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36. AZNAR BROTHERS REALTY COMPANY vs.

AYING

G.R. No. 144773

May 16, 2005

FACTS:
Crisanta Maloloy-on petitioned for the issuance of a cadastral decree in her
favor over Lot No. 4399 located in Lapu-Lapu City.
Crisanta Maloloy-on died, so the Cadastral court issued a decision directing the
issuance of a decree of title in the name of her 8 children, namely: Juan, Celedonio,
Emiliano, Francisco, Simeon, Bernabe, Roberta and Fausta, all surnamed Aying.
However, the certificate was lost during the war.
All the heirs of the Aying siblings executed an Extra-Judicial Partition of Real
Estate with Deed of Absolute Sale conveying the lot in issue to the Aznar Brothers
Realty Company. The deed was registered with the ROD of Lapu-Lapu City on March
6, 1994 under Act. No. 3344 (the law governing registration of unregistered land,
and since then, the realty company religiously paid the real property taxes on the
property.
Later, Aznar Brothers Realty Company filed a Petition for Reconstitution of
the Original Title since the original title of the lot was lost during the war.
This was granted by the court and the ROD of Lapu-Lapu was directed to issue a
reconstituted title in the name of the Aying Siblings. Thus, OCT No. RO-2856 was
issued.
The Aznar Brothers Realty Company then sent out notices, to vacate the lot, to
the persons occupying the property, reasoning that they were the rightful owner.
The occupants refused to vacate, hence an ejectment case was filed against them
before the MTC. The MTC ordered the occupants to vacate. Eventually, this case
reached the Supreme Court and a decision was rendered in favor of the realty
company declaring them as the rightful possessor of the land.
Meanwhile, persons claiming to be the descendants of the eight Aying siblings,
numbering around 220 persons submitted an amended complaint before the RTC
and alleged that they are co-owners of the land being the descendants of the
registered owners under OCT No. RO-2856; that they had been in actual, peaceful,
physical, open, adverse, continuous and uninterrupted possession in concept of
owner of subject parcel of land since time immemorial; and that the deed of
absolute sale executed in favor of the realty company by the alleged heirs
of Crisanta Maloloy-on is a fraud and is null and void ab initio because not
all the co-owners of subject property affixed their signature on said
document and some of the co-owners who supposedly signed said

document had been dead at the time of the execution thereof; that Aznar
Brothers Realty Company held the land in bad faith, knowing fully well that it did not
have any right to the land and used force, threat and intimidation against them thus
suffering moral damages.
Aznar Brothers Realty Company denied that the Ayings are the lawful owners of
the land and alleged it had been in actual possession of subject land as owner
thereof by virtue of the extra-judicial partition of real property and deed of absolute
sale executed in its favor; that in fact, it had been paying taxes thereon religiously.
The realty company further alleged that they are barred by prescription to file
an action for recovery of property which should be instituted within
4years from discovery of the fraud. It took the Aying heirs 27years to file their
action against the realty company.

ISSUE: Is the registration of the Extra-Judicial Partition of Real Estate with Deed of
Absolute Sale conveying the lot in issue to the Aznar Brothers Realty Company with
the ROD binding and consequently, results in the running of the prescriptive period
for reconveyance?
Held: No. The sale of registered property, recorded in the ROD, cannot be
considered as registered.
Rationale: Jurisprudence dictates that that registration of instruments must be
done in the proper registry, in order to affect and bind the land and, thus, operate
as constructive notice to the world. In this case, the Extrajudicial Partition of Real
Estate with Deed of Absolute Sale was registered under Act No. 3344 and not under
Act No. 496, therefore the document cannot be deemed registered. As consequence
of non-registration, the 10year prescriptive period cannot be reckoned from the date
of registration of the document under Act. No. 3444 since no constructive notice to
the world was perfected by such registration. The prescriptive period only began to
run from the time the Aying heirs had actual notice of the Extra-Judicial Partition of
Real Estate with Deed of Absolute Sale which was not proven by clear and
convincing evidence in this case.

Issue: Is the extra-judicial partition with deed of absolute sale null and void, as
claimed by the Aying Descendants, because not all the co-owners of subject
property affixed their signature on said document and some of the co-owners who
supposedly signed said document had been dead at the time of the execution
thereof?
Held: No. The extra-judicial partition with deed of absolute sale is VALID but only
between the heirs who participated in the execution thereof. Therefore, the heirs
who undisputedly did not participate therein, cannot be bound by said document.

