FIRST DIVISION government as well as the provincial and city

governments shall be exempt from the payment of

UDK No. 7671 June 23, 1988 such fees in advance in order to be entitled to entry
and registration.
DEVELOPMENT BANK OF THE PHILIPPINES, registrant-appellant,
vs. xxx xxx xxx
THE ACTING REGISTER DEEDS OF NUEVA ECIJA, respondent-
appellee. The facts are few and undisputed. On June 13, 1980, the Development
Bank of the Philippines (hereafter, DBP) presented for registration to
the Register of Deeds of Nueva Ecija, Cabanatuan City, a sheriff's
certificate of sale in its favor of two parcels of land covered by Transfer
NARVASA, J.: Certificates of Title Nos. NT-149033 and NT-149034, both in the
names of the spouses Andres Bautista and Marcelina Calison, which
This case, rather cut-and-dried as far as factual background is
said institution had acquired as the highest bidder at an extrajudicial
concerned, turns upon a determination of the true meaning and
foreclosure sale. The transaction was entered as Entry No. 8191 in the
intendment of Section 56 of Presidential Decree No. 1529, 1 which in
Registry's Primary Entry Book and DBP paid the requisite registration
part reads:
fees on the same day. Annotation of the sale on the covering
certificates of title could not, however be effected because the originals
Sec. 56. Primary Entry Book; fees, certified copies. —
of those certificates were found to be missing from the files of the
Each Register of Deeds shall keep a primary entry
Registry, where they were supposed to be kept, and could not be
book in which, upon payment of the entry fee, he
located. 2 On the advice of the Register of Deeds, DBP instituted
shall enter, in the order of their reception, all
proceedings in the Court of First Instance of Nueva Ecija to
instruments including copies of writs and processes
reconstitute said certificates, and reconstitution was ordered by that
filed with him relating to registered land. He shall, as
court in a decision rendered on June 15, 1982. 3For reasons not
a preliminary process in registration, note in such
apparent on the record, the certificates of title were reconstituted only
book the date, hour and minute of reception of all
on June 19,1984. 4
instruments, in the order in which they were received.
They shall be regarded as registered from the time so
On June 25, 1984, DBP sought annotation on the reconstituted titles of
noted, and the memorandum of each instrument,
the certificate of sale subject of Entry No. 8191 on the basis of that
when made on the certificate of title to which it refers,
same four-year-old entry. The Acting Register of Deeds, being in doubt
shall bear the same date: Provided, that the national
of the proper action to take on the solicitation, took the matter to the
Commissioner of Land Registration by consulta raising two questions:
(a) whether the certificate of sale could be registered using the old
Entry No. 8191 made in 1980 notwithstanding the fact that the original
copies of the reconstituted certificates of title were issued only on June
19, 1984; and (b) if the first query was answered affirmatively,
whether he could sign the proposed annotation, having assumed his
duties only in July 1982.5
The resolution on the consulta held that Entry No. 8191 had been
rendered "... ineffective due to the impossibility of accomplishing
registration at the time the document was entered because of the non-
availability of the certificate (sic) of title involved. For said certificate of
sale to be admitted for registration, there is a need for it to be re-
entered now that the titles have been reconstituted upon payment of
new entry fees," and by-passed the second query as having been
rendered moot and academic by the answer to the first. 6
Unwilling to accept that result, the DBP appealed the resolution to the
Court of Appeals (then the Intermediate Appellate Court) 7 which,
after reviewing the record, certified the appeal to this Court as
involving a question purely of law.8
The appealed resolution appears to be based upon a reading of the
cited Section 56 of PD No. 1529, and particularly of the provision
therein referring to the Register's act of making a primary entry as "
... a preliminary process in registration ...," as depriving of any effect a
primary entry without a corresponding annotation thereof on the
certificate of title to which the instrument subject of said entry refers.
That view fails to find support from a consideration of entire context of
said Section 56 which in another part also provides that the instrument
subject of a primary entry "... shall be regarded as registered from the
time so noted ...," and, at the very least, gives such entry from the
moment of its making the effect of putting the whole world on notice
of the existence the instrument on entered. Such effect (of
registration) clearly attaches to the mere making of the entry without
regard to the subsequent step of annotating a memorandum of the
instrument subject of the entry on the certificate of title to which it
refers. Indeed, said Section, in also providing that the annotation, "...
when made ... shall bear the same date ..." as the entry, may be said
to contemplate unspecified intervals of time occurring between the
making of a primary entry and that of the corresponding annotation on
the certificate of title without robbing the entry of the effect of being
equivalent to registration. Neither, therefore, is the implication in the
appealed resolution that annotation must annotation entry
immediately or in short order justified by the language of Section 56.
Furthermore, it is amply clear that the four-year hiatus between
primary entry and proposed annotation in this case has not been of
DBP's making. Though it was under no necessity to present the
owner's duplicates of the certificates of title affected for purposes of
primary entry, since the transaction sought to be recorded was an
involuntary transaction, 9 and the record is silent as to whether it
presented them or not, there is nonetheless every probability that it
did so. It was the mortgagee of the lands covered by those titles and it
is usual in mortgage transactions that the owner's duplicates of the
encumbered titles are yielded into the custody of the mortgage until
the mortgage is discharged. Moreover, the certificates of title were
reconstituted from the owner's duplicates, 10 and again it is to be
presumed that said duplicates were presented by DBP, the petitioner
in the reconstitution proceedings.
It is, furthermore, admitted that the requisite registration fees were
fully paid and that the certificate of sale was registrable on its
face. 11 DBP, therefore, complied with all that was required of it for
purposes of both primary entry and annotation of the certificate of
sale. It cannot be blamed that annotation could not be made
contemporaneously with the entry because the originals of the subject
certificates of title were missing and could not be found, since it had
nothing to do with their safekeeping. If anyone was responsible for
failure of annotation, it was the Register of Deeds who was chargeable
with the keeping and custody of those documents.
It does not, therefore, make sense to require DBP to repeat the
process of primary entry, paying anew the entry fees as the appealed
resolution disposes, in order to procure annotation which through no
fault on its part, had to be deferred until the originals of the
certificates of title were found or reconstituted. That it is hardly just or
equitable to do so also seems to have occurred to the Solicitor
General, who dilutes his argument in support of the appealed
resolution with the suggestion that "... the making of a new entry ...
would be the more orderly procedure," and that DBP should not be
made to pay filing fees anew.12
Jurisprudence on the subject, while it has not been entirely consistent,
is not wanting. In Government vs. Aballe, 13this Court ruled that " ...
(a)lthough a notice of attachment has not been noted on the certificate
of title, its notation in the book of entry of the register of deeds
produces all the effects which the law gives to its registration or
inscription." Seemingly, that ruling was abandoned in the wartime case
of Basa vs. De la Rama, 14 where it was held that the entry of an
instrument in the primary entry book produces no legal effect unless a
memorandum thereof is noted on the certificate of title. Villasor vs.
Camon, 15 however, clarified that Aballe was never really abandoned
or reversed insofar as it applied to involuntary transactions. Said the
Court in that case, which involved a voluntary transactions — a deed
of assignment of rights in a parcel of land and its improvements:
The appellant cannot invoke in support of her
contention, the ruling laid down in the case of
Government of the Philippine Islands vs. Aballe, 60
Phil., 986, which was followed in Director of Lands vs.
Abad, 61 Phil. 479, to the effect that an attachment
entered upon the entry book is duly registered
although the duplicate certificate is not presented at
the time of registration to the register of deeds.
Appellant cannot invoked said ruling, not because it
has been abandoned by the Supreme Court during the
Japanese occupation in the case of Bass VS. De la
Rama, et al., ... in which it was said that "we are
constrained to abandon the ruling in said two cases,"-
it was not abandoned for the decision was concurred
by only two justices or less than a majority, and said
statement was not necessary or an obiter dictum and
against the law, as correctly stated by the two
associate justices who dissented and only concurred
in the result, but because said ruling, subsisting and
in force, does not support appellant's contention, for it
is only applicable to registration of involuntary
 instruments, such as attachment, or other liens and
adverse claims of any description. This ruling is
correct or in conformity with the provisions of section
72 of Act No. 496, which do not require the
production by the registrant of the duplicate
certificate of the land to be affected, ... (emphasis
supplied)
The decision in Villasor also quoted with approval the following excerpt
from an earlier case, Philippine National Bank vs. Fernandez. 16
Coming now to the second ground on which the
appellant bases his claims, we find that when Simona
Fausa executed the document, Exhibit 3, on October
17, 1928, conveying her interest in the land to the
appellant, her interest therein had already been
attached by the provincial sheriff and also by him at
public auction to the Philippine National Bank, and the
certificate of sale filed in the office of the register of
deeds in accordance with the law (sections 429 and
450 of the Code of Civil Procedure). It was not
necessary for the sheriff to present the owner's
duplicate of the certificate of title when he filed notice
of attachment with the register of deeds, nor was it
necessary for the Philippine National Bank to present
the owner's duplicate when the bank filed its
certificate of sale for registration (sections 71 and 72
of Act No. 496).
Later cases appear to have applied the Aballe ruling that entry in the
day book, even without the corresponding annotation on the certificate
of title, is equivalent to, or produces the effect of, registration to
voluntary transactions, provided the requisite fees are paid and the
owner's duplicates of the certificates of title affected are presented.
Thus, in Levin vs. Bass, et al., 17 it was held:
... Under the Torrens system the act of registration is
the operative act to convey and affect the land. Do
the entry in the day book of a deed of sale which was
presented and filed together with owner's duplicate
certificate of title which the office of the Registrar of
Deeds and full payment of registration fees constitute
a complete act of registration which operates to
convey and affect the land? In voluntary registration,
such as a sale, mortgage, lease and the like, if the
owner's duplicate certificate be not surrendered and
presented or if no payment of registration fees be
made within 15 days, entry in the day book of the
deed of sale does not operate to convey and affect
the land sold. In involuntary registration, such as an
attachment, levy upon execution, lis pendens and the
like entry thereof in the day book is a sufficient notice
to all persons of such adverse claim. ... The
pronouncement of the court below is to the effect that
an innocent purchaser for value has no right to the
property because he is not a holder of a certificate of
title to such property acquired by him for value and in
good faith. It amounts to holding that for failure of
the Registrar of Deeds to comply and perform his
 duty, an innocent purchaser for value loses that
character-he is not an "innocent holder for value of a
certificate of title." ... Neither violence to, nor
stretching of the meaning of, the law would be done,
if we should hold that an innocent purchaser for value
of registered land becomes the registered owner and
in contemplation of law the holder of a certificate
thereof the moment he presents the owner's duplicate
certificate of title to the property sold and pays the
full amount of registration fees, because what
remains to be done lies not within his power to
perform. The Registrar of Deeds is in duty bound to
perform it. We believe that is a reasonable and
practical interpretation of the law under
considerations-a construction which would lead to no
inconsistency and injustice. (emphasis supplied)
A similar ruling was made in Potenciano vs. Dineros, et
al., 18 concerning land a deed of sale of which was entered in the day
book upon payment of the corresponding fees and presentation of the
owner's duplicate of the covering certificate of title, on November 4,
1944. However, due to the confusion arising from the bombing of
Manila (this having happened during the final months of the Japanese
Occupation), the papers presented by the registrant were either lost or
destroyed, no certificate of title was issued to him and as far as the
records of the Register of Deeds showed, the property remained in the
name of the vendor. Another party later sued the vendor, obtained
judgment against him and purchased the property on execution sale.
In affirming judgment annulling the execution sale in an action
brought by the original purchaser, this Court held:
The judgment creditor contends that entry of the
deed in the day book is not sufficient registration.
Both upon law and authority this contention must be
rejected. Section 56 of the Land Registration Act says
that deeds relating to registered land shall, upon
payment of the filing fees, be entered in the entry
book — also called day book in the same section —
with notation of the year, month, day, hour, and
minute of their reception and that "they shall be
regarded as registered from the moment so
noted." And applying this provision in the cases of
Levin vs. Bass, etc., G.R. Nos. L-4340 to 4346,
decided on May 28, 1952, this Court held that "an
innocent purchaser for value of registered land
becomes the registered owner and in contemplation of
law the holder of a certificate thereof the moment he
presents and files a duly notarized and lawful deed of
sale and the same is entered on the day book and at
the same time he surrenders or presents the owner's
duplicate certificate of title to the property sold and
pays the full amount of registration fees, because
what remains to be done lies not within his power to
perform."
Current doctrine thus seems to be that entry alone produces the effect
of registration, whether the transaction entered is a voluntary or an
involuntary one, so long as the registrant has complied with all that is
required of him for purposes of entry and annotation, and nothing
more remains to be done but a duty incumbent solely on the register
of deeds.
Therefore, without necessarily holding that annotation of a primary Philippines as entered under Entry No. 8191 dated June 13, 1980 of
entry on the original of the certificate of title may be deferred the Primary Entry (Day) Book of said Registry. No pronouncement as
indefinitely without prejudice to the legal effect of said entry, the Court to costs.
rules that in the particular situation here obtaining, annotation of the
disputed entry on the reconstituted originals of the certificates of title SO ORDERED.

to which it refers is entirely proper and justified. To hold said entry

"ineffective," as does the appealed resolution, amounts to declaring
that it did not, and does not, protect the registrant (DBP) from claims
arising, or transactions made, thereafter which are adverse to or in
derogation of the rights created or conveyed by the transaction thus
entered. That, surely, is a result that is neither just nor can, by any
reasonable interpretation of Section 56 of PD 1529, be asserted as
warranted by its terms.

The qualms implicit in the query of the respondent (and present

appellee) register of deeds about making annotation of an entry
effected before he assumed that office are more imagined than real.
He would only be making a memorandum of an instrument and of its
entry based on or reciting details which are already of indubitable
record and, pursuant to the express command of the law, giving said
memorandum the same date as the entry. No part of that function is
exclusive to the incumbent of the office at the time entry was made or
is forbidden to any of his successors.

