals as a respondent. The Court clarified that the only parties in an
appeal by certiorari under Rule 45 of the Rules of Court are the appellant as
petitioner and the appellee as respondent. The court which rendered the judgment
appealed from is not a party in said appeal. It is in the special civil action of
certiorari under Rule 65 of the Rules of Court where the court or judge is required to
be joined as party defendant or respondent. The Court, however, also
acknowledged that there may be an instance when in an appeal by certiorari under
Rule 45, the petitioner-appellant would also claim that the court that rendered the
appealed judgment acted without or in excess of its jurisdiction or with grave abuse
of discretion, in which case, such court should be joined as a party-defendant or
respondent. While the Court may have stated that in such an instance, the petition
for review on certiorari under Rule 45 of the Rules of Court is at the same time a
petition for certiorari under Rule 65, the Court did not hold that consolidated
petitions under both Rules 45 and 65 could or should be filed.
The Court, in more recent cases, had been stricter and clearer on the distinction
between these two modes of appeal. In Nunez v. GSIS Family Bank,[62] the Court
elucidated:
In Ligon v. Court of Appeals where the therein petitioner described her petition as
an appeal under Rule 45 and at the same time as a special civil action of certiorari
under Rule 65 of the Rules of Court, this Court, in frowning over what it described
as a chimera, reiterated that the remedies of appeal and certiorari are mutually
exclusive and not alternative nor successive.
To be sure, the distinctions between Rules 45 and 65 are far and wide. However,
the most apparent is that errors of jurisdiction are best reviewed in a special civil
action for certiorari under Rule 65 while errors of judgment can only be corrected by
appeal in a petition for review under Rule 45.

But in the same case, the Court also held that:

This Court, x x x, in accordance with the liberal spirit which pervades the Rules of
Court and in the interest of justice may treat a petition for certiorari as having been
filed under Rule 45, more so if the same was filed within the reglementary period for
filing a petition for review.[63]

It is apparent in the case at bar that the Republic availed itself of the wrong mode of
appeal by filing Consolidated Petitions for Review under Rule 45 and for Certiorari
under Rule 65, when these are two separate remedies that are mutually exclusive
and neither alternative nor successive. Nevertheless, the Court shall treat the
Consolidated Petitions as a Petition for Review on Certiorari under Rule 45 and the
allegations therein as errors of judgment. As the records show, the Petition was
filed on time under Rules 45. Before the lapse of the 15-day reglementary period to
appeal under Rule 45, the Republic filed with the Court a motion for extension of
time to file its petition. The Court, in a Resolution[64] dated January 23, 2006,
granted the Republic a 30-day extension, which was to expire on December 29,
2005. The Republic was able to file its Petition on the last day of the extension
period.
Hierarchy of courts
The direct filing of the instant Petition with this Court did not violate the doctrine of
hierarchy of courts.
According to Rule 41, Section 2(c)[65] of the Rules of Court, a decision or
order of the RTC may be appealed to the Supreme Court by petition for review on
certiorari under Rule 45, provided that such petition raises only questions of law.
[66]
A question of law exists when the doubt or controversy concerns the correct
application of law or jurisprudence to a certain set of facts; or when the issue does
not call for an examination of the probative value of the evidence presented, the
truth or falsehood of facts being admitted.[67] A question of fact exists when the
doubt or difference arises as to the truth or falsehood of facts or when the query
invites calibration of the whole evidence considering mainly the credibility of the
witnesses, the existence and relevancy of specific surrounding circumstances, as
well as their relation to each other and to the whole, and the probability of the
situation.[68]
Here, the Petition of the Republic raises pure questions of law, i.e., whether Civil
Case No. 106 should have been dismissed for failure to implead indispensable
parties and for forum shopping. Thus, the direct resort by the Republic to this Court
is proper.

The Court shall now consider the propriety of the dismissal by the RTC-Branch 1 of
the Complaint for Expropriation of the Republic.

The proper parties in the expropriation proceedings

The right of the Republic to be substituted for ISA as plaintiff in Civil Case No. 106
had long been affirmed by no less than this Court in the ISA case. The dispositive
portion of the ISA case reads:
WHEREFORE, for all the foregoing, the Decision of the Court of Appeals dated 8
October 1991 to the extent that it affirmed the trial courts order dismissing the
expropriation proceedings, is hereby REVERSED and SET ASIDE and the case is
REMANDED to the court a quo which shall allow the substitution of the Republic of
the Philippines for petitioner Iron Steel Authority for further proceedings consistent
with this Decision. No pronouncement as to costs.[69]

The ISA case had already become final and executory, and entry of judgment was
made in said case on August 31, 1998. The RTC-Branch 1, in an Order dated
November 16, 2001, effected the substitution of the Republic for ISA.
The failure of the Republic to actually file a motion for execution does not render the
substitution void. A writ of execution requires the sheriff or other proper officer to
whom it is directed to enforce the terms of the writ.[70] The November 16, 2001
Order of the RTC-Branch 1 should be deemed as voluntary compliance with a final
and executory judgment of this Court, already rendering a motion for and issuance
of a writ of execution superfluous.
Besides, no substantive right was violated by the voluntary compliance by the RTCBranch 1 with the directive in the ISA case even without a motion for execution
having been filed. To the contrary, the RTC-Branch 1 merely enforced the judicially
determined right of the Republic to the substitution. While it is desirable that the
Rules of Court be faithfully and even meticulously observed, courts should not be so
strict about procedural lapses that do not really impair the administration of justice.
If the rules are intended to insure the orderly conduct of litigation it is because of
the higher objective they seek which is the protection of the substantive rights of
the parties.[71]
The Court also observes that MCFC did not seek any remedy from the Order dated
November 16, 2001 of the RTC-Branch 1. Consequently, the said Order already

became final, which even the RTC-Branch 1 itself cannot reverse and set aside on
the ground of honest mistake.
The RTC-Branch 1 dismissed the Complaint in Civil Case No. 106 on another ground:
that MCFC is not a proper party to the expropriation proceedings, not being the
owner of the parcels of land sought to be expropriated. The RTC-Branch 1
ratiocinated that since the exercise of the power of eminent domain involves the
taking of private land intended for public use upon payment of just compensation to
the owner, then a complaint for expropriation must be directed against the owner of
the land sought to be expropriated.
The Republic insists, however, that MCFC is a real party-in-interest, impleaded as a
defendant in the Complaint for Expropriation because of its possessory or
occupancy rights over the subject parcels of land, and not by reason of its
ownership of the said properties. In addition, the Republic maintains that nonjoinder of parties is not a ground for the dismissal of an action.
Rule 67, Section 1 of the then Rules of Court[72] described how expropriation
proceedings should be instituted:
Section 1. The complaint. The right of eminent domain shall be exercised by the
filing of a complaint which shall state with certainty the right and purpose of
condemnation, describe the real or personal property sought to be condemned, and
join as defendants all persons owning or claiming to own, or occupying, any part
thereof or interest therein, showing, so far as practicable, the interest of each
defendant separately. If the title to any property sought to be condemned appears
to be in the Republic of the Philippines, although occupied by private individuals, or
if the title is otherwise obscure or doubtful so that the plaintiff cannot with accuracy
or certainty specify who are the real owners, averment to that effect may be made
in the complaint.[73] (Emphases supplied.)
For sure, defendants in an expropriation case are not limited to the
owners of the property to be expropriated, and just compensation is not due to the
property owner alone. As this Court held in De Knecht v. Court of Appeals[74]:
The defendants in an expropriation case are not limited to the owners of the
property condemned. They include all other persons owning, occupying or claiming
to own the property. When [property] is taken by eminent domain, the owner x x x
is not necessarily the only person who is entitled to compensation. In the American
jurisdiction, the term owner when employed in statutes relating to eminent domain
to designate the persons who are to be made parties to the proceeding, refer, as is
the rule in respect of those entitled to compensation, to all those who have lawful
interest in the property to be condemned, including a mortgagee, a lessee and a
vendee in possession under an executory contract. Every person having an estate

or interest at law or in equity in the land taken is entitled to share in the award. If a
person claiming an interest in the land sought to be condemned is not made a
party, he is given the right to intervene and lay claim to the compensation.
(Emphasis supplied.)

At the time of the filing of the Complaint for Expropriation in 1983,

possessory/occupancy rights of MCFC over the parcels of land sought to be
expropriated were undisputed. In fact, Letter of Instructions No. 1277[75] dated
November 16, 1982 expressly recognized that portions of the lands reserved by
Presidential Proclamation No. 2239, also dated November 16, 1982, for the use and
immediate occupation by the NSC, were then occupied by an idle fertilizer
plant/factory and related facilities of MCFC. It was ordered in the same Letter of
Instruction that:
(1)
NSC shall negotiate with the owners of MCFC, for and on behalf of the
Government, for the compensation of MCFC's present occupancy rights on the
subject lands at an amount of Thirty (P30.00) Pesos per square meter or equivalent
to the assessed value thereof (as determined by the City Assessor of Iligan),
whichever is higher. NSC shall give MCFC the option to either remove its aforesaid
plant, structures, equipment, machinery and other facilities from the lands or to sell
or cede ownership thereof to NSC at a price equivalent to the fair market value
thereof as appraised by the Asian Appraisal Inc. as may be mutually agreed upon by
NSC and MCFC.
(2)
In the event that NSC and MCFC fail to agree on the foregoing within sixty
(60) days from the date hereof, the Iron and Steel Authority (ISA) shall exercise its
authority under Presidential Decree (PD) No. 272, as amended, to initiate the
expropriation of the aforementioned occupancy rights of MCFC on the subject lands
as well as the plant, structures, equipment, machinery and related facilities, for and
on behalf of NSC, and thereafter cede the same to NSC. During the pendency of the
expropriation proceedings, NSC shall take possession of the properties, subject to
bonding and other requirements of P.D. 1533. (Emphasis supplied.)

Being the occupant of the parcel of land sought to be expropriated, MCFC

could very well be named a defendant in Civil Case No. 106. The RTC-Branch 1
evidently erred in dismissing the Complaint for Expropriation against MCFC for not
being a proper party.
Also erroneous was the dismissal by the RTC-Branch 1 of the original
Complaint for Expropriation for having been filed only against MCFC, the occupant
of the subject land, but not the owner/s of the said property.

Dismissal is not the remedy for misjoinder or non-joinder of parties.

According to Rule 3, Section 11 of the Rules of Court:
SEC. 11. Misjoinder and non-joinder of parties. Neither misjoinder nor non-joinder
of parties is ground for dismissal of an action. Parties may be dropped or added by
order of the court on motion of any party or on its own initiative at any stage of the
action and on such terms as are just. Any claim against a misjoined party may be
severed and proceeded with separately. (Emphasis supplied.)

MCFC contends that the aforequoted rule does not apply in this case where
the party not joined, i.e., the owner of the property to be expropriated, is an
indispensable party.
An indispensable party is a party-in-interest without whom no final
determination can be had of an action.[76]
Now, is the owner of the property an indispensable party in an action for
expropriation? Not necessarily. Going back to Rule 67, Section 1 of the Rules of
Court, expropriation proceedings may be instituted even when title to the property
sought to be condemned appears to be in the Republic of the Philippines, although
occupied by private individuals. The same rule provides that a complaint for
expropriation shall name as defendants all persons owning or claiming to own, or
occupying, any part thereof or interest in the property sought to be condemned.
Clearly, when the property already appears to belong to the Republic, there is no
sense in the Republic instituting expropriation proceedings against itself. It can still,
however, file a complaint for expropriation against the private persons occupying
the property. In such an expropriation case, the owner of the property is not an
indispensable party.
To recall, Presidential Proclamation No. 2239 explicitly states that the parcels of land
reserved to NSC are part of the public domain, hence, owned by the Republic.
Letter of Instructions No. 1277 recognized only the occupancy rights of MCFC and
directed NSC to institute expropriation proceedings to determine the just
compensation for said occupancy rights. Therefore, the owner of the property is not
an indispensable party in the original Complaint for Expropriation in Civil Case No.
106.
Assuming for the sake of argument that the owner of the property is an
indispensable party in the expropriation proceedings, the non-joinder of said party
would still not warrant immediate dismissal of the complaint for expropriation. In
Vda. De Manguerra v. Risos,[77] the Court applied Rule 3, Section 11 of the Rules of
Court even in case of non-joinder of an indispensable party, viz:

[F]ailure to implead an indispensable party is not a ground for the dismissal of an

action. In such a case, the remedy is to implead the non-party claimed to be
indispensable. Parties may be added by order of the court, on motion of the party or
on its own initiative at any stage of the action and/or such times as are just. If the
petitioner/plaintiff refuses to implead an indispensable party despite the order of
the court, the latter may dismiss the complaint/petition for the petitioner's/plaintiff's
failure to comply. (Emphasis supplied.)

In this case, the RTC-Branch 1 did not first require the Republic to implead the
alleged owner/s of the parcel of land sought to be expropriated. Despite the
absence of any order from the Court, the Republic upon becoming aware that the
parcels of land involved in the 1914 Cacho case and 1997 Cacho case, claimed by
Teofilo and LANDTRADE, and Vidal and AZIMUTH, encroached into and overlapped
with the parcel of land subject of Civil Case No. 106 sought leave of court to file a
Supplemental Complaint to implead these four parties. The RTC-Branch 1 did not
take the Supplemental Complaint of the Republic into consideration. Instead, it
dismissed outright the original Complaint for Expropriation against MCFC.
Forum shopping
The RTC-Branch 1 further erred in finding that the Republic committed forum
shopping by (1) simultaneously instituting the actions for expropriation (Civil Case
No. 106) and reversion (Civil Case No. 6686) for the same parcels of land; and (2)
taking inconsistent positions when it conceded lack of ownership over the parcels of
land in the expropriation case but asserted ownership of the same properties in the
reversion case.
There is no dispute that the Republic instituted reversion proceedings (Civil Case
No. 6686) for the same parcels of land subject of the instant Expropriation Case
(Civil Case No. 106). The Complaint for Cancellation of Titles and Reversion[78]
dated September 27, 2004 was filed by the Republic with the RTC on October 13,
2004. The records, however, do not show when the Supplemental Complaint for
Expropriation[79] dated September 28, 2004 was filed with the RTC. Apparently,
the Supplemental Complaint for Expropriation was filed after the Complaint for
Cancellation of Titles and Reversion since the Republic mentioned in the former the
fact of filing of the latter.[80] Even then, the Verification and Certification of NonForum Shopping[81] attached to the Supplemental Complaint for Expropriation did
not disclose the filing of the Complaint for Cancellation of Titles and Reversion.
Notwithstanding such non-disclosure, the Court finds that the Republic did not
commit forum shopping for filing both Complaints.
In NBI-Microsoft Corporation v Hwang,[82] the Court laid down the circumstances
when forum shopping exists:

Forum-shopping takes place when a litigant files multiple suits involving the same
parties, either simultaneously or successively, to secure a favorable judgment.
Thus, it exists where the elements of litis pendentia are present, namely: (a) identity
of parties, or at least such parties who represent the same interests in both actions;
(b) identity of rights asserted and relief prayed for, the relief being founded on the
same facts; and (c) the identity with respect to the two preceding particulars in the
two cases is such that any judgment that may be rendered in the pending case,
regardless of which party is successful, would amount to res judicata in the other
case. Forum-shopping is an act of malpractice because it abuses court processes. x
x x.

Here, the elements of litis pendencia are wanting. There is no identity of rights
asserted and reliefs prayed for in Civil Case No. 106 and Civil Case No. 6686.
Civil Case No. 106 was instituted against MCFC to acquire, for a public
purpose, its possessory/occupancy rights over 322,532 square meters or 32.25
hectares of land which, at the time of the filing of the original Complaint in 1983,
was not yet covered by any certificate of title. On the other hand, Civil Case No.
6686 sought the cancellation of OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.), which was
entered into registration on December 4, 1998 in Doa Demetrias name, on the
argument that the parcels of land covered by said certificates exceeded the areas
granted by the LRC to Doa Demetria in GLRO Record Nos. 6908 and 6909, as
affirmed by this Court in the 1914 Cacho case.
Expropriation vis--vis reversion
The Republic is not engaging in contradictions when it instituted both
expropriation and reversion proceedings for the same parcels of land. The
expropriation and reversion proceedings are distinct remedies that are not
necessarily exclusionary of each other.
The filing of a complaint for reversion does not preclude the institution of an
action for expropriation. Even if the land is reverted back to the State, the same
may still be subject to expropriation as against the occupants thereof.
Also, Rule 67, Section 1 of the Rules of Court allows the filing of a complaint for
expropriation even when the title to any property sought to be condemned appears
to be in the Republic of the Philippines, although occupied by private individuals, or
if the title is otherwise obscure or doubtful so that the plaintiff cannot with accuracy
or certainty specify who are the real owners. Rule 67, Section 9 of the Rules of
Court further provides:

SEC. 9. Uncertain ownership; conflicting claims. If the ownership of the

property taken is uncertain, or there are conflicting claims to any part thereof, the
court may order any sum or sums awarded as compensation for the property to be
paid to the court for the benefit of the person adjudged in the same proceeding to
be entitled thereto. But the judgment shall require the payment of the sum or sums
awarded to either the defendant or the court before the plaintiff can enter upon the
property, or retain it for the public use or purpose if entry has already been made.
(Emphasis supplied.)

Hence, the filing by the Republic of the Supplemental Complaint for Expropriation
impleading Teofilo, Vidal, LANDTRADE, and AZIMUTH, is not necessarily an
admission that the parcels of land sought to be expropriated are privately owned.
At most, the Republic merely acknowledged in its Supplemental Complaint that
there are private persons also claiming ownership of the parcels of land. The
Republic can still consistently assert, in both actions for expropriation and reversion,
that the subject parcels of land are part of the public domain.
In sum, the RTC-Branch 1 erred in dismissing the original Complaint and disallowing
the Supplemental Complaint in Civil Case No. 106. The Court reverses and sets
aside the Resolutions dated July 12, 2005 and October 24, 2005 of the RTC-Branch 1
in Civil Case 106, and reinstates the Complaint for Reversion of the Republic.
The Quieting of Title Case
(G.R. Nos. 178779 and 178894)
Essentially, in their Petitions for Review on Certiorari under Rule 45 of the Rules of
Court, LANDTRADE and Teofilo, and/or Atty. Cabildo are calling upon this Court to
determine whether the Court of Appeals, in its Decision dated January 19, 2007 in
CA-G.R. CV No. 00456, erred in (1) upholding the jurisdiction of the RTC-Branch 3 to
resolve the issues on Vidal's status, filiation, and heirship in Civil Case No. 4452, the
action for quieting of title; (2) not holding that Vidal and AZIMUTH have neither
cause of action nor legal or equitable title or interest in the parcels of land covered
by OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.); (3) finding the evidence sufficient to
establish Vidals status as Doa Demetrias granddaughter and sole surviving heir;
and (4) not holding that Civil Case No. 4452 was already barred by prescription.
In their Comment, Vidal and AZIMUTH insisted on the correctness of the Court of
Appeals Decision dated January 19, 2007, and questioned the propriety of the
Petition for Review filed by LANDTRADE as it supposedly raised only factual issues.
The Court rules in favor of Vidal and AZIMUTH.
Petitions for review under Rule 45

A scrutiny of the issues raised, not just in the Petition for Review of
LANDTRADE, but also those in the Petition for Review of Teofilo and/or Atty. Cabildo,
reveals that they are both factual and legal.
The Court has held in a long line of cases that in a petition for review on
certiorari under Rule 45 of the Rules of Court, only questions of law may be raised
as the Supreme Court is not a trier of facts. It is settled that as a rule, the findings
of fact of the Court of Appeals especially those affirming the trial court are final and
conclusive and cannot be reviewed on appeal to the Supreme Court. The
exceptions to this rule are: (a) when the conclusion is a finding grounded entirely on
speculations, surmises or conjectures; (b) when the inference made is manifestly
mistaken, absurd or impossible; (c) when there is grave abuse of discretion; (d)
when the judgment is based on a misapprehension of facts; (e) when the findings of
fact are conflicting; (f) when the Court of Appeals, in making its findings, went
beyond the issues of the case and the same is contrary to the admissions of both
appellant and appellee; (g) where the Court of Appeals manifestly overlooked
certain relevant facts not disputed by the parties and which, if properly considered,
would justify a different conclusion; and (h) where the findings of fact of the Court of
Appeals are contrary to those of the trial court, or are mere conclusions without
citation of specific evidence, or where the facts set forth by the petitioner are not
disputed by the respondent, or where the findings of fact of the Court of Appeals are
premised on absence of evidence but are contradicted by the evidence on record.
[83] None of these exceptions exists in the Petitions at bar.
Be that as it may, the Court shall address in full-length all the issues tendered
in the instant Petitions for Review, even when factual, if only to bolster the
conclusions reached by the RTC-Branch 3 and the Court of Appeals, with which the
Court fully concurs.
Jurisdiction vis--vis exercise of jurisdiction

LANDTRADE, Teofilo, and/or Atty. Cabildo argue that the RTC-Branch 3 had no
jurisidiction to resolve the issues of status, filiation, and heirship in an action for
quieting of title as said issues should be ventilated and adjudicated only in special
proceedings under Rule 90, Section 1 of the Rules of Court, pursuant to the ruling of
this Court in Agapay v. Palang[84] (Agapay case) and Heirs of Guido Yaptinchay and
Isabel Yaptinchay v. Del Rosario[85] (Yaptinchay case). Even on the assumption that
the RTC-Branch 3 acquired jurisdiction over their persons, LANDTRADE, Teofilo,
and/or Atty. Cabildo maintain that the RTC-Branch 3 erred in the exercise of its
jurisdiction by adjudicating and passing upon the issues on Vidals status, filiation,
and heirship in the Quieting of Title Case. Moreover, LANDTRADE, Teofilo, and/or
Atty. Cabildo aver that the resolution of issues regarding status, filiation, and

heirship is not merely a matter of procedure, but of jurisdiction which cannot be

waived by the parties or by the court.
The aforementioned arguments fail to persuade.
In the first place, jurisdiction is not the same as the exercise of jurisdiction.
The Court distinguished between the two, thus:
Jurisdiction is not the same as the exercise of jurisdiction. As distinguished from the
exercise of jurisdiction, jurisdiction is the authority to decide a cause, and not the
decision rendered therein. Where there is jurisdiction over the person and the
subject matter, the decision on all other questions arising in the case is but an
exercise of the jurisdiction. And the errors which the court may commit in the
exercise of jurisdiction are merely errors of judgment which are the proper subject
of an appeal.[86] (Emphasis supplied.)

Here, the RTC-Branch 3 unmistakably had jurisdiction over the subject matter and
the parties in Civil Case No. 4452.
Jurisdiction over the subject matter or nature of the action is conferred only by the
Constitution or by law. Once vested by law on a particular court or body, the
jurisdiction over the subject matter or nature of the action cannot be dislodged by
anybody other than by the legislature through the enactment of a law. The power
to change the jurisdiction of the courts is a matter of legislative enactment, which
none but the legislature may do. Congress has the sole power to define, prescribe
and apportion the jurisdiction of the courts.[87]
The RTC has jurisdiction over an action for quieting of title under the circumstances
described in Section 19(2) of Batas Pambansa Blg. 129, as amended:
SEC. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive
original jurisdiction:
xxxx
(2) In all civil actions which involve the title to, or possession of, real property, or
any interest therein, where the assessed value of the property involved exceeds
Twenty thousand pesos (P20,000.00) or, for civil actions in Metro Manila, where such
value exceeds Fifty thousand pesos (P50,000.00) except actions for forcible entry
into and unlawful detainer of lands or buildings, original jurisdiction over which is
conferred upon the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal
Circuit Trial Courts.

Records show that the parcels of land subject of Civil Case No. 4452 have a
combined assessed value of P35,398,920.00,[88] undisputedly falling within the
jurisdiction of the RTC-Branch 3.
The RTC-Branch 3 also acquired jurisdiction over the person of Teofilo when he filed
his Answer to the Complaint of Vidal and AZIMUTH; and over the juridical
personality of LANDTRADE when the said corporation was allowed to intervene in
Civil Case No. 4452.
Considering that the RTC-Branch 3 had jurisdiction over the subject matter
and parties in Civil Case No. 4452, then it can rule on all issues in the case,
including those on Vidals status, filiation, and heirship, in exercise of its jurisdiction.
Any alleged erroneous finding by the RTC-Branch 3 concerning Vidals status,
filiation, and heirship in Civil Case No. 4452, is merely an error of judgment subject
to the affirmation, modification, or reversal by the appellate court when appealed.
The Agapay and Yaptinchay cases
LANDTRADE, Teofilo, and/or Atty. Cabildo cannot rely on the cases of Agapay and
Yaptinchay to support their position that declarations on Vidals status, filiation, and
heirsip, should be made in special proceedings and not in Civil Case No. 4452.
In the Agapay case, the deceased Miguel Agapay (Miguel) contracted two
marriages. Miguel married Carlina (sometimes referred to as Cornelia) in 1949, and
they had a daughter named Herminia, who was born in 1950. Miguel left for Hawaii
a few months after his wedding to Carlina. When Miguel returned to the Philippines
in 1972, he did not live with Carlina and Herminia. He married Erlinda in 1973, with
whom he had a son named Kristopher, who was born in 1977. Miguel died in 1981.
A few months after Miguels death, Carlina and Herminia filed a complaint for
recovery of ownership and possession with damages against Erlinda over a riceland
and house and lot in Pangasinan, which were allegedly purchased by Miguel during
his cohabitation with Erlinda. The RTC dismissed the complaint, finding little
evidence that the properties pertained to the conjugal property of Miguel and
Carlina. The RTC went on to provide for the intestate shares of the parties,
particularly of Kristopher, Miguels illegitimate son. On appeal, the Court of
Appeals: (1) reversed the RTC judgment; (2) ordered Erlinda to vacate and deliver
the properties to Carlina and Herminia; and (3) ordered the Register of Deeds to
cancel the Transfer Certificates of Title (TCTs) over the subject property in the name
of Erlinda and to issue new ones in the names of Carlina and Herminia. Erlinda filed
a Petition for Review with this Court.
In resolving Erlindas Petition, the Court held in the Agapay case that Article 148 of
the Family Code applied to Miguel and Erlinda. Article 148 specifically governs the

property relations of a man and a woman who are not capacitated to marry each
other and live exclusively with each other as husband and wife without the benefit
of marriage or under a void marriage. Under said provision, only the properties
acquired by both parties through their actual joint contribution of money, property,
or industry shall be owned by them in common in proportion to their respective
contributions. In this case, the Court found that the money used to buy the subject
properties all came from Miguel.
The Court then proceeded to address another issue in the Agapay case, more
relevant to the one at bar:
The second issue concerning Kristopher Palangs status and claim as an illegitimate
son and heir to Miguels estate is here resolved in favor of respondent courts
correct assessment that the trial court erred in making pronouncements regarding
Kristophers heirship and filiation inasmuch as questions as to who are the heirs of
the decedent, proof of filiation of illegitimate children and the determination of the
estate of the latter and claims thereto should be ventilated in the proper probate
court or in a special proceeding instituted for the purpose and cannot be
adjudicated in the instant ordinary civil action which is for recovery of ownership
and possession.[89]

The Yaptinchay case involved two parcels of land in Cavite which were supposedly
owned by Guido and Isabel Yaptinchay (spouses Yaptinchay). Upon the death of the
spouses Yaptinchay, their heirs (Yaptinchay heirs) executed an Extra-Judicial
Settlement of the deceased spouses estate. However, the Yaptinchay heirs
discovered that the properties were already covered by TCTs in the name of Golden
Bay Realty Corporation (Golden Bay), prompting the Yaptinchay heirs to file with the
RTC a complaint against Golden Bay for the annulment and/or declaration of nullity
of TCT Nos. 493363 to 493367 and all their derivatives, or in the alternative, the
reconveyance of realty with a prayer for a writ of preliminary injunction and/or
restraining order with damages. The Yaptinchay heirs later filed an amended
complaint to include additional defendants to whom Golden Bay sold portions of the
subject properties. The RTC initially dismissed the amended complaint, but acting
on the motion for reconsideration of the Yaptinchay heirs, eventually allowed the
same. Golden Bay and its other co-defendants presented a motion to dismiss the
amended complaint, which was granted by the RTC. The Yaptinchay heirs came
before this Court via a Petition for Certiorari.
The Court first observed in the Yaptinchay case that the Yaptinchay heirs availed
themselves of the wrong remedy. An order of dismissal is the proper subject of an
appeal, not a petition for certiorari. Next, the Court affirmed the dismissal of the
amended complaint, thus:

Neither did the respondent court commit grave abuse of discretion in issuing the
questioned Order dismissing the Second Amended Complaint of petitioners, x x x.
xxxx
In Litam, etc., et al. v. Rivera, this court opined that the declaration of heirship must
be made in an administration proceeding, and not in an independent civil action.
This doctrine was reiterated in Solivio v. Court of Appeals where the court held:
In Litam, et al. v. Rivera, 100 Phil. 364, where despite the pendency of the special
proceedings for the settlement of the intestate estate of the deceased Rafael Litam,
the plaintiffs-appellants filed a civil action in which they claimed that they were the
children by a previous marriage of the deceased to a Chinese woman, hence,
entitled to inherit his one-half share of the conjugal properties acquired during his
marriage to Marcosa Rivera, the trial court in the civil case declared that the
plaintiffs-appellants were not children of the deceased, that the properties in
question were paraphernal properties of his wife, Marcosa Rivera, and that the latter
was his only heir. On appeal to this Court, we ruled that such declarations (that
Marcosa Rivera was the only heir of the decedent) is improper, in Civil Case No.
2071, it being within the exclusive competence of the court in Special Proceedings
No. 1537, in which it is not as yet, in issue, and, will not be, ordinarily, in issue until
the presentation of the project of partition. (p. 378).
The trial court cannot make a declaration of heirship in the civil action for the
reason that such a declaration can only be made in a special proceeding. Under
Section 3, Rule 1 of the 1997 Revised Rules of Court, a civil action is defined as one
by which a party sues another for the enforcement or protection of a right, or the
prevention or redress of a wrong while a special proceeding is a remedy by which
a party seeks to establish a status, a right, or a particular fact. It is then decisively
clear that the declaration of heirship can be made only in a special proceeding
inasmuch as the petitioners here are seeking the establishment of a status or right.
[90]

LANDTRADE, Teofilo, and/or Atty. Cabildo missed one vital factual distinction
between the Agapay and Yaptinchay cases, on one hand, and the present Petitions,
on the other, by reason of which, the Court shall not apply the prior two to the last.
The Agapay and Yaptinchay cases, as well as the cases of Litam v. Rivera[91] and
Solivio v. Court of Appeals,[92] cited in the Yaptinchay case, all arose from actions
for reconveyance; while the instant Petitions stemmed from an action for quieting of
title. The Court may have declared in previous cases that an action for
reconveyance is in the nature of an action for quieting of title,[93] but the two are
distinct remedies.

Ordinary civil action for reconveyance vis-a-vis special proceeding for quieting of
title

The action for reconveyance is based on Section 55 of Act No. 496, otherwise known
as the Land Registration Act, as amended, which states [t]hat in all cases of
registration procured by fraud the owner may pursue all his legal and equitable
remedies against the parties to such fraud, without prejudice, however, to the rights
of any innocent holder for value of a certificate of title.
The Court, in Heirs of Eugenio Lopez, Sr. v. Enriquez,[94] described an action for
reconveyance as follows:
An action for reconveyance is an action in personam available to a person whose
property has been wrongfully registered under the Torrens system in anothers
name. Although the decree is recognized as incontrovertible and no longer open to
review, the registered owner is not necessarily held free from liens. As a remedy,
an action for reconveyance is filed as an ordinary action in the ordinary courts of
justice and not with the land registration court. Reconveyance is always available
as long as the property has not passed to an innocent third person for value. x x x
(Emphases supplied.)

On the other hand, Article 476 of the Civil Code lays down the circumstances when
a person may institute an action for quieting of title:
ART. 476. Whenever there is a cloud on title to real property or any interest therein,
by reason of any instrument, record, claim, encumbrance or proceeding which is
apparently valid or effective but is in truth and in fact invalid, ineffective, voidable,
or unenforceable, and may be prejudicial to said title, an action may be brought to
remove such cloud or to quiet the title.
An action may also be brought to prevent a cloud from being cast upon title to real
property or any interest therein.

In Calacala v. Republic,[95] the Court elucidated on the nature of an action to

quiet title:
Regarding the nature of the action filed before the trial court, quieting of
title is a common law remedy for the removal of any cloud upon or doubt or
uncertainty with respect to title to real property. Originating in equity jurisprudence,
its purpose is to secure x x x an adjudication that a claim of title to or an interest in

property, adverse to that of the complainant, is invalid, so that the complainant and
those claiming under him may be forever afterward free from any danger of hostile
claim. In an action for quieting of title, the competent court is tasked to determine
the respective rights of the complainant and other claimants, x x x not only to
place things in their proper place, to make the one who has no rights to said
immovable respect and not disturb the other, but also for the benefit of both, so
that he who has the right would see every cloud of doubt over the property
dissipated, and he could afterwards without fear introduce the improvements he
may desire, to use, and even to abuse the property as he deems best x x x .
(Emphases supplied.)

The Court expounded further in Spouses Portic v. Cristobal[96] that:

Suits to quiet title are characterized as proceedings quasi in rem.
Technically, they are neither in rem nor in personam. In an action quasi in rem, an
individual is named as defendant. However, unlike suits in rem, a quasi in rem
judgment is conclusive only between the parties.
Generally, the registered owner of a property is the proper party to bring an action
to quiet title. However, it has been held that this remedy may also be availed of by
a person other than the registered owner because, in the Article reproduced above,
title does not necessarily refer to the original or transfer certificate of title. Thus,
lack of an actual certificate of title to a property does not necessarily bar an action
to quiet title. x x x (Emphases supplied.)

The Court pronounced in the Agapay and Yaptinchay cases that a declaration of
heirship cannot be made in an ordinary civil action such as an action for
reconveyance, but must only be made in a special proceeding, for it involves the
establishment of a status or right.
The appropriate special proceeding would have been the settlement of the estate of
the decedent. Nonetheless, an action for quieting of title is also a special
proceeding, specifically governed by Rule 63 of the Rules of Court on declaratory
relief and similar remedies.[97] Actions for declaratory relief and other similar
remedies are distinguished from ordinary civil actions because:
2.
In declaratory relief, the subject-matter is a deed, will, contract or other
written instrument, statute, executive order or regulation, or ordinance. The issue is
the validity or construction of these documents. The relief sought is the declaration
of the petitioners rights and duties thereunder.

The concept of a cause of action in ordinary civil actions does not apply to
declaratory relief as this special civil action presupposes that there has been no
breach or violation of the instruments involved. Consequently, unlike other
judgments, the judgment in an action for declaratory relief does not essentially
entail any executional process as the only relief to be properly granted therein is a
declaration of the rights and duties of the parties under the instrument, although
some exceptions have been recognized under certain situations.[98]

Civil Case No. 4452 could not be considered an action for reconveyance as it is not
based on the allegation that the two parcels of land, Lots 1 and 2, have been
wrongfully registered in another persons name. OCT Nos. 0-1200 (a.f.) and 0-1201
(a.f.), covering the subject properties, are still in Doa Demetrias name. Vidal and
Teofilo each claims to have inherited the two parcels of land from the late Doa
Demetria as said decedents sole heir, but neither Vidal nor Teofilo has been able to
transfer registration of the said properties to her/his name as of yet.
Instead, Civil Case No. 4452 is indisputably an action for quieting of title, a special
proceeding wherein the court is precisely tasked to determine the rights of the
parties as to a particular parcel of land, so that the complainant and those claiming
under him/her may be forever free from any danger of hostile claim. Vidal asserted
title to the two parcels of land as Doa Demetrias sole heir. The cloud on Vidals
title, which she sought to have removed, was Teofilos adverse claim of title to the
same properties, also as Doa Demetrias only heir. For it to determine the rights of
the parties in Civil Case No. 4452, it was therefore crucial for the RTC-Branch 3 to
squarely make a finding as to the status, filiation, and heirship of Vidal in relation to
those of Teofilo. A finding that one is Doa Demetrias sole and rightful heir would
consequently exclude and extinguish the claim of the other.
Even assuming arguendo that the proscription in the Agapay and Yaptinchay cases
against making declarations of heirship in ordinary civil actions also extends to
actions for quieting of title, the same is not absolute.
In Portugal v. Portugal-Beltran[99] (Portugal case), the Court recognized that
there are instances when a declaration of heirship need not be made in a separate
special proceeding:
The common doctrine in Litam, Solivio and Guilas in which the adverse parties are
putative heirs to the estate of a decedent or parties to the special proceedings for
its settlement is that if the special proceedings are pending, or if there are no
special proceedings filed but there is, under the circumstances of the case, a need
to file one, then the determination of, among other issues, heirship should be raised
and settled in said special proceedings. Where special proceedings had been
instituted but had been finally closed and terminated, however, or if a putative heir

has lost the right to have himself declared in the special proceedings as co-heir and
he can no longer ask for its re-opening, then an ordinary civil action can be filed for
his declaration as heir in order to bring about the annulment of the partition or
distribution or adjudication of a property or properties belonging to the estate of the
deceased.[100]

In the Portugal case itself, the Court directed the trial court to already determine
petitioners status as heirs of the decedent even in an ordinary civil action, i.e.,
action for annulment of title, because:
It appearing x x x that in the present case the only property of the intestate
estate of Portugal is the Caloocan parcel of land, to still subject it, under the
circumstances of the case, to a special proceeding which could be long, hence, not
expeditious, just to establish the status of petitioners as heirs is not only
impractical; it is burdensome to the estate with the costs and expenses of an
administration proceeding. And it is superfluous in light of the fact that the parties
to the civil casesubject of the present case, could and had already in fact
presented evidence before the trial court which assumed jurisdiction over the case
upon the issues it defined during pre-trial.
In fine, under the circumstances of the present case, there being no
compelling reason to still subject Portugals estate to administration proceedings
since a determination of petitioners status as heirs could be achieved in the civil
case filed by petitioners, the trial court should proceed to evaluate the evidence
presented by the parties during the trial and render a decision thereon upon the
issues it defined during pre-trial, x x x.[101]

Another case, Heirs of Teofilo Gabatan v. Court of Appeals[102] (Gabatan case),

involved an action for recovery of ownership and possession of property with the
opposing parties insisting that they are the legal heirs of the deceased. Recalling
the Portugal case, the Court ruled:
Similarly, in the present case, there appears to be only one parcel of land being
claimed by the contending parties as their inheritance from Juan Gabatan. It would
be more practical to dispense with a separate special proceeding for the
determination of the status of respondent as the sole heir of Juan Gabatan, specially
in light of the fact that the parties to Civil Case No. 89-092, had voluntarily
submitted the issue to the RTC and already presented their evidence regarding the
issue of heirship in these proceeding. Also the RTC assumed jurisdiction over the
same and consequently rendered judgment thereon.

In Fidel v. Court of Appeals[103] (Fidel case), therein respondents, the heirs of

the late Vicente Espineli (Vicente) from his first marriage, instituted an action to
annul the sale of Vicentes property to therein petitioners, the spouses Fidel. The
subject property was sold to petitioners by Vicentes heirs from his second
marriage. Even though ones legitimacy can only be questioned in a direct action
seasonably filed by the proper party, the Court held that it was necessary to pass
upon respondents relationship to Vicente in the action for annulment of sale so as
to determine respondents legal rights to the subject property. In fact, the issue of
whether respondents are Vicentes heirs was squarely raised by petitioners in their
Pre-Trial Brief. Hence, petitioners were estopped from assailing the ruling of the trial
court on respondents status.
In Civil Case No. 4452, Teofilo and/or Atty. Cabildo themselves asked the RTC-Branch
3 to resolve the issue of Vidal's legal or beneficial ownership of the two parcels of
land.[104] During trial, Vidal already presented before the RTC-Branch 3 evidence
to establish her status, filiation, and heirship. There is no showing that Doa
Demetria left any other property that would have required special administration
proceedings. In the spirit of the Portugal, Gabatan, and Fidel cases, the Court
deems it more practical and expeditious to settle the issue on Vidals status,
filiation, and heirship in Civil Case No. 4452.
Title in quieting of title
LANDTRADE, Teofilo, and/or Atty. Cabildo further contend that Vidal and AZIMUTH
have no cause of action for quieting of title since Vidal has no title to the two
parcels of land. In comparison, Teofilos title to the same properties, as Doa
Demetrias only heir, was already established and recognized by this Court in the
1997 Cacho case.
Again, the Court cannot sustain the foregoing contention of LANDTRADE, Teofilo,
and/or Atty. Cabildo.
It must be borne in mind that the concept of a cause of action in ordinary civil
actions does not apply to quieting of title. In declaratory relief, the subject-matter is
a deed, will, contract or other written instrument, statute, executive order or
regulation, or ordinance. The issue is the validity or construction of these
documents. The relief sought is the declaration of the petitioners rights and duties
thereunder. Being in the nature of declaratory relief, this special civil action
presupposes that there has yet been no breach or violation of the instruments
involved.[105]
In an action for quieting of title, the subject matter is the title sought to have
quieted. Title is not limited to the certificate of registration under the Torrens
System (i.e., OCT or TCT). Pursuant to Article 477 of the Civil Code, the plaintiff

must have legal or equitable title to, or interest in, the real property subject of the
action for quieting of title. The plaintiff need not even be in possession of the
property. If she is indeed Doa Demetrias sole heir, Vidal already has equitable
title to or interest in the two parcels of land by right of succession, even though she
has not yet secured certificates of title to the said properties in her name.
LANDTRADE, Teofilo, and/or Atty. Cabildo mistakenly believe that the 1997
Cacho case had conclusively settled Teofilo's identity and existence as Doa
Demetrias sole heir. They failed to appreciate that the 1997 Cacho case involved
Teofilos petition for reconstitution of title, treated as a petition for the re-issuance of
Decree Nos. 10364 and 18969. The grant by the RTC of Teofilos petition, affirmed
by this Court, only conclusively established the prior issuance and existence and the
subsequent loss of the two decrees, thus, entitling Teofilo to the re-issuance of the
said decrees in their original form and condition.
As the Court of Appeals pointed out in its assailed Decision dated January 19, 2007,
the issue of Teofilos heirship was not the lis mota of the 1997 Cacho case. It was
addressed by the Court in the 1997 Cacho case for the simple purpose of
determining Teofilos legal interest in filing a petition for the re-issuance of the lost
decrees. The Court merely found therein that Teofilos Affidavit of Adjudication,
executed in the U.S.A. before the Philippine Consulate General, enjoyed the
presumption of regularity and, thus, sufficiently established Teofilos legal interest.
The 1997 Cacho case, however, did not conclusively settle that Teofilo is indeed
Doa Demetrias only heir and the present owner, by right of succession, of the
subject properties.

Factual findings of the RTC-Branch 3 and the Court of Appeals

LANDTRADE, Teofilo, and/or Atty. Cabildo additionally posit that the evidence
presented by Vidal and AZIMUTH were insufficient to prove the fact of Vidal's
filiation and heirship to Doa Demetria. LANDTRADE, Teofilo, and/or Atty. Cabildo
particularly challenged the reliance of the RTC-Branch 3 on Vidals baptismal
certificate, arguing that it has no probative value and is not conclusive proof of
filiation.
Alternative means of proving an individuals filiation have been
recognized by this Court in Heirs of Ignacio Conti v. Court of Appeals.[106] The
property in litigation in said case was co-owned by Lourdes Sampayo (Sampayo)
and Ignacio Conti, married to Rosario Cuario (collectively referred to as the spouses

Conti). Sampayo died without issue. Therein respondents, claiming to be

Sampayos collateral relatives, filed a petition for partition of the subject property,
plus damages. To prove that they were collaterally related to Sampayo through the
latters brothers and sisters, respondents submitted photocopies of the birth
certificates, certifications on the non-availability of records of births, and certified
true copies of the baptismal certificates of Sampayos siblings. The spouses Conti
questioned the documentary evidence of respondents filiation on the ground that
these were incompetent and inadmissible, but the Court held that:
Under Art. 172 of the Family Code, the filiation of legitimate children shall be
proved by any other means allowed by the Rules of Court and special laws, in the
absence of a record of birth or a parents admission of such legitimate filiation in a
public or private document duly signed by the parent. Such other proof of ones
filiation may be a baptismal certificate, a judicial admission, a family Bible in which
his name has been entered, common reputation respecting his pedigree, admission
by silence, the testimonies of witnesses and other kinds of proof admissible under
Rule 130 of the Rules of Court. By analogy, this method of proving filiation may also
be utilized in the instant case.
xxxx
The admissibility of baptismal certificates offered by Lydia S. Reyes, absent the
testimony of the officiating priest or the official recorder, was settled in People v.
Ritter, citing U.S. v. de Vera (28 Phil. 105 [1914]), thus x x x the entries made in the Registry Book may be considered as entries made in
the course of the business under Section 43 of Rule 130, which is an exception to
the hearsay rule. The baptisms administered by the church are one of its
transactions in the exercise of ecclesiastical duties and recorded in the book of the
church during the course of its business.
It may be argued that baptismal certificates are evidence only of the administration
of the sacrament, but in this case, there were four (4) baptismal certificates which,
when taken together, uniformly show that Lourdes, Josefina, Remedios and Luis had
the same set of parents, as indicated therein. Corroborated by the undisputed
testimony of Adelaida Sampayo that with the demise of Lourdes and her brothers
Manuel, Luis and sister Remedios, the only sibling left was Josefina Sampayo Reyes,
such baptismal certificates have acquired evidentiary weight to prove filiation.[107]

Thus, Vidals baptismal certificate is not totally bereft of any probative value. It may
be appreciated, together with all the other documentary and testimonial evidence
submitted on Vidals filiation, to wit:

The first issue proposed by petitioners for resolution is whether or not petitioner
Demetria C. Vidal is the sole surviving heir of the late Doa Demetria Cacho. To
prove that, indeed, she is the sole surviving heir of the late Doa Demetria Cacho,
she testified in open court and identified the following documentary evidence, to
wit:
Exhibit A Birth Certificate of Demetria C. Vidal
Exhibit B Partida de Bautismo of Demetria C. Vidal
Exhibit C Certificate of Baptism Demetria C. Vidal
Exhibit D Cacho Family Tree
Exhibit D-1 Branch of Demetria Cacho
Exhibit F Death Certificate of Demetria Cacho.
Exhibit P Drivers license of Demetria C. Vidal.
Exhibit Q to Q5 The book entitled CACHO, the introductory page on March
1988 when the data were compiled, page 58 on the Vidal branch of the Cacho
family, page 62 on Demetria Cacho and her descendants, page 69 on the family
member with the then latest birth day 26 March 1988, and page 77 with the picture
of Demetria Cacho Vidal, Dionisio Vidal and Francisco Vidal.[108]

In contrast, LANDTRADE, Teofilo, and/or Atty. Cabildo failed to present any evidence
at all in support of their claims. According to the RTC-Branch 3:
Landtrade was also declared to have waived its right to present evidence on its
defense and counterclaim in the above-entitled case in view of its failure to present
evidence on their scheduled trial date.
xxxx
Since respondents Teofilo Cacho and Atty. Godofredo Cabildo opted not to adduce
evidence in this case as they failed to appear during the scheduled trial dates, the
court shall decide on the basis of the evidence for the respondents-intervenor and
petitioners.[109]

Based on the evidence presented before it, the RTC-Branch 3 made the following
factual findings:
From the evidence adduced, both testimonial and documentary, the court is
convinced that petitioner Vidal is the granddaughter of Demetria Cacho Vidal, the
registered owner of the subject property covered by decree Nos. 10364 & 18969,
reissued as Decrees No. 19364 and No. 16869. Such being the case, she is an heir
of Demetria Cacho Vidal.

Petitioner Vidals Certificate of Birth (Exh. A) shows that she was born on June 3,
1941, with the name Demetria Vidal. [Her] father was Francisco Vidal and her
mother was Fidela Confesor, Francisco Vidal is the son of Dionisio Vidal and
Demetria Cacho as shown by [his] Partida de Bautismo (Baptismal Certificate).
Moreover, it was shown in the same document that her godmother was Demetria
Cacho. By inference, this Demetria Cacho is actually Demetria Cacho Vidal because
she was married to Dionisio Vidal, the father of Francisco Vidal.
Now then, is Demetria Cacho Vidal the same person referred to in Cacho v.
Government of the United States (28 Phil. 616 [1914])? Page 618, Vol. 28 of the
Philippine Reports would indicate that the applicant for registration was Doa
Demetria Cacho y Soriano (Exh. R-1). The Death Certificate of Demetria Cacho
Vidal shows that her mother was Candelaria Soriano (Exh. F). Necessarily, they
are one and the same person. This is further confirmed by the fact that the
husband of Demetria Cacho Vidal, Seor Dionisio Vidal, was quoted in pp. 629-630
of the aforecited decision as the husband of Demetria Cacho (Exh. R-3).
The book CACHO (Exhs. Q to Q-5) and the Cacho Family Tree (Exhs. D to D1) further strengthen the aforecited findings of this Court.
It was established by petitioner Vidals own testimony that at the time of Doa
Demetria Cacho's death, she left no heir other than petitioner Vidal. Her husband,
Don Dionisio, died even before the war, while her only child, Francisco Cacho Vidal
xxx Vidals father died during the war. Petitioners only sibling Francisco Dionisio
died at childbirth.
xxxx
The next factual issue proposed by petitioners is whether or not respondent Teofilo
Cacho is the son or heir of the late Doa Demetria Cacho. The following facts and
circumstances negate the impression that he is the son, as he claims to be, of Doa
Demetria Cacho. Thus:
a)
Doa Demetria Cacho was married to Don Dionisio Vidal, and thus her full
name was Doa Demetria Cacho Vidal. Her only child, expectedly, carried the
surname Vidal (Francisco Cacho Vidal). Had Teofilo Cacho actually been a son of
Demetria Cacho, he would and should have carried the name Teofilo Cacho Vidal,
but he did not.
b)
Teofilo Cacho admits to being married to one Elisa Valderrama in the Special
Power of Attorney he issued to Atty. Godofredo [Cabildo] (Exh. O). Teofilo Cacho
married Elisa Valderrama on 27 May 1953, in the Parish of the Immaculate
Conception, Bani, Pangasinan. The Certificate of Marriage shows that Teofilo Cacho
is the son of Agustin Cacho and Estefania Cordial, not Demetria Cacho. In his

Certificate of Baptism (Exh. G), he was born to Agustin Cacho and Estefania
Cordial on May 1930 (when Doa Demetria Cacho was already 50 years old).
c)
The Cacho Family Tree (Exh. D) (that is, the Cacho Family to which Doa
Demetria Cacho belonged) as well as the book on the Cacho Family (Exh. Q) are
bereft of any mention of Teofilo Cacho or his wife Elisa Valderrama, or even his real
father Agustin Cacho, or mother Estefania Cordial. They are not known to be
related to the Cacho family of Doa Demetria Cacho.
d)
Paragraph 1.11 of the Petition charges respondent Teofilo Cacho of having
falsely and fraudulently claiming to be the son and sole heir of the late Doa
Demetria Cacho. In his answer to this particular paragraph, he denied the same for
lack of knowledge or information to form a belief. He should know whether this
allegation is true or not because it concerns him. If true, he should admit and if
false, he opted to deny the charges for lack of knowledge or information to form a
belief. The Court considers his denial as an admission of the allegation that he is
falsely and fraudulently claiming to be the son and sole heir of the late Doa
Demetria Cacho.[110]

Considering the aforequoted factual findings, the RTC-Branch 3 arrived at the

following legal conclusions, quieting the titles of Vidal and AZIMUTH, viz:
The first proposed legal issue to be resolved had been amply discussed under the
first factual issue. Certainly, petitioner Vidal has hereditary rights, interest, or title
not only to a portion of the Subject Property but to the entire property left by the
late Doa Demetria Cacho Vidal, subject, however, to the Deed of Conditional
Conveyance executed by petitioner Vidal of a portion of the Subject Property in
favor of petitioner Azimuth International Development Corporation (Exh. J)
executed pursuant to their Memorandum of Agreement (Exh. I). Consequently, it
goes without saying that petitioner Azimuth International Development Corporation
has a right, interest in, or title to a portion of the subject property.
As discussed earlier in this decision, Teofilo Cacho, not being the son, as he claims
to be, of the late Doa Demetria Cacho Vidal, has no hereditary rights to the Subject
Property left by Doa Demetria Cacho Vidal. He failed to show any evidence that he
is the son of the late Doa Demetria Cacho Vidal as he and his co respondent, Atty.
Godofredo Cabildo, even failed to appear on the scheduled trial date.
It is, therefore, safe to conclude that respondents Teofilo Cacho and/or Atty.
Godofredo Cabildo and their transferees/assignees have no right, interest in, or title
to the subject property.

Prescinding from the finding of this Court that respondent Teofilo Cacho is not the
son of the registered owner of the Subject Property, the late Doa Demetria Cacho
Vidal, respondent Cacho committed false pretenses and fraudulent acts in
representing himself as son and sole heir of Doa Demetria Cacho (Vidal) in his
petition in court, which eventually led to the reconstitution of the titles of Doa
Demetria Cacho (Vidal). Certainly, his misrepresentation in the reconstitution case,
which apparently is the basis of his claim to the subject property, casts clouds on
[respondents'] title to the subject property.
It is only right that petitioner Vidal should seek protection of her ownership from
acts tending to cast doubt on her title. Among the legal remedies she could pursue,
is this petition for Quieting of Title under Chapter 3, Title I, Book II of the Civil Code,
Articles 476 to 481 inclusive. x x x.[111]

The Court of Appeals affirmed in toto the judgment of the RTC-Branch 3. The
appellate court even soundly trounced Teofilos attack on the factual findings of the
trial court:
[T]he material facts sought to be established by the afore-mentioned documentary
evidence corroborated by the testimony of VIDAL, whose testimony or credibility
neither TEOFILO and LANDTRADE even attempted to impeach, only proves one
thing, that she is the granddaughter of DOA DEMETRIA and the sole heiress
thereof.
xxxx
Hence, it is now too late for appellant TEOFILO to assail before Us the facts proven
during the trial, which he failed to refute in open court. Verily, TEOFILOs
lackadaisical attitude in the conduct of his defense only shows that he has no proof
to offer in refutation of the evidence advanced by appellee VIDAL.
Otherwise stated, appellant TEOFILO is an impostor, a pretender and bogus heir of
DOA DEMETRIA.
xxxx
Besides, it is quite unnatural and against human nature for a rightful heir, if
TEOFILO is really one, to merely stand still with folded arms, while the accusing
finger of VIDAL is right on his very nose. In all likelihood, and with all his might and
resources, a rightful heir may even be expected to cross continents and reach
distant shores to protect his interest over the subject properties, which in this case
is arguably worth more than a Kings ransom.

It stands on record that TEOFILO CACHO has all along even prior to executing his
Affidavit of Adjudication in 1985 in Chicago, United States of America, and in
simultaneously executing a Special Power of Attorney in favor of ATTY. CABILDO, had
remained in the United States, and not for a single moment appeared in court
except through his agents or representatives. To Our mind, this fact alone adversely
affects his pretension in claiming to be an heir of DOA DEMETRIA.[112]

As a rule, the findings of fact of the trial court when affirmed by the Court of
Appeals are final and conclusive, and cannot be reviewed on appeal by this Court as
long as they are borne out by the record or are based on substantial evidence. It is
not the function of the Court to analyze or weigh all over again the evidence or
premises supportive of such factual determination. The Court has consistently held
that the findings of the Court of Appeals and other lower courts are, as a rule,
accorded great weight, if not binding upon it, save for the most compelling and
cogent reasons.[113] There is no justification for the Court to deviate from the
factual findings of the RTC-Branch 3 and the Court of Appeals which are clearly
supported by the evidence on record.
Prescription
LANDTRADE finally asserts that the action for quieting of title of Vidal and
AZIMUTH already prescribed since LANDTRADE has been in possession of the two
parcels of land in question. The prescriptive period for filing said action lapsed in
1995, ten years from the time Teofilo executed his Affidavit of Adjudication in 1985.
Yet, Vidal and AZIMUTH instituted Civil Case No. 4452 only in 1998.
It is too late in the day for LANDTRADE to raise the issue of prescription of Civil Case
No. 4452 for the first time before this Court. In this jurisdiction, the defense of
prescription cannot be raised for the first time on appeal. Such defense may be
waived, and if it was not raised as a defense in the trial court, it cannot be
considered on appeal, the general rule being that the Appellate Court is not
authorized to consider and resolve any question not properly raised in the lower
court.[114]
But even if the Court takes cognizance of the issue of prescription, it will rule
against LANDTRADE.
A real action is one where the plaintiff seeks the recovery of real property or, as
indicated in what is now Rule 4, Section 1 of the Rules of Court, a real action is an
action affecting title to or recovery of possession of real property.[115] An action for
quieting of title to real property, such as Civil Case No. 4452, is indubitably a real
action.

Article 1141 of the Civil Code plainly provides that real actions over immovables
prescribe after thirty years. Doa Demetria died in 1974, transferring by
succession, her title to the two parcels of land to her only heir, Vidal. Teofilo,
through Atty. Cabildo, filed a petition for reconstitution of the certificates of title
covering said properties in 1978. This is the first palpable display of Teofilos
adverse claim to the same properties, supposedly, also as Doa Demetrias only
heir. When Vidal and AZIMUTH instituted Civil Case No. 4452 in 1998, only 20 years
had passed, and the prescriptive period for filing an action for quieting of title had
not yet prescribed.
Nevertheless, the Court notes that Article 1411 of the Civil Code also clearly states
that the 30-year prescriptive period for real actions over immovables is without
prejudice to what is established for the acquisition of ownership and other real
rights by prescription. Thus, the Court must also look into the acquisitive
prescription periods of ownership and other real rights.
Acquisitive prescription of dominion and real rights may be ordinary or
extraordinary. [116]
Ordinary acquisitive prescription requires possession of things in good faith and with
just title for the time fixed by law.[117] In the case of ownership and other real
rights over immovable property, they are acquired by ordinary prescription through
possession of 10 years.[118]
LANDTRADE cannot insist on the application of the 10-year ordinary acquisitive
prescription period since it cannot be considered a possessor in good faith. The
good faith of the possessor consists in the reasonable belief that the person from
whom he received the thing was the owner thereof, and could transmit his
ownership.[119]
LANDTRADE came to possession of the two parcels of land after purchasing the
same from Teofilo. The Court stresses, however, that Teofilo is not the registered
owner of the subject properties. The said properties are still registered in Doa
Demetrias name under OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.). The Affidavit of
Adjudication, by which Teofilo declared himself to be the sole heir of Doa
Demetrias estate, is not even annotated on the OCTs. Worse, LANDTRADE is not
dealing directly with Teofilo, but only with the latters attorney-in-fact, Atty. Cabildo.
It is axiomatic that one who buys from a person who is not a registered owner is not
a purchaser in good faith.[120]
Furthermore, in its Complaint for Unlawful Detainer against NAPOCOR and
TRANSCO, which was docketed as Civil Case No. 11475-AF before the MTCC,
LANDTRADE itself alleged that when it bought the two parcels of land from Teofilo,
portions thereof were already occupied by the Overton Sub-station and Agus 7

Warehouse of NAPOCOR and TRANSCO. This is another circumstance which should

have prompted LANDTRADE to investigate or inspect the property being sold to it.
It is, of course, expected from the purchaser of a valued piece of land to inquire first
into the status or nature of possession of the occupants, i.e., whether or not the
occupants possess the land en concepto de dueo, in concept of owner. As is the
common practice in the real estate industry, an ocular inspection of the premises
involved is a safeguard a cautious and prudent purchaser usually takes. Should he
find out that the land he intends to buy is occupied by anybody else other than the
seller who, as in this case, is not in actual possession, it would then be incumbent
upon the purchaser to verify the extent of the occupants possessory rights. The
failure of a prospective buyer to take such precautionary steps would mean
negligence on his part and would thereby preclude him from claiming or invoking
the rights of a purchaser in good faith.[121]
Since the ordinary acquisitive prescription period of 10 years does not apply
to LANDTRADE, then the Court turns its attention to the extraordinary acquisitive
prescription period of 30 years set by Article 1137 of the Civil Code, which reads:
ART. 1137. Ownership and other real rights over immovables also prescribe through
uninterrupted adverse possession thereof for thirty years, without need of title or of
good faith.

LANDTRADE adversely possessed the subject properties no earlier than 1996,

when it bought the same from Teofilo, and Civil Case No. 4452 was already
instituted two years later in 1998. LANDTRADE cannot tack its adverse possession
of the two parcels of land to that of Teofilo considering that there is no proof that
the latter, who is already residing in the U.S.A., adversely possessed the properties
at all.
Thus, the Court of Appeals did not err when it affirmed in toto the judgment of the
RTC-Branch 3 which declared, among other things, that (a) Vidal is the sole surviving
heir of Doa Demetria, who alone has rights to and interest in the subject parcels of
land; (b) AZIMUTH is Vidals successor-in-interest to portions of the said properties
in accordance with the 1998 Memorandum of Agreement and 2004 Deed of
Conditional Conveyance; (c) Teofilo is not the son or heir of Doa Demetria; and (d)
Teofilo, Atty. Cabildo, and their transferees/assignees, including LANDTRADE, have
no valid right to or interest in the same properties.
The Ejectment or Unlawful Detainer Case
(G.R. Nos. 170505, 173355-56, and 173563-64)

The Petitions in G.R. Nos. 170505, 173355-56, and 173563-64 all concern the
execution pending appeal of the Decision dated February 17, 2004 of the MTCC in
Civil Case No. 11475-AF, which ordered NAPOCOR and TRANSCO to vacate the two
parcels of land in question, as well as to pay rent for the time they occupied said
properties.
LANDTRADE filed its Petition for Review in G.R. No. 170505 when it failed to have
the MTCC Decision dated February 17, 2004 executed while Civil Case No. 6613, the
appeal of the same judgment by NAPOCOR and TRANSCO, was still pending before
the RTC-Branch 5.
NAPOCOR and TRANSCO sought recourse from this Court through their Petitions for
Certiorari and Prohibition in G.R. Nos. 173355-56 and 173563-64 after the RTCBranch 1 (to which Civil Case No. 6613 was re-raffled) already rendered a Decision
dated December 12, 2005 in Civil Case No. 6613, affirming the MTCC Decision dated
February 17, 2004. Expectedly, NAPOCOR and TRANSCO appealed the judgment of
the RTC-Branch 1 to the Court of Appeals. The Court of Appeals granted the motion
for execution pending appeal of LANDTRADE, and denied the application for
preliminary injunction of NAPOCOR and TRANSCO.
The requirements of posting a supersedeas bond and depositing rent to stay
execution

The pivotal issue in G.R. No. 170505 is whether LANDTRADE is entitled to the
execution of the MTCC Decision dated February 17, 2004 even while said judgment
was then pending appeal before the RTC-Branch 5. The RTC-Branch 5 granted the
motion for immediate execution pending appeal of LANDTRADE because of the
failure of NAPOCOR and TRANSCO to comply with the requirements for staying the
execution of the MTCC judgment, as provided in Rule 70, Section 19 of the Rules of
Court. The Court of Appeals subsequently found grave abuse of discretion on the
part of RTC-Branch 5 in issuing the Order dated August 9, 2004 which granted
execution pending appeal and the Writ of Execution Pending Appeal dated August
10, 2004; and on the part of Sheriff Borres, in issuing the Notices of Garnishment
and Notification to vacate, all dated August 11, 2004. According to the appellate
court, NAPOCOR and TRANSCO are exempt from the requirements of filing a
supersedeas bond and depositing rent in order to stay the execution of the MTCC
judgment.
Rule 70, Section 19 of the Rules of Court lays down the requirements for staying the
immediate execution of the MTCC judgment against the defendant in an ejectment
suit:

SEC. 19. Immediate execution of judgment; how to stay same. If judgment is

rendered against the defendant, execution shall issue immediately upon motion,
unless an appeal has been perfected and the defendant to stay execution files a
sufficient supersedeas bond, approved by the Municipal Trial Court and executed in
favor of the plaintiff to pay the rents, damages, and costs accruing down to the time
of the judgment appealed from, and unless, during the pendency of the appeal, he
deposits with the appellate court the amount of rent due from time to time under
the contract, if any, as determined by the judgment of the Municipal Trial Court. In
the absence of a contract, he shall deposit with the Regional Trial Court the
reasonable value of the use and occupation of the premises for the preceding
month or period at the rate determined by the judgment of the lower court on or
before the tenth day of each succeeding month or period. The supersedeas bond
shall be transmitted by the Municipal Trial Court, with the other papers, to the clerk
of the Regional Trial Court to which the action is appealed.
All amounts so paid to the appellate court shall be deposited with said court or
authorized government depositary bank, and shall be held there until the final
disposition of the appeal, unless the court, by agreement of the interested parties,
or in the absence of reasonable grounds of opposition to a motion to withdraw, or
for justifiable reasons, shall decree otherwise. Should the defendant fail to make
the payments above prescribed from time to time during the pendency of the
appeal, the appellate court, upon motion of the plaintiff, and upon proof of such
failure, shall order the execution of the judgment appealed from with respect to the
restoration of possession, but such execution shall not be a bar to the appeal taking
its course until the final disposition thereof on the merits.
After the case is decided by the Regional Trial Court, any money paid to the court by
the defendant for purposes of the stay of execution shall be disposed of in
accordance with the provisions of the judgment of the Regional Trial Court. In any
case wherein it appears that the defendant has been deprived of the lawful
possession of land or building pending the appeal by virtue of the execution of the
judgment of the Municipal Trial Court, damages for such deprivation of possession
and restoration of possession may be allowed the defendant in the judgment of the
Regional Trial Court disposing of the appeal. (Emphases supplied.)

The Court had previously recognized the exemption of NAPOCOR from filing a
supersedeas bond. The Court stated in Philippine Geothermal, Inc. v. Commissioner
of Internal Revenue[122] that a chronological review of the NAPOCOR Charter will
show that it has been the lawmakers intention that said corporation be completely
exempt not only from all forms of taxes, but also from filing fees, appeal bonds, and
supersedeas bonds in any court or administrative proceedings. The Court traced
the history of the NAPOCOR Charter, thus:

Republic Act No. 6395 (10 September 1971) enumerated the details covered by the
exemptions by stating under Sec. 13 that The Corporation shall be non-profit and
shall devote all its returns from its capital investment, as well as excess revenues
from its operation, for expansionthe Corporation is hereby declared exempt from
the payment of all taxes, duties, fees, imposts, charges, costs and service fees in
any court or administrative proceedings in which it may be a party, restrictions and
duties to the Republic of the Philippines, its provinces, cities, municipalities and
other government agencies and instrumentalities . . . Subsequently, Presidential
Decree No. 380 (22 January 1974), Sec. 10 made even more specific the details of
the exemption of NPC to cover, among others, both direct and indirect taxes on all
petroleum products used in its operation. Presidential Decree No. 938 (27 May
1976), Sec. 13 amended the tax exemption by simplifying the same law in general
terms. It succinctly exempts service fees, including filing fees, appeal bonds,
supersedeas bonds, in any court or administrative proceedings. The use of the
phrase all forms of taxes demonstrate the intention of the law to give NPC all the
exemption it has been enjoying before. The rationale for this exemption is that
being non-profit, the NPC shall devote all its return from its capital investment as
well as excess revenues from its operation, for expansion.[123] (Emphases
supplied.)

As presently worded, Section 13 of Republic Act No. 6395, the NAPOCOR Charter, as
amended, reads:
SEC. 13. Non-profit Character of the Corporation; Exemption from All Taxes, Duties,
Fees, Imposts and Other Charges by the Government and Government
Instrumentalities. The Corporation shall be non-profit and shall devote all its
returns from its capital investment as well as excess revenues from its operation, for
expansion. To enable the Corporation to pay its indebtedness and obligations and in
furtherance and effective implementation of the policy enunciated in Section One of
this Act, the Corporation, including its subsidiaries, is hereby declared exempt from
the payment of all forms of taxes, duties, fees, imposts as well as costs and service
fees including filing fees, appeal bonds, supersedeas bonds, in any court or
administrative proceedings. (Emphasis supplied.)

In A.M. No. 05-10-20-SC, captioned In Re: Exemption of the National Power

Corporation from Payment of Filing/Docket Fees, the Court addressed the query of a
Clerk of Court from the RTC of Urdaneta, Pangasinan on whether NAPOCOR is
exempt from the payment of filing fees and Sheriffs Trust Fund. In its Resolution
dated December 6, 2005, the Court, upon the recommendation of the Court
Administrator, declared that NAPOCOR is still exempt from the payment of filing
fees, appeal bonds, and supersedeas bonds.

Consistent with the foregoing, the Court of Appeals rendered its Decision dated
November 23, 2005 in CA-G.R. SP Nos. 85714 and 85841 declaring that NAPOCOR
was exempt from filing a supersedeas bond to stay the execution of the MTCC
judgment while the same was pending appeal before the RTC-Branch 5. The
appellate court also held that the exemption of NAPOCOR extended even to the
requirement for periodical deposit of rent, ratiocinating that:
On the whole, the posting of supersedeas bond and the making of the periodical
deposit are designed primarily to insure that the plaintiff would be paid the back
rentals and the compensation for the use and occupation of the premises should the
municipal trial courts decision be eventually affirmed on appeal. Elsewise stated,
both the posting of the supersedeas bond and the payment of monthly deposit are
required to accomplish one and the same purpose, namely, to secure the
performance of, or to satisfy the judgment appealed from in case it is affirmed on
appeal by the appellate court.
xxxx
Thus viewed, the inescapable conclusion is, and so We hold, that although the term
making of monthly deposit in ejectment cases is not expressly or specifically
mentioned in Section 13 of R.A. 6395, however, inasmuch as it has the same or
similar function, purpose, and essence as a supersedeas bond, it should be deemed
included in the enumeration laid down under the said provision. This accords well
with the principle of ejusdem generis which says that where a statute uses a
general word followed by an enumeration of specific words embraced within the
general word merely as examples, the enumeration does not restrict the meaning of
the general word which should be construed to include others of the same class
although not enumerated therein; or where a general word or phrase follows an
enumeration of particular and specific words of the same class or where the latter
follow the former, the general word or phrase is to be construed to include persons,
things or cases akin to, resembling, or of the same kind or class as those specifically
mentioned.
In a nutshell, We hold that petitioner NAPOCOR enjoys exemption not only from
posting supersedeas bond in courts in appealed ejectment cases, but also from
periodically depositing the amount of the monthly rental or the reasonable
compensation of the use and occupancy of the property, as determined in the
municipal trial courts decision.[124]

The Court of Appeals further adjudged that the exemptions of NAPOCOR similarly
applied to TRANSCO since [i]t is all too obvious that the interests of NAPOCOR and
TRANSCO over the premises in litigation are so interwoven and dependent upon

each other, such that whatever is adjudged in regard to the former, whether
favorable or adverse, would ineluctably and similarly affect the latter[;] and
[c]onsequently, x x x the stay of the execution of the appealed decision insofar as
NAPOCOR is concerned necessarily extends and inures to its co-defendant
TRANSCO, not by virtue of the formers statutory exemption privilege from filing
supersedeas bond and making periodic deposits, but by the indisputably operative
fact that the rights and liabilities in litis of BOTH defendants are so intimately
interwoven, interdependent, and indivisible.[125]
Only recently, however, the Court reversed its stance on the exemption of
NAPOCOR from filing fees, appeal bonds, and supersedeas bonds. Revisiting A.M.
No. 05-10-20-SC, the Court issued Resolutions dated October 27, 2009 and March
10, 2010, wherein it denied the request of NAPOCOR for exemption from payment of
filing fees and court fees for such request appears to run counter to Article VIII,
Section 5(5)[126] of the Constitution, on the rule-making power of the Supreme
Court over the rules on pleading, practice and procedure in all courts, which
includes the sole power to fix the filing fees of cases in courts. The Court
categorically pronounced that NAPOCOR can no longer invoke its amended Charter
as basis for exemption from the payment of legal fees.

Nevertheless, in this case, the RTC-Branch 1 already promulgated its Decision

in Civil Case No. 6613 on December 12, 2005, denying the appeal of NAPOCOR and
TRANSCO and affirming the MTCC judgment against said corporations. NAPOCOR
and TRANSCO presently have pending appeals of the RTC-Branch 1 judgment before
the Court of Appeals.
Rule 70, Section 19 of the Rules of Court applies only when the judgment of a
Municipal Trial Court (and any same level court such as the MTCC) in an ejectment
case is pending appeal before the RTC. When the RTC had already resolved the
appeal and its judgment, in turn, is pending appeal before the Court of Appeals,
then Rule 70, Section 21 of the Rules of Court governs.
The Court already pointed out in Northcastle Properties and Estate Corporation v.
Paas[127] that Section 19 applies only to ejectment cases pending appeal with the
RTC, and Section 21 to those already decided by the RTC. The Court again held in
Uy v. Santiago[128] that:
[I]t is only execution of the Metropolitan or Municipal Trial Courts judgment pending
appeal with the Regional Trial Court which may be stayed by a compliance with the
requisites provided in Rule 70, Section 19 of the 1997 Rules on Civil Procedure. On
the other hand, once the Regional Trial Court has rendered a decision in its
appellate jurisdiction, such decision shall, under Rule 70, Section 21 of the 1997
Rules on Civil Procedure, be immediately executory, without prejudice to an appeal,

via a Petition for Review, before the Court of Appeals and/or Supreme Court.
(Emphases supplied.)

According to Rule 70, Section 21 of the Rules of Court, [t]he judgment of the
Regional Trial Court against the defendant shall be immediately executory, without
prejudice to a further appeal that may be taken therefrom. It no longer provides
for the stay of execution at such stage.
Thus, subsequent events have rendered the Petition of LANDTRADE in G.R. No.
170505 moot and academic. It will serve no more purpose for the Court to require
NAPOCOR and TRANSCO to still comply with the requirements of filing a
supersedeas bond and depositing rent to stay execution pending appeal of the
MTCC judgment, as required by Rule 70, Section 19 of the Rules of Court, when the
appeal had since been resolved by the RTC.
Preliminary injunction to stay execution of RTC judgment against defendant in an
ejectment case

The issues raised by NAPOCOR and TRANSCO in their Petitions in G.R. Nos. 17335556 and 173563-64 boil down to the sole issue of whether the Court of Appeals
committed grave abuse of discretion amounting to lack or excess of jurisdiction in
refusing to enjoin the execution of the Decision dated December 12, 2005 of the
RTC-Branch 1 in Civil Case No. 6613 while the same is pending appeal before the
appellate court.
The Court of Appeals granted the issuance of a writ of execution in favor of
LANDTRADE and denied the application for writ of preliminary injunction of
NAPOCOR and TRANSCO because Rule 70, Section 21 of the Rules of Court explicitly
provides that the RTC judgment in an ejectment case, which is adverse to the
defendant and pending appeal before the Court of Appeals, shall be immediately
executory and can be enforced despite further appeal. Therefore, the execution of
the RTC judgment pending appeal is the ministerial duty of the Court of Appeals,
specifically enjoined by law to be done.
NAPOCOR and TRANSCO argue that neither the rules nor jurisprudence explicitly
declare that Rule 70, Section 21 of the Rules of Court bars the application of Rule 58
on preliminary injunction. Regardless of the immediately executory character of the
RTC judgment in an ejectment case, the Court of Appeals, before which said
judgment is appealed, is not deprived of power and jurisdiction to issue a writ of
preliminary injunction when circumstances so warrant.
There is merit in the present Petitions of NAPOCOR and TRANSCO.

The Court expounded on the nature of a writ of preliminary injunction in Levi Strauss
& Co. v. Clinton Apparelle, Inc. [129]:
Section 1, Rule 58 of the Rules of Court defines a preliminary injunction as an order
granted at any stage of an action prior to the judgment or final order requiring a
party or a court, agency or a person to refrain from a particular act or acts.
Injunction is accepted as the strong arm of equity or a transcendent remedy to be
used cautiously as it affects the respective rights of the parties, and only upon full
conviction on the part of the court of its extreme necessity. An extraordinary
remedy, injunction is designed to preserve or maintain the status quo of things and
is generally availed of to prevent actual or threatened acts until the merits of the
case can be heard. It may be resorted to only by a litigant for the preservation or
protection of his rights or interests and for no other purpose during the pendency of
the principal action. It is resorted to only when there is a pressing necessity to avoid
injurious consequences, which cannot be remedied under any standard
compensation. The resolution of an application for a writ of preliminary injunction
rests upon the existence of an emergency or of a special recourse before the main
case can be heard in due course of proceedings.
Section 3, Rule 58, of the Rules of Court enumerates the grounds for the
issuance of a preliminary injunction:
SEC. 3. Grounds for issuance of preliminary injunction. A preliminary injunction
may be granted when it is established:
(a) That the applicant is entitled to the relief demanded, and the whole or part of
such relief consists in restraining the commission or continuance of the act or acts
complained of, or in requiring the performance of an act or acts, either for a limited
period or perpetually;
(b) That the commission, continuance, or non-performance of the act or acts
complained of during the litigation would probably work injustice to the applicant; or
(c) That a party, court, agency or a person is doing, threatening, or is attempting to
do, or is procuring or suffering to be done, some act or acts probably in violation of
the rights of the applicant respecting the subject of the action or proceeding, and
tending to render the judgment ineffectual.
Under the cited provision, a clear and positive right especially calling for judicial
protection must be shown. Injunction is not a remedy to protect or enforce
contingent, abstract, or future rights; it will not issue to protect a right not in esse
and which may never arise, or to restrain an act which does not give rise to a cause
of action. There must exist an actual right. There must be a patent showing by the
complaint that there exists a right to be protected and that the acts against which
the writ is to be directed are violative of said right.

Benedicto v. Court of Appeals[130] sets forth the following elucidation on the

applicability of Rule 58 vis--vis Rule 70, Section 21 of the Rules of Court:
This section [Rule 70, Section 21] presupposes that the defendant in a forcible entry
or unlawful detainer case is unsatisfied with the judgment of the Regional Trial Court
and decides to appeal to a superior court. It authorizes the RTC to immediately
issue a writ of execution without prejudice to the appeal taking its due course. It is
our opinion that on appeal the appellate court may stay the said writ should
circumstances so require.
In the case of Amagan v. Marayag, we reiterated our pronouncement in Vda. de
Legaspi v. Avendao that the proceedings in an ejectment case may be suspended
in whatever stage it may be found. We further drew a fine line between forcible
entry and unlawful detainer, thus:
Where the action, therefore, is one of illegal detainer, as distinguished from one of
forcible entry, and the right of the plaintiff to recover the premises is seriously
placed in issue in a proper judicial proceeding, it is more equitable and just and less
productive of confusion and disturbance of physical possession, with all its
concomitant inconvenience and expenses. For the Court in which the issue of legal
possession, whether involving ownership or not, is brought to restrain, should a
petition for preliminary injunction be filed with it, the effects of any order or decision
in the unlawful detainer case in order to await the final judgment in the more
substantive case involving legal possession or ownership. It is only where there has
been forcible entry that as a matter of public policy the right to physical possession
should be immediately set at rest in favor of the prior possession regardless of the
fact that the other party might ultimately be found to have superior claim to the
premises involved thereby to discourage any attempt to recover possession thru
force, strategy or stealth and without resorting to the courts.
Patently, even if RTC judgments in unlawful detainer cases are immediately
executory, preliminary injunction may still be granted. There need only be clear
showing that there exists a right to be protected and that the acts against which the
writ is to be directed violate said right. (Emphasis supplied.)

As in Benedicto, substantial considerations exist herein that compels the

Court to issue a writ of preliminary injunction enjoining the execution of the
February 17, 2004 Decision of the MTCC, as affirmed by the December 12, 2005
Decision of the RTC-Branch 1, until the appeal of latter judgment, sought by
NAPOCOR and TRANSCO, is finally resolved by the Court of Appeals.

First, the two parcels of land claimed by LANDTRADE are the subject of
several other cases. In fact, Vidal and AZIMUTH, who instituted the Quieting of Title
Case against Teofilo and LANDTRADE (also presently before the Court in G.R. Nos.
178779 and 178894) have filed a Motion For Leave to Intervene in the instant case,
thus, showing that there are other parties who, while strangers to the ejectment
case, might be greatly affected by its result and who want to protect their interest in
the subject properties. And although cases involving title to real property, i.e.,
quieting of title, accion publiciana, etc., are not prejudicial to and do not suspend an
ejectment case,[131] the existence of such cases should have already put the Court
of Appeals on guard that the title of LANDTRADE to the subject properties on
which it fundamentally based its claim of possessory right is being fiercely
contested.
Second, it is undisputed that TRANSCO and its predecessor, NAPOCOR, have been in
possession of the disputed parcels of land for more than 40 years. Upon said
properties stand the TRANSCO Overton Sub-station and Agus 7 Warehouse. The
Overton Sub-station, in particular, is a crucial facility responsible for providing the
power requirements of a large portion of Iligan City, the two Lanao Provinces, and
other nearby provinces. Without doubt, having TRANSCO vacate its Overton Substation, by prematurely executing the MTCC judgment of February 17, 2004, carries
serious and irreversible implications, primordial of which is the widespread
disruption of the electrical power supply in the aforementioned areas, contributing
further to the electric power crisis already plaguing much of Mindanao.
Lastly, allowing execution pending appeal would result in the payment of an
astronomical amount in rentals which, per Sheriff Borress computation, already
amounted to P156,000,000.00 by August 11, 2004, when he issued the Notices of
Garnishment and Notification against NAPOCOR and TRANSCO; plus, P500,000.0
each month thereafter. Payment of such an amount may seriously put the
operation of a public utility in peril, to the detriment of its consumers.
These circumstances altogether present a pressing necessity to avoid injurious
consequences, not just to NAPOCOR and TRANSCO, but to a substantial fraction of
the consuming public as well, which cannot be remedied under any standard
compensation. The issuance by the Court of Appeals of a writ of preliminary
injunction is justified by the circumstances.
The Court must emphasize though that in so far as the Ejectment Case is
concerned, it has only settled herein issues on the propriety of enjoining the
execution of the MTCC Decision dated February 17, 2004 while it was on appeal
before the RTC, and subsequently, before the Court of Appeals. The Court of
Appeals has yet to render a judgment on the appeal itself. But it may not be amiss
for the Court to also point out that in G.R. Nos. 178779 and 178894 (Quieting of
Title Case), it has already found that Vidal, not Teofilo, is the late Doa Demetrias

sole heir, who alone inherits Doa Demetrias rights to and interests in the disputed
parcels of land. This conclusion of the Court in the Quieting of Title Case will
inevitably affect the Ejectment Case still pending appeal before the Court of Appeals
since LANDTRADE is basing its right to possession in the Ejectment Case on its
supposed title to the subject properties, which it derived from Teofilo.
The Cancellation of Titles and Reversion Case
(G.R. No. 173401)
The Republic is assailing in its Petition in G.R. No. 173401 the (1) Order dated
December 13, 2005 of the RTC-Branch 4 dismissing Civil Case No. 6686, the
Complaint for Cancellation of Titles and Reversion filed by the Republic against the
deceased Doa Demetria, Vidal and/or Teofilo, and AZIMUTH and/or LANDTRADE;
and (2) Order dated May 16, 2006 of the same trial court denying the Motion for
Reconsideration of the Republic, averring that:
With due respect, the trial court decided a question of substance contrary to law
and jurisprudence in ruling:
(i)
THAT PETITIONER HAD NO CAUSE OF ACTION IN INSTITUTING THE SUBJECT
COMPLAINT FOR CANCELLATION OF OCT NOS. 0-1200 (A.F.) AND 0-1201 (A.F.),
INCLUDING ALL DERIVATIVE TITLES, AND REVERSION.
(ii)
THAT PETITIONERS COMPLAINT FOR CANCELLATION OF OCT NOS. 0-1200
(A.F.) AND 0-1201 (A.F.) INCLUDING ALL DERIVATIVE TITLES, AND REVERSION IS
BARRED BY THE DECISIONS IN CACHO VS GOVERNMENT OF THE UNITED STATES (28
PHIL. 616 [1914] AND CACHO VS COURT OF APPEALS (269 SCRA 159 [1997].
(iii)

THAT PETITIONERS CAUSE OF ACTION HAS PRESCRIBED; AND

(iv)

THAT PETITIONER IS GUILTY OF FORUM SHOPPING.[132]

The Court finds merit in the present Petition.

Cause of action for reversion
The Complaint in Civil Case No. 6686 seeks the cancellation of OCT Nos. 01200 (a.f.) and 0-1201 (a.f.), with all their derivative titles, and reversion. The
Complaint was dismissed by the RTC-Branch 4 in its Order dated December 13,
2005, upon Motion of Vidal and AZIMUTH, on the ground that the State does not
have a cause of action for reversion. According to the RTC-Branch 4, there was no
showing that the late Doa Demetria committed any wrongful act or omission in
violation of any right of the Republic. Additionally, the Regalian doctrine does not

apply to Civil Case No. 6686 because said doctrine does not extend to lands beyond
the public domain. By the own judicial admission of the Republic, the two parcels of
land in question are privately owned, even before the same were registered in Doa
Demetrias name.
The Court disagrees.
Rule 2, Section 2 of the Rules of Court defines a cause of action as the act or
omission by which a party violates a right of another. Its essential elements are
the following: (1) a right in favor of the plaintiff; (2) an obligation on the part of the
named defendant to respect or not to violate such right; and (3) such defendants
act or omission that is violative of the right of the plaintiff or constituting a breach of
the obligation of the former to the latter.[133]
Reversion is an action where the ultimate relief sought is to revert the land
back to the government under the Regalian doctrine. Considering that the land
subject of the action originated from a grant by the government, its cancellation is a
matter between the grantor and the grantee.[134] In Estate of the Late Jesus S.
Yujuico v. Republic[135] (Yujuico case), reversion was defined as an action which
seeks to restore public land fraudulently awarded and disposed of to private
individuals or corporations to the mass of public domain. It bears to point out,
though, that the Court also allowed the resort by the Government to actions for
reversion to cancel titles that were void for reasons other than fraud, i.e., violation
by the grantee of a patent of the conditions imposed by law;[136] and lack of
jurisdiction of the Director of Lands to grant a patent covering inalienable forest
land[137] or portion of a river, even when such grant was made through mere
oversight.[138] In Republic v. Guerrero,[139] the Court gave a more general
statement that the remedy of reversion can be availed of only in cases of
fraudulent or unlawful inclusion of the land in patents or certificates of title.
The right of the Republic to institute an action for reversion is rooted in the Regalian
doctrine. Under the Regalian doctrine, all lands of the public domain belong to the
State, and that the State is the source of any asserted right to ownership in land
and charged with the conservation of such patrimony. This same doctrine also
states that all lands not otherwise appearing to be clearly within private ownership
are presumed to belong to the State.[140] It is incorporated in the 1987 Philippine
Constitution under Article XII, Section 2 which declares [a]ll lands of the public
domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of
potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other
natural resources are owned by the State. x x x No public land can be acquired by
private persons without any grant, express or implied, from the government; it is
indispensable that there be a showing of the title from the State.[141]

The reversion case of the Republic in Civil Case No. 6686 rests on the main
argument that OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.), issued in Doa Demetrias
name, included parcels of lands which were not adjudicated to her by the Court in
the 1914 Cacho case. Contrary to the statement made by the RTC-Branch 4 in its
December 13, 2005 Order, the Republic does not make any admission in its
Complaint that the two parcels of land registered in Doa Demetrias name were
privately owned even prior to their registration. While the Republic does not dispute
that that two parcels of land were awarded to Doa Demetria in the 1914 Cacho
case, it alleges that these were not the same as those covered by OCT Nos. 0-1200
(a.f.) and 0-1201 (a.f.) issued in Doa Demetrias name 84 years later. If, indeed,
the parcels of land covered by said OCTs were not those granted to Doa Demetria
in the 1914 Cacho case, then it can be presumed, under the Regalian doctrine, that
said properties still form part of the public domain belonging to the State.
Just because OCTs were already issued in Doa Demetrias name does not bar the
Republic from instituting an action for reversion. Indeed, the Court made it clear in
Francisco v. Rodriguez[142] that Section 101 of the Public Land Act may be invoked
only when title has already vested in the individual, e.g., when a patent or a
certificate of title has already been issued[,] for the basic premise in an action for
reversion is that the certificate of title fraudulently or unlawfully included land of the
public domain, hence, calling for the cancellation of said certificate. It is actually
the issuance of such a certificate of title which constitutes the third element of a
cause of action for reversion.
The Court further finds that the Complaint of the Republic in Civil Case No. 6686
sufficiently states a cause of action for reversion, even though it does not allege
that fraud was committed in the registration or that the Director of Lands requested
the reversion.
It is a well-settled rule that the existence of a cause of action is determined by the
allegations in the complaint. In the resolution of a motion to dismiss based on
failure to state a cause of action, only the facts alleged in the complaint must be
considered. The test in cases like these is whether a court can render a valid
judgment on the complaint based upon the facts alleged and pursuant to the prayer
therein. Hence, it has been held that a motion to dismiss generally partakes of the
nature of a demurrer which hypothetically admits the truth of the factual allegations
made in a complaint.[143] The hypothetical admission extends to the relevant and
material facts well pleaded in the complaint and inferences fairly deducible
therefrom. Hence, if the allegations in the complaint furnish sufficient basis by
which the complaint can be maintained, the same should not be dismissed
regardless of the defense that may be assessed by the defendants.[144]
In Vergara v. Court of Appeals,[145] the Court additionally explained that:

In determining whether allegations of a complaint are sufficient to support a cause

of action, it must be borne in mind that the complaint does not have to establish or
allege facts proving the existence of a cause of action at the outset; this will have to
be done at the trial on the merits of the case. To sustain a motion to dismiss for
lack of cause of action, the complaint must show that the claim for relief does not
exist, rather than that a claim has been defectively stated, or is ambiguous,
indefinite or uncertain.

The Republic meticulously presented in its Complaint the discrepancies between the
1914 Cacho case, on one hand, which granted Doa Demetria title to two parcels of
land; and OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.), on the other, which were
supposedly issued pursuant to the said case. In paragraphs 9 and 16 of its
Complaint, the Republic clearly alleged that OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.)
cover properties much larger than or areas beyond those granted by the land
registration court in GLRO Record Nos. 6908 and 6909. Thus, the Republic was able
to satisfactorily allege the unlawful inclusion, for lack of an explicit grant from the
Government, of parcels of public land into Doa Demetrias OCTs, which, if true, will
justify the cancellation of said certificates and the return of the properties to the
Republic.
That the Complaint in Civil Case No. 6686 does not allege that it had been filed by
the Office of the Solicitor General (OSG), at the behest of the Director of Lands, does
not call for its dismissal on the ground of failure to state a cause of action. Section
101 of Commonwealth Act No. 141, otherwise known as the Public Land Act, as
amended, simply requires that:
SEC. 101. All actions for the reversion to the Government of lands of the public
domain or improvements thereon shall be instituted by the Solicitor General or the
officer acting in his stead, in the proper courts, in the name of the Republic of the
Philippines. (Emphasis supplied.)

Clear from the aforequoted provision that the authority to institute an action for
reversion, on behalf of the Republic, is primarily conferred upon the OSG. While the
OSG, for most of the time, will file an action for reversion upon the request or
recommendation of the Director of Lands, there is no basis for saying that the
former is absolutely bound or dependent on the latter.
RTC-Branch 4 cited Sherwill Development Corporation v. Sitio Nio Residents
Association, Inc. [146] (Sherwill case), to support its ruling that it is absolutely
necessary that an investigation and a determination of fraud should have been
made by the Director of Lands prior to the filing of a case for reversion. The
Sherwill case is not in point and does not constitute a precedent for the case at bar.

It does not even involve a reversion case. The main issue therein was whether the
trial court properly dismissed the complaint of Sherwill Development Corporation for
quieting of title to two parcels of land, considering that a case for the declaration of
nullity of its TCTs, instituted by the Sto. Nio Residents Association, Inc., was already
pending before the Land Management Bureau (LMB). The Court recognized therein
the primary jurisdiction of the LMB over the dispute, and affirmed the dismissal of
the quieting of title case on the grounds of litis pendentia and forum shopping.
Res judicata
Public policy and sound practice enshrine the fundamental principle upon which the
doctrine of res judicata rests that parties ought not to be permitted to litigate the
same issues more than once. It is a general rule common to all civilized system of
jurisprudence, that the solemn and deliberate sentence of the law, pronounced by
its appointed organs, upon a disputed fact or a state of facts, should be regarded as
a final and conclusive determination of the question litigated, and should forever set
the controversy at rest. Indeed, it has been well said that this maxim is more than a
mere rule of law; more even than an important principle of public policy; and that it
is not too much to say that it is a fundamental concept in the organization of every
jural system. Public policy and sound practice demand that, at the risk of
occasional errors, judgments of courts should become final at some definite date
fixed by law. The very object for which courts were constituted was to put an end to
controversies.[147]
The doctrine of res judicata comprehends two distinct concepts - (1) bar by former
judgment, and (2) conclusiveness of judgment. For res judicata to serve as an
absolute bar to a subsequent action, the following requisites must concur: (1) the
former judgment or order must be final; (2) the judgment or order must be on the
merits; (3) it must have been rendered by a court having jurisdiction over the
subject matter and parties; and (4) there must be between the first and second
actions, identity of parties, of subject matter, and of causes of action. When there is
no identity of causes of action, but only an identity of issues, there exists res
judicata in the concept of conclusiveness of judgment. Although it does not have
the same effect as res judicata in the form of bar by former judgment which
prohibits the prosecution of a second action upon the same claim, demand, or cause
of action, the rule on conclusiveness of judgment bars the relitigation of particular
facts or issues in another litigation between the same parties on a different claim or
cause of action.[148]
The 1914 Cacho case does not bar the Complaint for reversion in Civil Case No.
6686 by res judicata in either of its two concepts.

There is no bar by prior judgment because the 1914 Cacho case and Civil Case No.
6686 do not have the same causes of action and, even possibly, they do not involve
identical subject matters.
Land registration cases, such as GLRO Record Nos. 6908 and 6909, from which the
1914 Cacho case arose, are special proceedings where the concept of a cause of
action in ordinary civil actions does not apply. In special proceedings, the purpose is
to establish a status, condition or fact; in land registration proceedings, the
ownership by a person of a parcel of land is sought to be established.[149] Civil
Case No. 6686 is an action for reversion where the cause of action is the alleged
unlawful inclusion in OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.) of parcels of public
land that were not among those granted to Doa Demetria in the 1914 Cacho case.
Thus, Civil Case No. 6686 even rests on supposition that the parcels of land covered
by the certificates of title in Doa Demetrias name, which the Republic is seeking to
have cancelled, are different from the parcels of land that were the subject matter
of the 1914 Cacho case and adjudged to Doa Demetria.
Res judicata in the concept of conclusiveness of judgment, likewise, does not apply
as between the 1914 Cacho case and Civil Case No. 6686. A careful study of the
Complaint in Civil Case No. 6686 reveals that the Republic does not seek to relitigate any of the issues resolved in the 1914 Cacho case. The Republic no longer
questions in Civil Case No. 6686 that Doa Demetria was adjudged the owner of two
parcels of land in the 1914 Cacho case. The Republic is only insisting on the strict
adherence to the judgment of the Court in the 1914 Cacho case, particularly: (1) the
adjudication of a smaller parcel of land, consisting only of the southern portion of
the 37.87-hectare Lot 2 subject of Doa Demetrias application in GLRO Record No.
6909; and (2) the submission of a new technical plan for the adjudicated southern
portion of Lot 2 in GLRO Record No. 6909, and the deed executed by Datto
Darondon, husband of Alanga, renouncing all his rights to Lot 1, in GLRO Record No.
6908, in Doa Demetrias favor.[150]

Similarly, the 1997 Cacho case is not an obstacle to the institution by the Republic
of Civil Case No. 6686 on the ground of res judicata.
Bar by prior judgment does not apply for lack of identity of causes of action
between the 1997 Cacho case and Civil Case No. 6686. The 1997 Cacho case
involves a petition for re-issuance of decrees of registration. In the absence of
principles and rules specific for such a petition, the Court refers to those on
reconstitution of certificates of title, being almost of the same nature and granting
closely similar reliefs.
Reconstitution denotes a restoration of the instrument which is supposed to have
been lost or destroyed in its original form or condition. The purpose of the

reconstitution of title or any document is to have the same reproduced, after

observing the procedure prescribed by law, in the same form they were when the
loss or destruction occurred.[151] Reconstitution is another special proceeding
where the concept of cause of action in an ordinary civil action finds no application.
The Court, in the 1997 Cacho case, granted the reconstitution and re-issuance of
the decrees of registration considering that the NALTDRA, through then Acting
Commissioner Santiago M. Kapunan,[152] its Deputy Clerk of Court III, the Head
Geodetic Engineer, and the Chief of Registration, certified that according to the
Record Book of Decrees for Ordinary Land Registration Case, Decree No. 18969 was
issued in GLRO Record No. 6909 and Decree No. 10364 was issued in GLRO Record
No. 6908[;][153] thus, leaving no doubt that said decrees had in fact been issued.
The 1997 Cacho case only settled the issuance, existence, and subsequent
loss of Decree Nos. 10364 and 18969. Consequently, said decrees could be reissued in their original form or condition. The Court, however, could not have
passed upon in the 1997 Cacho case the issues on whether Doa Demetria truly
owned the parcels of land covered by the decrees and whether the decrees and the
OCTs subsequently issued pursuant thereto are void for unlawfully including land of
the public domain which were not awarded to Doa Demetria.
The following pronouncement of the Court in Heirs of Susana de Guzman
Tuazon v. Court of Appeals[154] is instructive:
Precisely, in both species of reconstitution under Section 109 of P.D. No. 1529 and
R.A. No. 26, the nature of the action denotes a restoration of the instrument which is
supposed to have been lost or destroyed in its original form and condition. The
purpose of the action is merely to have the same reproduced, after proper
proceedings, in the same form they were when the loss or destruction occurred, and
does not pass upon the ownership of the land covered by the lost or destroyed title.
It bears stressing at this point that ownership should not be confused with a
certificate of title. Registering land under the Torrens System does not create or
vest title because registration is not a mode of acquiring ownership. A certificate of
title is merely an evidence of ownership or title over the particular property
described therein. Corollarily, any question involving the issue of ownership must
be threshed out in a separate suit, which is exactly what the private respondents
did when they filed Civil Case No. 95-3577 before Branch 74. The trial court will
then conduct a full-blown trial wherein the parties will present their respective
evidence on the issue of ownership of the subject properties to enable the court to
resolve the said issue. x x x. (Emphases supplied.)

Whatever findings the Court made on the issue of ownership in the 1997
Cacho case are mere obiter dictum. As the Court held in Amoroso v. Alegre, Jr.[155]:

Petitioner claims in his petition that the 3 October 1957 Decision resolved the issue
of ownership of the lots and declared in the body of the decision that he had
sufficiently proven uncontroverted facts that he had been in possession of the land
in question since 1946 x x x [and] has been in possession of the property with
sufficient title. However, such findings made by the CFI in the said decision are
mere obiter, since the ownership of the properties, titles to which were sought to be
reconstituted, was never the issue in the reconstitution case. Ownership is not the
issue in a petition for reconstitution of title. A reconstitution of title does not pass
upon the ownership of the land covered by the lost or destroyed title.
It may perhaps be argued that ownership of the properties was put in issue when
petitioner opposed the petition for reconstitution by claiming to be the owner of the
properties. However, any ruling that the trial court may make on the matter is
irrelevant considering the courts limited authority in petitions for reconstitution. In
a petition for reconstitution of title, the only relief sought is the issuance of a
reconstituted title because the reconstituting officers power is limited to granting or
denying a reconstituted title. As stated earlier, the reconstitution of title does not
pass upon the ownership of the land covered by the lost or destroyed title, and any
change in the ownership of the property must be the subject of a separate suit.
(Emphases supplied.)

The Court concedes that the 1997 Cacho case, by reason of conclusiveness of
judgment, prevents the Republic from again raising as issues in Civil Case No. 6686
the issuance and existence of Decree Nos. 10364 and 18969, but not the validity of
said decrees, as well as the certificates of title issued pursuant thereto.
Forum shopping
Forum shopping is the filing of multiple suits involving the same parties for the
same cause of action, either simultaneously or successively, for the purpose of
obtaining a favorable judgment. A party violates the rule against forum shopping if
the elements of litis pendentia are present; or if a final judgment in one case would
amount to res judicata in the other.[156]
There is forum shopping when the following elements are present: (a) identity of
parties, or at least such parties as represent the same interests in both actions; (b)
identity of rights asserted and relief prayed for, the relief being founded on the
same facts; and (c) the identity of the two preceding particulars, is such that any
judgment rendered in the other action will, regardless of which party is successful,
amount to res judicata in the action under consideration; said requisites are also
constitutive of the requisites for auter action pendant or lis pendens.[157]

Given the preceding disquisition of the Court that the 1914 and 1997 Cacho cases
do not constitute res judicata in Civil Case No. 6686, then the Court also cannot
sustain the dismissal by the RTC-Branch 4 of the Complaint of the Republic in Civil
Case No. 6686 for forum shopping.
Prescription
According to the RTC-Branch 4, the cause of action for reversion of the
Republic was already lost or extinguished by prescription, citing Section 32 of the
Property Registration Decree, which provides:
SEC. 32. Review of decree of registration; Innocent purchaser for value. The
decree of registration shall not be reopened or revised by reason of absence,
minority, or other disability of any person adversely affected thereby, nor by any
proceeding in any court for reversing judgment, subject, however, to the right of
any person, including the government and the branches thereof, deprived of land or
of any estate or interest therein by such adjudication or confirmation of title
obtained by actual fraud, to file in the proper Court of First Instance a petition for
reopening and review of the decree of registration not later than one year from and
after the date of the entry of such decree of registration, but in no case shall such
petition be entertained by the court where an innocent purchaser for value has
acquired the land or an interest therein, whose rights may be prejudiced. Whenever
the phrase innocent purchaser of value or an equivalent phrase occurs in this
Decree, it shall be deemed to include an innocent lessee, mortgagee, or other
encumbrancer for value.
Upon the expiration of said period of one year, the decree of registration and the
certificate of title issued shall become incontrovertible. Any person aggrieved by
such decree of registration in any case may pursue his remedy by action for
damages against the applicant or any other persons responsible for the fraud.

Decree No. 10364 in GLRO Record No. 6908 was issued on May 9, 1913, while
Decree No. 18969 in GLRO Record No. 6909 was issued on July 8, 1915. In the
course of eight decades, the decrees were lost and subsequently reconstituted per
order of this Court in the 1997 Cacho case. The reconstituted decrees were issued
on October 15, 1998 and transcribed on OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.).
The reconstituted decrees were finally entered into the Registration Book for Iligan
City on December 4, 1998 at 10:00 a.m. Almost six years had elapsed from entry of
the decrees by the time the Republic filed its Complaint in Civil Case No. 6686 on
October 13, 2004.
Nonetheless, elementary is the rule that prescription does not run against the State
and its subdivisions. When the government is the real party in interest, and it is

proceeding mainly to assert its own right to recover its own property, there can as a
rule be no defense grounded on laches or prescription. Public land fraudulently
included in patents or certificates of title may be recovered or reverted to the State
in accordance with Section 101 of the Public Land Act. The right of reversion or
reconveyance to the State is not barred by prescription.[158]
The Court discussed lengthily in Republic v. Court of Appeals[159] the
indefeasibility of a decree of registration/certificate of title vis--vis the remedy of
reversion available to the State:
The petitioner invokes Republic v. Animas, where this Court declared that a title
founded on fraud may be cancelled notwithstanding the lapse of one year from the
issuance thereof. Thus:
x x x The misrepresentations of the applicant that he had been occupying and
cultivating the land and residing thereon are sufficient grounds to nullify the grant
of the patent and title under Section 91 of the Public Land Law which provides as
follows:
"The statements made in the application shall be considered as essential conditions
or parts of any concession, title or permit issued on the basis of such application,
and any false statement thereon or omission of facts, changing, or modifying the
consideration of the facts set forth in such statement, and any subsequent
modification, alteration, or change of the material facts set forth in the application
shall ipso facto produce the cancellation of the concession, title or permit granted.
x x x"
A certificate of title that is void may be ordered cancelled. A title will be considered
void if it is procured through fraud, as when a person applies for registration of the
land under his name although the property belongs to another. In the case of
disposable public lands, failure on the part of the grantee to comply with the
conditions imposed by law is a ground for holding such title void. The lapse of the
one year period within which a decree of title may be reopened for fraud would not
prevent the cancellation thereof, for to hold that a title may become indefeasible by
registration, even if such title had been secured through fraud or in violation of the
law, would be the height of absurdity. Registration should not be a shield of fraud in
securing title.
This doctrine was reiterated in Republic v. Mina, where Justice Relova declared for
the Court:
A certificate of title that is void may be ordered cancelled. And, a title will be
considered void if it is procured through fraud, as when a person applies for
registration of the land on the claim that he has been occupying and cultivating it.

In the case of disposable public lands, failure on the part of the grantee to comply
with the conditions imposed by law is a ground for holding such title void. x x x The
lapse of one (1) year period within which a decree of title may be reopened for fraud
would not prevent the cancellation thereof for to hold that a title may become
indefeasible by registration, even if such title had been secured through fraud or in
violation of the law would be the height of absurdity. Registration should not be a
shield of fraud in securing title.
Justifying the above-quoted provision, the Court declared in Piero, Jr. v. Director of
Lands:
It is true that under Section 122 of the Land Registration Act, a Torrens title issued
on the basis of a free patent or a homestead patent is as indefeasible as one
judicially secured. And in repeated previous decisions of this Court that
indefeasibility has been emphasized by Our holding that not even the Government
can file an action for annulment, but at the same time, it has been made clear that
an action for reversion may be instituted by the Solicitor General, in the name of the
Republic of the Philippines. It is to the public interest that one who succeeds in
fraudulently acquiring title to a public land should not be allowed to benefit
therefrom, and the State should, therefore, have an even existing authority, thru its
duly authorized officers, to inquire into the circumstances surrounding the issuance
of any such title, to the end that the Republic, thru the Solicitor General or any other
officer who may be authorized by law, may file the corresponding action for the
reversion of the land involved to the public domain, subject thereafter to disposal to
other qualified persons in accordance with law. In other words, the indefeasibility of
a title over land previously public is not a bar to an investigation by the Director of
Lands as to how such title has been acquired, if the purpose of such investigation is
to determine whether or not fraud had been committed in securing such title in
order that the appropriate action for reversion may be filed by the Government.
Private respondent PNB points out that Animas involved timberland, which is not
alienable or disposable public land, and that in Piero the issue raised was whether
the Director of Lands would be enjoined by a writ of prohibition from investigating
allegations of fraud that led to the issuance of certain free patents. Nevertheless,
we find that the doctrine above quoted is no less controlling even if there be some
factual disparities (which are not material here), especially as it has been buttressed
by subsequent jurisprudence.
In Director of Lands v. Jugado, upon which the appellate court based its ruling, the
Court declared meaningfully that:
There is, however, a section in the Public Land Law (Sec. 101 of Commonwealth Act
141), which affords a remedy whereby lands of the public domain fraudulently
awarded may be recovered or reverted back to its original owner, the Government.

But the provision requires that all such actions for reversion shall be instituted by
the Solicitor General or the officer acting in his stead, in the proper courts, in the
name of the Republic of the Philippines (See Director of Lands v. De Luna, supra). As
the party in interest in this case is the Director of Lands and not the Republic of the
Philippines, the action cannot prosper in favor of the appellant.
The reference was to the Public Land Law which authorizes the reversion suit under
its Sec. 101, thus:
Sec. 101. All actions for the reversion to the Government of lands of the public
domain or improvements thereon shall be instituted by the Solicitor General or the
officer acting in his stead, in the proper courts, in the name of the Republic of the
Philippines.
This remedy was recently affirmed by the Court in Heirs of Gregorio Tengco v. Heirs
of Jose and Victoria Aliwalas, thus:
x x x Title to the property having become incontrovertible, such may no longer be
collaterally attacked. If indeed there had been any fraud or misrepresentation in
obtaining the title, an action for reversion instituted by the Solicitor General would
be the proper remedy.

It is evident from the foregoing jurisprudence that despite the lapse of one year
from the entry of a decree of registration/certificate of title, the State, through the
Solicitor General, may still institute an action for reversion when said
decree/certificate was acquired by fraud or misrepresentation. Indefeasibility of a
title does not attach to titles secured by fraud and misrepresentation. Well-settled is
the doctrine that the registration of a patent under the Torrens system does not by
itself vest title; it merely confirms the registrants already existing one. Verily,
registration under the Torrens system is not a mode of acquiring ownership.[160]
But then again, the Court had several times in the past recognized the right
of the State to avail itself of the remedy of reversion in other instances when the
title to the land is void for reasons other than having been secured by fraud or
misrepresentation. One such case is Spouses Morandarte v. Court of Appeals,[161]
where the Bureau of Lands (BOL), by mistake and oversight, granted a patent to the
spouses Morandarte which included a portion of the Miputak River. The Republic
instituted an action for reversion 10 years after the issuance of an OCT in the name
of the spouses Morandarte. The Court ruled:
Be that as it may, the mistake or error of the officials or agents of the BOL in this
regard cannot be invoked against the government with regard to property of the

public domain. It has been said that the State cannot be estopped by the omission,
mistake or error of its officials or agents.
It is well-recognized that if a person obtains a title under the Public Land Act which
includes, by oversight, lands which cannot be registered under the Torrens system,
or when the Director of Lands did not have jurisdiction over the same because it is a
public domain, the grantee does not, by virtue of the said certificate of title alone,
become the owner of the land or property illegally included. Otherwise stated,
property of the public domain is incapable of registration and its inclusion in a title
nullifies that title.

Another example is the case of Republic of the Phils. v. CFI of Lanao del Norte,
Br. IV,[162] in which the homestead patent issued by the State became null and
void because of the grantees violation of the conditions for the grant. The Court
ordered the reversion even though the land subject of the patent was already
covered by an OCT and the Republic availed itself of the said remedy more than 11
years after the cause of action accrued, because:
There is merit in this appeal considering that the statute of limitation does not lie
against the State. Civil Case No. 1382 of the lower court for reversion is a suit
brought by the petitioner Republic of the Philippines as a sovereign state and, by
the express provision of Section 118 of Commonwealth Act No. 141, any transfer or
alienation of a homestead grant within five (5) years from the issuance of the patent
is null and void and constitute a cause for reversion of the homestead to the State.
In Republic vs. Ruiz, 23 SCRA 348, We held that "the Court below committed no
error in ordering the reversion to plaintiff of the land grant involved herein,
notwithstanding the fact that the original certificate of title based on the patent had
been cancelled and another certificate issued in the names of the grantee heirs.
Thus, where a grantee is found not entitled to hold and possess in fee simple the
land, by reason of his having violated Section 118 of the Public Land Law, the Court
may properly order its reconveyance to the grantor, although the property has
already been brought under the operation of the Torrens System. And, this right of
the government to bring an appropriate action for reconveyance is not barred by
the lapse of time: the Statute of Limitations does not run against the State." (Italics
supplied). The above ruling was reiterated in Republic vs. Mina, 114 SCRA 945.

If the Republic is able to establish after trial and hearing of Civil Case No. 6686 that
the decrees and OCTs in Doa Demetrias name are void for some reason, then the
trial court can still order the reversion of the parcels of land covered by the same
because indefeasibility cannot attach to a void decree or certificate of title. The
RTC-Branch 4 jumped the gun when it declared that the cause of action of the

Republic for reversion in Civil Case No. 6686 was already lost or extinguished by
prescription based on the Complaint alone.
All told, the Court finds that the RTC-Branch 4 committed reversible error in
dismissing the Complaint for Cancellation of Titles and Reversion of the Republic in
Civil Case No. 6686. Resultantly, the Court orders the reinstatement of said
Complaint. Yet, the Court also deems it opportune to recall the following statements
in Saad-Agro Industries, Inc. v. Republic[163]:
It has been held that a complaint for reversion involves a serious controversy,
involving a question of fraud and misrepresentation committed against the
government and it is aimed at the return of the disputed portion of the public
domain. It seeks to cancel the original certificate of registration, and nullify the
original certificate of title, including the transfer certificate of title of the successorsin-interest because the same were all procured through fraud and
misrepresentation. Thus, the State, as the party alleging the fraud and
misrepresentation that attended the application of the free patent, bears that
burden of proof. Fraud and misrepresentation, as grounds for cancellation of patent
and annulment of title, should never be presumed but must be proved by clear and
convincing evidence, mere preponderance of evidence not even being adequate. It
is but judicious to require the Government, in an action for reversion, to show the
details attending the issuance of title over the alleged inalienable land and explain
why such issuance has deprived the State of the claimed property. (Emphasis
supplied.)

It may do well for the Republic to remember that there is a prima facie presumption
of regularity in the issuance of Decree Nos. 10364 and 18969, as well as OCT Nos.
0-1200 (a.f.) and 0-1201 (a.f.), in Doa Demetrias name, and the burden of proof
falls upon the Republic to establish by clear and convincing evidence that said
decrees and certificates of title are null and void.
IV
DISPOSITIVE PART
WHEREFORE, premises considered, the Court renders the following judgment
in the Petitions at bar:
1)
In G.R. No. 170375 (Expropriation Case), the Court GRANTS the Petition
for Review of the Republic of the Philippines. It REVERSES and SETS ASIDE the
Resolutions dated July 12, 2005 and October 24, 2005 of the Regional Trial Court,
Branch 1 of Iligan City, Lanao del Norte. It further ORDERS the reinstatement of the
Complaint in Civil Case No. 106, the admission of the Supplemental Complaint of

the Republic, and the return of the original record of the case to the court of origin
for further proceedings. No costs.
2)
In G.R. Nos. 178779 and 178894 (Quieting of Title Case), the Court
DENIES the consolidated Petitions for Review of Landtrade Realty Corporation,
Teofilo Cacho, and/or Atty. Godofredo Cabildo for lack of merit. It AFFIRMS the
Decision dated January 19, 2007 and Resolution dated July 4, 2007 of the Court of
Appeals in CA-G.R. CV. No. 00456, affirming in toto the Decision dated July 17, 2004
of the Regional Trial Court, Branch 3 of Iligan City, Lanao del Norte, in Civil Case No.
4452. Costs against Landtrade Realty Corporation, Teofilo Cacho, and Atty.
Godofredo Cabildo.
3)
In G.R. No. 170505 (The Ejectment or Unlawful Detainer Case execution
pending appeal before the Regional Trial Court), the Court DENIES the Petition for
Review of Landtrade Realty Corporation for being moot and academic given that the
Regional Trial Court, Branch 1 of Iligan City, Lanao del Norte had already rendered a
Decision dated December 12, 2005 in Civil Case No. 6613. No costs.
4)
In G.R. Nos. 173355-56 and 173563-64 (The Ejectment or Unlawful
Detainer Case execution pending appeal before the Court of Appeals), the Court
GRANTS the consolidated Petitions for Certiorari and Prohibition of the National
Power Corporation and National Transmission Corporation. It SETS ASIDE the
Resolution dated June 30, 2006 of the Court of Appeals in CA-G.R. SP Nos. 00854
and 00889 for having been rendered with grave abuse of discretion amounting to
lack or excess of jurisdiction. It further ORDERS the Court of Appeals to issue a writ
of preliminary injunction enjoining the execution of the Decision dated December
12, 2005 of the Regional Trial Court, Branch 1 of Iligan City, Lanao del Norte, in Civil
Case No. 6613, while the same is pending appeal before the Court of Appeals in CAG.R. SP Nos. 00854 and 00889. It finally DIRECTS the Court of Appeals to resolve
without further delay the pending appeals before it, in CA-G.R. SP Nos. 00854 and
00889, in a manner not inconsistent with this Decision. No costs.
5)
In G.R. No. 173401 (Cancellation of Titles and Reversion Case), the
Court GRANTS the Petition for Review of the Republic of the Philippines. It
REVERSES and SETS ASIDE the Orders dated December 13, 2005 and May 16, 2006
of the Regional Trial Court, Branch 4 of Iligan City in Civil Case No. 6686. It further
ORDERS the reinstatement of the Complaint in Civil Case No. 6686 and the return of
the original record of the case to the court of origin for further proceedings. No
costs.
SO ORDERED.

CONRADO O. LASQUITE and TEODORA I. ANDRADE,

Petitioners,

- versus VICTORY HILLS, INC.,

Respondent.
G.R. No. 175375
Promulgated:
June 23, 2009
DECISION
QUISUMBING, J.:
This appeal seeks to annul the Decision[1] dated November 8, 2006 of the Court of
Appeals in CA G.R. CV No. 77599. The Court of Appeals had set aside the
Decision[2] dated July 2, 2002 of the Regional Trial Court (RTC) of San Mateo, Rizal,
Branch 77 in Civil Case No. 548 which upheld Original Certificate of Title (OCT) Nos.
NP-197[3] and NP-198,[4] in the names of petitioners Andrade and Lasquite,
respectively.
The antecedent facts are as follows:
On May 4, 1971, Jose Manahan[5] executed a Deed of Quitclaim/Assignment of
Rights[6] over a parcel of land designated as Lot No. 3050 at Barrio Ampid, San
Mateo, Rizal in favor of Conrado O. Lasquite. Lasquite applied for a free patent over
the lot, and pending approval of the application, sold half of the land to Juanito L.
Andrade on January 11, 1981.[7] Upon the grant of the patent application, OCT
Nos. NP-197 and NP-198 were issued in the names of Andrade and Lasquite,
respectively, on June 18, 1981.
Thereafter, on August 22, 1983[8] and October 22, 1983,[9] Simeona, Armentina,
Herminia, Zenaida, Gloria, Yolanda and Rodolfo, all surnamed Prescilla, filed a
protest with the Bureau of Lands to question the grant of free patent in favor of
petitioners. They claimed to have been in possession in concepto de dueno of Lot
No. 3050, planting and cultivating crops thereon since 1940. On March 8, 1989, the
Prescillas also instituted a case for reconveyance and damages against petitioners
before the RTC of San Mateo, Rizal, Branch 77 which was docketed as Civil Case No.
548-SM. They alleged that Lasquite forged the signature of Jose M. Manahan in the
Deed of Quitclaim/Assignment of Rights since the latter has died on April 11, 1968.
[10]
It also appears that a second complaint,[11] for annulment of title, reconveyance
and damages, was filed by Roberto and Raquel Manahan, Maria Gracia M. Natividad,
the heirs of Leocadio Manahan, and the heirs of Joaquin Manahan against
petitioners on June 1, 1990. The Manahans asserted title over Lot No. 3050 as
successors of Jose S. Manahan whom they claimed to have died on October 12,
1947.[12] The case was docketed as Civil Case No. 680-90-SM and raffled to Branch
76 of the San Mateo, Rizal RTC. Upon learning of Civil Case No. 548-SM initiated by
the Prescillas against petitioners, the Manahans filed a Complaint in

Intervention[13] on June 23, 1993, and Civil Case No. 680-90-SM was consolidated
with Civil Case No. 548-SM.
It also appears that on January 11, 1994, respondent Victory Hills, Inc. (Victory Hills)
also intervened in Civil Case No. 548-SM. Victory Hills likewise claimed to be the
owner of the subject lot. Victory Hills traced its title to Lot No. 3050 to OCT No.
380[14] which was allegedly registered on January 4, 1937 to Jose H. Manahan by
virtue of Homestead Patent No. H-19562[15] dated December 14, 1936. According
to Victory Hills, Jose H. Manahan sold Lot No. 3050 to Rufino Hieras on May 17, 1944
to whom Transfer Certificate of Title (TCT) No. 46219[16] was issued. Hieras then
conveyed the lot to spouses Serafin and Veronica Angeles, and Catalina Cayetano
who obtained TCT No. 85082[17] in their names. Later, the lot was transferred to
Victory Hills on September 6, 1961 under TCT No. 90816.[18]
On November 27, 1991, Victory Hills filed an Ex-Parte Motion for Relocation
Survey[19] with the Department of Environment and Natural Resources (DENR).
Upon grant of the motion, the DENR released a Narration Report of the Relocation
Survey[20] on December 9, 1993. The report noted that:
xxxx
1. H-19562 and H-19887 had been accepted by Cad. 375-D, San Mateo Cadastre
and identical to Lot [No.] 3050 and Lot [No.] 258 respectively[;]
2. H-19562 had been issued a free patent and Original Certificate of Title No. 380
in favor [of] Jose Manahan on June 4, 1937. That said title was transferred to
Rufin[o] Hieras on May 17, 1944 with TCT [No.] 46219, cancelling O[CT] [No.] 3[8]0.
Again TCT [No.] 46219-T-237 was cancelled and TCT [No.] [8]5082 was issued to
[Spouses] Serafin Angeles and [Veronica] D. Angeles and Catalina Cayetano [on]
March 17, 1961;
3. A consolidate[d] subdivision survey of H-19562 and H-19887 had been approved
by the LRC designated as plan (LRC) Pcs [-] [1586] surveyed June 1-15, 1961; which
was not projected in Cad. 375-D, San Mateo Cadastre;
4. Lot [No.] 3050 which is identical to H-19562 was subdivided and designated as
plan Cad-04-002023-D, into two lots. (Emphasis supplied.)[21]
xxxx
Notwithstanding the said report, Branch 77 of the Rizal RTC, on July 2, 2002,
promulgated a Decision which upheld the title of petitioners to Lot No. 3050. It
decreed:
Accordingly, the title of defendants, Conrado Lasquite and Jose Andrade, involving
the subject parcel of land under OCT No. NP-198 and OCT No. NP-197 registered on
June 18, 1981, are sustained. Likewise, the title issued to plaintiffs Prescilla, under
OCT No. ON-333 involving Lot 3052 is sustained.
WHEREFORE, premises considered, judgment is hereby rendered dismissing these
cases.

No Costs.
SO ORDERED.[22]
The trial court disregarded OCT No. 380 and ruled that it was spurious as it lacked
the signature of then Secretary of Agriculture and Commerce Eulogio Rodriguez.
The RTC also ruled that the complaints for reconveyance of the Precillas, the
Manahans and Victory Hills, which were all founded on extrinsic fraud, had
prescribed since more than four (4) years have elapsed since the land was
registered before they filed cases in court.
The Prescillas, the Manahans and Victory Hills interposed an appeal to the Court of
Appeals. On November 8, 2006, the appellate court set aside the ruling of the RTC
and declared Victory Hills the absolute owner of Lot No. 3050. The appellate court
ruled:
WHEREFORE, the Decision dated July 2, 2002 rendered by the Regional Trial Court of
San Mateo, Rizal, Branch 77 is ANNULLED and SET ASIDE and a new one entered
DECLARING VICTORY HILLS, INC. the absolute owner of the parcel of land
designated as Lot 3050 subject of the instant case and ORDERING the Register of
Deeds of Rizal to cancel OCT No. NP-198 and OCT No. NP-197 in the names of
defendants-appellees Conrado Lasquite and Juanito Andrade.
SO ORDERED.[23]
Aggrieved, petitioners elevated the case to us. Petitioners contend that the Court of
Appeals erred in
I.
HOLDING THAT RESPONDENTS OCT NO. 380 AND HOMESTEAD PATENT NO. H19562 ARE VALIDLY ISSUED;
II.
HOLDING THAT RESPONDENT VICTORY HILLS, INC. HAS A BETTER RIGHT OF TITLE
AND OWNERSHIP OVER THE SUBJECT PROPERTY VIS-A-VIS PETITIONERS CONRADO
O. LASQUITE AND TEODORA I. ANDRADE;
III.
GIVING WEIGHT AND CREDENCE TO RESPONDENTS HOMESTEAD PATENT NO. H19562 DESPITE THE FACT THAT A COPY OF SAID HOMESTEAD PATENT WAS NEVER
PRESENTED DURING THE TRIAL NOR IN THE APPEAL;
IV.
HOLDING THAT OCT NO. 380 IS AN EN TOTO TRANSCRIPTION OF HOMESTEAD
PATENT NO. H-19562 NOTWITHSTANDING THE FACT THAT NO EVIDENCE RELATIVE
THERETO WAS ADDUCED IN THE LOWER COURT;
V.

NOT RESOLVING THE ISSUE THAT RESPONDENTS CLAIM HAD ALREADY

PRESCRIBED.[24]
Condensed, the twin issues for our determination are: (1) whether respondent
Victory Hills, Inc. is entitled to reconveyance of Lot No. 3050; and (2) whether
respondents claim had prescribed.
Petitioners assail the validity of OCT No. 380 as the source of respondents
derivative title. They fault the appellate court for according weight to the certificate
of title even if it does not bear the signature of the Secretary of Agriculture and
Commerce. They stress that the Bureau of Lands has no record of Patent No. H19562 which respondent cited as the basis for the issuance of its title to Lot No.
3050 and yet the appellate court still concluded that the transcription of Patent No.
H-19562 in OCT No. 380 was conclusive proof of its due execution. Petitioners
likewise call for a review of the facts in this case owing to the conflicting findings of
the RTC and the Court of Appeals.
On the other hand, respondent relies on OCT No. 380 as evidence of the earlier
registration of Lot No. 3050 in the name of its predecessor, Jose H. Manahan. Such
recording, respondent asserts, has rendered OCT No. 380 indefeasible one year
following its issuance on January 4, 1937 and has effectively segregated Lot No.
3050 from the domain of public lands. Respondent further justifies that the notation
sgd in OCT No. 380 was sufficient indication that the original copy of Homestead
Patent No. H-19562 had been signed by then Secretary of Agriculture and
Commerce Eulogio Rodriguez. In any case, respondent invokes the presumption of
regularity in the performance of duty by the Register of Deeds in issuing OCT No.
380. It finally argues against the issue of prescription since petitioners raised the
same only for the first time on appeal.
Often cited but rarely heeded is the rule that the Supreme Court is not a trier of
facts. In the exercise of its power of review, the Court does not normally undertake
a re-examination of the evidence presented by the contending parties during the
trial of the case considering that the findings of fact of the Court of Appeals are
conclusive and binding on the Court. However, there are several recognized
exceptions[25] in which factual issues may be resolved by this Court. Two of these
exceptions find application in the present case, to wit: (1) when the findings of fact
of the appellate court are contrary to those of the trial court;[26] and (2) when the
findings of fact are premised on the supposed absence of evidence and contradicted
by the evidence on record.
The assailed Decision of the Court of Appeals upheld OCT No. 380 as the origin of
TCT No. 90816 in the name of respondent Victory Hills. The appellate court ruled
that the homestead patent which was awarded to respondents predecessor, Jose H.
Manahan, in 1936 cannot simply be defeated by the subsequent grant of free
patent to petitioners 45 years later. It accepted the transcript of Homestead Patent
No. H-19562 in OCT No. 380 as a faithful reproduction of the original. Also, the
Court of Appeals recognized the notation sgd in OCT No. 380 as customary to
signify that the original copy of the patent had been signed by the Secretary of
Agriculture and Commerce.

After carefully poring over all the evidence submitted in this case, we find the
petition to be impressed with merit.
The relocation survey conducted by the DENR on October 25, 1993 positively
confirmed that the mother title of respondents TCT and the OCTs of petitioners
cover the same land. We are confronted, therefore, with a case of successive
registration, in the event of which we have been constantly guided that:
In successive registrations, where more than one certificate is issued in respect of a
particular estate or interest in land, the person claiming under the prior certificate is
entitled to the estate or interest; and the person is deemed to hold under the prior
certificate who is the holder of, or whose claim is derived directly or indirectly from
the person who was the holder of the earliest certificate issued in respect thereof.
[27]
However, we find that the circumstances attendant in this case militate against a
forthright application of this rule.
Section 105 of Act No. 2874,[28] the governing law when Homestead Patent No. H19562 was purportedly issued, speaks of who must sign the patents and certificates
granted pursuant to the Act:
SEC. 105. All patents or certificates for lands granted under this Act shall be
prepared in the Bureau of Lands and shall issue in the name of the Government of
the Philippine Islands under the signature of the Governor-General, countersigned
by the Secretary of Agriculture and Natural Resources, but such patents or
certificates shall be effective only for the purposes defined in section one hundred
and twenty-two of the Land Registration Act; and the actual conveyance of the land
shall be effected only as provided in said section. (Emphasis supplied.)
Noteworthy, Section 47[29] of Act No. 496 or the Land Registration Act[30] provides
that a certified true copy of an original certificate of title shall be admissible as
evidence in our courts and shall be conclusive as to all matters contained therein
except as otherwise provided by the Act. This is complementary to the rule on the
admissibility of public documents as evidence under Section 23, Rule 132 of the
Rules of Court:
SEC. 23. Public documents as evidence. -Documents consisting of entries in public
records made in the performance of a duty by a public officer are prima facie
evidence of the facts therein stated. All other public documents are evidence, even
against a third person, of the fact which gave rise to their execution and of the date
of the latter.
Thus, the evidentiary value of public documents must be sustained in the absence
of strong, complete and conclusive proof of its falsity or nullity.[31]
In the case at bar, the appellate court gave credence to the certified true copy of
OCT No. 380 as proof of ownership of respondents predecessor. Yet, it is readily
apparent from a cursory reading of said copy that OCT No. 380 was supposedly
signed,[32] not by the Secretary of Agriculture and Natural Resources, as mandated
by law, but by the Secretary of Agriculture and Commerce. Hence, it is plain to see

that to give OCT No. 380 probative value in court would be to allow variance or an
evasion or circumvention of the requirement laid down in Section 105 of Act No.
2874. We are thus warned that any title sourced from the flawed OCT No. 380 could
be void. On this basis, we are justified to consider with great care any claims
derived therefrom.
What taints OCT No. 380 even more is the fact that the records of the Community
Environment and Natural Resources Office (CENRO) are devoid of evidence to prove
that Homestead Patent No. H-19562,[33] much less a patent application[34] for Lot
No. 3050 with the Bureau of Lands ever existed. The certification[35] from the
Bureau of Lands that Lot No. 3050 was surveyed in the name of Jose Manahan
suggests, at best, that he was a survey claimant. Neither do we find the derivative
titles of OCT No. 380 free from any taint of irregularity. While TCT No. 46219 in the
name of Hieras indicated January 4, 1937 as the original registration date of Lot No.
3050, the TCTs of subsequent transferees designated a different date May 17,
1944.
True, a duly-registered certificate of title is considered a public document and the
entries found in it are presumed correct, unless the party who contests its accuracy
can produce evidence establishing otherwise.[36] Even then, records of public
officers which are admissible in evidence are limited to those matters which the
public officer has authority to record.[37] Indisputably, it was beyond the power of
the Register of Deeds to register a public land based on an invalid, much worse, a
non-existent patent. To sanction an otherwise invalid document in the guise of
upholding the stability of our land registration system would run counter to the
judicial devotion towards purging the system of illicit titles, in accordance with our
base task as the ultimate citadel of justice and legitimacy.[38]
The established legal principle in actions for annulment or reconveyance of title is
that a party seeking it should establish not merely by a preponderance of evidence
but by clear and convincing evidence that the land sought to be reconveyed is his.
[39] It is rather obvious from the foregoing disquisition that respondent failed to
dispense such burden. Indeed, the records are replete with proof that respondent
declared the lots comprising Lot No. 3050 for taxation purposes only after it had
instituted the present case in court. This is not to say of course that tax receipts are
evidence of ownership, since they are not, albeit they are good indicia of possession
in the concept of owner, for no one would ordinarily be paying taxes for a property
not in his actual or at least constructive possession.[40]
Other than paying taxes from 1994-1997, however, respondent has not shown that
it exercised dominion over Lot No. 3050. In contrast, petitioner Lasquite has been
continuously paying taxes on the land since 1972,[41] and has utilized the land as a
farm, planted fruit trees and raised goats thereon. Petitioners have likewise built
structures and managed to entrust the property to the care of certain individuals
without any objection from respondent.
Respondent avers that petitioner Lasquite forged the Deed of Quitclaim/Assignment
of Rights to make it appear that Jose Manahan conveyed Lot No. 3050 to him. It

must be stressed, however, that whoever alleges forgery has the burden of proving
the same. Forgery cannot be presumed but should be substantiated with clear and
convincing evidence.[42]
Regrettably, Victory Hills was unable to establish that the Jose H. Manahan from
whom it derived its title is the same Jose Manahan from whom petitioner Lasquite
bought Lot No. 3050. During the trial of this case, several death certificates had
been proferred by the parties, albeit, inconclusive to establish the identity of Jose
Manahan as the common origin of all their titles. Respondent Victory Hills obtained
its title from Jose H. Manahan. Meanwhile, the records disclose that the Jose S.
Manahan from whom the Manahans derived title was 54 years old and married
when he died of infectious hepatitis on October 12, 1947.[43] For their part, the
Prescillas traced their title from Jose M. Manahan, who was supposedly 68 years old
and single when he succumbed to acute myocardial infarction on April 11, 1968.[44]
This was however belied by the List of Register of Deaths in the Municipality of San
Mateo Rizal for the year 1968.[45]
Relevant to the issue of prescription, we have ruled that to determine when the
prescriptive period commenced in an action for reconveyance, the plaintiffs
possession of the disputed property is material. An action for reconveyance based
on an implied trust prescribes in 10 years. The reference point of the 10-year
prescriptive period is the date of registration of the deed or the issuance of the title.
The prescriptive period applies only if there is an actual need to reconvey the
property as when the plaintiff is not in possession of the property. However, if the
plaintiff, as the real owner of the property also remains in possession of the
property, the prescriptive period to recover title and possession of the property does
not run against him. In such a case, an action for reconveyance, if nonetheless
filed, would be in the nature of a suit for quieting of title, an action that is
imprescriptible.[46]
The records reveal that it was only on January 11, 1994 or nearly 13 years after OCT
Nos. NP-197 and NP-198 were issued that respondent filed a Motion for Leave to
Admit Complaint in Intervention[47] and Complaint in Intervention[48] before the
RTC of Rizal. Nevertheless, respondent claimed to be in actual possession in
concepto de dueno of a sizeable portion of Lot No. 3050. Thus, the action assumed
the nature of a suit to quiet title; hence, imprescriptible.
However, in our view, respondent Victory Hills has failed to show its entitlement to a
reconveyance of the land subject of the action.
WHEREFORE, the petition is GRANTED. The Decision dated November 8, 2006 of
the Court of Appeals in CA G.R. CV No. 77599 is hereby REVERSED and SET ASIDE.
The Decision dated July 2, 2002 of the Regional Trial Court of San Mateo, Rizal,
Branch 77, is REINSTATED. No pronouncement as to costs.
SO ORDERED.
d. Quantum of proof
CONRADO O. LASQUITE and TEODORA I. ANDRADE,

Petitioners,
- versus VICTORY HILLS, INC.,
Respondent.
G.R. No. 175375
Promulgated:
June 23, 2009
DECISION
QUISUMBING, J.:
This appeal seeks to annul the Decision[1] dated November 8, 2006 of the Court of
Appeals in CA G.R. CV No. 77599. The Court of Appeals had set aside the
Decision[2] dated July 2, 2002 of the Regional Trial Court (RTC) of San Mateo, Rizal,
Branch 77 in Civil Case No. 548 which upheld Original Certificate of Title (OCT) Nos.
NP-197[3] and NP-198,[4] in the names of petitioners Andrade and Lasquite,
respectively.
The antecedent facts are as follows:
On May 4, 1971, Jose Manahan[5] executed a Deed of Quitclaim/Assignment of
Rights[6] over a parcel of land designated as Lot No. 3050 at Barrio Ampid, San
Mateo, Rizal in favor of Conrado O. Lasquite. Lasquite applied for a free patent over
the lot, and pending approval of the application, sold half of the land to Juanito L.
Andrade on January 11, 1981.[7] Upon the grant of the patent application, OCT
Nos. NP-197 and NP-198 were issued in the names of Andrade and Lasquite,
respectively, on June 18, 1981.
Thereafter, on August 22, 1983[8] and October 22, 1983,[9] Simeona, Armentina,
Herminia, Zenaida, Gloria, Yolanda and Rodolfo, all surnamed Prescilla, filed a
protest with the Bureau of Lands to question the grant of free patent in favor of
petitioners. They claimed to have been in possession in concepto de dueno of Lot
No. 3050, planting and cultivating crops thereon since 1940. On March 8, 1989, the
Prescillas also instituted a case for reconveyance and damages against petitioners
before the RTC of San Mateo, Rizal, Branch 77 which was docketed as Civil Case No.
548-SM. They alleged that Lasquite forged the signature of Jose M. Manahan in the
Deed of Quitclaim/Assignment of Rights since the latter has died on April 11, 1968.
[10]
It also appears that a second complaint,[11] for annulment of title, reconveyance
and damages, was filed by Roberto and Raquel Manahan, Maria Gracia M. Natividad,
the heirs of Leocadio Manahan, and the heirs of Joaquin Manahan against
petitioners on June 1, 1990. The Manahans asserted title over Lot No. 3050 as
successors of Jose S. Manahan whom they claimed to have died on October 12,

1947.[12] The case was docketed as Civil Case No. 680-90-SM and raffled to Branch
76 of the San Mateo, Rizal RTC. Upon learning of Civil Case No. 548-SM initiated by
the Prescillas against petitioners, the Manahans filed a Complaint in
Intervention[13] on June 23, 1993, and Civil Case No. 680-90-SM was consolidated
with Civil Case No. 548-SM.
It also appears that on January 11, 1994, respondent Victory Hills, Inc. (Victory Hills)
also intervened in Civil Case No. 548-SM. Victory Hills likewise claimed to be the
owner of the subject lot. Victory Hills traced its title to Lot No. 3050 to OCT No.
380[14] which was allegedly registered on January 4, 1937 to Jose H. Manahan by
virtue of Homestead Patent No. H-19562[15] dated December 14, 1936. According
to Victory Hills, Jose H. Manahan sold Lot No. 3050 to Rufino Hieras on May 17, 1944
to whom Transfer Certificate of Title (TCT) No. 46219[16] was issued. Hieras then
conveyed the lot to spouses Serafin and Veronica Angeles, and Catalina Cayetano
who obtained TCT No. 85082[17] in their names. Later, the lot was transferred to
Victory Hills on September 6, 1961 under TCT No. 90816.[18]
On November 27, 1991, Victory Hills filed an Ex-Parte Motion for Relocation
Survey[19] with the Department of Environment and Natural Resources (DENR).
Upon grant of the motion, the DENR released a Narration Report of the Relocation
Survey[20] on December 9, 1993. The report noted that:
xxxx
1. H-19562 and H-19887 had been accepted by Cad. 375-D, San Mateo Cadastre
and identical to Lot [No.] 3050 and Lot [No.] 258 respectively[;]
2. H-19562 had been issued a free patent and Original Certificate of Title No. 380
in favor [of] Jose Manahan on June 4, 1937. That said title was transferred to
Rufin[o] Hieras on May 17, 1944 with TCT [No.] 46219, cancelling O[CT] [No.] 3[8]0.
Again TCT [No.] 46219-T-237 was cancelled and TCT [No.] [8]5082 was issued to
[Spouses] Serafin Angeles and [Veronica] D. Angeles and Catalina Cayetano [on]
March 17, 1961;
3. A consolidate[d] subdivision survey of H-19562 and H-19887 had been approved
by the LRC designated as plan (LRC) Pcs [-] [1586] surveyed June 1-15, 1961; which
was not projected in Cad. 375-D, San Mateo Cadastre;
4. Lot [No.] 3050 which is identical to H-19562 was subdivided and designated as
plan Cad-04-002023-D, into two lots. (Emphasis supplied.)[21]
xxxx
Notwithstanding the said report, Branch 77 of the Rizal RTC, on July 2, 2002,
promulgated a Decision which upheld the title of petitioners to Lot No. 3050. It
decreed:
Accordingly, the title of defendants, Conrado Lasquite and Jose Andrade, involving
the subject parcel of land under OCT No. NP-198 and OCT No. NP-197 registered on
June 18, 1981, are sustained. Likewise, the title issued to plaintiffs Prescilla, under
OCT No. ON-333 involving Lot 3052 is sustained.

WHEREFORE, premises considered, judgment is hereby rendered dismissing these

cases.
No Costs.
SO ORDERED.[22]
The trial court disregarded OCT No. 380 and ruled that it was spurious as it lacked
the signature of then Secretary of Agriculture and Commerce Eulogio Rodriguez.
The RTC also ruled that the complaints for reconveyance of the Precillas, the
Manahans and Victory Hills, which were all founded on extrinsic fraud, had
prescribed since more than four (4) years have elapsed since the land was
registered before they filed cases in court.
The Prescillas, the Manahans and Victory Hills interposed an appeal to the Court of
Appeals. On November 8, 2006, the appellate court set aside the ruling of the RTC
and declared Victory Hills the absolute owner of Lot No. 3050. The appellate court
ruled:
WHEREFORE, the Decision dated July 2, 2002 rendered by the Regional Trial Court of
San Mateo, Rizal, Branch 77 is ANNULLED and SET ASIDE and a new one entered
DECLARING VICTORY HILLS, INC. the absolute owner of the parcel of land
designated as Lot 3050 subject of the instant case and ORDERING the Register of
Deeds of Rizal to cancel OCT No. NP-198 and OCT No. NP-197 in the names of
defendants-appellees Conrado Lasquite and Juanito Andrade.
SO ORDERED.[23]
Aggrieved, petitioners elevated the case to us. Petitioners contend that the Court of
Appeals erred in
I.
HOLDING THAT RESPONDENTS OCT NO. 380 AND HOMESTEAD PATENT NO. H19562 ARE VALIDLY ISSUED;
II.
HOLDING THAT RESPONDENT VICTORY HILLS, INC. HAS A BETTER RIGHT OF TITLE
AND OWNERSHIP OVER THE SUBJECT PROPERTY VIS-A-VIS PETITIONERS CONRADO
O. LASQUITE AND TEODORA I. ANDRADE;
III.
GIVING WEIGHT AND CREDENCE TO RESPONDENTS HOMESTEAD PATENT NO. H19562 DESPITE THE FACT THAT A COPY OF SAID HOMESTEAD PATENT WAS NEVER
PRESENTED DURING THE TRIAL NOR IN THE APPEAL;
IV.

HOLDING THAT OCT NO. 380 IS AN EN TOTO TRANSCRIPTION OF HOMESTEAD

PATENT NO. H-19562 NOTWITHSTANDING THE FACT THAT NO EVIDENCE RELATIVE
THERETO WAS ADDUCED IN THE LOWER COURT;
V.
NOT RESOLVING THE ISSUE THAT RESPONDENTS CLAIM HAD ALREADY
PRESCRIBED.[24]
Condensed, the twin issues for our determination are: (1) whether respondent
Victory Hills, Inc. is entitled to reconveyance of Lot No. 3050; and (2) whether
respondents claim had prescribed.
Petitioners assail the validity of OCT No. 380 as the source of respondents
derivative title. They fault the appellate court for according weight to the certificate
of title even if it does not bear the signature of the Secretary of Agriculture and
Commerce. They stress that the Bureau of Lands has no record of Patent No. H19562 which respondent cited as the basis for the issuance of its title to Lot No.
3050 and yet the appellate court still concluded that the transcription of Patent No.
H-19562 in OCT No. 380 was conclusive proof of its due execution. Petitioners
likewise call for a review of the facts in this case owing to the conflicting findings of
the RTC and the Court of Appeals.
On the other hand, respondent relies on OCT No. 380 as evidence of the earlier
registration of Lot No. 3050 in the name of its predecessor, Jose H. Manahan. Such
recording, respondent asserts, has rendered OCT No. 380 indefeasible one year
following its issuance on January 4, 1937 and has effectively segregated Lot No.
3050 from the domain of public lands. Respondent further justifies that the notation
sgd in OCT No. 380 was sufficient indication that the original copy of Homestead
Patent No. H-19562 had been signed by then Secretary of Agriculture and
Commerce Eulogio Rodriguez. In any case, respondent invokes the presumption of
regularity in the performance of duty by the Register of Deeds in issuing OCT No.
380. It finally argues against the issue of prescription since petitioners raised the
same only for the first time on appeal.
Often cited but rarely heeded is the rule that the Supreme Court is not a trier of
facts. In the exercise of its power of review, the Court does not normally undertake
a re-examination of the evidence presented by the contending parties during the
trial of the case considering that the findings of fact of the Court of Appeals are
conclusive and binding on the Court. However, there are several recognized
exceptions[25] in which factual issues may be resolved by this Court. Two of these
exceptions find application in the present case, to wit: (1) when the findings of fact
of the appellate court are contrary to those of the trial court;[26] and (2) when the
findings of fact are premised on the supposed absence of evidence and contradicted
by the evidence on record.
The assailed Decision of the Court of Appeals upheld OCT No. 380 as the origin of
TCT No. 90816 in the name of respondent Victory Hills. The appellate court ruled
that the homestead patent which was awarded to respondents predecessor, Jose H.
Manahan, in 1936 cannot simply be defeated by the subsequent grant of free
patent to petitioners 45 years later. It accepted the transcript of Homestead Patent

No. H-19562 in OCT No. 380 as a faithful reproduction of the original. Also, the
Court of Appeals recognized the notation sgd in OCT No. 380 as customary to
signify that the original copy of the patent had been signed by the Secretary of
Agriculture and Commerce.
After carefully poring over all the evidence submitted in this case, we find the
petition to be impressed with merit.
The relocation survey conducted by the DENR on October 25, 1993 positively
confirmed that the mother title of respondents TCT and the OCTs of petitioners
cover the same land. We are confronted, therefore, with a case of successive
registration, in the event of which we have been constantly guided that:
In successive registrations, where more than one certificate is issued in respect of a
particular estate or interest in land, the person claiming under the prior certificate is
entitled to the estate or interest; and the person is deemed to hold under the prior
certificate who is the holder of, or whose claim is derived directly or indirectly from
the person who was the holder of the earliest certificate issued in respect thereof.
[27]
However, we find that the circumstances attendant in this case militate against a
forthright application of this rule.
Section 105 of Act No. 2874,[28] the governing law when Homestead Patent No. H19562 was purportedly issued, speaks of who must sign the patents and certificates
granted pursuant to the Act:
SEC. 105. All patents or certificates for lands granted under this Act shall be
prepared in the Bureau of Lands and shall issue in the name of the Government of
the Philippine Islands under the signature of the Governor-General, countersigned
by the Secretary of Agriculture and Natural Resources, but such patents or
certificates shall be effective only for the purposes defined in section one hundred
and twenty-two of the Land Registration Act; and the actual conveyance of the land
shall be effected only as provided in said section. (Emphasis supplied.)
Noteworthy, Section 47[29] of Act No. 496 or the Land Registration Act[30] provides
that a certified true copy of an original certificate of title shall be admissible as
evidence in our courts and shall be conclusive as to all matters contained therein
except as otherwise provided by the Act. This is complementary to the rule on the
admissibility of public documents as evidence under Section 23, Rule 132 of the
Rules of Court:
SEC. 23. Public documents as evidence. -Documents consisting of entries in public
records made in the performance of a duty by a public officer are prima facie
evidence of the facts therein stated. All other public documents are evidence, even
against a third person, of the fact which gave rise to their execution and of the date
of the latter.
Thus, the evidentiary value of public documents must be sustained in the absence
of strong, complete and conclusive proof of its falsity or nullity.[31]

In the case at bar, the appellate court gave credence to the certified true copy of
OCT No. 380 as proof of ownership of respondents predecessor. Yet, it is readily
apparent from a cursory reading of said copy that OCT No. 380 was supposedly
signed,[32] not by the Secretary of Agriculture and Natural Resources, as mandated
by law, but by the Secretary of Agriculture and Commerce. Hence, it is plain to see
that to give OCT No. 380 probative value in court would be to allow variance or an
evasion or circumvention of the requirement laid down in Section 105 of Act No.
2874. We are thus warned that any title sourced from the flawed OCT No. 380 could
be void. On this basis, we are justified to consider with great care any claims
derived therefrom.
What taints OCT No. 380 even more is the fact that the records of the Community
Environment and Natural Resources Office (CENRO) are devoid of evidence to prove
that Homestead Patent No. H-19562,[33] much less a patent application[34] for Lot
No. 3050 with the Bureau of Lands ever existed. The certification[35] from the
Bureau of Lands that Lot No. 3050 was surveyed in the name of Jose Manahan
suggests, at best, that he was a survey claimant. Neither do we find the derivative
titles of OCT No. 380 free from any taint of irregularity. While TCT No. 46219 in the
name of Hieras indicated January 4, 1937 as the original registration date of Lot No.
3050, the TCTs of subsequent transferees designated a different date May 17,
1944.
True, a duly-registered certificate of title is considered a public document and the
entries found in it are presumed correct, unless the party who contests its accuracy
can produce evidence establishing otherwise.[36] Even then, records of public
officers which are admissible in evidence are limited to those matters which the
public officer has authority to record.[37] Indisputably, it was beyond the power of
the Register of Deeds to register a public land based on an invalid, much worse, a
non-existent patent. To sanction an otherwise invalid document in the guise of
upholding the stability of our land registration system would run counter to the
judicial devotion towards purging the system of illicit titles, in accordance with our
base task as the ultimate citadel of justice and legitimacy.[38]
The established legal principle in actions for annulment or reconveyance of title is
that a party seeking it should establish not merely by a preponderance of evidence
but by clear and convincing evidence that the land sought to be reconveyed is his.
[39] It is rather obvious from the foregoing disquisition that respondent failed to
dispense such burden. Indeed, the records are replete with proof that respondent
declared the lots comprising Lot No. 3050 for taxation purposes only after it had
instituted the present case in court. This is not to say of course that tax receipts are
evidence of ownership, since they are not, albeit they are good indicia of possession
in the concept of owner, for no one would ordinarily be paying taxes for a property
not in his actual or at least constructive possession.[40]
Other than paying taxes from 1994-1997, however, respondent has not shown that
it exercised dominion over Lot No. 3050. In contrast, petitioner Lasquite has been
continuously paying taxes on the land since 1972,[41] and has utilized the land as a

farm, planted fruit trees and raised goats thereon. Petitioners have likewise built
structures and managed to entrust the property to the care of certain individuals
without any objection from respondent.
Respondent avers that petitioner Lasquite forged the Deed of Quitclaim/Assignment
of Rights to make it appear that Jose Manahan conveyed Lot No. 3050 to him. It
must be stressed, however, that whoever alleges forgery has the burden of proving
the same. Forgery cannot be presumed but should be substantiated with clear and
convincing evidence.[42]
Regrettably, Victory Hills was unable to establish that the Jose H. Manahan from
whom it derived its title is the same Jose Manahan from whom petitioner Lasquite
bought Lot No. 3050. During the trial of this case, several death certificates had
been proferred by the parties, albeit, inconclusive to establish the identity of Jose
Manahan as the common origin of all their titles. Respondent Victory Hills obtained
its title from Jose H. Manahan. Meanwhile, the records disclose that the Jose S.
Manahan from whom the Manahans derived title was 54 years old and married
when he died of infectious hepatitis on October 12, 1947.[43] For their part, the
Prescillas traced their title from Jose M. Manahan, who was supposedly 68 years old
and single when he succumbed to acute myocardial infarction on April 11, 1968.[44]
This was however belied by the List of Register of Deaths in the Municipality of San
Mateo Rizal for the year 1968.[45]
Relevant to the issue of prescription, we have ruled that to determine when the
prescriptive period commenced in an action for reconveyance, the plaintiffs
possession of the disputed property is material. An action for reconveyance based
on an implied trust prescribes in 10 years. The reference point of the 10-year
prescriptive period is the date of registration of the deed or the issuance of the title.
The prescriptive period applies only if there is an actual need to reconvey the
property as when the plaintiff is not in possession of the property. However, if the
plaintiff, as the real owner of the property also remains in possession of the
property, the prescriptive period to recover title and possession of the property does
not run against him. In such a case, an action for reconveyance, if nonetheless
filed, would be in the nature of a suit for quieting of title, an action that is
imprescriptible.[46]
The records reveal that it was only on January 11, 1994 or nearly 13 years after OCT
Nos. NP-197 and NP-198 were issued that respondent filed a Motion for Leave to
Admit Complaint in Intervention[47] and Complaint in Intervention[48] before the
RTC of Rizal. Nevertheless, respondent claimed to be in actual possession in
concepto de dueno of a sizeable portion of Lot No. 3050. Thus, the action assumed
the nature of a suit to quiet title; hence, imprescriptible.
However, in our view, respondent Victory Hills has failed to show its entitlement to a
reconveyance of the land subject of the action.
WHEREFORE, the petition is GRANTED. The Decision dated November 8, 2006 of
the Court of Appeals in CA G.R. CV No. 77599 is hereby REVERSED and SET ASIDE.
The Decision dated July 2, 2002 of the Regional Trial Court of San Mateo, Rizal,
Branch 77, is REINSTATED. No pronouncement as to costs.

SO ORDERED.

PERFECTA CAVILE, JOSE DE LA CRUZ and RURAL BANK OF BAYAWAN, INC.,

Petitioners,
- versus JUSTINA LITANIA-HONG, accompanied and joined by her husband,
LEOPOLDO HONG and GENOVEVA LITANIA,
Respondents.
G.R. No. 179540
Promulgated:
March 13, 2009

DECISION

CHICO-NAZARIO, J.:
Before us is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of
Court, which seeks to reverse and set aside the Decision[2] dated 8 March 2007 and
the Resolution[3] dated 3 September 2007 of the Court of Appeals in CA-G.R. CV No.
66873. The assailed Decision of the appellate court reversed and set aside the
Decision[4] dated 29 February 2000 of the Regional Trial Court (RTC) of Negros
Oriental, Branch 35, in Civil Case No. 6111, dismissing the complaint of respondents
Justina Litania-Hong, her husband Leopoldo Hong, and her sister Genoveva Litania;
and declaring petitioner spouses Perfecta Cavile and Jose de la Cruz to be the
absolute owners of the parcels of land subjects of this case. The assailed Resolution
of the appellate court denied petitioner spouses Motion for Reconsideration of its
decision.
The factual and procedural antecedents of the case proceed as follows:
On 5 April 1937, a Deed of Partition[5] was entered into by the heirs of the
spouses Bernardo Cavile and Tranquilina Galon. Said heirs included the legitimate
children of Bernardo and Tranquilina, namely, (1) Susana Cavile, (2) Castor Cavile,
and (3) Benedicta Cavile; as well as the children of Bernardo by his previous
marriages, specifically: (4) Simplicia Cavile, (5) Fortunato Cavile, and (6) Vevencia
Cavile.[6] Subject of the Deed of Partition were several parcels of land situated in

the Municipality of Tolong, Negros Oriental, which were then covered by Tax
Declarations No. 5615, No. 5729, No. 7143, No. 7421 and No. 7956, all under the
name of Bernardo.
Of particular interest in this case are the lots covered by Tax Declarations No. 7421
and No. 7956. The lot covered by Tax Declaration No. 7421 was described in the
Deed of Partition as bounded on the North by Simplicio Cavile antes Roman
Echaves, on the East by Rio Bayawan, on the South by Riachuelo Napasu-an, and on
the West by Riachuelo Napasu-an y Julian Calibug antes Francisco Tacang. The lot
covered by Tax Declaration No. 7956 was identified to be the one bounded on the
North by Hilario Navaro, on the East by Silverio Yunting, on the South by Fortunato
Cavile, and on the West by Maximiano Balasabas.
In accordance with the Deed of Partition, the conjugal properties of Bernardo and
Tranquilina were divided into two parts. The first part, corresponding to Bernardos
share, was further divided into six equal shares and distributed among his six heirs.
The second part, corresponding to Tranquilinas share, was subdivided only into
three shares and distributed among her children with Bernardo, i.e., Susana, Castor,
and Benedicta.
Also stated in the Deed of Partition was the sale by the other aforementioned
legal heirs to their co-heir Castor of their aliquot shares in the lots covered by Tax
Declarations No. 7143, No. 7421, and No. 7956; thus, making Castor the sole owner
of the said properties. Similarly, the Deed of Partition acknowledged the sale by all
the legal heirs to Ulpiano Cavile of their respective shares in the lot covered by Tax
Declaration No. 5729, thus, transferring to the latter absolute ownership of said
parcel of land.
Thereafter, on 5 August 1960, Castor and Susana executed a Confirmation of
Extrajudicial Partition,[7] whereby Castor recognized and confirmed that the lots
covered by Tax Declarations No. 2039 and No. 2040 were the just and lawful shares
of Susana in the properties left by their deceased parents Bernardo and Tranquilina,
and that Susana was in actual possession of the said properties. According to the
Confirmation of Extrajudicial Partition, the lot covered by Tax Declaration No. 2039
was bounded on the North by Simplicio Cavile, on the East by Rio Bayawan, on the
South by Napasu-an, and on the West by Napasu-an Creek and Julian Calibog; while
the one covered by Tax Declaration No. 2040 was bounded on the North by Hilario
Navvaro (sic), on the South by Fortunato Cavile, on the East by Silverio Yunting, and
on the West by Maximino (sic) Balasabas.
The descriptions of the lots covered by Tax Declarations No. 2039 and No. 2040 in
the Confirmation of Extrajudicial Partition were strikingly close to those of the lots
covered by Tax Declarations No. 7421 and No. 7956, respectively, in the Deed of
Partition.