Issue: Does the realty companys defense, that they acquired the entire parcel of
land with the mistaken belief that all the heirs have executed the document, entitle
them to ownership over the land by prescription?
Held: No, Aznar Brothers Realty Company cannot be entitled ownership over the
land based on mistaken belief.
Rationale: The law provides that if property is acquired through mistake or
fraud, the person obtaining it is considered a trustee of an implied trust
for the benefit of the person from whom the property comes. Based on this
rule, a trustee cannot acquire by prescription ownership over property entrusted to
him until and unless he repudiates the trust. However, in constructive implied
trusts, prescription may supervene even if the trustee does not repudiate the
relationship. Necessarily, repudiation of said trust is not a condition precedent to
the running of the prescriptive period.

Notes:
1. Who has the burden of proving that prescription has begun to run?
-Aznar Brothers Realty Company has the burden of proving the running of
prescription because it was the realty company that set up the defense that of
prescription which was denied by the Aying heirs.
2. Does laches apply here?
-No laches will not apply here because the three heirs took action to protect their
interest well within the period prescribed by law.

37. Alabang Development Corporation v Valenzuela


Alabang Development Corp. v. Valenzuela
Teehankee, J. | August 30, 1982
Note: Obiter lang ang relevant sa discussion.
Facts:
This case originated from a petition for reconstitution of title by the
respondents, Pascual. The respondents allege that they are the owners of the
land which is now Alabang Hills Village Subdivision.

Alabang Development Corporation (ADC) filed in the court below a belated


intervention and motion for new trial which were denied by respondent
judge. The trial court granted the petition of the respondents ordering the
issuance of TCTs in favor of them. This led to the filing of this petition for
certiorari and prohibition by ADC.
The abovementioned lands was also the subject of a previous case heard by
the Court, Director of Lands v Bernal.
Issue:
WON the court had jurisdiction?
Held: No, Failure of the Respondent to observe the notice requirements in
Section 12 and 13 of Republic Act 26.
Ratio:
Upon examination of the subject petition for reconstitution, the Court notes
that some essential data required in section 12 and section 13 of Republic
Act 26 have been omitted: the nature and description of the buildings or
improvements, which do not belong to the owner of the land, and the names
and addresses of the owners of such buildings or improvements, and 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. Neither do these data appear in the
Notice of Hearing. Such that no adjoining owner, occupant or possessor was
ever served a copy thereof by registered mail or otherwise. The court then
quotes the decision in Bernal.
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
At this point the case was already dismissed, but then the court continues
the discussion.
Relevant discussion:
After passing upon the jurisdiction issue, the Court cannot just let go
unmentioned its observation that the lots 8involved in this reconstitution
case are part of the survey plan (Plan II-4373) allegedly covering also Lots 1
and 3 which are involved in the Bernal case. This remarkable coincidence
warrants a reproduction here of the Court's findings as to the non-veracity
and falsity of the survey plan II-4374 submitted in support of reconstitution in
the Bernal case.
The court then continues to point out that the land involved in that case is
the exact same land. The evidence presented, the subdivision plans were the
same, and the respondents

As the Court accepted and approved in the Bernal case the above final report
on the relocation-verification survey of the regional officer of the Bureau of
Lands and admitted it as evidence of the falsity of the survey plan in
question, there is no reason for this Court not to use it likewise as basis for
reaching. The conclusion that Lots 2 and 4 supposedly covered by the
same Survey Plan II-4374 are purely imaginary and "do not actually exist on
the ground."
We can take judicial notice of innumerable litigations and controversies that
have been spawned by the reckless and hasty grant of such reconstitution of
alleged lost or destroyed titles as well as of the numerous purchasers who
have been victimized only to find that the 'lands' purchased by them were
covered by forged or fake titles or their areas simply 'expanded' through
'table surveys' with the cooperation of unscrupulous officials."
38. Spouses Tan v Republic
39. Recto v Republic
40. Eagle Realty Corporation v. Republic
594 SCRA 555 Civil Law Land Titles and Deeds Innocent Purchaser
Sunshine Finance Doctrine
Eagle Realty Corporation, a company engaged in the real estate business,
bought a parcel of land from a certain Reyes in 1984 via a Deed of Sale. This
Reyes acquired the land from a certain Medina who earlier acquired the said
land via surreptitiously entering a false record in the records of the Land
Registration Commission. Eventually, the true owners of the said land, the de
Leons, discovered that another title was fraudulently issued to Medina over the
same parcel of land. De Leon was able to have the said title annulled as well as
the TCT issued to Eagle Realty by virtue of the Deed of Sale.
ISSUE: Whether or not Eagle Realty is an innocent purchaser.
HELD: No. Based on case law (Sunshine Finance vs IAC, Oct. 28, 1991 / 203
SCRA 210), a corporation engaged in the buying and selling of real estate is
expected to exercise a higher standard of care and diligence in ascertaining the
status and condition of the property subject of its business transaction. Similar
to investment and financing corporations, it cannot simply rely on an
examination of a Torrens certificate to determine what the subject property,
looks like as its condition is not apparent in the document.