WHEREFORE, the appealed resolution of the Acting Commissioner of

Land Registration is SET ASIDE. The respondent-appellee Register of
Deeds of Nueva Ecija, or his successor, is ordered to annotate on the
originals of the reconstituted Transfer Certificates of Title Nos. NT-
149033 and NT-149034 of his Registry a memorandum of the
certificate of sale in favor of appellant Development Bank of the

G.R. No. 149121 : April 20, 2010
NATIONAL HOUSING AUTHORITY, Petitioner, v. AUGUSTO BASA,
JR., LUZ BASA and EDUARDO S. BASA, Respondents.
DECISION
LEONARDO-DE CASTRO, J.:
This Petition for Review on Certiorari under Rule 45 of the Rules of
Court seeks to set aside the Amended Decision1cЃa of the Court of
Appeals dated November 27, 2000 and its Resolution dated July 19,
2001 denying the motion for reconsideration of the National Housing
Authority (NHA).
On April 19, 1983, spouses Augusto and Luz Basa loaned from NHA
the amount of P556,827.10 secured by a real estate mortgage over
their properties covered by Transfer Certificates of Title (TCTs) Nos.
287008 and 285413, located at No. 30 San Antonio St., San Francisco
del Monte, Quezon City.2cЃa Spouses Basa did not pay the loan despite
repeated demands. To collect its credit, the NHA, on August 9, 1990,
filed a verified petition for extrajudicial foreclosure of mortgage before
the Sheriff's Office in Quezon City, pursuant to Act No. 3135, as
amended.3cräläwvirtualibräry
After notice and publication, the properties were sold at public auction
where NHA emerged as the highest bidder.4cЃa On April 16, 1991, the
sheriff's certificate of sale was registered and annotated only on the
owner's duplicate copies of the titles in the hands of the respondents,
since the titles in the custody of the Register of Deeds were among
those burned down when a fire gutted the City Hall of Quezon City on
June 11, 1988.5cЃa
On April 16, 1992, the redemption period expired,6cЃa without
respondents having redeemed the properties. Shortly thereafter, on
April 24, 1992, NHA executed an Affidavit of Consolidation of
Ownership7cЃa over the foreclosed properties, and the same was
inscribed by the Register of Deeds on the certificates of title in the
hand of NHA under Entry No. 6572/T-287008-PR-
29207.8cräläwvirtualibräry
On June 18, 1992, NHA filed a petition for the issuance of a Writ of
Possession. The said petition was granted by the Regional Trial Court
(RTC) in an Order9cЃa dated August 4, 1992.
A Writ of Possession10cЃa was issued on March 9, 1993 by the RTC,
ordering spouses Augusto and Luz Basa to vacate the subject lots. The
writ, however, remained unserved. This compelled NHA to move for
the issuance of an alias writ of possession on April 28, 1993.
Before the RTC could resolve the motion for the issuance of an alias
writ of possession, respondents spouses Basa and Eduardo Basa, on
June 2, 1993, filed a Motion for Leave to Intervene and Petition in
Intervention (with Prayer for Temporary Restraining Order and/or Writ
of Preliminary Injunction).11cЃa Respondents anchored said petition for
intervention on Section 812cЃa of Act No. 3135, as amended, which
gives the debtor/mortgagor the remedy to petition that the sale be set
aside and the writ of possession be cancelled. In the said petition for
intervention, respondents averred that the extrajudicial foreclosure of
the subject properties was a nullity since notices were not posted and
published, written notices of foreclosure were not given to them, and
notices of sale were not tendered to the occupants of the sold
properties, thereby denying them the opportunity to ventilate their
13
rights. cЃa Respondents likewise insisted that even assuming
arguendo that the foreclosure sale were valid, they were still entitled
to redeem the same since the one-year redemption period from the
registration of the sheriff's certificate of foreclosure sale had not yet
prescribed.14cЃa Citing Bernardez v. Reyes15cЃa and Bass v. De la
Rama,16cЃa respondents theorized that the instrument is deemed
registered only upon actual inscription on the certificate of title in the
17
custody of the civil registrar. cЃa Since the sheriff's certificate was
only inscribed on the owner's duplicate certificate of title, and not on
the certificate of title in the possession of the Register of Deeds, then
there was no effective registration and the one-year redemption period
had not even begun to run. Thus, respondents asked the RTC, among
others, to declare the foreclosure sale null and void, to allow the
respondents to redeem the mortgaged properties in the amount
of P21,160.00, and to cancel the Writ of Possession dated March 9,
1993.
NHA opposed respondents' petition for intervention.18cЃa It countered
that the extrajudicial foreclosure sale was conducted validly and made
in accordance with Act No. 3135 as evidenced by the publication of the
Notice of Sheriff's Sale in the Manila Times in its issues dated July 14,
21 and 28, 1990.19cЃa NHA also said that respondents had been
furnished with a copy of the Notice of Sheriff's Sale as shown at the
bottom portion of said notice.20cЃa NHA maintained that respondents'
right of redemption had long expired on April 15, 1992 since the
certificate of sale was inscribed on their TCT Nos. 285413 and 287008
a year earlier, or on April 16, 1991. It pointed out that the RTC, via its
Order dated August 4, 1992, had already ruled that respondents' right
of redemption was already gone without them exercising said right.
Since said order had already attained finality, the ruling therein could
no longer be disturbed.
On January 2, 1995, the RTC issued the first assailed Order21cЃa with
the following directives: 1) granting the issuance of the alias writ of
possession which allowed NHA to take possession of the subject
properties; 2) admitting the Petition in Intervention and "treating the
same as the petition to set aside sale mentioned in [Sec. 8] of Act No.
3155"; and 3) granting the issuance of a Writ of Preliminary Injunction
in favor of respondents that ordered NHA to refrain from selling or
disposing of the contested properties. The pertinent portion of the
order reads:
After examining the record and following precedents x x x this Court
hereby orders:
1. The issuance of an alias writ of possession;
2. Admission of the "Petition in Intervention," treating the same as the
"petition" to set aside sale, etc., mentioned in [Sec. 8] of Act No.
3155;
3. The issuance of a writ of preliminary injunction, after a BOND in the
amount of P20,000.00 had been duly filed by intervenors, ordering
movant National Housing Authority, its agents and/or any other person
acting under its command, to desist and refrain from selling or in any
manner from disposing of the subject properties covered by TCT Nos.
287008 and 285413 and located at No. 30, San Antonio Street, San
Francisco del Monte, Quezon City, pending the termination of this
proceeding and/or unless a contrary order is issued by this Court;
4. Setting the hearing of the petition in intervention (to set aside) on
22
March 17, 1995, at 8:30 a.m.
NHA filed a motion for reconsideration23cЃa assailing the RTC's Order
insofar as it admitted respondents' motion for intervention and issued
a writ of preliminary injunction. NHA argued that respondents should
have assailed the foreclosure sale during the hearing in the petition for
the issuance of a Writ of Possession, and not during the hearing in the
petition for the issuance of an alias writ of possession since the
"petition" referred to in Section 8 of Act No. 3135 pertains to the
original petition for the issuance of the Writ of Possession and not the
Motion for the Issuance of an Alias Writ of Possession. NHA stressed
that another reason why the petition for intervention should be denied
was the finality of the Order dated August 4, 1992 declaring
respondents' right of redemption barred by prescription. Lastly, NHA
asserted that the writ of possession was issued as a matter of course
upon filing of the proper motion and thereby, the court was bereft of
discretion.
24
In the second assailed Order cЃa dated September 4, 1995, the RTC
denied NHA's motion for reconsideration reasoning that the admission
of the intervention was sanctioned by Section 8 of Act No. 3135. As to
the grant of preliminary injunction, the RTC made the justification that
if the NHA was not restrained, the judgment which may be favorable
to respondents would be ineffectual. The order partly provides:
The motion is without merit. The admission of the intervention is
sanctioned by Sec. 8 of Act No. 3135. And, because, otherwise or if no
preliminary injunction is issued, the movant NHA may, before final
judgment, do or continue the doing of the act with the intervenor asks
the court to restrain, and thus make ineffectual the final judgment
rendered afterwards which may grant the relief sought by the
intervenor.
ACCORDINGLY, the motion for reconsideration is DENIED.25
Undaunted, NHA filed on November 24, 1995, a special civil action
for certiorariand prohibition before the Court of Appeals.
The Court of Appeals rendered a Decision26cЃa dated February 24,
2000, in favor of the NHA. It declared null and void the assailed orders
of the RTC dated January 2, 1995 and September 4, 1995, to the
extent that the said orders admitted the petition in intervention and
granted the issuance of the preliminary injunction; but it upheld the
grant of the alias writ of possession, thus:
WHEREFORE, the petition is GRANTED, and the assailed order of
January 2, 1995 is declared NULL AND VOID except for the portion
directing the issuance of an alias writ of possession. Likewise declared
NULL AND VOID is the second assailed order of September 4, 1995
denying the petitioner's motion for reconsideration. Let an alias writ of
possession be issued and executed/implemented by the public
respondent without further delay.27
The Court of Appeals defended its affirmation of the RTC's grant of the
alias writ of possession in NHA's favor by saying that it was a
necessary consequence after the earlier writ was left unserved to the
party. It further explained that NHA was entitled to the writ of
possession as a matter of course after the lapse of the redemption
period.
As to the RTC's admission of respondents' petition for intervention, the
appellate court opined that it was improperly and erroneously made.
The Court of Appeals believed that the only recourse available to a
mortgagor, in this case the respondents, in a foreclosure sale is to
question the validity of the sale through a petition to set aside the sale
and to cancel the writ of possession, a summary procedure provided
for under Section 112 of the Land Registration Act. It also observed
that the grant of the preliminary injunction by the RTC was uncalled
for as it would effectively defeat the right of NHA to possession, the
latter having been entitled by virtue of the grant of the alias writ of
possession.
28
Respondents filed a motion for reconsideration. cЃa They alleged that
since they raised the issue that their right of redemption had not
prescribed, said fact should have changed the whole scenario such that
the issuance of a writ of possession ceased to be summary in nature
and was no longer ministerial. Respondents then concluded that their
right to redeem the properties against NHA's right to the writ of
possession must be threshed out in a hearing of the case on its merits.
With regard to the RTC Order dated August 4, 1992 granting the writ
of possession which, according to the NHA, became final and
executory, respondents argued that said order did not constitute res
judicata so as to bar the filing of the petition for intervention since the
said order was not a judgment on the merits that could attain finality.
Also, respondents would like the Court of Appeals to treat the petition
for intervention not only as an opposition to the issuance of the alias
writ of possession, but also as a proper remedy under Section 8 of Act
No. 3135, as amended, in view of the various issues raised.
On November 27, 2000, the Court of Appeals, in its Amended Decision,
reconsidered its earlier stance. It declared that the period of
redemption had not expired as the certificate of sale had not been
registered or annotated in the original copies of the titles supposedly
kept with the Register of Deeds since said titles were earlier razed by
fire. Taking its cue from Bass v. De la Rama where the Court
purportedly made a ruling that entry of a document, such as sale of
real property, in the entry book is insufficient to treat such document
as registered, unless the same had been annotated on the certificate
of title; the Court of Appeals went on to say that the entry of the
certificate of sale in the owner's duplicate of the titles could not have
been sufficient to register the same since anyone who would wish to
check with the Register of Deeds would not see any annotation. Thus,
entry made on the owner's duplicate of the titles cannot be considered
notice that would bind the whole world. Having been deprived of their
right of redemption, the Court of Appeals deemed it proper to allow
respondents to intervene. The dispositive part of the amended decision
decrees:
WHEREFORE, the motion for reconsideration is GRANTED. Our
decision dated February 24, 2000, is RECONSIDERED and SET ASIDE
and the petition DISMISSED .29
Unfazed, NHA filed a motion for reconsideration, which the Court of
Appeals denied in its July 19, 2001 Resolution, to wit:
ACCORDINGLY, the Motion for Reconsideration dated February 24,
30
2000 is DENIED for lack of merit.
Hence, the instant petition.
In its memorandum, NHA tendered the following issues:
1. WHETHER OR NOT THE ANNOTATION OF THE SHERIFF'S
CERTIFICATE OF SALE IN THE PRIMARY ENTRY BOOK OF THE
REGISTER OF DEEDS AND ON THE OWNER'S DUPLICATE TITLE IS
SUFFICIENT COMPLIANCE WITH THE REQUIREMENT OF LAW ON
REGISTRATION.
2. WHETHER OR NOT THE CASE OF BASS VS. DE LA RAMA HAS BEEN
SUPERSEDED.31
Respondents, on the other hand, offered the following as issues:
I
WHETHER OR NOT THE COURT OF APPEALS ERRED IN FINDING THAT
THE LOWER COURT DID NOT ACT WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION IN ADMITTING
THE RESPONDENTS' INTERVENTION AND GRANTING THE EQUITABLE
WRIT OF INJUNCTION THEREBY DISMISSING THE PETITION FOR
CERTIORARI AND PROHIBITION.
II
WHETHER OR NOT THE INSTANT PETITION COMPLIES WITH THE
REQUIREMENTS OF RULE 45 OF THE RULES OF COURT.32
On the procedural aspect, respondents question NHA's alleged failure
to include in its petition copies of material portions of the record such
as pleadings filed in the RTC and the Court of Appeals as required
under Section 4, Rule 45 of the Rules of Court. Respondents also
pointed out the purported defective verification of NHA in view of the
fact that it merely stated that the one verifying had read the
allegations of the petition and that the same were true and correct to
the best of his knowledge. According to respondents, such declarations
were not in accordance with the rules which require that a verified
pleading must state that the affiant had read the pleading and that the
allegations therein were true and correct based on his personal
knowledge and not only to the "best" of his knowledge.
As to the merits, NHA stresses that the annotation and entry in the
owner's duplicate certificate of titles of the sheriff's certificate of sale
are sufficient compliance with the requirement of law on registration.
To support this, NHA refers to Land Registration Administration
Circular No. 3 dated December 6, 1988, entitled "Entry and Provisional
Registration of Instruments Pending Reconstitution of Title" which
allegedly authorized all Registers of Deeds to accept for entry and
provisional registration instruments affecting lost or destroyed
certificates of title pending reconstitution of the original. The legality
and validity of the disputed registration on its duplicate copies of the
sheriff's certificate of sale, NHA insists, are backed by this Court's
ruling in Development Bank of the Philippines v. Acting Register of
Deeds of Nueva Ecija,33cЃawhere purportedly, this Court made a
favorable interpretation of Section 56 of Presidential Decree No. 1529.
NHA says that the inscription of the sheriff's certificate of sale only to
the owner's duplicate copies, but not to those in the custody of the
register of deeds is justified as the latter were burned down. Thus, it
could not be blamed for the non-registration of the sale in the original
copies.
NHA faults the Court of Appeals' reliance on Bass v. De la Rama since
the ruling therein stating that entry and annotation of a sale
instrument on the owner's duplicate copy only as insufficient
registration, was already abandoned in Development Bank of the
Philippines v. Acting Register of Deeds of Nueva Ecija, where it was
allegedly ruled that the primary entry alone of the transaction
produces the effect of registration so long as the registrant has
complied with all that is required of him for purposes of entry and
annotation.
In contrast, respondents submit that annotation of the sheriff's
certificate of sale on the owner's copy is inadequate to propel the
running of the redemption period. They firmly believe that for the sale
instrument to be considered as registered, the inscription must be
made on the reconstituted titles.
Respondents disagree with NHA's opinion that Bass v. De la Rama was
superceded by Development Bank of the Philippines v. Acting Register
of Deeds of Nueva Ecija. They are of the persuasion that the ruling
in DBP pertains exclusively to the unique factual milieu and the issues
attendant therein, but not to the instant case where Basspurportedly
applies. Respondents also assail NHA's citation of Sta. Ignacia Rural
Bank, Inc. v. Court of Appeals.34cЃaAccording to them, said case finds
no application to the instant controversy because the issue involved in
the former was whether the redemption period should be reckoned
from the date of the auction sale or the registration of the certificate of
sale, which ostensibly is not the bone of contention in this case.
Ascribing NHA's inaction to have the burned titles reconstituted,
respondents assert that such neglect should not be used as a
justification for the non-inscription in the original titles of the
certificate of sale. Additionally, respondents insist that the question of
whether the redemption period should be reckoned from the
inscription on the owner's duplicate copies is a factual and legal issue
that is appropriately adjudicated in a hearing on the merits of their
petition in intervention, and not in the instant special civil action
for certiorariand prohibition which is limited in scope, namely, whether
the RTC committed grave abuse of discretion amounting to lack of
jurisdiction in admitting their petition in intervention.
Respondents reiterate that the issuance of the writ of possession
prayed for by NHA before the RTC is no longer ministerial since it
raised the issue of whether their period of redemption has already
expired. They cite Barican v. Intermediate Appellate Court35cЃa as the
authority to this argument.
We dwell first with the procedural issues before the main controversy.
Respondents contend that the instant petition is dismissible on the
ground that NHA failed to attach pleadings filed in the RTC and the
Court of Appeals as required under Section 4, Rule 45 of the Rules of
Court which partly provides:
SEC. 4. Contents of petition. — The petition shall be filed in eighteen
(18) copies, with the original copy intended for the court being
indicated as such by the petitioner, and shall x x x (d) be accompanied
by a clearly legible duplicate original, or a certified true copy of the
judgment or final order or resolution certified by the clerk of court of
the court a quo and the requisite number of plain copies thereof, and
such material portions of the record as would support the petition; x x
x.
In its petition, NHA attached the February 24, 2000 Decision, the
November 27, 2000 Amended Decision, and the July 19, 2001
Resolution all of the Court of Appeals; copies of the transfer
certificates of title of the disputed properties; and the June 13, 1994