Fourteen years after the execution of the Confirmation of Extrajudicial

Partition in 1960, respondents filed on 23 December 1974 a Complaint for
Reconveyance and Recovery of Property with Damages before the RTC against
Perfecta Cavile, the daughter of Castor, Jose de la Cruz, the husband of Perfecta
(hereinafter petitioner spouses), and the Rural Bank of Bayawan, Inc. The
Complaint was docketed as Civil Case No. 6111.[8]
Respondents averred in the Complaint that respondents Justina and Genoveva
inherited two parcels of land, covered by Tax Declarations No. 07408 and No. 07409
(subject lots),[9] from their mother Susana, who, in turn, inherited the same from
her parents Bernardo and Tranquilina. Respondents invoked the Confirmation of
Extrajudicial Partition dated 5 August 1960 wherein Castor purportedly recognized
Susanas ownership of the subject lots. Susana had enjoyed undisputed ownership
and possession of the subject lots, paying the realty taxes due and introducing
improvements thereon. Susana was even able to obtain a loan from the Rural Bank
of Dumaguete City sometime in 1960, mortgaging the subject lots as security for
the same.
After Susanas death in 1965, the subject lots were inherited by her
daughters, respondents Justina and Genoveva, who then assumed the mortgage
thereon. However, respondents alleged that Castor and petitioner spouses
eventually intruded upon and excluded respondents from the subject lots. When
Castor died in 1968, petitioner spouses continued their unlawful occupancy of the
subject lots, planting on the same and harvesting the products. Respondents
claimed that they exerted efforts to settle the matter, but petitioner spouses
stubbornly refused to accede. In 1974, prior to the filing of the Complaint,
respondents again sought an audience with petitioner spouses, yet the latter only
presented to them the Original Certificates of Title (OCTs) No. FV-4976,[10] No. FV4977,[11] and No. FV-4978[12] covering the subject lots, issued by the Registry of
Deeds for the Province of Negros Oriental, on 9 October 1962, in the name of
petitioner Perfecta. Respondents were, thus, constrained to institute Civil Case No.
6111 against petitioner spouses and the Rural Bank of Bayawan, Inc., seeking the
cancellation of the OCTs in the name of petitioner Perfecta or, alternatively, the
reconveyance by petitioner spouses of the subject lots to respondents, plus award
for damages. The Rural Bank of Bayawan, Inc. was impleaded as a defendant in the
Complaint since petitioner spouses mortgaged the subject lots in its favor as
security for a loan in the amount of P42,227.50. However, the bank was later
dropped as a party after the aforesaid loan was settled.
Petitioner spouses countered in their Answer to the Complaint that, by virtue of the
Deed of Partition dated 5 April 1937, the heirs of both Bernardo and Tranquilina took
exclusive possession of their respective shares in the inheritance. Castor fully
possessed the lots covered by Tax Declarations No. 7143, No. 7421 and No. 7956,

after his co-heirs sold to him their shares therein. In 1962, Castor sold to petitioner
Perfecta the lots covered by Tax Declarations No. 7421 and No. 7956, which
corresponded to the subject lots in the Complaint. Following the sale, petitioner
Perfecta took possession of the subject lots and filed with the Bureau of Lands an
application for the issuance of title over the same. The Bureau issued free patent
titles over the subject lots in favor of petitioner Perfecta and, by virtue thereof, she
was able to secure on 9 October 1962, OCTs No. FV-4976, No. FV-4977, and No. FV4978 in her name.
Petitioner spouses asserted that the Confirmation of Extrajudicial Partition dated 5
August 1960 involving the subject lots was a nullity since said properties were never
owned nor adjudicated in favor of Susana, respondents predecessor-in-interest.
Castor and Susana executed the Confirmation of Extrajudicial Partition merely to
accommodate the latter who then needed security for the loan she was trying to
obtain from the Rural Bank of Dumaguete City. Respondents would not be able to
deny the said accommodation arrangement, given that neither Susana nor
respondents actually possessed the subject lots or applied for titles thereto.
Respondents did not even know that the subject lots were divided into three lots
after a Government survey. If Susana and respondents paid realty taxes for the
subject lots, it was only to convince the Rural Bank of Dumaguete to renew their
loan from year to year, secured as it was by the mortgage on the subject lots. Thus,
petitioner spouses posited that no ownership could then be transferred to
respondents after Susanas death.
Trial in Civil Case No. 6111 thereafter ensued before the RTC.[13]
On 29 February 2000, the RTC promulgated its Decision, with the following
dispositive portion:
WHEREFORE, premises considered, judgment is hereby rendered declaring
[herein petitioner spouses] as the absolute owners over the parcels of land in
litigation. Consequently, [herein respondents] complaint is ordered dismissed.
[Respondents] counterclaim is likewise entered dismissed for lack of merit.[14]

The RTC ruled that the petitioner spouses evidence was more worthy of
credence in establishing their ownership of the subject lots. As petitioner Perfecta
testified before the RTC, Castor immediately took possession of the subject lots after
the Deed of Partition was executed in 1937. This fact was supported by the
unrebutted testimony of Luciana Navarra, petitioner Perfectas cousin, who declared
that her husband was petitioner Perfectas tenant on the subject lots since 1947 and
that respondents never actually occupied the said properties. The RTC observed
that it was highly questionable and contrary to human experience that respondents

waited nine long years after their ejection from the subject lots in 1965 before
taking any legal step to assert their rights over the same.
The RTC further subscribed to the testimony of Perfecta that the Confirmation of
Extrajudicial Partition was executed by Castor solely to accommodate Susana,
enabling her to obtain a bank loan using the subject lots as collateral. It noted that
Susana did not bother to apply for the issuance of title to the subject lots in her
name. Contrarily, it was Perfecta who applied for and obtained title to the subject
lots, which, surprisingly, respondents were not even aware of. The RTC found that
the contemporaneous and subsequent acts of the parties after the execution of the
Confirmation of Extrajudicial Partition evidently demonstrated their intention to
merely accommodate Susana in her loan application. Hence, the RTC concluded
that the Confirmation of Extrajudicial Partition was a simulated contract which was
void and without any legal effect.
Without seeking a reconsideration of the above RTC Decision, respondents
challenged the same by way of appeal before the Court of Appeals, docketed as CAG.R. CV No. 66873.
On 8 March 2007, the Court of Appeals rendered the assailed Decision in
favor of respondents, the decretal portion of which provides:
WHEREFORE, the assailed decision is REVERSED AND SET ASIDE and a new
one entered ORDERING [herein petitioner spouses] and/or their heirs, assigns and
representatives as follows:
1.
To reconvey to [herein respondents] the possession and title to the
litigated parcels of land.
2.
Upon reconveyance of the litigated properties, the Register of Deeds of
Dumaguete City is ordered to cancel Certificate of Title No. 4877 (sic), 4976 and
4978 and to issue a new certificate to [respondents] or their successors in interest.
3.
With costs against [petitioner spouses].[15]

The Court of Appeals agreed in the respondents contention that the

Confirmation of Extrajudicial Partition was not a simulated document. The said
document should be entitled to utmost respect, credence, and weight as it was
executed by and between parties who had firsthand knowledge of the Deed of
Partition of 1937. Moreover, the Confirmation of Extrajudicial Partition constituted
evidence that was of the highest probative value against the declarant, Castor,
because it was a declaration against his proprietary interest. Other than petitioner
Perfectas testimony, the appellate court found no other proof extant in the records
to establish that the Confirmation of Extrajudicial Partition was a simulated
document or that it did not express the true intent of the parties. The Court of

Appeals likewise highlighted the fact that Castor did not attempt to have the subject
lots declared in his name during his lifetime and that petitioner Perfecta herself
admitted that she only started paying real estate taxes for the subject lots in 1993.
It was Susana and, later, her children, respondents Justina and Genoveva, who had
been paying for the realty taxes on the subject lots since 1937.
Petitioner spouses filed a Motion for Reconsideration[16] of the foregoing
Decision, but it was denied by the Court of Appeals in a Resolution[17] dated 3
September 2007.
Petitioner spouses filed the instant Petition, raising the following issues for the
Courts consideration:
I.
WHETHER [OR NOT] THE HONORABLE COURT OF APPEALS ACTED IN ACCORDANCE
WITH LAW IN RULING THAT EXTRANEOUS EVIDENCE IN THE FORM OF AN AFFIDAVIT,
THE CONFIRMATION OF EXTRAJUDICIAL PARTITION, MAY BE ADMITTED IN
EVIDENCE TO VARY THE TERMS OF A JUDICIALLY DECLARED VALID AGREEMENT
ENTITLED DEED OF PARTITION?
II.
WHETHER [OR NOT] THE HONORABLE COURT OF APPEALS COMMITTED A LEGAL
ERROR IN NOT DISMISSING THE COMPLAINT ON THE GROUND OF RES JUDICATA?

III.
WHETHER [OR NOT] THE COMPLAINT FILED BY THE RESPONDENTS SHOULD BE
DISMISSED ON THE GROUND OF FORUM-SHOPPING?
IV.
WHETHER [OR NOT] THE FREE PATENT TITLES ISSUED TO THE PETITIONERS MAY BE
RECONVEYED TO THE RESPONDENTS?[18]

Essentially, the Court finds that the fundamental issue that must be settled in
this case is who, among the parties herein, have the better right to the subject lots.
The Court notes prefatorily that in resolving the present case, an examination
of the respective evidence of the parties must necessarily be undertaken. Although
the jurisdiction of the Court in a petition for review on certiorari under Rule 45 of the

Rules of Court is limited to reviewing only errors of law, we find that an

exception[19] to this rule is present in the instant case in that the Court of Appeals
made findings of fact which were contrary to those of the RTC.
Before proceeding, the Court further establishes as a foregone fact, there
being no issue raised on the matter, that the subject lots covered by Tax
Declarations No. 07408 and No. 07409 described in the Complaint in Civil Case No.
6111 are the very same lots covered by Tax Declarations No. 7956 and No. 7421
included in the Deed of Partition, and by Tax Declarations No. 2040 and No. 2039
subject of the Confirmation of Extrajudicial Partition.
Respondents, as plaintiffs before the RTC in Civil Case No. 6111, sought the
reconveyance and recovery of the subject lots purportedly illegally usurped by
petitioner spouses who succeeded in having the same titled in the name of
petitioner Perfecta. Respondent Justina testified in open court that the subject lots
were inherited by her and co-respondent Genovevas mother, Susana, from their
grandparents, Bernardo and Tranquilina.[20] As proof of Susanas ownership of the
subject lots, respondents presented the Confirmation of Extrajudicial Partition
executed on 5 August 1960 by Castor and Susana. In said document, Castor
ostensibly recognized and confirmed Susanas ownership and possession of the
subject lots.[21] Tax declarations[22] covering the subject lots in the names of
Susana and respondents were also offered to the court a quo to lend support to
respondents claims of ownership.
On the other hand, to prove their entitlement to the subject lots, petitioner
spouses presented before the RTC the Deed of Partition[23] entered into by the
heirs of spouses Bernardo and Tranquilina on 5 April 1937. By virtue thereof, Castor
acquired through sale the shares of his co-heirs in the subject lots. Petitioner
Perfecta testified before the trial court that right after the execution of said Deed,
she and her father, Castor, assumed possession of the subject lots, planting
coconuts, rice, and corn thereon.[24] She additionally testified that realty taxes on
the subject lots had since been paid by Castor and, subsequently, by her.[25]
Possession of the subject lots by Castor and petitioner spouses was corroborated by
the testimony of Luciana Navarra, who insisted that respondents never occupied the
said lots.[26] Finally, petitioner spouses presented OCTs No. FV-4976, No. FV-4977,
and No. FV-4978, covering the subject lots, issued by the Registry of Deeds for the
Province of Negros Oriental on 9 October 1962 in the name of petitioner Perfecta.
After a careful evaluation of the evidence adduced by the parties in the
instant case, the Court rules in favor of petitioner spouses.
At this point, let it be stated that the validity and due execution of the Deed
of Partition executed in 1937 is not directly assailed in this case, thus, the Court
need not pass upon the same. Under the said Deed of Partition, the other heirs of

Bernardo and Tranquilina clearly and unequivocally sold their shares in the subject
lots to Castor, petitioner Perfectas father. What appeared to be the clear right of
ownership of Castor over the subject lots was put in doubt by the execution of the
Confirmation of Extrajudicial Partition by Castor and his sister Susana in 1960.
Respondents, children and heirs of Susana, base their claim of ownership of the
subject lots on the said document, while petitioner spouses denounce the same to
be simulated, executed for purposes other than to transfer ownership of the subject
lots, and cannot legally alter the terms of the previously duly executed Deed of
Partition.
As held by the Court of Appeals, the Confirmation of Extrajudicial Partition
partakes of the nature of an admission against a persons proprietary interest.[27]
As such, the same may be admitted as evidence against Castor and petitioner
spouses, his successors-in-interest. The theory under which declarations against
interest are received in evidence, notwithstanding that they are hearsay, is that the
necessity of the occasion renders the reception of such evidence advisable and,
further, that the reliability of such declaration asserts facts which are against his
own pecuniary or moral interest.[28]
Nevertheless, the Confirmation of Extrajudicial Partition is just one piece of
evidence against petitioner spouses. It must still be considered and weighed
together with respondents other evidence vis--vis petitioner spouses evidence. In
civil cases, the party having the burden of proof must establish his case by a
preponderance of evidence. Preponderance of evidence is the weight, credit, and
value of the aggregate evidence on either side and is usually considered to be
synonymous with the term greater weight of the evidence or greater weight of
the credible evidence. Preponderance of evidence is a phrase which, in the last
analysis, means probability of the truth. It is evidence which is more convincing to
the court as worthy of belief than that which is offered in opposition thereto.[29]
Rule 133, Section 1 of the Rules of Court provides the guidelines in determining
preponderance of evidence, thus:
In civil cases, the party having the burden of proof must establish his case by a
preponderance of evidence. In determining where the preponderance or superior
weight of evidence on the issues involved lies, the court may consider all the facts
and circumstances of the case, the witnesses manner of testifying, their
intelligence, their means and opportunity of knowing the facts to which they are
testifying, the nature of the facts to which they testify, the probability or
improbability of their testimony, their interest or want of interest, and also their
personal credibility so far as the same may legitimately appear upon the trial. The
court may also consider the number of witnesses, though the preponderance is not
necessarily with the greater number.

Herein, despite the admission made by Castor in the Confirmation of Extrajudicial

Partition against his own interest, the Court is still convinced that the evidence
adduced by the petitioner spouses preponderated over that of the respondents.
In analyzing the two vital documents in this case, the Court discerns that
while the Deed of Partition clearly explained how Castor came to fully own the
subject lots, the Confirmation of Extrajudicial Partition, even though confirming
Susanas ownership of the subject lots, failed to shed light on why or how the said
properties wholly pertained to her when her parents Bernardo and Tranquilina
clearly had other heirs who also had shares in the inheritance.
Other than the Confirmation of Extrajudicial Partition, respondents were only
able to present as evidence of their title to the subject lots tax declarations covering
the same, previously, in the name of Susana and, subsequently, in their own names.
We find such tax declarations insufficient to establish respondents ownership of the
subject lots. That the disputed property has been declared for taxation purposes in
the name of any party does not necessarily prove ownership. Jurisprudence is
consistent that tax declarations are not conclusive evidence of ownership of the
properties stated therein. A disclaimer is even printed on the face of such tax
declarations that they are "issued only in connection with real property taxation
[and] should not be considered as title to the property." At best, tax declarations
are indicia of possession in the concept of an owner.[30] Conversely, nondeclaration of a property for tax purposes does not necessarily negate ownership.
[31]
On the other hand, the Court is at a loss as to how the Court of Appeals failed
to give due consideration to the Torrens titles issued in the name of petitioner
Perfecta when it rendered its assailed Decision.
Sometime in 1962, petitioner Perfecta applied for and was granted by the
Bureau of Lands free patents over the subject lots. Pursuant thereto, Original
Certificates of Title No. FV-4976, No. FV-4977, and No. FV-4978, covering the subject
lots, were issued by the Registry of Deeds for the Province of Negros Oriental, on 9
October 1962, in the name of petitioner Perfecta. Given this crucial fact, the Court
pronounces that respondents Complaint for reconveyance of the subject lots and
damages filed only on 23 December 1974 is already barred.
A Torrens title issued on the basis of the free patents become as indefeasible
as one which was judicially secured upon the expiration of one year from date of
issuance of the patent.[32] However, this indefeasibility cannot be a bar to an
investigation by the State as to how such title has been acquired, if the purpose of
the investigation is to determine whether or not fraud has been committed in
securing the title. Indeed, one who succeeds in fraudulently acquiring title to public
land should not be allowed to benefit from it.[33]

On this matter, Section 101 of Commonwealth Act No. 141[34] provides that
all actions for the reversion to the government of lands of the public domain or
improvements thereon shall be instituted by the Solicitor General or the officer
acting in his stead, in the proper courts, in the name of the Commonwealth [now
Republic] of the Philippines. Such is the rule because whether the grant of a free
patent is in conformity with the law or not is a question which the government may
raise, but until it is so raised by the government and set aside, another claiming
party may not question it. The legality of the grant is a question between the
grantee and the government.[35] Thus, private parties, like respondents in the
instant case, cannot challenge the validity of the patent and the corresponding title,
as they had no personality to file the suit.
Although jurisprudence recognizes an exception to this case, the respondents
may not avail themselves of the same.
Verily, an aggrieved party may still file an action for reconveyance based on
implied or constructive trust, which prescribes in 10 years from the date of the
issuance of the Certificate of Title over the property, provided that the property has
not been acquired by an innocent purchaser for value. An action for reconveyance
is one that seeks to transfer property, wrongfully or fraudulently registered by
another, to its rightful and legal owner.[36] If the registered owner, be he the
patentee or his successor-in-interest to whom the free patent was transferred, knew
that the parcel of land described in the patent and in the Torrens title belonged to
another, who together with his predecessors-in-interest had been in possession
thereof, and if the patentee and his successor-in-interest were never in possession
thereof, the true owner may bring an action to have the ownership of or title to the
land judicially settled. The court in the exercise of its equity jurisdiction, without
ordering the cancellation of the Torrens titled issued upon the patent, may direct the
defendant, the registered owner, to reconvey the parcel of land to the plaintiff who
has been found to be the true owner thereof.[37]
In the instant case, respondents brought the action for reconveyance of the
subject lots before the RTC only on 23 December 2004, or more than 12 years after
the Torrens titles were issued in favor of petitioner Perfecta on 9 October 1962. The
remedy is, therefore, already time-barred.
And even if respondents Complaint was filed on time, the Court would still rule that
respondents failed to satisfactorily prove that they were in possession of the subject
lots prior to the grant of free patents and issuance of Torrens titles over the same in
favor petitioner Perfecta. The bare testimony of respondent Justina that Susana had
been in the peaceful and undisturbed possession of the subject lots since 1937 up
to the time of her death in 1965 was entirely bereft of substantiation and details.
No information was provided as to how said possession of the subject lots was

actually exercised or demonstrated by Susana. In contrast, the possession of the

subject lots by Castor, and later on by petitioner spouses, was established not just
by the testimony of petitioner Perfecta, but was corroborated by the testimony of
Luciana Navarra, whose husband was a tenant working on the subject lots.
Petitioner spouses possessed the subject lots by planting thereon coconuts, rice,
and corn - a claim which respondents were unable to refute.
Furthermore, respondents allegation that petitioner Perfecta committed fraud and
breach of trust in her free patent application is specious. The fact that the
document evidencing the sale of the subject lots by Castor to petitioner Perfecta
was not presented does not automatically mean that said contract was never in
existence. Also undeserving of much consideration without sufficient proof is
respondents averment that the subject lots were private lands which could no
longer be granted to any person via free patent. Respondents ought to remember
that mere allegation of fraud is not enough. Specific, intentional acts to deceive
and deprive another party of his right, or in some manner injure him, must be
alleged and proved.[38] Also, the issuance by Bureau of Lands of free patents over
the subject property to petitioner Perfecta enjoys the presumption of regularity.
WHEREFORE, premises considered, the Petition for Review under Rule 45 of
the Rules of Court is hereby GRANTED. The assailed Decision dated 8 March 2007
and Resolution dated 3 September 2007 of the Court of Appeals in CA-G.R. CV No.
66873 are hereby REVERSED AND SET ASIDE. The Decision dated 29 February 2000
of the RTC of Negros Oriental, Branch 35, in Civil Case No. 6111 is hereby
REINSTATED. No costs.
SO ORDERED.
e. Prescription
G.R. No. L-33261

September 30, 1987

LIWALUG AMEROL, MACATANTO AMEROL, TAIB AMEROL, DIBARATUN

AMEROL, DIBARATUN, MATABALAO, MINDALANO DIBARATUN,
DIPUNDUGUN MORO, and MANUCAO MORO, petitioners,
vs.
MOLOK BAGUMBARAN, respondent.

SARMIENTO, J.:
This is a petition for review on certiorari of the decision 1 of the then Court of
First Instance of Lanao del Sur, Branch III, Marawi City, in Civil Case No. 1354,

entitled, "Molok Bagumbaran vs. Liwalug Amerol et al.," under Republic Act No.
5400, "as only question of law is raised." 2
The only issue for resolution is the prescriptive period of an action for
reconveyance of real property which has been wrongfully or erroneously
registered under the Torrens System in another's name. In other words, what is
the prescriptive period for the action to reconvey the title to real property arising
from an implied or constructive trust and, corrolarily reference. The petitioners
herein, defendants in the trial court, assert that they have ten years to bring the
action, while the respondent, plaintiff in the court below, claims the prescriptive
period is four years. The trial court ruled tor the plaintiff, now respondent.
We reverse. We hold that the prescriptive period for such an action for
reconveyance, as this case, is ten years. The point of reference is, or the tenyear prescriptive period commences to run from, the. date of the issuance of the
certificate of title over the real property.
There is no issue as to the facts, this case having been elevated to this Court, as
aforestated, on purely a question of law. Be that as it may, in order to satisfy
constitutional requirements as well as to place the question of law in proper
perspective, there is need to state the facts of the case. On this regard, the
findings of the trial court would best serve the stated purposes.
xxx

xxx

xxx

From the evidence submitted during the trial there is no dispute concerning the
fact relative to the Identity of the land in litigation. It is commonly known as Lot
No. 524, Pls-126 and technically described and bounded in the sketch (Exh. "7 ").
This is the very tract of land alleged by the plaintiff to have been forcibly entered
into by the defendants and which plaintiff now w&s to recover possession
thereof. It has also been proven that the same lot was covered by two free
patent applications: (l) that of defendant Liwalug Datomanong (erroneously
surnamed Amerol) which he filed on the 4th day of September, 1953, and (2)
that of Molok Bagumbaran which was filed on December 27, 1954. There is also
no question regarding the fact that as to these two free patent applications, that
of plaintiff Molok Bagumbaran was given due course as a result of which Free
Patent No. V-19050 was issued on August 16,1955 by authority of the President
of the Philippines Ramon Magsaysay, by Jaime Ferrer, Undersecretary of
Agriculture and Natural Resources and duly registered with the office of the
Register of Deeds of the Province of Lanao (now Lanao del Sur) in the mm year
whereupon Original Certificate of Title No. P-466 was duly issued, owner's
duplicate certificate having been furnished the herein plaintiff.

This court is also inclined to believe that defendant Liwalug Datomanong had
never known of plaintiff's free patent application on the land in question nor was
he ever notified or participated in the administrative proceedings relative to
plaintiff's free patent application. In the meantime, since the date he purchased
the land from Mandal Tondo, said defendant has been and up to the present in
con. tinuous occupation and cultivation of the same. His co-defendants named in
the complaint are merely his tenants.
It is also incontrovertible fact that said defendant did not take appropriate action
to annul the patent and title of the plaintiff within one year from issuance thereof
and that the first step taken by him to contest said patent and title was a formal
protest (Exh. "12", p. 408, Record) dated April 24, 1964, filed before the Bureau
of Lands after the lapse of Nine (9) long years from the issuance of patent in
favor of the plaintiff. The second step he took was his counterclaim contained in
his answer to the complaint in the above entitled case, which answer was filed
with this court on December 4, 1964. In said counterclaim, defendant reiterated
his stand that plaintiff secured patent on the land by means of deceit and fraud,
wherefore, defendant prayed that said title be annulled, or, alternatively, plaintiff
be ordered to reconvey the said land to the said defendant Liwalug Datomanong.
First question to be resolved is whether or not the plaintiff is guilty of fraud or
misrepresentation in securing the Free Patent No. V-19050 covering the land in
question.
Upon a thorough examination of the evidence, proofs are sufficient to support
defendant's contention that plaintiff is guilty of fraud and misrepresentation. In
the first place, proofs are abundant tending to show that since 1952 when
Mandal Tando transferred the land to said defendant, the latter occupied, took
possession thereof and cultivated the same continuously, publicly, adversely
against any claimant and in the concept of owner up to the present; that said
defendant had introduced considerable improvements such as coconut and
coffee plantations and other fruit trees besides his farm house, a mosque,
cassava plantation and clearing and full cultivation of the entire area. The fact of
possession on the part of said defendant has been attested to by competent and
creditable witnesses like Mandal Tando who conveyed the land to the defendant;
Hadji Sirad Gomandang, the barrio captain of Montay, Malabang, Lanao del Sur,
Hadji Rasol Maruhom and Hadji Abdulcadir Pagayawan, both of Pialot, Malabang,
Lanao del Sur who are farmers and barrio-mates of said defendant; and also
Disomnong Dimna Macabuat, an employee in the office of the District Land
Officer at Marawi City who had officially conducted occular inspection and
investigation of the premises in connection with the protest of said defendant
found thereon the above-mentioned improvements introduced by the said
defendant.

What is more, on or before filing his free patent application, plaintiff knew that
the land in question which was covered by his free patent application was then
actually occupied and cultivated by defendant Liwalug Datomanong if not by
Mandal Tando, the original occupant. Be it remembered that Mandal Tando had
transferred to defendant Liwalug Datomanong Twenty Four (24) hectares, more
than eleven hectares of which is (sic) outside the military reservation and
designated as Lot No. 524, Pls-126 and the rest which is in the southern portion
lies within the military reservation. Now, immediately adjacent thereto on the
south is the land claimed and occupied by the herein plaintiff also consisting of
Twenty Four (24) hectares but wholly within the military reservation. It appears
that plaintiff declared this Twenty four hectares for the first time on October 24,
1950 for taxation purposes (Tax Declaration No. 1529, Record) and stated in said
tax declaration (Exhs. "8" and "8-A," p. 414, Record) regarding the boundaries
that the adjacent owner on the north is Mandal Tando. In other words, plaintiff
had expressly recognized the fact that Mandal Tando is an adjacent land owner
north of plaintiff's property. On February 19, 1951 herein plaintiff revised the
above-stated tax declaration and secured another (Tax Declaration No. 1794,
Exh. "9" and "9-A," p. 413, Record) and still plaintiff stated therein that his
boundary land owner on the north is Hadji Abdul Gani. 3 [a.k.a.Liwalug
Datomanong(Amerol)]. 4
xxx

xxx

xxx

Notwithstanding the aforequoted findings, very unequivocal to be sure, the trial

court denied the counterclaim of the defendants, now petitioners, for the
affirmative relief of reconveyance on the ground of prescription. Said the court:
xxx

xxx

xxx

The patent of the plaintiff having been registered back in 1955 and in
contemplation of law registration thereof is notice to the whole world and yet
defendant exerted no effort whatsoever either to annul the title or institute
proceedings for reconveyance except in his counterclaim contained in his answer
to the complaint in this case at bar which answer and counter-claim was filed on
December 4, 1964, some nine long years from the date of registration of the
patent, defendant unfortunately lost his right to reconveyance within the period
of four (4) years from the date of registration of said patent. 5
xxx

xxx

xxx

Thus, the dispositive portion of the assailed decision stated:

xxx

xxx

xxx

PREMISES CONSIDERED, judgment is hereby rendered as follows: (1) declaring

the herein plaintiff the registered owner of Lot No. 524, Pls-126 and sustaining
and respecting the validity of the plaintiff's Original Certificate of Title No. P-466
covering the said land; (2) ordering the defendants to vacate the premises of Lot
No. 524; Pls-126 and deliver possession thereof to the herein plaintiff under
certain terms and conditions herein below stated; (3) denying and hereby
dismissing the counterclaim of the herein defendants and consequently the
prayer to annul the title and/or for reconveyance of the land to said defendant
Liwalug Datomanong must Likewise be denied; (4) that before plaintiff could take
possession of said premises he must reimburse defendant Liwalug Datomanong
the total sum of Six Thousand Seven Hundred Fifty-Two Pesos and Sixty-Two
Centavos (P6,752.62) which he incurred for the necessary and useful expenses
on the land in question with the right of said defendant to retain possession of
the premises if said reimbursement be not completely made. No pronouncement
as to costs. 6
xxx

xxx

xxx

Hence, this petition. 7

The petitioners in their Brief 8 assign the following two errors allegedly
committed by the trial court:
I.
THE COURT ERRED IN ITS CONCLUSION OF LAW TOTHE EFFECT THAT
PETITIONERS RIGHT OF ACTION FOR RECONVEYANCE FOR VIOLATION OF AN
IMPLIED TRUST PRESCRIBED AFTER FOUR YEARS FROM THE REGISTRATION OF
THE PATENT OF RESPONDENT.
II.
THE COURT ERRED IN NOT REQUIRING THE INTRODUCTION OF EVIDENCE AS
BASIS IN THE ASSESSMENT OF THE FAIR MARKET VALUE OF THE IMPROVEMENT
INTRODUCED ON THE LAND IN GOOD FAITH BY PETITIONERS INSTEAD OF BASING
SUCH ASSESSMENT UPON PURE AND SIMPLE GUESS WORKS AND WILD
ESTIMATIONS.
The first assignment of error is well-taken as adverted to at the outset.
Indubitably, the act of respondent in misrepresenting that he was in actual
possession and occupation of the property in question, obtaining a patent and
Original Certificate of Title No. P- 466 in his name, created an implied trust in
favor of the actual possessor of the said property. The Civil Code provides:

ARTICLE 1456. If property is acquired through mistake or fraud, the person

obtaining it is by force of law, considered a trustee of an implied trust for the
benefit of the person from whom the property comes.
In this case, the land in question was patented and titled in respondent's name
by and through his false pretenses. Molok Bagumbaran fraudulently
misrepresented that he was the occupant and actual possessor of the land in
question when he was not because it was Liwalug Datomanong. Bagumbaran
falsely pretended that there was no prior applicant for a free patent over the
land but there was Liwalug Datomanong. By such fraudulent acts, Molok
Bagumbaran is deemed to hold the title of the property in trust and for the
benefit of petitioner Liwalug Datomanong. Notwithstanding the irrevocability of
the Torrens title already issued in the name of respondent, he, even being
already the registered owner under the Torrens system, may still be compelled
under the law to reconvey the subject property to Liwalug Datomanong. After all,
the Torrens system was not designed to shield and protect one who had
committed fraud or misrepresentation and thus holds title in bad faith. Further,
contrary to the erroneous claim of the respondent, 9 reconveyance does not
work to set aside and put under review anew the findings of facts of the Bureau
of Lands. In an action for reconveyance, the decree of registration is respected
as incontrovertible. What is sought instead is the transfer of the property, in this
case the title thereof, which has been wrongfully or erroneously registered in
another person's name, to its rightful and legal owner, 10 or to one with a better
right. That is what reconveyance is all about.
Yet, the right to seek reconveyance based on an implied or constructive trust is
not absolute. It is subject to extinctive prescription. 11 Happily, both parties
agree on this point. The seeming impediment however, is that while the
petitioners assert that the action prescribes in ten years, the respondent avers
that it does in only four years.
In support of his submission, the respondent invokes several cases. We have
examined the invocations and find them inapplicable. For instance, the case of
Fabian vs. Fabian, 12 relied on by the respondent, does not square with the
present case. In Fabian, the party who prayed for reconveyance was not in actual
possession and occupation of the property. It was instead the party to whom title
over the property had been issued who occupied and possessed it. Further, the
litigated property had been in the adverse possession of the registered owner for
well-nigh over twenty-nine big years, hence, reconveyance had been
irretrievably lost.
Miguel vs. Court of Appeals, 13 is, likewise, inapplicable. In Miguel, the actual
occupant and possessor of the controverted parcel of land, after having been

enticed by Leonor Reyes, an ambulatory notary public, with promise of help,

engaged and retained the services of the latter to facilitate the issuance of a
patent for the said land in his (Miguel's) favor. Thus, there existed between the
parties a relationship very much akin to that of lawyer-client and which is
similarly fiduciary in character. But Reyes, inspite of his compensation of onefifth of the yearly produce of the property, still violated the trust reposed on him
and instead worked for the issuance of the patent in the name of his own wife.
So, after the demise of Leonor Reyes, the property was fraudulently patented
and titled in his widow's favor. The reconveyance of the property was decreed by
the Court based on "breach of fiduciary relations and/or fraud." It was shown that
the parties were legally bound to each other by a bond of fiduciary trust, a bond
lacking in the case at bar.
Finally, the case of Ramirez vs. Court of Appeals 14 can not be availed of
because the period of prescription was not there definitely and squarely settled.
In fact, Ramirez underscores a vacillation between the four-year and the ten-year
rule. There it was stated that "an action for relief on the ground of fraud to
which class the remedy prayed for by Paguia belong scan only be brought
within four years after accrual of the right of action, or from the discovery of the
fraud." If the decision just stayed pat on that statement, there would be merit in
the respondent's presentation. But Ramirez continues: "(I)ndepedently, however,
of the alleged fraud on the part of Ramirez, the right to demand a reconveyance
prescribes after 10 years from accrual of the cause of action, June 22, 1944, the
date of registration of the patent and of the issuance of OCT No. 282- A in his
name." 15
Significantly, the three cases cited by the respondent to buttress his position and
support the ruling of the trial court have a common denominator, so to speak.
The cause of action assailing the frauds committed and impugning the Torrens
titles issued in those cases, all accrued prior to the effectivity of the present Civil
Code. The accrual of the cause of action in Fabian was in 1928, in Miguel,
February, 1950, and in Ramirez, 1944. It must be remembered that before
August 30, 1950, the date of the effectivity of the new Civil Code, the old Code
of Civil Procedure (Act No. 190) governed prescription. It provided:
SEC. 43. Other civil actions; how limited-Civil actions other than for the recovery
of real property can only be brought within the following periods after the right of
action accrues:
xxx

xxx

xxx

3. Within four years: x x x An action for relief on the ground of fraud, but the
right of action in such case shall not be deemed to have accrued until the
discovery of the fraud;

xxx

xxx

xxx

In contrast, under the present Civil Code, we find that just as an implied or
constructive trust is an offspring of the law (Art. 1456, Civil Code), so is the
corresponding obligation to reconvey the property and the title thereto in favor
of the true owner. In this context, and vis-a-vis prescription, Article 1144 of the
Civil Code is applicable.
Article 1144. The following actions must be brought within ten years from the
time the right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.
xxx

xxx

xxx

(Emphasis supplied)
An action for reconveyance based on an implied or constructive trust must
perforce prescribed in ten years and not otherwise. A long line of decisions of
this Court, and of very recent vintage at that, illustrates this rule. Undoubtedly, it
is now well-settled that an action for reconveyance based on an implied or
constructive trust prescribes in ten years from the issuance of the Torrens title
over the property. 16 The only discordant note, it seems, is Balbin vs. Medalla,
17 which states that the prescriptive period for a reconveyance action is four
years. However, this variance can be explained by the erroneous reliance on
Gerona vs. de Guzman. 18 But in Gerona, the fraud was discovered on June 25,
1948, hence Section 43(3) of Act No. 190, was applied, the new Civil Code not
coming into effect until August 30, 1950 as mentioned earlier. It must be
stressed, at this juncture, that Article 1144 and Article 1456, are new provisions.
They have no counterparts in the old Civil Code or in the old Code of Civil
Procedure, the latter being then resorted to as legal basis of the four-year
prescriptive period for an action for reconveyance of title of real property
acquired under false pretenses.
It is abundantly clear from all the foregoing that the action of petitioner
Datomanong for reconveyance, in the nature of a counterclaim interposed in his
Answer, filed on December 4, 1964, to the complaint for recovery of possession
instituted by the respondent, has not yet prescribed. Between August 16, 1955,
the date of reference, being the date of the issuance of the Original Certificate of

Title in the name of the respondent, and December 4, 1964, when the period of
prescription was interrupted by the filing of the Answer cum Counterclaim, is less
than ten years.
The respondent also interposed as a deterrent to reconveyance the existence of
a mortgage on the property. It is claimed by the respondent that reconveyance
would not be legally possible because the property under litigation has already
been mortgaged by him to the Development Bank of the Philippines. 19 This
claim is untenable otherwise the judgment for reconveyance could be negated at
the will of the holder of the title. By the simple expedient of constituting a
mortgage or other encumbrance on the property, the remedy of reconveyance
would become illusory. In the instant case, the respondent being doubly in bad
faith for applying for and obtaining a patent and the Original Certificate of
Title therefor without being in possession of the land and for mortgaging it to the
Development Bank knowing that his Original Certificate of Title was issued under
false pretenses must alone suffer the consequences.
Besides, given the undisputed facts, we cannot consider the mortgage
contracted by the respondent in favor of the Development Bank of the
Philippines as valid and binding against petitioner Liwalug Datomanong. It would
be most unjust to saddle him, as owner of the land, with a mortgage lien not of
his own making and from which he derived no benefit whatsoever. The
consequences of the void mortgage must be left between the mortgagor and the
mortgagee. In no small measure the Development Bank of the Philippines might
even be faulted for not making the requisite investigation on the possession of
the land mortgaged.
Premises considered, we deemed it superfluous to rule on the second
assignment of error raised by the petitioners.
WHEREFORE, the petition is GRANTED and the Decision dated June 3, 1970 of
the then Court of First Instance of Lanao del Sur in Civil Case No. 1354 is hereby
ANNULLED and SET ASIDE and a new one entered ORDERING the respondent to
RECONVEY Original Certificate of Title No. P-466 in favor of petitioner Liwalug
Datomanong, free of any encumbrance. Costs against the respondent.
SO ORDERED.

[G.R. No. 140457. January 19, 2005]

HEIRS OF MAXIMO SANJORJO, namely, VICENTE SANJORJO, MACARIA
SANJORJO, DOMINGO SANJORJO, ALFREDO CASTRO, and SPOUSES
SANTOS AND LOLITA INOT, petitioners, vs. HEIRS OF MANUEL Y.

QUIJANO, namely, ROSA Q. LEDESMA, MILAGROS Q. YULIONGSIU, ALAN

P. QUIJANO AND GWENDOLYN P. ENRIQUEZ, and VICENTE Z. GULBE,
respondents.
DECISION
CALLEJO, SR., J.:
This is a petition for review on certiorari under Rule 45 of the Revised Rules of
Court of the Decision[1] dated February 17, 1999 of the Court of Appeals (CA) in
CA-G.R. CV No. 50246 and its Resolution[2] dated October 12, 1999 denying the
petitioners motion for reconsideration.
The Antecedents
On August 29, 1988, Free Patent No. VII-4-2974 was issued to Alan P. Quijano,
married to Mila Matutina, over a parcel of land located in Antipolo, Medellin,
Cebu, with an area of 14,197 square meters identified as Lot 374, Cadastre 374D. Based on the said patent, Original Certificate of Title (OCT) No. OP-38221 was
issued by the Register of Deeds to and in the name of Alan P. Quijano on
September 6, 1988.[3] On November 11, 1988, Free Patent No. VII-4-3088 was
issued to and in favor of Gwendolyn Q. Enriquez, married to Eugenio G. Enriquez,
over a parcel of land located in Antipolo, Medellin, Cebu, identified as Lot 379,
Cadastre 374-D, with an area of 6,640 square meters. Based on the said patent,
OCT No. OP-39847 was issued in her favor on February 11, 1989.[4]
In the meantime, Gwendolyn Enriquez filed an application for a free patent over
Lot 376 of Cadastre 374-D with the Department of Environment and Natural
Resources (DENR). The application was docketed as Free Patent Application
(F.P.A.) No. VII-4-3152. She also filed an application for a free patent over Lot
378, docketed as F.P.A. No. VII-4-3152-A. However, the heirs of Guillermo
Sanjorjo, namely, Tranquilina, Pablo, Boir, Erlinda, Josefina, Maria, Maximo,
Isabel, Jose, Dario, Vicente, Noel, Albina, Ramon, Domingo, Adriano and
Celedonia, all surnamed Sanjorjo, filed a protest/complaint with the DENR on
May 22, 1991, praying for the cancellation of Free Patent No. VII-4-2974, as well
as Free Patent No. VII-4-3088, and for the dismissal of the free patent
applications over Lots 376 and 378.[5] The complaint was docketed as PENRO
Claim No. PN 072231-4, and was assigned to the Regional Executive Director for
hearing and decision.
The protestants/claimants alleged that the said parcels of land were originally
owned by Ananias Ursal but were exchanged for a parcel of land located in San
Remegio, Cebu, owned by their predecessor, Guillermo Sanjorjo, married to
Maria Ursal, and from whom they inherited the property. They prayed that:

WHEREFORE, premises considered and after hearing on the merits, it is most

respectfully prayed of this most Honorable Office to render judgment ordering:
1.
The cancellation of Free Patent Titles Nos. VII-4-2974 and VII-4-3088 issued
to respondents Alan P. Quijano and Gwendolyn Quijano Enriquez concerning Lot
Nos. 374 and 379, respectively.
2.
The cancellation of Free Patent Application Nos. VII-4-3152, VII-4-3152-A,
and VII-1-18277-I of respondents concerning Lot Nos. 376 and 378.
3.
The return of possession and ownership of these lots to the
complainants/protestants who are the rightful owners by inheritance.
Protestants further pray for other relief, just and equitable, under the premises.
[6]
During the pre-trial conference of August 2, 1991, the protestants/claimants
manifested that they were withdrawing their protest/complaint. Thus, on April
14, 1992, the Regional Executive Director rendered a decision[7] giving due
course to the applications. However, he ruled that the free patents over Lots
374 and 379 could no longer be disturbed since the complaint for the
cancellation was filed more than one year from their issuance. The dispositive
portion of the decision reads:
WHEREFORE, it is hereby ordered that the above-entitled administrative case be
dismissed and dropped from the records. It is further ordered that the Free
Patent Application of applicants-respondents over Lot Nos. 376 and 378 be given
due course for being in the actual adverse and continuous possession of the land
in controversy. Patent/Titles already issued and entered in the Registry Book in
favor of applicants-respondents on Lot Nos. 374 and 379 in 1988 and 1989 need
not be disturbed anymore, for failure to show evidence of actual fraud in the
procurement of such titles.[8]
On September 13, 1993, Vicente Sanjorjo, the heirs of Maximo Sanjorjo, namely,
Macaria Sanjorjo, Domingo Sanjorjo, Alfredo Castro, and the Spouses Santos and
Lolita Inot, herein petitioners, filed a complaint for cancellation of titles under tax
declarations and reconveyance of possession of real property covering Lots 374,
376, 378 and 379 located in Medellin, Cebu, against the private respondents, the
heirs of Manuel Quijano, namely, Rosa Q. Ledesma, Milagros Q. Yuliongsiu, Alan
P. Quijano and Gwendolyn P. Enriquez, and Vicente Gulbe. The petitioners did
not implead the rest of the heirs of Guillermo Sanjorjo, including his daughter
Tranquilina Sanjorjo, as parties-plaintiffs, and alleged, inter alia

3.
That the plaintiffs are the owners of several parcels of land in Antipolo,
Medellin, Cebu, which are more particularly described as follows:
(a)
Lot No. 374 with an area of 14,179 sq.m. and covered by Tax Declaration
No. 00718 in the name of PONCIANO DEMIAR and Tax Declaration No. 01042 in
the name of TRANQUILINA SANJORJO;
(b)
Lot No. 376 with an area of 6,177 sq.m. and covered by Tax Declaration
No. 01038 in the name of MAURO SANJORJO;
(c)
Lot No. 378 with an area of 3,201 sq.m. and covered by Tax Declaration No.
01035 in the name of FLORENTINO SANJORJO;
(d)
Lot No. 379 with an area of 6,640 sq.m. and covered by Tax Declaration
No. 00772 in the name of SANTOS INOT and Tax Declaration No. 01039 in the
name of SABINIANO SANJORJO;
The said Tax Declarations are hereto attached and marked as Annexes A, B,
C, D, E and F, respectively, and made integral parts of this complaint;
4.
That the aforestated lots originally belonged to the late MAXIMO SANJORJO
who died during World War II. His children MAURO, FLORENTINO, SABINIANO,
TRANQUILINA and RAYMUNDA, all surnamed SANJORJO, inherited the said
properties. They have also passed away and the plaintiffs, who are the children
of MAXIMO SANJORJOs children are now the rightful heirs of the aforementioned
parcels of land;
5.
That sometime in 1983, the parcels of land in question were leased to
MANUEL QUIJANO for a two (2) year period at the rate of P4,500.00 per year.
However, the lease was never paid for nor was possession of the said properties
ever returned to the plaintiffs, despite repeated demands on QUIJANO to return
the same;
6.
That MANUEL QUIJANO died in 1987 and the herein defendants, the heirs
of MANUEL QUIJANO, divided among themselves the land belonging to the
plaintiffs. Titles and Tax Declarations were then issued on the said lots in the
name of the defendants, as follows:
(a)
Lot No. 374 is now covered by OCT No. OP-38221 in the name of defendant
ALAN P. QUIJANO. A copy of the title is hereto attached and marked as Annex
G and made an integral part of this complaint;
(b)
Lot No. 376 is now covered by Tax Declaration No. 10015 in the name of
MANUEL Y. QUIJANO married to FLAVIANA P. QUIJANO. A copy of the said tax

declaration is hereto attached and marked as Annex H and made an integral

part of this complaint;
(c)
Lot No. 379 is now covered by OCT No. OP-39847 in the name of
GWENDOLYN Q. ENRIQUEZ. A copy of the title is hereto attached and marked as
Annex I and made an integral part of this complaint;
7.
That the plaintiffs nor their ascendants have never sold, donated, or
mortgaged any of these lots in question to the defendants or their ascendants;
8.
That sometime in September 1991, the defendant ALAN QUIJANO charged
plaintiff ALFREDO CASTRO with QUALIFIED THEFT for allegedly having stolen the
coconuts on the properties in question. Subsequently, the Municipal Court of
Medellin acquitted CASTRO on the ground that he was the real owner of the lot.
It was only on that time that plaintiffs discovered that defendants had already
titled their lots. Furthermore, in 1992, the herein plaintiffs were sued by the
defendants for Quieting of Title, which case they subsequently withdrew. This
case made the plaintiffs realize that all their properties had already been titled in
defendants names;
9.
That, at present, defendants have leased these lots to a certain VICENTE
GULBE, who is named as a defendant in this case. Plaintiffs also demanded from
defendant GULBE the return of their possession over these lots but to no avail.
The Certification to File Action from the barangay captain of Antipolo, Medellin,
Cebu, is hereto attached and marked as Annex J and made an integral part of
this complaint;
10.
That upon their discovery of defendants fraudulent acts, plaintiffs
demanded the return of their properties but the defendants have failed and
refused and continue to fail and refuse to do so.[9]
The petitioners prayed that, after due proceedings, judgment be rendered in
their favor:
(a)
Ordering the cancellation of OCT Nos. OP-38221 and OP-39847 and Tax
Declaration No. 10015;
(b)
Ordering the defendants to pay rentals to the plaintiffs in the amount of
P4,500.00 per year from 1983 up to the time the properties are returned to the
plaintiffs; and
(c)
Ordering the defendants to pay the plaintiffs moral damages in the amount
of not less than P20,000.00.

Plaintiffs further pray for such other relief and remedies as this Court may deem
just and equitable under the premises.[10]
The private respondents filed a motion to dismiss the complaint on the ground of
res judicata based on the decision of the Regional Executive Director on April 14,
1992. They maintained that the decision of the Regional Executive Director had
become final and executory and, as such, barred the petitioners action.
The petitioners opposed the motion. In their reply to such opposition, the
private respondents invoked another ground that the petitioners action was
barred by the issuance of OCT No. OP-38221 covering Lot 374 on August 29,
1988, and OCT No. OP-39847 covering Lot 379 on November 11, 1988.
On September 13, 1994, the trial court issued an Order dismissing the complaint
on the ground of res judicata. The petitioners appealed the order to the CA.
We note that the petitioners limited the issues to the two titled lots, Lots 374 and
379, arguing that there can be no res judicata in this case because one of its
elements, i.e., that the former judgment is a judgment on the merits, was
lacking. The petitioners did not assail the trial courts order dismissing the
complaint insofar as Lots 376 and 378 are concerned. Moreover, according to
the petitioners, the April 14, 1992 Decision of the Regional Executive Director
was not a decision on the merits of the complaint, as they had yet to prove their
allegation of fraud as regards the said lots.
In its Decision promulgated on February 17, 1999, the appellate court affirmed
the assailed order of the trial court, albeit for a different reason, i.e., prescription.
Citing Section 32 of Presidential Decree No. 1529,[11] it held that the OCTs
issued to the respondents on the basis of their respective free patents became
as indefeasible as one which was judicially secured upon the expiration of one
year from the date of the issuance of the patent. The CA did not deem it
necessary to rule on the issue of res judicata since it dismissed the case on the
ground of prescription.[12]
When their motion for reconsideration of the said decision of the CA was denied,
[13] the petitioners filed the instant petition for review, contending that:
THE HONORABLE COURT OF APPEALS (THIRD DIVISION) GRAVELY ERRED IN
AFFIRMING THE DECISION OF THE REGIONAL TRIAL COURT, BRANCH 13, CEBU
CITY, DATED SEPTEMBER 13, 1994.
PETITIONERS BEG THAT THIS PETITION BE GIVEN DUE COURSE IN THE INTEREST
OF SUBSTANTIAL JUSTICE, [SINCE] THE DECISION OF THE COURT OF APPEALS, IF
NOT CORRECTED, WOULD CAUSE IRREPARABLE INJURY TO THE PREJUDICE OF

HEREIN PETITIONERS WHO ARE THE REAL OWNERS OF THE LOTS IN QUESTION.
[14]
The petitioners maintain that the appellate court erred in holding that their
action in Civil Case No. CEB 14580 was barred by the Decision dated April 14,
1992 of the DENR Regional Executive Director. They contend that the latter
decision is not a decision on its merits so as to bar their complaint.
We agree.
The elements of res judicata are the following: (1) the previous judgment has
become final; (2) the prior judgment was rendered by a court having jurisdiction
over the subject matter and the parties; (3) the first judgment was made on the
merits; and (4) there was substantial identity of parties, subject matter and
causes of action, as between the prior and subsequent actions.[15]
A judgment on the merits is one rendered after argument and investigation, and
when there is determination which party is right, as distinguished from a
judgment rendered upon some preliminary or formal or merely technical point,
or by default and without trial.[16]
As gleaned from the decision of the DENR Regional Executive Director, he
dismissed the petitioners complaint for the cancellation of Free Patent Nos. VII4-2974 and VII-4-3088 on the ground that it was filed only on May 22, 1991,
more than three years from the issuance of the said patents on August 29, 1988
and November 11, 1988, respectively. In the said decision, the Regional
Executive Director declared that after the lapse of one year from the issuance of
patent and registry thereof in the Registry Book of the Register of Deeds, Cebu
Province, only the regular courts of justice have jurisdiction on the matter of
cancellation of title.[17] The petitioners agreed with the Regional Executive
Director and withdrew their complaint, opting to file an appropriate action in
court for the nullification of the said patents and titles. Hence, the decision of
the Regional Executive Director was not a decision on the merits of the
petitioners complaint.
On the second issue, we agree with the petitioners that their action against the
private respondents for the reconveyance of Lots 374 and 379, covered by OCT
No. OP-38221 issued on September 6, 1988 and OCT No. OP-39847 issued on
February 11, 1989, respectively, was not barred by Section 32 of P.D. No. 1529,
which reads:
SEC. 32. Review of decree of registration; Innocent purchaser for value. The
decree of registration shall not be reopened or revised by reason of absence,
minority, or other disability of any person adversely affected thereby, nor by any

proceeding in any court for reversing judgments, subject, however, to the right
of any person, including the government and the branches thereof, deprived of
land or of any estate or interest therein by such adjudication or confirmation of
title obtained by actual fraud, to file in the proper Court of First Instance a
petition for reopening and review of the decree of registration not later than one
year from and after the date of the entry of such decree of registration, but in no
case shall such petition be entertained by the court where an innocent purchaser
for value has acquired the land or an interest therein, whose rights may be
prejudiced. Whenever the phrase innocent purchaser for value or any
equivalent phrase occurs in this Decree, it shall be deemed to include an
innocent lessee, mortgagee, or other encumbrancer for value.[18]
We agree with the ruling of the CA that the torrens title issued on the basis of the
free patents became as indefeasible as one which was judicially secured upon
the expiration of one year from date of issuance of the patent.[19] The order or
decision of the DENR granting an application for a free patent can be reviewed
only within one year thereafter, on the ground of actual fraud via a petition for
review in the Regional Trial Court (RTC) provided that no innocent purchaser for
value has acquired the property or any interest thereon. However, an aggrieved
party may still file an action for reconveyance based on implied or constructive
trust, which prescribes in ten years from the date of the issuance of the
Certificate of Title over the property provided that the property has not been
acquired by an innocent purchaser for value. Thus:
The basic rule is that after the lapse of one (1) year, a decree of registration
is no longer open to review or attack although its issuance is attended with
actual fraud. This does not mean, however, that the aggrieved party is without a
remedy at law. If the property has not yet passed to an innocent purchaser for
value, an action for reconveyance is still available. The decree becomes
incontrovertible and can no longer be reviewed after one (1) year from the date
of the decree so that the only remedy of the landowner whose property has been
wrongfully or erroneously registered in anothers name is to bring an ordinary
action in court for reconveyance, which is an action in personam and is always
available as long as the property has not passed to an innocent third party for
value. If the property has passed into the hands of an innocent purchaser for
value, the remedy is an action for damages. In this case, the disputed property
is still registered in the name of respondent Demetrio Caringal, so that petitioner
was correct in availing himself of the procedural remedy of reconveyance.[20]
An action for reconveyance is one that seeks to transfer property, wrongfully
registered by another, to its rightful and legal owner.[21] All that must be alleged
in the complaint are two (2) facts which, admitting them to be true, would entitle
the plaintiff to recover title to the disputed land, namely, (1) that the plaintiff
was the owner of the land and, (2) that the defendant had illegally dispossessed

him of the same.[22] The body of the pleading or complaint determines the
nature of an action, not its title or heading.[23] In their complaint, the petitioners
clearly asserted that their predecessors-in-interest have long been the absolute
and exclusive owners of the lots in question and that they were fraudulently
deprived of ownership thereof when the private respondents obtained free
patents and certificates of title in their names.[24] These allegations certainly
measure up to the requisite statement of facts to constitute an action for
reconveyance.
Article 1456 of the New Civil Code provides that a person acquiring property
through fraud becomes by operation of law a trustee of an implied trust for the
benefit of the real owner of the property. The presence of fraud in this case
created an implied trust in favor of the petitioners, giving them the right to seek
reconveyance of the property from the private respondents. However, because
of the trial courts dismissal order adverted to above, the petitioners have been
unable to prove their charges of fraud and misrepresentation.
The petitioners action for reconveyance may not be said to have prescribed, for,
basing the present action on implied trust, the prescriptive period is ten years.
[25] The questioned titles were obtained on August 29, 1988 and November 11,
1988, in OCT Nos. OP-38221 and OP-39847, respectively. The petitioners
commenced their action for reconveyance on September 13, 1993. Since the
petitioners cause of action is based on fraud, deemed to have taken place when
the certificates of title were issued,[26] the complaint filed on September 13,
1993 is, therefore, well within the prescriptive period.
IN LIGHT OF ALL THE FOREGOING, the petition is PARTIALLY GRANTED. The
Decision of the Court of Appeals is MODIFIED. Accordingly, the Regional Trial
Court of Cebu City, Branch 13, is DIRECTED to reinstate the complaint insofar as
Lots 374 and 379 are concerned. No costs.
SO ORDERED.

G.R. No. 159578

February 18, 2009

ROGELIA DACLAG and ADELINO DACLAG (deceased), substituted by

RODEL M. DACLAG, and ADRIAN M. DACLAG, Petitioners,
vs.
ELINO MACAHILIG, ADELA MACAHILIG, CONRADO MACAHILIG, LORENZA
HABER and BENITA DEL ROSARIO, Respondents.
RESOLUTION

AUSTRIA-MARTINEZ, J.:
Before us is petitioners' Motion for Reconsideration of our Decision dated July 28,
2008 where we affirmed the Decision dated October 17, 2001 and the Resolution
dated August 7, 2003 of the Court of Appeals (CA) in CA-G.R. CV No. 48498.
Records show that while the land was registered in the name of petitioner
Rogelia in 1984, respondents complaint for reconveyance was filed in 1991,
which was within the 10-year prescriptive period.
We ruled that since petitioners bought the property when it was still an
unregistered land, the defense of having purchased the property in good faith is
unavailing. We affirmed the Regional Trial Court (RTC) in finding that petitioners
should pay respondents their corresponding share in the produce of the subject
land from the time they were deprived thereof until the possession is restored to
them.
In their Motion for Reconsideration, petitioners contend that the 10-year period
for reconveyance is applicable if the action is based on an implied or a
constructive trust; that since respondents' action for reconveyance was based on
fraud, the action must be filed within four years from the discovery of the fraud,
citing Gerona v. De Guzman,1 which was reiterated in Balbin v. Medalla.2
We do not agree.
In Caro v. Court of Appeals,3 we have explicitly held that "the prescriptive period
for the reconveyance of fraudulently registered real property is 10 years
reckoned from the date of the issuance of the certificate of title x x x."4
However, notwithstanding petitioners' unmeritorious argument, the Court deems
it necessary to make certain clarifications. We have earlier ruled that
respondents' action for reconveyance had not prescribed, since it was filed
within the 10-year prescriptive period.
However, a review of the factual antecedents of the case shows that
respondents' action for reconveyance was not even subject to prescription.
The deed of sale executed by Maxima in favor of petitioners was null and void,
since Maxima was not the owner of the land she sold to petitioners, and the onehalf northern portion of such land was owned by respondents. Being an absolute
nullity, the deed is subject to attack anytime, in accordance with Article 1410 of
the Civil Code that an action to declare the inexistence of a void contract does
not prescribe. Likewise, we have consistently ruled that when there is a showing
of such illegality, the property registered is deemed to be simply held in trust for

the real owner by the person in whose name it is registered, and the former then
has the right to sue for the reconveyance of the property.5 An action for
reconveyance based on a void contract is imprescriptible.6 As long as the land
wrongfully registered under the Torrens system is still in the name of the person
who caused such registration, an action in personam will lie to compel him to
reconvey the property to the real owner.7 In this case, title to the property is in
the name of petitioner Rogelia; thus, the trial court correctly ordered the
reconveyance of the subject land to respondents.
Petitioners next contend that they are possessors in good faith, thus, the award
of damages should not have been imposed. They further contend that under
Article 544, a possessor in good faith is entitled to the fruits received before the
possession is legally interrupted; thus, if indeed petitioners are jointly and
severally liable to respondents for the produce of the subject land, the liability
should be reckoned only for 1991 and not 1984.
We find partial merit in this argument.
Article 528 of the Civil Code provides that possession acquired in good faith does
not lose this character, except in a case and from the moment facts exist which
show that the possessor is not unaware that he possesses the thing improperly
or wrongfully. Possession in good faith ceases from the moment defects in the
title are made known to the possessors, by extraneous evidence or by suit for
recovery of the
property by the true owner. Whatever may be the cause or the fact from which it
can be deduced that the possessor has knowledge of the defects of his title or
mode of acquisition, it must be considered sufficient to show bad faith.8 Such
interruption takes place upon service of summons.9lawphil.net
Article 544 of the same Code provides that a possessor in good faith is entitled
to the fruits only so long as his possession is not legally interrupted. Records
show that petitioners received a summons together with respondents' complaint
on August 5, 1991;10 thus, petitioners' good faith ceased on the day they
received the summons. Consequently, petitioners should pay respondents 10
cavans of palay per annum beginning August 5, 1991 instead of 1984.
Finally, petitioner would like this Court to look into the finding of the RTC that
"since Maxima died in October 1993, whatever charges and claims petitioners
may recover from her expired with her"; and that the proper person to be held
liable for damages to be awarded to respondents should be Maxima Divison or
her estate, since she misrepresented herself to be the true owner of the subject
land.

We are not persuaded.

Notably, petitioners never raised this issue in their appellants' brief or in their
motion for reconsideration filed before the CA. In fact, they never raised this
matter before us when they filed their petition for review. Thus, petitioners
cannot raise the same in this motion for reconsideration without offending the
basic rules of fair play, justice and due process, specially since Maxima was not
substituted at all by her heirs after the promulgation of the RTC Decision.
WHEREFORE, petitioners Motion for Reconsideration is PARTLY GRANTED. The
Decision of the Court of Appeals dated July 28, 2008 is MODIFIED only with
respect to prescription as discussed in the text of herein Resolution, and the
dispositive portion of the Decision is MODIFIED to the effect that petitioners are
ordered to pay respondents 10 cavans of palay per annum beginning August 5,
1991 instead of 1984.
SO ORDERED.
f. Action for Damages (section 32)
g. Recovery from assurance fund (section 95)
G.R. No. L-21362
November 29, 1968
DEVELOPMENT BANK OF THE PHILIPPINES, plaintiff-appellant,
vs.
LOURDES GASPAR BAUTISTA, THE DIRECTOR OF THE LANDS and THE
NATIONAL TREASURER OF THE PHILIPPINES, defendants-appellees.
Jesus A. Avancea for plaintiff-appellant.
Lourdes Gaspar Bautista in her own behalf as defendant-appellee.
Assistant Solicitor General Antonio Torres, Solicitor Francisco J. Bautista
and Special Attorney Daniel G. Florida for defendants-appelles Director
of Lands, et al.
FERNANDO, J.:
The question this appeal from a judgment of a lower court presents is one that
possesses both novelty and significance. It is this: What is the right, if any, of a
creditor which previously satisfied its claim by foreclosing extrajudicially on a
mortgage executed by the debtor, whose title was thereafter nullified in a
judicial proceeding where she was not brought in as a party?
As creditor, the Development Bank of the Philippines now appellant, filed a
complaint against one of its debtors, Lourdes Gaspar Bautista, now appellee, for
the recovery of a sum of money representing the unpaid mortgage

indebtedness, which previously had been wiped out with the creditor bank
acquiring the title of the mortgaged property in an extrajudicial sale. Thereafter,
the title was nullified in a judicial proceeding, the land in question being
adjudged as belonging to another claimant, without, however, such debtor, as
above noted, having been cited to appear in such court action.
The Development Bank was unsuccessful, the lower court being of the view that
with the due process requirement thus flagrantly disregarded, since she was not
a party in such action where her title was set aside, such a judgment could in no
wise be binding on her and be the source of a claim by the appellant bank. The
complaint was thus dismissed by the lower court, then presided by Judge, now
Justice, Magno Gatmaitan of the Court of Appeals. Hence, this appeal by
appellant bank.
Such dismissal is in accordance with law. There is no occasion for us to repudiate
the lower court.
From the very statement of facts in the brief for appellant bank, the following
appears: "On or before May 31, 1949, the defendant-appellee, Lourdes Gaspar
Bautista, who shall hereafter be referred to as Bautista, applied to the
Government for the sale favor of a parcel of land with an area of 12 has., 44
ares, and 22 centares, located at Bo. Barbara, San Jose, Nueva Ecija. After proper
investigation, Sales Patent no. V-132 covering said property was issued in her
favor on June 1, 1949 (Exh. A-1) by the Director of Lands. Sales Patent No. V-132
was registered in the office of the Register of Deeds of Nueva Ecija pursuant to
Section 122 of Act 496 on June 3, 1949 (Exh. A), as a result of which Original
Certificate of Title No. P-389 was issued in her favor."1
How the loan was contracted by now appellee Bautista was therein set forth.
Thus: "On July 16, 1949, Bautista applied for a loan with the Rehabilitation
Finance Corporation (RFC), predecessor in interest of the plaintiff-appellee
Development Bank of the Philippines (DBP), offering as security the parcel of
land covered by O.C.T. No. P-389. Aside from her certificate of title, Bautista also
submitted to the RFC other documents to show her ownership and possession of
the land in question, namely, Tax Declaration No. 5153 (Exh. A-4) in her name
and the blueprint plan of the land. On the basis of the documents mentioned and
the appraisal of the property by its appraiser, the RFC approved a loan of
P4,000.00 in favor of Bautista. On July 16, 1949, Bautista executed the mortgage
contract over the property covered by O.C.T. No. P-389 and the promissory note
for P4,000.00 in favor of RFC (Exhs. C and C-1), after which the proceeds of the
loan were released."2
The satisfaction of the mortgage debt with the acquisition of the title to such
property by appellant Bank, by virtue of an extrajudicial foreclosure sale, and

such title losing its validity in view of a court proceeding, where however,
appellee Bautista, was not made a party, was next taken up in the brief of
plaintiff-appellant. Thus: "Bautista failed to pay the amortization on the loan so
that the RFC took steps to foreclose the mortgage extra-judicially under Act
3135, as amended. In the ensuing auction sale conducted by the sheriff of Nueva
Ecija on June 27, 1951, the RFC acquired the mortgaged property as the highest
bidder (Exh. D). On the date of the sale, the total obligation of Bautista with the
RFC was P4,858.48 (Exh. I). On July 21, 1952, upon failure of Bautista to redeem
the property within the one (1) year period as provided bylaw, plaintiff-appellant
RFC consolidated its ownership thereon (Exhs. E and E-I). On July 26, 1952, the
Register of Deeds of Nueva Ecija cancelled O.C.T. No. P-389 and replaced it with
T.C.T. No. NT-12108 in the name of the RFC (Exhs. F and F-1). On or about this
time, however, an action (Civil Case No. 870) was filed by Rufino Ramos and Juan
Ramos in the Court of First Instance of Nueva Ecija against the Government of
the Republic of the Philippines and the RFC (as successor in interest of Bautista)
claiming ownership of the land in question and seeking the annulment of T.C.T.
No. 2336 in the name of the Government, O.C.T. No. P-389 in the name of
Bautista and T.C.TG. No. NT-12108 in the name of the RFC. A decision thereon
was rendered on June 27, 1955 (Exhs. G, G-1, and G-3) whereby the
aformentioned certificates of title were declared null and void."3
Why the complaint had to be dismissed was explained thus in the decision now
on appeal: "The Court after examining the proofs, is constrained to sustain her
on that; it will really appear that she had never been placed within the
jurisdiction of the Nueva Ecija Court; as the action there was one to annual the
title, it was an action strictly in personam, if that was the case as it was, the
judgment there could not in any way bind Lourdes who had not acquired in said
decision in any way for what only happened is that as to the mortgage, the Bank
foreclosed, and then sold unto Conrada and when the title had been annulled,
the Bank reimbursed Conrada; stated otherwise, the annulment of Lourdes' title
was a proceeding ex parte as far as she was concerned and could not bind her at
all; and her mortgage was foreclosed an the Bank realized on it, when the Bank
afterwards acquiesced in the annulment of the title and took it upon itself to
reimburse Conrada, the Bank was acting on its own peril because it could not
have by that, bound Lourdes at all."4
As stated at the outset, the decision must be affirmed. The fundamental due
process requirement having been disregarded, appellee Bautista could not in any
wise be made to suffer, whether directly or indirectly, from the effects of such
decision. After appellant bank had acquired her title by such extrajudicial
foreclosure sale and thus, through its own act, seen to it that her obligation had
been satisfied, it could not thereafter, seek to revive the same on the allegation
that the title in question was subsequently annulled, considering that she was
not made a party on the occasion of such nullification.

If it were otherwise, then the cardinal requirement that no party should be made
to suffer in person or property without being given a hearing would be brushed
aside. The doctrine consistently adhered to by this Court whenever such a
question arises in a series of decisions is that a denial of due process suffices to
cast on the official act taken by whatever branch of the government the impress
of nullity.5
A recent decision, Macabingkil v. Yatco,6 possesses relevance. "A 1957 decision,
Cruzcosa v. Concepcion, is even more illuminating in so far as the availability of
the remedy sought is concerned. In the language of this Court, speaking through
Justice J.B.L. Reyes: 'The petition is clearly meritorious. Petitioners were
conclusively found by the Court of Appeals to be co-owners of the building in
question. Having an interest therein, they should have been made parties to the
ejectment proceedings to give them a chance to protect their rights: and not
having been made parties thereto, they are not bound and can not be affected
by the judgment rendered therein against their co-owner Catalino Cruzcosa.
Jr. ....' Two due process cases deal specifically with a writ of execution that could
not validly be enforced against a party who was not given his day in court, Sicat
v. Reyes, and Hamoy v. Batingoplo. According to the former: 'The above
agreement, which served as basis for the ejectment of Alipio Sicat, cannot be
binding and conclusive upon the latter, who is not a party to the case. Indeed,
that order, as well as the writ of execution, cannot legally be enforced against
Alipio Sicat for the simple reason that he was not given his day in court.' From
the latter: 'The issue raised in the motion of Rangar is not involved in the appeal
for it concerns a right which he claims over the property which has not so far
been litigated for the reason that he was not made a party to the case either as
plaintiff for a defendant. He only came to know of the litigation when he was
forced out of the property by the sheriff, and so he filed the present motion to be
heard and prove his title to the property. This he has the right to do as the most
expeditious manner to protect his interest instead of filing a separate action
which generally is long, tedious and protracted.'"
Reinforcement to the above conclusion comes from a codal provision. According
to the Civil Code:7 "The vendor shall not be obliged to make good the proper
warranty, unless he is summoned in the suit for eviction at the instance of the
vendee. "While not directly in point, the principle on which the above
requirement is based sustains the decision of the lower court. In effect, appellant
bank would hold appellee Bautista liable for the warranty on her title, its
annullment having the same effect as that of an eviction. In such a case, it is
wisely provided by the Civil Code that appellee Bautista, as vendor, should have
been summoned and given the opportunity to defend herself. In view of her
being denied her day in court, it would to be respected, that she is not "obliged
to made good the proper warranty."

In the suit before the lower court, the Director of Lands and the National
Treasurer of the Philippines were likewise made defendants by appellant bank
because of its belief that if no right existed as against appellee Bautista,
recovery could be had from the Assurance Fund. Such a belief finds no support in
the applicable, law, which allows recovery only upon a showing that there be no
negligence on the part of the party sustaining any loss or damage or being
deprived of any land or interest therein by the operation of the Land Registration
Act.8 This certainly is not the case here, plaintiff-appellant being solely
responsible for the light in which it now finds itself. Accordingly, the Director of
Lands and the National Treasurer of the Philippines are likewise exempt from any
liability.
WHEREFORE, the judgment appealed from is affirmed, with costs against the
Development Bank of the Philippines.
3. Other remedies available
a. Action for cancellation or reservation (Sec. 101 of the Public land
act)
b. Annulment of judgements, Final orders or resolutions (rule 407,
Rules of Court)
c. Criminal action for Perjury
d. Appeal from judgement (section 33, Section 34)
VI. Certificate of Title (Section 39-50 Chapter IV)
a.Salient Features of the Torrens System
i. Decree binds the land
G.R. No. 148225

March 3, 2010

CARMEN DEL PRADO, Petitioner,

vs.
SPOUSES ANTONIO L. CABALLERO and LEONARDA CABALLERO,
Respondents.
DECISION
NACHURA, J.:
This is a petition for review on certiorari of the decision1 of the Court of Appeals
(CA) dated September 26, 2000 and its resolution denying the motion for
reconsideration thereof.
The facts are as follows:

In a judgment rendered on February 1, 1985 in Cadastral Case No. N-6 (LRC Rec. No.
N-611), Judge Juan Y. Reyes of the Regional Trial Court (RTC) of Cebu City, Branch 14,
adjudicated in favor of Spouses Antonio L. Caballero and Leonarda B. Caballero
several parcels of land situated in Guba, Cebu City, one of which was Cadastral Lot
No. 11909, the subject of this controversy.2 On May 21, 1987, Antonio Caballero
moved for the issuance of the final decree of registration for their lots.3
Consequently, on May 25, 1987, the same court, through then Presiding Judge
Renato C. Dacudao, ordered the National Land Titles and Deeds Registration
Administration to issue the decree of registration and the corresponding titles of the
lots in favor of the Caballeros.4
On June 11, 1990, respondents sold to petitioner, Carmen del Prado, Lot No. 11909
on the basis of the tax declaration covering the property. The pertinent portion of
the deed of sale reads as follows:
That we, Spouses ANTONIO L. CABALLERO and LEONARDA B. CABALLERO, Filipinos,
both of legal age and residents of Talamban, Cebu City, Philippines, for and in
consideration of the sum of FORTY THOUSAND PESOS (P40,000.00), Philippine
Currency, paid by CARMEN DEL PRADO, Filipino, of legal age, single and a resident
of Sikatuna St., Cebu City, Philippines, the receipt of which is full is hereby
acknowledged, do by these presents SELL, CEDE, TRANSFER, ASSIGN & CONVEY
unto the said CARMEN DEL PRADO, her heirs, assigns and/or successors-in-interest,
one (1) unregistered parcel of land, situated at Guba, Cebu City, Philippines, and
more particularly described and bounded, as follows:
"A parcel of land known as Cad. Lot No. 11909, bounded as follows:
North : Lot 11903
East : Lot 11908
West : Lot 11910
South : Lot 11858 & 11912
containing an area of 4,000 square meters, more or less, covered by Tax Dec. No.
00787 of the Cebu City Assessors Office, Cebu City." of which parcel of land we are
the absolute and lawful owners.
Original Certificate of Title (OCT) No. 1305, covering Lot No. 11909, was issued only
on November 15, 1990, and entered in the "Registration Book" of the City of Cebu
on December 19, 1990.5 Therein, the technical description of Lot No. 11909 states
that said lot measures about 14,457 square meters, more or less.6

On March 20, 1991, petitioner filed in the same cadastral proceedings a "Petition for
Registration of Document Under Presidential Decree (P.D.) 1529"7 in order that a
certificate of title be issued in her name, covering the whole Lot No. 11909. In the
petition, petitioner alleged that the tenor of the instrument of sale indicated that
the sale was for a lump sum or cuerpo cierto, in which case, the vendor was bound
to deliver all that was included within said boundaries even when it exceeded the
area specified in the contract. Respondents opposed, on the main ground that only
4,000 sq m of Lot No. 11909 was sold to petitioner. They claimed that the sale was
not for a cuerpo cierto. They moved for the outright dismissal of the petition on
grounds of prescription and lack of jurisdiction.
After trial on the merits, the court found that petitioner had established a clear and
positive right to Lot No. 11909. The intended sale between the parties was for a
lump sum, since there was no evidence presented that the property was sold for a
price per unit. It was apparent that the subject matter of the sale was the parcel of
land, known as Cadastral Lot No. 11909, and not only a portion thereof.8
Thus, on August 2, 1993, the court a quo rendered its decision with the following
dispositive portion:
WHEREFORE, premises considered, the petition is hereby granted and judgment is
hereby rendered in favor of herein petitioner. The Register of Deeds of the City of
Cebu is hereby ordered and directed to effect the registration in his office of the
Deed of Absolute Sale between Spouses Antonio Caballero and Leonarda Caballero
and Petitioner, Carmen del Prado dated June 11, 1990 covering Lot No. 11909 after
payment of all fees prescribed by law. Additionally, the Register of Deeds of the City
of Cebu is hereby ordered to cancel Original Certificate No. 1305 in the name of
Antonio Caballero and Leonarda Caballero and the Transfer Certificate of Title be
issued in the name of Petitioner Carmen del Prado covering the entire parcel of land
known as Cadastral Lot No. 11909.9
An appeal was duly filed. On September 26, 2000, the CA promulgated the assailed
decision, reversing and setting aside the decision of the RTC.
The CA no longer touched on the character of the sale, because it found that
petitioner availed herself of an improper remedy. The "petition for registration of
document" is not one of the remedies provided under P.D. No. 1529, after the
original registration has been effected. Thus, the CA ruled that the lower court
committed an error when it assumed jurisdiction over the petition, which prayed for
a remedy not sanctioned under the Property Registration Decree. Accordingly, the
CA disposed, as follows:

IN VIEW OF ALL THE FOREGOING, the appealed decision is REVERSED and SET
ASIDE and a new one entered dismissing the petition for lack of jurisdiction. No
pronouncement as to costs.10
Aggrieved, petitioner filed the instant petition, raising the following issues:
I. WHETHER OR NOT THE COURT OF APPEALS COMMITTED GRAVE ERROR IN MAKING
FINDINGS OF FACT CONTRARY TO THAT OF THE TRIAL COURT[;]
II. WHETHER OR NOT THE COURT OF APPEALS COMMITTED GRAVE ERROR IN FAILING
TO RULE THAT THE SALE OF THE LOT IS FOR A LUMP SUM OR CUERPO CIERTO[;]
III. WHETHER OR NOT THE COURT A QUO HAS JURISDICTION OVER THE PETITION
FOR REGISTRATION OF THE DEED OF ABSOLUTE SALE DATED 11 JUNE 1990
EXECUTED BETWEEN HEREIN PETITIONER AND RESPONDENTS[.]11
The core issue in this case is whether or not the sale of the land was for a lump sum
or not.
Petitioner asserts that the plain language of the Deed of Sale shows that it is a sale
of a real estate for a lump sum, governed under Article 1542 of the Civil Code.12 In
the contract, it was stated that the land contains an area of 4,000 sq m more or
less, bounded on the North by Lot No. 11903, on the East by Lot No. 11908, on the
South by Lot Nos. 11858 & 11912, and on the West by Lot No. 11910. When the OCT
was issued, the area of Lot No. 11909 was declared to be 14,475 sq m, with an
excess of 10,475 sq m. In accordance with Article 1542, respondents are, therefore,
duty-bound to deliver the whole area within the boundaries stated, without any
corresponding increase in the price. Thus, petitioner concludes that she is entitled
to have the certificate of title, covering the whole Lot No. 11909, which was
originally issued in the names of respondents, transferred to her name.
We do not agree.
In Esguerra v. Trinidad,13 the Court had occasion to discuss the matter of sales
involving real estates. The Courts pronouncement is quite instructive:
In sales involving real estate, the parties may choose between two types of pricing
agreement: a unit price contract wherein the purchase price is determined by way
of reference to a stated rate per unit area (e.g., P1,000 per square meter), or a lump
sum contract which states a full purchase price for an immovable the area of which
may be declared based on the estimate or where both the area and boundaries are
stated (e.g., P1 million for 1,000 square meters, etc.). In Rudolf Lietz, Inc. v. Court of
Appeals (478 SCRA 451), the Court discussed the distinction:

"In a unit price contract, the statement of area of immovable is not conclusive and
the price may be reduced or increased depending on the area actually delivered. If
the vendor delivers less than the area agreed upon, the vendee may oblige the
vendor to deliver all that may be stated in the contract or demand for the
proportionate reduction of the purchase price if delivery is not possible. If the
vendor delivers more than the area stated in the contract, the vendee has the
option to accept only the amount agreed upon or to accept the whole area, provided
he pays for the additional area at the contract rate.
xxxx
In the case where the area of an immovable is stated in the contract based on an
estimate, the actual area delivered may not measure up exactly with the area
stated in the contract. According to Article 1542 of the Civil Code, in the sale of real
estate, made for a lump sum and not at the rate of a certain sum for a unit of
measure or number, there shall be no increase or decrease of the price, although
there be a greater or less areas or number than that stated in the contract. . . .
xxxx
Where both the area and the boundaries of the immovable are declared, the area
covered within the boundaries of the immovable prevails over the stated area. In
cases of conflict between areas and boundaries, it is the latter which should prevail.
What really defines a piece of ground is not the area, calculated with more or less
certainty, mentioned in its description, but the boundaries therein laid down, as
enclosing the land and indicating its limits. In a contract of sale of land in a mass, it
is well established that the specific boundaries stated in the contract must control
over any statement with respect to the area contained within its boundaries. It is
not of vital consequence that a deed or contract of sale of land should disclose the
area with mathematical accuracy. It is sufficient if its extent is objectively indicated
with sufficient precision to enable one to identify it. An error as to the superficial
area is immaterial. Thus, the obligation of the vendor is to deliver everything within
the boundaries, inasmuch as it is the entirety thereof that distinguishes the
determinate object.14
The Court, however, clarified that the rule laid down in Article 1542 is not hard and
fast and admits of an exception. It held:
A caveat is in order, however. The use of "more or less" or similar words in
designating quantity covers only a reasonable excess or deficiency. A vendee of
land sold in gross or with the description "more or less" with reference to its area
does not thereby ipso facto take all risk of quantity in the land..

Numerical data are not of course the sole gauge of unreasonableness of the excess
or deficiency in area. Courts must consider a host of other factors. In one case (see
Roble v. Arbasa, 414 Phil. 343 [2001]), the Court found substantial discrepancy in
area due to contemporaneous circumstances. Citing change in the physical nature
of the property, it was therein established that the excess area at the southern
portion was a product of reclamation, which explained why the lands technical
description in the deed of sale indicated the seashore as its southern boundary,
hence, the inclusion of the reclaimed area was declared unreasonable.15
In the instant case, the deed of sale is not one of a unit price contract. The parties
agreed on the purchase price of P40,000.00 for a predetermined area of 4,000 sq m,
more or less, bounded on the North by Lot No. 11903, on the East by Lot No. 11908,
on the South by Lot Nos. 11858 & 11912, and on the West by Lot No. 11910. In a
contract of sale of land in a mass, the specific boundaries stated in the contract
must control over any other statement, with respect to the area contained within its
boundaries.161avvphi1
Blacks Law Dictionary17 defines the phrase "more or less" to mean:
About; substantially; or approximately; implying that both parties assume the risk of
any ordinary discrepancy. The words are intended to cover slight or unimportant
inaccuracies in quantity, Carter v. Finch, 186 Ark. 954, 57 S.W.2d 408; and are
ordinarily to be interpreted as taking care of unsubstantial differences or differences
of small importance compared to the whole number of items transferred.
Clearly, the discrepancy of 10,475 sq m cannot be considered a slight difference in
quantity. The difference in the area is obviously sizeable and too substantial to be
overlooked. It is not a reasonable excess or deficiency that should be deemed
included in the deed of sale.
We take exception to the avowed rule that this Court is not a trier of facts. After an
assiduous scrutiny of the records, we lend credence to respondents claim that they
intended to sell only 4,000 sq m of the whole Lot No. 11909, contrary to the findings
of the lower court. The records reveal that when the parties made an ocular
inspection, petitioner specifically pointed to that portion of the lot, which she
preferred to purchase, since there were mango trees planted and a deep well
thereon. After the sale, respondents delivered and segregated the area of 4,000 sq
m in favor of petitioner by fencing off the area of 10,475 sq m belonging to them.18
Contracts are the law between the contracting parties. Sale, by its very nature, is a
consensual contract, because it is perfected by mere consent. The essential
elements of a contract of sale are the following: (a) consent or meeting of the
minds, that is, consent to transfer ownership in exchange for the price; (b)

determinate subject matter; and (c) price certain in money or its equivalent. All
these elements are present in the instant case.19
More importantly, we find no reversible error in the decision of the CA. Petitioners
recourse, by filing the petition for registration in the same cadastral case, was
improper. It is a fundamental principle in land registration that a certificate of title
serves as evidence of an indefeasible and incontrovertible title to the property in
favor of the person whose name appears therein. Such indefeasibility commences
after one year from the date of entry of the decree of registration.20 Inasmuch as
the petition for registration of document did not interrupt the running of the period
to file the appropriate petition for review and considering that the prescribed oneyear period had long since expired, the decree of registration, as well as the
certificate of title issued in favor of respondents, had become incontrovertible.21
WHEREFORE, the petition is DENIED.
SO ORDERED.
ii.

Certificate of Title (Section 39-40)

G.R. No. 171531

January 30, 2009

GUARANTEED HOMES, INC., Petitioner,

vs.
HEIRS OF MARIA P. VALDEZ, (EMILIA V. YUMUL and VICTORIA V. MOLINO),
HEIRS OF SEVERINA P. TUGADE (ILUMINADA and LEONORA P. TUGADE,
HEIRS OF ETANG P. GATMIN (LUDIVINA G. DELA CRUZ (by and through
ALFONSO G. DELA CRUZ), HILARIA G. COBERO and ALFREDO G. COBERO)
and SIONY G. TEPOL (by and through ELENA T. RIVAS and ELESIO TEPOL,
JR.), AS HEIRS OF DECEDENT PABLO PASCUA, Respondents.
DECISION
Tinga, J.:
This is a petition for review1 under Rule 45 of the Rules of Court of the Court of
Appeals Decision dated 22 March 20052 and Resolution dated 9 February 20063 in
CA-G.R. CV No. 67462. The Court of Appeals reversed the 12 November 1999 Order
of the Regional Trial Court (RTC) of Olongapo City, Branch 734 which granted the
motion to dismiss filed by Guaranteed Homes, Inc. (petitioner). The appellate court
denied petitioners motion for reconsideration.

The factual antecedents are as follows:

Respondents, who are the descendants of Pablo Pascua (Pablo), filed a complaint
seeking reconveyance of a parcel of land with an area of 23.7229 hectares situated
in Cabitaugan, Subic, Zambales and covered by Original Certificate of Title (OCT)
No. 404 in the name of Pablo.5 In the alternative, the respondents prayed that
damages be awarded in their favor.6
OCT No. 4047 was attached as one of the annexes of respondents complaint. It
contained several annotations in the memorandum of encumbrances which showed
that the property had already been sold by Pablo during his lifetime to Alejandria
Marquinez and Restituto Morales. Respondents also attached copies of the following
documents as integral parts of their complaint: Transfer Certificate of Title (TCT) No.
T-8241,8 TCT No. T-8242,9 TCT No. T-10863,10 the Extrajudicial Settlement of a Sole
Heir and Confirmation of Sales11 executed by Cipriano Pascua, Sr. (Cipriano), and
the Deed of Sale with Mortgage12 between spouses Albino Rodolfo and Fabia
Rodolfo (spouses Rodolfo) and petitioner.
In their complaint,13 respondents alleged that Pablo died intestate sometime in
June 1945 and was survived by his four children, one of whom was the deceased
Cipriano.14 On 13 February 1967, Cipriano executed a document denominated as
"Extrajudicial Settlement of a Sole Heir and Confirmation of Sales,"15 wherein he
declared himself as the only heir of Pablo and confirmed the sales made by the
decedent during his lifetime, including the alleged sale of the disputed property to
spouses Rodolfo.
Respondents likewise averred that on the following day 14 February 1967, TCT No.
T-824116 was issued in the name of Cipriano "without OCT No. 404 having been
cancelled."17 However, TCT No. T-8241 was not signed by the Register of Deeds. On
the same day, TCT No. T-8242 was issued in the name of the spouses Rodolfo and
TCT No. T-8241 was thereby cancelled.18 Subsequently, on 31 October 1969, the
spouses Rodolfo sold the disputed property to petitioner by virtue of a Deed of Sale
with Mortgage. Consequently, on 5 November 1969, TCT No. T-8242 was cancelled
and TCT No. T-1086319 was issued in the name of petitioner.20
It was further averred in the complaint that Jorge Pascua, Sr., son of Cipriano, filed
on 24 January 1997 a petition before the RTC of Olongapo City, Branch 75, for the
issuance of a new owners duplicate of OCT No. 404, docketed as Other Case No.
04-0-97.21 The RTC denied the petition.22 The trial court held that petitioner was
already the owner of the land, noting that the failure to annotate the subsequent
transfer of the property to it at the back of OCT No. 404 did not affect its title to the
property.

Petitioner filed a motion to dismiss23 the complaint on the grounds that the action
is barred by the Statute of Limitations, more than 28 years having elapsed from the
issuance of TCT No. T-10863 up to the filing of the complaint, and that the complaint
states no cause of action as it is an innocent purchaser for value, it having relied on
the clean title of the spouses Rodolfo.
Impleaded as defendants, the heirs of Cipriano filed an answer to the complaint in
which they denied knowledge of the existence of the extrajudicial settlement
allegedly executed by Cipriano and averred that the latter, during his lifetime, did
not execute any document transferring ownership of the property.24
The Register of Deeds and the National Treasurer filed, through the Office of the
Solicitor General, an answer averring that the six (6)-year period fixed in Section
102 of Presidential Decree (P.D.) No. 1529 for the filing of an action against the
Assurance Fund had long prescribed since the transfer of ownership over the
property was registered through the issuance of TCT No. T-10863 in favor of
petitioner as early as 1969. They also claimed that respondents have no cause of
action against the Assurance Fund since they were not actually deprived of
ownership over the property, as they could have recovered the property had it not
been for their inaction for over 28 years.25
The RTC granted petitioners motion to dismiss.26 Noting that respondents had
never claimed nor established that they have been in possession of the property
and that they did not present any evidence to show that petitioner has not been in
possession of the property either, the RTC applied the doctrine that an action to
quiet title prescribes where the plaintiff is not in possession of the property.
The trial court found that the complaint per its allegations presented a case of
implied or constructive trust on the part of Cipriano who had inaccurately claimed to
be the sole heir of Pablo in the deed of extrajudicial settlement of estate which led
to the issuance of TCT No. T- 8241 in his favor. As the prescriptive period for
reconveyance of a fraudulently registered real property is ten (10) years reckoned
from the date of the issuance of the title, the trial court held that the action for
reconveyance had already prescribed with the lapse of more than 28 years from the
issuance of TCT No. T-10863 on 5 November 1969 as of the filing of the complaint
on 21 November 1997.
The RTC added that it is an enshrined rule that even a registered owner of property
may be barred from recovering possession of property by virtue of laches.
The RTC further held that petitioner had the right to rely on TCT No. T- 8242 in the
name of spouses Rodolfo. Petitioner is not obliged to go beyond the title considering
that there were no circumstances surrounding the sale sufficient to put it into
inquiry.

Concerning the Assurance Fund, the RTC held that the claim against it had long
prescribed since Section 102 of P.D. No. 1529 provides for a six-year period within
which a plaintiff may file an action against the fund and in this case the period
should be counted from the time of the issuance of the challenged TCT No. T-10863
on 5 November 1969 and thus expired in 1975.
Undaunted, respondents appealed to the Court of Appeals.27
The Court of Appeals reversed the RTCs order.28 In ordering the reinstatement of
the complaint, the appellate court ruled that the averments in respondents
complaint before the RTC make out a case for quieting of title which has not
prescribed. Respondents did not have to prove possession over the property since
petitioner as the movant in a motion to dismiss hypothetically admitted the truth of
the allegations in the complaint. The appellate court found that possession over the
property was sufficiently alleged in the complaint which stated that "neither
petitioner nor the Rodolfo spouses ever had possession of the disputed property" as
"a number of the Pascua heirs either had been (still are) in actual, continuous and
adverse possession thereof or had been enjoying (still are enjoying) the use
thereof."29 By the same token, laches had not set in, the Court of Appeals added.
The appellate court further held that the ruling of the RTC that petitioner is an
innocent purchaser for value is contrary to the allegations in respondents
complaint.
Hence, the present petition for review.
The sole issue before this Court revolves around the propriety of the RTCs granting
of the motion to dismiss and conversely the tenability of the Court of Appeals
reversal of the RTCs ruling.
The petition is meritorious.
It is well-settled that to sustain a dismissal on the ground that the complaint states
no cause of action, the insufficiency of the cause of action must appear on the face
of the complaint, and the test of the sufficiency of the facts alleged in the complaint
to constitute a cause of action is whether or not, admitting the facts alleged, the
court could render a valid judgment upon the same in accordance with the prayer of
the complaint. For the purpose, the motion to dismiss must hypothetically admit the
truth of the facts alleged in the complaint.30 The admission, however, is limited
only to all material and relevant facts which are well pleaded in the complaint.31
The factual allegations in respondents complaint should be considered in tandem
with the statements and inscriptions on the documents attached to it as annexes or

integral parts. In a number of cases, the Court held that in addition to the
complaint, other pleadings submitted by the parties should be considered in
deciding whether or not the complaint should be dismissed for lack of cause of
action.32 Likewise, other facts not alleged in the complaint may be considered
where the motion to dismiss was heard with the submission of evidence, or if
documentary evidence admitted by stipulation discloses facts sufficient to defeat
the claim.33 For while the court must accept as true all well pleaded facts in the
complaint, the motion does not admit allegations of which the court will take judicial
notice are not true, nor does the rule apply to legally impossible facts, nor to facts
inadmissible in evidence, nor to facts which appear by record or document included
in the pleadings to be unfounded.34
In the case at bar, the trial court conducted a hearing on the motion to dismiss. At
the hearing, the parties presented documentary evidence. Among the documents
marked and offered in evidence are the annexes of the complaint.35
Based on the standards set by this Court in relation to the factual allegations and
documentary annexes of the complaint as well as the exhibits offered at the hearing
of the motion to dismiss, the inescapable conclusion is that respondents complaint
does not state a cause of action against petitioner.
Firstly, the complaint does not allege any defect with TCT No. T-8242 in the name of
the spouses Rodolfo, who were petitioners predecessors-in-interest, or any
circumstance from which it could reasonably be inferred that petitioner had any
actual knowledge of facts that would impel it to make further inquiry into the title of
the spouses Rodolfo.36 It is basic that a person dealing with registered property
need not go beyond, but only has to rely on, the title of his predecessor-in-interest.
Since "the act of registration is the operative act to convey or affect the land insofar
as third persons are concerned," it follows that where there is nothing in the
certificate of title to indicate any cloud or vice in the ownership of the property, or
any encumbrance thereon, the purchaser is not required to explore farther than
what the Torrens title upon its face indicates in quest for any hidden defect or
inchoate right that may subsequently defeat his right thereto. If the rule were
otherwise, the efficacy and conclusiveness of the certificate of title which the
Torrens system seeks to insure would entirely be futile and nugatory. The public
shall then be denied of its foremost motivation for respecting and observing the
Torrens system of registration. In the end, the business community stands to be
inconvenienced and prejudiced immeasurably.37
Contrary to the assertion of respondents, OCT No. 404 was expressly cancelled by
TCT No. T-8241. The alleged non-signature by the Register of Deeds Soliman
Achacoso, , does not affect the validity of TCT No. T-8241 since he signed TCT No. T8242 and issued both titles on the same day. There is a presumption of regularity in
the performance of official duty. The presumption is further bolstered by the fact

that TCT No. T-8241 was certified to be on file with the Registry of Deeds and
registered in the name of Cipriano. It is enough that petitioner had examined the
latest certificate of title which in this case was issued in the name of the immediate
transferor, the spouses Rodolfo. The purchaser is not bound by the original
certificate but only by the certificate of title of the person from whom he had
purchased the property.38
Secondly, while the Extrajudicial Settlement of a Sole Heir and Confirmation of Sales
executed by Cipriano alone despite the existence of the other heirs of Pablo, is not
binding on such other heirs, nevertheless, it has operative effect under Section 44
of the Property Registration Decree, which provides that:
SEC. 44. Statutory Liens Affecting Title. Every registered owner receiving a
certificate of title in pursuance of a decree of registration, and every subsequent
purchaser of registered land taking a certificate of title for value and in good faith,
shall hold the same free from all encumbrances except those noted on said
certificate and any of the following encumbrances which may be subsisting, namely:
xxxx
Even assuming arguendo that the extrajudicial settlement was a forgery, the Court
still has to uphold the title of petitioner. The case law is that although generally a
forged or fraudulent deed is a nullity and conveys no title, there are instances when
such a fraudulent document may become the root of a valid title.39 And one such
instance is where the certificate of title was already transferred from the name of
the true owner to the forger, and while it remained that way, the land was
subsequently sold to an innocent purchaser. For then, the vendee had the right to
rely upon what appeared in the certificate.40
The Court cannot give credence to respondents claims that the Extrajudicial
Settlement of a Sole Heir and Confirmation of Sales was not registered and that OCT
No. 404 was not cancelled by the Register of Deeds. The Register of Deeds of
Zambales certified that the extrajudicial settlement was recorded on 14 February
1967, per Entry No. 18590. This is in compliance with Section 56 of Act No. 496,41
the applicable law at the time of registration, which provides that:
Sec. 56. Each register of deeds shall keep an entry book in which he shall enter in
the order of their reception all deeds and other voluntary instruments, and all copies
of writs and other process filed with him relating to registered land. He shall note in
such book the year, month, day, hour, and minute of reception of all instruments, in
the order in which they are received. They shall be regarded as registered from the
time so noted, and the memorandum of each instrument when made on the
certificate of title to which it refers shall bear the same date. [Emphasis supplied]

Registration in the public registry is notice to the whole world. Every conveyance,
mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting
registered land shall be, if registered, filed or entered in the Office of the Register of
Deeds of the province or city where the land to which it relates lies, be constructive
notice to all persons from the time of such registering, filing or entering.42
Thirdly, respondents cannot make out a case for quieting of title since OCT No. 404
had already been cancelled. Respondents have no title to anchor their complaint
on.43 Title to real property refers to that upon which ownership is based. It is the
evidence of the right of the owner or the extent of his interest, by which means he
can maintain control and, as a rule, assert right to exclusive possession and
enjoyment of the property.44
Moreover, there is nothing in the complaint which specified that the respondents
were in possession of the property. They merely alleged that the occupants or
possessors are "others not defendant Spouses Rodolfo"45 who could be anybody,
and that the property is in actual possession of "a number of the Pascua heirs"46
who could either be the respondents or the heirs of Cipriano. The admission of the
truth of material and relevant facts well pleaded does not extend to render a
demurrer an admission of inferences or conclusions drawn therefrom, even if
alleged in the pleading; nor mere inferences or conclusions from
facts not stated; nor conclusions of law; nor matters of evidence; nor
surplusage and irrelevant matters.47
The other heirs of Pablo should have filed an action for reconveyance based on
implied or constructive trust within ten (10) years from the date of registration of
the deed or the date of the issuance of the certificate of title over the property.48
The legal relationship between Cipriano and the other heirs of Pablo is governed by
Article 1456 of the Civil Code which provides that if a property is acquired through
mistake or fraud, the person obtaining it is, by force of law, considered a trustee of
an implied trust for the benefit of the person from whom the property comes.
From the above discussion, there is no question that petitioner is an innocent
purchaser for value; hence, no cause of action for cancellation of title will lie against
it.49 The RTC was correct in granting petitioners motion to dismiss.
Lastly, respondents claim against the Assurance Fund also cannot prosper. Section
101 of P.D. No. 1529 clearly provides that the Assurance Fund shall not be liable for
any loss, damage or deprivation of any right or interest in land which may have
been caused by a breach of trust, whether express, implied or constructive. Even
assuming arguendo that they are entitled to claim against the Assurance Fund, the
respondents claim has already prescribed since any action for compensation

against the Assurance Fund must be brought within a period of six (6) years from
the time the right to bring such action first occurred, which in this case was in 1967.
WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals in CAG.R. CV No. 67462 is REVERSED and SET ASIDE. The 12 November 1999 Order of
the Regional Trial Court of Olongapo City, Branch 73 in Civil Case No. 432-097 is
REINSTATED.
SO ORDERED.
G.R. No. 154270

March 9, 2010

TEOFISTO OO, PRECY O. NAMBATAC, VICTORIA O. MANUGAS and POLOR

O. CONSOLACION, Petitioners,
vs.
VICENTE N. LIM, Respondent.
DECISION
BERSAMIN, J.:
The subject of controversy is Lot No. 943 of the Balamban Cadastre in Cebu City,
covered by Original Certificate of Title (OCT) No. RO-9969-(O-20449), over which the
contending parties in this action for quieting of title, initiated by respondent Vicente
N. Lim (Lim) in the Regional Trial Court (RTC) in Cebu City, assert exclusive
ownership, to the exclusion of the other. In its decision dated July 30, 1996,1 the
RTC favored Lim, and ordered the cancellation of OCT No. RO-9969-(O-20449) and
the issuance of a new certificate of title in the name of Luisa Narvios-Lim (Luisa),
Lims deceased mother and predecessor-in-interest.
On appeal (CA-GR CV No. 57823), the Court of Appeals (CA) affirmed the RTC on
January 28, 2002.2 It later denied the petitioners motion for reconsideration
through the resolution dated June 17, 2002.3
Hence, this appeal via petition for review on certiorari.
Antecedents
On October 23, 1992, Lim filed in the RTC in Cebu City a petition for the
reconstitution of the owners duplicate copy of OCT No. RO-9969-(O-20449),
alleging that said OCT had been lost during World War II by his mother, Luisa;4 that
Lot No. 943 of the Balamban Cadastre in Cebu City covered by said OCT had been
sold in 1937 to Luisa by Spouses Diego Oo and Estefania Apas (Spouses Oo), the
lots registered owners; and that although the deed evidencing the sale had been
lost without being registered, Antonio Oo (Antonio), the only legitimate heir of

Spouses Oo, had executed on April 23, 1961 in favor of Luisa a notarized
document denominated as confirmation of sale,5 which was duly filed in the
Provincial Assessors Office of Cebu.
Zosimo Oo and petitioner Teofisto Oo (Oos) opposed Lims petition, contending
that they had the certificate of title in their possession as the successors-in-interest
of Spouses Oo.
On account of the Oos opposition, and upon order of the RTC, Lim converted the
petition for reconstitution into a complaint for quieting of title,6 averring additionally
that he and his predecessor-in-interest had been in actual possession of the
property since 1937, cultivating and developing it, enjoying its fruits, and paying the
taxes corresponding to it. He prayed, inter alia, that the Oos be ordered to
surrender the reconstituted owners duplicate copy of OCT No. RO-9969-(O-20449),
and that said OCT be cancelled and a new certificate of title be issued in the name
of Luisa in lieu of said OCT.
In their answer,7 the Oos claimed that their predecessors-in-interest, Spouses Oo,
never sold Lot No. 943 to Luisa; and that the confirmation of sale purportedly
executed by Antonio was fabricated, his signature thereon not being authentic.
RTC Ruling
On July 30, 1996, after trial, the RTC rendered its decision,8 viz:
WHEREFORE, premises considered, judgment is hereby rendered quieting plaintiff's
title to Lot No. 943 of the Balamban (Cebu) Cadastre, and directing the Register of
Deeds of Cebu
(1) To register the aforestated April 23, 1961 Confirmation of Sale of Lot No. 943 of
the Balamban, Cebu Cadastre by Antonio Oo in favor of Luisa Narvios-Lim;
(2) To cancel the original certificate of title covering the said Lot No. 943 of the
Balamban, Cebu Cadastre; and,
(3) To issue in the name of Luisa Narvios-Lim, a new duplicate certificate of title No.
RO-9969 (O-20449) of the Register of Deeds of Cebu, which shall contain a
memorandum of the fact that it is issued in place of the lost duplicate certificate of
title, and shall in all respects be entitled to like faith and credit as the original
certificate, and shall be regarded as such for all purposes of this decree, pursuant to
the last paragraph of Section 109, Presidential Decree No. 1529.
Without special pronouncement as to costs.

SO ORDERED.9
The RTC found that the Lims had been in peaceful possession of the land since
1937; that their possession had never been disturbed by the Oos, except on two
occasions in 1993 when the Oos seized the harvested copra from the Lims
caretaker; that the Lims had since declared the lot in their name for taxation
purposes, and had paid the taxes corresponding to the lot; that the signature of
Antonio on the confirmation of sale was genuine, thereby giving more weight to the
testimony of the notary public who had notarized the document and affirmatively
testified that Antonio and Luisa had both appeared before him to acknowledge the
instrument as true than to the testimony of the expert witness who attested that
Antonios signature was a forgery.
CA Ruling
On appeal, the Oos maintained that the confirmation of sale was spurious; that the
property, being a titled one, could not be acquired by the Lims through prescription;
that their (the Oos) action to claim the property could not be barred by laches; and
that the action instituted by the Lims constituted a collateral attack against their
registered title.1avvphi1
The CA affirmed the RTC, however, and found that Spouses Oo had sold Lot No.
943 to Luisa; and that such sale had been confirmed by their son Antonio. The CA
ruled that the action for quieting of title was not a collateral, but a direct attack on
the title; and that the Lims undisturbed possession had given them a continuing
right to seek the aid of the courts to determine the nature of the adverse claim of a
third party and its effect on their own title.
Nonetheless, the CA corrected the RTC, by ordering that the Office of the Register of
Deeds of Cebu City issue a new duplicate certificate of title in the name of Luisa,
considering that the owners duplicate was still intact in the possession of the Oos.
The decree of the CA decision was as follows:
WHEREFORE, the appeal is DISMISSED for lack of merit. However, the dispositive
portion of the decision appealed from is CORRECTED as follows:
(1) Within five (5) days from finality of the decision, defendants-appellants are
directed to present the owner's duplicate copy of OCT No. RO-9969 (O-20449) to the
Register of Deeds who shall thereupon register the "Confirmation of Sale" of Lot No.
943, Balamban Cadastre, Cebu, executed on April 23, 1961 by Antonio Oo in favor
of Luisa Narvios-Lim, and issue a new transfer certificate of title to and in the name
of the latter upon cancellation of the outstanding original and owner's duplicate
certificate of title.

(2) In the event defendants-appellants neglect or refuse to present the owner's copy
of the title to the Register of Deeds as herein directed, the said title, by force of this
decision, shall be deemed annulled, and the Register of Deeds shall make a
memorandum of such fact in the record and in the new transfer certificate of title to
be issued to Luisa Narvios-Lim.
(3) Defendants-appellants shall pay the costs.
SO ORDERED.10
The CA denied the Oos motion for reconsideration11 on June 17, 2002.12
Hence, this appeal.
Issues
The petitioners raise the following issues:
1. Whether or not the validity of the OCT could be collaterally attacked through an
ordinary civil action to quiet title;
2. Whether or not the ownership over registered land could be lost by prescription,
laches, or adverse possession;
3. Whether or not there was a deed of sale executed by Spouses Oo in favor of
Luisa and whether or not said deed was lost during World War II;
4. Whether or not the confirmation of sale executed by Antonio in favor of Luisa
existed; and
5. Whether or not the signature purportedly of Antonio in that confirmation of sale
was genuine.
Ruling of the Court
The petition has no merit.
A.
Action for cancellation of title is not an attack on the title

The petitioners contend that this action for quieting of title should be disallowed
because it constituted a collateral attack on OCT No. RO-9969-(O-20449), citing
Section 48 of Presidential Decree No. 1529, viz:
Section 48. Certificate not subject to collateral attack. A certificate of title shall not
be subject to collateral attack. It cannot be altered, modified, or cancelled except in
a direct proceeding in accordance with law.
The petitioners contention is not well taken.
An action or proceeding is deemed an attack on a title when its objective is to nullify
the title, thereby challenging the judgment pursuant to which the title was
decreed.13 The attack is direct when the objective is to annul or set aside such
judgment, or enjoin its enforcement. On the other hand, the attack is indirect or
collateral when, in an action to obtain a different relief, an attack on the judgment is
nevertheless made as an incident thereof.14
Quieting of title is a common law remedy for the removal of any cloud, doubt, or
uncertainty affecting title to real property.15 Whenever there is a cloud on title to
real property or any interest in real property by reason of any instrument, record,
claim, encumbrance, or proceeding that is apparently valid or effective, but is, in
truth and in fact, invalid, ineffective, voidable, or unenforceable, and may be
prejudicial to said title, an action may be brought to remove such cloud or to quiet
the title.16 In such action, the competent court is tasked to determine the
respective rights of the complainant and the other claimants, not only to place
things in their proper places, and to make the claimant, who has no rights to said
immovable, respect and not disturb the one so entitled, but also for the benefit of
both, so that whoever has the right will see every cloud of doubt over the property
dissipated, and he can thereafter fearlessly introduce the improvements he may
desire, as well as use, and even abuse the property as he deems fit.17
Lims complaint pertinently alleged:
18. If indeed, the genuine original of the Owner's Duplicate of the Reconstituted
Original Certificate of Title No. RO-9699 (O-20449) for Lot 943, Balamban Cadastre
xxx is in Defendant's (Oos) possession, then VNL submits the following
PROPOSITIONS:
xxx
18.2. Therefore, the Original of Owners Duplicate Certificate (which Respondents
[Defendants Oos] claim in their Opposition is in their possession) must be
surrendered to VNL upon order of this Court, after the Court shall have determined

VNL's mother's acquisition of the attributes of ownership over said Lot 943, in this
action, in accordance with Section 107, P.D. 1529, Property Registration Decree xxx
xxx
[t]hat OCT 20449 be cancelled and new title for Lot 943 be issued directly in favor
of LUISA NARVIOS, to complete her title to said Lot;18
The averments readily show that the action was neither a direct nor a collateral
attack on OCT No. RO-9969-(O-20449), for Lim was asserting only that the existing
title registered in the name of the petitioners predecessors had become inoperative
due to the conveyance in favor of Lims mother, and resultantly should be
cancelled. Lim did not thereby assail the validity of OCT No. RO-9969-(O-20449), or
challenge the judgment by which the title of the lot involved had been decreed. In
other words, the action sought the removal of a cloud from Lims title, and the
confirmation of Lims ownership over the disputed property as the successor-ininterest of Luisa.
B.
Prescription was not relevant
The petitioners assert that the lot, being titled in the name of their predecessors-ininterest, could not be acquired by prescription or adverse possession.
The assertion is unwarranted.
Prescription, in general, is a mode of acquiring or losing ownership and other real
rights through the lapse of time in the manner and under the conditions laid down
by law.19 However, prescription was not relevant to the determination of the
dispute herein, considering that Lim did not base his right of ownership on an
adverse possession over a certain period. He insisted herein, instead, that title to
the land had been voluntarily transferred by the registered owners themselves to
Luisa, his predecessor-in-interest.
Lim showed that his mother had derived a just title to the property by virtue of sale;
that from the time Luisa had acquired the property in 1937, she had taken over its
possession in the concept of an owner, and had performed her obligation by paying
real property taxes on the property, as evidenced by tax declarations issued in her
name;20 and that in view of the delivery of the property, coupled with Luisas actual
occupation of it, all that remained to be done was the issuance of a new transfer
certificate of title in her name.
C.

Forgery, being a question of fact, could not be dealt with now

The petitioners submit that Lims evidence did not preponderantly show that the
ownership of the lot had been transferred to Luisa; and that both the trial and the
appellate courts disregarded their showing that Antonios signature on the
confirmation of sale was a forgery.
Clearly, the petitioners hereby seek a review of the evaluation and appreciation of
the evidence presented by the parties.
The Court cannot anymore review the evaluation and appreciation of the evidence,
because the Court is not a trier of facts.21 Although this rule admits of certain
exceptions, viz: (1) when the conclusion is a finding grounded entirely on
speculation, surmises, or conjecture; (2) when the inference made is manifestly
mistaken; (3) where there is a grave abuse of discretion; (4) when the judgment is
based on a misapprehension of facts; (5) when the findings of fact are conflicting;
(6) when the Court of Appeals, in making its findings, went beyond the issues of the
case, and the findings are contrary to the admissions of both appellant and
appellee; (7) when the findings of the Court of Appeals are contrary to those of the
trial court; (8) when the findings of fact are conclusions without specific evidence on
which they are based; (9) when the facts set forth in the petition as well in the
petitioners main and reply briefs are not disputed by the respondents; and, (10)
when the findings of fact of the Court of Appeals are premised on the supposed
absence of evidence and are contradicted by the evidence on record,22 it does not
appear now that any of the exceptions is present herein. We thus apply the rule
without hesitation, and reject the appeal for that reason.
It is emphasized, too, that the CA upheld the conclusion arrived at by the RTC that
the signature of Antonio had not been simulated or forged. The CA ruled that the
testimony of the notary public who had notarized the confirmation of sale to the
effect that Antonio and Luisa had appeared before him prevailed over that of the
petitioners expert witness. The concurrence of their conclusion on the genuineness
of Antonios signature now binds the Court.23
In civil cases, the party having the burden of proof must establish his case by a
preponderance of evidence. Preponderance of evidence is the weight, credit, and
value of the aggregate evidence on either side, and is usually considered to be
synonymous with the term greater weight of the evidence or greater weight of the
credible evidence. Preponderance of evidence is a phrase that means, in the last
analysis, probability of the truth.24 It is evidence that is more convincing to the
court as worthy of belief than that which is offered in opposition thereto.

Lim successfully discharged his burden of proof as the plaintiff. He established by

preponderant evidence that he had a superior right and title to the property. In
contrast, the petitioners did not present any proof of their better title other than
their copy of the reconstituted certificate of title. Such proof was not enough,
because the registration of a piece of land under the Torrens system did not create
or vest title, such registration not being a mode of acquiring ownership. The
petitioners need to be reminded that a certificate of title is merely an evidence of
ownership or title over the particular property described therein. Its issuance in
favor of a particular person does not foreclose the possibility that the real property
may be co-owned with persons not named in the certificate, or that it may be held
in trust for another person by the registered owner.25
WHEREFORE, the petition for review on certiorari is denied, and the decision dated
January 28, 2002 is affirmed.
The petitioners are ordered to pay the costs of suit.
SO ORDERED.
iii.
iv.

Original certificate of title (Section 40)

Owners duplicate certificate (Section 41)

August 31, 1966

G.R. No. L-21703-04
MATEO H. REYES and JUAN H. REYES, petitioners and appellants,
vs.
MATEO RAVAL REYES, respondent and appellee.
Harold M. Hernando for petitioners and appellants.
Rafael Ruiz for respondent and appellee.
, J.:
Direct appeal on pure question of law from an order of the Court of First Instance of
Ilocos Norte, in its Cadastral Cases Nos. 31, L. R. C. Rec. No. 1188, and 42, L. R. C.
Rec. No. 1994, denying petitioners motion to compel respondent to surrender their
owners duplicates of Original Certificates of Title Nos. 22161 and 8066, as well as
from a subsequent order of the same court, refusing, upon petitioners motion, to
reconsider the first order of denial.
The undisputed facts are: three brothers, Mateo H., Juan H., and Francisco H., all
surnamed Reyes, are the registered owners of several parcels of land, to wit; Lots
Nos. 15891, 15896, 15902 and 15912, of the Laoag (Ilocos Norte) Cadastre,

embraced in and covered by Original Certificate of Title No. 22161, and also Lots
Nos. 20481 and 20484, of the same cadastral survey, embraced in and covered by
Original Certificate of Title No. 8066, both of the Registry of Deeds of Ilocos Norte.
These titles were issued pursuant to a decree of registration, dated 31 May 1940.
On 17 July 1962, petitioners Mateo H. Reyes and Juan H. Reyes filed, in the above
stated cadastral cases, a motion for issuance of writs of possession over all the lots
covered by both Certificates of Title above referred to.
Respondent Mateo Raval Reyes opposed the motion, admitting that he is only in
possession of the lots covered by Original Certificate of Title No. 22161, but denying
that he possesses the lots covered by Original Certificate of Title No. 8066;
however, he claimed that he has been in, and is entitled to, the possession thereof
(i.e., Lots Nos. 20481 and 20484), having acquired by way of absolute sale (not
recorded) from petitioners brother, Francisco H. Reyes, the latters undivided onethird (1/3) share, interest and participation to these disputed lots.
After due hearing of this appellant, the court a quo issued, on 20 December 1962,
the writ of possession with respect to Lot Nos. 15891 and 15896, which writ was,
upon petitioners motion for reconsideration, amended, on 7 January 1963, to
include all the other lots covered by both titles.
Respondent did not appeal from this order amending the writ of possession.
Subsequently, petitioners in the above cadastral cases, as plaintiffs, commenced,
on 15 January 1963, before the same court of first instance, an ordinary civil action
seeking to recover the products of the disputed lots, or their value, and moral
damages against respondent Mateo Raval Reyes, as defendant. This case was
docketed as its Civil Case No. 3659.
Defendant therein (now respondent M. Raval Reyes) answered the complaint and
pleaded a counterclaim for partition of all the disputed lots, alleging the same
ground he had heretofore raised in his answer and/or opposition to the motion for
issuance of writ of possession, i.e., he is their (plaintiffs) co-owner, he having
bought from plaintiffs brother, Francisco H. Reyes, the latters undivided one-third
(1/3) share, interest and participation to these disputed lots.
Pending trial on this ordinary civil case (No. 3659), petitioners presented, on 25
February 1963, in the cadastral cases aforementioned, a motion to compel
respondent Mateo Raval Reyes to surrender and deliver to them the owners
duplicates of Original Certificates of Title Nos. 22161 and 8066. Respondent
opposed this motion.

The court a quo denied petitioners motion, on the ground that the parcels of land
covered by both titles are subjects of litigation in Civil Case No. 3659 and the same
has not yet been decided on the merits by it. Petitioners subjected the foregoing
order to a motion for reconsideration, but without success; hence, the present
appeal.
Petitioners-appellants dispute the above ruling of the trial court contending that,
since the subject matter of Civil Case No. 3659 are not the lots covered by the titles
in question but their products or value, and moral damages, these lots are not in
litigation in this ordinary civil case; and that since respondent had already raised
the issue of ownership and possession of these lots in his opposition to the
(petitioners) motion for issuance of writ of possession and, despite this opposition,
the court a quo granted the writ, without any appeal being taken, respondent is
barred and estopped from raising the same issue in the ordinary civil case, under
the principle of res judicata.
On the other hand, respondent-appellee maintains that, having pleaded a
counterclaim for partition of the lots in question in said Civil Case No. 3659, the trial
court correctly held that these lots are subjects of litigation in this ordinary civil
case. He also maintains that petitioners not having impleaded their brother,
Francisco H. Reyes, or his heirs, as parties in their motion for issuance of writ of
execution, and because these heirs have not intervened in this particular incident,
the writ of possession issued by the trial court is, at most, valid only with respect to
their (petitioners) undivided two-thirds (2/3) share and participation in these
disputed lots; hence, he concludes that he is not barred and estopped from raising
the issue of ownership and possession of the undivided one-third (1/3) share and
participation of petitioners brother, Francisco H. Reyes, which share respondent
allegedly bought from the latter.
In their reply brief, petitioners-appellants refute the latter argument of respondentappellee by showing that they had previously obtained special authority from the
heirs of their deceased brother to represent them in the proceedings had in the
court below.
The sole issue to be resolved in the instant appeal is: who between petitionersappellants or respondent-appellee has a better right to the possession or custody of
the disputed owners duplicates of certificates of title.
While we agree with the court a quo that the disputed lots are subjects of litigation
in Civil Case No. 3659, it appearing that respondent, as defendant therein, had
presented a counterclaim for partition of the lots covered by the titles, we see no
valid and plausible reason to justify, on this ground, the withholding from the
registered owners, such as the petitioners-appellants herein, the custody and
possession of the owners duplicates of certificates of title. In a decided case, this

Court has already held that the owner of the land in whose favor and in whose
name said land is registered and inscribed in the certificate of title has a more
preferential right to the possession of the owners duplicate than one whose name
does not appear in the certificate and has yet to establish his right to the
possession thereto. Thus, this Court said:
Como acertadamente dijo el Juzgado, lo unico que se suscita es si Ana Umbao de
Carpio tiene derecho a la possession del duplicado para el dueno del Certificado de
Titulo Original No. 698, con preferencia a la opositora-apelante. A nuestro juicio, la
solucion es clara e ineludible. Hallandose admitido que el decreto final que se dicto
en el expediente catastral en 28 de mayo de 1936, en relacion con el lote No. 778,
fue a favor de Ana Umbao y que el duplicado para el dueo del Certificado de Titulo
Original No. 698 se expidio por el Registrador de Titulos a favor de la misma es
obvious que quien tiene derecho a poseer el certificado de titulo es ella y no la
apelante (art. 41 de la Ley No. 496, tal como ha sido reformado).
Alega la apelante que ella tiene tanto derecho como la apelada a poseer el titulo
porque el terreno a que se refiere es de la propiedad de las tres hermanas. La
pretension no es meritoria Segun el articulo 41 de la Ley No. 496, conforme ha sido
enmendado, el duplicado para el dueno debe expedirse por el Registrador a nombre
de la persona a cuyo favor se ha decretado el terreno y dispone, ademas, que dicho
duplicado debe entregarsele al dueo inscrito. Si la apelante cree que tiene derecho
a participar en el lote No. 778, como coheredera, debe ejercitar una accion
independiente, encaminada a obtener su participacion. (El Director de Terrenos
contra Abacahin 72 Phil. 326).
It being undisputed that respondent had already availed of an independent civil
action to recover his alleged co-owners share in the disputed lots by filing a
counterclaim for partition in said Civil Case No. 3659, his rights appear to be amply
protected; and considering that he may also avail of, to better protect his rights
thereto, the provision on notice of lis pendens under Section 24, Rule 14, of the
Revised Rules of Court, for the purpose of recording the fact that the lots covered by
the titles in question are litigated in said Civil Case No. 3659, we again see no
justifiable reason for respondent to retain the custody of the owners duplicates of
certificates of titles.
In view of the above considerations, we deem it unnecessary to pass on the merits
of the second contention of petitioners-appellants.
Wherefore, the orders appealed from should be, as they are hereby, reversed; and,
in accordance with this opinion, respondent Mateo Raval Reyes is hereby ordered to
deliver to petitioners the owners duplicates of Original Certificates of Title No.
22161 and 8066. With costs against respondent-appellee, Mateo Raval Reyes.

Concepcion, C.J., Barrera, Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez and
Castro, JJ., concur.
Regala, J., took no part.

v.
vi.

Transfer Certificate of Titile (Section 43)

Statement of Personal Circumstances (Section 45)

[G.R. No. L-7644. November 27, 1956.]

HENRY LITAM, ETC., ET AL., Plaintiffs-Appellants, vs. REMEDIOS R.
ESPIRITU, as guardian of the incompetent MARCOSA RIVERA, and ARMINIO
RIVERA, Defendants-Appellees.
[G.R. No. L-7645. November 27, 1956]
IN THE MATTER OF THE INTESTATE OF THE DECEASED RAFAEL LITAM. GREGORIO DY
TAM, Petitioner-Appellant, vs. REMEDIOS R. ESPIRITU, in her capacity as judicial
guardian of the incompetent MARCOSA RIVERA, counter-Petitioner, ARMINIO RIVERA,
administrator-Appellee.

DECISION
CONCEPCION, J.:
This is an appeal from a decision of the Court of First Instance of Rizal in the above
entitled case, which were jointly tried.
On May 21, 1952, Gregorio Dy Tam instituted Special Proceeding No. 1537 of said
court, entitled In the matter of the Intestate Estate of the Deceased Rafael Litam.
The petition therein filed, dated April 24, 1952, states that Petitioner is the son of
Rafael Litam, who died in Manila on January 10, 1951; chan
roblesvirtualawlibrarythat the deceased was survived by:chanroblesvirtuallawlibrary
Li Hong Hap 40 years
Li Ho 37 years
Gregorio Dy Tam 33 years
Henry Litam alias Dy Bun Pho 29 years

Beatriz Lee Tam alias Lee Giak Ian 27 years

Elisa Lee Tam alias Lee Giok Bee 25 years
William Litam alias Li Bun Hua 23 years
Luis Litam alias Li Bun Lin 22 years
that the foregoing children of the decedent by a marriage celebrated in China in
1911 with Sia Khin, now deceased; chan roblesvirtualawlibrarythat after the death
of Rafael Litam, Petitioner and his co-heirs came to know that the decedent had,
during the subsistence of said marriage with Sia Khin, contracted in 1922 in the
Philippines cralaw another marriage with Marcosa Rivera, Filipino citizen; chan
roblesvirtualawlibrarythat the decedent left as his property among others, his onehalf (1/2) share valued at P65,000 in the purported conjugal properties between him
and Marcosa Rivera, which cralaw partnership consisted of the following real
property acquired during the marriage between him and Marcosa Rivera, to
wit:chanroblesvirtuallawlibrary
(1) Three (3) parcels of land covered by Transfer Certificate of Title No. 1228 of the
Registry of Deeds of the province of Pampanga:chanroblesvirtuallawlibrary
(2) One (1) parcel of land covered by Transfer Certificate of Title No. 26011 of the
Registry of Deeds of the province of Bulacan.
and that the decedent had left neither a will nor debt. Petitioner prayed, therefore,
that, after appropriate proceedings, letters of administration be issued to Marcosa
Rivera, the surviving spouse of the decedent. Soon thereafter, Marcosa Rivera
filed a counter- petition:chanroblesvirtuallawlibrary (1) substantially denying the
alleged marriage of the decedent to Sia Khin, as well as the alleged filiation of the
persons named in the petition; chan roblesvirtualawlibrary(2) asserting that the
properties described herein are her paraphernal properties, and that the decedent
had left unpaid debts, and certain properties in Bulan and Casiguran, Sorsogon, and
in Virac, Catanduanes, apart from shares of stock in a private corporation known by
the name of Litam Co., Inc.; chan roblesvirtualawlibraryand (3) praying that her
nephew, Arminio Rivera, be appointed administrator of the intestate estate of the
deceased.
In due course, the court granted this petition and letters of administration were
issued to Arminio Rivera, who assumed his duties as such, and, later, submitted an
inventory of the alleged estate of Rafael Litam. Inasmuch as said inventory did not
include the properties mentioned in the petition, dated April 24, 1952, of Gregorio
Dy Tam, the latter filed, on November 29, 1952, a motion for the removal of Rivera

as administrator of the aforementioned estate. This led to a number of incidents

hinging on the question whether said properties belong in common to the decedent
and Marcosa Rivera or to the latter exclusively.
Meanwhile, Remedios R. Espiritu was appointed, in Special Proceeding No. 1709 of
the Court of First Instance of Rizal, guardian of Marcosa Rivera, who had been
declared incompetent. Thereafter, or on April 20, 1953, Gregorio Dy Tam and his
alleged brothers and sisters aforementioned, filed the complaint in Civil Case No.
2071 of the same court, against Remedios R. Espiritu, as guardian of Marcosa
Rivera, and Arminio Rivera. In said complaint, Plaintiffs therein reproduced
substantially the allegations made in the aforementioned petition of Gregorio Dy
Tam dated April 24. 1952, except that the properties acquired during the existence
of marriage between Rafael Litam and Marcosa Rivera and/or with their joint
efforts during the time that they lived as husband and wife were said to be more
than those specified in said petition, namely:chanroblesvirtuallawlibrary
(1) 3 parcels of land situated in the Municipality of Macabebe, Province of
Pampanga, covered by Transfer Certificate of Title No. 1228 of the Registry of Deeds
for the Province of Pampanga, issued on July 29, 1947;
(2) 2 Parcels of land, together with all buildings and improvements thereon except
those expressly noted in the title as belonging to other persons, situated in the
Municipality of Navotas, Province of Rizal, covered by Transfer Certificate of Title No.
35836 of the Registry of Deeds for the Province of Rizal, issued on October 4, 1938;
(3) 1 parcel of land situated in the Municipality of Malabon, Province of Rizal,
covered by Transfer Certificate of Title No. 23248 of the Registry of Deeds for the
Province of Rizal, issued on June 12, 1933;
(4) 1 parcel of land situated in Barrio of Kay-Badia, Municipality of Obando,
Province of Bulacan, covered by Transfer Certificate of Title No. 21809 of the
Registry of Deeds for the Province of Bulacan, issued on May 25, 1939;
(5) 1 parcel of land (plan psu-93067, swo-16049) situated in Barrio of Quibadia,
Municipality of Obando, Province of Bulacan, covered by Transfer Certificate of Title
No. 26011 of the Registry of Deeds for the Province of Bulacan, issued on April 9,
1943;
Other properties are located in Bataan province.
All properties total an assessed value of approximately P150,000.00.
In said complaint, Plaintiffs prayed that the judgment be
rendered:chanroblesvirtuallawlibrary

(1) declaring the aforesaid properties as belonging to the conjugal partnership or

tenancy in common which existed between the deceased Rafael Litam and the
incompetent Marcosa Rivera;
(2) ordering the Defendants to deliver the aforesaid properties to the
administration of the estate of the deceased Rafael Litam (Rule 75, section 2, Rules
of Court);
(3) ordering the said Defendants further to render an accounting of the fruits they
collected from the aforesaid properties and to deliver the same to the
administration of the estate of the deceased Rafael Litam;
(4) ordering the said Defendants to pay the administration of the estate of the
deceased Rafael Litam damages in double the value of the fruits mentioned in the
preceding paragraph which they embezzled; chan roblesvirtualawlibraryand
(5) ordering the Defendants to pay the costs. The Plaintiffs further pray for such
other remedy as the Court may deem just and equitable in the premises.
In her answer to the complaint, Marcosa Rivera reiterated, in effect, the allegations
in her counter-petition, dated July 12, 1952, in Special Proceeding No. 1537, and set
up some affirmative and special defenses, as well as a counter-claim for attorneys
fees and damages in the aggregate sum of P110,000.00.
Owning to the identity of the issue raised in said Civil Case No. 2071 and in the
aforementioned incidents in Special Proceeding No. 1537, both were jointly heard.
Later on, the court rendered a decision.
(1) Dismissing Civil Case No. 2071, with costs against the Plaintiffs;
(2) Sentencing the Plaintiff in Civil Case No. 2071, under the Defendants
counterclaim, to pay jointly and severally each of the Defendants the sum of
P5,000.00 as actual damages and P25,000.00 as moral damages;
(3) Declaring that the properties in question, namely:chanroblesvirtuallawlibrary
the fishponds, consisting of three parcels, situated in Macabebe, Pampanga, with
Transfer certificate of Title No. 1228 of the land records of Pampanga, one-half
undivided portion of the fishponds, consisting of two parcels, situated in Navotas,
Rizal, covered by Transfer Certificate of Title No. 35836, the parcel of land with the
improvements thereon situated in Malabon, Rizal, covered by Transfer Certificate of
Title No. 23248, both of the land records of Rizal, and the fishponds, consisting of
two parcels, situated in Obando, Bulacan, covered by Transfer Certificates of Title
Nos. 21809 and 26011, both of the land records of Bulacan, are the exclusive,

separate and paraphernal properties of Marcosa Rivera; chan

roblesvirtualawlibraryand
(4) Declaring that the Plaintiffs in Civil Case No. 2071 (who are the same persons
alleged to be children of Rafael Litam in the petition, dated April 24, 1952, filed by
the Petitioner in Sp. Proc. No. 1537) are not the children of the deceased Rafael
Litam, and that his only heir is his surviving wife, Marcosa Rivera.
The two (2) Cases are now before us on appeal taken by the Petitioner in Special
Proceeding No. 1537 and the Plaintiffs in Civil Case No. 2071. The issues for
determination are:chanroblesvirtuallawlibrary (1) Are Appellants the legitimate
children of Rafael Litam? (2) Is Marcosa Rivera the exclusive owner of the properties
in question, or do the same constitute a common property of her and the decedent?
The first issue hinges on whether Rafael Litam and Sia Khin were married in 1911,
and whether Rafael Litam is the father of Appellants herein. In this connection, the
lower court had the following to say:chanroblesvirtuallawlibrary
cralaw the evidence weikhs very heavily in favor of the theory of the Defendants
in Civil Case No. 2071 to the effect that the said deceased Rafael Litam was not
married to Sia Khin and that Plaintiffs, are not the children of the said decedent. The
Plaintiffs in Civil Case No. 2071 and the Petitioner in Sp. Proc. No. 1537 have utterly
failed to prove their alleged status as children of Rafael Litam by a marriage with
Sia Khin.
It appears from the evidence presented by the Defendants in civil Case No. 2071
and the administrator and the counter-Petitioner in Sp. Proc. No. 1537 that there
was no such marriage between the deceased Rafael Litam and Sia Khin and that the
Plaintiffs named in Civil Case No. 2071 are not children of said deceased. The
various official and public documents executed by Rafael Litam himself convincingly
show that he had not contracted any marriage with any person other than Marcosa
Rivera, and that he had no child. In the marriage certificate, (Exhibit 55) it was
clearly stated that he was single when he married Marcosa Rivera on June 10, 1922.
In the sworn application for alien certificate of registration dated July 7, 1950
(Exhibit 1), Rafael Litam unequivocably declared under oath that he had no child. In
the several other documents executed by him and presented in evidence, (Exhibits
19, 21, 22, 23, 46 and 46-A) Rafael Litam had consistently referred to Marcosa
Rivera alone as his wife; chan roblesvirtualawlibraryhe had never mentioned of Sia
Khin as his wife, or of his alleged children.
The witnesses presented by the Defendants in Civil Case No. 2071 and the
administrator and counter Petitioner in Sp. Proc. No. 1537 positively testified to the
effect that they know that Rafael Litam did not have any child, nor was he married
with Sia Khin. An impartial and disinterested witness, Felipe Cruz, likewise testified

that he has known Rafael Litam even before his marriage with Marcosa Rivera and
that said Rafael Litam did not have any child.
On the other hand, the Plaintiffs in Civil Case No. 2071 and the Petitioner in Sp.
Proc. No. 1537 presented in support of their theory the testimony of their lone
witness, Luis Litam, and certain documentary evidence. It is noteworthy that the
said Plaintiffs and said Petitioner did not present in evidence the marriage certificate
of Rafael Litam and Sia Khin, which in the opinion of the Court, is the competent and
best evidence of the alleged marriage between them. No explanation has been
given for the non-presentation of said marriage certificate, nor has there been any
showing of its loss. Neither have said Plaintiffs and said Petitioner presented any
competent secondary evidence of the supposed marriage.
The testimony of the lone witness, Luis Litam, cannot be given any credence and
value at all. His testimony is mostly hearsay, as according to him, he was merely
informed by Rafael Litam of the latters supposed marriage with Sia Khin. His
testimony is uncorroborated. The court noticed that the said witness was only 22
years old when he testified, and it appears in the petition filed by the Petitioner in
Sp. Proc. No. 1537 that said witness is the youngest of all the alleged eight children
of Rafael Litam. The Court is at a loss to understand why one or some of the older
alleged children of Rafael Litam were not presented as witnesses in view of the
unreliable testimony of Luis Litam, and considering that older persons are better
qualified to testify on the matters sought to be proved which allegedly happened a
long time ago.
The birth certificate presented by the Plaintiff in Civil Case No. 2071 and Petitioner
in Sp. Proc. No. 1537 cannot be given even little consideration, because the name of
the father of the children appearing therein is not Rafael Litam, but different
persons. It is very significant to note that the names of the father of the persons
appearing in said birth certificates are Dy Tham, Li Tam, Lee Tham, Rafael Dy Tam,
and that said persons were born in different places, some in Amoy, China, another
Fukien, China, and the other in Limtao, China. It also appears in said birth
certificates that the childrens mothers named therein are different, some being Sia
Khim, others Sia Quien, the other Sia Khun, and still another Sia Kian. These
documents do not establish the identity of the deceased Rafael Litam and the
persons named therein as father. Besides, it does not appear in the said certificates
of birth that Rafael Litam had in any manner intervened in the preparation and filing
thereof.
The other documentary evidence presented by the said Plaintiffs and Petitioner are
entirely immaterial and highly insufficient to prove the alleged marriage between
the deceased Rafael Litam and Sia Khin and the alleged statue of the Plaintiffs as
children of said decedent.

It is, therefore, the finding of this Court that the Plaintiffs named in Civil Case No.
2071 are not heirs of the said decedent, his only heir being his surviving wife,
Marcosa Rivera. (Emphasis ours.)
The findings of fact thus made in the decision appealed from are borne out by the
records and the conclusion drawn from said facts is, to our mind, substantially
correct.
Appellants evidence on this point consists of the testimony of Appellant Li Bun Lin,
who said that he is, also known as Luis Litam; chan roblesvirtualawlibrarythat his coAppellants are his brothers and sisters; chan roblesvirtualawlibrarythat their parents
are the decedent and Sia Khin, who were married in China in 1911; chan
roblesvirtualawlibraryand that Sia Khin died in Manila during the Japanese
occupation. He likewise, identified several pictures, marked Exhibits I to S, which
were claimed to be family portraits, but the lower court rejected their admission in
evidence. Although we agree with herein Appellants that this was an error, it is clear
to us that said pictures and the testimony of Luis Litam, as well as the other
evidence adverted to in the above-quoted portion of the decision appealed from,
are far from sufficient to outweigh, or even offset, the evidence in favor of the
Appellees.
It should be noted that the decedent had admittedly married Marcosa Rivera in
1922. In the very petition of Appellant Gregorio Dy Tam, in Special Proceeding No.
1537, dated April 24, 1952, he alleged that Marcosa Rivera is the surviving spouse
of the decedent. In their complaint in Civil Case No. 2071, Appellants specifically
admitted and averred the existence of the marriage between said Rafael Litam and
Marcosa Rivera which would have been void ab initio, and, hence, inexistent
legally, if Appellants pretense were true or they believed it to be so and that
they had lived as husband and wife. Again, although Gregorio Dy Tam, asserted,
in his aforementioned petition, that he and his co-heirs came to know about the
marriage of the decedent and Marcosa Rivera after the death of Rafael Litam, the
very testimony of Li Bun Lin, as witness for the Appellants, show, beyond doubt,
that said Appellants knew, during the lifetime of Rafael Litam that he and Marcosa
Rivera were living in Malabon, Rizal, openly and publicly, as husband and wife, and
regarded her as his lawful wife. Indeed, in the course of his testimony, said Li Bun
Lin alluded to her as his mother. In other words, aside from the circumstance that
the wedding and marital life of Marcosa Rivera and Rafael Litam is undisputed, it is,
also, an established fact that they had the general reputation of being legally
married and were so regarded by the community and by Appellants herein, during
the lifetime of Rafael Litam.
Upon the other hand, Appellants maintain, in effect, that Rafael Litam was guilty of
the crime of bigamy; chan roblesvirtualawlibrarythat he had, likewise, willfully and
maliciously falsified public and official documents; chan roblesvirtualawlibraryand

that, although Appellants and Sia Khin were living in Manila and Marcosa Rivera
whom Appellants knew resided only a few kilometers away, in Malabon, Rizal
where Rafael Litam returned daily, after attending to his business in Manila, the
decedent had succeeded, for about thirty (30) years, in keeping each party in
complete ignorance of the nature of his alleged relations with the other. Apart from
the highly improbable nature of the last part of Appellants pretense, it is obvious
that the same cannot be sustained unless the evidence in support thereof is of the
strongest possible kind, not only because it entails the commission by Rafael Litam
of grave criminal offenses which are derogatory to his honor, but, also, because
death has sealed his lips, thus depriving him of the most effective means of
defense. The proof for Appellants herein does not satisfy such requirement.
As regards the title to the properties in dispute, the evidence thereon was analyzed
by the lower court in the following language:chanroblesvirtuallawlibrary
It has been established by the evidence that the properties in question were
bought by Marcosa Rivera with her separate and exclusive money. The fishponds
situated in Obando, Bulacan, covered by Transfer Certificate of Title Nos. 21809 and
26011, the one-half (1/2) undivided portion of the fishponds situated in Navotas,
Rizal with Transfer Certificate of Title No. 35836, and the property situated in
Hulong-Duhat, Malabon, Rizal, with Transfer Certificate of Title No. 23248 were all
purchased by Marcosa Rivera with the money she earned and accumulated while
she was still single; chan roblesvirtualawlibrarywhile the fishponds situated in
Macabebe, Pampanga with Transfer Certificate of Title No. 1228 were purchased by
her with the money she inherited from her late sister, Rafaela Rivera and with the
money she received from the proceeds of the sale of the pieces of jewelry she
inherited from her father Eduardo Rivera and her sister Rafaela Rivera. The
properties in question, having been bought by Marcosa Rivera, although during her
marriage with Rafael Litam, with her exclusive and separate money, said properties
are undeniably her paraphernal properties. (Art. 1396, Spanish Civil Code, which is
the same as Art. 148 of the Civil Code of the Phil.)
Great importance should be given to the documentary evidence,
vis:chanroblesvirtuallawlibrary Exhibits 21, 22, 23, 19, 46 and 46-A, presented by
the Defendants, in Civil Case No. 2071 and the administrator and counter- Petitioner
in Sp. Proc. No. 1537, which prove beyond peradventure of any doubt that the
properties in question are the paraphernal properties of Marcosa Rivera. In Exhibit
21, Rafael Litam unequivocably declared under his oath that the money paid by
Marcosa Rivera for the fishponds in Obando, Bulacan was her exclusive and
separate money which was earned by her while she was still single. In Exhibits 22
and 23, both dated June 16, 1947, same Rafael Litam, also under oath, acknowledge
the fact that the sums of P13,000.00 and P10,000.00 loaned by Marcosa Rivera to
the spouses Catalino Pascual and Juliana Pascual, and to Juliana Pascual,
respectively, are the separate and exclusive money of Marcosa Rivera, in which

money Rafael Litam had no interest whatsoever. In Exhibit 19, same Rafael Litam
acknowledged the fact that he had obtained, before the outbreak of the second
world war, from Marcosa Rivera the sum of P135,000.00 which belongs exclusively
to the latter, and that after the liberation, or more specifically, on January 4, 1946,
he stole from Marcosa Rivera the further sum of P62,000.00, also belonging
exclusively to the latter, which amounts, totalling P197,000.00, exclusive of
interests, have not, according to the evidence, been paid to her up to the present.
In Exhibits 46 and 46-A, it was acknowledged by Rafael Litam that he had not given
any money to his wife, Marcosa Rivera, and that they have actually adopted a
system of separation of property, each of them not having any interest or
participation whatsoever in the property of the other. These declarations and
admission of fact made by Rafael Litam against his interest are binding upon him,
his heirs and successors in interests and third persons as well. (Secs. 7 & 29, Rule
123, Rules of Court).
The finding of this Court that the properties in question are paraphernal properties
of Marcosa Rivera, having been bought by her with her separate and exclusive
money, is further strengthened by the fact that, as it is clearly disclosed by the
evidence when Marcosa Rivera married Rafael Litam in 1922, she was already rich,
she having already earned and saved money as consignataria while she was still
single. It also appears that she was born of a rich family, her father, Eduardo Rivera,
being the owner of fishponds, commercial and residential lands and buildings,
(Exhibits 5 to 18, inclusive), with an assessed value of around P150,000.00 (Exhibits
25 and 42, inclusive), now worth approximately a million pesos, and most of which
properties as may be seen from the certificates of title were acquired by him way
back in the years 1916 and 1919. When Eduardo Rivera died on February 5, 1942,
his cash and jewelry were inherited by his eldest daughter, Rafaela Rivera, and
when the latter died single on July 2, 1943, Marcosa Rivera inherited her cash
amounting to P150,000.00, Philippine currency, and and her pieces of jewelry. It is
with this amount and with the proceeds of the sale of some of said pieces of jewelry
that Marcosa Rivera purchased the fishponds in question, situated in Macabebe,
Pampanga.
On the other hand, it appears from the evidence that when Rafael Litam was on
June 10, 1922, married to Marcosa Rivera, he was poor. He had to borrow from
Marcosa Rivera, the sum of P135,000.00 belonging exclusively to her before the
outbreak of the war, and to steal from her further sum of P62,000.00 after the
liberation (Exhibit 10). The said amounts totalling P197,000.00, exclusive of the
stipulated interests, according to the evidence, have not been paid to Marcosa
Rivera up to the present. Rafael Litam did not contribute any amount of money or
labor to the properties in question, as he and Marcosa Rivera maintained an
absolute separation of property (Exhibits 46 and 46-A). Besides, during his lifetime
he used to go his office in Manila everyday.

Another circumstance which clearly proves that the properties in question belong
exclusively to Marcosa Rivera is the established fact that before she became
incompetent sometime in the early part of the year, 1953, she had been
administering said properties, to the exclusion of Rafael Litam. In fact, as may be
seen from the very documentary evidence (Exhibit EE, same as Nxh. 50) presented
by the Plaintiffs in Civil Case No. 2071 themselves and Petitioner in Sp. Proc. No.
1537, she alone leased the properties in question, situated in Macabebe, Pampanga,
and the corresponding lease contract, dated July 13, 1948 was signed by her as
lessor and by Rafael Suarez, Jr. as lessees. Furthermore, the properties in question
have been declared in the name of Marcosa Rivera alone, and she alone pays the
real estate taxes due thereon. (Exhibits 43, 44 & 45.)
Further strong proofs that the properties in question are the paraphernal properties
of Marcosa Rivera, are the very Torrens Titles covering said properties. All the said
properties are registered in the name of Marcosa Rivera, married to Rafael Litam.
This circumstance indicates that the properties in question belong to the registered
owner, Marcosa Rivera, as her paraphernal properties, for if they were conjugal, the
titles covering the same should have been issued in the names of Rafael Litam and
Marcosa Rivera. The words married to Rafael Litam written after the name of
Marcosa Rivera, in each of the above mentioned titles are merely descriptive of the
civil status of Marcosa Rivera, the registered owner of the properties covered by
said titles.
On the other hand, the evidence presented by the Plaintiffs in Civil Case No. 2071
and Petitioner in Sp. Proc. No. 1537 in support of their contention that the properties
in question are conjugal is, in the mind of the Court, very weak, unreliable, and
mostly incompetent, and cannot overcome the clear, convincing and almost
conclusive proofs presented by the opposite party. Scant or no consideration at all
could be given by the Court to the immaterial, incompetent and unbelievable
testimonies of the witnesses presented by the said Plaintiffs and Petitioners. The
disputable presumption of law that the properties acquired during the marriage are
conjugal properties, upon which legal presumption said Plaintiffs and Petitioner
mainly rely has been decisively overcome by the overwhelming preponderance of
evidence adduced in these cases that the properties in question are the paraphernal
properties of Marcosa Rivera. (Emphasis ours.)
Appellants counsel assail the decision appealed from upon the ground that the
lower court had been partial to the Appellees and had not accorded to the
Appellants a fair and just hearing.
As above pointed out, His Honor the trial Judge could have been, and should have
been, more liberal in the reception of evidence. Appellants witnesses (Li Bun Lin,
Dominador Gadi, Benigno Musni and Rafael B. Suarez) should have been allowed to
testify on the alleged title of Rafael Litam to certain properties and on his alleged

reasons for the language used in the public and official documents relied upon by
the Appellees. However, it is apparent to us that said evidence cannot affect the
decision in these cases.
The evidenciary value of the testimony of said witnesses would have depended
mainly upon their individual appraisal of certain facts, upon their respective
inferences therefrom and their biases or view points, and upon a number of other
factors affecting their credibility. At best, said testimony could not possibly prevail
over the repeated admissions made by the decedent against his own interest in
Exhibits 19, 21, 22, 23, 46 and 46-A (adverted to in the abovequoted portion of the
decision appealed from), which admissions are corroborated by the fact that the
deceased father of Marcosa Rivera was well to do; chan roblesvirtualawlibrarythat
aside from her share in his estate, she had, likewise, inherited from a sister who
died single and without issue; chan roblesvirtualawlibrarythat the lands in dispute
were registered, and some were, also, leased, in her name, instead of hers and that
of the decedent; chan roblesvirtualawlibraryand that the latter lived in her house in
Malabon, Rizal.
Appellants contend that the transactions covered by said Exhibits 19, 21 to 23 and
46 and 46-A, as well as by the other deeds referred to in the decision appealed
from, were caused to be made in the name of Marcosa Rivera, to the exclusion of
her husband, in order to evade the constitutional provision disqualifying foreigners
from the acquisition of private agricultural lands, except by succession. Apart from
being based, solely, upon a surmise, without any evidentiary support, this pretense
is refuted by the fact that said residential property in Hulong-Duhat, Malabon, Rizal,
was acquired on April 12, 1933, or prior to the adoption of our Constitution (see
Exhibits Z and AA). Her transactions subsequently thereto, merely followed,
therefore, the pattern of her activities before the drafting of said fundamental law.
This notwithstanding, we do not believe that Appellants should be sentenced to pay
damages. The petition of Gregorio Dy Tam in Special Proceeding No. 1537 and the
complaint in Civil Case No. 2071 contain nothing derogatory to the good name or
reputation of the herein Appellees. On the contrary, it may be surmised from said
pleadings that Marcosa Rivera had no knowledge of the alleged previous marriage
of the decedent to Sia Khin. Moreover, the records do not show that Appellants have
acted in bad faith.
Likewise, we are of the opinion that the lower court should not have declared, in the
decision appealed from, that Marcosa Rivera is the only heir of the decedent, for
such declaration is improper in Civil Case No. 2071, it being within the exclusive
competence of the court in Special Proceeding No. 1537, in which it is not as yet, in
issue, and, will not be, ordinarily, in issue until the presentation of the project of
partition.

Wherefore, with the elimination of the award for damages in favor of the herein
Appellees, and of said declaration of heirship, the decision appealed from is hereby
affirmed in all other respects, with costs against the Appellants. It is SO ORDERED.

[G.R. No. L-7644. November 27, 1956.]

HENRY LITAM, ETC., ET AL., Plaintiffs-Appellants, vs. REMEDIOS R.
ESPIRITU, as guardian of the incompetent MARCOSA RIVERA, and ARMINIO
RIVERA, Defendants-Appellees.
[G.R. No. L-7645. November 27, 1956]
IN THE MATTER OF THE INTESTATE OF THE DECEASED RAFAEL LITAM.
GREGORIO DY TAM, Petitioner-Appellant, vs. REMEDIOS R. ESPIRITU, in her
capacity as judicial guardian of the incompetent MARCOSA RIVERA,
counter-Petitioner, ARMINIO RIVERA, administrator-Appellee.

DECISION
CONCEPCION, J.:
This is an appeal from a decision of the Court of First Instance of Rizal in the above
entitled case, which were jointly tried.
On May 21, 1952, Gregorio Dy Tam instituted Special Proceeding No. 1537 of said
court, entitled In the matter of the Intestate Estate of the Deceased Rafael Litam.
The petition therein filed, dated April 24, 1952, states that Petitioner is the son of
Rafael Litam, who died in Manila on January 10, 1951; chan
roblesvirtualawlibrarythat the deceased was survived by:chanroblesvirtuallawlibrary
Li Hong Hap 40 years
Li Ho 37 years
Gregorio Dy Tam 33 years
Henry Litam alias Dy Bun Pho 29 years
Beatriz Lee Tam alias Lee Giak Ian 27 years
Elisa Lee Tam alias Lee Giok Bee 25 years

William Litam alias Li Bun Hua 23 years

Luis Litam alias Li Bun Lin 22 years
that the foregoing children of the decedent by a marriage celebrated in China in
1911 with Sia Khin, now deceased; chan roblesvirtualawlibrarythat after the death
of Rafael Litam, Petitioner and his co-heirs came to know that the decedent had,
during the subsistence of said marriage with Sia Khin, contracted in 1922 in the
Philippines cralaw another marriage with Marcosa Rivera, Filipino citizen; chan
roblesvirtualawlibrarythat the decedent left as his property among others, his onehalf (1/2) share valued at P65,000 in the purported conjugal properties between him
and Marcosa Rivera, which cralaw partnership consisted of the following real
property acquired during the marriage between him and Marcosa Rivera, to
wit:chanroblesvirtuallawlibrary
(1) Three (3) parcels of land covered by Transfer Certificate of Title No. 1228 of the
Registry of Deeds of the province of Pampanga:chanroblesvirtuallawlibrary
(2) One (1) parcel of land covered by Transfer Certificate of Title No. 26011 of the
Registry of Deeds of the province of Bulacan.
and that the decedent had left neither a will nor debt. Petitioner prayed, therefore,
that, after appropriate proceedings, letters of administration be issued to Marcosa
Rivera, the surviving spouse of the decedent. Soon thereafter, Marcosa Rivera
filed a counter- petition:chanroblesvirtuallawlibrary (1) substantially denying the
alleged marriage of the decedent to Sia Khin, as well as the alleged filiation of the
persons named in the petition; chan roblesvirtualawlibrary(2) asserting that the
properties described herein are her paraphernal properties, and that the decedent
had left unpaid debts, and certain properties in Bulan and Casiguran, Sorsogon, and
in Virac, Catanduanes, apart from shares of stock in a private corporation known by
the name of Litam Co., Inc.; chan roblesvirtualawlibraryand (3) praying that her
nephew, Arminio Rivera, be appointed administrator of the intestate estate of the
deceased.
In due course, the court granted this petition and letters of administration were
issued to Arminio Rivera, who assumed his duties as such, and, later, submitted an
inventory of the alleged estate of Rafael Litam. Inasmuch as said inventory did not
include the properties mentioned in the petition, dated April 24, 1952, of Gregorio
Dy Tam, the latter filed, on November 29, 1952, a motion for the removal of Rivera
as administrator of the aforementioned estate. This led to a number of incidents
hinging on the question whether said properties belong in common to the decedent
and Marcosa Rivera or to the latter exclusively.

Meanwhile, Remedios R. Espiritu was appointed, in Special Proceeding No. 1709 of

the Court of First Instance of Rizal, guardian of Marcosa Rivera, who had been
declared incompetent. Thereafter, or on April 20, 1953, Gregorio Dy Tam and his
alleged brothers and sisters aforementioned, filed the complaint in Civil Case No.
2071 of the same court, against Remedios R. Espiritu, as guardian of Marcosa
Rivera, and Arminio Rivera. In said complaint, Plaintiffs therein reproduced
substantially the allegations made in the aforementioned petition of Gregorio Dy
Tam dated April 24. 1952, except that the properties acquired during the existence
of marriage between Rafael Litam and Marcosa Rivera and/or with their joint
efforts during the time that they lived as husband and wife were said to be more
than those specified in said petition, namely:chanroblesvirtuallawlibrary
(1) 3 parcels of land situated in the Municipality of Macabebe, Province of
Pampanga, covered by Transfer Certificate of Title No. 1228 of the Registry of Deeds
for the Province of Pampanga, issued on July 29, 1947;
(2) 2 Parcels of land, together with all buildings and improvements thereon except
those expressly noted in the title as belonging to other persons, situated in the
Municipality of Navotas, Province of Rizal, covered by Transfer Certificate of Title No.
35836 of the Registry of Deeds for the Province of Rizal, issued on October 4, 1938;
(3) 1 parcel of land situated in the Municipality of Malabon, Province of Rizal,
covered by Transfer Certificate of Title No. 23248 of the Registry of Deeds for the
Province of Rizal, issued on June 12, 1933;
(4) 1 parcel of land situated in Barrio of Kay-Badia, Municipality of Obando,
Province of Bulacan, covered by Transfer Certificate of Title No. 21809 of the
Registry of Deeds for the Province of Bulacan, issued on May 25, 1939;
(5) 1 parcel of land (plan psu-93067, swo-16049) situated in Barrio of Quibadia,
Municipality of Obando, Province of Bulacan, covered by Transfer Certificate of Title
No. 26011 of the Registry of Deeds for the Province of Bulacan, issued on April 9,
1943;
Other properties are located in Bataan province.
All properties total an assessed value of approximately P150,000.00.
In said complaint, Plaintiffs prayed that the judgment be
rendered:chanroblesvirtuallawlibrary
(1) declaring the aforesaid properties as belonging to the conjugal partnership or
tenancy in common which existed between the deceased Rafael Litam and the
incompetent Marcosa Rivera;

(2) ordering the Defendants to deliver the aforesaid properties to the

administration of the estate of the deceased Rafael Litam (Rule 75, section 2, Rules
of Court);
(3) ordering the said Defendants further to render an accounting of the fruits they
collected from the aforesaid properties and to deliver the same to the
administration of the estate of the deceased Rafael Litam;
(4) ordering the said Defendants to pay the administration of the estate of the
deceased Rafael Litam damages in double the value of the fruits mentioned in the
preceding paragraph which they embezzled; chan roblesvirtualawlibraryand
(5) ordering the Defendants to pay the costs. The Plaintiffs further pray for such
other remedy as the Court may deem just and equitable in the premises.
In her answer to the complaint, Marcosa Rivera reiterated, in effect, the allegations
in her counter-petition, dated July 12, 1952, in Special Proceeding No. 1537, and set
up some affirmative and special defenses, as well as a counter-claim for attorneys
fees and damages in the aggregate sum of P110,000.00.
Owning to the identity of the issue raised in said Civil Case No. 2071 and in the
aforementioned incidents in Special Proceeding No. 1537, both were jointly heard.
Later on, the court rendered a decision.
(1) Dismissing Civil Case No. 2071, with costs against the Plaintiffs;
(2) Sentencing the Plaintiff in Civil Case No. 2071, under the Defendants
counterclaim, to pay jointly and severally each of the Defendants the sum of
P5,000.00 as actual damages and P25,000.00 as moral damages;
(3) Declaring that the properties in question, namely:chanroblesvirtuallawlibrary
the fishponds, consisting of three parcels, situated in Macabebe, Pampanga, with
Transfer certificate of Title No. 1228 of the land records of Pampanga, one-half
undivided portion of the fishponds, consisting of two parcels, situated in Navotas,
Rizal, covered by Transfer Certificate of Title No. 35836, the parcel of land with the
improvements thereon situated in Malabon, Rizal, covered by Transfer Certificate of
Title No. 23248, both of the land records of Rizal, and the fishponds, consisting of
two parcels, situated in Obando, Bulacan, covered by Transfer Certificates of Title
Nos. 21809 and 26011, both of the land records of Bulacan, are the exclusive,
separate and paraphernal properties of Marcosa Rivera; chan
roblesvirtualawlibraryand

(4) Declaring that the Plaintiffs in Civil Case No. 2071 (who are the same persons
alleged to be children of Rafael Litam in the petition, dated April 24, 1952, filed by
the Petitioner in Sp. Proc. No. 1537) are not the children of the deceased Rafael
Litam, and that his only heir is his surviving wife, Marcosa Rivera.
The two (2) Cases are now before us on appeal taken by the Petitioner in Special
Proceeding No. 1537 and the Plaintiffs in Civil Case No. 2071. The issues for
determination are:chanroblesvirtuallawlibrary (1) Are Appellants the legitimate
children of Rafael Litam? (2) Is Marcosa Rivera the exclusive owner of the properties
in question, or do the same constitute a common property of her and the decedent?
The first issue hinges on whether Rafael Litam and Sia Khin were married in 1911,
and whether Rafael Litam is the father of Appellants herein. In this connection, the
lower court had the following to say:chanroblesvirtuallawlibrary
cralaw the evidence weikhs very heavily in favor of the theory of the Defendants
in Civil Case No. 2071 to the effect that the said deceased Rafael Litam was not
married to Sia Khin and that Plaintiffs, are not the children of the said decedent. The
Plaintiffs in Civil Case No. 2071 and the Petitioner in Sp. Proc. No. 1537 have utterly
failed to prove their alleged status as children of Rafael Litam by a marriage with
Sia Khin.
It appears from the evidence presented by the Defendants in civil Case No. 2071
and the administrator and the counter-Petitioner in Sp. Proc. No. 1537 that there
was no such marriage between the deceased Rafael Litam and Sia Khin and that the
Plaintiffs named in Civil Case No. 2071 are not children of said deceased. The
various official and public documents executed by Rafael Litam himself convincingly
show that he had not contracted any marriage with any person other than Marcosa
Rivera, and that he had no child. In the marriage certificate, (Exhibit 55) it was
clearly stated that he was single when he married Marcosa Rivera on June 10, 1922.
In the sworn application for alien certificate of registration dated July 7, 1950
(Exhibit 1), Rafael Litam unequivocably declared under oath that he had no child. In
the several other documents executed by him and presented in evidence, (Exhibits
19, 21, 22, 23, 46 and 46-A) Rafael Litam had consistently referred to Marcosa
Rivera alone as his wife; chan roblesvirtualawlibraryhe had never mentioned of Sia
Khin as his wife, or of his alleged children.
The witnesses presented by the Defendants in Civil Case No. 2071 and the
administrator and counter Petitioner in Sp. Proc. No. 1537 positively testified to the
effect that they know that Rafael Litam did not have any child, nor was he married
with Sia Khin. An impartial and disinterested witness, Felipe Cruz, likewise testified
that he has known Rafael Litam even before his marriage with Marcosa Rivera and
that said Rafael Litam did not have any child.

