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Gonzales vs. IAC

A bank is not required, before accepting a mortgage, to
make an investigation of the title of the property being
given as security. Nevertheless, 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. Thus, banks before
approving a loan send representatives to the premises of
the land offered as collateral and investigate who are the
true owners thereof.
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Pactum Commissorium

A stipulation in a contract of mortgage that the ownership
of the property would automatically pass to the mortgagee
in case no redemption was effected within the stipulated
period is void for being a pactum commissorium which
enables the mortgagee to acquire ownership of the
mortgaged property without need of foreclosure.
Basic rules on judicial foreclosure
Rural Bank of Oroquieta v. Court of Appeals laid down the
following basic principles on judicial foreclosure of
mortgage:
1. 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 mortgagors of their rights to the mortgaged lot
and that would vest such rights in the bank as purchaser
at the auction sale.
2. 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 a case where the mortgagor did not
exercise his right of redemption under Section 78 of the
General Banking Law.
3. 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.
4. 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.
5. 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.
6. The confirmation retroacts to the date of the sale. A
hearing should be held for the confirmation of the sale.
The mortgagor should be notified of the 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.
7. 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.
8. An order of confirmation, void for lack of notice and
hearing, may be set aside anytime.
9. After the foreclosure 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.
10. 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.
11. 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.
12. 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).
13. It is after the confirmation of the sale that the
mortgagor loses all interest in the mortgaged property.

Equity of Redemption vs Right of Redemption
Equity of redemption is the right of the mortgagor to
redeem the mortgaged property after his default in the
performance of the conditions of the mortgage but before
the sale of the property or the confirmation of the sale,
whereas the right of redemption means the right of the
mortgagor to repurchase the property even after
confirmation of the sale, in cases of foreclosure by banks,
within one year from the registration of the sale.
Under Act No. 3135, as amended, a right of redemption is
granted to the debtor, his successor-in-interest or any
judicial 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, within a period of
one (1) year from the date of the sale. Such redemption is
governed by Sections 29, 30 and 31, Rule 39 of the Rules
of Court.
In 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. 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 (1) year
from the sale.
Torrens System
The Torrens system of land registration is a system for the
registration of title to land only, and not a system
established for the acquisition of land.
Heirs of Amunategui v. Director of Forestry
The applicant shoulders the burden of overcoming the
presumption that the land sought to be registered forms
part of the public domain.

Palomo vs CA
It is elementary in the law governing natural resources that
forest land cannot be owned by private persons. It 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.
Susi vs Razon
The case of Susi blazed a trail of subsequent cases 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.
Dir. of Lands vs ACME
The Supreme Court ruled that Acme, although a private
corporation, was qualified to apply for the judicial
confirmation of its title under Section 48(b) of the Public
Land Act, as amended, since the property at the time it
was purchased by it from the Infiels on October 29, 1962
was already a private land to which they had a legally
sufficient and transferable title.
Vested right
A right is vested when the right to enjoyment, present or
prospective, has become the property of some particular
person or persons as a present interest. It is some right or
interest in property which has become fixed and
established and is no longer open to doubt or controversy.
Requirement of Publication

Application for Registration
Judicial Reconstitution
1. Publication
Once in OG and newspaper of general circulation
2 Successive issues of OG
2. Posting
Prominent place at the bray. hall and municipal bldg.
Prominent place Provincial Capitol Municipal bldg.
3. Mailing
Notice to the occupant and adjacent owner
Notice to the occupant and adjacent owner

Possession:
As explained in the recent case of Republic v. Court of
Appeals and Naguit,

the phrase since June 12, 1945
qualifies its antecedent phrase under a bona fide 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. Hence, what the law merely requires is
that the property sought to be registered is already
alienable and disposable at the time the application for
registration of title is filed. In other words, it is not
necessary that the land be first classified as alienable and
disposable before the applicants possession under a
bona fide claim of ownership could start
A grant is conclusively presumed by law when the
claimant, by himself or through his predecessors-in-
interest, has occupied the land openly, continuously,
exclusively, and under a claim of title since June 12, 1945
or prior thereto. The possessor is deemed to have
acquired, by operation of law, a right to a grant, without
the necessity of a certificate of title being issued. The
application for confirmation of title would then be a mere
formality
Sec. 31: Decree of Registration
A land registration proceeding being in rem, the decree of
reg- istration issued pursuant to the decision binds the
land covered by the decree and quiets 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 all whom it may
concern.
Under the Torrens System of registration, the Torrens title
be- comes indefeasible and incontrovertible one year from
its final de- cree. A Torrens title is generally conclusive
evidence of the owner- ship of the land referred to therein.
A strong presumption exists that the title was regularly
issued and that it is valid. It is incontrovert- ible as against
any information possessoria or title existing prior to the
issuance thereof not annotated on the title.
Possessor in Good faith
Good faith consists in the possessors belief that the
person from whom he received the thing was the owner of
the same and could convey his title.
Innocent purchaser for value and in good faith
A purchaser in good faith and for value 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. Good faith consists in an
honest intention to abstain from taking any
unconscientious advantage of another.