Order of the Quezon City RTC ordering the reconstitution of the said
titles. This Court finds that NHA substantially complied with the
requirements under Section 4 of Rule 45. The same conclusion was
arrived at by this Court in Development Bank of the Philippines v.
36
Family Foods Manufacturing Co., Ltd. cЃa when it was faced with the
same procedural objection, thus:
As held by this Court in Air Philippines Corporation v. Zamora:
[E]ven if a document is relevant and pertinent to the petition, it need
not be appended if it is shown that the contents thereof can also [be]
found in another document already attached to the petition. Thus, if
the material allegations in a position paper are summarized in a
questioned judgment, it will suffice that only a certified true copy of
the judgment is attached.
Third, a petition lacking an essential pleading or part of the case
record may still be given due course or reinstated (if earlier dismissed)
upon showing that petitioner later submitted the documents required,
or that it will serve the higher interest of justice that the case be
decided on the merits.
Nevertheless, even if the pleadings and other supporting documents
were not attached to the petition, the dismissal is unwarranted
because the CA records containing the promissory notes and the real
estate and chattel mortgages were elevated to this Court. Without a
doubt, we have sufficient basis to actually and completely dispose of
the case.
We must stress that cases should be determined on the merits, after
all parties have been given full opportunity to ventilate their causes
and defenses, rather than on technicalities or procedural
imperfections. In that way, the ends of justice would be served better.
Rules of procedure are mere tools designed to expedite the decision or
resolution of cases and other matters pending in court. A strict and
rigid application of rules, resulting in technicalities that tend to
frustrate rather than promote substantial justice, must be avoided. In
fact, Section 6 of Rule 1 states that the Rules shall be liberally
construed in order to promote their objective of ensuring the just,
speedy and inexpensive disposition of every action and proceeding.
Contrary to respondents' assertion, NHA's verification conforms to the
rule. Section 4, Rule 7 of the Rules of Court states:
SEC. 4. Verification. – Except when otherwise specifically required by
law or rule, pleadings need not be under oath, verified or accompanied
by affidavit.
A pleading is verified by an affidavit that the affiant has read the
pleading and that the allegations therein are true and correct of his
personal knowledge or based on authentic records.
A pleading required to be verified which contains a verification based
on "information and belief," or upon "knowledge, information and
belief," or lacks a proper verification, shall be treated as an unsigned
pleading.
The reason for requiring verification in the petition is to secure an
assurance that the allegations of a pleading are true and correct; are
not speculative or merely imagined; and have been made in good
37
faith. cЃa To achieve this purpose, the verification of a pleading is
made through an affidavit or sworn statement confirming that the
affiant has read the pleading whose allegations are true and correct of
the affiant's personal knowledge or based on authentic
records.38cräläwvirtualibräry
The General Manager of NHA verified the petition as follows:
3. I have read the allegations contained therein and that the same are
true and correct to the best of my own personal knowledge.39cЃa
A reading of the above verification reveals nothing objectionable about
it. The affiant confirmed that he had read the allegations in the
petition which were true and correct based on his personal knowledge.
The addition of the words "to the best" before the phrase "of my
personal knowledge" did not violate the requirement under Section 4
of Rule 7, it being sufficient that the affiant declared that the
allegations in the petition are true and correct based on his personal
knowledge.
Now, as to the merits of the case. The main issue before us is whether
the annotation of the sheriff's certificate of sale on the owner's
duplicate certificate of titles is sufficient registration considering that
the inscription on the original certificates could not be made as the
same got burned.
Jurisprudence is replete with analogous cases. Of foremost importance
is Development Bank of the Philippines v. Acting Register of Deeds of
Nueva Ecija40cЃa where the Court listed cases where the transaction or
instrument was annotated not on the original certificate but
somewhere else. In that case, DBP, following the extrajudicial
foreclosure sale where it emerged as the highest bidder, registered
with the Register of Deeds the sheriff's certificate of sale in its favor.
After it had paid the required fees, said transaction was entered in the
primary entry book. However, the annotation of the said transaction to
the originals of the certificates of title could not be done because the
same titles were missing from the files of the Registry. This prompted
DBP to commence reconstitution proceedings of the lost titles. Four
years had passed before the missing certificates of title were
reconstituted. When DBP sought the inscription of the four-year old
sale transaction on the reconstituted titles, the Acting Register of
Deeds, being in doubt of the proper action to take, referred the matter
to the Commissioner of the Land Registration Authority by consulta,
the latter resolved against the annotation of the sale transaction and
opined that said entry was "ineffective due to the impossibility of
accomplishing registration at the time the document was entered
because of the non-availability of the certificate (sic) of title
involved."41cЃa In other words, annotation on the primary book was
deemed insufficient registration. The Court disagreed with this
posture. Considering that DBP had paid all the fees and complied with
all the requirements for purposes of both primary entry and annotation
of the certificate of sale, the Court declared that mere entry in the
primary book was considered sufficient registration since "[DBP]
cannot be blamed that annotation could not be made
contemporaneously with the entry because the originals of the subject
certificates of title were missing and could not be found, since it had
nothing to do with their safekeeping. If anyone was responsible for
failure of annotation, it was the Register of Deeds who was chargeable
with the keeping and custody of those documents."42cЃa To buttress
its conclusion, the Court reviewed the relevant jurisprudence starting
from 1934. The Court noted that before the Second World War,
43
particularly in Government of the Philippine Islands v. Aballe, cЃa the
prevailing doctrine was an inscription in the book of entry even without
the notation on the certificate of title was considered as satisfactory
and produced all the effects which the law gave to its registration.
During the war, however, the Court observed that there was apparent
departure from said ruling since in Bass v. De la Rama, the holding
was that entry of an instrument in the primary entry book does not
confer any legal effect without a memorandum thereof inscribed on
44
the certificate of title. cЃa DBP noted that Bass v. De la Rama,
however, survived only for a little while since "later cases appear to
have applied the Aballe ruling that entry in the day book, even without
the corresponding annotation on the certificate of title, is equivalent
to, or produces the effect of, registration to voluntary transactions,
provided the requisite fees are paid and the owner's duplicates of the
45
certificates of title affected are presented." cЃa
46
These later cases are Levin v. Bass cЃa and Potenciano v.
47
Dineros, cЃa both of which involve the issue of whether entry in the
day book of a deed of sale, payment of the fees, and presentation of
the owner's duplicate certificate of title constitute a complete act of
48
registration. cЃa
Simply, respondents' resort to Bass v. De la Rama is futile as the same
was abandoned by the later cases, i.e., Bass, Potenciano and DBP.
In the recent case of Autocorp Group v. Court of Appeals,49cЃa the
respondent was awarded the foreclosed parcels of land. A sheriff's
certificate of sale was thereafter issued in its favor. Thereafter,
petitioners in that case filed a complaint before the RTC with a prayer
for the issuance of an ex parte TRO aimed at preventing the Register
of Deeds from registering the said certificate of sale in the name of the
respondent and from taking possession of the subject
properties.50cЃa Before the RTC could issue a TRO, respondent
presented the sheriff's certificate of sale to the Register of Deeds who
entered the same certificate in the primary book, even if the
registration fee was paid only the following day. Four days after, the
RTC issued a TRO directing the Register of Deeds to refrain from
registering the said sheriff's certificate of sale. A preliminary injunction
was thereafter issued as the TRO was about to expire. The preliminary
injunction was questioned by therein respondent. One of the main
issues raised there was whether the entry of the certificate of sale in
the primary book was equivalent to registration such that the TRO and
the preliminary injunction issues would not lie anymore as the act
sought to be restrained had become an accomplished act. The Court
held that the TRO and the preliminary injunction had already become
moot and academic by the earlier entry of the certificate of sale in the
primary entry book which was tantamount to registration, thus:
In fine, petitioner's prayer for the issuance of a writ of injunction, to
prevent the register of deeds from registering the subject certificate of
sale, had been rendered moot and academic by the valid entry of the
instrument in the primary entry book. Such entry is equivalent to
registration. Injunction would not lie anymore, as the act sought to be
enjoined had already become a fait accompli or an accomplished act.51
Indeed, the prevailing rule is that there is effective registration once
the registrant has fulfilled all that is needed of him for purposes of
entry and annotation, so that what is left to be accomplished lies solely
on the register of deeds. The Court thus once held:
Current doctrine thus seems to be that entry alone produces the effect
of registration, whether the transaction entered is a voluntary or an
involuntary one, so long as the registrant has complied with all that is
required of him for purposes of entry and annotation, and nothing
more remains to be done but a duty incumbent solely on the register
52
of deeds.
In the case under consideration, NHA presented the sheriff's certificate
of sale to the Register of Deeds and the same was entered as Entry
No. 2873 and said entry was further annotated in the owner's transfer
certificate of title.53cЃa A year later and after the mortgagors did not
redeem the said properties, respondents filed with the Register of
54
Deeds an Affidavit of Consolidation of Ownership after which the
same instrument was presumably entered into in the day book as the
55
same was annotated in the owner's duplicate copy. cЃa Just like in
DBP, Levin, Potenciano and Autocorp, NHA followed the procedure in
order to have its sheriff's certificate of sale annotated in the transfer
certificates of title. There would be, therefore, no reason not to apply
the ruling in said cases to this one. It was not NHA's fault that the
certificate of sale was not annotated on the transfer certificates of title
which were supposed to be in the custody of the Registrar, since the
same were burned. Neither could NHA be blamed for the fact that
there were no reconstituted titles available during the time of
inscription as it had taken the necessary steps in having the same
reconstituted as early as July 15, 1988.56cЃa NHA did everything within
its power to assert its right.
While it may be true that, in DBP, the Court ruled that "in the
particular situation here obtaining, annotation of the disputed entry on
the reconstituted originals of the certificates of title to which it refers is
entirely proper and justified," this does not mean, as respondents
insist, that the ruling therein applies exclusively to the factual milieu
and the issue obtaining in said case, and not to similar cases. There is
nothing in the subject declaration that categorically states its pro hac
vice character. For in truth, what the said statement really conveys is
that the current doctrine that entry in the primary book produces the
effect of registration can be applied in the situation obtaining in that
case since the registrant therein complied with all that was required of
it, hence, it was fairly reasonable that its acts be given the effect of
registration, just as the Court did in the past cases. In fact the Court
there continued with this pronouncement:
To hold said entry ineffective, as does the appealed resolution,
amounts to declaring that it did not, and does not, protect the
registrant (DBP) from claims arising, or transactions made, thereafter
which are adverse to or in derogation of the rights created or
conveyed by the transaction thus entered. That, surely, is a result that
is neither just nor can, by any reasonable interpretation of Section 56
of Presidential Decree No. 1529 be asserted as warranted by its
terms.57
What is more, in Autocorp Group v. Court of Appeals,58cЃa the
pertinent DBP ruling was applied, thereby demonstrating that the said
ruling in DBP may be applied to other cases with similar factual and
legal issues, viz:
Petitioners contend that the aforecited case of DBP is not apropos to
the case at bar. Allegedly, in DBP, the bank not only paid the
registration fees but also presented the owner's duplicate certificate of
title. We find no merit in petitioner's posture x x x.
xxx
Like in DBP v. Acting Register of Deeds of Nueva Ecija, the instrument
involved in the case at bar, is a sheriff's certificate of sale, We hold
now, as we held therein, that the registrant is under no necessity to
present the owner's duplicates of the certificates of title affected, for
purposes of primary entry, as the transaction sought to be recorded is
an involuntary transaction.
xxx
x x x Such entry is equivalent to registration. Injunction would not lie
anymore, as the act sought to be enjoined had already become a fait
accompli or an accomplished act.59
Moreover, respondents' stand on the non-applicability of the DBP case
to other cases, absent any statement thereof to such effect,
contravenes the principle of stare decisis which urges that courts are
to apply principles declared in prior decisions that are substantially
similar to a pending case.60cЃa
Since entry of the certificate of sale was validly registered, the
redemption period accruing to respondents commenced therefrom,
since the one-year period of redemption is reckoned from the date of
registration of the certificate of sale.61cЃaIt must be noted that on April
16, 1991, the sheriff's certificate of sale was registered and annotated
only on the owner's duplicate copies of the titles and on April 16,
1992, the redemption period expired, without respondents having
redeemed the properties. In fact, on April 24, 1992, NHA executed an
Affidavit of Consolidation of Ownership. Clearly, respondents have lost
their opportunity to redeem the properties in question.
As regards respondents' allegation on the defect in the publication and
notice requirements of the extrajudicial foreclosure sale, the same is
unavailing. The rule is that it is the mortgagor who alleges absence of
a requisite who has the burden of establishing such fact.62cЃa This is
so because foreclosure proceedings have in their favor the
presumption of regularity and the burden of evidence to rebut the
same is on the party who questions it.63cЃa Here, except for their bare
allegations, respondents failed to present any evidence to support
them. In addition, NHA stated in its Comment to Motion for Leave of
Court to Intervene that it had complied with the publication of the
Notice of Sheriff's Sale in the Manila Times in the latter's issues dated
July 14, 21 and 28, 1990.64cЃa It also claimed that an Affidavit of
Publication of said newspaper was attached as Annex "B" in the said
comment.65cЃa NHA also said that respondents had been furnished
with a copy of the Notice of Sheriff's Sale as shown at the bottom
portion of said notice.66cЃa From all these, it would tend to show that
respondents' aspersion of non-compliance with the requirements of
foreclosure sale is a futile attempt to salvage its statutory right to
redeem their foreclosed properties, which right had long been lost by
inaction.
Considering that the foreclosure sale and its subsequent registration
with the Register of Deeds were done validly, there is no reason for
the non-issuance of the writ of possession. A writ of possession is an
order directing the sheriff to place a person in possession of a real or
personal property, such as when a property is extrajudicially
foreclosed.67cЃa Section 7 of Act No. 3135 provides for the rule in the
issuance of the writ of possession involving extrajudicial foreclosure
sales of real estate mortgage, to wit:
Sec. 7. In any sale made under the provisions of this Act, the
purchaser may petition the [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. Such petition shall be made under oath and
filed in the 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.
This provision of law authorizes the purchaser in a foreclosure sale to
apply for a writ of possession during the redemption period by filing
an ex parte motion under oath for that purpose in the corresponding
registration or cadastral proceeding in the case of property with
Torrens title.68cЃa Upon the filing of such motion and the approval of
the corresponding bond, the law also in express terms directs the
court to issue the order for a writ of possession.69cräläwvirtualibräry
The time-honored precept is that after the consolidation of titles in the
buyer's name, for failure of the mortgagor to redeem, the writ of
possession becomes a matter of right.70cЃa Its issuance to a purchaser
in an extrajudicial foreclosure is merely a ministerial function.71cЃa 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.72cЃa As such, the court
granting the writ cannot be charged with having acted without
jurisdiction or with grave abuse of discretion.73cЃa To accentuate the
writ's ministerial character, the Court disallowed injunction to prohibit
its issuance despite a pending action for annulment of mortgage or the
foreclosure itself.74cräläwvirtualibräry
Believing that the instant case does not come within the penumbra of
the foregoing rule, respondents resort to the ruling in Barican v.
Intermediate Appellate Court.75cЃa Unfortunately for them, the instant
case does not even come close to the cited case. There, the Court
deemed it inequitable to issue a writ of possession in favor of the
purchaser in the auction sale considering that the property involved
was already in the possession of a third person by virtue of a deed of
sale with assumption of mortgage even before the purchaser could
register the sheriff's certificate of sale. Also, the auction buyer therein
unreasonably deferred to exercise its right to acquire possession over
the property. These circumstances are not present in the instant case.
76
Moreover, in Fernandez v. Espinoza, cЃa the Court refused to apply
the ruling in Barican v. Intermediate Appellate Court77cЃaand Cometa
78
v. Intermediate Appellate Court, cЃa two cases which are exemptions
to the stated rule, reasoning that:
In fine, this Court finds that the Court of Appeals committed reversible
error in ruling that the annotation of NHA's sheriff's certificate of sale
on the duplicate certificates of title was not effective registration and
in holding that respondents' redemption period had not expired.
WHEREFORE, premises considered, the instant petition is
hereby GRANTED. The Amended Decision of the Court of Appeals
dated November 27, 2000 is SET ASIDE.