On the other hand, the Plaintiffs in Civil Case No. 2071 and the Petitioner in Sp.
Proc. No. 1537 presented in support of their theory the testimony of their lone
witness, Luis Litam, and certain documentary evidence. It is noteworthy that the
said Plaintiffs and said Petitioner did not present in evidence the marriage certificate
of Rafael Litam and Sia Khin, which in the opinion of the Court, is the competent and
best evidence of the alleged marriage between them. No explanation has been
given for the non-presentation of said marriage certificate, nor has there been any
showing of its loss. Neither have said Plaintiffs and said Petitioner presented any
competent secondary evidence of the supposed marriage.
The testimony of the lone witness, Luis Litam, cannot be given any credence and
value at all. His testimony is mostly hearsay, as according to him, he was merely
informed by Rafael Litam of the latters supposed marriage with Sia Khin. His
testimony is uncorroborated. The court noticed that the said witness was only 22
years old when he testified, and it appears in the petition filed by the Petitioner in
Sp. Proc. No. 1537 that said witness is the youngest of all the alleged eight children
of Rafael Litam. The Court is at a loss to understand why one or some of the older
alleged children of Rafael Litam were not presented as witnesses in view of the
unreliable testimony of Luis Litam, and considering that older persons are better
qualified to testify on the matters sought to be proved which allegedly happened a
long time ago.
The birth certificate presented by the Plaintiff in Civil Case No. 2071 and Petitioner
in Sp. Proc. No. 1537 cannot be given even little consideration, because the name of
the father of the children appearing therein is not Rafael Litam, but different
persons. It is very significant to note that the names of the father of the persons
appearing in said birth certificates are Dy Tham, Li Tam, Lee Tham, Rafael Dy Tam,
and that said persons were born in different places, some in Amoy, China, another
Fukien, China, and the other in Limtao, China. It also appears in said birth
certificates that the childrens mothers named therein are different, some being Sia
Khim, others Sia Quien, the other Sia Khun, and still another Sia Kian. These
documents do not establish the identity of the deceased Rafael Litam and the
persons named therein as father. Besides, it does not appear in the said certificates
of birth that Rafael Litam had in any manner intervened in the preparation and filing
thereof.
The other documentary evidence presented by the said Plaintiffs and Petitioner are
entirely immaterial and highly insufficient to prove the alleged marriage between
the deceased Rafael Litam and Sia Khin and the alleged statue of the Plaintiffs as
children of said decedent.
It is, therefore, the finding of this Court that the Plaintiffs named in Civil Case No.
2071 are not heirs of the said decedent, his only heir being his surviving wife,
Marcosa Rivera. (Emphasis ours.)

The findings of fact thus made in the decision appealed from are borne out by the
records and the conclusion drawn from said facts is, to our mind, substantially
correct.
Appellants evidence on this point consists of the testimony of Appellant Li Bun Lin,
who said that he is, also known as Luis Litam; chan roblesvirtualawlibrarythat his coAppellants are his brothers and sisters; chan roblesvirtualawlibrarythat their parents
are the decedent and Sia Khin, who were married in China in 1911; chan
roblesvirtualawlibraryand that Sia Khin died in Manila during the Japanese
occupation. He likewise, identified several pictures, marked Exhibits I to S, which
were claimed to be family portraits, but the lower court rejected their admission in
evidence. Although we agree with herein Appellants that this was an error, it is clear
to us that said pictures and the testimony of Luis Litam, as well as the other
evidence adverted to in the above-quoted portion of the decision appealed from,
are far from sufficient to outweigh, or even offset, the evidence in favor of the
Appellees.
It should be noted that the decedent had admittedly married Marcosa Rivera in
1922. In the very petition of Appellant Gregorio Dy Tam, in Special Proceeding No.
1537, dated April 24, 1952, he alleged that Marcosa Rivera is the surviving spouse
of the decedent. In their complaint in Civil Case No. 2071, Appellants specifically
admitted and averred the existence of the marriage between said Rafael Litam and
Marcosa Rivera which would have been void ab initio, and, hence, inexistent
legally, if Appellants pretense were true or they believed it to be so and that
they had lived as husband and wife. Again, although Gregorio Dy Tam, asserted,
in his aforementioned petition, that he and his co-heirs came to know about the
marriage of the decedent and Marcosa Rivera after the death of Rafael Litam, the
very testimony of Li Bun Lin, as witness for the Appellants, show, beyond doubt,
that said Appellants knew, during the lifetime of Rafael Litam that he and Marcosa
Rivera were living in Malabon, Rizal, openly and publicly, as husband and wife, and
regarded her as his lawful wife. Indeed, in the course of his testimony, said Li Bun
Lin alluded to her as his mother. In other words, aside from the circumstance that
the wedding and marital life of Marcosa Rivera and Rafael Litam is undisputed, it is,
also, an established fact that they had the general reputation of being legally
married and were so regarded by the community and by Appellants herein, during
the lifetime of Rafael Litam.
Upon the other hand, Appellants maintain, in effect, that Rafael Litam was guilty of
the crime of bigamy; chan roblesvirtualawlibrarythat he had, likewise, willfully and
maliciously falsified public and official documents; chan roblesvirtualawlibraryand
that, although Appellants and Sia Khin were living in Manila and Marcosa Rivera
whom Appellants knew resided only a few kilometers away, in Malabon, Rizal
where Rafael Litam returned daily, after attending to his business in Manila, the

decedent had succeeded, for about thirty (30) years, in keeping each party in
complete ignorance of the nature of his alleged relations with the other. Apart from
the highly improbable nature of the last part of Appellants pretense, it is obvious
that the same cannot be sustained unless the evidence in support thereof is of the
strongest possible kind, not only because it entails the commission by Rafael Litam
of grave criminal offenses which are derogatory to his honor, but, also, because
death has sealed his lips, thus depriving him of the most effective means of
defense. The proof for Appellants herein does not satisfy such requirement.
As regards the title to the properties in dispute, the evidence thereon was analyzed
by the lower court in the following language:chanroblesvirtuallawlibrary
It has been established by the evidence that the properties in question were
bought by Marcosa Rivera with her separate and exclusive money. The fishponds
situated in Obando, Bulacan, covered by Transfer Certificate of Title Nos. 21809 and
26011, the one-half (1/2) undivided portion of the fishponds situated in Navotas,
Rizal with Transfer Certificate of Title No. 35836, and the property situated in
Hulong-Duhat, Malabon, Rizal, with Transfer Certificate of Title No. 23248 were all
purchased by Marcosa Rivera with the money she earned and accumulated while
she was still single; chan roblesvirtualawlibrarywhile the fishponds situated in
Macabebe, Pampanga with Transfer Certificate of Title No. 1228 were purchased by
her with the money she inherited from her late sister, Rafaela Rivera and with the
money she received from the proceeds of the sale of the pieces of jewelry she
inherited from her father Eduardo Rivera and her sister Rafaela Rivera. The
properties in question, having been bought by Marcosa Rivera, although during her
marriage with Rafael Litam, with her exclusive and separate money, said properties
are undeniably her paraphernal properties. (Art. 1396, Spanish Civil Code, which is
the same as Art. 148 of the Civil Code of the Phil.)
Great importance should be given to the documentary evidence,
vis:chanroblesvirtuallawlibrary Exhibits 21, 22, 23, 19, 46 and 46-A, presented by
the Defendants, in Civil Case No. 2071 and the administrator and counter- Petitioner
in Sp. Proc. No. 1537, which prove beyond peradventure of any doubt that the
properties in question are the paraphernal properties of Marcosa Rivera. In Exhibit
21, Rafael Litam unequivocably declared under his oath that the money paid by
Marcosa Rivera for the fishponds in Obando, Bulacan was her exclusive and
separate money which was earned by her while she was still single. In Exhibits 22
and 23, both dated June 16, 1947, same Rafael Litam, also under oath, acknowledge
the fact that the sums of P13,000.00 and P10,000.00 loaned by Marcosa Rivera to
the spouses Catalino Pascual and Juliana Pascual, and to Juliana Pascual,
respectively, are the separate and exclusive money of Marcosa Rivera, in which
money Rafael Litam had no interest whatsoever. In Exhibit 19, same Rafael Litam
acknowledged the fact that he had obtained, before the outbreak of the second
world war, from Marcosa Rivera the sum of P135,000.00 which belongs exclusively

to the latter, and that after the liberation, or more specifically, on January 4, 1946,
he stole from Marcosa Rivera the further sum of P62,000.00, also belonging
exclusively to the latter, which amounts, totalling P197,000.00, exclusive of
interests, have not, according to the evidence, been paid to her up to the present.
In Exhibits 46 and 46-A, it was acknowledged by Rafael Litam that he had not given
any money to his wife, Marcosa Rivera, and that they have actually adopted a
system of separation of property, each of them not having any interest or
participation whatsoever in the property of the other. These declarations and
admission of fact made by Rafael Litam against his interest are binding upon him,
his heirs and successors in interests and third persons as well. (Secs. 7 & 29, Rule
123, Rules of Court).
The finding of this Court that the properties in question are paraphernal properties
of Marcosa Rivera, having been bought by her with her separate and exclusive
money, is further strengthened by the fact that, as it is clearly disclosed by the
evidence when Marcosa Rivera married Rafael Litam in 1922, she was already rich,
she having already earned and saved money as consignataria while she was still
single. It also appears that she was born of a rich family, her father, Eduardo Rivera,
being the owner of fishponds, commercial and residential lands and buildings,
(Exhibits 5 to 18, inclusive), with an assessed value of around P150,000.00 (Exhibits
25 and 42, inclusive), now worth approximately a million pesos, and most of which
properties as may be seen from the certificates of title were acquired by him way
back in the years 1916 and 1919. When Eduardo Rivera died on February 5, 1942,
his cash and jewelry were inherited by his eldest daughter, Rafaela Rivera, and
when the latter died single on July 2, 1943, Marcosa Rivera inherited her cash
amounting to P150,000.00, Philippine currency, and and her pieces of jewelry. It is
with this amount and with the proceeds of the sale of some of said pieces of jewelry
that Marcosa Rivera purchased the fishponds in question, situated in Macabebe,
Pampanga.
On the other hand, it appears from the evidence that when Rafael Litam was on
June 10, 1922, married to Marcosa Rivera, he was poor. He had to borrow from
Marcosa Rivera, the sum of P135,000.00 belonging exclusively to her before the
outbreak of the war, and to steal from her further sum of P62,000.00 after the
liberation (Exhibit 10). The said amounts totalling P197,000.00, exclusive of the
stipulated interests, according to the evidence, have not been paid to Marcosa
Rivera up to the present. Rafael Litam did not contribute any amount of money or
labor to the properties in question, as he and Marcosa Rivera maintained an
absolute separation of property (Exhibits 46 and 46-A). Besides, during his lifetime
he used to go his office in Manila everyday.
Another circumstance which clearly proves that the properties in question belong
exclusively to Marcosa Rivera is the established fact that before she became
incompetent sometime in the early part of the year, 1953, she had been

administering said properties, to the exclusion of Rafael Litam. In fact, as may be

seen from the very documentary evidence (Exhibit EE, same as Nxh. 50) presented
by the Plaintiffs in Civil Case No. 2071 themselves and Petitioner in Sp. Proc. No.
1537, she alone leased the properties in question, situated in Macabebe, Pampanga,
and the corresponding lease contract, dated July 13, 1948 was signed by her as
lessor and by Rafael Suarez, Jr. as lessees. Furthermore, the properties in question
have been declared in the name of Marcosa Rivera alone, and she alone pays the
real estate taxes due thereon. (Exhibits 43, 44 & 45.)
Further strong proofs that the properties in question are the paraphernal properties
of Marcosa Rivera, are the very Torrens Titles covering said properties. All the said
properties are registered in the name of Marcosa Rivera, married to Rafael Litam.
This circumstance indicates that the properties in question belong to the registered
owner, Marcosa Rivera, as her paraphernal properties, for if they were conjugal, the
titles covering the same should have been issued in the names of Rafael Litam and
Marcosa Rivera. The words married to Rafael Litam written after the name of
Marcosa Rivera, in each of the above mentioned titles are merely descriptive of the
civil status of Marcosa Rivera, the registered owner of the properties covered by
said titles.
On the other hand, the evidence presented by the Plaintiffs in Civil Case No. 2071
and Petitioner in Sp. Proc. No. 1537 in support of their contention that the properties
in question are conjugal is, in the mind of the Court, very weak, unreliable, and
mostly incompetent, and cannot overcome the clear, convincing and almost
conclusive proofs presented by the opposite party. Scant or no consideration at all
could be given by the Court to the immaterial, incompetent and unbelievable
testimonies of the witnesses presented by the said Plaintiffs and Petitioners. The
disputable presumption of law that the properties acquired during the marriage are
conjugal properties, upon which legal presumption said Plaintiffs and Petitioner
mainly rely has been decisively overcome by the overwhelming preponderance of
evidence adduced in these cases that the properties in question are the paraphernal
properties of Marcosa Rivera. (Emphasis ours.)
Appellants counsel assail the decision appealed from upon the ground that the
lower court had been partial to the Appellees and had not accorded to the
Appellants a fair and just hearing.
As above pointed out, His Honor the trial Judge could have been, and should have
been, more liberal in the reception of evidence. Appellants witnesses (Li Bun Lin,
Dominador Gadi, Benigno Musni and Rafael B. Suarez) should have been allowed to
testify on the alleged title of Rafael Litam to certain properties and on his alleged
reasons for the language used in the public and official documents relied upon by
the Appellees. However, it is apparent to us that said evidence cannot affect the
decision in these cases.

The evidenciary value of the testimony of said witnesses would have depended
mainly upon their individual appraisal of certain facts, upon their respective
inferences therefrom and their biases or view points, and upon a number of other
factors affecting their credibility. At best, said testimony could not possibly prevail
over the repeated admissions made by the decedent against his own interest in
Exhibits 19, 21, 22, 23, 46 and 46-A (adverted to in the abovequoted portion of the
decision appealed from), which admissions are corroborated by the fact that the
deceased father of Marcosa Rivera was well to do; chan roblesvirtualawlibrarythat
aside from her share in his estate, she had, likewise, inherited from a sister who
died single and without issue; chan roblesvirtualawlibrarythat the lands in dispute
were registered, and some were, also, leased, in her name, instead of hers and that
of the decedent; chan roblesvirtualawlibraryand that the latter lived in her house in
Malabon, Rizal.
Appellants contend that the transactions covered by said Exhibits 19, 21 to 23 and
46 and 46-A, as well as by the other deeds referred to in the decision appealed
from, were caused to be made in the name of Marcosa Rivera, to the exclusion of
her husband, in order to evade the constitutional provision disqualifying foreigners
from the acquisition of private agricultural lands, except by succession. Apart from
being based, solely, upon a surmise, without any evidentiary support, this pretense
is refuted by the fact that said residential property in Hulong-Duhat, Malabon, Rizal,
was acquired on April 12, 1933, or prior to the adoption of our Constitution (see
Exhibits Z and AA). Her transactions subsequently thereto, merely followed,
therefore, the pattern of her activities before the drafting of said fundamental law.
This notwithstanding, we do not believe that Appellants should be sentenced to pay
damages. The petition of Gregorio Dy Tam in Special Proceeding No. 1537 and the
complaint in Civil Case No. 2071 contain nothing derogatory to the good name or
reputation of the herein Appellees. On the contrary, it may be surmised from said
pleadings that Marcosa Rivera had no knowledge of the alleged previous marriage
of the decedent to Sia Khin. Moreover, the records do not show that Appellants have
acted in bad faith.
Likewise, we are of the opinion that the lower court should not have declared, in the
decision appealed from, that Marcosa Rivera is the only heir of the decedent, for
such declaration is improper in Civil Case No. 2071, it being within the exclusive
competence of the court in Special Proceeding No. 1537, in which it is not as yet, in
issue, and, will not be, ordinarily, in issue until the presentation of the project of
partition.
Wherefore, with the elimination of the award for damages in favor of the herein
Appellees, and of said declaration of heirship, the decision appealed from is hereby
affirmed in all other respects, with costs against the Appellants. It is SO ORDERED.

G.R. No. L-57757 August 31, 1987

PHILIPPINE NATIONAL BANK, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, PRAGMACIO VITUG AND MAXIMO
VITUG, respondents.

GANCAYCO, J.:
Does the presumption of conjugality of properties acquired by the spouses during
coverture provided for in Article 160 of the Civil Code apply to property covered by
a Torrens certificate of title in the name of the widow? This is the issue posed in this
petition to review on certiorari of the decision of the Court of Appeals in CA-G.R. No.
60903 which is an action for reconveyance and damages. *
On November 28, 1952, Donata Montemayor, through her son, Salvador M. Vitug,
mortgaged to the Philippine National Bank (PNB) several parcels of land covered by
Transfer Certificate of Title (TCT) No. 2289 Pampanga to guarantee the loan
granted by the PNB to Salvador Jaramilla and Pedro Bacani in the amount of
P40,900.00 which was duly registered in the Office of the Register of Deeds of
Pampanga. 1
On December 1, 1963, Donata Montemayor also mortgaged in favor of PNB certain
properties covered by TCT Nos. 2887 and 2888-Pampanga to guarantee the
payment of the loan account of her son Salvador Vitug in the amount of P35,200.00,
which mortgage was duly registered in the Register of Deeds of Pampanga. 2
The above-mentioned Transfer Certificates of Titles covering said properties were all
in the name of Donata Montemayor, of legal age, Filipino, widow and a resident of
Lubao, Pampanga at the time they were mortgaged to PNB 3 and were free from all
hens and encumbrances. 4
Salvador Vitug failed to pay his account so the bank foreclosed the mortgaged
properties covered by TCT Nos. 2887 and 2888. They were sold at public auction on
May 20, 1968 in which the PNB was the highest bidder. The titles thereto were
thereafter consolidated in the name of PNB.
Likewise, Salvador Jaramilla and Pedro Bacani failed to settle their accounts with the
PNB so the latter foreclosed the properties covered by TCT No. 2889 which were
sold at public auction and likewise PNB was the buyer thereof. On August 30, 1968,
a certificate of sale was issued by the Register of Deeds covering said properties in

favor of the PNB. When the title of the PNB was consolidated a new title was issued
in its name. 5
On September 2, 1969, the PNB sold the properties covered by TCT Nos. 2887 and
2888 Pampanga to Jesus M. Vitug, Anunciacion V. de Guzman, Prudencia V.
Fajardo, Salvador Vitug and Aurora V. Gutierrez in those names the corresponding
titles were issued. 6

During the lifetime of Clodualdo Vitug he married two times. His first wife was
Gervacia Flores with whom he had 3 children, namely, Victor, Lucina and Julio all
surnamed Vitug. Victor now dead is survived by his 5 children: Leonardo, Juan,
Candida Francisco and Donaciano, an surnamed Vitug. Juan Vitug is also dead and is
survived by his only daughter Florencia Vitug.
The second wife of Clodualdo Vitug was Donata Montemayor with whom he had 8
children, namely, Pragmacio, Maximo, Jesus, Salvador, Prudencio and Anunciacion,
all surnamed Vitug, the late Enrique Vitug represented by his wife Natalia Laquian,
and the late Francisco Vitug who is survived by 11 children, namely, Antonio,
Francisco, Aurora, Pedro, Honorio, Corazon, Anselmo, Benigno, Eligio Jesus and Luz.
Clodualdo Vitug died intestate on May 20, 1929 so his estate was settled and
distributed in Special Proceeding No. 422 in the Court of First Instance of Pampanga
wherein Donata Montemayor was the Administratrix. 7
Meanwhile, on May 12,1958, Donata Montemayor executed a contract of lease of
Lot No. 24, which is covered by TCT No. 2887-R in favor of her children Pragmacio
and Maximo both surnamed Vitug. This lease was extended on August 31, 1963. By
virtue of a general power of attorney executed by Donata Montemayor on Sept. 19,
1966 in favor of Pragmacio Vitug, the latter executed a contract of lease on Sept.
19, 1967 of the said lot in favor of Maximo Vitug. 8
On March 21, 1970 Pragmacio Vitug and Maximo Vitug filed an action for partition
and reconveyance with damages in the Court of First Instance of Pampanga against
Marcelo Mendiola, special administrator of the intestate estate of Donata
Montemayor who died earlier, Jesus Vitug, Sr., Salvador, Natalia, Prudencia,
Anunciacion, all surnamed Vitug, Antonio, Francisco, Aurora, Pedro, Honorio,
Corazon, Anselmo, Benigno, Eligio Jesus and Luz, all surnamed Fajardo and the PNB.
The subject of the action is 30 parcels of land which they claim to be the conjugal
property of the spouses Donata Montemayor and Clodualdo Vitug of which they
claim a share of 2/11 of 1/2 thereof. They assailed the mortgage to the PNB and the
public auction of the properties as null and void. They invoked the case of Vitug vs.
Montemayor, L-5297 decided by this Court on Oct. 20, 1953 which is an action for

partition and liquidation of the said 30 parcels of land wherein the properties were
found to be conjugal in nature.
In a decision of Sept. 15, 1975, the lower court dismissed the complaint with costs
against the plaintiffs and ordered them to pay attorney's fees of P5,000.00 to the
defendant's counsel. Plaintiffs then interposed an appeal to the Court of Appeals,
wherein in due course a decision was rendered on May 20, 1981, the dispositive
part of which reads as follows:
WHEREFORE, in the light of the foregoing, the decision appealed from is hereby
reversed and set aside, and another one entered in accordance with the tenor of the
prayer of appellant's complaint with the modification that the sale at public auction
of the 22 parcels be considered valid with respect to the 1/2 thereof. No costs.
Hence the herein petition for certiorari filed by the PNB raising the following
assignments of error:
I
THE RESPONDENT COURT OF APPEALS ERRED IN APPLYING TO THE CASE AT BAR
THE RULING OF THIS HONORABLE SUPREME COURT IN FLORENCIA VITUG VS.
DONATA MONTEMAYOR, ET AL., 91 PHIL. 286 (1953) BECAUSE:
A.
BETWEEN A PROVISION OF A SPECIAL LAW AND THE JUDICIAL
INTERPRETATION AND/OR APPLICATION OF A PROVISION OF A GENERAL LAW, THE
FORMER PREVAILS.
B.
THE DOCTRINE OF STARE DECISIS IS NOT A MECHANICAL FORMULA OF
ADHERENCE.
C.
PNB WAS NOT A PARTY, AND HAD NO KNOWLEDGE OF THE ABOVECITED
CASE.
D.
SIMILARLY, PRAGMACIO VITUG AND MAXIMO VITUG WERE NOT PARTIES IN
SAID CASE.
II
THE RESPONDENT COURT OF APPEALS ERRED IN NOT RECOGNIZING THE
CONCLUSIVENESS OF THE CERTIFICATE, OF TITLE, AS PROVIDED IN ACT 496, AS
AMENDED (THE LAND REGISTRATION).
III

THE RESPONDENT COURT OF APPEALS ERRED IN IGNORING THE CONCLUSIVENESS

OF OWNERSHIP OF DONATA MONTEMAYOR OVER THE PROPERTIES WHICH WERE
REGISTERED EXCLUSIVELY IN HER NAME WHEN PRIVATE RESPONDENTS (PRAGMACIO
VITUG AND MAXIMO VITUG), AS LESSEES, ENTERED INTO A CONTRACT OF LEASE
WITH DONATA MONTEMAYOR AS THE OWNER-LESSOR.
IV
THE RESPONDENT COURT OF APPEALS ERRED IN CONCLUDING THAT PNB WAS A
MORTGAGEE IN BAD FAITH.
The petition is impressed with merit.
When the subject properties were mortgaged to the PNB they were registered in the
name of Donata Montemayor, widow. Relying on the torrens certificate of title
covering said properties the mortgage loan applications of Donata were granted by
the PNB and the mortgages were duly constituted and registered in the office of the
Register of Deeds.
In processing the loan applications of Donata Montemayor, the PNB had the right to
rely on what appears in the certificates of title and no more. On its face the
properties are owned by Donata Montemayor, a widow. The PNB had no reason to
doubt nor question the status of said registered owner and her ownership thereof.
Indeed, there are no liens and encumbrances covering the same.
The well-known rule in this jurisdiction is that a person dealing with a registered
land has a right to rely upon the face of the torrens certificate of title and to
dispense with the need of inquiring further, except when the party concerned has
actual knowledge of facts and circumstances that would impel a reasonably
cautious man make such inquiry. 9
A torrens title concludes all controversy over ownership of the land covered by a
final degree of registration. 10 Once the title is registered the owner may rest
assured without the necessity of stepping into the portals of the court or sitting in
the mirador de su casa to avoid the possibility of losing his land. 11
Article 160 of the Civil Code provides as follows:
Art. 160.
All property of the marriage is presumed to belong to the conjugal
partnership, unless it be proved that it pertains exclusively to the husband or to the
wife.
The presumption applies to property acquired during the lifetime of the husband
and wife. In this case, it appears on the face of the title that the properties were

acquired by Donata Montemayor when she was already a widow. When the property
is registered in the name of a spouse only and there is no showing as to when the
property was acquired by said spouse, this is an indication that the property belongs
exclusively to said spouse. 12 And this presumption under Article 160 of the Civil
Code cannot prevail when the title is in the name of only one spouse and the rights
of innocent third parties are involved. 13
The PNB had a reason to rely on what appears on the certificates of title of the
properties mortgaged. For all legal purposes, the PNB is a mortgagee in goodfaith
for at the time the mortgages covering said properties were constituted the PNB
was not aware to any flaw of the title of the mortgagor. 14
True it is that in the earlier cases decided by this Court, namely Vitug VS.
Montemayor decided on May 15, 1952, which is an action for recovery of possession
of a share in said parcels of land, 15 and in the subsequent action for partition
between the same parties decided on Oct. 20, 1953, 16 this court found the 30
parcels of land in question to be conjugal in nature and awarded the corresponding
share to the property of Florencia Vitug, an heir of the late Clodualdo Vitug from the
first marriage. In said cases this Court affirmed the decision of the lower court. In
the dispositive part of the decision of the trial court it made the observation that
"but from the conduct of Clodualdo Vitug and Donata Montemayor during the
existence of their marital life, the inference is clear that Clodualdo had the
unequivocal intention of transmitting the full ownership of the 30 parcels of land to
his wife Donata Montemayor, thus considering the 1/2 of the funds of the conjugal
property so advanced for the purchase of said parcels of land as reimbursible to the
estate of Clodualdo Vitug on his death. 17 That must be the reason why the
property was registered in the name of Donata Montemayor as widow after the
death of Clodualdo Vitug. 18
At any rate, although actions for recovery of real property and for partition are real
actions, however, they are actions in personam that bind only the particular
individuals who are parties thereto. 19 The PNB not being a party in said cases is
not bound by the said decisions. Nor does it appear that the PNB was aware of the
said decisions when it extended the above describe mortgage loans. Indeed, if the
PNB knew of the conjugal nature of said properties it would not have approved the
mortgage applications covering said properties of Donata Montemayor without
requiring the consent of all the other heirs or co-owners thereof. Moreover, when
said properties were sold at public auction, the PNB was a purchaser for value in
good faith. So its right thereto is beyond question. 20
Pragmacio and Maximo Vitug are now estopped from questioning the title of Donata
Montemayor to the said properties. They never raised the conjugal nature of the
property nor took issue as to the ownership of their mother, Donata Montemayor,
over the same. Indeed private respondents were among the defendants in said two

cases wherein in their answers to the complaint they asserted that the properties in
question are paraphernal properties belonging exclusively to Donata Montemayor
and are not conjugal in nature. 21 Thus they leased the properties from their
mother Donata Montemayor for many years knowing her to be the owner. They
were in possession of the property for a long time and they knew that the same
were mortgaged by their mother to the PNB and thereafter were sold at public
auction, but they did not do anything. 22 It is only after 17 years that they
remembered to assert their rights. Certainly, they are guilty of laches. 23
Moreover, as correctly held by the lower court. Pragmacio and Maximo Vitug as
occupants and lessees of the property in question cannot now dispute the
ownership of their mother over the same who was their lessor. 24
WHEREFORE, the subject decision of the respondent Court of Appeals is hereby
REVERSED and set aside and another decision is hereby rendered DISMISSING the
complaint and ordering private respondents to pay attomey's fees and expenses of
litigation to petitioner PNB in the amount of P20,000.00 and the costs of the suit.
SO ORDERED.
vii.

Registered land not subject to prescription (Sec. 47)

REPUBLIC OF THE PHILIPPINES,

REPRESENTED BY THE
DEPARTMENT OF EDUCATION
DIVISION OF LIPA CITY (FOR
PANINSINGIN PRIMARY SCHOOL),
Petitioner,

- versus
MENDOZA, JJ.
PRIMO MENDOZA and
MARIA LUCERO,
Respondents.

G.R. No. 185091

Present:

Promulgated:
August 8, 2010

DECISION
ABAD, J.:

This case is about the propriety of filing an ejectment suit against the Government
for its failure to acquire ownership of a privately owned property that it had long
used as a school site and to pay just compensation for it.

The Facts and the Case

Paninsingin Primary School (PPS) is a public school operated by petitioner Republic

of the Philippines (the Republic) through the Department of Education. PPS has
been using 1,149 square meters of land in Lipa City, Batangas since 1957 for its
school. But the property, a portion of Lots 1923 and 1925, were registered in the
name of respondents Primo and Maria Mendoza (the Mendozas) under Transfer
Certificate of Title (TCT)
T-11410.[1]
On March 27, 1962 the Mendozas caused Lots 1923 and 1925 to be consolidated
and subdivided into four lots, as follows:
Lot
Lot
Lot
Lot

1
2
3
4

292 square meters in favor of Claudia Dimayuga

292 square meters in favor of the Mendozas
543 square meters in favor of Gervacio Ronquillo; and
1,149 square meters in favor of the City Government of Lipa[2]

As a result of subdivision, the Register of Deeds partially cancelled TCT T-11410 and
issued new titles for Lots 1 and 3 in favor of Dimayuga and Ronquillo, respectively.
Lot 2 remained in the name of the Mendozas but no new title was issued in the
name of the City Government of Lipa for Lot 4.[3] Meantime, PPS remained in
possession of the property.
The Republic claimed that, while no title was issued in the name of the City
Government of Lipa, the Mendozas had relinquished to it their right over the school
lot as evidenced by the consolidation and subdivision plan. Further, the property
had long been tax-declared in the name of the City Government and PPS built
significant, permanent improvements on the same. These improvements had also
been tax-declared.[4]
The Mendozas claim, on the other hand, that although PPS sought permission
from them to use the property as a school site, they never relinquished their right to
it. They allowed PPS to occupy the property since they had no need for it at that
time. Thus, it has remained registered in their name under the original title, TCT T11410, which had only been partially cancelled.

On November 6, 1998 the Mendozas wrote PPS, demanding that it vacate the
disputed property.[5] When PPS declined to do so, on January 12, 1999 the
Mendozas filed a complaint with the Municipal Trial Court in Cities (MTCC) of Lipa
City in Civil Case 0002-99 against PPS for unlawful detainer with application for
temporary restraining order and writ of preliminary injunction.[6]
On July 13, 1999 the MTCC rendered a decision, dismissing the complaint on ground
of the Republics immunity from suit.[7] The Mendozas appealed to the Regional
Trial Court (RTC) of Lipa City which ruled that the Republics consent was not
necessary since the action before the MTCC was not against it.[8]
In light of the RTCs decision, the Mendozas filed with the MTCC a motion to render
judgment in the case before it.[9] The MTCC denied the motion, however, saying
that jurisdiction over the case had passed to the RTC upon appeal.[10] Later, the
RTC remanded the case back to the MTCC,[11] which then dismissed the case for
insufficiency of evidence.[12] Consequently, the Mendozas once again appealed to
the RTC in Civil Case 2001-0236.
On June 27, 2006 the RTC found in favor of the Mendozas and ordered PPS to vacate
the property. It held that the Mendozas had the better right of possession since they
were its registered owners. PPS, on the other hand, could not produce any
document to prove the transfer of ownership of the land in its favor.[13] PPS moved
for reconsideration, but the RTC denied it.
The Republic, through the Office of the Solicitor General (OSG), appealed the RTC
decision to the Court of Appeals (CA) in CA-G.R. SP 96604 on the grounds that: (1)
the Mendozas were barred by laches from recovering possession of the school lot;
(2) sufficient evidence showed that the Mendozas relinquished ownership of the
subject lot to the City Government of Lipa City for use as school; and (3) Lot 4, Pcs5019 has long been declared in the name of the City Government since 1957 for
taxation purposes.[14]

In a decision dated February 26, 2008, the CA affirmed the RTC decision.[15]
Upholding the Torrens system, it emphasized the indefeasibility of the Mendozas
registered title and the imprescriptible nature of their right to eject any person
occupying the property. The CA held that, this being the case, the Republics
possession of the property through PPS should be deemed merely a tolerated one
that could not ripen into ownership.
The CA also rejected the Republics claim of ownership since it presented no
documentary evidence to prove the transfer of the property in favor of the
government. Moreover, even assuming that the Mendozas relinquished their right
to the property in 1957 in the governments favor, the latter never took steps to

have the title to the property issued in its name or have its right as owner
annotated on the Mendozas title. The CA held that, by its omissions, the Republic
may be held in estoppel to claim that the Mendozas were barred by laches from
bringing its action.
With the denial of its motion for reconsideration, the Republic has taken recourse to
this Court via petition for review on certiorari under Rule 45.
The Issue Presented
The issue in this case is whether or not the CA erred in holding that the Mendozas
were entitled to evict the Republic from the subject property that it had used for a
public school.
The Courts Ruling
A decree of registration is conclusive upon all persons, including the Government of
the Republic and all its branches, whether or not mentioned by name in the
application for registration or its notice.[16] Indeed, title to the land, once
registered, is imprescriptible.[17] No one may acquire it from the registered owner
by adverse, open, and notorious possession.[18] Thus, to a registered owner under
the Torrens system, the right to recover possession of the registered property is
equally imprescriptible since possession is a mere consequence of ownership.
Here, the existence and genuineness of the Mendozas title over the property has
not been disputed. While the consolidation and subdivision plan of Lots 1923 and
1925 shows that a 1,149 square meter lot had been designated to the City
Government, the Republic itself admits that no new title was issued to it or to any of
its subdivisions for the portion that PPS had been occupying since 1957.[19]
That the City Government of Lipa tax-declared the property and its improvements in
its name cannot defeat the Mendozas title. This Court has allowed tax declarations
to stand as proof of ownership only in the absence of a certificate of title.[20]
Otherwise, they have little evidentiary weight as proof of ownership.[21]
The CA erred, however, in ordering the eviction of PPS from the property that it had
held as government school site for more than 50 years. The evidence on record
shows that the Mendozas intended to cede the property to the City Government of
Lipa permanently. In fact, they allowed the city to declare the property in its name
for tax purposes. And when they sought in 1962 to have the bigger lot subdivided
into four, the Mendozas earmarked Lot 4, containing 1,149 square meters, for the
City Government of Lipa. Under the circumstances, it may be assumed that the
Mendozas agreed to transfer ownership of the land to the government, whether to
the City Government of Lipa or to the Republic, way back but never got around to

do so and the Republic itself altogether forgot about it. Consequently, the Republic
should be deemed entitled to possession pending the Mendozas formal transfer of
ownership to it upon payment of just compensation.
The Court holds that, where the owner agrees voluntarily to the taking of his
property by the government for public use, he thereby waives his right to the
institution of a formal expropriation proceeding covering such property. Further, as
the Court also held in Eusebio v. Luis,[22] the failure for a long time of the owner to
question the lack of expropriation proceedings covering a property that the
government had taken constitutes a waiver of his right to gain back possession.
The Mendozas remedy is an action for the payment of just compensation, not
ejectment.
In Republic of the Philippines v. Court of Appeals,[23] the Court affirmed the RTCs
power to award just compensation even in the absence of a proper expropriation
proceeding. It held that the RTC can determine just compensation based on the
evidence presented before it in an ordinary civil action for recovery of possession of
property or its value and damages. As to the time when just compensation should
be fixed, it is settled that where property was taken without the benefit of
expropriation proceedings and its owner filed an action for recovery of possession
before the commencement of expropriation proceedings, it is the value of the
property at the time of taking that is controlling.[24]
Since the MTCC did not have jurisdiction either to evict the Republic from the land it
had taken for public use or to hear and adjudicate the Mendozas right to just
compensation for it, the CA should have ordered the complaint for unlawful detainer
dismissed without prejudice to their filing a proper action for recovery of such
compensation.
WHEREFORE, the Court partially GRANTS the petition, REVERSES the February 26,
2008 decision and the October 20, 2008 resolution of the Court of Appeals in CAG.R. 96604, and ORDERS the dismissal of respondents Primo and Maria Mendozas
action for eviction before the Municipal Trial Court in Cities of Lipa City in Civil Case
0002-99 without prejudice to their filing an action for payment of just compensation
against the Republic of the Philippines or, when appropriate, against the City of
Lipa.

SO ORDERED.
G.R. No. 167232

July 31, 2009

D.B.T. MAR-BAY CONSTRUCTION, INCORPORATED, Petitioner,

vs.
RICAREDO PANES, ANGELITO PANES, SALVADOR CEA, ABOGADO MAUTIN,
DONARDO PACLIBAR, ZOSIMO PERALTA and HILARION MANONGDO,
Respondents.
DECISION
NACHURA, J.:
Before this Court is a Petition1 for Review on Certiorari under Rule 45 of the Rules of
Civil Procedure, assailing the Court of Appeals (CA) Decision2 dated October 25,
2004 which reversed and set aside the Order3 of the Regional Trial Court (RTC) of
Quezon City, Branch 216, dated November 8, 2001.
The Facts
Subject of this controversy is a parcel of land identified as Lot Plan Psu-123169,4
containing an area of Two Hundred Forty Thousand, One Hundred Forty-Six
(240,146) square meters, and situated at Barangay (Brgy.) Pasong Putik, Novaliches,
Quezon City (subject property). The property is included in Transfer Certificate of
Title (TCT) No. 200519,5 entered on July 19, 1974 and issued in favor of B.C.
Regalado & Co. (B.C. Regalado). It was conveyed by B.C. Regalado to petitioner
D.B.T. Mar-Bay Construction, Inc. (DBT) through a dacion en pago6 for services
rendered by the latter to the former.
On June 24, 1992, respondents Ricaredo P. Panes (Ricaredo), his son Angelito P.
Panes (Angelito), Salvador Cea, Abogado Mautin, Donardo Paclibar, Zosimo P.
Peralta, and Hilarion Manongdo (herein collectively referred to as respondents) filed
a Complaint7 for "Quieting of Title with Cancellation of TCT No. 200519 and all Titles
derived thereat (sic), Damages, with Petition for the Issuance of Injunction with
Prayer for the Issuance of Restraining Order Ex-Parte, Etc." against B.C. Regalado,
Mar-Bay Realty, Inc., Spouses Gereno Brioso and Criselda M. Brioso, Spouses Ciriaco
and Nellie Mariano, Avelino C. Perdido and Florentina Allado, Eufrocina A. Maborang
and Fe Maborang, Spouses Jaime and Rosario Tabangcura, Spouses Oscar Ikalina
and the Register of Deeds (RD) of Quezon City. Subsequently, respondents filed an
Amended Complaint8 and a Second Amended Complaint9 particularly impleading
DBT as one of the defendants.
In the Complaints, Ricaredo alleged that he is the lawful owner and claimant of the
subject property which he had declared for taxation purposes in his name, and
assessed in the amount of P2,602,190.00 by the City Assessor of Quezon City as of
the year 1985. Respondents alleged that per Certification10 of the Department of
Environment and Natural Resources (DENR) National Capital Region (NCR) dated

May 7, 1992, Lot Plan Psu-123169 was verified to be correct and on file in said
office, and approved on July 23, 1948.
Respondents also claimed that Ricaredo, his immediate family members, and the
other respondents had been, and still are, in actual possession of the portions of the
subject property, and their possession preceded the Second World War. To perfect
his title in accordance with Act No. 496 (The Land Registration Act) as amended by
Presidential Decree (P.D.) No. 1529 (The Property Registration Decree), Ricaredo
filed with the RTC of Quezon City, Branch 82 a case docketed as LRC Case No. Q-91011, with LRC Rec. No. N-62563.11
Respondents averred that in the process of complying with the publication
requirements for the Notice of Initial Hearing with the Land Registration Authority
(LRA), it was discovered by the Mapping Services of the LRA that there existed an
overlapping of portions of the land subject of Ricaredos application, with the
subdivision plan of B.C. Regalado. The said portion had, by then, already been
conveyed by B.C. Regalado to DBT.
Ricaredo asseverated that upon verification with the LRA, he found that the
subdivision plan of B.C. Regalado was deliberately drawn to cover portions of the
subject property. Respondents claimed that the title used by B.C. Regalado in the
preparation of the subdivision plan did not actually cover the subject property. They
asserted that from the records of B.C. Regalado, they gathered that TCT Nos.
211081,12 21109513 and 211132,14 which allegedly included portions of the
subject property, were derived from TCT No. 200519. However, TCT No. 200519 only
covered Lot 503 of the Tala Estate with an area of Twenty-Two Thousand Six Hundred
Fifteen (22,615) square meters, and was different from those mentioned in TCT Nos.
211081, 211095 and 211132. According to respondents, an examination of TCT No.
200519 would show that it was derived from TCT Nos. 14814,15 14827,16 1481517
and T-28.
In essence, respondents alleged that B.C. Regalado and DBT used the derivative
titles which covered properties located far from Pasong Putik, Novaliches, Quezon
City where the subject property is located, and B.C. Regalado and DBT then offered
the same for sale to the public. Respondents thus submitted that B.C Regalado and
DBT through their deliberate scheme, in collusion with others, used (LRC) Pcs-18345
as shown in the consolidation-subdivision plan to include the subject property
covered by Lot Plan Psu-123169.
In his Answer18 dated July 24, 1992, the RD of Quezon City interposed the defense
that at the time of registration, he found all documents to be in order. Subsequently,
on December 5, 1994, in his Motion19 for Leave to Admit Amended Answer, with
the Amended Answer attached, he admitted that he committed a grave mistake
when he earlier said that TCT No. 200519 covered only one lot, i.e. Lot 503. He

averred that upon careful examination, he discovered that TCT No. 200519 is
composed of 17 pages, and actually covered 54 lots, namely: Lots 503, 506, 507,
508, 509, 582, 586, 655, 659, 686, 434, 495, 497, 299, 498, 499, 500, 501, 502,
493, 692, 776, 496, 785, 777, 786, 780, 783, 505, 654, 660, 661, 663, 664, 665,
668, 693, 694, 713, 716, 781, 779, 784, 782, 787, 893, 1115, 1114, 778, 669 and
788, all of the Tala Estate. Other lots included therein are Lot 890-B of Psd 36854,
Lot 2 of (LRC) Pcs 12892 and Lot 3 of (LRC) Pcs 12892. Thus, respondents' allegation
that Lots 661, 664, 665, 693 and 694 of the Tala Estate were not included in TCT No.
200519 was not true.
On December 28, 1993, then defendants Spouses Jaime and Rosario Tabangcura
(Spouses Tabangcura) filed their Answer20 with Counterclaim, claiming that they
were buyers in good faith and for value when they bought a house and lot covered
by TCT No. 211095 from B.C. Regalado, the latter being a subdivision developer and
registered owner thereof, on June 30, 1986. When respondent Abogado Mautin
entered and occupied the property, Spouses Tabangcura filed a case for Recovery of
Property before the RTC, Quezon City, Branch 97 which rendered a decision21 in
their favor.
On its part, DBT, traversing the complaint, alleged that it is the legitimate owner
and occupant of the subject property pursuant to a dacion en pago executed by B.C.
Regalado in the formers favor; that respondents were not real parties-in-interests
because Ricaredo was a mere claimant whose rights over the property had yet to be
determined by the RTC where he filed his application for registration; that the other
respondents did not allege matters or invoke rights which would entitle them to the
relief
prayed for in their complaint; that the complaint was premature; and that the action
inflicted a chilling effect on the lot buyers of DBT.22
The RTC's Rulings
On June 15, 2000, the RTC through Judge Marciano I. Bacalla (Judge Bacalla),
rendered a Decision23 in favor of the respondents. The RTC held that the testimony
of Ricaredo that he occupied the subject property since 1936 when he was only 16
years old had not been rebutted; that Ricaredo's occupation and cultivation of the
subject property for more than thirty (30) years in the concept of an owner vested
in him equitable ownership over the same by virtue of an approved plan, Psu
123169; that the subject property was declared under the name of Ricaredo for
taxation purposes;24 and that the subject property per survey should not have been
included in TCT No. 200519, registered in the name of B.C. Regalado and ceded to
DBT. The RTC further held that Spouses Tabangcura failed to present satisfactory
evidence to prove their claim. Thus, the RTC disposed of the case in this wise:

WHEREFORE, in view of the foregoing considerations, judgment is hereby rendered

declaring Certificate of Title No. 200519 and all titles derived thereat as null and
void insofar as the same embrace the land covered by Plan PSU-123169 with an
area of 240,146 square meters in the name of Ricaredo Panes; ordering defendant
DBT Marbay Realty, Inc. to pay plaintiff Ricaredo Panes the sum of TWENTY
THOUSAND (P20,000) pesos as attorneys fees plus costs of suit.
SO ORDERED.
On September 12, 2000, DBT filed a Motion25 for Reconsideration, based on the
grounds of prescription and laches. DBT also disputed Ricaredos claim of open,
adverse, and continuous possession of the subject property for more than thirty (30)
years, and asserted that the subject property could not be acquired by prescription
or adverse possession because it is covered by TCT No. 200519.
While the said Motion for Reconsideration was pending, Judge Bacalla passed away.
Meanwhile, on January 2, 2001, a Motion26 for Intervention and a Complaint in
Intervention were filed by Atty. Andres B. Pulumbarit (Atty. Pulumbarit), representing
the Don Pedro/Don Jose de Ocampo Estate. The intervenor alleged that the subject
property formed part of the vast tract of land with an area of 117,000 hectares,
covered by Original Certificate of Title (OCT) No. 779 issued by the Honorable
Norberto Romualdez on March 14, 1913 under Decree No. 10139, which belongs to
the Estate of Don Pedro/Don Jose de Ocampo. Thus, the Complaint27 in Intervention
prayed that the RTCs Decision be reconsidered; that the legitimacy and superiority
of OCT 779 be upheld; and that the subject property be declared as belonging to the
Estate of Don Pedro/Don Jose de Ocampo.
In its Order28 dated March 13, 2001, the RTC, through Acting Judge Modesto C.
Juanson (Judge Juanson), denied Atty. Pulumbarits Motion for Intervention because
a judgment had already been rendered pursuant to Section 2,29 Rule 19 of the 1997
Rules of Civil Procedure.
On April 10, 2001, the RTC issued an Order30 stating that there appeared to be a
need for a clarificatory hearing before it could act on DBT's Motion for
Reconsideration. Thus, a hearing was held on May 17, 2001. Thereafter,
supplemental memoranda were required of the parties.31 Both parties complied.32
However, having found that the original copy of TCT No. 200519 was not submitted
to it for comparison with the photocopy thereof on file, the RTC directed DBT to
present the original or certified true copy of the TCT on August 21, 2001.33
Respondents moved to reconsider the said directive34 but the same was denied.35
DBT, on the other hand, manifested that a copy of TCT No. 200519, consisting of 17
pages, had already been admitted in evidence; and that because of the fire in the
Office of the RD in Quezon City sometime in 1988, DBT, despite diligent effort, could

not secure an original or certified true copy of said TCT. Instead, DBT submitted a
certified true copy of Consolidated Subdivision Plan Pcs 18345.36
On November 8, 2001, the RTC, through Judge Juanson, issued an Order37 reversing
the earlier RTC Decision and dismissing the Complaint for lack of merit. The RTC
held that prescription does not run against registered land; hence, a title once
registered cannot be defeated even by adverse, open or notorious possession.
Moreover, the RTC opined that even if the subject property could be acquired by
prescription, respondents' action was already barred by prescription and/or laches
because they never asserted their rights when B.C. Regalado registered the subject
property in 1974; and later developed, subdivided and sold the same to individual
lot buyers.
On December 18, 2001, respondents filed a Motion for Reconsideration38 which the
RTC denied in its Order39 dated June 17, 2002. Aggrieved, respondents appealed to
the CA.40
The CA's Ruling
On October 25, 2004, the CA reversed and set aside the RTC Orders dated
November 8, 2001 and June 17, 2002 and reinstated the RTC Decision dated June
15, 2000. The CA held that the properties described and included in TCT No. 200519
are located in San Francisco del Monte, San Juan del Monte, Rizal and Cubao,
Quezon City while the subject property is located in Brgy. Pasong Putik, Novaliches,
Quezon City. Furthermore, the CA held that Engr. Vertudazo's testimony that there is
a gap of around 1,250 meters between Lot 503 and Psu 123169 was not disproved
or refuted. The CA found that Judge Juanson committed a procedural infraction
when he entertained issues and admitted evidence presented by DBT in its Motion
for Reconsideration which were never raised in the pleadings and proceedings prior
to the rendition of the RTC Decision. The CA opined that DBT's claims of laches and
prescription clearly appeared to be an afterthought. Lastly, the CA held that DBT's
Motion for Reconsideration was not based on grounds enumerated in the Rules of
Procedure.41
Petitioner filed a Motion for Reconsideration,42 which was, however, denied by the
CA in its Resolution43 dated February 22, 2005.
Hence, this Petition.
The Issues
Petitioner raises the following as grounds for this Petition:
I.

PETITIONER'S FAILURE TO ALLEGE PRESCRIPTION IN ITS ANSWER IS NOT A WAIVER

OF SUCH DEFENSE.
II.
IT IS NOT ERRONEOUS TO REQUIRE THE PRODUCTION OF A CERTIFIED TRUE COPY
OF TCT NO. 200519 AFTER THE DECISION ON THE MERITS HAS BEEN RENDERED
BUT BEFORE IT BECAME FINAL.
III.
A REGISTERED LAND CAN NOT BE ACQUIRED BY ACQUISITIVE PRESCRIPTION.
IV.
THE TESTIMONY OF ENGR. VERTUDAZO ON THE BASIS OF THE TECHNICAL
DESCRIPTION OF LOT 503 IN AN INCOMPLETE DOCUMENT IS UNRELIABLE.
V.
MR. PANES HAS NEVER BEEN IN OPEN, ADVERSE AND CONTINUOUS POSSESSION OF
THE SUBJECT PROPERTY FOR MORE THAN THIRTY (30) YEARS.44
Distilled from the petition and the responsive pleadings, and culled from the
arguments of the parties, the issues may be reduced to two questions, namely:
1) Did the RTC err in upholding DBT's defenses of prescription and laches as raised
in the latter's Motion for Reconsideration?
2) Which between DBT and the respondents have a better right over the subject
property?
Our Ruling
We answer the first question in the affirmative.
It is true that in Dino v. Court of Appeals45 we ruled:
(T)rial courts have authority and discretion to dismiss an action on the ground of
prescription when the parties' pleadings or other facts on record show it to be
indeed time-barred; (Francisco v. Robles, Feb. 15, 1954; Sison v. McQuaid, 50 O.G.
97; Bambao v. Lednicky, Jan. 28, 1961; Cordova v. Cordova, Jan. 14, 1958; Convets,
Inc. v. NDC, Feb. 28, 1958; 32 SCRA 529; Sinaon v. Sorongan, 136 SCRA 408); and it

may do so on the basis of a motion to dismiss (Sec. 1, [f] Rule 16, Rules of Court), or
an answer which sets up such ground as an affirmative defense (Sec. 5, Rule 16), or
even if the ground is alleged after judgment on the merits, as in a motion for
reconsideration (Ferrer v. Ericta, 84 SCRA 705); or even if the defense has not been
asserted at all, as where no statement thereof is found in the pleadings (Garcia v.
Mathis, 100 SCRA 250; PNB v. Pacific Commission House, 27 SCRA 766; Chua Lamco
v. Dioso, et al., 97 Phil. 821); or where a defendant has been declared in default
(PNB v. Perez; 16 SCRA 270). What is essential only, to repeat, is that the facts
demonstrating the lapse of the prescriptive period be otherwise sufficiently and
satisfactorily apparent on the record; either in the averments of the plaintiff's
complaint, or otherwise established by the evidence. (Emphasis supplied)
Indeed, one of the inherent powers of courts is to amend and control its processes
so as to make them conformable to law and justice. This includes the right to
reverse itself, especially when in its opinion it has committed an error or mistake in
judgment, and adherence to its decision would cause injustice.46 Thus, the RTC in
its Order dated November 8, 2001 could validly entertain the defenses of
prescription and laches in DBT's motion for reconsideration.
However, the conclusion reached by the RTC in its assailed Order was erroneous.
The RTC failed to consider that the action filed before it was not simply for
reconveyance but an action for quieting of title which is imprescriptible.
Verily, an action for reconveyance can be barred by prescription. When an action for
reconveyance is based on fraud, it must be filed within four (4) years from discovery
of the fraud, and such discovery is deemed to have taken place from the issuance of
the original certificate of title. On the other hand, an action for reconveyance based
on an implied or constructive trust prescribes in ten (10) years from the date of the
issuance of the original certificate of title or transfer certificate of title. The rule is
that the registration of an instrument in the Office of the RD constitutes
constructive notice to the whole world and therefore the discovery of the fraud is
deemed to have taken place at the time of registration.47lavvphil
However, the prescriptive period applies only if there is an actual need to reconvey
the property as when the plaintiff is not in possession of the property. If the plaintiff,
as the real owner of the property also remains in possession of the property, the
prescriptive period to recover title and possession of the property does not run
against him. In such a case, an action for reconveyance, if nonetheless filed, would
be in the nature of a suit for quieting of title, an action that is imprescriptible.48
Thus, in Vda. de Gualberto v. Go,49 this Court held:
[A]n action for reconveyance of a parcel of land based on implied or constructive
trust prescribes in ten years, the point of reference being the date of registration of
the deed or the date of the issuance of the certificate of title over the property, but

this rule applies only when the plaintiff or the person enforcing the trust is not in
possession of the property, since if a person claiming to be the owner thereof is in
actual possession of the property, as the defendants are in the instant case, the
right to seek reconveyance, which in effect seeks to quiet title to the property, does
not prescribe. The reason for this is that one who is in actual possession of a piece
of land claiming to be the owner thereof may wait until his possession is disturbed
or his title is attacked before taking steps to vindicate his right, the reason for the
rule being, that his undisturbed possession gives him a continuing right to seek the
aid of a court of equity to ascertain and determine the nature of the adverse claim
of a third party and its effect on his own title, which right can be claimed only by
one who is in possession.
Insofar as Ricaredo and his son, Angelito, are concerned, they established in their
testimonies that, for some time, they possessed the subject property and that
Angelito bought a house within the subject property in 1987.50 Thus, the
respondents are proper parties to bring an action for quieting of title because
persons having legal, as well as equitable, title to or interest in a real property may
bring such action, and "title" here does not necessarily denote a certificate of title
issued in favor of the person filing the suit.51
Although prescription and laches are distinct concepts, we have held, nonetheless,
that in some instances, the doctrine of laches is inapplicable where the action was
filed within the prescriptive period provided by law. Therefore, laches will not apply
to this case, because respondents' possession of the subject property has rendered
their right to bring an action for quieting of title imprescriptible and, hence, not
barred by laches. Moreover, since laches is a creation of equity, acts or conduct
alleged to constitute the same must be intentional and unequivocal so as to avoid
injustice. Laches will operate not really to penalize neglect or sleeping on one's
rights, but rather to avoid recognizing a right when to do so would result in a clearly
inequitable situation.52
Albeit the conclusion of the RTC in its Order dated November 8, 2001, which
dismissed respondents' complaint on grounds of prescription and laches, may have
been erroneous, we, nevertheless, resolve the second question in favor of DBT.
It is a well-entrenched rule in this jurisdiction that no title to registered land in
derogation of the rights of the registered owner shall be acquired by prescription or
adverse possession.53
Article 112654 of the Civil Code in connection with Section 4655 of Act No. 496 (The
Land Registration Act), as amended by Section 4756 of P.D. No. 1529 (The Property
Registration Decree), clearly supports this rule. Prescription is unavailing not only
against the registered owner but also against his hereditary successors. Possession
is a mere consequence of ownership where land has been registered under the

Torrens system, the efficacy and integrity of which must be protected. Prescription is
rightly regarded as a statute of repose whose objective is to suppress fraudulent
and stale claims from springing up at great distances of time and surprising the
parties or their representatives when the facts have become obscure from the lapse
of time or the defective memory or death or removal of witnesses.57
Thus, respondents' claim of acquisitive prescription over the subject property is
baseless. Under Article 1126 of the Civil Code, acquisitive prescription of ownership
of lands registered under the Land Registration Act shall be governed by special
laws. Correlatively, Act No. 496, as amended by PD No. 1529, provides that no title
to registered land in derogation of that of the registered owner shall be acquired by
adverse possession. Consequently, in the instant case, proof of possession by the
respondents is immaterial and inconsequential.58
Moreover, it may be stressed that there was no ample proof that DBT participated in
the alleged fraud. While factual issues are admittedly not within the province of this
Court, as it is not a trier of facts and is not required to re-examine or contrast the
oral and documentary evidence anew, we have the authority to review and, in
proper cases, reverse the factual findings of lower courts when the findings of fact
of the trial court are in conflict with those of the appellate court.59 In this regard,
we reviewed the records of this case and found no clear evidence that DBT
participated in the fraudulent scheme. In Republic v. Court of Appeals,60 this Court
gave due importance to the fact that the private respondent therein did not
participate in the fraud averred. We accord the same benefit to DBT in this case. To
add, DBT is an innocent purchaser for value and good faith which, through a dacion
en pago duly entered into with B.C. Regalado, acquired
ownership over the subject property, and whose rights must be protected under
Section 3261 of P.D. No. 1529.
Dacion en pago is the delivery and transmission of ownership of a thing by the
debtor to the creditor as an accepted equivalent of the performance of the
obligation. It is a special mode of payment where the debtor offers another thing to
the creditor, who accepts it as an equivalent of the payment of an outstanding debt.
In its modern concept, what actually takes place in dacion en pago is an objective
novation of the obligation where the thing offered as an accepted equivalent of the
performance of an obligation is considered as the object of the contract of sale,
while the debt is considered as the purchase price.62
It must also be noted that portions of the subject property had already been sold to
third persons who, like DBT, are innocent purchasers in good faith and for value,
relying on the certificates of title shown to them, and who had no knowledge of any
defect in the title of the vendor, or of facts sufficient to induce a reasonably prudent
man to inquire into the status of the subject property.63 To disregard these

circumstances simply on the basis of alleged continuous and adverse possession of

respondents would not only be inimical to the rights of the aforementioned
titleholders, but would ultimately wreak havoc on the stability of the Torrens system
of registration.
A final note.
While the Torrens system is not a mode of acquiring title, but merely a system of
registration of titles to lands, justice and equity demand that the titleholder should
not be made to bear the unfavorable effect of the mistake or negligence of the
State's agents, in the absence of proof of his complicity in a fraud or of manifest
damage to third persons. The real purpose of the Torrens system is to quiet title to
land and put a stop forever to any question as to the legality of the title, except
claims that were noted in the certificate at the time of the registration or that may
arise subsequent thereto. Otherwise, the integrity of the Torrens system would
forever be sullied by the ineptitude and inefficiency of land registration officials,
who are ordinarily presumed to have regularly performed their duties.64 Thus,
where innocent third persons, relying on the correctness of the certificate of title
thus issued, acquire rights over the property, the court cannot disregard those
rights and order the cancellation of the certificate. The effect of such outright
cancellation will be to impair public confidence in the certificate of title. The sanctity
of the Torrens system must be preserved; otherwise, everyone dealing with the
property registered under the system will have to inquire in every instance on
whether the title had been regularly or irregularly issued, contrary to the evident
purpose of the law. Every person dealing with the 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.65
WHEREFORE, the instant Petition is GRANTED and the assailed Court of Appeals
Decision dated October 25, 2004 is hereby REVERSED and SET ASIDE. A new
judgment is hereby entered DISMISSING the Complaint filed by the respondents for
lack of merit.
SO ORDERED.
viii.

Certificate of title not subject to Collateral attack (Section 48)

G.R. No. 140752

DIONISIO CARAAN, represented by HEIDI CARAAN and ERLINDA CARAAN,
Petitioners,
Versus

COURT OF APPEALS and SPOUSES SALCEDO R. COSME and NORA LINDA S.

COSME,
Respondents.
November 11, 2005
DECISION

AUSTRIA-MARTINEZ, J.:

This resolves the petition for review on certiorari seeking to set aside the
Decision[1] of the Court of Appeals (CA) dated October 29, 1999 affirming with
modification the Decision of the Regional Trial Court of Quezon City, Branch 104
(RTC), thereby ordering herein petitioners to vacate the property located at No. 65
Commodore St., Veterans Subdivision, Barangay Holy Spirit, Quezon City and
surrender possession thereof to herein private respondents.
The antecedent facts are as follows.
On September 16, 1992, private respondents-spouses Salcedo R. Cosme and Nora
Linda S. Cosme filed a complaint (accion reivindicatoria) with damages against
Dionisio Caraan in the RTC. Therein, it was alleged that: herein private respondents
are the registered owners of the real property located at No. 65 Commodore St.,
Veterans Subdivision, Barangay Holy Spirit, Quezon City under Transfer Certificate of
Title (TCT) No. 214949; they had been paying realty taxes on the property from
1969 to 1993; sometime in March 1991, they discovered that the land was being
occupied by petitioner who had built his residential house thereon; such occupancy
by petitioner was effected through fraud, strategy and stealth without private
respondents knowledge and consent; demands to vacate, both oral and written,
were made upon petitioner, the last written demand having been received by
petitioner on August 7, 1992, but said demands went unheeded; thus, private
respondents prayed that judgment be rendered ordering petitioner and all persons
holding title under him to vacate the subject premises and deliver possession
thereof to private respondents; pay private respondents the amount of P54,000.00
by way of reasonable compensation for the use and occupancy of the premises,
P50,000.00 as moral damages, and P50,000.00 as attorneys fees.
In his Answer with Counterclaim, petitioner alleged that he had acquired the land in
question through extra-ordinary prescription of thirty years of continuous, public,
open and uninterrupted possession; private respondents title was one of the
numerous titles derived from TCT No. 3548 in the name of Eustacio Morales and
Vicente Villar doing business under the style of Vilma Malolos Subdivision, which

was in turn derived from TCT No. 33531 which came from TCT No. 26285 and
derived from (OCT) No. 614; and OCT No. 614 had been declared null and void by
the RTC, Quezon City (Branch 83).[2]
After trial on the merits, the RTC rendered its Decision dated August 9, 1995, the
dispositive portion of which reads as follows:

WHEREFORE, premises considered, judgment is hereby rendered in favor of

the plaintiffs [herein private respondents], whereby defendant [herein petitioner] is
ordered to:
(a)
Vacate the premises concerned and to deliver and surrender the possession
of the same to the plaintiff;
(b)
To pay plaintiffs the sum of P54,000.00 as reasonable compensation for the
use and occupancy of the premises subject matter of the above-entitled case;
(c)

Pay the plaintiffs the sum P30,000.00 as moral damages;

(d)
Pay the plaintiffs the sum of P20,000.00 as attorneys fees and to pay the
cost of the suit.[3]

Herein petitioner Dionisio Caraan then appealed the RTC judgment to the CA. On
October 29, 1999, the CA promulgated its Decision ruling thus:

Absent any countervailing factum probandum adduced by the defendantappellant [herein petitioner], the indefeasibility of the Torrens title under their
[herein private respondents] names buttresses the presumption ad homini that
they have a better right of ownership over the land.
The defendant-appellant [herein petitioner] cannot seek refuge on his contention
that he is a holder of a residential permit allegedly issued by the Bureau of Forest
Development. Within the aegis of Section 3 (ff) of Presidential Decree No. 705,
otherwise known as the Revised Forestry Code, a [p]ermit is a short-term privilege
or authority granted by the State to a person to utilize any limited forest resources
or undertake a limited activity within any forest land without any right to occupation
and possession therein.

Neither is the defendant-appellant a possessor in the concept of an owner, which

fact is a conditio sine qua non in order to be entitled to ownership through
acquisitive prescription.
mere possession with a juridical title, e.g., as a usufructuary, a trustee, a lessee,
an agent or a pledgee, not being in the concept of owner, cannot ripen into
ownership by acquisitive prescription, unless the juridical relation is first expressly
repudiated and such repudiation has been communicated to the other party.[4]

The appellate court then affirmed the RTC judgment ordering petitioner Dionisio
Caraan to vacate subject premises and to deliver and surrender possession thereof
to herein private respondents. The CA, however, deleted the sums for
compensatory and moral damages and attorneys fees awarded by the RTC in favor
of private respondents. No motion for reconsideration of the CA Decision was filed.
In the meantime, petitioner Dionisio Caraan died and his surviving heirs filed with
this Court a petition for review on certiorari with motion that said heirs be
substituted as petitioners in this case.
Petitioners insist that private respondents TCT No. 214949 is a derivative of OCT
No. 614 and TCT No. 3548 which had been declared spurious and null and void;
Dionisio Caraan has a better right of possession because he had been in open,
public, adverse, continuous, and uninterrupted possession in the concept of owner
of subject land for more than thirty years; and the subject land is part of a large
tract of public land not yet classified for alienation to private ownership.
On the other hand, private respondents argue that a certificate of title cannot be
collaterally attacked, thus, TCT No. 214949 is valid and existing and conclusive
evidence of ownership unless it becomes subject of a direct attack through a
proceeding for cancellation of title.
The Court finds the present petition bereft of merit.
In Eduarte vs. Court of Appeals,[5] the Court reiterated the hornbook principle that
a certificate of title serves as evidence of an indefeasible title to the property in
favor of the person whose name appears therein.[6] Private respondents having
presented TCT No. RT-71061, which is the reconstituted title of TCT No. 214949, they
have thus proven their allegation of ownership over the subject property. The
burden of proof then shifted to petitioners who must establish by preponderance of
evidence their allegation that they have a better right over the subject property.

Petitioners attack the validity of private respondents certificate of title, alleging

that TCT No. 214949 is spurious as it was derived from OCT No. 614 which had
allegedly been declared null and void pursuant to the
Partial Decision on Defaulted Private Respondents dated March 21, 1988 issued in
Civil Case No. Q-35672, entitled Teofilo M. Gariando, et al. vs. Gregorio Dizon, et al.
Petitioners further point out that the subject land could not have been titled in favor
of private respondents as said land is within the unclassified public forest land of
Quezon City and not subject to disposition under the Public Land Law, per
Certification dated April 16, 1985 issued by the Bureau of Forest Development.
Petitioners further argue that they have a better right to subject property, as they
had been in possession thereof in open, public, adverse, continuous, and
uninterrupted possession in the concept of owner of subject land for more than
thirty years.
It should be borne in mind, however, that Section 48, Presidential Decree No. 1529
(P.D. No. 1529), provides that a certificate of title shall not be subject to collateral
attack. It cannot be altered, modified, or cancelled except in a direct proceeding in
accordance with law.
Petitioners defense takes the form of a collateral attack on private respondents
certificate of title. In Mallilin, Jr. vs. Castillo,[7] the Court defined a collateral attack
on the title in this wise:
When is an action an attack on a title? It is when the object of the action or
proceeding is to nullify the title, and thus challenge the judgment pursuant to which
the title was decreed. The attack is direct when the object of an action or
proceeding is to annul or set aside such judgment, or enjoin its enforcement. On
the other hand, the attack is indirect or collateral when, in an action to obtain a
different relief, an attack on the judgment is nevertheless made as an incident
thereof.[8]

In the present case, the attack on the title is definitely merely collateral as the relief
being sought by private respondents in their action was recovery of possession.
The attack on the validity of private respondents certificate of title was merely
raised as a defense in petitioners Answer filed with the trial court. In Ybaez vs.
Intermediate Appellate Court,[9] the Court categorically ruled that:

It was erroneous for petitioners to question the Torrens Original Certificate of Title
issued to private respondent over Lot No. 986 in Civil Case No. 671, an ordinary civil
action for recovery of possession filed by the registered owner of the said lot, by
invoking as affirmative defense in their answer the Order of the Bureau of Lands,
dated July 19, 1978, issued pursuant to the investigatory power of the Director of
Lands under Section 91 of Public Land Law (C.A. 141 as amended). Such a defense

partakes of the nature of a collateral attack against a certificate of title brought

under the operation of the Torrens system of registration pursuant to Section 122 of
the Land Registration Act, now Section 103 of P.D. 1259. The case law on the
matter does not allow collateral attack on the Torrens certificate of title on the
ground of actual fraud. The rule now finds expression in section 48 of P.D. 1529
otherwise known as the Property Registration Decree.[10] (Emphasis supplied)

The Court cannot, therefore, resolve the issue of the alleged invalidity of private
respondents certificate of title in the present action for recovery of possession.
Even petitioners claim that subject property could not have been titled in favor of
private respondents because the same has not yet been classified for alienation for
private ownership, cannot be given consideration because, as clearly stated in
Apostol vs. Court of Appeals, [t]he issue of the validity of the title of respondents
can only be assailed in an action expressly instituted for that purpose.[11]
Petitioners asseveration that TCT No. RT-71061 (214949) should not have
been admitted into evidence because private respondents merely presented the
photocopy thereof is also unmeritorious. Private respondents presented the original
of TCT No. RT-71061 (214949) in open court during the hearing held on April 13,
1994. The pertinent portions of the transcript of stenographic notes of said hearing
are reproduced hereunder:
Atty. Mazo:
Your Honor, we are presenting in evidence this Transfer Certificate of Title No. RT71061 (214949) as Exhibit A. The purpose of which, Your Honor, is to show that the
property subject matter of this case is registered in the name of the herein plaintiff
spouses Salcedo R. Cosme and Nora Linda S. Cosme. And in that regard, Your
Honor, may we invite Counsel to stipulate that this is a Xerox copy and that we
request to be marked as Exhibit A is a faithful reproduction of the original.
If Counsel will stipulate, this will be the one to be submitted in evidence.
Atty. Moya:
This is a faithful reproduction, Your Honor. (Emphasis supplied)

Furthermore, no objection was raised by counsel for petitioners in their written

opposition/comment to private respondents offer of evidence[12] regarding the fact
that what was marked and submitted to the court was the photocopy. In Blas vs.
Angeles-Hutalla,[13] the Court held thus:

The established doctrine is that when a party failed to interpose a timely objection
to evidence at the time they were offered in evidence, such objection shall be
considered as waived. In Tison v. Court of Appeals, the Supreme Court set out the
applicable principle in the following terms:
[F]or while the documentary evidence submitted by petitioners do not strictly
conform to the rules on their admissibility, we are, however, of the considered
opinion that the same may be admitted by reason of private respondents failure to
interpose any timely objection thereto at the time they were being offered in
evidence. It is elementary that an objection shall be made at the time when an
alleged inadmissible document is offered in evidence, otherwise, the objection shall
be treated as waived, since the right to object is merely a privilege which the party
may waive.
As explained in Abrenica vs. Gonda, et al., it has been repeatedly laid down as a rule
of evidence that a protest or objection against the admission of any evidence must
be made at the proper time, otherwise, it will be deemed to have been waived. The
proper time is when from the question addressed to the witness, or from the answer
thereto, or from the presentation of the proof, the inadmissibility of the evidence is,
or may be inferred.
Thus, a failure to except to the evidence because it does not conform with the
statute is a waiver of the provisions of the law.[14]

Hence, considering the fact that counsel for petitioners admitted that the photocopy
of TCT No. RT-71061 (214949) is a faithful reproduction of the original thereof,
stipulated with private respondents counsel that what will be marked and
submitted to the trial court as Exhibit A is the photocopy, and the lack of objection
on such ground which is then deemed a waiver thereof, the admission into evidence
of the photocopy of TCT No. RT-71061 was absolutely correct.
Moreover, although the reconstituted title of TCT No. 214949 does show on its face
that it was derived from OCT No. 614,[15] both the trial and appellate courts are
correct in saying that petitioners assertion that OCT No. 614 had been declared null
and void is misleading. The RTC of Quezon City, Branch 83 issued a Partial Decision
on Defaulted Private Respondents[16] dated March 21, 1988 in Civil Case No. Q35672 which declared OCT No. 614 and subsequent TCTs issued therefrom, with
the exception of those titles belonging to the non-defaulted respondents,[17] null
and void. However, the defaulted private respondents in Civil Case No. Q-35672
filed a case for annulment of said partial judgment. The CA granted the petition for
annulment of partial judgment in Civil Case No. Q-35672. The case was elevated
via a petition for review on certiorari assailing the CA decision and on January 19,

2001, this Court promulgated a Decision in Pinlac vs. Court of Appeals,[18] docketed
as G.R. No. 91486, affirming the CA Decision setting aside and annulling said partial
decision on the ground of the trial courts lack of jurisdiction over the persons of
respondents in said case. Petitioners have not been able to present any proof that,
indeed, OCT No. 614 had been declared null and void by final judgment. Hence,
petitioners claim that private respondents certificate of title is spurious deserves
no consideration whatsoever. Private respondents certificate of title must be
deemed valid and existing, as it cannot be assailed through a collateral attack in the
present action.
Consequently, petitioners defense that they have a better right over the subject
land because they had been in open, public, adverse, continuous, and uninterrupted
possession in the concept of owner for more than 30 years must be struck down.
Section 47 of P.D. No. 1529 provides that [n]o title to registered land in derogation
of the title of the registered owner shall be acquired by prescription or adverse
possession. The ruling in Ragudo vs. Fabella Estate Tenants Association, Inc.,[19] is
exactly in point, to wit:

In a long line of cases, we have consistently ruled that lands covered by a title
cannot be acquired by prescription or adverse possession. So it is that in Natalia
Realty Corporation vs. Vallez, et al., we held that a claim of acquisitive prescription
is baseless when the land involved is a registered land because of Article 1126 of
the Civil Code in relation to Act 496 (now, Section 47 of Presidential Decree No.
1529):

Appellants claim of acquisitive prescription is likewise baseless. Under

Article 1126 of the Civil Code, prescription of ownership of lands registered under
the Land Registration Act shall be governed by special laws. Correlatively, Act No.
496 provides that no title to registered land in derogation of that of the registered
owner shall be acquired by adverse possession. Consequently, proof of possession
by the defendants is both immaterial and inconsequential. (Emphasis supplied)

Therefore, as emphasized in the above quoted ruling, petitioners allegations of

uninterrupted possession for 30 years cannot prevail over private respondents
certificate of title, which is the best proof of ownership. As the Court stated in
Apostol vs. Court of Appeals, et al.,[20] the registered owners are entitled to the
possession of the property covered by the said title from the time such title was
issued in their favor. Preponderance of evidence being in favor of private

respondents, there can be no other conclusion but that private respondents, being
the registered owners of subject property, should be placed in possession thereof.
WHEREFORE, the petition is DENIED for lack of merit. The Decision of the Court of
Appeals dated October 29, 1999 is hereby AFFIRMED.
SO ORDERED.

G.R. No. 156357

February 18, 2005

ENGR. GABRIEL V. LEYSON, DR. JOSEFINA L. POBLETE, FE LEYSON QUA,

CARIDAD V. LEYSON and ESPERANZA V. LEYSON, petitioners,
vs.
NACIANSINO BONTUYAN and MAURECIA B. BONTUYAN, respondents.
DECISION
CALLEJO, SR., J.:
This is a petition for review on certiorari of the Decision1 of the Court of Appeals
(CA), as well as its Resolution in CA-G.R. CV No. 64471 denying the motion for
reconsideration of the said decision.
The Antecedents
Calixto Gabud was the owner of a parcel of land located in Barangay Adlawon,
Mabolo, Cebu City, which was declared for taxation purposes under Tax Declaration
(T.D.) No. 03276-R in 19452 with the following boundaries:
North Calixto Gabud East Marcelo Cosido
South Pedro Bontuyan West Asuncion Adulfo.3
Because of the construction of a provincial road, the property was divided into two
parcels of land covered by T.D. No. 03276-R and T.D. No. 01979-R. On February 14,
1948, Gabud executed a Deed of Absolute Sale4 over the property covered by T.D.
No. 03276-R, as well as the other lot covered by T.D. No. 01979-R, in favor of
Protacio Tabal, married to Leodegaria Bontuyan. On the basis of the said deed, T.D.
No. 03276-R was cancelled by T.D. No. 13615-R in the name of Protacio Tabal
effective 1949.5 On January 5, 1959, Tabal executed a Deed of Sale6 over the
property covered by T.D. No. 13615-R in favor of Simeon Noval, married to Vivencia
Bontuyan, daughter of Gregorio Bontuyan, for P800.00. T.D. No. 13615-R was
cancelled by T.D. No. 100356 in the names of the spouses Noval.7 Gregorio

Bontuyan received a copy of the said tax declaration in behalf of the spouses
Noval.8 The latter tax declaration was then cancelled by T.D. No. 008876 under the
same names effective 1967.9
Subsequently, the property was surveyed by Cadastral Land Surveyor Mauro U.
Gabriel on January 22, 1964. The plan survey was approved on September 30,
1966.10 The property covered by T.D. No. 008876 was identified as Lot No. 17150 of
Cebu Cadastre No. 12, while the property covered by T.D. No. 01979-R was
identified as Lot No. 13272. On May 22, 1968, the spouses Noval executed a Deed
of Absolute Sale11 over the two lots covered by T.D. No. 008876 in favor of Lourdes
V. Leyson for P4,000.00. Lourdes Leyson took possession of the property and had it
fenced. Despite the said sale, T.D. No. 008876 was cancelled by T.D. No. 21267
effective 1974.12 Thereafter, T.D. No. 21267 was cancelled by T.D. No. 2382113
which, in turn, was cancelled by T.D. No. 01-17455 effective 1980.14 In 1989, the
latter was cancelled by a new tax declaration, T.D. No. 01-001-00646. All these tax
declarations were in the names of the spouses Noval.15
Meanwhile, Lourdes Leyson paid for the realty taxes over the property. However, the
tax declaration issued thereon continued to be under the names of the spouses
Noval.16
Despite his knowledge that the property had been purchased by his son-in-law and
daughter, the spouses Noval, Gregorio Bontuyan, who was then 91 years old, filed
an application with the Bureau of Lands for a free patent over Lot No. 17150 on
December 4, 1968. He alleged therein that the property was public land and was
neither claimed nor occupied by any person,17 and that he first entered upon and
began cultivating the same in 1918. Thus, on November 19, 1971, Free Patent No.
510463 was issued over Lot No. 17150 in his favor, on the basis of which Original
Certificate of Title (OCT) No. 0-1619 was issued to and under his name on March 21,
1974.18 Another parcel of land, Lot No. 13272, was also registered under the name
of Gregorio Bontuyan under OCT No. 0-1618. He then declared Lot No. 17150 for
taxation purposes under T.D. No. 13596 effective 1974.19 On February 20, 1976,
Gregorio Bontuyan executed a Deed of Absolute Sale20 over Lot No. 17150 in favor
of his son, Naciansino Bontuyan.
On April 28, 1980, Gregorio Bontuyan, then 103 years old, executed another Deed
of Absolute Sale21 over Lot Nos. 13272 and 17150, covered by OCT No. 0-1618 and
OCT No. 0-1619, respectively, in favor of Naciansino Bontuyan for P3,000.00. On the
basis of the said deed, OCT No. 0-1619 was cancelled by TCT No. 1392 in the name
of Naciansino Bontuyan on December 2, 1980.22 Gregorio Bontuyan died intestate
on April 12, 1981.23
On March 30, 1981, the spouses Bontuyan executed a Real Estate Mortgage over
Lot No. 17150 covered by OCT No. 0-1619 in favor of the Development Bank of the

Philippines (DBP) as security for a loan of P11,200.00.24 Naciansino Bontuyan had

earlier executed an affidavit that the property was not tenanted. Shortly thereafter,
the spouses Bontuyan left the Philippines and resided in the United States.
Meanwhile, Lourdes Leyson died intestate.
The spouses Bontuyan returned to the Philippines in 1988 to redeem the property
from DBP only to discover that there were tenants living on the property installed by
Engineer Gabriel Leyson, one of the late Lourdes Leysons children. Despite being
informed that the said spouses owned the property, the tenants refused to vacate
the same. The tenants also refused to deliver to the spouses the produce from the
property. The spouses Bontuyan redeemed the property from DBP on September 22,
1989.
On February 12, 1993, Jose Bontuyan, Nieves Atilano, Pacifico Bontuyan, Vivencia
Noval and Naciansino Bontuyan, the surviving heirs of Gregorio Bontuyan, executed
an Extrajudicial Settlement25 of the latters estate and adjudicated Lot No. 13272 in
favor of Naciansino. Based on the said deed, T.D. No. 01-001-00877 was issued to
and under the name of Naciansino over the said property starting 1994.
On June 24, 1993, Naciansino Bontuyan, through counsel, wrote Engr. Gabriel
Leyson, demanding that he be furnished with all the documents evidencing his
ownership over the two lots, Lots Nos. 17150 and 13272.26 Engr. Leyson ignored
the letter.
The spouses Bontuyan, thereafter, filed a complaint against Engr. Leyson in the
Regional Trial Court (RTC) of Cebu City for quieting of title and damages. They
alleged that they were the lawful owners of the two lots and when they discovered,
upon their return from the United States, that the property was occupied and
cultivated by the tenants of Engr. Leyson, they demanded the production of
documents evidencing the latters ownership of the property, which was ignored.
The spouses Bontuyan prayed that, after due proceedings, judgment be rendered in
their favor, thus:
WHEREFORE, premises considered, it is most respectfully prayed of this Honorable
Court to render judgment against the defendant and in favor of the plaintiffs, to wit:
(a) Confirming the ownership of the plaintiffs on the lots in question;
(b) Ordering defendant to pay the plaintiffs the amount of Twenty Thousand Pesos
(P20,000.00) as the share of the plaintiffs of the produce of the lots in question;

(c) Ordering defendant to pay plaintiffs the sum of P50,000.00 as reimbursement of

attorneys fees and the further sum of P500.00 as appearance fee every time the
case is called for trial;
(d) Ordering the defendant to pay plaintiffs the sum of P50,000.00 as moral
damages and exemplary damages may be fixed by the court;
(e) Ordering defendant to pay plaintiffs the sum of P5,000.00 as actual expenses for
the preparation and filing of the complaint;
(f) Ordering defendant to pay the costs; and
(g) Granting to plaintiffs such other reliefs and remedies just and equitable in the
premises.27
In his answer to the complaint, Engr. Leyson averred, by way of affirmative
defenses, that the two lots were but portions of a parcel of land owned by Calixto
Gabud, covered by T.D. No. 03276-R, and was subdivided into two parcels of land
because of the construction of a provincial road on the property; Gabud later sold
the two lots to Protacio Tabal, who sold the same to Simeon Noval, married to
Vivencia Bontuyan, one of the children of Gregorio Bontuyan; Simeon Noval later
sold the property to Lourdes Leyson on May 22, 1968 who, forthwith, took
possession thereof as owner; and Gregorio Bontuyan was issued a free patent over
the property through fraud. Engr. Leyson concluded that the said patent, as well as
OCT No. 0-1619 and TCT No. 1392, were null and void and that the plaintiffs
acquired no title over the property.
Engr. Leyson interposed a counterclaim against the spouses Bontuyan and
repleaded as an integral part thereof all the material allegations in his affirmative
defense. He prayed that, after due proceedings, judgment be rendered in his favor,
thus:
a) Dismissing Plaintiffs complaint for failure to include indispensable parties;
b) Declaring the Defendant and his four (4) sisters, namely, Dr. Josefina L. Poblete,
Mrs. Fe L. Qua, Esperanza Leyson and Caridad Leyson as the true and legal owners
and possessors of the parcels of land in issue;
c) Declaring OCT No. 0-1619 in the name of Gregorio Bontuyan and TCT No. 1392 in
the name of Naciansino Bontuyan null and void and to order the Register of Deeds
to cancel the same and issue new ones in favor of the Defendant Gabriel V. Leyson
and his four (4) sisters, namely: Dr. Josefina L. Poblete, Mrs. Fe L. Qua, Esperanza V.
Leyson and Caridad V. Leyson;

d) And on the Counterclaim, to order Plaintiffs to pay the Defendant the following
sums:
d-1) P50,000.00 as attorneys fees and appearance fee of P1,000.00 per hearing;
d-2) P500,000.00 as moral damages;
d-3) P20,000.00 as exemplary damages;
d-4) P10,000.00 as expenses of litigation.
Defendant further prays for such other reliefs just and equitable in the premises.28
In due course, the other children of Lourdes Leyson, namely, Dr. Josefina L. Poblete,
Fe Leyson Qua, Caridad V. Leyson and Esperanza V. Leyson, were allowed to
intervene as defendants. They filed their answer-in-intervention wherein they
adopted, in their counterclaim, paragraphs 7 to 26 of the answer of their brother,
Engr. Leyson, the original defendant. They prayed that, after due hearing, judgment
be rendered in their favor as follows:
Wherefore, this Honorable Court is prayed to render judgment in favor of the
Defendant and the Defendants-in-Intervention and against the Plaintiffs as follows:
a) Promissory Plaintiffs complaint for failure to include indispensable parties and for
lack of cause of action;
b) Declaring the Defendant and his four (4) sisters, namely: Dr. Josefina L. Poblete;
Mrs. Fe L. Qua, Esperanza Leyson and Caridad Leyson as the true and legal owners
and possessors of the parcels of land in issue;
c) Declaring OCT No. 0-1619 in the name of Gregorio Bontuyan and TCT No. 1392 in
the name of Naciansino Bontuyan null and void and to order the Register of Deeds
to cancel the same and issue new ones in favor of the Defendant Gabriel V. Leyson
and his four (4) sisters, namely: Dr. Josefina L. Poblete, Mrs. Fe L. Qua, Esperanza V.
Leyson and Caridad V. Leyson;
d) On the Counterclaim, Plaintiffs should pay the Defendants the following sums:
d-1) P50,000.00 as attorneys fees and appearance fee of P1,000.00 per hearing;
d-2) P500,000.00 as moral damages to each Intervenor;
d-3) P50,000.00 as exemplary damages;

d-4) P15,000.00 as expenses of litigation.

Defendant further prays for such other reliefs just and equitable in the premises.29
In their reply, the spouses Bontuyan averred that the counterclaim of the
defendants for the nullity of TCT No. 1392 and the reconveyance of the property
was barred by laches and prescription.
On January 21, 1999, the trial court rendered judgment in favor of the Leyson heirs
and against the spouses Bontuyan. The fallo of the decision reads:
WHEREFORE, foregoing considered judgment is hereby rendered dismissing
plaintiffs complaint for dearth of evidence declaring the defendant and the
intervenors as the true and legal owners and possessors of the subject parcels of
land; declaring OCT No. 0-1619 in the name of Gregorio Bontuyan and TCT No. 1392
in the name of Naciansino Bontuyan null and void; ordering the Register of Deeds to
cancel OCT No. 0-1619 and TCT No. 1392 and issue new ones in favor of defendant
Gabriel Leyson and intervenors Josefina Poblete, Fe Qua, Esperanza Leyson and
Caridad Leyson; ordering plaintiff to pay defendant and intervenors the following:
a) P50,000.00 attorneys fees;
b) 1,000.00 per appearance;
c) 100,000.00 moral damages for defendant and intervenors;
d) 10,000.00 exemplary damages; and
e) 10,000.00 litigation expenses.
SO ORDERED.30
The trial court held that Simeon Noval had sold the lots to Lourdes Leyson on May
22, 1968, who thus acquired title over the property.
The spouses Bontuyan appealed the decision to the CA which affirmed, with
modification, the decision of the RTC. The appellate court held that the Leyson heirs
were the owners of Lot No. 13273, while the spouses Bontuyan were the owners of
Lot No. 17150. The CA ruled that the answer of the Leyson heirs to the complaint
constituted a collateral attack of OCT No. 0-1619 which was proscribed by law. The
Leyson heirs filed a motion for reconsideration of the decision insofar as Lot No.
17150 was concerned, contending that their counterclaim for the nullification of
OCT No. 0-1619 contained in their answer constituted a direct attack on the said
title. The CA denied the motion.

The Leyson heirs then filed a petition for review with this Court and made the
following assignments of error:
First Assignment of Error
THE HONORABLE COURT OF APPEALS COMMITTED ERROR WHEN IT RULED THAT
THE NULLITY OR THE VALIDITY OF OCT NO. 0-1619 CANNOT BE RULED UPON IN
THESE PROCEEDINGS BROUGHT BY THE RESPONDENTS FOR THE QUIETING OF
THEIR TITLE.
Second Assignment of Error
THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT RULED THAT
PETITIONERS ANSWER WITH COUNTERCLAIM, PRAYING FOR THE CANCELLATION OF
PLAINTIFFS TORRENS CERTIFICATE IS A MERE COLLATERAL ATTACK ON THE TITLE.31
Third Assignment of Error
THE APPELLATE COURT GRAVELY ERRED WHEN IT MODIFIED THE DECISION OF THE
REGIONAL TRIAL COURT DATED JANUARY 21, 1999 BY RULING THAT PETITIONERS
ARE DECLARED THE OWNERS OF LOT 13273 BUT RESPONDENTS ARE DECLARED
THE OWNERS OF LOT 17150 UNDER OCT NO. 0-1619 AND PRESENTLY COVERED BY
TCT NO. 1392 IN THE NAME OF NACIANSINO BONTUYAN, DESPITE THE APPELLATE
COURTS AFFIRMING THE FINDINGS OF THE TRIAL COURT THAT FRAUD WAS
COMMITTED BY GREGORIO BONTUYAN (RESPONDENTS PREDECESSOR-IN-INTEREST)
IN ACQUIRING TITLE OVER THE SUBJECT PROPERTIES.32
Fourth Assignment of Error
THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT RULED THAT
RECONVEYANCE OF TITLE OF LOT 17150 COVERED BY OCT NO. 0-1619 AND
PRESENTLY COVERED BY TCT NO. 1392, IN FAVOR OF PETITIONERS HAD
PRESCRIBED.33
Fifth Assignment of Error
THE APPELLATE COURT GRAVELY ERRED IN NOT GRANTING ATTORNEYS FEES AND
APPEARANCE FEES DESPITE RESPONDENTS FRAUD IN ACQUIRING TITLE OVER THE
SUBJECT PROPERTIES.34
On the first two assignments of errors, the petitioners aver that the counterclaim in
their answer to the complaint constituted a direct attack of the validity of OCT No.
0-1619. They maintain that the appellate courts reliance on the ruling of this Court

in Cimafrancia v. Intermediate Appellate Court35 was misplaced. They assert that

what is controlling is the ruling in Pro Line Sports Center, Inc. v. Court of Appeals36
wherein this Court held that the counterclaim of the petitioners therein constituted
a direct attack on a certificate of title. The petitioners, likewise, cited Section 55 of
Act No. 496, as amended, to buttress their stance. They plead that their answer to
the complaint should be liberally construed so as to afford them substantial justice.
On the other hand, the respondents assert that the decision of the CA is correct.
They claim that Lot No. 17150 was still public land when Lourdes Leyson purchased
the same from Simeon Noval, and that the property became private land only when
Free Patent No. 510463 was issued to and under the name of Gregorio Bontuyan.
We agree with the contention of the petitioners that the CA erred in not nullifying
OCT No. 0-1619 and TCT No. 1392 and ordering the respondents to reconvey the
property covered by the said title to the petitioners.
The respondents, as plaintiffs in the court a quo, were burdened to prove their claim
in their complaint that Gregorio Bontuyan was the owner of Lot No. 17150 and that
they acquired the property in good faith and for valuable consideration from him.37
However, the respondents failed to discharge this burden. The evidence on record
shows that Calixto Gabud sold the property to Protacio Tabal on February 14,
1948,38 and that the latter sold the property to Simeon Noval on January 5, 1959.39
Simeon Noval then sold the property to Lourdes Leyson on May 22, 1968.40 The
respondents failed to adduce any evidence to prove that Lourdes Leyson, or even
Simeon Noval, sold the property to Gregorio Bontuyan, or to any of the respondents
for that matter. Since Gregorio Bontuyan was not the owner of the property, he
could not have sold the same to his son Naciansino Bontuyan and the latters wife,
the respondents herein. As the Latin adage goes: NEMO DAT QUOD NON HABET.
Gregorio Bontuyan could not feign ignorance of Simeon Novals ownership of the
property, considering that the latter was his son-in-law, and that he (Gregorio
Bontuyan) was the one who received the owners copy of T.D. No. 100356 covering
the property under the name of Simeon Noval.41 At the dorsal portion of the said
tax declaration, there was even an annotation that the property was transferred to
Simeon Noval as shown by the deed of sale executed before Notary Public Gregorio
A. Uriarte who notarized the deed of sale over the property executed by Protacio
Tabal in favor of Simeon Noval on January 5, 1959.42 We note that the respondents
failed to adduce in evidence any receipts of real property tax payments made on
the property under their names, which would have fortified their claim that they
were the owners of the property. We agree with the findings of the CA, thus:
This case involves two parcels of land Lot 17150 and Lot 13273. Lot 17150 is
registered under the Torrens System under the names of plaintiffs-appellants, while
Lot 13273 remained to be unregistered.

In this case, records show that defendant-appellee and intervenors-appellees are

the true owners of the subject lots. They have in their favor tax receipts covering
the subject lots issued since 1945.
While, indeed, tax receipts and declarations are not incontrovertible evidence of
ownership, such, however, if accompanied with open, adverse, continuous
possession in the concept of an owner, as in this case, constitute evidence of great
weight that person under whose name the real taxes were declared has a claim of
right over the land.
Further, defendant-appellee and intervenors-appellees presented before the trial
court the Deed of Absolute Sale dated February 14, 1948, executed by Calixto
Gabud, conveying the subject lots in favor of Protacio Tabal. The deed is a notarial
document.
Likewise presented is the Deed of Absolute Sale of the subject lots dated January 5,
1959, executed by Protacio Tabal in favor of spouses Simeon Noval and Vivencia
Bontuyan. The document is, likewise, a notarial document.
Defendant-appellee and intervenors-appellees also presented the Deed of Absolute
Sale of the subject lots dated May 22, 1968, executed by spouses Simeon Noval and
Vivencia Bontuyan in favor of Lourdes Leyson. The deed is a notarial document.
A notarial document is evidence of the facts in clear, unequivocal manner therein
expressed. It has in its favor the presumption of regularity. It is admissible in
evidence without necessity of preliminary proof as to its authenticity and due
execution.
There exist (sic) no trace of irregularity in the transfers of ownership from the
original owner, Calixto Gabud, to defendant-appellee and intervenors-appellees.
Plaintiffs-appellants, on the other hand, offered no convincing evidence as to how
their predecessor-in-interest, Gregorio Bontuyan, acquired the subject lots.
Plaintiffs-appellants presented only the Free Patent and OCT No. 0-1619, covering
Lot No. 17150, issued in the name of Gregorio Bontuyan.
As to Lot No. 13273, We find no sufficient reason why defendant-appellee and
intervenors-appellees should be disturbed in their ownership and possession of the
same.43
As copiously shown by the record, Gregorio Bontuyan filed his application for a free
patent with the Bureau of Lands on December 4, 1968 in gross bad faith, thereby
defrauding Lourdes Leyson of the said property through deceit. Gregorio Bontuyan
falsely declared in the said application: (a) that he entered upon and cultivated the

property since 1918 and that the property was not claimed or occupied by any
person; and (b) that Lot No. 17150 was located in Sirao, Cebu City, when, in fact,
the property was located in Adlawon, Cebu City. Lourdes Leyson was not notified of
the said application and failed to file any opposition thereto. Gregorio Bontuyan was
then able to secure Free Patent No. 510463 on November 19, 1971 and OCT No. 01619 on March 21, 1974. It appears in the said title that the propertys location was
indicated as "Sirao, Cebu City."44 Indeed, the CA declared that Gregorio Bontuyan
had acquired title to the property through fraud:
However, as to Lot No. 17150, We find that despite the fraud committed by Gregorio
Bontuyan (plaintiffs-appellants predecessor-in-interest) in acquiring his title over
the said lot, ownership over the said lot should be adjudged in favor of plaintiffsappellants.
Records, indeed, show that, at the time when Gregorio Bontuyan applied for Free
Patent, Gregorio Bontuyan was living with his daughter, Vivencia Bontuyan
(defendant-appellees predecessor-in-interest). Thus, Gregorio Bontuyan must have
known that at the time when he applied for free patent on December 1968, the
subject lots were already sold on May 1968 by his daughter Vivencia Bontuyan in
favor of Lourdes Leyson, predecessor-in-interest of defendants-appellees.
Moreover, records further show that Gregorio Bontuyan sold twice Lot [No.] 17150
to plaintiffs-appellants. The first was in 1976 and the other was in 1980. Plaintiffsappellants offered no reasonable explanation why Gregorio Bontuyan have (sic) to
sell twice Lot No. 17150 in favor of plaintiffs-appellants.
As found by the trial court, these are badges of bad faith which affect the validity of
the title of Gregorio Bontuyan over the subject lots.
We are aware that the torrens system does not create or vest title. It only confirms
and records title already existing and vested. It does not protect a usurper from the
true owner. It cannot be a shield for the commission of fraud. It does not permit one
to enrich himself at the expense of another. Where one does not have any rightful
claim over a real property, the torrens system of registration can confirm or record
nothing.45
The findings of the CA affirmed the findings of the trial court in its decision, thus:
After having thoroughly analyzed the records and the evidences adduced during the
trial of this case, this Court is convinced and sincerely believes that the lots in
question were originally owned by Calixto Gabud as evidenced by T.D. [No.] 03276R
marked as Exh. "1." In 1945, this consisted of only one lot in Adlawon, Cebu City, as
there was no provincial road yet. However in 1948, the said parcel of land was
divided into two because a provincial road was constructed passing through it.

Hence, T.D. [No.] 03276R and T.D. [No.] 01979-R were issued to Calixto Gabud. On
February 16, 1948, Calixto Gabud sold the said parcels of land to spouses Protacio
Tabal and Ludegaria (sic) Bontuyan as evidenced by an Absolute Deed of Sale, Exh.
"2." On January 5, 1959, spouses Protacio Tabal and Ludegaria (sic) Bontuyan, in
turn, sold the same parcels of land to spouses Simeon Noval and Vivencia Bontuyan
as evidenced by a Deed of Sale, Exh. "4." It is noteworthy to mention at this point in
time that Vivencia Bontuyan is one of the daughters of Gregorio Bontuyan, the
father of herein plaintiff Naciansino Bontuyan. In May 1968, spouses Simeon Noval
and Vivencia Bontuyan sold the subject parcels of land to Lourdes vs. (sic) Leyson,
the mother of herein defendant as evidenced by a Deed of Sale marked as Exh. "6."
It is quite perplexing for the court to imagine that Gregorio Bontuyan, father of
herein plaintiff, who was then residing with spouses Simeon Noval and Vivencia
Bontuyan at 179 C San Jose dela Montaa, Mabolo, Cebu City, as reflected in his
application for Free Patent (Exhs. "8" & "26") dated December 4, 1968 was unaware
of the sale of the subject parcels of land made by his daughter Vivencia Bontuyan
and spouse Simeon Noval to Lourdes Leyson. It is evident that, after the sale from
spouses Noval to Lourdes Leyson in May 1968, Gregorio Bontuyan applied for Free
Patent for the same parcels of land in December 1968 claiming to have cultivated
the land since 1918, stating therein the location as Sirao and not Adlawon which is
the true and correct location. Sirao and Adlawon are two different barangays which
are not even adjacent to each other. In fact, as borne out by Exh. "25," it is
separated by Barangay Guba. In 1974, Free Patent No. 510463 and OCT# 0-1619
was issued to Gregorio Bontuyan covering subject property, the location of which is
in Barangay Sirao in consonance to his application. Gregorio Bontuyans application
for Free Patent over subject parcels of land had raised in the mind of this Court
reasonable badges of bad faith on his part as the subject parcels of land were
already sold by his daughter Vivencia Bontuyan and spouse Simeon Noval to
Lourdes Leyson. Another badge of bad faith is raised in the mind of this Court when
he (Gregorio) sold the subject parcels of land twice to his son Naciansino Bontuyan
in 1976 and 1980, respectively, wherein both Deeds of Sale were notarized by
different Notary Publics, (Exhs. "10" & "16").46
Considering that Lourdes Leyson was in actual possession of the property, the
respondents cannot, likewise, claim that they were in good faith when Gregorio
Bontuyan allegedly sold the property to them on April 28, 1980.1awphi1.nt
Anent the third and fourth assignments of error, we do not agree with the ruling of
the CA that the petitioners failed to directly attack the validity of OCT No. 0-1619.
The CA failed to consider the fact that, in their respective answers to the complaint,
the petitioners inserted therein a counterclaim wherein they repleaded all the
material allegations in their affirmative defenses, that Gregorio Bontuyan secured
OCT No. 0-1619 through fraud and deceit and prayed for the nullification thereof.

While Section 47 of Act No. 496 provides that a certificate of title shall not be
subject to collateral attack, the rule is that an action is an attack on a title if its
object is to nullify the same, and thus challenge the proceeding pursuant to which
the title was decreed.l^vvphi1.net The attack is considered direct when the object
of an action is to annul or set aside such proceeding, or enjoin its enforcement. On
the other hand, an attack is indirect or collateral when, in an action to obtain a
different relief, an attack on the proceeding is nevertheless made as an incident
thereof.47 Such action to attack a certificate of title may be an original action or a
counterclaim in which a certificate of title is assailed as void. A counterclaim is
considered a new suit in which the defendant is the plaintiff and the plaintiff in the
complaint becomes the defendant. It stands on the same footing and is to be tested
by the same rules as if it were an independent action.48 Furthermore, since all the
essential facts of the case for the determination of the titles validity are now before
the Court, to require the party to institute cancellation proceedings would be
pointlessly circuitous and against the best interest of justice.49
The CA, likewise, erred in holding that the action of the petitioners to assail OCT No.
0-1619 and TCT No. 1392 and for the reconveyance of the property covered by the
said title had already prescribed when they filed their answer to the complaint.
Case law has it that an action for reconveyance prescribes in ten years, the point of
reference being the date of registration of the deed or the date of issuance of the
certificate of title over the property. In an action for reconveyance, the decree of
registration is highly regarded as incontrovertible. What is sought instead is the
transfer of the property or its title, which has been wrongfully or erroneously
registered in another persons name, to its rightful or legal owner, or to one who has
a better right.50
However, in a series of cases, this Court declared that an action for reconveyance
based on fraud is imprescriptible where the plaintiff is in possession of the property
subject of the acts. In Vda. de Cabrera v. Court of Appeals,51 the Court held:
... [A]n action for reconveyance of a parcel of land based on implied or constructive
trust prescribes in ten years, the point of reference being the date of registration of
the deed or the date of the issuance of the certificate of title over the property, but
this rule applies only when the plaintiff or the person enforcing the trust is not in
possession of the property, since if a person claiming to be the owner thereof is in
actual possession of the property, as the defendants are in the instant case, the
right to seek reconveyance, which in effect seeks to quiet title to the property, does
not prescribe. The reason for this is that one who is in actual possession of a piece
of land claiming to be the owner thereof may wait until his possession is disturbed
or his title is attacked before taking steps to vindicate his right, the reason for the
rule being, that his undisturbed possession gives him a continuing right to seek the
aid of a court of equity to ascertain and determine the nature of the adverse claim

of a third party and its effect on his own title, which right can be claimed only by
one who is in possession.
Similarly, in the case of David v. Malay,52 the same pronouncement was reiterated
by the Court:
... There is settled jurisprudence that one who is in actual possession of a piece of
land claiming to be owner thereof may wait until his possession is disturbed or his
title is attacked before taking steps to vindicate his right, the reason for the rule
being, that his undisturbed possession gives him a continuing right to seek the aid
of the court of equity to ascertain and determine the nature of the adverse claim of
a third party and its effect on his own title, which right can be claimed only by one
who is in possession. No better situation can be conceived at the moment for Us to
apply this rule on equity than that of herein petitioners whose ... possession of the
litigated property for no less than 30 years and was suddenly confronted with a
claim that the land she had been occupying and cultivating all these years, was
titled in the name of a third person. We hold that in such a situation the right to
quiet title to the property, to seek its reconveyance and annul any certificate of title
covering it, accrued only from the time the one in possession was made aware of a
claim adverse to his own, and it is only then that the statutory period of prescription
commences to run against such possessor.1awphi1.nt
The paramount reason for this exception is based on the theory that registration
proceedings could not be used as a shield for fraud.53 Moreover, to hold otherwise
would be to put premium on land-grabbing and transgressing the broader principle
in human relations that no person shall unjustly enrich himself at the expense of
another.54
In the present case, Lourdes Leyson and, after her death, the petitioners, had been
in actual possession of the property. The petitioners were still in possession of the
property when they filed their answers to the complaint which contained their
counterclaims for the nullification of OCT No. 0-1619 and TCT No. 1392, and for the
consequent reconveyance of the property to them. The reconveyance is just and
proper in order to put a stop to the unendurable anomaly that the patentees should
have a Torrens title for the land which they and their predecessors never possessed
and which has been possessed by another in the concept of an owner.55
On the fifth assignment of error, we rule for the petitioners. The award of attorneys
and appearance fees is better left to the sound discretion of the trial court, and if
such discretion is well exercised, as in this case, it will not be disturbed on
appeal.56 With the trial and the appellate courts findings that the respondents
were in bad faith, there is sufficient basis to award attorneys and appearance fees
to the petitioners. Had it not been for the filing of a baseless suit by the respondents

against the petitioners, the latter would not have sought the services of counsel to
defend their interests and represent them in this case.1awphi1.nt
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decision of the
Court of Appeals declaring the respondents the owners of Lot No. 17150 covered by
OCT No. 0-1619 and TCT No. 1392; and setting aside the award of attorneys fees in
favor of the petitioners by the Regional Trial Court are REVERSED AND SET ASIDE.
The Court hereby AFFIRMS the ownership of the petitioners of Lot No. 17150. OCT
No. 0-1619 and TCT No. 1392 covering the said lot are hereby nullified. The Register
of Deeds is ORDERED to cancel TCT No. 1392 and to issue another title over the
property in favor of the petitioners as co-owners thereof. The trial courts award of
P50,000.00 for attorneys fees to the petitioners is AFFIRMED. No pronouncement as
to costs.
SO ORDERED.
ix.
Splitting and Consolidation (Section 49-50)
VII. Subsequent Registration (Chapter V, Section 51-77)
a. Voluntary Dealings with Registered Lands
1.Operative Act to convey or Affect Registered LAns (section 51-52)
G.R. No. 83141

September 21, 1990

SPOUSES FLORENTINO L. FERNANDEZ AND VIVENCIA B. FERNANDEZ,

petitioners,
vs.
HON. COURT OF APPEALS AND ZENAIDA ANGELES FERNANDEZ,
respondents.
Wilfredo Espiritu Taganas for petitioners.
L.B. Camins for private respondent.

MEDIALDEA, J.:
This is a petition for review of the decision of the Court of Appeals in CA-G.R. CV No.
05191 which modified the decision of the Regional Trial Court, Branch 95, Quezon
City in Civil Case No. Q-32843 ordering private respondent Zenaida AngelesFernandez to execute a deed of conveyance over 1/3 portion or 110 square meters
of the lot subject of the action.

The facts of the case are as follows:

On November 28, 1966, petitioners-spouses Florentino and Vivencia Fernandez and
private respondent Zenaida Angeles-Fernandez and the latter's husband Justiniano
Fernandez purchased in common a parcel of land with an area of 310 square meters
Identified as Lot 13, Block 19, Pagasa Subdivision, Quezon City. The parcel of land
was purchased for P15,500.00. Spouses Florentino and Vivencia Fernandez
advanced the downpayment of P5,500.00 to the vendors-spouses Santos and
Matilde de Torres. A Deed of Conditional Sale (Exhibit "B") was executed by the
spouses de Torres in favor of the two Fernandez couples.
On February 24, 1967, the vendors Torres executed a Deed of Absolute Sale in favor
of spouses Zenaida and Justiniano Fernandez only. When petitioners learned that
the Absolute Deed of Sale did not include their names as vendees they confronted
Zenaida and Justiniano Fernandez. Thus, on April 24, 1967, Zenaida and Justiniano
Fernandez executed an affidavit (Exhibit "D") in which they acknowledged the sale
to petitioners Florentino and Vivencia Fernandez of a portion of the subject parcel of
land consisting of 110 square meters and the receipt of the consideration therefor in
the amount of P5,500.00.
When private respondent Zenaida Angeles-Fernandez planned to build a house on
the lot, she was informed by the City Engineer of Quezon City that the area in Pagasa is classified under the zoning ordinance as R-2 or residential 2, wherein the
minimum requirement for a family house is 240 square meters and therefore, no
two (2) separate and independent family houses can be built on the 310 square
meter lot. She also found out that the Register of Deeds will not issue a separate
title for only 110 square meters (p. 4, C.A. Decision; p. 36, Rollo).
Thus, a duplex building was constructed on the subject land, one unit known as No.
216-A Road I, Pag-asa, Quezon City which was occupied by petitioners Florentino
and Vivencia and the other unit known as No. 216, Pag-asa, Quezon City which was
occupied by the spouses Zenaida and Justiniano.
On January 26, 1970, Zenaida and Justiniano caused the issuance of a certificate of
title (TCT No. 149347) only in their names (p. 47, Rollo).
On February 26, 1976, private respondent Zenaida Fernandez and her husband
Justiniano Fernandez filed a petition for voluntary dissolution of their conjugal
partnership before the Juvenile and Domestic Relations Court, Quezon City. In the
petition, the couple prayed for judicial approval of their compromise agreement
wherein Justiniano waived all his rights to the conjugal properties including the
subject parcel of land. Pursuant to the compromise agreement, the Juvenile and
Domestic Relations Court awarded the parcel of land subject of the instant case to
private respondent Zenaida Angeles-Fernandez on December 13, 1976. In a letter

dated October 22, 1977, private respondent demanded that petitioners vacate the
premises of the lot awarded to her. On June 9, 1981, petitioners' spouses Florentino
and Vivencia filed an action to quiet title and damages against Zenaida Fernandez
only, who was then already estranged from her husband Justiniano. In another letter
dated June 21, 1981, Zenaida reiterated her demand that petitioners vacate the
premises of the lot awarded to her, which lot was also the subject matter of the
complaint for quieting of title filed by petitioners.
After trial, a decision (pp. 43-45, Rollo) was rendered on July 23, 1984 wherein the
trial court made the following findings and conclusions:
1.
The genuineness and/or due execution of the Deed of Conditional Sale dated
November 28, 1966 (Exhibit 'B' & Exhibit '2') and Affidavit dated April 24, 1967
(Exhibit 'D' & Exhibit '4'), were admitted by defendant Zenaida Angeles-Fernandez.
Likewise, the voluntariness of the execution thereof, including their contents, were
not seriously controverted by defendant Zenaida Angeles- Fernandez. Said
documents, therefore, should be taken against her for as ruled by the higher court;
a man's acts, conduct, and declarations wherever made, if voluntary, are admissible
against him, for the reason that it is fair to presume that they correspond with the
truth, and it is his fault if they do not. (US vs. Ching Po, 23 Phil. 578, 583);
2.
The claim of defendant Zenaida Angeles-Fernandez to the effect that the
P5,500.00 used as down payment for the purchase price in the total amount of
P15,500.00 mentioned in the Deed of Conditional Sale dated November 28, 1966
(Exhibit 'B' & Exhibit '2'), was merely a loan, and that she and her husband
Justiniano E. Fernandez have already paid the same almost three-fold to plaintiffs,
cannot be considered there being no concrete proof on record to substantiate the
same. The Court noted, however, that no further amount, aside from the P5,500.00
were paid by the plaintiffs for the purchase of Lot 13, Block N-19 of Pag-asa
Subdivision. By mathematical computations, said amount was short for the amount
they should pay for the 1/2 portion of the purchased lot, and they should be
required to reimburse defendant Zenaida Angeles- Fernandez;
3.
Likewise, the verbal claim of the defendant Zenaida Angeles- Fernandez that
she and her husband Justiniano B. Fernandez executed the Affidavit dated April 24,
1967 (Exhibit 'D' & Exhibit '4') as security or assurance to plaintiffs' non-eviction
from the premises they are co-occupying and/or payment of the alleged loan,
appears gratuitous and illogical, and cannot be given weight more than their
admission (Exhibit 'B' & Exhibit '4'), while admission is against interest.
4.
The fact that the names of plaintiffs no longer appear as co-vendees in the
Deed of Absolute Sale dated February 24,1967 (Exhibit 'C', & Exhibit '3'), and to the
title to Lot 13, Block N-1 9 of the Pagasa Subdivision, Quezon City Exhibit 'A' &
Exhibit '1'), as of not moment (sic) and inconsequential to their right or ownership

over the 1/2 portion of the lot, the same having been sufficiently established by the
Deed of Conditional Sale dated November 28, 1966 (Exhibit 'B' and Exhibit '2'); the
Affidavit dated April 24,1967 (Exhibit 'D' & Exhibit '4'); and the proof on record
showing that defendant Zenaida Angeles-Fernandez collected taxes due on the
subject lot for the year 1974, 1975,1976 and 1977 (Exhibit 'H'). (pp. 50-51, Rollo)
Anent the ownership of the duplex house, the trial court concluded that although
the petitioners advanced the sum of P l,258.00 (Exhibit "K" and "K-1") for the unit
occupied by them, said amount is not sufficient to construct one unit of the duplex
building.
The trial court disposed of the case as follows:
All told, this Court finds plaintiffs spouses Florentino L. Fernandez and Vivencia B.
Fernandez, owner of 1/2 portion or the area of 113 square meters of the Lot 13,
Block N-19 of Pag-asa Subdivision, Quezon City, subject to reimbursement of the
sum of P 2,250.00, representing the difference of the total amount they ought to
pay for the purchase price thereof, to defendant Zenaida Angeles-Fernandez, plus
legal interest thereon from February 24, 1967 until fully paid; and defendant
Zenaida Angeles-Fernandez owner of the other one-half or 113 square meters of the
aforesaid lot, together with both units of the duplex house existing thereon, subject
to the provision of Article 448 of the Civil Code.
WHEREFORE, decision is hereby rendered:
l.
ORDERING defendant Zenaida Angeles-Fernandez to execute a deed of
conveyance over 1/2 portion of 13 square meters of Lot 13, Block N-19 of Pag-asa
Subdivision, covered by Transfer Certificate of Title No. 149347 of the Register of
Deeds of Quezon City, in favor of plaintiffs, spouses Florentino L. Fernandez and
Vivencia B. Fernandez, upon the latter's payment of P 2,225.00 plus legal interest
thereon counted from February 24, 1967, until fully paid.
2.
The portion of the duplex building resting on the portion of the lot to be
reconveyed to the plaintiffs, spouses Florentino L. Fernandez and Vivencia B.
Fernandez, shall remain under the ownership of defendant Zenaida AngelesFernandez, subject to the provision of Article 448 of the Civil Code.
xxx
(pp. 53-54, Rollo).
Petitioners filed a motion to reconsider the decision insofar as the area awarded
them was concerned and the amount spent by them for the construction of the

duplex house. On November 15, 1984, an order (pp. 55-56, Rollo) was issued by the
trial court amending the July 23, 1984 decision, thus:
WHEREFORE, 1) The dispositive portion of the decision dated July 23, 1984, is
hereby amended as follows: 'l. ORDERING defendant Zenaida Angeles-Fernandez to
execute a deed of conveyance over 1/3 portion or 110 square meters of Lot 13,
Block N-19 of the Pag-asa Subdivision, covered by Transfer Certificate of Title No.
149347 of the Register of Deeds of Quezon City, in favor of plaintiffs, spouses
Florentino L. Fernandez and Vivencia B. Fernandez, upon the latter's payment of P
2,225 plus legal interest thereon counted from February 24, 1967, until fully paid.'
2) Denying all other matters raised in the motion for reconsideration and opposition
thereto.
SO ORDERED. (pp. 55-56, Rollo)
While the order amended the area of the land to be awarded to the petitioners from
1/2 to 1/3, it failed to delete the portion ordering petitioners to pay private
respondent the amount of P 2,225, as originally ordered in the July 23, 1984
decision.
Not satisfied with the trial court's decision and the order amending said decision,
both the petitioners and the private respondent appealed to respondent Court of
Appeals. In a decision (pp. 33-40, Rollo) promulgated on January 26, 1988,
respondent appellate court made a different conclusion and modified the decision of
the trial court:
The main basis of the trial court in concluding that the plaintiffs are entitled to 1/2
and later to 1/3 portion of the lot and house in Pag-asa are the deed of conditional
sale (Exh. B and 2) and the affidavit executed by Justiniano Fernandez (Exh. D).
It appears, however, that the effect of said documents have been modified by later
events. The first is the absolute deed of sale of the house and lot in question and
the subsequent issuance of the title thereof only in the name of Justiniano
Fernandez and his wife (Exh. C and 3 and Exh. A and 1). Thereafter, Transfer
Certificate of Title No. 149347 in the name of the spouses Justiniano E. Fernandez
and Zenaida A. Fernandez was issued by the Register of Deeds of Quezon City on
January 26, 1970 (Exh. A). If, indeed, the herein plaintiffs were entitled to 1/2 of the
said property, they should have taken steps to include their names in the said title
or at least had it annotated on said title. A Certificate of Title issued a party
accumulates all the ultimate facts with respect to a particular piece of registered
land in one single document, making out a precise and correct statement to the
exact status of the fee simple title which the owner has in fact. Once issued, the
certificate is the evidence of the title which the owner has (Legarda vs. Saleeby, 31
Phil. 590). A torrens title concludes all controversy over ownership of land covered

by final decree of registration, and title by adverse possession cannot be acquired

against the registered owner (Sec. 46, Act 496; J.M. Tuason and Co. vs. Vibat, L28884, May 29,1963,8 SCRA 54; Espiritu vs. Sison, CA 51612-R, Feb. 14,1979).
What militates more against the claim of ownership of a portion of the property in
question by the plaintiffs is the fact that as a result of marriage settlement between
Justiniano Fernandez and his wife Zenaida, the whole property was adjudicated to
Zenaida. The settlement was approved by the Juvenile and Domestic Relations
Court. The herein plaintiffs were supposed to know about said marriage settlement
of property. Here is a situation where Zenaida was in fact abandoned by her
husband Justiniano, who is a nephew of plaintiff Florentino Fernandez. The plaintiffs
should have intervened in said case by filing their claims on the property that was
to be granted to Zenaida alone in the marriage settlement. Indeed, it would be less
than fair for the herein plaintiffs to demand their alleged share against Zenaida
alone after their nephew agreed to grant said property to his wife whom he
abandoned.
Lastly, the cause of action of the plaintiffs had already prescribed. As already
stated, the Transfer Certificate of Title was issued in the name of the spouses
Justiniano and Zenaida Fernandez in 1970. From said date, Justiniano and his wife
exercised acts of absolute ownership by mortgaging the property. The instant action
to claim ownership of the portion of the land was filed on July 9, 1981.
With these findings, We find no merit in the contention of plaintiffs-appellants that
they are entitled to damages and attorney's fees.
WHEREFORE, the decision appealed from is hereby MODIFIED by declaring the
defendant Zenaida Fernandez as the sole owner of the property in question covered
by Transfer Certificate of Title No. 14934, Registry of Deeds of Quezon City. In
fairness to the plaintiffs, however, defendant Zenaida Fernandez is ordered to return
to the plaintiffs the amount of P5,500.00 plus interest at the legal rate from
November 28, 1966 until full payment thereof. SO ORDERED. (pp. 39-40, Rollo)
Petitioners' motion for reconsideration of the decision of the Court of Appeals was
denied on April 22, 1988 (p. 42, Rollo).
On June 15, 1988, petitioners filed the instant petition for review. They contend that
respondent appellate court erred in not declaring them part owners of the lot in
question despite the fact that it is not disputed that petitioners and defendant
Zenaida Fernandez with her husband Justiniano Fernandez entered into an
agreement with the vendors-spouses Santos and Matilde de Torres that the subject
land would be purchased by them in common.

While, as a rule, this Court is bound by the findings of the Court of Appeals in
matters of fact, that rule is subject to well-settled exceptions, amongst them: (1)
when the same are grounded entirely on speculation, surmise, and conjecture; (2)
the inference made is manifestly mistaken; (3)...; (4) its judgment is based on a
misapprehension of facts; (5) it went beyond the issues of the case and its findings
contravene admissions of the parties; (6) its findings of fact are contrary to those of
the trial court; (7) the same are conclusions without citation of specific evidence; (8)
...; and (9) when the findings of fact of the Court of Appeals are not supported by
the evidence or contradicted in fact by the evidence on record (Teodoro v. Court of
Appeals, L-31471, November 12, 1987).
In the instant case, there is a disparity in the factual findings and conclusions of the
respondent appellate court and the trial court. On the basis of the evidence
presented and in view of the accepted rule that "the judge who tries a case in the
court below, has vastly superior advantage for the ascertainment of truth and the
detection of falsehood over an appellate court of review (Roque v. Buan, L-22459,
October 31, 1967, 21 SCRA 642), the findings of the trial court must be upheld.
We agree with petitioners' contention that respondent court erred in not declaring
them as part owners of the subject property. There is sufficient evidence on record
to prove that petitioners and spouses Justiniano and Zenaida Fernandez purchased
in common the lot subject of this case and that it was the parties' intention to
become owners of specific portions thereof.
The purchase of the property by the two Fernandez couples was evidenced by a
Deed of Conditional Sale (Exhibit "B" and Exhibit "2") executed by the previous
owners Spouses Santos and Matilde de Torres in favor of the petitioners and the
Spouses Zenaida and Justiniano Fernandez. Respondent appellate court concluded
that the effect of the Deed of Conditional Sale was modified by later events
specifically, the execution of a deed of Absolute Sale in favor of Justiniano
Fernandez and private respondent Zenaida Fernandez only. However, respondent
appellate court lost sight of the fact that upon petitioners' knowledge that the Deed
of Absolute Sale was executed in favor of Justiniano and Zenaida Fernandez only,
the petitioners confronted the latter spouses which led to the execution by the latter
on April 24,1967 of an affidavit (Exhibit 'D') acknowledging petitioners' purchase of
110 square meters of the subject lot and the receipt of the consideration therefor
for P5,500.00. The due execution and authenticity of both the Deed of Conditional
Sale and Affidavit were never denied by private respondent. Having recognized the
sale and the receipt of the consideration in the affidavit, private respondent is now
estopped from going against such declaration.
It is noted that subsequent to the execution of the affidavit, a duplex house was
constructed on the lot where one unit was occupied by private respondent Zenaida
and her husband Justiniano and the other unit by the petitioners. The expenses for

the construction of the duplex were advanced by the spouses Zenaida and
Justiniano, but they demanded reimbursement of the expenses they advanced for
the portion belonging to petitioners. Exhibit "I" and Exhibit "J" reveal that on
November 10, 1969, Justiniano demanded from the petitioners payment of their
share of the materials used in the construction of their portion of the duplex house
amounting to P 2,607.70 (p. 44, Rollo) and the taxes due from them for the house
and lot. On March 8, 1977, petitioners paid for their share of the realty taxes for the
year 1974,1975,1976 and 1977 in the total amount of P 894.36 to private
respondent Zenaida (Exhibit "H"). For the expenses in the construction of the
portion of the duplex possessed by petitioners, they gave P1,258.10 to Justiniano
who issued a receipt therefor (Exhibit "K" and "K-1") Petitioners promised to
liquidate the balance in installment at the rate of P 300.00 a month. The trial court
concluded that the amount of P l,258.10 advanced by petitioners was not sufficient
to construct their portion of the duplex house and that no evidence was presented
to prove that petitioners paid for the balance. From this findings, it erroneously
concluded that the entire duplex house belongs to private respondent Zenaida
Angeles-Fernandez.
It should be noted that Justiniano Fernandez admitted in Exhibits "I" and "J"
petitioner's ownership of the portion of the duplex house now occupied by them. It
may be that the amount of P1,258.10 paid by petitioner Florentino Fernandez to
Justiniano Fernandez was not sufficient to construct their portion of the duplex
house but such insufficiency cannot be made the basis for divesting them of their
ownership.
Respondent court's conclusion that petitioners were not part owners of subject land
relied much on the existence of Transfer Certificate of Title No. 149347 issued in the
name of Spouses Justiniano and Zenaida Fernandez only. It further concluded that if,
indeed, petitioners were entitled to 1/2 of the property, they should have taken
steps to include their names in the title.
Section 50 of Act No. 496 (now Sec. 51 of P.D. 1529), provides that the registration
of the deed is the operative act to bind or affect the land insofar as third persons
are concerned. But where the party has knowledge of a prior existing interest which
is unregistered at the time he acquired a right to the same land, his knowledge of
that prior unregistered interest has the effect of registration as to him. The torrens
system cannot be used as a shield for the commission of fraud (Gustillo v. Maravilla,
48 Phil. 442). As far as private respondent Zenaida Angeles and her husband
Justiniano are concerned, the non-registration of the affidavit admitting their sale of
a portion of 110 square meters of the subject land to petitioners cannot be invoked
as a defense because (K)nowledge of an unregistered sale is equivalent to
registration (Winkleman v. Veluz, 43 Phil. 604).

The respondent appellate court also erred in ruling that the cause of action of
petitioners had already prescribed in view of the issuance in 1970 of a certificate of
title in the name of the Spouses Justiniano and Zenaida Fernandez. As already
stated, the issuance of a certificate of title in the name appearing therein does not
preclude petitioners from asserting their right of ownership over the land in
question. Time and again it has been ruled that the torrens system should not be
used as a shield to protect fraud. Moreover, prescription cannot be considered
against petitioners who had been in possession of subject premises from the time it
was purchased from the de Torres spouses in 1967 and continue to possess the
same under claim of ownership. There is no sufficient basis for the respondent court
to conclude that spouses Zenaida and Justiniano were possessing the entire
property adversely against petitioners. At most, the first time that respondent
Zenaida Fernandez claimed adverse possession of the entire premises was when
she demanded from petitioners the possession of the unit possessed by them in a
letter dated October 22, 1977 (Exhibit "F") emboldened by a decision of the Juvenile
and Domestic Relations Court awarding the premises to her. The decision of private
respondent to claim total ownership of the premises was in fact, pursued only halfheartedly by her because the second time that she demanded possession of the
premises was four (4) years after or on June 21, 1981, after an action to quiet title
was filed by petitioners on June 9,1981. In Almanza v. Arguelles, L-49250, December
21, 1987, We held that, "prescription cannot be invoked in an action for
reconveyance, which is, in effect an action to quiet title against the plaintiff therein
who is in possession of the land in question. As lawful possessor and owner of the
disputed portion, her cause of action for reconveyance which, in effect, seeks to
quiet title to property in one's possession is imprescriptible (also cited in CaragayLayno v. Court of Appeals, 133 SCRA 718, citing Sapto et al. v. Fabiana, 103 Phil.
683 and Faja v. C.A., 75 SCRA 441). The reason, we explained in Bucton v. Gabar, L36359, January 31, 1974, 55 SCRA 499, is:
... that while the owner in fee continues liable to an action, proceeding, or suit upon
the adverse claim, he has a continuing right to the aid of a court of equity to
ascertain and determine the nature of such claim and its effect on his title, or to
assert any superior equity in his favor. He may wait until his possession is disturbed
or his title is attacked before taking steps to vindicate his right. But the rule that the
statute of limitations is not available as a defense of an action to remove a cloud
from title can only be invoked by a complainant when he is in possession. .... (44
Am. Jur., p. 47)
The judgment in the petition for dissolution of the conjugal partnership filed with the
Juvenile and Domestic Relations Court of private respondent Zenaida AngelesFernandez and her husband Justiniano where the property in question was awarded
to Zenaida cannot bind the petitioners who were not parties thereto. The failure of
petitioners to intervene in the said proceedings for dissolution of conjugal
partnership is not fatal. Petitioners may file their claim of ownership over the one-

third portion of the property in question separately which they did when they
brought the complaint for quieting of title before the trial court.
As already stated, the affidavit executed by Justiniano Fernandez and private
respondent Zenaida Angeles Fernandez acknowledged the sale of one-third (1/3)
portion of the subject land to petitioners-spouses Florentino and Vivencia Fernandez
and the receipt by the former of the amount of P5,500.00 as consideration thereof.
However, the trial court in awarding the said one-third portion to petitioners also
ordered the payment by them of P 2,225.00 to private respondent Zenaida AngelesFernandez, oblivious of the fact that only 1/3 and not one half (1/2) pertain to
petitioners and that the P5,500.00 advanced by petitioners at the time the subject
property was purchased from the de Torres spouses was sufficient payment for the
1/3 portion awarded to them.
ACCORDINGLY, the petition is GRANTED. The decision of respondent appellate court
is REVERSED. Judgment is hereby rendered declaring petitioners owners of 1) onethird (1/3) or 110 square meters of Lot 13, Block N-19 of Pag-asa Subdivision,
presently occupied by them, covered by TCT No. 149347 of the Register of Deeds of
Quezon City; and 2) the portion of the duplex house occupied by them after
payment of the balance of P l,349.70 advanced by the husband of private
respondent Zenaida Fernandez for the construction thereof, with interest at the
legal rate from November 1969 until fully paid.
SO ORDERED.
ii.Double Sales
1. Article 1544 of the Civil Code
G.R. No. 154409

June 21, 2004

Spouses NOEL and JULIE ABRIGO, petitioners,

vs.
ROMANA DE VERA, respondent.
DECISION
PANGANIBAN, J.:
Between two buyers of the same immovable property registered under the Torrens
system, the law gives ownership priority to (1) the first registrant in good faith; (2)
then, the first possessor in good faith; and (3) finally, the buyer who in good faith
presents the oldest title. This provision, however, does not apply if the property is
not registered under the Torrens system.

The Case
Before us is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to
set aside the March 21, 2002 Amended Decision2 and the July 22, 2002 Resolution3
of the Court of Appeals (CA) in CA-GR CV No. 62391. The Amended Decision
disposed as follows:
"WHEREFORE, the dispositive part of the original D E C I S I O N of this case,
promulgated on November 19, 2001, is SET ASIDE and another one is entered
AFFIRMING in part and REVERSING in part the judgment appealed from, as follows:
"1. Declaring [Respondent] Romana de Vera the rightful owner and with better right
to possess the property in question, being an innocent purchaser for value therefor;
"2. Declaring Gloria Villafania [liable] to pay the following to [Respondent] Romana
de Vera and to [Petitioner-]Spouses [Noel and Julie] Abrigo, to wit:
As to [Respondent] Romana de Vera:
1. P300,000.00 plus 6% per annum as actual damages;
2. P50,000.00 as moral damages;
3. P50,000.00 as exemplary damages;
4. P30,000.00 as attorneys fees; and
5. Cost of suit.
As to [Petitioner-]Spouses [Noel and Julie] Abrigo:
1. P50,000.00 as moral damages;
2. P50,000.00 as exemplary damages;
3. P30,000.00 as attorneys fees;
4. Cost of suit."4
The assailed Resolution denied reconsideration.
The Facts
Quoting the trial court, the CA narrated the facts as follows:

"As culled from the records, the following are the pertinent antecedents amply
summarized by the trial court:
On May 27, 1993, Gloria Villafania sold a house and lot located at Banaoang,
Mangaldan, Pangasinan and covered by Tax Declaration No. 1406 to Rosenda TignoSalazar and Rosita Cave-Go. The said sale became a subject of a suit for annulment
of documents between the vendor and the vendees.
On December 7, 1993, the Regional Trial Court, Branch 40 of Dagupan City
rendered judgment approving the Compromise Agreement submitted by the parties.
In the said Decision, Gloria Villafania was given one year from the date of the
Compromise Agreement to buy back the house and lot, and failure to do so would
mean that the previous sale in favor of Rosenda Tigno-Salazar and Rosita Cave-Go
shall remain valid and binding and the plaintiff shall voluntarily vacate the premises
without need of any demand. Gloria Villafania failed to buy back the house and lot,
so the [vendees] declared the lot in their name.
Unknown, however to Rosenda Tigno-Salazar and Rosita Cave-Go, Gloria Villafania
obtained a free patent over the parcel of land involved [on March 15, 1988 as
evidenced by OCT No. P-30522]. The said free patent was later on cancelled by TCT
No. 212598 on April 11, 1996.
On October 16, 1997, Rosenda Tigno-Salazar and Rosita Cave-Go, sold the house
and lot to the herein [Petitioner-Spouses Noel and Julie Abrigo].
On October 23, 1997, Gloria Villafania sold the same house and lot to Romana de
Vera x x x. Romana de Vera registered the sale and as a consequence, TCT No.
22515 was issued in her name.
On November 12, 1997, Romana de Vera filed an action for Forcible Entry and
Damages against [Spouses Noel and Julie Abrigo] before the Municipal Trial Court of
Mangaldan, Pangasinan docketed as Civil Case No. 1452. On February 25, 1998, the
parties therein submitted a Motion for Dismissal in view of their agreement in the
instant case that neither of them can physically take possession of the property in
question until the instant case is terminated. Hence the ejectment case was
dismissed.5
"Thus, on November 21, 1997, [petitioners] filed the instant case [with the Regional
Trial Court of Dagupan City] for the annulment of documents, injunction, preliminary
injunction, restraining order and damages [against respondent and Gloria
Villafania].

"After the trial on the merits, the lower court rendered the assailed Decision dated
January 4, 1999, awarding the properties to [petitioners] as well as damages.
Moreover, x x x Gloria Villafania was ordered to pay [petitioners and private
respondent] damages and attorneys fees.
"Not contented with the assailed Decision, both parties [appealed to the CA]."6
Ruling of the Court of Appeals
In its original Decision promulgated on November 19, 2001, the CA held that a void
title could not give rise to a valid one and hence dismissed the appeal of Private
Respondent Romana de Vera.7 Since Gloria Villafania had already transferred
ownership to Rosenda Tigno-Salazar and Rosita Cave-Go, the subsequent sale to De
Vera was deemed void.
The CA also dismissed the appeal of Petitioner-Spouses Abrigo and found no
sufficient basis to award them moral and exemplary damages and attorneys fees.
On reconsideration, the CA issued its March 21, 2002 Amended Decision, finding
Respondent De Vera to be a purchaser in good faith and for value. The appellate
court ruled that she had relied in good faith on the Torrens title of her vendor and
must thus be protected.8
Hence, this Petition.9
Issues
Petitioners raise for our consideration the issues below:
"1. Whether or not the deed of sale executed by Gloria Villafania in favor of
[R]espondent Romana de Vera is valid.
"2. Whether or not the [R]espondent Romana de Vera is a purchaser for value in
good faith.
"3. Who between the petitioners and respondent has a better title over the property
in question."10
In the main, the issues boil down to who between petitioner-spouses and
respondent has a better right to the property.
The Courts Ruling
The Petition is bereft of merit.

Main Issue:
Better Right over the Property
Petitioners contend that Gloria Villafania could not have transferred the property to
Respondent De Vera because it no longer belonged to her.11 They further claim that
the sale could not be validated, since respondent was not a purchaser in good faith
and for value.12
Law on Double Sale
The present case involves what in legal contemplation was a double sale. On May
27, 1993, Gloria Villafania first sold the disputed property to Rosenda Tigno-Salazar
and Rosita Cave-Go, from whom petitioners, in turn, derived their right.
Subsequently, on October 23, 1997, a second sale was executed by Villafania with
Respondent Romana de Vera.
Article 1544 of the Civil Code states the law on double sale thus:
"Art. 1544. If the same thing should have been sold to different vendees, the
ownership shall be transferred to the person who may have first taken possession
thereof in good faith, if it should be movable property.
"Should it be immovable property, the ownership shall belong to the person
acquiring it who in good faith first recorded it in the Registry of Property.
"Should there be no inscription, the ownership shall pertain to the person who in
good faith was first in the possession; and, in the absence thereof, to the person
who presents the oldest title, provided there is good faith."
Otherwise stated, the law provides that a double sale of immovables transfers
ownership to (1) the first registrant in good faith; (2) then, the first possessor in
good faith; and (3) finally, the buyer who in good faith presents the oldest title.13
There is no ambiguity in the application of this law with respect to lands registered
under the Torrens system.
This principle is in full accord with Section 51 of PD 152914 which provides that no
deed, mortgage, lease or other voluntary instrument -- except a will -- purporting to
convey or affect registered land shall take effect as a conveyance or bind the land
until its registration.15 Thus, if the sale is not registered, it is binding only between
the seller and the buyer but it does not affect innocent third persons.16

In the instant case, both Petitioners Abrigo and respondent registered the sale of
the property. Since neither petitioners nor their predecessors (Tigno-Salazar and
Cave-Go) knew that the property was covered by the Torrens system, they
registered their respective sales under Act 3344.17 For her part, respondent
registered the transaction under the Torrens system18 because, during the sale,
Villafania had presented the transfer certificate of title (TCT) covering the
property.19
Respondent De Vera contends that her registration under the Torrens system should
prevail over that of petitioners who recorded theirs under Act 3344. De Vera relies
on the following insight of Justice Edgardo L. Paras:
"x x x If the land is registered under the Land Registration Act (and has therefore a
Torrens Title), and it is sold but the subsequent sale is registered not under the Land
Registration Act but under Act 3344, as amended, such sale is not considered
REGISTERED, as the term is used under Art. 1544 x x x."20
We agree with respondent. It is undisputed that Villafania had been issued a free
patent registered as Original Certificate of Title (OCT) No. P-30522.21 The OCT was
later cancelled by Transfer Certificate of Title (TCT) No. 212598, also in Villafanias
name.22 As a consequence of the sale, TCT No. 212598 was subsequently cancelled
and TCT No. 22515 thereafter issued to respondent.
Soriano v. Heirs of Magali23 held that registration must be done in the proper
registry in order to bind the land. Since the property in dispute in the present case
was already registered under the Torrens system, petitioners registration of the sale
under Act 3344 was not effective for purposes of Article 1544 of the Civil Code.
More recently, in Naawan Community Rural Bank v. Court of Appeals,24 the Court
upheld the right of a party who had registered the sale of land under the Property
Registration Decree, as opposed to another who had registered a deed of final
conveyance under Act 3344. In that case, the "priority in time" principle was not
applied, because the land was already covered by the Torrens system at the time
the conveyance was registered under Act 3344. For the same reason, inasmuch as
the registration of the sale to Respondent De Vera under the Torrens system was
done in good faith, this sale must be upheld over the sale registered under Act 3344
to Petitioner-Spouses Abrigo.
Radiowealth Finance Co. v. Palileo25 explained the difference in the rules of
registration under Act 3344 and those under the Torrens system in this wise:
"Under Act No. 3344, registration of instruments affecting unregistered lands is
without prejudice to a third party with a better right. The aforequoted phrase has
been held by this Court to mean that the mere registration of a sale in ones favor

does not give him any right over the land if the vendor was not anymore the owner
of the land having previously sold the same to somebody else even if the earlier
sale was unrecorded.
"The case of Carumba vs. Court of Appeals26 is a case in point. It was held therein
that Article 1544 of the Civil Code has no application to land not registered under
Act No. 496. Like in the case at bar, Carumba dealt with a double sale of the same
unregistered land. The first sale was made by the original owners and was
unrecorded while the second was an execution sale that resulted from a complaint
for a sum of money filed against the said original owners. Applying [Section 33],
Rule 39 of the Revised Rules of Court,27 this Court held that Article 1544 of the Civil
Code cannot be invoked to benefit the purchaser at the execution sale though the
latter was a buyer in good faith and even if this second sale was registered. It was
explained that this is because the purchaser of unregistered land at a sheriffs
execution sale only steps into the shoes of the judgment debtor, and merely
acquires the latters interest in the property sold as of the time the property was
levied upon.
"Applying this principle, x x x the execution sale of unregistered land in favor of
petitioner is of no effect because the land no longer belonged to the judgment
debtor as of the time of the said execution sale."28
Petitioners cannot validly argue that they were fraudulently misled into believing
that the property was unregistered. A Torrens title, once registered, serves as a
notice to the whole world.29 All persons must take notice, and no one can plead
ignorance of the registration.30
Good-Faith Requirement
We have consistently held that Article 1544 requires the second buyer to acquire
the immovable in good faith and to register it in good faith.31 Mere registration of
title is not enough; good faith must concur with the registration.32 We explained the
rationale in Uraca v. Court of Appeals,33 which we quote:
"Under the foregoing, the prior registration of the disputed property by the second
buyer does not by itself confer ownership or a better right over the property. Article
1544 requires that such registration must be coupled with good faith. Jurisprudence
teaches us that (t)he governing principle is primus tempore, potior jure (first in
time, stronger in right). Knowledge gained by the first buyer of the second sale
cannot defeat the first buyers rights except where the second buyer registers in
good faith the second sale ahead of the first, as provided by the Civil Code. Such
knowledge of the first buyer does not bar her from availing of her rights under the
law, among them, to register first her purchase as against the second buyer. But in
converso, knowledge gained by the second buyer of the first sale defeats his rights

even if he is first to register the second sale, since such knowledge taints his prior
registration with bad faith. This is the price exacted by Article 1544 of the Civil Code
for the second buyer being able to displace the first buyer; that before the second
buyer can obtain priority over the first, he must show that he acted in good faith
throughout (i.e. in ignorance of the first sale and of the first buyers rights) ---- from
the time of acquisition until the title is transferred to him by registration, or failing
registration, by delivery of possession."34 (Italics supplied)
Equally important, under Section 44 of PD 1529, every registered owner receiving a
certificate of title pursuant to a decree of registration, and every subsequent
purchaser of registered land taking such certificate for value and in good faith shall
hold the same free from all encumbrances, except those noted and enumerated in
the certificate.35 Thus, a person dealing with registered land is not required to go
behind the registry to determine the condition of the property, since such condition
is noted on the face of the register or certificate of title.36 Following this principle,
this Court has consistently held as regards registered land that a purchaser in good
faith acquires a good title as against all the transferees thereof whose rights are not
recorded in the Registry of Deeds at the time of the sale.37
Citing Santiago v. Court of Appeals,38 petitioners contend that their prior
registration under Act 3344 is constructive notice to respondent and negates her
good faith at the time she registered the sale. Santiago affirmed the following
commentary of Justice Jose C. Vitug:
"The governing principle is prius tempore, potior jure (first in time, stronger in right).
Knowledge by the first buyer of the second sale cannot defeat the first buyer's
rights except when the second buyer first registers in good faith the second sale
(Olivares vs. Gonzales, 159 SCRA 33). Conversely, knowledge gained by the second
buyer of the first sale defeats his rights even if he is first to register, since such
knowledge taints his registration with bad faith (see also Astorga vs. Court of
Appeals, G.R. No 58530, 26 December 1984) In Cruz vs. Cabana (G.R. No. 56232, 22
June 1984; 129 SCRA 656), it was held that it is essential, to merit the protection of
Art. 1544, second paragraph, that the second realty buyer must act in good faith in
registering his deed of sale (citing Carbonell vs. Court of Appeals, 69 SCRA 99,
Crisostomo vs. CA, G.R. 95843, 02 September 1992).
xxx

xxx

xxx

"Registration of the second buyer under Act 3344, providing for the registration of
all instruments on land neither covered by the Spanish Mortgage Law nor the
Torrens System (Act 496), cannot improve his standing since Act 3344 itself
expresses that registration thereunder would not prejudice prior rights in good faith
(see Carumba vs. Court of Appeals, 31 SCRA 558). Registration, however, by the
first buyer under Act 3344 can have the effect of constructive notice to the second

buyer that can defeat his right as such buyer in good faith (see Arts. 708-709, Civil
Code; see also Revilla vs. Galindez, 107 Phil. 480; Taguba vs. Peralta, 132 SCRA
700). Art. 1544 has been held to be inapplicable to execution sales of unregistered
land, since the purchaser merely steps into the shoes of the debtor and acquires the
latter's interest as of the time the property is sold (Carumba vs. Court of Appeals,
31 SCRA 558; see also Fabian vs. Smith, Bell & Co., 8 Phil. 496) or when there is only
one sale (Remalante vs. Tibe, 158 SCRA 138)."39 (Emphasis supplied)
Santiago was subsequently applied in Bayoca v. Nogales,40 which held:
"Verily, there is absence of prior registration in good faith by petitioners of the
second sale in their favor. As stated in the Santiago case, registration by the first
buyer under Act No. 3344 can have the effect of constructive notice to the second
buyer that can defeat his right as such buyer. On account of the undisputed fact of
registration under Act No. 3344 by [the first buyers], necessarily, there is absent
good faith in the registration of the sale by the [second buyers] for which they had
been issued certificates of title in their names. x x x."41
Santiago and Bayoca are not in point. In Santiago, the first buyers registered the
sale under the Torrens system, as can be inferred from the issuance of the TCT in
their names.42 There was no registration under Act 3344. In Bayoca, when the first
buyer registered the sale under Act 3344, the property was still unregistered
land.43 Such registration was therefore considered effectual.
Furthermore, Revilla and Taguba, which are cited in Santiago, are not on all fours
with the present case. In Revilla, the first buyer did not register the sale.44 In
Taguba, registration was not an issue.45
As can be gathered from the foregoing, constructive notice to the second buyer
through registration under Act 3344 does not apply if the property is registered
under the Torrens system, as in this case.
We quote below the additional commentary of Justice Vitug, which was omitted in
Santiago. This omission was evidently the reason why petitioner misunderstood the
context of the citation therein:
"The registration contemplated under Art. 1544 has been held to refer to
registration under Act 496 Land Registration Act (now PD 1529) which considers the
act of registration as the operative act that binds the land (see Mediante vs.
Rosabal, 1 O.G. [12] 900, Garcia vs. Rosabal, 73 Phil 694). On lands covered by the
Torrens System, the purchaser acquires such rights and interest as they appear in
the certificate of title, unaffected by any prior lien or encumbrance not noted
therein. The purchaser is not required to explore farther than what the Torrens title,
upon its face, indicates. The only exception is where the purchaser has actual

knowledge of a flaw or defect in the title of the seller or of such liens or

encumbrances which, as to him, is equivalent to registration (see Sec. 39, Act 496;
Bernales vs. IAC, G.R. 75336, 18 October 1988; Hernandez vs. Sales, 69 Phil 744;
Tajonera vs. Court of Appeals, L-26677, 27 March 1981),"46
Respondent in Good Faith
The Court of Appeals examined the facts to determine whether respondent was an
innocent purchaser for value.47 After its factual findings revealed that Respondent
De Vera was in good faith, it explained thus:
"x x x. Gloria Villafania, [Respondent] De Veras vendor, appears to be the
registered owner. The subject land was, and still is, registered in the name of Gloria
Villafania. There is nothing in her certificate of title and in the circumstances of the
transaction or sale which warrant [Respondent] De Vera in supposing that she
need[ed] to look beyond the title. She had no notice of the earlier sale of the land to
[petitioners]. She ascertained and verified that her vendor was the sole owner and
in possession of the subject property by examining her vendors title in the Registry
of Deeds and actually going to the premises. There is no evidence in the record
showing that when she bought the land on October 23, 1997, she knew or had the
slightest notice that the same was under litigation in Civil Case No. D-10638 of the
Regional Trial Court of Dagupan City, Branch 40, between Gloria Villafania and
[Petitioners] Abrigo. She was not even a party to said case. In sum, she testified
clearly and positively, without any contrary evidence presented by the [petitioners],
that she did not know anything about the earlier sale and claim of the spouses
Abrigo, until after she had bought the same, and only then when she bought the
same, and only then when she brought an ejectment case with the x x x Municipal
Court of Mangaldan, known as Civil Case No. 1452. To the [Respondent] De Vera, the
only legal truth upon which she had to rely was that the land is registered in the
name of Gloria Villafania, her vendor, and that her title under the law, is absolute
and indefeasible. x x x."48
We find no reason to disturb these findings, which petitioners have not rebutted.
Spouses Abrigo base their position only on the general averment that respondent
should have been more vigilant prior to consummating the sale. They argue that
had she inspected the property, she would have found petitioners to be in
possession.49
This argument is contradicted, however, by the spouses own admission that the
parents and the sister of Villafania were still the actual occupants in October 1997,
when Respondent De Vera purchased the property.50 The family members may
reasonably be assumed to be Villafanias agents, who had not been shown to have
notified respondent of the first sale when she conducted an ocular inspection. Thus,
good faith on respondents part stands.

WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED. Costs
against petitioners.
SO ORDERED.

G.R. No. 124242

January 21, 2005

SAN LORENZO DEVELOPMENT CORPORATION, petitioner,

vs.
COURT OF APPEALS, PABLO S. BABASANTA, SPS. MIGUEL LU and PACITA
ZAVALLA LU, respondents.
DECISION
TINGA, J.:
From a coaptation of the records of this case, it appears that respondents Miguel Lu
and Pacita Zavalla, (hereinafter, the Spouses Lu) owned two (2) parcels of land
situated in Sta. Rosa, Laguna covered by TCT No. T-39022 and TCT No. T-39023 both
measuring 15,808 square meters or a total of 3.1616 hectares.
On 20 August 1986, the Spouses Lu purportedly sold the two parcels of land to
respondent Pablo Babasanta, (hereinafter, Babasanta) for the price of fifteen pesos
(P15.00) per square meter. Babasanta made a downpayment of fifty thousand pesos
(P50,000.00) as evidenced by a memorandum receipt issued by Pacita Lu of the
same date. Several other payments totaling two hundred thousand pesos
(P200,000.00) were made by Babasanta.
Sometime in May 1989, Babasanta wrote a letter to Pacita Lu to demand the
execution of a final deed of sale in his favor so that he could effect full payment of
the purchase price. In the same letter, Babasanta notified the spouses about having
received information that the spouses sold the same property to another without his
knowledge and consent. He demanded that the second sale be cancelled and that a
final deed of sale be issued in his favor.
In response, Pacita Lu wrote a letter to Babasanta wherein she acknowledged
having agreed to sell the property to him at fifteen pesos (P15.00) per square meter.
She, however, reminded Babasanta that when the balance of the purchase price

became due, he requested for a reduction of the price and when she refused,
Babasanta backed out of the sale. Pacita added that she returned the sum of fifty
thousand pesos (P50,000.00) to Babasanta through Eugenio Oya.
On 2 June 1989, respondent Babasanta, as plaintiff, filed before the Regional Trial
Court (RTC), Branch 31, of San Pedro, Laguna, a Complaint for Specific Performance
and Damages1 against his co-respondents herein, the Spouses Lu. Babasanta
alleged that the lands covered by TCT No. T- 39022 and T-39023 had been sold to
him by the spouses at fifteen pesos (P15.00) per square meter. Despite his repeated
demands for the execution of a final deed of sale in his favor, respondents allegedly
refused.
In their Answer,2 the Spouses Lu alleged that Pacita Lu obtained loans from
Babasanta and when the total advances of Pacita reached fifty thousand pesos
(P50,000.00), the latter and Babasanta, without the knowledge and consent of
Miguel Lu, had verbally agreed to transform the transaction into a contract to sell
the two parcels of land to Babasanta with the fifty thousand pesos (P50,000.00) to
be considered as the downpayment for the property and the balance to be paid on
or before 31 December 1987. Respondents Lu added that as of November 1987,
total payments made by Babasanta amounted to only two hundred thousand pesos
(P200,000.00) and the latter allegedly failed to pay the balance of two hundred sixty
thousand pesos (P260,000.00) despite repeated demands. Babasanta had
purportedly asked Pacita for a reduction of the price from fifteen pesos (P15.00) to
twelve pesos (P12.00) per square meter and when the Spouses Lu refused to grant
Babasantas request, the latter rescinded the contract to sell and declared that the
original loan transaction just be carried out in that the spouses would be indebted to
him in the amount of two hundred thousand pesos (P200,000.00). Accordingly, on 6
July 1989, they purchased Interbank Managers Check No. 05020269 in the amount
of two hundred thousand pesos (P200,000.00) in the name of Babasanta to show
that she was able and willing to pay the balance of her loan obligation.
Babasanta later filed an Amended Complaint dated 17 January 19903 wherein he
prayed for the issuance of a writ of preliminary injunction with temporary
restraining order and the inclusion of the Register of Deeds of Calamba, Laguna as
party defendant. He contended that the issuance of a preliminary injunction was
necessary to restrain the transfer or conveyance by the Spouses Lu of the subject
property to other persons.
The Spouses Lu filed their Opposition4 to the amended complaint contending that it
raised new matters which seriously affect their substantive rights under the original
complaint. However, the trial court in its Order dated 17 January 19905 admitted
the amended complaint.

On 19 January 1990, herein petitioner San Lorenzo Development Corporation (SLDC)

filed a Motion for Intervention6 before the trial court. SLDC alleged that it had legal
interest in the subject matter under litigation because on 3 May 1989, the two
parcels of land involved, namely Lot 1764-A and 1764-B, had been sold to it in a
Deed of Absolute Sale with Mortgage.7 It alleged that it was a buyer in good faith
and for value and therefore it had a better right over the property in litigation.
In his Opposition to SLDCs motion for intervention,8 respondent Babasanta
demurred and argued that the latter had no legal interest in the case because the
two parcels of land involved herein had already been conveyed to him by the
Spouses Lu and hence, the vendors were without legal capacity to transfer or
dispose of the two parcels of land to the intervenor.
Meanwhile, the trial court in its Order dated 21 March 1990 allowed SLDC to
intervene. SLDC filed its Complaint-in-Intervention on 19 April 1990.9 Respondent
Babasantas motion for the issuance of a preliminary injunction was likewise
granted by the trial court in its Order dated 11 January 199110 conditioned upon his
filing of a bond in the amount of fifty thousand pesos (P50,000.00).
SLDC in its Complaint-in-Intervention alleged that on 11 February 1989, the Spouses
Lu executed in its favor an Option to Buy the lots subject of the complaint.
Accordingly, it paid an option money in the amount of three hundred sixteen
thousand one hundred sixty pesos (P316,160.00) out of the total consideration for
the purchase of the two lots of one million two hundred sixty-four thousand six
hundred forty pesos (P1,264,640.00). After the Spouses Lu received a total amount
of six hundred thirty-two thousand three hundred twenty pesos (P632,320.00) they
executed on 3 May 1989 a Deed of Absolute Sale with Mortgage in its favor. SLDC
added that the certificates of title over the property were delivered to it by the
spouses clean and free from any adverse claims and/or notice of lis pendens. SLDC
further alleged that it only learned of the filing of the complaint sometime in the
early part of January 1990 which prompted it to file the motion to intervene without
delay. Claiming that it was a buyer in good faith, SLDC argued that it had no
obligation to look beyond the titles submitted to it by the Spouses Lu particularly
because Babasantas claims were not annotated on the certificates of title at the
time the lands were sold to it.
After a protracted trial, the RTC rendered its Decision on 30 July 1993 upholding the
sale of the property to SLDC. It ordered the Spouses Lu to pay Babasanta the sum of
two hundred thousand pesos (P200,000.00) with legal interest plus the further sum
of fifty thousand pesos (P50,000.00) as and for attorneys fees. On the complaint-inintervention, the trial court ordered the Register of Deeds of Laguna, Calamba
Branch to cancel the notice of lis pendens annotated on the original of the TCT No.
T-39022 (T-7218) and No. T-39023 (T-7219).