Good faith is the
opposite of fraud and of bad faith, and its non-existence
must be established by competent proof.
Principle of primus tempore, potior jure (first in time,
stronger in right)
The principle of primus tempore, potior jure (first in time,
stron- ger in right) gains greater significance in case of
double sale of im- movable 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.
Verily, the act of registration must be coupled with good
faith that is, the regis- trant 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.

Double Sale: order of preference
Following Article 1544, in the double sale of an
immovable, the
rules of preference are:
(a) the first registrant in good faith;
(b) should there be no entry, the first in possession in
good faith; and
(c) in the absence thereof, the buyer who presents the
oldest title in good faith.

Mesina vs. Sonza
Once a homestead applicant has complied with all the
conditions essential to a government grant, he acquires
not only a right to a grant, but a grant of the government.

Unrecorded sale of a prior date vs. recorded mortgage on
a later date
Between an unrecorded sale of a prior date and a
recorded mortgage of a later date the former is preferred
to the latter for the reason that if the original owner had
parted with his ownership of the thing sold then he no
longer had the ownership and free disposal of that thing so
as to be able to mortgage it again.
Purchaser charged only with notice of liens noted on the
title
Well settled is the rule that all persons dealing with
property covered by a Torrens certificate of title are not
required to go beyond what appears on the face of the
title. When there is nothing on the certificate of title to
indicate any cloud or vice in the ownership of the property,
or any encumbrance thereon, the purchaser is not re-
quired to explore further 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.
Forged deed may the basis of a good title in the hands of
a bona fide purchaser.
An executed transfer of registered lands placed by the
registered owner thereof in the hands of another operates
as a representation to a third party that the holder of the
transfer is authorized to deal with the lands.
If the owner has voluntarily or carelessly allowed the
forger to come into possession of his owners certificate he
is to be judged according to the maxim, that when one of
two innocent persons must suffer by the wrongful act of a
third person the loss fall on him who put it into the power
of that third person to perpetrate the wrong. Furthermore,
even if the forger stole the owners certificate, the owner is
up against no greater hardship than is experienced by one
whose money or negotiable paper payable to bearer is
stolen and transferred by the thief to an innocent
purchaser.

Concept of foreclosure.
Foreclosure is the process by which a mortgagee acquires
an absolute title to the property of which he had previously
been only the conditional owner, or upon which he had
previously a mere lien or encumbrance.
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Foreclosure is
valid where the debtors are in default in the payment of
their obligation
Lis Pendens
A notice of lis pendens may thus be annotated on the
certificate of title immediately upon the institu- tion 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.
A notice of lis pendens serves as a warning to a
prospective purchaser or encumbrancer that the particular
property is in liti- gation, and that he should keep his
hands off the same, unless he intends to gamble on the
results of the litigation. However, the constructive notice
operates as such by the express wording of Section 52
only from the time of the registration of the notice of lis
pendens.
Certificate of title cannot be the subject of collateral attack.
A Torrens title cannot be attacked collaterally. The issue
on its validity can be raised only in an action expressly
instituted for the purpose.
The certificate of title serves as evidence of an
indefeasible title to the property in favor of the person
whose name appears therein.
Extrinsic Fraud vs. Intrinsic Fraud
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 or perjured testimony, which did
not affect the presentation of the case, but did prevent a
fair and just determination of the case.
Reconveyance
An action for reconveyance is a legal and equitable
remedy granted to the rightful owner of land which has
been wrongfully or erroneously registered in the name of
another for the purpose of com- pelling the latter to
transfer or reconvey the land to him.
Such an action does not aim or purport to re-open the
registration proceeding and set aside the decree of
registration, but only to show that the person who secured
the registration of the questioned property is not the real
owner thereof. The action does not seek to set aside the
decree but, respecting the decree as incontrovertible and
no longer open to review, seeks to transfer or reconvey
the land from the registered owner to the rightful owner.
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