In Cometa, which actually involved execution of judgment for the SO ORDERED.

prevailing party in a damages suit, the subject properties were sold at
the public auction at an unusually lower price, while in Barican, the
mortgagee bank took five years from the time of foreclosure before
filing the petition for the issuance of writ of possession. We have
considered these equitable and peculiar circumstances
in Cometa and Baricanto justify the relaxation of the otherwise
absolute rule. None of these exceptional circumstances, however,
attended herein so as to place the instant case in the same stature as
that of Cometa and Barican. Instead, the ruling in Vaca v. Court of
Appeals is on all fours with the present petition. In Vaca, there is no
dispute that the property was not redeemed within one year from the
registration of the extrajudicial foreclosure sale; thus, the mortgagee
bank acquired an absolute right, as purchaser, to the issuance of the
writ of possession. Similarly, UOB, as the purchaser at the auction sale
in the instant case, is entitled as a matter of right, to the issuance of
the writ of possession.

Just as in Fernandez, this Court does not see any compelling reason to
veer away from the established rule.
 FIRST DIVISION
[G.R. No. 179884 : January 25, 2012]
DURAWOOD CONSTRUCTION AND LUMBER SUPPLY, INC.,
PETITIONER, VS. CANDICE S. BONA, RESPONDENT.
DECISION
LEONARDO-DE CASTRO, J.:
[1]
This is a Petition for Review on Certiorari assailing the Decision
the Court of Appeals in CA-G.R. SP No. 94479 dated April 18, 2007
[2]
and its Resolution dated September 18, 2007.cralaw
On June 3, 2004, petitioner Durawood Construction and Lumber
Supply, Inc. (Durawood) filed an action for sum of money plus
damages with a prayer for the issuance of a writ of preliminary
attachment against LBB Construction and Development Corporation
(LBB Construction) and its president Leticia Barber (Barber) before the
Regional Trial Court (RTC) of Antipolo. In said suit, which was
docketed as Civil Case No. 04-7240, Durawood prayed for the sum of
P665,385.50 as payment for construction materials delivered to LBB
Construction.
On June 14, 2004, the RTC issued an Order granting Durawood's
prayer for the issuance of a writ of attachment. On June 16, 2004, the
corresponding writ was issued.
On June 17, 2004, Sheriff Rolando C. Leyva (Sheriff Leyva) levied on a
344-square meter parcel of land in Richdale Subdivision, Antipolo City
covered by Transfer Certificate of Title (TCT) No. R-17571 in the name
of LBB Construction. A Notice of Levy on Attachment was annotated in
TCT No. R-17571's Memorandum of Encumbrances on the same day,
June 17, 2004.
On July 13, 2004, respondent Candice S. Bona (Candice) filed a Motion
seeking leave to intervene in Civil Case No. 04-7240. Attached to said
Motion was Candice's Answer in Intervention, her Third Party Claim
addressed to Sheriff Leyva, and a copy of TCT No. R-17571. Candice
claimed therein that she is a co-owner of the property covered by TCT
of No. R-17571. She alleged that LBB Construction had sold the property
to her and her siblings, Michael Angelo S. Bona, Diane Sheila S. Bona,
Glenda May S. Bona and Johann Louie Sebastian S. Bona, through a
Deed of Absolute Sale dated June 2, 2004. Candice asserted that
the sale is the subject of Entry No. 30549 dated June 16, 2004 in
the books of the Registry of Deeds of Antipolo City, while the levy on
attachment is only Entry No. 30590 dated June 17, 2004. What
was attached to the Motion was a copy of TCT No. R-17571, and not a
title in Candice and her co-owners' names.
On August 11, 2004, the RTC issued an Order granting Candice's
Motion to Intervene.
LBB Construction and Barber filed their Answer in Civil Case No. 04-
7240, but failed to attend the scheduled hearings, including the pre-
trial. Consequently, Durawood was allowed to present its evidence ex
parte.
On July 21, 2005, the RTC rendered its Decision[3] in Civil Case No. 04-
7240 in favor of Durawood. The dispositive portion of the Decision
reads:
WHEREFORE, in view of the foregoing consideration, judgment is
rendered in favor of the plaintiff and against the defendants, viz:
issuance of the new one was antedated, since Atty. Rutaquio was still
the Register of Deeds of Malabon on said date.[5] According to a
certification of the Land Registration Authority,[6] it was a certain Atty.
Edgar D. Santos (Atty. Santos) who was the Acting Register of Deeds
of Antipolo City on June 16, 2004.

1. Ordering the defendants to pay plaintiff the sum of Six

Durawood filed a Motion to Reinstate Notice of Levy on Attachment in
Hundred Sixty[-]Five Thousand Three Hundred Eighty[-]Five
TCT No. R-22522 and Cite Atty. Randy A. Rutaquio for Contempt[7] on
Pesos and Fifty Centavos (P665,385.50) plus two percent
the following grounds:
(2%) interest per month from May 11, 2004 up to the
present; 5. The cancellation of TCT No. R-17571 and the issuance of TCT No.
R-22522 was made by Atty. Randy A. Rutaquio who, on June 2004,
2. Ordering the defendants to pay plaintiff twenty-five percent
was not the Register of Deeds of Antipolo City. As evidence of such
(25%) of the amount due to the plaintiff by way of attorney's
fact, plaintiff corporation was issued a certification by LRA Human
fees; and
Resource Management Officer IV Loreto I. Orense that Atty. Edgar D.
Santos was the Acting Register of Deeds of Antipolo City from June 1-
3. To pay the costs of suit.[4]
30, 2004.

6. While the Deed of Sale annotated in TCT No. R-17571 appears to

The Decision became final and executory. On September 12, 2005,
have been made on June 16, 2004, the fact of its inscription was made
Durawood filed a Motion for the Issuance of a Writ of Execution. On
after that of the levy on attachment as it obviously appears below and
November 15, 2005, the RTC issued a Writ of Execution. It was when
next to it.
this Writ was about to be enforced that Durawood discovered the
cancellation of TCT No. R-17571 and the issuance of TCT No. R-22522
7. The records of this case reveal that in the Third Party Claim filed by
in the name of Candice and her siblings.
Candice Bona sometime in July 2004, there was never any mention of
any recording about a Deed of Absolute Sale in the Memorandum of
It would appear from the records that on June 16, 2004, the
Encumbrances in TCT No. R-17571. It is difficult to comprehend that
supposed Register of Deeds of Antipolo City, Atty. Randy A. Rutaquio
Atty. Hernando U. Salvador, Bona's lawyer, would miss mentioning
(Atty. Rutaquio), cancelled TCT No. R-17571 and issued TCT No. R-
that a Deed of Absolute Sale was inscribed ahead of the notice of levy
22522 in the name of Candice and her co-owners. The parties,
on attachment if ever such sale was made on June 16, 2004.
however, do not dispute that said cancellation of the old TCT and