Applying Article 1544 of the Civil Code, the trial court ruled that since both
Babasanta and SLDC did not register the respective sales in their favor, ownership
of the property should pertain to the buyer who first acquired possession of the
property. The trial court equated the execution of a public instrument in favor of
SLDC as sufficient delivery of the property to the latter. It concluded that symbolic
possession could be considered to have been first transferred to SLDC and
consequently ownership of the property pertained to SLDC who purchased the
property in good faith.
Respondent Babasanta appealed the trial courts decision to the Court of Appeals
alleging in the main that the trial court erred in concluding that SLDC is a purchaser
in good faith and in upholding the validity of the sale made by the Spouses Lu in
favor of SLDC.
Respondent spouses likewise filed an appeal to the Court of Appeals. They
contended that the trial court erred in failing to consider that the contract to sell
between them and Babasanta had been novated when the latter abandoned the
verbal contract of sale and declared that the original loan transaction just be carried
out. The Spouses Lu argued that since the properties involved were conjugal, the
trial court should have declared the verbal contract to sell between Pacita Lu and
Pablo Babasanta null and void ab initio for lack of knowledge and consent of Miguel
Lu. They further averred that the trial court erred in not dismissing the complaint
filed by Babasanta; in awarding damages in his favor and in refusing to grant the
reliefs prayed for in their answer.
On 4 October 1995, the Court of Appeals rendered its Decision11 which set aside
the judgment of the trial court. It declared that the sale between Babasanta and the
Spouses Lu was valid and subsisting and ordered the spouses to execute the
necessary deed of conveyance in favor of Babasanta, and the latter to pay the
balance of the purchase price in the amount of two hundred sixty thousand pesos
(P260,000.00). The appellate court ruled that the Absolute Deed of Sale with
Mortgage in favor of SLDC was null and void on the ground that SLDC was a
purchaser in bad faith. The Spouses Lu were further ordered to return all payments
made by SLDC with legal interest and to pay attorneys fees to Babasanta.
SLDC and the Spouses Lu filed separate motions for reconsideration with the
appellate court.12 However, in a Manifestation dated 20 December 1995,13 the
Spouses Lu informed the appellate court that they are no longer contesting the
decision dated 4 October 1995.
In its Resolution dated 11 March 1996,14 the appellate court considered as
withdrawn the motion for reconsideration filed by the Spouses Lu in view of their
manifestation of 20 December 1995. The appellate court denied SLDCs motion for
reconsideration on the ground that no new or substantial arguments were raised

therein which would warrant modification or reversal of the courts decision dated 4
October 1995.
Hence, this petition.
SLDC assigns the following errors allegedly committed by the appellate court:
THE COURT OF APPEALS ERRED IN HOLDING THAT SAN LORENZO WAS NOT A BUYER
IN GOOD FAITH BECAUSE WHEN THE SELLER PACITA ZAVALLA LU OBTAINED FROM IT
THE CASH ADVANCE OF P200,000.00, SAN LORENZO WAS PUT ON INQUIRY OF A
PRIOR TRANSACTION ON THE PROPERTY.
THE COURT OF APPEALS ERRED IN FAILING TO APPRECIATE THE ESTABLISHED FACT
THAT THE ALLEGED FIRST BUYER, RESPONDENT BABASANTA, WAS NOT IN
POSSESSION OF THE DISPUTED PROPERTY WHEN SAN LORENZO BOUGHT AND
TOOK POSSESSION OF THE PROPERTY AND NO ADVERSE CLAIM, LIEN,
ENCUMBRANCE OR LIS PENDENS WAS ANNOTATED ON THE TITLES.
THE COURT OF APPEALS ERRED IN FAILING TO APPRECIATE THE FACT THAT
RESPONDENT BABASANTA HAS SUBMITTED NO EVIDENCE SHOWING THAT SAN
LORENZO WAS AWARE OF HIS RIGHTS OR INTERESTS IN THE DISPUTED PROPERTY.
THE COURT OF APPEALS ERRED IN HOLDING THAT NOTWITHSTANDING ITS FULL
CONCURRENCE ON THE FINDINGS OF FACT OF THE TRIAL COURT, IT REVERSED AND
SET ASIDE THE DECISION OF THE TRIAL COURT UPHOLDING THE TITLE OF SAN
LORENZO AS A BUYER AND FIRST POSSESSOR IN GOOD FAITH. 15
SLDC contended that the appellate court erred in concluding that it had prior notice
of Babasantas claim over the property merely on the basis of its having advanced
the amount of two hundred thousand pesos (P200,000.00) to Pacita Lu upon the
latters representation that she needed the money to pay her obligation to
Babasanta. It argued that it had no reason to suspect that Pacita was not telling the
truth that the money would be used to pay her indebtedness to Babasanta. At any
rate, SLDC averred that the amount of two hundred thousand pesos (P200,000.00)
which it advanced to Pacita Lu would be deducted from the balance of the purchase
price still due from it and should not be construed as notice of the prior sale of the
land to Babasanta. It added that at no instance did Pacita Lu inform it that the lands
had been previously sold to Babasanta.
Moreover, SLDC stressed that after the execution of the sale in its favor it
immediately took possession of the property and asserted its rights as new owner
as opposed to Babasanta who has never exercised acts of ownership. Since the
titles bore no adverse claim, encumbrance, or lien at the time it was sold to it, SLDC
argued that it had every reason to rely on the correctness of the certificate of title

and it was not obliged to go beyond the certificate to determine the condition of the
property. Invoking the presumption of good faith, it added that the burden rests on
Babasanta to prove that it was aware of the prior sale to him but the latter failed to
do so. SLDC pointed out that the notice of lis pendens was annotated only on 2 June
1989 long after the sale of the property to it was consummated on 3 May
1989.1awphi1.nt
Meanwhile, in an Urgent Ex-Parte Manifestation dated 27 August 1999, the Spouses
Lu informed the Court that due to financial constraints they have no more interest
to pursue their rights in the instant case and submit themselves to the decision of
the Court of Appeals.16
On the other hand, respondent Babasanta argued that SLDC could not have
acquired ownership of the property because it failed to comply with the requirement
of registration of the sale in good faith. He emphasized that at the time SLDC
registered the sale in its favor on 30 June 1990, there was already a notice of lis
pendens annotated on the titles of the property made as early as 2 June 1989.
Hence, petitioners registration of the sale did not confer upon it any right.
Babasanta further asserted that petitioners bad faith in the acquisition of the
property is evident from the fact that it failed to make necessary inquiry regarding
the purpose of the issuance of the two hundred thousand pesos (P200,000.00)
managers check in his favor.
The core issue presented for resolution in the instant petition is who between SLDC
and Babasanta has a better right over the two parcels of land subject of the instant
case in view of the successive transactions executed by the Spouses Lu.
To prove the perfection of the contract of sale in his favor, Babasanta presented a
document signed by Pacita Lu acknowledging receipt of the sum of fifty thousand
pesos (P50,000.00) as partial payment for 3.6 hectares of farm lot situated at
Barangay Pulong, Sta. Cruz, Sta. Rosa, Laguna.17 While the receipt signed by Pacita
did not mention the price for which the property was being sold, this deficiency was
supplied by Pacita Lus letter dated 29 May 198918 wherein she admitted that she
agreed to sell the 3.6 hectares of land to Babasanta for fifteen pesos (P15.00) per
square meter.
An analysis of the facts obtaining in this case, as well as the evidence presented by
the parties, irresistibly leads to the conclusion that the agreement between
Babasanta and the Spouses Lu is a contract to sell and not a contract of sale.
Contracts, in general, are perfected by mere consent,19 which is manifested by the
meeting of the offer and the acceptance upon the thing which are to constitute the
contract. The offer must be certain and the acceptance absolute.20 Moreover,

contracts shall be obligatory in whatever form they may have been entered into,
provided all the essential requisites for their validity are present.21
The receipt signed by Pacita Lu merely states that she accepted the sum of fifty
thousand pesos (P50,000.00) from Babasanta as partial payment of 3.6 hectares of
farm lot situated in Sta. Rosa, Laguna. While there is no stipulation that the seller
reserves the ownership of the property until full payment of the price which is a
distinguishing feature of a contract to sell, the subsequent acts of the parties
convince us that the Spouses Lu never intended to transfer ownership to Babasanta
except upon full payment of the purchase price.
Babasantas letter dated 22 May 1989 was quite telling. He stated therein that
despite his repeated requests for the execution of the final deed of sale in his favor
so that he could effect full payment of the price, Pacita Lu allegedly refused to do
so. In effect, Babasanta himself recognized that ownership of the property would not
be transferred to him until such time as he shall have effected full payment of the
price. Moreover, had the sellers intended to transfer title, they could have easily
executed the document of sale in its required form simultaneously with their
acceptance of the partial payment, but they did not. Doubtlessly, the receipt signed
by Pacita Lu should legally be considered as a perfected contract to sell.
The distinction between a contract to sell and a contract of sale is quite germane. In
a contract of sale, title passes to the vendee upon the delivery of the thing sold;
whereas in a contract to sell, by agreement the ownership is reserved in the vendor
and is not to pass until the full payment of the price.22 In a contract of sale, the
vendor has lost and cannot recover ownership until and unless the contract is
resolved or rescinded; whereas in a contract to sell, title is retained by the vendor
until the full payment of the price, such payment being a positive suspensive
condition and failure of which is not a breach but an event that prevents the
obligation of the vendor to convey title from becoming effective.23
The perfected contract to sell imposed upon Babasanta the obligation to pay the
balance of the purchase price. There being an obligation to pay the price,
Babasanta should have made the proper tender of payment and consignation of the
price in court as required by law. Mere sending of a letter by the vendee expressing
the intention to pay without the accompanying payment is not considered a valid
tender of payment.24 Consignation of the amounts due in court is essential in order
to extinguish Babasantas obligation to pay the balance of the purchase price.
Glaringly absent from the records is any indication that Babasanta even attempted
to make the proper consignation of the amounts due, thus, the obligation on the
part of the sellers to convey title never acquired obligatory force.
On the assumption that the transaction between the parties is a contract of sale and
not a contract to sell, Babasantas claim of ownership should nevertheless fail.

Sale, being a consensual contract, is perfected by mere consent25 and from that
moment, the parties may reciprocally demand performance.26 The essential
elements of a contract of sale, to wit: (1) consent or meeting of the minds, that is,
to transfer ownership in exchange for the price; (2) object certain which is the
subject matter of the contract; (3) cause of the obligation which is established.27
The perfection of a contract of sale should not, however, be confused with its
consummation. In relation to the acquisition and transfer of ownership, it should be
noted that sale is not a mode, but merely a title. A mode is the legal means by
which dominion or ownership is created, transferred or destroyed, but title is only
the legal basis by which to affect dominion or ownership.28 Under Article 712 of the
Civil Code, "ownership and other real rights over property are acquired and
transmitted by law, by donation, by testate and intestate succession, and in
consequence of certain contracts, by tradition." Contracts only constitute titles or
rights to the transfer or acquisition of ownership, while delivery or tradition is the
mode of accomplishing the same.29 Therefore, sale by itself does not transfer or
affect ownership; the most that sale does is to create the obligation to transfer
ownership. It is tradition or delivery, as a consequence of sale, that actually
transfers ownership.
Explicitly, the law provides 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 Article
1497 to 1501.30 The word "delivered" should not be taken restrictively to mean
transfer of actual physical possession of the property. The law recognizes two
principal modes of delivery, to wit: (1) actual delivery; and (2) legal or constructive
delivery.
Actual delivery consists in placing the thing sold in the control and possession of the
vendee.31 Legal or constructive delivery, on the other hand, may be had through
any of the following ways: the execution of a public instrument evidencing the
sale;32 symbolical tradition such as the delivery of the keys of the place where the
movable sold is being kept;33 traditio longa manu or by mere consent or agreement
if the movable sold cannot yet be transferred to the possession of the buyer at the
time of the sale;34 traditio brevi manu if the buyer already had possession of the
object even before the sale;35 and traditio constitutum possessorium, where the
seller remains in possession of the property in a different capacity.36
Following the above disquisition, respondent Babasanta did not acquire ownership
by the mere execution of the receipt by Pacita Lu acknowledging receipt of partial
payment for the property. For one, the agreement between Babasanta and the
Spouses Lu, though valid, was not embodied in a public instrument. Hence, no
constructive delivery of the lands could have been effected. For another, Babasanta
had not taken possession of the property at any time after the perfection of the sale

in his favor or exercised acts of dominion over it despite his assertions that he was
the rightful owner of the lands. Simply stated, there was no delivery to Babasanta,
whether actual or constructive, which is essential to transfer ownership of the
property. Thus, even on the assumption that the perfected contract between the
parties was a sale, ownership could not have passed to Babasanta in the absence of
delivery, since in a contract of sale ownership is transferred to the vendee only
upon the delivery of the thing sold.37
However, it must be stressed that the juridical relationship between the parties in a
double sale is primarily governed by Article 1544 which lays down the rules of
preference between the two purchasers of the same property. It provides:
Art. 1544. If the same thing should have been sold to different vendees, the
ownership shall be transferred to the person who may have first taken possession
thereof in good faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person
acquiring it who in good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in
good faith was first in the possession; and, in the absence thereof, to the person
who presents the oldest title, provided there is good faith.
The principle of primus tempore, potior jure (first in time, stronger in right) gains
greater significance in case of double sale of immovable property. When the thing
sold twice is an immovable, the one who acquires it and first records it in the
Registry of Property, both made in good faith, shall be deemed the owner.38 Verily,
the act of registration must be coupled with good faith that is, the registrant must
have no knowledge of the defect or lack of title of his vendor or must not have been
aware of facts which should have put him upon such inquiry and investigation as
might be necessary to acquaint him with the defects in the title of his vendor.39
Admittedly, SLDC registered the sale with the Registry of Deeds after it had
acquired knowledge of Babasantas claim. Babasanta, however, strongly argues that
the registration of the sale by SLDC was not sufficient to confer upon the latter any
title to the property since the registration was attended by bad faith. Specifically, he
points out that at the time SLDC registered the sale on 30 June 1990, there was
already a notice of lis pendens on the file with the Register of Deeds, the same
having been filed one year before on 2 June 1989.
Did the registration of the sale after the annotation of the notice of lis pendens
obliterate the effects of delivery and possession in good faith which admittedly had
occurred prior to SLDCs knowledge of the transaction in favor of Babasanta?

We do not hold so.

It must be stressed that as early as 11 February 1989, the Spouses Lu executed the
Option to Buy in favor of SLDC upon receiving P316,160.00 as option money from
SLDC. After SLDC had paid more than one half of the agreed purchase price of
P1,264,640.00, the Spouses Lu subsequently executed on 3 May 1989 a Deed of
Absolute Sale in favor or SLDC. At the time both deeds were executed, SLDC had no
knowledge of the prior transaction of the Spouses Lu with Babasanta. Simply stated,
from the time of execution of the first deed up to the moment of transfer and
delivery of possession of the lands to SLDC, it had acted in good faith and the
subsequent annotation of lis pendens has no effect at all on the consummated sale
between SLDC and the Spouses Lu.
A purchaser in good faith is one who buys property of another without notice that
some other person has a right to, or interest in, such property and pays a full and
fair price for the same at the time of such purchase, or before he has notice of the
claim or interest of some other person in the property.40 Following the foregoing
definition, we rule that SLDC qualifies as a buyer in good faith since there is no
evidence extant in the records that it had knowledge of the prior transaction in
favor of Babasanta. At the time of the sale of the property to SLDC, the vendors
were still the registered owners of the property and were in fact in possession of the
lands.l^vvphi1.net Time and again, this Court has ruled that a person dealing with
the owner of registered land is not bound to go beyond the certificate of title as he
is charged with notice of burdens on the property which are noted on the face of the
register or on the certificate of title.41 In assailing knowledge of the transaction
between him and the Spouses Lu, Babasanta apparently relies on the principle of
constructive notice incorporated in Section 52 of the Property Registration Decree
(P.D. No. 1529) which reads, thus:
Sec. 52. Constructive notice upon registration. Every conveyance, mortgage,
lease, lien, attachment, order, judgment, instrument or entry affecting registered
land shall, if registered, filed, or entered in the office of the Register of Deeds for the
province or city where the land to which it relates lies, be constructive notice to all
persons from the time of such registering, filing, or entering.
However, the constructive notice operates as suchby the express wording of
Section 52from the time of the registration of the notice of lis pendens which in
this case was effected only on 2 June 1989, at which time the sale in favor of SLDC
had long been consummated insofar as the obligation of the Spouses Lu to transfer
ownership over the property to SLDC is concerned.
More fundamentally, given the superiority of the right of SLDC to the claim of
Babasanta the annotation of the notice of lis pendens cannot help Babasantas
position a bit and it is irrelevant to the good or bad faith characterization of SLDC as

a purchaser. A notice of lis pendens, as the Court held in Natao v. Esteban,42

serves as a warning to a prospective purchaser or incumbrancer that the particular
property is in litigation; and that he should keep his hands off the same, unless he
intends to gamble on the results of the litigation." Precisely, in this case SLDC has
intervened in the pending litigation to protect its rights. Obviously, SLDCs faith in
the merit of its cause has been vindicated with the Courts present decision which is
the ultimate denouement on the controversy.
The Court of Appeals has made capital43 of SLDCs averment in its Complaint-inIntervention44 that at the instance of Pacita Lu it issued a check for P200,000.00
payable to Babasanta and the confirmatory testimony of Pacita Lu herself on crossexamination.45 However, there is nothing in the said pleading and the testimony
which explicitly relates the amount to the transaction between the Spouses Lu and
Babasanta for what they attest to is that the amount was supposed to pay off the
advances made by Babasanta to Pacita Lu. In any event, the incident took place
after the Spouses Lu had already executed the Deed of Absolute Sale with Mortgage
in favor of SLDC and therefore, as previously explained, it has no effect on the legal
position of SLDC.
Assuming ex gratia argumenti that SLDCs registration of the sale had been tainted
by the prior notice of lis pendens and assuming further for the same nonce that this
is a case of double sale, still Babasantas claim could not prevail over that of
SLDCs. In Abarquez v. Court of Appeals,46 this Court had the occasion to rule that if
a vendee in a double sale registers the sale after he has acquired knowledge of a
previous sale, the registration constitutes a registration in bad faith and does not
confer upon him any right. If the registration is done in bad faith, it is as if there is
no registration at all, and the buyer who has taken possession first of the property
in good faith shall be preferred.
In Abarquez, the first sale to the spouses Israel was notarized and registered only
after the second vendee, Abarquez, registered their deed of sale with the Registry of
Deeds, but the Israels were first in possession. This Court awarded the property to
the Israels because registration of the property by Abarquez lacked the element of
good faith. While the facts in the instant case substantially differ from that in
Abarquez, we would not hesitate to rule in favor of SLDC on the basis of its prior
possession of the property in good faith. Be it noted that delivery of the property to
SLDC was immediately effected after the execution of the deed in its favor, at which
time SLDC had no knowledge at all of the prior transaction by the Spouses Lu in
favor of Babasanta.1a\^/phi1.net
The law speaks not only of one criterion. The first criterion is priority of entry in the
registry of property; there being no priority of such entry, the second is priority of
possession; and, in the absence of the two priorities, the third priority is of the date
of title, with good faith as the common critical element. Since SLDC acquired

possession of the property in good faith in contrast to Babasanta, who neither

registered nor possessed the property at any time, SLDCs right is definitely superior
to that of Babasantas.
At any rate, the above discussion on the rules on double sale would be purely
academic for as earlier stated in this decision, the contract between Babasanta and
the Spouses Lu is not a contract of sale but merely a contract to sell. In Dichoso v.
Roxas,47 we had the occasion to rule that Article 1544 does not apply to a case
where there was a sale to one party of the land itself while the other contract was a
mere promise to sell the land or at most an actual assignment of the right to
repurchase the same land. Accordingly, there was no double sale of the same land
in that case.
WHEREFORE, the instant petition is hereby GRANTED. The decision of the Court of
Appeals appealed from is REVERSED and SET ASIDE and the decision of the
Regional Trial Court, Branch 31, of San Pedro, Laguna is REINSTATED. No costs.
SO ORDERED.

G.R. No. L-76265 March 11, 1994

VIRGINIA CALALANG, petitioner,
vs.
REGISTER OF DEEDS OF QUEZON CITY, ADMINISTRATOR OF NATIONAL
LAND TITLES AND DEEDS REGISTRATION, LUCIA DE LA CRUZ, CONSTANCIO
SIMANGAN, and IGLESIA NI KRISTO, respondents.
G.R. No. L-83280 March 11, 1994
AUGUSTO M. DE LEON, JOSE M. DE CASTRO, JOSE A. PANLILEO, FELICIDAD
VERGARA VDA. DE PINEDA, FERNANDO L. VITUG I, FERNANDO M. VITUG II,
FERNANDO M. VITUG III, FAUSTINO TOBIA, ELENO M. OSTREA and FELISA C.
CRISTOBAL-GENEROSO, petitioners,
vs.
THE HONORABLE COURT OF APPEALS and BISHOP ERANO-MANALO,
respondents.
Alampay & Manhit Law Office for petitioner in G.R. 83280.
Araceli Bavieraa for petitioner in G.R. 76265.

Cuevas, De la Cuesta & De las Alas for respondents INC and Manalo.
Balgos & Perez Law Offices for intervenors.
Eliseo M. Cruz for the heirs of Lucia de la Cruz.
Cruz, Tafalla, Castillo, Jr., Peren & Associates for private respondent INC.
RESOLUTION

MELO, J.:
The Decision of the Second Division of this Court promulgated April 22, 1992 (208
SCRA 215) dismissing, for lack of merit, these two (2) consolidated petitions, is
assailed by petitioners in their separate motions for reconsideration.
The assailed Decision states:
With this Court's ruling promulgated in 1984, it is our considered view that the
petitioners can not raise anew the question of ownership of Lucia de la Cruz over
Lot 671 which had been determined by the Court of Appeals and affirmed by the
Supreme Court in the de la Cruz case. Well-settled in the rule enunciated in Church
Assistance Program, Inc. v. Sibulo, 171 SCRA 408 [1989] that:
When a right or fact has been judicially tried and determined by a court of
competent jurisdiction, so long as it remains unreversed, it should be conclusive
upon the parties and those in privity with them in law or estate.
The Court's ruling has long been final and the issue on ownership of Lot 671 finally
disposed of several years ago. This declaration must be respected and followed in
the instant case applying the principle of res judicata or, otherwise, the rule on
conclusiveness of judgment. The less familiar concept of less terminological usage
of res judicata as a rule on conclusiveness of judgment refers to the situation where
the judgment in the prior action operates as an estoppel only as to the matters
actually determined therein or which were necessarily included therein. (De la Cruz
v. Court of Appeals, 187 SCRA 165 [1990]).
Inevitably, the de la Cruz ruling should be applied to the present petitions since the
facts on which such decision was predicated continue to be the facts of the case
before us now (See Rivas v. SEC, 190 SCRA 295 [1990]). Even the petitioners
substantially adopt the same findings of facts in their pleadings. The factual inquiry

with regards to the history of Lot 671 has already been laid to rest and may no
longer be disturbed.
xxx

xxx

xxx

In our capacity as the court of last resort, the petitioners try to convince us to look
or inquire into the validity of the reconstitution proceedings initiated by Lucia de la
Cruz ruling, contending that the implementation of de la Cruz ruling would deprive
them of their properties without due process of law. We have looked long and hard
into the records of the case but the facts and circumstances plus law and
jurisprudence on the matter do not warrant such action from the Court. INK's title
over Lot 671 which necessarily included Lot 671-A had already become
incontrovertible and indefeasible. To reopen or to question the legality of INK's title
would defeat the purpose of our Torrens system which seeks to insure stability by
quieting titled lands and putting to a stop forever any question of the legality of the
registration in the certificate or questions which may arise therefrom. (de la Cruz v.
de la Cruz, supra.) In fairness to INK, as registered owner it is entitled to rest secure
in its land title.
In view of all the foregoing, it would be for the public interest and the maintenance
of the integrity and stability of the Torrens system of land registration that all
transfer certificates of title derived from the reconstituted title of Eugenia de la Paz
and Dorotea de la Cruz be annulled in order to prevent the proliferation of derivative
titles which are null and void. The legality or validity of INK's title over Lot 671 has
been settled. The Court has spoken and it has done so with finality, logically and
rightly so as to assure stability in legal relations and avoid confusion. (See Ver v.
Quetulio, 163 SCRA 80 [1988]).
(pp. 224-225; 229-230.)
In G.R. No. 76265, petitioners seek a reconsideration of the aforesaid decision
because allegedly, the same is contrary to the following settled principles of law and
doctrines laid down this Court, to wit:
1. That a judgment rendered in an action in personam binds only the parties to the
action;
2. That a petition for "reconstitution" of a certificate of title filed in 1971, thirty
years after the sale to respondent Lucia de la Cruz in 1941, without personal notice
to petitioners and other title holders of Lot 671-A, whose titles date from 1952, is
void and can be collaterally attacked;
3. That the registration of the sale to respondent Lucia de la Cruz in the Primary
Entry Book of the Register of Deeds of Manila in 1943 of a land located in Caloocan,

Rizal, cannot be the operative act to convey said property to the vendee, as the
record of the title to said property was then in Pasig, Rizal and then transferred to
Quezon City, after the war;
4. That the indefeasibility of a Torrens title after one year from issuance, refers to
the indefeasibility of a decree of registration after one year from entry thereof in an
original registration or cadastral proceeding, and by analogy, the principle is
extended to a patent issued in an administrative proceeding, but not to a
reconstitution of a certificate of title allegedly lost, nor to the issuance of
subsequent transfer certificate of title; and
5. That respondent Iglesia ni Kristo cannot be considered as an innocent purchaser
for value as far as petitioners and other title holders to Lot 671-A are concerned,
because the titles of respondent Iglesia ni Kristo are derived from the
"reconstituted" title of respondent Lucia de la Cruz issued in 1971. Respondent
Iglesia ni Kristo is deemed to have actual and constructive knowledge of the rights
of more than 80 buyers of Lot 671-A who were issued transfer certificates of title
dating from 1952.
In G.R. No. 83280, petitioners assail the decision on the following grounds:
1. The decision in the de la Cruz case does not bind the petitioners.
2. The Iglesia ni Kristo, represented by public respondent, is not an innocent
purchaser for value of the parcels of land in dispute.
3. Petitioners, as duly registered owners of land under the Torrens system, are
purchasers in good faith whose titles have become indefeasible.
Aware of the importance of the case, the Court granted the request of petitioners to
have their motions for reconsideration be considered by the Court en banc.
At the core of the controversy is the case of Agustina de la Cruz et al. vs. Lucia de la
Cruz, Iglesia ni Kristo and Hon. Court of Appeals (130 SCRA 666 [1984]) which has
settled once and for all the question of ownership of Lot 671 of the Piedad Estate in
Barrio Culiat, Quezon City. A portion of this lot, Lot 671-A, is the subject of these two
(2) consolidated petitions at bar.
In said de la Cruz case, the Court found and held:
1. The mother title of Lot 671 is OCT. No. 614 registered on March 12, 1912 in the
name of the Philippine Government. When Lot 671, with an area of 184,268 square
meters, more or less, was segregated the original title was partially cancelled and

TCT-40355 T-201 was issued to Eugenia de la Paz and Dorotea de la Cruz by virtue
of Entry No. 3241 which reads:
. . . Vendido a Eugenia de la Paz y Dorotea de la Paz y Dorotea de la Cruz el Lote No.
671 del terreno en este certificado de titulo, mediante escritura ratificada al 27 de
Julio de 1931 en Manila, ante Vicente Garcia, Notario Publico, se cancela
parcialmente al presente certificado de titulo, en cuanto al lote mencianado y se
expide otro a nombre de las compradoras con el No. 40355, folio 5, Tomo T-201 del
libro de transferencias; archivandose la escritura de que se ha hecho referencia en
el Legajo
T-No. 40355.
2. On November 29, 1941 Eugenia de la Paz and Dorotea de la Cruz sold Lot 671 to
Lucia de la Cruz and TCT No. 40355 T-201 was cancelled by virtue of Entry No. 258,
Page 7, volume 7, Primary Entry Book of the Registry of Deeds of Manila. Said entry
reads as follows:
1.
Number of Entry
258
2.
Date of filing:
Month, day & year July 17, 1943
Hour and Minute 10:15 A.M.
3.
Nature of Contract Sale
4.
Executed by Doroteo (sic)
de la Cruz, et al.
5.
In favor of Lucia de la Cruz
6.
Date of Instrument 11-29-41
7.
Relative to:
Certificate of
Title No
40355
Book T-201
8.
Papers presented by:
Name Regino Cleofas
Address
Pasong Tamo,
Quezon City
9.
Contract value
P2,500.00
10.
Remark
Caloocan
3.
In 1971, Lucia de la Cruz petitioned for the reconstitution of her title in the
Court of First Instance of Manila. The court granted the petition and the Register of
Deeds of Manila issued to her TCT No. RT-58, thereby cancelling TCT 40355 T-201.
(at p. 698.)
4.
The petition for reconstitution was duly published and proper notices posted
in accordance with law; and after due hearing, was granted by the court in the

exercise of its authority and jurisdiction. "Hence, We reject petitioners' assignment

of error that the Court of Appeals erred in not declaring that the reconstituted title
of Lucia de la Cruz is absolutely null and void." (at p. 698.).
5.
"With respect to the reconstituted title of Dorotea de la which was granted by
the Court of First Instance of Rizal on December 14, 1945 and TCT 5284 of the
Register of Deeds of Quezon City was issued in substitution and/or reconstitution of
TCT 40355 of the Register of Deeds of Rizal, . . . it may be true that the order
granting reconstitution was null and void by reason of the failure to cause the
necessary publication of the petition, and, therefore, the reconstituted title was
ineffective. More than that, it is established that Dorotea de la Cruz and Eugenia de
la Paz had previously sold the land to Lucia de la Cruz on November 29, 1941 as
indicated in Entry No. 258 so that Dorotea de la Cruz was no longer the owner at the
time she petitioned for reconstitution." (at pp. 298-699.)
6.
"Nonetheless, it is not disputed that Dorotea de la Cruz together with Eugenia
de la Paz were the registered owners of Lot 671 under TCT 40355, T-201 of the
Register of Deeds of Rizal and they could legally transfer the same to Lucia de la
Cruz who thereafter sold in favor of Iglesia ni Kristo." (at p. 699.)
7.
Under Section 38 of the Land Registration Act, "the registered title of Lucia de
la Cruz reconstituted as TCT No. RT-58 in 1971 became indefeasible and
incontrovertible one year from its issuance. As registered owner, Lucia de la Cruz
had the perfect and legal right to sell, assign, and convey the property to
respondent Iglesia ni Kristo who as purchaser for value in good faith hold the same
free from all encumbrances except those noted in said certificate (Sec. 39 Land
Registration Act). The Iglesia may then safely rely on the correctness of the
certificate of title issued therefor and the will in no way oblige him to go behind the
certificate to determine the condition of the property". (at p. 7063.)
The rule is well-settled that once a decision becomes final, the Court can no longer
amend, modify, much less, set aside the same (Adez Realty Inc. vs. Court of
Appeals, 212 SCRA 625 [1992]); otherwise, endless litigation will result (Fabular vs.
Court of Appeals, 119 SCRA 329 [1982])
In fact, in Duenas vs. Mandi (151 SCRA 530 [1987]) cited in Adez, we held that the
trial court and the appellate court may have committed error in the assignment or
partition of the eight (8) parcels of land to the parties in said case, but considering
that their judgments are already final, the error, assuming one was committed, can
no longer be amended or corrected.
In Icao vs. Apalisok (180 SCRA 680 [1989]), likewise cited in Adez, we ruled that
even the subsequent discovery of an erroneous imposition of a penalty will not
justify correction of the judgment after it has become final.

Our decision in these two consolidated petitions is an application of this wellestablished rule, that once a decision becomes final, the Court can no longer
modify, amend, much less, set aside the same. To grant a reconsideration of this
decision would also reconsider, reverse, and set aside our 1984 decision which was
long become final. For, while the 1984 decision declared the reconstituted title RT58 of Lucia de la Cruz valid and legal, petitioners would want us to reach 10 years
back and declare the same title null and void; while the 1984 decision declared the
Iglesia ni Kristo a purchaser in good faith and for value, petitioners would want us to
do a complete turn around and find the Iglesia ni Kristo a purchaser in bad faith.
In the case of Legarda vs. Savellano (158 SCRA 194 [1988] the Court stated:
. . . It is a general rule common to all civilized system of jurisprudence, that the
solemn and deliberate sentence of the law, pronounced by its appointed organs,
upon a disputed fact or a state of facts, should be regarded as a final and conclusive
determination of the question litigated, and should forever set the controversy at
rest. Indeed, it has been well said that this maxim is more than a mere rule of law,
more than an important principle of public policy; and that it is not too much to say
that it is a fundamental concept in the organization of every jural system. Public
policy and sound practice demand that at the risk of occasional errors, judgments of
courts should become final at some definite date fixed by law. The very object for
which courts were constituted was to put an end to controversies.
If we were to allow repeated suits seeking to nullify OCT Nos. 1348-1355 issued to
Benito Legarda, Sr. in 1907, the indefeasibility of titles issued under the Torrens
systems and land registration, which the Philippines has adopted, will be defeated
and set to naught. (at p. 200.)
The Court, speaking through Justice Nocon, in Swan vs. Court of Appeals (212 SCRA
114 [1992]) stated:
It is high time that we write finis to a litigation that has been pending for years not
only to the prejudice of the prevailing parties, but also to the prompt determination
of controversies, and in violation of the fundamental concept that public policy and
sound practice demand that judgments of courts shall become final at some definite
date fixed by law. (at p. 124)
Petitioners contend that the de la Cruz case is not applicable and that the doctrine
of res judicata should not have been applied. We do not agree.
The doctrine res judicata actually embraces two different concepts: (1) bar by
former judgment and (b) conclusiveness of judgment.

The second concept conclusiveness of judgment states that a fact or question

which was in issue in a former suit and was there judicially passed upon and
determined by a court of competent jurisdiction, is conclusively settled by the
judgment therein as far as the parties to the action and persons in privity with them
are concerned and cannot be again litigated in any future action between such
parties or their privies, in the same court or any other court of concurrent
jurisdiction on either the same or different cause of action, while the judgment
remains unreversed by proper authority. It has been held that in order that a
judgment in one action can be conclusive as to a particular matter in another action
between the same parties or their privies, it is essential that the issue be identical.
If a particular point or question is in issue in the second action, and the judgment
will depend on the determination of that particular point or question, a former
judgment between the same parties or their privies will be final and conclusive in
the second if that same point or question was in issue and adjudicated in the first
suit (Nabus vs. Court of Appeals, 193 SCRA 732 [1991]). Identity of cause of action
is not required but merely identity of issue.
Justice Feliciano, in Smith Bell & Company (Phils.), Inc. vs. Court of Appeals (197
SCRA 201, 210 [1991]), reiterated Lopez vs. Reyes (76 SCRA 179 [1977]) in regard
to the distinction between bar by former judgment which bars the prosecution of a
second action upon the same claim, demand, or cause of action, and conclusiveness
of judgment which bars the relitigation of particular facts or issues in another
litigation between the same parties on a different claim or cause of action.
The general rule precluding the relitigation of material facts or questions which were
in issue and adjudicated in former action are commonly applied to all matters
essentially connected with the subject matter of the litigation. Thus, it extends to
questions necessarily implied in the final judgment, although no specific finding
may have been made in reference thereto and although such matters were directly
referred to in the pleadings and were not actually or formally presented. Under this
rule, if the record of the former trial shows that the judgment could not have been
rendered without deciding the particular matter, it will be considered as having
settled that matter as to all future actions between the parties and if a judgment
necessarily presupposes certain premises, they are as conclusive as the judgment
itself . . .
(at pp. 186-187.)
The issue of the validity of the reconstituted title of Lucia de la Cruz over Lot 671 of
the Piedad Estate, the issue of whether or not the Iglesia ni Kristo was an innocent
purchaser for value and in good faith, and the issue of the validity of the
reconstituted title of Dorotea de la Cruz and Eugenia de la Paz (herein petitioners'
predecessors-in-interest) were actually, directly, and expressly raised, controverted,

litigated and resolved in our 1984 decision. Applying the rule on conclusiveness of
judgment, these issue may no longer be relitigated in these present petitions.
Petitioners cannot evade the conclusive effect of the 1984 decision, merely because
they were not impleaded parties in the said case. It has been said that the
foundation principle upon which the doctrine of res judicata rests is that parties
ought no to be permitted to litigate the same issue more than once; that, when a
right or fact has been judicially tried and determined by a court of competent
jurisdiction, or an opportunity for such trials has been given, the judgment of the
court, so long as it remains unreversed, should be conclusive upon the parties those
in privity with them in law or estate. (Nabus vs. Court of Appeals, supra).
In the case of Vda. de Medina vs. Cruz (161 SCRA 36 [1988]), the Court stated:
The crucial issue in this case is whether or not the decision in Civil Case No. C-120
which has long become final and executory can be enforced against the petitioner
who is not a party to the aforementioned case.
Petitioner alleged in her memorandum that she is not affected by the decision in C120 as persons who are not parties to a suit are not bound by the judgment and
that she purchased the lot in good faith from an entirely different person the
Heirs of Don Mariano San Pedro y Esteban and not from either the plaintiffs or
defendants of the aforesaid case.
It is a generally accepted principle "that no man shall be affected by any proceeding
to which he is a stranger . . .
[but] being a privy, the petitioner can be reached by the order of execution and Writ
of Demolition.
(at pp. 43-44.)
Also, in the case of Varsity Hills, Inc. vs. Navarro (43 SCRA 503 [1972]), the Court
ruled:
In the face of these declarations in a final decisions of the highest Court of the land,
it becomes indubitable that the action in the court below was definitely barred: for
while present private respondents were not parties in the 1993 cause, their
predecessor-in-interest Quintin Mejia was such a party and the final judgment
against him concludes and bars his successors and privies as well.
(at pp. 510-511.)

Admittedly, petitioners derived their title from Amando Clemente and/or Clemville
Subdivision. Amando Clemente derived his title from Dorotea de la Cruz and
Eugenia de la Paz. Being privies and/or successors in interest to the parties in the
1984 decision, petitioners are bound by said decision.
Likewise untenable is petitioners' contention that the reconstituted titled of Lucia de
la Cruz, RT-58, is void.
Proceedings for judicial reconstitution or certificates of title are proceedings in rem.
Thus, notice of hearing by proper publication is sufficient to clothe the Court with
jurisdiction and the mere fact that a person purporting to have a legitimate claim in
the property did not receive personal notice is not sufficient ground to invalidate the
proceedings.
In Adez Realty, Inc. vs. Court of Appeals (212 SCRA 625 [1992]), the Court, through
Justice Bellosillo, held:
Besides, as early as 1910, in Grey Alba v. de la Cruz (17 Phil. 41) We already ruled
that the land registration proceedings are proceedings in rem, not in personam, and
therefore it is not necessary to give personal notice to the owners or claimants of
the land sought to be registered, in order to vest the courts with power and
authority over the res. Thus, while, it may be true that no notice was sent by
registered mail to petitioners when the judicial reconstitution of title was sought,
such failure, however, did not amount to a jurisdictional defect. (See PNR vs. De la
Vina & Zamacona, 109 Phil. 342). In Register of Deeds of Malabon vs. RTC, Malabon,
Metro Manila, Br. 170 (G.R. No. 886623, February 5, 1990, 181 SCRA 788), We said
that "the purpose of the publication of the notice of the petition for reconstitution in
the Official Gazette is to apprise the whole world that such a petition has been filed
and that whoever is minded to oppose it for good cause may do so within thirty (30)
days before the date set by the court for hearing the petition. It is the publication of
such notice that brings in the whole word as a party in the case and vests the court
with jurisdiction to hear and decide it." Thus, notice of hearing by proper publication
in the Official Gazette is sufficient to clothe the court with jurisdiction, and the mere
fact that a person purporting to have a legitimate claim in the property did not
receive personal notice is not sufficient ground to invalidate the proceedings. (at p.
628.)
Besides, the official records of the Quezon City Municipal Hall, as certified to by the
Office of the City Assessor of Quezon City (pp. 456-556, Rollo of G.R. No. 83280)
show that there are no improvements whatsoever on the property in question thus
signifying that the property is unoccupied. Therefore, it would have been impossible
for Lucia de la Cruz to notify petitioners.

Be this as it may, the issue of the validity of the 1971 reconstitution proceedings is
no longer a valid issue in these petitions at bar, its validity having already been
resolved with finality in the 1984 decision.
The contention that the registration of the November 29, 1941 sale by Dorotea de la
Cruz and Eugenia de la Paz to Lucia de la Cruz, with the Register of Deeds of Manila
is irregular deserves scant consideration.
As certified to by the Administrator of the Land. Registration Authority (p. 448, Rollo
of G.R. No. 83280) the City of Manila and the nearby towns and cities were treated
as a single political unit, that is Greater Manila, during the Japanese Occupation.
Thus, the Excerpts from volume 7 of the Registry Book of Manila, year 1943 (p. 447,
Rollo of G.R. No. 83280), show, among other things, the following entries:
(a)
The sale of a parcel of land located in Quezon City executed by Magdalena
Estates, Inc. in favor of Dionisio Bravo;
(b)
The mortgage of a parcel of land in Quezon City by Antonio Zuzuareggui in
favor of Elena Africa, et al.; and
(c)
The sale of a parcel of land in Quezon City to Lucia de la Cruz by Dorotea de
la Cruz, et al.
clearly indicating that transactions involving parcels of land located in Quezon City
were indeed recorded and registered in the Registry of Manila.
Under the law, it is the act of registration of the deed of conveyance that serves as
the operative act to convey the land registered under the Torrens system. The act of
registration creates constructive notice to the whole world of the fact of such
conveyance. (Quilisadio vs. Court of Appeals, 182 SCRA 401 [1990]; De la CalzadaCierras vs. Court of Appeals, 212 SCRA 390 [1992]).
We cannot go along with petitioners' position that their titles, because they were
issued in 1952, must prevail over the title of the Iglesia ni Kristo.
The titles issued to petitioners are derived from TCT No. 5284. This title, TCT No.
5284 is the reconstituted title of Dorotea de la Cruz which was declared null and
void in the 1984 decision.
3.
With respect to the reconstituted title of Dorotea de la Cruz which was
granted by the Court of First Instance of Rizal on December 14, 1945 and TCT 5284
of the Register of Deeds of Quezon City was issued in substitution and/or
reconstitution of TCT 40355 of the Register of Deeds of Rizal by virtue of the
following inscription on TCT 40335, to wit:

Se expide otra copia para el dueno del presente certificado de titulo en sustitucion
del duplicado que se alega haberse quemado, en virtud de na orden del juzgado de
Primera Instancia de Rizal dictada el 14 de Deciembre, 1945, en Expediente G.L.R.O.
Rec. No. 5975, y en donde se declara nulo y ninguna valor dicho duplicado
quemado.
MAMERTO TINGKUNGKO
Register of Deeds Interino it may be true that the order granting reconstitution was
null and void by reason of the failure to cause the necessary publication of the
petition, and therefore, the reconstituted title was ineffective. More than that, it is
established that Dorotea de la Cruz and Eugenia de la Paz had previously sold the
land to Lucia de la Cruz executed on November 29, 1941 as indicated in Entry No.
258 so that Dorotea de la Cruz was no longer the owner at the time she petitioned
for reconstitution. Nonetheless, it is not disputed that Dorotea de la Cruz together
with Eugenia de la Paz were the registered owners of Lot 671 under TCT 40355, T201 of the Register of Deeds of Rizal, and they could legally transfer the same to
Lucia de la Cruz who thereafter sold in favor of respondent Iglesia ni Kristo.
(at pp. 698-699.)
Needless to state, all subsequent certificates of title including petitioners' titles are
also void because of the legal truism that the spring cannot rise higher than its
source (De Santos vs. Intermediate Appellate Court, 157 SCRA 295 [1988].) The law
must protect and prefer the lawful holder of registered title over the transferee of a
vendor bereft of any transmissible rights (Baltazar vs. Court of Appeals, 168 SCRA
354 [1988]).
Finally, both petitions are procedurally erroneous because certiorari is not the
proper remedy.
G.R. No. 76265 stemmed from a letter in consulta addressed by the then Acting
Register of Deeds of Quezon City to the Administrator of the National Land Titles
and Deeds Registration Administration involving the registrability of a deed of sale
presented for registration. by Mr. Constancio Simangan.
The Administrator issued a resolution dated April 4, 1988 ordering the Register of
Deeds to register the deed of sale subject of the consulta.
The Register of Deeds moved for reconsideration. Herein petitioner Virginia Calalang
moved to intervene.

The Acting Administrator denied both motions. Calalang filed a motion for
reconsideration but the same was denied, and forthwith, Calalang filed the present
petition.
The proper remedy available to Calalang is an appeal to the Court of Appeals
pursuant to Section 117 of Presidential Decree No. 1529 and Republic Act No. 5434,
and not certiorari or prohibition.
Sec. 117, PD 1529 (Property Registration Decree) Procedure . . . the party in
interest who disagrees with the final resolution, ruling or order of the Commission
relative to the consultas may appeals to the Court of Appeals within the period and
in the manner provided in Republic Act No. 5434.
Sec. 2, RA 5434 (Uniform Procedure for Appeals) Appeals to Court of Appeals.
Appeals to the Court of Appeals shall be filed within fifteen (15) days from notice of
the ruling, award, order, decision or judgment or from the date of its last
publication, if publication is required by law for its effectivity; . . . If no appeal is filed
within the periods here fixed, the ruling, award, order, decision or judgment shall
become final and may be executed as provided by existing law.
The other case, G.R. No. 83280, stemmed from an injunction suit filed by Augusto
de Leon et al. against the Iglesia ni Kristo and Bishop Manalo.
The case was dismissed by the Regional Trial Court. Instead of appealing the order
of dismissal, petitioners filed with the Court of Appeals the following.
1.

A "Motion for Reconsideration Ad Cautelam"; and

2.

An "Omnibus Motion Incident to Execution of the Decision"

The Court of Appeals denied both motions. Hence, the other herein petition.
It is elementary that a petition for certiorari can not substitute for a lost appeal. The
order of the Regional Trial Court dismissing the case was appealable. Petitioners in
the second petition failed to appeal the same, consequently the order has already
become final and may no longer be reviewed on certiorari.
Moreover, these petitions amount to a collateral attack on the title of the Iglesia ni
Kristo. Well-settled is the rule that a certificate of title cannot be altered, modified or
cancelled except in a direct proceeding in accordance with law. (Section 48, PD No.
1529.)
IN VIEW OF THE FOREGOING, petitioners' Motion for Reconsiderations are hereby
DENIED.

G.R. No. L-56232 June 22, 1984

ABELARDO CRUZ (deceased) substituted by Heirs Consuelo C. Cruz, Claro
C. Cruz and Stephen C. Cruz, per Resolution, petitioners,
vs.
LEODEGARIA CABANA, TEOFILO LEGASPI , ILUMINADA CABANA and THE
HONOR- ABLE COURT OF APPEALS,* respondents.
Nazareno, Azada, Sabado & Dizon for petitioners.
Felixberto N. Boquiren for respondents.

TEEHANKEE, J.:
The Court affirms the questioned decision of the now defunct Court of Appeals
which affirmed that of the Court of First Instance of Quezon Province, but directs
that the seller, respondent Leodegaria Cabana who sold the property in question
twice, first to her co-respondents Teofilo Legaspi and Iluminada Cabana and later to
petitioner Abelardo Cruz (now deceased), should reimburse to petitioner's heirs the
amounts of P2,352.50, which the late petitioner Abelardo Cruz paid to the Philippine
National Bank to discharge the mortgage obligation of said respondent Leodegaria
Cabana in favor of said bank, and of P3,397.50, representing the amount paid by
said Abelardo Cruz to her as consideration of the sale with pacto de retro of the
subject property.
This is a simple case of double sale of real property. Respondent appellate court in
its decision of August 13, 1980 stated the background facts and resolved the issue
in favor of defendants- appellees, first buyers- respondents herein, and against
plaintiff-appellant Abelardo Cruz, petitioner herein (substituted by his heirs), as
follows:
Defendants' evidence shows that on October 21, 1968, defendant Leodegaria
Cabana sold the land in question to defendants-spouses Teofilo Legaspi and
Iluminada Cabana (Exh. 1). The said defendants-spouses attempted to register the
deed of sale but said registration was not accomplished because they could not
present the owner's duplicate of title which was at that time in the possession of the
PNB as mortgage.
Likewise, when plaintiff tried to register the deed of sale executed by Leodegaria
Cabana on September 3, 1970, said plaintiff was informed that the owner thereof

had sold the land to defendants-spouses on October 21, 1968. Plaintiff was able to
register the land in his name on February 9, 1971 (Exh. A). With the admission of
both parties that the land in question was sold to two persons, the main issue to be
resolved in this appeal is as to who of said vendees has a better title to said land.
There is no dispute that the land in question was sold with right of repurchase on
June 1, 1965 to defendants- spouses Teofilo Legaspi and Iluminada Cabana (Exh. 1).
The said document 'Bilihang Muling Mabibili' stipulated that the land can be
repurchased by the vendor within one year from December 31, 1966 (see par. 5,
Exh. 1).lwphl@it Said land was not repurchased and in the meantime, however,
said defendants-spouses took possession of the land.
Upon request of Leodegaria Cabana, the title of the land was lent to her in order to
mortgage the property to the Philippine National Bank. Said title was, forthwith,
deposited with the PNB. On October 21, 1968, defendant Leodegaria Cabana sold
the land by way of absolute sale to the defendants- spouses (Exh. 2). However, on
November 29, 1968 defendant sold the same property to herein plaintiff and the
latter was able to register it in his name.
The transaction in question is governed by Article 1544 of the Civil Code. True it is
that the plaintiff was able to register the sale in his name but was he in good faith in
doing so?
While the title was registered in plaintiff- appellant's name on February 9, 1971
(Exh. A), it appears that he knew of the sale of the land to defendants-spouses
Legaspi as he was informed in the Office of the Register of Deeds of Quezon. It
appears that the defendants-spouses registered their document of sale on May 13,
1965 under Primary Entry No. 210113 of the Register of Deeds (Exh. 2).
Under the foregoing circumstances, the right of ownership and title to the land must
be resolved in favor of the defendants- spouses Legaspi on three counts. First, the
plaintiff-appellant was not in good faith in registering the title in his name.
Consistent is the jurisprudence in this jurisdiction that in order that the provisions of
Article 1544 of the new Civil Code may be invoked, it is necessary that the
conveyance must have been made by a party who has an existing right in the thing
and the power to dispose of it (10 Manresa 170, 171). It cannot be set up by a
second purchaser who comes into possession of the property that has already been
acquired by the first purchaser in full dominion (Bautista vs. Sison, 39 Phil. 615), this
not withstanding that the second purchaser records his title in the public registry, if
the registration be done in bad faith, the philosophy underlying this rule being that
the public records cannot be covered into instruments of fraud and oppression by
one who secures an inscription therein in bad faith (Chupinghong vs. Borreros, 7 CA
Rep. 699).

A purchaser who has knowledge of fact which would put him upon inquiry and
investigation as to possible defects of the title of the vendor and fails to make such
inquiry and investigation, cannot claim that he is a purchaser in good faith.
Knowledge of a prior transfer of a registered property by a subsequent purchaser
makes him a purchaser in bad faith and his knowledge of such transfer vitiates his
title acquired by virtue of the latter instrument of conveyance which creates no
right as against the first purchaser (Reylago vs. Jarabe, L-20046, March 27, 1968, 22
SCRA 1247).
In the second place, the defendants-spouses registered the deed of absolute sale
ahead of plaintiff- appellant. Said spouses were not only able to obtain the title
because at that time, the owner's duplicate certificate was still with the Philippine
National Bank.
In the third place, defendants-spouses have been in possession all along of the land
in question. If immovable property is sold to different vendees, the ownership shall
belong to the person acquiring it who in good faith first recorded it in the registry of
property; and should there be no inscription, the ownership shall pertain to the
person who in good faith was first in the possession (Soriano, et al. vs. The Heirs of
Domingo Magali et al., L-15133 , July 31, 1963, 8 SCRA 489). Priority of possession
stands good in favor of herein defendants-spouses (Evangelista vs. Abad, [CA] 36
O.G. 2913; Sanchez vs. Ramos, 40 Phil. 614, Quimson vs, Rosete, 87 Phil. 159).
The Court finds that in this case of double sale of real property, respondent
appellate court, on the basis of the undisputed facts, correctly applied the
provisions of Article 1544 of the Civil Code that
Art. 1544.
If the same thing should have been sold to different vendees, the
ownership shall be transferred to the person who may have first taken possession
thereof in good faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person
acquiring it who in good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in
good faith was first in the possession; and, in the absence thereof, to the person
who presents the oldest title, provided there is good faith.
There is no question that respondents-spouses Teofilo Legaspi and Iluminada
Cabana were the first buyers, first on June 1, 1965 under a sale with right of
repurchase and later on October 21, 1968 under a deed of absolute sale and that
they had taken possession of the land sold to them; that petitioner was the second
buyer under a deed of sale dated November 29, 1968, which to all indications,
contrary to the text, was a sale with right of repurchase for ninety (90) days. 1

There is no question either that respondents legaspi spouses were the first and the
only ones to be in possession of the subject property.
Said respondents spouses were likewise the first to register the sale with right of
repurchase in their favor on May 13, 1965 under Primary Entry No. 210113 of the
Register of Deeds. They could not register the absolute deed of sale in their favor
and obtain the corresponding transfer certificate of title because at that time the
seller's duplicate certificate was still with the bank. But there is no question, and the
lower courts so found conclusively as a matter of fact, that when petitioner Cruz
succeeded in registering the later sale in his favor, he knew and he was informed of
the prior sale in favor of respondents-spouses. Respondent appellate court correctly
held that such "knowledge of a prior transfer of a registered property by a
subsequent purchaser makes him a purchaser in bad faith and his knowledge of
such transfer vitiates his title acquired by virtue of the latter instrument of
conveyance which creates no right as against the first purchaser."
As the Court held in Carbonell vs. Court of Appeals 2 "it is essential that the buyer of
realty must act in good faith in registering his deed of sale to merit the protection of
the second paragraph of [the above quoted] Article 1544." As the writer stressed in
his concurring opinion therein, "(T)he governing principle here is prius tempore,
potior jure (first in time, stronger in right). Knowledge gained by the first buyer of
the second sale cannot defeat the first buyer's rights except only as provided by the
Civil Code and that is where the second buyer first registers in good faith the
second sale ahead of the first. Such knowledge of the first buyer does not bar her
from availing of her rights under the law, among them, to register first her purchase
as against the second buyer. But in converso knowledge gained by the second
buyer of the first sale defeats his rights even if he is first to register the second sale,
since such knowledge taints his prior registration with bad faith. This is the price
exacted by Article 1544 of the Civil Code for the second buyer being able to
displace the first buyer; that before the second buyer can obtain priority over the
first, he must show that he acted in good faith throughout (i.e. in ignorance of the
first sale and of the first buyer's rights) from the time of acquisition until the title
is transferred to him by registration or failing registration, by delivery of possession.
The second buyer must show continuing good faith and innocence or lack of
knowledge of the first sale until his contract ripens into full ownership through prior
registration as provided by law."
Petitioner's prayer for alternative relief for reimbursement of the amount of
P2,352.50 paid by him to the bank to discharge the existing mortgage on the
property and of the amount of P3,397.50 representing the price of the second sale
are well taken insofar as the seller Leodegaria Cabana is concerned. These amounts
have been received by the said seller Leodegaria Cabana on account of a void
second sale and must be duly reimbursed by her to petitioner's heirs, but the
Legaspi spouses cannot be held liable therefor since they had nothing to do with the

said second sale nor did they receive any benefit therefrom. Petitioner's claim for
reimbursement of the amount of P102.58 as real estate taxes paid on the property
is not well taken because the respondents Legaspi spouses had been paying the
real estate taxes on the same property since June 1, 1969. 4
ACCORDINGLY, the appealed judgment of respondent appellate court, upholding
respondents-spouses Teofilo Legaspi and Iluminada Cabana as the true and rightful
owners of the property in litigation and ordering the issuance of a new title with the
cancellation as null and void of Title No. T- 99140 obtained by petitioner Abelardo C.
Cruz, is hereby affirmed in toto. In accordance with the partial grant of petitioner's
prayer for alternative relief as stated in the preceding paragraph hereof, the Court
hereby orders and sentences respondent Leodegaria Cabana to reimburse and pay
to petitioner's heirs the total sum of P5,750.00.

iii.
iv.

Presentation of Owners Duplicate upon entry of new certificate

(Sec. 53)
Innocent Purchaser for Value (Sec. 53), Forged Deeds

EN BANC
G.R. No. L-13551

January 30, 1960

CONSTANCIO JOAQUIN, petitioner,

vs.
ABUNDIO MADRID, ET AL., respondents.
M. S. Calayag fro petitioner.
Rodolfo R. Medina for respondents.
LABRADOR, J.:
This is a petition to review the decision of the Court of Appeals against petitioner
and in favor of respondents. The facts found in the appellate court below are as
follows:
The spouses Abundio Madrid and Rosalinda Yu are the owners of a residential lot at
148 Provincial corner Sto. Sacramento, Makati, Rizal, covered by Transfer Certificate
of Title No. 31379 (for Rizal). Planning to build a house thereon, the said spouses
sought short, in November, 1953. One Carmencita de Jesus, godmother of
Rosalinda, offered to work for the shortening of the usually long process before a
loan could be granted and the spouses, accepting the proferred assistance,
delivered to her the Transfer Certificate of Title covering the lot in January, 1954, to
be surrendered to ]the RFC. Later the spouses were able to secure a loan of

P4,000.00 from their parents for the construction of their house and they decided to
withdraw the application for a loan they had filed with the RFC. They so informed
Carmencita de Jesus and asked her to retrieve the Transfer Certificate of Title and
return it to them. Shortly thereafter, Carmencita told them, however, that the RFC
employee in charge of keeping the Transfer Certificate of Title was out on leave. In
August, 1954, one Florentino Calayag showed up in the house of the spouses and
asked for Abundio Madrid and Rosalinda Yu. Rosalinda answered that she was
Rosalinda Yu and Abundio, that he was Abundio Madrid. Calayag would not believe
them. He said that he was looking for Abundio Madrid and Rosalinda Yu who had
executed a deed of mortgage on the lot where the house they were in then stood,
and that the term of the mortgage had already expired, he added. Abundio and
Rosalinda then retorted that they had not mortgaged their land to anyone. The
spouses immediately went to consult with a lawyer who accompanied them to the
Office of the Register of Deeds of Rizal. They found out then that the land had been
mortgaged to Constancio Joaquin on January 21, 1954 (Exh. B). Thus runs the
evidence of the plaintiffs-appellees.
The appellant admits that Abundio Madrid and Rosalinda Yu, the registered owners
of the mortgaged property, were not those persons who had signed the deed of
mortgage. His version of the case is as follows: In the month of January, 1954
Carmencita de Jesus saw Florentino Calayag and asked the latter to find a moneylender who could grant a loan on a security of real property, showing, at the same
time, a Transfer Certificate of Title in the name of the spouses Abundio Madrid and
Rosalinda Yu. Calayag approached Constancio Joaquin who having funds to spare for
the purpose, visited the land and. finding it well situated, told Calayag to show him
the prospective borrowers. On the following day, Calayag brought two women to the
law office of Atty. M.S. Calayag and presente them to Constancio Joaquin as
Rosalinda Yu and Carmencita de Jesus. The alleged Rosalinda Yu claimed to be the
owner of the lot with her husband Abundio Madrid who authorized her to secure a
loan on their property, she assured him, and that Abundio would come where the
contract therefor was ready to sign it with her. Thus, the deed of mortgage Exhibit I
was signed by the persons who posed themselves as Abundio Madrid and Rosalinda
Yu on the following day. The whole amount of the loan was delivered to the
supposed Rosalinda Yu immediately after the registration of the document of
mortgage in the Office of the Register of Deeds of Rizal, according to Florentino
Calayag. (Dec. of the Court of Appeals, CA-G.R. No. 16717-R, prom. Nov. 29, 1957).
The appellate court below further found that the petitioner "visited the property
proposed for mortgage to find out at the same time who was the real owner thereof.
But he contented himself with the information given to him by the person living
then on the land that the owner was woman known as 'Taba'. There ended his
inquiry about the identity of the prospective mortgagors."(Dec. of the Court of
Appeals, p. 8). The lower court based it decision on the case of Lara, et al., vs.
Ayroso, 95 Phil., 185, 50 Off. Gaz., (10), 4838, in which we held that as the land

mortgaged was still in the name of the real owner when mortgaged to the
mortgagees by an impostor, the mortgagees were defrauded not because they
relied upon what appeared in a Torrens certificate of title, but because they believed
the words of the impostor; that it was the duty of the mortgagees to ascertain the
identity of the man with whom they were dealing which circumstances
differentiate the case from the previous cases of De la Cruz vs, Fabie, 35 Phil., 144
and Blondeau, et al., vs. Nano and Vallejo, 61 Phil., 625.
In the first assignment of error it is argued that since par. 2 of Sec. 55 of the Land
Registration Act expressly provides that "in all cases of registration by fraud the
owner may pursue all his legal and equitable remedies against the parties to the
fraud, without prejudice to the rights of any innocent holder for value of a certificate
of title", the second proviso in the same section "that a registration procured by the
presentation of a forged deed shall be null and void" should be overlooked. There is
no merit in this argument, which would have the effect of deleting the last proviso.
This last proviso is a limitation of the first part of par. 2 in the sense that in order
that the holder of a certificate for value issued by virtue of the registration of a
voluntary instrument may be considered a holder in good faith for value, the
instrument registered should be forged. When the instrument presented is forged,
even if accompanied by the owner's duplicate certificate of title, the registered
owner does not thereby lose his title, and neither does the assignee in the forged
deed acquire any right or title to the property.
In the second assignment of error it is further argued that as the petitioner is an
innocent purchaser for value, he should be protected as against the registered
owner because the latter can secure reparation from the assurance fund. The fact
is, however, that petitioner herein in not the innocent purchaser for value protected
by law is one who purchases a titled land by virtue of a deed executed by the
registered owner himself, not by a forged deed, as the law expressly states. Such is
not the situation of the petitioner, who has been the victim of impostors pretending
to be registered owners but who are not said owners.
The next assignments of errors are predicted on the assumption that both the
petitioner and the respondents are guilty of negligence. The giving of the certificate
of title to Carmencita de Jesus is in itself no act of negligence on the part of
respondents; it was perfectly a legitimate act. Delay in demanding the certificate of
title is no act of neglect either, as respondents have not executed any deed or
document authorizing Carmencita de Jesus to execute deeds for and on their behalf.
It was petitioner who was negligent, as he did not take enough care to see to it that
the persons who executed the deed of mortgage are the real registered owners of
the property. The argument raised by petitioner's counsel that in case of negligence
on the part of both the one who committed a breach of faith is responsible, is not
applicable. Petitioner alone is guilty of neglect, so he must suffer from it.

Finding no error in the decision of the Court of Appeals, we hereby affirm it with
costs against petitioner. So ordered.

EMERITA MUOZ,
Petitioner,
- versus ATTY. VICTORIANO R. YABUT, JR. and SAMUEL GO CHAN,
Respondents.
x------------------------x
EMERITA MUOZ,
Petitioner,

- versus SPOUSES SAMUEL GO CHAN and AIDA C. CHAN, and THE BANK OF THE
PHILIPPINE ISLANDS,
Respondents.
G.R. No. 142676
G.R. No. 146718
Promulgated:
June 6, 2011
DECISION

LEONARDO-DE CASTRO, J.:

Before Us are the following consolidated petitions for review on certiorari under Rule
45 of the Rules of Court.
In G.R. No. 142676, Emerita Muoz (Muoz) is seeking the reversal, annulment, and
setting aside of the Decision[1] dated July 21, 1995 and Resolution[2] dated March
9, 2000 of the Court of Appeals in CA-G.R. SP No. 35322, which affirmed the
Orders[3] dated June 10, 1994 and August 5, 1994 of the Regional Trial Court,
Branch 88 (RTC-Branch 88) of Quezon City in Civil Case No. Q-94-20632. The RTC
dismissed Civil Case No. 8286, the forcible entry case instituted by Muoz against
Atty. Victoriano R. Yabut, Jr. (Atty. Yabut) and Samuel Go Chan before the
Metropolitan Trial Court (MeTC), Branch 33 of Quezon City; and nullified the MeTC

Order[4] dated May 16, 1994, granting Muozs prayer for the issuance of a writ of
preliminary mandatory injunction which restored possession of the subject property
to Muoz.
In G.R. No. 146718, Muoz is praying for the reversal, setting aside, and nullification
of the Decision[5] dated September 29, 2000 and Resolution[6] dated January 5,
2001 of the Court of Appeals in CA-G.R. SP No. 40019, which affirmed the Orders[7]
dated August 21, 1995 and October 3, 1995 of the Quezon City RTC, Branch 95
(RTC-Branch 95) in Civil Case No. Q-28580 denying Muozs Motion for an Alias Writ
of Execution and Application for Surrender of the Owners Duplicate Copy of TCT No.
53297[8] against respondents Bank of the Philippine Islands (BPI) and the spouses
Samuel Go Chan and Aida C. Chan (spouses Chan).

I
FACTS
The subject property is a house and lot at No. 48 Scout Madrian St., Diliman,
Quezon City, formerly owned by Yee L. Ching. Yee L. Ching is married to Emilia M.
Ching (spouses Ching), Muozs sister. Muoz lived at the subject property with the
spouses Ching. As consideration for the valuable services rendered by Muoz to the
spouses Chings family, Yee L. Ching agreed to have the subject property
transferred to Muoz. By virtue of a Deed of Absolute Sale, seemingly executed by
Yee L. Ching in favor of Muoz,[9] the latter acquired a Transfer Certificate of Title
(TCT) No. 186306 covering the subject property in her name on December 22, 1972.
[10] However, in a Deed of Absolute Sale dated December 28, 1972, Muoz
purportedly sold the subject property to her sister, Emilia M. Ching. As a result, TCT
No. 186306 was cancelled and TCT No. 186366 was issued in Emilia M. Chings
name. Emilia M. Ching, in a Deed of Absolute Sale dated July 16, 1979, sold the
subject property to spouses Go Song and Tan Sio Kien (spouses Go), hence, TCT No.
186366 was cancelled and replaced by TCT No. 258977 in the spouses Gos names.
On October 15, 1979, Muoz registered her adverse claim to the subject property on
TCT No. 258977 of the spouses Go. The next day, on October 16, 1979, Muoz filed
a complaint for the annulment of the deeds of absolute sale dated December 28,
1972 and July 16, 1979, the cancellation of TCT No. 258977 in the spouses Gos
names, and the restoration and revival of TCT No. 186306 in Muozs name. The
complaint was docketed as Civil Case No. Q-28580 and raffled to RTC-Branch 95.
On October 17, 1979, Muoz caused the annotation of a notice of lis pendens on
TCT No. 258977 of the spouses Go. In an Order dated December 17, 1979, the RTCBranch 95 granted the spouses Gos motion for the issuance of a writ of preliminary
mandatory injunction and ordered the sheriff to put the spouses Go in possession of
the subject property. The writ was implemented by the sheriff on March 26, 1980,
driving Muoz and her housemates away from the subject property.

Muoz filed a petition for certiorari and prohibition before the Court of Appeals,
assailing the issuance of the writ of preliminary mandatory injunction, which was
docketed as CA-G.R. SP No. 10148. The appellate court dismissed Muozs petition
on January 4, 1980. Yee L. Ching and his son Frederick M. Ching filed an urgent
motion for leave to intervene in CA-G.R. SP No. 10148 and for the issuance of a
temporary restraining order (TRO). The Court of Appeals issued a TRO. However, in
a Resolution dated March 18, 1980, the appellate court denied the motion to
intervene of Yee L. Ching and Frederick M. Ching, and cancelled the TRO previously
issued. Yee L. Ching and Frederick M. Ching challenged before this Court, in G.R. No.
53463, the Resolution dated March 18, 1980 of the Court of Appeals. Eventually, in
a Resolution dated June 3, 1981, the Court dismissed the petition in G.R. No. 53463,
for lack of merit and failure of Yee L. Ching and Frederick M. Ching to substantially
show that the RTC-Branch 95 and the Court of Appeals gravely abused their
discretion. In a subsequent Resolution dated June 21, 1982, the Court clarified that
its Resolution of June 3, 1981 was without prejudice to the continuation of the
litigation in Civil Case No. Q-28580 still pending before the trial court, in order that
proper and final adjudication may be made of whether or not the deed of sale by
Emerita L. Muoz in favor of Emilia M. Ching is a real, genuine and authentic
transaction, thereby to settle once and for all the issue of ownership of the property
herein in question.[11]
Trial in Civil Case No. Q-28580 proceeded before RTC-Branch 95.
In the meantime, Muozs adverse claim and notice of lis pendens on TCT No.
258977 was cancelled on October 28, 1982 on the basis of an alleged final
judgment in favor of the spouses Go.[12] The spouses Go obtained a loan of
P500,000.00 from BPI Family Savings Bank (BPI Family) and to secure the same,
they constituted a mortgage on the subject property on November 23, 1982.[13]
When the spouses Go defaulted on the payment of their loan, BPI Family foreclosed
the mortgage. BPI Family was the highest bidder at the auction sale of the subject
property. The spouses Go failed to exercise their right of redemption within the
prescribed period, thus, BPI Family was finally able to register the subject property
in its name on October 23, 1987 under TCT No. 370364.[14] Apparently, the
original copy of TCT No. 370364 was among those razed in the fire at the Quezon
City Register of Deeds on June 11, 1988. As a result of the administrative
reconstitution of the lost title, TCT No. RT-54376 (370364) was issued to BPI Family.
On December 3, 1990, BPI Family executed in favor of the spouses Samuel Go Chan
and Aida C. Chan (spouses Chan) a Deed of Absolute Sale[15] covering the subject
property for and in consideration of P3,350,000.00. Consequently, TCT No. RT54376 (370364) in the name of BPI Family was cancelled and TCT No. 53297 was
issued in the spouses Chans names on January 28, 1991.[16] The spouses Chan
obtained a loan from BPI Family on October 2, 1992 for the construction of a

building on the subject property, and to secure the same, constituted a mortgage
on the subject property in favor of BPI Family.[17]
On July 19, 1991, RTC-Branch 95 rendered its Decision[18] in Civil Case No. Q28580, against Emilia M. Ching, Yee L. Ching, and the spouses Go (Emilia M. Ching,
et al.). It found that Muozs signature on the Deed of Absolute Sale dated
December 28, 1972 was forged; that Muoz never sold the subject property to her
sister, Emilia M. Ching; and that the spouses Go were not innocent purchasers for
value of the subject property. The fallo of the said decision reads:
WHEREFORE, judgment is hereby rendered dismissing for lack of merit [Emilia M.
Ching, et al.s] respective counterclaims, cross-claims, and counter-cross-claim,
declaring as null and void ab initio the following documents, to wit: (a) Deed of
Absolute Sale dated December 28, 1972, copy of which is marked in evidence as
Exh. M; (b) TCT No. 186366 of the Registry of Deeds for Quezon City, copy of which
is marked in evidence as Exh. N; (c) Deed of Absolute Sale dated July 16, 1979, copy
of which is marked in evidence as Exh. 3; and, (d) TCT No. 258977 of the Registry of
Deeds for Metro Manila District III, copy of which is marked in evidence as Exh. 4,
and directing defendant Register of Deeds of Quezon City to cancel from the records
of the subject property the registrations of all the said documents and to restore
and revive, free from all liens and encumbrances, TCT No. 186306 of the Registry of
Deeds for Quezon City, copy of which is marked in evidence as Exh. L, as well as
ordering defendants Emilia M. Ching, Go Song and Tan Sio Kien jointly and severally
to pay [Muoz] the sum of P50,000.00 as and for attorneys fees and to pay the
costs of suit. The court also hereby dismisses the rest of the claims in [Muozs]
complaint, there being no satisfactory warrant therefor.[19]

Emilia M. Ching, et al.s, appeal of the foregoing judgment of the RTC-Branch 95 was
docketed as CA-G.R. CV No. 33811 before the Court of Appeals. In its Decision[20]
dated March 4, 1993, the appellate court not only affirmed the appealed judgment,
but also ordered the spouses Go and their successors-in-interest and assigns and
those acting on their behalf to vacate the subject property, to wit:
WHEREFORE, premises considered, the decision appealed from is AFFIRMED, with
costs against [Emilia M. Ching, et al.]. The writ of preliminary mandatory injunction
issued on December 17, 1979 is hereby set aside and declared dissolved.
Defendants-appellants Go and Tan, their successors-in-interest and assigns and
those acting on their behalf, are ordered to vacate the disputed premises and to
deliver the same to [Muoz] immediately upon receipt of this decision.[21]
Emilia L. Ching, et al., filed before this Court a motion for extension of time to file
their petition for review, which was assigned the docket number G.R. No. 109260.
However, they failed to file their intended petition within the extended period which

expired on April 23, 1993. In a Resolution[22] dated July 12, 1993, the Court
declared G.R. No. 109260 terminated. The Resolution dated July 12, 1993 of the
Court in G.R. No. 109260 became final and executory on July 15, 1993 and was
entered in the Book of Entries of Judgments on even date.[23]
More than two months later, on September 20, 1993, the RTC-Branch 95 issued a
writ of execution to implement the judgment in Civil Case No. Q-28580.
The spouses Chan, who bought the subject property from BPI Family, then
came forward and filed before the RTC-Branch 95 on October 22, 1993 an Urgent
Motion to Stop Execution as Against Spouses Samuel Go Chan and Aida Chan,[24]
opposing the writ of execution issued in Civil Case No. Q-28580. The spouses Chan
asserted ownership and possession of the subject property on the basis of a clean
title registered in their names under TCT No. 53297. The spouses Chan further
contended that the final judgment in Civil Case No. Q-28580 could not be executed
against them since they were not parties to the said case; they were not
successors-in-interest, assigns, or acting on behalf of the spouses Go; and they
purchased the subject property from BPI Family without any notice of defect in the
latters title.
It was only at this point that Muoz, upon her own inquiry, discovered the
cancellation on October 28, 1982 of her adverse claim and notice of lis pendens
annotated on the spouses Gos TCT No. 258977, and the subsequent events that led
to the transfer and registration of the title to the subject property from the spouses
Go, to BPI Family, and finally, to the spouses Chan.
In its Order[25] dated December 28, 1993, the RTC-Branch 95 denied the spouses
Chans urgent motion to stop the execution. According to the RTC-Branch 95, the
photocopy of TCT No. 370364 in the name of BPI Family, submitted by the spouses
Chan with their motion, could hardly be regarded as satisfactory proof that Muozs
adverse claim and notice of lis pendens annotated therein were also missing from
the original copy of said certificate of title. Muozs adverse claim and notice of lis
pendens were annotated on TCT No. 258977 in the spouses Gos names as P.E.-8078
and P.E.-8178, respectively. So when TCT No. 258977 of the spouses Go was
cancelled and TCT No. 370364 was issued to BPI Family, it could be presumed that
the Register of Deeds regularly performed his official duty by carrying over Muozs
adverse claim and notice of lis pendens to TCT No. 370364. In addition, the RTCBranch 95 pointed out that in this jurisdiction, the entry of the notice of lis pendens
in the day book of the Register of Deeds was already sufficient notice to the whole
world of the dispute over the subject property, and there was no more need to
annotate the same on the owners duplicate of the certificate of title. Finally, the
RTC-Branch 95 held that TCT No. RT-54376 (370364) of BPI Family and TCT No.
53297 of the spouses Chan shall be subject to the reservation under Section 7 of
Republic Act No. 26[26] [t]hat certificates of title reconstituted extrajudicially, in

the manner stated in sections five and six hereof, shall be without prejudice to any
party whose right or interest in the property was duly noted in the original, at the
time it was lost or destroyed, but entry or notation of which has not been made on
the reconstituted certificate of title. Thus, the spouses Chan were deemed to have
taken the disputed property subject to the final outcome of Civil Case No. Q-28580.
On January 3, 1994, the RTC-Branch 95 issued an Alias Writ of Execution.[27] On
January 10, 1994, the writ was enforced, and possession of the subject property was
taken from the spouses Chan and returned to Muoz.[28] In its Orders dated April
8, 1994 and June 17, 1994, the RTC-Branch 95 denied the spouses Chans motion for
reconsideration and notice of appeal, respectively.[29]
G.R. No. 142676

Pending resolution by the RTC-Branch 95 of the spouses Chans motion for

reconsideration and notice of appeal in Civil Case No. Q-28580, Muoz instituted
before the MeTC on February 4, 1994 a Complaint for Forcible Entry with Prayer for
Preliminary Mandatory Injunction[30] against Samuel Go Chan and Atty. Yabut,
docketed as Civil Case No. 8286. Muoz alleged in her complaint that she had been
in actual and physical possession of the subject property since January 10, 1994.
She hired a caretaker and two security guards for the said property. On February 2,
1994, Samuel Go Chan and Atty. Yabut, along with 20 other men, some of whom
were armed, ousted Muoz of possession of the subject property by stealth, threat,
force, and intimidation. Muoz prayed for the issuance of a writ of preliminary
mandatory injunction directing Samuel Go Chan and Atty. Yabut and all persons
claiming right under them to vacate the subject property. Muoz additionally
prayed for judgment making the mandatory injunction permanent and directing
Samuel Go Chan and Atty. Yabut to pay Muoz: (1) compensation for the unlawful
occupation of the subject property in the amount of P50,000.00 per month,
beginning February 2, 1994 until the said property is fully and completely turned
over to Muoz; (2) attorneys fees in the amount of P50,000.00, plus P1,500.00 per
court appearance of Muozs counsel; and (3) costs of suit.
Samuel Go Chan and Atty. Yabut denied Muozs allegations, insisting that Samuel
Go Chan is the valid, lawful, and true legal owner and possessor of the subject
property. Samuel Go Chan and Atty. Yabut averred that the Turn-Over of Possession
and Receipt of Possession dated January 10, 1994 attached to Muozs complaint
as proof that the subject property had been placed in her possession is a falsified
document. The Writ of Execution issued on September 20, 1993 in Civil Case No. Q28580 had already expired and the Sheriffs Return on the Writ another document
purporting to show that possession of the subject property was turned-over to
Muoz on January 10, 1994 was then being challenged in a complaint before the
Office of Deputy Court Administrator Reynaldo L. Suarez of the Supreme Court.

Samuel Go Chans possession of the subject property has never been interrupted.
His sister, Cely Chan, resided at the subject property and was never removed
therefrom. On February 2, 1994, Atty. Yabut was at the subject property only to
protect the rights and interest of his client, Samuel Go Chan, and since the latters
possession of the subject property had never been interrupted, Atty. Yabut entered
the same peacefully, without intimidation, force, or stealth. The other people at the
subject property on February 2, 1994 were there to attend the services at the
Buddhist Temple which occupied the fourth floor of the building erected by the
spouses Chan on the subject property. Samuel Go Chan and Atty. Yabut, thus, asked
the MeTC to dismiss Muozs complaint for lack of merit and legal basis.[31]
The MeTC received evidence from the parties on whether a writ of preliminary
injunction should be issued, as prayed for by Muoz. In its Order dated May 16,
1994, the MeTC adjudged that the final judgment in Civil Case No. Q-28580 was
already executed against the spouses Chan and there was, indeed, a turn-over of
possession of the subject property to Muoz. Accordingly, the MeTC granted
Muozs prayer for the issuance of a writ of preliminary mandatory injunction,
restoring possession of the subject property to Muoz.
Samuel Go Chan and Atty. Yabut questioned the foregoing MeTC order through a
Petition for Certiorari with Prayer for Temporary Restraining Order and Writ of
Preliminary Injunction[32] before the RTC-Branch 88, which was docketed as Civil
Case No. Q-94-20632. They asserted that they were not bound by the execution of
the final judgment of RTC-Branch 95 in Civil Case No. Q-28580 as they were not
parties to the said case. Muoz, on the other hand, argued that the MeTC Order of
May 16, 1994 was an interlocutory order, and under Section 19 of the Rules of
Summary Procedure, a petition for certiorari against an interlocutory order issued by
the court is one of the prohibited pleadings and motions in summary proceedings.
In its Order dated June 10, 1994, the RTC-Branch 88 issued a writ of preliminary
injunction to enjoin the implementation of the MeTC Order dated May 16, 1994.
On August 5, 1994, the RTC-Branch 88 issued another Order resolving Muozs
motion to dismiss the petition for certiorari in Civil Case No. Q-94-20632, motion for
reconsideration of the Order dated June 10, 1994 of RTC-Branch 88 granting the
issuance of a writ of preliminary injunction, and motion to resolve with additional
grounds for dismissal. According to the RTC-Branch 88, the MeTC failed to
distinguish the issue of finality of the judgment of the RTC-Branch 95 in Civil Case
No. Q-28580 from the assertions of Samuel Go Chan and Atty. Yabut that the
spouses Chan are not covered by said final judgment because they are not
successors-in-interest, assigns, or privies of the spouses Go and they are purchasers
of the subject property in good faith. The issue of whether the final judgment in
Civil Case No. Q-28580 extended to the spouses Chan was then still being litigated
in the same case before RTC-Branch 95, where the spouses Chans motion for

reconsideration of the denial of their notice of appeal was pending. The RTC-Branch
88 further found that the MeTC committed grave abuse of discretion in not
dismissing Muozs complaint for forcible entry on the ground of lis pendens, as
the issue as to who between Muoz and the spouses Chan had the better right to
possession of the subject property was the subject of the pending proceeding in
Civil Case No. Q-28580 before the RTC-Branch 95. In the end, the RTC-Branch 88
decreed:
WHEREFORE, premises considered, the Court renders judgment
(a)
Denying the motion to dismiss of respondent Muoz for lack of merit;
(b)
Denying the motion for reconsideration of respondent Muoz for the recall
and/or setting aside of the writ of preliminary injunction granted to petitioners;
(c)
Declaring the Order dated May 16, 1994 of Public respondent Hon. Elsa de
Guzman in Civil Case No. 8286 illegal and therefore null and void; and
(d)
Dismissing the ejectment suit in Civil Case No. 8286 on ground of lis
pendens.
Without pronouncement as to costs.[33]

Muoz appealed the Orders dated June 10, 1994 and August 5, 1994 of RTC-Branch
88 before the Court of Appeals. Her appeal was docketed as CA-G.R. SP No. 35322.
Aside from the nullification of the two orders, Muoz additionally prayed for the
dismissal from the service of the RTC-Branch 88 presiding judge and the disbarment
of Atty. Yabut.
The Court of Appeals, in its Decision dated July 21, 1995, sustained the appealed
orders of RTC-Branch 88. The Court of Appeals held that the MeTC should have
dismissed the forcible entry case on the ground of lis pendens; that the spouses
Chan were not parties in Civil Case No. Q-28580, and impleading them only in the
execution stage of said case vitiated their right to due process; that the order of the
RTC-Branch 95 involving the spouses Chan in Civil Case No. Q-28580 was null and
void, considering that they are strangers to the case, and they are innocent
purchasers for value of the subject property; that the notice of lis pendens was
already cancelled from the spouses Gos certificate of title at the time they
mortgaged the subject property to BPI Family; and that the title to the subject
property was already free of any and all liens and encumbrances when the spouses
Chan purchased the said property from BPI Family. The Court of Appeals, in its
Resolution dated March 9, 2000, denied Muozs motion for reconsideration.
G.R. No. 146718

Meanwhile, Muoz filed before the RTC-Branch 95 in Civil Case No. Q-28580 a
Motion to Cite the Register of Deeds in Contempt of Court for the failure of the
Register of Deeds to restore Muozs TCT No. 186306 despite having been served
with a copy of the writ of execution on October 11, 1993. In its Judgment (on the
Contempt Proceedings against the Register of Deeds of Quezon City Samuel C.
Cleofe)[34] dated March 18, 1994, the RTC-Branch 95 denied Muozs motion,
convinced that the Register of Deeds had a valid excuse for his inability to
implement the served writ. The Register of Deeds could not cancel the spouses
Chans TCT No. 53297, the subsisting certificate of title over the subject property,
absent any authority or directive for him to do so. The directive in the final
judgment in Civil Case No. Q-28580 and the writ of execution for the same only
pertained to the cancellation of the spouses Gos TCT No. 258977.
Thereafter, Muoz filed a Motion for Contempt against the spouses Chan and a
Second Motion for Contempt against Samuel Go Chan and Atty. Yabut. Muoz also
filed a Motion for an Alias Writ of Execution and Application for Surrender of the
Owners Duplicate Copy of TCT No. 53297,[35] in which she prayed for the issuance
of an alias writ of execution directing the Register of Deeds not only to cancel TCT
No. 258977 and all documents declared null and void ab initio in the dispositive
portion of the Decision[36] dated July 19, 1991 of RTC-Branch 95 in Civil Case No. Q28580, and to restore and revive, free from all liens and encumbrances Muozs TCT
No. 186306, but likewise to cancel the present certificate of title covering the
subject property, TCT No. 53297.
In its Order dated August 21, 1995, the RTC-Branch 95 denied all of Muozs
aforementioned motions. The RTC-Branch 95 was of the view that Samuel Go
Chans title should be litigated in another forum, not in Civil Case No. Q-28580
where the judgment had already become final and executory. The RTC-Branch 95
also stressed that since the judgment in Civil Case No. Q-28580 had long become
final and executory, it could no longer be changed or amended except for clerical
error or mistake. Accordingly, the RTC-Branch 95 resolved as follows:
1.
Ordering, as it hereby orders, the denial of [Muozs] first and second
motions for contempt and hereby absolves respondents Samuel Go Chan, Celia
Chan, Atty. Victoriano R. Yabut, Jr., and several John Does of the Contempt Charges
against them.

2.
Ordering, as it hereby orders, the issuance of an alias writ of execution
directing the Courts Deputy Sheriff:

(a)
Defendants Go Song and Tan Sio Kien, their successors-in-interest and
assigns and those acting on their behalf to vacate the disputed premises and deliver
the same to [Muoz];
(b)
Defendant Register of Deeds of Quezon City to cancel from the records
of the subject property the registration of all the following documents, to wit: (1)
Deed of Absolute Sale dated December 28, 1972; (2) Transfer Certificate of Title
(TCT) No. 186366 of the Register of Deeds of Quezon City; (3) Deed of Absolute
Sale dated July 16, 1979; and (4) TCT No. 258977 of the Registry of Deeds for
Metro Manila II, and to restore and revive, free from all liens and encumbrances TCT
No. 186306 of the Registry of Deeds for Quezon City; and
(c)
Defendants Emilia M. Ching, Go Song and Tan Sio Kien jointly and
severally to pay [Muoz] the sum of P50,000.00 as and for attorneys fees and to
pay the cost of suit.[37]

Unrelenting, Muoz filed a Motion for Clarificatory Order, pointing out that the
spouses Chan are the present occupants of the subject property. The Order dated
August 21, 1995 of the RTC-Branch 95 directed the deputy sheriff to deliver the
subject property to Muoz, and this could not be done unless the spouses Chan are
evicted therefrom. Resultantly, Muoz prayed that a clarificatory order be made
categorically stating that the spouses Samuel Go Chan and Aida C. Chan, and all
persons claiming right under them, are likewise evicted from the subject premises
pursuant to the Order of 21 August 1995.[38]
Once more, the RTC-Branch 95 denied Muozs motion in its Order dated October 3,
1995. The RTC-Branch 95 reiterated the rule that after the judgment had become
final, only clerical errors, as distinguished from substantial errors, can be amended
by the court. Furthermore, when the decision or judgment sought to be amended is
promulgated by an appellate court, it is beyond the power of the trial court to
change, amplify, enlarge, alter, or modify. Ultimately, the RTC-Branch 95
pronounced that it was restrained x x x to consider as mere clerical error the
exclusion of spouses Samuel Go Chan and Aida C. Chan in the Decision of the Court
dated July 19, 1991, a final judgment, which judgment cannot now be made to
speak a different language.[39]
Attributing grave abuse of discretion on the part of the RTC-Branch 95 in issuing its
Orders dated August 21, 1995 and October 3, 1995, Muoz filed before this Court a
Petition for Certiorari and Mandamus, which was remanded to the Court of Appeals
in observance of the hierarchy of courts, where it was docketed as CA-G.R. SP No.
40019. The Court of Appeals promulgated its Decision on September 29, 2000
dismissing Muozs petition. The Court of Appeals agreed with the RTC-Branch 95

that the spouses Chan could not be covered by the alias writ of execution
considering that they were not impleaded in Civil Case No. Q-28580. The
cancellation of TCT No. 53297 in the spouses Chans names could not be done apart
from a separate action exclusively for that matter. The spouses Chan are deemed
buyers in good faith and for value as the certificate of title delivered to them by BPI
Family was free from any liens or encumbrances or any mark that would have raised
the spouses Chans suspicions. Every person dealing with registered lands may
safely rely on the correctness of the certificate of title of the vendor/transferor, and
he is not required to go beyond the certificate and inquire into the circumstances
culminating in the vendors acquisition of the property. The Court of Appeals denied
Muozs motion for reconsideration in a Resolution dated January 5, 2001.
Muoz comes before this Court via the present consolidated petitions.
Muoz posits that the final judgment and writ of execution of RTC-Branch 95 in Civil
Case No. Q-28580 bind not only Emilia M. Ching and the spouses Go, but also their
successors-in-interest, assigns, or persons acting on their behalf, namely, BPI Family
and spouses Chan. The spouses Chan cannot be deemed innocent purchasers for
value of the property since the cancellation of the adverse claim and notice of lis
pendens on the spouses Gos TCT No. 258977 is completely null and void.
Muoz further argues that the MeTC Order dated May 16, 1994 in Civil Case No.
8286 correctly ordered the issuance of a writ of preliminary mandatory injunction
restoring possession of the subject property to her, as she had already acquired
prior possession of the said property upon the execution of the final judgment in
Civil Case No. Q-28580. Also, the spouses Chans petition for certiorari before the
RTC-Branch 88, docketed as Civil Case No. Q-94-20632, challenging the Order dated
May 16, 1994 of the MeTC in Civil Case No. 8286, is a prohibited pleading under the
Rules of Summary Procedure; and the RTC-Branch 88 and the Court of Appeals
should be faulted for giving due course to the said petition even in the absence of
jurisdiction.
On the other hand, in their comments to the two petitions at bar, the spouses Chan,
Atty. Yabut, and BPI Family assert that given the peculiar factual circumstances of
the case, RTC-Branch 88 was justified in taking cognizance of Samuel Go Chan and
Atty. Yabuts petition for certiorari in Civil Case No. Q-94-20632; that Muoz is
estopped from questioning the jurisdiction of RTC-Branch 88 after participating in
the proceedings in Civil Case No. Q-94-20632; that the spouses Chans title to the
subject property is not affected by the final judgment of RTC-Branch 95 in Civil Case
No. Q-28580, and the said judgment cannot be executed against the spouses Chan
since they are neither parties to the case, nor are they the successors-in-interest,
assigns, or persons acting on behalf of Emilia M. Ching or the spouses Go; that BPI
Family and consequently, the spouses Chan, obtained title to the subject property
as innocent purchasers for value, there being no notice of any infirmity in said title;

and that Muoz is guilty of forum shopping for filing her petition in G.R. No. 146718
even while her petition in G.R. No. 142676 is still pending.
II
RULING

For the sake of expediency, we will be discussing first the merits of the
petition in G.R. No. 146718.

G.R. No. 146718

Civil Case No. Q-28580 involved Muozs complaint for the annulment of the deeds
of absolute sale dated December 28, 1972[40] and July 16, 1979,[41] the
cancellation of the spouses Gos TCT No. 258977, and the restoration and revival of
Muozs TCT No. 186306. The final judgment of RTC-Branch 95 in Civil Case No. Q28580 was in favor of Muoz and against Emilia M. Ching and the spouses Go. The
problem arose when during the pendency of the said case, title and possession of
the subject property were transferred from the spouses Go, to BPI Family, and
finally, to the spouses Chan. BPI Family and the spouses Chan were never
impleaded as parties and were not referred to in the dispositive portion of the final
judgment in Civil Case No. Q-28580.
Muoz questions in G.R. No. 146718: (1) the Order dated August 21, 1995
denying her Motion for Contempt against the spouses Chan, Second Motion for
Contempt against Samuel Go Chan and Atty. Yabut, and Motion for an Alias Writ of
Execution and Application for Surrender of the Owners Duplicate Copy of TCT No.
53297; and (2) the Order dated October 3, 1995 denying her Motion for Clarificatory
Order, both issued by the RTC-Branch 95 in Civil Case No. Q-28580, and upheld by
the Court of Appeals in CA-G.R. SP No. 40019. In sum, Muoz was seeking in her
aforementioned motions: (1) a categorical order from the RTC-Branch 95 that the
final judgment in Civil Case No. Q-28580 be executed against the spouses Chan;
and (2) the surrender and cancellation of the spouses Chans TCT No. 53297 and
restoration of Muozs TCT No. 186306.
There is no merit in Muozs petition in G.R. No. 146718.
Civil Case No. Q-28580 is an action for reconveyance of real property. In Heirs of
Eugenio Lopez, Sr. v. Enriquez,[42] we described an action for reconveyance as
follows:
An action for reconveyance is an action in personam available to a person whose
property has been wrongfully registered under the Torrens system in anothers

name. Although the decree is recognized as incontrovertible and no longer open to

review, the registered owner is not necessarily held free from liens. As a remedy,
an action for reconveyance is filed as an ordinary action in the ordinary courts of
justice and not with the land registration court. Reconveyance is always available
as long as the property has not passed to an innocent third person for value. A
notice of lis pendens may thus be annotated on the certificate of title immediately
upon the institution of the action in court. The notice of lis pendens will avoid
transfer to an innocent third person for value and preserve the claim of the real
owner.[43] (Emphases ours.)

The rule is that: (1) a judgment in rem is binding upon the whole world, such as a
judgment in a land registration case or probate of a will; and (2) a judgment in
personam is binding upon the parties and their successors-in-interest but not upon
strangers. A judgment directing a party to deliver possession of a property to
another is in personam; it is binding only against the parties and their successors-ininterest by title subsequent to the commencement of the action. An action for
declaration of nullity of title and recovery of ownership of real property, or reconveyance, is a real action but it is an action in personam, for it binds a particular
individual only although it concerns the right to a tangible thing. Any judgment
therein is binding only upon the parties properly impleaded.[44]
Since they were not impleaded as parties and given the opportunity to participate in
Civil Case No. Q-28580, the final judgment in said case cannot bind BPI Family and
the spouses Chan. The effect of the said judgment cannot be extended to BPI
Family and the spouses Chan by simply issuing an alias writ of execution against
them. No man shall be affected by any proceeding to which he is a stranger, and
strangers to a case are not bound by any judgment rendered by the court. In the
same manner, a writ of execution can be issued only against a party and not
against one who did not have his day in court. Only real parties in interest in an
action are bound by the judgment therein and by writs of execution issued pursuant
thereto.[45]
A similar situation existed in Dino v. Court of Appeals,[46] where we resolved that:
As the registered owner of the subject property, petitioners are not bound by
decision in Civil Case No. R-18073 for they were never summoned in said case and
the notice of lis pendens annotated on TCT No. 73069 was already cancelled at the
time petitioners purchased the subject property. While it is true that petitioners are
indispensable parties in Civil Case No. R-18073, without whom no complete relief
could be accorded to the private respondents, the fact still remains that petitioners
were never actually joined as defendants in said case. Impleading petitioners as
additional defendants only in the execution stage of said case violated petitioners
right to due process as no notice of lis pendens was annotated on the existing

certificate of title of said property nor were petitioners given notice of the pending
case, therefore petitioners remain strangers in said case and the Order of the trial
court involving them is null and void, considering that petitioners are innocent
purchasers of the subject property for value.[47]

We further stress that Section 48 of Presidential Decree No. 1529, otherwise known
as the Property Registration Decree, clearly provides that [a] certificate of title
shall not be subject to collateral attack. It cannot be altered, modified or cancelled
except in a direct proceeding in accordance with law. Herein, several Torrens titles
were already issued after the cancellation of Muozs. Certificates of title had been
successively issued to Emilia M. Ching, spouses Go, BPI Family, and spouses Chan.
Civil Case No. Q-28580, in which a final judgment had already been rendered,
specifically challenged the validity of the certificates of title of Emilia M. Ching and
the spouses Go only. To have the present certificate of title of the spouses Chan
cancelled, Muoz must institute another case directly attacking the validity of the
same.
The fact that the titles to the subject property of Emilia M. Ching and the spouses
Go were already declared null and void ab initio by final judgment in Civil Case No.
Q-28580 is not enough, for it does not automatically make the subsequent titles of
BPI Family and the spouses Chan correspondingly null and void ab initio.
It has long been ingrained in our jurisprudence that a void title may become the
root of a valid title if the derivative title was obtained in good faith and for value.
Following the principle of indefeasibility of a Torrens title, every person dealing with
registered lands may safely rely on the correctness of the certificate of title of the
vendor/transferor, and he is not required to go beyond the certificate and inquire
into the circumstances culminating in the vendors acquisition of the property. The
rights of innocent third persons who relied on the correctness of the certificate of
title and acquired rights over the property covered thereby cannot be disregarded
and the courts cannot order the cancellation of such certificate for that would impair
or erode public confidence in the Torrens system of land registration.[48]

Hence, we pronounced in Republic v. Agunoy, Sr.[49]:

Here, it bears stressing that, by petitioner's own judicial admission, the lots in
dispute are no longer part of the public domain, and there are numerous third,
fourth, fifth and more parties holding Torrens titles in their favor and enjoying the
presumption of good faith. This brings to mind what we have reechoed in Pino v.
Court of Appeals and the cases therein cited:

[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.[50]
(Emphases ours.)

Although the RTC-Branch 95 had declared with finality in Civil Case No. Q-28580
that the titles of Emilia M. Ching and the spouses Go were null and void, there is yet
no similar determination on the titles of BPI Family and the spouses Chan. The
question of whether or not the titles to the subject property of BPI Family and the
spouses Chan are null and void, since they are merely the successors-in-interest,
assigns, or privies of Emilia M. Ching and the spouses Go, ultimately depends on the
issue of whether or not BPI Family and the spouses Chan obtained their titles to the
subject property in bad faith, i.e., with notice of Muozs adverse claim and
knowledge of the pendency of Civil Case No. Q-28580. The latter is a factual issue
on which we cannot rule in the present petition, not only because we are not a trier
of facts, but more importantly, because it was not among the issues raised and tried
in Civil Case No. Q-28580.
In support of her prayer for an alias writ of execution against BPI Family and the
spouses Go, Muoz cites our ruling in Calalang v. Register of Deeds of Quezon City,
[51] in relation to De la Cruz v. De la Cruz.[52]
De la Cruz is an action for reconveyance of Lot 671 founded on breach of trust filed
by Augustina de la Cruz, et al., against Lucia dela Cruz (Lucia) and Iglesia Ni Kristo
(INK). We upheld the validity of the sale of Lot 671 by Lucia to INK, and thereby
validated the title of INK to the said property.
Calalang actually involved two petitions: (1) a special civil action for certiorari and
prohibition originally filed by Virginia Calalang (Calalang) before this Court, and (2) a
petition for injunction with damages originally filed by Augusto M. de Leon (De
Leon), et al., before the RTC and docketed as Civil Case No. Q-45767. Calalang and
De Leon, et al., assert titles that were adverse to that of INK. De Leon, et al., in
particular, claim that their titles to Lot 671 were derived from Amando Clemente.
Calalang and De Leon, et al., sought from the court orders enjoining INK from
building a fence to enclose Lot 671; requiring the Administrator of the National Land
Titles and Deeds Registration Administration (NLTDRA) to conduct an investigation
of the anomaly regarding Lucias reconstituted title to Lot 671; and dismissing the
proceedings instituted by the Register of Deeds for the cancellation of their titles.

We dismissed the petitions of Calalang and De Leon, et al., on the ground of res
judicata, the legality or validity of the title of INK over Lot 671 had been settled with
finality in De la Cruz. De la Cruz was applied to Calalang and De Leon, et al., since
the facts on which such decision was predicated continued to be the facts on which
the petitions of Calalang and De Leon, et al., were based.
Muozs reliance on Calalang is misplaced. There are substantial differences in the
facts and issues involved in Calalang and the present case.
In Calalang, there is duplication or overlapping of certificates of title issued to
different persons over the same property. We already upheld in De la Cruz the
validity of the certificate of title of INK over Lot 671, which effectively prevents us
from recognizing the validity of any other certificate of title over the same property.
In addition, Lucia, the predecessor-in-interest of INK, had her certificate of title
judicially reconstituted. The judicial reconstitution of title is a proceeding in rem,
constituting constructive notice to the whole world. Hence, we rejected the
petitions of Calalang and De Leon, et al., to enjoin INK from building a fence
enclosing Lot 671, and the concerned public authorities from instituting appropriate
proceedings to have all other certificates of title over Lot 671 annulled and
cancelled.
In the instant case, there has been no duplication or overlapping of certificates of
title. The subject property has always been covered by only one certificate of title
at a time, and at present, such certificate is in the spouses Chans names. As we
have previously discussed herein, Muoz cannot have the spouses Chans TCT No.
53297 cancelled by a mere motion for the issuance of an alias writ of execution in
Civil Case No. Q-28580, when the spouses Chan were not parties to the case. Civil
Case No. Q-28580 was a proceeding in personam, and the final judgment rendered
therein declaring null and void the titles to the subject property of Emilia M. Ching
and the spouses Go should bind only the parties thereto. Furthermore, despite the
void titles of Emilia M. Ching and the spouses Go, the derivative titles of BPI Family
and the spouses Chan may still be valid provided that they had acquired the same
in good faith and for value.
More in point with the instant petition is Pineda v. Santiago.[53] Pineda still
involved Lot 671. INK sought from the RTC a second alias writ of execution to
implement the judgment in Calalang against Conrado Pineda (Pineda), et. al. In
opposing the issuance of such writ, Pineda, et al., asserted that they held titles to
Lot 671 adverse to those of Lucia and INK and that they were not parties in De la
Cruz or in Calalang. In its assailed order, the RTC granted the second alias writ of
execution on the basis that the issue of ownership of Lot 671 was already
determined with finality in favor of Lucia and INK. The writ ordered the deputy
sheriff to eject Pineda, et al., from Lot 671. When the matter was brought before us,
we annulled the assailed order as the writ of execution issued was against Pineda,

et al., who were not parties to Civil Case No. Q-45767, the ejectment suit instituted
by De Leon, et al. We elaborated in Pineda that:
Being a suit for injunction, Civil Case No. Q-45767 partakes of an action in
personam. In Domagas v. Jensen, we have explained the nature of an action in
personam and enumerated some actions and proceedings which are in personam,
viz:
The settled rule is that the aim and object of an action determine its character.
Whether a proceeding is in rem, or in personam, or quasi in rem for that matter, is
determined by its nature and purpose, and by these only. A proceeding in personam
is a proceeding to enforce personal rights and obligations brought against the
person and is based on the jurisdiction of the person, although it may involve his
right to, or the exercise of ownership of, specific property, or seek to compel him to
control or dispose of it in accordance with the mandate of the court. The purpose of
a proceeding in personam is to impose, through the judgment of a court, some
responsibility or liability directly upon the person of the defendant. Of this
character are suits to compel a defendant to specifically perform some act or
actions to fasten a pecuniary liability on him. An action in personam is said to be
one which has for its object a judgment against the person, as distinguished from a
judgment against the propriety to determine its state. It has been held that an
action in personam is a proceeding to enforce personal rights or obligations; such
action is brought against the person. As far as suits for injunctive relief are
concerned, it is well-settled that it is an injunctive act in personam. In Combs v.
Combs, the appellate court held that proceedings to enforce personal rights and
obligations and in which personal judgments are rendered adjusting the rights and
obligations between the affected parties is in personam. Actions for recovery of real
property are in personam.
The respondent judge's jurisdiction is, therefore, limited to the parties in the
injunction suit. To stress, the petition for injunction, docketed as Civil Case No. Q45767, was filed only by therein petitioners Augusto M. de Leon, Jose de Castro, Jose
A. Panlilio, Felicidad Vergara Vda. De Pineda, Fernando L. Vitug I, Fernando M. Vitug
II, Fernando M. Vitug III, and Faustino Tobia, and later amended to include Elena
Ostrea and Feliza C. Cristobal-Generoso as additional petitioners therein, against
Bishop Erao Manalo, in his capacity as titular and spiritual head of I.N.K. Herein
petitioners Conrado Pineda, et al. never became parties thereto. Any and all orders
and writs of execution, which the respondent judge may issue in that case can,
therefore, be enforced only against those parties and not against the herein
petitioners Conrado Pineda, et al. In issuing the assailed Order dated 22 April 1998,
which directed the issuance of the 2nd Alias Writ of Execution to eject non-parties
(herein petitioners), the respondent judge clearly went out of bounds and
committed grave abuse of discretion.

The nature of the injunction suit Civil Case No. Q-45767 as an action in
personam in the RTC remains to be the same whether it is elevated to the CA or to
this Court for review. An action in personam does not become an action in rem just
because a pronouncement confirming I.N.K.'s title to Lot 671 was made by this
Court in the Calalang decision. Final rulings may be made by this Court, as the
Highest Court of the Land, in actions in personam but such rulings are binding only
as against the parties therein and not against the whole world. Here lies another
grave abuse of discretion on the part of the respondent judge when he relied on the
Calalang decision in his assailed Order dated 07 May 1998 as if it were binding
against the whole world, saying:
After evaluating the arguments of both parties, decisive on the incident is the
decision of the Supreme Court in favor of the respondent I.N.K., represented by its
titular and spiritual head Bishop Erao G. Manalo, sustaining its ownership over the
subject Lot 671. This Court could do no less but to follow and give substantial
meaning to its ownership which shall include all dominical rights by way of a Writ of
Execution. To delay the issuance of such writ is a denial of justice due the I.N.K.
As a final word, this decision shall not be misinterpreted as disturbing or modifying
our ruling in Calalang. The final ruling on I.N.K.'s ownership and title is not at all
affected. Private respondent I.N.K., as the true and lawful owner of Lot 671 as ruled
by the Court in Calalang, simply has to file the proper action against the herein
petitioners to enforce its property rights within the bounds of the law and our rules.
I.N.K.'s recourse of asking for the issuance of an alias writ of execution against the
petitioners in Civil Case No. Q-45767 and the respondent judge's orders in said
case, granting I.N.K.'s prayer and enforcing the alias writ of execution against the
present petitioners, constitutes blatant disregard of very fundamental rules and
must therefore be stricken down.[54] (Emphases ours.)

Consistent with Pineda, and as appositely recommended by the RTC-Branch 95 and

the Court of Appeals in the present case, Muozs legal remedy is to directly assail
in a separate action the validity of the certificates of title of BPI Family and the
spouses Chan.
G.R. No. 142676
G.R. No. 142676 is Muozs appeal of the dismissal of Civil Case No. 8286, the
forcible entry case she instituted against Samuel Go Chan and Atty. Yabut before the
MeTC.
There is forcible entry or desahucio when one is deprived of physical possession of
land or building by means of force, intimidation, threat, strategy or stealth. In such
cases, the possession is illegal from the beginning and the basic inquiry centers on

who has the prior possession de facto. In filing forcible entry cases, the law tells us
that two allegations are mandatory for the municipal court to acquire jurisdiction:
first, the plaintiff must allege prior physical possession of the property, and second,
he must also allege that he was deprived of his possession by any of the means
provided for in Section 1, Rule 70 of the Rules of Court, i.e., by force, intimidation,
threat, strategy, or stealth. It is also settled that in the resolution thereof, what is
important is determining who is entitled to the physical possession of the property.
Indeed, any of the parties who can prove prior possession de facto may recover
such possession even from the owner himself since such cases proceed
independently of any claim of ownership and the plaintiff needs merely to prove
prior possession de facto and undue deprivation thereof.[55]
Title is never in issue in a forcible entry case, the court should base its decision on
who had prior physical possession. The main thing to be proven in an action for
forcible entry is prior possession and that same was lost through force, intimidation,
threat, strategy, and stealth, so that it behooves the court to restore possession
regardless of title or ownership.[56]
We more extensively discussed in Pajuyo v. Court of Appeals[57] that:
Ownership or the right to possess arising from ownership is not at issue in an action
for recovery of possession. The parties cannot present evidence to prove ownership
or right to legal possession except to prove the nature of the possession when
necessary to resolve the issue of physical possession. The same is true when the
defendant asserts the absence of title over the property. The absence of title over
the contested lot is not a ground for the courts to withhold relief from the parties in
an ejectment case.
The only question that the courts must resolve in ejectment proceedings is - who is
entitled to the physical possession of the premises, that is, to the possession de
facto and not to the possession de jure. It does not even matter if a partys title to
the property is questionable, or when both parties intruded into public land and
their applications to own the land have yet to be approved by the proper
government agency. Regardless of the actual condition of the title to the property,
the party in peaceable quiet possession shall not be thrown out by a strong hand,
violence or terror. Neither is the unlawful withholding of property allowed. Courts
will always uphold respect for prior possession.
Thus, a party who can prove prior possession can recover such possession even
against the owner himself. Whatever may be the character of his possession, if he
has in his favor prior possession in time, he has the security that entitles him to
remain on the property until a person with a better right lawfully ejects him. To
repeat, the only issue that the court has to settle in an ejectment suit is the right to
physical possession.[58] (Emphases ours.)

Based on the foregoing, we find that the RTC-Branch 88 erred in ordering the
dismissal of Civil Case No. 8286 even before completion of the proceedings before
the MeTC. At the time said case was ordered dismissed by RTC-Branch 88, the MeTC
had only gone so far as holding a hearing on and eventually granting Muozs
prayer for the issuance of a writ of preliminary mandatory injunction.
Muoz alleges in her complaint in Civil Case No. 8286 that she had been in prior
possession of the subject property since it was turned-over to her by the sheriff on
January 10, 1994, pursuant to the Alias Writ of Execution issued by the RTC-Branch
95 to implement the final judgment in Civil Case No. Q-28580. The factual issue of
who was in prior possession of the subject property should be litigated between the
parties regardless of whether or not the final judgment in Civil Case No. Q-28580
extended to the spouses Chan. Hence, the pendency of the latter issue in Civil Case
No. Q-28580 before the RTC-Branch 95 did not warrant the dismissal of Civil Case
No. 8286 before the MeTC on the ground of litis pendentia. The two cases could
proceed independently of one another.
Samuel Go Chan and Atty. Yabut aver that the spouses Chan have never lost
possession of the subject property since acquiring the same from BPI Family in
1990. This is a worthy defense to Muozs complaint for forcible entry, which
Samuel Go Chan and Atty. Yabut should substantiate with evidence in the
continuation of the proceedings in Civil Case No. 8286 before the MeTC.
In addition, Civil Case No. 8286, a forcible entry case, is governed by the Revised
Rule on Summary Procedure, Section 19 whereof provides:
SEC. 19. Prohibited pleadings and motions. The following pleadings, motions, or
petitions shall not be allowed in the cases covered by this Rule:
xxxx
(g)
Petition for certiorari, mandamus, or prohibition against any interlocutory
order issued by the court.

The purpose of the Rule on Summary Procedure is to achieve an expeditious and

inexpensive determination of cases without regard to technical rules. Pursuant to
this objective, the Rule prohibits petitions for certiorari, like a number of other
pleadings, in order to prevent unnecessary delays and to expedite the disposition of
cases.[59]

Interlocutory orders are those that determine incidental matters that do not touch
on the merits of the case or put an end to the proceedings.[60] An order granting a
preliminary injunction, whether mandatory or prohibitory, is interlocutory and
unappealable.[61]
The writ of preliminary mandatory injunction issued by the MeTC in its Order dated
May 16, 1994, directing that Muoz be placed in possession of the subject property
during the course of Civil Case No. 8286, is an interlocutory order. Samuel Go Chan
and Atty. Yabut assailed the said order before the RTC-Branch 88 via a petition for
certiorari, docketed as Civil Case No. Q-94-20632. The RTC-Branch 88 gave due
course to said petition, and not only declared the MeTC Order dated May 16, 1994
null and void, but went further by dismissing Civil Case No. 8286.
The prohibition in Section 19(g) of the Revised Rule on Summary Procedure is plain
enough. Its further exposition is unnecessary verbiage.[62] The petition for
certiorari of Samuel Go Chan and Atty. Yabut in Civil Case No. Q-94-20632 is clearly
covered by the said prohibition, thus, it should have been dismissed outright by the
RTC-Branch 88. While the circumstances involved in Muozs forcible entry case
against Samuel Go Chan and Atty. Yabut are admittedly very peculiar, these are
insufficient to except the petition for certiorari of Samuel Go Chan and Atty. Yabut in
Civil Case No. Q-94-20632 from the prohibition. The liberality in the interpretation
and application of the rules applies only in proper cases and under justifiable causes
and circumstances. While it is true that litigation is not a game of technicalities, it is
equally true that every case must be prosecuted in accordance with the prescribed
procedure to insure an orderly and speedy administration of justice.[63]
Nonetheless, even though the peculiar circumstances extant herein do not justify
the dismissal of Civil Case No. 8286, they do require limiting pro hac vice the reliefs
the MeTC may accord to Muoz in the event that she is able to successfully prove
forcible entry by Samuel Go Chan and Atty. Yabut into the subject property (i.e., that
the sheriff actually turned-over to Muoz the possession of the subject property on
January 10, 1994, and that she was deprived of such possession by Samuel Go Chan
and Atty. Yabut on February 2, 1994 by means of force, intimidation, threat,
strategy, and stealth). Taking into account our ruling in G.R. No. 146718 that the
final judgment in Civil Case No. Q-28580 does not extend to the spouses Chan, who
were not impleaded as parties to the said case the MeTC is precluded from
granting to Muoz relief, whether preliminary or final, that will give her possession
of the subject property. Otherwise, we will be perpetuating the wrongful execution
of the final judgment in Civil Case No. Q-28580. Based on the same reason, Muoz
can no longer insist on the reinstatement of the MeTC Order dated May 16, 1994
granting a preliminary mandatory injunction that puts her in possession of the
subject property during the course of the trial. Muoz though may recover damages
if she is able to prove wrongful deprivation of possession of the subject property
from February 2, 1994 until the finality of this decision in G.R. No. 146718.

WHEREFORE, in view of the foregoing, we:

(1)
GRANT Emerita Muozs petition in G.R. No. 142676. We REVERSE and
SET ASIDE the Decision dated July 21, 1995 and Resolution dated March 9, 2000 of
the Court of Appeals in CA-G.R. SP No. 35322, which affirmed the Orders dated June
10, 1994 and August 5, 1994 of the Regional Trial Court, Branch 88 of Quezon City
in Civil Case No. Q-94-20632. We DIRECT the Metropolitan Trial Court, Branch 33 of
Quezon City to reinstate Emerita Muozs complaint for forcible entry in Civil Case
No. 8286 and to resume the proceedings only to determine whether or not Emerita
Muoz was forcibly deprived of possession of the subject property from February 2,
1994 until finality of this judgment, and if so, whether or not she is entitled to an
award for damages for deprivation of possession during the aforementioned period
of time; and
(2)
DENY Emerita Munozs petition in G.R. No. 146718 for lack of merit, and
AFFIRM the Decision dated September 29, 2000 and Resolution dated January 5,
2001 of the Court of Appeals in CA-G.R. SP No. 40019, which in turn, affirmed the
Orders dated August 21, 1995 and October 3, 1995 of the Regional Trial Court,
Branch 95 of Quezon City in Civil Case No. Q-28580.
No pronouncement as to costs.
SO ORDERED.

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 crossclaim, 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.
SO ORDERED.

G.R. No. 137471

January 16, 2002

GUILLERMO ADRIANO, petitioner,

vs.
ROMULO PANGILINAN, respondent.
PANGANIBAN, J.:
Loss brought about by the concurrent negligence of two persons shall be borne by
the one who was in the immediate, primary and overriding position to prevent it. In
the present case, the mortgagee -- who is engaged in the business of lending
money secured by real estate mortgages -- could have easily avoided the loss by
simply exercising due diligence in ascertaining the identity of the impostor who
claimed to be the registered owner of the property mortgaged.
The Case
Before us is a Petition for Review under Rule 45 of the Rules of Court, assailing the
November 11, 1998 Decision1 of the Court of Appeals (CA) in CA-GR CV No. 44558.
The dispositive portion of the CA Decision reads as follows:
"WHEREFORE, premises considered, the judgment appealed from is hereby
REVERSED and SET ASIDE, and another entered dismissing the complaint instituted
in the court below. Without costs in this instance."2
Also questioned is the February 5, 1999 CA Resolution3 denying petitioner's Motion
for Reconsideration.
The CA reversed the Regional Trial Court (RTC) of San Mateo, Rizal (Branch 76) in
Civil Case No. 845, which disposed as follows:
"WHEREFORE, premises considered, judgment is hereby rendered declaring the real
estate mortgage constituted on the property described in and covered by TCT No.
337942 of the Registry of Deeds for the Province of Rizal, in the name of Guillermo
Adriano, to be null and void and of no force and effect, and directing defendant
Romulo Pangilinan to reconvey or deliver to herein plaintiff Guillermo Adriano the

aforesaid title after causing and effecting a discharge and cancellation of the real
estate mortgage annotated on the said title. No pronouncement as to costs.
"Defendant's counterclaim is dismissed for want of basis."4
The Facts
The undisputed facts of the case are summarized by the Court of Appeals as
follows:
"[Petitioner] Guillermo Adriano is the registered owner of a parcel of land with an
area of three hundred four (304) square meters, more or less, situated at Col. S.
Cruz, Geronimo, Montalban, Rizal and covered by Transfer Certificate of Title No.
337942.

"Sometime on November 23, 1990[, petitioner] entrusted the original owner's copy
of the aforesaid Transfer Certificate of Title to Angelina Salvador, a distant relative,
for the purpose of securing a mortgage loan.
"Without the knowledge and consent of [petitioner], Angelina Salvador mortgaged
the subject property to the [Respondent] Romulo Pangilinan. After a time,
[petitioner] verified the status of his title with the Registry of Deeds of Marikina,
Metro Manila, and was surprised to discover that upon the said TCT No. 337942 was
already annotated or inscribed a first Real Estate Mortgage purportedly executed by
one Guillermo Adriano over the aforesaid parcel of land, together with the
improvements thereon, in favor of the [Respondent] Romulo Pangilinan, in
consideration of the sum of Sixty Thousand Pesos (P60,000.00). [Petitioner] denied
that he ever executed the deed of mortgage, and denounced his signature thereon
as a forgery; he also denied having received the consideration of P60,000.00 stated
therein.
"[Petitioner] thereafter repeatedly demanded that [respondent] return or reconvey
to him his title to the said property and when these demands were ignored or
disregarded, he instituted the present suit.
"[Petitioner] likewise filed a criminal case for estafa thru falsification of public
document against [Respondent] Romulo Pangilinan, as well as against Angelina
Salvador, Romy de Castro and Marilen Macanaya, in connection with the execution
of the allegedly falsified deed of real estate mortgage: this was docketed as
Criminal Case No. 1533-91 of the Regional Trial Court of San Mateo, Rizal, Branch
76.

"[Respondent] in his defense testified that he [was] a businessman engaged in the

buying and selling as well as in the mortgage of real estate properties; that
sometime in the first week of December, 1990 Angelina Salvador, together with
Marilou Macanaya and a person who introduced himself as Guillermo Adriano, came
to his house inquiring on how they could secure a loan over a parcel of land; that he
asked them to submit the necessary documents, such as the owner's duplicate of
the transfer certificate of title to the property, the real estate tax declaration, its
vicinity location plan, a photograph of the property to be mortgaged, and the
owner's residence certificate; that when he conducted an ocular inspection of the
property to be mortgaged, he was there met by a person who had earlier introduced
himself as Guillermo Adriano, and the latter gave him all the original copies of the
required documents to be submitted; that after he (defendant) had verified from the
Registry of Deeds of Marikina that the title to the property to be mortgaged was
indeed genuine, he and that person Guillermo Adriano executed the subject real
estate mortgage, and then had it notarized and registered with the Registry of
Deeds. After that, the alleged owner, Guillermo Adriano, together with Marilou
Macanaya and another person signed the promissory note in the amount of Sixty
Thousand Pesos (P60,000.00) representing the appraised value of the mortgage
property. This done, he (defendant) gave them the aforesaid amount in cash.
"[Respondent] claimed that [petitioner] voluntarily entrusted his title to the subject
property to Angelina Salvador for the purpose of securing a loan, thereby creating a
principal-agent relationship between the plaintiff and Angelina Salvador for the
aforesaid purpose. Thus, according to [respondent], the execution of the real estate
mortgage was within the scope of the authority granted to Angelina Salvador; that
in any event TCT No. 337942 and the other relevant documents came into his
possession in the regular course of business; and that since the said transfer
certificate of title has remained with [petitioner], the latter has no cause of action
for reconveyance against him."5
In his appeal before the CA,6 respondent contended that the RTC had erred (1) in
holding that petitioner's signature on the Real Estate Mortgage was a forgery and
(2) in setting aside and nullifying the Mortgage.
Ruling of the Court of Appeals
The CA ruled that "when a mortgagee relies upon a Torrens title and lends money in
all good faith on the basis of the title standing in the name of the mortgagor, only to
discover one defendant to be an alleged forger and the other defendant to have by
his negligence or acquiescence made it possible for fraud to transpire, as between
two innocent persons, the mortgagee and one of the mortgagors, the latter who
made the fraud possible by his act of confidence must bear the loss."7

It further explained that "even conceding for the sake of argument that the
appellant's signature on the Deed of First Real Estate Mortgage was a forgery, and
even granting that the appellee did not participate in the execution of the said deed
of mortgage, and was not as well aware of the alleged fraud committed by other
persons relative to its execution, the undeniable and irrefutable fact remains that
the appellee did entrust and did deliver his Transfer Certificate of Title No. 337942
covering the subject property, to a distant relative, one Angelina Salvador, for the
avowed purpose of using the said property as a security or collateral for a real
estate mortgage debt of loan."8
Hence, this present recourse.9
The Issues
In his Memorandum,10 petitioner raises the following issues for our consideration:
I
"Whether or not consent is an issue in determining who must bear the loss if a
mortgage contract is sought to be declared a nullity[;]
and
II
"Whether or not the Motion for Reconsideration filed by the petitioner before the
Court of Appeals should have been dismissed[.]"11
This Court's Ruling
The Petition is meritorious.
First Issue:
Effect of Mortgage by Non-Owner
Petitioner contends that because he did not give his consent to the real estate
mortgage (his signature having been forged), then the mortgage is void and
produces no force and effect.
Article 2085 of the Civil Code enumerates the essential requisites of a mortgage, as
follows:

"Art. 2085. The following requisites are essential to the contracts of pledge and
mortgage:
"(1) That they be constituted to secure the fulfillment of a principal obligation;
"(2) That the pledgor or mortgagor be the absolute owner of the thing pledged or
mortgaged;
"(3) That the persons constituting the pledge or mortgage have the free disposal of
their property, and in the absence thereof, that they be legally authorized for that
purpose.
"Third persons who are not parties to the principal obligation may secure the latter
by pledging or mortgaging their own property. (1857)" (Italics supplied)
In the case at bar, not only was it proven in the trial court that the signature of the
mortgagor had been forged, but also that somebody else -- an impostor -- had
pretended to be the former when the mortgagee made an ocular inspection of the
subject property. On this point, the RTC held as follows:
"The falsity attendant to the subject real estate mortgage is evidenced not only by
herein plaintiff's vehement denial of having entered into that contract with
defendant, but also by a comparison between the signature of the debtor-mortgagor
appearing in the said mortgage contract, and plaintiff's signatures appearing in the
records of this case. Even to the naked eye, the difference is glaring, and there can
be no denying the fact that both signatures were not written or affixed by one and
the same person. The falsity is further infe[r]able from defendant's admission that
the plaintiff in this case who appeared in court [was] not the same person who
represented himself as the owner of the property (TSN, pp. 7, 11, June 21, 1993
hearing) and who therefore was the one who signed the contract as the debtormortgagor."12
The CA did not dispute the foregoing finding, but faulted petitioner for entrusting to
Angelina Salvador the TCT covering the property. Without his knowledge or consent,
however, she caused or abetted an impostor's execution of the real estate
mortgage.
"Even conceding for the sake of argument that the appellee's signature on the Deed
of First Real Estate Mortgage (Exh. B; Original Record, pp. 56-58) was a forgery, and
even granting that the appellee did not participate in the execution of the said deed
of mortgage, and was not as well aware of the alleged fraud committed by other
persons relative to its execution, the undeniable and irrefutable fact remains that
the appellee did entrust and did deliver his Transfer Certificate of Title No. 337942
(Exh. A; Original Record, pp. 53-55) covering the subject property, to a distant

relative, one Angelina Salvador, for the avowed purpose of using the said property
as a security or collateral for a real estate mortgage debt of loan. x x x"13
Be that as it may, it is clear that petitioner who is undisputedly the property owner
-- did not mortgage the property himself. Neither did he authorize Salvador or
anyone else to do so.
In Parqui v. Philippine National Bank,14 this Court affirmed the trial court's ruling
that a mortgage was invalid if the mortgagor was not the property owner:
"After carefully considering the issue, we reach the conclusion that His Honor's
decision was correct. One of the essential requisites of a valid mortgage, under the
Civil Code is 'that the thing pledged or mortgaged be owned by the person who
pledges or mortgages it' (Art. 1857, par. 2); and there is no question that Roman
Oliver who pledged the property to the Philippine National Bank did not own it. The
mortgage was consequently void."15
Second Issue:
Concurrent Negligence of the Parties
The CA reversed the lower court, because petitioner had been negligent in
entrusting and delivering his TCT No. 337942 to his "distant relative" Angelina
Salvador, who undertook to find a money lender. Citing Blondeau v. Nano16 and
Philippine National Bank v. CA,17 it then applied the "bona fide purchaser for value"
principle.
Both cases cited involved individuals who, by their negligence, enabled other
persons to cause the cancellation of the original TCT of the disputed property and
the issuance of a new one in their favor. Having obtained TCTs in their names, they
conveyed the subject property to third persons, who in Blondeau was a bona fide
purchaser while in Philippine National Bank was an innocent mortgagee for value. It
should be stressed that in both these cases, the seller and the mortgagor were the
registered owners of the subject property; whereas in the present case, the
mortgagor was an impostor, not the registered owner.1wphi1.nt
It must be noted that a Torrens certificate "serves as evidence of an indefeasible
title to the property in favor of the person whose name appears therein."18
Moreover, the Torrens system "does not create or vest title. It only confirms and
records title already existing and vested. It does not protect a usurper from the true
owner. It cannot be a shield for the commission of fraud. It does not permit one to
enrich himself at the expense of another."19

Thus, we ask these questions: Was petitioner negligent in entrusting and delivering
his TCT to a relative who was supposed to help him find a money lender? And if so,
was such negligence sufficient to deprive him of his property?
To be able to answer these questions and apply the holding in Philippine National
Bank, it is crucial to determine whether herein respondent was an "innocent
mortgagee for value." After a careful review of the records and pleadings of the
case, we hold that he is not, because he failed to observe due diligence in the grant
of the loan and in the execution of the real estate mortgage.20
Respondent testified that he was engaged in the real estate business, including the
grant of loans secured by real property mortgages. Thus, he is expected to
ascertain the status and condition of the properties offered to him as collaterals, as
well as to verify the identities of the persons he transacts business with.
Specifically, he cannot simply rely on a hasty examination of the property offered to
him as security and the documents backing them up.21 He should also verify the
identity of the person who claims to be the registered property owner.
Respondent stated in his testimony that he had been engaged in the real estate
business for almost seven years.22 Before the trial court, he testified on how he had
approved the loan sought and the property mortgaged:
"Q
Mr. witness, you stated earlier that you are a businessman. Will you please
inform the Hon. Court what kind of business you are engaged in?
A
First, as a businessman, I buy and sell real estate properties, sir, and engaged
in real estate mortgage, sir.
Q
In relation to your buy and sell business, Mr. witness, how many clients have
you had since you started?
A
xxx

Since I started in 1985, I have [had] almost 30 to 50 clients, sir.

xxx

xxx

Will you inform the Court, Mr. [W]itness, how are you found by your clients?

I advertise it in the newspapers, sir.

And what is the frequency of this advertisement in the newspapers?

One whole week in every month, sir.

Q
Let us go specifically [to] the real estate mortgage, Mr. [W]itness, which has
relation to this case. Will you inform the Court how you go about this business,
meaning, if you have any procedure that you follow?
A
As soon as my client go[es] to our house, I usually give them the
requirements, sir.
Q

And what are these requirements?

A
I usually require them to submit to me at least a machine copy of the title, the
location plan with vicinity, the real estate tax, the tax declaration, the picture of the
property and the Res. Cert. of the owner, sir.
Q

And when these documents are given to you, what else do you do, if any?

A
When they present to me the machine copy, I require them to visit the place
for the ocular inspection for the appraisal of the property, sir.
Q

What other steps, if any?

A
After that ocular inspection, sir, appraising the property, I usually tell them to
come back after one week for verification of the title in the Register of Deeds, sir.
Q
Will you inform the Court how you verif[ied] the title with the Register of
Deeds?
A

I got a certified true copy from the Register of Deeds, sir.

Certified true copy of what, Mr. witness?

The owner's duplicate title [to] the property, sir.

Will you inform the Court why you asked for these documents?

To see to it that the title [was] genuine, sir.

xxx

xxx

xxx

Q
You mentioned Residence Certificate. Why did you ask for a Residence
Certificate?
A

To fully identify the alleged owner, sir.

Q
So, when the machine copies of these documents x x x were given to you [as
you said], what did you do next, if any?
A
x x x [O]cular inspection, sir, that is my standard procedure. After they gave
me all the requirements, we usually go there for the ocular inspection for the
appraisal of the property, sir.
Q

So, you went to the house itself?

Yes, sir.

Did you go there alone or were you with somebody else?

A
With the[ir] group x x x, sir, the one [which] came to our house. The two of
them were Marilou Macanaya and Angelina Salvador.
Q

And when you went to the house, what did you see?

A
I saw a man there x x x who posed as Guillermo Adriano and gave me all the
original copies of the requirements, sir.
Q

Did you get to enter the house?

A
As an architect, as soon as I [saw] the house, I already knew what [was] the
appraisal, sir, and I knew already the surroundings of the property.
Q

So, you did not need to go inside the house?

Inside the house, not anymore, sir, we talked only inside the property.

Q
And this person who gave you the original documents is the owner of the
house?
A

I assumed it, sir, [that] he [was] the owner."23 (Emphasis supplied)

On cross[-]examination, he made a clarification:

"Q

Mr. Pangilinan, will you state again what business are you engaged [in]?

A
First, as an Architect, I do design and build and as a businessman, I do the buy
and sell of real properties and engag[e] in mortgage contract, sir.
Q
Actually, it is in the mortgage business that you practically have the big bulk
of your business. Isn't it?

Yes, sir."24

It is quite clear from the testimony of respondent that he dismally failed to verify
whether the individual executing the mortgage was really the owner of the property.
The ocular inspection respondent conducted was primarily intended to appraise the
value of the property in order to determine how much loan he would grant. He did
not verify whether the mortgagor was really the owner of the property sought to be
mortgaged. Because of this, he must bear the consequences of his negligence.
In Uy v. CA,25 the Court through Mr. Justice Jose A. R. Melo made the following
significant observations:
"Thus, while it is true, as asserted by petitioners, that a person dealing with
registered lands need not go beyond the certificate of title, it is likewise a wellsettled rule that a purchaser or mortgagee cannot close his eyes to facts which
should put a reasonable man on his guard, and then claim that he acted in good
faith under the belief that there was no defect in the title of the vendor or
mortgagor. His mere refusal to face up to the fact that such defect exists, or his
willful closing of his eyes to the possibility of the existence of a defect in the
vendor's or mortgagor's title, will not make him an innocent purchaser for value, if it
afterwards develops that the title was in fact defective, and it appears that he had
such notice of the defect as would have led to its discovery had he acted with the
measure of precaution which may be required of a prudent man in a like
situation."26
Indeed, there are circumstances that should put a party on guard and prompt an
investigation of the property being mortgaged. Citing Torres v. CA,27 the Court
continued as follows:
"x x x [T]he value of the property, its principal value being its income potential in
the form of monthly rentals being located at the corner of Quezon Boulevard and
Raon Street, Manila, and the registered title not yielding any information as to the
amount of rentals due from the building, much less on who is collecting them, or
who is recognized by the tenants as their landlord - it was held that any prospective
buyer or mortgagee of such a valuable building and land at the center of Manila, if
prudent and in good faith, is normally expected to inquire into all these and related
facts and circumstances. For failing to conduct such an investigation, a party would
be negligent in protecting his interests and cannot be held as an innocent purchaser
for value."28
We are not impressed by the claim of respondent that he exercised due diligence in
ascertaining the identity of the alleged mortgagor when he made an ocular

inspection29 of the mortgaged property. Respondent's testimony negated this

assertion.
"Q
Now you told me also that you conducted an ocular inspection o[f] the
premises. How many times did you do it?
A

Once, sir.

Who were with you when you went there?

The same group of them, sir.

How long did you stay in the premises?

I think 5 to 10 minutes, sir.

And did you see any people inside the premises where you visited?

Yes, sir.

Did you ask these persons?

They told me that. . .

Did you ask these persons whom you saw in the premises?

No, sir.

And what x x x did you [just] do when you inspected the premises?

xxx

xxx

xxx

A
When I arrived in the property, that house, the alleged owner told me that the
one staying at his house were just renting from him, sir.
xxx

xxx

xxx

Q
Again, Mr. Pangilinan, my question to you is, what did you do when you
arrived in the premises in the course of your ocular inspection?
Atty. Garcia:
Already answered.

Court:
You may answer.
A
When I arrived at that place, I just looked around and as an Architect, I [saw]
that I [could] appraise it just [by] one look at it, sir.
Atty. Amado:
Q

And after that, where did you go? Where did you and this group go?

A
Just inside the property, sir. We talked [about] how much [would] be given to
them and I told them this [was] only the amount I [could] give them, sir."30
(Emphasis supplied)
Since he knew that the property was being leased, respondent should have made
inquiries about the rights of the actual possessors. He could have easily verified
from the lessees whether the claimed owner was, indeed, their lessor.
Petitioner's act of entrusting and delivering his TCT and Residence Certificate to
Salvador was only for the purpose of helping him find a money lender. Not having
executed a power of attorney in her favor, he clearly did not authorize her to be his
agent in procuring the mortgage. He only asked her to look for possible money
lenders. Article 1878 of the Civil Code provides:
"Art. 1878. Special powers of attorney are necessary in the following cases:
xxx

xxx

xxx

(7) To loan or borrow money, unless the latter act be urgent and indispensable for
the preservation of the things which are under administration;
xxx

xxx

xxx

(12) To create or convey real rights over immovable property;

xxx

xxx

x x x."

As between petitioner and respondent, we hold that the failure of the latter to verify
essential facts was the immediate cause of his predicament. If he were an ordinary
individual without any expertise or experience in mortgages and real estate
dealings, we would probably understand his failure to verify essential facts.
However, he has been in the mortgage business for seven years. Thus, assuming
that both parties were negligent, the Court opines that respondent should bear the

loss. His superior knowledge of the matter should have made him more cautious
before releasing the loan and accepting the identity of the mortgagor.31
Given the particular circumstances of this case, we believe that the negligence of
petitioner is not enough to offset the fault of respondent himself in granting the
loan. The former should not be made to suffer for respondent's failure to verify the
identity of the mortgagor and the actual status of the subject property before
agreeing to the real estate mortgage. While we commiserate with respondent -- who
in the end appears to have been the victim of scoundrels -- his own negligence was
the primary, immediate and overriding reason that put him in his present
predicament.1wphi1.nt
To summarize, we hold that both law and equity favor petitioner. First, the relevant
legal provision, Article 2085 of the Civil Code, requires that the "mortgagor be the
absolute owner of the thing x x x mortgaged." Here, the mortgagor was an impostor
who executed the contract without the knowledge and consent of the owner.
Second, equity dictates that a loss brought about by the concurrent negligence of
two persons shall be borne by one who was in the immediate, primary and
overriding position to prevent it. Herein respondent who, we repeat, is engaged in
the business of lending money secured by real estate mortgages could have easily
avoided the loss by simply exercising due diligence in ascertaining the identity of
the impostor who claimed to be the owner of the property being mortgaged. Finally,
equity merely supplements, not supplants, the law. The former cannot contravene
or take the place of the latter.
In any event, respondent is not precluded from availing himself of proper remedies
against Angelina Salvador and her cohorts.
WHEREFORE, the Petition is GRANTED and the assailed Decision SET ASIDE. The
November 25, 1993 Decision of the RTC of San Mateo, Rizal (Branch 76) is hereby
REINSTATED. No costs.
SO ORDERED.

v.
vi.
vii.
viii.
ix.

Memorandum of Encumbrances (Sec. 54)

Contents of Voluntary Instrument (Sec. 55)
Primary Entry Book(Sec. 56)
Conveyances and Tranfers Sections (Sec. 57-59)
Real Estate Mortgage (Sec. 60)
1.REM Definition

[G.R. Nos. 115981-82. August 12, 1999]

RUBEN LAGROSA, petitioner, vs. COURT OF APPEALS, SPOUSES ROMULO &
EVELYN A. BANUA, and CESAR OROLFO, respondents.
DECISION
GONZAGA-REYES, J.:
Petitioner seeks to review and set aside the Decision[1] of respondent Court of
Appeals dated January 7, 1994 affirming the July 12, 1993 decision of the Regional
Trial Court of Manila (Branch 42) in Civil Case No. 93-65646 (CA-G.R. SP No. 31683);
and reversing the decision dated March 15, 1993 of the Regional Trial Court of
Manila (Branch 12) in Civil Case No. 92-62967 (CA-G.R. SP No. 32070). The two
petitions for review of two (2) conflicting decisions rendered by two different
branches of the Regional Trial Court of Manila in ejectment suits involving the same
parties and property were consolidated before the Court of Appeals upon motion of
one of herein respondents, Cesar Orolfo. The consolidation was granted considering
the property involved is one and the same in both petitions and Ruben Lagrosa,
petitioner in CA-G.R. SP No. 31683 is the same Ruben Lagrosa, who is the private
respondent in CA G. R. SP No. 32070; in the same manner that Evelyn Arizapa
Banua is the private respondent in CA-G. R. SP No. 31683 while Cesar Orolfo who is
the caretaker of the subject property representing Evelyn Arizapa Banua, is the
petitioner in CA-G. R. SP No. 32070.[2]
Both petitions involve the possession of sixty-five (65) square meters of residential
lot located in Paco, Manila, originally owned by the City of Manila which, in due
course, following its land and housing program for the under-privileged, awarded it
to one Julio Arizapa who constructed a house and upholstery shop thereon. The
award was in the nature of a Contract to Sell payable monthly for a period of
twenty (20) years. Julio Arizapa is the predecessor-in-interest of respondent Evelyn
Arizapa Banua in CA-G.R. SP No. 31683, while Cesar Orolfo, petitioner in CA-G.R. SP
No. 32070, is the caretaker of the same subject property as authorized and
appointed by Evelyn Arizapa Banua, in whose name Transfer Certificate of Title No.
197603 covering the said property is registered. Cesar Orolfo, as aforestated,
represented Evelyn Arizapa Banua, in CA-G.R. SP No. 32070.[3]
As found by the trial court, the title of respondent Evelyn Arizapa Banua to the
subject property is evidenced by the Deed of Sale executed by the City of Manila
in her favor and the Transfer Certificate of Title No. 197603, issued to her by the
Register of Deeds of Manila.[4] Respondent Evelyn Arizapa Banua derived her title
as follows: Before Julio Arizapa could make the full payment for the said lot, he died
on January 20, 1987, intestate, at the age of 67 and was survived by his wife, Josefa
Albaytar Arizapa and children[5] His wife Josefa Alabaytar Arizapa died intestate on
January 21, 1988. On February 17, 1988, Evelyn Arizapa and her brothers and

sisters executed a Deed of Extrajudicial Partition adjudicating unto themselves as

the sole heirs of the deceased, the aforesaid lot and a Renunciation in favor of
Evelyn Arizapa under which they renounced and waived all their rights over the
aforesaid lot in favor of Evelyn Arizapa. The Notice of Extrajudicial Settlement of
Estate of Deceased Julio Arizapa and Josefa Albaytar was duly published in the
BALITA in its March 4, 11 and 18, 1988 issues. On March 22, 1988, the heirs of
Julio Arizapa wrote a letter to the City of Manila, through the City Tenants Security
Committee, requesting that the award of said lot be placed under the name of
Evelyn Arizapa based on said Deed of Extrajudicial Partition and the
Renunciation. On December 26, 1988, the Committee approved the request by
Resolution. On January 8, 1990, Evelyn Arizapa paid the amount of P29,500.00 to
the City of Manila which constituted the full payment of the lot for which Evelyn
Arizapa was issued Official Receipt No. 738608 by the City Treasurer. On April 8,
1991, the City of Manila executed a Deed of Sale over the lot in favor of Evelyn
Arizapa and, on the basis thereof, Transfer Certificate of Title No. 197603 was issued
to Evelyn Arizapa.
Petitioner Ruben Lagrosa claims to be the lawful possessor of the subject property
by virtue of the Deed of Assignment of Real Estate Mortgage executed in his favor
by Presentacion Quimbo on the basis of a Contract of Real Estate Mortgage
executed by Julio Arizapa in favor of the latter. Lagrosa posits that he cannot be
evicted from the subject property because he had prior possession as assignee of
the said Assignment of Real Estate Mortgage executed by Presentacion Quimbo in
his favor, and with the consent of Mauricia Albaytar, the sister of the deceased
Josefa Albaytar Arizapa, after the demise of the spouses Julio Arizapa and Josefa
Albaytar.
The first petition (CA-G.R. SP No. 31683) sought the review of the decision rendered
by the Regional Trial Court of Manila, Branch 49, with the Honorable Romeo J. Callejo
presiding in Civil Case No. 93-65646 entitled Spouses Romulo and Evelyn ArizapaBanua, plaintiffs-appellees, vs. Ruben Lagrosa, et al., defendants-appellants,
affirming in toto the judgment dated March 24, 1993 of the Metropolitan Trial Court
of Manila, Branch 2, the dispositive portion of which reads:
WHEREFORE, judgment is rendered for the PLAINTIFFS.
The DEFENDANTS and all other persons claiming rights under them are hereby
ordered:
(a)

To vacate the land covered by T.C.T. No. 197603 situated in Paco, Manila;

(b)
To pay the amount of P1,000.00 per month as reasonable compensation for
the use and enjoyment of the premises, from the filing of this complaint until
possession is restored to the plaintiffs;

(c)

To pay the amount of P2,000.00 as attorneys fees; and costs of suit.

SO ORDERED. (Rollo, 73-74)[6]

The second petition (CA-G.R. SP No. 32070) sought the review of the decision
rendered on March 15, 1993 by the Regional Trial Court of Manila, Branch 12, with
the Honorable Edgardo Sundiam presiding in Civil Case No. 92-62967 entitled
Ruben Lagrosa, plaintiff, versus, Cesar Orolfo, defendant, affirming in toto on
appeal the judgment of the Metropolitan Trial Court of Manila, Branch 5, the
dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the
plaintiff and against the defendant Cesar Orolfo ordering the said defendant and all
the persons claiming rights under him to vacate the leased premises located at
1765 La Purisima Concepcion, Pedro Gil, Paco, Manila; ordering the Defendant to
pay the plaintiff the sum of P5,950.00 representing the arrears in monthly rental
from October 1989 up to February 1991; ordering the defendant to pay the monthly
rental of P350.00 starting March 1991 until the defendant actually vacates the
leased premises in question and, ordering the defendant to pay plaintiff the sum of
P5,000.00 as attorneys fees plus the costs of suit.[7]
In sum, in Civil Case No. 93-65646 (subject of CA-G.R. SP No. 31683), the trial court
upheld the rightful possession of Evelyn Arizapa Banua over the subject lot and
accordingly ordered the immediate execution of its judgment against Ruben
Lagrosa, et al. On the other hand, in Civil Case No. 92-62967 (subject of CA-G.R. SP
No. 32070), the trial court opined that a preponderance of evidence tilted on the
side of Ruben Lagrosa and gave judgment in his favor, all because defendant
therein, Cesar Orolfo, through utter negligence of his former counsel, failed to
submit countervailing evidence on time, i.e. prior to the rendition of judgment by
the Metropolitan Trial Court.[8]
After a careful review of the records, the respondent Court of Appeals proceeded to
determine which of the two conflicting decisions should be sustained and given
effect, the decision in Civil Case No. 93-65646 in favor of Evelyn Arizapa Banua, or
the decision in Civil Case No. 92-62967 in favor of Ruben Lagrosa. The controlling
operative facts as found by the respondent Court of Appeals are:
1. The subject property involved in both petitions is more particularly described as
Lot No. 2, Block No. 29 of the former Fabmar Estate owned by the City of Manila.
Subject property contains an area of 65 square meters.
2. On June 24, 1977, the City of Manila awarded said lot to Julio Arizapa under its
land for the landless program. It was payable in monthly installments for a period
twenty (20) years.

3. Julio Arizapa obtained a loan of P17,000.00 from one Presentacion B. Quimbo and
he executed on August 2, 1985 a Contract of Real Estate Mortgage of his right over
the subject property in favor of the latter. He failed to pay his loan and on top of
which he borrowed more from Presentacion Quimbo until his account reached
P28,000.00.
4. Julio Arizapa died intestate on January 20, 1987, leaving no other property
except the lot in question. Meanwhile, his wife Josefa Albaytar, on account of her
deteriorating health, borrowed P40,000.00 from Ruben Lagrosa, for which she
executed a deed mortgaging her one-half right to the lot. When Quimbo was poised
to foreclose the mortgage, Albaytar convinced her to execute instead a Deed of
Assignment of Mortgage in favor of Ruben Lagrosa for a certain consideration, which
she did.
5. Josefa Albaytar died on January 21, 1988. For her burial expenses, Mauricia
Albaytar sister of the deceased, borrowed P65,000.00 from Ruben Lagrosa. In the
meantime, Ruben Lagrosa with the permission of Mauricia Albaytar, allowed his
relatives, to occupy and take possession of the subject property. Ruben Lagrosa
himself was never in actual physical possession or occupation of the property.
6. Thus, the tenuous claim of Ruben Lagrosa over the subject property rests on the
Deed of Assignment of Mortgage executed by Presentacion B. Quimbo in his favor.
This deed of assignment was correctly declared illegal by the Honorable Romeo
Callejo in SP No. 31683. It was declared illegal for the simple reason that the Deed
of Mortgage executed by the late Julio Arizapa in favor of Presentacion D. Quimbo
was fatally defective in that the property subject thereof was still owned by the City
of Manila when said deed of mortgage was executed.
7. Concerning the issue of possession of the subject property, the rightful
possession thereof of Evelyn Arizapa Banua is traceable to the possession of the
City of Manila, then to her father Julio Arizapa; whereas, the possession claimed by
Ruben Lagrosa is founded on that illegal Deed of Assignment of Mortgage (which
was not even notarized), and the permission given him by Mauricia Albaytar after
the death of her sister Josefa Albaytar, a permission which derives no legal authority
or validity because Mauricia, apart from her being a sister of the deceased, was not
and has never been appointed as a legal representative or administratrix of the
deceased spouses.[9]
In light of the foregoing, the respondent Court of Appeals affirmed the decision of
the Regional Trial Court of Manila (Branch 49) in Civil Case No. 93-65646 finding for
spouses Romulo and Evelyn Arizapa Banua. The dispositive portion of said decision
reads:

WHEREFORE, considering that respondent court has committed no error of law or

fact in the decision under review, the same is affirmed and the petition is hereby
DISMISSED. Costs against petitioner.[10]
On the other hand, the respondent Court of Appeals reversed the decision of the
Regional Trial Court of Manila (Branch 12) in Civil Case No. 92-62967 which ruled in
favor of Ruben Lagrosa. The dispositive portion of said decision reads:
WHEREFORE, the decision under review in SP No. 32070 is reversed and set aside,
and another one is hereby entered dismissing the complaint for ejectment against
petitioner Cesar Orolfo. Accordingly, the writ of execution and notice to vacate
issued by respondent court in Civil Case No. 92-12917[11] are hereby declared null
and void and set aside. Costs against private respondents.[12]
Thus, the conflict between the two decisions as to who is entitled to the possession
of the subject property, Ruben Lagrosa on the one hand, or Evelyn Arizapa-Banua on
the other, with Cesar Orolfo merely representing the latter in Civil Case No. 9262967, was resolved.
Hence, the instant petition on grounds that may be summarized as follows: (1) that
the respondent Court of Appeals erred in declaring the Contract of Real Estate
Mortgage and the Assignment of Mortgage as illegal; (2) that the respondent
Court of Appeals erred in upholding the validity of Transfer Certificate of Title No.
197603 in the name of Evelyn Arizapa Banua despite the fact that Josefa Arizapa
was the only legal wife of Julio Arizapa and that they were childless; (3) that the
respondent Court of Appeals erred in declaring that Cesar Orolfo was appointed
caretaker of the subject property and that he was not given a chance to present his
evidence before the lower court.
The petition is bereft of merit.
The only issue to be resolved in ejectment cases is the question as to who is
entitled to the physical or material possession of the premises or possession de
facto.[13] In the event the issue of ownership is raised in the pleadings, such issue
shall be taken up only for the limited purpose of determining who between the
contending parties has the better right of possession.[14] As it were, herein
petitioner Ruben Lagrosa also filed before the Regional Trial Court of Manila (Branch
32), in Civil Case No. 90-55315 entitled Ruben Lagrosa, versus, City Tenants
Security Committee, represented by its Chairman, Hon. Gemiliano Lopez, Jr.,
Intestate Estate of Julio Arizapa represented by Mauricia Albaytar, Evelyn Arizapa
Banua and Register of Deeds of Manila, a Complaint for Foreclosure of the Real
Estate Mortgage, Annulment of Awards with Damages, and Cancellation of Title and
Reconveyance of Real Property.[15]

As mentioned earlier, petitioner Lagrosa claims to be the lawful possessor of the

subject property by virtue of the Deed of Assignment of Real Estate Mortgage
executed by Julio Arizapa in favor of the latter. Lagrosa posits that he cannot be
evicted from the subject property because he had prior possession as assignee of
the said Assignment of Real Estate Mortgage executed by Presentacion Quimbo in
his favor, and with the consent of Mauricia Albaytar, the sister of the deceased
Josefa Albaytar Arizapa, after the demise of the spouses Julio Arizapa and Josefa
Albaytar.
On the other hand, Evelyn Arizapa Banuas title to the property is evidenced by a
Deed of Sale executed by the City of Manila in her favor and the Transfer
Certificate of Title No. 197603 issued to her by the Register of Deeds. Evelyn
Arizapa Banua sought to evict Lagrosa from the subject property citing, among
others, the need to repossess the property for her own personal use.
We agree with the respondent Court of Appeals that petitioner Lagrosas right to
possess the subject property is clearly inferior to or inexistent in relation to Evelyn
Arizapa Banua.
As correctly held by the lower courts, the Deed of Real Estate Mortgage executed
by Julio Arizapa is null and void, the property mortgaged by Julio Arizapa being then
owned by the City of Manila under Transfer Certificate of Title No. 91120. For a
person to validly constitute a valid mortgage on real estate, he must be the
absolute owner thereof as required by Article 2085 of the Civil Code of the
Philippines.[16] Since the mortgage to Presentacion Quimbo of the lot is null and
void, the assignment by Presentacion Quimbo of her rights as mortgagee to Lagrosa
is likewise void. Even if the mortgage is valid as insisted by herein petitioner, it is
well-settled that a mere mortgagee has no right to eject the occupants of the
property mortgaged.[17] This is so, because a mortgage passes no title to the
mortgagee. Indeed, by mortgaging a piece of property, a debtor merely subjects it
to lien but ownership thereof is not parted with.[18] Thus, a mortgage is regarded
as nothing more than a mere lien, encumbrance, or security for a debt, and passes
no title or estate to the mortgagee and gives him no right or claim to the possession
of the property.
Petitioner Lagrosa now contends that what was mortgaged by Julio Arizapa in favor
of Presentacion Quimbo was his right as an awardee over the homelot in question,
and not the homelot itself." Petitioner would have this Court uphold the validity and
legality of the mortgage over the right as an awardee rather than the homelot
itself. The agreement between the City of Manila and Julio Arizapa was in the nature
of a contract to sell, the price for the lot being payable on installment for a period
of twenty (20) years which could yet prevent, such as by the non-fulfillment of the
condition, the obligation to convey title from acquiring any obligatory force.[19]

Hence, there is no right as awardee to speak of, and there is no alienable interest
in the property to deal with.
The further allegation in petitioners memorandum that Evelyn Arizapa Banua is not
the lawful owner of the lot and residential house in question because the
Extrajudicial Partition and the Renunciation on the basis of which the Deed of
Sale was executed by the City of Manila and the Transfer Certificate of Title No.
197603 was issued, are all falsified because Julio Arizapa and Josefa Albaytar
Arizapa were childless up to their demise deserves no prolonged consideration,
being factual in nature. Factual findings of the Court of Appeals are conclusive on
the parties and carry even more weight when said court affirms the factual findings
of the trial court.[20] We quote the following findings of the trial court as adopted by
the respondent Court of Appeals, to wit:
The Court cannot accord its imprimatur to the stance of the Defendants-Appellants.
As borne by the evidence of the Plaintiff-Appellee, Julio Arizapa and Bernardita Iigo
Arizapa were married on May 9, 1963 in Manila (Exhibit GG). Julio Arizapa, during
his lifetime, wrote a letter to the Plaintiff-Appellee and her brothers and sisters and
addressing them as his children, thus:
Mahal kong mga anak magmahalan kayong mabuti at magtulungan habang buhay.
Ala-ala ko kayo kailan mang.
-Exhibit RR.
The bare fact that, after the demise of Bernardita Iigo Arizapa in 1984, Julio Arizapa
and Josefa Albaytar lived together as husband and wife but bore no children does
not necessarily mean that Julio Arizapa was incapable of procreation. Indeed, there
is persuasive authority to the effect that it is presumed in the absence of evidence
to the contrary, that a male person of mature years, is capable of sexual intercourse
and procreation, even though he has reached a very advanced age (Francisco, The
Revised Rules of Court in the Philippines, Volume VII, Part II, at pages 142-143, citing
Love versus Mcdonald, 148 S.W. 2d. 170, 201 Ark. 882). While it is true in their
Extrajudicial Partition, the Plaintiff-Appellee and her brothers and sisters called
Julio Arizapa and Josefa Arizapa, as their parents, however, this is not unusual
because, after all, after the demise of Bernardita Iigo, Josefa Albaytar and Julio
Arizapa lived together as husband and wife and, in the process, the PlaintiffAppellee must have considered Josefa Albaytar as their step-mother in deference
and out of respect to their father. (Resolution, at page 348, Records).[21]
Moreover, it is a well-known doctrine that the issue as to whether title was procured
by falsification or fraud as advanced by petitioner can only be raised in an action
expressly instituted for the purpose. Torrens title can be attacked only for fraud,
within one year after the date of the issuance of the decree of registration. Such

attack must be direct, and not by a collateral proceeding.[22] The title represented
by the certificate cannot be changed, altered, modified, enlarged, or diminished in a
collateral proceeding.[23] Thus, the arguments of petitioner Lagrosa in the
ejectment suit are misplaced.
As to Lagrosas prior possession of the subject property, their stay in the property as
correctly found by the respondent Court of Appeals was by mere tolerance or
permission. It is well-settled that a person who occupies the land of another at the
latters tolerance or permission, without any contract between them, is necessarily
bound by an implied promise that he will vacate upon demand, failing which, a
summary action for ejectment is the proper remedy against him.[24] The trial court
rationalized thus:
On the other hand, the possession of the Plaintiff-Appellee retroacted to the
possession of the City of Manila of the property in question because the PlaintiffAppellee merely stepped into the shoes of the owner of the property when she
purchased the said property from the City of Manila and thus may cause the
eviction of the Defendants-Appellants from said property (Caudal versus Court of
Appeals, et al., 175 SCRA 798).
It must be borne in mind that, as mere assignee of the mortgage rights of
Presentacion Quimbo, the Defendant-Appellant is not entitled to the physical
possession of the mortgaged property. The same is true even if the DefendantAppellant was himself the mortgagee. In point of fact, during the lifetime of Julio
Arizapa and Josefa Albaytar, they had possession of the property. The DefendantAppellant managed to take possession of the property only because of the alleged
consent thereto by Mauricia Albaytar, who was merely the sister of Josefa Albaytar.
By then, the couple, Julio Arizapa and Josefa Albaytar were already dead. Mauricia
Albaytar thus had no lawful authority to allow anybody to enter into and occupy the
property. There is no evidence in the records that Mauricia Albaytar had been
appointed by any Court as the Administratrix of the estate of the Spouses.[25]
By Lagrosas own admission, he is merely an assignee of the rights of the
mortgagee of the lot and that, consequently, the respondent Court of Appeals
correctly ruled that the only right of action of Lagrosa as such assignee of the
mortgagee, where the mortgagor is already dead, is that provided for in Section 7 of
Rule 86[26] and Section 5 of Rule 87[27] of the Rules of Court. Thus, the mortgagee
does not acquire title to the mortgaged real estate unless and until he purchases
the same at public auction and the property is not redeemed within the period
provided for by the Rules of Court.
The issues raised by petitioner in CA G. R. SP No. 32070 that the respondent Court
of Appeals erred in declaring Cesar Orolfo as the caretaker of the subject property
and that he was not given a chance to present his evidence before the lower courts

are also factual. The jurisdiction of this court is limited to reviewing errors of law
unless there is a showing that the findings complained of are totally devoid of
support in the record or that they so glaringly erroneous as to constitute serious
abuse of discretion.[28] We find no such showing in this case. More importantly,
whether Cesar Orolfo is the caretaker of the property as appointed by Evelyn
Arizapa Banua and the representative of the latter is now beside the point. As was
discussed by this Court, petitioner Ruben Lagrosas right to possess the subject
property is clearly inexistent in relation to herein respondent Evelyn Arizapa Banua.
WHEREFORE, the joint decision of the Court of Appeals in CA-G.R. SP Nos. 31683
and 32070 promulgated on January 7, 1994 is AFFIRMED in toto.
SO ORDERED.
3.Registration (Sec. 61)
4. Rights of innocent Mortgagee for Value
a. General rule
b. Banks

G.R. No. 142015. April 29, 2003]

RURAL BANK OF STA. IGNACIA, INC., petitioner, vs. PELAGIA DIMATULAC,
GLORIA DIMATULAC, NORA M. VDA. DE GRACIA AND ANTONIO NUQUI,
respondents.
DECISION
QUISUMBING, J.:
Before us is a petition for review on certiorari seeking to set aside the decision[1] of
the Court of Appeals, dated November 26, 1999, in CA-GR SP No. 52157, which
dismissed the petitioners petition for review to set aside the decision[2] of the
Regional Trial Court (RTC) of Tarlac City, Branch 64, in Civil Case No. 8670. The RTC
affirmed the decision[3] of the Municipal Trial Court (MTC) of Tarlac City, Branch 2,
dismissing herein petitioners complaint for unlawful detainer and damages against
respondents.
Before the MTC, petitioner had filed what appeared to be a simple ejectment case,
but as found out by the Court of Appeals, the parcel of land subject of the dispute
has a long and convoluted history, to wit:
Back in August 17, 1965, Prudencia Reyes purchased from the now defunct Rural
Progress Administration (RPA), an 800-square meter parcel of land identified as Lot
11, Block 8 of the Subdivision Plan, Psd-24941 located in Barrio Suizo and Barrio San
Rafael, Tarlac, Tarlac. As a result of the purchase, TCT No. 65765 was issued in her

favor. However, the deed of sale in favor of Reyes was later cancelled by the
Department of Agrarian Reform (DAR) by reason of her non-occupancy of said
property, and made the land available for distribution to the landless residents of
San Rafael.
In 1971, respondents took possession of the property and were allocated portions of
200 square meters each. They paid the purchase price and awaited their
Emancipation Patent titles.
Despite her knowledge that the land had reverted to the government, Reyes sold
the property to the spouses Maximo Valentin and Retina Razon in a Deed of Sale
dated April 4, 1973. The spouses thereafter obtained TCT No. 106153 thereon. On
finding, however, that respondents were in possession of the property, Valentin and
Razon filed a complaint for recovery and damages against respondents, docketed as
Civil Case No. 6152, with the Regional Trial Court of Tarlac, Tarlac. The Republic of
the Philippines intervened in said case and along with respondents, contending that
the title of the spouses was null and void, because the sale by Reyes was in
violation of the terms and conditions of sale of the lot by the RPA to Reyes.
The trial court decided in favor of the spouses Maximo Valentin and Retina Razon.
But on appeal, the appellate court in CA-G.R. CV No. 14909, entitled Spouses
Maximo E. Valentin and Retina Razon v. Sps. Ricardo Garcia and Mona Macabili, et
al., reversed the judgment, cancelled the title of the spouses, and decreed the
reversion of the property to the government for disposition to qualified
beneficiaries. The decision of the Court of Appeals in CA-G.R. CV No. 14909 dated
August 31, 1990, attained finality on September 22, 1990, as per entry of judgment
dated February 22, 1991.
Meanwhile, on February 15, 1987, or during the pendency of CA-G.R. CV No. 14909,
Razon, through her attorney-in-fact, mortgaged the property to petitioner rural bank
to secure a loan of P37,500.00. The property was subsequently extra-judicially
foreclosed when Razon failed to pay the loan and on October 20, 1987, petitioner
purchased the property. TCT No. 330969 dated May 11, 1989 was accordingly
issued to herein petitioner.
On March 4, 1997, petitioner filed a complaint for unlawful detainer and damages
with the MTC of Tarlac, Tarlac, docketed as Civil Case No. 6367. Petitioner alleged
that respondents were occupying the property by mere tolerance as they had no
contract of lease with it, nor right or claim annotated on its title. It also averred that
it had advised respondents of its purchase of the property and had demanded that
respondents vacate the same, but its notice went unheeded.
Respondents in their Answer claimed that they had been occupants of the land
since 1971 and had been awarded as beneficiaries by the government after the

titles of Reyes and Razon were nullified. They also maintained that the lots had
been reverted to the government by virtue of the final and executory judgment in
CA-G.R. CV No. 14909.[4]
On April 6, 1998, the municipal court decided Civil Case No. 6367 in this wise:
WHEREFORE, premises considered, the instant case is hereby dismissed for want of
jurisdiction. The counter-claim is likewise dismissed for lack of jurisdiction to grant.
No pronouncement as to costs.
SO ORDERED.[5]
In dismissing the complaint, the MTC found that the possession of respondents was
not by mere tolerance but as lawful beneficiaries. It also declared that it had no
jurisdiction over the case as it involved the issue of ownership. The court noted that
the respondents were lawful beneficiaries of a government land grant while
petitioner was not a purchaser in good faith and hence, could not avail of the
protective mantle of the indefeasibility of Torrens Title. It concluded that its
competence to decide the case was limited only to addressing the question of
ownership in order to determine the issue of de facto possession.[6]
Petitioner then elevated the matter to the RTC of Tarlac City, Branch 64 in Civil Case
No. 8670. The RTC ruled on the appeal as follows:
ACCORDINGLY, above premises all considered, this Court hereby affirms the lower
courts Judgment, dated April 6, 1998, dismissing the case. With costs against
appellant.
SO ORDERED.[7]
In affirming the judgment of the municipal court, the RTC ruled that petitioner could
not eject respondents from said property as: (1) there was no legal relationship, e.g.
such as a lease agreement or otherwise, between them that has expired or
terminated; (2) respondents possession was not through the tolerance of petitioner;
(3) respondents were in possession of the lot as lawful/rightful possessors, vis-a-vis
their status as occupants-beneficiaries of the DAR, previously RPA. Therefore,
respondents had a better right to possession as against petitioner rural bank.[8]
Petitioner then moved for reconsideration, but this was likewise denied by the RTC
in its Order dated March 15, 1999.[9]
Petitioner then filed a petition for review on certiorari with the Court of Appeals,
docketed as CA-G.R. SP No. 52517. The appellate court, however, dismissed the
petition and ruled that the possession of respondents was not by mere tolerance but

by lawful mandate of the law and by virtue of its final judgment in CA-G.R. CV No.
14909, thus:
WHEREFORE, the petition at bench is hereby DISMISSED. Without costs.
SO ORDERED.[10]
Hence, the instant recourse to this Court premised on the following issues:
1. WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT CONSIDERING THAT
PETITIONERS OWNERSHIP OVER THE PROPERTY IN LITIGATION WAS ACQUIRED
THRU AN EXTRAJUDICIAL FORECLOSURE SALE;
2. WHETHER OR NOT THE COURT OF APPEALS ERRED IN APPLYING THE DECISION IN
C.A.-G.R. CV NO. 14909 IN THE CASE AT BENCH;
3. WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT TREATING THE
POSITION PAPER OF THE RESPONDENTS AS A MERE SCRAP OF PAPER FOR HAVING
BEEN FILED FIFTEEN (15) DAYS LATE;
4. WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT CONSIDERING THAT
EXHIBITS MARKED ONLY DURING THE PRE-TRIAL SHOULD NOT BE TREATED AS
EVIDENCES.[11]
Worth noting, the issues raised by petitioner involve questions on procedure
premised on a very rigid and strict application of the Rules of Court. Petitioner
faults the appellate court for sustaining the liberal interpretation of the rules by the
trial court. However, this case springs from a complaint for unlawful detainer. In
forcible entry and detainer cases, which are summary in nature to minimize
disturbance of social order, procedural technicalities should be carefully avoided
and should not be allowed to override substantial justice.[12] The interest of
substantial justice is best served if both parties in a case like this are heard and
their respective claims considered through their respective pleadings and position
papers. A liberal interpretation of the technical rules, which does not subvert the
nature of the Rule on Summary Procedure nor defeat its objective of expediting the
adjudication of suits,[13] is not disfavored by this Court.
Coming to the issues as formulated by petitioner, we find that the only issue left for
our resolution is: Did the Court of Appeals commit a reversible error when it
dismissed the petition of the bank? In our view, it did not err when it sustained the
judgment of the regional trial court which earlier also sustained that of the
municipal trial court.