Another digest pili ka na lng sis


Petitioner Eagle Realty Corporation seeks the reconsideration of this Courts
Decision dated July 4, 2008, which affirmed the Court of Appeals Decision dated
January 22, 2001 and Resolution dated January 8, 2002, and upheld the

cancellation of petitioners certificate of title based on a finding that it is not a


purchaser in good faith and for value.
In the assailed decision, the Court held that a corporation engaged in the
buying and selling of real estate is expected to exercise a higher standard of
care and diligence in ascertaining the status and condition of the property
subject of its business transaction. Citing Sunshine Finance and Investment
Corporation v. Intermediate Appellate Court,1 the Court declared that, similar to
investment and financing corporations, such corporation cannot simply rely on
an examination of a Torrens certificate to determine what the subject property
looks like as its condition is not apparent in the document.
Petitioners Motion for Reconsideration centers on the application of Sunshine
Finance to the present case. Petitioner argues therein that the ruling in Sunshine
Finance is a recent innovation, established long after the subject property was
transferred in petitioners name in 1984, hence, should not be applied to the
case. Prior jurisprudence that protected banks, investment corporations and
realty companies, without imposing any additional burden of going beyond the
face of the title, should be applied instead. Petitioner points out that it
purchased the subject property in 1984, when prevailing jurisprudence did not,
as yet, impose upon realty companies the obligation to look beyond the
certificate of title for it to qualify as an innocent purchaser for value. To charge
petitioner with such additional obligation is to burden it with a then non-existent
obligation which thus violates its right to due process. 2
In its Comment, the Office of the Solicitor General (OSG) averred that the ruling
in Sunshine Finance is not in the nature of a statute that cannot be retroactively
applied; it is jurisprudence that merely restates the definition of an innocent
purchaser for value.3
We agree with the OSG and, consequently, deny the motion for reconsideration.
Judicial interpretation of a statute constitutes part of the law as of the date it
was originally passed, since the Courts construction merely establishes the
contemporaneous legislative intent that the interpreted law carried into effect.
Such judicial doctrine does not amount to the passage of a new law, but consists
merely of a construction or interpretation of a pre-existing one, 4 as is the
situation in this case. The assailed decision merely defines an innocent
purchaser for value with respect to entities engaged in the real estate business.
In Sunshine Finance, the Court required, for the first time, investment and
financing corporations to take the necessary precautions to ascertain if there
were any flaws in the certificate of title and examine the condition of the
property they were dealing with. Although the property involved was mortgaged
to and, subsequently, purchased by therein petitioner several years before the
said decision was promulgated, we note that the rule was immediately applied
to that case.
Our herein assailed ruling expands the ruling in Sunshine Finance to cover realty
corporations, which, because of the nature of their business, are, likewise,
expected to exercise a higher standard of diligence in ascertaining the status of
the property, not merely rely on what appears on the face of a certificate of title.
In like manner, our ruling should be applied to the present case; otherwise, it
would be reduced to a mere academic exercise with the result that the doctrine

laid down would be no more than a dictum, and would deprive the holding in the
case of any force. 5
The other arguments advanced by petitioner are a mere rehash of the
arguments in its previous pleadings, which had already been passed upon
adequately by the Court in the assailed decision.
IN LIGHT OF THE FOREGOING, the Motion for Reconsideration is DENIED
WITH FINALITY for lack of merit.
SO ORDERED.
Ynares-Santiago, Carpio Morales*, Chico-Nazario, Leonardo-De Castro**, JJ.
concur.
Footnotes
* Designated member per raffle dated March 18, 2009.
** Designated additional member per Special Order No. 669 dated July 15, 2009.
1 G.R. Nos. 74070-71, October 28, 1991, 203 SCRA 210.
2 Rollo, pp. 1523-1525.
3 Id. at pp. 1734-1735.
4 Senarillos v. Hermosisima, 101 Phil. 561 (1956).
5 Serrano v. National Labor Relations Commission, 387 Phil. 345, 357 (2000)
41. laxamana v. Carlos
42. Egao v CA