8. Thus, under the circumstances, plaintiff corporation cannot help
speculate that [the] Deed of Sale between LBB Construction and the
Bonas was made to appear to have been recorded a day before the
attachment.
9. While the Notice of Levy on Attachment was inscribed in TCT No. R-
17571 ahead and before of the Deed of Sale between LBB Construction
Co., Inc. and the Bonas, the said notice was not carried over in TCT
No. R-22522 despite the fact that there was no order coming from this
Honorable Court dissolving the Writ of Preliminary Attachment dated
June 16, 2004.
10. Randy Rutaquio's unauthorized acts of cancelling TCT No. R-
17571 and issuing TCT No. R-22522 without inscribing the Notice of
Levy on Attachment despite the absence of a court order dissolving the
writ of Preliminary Attachment constitute improper conduct tending to
directly or indirectly to impede, obstruct or degrade the administration
of justice.[8]
Atty. Rutaquio filed a Manifestation alleging that the sale was entered
in the Primary Entry Book prior to the Levy on Attachment. The two
transactions were assigned to different examiners and it just so
happened that the examiner to whom the levy on attachment was
assigned was able to inscribe the memorandum ahead of the sale,
although the inscription of the sale was entered ahead of the
levy. The levy on attachment was not inscribed on TCT No. R-22522
because allegedly the sale should have priority and preference. The
cancellation of TCT No. R-17571 and the issuance of TCT No. R-22522
was already completed when he took over the position of Atty. Santos
as Acting Register of Deeds and was therefore already clothed with the
authority to issue and sign TCT No. R-22522.
Atty. Rutaquio also submitted a letter dated June 25, 2004 from Atty.
Santos to Land Registration Authority (LRA) Administrator Benedicto B.
Ulep (Administrator Ulep) consulting the latter as regards the
registration of the Deed of Absolute Sale and the Notice of Levy on
Attachment.[9] In said letter received by the LRA on July 1, 2004, Atty.
Santos stated that he had not acted on the Deed of Absolute Sale
since the required registration fees were not paid
therefor.[10] Administrator Ulep was able to reply to said letter on
October 6, 2004, when Atty. Rutaquio was already the Acting Register
of Deeds. Administrator Ulep stated that since the Deed of Sale was
considered registered on June 16, 2004, the same shall take
precedence over the Notice of Levy on Attachment registered on June
17, 2004.[11]
Acting on the Motion to Reinstate Notice of Levy on Attachment in TCT
No. R-22522 and Cite Atty. Randy A. Rutaquio for Contempt, the RTC
issued an Order[12] dated March 2, 2006, ruling in favor of
Durawood. The RTC gave great weight to the certification by LRA
Human Resource Management Officer IV Loreto I. Orense that Atty.
Santos was the Acting Register of Deeds from June 1-30, 2004, and
held that this proves the fact that Atty. Santos was the only person
authorized to sign and approve all the transactions with the Registry of
Deeds of Antipolo City at the time. Moreover, according to the RTC,
the alienation of LBB Construction in favor of the Bonas without
leaving sufficient property to pay its obligation is considered by law in
fraud of creditor under Articles 1381[13] and 1387[14] of the Civil Code.
The RTC did not rule on Durawood's prayer to cite Atty. Rutaquio for
contempt. The dispositive portion of the March 2, 2006 Order reads:
WHEREFORE, premises considered, the instant motion to reinstate
notice of levy on attachment in TCT No. R-22522 now in the name of
the intervenors is hereby GRANTED its non-inscription therein having
been made without order of this Court.
The Register of Deeds of Antipolo City is directed to reinstate the
notice of levy on attachment in TCT No. R-22522 in the names of
intervenors immediately upon receipt of this Order.[15]
Candice filed a Motion for Reconsideration of the above Order. In the
meantime, on March 13, 2006, Sheriff Leyva issued a Notice of
Sheriff's Sale setting the sale of the property covered by TCT No. R-
22522 at public auction on April 11, 2006 at 10:00 a.m., pursuant to
the November 15, 2005 Writ of Execution. Candice filed an Urgent Ex-
Parte Motion to Order the Branch Sheriff to Desist from the Sale of
Intervenor's Property for Being Premature, which was granted by the
RTC in an Order dated March 29, 2006.
On March 8, 2006, the new Acting Register of Deeds Jose S. Loriega,
Jr. complied with the March 6, 2006 Order of the RTC by reinstating in
TCT No. R-22522 the Notice of Levy on Attachment in favor of
Durawood.
On April 7, 2006, the RTC issued an Order denying Candice's Motion
for Reconsideration. In said Order, the RTC highlighted its observation
that in TCT No. R-17571, the inscription of the levy on attachment by
Atty. Santos dated June 17, 2004 was in page A (the dorsal portion) of
the title, while the supposedly earlier inscription of the Deed of Sale by
Atty. Rutaquio dated June 16, 2004 was found in page B (a separate
page) of the title. The RTC found this fact, as well as the above-
mentioned certification that Atty. Santos was the Acting Register of
Deeds of Antipolo City from June 1 to 30, 2004, sufficient proof of the
irregularity of the June 16, 2004 inscription of the Deed of Sale.
On April 11, 2006, Sheriff Leyva sold the subject property at public
auction for P1,259,727.90 with Durawood being the lone bidder, and
issued the corresponding Certificate of Sale. The sale was inscribed in
TCT No. R-22522 on the same date.[16]
Candice filed with the Court of Appeals a Petition for Certiorari and
Prohibition assailing the March 2, 2006 and April 7, 2006 Orders of the
RTC.
On April 18, 2007, the Court of Appeals rendered the assailed Decision
in favor of Candice. According to the Court of Appeals, the sequence
of presentation of the entries in the TCT cannot control the
determination of the rights of the claimants over a disputed
property. It is the registration in the Primary Entry Book (also referred
to in other cases as the day book) that establishes the order of
reception of instruments affecting registered land. As explained by
Atty. Rutaquio, the entry in the day book is only the preliminary step
in the registration. The inscription of the levy on attachment on TCT
No. R-17571 (which was made before the inscription of the Deed of
Sale on said title) retroacts to the date of entry in the Primary Entry
Book, which is June 17, 2004. However, the inscription of the Deed of
Sale on TCT No. R-17571, although made after the inscription of the
levy on attachment, retroacts to the earlier date of entry in the
Primary Entry Book, which is June 16, 2004.
As regards the issuance by Atty. Rutaquio of TCT No. R-22522 on June
16, 2004 despite the fact that he was not yet the Register of Deeds of
Antipolo City at that time, the Court of Appeals held that there was
substantial compliance with the National Land Titles and Deeds
Registration Administration (NALTDRA; now the Land Registration
Authority [LRA]) Circular No. 94 on "Certificates of title and documents
left unsigned by former Register of Deeds," which provides:
It has been brought to the attention of this Registration that, in some
Registries, there are certificates of title with the full transcriptions and
inscriptions, including the volume and page numbers, the title number,
the date and the name of the former Register of Deeds, already
typewritten thereon but which, for some reasons, cannot anymore be
signed by the former official. In such cases and to resolve this
problem, the present Register of Deeds may, without changing or
altering the transcriptions and inscriptions, affix his signature below
the name of the former Register of Deeds but placing the actual date
and time of signing enclosed in parenthesis below his signature.[17]
The Court of Appeals accepted Atty. Rutaquio's manifestation that he
signed TCT No. R-22522 subsequent to June 16, 2004, on a date when
he was already the Acting Register of Deeds of Antipolo City. Since
the entry in the Primary Entry Book was made at the time of the
incumbency of Atty. Santos, the name of the latter still appears on the
document. According to the Court of Appeals, Candice cannot be
made to suffer for the failure of Atty. Rutaquio to affix the date when
he signed the document. Furthermore, a certificate of title, once
registered, cannot be impugned, altered, changed, modified, enlarged
or diminished except in a direct proceeding permitted by law. Finally,
an action for rescission of contracts entered into in fraud of creditors
cannot be instituted except when the party suffering damage has no
other legal means to obtain reparation for the same.[18]
The dispositive portion of the Decision reads:
WHEREFORE, in view of the foregoing, the assailed Orders of public
respondent judge ordering the reinstatement of the subject notice of
levy on attachment in TCT No. R-22522 are hereby ANNULLED and
SET ASIDE. As a result thereof, the public auction sale carried out
pursuant to said levy is also declared null and void.[19]
Durawood filed a Motion for Reconsideration, but the same was denied
by the Court of Appeals in its Resolution dated September 18, 2007.
Durawood filed the instant Petition for Review, with the following
Assignment of Errors:
I.
THE COURT OF APPEALS IGNORED THE FACT THAT NON-PAYMENT OF
THE REQUIRED REGISTRATION FEES BY CANDICE S. BONA AND HER
SIBLINGS DID NOT COMPLETE THE REGISTRATION OF THE DEED OF
ABSOLUTE SALE ON JUNE 16, 2004.
II.
THE COURT OF APPEALS GRAVELY ERRED WHEN IT DISREGARDED
THE FACT THAT NALTDRA CIRCULAR NO. 94 WAS NOT COMPLIED
WITH BY ATTY. RANDY RUTAQUIO.
 III.
THE COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO
CONSIDER THAT THE ENTRIES IN TCT NO. R-17571 (THE
PREDECESSOR OF TCT NO. R-22522) ARE EVIDENCES OF THE FACTS
STATED THEREIN.
IV.
THE COURT OF APPEALS OVERLOOKED THE FACT THAT THE REAL
PROPERTY COVERED BY TCT NO. R-17571 AND SUBSEQUENTLY BY
TCT NO. R-22522 HAS ALREADY BEEN ATTACHED BUT WAS
UNILATERALLY RELEASED FROM THE COURT'S JURISDICTION BY A
[20]
USURPER.
All these allegations are specific matters to be resolved by this Court in
determining the overriding issue of the case at bar: whether the Court
of Appeals correctly granted Candice's Petition for Certiorari and
Prohibition on its finding that the RTC committed grave abuse of
discretion in issuing its March 2, 2006 and April 7, 2006 Orders. In
other words, the main issue to be determined by this Court is whether
or not there was grave abuse of discretion in the RTC's order to
reinstate the notice of levy on attachment in TCT No. R-22522. "Grave
abuse of discretion" signifies "such capricious and whimsical exercise
of judgment that is equivalent to lack of jurisdiction. The abuse of
discretion must be grave as where the power is exercised in an
arbitrary or despotic manner by reason of passion or personal hostility,
and must be so patent and gross as to amount to an evasion of
positive duty or to a virtual refusal to perform the duty enjoined by or
[21]
to act all in contemplation of law."
The Court of Appeals, in considering the date of entry in the day book
of the Registry of Deeds as controlling over the presentation of the
entries in TCT No. R-17571, relied on Section 56 of Presidential Decree
No. 1529 which provides that:
SEC. 56. Primary Entry Book; fees; certified copies. - Each Register of
Deeds shall keep a primary entry book in which, upon payment of the
entry fee, he shall enter, in the order of their reception, all instruments
including copies of writs and processes filed with him relating to
registered land. He shall, as a preliminary process in registration, note
in such book the date, hour and minute of reception of all instruments,
in the order in which they were 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: Provided, that the national
government as well as the provincial and city governments shall be
exempt from the payment of such fees in advance in order to be
entitled to entry and registration. (Emphasis supplied.)
The consequence of the highlighted portion of the above section is
two-fold: (1) in determining the date in which an instrument is
considered registered, the reckoning point is the time of the reception
of such instrument as noted in the Primary Entry Book; and (2) when
the memorandum of the instrument is later made on the certificate of
title to which it refers, such memorandum shall bear the same date as
that of the reception of the instrument as noted in the Primary Entry
Book. Pursuant to the second consequence stated above, the Court of
Appeals held that Atty. Rutaquio correctly placed the date of entry in
the Primary Entry Book as the date of the memorandum of the
registration of the deed of sale in TCT No. R-17571.
As regards the first consequence, this Court has applied the same in
[22]
several cases. Thus, in the old cases of Levin v. Bass, Potenciano v.
[23]
Dineros, and Development Bank of the Philippines v. Acting Register
[24]
of Deeds of Nueva Ecija, as well as in the fairly recent cases
of Autocorp Group v. Court of Appeals,[25] Armed Forces and Police
Mutual Benefit Association, Inc. v. Santiago,[26] and National Housing
[27]
Authority v. Basa, Jr., we upheld the entry of instruments in the
Primary Entry Book to be equivalent to registration despite even the
failure to annotate said instruments in the corresponding certificates of
title.
Based on this alone, it appears that the RTC was in error when it
considered the registration of the Absolute Deed of Sale on June 16,
2004 inferior to the registration of the Notice of Levy on Attachment
on June 17, 2004 on the ground that the Attachment was annotated
on TCT No. R-17571 earlier than the Deed of Sale. As discussed in the
above-mentioned cases, the annotation in the certificate of title is not
determinative of the effectivity of the registration of the subject
instrument.
However, a close reading of the above-mentioned cases reveals that
for the entry of instruments in the Primary Entry Book to be equivalent
to registration, certain requirements have to be met. Thus, we held
in Levin that:
Do the entry in the day book of a deed of sale which was presented
and filed together with the owner's duplicate certificate of title with the
office of the Registrar of Deeds and full payment of registration fees
constitute a complete act of registration which operates to convey and
affect the land? In voluntary registration, such as a sale, mortgage,
lease and the like, if the owner's duplicate certificate be not
surrendered and presented or if no payment of registration fees be
made within 15 days, entry in the day book of the deed of sale
does not operate to convey and affect the land sold. x x x.[28]
Levin, which was decided in 1952, applied Section 56 of the Land
Registration Act[29] which provides:
Sec. 56. Each register of deeds shall keep an entry book in which,
upon payment of the filing fee, he shall enter in the order of their
reception all deeds and other voluntary instruments, and all copies of
writs or 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 were
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; Provided, however, That no registration, annotation, or
memorandum on a certificate of title shall be made unless the
fees prescribed therefor by this Act are paid within fifteen days'
time after the date of the registration of the deed, instrument,
order or document in the entry book or day book, and in case
said fee is not paid within the time above mentioned, such
entry shall be null and void: Provided further, That the Insular
Government and the provincial and municipal governments need not
pay such fees in advance in order to be entitled to entry or
registration. (Emphasis supplied.)
This provision is the precursor of the aforequoted Section 56 of
Presidential Decree No. 1529, which seems to have dispensed with the
provision nullifying the registration if the required fees are not paid:
SEC. 56. Primary Entry Book; fees; certified copies. - Each Register of
Deeds shall keep a primary entry book in which, upon payment of the
entry fee, he shall enter, in the order of their reception, all instruments
including copies of writs and processes filed with him relating to
registered land. He shall, as a preliminary process in registration, note
in such book the date, hour and minute of reception of all instruments,
in the order in which they were 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: Provided, that the national government as
well as the provincial and city governments shall be exempt from the
payment of such fees in advance in order to be entitled to entry and
registration.
In Development Bank of the Philippines v. Acting Register of Deeds of
Nueva Ecija,[30] this Court applied the provisions of Presidential Decree
No. 1529 and modified the doctrine as follows:
Current doctrine thus seems to be that entry alone produces the effect
of registration, whether the transaction entered is a voluntary or an
involuntary one, so long as the registrant has complied with all
that is required of him for purposes of entry and annotation,
and nothing more remains to be done but a duty incumbent
solely on the register of deeds.[31]
This pronouncement, which was reiterated in National Housing
Authority v. Basa, Jr.,[32] shows that for the entry to be considered to
have the effect of registration, there is still a need to comply with all
that is required for entry and registration, including the payment of
the prescribed fees. Thus, in Autocorp Group v. Court of
Appeals,[33] this Court compared the date when the required fees were
paid with the therein assailed writ of preliminary injunction:
Petitioners contend that payment of the entry fee is a condition sine
qua non before any valid entry can be made in the primary entry book.
Allegedly, the Court of Appeals resorted to judicial legislation when it
held that the subsequent payment of the entry fee was curative and a
substantial compliance with the law. Petitioners claim that the ruling
in DBP vs. Acting Register of Deeds of Nueva Ecija does not apply to
this case. As there was no valid registration, petitioners conclude that
the order of the trial court issuing a writ of preliminary injunction was
proper, considering the irregularities present in the conduct of the
extrajudicial foreclosure x x x.
We find the petition bereft of merit.
First. The objection as to the payment of the requisite fees is
unavailing. There is no question that the fees were
paid, albeit belatedly. Respondent bank presented the certificate of
sale to the Office of the Register of Deeds of Cebu City for registration
on January 21, 1999 at 4:30 p.m. As the cashier had already left,
the Office could not receive the payment for entry and registration
fees, but still, the certificate of sale was entered in the primary entry
book. The following day, respondent bank paid the requisite entry and
registration fees. Given the peculiar facts of the case, we agree with
the Court of Appeals that the payment of respondent bank must be
deemed to be substantial compliance with the law; and, the entry of
the instrument the day before, should not be invalidated. In any case,
even if we consider the entry to have been made on January 22, the
important fact is that the entry in the primary entry book was done
prior to the issuance of the writ of injunction [on February 15,
1999; TRO issued on January 25, 1999] by the trial
[34]
court. (Emphases supplied.)
Records in the case at bar reveal that as of June 25, 2004, the date
of the letter of Atty. Santos seeking the opinion of the LRA as regards
the registration of the Deed of Sale and the Notice of Levy on
Attachment, the required registration fees for the Deed of Sale has not
yet been paid:
25 June 2004
[received by the LRA: July 01, 2004]
HON. BENEDICTO B. ULEP
Administrator
This Authority
Sir:
This has reference to the TCT No. R-17571/T-87 registered under the
name of LBB Construction and Development Corporation relative to the
Deed of Absolute Sale with Entry No. 30549, which was sought to be
registered on 16 June 2004 at 11:20 a.m. (a photocopy of which is
hereto attached as Annex "A").
However, on 17 June 2004 at 11:45 a.m. a Notice of Levy on
Attachment (a photocopy of which is hereto attached as Annex "B")
with Entry No. 30590 was filed and annotated against TCT No. R-
17571/T-87.
In view of the foregoing, we are now in a quandary as to what proper
steps should be taken. It should be noted further that the
required registration fees of the abovementioned sale was not
paid the reason for which the same was not immediately acted
upon by the undersigned.[35]
Since there was still no compliance of "all that is required x x x for
purposes of entry and annotation"[36]of the Deed of Sale as of June
25, 2004, we are constrained to rule that the registration of the
Notice of Levy on Attachment on June 17, 2004 should take
precedence over the former. Considering that the Notice of Levy on
Attachment was deemed registered earlier than the Deed of Sale, the
TCT issued pursuant to the latter should contain the annotation of the
Attachment.
In view of the foregoing, we find that the RTC was, in fact, acting
properly when it ordered the reinstatement of the Notice of Levy on
Attachment in TCT No. R-22522. Since the RTC cannot be considered
as to have acted in grave abuse of its discretion in issuing such Order,
the Petition for Certiorari assailing the same should have been
dismissed.cralaw
WHEREFORE, premises considered, the instant Petition for Review
on Certiorari is hereby GRANTED. The Decision of the Court of
Appeals in CA-G.R. SP No. 94479 dated April 18, 2007 and its
Resolution dated September 18, 2007 are REVERSED and SET
ASIDE.

SO ORDERED.
 price, Neri will surrender the mother title to the Municipality for
THIRD DIVISION subdivision of the property on the condition that Neri will equitably
share in the expense thereof.6chanrobleslaw
G.R. No. 199180, July 27, 2016

Lot 398 was subsequently subdivided into 5 lots: Lot 398-A, Lot 398-
THELMA RODRIGUEZ, JOINED BY HER
B, Lot 398-C, Lot 398-D, and Lot 398-E. Lots 398-C and 398-D pertain
HUSBAND, Petitioners, v. SPOUSES JAIME SIOSON AND ARMI
to the portions that were sold to the Municipality, while Lot 398-E is a
SIOSON, ET AL., Respondents.
road lot. Consequently, only Lots 398-A and 398-B were left as the
remaining portions over which Neri retained absolute title. TCT Nos. T-
DECISION
209894 and T-209895 were then respectively issued over Lots 398-A
and 398-B and were both registered in the name of "Neri delos Reyes,
REYES, J.:
married to Violeta Lacuata." The owner's duplicate copies of TCT Nos.
T-209894 and T-209895, however, were retained by the Municipality
Before the Court is a petition for review1 under Rule 45 of the Rules of
pending Neri's payment of his share in the expenses incurred for the
Court assailing the Decision2dated May 26, 2011 and Resolution3 dated
subdivision of Lot 398. These were placed under the custody of the
October 21, 2011 of the Court of Appeals (CA) in CA-G.R. CV No.
Municipal Treasurer, where they continue to remain.7chanrobleslaw
94867, which nullified the Joint Decision4 dated August 13, 2009 of the
Regional Trial Court (RTC) of Bataan, Branch 3.
Neri, however, alleged that then Municipal Mayor Mario Zuñiga

The Facts suggested that he sell Lot 398-A to his aunt, petitioner Thelma
Rodriguez (Thelma). The Municipality would then expropriate the same

This petition is the aftermath of a series of sales transactions entered from Thelma. Neri agreed to the suggestion.8chanrobleslaw

into by Neri delos Reyes (Neri) over a portion of a property formerly

identified as Lot 398, with an area of 22,398 square meters, covered After agreeing to the amount of P1,243,000.00 as the selling price,

by Transfer Certificate of Title (TCT) No. T-86275 and registered in the Thelma, on March 20, 1997, issued a check for said amount payable to
5
name of "Neri delos Reyes, married to Violeta Lacuata." chanrobleslaw Neri. When it fell due, no sufficient funds were available to cover the
check. Consequently, it was agreed that Thelma would pay the