Petitioner contends that as the absolute and registered owner of the subject land as
a mortgagee-purchaser in a foreclosure sale it is entitled to possession of the land
as an attribute of ownership. Petitioner further argues that it cannot be faulted for
relying on the validity of Valentin and Razons title as it had checked and verified
the status of said title on file with the Register of Deeds and found that it was free
from any lien and encumbrance.[14] Further, petitioner submits that the decision of
the Court of Appeals in CA-G.R. No. 14909 cannot defeat its right to eject
respondents as it is not bound by the said judgment because petitioner was not
impleaded as a party therein. Moreover, according to petitioner when the decision
in CA-G.R. No. 14909 nullifying Razons title became final, said title was already
cancelled and another title already issued in favor of petitioner. For this reason,
petitioner insists the CA decision could not comprehend within its ambit petitioners
title to the land.
Respondents contend that petitioner could not properly raise in issue the question
of ownership in an action for unlawful detainer under the Rule on Summary
Procedure. Petitioner should seek the proper remedy through an ordinary civil
proceeding. Moreover, they argue that petitioner was totally negligent in its duty to
determine the propriety of accepting the property for a mortgage by the Valentin
and Razon spouses. Thus, it is estopped from claiming good faith. Further,
respondents add that since the title of Razon was declared null and void, petitioner
as the successor-in-interest acquired no rights of ownership over the land it
purchased through public auction.
In ejectment cases the question is limited to which party among the litigants is
entitled to the physical or material possession of the premises, that is to say, who
should have possession de facto.[15] Settled is the rule, however, that in an
ejectment case, the assertion by a defendant of ownership over the disputed
property does not serve to divest an inferior court of its jurisdiction.[16] When the
defendant raises the defense of ownership and the question of possession cannot
be resolved without deciding the issue of ownership, the issue of ownership shall be
resolved for the purpose only of determining the issue of possession.[17] Said
judgment shall be conclusive with respect to the possession only, and shall in no
wise bind the title of the realty, or affect the ownership thereof. It shall not bar an
action between the same parties respecting title to the real property.[18] Only with
this understanding of that well-entrenched principle can we accept the ruling of the
municipal court in Civil Case No. 6367 that the case is dismissed for want of
jurisdiction.[19]
Petitioners contention that the final and executory judgment of the Court of
Appeals in CA-G.R. CV No. 14909 does not bind the bank, in our view, is devoid of
merit. Rule 39, Section 47 (b)[20] of the 1997 Rules of Civil Procedure, speaks of
conclusiveness of judgment as between the parties and their successors-in-interest
by title subsequent to the commencement of the action. In the present case,

petitioner herein derived its title from the Valentin and Razon spouses, after an
extrajudicial foreclosure sale. Under the law which permits a successor in interest
to redeem the property sold on execution, the term successor-in-interest includes
one to whom the debtor has transferred his statutory right of redemption; one to
whom the debtor has conveyed his interest in the property for the purpose of
redemption; or one who succeeds to the interest of the debtor by operation of law.
[21] Petitioner acquired its title while CA-G.R. CV No. 14909 was pending before the
Court of Appeals. To acquire title, the successor-in-interest must do so subsequent
to the commencement of the action, and not before such commencement.[22]
Having derived little from the Spouses Valentin and Razon, whose title was nullified
by the final and executory decision of the Court of Appeals in CA-G.R. CV No. 14909,
the petitioner cannot escape the effect of the appellate courts judgment in said
case. The rural bank as purchaser at an auction sale does not have a better right to
said property than their predecessors-in-interest, namely the Valentin and Razon
couple.
The rule that persons dealing with registered lands can rely solely on the certificate
of title does not apply to banks.[23] The degree of diligence required of banks is
more than that of a good father of a family; in keeping with their responsibility to
exercise the necessary care and prudence in dealing even with a registered or titled
property. The business of a bank is affected with public interest, holding in trust the
money of the depositors, which the bank should guard against loss due to
negligence or bad faith. For this reason, the bank is not allowed to rely merely on
the protective mantle of the land registration law, which is normally accorded only
to purchasers or mortgagees for value and in good faith.[24]
In the present case, while petitioner sent a representative to verify the original TCT
on file with the Registrar of Deeds, no ocular inspection of the premises took place.
Judicial notice may be taken of the common practice of banks, before approving a
loan, to send a representative to the premises of the land offered as collateral and
duly investigate who are the true owners thereof. Failure to do so is negligence on
the part of a bank.[25] Had petitioner taken extra steps, time and effort in dealing
with the property it purchased by conducting proper ocular inspection of the
premises, it could have discovered early the presence of settlers therein who are
land reform beneficiaries.
To capitulate, we find no reversible error in the decision of the Court of Appeals
sustaining those of the lower courts that the possession of respondents is not by
mere tolerance. Respondents possession springs from their right as lawful
beneficiaries of a government program, pursuant to law. Certainly, the decision of
the appellate court in CA G.R. CV No. 14909 binds not just the beneficiary but also
the bank as claimant of the land. In contrast, petitioners claim to possession of the
land emanates from a nullified and non-existing title of its predecessors-in-interest,
from which it cannot rely to eject the respondents from the premises.

WHEREFORE, the petition is DENIED. The decision of Court of Appeals, dated

November 26, 1999 in CA-G.R. SP No. 52157 as well as the Resolution dated
February 18, 2000, denying the Motion for Reconsideration are AFFIRMED. Costs
against petitioner.
SO ORDERED.

G.R. No. L-69622 January 29, 1988

LILIA Y. GONZALES, petitioner,
vs.
INTERMEDIATE APPELLATE COURT and RURAL BANK OF PAVIA, INC.,
respondents.

GANCAYCO, J.:
This is a petition for review on certiorari of the Decision of the Court of Appeals
dated November 15,1983, 1 affirming the decision of the trial court of July 16, 1975
2 dismissing the complaint for annulment of title and ordering plaintiff, herein
petitioner, to deliver possession of the property covered by said title and to account
for the produce thereof to defendant bank, private respondent herein.
The antecedent facts of this case as found by the Appellate Court are as follows:
The spouses Asuncion Sustiguer and Dioscoro Buensuceso were the original owners
of Lot No. 2161 of the Cadastral Survey of Barotac Nuevo, the property subject of
this controversy. For delinquency in the payment of the real estate taxes due
thereon, the land was sold at public auction to the Province of Iloilo in 1955.
Hortencia Buensuceso, daughter of said spouses, discovered in the office of the
Register of Deeds of Iloilo that the Certificate of Title of subject land, OCT No. 3351,
was still in the name of her parents. Hortencia paid the back taxes on the land in
behalf of her mother (who by that time was already separated in fact from her
father) in whose favor the Provincial Treasurer executed a deed of repurchase on
April 10, 1969. On April 17, 1969, the spouses Gaudioso Panzo and Hortencia
Buensuceso bought the land from the latter's mother for P1,000.00. Thereafter, the
spouses Panzo filed a petition in the Court of First Instance of Iloilo for the
reconstitution of the original certificate of title. On February 26,1971, a
reconstituted original certificate of title was issued in the name of Asuncion
Sustiguer alone. And by virtue of the sale of said property by Sustiguer to the
spouses Panzo, her title was cancelled and in lieu thereof TCT No. T-64807 was

issued by the Register of Deeds of Iloilo in the spouses' name on March 3, 1971. The
said spouses then mortgaged the property to respondent Rural Bank of Pavia for
P5,000.00. Upon their failure to pay the account, respondent bank foreclosed the
mortgage on August 11, 1973 and the bank was the highest bidder. A certificate of
sale was executed by the Provincial Sheriff in its favor.
On April 18, 1974, petitioner as judicial co-administratrix of the Intestate Estate of
the late Matias Yusay brought an action, against the spouses Panzo and the
respondent Rural Bank seeking the annulment and cancellation of the title in the
name of the Panzos and the issuance of a new title in favor of Yusay. In her
complaint, 3 petitioner alleged among other things: that the subject property was
first mortgaged to Yusay on April 30, 1929 by the spouses Sustiguer and
Buensuceso; that sometime November, 1934, said property was verbally sold to
Yusay by the same spouses; that since Yusay bought the property in 1948, he and
his administrator and later plaintiff administratrix, have been in possession of the
property thru their tenant Elias Daguino until April 15, 1971, when defendants
spouses Panzo wrested possession from their tenant; that on May 12, 1971, plaintiff
administratrix filed an action, for forcible entry against them before the Municipal
Court of Barotac Nuevo, Iloilo docketed as Civil Case No. 577; that the trial court
having ruled in favor of plaintiffs on November 4, 1972, defendants spouses
appealed the said decision to the Court of First Instance of Iloilo, where the said
appeal still pends; that defendant Rural Bank was not a mortgagee in good faith for
not having taken the necessary precaution before accepting the subject property as
collateral for the loan granted the defendants-spouses.
In its answer of May 14,1984 4 defendant Rural Bank set up the defense of good
faith alleging that the certificate of title in the names of the spouses Panzo was free
from any lien and that the rigid requirements for loan applications had been duly
deserved by the Bank. It further claimed that on August 11, 1973, the mortgage
executed by the spouses was foreclosed and defendant bank being the highest
bidder was issued a certificate of sale by the Provincial Sheriff of Iloilo.
Upon receipt of the answer of defendant Bank, plaintiff on July 15, 1974 moved to
dismiss the case as regards defendants spouses Panzo on the ground that the
subject property having already been sold to defendant Rural Bank, the said
spouses ceased to have any interest in the property. 5 The lower court acting on this
motion ordered the dismissal of the case on July 26, 1974 against the said
defendant-spouses only. 6
After trial and submission of the respective memoranda of the parties, the court a
quo addressing itself to the only issue of whether or not defendant Rural Bank was a
mortgagee and subsequent buyer for value and in good faith ruled in favor of said
defendant. 7

From the decision of the court a quo, petitioner appealed to the Intermediate
Appellate Court which rendered its decision, subject of this petition, agreement in
toto the decision of the court a quo. Thus:
xxx

xxx

xxx

This being so, whether or not the bank inspect d the premises or whether or not the
reconstituted title was void is indeed irrelevant in the land in question was
confiscated for non-payment of taxes and that it was sold at public auction, for if so,
then at the time of its confiscation, in effect the land in question lost its Identity as
private land and acquired the status of a government land to say the least. If sold at
public auction and the buyer was Asuncion Sustiguer, then all prior ownership there
was cancelled, including that of the original owners, (the spouses Asuncion
Sustiguer and her husband Dioscoro Buensuceso). Record shows they were later
separated. There is therefore, no conjugal property to speak of for the exclusive
buyer of the land at the public auction was Asuncion Sustiguer and she alone. When
this was not redeemed by the couple as they were then separated, Asuncion
Sustiguer became the exclusive owner of the land on the basis of the Tax Sale
pursuant to Sec. 40 Com. Act No. 470 and Velasquez vs. Coroner, 9 SCRA 986-990.
Its subsequent sale to the Panzos and later its acquisition by the Rural Bank, the
herein defendant, is now beyond question. 8
In the petition for review before Us, herein petitioner, assigns the following errors:
I
THE INTERMEDIATE APPELLATE COURT COMMITTED AN ERROR OF LAW IN HOLDING
THAT THE LAND IN QUESTION LOST ITS IdENTITY AS A PRIVATE LAND AND
ACQUIRED THE STATUS OF A GOVERNMENT LAND, WHEN IT WAS SOLD AT PUBLIC
AUCTION FOR NON-PAYMENT OF TAXES TO THE PROVINCE OF ILOILO, DIVESTING
THE SPOUSES BUENSUCESO AND THEIR SUCCESSOR-IN-INTEREST, MATIAS YUSAY,
OF THE OWNERSHIP THEREOF, WITH ASUNCION SUSTIGUER BECOMING THE
EXCLUSIVE OWNER UPON HER REPURCHASE OF THE SAID LAND FROM THE
PROVINCE OF ILOILO.
II
THE INTERMEDIATE APPELLATE COURT COMMITTED AN ERROR OF LAW IN NOT
HOLDING THAT THE RECONSTITUTED TITLE IN THE NAME OF ASUNCION SUSTIGUER
IS VOID FOR WANT OF JURISDICTION OF THE CADASTRAL COURT IN
RECONSTITUTING THE SAME.
III

THE INTERMEDIATE APPELLATE COURT COMMITTED AN ERROR OF LAW IN NOT

HOLDING THAT SINCE ADMITTEDLY THE SPOUSES PANZOS WERE GUILTY OF FRAUD
IN SECURING THE SAID RECONSTITUTED TITLE IN THE NAME OF ASUNCION
SUSTIGUER FROM THE CADASTRAL COURT, THEN THEY CAN NOT TRANSMIT TITLE
TO DEFENDANT BANK.
IV
THE INTERMEDIATE APPELLATE COURT COMMITTED AN ERROR OF LAW IN NOT
HOLDING THAT THE PUBLIC AUCTION SALE OF THE PROPERTY IN QUESTION IN 1955
FOR NON-PAYMENT OF TAXES IN FAVOR OF THE PROVINCE OF ILOILO, IS NULL AND
VOID, FOR WANT OF NOTICE TO JOSE S. YUSAY, THEN ADMINISTRATOR OF THE
ESTATE OF MATIAS YUSAY, HENCE THE SALE OF THE PROVINCE OF ILOILO IN FAVOR
OF ASUNCION SUSTIGUER AND FROM HER TO THE SPOUSES PANZOS, ARE NULL
AND VOID.
V
THE INTERMEDIATE APPELLATE COURT ERRED IN NOT RESOLVING THE FOLLOWING
ERRORS OF FACT OF THE TRIAL COURT.
(a)
The lower court erred in finding that defendant bank has made an ocular
inspection of the property prior to the granting of the loan in favor of the spouses
Gaudioso Panzo and Hortencia Buensuceso;
(b)
The lower court erred in holding that defendant bank is not negligent in not
consulting a lawyer before granting the loan;
(c)
The lower court erred in finding plaintiff as grossly negligent in not taking
steps to perfect its title over the property.
We affirm the dismissal by the court a quo.
The principal question in this controversy is whether or not the respondent bank
was an innocent mortgagee and subsequent buyer for value in good faith of the
property.
When the certificate of title in the name of the Panzo spouses was submitted to
private respondent bank for purposes of their loan application, it was free from any
lien and encumbrance. The mortgage was duly constituted and registered with the
Register of Deeds on May 28,1971. The ejectment case which was filed by petitioner
against the said spouses which petitioner claims should have put the respondent
bank on its guard was annotated at the back of the subject title only on March
29,1973. There was therefore nothing on the face of the title of the Panzos which

would arouse the suspicion of the respondent bank. The certificate of title was in the
name of the mortgagors when the land was mortgaged by them to respondent
bank. Such being the case, said respondent bank, As mortgagee, had the right to
rely on what appeared on the certificate of title and, in the absence of anything to
excite suspicion, was under no obligation to look beyond the certificate and
investigate the title of the mortgagor appearing on the face of said certificate. 9
To further determine the good faith of the mortgagee Rural Bank, We must address
ourselves to the fifth assigned error which focuses on the alleged negligence of the
respondent bank in taking the precautionary steps in the processing of the loan
application of the Panzo spouses. The findings of the trial court which were affirmed
by the appellate court ruled out any negligence of the Rural Bank, thus:
The preponderance of evidence favors defendant Rural Bank. This Court is satisfied
that an ocular inspection was indeed conducted by Gorriceta pursuant to
established practice among banks. Assuming, for the sake of argument, that the
Panzo spouses were not in actual possession of the entire property, the fact is that
they possessed a substantial part thereof and his possession coincided with the visit
of Gorriceta. At that particular moment, Panzo had been working for him in the
construction of the building and weeding of the land. These man had recognized
Panzo as the owner of the land in response to inquiries by Gorriceta to go around
the entire perimeter of the property because there was nothing to arouse his
suspicion, what with certificate of title in the name of the Panzos having been
submitted to him. A contrary requirement would negate the efficacy of a torrens
title. In fact, the allegations of plaintiff in Civil Case No. 517 (the ejectment case
filed against Gaudencio Panzo and Hortencia Buensuceso Annex D of the
complaint in this case), would bear out the claim of defendant Bank that the Panzos
were in effective possession of the
property. 10
We have examined the records of this case and We find no cogent reason to disturb
the findings of the court below in this regard. Well-settled is the rule that the
findings of facts of the Court of Appeals are generally final and conclusive upon this
Court. 11
Petitioner now claims that the negligence of respondent bank consists in its failure
to consult a lawyer before approving the loan of the Panzo spouses. She asserts that
had a lawyer been consulted, the fact that the Panzo's title had been derived from a
reconstituted title would have surfaced. This would have provoked an inquiry as to
the status of the original title by the lawyer and he would have found out about the
irregularity of the reconstitution proceedings consisting of the lack of publication
and notices.

We agree with the trial court that the respondent Bank was not negligent in failing
to consult a lawyer. The loan application of the Panzos was subjected to the rigid
requirements of the bank. There was a physical inspection of the property. The loan
application passed thru the scrutiny of the Credit Committee, the members of which
are also the Directors of the Bank. 12 The mortgage wits then duly registered with
the Register of Deeds.
The credit investigation and approval were undertaken by responsible officers of the
respondent Bank. For the bank to consult a lawyer would not have made much
difference in its findings.
As the trial court pointed out, the most that a lawyer could have done was to
consult the records in the reconstitution case which would not reveal anything
irregular. It must be presumed that official duty was duly and properly exercised in
the reconstitution proceedings. 13
The well-known rule in this jurisdiction is that a person dealing with a registered
land has a light to rely upon the face of the torrens certificate of title and to
dispense with the need of inquiring her except when the party concerned has actual
knowledge of facts and circumstances that would impel a reasonably cautious man
to make inquiry. 14 It has also been held that a bank is not required, before
accepting a mortgage, to make an investigation of the title of the property being
given as security. 15
Of course, banks are cautioned to exercise more care and prudence in dealing even
with registered lands, than private individuals, "for their business is one affected
with public interest, keeping in trust money belonging to their depositors, which
they should guard against loss by not committing any act of negligence which
amounts to lack of good faith by which they would be denied the protective mantle
of the land registration statute Act 496, extended only to purchasers for value and
in good faith, as well as to mortgagees of the same character and description. 16 It
is for this reason that banks before approving a loan send representatives to the
premises of the land offered as collateral and investigate who are the true owners
thereof. 17 In this regard, We believe that respondent bank had exercised the due
care demanded of it relative to the real estate loan of the Panzos for it to be
considered an innocent mortgagee for value.
If anyone can be faulted for being negligent, it is the petitioner herself and her
predecessors-in-interest. In the complaint, petitioner alleged that the subject
property was sold verbally to Matias Yusay by the original owners, the spouses
Buensuceso, in November, 1934 (under paragraph 5 of the same complaint, it was
alleged to have been bought by Yusay in 1948). From that time to the filing of the
ejectment case in May 1971, or a period of almost 37 years, petitioner and her
predecessors did not take any step to perfect their title over the property. There was

not even a tax declaration over the subject property of Matias Yusay or his
successors-in-interest.
When the land was sold at public auction to the Province of Iloilo in 1955 for
non-payment of taxes, petitioner's brother Jose Yusay, the administrator of the
Yusay estate did not do anything to redeem the property. Petitioner alleged that the
reason why she and her predecessors had not been paying the taxes was their
mistaken belief that Lot 2161, the subject property, was Lot 2159, an adjacent lot,
18 the taxes of which were being paid by her. She further claims that they were not
given any notice of the public auction sale. So it was only in 1971, at the time of the
filing of their ejectment case against the Panzos that petitioner came to know of
said public auction.
Noteworthy is the case of Paguio vs. Ruiz, 19 where this Court upheld the city
treasurer's 1947 tax sale of the delinquent property despite non-delivery of the
treasurer's notices of sale to the registered owner who was already deceased. We
ruled
Yet it was her gross negligence which brought about the appellee's predicament.
Knowing her property to be subject to tax, she neglected to pay her obligation.
Vigorous in her protest that she was not given opportunity to protect her rights, she
at least neglected to put the Government in a position to allow her that opportunity.
And this, notwithstanding the categorical mandate of Section 2482 of the Revised
Administrative Code, which she was presumed to know, and which makes it the duty
of each person acquiring real estate in the City to make a new declaration thereof,
with the advertence that failure to do so shall make the assessment in the name of
the previous owner valid and binding on all persons interested and for all purposes,
as though the same had been assessed in the name of the actual owner.
Apart from this, the subject property was not even included in the project of
partition and even the re-amended project of partition over the estate of Matias
Yusay after he died in 1948. What is revealing is that it took them almost 37 years
to discover that there was such a discrepancy.
The law helps the vigilant but not those who sleep on their rights. For time is a
means of destroying obligations and actions, because time runs against the slothful
and contemners of their own rights. 20 By their inexplicable inaction for such a long
period of time, they are now barred by laches to lay claim over the property. 21
Moreover, there are several inconsistencies in the evidence of petitioner ranging
from the date of the alleged verbal sale in favor of Matias Yusay as stated in the
complaint 22 to the testimonies of her witnesses, particularly her tenant Elias
Daguino as to his possession of subject property. 23 Indeed, the validity of
petitioner's claim appears to be questionable.

Respondent bank is no doubt an innocent mortgagee for value but is it a

subsequent purchaser in good faith and for value?
It will be remembered that at the time of the purchase of the subject property at the
foreclosure sale on August 11, 1973, the notice of lis pendens had already been
inscribed in the title of the Panzos, subject of the mortgage.
It is true that the notice of lis pendens is an announcement to the whole world that
a particular real property is in litigation, and serves as a warning that one who
acquires an interest over said property does so at his own risk, so that he gambles
on the results of the litigation over said property. 24
However, it has also been held that any subsequent lien or encumbrance annotated
at the back of the certificate of title cannot in any way prejudice the mortgage
previously registered, and the lots subject thereto pass to the purchaser at the
public auction sale free from any lien or encumbrance. Otherwise, the value of the
mortgage could be easily destroyed by a subsequent record of an adverse claim, for
no one would purchase at a foreclosure sale if bound by the posterior claim. 25
In the case of Gomes vs. Government of the Philippine Islands 26 this Court ruled:
The appealed judgment was finally based on the fact that both the plaintiff and the
intervenor had succeeded in having notices of lis pendens noted in transfer
certificate of title No. 25909. It seems that it is desired to attribute to these
notations a legal effect similar to a lien. This is not, however, the effect of a notice
of lis pendens under sections 79 of Act No. 496, and 401 of the Code of Civil
Procedure. The notation of the plaintiffs notice produced no effect whatsoever
against the Government's mortgage not only because the latter was prior to the
former but also because once the mortgage is declared valid and effective by final
judgment, the plaintiff can no longer enforce any preferential right. ... We hold,
therefore, that the notices of lis pendens and the attachment did not constitute
justifiable or lawful cause to prevent the execution of the judgment of foreclosure of
mortgage obtained by the Government.
A person who takes a mortgage in good faith and for a valuable consideration, the
record showing a clear title in the mortgagor will be protected against any equitable
titles to the premises or equitable claims on the title, in favor of their persons, of
which he had no notice, actual or constructive and that protection extends to a
purchaser at a Sheriff s sale under proceedings on the mortgage although such
purchaser had notice of the alleged equity. 27
In the case at bar, it is the respondent bank, the mortgagee itself, which purchased
the subject property in the foreclosure sale. Being an innocent mortgagee with a

superior lien over that of petitioner, its right to a foreclosure of the property is
reserved. 28 The notice of lis pendens which antedated the foreclosure and sale at
public auction of subject property could not affect the rights of the respondent bank
because the foreclosure sale retroacts to the date of registration of the mortgage.
29 Its character of being an innocent mortgagee continues up to the date of actual
foreclosure and sale at public auction.
At any rate, even if the pending litigation between petitioner and the Panzos be
finally decided in favor of the former, it will have no effect on the ownership rights
of the respondent bank over the subject property since a forcible entry suit is not
conclusive as to ownership but only as to possession. 30
Petitioner, in the rest of the assigned errors, persists in questioning the validity of
the titles of the respondent bank's predecessors-in-interest, not only the title of its
immediate transferor, the Panzo spouses but even that of Asuncion Sustiguer,
seeking a declaration of their nullity.
Furthermore, petitioner contends that notwithstanding the good faith of the
respondent bank, its title over the subject property is fatally defective since the title
of its predecessors are null and void.
Respondent Bank, however, maintains that the arguments of petitioner constitute a
collateral attack on said titles. We find merit in this contention.
Asuncion Sustiguer from whom the Panzo spouses obtained their title was never
made a party to the proceedings. Her title was acquired from the Province of Iloilo
which in turn acquired the property way back in 1955 at a sale at public auction. As
to the Panzo spouses, they were originally defendants in this case but on
petitioner's motion, they were dropped from the complaint even before they had the
opportunity to file their answer. Thus, the case proceeded against the respondent
bank alone.
It is well-settled that a Torrens Title cannot be collaterally attacked. The issue on the
validity of the title can only be raised in an action expressly instituted for that
purpose. 31
A Torrens Title can be attacked only for fraud within one year after the date of the
issuance of the decree of registration. Such attack must be direct and not by
collateral proceeding. The title represented by the certificate cannot be changed,
altered, modified, enlarged or diminished in a collateral proceeding. 32
After one year from the date of the degree, the sole remedy of the landowner whose
property has been wrongfully or erroneously registered in another's name is not to
set aside the decree, but, respecting the decree as incontrovertible and no longer

open to review, to bring an ordinary action in the ordinary court of justice for
reconveyance or, if the property has passed into the hands of an innocent purchaser
for value, for damages. 33
The title of Asuncion Sustiguer was obtained on February 26, 1971 while that of the
Panzos on March 3, 1971. The complaint in this acto, was filed only on April 18,
1974, clearly more than one year from the date of the decree of registration. The
disputed titles by then had become indefeasible. Since the property had already
been acquired by respondent bank at the foreclosure sale, as an innocent purchaser
for value, an action for reconveyance cannot prosper. The only remedy of petitioner
is an action for damages against the person whom she claims procured the wrongful
registration in his name. 34
Nevertheless, even assuming that the validity of the titles of Asuncion Sustiguer and
the Panzo spouses may be questioned in these proceedings and such titles may be
declared null and void, it will still be of no moment in this case. Where the torrens
title of the land was in the name of the mortgagor and later given as security for a
bank loan, the subsequent declaration of said title as null and void is not a ground
for nullifying the mortgage right of the bank, which had acted in good faith. 35
Being thus an innocent mortgagee for value, its right or lien upon the land
mortgaged must be respected and protected, even if the mortgagors obtained their
title thereto thru fraud. 36
WHEREFORE, the decision of respondent Intermediate Appellate Court of November
15, 1983 agreement in toto with costs the decision of the Court of First Instance of
Iloilo dated July 16, 1975 is hereby AFFIRMED without pronouncement as to costs.
SO ORDERED.

5. Discharge or Cancellation (Sec. 62)

6. Forclosure (Sec. 63)
a. Meaning
b. Remedies of the Creditor in case of default by the Debtor
c. Prescription
d. Types of Sales
i. Ordinary Execution Slae
ii. Judicial Forclosure Sale ( Rule 68, Rules of Court)
1. Basic Rules

G.R. No. L-53466 November 10, 1980

RURAL BANK OF OROQUIETA (MIS. OCC.), INC., petitioner,

vs.
COURT OF APPEALS, Eighth Division; JUDGE MELECIO A. GENATO Court of
First Instance of Misamis Occidental, Oroquieta Branch I; PROCOPIO
SERRANO and MARIA CUEME respondents.

AQUINO, J.:
This case is about the mortgagor's equity of redemption in case of judicial
foreclosure of a mortgage in favor of a rural bank.
In Civil Case No. 2988 of the Court of First Instance of Misamis Occidental, Oroquieta
City Branch I, entitled "Rural Bank of Oroquieta (Mis. Occ.), Inc. vs. Procopio Serrano
and Maria Cueme a case of foreclosure of mortgage, Judge Melecio A. Genato on
July 3, 1974 rendered a decision, ordering the defendants to pay plaintiff bank
within a period of "not less than ninety (90) days nor more than one hundred (100)
days from" the receipt of the decision the loan of P1,500 with twelve percent
interest per annum from January 16, 1972 plus ten percent of the principal as
attorney's fees (p. 29, Rollo).
In case of nonpayment within that period, the trial court, in order to satisfy that
obligation, ordered the sheriff to sell at public auction the mortgaged lot, a parcel of
coconut land with an area of 2.8 hectares, covered by TCT No. T-1753, located at
Sitio Petugo Barrio Bato, Plaridel, Misamis Occidental and assessed at P3,433.86 (p.
29, Rollo).
That judgment became final and executory. The Serrano spouses did not pay their
mortgage debt. A writ of execution was issued. On January 13, 1975, the sheriff
levied upon the mortgaged lot and advertised its sale at public auction to satisfy the
mortgage obligation which, together with the sheriff's fees and costs, amounted to
P2,223.60 on January 28, 1975.
At the auction sale held on March 3, 1975, the mortgaged lot was sold to the bank
as the only bidder. The sheriff issued a certificate of sale dated March 4, 1975 (p.
34, Rollo).
There being no redemption within the one-year period (sec. 78, General Banking
Law), the sheriff issued a final certificate of sale dated April 19, 1976 which was
registered on the following day.
On September 20, 1976, the bank sold the lot to Eufemia Mejos. TCT No. 6035 was
issued to her (pp. 47-48, Rollo).

On September 8, 1977, Judge Genato issued an order directing the issuance of a

writ of possession to the bank. The mortgagors or judgment debtors filed a motion
for the reconsideration of that order on the grounds that, because there was no
judicial confirmation of the action sale, they still have an equity of redemption and
could still pay the mortgage debt (alleged to be usurious) and that the auction sale
was fraudulent and irregular. They averred that the bank rejected their offer to
redeem the mortgaged lot and that the issuance of the writ of possession was
premature.
Judge Genato granted the motion for reconsideration in his order of October 12,
1977 which contains these inconsistent or contradictory directives: "Let the
execution of judgment in this case be ordered and subsequently the writ of
possession be accordingly issued. The Rural Bank of Oroquieta is hereby ordered to
accept payment of the loan with interests." (p. 36, Record.)
On December 23, 1977, the bank filed a manifestation and motion wherein it
revealed that the land had already been sold to Eufemia Mejos and, therefore, its
acceptance of the redemption tion price amounting to P2,820.60 would not produce
any legal effect (pp. 47-48, Rollo).
The bank further disclosed that there is pending in the trial court a case for the
annulment of the foreclosure sale of the said lot and the release of the mortgage,
docketed as Civil Case No. 3265, which was instituted by the Serrano spouses, as
mortgagors, against the bank and the Mejos spouses. The bank prayed that it
should not be compelled to accept the proffered redemption price.
The trial court denied the motion. The bank filed a notice of appeal, deposited the
appeal bond of P120 and submitted a record on appeal. It specified in its notice of
appeal that it was appealing to the Court of Appeals from the trial court's order of
October 12, 1977, allowing the redemption.
The Serrano spouses filed a motion to dismiss the appeal on the ground that they
had already deposited with the clerk of court the redemption price of P2,830.
The trial court in its order of February 27, 1978 dismissed the appeal on the ground
that the order sought to be appealed is interlocutory or not appealable. The bank
assailed that order in the Court of Appeals by means of certiorari which was really a
mandamus action to compel the trial court to give due course to its appeal.
The Court of Appeals dismissed the petition. It sustained the trial court's position
that the order sought to be appealed is interlocutory because the trial court had not
yet confirmed the foreclosure sale (Rural Bank of Oroquieta [Mis. Occ.], Inc. vs.
Judge Genato, CA-G. R. No. SP-07756, October 26, 1979).

The bank appealed to this Court. The issue is whether the trial court and the Court
of Appeals erred in not giving due course to the bank's appeal.
We hold that the trial court and the Court of Appeals acted correctly in refusing to
give due course to the bank's appeal not only because the order sought to be
appealed is in interlocutory but also because in the present posture of the case it is
imperative that the trial court should consolidate the foreclosure case, Civil Case
No. 2988, with the other case, Civil Case No. 3265 filed by the Serrano spouses for
the annulment of the foreclosure sale and the subsequent sale of the mortgaged lot
to the Mejos spouses. Note that the latter case is also pending in the sala of
respondent Judge.
The trial court erred in unreservedly allowing the Serrano spouses to redeem the
mortgaged lot without taking into ac count the supervening fact that the lot is now
registered in the name of Eufemia Mejos who is not a party in the foreclosure
proceeding and who is entitled to be heard. That complication cannot be summarily
ignored.
At this stage, a decision cannot be rendered outright on the conflicting rights of the
Serrano spouses, the bank and the Mejos spouses with respect to the mortgaged
lot. The trial court should first try and resolve the issues arising out of the lack of
judicial confirmation of the foreclosure sale and the subsequent sale of the
mortgaged lot to a third person after the expiration of the one-year period for
exercising the right of redemption. We can only state some guidelines in resolving
those issues.
After the execution of a real estate mortgage, the mortgagor has an equity of
redemption exercisable within the period stipulated in the mortgage deed. In case
of judicial foreclosure, that equity of redemption subsists after the sale and before it
is confirmed by the court (Raymundo vs. Sunico, 25 Phil. 365; Benedicto vs. Yulo, 26
Phil. 160; Grimalt vs. Velasquez and Sy Quio 36 Phil. 936; Sun Life Assurance Co. vs.
Gonzales Diez, 52 Phil. 271; La Urbana vs. Belando 54 Phil. 930; Villar vs. Javier de
Paderanga 97 Phil. 604; Piano vs. Cayanong 117 Phil. 415).
However, in case of a judicial foreclosure of a mortgage in favor of a banking
institution, section 78 of the General Banking Law grants the mortgagor a right of
redemption which may be exercised within one year from the sale.
Under section 3, Rule 68 of the Rules of Court, it is the confirmation by the court of
the auction sale that would divest the Serrano spouses of their rights to the
mortgaged lot and that would vest such rights in the bank as purchaser at the
auction sale.

The clause "subject to such rights of redemption as may be allowed by law," found
in the last part of section 3, has no application to this case because the mortgagor
did not exercise his right of redemption under section 78 of the General BanKing
Law.
What applies to this case is the settled rule that "a foreclosure sale is not complete
until it is confirmed, and before said confirmation, the court retains control of the
proceedings by exercising a sound discretion in regard to it, either granting or
withholding confirmation as the rights and interests of the parties and the ends of
justice may require." (Salazar vs. Tor res, 108 Phil. 209, 214-5).
"In order that a foreclosure sale may be validly confirmed by the court, it is
necessary that a hearing be given the interested parties, at which they may have an
opportunity to show cause why the sale should not be confirmed." (Raymundo vs.
Sunico, 25 Phil. 365).
"The acceptance of a bid at the foreclosure sale confers no title on the purchaser.
Until the sale has been validly confirmed by the court, he is nothing more than a
preferred bidder. Title vests only when the sale has been validly confirmed by the
court." (Raymundo vs. Sunico, 25 Phil. 365).
The confirmation retroacts to the date of the sale (Villar vs. Javier de Paderanga 97
Phil. 604, citing Binalbagan Estate, Inc. vs. Gatuslao, 74 Phil. 128).
A hearing should be held for the confirmation of the sale. The mortgagor should be
notified of that hearing. Lack of notice vitiates the confirmation of the sale. The
mortgagor may still redeem the mortgaged lot after the rendition of the order
confirming the sale which is void for lack of hearing and notice to the mortgagor.
Grimalt vs. Velasquez and Sy Quio 36 Phil. 936; Raymundo vs. Sunico, 25 Phil. 365).
Notice and hearing of a motion for confirmation of sale are essential to the validity
of the order of confirmation, not only to enable the interested parties to resist the
motion but also to inform them of the time when their right of redemption is cut off
(Tiglao vs. Botones, 90 Phil. 275, 279).
An order of confirmation, void for lack of notice and hearing, may be set aside
anytime (Tiglao vs. Botones, supra).
It is equally settled that after the foreclosure sale but before its confirmation, the
court may grant the judgment debtor or mortgagor an opportunity to pay the
proceeds of the sale and thus refrain from confirming it (Anderson and De Mesa vs.
Reyes and Gutierrez Saenz 54 Phil. 944, citing Grit vs. Velasquez and Sy Quio 36
Phil. 936 and La Urbana vs. Belan do, 54 Phil. 930).

If after the foreclosure sale and before the confirmation thereof, the mortgagee, as
purchaser at the auction sale, sold the mortgaged property to another person, that
subsequent sale does not render the foreclosure sale more effective. That
subsequent sale does not prevent the trial court from granting the mortgagor a
period within which to redeem the mortgaged lot by paying the judgment debt and
the expenses of the sale and costs (Anderson and De Mesa vs. Reyes and Gutierrez
Saenz, 54 Phil. 944).
"Whatever may have been the old rule by all of the modern authorities, it is the
policy of the courts to assist rather than to defeat the right of redemption" (De
Castro vs. Olondriz and Escudero 50 Phil. 725, 732).
After the confirmation of the sale, made after hearing and with due notice to the
mortgagor, the latter cannot redeem anymore the mortgaged lot (unless the
mortgagee is a banking institution) (Piano vs. Cayanong 117 Phil. 415).
It is after the confirmation of the sale that the mortgagor loses all interest in the
mortgaged property (Clemente vs. H. E. Heacock Co., 106 Phil. 1163; Clemente vs.
Court of Appeals, 109 Phil. 798; Clemente vs. H.E. Heacock Co., L-23212, May 18,
1967, 20 SCRA 115).
In the instant case, where the foreclosure sale has not yet been confirmed but the
statutory one-year period for redemption tion expired and the mortgaged lot was
sold by the mortgagee (as the only bidder at the auction sale) to a third person, the
trial court should give the purchaser a chance to be heard before requiring the
mortgagee-bank to accept the redemption price tendered by the mortgagors.
WHEREFORE, while we affirm the decision of the Court of Appeals in not giving due
course to petitioner's appeal from the trial court's aforementioned order of October
12, 1977, at the same time the said order is reversed and set aside for being
premature.

The trial court is directed to consolidate the foreclosure case, Civil Case No. 2988,
with Civil Case No. 3265 for the annulment of the foreclosure sale and the sale of
the mortgaged lot to Eufemia Mejos and to proceed in accordance with the
guidelines laid down in this decision. No costs.
SO ORDERED.

iii.

Extrajudicial Forclosure Sale

1.Act no 3135, as amended by Act no. 4118

[G.R. No. 169846, March 28, 2008]
SPS. NESTOR AND MA. NONA BORROMEO, Petitioners, vs. HONORABLE
COURT OF APPEALS and EQUITABLE SAVINGS BANK , Respondents.
DECISION
CHICO-NAZARIO, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court,
assailing the Decision,[1] dated 29 April 2005, thereafter, upheld in a Resolution[2]
dated 16 September 2005, both rendered by the Court of Appeals in CA-G.R. SP No.
85114. The Court of Appeals, in its assailed Decision, reversed the Order dated 3
March 2004 of Branch 215 of the Regional Trial Court (RTC) of Quezon City in Civil
Case No. Q-03-51184, and denied the issuance of a Writ of Preliminary Injunction
enjoining respondent Equitable Savings Bank (ESB) from executing the extra-judicial
foreclosure of the mortgaged property owned by petitioners, Spouses Nestor and
Nona Borromeo.
Respondent is a domestic savings bank corporation with principal office and place of
business at EPCIB Tower 2, Makati Avenue, Salcedo Village, Makati City.[3] At the
time the dispute began, it was a subsidiary of Equitable PCI Bank (EPCIB), a
domestic universal banking corporation with principal office at Makati Avenue,
Salcedo Village, Makati City. After the merger of EPCIB and Banco De Oro (BDO),
they have adopted the corporate name "Banco De Oro."[4]
Petitioners were client-depositors of EPCIB for more than 12 years. Petitioners
alleged that sometime in mid-1999, the branch manager of EPCIB, J.P. Rizal Branch,
offered a loan to the petitioners under its "Own-a-Home Loan Program." Petitioners
applied for a loan of P4,000,000.00 and were informed of the approval of their loan
application sometime in October 1999. It was in the early part of 2000 that
petitioners signed blank loan documents consisting of the Loan Agreement,
Promissory Notes, a Real Estate Mortgage (REM) and Disclosure Statements.[5]
To secure the payment of the loan, petitioners executed an REM over their land,
registered under Transfer Certificate of Title (TCT) No. N-203923, located at Loyola
Grand Villas, Quezon City, consisting of 303 square meters; and the proposed house
that was to be built thereon.[6] Petitioners asserted that even if the loan documents
were signed in blank, it was understood that they executed the REM in favor of
EPCIB.[7]

From April 2001 to September 2002, respondent released a total amount of

P3,600,000.00 in four installments, while the balance of P400,000.00 was not drawn
by petitioners.[8] On the other hand, petitioners started to pay their monthly
amortizations on 21 April 2001.[9]
Petitioners made repeated verbal requests to EPCIB to furnish them their copies of
the loan documents.[10] On 6 August 2003, they sent the president of EPCIB a
letter[11] which reiterated their request for copies of the loan documents. In
addition, petitioners stated that the interest rate of 14% to 17% that was charged
against them was more than the interest rate of 11% or 11.5% that the parties
agreed upon. They further claimed that they purposely did not draw the remaining
balance of the loan in the amount of P400,000.00 and stopped paying their loan
amortizations to protest EPCIB's continued failure to provide them copies of the loan
documents and its imposition of an interest rate higher than that agreed upon. From
the time petitioners began paying their monthly amortizations on 21 April 2001 until
the time they stopped, petitioners made total payments of approximately
P500,000.00.[12]
In reply to the petitioners' letter dated 6 August 2003, the Vice President of EPCIB,
Gary Vargas, sent to the petitioners a letter[13] dated 27 August 2003 explaining
that as a matter of practice, their clients were given original copies of the loan
documents only upon full release of the amount loaned. EPCIB clarified that since
petitioners' loan had not been fully released, the original documents were not yet
sent to them. Petitioners were also informed that the applicable interest rate was
set at the time the loan was released, not at the time the loan was approved, and
that the prevailing interest when the first four installments of the loan were released
ranged from 9.5% to 16%.
In the meantime, on 13 August 2003, respondent, through counsel, also sent a
letter[14] to the petitioners demanding payment for their obligation, which, as of 15
August 2003, amounted to P4,097,261.04, inclusive of interest and other charges.
Respondent informed petitioners that failure to pay their obligation would result in
its pursuing legal action against petitioners, including foreclosure proceedings on
their REM.
In a letter dated 18 September 2003,[15] respondent, through counsel, reiterated to
petitioners its demand for the full settlement of their obligation on or before 30
September 2003.
Finally, on 3 October 2003, petitioners received copies of the loan documents which
they had earlier signed in blank.[16] According to petitioners, they were surprised to
find out that the Loan Agreement and REM designated respondent ESB as lender
and mortgagor, instead of EPCIB with whom they allegedly entered into the
agreement. However, in contrast to the Loan Agreement and the REM, the four

Promissory Notes designated EPCIB as the lender. Petitioners also alleged that
instead of the prevailing interest rates of 8% to 10% annually, which the parties
agreed upon,[17] the four Promissory Notes were set at the following interest rates:
[18]
DATE AMOUNT
INTEREST RATE
25 April 2001
P1,200,000.00
16%
18 January 2002
P 800,000.00
14.0%
29 June 2001
P 800,000.00
15%
19 September 2002
P 800,000.00
9.0%
When the petitioners failed to pay for the loan in full by 30 September 2003,
respondent sought to extra-judicially foreclose the REM. Upon the respondent's
petition for foreclosure, the Office of the Ex-Officio Sheriff of Quezon City issued a
Notice of Extrajudicial Sale dated 16 October 2003, wherein the mortgage debt was
set at P5,114,601.00.[19] The Extrajudicial Sale was set to take place on 26
November 2003. On 14 November 2003, petitioners received Notice of Extrajudicial
Sale of their property.[20]

On 20 November 2003, petitioners filed with the RTC a Complaint for Injunction,
Annulment of Mortgage with Damages and with Prayer for Temporary Restraining
Order and Preliminary and Mandatory Injunction against EPCIB and respondent,
docketed as Civil Case No. Q-03-51184. In their Complaint, petitioners alleged that
the loan documents failed to reflect the true agreement between the parties. Firstly,
the agreement was between the petitioners and EPCIB and, consequently,
respondent had no interest in the REM. Secondly, the interest rates reflected in the
Promissory Notes were not the interest rates on which the parties had settled. They
also averred in their Complaint that EPCIB committed a breach of contract when it
failed to release the fifth and last installment of the loan to petitioners. [21]
Petitioners sought to prevent the Extrajudicial Sale from taking place on 26
November 2003. Petitioners maintained that EPCIB acted in bad faith when it
foreclosed the subject property simply because petitioners complained that the
interest rates unilaterally imposed by EPCIB were excessive. It further averred that
their deposit accounts with EPCIB were more than sufficient to pay for the
amortizations due on the housing loan.[22]
The scheduled date for the Extrajudicial Foreclosure, namely, 26 November 2003,
fell on the holiday Eid-el-Fitr, and as a result, it did not push through. In an Order
dated 5 December 2003, the RTC determined that there was no longer any need to
issue a temporary restraining order (TRO) and/or preliminary injunction.[23]
On 14 December 2003, respondent re-filed its petition for extrajudicial foreclosure of
the REM. The Ex-Officio Sheriff of Quezon City set the auction sale on 14 January
2004.

Petitioners reacted by filing with the RTC a Motion for Reconsideration of its Order
dated 5 December 2003, again praying for the issuance of a TRO and/or preliminary
injunction to forestall the extrajudicial sale of their property scheduled for 14
January 2004.[24]
On 3 March 2004, the RTC granted petitioners' motion for reconsideration and
ordered the issuance of a preliminary injunction after declaring that the validity of
the REM was yet to be determined. It found that petitioners were bound to suffer
grave injustice if they were deprived of their property before the RTC could rule on
the validity of the REM constituted on the same. On the other hand, it held that
respondent's interest was amply protected, since petitioners' mortgaged property
was valued at P12,000,000.00, which was more than sufficient to answer for
petitioner's obligation pegged at P4,097,261.00, and respondent's REM over said
property remained in effect. Moreover, petitioners posted a bond in the amount of
P3,500,000.00 to cover their unpaid liabilities.[25] In its Order dated 3 March 2004,
the RTC ordered that[26]:
With all the foregoing disquisitions and finding merit in plaintiffs' application, the
same [is] hereby GRANTED. Let a writ of preliminary injunction issue upon plaintiffs'
posting of a bond in the amount of three million five hundred thousand
(P3,500,000.00) pesos.
Respondent filed a Motion for Reconsideration of the afore-quoted Order, which was
denied for lack of merit by the RTC in an Order dated 29 April 2004.
Thereafter, respondent filed on 14 July 2004 a Special Civil Action for Certiorari
before the Court of Appeals, docketed as CA-G.R. SP No. 85114.
During the proceedings before the Court of Appeals, petitioner presented a letter
dated 19 December 2002, with supporting documents, written and compiled by
EPCIB for Home Guaranty Corporation, wherein EPCIB included petitioners' loan
among its housing loans for which it sought insurance coverage.[27]
In reversing the RTC Order dated 3 March 2004, the Court of Appeals decreed that
pending the RTC's determination of the validity of the REM, its validity should be
presumed. It further ruled that the intended foreclosure of the mortgage by
respondent was a proper exercise of its right after petitioners admittedly stopped
paying their loan amortizations. Moreover, it held that the foreclosure of the REM
would not result in any grave and irreparable damage to the petitioners since
petitioners, as mortgagors, may redeem the subject property or avail themselves of
the remedy of claiming damages or nullifying the sale.[28] The dispositive portion of
the Court of Appeals Decision, dated 29 April 2005, reads:[29]
WHEREFORE, in view of the foregoing, the assailed Orders dated March 3, 2004 and
April 29, 2004 issued by the Regional Trial Court of Quezon City, Branch 215 in Civil
Case No. Q-03-51184 are hereby ANNULLED and SET ASIDE.

Petitioners filed a Motion for Reconsideration of the foregoing Decision, which the
Court of Appeals denied in a Resolution dated 16 September 2005.[30]
Hence, the present Petition, in which the following issues are raised[31]:
I
WHETHER OR NOT THE PRIVATE RESPONDENT SAVINGS BANK IS THE REAL PARTY-ININTEREST.
II
WHETHER OR NOT PETITIONERS ARE ENTITLED TO THE RELIEF DEMANDED, THAT
THE FORECLOSURE AND PUBLIC AUCTION OF THE PROPERTY BELONGING TO
PETITIONERS DURING THE LITIGATION PROCEEDINGS IN THE LOWER COURT WOULD
PROBABLY WORK INJUSTICE TO THEM SUCH THAT THE JUDGMENT WHICH MAY BE
ISSUED BY THE SAID COURT WILL BE RENDERED INEFFECTUAL BY SUCH
FORECLOSURE AND PUBLIC AUCTION OF SAID PROPERTY.
III
WHETHER OR NOT THE LOWER COURT WAS CORRECT IN GRANTING THE WRIT OF
PRELIMINARY INJUNCTION, ALL REQUISITES BEING PRESENT
The petition is meritorious.
The only issue that needs to be determined in this case is whether or not a writ of
preliminary injunction should be issued to enjoin the foreclosure and public auction
of petitioner's property during the proceedings and pending determination of the
main cause of action for annulment of the REM on said property. By no means is this
a final determination of the merits of the main case still before the RTC.[32]
Section 3, Rule 58 of the Rules of Court provides that:
SEC. 3. Grounds for issuance of preliminary injunctions.--A preliminary injunction
may be granted when it is established:
(a)
That the applicant is entitled to the relief demanded, and the whole or part of such
relief consists in restraining the commission or continuance of the act or acts
complained of, or in requiring the performance of an act or acts, either for a limited
period or perpetually;
(b)
That the commission, continuance or non-performance of the act or acts
complained of during the litigation would probably work injustice to the applicant; or
(c)

That a party, court, agency or a person is doing, threatening, or is attempting to do,

or is procuring or suffering to be done, some act or acts probably in violation of the
rights of the applicant respecting the subject of the action or proceeding, and
tending to render the judgment ineffectual.
As such, a writ of preliminary injunction may be issued only upon clear showing of
an actual existing right to be protected during the pendency of the principal action.
The twin requirements of a valid injunction are the existence of a right and its actual
or threatened violations. Thus, to be entitled to an injunctive writ, the right to be
protected and the violation against that right must be shown.[33]
In this case, petitioners' rights to their property is restricted by the REM they
executed over it. Upon their default on the mortgage debt, the right to foreclose the
property would be vested upon the creditor-mortgagee.[34] Nevertheless, the right
of foreclosure cannot be exercised against the petitioners by any person other than
the creditor-mortgagee or its assigns. According to the pertinent provisions of the
Civil Code:
Art. 1311. Contracts take effect only between the parties, their assigns and heirs,
except in case where the rights and obligations arising from the contract are not
transmissible by their nature, or by stipulation or by provision of law. The heir is not
liable beyond the value of the property he received from the decedent.
If a contract should contain some stipulation in favor of a third person, he may
demand its fulfillment provided he communicated his acceptance to the obligor
before its revocation. A mere incidental benefit or interest of a person is not
sufficient. The contracting parties must have clearly and deliberately conferred a
favor upon a third person. (Emphasis ours.)
An extrajudicial foreclosure instituted by a third party to the Loan Agreement and
the REM would, therefore, be a violation of petitioners' rights over their property.
It is clear that under Article 1311 of the Civil Code, contracts take effect only
between the parties who execute them.[35] Where there is no privity of contract,
there is likewise no obligation or liability to speak about.[36] The civil law principle
of relativity of contracts provides that contracts can only bind the parties who
entered into it, and it cannot favor or prejudice a third person, even if he is aware of
such contract and has acted with knowledge thereof.[37] Since a contract may be
violated only by the parties thereto as against each other, a party who has not
taken part in it cannot sue for performance, unless he shows that he has a real
interest affected thereby.[38]
In the instant case, petitioners assert that their creditor-mortgagee is EPCIB and not
respondent. While ESB claims that petitioners have had transactions with it,
particularly the five check payments made in the name of ESB, it fails to
categorically state that ESB and not EPCIB is the real creditor-mortgagor in this loan
and mortgage transaction. This Court finds the position taken by the petitioners to

be more credible. The four Promissory Notes designate EPCIB as the "lender."[39] In
a letter dated 19 December 2002, addressed to Home Guaranty Corporation, EPCIB
Vice President Gary Vargas even specified petitioners' loan as one of its housing
loans for which it sought insurance coverage.[40] Records also show that petitioners
repeatedly dealt with EPCIB. When the petitioners complained of not receiving the
loan documents and the allegedly excessive interest charges, they addressed their
letter dated 3 August 2003 to the president of EPCIB.[41] The response, which
explained the loan transactions in detail in a letter dated 27 August 2003, was
written by Gary Vargas, EPCIB Vice President.[42] Of almost three years'
amortizations, the checks were issued by petitioners in the name of EPCIB, except
only for five checks which were issued in respondent's name.[43]
Respondent, although a wholly-owned subsidiary of EPCIB, has an independent and
separate juridical personality from its parent company. The fact that a corporation
owns all of the stocks of another corporation, taken alone, is not sufficient to justify
their being treated as one entity. If used to perform legitimate functions, a
subsidiary's separate existence shall be respected, and the liability of the parent
corporation, as well as the subsidiary, shall be confined to those arising from their
respective businesses. A corporation has a separate personality distinct from its
stockholders and other corporations to which it may be conducted.[44] Any claim or
suit of the parent corporation cannot be pursued by the subsidiary based solely on
the reason that the former owns the majority or even the entire stock of the latter.
From a perusal of the records, petitioners did not enter into a Loan Agreement and
REM with respondent. Respondent, therefore, has no right to foreclose the subject
property even after default, since this right can only be claimed by the creditormortgagor, EPCIB; and, consequently, the extrajudicial foreclosure of the REM by
respondent would be in violation of petitioners' property rights.
This Court takes note of the fact that in several cases[45] the Court denied the
application for a Writ of Preliminary Injunction that would enjoin an extrajudicial
foreclosure of a mortgage, and declared that foreclosure is proper when the debtors
are in default of the payment of their obligation. Where the parties stipulated in
their credit agreements, mortgage contracts and promissory notes that the
mortgagee is authorized to foreclose the mortgaged properties in case of default by
the mortgagors, the mortgagee has a clear right to foreclosure in case of default,
making the issuance of a Writ of Preliminary Injunction improper. However, the
doctrine in these cases is not applicable to the case at bar where the identity of the
creditor-mortgagor is highly disputable.
This Court emphasizes that the determination of who is the creditor-mortgagee is
only for purposes of determining the propriety of issuing a writ of preliminary
injunction, based on the evidence presented before the hearing for the issuance of a
preliminary injunction. It will not bar the RTC from making its own determination as

to who is the true creditor-mortgagee after trial and presentation of evidence on the
main case. To establish the essential requisites for a preliminary injunction, the
evidence submitted by the plaintiff need not be conclusive and complete. The
plaintiffs are only required to show that they have an ostensible right to the final
relief prayed for in their complaint.[46] In Urbanes, Jr. v. Court of Appeals, this Court
expounded that:
A writ of preliminary injunction is generally based solely on initial and incomplete
evidence. The evidence submitted during the hearing on an application for a writ of
preliminary injunction is not conclusive or complete for only a sampling is needed to
give the trial court an idea of the justification for the preliminary injunction pending
the decision of the case on the merits. As such, the findings of fact and opinion of a
court when issuing the writ of preliminary injunction are interlocutory in nature and
made even before the trial on the merits is commenced or terminated. There are
vital facts that have yet to be presented during the trial which may not be obtained
or presented during the hearing on the application for the injunctive writ. The trial
court needs to conduct substantial proceedings in order to put the main controversy
to rest. It does not necessarily proceed that when a writ of preliminary injunction is
issued, a final injunction will follow.[47] (Emphasis provided.)
The extrajudicial foreclosure of the petitioners' property pending the final
determination by the RTC of their complaint for annulment of the REM and claim for
damages would result in an injustice to the petitioners. If the RTC would
subsequently declare that respondent was entitled to have petitioners' property
foreclosed, it may still foreclose the subject property which is valued at
P12,000,000.00,[48] to answer for the debt which is estimated at P5,000,000.00,
and further claim the P3,500,000.00 surety bond posted by petitioners with the RTC.
On the other hand, if the RTC later finds that respondent is not the creditormortgagee and, therefore, the foreclosure of the property is invalid, petitioners
would be placed in an oppressively unjust situation where they will be tied up in
litigation for the recovery of their property while their debt to the real creditormortgagee, EPCIB, would remain unpaid and continue to accrue interest and other
charges.
The sole object of a preliminary injunction is to maintain the status quo until the
merits can be heard. A preliminary injunction is an order granted at any stage of an
action prior to judgment of final order, requiring a party, court, agency, or person to
refrain from a particular act or acts. It is a preservative remedy to ensure the
protection of a party's substantive rights or interests pending the final judgment on
the principal action. A plea for an injunctive writ lies upon the existence of a claimed
emergency or extraordinary situation which should be avoided for, otherwise, the
outcome of a litigation would be useless as far as the party applying for the writ is
concerned.[49]

IN VIEW OF THE FOREGOING, the instant Petition is GRANTED. This Court REVERSES
the assailed Decision dated 29 April 2005 of the Court of Appeals in CA-G.R. SP No.
85114, and REINSTATES the Order dated 3 March 2004 of Branch 215 of the
Regional Trial Court of Quezon City in Civil Case No. Q-03-51184 ordering the
issuance of a Writ of Preliminary Injunction.
SO ORDERED.
e.Redemption
i. Section 6, Act 3135, in relation to Section 28, Rule 39 of the Rules
of Court
ii.
[G.R. No. 133079. August 9, 2005]
SPS. MAXIMO LANDRITO, JR. and PACITA EDGALANI, petitioners, vs. THE
HONORABLE COURT OF APPEALS; SPS. BENJAMIN SAN DIEGO and
CARMENCITA SAN DIEGO; The EX-OFFICIO SHERIFF and CLERK OF COURT of
the Regional Trial Court, Makati City; and the REGISTER OF DEEDS, Makati
City, respondents.
DECISION
GARCIA, J.:
Herein petitioners, the spouses Maximo Landrito, Jr. and Pacita Landrito, have come
to this Court via this petition for review on certiorari under Rule 45 of the Rules of
Court to seek the reversal and setting aside of the decision dated 12 December
1997[1] and resolution dated 10 March 1998[2] of the Court of Appeals in CA-G.R.
CV No. 48896, affirming an earlier order of the Regional Trial Court at Makati City
which granted the motion to dismiss filed by the herein private respondents, the
spouses Benjamin San Diego and Carmencita San Diego, in its Civil Case No. 942950, a complaint for annulment of extrajudicial foreclosure and auction sale,
thereat commenced by them against the San Diegos, the ex-officio sheriff and the
Register of Deeds of Makati City.
The facts:
In July 1990, petitioners obtained a loan of P350,000.00 from respondent
Carmencita San Diego. To secure payment thereof, petitioners executed on 02
August 1990 in favor of the same respondent a deed of real estate mortgage over
their parcel of land located at Bayanan, Muntinlupa, Rizal and registered in their
names under Transfer Certificate of Title No. (432281) S-21000.
After making substantial payments, petitioners again obtained and were granted by
Carmencita San Diego an additional loan of One Million Pesos (P1,000,000.00). To

secure this additional loan, the parties executed on 13 September 1991 an

Amendment of Real Estate Mortgage, whereunder they stipulated that the loan
shall be paid within six (6) months from 16 September 1991, and if not paid within
said period, the mortgagee shall have the right to declare the mortgage due and
may immediately foreclose the same judicially or extrajudicially, in accordance with
law.
It appears that petitioners defaulted in paying their loan and continuously refused to
comply with their obligation despite repeated demands therefor, prompting
respondent Carmencita San Diego to send them on 27 April 1993, a final notice of
demand requiring them to settle their financial obligation which, by then, already
amounted to P1,950,000.00.
On 30 June 1993, after her efforts to collect proved futile, respondent Carmencita
San Diego filed with the Office of the Clerk of Court and Ex-Officio Sheriff of RTCMakati, a petition for the extrajudicial foreclosure of the mortgage.
On 06 July 1993, said office sent to the parties a Notice of Sheriffs Sale, therein
announcing that petitioners mortgaged property will be sold in a public auction to
be conducted on 11 August 1993 at 10:00 oclock in the morning, copies of which
notice were posted in several conspicuous places within the sheriffs territorial
jurisdiction.
As announced, on 11 August 1993, at 10:00 oclock in the morning, the public
auction sale was held and the mortgaged property sold to respondent Carmencita
San Diego as the highest bidder for P2,000,000.00, as evidenced by the Sheriffs
Certificate of Sale issued in her favor on 07 October 1993.
On 29 October 1993, respondent San Diego caused the registration of the same
sheriffs certificate of sale with the Office of the Register of Deeds, Makati City, and
duly inscribed on the same date at the dorsal side of the petitioners TCT No.
(432281) S-21000.
With the petitioners having failed to redeem their property within the 1-year
redemption period from the date of inscription of the sheriffs certificate of sale, as
provided for in Act No. 3135, as amended, the San Diegos caused the consolidation
of title over the foreclosed property in their names.
Then, on 09 November 1994, before the Regional Trial Court at Makati City,
petitioners filed their complaint for annulment of the extrajudicial foreclosure and
auction sale, with damages. In their complaint, thereat docketed as Civil Case No.
94-2950, petitioners alleged that (1) said foreclosure and auction sale were null and
void for failure to comply with the requirements of notice and publication, as
mandated by Act 3135, as amended; (2) the mortgaged property was illegally

foreclosed in the light of the settled rule that an action to foreclose a mortgage
must be limited to the amount mentioned in the mortgage document, in this case,
P1,000,000.00, which amount was allegedly bloated by respondent Carmencita San
Diego to P1,950,000.00; and (3) the San Diegos application for consolidation of title
was premature because the husband, Benjamin San Diego, allegedly granted them
an extension of the period of redemption up to 11 November 1994.
To the complaint, respondents interposed a Motion to Dismiss, therein alleging that
said complaint failed to state a cause of action as no primary right of the petitioners
had been violated since they actually failed to exercise their right of redemption
within the one-year redemption period, adding that petitioners never took any
action which may stall the running of the same period, thereby leaving them no
further right or interest in the property in question.
In an order dated 13 January 1995, the trial court granted respondents motion to
dismiss and accordingly dismissed petitioners complaint, saying that the latters
cause of action, if any, is already barred by laches on account of their failure or
neglect for an unreasonable length of time to do that which, by exercising due
diligence, could or should have been done earlier. Further, the trial court ruled that
petitioners inaction constituted a waiver on their part.
Therefrom, petitioners went on appeal to the Court of Appeals in CA-G.R. CV No.
48896.
As stated at the outset hereof, the appellate court, in its decision of 12 December
1997, dismissed petitioners appeal and affirmed in toto the trial courts order of
dismissal. With their motion for reconsideration having been denied by the same
court in its resolution of 10 March 1998,[3] petitioners are now with us via the
present recourse, faulting the Court of Appeals, as follows:
1.
The Court of Appeals gravely erred in avoiding to resolve in the assailed
Decision and in the questioned Resolution the basic issue as to whether or not the
extra-judicial foreclosure and public auction sale of the subject parcel of land are
valid and lawful when the amount stated in letter-request or the petition for extrajudicial foreclosure and in the notice of sheriff sale doubled the amount stipulated in
the Amendment of Real Estate Mortgage;
2.
The Court of Appeals has similarly committed serious error in considering
that the complaint of the petitioner is a complaint for redemption when in the
caption; in the body; and in the prayer of the complaint, petitioner spouses have
sought the nullity as void ab initio the extra-judicial foreclosure and auction sale of
the subject property;

3.
The respondent Appellate Court likewise incredulously erred to have resolved
the admissibility and probative value of the statement of account attached as Annex
E of the complaint when it was not yet presented in evidence; because the stage
of the case at the time the assailed dismissal order was issued, was yet in the
period of pleadings;
4.
The Court of Appeals has grievously erred in affirming the assailed dismissal
order by declaring petitioner spouses to have been guilty of laches in failing to
redeem during the legal period of redemption the foreclosed parcel of land; when
the cause of the failure to redeem was the illegal increase by 100% of the original
obligation, stated in the Amendment of Real Estate Mortgage and bloating of the
redemption price from Two Million Pesos (P2,000,000.00) to Three Million Four
Hundred Ninety One Thousand Two Hundred Twenty Five & 98/100 Pesos
(P3,491,225.98).
We DENY.
The records indubitably show that at the time of the foreclosure sale on 11 August
1993, petitioners were already in default in their loan obligation to respondent
Carmencita San Diego.
Much earlier, or on 27 April 1993, a final notice of demand for payment had been
sent to them, despite which they still failed to pay. Hence, respondent Carmencita
San Diegos resort to extrajudicial foreclosure, provided no less in the parties
Amendment of Real Estate Mortgage.
The rule has been, and still is, that in real estate mortgage, when the principal
obligation is not paid when due, the mortgagee has the right to foreclose on the
mortgage and to have the mortgaged property seized and sold with the view of
applying the proceeds thereof to the payment of the obligation.[4]
Here, the validity of the extrajudicial foreclosure on 11 August 1993 was virtually
confirmed by the trial court when it dismissed petitioners complaint, and rightly so,
what with the fact that petitioners failed to exercise their right of redemption within
the 1-year period therefor counted from the registration of the sheriffs certificate of
sale.
It is petitioners main submission, however, that the very reason why they did not
avail of their redemption right is because Mrs. San Diego bloated their original loan
of P1,000,000.00 to P1,950,000.00, an issue supposedly not considered and/or
addressed by the appellate court in the decision under review. In this regard,
petitioners argue that the Court of Appeals, in sustaining the extrajudicial
foreclosure proceedings, thereby go against the established jurisprudence that an

action for foreclosure must be limited to the amount mentioned in the mortgage
document, P1,000,000.00 in this case.
We do not take issue with petitioners submission that a mortgage may be
foreclosed only for the amount appearing in the mortgage document, more so
where, as here, the mortgage contract entered into by the parties is evidently silent
on the payment of interest.
However, contrary to petitioners claim, the appellate court did pass upon the legal
issue raised by them, albeit ruling that petitioners had been barred by laches from
raising the same. We quote from the challenged decision:
[Petitioners] next argued that the mortgaged property was illegally foreclosed since
it is a well settled rule that an action to foreclose a mortgage must be limited to the
amount mentioned in the mortgage.
The argument is without merit.
It appears from the evidence on record that despite due notice and publication of
the same in a newspaper of general circulation (Exhs. 5, 5-A and 5-B, pp. 5355, Record), [petitioners] did not bother to attend the foreclosure sale nor raise any
question regarding the propriety of the sale. It was only on November 9, 1994, or
more than one year from the registration of the Sheriffs Certificate of Sale, that
[petitioners] filed the instant complaint. Clearly, [petitioners] had slept on their
rights and are therefore guilty of laches, which is defined as the failure or neglect
for an unreasonable or explained length of time to do that which, by exercising due
diligence, could or should have been done earlier, failure of which gives rise to the
presumption that the person possessed of the right or privilege has abandoned or
has declined to assert the same. (Words in bracket added.)
For sure, in the very petition they filed in this case, petitioners have not offered any
valid excuse why, despite notice to them of the petition for extrajudicial foreclosure
filed by the respondents, they failed to attend the proceedings and there voiced out
what they are now claiming. Truly, laches has worked against them.
The law on redemption of mortgaged property is clear. Republic Act No. 3135 (An
Act to Regulate the Sale of Property Under Special Powers Inserted In Or Annexed
to Real Estate Mortgages), as amended by Republic Act No. 4118, provides in
Section 6 thereof, thus:
Sec. 6. In all cases in which an extrajudicial sale is made under the special power
hereinbefore referred to, the debtor, his successors in interest or any judicial
creditor or judgment creditor of said debtor, or any person having a lien on the
property subsequent to the mortgage or deed of trust under which the property is

sold, may redeem the same at any time within the term of one year from and after
the date of the sale; xxx (Emphasis supplied)
In a long line of cases[5], this Court has consistently ruled that the one-year
redemption period should be counted not from the date of foreclosure sale, but from
the time the certificate of sale is registered with the Register of Deeds. Here, it is
not disputed that the sheriffs certificate of sale was registered on 29 October 1993.
And under Article 13 of the New Civil Code[6], a year is understood to have three
hundred sixty-five (365) days each. Thus, excluding the first day and counting from
30 October 1993 (under paragraph 3 of Article 13 of the New Civil Code), and
bearing in mind that 1994 was a leap year, petitioners had only until 29 October
1994, the 365th day after registration of the sheriffs certificate of sale on 29
October 1993, within which to redeem the foreclosed property in accordance with
law. And since 29 October 1994 fell on a Saturday, petitioners had until the
following working day, 31 October 1994, within which to exercise their right of
redemption.
From the foregoing, it is clear as day that even the complaint filed by the petitioners
with the trial court on 09 November 1994 was instituted beyond the 1-year
redemption period. In fact, petitioners no less acknowledged that their complaint
for annulment of extrajudicial foreclosure and auction sale was filed about eleven
(11) days after the redemption period had already expired on 29 October 1994[7].
They merely harp on the alleged increase in the redemption price of the mortgaged
property as the reason for their failure to redeem the same. However, and as
already pointed out herein, they chose not, despite notice, to appear during the
foreclosure proceedings.
Of course, petitioners presently insist that they requested for and were granted an
extension of time within which to redeem their property, relying on a handwritten
note allegedly written by Mrs. San Diegos husband on petitioners statement of
account, indicating therein the date 11 November 1994 as the last day to pay their
outstanding account in full. Even assuming, in gratia argumenti, that they were
indeed granted such an extension, the hard reality, however, is that at no time at all
did petitioners make a valid offer to redeem coupled with a tender of the
redemption price.
Even on this score, petitioners case must fall.
For, in Lazo v. Republic Surety & Insurance Co., Inc.[8], this Court has made it clear
that it is only where, by voluntary agreement of the parties, consisting of extensions
of the redemption period, followed by commitment by the debtor to pay the
redemption price at a fixed date, will the concept of legal redemption be converted
into one of conventional redemption.

Here, there is no showing whatsoever that petitioners agreed to pay the redemption
price on or before 11 November 1994, as allegedly set by Mrs. San Diegos
husband. On the contrary, their act of filing their complaint on 09 November 1994
to declare the nullity of the foreclosure sale is indicative of their refusal to pay the
redemption price on the alleged deadline set by the husband. At the very least, if
they so believed that their loan obligation was only for P1,000,000.00, petitioners
should have made an offer to redeem within one (1) year from the registration of
the sheriffs certificate of sale, together with a tender of the same amount. This,
they never did.
It must be remembered that the period of redemption is not a prescriptive period
but a condition precedent provided by law to restrict the right of the person
exercising redemption. Correspondingly, if a person exercising the right of
redemption has offered to redeem the property within the period fixed, he is
considered to have complied with the condition precedent prescribed by law and
may thereafter bring an action to enforce redemption. If, on the other hand, the
period is allowed to lapse before the right of redemption is exercised, then the
action to enforce redemption will not prosper, even if the action is brought within
the ordinary prescriptive period. Moreover, the period within which to redeem the
property sold at a sheriffs sale is not suspended by the institution of an action to
annul the foreclosure sale.[9] It is clear, then, that petitioners have lost any right or
interest over the subject property primarily because of their failure to redeem the
same in the manner and within the period prescribed by law. Their belated
attempts to question the legality and validity of the foreclosure proceedings and
public auction must accordingly fail.
WHEREFORE, the instant petition is DENIED and the challenged decision and
resolution of the Court of Appeals AFFIRMED.
No pronouncement as to costs.
SO ORDERED.
iii. Failure to Redeem, Consolidation of ownership
G.R. No. 141365

November 27, 2002

SPOUSES FELIPE YULIENCO and FLORA YULIENCO, petitioners,

vs.
HON. COURT OF APPEALS (4th DIVISION); HON. LUCAS P. BERSAMIN in his
official capacity as Presiding Judge of the Regional Trial Court, Branch 96,
NCJR, Quezon City; DEPUTY SHERIFF JOSE G. MARTINEZ of Branch 96, RTC,
Quezon City; and ADVANCE CAPITAL CORPORATION, respondents.

DECISION
QUISUMBING, J.:
Petitioners seek to annul and set aside the decision1 dated December 20, 1999 of
the Court of Appeals, which (1) affirmed the order of the Regional Trial Court of
Quezon City, Branch 96, in Land Registration Case No. Q-11564 (99) granting a writ
of possession to private respondent Advance Capital Corporation; and (2) lifted the
temporary restraining order issued by the CA on September 17, 1999.
The records show that petitioner spouses Felipe and Flora Yulienco were the owners
of a residential house and lot located at Nos. 136-138 Biak-na-Bato Street, Sta. Mesa
Heights, Quezon City, covered by Transfer Certificate of Title No. RT-2572 (57609).2
On June 29, 1990, petitioners obtained a loan of P20,000,000 from private
respondent Advance Capital Corporation (ACC) with interest at 24 percent per
annum and evidenced by a promissory note. To secure the loan, deeds of real estate
mortgage were executed on their properties in Makati City, Benguet, and Quezon
City. When petitioners failed to pay the loan in full, ACC filed on July 2, 1993 a
petition for extrajudicial foreclosures of the properties with the Ex-Officio Sheriff of
Quezon City, pursuant to the authority provided in the deed of real estate
mortgage. Auction sale of the properties was scheduled on July 30, 1993 and notice
of the sale was published in the Times Record on July 7, 14, and 21, 1993.3
To forestall the foreclosure of their properties, petitioners filed on July 26, 1993 a
petition for injunction, reformation, and damages with prayer for temporary
restraining order and/or preliminary injunction against ACC with the Regional Trial
Court of Makati City, Branch 61. In their complaint, petitioners questioned the
validity of the promissory notes and real estate mortgages. They alleged that their
true agreement with ACC was to pay the loan from the proceeds of the sale of their
shares of stock in PHESCO which were then subject of a pending case in the
Securities and Exchange Commission. They also assailed the Notice of Sheriffs Sale
in Makati and Quezon City because it was not published in newspapers of general
circulation in Metro Manila.
On July 28, 1993, or two days before the scheduled sale, the Makati RTC issued an
order4 enjoining private respondent and the sheriffs of Makati, Quezon City, and
Benguet from proceeding with the foreclosure of petitioners properties. The auction
sale of petitioners Quezon City property scheduled on July 30, 1993 was likewise
cancelled.
On August 30, 1993, ACC filed with the Office of the Clerk of Court and Ex-Officio
Sheriff of Quezon City a letter-request to proceed with the auction sale of
petitioners Quezon City property since, by that time, the 20-day effectivity period

of the temporary restraining order issued by the Makati RTC had expired5 and,
therefore, there was no more legal impediment to the sale. On the same day, the
Sheriff of Quezon City prepared and issued a Second Notice of Sheriffs Sale of the
Quezon City property, scheduling the sale on September 27, 1993. The notice was
published in the Times Record on September 1, 8, and 15 1993.6
In the meantime, the RTC of Makati issued on September 20, 1993 an order granting
petitioners prayer for preliminary injunction as to the foreclosure of their property
in Makati City, but not as to the Quezon City and Benguet properties since under
Section 21 of Batas Pambansa Bilang 129, the court does not have jurisdiction to
enforce a writ of preliminary injunction outside its territorial jurisdiction.
The public auction was held on September 27, 1993 and petitioners Quezon City
property was sold to ACC as the highest bidder.7 On the same date, the Sheriffs
Certificate of Sale was annotated on the TCT.8 A year later, petitioners filed a
second amended and supplemental petition in the case pending before the RTC of
Makati. On September 26, 1994, the RTC issued a temporary restraining order
enjoining ACC from exercising its right of consolidation of ownership of the
foreclosed property in Quezon City.9 Then on October 13, 1994, the RTC, again
citing Section 21 of Batas Pambansa Bilang 129, finally denied petitioners prayer
for preliminary injunction to enjoin ACC from consolidating title.10
Thereafter, when petitioners failed to redeem the foreclosed property, ACC caused
the consolidation of its ownership and paid the necessary taxes with the Bureau of
Internal Revenue to effect transfer of the title to its name.11 Accordingly, the
Register of Deeds of Quezon City cancelled TCT No. RT-2572 (57609) and issued TCT
No. 119740 in ACCs name.12 Tax declarations over the subject property were
likewise transferred in the name of ACC after it paid real estate taxes.13 From then
on, private respondent ACC has been paying real taxes on the property.14
Petitioners continued to occupy the house and lot over the property so, in a letter
dated May 3, 1999, ACC made a formal and final demand on petitioners to vacate
the subject house and lot within five days from receipt of the letter. ACC also
demanded P1,080,000 corresponding to rental arrearages from October 1994 to the
date of the letter, at P20,000 per month.15 ACC likewise filed with the RTC of
Quezon City, Branch 96, a petition for the issuance of a writ of possession over the
subject property. The case was docketed as Land Registration Case No. Q-11564
(99).16
At the hearing of June 25, 1999, public respondent Hon. Lucas Bersamin, the
presiding judge of the RTC of Quezon City, Branch 96, allowed ACC to present its
evidence ex parte without prejudice to any comment that may be filed by
petitioners.

In their comment below, petitioners alleged, among others, that it would be

improper for the court to issue a writ of possession pending the outcome of Special
Civil Case No. 93-2521 before Branch 61 of the Makati RTC for injunction,
reformation, and damages assailing the validity of the loan and the mortgage.17
On September 3, 1999, the RTC of Quezon City granted the petition for writ of
possession, disposing as follows:
ACCORDINGLY, premises considered, the instant petition is hereby GRANTED. Let a
writ of possession be issued over the property covered by Transfer Certificate of
Title No. 119740 of the Registry of Deeds of Quezon City and located at 136-138
Biak-na-Bato, Sta. Mesa Heights, Quezon City.
SO ORDERED.18
Petitioners motion for reconsideration was denied. To annul the trial courts decision
dated September 3, 1999, petitioners elevated the case to the Court of Appeals via
certiorari and prohibition with a prayer for temporary restraining order and/or writ of
preliminary injunction.19 In a resolution dated September 17, 1999, the CA issued a
temporary restraining order enjoining the implementation of the writ of possession
issued by the RTC of Quezon City.20 Then on December 20, 1999, respondent Court
of Appeals denied the petition for certiorari.21 The appellate court confined its
discussion to the validity of the trial courts issuance of the writ of possession,
finding the same neither a capricious nor a whimsical exercise of judgment that
could amount to grave abuse of discretion. In the same decision, the CA likewise
lifted the temporary restraining order it issued on September 17, 1999.22
Hence, the instant petition under Rule 45 of the Rules of Court, anchored on the
following averments:
A.
THE RESPONDENT COURT HAS RENDERED THE DECISION DATED DECEMBER 20,
1999 (ANNEX B) IN DISREGARD OF THE FRAUD COMMITTED BY RESPONDENT ACC
PROVEN BY FACTS NOT DENIED BY RESPONDENT ACC WHICH CLEARLY VIOLATE THE
CONSTITUTIONAL RIGHT TO DUE PROCESS OF PETITIONERS AND WILL
FRAUDULENTLY ENRICH RESPONDENT ACC THRU ACTUAL AND ILLEGAL
CONFISCATION OF THE PROPERTIES OF PETITIONERS IN AN ILLEGAL AND
FRAUDULENT MANNER, THUS CONSTITUTING A DEPARTURE FROM THE ACCEPTED
AND USUAL COURSE OF JUDICIAL PROCEEDINGS OR SO FAR SANCTIONED SUCH
DEPARTURE BY A LOWER COURT, AS TO CALL FOR AN EXERCISE OF THE POWER OF
SUPERVISION OF THIS HONORABLE COURT; and
B.

THE RESPONDENT JUDGE COURT HAS DECIDED IN ITS DECISION DATED DEC. 20,
1999 (ANNEX B) QUESTIONS OF SUBSTANCE NOT THERETOFORE DETERMINED BY
THIS HONORABLE COURT, OR HAS DECIDED IT IN A WAY NOT IN ACCORD WITH LAW
AND LOGIC AND/OR WITH THE APPLICABLE DECISIONS OF THIS HONORABLE
COURT.23
At issue is whether the Court of Appeals committed reversible error in affirming the
RTC decision granting the writ of possession to respondent corporation. To resolve
this issue, we must also inquire whether prohibition lies to enjoin the Regional Trial
Court of Quezon City from issuing to ACC the writ of possession over the property
covered by TCT No. 119740 of the Quezon City Register of Deeds.
Petitioners assail the jurisdiction of the Quezon City RTC in taking cognizance of the
present case on the ground that there is a pending case in the Makati RTC for
injunction, reformation, and damages impugning the validity of the promissory
notes and mortgage contracts used as basis for the foreclosure sale. They likewise
lament that the grant of the writ and the displacement of petitioners from their
residence on the basis of fraud smacks of deprivation of property without due
process of law.
Petitioners contention cannot stand judicial muster. Act 3135, otherwise known as
"An Act to Regulate the Sale of Property under Special Powers Inserted in or
Annexed to Real Estate Mortgages," mandates that jurisdiction over a petition for a
writ of possession lies in the court of the province, city, or municipality where the
property subject thereof is situated. Section 7 of the said Act is clear on this matter,
thus:
SEC. 7. In any sale made under the provisions of this Act, the purchaser may
petition the Court of First Instance [now Regional Trial Court] of the province or
place where the property or any part thereof is situated, to give him possession
thereof during the redemption period, furnishing bond in an amount equivalent to
the use of the property for a period of twelve months, to indemnify the debtor in
case it be shown that the sale was made without violating the mortgage or without
complying with the requirements of this Act.
Since the land subject of the controversy is located in Quezon City, the citys RTC
should rightly take cognizance of the case, to the exclusion of other courts.
Neither can this Court consider the pendency of Special Civil Case No. 93-2521
before Branch 61 of the Makati RTC a procedural obstacle. Said action for injunction,
reformation, and damages does not raise an issue that constitutes a prejudicial
question in relation to the present case.

A prejudicial question is one that arises in a case the resolution of which is a logical
antecedent of the issue involved therein, and the cognizance of which pertains to
another tribunal.24 It generally comes into play in a situation where a civil action
and a criminal action are both pending and there exists in the former an issue that
must be preemptively resolved before the criminal action may proceed, because
howsoever the issue raised in the civil action is resolved would be determinative
juris et de jure of the guilt or innocence of the accused in the criminal case.25 The
rationale behind the principle of prejudicial question is to avoid two conflicting
decisions.26
Here, Special Civil Case No. 93-2521 and the present one are both civil in nature
and, therefore, no prejudicial question can arise from the existence of the two
actions. It taxes our imagination how the questions raised in Special Civil Case No.
93-2521 would be determinative of Land Registration Case No. Q-11564 (99). The
basic issue in the former is whether the promissory note and mortgage agreement
executed between petitioners and private respondent ACC are valid. In the latter
case, the issue is whether respondent, armed with a TCT in its name, is entitled to a
writ of possession. Clearly, the two cases can proceed separately and take their own
direction independently of each other.
In the present case, petitioners cannot anchor their case on the purported interest
they have, as owners, over the land and the improvements thereon. They have
been stripped of their rights over the property when, as mortgagors, they failed to
redeem it after foreclosure took place. A mortgagor has only one year after
registration of sale with the Register of Deeds within which to redeem the foreclosed
real estate.27 After that one-year period, he loses all his interests over it. This is in
consonance with Section 78 of Republic Act 337, otherwise known as the "General
Banking Act," which provides:
SEC. 78. In the event of foreclosure, whether judicially or extrajudicially, of any
mortgage on real estate which is security for any loan granted before the passage
of this Act or under the provisions of this Act, the mortgagor or debtor whose real
property has been sold at public auction, judicially or extrajudicially, for the full or
partial payment of an obligation to any bank, banking, or credit institution, within
the purview of this Act, shall have the right, within one year after the sale of the real
estate as a result of the foreclosure of the respective mortgage, to redeem the
property by paying the amount fixed by the court in the order of execution
(Emphasis supplied.)
Likewise, Section 6 of Act 3135 states:
SEC. 6. In all cases in which an extrajudicial sale is made under the special power
hereinbefore referred to, the debtor, his successors in interest or any judicial
creditor or judgment creditor of said debtor, or any person having a lien on the

property subsequent to the mortgage or deed of trust under which the property is
sold, may redeem the same at any time within the term of one year from and after
the date of the sale; (Emphasis supplied.)
Well established is the rule that after the consolidation of title in the buyers name,
for failure of the mortgagor to redeem, the writ of possession becomes a matter of
right.28 Its issuance to a purchaser in an extrajudicial foreclosure is merely a
ministerial function.29 The writ of possession issues as a matter of course upon the
filing of the proper motion and the approval of the corresponding bond. The judge
issuing the writ following these express provisions of law neither exercises his
official discretion nor judgment.30 As such, the court granting the writ cannot be
charged with having acted without jurisdiction or with grave abuse of discretion.
Petitioners cite the 1987 case of Cometa vs. IAC,31 to bolster their argument that a
writ of possession should not be granted in the light of a pending case for
annulment of the foreclosure sale wherein the properties were sold at an unusually
low price. We note that petitioners reliance thereon is as flawed as their citation
thereof.32 In said case, there was a pending action where the validity of the levy
and sale of the properties in question were directly put in issue, which is not the
case here. Special Civil Case No. 93-2521 pending before the Makati RTC for
reformation of instrument is not the pending case as contemplated in Cometa
because (1) the sale and levy of the property are not directly put in issue, and (2)
the Makati RTC could not have taken cognizance of the foreclosure proceedings of
the Quezon City property for lack of jurisdiction. A direct action for annulment of the
foreclosure sale of the subject property should have been filed in the RTC of Quezon
City where the property is located.
More instructive is the 1997 case of Arcega vs. CA,33 where we held that the
purchaser in a foreclosure sale is entitled to possession of the property:
Respondent banks right to possess the property is clear and is based on its right of
ownership as a purchaser of the properties in the foreclosure sale to whom title has
been conveyed. Under Section 7 of Act No. 3135 and Section 35 [now Section 33] of
Rule 39, the purchaser in a foreclosure sale is entitled to possession of the property.
The bank in this case has a better right to possess the subject property because of
its title over the same. (Emphasis supplied.)
If only to stress the writs ministerial character, we have, in a case more recent than
Cometa, disallowed injunction prohibiting its issuance,34 just as we have held that
its issuance may not be stayed by a pending action for annulment of mortgage or
the foreclosure itself.35
Guided by the foregoing principles, until the foreclosure sale of the property in
question is annulled by a court of competent jurisdiction, petitioners are bereft of

valid title and right to prevent the issuance of a writ of possession to respondent
corporation. Until then, it is the trial courts ministerial function to grant the
possessory writ to said corporation. No error could be attributed to the respondent
appellate court for affirming the trial courts order in favor of private respondent,
Advance Capital Corporation.
WHEREFORE, the instant petition is DENIED for lack of merit. The challenged
decision of the Court of Appeals dated December 20, 1999 in CA-G.R. SP No. 54949
is AFFIRMED. Costs against petitioners.
SO ORDERED.

G.R. No. 154355

May 20, 2004

Spouses REMPSON SAMSON and MILAGROS SAMSON; and REMPSON

REALTY & DEVELOPMENT CORPORATION petitioners,
vs.
Judge MAURICIO M. RIVERA, in His Capacity as Presiding Judge of the
Regional Trial Court of Antipolo City, Branch 73; Atty. JOSELITA MALIBAGOSANTOS, in Her Capacity as Ex Officio Sheriff, RTC of Antipolo City; and
LENJUL REALTY CORPORATION, respondents.
DECISION
PANGANIBAN**, J.:
In denying the Petition, this Court applies the well-entrenched rule that the buyer in
an extrajudicial foreclosure sale is entitled to possession of the purchased property.
Any question regarding the regularity and validity of the mortgage and foreclosure
sale may be determined only after the issuance of the writ of possession.
The Case
Before us is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to
set aside the March 7, 2002 Resolution2 and the July 18, 2002 Resolution3 of the
Court of Appeals (CA) in CA-GR SP No. 69266. The March 7, 2002 Resolution
disposed as follows:
"WHEREFORE, the instant petition is DISMISSED."4
The July 18, 2002 Resolution denied reconsideration.

The Facts
The pertinent facts are undisputed. Petitioner Spouses Rempson and Milagros
Samson incurred from Far East Bank and Trust Company (FEBTC) loan obligations,
the principal of which amounted to fifty-five million pesos (P55,000,000).5 On
October 10, 1994 and February 22, 1996, in order to secure the payment of the loan
obligations, Spouses Samson executed in favor of FEBTC two real estate mortgages
covering five parcels of commercial property located at Antipolo City, Rizal.6
Petitioner spouses failed to settle their loan obligations. Thus, on May 16, 2000,
FEBTC filed an Application for Extra-Judicial Foreclosure of Real Estate Mortgage7
before the Office of the Clerk of Court and Ex-Officio Sheriff of the Regional Trial
Court (RTC) of Antipolo City.8 In their application, FEBTC requested the said office to
foreclose the two mortgages extrajudicially, in the manner and form prescribed by
Act 3135, as amended, to satisfy the debt of P72,219,158.45, inclusive of interest,
penalties and other charges.9
Acting on the application, the Office of the Clerk of Court and Ex-Officio Sheriff
issued a Notice of Sheriff Sale dated May 19, 2000,10 setting the foreclosure sale on
June 22, 2000.11 There was only one bidder during the foreclosure sale, so in
accordance with AM 99-10-05-0,12 the sheriff postponed the auction to July 5,
2000.13
On July 5, 2000, the auction sale proceeded with two bidders participating -- FEBTC
and Lenjul Realty and Development Corporation, with the latter declared as the
highest bidder in the amount of eighty million pesos (P80,000,000).14 On July 11,
2000, a Certificate of Sheriffs Sale was issued confirming the sale of the foreclosed
properties to the winning bidder.15 Shortly thereafter, the Certificate of Sale was
registered with the Registry of Deeds of Antipolo City.16 On February 19, 2001, new
Certificates of Title over the foreclosed properties were issued by the Register of
Deeds of Antipolo City in favor of Lenjul Realty Corporation.17
On April 3, 2001, Private Respondent Lenjul Realty filed a Petition for the Issuance of
a Writ of Possession, which sought an ex parte issuance of a writ of possession over
the foreclosed properties.18 The Petition was docketed as Land Registration Case
No. 01-2698 and raffled to Branch 73 presided by Judge Mauricio M. Rivera.19 On
June 11, 2001 and June 15, 2001, Spouses Samson and Rempson Corporation filed
their respective Answer/Opposition.20
While the Petition was pending, Spouses Samson and Rempson Corporation filed
with the Antipolo City RTC, an action for Annulment of Extra-Judicial Foreclosure
and/or Nullification of Sale and the Certificates of Title, plus Reconveyance and
Damages with Prayer for a Temporary Restraining Order and/or Writ of Preliminary
Injunction. Petitioners filed it against Lenjul Realty Corporation, FEBTC, Bank of the

Philippine Islands, Joselita Malibao-Santos in her capacity as the clerk of court and
ex officio sheriff of the Antipolo City RTC, and the Register of Deeds of Antipolo City.
The case was docketed as Civil Case No. 01-6219 and raffled to Branch 71 presided
by Judge Felix S. Caballes.21 On August 15, 2001, upon motion of Petitioner
Rempson Realty and Development Corporation, Judge Caballes issued an Order
directing the consolidation of the civil case with the land registration case.22
On September 18, 2001, Judge Rivera issued an order denying the consolidation of
the Petition for Writ of Possession and the civil case for annulment of foreclosure.23
On October 22, 2001 and December 4, 2001, respectively, Rempson Corporation
and Spouses Samson moved for a reconsideration of the September 18, 2001 Order
denying consolidation.24
On November 5, 2001, Judge Rivera gave due course to the Petition for the Issuance
of a Writ of Possession and denied the Opposition of Spouses Samson and Rempson
Corporation.25 Thus, they filed their respective Motions for Reconsideration on
December 4, 2001 and December 7, 2001.26
On February 11, 2002, Judge Rivera denied reconsideration of the Order giving due
course to the Petition for the Issuance of the Writ of Possession and directed the
issuance of such writ of possession.27
On February 20, 2002, Judge Rivera issued an Order granting petitioners Motion for
Reconsideration with regard to the September 18, 2001 Order denying the
consolidation of cases.28
On February 26, 2002, a Writ of Possession29 was issued directing the sheriff of the
Antipolo City RTC to place Lenjul Realty Corporation in physical possession of the
foreclosed properties. On the same date, the sheriff issued a Notice to Vacate30
addressed to Rempson Corporation, ordering it to leave the properties on or before
March 2, 2002.
On February 22, 2002, petitioners filed with the Court of Appeals the aforesaid
Special Civil Action for Certiorari with Prohibition/Mandamus under Rule 65 with an
Application for Issuance of a Writ of Preliminary Injunction and/or Temporary
Restraining Order to annul the November 5, 2001 and the February 11, 2002 Orders
of Judge Rivera.31
Ruling of the Court of Appeals
The Court of Appeals ruled that certiorari was improper, because there was an
adequate remedy in the ordinary course of law. Citing Section 8 of Act No. 3135, it
opined that petitioners remedy was to file a petition to set aside the foreclosure
sale and to cancel the writ of possession in LR Case No. 01-2698. The CA further

noted that certiorari was premature inasmuch as petitioners had failed to file a
motion for reconsideration of the Order directing the issuance of the writ of
possession.32
In denying the Motion for Reconsideration, the Court of Appeals held that the
issuance of a writ of possession was a ministerial function that was done upon the
filing of the proper motion and the approval of the corresponding bond.33 It further
ruled that prohibition did not lie to enjoin the implementation of the writ.34
Hence this Petition.35
The Issues
In their Memorandum, petitioners assign the following issues for our consideration:
"1.) Whether or not the Court of Appeals had erroneously affirmed the ruling of x x x
Judge Rivera ordering the immediate issuance of a writ of possession in favor of
private respondent Lenjul Realty Corporation without first requiring presentation of
evidence and formal offer thereof;
"2.) Whether or not the Court of Appeals had erroneously affirmed the ruling of x x x
Judge Rivera upholding the validity of the issuance of new titles over the foreclosed
properties in the name of Private Respondent Lenjul Realty Corporation despite the
fact that the consolidation of ownership therein was done prior to the expiration of
the 1-year period of redemption.
"3.) Whether or not the Court of Appeals had erroneously affirmed the ruling of x x x
Judge Rivera upholding the now 3-month period of redemption for juridical
mortgagors under the General Banking Act of Year 2000 and the application of said
law retroactively as to violate the equal protection clause of the [n]ew Constitution
and the prohibition therein on non-impairment of contracts.
"4.) Whether or not the Court of Appeals had erroneously affirmed the ruling of x x x
Judge Rivera refusing consolidation of the annulment case pending in the sala of
Judge Caballes with the case below despite the fact that petitioners had already
contested Private Respondent Lenjul Realty Corporations presumed ownership over
the foreclosed properties so that the issue of such presumed ownership should first
be resolved before the petition for writ of possession is heard.
"5.) Whether or not the Court of Appeals had erroneously affirmed the ruling of x x x
Judge Rivera giving due course to the petition for writ of possession despite the fact
that Private Respondent Lenjul Realty Corporation was not the winning bidder at the
foreclosure sale, nor a transferee and/or successor-in-interest of the rightful winning
bidder Lenjul Realty and Development Corporation.

"6.) Whether or not the Court of Appeals had erroneously affirmed the ruling of x x x
Judge Rivera ignoring and disregarding existing rules of procedure and
jurisprudence that foreclosed properties, consisting of separate lots covered by
individual transfer certificates of title, should be sold separately and not en masse.
"7.) Whether or not the Court of Appeals had erred in dismissing the special civil
action for certiorari on grounds of perceived technicalities and/or alleged procedural
imperfections rather than on its merits."36
The issues to be addressed in this case are as follows: (1) whether the trial court
committed grave abuse of discretion in granting the Petition for the Issuance of a
Writ of Possession; and (2) whether the filing of a Petition for Certiorari with the
Court of Appeals was the proper remedy.
The Courts Ruling
The Petition has no merit.
First Issue:
Writ of Possession
The Court of Appeals correctly sustained the issuance of the Writ of Possession. The
issuance of the Writ is explicitly authorized by Act 313537 (as amended by Act
4118), which regulates the methods of effecting an extrajudicial foreclosure of
mortgage.38 Section 7 thereof provides:
"Section 7. Possession during redemption period. In any sale made under the
provisions of this Act, the purchaser may petition the [Regional Trial Court] where
the property or any part thereof is situated, to give him possession thereof during
the redemption period, furnishing bond in an amount equivalent to the use of the
property for a period of twelve months, to indemnify the debtor in case it be shown
that the sale was made without violating the mortgage or without complying with
the requirements of this Act. Such petition shall be made under oath and filed in
form of an ex parte motion in the registration or cadastral proceedings if the
property is registered, or in special proceedings in the case of property registered
under the Mortgage Law or under section one hundred and ninety-four of the
Administrative Code, or of any other real property encumbered with a mortgage
duly registered in the office of any register of deeds in accordance with any existing
law, and in each case the clerk of the court shall, upon the filing of such petition,
collect the fees specified in paragraph eleven of section one hundred and fourteen
of Act Numbered Four hundred and ninety-six, as amended by Act Numbered
Twenty-eight hundred and sixty-six, and the court shall, upon approval of the bond,

order that a writ of possession issue, addressed to the sheriff of the province in
which the property is situated, who shall execute said order immediately."
Entitlement to Writ of Possession
Under the provision cited above, the purchaser in a foreclosure sale may apply for a
writ of possession during the redemption period by filing for that purpose an ex
parte motion under oath, in the corresponding registration or cadastral proceeding
in the case of a property with torrens title. Upon the filing of such motion and the
approval of the corresponding bond, the court is expressly directed to issue the
writ.39
This Court has consistently held that the duty of the trial court to grant a writ of
possession is ministerial.40 Such writ issues as a matter of course upon the filing of
the proper motion and the approval of the corresponding bond. No discretion is left
to the trial court.41 Any question regarding the regularity and validity of the sale, as
well as the consequent cancellation of the writ, is to be determined in a subsequent
proceeding as outlined in Section 8 of Act 3135.42 Such question cannot be raised
to oppose the issuance of the writ, since the proceeding is ex parte.43 The recourse
is available even before the expiration of the redemption period provided by law
and the Rules of Court.44
The purchaser, who has a right to possession that extends after the expiration of
the redemption period,45 becomes the absolute owner of the property when no
redemption is made. Hence, at any time following the consolidation of ownership
and the issuance of a new transfer certificate of title in the name of the purchaser,
he or she is even more entitled to possession of the property.46 In such a case, the
bond required under Section 7 of Act 3135 is no longer necessary, since possession
becomes an absolute right of the purchaser as the confirmed owner.47
The Petition for Writ of Possession Not Stayed by the Annulment Case
This Court has long settled that a pending action for annulment of mortgage or
foreclosure does not stay the issuance of a writ of possession.48 Therefore, the
contention of petitioners that the RTC should have consolidated Civil Case No. 016219 with LR Case No. 01-2698 and resolved the annulment case prior to the
issuance of the Writ of Possession is unavailing.
Their reliance on Active Wood Products Co., Inc. v. Court of Appeals49 is misplaced.
In that case, the sole issue was the consolidation of a civil case regarding the
validity of the mortgage and a land registration case for the issuance of a writ of
possession. It did not declare that the writ of possession must be stayed until the
questions on the mortgage or the foreclosure sale were resolved. Moreover, the

issue of consolidation in the present case has become moot, considering that the
trial court has already granted it.
Second Issue:
Proper Remedy
The Court of Appeals correctly declared that petitioners pursued the wrong remedy.
A special civil action for certiorari could be availed of only if the lower tribunal has
acted without or in excess of jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction; and if there is no appeal or any other
plain, speedy, and adequate remedy in the ordinary course of law.50
No Grave Abuse of Discretion
There is grave abuse when the court -- in the exercise of its judgment -- acts in a
capricious, whimsical, arbitrary or despotic manner equivalent to acting with lack of
jurisdiction.51 Considering that the trial court issued the Writ of Possession in
compliance with the express provisions of Act 3135, it cannot be charged with
having acted in excess of its jurisdiction or with grave abuse of discretion.52
Since there was no grave abuse of discretion, petitioner should have filed an
ordinary appeal instead of a petition for certiorari. In GSIS v. CA,53 this Court held
that "the wisdom or soundness of the x x x order granting [the] writ of possession x
x x is a matter of judgment [in] which the remedy is ordinary appeal."54 An error of
judgment committed by a court in the exercise of its legitimate jurisdiction is not
the same as "grave abuse of discretion."55 Errors of judgment are correctible by
appeal, while those of jurisdiction are reviewable by certiorari.56
Available Remedy
Section 8 of Act 3135 provides the plain, speedy, and adequate remedy in opposing
the issuance of a writ of possession.57 The provision reads:
"Section 8. Setting aside of sale and writ of possession. The debtor may, in the
proceedings in which possession was requested, but not later than thirty days after
the purchaser was given possession, petition that the sale be set aside and the writ
of possession cancelled, specifying the damages suffered by him, because the
mortgage was not violated or the sale was not made in accordance with the
provisions hereof, and the court shall take cognizance of this petition in accordance
with the summary procedure provided for in section one hundred and twelve of Act
Numbered Four hundred and ninety-six; and if it finds the complaint of the debtor
justified, it shall dispose in his favor of all or part of the bond furnished by the
person who obtained possession. Either of the parties may appeal from the order of
the judge in accordance with section fourteen of Act Numbered Four hundred and

ninety-six; but the order of possession shall continue in effect during the pendency
of the appeal." (Emphasis supplied)
A party may petition for the setting aside of a foreclosure sale and for the
cancellation of a writ of possession in the same proceedings where the writ of
possession was requested. In petitioners case, the filing of the Petition is no longer
necessary because the pendency of Civil Case No. 01-6219 (which was consolidated
with the present case) already challenged the foreclosure sale.
Pending proceedings assailing the issuance of the writ, the purchaser in a
foreclosure sale is entitled to possession of property. If the trial court later finds
merit in a petition to set the writ aside, it shall dispose in favor of the mortgagor the
bond furnished by the purchaser.58
It should also be noted that prior to the filing of a petition for certiorari, a motion for
reconsideration is generally required.59 Petitioner may have filed a Motion for
Reconsideration with regard to the trial courts Order giving due course to the
Petition, but not with regard to the Order directing the issuance of a writ of
possession.
Finally, petitioners allegation that the RTC issued the Writ of Possession despite
failing to receive evidence is unsupported by the record. The documents submitted
to this Court show sufficient basis for the trial court to rule accordingly. Despite the
ex parte nature of the proceedings, and aside from the oral arguments, the RTC
allowed petitioners to file pleadings to oppose the Petition for the issuance of the
Writ of Possession.
Other Issues
The other issues raised by petitioners are factual matters which, subject to certain
exceptions not applicable here,60 this Court does not review. Moreover, petitioners
rely on factual matters on which the trial court has yet to make any finding. The
tenability of their arguments should be ventilated in Civil Case No. 01-6219, an
"Annulment of Extra-Judicial Foreclosure and/or Nullification of Sale and the
Certificates of Title, plus Reconveyance and Damages." Those factual issues cannot
be ruled upon in these proceedings.
WHEREFORE, the Petition is DENIED, and the assailed Resolutions of the Court of
Appeals AFFIRMED. Costs against petitioners.
SO ORDERED.

G.R. No. 155673

January 14, 2005

SPOUSES SALVADOR F. DE VERA and FELIZA V. DE VERA, petitioners,

vs.
HON. GUILLERMO P. AGLORO, Presiding Judge, RTC Branch 83 Malolos,
Bulacan and BPI FAMILY SAVINGS BANK, INC., respondents.
DECISION
CALLEJO, SR., J.:
This is a petition for review on certiorari with urgent application for temporary
restraining order/preliminary injunction of the March 22, 2002 Decision1 of the
Court of Appeals (CA) in CA-G.R. SP No. 67164.
On March 25, 1996, the Spouses Salvador F. De Vera and Feliza V. De Vera secured a
loan in the amount of P1,200,000.00 from the BPI Family Savings Bank, Inc. (the
Bank, for brevity).2 To secure the payment thereof, the Spouses executed a Real
Estate Mortgage over their property located in Guiguinto, Bulacan, with an area of
232 square meters covered by Transfer Certificate of Title (TCT) No. T-85716.3 When
the Spouses De Vera defaulted in the payment of the balance of their loan
amounting to P1,091,484.01 and failed to pay despite demands of the Bank, the
latter filed a petition4 with the ex-officio sheriff of the Regional Trial Court (RTC) of
Malolos, Bulacan, for the extrajudicial foreclosure of the real estate mortgage. At the
public auction scheduled on October 9, 1998, the Bank was declared the highest
bidder for the property. On October 18, 1998, the Sheriff executed a certificate of
sale5 in favor of the Bank. On November 18, 1999, the Bank filed in the Office of the
Register of Deeds an affidavit for the consolidation of its ownership over the
property.6 Thus, on December 1, 1999, TCT No. T-133862 was issued in the name of
the Bank.7
On February 11, 2000, the Spouses De Vera filed a Complaint8 for the nullification of
the real estate mortgage against the Bank and the Sheriff with the RTC of Malolos,
Bulacan, as well as the extrajudicial sale of the property at public auction. The
Spouses prayed that, after due proceedings, judgment be rendered in their favor as
follows:
WHEREFORE, it is most respectfully prayed that, after hearing, judgment be
rendered:
1. Setting aside the Mortgage Loan Agreement and any/all contracts, accessory or
subsidiary thereto;

2. Setting aside the foreclosure proceedings and the issuance of new title to the
defendant Bank;
3. Allowing the plaintiffs to pay to the defendant Bank what is legal, just and
equitable under the premises;
4. Sentencing defendant Bank to pay plaintiffs the following items of damages:
a. At least P500,000.00 as actual or compensatory damages;
b. At least P100,000.00 as moral damages;
c. At least P100,000.00 as exemplary damages;
d. 25% of total recovery as attorneys fees;
e. Cost of suit.9
The case was docketed as Civil Case No. 109-M-2000 and was raffled to Branch 83
of the court. On February 23, 2000, the Bank filed an Ex Parte Petition for Writ of
Possession with the RTC of Malolos, Bulacan, docketed as LRC Case No. P-97-2000.
The case was raffled to Branch 83 of the court. The Bank impleaded the Spouses as
respondents and prayed that after an ex parte hearing, an order be issued as
follows:
1. Granting petitioner a writ of possession over the properties covered by TCT No. T133862 of the Registry of Deeds of Bulacan, together with all the improvements
thereon; and
2. Ordering the Sheriff or any of his duly authorized deputies to immediately place
petitioner in possession thereof.
3. Petitioner further prays for such other reliefs as may be deemed just and
equitable under the premises.10
The trial court set the petition for hearing at 8:30 a.m. of August 16, 2000 at the
Building of the Bulwagan ng Katarungan, Provincial Capitol Compound in Malolos,
Bulacan.11
When the petition was called for hearing on August 16, 2000, no oppositor
appeared. Forthwith, the trial court authorized its Branch Clerk of Court to receive
the evidence of the Bank ex parte,12 and the Bank adduced its testimonial and
documentary evidence ex parte on August 28, 2000.

On September 8, 2000, the Spouses De Vera filed in LRC Case No. P-97-2000 an
Urgent Motion to Suspend Proceedings to await the resolution of Civil Case No. 109M-2000 or for the consolidation of the two cases. The Spouses cited the rulings of
this Court in Barican v. IAC13 and Sulit v. Court of Appeals .14 Opposing the motion,
the Bank alleged that the pendency of Civil Case No. 109-M-2000 was not a bar to
the petition for a writ of possession because the issuance of the said writ was
ministerial on the part of the trial court. The petitioner cited the rulings of this Court
in Ong v. Court of Appeals15 and Vaca v. Court of Appeals.16
In an Order17 dated February 13, 2001, the trial court denied the motion of the
Spouses. Citing the case of Vda. de Zaballero v. CA,18 the trial court ruled that the
purchaser of the foreclosed property, upon ex parte application and the posting of
the required bond, has the right to acquire possession of the foreclosed property
during the 12-month redemption period. According to the trial court, this is
sanctioned under Section 7 of Act No. 3135, as amended by Act No. 4118. The trial
court also declared that considering that the redemption period had already
expired, the Bank as purchaser, can, and with more reason, demand for a writ of
possession.
The trial court emphasized that it is its ministerial duty to issue the writ of
possession in favor of a purchaser at public auction, and that such duty could not be
defeated by the pendency of a civil case, in this instance Civil Case No. 109-M2000.19
A motion for reconsideration was filed by the Spouses De Vera which was denied in
an Order20 dated September 7, 2001. The trial court cited the case of Banco Filipino
Savings and Mortgage Bank v. IAC,21 which reiterated the rule that a purchaser in a
foreclosed sale of mortgaged property is entitled to a writ of possession and that
upon an ex parte petition of the purchaser, it is ministerial upon the trial court to
issue such writ in the latters favor. It added that the pendency of a separate civil
action questioning the validity of the mortgage or its foreclosure cannot be a legal
ground for refusing the issuance of the writ of possession.
Aggrieved, the Spouses De Vera filed a petition for certiorari and mandamus with
temporary restraining order and writ of preliminary injunction before the CA
docketed as CA-G.R. SP No. 67164. Therein, they alleged that:
A.
PUBLIC RESPONDENT GRAVELY ABUSED HIS DISCRETION IN NOT SUSPENDING THE
PETITION FOR WRIT OF POSSESSION DESPITE THE PENDENCY OF CIVIL CASE NO.
109-M-2000, WHICH IS A VIRTUAL REFUSAL TO PERFORM A BOUNDEN DUTY
ENJOINED BY LAW AND JURISPRUDENCE, TENDING TO RENDER SAID CASE MOOT

AND ACADEMIC, AND EXPOSING THE PETITIONERS TO GREAT AND IRREPARABLE

INJURIES AS THEY STAND TO BE OUSTED FROM THEIR HOUSE AND LOT.
B.
PUBLIC RESPONDENT GRAVELY ABUSED HIS DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION IN DENYING PETITIONERS MOTION FOR
RECONSIDERATION DESPITE CLEAR GROUND TO RECONSIDER THE ORDER DATED
FEBRUARY 11, 2001.
The Bank posited that Section 7 of Act No. 3135, as amended by Act No. 4118,
authorizes it to obtain a writ of possession by filing a petition under oath in the
registration or cadastral proceedings in the form of an ex parte motion. It further
emphasized that the issuance of a writ of possession is a ministerial duty of the trial
court, as held in Spouses Ong v. Court of Appeals .22
On March 22, 2002, the CA rendered a decision denying due course to and
dismissing the petition. The dispositive portion reads:
WHEREFORE, premises considered, the present petition is hereby DENIED DUE
COURSE and accordingly DISMISSED, for lack of merit.23
The CA ruled that the respondent judge did not act with grave abuse of discretion
when he denied the petitioners motion to suspend proceedings. It reasoned that
since the subject parcel of land (with all its improvements) was not redeemed within
one (1) year from the registration of the extrajudicial foreclosure sale, it follows that
the bank, as purchaser thereof, acquired an absolute right to the writ of possession.
It emphasized that the land registration court has the ministerial duty to issue the
writ of possession upon mere motion, conformably to Section 7, Act No. 3135, as
amended. Thus, the CA found that the Spouses De Vera failed to show that the
injunctive relief prayed for was warranted.
The Spouses filed a motion for reconsideration which the appellate court denied in a
Resolution24 dated October 15, 2002.
The Spouses forthwith filed their petition for review on certiorari under Rule 45 of
the Rules of Court assailing the decision and the October 15, 2002 Resolution of the
CA, asserting that:
A. THE COURT OF APPEALS ERRED IN NOT SUSPENDING THE PROCEEDINGS IN LRC
CASE NO. N-3507 BECAUSE OF THE PENDENCY OF CIVIL CASE NO. 109-M-2000
FILED BY PETITIONERS SEEKING THE NULLITY, NOT ONLY OF THE FORECLOSURE
AND AUCTION SALE, BUT ALSO OF THE MORTGAGE ITSELF.25

B. THE RESPONDENT JUDGE SHOULD [HAVE] CONSOLIDATED THE P-97-2000 LRC

CASE NO. 3507 WITH CIVIL CASE NO. 109-M-2000 (BRANCH 83, RTC, BULACAN).26
The petition has no merit.
Section 6 of Act No. 313527 provides that the mortgagor or his successor-in-interest
may redeem the foreclosed property within one (1) year from the registration of the
sale with the Register of Deeds. Under Section 728 of the law, if the mortgagor fails
to redeem the property, the buyer at public auction may file, with the RTC in the
province or place where the property or portion thereof is located, an ex parte
motion for the issuance of a writ of possession within one (1) year from the
registration of the Sheriffs Certificate of Sale, and the court shall grant the said
motion upon the petitioners posting a bond in an amount equivalent to the use of
the property for a period of twelve (12) months. On the strength of the writ of
possession, the Sheriff is duty-bound to place the buyer at public auction in actual
possession of the foreclosed property.29 After the one-year period, the mortgagor
loses all interest over it.30 The purchaser, who has a right to possession that
extends after the expiration of the redemption period, becomes the absolute owner
of the property when no redemption is made.31 Thus, the bond required under
Section 7 of Act No. 3135 is no longer needed. The possession of land becomes an
absolute right of the purchaser as confirmed owner.32 The purchaser can demand
possession at any time following the consolidation of ownership in his name and the
issuance to him of a new transfer certificate of title. After the consolidation of title in
the buyers name for failure of the mortgagor to redeem the property, the writ of
possession becomes a matter of right. Its issuance to a purchaser in an extrajudicial
foreclosure sale is merely a ministerial function.33
In the present case, the petitioners-mortgagors failed to redeem the property within
one (1) year from the registration of the Sheriffs Certificate of Sale with the
Register of Deeds. The respondent, being the purchaser of the property at public
auction, thus, had the right to file an ex parte motion for the issuance of a writ of
possession; and considering that it was its ministerial duty to do so, the trial court
had to grant the motion and to thereafter issue the writ of possession.
The bare fact that the petitioners were impleaded in the ex parte petition for a writ
of possession filed by the respondent did not alter the summary nature of the
proceedings in Act No. 3135. Indeed, there was no need for the respondent to
implead the petitioners as parties-respondents in its petition with the RTC. Hence,
the petitioners cannot claim that they were denied due process when the RTC took
cognizance of the respondents petition without prior service of copies of the
petition and of the notice of hearing thereof on them.
Neither was there a need for the court to suspend the proceedings merely and
solely because the petitioners filed a complaint in the RTC for the nullification of the

real estate mortgage, the sale at public auction and the Sheriffs Certificate of Sale
issued in favor of the respondent.
First. An ex parte petition for the issuance of a possessory writ under Section 7 of
Act No. 3135 is not, strictly speaking, a "judicial process" as contemplated in Article
433 of the Civil Code.34 It is a judicial proceeding for the enforcement of ones right
of possession as purchaser in a foreclosure sale. It is not an ordinary suit filed in
court, by which one party "sues another for the enforcement of a wrong or
protection of a right, or the prevention or redress of a wrong." It is a non-litigious
proceeding authorized in an extrajudicial foreclosure of mortgage pursuant to Act
No. 3135, as amended.35 It is brought for the benefit of one party only, and without
notice to, or consent by any person adversely interested.36 It is a proceeding where
the relief is granted without an opportunity for the person against whom the relief is
sought to be heard.37 No notice is needed to be served upon persons interested in
the subject property. Hence, there is no necessity of giving notice to the petitioners
since they had already lost all their interests in the property when they failed to
redeem the same.38
Second. As a rule, any question regarding the validity of the mortgage or its
foreclosure cannot be a legal ground for refusing the issuance of a writ of
execution.39 The right of the purchaser to have possession of the subject property
would not be defeated notwithstanding the pendency of a civil case seeking the
annulment of the mortgage or of the extrajudicial foreclosure.40 Indeed, under
Section 8 of Act No. 3135,41 even if the mortgagor files a petition assailing the writ
of possession granted to the buyer and the sale at public auction within thirty (30)
days from the issuance of a writ of possession in favor of the buyer at public auction
of the property, and the court denies the same, the buyer may appeal the order of
denial. However, the buyer at public auction remains in possession of the property
pending resolution of the appeal. We have consistently ruled that it is the ministerial
duty of the court to issue writ of possession in favor of the purchaser in a
foreclosure sale. The trial court has no discretion on this matter.42
On the issue of whether the RTC was mandated to consolidate LRC Case No. P-972000 and Civil Case No. 109-M-2000, we agree with the following ruling of the CA:
Neither can the prayer for mandamus be granted under the present
circumstances. The reason is simple: Mandamus as a remedy applies only where
petitioners right is founded clearly in law and not when it is doubtful. It will not
issue to give to him something to which he is not clearly and conclusively entitled.
Here, respondent JUDGEs ministerial duty in issuing the questioned issuance of the
writ of possession finds ample support not only in the jurisprudence laid down by
the Supreme Court in Navarra, but also in the case of Philippine National Bank v.
Adil:

"The rule, therefore, is that after the redemption period has expired, the purchaser
of the property has the right to be placed in possession thereof. Accordingly, it is the
inescapable duty of the Sheriff to enforce the writ of possession especially as in this
case, a new title has already been issued in the name of the purchaser." (Emphasis
supplied)
Therefore, petitioners, who failed to establish a clear right, cannot compel
respondent JUDGE to deviate from his duty to issue the writ of possession which is
ministerial in nature, not requiring the exercise of sound discretion, especially since,
as we have said, the redemption period has expired and a new title has already
been issued in the name of BPI. As correctly pointed out in the assailed Order dated
February 13, 2001:
"x x x it is its ministerial duty to issue the writ of possession in favor of a purchaser
in a foreclosure sale and the right of the petitioner cannot be defeated
notwithstanding the pendency of Civil Case No. 109-M-2000 being invoked by herein
oppositor."43
Section 1, Rule 31 of the Rules of Court, as amended, reads:
Section 1. Consolidation. When actions involving a common question of law or fact
are pending before the court, it may order a joint hearing or trial of any or all the
matters in issue in the actions; it may order all the actions consolidated; and it may
make such orders concerning proceedings therein as may tend to avoid
unnecessary costs or delay.
It is plain as day that the trial court is not mandated to consolidate two or more
related cases. The trial court is vested with discretion whether or not to consolidate
two or more cases.44 The grant of discretion to the trial court is incompatible with
the clear legal duty, the existence of which is essential to warrant the issuance of a
writ of mandamus.
It bears stressing that consolidation is aimed to obtain justice with the least
expense and vexation to the litigants. The object of consolidation is to avoid
multiplicity of suits, guard against oppression or abuse, prevent delays and save the
litigants unnecessary acts and expense.45 Consolidation should be denied when
prejudice would result to any of the parties or would cause complications, delay,
prejudice, cut off, or restrict the rights of a party.46
In the present case, the trial court acted in the exercise of its sound judicial
discretion in denying the motion of the petitioners for the consolidation of LRC Case
No. P-97-2000 with Civil Case No. 109-M-2000.

First. The proceedings in LRC Case No. P-97-2000 is not, strictly speaking, a judicial
process and is a non-litigious proceeding; it is summary in nature. In contrast, the
action in Civil Case No. 109-M-2000 is an ordinary civil action and adversarial in
character. The rights of the respondent in LRC Case No. P-97-2000 would be
prejudiced if the said case were to be consolidated with Civil Case No. 109-M-2000,
especially since it had already adduced its evidence.
Second. The matter of whether or not consolidation is proper has certainly become
moot and academic. The RTC had already issued an order granting the writ of
possession in favor of the respondent herein, and declared that the latter had
already been placed in actual possession of the property per its Order of November
8, 2002. The petitioners herein had already appealed the said order of the RTC
granting the writ of possession to the CA on December 2, 2002. In the meantime,
Civil Case No. 109-M-2000 is still pending trial in Branch 83 of the RTC of Malolos,
Bulacan.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. The
decision of the Court of Appeals in CA-G.R. SP No. 67164 is AFFIRMED. Costs against
the petitioners.
SO ORDERED.
f.Rights of Subsequent Lien holder
G.R. No. 86679

July 23, 1991

PHILIPPINE NATIONAL BANK, petitioner,

vs.
INTERNATIONAL CORPORATE BANK and COURT OF APPEALS, *
respondents.
Domingo A. Santiago, Jr., Nicolas C. Alino, Cesar T. Basa and Evelyn A.
Alvarez for petitioner.
A.M. Perez & Associates for private respondent.

REGALADO, J.:p
Challenged in this petition for review on certiorari is the decision of the Court of
Appeals, dated January 31, 1989, in C.A.-G.R. CV No. 12342 affirming the decision of
the Regional Trial Court of Alaminos, Pangasinan, acting as a land registration court,

which dismissed petitioner's application for the cancellation of annotations of an

encumbrance on its transfer certificates of title. 1
As found by respondent court and sustained by the record, on May 7, 1985,
petitioner filed with the Regional Trial Court of Alaminos, Pangasinan and docketed
therein as LRC No. A-229, Record No. N-33399, a petition for the cancellation of a
memorandum of encumbrance annotated upon its sixteen (16) transfer certificates
of title. As a backdrop, petitioner alleged that spouses Archimedes J. Balingit and Ely
Suntay executed in its favor the following real estate mortgages, to wit:
2.
On December 16, 1966, a real estate mortgage was executed and registered
on December 19, 1966 with the Register of Deeds of Alaminos, Pangasinan. The
corresponding annotations were made on Transfer Certificates of Title Nos. 49020
and 49021 covering the mortgaged parcels of land as entry No. 264514 therein.
3.
On September 14, 1967, an amendment of mortgage was executed in favor
of the petitioner and registered on September 15, 1967 with the Register of Deeds
of Alaminos, Pangasinan. The corresponding annotations were made on the
aforesaid Transfer Certificates of Title Nos. 49020 and 49021 as entry No. 282423
therein.
4.
On August 1, 1968, another real estate mortgage was executed and
registered on August 2, 1968 with the Register of Deeds of Alaminos, Pangasinan.
The corresponding annotations were made on Original Certificates of Title Nos.
18988, 18987, 19020, 19021, 19017, 19015, 18989, 19018, 19019, 19016, 18983,
18984, 18985 and 18986 covering the mortgaged parcels of land as entry No.
302341 therein.
5.
On October 31, 1968, a real estate mortgage was executed in favor of the
petitioner and registered on November 4, 1968 with the Register of Deeds of
Alaminos, Pangasinan. The corresponding annotations were made on the Original
Certificates of Title with numbers as enumerated in the immediately preceding
paragraph as entry No. 306445 therein. 2
Annotated subsequent to the foregoing memoranda of the mortgage lien of
petitioner on the above-mentioned properties is a "Notice of Levy re Civil Case No.
69035, CFI-Manila, Continental Bank vs. Archimedes J. Balingit and Ely Suntay
Balingit" for a total sum of P96,636.10, as entry No. 285511 at the back of the titles
enumerated in paragraph 2 and as entry No. 308262 in the titles enumerated in
paragraph 4 of said petition. 3
For failure of the Balingit spouses to settle their loan obligation with petitioner, the
latter extrajudicially foreclosed under Act 3135, as amended, the sixteen (16)
parcels of land covered by the real estate mortgages executed by the said spouses

in favor of petitioner. The sheriff s certificate of sale was registered on April 3, 1972
with the Register of Deeds, with a memorandum thereof duly annotated at the back
of the aforesaid certificates of title of the foreclosed properties.
Upon the expiration of the one-year legal redemption period, petitioner consolidated
in its name the ownership of all the foregoing mortgaged properties for which new
transfer certificates of title were issued in its name. However, the annotation of the
notice of levy in favor of private respondent was carried over to and now appears as
the sole annotated encumbrance in the new titles of petitioner, that is, Transfer
Certificates of Title Nos. 1228, 1229, 1230, 1231, 1232, 1236, 1237, 1238, 1239,
1240, 1242, 1243, 1244, 1216, 1217 and 1218. 4
On May 28, 1986, private respondent International Corporate Bank, as successor in
interest of the defunct Continental Bank, filed an opposition to the petition
contending that, since it was not informed of the extrajudicial foreclosure
proceedings, the new and consolidated titles over the foreclosed properties issued
in favor of herein petitioner are null and void. 5
On August 28, 1986, the lower court rendered a decision, denying the petition for
lack of jurisdiction, the pertinent part whereof reads:
Section 108 of Presidential Decree No. 1529 (Section 112 of Act 496) under which
the petitioner seeks remedy has been interpreted by the Supreme Court that the
relief therein can only be granted if there is no adverse claim or serious objection on
the part of any party in interest otherwise the case becomes controversial and
should be threshed out in an ordinary case or in the case where the incident
properly belongs. Accordingly, an annotation of an adverse claim may be ordered
cancelled only where the issue involved is not controversial or so disputed as to
warrant that it be litigated in an ordinary action. (Tangunan and Tangunan vs.
Republic of the Philippines, 94 Phil. 171; Asturias Sugar Central vs. Segovia, 190
Phil. 383; RP vs. Laperal, 108 Phil. 860; Abustan vs. Ferrer and Golez, 63 O.G. 34,
August 21, 1967 and Cheng vs. Lim (Second Division), L-27614 jointly decided with
L-27148, June 29, 1977).
Considering that the issue of whether the notice of levy should be cancelled as
sought by the petitioner becomes controversial in view of the opposition and
adverse claim of the oppositor Interbank, this Court, as land registration court and
in accordance with the jurisprudence above cited, has no jurisdiction to entertain
and act on the contested petition. The cancellation prayed for should be threshed
out in an ordinary case.
WHEREFORE, the petition is hereby DENIED, without prejudice to the filing of an
ordinary case by the petitioner.

SO ORDERED. 6
Not satisfied therewith, petitioner appealed to respondent Court of Appeals,
asserting that the lower court erred in ruling that (1) there is an adverse claim or
serious objection on the part of oppositor rendering the case controversial and
therefore should be threshed out in an ordinary case; and (2) it has no jurisdiction to
entertain and act on the contested petition. 7
On January 13, 1989, respondent court rendered judgment affirming the appealed
decision, 8 as a consequence of which petitioner is now before us contending that:
I
REGIONAL TRIAL COURTS (RTC's) HAVE JURISDICTION TO ACT UPON PETITIONS
FILED UNDER SEC. 108 OF "THE PROPERTY REGISTRATION DECREE" (P.D. 1529),
WHETHER THEY ARE ACTING AS A LAND REGISTRATION COURT OR A COURT OF
GENERAL JURISDICTION.
II
PURCHASER OF REAL PROPERTY AT AN EXTRAJUDICIAL FORECLOSURE SALE
ACQUIRES SUCH PROPERTY FREE FROM ALL LIENS AND ENCUMBRANCES. THE
ACTION OF REGISTER OF DEEDS IN CARRYING THE ANNOTATION OF THE NOTICES
OF LEVY OVER TO THE NEW TITLE CERTIFICATES ISSUED IN PURCHASER'S FAVOR IS
VOID AND ILLEGAL.
III
SECTION 108 OF "PROPERTY REGISTRATION DECREE" EXPRESSLY ALLOWS THE
SUMMARY AMENDMENT OF CERTIFICATES OF TITLE WHENEVER INTEREST
ANNOTATED HAS "TERMINATED AND CEASED."
IV
REMAND OF PROCEEDINGS TO TRIAL COURT TO DETERMINE PRIORITY OF LIENS
BETWEEN PETITIONER AND RESPONDENT MAY BE UNNECESSARY AS FACTUAL BASIS
OF PNB'S SUPERIOR LIEN IS BORNE OUT AND DISCLOSED BY THE RECORDS OF CASE
BEFORE THIS TRIBUNAL. 9
We find the foregoing contentions meritorious.
The rule that was adopted by respondent Court of Appeals in its decision to the
effect that a regional trial court sitting as a land registration court has limited

jurisdiction and has no authority to resolve controversial issues, which should

accordingly be litigated in a court of general jurisdiction, no longer holds.
We have held that under Section 2 of Presidential Decree No. 1529 (The Property
Registration Decree) which took effect on June 11, 1979, regional trial courts acting
as land registration courts now have exclusive jurisdiction not only over applications
for original registration of title to lands, including improvements and interests
therein, but also over petitions filed after original registration of title, with power to
hear and determine all questions arising upon such applications or petitions. 10
That definitive ruling was precisely to correct the position taken therein by the Court
of Appeals that the court a quo has limited jurisdiction and has no authority to
resolve controversial issues which should be litigated before a court of general
jurisdiction.
In the same case, the Court further noted that even under Act 496 (Land
Registration Act), specifically Section 110 thereof, the court of first instance, sitting
as a land registration court, has the authority to conduct a hearing, receive
evidence, and decide controversial matters with a view to determining whether or
not the filed notice of adverse claim is valid.
The said doctrine was a reiteration of our earlier ruling in Averia, Jr. vs. Caguioa,
etc., et al., 11 as follows:
In Section 2 of the Id P.D. No. 1529, it is clearly provided that:
Sec. 2.
Nature of registration proceedings; jurisdiction of courts. Judicial
proceedings for the registration of lands throughout the Philippines shall be in rem
and shall be based on the generally accepted principles underlying the Torrens
system.
Courts of First Instance shall have exclusive jurisdiction over all applications for
original registration of titles to lands, including improvements and interest therein,
and over an petitions filed after original registration of title, with power to hear and
determine all questions arising upon such applications or petitions . . .
The above provision has eliminated the distinction between the general jurisdiction
vested in the regional trial court and the limited jurisdiction conferred upon it by the
former law when acting merely as a cadastral court. Aimed at avoiding multiplicity
of suits, the change has simplified registration proceedings by conferring upon the
regional trial courts the authority to act not only on applications for "original
registration" but also "over all petitions filed after original registration of title, with
power to hear and determine all questions arising upon such applications or
petitions."

Consequently, and specifically with reference to Section 112 of the Land

Registration Act (now Section 108 of P.D. No. 1529), the court is no longer fettered
by its former limited jurisdiction which enabled it to grant relief only in cases where
there was "unanimity among the parties" or none of them raised any "adverse claim
or serious objection." Under the amended law, the court is now authorized to hear
and decide not only such non-controversial case but even the contentious and
substantial issues, such as the question at bar, which were beyond its competence
before.
It is now beyond cavil, therefore, that the court below has ample jurisdiction to
decide the controversy raised by the petition in LRC No. A-229, Record No. N-33399
initiated therein by petitioner.
However, considering that the issue of whether the adverse claim of private
respondent should be cancelled or allowed to remain as annotations on the
certificates of title involved can be resolved by us in the present recourse, we agree
that the remand of the case to the court of origin is no longer necessary.
We have time and again laid down the rule that the remand of the case to the lower
court for further reception of evidence is no longer necessary where this Court is in
a position to resolve the dispute based on the records before it. In a number of
cases, the Court, in the public interest and for the expeditious administration of
justice, has resolved actions on the merits instead of remanding them to the trial
court for further proceedings, such as where the ends of justice would not be
subserved by the remand of the case. 12
In the case at bar, the right of petitioner to the relief prayed for is clear. The facto
before us sufficiently show that the cancellation of the disputed annotation from the
certificates of title of petitioner is justified in law.
It is undisputed that private respondent is a subsequent lien holder whose rights
over the mortgaged property are inferior to that of petitioner as a mortgagee. Being
a subsequent lien holder, private respondent acquires only the right of redemption
vested in the mortgagor, and his rights are strictly subordinate to the superior lien
of the anterior mortgagee. 13 After the foreclosure sale, the remedy of the second
mortgagee is limited to the right to redeem by paying off the debt secured by the
first mortgage. 14
The rule is that upon a proper foreclosure of a prior mortgage, all liens subordinate
to the mortgage are likewise foreclosed, and the purchaser at public auction held
pursuant thereto acquires title free from the subordinate liens. Ordinarily, thereafter
the Register of Deeds is authorized to issue the new titles without carrying over the
annotation of subordinate liens. 15 In a case with similar features, we had earlier
held that the failure of the subsequent attaching creditor to redeem, within the time

allowed by Section 6 of Act 3136, the land which was sold extrajudicially to satisfy
the first mortgage, gives the purchaser a perfect right to secure the cancellation of
the annotation of said creditor's attachment lien on the certificates of title of said
land. 16
It has likewise been declared in Bank of the Philippine Islands, etc., et al. vs.
Noblejas, etc., et al., 17 that "(a)ny subsequent lien or encumbrance annotated at
the back of the certificates of title cannot in any way prejudice the mortgage
previously registered, and the lots subject thereto pass to the purchaser at the
public auction sale free from any lien or encumbrance. Otherwise, the value of the
mortgage could be easily destroyed by a subsequent record of an adverse claim, for
no one would purchase at a foreclosure sale if bound by the posterior claim. . . . This
alone is sufficient justification for the dropping of the adverse claim from the new
certificates of title to be issued to her, as directed by respondent Commissioner in
his opinion subject of this appeal."
The contention of private respondent in its opposition that the extrajudicial
foreclosure is null and void for failure of petitioner to inform them of the said
foreclosure and the pertinent dates of redemption so that it can exercise its
prerogatives under the law 18 is untenable. There being obviously no contractual
stipulation therefor, personal notice is not necessary and what governs is the
general rule in Section 3 of Act 3135, as amended, which directs the posting of
notices of the sale in at least three (3) public places of the municipality where the
property is situated, and the publication thereof in a newspaper of general
circulation in said municipality.
Finally, the levy in favor of private respondent's predecessor in interest arising from
the judgment in Civil Case No. 69035 of the Court of First Instance of Manila,
appearing at the back of petitioner's certificates of titles, is already without force
and effect consider that the same has been annotated in the certificates of title for
more than ten (10) years without being duly implemented. Properties levied upon
by execution must be sold at public auction within the period of ten (10) years
during which the judgment can be enforced by action. 19
WHEREFORE, the judgment of respondent Court of Appeals is hereby SET ASIDE.
Instead, another judgment is hereby rendered ordering that the annotations of the
notice of levy in favor of Continental Bank, now substituted by private respondent,
on petitioner's Transfer Certificates of Title Nos. 1216, 1217, 1218, 1228, 1229,
1230, 1231, 1232, 1236, 1237, 1238, 1239, 1240, 1242, 1243 and 1244 should be,
as they are hereby, CANCELLED.
SO ORDERED.
7.Caveat Emptor

[G.R. No. 154450, July 28, 2008]

JOSEPH L. SY, NELSON GOLPEO AND JOHN TAN, PETITIONERS, VS. NICOLAS
CAPISTRANO, JR., SUBSTITUTED BY JOSEFA B. CAPISTRANO, REMEDIOS
TERESITA B. CAPISTRANO AND MARIO GREGORIO B. CAPISTRANO; NENITA
F. SCOTT; SPS.JUANITO JAMILAR AND JOSEFINA JAMILAR; SPS. MARIANO
GILTURA AND ADELA GILTURA, RESPONDENTS.
RESOLUTION
NACHURA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court of the
Decision of the Court of Appeals (CA) dated July 23, 2002 in CA-G.R. CV No. 53314.
The case originated from an action for reconveyance of a large tract of land in
Caloocan City before the Regional Trial Court (RTC), Branch 129, Caloocan City,
entitled Nicolas Capistrano, Jr. v. Nenita F. Scott, Spouses Juanito and Josefina
Jamilar, Joseph L. Sy, Nelson Golpeo and John Tan, and the Register of Deeds,
Caloocan City. Said case was docketed as Civil Case No. C-15791.
The antecedents are as follows:
Sometime in 1980, Nenita Scott (Scott) approached respondent Nicolas Capistrano,
Jr. (Capistrano) and offered her services to help him sell his 13,785 square meters of
land covered by Transfer Certificate of Title (TCT) No. 76496 of the Register of Deeds
of Caloocan City. Capistrano gave her a temporary authority to sell which expired
without any sale transaction being made. To his shock, he discovered later that TCT
No. 76496, which was in his name, had already been cancelled on June 24, 1992
and a new one, TCT No. 249959, issued over the same property on the same date to
Josefina A. Jamilar. TCT No. 249959 likewise had already been cancelled and
replaced by three (3) TCTs (Nos. 251524, 251525, and 251526), all in the names of
the Jamilar spouses. TCT Nos. 251524 and 251526 had also been cancelled and
replaced by TCT Nos. 262286 and 262287 issued to Nelson Golpeo and John B. Tan,
respectively.
Upon further inquiries, Capistrano also discovered the following:
The cancellation of his TCT No. 76496 and the issuance of TCT No. 249959 to Jamilar
were based upon two (2) deeds of sale, i.e., a "Deed of Absolute Sale" purportedly
executed by him in favor of Scott on March 9, 1980 and a "Deed of Absolute Sale"
allegedly executed by Scott in favor of Jamilar on May 17, 1990.

The supposed 1980 sale from him to Scott was for P150,000.00; but despite the
lapse of more than 10 years thereafter, the alleged 1990 sale from Scott to Jamilar
was also for P150,000.00.
Both deeds were presented for registration simultaneously on June 24, 1992.
Although the deed in favor of Scott states that it was executed on March 9, 1980,
the annotation thereof at the back of TCT No. 76496 states that the date of the
instrument is March 9, 1990.
Even if there was no direct sale from Capistrano to Jamilar, the transfer of title was
made directly to the latter. No TCT was issued in favor of Scott.
The issuance of TCT No. 249959 in favor of Jamilar was with the help of Joseph Sy,
who provided for (sic) money for the payment of the capital gains tax, documentary
stamps, transfer fees and other expenses of registration of the deeds of sale.
On July 8, 1992, an Affidavit of Adverse Claim was annotated at the back of Jamilar's
TCT No. 249959 at the instance of Sy, Golpeo, and Tan under a Contract to Sell in
their favor by the Jamilar spouses. Said contract was executed sometime in May,
1992 when the title to the property was still in the name of Capistrano.
Around July 28, 1992, upon request of the Jamilar spouses, TCT No. 249959 was
cancelled and three (3) new certificates of title (TCT Nos. 251524, 251525, and
251526) all in the name of Jamilar on the basis of an alleged subdivision plan (No.
Psd-13-011917) without Capistrano's knowledge and consent as registered owner.
The notice of adverse claim of Sy, Golpeo, and Tan was carried over to the three
new titles.
Around August 18, 1992, Sy, Golpeo, and Tan filed Civil Case No. C-15551 against
the Jamilars and another couple, the Giltura spouses, for alleged violations of the
Contract to Sell. They caused a notice of lis pendens to be annotated on the three
(3) TCTs in Jamilar's name. Said civil case, however, was not prosecuted.
On January 26, 1993, a Deed of Absolute Sale was executed by the Jamilars and the
Gilturas, in favor of Golpeo and Tan. Thus, TCT Nos. 251524 and 251526 were
cancelled and TCT Nos. 262286 and 262287 were issued to Golpeo and Tan,
respectively. TCT No. 251525 remained in the name of Jamilar.[1]
Thus, the action for reconveyance filed by Capistrano, alleging that his and his
wife's signatures on the purported deed of absolute sale in favor of Scott were
forgeries; that the owner's duplicate copy of TCT No. 76496 in his name had always
been in his possession; and that Scott, the Jamilar spouses, Golpeo, and Tan were
not innocent purchasers for value because they all participated in defrauding him of

his property. Capistrano claimed P1,000,000.00 from all defendants as moral

damages, P100,000.00 as exemplary damages; and P100,000.00 as attorney's fees.
In their Answer with Counterclaim, the Jamilar spouses denied the allegations in the
complaint and claimed that Capistrano had no cause of action against them, as
there was no privity of transaction between them; the issuance of TCT No. 249959
in their names was proper, valid, and legal; and that Capistrano was in estoppel. By
way of counterclaim, they sought P50,000.00 as actual damages, P50,000.00 as
moral damages, P50,000.00 as exemplary damages, and P50,000.00 as attorney's
fees.
In their Answer, Sy, Golpeo, and Tan denied the allegations in the complaint and
alleged that Capistrano had no cause of action against them; that at the time they
bought the property from the Jamilars and the Gilturas as unregistered owners,
there was nothing in the certificates of title that would indicate any vice in its
ownership; that a buyer in good faith of a registered realty need not look beyond
the Torrens title to search for any defect; and that they were innocent purchasers of
the land for value. As counterclaim, they sought P500,000.00 as moral damages
and P50,000.00 as attorney's fees.
In her Answer with Cross-claim, Scott denied the allegations in the complaint and
alleged that she had no knowledge or any actual participation in the execution of
the deeds of sale in her favor and the Jamilars'; that she only knew of the purported
conveyances when she received a copy of the complaint; that her signatures
appearing in both deeds of sale were forgeries; that when her authority to sell the
land expired, she had no other dealings with it; that she never received any amount
of money as alleged consideration for the property; and that, even if she were the
owner, she would never have sold it at so low a price.
By way of Cross-claim against Sy, Golpeo, Tan, and the Jamilars, Scott alleged that
when she was looking for a buyer of the property, the Jamilars helped her locate the
property, and they became conversant with the details of the ownership and other
particulars thereof; that only the other defendants were responsible for the seeming
criminal conspiracy in defrauding Capistrano; that in the event she would be held
liable to him, her other co-defendants should be ordered to reimburse her of
whatever amount she may be made to pay Capistrano; that she was entitled to
P50,000.00 as moral damages and P50,000.00 as attorney's fees from her codefendants due to their fraudulent conduct.
Later, Sy, Golpeo, and Tan filed a third-party complaint against the Giltura spouses
who were the Jamilars' alleged co-vendors of the subject property.
Thereafter, trial on the merits ensued.

Subsequently, the trial court decided in favor of Capistrano. In its Decision dated
May 7, 1996, adopting the theory of Capistrano as presented in his memorandum,
the trial court rendered judgment as follows:
Declaring plaintiff herein as the absolute owner of the parcel of land located at the
Tala Estate, Bagumbong, Caloocan City and covered by TCT No. 76496;
Ordering defendant Register of Deeds to cause the cancellation of TCT No. 251525
registered in the name of defendant Josefina Jamilar;
Ordering defendant Register of Deeds to cause the cancellation of TCT Nos. 262286
and 262287 registered in the names of defendants Nelson Golpeo and John B. Tan;
Ordering defendant Register of Deeds to cause the issuance to plaintiff of three (3)
new TCTs, in replacement of the aforesaid TCTs Nos. 251525, 262286 and 262287;
Ordering all the private defendants in the above-captioned case to pay plaintiff,
jointly and severally, the reduced amount of P400,000.00 as moral damages;
Ordering all the private defendants in the above-captioned case to pay to plaintiff,
jointly and severally, the reduced sum of P50,000.00 as exemplary damages;
Ordering all the private defendants in the above-captioned case to pay plaintiff's
counsel, jointly and severally, the reduced amount of P70,000.00 as attorney's fees,
plus costs of suit;
Ordering the dismissal of defendants Sy, Golpeo and Tan's Cross-Claim against
defendant spouses Jamilar;
Ordering the dismissal of defendants Sy, Golpeo and Tan's Third-Party Complaint
against defendant spouses Giltura; and
Ordering the dismissal of the Counterclaims against plaintiff.
SO ORDERED.[2]
On appeal, the CA, in its Decision dated July 23, 2002, affirmed the Decision of the
trial court with the modification that the Jamilar spouses were ordered to return to
Sy, Golpeo, and Tan the amount of P1,679,260.00 representing their full payment
for the property, with legal interest thereon from the date of the filing of the
complaint until full payment.
Hence, this petition, with petitioners insisting that they were innocent purchasers
for value of the parcels of land covered by TCT Nos. 262286 and 262287. They claim
that when they negotiated with the Jamilars for the purchase of the property,
although the title thereto was still in the name of Capistrano, the documents shown
to them - the court order directing the issuance of a new owner's duplicate copy of

TCT No. 76496, the new owner's duplicate copy thereof, the tax declaration, the
deed of absolute sale between Capistrano and Scott, the deed of absolute sale
between Scott and Jamilar, and the real estate tax receipts - there was nothing that
aroused their suspicion so as to compel them to look beyond the Torrens title. They
asseverated that there was nothing wrong in financing the cancellation of
Capistrano's title and the issuance of titles to the Jamilars because the money they
spent therefor was considered part of the purchase price they paid for their
property.
In their Comment, the heirs of Capistrano, who were substituted after the latter's
death, reiterated the factual circumstances which should have alerted the
petitioners to conduct further investigation, thus (a)
Why the "Deed of Absolute Sale" supposedly executed by Capistrano had remained
unregistered for so long, i.e., from March 9, 1980 up to June 1992, when they were
negotiating with the Jamilars and the Gilturas for their purchase of the subject
property;
(b)
Whether or not the owner's copy of Capistrano's certificate of title had really been
lost;
(c)
Whether Capistrano really sold his property to Scott and whether Scott actually sold
it to the Jamilars, which matters were easily ascertainable as both Capistrano and
Scott were still alive and their names appear on so many documents;
(d)
Why the consideration for both the March 9, 1980 sale and the May 17, 1990 sale
was the same (P150,000.00), despite the lapse of more than 10 years;
(e)
Why the price was so low (P10.88 per square meter, both in 1980 and in 1990)
when the petitioners were willing to pay and actually paid P150.00 per square meter
in May 1992; and
(f)
Whether or not both deeds of sale were authentic.[3]
In addition, the heirs of Capistrano pointed out that petitioners entered into
negotiations over the property, not with the registered owner thereof, but only with
those claiming ownership thereof based on questionable deeds of sale.

The petition should be denied. The arguments proffered by petitioners all pertain to
factual issues which have already been passed upon by both the trial court and the
CA.
Findings of facts of the CA are final and conclusive and cannot be reviewed on
appeal, as long as they are based on substantial evidence. While, admittedly, there
are exceptions to this rule such as: (a) when the conclusion is a finding grounded
entirely on speculations, surmises or conjectures; (b) when the inference made is
manifestly mistaken, absurd or impossible; (c) when there is grave abuse of
discretion; (d) when the judgment is based on a misapprehension of facts; (e) when
the findings of facts are conflicting; (f) when the CA, in making its findings, went
beyond the issues of the case and the same were contrary to the admissions of both
the appellant and appellee.[4] Not one of these exceptional circumstances is
present in this case.
First. The CA was correct in upholding the finding of the trial court that the
purported sale of the property from Capistrano to Scott was a forgery, and resort to
a handwriting expert was not even necessary as the specimen signature submitted
by Capistrano during trial showed marked variance from that found in the deed of
absolute sale. The technical procedure utilized by handwriting experts, while usually
helpful in the examination of forged documents, is not mandatory or indispensable
to the examination or comparison of handwritings.[5]
By the same token, we agree with the CA when it held that the deed of sale
between Scott and the Jamilars was also forged, as it noted the stark differences
between the signatures of Scott in the deed of sale and those in her handwritten
letters to Capistrano.
Second. In finding that the Jamilar spouses were not innocent purchasers for value
of the subject property, the CA properly held that they should have known that the
signatures of Scott and Capistrano were forgeries due to the patent variance of the
signatures in the two deeds of sale shown to them by Scott, when Scott presented
to them the deeds of sale, one allegedly executed by Capistrano in her favor
covering his property; and the other allegedly executed by Scott in favor of
Capistrano over her property, the P40,000.00 consideration for which ostensibly
constituted her initial and partial payment for the sale of Capistrano's property to
her.
The CA also correctly found the Gilturas not innocent purchasers for value, because
they failed to check the veracity of the allegation of Jamilar that he acquired the
property from Capistrano.
In ruling that Sy was not an innocent purchaser for value, we share the observation
of the appellate court that Sy knew that the title to the property was still in the

name of Capistrano, but failed to verify the claim of the Jamilar spouses regarding
the transfer of ownership of the property by asking for the copies of the deeds of
absolute sale between Capistrano and Scott, and between Scott and Jamilar. Sy
should have likewise inquired why the Gilturas had to affix their conformity to the
contract to sell by asking for a copy of the deed of sale between the Jamilars and
the Gilturas. Had Sy done so, he would have learned that the Jamilars claimed that
they purchased the property from Capistrano and not from Scott.
We also note, as found by both the trial court and the CA, Tan's testimony that he,
Golpeo and Sy are brothers, he and Golpeo having been adopted by Sy's father. Tan
also testified that he and Golpeo were privy to the transaction between Sy and the
Jamilars and the Gilturas, as shown by their collective act of filing a complaint for
specific performance to enforce the contract to sell.
Also noteworthy - and something that would have ordinarily aroused suspicion - is
the fact that even before the supposed execution of the deed of sale by Scott in
favor of the Jamilars, the latter had already caused the subdivision of the property
into nine (9) lots, with the title to the property still in the name of Capistrano.
Notable likewise is that the owner's duplicate copy of TCT No. 76496 in the name of
Capistrano had always been in his possession since he gave Scott only a photocopy
thereof pursuant to the latter's authority to look for a buyer of the property. On the
other hand, the Jamilars were able to acquire a new owner's duplicate copy thereof
by filing an affidavit of loss and a petition for the issuance of another owner's
duplicate copy of TCT No. 76496. The minimum requirement of a good faith buyer is
that the vendee of the real property should at least see the owner's duplicate copy
of the title.[6] A person who deals with registered land through someone who is not
the registered owner is expected to look beyond the certificate of title and examine
all the factual circumstances thereof in order to determine if the vendor has the
capacity to transfer any interest in the land. He has the duty to ascertain the
identity of the person with whom he is dealing and the latter's legal authority to
convey.[7]
Finally, there is the questionable cancellation of the certificate of title of Capistrano
which resulted in the immediate issuance of a certificate of title in favor of the
Jamilar spouses despite the claim that Capistrano sold his property to Scott and it
was Scott who sold the same to the Jamilars.
In light of the foregoing disquisitions, based on the evidence on record, we find no
error in the findings of the CA as to warrant a discretionary judicial review by this
Court.
WHEREFORE, the petition is DENIED DUE COURSE for failure to establish reversible
error on the part of the Court of Appeals. Costs against petitioners.

SO ORDERED.

b.Involuntary Dealings
i.Attachments (Sec. 69)
ii. Adverse Claims (Sec. 70)
G.R. No. 187824

November 17, 2010

FILINVEST DEVELOPMENT CORPORATION, Petitioner,

vs.
GOLDEN HAVEN MEMORIAL PARK, INC., Respondent.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 188265
GOLDEN HAVEN MEMORIAL PARK, INC. Petitioner,
vs.
FILINVEST DEVELOPMENT CORPORATION, Respondent.
DECISION
ABAD, J.:
These cases are about which of two real estate developers, both buyers of the same
lands, acted in good faith and has a better title to the same.
The Facts and the Case
Petronila Yap (Yap), Victoriano and Policarpio Vivar (the Vivars), Benjamin Cruz
(Cruz), Juan Aquino (Aquino), Gideon Corpuz (Corpuz), and Francisco Sobremesana
(Sobremesana), and some other relatives inherited a parcel of land in Las Pias City
covered by Transfer Certificate of Title (TCT) 67462 RT-1. Subsequently, the heirs
had the land divided into 13 lots and, in a judicial partition, the court distributed
four of the lots as follows: a) Lots 1 and 12 to Aquino; b) Lot 2 to Corpuz and
Sobremesana; and (c) Lot 6 to Yap, Cruz, and the Vivars. The other lots were
distributed to the other heirs.
On March 6, 1989 Yap, acting for herself and for Cruz and the Vivars, executed an
agreement to sell Lot 6 in favor of Golden Haven Memorial Park, Inc. (GHM), payable

in three installments. On July 31, 1989 another heir, Aquino, acting for himself and
for Corpuz and Sobremesana, also executed an agreement to sell Lots 1, 2, and 12
in favor of GHM, payable in the same manner. In both instances, GHM paid the first
installment upon execution of the contract.
On August 4, 1989 GHM caused to be annotated a Notice of Adverse Claim on TCT
67462 RT-1. On September 20, 1989 the sellers of the four lots wrote GHM that they
were still working on the titling of the lots in their names and wanted to know if
GHM was still interested in proceeding with their agreements. GHM replied in the
affirmative on September 21, 1989 and said that it was just waiting for the sellers
titles so it can pay the second installments.
Sometime in August of 1989, Filinvest Development Corporation (Filinvest) applied
for the transfer in its name of the titles over Lots 2, 4, and 5 but the Las Pias
Register of Deeds declined its application. Upon inquiry, Filinvest learned that Lot 8,
a lot belonging to some other heir or heirs and covered by the same mother title,
had been sold to Household Development Corporation (HDC), a sister company of
GHM, and HDC held the owners duplicate copy of that title. Filinvest immediately
filed against HDC a petition for the surrender and cancellation of the co-owners
duplicate copy of TCT 67462 RT-1. Filinvest alleged that it bought Lots 1, 2, 6, and
12 of the property from their respective owners as evidenced by three deeds of
absolute sale in its favor dated September 10, November 18, and December 29,
1989 and that Filinvest was entitled to the registrations of such sales.
On January 14, 1991 GHM filed against the sellers and Filinvest a complaint for the
annulment of the deeds of sale issued in the latters favor before the Regional Trial
Court (RTC) of Las Pias City in Civil Case 91-098. On March 16, 2006 the RTC
rendered a decision after trial, declaring the contracts to sell executed by some of
the heirs in GHMs favor valid and enforceable and the sale in favor of Filinvest null
and void. Only Filinvest appealed among the defendants.
On November 25, 2008 the Court of Appeals (CA) affirmed the RTC decision with
respect to the validity of the contract to sell Lot 6 in GHMs favor. But the CA
declared the contracts to sell Lots 1, 2, and 12 in GHMs favor void and the sale of
the same lots in favor of Filinvest valid.
Both parties filed their petitions for review before this Court, Filinvest in G.R.
187824, and GHM in G.R. 188265.
The Issue Presented
The issue presented in these cases is whether or not the contracts to sell that the
sellers executed in GHMs favor covering the same lots sold to Filinvest are valid
and enforceable.

The Courts Ruling

To prove good faith, the rule is that the buyer of registered land needs only show
that he relied on the title that covers the property. But this is true only when, at the
time of the sale, the buyer was unaware of any adverse claim to the property.1
Otherwise, the law requires the buyer to exercise a higher degree of diligence
before proceeding with his purchase. He must examine not only the certificate of
title, but also the sellers right and capacity to transfer any interest in the property.2
In such a situation, the buyer must show that he exercised reasonable precaution by
inquiring beyond the four corners of the title.3 Failing in these, he may be deemed a
buyer in bad faith.4
Here, Filinvest was on notice that GHM had caused to be annotated on TCT 67462
RT-1, the mother title, as early as August 4, 1989 a notice of adverse claim covering
Lot 6. This notwithstanding, Filinvest still proceeded to buy Lots 1, 2, 6, and 12 on
September 10, November 18, and December 29, 1989.
Filinvest of course contends that, although the title carried a notice of adverse
claim, that notice was only with respect to seller Yaps interest in Lot 6 and it did not
affect Lots 1, 2, 12, and the remaining interests in Lot 6. The Court disagrees.
The annotation of an adverse claim is intended to protect the claimants interest in
the property.1avvphi1 The notice is a warning to third parties dealing with the
property that someone claims an interest in it or asserts a better right than the
registered owner.5 Such notice constitutes, by operation of law, notice to the whole
world.6 Here, although the notice of adverse claim pertained to only one lot and
Filinvest wanted to acquire interest in some other lots under the same title, the
notice served as warning to it that one of the owners was engaged in double selling.
What is more, upon inquiry with the Register of Deeds of Las Pias, Filinvest also
learned that the heirs of Andres Aldana sold Lot 8 to HDC and turned over the coowners duplicate copy of TCT 67462 RT-1 to that company which had since then
kept the title. Filinvest (referred to below as FDC) admits this fact in its petition,7
thus:
Sometime in August 1989, FDC applied with the Register of Deeds of Las Pias for
the transfer and registration of Lots 2, 4, and 5 in its name and surrendered the coowners duplicate copy of TCT No. (67462) RT-1 given to it by the Vivar family, but
the Register of Deeds of Las Pias City refused to do the transfer of title in the name
of FDC and instead demanded from FDC to surrender as well the other co-owner's
duplicate copy of TCT No. (67462) RT-1 which was issued to the heirs of Andres
Aldana. Upon further inquiry, FDC came to know that the heirs of Andres Aldana
sold Lot 8 and delivered their co-owner's duplicate copy of TCT No. (67462) RT-1 to

Household Development Corporation, a sister company of respondent GHMPI. FDC

made representations to Household Development Corporation for the surrender of
said co-owner's duplicate copy of TCT No. (67462) RT-1 to the Register of Deeds of
Las Pias City, but Household Development Corporation refused to do so.
Filinvests knowledge that GHM, a competitor, had bought Lot 6 in which Filinvest
was interested, that GHM had annotated an adverse claim to that Lot 6, and that
GHM had physical possession of the title, should have put Filinvest on its toes
regarding the prospects it faced if it bought the other lots covered by the title in
question. Filinvest should have investigated the true status of Lots 1, 2, 6, and 12 by
asking GHM the size and shape of its interest in the lands covered by the same title,
especially since both companies were engaged in the business of developing lands.
One who has knowledge of facts which should have put him upon such inquiry and
investigation cannot claim that he has acquired title to the property in good faith as
against the true owner of the land or of an interest in it.8
The Court upholds the validity of the contracts between GHM and its sellers. As the
trial court aptly observed, GHM entered into valid contracts with its sellers but the
latter simply and knowingly refused without just cause to honor their obligations.
The sellers apparently had a sudden change of heart when they found out that
Filinvest was willing to pay more.
As to the award of exemplary damages, the Court sustains the CA ruling. This
species of damages is allowed only in addition to moral damages such that
exemplary damages cannot be awarded unless the claimant first establishes a clear
right to moral damages.9 Here, since GHM failed to prove that it is entitled to moral
damages, the RTCs award of exemplary damages had no basis. But the grant of
attorneys fees is proper. As the RTC noted, this case has been pending since 1991,
or for 19 years now. GHM was forced to litigate and incur expenses in order to
protect its rights and interests.
WHEREFORE, the Court GRANTS the petition in G.R. 188265 and DISMISSES the
petition in G.R. 187824. The Court likewise REVERSES and SETS ASIDE the decision
of the Court of Appeals dated November 25, 2008 in CA-G.R. CV 89448, and
REINSTATES the decision of the Regional Trial Court in Civil Case 91-098 dated
March 16, 2006 with the MODIFICATION that the award of exemplary damages is
DELETED.
SO ORDERED.
iii. Enforcement of Liens on registered Land and Application for New
Certificate Upon Expiration of Redemption Period (Sec. 74-75)

ESTANISLAO PADILLA, JR.

Petitioner,
-versus-

G.R. No. 141256

PHILIPPINE PRODUCERS
COOPERATIVE MARKETING
ASSOCIATION, INC.,
Respondent
July 15, 2005
DECISION
CORONA, J.:

In implementing the involuntary transfer of title of real property levied and sold on
execution, is it enough for the executing party to file a motion with the court which
rendered judgment, or does he need to file a separate action with the Regional Trial
Court?
This is a petition for review on certiorari[1] from a decision
of the Court of Appeals in CA-G.R. CV No. 53085,[2] and its resolution denying
reconsideration,[3] both of which affirmed the orders of the Regional Trial Court of
Bacolod City, Branch 51.[4]
The undisputed facts of the case follow.[5]
Petitioner and his wife are the registered owners of the following real properties: Lot
Nos. 2904-A (covered by TCT No. T-36090), 2312-C-5 (covered by TCT No. T-3849),
and 2654 (covered by TCT No. T-8053), all situated in Bago City.
Respondent is a marketing cooperative which had a money claim against petitioner.
On April 24, 1987, respondent filed a civil case against petitioner for collection of a
sum of money in the Regional Trial Court of Bacolod City.[6] Despite receipt of
summons on May 18, 1987, petitioner (then defendant) opted not to file an answer.
[7] On March 3, 1988, respondent (then plaintiff) moved to have petitionerdefendant declared in default, which the trial court granted on April 15, 1988.[8]
Respondent presented its evidence on October 9, 1989.[9] On November 28, 1989,
the trial court rendered a decision in respondents favor.[10] Petitioner was

furnished a copy of this decision by mail on November 29, 1989 but, because of his
failure to claim it, the copy was returned.[11]
On May 31, 1990, the Court issued a writ of execution. On June 4, 1990, the three
lots (Lot 2904-A, Lot 2312-C-5 and Lot 2654), all of the Bago Cadastre and
registered in petitioners name, were levied by virtue of that writ. On July 4, 1990,
sheriff Renato T. Arimas auctioned off the lots to satisfy the judgment, with
respondent as the only bidder. On July 10, 1990, ex-officio provincial sheriff and
clerk of court Antonio Arbis executed a certificate of sale in favor of respondent. On
August 13, 1990, the certificate of sale was recorded in the Register of Deeds.[12]
When petitioner failed to exercise his right of redemption within the 12-month
period allowed by law, the court, on motion of respondent, ordered on February 5,
1992 the issuance of a writ of possession for the sheriff to cause the delivery of the
physical possession of the properties in favor of respondent.[13]
On May 17, 1995, respondent filed a motion to direct the Register of Deeds to issue
new titles over the properties in its name, alleging that the Register of Deeds (RD)
of Bago City would not issue new titles (in respondents name) unless the owners
copies were first surrendered to him. Respondent countered that such surrender
was impossible because this was an involuntary sale and the owners copies were
with petitioner.[14]
On July 3, 1995, the trial court issued an order granting the motion. In a subsequent
order dated August 8, 1995, it denied petitioners motion for reconsideration.
Petitioner appealed. Four years later, the Court of Appeals rendered the assailed
decision affirming the order of the trial court.
Petitioner contends that respondents motion for the RD to cancel the existing
certificates of title and issue new ones in its name was in fact a real action and that
the motion was procedurally infirm because respondent did not furnish him a copy.
[15] He also claims that under Section 6 of Rule 39 of the 1997 Rules of Civil
Procedure, the execution of the judgment was barred by prescription, given that the
motion was filed more than 5 years after the writ of execution was issued on March
23, 1990.[16] He also argues that respondent failed to follow the correct procedure
for the cancellation of a certificate of title and the issuance of a new one, which is
contained in Section 107 of PD 1529.[17]
In its comment,[18] respondent claims that the motion dated May 15, 1995 to direct
the RD to issue new certificates of title was but a continuation of the series of
events that began with the decision in its favor on November 28, 1989, and from
there, the auction of the properties and the issuance of a certificate of sale in 1990.

The two principal issues for consideration are:

(1) whether or not respondents right to have new titles issued in its name is now
barred by prescription and
(2) whether or not the motion in question is the proper remedy for cancelling
petitioners certificates of title and new ones issued in its name.
On the first issue, we rule that the respondents right to petition the court for the
issuance of new certificates of title has not yet prescribed.
In Heirs of Blancaflor vs. Court of Appeals,[19] Sarmiento Trading Corporation,
predecessor-in-interest of the private respondent Greater Manila Equipment
Marketing Corporation, secured a writ of execution in 1968 by virtue of which it
levied real property belonging to petitioners predecessor-in-interest, Blancaflor.
When the property was auctioned, Sarmiento Trading bid successfully and, in 1970,
after the lapse of the one-year redemption period, consolidated its ownership over
the lot.
Sarmiento Trading then filed a petition with the Court of First Instance to order the
cancellation of Blancaflors title and the issuance of a new one in its name. In 1972,
Sarmiento Trading sold the lot to private respondent which, at the time, went by the
name Sarmiento Distributors Corporation.
In 1988, the Deputy Register of Deeds of Iloilo wrote to Blancaflor requesting him to
surrender his owners duplicate copy of the TCT. Blancaflor did not comply and the
RD refused to issue a new title. On May 25, 1989, private respondent filed a
petition in the Regional Trial Court praying that the petitioners be ordered to
surrender the owners duplicate copy of the title. The petitioners refused, claiming
that respondents cause of action had already prescribed. Ruling otherwise, we
stated:
It is settled that execution is enforced by the fact of levy and sale. The result of such
execution salewith Sarmiento Trading Corporation as the highest bidderwas that
title to Lot No. 22 of TCT No. 14749 vested immediately in the purchaser subject
only to the judgment debtors right to repurchase. Therefore, upon Sarmiento
Trading Corporations purchase of Lot No. 22 covered by TCT No. 14749 at the
auction sale, private respondents successor-in-interest had acquired a right over
said title.
The right acquired by the purchaser at an execution sale is inchoate and does not
become absolute until after the expiration of the redemption period without the
right of redemption having been exercised. But inchoate though it be, it is like any
other right, entitled to protection and must be respected until extinguished by
redemption. Gaudencio Blancaflor was not able to redeem his property after the
expiration of the redemption period, which was 12 months after the entry or
annotation of the certificate of sale made on the back of TCT No. 14749.

Consequently, he had been divested of all his rights to the property. (underscoring
ours)
In this case, the rule being invoked by petitioner[20] states:
SEC. 6. Execution by motion or by independent action.A final and executory
judgment or order may be executed on motion within five (5) years from the date of
its entry. After the lapse of such time, and before it is barred by the statute of
limitations, a judgment may be enforced by action. The revived judgment may also
be enforced by motion within five (5) years from the date of its entry and thereafter
by action before it is barred by the statute of limitations.

As should be evident from Blancaflor, petitioner Padillas reliance on Section 6 of

Rule 39 of the 1997 Revised Rules of Civil Procedure is misplaced. The fact of levy
and sale constitutes execution, and not the action for the issuance of a new title.
Here, because the levy and sale of the properties took place in June and July of
1990, respectively, or less than a year after the decision became final and
executory, the respondent clearly exercised its rights in timely fashion.
In addition, petitioner himself admits his failure to redeem the properties within the
one-year period by adopting the facts stated in the Court of Appeals decision.[21]
There is thus no doubt he had been divested of his ownership of the contested lots.

Respondents position hinges on petitioners failure to redeem the properties 12

months after the certificate of sale was recorded in the Register of Deeds on August
13, 1990. There is no uncertainty about respondents having become the new
lawful owner of the lots in question by virtue of the levy and the execution sale.
On the other hand, the issue of whether to acquire new titles by mere motion or
through a separate petition is an entirely different matter.
Petitioner is correct in assailing as improper respondents filing of a mere
motion for the cancellation of the old TCTs and the issuance of new ones as a result
of petitioners refusal to surrender his owners duplicate TCTs.
Indeed, this called for a separate cadastral action initiated via petition.
Section 107 of PD 1529,[22] formerly Section 111 of Act 496,[23] provides:
Sec. 107. Surrender of withheld duplicate certificates.Where it is
necessary to issue a new certificate of title pursuant to any involuntary instrument
which divests the title of the registered owner against his consent or where a
voluntary instrument cannot be registered by reason of the refusal or failure of the

holder to surrender the owners duplicate certificate of title, the party in interest
may file a petition in court to compel the surrender of the same to the Register of
Deeds. The court, after hearing, may order the registered owner or any person
withholding the duplicate certificate to surrender the same, and direct the entry of a
new certificate or memorandum upon such surrender. If the person withholding the
duplicate certificate is not amenable to the process of the court, or if for any reason
the outstanding owners duplicate certificate cannot be delivered, the court may
order the annulment of the same as well as the issuance of a new certificate of title
in lieu thereof. Such new certificate and all duplicates thereof shall contain a
memorandum of the annulment of the outstanding duplicate.

Respondent alleges that it resorted to filing the contested motion because it could
not obtain new certificates of title, considering that petitioner refused to surrender
his owners duplicate TCTs. This contention is incorrect. The proper course of action
was to file a petition in court, rather than merely move, for the issuance of new
titles. This was the procedure followed in Blancaflor by Sarmiento Trading which
was in more or less the same situation as the respondent in this case:[24]
Petitioners reliance on prescription and laches is unavailing in this instance. It was
proper for Sarmiento Trading Corporation to file a petition with the Court of First
Instance of Iloilo, acting as a cadastral court, for the cancellation of TCT No. 14749
in the name of Gaudencio Blancaflor and the issuance of another in its name. This
is a procedure provided for under Section 78 of Act No. 496 and Section 75 of PD
No. 1529

Section 78 of Act 496 reads:

Sec. 78. Upon the expiration of the time, if any allowed by law for redemption
after registered land has been sold on any execution, or taken or sold for the
enforcement of any lien of any description, the person claiming under the execution
or under any deed or other instrument made in the course of the proceedings to
levy such execution or enforce any lien, may petition the court for the entry of a
new certificate to him, and the application may be granted: Provided, however, That
every new certificate entered under this section shall contain a memorandum of the
nature of the proceeding on which it is based: Provided, further, That at any time
prior to the entry of a new certificate the registered owner may pursue all his lawful
remedies to impeach or annul proceedings under execution or to enforce liens of
any description.
Section 75 of PD 1529 provides:

Sec. 75. Application for new certificate upon expiration of redemption period.
Upon the expiration of the time, if any, allowed by law for redemption after the
registered land has been sold on execution, or taken or sold for the enforcement of
a lien of any description, except a mortgage lien, the purchaser at such sale or
anyone claiming under him may petition the court for the entry of a new certificate
to him.
Before the entry of a new certificate of title, the registered owner may pursue all
legal and equitable remedies to impeach or annul such proceedings.

It is clear that PD 1529 provides the solution to respondents quandary. The reasons
behind the law make a lot of sense; it provides due process to a registered
landowner (in this case the petitioner) and prevents the fraudulent or mistaken
conveyance of land, the value of which may exceed the judgment obligation.
Petitioner contends that only his interest in the subject lots, and not that of his wife
who was not a party to the suit, should have been subjected to execution, and he
should have had the opportunity to prove as much.
While we certainly will not condone any attempt by petitioner to frustrate the ends
of justice the only way to describe his refusal to surrender his owners duplicates
of the certificates of title despite the final and executory judgment against him
respondent, on the other hand, cannot simply disregard proper procedure for the
issuance to it of new certificates of title. There was a law on the matter and
respondent should have followed it.
In any event, respondent can still file the proper petition with the cadastral court for
the issuance of new titles in its name.
WHEREFORE, the instant petition is hereby GRANTED. The decision of the Court of
Appeals in CA-G.R. CV No. 53085 is hereby REVERSED. The order of the Regional
Trial Court of Bacolod City ordering the Register of Deeds of Bago City to issue new
certificates of title in favor of respondent is ANULLED.

SO ORDERED.

iv.Lis Pendens (Sec. 76)

G.R. No. 136283

February 29, 2000

VIEWMASTER CONSTRUCTION CORPORATION, petitioner,

vs.
HON. REYNALDO Y. MAULIT in his official capacity as administrator of the
Land Registration Authority; and EDGARDO CASTRO, acting register of
deeds of Las Pias, Metro Manila, respondents.
PANGANIBAN, J.:
A notice of lis pendens may be registered when an action or a proceeding directly
affects the title to the land or the buildings thereon; or the possession, the use or
the occupation thereof. Hence, the registration of such notice should be allowed if
the litigation involves the enforcement of an agreement for the co-development of a
parcel of land.
Statement of the Case
Before us is a Petition for Review on Certiorari 1 assailing the February 27, 1998
Decision 2 of the Court of Appeals (CA) 3 in CA-GR SP No. 39649 and its November
12, 1998 Resolution 4 denying reconsideration. The assailed Decision affirmed the
Resolution 5 of the Land Registration Authority (LRA) in Consulta No. 2381, which
ruled as follows:
PREMISES CONSIDERED, this Authority is of the considered view and so holds that
the Notice of Lis Pendens subject of this consulta is not registrable. 6
The Facts
The undisputed facts were summarized by the Court of Appeals as follows:
The subject property is known as the Las Pias property registered in the name of
Peltan Development Inc. (now State Properties Corporation) covered by Transfer
Certificate of Title No. (S-17882) 12473-A situated in Barrio Tindig na Manga, Las
Pias, Rizal.
The Chiong/Roxas family collectively owns and controls State Investment Trust, Inc.
(formerly State Investment House, Inc.) and is the major shareholder of the
following corporations, namely: State Land Investment Corporation, Philippine
Development and Industrial Corporation and Stronghold Realty Development.
Sometime in 1995, the said family decided to give control and ownership over the
said corporations to only one member of the family, through the process of bidding

among the family members/stockholders of the said companies. It was agreed that
the bidder who acquires 51% or more of the said companies shall be deemed the
winner.
Defendant Allen Roxas, one of the stockholders of State Investment Trust, Inc.
applied for a loan with First Metro Investment, Inc. (First Metro for brevity) in the
amount of P36,500,000.00 in order to participate in the bidding.
First Metro granted Alien Roxas' loan application without collateral provided,
however, that he procure a guarantor/surety/solidary co-debtor to secure the
payment of the said loan.
Petitioner Viewmaster agreed to act as guarantor for the aforementioned loan in
consideration for its participation in a Joint Venture Project to co-develop the real
estate assets of State Investment Trust, Inc.
After a series of negotiations, petitioner Viewmaster and defendant Allen Roxas
agreed that should the latter prevail and win in the bidding, he shall sell to
petitioner fifty percent (50%) of the total eventual acquisitions of shares of and
stock in the State Investment Trust, Inc., at a purchase price equivalent to the
successful bid price per share plus an additional ten percent (10%) per share.
As a result of the loans granted by First Metro in consideration of and upon the
guaranty of petitioner Viewmaster, defendant Allen Roxas, eventually gained control
and ownership of State Investment Trust, Inc.
However, notwithstanding the lapse of two (2) years since defendant Allen Roxas
became the controlling stockholder of State Investment Trust, Inc., he failed to take
the necessary action to implement the Joint Venture Project with petitioner
Viewmaster to co-develop the subject properties.1wphi1.nt
Thus, petitioner's counsel wrote defendant Allen Roxas, reiterating petitioner's
demand to comply with the agreement to co-develop the Las Pias Property and to
set in operation all the necessary steps towards the realization of the said project.
On September 8, 1995, petitioner Viewmaster filed a Complaint for Specific
Performance, Enforcement of Implied Trust and Damages against State Investment
Trust, Inc. Northeast Land Development, Inc., State Properties Corporation (formerly
Peltan Development, Inc.) and defendant Allen Roxas, in his capacity as ViceChairman of State Investment Trust, Inc., and Chairman of Northeast Land
Development, Inc., State Properties Corporation, which was docketed as Civil Case
No. 65277.

On September 11, 1995, petitioner Viewmaster filed a Notice of Lis Pendens with
the Register of Deeds of Quezon City and Las Pias for the annotation of a Notice of
Lis Pendens on Transfer Certificate of Title No. (S-17992) 12473-A, registered in the
name of Peltan Development, Inc. (now State Properties Corporation).
In a letter dated September 15, 1995, the respondent Register of Deeds of Las Pias
denied the request for annotation of the Notice of Lis Pendens on the following
grounds:
1. the request for annotation and the complaint [do] not contain an adequate
description of the subject property;
2. petitioner's action only has an incidental effect on the property in question.
On September 20, 1995, petitioner filed an appeal to the respondent Land
Registration Authority, which was docketed as Consulta No. 2381.
On December 14, 1995, the Respondent Land Registration Authority issued the
assailed Resolution holding that petitioner's "Notice of Lis Pendens" was not
registrable. 7
Ruling of the Court of Appeals
In affirming the ruling of the LRA, the Court of Appeals held that petitioner failed to
adequately describe the subject property in the Complaint and in the application for
the registration of a notice of lis pendens. The CA noted that while Transfer
Certificate of Title No. (S-17992) 12473-A indicated six parcels of land, petitioner's
application mentioned only one parcel.
Moreover, the CA also ruled that a notice of lis pendens may be registered only
when an action directly affects the title to or possession of the real property. In the
present case, the proceedings instituted by petitioner affected the title or
possession incidentally only, not directly.
Hence, this Petition. 8
Issues
Petitioner submits for the consideration of the Court the following issues:
I
Whether or not the petitioner failed to adequately describe the subject property in
its complaint and in the notice of lis pendens.

II
Whether or not the Las Pias property is directly involved in Civil Case No. 65277. 9
The Court's Ruling
The Petition is meritorious.
First Issue:
Description of Property
Petitioner contends that the absence of the property's technical description in either
the notice of lis pendens or the Complaint is not a sufficient ground for rejecting its
application, because a copy of TCT No. (S-17992) 12473-A specifically describing the
property was attached to and made an integral part of both documents.
On the other hand, respondents argue that petitioner failed to provide an accurate
description of the Las Pias property, which was merely referred to as a "parcel of
land."
The notice of lis pendens described the property as follows:
A parcel of land situated in the Barrio of Tindig na Manga, Municipality of Las Pias,
Province of Rizal . . . containing an area of Seven Hundred Eighty Six Thousand One
Hundred Sixty Seven (786,167) square meters, more or less.
By itself, the above does not adequately describe the subject property, pursuant to
Section 14 of Rule 13 of the Rules of Court and Section 76 of Presidential Decree
(PD) No. 1529. It does not distinguish the said property from other properties
similarly located in the Barrio of Tindig na Manga, Municipality of Las Pias, Province
of Rizal. Indeed, by the above description alone, it would be impossible to identify
the property.
In the paragraph directly preceding the description quoted above, however,
petitioner specifically stated that the property referred to in the notice of lis
pendens was the same parcel of land covered by TCT No. (S-17992) 12473-A:
Please be notified that on 08 September 1995, the [p]laintiff in the above-entitled
case filed an action against the above-named [d]efendants for specific performance,
enforcement of an implied trust and damages, now pending in the Regional Trial
Court of Pasig, Branch 166, which action involves a parcel of land covered by
Transfer Certificate Title (TCT) No. (S-17992) 12473-A, registered in the name of
Peltan Development Incorporated which changed its corporate name to State

Properties Corporation, one of the [d]efendants in the aforesaid case. The said
parcel of land is more particularly described as follows:
A parcel of land situated in the Barrio of Tindig na Manga, Municipality of Las Pias,
Province of Rizal . . . containing an area of Seven Hundred Eighty Six Thousand One
Hundred Sixty Seven (786,167) square meters, more or less.
Request is therefore made [for] your good office to record this notice of pendency of
the aforementioned action in TCT No. (S-17892) 12473-A for all legal purposes. 10
As earlier noted, a copy of the TCT was attached to and made an integral part of
both documents. Consequently, the notice of lis pendens submitted for registration,
taken as a whole, leaves no doubt as to the identity of the property, the technical
description of which appears on the attached TCT. We stress that the main purpose
of the requirement that the notice should contain a technical description of the
property is to ensure that the same can be distinguished and readily identified. In
this case, we agree with petitioner that there was substantial compliance with this
requirement.
Second Issue:
Property Directly Involved
In upholding the LRA, the Court of Appeals held that "the doctrine of lis pendens has
no application to a proceeding in which the only object sought is the recovery of [a]
money judgment, though the title [to] or right or possession [of] a property may be
incidentally affected. It is thus essential that the property be directly affected where
the relief sought in the action or suit includes the recovery of possession, or the
enforcement [thereof], or an adjudication between the conflicting claims of title,
possession or right of possession to specific property, or requiring its transfer or
sale." 11
On the other hand, petitioner contends that the civil case subject of the notice of lis
pendens directly involved the land in question, because it prayed for the
enforcement of a prior agreement between herein petitioner and Defendant Allen
Roxas to co-develop the latter's property.
We agree with the petitioner. A notice of lis pendens, which literally means "pending
suit," may involve actions that deal not only with the title or possession of a
property, but even with the use or occupation thereof. Thus, Section 76 of PD 1529
reads:

Sec. 76. Notice of lis pendens. No action to recover possession of real estate, or
to quiet title thereto, or to remove clouds upon the title thereof, or for partition, or

other proceedings of any kind in court directly affecting the title to land or the use
or occupation thereof or the buildings thereon, and no judgment, and no proceeding
to vacate or reverse any judgment, shall have any effect upon registered land as
against persons other than the parties thereto, unless a memorandum or notice
stating the institution of such action or proceeding and the court wherein the same
is pending, as well as the date of the institution thereof, together with a reference to
the number of the certificate of title, and an adequate description of the land
affected and the registered owner thereof, shall have been filed and registered.
In Magdalena Homeowners Association, Inc. v. Court of Appeals, 12 the Court did
not confine the availability of lis pendens to cases involving the title to or
possession of real property. Thus, it held:
According to Section 24, Rule 14 13 of the Rules of Court and Section 76 of
Presidential Decree No. 1529, a notice of lis pendens is proper in the following
cases, viz.:
a) An action to recover possession of real estate;
b) An action to quiet title thereto;
c) An action to remove clouds thereon;
d) An action for partition; and
e) Any other proceedings of any kind in Court directly affecting the title to the land
or the use or occupation thereof or the buildings thereon.
In Villanueva v. Court of Appeals, 14 this Court further declared that the rule of lis
pendens applied to suits brought "to establish an equitable estate, interest, or right
in specific real property or to enforce any lien, charge, or encumbrance against
it . . . ." Thus, this Court observed that the said notice pertained to the following:
. . . all suits or actions which directly affect real property and not only those which
involve the question of title, but also those which are brought to establish an
equitable estate, interest, or right, in specific real property or to enforce any lien,
charge, or encumbrance against it, there being in some cases a lis pendens,
although at the commencement of the suit there is no present vested interest,
claim, or lien in or on the property which it seeks to charge. It has also been held to
apply in the core of a proceeding to declare an absolute deed of mortgage, or to
redeem from a foreclosure sale, or to establish a trust, or to suits for the settlement
and adjustment of partnership interests.

In the present case, petitioner's Complaint docketed as Civil Case No. 65277 clearly
warrants the registration of a notice of lis pendens. The Complaint prayed for the
following reliefs:
1. Render judgment ordering the Defendant Allen Roxas to sell fifty percent (50%) of
his shareholdings in Defendant State Investment to Plaintiff at the price equivalent
to the successful bid price per share plus an additional ten percent (10%) per share
and directing Defendants to co-develop with the Plaintiff the subject real properties;
2. Render judgment ordering the Defendant Allen Roxas to:
a. Pay the Plaintiff the amount of at least Twenty Million Pesos (P20,000,000.00)
and/or such other amounts as may be proven during the course of the trial, by way
of actual damages;
b. Pay the Plaintiff the amount of at least One Million Pesos (P1,000,000.00), by way
of moral damages;
c. Pay the Plaintiff the amount of at least One Million Pesos (P1000,000.00), by way
of exemplary damages;
d. Pay the Plaintiff the amount of Two Hundred Fifty Thousand Pesos (P250,000.00)
by way of attorney's fees; and
e. Pay expenses of litigation and costs of suit. 15
Undeniably, the prayer that Defendant Allen Roxas be ordered to sell 50 percent of
his shareholdings in State Investment does not directly involve title to the property
and is therefore not a proper subject of a notice of lis pendens. Neither do the
various amounts of damages prayed for justify such annotation.
We disagree, however, with the Court of Appeals and the respondents that the
prayer for the co-development of the land was merely incidental to the sale of
shares of defendant company.
The Complaint shows that the loan obtained by Allen Roxas (one of the defendants
in the civil case) from First Metro was guaranteed by petitioner for two distinct
considerations: (a) to enable it to purchase 50 percent of the stocks that the said
defendant may acquire in State Investment and (b) to co-develop with the
defendants the Quezon City and the Las Pias properties of the corporation. In other
words, the co-development of the said properties is a separate undertaking that did
not arise from petitioner's acquisition of the defendant's shares in the corporation.
To repeat, the co-development is not merely auxiliary or incidental to the purchase
of the shares; it is a distinct consideration for Viewmaster's guaranty. 16

Hence, by virtue of the alleged agreement with Allen Roxas, petitioner has a direct
not merely incidental interest in the Las Pias property. Contrary to
respondents' contention, 17 the action involves not only the collection of a money
judgment, but also the enforcement of petitioner's right to co-develop and use the
property.
The Court must stress that the purpose of lis pendens is (1) to protect the rights of
the party causing the registration thereof 18 and (2) to advise third persons who
purchase or contract on the subject property that they do so at their peril and
subject to the result of the pending litigation. 19 One who deals with property
subject of a notice of lis pendens cannot acquire better rights than those of his
predecessors-in-interest. 20 In Tanchoco v. Aquino, 21 the Court held:
. . . . The doctrine of lis pendens is founded upon reason of public policy and
necessity, the purpose of which is to keep the subject matter of the litigation within
the power of the court until the judgment or decree shall have been entered;
otherwise, by successive alienations pending the litigation, its judgment or decree
shall be rendered abortive and impossible of execution. Purchasers pendente lite of
the property subject of the litigation after the notice of lis pendens is inscribed in
the Office of the Register of Deeds are bound by the judgment against their
predecessors. . . .
Without a notice of lis pendens, a third party who acquires the property after relying
only on the Certificate of Title would be deemed a purchaser in good faith. Against
such third party, the supposed rights of petitioner cannot be enforced, because the
former is not bound by the property owner's undertakings not annotated in the TCT.
22
Likewise, there exists the possibility that the res of the civil case would leave the
control of the court and render ineffectual a judgment therein. Indeed, according to
petitioner, it was not even informed when Allen Roxas exchanged the Quezon City
property for shares of stock in Northeast Land Development, Inc. 23 Hence, it
maintains that there is a clear risk that the same thing would be done with the Las
Pias property.
In this light, the CA ruling left unprotected petitioner's claim of co-development over
the Las Pias property. Hence, until the conflicting rights and interests are threshed
out in the civil case pending before the RTC, it will be in the best interest of the
parties and the public at large that a notice of the suit be given to the whole world.
The Court is not here saying that petitioner is entitled to the reliefs prayed for in its
Complaint pending in the RTC. Verily, there is no requirement that the right to or the
interest in the property subject of a lis pendens be proven by the applicant. The

Rule merely requires that an affirmative relief be claimed. 24 A notation of lis

pendens neither affects the merits of a case nor creates a right or a lien. 25 It
merely protects the applicant's rights, which will be determined during the trial.
WHEREFORE, the Petition is hereby GRANTED and the assailed Decision of the Court
of Appeals REVERSED and SET ASIDE. The Las Pias Register of Deeds is directed to
cause the annotation of lis pendens in TCT No. (S-17992) 12473-A. No
costs.1wphi1.nt
SO ORDERED.
G.R. No. 174290

January 20, 2009

ST. MARY OF THE WOODS SCHOOL, INC. and MARCIAL P. SORIANO,

petitioners,
vs.
OFFICE OF THE REGISTRY OF DEEDS OF MAKATI CITY and HILARIO P.
SORIANO,
x---------------------x
G.R. No. 176116

January 20, 2009

ST. MARY OF THE WOODS SCHOOL, INC. and MARCIAL P. SORIANO,

petitioners,
vs.
OFFICE OF THE REGISTRY OF DEEDS OF MAKATI CITY, NATIONAL BUREAU
OF INVESTIGATION, and HILARIO P. SORIANO, Respondents.
DECISION
CHICO-NAZARIO, J.:
Before this Court are two special civil actions for Certiorari and Prohibition under
Rule 65 of the 1997 Revised Rules of Civil Procedure, which were consolidated per
Resolution1 dated 5 February 2007.
The petitioners in G.R. No. 174290, namely: St. Mary of the Woods School, Inc.
(SMWSI) and Marcial P. Soriano, seek to annul and set aside on the ground of grave
abuse of discretion tantamount to lack or excess of jurisdiction the Resolution2
dated 18 August 2006 of the Court of Appeals in CA-G.R. CV No. 85561, which
granted herein private respondent Hilario P. Sorianos Motion to Reinstate/Reannotate the Notice of Lis Pendens over Transfer Certificates of Title (TCT) No.

175029,3 2209774 and 220978,5 of the Registry of Deeds of Makati City, all
registered in the name of herein petitioner SMWSI.
The afore-named petitioners are the same petitioners in G.R. No. 176116 in which
they also seek to annul and set aside, on the ground of grave abuse of discretion
amounting to lack or excess of jurisdiction, the three Resolutions similarly rendered
by the Court of Appeals in CA-G.R. CV No. 85561, to wit: (1) Resolution6 dated 18
August 2006 denying petitioners Motion to Dismiss Appeal of herein private
respondent Hilario P. Soriano; (2) Resolution7 dated 9 November 2006 denying for
lack of merit petitioners Motion for Reconsideration of the 18 August 2006
Resolution of the appellate court, as well as the supplement to the said motion; and
(3) Resolution8 dated 9 November 2006 requiring the Register of Deeds of Makati
City to submit to the appellate court the original copies of the documents involved
in Civil Case No. 03-954 so that they can be presented to the National Bureau of
Investigation (NBI) for comparative analysis of the signatures of Tomas Q. Soriano.
Petitioner SMWSI is an educational institution incorporated and existing by virtue of
the laws of the Republic of the Philippines. It is the current registered owner of the
three parcels of land (subject properties), located in Makati City and covered by
TCTs No. 175029, No. 220977 and No. 220978. Petitioner Marcial P. Soriano is the
President of petitioner SMWSI.
Private respondent Hilario P. Soriano, on the other hand, is one of the siblings of
petitioner Marcial P. Soriano.
The consolidated cases presently before this Court originated from the Complaint9
filed on 14 August 2003 by the private respondent with the Regional Trial Court
(RTC) of Makati City, Branch 148, for Declaration of Nullity of Deed of Assignment,
Deed of Sale and Cancellation of TCTs No. 156249, No. 156250, and No. 156251 of
the Register of Deeds of Makati, Metro Manila,10 registered in the name of Oro
Development Corporation (ODC); and TCT No. 175029, registered in the name of
petitioner SMWSI. Named defendants therein were the petitioners, together with
ODC, Antonio P. Soriano, Aurelia P. Soriano-Hernandez, Rosario P. Soriano-Villasor,
Eugenia Ma. P. Soriano-Lao and Josefina P. Soriano (hereinafter collectively referred
to as petitioners, et al.). The Complaint was docketed as Civil Case No. 03-954.
In his Complaint, private respondent alleged that during the marriage of his parents,
Tomas Q. Soriano and Josefina P. Soriano, the couple acquired both real and
personal properties, including the subject properties, which were then covered by
TCTs No. 169941,11 No. 114408,12 and No. 114409.13 On 10 May 1988, the Soriano
couple allegedly executed14 a Deed of Assignment15 in favor of ODC involving the
subject properties to pay for Tomas Q. Sorianos subscription of stocks in the said
corporation. On 14 June 1988, Tomas Q. Soriano died16 intestate.

By virtue of the said Deed of Assignment, the ownership and title over the subject
properties were transferred to ODC. Consequently, TCTs No. 169941, No. 114408
and No. 114409 were cancelled and the new TCTs No. 156249,17 No. 15625018 and
No. 15625119 were issued in the name of ODC.
Thereafter, on 26 April 1991, ODC executed20 in favor of petitioner SMWSI a Deed
of Sale21 over the subject property covered by TCT No. 156249. By virtue of the
sale, petitioner SMWSI acquired ownership and title over the particular property.
Thus, TCT No. 156249 was cancelled and the new TCT No. 175209 was issued in the
name of petitioner SMWSI.
Private respondent claimed that several years after his father Tomas Q. Sorianos
death, he discovered that the latters signature in the Deed of Assignment of 10
May 1988 in favor of ODC was a forgery. Being very familiar with his fathers
signature, private respondent compared Tomas Q. Sorianos purported signature in
the Deed of Assignment of 10 May 1988 with Tomas Q. Sorianos genuine signature
in another document captioned Second Amendment of Credit Agreement.22 Private
respondent also presented a Certification23 from the Records Management and
Archives Office which stated that the forged Deed of Assignment dated 10 May
1988 was not available in the files of the Office.
Meanwhile, by reason of the pendency of Civil Case No. 03-954, a Notice of Lis
Pendens was annotated on TCTs No. 156249, No. 156250, and No. 156251, in the
name of ODC. With the subsequent cancellation of TCT No. 156249 and the issuance
of TCT No. 175209 in the name of petitioner SMWSI, the Notice of Lis Pendens was
carried over to the new certificate of title.
In a Joint Affidavit24 dated 18 July 1990 executed by petitioner Marcial P. Soriano, it
appears that the other individual defendants in Civil Case No. 03-954, and private
respondent, recognized and acknowledged the validity, legality and propriety of the
transfer of the subject properties from Tomas Q. Soriano to ODC. On this basis,
defendants filed with the RTC a Motion to Dismiss25 Civil Case No. 03-954 on the
grounds that: (1) the Complaint states no cause of action; (2) the claim set forth in
the Complaint has been paid, waived, abandoned or otherwise extinguished; (3) the
Complaint is barred by estoppel or laches; (4) the Complaint is barred by
prescription; (5) the titles to the subject properties are incontestable and can no
longer be annulled; and (6) a condition precedent for filing the claim has not been
complied with, i.e., the compromise agreement failed despite earnest efforts
towards that end.
On 17 January 2005, the RTC issued an Order26 dismissing the private respondents
Complaint. The RTC ratiocinated in this manner:

A careful reading of the [14] August 2003 Complaint filed by [herein private
respondent] Hilario P. Soriano would suffice that he indeed failed to state that he
has a right over the [subject properties] and that the [herein petitioners, et al.] have
the obligation to observe such right. Assuming for the sake of argument that the
signature was forged, the [private respondent] did not state that he was deprived of
his share in the legitime of the deceased. Thus, his right over the [subject properties
which were] assigned by the deceased was not clearly defined and stated in the
[C]omplaint filed.
xxxx
x x x. Also, the [private respondent] must comply with the provision of the Civil
Code of [the] Philippines, to wit:
"Article 22227 No suit shall be filed or maintained between members of the same
family unless it should appear that earnest efforts toward a compromise have been
made, but that the same have failed, subject to the limitations in Article 2035."
x x x. There is no showing in the allegations in the [C]omplaint of the [private
respondent] that he complied with the requirement of the law. Thus, the Court finds
merit in the position of the [petitioners, et al.]
xxxx
x x x. Clearly, the act of the [private respondent] in acknowledging the legality,
validity and genuineness of the [D]eed of [A]ssignment in the [J]oint [A]ffidavit
placed him in no better position to question the validity of the subject document.
[Private respondent] never questioned the distribution of the properties among the
heirs of Tomas Soriano. [Private respondent] even accepted the conveyance of a
parcel of land covered by TCT No. 156253. By accepting said property as his share
in the estate of his late father, [private respondent] is now deemed to have been
paid or compensated because there was delivery of his share in the estate of the
deceased. It can now be conclusively presumed that his share in the legitime of
deceased Tomas Soriano was fully awarded to [private respondent]. He is now
estopped in questioning the validity of the [D]eed of [A]ssignment by Tomas Q.
Soriano in favor of [ODC]. Accordingly, all subsequent conveyances involving the
subject properties can no longer be questioned by [private respondent] Hilario P.
Soriano.28
Accordingly, the RTC decreed:
WHEREFORE, finding merits on the [M]otion to [D]ismiss filed by [herein petitioners,
et al.] and in the prayer set forth in the [A]nswer of defendants Josefina P. Soriano
and Rosario P. Soriano-Villasor, the dismissal of this case is hereby GRANTED.

Accordingly, the Complaint filed by [private respondent] Hilario P. Soriano is

dismissed because it asserts no cause of action and the claim or demand set forth
in the [private respondents] pleading has been waived, abandoned, or otherwise
extinguished, and that a condition precedent for filing the claim has not been
complied with.29
In the interim, the subject properties covered by TCTs No. 156250 and No. 156251 in
the name of ODC were also transferred to petitioner SMWSI by virtue of a Deed of
Sale dated 3 February 2005. TCTs No. 156250 and No. 156251 in the name of ODC
were then cancelled and the new TCTs No. 220977 and No. 220978 were issued in
the name of petitioner SMWSI. The Notice of Lis Pendens annotated on the
cancelled TCTs was copied into the new TCTs in the name of petitioner SMWSI.
Aggrieved by the RTC Order dated 17 January 2005, private respondent moved for
its reconsideration, but the RTC denied the same in an Order30 dated 26 April 2005.
On 16 May 2005, petitioners, et al., filed with the RTC a Motion to Cancel Notice of
Lis Pendens31 annotated on the titles covering the subject properties, which Motion
was opposed by the private respondent.
The very next day, 17 May 2005, private respondent filed a Notice of Appeal stating
his intention to elevate the RTC Orders dated 17 January 2005 and 26 April 2005 to
the Court of Appeals. Private respondents appeal before the Court of Appeals was
docketed as CA-G.R. CV No. 85561.
Meanwhile, the RTC issued its Order32 dated 20 June 2005 granting the Motion to
Cancel Notice of Lis Pendens filed by petitioners, et al., and ordering the Registrer of
Deeds of Makati City to cancel the Notice of Lis Pendens annotated on TCTs No.
156249, No. 156250, No. 156251 in the name of ODC and TCT No. 175029 in the
name of petitioner SMWSI. The RTC justified its latest Order as follows:
As mentioned in the case, the notice of lis pendens can be cancelled if it is not
necessary to protect the interest of the party who caused it to be recorded. In this
case, the [herein private respondents] interest should be considered on whether
the notice of lis pendens should be cancelled or not. As it is the Court believes that
the cancellation is proper in this case. First, the Court still has jurisdiction of the
case considering that the Notice of Appeal was only filed on [17 May 2005], while
the Motion to cancel Notice of Lis Pendens was filed on [16 May 2005]. Second,
[private respondent] Hilario P. Soriano has no interest to be protected insofar as the
subject properties are concerned because of his acknowledgment that he already
received his share in the estate of Tomas Soriano. Lastly, the contention of the
[private respondent] that the motion is premature is not tenable. The authority of
the Court to Cancel Notice of Lis Pendens is even evident in the
Comment/Opposition of the [private respondent] which states that "While it may be

true that the cancellation of a notice of lis pendens may be ordered at any given
time even before final judgment, x x x."33
On 4 July 2005, the petitioners, et al., filed with the RTC a Motion for Issuance of
Supplement to Order Cancelling Notice of Lis Pendens34 to clarify that TCTs No.
156249, No. 156250, and No. 156251 in the name of ODC were already cancelled
and replaced with TCTs No. 175209, No. 220977, and No. 220978 all registered in
the name of petitioner SMWSI in which the Notice of Lis Pendens was carried over.
The private respondent, on the other hand, filed a Motion for Reconsideration of the
RTC Order dated 20 June 2005 with Comment on the petitioners, et al.s, Motion for
Issuance of Supplement to the same RTC Order.
On 15 July 2005, the RTC issued another Order35 by way of supplement to its Order
dated 20 June 2005, directing anew the Registrer of Deeds of Makati City to cancel
the Notice of Lis Pendens annotated on TCTs No. 175029, No. 220977 and No.
220978 in the name of petitioner SMWSI.
In a subsequent Order36 dated 15 August 2005, the RTC denied for lack of merit
private respondents Motion for Reconsideration of the RTC Order dated 20 June
2005.
On 28 September 2005, private respondent received a directive from the Court of
Appeals dated 20 September 2005 requiring him to file his Appellants Brief
pursuant to his Notice of Appeal dated 17 May 2005. In compliance therewith,
private respondent submitted his Appellants Brief to the Court of Appeals with the
following assignment of errors:
1. The lower court erred in dismissing the [C]omplaint on the ground that no
certificate from a signature expert was attached to affirm the conclusion of the
[herein private respondent] that the signature of Tomas Q. Soriano in the [D]eed of
[A]ssignment was forged and on the ground that neither can the certificate issued
by the Records Management and Archive Office support such allegation and that the
[herein petitioners, et al.] cannot shoulder the burden caused by the Notary Public
in failing to file the notarized documents, if he indeed failed.
2. The lower court erred in dismissing the [C]omplaint on the ground that the
[private respondent] failed to state that he has a right over the subject properties
and that the [petitioners, et al.] have the obligation to observe such right.
3. The lower court erred in ruling that Article 151 of the Family Code should have
been complied with.

4. The lower court erred in denying [private respondents] [M]otion for

[R]econsideration despite valid and compelling arguments that warrant the
reconsideration prayed for.
5. The lower court erred in granting [petitioners, et al.] [M]otion for [C]ancellation of
Lis Pendens.
6. The lower court erred in dismissing the [C]omplaint on the ground that by
accepting the conveyance of a parcel of land covered by TCT No. 156253 as his
share in the estate of his late father, [private respondent] is now deemed to have
been paid or compensated because there was delivery of his share in the estate of
the deceased.37
While CA-G.R. CV No. 85561 was still pending, and since the Notice of Lis Pendens
annotated on the TCTs of the subject properties in the name of petitioner SMWSI
was already cancelled per RTC Orders dated 20 June 2005 and 15 July 2005,
petitioner SMWSI mortgaged the subject properties on 15 February 2006 for the
amount of P8,000,000.00.
On 14 March 2006, private respondent filed before the Court of Appeals a Motion to
Reinstate/Re-annotate Notice of Lis Pendens on the TCTs of the subject properties
given that there was yet no final judgment of dismissal of his Complaint, as its
dismissal had been duly appealed. Moreover, it had not been shown that the Notice
of Lis Pendens was to molest the petitioners, et al., or that the same was not
necessary to protect his interests; thus, its re-annotation on the TCTs of the subject
properties while the appeal was pending would be in accordance with public policy.
Petitioners, et al., opposed the aforesaid Motion of private respondent.
On 17 March 2006, petitioners, et al., filed a Motion to Dismiss Appeal on the ground
that "the issues in the appeal are and can only be questions of law, the appellate
jurisdiction over which belongs exclusively to the Supreme Court, thus the dismissal
of [private respondents] appeal is mandatory pursuant to Supreme Court Circular
No. 2-90 and Section 2, Rule 50 of the 1997 Rules of Civil procedure."38
Thereafter, on 18 August 2006, the Court of Appeals issued a Resolution granting
private respondents Motion to Reinstate/Re-annotate Notice of Lis Pendens on the
TCTs of the subject properties. The Court of Appeals ruled that although the RTC
found that private respondent had no interest to be protected by the Notice of Lis
Pendens, since the appellate court already acquired jurisdiction over the case, it
was the latter which must ascertain the propriety of canceling the Notice of Lis
Pendens upon proper motion and hearing.39 On the same day, the Court of Appeals
also issued a separate Resolution denying petitioners, et al.s, Motion to Dismiss
Appeal of private respondent. According to the appellate court, private respondent

raised both questions of fact and law in his appeal; hence, the ground for the
dismissal of the appeal relied upon by the petitioners, et al., was untenable.
G.R. No. 17429040
Aggrieved by the Resolution dated 18 August 2006 of the Court of Appeals granting
private respondents Motion to Reinstate/Re-annotate Notice of Lis Pendens on the
subject properties, petitioners, without filing a Motion for Reconsideration, filed on
11 September 2006 before this Court the instant Petition for Certiorari under Rule
65 of the 1997 Revised Rules of Civil Procedure alleging grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of the appellate court in
rendering the assailed Resolution. The Petition is docketed as G.R. No. 174290.
Petitioners maintain that the RTC Orders canceling the Notice of Lis Pendens on the
TCTs of the subject properties were valid and proper as they were issued on the
basis of private respondents lack of interest/right over the subject properties to be
protected by the annotation of such Notice. Moreover, the cancellation of the Notice
of Lis Pendens is authorized by Section 14,41 Rule 13 of the 1997 Revised Rules of
Civil Procedure, as well as under Section 77,42 Presidential Decree No. 1529.43
Hence, the reinstatement of the Notice of Lis Pendens should not have been
allowed.
Petitioners opine that the Court of Appeals gravely abused its discretion when it
ordered the re-annotation of the Notice of Lis Pendens based on the mere motion
filed by private respondent, as it was violative of the proper procedures prescribed
under Presidential Decree No. 1529.
Grave abuse of discretion is committed when an act is 1) done contrary to the
Constitution, the law or jurisprudence; or 2) executed "whimsically or arbitrarily" in
a manner "so patent and so gross as to amount to an evasion of a positive duty, or
to a virtual refusal to perform the duty enjoined." What constitutes grave abuse of
discretion is such capricious and arbitrary exercise of judgment as that which is
equivalent, in the eyes of the law, to lack of jurisdiction.44 It does not encompass
an error of law.45
At the outset, it is significant to note that petitioners filed the instant Petition
without filing a Motion for Reconsideration of the assailed Resolution. A Motion for
Reconsideration of the order or resolution is a condition precedent for the filing of a
Petition for Certiorari challenging the issuance of the same.46
The general rule that the filing of a Motion for Reconsideration before resort to
certiorari will lie is intended to afford the public respondent an opportunity to
correct any factual or fancied error attributed to it by way of re-examination of the
legal and factual aspects of the case.47 This rule, however, is subject to certain

recognized exceptions, to wit: (1) where the order or a resolution, is a patent nullity,
as where the court a quo has no jurisdiction; (2) where the questions raised in the
certiorari proceeding have been duly raised and passed upon in the lower court; (3)
where there is an urgent necessity for the resolution of the question, and any
further delay would prejudice the interests of the Government or of the petitioner or
the subject matter of the action is perishable; (4) where, under the circumstances, a
Motion for Reconsideration would be useless; (5) where petitioner was deprived of
due process and there is extreme urgency for relief; (6) where, in a criminal case,
relief from an order of arrest is urgent and the granting of such relief by the trial
court is improbable; (7) where the proceedings in the lower court are a nullity for
lack of due process; (8) where the proceedings were ex parte or were such that the
petitioner had no opportunity to object; and (9) where the issue raised is one purely
of law or where public interest is involved.48
In the case at bar, petitioners aver that they dispensed with the filing of a Motion for
Reconsideration of the 18 August 2006 before the Court of Appeals because of the
extreme urgency of the relief prayed for, and the issues raised herein are purely of
law and involve public interest, therefore, placing the instant case within the ambit
of the exceptions to the general rule. Petitioners claim that at the time of filing of
this Petition, private respondent was taking steps and other measures to present for
registration the 18 August 2006 Resolution of the Court of Appeals to the Office of
the Registry of Deeds of Makati City so as to already re-annotate the Notice of Lis
Pendens on the TCTs of the subject properties, prompting petitioners to immediately
file the instant Petition without seeking reconsideration of the assailed Resolution.
We find that petitioners reasons for excusing themselves from filing a Motion for
Reconsideration before filing the present Petition for Certiorari are baseless and
unsubstantiated.
Petitioners averment of sense of urgency in that private respondent was already
taking steps and other measures to have the Notice of Lis Pendens re-annotated by
presenting the 18 August 2006 Resolution of the Court of Appeals to the Office of
the Registry of Deeds of Makati City deserves scant consideration. Petitioners never
described with particularity, much less, presented proof of the steps purportedly
taken by the private respondent that would justify their immediate resort to this
Court on certiorari without seeking reconsideration of the Resolution in question
from the Court of Appeals. Petitioners simply made a sweeping allegation that
absolutely has no basis. The records themselves are bare of any proof that would
convince this Court that the private respondent indeed, took steps to have the
challenged Resolution implemented. In fact, petitioners themselves, in their letter49
dated 8 September 2006 addressed to the Office of the Registry of Deeds of Makati
City, pointed out that the questioned Resolution of the Court of Appeals did not yet
order the said Office to re-annotate the Notice of Lis Pendens. Petitioners explained
in their letter that the 18 August 2006 Resolution granting private respondents

Motion to Reinstate/Re-annotate Notice of Lis Pendens is a mere indication that

private respondent can proceed with the legal procedure leading to the actual reannotation of the said notice. They even reminded the Register of Deeds of Makati
City that even if it would be furnished with a copy of the assailed Resolution, it had
no authority to reinstate/re-annotate the Notice of Lis Pendens without a proper and
direct order from the appellate court. More importantly, petitioners explicitly
revealed in their letter that they intended to file a Motion for Reconsideration with
the Court of Appeals, as its Resolution dated 18 August 2006 had not yet acquired
finality. Why then did petitioners not proceed with filing their motion for
reconsideration, and opted to immediately file the present Petition for Certiorari?
Similarly baseless is petitioners bare assertion, without even an attempt at
explaining, that the issues subject of the Petition at bar involve public interest
sufficient to excuse them from filing a Motion for Reconsideration of the Resolution
dated 18 August 2006.
Given the foregoing, the Court dismisses the instant Petition for Certiorari for
petitioners failure to comply with a condition precedent for filing such a petition.
Granting arguendo that the present special civil action for certiorari can be given
due course, the Court still finds that the Court of Appeals did not commit any grave
abuse of discretion in granting private respondents Motion to Reinstate/Re-annotate
Notice of Lis Pendens.
Lis pendens, which literally means pending suit, refers to the jurisdiction, power or
control which a court acquires over property involved in a suit, pending the
continuance of the action, and until final judgment. Founded upon public policy and
necessity, lis pendens is intended (1) to keep the properties in litigation within the
power of the court until the litigation is terminated and to prevent the defeat of the
judgment or decree by subsequent alienation; and (2) to announce to the whole
world that a particular property is in litigation and serves as a warning that one who
acquires an interest over said property does so at his own risk, or that he gambles
on the result of the litigation over said property.50
A trial court has, however, the inherent power to cancel a notice of lis pendens,
under the express provisions of law.51 As provided for by Sec. 14, Rule 13 of the
1997 Rules of Civil Procedure, a notice of lis pendens may be cancelled on two
grounds: (1) if the annotation was for the purpose of molesting the title of the
adverse party; or (2) when the annotation is not necessary to protect the title of the
party who caused it to be recorded.
Considering that the dismissal of private respondents Complaint by the RTC was
appealed to the Court of Appeals, which Complaint refers to the properties covered
by TCTs No. 175209, No. 220977, and No. 220978 that bear the annotations of lis

pendens, and such properties therefore are irrefragably still the subject matter of
litigation, the appellate court rightly saw the need for giving notice to the public of
such a fact. The necessity becomes even more compelling considering that
petitioner SMWSI had already entered into transactions with third parties involving
the subject properties.
On the issue of jurisdiction of the Court of Appeals to entertain the issue on the
notice of lis pendens, we adhere to the Court of Appeals ratiocination, thus:
However, as the dismissal of this case by the lower court has been appealed to us,
we now have jurisdiction over the case.
The doctrine of lis pendens is based on consideration of public policy and
convenience, under the view that once a court has taken cognizance of a
controversy, it should be impossible to interfere with the consummation of the
judgment by any ad interim transfer, encumbrance, or change of possession.
Now that the case is pending before us on appeal, there is no certainty as to the
outcome of the case. There is a need to warn the whole world that a particular
property is in litigation, serving as a warning that the one who acquires an interest
over said property does so at his own risk, or that he gambles on the result of the
litigation over said property.
x x x. Although the lower court made a finding that [herein private respondent]
Hilario has no interest to be protected by the annotation of the notice of the
pendency of the case as we now have jurisdiction over the case, we have to
ascertain for ourselves the propriety of canceling the annotation of the notice of lis
pendens upon proper motion and hearing.52
There is likewise no merit in petitioners contention that the filing by private
respondent with the Court of Appeals of an appeal (where he already raised the
issue of re-annotating the Notice of Lis Pendens) and, subsequently, a separate
Motion to Reinstate/Re-annotate Notice of Lis Pendens is tantamount to forum
shopping.
Forum shopping is committed by a party who, having received an adverse judgment
in one forum, seeks another opinion in another court, other than by appeal or the
special civil action of certiorari. More accurately, however, forum shopping is the
institution of two or more suits in different courts, either simultaneously or
successively, in order to ask the courts to rule on the same or related causes and/or
to grant the same or substantially the same reliefs.53 The essence of forumshopping is the filing of multiple suits involving the same parties for the same cause
of action, either simultaneously or successively, to secure a favorable judgment.

Forum-shopping is present when in the two or more cases pending, there is identity
of parties, rights of action and reliefs sought.54
In the present case, what were filed by the private respondent before the appellate
court were an appeal and a motion relative to the same case. The appeal and the
motion filed by the private respondent cannot be regarded as separate and distinct
cases or suits. It is settled that the office of a motion is not to initiate new litigation,
but to bring up a material but incidental matter arising in the progress of the case in
which the motion was filed. A motion is not an independent right or remedy, but is
confined to incidental matters in the progress of a cause. It relates to some question
that is collateral to the main object of the action and is connected with and
dependent upon the principal remedy.55 Private respondents Motion to
Reinstate/Re-annotate Notice of Lis Pendens is, at the very least, a mere reiteration
of one particular issue already raised in the appeal, and an insistence on the
urgency of resolving the same ahead of the other issues. The filing of said Motion
cannot be considered forum shopping and the admission thereof by the Court of
Appeals did not constitute grave abuse of discretion.
Finally, petitioners futilely attempt to convince this Court that the Court of Appeals
acted with grave abuse of discretion in granting private respondents Motion to
Reinstate/Re-annotate Notice of Lis Pendens in violation of the proper procedures
prescribed under Presidential Decree No. 1529:
Section 117. Procedure. When the Register of Deeds is in doubt with regard to the
proper step to be taken or memorandum to be made in pursuance of any deed,
mortgage or other instrument presented to him for registration, or where any party
in interest does not agree with the action taken by the Register of Deeds with
reference to any such instrument, the question shall be submitted to the
Commissioner of Land Registration by the Register of Deeds, or by the party in
interest thru the Register of Deeds.
Where the instrument is denied registration, the Register of Deeds shall notify the
interested party in writing, setting forth the defects of the instrument or legal
grounds relied upon, and advising him that if he is not agreeable to such ruling, he
may, without withdrawing the documents from the Registry, elevate the matter by
consulta within five days from receipt of notice of the denial of registration to the
Commissioner of Land Registration.
The Register of Deeds shall make a memorandum of the pending consulta on the
certificate of title which shall be canceled motu proprio by the Register of Deeds
after final resolution or decision thereof, or before resolution, if withdrawn by
petitioner.

The Commissioner of Land Registration, considering the consulta and the records
certified to him after notice to the parties and hearing, shall enter an order
prescribing the step to be taken or memorandum to be made. His resolution or
ruling in consultas shall be conclusive and binding upon all Registers of Deeds,
provided, that the party in interest who disagrees with the final resolution, ruling or
order of the Commissioner relative to consultas may appeal to the Court of Appeals
within the period and in the manner provided in Republic Act No. 5434.
It is clear that the afore-quoted procedure applies only when the instrument is
already presented for registration and: (1) the Register of Deeds is in doubt with
regard to the proper step to be taken or memorandum to be made in pursuance of
any deed, mortgage or other instrument presented to him for registration; or (2)
where any party in interest does not agree with the action taken by the Register of
Deeds with reference to any such instrument; and (3) when the registration is
denied. None of these situations is present in this case.
There was no evidence that the 18 August 2006 Resolution of the Court of Appeals
was already presented to the Register of Deeds of Makati City for the re-annotation
of the Notice of Lis Pendens. There is also no showing that the Register of Deeds
denied the re-annotation.
G.R. No. 17611656
Unsatisfied with the other Resolution dated 18 August 2006 of the Court of Appeals
denying their Motion to Dismiss Appeal, petitioners moved for its reconsideration,
but it was denied by the appellate court in a Resolution57 dated 9 November 2006.
In a separate Resolution58 also dated 9 November 2006, the Court of Appeals
ordered the Register of Deeds of Makati City to submit the original copies of the
Minutes of the Meeting of the Board of Directors of ODC dated 7 May 1988, together
with the Deed of Assignment dated 10 May 1988 entered into by and between
Tomas Q. Soriano and ODC involving the subject properties, so that they could be
referred to the NBI for comparative analysis of Tomas Q. Sorianos signatures.
Following the foregoing development, petitioners filed before this Court another
Petition for Certiorari under Rule 65 of the 1997 Revised Rules of Civil Procedure on
29 December 2006, docketed as G.R. No. 176116.
Petitioners assert that the Court of Appeals acted with grave abuse of discretion
amounting to lack or excess of jurisdiction in refusing to dismiss private
respondents appeal in its Resolutions dated 18 August 2006 and 9 November 2006,
even though the appeal raised only questions of law. Petitioners argue that an
appeal raising pure questions of law must be filed with the Supreme Court via
Petition for Review under Rule 45 and not with the Court of Appeals.

Petitioners also contend that the Resolution dated 9 November 2006 of the Court of
Appeals ordering the submission of documents so that the NBI could perform a
comparative analysis of Tomas Q. Sorianos signatures, was apparently for the
purpose of finding out whether forgery was committed in the Deed of Assignment
dated 10 May 1988. Petitioners assert that the appellate court has absolutely no
original jurisdiction to rule whether Tomas Q. Sorianos signature was forged in the
Deed of Assignment in question. There is no need for the Court of Appeals to have
done an analytical comparison of Tomas Q. Sorianos signatures considering that the
RTC made no factual finding as regards the existence or non-existence of forgery.
Accordingly, the Court of Appeals has no power to inquire into the allegations of
forgery made in the private respondents Complaint, and for it to proceed to do so is
grave abuse of discretion tantamount to lack or excess of jurisdiction.
The Court resolves first the issue of whether the Court of Appeals committed grave
abuse of discretion amounting to lack or excess of jurisdiction in denying
petitioners Motion to Dismiss Appeal.
In resolving such issue, it is necessary to determine only if private respondent's
appeal to the Court of Appeals involves purely questions of law, in which case, the
proper mode of appeal would be a Petition for Review on Certiorari to the Supreme
Court under Rule 45 of the 1997 Revised Rules of Civil Procedure; or questions of
fact or mixed questions of fact and law, in which case, the proper mode would be by
ordinary appeal to the Court of Appeals under Rule 41.
A question of law exists when there is doubt or controversy as to what the law is on
a certain state of facts, and there is a question of fact when the doubt or difference
arises as to the truth or falsehood of facts, or when the query necessarily invites
calibration of the whole evidence considering mainly the credibility of witnesses,
existence and relevancy of specific surrounding circumstances, their relation to one
another and to the whole, and probabilities of the situation. Ordinarily, the
determination of whether an appeal involves only questions of law or questions both
of law and of fact is best left to the appellate court, and all doubts as to the
correctness of such conclusions will be resolved in favor of the Court of Appeals.59
Among the grounds raised by petitioners in seeking the dismissal by the RTC of
private respondents Complaint in Civil Case No. 03-954 are: (1) the Complaint
stated no cause of action;60 (2) the claim or demand set forth in the Complaint had
been paid, waived, abandoned, or otherwise extinguished;61 and (3) a condition
precedent for filing the claim has not been complied with.62
Settled is the rule that in a Motion to Dismiss based on lack of cause of action, the
issue is passed upon on the basis of the allegations in the complaint, assuming
them to be true. The court does not inquire into the truth of the allegations and
declare them to be false; otherwise, it would be a procedural error and a denial of

due process to the plaintiff. Only the statements in the complaint may be properly
considered, and the court cannot take cognizance of external facts or hold
preliminary hearings to ascertain their existence. To put it simply, the test for
determining whether a complaint states or does not state a cause of action against
the defendants is whether or not, admitting hypothetically the truth of the
allegations of fact made in the complaint, the judge may validly grant the relief
demanded in the complaint.63
In a Motion to Dismiss based on failure to state a cause of action, there cannot be
any question of fact or "doubt or difference as to the truth or falsehood of facts,"
simply because there are no findings of fact in the first place. What the trial court
merely does is to apply the law to the facts as alleged in the complaint, assuming
such allegations to be true. It follows then that any appeal therefrom could only
raise questions of law or "doubt or controversy as to what the law is on a certain
state of facts." Therefore, a decision dismissing a complaint based on failure to
state a cause of action necessarily precludes a review of the same decision on
questions of fact. One is the legal and logical opposite of the other.64
Hence, private respondent did raise a question of law when he assigned as an error
in his appeal to the Court of Appeals the RTCs alleged error in dismissing his
Complaint in Civil Case No. 03-954 for failure to state a cause of action.
It must be remembered, however, that the basis of the RTC Order on 17 January
2005 dismissing private respondents Complaint was not only its failure to state a
cause of action, but also the fact that the claim or demand set forth therein had
been paid, waived, abandoned, or otherwise extinguished, and that the condition
precedent for filing a claim had not been complied with.
According to the RTC, the Complaint was dismissible on the ground that the claim or
demand set forth therein had been paid, waived, abandoned, or otherwise
extinguished. Private respondent, in accepting a certain parcel of land as his share
in the estate of his late father Tomas Q. Soriano, was now deemed to have been
paid or compensated because his share in the estate of the deceased had been
delivered to him. In arriving at such a finding, the RTC necessarily made a
preliminary determination of the facts in order to verify that, indeed, private
respondents claim or demand had been paid. When the private respondent
assigned as error in his appeal such finding of the RTC, he raised not only a question
of law, but also a question of fact.
The Court agrees in the following observation and pronouncement made by the
Court of Appeals:
The lower court evaluated the documents [herein private respondent] Hilario
submitted to prove his claim of forgery. The lower court practically made a finding of

fact that the signature of Tomas Q. Soriano in the [D]eed of [A]ssignment is a

forgery when the court stated that "the signatures in the [D]eed of [A]ssignment
and in the [S]econd [A]mendment of [C]redit [A]greement are the same." Whether
the signature of Tomas Q. Soriano was a forgery or not should have been
determined during a trial, and not merely in the resolution of a [M]otion to
[D]ismiss.
[Private respondent] Hilario likewise raised the issue of whether or not there was
payment or estoppel as claimed by the [herein peititoners]. At first glance, it could
be surmised that the issue of estoppel is a question of law. However, in this case,
there is a question of fact involved.
[Private respondent] Hilario comments that there is precisely a need to factually
ascertain whether there has been full payment or award of his legitime, as a
compulsory heir of Tomas Q. Soriano, before the court can conclude that [private
respondent] Hilario is estopped from questioning the [D]eed of [A]ssignment.
xxxx
As [private respondent] Hilario raised questions of fact as well as questions of law in
his appeal, the ground for dismissal relied upon by the [petitioners] is not applicable
in his case.65
The rule is that the determination of whether an appeal involves only questions of
law or questions of both law and fact is best left to the appellate court, and all
doubts as to the correctness of such conclusions will be resolved in favor of the
Court of Appeals.66
Finally, we do not perceive any abusive exercise of power in the Resolution dated 9
November 2006 of the Court of Appeals requiring the submission of the original
copies of the documents involved in Civil Case No. 03-954 to enable the NBI to
perform a comparative analysis of Tomas Q. Sorianos signatures therein.
It must be stressed that in its 17 January 2005 Order, the trial court expressed a
finding that "in the beholder of untrained eyes, the signatures in the Deed of
Assignment and in the Second Amendment of Credit Agreement are the same."67
Considering that the trial court made a finding of fact as regards the issue of forgery
and such issue was properly raised in the private respondents appeal with the
appellate court, it certainly behooves the appellate court to review the said findings.
Accordingly, as the Court of Appeals has the power to inquire into the allegations of
forgery made in the private respondents Complaint, it can validly require the
submission of the original copies of the documents involved in Civil Case No. 03-954
to enable the NBI to perform a comparative analysis of Tomas Q. Sorianos
signatures therein.

WHEREFORE, premises considered, these consolidated Petitions for Certiorari are

hereby DISMISSED.
SO ORDERED.
G.R. No. 167140
COL. FRANCISCO DELA MERCED, substituted by his heirs namely, LUIS
CESAR DELA MERCED, BLANQUITA DELA MERCED nee MACATANGAY, and
MARIA OLIVIA M. PAREDES,
Petitioners,
- versus GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS) and Spouses VICTOR
and MILAGROS MANLONGAT,
Respondents.
November 23, 2011
DECISION

DEL CASTILLO, J.:

A transferee pendente lite of registered land, whose title bears a notice of a
pending litigation involving his transferors title to the said land, is bound by the
outcome of the litigation, whether it be for or against his transferor. Given this
principle, the modification of the final decision against the transferor in order to
include the transferee pendente lite does not violate the doctrine of immutability of
final judgments. His inclusion does not add to or change the judgment; it is only a
legal consequence of the established doctrine that a final judgment binds the privy
of a litigating party.
Before the Court is a Petition for Review[1] assailing the validity of the
February 9, 2005 Order[2] of Branch 160 of the Regional Trial Court (RTC) of Pasig
City. The said Order denied petitioners motion for supplemental writ of execution:
[3]
Conformably with Section 8, Rule 39, 1997 Rules of Civil Procedure,
execution in this case can only be implemented as far as what has been decreed in
the decision dated September 11, 2001, qualified by the Order of this Court dated
January 20, 2003 with respect [to] the payment of attorneys fees.

In view thereof, plaintiffs motion for supplemental writ of execution is

DENIED.
SO ORDERED.[4]

The September 11, 2001 Decision referred to in the assailed Order was
rendered by this Court in G.R. No. 140398, entitled Col. Francisco Dela Merced,
substituted by his heirs, namely, BLANQUITA E. DELA MERCED, LUIS CESAR DELA
MERCED, BLANQUITA E. DELA MERCED (nee MACATANGAY), and MARIA OLIVIA M.
PAREDES, v. GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS) and SPOUSES
VICTOR and MILAGROS MANLONGAT.[5] The fallo of the said Decision reads:
WHEREFORE, in view of the foregoing, the petition is GRANTED. The
decision of the Court of Appeals is REVERSED AND SET ASIDE. The decision of the
Regional Trial Court of Pasig City, Branch 160, in Civil Case Nos. 51410 and 51470, is
REINSTATED. The foreclosure sale of Lot Nos. 6, 7, 8 and 10 of Block 2 and Lot 8 of
Block 8 of the property originally covered by TCT 26105, and the subsequent
certificates of titles issued to GSIS as well as TCT No. PT-94007 in the name of
Elizabeth Manlongat, are declared NULL AND VOID. The Register of Deeds of Pasig
City is ordered to CANCEL all present certificates of title in the name of GSIS and
Elizabeth Manlongat covering the above-mentioned properties, and to ISSUE new
certificates of title over the same in the name of petitioners as co-owners thereof.
Respondents GSIS and spouses Victor and Milagros Manlongat are ORDERED to pay,
jointly and severally, attorneys fees in the increased amount of P50,000.00, and to
pay the costs.
SO ORDERED.[6]

G.R. No. 140398 has long attained finality[7] but could not be executed because of
the objections raised by the Register of Deeds (RD) and respondent Government
Service Insurance System (GSIS). These objections, which the trial court found
insurmountable in its assailed February 9, 2005 Order, are now presented to us for
resolution.
Factual antecedents
This case involves five registered parcels of land located within the Antonio
Subdivision, Pasig City Lots 6, 7, 8, and 10 of Block 2 and Lot 8 of Block 8 (subject
properties). These lots were originally owned by, and titled in the name of, Jose C.
Zulueta (Zulueta), as evidenced by Transfer Certificate of Title (TCT) No. 26105.[8]
TCT No. 26105 contains several lots, other than the subject properties, within the
Antonio Subdivision.

Later, the Zulueta spouses mortgaged[9] several lots contained in TCT No.
26105 to the GSIS, which eventually foreclosed on the mortgaged properties,
including the subject properties. Upon consolidation of GSISs ownership, TCT No.
26105 in Zuluetas name was cancelled, and TCT No. 23554[10] was issued in
GSISs name.[11]
Upon learning of the foreclosure, petitioners predecessor, Francisco Dela
Merced (Dela Merced) filed a complaint[12] praying for the nullity of the GSIS
foreclosure on the subject properties (Lots 6, 7, 8, and 10 of Block 2 and Lot 8 of
Block 8) on the ground that he, not the Zuluetas, was the owner of these lots at the
time of the foreclosure. Dela Merced also impleaded Victor and Milagros Manlongat,
[13] who were claiming Lot 6, Block 2 by virtue of a sale executed by the GSIS in
their daughters (Elizabeth Manlongat) favor.[14] Dela Merced argued that, due to
the nullity of GSISs foreclosure over the subject properties, it had no ownership
right that could be transferred to Elizabeth Manlongat.
Dela Merced caused the annotation of lis pendens[15] on GSISs TCT No.
23554 on September 21, 1984 in order to protect his interests in the subject
properties. Dela Merced died in 1988 and was substituted by his heirs, the
petitioners in the instant case.
After a protracted litigation, the case reached this Court as G.R. No. 140398.
On September 11, 2001, a Decision[16] was rendered in petitioners favor. The
Court nullified GSISs foreclosure of the subject properties because these lots were
never part of its mortgage agreement with the Zulueta spouses. The dispositive
portion of said Decision reads:
WHEREFORE, in view of the foregoing, the petition is GRANTED. The
decision of the Court of Appeals is REVERSED AND SET ASIDE. The decision of the
Regional Trial Court of Pasig City, Branch 160, in Civil Case Nos. 51410 and 51470, is
REINSTATED. The foreclosure sale of Lot Nos. 6, 7, 8 and 10 of Block 2 and Lot 8 of
Block 8 of the property originally covered by TCT 26105, and the subsequent
certificates of titles issued to GSIS as well as TCT No. PT-94007 in the name of
Elizabeth Manlongat, are declared NULL AND VOID. The Register of Deeds of Pasig
City is ordered to CANCEL all present certificates of title in the name of GSIS and
Elizabeth Manlongat covering the above-mentioned properties, and to ISSUE new
certificates of tile over the same in the name of petitioners as co-owners thereof.
Respondents GSIS and spouses Victor and Milagros Manlongat are ORDERED to pay,
jointly and severally, attorneys fees in the increased amount of P50,000.00, and to
pay the costs.[17]
Judgment was entered on April 23, 2002.[18]

Pursuant to the finality of the above Decision, petitioners filed a Motion for
Execution[19] with Branch 160 of the RTC of Pasig City.
First obstacle:
GSISs alleged exemption from execution

GSIS opposed the motion for execution, citing as basis Section 39 of

Republic Act No. 8291 (RA 8291), also known as the GSIS Act of 1997. The said
provision allegedly exempts GSIS funds and properties from attachment,
garnishment, execution, levy and other court processes.[20]
On January 20, 2003, the trial court granted petitioners motion for
execution; but held in abeyance the execution of the award of attorneys fees,
pending clarification before the higher courts of the issue of GSISs exemption under
Section 39 of RA 8291. The said Order is reproduced below:
Acting on the Motion for Execution filed by the plaintiff herein together
with the opposition of defendant GSIS, and considering that the judgment has
already become final and executory, the same is hereby Granted.
As prayed for, let a writ of execution issue to enforce the judgment of this
court.
However, with respect to the payment of attorneys fees in the increased
amount of P50,000.00 which has to be paid jointly and severally by the GSIS and
Sps. Manlongat, the same is held in abeyance as far as GSIS is concerned pending
clarification by the GSIS before the Supreme Court on the issue of whether its funds
and assets are exempt from execution pursuant to Section 39, R.A. 8291, otherwise
known as the GSIS Act of 1997.
SO ORDERED.[21]

A writ of execution was issued on July 24, 2003.[22]

Eventually, GSIS filed with the Court of Appeals (CA) a petition for certiorari
and prohibition against the trial courts implementation of the writ of execution
against it.[23] The petition, docketed as CA-G.R. SP No. 87821, presented the issue
whether the trial judge gravely abused her discretion in ordering execution against
GSIS funds and properties despite their alleged express and absolute exemption
from execution, garnishment, and other court processes under Section 39 of RA
8291.[24]

In its October 28, 2005 Decision, the CA dismissed GSISs petition and held
that execution may be enforced against it.[25] The ratio of the appellate court is
reproduced in part:
Public respondent court presided by Hon. Amelia A. Fabros did not commit
grave abuse of discretion when it issued the Writ of Execution dated 24 July 2003. It
must be considered that the properties which (Lots 6, 7, 8, and 10 of Block 2 and
Lot 8 of Block 8 of Antonio Subdivision) were the subject of the writ of execution in
the instant case are not the properties of petitioner GSIS. In the court a quos
Decision dated October 23, 1987 and reiterated in the Honorable Supreme Courts
Decision dated September 11, 2001, it declared inter alia that the certificates of title
issued to petitioner GSIS pertaining to Lot Nos. 6, 7, 8, and 10 of Block 2 and Lot 8
of Block 8 are null and void and further directed inter alia the Register of Deeds of
Pasig City to cancel all the present certificates of title in the name of petitioner
GSIS. x x x[26]
xxxx
[P]etitioner GSIS has no interest over the subject properties and x x x had never
validly acquired ownership thereof. x x x[27] Therefore, any and all [rights] that
petitioner GSIS may have on the subject properties were non-existent from the very
beginning. Verily, the court a quo was right then in issuing the writ of execution
dated 24 July 2003 and that petitioner GSIS claim that it should be exempted from
execution has no basis in fact and in law.[28]
xxxx
We lay stress that the pronouncement made in the abovementioned SC
circular and in the case of Commissioner of Public Highways vs. San Diego, cited in
the Armovit case find no application in the case at bar. It must be noted that the
properties referred to therein are those owned by government which could not be
seized under writ of execution to satisfy such judgment because to do so, there is a
necessity for the corresponding appropriation of public funds by Congress before
the same could be disbursed. In this instant case, it has already been settled that
the herein properties involved are not owned by petitioner GSIS; hence, there is no
prohibition that the same could be executed and that there is no public funds
involved which require the corresponding appropriation thereof. x x x[29]
xxxx
In fine, the execution of the subject properties is proper for to assert
otherwise, would be depriving private respondents dela Merced and Paredes of their
properties without due process of law as it had been clearly established on record
that they really owned the subject properties. To sustain petitioner GSIS view that

it should be exempt from execution would be putting the subject properties beyond
the reach of the rightful owners thereof x x x. Likewise, to uphold petitioner GSIS
theory would inevitably lead to a disastrous consequence and lend imprimatur to
deprivation of property without due process of law. Additionally, to grant petitioner
GSIS prayer that the subject properties be exempt from execution without any
factual and legal basis thereof would resultantly remain the same in the custody or
control of petitioner GSIS which unjustly enriches itself at the expense of private
respondents dela Merced and Paredes and who the latter could be deprived of the
beneficial use/ownership thereof when in the very first place they were able to
establish the ownership thereof. Every person who through an act or performance
by another, or any other means, acquires or comes into possession of something at
the expense of the latter without just or legal ground, shall return the same to him.
[30]
xxxx
WHEREFORE, premises considered, the instant PETITION FOR CERTIORARI
and PROHIBITION is hereby DISMISSED. Accordingly, the Writ of Execution dated 24
July 2003 and the Order dated 16 September 2004 both rendered by the Regional
Trial Court of Pasig City, Branch 160 stand.
SO ORDERED. [31]

GSISs motion for reconsideration of the above Decision was denied in the June 30,
2006 Resolution of the appellate court.[32] GSIS appealed the CA Decision to this
Court[33] but the petition was denied in a Resolution dated February 12, 2007,[34]
which denial was entered in the Book of Judgments on October 2, 2007.[35]
Second obstacle:
Alleged inadequacy of the fallo

After the resolution of the issue of GSISs exemption, petitioners

encountered more problems with the execution of the September 11, 2001 Decision
in G.R. No. 140398. According to the RD of Pasig City, Policarpio Espenesin, he
could not enforce the Decision in G.R. No. 140398 as worded.
The order to cancel the titles of GSIS over Lots 7 and 8 of Block 2 allegedly
could not be enforced because GSIS no longer had title over these two lots. GSIS
had already conveyed these lots in 1985 and 1988 to Diogenes Bartolome (Lot 8)
and Antonio Dimaguila [Dimaguila] (Lot 7), respectively. At present, Lot 7 of Block 2
is titled in Dimaguilas name (TCT No. PT-67466)[36] while Lot 8 of Block 2 is titled
in the name of Bartolomes assignee, Zenaida Victorino [Victorino] (TCT No. 53031).
[37] While both titles contain notices of lis pendens carried over from GSISs title,

[38] the RD claimed that the writ of execution must first be modified to include the
cancellation of derivative titles of the GSIS title.
The RD also found difficulty in implementing the order to cancel GSISs titles
over Lot 10 of Block 2 and Lot 8 of Block 8 and to issue new ones in petitioners
name because no such individual titles exist in his records. The RD posited that
these two lots must still be included in GSISs mother title, TCT No. 23554. The
RD opined that he cannot cancel GSISs mother title, even if it contains Lot 10 of
Block 2 and Lot 8 of Block 8 because it would affect other lots that might still be
included therein.
The RD further lamented that assuming he could cancel GSISs mother title
with respect to Lot 10 of Block 2 and Lot 8 of Block 8, there is still no way that he
could issue new titles over these lots in petitioners name. This is because his office
has no information regarding the technical descriptions for these two lots. The RD
thus suggested that the parties provide him with these relevant information before
he can proceed.
In order to address these difficulties, petitioners filed before the trial court a
Motion for Supplemental Writ of Execution.[39] They prayed for a supplemental writ
ordering the RD to cancel the titles over Lots 7 and 8 of Block 2 in GSISs name or in
the name of other subsequent transferees; and directing the GSIS and the Bureau of
Lands to supply the RD with the technical descriptions of Lot 10, Block 2, and Lot 8,
Block 8.[40]
GSIS opposed the issuance of a supplemental writ of execution.[41]
On February 9, 2005, Judge Amelia A. Fabros issued the assailed order
denying petitioners motion for supplemental writ of execution.
Respondents arguments
The Manlongats could not be served with copies of the Courts resolutions;
hence the Court dispensed with their comment.[42]
GSIS argues that petitioners motion was properly denied because it seeks
to modify a final and executory Decision. The September 11, 2001 Decision in G.R.
No. 140398 only ordered the cancellation of GSISs titles over the subject properties.
It did not order the cancellation of all derivative titles of GSISs transferees; nor did
it order the GSIS to perform acts such as providing the RD with the technical
descriptions for Lot 10, Block 2 and Lot 8, Block 8. GSIS maintains that a
supplemental writ that includes such additional orders is null and void for nonconformity with the judgment.

Further, GSIS argues that the inclusion of derivative titles in the

September 11, 2001 Decision in G.R. No. 140398 would deprive the holders of these
derivative titles their day in court. GSIS opines that the holders of the derivative
titles are not bound by the judgment against GSIS because these holders are
strangers to the action between GSIS and petitioners.
Lastly, GSIS again raises its earlier argument that the September 11, 2001
Decision in G.R. No. 140398 cannot be enforced because of GSISs exemption from
court processes under RA 8291.
Petitioners arguments
Petitioners counter that the September 11, 2001 Decision in G.R. No. 140398
can be enforced against GSISs transferees pendente lite because these transferees
were given notice of the pendency of the case by virtue of the notice of lis pendens
that had been inscribed on GSISs TCT No. 23554 as early as September 21, 1984.
In fact, when TCT No. 23554 was cancelled with respect to Lots 7 and 8 of Block 2 in
order to issue new titles in Dimaguilas and Victorinos names, this notice was
carried over to their respective titles. Moreover, the conveyance of these lots to
Victorino and Dimaguila transpired in 1985 and 1988, respectively; clearly during
the pendency of the case and with notice of the questions surrounding GSISs
ownership over these properties.
As transferees pendente lite, Dimaguilas and Victorinos titles are proper
subjects of writs of execution even if they were not actual parties to the case.
Petitioners cite Voluntad v. Spouses Dizon[43] as their authority.[44]
With regard to the issuance of new titles for Lot 10, Block 2 and Lot 8, Block
8, petitioners argue that GSIS can be compelled to provide the RD with their
respective technical descriptions. This power is granted to the courts under Section
10, Rule 39 of the Rules of Court.[45]
Petitioners maintain that execution of the Decision in G.R. No. 140398
should not be confined to the literal terms contained only in the fallo or the
dispositive portion.[46]
As regards GSISs alleged exemption, petitioners posit that the GSIS can no
longer raise the issue of exemption from execution given that the CA had already
rendered its Decision on that question in CA-G.R. SP No. 87821. The said Decision
was affirmed by this Court in G.R. No. 173391 through our February 12, 2007
Resolution[47] and entry of judgment in that case was made on October 2, 2007.
[48]
Issues

Can GSIS still raise the issue of exemption?

Whether a final and executory judgment against GSIS and Manlongat can be
enforced against their successors-in-interest or holders of derivative titles
Whether an order to cancel title to a particular property includes an order to provide
technical descriptions and segregate it from its mother title
Our Ruling
On the issue of GSISs exemption
The issue of GSISs alleged exemption under RA 8291 had been finally
decided against GSIS in G.R. No. 173391, when this Court denied GSISs petition for
review. The denial rendered the CA Decision in CA-G.R. SP No. 87821 final and
executory. GSISs attempt to resurrect the same issue by interjecting the same in
this proceeding is barred by the principle of law of the case, which states that
determinations of questions of law will generally be held to govern a case
throughout all its subsequent stages where such determination has already been
made on a prior appeal to a court of last resort.[49] The Decision in G.R. No.
173391 allowing the execution of the judgment against GSIS is the law of the case
and controls the proceedings below which are already in the execution stage.
Enforcement of judgment against transferees pendente lite

A notice of lis pendens is an announcement to the whole world that a

particular real property is in litigation, serving as a warning that one who acquires
an interest over said property does so at his own risk, or that he gambles on the
result of the litigation over the said property.[50] The effect of the annotation of lis
pendens on future transactions over the subject property is discussed by an
authority on land titles and registration:
Once a notice of lis pendens has been duly registered, any cancellation or issuance
of the title of the land involved as well as any subsequent transaction affecting the
same, would have to be subject to the outcome of the litigation. In other words,
upon the termination of the litigation there can be no risk of losing the property or
any part thereof as a result of any conveyance of the land or any encumbrance that
may be made thereon posterior to the filing of the notice of lis pendens.[51]
It is not disputed that petitioners caused the annotation of lis pendens on
TCT No. 23554, which covers Lots 7 and 8 of Block 2, as early as September 21,
1984.[52] On July 29, 1985 and August 24, 1998, TCT No. 23554 was cancelled with
respect to Lots 7 and 8 of Block 2 and new individual titles were issued to Victorino

and Dimaguila. Both titles had the notice of lis pendens which was carried over from
TCT No. 23554. Ineluctably, both Victorino and Dimaguila had notice of the
litigation involving GSISs ownership over the subject properties, and were bound by
the outcome of the litigation. When a transferee pendente lite takes property with
notice of lis pendens, such transferee undertakes to respect the outcome of the
litigation. As held in Selph v. Vda. de Aguilar,[53] an order to cancel the transferors
title may be enforced against his transferee, whose title is expressly subject to the
outcome of the litigation by the fact of the annotation of lis pendens.
The existence of these entries on Dimaguilas and Victorinos titles bars any
defense of good faith[54] against petitioners and effectively makes Dimaguila and
Victorino mere privies of GSIS and subject to whatever rights GSIS might have in the
subject properties, which (as it turns out) is none at all. What Dimaguila and
Victorino possess are derivative titles of the GSISs title over Lots 7 and 8 of Block 2,
which this Court has finally adjudicated to be null and void. Given the legal maxim
that a spring cannot rise higher than its source, it follows that Dimaguilas and
Victorinos titles, or any other title over the subject properties that are derived from
TCT No. 23554 of the GSIS, are likewise null and void. As explained by this Court in
another case, the title obtained by the transferee pendente lite affords him no
special protection; he cannot invoke the rights of a purchaser in good faith and
cannot acquire better rights than those of his predecessor-in-interest.[55]
In Voluntad v. Spouses Dizon,[56] the Court allowed the issuance of an
alias
writ of execution against the transferees pendente lite, who had knowledge of the
pending litigation on the basis of the annotation of the notice of lis pendens on their
titles. The Court clarified therein that there was no need for the victorious [parties]
to file a separate action to enforce their right to recover the property as against the
new registered owners.[57]
In Associated Bank v. Pronstroller,[58] the Court affirmed the judgments of
the trial and appellate courts cancelling the titles of the spouses Vaca, who were
transferees pendente lite of Associated Bank, despite the fact that the spouses Vaca
were not parties to the case between Associated Bank and the Pronstrollers. The
Court explained therein:
Admittedly, during the pendency of the case, respondents timely
registered a notice of lis pendens to warn the whole world that the property was the
subject of a pending litigation.
Lis pendens, which literally means pending suit, refers to the jurisdiction,
power or control which a court acquires over property involved in a suit, pending the
continuance of the action, and until final judgment. Founded upon public policy and
necessity, lis pendens is intended to keep the properties in litigation within the

power of the court until the litigation is terminated, and to prevent the defeat of the
judgment or decree by subsequent alienation. x x x
The filing of a notice of lis pendens has a twofold effect: (1) to keep the
subject matter of the litigation within the power of the court until the entry of the
final judgment to prevent the defeat of the final judgment by successive alienations;
and (2) to bind a purchaser, bona fide or not, of the land subject of the litigation to
the judgment or decree that the court will promulgate subsequently.
This registration, therefore, gives the court clear authority to cancel the
title of the spouses Vaca, since the sale of the subject property was made after the
notice of lis pendens. x x x[59]

Upon Associated Banks MR, the spouses Vaca filed a motion to intervene arguing
that they had a real interest in assailing the July 14, 2008 Decision, which ordered
the cancellation of their title. The Court denied the intervention. It was held that
the interests of the spouses Vaca in the subject property were properly represented
in the action by their transferor/vendor Associated Bank, which was already a party
thereto. As transferees pendente lite, the spouses Vaca stand exactly in the shoes
of their predecessor-in-interest, Associated Bank.[60]
The Court cannot accept GSISs theory that the dispositive portion of the
Decision in G.R. No. 140398 is enforceable only against GSISs title because it does
not contain the phrase and all its derivative titles. GSISs narrow interpretation
would render nugatory the principle that a final judgment against a party is binding
on his privies and successors-in-interest. We cannot sustain this interpretation. In
Cabresos v. Judge Tiro,[61] the Court upheld the respondent judges issuance of an
alias writ of execution against the successors-in-interest of the losing litigant
despite the fact that these successors-in-interest were not mentioned in the
judgment and were never parties to the case. The Court explained that an action is
binding on the privies of the litigants even if such privies are not literally parties to
the action. Their inclusion in the writ of execution does not vary or exceed the
terms of the judgment. In the same way, the inclusion of the derivative titles in
the writ of execution will not alter the Decision in G.R. No. 140398 ordering the
cancellation of GSISs title.
Cancellation of title
The RD claimed that it cannot execute the order to cancel the GSISs titles
over Lot 10, Block 2 and Lot 8, Block 8 because it has no record of GSISs title over
these two lots. The RD theorized that these lots are included in a mother title in
GSISs possession and would still have to be segregated therefrom. To effectuate
such segregation, the RD needed the technical descriptions of the two lots and the

mother title. Thus, petitioners ask that the GSIS be compelled to surrender its title
over, as well as the technical descriptions of, Lot 10, Block 2 and Lot 8, Block 8.
GSIS refused to turn over the needed documents and information, claiming
that these acts go beyond what were ordered in the Decision in G.R. No. 140398.
GSISs protestations ring hollow.
The order contained in the Decision in G.R. No. 140398 is for the RD to
cancel GSISs titles over Lot 10, Block 2 and Lot 8, Block 8, inter alia. Whether
these titles are individual or contained in a mother title is of no consequence. The
RD has to cause their cancellation. If the cancellation can only be carried out by
requiring GSIS or the Bureau of Lands to provide the necessary information, then
they can be compelled to do so. Otherwise, the Courts decision would be rendered
inefficacious, and GSIS would retain ostensible ownership over the lots by the
simple expedience that they are included in a mother title, instead of individual
titles. That result is manifestly contrary to the Courts ruling and would subvert the
very purpose of bringing this case for a complete resolution.
A similar predicament was ruled upon by the Court in Republic Surety and
Insurance Co., Inc. v. Intermediate Appellate Court.[62] In that case, the Court
declared that Republic Mines had no right to the property involved but during the
execution, the RD refused to cancel the TCT in Republic Mines name on the ground
that the dispositive portion of the trial courts Decision did not order the RD to
cancel the title and to revive the old title in favor of the victorious party. The Court
held that the missing order to cancel and revive should be deemed implied in the
trial courts decision. Speaking through Justice Feliciano, the Court explained thus:
What is involved here is not what is ordinarily regarded as a clerical error in the
dispositive part of the decision of the Court of First Instance, which type of error is
perhaps best typified by an error in arithmetical computation. At the same time,
what is involved here is not a correction of an erroneous judgment or dispositive
portion of a judgment. What we believe is involved here is in the nature of an
inadvertent omission on the part of the Court of First Instance x x x, of what might
be described as a logical follow-through of something set forth both in the body of
the decision and in the dispositive portion thereof: the inevitable follow-through, or
translation into, operational or behavioral terms, of the annulment of the Deed of
Sale with Assumption of Mortgage, from which petitioners' title or claim of title
embodied in TCT 133153 flows. The dispositive portion of the decision itself declares
the nullity ab initio of the simulated Deed of Sale with Assumption of Mortgage and
instructed the petitioners and all persons claiming under them to vacate the subject
premises and to turn over possession thereof to the respondent-spouses. Paragraph
B of the same dispositive portion, confirming the real estate mortgage executed by
the respondent-spouses also necessarily assumes that Title No. 133153 in the name
of petitioner Republic Mines is null and void and therefore to be cancelled, since it is

indispensable that the mortgagors have title to the real property given under
mortgage to the creditor (Article 2085 [2], Civil Code).[63]
xxxx
There are powerful considerations of an equitable nature which impel us
to the conclusions we reach here. Substantial justice cannot be served if the
petitioner Republic Mines, having absolutely no right, legal or equitable, to the
property involved, its claim thereto being based upon a transaction which was not
only simulated but also immoral and unconscionable, should be allowed to retain
the Transfer Certificate of Title in its name. The petitioner would thereby be in a
position to inflict infinite mischief upon the respondent-spouses whom they deprived
for 15 years of the possession of the property of which they were and are lawful
owners, and whom they compelled to litigate for 15 years to recover their own
property. The judicial process as we know it and as administered by this Court
cannot permit such a situation to subsist. It cannot be an adequate remedy for the
respondent-spouses to have to start once more in the Court of First Instance, to ask
that court to clarify its own judgment, a process which could be prolonged by the
filing of petitions for review in the Court of Appeals and eventually in this Court once
more. Public policy of the most fundamental and insistent kind requires that
litigation must at last come to an end if it is not to become more pernicious and
unbearable than the very injustice or wrong sought to be corrected thereby. That
public policy demands that we cut this knot here and now.[64]

When a judgment calls for the issuance of a new title in favor of the winning party
(as in the instant case), it logically follows that the judgment also requires the losing
party to surrender its title for cancellation. It is the only sensible way by which the
decision may be enforced. To this end, petitioners can obtain a court order requiring
the registered owner to surrender the same and directing the entry of a new
certificate of title in petitioners favor.[65] The trial court should have granted
petitioners motion for supplemental writ of execution as it had authority to issue
the necessary orders to aid the execution of the final judgment.[66]
GSISs objection that these orders cannot be enforced because they do not
literally appear in the Decision in G.R. No. 140398 is unreasonable. GSIS would
have the Court spell out the wheres, whys, and hows of the execution. GSIS wants a
dispositive portion that is a step-by-step detailed description of what needs to be
done for purposes of execution. This expectation is unreasonable and absurd.
WHEREFORE, the petition is GRANTED. The February 9, 2005 Order of
Branch 160 of the Regional Trial Court of Pasig City is REVERSED and SET ASIDE.
The September 11, 2001 Decision in G.R. No. 140398 is clarified to read as follows:

WHEREFORE, in view of the foregoing, the petition is GRANTED. The

decision of the Court of Appeals is REVERSED AND SET ASIDE.
The decision of the Regional Trial Court of Pasig City, Branch 160, in Civil
Case Nos. 51410 and 51470, is REINSTATED. The foreclosure sale of Lot Nos. 6, 7, 8
and 10 of Block 2 and Lot 8 of Block 8 of the property originally covered by TCT No.
26105, and the subsequent certificates of titles issued to GSIS as well as TCT No. PT94007 in the name of Elizabeth Manlongat, and their respective derivative titles are
declared NULL AND VOID.
The Register of Deeds of Pasig City is ordered to CANCEL all present
certificates of title covering the above-mentioned properties, whether contained in
individual titles or in a mother title, in the name of GSIS and Elizabeth Manlongat, or
in the name of their privies, successors-in-interest or transferees pendente lite, and
to ISSUE new certificates of title over the same in the name of petitioners as coowners thereof.
GSIS and the Bureau of Lands are ordered to supply the necessary
documents and information for the proper enforcement of the above orders.
Respondents GSIS and spouses Victor and Milagros Manlongat are ORDERED
to pay, jointly and severally, attorneys fees in the increased amount of P50,000.00,
and to pay the costs.
SO ORDERED.

VIII. Registration of Judgements, orders participation (Chapter VI, Sections

78-92)
a.Surrender of Owners Duplicate (Sec. 79)
G.R. No. 189239
SPOUSES LETICIA & JOSE ERVIN ABAD, SPS. ROSARIO AND ERWIN
COLLANTES, SPS. RICARDO AND FELITA ANN, SPS. ELSIE AND ROGER LAS
PIAS, LINDA LAYDA, RESTITUTO MARIANO, SPS. ARNOLD AND MIRIAM
MERCINES, SPS. LUCITA AND WENCESLAO A. RAPACON, SPS. ROMEO AND
EMILYN HULLEZA, LUZ MIPANTAO, SPS. HELEN AND ANTHONY TEVES,
MARLENE TUAZON, SPS. ZALDO AND MIA SALES, SPS. JOSEFINA AND JOEL
YBERA, SPS. LINDA AND JESSIE CABATUAN, SPS. WILMA AND MARIO
ANDRADA, SPS. RAYMUNDO AND ARSENIA LELIS, FREDY AND SUSANA
PILONEO,
Petitioners,

- versus -

FIL-HOMES REALTY and DEVELOPMENT CORPORATION and MAGDIWANG

REALTY CORPORATION,
Respondents.
November 24, 2010
DECISION
CARPIO MORALES, J.:

Fil-Homes Realty and Development Corporation and Magdiwang Realty

Corporation (respondents), co-owners of two lots situated in Sucat, Paraaque City
and covered by Transfer Certificates of Title Nos. 21712 and 21713, filed a
complaint for unlawful detainer on May 7, 2003 against above-named petitioners
before the Paraaque Metropolitan Trial Court (MeTC).
Respondents alleged that petitioners, through tolerance, had occupied the
subject lots since 1980 but ignored their repeated demands to vacate them.
Petitioners countered that there is no possession by tolerance for they have
been in adverse, continuous and uninterrupted possession of the lots for more than
30 years; and that respondents predecessor-in-interest, Pilipinas Development
Corporation, had no title to the lots. In any event, they contend that the question of
ownership must first be settled before the issue of possession may be resolved.
During the pendency of the case or on June 30, 2004, the City of Paraaque
filed expropriation proceedings covering the lots before the Regional Trial Court of
Paraaque with the intention of establishing a socialized housing project therein for
distribution to the occupants including petitioners. A writ of possession was
consequently issued and a Certificate of Turn-over given to the City.
Branch 77 of the MeTC, by Decision of March 3, 2008, rendered judgment in the
unlawful detainer case against petitioners, disposing as follows:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against
the defendants Leticia and Ervin Abad et. als. ordering the latter and all persons
claiming rights under them to VACATE and SURRENDER possession of the premises
(Lots covered by TCT NOS. (71065) 21712 and (71066) 21713 otherwise known as
Purok I Silverio Compound, Barangay San Isidro, Paraaque City to plaintiff and to
PAY the said plaintiff as follows:
1.
The reasonable compensation in the amount of P20,000.00 a month
commencing November 20, 2002 and every month thereafter until the defendants
shall have finally vacated the premises and surrender peaceful possession thereof
to the plaintiff;

2.
3.

P20,000.00 as and for attorneys fees, and finally

Costs of suit.

SO ORDERED.[1] (emphasis in the original)

The MeTC held that as no payment had been made to respondents for the
lots, they still maintain ownership thereon. It added that petitioners cannot claim a
better right by virtue of the issuance of a Writ of Possession for the project
beneficiaries have yet to be named.
On appeal, the Regional Trial Court (RTC), by Decision of September 4, 2008,
[2] reversed the MeTC decision and dismissed respondents complaint in this wise:
x x x The court a quo ruled that the case filed by plaintiffs (respondents
herein) is unlawful detainer as shown by the allegations of the Complaint. The ruling
of the court a quo is not accurate. It is not the allegations of the Complaint that
finally determine whether a case is unlawful detainer, rather it is the evidence in the
case.
Unlawful detainer requires the significant element of tolerance. Tolerance of the
occupation of the property must be present right from the start of the defendants
possession. The phrase from the start of defendants possession is significant.
When there is no tolerance right from the start of the possession sought to be
recovered, the case of unlawful detainer will not prosper.[3] (emphasis in the
original; underscoring supplied)

The RTC went on to rule that the issuance of a writ of possession in favor of
the City bars the continuation of the unlawful detainer proceedings, and since the
judgment had already been rendered in the expropriation proceedings which
effectively turned over the lots to the City, the MeTC has no jurisdiction to
disregard the . . . final judgment and writ of possession due to non-payment of
just compensation:
The Writ of Possession shows that possession over the properties subject of this
case had already been given to the City of Paraaque since January 19, 2006 after
they were expropriated. It is serious error for the court a quo to rule in the unlawful
detainer case that Magdiwang Realty Corporation and Fil-Homes Realty and
Development Corporation could still be given possession of the properties which
were already expropriated in favor of the City of Paraaque.
There is also another serious lapse in the ruling of the court a quo that the case for
expropriation in the Regional Trial Court would not bar, suspend or abate the

ejectment proceedings. The court a quo had failed to consider the fact that the case
for expropriation was already decided by the Regional Trial Court, Branch 196 way
back in the year 2006 or 2 years before the court a quo rendered its judgment in
the unlawful detainer case in the year 2008. In fact, there was already a Writ of
Possession way back in the year 1996 (sic) issued in the expropriation case by the
Regional Trial Court, Branch 196. The court a quo has no valid reason to disregard
the said final judgment and the writ of possession already issued by the Regional
Trial Court in favor of the City of Paraaque and against Magdiwang Realty
Corporation and Fil-Homes Realty Development Corporation and make another
judgment concerning possession of the subject properties contrary to the final
judgment of the Regional Trial Court, Branch 196.[4] (emphasis in the original)

Before the Court of Appeals where respondents filed a petition for review, they
maintained that respondents act of allowing several years to pass without
requiring [them] to vacate nor filing an ejectment case against them amounts to
acquiescence or tolerance of their possession.[5]
By Decision of May 27, 2009,[6] the appellate court, noting that petitioners
did not present evidence to rebut respondents allegation of possession by
tolerance, and considering petitioners admission that they commenced occupation
of the property without the permission of the previous owner Pilipinas
Development Corporation as indicium of tolerance by respondents predecessorin-interest, ruled in favor of respondents. Held the appellate court:
Where the defendants entry upon the land was with plaintiffs tolerance from the
date and fact of entry, unlawful detainer proceedings may be instituted within one
year from the demand on him to vacate upon demand. The status of such
defendant is analogous to that of a tenant or lessee, the term of whose lease, has
expired but whose occupancy is continued by the tolerance of the lessor. The same
rule applies where the defendant purchased the house of the former lessee, who
was already in arrears in the payment of rentals, and thereafter occupied the
premises without a new lease contract with the landowner.[7]

Respecting the issuance of a writ of possession in the expropriation

proceedings, the appellate court, citing Republic v. Gingoyon,[8] held the same does
not signify the completion of the expropriation proceedings. Thus it disposed:
WHEREFORE, premises considered, the instant Petition is GRANTED. The assailed
Decision of the Court a quo is REVOKED and SET ASIDE. The Decision of the
Metropolitan Trial Court dated March 3, 2008 is hereby REINSTATED with
MODIFICATION [by] deleting the award for attorneys fees.

SO ORDERED. (underscoring supplied)

Petitioners motion for reconsideration was denied by Resolution dated
August 26, 2009, hence, the filing of the present petition for review.
The petition fails.
In the exercise of the power of eminent domain, the State expropriates private
property for public use upon payment of just compensation. A socialized housing
project falls within the ambit of public use as it is in furtherance of the constitutional
provisions on social justice.[9]
As a general rule, ejectment proceedings, due to its summary nature, are not
suspended or their resolution held in abeyance despite the pendency of a civil
action regarding ownership.
Section 1 of Commonwealth Act No. 538[10] enlightens, however:
Section 1. When the Government seeks to acquire, through purchase or
expropriation proceedings, lands belonging to any estate or chaplaincy
(cappellania), any action for ejectment against the tenants occupying said lands
shall be automatically suspended, for such time as may be required by the
expropriation proceedings or the necessary negotiations for the purchase of the
lands, in which latter case, the period of suspension shall not exceed one year.
To avail himself of the benefits of the suspension, the tenants shall pay to the
landowner the current rents as they become due or deposit the same with the court
where the action for ejectment has been instituted. (emphasis and underscoring
supplied)

Petitioners did not comply with any of the acts mentioned in the law to avail
of the benefits of the suspension. They nevertheless posit that since the lots are
the subject of expropriation proceedings, respondents can no longer assert a better
right of possession; and that the City Ordinance authorizing the initiation of
expropriation proceedings designated them as beneficiaries of the lots, hence, they
are entitled to continue staying there.
Petitioners position does not lie.
The exercise of expropriation by a local government unit is covered by Section 19 of
the Local Government Code (LGC):

SEC. 19. Eminent Domain. A local government unit may, through its chief
executive and acting pursuant to an ordinance, exercise the power of eminent
domain for public use, or purpose, or welfare for the benefit of the poor and the
landless, upon payment of just compensation, pursuant to the provisions of the
Constitution and pertinent laws: Provided, however, That the power of eminent
domain may not be exercised unless a valid and definite offer has been previously
made to the owner, and such offer was not accepted: Provided, further, That the
local government unit may immediately take possession of the property upon the
filing of the expropriation proceedings and upon making a deposit with the proper
court of at least fifteen percent (15%) of the fair market value of the property based
on the current tax declaration of the property to be expropriated: Provided, finally,
That the amount to be paid for the expropriated property shall be determined by
the proper court, based on the fair market value of the property.
Lintag v. National Power Corporation[11] clearly outlines the stages of expropriation,
viz:
Expropriation of lands consists of two stages:
The first is concerned with the determination of the authority of the plaintiff to
exercise the power of eminent domain and the propriety of its exercise in the
context of the facts involved in the suit. It ends with an order, if not of dismissal of
the action, "of condemnation declaring that the plaintiff has a lawful right to take
the property sought to be condemned, for the public use or purpose described in
the complaint, upon the payment of just compensation to be determined as of the
date of the filing of the complaint x x x.
The second phase of the eminent domain action is concerned with the
determination by the court of "the just compensation for the property sought to be
taken." This is done by the court with the assistance of not more than three (3)
commissioners x x x .
It is only upon the completion of these two stages that expropriation is said
to have been completed. The process is not complete until payment of just
compensation. Accordingly, the issuance of the writ of possession in this case does
not write finis to the expropriation proceedings. To effectuate the transfer of
ownership, it is necessary for the NPC to pay the property owners the final just
compensation.[12] (emphasis and underscoring supplied)
In the present case, the mere issuance of a writ of possession in the
expropriation proceedings did not transfer ownership of the lots in favor of the City.
Such issuance was only the first stage in expropriation. There is even no evidence
that judicial deposit had been made in favor of respondents prior to the Citys
possession of the lots, contrary to Section 19 of the LGC.

Respecting petitioners claim that they have been named beneficiaries of the lots,
the city ordinance authorizing the initiation of expropriation proceedings does not
state so.[13] Petitioners cannot thus claim any right over the lots on the basis of
the ordinance.
Even if the lots are eventually transferred to the City, it is non sequitur for
petitioners to claim that they are automatically entitled to be beneficiaries thereof.
For certain requirements must be met and complied with before they can be
considered to be beneficiaries.
In another vein, petitioners posit that respondents failed to prove that their
possession is by mere tolerance. This too fails. Apropos is the ruling in Calubayan
v. Pascual:[14]
In allowing several years to pass without requiring the occupant to vacate the
premises nor filing an action to eject him, plaintiffs have acquiesced to defendants
possession and use of the premises. It has been held that a person who occupies
the land of another at the latters tolerance or permission, without any contract
between them, is necessarily bound by an implied promise that he will vacate upon
demand, failing which a summary action for ejectment is the proper remedy against
them. The status of the defendant is analogous to that of a lessee or tenant whose
term of lease has expired but whose occupancy continued by tolerance of the
owner. In such a case, the unlawful deprivation or withholding of possession is to be
counted from the date of the demand to vacate. (emphasis and underscoring
supplied)

Respondents bought the lots from Pilipinas Development Corporation in 1983.

They stepped into the shoes of the seller with respect to its relationship with
petitioners. Even if early on respondents made no demand or filed no action
against petitioners to eject them from the lots, they thereby merely maintained the
status quo allowed petitioners possession by tolerance.
WHEREFORE, the petition for review is DENIED.
IX. Assurance Fund (Chapter VII, Section 93-102)
a. Claims Against the Assurance Fund (Sec. 95)
G.R. No. L-63046 June 21, 1990
MARIANO TORRES Y CHAVARRIA, petitioner,

vs.
THE HONORABLE COURT OF APPEALS, FRANCISCO E. FERNANDEZ and FE
FERNANDEZ, ROSARIO MOTA CUE, ERNESTO MEDINA CUE and the
NATIONAL TREASURER, as Custodian of the Assurance Fund, respondents.
Bengzon, Zarraga, Narciso, Cudala, Pecson, Azcuna & Bengzon for
petitioner.
Albon, Serrano & Associates for private respondents.
T.J. Sumawang & Associates for respondent Fernandezes.

MEDIALDEA, J.:
This is a petition for review of the decision of the Court of Appeals in CA-G.R. No.
62248-R entitled "Mariano Torres Y Chavarria v. Francisco E. Fernandez, et al., etc.,"
which reversed the decision of the then Court of First Instance of Manila, Branch 7,
by holding that it is the respondent Rosario Mota who is legally entitled to the
disputed realties, being an innocent mortgagee and later the highest bidder when
the properties were supposedly foreclosed, and not the petitioner Mariano Torres,
the defrauded owner thereof; and of the resolution of that Court denying Torres'
motion for reconsideration.
The parcel of land located at the comer of Quezon Boulevard and Raon Street (now
Gonzalo Street), and the building erected thereon known as "M. Torres Building" is
owned by Mariano Torres, the herein petitioner, as evidenced by Transfer Certificate
of Title No. 53628-Manila issued in his name. As far as the records show, Torres was
and still is in possession of the realties, holding safely to his owner's duplicate
certificate of title, and, at least until 1971, paying the real estate taxes due thereon,
and collecting rentals from his tenants occupying the building.
Sometime in 1966, Francisco Fernandez, Torres' brother-in-law, filed a petition with
the Court of First Instance of Manila, docketed as LRC GLRO Cad. Rec. No. 133,
where he, misrepresenting to be the attorney-in-fact of Torres and falsely alleging
that the a duplicate copy of TCT No. 53628 was lost, succeeded in obtaining a court
order for the issuance of another copy of the certificate.
Once in possession thereof, Fernandez forged a simulated deed of sale of the
realties in his favor. Whereupon TCT No. 53628 in the name of Torres was canceled
and TCT No. 86018 was issued in Fernandez' name.

On various dates from December, 1966 to November, 1967 Fernandez mortgaged

the realties to Rosario Mota, wife of Ernesto Cue, and also to Angela Fermin, who
later assigned her credit to the spouses Cue. The mortgages were annotated at the
back of TCT No. 86018 and so was the deed of assignment.
Torres, who up to this time still had possession of his owner's duplicate certificate of
title and who was still collecting rentals from the occupants of the subject building,
upon Teaming of the fraud committed by Fernandez, caused, on March 18, 1968, the
annotation on the latter's TCT a notice of adverse claim.
On March 30, 1968, Torres filed Civil Case No. 72494 against Fernandez to annul TCT
No. 86018 as well as the proceedings in LRC GLRO Cad. Rec. No. 133. On April 2,
1968, a notice of lis pendens was annotated at the back of Fernandez' TCT.
In the meantime, Fernandez failed to pay his various loans which prompted the
Cues to institute an extrajudicial foreclosure of the mortgage.
On February 11, 1969, Fernandez filed Civil Case No. 75643 against the spouses Cue
for the annulment of the mortgage with preliminary injunction.
After the foreclosure was enjoined, the parties entered into an amicable settlement,
approved by the court whereby it was stipulated that Fernandez acknowledged and
promised to pay his debt to the Cues for Five Hundred Sixty-Two Thousand Nine
Hundred Fifty-Five and 28/100 (P562,955.28) Pesos on or before, March 30, 1970,
while the spouses bound themselves to execute and deliver, within ten (10) days
from receipt of the sum mentioned such documents as are necessary to release the
mortgages in favor of defendants on plaintiffs' property.
Before Fernandez could pay his obligation under the settlement agreement, a
decision was rendered in Civil Case No. 72494 where it was declared that the
proceedings held in LRC GLRO Cad. Rec, No. 133 was void and that TCT No. 86018,
issued in the name of Fernandez, is without force and effect as TCT No. 53628 in the
name of Torres is the true and legal evidence of ownership of the subject
immovables. Fernandez appealed from this decision to the Court of Appeals where it
was docketed as CA-G.R. No. 46386-R. The Court of Appeals, on April 20, 1979,
affirmed the decision of the trial court. There being nothing on the records that
would indicate that the judgment of the appellate court was elevated here, it would
appear that it had become final and executory.
But meanwhile, prior to the Court of Appeals' decision mentioned above, Fernandez
failed to comply with his obligation under the amicable settlement and whereupon
the Cues applied for and were granted a writ of execution. The subject realties were
then levied upon and sold at public auction where Rosario Mota was the highest
bidder.

On August 31, 1971, the redemption period for the subject immovables having
lapsed without Fernandez nor Torres redeeming the properties, Rosario Mota was
issued the Sheriffs Deed of Sale. Thereafter, TCT No. 86018 was canceled and TCT
No. 105953 was issued in her name.
On December 7, 1971 Mota, through her lawyer, notified the tenants occupying "M.
Torres Building" that she is the new owner thereof and henceforth, payment of their
rentals should be made to her.
On December 17, 1971 Torres filed a complaint, which later gave rise to this
petition, with the Court of First Instance of Manila, docketed as Civil Case No. 85753,
against Fernandez and his spouse and the Cues to restrain the latter from collecting
rentals and for the declaration as void TCT No. 105953. The Cues in turn filed a
cross-claim against Fernandez spouses and a third party complaint against the
National Treasurer as the custodian of the Assurance Fund.
During the proceeding, Mariano Torres, having died sometime in 1974, was
substituted by his widow. On June 3, 1977, the trial court rendered its decision
declaring TCT No. 105953 in the name of Rosario Mota nun and void as it upheld the
validity of TCT No. 53628 in the name of Torres as the true evidence of title to the
disputed realties, and at the same time dismissing the Cue's third party complaint
and cross claim.
The decision was reviewed by the respondent court at the instance of the Cues
which, as aforementioned, reversed the trial court in its decision dated July 30, 1982
and the Resolution of January 14, 1983. Hence, this petition.
There is nothing on the records which shows that Torres performed any act or
omission which could have jeopardized his peaceful dominion over his realties. The
decision under review, however, in considering Mota an innocent mortgagee
protected under Section 55 of the Land Registration Law, held that Torres was bound
by the mortgage. Inevitably, it pronounced that the foreclosure sale, where Mota
was the highest bidder, also bound Torres and concluded that the certificate of title
issued in the name of Mota prevails over that of Torres'. As correctly pointed out by
Torres, however, his properties were sold on execution, and not on foreclosure sale,
and hence, the purchaser thereof was bound by his notice of adverse claim and lis
pendens annotated at the back of Fernandez' TCT. Moreover, even if We grant Mota
the status of an innocent mortgagee, the doctrine relied upon by the appellate court
that a forged instrument may become the root of a valid title, cannot be applied
where the owner still holds a valid and existing certificate of title covering the same
interest in a realty. The doctrine would apply rather when, as in the cases for
example of De la Cruz v. Fable, 35 Phil. 144 [1916], Fule v. De Legare, No. L-17951,
February 28, 1963, 7 SCRA 351, and Republic v. Umali, G.R. No. 80687, April 10,

1989, the forger thru insidious means obtains the owner's duplicate certificate of
title, converts it in his name, and subsequently sells or otherwise encumbers it to an
innocent holder for value, for in such a case the new certificate is binding upon the
owner (Sec. 55, Act 496; Sec. 53, P.D. No. 1529). But if the owner holds a valid and
existing certificate of title, his would be indefeasible as against the whole world, and
not that of the innocent holder's. "Prior tempore potior jure" as We have said in
Register of Deeds v. Philippine National Bank, No. L-17641, January 30, 1965, 13
SCRA 46 , citing Bank, No. L Legarda v. Saleeby, 31 Phil. 590, Roman Catholic Bishop
v. Philippine Railway, 49 Phil. 546, Reyes v. Borbon, 50 Phil. 791. in C.N. Hodges v.
Dy Buncio & Co., Inc., No. L-16096, October 30, 1962, 6 SCRA 287, 292, We laid
down the doctrine that:
The claim of indefeasibility of the petitioner's title under the Torrens land title
system would be correct if previous valid title to the same parcel of land did not
exist. The respondent had a valid title ... It never parted with it; it never handed or
delivered to anyone its owner's duplicate of the transfer certificate of title, it could
not be charged with negligence in the keeping of its duplicate certificate of title or
with any act which could have brought about the issuance of another certificate
upon which a purchaser in good faith and for value could rely. If the petitioner's
contention as to indefeasibility of his title should be upheld, then registered owners
without the least fault on their part could be divested of their title and deprived of
their property. Such disastrous results which would shake and destroy the stability
of land titles had not been foreseen by those who had endowed with indefeasibility
land titles issued under the Torrens system. Veronica Bareza perpetrated the fraud
by making false representations in her petition and the title issued to her being the
product of fraud could not vest in her valid and legal title to the parcel of land in
litigation. As she had no title to the parcel of land, in the same way that a thief does
not own or have title to the stolen goods, she could not transmit title which she did
not have nor possess.
We have applied this doctrine in the case of the Register of Deeds v. P.N.B., supra,
where We noted that said ruling is "a mere affirmation of the recognized principle
that a certificate is not conclusive evidence of title if it is shown that the same land
had already been registered and an earlier certificate for the same land is in
existence." Again in the case of Baltazar v. Court of Appeals, G.R. No. 78728,
December 8, 1988, 168 SCRA 354, We held that as between two persons both of
whom are in good faith and both innocent of any negligence, the law must protect
and prefer the lawful holder of registered title over the transfer of a vendor bereft of
any transmissible rights.
In view of the foregoing, to hold, for the purpose of enforcing the mortgage, that
Mota was an innocent mortgagee would be futile because, as above shown, no
certificate of title covering the subject realties in derogation of Torres' certificate of
title may validly be issued.

Then it becomes evident that the remaining possible remedies of the Cues are to go
against Fernandez or the Assurance Fund, as they in fact had done in the lower
court by filing a cross claim and third party complaint. The lower court dismissed
the Cues' cross-claim against Fernandez reasoning out that their remedy is to cause
the final judgment (compromise agreement) in Civil Case No. 75643 executed. This,
of course, is correct since the rights and obligations of both parties had been
determined in that case.
The trial court also dismissed the Cues' third party complaint against the Treasurer
of the Philippines as custodian of the Assurance Fund after finding them negligent in
protecting their interest. The trial court recognized the principle that a person
dealing with registered lands need not go beyond the certificate of title but
nevertheless pointed out that there are circumstances in this case which should
have put the Cues on guard and prompted them to investigate the property being
mortgaged to them, thus:
The property in question is a very valuable property, in fact accepted by defendants
Mota and Medina Cue as collateral for more than half a million pesos in loans
granted by them to Fernandez. Its value lies principally in its income potential, in
the form of substantial monthly rentals. Certainly, the registered title does not yield
any information as to the amount of rentals due from the building, much less on
who is collecting them, or who is recognized by the tenants as their landlord. Any
prospective buyer or mortgagee of such a property, if prudent and in good faith, is
normally expected to inquire into all these and related facts and circumstances.
Besides, by the course of visible dimensions of the M. Torres Building, it should be
readily obvious to any one that the area of the two lots ... covered by TCT No. 86018
cannot accommodate the building, as in fact it also rests upon a lot covered by TCT
No. 56387, and partly upon a lot leased by (Torres) from the City of Manila. Had (the
Cues) known of this fact would they have accepted the mortgage alone over TCT
No. 86018? The answer is obvious. And yet, to all indications, they never bothered
to look into this fact about the M. Torres Building.
xxx

xxx

xxx

Another thing that defendants Mota and Medina Cue must have investigated, as any
prudent buyer or mortgagee should before consummating any transaction on real
property, in the matter of payment of taxes on the property. After all, the big value
of the property in question necessarily means that even real estate taxes on it alone
would involve big amounts of money, and if there are tax arrearages, any buyer or
subsequent owner of the property wig have to come face to face with the tax hen
attaching to the property wherever its owner may be. ... (P. 257, Record on Appeal)

We likewise take note of the manifestation of the Office of the Solicitor General that
the Cues failed to contest the ruling of the trial court negating the liability of the
Assurance Fund. For these reasons, We hold that the Cues' remedy merely is to go
against Francisco Fernandez or rather his estate since record shows that he died
sometime in 1983.
ACCORDINGLY, the decision and resolution under review are REVERSED and the
decision of the then Court of First Instance, Branch 7, Manila in Civil Case No. 85753
is REINSTATED.
SO ORDERED.

X. Registration of Patents (Chapter VIII, Sec. 103)

FRANCISCO ALONSO, substituted by MERCEDES V. ALONSO, TOMAS V.

ALONSO and ASUNCION V. ALONSO,
Petitioners,
- versus CEBU COUNTRY CLUB, INC.,
Respondent,
REPUBLIC OF THE PHILIPPINES, represented by the OFFICE OF THE
SOLICITOR GENERAL,
Public Respondent.
G.R. No. 188471
April 20, 2010
x-----------------------------------------------------------------------------------------x
DECISION

BERSAMIN, J.:

By petition for review on certiorari, the petitioners appeal the order dated
December 28, 2007 of the Regional Trial Court (RTC), Branch 20, in Cebu City,
denying the motion for issuance of writ of execution of the Office of the Solicitor
General (OSG) in behalf of the Government, and the order dated April 24, 2009,
denying their motion for reconsideration filed against the first order.

Antecedents

The antecedent facts are those established in Alonso v. Cebu Country Club,[1] which
follow.
Petitioner Francisco M. Alonso (Francisco) was the only son and sole heir of the late
spouses Tomas N. Alonso and Asuncion Medalle. Francisco died during the pendency
of this case, and was substituted by his legal heirs, namely: his surviving spouse,
Mercedes V. Alonso, his son Tomas V. Alonso (Tomas) and his daughter Asuncion V.
Alonso.[2]
In 1992, Francisco discovered documents showing that his father Tomas N. Alonso
had acquired Lot No. 727 of the Banilad Friar Lands Estate from the Government in
or about the year 1911; that the original vendee of Lot No. 727 had assigned his
sales certificate to Tomas N. Alonso, who had been consequently issued Patent No.
14353; and that on March 27, 1926, the Director of Lands had executed a final deed
of sale in favor of Tomas N. Alonso, but the final deed of sale had not been
registered with the Register of Deeds because of lack of requirements, like the
approval of the final deed of sale by the Secretary of Agriculture and Natural
Resources, as required by law.[3]
Francisco subsequently found that the certificate of title covering Lot No. 727-D-2 of
the Banilad Friar Lands Estate had been administratively reconstituted from the
owners duplicate of Transfer Certificate of Title (TCT) No. RT-1310 in the name of
United Service Country Club, Inc., the predecessor of respondent Cebu Country
Club, Inc (Cebu Country Club); and that upon the order of the court that had heard
the petition for reconstitution of the TCT, the name of the registered owner in TCT
No. RT-1310 had been changed to that of Cebu Country Club; and that the TCT
stated that the reconstituted title was a transfer from TCT No. 1021.[4]
It is relevant to mention at this point that the current TCT covering Lot 727-D-2 in
the name of Cebu Country Club is TCT No. 94905, which was entered in the land
records of Cebu City on August 8, 1985.[5]
With his discoveries, Francisco formally demanded upon Cebu Country Club to
restore the ownership and possession of Lot 727-D-2 to him. However, Cebu
Country Club denied Franciscos demand and claim of ownership, and refused to
deliver the possession to him.[6]
On September 25, 1992, Francisco commenced against Cebu Country Club in the
RTC in Cebu City an action for the declaration of nullity and non-existence of

deed/title, the cancellation of certificates of title, and the recovery of property. On

November 5, 1992, Cebu Country Club filed its answer with counterclaim.[7]
On May 7, 1993, the RTC decided in favor of Cebu Country Club.
Both parties appealed to the Court of Appeals (CA), which ultimately affirmed the
RTC on March 31, 1997. Thus, Francisco filed a motion for reconsideration, which
was denied on October 2, 1997.[8]
Nothing daunted, Francisco appealed to this Court (G.R. No. 130876).
On January 31, 2002, this Court decided G.R. No. 130876, decreeing:

WHEREFORE, we DENY the petition for review. However, we SET ASIDE the decision
of the Court of Appeals and that of the Regional Trial Court, Cebu City, Branch 08.
IN LIEU THEREOF, we DISMISS the complaint and counterclaim of the parties in Civil
Cases No. CEB 12926 of the trial court. We declare that Lot No. 727 D-2 of the
Banilad Friar Lands Estate covered by Original Certificate of Title Nos. 251, 232, and
253 legally belongs to the Government of the Philippines. [9]
The petitioners sought a reconsideration. On December 5, 2003, however, the Court
denied their motion for reconsideration.[10] Hence, the decision in G.R. No. 130876
became final and executory.
In late 2004, the Government, through the OSG, filed in the RTC a motion for the
issuance of a writ of execution.[11] Cebu Country Club opposed the motion for the
issuance of a writ of execution in due course.
Later on, the proceedings on the OSGs motion for the issuance of a writ of
execution at the instance of Cebu Country Club in deference to the on-going
hearings being conducted by the Committee on Natural Resources of the House of
Representatives on a proposed bill to confirm the TCTs and reconstituted titles
covering the Banilad Friar Lands Estate in Cebu City.[12] The Congress ultimately
enacted a law to validate the TCTs and reconstituted titles covering the Banilad Friar
Lands Estate in Cebu City. This was Republic Act No. 9443,[13] effective on July 27,
2007.
Thereafter, both Cebu Country Club and the OSG brought the passage of R.A. No.
9443 to the attention of the RTC for its consideration in resolving the OSGs motion
for the issuance of a writ of execution.[14] On December 28, 2007, therefore, the
RTC denied the OSGs motion for the issuance of a writ of execution through the first
appealed order.[15]

The petitioners filed a motion for reconsideration dated February 1, 2008,

questioning the denial of the OSGs motion for the issuance of a writ of execution.
[16]
Upon being directed by the RTC to comment on the petitioners motion for
reconsideration, the OSG manifested in writing that the Government was no longer
seeking the execution of the decision in G.R. No. 130876, subject to its reservation
to contest any other titles within the Banilad Friar Lands Estate should clear
evidence show such titles as having been obtained through fraud.[17]
After the filing of the OSGs comment, the RTC issued the second appealed order,
denying the petitioners motion for reconsideration, giving the following reasons:
1.
The party who had a direct interest in the execution of the decision and the
reconsideration of the denial of the motion for execution was the Government,
represented only by the OSG; hence, the petitioners had no legal standing to file the
motion for reconsideration, especially that they were not authorized by the OSG for
that purpose;
2.
R.A. No. 9443 confirms and declares as valid all existing TCTs and
reconstituted titles; thereby, the State in effect waived and divested itself of
whatever title or ownership over the Banilad Friar Lands Estate in favor of the
registered owners thereof, including Lot 727 D-2; and
3.
The situation of the parties had materially changed, rendering the enforcement
of the final and executory judgment unjust, inequitable, and impossible, because
Cebu Country Club was now recognized by the State itself as the absolute
owner of Lot 727 D-2.[18]
Hence, the petitioners appeal by petition for review on certiorari.

Contentions of the Petitioners

The petitioners challenge the orders dated December 28, 2007 and April 29, 2009,
because:
1.
R.A. No. 9443 did not improve Cebu Country Clubs plight, inasmuch as R.A. No.
9443 presupposed first a sales certificate that lacked the required signature, but
Cebu Country Club did not have such sales certificate. Moreover, the titleholders
were in fact the owners of the lands covered by their respective titles, which was
not true with Cebu Country Club due to its being already adjudged with finality to be

not the owner of Lot 727-D-2. Lastly, Cebu Country Clubs title was hopelessly
defective, as found by the Supreme Court itself;
2.
The doctrine of law of the case barred the application of R.A. No. 9443 to Cebu
Country Club;
3.
The RTCs declaration that R.A. No. 9443 confirmed Cebu Country Club as the
absolute owner of Lot 727-D-2 despite the prior and final judgment of the Supreme
Court that Cebu Country Club was not the owner was unconstitutional, because it
virtually allowed the legislative review of the Supreme Courts decision rendered
against Cebu Country Club;
4.
The use of R.A. No. 9443 as a waiver on the part of the Government vis--vis
Cebu Country Club was not only misplaced but downrightly repugnant to Act 1120,
the law governing the legal disposition and alienation of Friar Lands; and
5.
The petitioners had the requisite standing to question the patent errors of the
RTC, especially in the face of the unholy conspiracy between the OSG and Cebu
Country Club, on the one hand, and, on the other hand, the passage of R.A. No.
9443 and DENR Memorandum No. 16, both of which in fact made their predecessor
Tomas N. Alonsos sales certificate and patent valid.[19]

Issues
The Court confronts and resolves the following issues, to wit:
1.
Whether or not the petitioners were the real parties-in-interest to question the
denial by the RTC of the OSGs motion for the issuance of a writ of execution;
2.
Whether or not R.A. No. 9443 gave the petitioners a legal interest to assail the
RTCs orders; and
3.
Whether or not the petitioners can appeal by petition for review on certiorari in
behalf of the OSG.

Ruling

The petition for review is denied due course.

A.
Preliminary Considerations:
Petitioners contravene the hierarchy of courts,
and the petition is fatally defective

Before delving on the stated issues, the Court notes that the petitioners are guilty of
two violations that warrant the immediate dismissal of the petition for review on
certiorari.
The first refers to the petitioners breach of the hierarchy of courts by coming
directly to the Court to appeal the assailed issuances of the RTC via petition for
review on certiorari. They should not have done so, bypassing a review by the Court
of Appeals (CA), because the hierarchy of courts is essential to the efficient
functioning of the courts and to the orderly administration of justice. Their nonobservance of the hierarchy of courts has forthwith enlarged the docket of the Court
by one more case, which, though it may not seem burdensome to the layman, is
one case too much to the Court, which has to devote time and effort in poring over
the papers submitted herein, only to discover in the end that a review should have
first been made by the CA. The time and effort could have been dedicated to other
cases of importance and impact on the lives and rights of others.
The hierarchy of courts is not to be lightly regarded by litigants. The CA stands
between the RTC and the Court, and its establishment has been precisely to take
over much of the work that used to be done by the Court. Historically, the CA has
been of the greatest help to the Court in synthesizing the facts, issues, and rulings
in an orderly and intelligible manner and in identifying errors that ordinarily might
escape detection. The Court has thus been freed to better discharge its
constitutional duties and perform its most important work, which, in the words of
Dean Vicente G. Sinco,[20] is less concerned with the decision of cases that begin
and end with the transient rights and obligations of particular individuals but is
more intertwined with the direction of national policies, momentous economic and
social problems, the delimitation of governmental authority and its impact upon
fundamental rights.[21]
The need to elevate the matter first to the CA is also underscored by the reality that
determining whether the petitioners were real parties in interest entitled to bring
this appeal against the denial by the RTC of the OSGs motion for the issuance of a
writ of execution was a mixed question of fact and law. As such, the CA was in the
better position to review and to determine. In that regard, the petitioners violate
Section 1, Rule 45 of the 1997 Rules of Civil Procedure, which demands that an
appeal by petition for review on certiorari be limited to questions of law.[22]

The second violation concerns the omission of a sworn certification against

forum shopping from the petition for review on certiorari. Section 4, Rule 45 of the
1997 Rules of Civil Procedure requires that the petition for review should contain,
among others, the sworn certification on the undertakings provided in the last
paragraph of Section 2, Rule 42 of the 1997 Rules of Civil Procedure, viz:
Section 2. xxx
The petitioner shall also submit together with the petition a certification under oath
that he has not theretofore commenced any other action involving the same issues
in the Supreme Court, the Court of Appeals or different divisions thereof, or any
other tribunal or agency; if there is such other action or proceeding, he must state
the status of the same; and if he should thereafter learn that a similar action or
proceeding has been filed or is pending before the Supreme Court, the Court of
Appeals, or different divisions thereof, or any other tribunal or agency, he
undertakes to promptly inform the aforesaid courts and other tribunal or agency
thereof within five (5) days therefrom. (n)

Only petitioner Tomas V. Alonso has executed and signed the sworn
certification against forum shopping attached to the petition. Although neither of his
co-petitioners Mercedes V. Alonso and Asuncion V. Alonso has joined the
certification, Tomas did not present any written express authorization in his favor
authorizing him to sign the certification in their behalf. The signing of the
certification by only one of the petitioners could not be presumed to reflect the
personal knowledge by his co-petitioners of the filing or non-filing of any similar
action or claim.[23] Hence, the failure of Mercedes and Asuncion to sign and
execute the certification along with Tomas warranted the dismissal of their petition.
[24]

B.
Petitioners are not proper parties
to appeal and assail the order of the RTC

The petitioners are relentless in insisting that their claim to Lot No. 727-D-2 of the
Banilad Friar Lands Estate should be preferred to that of Cebu Country Club, despite
the final judgment in G.R. No. 130876 being adverse to their claim. Their insistence
raises the need to resolve once and for all whether or not the petitioners retained
any legal right to assert over Lot No. 727-D-2 following the Governments manifest
desistance from the execution of the judgment in G.R. No. 130876 against Cebu
Country Club.

The above-noted defects of the petition for review notwithstanding, therefore, the
Court has now to address and resolve the stated issues on the sole basis of the
results the Court earlier reached in G.R. No. 130876. In this regard, whether or not
the petitioners are the proper parties to bring this appeal is decisive.
After careful consideration, the Court finds that the cause of the petitioners instantly
fails.
In G.R. No. 130876, the Court found that the petitioners did not validly acquire
ownership of Lot No. 727-D-2, and declared that Lot No. 727 D-2 legally belonged to
the Government, thus:

The second issue is whether the Court of Appeals erred in ruling that the Cebu
Country Club, Inc. is owner of Lot No. 727.
Admittedly, neither petitioners nor their predecessor had any title to the land in
question. The most that petitioners could claim was that the Director of Lands
issued a sales patent in the name of Tomas N. Alonso. The sales patent, however,
and even the corresponding deed of sale were not registered with the Register of
Deeds and no title was ever issued in the name of the latter. This is because there
were basic requirements not complied with, the most important of which was that
the deed of sale executed by the Director of Lands was not approved by the
Secretary of Agriculture and Natural Resources. Hence, the deed of sale was void.
Approval by the Secretary of Agriculture and Commerce is indispensable for the
validity of the sale. Moreover, Cebu Country Club, Inc. was in possession of the
land since 1931, and had been paying the real estate taxes thereon based on tax
declarations in its name with the title number indicated thereon. Tax receipts and
declarations of ownership for taxation purposes are strong evidence of ownership.
This Court has ruled that although tax declarations or realty tax payments are not
conclusive evidence of ownership, nevertheless, they are good indicia of possession
in the concept of owner for no one in his right mind will be paying taxes for a
property that is not in his actual or constructive possession.
Notwithstanding this fatal defect, the Court of Appeals ruled that there was
substantial compliance with the requirement of Act No. 1120 to validly convey title
to said lot to Tomas N. Alonso.
On this point, the Court of Appeals erred.
Under Act No. 1120, which governs the administration and disposition of friar lands,
the purchase by an actual and bona fide settler or occupant of any portion of friar
land shall be agreed upon between the purchaser and the Director of Lands,

subject to the approval of the Secretary of Agriculture and Natural Resources

(mutatis mutandis).
In his Memorandum filed on May 25, 2001, the Solicitor General submitted to this
Court certified copies of Sale Certificate No. 734, in favor of Leoncio Alburo, and
Assignment of Sale Certificate No. 734, in favor of Tomas N. Alonso. Conspicuously,
both instruments do not bear the signature of the Director of Lands and the
Secretary of the Interior. They also do not bear the approval of the Secretary of
Agriculture and Natural Resources.
Only recently, in Jesus P. Liao v. Court of Appeals, the Court has ruled categorically
that approval by the Secretary of Agriculture and Commerce of the sale of friar
lands is indispensable for its validity, hence, the absence of such approval made the
sale null and void ab-initio. Necessarily, there can be no valid titles issued on the
basis of such sale or assignment. Consequently, petitioner Franciscos father did not
have any registerable title to the land in question. Having none, he could not
transmit anything to his sole heir, petitioner Francisco Alonso or the latters heirs.
In a vain attempt at showing that he had succeeded to the estate of his father, on
May 4, 1991, petitioner Francisco Alonso executed an affidavit adjudicating the
entire estate to himself (Exh. Q), duly published in a newspaper of general
circulation in the province and city of Cebu (Exh. Q-1). Such affidavit of selfadjudication is inoperative, if not void, not only because there was nothing to
adjudicate, but equally important because petitioner Francisco did not show proof of
payment of the estate tax and submit a certificate of clearance from the
Commissioner of Internal Revenue. Obviously, petitioner Francisco has not paid the
estate taxes.
Consequently, we rule that neither Tomas N. Alonso nor his son Francisco M. Alonso
or the latters heirs are the lawful owners of Lot No. 727 in dispute. xxx.[25]

The pronouncement in G.R. No. 130876 renders beyond dispute that the nonexecution of the judgment would not adversely affect the petitioners, who now hold
no right whatsoever in Lot No. 727-D-2. Otherwise put, they are not the proper
parties to assail the questioned orders of the RTC, because they stand to derive
nothing from the execution of the judgment against Cebu Country Club.
Every action must be prosecuted or defended in the name of the real party in
interest, unless otherwise authorized by law or the rules.[26] A real party in interest
is one who stands to be benefited or injured by the judgment in the suit, or the
party entitled to the avails of the suit.[27] Interest within the meaning of the rule
means material interest, an interest in issue and to be affected by the decree, as
distinguished from mere interest in the question involved, or a mere incidental

interest. The rule refers to a real or present substantial interest, as distinguished

from a mere expectancy; or from a future, contingent, subordinate, or consequential
interest.[28] One having no right or interest to protect cannot invoke the jurisdiction
of the court as a party-plaintiff in an action.[29]
Thus, an appeal, like this one, is an action to be prosecuted by a party in interest
before a higher court. In order for the appeal to prosper, the litigant must of
necessity continue to hold a real or present substantial interest that entitles him to
the avails of the suit on appeal. If he does not, the appeal, as to him, is an exercise
in futility. So it is with the petitioners!
In contrast, the Government, being the legal owner of Lot No. 727-D-2, is the only
party adversely affected by the denial, and is the proper party entitled to assail the
denial.[30] However, its manifest desistance from the execution of the decision
effectively barred any challenge against the denial, for its non-appeal rendered the
denial final and immutable.
C.
R.A. No. 9443 gives petitioners no legal interest
to assail the denial of the motion for execution
Section 1 of R.A. No. 9443 provides:

Section 1. All existing Transfer Certificates of Title and Reconstituted Certificates of

Title duly issued by the Register of Deeds of Cebu Province and/or Cebu City
covering any portion of the Banilad Friar Lands Estate, notwithstanding the lack of
signatures and/or approval of the then Secretary of Interior (later Secretary of
Agriculture and Natural Resources) and/or the then Chief of the Bureau of Public
Lands (later Director of Public Lands) in the copies of the duly executed Sale
Certificates and Assignments of Sale Certificates, as the case may be, now on file
with the Community Environment and Natural Resources Office (CENRO), Cebu City,
are hereby declared as valid titles and the registered owners recognized as absolute
owners thereof.
The law expressly declares as valid (a)ll existing Transfer Certificates of Title and
Reconstituted Certificates of Title duly issued by the Register of Deeds of Cebu
Province and/or Cebu City covering any portion of the Banilad Friar Lands Estate,
and recognizes the registered owners as absolute owners. To benefit from R.A. No.
9443, therefore, a person must hold as a condition precedent a duly issued Transfer
Certificate of Title or a Reconstituted Certificate of Title.
Although Lot 727-D-2 was earlier declared to be owned by the Government in G.R.
No. 130876, R.A. No. 9443 later validated Cebu Country Clubs registered ownership

due to its holding of TCT No. RT-1310 (T-11351) in its own name. As the OSG
explained in its manifestation in lieu of comment[31] (filed in the RTC vis--vis the
petitioners motion for reconsideration against the RTCs denial of the OSGs motion
for issuance of a writ of execution), the enactment of R.A. No. 9443 had mooted
the final and executory Decision of the Supreme Court in Alonso v. Cebu Country
Club, Inc., docketed as G.R. No. 130876, which declared the Government as the
owner of Lot 727-D-2 based on the absence of signature and approval of the then
Secretary of Interior; and that the decision in G.R. No. 130876 had ceased to have
any practical effect as the result of the enactment of R.A. No. 9443, and had
thereby become academic.[32]
On the other hand, the petitioners could not benefit from R.A. No. 9443 because of
their non-compliance with the express condition of holding any Transfer Certificate
of Title or Reconstituted Certificate of Title respecting Lot 727-D-2 or any portion
thereof.
The appropriate recourse for the petitioners, if they persist in the belief that the TCT
of Cebu Country Club should be nullified, is to compel the OSG through the special
civil action for mandamus to commence the action to annul on the ground that
Cebu Country Club had obtained its title to Lot 7217-D-2 through fraud. Yet, that
recourse is no longer availing, for the decision in G.R. No. 130876 explicitly found
and declared that the reconstituted title of Cebu Country Club had not been
obtained through fraud. Said the Court:
On the question that TCT No. RT-1310 (T-11351) bears the same number as another
title to another land, we agree with the Court of Appeals that there is nothing
fraudulent with the fact that Cebu Country Club, Inc.s reconstituted title bears the
same number as the title of another parcel of land. This came about because under
General Land Registration Office (GLRO) Circular No. 17, dated February 19, 1947,
and Republic Act No. 26 and Circular No. 6, RD 3, dated August 5, 1946, which were
in force at the time the title was reconstituted on July 26, 1948, the titles issued
before the inauguration of the Philippine Republic were numbered consecutively and
the titles issued after the inauguration were numbered also consecutively starting
with No. 1, so that eventually, the titles issued before the inauguration were
duplicated by titles issued after the inauguration of the Philippine Republic. xxx.
xxx
Petitioners next argue that the reconstituted title of Cebu Country Club, Inc. had no
lawful source to speak of; it was reconstituted through extrinsic and intrinsic fraud
in the absence of a deed of conveyance in its favor. In truth, however, reconstitution
was based on the owners duplicate of the title, hence, there was no need for the
covering deed of sale or other modes of conveyance. Cebu Country Club, Inc. was
admittedly in possession of the land since long before the Second World War, or
since 1931. In fact, the original title (TCT No. 11351) was issued to the United
Service Country Club, Inc. on November 19, 1931 as a transfer from Transfer

Certificate of Title No. 1021. More importantly, Cebu Country Club, Inc. paid the
realty taxes on the land even before the war, and tax declarations covering the
property showed the number of the TCT of the land. Cebu Country Club, Inc.
produced receipts showing real estate tax payments since 1949. On the other hand,
petitioner failed to produce a single receipt of real estate tax payment ever made
by his father since the sales patent was issued to his father on March 24, 1926.
Worse, admittedly petitioner could not show any [T]orrens title ever issued to Tomas
N. Alonso, because, as said, the deed of sale executed on March 27, 1926 by the
Director of Lands was not approved by the Secretary of Agriculture and Natural
Resources and could not be registered. Under the law, it is the act of registration of
the deed of conveyance that serves as the operative act to convey the land
registered under the Torrens system. The act of registration creates constructive
notice to the whole world of the fact of such conveyance. On this point, petitioner
alleges that Cebu Country Club, Inc. obtained its title by fraud in connivance with
personnel of the Register of Deeds in 1941 or in 1948, when the title was
administratively reconstituted. Imputations of fraud must be proved by clear and
convincing evidence. Petitioner failed to adduce evidence of fraud. In an action for
re-conveyance based on fraud, he who charges fraud must prove such fraud in
obtaining a title. In this jurisdiction, fraud is never presumed. The strongest
suspicion cannot sway judgment or overcome the presumption of regularity. The
sea of suspicion has no shore, and the court that embarks upon it is without rudder
or compass. Worse, the imputation of fraud was so tardily brought, some forty-four
(44) years or sixty-one (61) years after its supposed occurrence, that is, from the
administrative reconstitution of title on July 26, 1948, or from the issuance of the
original title on November 19, 1931, that verification is rendered extremely difficult,
if not impossible, especially due to the supervening event of the second world war
during which practically all public records were lost or destroyed, or no longer
available.[33]
IN VIEW OF THE FOREGOING, the petition for review on certiorari is denied for lack
of merit.
The Court declares that Cebu Country Club, Inc. is the exclusive owner of Lot
No.727-D-2 of the Banilad Friar Lands Estate, as confirmed by Republic Act No.
9443.
Costs of suit to be paid by the petitioners.
SO ORDERED.
XI.Certificate of Land transfer, emancipation patent 9chapter IX, Sections
104-105)
XII. Petitions and actions after original registration (Chapter X, Sections
107-110)

a. Surrender and withheld Duplicate Certificate (Sec 107)

G.R. No. 127941 January 28, 1999

BIBLIA TOLEDO-BANAGA and JOVITA TAN, petitioners,
vs.
COURT OF APPEALS and CANDELARIO DAMALERIO, respondents.

MARTINEZ, J.:
The Court of Appeals (CA), in a decision penned by then justice Richard Francisco, 1
categorically declared private respondent as the absolute owner of the land subject
of this case. That decision was affirmed by this Court, became final and executory
and was remanded to the lower court for execution. But the Register of Deeds
frustrated private respondent's judicially determined right as it refused to issue
Certificates of Title in his name on the ground that the matter should be referred
"en consulta" to the Register of Deeds before petitioner's title can be canceled and
a new one issued in the name of the winning party herein private respondent. So,
for the third time, this simple redemption case which commenced in the 1980's is
again before this Court.
Here is a summary of the facts, over which there is no dispute:
In an action for redemption filed by petitioner Banaga, the trial court declared that
she had lost her right to redeem her property earlier foreclosed and which was
subsequently sold at public auction to private respondent 2 Certificates of Title
covering the said property were issued to private respondent over which petitioner
Banaga annotated on March 3, 1983 a notice of lis pendens. 3 On appeal by
petitioner Banaga, the CA reversed the decision of the trial court and allowed the
former to redeem the property within a certain period. 4 Private respondent's
petition to this Court was dismissed 5 and the decision became final.
On June 11, 1992 petitioner Banaga tried to redeem the property by depositing with
the trial court the amount of redemption which was financed by her co-petitioner
Tan. Private respondent opposed the redemption arguing that it was made beyond
the time given to her by the court in the earlier case However, the lower court
issued an order on August 7, 1992 upholding the redemption and ordered the
Register of Deeds to cancel private respondent's Certificates of Title and issue new
titles in the name of petitioner Banaga 6 When his motion for reconsideration was
denied by the trial court in an order dated January 4, 1993, private respondent filed
a petition for certiorari with the CA which was docketed as CA-G.R. No. 29869. On

January 11, 1993, private respondent caused the annotation of said petition as
another notice of lis pendens on the Certificates of Title. Three days later, the CA
issued a temporary restraining order to enjoin the execution of the August 7, 1992
and January 4, 1993 orders.
Meanwhile, on January 7, 1993, petitioner Banaga sold the subject property to
petitioner Tan with the deed of absolute sale mentioning private respondent's
certificate of title which was not yet cancelled. Notwithstanding the notice of lis
pendens, petitioner Tan subdivided the property in question under a subdivision
plan, which she made not in her name but in the name of private respondent. There
being no preliminary injunction issue and with the expiration of the TRO, petitioner
Tan asked the Register of Deeds to issue new titles in her name. On March 24, 1993,
such titles were issued in petitioner Tan's name but it still carried the annotations of
the two notices of lis pendens. Upon learning of the new title of petitioner Tan,
private respondent impleaded the former in his petition in CA-G.R. No. 29869.
On October 28, 1993, the CA set aside the August 7, 1992 and January 4, 1993
orders of the trial court and declared private respondent absolute owner of the
subject property the CA disposed of the petition as follows:
WHEREFORE, in view of the foregoing considerations, the instant petition is hereby
GRANTED. The order issued by public respondent judge dated August 7, 1992 and
January 4, 1993 are hereby order SET ASIDE and a new one is hereby entered
declaring petitioner as the absolute owner of the parcels of land subject of
redemption for failure of private respondent to exercise the right of redemption
within the thirty (30) days period previously granted her by this court. 7
That decision became final and executory after petitioner Banaga's petition for
review was dismissed by this Court for lack of merit. 8 Upon motion of private
respondent, the trial court issued a writ of execution on December 27, 1994
ordering the Register of Deeds to reinstate the Certificates of Title in the name of
the movant herein private respondent. In its order which petitioners did not
contest, the court a quo said that:
Although there is no specific pronouncement in the decision of the Court of Appeals
that reverts the titles to the land subjects of redemption to the defendant, the fact
that it declared the petioner (Damalerio) as the absolute owner of the lands entitles
him to writ of execution issuing from this court directing the Register of Deeds to
reinstate his titles to his name. As it is implied from the decision declaring him the
absolute owner of the land be reverted to him (See Uy v. Capulong, 221, SCRA 87).
Let therefore a writ of execution issue in this case to enforce the decision of the
Court of Appeals. In this connection, the Register of Deeds of the Registry of Deeds
for General Santos City is hereby ordered to reinstate the title of Candelario B.

Damalerio Transfer Certificates of Title No. T-19570 and T-19571, both of the
Registry of Deeds from General Santos City. 9
But the Register of Deeds refused to comply with the writ of execution alleging that
the Certificates of Title issued to petitioner Tan must first be surrendered.
Accordingly, private respondent moved to cite the Register of Deeds in contempt of
court which was denied, as the trial court ruled on January 11, 1995 that the
former's remedy is by consulta to the Commissioner of Land Registration. 10 In
another order (dated March 29, 1996) the trial court likewise denied private
respondent's motion for the issuance of a writ of possession ruling that the latter's
remedy is a separate action to declare petitioner Tan's Certificates of Title void.
Aggrieved, private respondent again elevated the case to the CA via a petition for
certiorari and mandamus 11 assailing the above-mentioned two orders of the court
a quo naming as respondents the trial court judge, the Register of Deeds and the
petitioners. On November 7, 1996, the CA rendered a decision granting the petition
and, among others, set aside the assailed orders of the trial court. The dispositive
portion of the CA decision reads:
WHEREFORE, in view of all the foregoing considerations, the petition is GRANTED.
Judgment is hereby rendered:
setting aside the orders of the respondent judge dated January 11, 1995 and March
29, 1996;
declaring the title issued to Biblia Toledo-Banaga, Jovita Tan and to those other
subsequent transferee or transferees, if any, as null and void;
ordering the Register of Deeds of General Santos City to issue a new certificates of
title to Candelario Damalerio over the parcels of land in question;
ordering the respondent court to issue writ of execution for the enforcement of this
decision and of the decision in CA-G.R. SP No. 29868 (sic), as well as writ of
possession for the delivery to petitioner Damalerio of the Physical possession of the
parcels of land subject matter of this case.
SO ORDERED. 12
Upon denial by the CA of their motion for reconsideration, petitioners filed the
instant petition for certiorari and mandamus. The Court, however, is puzzled why
petitioners, in their petition, would seek to set aside the two orders (January 4, 1995
and March 29, 1996) of "respondent judge" who was not named in their petition. 13
Assuming this be a mere lapsus since they also confusingly refer to Banaga and Tan
as "private respondent" and to Damalerio as "petitioner", 14 the petition is still
utterly without merit. It is petitioners' stand (1) that petitioner Tan is a buyer in god
faith and (2) that the remedy of private respondent to secure the titles in his name
is by consulta to the Land Registration Commissioner and not through contempt.
The Court is not convinced of the arguments proffered by petitioners.