Sometime in 1997, the Municipality of Orani, Bataan (Municipality) purchase price in installments from March 20, 1997 to September 4,

purchased from Neri an area of about 1.7 hectare of Lot 398, to be 1997. Thelma, however, was only able to pay

used for the extension of the Municipality's public market. Among P442,293.50.9chanrobleslaw

other things, it was agreed that upon full payment of the purchase
On November 12, 2001, Thelma caused the annotation of an adverse
10
claim on TCT No. T-209894. At about the same time, Thelma saw an
announcement that a new Orani Common Terminal would be built on
Lot 398-A. As she has not yet entered into any agreement regarding
the utilization of said lot, Thelma filed a Complaint for
Injunction docketed as Civil Case No. 7394 against then incumbent
mayor Efren Pascual, Jr. (Mayor Pascual), and the Municipality under
claim of ownership. To support her claim, Thelma incorporated in her
complaint a copy of an undated and unnotarized deed of absolute
11
sale allegedly executed by Neri in her favor. chanrobleslaw
In their joint verified answer, Mayor Pascual and the Municipality
acknowledged that Thelma became the owner of Lot 398-A by way of
12
purchase from Neri. chanrobleslaw
In 2002, Neri executed an affidavit claiming that the owner's copies of
TCT No. T-209894 (covering Lot 398-A) and TCT No. T-209895
(covering Lot 398-B) were lost, which was annotated on the original
copy of TCT No. T-209894 on May 8, 2002.13 Two days after, or on
May 10, 2002, Neri caused the cancellation of Thelma's adverse
claim.14 Neri also caused the reconstitution of new owner's copies of
TCT Nos. T-209894 and T-209895.15 Thereafter, new copies of TCT
Nos. T-209894 and T-209895 were issued, and Neri then sold Lot 398-
A to Spouses Jaime and Armi Sioson, Spouses Joan and Joseph
Camacho, and Agnes Samonte (respondents) - in a deed of sale dated
November 27, 2002. A special power of attorney was executed by
Violeta delos Reyes (Violeta) in favor of Neri for the purpose.
Consequently, TCT No. T-209894 was cancelled, and TCT No. T-
16
226775 was thus issued in the respondents' names. chanrobleslaw
Upon the issuance of TCT No. T-226775, the respondents declared Lot
398-A for tax purposes and paid them accordingly. They sought to
take actual possession thereof by filling it; however, after they filled
said lot with about 40 truckloads of soil/fillings, Thelma sent two
armed blue guards who entered the premises and set up a tent
therein. The respondents brought the matter to the attention of
barangay authorities who referred them to the municipal mayor. As
the municipal mayor did not take any action, the respondents filed a
forcible entry case against Thelma before the Municipal Circuit Trial
Court of Orani-Samal, Bataan, docketed as Civil Case No. 843. The
said ejectment case is still pending.17chanrobleslaw
After Thelma learned of the second sale of Lot 398-A, she filed against
the respondents a complaint for the Declaration of Nullity of the
Second Sale and TCT No. T-226775 on February 11, 2003, docketed
as Civil Case No. 7664. In support of her claim, Thelma once again
presented a deed of absolute sale executed by Neri in her favor. This
time, the deed of sale she presented was duly signed by her and
Neri, witnessed, notarized and dated April 10,
1997.18chanrobleslaw
The respondents countered that they are innocent purchasers for value
having bought Lot 398-A at the time when Thelma's adverse claim was
already cancelled. While they admit Thelma's possession of the subject
property, they, however, qualify that possession is being contested in
a separate action for forcible entry.19chanrobleslaw
The respondents also filed a verified answer-in-intervention in Civil
Case No. 7394 (injunction case) contending that they are the present
registered owners of Lot 398-A, and as such, Thelma is not entitled to
20
any relief. chanrobleslaw
Ruling of the RTC
The RTC jointly heard Civil Case No. 7394 and Civil Case No. 7664 and
after trial, rendered judgment in favor of Thelma. The dispositive
portion of the Joint Decision21 dated August 13, 2009
reads:ChanRoblesVirtualawlibrary
WHEREFORE, judgment is hereby rendered declaring
that:ChanRoblesVirtualawlibrary
1) [Thelma] is entitled to the relief of permanent injunction prayed for
in Civil Case No. 7394 against the respondents. Insofar as defendants
[Mayor Pascual] and the [Municipality] are concerned, not only did
they acknowledge expressly the ownership of [Thelma] of Lot 398-A,
they have disowned the commission of any act in derogation of
[Thelma's] right of ownership of the lot and did not contest anymore
the action of [Thelma] in said case;
2) Insofar as Civil Case No. 7664 is concerned, the second deed of sale
entered into by [Neri] with the [respondents] is hereby declared null
and void, and [TCT] No. T-226775 of the Registry of Deeds of Bataan
which was issued by defendant Register of Deeds pursuant to said
second deed of sale is likewise declared null and void, and accordingly,
the Register of Deeds for the Province of Bataan is ordered to cancel
said certificate of title and to reinstate [TCT] No. T-209894 in the
name of [Neri], married to [Violeta];
3) The new owner's copy of [TCT] No. T-209894 is hereby declared
null and void as the original owner's copy is not lost but actually exists
and is presently in the custody of the Municipal Treasurer of Orani,
Bataan. In consequence, defendant Register of Deeds of Bataan is
directed to cancel said new owner's copy of [TCT] No. T-209894;
and cralawlawlibrary
4) [The respondents] are hereby ordered to jointly and severally pay
to [Thelma] attorney's fees in the amount of Twenty[-]Five Thousand
Pesos (P25,000.00).
All counterclaims of [the respondents] are denied for lack of basis in
fact and in law.
No pronouncement as to costs.
SO ORDERED.22chanroblesvirtuallawlibrary
The RTC concluded that by Neri's admission that he sold the subject
lot to Thelma for a consideration of P1,243,000.00, and his
acknowledgement receipt of P442,293.50 as partial payment from the
latter, the transaction between Thelma and Neri should be regarded as
an executed contract of sale. Hence, Lot 398-A was subjected to a
double sale when Neri sold the same property to the
respondents.23 The RTC further ruled that the contract of sale between
Neri and the respondents is null and void because it was transacted
and executed at the time when Neri was no longer the owner of Lot
398-A. It was legally inexistent for lack of object certain. Thereupon,
the fact that the respondents were able to register their acquisition
first is of no moment. Registration does not legitimize a void contract
and thus, TCT No. T-226775 should be cancelled.24chanrobleslaw
The respondents moved for reconsideration but it was denied by the
RTC per Order25cralawred dated January 13, 2010. Hence, they
elevated their case to the CA.
Ruling of the CA
On May 26, 2011, the CA promulgated the assailed Decision,26 with
the following dispositive portion:ChanRoblesVirtualawlibrary
WHEREFORE, the instant Appeal is GRANTED. The Joint Decision
dated August 13, 2009 and the Order dated January 13, 2010 of the
[RTC] of Bataan are hereby declared NULLand VOID insofar as it (1)
granted permanent injunction in favor of [Thelma] in Civil Case No.
7394 against [the respondents];T2) declared null and void the deed of
sale between [Neri] and [the respondents] in Civil Case No. 7664; (3)
declared null and void the [TCT] No. T-226775; (4) ordered the
cancellation of [TCT] No. T-226775 and reinstatement of [TCT] No. T-
209894 in the name of [Neri], married to [Violeta]; and (5) ordered
the payment of attorney's fees.
Consequently, the following are hereby declared VALID: (1) the
Deed of Sale between [Neri] and [the respondents]; and (2) the [TCT]
No. T-226775 in the names of [the respondents].
This Decision is without prejudice to any right which [Thelma] may
have against [Neri] for the refund of the amount of Four Hundred
Forty-Two Thousand Two Hundred Ninety-Three and 50/100
Pesos (P442,293.50).
The Complaints in Civil Cases Nos. 7394 and 7664 are
hereby DISMISSED.
SO ORDERED.27 (Emphasis in the original)
Contrary to the findings of the RTC, the CA found that the contract
between Neri and Thelma was a mere contract to sell and not a
contract of sale; hence, there was no double sale of Lot 93 8-A.
According to the CA, the question of whether or not the respondents
are buyers in good faith is unavailing since the concept of a "buyer in
good faith" finds relevance only in cases of double sale. The CA further
stated that even if it is assumed that the contract between Neri and
Thelma was an absolute contract of sale, the same is nonetheless void
for lack of consent of Neri's wife, Violeta, insofar as the object of the
transaction is a conjugal property.
Thelma moved for reconsideration of the CA decision, which was
denied for lack of merit in Resolution28dated October 21, 2011.
Hence this petition.
Thelma argues that there was double sale and the CA erred in
reversing the RTC decision: (1) by interpreting the sale between
Thelma and Neri as a mere contract to sell; (2) by declaring the deed
of sale in favor of Thelma as null and void due to lack of Violeta's
consent or conformity; and (3) by declaring the respondents as buyers
in good faith despite prior registration of Thelma's notice of adverse
claim in TCT No. T-209894, and her actual possession of the subject
property.29chanrobleslaw
Ruling of the Court
The resolution of this case basically rests on the determination of
whether the transaction between Neri and Thelma is a contract of sale
or a contract to sell. The rule on double sale, as provided in Article
1544 of the Civil Code,30 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
31
repurchase the same land. chanrobleslaw
Both the RTC and the CA concur in the finding that Neri agreed to sell
Lot 398-A to Thelma for an agreed price of P1,243,000.00. The RTC,
however, concluded that by Neri's admission that he sold the subject
lot to Thelma for a consideration of P1,243,000.00, and that he
acknowledged receipt of P442,293.50 as partial payment from the
latter, the transaction between Thelma and Neri should be regarded as
an executed contract of sale, and not a merely executory one. The RTC
likewise took into consideration Thelma's alleged possession of the
property and Neri's failure to rescind the contract as indicative of the
32
nature of their agreement as one of sale. chanrobleslaw
On the other hand, the CA ruled that "the contract between Thelma
and Neri was a mere contract to sell, the transfer of ownership over
Lot 398-A being conditioned on Thelma's full payment of the purchase
33
price." As regards the existence of the two contracts of sale, the CA
concluded that Thelma admitted on trial that the first deed of sale was
only meant to be an acknowledgment receipt for the down payment
she made on the subject lot, and the second deed of sale was
allegedly executed after Thelma pays in full the purchase price of the
lot.
A review of this case shows that the CA ruled in accord with existing
jurisprudence.
"The real character of the contract is not the title given, but the
intention of the parties."34 In this case, there exist two deeds of
absolute sale. Though identically worded, the first contract was
undated, not notarized, signed only by Neri, and was presented in Civil
Case No. 7394 for Injunction,35 while the second deed was dated April
10, 1997, notarized on September 5, 1997, signed by both Neri and
Thelma, and was presented in Civil Case No. 7664 for Declaration of
Nullity of Deed of Sale and Title.36chanrobleslaw
In determining the nature of the agreement between Thelma and Neri,
the CA took note of these two documents, and, coupled with Thelma's
own admissions, correctly found that it was a mere contract to sell.
According to the CA:ChanRoblesVirtualawlibrary
During trial, Thelma explained the apparent disparity between the two
(2) "deeds of absolute sale" by testifying that the undated and
unnotarized deed of sale served only as a "receipt" which was signed
by Neri when the latter received the downpayment for the lot. The
dated and notarized deed of sale, on the other hand, was signed by
both Thelma and Neri upon Thelma's alleged full payment of the
purchase price:
chanRoblesvirtualLawlibraryx x x x
Second, the execution of the "deed of absolute sale" dated August 10,
1997 and the transfer and delivery of the title to Thelma's name
covering Lot No. 398-A were conditioned upon full payment of the
purchase price.
Thelma testified that the "deed of absolute sale" dated August 10,
1997 and which was attached to Thelma's complaint in Civil Case No.
7664 was signed by her, Neri and their witnesses only upon full
payment of the purchase price. Thelma further testified that she and
Neri agreed to place the amount of the purchase price on the deed of
absolute sale only at the time when Thelma had fully paid the same: x
37
xx (Italics ours and emphasis deleted)
Despite the denomination of their agreement as one of sale, the
circumstances tend to show that Neri agreed to sell the subject
property to Thelma on the condition that title and ownership would
pass or be transferred upon the full payment of the purchase price.
This is the very nature of a contract to sell, which is a "bilateral
contract whereby the prospective seller, while expressly reserving the
ownership of the property despite delivery thereof to the prospective
buyer, binds himself to sell the property exclusively to the prospective
buyer upon fulfillment of the condition agreed upon, i.e., the full
payment of the purchase price."38 As stated by the Court, the
agreement to execute a deed of sale upon full payment of the
purchase price "shows that the vendors reserved title to the subject
property until full payment of the purchase price."39chanrobleslaw
It was likewise established that Thelma was not able to pay the full
purchase price, and that she was only able to pay P442,293.50 of the
agreed selling price of P1,243,000.00. The RTC, in fact, made the
following findings: (1) the consideration for Lot 398-A was
P1,243,000.00; (2) Thelma issued a check on March 20, 1997 for said
amount, payable to Neri; (3) the agreement was that the check would
only be held by Neri for safekeeping as it was yet unsure if there was
ample funds to cover the check; (4) the check was not covered by
sufficient funds when presented for payment, so Thelma subsequently
paid Neri in installments starting from March 20, 1997 to September 4,
1997; and (5) Neri acknowledged receipt from Thelma the total
amount of P442,293.50.40chanrobleslaw
To bolster her claim, Thelma insists that she now holds title over the
subject property after Neri allegedly delivered the subject lot to her
right after the execution of the sale.41 There is, however, nothing on
record to support this claim aside from her bare assertions. There was
no testimony or any proof on her part showing when and how she took
possession of the property. At best, what is extant from the records is
that Thelma paid taxes on the property for the years 2000 and 2001,
which was three years after the alleged sale. "But tax declarations, by
themselves, are not conclusive evidence of ownership of real
property."42 Aside from this, the tax receipts showed that the property
was still declared in the name of Neri.43chanrobleslaw
Moreover, the alleged delivery of the property, even if true, is
irrelevant considering that in a contract to sell, ownership is retained
by the registered owner in spite of the partial payment of the purchase
price and delivery of possession of the property. Thus, in Roque v.
Aguado,44 the Court ruled that since the petitioners have not paid the
final installment of the purchase price, the condition which would have
triggered the parties' obligation to enter into and thereby perfect a
contract of sale cannot be deemed to have been fulfilled;
consequently, they "cannot validly claim ownership over the
subject portion even if they had made an initial payment and
even took possession of the same."45chanrobleslaw
Accordingly, the CA did not commit any reversible error in concluding
that "the contract between Thelma and Neri was a mere contract to
sell, the transfer of ownership over Lot 398-A being conditioned on
Thelma's full payment of the purchase price. Having failed to pay the
purchase price in full, Thelma cannot claim ownership over Lot 398-A
and Neri is not legally proscribed from alienating the same lot to other
buyers."46chanrobleslaw

Finally, while the CA correctly ruled that the agreement was a contract
to sell, the Court, however, does not share its position that the subject
property is a conjugal property, and as such, the absence of Violeta's
consent should be held as among the factors which could have
adversely affected the validity of the purported contract of sale
between Neri and Thelma. This is due to the following reasons: first,
the subject property, Lot 398-A, is registered in the name of "Neri
delos Reyes, married to Violeta Lacuata," and so was its mother lot,
Lot 398. In Metropolitan Bank and Trust Company v. Tan,47 it was held
that such form of registration is determinative of the property's nature
as paraphemal. That the only import of the title is that Neri is the
owner of the subject property, it being registered in his name alone,
and that he is married to Violeta; and second, the record is bereft of
proof that said property was acquired during Neri and Violeta's
marriage - such that, the presumption under Article 116 of the Family
Code that properties acquired during the marriage are presumed to be
conjugal cannot apply.

WHEREFORE, the petition is DENIED for lack of merit. Accordingly,

the Decision dated May 26, 2011 and Resolution dated October 21,
2011 of the Court of Appeals in CA-G.R. CV No. 94867
are AFFIRMED.