By arguing that petitioner Tan was a buyer in good faith, petitioners in effect raise
once more the issue of ownership of the subject property. But such issue had
already been clearly and categorically ruled upon by the CA and affirmed by this
Court, wherein private respondent was adjudged the rightful and absolute owner
thereof. The decision in that case bars a further repeated consideration of the very
same issue that has already been settled with finality. To once again re-open that
issue through a different avenue would defeat the existence of our courts as final
arbiters of legal controversies. Having attained finality, the decision is beyond
review or modification even by this Court. 15
Under the principle of res judicata, the Court and the parties, are bound by such
final decision, otherwise, there will be no end to litigation. It is to the interest of the
public that there should be an end to litigation by the parties over a subject fully
and fairly adjudicated, and an individual should not be vexed twice for the same
cause. 16 All the elements of res judicata are present in this case, which are:
the former judgment must be final;
the court which rendered judgment had jurisdiction over the parties and the subject
matter;
it must be a judgment on the merits;
and there must be between the first and second actions identity of parties, subject
matter, and cause of action. 17
The judgment in the redemption suit had long become final and executory; there is
no question that the court had jurisdiction over the parties and the subject matter;
it involves an adjudication on the merits of the case as the court discussed and
passed upon petitioner Banaga's right of redemption which she did not timely
exercise and as a consequence, lost her claim of ownership of the lot. Both
petitioners and private respondent are parties to the earlier cases, disputing the
same parcel of land with both opposing parties claiming ownership thereof.
Certainly, res judicata had set in. Besides, once judgment had become final and
executory, it can no longer distributed no matter how erroneous it may be. In any
case, no such error was attributed to in this case.
Contrary to petitioners' argument, private respondent's remedy is not a direct or
independent civil action for cancellation of petitioner Tan's titles. The facts,
circumstances, evidence and arguments invoked in this derailed final and executory
decision are the very same matters that will be established assuming such
independent suit is legally warranted. It does not matter whether the former case
was a redemption suit and the new one will be for cancellation of title because the
test of identity of causes of action is not in its form but whether the same evidence
would support and establish the former and present causes of action. 18

Petitioners other contention that the execution of the final and executory decision
which is to issue titles in the name of private respondent cannot be compelled by
mandamus because of the "formality" that the registered owner first surrenders her
duplicate Certificates of Title for cancellation per Section 80 of Presidential Decree
1529 19 cited by the Register of Deeds, 20 bears no merit. In effect, they argue that
the winning party must wait execution until the losing party has complied with the
formality of surrender of the duplicate title. Such preposterous contention borders
on the absurd and has no place in our legal system. Precisely, the Supreme Court
had already affirmed the CA's judgment that Certificates of Title be issued in private
respondent's name. To file another action just to compel the registered owner,
herein petitioner Tan, to surrender her titles constitute violation of, if not disrespect
to, the orders of the highest tribunal. Otherwise, if execution cannot be had just
because the losing party will not surrender her titles, the entire proceeding in the
courts, not to say the efforts, expenses and time of the parties, would be rendered
nugatory. It is revolting to conscience to allow petitioners to further avert the
satisfaction of their obligation because of sheer literal adherence to technicality, 21
or formality of surrender of the duplicate titles. The surrender of the duplicate is
implied from the executory decision since petitioners themselves were parties
thereto. Besides, as part of the execution process, it is a ministerial function of the
Register of Deeds to comply with the decision of the court to issue a title and
register a property in the name of a certain person, especially when the decision
had attained finality, as in this case.
In addition, the enforcement of final and executory judgment is likewise a
ministerial function of the courts 22 and does not call for the exercise of discretion.
Being a ministerial duty, a writ of mandamus lies to compel its performance. 23
Moreover, it is axiomatic that where a decision on the merits is rendered and the
same has become final and executory, as in this case, the action on procedural
matters or issues becomes moot and academic. 24 Thus, the so-called consulta to
the Commissioner of Land Registration, which is not applicable herein, was only a
naive and belated effort resorted to by petitioners in order to delay execution. If
petitioners desire to stop the enforcement of a final and executory decision, they
should have secured the issuance of a writ of preliminary injunction, 25 but which
they did not avail knowing that there exists no legal or even equitable justifications
to support it.
At any rate, the time petitioner Banaga sold the property to petitioner Tan, the latter
was well aware or the interest of private respondent over the lot. Petitioner Tan
furnished the amount used by petitioner Banaga for the attempted redemption. One
who redeems in vain a property of another acquires notice that there could be a
controversy. It is for the same reason that petitioner Tan was included as party to
the case filed in court. Worse, at the time of the sale, petitioner Tan was buying
property not registered in the seller's name. This clear from the deed of absolute
sale which even mentioned that the Certificates of Title is still in the name of private

respondent. It is settled that a party dealing with a registered land need not go
beyond the Certificate of Title to determine the true owner thereof so as to guard or
protect her interest. She has only to look and rely on the entries in the Certificate of
Title. By looking at the title, however, petitioner Tan cannot feigned ignorance that
the property is registered in private respondent's name and not in the name of the
person selling to her. Such fact alone should have at least prompted, if not impelled
her to investigate deeper into the title of her seller petitioner Banaga, more so
when such effort would not have entailed additional hardship, and would have been
quite easy, as the titles still carried the two notices of lis pendens.
By virtue of such notices, petitioner Tan is bound by the outcome of the litigation
subject of the lis pendens. As a transferee pendente lite, she stands exactly in. the
shoes of the transferor and must respect any judgment or decree which may be
rendered for or against the transferor. Her interest is subject to the incident or
results of the pending suit, and her Certificates of Title will, in that respect, afford
her no special protection. 26
To repeat, at the time of the sale, the person from whom petitioner Tan bought the
property is neither the registered owner nor was the former authorized by the latter
to sell the same. She knew she was not dealing with the registered owner or a
representative of the latter. One who buys property with full knowledge of the flaws
and defects in the title of his vendor is enough proof of his bad faith 27 and cannot
claim that he acquired title in good faith as against the owner or of an interest
therein. 28 When she nonetheless proceeded to buy the lot, petitioner Tan gambled
on the result of litigation. 29 She is bound by the outcome of her indifference with
no one to blame except herself if she looses her claim as against one who has a
superior right or interest over the property. These are the undeniable and
unconverted facts found by the CA, which petitioners even quote and cite in their
petition. As aptly concluded by the CA that petitioner Tan is indeed a buyer in bad
faith on which the Court agrees:
Notwithstanding her constructive and actual knowledge that Damalerio was
claiming the land, that the land was in his name, and it was involved in pending
litigation. Jovita Tan bought it from Banaga on January 7, 1993. The deed of sale
recites that the parcels of land so I were covered by Transfer Certificates of Title No.
(formerly) [T-12488] T-530) and TCT No. (formerly [T-12488] T-530) (sic) "and TCT
No. (formerly P-1294) (Annex "F", Petition). Apart from the fact that Banaga was
without any TCT, as above stated, TCT No. T-12488 was petitioner's title (Annex "C",
Petition). Herein private respondent Tan was buying a land not registered in her
seller's (Banaga's) name, but in that petitioner Damalerio who had been claiming it
as his own. She admitted this fact when she had the land subdivided on February 2,
1993 not in her name but in the name of Candelario Damalerio (Annex "Q", Reply).
Evidently, she was a purchaser in bad faith because she had full knowledge of the
flaws and defects of title of her seller, Banaga . . . .

The notice of lis pendens registered on March 3, 1993 involving the land in question
and private respondent Tan's actual knowledge of the then pending Civil Case No.
2556, where the question as to whether the redemption of the land which she
financed was raised, rendered her a purchaser in bad faith and made the decision
therein binding upon her. 30
Being a buyer in bad faith, petitioner Tan cannot acquire a better rights than her
predecessor in interest, 31 for she merely stepped into the shoes of the latter. Such
finding of bad faith is final and may not be re-opened for the law cannot allow the
parties to trifle with the courts. 32
With respect to the issue of possession, such right is a necessary incident of
ownership. 33 The adjudication or ownership to private respondent includes the
delivery of possession since the defeated parties in this case has not shown by what
right to retain possession of the land independently of their claim of ownership
which was rejected. 34 Otherwise, it would be unjust if petitioners who has no valid
right over the property will retain the same. 35 Thus, the CA correctly disagreed
with the trial court's order denying private respondent's motion for writ of
possession for the following reasons cited in its decision:
1.
The order violates the doctrine laid down in Javier vs. Court of Appeals, 224
SCRA 704, which ruled that the issuance of title in favor of a purchaser in bad faith
does not exempt the latter from complying with the decision adverse to his
predecessor in interest, nor preclude him from being reached by writ of execution;
2.
Private respondent Tan was a party respondent in CA-G.R. SP No. 29869, she
having been impleaded in a supplemental petition, which this Court gave due
course and required the respondents to file their answer. The fact that she did not
file any pleading, nor intervene therein did not excuse her from being bound by the
decision, otherwise all that a party respondent was to fold his arm to prevent him
from being bound by a decision in a case. Her securing titles over the land during
the pendency of said case did not protect her from the effects of said decision. The
validity of tile of a purchaser of registered land depends on whether he had
knowledge, actual or constructive, of defects in the title of his vendor. If he has such
knowledge, he is a purchaser in bad faith and acquires the land subject to such
defects (. . . indicates that citations of authorities omitted) The title secured by a
purchaser in bad faith is a nullity and gave the latter no right whatsoever as against
the owner (. . .).
3.
Private, respondent Tan's titles and those of her predecessor, Banaga arose
from the void orders of August 7, 1992 and January 4, 1993. Since a void order
could not give rise to valid rights, said titles were also necessarily null and void
(. . .).

4.
Private respondents and respondent Judge executed the questioned orders of
August 7, 1993 and January 4, 1993, pending review of said orders in CA-G.R. SP No.
29869. The nullification of said orders by this out imposed upon the private
respondents the obligation to return the property to Damalerio and upon
respondent Judge, upon motion for execution, to order the cancellation of private
respondents titles and the issuance of new titles to him.
5.
This Court in its decision in CA-G.R. SP. No. 29869 declared petitioner
Damalerio absolute owner of the property in question. Private respondents were
parties litigants in said case, who did not claim possession of the land separately
from their claim of ownership thereof. Such being the case, the delivery of
possession is considered included in this Court's decision declaring Damalerio
absolute owner of the property
(. . .), which can be enforced by writ of possession (. . .). In denying petitioner's
motion for writ of possession, the trial court violated said doctrines, and
6.
Lastly, the effect of respondent Judge's order of March 29, 1996 is to re-open
the decision in CA-G.R. SP No. 29689 for re-litigation and alteration in a separate
action. For while this Court already declared that Banaga's redemption of the land
financed by private respondent Tan was invalid, and as a consequence declared
Damalerio absolute owner of the property, which was binding against private
respondent Tan, as she was a respondent therein and a purchaser pendente lite and
in bad faith, the order of the respondent Court holding that another civil action be
filed to annul private respondent Tan's titles would be to re-litigate such issues and
modify or alter this Court's final decision.
The respondent Court has no authority to do so. 36
WHEREFORE, premises considered, the petition is hereby DENIED and the assailed
decision of the Court of Appeals is AFFIRMED in toto with costs against petitioners.
No further proceeding will be entertained in this case.1wphi1.nt
SO ORDERED.
b. Amendment and Alteration of Certificates (Sec. 108)
G.R. No. 163118

April 27, 2007

DORIS CHIONGBIAN-OLIVA, Petitioner,

vs.
REPUBLIC OF THE PHILIPPINES, THE DEPARTMENT OF ENVIRONMENT AND
NATURAL RESOURCES AND THE REGISTER OF DEEDS OF CEBU CITY,
Respondents.

DECISION
QUISUMBING, J.:
This petition for certiorari assails (1) the Decision1 dated August 7, 2003 of the
Court of Appeals in CA-G.R. CV. No. 74409, reversing the Decision2 dated December
13, 2001 of the Regional Trial Court of Cebu City, Branch 12 in SP. Proc. No. 10746CEB, and (2) the Resolution3 dated March 17, 2004, denying the motion for
reconsideration.
The following facts are undisputed.
Petitioner Doris Chiongbian-Oliva is the registered owner of a parcel of land in
Talamban, Cebu City, as evidenced by Transfer Certificate of Title (TCT) No. 5455.4
This title originated from Original Certificate of Title (OCT) No. 1066 from a free
patent granted on September 11, 1969 under Commonwealth Act No. 141,5 as
amended. The free patent, OCT No. 1066, and TCT No. 5455 contained the condition
that a forty-meter legal easement from the bank of any river or stream shall be
preserved as permanent timberland.6
On October 1, 2001, petitioner filed a petition for reduction of legal easement
docketed as SP. Proc. No. 10746-CEB before the Regional Trial Court of Cebu City,
Branch 12. Petitioner alleged that the property is residential as shown by the tax
declaration7 and the Certification8 of the Office of the City Assessor. Thus, the
applicable legal easement is only three meters pursuant to Department of
Environment and Natural Resources (DENR) Administrative Order No. 99-21,9 and
not forty meters, which applies to timberlands and forest lands. Petitioner also
alleged that enforcing the forty-meter legal easement would virtually deprive her of
the use and enjoyment of the property since it consists only of 1,000 square meters.
The DENR countered that the property is inalienable. It also claimed that the
applicant agreed on the forty-meter legal easement when the free patent was
applied for.
The trial court ruled in favor of petitioner. It said that there is no longer any reason
for the forty-meter legal easement because the property had been transformed into
residential land and the area where it is located has been reclassified as urban.
Applying DENR A.O. No. 99-21, the applicable legal easement is only three meters.
The decisions decretal portion states:
WHEREFORE, premises considered, it is hereby ordered that the legal encumbrance
of forty (40) meters for river bank protection annotated on Petitioners Transfer

Certificate of Title No. 5455 be reduced to the applicable legal easement of three (3)
meters in accordance with law.
Accordingly, the Register of Deeds of Cebu City is hereby directed to cancel the
above legal encumbrance of forty (40) meters annotated on Petitioners Transfer
Certificate of Title No. 5455 and in lieu thereof, annotate the applicable legal
encumbrance of three (3) meters for river bank protection.
SO ORDERED.10
On appeal, the Court of Appeals reversed the trial courts decision. It upheld the
DENRs claim that the property was inalienable. Accordingly, a positive act of the
government was necessary to declassify it from forest land to alienable land.
Declaration of the property as residential in the tax declaration and reclassification
of the area where it is located as urban were insufficient bases to reclassify the
property. The fallo of the appellate courts decision reads:
WHEREFORE, premises considered, the Decision dated December 13, 2001, of the
Regional Trial Court, 7th Judicial Region, Branch 12, Cebu City, in SP. PROC. NO.
10746-CEB, is hereby REVERSED and SET ASIDE. No pronouncement as to costs.
SO ORDERED.11
The appellate court later denied petitioners motion for reconsideration.
Petitioner now raises the following issues:
I.
WHETHER OR NOT PETITIONERS LOT COVERED BY THE LEGAL ENCUMBRANCE IS A
PUBLIC LAND/LAND OF THE PUBLIC DOMAIN (AND THUS, CANNOT BE RECLASSIFIED
EXCEPT BY THE EXECUTIVE DEPARTMENT) OF THE GOVERNMENT, OR A PRIVATE
LAND.
II.
WHETHER OR NOT THE TRIAL COURT IS CORRECT IN TAKING JUDICIAL NOTICE OF
THE FACT THAT PETITIONERS LOT COVERED BY TCT NO. 5455 IS SITUATED IN AN
URBAN AREA AND NOT IN A FOREST AREA, AND IN THUS CONCLUDING THAT THE
LEGAL EASEMENT APPLICABLE FOR RIVER BANK PROTECTION IS THREE (3) METERS
AND NOT FORTY (40) METERS.
III.

WHETHER OR NOT SECTION 90(i) OF C.A. NO. 141 WHICH PROVIDES FOR A
UNIFORM EASEMENT OF FORTY (40) METERS FROM THE BANK ON EACH SIDE OF
ANY RIVER, AND WHICH PRESERVES THE SAID 40-METER PORTION AS PERMANENT
TIMBERLAND REGARDLESS OF WHETHER IT IS SITUATED IN A FOREST AREA OR AN
URBAN AREA, IS STILL APPLICABLE TO LOTS SITUATED IN AN URBAN AREA IN THE
LIGHT OF THE PROVISIONS OF SUBSEQUENT LEGISLATION, SPECIFICALLY SECTION
51 OF P.D. NO. 1067.12
Simply stated, the issues are: (1) Is the property public or private land? and (2) Is
the applicable legal easement forty or three meters?
On the first issue, C.A. No. 141, as amended, provides that lands of the public
domain may be classified by the President, upon the recommendation of the
Secretary of Environment and Natural Resources, into: (1) alienable or disposable;
(2) timber; and (3) mineral lands.13 However, only alienable or disposable lands
may be disposed of through any of the forms of concession enumerated in the
law.14 A free patent is one of such concessions15 and once it is registered and the
corresponding certificate of title issued, the land covered by them ceases to be part
of the public domain and becomes private property.16
Verily, by the issuance of a free patent on September 11, 1969, and the subsequent
issuance of OCT No. 1066 and TCT No. 5455, the property in this case had become
private land. It is inconsistent for an alienable land of the public domain to be
covered by a free patent and at the same time retain its character as public land.
On the second issue, Section 90(i) of C.A. No. 141 requires that a forty-meter legal
easement from the bank of any river or stream shall be preserved as permanent
timberland. More specifically, it provides:
(i) That the applicant agrees that a strip forty meters wide starting from the bank on
each side of any river or stream that may be found on the land applied for, shall be
demarcated and preserved as permanent timberland to be planted exclusively to
trees of known economic value, and that he shall not make any clearing thereon or
utilize the same for ordinary farming purposes even after patent shall have been
issued to him or a contract of lease shall have been executed in his favor. (Emphasis
supplied.)
To implement this, the DENR promulgated A.O. No. 99-21 which provides the
guidelines in the processing, verification, and approval of isolated and cadastral
surveys. Pertinent to this case are the following provisions:
2.1 Original Surveys:
2.1.a Public Lands:

All alienable and disposable (A and D) lands of the public domain shall be surveyed
pursuant to Section 1 Par. (1) of R.A. 1273 [C.A. No. 141, Section 90(i)] whereby a
strip of forty (40) meters wide starting from the banks on each side of any river or
stream that may be found on the land shall be demarcated and preserved as
permanent timberland.
Likewise, to be demarcated are public lands along the banks of rivers and streams
and the shores of the seas and lakes throughout their entire length and within a
zone of three (3) meters in urban areas, twenty (20) meters in agricultural areas
and forty (40) meters in forest area, along their margins which are subject to the
easement for public use in the interest of recreation, navigation, floatage, fishing
and salvage.
xxxx
2.3 Survey of Titled Lands:
2.3.1 Administratively Titled Lands:
The provisions of item 2.1.a and 2.1.b shall be observed as the above. However,
when these lands are to be subdivided, consolidated or consolidated-subdivided, the
strip of three (3) meters which falls within urban areas shall be demarcated and
marked on the plan for easement and bank protection.
The purpose of these strips of land shall be noted in the technical description and
annotated in the title.
xxxx
Running in parallel vein is the Water Code of the Philippines17 which provides:
Art. 51. The banks of rivers and streams and the shores of the seas and lakes
throughout their entire length and within a zone of three (3) meters in urban areas,
twenty (20) meters in agricultural areas and forty (40) meters in forest areas, along
their margins, are subject to the easement of public use in the interest of recreation,
navigation, floatage, fishing and salvage. No person shall be allowed to stay in this
zone longer than what is necessary for recreation, navigation, floatage, fishing or
salvage or to build structures of any kind.
Since the property in this case was originally alienable land of the public domain,
the application for free patent contained the condition that a forty-meter legal
easement from the banks on each side of any river or stream found on the land
shall be demarcated and preserved as permanent timberland. However, after the

property was administratively titled, it underwent several surveys for purposes of

subdivision, consolidation, or consolidation-subdivision as evidenced by TCT No.
5455. This title provides that it is a transfer from TCT Nos. 3975 and 436018 and
describes the property as Lot 2 of the consolidation-subdivision plan Pcs-07-002121,
being a portion of Lot 6 and 7 Pcs-07-000974.19 Thus, presently only three meters
is required to be demarcated and preserved as permanent timberland.
In this case, the trial court properly took judicial notice that Talamban, Cebu City is
an urban area. Judicial notice is the cognizance of certain facts which judges may
properly take and act on without proof because they already know them.20 A
municipal jurisdiction, whether designated as chartered city or provincial capital, is
considered as urban in its entirety if it has a population density of at least 1,000
persons per square kilometer.21 The City of Cebu was created on October 20, 1934
under Commonwealth Act No. 58.22 It is a highly urbanized city classified as
entirely urban.23 Thus, all its barangays, including Talamban, are considered urban.
Conformably with the foregoing considerations, the reduction of the legal easement
of forty meters on petitioners property covered by TCT No. 5455 to three meters
now is in order.
WHEREFORE, the instant petition is GRANTED. The assailed Decision dated August
7, 2003 and Resolution dated March 17, 2004 of the Court of Appeals in CA-G.R. CV.
No. 74409 are REVERSED, and the Decision dated December 13, 2001 of the
Regional Trial Court of Cebu City, Branch 12 in SP. Proc. No. 10746-CEB is
REINSTATED.
SO ORDERED.
[G.R. No. 130389, February 11, 2008]
THE PHILIPPINE COTTON CORPORATION, Petitioner-Appellant, vs.
NARAINDAS GAGOOMAL and ENGRACIO ANG, Respondents-Appellees,
CHINA BANKING CORPORATION, Intervenor-Appellee.
DECISION
decisions.php?doctype=Decisions / Signed Resolutions&docid=
This is a petition for review on certiorari[1] assailing the Decision[2] of the Court of
Appeals (CA) promulgated on August 29, 1997 in CA-G.R. CV No. 50332.
The facts of record would indicate that Pacific Mills, Inc. (Pacific Mills) originally
owned five parcels of land covered by Transfer Certificates of Title (TCT) Nos.
136640, 136441, 222370 and 134249. These properties were subsequently

purchased by respondents on an installment basis from Pacific Mills on July 19,

1979.[3]
On June 23, 1983, petitioner filed a collection case against Pacific Mills before the
Regional Trial Court (RTC) of Pasig, Branch 162 on the ground of alleged failure to
fulfill its obligation under a contract of loan. After hearing, the trial court issued a
writ of preliminary attachment in favor of petitioner. Thereafter, on August 17, 1983,
the writ of preliminary attachment was annotated on TCT Nos. 136640, 136441,
222370 and 134249.
On December 27, 1985, the RTC of Pasig rendered a decision ordering Pacific Mills to
pay its obligation under the loan agreement plus interest, penalty charges,
attorneys fees and costs of suit. On appeal, the CA affirmed the decision of the trial
court. Not satisfied with the judgment of the appellate court, Pacific Mills filed a
petition for review before this Court.
During the pendency of the appeal or on June 11, 1988, the Quezon City Hall was
razed by fire thereby destroying the records of the Registry of Deeds of Quezon City,
including the TCTs of Pacific Mills.
Sometime in 1992, Pacific Mills filed a petition for reconstitution of the burned TCTs
through administrative reconstitution, in accordance with Republic Act No. 6732.[4]
On March 23, 1992, the Registry of Deeds of Quezon City issued to Pacific Mills the
reconstituted TCTs, namely: No. RT-55702 (for TCT No. 136640), No. RT-55704 (for
TCT No. 134249), No. RT-55703 (for TCT No. 136441) and No. RT-55705 (for TCT No.
222370). However, the aforesaid alleged annotations of the preliminary attachment
in favor of petitioner were not incorporated in the reconstituted TCTs, but annotated
therein was the sale made by Pacific Mills to respondents and their payment in full.
On even date, the reconstituted TCTs were cancelled in favor of the respondents.
Respondents were given the following clean TCT Nos. 56683[5] (for RT-55703),
56684[6] (for RT-55702), 56685[7] (for RT-55704) and 56686[8] (for RT-55705).
On February 8, 1993, petitioner wrote the Registry of Deeds of Quezon City
requesting for the annotation of the notice of levy, and, subsequently, the
annotation of a favorable decision of this Court rendered on August 3, 1992, on the
new TCTs issued to respondents.
On February 10, 1993, Samuel C. Cleofe, the Quezon City Register of Deeds,
informed respondents that the letter-request for re-annotation of notice of levy had
been entered in the Primary Entry Book 574/Volume 24, and asked them to
surrender their owners duplicate copies of TCT Nos. 56683 to 56686.[9]
Immediately upon receipt of the said letter, respondents verified the original copies
of titles in the possession of the Registry of Deeds and discovered that the following

annotations were included at the back of the titles: Request for Re-Annotation of
Notice of Levy and Letter Request for Annotation of Entry of Judgment of Supreme
Court.
Thereafter, respondents filed on March 3, 1993, a Petition for the Cancellation of
Annotations in Land Titles before the RTC of Quezon City, Branch 100, docketed as
Civil Case No. Q-6056(93). Later on, petitioner was impleaded as an additional
respondent, while China Banking Corporation filed a complaint-in-intervention for
being a mortgagee of the real properties, together with all the improvements
thereon.
On March 29, 1995, the trial court rendered judgment in favor of respondents. The
dispositive portion of the decision reads:
WHEREFORE, premises above considered, there being no justification for the
Quezon City Register of Deeds in making the annotation on petitioners original TCT
Nos. 56683 (RT-55703), 56684 (RT-55702), 56685 (RT-55748) and 56686 (RT-55705),
said respondent is hereby ordered to DELETE therefrom the said annotation
request for annotation and the annotated Supreme Court decision against the
Pacific Mills, Inc. and to desist from its request for petitioners to submit their
owners duplicate of titles to annotate such request of the Philippine Cotton
Corporation.
There being no justiciable issue in the complaint-in-intervention, let the annotations
of a mortgage executed by petitioners on December 18, 1992 in favor of intervenor
China Banking Corporation remain on petitioners subject TCTs.
SO ORDERED.[10]
The trial court ratiocinated that:
Under the circumstances, respondent [the Registry of Deeds of Quezon City] should
and could have properly refused such request instead of immediately annotating it.
In the same light, The Register of Deeds may likewise properly refuse registration
of an order attachment when it appears that the title involved is not in the name of
the defendant and there is no evidence submitted to indicate that the said
defendant has any present or future interest in the property covered by the titles.
(Gotauco vs. Register of Deeds of Tayabas, 59 Phil. 756, 1934 and Geonanga vs.
Hodges, 55 O.G. p. 2891, April 21, 1958). (Underscoring Supplied)[11]
Unsatisfied with the outcome of the case, petitioner filed a notice of appeal before
the CA, contending that:
THE REGISTER OF DEEDS OF QUEZON CITY HAS THE AUTHORITY TO RE-ANNOTATE
THE NOTICE OF LEVY AND TO ANNOTATE THE ENTRY OF JUDGMENT OF THE
SUPREME COURT ON TRANSFER CERTIFICATES OF TITLE NOS. 56683, 56684, 56685
AND 56686, ALL ISSUED IN THE NAME OF THE PETITIONERS-APPELLEES AS A RESULT
OF AN ADMINISTRATIVE RECONSTITUTION OF TITLES.[12]

In its August 29, 1997 decision, the appellate court dismissed the appeal because
the issue raised by the petitioner was a pure question of law, over which the CA had
no jurisdiction.
Hence, this petition.
Petitioner presents the following assignment of errors:
FIRST ERROR
THE LOWER COURT ERRED IN NOT SUSTAINING THE AUTHORITY OF THE QUEZON
CITY REGISTER OF DEEDS TO VALIDLY RE-ANNOTATE THE INCUMBRANCE/LIENS AND
ANNOTATE THE SUPREME COURT DECISION ON THE ADMINISTRATIVELY
RECONSTITUTED TRANSFER CERTIFICATES OF TITLES (TCTs) IN FAVOR OF
PETITIONER-APPELLANT.
SECOND ERROR
THE LOWER COURT, IN CONSEQUENCE THEREOF, LIKEWISE ERRED IN ORDERING
THE QUEZON CITY REGISTER OF DEEDS TO DELETE THE ANNOTATION THAT READS:
REQUEST FOR ANNOTATION AND THE ANNOTATED SUPREME COURT DECISION
AGAINST PACIFIC MILLS, INC., FROM PETITIONERS ORIGINAL TCT NOS. 96683 [sic]
(RT-55703), 56684 (RT-55702), 56685 (RT-55748) AND 56686 (RT-55705) AND TO
DESIST FROM REQUESTING RESPONDENTS/APPELLEES TO SUBMIT THEIR OWNERS
DUPLICATE OF TITLES FOR ANNOTATION OF PETITIONER PHILIPPINE COTTON
CORPORATIONS REQUEST.[13]
Petitioner asserts that a cursory reading of Section 71 of Presidential Decree No.
1529 shows that it is the ministerial duty of the Register of Deeds, in the matter of
an attachment or other liens in the nature of involuntary dealing in registered land,
to send notice by mail to a registered owner requesting him to produce his
duplicate certificate so that a memorandum of attachment or other lien may be
made thereon. This provision, according to petitioner, actually applies whenever a
writ of attachment has been issued by a court of competent jurisdiction after
hearing on the issuance of the said writ. The notice of attachment not having been
dissolved, it was ministerial on the part of the Register of Deeds to record the notice
on the TCTs he issued.
Petitioner would persuade this Court that it is the ministerial duty of the Register of
Deeds to record any encumbrance or lien on respondents existing TCTs. It cites, as
proof of its supposition, Sections 10 and 71 of the Property Registration Decree (P.D.
No. 1529), which are quoted as follows:
Section 10. General functions of Registers of Deeds. The office of the Register of
Deeds constitutes a public repository of records of instruments affecting registered
or unregistered lands and chattel mortgages in the province or city wherein such
office is situated.

It shall be the duty of the Register of Deeds to immediately register an instrument

presented for registration dealing with real or personal property which complies with
all the requisites for registration. He shall see to it that said instrument bears the
proper documentary and science stamps and that the same are properly cancelled.
If the instrument is not registrable, he shall forthwith deny registration thereof and
inform the presentor of such denial in writing, stating the ground or reason therefor,
and advising him of his right to appeal by consulta in accordance with Section 117
of this Decree.
xxx
Section 71. Surrender of certificate in involuntary dealings. If an attachment or
other lien in the nature of involuntary dealing in registered land is registered, and
the duplicate certificate is not presented at the time of registration, the Register of
Deeds, shall, within thirty-six hours thereafter, send notice by mail to the registered
owner, stating that such paper has been registered, and requesting him to send or
produce his duplicate certificate so that a memorandum of the attachment or other
lien may be made thereon. If the owner neglects or refuses to comply within a
reasonable time, the Register of Deeds shall report the matter to the court, and it
shall, after notice, enter an order to the owner to produce his certificate at a time
and place named therein, and may enforce the order by suitable process.
(Underscoring supplied)
The Court is not in accord with the stance of petitioner. Section 10 of P.D. No. 1529
merely involves the general functions of the Register of Deeds, while Section 71
thereof relates to an attachment or lien in a registered land in which the duplicate
certificate was not presented at the time of the registration of the said lien or
attachment.
A special law specifically deals with the procedure for the reconstitution of Torrens
certificates of title lost or destroyed. Under Section 4 of Act No. 26:[14]
Liens and other encumbrances affecting a destroyed or lost certificate of title shall
be reconstituted from such of the sources hereunder enumerated as may be
available, in the following order:
(a)
Annotations or memoranda appearing on the owners, co-owners,
mortgagees or lessees duplicate;

(b)
Registered documents on file in the registry of deeds, or authenticated copies
thereof showing that the originals thereof had been registered; and

(c)
Any other document which, in the judgment of the court, is sufficient and
proper basis for reconstituting the liens or encumbrances affecting the property
covered by the lost or destroyed certificate of title. (Underscoring supplied)
Furthermore, Sections 8 and 11 of the same Act provide for the procedure for the
notation of an interest that did not appear in the reconstituted certificate of title,
mandating that a petition be filed before a court of competent jurisdiction:
Section 8. Any person whose right or interest was duly noted in the original of a
certificate of title, at the time it was lost or destroyed, but does not appear so noted
on the reconstituted certificate of title, which is subject to the reservation provided
in the preceding section, may, while such reservation subsists, file a petition with
the proper Court of First Instance for the annotation of such right or interest on said
reconstituted certificate of title, and the court, after notice and hearing, shall
determine the merits of the petition and render such judgment as justice and equity
may require. The petition shall state the number of the reconstituted certificate of
title and the nature, as well as a description, of the right or interest claimed.
(Underscoring supplied)
xxx
Section 11. Petitions for reconstitution of registered interests, liens and other
encumbrances, based on sources enumerated in sections 4(b) and/or 4(c) of this
Act, shall be filed, by the interested party, with the proper Court of First Instance.
The petition shall be accompanied with the necessary documents and shall state,
among other things, the number of the certificate of title and the nature as well as a
description of the interest, lien or encumbrance which is to be reconstituted, and
the court, after publication, in the manner stated in section nine of this Act, and
hearing shall determine the merits of the petition and render such judgment as
justice and equity may require. (Underscoring supplied)
Clearly, therefore, it is not the ministerial function of the Register of Deeds to record
a right or an interest that was not duly noted in the reconstituted certificate of title.
As a matter of fact, this task is not even within the ambit of the Register of Deeds
job as the responsibility is lodged by law to the proper courts. The foregoing quoted
provisions of the law leave no question nor any doubt that it is indeed the duty of
the trial court to determine the merits of the petition and render judgment as justice
and equity may require.
This conclusion is bolstered by Chapter X,[15] Section 108 of P.D. No. 1529, which
provides:
Sec. 108. Amendment and alteration of certificates. No erasure, alteration, or
amendment shall be made upon the registration book after the entry of a certificate
of title or of a memorandum thereon and the attestation of the same by the
Register of Deeds, except by order of the proper Court of First Instance. A registered
owner or other person having an interest in registered property, or, in proper cases,
the Register of Deeds with the approval of the Commissioner of Land Registration,

may apply by petition to the court upon the ground that the registered interests of
any description, whether vested, contingent, expectant inchoate appearing on the
certificate, have terminated and ceased; or that new interest not appearing upon
the certificate have arisen or been created; or that an omission or error was made in
entering the certificate or any memorandum thereon, or on any duplicate
certificate; or that the name of any person on the certificate has been changed; or
that the registered owner has married, or, if registered as married, that the
marriage has been terminated and no right or interest of heirs or creditors will
thereby be affected, or that a corporation which owned registered land and has
been dissolved has not yet conveyed the same within three years after its
dissolution; or upon any other reasonable ground; and the court may hear and
determine the petition after notice to all parties in interest, and may order the entry
or cancellation of a new certificate, the entry or cancellation of a memorandum
upon a certificate, or grant any other relief upon such terms and conditions,
requiring security or bond if necessary, as it may consider proper: Provided,
however, That this section shall not be construed to give the court authority to
reopen the judgment or decree of registration, and that nothing shall be done or
ordered by the court which shall impair the title or other interest of a purchaser
holding a certificate for value and in good faith, or his heirs and assigns, without his
or their written consent. Where the owners duplicate certificate is not presented, a
similar petition may be filed as provided in the preceding section,
All petitions or motions filed under this section as well as under any other provision
of this Decree after original registration shall be filed and entitled in the original
case in which the decree or registration was entered. (Underscoring supplied)
The courts intervention in the amendment of the registration book after the entry
of a certificate of title or of a memorandum thereon is categorically stated in the
Property Registration Decree and cannot be denied by the mere allegations of
petitioner. Hence, the contentions that the Register of Deeds may validly reannotate the incumbrance/liens and annotate the Supreme Court decision on the
administratively reconstituted transfer certificates of titles (TCTs) have no basis in
law and jurisprudence.
Petitioner further submits that the issuance of the TCTs to respondents is fraudulent.
It suggests that under Sections 69 and 73 of P.D. No. 1529, any person whose
interest does not appear on a reconstituted title may file a request directly with the
Register of Deeds.
As correctly observed by respondents, P.D. No. 1529 principally pertains to the
registration of property, while R.A. No. 26 is a special law on the procedure for the
reconstitution of Torrens certificates of title that were lost or destroyed. Specifically,
Section 69[16] of P.D. No. 1529 refers to an attachment that arose after the
issuance of a certificate of title; while Section 71[17] of the same law pertains to the
registration of the order of a court of an attachment that was continued, reduced,

dissolved or otherwise affected by a judgment of the court. Undoubtedly, the

foregoing provisions find no application in the present case since petitioner insists
that its interest was annotated prior to the reconstitution of the disputed certificates
of title.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R.
CV No. 50332, dated August 29, 1997, and the Decision of the Regional Trial Court
of Quezon City, Branch 101, in Civil Case No. Q-6056(93),[18] are hereby AFFIRMED.
No costs.
SO ORDERED.

c. Notice and replacement of lost Duplicate Certificate

REMEGIA Y. FELICIANO,
G.R. No. 162593
Substituted by the Heirs of
Remegia Y. Feliciano, as
represented by NILO Y
Petitioners,
- versus SPOUSES AURELIO and LUZ
ZALDIVAR,
Respondents.

DECISION
CALLEJO, SR., J.:
Before the Court is the petition for review on certiorari filed by the Heirs of Remegia
Y. Feliciano (as represented by Nilo Y. Feliciano) seeking the reversal of the
Decision[1] dated July 31, 2003 of the Court of Appeals (CA) in CA-G.R. CV No.
66511 which ordered the dismissal of the complaint filed by Remegia Y. Feliciano[2]
for declaration of nullity of title and reconveyance of property. The assailed decision
of the appellate court reversed and set aside that of the Regional Trial Court (RTC) of
Cagayan de Oro City, Branch 25 in Civil Case No. 92-423.
The factual and procedural antecedents of the present case are as follows:
Remegia Y. Feliciano filed against the spouses Aurelio and Luz Zaldivar a complaint
for declaration of nullity of Transfer Certificate of Title (TCT) No. T-17993 and

reconveyance of the property covered therein consisting of 243 square meters of lot
situated in Cagayan de Oro City. The said title is registered in the name of Aurelio
Zaldivar.

In her complaint, Remegia alleged that she was the registered owner of a parcel of
land situated in the District of Lapasan in Cagayan de Oro City with an area of 444
square meters, covered by TCT No. T-8502. Sometime in 1974, Aurelio, allegedly
through fraud, was able to obtain TCT No. T-17993 covering the 243-sq-m portion of
Remegias lot as described in her TCT No. T-8502.
According to Remegia, the 243-sq-m portion (subject lot) was originally leased from
her by Pio Dalman, Aurelios father-in-law, for P5.00 a month, later increased to
P100.00 a month in 1960. She further alleged that she was going to mortgage the
subject lot to Ignacio Gil for P100.00, which, however, did not push through
because Gil took back the money without returning the receipt she had signed as
evidence of the supposed mortgage contract. Thereafter, in 1974, Aurelio filed with
the then Court of First Instance of Misamis Oriental a petition for partial cancellation
of TCT No. T-8502. It was allegedly made to appear therein that Aurelio and his
spouse Luz acquired the subject lot from Dalman who, in turn, purchased it from Gil.
The petition was granted and TCT No. T-17993 was issued in Aurelios name.
Remegia denied that she sold the subject lot either to Gil or Dalman. She likewise
impugned as falsified the joint affidavit of confirmation of sale that she and her
uncle, Narciso Labuntog, purportedly executed before a notary public, where
Remegia appears to have confirmed the sale of the subject property to Gil. She
alleged that she never parted with the certificate of title and that it was never lost.
As proof that the sale of the subject lot never transpired, Remegia pointed out that
the transaction was not annotated on TCT No. T-8502.
In their answer, the spouses Zaldivar denied the material allegations in the
complaint and raised the affirmative defense that Aurelio is the absolute owner and
possessor of the subject lot as evidenced by TCT No. 17993 and Tax Declaration No.
26864 covering the same. Aurelio claimed that he acquired the subject lot by
purchase from Dalman who, in turn, bought the same from Gil on April 4, 1951. Gil
allegedly purchased the subject lot from Remegia and this sale was allegedly
conformed and ratified by the latter and her uncle, Narciso Labuntog, before a
notary public on December 3, 1965.
After Aurelio obtained a loan from the Government Service Insurance System (GSIS),
the spouses Zaldivar constructed their house on the subject lot. They alleged that
they and their predecessors-in-interest had been occupying the said property since
1947 openly, publicly, adversely and continuously or for over 41 years already.
Aurelio filed a petition for the issuance of a new owners duplicate copy of TCT No. T-

8502 because when he asked Remegia about it, the latter claimed that it had been
lost.
After due trial, the RTC rendered judgment in favor of Remegia. It declared that TCT
No. 17993 in the name of Aurelio was null and void for having been obtained
through misrepresentation, fraud or evident bad faith by claiming in his affidavit
that Remegias title (TCT No. T-8502) had been lost, when in fact it still existed.
The court a quo explained that the court that orders a title reconstituted when the
original is still existing has not acquired jurisdiction over the case. A judgment
otherwise final may be annulled not only on extrinsic fraud but also for lack of
jurisdiction.[3] Aurelios use of a false affidavit of loss, according to the court a quo,
was similar to the use during trial of a forged document or perjured testimony that
prevented the adverse party, Remegia, from presenting her case fully and fairly.
The RTC likewise noted that no public instrument was presented in evidence
conveyancing or transferring title to the subject lot from Remegia to Dalman, the
alleged predecessor-in-interest of the spouses Zaldivar. The only evidence
presented by the said spouses was a joint affidavit of confirmation of sale
purportedly signed by Remegia and her uncle, the execution of which was denied by
the latters children. The certificate of title of the spouses Zaldivar over the subject
property was characterized as irregular because it was issued in a calculated move
to deprive Remegia of dominical rights over her own property. Further, the spouses
Zaldivar could not set up the defense of indefeasibility of Torrens title since this
defense does not extend to a transferor who takes the certificate of title with notice
of a flaw therein. Registration, thus, did not vest title in favor of the spouses;
neither could they rely on their adverse or continuous possession over the subject
lot for over 41 years, as this could not prevail over the title of the registered owner
pursuant to Sections 50[4] and 51[5] of Act No. 496, otherwise known as The Land
Registration Act.
The dispositive portion of the decision of the court a quo reads:
IN THE LIGHT OF THE FOREGOING, and by preponderance of evidence,
judgment is hereby rendered canceling TCT T-17993 and reconveyance of 243
square meters the title and possession of the same, by vacating and turning over
possession of the 243 square meters of the subject property to the plaintiff
[referring to Remegia] which is part of the land absolutely owned by the plaintiff
covered by [TCT] T-8502 and to solidarily pay the plaintiff Fifty Thousand Pesos
(P50,000.00) as moral damages; Ten Thousand Pesos (P10,000.00) as exemplary
damages; Fifty Thousand Pesos (P50,000.00) as attorneys fees and Ten Thousand
Pesos (P10,000.00) expenses for litigation to the plaintiff.
SO ORDERED.[6]

On appeal, the CA reversed the decision of the RTC and ruled in favor of the spouses
Zaldivar. In holding that Remegia sold to Gil a 243 sq m portion of the lot covered by
TCT No. T-8502, the appellate court gave credence to Exhibit 5, the deed of sale
presented by the spouses Zaldivar to prove the transaction. The CA likewise found
that Gil thereafter sold the subject property to Dalman who took actual possession
thereof. By way of a document denominated as joint affidavit of confirmation of sale
executed before notary public Francisco Velez on December 3, 1965, Remegia and
her uncle, Narciso Labuntog, confirmed the sale by Remegia of the subject lot to Gil
and its subsequent conveyance to Dalman. Per Exhibit 6, the CA likewise found
that Dalman had declared the subject lot for taxation purposes in his name. In 1965,
Dalman sold the same to the spouses Zaldivar who, in turn, had it registered in their
names for taxation purposes beginning 1974. Also in the same year, Aurelio filed
with the then CFI of Misamis Oriental a petition for the issuance of a new owners
duplicate copy of TCT No. T-8502, alleging that the owners duplicate copy was lost;
the CFI granted the petition on March 20, 1974. Shortly, Aurelio filed with the same
CFI another petition, this time for the partial cancellation of TCT No. T-8502 and for
the issuance of a new certificate of title in Aurelios name covering the subject lot.
The CFI issued an order granting the petition and, on the basis thereof, the Register
of Deeds of Cagayan de Oro City issued TCT No. T-17993 covering the subject lot in
Aurelios name.
Based on the foregoing factual findings, the appellate court upheld the spouses
Zaldivars ownership of the subject lot. The CA stated that Remegias claim that she
did not sell the same to Gil was belied by Exhibit 5, a deed which showed that she
transferred ownership thereof in favor of Gil. The fact that the said transaction was
not annotated on Remegias title was not given significance by the CA since the lack
of annotation would merely affect the rights of persons who are not parties to the
said contract. The CA also held that the joint affidavit of confirmation of sale
executed by Remegia and Narciso Labuntog before a notary public was a valid
instrument, and carried the evidentiary weight conferred upon it with respect to its
due execution.[7] Moreover, the CA found that the notary public (Atty. Francisco
Velez) who notarized the said document testified not only to its due execution and
authenticity but also to the truthfulness of its contents. The contradiction between
the testimonies of the children of Narciso Labuntog and the notary public (Atty.
Velez), according to the CA, casts doubt on the credibility of the former as it was
ostensible that their version of the story was concocted.[8]
The CA further accorded in favor of the judge who issued the order for the issuance
of the new owners duplicate copy of TCT No. T-8502 the presumption of regularity
in the performance of his official duty. It noted that the same was issued by the CFI
after due notice and hearing.

Moreover, prescription and laches or estoppel had already set in against Remegia.
The appellate court pointed out that TCT No. T-17993 in the name of Aurelio was
issued on September 10, 1974, while Remegias complaint for annulment and
reconveyance of property was filed more than 17 years thereafter or on August 10,
1992. Consequently, Remegias action was barred by prescription because an action
for reconveyance must be filed within 10 years from the issuance of the title since
such issuance operates as a constructive notice.[9] The CA also noted that the
spouses Zaldivar constructed their house on the subject lot some time in 19741975, including a 12-foot firewall made of hollow blocks, and Remegia took no
action to prevent the said construction.
The dispositive portion of the assailed CA decision reads:
WHEREFORE, foregoing premises considered, the December 3, 1999 Decision of
the Regional Trial Court of Misamis Oriental, Cagayan de Oro City, in Civil Case No.
92-423, is REVERSED and SET ASIDE and a new one is entered DISMISSING the said
civil case.
SO ORDERED.[10]
When their motion for reconsideration was denied by the CA in the assailed
Resolution dated February 4, 2004, the heirs of Remegia (the petitioners) sought
recourse to the Court. In their petition for review, they allege that the appellate
court gravely erred
A.
IN NOT DISMISSING THE APPEAL OF THE RESPONDENTS (DEFENDANTSAPELLANTS) MOTU PROPIO OR EXPUNGING THE BRIEF FOR DEFENDANTSAPPELLANTS FROM RECORD FOR FAILURE TO FILE THE REQUIRED BRIEF FOR THE
DEFENDANTS-APPELLANTS ON TIME BUT BEYOND THE LAST AND FINAL EXTENDED
PERIOD WITHIN WHICH TO FILE THE SAID BRIEF IN VIOLATION TO SECTION 7 AND
SECTION 12, RULE 44 OF THE REVISED RULES OF COURT AND IN CONTRADICTION
TO THE RULING ENUNCIATED IN CATALINA ROXAS, ET AL. VS. COURT OF APPEALS,
G.R. NO. L-76549, DECEMBER 10, 1987.
B.
IN DENYING THE MOTION FOR RECONSIDERATION WHICH WAS FILED WITHIN
THE FIFTEEN-DAY REGLEMENTARY PERIOD IN VIOLATION TO THE RULES OF COURT.
C.

IN RULING THAT THE COURT WHO ORDERED THE ISSUANCE OF NEW

CERTIFICATE OF TITLE DESPITE EXISTENCE OF OWNERS DUPLICATE COPY THAT WAS
NEVER LOST HAS JURISDICTION OVER THE CASE.
D.
IN CONCLUDING THAT PETITIONERS (PLAINTIFF-APPELLEE) CLAIM OF
OWNERSHIP OVER THE SUBJECT LOT WAS BARRED BY ESTOPPEL OR LACHES.
E.
IN CONCLUDING THAT THE RESPONDENTS (DEFENDANTS-APPELLANTS) ARE
THE ABSOLUTE OWNERS OF THE SUBJECT LOT BASED ON TCT NO. 17993 ISSUED TO
THEM.
F.
IN OBVIATING ESSENTIAL AND RELEVANT FACTS, HAD IT BEEN PROPERLY
APPRECIATED, WOULD MAINTAIN ABSOLUTE OWNERSHIP OF PETITIONER (PLAINTIFFAPPELLEE) OVER THE SUBJECT LOT AS EVIDENCED BY EXISTING TCT NO. T-8502.[11]

The Court finds the petition meritorious.

It should be recalled that respondent Aurelio Zaldivar filed with the then CFI of
Misamis Oriental a petition for issuance of a new owners duplicate copy of TCT
No.T-8502, alleging that the owners duplicate copy was lost. In the Order dated
March 20, 1974, the said CFI granted the petition and consequently, a new owners
duplicate copy of TCT No. T-8502 was issued.
However, as the trial court correctly held, the CFI which granted respondent
Aurelios petition for the issuance of a new owners duplicate copy of TCT No. T-8502
did not acquire jurisdiction to issue such order. It has been consistently ruled that
when the owners duplicate certificate of title has not been lost, but is in fact in the
possession of another person, then the reconstituted certificate is void, because the
court that rendered the decision had no jurisdiction. Reconstitution can validly be
made only in case of loss of the original certificate.[12] In such a case, the
decision authorizing the issuance of a new owners duplicate certificate of title may
be attacked any time.[13]
The new owners duplicate TCT No. T-8502 issued by the CFI upon the petition filed
by respondent Aurelio is thus void. As Remegia averred during her testimony, the
owners duplicate copy of TCT No. T-8502 was never lost and was in her possession
from the time it was issued to her:

Q
A while ago, you said that you were issued a title in 1968, can you tell the
Honorable Court who was in possession of the title?
A
I am the one in possession and I am the one keeping the title.
Q
A

Even up to the present?

Yes, Sir.

Q
A

Was there any instance that this title was borrowed from you?
No, Sir.

Q
A

Was there any instance that this title was lost from your possession?
No, Sir.

Q
Was there any instance that this title was surrendered to the Register of
Deeds of the City of Cagayan de Oro?
A
No, Sir. There never was an instance There never was an instance that this
title was surrendered to the Register of Deeds.
Q
As there any instance that you petitioned to the Honorable Court for the
issuance of a new owners duplicate copy of this title in lieu of the lost copy of said
title?
A
No, Sir. There was never an instance because this title was never lost.[14]

Consequently, the court a quo correctly nullified TCT No. T-17993 in Aurelios name,
emanating as it did from the new owners duplicate TCT No. T-8502, which Aurelio
procured through fraud. Respondent Aurelio cannot raise the defense of
indefeasibility of title because the principle of indefeasibility of a Torrens title does
not apply where fraud attended the issuance of the title. The Torrens title does not
furnish a shield for fraud.[15] As such, a title issued based on void documents may
be annulled.[16]
The appellate courts reliance on the joint affidavit of confirmation of sale
purportedly executed by Remegia and her uncle, Narciso Labuntog, is not proper. In
the first place, respondent Aurelio cannot rely on the joint
affidavit of confirmation of sale to prove that they had validly acquired the subject
lot because, by itself, an affidavit is not a mode of acquiring ownership.[17]
Moreover, the affidavit is written entirely in English in this wise:
JOINT AFFIDAVIT OF CONFIRMATION OF SALE[18]
We, NARCISO LABUNTOG and REMEGIA YAPE DE FELICIANO, both of legal
age, Filipino citizens and residents of Lapasan, Cagayan de Oro City, Philippines,
after being duly sworn according to law, depose and say:

1. That the late FRANCISCO LABUNTOG is our common ancestor, the

undersigned NARCISO LABUNTOG being one of his sons and the undersigned
REMEGIA YAPE DE FELICIANO being the daughter of the late Emiliana Labuntog,
sister of Narciso Labuntog;
2. That after his death, the late Francisco Labuntog left behind a parcel of
land known as Lot No. 2166 C-2 of the Cagayan Cadastre situated at Lapasan, City
of Cagayan de Oro, Philippines which is being administered by the undersigned
Narciso Labuntog under Tax Decl. No. 27633;
3. That the entire Cadastral Lot No. 2166 C-2 has been subdivided and
apportioned among the heirs of the late Francisco Labuntog, both of the
undersigned affiants having participated and shared in the said property, Remegia
Yape de Feliciano having inherited the share of her mother Emiliana Labuntog, sister
of Narciso Labuntog;
4. That on April 4, 1951, Remegia Yape de Feliciano sold a portion of her
share to one Ignacio Gil and which portion is more particularly described and
bounded as follows:
On the North for 13 meters by Agustin Cabaraban;
On the South for 13 meters by Antonio Babanga;
On the East for 18 meters by Clotilde Yape; and
On the West for 18meters by Agustin Cabaraban;
5. That sometime in the year 1960, the said Ignacio Gil conveyed the same
portion to Pio Dalman, who is of legal age, Filipino citizen and likewise a resident of
Lapasan, Cagayan de Oro City and that since 1960 up to the present, the said Pio
Dalman has been in continuous, open, adverse and exclusive possession of the
property acquired by him in concept of owner;
6. That we hereby affirm, ratify and confirm the acquisition of the above
described portion acquired by Pio Dalman inasmuch as the same is being used by
him as his residence and family home and we hereby request the Office of the City
Assessor to segregate this portion from our Tax Decl. No. 27633 and that a new tax
declaration be issued in the name of PIO DALMAN embracing the area acquired and
occupied by him.
IN WITNESS WHEREOF, we have hereunto affixed our signatures on this 3rd
day of December, 1965 at Cagayan de Oro City, Philippines.
(SGD.) Narciso Labuntog
(SGD.)Remegia Yape de Feliciano
NARCISO LABUNTOG
REMEGIA YAPE DE FELICIANO

Affiant

Affiant

SUBSCRIBED & SWORN to before me this 3rd day of December, 1965 at

Cagayan de Oro City, Philippines, affiants exhibited their Residence Certificates as
follows: NARCISO LABUNTOG, A-1330509 dated Oct. 5, 1965 and REMEGIA YAPE DE
FELICIANO, A-1811104 dated Dec. 3, 1965 both issued at Cagayan de Oro City.
(SGD.) ILLEGIBLE
FRANCISCO X. VELEZ
Notary Public
However, based on Remegias testimony, she could not read and understand
English:
COURT:
Can you read English?
A

No, I cannot read and understand English.

ATTY. LEGASPI:
Q
What is your highest educational attainment?
A
Grade 3.
Q
But you can read and understand Visayan?
A
Yes, I can read Visayan, but I cannot understand well idiomatic visayan terms
(laglom nga visayan).[19]
On this point, Article 1332 of the Civil Code is relevant:
ART.1332. When one of the parties is unable to read, or if the contract is in a
language not understood by him, and mistake or fraud is alleged, the person
enforcing the contract must show that the terms thereof have been fully explained
to the former.

The principle that a party is presumed to know the import of a document to which
he affixes his signature is modified by the foregoing article. Where a party is unable
to read or when the contract is in a language not understood by the party and
mistake or fraud is alleged, the obligation to show that the terms of the contract
had been fully explained to said party who is unable to read or understand the
language of the contract devolves on the party seeking to enforce the contract to
show that the other party fully understood the contents of the document. If he fails
to discharge this burden, the presumption of mistake, if not, fraud, stands
unrebutted and controlling.[20]

Applying the foregoing principles, the presumption is that Remegia, considering her
limited educational attainment, did not understand the full import of the joint
affidavit of confirmation of sale and, consequently, fraud or mistake attended its
execution. The burden is on respondents, the spouses Zaldivar, to rebut this
presumption. They tried to discharge this onus by presenting Atty. Francisco Velez
(later RTC Judge) who notarized the said document. Atty. Velez testified that he
read and interpreted the document to the affiants and he asked them whether the
contents were correct before requiring them to affix their signatures thereon.[21]
The bare statement of Atty. Velez that he read and interpreted the document to
the affiants and that he asked them as to the correctness of its contents does not
necessarily establish that Remegia actually comprehended or understood the
import of the joint affidavit of confirmation of sale. Nowhere is it stated in the
affidavit itself that its contents were fully explained to Remegia in the language that
she understood before she signed the same. Thus, to the mind of the Court, the
presumption of fraud or mistake attending the execution of the joint affidavit of
confirmation of sale was not sufficiently overcome.
Moreover, the purported joint affidavit of confirmation of sale failed to state certain
important information. For example, it did not mention the
consideration or price for the alleged sale by Remegia of the subject lot to Ignacio
Gil. Also, while it stated that the subject lot was conveyed by Ignacio Gil to Pio
Dalman, it did not say whether the conveyance was by sale, donation or any other
mode of transfer. Finally, it did not also state how the ownership of the subject lot
was transferred from Pio Dalman to respondent Aurelio or respondents.
Respondents claim that they had been occupying the subject lot since 1947 openly,
publicly, adversely and continuously or for over 41 years is unavailing. In a long line
of cases,[22] the Court has consistently ruled that lands covered by a title cannot
be acquired by prescription or adverse possession. A claim of acquisitive
prescription is baseless when the land involved is a registered land following Article
1126[23] of the Civil Code in relation to Section 46 of Act No. 496 or the Land
Registration Act (now Section 47[24] of P.D. No 1529):
Appellants claim of acquisitive prescription is likewise baseless. Under Article
1126 of the Civil Code, prescription of ownership of lands registered under the Land
Registration Act shall be governed by special laws. Correlatively, Act No. 496
provides that no title to registered land in derogation of that of the registered owner
shall be acquired by adverse possession. Consequently, proof of possession by the
defendants is both immaterial and inconsequential.[25]
Neither can the respondents spouses Zaldivar rely on the principle of indefeasibility
of TCT No. 17793 which was issued on September 10, 1974 in favor of respondent

Aurelio. As it is, the subject lot is covered by two different titles: TCT No. T-8502 in
Remegias name covering an area of 444 sq m including therein the subject lot, and
TCT No. 17793 in the name of respondent Aurelio covering the subject lot. Aurelios
title over the subject lot has not become indefeasible, by virtue of the fact that TCT
No. T-8502 in the name of Remegia has remained valid. The following disquisition is
apropos:
The claim of indefeasibility of the petitioners title under the Torrens land title
system would be correct if previous valid title to the same parcel of land did not
exist. The respondent had a valid title x x x It never parted with it; it never handed
or delivered to anyone its owners duplicate of the transfer certificate of title; it
could not be charged with negligence in the keeping of its duplicate certificate of
title or with any act which could have brought about the issuance of another
certificate upon which a purchaser in good faith and for value could rely. If the
petitioners contention as to indefeasibility of his title should be upheld, then
registered owners without the least fault on their part could be divested of their title
and deprived of their property. Such disastrous results which would shake and
destroy the stability of land titles had not been foreseen by those who had endowed
with indefeasibility land titles issued under the Torrens system.[26]
Remegias TCT No. T-8502, thus, prevails over respondent Aurelios TCT No. 17793,
especially considering that, as earlier opined, the latter was correctly nullified by
the RTC as it emanated from the new owners duplicate TCT No. T-8502, which in
turn, respondent Aurelio was able to procure through fraudulent means.
Contrary to the appellate courts holding, laches has not set in against Remegia.
She merely tolerated the occupation by the respondents of the subject lot:
Q
You also stated in the direct that the defendants in this case, Mr. and Mrs.
Zaldivar, were issued a title over a portion of this land which you described a while
ago?
A
We knew about that only recently.
Q
When was that when you knew that the defendants were issued title over a
portion of the land you described a while ago?
A
In June, 1992.
Q
In what way did you discover that a portion of the land was titled in the
name of the defendants?
A
I discovered that my property was titled by Mr. and Mrs. Zaldivar when I went
to the Register of Deeds for the purpose of partitioning my property among my
children.
Q
And you were surprised why it is titled in their names?
A
Yes.

Q
Is it not a fact that the defendants have constructed their house on a portion
of the land you described a while ago?
A
Yes. I knew that the Zaldivars built a house on the property I described a
while ago, but I did not bother because I know that I can get that property because I
own that property.
Q
A

And the defendants constructed that house in 1974-75, am I correct?

Yes.

Q
And as a matter of fact, you have also a house very near to the house that
was constructed by the defendants in this case?
A
Yes.
Q
Can you tell us what is the distance between your house and the house
constructed by the defendants in 1974?
A
They are very near because they constructed their house in my lot.
Q
A

How many meters, more or less?

It is very near, very close.

Q
When they constructed their house, meaning the defendants, did you not
stop the defendants from the construction?
A
I did not bother in stopping the Zaldivars in constructing the house because I
am certain that I can get the land because I own the land.
Q
to the
A
police

Aside from not protesting to the construction, did you not bring this matter
attention of the barangay captain or to the police authorities?
No, because I did not bring this matter to the barangay captain nor to the
authorities. It is only now that we discovered that it is already titled.

Q
A

When you said now, it is in 1992?

Yes.

Q
Is it not a fact that after the house was finished the defendants and their
family resided in that house which they constructed?
A
Yes, after the house was finished, they resided in that house.
Q
As a matter of fact, from that time on up to the present, the defendants are
still residing in that house which they constructed in 1974 or 1975, am I correct?
A
Yes.
Q
As a matter of fact also the defendants fenced the lot in which their house
was constructed with hollow blocks, am I correct?

A
Yes, the house of the Zaldivars was fenced by them with hollow blocks and I
did not stop them to avoid trouble.
Q
As a matter of fact, the boundary between your house and the house of
Zaldivar, there was constructed a firewall made of hollow blocks about twelve feet
in height, am I correct?
A
Yes.
Q
Such that you cannot see their house and also the Zaldivars cannot see your
house because of that high firewall, am I correct?
A
We can still see each other because the firewall serves as the wall of their
house.
Q
When did the Zaldivars construct that hollow blocks fence? After the house
was finished?
A
I cannot remember.
Q

But it could be long time ago?

ATTY. VEDAD:
Q
That would be repetitious. She answered she could not remember.
ATTY. LEGASPI:
Q
It could be many years ago?
A
I cannot remember when they constructed the fence.
Q
Did you [file] any protest or complaint when the Zaldivars constructed the
hollow blocks fence?
A
No.
Q
Neither did you bring any action in court or with the barangay captain or the
police authorities when the Zaldivars constructed that hollow blocks fence?
A
No, I did not complain the fencing by the Zaldivars. Only now that we know
that we bring this matter to the barangay captain.
Q
And in the [office of the] barangay captain, you were able to meet the
defendants, am I correct?
A
No. When we went to the barangay captain, the Zaldivars did not appear
there; therefore, we hired a lawyer and filed this case.[27]

Case law teaches that if the claimants possession of the land is merely tolerated by
its lawful owner, the latters right to recover possession is never barred by laches:

As registered owners of the lots in question, the private respondents have a

right to eject any person illegally occupying their property. This right is
imprescriptible. Even if it be supposed that they were aware of the petitioners
occupation of the property, and regardless of the length of that possession, the
lawful owners have a right to demand the return of their property at any time as
long as the possession was unauthorized or merely tolerated, if at all. This right is
never barred by laches.[28]

Nonetheless, the Court is not unmindful of the fact that respondents had built their
house on the subject lot and, despite knowledge thereof, Remegia did not lift a
finger to prevent it. Article 453 of the Civil Code is applicable to their case:

ART. 453. If there was bad faith, not only on the part of the person who built,
planted or sowed on the land of another, but also on the part of the owner of such
land, the rights of one and the other shall be the same as though both had acted in
good faith.
It is understood that there is bad faith on the part of the landowner whenever
the act was done with his knowledge and without opposition on his part.
Under the circumstances, respondents and Remegia are in mutual bad faith
and, as such, would entitle the former to the application of Article 448 of the Civil
Code governing builders in good faith:
ART. 448. The owner of the land on which anything has been built, sown or
planted in good faith, shall have the right to appropriate as his own the works,
sowing or planting, after payment of the indemnity provided for in Articles 546[29]
and 548,[30] or to oblige the one who built or planted to pay the price of the land,
and the one who sowed, the proper rent. However, the builder or planter cannot be
obliged to buy the land if its value is considerably more than that of the building or
trees. In such a case, he shall pay reasonable rent, if the owner of the land does not
choose to appropriate the building or trees after the proper indemnity. The parties
shall agree upon the terms of the lease and in case of disagreement, the court shall
fix the terms thereof.
Following the above provision, the owner of the land on which anything has been
built, sown or planted in good faith shall have the right to appropriate as his own
the building, planting or sowing, after payment to the builder, planter or sower of
the necessary and useful expenses, and in the proper case, expenses for pure
luxury or mere pleasure.[31]

The owner of the land may also oblige the builder, planter or sower to purchase and
pay the price of the land. If the owner chooses to sell his land, the builder, planter
or sower must purchase the land, otherwise the owner may remove the
improvements thereon. The builder, planter, or sower, however, is not obliged to
purchase the land if its value is considerably more than the building, planting or
sowing. In such case, the builder, planter or sower must pay rent to the owner of
the land. If the parties cannot come to terms over the conditions of the lease, the
court must fix the terms thereof. [32]
The right to choose between appropriating the improvement or selling the land on
which the improvement of the builder, planter or sower stands, is given to the
owner of the land,[33] Remegia, in this case, who is now substituted by petitioners
as her heirs.
Consequently, the petitioners are obliged to exercise either of the following options:
(1) to appropriate the improvements, including the house, built by the respondents
on the subject lot by paying the indemnity required by law, or (2) sell the subject lot
to the respondents. Petitioners cannot refuse to exercise either option and compel
respondents to remove their house from the land.[34] In case petitioners choose to
exercise the second option, respondents are not obliged to purchase the subject lot
if its value is considerably more than the improvements thereon and in which case,
respondents must pay rent to petitioners. If they are unable to agree on the terms
of the lease, the court shall fix the terms thereof.
In light of the foregoing disquisition, the Court finds it unnecessary to resolve the
procedural issues raised by petitioners.
WHEREFORE, the petition is GRANTED. The Decision dated July 31, 2003 and
Resolution dated February 4, 2004 of the Court of Appeals in CA-G.R. CV No. 66511
are REVERSED and SET ASIDE. The Decision
dated December 3, 1999 of the Regional Trial Court of Cagayan de Oro City, Branch
25 in Civil Case No. 92-423 is REINSTATED with the MODIFICATION that petitioners
are likewise ordered to exercise the option under Article 448 of the Civil Code.
SO ORDERED.
d. Reconstruction of Lost or Destroyed original torrens title (Sec.
110)
[G.R. No. 162097, February 13, 2008]
LOURDES A. PASCUA, Petitioner, vs. REPUBLIC OF THE PHILIPPINES,
Respondent.

DECISION
decisions.php?doctype=Decisions / Signed Resolutions&docid=
The instant petition for review under Rule 45 seeks the reversal of the July 22, 2003
Decision[1] and February 10, 2004 Resolution[2] of the Court of Appeals (CA) in CAG.R. CV No. 74050, affirming the trial courts denial of petitioners action for
reconstitution of title covering Lot No. 3209 of the Pagsanjan, Laguna Cadastre in
her name.
The Facts
Petitioner claimed that she is the owner in fee simple of Lot No. 3209, Pagsanjan,
Laguna Cadastre, having inherited it from her parents, Guillermo Abinsay and
Leoncia Rivera. She and her predecessors-in-interest had allegedly been in open,
public, continuous, and peaceful possession of the disputed lot since it was bought
from Serafin Limuaco in 1956. On December 4, 1930, the cadastral court awarded
the lot to Limuaco, who sold the lot to petitioners parents on December 24, 1956,
as evidenced by a Deed of Absolute Sale.[3]
Due to the ravages of World War II, however, the owners duplicate certificate of the
Torrens title covering Lot No. 3209, its original copy on file with the Laguna Register
of Deeds (RD), and other pertinent papers were lost and/or destroyed, and diligent
efforts to find them were futile. Thus, on December 8, 1999, petitioner filed a
petition for judicial reconstitution of the original certificate of title (OCT) covering
Lot No. 3209 with the Sta. Cruz, Laguna, Regional Trial Court (RTC), Branch 27. She
alleged that there were no deeds or instruments covering the disputed lot that were
presented or pending registration with the RD, and that no co-owners, mortgagees,
or lessees duplicate of the OCT was issued by the RD.
After complying with the jurisdictional requirements, petitioner was allowed to
present evidence ex-parte. She testified that her parents bought a piece of land
from Limuaco and that after her parents death, her siblings partitioned the land
and Lot No. 3209 was allocated to her. She learned from the Land Registration
Authority (LRA) that Decree No. 412846 was issued in the cadastral case in 1930,
but the records, including those in the Laguna RD, were destroyed during the war.
She said the lot was declared for tax purposes in her name and she had been
paying taxes due on the lot, as evidenced by the Tax Clearance dated March 2,
2000. She stated that the adjoining lot owners were Olivar Pening on the north,
Hernan Zaide on the east; and that there is a stream on the south and west.
Petitioner submitted in evidence the tracing cloth plan and technical description of
Lot No. 3209.

The RTC denied the petition for reconstitution for insufficiency of evidence in its
October 30, 2000 Order, ruling as follows:
The certification issued by Acting Chief Alberto H. Lingayo of the Ordinary and
Cadastral Decree Division (Exh. F) and another certification of the Chief of the
Docket Division of the Land Registration Authority (Exh. G) speak of Decree No.
412846 issued on December 4, 1930 covering Lot No. 3209. On the other hand, Tax
Declaration No. 5471 in the name of spouses Guillermo Abinsay and Leoncia Rivera
(Exh. I) did not indicate any certificate of title number, cadastral lot number or
even an assessors lot number while Tax Declaration No. 1376 (Exh. J) only
indicated Assessors Lot No. 19-pt. Petitioner failed to establish that Assessors Lot
No. 19-pt and Lot No. 3209 are one and the same.
Assuming that Assessors Lot No. 19-pt refers to Lot No. 3209, still, the petition
could not be granted because there is no showing that an original certificate of title
was actually issued pursuant to Decree No. 412846. The certifications issued by the
Land Registration Authority dated October 26, 1999 and September 23, 1998 and
the Report of the same office dated May 5, 2000 are bereft of any allusion to the
issuance of a title. The documents presented in evidence by petitioner not only
failed to prove the issuance of an original certificate of title but also the name of the
adjudicatee.[4]
On appeal to the CA, petitioner argued that Assessors Lot No. 19-pt and Lot No.
3209 are the same; that she is the adjudicatee of the disputed lot; and that an OCT
was issued in accordance with Decree No. 412846. For respondent Republic of the
Philippines, the Solicitor General contended that what petitioners predecessors-ininterest bought from Limuaco was Assesors Lot No. 19-pt, which was neither
designated nor mentioned as Lot No. 3209. Also, the Solicitor General said the
property described in the documents presented is still unregistered land of the
public domain and there is no evidence that an OCT was actually issued to Lot No.
3209. The Solicitor General added that the trial court did not acquire jurisdiction
over the petition since petitioner failed to submit proof of notices to all adjoining lot
owners.
The July 22, 2003 Decision of the CA affirmed the trial courts order in toto. The CA
held that petitioner failed to present the documents enumerated in Section 2,
Republic Act No. (RA) 26 entitled An Act Providing a Special Procedure for the
Reconstitution of Torrens Certificate of Title Lost or Destroyed, as amended by RA
6732, or any other document that could be a sufficient basis for reconstituting title.
Petitioners motion for reconsideration was denied by the CA in its February 10,
2004 Resolution.
The Issues
Thus, petitioner elevated the matter to us, interposing that:

I
The CA erred in holding that petitioner failed to present any of the documents
enumerated in Sec. 2 of RA 26.
II
The CA erred in holding that the certification of the LRA that Decree No. 412846 was
issued over Lot 3209 cannot qualify as a proper document for reconstituting the lost
or destroyed titled because Lot 3209 is different from Lot 19-pt.
III
The CA erred in holding that the lot sold by Serafin Limuaco to the Sps. Abinsay and
Rivera is not Lot 3209 but Lot 19-pt which are different from each other.
IV
The CA erred in holding that statements in the Deed of Sale and Deed of Co-owners
Partition that the land is not registered under Act 496 are fatal to the instant
Petition.[5]
The Courts Ruling
The petition lacks merit.
Sec. 2 of RA 26 provides:
SEC. 2. Original certificates of title shall be reconstituted from such of the sources
hereunder enumerated as may be available in the following order:
(a) The owners duplicate of the certificate of title;
(b) The co-owners, mortgagees, or lessees duplicate of the certificate of title;
(c) A certified copy of the certificate of title, previously issued by the register of
deeds or by a legal custodian thereof;
(d) An authenticated copy of the decree of registration or patent, as the case may
be pursuant to which the original certificate of title was issued;
(e) A document, on file in the Registry of Deeds by which the property, the
description of which is given in said document, is mortgaged, leased or
encumbered, or an authenticated copy of said document showing that its original
has been registered; and

(f) Any other document which, in the judgment of the court, is sufficient and proper
basis for reconstituting the lost or destroyed certificate of title.
Petitioner asserts that under Sec. 2(f) of RA 26, other documents may be considered
by the court as sufficient bases for the reconstitution of a lost or destroyed
certificate of title. The pertinent documents she presented before the trial court are
as follows:
(1)
List of lot descriptions from the Bureau of Lands which show that Limuaco is a
claimant of Lot No. 3209 covered by Survey No. Cad. 69, Case No. 5 Pagsanjan,
Laguna, which is 10,673 sq. m. in area (Exhibit O);
(2)
Certification of the LRA dated October 26, 1999, stating that based on the Record of
Book of Decrees kept at the Vault Section, Docket Division of said office, the copy of
Decree No. 412846 issued on December 4, 1930 covering Lot No. 3209 of the
Cadastral Survey of Pagsanjan, Laguna under Cadastral Case No. 14, LRC Cadastral
Record No. 211 was not among the salvaged decrees on file with said office and that
the said copy is presumed lost or destroyed during World War II (Exhibit F);
(3)
Certification from the LRA dated September 23, 1998 that its Record of Book of
Cadastral Lots shows that Lot No. 3209 of Pagsanjan Cadastre was issued Decree
No. 412846 (Exhibit G);
(4)
Deed of Absolute Sale dated December 24, 1956, showing that Limuaco sold to
petitioners parents a parcel of land in Anibong, Pagsanjan, Laguna which consists of
10,673 sq. m. covered by Tax Declaration No. 156 (Exhibit E);
(5)
Tax Declaration No. 5471 in the name of petitioners parents which canceled Tax
Declaration No. 156 covering a property bounded by the lot of Timoteo Abaya on
the north, a stream on the south and west, a callejon in the east (Exhibit J); and
(6)
Deed of Co-owners Partition dated February 5, 1968 which shows that petitioner
and her siblings divided their inheritance after the death of their parents, and that
petitioner obtained Lot No. 19-pt covered by Tax Declaration No. 1376 situated in
Anibong, Pagsanjan, Laguna consisting of 10,673 sq. m., bounded by Lot No. 15 pt.
of Marcelo Aquino on the north, a stream on the south and west, and a callejon in
the east (Exhibit D).[6]
As held in Republic v. Intermediate Appellate Court,[7] when RA 26, Section 2(f)
speaks of any other document, the reference is to similar documents previously
enumerated in the section or documents ejusdem generis as the documents earlier
referred to.

The Deed of Co-owners Partition states that the subject of the instrument is Lot No.
19-pt. The Deed of Absolute Sale between Limuaco and petitioners parents, on the
other hand, states that the land was not registered under Act No. 496. Petitioner
nevertheless insists that Lot No. 3209 is the subject of a decree of registration
according to the records of the LRA, and that between Limuacos statement and the
certification from the LRA, the latter must prevail.
We are not convinced. RA 26 presupposes that the property whose title is sought to
be reconstituted has already been brought under the provisions of the Torrens
System, Act No. 496.[8] Petitioners evidence itself, the Deed of Sale between
Limuaco and her parents, stated that the lot was not registered under Act No. 496
and that the parties agreed to register it under Act No. 3344. Even the Deed of Coowners Partition stated that the subject lot, Lot No. 19-pt, is not registered. The
other piece of evidence, the certifications from the LRA, merely stated that Decree
No. 412846 covering Lot No. 3209 was issued on December 4, 1930, but the copy of
said decree is not among the salvaged decrees on file with said office. The said copy
is presumed lost or destroyed during World War II. The LRA neither stated that a
certificate of title was actually issued nor mentioned the number of the OCT. It
cannot be determined from any of the evidence submitted by petitioner that the
adjudicatee of the purported decree was Limuaco.
In Republic v. El Gobierno de las Islas Filipinas, this Court denied the petition for
reconstitution of title despite the existence of a decree:
We also find insufficient the index of decree showing that Decree No. 365835 was
issued for Lot No. 1499, as a basis for reconstitution. We noticed that the name of
the applicant as well as the date of the issuance of such decree was illegible. While
Decree No. 365835 existed in the Record Book of Cadastral Lots in the Land
Registration Authority as stated in the Report submitted by it, however, the same
report did not state the number of the original certificate of title, which is not
sufficient evidence in support of the petition for reconstitution. The deed of
extrajudicial declaration of heirs with sale executed by Aguinaldo and Restituto
Tumulak Perez and respondent on February 12, 1979 did not also mention the
number of the original certificate of title but only Tax Declaration No. 00393. As we
held in Tahanan Development Corp. vs. Court of Appeals, the absence of any
document, private or official, mentioning the number of the certificate of title and
the date when the certificate of title was issued, does not warrant the granting of
such petition.[9]
Petitioner argues that since it is incumbent upon the Commissioner of Land
Registration to issue a certificate of title pursuant to a court decree, it can be
presumed that a certificate of title over Lot No. 3209 was indeed issued when the
cadastral court ordered it so on December 4, 1930. Petitioner relied on Rule 131,
Sec. 3 of the Rules of Court which states the presumption that official duty has been
regularly performed. This presumption, however, is merely disputable. In this case,
the LRA certified that (1) a decree covering Lot No. 3209 was issued, but (2) a copy

of the said decree cannot be found on the records. If in fact a certificate of title was
issued, a title number could have been mentioned by the LRA. Since the LRA itself
made no reference to any certificate of title, the conclusion is that none was issued.
More importantly, Limuaco himself stated in the Deed of Absolute Sale that the
property he was selling was not registered. Petitioners evidence, no less, disproves
the presumption she relies upon.
What further militates against petitioners arguments is the fact that the Deed of
Absolute Sale, Deed of Co-owners Partition, and Tax Declaration Nos. 5471 and 9919-003-00022 mention Lot No. 19-pt and not Lot No. 3209, which was sold by
Limuaco to her parents. Lot No. 3209 only appears on the Tracing Cloth Plan and
the Technical Description. There is no document that refers or designates Lot No.
19-pt as Lot No. 3209.
Petitioner points out, however, that both Lot No. 19-pt and Lot No. 3209 have the
area of 10,673 sq. m., bounded by a callejon and a stream, and located in Anibong,
Pagsanjan, Laguna. Moreover, the Lot Description (Exhibit O) and Lot Data (Exhibit
P) show that the technical description of Lot No. 19-pt fits the technical
description of Lot No. 3209. She also asserts that Lot No. 19-pt, which was
mentioned in Tax Declaration No. 99-19-003-00022 issued in her name, was the
Assessors Lot Number and not the Cadastral Lot Number.[10] The Solicitor General
points out, however, that Tax Declaration No. 5471 in the name of petitioners
parents did not indicate any certificate of title number or cadastral or assessors lot
number. This creates serious doubt as to the exact identity of the two lots.
Assuming that Lot Nos. 19-pt and 3209 are the same, we are still constrained to
deny the reconstitution of title mainly because there is no proof that a certificate of
title was originally issued to both lots. The Solicitor General notes that both lots are
still unregistered land of the public domain; thus, no certificate covering such
property can be issued under the instant proceeding.
In sum, we are not persuaded that petitioners pieces of evidence warrant the
reconstitution of title since she failed to prove the existence of the title in the first
place. The purpose of reconstitution of title is to have the original title reproduced in
the same form it was when it was lost or destroyed.[11] In this case, there is no title
to be re-issued. The appellate and trial courts were correct in denying Pascuas
petition. We emphasize that courts must be cautious in granting reconstitution of
lost or destroyed certificates of titles. It is the duty of the trial court to scrutinize and
verify carefully all supporting documents, deeds, and certifications. Each and every
fact, circumstance, or incident which corroborates or relates to the existence and
loss of the title should be examined.[12]

WHEREFORE, the CAs July 22, 2003 Decision and February 10, 2004 Resolution in
CA-G.R. CV No. 74050, affirming the October 30, 2000 Order of the Sta. Cruz,
Laguna RTC, Branch 27, are AFFIRMED IN TOTO. Costs against petitioner.
SO ORDERED.
G.R. No. 171774
REPUBLIC OF THE PHILIPPINES,
Petitioner
,
- versus
APOLINARIO CATARROJA,
REYNALDO CATARROJA, and
ROSITA CATARROJA-DISTRITO,
Respondents.

February 12, 2010

DECISION
ABAD, J.:

This is about a petition for reconstitution of a lost original certificate of title in which
the respondents have been unable to present evidence that such title had in fact
been issued by an appropriate land registration court.
The Facts and the Case
Respondents Apolinario Catarroja, Reynaldo Catarroja, and Rosita Catarroja-Distrito
(the Catarrojas) filed a petition for reconstitution of lost original certificate of title
covering two lots in Zapang, Ternate, Cavite, one with an area of 269,695 square
meters and the other with an area of 546,239 square meters.[1] The Catarrojas
alleged that they inherited these lands from their parents, Fermin and Sancha
Catarroja, who reportedly applied for their registration with the Court of First
Instance of Cavite sometime before the last world war.[2]
The Land Registration Authority (LRA) issued a certification on August 3, 1998[3]
and a report on February 4, 2002,[4] confirming that the land registration court
issued Decree 749932 on May 21, 1941 covering the subject lots. A copy of this
decree was, however, no longer available in the records of the LRA. The LRA report
verified as correct the plans and technical descriptions of the subject lots which had
been approved under LRA PR-19042 and LRA PR-19043.
The Catarrojas alleged that, pursuant to the decree, the Register of Deeds of Cavite
issued an original certificate of title to their parents. But, as it happened, based on
a certification issued by the Register of Deeds, the original on file with it was lost in

the fire that gutted the old Cavite capitol building on June 7, 1959.[5] The
Catarrojas also claimed that the owners duplicate copy of the title had been lost
while with their parents.[6]
Since the public prosecutor representing the government did not object to the
admission of the evidence of the Catarrojas and since he said that he had no
evidence to refute their claims, the case was submitted for decision.[7] On June 27,
2003 the Regional Trial Court (RTC) of Cavite issued an Order, granting the petition
for reconstitution of title.[8]
On appeal, however, the Court of Appeals (CA) reversed the RTC decision.[9] It held
that the evidence of the Catarrojas failed to establish any of the sources for
reconstitution enumerated in Section 2 of Republic Act (R.A.) 26 (An act providing a
special procedure for reconstitution of Torrens certificate of title lost or destroyed).
The Catarrojas did not have proof that an original certificate of title had in fact been
issued covering the subject lots. On motion for reconsideration, however, the CA
rendered an amended decision dated February 23, 2006, setting aside its decision
dated July 12, 2005 and finding sufficient evidence to allow reconstitution of the
Catarrojas title.[10] Petitioner Republic of the Philippines challenges that decision
through this action.
The Issue Presented
The sole issue presented in this case is whether or not the CA erred in finding
sufficient evidence to grant the petition for reconstitution of title.
The Courts Ruling
R.A. 26 governs the reconstitution of lost or destroyed Torrens certificates of title.
Its Section 2 enumerates the following sources for the reconstitution of such titles:
(a)
The owners duplicate of the certificate of title;
(b)
The co-owners, mortgagees, or lessees duplicate of the certificate of title;
(c)
A certified copy of the certificate of title, previously issued by the register of
deeds or by a legal custodian thereof;
(d)
An authenticated copy of the decree of registration or patent, as the case
may be, pursuant to which the original certificate of title was issued;
(e)
A document, on file in the Registry of Deeds, by which the property, the
description of which is given in said document, is mortgaged, leased or
encumbered, or an authenticated copy of said document showing that its original
had been registered; and
(f)
Any other document which, in the judgment of the court, is sufficient and
proper basis for reconstituting the lost or destroyed certificate of title.

Admittedly, the Catarrojas have been unable to present any of the documents
mentioned in paragraphs (a) to (e) above. Their parents allegedly lost the owners
duplicate certificate of title. They did not have a certified copy of such certificate of
title or a co-owners, a mortgagees, or a lessees duplicate of the same. The LRA
itself no longer has a copy of the original decree or an authenticated copy of it.
Likewise, the Register of Deeds did not have any document of encumbrance on file
that shows the description of the property.
The only documentary evidence the Catarrojas could produce as possible sources
for the reconstitution of the lost title are those other documents described in
paragraph (f). Relying on this, they submitted the following documents:
1.
The Microfilm printouts of the Official Gazette dated February 25, 1941,
Vol. 39, No. 24, Pages 542-543, showing a notice of hearing in LRC 482, GLRO
Record 54798, respecting their parents application for registration and confirmation
of their title to the subject lots.[11]
2.
A certification issued by the LRA dated August 3, 1998, stating that,
based on official records, GLRO Record 54798, Cavite, had been issued Decree
749932 on May 21, 1941.[12]
3.
A certification from the Register of Deeds of Cavite dated July 3, 1999,
stating that it cannot ascertain whether the land covered by Decree 749932 and
GLRO Record 54798 had been issued a certificate of title because its titles were
arranged numerically and not by lot numbers, location, or names of registered
owners. The Register of Deeds also certified that all their records were lost in the
June 7, 1959 fire.[13]
4.
The Report of the LRA dated February 4, 2002, stating that based on
their record book of decrees, Decree 749932 had been issued on May 21, 1941
covering the subject lots under GLRO Record 54798. The report also verified as
correct the plans (Psu-111787 and Psu-111788) and technical descriptions of the
subject lots and approved under LRA PR-19042 and LRA PR-19043.[14]
5.
An Affidavit of Loss dated December 14, 2001, stating that the
duplicate certificate of title covering the subject lots had been lost.[15]
This Court has, in Republic v. Intermediate Appellate Court,[16] applied the principle
of ejusdem generis in interpreting Section 2(f) of R.A. 26. Any other document
refers to reliable documents of the kind described in the preceding enumerations.
This Court is not convinced that the above documents of the Catarrojas fall in the
same class as those enumerated in paragraphs (a) to (e). None of them proves that
a certificate of title had in fact been issued in the name of their parents. In Republic
v. Tuastumban,[17] the Court ruled that the documents must come from official

sources which recognize the ownership of the owner and his predecessors-ininterest. None of the documents presented in this case fit such description.
Moreover the Catarrojas failed to show that they exerted efforts to look for and avail
of the sources in paragraphs (a) to (e) before availing themselves of the sources in
paragraph (f). The Court said in Republic v. Holazo[18] that the documents referred
to in Sec. 2(f) may be resorted to only in the absence of the preceding documents in
the list. Only if the petitioner for reconstitution fails to show that he had, in fact,
sought to secure such documents and failed to find them, can the presentation of
the other document as evidence in substitution be allowed.
Further, in Republic v. Tuastumban[19] the Court enumerated what needs to be
shown before the issuance of an order for reconstitution: (a) that the certificate of
title had been lost or destroyed; (b) that the documents presented by petitioner are
sufficient and proper to warrant reconstitution of the lost or destroyed certificate of
title; (c) that the petitioner is the registered owner of the property or had an interest
therein; (d) that the certificate of title was in force at the time it was lost or
destroyed; and (e) that the description, area and boundaries of the property are
substantially the same as those contained in the lost or destroyed certificate of title.
The microfilm printouts of the Official Gazette are not proof that a certificate of title
was in fact issued in the name of the Catarrojas parents. The publication in the
Official Gazette only proved that the couple took the initial step of publishing their
claim to the property. There was no showing, however, that the application had
been granted and that a certificate of title was issued to them.
Although the LRAs certification and its report confirmed the issuance of a decree,
these documents do not sufficiently prove that a title had in fact been issued to the
parents of the Catarrojas pursuant to such decree. Indeed, it remains uncertain
what kind of decree the land registration court issued in the case. Significantly, Act
496 (the 1903 Land Registration Act) which was then in force recognized two kinds
of decrees in land registration proceedings: first, a decree issued under Section 37
that dismisses the application and, second, a decree issued under Section 38
confirming title of ownership and its registration.[20]
SECTION 37. If in any case without adverse claim the court finds that the applicant
has no proper title for registration, a decree shall be entered dismissing the
application, and such decree may be ordered to be without prejudice x x x.
SECTION 38. If the court after hearing finds that the applicant or adverse claimant
has title as stated in his application or adverse claim and proper registration, a
decree of confirmation and registration shall be entered x x x.

Absent a clear and convincing proof that an original certificate of title had in fact
been issued to their parents in due course, the Catarrojas cannot claim that their
predecessors succeeded in acquiring title to the subject lots. The nature of
reconstitution of a lost or destroyed certificate of title denotes a restoration of the
instrument in its original form and condition. That cannot be done without proof
that such certificate of title had once existed. The procedures laid down in R.A. 26
for reconstituting a title have to be strictly followed considering that reconstitution,
if made easy, could be the source of anomalous titles. It could also be
unscrupulously availed of by some as a convenient substitute for the rigid
proceedings involved in original registration of title.[21]
The Court observes that the subject property, supposedly located in Ternate, Cavite,
where the naval reservation is found, covers more than 81 hectares of land. It is
hardly believable that it has remained untouched by any documented transaction
since its supposed titling in May 1941. It is also curious that no photocopy of that
title has ever been kept and preserved in some private or public repository.
Parenthetically, the Catarrojas did not present any tax declaration covering such
vast piece of property. Although a tax declaration is not a proof of ownership,
payment of realty tax is an exercise of ownership over the property and is the
payers unbroken chain of claim of ownership over it. Furthermore, the Catarrojas
procrastination of over five decades before finally seeking reconstitution of title has
allowed laches to set in.
Once again, courts must be cautious against hasty and reckless grant of petitions
for reconstitution, especially when they involve vast properties as in this case.[22]
WHEREFORE, the Court GRANTS the petition, REVERSES the amended decision of
the Court of Appeals dated February 23, 2006, and REINSTATES its decision dated
July 12, 2005 in CA-G.R. CV 80401 that denied the petition for reconstitution of title
of respondents Apolinario Catarroja, Reynaldo Catarroja, and Rosita CatarrojaDistrito.
SO ORDERED.
G.R. No. 182980
BIENVENIDO CASTILLO,
Petitioner,
- versus REPUBLIC OF THE PHILIPPINES,
Respondent.
June 22, 2011

DECISION
CARPIO, J.:

The Case

Petitioner Bienvenido Castillo (Bienvenido) filed the present petition for review on
certiorari1 of the Decision2 dated 23 October 2007 as well as the Resolution3 dated
7 May 2008 of the Court of Appeals (appellate court) in CA-G.R. CV No. 81916. The
appellate court reversed the Decision4 dated 3 October 2003 of Branch 22, Regional
Trial Court of Malolos, Bulacan (trial court) in P-111-2002. The trial court ordered the
reconstitution of the original copy of Transfer Certificate of Title (TCT) No. T-16755
as well as the issuance of another owners duplicate copy, in the name of the
registered owner and in the same terms and conditions as the original, in lieu of the
lost original copy.

The Facts
Bienvenido filed on 7 March 2002 a Petition for Reconstitution and Issuance of
Second Owners Copy of Transfer Certificate of Title No. T-16755. The petition reads
as follows:

1. That petitioner is of legal age, Filipino, widower and with residence and postal
address at Poblacion, Pulilan, Bulacan;
2. That petitioner is the registered owner of a parcel of land situated at Paltao,
Pulilan, Bulacan covered by Transfer Certificate of Title No. T-16755, a zerox [sic]
copy of which is hereto attached as Annex A;
3. That the zerox [sic] copy of technical description and subdivision plan of the
parcel of land with an area of 50,199 [square meters] (Lot 6-A) are hereto attached
as Annexes B and C;
4. That the original copy of the said certificate of title on file with the Register of
Deeds of Bulacan was lost and/or destroyed during the fire on March 7, 1987 in the

Office of the Register of Deeds of Bulacan, certification from the said office is hereto
attached as Annex D;
5. That, the owners copy of the said certificate of title was likewise lost and all
efforts to locate the same proved futile and in vain, copy of the the [sic] Affidavit of
Loss is hereto attached as Annex E;
6. That no co-owners copy of duplicate of the same certificate has been issued;
7. The names and addresses of the boundary owners of said lot are the following:
a. West - Jorge Peralta
b. North - Lorenzo Calderon
c. South - Lorenzo Calderon
d. East - Melvin & Marlon Reyes
with postal address at Poblacion, Pulilan, Bulacan;
8. That said property has been declared for taxation purposes under Tax Declaration
No. 97-19001-00019, zerox [sic] copy of which is hereto attached as Annex F;
9. That the real estate tax for the current year has been paid per official receipt no.
0287074, zerox [sic] copy of which is hereto attached as Annex G;
10. That said property is free from all liens and encumbrances;
11. That there exist no deeds or instruments affecting the said property which has
been presented for and pending registration with the Register of Deeds of Bulacan;

WHEREFORE, it is most respectfully prayed of this Honorable Court that after due
notice and hearing judgment be rendered:
1. Declaring the Original Owners Duplicate Certificate of Title No. T-16755 that was
lost as null and void;
2. Ordering the Register of Deeds of Bulacan to issue second owners duplicate copy
of the said certificate of title upon payment of proper fees.5

The trial court furnished the Land Registration Authority (LRA) with a duplicate copy
of Bienvenidos petition and its Annexes, with a note stating that No Tracing Cloth
of Plan [sic] and Blue print of plan attached.6 As requested by the LRA in its letter
dated 17 April 2002,7 the trial court ordered Bienvenido to submit within 15 days
from receipt of the order (a) the original of the technical description of the parcel of
land covered by the lost/destroyed certificate of title, certified by the authorized
officer of the Land Management Bureau/Land Registration Authority and two
duplicate copies thereof, and (b) the sepia film plan of the subject parcel of land
prepared by a duly licensed Geodetic Engineer, who shall certify thereon that its
preparation was made on the basis of a certified technical description, and two blue
print copies thereof.8 Bienvenido complied with the order.9

The trial court, in an order dated 7 August 2002, ordered Bienvenido to supply the
names and addresses of the occupants of the subject property.10 Bienvenido
manifested that there is no actual occupant in the subject property.11

On 4 October 2002, the trial court issued an order which found Bienvenidos petition
sufficient in form and substance and set the same for hearing.12

Copies of the 4 October 2002 order were posted on three bulletin boards: at the
Bulacan Provincial Capitol Building, at the Pulilan Municipal Building, and at the
Bulacan Regional Trial Court.13 The 4 October 2002 order was also published twice
in the Official Gazette: on 13 January 2003 (Volume 99, Number 2, Pages 237 to
238), and on 20 January 2003 (Volume 99, Number 3, Pages 414 to 415).14 After
two cancellations,15 a hearing was conducted on 12 March 2003.

During the hearing, the following were marked in evidence for jurisdictional
requirements:

Exhibit A - Order of the Court dated 4 October 2002

Exhibit A-1 - Second page of the Order of the Court dated 4 October 2002

Exhibit A-2 - Third page of the Order of the Court dated 4 October 2002
Exhibit A-3 - Registry return receipt of notice to the Office of the Solicitor General
Exhibit A-4 - Registry return receipt of notice to the Land Registration Authority
Exhibit A-5 - Registry return receipt of notice to the Register of Deeds
Exhibit A-6 - Registry return receipt of notice to the Public Prosecutor
Exhibit A-7 - Registry return receipt of notice to boundary owner Jorge Peralta
Exhibit A-8 - Registry return receipt of notice to boundary owner Lorenzo Calderon
Exhibit A-9 - Registry return receipt of notice to boundary owners Melvin and
Marlon Reyes
Exhibit B - Certificate of Posting
Exhibit C - Certificate of Publication from the Director of the National Printing
Office
Exhibit D - Official Gazette, Volume 99, Number 2, 13 January 2003
Exhibit D-1 - Page 237, Publication of the trial courts Order dated 4 October 2002
Exhibit D-2 - Page 238, Publication of the trial courts Order dated 4 October 2002
Exhibit E - Official Gazette, Volume 99, Number 3, 20 January 2003

Exhibit E-1 - Page 414, Publication of the trial courts Order dated 4 October 2002
Exhibit E-2 - Page 415, Publication of the trial courts Order dated 4 October
200216

Fernando Castillo (Fernando), Bienvenidos son and attorney-in-fact, testified on his

fathers behalf. During the course of his testimony, Fernando identified the
following:

Exhibit F - Photocopy of TCT No. T-16755

Exhibit G - Blueprint of the subject property
Exhibit H - Technical description of the property
Exhibit I - Affidavit of Loss executed by Bienvenido Castillo
Exhibit I-1 - Entry of the Affidavit of Loss in the book of the Register of Deeds
Exhibit J - Certification issued by the Office of the Register of Deeds, Malolos,
Bulacan that TCT No. T-16755 was burned in a fire on 7 March 1987
Exhibit K - Tax declaration
Exhibit L - 2002 Real Estate Tax Receipt

Upon presentation of the photocopy of TCT No. T-16755, Fernando stated that the
title was issued in the names of his parents, Bienvenido Castillo and Felisa Cruz
(Felisa), and that his mother died in 1982. Fernando did not mention any sibling.
Fernando further testified that on 6 February 2002, Bienvenido executed an Affidavit
of Loss which stated that he misplaced the owners copy of the certificate of title
sometime in April 1993 and that all efforts to locate the same proved futile. The title
is free from all liens and encumbrances, and there are no other persons claiming
interest over the land.17

The LRA submitted a Report dated 25 July 2003, portions of which the trial court
quoted in its Decision. The LRA stated that:

(2) The plan and technical description of Lot 6-A of the subdivision plan Psd-37482
were verified correct by this Authority to represent the aforesaid lot and the same
have been approved under (LRA) PR-03-00321-R pursuant to the provisions of
Section 12 of Republic Act No. 26.

WHEREFORE, the foregoing information anent the lot in question is respectfully

submitted for consideration in the resolution of the instant petition, and if the
Honorable Court, after notice and hearing, finds justification pursuant to Section 15
of Republic Act No. 26 to grant the same, the plan and technical description having
been approved, may be used as basis for the inscription of the technical description
on the reconstituted certificate. Provided, however, that in case the petition is
granted, the reconstituted title should be made subject to such encumbrances as
may be subsisting; and provided further, that no certificate of title covering the
same parcel of land exists in the office of the Register of Deeds concerned.18

The Trial Courts Ruling

On 3 October 2003, the trial court promulgated its Decision in favor of Bienvenido.
The trial court found valid justifications to grant Bienvenidos petition as the same is
in order and meritorious.

The dispositive portion reads:

WHEREFORE, the Register of Deeds for the province of Bulacan is hereby ordered,
upon payment of the prescribed fees, to reconstitute the original copy of Original
Certificate of Title No. 16755 and to issue another owners duplicate copy thereof, in
the name of the registered owner and in the same terms and conditions as the
original thereof, pursuant to the provisions of R.A. No. 26, as amended by P.D. No.
1529, in lieu of the lost original copy. The new original copy shall in all respects be
accorded the same validity and legal effect as the lost original copy for all intents
and purposes. Provided, that no certificate of title covering the same parcel of land
exists in the office of the Register of Deeds concerned.

SO ORDERED.19

The Office of the Solicitor General (OSG) filed its Notice of Appeal on 18 November
2003. The OSG stated that it was grave error for the trial court to order

reconstitution despite absence of any prayer seeking such relief in the petition and
on the basis of a mere photocopy of TCT No. T-16755. Counsel for Bienvenido filed a
motion for early resolution on 25 January 2006.

The Appellate Courts Ruling

On 23 October 2007, the appellate court rendered its Decision which reversed the 3
October 2003 Decision of the trial court. Bienvenidos counsel withdrew from the
case on 11 October 2007 and was substituted by Mondragon and Montoya Law
Offices.

The appellate court ruled that even if Bienvenido failed to specifically include a
prayer for the reconstitution of TCT No. T-16755, the petition is captioned as In re:
Petition for Reconstitution and Issuance of Second Owners Copy of Transfer
Certificate of Title No. T-16755, Bienvenido Castillo, Petitioner. The prayer for such
other reliefs and remedies just and proper under the premises is broad and
comprehensive enough to justify the extension of a remedy different from that
prayed for.

However, the appellate court still ruled that the trial court erred in ordering the
reconstitution of the original copy of TCT No. T-16755 and the issuance of another
owners duplicate copy thereof in the name of the registered owner. Section 3 of
Republic Act No. 26 specified the order of sources from which transfer certificates of
title may be reconstituted, and Bienvenido failed to comply with the order.
Moreover, the documentary evidences presented before the trial court were
insufficient to support reconstitution. The loss of the original copy on file with the
Registry of Deeds of Bulacan may be credible, but Bienvenido failed to adequately
explain the circumstances which led to the loss of the owners copy. The tax
declaration presented is not a conclusive evidence of ownership, but merely
indicates possession. The plan and technical description of the property are merely
additional documents that must accompany the petition for the LRAs verification
and approval.

The dispositive portion of the appellate courts Decision reads:

WHEREFORE, the instant appeal is GRANTED. The assailed Decision dated October
3, 2003 of Branch 22, RTC of Malolos, Bulacan in P-111-2002 is hereby SET ASIDE
and a new judgment is entered dismissing the Petition therein.

SO ORDERED.20

On 3 December 2007, Bienvenidos counsel filed a Motion for Reconsideration

and/or for New Trial.21 The motion asserted that Bienvenido presented sufficient
documents to warrant reconstitution of TCT No. T-16755. Aside from the photocopy
of TCT No. T-16755, Fernando presented the plan and technical description
approved by the LRA. Moreover, to support the Motion for New Trial, Fernando went
through Bienvenidos papers and found the Deed of Absolute Sale22 from the
original owner, Elpidio Valencia, to spouses Bienvenido and Felisa. Fernando also
found the cancellation of mortgage23 of the property covered by TCT No. T-16755
issued by the Development Bank of the Philippines. Fernando also submitted a copy
of the Extra-Judicial Partition24 by and among the heirs of his mother. The property
covered by TCT No. T-16755 was partitioned among Bienvenido, Fernando, and
Fernandos siblings Emma Castillo Bajet (Emma) and Elpidio Castillo (Elpidio).

In Fernandos affidavit attached to the Motion for Reconsideration and/or for New
Trial, Fernando stated, but without presenting any proof, that Bienvenido passed
away at the age of 91 on 14 February 2006.

The Republic, through the OSG, opposed the Motion for Reconsideration and/or for
New Trial. Bienvenidos petition failed to satisfy Section 3(f) of R.A. No. 26. The
Affidavit of Loss is hearsay because Bienvenido failed to affirm it in court. Therefore,
the loss of the owners duplicate copy of TCT No. T-16755 is not established. The
plan and technical description approved by the LRA are not independent sources of
reconstitution and are mere supporting documents. The documents submitted in
support of the Motion for New Trial are not newly discovered, but could have been
discovered earlier by exercise of due diligence.

In its Resolution25 dated 7 May 2008, the appellate court denied the Motion for
Reconsideration and/or for New Trial.

Issues

The following were assigned as errors of the appellate court:

I. The Honorable Court of Appeals erred in holding that the documentary evidence
presented by petitioner in the lower court are insufficient to support the
reconstitution prayed for.

II. The Honorable Court of Appeals erred in finding that petitioner failed to establish
the circumstances which led to the loss of his duplicate owners copy of TCT No. T16755.

III. The Honorable Court of Appeals erred in finding that there is no merit in the
motion for new trial filed by petitioner.26

The Courts Ruling

The petition must fail. There can be no reconstitution as the trial court never
acquired jurisdiction over the present case.

Process of Reconstitution of
Transfer Certificates of Title under R.A. No. 26

Section 3 of R.A. No. 26 enumerates the sources from which transfer certificates of
title shall be reconstituted. Section 3 reads:

Sec. 3. Transfer certificates of title shall be reconstituted from such of the sources
hereunder enumerated as may be available, in the following order:
(a) The owners duplicate of the certificate of title;
(b) The co-owners, mortgagees, or lessees duplicate of the certificate of title;
(c) A certified copy of the certificate of title, previously issued by the register of
deeds or by a legal custodian thereof;
(d) The deed of transfer or other document, on file in the registry of deeds,
containing the description of the property, or an authenticated copy thereof,
showing that its original had been registered, and pursuant to which the lost or
destroyed transfer certificate of title was issued;
(e) A document, on file in the registry of deeds, by which the property, the
description of which is given in said document, is mortgaged, leased, or
encumbered, or an authenticated copy of said document showing that its original
had been registered; and
(f) Any other document which, in the judgment of the court, is sufficient and proper
basis for reconstituting the lost or destroyed certificate of title.

Bienvenido already admitted that he cannot comply with Section 3(a) to 3(e), and
that 3(f) is his last recourse. Bienvenido, through Fernandos testimony, presented a
photocopy of TCT No. T-16755 before the trial court. The owners original duplicate
copy was lost, while the original title on file with the Register of Deeds of Malolos,
Bulacan was burned in a fire on 7 March 1987. The property was neither mortgaged
nor leased at the time of Bienvenidos loss of the owners original duplicate copy.

Section 12 of R.A. No. 26 describes the requirements for a petition for

reconstitution. Section 12 reads:

Sec. 12. Petitions for reconstitution from sources enumerated in Sections 2(c), 2(d),
2(e), 2(f), 3(c), 3(d), and/or 3(f) of this Act, shall be filed with the proper Court of
First Instance, by the registered owner, his assigns, or any person having an interest
in the property. The petition shall state or contain, among other things, the
following: (a) that the owners duplicate of the certificate of title had been lost or
destroyed; (b) that no co-owners, mortgagees, or lessees duplicate had been
issued, or, if any had been issued, the same had been lost or destroyed; (c) the
location and boundaries of the property; (d) the nature and description of the
building or improvements, if any, which do not belong to the owner of the land, and
the names and addresses of the owners of such buildings or improvements; (e) the
names and addresses of the occupants or persons in possession of the property, of
the owners of the adjoining properties and of all persons who may have any interest
in the property; (f) a detailed description of the encumbrances, if any, affecting the
property; and (g) a statement that no deeds or other instruments affecting the
property have been presented for registration, or if there be any, the registration
thereof has not been accomplished, as yet. All the documents, or authenticated
copies thereof, to be introduced in evidence in support to the petition for
reconstitution shall be attached thereto and filed with the same: Provided, That in
case the reconstitution is to be made exclusively from sources enumerated in
Section 2(f) or 3(f) of this Act, the petition shall be further accompanied with a plan
and technical description of the property duly approved by the Chief of the General
Land Registration office (now Commission of Land Registration) or with a certified
copy of the description taken from a prior certificate of title covering the same
property.

We compared the requirements of Section 12 to the allegations in Bienvenidos

petition. Bienvenidos petition complied with items (a), (b), (f) and (g): in paragraph
5 of the petition, he alleged the loss of his copy of TCT No. T-16755; paragraph 6
declared that no co-owners copy of the duplicate title has been issued; paragraph
10 stated that the property covered by the lost TCT is free from liens and
encumbrances; and paragraph 11 stated that there are no deeds or instruments
presented for or pending registration with the Register of Deeds. There was

substantial compliance as to item (c): the location of the property is mentioned in

paragraph 2; while the boundaries of the property, although not specified in the
petition, refer to an annex attached to the petition. The petition did not mention
anything pertaining to item (d). There was a failure to fully comply with item (e). By
Fernandos admission, there exist two other co-owners of the property covered by
TCT No. T-16755. Fernandos siblings Emma and Elpidio were not mentioned
anywhere in the petition.
Section 13 of R.A. No. 26 prescribes the requirements for a notice of hearing of the
petition:

Sec. 13. The court shall cause a notice of the petition, filed under the preceding
section, to be published, at the expense of the petitioner, twice in successive issues
of the Official Gazette, and to be posted on the main entrance of the provincial
building and of the municipal building of the municipality or city in which the land is
situated, at least thirty days prior to the date of hearing. The court shall likewise
cause a copy of the notice to be sent, by registered mail or otherwise, at the
expense of the petitioner, to every person named therein whose address is known,
at least thirty days prior to the date of the hearing. Said notice shall state, among
other things, the number of the lost or destroyed certificate of title, if known, the
name of the registered owner, the names of the occupants or persons in possession
of the property, the owners of the adjoining properties and all other interested
parties, the location area and boundaries of the property, and the date on which all
persons having any interest therein must appear and file their claim or objections to
the petition. The petitioner shall, at the hearing, submit proof of the publication,
posting and service of the notice as directed by the court.

The trial courts 4 October 2002 Order was indeed posted in the places mentioned
in Section 13, and published twice in successive issues of the Official Gazette:
Volume 99, Number 2 dated 13 January 2003 and Volume 99, Number 3 dated 20
January 2003. The last issue was released by the National Printing Office on 21
January 2003.27 The notice, however, did not state Felisa as a registered co-owner.
Neither did the notice identify Fernandos siblings Emma and Elpidio as interested
parties.

The non-compliance with the requirements prescribed in Sections 12 and 13 of R.A.

No. 26 is fatal. Hence, the trial court did not acquire jurisdiction over the petition for
reconstitution. We cannot stress enough that our jurisprudence is replete with

rulings regarding the mandatory character of the requirements of R.A. No. 26. As
early as 1982, we ruled:

Republic Act No. 26 entitled An act providing a special procedure for the
reconstitution of Torrens Certificates of Title lost or destroyed approved on
September 25, 1946 confers jurisdiction or authority to the Court of First Instance to
hear and decide petitions for judicial reconstitution. The Act specifically provides the
special requirements and mode of procedure that must be followed before the court
can properly act, assume and acquire jurisdiction or authority over the petition and
grant the reconstitution prayed for. These requirements and procedure are
mandatory. The Petition for Reconstitution must allege certain specific jurisdictional
facts; the notice of hearing must be published in the Official Gazette and posted in
particular places and the same sent or notified to specified persons. Sections 12 and
13 of the Act provide specifically the mandatory requirements and procedure to be
followed.28

We cannot simply dismiss these defects as technical. Liberal construction of the

Rules of Court does not apply to land registration cases.29 Indeed, to further
underscore the mandatory character of these jurisdictional requirements, the Rules
of Court do not apply to land registration cases.30 In all cases where the authority
of the courts to proceed is conferred by a statute, and when the manner of
obtaining jurisdiction is prescribed by a statute, the mode of proceeding is
mandatory, and must be strictly complied with, or the proceeding will be utterly
void.31 When the trial court lacks jurisdiction to take cognizance of a case, it lacks
authority over the whole case and all its aspects.32 All the proceedings before the
trial court, including its order granting the petition for reconstitution, are void for
lack of jurisdiction.33

WHEREFORE, we DENY the petition. We AFFIRM the Decision dated 23 October 2007
and the Resolution dated 7 May 2008 of the Court of Appeals in CA-G.R. CV No.
81916.

SO ORDERED.

e.Estoppel in Action for Cancellation of Title

G.R. No. 133110

March 28, 2007

BARSTOWE PHILIPPINES CORPORATION, Petitioner,

vs.
REPUBLIC OF THE PHILIPPINES, Respondent.
DECISION
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of
Court seeking the reversal and setting aside the Decision,2 dated 8 August 1997,
and Resolution,3 dated 18 March 1998, of the Court of Appeals in CA-G.R. CV No.
47522, which in turn, reversed and set aside the Decision,4 dated 22 December
1992, of the Quezon City Regional Trial Court (RTC), Branch 80 in Civil Case No. Q92-11806.
Antecedent Facts
This case involves the conflicting titles to the same parcels of land (subject lots) of
petitioner Barstowe Philippines Corporation (BPC) and the respondent Republic of
the Philippines (Republic). The subject lots have a total area of 111,447 square
meters, and are situated along the northeastern perimeter boundary of the National
Government Center in Payatas, Quezon City.
BPC traces its titles to the subject lots back to Servando Accibal (Servando) who was
supposedly issued on 24 July 1974, at 3:20 p.m., Transfer Certificates of Title (TCTs)
No. 200629 and 200630 over the subject lots. TCTs No. 200629 and 200630 were
purportedly signed by Nestor N. Pena, Deputy Register of Deeds of Quezon City. On
10 June 1988, Servando executed a Deed of Absolute Sale of the subject lots to his
son Antonio Accibal (Antonio), with the concurrence of his other heirs. Despite his
prior sale of the subject lots to Antonio, Servando, by virtue of a Deed of
Conveyance, dated 8 February 1989, transferred/conveyed the subject lots to BPC in
exchange for subscription of 51% of the capital stock of BPC, such subscription
supposedly amounting to P6,000,000.00.5 About a year after the death of Servando
on 3 October 1989, particularly on 10 October 1990, Antonio executed another
Deed of Conveyance of the subject lots in favor of BPC in exchange for subscription
of 2,450 shares of its capital stock, with an alleged total value of P49,000,000.00.6
Due to the fire that gutted the Office of the Quezon City Register of Deeds on 11
June 1988 and destroyed many certificates of title kept therein, Antonio sought the
administrative reconstitution of the original copies and owners duplicate copies of
TCTs No. 200629 and 200630 with the Land Registration Authority (LRA). On 12

December 1990, the LRA issued TCTs No. RT-23687 and RT-23688 (reconstituting
TCTs No. 200629 and 200630, respectively), which were transmitted to the Quezon
City Register of Deeds and signed by Deputy Register of Deeds Edgardo Castro on
19 February 1991. Also on 19 February 1991, TCTs No. RT-23687 and RT-23688 were
cancelled and in lieu thereof, TCTs No. 30829, 30830, 30831, and 30832 in the
name of BPC were issued. BPC then acquired from the Housing and Land Use
Regulatory Board (HLURB) a permit to develop the subject lots into a residential
subdivision. Subsequently, BPC entered into Joint Venture Agreements with other
corporations for the development of the subject lots into a subdivision called
Parthenon Hills.
Meanwhile, according to the Republic, prior to 14 November 1979, the subject lots
were owned by First Philippine Holdings Corporation (FPHC). As evidence of its title
to the subject lots, FPHC was issued TCT No. 257672, on an undetermined date, and
TCT No. 275201, on 20 January 1981. Pursuant to a Deed of Sale, dated 14
November 1979, FPHC sold one of the subject lots, covered by TCT No. 257672, to
the Republic for P2,757,360.00. Thus, on 22 January 1981, TCT No. 257672 was
cancelled and TCT No. 275443 was issued in place thereof in the name of the
Republic. FPHC executed another Deed of Sale on 25 March 1982 in which it sold the
remainder of the subject lots, covered by TCT No. 275201, to the Republic for
P9,575,920.00. On 31 May 1982, TCT No. 275201 was cancelled and was replaced
by TCT No. 288417 issued in the name of the Republic. Because of the 11 June 1988
fire which razed the Quezon City Office of the Register of Deeds and destroyed the
original copies of TCTs No. 275443 and 288417, the Republic applied for
administrative reconstitution of the same with the LRA. It was then that the Republic
came to know that another party had applied for reconstitution of TCTs No. 200629
and 200630 which also covered the subject lots. This prompted the Republic to file
before the RTC on 26 March 1992 a petition for cancellation of title against Antonio,
Servando, and BPC, docketed as Civil Case No. Q-92-11806.
Civil Case No. Q-92-11806
Counsel for Antonio and the late Servando filed two successive Motions for
extension of time to file the proper pleading, dated 17 June 1992 and 1 July 1992,
but despite the grant thereof by the RTC,7 no such responsive pleading on behalf of
Antonio and the late Servando was ever filed. Hence, on 31 July 1992, the RTC
issued an Order8 declaring Antonio and the late Servando in default.
In another Order,9 also dated 31 July 1992, the RTC, upon the motion of BPC,
allowed the latter to continue with the development of the subject lots. It concluded
that
Considering the plight of [BPC] and the possible irreparable damage that may be
caused against the residents in the surrounding developed subdivision, even as said

corporation is possessed of a good title, the court in the exercise of its discretion
grants the motion. More importantly, consideration of equity demands that the
titled owner [BPC] herein must be able to exercise all its dominical right bloosoming
[sic] forth from its ownership of the land in suit.
WHEREFORE, under cool reflection and prescinding from the foregoing, the motion
is hereby granted. [BPC] is hereby permitted and allowed to continue with the
improvement and development of the controverted property into a residential
subdivision.10
On 12 October 1992, the Republic filed with the Quezon City Register of Deeds a
Notice of Lis Pendens requesting the recording of the pendency of Civil Case No. Q92-11806 on TCTs No. 30830, 30831, and 30832, all in the name of BPC.
While Civil Case No. Q-92-11806 was still pending before the RTC, there were two
intervenors.
Gloria Accibal Rettoriano (Gloria) filed with the RTC a Motion for Intervention, with a
Complaint in Intervention, both dated 1 September 1992. Gloria alleged that she
was the only child of Basilia Accibal, Servandos sister; the subject lots were
inherited by Basilia, Servando, and their other siblings from their parents Martin and
Mauricia Accibal; upon her mothers death, Gloria inherited and came into
possession of a portion of the subject lots with an area of about 2.5 hectares; Gloria
had been possessing, cultivating and improving her portion of the subject lots for
the last 30 years; Servando, through fraudulent means, was able to secure TCTs
over all the subject lots, including Glorias portion therein; the inclusion of Glorias
portion in the TCTs of Servando and, later, in those of BPC, was done through fraud
and gross bad faith; and unless the TCTs of Servando and BPC are declared null and
void, Gloria will be deprived of her property without due process and just
compensation. BPC opposed Glorias intervention in Civil Case No. Q-92-11806
considering that she had already instituted Civil Case No. Q-91-10933 before the
RTC, Quezon City, Branch 76, seeking the annulment of TCTs No. 30830, 30831, and
30832 of BPC based on the very same grounds she raised in her present Complaint
in Intervention; on 11 February 1992, Gloria entered into a Compromise Agreement
with BPC in which she waived and renounced any and all claims whatsoever which
she may have over the titles of BPC in consideration of the payment by the latter of
P2,000,000.00; the RTC, Branch 76, after finding that the said Compromise
Agreement was not contrary to law, morals, good customs, public order or public
policy, approved the same, thus putting an end to Civil Case No. Q-91-10933;11
Glorias cause of action to intervene in Civil Case No. Q-92-11806 was already
barred by prior judgment in Civil Case No. Q-91-10933 and Glorias Complaint in
Intervention is tantamount to a collateral attack against a TCT. In rejecting Glorias
intervention in Civil Case No. Q-92-11806, the RTC found as follows

The motion for intervention must be denied and the complaint in intervention
therein attached must be rejected.
For one thing, herein movant Gloria Accibal Rettoriano, was the plaintiff in the first
case (RTC Br. 76 No. Q-91-10933) and with "eyes wide open" she entered into a
compromise agreement with [BPC], which was the basis of the 26 February 1992
decision rendered therein and it being based on a compromise agreement, said
decision became immediately final and executory.
Whether or not the decision rendered in the first case was satisfied is of no moment
in the present case, as herein movant intervenor has all the remedies to protect her
rights therein.
For another, movant intervenor Gloria Accibal Rettoriano, from her complaint in
intervention would ask for the cancellation of the titles issued to their [sic] relative
Servando Accibal and those titles duly issued and registered in the name of [BPC].
Certainly, this can not be done, as it constitutes a collateral attack on the
questioned titles which the law and settled jurisprudence do not allow. Perforce, a
separate action against the questioned titles is the remedy available for intervenor
Gloria A. Retoriano [sic].
Accordingly, the Court finds the opposition of [BPC] to be impressed with merit and
the motion for intervention does not inspire confidence.
WHEREFORE, the subject motion for intervention is denied and the complaint in
intervention attached thereto must be rejected.12
Another intervenor in Civil Case No. Q-92-11806 was EL-VI Realty and Development
Corporation (ERDC) which filed with the RTC a Motion for Leave to Intervene, dated
1 September 1992. Subsequently, it filed an Answer in Intervention, dated 15
September 1992, in which, it alleged that it acquired interest in the subject lots
after having entered into a Joint Venture Agreement dated 16 January 1992, with
BPC, for the development of the subject lots into a residential subdivision; the
action initiated by the Republic for the cancellation of the TCTs of BPC was already
barred by laches and estoppel because of the recognition accorded upon the said
TCTs by the instrumentalities of the Republic, particularly the Register of Deeds and
the HLURB, on which the ERDC relied in all good faith when it entered into the Joint
Venture Agreement with BPC; the Republic is liable to ERDC for moral damages and
attorneys fees; should the RTC find the TCTs of BPC infirm, rendering the Joint
Venture Agreement between ERDC and BPC of no force and effect, then BPC should
be held liable to ERDC, being an innocent third party, for reimbursement of all
expenses incurred by the latter in the development of the subject lots; and should
the RTC find that the TCTs of BPC are spurious, then it should be declared in bad
faith when it entered into the Joint Venture Agreement with ERDC, for which it

should be liable for exemplary damages and attorneys fees. In an Order,13 dated
27 October 1992, the RTC granted ERDCs Motion to Intervene and admitted its
Answer in Intervention.
After all the parties had submitted their respective Pre-Trial Briefs,14 and upon
motion by the BPC,15 the RTC decided the case on 22 December 1992 on summary
judgment.16 Although it found both the Republic and the BPC as buyers in good
faith, it held that the titles of BPC should prevail. It ratiocinated thus
3. To the third issue, we rule that the title of [BPC] must prevail over that of the
[Republic].
There is no dispute that the titles of the First Philippine Holdings Corporation,
predecessor-in-interest of [Republic] were either issued in the year 1979 and 1981
(Exh. "A" and "B"). On the other hand, there is likewise no dispute that the titles of
defaulted defendant Servando Accibal, and predecessor-in-interest of [BPC], were
both issued and registered much earlier on July 24, 1974 (Exhs. "F" and "G", pp.
210-213, record) and/or a difference of 5 or 6 years in point of time.
MORE, Servando Accibal, the predecessor-in-interest of [BPC] has been in the actual
and peaceful physical possession of the lots in suit before he sold them to [BPC] on
February 08, 1991. Upon registration of the same on February 19, 1991, [BPC], after
having subdivided the land into four (4) smaller lots was issued on 19 February TCT
Nos. 30829, 30830, 30831, and 30832 (Exhs. 1, 2, 3 and 4).
It is true [Republic] acquired the land in suit on November 14, 1979 and for which
TCT Nos. 275443 and 288417 were issued in the years 1979 and 1981, but
[Republic] never took assertive steps to take actual possession of the land sold to it
by the First Philippine Holdings Corporation. It is even of grave doubt that the latter
took actual possession of the land before the land in suit was sold to the [Republic].
So much so, that the area had been occupied by several squatters, one of them is
Servando Accibal who by the way, was able to have the land in suit titled in his
name as early as July 24, 1974, under TCT Nos. 200629 and 200630 of the land
records of Quezon City. Further, [Republic] and its predecessor-in-interest were not
able to discover the overlapping of their titles by the titles of Servando Accibal for a
period of eighteen (18) long years starting from July 24, 1974 to about June 10,
1992 when the LRA during a reconstitution of the titles of [Republic] was initiated,
as evidenced by a report of reconstituting officer Benjamin A. Flestado of that office
(Exh. "H", pp. 214-258, record).
Simply stated, [Republic] may be guilty of LACHES.
xxxx

Perforce, the claim of [Republic] which was probably originally VALID became a
STALE claim as the years went by. Verily, the titles of [Republic] must be cancelled
and the titles of [BPC] must be upheld and declared as good and valid titles and
[BPC] is entitled to all the rights bloosoming [sic] fourth from its dominical right of
ownership.
More importantly, the predecessor-in-interest of [BPC] had been long in the actual
and physical possession of the lands in suit, while that of the predecessor-in-interest
of [Republic] was not in the actual possession of the land before the sale to
[Republic]. On the other hand, [BPC] immediately after the sale in its favor took
actual, physical and peaceful possession of the land in suit to the exclusion of all
others. It has no knowledge, actual or constructive that said parcels of land were
sold to the [Republic]. When it registered the sale, there was no inscription in the
Land Registry that the same parcels of land were earlier sold to the [Republic].
Hence, there was and is a continuing good faith on the part of [BPC]. (Article 1544,
NCC; Cruz vs Cabana, 129 SCRA 656).
In the same Decision, the RTC found certain irregularities in TCTs No. 200629 and
200630 in the name of Servando and that the said TCTs should be cancelled,
without prejudice to the rights and interests of BPC. The RTC discussed the matter in
this wise
We shall now dwell on the validity of the titles TCT Nos. 200629 and 200630,
issued in the name of Servando Accibal on July 24, 1974 by the Register of Deeds of
Quezon City. The LRA report dated 10 June 1992 (Exh. H, pp. 214-258, record) is
competent proof that indeed said titles must be cancelled. In short, the LRA found
after due investigation that the said titles of Servando Accibal were issued with
certain irregularities. It recommended the cancellation therefore, of TCT Nos.
200629 and 200630, to which the court concurs, as said report must be accorded
due respect and in the absence of fraud or irregularities that attended the
investigation, which the Court finds none, the same must be persuasive, if not
conclusive. Moreover, herein defendant Servando Accibal because of his failure to
answer, despite extension of time given him, failed to file his answer. Upon motion
of [Republics] counsel, he was declared as in default and since then, he never
asked the court to lift and set aside the default order. There is no way, his title must
be cancelled. For one thing, he was not able to present evidence to controvert the
recommendation of LRA to cancel his titles. For another, Servando Accibal is
deemed to have impliedly admitted the irregularities that attended the issuance of
his aforestated titles.
However, the cancellation of the titles of Servando Accibal, would not affect the
rights and interests of [BPC] as the latter is declared to be a purchaser in good faith
and for value. MORE, under the circumstances of the case, and even when the titles
of Servando Accibal are cancelled, the titles of [BPC] are still good and indefeasible

titles, as it is settled rule that good titles may be sustained even when the seller has
spurious titles.
As for the intervention of ERDC, the RTC addressed the same as follows
Finally, we shall next discuss the claim of intervenor EL-VI Realty and Development
Corporation. A close reading from the Joint Venture Agreement dated January 16,
1992, shows that in case of litigation, intervenor Realty Corporation shall have the
right to suspend all development activities and the development period of 5 years
shall automatically be suspended until such time as the said case is finally
settled/decided (Exh. "5" and Annex "A" answer in intervention pp. 109-114). Upon
the signing of the said agreement the amount of P1,500,000.00 was received by
[BPC] as advance payment of the 50-50 sharing basis in the sales proceeds. During
the pre-trial conference, herein intervenor tried to enforce a supplemental
agreement dated October 15, 1992, by filing a motion for a writ of preliminary
injunction with prayer for the issuance of a restraining order. Resolution of the same
was held in abeyance to await the decision to be rendered, after [BPC] assured
intervenor herein that it will abide by and strictly comply with its commitments
arising from the aforesaid agreement, after proper accounting is made therefore.
Herein intervenor admits that another financier-developer has entered the area due
to the delay of the project caused by the filing of the present case.
MORE, due to the filing of the present case, herein intervenor was reluctant to
further finance the project because of its big exposure already made. Hence,
intervenors works and other activities in the area was suspended in accordance
with their Joint Venture Agreement.
Perforce, there is compelling necessity for a proper accounting, more particularly its
substantial exposure to the project, on a quantum meruit basis, in fairness to all
concerned and involved parties in the project, including but not limited to the
present contractor-developer of the area.
Finally, the RTC concluded that
A FORTIORARI, the environmental setting and factual scenario of the case, in
relation to its legal ambience will show that the great preponderance of evidence
lies in favor of [BPC]. (Section 01, Rule 133, Revised Rules of Court), and the motion
for summary judgment is granted. The hearing as to damages, including attorneys
fees shall be scheduled soonest possible.
WHEREFORE, under cool reflection and prescinding from the foregoing, judgment is
rendered as follows:

1. Ordering the Register of Deeds of Quezon City to cancel Transfer Certificates of

Title No. 275443 and 288417 issued in the name of the [Republic] covering the lots
in suit. However, [Republic] being a purchaser in good faith, and based on
considerations of equity and justice Barstowe Philippine[s] Corporation is ordered to
re-imburse and pay [Republic], the sum of P12,333,280.00 representing the
purchase price from the vendor, First Philippine Holdings Corporation soonest
possible;
2. Ordering the Register of Deeds of Quezon City to officially and finally cancel from
his records, Transfer Certificates of Title Nos. 200629 and 200630 issued in the
name of Servando Accibal, on July 24, 1974, covering the same lots in suit (Exh. "F"
and "G", pp. 210-213, record).
3. Declaring herein defendant Barstowe Philippines Corporation as the absolute
owner in fee simple title over the lots in suit, as evidenced by Transfer Certificates
of Title Nos. 30829, 30830, 30831 and 30832 of the land records of Quezon City, all
issued on February 19, 1991 and the said titles are further more declared valid,
existing and indefeasible titles of [BPC] and as such is entitled to all the dominical
rights bloosoming [sic] forth from its ownership over the lots in suit.
4. Ordering [BPC] to abide by and strictly comply with the terms and conditions of
the supplemental Agreement entered into by it with herein intervenor EL-VI Realty
and Development Corporation dated October 15, 1992, after proper accounting is
made;
5. Perforce, the Register of Deeds of Quezon City is likewise ordered to cancel any
and all encumbrances annotated on said titles of defendant corporation including,
but not limited to the lis pendens notice filed by the [Republic], if any;
6. The hearing as to damages, including the claim for attorneys fees shall be
scheduled soonest.
7. Considering the admissions and agreements of the parties during the pre-trial
conference, which are considered judicial admissions, this decision acquires the
nature of one based on a compromise agreement. Perforce, the Court declares this
decision to be immediately final and executory.
8. No pronouncement as to costs.
Despite the promulgation of the foregoing Decision by the RTC on 22 December
1992, the proceedings in Q-92-11806 were still far from over; significant
developments still took place thereafter.

ERDC sought the execution of paragraph 4 of the dispositive portion of the RTC
Decision dated 22 December 1992. In an Order,17 dated 13 January 1993, the RTC
issued a writ of execution in favor of ERDC, and a notice of levy on execution was
accordingly made on the subject lots. In a dialogue held between the counsels for
BPC and ERDC in the chamber of the RTC Judge on 26 February 1993, an amicable
settlement was reached whereby BPC agreed to settle the claim of ERDC in the form
of developed subdivision lots in Parthenon Hills, subject to proper accounting.18
BPC offered to ERDC 40 developed subdivision lots in Parthenon Hills, valued at
P18,543,000.00, representing 65% of the total claims (prior to proper accounting) of
ERDC, which amounted to P28,787,306.32. However, ERDC refused the offer of BPC
and demanded that it be paid the total amount of its claims. It also brought to the
attention of the RTC that, in violation of their Joint Venture Agreement, BPC
contracted another realty developer for the development of Parthenon Hills. Thus,
ERDC opposed the lifting of the notice of levy on execution on the subject lots for
the protection of its interests. In an Order,19 dated 17 March 1993, the RTC found
that BPC already substantially complied with the terms of its agreement with ERDC
and that the rights and interests of the latter were well-protected and safeguarded.
In the same Order, the RTC lifted and set aside the notice of levy on execution on
the subject lots. However, on 20 April 1993, ERDC filed a Motion for Contempt20
against BPC and informed the RTC that BPC, fraudulently, maliciously, and in bad
faith, already sold 36 of the 40 subdivision lots it earlier offered to ERDC by
accepting downpayments thereon of only 30% of the selling price. Upon further
investigation, it discovered that of the four remaining lots, two were vacant while
the other two were reserved. ERDC subsequently filed two other motions: (1) A
Motion,21 dated 29 April 1993, to set for trial the claim of ERDC for damages. Said
motion was granted, and the RTC set the hearing on 16 September 1993, at 8:30
a.m.,22 but upon the motion of the counsel for BPC, the hearing was reset to 7
October 1993;23 and (2) A Motion,24 dated 6 September 1993, for the issuance of a
partial writ of execution for the undisputed amount of P18,543,000.00, representing
65% of the total claims of ERDC. Unfortunately, the records no longer show the
succeeding incidents concerning these motions.
In a Motion for Leave to Intervene25 dated 8 March 1993, and the attached
Complaint in Intervention,26 dated 10 March 1993, Kadakilaan Estate expressed its
intent to intervene in Civil Case No. Q-92-11806. It anchored its claims on the
contention that the subject lots were already registered as private property under
the Spanish Mortgage Law since 18 May 1891, and under the Torrens System of
Registration since 31 August 1907, by the predecessors-in-interest of Kadakilaan
Estate. The subject lots were supposedly included in a vast track of land covered by
Titulo de la Propiedad de Terrenos No. 01-4 in the name of Doa Petra Rodriguez,
who transferred the same to her son, Don Gonzalo Yanesa y Rodriguez. Kadakilaan
Estate came into ownership and possession of the vast track of land, including the
subject lots, by virtue of its successive sales from Don Gonzalo Yanesa y Rodriguez
to Doa Lourdez Rodriguez Yanesa, and from the latter to Kadakilaan Estate.

Kadakilaan Estate further alleged that the Original Certificate of Title (OCT) No. 333,
from which the TCTs of both BPC and the Republic were ultimately derived, was null
and void ab initio, and that the TCTs of BPC and the Republic were spurious and
likewise null and void ab initio, and without any probative value. Kadakilaan Estate
prayed for judgment declaring it the owner of the subject lots; directing the other
parties to respect its ownership, possession, rights and interests over the subject
lots; and ordering the other parties to pay just compensation, damages, and
attorneys fees. The RTC, in an Order27 dated 27 April 1993, denied the Motion for
Leave to Intervene and rejected the Complaint in Intervention of Kadakilaan Estate
for the following reasons
New intervenor Kadakilaan Estate alleges that the titles of the [Republic] and
[Antonio, Servando, and BPC] are all falsified, spurious in origin and null and void ab
initio, as the property in question were already registered as private properties of
[Kadakilaan Estates] predecessors-in-interest, under Spanish Mortgage law since
May 18, 1891, and under the Torrens System, Act No. 496, as amended, in Titulo
dela propriedad de Terrenos No. 01-4.
If this is clearly so, then [Kadakilaan Estate] is attacking the validity of the titles of
[Republic] and [Antonio, Servando, and BPC] in this case. It is settled rule that titles
registered under the Torrens System cannot be the subject of a collateral attack.
Perforce, the remedy of [Kadakilaan Estate] is to file a separate action. For, if the
intervention is allowed at this late stage of the proceedings, then it will cause
unnecessary delay in the soonest termination of this case.
MORE, the law and the rules as well as jurisprudence on the matter, will only allow
in the courts discretion, intervention, before or during the trial. Certainly NOT after
the trial and with more reason intervention may no longer be allowed after the
decision has been rendered as in the present case.
In the meantime, on 4 January 1993, the Republic filed a Notice of Appeal28 of the
RTC Decision, dated 22 December 1992. The RTC, in an Order,29 dated 16 February
1993, denied the same. It reasoned that
Considering these judicial dimensions and acquiescence of the [Republic] in open
court during the hearings held and during the pre-trial conference, the court in its
dispositive portion of the questioned decision, declared it to be a judgment based
on a compromise agreement which by operation of law becomes immediately
executory.
It is unfortunate that despite the above declarations of the court [Republic] failed to
ask for a clarification of the said declarations, by way of a motion for
reconsideration of the decision based on fraud, mistake or duress mandated by the
rules.

The notice of appeal must be denied due course.

xxxx
WHEREFORE, prescinding from the foregoing, the notice of appeal filed by plaintiff is
rejected and denied due course.
From the foregoing RTC Order, the Republic filed with the Court of Appeals a Petition
for Certiorari and Mandamus (with Urgent Prayer for Temporary Restraining Order
and/or Writ of Preliminary Injunction), docketed as CA-G.R. SP No. 30647. The
Republic primarily questioned the denial of its Notice of Appeal by the RTC in its
Order, dated 16 February 1993, on the basis that the RTC Decision of 22 December
1992 constitutes a compromise agreement, and is immediately final and executory.
The Court of Appeals issued a writ of preliminary injunction30 enjoining the RTC
from implementing and enforcing its Order, dated 16 February 1993, during the
pendency of CA-G.R. SP No. 30647 or until otherwise directed by the appellate
court. Apparently, from the denial by the RTC of its Motion for Leave to Intervene
and the rejection of its Complaint in Intervention in Civil Case No. Q-92-11806, the
Kadakilaan Estate again filed a Motion for Leave to Intervene in CA-G.R. SP No.
30647, which in a Resolution,31 dated 13 September 1993, the Court of Appeals
also denied on the following grounds
We find the stance of [Republic] and [BPC] well-grounded. Not only is [Kadakilaan
Estate] precluded by estoppel from filing the present motion, after failing to
challenge before this Court or the Supreme Court the trial courts denial of subject
motion for intervention, on April 27, 1993; it is too late for [Kadakilaan Estate] to
come in at this stage of the present litigation. Furthermore, as aptly put by the
[Republic] the alleged rights [Kadakilaan Estate] seeks to protect here can be amply
protected in an appropriate action [Kadakilaan Estate] may later bring.
In a Decision,32 dated 29 June 1994, the Court of Appeals granted the Republics
Petition for Certiorari and Mandamus, ruling in this wise
We rule for [Republic]. Respondent Courts conclusion lost sight of the nature of a
compromise agreement, and the circumstances under which a judgment based on a
compromise may be rendered.
xxxx
Guided by the aforecited law and jurisprudence in point, it can be safely concluded
that neither mere silence or acquiescence by the [Republic] in open court during the
hearing nor [Republics] stipulation of facts, marking of exhibits, alleged admission
of Exhibit 6 which contains [BPCs] offer of compromise during the pre-trial, be

properly considered as a compromise agreement. Had the parties really intended to

enter into a compromise to end their case, they could have executed and submitted
a compromise agreement for the approval of the trial court. But no such step was
taken.
xxxx
Records readily show that due to lack of an amicable settlement or any compromise
agreement, the respondent judge directed the parties to present their documentary
exhibits so as to facilitate the trial; no longer for the purpose of settling the case.
Evidently, there was no explicit agreement nor any reciprocal concession between
the parties with an end in view of terminating the litigation. Absence of these
essential elements of a compromise inevitably results in the absence of a valid
compromise agreement. (Merced vs. Roman Catholic Archbishop, L-24614, August
17, 1967, 20 SCRA 1077). Consequently, the opinion of respondent Judge that his
December 22, 1992 Decision had the nature of a judgment based on compromise,
cannot be upheld.
So also, the doctrine relied on by respondents that a compromise agreement
constitutes the law between the parties and a judgment based thereon is
immediately final, executory and not appealable, is inapplicable under the premises.
xxxx
WHEREFORE, the petition is GRANTED; the questioned order dated 16 February
1993 is SET ASIDE; and respondent court is hereby ordered to give due course to
[Republics] Notice of Appeal in Civil Case No. Q-92-11806. Costs against [BPC].
This Court, in its Resolution, dated 6 February 1995, issued in G.R. No. 117969, in
effect, sustained the afore-mentioned Decision of the Court of Appeals.
CA-G.R. CV No. 47522
Finally, the Republic was allowed to appeal the RTC Decision, dated 22 December
1992, in Civil Case No. Q-92-11806, to the Court of Appeals, where it was docketed
as CA-G.R. CV No. 47522. In a Decision,33 dated 8 August 1997, the Court of
Appeals found in favor of the Republic, and disposed thus
WHEREFORE, premises considered, plaintiff-appellant Republic of the Philippines
appeal is GRANTED. Except for paragraph 2 of the dispositive portion of the decision
appealed from declaring TCT Nos. 200629 and 200630 in the name of Servando
Accibal null and void and ordering the Register of Deeds of Quezon City to cancel
said TCT Nos. 200629 and 200630, the appealed decision is REVERSED and SET
ASIDE and a new one entered:

(a) declaring and affirming the validity of TCT Nos. 288417 and 275443 of the
Registry of Deeds of Quezon City in the name of appellant Republic of the
Philippines and that appellant Republic has indefeasible title to the property covered
thereby;
(b) declaring TCT Nos. 30829, 30830, 30831 and 30832 also of the Registry of
Deeds of Quezon City in the name of Barstowe Philippines Corporation null and void
and ordering the Register of Deeds of Quezon City to cancel said titles;
(c) ordering Barstowe Philippines Corporation to surrender to the Register of Deeds
of Quezon City the owners duplicate certificates of title of TCT Nos. 30829, 30830,
30831 and 30832 for cancellation;
(d) enjoining defendant-appellee Barstowe Philippines Corporation and intervenor
EL-VI Realty Development Corporation from exercising any act of ownership or
possession of the land in question; and
(e) remanding the case to the court of origin for further proceedings for
determination of the crossclaim of intervenor EL-VI Realty and Development
Corporation against defendant-appellee Barstowe Philippines Corporation.
There is no pronouncement as to costs.
The Motion for Reconsideration filed by BPC was denied by the Court of Appeals in a
Resolution,34 dated 18 March 1998.
G.R. No. 133110
Aggrieved, BPC came before this Court via a Petition for Review on Certiorari35
under Rule 45 of the Rules of Court, dated 28 April 1998, raising the sole issue of
who between BPC and the Republic has a better title over the subject lots. BPC
prays that this Court rule in its favor, and reverse and set aside the Court of Appeals
Decision, dated 8 August 1997, in CA-G.R. CV No. 47522, based on the following
grounds
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ERROR IN NOT
CONSIDERING THE GOOD FAITH OF [BPC] THOUGH IT WAS ADMITTED BY [REPUBLIC]
DURING THE PRE-TRIAL CONFERENCE.
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ERROR IN UPHOLDING
THE VALIDITY OF THE TITLE OF [REPUBLIC] OVER THAT OF [BPC.]

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ERROR IN ORDERING

[BPC] TO SURRENDER ITS TITLE TO THE REGISTER OF DEEDS FOR CANCELLATION[.]
THE HONORABLE COURT OF APPEALS ERRED IN ENJOINING [BPC] FROM EXERCISING
ACTS OF OWNERSHIP OVER THE SUBJECT PARCEL OF LAND[.]
THE HONORABLE COURT OF APPEALES [sic] ERRED IN APPLYING THE CALALANG
CASE (231 SCRA 88) AS IT IS NOT APPLICABLE TO THE CASE AT BAR[.]
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING [REPUBLIC]
GUILTY OF ESTOPPEL BY LACHES[.]
After the Republic filed its Comment, dated 29 October 1998, several parties again
sought to intervene in the case.
Winnie U. Nicolas (Nicolas), through her sister and attorney-in-fact, Ditas Felicitas
Nicolas-Agbulos (Nicolas-Agbulos), and Edgardo Q. Abesamis (Abesamis), filed their
respective Petitions for Intervention, dated 22 October 1998 and 9 December 1998,
respectively.
Nicolas-Agbulos invokes the provisions of the Rules of Court on the joinder of
indispensable parties and necessary parties for the complete determination of all
possible issues, not only between the parties themselves but also as regards to
other persons who may be affected by the judgment. Nicolas-Agbulos contends that
she was a buyer in good faith of Lots No. 27 and 28, Block 13, of Parthenon Hills,
covered by TCTs No. 76497 and 76498, respectively, of the Quezon City Register of
Deeds, derived from TCTs No. 30830, 30831, and 30832 in the name of BPC.
Nicolas-Agbulos had already partially paid BPC for Lots No. 27 and 28 in the amount
of P1,500,000.00, and the balance of P800,000.00 was already deposited in a trust
account in the name of BPC with the Far East Bank and Trust Company (FEBTC). She
bought Lots No. 27 and 28 after relying on the face of the TCTs of BPC which were
intact and subsisting in the records of the Quezon City Register of Deeds, and on the
authority granted to BPC by several government agencies, such as the HLURB, LRA,
and the Register of Deeds, for the subdivision, development, and sale of the subject
lots to private individuals. She only came to know, through her sister and attorneyin-fact, Nicolas-Agbulos, that the TCTs of BPC covering the subject lots, which
comprised the Parthenon Hills, were being assailed in Civil Case No. Q-92-11806
pending before the RTC. Nicolas inquiry on the matter was answered by BPC with
an assurance that despite the "bad publicity," Parthenon Hills was an on-going
project and that she should continue paying her installments. Acting cautiously,
Nicolas-Agbulos decided that instead of paying the balance of the purchase price for
Lots No. 27 and 28 directly to BPC, she would open a trust account with FEBTC in
the name of BPC where she would deposit Nicolas-Agbulos succeeding installment
payments. Nicolas-Agbulos was compelled to intervene in the instant case because

BPC made no mention of the fact that it had already sold numerous subdivision lots
in Parthenon Hills to innocent purchasers for value, either through absolute or
installment sales. She thus sought a ruling upholding the title of BPC, and
recognizing and protecting the rights of Nicolas as an innocent purchaser for value
of Lots No. 27 and 28.36
Abesamis seeks to intervene in the present case as an indispensable party since no
complete and conclusive determination can be had therein, which shall be legally
binding and effective on Abesamis, unless he be allowed to intervene. Abesamis
claims to have acquired by purchase Lot No. 16, Block 4, of Parthenon Hills, for the
purchase price of P720,000.00, and evidenced by a Deed of Absolute Sale dated 9
June 1993. BPC processed and secured TCT No. 92270 covering Lot No. 16 in
Abesamis name. He only learned that the subject lots comprising the Parthenon
Hills, including his Lot No. 16, was mired in controversy, when he attended an
emergency meeting of the Homeowners Association of Parthenon Hills. He asserts
that, being a bona fide purchaser and holder of a legitimate and indefeasible title to
Lot No. 16, he had valid and enforceable rights against both BPC and the
Republic.37
A third Petition in Intervention, dated 8 February 1999, was filed by spouses Jacinto
H. Santiago, Jr. and Arlene C. Santiago (spouses Santiago). The spouses Santiago
aver that, doing business as ACS Trading, they entered into a supply agreement
with Proven International Development Corporation (PIDC), which had a construction
contract with BPC, for the development of Parthenon Hills. The spouses Santiago
agreed to accept lots in Parthenon Hills as payment for the construction materials
they supplied BPC since the latter showed them clean TCTs to the subject lots, and
HLURB licenses and permits to develop Parthenon Hills. In payment for the
construction materials delivered, and financial assistance and various other
professional services rendered by the spouses Santiago to BPC, the latter initially
executed in their favor 15 Deeds of Assignment for 15 subdivision lots in Parthenon
Hills. The TCTs for the 15 subdivision lots were transferred in the name of the
spouses Santiago free from any lien or encumbrance. The spouses Santiago
mortgaged 13 of the subdivision lots with the Planters Development Bank and sold
the remaining two to different buyers. Thereafter, BPC again executed in favor of
the spouses Santigao 71 Deeds of Assignment over 71 subdivision lots in Parthenon
Hills. When the spouses Santiago attempted to transfer the TCTs covering the 71
subdivision lots to their names, they discovered that the TCTs of BPC already bore
the annotation of the notice of lis pendens. The Quezon City Register of Deeds
cancelled the TCTs of BPC covering the 71 subdivision lots and issued new ones in
the names of the spouses Santiago, still bearing the annotation of the notice of lis
pendens. The spouses Santiago claim that they were unable to intervene earlier in
this case because of the pendency of the case filed by BPC against them, docketed
as Civil Case No. 93-18231, with the Quezon City RTC, Branch 84, for the annulment
of the last 71 Deeds of Assignment. This case had since been dismissed. The

spouses Santiago invoke that they have sufficient interest in the present case which
would necessarily be affected by the resolution/decision thereof, and they must
necessarily intervene herein to protect their interest. The spouses Santiago pray for
this Court to declare the assignment to them by BPC of the subdivision lots as valid,
and to direct both BPC and the Republic to recognize and respect their rights and
interest.38
BPC supports the intervention in the case by Nicolas-Agbulos and Abesamis. It
explains that its failure to mention that it has already practically sold all the
subdivision lots in Parthenon Hills was not by design, but by mere oversight.39
However, BPC opposes the intervention of the spouses Santiago claiming that the
latter are not indispensable parties to the case; they acquired their TCTs through
fraudulent means; and Civil Case No. 93-18231 which it instituted against the
spouses Santiago was dismissed by the Quezon City RTC, Branch 84, without
prejudice. According to BPC, the supply agreement for construction materials was
between the spouses Santiago and PIDC, so that it could not be enforced against
BPC. This issue, as well as the validity of the 71 Deeds of Assignment over 71
subdivision lots supposedly executed by BPC in favor of the spouses Santiago,
requires the holding of a trial, not a mere intervention.40
The Republic opposed all efforts of other parties to intervene in the case. The legal
interests of Nicolas-Agbulos, Abesamis, and the spouses Santiago are totally
dependent on the alleged right of ownership of BPC, and the issues they raised are
similar to those raised by BPC. The fact that Nicolas-Agbulos and Abesamis are
purchasers in good faith will not render their titles valid and indefeasible. The titles
of Servando from whom BPC acquired its titles and from whom, in turn, NicolasAgbulos and Abesamis, derived their titles, were found to be spurious; and the
spring cannot rise higher than its source.41
In the interim, BPC filed its Reply dated 22 January 1999, to the Comment of the
Republic.
This Court, in a Resolution, dated 22 March 1999, granted the motion of the
Republic for the issuance of a temporary restraining order enjoining BPC from selling
the remaining unsold portions of the subject lots and from allowing buyers to enter
and occupy portions thereof.42
Thereafter, BPC,43 the Republic,44 spouses Santiago,45 Abesamis,46 and NicolasAgbulos,47 filed their respective Memoranda.
However, even before the case could be submitted for decision, Servandos heirs,
namely Virgilio V. Accibal (Virgilio), Virginia A. Macabudbod (Virginia), and Antonio,
filed an Urgent Ex Parte Motion to Defer Resolution of the same. Soon after, they
filed a Petition for New Trial, dated 23 May 2001.48 Although Servandos heirs

concede that the period allowed for the filing of a motion to set aside the judgment
and grant a new trial under Rule 37, Section 1 of the Rules of Court, had already
lapsed, on grounds of justice and equity, they still move that this Court grant their
Petition. Servandos heirs were allegedly prevented from participating in Civil Case
No. Q-92-11806 before the RTC by the fraudulent misrepresentations of Rev. Father
Antonio O. Ipo (Ipo), BPC President, together with the BPC counsel, who convinced
the nave Antonio that there was no need to worry about the case filed by the
Republic against them and to hire another counsel as the BPC counsel shall
represent all of them. Unknown to Servandos heirs, the BPC counsel neither
represented them nor included them in the Answer he filed on behalf of BPC, thus,
Servandos heirs were declared in default by the RTC. Because of the extrinsic fraud
perpetrated upon them and their excusable negligence, Servandos heirs should be
granted a new trial, otherwise, they would be deprived of their constitutional right
to due process of law. According to Servandos heirs, neither BPC nor the Republic
was a purchaser in good faith who acquired clean titles to the subject lots. The BPC
President Ipo, hoodwinked Antonio into agreeing to convey the subject lots to BPC in
exchange for 51% of its capital stock. However, despite acquiring titles to the
subject lots, BPC failed to transfer the promised 51% of its capital stock. On the
other hand, the TCTs of FPHC, the Republics predecessor-in-interest, were of
doubtful origin; and the Republics acquisition of the subject lots from FPHC was
anomalous in the sense that it purchased the said property through ordinary sale
when it could have easily expropriated the same.
Without formally intervening in the case at bar, Sariling Sikap Pabahay (SSP),
through its President, Elias V. Esraita, submitted to this Court a letter,49 dated 26
August 2002, together with other documents to disprove the validity of the titles of
Servando and his heirs to the subject lots. SSP is a cooperative formed by the urban
poor to help secure for its members award from the government of titles to the
portions of the subject lots which they are presently occupying. It presented the
affidavit of a certain Edith C. Mantaring,50 who attests that the Accibals are still
misrepresenting themselves as owners of the subject lots and fraudulently selling
portions thereof to unsuspecting buyers.
This Courts Ruling
Ultimately, this Court is called upon to determine which party now has superior title
to the subject lots: the Republic, BPC, the intervenors Abesamis, Nicolas-Agbulos,
and spouses Santiago, or Servandos heirs?
BPC, the intervenors Abesamis, Nicolas-Agbulos, spouses Santiago, and Servandos
heirs derived their title to the subject lots from Servandos TCTs No. 200629 and
200630. This Court then is compelled to look into the validity, authenticity, and
existence of these two TCTs.

It is alleged by BPC and Servandos heirs that Servando was issued TCTs No. 200629
and 200630 on 24 July 1974. However, there is an absolute dearth of information
and proof as to how Servando acquired ownership and came into possession of the
subject lots.
An investigation conducted by the LRA revealed even more irregularities which
raised serious doubts as to the validity and authenticity of TCTs No. 200629 and
200630. The LRA Report, dated 10 June 1992, submitted by Investigator Benjamin A.
Flestado (Flestado), found the said certificates of titles spurious after a very detailed
and exhaustive analysis of the evidence available.
First, it should be noted that despite letters sent by Investigator Flestado to BPC
President Ipo, Servando, and Antonio, requesting copies of documents to support
the issuance of TCTs No. 200629 and 200630, they failed to file a reply and furnish
him with the documents requested. A certain Atty. Justino Z. Benito (Atty. Benito)
appeared before Investigator Flestado claiming to be the counsel for BPC and
promising to contact Servandos heirs. Yet, even by the time the LRA Report was
finalized on 10 June 1992, Atty. Benito still failed to submit the documents
requested. Instead, he wrote letters insisting that TCTs No. 200629 and 200630 be
returned to the Quezon City Register of Deeds since these certificates "were
detached and transferred to [your LRA central] office for no cogent reason or
purpose;" and his client, BPC, "is a transferee in good faith and for value, and its
titles unchallenged."
Second, although the 109-D forms on which TCTs No. 200629 and 200630 were
printed appeared to be genuine, and determined to have been issued to the Quezon
City Register of Deeds on 5 July 1974, the signature therein of the Quezon City
Register of Deeds Atty. Nestor N. Pea (Atty. Pea) was forged. No less than Atty.
Pea himself refuted that the signatures on TCTs No. 200629 and 200630 were his.
In his sworn statement, he noted
A. At a glance, I am definitely sure that the signatures appearing here are not mine.
My attention is invited on the loop, on the starting point of the signature. The loop
should be sharp on the last portion of my signature. The portion going-up starts
from a point and is also sharp because that represents hypen [sic] on letter n. I
notice in these titles my surname is typed as PENA and not PEA. If ever there is
no in the typewriter, I used to add hypen [sic] over the letter n. Besides, my
position here is indicated as Deputy Register of Deeds. I never signed titles as
Deputy Register of Deeds, during my time; and if ever a title was presented
indicating my position as Deputy Register of Deeds, I would erase the word
Deputy. Moreso, the pen used here was a sign-pen. I never used a signpen, as
shown in the other 5 titles I identified earlier.

His employment records revealed that Atty. Pea was appointed as the Quezon City
Register of Deeds on 27 May 1968, and served as such until his retirement in
August of 1980, so that at the time when he supposedly signed TCTs No. 200629
and 200630 on 24 July 1974, he was the Quezon City Register of Deeds, not the
Deputy Register of Deeds.
Third, even the then incumbent Quezon City Register of Deeds Samuel Cleofe (RD
Cleofe) and Deputy Register of Deeds Edgardo Castro (DRD Castro) believed that
TCTs No. 200629 and 200630 were spurious. According to RD Cleofe, the size of the
area covered by the TCTs made him highly suspicious of the same. In Quezon City,
only a few people own big tracts of land, namely, the Aranetas, Tuazons, etc.
Commonly, ordinary individuals own only 300 to 2,000 square meters of land. Both
RD Cleofe and DRD Castro identified differences in the signatures and designation of
Atty. Pea appearing on the questionable TCTs No. 200629 and 200630 compared to
those on five other admittedly authentic TCTs.51.
Fourth, the National Bureau of Investigation (NBI), upon request of Investigator
Flestado, conducted an examination and issued Questioned Documents Report No.
636-991, dated 31 March 1992, wherein it noted significant differences in the
handwriting characteristics between the standard/sample signatures of Atty. Pea
and those appearing on TCTs No. 200629 and 200630, i.e., in the manner of
execution, direction/movement of strokes, and other identifying details. The NBI
concluded that "[t]he questioned and the standard/sample signatures of [N]estor N.
Pea were NOT WRITTEN by one and the same person."
Finally, Investigator Flestado made inquiries with the Land Management Bureau
(LMB) regarding the consolidation-subdivision plan Pcs-2480 and plan Psu-32606 of
Lots 34 and 40 (the subject lots) as described in TCTs No. 200629 and 200630. LMB
Geodetic Surveys Division Chief Privadi J.G. Dalire, in a letter, dated 29 November
1991, informed Investigator Flestado that LMB had no records of Pcs-2480, while the
original copy of Psu-32606 is no longer available as it had been badly damaged.
Thus, there was no record in the LMB that Lots 34 and 40, Psu-32606, were in fact
consolidated and then subdivided into Lots 3, 4, 5, and 6 pursuant to plan Pcs-2480,
as mentioned in TCTs No. 200629 and 200630.
To rebut the foregoing findings of LRA Investigator Flestado, BPC presented, in
support of the authenticity and validity of TCTs No. 200629 and 200630, the LRA
Resolution,52 dated 4 November 1991, in Consulta No. 1957, and NBI Questioned
Documents Report No. 585-891,53 dated 2 September 1991. A careful study of the
said documents does little to support the position of BPC.
The LRA Resolution in Consulta No. 1957 merely allowed the registration of the
rescission of a Joint Venture Agreement on TCTs No. 200629 and 200630 despite the
initial adverse finding that the said certificates were of doubtful authenticity. It did

not make any categorical finding as to the authenticity or validity of the TCTs. In
fact, the last paragraph of the said Resolution elucidated that
This resolution, however, should be understood to be limited to the issue of
registrability of the instrument sought to be registered and is without prejudice to
any action, if warranted, that may be filed in court assailing the validity or
authenticity of the certificate of titles. (Emphasis supplied.)
The NBI Questioned Documents Report No. 585-891 was even in accordance with
the finding in the LRA Report that the 109-D forms on which TCTs No. 200629 and
200630 were printed seemed to be genuine. The NBI concluded that the words
"109-D" and the serial numbers printed on the forms were not altered. The NBI did a
very limited examination of the genuineness of the forms on which TCTs No. 200629
and 200630 were printed, but it did not look into the authenticity of Atty. Peas
signature (which was the subject of NBI Questioned Documents Report No. 636-991,
dated 31 March 1992, mentioned in the LRA Report) or the accuracy of the entries
made therein.
The LRA Report, dated 10 June 1992, of Investigator Flestado was submitted as
evidence before the RTC. It must be emphasized that the LRA Report was extensive
and thorough. Its findings are sufficiently supported by independent and reliable
proof. The BPC failed to present evidence to refute the same. The LRA Report
deserves great weight sufficient to overcome the presumption that TCTs No. 200629
and 200630 were genuine, authentic, and indefeasible.54
It having been established that TCTs No. 200629 and 200630 were forged and
spurious, their reconstitution was also attended with grave irregularities. Once
more, this Court relies on the findings in the LRA Report, dated 10 June 1992, of
Investigator Flestado. Quezon City RD Cleofe; the unnamed Chief of the LRA
Micrographics and Computer Division; and Records Officer Viterbo Cahilig of the
Quezon City Register of Deeds, all confirmed that there were no records of any
applications for reconstitution of TCTs No. 200629 and 200630 in the name of
Servando. It would seem that an LRA employee, Cartographer Rovil Ruiz (Ruiz),
made it appear that there were applications for reconstitution of TCTs No. 200629
and 200630 filed, and which were included in Folder 1614. When Folder 1614 was
inspected, TCTs No. 200629 and 200630 were not included in its table of contents;
and although the said folder did have 44 missing pages, the missing pages pertain
to the supporting documents of other TCTs, and there was no showing that TCTs No.
200629 and 200630 and the applications for reconstitution thereof were among
these missing pages. Ruiz undertook by himself the computation of the tie-lines of
the subject lots as described in TCTs No. 200629 and 200630, the plotting, and
examination of the titles. The LRA Report thus recommended that Ruiz be
administratively charged for grave misconduct, it appearing that he was the one
who facilitated the administrative reconstitution of TCTs No. 200629 and 200630.

In contrast, the Republic was able to supply Investigator Flestado with the
documents supporting the transfer of the titles to the subject lots from FPHC to the
Republic, among which were the TCTs of FPHC, the Deeds of Sale executed by FPHC
to the Republic, notice to the real property owners within 300-meter radius from the
area, receipts for payment of registration fees, and payment order for the
documentary stamp tax on the sales. TCTs No. 275443 and 288417 in the name of
the Republic were included in LRA Folder No. 1976-B, together with other certificates
of title in the name of the Republic. One of the applications filed by the Republic was
docketed as Application for Reconstitution No. 41869. The Chief of the LRA
Micrographics and Computer Division confirmed that the applications for
reconstitution of TCTs No. 275443 and 288417 by the Republic were recorded in the
computerized Administrative Reconstitution System.
BPC was unable to attack the authenticity and validity of the titles of the Republic to
the subject lots, and could only interpose the defense that it was a buyer in good
faith. Only Servandos heirs, in their Petition for New Trial, attempted to raise doubts
as to the titles of the Republic to the subject lots by averring that the transfer
thereof from FPHC to the Republic was highly irregular because the latter could
have acquired the property by expropriation. Such an averment is totally baseless.
Expropriation as the means by which the State can acquire private property is
always the remedy of last resort. Expropriation lies only when it is made necessary
by the opposition of the owner of the property to the sale or by the lack of any
agreement as to the price.55 There being, in the present case, valid and subsisting
contracts between the FPHC, the previous owner, and the Republic, the buyer, for
the purchase of the subject lots at an agreed price, there was no reason for the
expropriation.
In consideration of all the foregoing findings, it is indubitable that TCTs No. 275443
and 288417 of the Republic covering the subject lots are authentic and valid, while
TCTs No. 200629 and 200630 of Servando covering the same property are not.
However, BPC maintains that it was a purchaser in good faith, for value and without
any inkling about any flaw from Servandos titles. It points out that it purchased the
subject lots from Servando on 8 February 1989 and registered the same on 19
February 1991, way before the titles of Servando were declared null by the RTC on
22 December 1992. BPC relies on this Courts ruling in Tenio-Obsequio v. Court of
Appeals,56 to wit
Under Section 55 of the Land Registration Act, as amended by Section 53 of
Presidential Decree No. 1529, an original owner of registered land may seek the
annulment of a transfer thereof on the ground of fraud. However, such a remedy is
without prejudice to the rights of any innocent holder for value with a certificate of
title.

A purchaser in good faith and for value is one who buys the property of another,
without notice that some other person has a right to or interest in such property,
and pays a full and fair price for the same at the time of such purchase or before he
has notice of the claim or interest of some other person in the property. In
consonance with this accepted legal definition, petitioner Consorcia Tenio-Obsequio
is a purchaser in good faith. There is no showing whatsoever nor even an allegation
that herein petitioner had any participation, voluntarily or otherwise, in the alleged
forgery.
xxxx
The main purpose of the Torrens system is to avoid possible conflicts of title to real
estate and to facilitate transactions relative thereto by giving the public the right to
rely upon the face of a Torrens certificate of title and to dispense with the need of
inquiring further, except when the party concerned has actual knowledge of facts
and circumstances that should impel a reasonable cautious man to make such
further inquiry. Where innocent third persons, relying on the correctness of the
certificate of title thus issued, acquire rights over the property, the court cannot
disregard such rights and order the total cancellation of the certificate. The effect of
such an outright cancellation would be to impair public confidence in the certificate
of title, for everyone dealing with property registered under the Torrens system
would have to inquire in every instance as to whether the title has been regularly or
irregularly issued by the court. 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 beyond the certificate to determine the condition of the
property.
xxxx
It has been consistently ruled that a forged deed can legally be the root of a valid
title when an innocent purchaser for value intervenes. A deed of sale executed by
an impostor without the authority of the owner of the land sold is a nullity, and
registration will not validate what otherwise is an invalid document. However, where
the certificate of title was already transferred from the name of the true owner to
the forger and, while it remained that way, the land was subsequently sold to an
innocent purchaser, the vendee had the right to rely upon what appeared in the
certificate and, in the absence of anything to excite suspicion, was under no
obligation to look beyond the certificate and investigate the title of the vendor
appearing on the face of said certificate.
Now the question is whether BPC qualifies as an innocent purchaser for value which
acquired valid titles to the subject lots, despite the fact that the titles of its
predecessor-in-interest were found to be forged and spurious.

This Court finds in the negative.

Foremost is the fact that there seem to be two documents by which titles to the
subject lots were transferred from the Accibals to BPC: (1) A Deed of Conveyance,
dated 8 February 1989, executed by Servando in favor of BPC, transferring to the
latter titles to the subject lots in exchange for 51% of its capital stock; and (2) A
Deed of Conveyance, dated 10 October 1990, executed by Antonio in favor of BPC,
transferring to the latter the very same property in exchange for 2,450 shares in
BPC. It should be noted that even prior to these Deeds of Conveyance, Servando
already transferred the subject lots by way of a Deed of Absolute Sale, dated 10
June 1988, in favor of his son Antonio, with the concurrence of his other heirs. Thus,
by the time Servando executed the Deed of Conveyance over the subject lots in
favor of BPC on 8 February 1989, he no longer had any right to the said property,
having sold the same to Antonio. It was probably to rectify this mistake that a
second Deed of Conveyance was executed by Antonio on 10 October 1990.
Comparing all these transfer documents, the LRA Report, dated 10 June 1992,
prepared by Investigator Flestado noted that Servandos Tax Account Number (TAN)
in the Deed of Conveyance, dated 8 February 1989, which he executed over the
subject lots in favor of BPC, was "A2140-M1746-A-1;" while in the Deed of Sale,
dated 10 June 1988, which he executed over the subject lots in favor of Antonio, his
TAN was "4110-241-R." Moreover, despite being executed a year apart, Servando
had the same residence certificate (No. 5901393, issued at Quezon City, on 6 April
1988) appearing in both documents.
Furthermore, BPC cannot really claim that it was a purchaser in good faith which
relied upon the face of Servandos titles. It should be recalled that the Quezon City
Register of Deeds caught fire on 11 June 1988. Presumably, the original copies of
TCTs No. 200629 and 200630 were burnt in the said fire. Servandos heirs sought
the administrative reconstitution of of TCTs No. 200629 and 200630 only in
December 1990. The two Deeds of Conveyance over the subject lots were executed
in favor of BPC by Servando and Antonio on 8 February 1989 and 10 October 1990,
respectively, both prior to the administrative reconstitution of TCTs No. 200629 and
200630. If BPC bought the subject lots after TCTs No. 200629 and 200630 were
destroyed when the Quezon City Register of Deeds burned down, but before the
said certificates were reconstituted, then on the face of what titles did BPC rely on
before deciding to proceed with the purchase of the subject lots? There was no
showing that there were surviving owners duplicate copies of TCTs No. 200629 and
200630, or even if there were, without the original copies of the said TCTs which
were stored in the Quezon City Register of Deeds and purportedly destroyed in the
fire, there would have been no way for BPC to have verified the owners duplicate
copies.

In addition, without the original copies and owners duplicate copies of TCTs No.
200629 and 200630, BPC had to rely on the reconstituted certificates, issued on 12
December 1990, bearing the following numbers: TCTs No. RT-23687 (for TCT No.
200629) and RT-23688 (for TCT No. 200630). Under section 7 of Republic Act No.
26,57 "Reconstituted titles shall have the same validity and legal effect as the
originals thereof" unless the reconstitution was made extrajudicially.58 In this case,
TCTs No. 200629 and 200630 were reconstituted administratively, hence,
extrajudicially. In contrast to the judicial reconstitution of a lost certificate of title
which is in rem, the administrative reconstitution is essentially ex-parte and without
notice.59 The reconstituted certificates of title do not share the same indefeasible
character of the original certificates of title for the following reason
x x x The nature of a reconstituted Transfer Certificate Of Title of registered land is
similar to that of a second Owner's Duplicate Transfer Certificate Of Title. Both are
issued, after the proper proceedings, on the representation of the registered owner
that the original of the said TCT or the original of the Owner's Duplicate TCT,
respectively, was lost and could not be located or found despite diligent efforts
exerted for that purpose. Both, therefore, are subsequent copies of the originals
thereof. A cursory examination of these subsequent copies would show that they are
not the originals. Anyone dealing with such copies are put on notice of such fact and
thus warned to be extra-careful. x x x.60
The fact that the TCTs were reconstituted should have alerted BPC and its officers to
conduct an inquiry or investigation as might be necessary to acquaint themselves
with the defects in the titles of Servando.61
What is more, BPC again invokes LRA Resolution, dated 4 November 1991, in
Consulta No. 1957, and NBI Questioned Documents Report No. 585-891, dated 2
September 1991 as proof that it did inquire or investigate into the validity and
authenticity of Servandos titles. But again, it should be noted that these documents
were issued after BPC already acquired the subject lots from Servando and Antonio.
Lastly, there are serious doubts that BPC acquired the subject lots for value. The
Republic bought the subject lots from FPHC for the combined price of
P12,333,280.00. BPC, on the other hand, supposedly acquired the subject lots from
Servando on 8 February 1989 in exchange for 51% of the capital stock of BPC, with
a subscription value of P6,000,000.00. In the LRA Report, dated 10 June 1992,
Investigator Flestado pointed out that in the Articles of Incorporation, dated 16
January 1989, of BPC, submitted to the Securities and Exchange Commission (SEC)
on 20 January 1989, BPC had an authorized capital stock of only P1,000,000.00,
which was divided into 10,000 shares, with a par value of P100.00 each; and the
amount of capital stock actually subscribed was P250,000.00. Therefore, in 1989,
fifty-one percent of the capital stock of BPC would be 5,100 shares, with an
aggregate value of only P510,000.00. BPC is not saved by the second Deed of

Conveyance, executed more than a year later by Antonio, again transferring to BPC
the subject lots in exchange for 2,450 shares in the latter, with the alleged value of
P49,000.000.00. Unless BPC is able to present proof that it applied for, and the SEC
approved, a substantial increase in its capital stock, then this Court can only
assume that its capital stock remained the same as the year before, 2,450 shares in
BPC, with a par value of P100.00 each, amount only to P245,000.00. This Court
cannot find a plausible explanation for the discrepancy in the value of 2,450 shares
of BPC between the P245,000.00 it has hereby computed and the P49,000,000.00
claimed by BPC.
For the above-stated reasons, this Court cannot declare BPC an innocent purchaser
for value, and it acquired no better titles to the subject lots than its predecessors-ininterest, Servando and Antonio.
At this point, it would seem that the Republic does hold better titles to the subject
lots. Nonetheless, another level of transactions involving the subject lots was
brought by intervenors to the attention of this Court.
From the reconstituted TCTs No. RT-23687 (200629) and RT- 23688 (200630) in the
name of Servando, BPC derived and was issued by the Quezon City Register of
Deeds new certificates, TCTs No. 30829, 30830, 30831 and 30832, in its own name.
It was able to secure the necessary licenses and permits from the appropriate
government agencies to subdivide, develop, and sell the subject lots as Parthenon
Hills. The Parthenon Hills project was openly advertised and marketed, and a
substantial portion of the subject lots was already sold by BPC to the public.
Except for the spouses Santiago, BPC recognizes that the intervenors, NicolasAgbulos and Abesamis, together with other legitimate homeowners in Parthenon
Hills, acquired from BPC titles to their respective subdivided lots in good faith and
for value. Even the Republic could not refute that the individuals who acquired lots
in Parthenon Hills from BPC were purchasers in good faith and for value. It insists,
however, that these buyers could not acquire better titles to the property than its
predecessors-in-interest BPC, Servando, and Antonio since the spring cannot rise
higher than its source. The law must protect and prefer the lawful holder of
registered title over the transferee of a vendor bereft of any transmissible rights.62
It is true that the general rule is that a forged deed is a nullity and conveys no
title.63 A forged deed may be defined as an instrument which purports to have
been executed by the person or persons whose signatures appear thereon, but
which, in fact, was not executed, and the signatures thereon had been merely
imitated so as to give them the deceptive appearance of genuineness.64 In the
case at bar, it was not any of the deeds of transfer or conveyance of the subject lots
which was forged, but TCTs No. 200629 and 200630 themselves. The forged TCTs,
nevertheless, just as a forged deed, can make it appear that one had title, right, or

interest to the land, when in truth, he had none, to the deprivation of the rightful
owner. It has been recognized that while a forged instrument is null and void and of
no effect as between the parties, it may nevertheless be the root of a good title; so
that the title of a registered owner who has taken it bona fide and for value, is not
affected by reason of his claiming through someone, that the registration was void
because it had been procured by the presentation of a forged instrument.65
The forged TCTs No. 200629 and 200630 were later administratively reconstituted,
and although an investigation would show that their reconstitution was also
attended with irregularities, TCTs No. RT-23687 (200629) and RT-23688 (200630)
appear, on either face, to have been duly approved by the LRA and issued by the
Quezon City Register of Deeds. With the cancellation of the reconstituted TCTs and
the issuance of new ones, TCTs No. 30829, 30830, 30831, and 30832, in the name
of BPC, any trace of forgery or irregularity as to BPCs titles was eliminated. TCTs No.
30829, 30830, 30831, and 30832 were clean, at least, until the annotation therein
of the notice of lis pendens of the Republic on 21 October 1992. It is a settled
doctrine that one who deals with property registered under the Torrens system need
not go beyond the same, but only has to rely on the certificates of title. He is
charged with notice only of such burdens and claims as are annotated on the
certificates.66 Herein intervenors, Nicolas-Agbulos and Abesamis, before purchasing
subdivision lots in Parthenon Hills, looked into the TCTs of BPC and found nothing on
the face thereof to raise doubts or suspicions as to their validity and authenticity.
Besides, BPC was the holder of licenses and permits to subdivide, develop, and sell
the subject lots as Parthenon Hills, issued by the appropriate government agencies,
primarily HLURB.
This is definitely a situation which constitutes an exception to the general rule that
estoppel cannot lie against the government. The Republic v. Court of Appeals,67
provides an illuminating discourse on when such an exception applies, thus
Is the immunity of the government from laches and estoppel absolute? May it still
recover the ownership of lots sold in good faith by a private developer to innocent
purchasers for value, notwithstanding its approval of the subdivision plan and its
issuance of separate individual certificates of title thereto?
xxxx
The general rule is that the State cannot be put in estoppel by the mistakes or
errors of its officials or agents. However, like all general rules, this is also subject to
exceptions, viz:
"Estoppels against the public are little favored. They should not be invoked except
in rare and unusual circumstances, and may not be invoked where they would
operate to defeat the effective operation of a policy adopted to protect the public.

They must be applied with circumspection and should be applied only in those
special cases where the interests of justice clearly require it. Nevertheless, the
government must not be allowed to deal dishonorably or capriciously with its
citizens, and must not play an ignoble part or do a shabby thing; and subject to
limitations x x x the doctrine of equitable estoppel may be invoked against public
authorities as well as against private individuals."
xxxx
Significantly, the other private respondents Spouses Santos, Spouses Calaguian,
Dela Fuente and Madaya bought such "expanded" lots in good faith, relying on the
clean certificates of St. Jude, which had no notice of any flaw in them either. It is
only fair and reasonable to apply the equitable principle of estoppel by laches
against the government to avoid an injustice to the innocent purchasers for value.
Likewise time-settled is the doctrine that where innocent third persons, relying on
the correctness of the certificate of title, acquire rights over the property, courts
cannot disregard such rights and order the cancellation of the certificate. Such
cancellation would impair public confidence in the certificate of title, for everyone
dealing with property registered under the Torrens system would have to inquire in
every instance whether the title has been regularly issued or not. This would be
contrary to the very purpose of the law, which is to stabilize land titles. Verily, all
persons dealing with registered land may safely rely on the correctness of the
certificate of title issued therefor, and the law or the courts do not oblige, them to
go behind the certificate in order to investigate again the true condition of the
property. They are only charged with notice of the lions and encumbrances on the
property that are noted on the certificate.
When private respondents-purchasers bought their lots from St. Jude, they did not
have to go behind the titles thereto to verify their contents or search for hidden
defects or inchoate rights that could defeat their rights to said lots. Although they
were bound by liens and encumbrances annotated on the titles, private respondents
purchasers could not have had notice of defects that only an inquiry beyond the
face of the titles could have satisfied. The rationale for this presumption has been
stated thus:
"The main purpose of the Torrens System is to avoid possible conflicts of title to real
estate and to facilitate transactions, relative thereto by giving the public the right to
rely upon the face of a Torrens Certificate of Title and to dispense with the need of
inquiring further, except when the party concerned had actual knowledge of facts
and circumstances that should impel a reasonably cautious man to make such
further inquiry (Pascua v. Capuyoc, 77 SCRA 78). Thus, where innocent third persons
relying on the correctness of the certificate thus issued, acquire rights over the

property, the court cannot disregard such rights (Director of Land v. Abache, et al.,
73 Phil. 606)."
In another case, this Court further said:
"The Torrens System was adopted in this country because it was believed to be the
most effective measure to guarantee the integrity of land titles and to protect their
indefeasibility once the claim of ownership is established and recognized. If a
person purchases a piece of land on the assurance that the seller's title thereto is
valid, he should not run the risk of being told later that his acquisition was
ineffectual after all. This would not only be unfair to him. What is worse is that if this
were permitted, public confidence in the system would be eroded and land
transactions would have to be attended by complicated and not necessarily
conclusive investigations and proof of ownership. The further consequence would be
that land conflicts could be even more abrasive, if not even violent. The
Government, recognizing the worthy purposes of the Torrens System, should be the
first to accept the validity of titles issued thereunder once the conditions laid down
by the law are satisfied. [Italics supplied.]
Petitioner never presented proof that the private respondents who had bought their
lots from St. Jude were buyers in bad faith. Consequently, their claim of good faith
prevails. A purchaser good faith and for value is one who buys the property of
another without notice that some other person has a right to or an interest in such
property; and who pays a full and fair price for the same at the time of such
purchase or before he or she has notice of the claims or interest of some other
person. Good faith is the honest intention to abstain from taking any
unconscientious advantage of another.
It also bears to emphasize that the subject lots covered by TCTs No. 30829, 30830,
30831, and 30832 were already subdivided, and new TCTs were issued in the names
of the buyers of each subdivision lot. To order the cancellation of all these derivative
titles and the return of the subdivision lots to the Republic shall irrefragably be
unjust to the innocent purchasers for value and shall wreak havoc on the Torrens
System.
Anyway, the Republic is not without recourse. It can claim damages from BPC, found
herein not to be a buyer of the subject lots in good faith. For its loss of portions of
the subdivision lots to innocent purchasers from BPC, the Republic may recover
from BPC the purchase price it paid to FPHC corresponding to such subdivision lots,
with interest at 6% per annum from 26 March 1992 (the date when the Republic
instituted its petition for the cancellation of the TCTs of Servando, Antonio, and BPC)
until finality of this Decision, and 12% per annum thereafter until fully paid.68

Although this Court allowed in the case at bar the intervention of Nicolas-Agbulos
and Abesamis, and recognized their title to their respective subdivision lots in
Parthenon Hills as purchasers in good faith and for value from BPC, it could not do
the same for the spouses Santiago, for the reason that BPC contested their claim
that they had acquired titles to the subdivision lots in Parthenon Hills in good faith
and for value, and further asserted that the spouses Santiago acquired the said
subdivision lots by fraudulent means. The allegations by the spouses Santiago of
good faith, on one hand, and by BPC of fraud, on the other, in the acquisition by the
spouses Santiago of the subdivision lots in question, are factual matters, best
proven and established before the RTC, which could receive evidence in support of
each partys position during trial. Should the RTC find that the spouses Santiago
have indeed acquired the subdivision lots in good faith and for value, then their
titles thereto shall, likewise, be valid and indefeasible even against that of the
Republic. However, in a contrary case, should the RTC find that the spouses
Santiago acquired the subdivision lots by fraud, then titles thereto return to BPC.
Though estoppel by laches may lie against the Republic when titles to the
subdivision lots are already in the names of the respective innocent purchasers for
value from BPC, it may not be used by BPC to defeat the titles of the Republic as
regards the subdivision lots which remain unsold and the titles to which are still in
the name of BPC. It must be recalled that BPC is not a purchaser in good faith.
Estoppel, being an equitable principle, may only be invoked by one who comes to
court with clean hands.69

Pertinent provisions of the New Civil Code concerning builders in bad faith provide
that
ART. 449. He who builds, plants, or sows in bad faith on the land of another, loses
what is built, planted or sown without right to indemnity.
ART. 450. The owner of the land on which anything has been built, planted or sown
in bad faith may demand the demolition of the work, or that the planting or sowing
be removed, in order to replace things in their former condition at the expense of
the person who built, planted or sowed; or he may compel the builder or planter to
pay the price of the land, and the sower the proper rent.
ART. 451. In cases of the two preceding articles, the landowner is entitled to
damages from the builder, planter or sower.
ART. 452. The builder, planter or sower in bad faith is entitled to reimbursement for
the necessary expenses of preservation of the land.

Hence, as far as the subdivision lots still in the name of BPC are concerned, the
Republic has the option to either (1) recover the said lots and demand that BPC
demolish whatever improvements it has made therein, to return the lots to their
former condition, at the expense of BPC; or (2) compel BPC to pay the price of the
land. The choice can only be made by the Republic, as the rightful owner of the said
subject lots. Should the Republic choose the first option, BPC is under the obligation
to return the possession of the subdivision lots to the Republic and surrender its
corresponding TCTs for cancellation and issuance of new ones in the name of the
Republic. Should the Republic select the second option, then BPC shall pay the
Republic the purchase price that the latter had paid to FPHC corresponding to such
subdivision lots, with interest at 6% per annum from 26 March 1992 until finality of
this Decision, and 12% per annum thereafter until fully paid. In either option, the
Republic may claim damages from BPC, while BPC cannot seek indemnity from the
Republic for any improvements made on the subdivision lots, except if these
constitute as necessary expenses for the preservation of the land, for which it shall
still be entitled to reimbursement.
As for the Petition for New Trial filed by Servandos heirs, this Court dismisses the
same for lack of legal basis. Section 1, Rule 37 of the Rules of Court reads
SECTION 1. Grounds of and period for filing motion for new trial or reconsideration.
Within the period for taking an appeal, the aggrieved party may move the trial court
to set aside the judgment or final order and grant a new trial for one or more of the
following causes materially affecting the substantial rights of the said party:
(a) Fraud, accident, mistake or excusable negligence which ordinary prudence could
not have guarded against and by reason of which such aggrieved party has
probably been impaired in his rights; or
(b) Newly discovered evidence, which he could not, with reasonable diligence, have
discovered and produced at the trial, and which if presented would probably alter
the result.
Servandos heirs themselves admit that the period allowed for the filing of a motion
to set aside the judgment and grant a new trial under the afore-quoted provision
had already lapsed, but they still pray that this Court give due course to their
Petition on the grounds of justice and equity.
In Malipol v. Lim Tan,70 this Court ruled that
It is within the sound discretion of the court to set aside an order of default and to
permit a defendant to file his answer and to be heard on the merits even after the
reglementary period for the filing of the answer has expired, but it is not error, or an
abuse of discretion, on the part of the court to refuse to set aside its order of default

and to refuse to accept the answer where it finds no justifiable reason for the delay
in the filing of the answer. In the motions for reconsideration of an order of default,
the moving parry has the burden of showing such diligence as would justify his
being excused from not filing the answer within the reglementary period as
provided by the Rules of Court, otherwise these guidelines for an orderly and
expeditious procedure would be rendered meaningless. Unless it is shown clearly
that a party has justifiable reason for the delay, the court will not ordinarily exercise
its discretion in his favor.
In the present case, the late Servando and Antonio were already declared in default
by the RTC on 31 July 1992, after their supposed counsel failed to file an answer to
the Republics petition for cancellation of title. Nothing was heard from Servandos
heirs even after the promulgation of the RTC Decision on 22 December 1992, and
the Court of Appeals Decision, dated 8 August 1997, until they filed their Petition for
New Trial, dated 23 May 2001, before this Court, or nine years from the date they
were declared in default.
According to Servandos heirs, due to the extrinsic fraud committed by the President
and counsel of BPC, they were prevented from participating in the proceedings
before the trial court. They allegedly relied on the assurance of the President and
counsel of BPC that the latter shall also represent them and their interests in the
subject lots in the case.
This allegation of fraud by Servandos heirs has no leg to stand on. It should be
recalled that the late Servando and Antonio were represented by a counsel at the
beginning of the proceedings before the RTC. Their counsel even submitted two
consecutive motions for extension of time to file the appropriate pleadings. There
was no explanation provided as to why, despite the grant of said motions, the
counsel still failed to file an answer to the Republics petition for cancellation of title.
It is also contrary to common human experience that Servandos heirs, by the mere
assurance of the President and counsel of BPC, adopted a totally hands-off attitude
in a case where they supposedly have substantial interest. There is no showing
during the nine years when they were not participating in the court proceedings,
that they, at least, inquired into or followed-up on the status of the case with BPC.
Such blind trust in the President and counsel of BPC is surely difficult to
comprehend, especially if this Court takes into account the contention of Servandos
heirs that BPC failed to deliver the shares of stock in exchange for the subject lots.
What is apparent to this Court is not the alleged fraud committed by BPC but,
rather, the inexcusable negligence of Servandos heirs when it came to protecting
their titles, rights, and interests to the subject lots, if indeed, there were still any.
Worth reproducing herein, is the conclusion71 made by the Court of Appeals on
Servandos titles

On the strength of the LRA report, Exhibit H (Record, pp. 214-258), the court a quo
found TCT Nos. 200629 and 200630, in the name of Servando Accibal and from
which the titles of defendant-appellee Barstowe Philippines Corporation were
derived, spurious, and ordered the Register of Deeds of Quezon City "to officially
and finally cancel (said titles) from his records" (Par. 2, dispositive portion,
Decision, p. 16; Rollo, p. 71). As explained by the court a quo:
"We shall now dwell on the validity of the titles, TCT Nos. 200629 and 200630,
issued in the name of Servando Accibal on July 24, 2974 by the Register of Deeds of
Quezon City. The LRA Report dated 10 June 1992 (Exh. H, pp. 214-258, record) is
competent proof that indeed said titles must be cancelled. In short, the LRA found
after due investigation that the said titles of Servando Accibal were issued with
certain irregularties (sic). It recommended the cancellation therefore, of TCT Nos.
200629 and 200630, to which the court concurs, as said report must be accorded
due respect and in the absence of fraud or irregularties (sic) that attended the
investigation, which the Court finds none, the same must be persuasive, if not
conclusive. Moreover, herein defendant Servando Accibal because of his failure to
answer, despite extension of time given him, plaintiffs counsel, he was declared as
in default since then, he never asked the court to lift and set aside the default order.
There is no way, his title may be cancelled. For one thing, he was not able to
present evidence to controvert the recommendation of the LRA to cancel his titles.
For another, Servando Accibal is deemed to have impliedly admitted the
irregularties (sic) that attended the issuance of his aforestated titles." (Decision, pp.
14-15; Rollo, pp. 69-70)
This portion of the decision ordering the cancellation of TCT Nos. 200629 and
200630 in the name of Servando Accibal was not appealed nor assigned as a
counter-assigment of error in the brief of Barstowe Philippines Corporation; hence, is
now final.
Thus, the findings of this Court as to the rights of the parties involved in the present
case are summarized as follows
(1) The certificates of title acquired by Servando over the subject lots were forged
and spurious, and such finding made by both the RTC and Court of Appeals is
already final and binding on Servandos heirs;
(2) BPC did not acquire the subject lots in good faith and for value, and its
certificates of title cannot defeat those of the Republics;
(3) As between BPC and the Republic, the latter has better titles to the subject lots
being the purchaser thereof in good faith and for value from FPHC;

(4) However, considering that the subject lots had already been subdivided and the
certificates of title had been issued for each subdivision lot, which were derived
from the certificates of title of BPC, it is more practical, convenient, and in
consonance with the stability of the Torrens System that the certificates of title of
BPC and its derivative certificates be maintained, while those of the Republics be
cancelled;
(5) Estoppel lies against the Republic for granting BPC governmental permits and
licenses to subdivide, develop, and sell to the public the subject lots as Parthenon
Hills. Relying on the face of the certificates of title of BPC and the licenses and
permits issued to BPC by government agencies, innocent individuals, including
intervenors Nicolas-Agbulos and Abesamis, purchased subdivision lots in good faith
and for value;
(6) The claims of the intervenor spouses Santiago that they acquired portions of the
subject lots in good faith and for value still need to be proven during trial before the
court a quo. Unlike the claims of intervenors Nicolas-Agbulos and Abesamis, which
BPC admitted, the claims of the spouses Santiago were opposed by BPC on the
ground of fraud;
(7) Certificates of title over portions of the subject lots, acquired by purchasers in
good faith and for value, from BPC, are valid and indefeasible, even as against the
certificates of title of the Republic. The Republic, however, is entitled to recover
from BPC the purchase price the Republic paid to FPHC for the said portions, plus
appropriate interests; and
(8) As portions of the subject lots are still unsold and their corresponding certificates
of title remain in the name of BPC, the Republic may exercise two options: (a) It may
recover the said portions and demand that BPC demolish whatever improvements it
has made therein, so as to return the said portions to their former condition, at the
expense of BPC. In such a case, certificates of title of BPC over the said portions
shall be cancelled and new ones issued in the name of the Republic; or (b) It may
surrender the said portions to BPC and just compel BPC to reimburse the Republic
for the purchase price the Republic paid to FPHC for the said portions, plus
appropriate interest.
WHEREFORE, premises considered, the instant Petition is hereby PARTLY GRANTED.
The Decision, dated 8 August 1997, of the Court of Appeals in CA-G.R. CV No. 47522
is hereby REVERSED and SET ASIDE and a new one is hereby entered, as follows:
(1) In view of the finding that the Transfer Certificates of Title No. 200629 and
200630 in the name of Servando Accibal are forged and spurious, the Quezon City
Register of Deeds is ORDERED to officially and finally cancel the same from his
records;

(2) In view of the finding that the respondent Republic of the Philippines was a
purchaser in good faith of the subject lots from Philippine First Holdings Corporation,
but also taking into consideration the functioning and stability of the Torrens
System, as well as the superior rights of subsequent purchasers in good faith and
for value of portions of the subject lots subdivided, developed, and sold as
Parthenon Hills from petitioner Barstowe Philippines Corporation
(a) The Quezon City Register of Deeds is ORDERED to cancel Transfer Certificates of
Title No. 275443 and 288417 in the name of respondent Republic of the Philippines;
(b) The respondent Republic of the Philippines is ORDERED to respect and recognize
the certificates of title to the subject portions of land in the name of purchasers of
good faith and for value from petitioner Republic of the Philippines;
(c) Petitioner Barstowe Philippines Corporation is ORDERED to pay respondent
Republic of the Philippines for the purchase price the latter paid to First Philippine
Holdings Corporation corresponding to the portions of the subject lots which are
already covered by certificates of title in the name of purchasers in good faith and
for value from petitioner Barstowe Philippines Corporation, plus appropriate interest;
(d) The respondent Republic of the Philippines is ORDERED to choose one of the
options available to it as regards the portions of the subject lots which remain
unsold and covered by certificates of title in the name of petitioner Barstowe
Philippines Corporation, either (i) To recover the said portions and demand that
petitioner Barstowe Philippines Corporation demolish whatever improvements it has
made therein, so as to return the said portions to their former condition, at the
expense of the latter, or (ii) To surrender the said portions to petitioner Barstowe
Philippines Corporation and compel the latter to reimburse the respondent Republic
of the Philippines for the purchase price it had paid to First Philippine Holdings
Corporation for the said portions, plus appropriate interest. Regardless of the option
chosen by the respondent Republic of the Philippines, it is ORDERED to reimburse
petitioner Barstowe Philippines Corporation for any necessary expenses incurred by
the latter for the said portions;
(2) In view of the finding that petitioner Barstowe Philippines Corporation is not a
purchaser and builder in good faith, and depending on the option chosen by
respondent Republic of the Philippines concerning the portions of the subject lots
which remain unsold and covered by certificates of title in the name of petitioner
Barstowe Philippines Corporation, as enumerated in paragraph 2(d) hereof
(a) In case the respondent Republic of the Philippines chooses the option under
paragraph 2(d)(i) hereof, petitioner Barstowe Philippines Corporation is ORDERED to
demolish whatever improvements it has made on the said portions, so as to return

the same to their former condition, at its own expense. The Quezon City Register of
Deeds is also ORDERED to cancel the certificates of title of petitioner Barstowe
Philippines Corporation over the said portions and to issue in lieu thereof certificates
of title in the name of respondent Republic of the Philippines;
(b) In case the respondent Republic of the Philippines chooses the option under
paragraph 2(d)(ii) hereof, petitioner Barstowe Philippines Corporation is ORDERED
to reimburse the petitioner Republic of the Philippines for the purchase price it had
paid to First Philippine Holdings Corporation for the said portions, plus appropriate
interest;
(c) Petitioner Barstowe Philippines Corporaton is ORDERED to pay appropriate
damages to respondent Republic of the Philippines as may be determined by the
trial court;
(3) In view of the finding that intervenors Winnie U. Nicolas-Agbulos and Edgardo Q.
Abesamis are purchasers in good faith and for value of portions of the subject lots
subdivided, developed, and sold as Parthenon Hills from petitioner Barstowe
Philippines Corporation, it is DECLARED that their certificates of title are valid and
indefeasible as to all parties;
(4) In view of the finding that the Petition for New Trial filed by the heirs of Servando
Accibal, namely, Virgilio V. Accibal, Virginia A. Macabudbud, and Antonio V. Accibal,
lacks merit, the said Petition is DISMISSED; and
(5) The case is REMANDED to the court of origin for determination of the following
(a) The validity of the claims, and identification of the purchasers, in good faith and
for value, of portions of the subject lots from petitioner Barstowe Philippines
Corporation, other than intervenors Winnie U. Nicolas-Agbulos and Edgardo Q.
Abesamis, whose titles are to be declared valid and indefeasible;
(b) The identification of the portions of the subject lots in the possession and names
of purchasers in good faith and for value and those which remain with petitioner
Barstowe Philippines Corporation;
(c) The computation of the amount of the purchase price which respondent Republic
of the Philippines may recover from petitioner Barstowe Philippines Corporation in
consideration of the preceding paragraphs hereof;
(d) The types and computation of the damages recoverable by the parties; and
(e) The computation and award of the cross-claim of EL-VI Realty and Development
Corporation against petitioner Barstowe Philippines Corporation.

SO ORDERED.

G.R. No. 168661

ESTATE OF THE LATE
JESUS S. YUJUICO, represented
by ADMINISTRATORS
BENEDICTO V. YUJUICO and
AUGUSTO Y.
Petitioners
,
- versus REPUBLIC OF THE PHILIPPINES
and the COURT OF APPEALS,
Respondents.
DECISION

October 26, 2007

VELASCO, JR., J.:

In 1973, Fermina Castro filed an application for the registration and
confirmation of her title over a parcel of land with an area of 17,343 square meters
covered by plan (LRC) Psu-964 located in the Municipality of Paraaque, Province of
Rizal (now Paraaque City), in the Pasig-Rizal Court of First Instance (CFI), Branch
22. The application was docketed LRC Case No. N-8239. The application was
opposed by the Office of the Solicitor General (OSG) on behalf of the Director of
Lands, and by Mercedes Dizon, a private party. Both oppositions were stricken from
the records since the opposition of Dizon was filed after the expiration of the period
given by the court, and the opposition of the Director of Lands was filed after the
entry of the order of general default. After considering the evidence, the trial court
rendered its April 26, 1974 Decision. The dispositive portion reads:
____________________________
* As per September 3, 2007 raffle.
WHEREFORE, the Court hereby declares the applicant, Fermina Castro, of
legal age, single, Filipino and a resident of 1515 F. Agoncillo St., Corner J. Escoda St.,
Ermita, Manila, the true and absolute owner of the land applied for situated in the
Municipality of Paraaque, Province of Rizal, with an area of 17,343 square meters
and covered by plan (LRC) Psu-964 and orders the registration of said parcel of land
in her name with her aforementioned personal circumstances.
Once this decision becomes final and executory, let the corresponding order
for the issuance of the decree be issued.

SO ORDERED.[1]
The Director of Lands and Mercedes Dizon did not appeal from the adverse
decision of the Pasig-Rizal CFI. Thus, the order for the issuance of a decree of
registration became final, and Decree No. N-150912 was issued by the Land
Registration Commission (LRC).[2] Original Certificate of Title (OCT) No. 10215 was
issued in the name of Fermina Castro by the Register of Deeds for the Province of
Rizal on May 29, 1974.[3]
The land was then sold to Jesus S. Yujuico, and OCT No. 10215 was cancelled. On
May 31, 1974,[4] Transfer Certificate of Title (TCT) No. 445863 was issued in
Yujuicos name, who subdivided the land into two lots. TCT No. 446386[5] over Lot
1 was issued in his name, while TCT No. S-29361[6] over Lot 2 was issued in the
name of petitioner Augusto Y. Carpio.
Annotations at the back of TCT No. 446386 show that Yujuico had, at one time
or another, mortgaged the lot to the Philippine Investments System Organization
(PISO) and Citibank, N.A. Annotations in the title of petitioner Carpio reveal the lot
was mortgaged in favor of Private Development Corporation (PDC), Rizal
Commercial Banking Corporation (RCBC) and then Philippine Commercial and
Industrial Bank (PCIB) and the Development Bank of the Philippines (DBP) to secure
various loans.
Sometime in 1977, Presidential Decree No. (PD) 1085 entitled Conveying the
Land Reclaimed in the Foreshore and Offshore of the Manila Bay (The Manila-Cavite
Coastal Road Project) as Property of the Public Estates Authority as well as Rights
and Interests with Assumptions of Obligations in the Reclamation Contract Covering
Areas of the Manila Bay between the Republic of the Philippines and the
Construction and Development Corporation of the Philippines (1977) was issued.
Land reclaimed in the foreshore and offshore areas of Manila Bay became the
properties of the Public Estates Authority (PEA), a government corporation that
undertook the reclamation of lands or the acquisition of reclaimed lands. On
January 13, 1989, OCT No. SP 02 was issued in favor of PEA. The PEA also acquired
ownership of other parcels of land along the Manila Bay coast, some of which were
subsequently sold to the Manila Bay Development Corporation (MBDC), which in
turn leased portions to Uniwide Holdings, Inc.[7]
The PEA undertook the construction of the Manila Coastal Road. As this was
being planned, Yujuico and Carpio discovered that a verification survey they
commissioned showed that the road directly overlapped their property, and that
they owned a portion of the land sold by the PEA to the MBDC.
On July 24, 1996, Yujuico and Carpio filed before the Paraaque City Regional Trial
Court (RTC), a complaint for the Removal of Cloud and Annulment of Title with
Damages docketed as Civil Case No. 96-0317 against the PEA. On May 15, 1998 the

parties entered into a compromise agreement approved by the trial court in a

Resolution dated May 18, 1998. On June 17, 1998, the parties executed a Deed of
Exchange of Real Property, pursuant to the compromise agreement, where the PEA
property with an area of 1.4007 hectares would be conveyed to Jesus Yujuico and
petitioner Carpio in exchange for their property with a combined area of 1.7343
hectares.
On July 31, 1998, the incumbent PEA General Manager, Carlos P. Doble,
informed the OSG that the new PEA board and management had reviewed the
compromise agreement and had decided to defer its implementation and hold it in
abeyance following the view of the former PEA General Manager, Atty. Arsenio Yulo,
Jr., that the compromise agreement did not reflect a condition of the previous PEA
Board, requiring the approval of the Office of the President. The new PEA
management then filed a petition for relief from the resolution approving the
compromise agreement on the ground of mistake and excusable negligence.
The petition was dismissed by the trial court on the ground that it was filed out of
time and that the allegation of mistake and excusable negligence lacked basis.
The PEA fared no better in the Court of Appeals (CA), as the petition was dismissed
for failure to pay the required docket fees and for lack of merit.
The matter was raised to the Supreme Court in Public Estates Authority v. Yujuico[8]
but PEAs petition was denied, upholding the trial courts dismissal of the petition for
relief for having been filed out of time. The allegation of fraud in the titling of the
subject property in the name of Fermina Castro was not taken up by the Court.
On June 8, 2001, in a Complaint for Annulment and Cancellation of Decree No.
N-150912 and its Derivative Titles, entitled Republic of the Philippines v. Fermina
Castro, Jesus S. Yujuico, August Y. Carpio and the Registry of Deeds of Paraaque
City docketed as Civil Case No. 01-0222, filed with the Paraaque City RTC,
respondent Republic of the Philippines, through the OSG, alleged that when the land
registered to Castro was surveyed by Engr. H. Obreto on August 3, 1972 and
subsequently approved by the LRC on April 23, 1973, the land was still a portion of
Manila Bay as evidenced by Namria Hydrographic Map No. 4243, Surveys to 1980;
1st Ed/. January 9/61: Revised 80-11-2; that Roman Mataverde, the then OIC of the
Surveys Division, Bureau of Lands, informed the OIC of the Legal Division that
[w]hen projected on Cadastral Maps CM 14 deg. 13 N-120 deg, 59E, Sec.2-A of
Paraaque Cadastre (Cad. 299), (LRC) Psu-964 falls inside Manila Bay, outside Cad.
299; that then Acting Regional Lands Director Narciso V. Villapando issued a Report
dated November 15, 1973 stating that plan (LRC) Psu-964 is a portion of Manila Bay;
that then Officer-in-Charge, Assistant Director of Lands, Ernesto C. Mendiola,
submitted his Comment and Recommendation re: Application for Registration of
Title of FERMINA CASTRO, LRC Case No. N-8239, dated Dec. 1, 1977, praying that

the instant registration case be dismissed; and that Fermina Castro had no
registrable rights over the property.
More significantly, respondent Republic argued that, first, since the subject
land was still underwater, it could not be registered in the name of Fermina Castro.
Second, the land registration court did not have jurisdiction to adjudicate inalienable
lands, thus the decision adjudicating the subject parcel of land to Fermina Castro
was void. And third, the titles of Yujuico and Carpio, being derived from a void title,
were likewise void.[9]
On September 13, 2001, Yujuico and Carpio filed a Motion to Dismiss (With
Cancellation of Notice of Lis Pendens),[10] on the grounds that: (1) the cause of
action was barred by prior judgment; (2) the claim had been waived, abandoned, or
otherwise extinguished; (3) a condition precedent for the filing of the complaint was
not complied with; and (4) the complaint was not verified and the certification
against forum shopping was not duly executed by the plaintiff or principal party.
On November 27, 2001, respondent Republic filed an Opposition[11] to the motion
to dismiss to which defendants filed a Reply[12] on January 14, 2002, reiterating the
grounds for the motion to dismiss.
In the August 7, 2002 Order of the RTC,[13] Civil Case No. 01-0222 was dismissed.
The trial court stated that the matter had already been decided in LRC Case No. N8239, and that after 28 years without being contested, the case had already
become final and executory. The trial court also found that the OSG had
participated in the LRC case, and could have questioned the validity of the decision
but did not. Civil Case No. 01-0222 was thus found barred by prior judgment.
On appeal to the CA, in CA-G.R. CV No. 76212, respondent Republic alleged that the
trial court erred in disregarding that appellant had evidence to prove that the
subject parcel of land used to be foreshore land of the Manila Bay and that the trial
court erred in dismissing Civil Case No. 01-0222 on the ground of res judicata.[14]

The CA observed that shores are properties of the public domain intended for
public use and, therefore, not registrable and their inclusion in a certificate of title
does not convert the same into properties of private ownership or confer title upon
the registrant.
Further, according to the appellate court res judicata does not apply to lands of
public domain, nor does possession of the land automatically divest the land of its
public character.
The appellate court explained that rulings of the Supreme Court have made
exceptions in cases where the findings of the Director of Lands and the Department

of Environment and Natural Resources (DENR) were conflicting as to the true nature
of the land in as much as reversion efforts pertaining foreshore lands are embued
with public interest.
The dispositive portion of the CA decision reads,

WHEREFORE, premises considered, the present appeal is hereby GRANTED.

The appealed Order dated August 7, 2002 of the trial court in Civil Case No. 01-0222
is hereby REVERSED and SET ASIDE. The case is hereby REMANDED to said court
for further proceedings and a full-blown trial on the merits with utmost dispatch.[15]

Hence, this petition.

The Issues
Petitioners now raise the following issues before this Court:

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR AND DECIDED A

QUESTION OF SUBSTANCE IN A WAY NOT IN ACCORDANCE WITH LAW AND THE
APPLICABLE DECISIONS OF THE HONORABLE COURT AND HAS DEPARTED FROM THE
ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS NECESSITATING THE
HONORABLE COURTS EXERCISE OF ITS POWER OF SUPERVISION CONSIDERING
THAT:
I.
THE REVERSAL BY THE COURT OF APPEALS OF THE
TRIAL
COURTS APPLICATION OF THE PRINCIPLE OF
RES JUDICATA IN THE INSTANT CASE
IS BASED ON ITS
ERRONEOUS ASSUMPTION THAT THE SUBJECT LAND
IS
OF PUBLIC DOMAIN, ALLEGEDLY PART OF MANILA
BAY.
A.
IN THE FIRESTONE CASE, THE HONORABLE COURT APPLIED THE PRINCIPLE OF
RES JUDICATA NOTWITHSTANDING ALLEGATIONS OF LACK OF JURISDICTION OF A
LAND REGISTRATION COURT, FORECLOSING ANY FURTHER ATTEMPT BY
RESPONDENT THEREIN, AS IN THE INSTANT CASE, TO RESURRECT A LONG-SETTLED
JUDICIAL DETERMINATION OF REGISTRABILITY OF A PARCEL OF LAND BASED ON THE
SHEER ALLEGATION THAT THE SAME IS PART OF THE PUBLIC DOMAIN.
B.
THE LAND REGISTRATION COURT HAD JURISDICTION TO DETERMINE WHETHER
THE SUBJECT LAND WAS PART OF THE PUBLIC DOMAIN.

C.
RESPONDENTS REVERSION CASE SEEKS TO RETRY THE VERY SAME FACTUAL
ISSUES THAT HAVE ALREADY BEEN JUDICIALLY DETERMINED OVER THIRTY (30)
YEARS AGO.
D.
THE JURISPRUDENTIAL BASES APPLIED BY THE COURT OF APPEALS IN ITS
QUESTIONED DECISION ARE MISPLACED, CONSIDERING THAT THEY ARE ALL
PREDICATED ON THE ERRONEOUS PREMISE THAT IT IS UNDISPUTED THAT THE
SUBJECT LAND IS PART OF THE PUBLIC DOMAIN.
II.
RESPONDENT IS BARRED BY JURISDICTIONAL
ESTOPPEL AND LACHES
FROM QUESTIONING THE
JURISDICTION OF THE LAND REGISTRATION COURT.
III.
RELIANCE BY THE COURT OF APPEALS ON THE
ISOLATED
PRONOUNCEMENT OF THE HONORABLE COURT IN THE PEA CASE IS
UNWARRANTED AND MISLEADING CONSIDERING THAT THE MATTER OF WHETHER
RES JUDICATA APPLIES WITH RESPECT TO THE LAND REGISTRATION COURTS
DECISION IN 1974
WAS NOT IN ISSUE IN SAID CASE.
A.

THE INSTANT REVERSION CASE IS NOT THE PROPER RECOURSE.

B.
THE VALIDITY OF THE COURT-APPROVED COMPROMISE AGREEMENT 15 MAY
1998 HAS ALREADY BEEN AFFIRMED BY THE HONORABLE COURT IN THE PEA CASE.
IV.
EQUITABLE CONSIDERATIONS MANDATE THE
APPLICATION OF THE RULE
ON ORDINARY ESTOPPEL
AND LACHES IN THE INSTANT CASE AGAINST
RESPONDENT.
V.
RESPONDENT CANNOT BE GIVEN SPECIAL CONSIDERATION AND EXCUSED FOR
TRANSGRESSING RULES OF PROCEDURE.[16]

Essentially, the issues boil down to three: (1) Is a reversion suit proper in this case?
(2) Is the present petition estopped by laches? (3) Did the CA erroneously apply the
principle of res judicata?
An action for reversion seeks to restore public land fraudulently awarded and
disposed of to private individuals or corporations to the mass of public domain.[17]
This remedy is provided under Commonwealth Act (CA) No. 141 (Public Land Act)
which became effective on December 1, 1936. Said law recognized the power of
the state to recover lands of public domain. Section 124 of CA No. 141 reads:
SEC. 124. Any acquisition, conveyance, alienation, transfer, or other contract made
or executed in violation of any of the provisions of Sections one hundred and

eighteen, one hundred and twenty, one hundred and twenty one, one hundred and
twenty-two, and one hundred twenty-three of this Act shall be unlawful and null and
void from its execution and shall produce the effect of annulling and cancelling the
grant, title, patent, or permit originally issued, recognized or confirmed, actually or
presumptively, and cause the reversion of the property and its improvements to the
State. (Emphasis supplied.)

Pursuant to Section 124 of the Public Land Act, reversion suits are proper in the
following instances, to wit:
1.
Alienations of land acquired under free patent or homestead provisions in
violation of Section 118, CA No. 141;
2.
and

Conveyances made by non-Christians in violation of Section 120, CA No. 141;

3.
Alienations of lands acquired under CA No. 141 in favor of persons not
qualified under Sections 121, 122, and 123 of CA No. 141.

From the foregoing, an action for reversion to cancel titles derived from homestead
patents or free patents based on transfers and conveyances in violation of CA No.
141 is filed by the OSG pursuant to its authority under the Administrative Code with
the RTC. It is clear therefore that reversion suits were originally utilized to annul
titles or patents administratively issued by the Director of the Land Management
Bureau or the Secretary of the DENR.
While CA No. 141 did not specify whether judicial confirmation of titles by a land
registration court can be subject of a reversion suit, the government availed of such
remedy by filing actions with the RTC to cancel titles and decrees granted in land
registration applications.
The situation changed on August 14, 1981 upon effectivity of Batas Pambansa (BP)
Blg. 129 which gave the Intermediate Appellate Court the exclusive original
jurisdiction over actions for annulment of judgments of RTCs.
When the 1997 Rules of Civil Procedure became effective on July 1, 1997, it
incorporated Rule 47 on annulment of judgments or final orders and resolutions of
the RTCs. The two grounds for annulment under Sec. 2, Rule 47 are extrinsic fraud
and lack of jurisdiction. If based on extrinsic fraud, the action must be filed within
four (4) years from its discovery, and if based on lack of jurisdiction, before it is
barred by laches or estoppel as provided by Section 3, Rule 47. Thus, effective July

1, 1997, any action for reversion of public land instituted by the Government was
already covered by Rule 47.
The instant Civil Case No. 01-0222 for annulment and cancellation of Decree No. N150912 and its derivative titles was filed on June 8, 2001 with the Paraaque City
RTC. It is clear therefore that the reversion suit was erroneously instituted in the
Paraaque RTC and should have been dismissed for lack of jurisdiction. The proper
court is the CA which is the body mandated by BP Blg. 129 and prescribed by Rule
47 to handle annulment of judgments of RTCs.
In Collado v. Court of Appeals,[18] the government, represented by the Solicitor
General pursuant to Section 9(2) of BP Blg. 129, filed a petition for annulment of
judgment with the CA. Similarly in the case of Republic v. Court of Appeals,[19] the
Solicitor General correctly filed the annulment of judgment with the said appellate
court.
This was not done in this case. The Republic misfiled the reversion suit with the
Paraaque RTC. It should have been filed with the CA as required by Rule 47.
Evidently, the Paraaque RTC had no jurisdiction over the instant reversion case.
Assuming that the Paraaque RTC has jurisdiction over the reversion case, still the
lapse of almost three decades in filing the instant case, the inexplicable lack of
action of the Republic and the injury this would cause constrain us to rule for
petitioners. While it may be true that estoppel does not operate against the state
or its agents,[20] deviations have been allowed. In Manila Lodge No. 761 v. Court of
Appeals, we said:
Estoppels against the public are little favored. They should not be invoked except in
rare and unusual circumstances, and may not be invoked where they would operate
to defeat the effective operation of a policy adopted to protect the public. They
must be applied with circumspection and should be applied only in those special
cases where the interests of justice clearly require it. Nevertheless, the government
must not be allowed to deal dishonorably or capriciously with its citizens, and must
not play an ignoble part or do a shabby thing; and subject to limitations x x x, the
doctrine of equitable estoppel may be invoked against public authorities as well as
against private individuals.[21] (Emphasis supplied.)

Equitable estoppel may be invoked against public authorities when as in this case,
the lot was already alienated to innocent buyers for value and the government did
not undertake any act to contest the title for an unreasonable length of time.
In Republic v. Court of Appeals, where the title of an innocent purchaser for value
who relied on the clean certificates of the title was sought to be cancelled and the
excess land to be reverted to the Government, we ruled that [i]t is only fair and

reasonable to apply the equitable principle of estoppel by laches against the

government to avoid an injustice to innocent purchasers for value (emphasis
supplied).[22] We explained:

Likewise time-settled is the doctrine that where innocent third persons, relying on
the correctness of the certificate of title, acquire rights over the property, courts
cannot disregard such rights and order the cancellation of the certificate. Such
cancellation would impair public confidence in the certificate of title, for everyone
dealing with property registered under the Torrens system would have to inquire in
every instance whether the title has been regularly issued or not. This would be
contrary to the very purpose of the law, which is to stabilize land titles. Verily, all
persons dealing with registered land may safely rely on the correctness of the
certificate of title issued therefore, and the law or the courts do not oblige them to
go behind the certificate in order to investigate again the true condition of the
property. They are only charged with notice of the liens and encumbrances on the
property that are noted on the certificate.[23]
xxxx
But in the interest of justice and equity, neither may the titleholder be made to bear
the unfavorable effect of the mistake or negligence of the States agents, in the
absence of proof of his complicity in a fraud or of manifest damage to third persons.
First, the real purpose of the Torrens system is to quiet title to land to put a stop
forever to any question as to the legality of the title, except claims that were noted
in the certificate at the time of the registration or that may arise subsequent
thereto. Second, as we discussed earlier, estoppel by laches now bars petitioner
from questioning private respondents titles to the subdivision lots. Third, it was
never proven that Private Respondent St. Jude was a party to the fraud that led to
the increase in the area of the property after its subdivision. Finally, because
petitioner even failed to give sufficient proof of any error that might have been
committed by its agents who had surveyed the property, the presumption of
regularity in the performance of their functions must be respected. Otherwise, the
integrity of the Torrens system, which petitioner purportedly aims to protect by filing
this case, shall forever be sullied by the ineptitude and inefficiency of land
registration officials, who are ordinarily presumed to have regularly performed their
duties.[24]

Republic v. Court of Appeals is reinforced by our ruling in Republic v. Umali,[25]

where, in a reversion case, we held that even if the original grantee of a patent and
title has obtained the same through fraud, reversion will no longer prosper as the
land had become private land and the fraudulent acquisition cannot affect the titles
of innocent purchasers for value.

Considering that innocent purchaser for value Yujuico bought the lot in 1974, and
more than 27 years had elapsed before the action for reversion was filed, then said
action is now barred by laches.
While the general rule is that an action to recover lands of public domain is
imprescriptible, said right can be barred by laches or estoppel. Section 32 of PD
1592 recognized the rights of an innocent purchaser for value over and above the
interests of the government. Section 32 provides:
SEC. 32. Review of decree of registration; Innocent purchaser for value.The
decree of registration shall not be reopened or revised by reason of absence,
minority, or other disability of any person adversely affected thereby, nor by any
proceeding in any court for reversing judgments, subject, however, to the right of
any person, including the government and the branches thereof, deprived of land or
of any estate or interest therein by such adjudication or confirmation of title
obtained by actual fraud, to file in the proper Court of First Instance a petition for
reopening and review of the decree of registration not later than one year from and
after the date of the entry of such decree of registration, but in no case shall such
petition be entertained by the court where an innocent purchaser for value has
acquired the land or an interest therein, whose rights may be prejudiced. Whenever
the phrase innocent purchaser for value or an equivalent phrase occurs in this
Decree, it shall be deemed to include an innocent lessee, mortgagee, or other
encumbrances for value. (Emphasis supplied.)

In this petition, the LRC (now LRA), on May 30, 1974, issued Decree No. N-150912 in
favor of Fermina Castro and OCT No. 10215 was issued by the Rizal Registrar of
Deeds on May 29, 1974. OCT No. 10215 does not show any annotation, lien, or
encumbrance on its face. Relying on the clean title, Yujuico bought the same in
good faith and for value from her. He was issued TCT No. 445863 on May 31, 1974.
There is no allegation that Yujuico was a buyer in bad faith, nor did he acquire the
land fraudulently. He thus had the protection of the Torrens System that every
subsequent purchaser of registered land taking a certificate of title for value and in
good faith shall hold the same free from all encumbrances except those noted on
the certificate and any of the x x x encumbrances which may be subsisting.[26]
The same legal shield redounds to his successors-in-interest, the Yujuicos and
Carpio, more particularly the latter since Carpio bought the lot from Jesus Y. Yujuico
for value and in good faith.
Likewise protected are the rights of innocent mortgagees for value, the PISO,
Citibank, N.A., PDC, RCBC, PCIB, and DBP. Even if the mortgagors title was proved
fraudulent and the title declared null and void, such declaration cannot nullify the
mortgage rights of a mortgagee in good faith.[27]

All told, a reversion suit will no longer be allowed at this stage.

More on the issue of laches. Laches is the failure or neglect, for an unreasonable
and unexplained length of time, to do that which by exercising due diligence could
or should have been done earlier. It is negligence or omission to assert a right within
a reasonable time, warranting a presumption that the party entitled thereto has
either abandoned or declined to assert it.[28]
When respondent government filed the reversion case in 2001, 27 years had
already elapsed from the time the late Jesus Yujuico purchased the land from the
original owner Castro. After the issuance of OCT No. 10215 to Castro, no further
action was taken by the government to question the issuance of the title to Castro
until the case of Public Estates Authority, brought up in the oral argument before
this Court on September 6, 2000.[29] We then held that allegation of fraud in the
issuance of the title was not proper for consideration and determination at that
stage of the case.
From the undisputed facts of the case, it is easily revealed that respondent Republic
took its sweet time to nullify Castros title, notwithstanding the easy access to
ample remedies which were readily available after OCT No. 10215 was registered in
the name of Castro. First, it could have appealed to the CA when the Pasig-Rizal CFI
rendered a decision ordering the registration of title in the name of applicant Castro
on April 26, 1974. Had it done so, it could have elevated the matter to this Court if
the appellate court affirms the decision of the land registration court. Second, when
the entry of Decree No. N-150912 was made on May 29, 1974 by the Rizal Register
of Deeds, the Republic had one (1) year from said date or up to May 28, 1975 to file
a petition for the reopening and review of Decree No. N-150912 with the Rizal CFI
(now RTC) on the ground of actual fraud under section 32 of PD 1592. Again,
respondent Republic did not avail of such remedy. Third, when Jesus Yujuico filed a
complaint for Removal of Cloud and Annulment of Title with Damages against PEA
before the Paraaque RTC in Civil Case No. 96-0317, respondent could have
persevered to question and nullify Castros title. Instead, PEA undertook a
compromise agreement on which the May 18, 1998 Resolution[30] was issued. PEA
in effect admitted that the disputed land was owned by the predecessors-in-interest
of petitioners and their title legal and valid; and impliedly waived its right to contest
the validity of said title; respondent Republic even filed the petition for relief from
judgment beyond the time frames allowed by the rules, a fact even acknowledged
by this Court in Public Estates Authority. Lastly, respondent only filed the reversion
suit on June 8, 2001 after the passage of 27 years from the date the decree of
registration was issued to Fermina Castro.
Such a Rip Van Winkle, coupled with the signing of the settlement with PEA,
understandably misled petitioners to believe that the government no longer had

any right or interest in the disputed lot to the extent that the two lots were even
mortgaged to several banks including a government financing institution. Any
nullification of title at this stage would unsettle and prejudice the rights and
obligations of innocent parties. All told, we are constrained to conclude that laches
had set in.
Even granting arguendo that respondent Republic is not precluded by laches from
challenging the title of petitioners in the case at bar, still we find that the instant
action for reversion is already barred by res judicata.
Petitioners relying on Firestone Ceramics, Inc. v. Court of Appeals[31] as a precedent
to the case at bar contend that the instant reversion suit is now barred by res
judicata.
We agree with petitioners.
The doctrine on precedents is expressed in the latin maximStare decisis et non
quieta movere. Follow past precedents and do not disturb what has been settled.
[32] In order however that a case can be considered as a precedent to another
case which is pending consideration, the facts of the first case should be similar or
analogous to the second case.
A perusal of the facts of the Firestone case and those of the case at bar reveals that
the facts in the two (2) cases are parallel. First, in Firestone and in this case, the
claimants filed land registration applications with the CFI; both claimants obtained
decrees for registration of lots applied for and were issued OCTs. Second, in
Firestone, the Republic filed a reversion case alleging that the land covered by the
OCT was still inalienable forest land at the time of the application and hence the
Land Registration Court did not acquire jurisdiction to adjudicate the property to the
claimant. In the instant case, respondent Republic contend that the land applied for
by Yujuico was within Manila Bay at the time of application and therefore the CFI
had no jurisdiction over the subject matter of the complaint. Third, in Firestone, the
validity of the title of the claimant was favorably ruled upon by this Court in G.R. No.
109490 entitled Patrocinio E. Margolles v. CA. In the case at bar, the validity of the
compromise agreement involving the disputed lot was in effect upheld when this
Court in Public Estates Authority v. Yujuico dismissed the petition of PEA seeking to
reinstate the petition for relief from the May 18, 1998 Resolution approving said
compromise agreement. With the dismissal of the petition, the May 18, 1998
Resolution became final and executory and herein respondent Republic through PEA
was deemed to have recognized Castros title over the disputed land as legal and
valid. In Romero v. Tan,[33] we ruled that a judicial compromise has the effect of
res judicata. We also made clear that a judgment based on a compromise
agreement is a judgment on the merits, wherein the parties have validly entered
into stipulations and the evidence was duly considered by the trial court that

approved the agreement. In the instant case, the May 18, 1998 Resolution
approving the compromise agreement confirmed the favorable decision directing
the registration of the lot to Castros name in LRC Case No. N-8239. Similarly, in
Firestone, the Margolles case confirmed the decision rendered in favor of Gana in
Land Registration Case No. 672 ordering the issuance of the decree to said
applicant. Fourth, in Firestone, the Supreme Court relied on the letter of then
Solicitor General Francisco Chavez that the evidence of the Bureau of Lands and the
LRC was not sufficient to support an action for cancellation of OCT No. 4216. In the
instant case, both the Solicitor General and the Government Corporate Counsel
opined that the Yujuico land was not under water and that there appears to be no
sufficient basis for the Government to institute the action for annulment. Fifth, in
Firestone, we ruled that the Margolles case had long become final, thus the
validity of OCT No. 4216 should no longer be disturbed and should be applied in the
instant case (reversion suit) based on the principle of res judicata or, otherwise, the
rule on conclusiveness of judgment.[34]
Clearly from the above, Firestone is a precedent case. The Public Estates Authority
had become final and thus the validity of OCT No. 10215 issued to Castro could no
longer be questioned.
While we said in Public Estates Authority that the court does not foreclose the right
of the Republic from pursuing the proper recourse in a separate proceedings as it
may deem warranted, the statement was obiter dictum since the inquiry on whether
or not the disputed land was still under water at the time of its registration was a
non-issue in the said case.
Even granting for the sake of argument that Firestone is not squarely applicable, still
we find the reversion suit already barred by res judicata.
For res judicata to serve as an absolute bar to a subsequent action, the following
requisites must concur: (1) there must be a final judgment or order; (2) the court
rendering it must have jurisdiction over the subject matter and the parties; (3) it
must be a judgment or order on the merits; and (4) there must be between the two
cases, identity of parties, subject matter and causes of action.[35]
There is no question as to the first, third and last requisites. The threshold question
pertains to the second requisite, whether or not the then Pasig-Rizal CFI, Branch 22
had jurisdiction over the subject matter in LRC Case No. N-8239. In Civil Case No.
01-0222, the Paraaque City RTC, Branch 257 held that the CFI had jurisdiction. The
CA reversed the decision of the Paraaque City RTC based on the assertion of
respondent Republic that the Pasig-Rizal CFI had no jurisdiction over the subject
matter, and that there was a need to determine the character of the land in
question.
The Paraaque City RTC Order dismissing the case for res judicata must be upheld.

The CA, in rejecting the dismissal of the reversion case by the Paraaque RTC, relied
on two cases, namely: Municipality of Antipolo v. Zapanta[36] and Republic v. Vda.
De Castillo.[37]
In Municipality of Antipolo, we held that the land registration court had no
jurisdiction to entertain any land registration application if the land was public
property, thus:
Since the Land Registration Court had no jurisdiction to entertain the
application for registration of public property of ANTIPOLO, its Decision adjudicating
the DISPUTED PROPERTY as of private ownership is null and void. It never attained
finality, and can be attacked at any time. It was not a bar to the action brought by
ANTIPOLO for its annulment by reason of res judicata.
[x x x] the want of jurisdiction by a court over the subject matter renders the
judgment void and a mere nullity, and considering that a void judgment is in legal
effect no judgment, by which no rights are divested, from which no rights can be
obtained, which neither binds nor bars any one, and under which all acts performed
and all claims flowing out of are void, and considering, further, that the decision, for
want of jurisdiction of the court, is not a decision in contemplation of law, and
hence, can never become executory, it follows that such a void judgment cannot
constitute a bar to another case by reason of res judicata.
xxxx
It follows that if a person obtains a title under the Public Land Act which
includes, by oversight, lands which cannot be registered under the Torrens System,
or when the Director of Lands did not have jurisdiction over the same because it is a
public forest, the grantee does not, by virtue of the said certificate of title alone,
become the owner of the land illegally included (Republic vs. Animas, 56 SCRA 499,
503; Ledesma vs. Municipality of Iloilo, 49 Phil. 769).
[x x x x]
Under these circumstances, the certificate of title may be ordered cancelled
(Republic vs. Animas, et al., supra), and the cancellation maybe pursued through an
ordinary action therefore. This action cannot be barred by the prior judgment of the
land registration court, since the said court had no jurisdiction over the subject
matter. And if there was no such jurisdiction, then the principle of res judicata does
not apply. [x x x] Certainly, one of the essential requisites, i.e., jurisdiction over the
subject matter, is absent in this case. (Italics supplied).[38]

The plain import of Municipality of Antipolo is that a land registration court,

the RTC at present, has no jurisdiction over the subject matter of the application
which respondent Republic claims is public land. This ruling needs elucidation.
Firmly entrenched is the principle that jurisdiction over the subject matter is
conferred by law.[39] Consequently, the proper CFI (now the RTC) under Section 14
of PD 1529[40] (Property Registration Decree) has jurisdiction over applications for
registration of title to land.
Section 14 of PD 1592 provides:

SEC. 14. Who may apply.The following persons may file in the proper
Court of First Instance an application for registration of title to land, whether
personally or through their duly authorized representatives:
(1)
Those who by themselves or through their predecessors-in-interest
have been in open, continuous, exclusive and notorious possession and occupation
of alienable and disposable lands of the public domain under a bona fide claim of
ownership since June 12, 1945, or earlier. (Emphasis supplied.)

Conformably, the Pasig-Rizal CFI, Branch XXII has jurisdiction over the subject
matter of the land registration case filed by Fermina Castro, petitioners
predecessor-in-interest, since jurisdiction over the subject matter is determined by
the allegations of the initiatory pleadingthe application.[41] Settled is the rule
that the authority to decide a case and not the decision rendered therein is what
makes up jurisdiction. When there is jurisdiction, the decision of all questions
arising in the case is but an exercise of jurisdiction.[42]
In our view, it was imprecise to state in Municipality of Antipolo that the Land
Registration Court [has] no jurisdiction to entertain the application for registration of
public property x x x for such court precisely has the jurisdiction to entertain land
registration applications since that is conferred by PD 1529. The applicant in a land
registration case usually claims the land subject matter of the application as his/her
private property, as in the case of the application of Castro. Thus, the conclusion of
the CA that the Pasig-Rizal CFI has no jurisdiction over the subject matter of the
application of Castro has no legal mooring. The land registration court initially has
jurisdiction over the land applied for at the time of the filing of the application. After
trial, the court, in the exercise of its jurisdiction, can determine whether the title to
the land applied for is registrable and can be confirmed. In the event that the
subject matter of the application turns out to be inalienable public land, then it has

no jurisdiction to order the registration of the land and perforce must dismiss the
application.
Based on our ruling in Antipolo, the threshold question is whether the land covered
by the titles of petitioners is under water and forms part of Manila Bay at the time of
the land registration application in 1974. If the land was within Manila Bay, then res
judicata does not apply. Otherwise, the decision of the land registration court is a
bar to the instant reversion suit.
After a scrutiny of the case records and pleadings of the parties in LRC Case No. N8239 and in the instant petition, we rule that the land of Fermina Castro is
registrable and not part of Manila Bay at the time of the filing of the land
registration application.
The trial courts Decision in 1974 easily reveals the basis for its conclusion that the
subject matter was a dry land, thus:
On February 1, 1974, the applicant presented her evidence before the Deputy Clerk
of this Court and among the evidence presented by her were certain documents
which were marked as Exhibits D to J, inclusive. The applicant testified in her behalf
and substantially declared that: she was 62 years old, single, housekeeper and
residing at 1550 J. Escoda, Ermita, Manila; that she was born on June 3, 1911; that
she first came to know of the land applied for which is situated in the Municipality of
Paraaque, province of Rizal, with an area of 17,343 square meters and covered by
plan (LRC) Psu-964 while she was still ten (10) years old or sometime in 1921; that
when she first came to know of the land applied for, the person who was in
possession and owner of said land was her father, Catalino Castro; that during that
time her father used to plant on said land various crops like pechay, mustard,
eggplant, etc.; that during that time, her father built a house on said land which was
used by her father and the other members of the family, including the applicant, as
their residential house; that the land applied for was inherited by her father from
her grandfather Sergio Castro; that Catalino Castro continuously possessed and
owned the land in question from 1921 up to the time of his death in 1952; and that
during that period of time nobody ever disturbed the possession and ownership of
her father over the said parcel of land; that after the death of her father in 1952 she
left the place and transferred her place of residence but she had also occasions to
visit said land twice or thrice a week and sometimes once a week; that after she left
the land in question in 1952, she still continued possessing said land, through her
caretaker Eliseo Salonga; that her possession over the land in question from the
time she inherited it up to the time of the filing of the application has been
continuous, public, adverse against the whole world and in the concept of an owner;
that it was never encumbered, mortgaged, or disposed of by her father during his
lifetime and neither did she ever encumber or sell the same; that it was declared for
taxation purposes by her father when he was still alive and her father also paid the
real estate taxes due to the government although the receipt evidencing the

payment of said real estate taxes for the property applied for have been lost and
could no longer be found inspite of diligent effort exerted to locate the same.
The other witness presented by the applicant was Emiliano de Leon, who declared
that he was 70 years old, married, farmer and residing at San Jose, Baliwag,
Bulacan; that he knew Catalino Castro, the father of the applicant because said
Catalino Castro was his neighbor in Tambo, Paraaque, Rizal, he had a house
erected on the land of Catalino Castro; that he was born in 1903 and he first came
to know of the land in question when in 1918 when he was about 18 years old; that
the area of the land owned and possessed by Catalino Castro where he constructed
a residential house has an area of more than one and one-half (1 ) hectares; that
the possession of Catalino Castro over the land in question was peaceful,
continuous, notorious, adverse against the whole world and in the concept of an
owner; that during the time that Catalino Castro was in possession of the land
applied for he planted on said parcel of land mango, coconut and banana, etc.; that
Catalino Castro continuously possessed and owned said parcel of land up to the
year 1952 when he died; that during the time that Catalino Castro was in
possession of said land, nobody ever laid claim over the said property; that said
land is not within any military or naval reservation; that upon the death of Catalino
Castro, the applicant took possession of the land applied for and that up to the
present the applicant is in possession of said land; that he resided in the land in
question from 1918 up to the time he transferred his place of residence in Baliwag,
Bulacan in the year 1958.
On February 11, 1974, the Court, pursuant to the provision of Presidential Decree
No. 230 issued by his Excellency, Ferdinand E. Marcos dated July 9, 1973 held in
abeyance the rendition of a decision in this case and directed the applicant to
submit a white print copy of plan (LRC) Psu-964 to the Director of lands who was
directed by the Court to submit his comment and recommendation thereon.
The property in question is declared for taxation purposes under Tax Declaration No.
51842 (Exhibit G) and real estate taxes due thereon have been paid up to the year
1973 (Exhibit H).
In compliance with the Order of this Court February 11, 1974, the Director of
Lands, thru Special Attorney Saturnino A. Pacubas, submitted a report to this Court
dated April 25, 1974, stating among other things, that upon ocular inspection
conducted by Land Inspector Adelino G. Gorospe and the subsequent joint ocular
inspection conducted by Geodetic Engineer Manuel A. Cervantes and Administrative
Assistant Lazaro G. Berania, it was established that the parcel of land covered by
plan (LRC) Psu-964 no longer forms part of the Manila Bay but is definitely solid and
dry land.

In this connection, it should be noted that Administrative Assistant Lazaro G.

Berania and Geodetic Engineer Manuel A. Cervantes, in their report dated March 22,
1974 have also stated that the land applied for cannot be reached by water even in
the highest tide and that the said land is occupied by squatter families who have
erected makeshift shanties and a basketball court which only prove that the same is
dry and solid land away from the shores of Manila Bay.
Furthermore, Land Inspector Adelino G. Gorospe in his letter-report dated
November 28, 1973 has also stated that there is a house of pre-war vintage owned
by the applicant on the land in question which in effect corroborates the testimony
of the applicant and her witness that they have lived on the land in question even
prior to the outbreak of the second world war and that the applicant has been in
possession of the land in question long time ago.[43]

To counter the evidence of applicant Castro, and bolster its claim that she has no
valid title, respondent Republic relies on the July 18, 1973 Office Memorandum[44]
of Roman Mataverde, OIC, Surveys Division, to the OIC, Legal Division, of the Bureau
of Lands, stating that when projected on cadastral maps CM 14 13N - 120 59 E.,
Sec. 3-D and CM 14 30N - 120 59E., Sec. 2-A of Paranaque [sic] Cadastre (Cad299), (LRC) Psu-964 falls inside Manila Bay, outside Cad-299.[45]
The same conclusion was adopted in a November 15, 1973 letter of Narciso
Villapando, Acting Regional Lands Director to the Chief, Legal Division, Bureau of
Lands and in the Comment and Recommendation of Ernesto C. Mendiola, Assistant
Director, also of the Bureau of Lands.
Respondent likewise cites Namria Hydrographic Map No. 4243 Revised 80-11-2 to
support its position that Castros lot is a portion of Manila Bay.
The burden of proving these averments falls to the shoulders of respondent
Republic. The difficulty is locating the witnesses of the government. Roman
Mataverde, then OIC of the Surveys Division retired from the government service in
1982. He should by this time be in his 90s. Moreover, Asst. Regional Director
Narciso Villapando and Asst. Director Ernesto C. Mendiola are no longer connected
with the Bureau of Lands since 1986.
Assuming that OIC Roman Mataverde, Asst. Regional Director Narciso Villapando
and Assistant Director Ernesto C. Mendiola are still available as witnesses, the
projections made on the cadastral maps of the then Bureau of Lands cannot prevail
over the results of the two ocular inspections by several Bureau of Lands officials
that the disputed lot is definitely dry and solid land and not part of Manila Bay.
Special Attorney Saturnino A. Pacubas, Land Inspector Adelino G. Gorospe, Geodetic
Engineer Manuel A. Cervantes and Administrative Asst. Lazaro A. Berana, all officials

of the Bureau of Lands, were positive that the disputed land is solid and dry land
and no longer forms part of Manila Bay. Evidence gathered from the ocular
inspection is considered direct and firsthand information entitled to great weight
and credit while the Mataverde and Villapando reports are evidence weak in
probative value, being merely based on theoretical projections in the cadastral
map or table surveys.[46] Said projections must be confirmed by the actual
inspection and verification survey by the land inspectors and geodetic engineers of
the Bureau of Lands. Unfortunately for respondent Republic, the bureau land
inspectors attested and affirmed that the disputed land is already dry land and not
within Manila Bay.
On the other hand, the Namria Hydrographic Map No. 4243 does not reveal what
portion of Manila Bay was Castros lot located in 1974. Moreover, a hydrographic
map is not the best evidence to show the nature and location of the lot subject of a
land registration application. It is derived from a hydrographic survey which is
mainly used for navigation purposes, thus:

Surveys whose principal purpose is the determination of data relating to bodies of

water. A hydrographic survey may consist of the determination of one or several of
the following classes of data: depth water; configuration and nature of the bottom;
directions and force of currents; heights and times of tides and water stages; and
location of fixed objects for survey and navigation purposes.[47]

Juxtaposed with finding of the ocular inspection by Bureau of Lands Special Attorney
Pacubas and others that Castros lot is dry land in 1974, Namria Hydrographic Map
No. 4243 is therefore inferior evidence and lacking in probative force.
Moreover, the reliability and veracity of the July 18, 1973 report of Roman
Mataverde based on the alleged projection on cadastral maps and the Villapando
report dated November 15, 1973 are put to serious doubt in the face of the opinion
dated October 13, 1997 of the Government Corporate Counsel, the lawyer of the
PEA, which upheld the validity of the titles of petitioners, thus:

We maintain to agree with the findings of the court that the property of Fermina
Castro was registrable land, as based on the two (2) ocular inspections conducted
on March 22, 1974 by Lands Administrative Assistant Lazaro G. Berania and Lands

Geodetic Engr. Manuel Cervantes, finding the same no longer forms part of
Manila Bay but is definitely solid land which cannot be reached by water even in the
highest of tides. This Berania-Cervantes report based on ocular inspections literally
overturned the findings and recommendations of Land Director Narciso V. Villapando
dated November 15, 1973, and that of Director Ernesto C. Mendiola dated
December 1, 1977, and the fact that the Villapando-Mendiola reports were merely
based on projections in the cadastral map or table surveys.
xxxx
A. The Legal prognosis of the case is not promising in favor of PEA.
4.1
LRC Case No. N-8239 has already become final and executory and OCT No.
10215 was already issued in favor of Fermina Castro. Any and all attempts to
question its validity can only be entertained in a quo warranto proceedings (sic),
assuming that there are legal grounds (not factual grounds) to support its
nullification. Subjecting it to a collateral attack is not allowed under the Torrens Title
System. In Calalang vs. Register of Deeds of Quezon City, 208 SCRA 215, the
Supreme Court held that the present petition is not the proper remedy in
challenging the validity of certificates of titles since the judicial action required is a
direct and not a collateral attack (refer also to: Toyota Motor Philippine Corporation
vs. CA, 216 SCRA 236).
4.2
OCT No. 10215 in favor of Fermina Castro was issued pursuant to a cadastral
proceeding, hence is a rem proceedings which is translated as a constructive notice
to the whole world, as held in Adez Realty Incorporated vs. CA, 212 SCRA 623.
4.3
From the cursory and intent reading of the decision of Judge Sison in LRC
Case No. N-8239, we cannot find any iota of fraud having been committed by the
court and the parties. In fact, due process was observed when the Office of the
Solicitor General represented ably the Bureau of Lands. In Balangcad vs. Justices of
the Court of Appeals, 206 SCRA 169, the Supreme Court held that title to registered
property becomes indefeasible after one-year from date of registration except
where there is actual fraud in which case it may be challenged in a direct
proceeding within that period. This is also the ruling in Bishop vs. CA, 208 SCRA 636,
that to sustain an action for annulment of a torrens certificate for being void ab
initio, it must be shown that the registration court had not acquired jurisdiction over
the case and there was actual fraud in securing the title.
4.4
As to priority of torrens title, PEA has no defense, assuming that both PEA
and Yujuico titles are valid, as held in Metropolitan Waterworks and Sewerage
System vs. CA, 215 SCRA 783, where two (2) certificates purport to include the
same land, the earlier in date prevails.

4.5
The documents so far submitted by the parties to the court indicate that the
mother title of the Yujuico land when registered in 1974 was not underwater. This
was shown in the two (2) ocular inspections conducted by the officials of the Land
Bureau.
4.6
The provision of P.D. 239 that no decree of registration may be issued by the
court unless upon approval and recommendation of the Bureau of Lands was
substantially complied with in the Report of Lands Special Attorney Saturnino
Pacubas, submitted to the court.[48]

Even the counsel of respondent Republic, the OSG, arrived at the conclusion that
there is no sufficient legal basis for said respondent to institute action to annul the
titles of petitioners, thus:

It may be stated at the outset that a petition for annulment of certificate of title or
reconveyance of land may be based on fraud which attended the issuance of the
decree of registration and the corresponding certificate of title.
Based on the decision in the LRC Case No. N-8239 involving the petition for
registration and confirmation of title filed by Fermina Castro, there is no showing
that fraud attended the issuance of OCT No. 10215. it appears that the evidence
presented by Fermina Castro was sufficient for the trial court to grant her petition.
The testimony of Fermina Castro, which was corroborated by Emiliano de Leon, that
she and her predecessors-in-interest had been in possession of the land for more
than thirty (30) years sufficiently established her vested right over the property
initially covered by OCT No. 10215. The report dated April 25, 1974 which was
submitted to the trial court by the Director of Lands through Special Attorney
Saturnino Pacubas showed that the parcel of land was solid and dry land when
Fermina Castros application for registration of title was filed. It was based on the
ocular inspection conducted by Land Inspector Adelino Gorospe and the joint
circular inspection conducted by Geodetic Engineer Manuel A. Cervantes and
Administrative Assistant Lazaro Berania on November 28, 1973 and March 22, 1974
respectively.
The aforesaid report must be requested unless there is a concrete proof that there
was an irregularity in the issuance thereof. In the absence of evidence to the

contrary, the ocular inspection of the parcel of land, which was made the basis of
said report, is presumed to be in order.
Based on the available records, there appears to be no sufficient basis for the
Government to institute an action for the annulment of OCT No. 10215 and its
derivative titles. It is opined that a petition for cancellation/annulment of Decree No.
N-150912 and OCT No. 10215 and all its derivative titles will not prosper unless
there is convincing evidence to negate the report of the then Land Management
Bureau through Special Attorney Pacubas. Should the Government pursue the filing
of such an action, the possibility of winning the case is remote.[49]

More so, respondent Government, through its counsel, admits that the land applied
by Fermina Castro in 1973 was solid and dry land, negating the nebulous allegation
that said land is underwater. The only conclusion that can be derived from the
admissions of the Solicitor General and Government Corporate Counsel is that the
land subject of the titles of petitioners is alienable land beyond the reach of the
reversion suit of the state.
Notably, the land in question has been the subject of a compromise agreement
upheld by this Court in Public Estates Authority.[50] In that compromise agreement,
among other provisions, it was held that the property covered by TCT Nos. 446386
and S-29361, the land subject of the instant case, would be exchanged for PEA
property. The fact that PEA signed the May 15, 1998 Compromise Agreement is
already a clear admission that it recognized petitioners as true and legal owners of
the land subject of this controversy.
Moreover, PEA has waived its right to contest the legality and validity of Castros
title. Such waiver is clearly within the powers of PEA since it was created by PD
1084 as a body corporate which shall have the attribute of perpetual succession
and possessed of the powers of the corporations, to be exercised in conformity with
the provisions of this Charter [PD 1084].[51] It has the power to enter into, make,
perform and carry out contracts of every class and description, including loan
agreements, mortgages and other types of security arrangements, necessary or
incidental to the realization of its purposes with any person, firm or corporation,
private or public, and with any foreign government or entity.[52] It also has the
power to sue and be sued in its corporate name.[53] Thus, the Compromise
Agreement and the Deed of Exchange of Real Property signed by PEA with the
petitioners are legal, valid and binding on PEA. In the Compromise Agreement, it is
provided that it settles in full all the claims/counterclaims of the parties against
each other.[54] The waiver by PEA of its right to question petitioners title is
fortified by the manifestation by PEA in the Joint Motion for Judgment based on
Compromise Agreement that

4.
The parties herein hereto waive and abandon any and all other claims and
counterclaims which they may have against each other arising from this case or
related thereto.[55]

Thus, there was a valid waiver of the right of respondent Republic through PEA to
challenge petitioners titles.
The recognition of petitioners legal ownership of the land is further bolstered by the
categorical and unequivocal acknowledgment made by PEA in its September 30,
2003 letter where it stated that: Your ownership thereof was acknowledged by PEA
when it did not object to your membership in the CBP-IA Association, in which an
owner of a piece of land in CBP-IA automatically becomes a member thereof.[56]
Section 26, Rule 130 provides that the act, declaration or omission of a party as to
a relevant fact may be given in evidence against him. The admissions of PEA
which is the real party-in-interest in this case on the nature of the land of Fermina
Castro are valid and binding on respondent Republic. Respondents claim that the
disputed land is underwater falls flat in the face of the admissions of PEA against its
interests. Hence, res judicata now effectively precludes the relitigation of the issue
of registrability of petitioners lot.
In sum, the Court finds that the reversion case should be dismissed for lack of
jurisdiction on the part of the Paraaque RTC. Even if we treat said case as a
petition for annulment of judgment under Rule 47 of the 1997 Rules of Civil
Procedure, the dismissal of the case nevertheless has to be upheld because it is
already barred by laches. Even if laches is disregarded, still the suit is already
precluded by res judicata in view of the peculiar facts and circumstances obtaining
therein.
WHEREFORE, premises considered, the petition is GRANTED. The Decision of the
Court of Appeals in CA-G.R. CV No. 76212 is REVERSED and SET ASIDE, and the
August 7, 2002 Order of the Paraaque City RTC, Branch 257 in Civil Case No. 010222 entitled Republic of the Philippines v. Fermina Castro, et al. dismissing the
complaint is AFFIRMED.
No costs.
SO ORDERED.
XIX. The Condominium Act (RA 4726)
a. Definition
b. Warraties and representations

G.R. No. 151821

April 14, 2004

BANK OF THE PHILIPPINE ISLANDS, as Successor-in-Interest of BPI

Investment Corporation, petitioner,
vs.
ALS MANAGEMENT & DEVELOPMENT CORP., respondent.
DECISION
PANGANIBAN, J.:
Factual findings of the lower courts are entitled to great respect, but may be
reviewed if they do not conform to law and to the evidence on record. In the case at
bar, a meticulous review of the facts compels us to modify the award granted by the
Court of Appeals.
The Case
Before us is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to
set aside the November 24, 2000 Decision2 and the January 9, 2002 Resolution3 of
the Court of Appeals (CA) in CA-GR CV No. 25781. The assailed Decision disposed as
follows:
"WHEREFORE, premises considered, the assailed decision is hereby AFFIRMED in
toto and the instant appeal DISMISSED."4
The assailed Resolution denied reconsideration.
The Facts
The facts of the case are narrated by the appellate court as follows:
"On July 29, 1985, [petitioner] BPI Investment Corporation filed a complaint for a
Sum of Money against ALS Management and Development Corporation, alleging
inter alia that on July 22, 1983, [petitioner] and [respondent] executed at Makati,
Metro Manila a Deed of Sale for one (1) unfurnished condominium unit of the Twin
Towers Condominium located at Ayala Avenue, corner Apartment Ridge Street,
Makati, Metro Manila designated as Unit E-4A comprising of 271 squares [sic]
meters more or less, together with parking stalls identified as G022 and G-63. The
Condominium Certificate of Title No. 4800 of the Registry of Deeds for Makati, Metro
Manila was issued after the execution of the said Deed of Sale. [Petitioner]
advanced the amount of P26,300.45 for the expenses in causing the issuance and
registration of the Condominium Certificate of Title. Under the penultimate
paragraph of the Deed of Sale, it is stipulated that the VENDEE [respondent] shall

pay all the expenses for the preparation and registration of this Deed of Sale and
such other documents as may be necessary for the issuance of the corresponding
Condominium Certificate of Title. After the [petitioner] complied with its obligations
under the said Deed of Sale, [respondent], notwithstanding demands made by
[petitioner], failed and refused to pay [petitioner] its legitimate advances for the
expenses mentioned above without any valid, legal or justifiable reason.
"In its Answer with Compulsory Counterclaim, [respondent] averred among others
that it has just and valid reasons for refusing to pay [petitioners] legal claims. In
clear and direct contravention of Section 25 of Presidential Decree No. 957 which
provides that No fee except those required for the registration of the deed of sale in
the Registry of Deeds shall be collected for the issuance of such title, the
[petitioner] has jacked-up or increased the amount of its alleged advances for the
issuance and registration of the Condominium Certificate of Title in the name of the
[respondent], by including therein charges which should not be collected from
buyers of condominium units. [Petitioner] made and disseminated brochures and
other sales propaganda in and before May 1980, which made warranties as to the
facilities, improvements, infrastructures or other forms of development of the
condominium units (known as The Twin Towers) it was offering for sale to the
public, which included the following:
The Twin Towers is destined to reflect condominium living at its very best.
While the twin tower design and its unusual height will make the project the only
one of its kind in the Philippines, the human scale and proportion [are] carefully
maintained.
To be sure, modern conveniences are available as in the installation of an intercom
system and a closed-circuit TV monitor through which residents from their
apartments can see their guests down at the lobby call station.
Some of the features of each typical apartment unit are: x x x A bar x x x Three
toilets with baths x x x.
The penthouse units are privileged with the provision of an all-around balcony. x x
x
"[Respondent] further averred that [petitioner] represented to the [respondent] that
the condominium unit will be delivered completed and ready for occupancy not later
than December 31, 1981. [Respondent] relied solely upon the descriptions and
warranties contained in the aforementioned brochures and other sales propaganda
materials when [respondent] agreed to buy Unit E-4A of the Twin Tower(s) for the
hefty sum of P2,048,900.00 considering that the Twin Towers was then yet to be
built. In contravention of [petitioners] warranties and of good engineering

practices, the condominium unit purchased by [respondent] suffered from the

following defects and/or deficiencies:
1. The clearance in the walkway at the balcony is not sufficient for passage;
2. The anodized aluminum used in the door and windows were damaged;
3. The kitchen counter tops/splashboard suffered from cracks and were mis-cut and
misaligned;
4. The partition between living and masters bedroom was unpainted and it had no
access for maintenance due to aluminum fixed glass cover;
5. The varifold divider, including the bar and counter top cabinet were not installed;
6. The toilets had no tiles;
7. No closed circuit TV was installed;
8. Rainwater leaks inside or into the condominium unit."5
Respondents Answer prayed that "judgment be rendered ordering [petitioner] to
correct such defects/deficiencies in the condominium unit,"6 and that the following
reliefs be granted:
"1. The sum of P40,000.00 plus legal interest thereon from the date of extra-judicial
demand, representing the amount spent by the defendant for the completion works
it had undertaken on the premises.
"2. The sum of U.S.$6,678.65 (or its equivalent in the Philippine currency)
representing the unearned rental of the premises which the defendant did not
realize by reason of the late delivery to him of the condominium unit;
"3. Twenty-four percent (24%) interest per annum on the agreed one (1) year
advance rental and one (1) month deposit (totaling U.S.$15,785.00) corresponding
to the period January 1, 1982 to June 17, 1982, which [petitioner] would have
earned had he deposited the said amount in a bank;
"4. The sum of U.S.$1,214.30 per month, commencing from May 1, 1985, which the
[respondent] no longer earns as rental on the premises because the lessee vacated
the same by reason of defects and/or deficiencies;
"5. The sum of P50,000.00 plus appearance fees of P300.00 per court hearing, as
attorneys fees;

"6. Litigation expenses and costs of suit."7

On February 6, 1990, the trial court issued this judgment:
"1. Ordering the [respondent] to pay [petitioner] the sum of P26,300.45, with legal
interest from the filing of the complaint up to full payment thereof, representing the
amount spent for the registration of the title to the condominium unit in
[respondents] name;
"2. Ordering [petitioner] to deliver, replace or correct at [petitioners] exclusive
expense/cost or appoint a licensed qualified contractor to do the same on its behalf,
the following defects/deficiencies in the condominium unit owned by the
[respondent]:
a) KITCHEN
i) The sides of the kitchen sink covered with sealants as well as miscut marble
installed as filler at the right side of the sink;
ii) Miscut marble installed on both sides of the side wall above the gas range;
b) FOYERS
Water marks at the parquet flooring, near the main water supply room;
c) MAIDS ROOM
Ceiling cut off about one (1) square foot in size and left unfinished
d) DINING ROOM
i) Water damaged parquet up to about one (1) meter from the wall underneath the
open shelves and directly behind the plant box;
ii) Plant box directly behind the dining room;
iii) The water damaged parquet flooring near the door of the dining room to the
passage way
e) MASTERS BEDROOM
i) Falling off paint layers at the bathroom wall behind the bathtub/faucet along the
passageway of the masters bedroom;

ii) Falling off water-damaged plywood ceiling in the masters bedroom bathroom;
iii) Grinders mark damage at the bathtub;
f) BALCONY WALKWAY
i) PVC pipes installed two (2) inches above floor level causing water to accumulate;
ii) Cracks on level of wash out flooring;
iii) 14-inches passageway going to the open terrace not sufficient as passageway;
iv) PVC pipe installed on the plant box water drained directly on the balcony floor;
g) BALCONY (OPEN) TERRACE
i) Two (2) concrete cement measuring about 6 x 4 inches with protruding live wires,
purportedly lamp posts which were not installed;
h) BOYS BEDROOM
i) Water mark on the parquet flooring due to water seepage;
ii) Asphalt plastered at the exterior wall/floor joints to prevent water seepage;
i) ANALOC FINISH of the aluminum frames of doors and windows all around the
condominium were painted with dark gray paint to cover dents and scratches;
j) LIVING ROOM
Intercom equipment installed without the TV monitor;
k) STORAGE FACILITIES at the ground floor
"3. Ordering [petitioner] to pay [respondent] the following:
a) The sum of P40,000.00 representing reimbursement for expenses incurred for the
materials/labor in installing walls/floor titles in 2 bathrooms and bar counter cabinet.
b) The sum of P136,608.75, representing unearned income for the five-month
period that the defendant had to suspend a lease contract over the premises.

c) The sum of P27,321.75 per month for a period of twenty-one (21) months (from
May 1985 to January 1987), representing unearned income when defendants lessee
had to vacate the premises and condominium unit remained vacant, all with legal
interest from the filing of the counterclaim until the same are fully paid."8
Ruling of the Court of Appeals
On appeal, after "a thorough review and examination of the evidence on record,"9
the CA found "no basis for disbelieving what the trial court found and arrived at."10
The appellate court sustained the trial courts finding that "while [petitioner]
succeeded in proving its claim against the [respondent] for expenses incurred in the
registration of [the latters] title to the condominium unit purchased, x x x for its
part [respondent] in turn succeeded in establishing an even bigger claim under its
counterclaim."11
Hence, this Petition.12
The Issues
Petitioner raises the following issues for our consideration:
"I. Whether or not the Honorable Court of Appeals erred in not holding that the trial
court had no jurisdiction over the respondents counterclaims.
"II. Whether or not the decision of the Court of Appeals is based on misapprehension
of facts and/or manifestly mistaken warranting a review by this Honorable Court of
the factual findings therein.
"III. Whether or not the award of damages by the Honorable Court of Appeals is
conjectural warranting a review by this Honorable Court of the factual findings
therein."13
The Courts Ruling
The Petition is partly meritorious.
First Issue:
Jurisdiction
Contending that it was the Housing and Land Use Regulatory Board (HLURB) -- not
the RTC -- that had jurisdiction over respondents counterclaim, petitioner seeks to
nullify the award of the trial court.

Promulgated on July 12, 1976, PD No. 957 -- otherwise known as "The Subdivision
and Condominium Buyers Protective Decree" -- provides that the National Housing
Authority (NHA) shall have "exclusive authority to regulate the real estate trade and
business."14 Promulgated later on April 2, 1978, was PD No. 1344 entitled
"Empowering the National Housing Authority to Issue Writs of Execution in the
Enforcement of Its Decisions Under Presidential Decree No. 957." It expanded the
jurisdiction of the NHA as follows:
"SECTION 1. In the exercise of its function to regulate the real estate trade and
business and in addition to its powers provided for in Presidential Decree No. 957,
the National Housing Authority shall have exclusive jurisdiction to hear and decide
cases of the following nature:
A. Unsound real estate business practices;
B. Claims involving refund and any other claims filed by subdivision lot or
condominium unit buyer against the project owner, developer, dealer, broker or
salesman; and
C. Cases involving specific performance of contractual and statutory obligations
filed by buyers of subdivision lot or condominium unit against the owner, developer,
broker or salesman." (Italics ours.)
On February 7, 1981, by virtue of Executive Order No. 648, the regulatory functions
of the NHA were transferred to the Human Settlements Regulatory Commission
(HSRC). Section 8 thereof provides:
"SECTION 8. Transfer of Functions. - The regulatory functions of the National
Housing Authority pursuant to Presidential Decree Nos. 957, 1216, 1344 and other
related laws are hereby transferred to the Commission (Human Settlements
Regulatory Commission). x x x. Among these regulatory functions are: 1) Regulation
of the real estate trade and business; x x x 11) Hear and decide cases of unsound
real estate business practices; claims involving refund filed against project owners,
developers, dealers, brokers, or salesmen; and cases of specific performance."
Pursuant to Executive Order No. 90 dated December 17, 1986, the functions of the
HSRC were transferred to the HLURB.
As mandated by PD No. 957, the jurisdiction of the HLURB is encompassing. Hence,
we said in Estate Developers and Investors Corporation v. Sarte:15
"x x x. While PD 957 was designed to meet the need basically to protect lot buyers
from the fraudulent manipulations of unscrupulous subdivision owners, sellers and

operators, the exclusive jurisdiction vested in the NHA is broad and general -to
regulate the real estate trade and business in accordance with the provisions of
said law."
Furthermore, the jurisdiction of the HLURB over cases enumerated in Section 1 of
PD No. 1344 is exclusive. Thus, we have ruled that the board has sole jurisdiction in
a complaint of specific performance for the delivery of a certificate of title to a
buyer of a subdivision lot;16 for claims of refund regardless of whether the sale is
perfected or not;17 and for determining whether there is a perfected contract of
sale.18
In Solid Homes v. Payawal,19 we declared that the NHA had the competence to
award damages as part of the exclusive power conferred upon it -- the power to
hear and decide "claims involving refund and any other claims filed by subdivision
lot or condominium unit buyers against the project owner, developer, dealer, broker
or salesman."20
Clearly then, respondents counterclaim -- being one for specific performance
(correction of defects/deficiencies in the condominium unit) and damages -- falls
under the jurisdiction of the HLURB as provided by Section 1 of PD No. 1344.
The Applicability of Estoppel
The general rule is that any decision rendered without jurisdiction is a total nullity
and may be struck down at any time, even on appeal before this Court.21 Indeed,
the question of jurisdiction may be raised at any time, provided that such action
would not result in the mockery of the tenets of fair play.22 As an exception to the
rule, the issue may not be raised if the party is barred by estoppel.23
In the present case, petitioner proceeded with the trial, and only after a judgment
unfavorable to it did it raise the issue of jurisdiction. Thus, it may no longer deny the
trial courts jurisdiction, for estoppel bars it from doing so. This Court cannot
countenance the inconsistent postures petitioner has adopted by attacking the
jurisdiction of the regular court to which it has voluntarily submitted.24
The Court frowns upon the undesirable practice of submitting ones case for
decision, and then accepting the judgment only if favorable, but attacking it for lack
of jurisdiction if it is not.25
We also find petitioner guilty of estoppel by laches for failing to raise the question of
jurisdiction earlier. From the time that respondent filed its counterclaim on
November 8, 1985, the former could have raised such issue, but failed or neglected
to do so. It was only upon filing its appellants brief26 with the CA on May 27, 1991,
that petitioner raised the issue of jurisdiction for the first time.

In Tijam v. Sibonghanoy,27 we declared that the failure to raise the question of

jurisdiction at an earlier stage barred the party from questioning it later. Applying
the rule on estoppel by laches, we explained as follows:
"A party may be estopped or barred from raising a question in different ways and
for different reasons. Thus, we speak of estoppel in pais, of estoppe[l] by deed or by
record, and of estoppel by laches.
"Laches, in general sense, is failure or neglect, for an unreasonable and unexplained
length of time, to do that which, by exercising due diligence, could or should have
been done earlier; it is negligence or omission to assert a right within a reasonable
time, warranting a presumption that the party entitled to assert it either has
abandoned it or declined to assert it.
"The doctrine of laches or of stale demands is based upon grounds of public policy
which requires, for the peace of society, the discouragement of stale claims and,
unlike the statute of limitations, is not a mere question of time but is principally a
question of the inequity or unfairness of permitting a right or claim to be enforced or
asserted."28
Thus, we struck down the defense of lack of jurisdiction, since the appellant therein
failed to raise the question at an earlier stage. It did so only after an adverse
decision had been rendered.
We further declared that if we were to sanction the said appellants conduct, "we
would in effect be declaring as useless all the proceedings had in the present case
since it was commenced x x x and compel the judgment creditors to go up their
Calvary once more. The inequity and unfairness of this is not only patent but
revolting."29
Applicable herein is our ruling in Gonzaga v. Court of Appeals,30 in which we said:
"Public policy dictates that this Court must strongly condemn any double-dealing by
parties who are disposed to trifle with the courts by deliberately taking inconsistent
positions, in utter disregard of the elementary principles of justice and good faith.
There is no denying that, in this case, petitioners never raised the issue of
jurisdiction throughout the entire proceedings in the trial court. Instead, they
voluntarily and willingly submitted themselves to the jurisdiction of said court. It is
now too late in the day for them to repudiate the jurisdiction they were invoking all
along."31
Second and Third Issues:

Appreciation of Facts
It is readily apparent that petitioner is raising issues of fact that have been ruled
upon by the RTC and sustained by the CA. The factual findings of lower courts are
generally binding upon this Court and will not be disturbed on appeal, especially
when both sets of findings are the same.32 Nevertheless, this rule has certain
exceptions,33 as when those findings are not supported by the evidence on record.
We have carefully scrutinized the records of this case and found reason to modify
the award to conform to law and the evidence. We thus address the arguments of
petitioner seriatim.
Warranties and Representations in the Brochure
The brochure that was disseminated indicated features that would be provided each
condominium unit; and that, under Section 19 of PD No. 957, would form part of the
sales warranties of petitioner.34 Respondent relied on the brochure in its decision to
purchase a unit.35 Since the former failed to deliver certain items stated therein,
then there was a clear violation of its warranties and representations.
The brochure says that "[t]he particulars stated x x x as well as the details and
visuals shown x x x are intended to give a general idea of the project to be
undertaken, and as such, are not to be relied [upon] as statements or
representations of fact."36 This general disclaimer should apply only to the general
concept of the project that petitioner aptly characterizes thus:
"x x x [D]estined to reflect condominium living at its very best and its design x x x
will make the project the only one of its kind in the Philippines."37
This disclaimer, however, should not apply to the features and the amenities that
the brochure promised to provide each condominium unit. Petitioner was thus in
breach when it failed to deliver a "closed-circuit TV monitor through which residents
from their apartments can see their guests x x x."38
Storage Facilities
The trial court erred, though, in requiring petitioner to provide storage facilities on
the ground floor, as the non-delivery had not been alleged in respondents Answer
with Counterclaim.39
It is elementary that a judgment must conform to and be supported by both the
pleadings and the evidence, and that it be in accordance with the theory of the
action on which the pleadings were framed and the case was tried.40 Indeed, issues
in each case are limited to those presented in the pleadings.41

We are aware that issues not alleged in the pleadings may still be decided upon, if
tried with the parties express or implied consent.42 Trial courts are not precluded
from granting reliefs not specifically claimed in the pleadings -- notwithstanding the
absence of their amendment -- upon the condition that evidence has been
presented properly, with full opportunity on the part of the opposing parties to
support their respective contentions and to refute each others evidence.43 This
exception is not present in the case at bar.
Moreover, a cursory reading of the brochure shows that there is no promise to
provide individual storage facilities on the ground floor for each condominium unit.
The brochure reads: "Storage facilities in the apartment units and the ground
floor."44 Apparent from the letter of petitioner dated June 18, 1982,45 was its
compliance with its promise of storage facilities on the ground floor. In that letter,
respondent was also informed that it may course a reservation of those facilities
through the building superintendent.
Damages for Delay in Delivery
It is undisputed that petitioner sent respondent a "Contract to Sell"46 declaring that
the construction would be finished on or before December 31, 1981.47 The former
delivered the condominium unit only in June 1982;48 thus, the latter claims that
there was a delay in the delivery.
Because of this delay, the trial court ordered petitioner to pay damages of
P136,608.75 representing unearned income for the period that respondent had to
suspend a lease contract. We find a dearth of evidence to support such award.
To recover actual damages, the amount of loss must not only be capable of proof,
but also be proven with a reasonable degree of certainty.49 The lone evidence for
this award was the self-serving testimony of respondents witness that a lease
contract had indeed been intended to commence in January 1982, instead of the
actual implementation on June 18, 1982.50 Without any other evidence, we fail to
see how the amount of loss was proven with a reasonable degree of certainty.
Condominium Defects
The rule is that a partys case must be established through a "preponderance of
evidence."51 By such term of evidence is meant simply evidence that is of greater
weight, or is more convincing than that which is offered in opposition to it.52
Respondent was able to establish through its witness testimony that the
condominium unit suffered from defects.53 This testimony was confirmed by an
inspection report54 noted and signed by petitioners representative, as well as by a
commissioners report55 prepared after an ocular inspection by the clerk of court

acting as a commissioner. Furthermore, this conclusion is supported by the

circumstances that occurred during the lease period, as evidenced by the complaint
and the update letters56 of respondents lessee.
Petitioners contention that the claim arising from the alleged defects has already
prescribed must fail for being raised for the first time only on appeal.57 Well-settled
is the rule that issues not raised below cannot be resolved on review in higher
courts.58
We agree, however, that the lower courts erred in finding that there was a defect in
a portion of the balcony, which respondent alleges to be a "walkway x x x [that] is
not sufficient for passage."59 Petitioner was able to prove, however, that the
specifications thereof conformed to the building plan.
Respondent contends that this portion should have been 65 to 80 centimeters wide,
so that it would be sufficient as a passageway.60 The building plan61 had not
specified the width, however. Architect Leo Ramos of W.V. Coscolluela & Associates,
the architectural firm that prepared the building plan, testified thus:
"Q I am directing your attention xxx to a certain portion in this condominium unit x
x x it appears x x x [that] there is no measurement indicated therein, do you know
why the measurement of said portion was not indicated in the building plan?
A Normally, it is variable.
Q What do you mean by variable?
A It depends on the actual measurement of the building construction.
Q Could you please tell the Court, what x x x the purpose of the said portion of the
condominium unit [is]?
A It is used for watering the plants and the servicing of some area[s].
Q How much measurement is made to affix the portion of watering the plants?
A Approximately .50 [m]."62
Respondent maintains that this portion should have been .80 meters (or 80
centimeters), similar to another area in the building plan that it offered as Exhibit
"2-A."63 But an analysis of this plan reveals that the latter area has a different width
from that of the former.

It is readily apparent from the foregoing facts that the portion in controversy was
not intended to be a walkway. Thus, there was no deviation from the building plan.
Because it has not been shown that this section was insufficient to serve the
purpose for which it was intended, the lower courts erred in considering it as
defective.
Reimbursement of P40,000 for Completion Work
The lower courts did not err in ordering petitioner to correct the defects in the
condominium unit, but in requiring it to reimburse respondent in the amount of
P40,000 for completion work done.
Petitioner argues that the trial courts Decision encompassed the areas beyond
those alleged in respondents Answer.64 This contention is not convincing, because
the allegations in the latter were broad enough to cover all the defects in the
condominium unit. In fact, respondent prayed that "judgment be rendered ordering
[petitioner] to correct such defects x x x in the condominium unit as may be
prove[d] during the trial."65
Petitioner further challenges the award of P40,000 as reimbursement for completion
work done by respondent, on the ground that this claim was not proven during the
trial. The latters evidence partook of a witness testimony66 and of a demand
letter67 sent to petitioner requesting reimbursement for completion work done.
Petitioner argues that respondent should have presented receipts to support the
expenses.68
We agree with petitioner. While respondent may have suffered pecuniary losses for
completion work done, it failed to establish with reasonable certainty the actual
amount spent. The award of actual damages cannot be based on the allegation of a
witness without any tangible document, such as receipts or other documentary
proofs to support such claim.69 In determining actual damages, courts cannot rely
on mere assertions, speculations, conjectures or guesswork, but must depend on
competent proof and on the best obtainable evidence of the actual amount of
loss.70
Unearned Lease Income
Respondent entered into a lease contract with Advanced Micro Device on May 18,
1982, for the period June 18, 1982 to June 17, 1983, with option to renew.71 The
lease -- which was for an agreed monthly rental of P17,000 -- was renewed for a
period ending May 1, 1985, when Advanced Micro Device vacated the unit.72 On
the basis of these facts, the trial court ordered petitioner to pay damages by way of
unrealized income for twenty-one months or from May 1, 1985, until January 1987 --

when respondent decided to move into the condominium unit, which was
unoccupied by then.
Despite the defects of the condominium unit, a lessee stayed there for almost three
years.73 The damages claimed by respondent is based on the rent that it might
have earned, had Advanced Micro Device chosen to stay and renew the lease. Such
claim is highly speculative, considering that respondent failed to adduce evidence
that the unit had been offered for lease to others, but that there were no takers
because of the defects therein. Speculative damages are too remote to be included
in an accurate estimate thereof.74 Absent any credible proof of the amount of
actual damage sustained, the Court cannot rely on speculations as to its existence
and amount.75
We recognize, however, that respondent suffered damages when its lessee vacated
the condominium unit on May 1, 1985, because of the defects therein. Respondents
are thus entitled to temperate damages.76 Under the circumstances, the amount
equivalent to three monthly rentals of P17,000 -- or a total of P51,000 -- would be
reasonable.
WHEREFORE, this Petition is PARTLY GRANTED, and the assailed Decision and
Resolution of the Court of Appeals MODIFIED, as follows:
Hereby DELETED is the requirement on the part of petitioner to (1) deliver storage
facilities on the ground floor; (2) pay P136,608.75 for unearned income for the fivemonth period that the lease contract was allegedly suspended; (3) correct the
alleged passageway in the balcony; (4) pay P40,000.00 as reimbursement for
completion work done by respondent; (5) pay P27,321.75 per month for a period of
twenty-one months for the alleged unearned income during the period when the
condominium unit remained vacant. Petitioner, however, is ORDERED to pay
P51,000 as temperate damages for the termination of the lease contract because of
the defects in the condominium unit. All other awards are AFFIRMED.
No pronouncement as to costs.
SO ORDERED.
c. Redemption of Mortgaged Condominium Lot
G.R. No. 132869

October 18, 2001

GREGORIO DE VERA, JR., petitioner,

vs.
COURT OF APPEALS, Q. P. SAN DIEGO CONSTRUCTION, INC., ASIATRUST
DEVELOPMENT BANK, SECOND LAGUNA DEVELOPMENT BANK, CAPITOL

CITY DEVELOPMENT BANK, EX-OFFICIO SHERIFF OF QUEZON CITY and/or

HIS DEPUTY, respondents.
BELLOSILLO, J.:
This is a Petition for Review, under Rule 45 of the Revised Rules of Court, of the
Decision of the Court of Appeals in CA-G.R. CV No. 37281, "Gregorio de Vera, Jr. v.
Court of Appeals, QP San Diego Construction, Inc., Asiatrust Development Bank,
Second Laguna Development Bank, Capitol City Development Bank, Ex-Officio
Sheriff of Quezon City and/or his Deputy," and of its Resolution of 18 February 1998
denying petitioner's Manifestation with Motion for Reconsideration.
Respondent Q. P. San Diego Construction, Inc. (QPSDCI), owned a parcel of land
located at 101 Panay Avenue, Quezon City, on which it built Lourdes I Condominium.
On 10 June 1983, to finance its construction and development, QPSDCI entered into
a Syndicate Loan Agreement1 with respondents Asiatrust Development Bank
(ASIATRUST) as lead bank, and Second Laguna Development Bank (LAGUNA) and
Capitol City Development Bank (CAPITOL) as participating banks (hereafter
collectively known as FUNDERS). QPSDCI mortgaged to the creditor banks as
security the herein mentioned Panay Avenue property and the condominium
constructed thereon. The mortgage deed was registered with the Register of Deeds
of Quezon City and annotated on the individual condominium certificates of title
(CCT) of each condominium unit.2
On 23 June 1983 petitioner Gregorio de Vera Jr. and QPSDCI, through its authorized
agent Fil-Estate Realty Corporation (FIL-ESTATE), entered into a Condominium
Reservation Agreement3 where petitioner undertook to buy Unit 211-2C of the
condominium for P325,000.00 under the following agreed terms of payment: (a) an
option money of P5,000.00 payable upon signing of the agreement to form part of
the purchase price; (b) a full downpayment of P175,675.00 broken down into the
reservation fee of P5,000.00 and three (3) equal monthly installments payable
beginning the month after the signing of the contract; and, (c) the remaining
balance of P160,000.00 to be secured through petitioner's Pag-IBIG and OpenHousing Loan. Pending release of the loan, petitioner was to avail of a bridge
financing loan with ASIATRUST or any accredited originating bank of the Pag-IBIG
program.
On 2 June 1983 petitioner paid the reservation fee of P5,000.00, and on 11 July
1983 the balance of the downpayment of P167,000.00, thus completing the
downpayment of P175,675.00 well before the due date. As incentive, petitioner was
given a full discount on cash payment by QPSDCI to bring the total payment to
P184,040.00.

Pursuant to their Condominium Reservation Agreement, petitioner submitted

through FIL-ESTATE his application for the Pag-IBIG loan. On 28 December 1983
ASIATRUST as originating bank notified FIL-ESTATE that petitioner's Pag-IBIG loan
application had been approved.4 In a letter dated 18 January 1984 QPSDCI
President Quintin P. San Diego forwarded the letter to petitioner. However, the
amount approved was only P139,100.00 and not P160,000.00. Additional charges
further reduced the amount to P117,043.33.
Petitioner De Vera Jr. approached QPSDCI to have the P12,040.00 discount credited
to his additional equity. Since the resultant net loan of P117,043.33 was insufficient
to cover the balance of the purchase price, De Vera Jr. negotiated with QPSDCI to
defer payment of the P23,916.67 deficiency until the project was completed and the
unit was ready for turnover. QPSDCI agreed.5
The condominium project was substantially completed in June 1984 and the unit
was turned over to De Vera Jr. the following month. Accordingly, petitioner paid
QPSDCI the P23,916.67 shortfall between the balance and the granted loan.
On 26 June 1984 ASIATRUST through its Vice-President Pedro V. Lucero and Manager
Nicanor T. Villanueva wrote to QPSDCI asking the unit buyers to pay in advance the
costs of the transfer of titles and registration of their Pag-IBIG loan mortgages.6
QPSDCI forwarded the letter to De Vera Jr. and requested that he pay the amount to
QPSDCI.7 As ASIATRUST indicated that the amount be paid directly to it, De Vera Jr.
went to the bank for clarification. On 23 August 1983, after learning that ASIATRUST
was in possession of the certificate of title, De Vera Jr. paid the transfer expenses
directly to ASIATRUST.
On 17 September 1984 ASIATRUST sent another notice of approval8 to QPSDCI and
De Vera Jr. with the notation, "additional equity of all accounts have (sic) to be paid
directly to the Bank."
On 3 October 1984 ASIATRUST wrote another letter9 asking QPSDCI to advise the
unit buyers, among others, to pay all additional and remaining equities on 10
October 1984; that their Pag-IBIG loan mortgages would be registered only upon
payment of those equities; and, that loan mortgages registered after 31 October
1984 would be subject to the increased Pag-IBIG interest rates.
On 12 October 1984 ASIATRUST also wrote a letter to petitioner and signed by its
Assistant Manager Leticia R. de la Cruz informing him that his housing loan would
only be implemented upon the following conditions: (a) Payment of the remaining
equity directly to ASIATRUST Development Bank; and (b) Signing of all Pag-IBIG
documents not later than 20 October 1984, so his mortgages could be registered on
or before 31 October 1984. Mortgages registered beyond said date shall subject the

Pag-IBIG loan to the increased interest rates of the National Home Mortgage Finance
Corp. (per Circular #27 dated June 21, 1984).
According to petitioner, the letter came as a total surprise to him; all the while he
thought that his loan had already been released to QPSDCI and the titles transferred
to his name; he promptly wrote ASIATRUST to seek clarification; ASIATRUST
responded by informing De Vera Jr. that the developmental loan agreement between
QPSDCI and the three (3) banks, under which the individual titles of the
condominium units were mortgaged in favor of the FUNDERS to secure the loan,
shall be paid out of the net proceeds of the Pag-IBIG loans of the buyers; that the
total amount of loan from the FUNDERS was distributed among all condominium
units such that each unit had to bear a certain portion of the total loan, or a "loan
value;" that per agreement with QPSDCI, ASIATRUST would only grant the Pag-IBIGHousing Loan with the release of the mortgage liens, which could not be released
unless the buyers fully paid their respective loan values; and that petitioner's equity
payments to QPSDCI had not been remitted to the bank.
On 30 May 1985 ASIATRUST informed QPSDCI that it could no longer extend the
bridge financing loan to some of the buyers, including petitioner, for various
reasons,10 among which was that petitioner had already exceeded the age limit,
hence, he was disqualified.11
After learning of the disapproval of his loan, petitioner wrote the president of
QPSDCI to make arrangements to settle his balance. Since petitioner had already
invested a substantial amount in remodelling and improving his unit, rescinding the
sale was no longer a viable option. Consequently, he only asked the president of
QPSDCI for some assurance that the title would be turned over to him upon full
payment.
In response, QPSDCI suggested that petitioner deal directly with ASIATRUST for any
matter regarding the sale of the unit.12 President San Diego explained that "as far
as we are concerned we have sold to you our property at a certain price and we
have correspondingly issued to your goodself, thru the Bank, a Deed of Absolute
Sale for the unit we sold to you taking into consideration that the Bank has
approved your loan per their advice dated December 28, 1983 and presumably
credited us for the approved amount of loan."
As petitioner failed to obtain the housing loan, he was not able to pay the balance of
the purchase price. QPSDCI sent him a letter13 dated 6 August 1987 presenting him
with two options: (a) to pay the remaining balance of the purchase price, with
interest, which had already ballooned to P263,751.63, on or before 15 August 1987;
or, (b) to pay rent for the use of the unit from 28 July 1984 to June 1987.

On 20 May 1988 petitioner, upon discovering that the FUNDERS had already
published a notice14 of extrajudicial foreclosure of the mortgage, filed a complaint
against respondents for damages and injunction with urgent prayer for issuance of a
writ of preliminary injunction, annulment of mortgage based on fraud, with urgent
prayer for the issuance of a writ of preliminary attachment and specific
performance. The complaint was docketed as Civil Case No. Q-53737 and
subsequently raffled to Branch 107 of the Regional Trial Court of Quezon City.
Meanwhile, QPSDCI failed to pay its obligations to the FUNDERS. On 23 May 1988
ASIATRUST extrajudicially foreclosed the mortgage on twenty-seven (27)
condominium units, including that of petitioner De Vera Jr. The units were sold at
public auction, with the FUNDERS as the highest bidder. The certificate of sale was
issued and annotated on the CCTs.
On 3 March 1992 the trial court rendered judgment "directing the defendants
(herein respondents) to pay to the plaintiff (herein petitioner) jointly and severally
the sum equivalent to the penalties and charges plus whatever amount may be
necessary to redeem Unit 211-2C from any lien and encumbrances so that the title
may be released and delivered to the plaintiff, free from any lien and
encumbrances, subject only to the deduction of his unpaid balance of P139,000.00,
which the plaintiff should pay out of his own funds, plus exemplary damages of
P100,000.00 each and to pay plaintiff attorney's fees jointly and severally x x x
P50,000.00 plus the expenses of litigation." The lower court denied plaintiff's prayer
for moral damages and dismissed defendants' counterclaim against the plaintiff and
cross-claims against each other.15
The Court of Appeals affirmed the decision of the trial court with the modification
that respondents were ordered solidarily to pay petitioner P50,000.00 as nominal
damages, but the award for actual and exemplary damages was deleted.
On 9 July 1997 petitioner filed a "Compliance with Manifestation and Motion for
Extension of Time to File Motion for Reconsideration" alleging that he received the
decision of the Court of Appeals on 4 July 1997 and requesting a thirty (30)-day
extension within which to file a motion for reconsideration. The motion was denied
by respondent appellate court.
On 8 August 1997 petitioner filed a "Manifestation with Motion for Reconsideration,"
and on 6 February 1998 a "Compliance with Motion to Resolve Manifestation with
Motion for Reconsideration," with respondent court. Reckoning the deadline of the
period to file a motion for reconsideration at 19 July 1997, the Court of Appeals
denied petitioner's Motion for Reconsideration for having been filed out of time.
Hence, the instant petition for review on certiorari.

Petitioner assails the 18 February 1998 Resolution denying his Motion for
Reconsideration, asserting that the Court of Appeals should not have denied his
motion on mere technicality. Petitioner claims that his counsel was not notified of
the Court of Appeals' decision. The Notice of Judgment16 of the decision of the
Court of Appeals shows that the same was served on petitioner Gregorio de Vera
himself and not on his counsel. Petitioner asserts that service to a party is allowed
only if the party is not represented by counsel. But if he is represented by a counsel,
then service shall be made upon his counsel unless service upon the party himself
is ordered by the court. Unless so ordered, service on the party himself who is
represented by counsel is not notice in law, hence, invalid.17
Furthermore, justice will be better served by entertaining this petition than by
dismissing it outright. It is always in the power of this Court to suspend its own
rules, or to except a particular case from its operation, whenever the purposes of
justice require it.18
The trial court found that petitioner's failure to pay the balance of the price of Unit
211-2C was not his fault. It also found that petitioner was a real party in interest to
annul the loan agreement between QPSDCI and the FUNDERS, and that he had
priority in right to the unit over the FUNDERS. The trial court rejected QPSDCI's
counterclaim against petitioner for rentals and sustained petitioner's claim for
damages against private respondents.
The Court of Appeals ruled that the regular courts had no jurisdiction over the
subject matter of the case, the proper venue being the Housing and Land Use
Regulatory Board (HLURB). However, respondents were estopped from questioning
jurisdiction because they filed counterclaims in the lower court.
As to the issue of who had superior right over the Unit 211-2C, the Court of Appeals
ruled in favor of petitioner, holding that the mortgage in favor of ASIATRUST, which
was the basis for its title, did not bind petitioner inasmuch as the same was not
registered with the National Housing Authority (NHA), contrary to the mandate of
Sec. 18 of PD 957, or "The Subdivision and Condominium Buyers' Protective
Decree.''19 The appellate court further found that QPSDCI breached its warranties
as seller under Art. 1547, and also violated its obligation to deliver to petitioner a
clean title as required by Sec. 4 of PD 957. It declared that delivery of the unit to
petitioner operated to transfer ownership to him from QPSDCI.
Respondents did not appeal. Petitioner contests the decision of the Court of Appeals
only insofar as it deleted the award of actual and exemplary damages and
attorney's fees. The only issue to be addressed by this Court therefore is the
propriety of the award of damages in favor of petitioner.
In finding QPSDCI liable for damages, the trial court held

x x x it (QPSDCI) has not exerted any reasonable diligence or effort to procure the
issuance of the title to the plaintiff. All that it did was to refer the plaintiff to the
Funder(s), alleging that he (plaintiff) should transact business with them as the
matter of loan is between the plaintiff and the Funder(s), and they had nothing to do
with it. However, it collected the additional equity and never forwarded the same to
the Funder(s) nor informed the latter of plaintiff's payment thereof. Thus, to the
mind of Asiatrust, plaintiff never paid the additional equity, although per records of
the Seller, he already had.
All these show negligence on the part of the Seller to perform its obligations under
the contract to the detriment of the plaintiff, for which it should be liable for
damages under Art. 2201 of the Civil Code, for the natural and probable
consequences of the breach of the obligation which the parties, specially the Seller,
should have foreseen or could have reasonably foreseen at the time the obligation
was contracted.
As to respondent ASIATRUST, the trial court held that its failure to notify petitioner
of the required steps to be taken after the approval of the loan, of the requirement
that additional equity be paid directly to the bank and other important aspects of
the bridging loan, made it liable for damages under the general provisions on torts
under Art. 2176 of the Civil Code, in relation to Art. 2202.
In deleting the award for damages, the respondent Court of Appeals explained
As earlier found, QPSDCI failed to comply with its warranties as seller. Unfortunately,
plaintiff-appellee posits the propriety of the award of actual damages only in the
probable sense: that such award is to the amount of interests, penalties and other
charges as plaintiff may stand liable for by reason of the non-payment of the
purchase price. In other words, plaintiff-appellee admits not having suffered
damages in consequence of non-compliance of seller's warranties. Since actual
damages are predicated on such pecuniary loss as duly proved, the award of the
lower court therefor is plainly not in order x x x (citations omitted).
We agree with the respondent Court of Appeals on this point. Petitioner did not
present any proof that he suffered any damage as a result of the breach of seller's
warranty. He did not lose possession of his condominium unit, although the same
had not yet been registered in his name. In his Consolidated Reply, petitioner came
up with this feeble argument for claiming actual damages, a rehash of his motion
for reconsideration with the Court of Appeals
Petitioner reiterates that the compensatory damages awarded is to the amount of
interests, penalties and other charges as (he) may stand liable for by reason of the
non-payment of the balance of the purchase price of Unit #211 in consequence of

the respondent's fault or negligence as evidenced by Exhs. S and S-1. The

compensation is the same amount as whatever the liability may be and therefore
merely offsets the liability x x x x
The cost of clearing the CCT of liens and encumbrances and transferring it to the
name of the petitioner are also part of the actual or compensatory damages and are
its own proof.
Article 2199 of the Civil Code provides that one is entitled to adequate
compensation only for such pecuniary loss suffered by him as is "duly proved."20
This provision denies the grant of speculative damages, or such damage not
actually proved to have existed and to have been caused to the party claiming the
same.21 Actual damages, to be recoverable, must not only be capable of proof, but
must actually be proved with reasonable degree of certainty. Courts cannot simply
rely on speculation, conjecture or guesswork in determining the fact and amount of
damages.22
This does not mean however that petitioner is liable to private respondents for
penalties, interests and other charges that accrued by reason of non-payment of the
balance of the purchase price. Respondent ASIATRUST had made several
representations to petitioner that his loan had been approved. The tenor of the
letters sent by ASIATRUST would lead a reasonable man to believe that there was
nothing left to do but await the release of the loan. ASIATRUST cannot hide behind
the pithy excuse that the grant of the bridge financing loan was subject to the
release of the Pag-IBIG loan. The essence of bridge financing loans is to obtain funds
through an interim loan while the Pag-IBIG funds are not yet available. To await the
release of the Pag-IBIG loan would render any bridge financing nugatory. Thus, we
agree with the trial court when it said that "the conclusion is inevitable that
although the plaintiff was not able to pay, he was a victim of circumstances and his
failure was not due to his own fault."
Furthermore, Sec. 25 of PD 957 provides:
SECTION 25. Issuance of Title. The owner or developer shall deliver the title of the
lot or unit to the buyer upon full payment of the lot or unit. No fee, except those
required for the registration of the deed of sale in the Registry of Deeds, shall be
collected for the issuance of such title. In the event a mortgage over the lot or unit
is outstanding at the time of the issuance of the title to the buyer, the owner or
developer shall redeem the mortgage or the corresponding portion thereof within
six months from such issuance in order that the title over any fully paid lot or unit
may be secured and delivered to the buyer in accordance herewith.
From the foregoing it is clear that upon full payment, the seller is duty-bound to
deliver the title of the unit to the buyer. Even with a valid mortgage over the lot, the

seller is still bound to redeem said mortgage without any cost to the buyer apart
from the balance of the purchase price and registration fees. It has been established
that respondent QPSDCI had been negligent in failing to remit petitioner's payments
to ASIATRUST. If QPSDCI had not been negligent, then even the possibility of
charges, liens or penalties would not have arisen. Therefore, as between QPSDCI
and petitioner, the former should be held liable for any charge, lien or penalty that
may arise. However, it was error for the trial court to remedy the situation in the
form of an award for damages because, as discussed earlier, the basis for the same
does not appear indubitable.
Part of the confusion lies in the deficiency of the trial court's decision. It had found
that petitioner had superior right to the unit over the FUNDERS and the mortgage in
favor of the FUNDERS was contrary to Condominium laws. Therefore, the proper
remedy was to annul the mortgage foreclosure sale and the CCT issued in favor of
ASIATRUST, and not merely decree an award for damages. We held in Union Bank of
the Philippines v. HLURB 23
Clearly, FRDC's act of mortgaging the condominium project to Bancom and FEBTC,
without the knowledge and consent of David as buyer of a unit therein, and without
the approval of the NHA (now HLURB) as required by P.D. No. 957, was not only an
unsound real estate business practice but also highly prejudicial to the buyer David,
(who) has a cause of action for annulment of the mortgage, the mortgage
foreclosure sale, and the condominium certificate of title that was issued to the UBP
and FEBTC as highest bidders of the sale.
These remedies were clearly within those sought for in petitioner's complaint. The
trial court should have also ordered QPSDCI to credit petitioner's payments to his
outstanding balance and deliver to petitioner a clean CCT upon full payment of the
purchase price as mandated by Sec. 25 of PD 957.
We note that petitioner, believing that he won, did not appeal the trial court's
decision. Petitioner is partly to blame for the difficult situation he is in, having filed
his complaint with the regular courts instead of the HLURB. Nevertheless, both trial
court and the Court of Appeals found that petitioner had superior rights over the
condominium unit, that petitioner was not bound by the mortgage in favor of the
FUNDERS and, that QPSDCI violated its contract with petitioner by its failure to remit
the latter's payments. Such findings are uncontested before us and provide enough
ground to warrant the modification of the ruling, so that full relief may be accorded
to petitioner. The general rule that an appellate court may only pass upon errors
assigned may be waived, and the appellate court may consider matters not
assigned when consideration of which is necessary in arriving at a just decision and
complete resolution of the case or serve the interests of justice or to avoid
dispensing piecemeal justice.24

WHEREFORE, the assailed Decision of the Court of Appeals in CA-G.R. CV No. 37281
is MODIFIED thus
(a)
The mortgage over Unit 211-2C of Lourdes I Condominium covered by CCT
No. 2307 as well as its foreclosure sale is declared NULL and VOID. The Ex-Officio
Sheriff of Quezon City is ordered to cancel the certificate of sale in favor of
ASIATRUST Development Bank over the aforesaid Unit 211-2C and the Register of
Deeds of Quezon City to cancel the Annotation of the Real Estate Mortgage (Entry
No. 7714) and the Annotation of the Certificate of Sale (Entry No. 8087); and
(b)
Respondents Q. P. San Diego Construction, Inc., and ASIATRUST are ordered
to credit all payments made by petitioner Gregorio de Vera Jr., to his outstanding
balance, and to deliver to petitioner the certificate of title over Unit 211-2C, Lourdes
I Condominium, upon full payment of the purchase price, free from all penalties,
liens, charges, except those accruing after finality of this Decision.
The award of nominal damages in favor of petitioner in the amount of P50,000.00 is
AFFIRMED.
SO ORDERED.
d. Suspension of monthly amortization
[G.R. No. 122088. January 26, 2001]
GOLD LOOP PROPERTIES, INC. and EMMANUEL R. ZAPANTA, petitioners,
vs. THE COURT OF APPEALS, BHAVNA HARILELA SADHWANI and RAMESH
J. SADHWANI, represented by their attorney-in-fact PURSHUTAM DIALANI,
respondents.
DECISION
PARDO, J. :
The case before the Court is an appeal via certiorari from the decision[1] of the
Court of Appeals dismissing the petition for certiorari assailing the decision of the
Senior Deputy Executive Secretary, Office of the President sustaining the ruling of
the Housing Land Use and Regulatory Board of Commissioners requiring petitioners
to furnish private respondents with copy of the contract to sell and to accept the
balance of the purchase price of a condominium unit.
On July 16, 1988, private respondents Bhavna Harilela and Ramesh Sadhwani
(hereinafter referred to as Sadhwanis) submitted through St. Martin Realty
Corporation, a realtor agent of petitioner Gold Loop Properties, Inc. (hereinafter
referred to as GLPI), a signed pro forma reservation application addressed to GLPI

for the purchase of one (1) condominium unit at Gold Loop Towers residential
complex, located in Ortigas Complex, Pasig. One of the terms of the reservation was
the execution of a contract to sell once the downpayment was paid in full. Upon
submission of the reservation, the Sadhwanis issued a check for P50,000.00 to
cover the reservation fees to Josephine Flores Guina, agent of St. Martin Realty who
issued a receipt to them.
On November 18, 1988, the Sadhwanis paid GLPI the amount of P819,531.25.
Subsequently, Bhavna Harilela signed a Contract To Sell[2] with GLPI, represented
by its President Emmanuel Zapanta. Ms. Guina assured them that they would be
furnished with a copy of the contract after its notarization, and that the amount,
representing the balance of the purchase price, would be included in a loan
application with a bank. However, the contract to sell was not notarized, as the
private respondents were not able to supply GLPI with a copy of their passports.
Under the contract, GLPI agreed to sell to Sadhwanis a 198.75 square meters
condominium unit particularly Unit R-84 of Southwest Tower. The contract price was
P2,484,375.00, inclusive of a reservation deposit of P50,000.00.
The Contract to Sell, Section 3, provides:
Section 3. PURCHASE PRICE AND TERMS OF PAYMENT.
(a) The purchase price of the UNIT, exclusive of interest shall be TWO MILLION
FOUR HUNDRED EIGHTY FOUR THOUSAND THREE HUNDRED SEVENTY FIVE
(P2,484,375.00) Pesos, Philippine Currency, payable as follows:
Amount
Downpayment of 35%
Less: Reservation
Net Downpayment
Balance Payable

Due Date

P869,531.25
50,000.00

July 16, 1988

819,531.25

Oct. 21, 1988

P1,614,843,80

thru the bank designated by the SELLER and subject to standard banking requisites
and approval.
NOTE: In the event of non-approval of the loan by the bank, the BUYER commits to
adopt the Co-Terminus Payment Plan retroactive to the date of scheduled
downpayment as reflected above. This plan requires the payment of non-interest
bearing equal monthly installments spreads on the full balance of the purchase

price commencing 30 days after the scheduled downpayment up to January

1990.[3]
GLPI informed the Sadhwanis that the bank loan accommodation which was to serve
as payment of the balance of the purchase price was disapproved, and thus, per the
terms of the Contract to Sell, the balance would become payable through the
Co-terminus Payment Plan schedule of payments, in implementation of which
petitioners were informed by letter[4] dated March 15, 1989, which pertinently
reads:
Despite diligent efforts and ardent representations on our part to have the
approval of the loan in accordance with the Contract, such approval could not be
obtained for the reason that banks are not willing to extend a loan to be secured by
a still ongoing project. Accordingly, the balance of the purchase price should now
be paid in equal monthly installments until January 1990 pursuant to the
aforequoted provision. The schedule of these payments in implementation of this
Co-Terminus Payment Plan should be as follows:
Date of Payment
March 20, 1989 (Covering
the period from Nov. 21,
1989 to March 21, 1989)
April 20, 1989
May 20, 1989
June 20, 1989
July 20, 1989
August 20, 1989
September 20, 1989
October 20, 1989
November 20, 1989
December 20, 1989
January 20, 1989
TOTAL

Amount

P538,281.25
107,626.25
107,626.25
107,626.25
107,626.25
107,626.25
107,626.25
107,626.25
107,626.25
107,626.25
107,626.25
P1,614,843.80

By letter[5] dated March 16, 1989, addressed to GLPI, the Sadhwanis offered to
resell their rights to the condominium unit they purchased. The letter contained
proposals which read:
Per our verbal agreement, this comes to formalize the earnest intention of my
clients, Spouses Ramesh and Anita Sadhwani, to sell their rights over Unit R-84 of
the Gold Loop Towers, under the following terms and conditions:
ACQUISITION:

198.75 sq. m. @ 12,500 per sq. m.

=
Less: 35% downpayment paid 11-15-88
Balance
=
Monthly amortization payable in
18 months starting December 1988
until May 1990 @ 3% penalty for
delayed amortization
Penalty per month

89,713.54

_________3%
P
2,691.41
x 3 months
P
8,074.22

198.75 sq. m. @ P14,500.00

per sq. m.

P2,881,875.00

Less: Balance

1,614,843.75
1,267,031.25

Less: Interest for delayed

Amortization

Net cash involved payable

in 6 months

Total Penalty

=
=

P2,484,375.00
869,531.25
1,614,843.75

RE-SALE:

8,074.22

P1,258,957.03

Petitioners rejected the offer on the resale of the rights over the condominium unit
proposed by private respondents because the offer was unreasonable, unfair and
inequitable.
On March 19 and April 25, 1989, respondent Ramesh J. Sadhwani demanded a copy
of the contract to sell, noting that his wife had no official document to show that she
bought a condominium unit from GLPI and there were conditions and/or
stipulations in the contract which she could not be expected to comply with, unless
a copy of the same be given to her. By letter dated May 22, 1989 to GLPI,
respondent Sadhwanis counsel made a formal demand for the delivery to him of a
copy of the contract to sell.
Spouses Sadhwanis failed to pay any of the monthly amortizations in the payment
plan.
On August 7, 1989, petitioners sent a letter demanding payment of the balance
amounting to P1,614,814.80, and informed the Sadhwanis that GLPI will rescind the

Contract to Sell and automatically forfeit their down payment should they fail to pay
within five (5) days from receipt of the letter in accordance with section 8 of the
contract to sell.[6]
On August 14, 1990, spouses Sadhwanis filed with the Housing and Land Use
Regulatory Board (hereinafter referred to as HLURB), a complaint for specific
performance with an alternative prayer for refund against GLPI. Spouses Sadhwanis
prayed that they be furnished with a copy of the contract to sell and allowed them
to remit the balance of the consideration to GLPI and to deliver to them the title and
possession of the condominium unit, or to be reimbursed of the amount they paid
with interest and damages.[7]
On October 8, 1990, petitioners filed with the HLURB an answer to the complaint
and subsequently, the parties submitted their position papers.
On October 2, 1992, HLURB Arbiter Roberto F. Paras rendered a decision, the
dispositive portion of which provides:
WHEREFORE, premises considered, judgment is hereby rendered:
1. Ordering respondents Gold Loop Properties, Inc. and St. Martin to furnish
complainants with a copy of the subject Contract to Sell and to accept
complainants payment of the agreed purchase price balance of the Condominium
unit described in the said Contract to Sell;
2. Ordering said respondents to deliver possession of and to effect the transfer of
title to the subject condominium unit in favor of the complainants after full payment
of the purchase price;
In the event compliance with the above dispositive portion is no longer possible,
respondents instead are hereby ordered to jointly and severally reimburse
complainants the amount of Eight Hundred Seventy Eight Thousand Three Hundred
Sixty Six Pesos and Thirty Five Centavos (P878,366.35) representing complainants
reservation deposit and downpayment, with legal interest from the time of the filing
of this complaint;
3. Ordering respondents jointly and severally to pay complainants (a) moral
damages in the amount of Ten Thousand Pesos (P10,000.00), and (b) attorneys fees
in the amount of Thirty Thousand Pesos (P30,000.00);
4. Dismissing respondents counterclaim for lack of merit.
IT IS SO ORDERED.[8]

On November 16, 1992, petitioners appealed to the HLURB Board of Commissioners,

Quezon City while private respondents interposed a partial appeal thereto.
On October 11, 1993, the HLURB Board of Commissioners rendered a decision, the
dispositive portion of which reads:
WHEREFORE, premises considered, respondents appeal is hereby DENIED and
complainants Partial Appeal is hereby given due course and the Decision subject of
this Appeal is hereby MODIFIED by DELETING the second paragraph of order
number two. Accordingly, complainants are directed to pay the balance of the
purchase price, without interest, within 30 days from receipt hereof while
respondents are ordered to accept said payment and turn over to complainants the
unit subject of said contract to sell.
All other aspects of the decision is hereby AFFIRMED IN TOTO.
SO ORDERED.[9]
On January 7, 1994, petitioners elevated the case to the Office of the President.
On August 24, 1994, Senior Deputy Executive Secretary Leonardo A.
Quisumbing[10] rendered a decision[11] dismissing petitioners appeal. He also
denied petitioners motion for reconsideration[12] in a Resolution[13] dated
December 22, 1994.
On March 22, 1995, petitioners filed with the Supreme Court a special civil action for
certiorari assailing the decision of the Senior Deputy Executive Secretary, Office of
the President. In a resolution dated April 4, 1995, the Court referred the case to the
Court of Appeals for proper disposition.[14]
On June 22, 1995, the Court of Appeals promulgated its decision dismissing the
petition.[15] The court ruled that the failure of petitioners to give respondents a
copy of the contract to sell sued upon, despite repeated demands therefor, and
notwithstanding the payment of P878,366.35, was a valid ground for private
respondents to suspend their payments. And given the fact that the contract to sell
was in writing, the Sadhwanis, as buyers, were entitled to a copy. Their request for
a copy sprung from their desire to comply with what was incumbent upon them to
perform thereunder. While buyers do not need a copy of the contract to know the
stipulated purchase price, the schedule of payments and the outstanding balance,
the contract to sell, being an eight paged single-spaced document, broken down
into twelve sections, spelling out the parties respective monetary and nonmonetary rights and obligations, the buyers could not be expected to recall each
and every detail of the stipulations of the contract without a copy of the contract to
guide them.

On July 14, 1995, petitioners filed with the Court of Appeals a motion for
reconsideration.[16] However, the court denied the motion.[17]
Hence, this petition.[18]
Petitioners contend that private respondents are not entitled to suspend payment of
their monthly amortizations because of the alleged failure of petitioners to furnish
them copy of the contract to sell and that private respondents used the alleged
failure to give them copy of the contract as an excuse for defaulting in their
contractual obligation to pay the installments. Petitioners insist that private
respondents were given copy of the contract to sell. Petitioners pointed out that
under the contract, they had the right to rescind the contract in case private
respondents breached the contract.
In their Comment[19] and Memorandum,[20] private respondents alleged that they
have not in fact received a copy of the contract to sell. Private respondents likewise
averred that petitioners assertion is premised on its completely wrong proposition
that private respondents had given petitioners a reason to rescind the contract to
sell. What was really in issue was that it was petitioners that gave them sufficient
and well-founded cause to suspend payment of their monthly amortizations on the
condominium unit.
We agree with private respondents.
The core issue actually boils down to the question of whether or not respondents
may suspend payment of their monthly amortizations due to failure of petitioners to
furnish them copy of the contract to sell.
Time and again, the Court had occasion to reiterate the well-established rule that
findings of fact of the Court of Appeals are conclusive on the parties and are not
generally reviewable by this Court.[21] We find no compelling reason to disturb the
factual findings of the Court of Appeals, in the absence of showing that the present
case falls within the exceptions to this rule.[22] When supported by sufficient
evidence, the findings of fact of the Court of Appeals affirming those of the trial
court, are not to be disturbed on appeal. The rationale behind this doctrine is that
review of the findings of fact of the Court of Appeals is not a function that the
Supreme Court normally undertakes. In the case at bar, we subscribe to the
findings of fact of the Court of Appeals when it held that:
x x x Private respondents were indeed justified in suspending payment of their
monthly amortizations. The failure of petitioners to give them a copy of the
Contract to Sell sued upon, despite repeated demands therefor, and
notwithstanding the private respondents payment of P878,366.35 for the subject

condominium unit was a valid ground for private respondents to suspend their
payments. x x x
xxx
And contrary to petitioners stance, records disclose that they were the ones who
did fraudulent acts against private respondents by entering into a Contract to Sell
with the latter and accepting their downpayment of P878,366.35, withholding a
copy thereof for no valid reason at all, and then threatening them with rescission
and forfeiture, when private respondents only suspended payment of the balance of
the purchase price while waiting for their copy of the Contract to Sell.[23]
The private respondents are entitled to a copy of the contract to sell, otherwise they
would not be informed of their rights and obligations under the contract. When the
Sadhwanis parted with P878,366.35 or more than one third of the purchase price for
the condominium unit, the contract to sell, or what it represents is concrete proof of
the purchase and sale of the condominium unit.
WHEREFORE, the Court hereby DENIES the petition for review on certiorari, for lack
of merit. The Court AFFIRMS the decision of the Court of Appeals in CA-G.R. SP No.
36977 affirming the order for delivery of a copy of the contract to sell to private
respondents and to accept payment of the balance of the purchase price and
deliver title over the condominium unit to the private respondents upon full
payment of the balance of the purchase price.
No costs.
SO ORDERED.

e. Alteration of plans
[G.R. No. 118822. July 28, 1997]
G.O.A.L., INC., petitioner, vs. COURT OF APPEALS, OFFICE OF THE
RESIDENT LEGAL AFFAIRS, HOUSING AND LAND USE REGULATORY BOARD,
RIZALINO SIMBILLO, WILLIAM ONG, HERMINIA MESINA, SELFA MARTINEZ,
FILOMENO TENG, RAFAEL JAVIER, FERNANDO DEL MUNDO, MILDRED
PAREJA, REMEDIOS LASQUETE, GEORGE CABIGAN, and ARCADIO SAMPANG,
respondents.
DECISION
BELLOSILLO, J.:

G. O. A. L., INC. (GOAL), in this petition for review on certiorari, seeks to set aside
part of the decision of the Court of Appeals dated 28 September 1994[1] which
affirmed the decision of the Office of the President Legal Affairs (OPLA) that earlier
likewise affirmed the decision of the Housing and Land Use Regulatory Board
(HLURB). Petitioner confines its petition to the construction of the fifth floor of
Gemin I Condominium and all works related thereto, including the issuance of title
to private respondent Teng and providing free parking spaces for the condominium
units.[2]
On 23 May 1983 GOAL and the National Housing Authority (NHA) entered into an
agreement whereby NHA extended to GOAL a loan of P4.425 million for the
construction of Gemin I Condominium at 941 Gonzales St., Ermita, Manila.
Sometime in 1984 a Contract Agreement was entered into between GOAL and
Matson International Corporation for the construction of the condominium within
one (1) year at the cost of P4.2 million. However, in the later part of 1984, the
contractor abandoned the project with only 60% of it finished. In 1985 GOAL
offered the condominium units for sale with private respondents among its buyers.
To remedy the situation brought about by the abandonment of the project by the
first contractor, GOAL subsequently pursued the construction of the fifth floor with
NHA granting additional funding on the condition that it would hold on to the
condominium certificates of title of private respondents.
In August 1989 private respondents filed with the Housing and Land Use Regulatory
Board (HLURB), Office of Appeals, Adjudication and Legal Affairs (OAALA), a
complaint against GOAL. Among the issues raised were the illegal construction of
the fifth floor of Gemin I Condominium, the failure to deliver the title of private
respondent Filomeno Teng despite his repeated demands, and the failure to provide
adequate parking spaces for the unit owners.
On 31 March 1989 OAALA rendered its decision ordering GOAL, inter alia, (a) to stop
the construction of the fifth floor, (b) to deliver the title of private respondent Teng,
and (c) to provide adequate parking space for the unit owners.[3]
On appeal to the Office of the President Legal Affairs (OPLA) and subsequently to
the Court of Appeals, the decision rendered by the HLURB-OAALA was affirmed in
toto. Petitioner's motion for reconsideration was denied. Hence this petition.
Petitioner imputes error to the Court of Appeals in not finding the true facts of the
case that greatly affected its decision, and its decision being contrary to law.
GOAL contends that the Court of Appeals failed to appreciate the fact that the
construction of the fifth floor was with the written approval of public respondent
HLURB as required by Sec. 22 of P.D. 957 which provides -

Sec. 22. Alteration of Plans. - No owner or developer shall change or alter the
roads, open spaces, infrastructures, facilities for public use and/or other form of
subdivision development as contained in the approved subdivision plan and/or
represented in its advertisements, without the permission of the Authority and the
written conformity or consent of the duly organized homeowners association, or in
the absence of the latter, by majority of the lot buyers in the subdivision
(underscoring supplied).
The above provision is clear. We do not have to tussle with legal hermeneutics in
the interpretation of Sec. 22 of P.D. 957. The written approval of the National
Housing Authority alone is not sufficient. It must be coupled with the written
conformity or consent of the duly organized homeowners association or the majority
of the lot buyers. Failing in this, the construction of the fifth floor is violative of the
decree invoked. The Court of Appeals simply applied the law, and correctly so.
Petitioner likewise contends that it should not have been faulted for failing to deliver
the title to private respondent Teng as the proximate cause thereof was the
abandonment of the construction project by the first contractor, hence, due to force
majeure.[4]
We cannot sustain petitioner. There is no one else to blame but itself. Upon full
payment of the agreed price, petitioner is mandated by law to deliver the title of the
lot or unit to the buyer. Both the Contract to Sell of petitioner and private
respondents, and Sec. 25 of P.D. 957 state Sec. III (Contract to Sell). - Title and Ownership of Unit. Upon full payment by the
vendees of the full amount of the purchase price stipulated under Sec. III hereof, the
assessments and expenses under Sec. IV and otherwise upon compliance by the
VENDEES of all obligations therein, the VENDOR will convey to the VENDEE all rights
and interests of the former and to the Unit, subject hereof together with the interest
in the common area and in the Condominium Corporation appurtenant to such unit
x x x x
Sec. 25, P.D. 957 - Issuance of Title. - The owner or developer shall deliver the title
of the lot or unit to the buyer upon full payment of the lot or unit x x x x In the event
a mortgage over the lot or unit is outstanding at the time of the issuance of the
title to the buyer, the owner or developer shall redeem the mortgage or the
corresponding portion thereof within six months from such issuance in order that
the title over any paid lot or unit may be secured and delivered to the buyer in
accordance herewith.
Petitioner also attempts to justify its failure to deliver the certificate of title of
private respondent Teng by claiming that it used the title as part collateral for the
additional loan NHA had extended for the construction of the fifth floor.

The Court observes the frequent allusion of petitioner to its predicament brought
about by the abandonment of the project by the first contractor. But such is
irrelevant in light of Sec. 25 of P.D. 957 as well as of the Contract to Sell of the
parties. While we empathize with petitioner in its financial dilemma we cannot
make innocent parties suffer the consequences of the formers lack of business
acumen. Upon full payment of a unit, petitioner loses all its rights and interests to
the unit in favor of the buyer. Consequently, it has no right to use the certificate of
title of respondent Teng as collateral for a new loan. The title of Teng must be
released to him as provided by law.
With respect to the second issue, petitioner contends that the decision of the Court
of Appeals is contrary to law considering that under Sec. 12-D, No. 2, Rule V of the
Implementing Rules of P.D. 957, what should be given for free are only off-street
parking spaces and not indoor parking areas.
Petitioner is wrong. It has for purposes of its own construed off-street to mean
not including indoor. On the other hand, the law does not exclude indoor
parking. What it specifically excludes is street parking. Therefore, parking may
be in the basement or, in the absence thereof, in the first floor.
Furthermore, at this point, a definition of terms may be necessary. In a
condominium, common areas and facilities are portions of the condominium
property not included in the units, whereas, a unit is a part of the condominium
property which is to be subject to private ownership.[5] Inversely, that which is not
considered a unit should fall under common areas and facilities.
Hence, the parking spaces not being subject to private ownership form part of the
common area over which the condominium unit owners hold undivided interest. As
such, petitioner cannot invoke Sec. I, Art. III, of the Bill of Rights which provides that
No person shall be deprived of life, liberty or property without due process of law.
Petitioner alone does not own the parking area. The parking space is owned in
common by the developer and the unit owners. Private respondents must be
allowed to use the parking area.
Finally, petitioner contends that the payment of P10,000.00 as moral damages and
P5,000.00 as exemplary damages plus P5,000.00 as attorney's fees is too much of a
penalty. However, the Court of Appeals upheld these awards holding that In the light of the foregoing premises, we sense no error in the award of attorney's
fees, moral and exemplary damages, and administrative fines against petitioner.
This is allowed by the provisions of civil law and under Secs. 38 and 39 of P.D. 957:

Sec. 38. Administrative Fines. - The Authority may prescribe and impose fines not
exceeding ten thousand pesos for violations of the provisions of this Decree or any
rule or regulation thereunder. Fines shall be payable to the Authority and
enforceable through writs of execution in accordance with the provisions of the
Rules of Court.
Sec. 39. Penalties - Any person who shall violate any of the provisions of this
Decree and/or any rule or regulation that may be issued pursuant to this Decree
shall, upon conviction, be punished by a fine of not more than twenty thousand
(P20,000.00) pesos and/or imprisonment of not more than ten years: Provided,
that in the case of corporations, partnership, cooperatives, or associations, the
President, manager, or Administrator or the person who has charge of the
administration of the business shall be criminally responsible for any violation of this
Decree and/or the rules and regulations promulgated pursuant thereto.[6]
Petitioner can hardly be excused for its failure to comply with the provisions of P.D.
957 by claiming ignorance of the requirements of the decree and that a mistake
upon a doubtful or difficult question of law may be the basis of good faith. Being
engaged in a business affected by P.D. 957, petitioner should be aware of its
provisions and its mandates which, as can be readily perceived, are clear, simple
and unmistakable.[7]
WHEREFORE, finding no error in the Decision sought to be reviewed, the petition is
DENIED. Costs against petitioner.
SO ORDERED

XX subdivision and Condominium protective buyers decree (PD 957)

a. Jurisdiction of the HLURB
G.R. No. 148333

November 17, 2004

VIRGILIO SANTIAGO, petitioner,

vs.
BERGENSEN D.Y. PHILIPPINES and NATIONAL LABOR RELATIONS
COMMISSION (THIRD DIVISION), respondents.

DECISION

CARPIO MORALES, J.:

Petitioner Virgilio Santos' petition for Certiorari before the Court of Appeals having
been dismissed by Resolution1 of October 15, 1999 on the ground that it was filed
out of time, and his Motion for Reconsideration having been denied by Resolution2
of May 18, 2001, he lodged the Petition for Review on Certiorari at bar.
Petitioner filed a complaint for illegal dismissal, non-payment of wages, overtime
pay, vacation pay, moral and exemplary damages and attorney's fees against
Bergensen D.Y. Philippines (respondent) before the Labor Arbiter.
The Labor Arbiter dismissed the complaint for lack of merit.
On appeal, the National Labor Relations Commission (NLRC), by Resolution3 of
November 16, 1998, affirmed the finding that petitioner was not illegally dismissed.
It, however, required respondent to pay petitioner the sum of Ten (10) Thousand
Pesos (P10,000.00) for failure to afford petitioner due process.
Petitioner received a copy of the NLRC Resolution on December 18, 1998.4 On
December 28, 1998, he filed a motion for reconsideration which the NLRC denied
with finality by Resolution5 of August 5, 1999. On August 18, 1999,6 "he was
informed by another law firm" of the denial of the Motion for Reconsideration.
On October 11, 1999, he filed before the appellate court a petition for Certiorari,
docketed as CA-G.R. SP No. 55295, which was, as earlier adverted to, dismissed by
Resolution7 of October 15, 1999 for having been filed four (4) days late.
Petitioner through counsel alleged that he received copy of the resolution dated
November 16, 1998 of the National Labor Relations Commission (NLRC) on
December 18, 1998, denying his appeal. Ten days (10) days later, or on December
28, 1998, he filed his motion for reconsideration. On August 18, 1999, he actually
received copy of the NLRC's resolution denying his aforesaid motion for
reconsideration (although admittedly said resolution was received by another law
firm earlier on August 16, 1999). The present petition for certiorari was filed on
December 11, 1999.
There are fifty-four (54) days from August 18, 1999 to October 11, 1999. However,
the ten (10) day period from receipt of the assailed resolution on December 18,
1998 to the filing of his motion for reconsideration on December 28, 1998 must be
included in determining the 60-day reglementary period (Section 4, Rule 65 of the
1997 Rules of Civil Procedure as amended by Resolution of the Supreme Court En
Banc dated July 21, 1998 in Bar Matter No. 803 which took effect on September 1,
1998). The last day of the reglementary period for filing the petition for certiorari
was on October 7, 1999. Hence, the present petition for certiorari was filed four (4)
days late.8 (Emphasis and underscoring supplied)

Petitioner's Motion for Reconsideration which was filed on November 17, 1999 was
denied by Resolution9 of May 18, 2001, hence, the petition at bar.
Before this Court, petitioner invokes the retroactive application of A.M. No. 00-2-03SC, which took effect on September 1, 2000, amending Section 4, Rule 65 of the
1997 Rules of Civil Procedure, contending that rules of procedure should be liberally
construed in order to promote its objectives of securing a just, speedy and
inexpensive disposition of every action and proceeding.10
Under A.M. No. 00-2-03-SC, in case a motion for reconsideration of the judgment,
order or resolution sought to be assailed has been filed, the 60-day period to file a
petition for certiorari shall be counted from notice of the denial of such motion. Thus
Section 4, Rule 65, as amended by A.M. No. 00-2-03-SC, provides:
SEC. 4. When and where petition filed. The petition shall be filed not later than
sixty (60) days from notice of the judgment, order or resolution. In case a motion for
reconsideration or new trial is timely filed, whether such motion is required or not,
the sixty (60) day period shall be counted from notice of the denial of said motion.
(Underscoring supplied)
This Court finds for petitioner.
When petitioner filed his petition for Certiorari before the appellate court on October
15, 1999, the prevailing rule was Section 4, Rule 65 (as amended by the Supreme
Court En Banc Resolution in Bar Matter No. 83 dated July 21, 1998) which provided:
SEC. 4. Where petition filed. The petition may be filed not later than sixty (60)
days from notice of the judgment, order or resolution sought to be assailed xxx.
If the petitioner had filed a motion for new trial or reconsideration in due time after
notice of said judgment, order or resolution, the period herein fixed shall be
interrupted. If the motion is denied, the aggrieved party may file the petition within
the remaining period, but which shall not be less than five (5) days in any event,
reckoned from notice of such denial. No extension of time to file the petition shall be
granted except for the most compelling reason and in no case to exceed fifteen (15)
days.
The appellate court thus correctly dismissed his petition.
When petitioner filed his Motion for Reconsideration on November 17, 1999, the
same above-quoted rule was still prevailing. When the appellate court resolved said
motion, however, or on May 18, 2001, Section 4, Rule 65 had already been
amended by A.M. No. 00-2-03-SC.

A.M. No. 00-2-03-SC, which is a rule of procedure, may be retroactively applied to

actions pending and undetermined at the time of their passage11 and will not
violate any right of a person who may feel that he is adversely affected, inasmuch
as there is no vested rights in rules of procedure.12
Remedial statues or statutes relating to remedies or modes of procedure, which do
not create new or take away vested rights, but only operate in furtherance of the
remedy or confirmation of rights already existing, do not come within the legal
conception of a retroactive law, or the general rule against retroactive operation of
statutes. Statutes regulating the procedures of the courts will be construed as
applicable to actions pending and undetermined at the time of their passage.
Procedural laws are retroactive in that sense and to that extent.13 (Citations
omitted)
The record shows that petitioner received the NLRC Resolution denying his Motion
for Reconsideration on August 18, 1999. Under A.M. No. 00-2-03-SC, he had 60 days
or until October 17, 1999 to file a petition for certiorari before the appellate court.
He filed one on October 11, 1999, well within the reglementary period.
WHEREFORE the petition is hereby GRANTED. The assailed Court of Appeals
Resolutions of October 15, 1999 and May 18, 2001 are hereby SET ASIDE and the
case is REMANDED to said court for appropriate action.
No costs.