SO ORDERED.chanRoblesvirtualLawlibrary

THIRD DIVISION
[G.R. NO. 148846 : September 25, 2007]
CECILIA AMODIA VDA. DE MELENCION, VENERANDA AMODIA,
FELIPE AMODIA, EUTIQUIO AMODIA and GO KIM
CHUAN, Petitioners, v. HONORABLE COURT OF APPEALS and
AZNAR BROTHERS REALTY COMPANY, Respondents.
DECISION
NACHURA, J.:
Before this Court is a Petition for Review on Certiorari1 under Rule 45
of the Rules of Civil Procedure seeking the reversal of the Court of
Appeals (CA) Decision2 dated March 30, 2001 and praying that the
Decision3 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. 206264 (entire property) in the name of the late petitioner Go Kim
Chuan (Go Kim Chuan).5
The entire property was originally owned by Esteban Bonghanoy6 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 Amodia8 (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 Sale10 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 334411 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 Amodia12 (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
Bonghanoy15 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.
16
On February 14, 1990, AZNAR wrote a letter 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 Claim17 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 better rights and the provision of Article 1544 of the New Civil Code
Sale dated February 1, 1989 executed by Felipe Amodia, Cecilia would be inapplicable;
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 III

Go Kim Chuan as NULL AND VOID;

The Honorable Court of Appeals erred in holding that an adverse claim
(3) Ordering Go Kim Chuan to deliver to the aforesaid plaintiff- was already existing at the time the subject land was sold to petitioner
appellant the possession of the land in question and to execute a Go Kim Chuan; on the contrary, the latter had purchased the said land

registrable deed of conveyance of the subject property to the said in good faith and for value, without notice of any fact that would
plaintiff-appellant. reasonably impel a closer inquiry as to the possibility of a defect in the
vendor's title; and
No costs.
IV
21
SO ORDERED.
The Court of Appeals has misapplied the case of Heirs of Severa
22
Petitioners filed a Motion for Reconsideration which the CA denied in Gregorio v. CA, 300 SCRA 565, cited in support of its ruling that the
23
its Resolution dated June 5, 2001. court a quo committed error in appreciating the testimony of an expert
witness as to the forgery of the first Deed of Sale.24
Hence, this Petition based on the following grounds:
In its Comment25 dated September 18, 2001, AZNAR argued, among
I others, that the Petition is dismissible because the Verification and
Certification of Non-forum Shopping were not signed by all the
Lot 3368 was already a registered land under Act 496, thus, the petitioners, invoking this Court's Decision in the case of Loquias v.
registration by respondent of the Deed of Sale in 1964 under Act 3344 Office of the Ombudsman,26 and that the same were signed only by
produces no legal effect whatsoever; 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
II
other petitioners.

Even assuming arguendo that the lot in question was duly registered
In their Reply27 dated October 22, 2001, petitioners contended that
under Act 3344 as an unregistered land, it is without prejudice to
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
28 29
Motion for Leave to Admit Amended Petition 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 Resolution33 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
35
the doctrine laid down in Heirs of Severa Gregorio v. CA 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.
36
On the other hand, in its Memorandum, 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 â‖€ non-compliance with the rules on Verification
and Certification of Non-Forum Shopping.
In this regard, the case of Iglesia ni Cristo v. Ponferrada37 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?cra lawlibrary
Second, who between Go Kim Chuan and AZNAR has the better right
over the subject property?cra lawlibrary
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 RTC's 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 act41 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 estate45without 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
47
under Art. 1544 of the New Civil Code.
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
54
owner. 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.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
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.57Given 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.

SECOND DIVISION
[G.R. NO. 149238 : November 22, 2007]
SIXTO ANTONIO, Petitioner, v. SPS. SOFRONIO SANTOS &
AURORA SANTOS, SPS. LUIS LIBERATO & ANGELINA LIBERATO
and SPS. MARIO CRUZ & VICTORIA CRUZ, Respondents.
Cainta, Rizal. He averred that, as evidenced by certificates of payment
of realty taxes for the years 1918 and 1919, the property was
previously owned by his father and that in 1984, he filed before
Branch 71, RTC, Antipolo, Rizal, an application for the registration of
two parcels of land, one of which was Lot No. 11703, CAD 688-D,
situated in Barangay San Juan, Cainta, Rizal. His application was
docketed as Land Registration Case No. 142-A (LRC No. 142-A).

Although the RTC, Branch 71, declared him the true and absolute
RESOLUTION
owner in fee simple of the two parcels of land he applied for, it set
aside its decision with respect to Lot No. 11703, CAD 688-D in an
QUISUMBING, J.:
Order dated August 21, 1986, to avoid duplication of issuance of titles.

This is an appeal from the Decision1 dated July 31, 2001 of the Court
Antonio said that after investigation, he discovered that Lot No. 11703,
of Appeals in CA-G.R. CV No. 58246, affirming, with modification, the
CAD 688-D was already titled in the name of respondents. He then
Decision2 dated October 7, 1997 of Branch 72, Regional Trial Court
filed the complaint for Reconveyance, Annulment of Title and Damages
(RTC) in Antipolo, Rizal in Civil Case No. 1261-A. The RTC had
against respondents, averring that respondents committed fraud in
dismissed the complaint for Reconveyance, Annulment of Title and
their application for titling because they made it appear in their
Damages filed by petitioner Sixto Antonio against respondents.
application for registration that the subject property was located in
Pinagbuhatan, Pasig, Rizal, when in fact, the property is located in
The antecedent facts, culled from the records, are as follows:
Barangay San Juan, Cainta, Rizal. He added, respondents also made it
appear in their application for registration that the subject property is
On September 19, 1988, petitioner Sixto Antonio filed before Branch
bound on the North East by the Pasig River when in fact it is bound on
72, RTC, Antipolo, Rizal, a complaint for Reconveyance, Annulment of
the North East by the Tapayan River. Furthermore, the Pasig River
Title and Damages against respondents spouses Sofronio and Aurora
does not traverse any portion of the jurisdiction of Cainta, Rizal. He
Santos, Luis and Angelina Liberato, and Mario and Victoria Cruz. The
argued that Original Certificate of Title No. 108 (OCT No. 108) in
complaint was docketed as Civil Case No. 1261-A.
respondents' names, insofar as it included Lot No. 11703, CAD 688-D,
is, therefore, null and void because it was obtained through fraudulent
In his complaint,3 Antonio alleged that he is the absolute owner of a
misrepresentations and machinations.
13,159-square meter parcel of land denominated as Lot No. 11703,
CAD 688-D, Cainta-Taytay Cadastre, situated in Barangay San Juan,
In their Answer4 dated July 26, 1989, respondents averred that OCT
No. 108 was duly issued to them by the Register of Deeds for Metro
Manila, District II, on May 20, 1977. They alleged that prior to the
issuance of OCT No. 108, they, as registered owners, had always been
in peaceful possession of the property and at no time had Antonio
possessed the property, nor did he ever make any claim against the
said property.
The RTC of Antipolo, Rizal, Branch 72, in a Decision dated October 7,
1997 dismissed the complaint and ordered Antonio to pay respondents
moral damages and attorney's fees. The dispositive portion of the
decision reads:
WHEREFORE, premises considered, judgment is hereby rendered
DISMISSING the instant complaint, and orders plaintiff as follows:
1. To pay defendants Sofronio Santos, Aurora Santos, Sps. Luis
Liberato and Angelina Santos, the amount of P100,000.00 each, by
way of moral damages;
2. To pay defendants the amount of P60,000.00, by way of attorney's
fees, and costs of suit.
SO ORDERED.5
The Court of Appeals in a Decision dated July 31, 2001 affirmed with
modification the abovementioned decision by deleting the award of
moral damages and attorney's fees. The dispositive portion of the
decision of the Court of Appeals states:
WHEREFORE, with modification deleting [or] setting aside the award
for moral damages and attorney's fees, the decision appealed from
is AFFIRMED with costs against the plaintiff-appellant.
SO ORDERED.6
Hence, the instant petition, raising the following issues:
I.
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN NOT
HOLDING THAT THE DECISION IN LAND REGISTRATION CASE NO.
142-A, LRC RECORD NO. 58707, REGIONAL TRIAL COURT OF
ANTIPOLO CITY, BRANCH 71, IS SUFFICIENT BASIS OF PETITIONER'S
CLAIM OF RIGHT OF OWNERSHIP OVER THE PROPERTY SUBJECT OF
ACTION FOR RECONVEYANCE.
II.
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN
TREATING PETITIONER'S ACTION FOR RECONVEYANCE AS ONE FOR
TITLING OF A PARCEL OF LAND.
III.
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN NOT
HOLDING THAT RESPONDENTS HAVE FRAUDULENTLY REGISTERED
AND TITLED SUBJECT PROPERTY IN THEIR NAMES.
IV.
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN HOLDING
THAT RESPONDENTS' MOTHER ACQUIRED SUBJECT PROPERTY FROM
HER FATHER, GAVINO SANTOS, WHICH THE LATTER ALLEGEDLY
PURCHASED FROM LADISLAO RIVERA.
V.
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN
AFFIRMING THE DECISION OF THE COURT A QUO DISMISSING
7
PETITIONER'S ACTION FOR RECONVEYANCE.
Simply put, the issues raised are: (1) Did the Court of Appeals err in
not holding that the decision in LRC No. 142-A was sufficient basis of
petitioner's claim of ownership over the subject property? (2) Did the
Court of Appeals and RTC erroneously treat petitioner's action for
reconveyance as one for titling of a parcel of land? (3) Did respondents
fraudulently title the subject property in their names? (4) Did the
Court of Appeals err in finding that respondents' mother acquired the
subject property from her father, Gavino Santos, who purchased it
from Ladislao Rivera? and (5) Did the Court of Appeals err in affirming
the decision of the RTC dismissing petitioner's action for
reconveyance?cra lawlibrary
Petitioner argues that the Court of Appeals erred in not holding that
the decision in LRC No. 142-A is sufficient basis for his claim of
ownership over the property; in treating his action for reconveyance as
one for titling; in not holding that respondents had fraudulently
registered the property in their names; and in holding that
respondents' mother had acquired the subject property from her
father, Gavino Santos, who allegedly bought the property from
Ladislao Rivera.
Respondents, on the other hand, in their Comments,8 contend that
they have proved they have a better title to the property. They argue
that petitioner's attempt to register Lot No. 11703, CAD 688-D in his
name is tainted with fraud, and that petitioner had failed to adduce
any evidence of fraud on their part. They assert that their
documentary and testimonial evidence which were unrebutted by
petitioner show original ownership of the land by Ladislao Rivera from
whom their grandfather bought the property.
After serious consideration, we find that petitioner's arguments lack
merit.
On the first issue, petitioner argues that in LRC No. 142-A, the RTC of
Antipolo, Branch 71, rendered a Decision on January 7, 1986
adjudicating ownership of two lots, including Lot No. 11703, CAD 688-
D, in his favor. He adds that on February 19, 1986, after said decision
has become final and executory, the said RTC issued a certification for
issuance of decree, directing the Land Registration Commission to
issue the corresponding decree of registration. Hence, he argues, his
right of ownership over the land has already been fully established, but
no certificate of title was issued to him only because the property was
already registered in the name of respondents.
But we agree with respondents that petitioner cannot rely on the
decision in LRC No. 142-A. As pointed out by the Court of Appeals,
even if a title had been issued to petitioner based on said decision, his
title would be of a later date than the title of respondents, hence
inefficacious and ineffective. This Court has ruled 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; and in case of
successive registrations where more than one certificate is issued over
the same land, the person holding a prior certificate is entitled to the
9
land as against a person who relies on a subsequent certificate.
On the second issue, petitioner contends that it is very apparent the
RTC and Court of Appeals had the notion that his case a quo was not
an action for reconveyance, but rather an application for registration of
land where the applicant and oppositor had to prove their respective
registrable titles. This, he adds, could be gleaned from the RTC's
findings that "the claim of plaintiff on the basis of said documents
cannot prevail over the adverse, public, open, peaceful and continuous
possession by the defendants over the subject property," and that "it
was indubitably shown that the defendants have occupied said
property since time immemorial while plaintiff has never at anytime
taken possession of said property."
We find petitioner's contentions unconvincing. For an action for
reconveyance based on fraud to prosper, this Court has held that the
party seeking reconveyance must prove by clear and convincing
10
evidence his title to the property and the fact of fraud. The RTC, in
making the abovementioned findings, was not treating petitioner's
action for reconveyance as one for titling of property. But it was
weighing whether petitioner has, by clear and convincing evidence,
proven his title to the property. Moreover, the RTC, in its decision,
discussed the merits of petitioner's ground for his action for
reconveyance, i.e. whether or not respondents committed fraud in
titling the subject property in their names. The RTC held that as shown
by public records in the custody of the RTC, Pasig City and the Land
Registration Authority, petitioner's claim that the property was
fraudulently titled in the names of respondents is baseless. Thus,
petitioner's contention that the RTC and the Court of Appeals treated
his action for reconveyance as one for titling of property lacks any
persuasive basis.
On the third and fourth issues, we find them to be factual issues,
hence beyond our jurisdiction to resolve. In a Petition for Review under
Rule 45 of the 1997 Rules of Civil Procedure, this Court's power of
review is limited to questions of law only.11
Note, however, should be taken of the established doctrine that an
action for reconveyance resulting from fraud prescribes four years
from the discovery of the fraud. Such discovery is deemed to have
taken place upon the issuance of the certificate of title over the
property. Registration of real property is considered a constructive
notice to all persons, thus, the four-year period shall be counted
therefrom.12It appears that OCT No. 108 was issued to respondents by
the Register of Deeds for Metro Manila on May 20, 1977. From the
time of registration of the land in the name of respondents on May 20,
1977 to the filing of the complaint on September 19, 1988, more than
four years had already elapsed. Hence, it cannot be denied that
petitioner's action had already prescribed.
Based on the foregoing considerations, we find that the Court of
Appeals did not err in affirming the decision of the RTC dismissing
petitioner's action for reconveyance.
Finally, concerning the deletion of moral damages and attorney's fees,
we agree with the ruling of the Court of Appeals that here an award of
moral damages is not warranted since the record is bereft of any proof
that Antonio acted maliciously or in bad faith in filing the
action.13 Neither should attorney's fees be awarded. The accepted rule
is that the reason for the award of attorney's fees must be stated in
the text of the trial court's decision; otherwise, if it is stated only in
the dispositive portion of the decision, the same must be
disallowed.14 In this case, we find that the trial court's decision failed
to show the reason for the award of attorney's fees, hence it was
properly deleted by the appellate court.

WHEREFORE, the petition is DENIED for lack of merit. The assailed

Decision dated July 31, 2001 of the Court of Appeals in CA-G.R. CV No.
58246 is AFFIRMED. No pronouncement as to costs.

SO ORDERED.

SECOND DIVISION
G.R. No. 196577 : February 25, 2013
LAND BANK OF THE PHILIPPINES, Petitioner, v. BARBARA
SAMPAGA POBLETE, Respondent.
DECISION
CARPIO, J.:
The Case
This Petition for Review on Certiorari1 seeks to reverse the Court of
Appeals' Decision2 dated 28 September 20 I 0 and its
Resolution3 dated 19 April 2011 in C A-G.R. CV No. 91666. The Court
of Appeals (C A) affirmed in toto the Decision4 of the Regional Trial
Court (RTC) of San Jose, Occidental Mindoro, Branch 46, in Civil Case
No. R-1331.
The Facts
The facts, as culled from the records, are as follows:cralawlibrary
Petitioner Land Bank of the Philippines (Land Bank) is a banking
institution organized and existing under Philippine laws. Respondent
Barbara Sampaga Poblete (Poblete) is the registered owner of a parcel
of land, known as Lot No. 29, with an area of 455 square meters,
located in Buenavista, Sablayan, Occidental Mindoro, under Original
Certificate of Title (OCT) No. P-12026. In October 1997, Poblete
obtained a P300,000.00 loan from Kabalikat ng Pamayanan ng
Nagnanais Tumulong at Yumaman Multi-Purpose Cooperative
(Kapantay). Poblete mortgaged Lot No. 29 to Kapantay to guarantee
payment of the loan. Kapantay, in turn, used OCT No. P-12026 as
collateral under its Loan Account No. 97-CC-013 with Land Bank-
Sablayan Branch.
In November 1998, Poblete decided to sell Lot No. 29 to pay her loan.
She instructed her son-in-law Domingo Balen (Balen) to look for a
buyer. Balen referred Angelito Joseph Maniego (Maniego) to Poblete.
According to Poblete, Maniego agreed to buy Lot No. 29
for P900,000.00, but Maniego suggested that a deed of absolute sale
for P300,000.00 be executed instead to reduce the taxes. Thus,
Poblete executed the Deed of Absolute Sale dated 9 November 1998
(Deed dated 9 November 1998) with P300,000.00 as
consideration.5 In the Deed dated 9 November 1998, Poblete described
herself as a "widow." Poblete, then, asked Balen to deliver the Deed
dated 9 November 1998 to Maniego and to receive the payment in her
behalf. Balen testified that he delivered the Deed dated 9 November
1998 to Maniego. However, Balen stated that he did not receive from
Maniego the agreed purchase price. Maniego told Balen that he would
pay the amount upon his return from the United States. In an Affidavit
dated 19 November 1998, Poblete stated that she agreed to have the
payment deposited in her Land Bank Savings Account.6?r?l1
Based on a Certification issued by Land Bank-Sablayan Branch
Department Manager Marcelino Pulayan on 20 August 1999,7 Maniego
paid Kapantays Loan Account No. 97-CC-013 for P448,202.08. On 8
June 2000, Maniego applied for a loan of P1,000,000.00 with Land
Bank, using OCT No. P 12026 as collateral. Land Bank alleged that as
a condition for the approval of the loan, the title of the collateral
should first be transferred to Maniego.
On 14 August 2000, pursuant to a Deed of Absolute Sale dated 11
8
August 2000 (Deed dated 11 August 2000), the Register of Deeds of
Occidental Mindoro issued Transfer Certificate of Title (TCT) No. T-
20151 in Maniegos name. On 15 August 2000, Maniego and Land Bank
executed a Credit Line Agreement and a Real Estate Mortgage over
TCT No. T- 20151. On the same day, Land Bank released
the P1,000,000.00 loan proceeds to Maniego. Subsequently, Maniego
failed to pay the loan with Land Bank. On 4 November 2002, Land
Bank filed an Application for Extra-judicial Foreclosure of Real Estate
Mortgage stating that Maniegos total indebtedness amounted
to P1,154,388.88.
On 2 December 2002, Poblete filed a Complaint for Nullification of the
Deed dated 11 August 2000 and TCT No. T-20151, Reconveyance of
Title and Damages with Prayer for Temporary Restraining Order and/or
Issuance of Writ of Preliminary Injunction. Named defendants were
Maniego, Land Bank, the Register of Deeds of Occidental Mindoro and
Elsa Z. Aguirre in her capacity as Acting Clerk of Court of RTC San
Jose, Occidental Mindoro. In her Complaint, Poblete alleged that
despite her demands on Maniego, she did not receive the consideration
of P900,000.00 for Lot No. 29. She claimed that without her
knowledge, Maniego used the Deed dated 9 November 1998 to acquire
OCT No. P-12026 from Kapantay. Upon her verification with the
Register of Deeds, the Deed dated 11 August 2000 was used to obtain
TCT No. T-20151. Poblete claimed that the Deed dated 11 August
2000 bearing her and her deceased husbands, Primo Poblete,
supposed signatures was a forgery as their signatures were forged. As
proof of the forgery, Poblete presented the Death Certificate dated 27
April 1996 of her husband and Report No. 294-502 of the Technical
Services Department of the National Bureau of Investigation showing
that the signatures in the Deed dated 11 August 2000 were forgeries.
Accordingly, Poblete also filed a case for estafa through falsification of
public document against Maniego and sought injunction of the
impending foreclosure proceeding.
On 7 January 2003, Land Bank filed its Answer with Compulsory
Counterclaim and Cross-claim. Land Bank claimed that it is a
mortgagee in good faith and it observed due diligence prior to
approving the loan by verifying Maniegos title with the Office of the
Register of Deeds. Land Bank likewise interposed a cross-claim against
Maniego for the payment of the loan, with interest, penalties and other
charges. Maniego, on the other hand, separately filed his Answer.
Maniego denied the allegations of Poblete and claimed that it was
Poblete who forged the Deed dated 11 August 2000. He also alleged
that he paid the consideration of the sale to Poblete and even her
loans from Kapantay and Land Bank.
The Ruling of the Regional Trial Court
On 28 December 2007, the RTC of San Jose, Occidental Mindoro,
Branch 46, rendered a Decision in favor of Poblete, the dispositive
portion of which reads:cralawlibrary
WHEREFORE, by preponderance of evidence, judgment is hereby
rendered in favor of the plaintiff and against the defendants, as
follows:cralawlibrary
1. Declaring the Deed of Sale dated August 11, 2000 over O.C.T. No.
P-12026, as null and void;
2. Declaring Transfer of Certificate of Title No. T-20151 as null and
void, it having been issued on the basis of a spurious and forged
document;
3. The preliminary [i]njunction issued directing the defendants to
refrain from proceedings [sic] with the auction sale of the plaintiffs
properties, dated February 10, 2002, is hereby made permanent;
4. Ordering defendant Angelito Joseph Maniego to return to the
plaintiff O.C.T. No. P-12026; and
5. Ordering defendant Angelito Joseph Maniego to pay plaintiff the
amount of P50,000.00, as and for reasonable attorneys
fees. ???ñr?bl?š ??r†??l l?? l?br?rÿ
Judgment is furthermore rendered on the cross-claim of defendant
Land Bank of the Philippines against defendant Angelito Joseph
Maniego, as follows:cralawlibrary
A. Ordering defendant Angelito Joseph Maniego to pay his co-
defendant [L]and Bank of the Philippines his loan with a principal
of P1,000,000.00, plus interests, penalties and other charges thereon;
and
B. Ordering defendant Angelito Joseph Maniego to pay the costs of this
suit. ???ñr?bl?š ??r†??l l?? l?br?rÿ
SO ORDERED.9?r?l1
The RTC ruled that the sale between Poblete and Maniego was a
nullity. The RTC found that the agreed consideration was P900,000.00
and Maniego failed to pay the consideration. Furthermore, the
signatures of Poblete and her deceased husband were proven to be
forgeries. The RTC also ruled that Land Bank was not a mortgagee in
good faith because it failed to exercise the diligence required of
banking institutions. The RTC explained that had Land Bank exercised
due diligence, it would have known before approving the loan that the
sale between Poblete and Maniego had not been consummated.
Nevertheless, the RTC granted Land Banks cross-claim against
Maniego.
In an Order dated 17 March 2008, the RTC denied the Motion for
Reconsideration filed by Land Bank for want of merit. Thereafter, Land
Bank and Maniego separately challenged the RTCs Decision before the
CA.
The Ruling of the Court of Appeals
On 28 September 2010, the CA promulgated its Decision affirming in
toto the Decision of the RTC.10Both Land Bank and Maniego filed their
Motions for Reconsideration but the CA denied both motions on 19
April 2011.11?r?l1
In a Resolution dated 13 July 2011,12 the Second Division of this Court
denied the Petition for Review on Certiorari filed by Maniego. This
Resolution became final and executory on 19 January 2012.
On the other hand, Land Bank filed this petition.
The Issues
Land Bank seeks a reversal and raises the following issues for
resolution:cralawlibrary
1. THE COURT OF APPEALS (FORMER SPECIAL ELEVENTH DIVISION)
ERRED IN UPHOLDING THE FINDING OF THE TRIAL COURT
DECLARING TCT NO. T-20151 AS NULL AND VOID. THE COURT OF
APPEALS MISCONSTRUED AND MISAPPRECIATED THE EVIDENCE AND
THE LAW IN NOT FINDING TCT NO. T-20151 REGISTERED IN THE
NAME OF ANGELITO JOSEPH MANIEGO AS VALID.
2. THE COURT OF APPEALS (FORMER SPECIAL ELEVENTH DIVISION)
MISCONSTRUED THE EVIDENCE AND THE LAW IN NOT FINDING LAND
BANK A MORTGAGEE IN GOOD FAITH.
3. THE COURT OF APPEALS (FORMER SPECIAL ELEVENTH DIVISION)
MISCONSTRUED THE EVIDENCE AND THE LAW IN NOT FINDING THE
RESPONDENT AND ANGELITO JOSEPH MANIEGO AS IN PARI DELICTO.
4. THE COURT OF APPEALS (FORMER SPECIAL ELEVENTH DIVISION)
ERRED IN NOT APPLYING THE PRINCIPLE OF ESTOPPEL OR LACHES
ON RESPONDENT IN THAT THE PROXIMATE CAUSE OF HER LOSS WAS
HER NEGLIGENCE TO SAFEGUARD HER RIGHTS OVER THE SUBJECT
PROPERTY, THEREBY ENABLING ANGELITO JOSEPH MANIEGO TO
MORTGAGE THE SAME WITH LAND BANK.13?r?l1
The Ruling of the Court
We do not find merit in the petition.
A petition for review under Rule 45 of the Rules of Court specifically
provides that only questions of law may be raised, subject to
exceptional circumstances14 which are not present in this case. Hence,
factual findings of the trial court, especially if affirmed by the CA, are
binding on us.15 In this case, both the RTC and the CA found that the
signatures of Poblete and her deceased husband in the Deed dated 11
August 2000 were forged by Maniego. In addition, the evidence is
preponderant that Maniego did not pay the consideration for the sale.
Since the issue on the genuineness of the Deed dated 11 August 2000
is essentially a question of fact, we are not dutybound to analyze and
weigh the evidence again.16?r?l1
It is a well-entrenched rule, as aptly applied by the CA, that a forged
or fraudulent deed is a nullity and conveys no title.17 Moreover, where
the deed of sale states that the purchase price has been paid but in
fact has never been paid, the deed of sale is void ab initio for lack of
consideration.18 Since the Deed dated 11 August 2000 is void, the
corresponding TCT No. T-20151 issued pursuant to the same deed is
likewise void. In Yu Bun Guan v. Ong,19 the Court ruled that there was
no legal basis for the issuance of the certificate of title and the CA
correctly cancelled the same when the deed of absolute sale was
completely simulated, void and without effect. In Ereña v. Querrer-
Kauffman,20 the Court held that when the instrument presented for
registration is forged, even if accompanied by the owners duplicate
certificate of title, the registered owner does not thereby lose his title,
and neither does the mortgagee acquire any right or title to the
property. In such a case, the mortgagee under the forged instrument
is not a mortgagee protected by law.21?r?l1
The issue on the nullity of Maniegos title had already been foreclosed
when this Court denied Maniegos petition for review in the Resolution
dated 13 July 2011, which became final and executory on 19 January
2012.22 It is settled that a decision that has acquired finality becomes
immutable and unalterable and may no longer be modified in any
respect, even if the modification is meant to correct erroneous
conclusions of fact or law and whether it will be made by the court that
rendered it or by the highest court of the land.23 This is without
prejudice, however, to the right of Maniego to recover from Poblete
what he paid to Kapantay for the account of Poblete, otherwise there
will be unjust enrichment by Poblete.
Since TCT No. T-20151 has been declared void by final judgment, the
Real Estate Mortgage constituted over it is also void. In a real estate
mortgage contract, it is essential that the mortgagor be the absolute
owner of the property to be mortgaged; otherwise, the mortgage is
void.24?r?l1
Land Bank insists that it is a mortgagee in good faith since it verified
Maniegos title, did a credit investigation, and inspected Lot No. 29. The
issue of being a mortgagee in good faith is a factual matter, which
cannot be raised in this petition.25 However, to settle the issue, we
carefully examined the records to determine whether or not Land Bank
is a mortgagee in good faith.
There is indeed a situation where, despite the fact that the mortgagor
is not the owner of the mortgaged property, his title being fraudulent,
the mortgage contract and any foreclosure sale arising therefrom are
given effect by reason of public policy.26 This is the doctrine of "the
mortgagee in good faith" based on the rule that buyers or mortgagees
dealing with property covered by a Torrens Certificate of Title are not
required to go beyond what appears on the face of the
27
title. However, it has been consistently held that this rule does not
apply to banks, which are required to observe a higher standard of
diligence.28 A bank whose business is impressed with public interest is
expected to exercise more care and prudence in its dealings than a
private individual, even in cases involving registered lands.29 A bank
cannot assume that, simply because the title offered as security is on
its face free of any encumbrances or lien, it is relieved of the
responsibility of taking further steps to verify the title and inspect the
properties to be mortgaged.30?r?l1
Applying the same principles, we do not find Land Bank to be a
mortgagee in good faith.
Good faith, or the lack of it, is a question of intention.31 In ascertaining
intention, courts are necessarily controlled by the evidence as to the
conduct and outward acts by which alone the inward motive may, with
safety, be determined.32?r?l1
Based on the evidence, Land Bank processed Maniegos loan
application upon his presentation of OCT No. P-12026, which was still
under the name of Poblete. Land Bank even ignored the fact that
Kapantay previously used Pobletes title as collateral in its loan account
with Land Bank.33 In Bank of Commerce v. San Pablo, Jr.,34 we held
that when "the person applying for the loan is other than the
registered owner of the real property being mortgaged, [such fact]
should have already raised a red flag and which should have induced
the Bank x x x to make inquiries into and confirm x x x [the] authority
to mortgage x x x. A person who deliberately ignores a significant fact
that could create suspicion in an otherwise reasonable person is not an
innocent purchaser for value."???ñr?bl?š ??r†??l l?? l?br?rÿ
The records do not even show that Land Bank investigated and
inspected the property to ascertain its actual occupants. Land Bank
merely mentioned that it inspected Lot No. 29 to appraise the value of
the property. We take judicial notice of the standard practice of banks,
before approving a loan, to send representatives to the premises of
the land offered as collateral to investigate its real
owners. 35
In Prudential Bank v. Kim Hyeun Soon, 36
the Court held that
the bank failed to exercise due diligence although its representative
conducted an ocular inspection, because the representative
concentrated only on the appraisal of the property and failed to inquire
as to who were the then occupants of the property.
Land Bank claims that it conditioned the approval of the loan upon the
transfer of title to Maniego, but admits processing the loan based on
Maniegos assurances that title would soon be his.37 Thus, only one day
after Maniego obtained TCT No. T-20151 under his name, Land Bank
and Maniego executed a Credit Line Agreement and a Real Estate
Mortgage. Because of Land Banks haste in granting the loan, it
appears that Maniegos loan was already completely processed while
the collateral was still in the name of Poblete. This is also supported by
the testimony of Land Bank Customer Assistant Andresito
Osano.38?r?l1
Where the mortgagee acted with haste in granting the mortgage loan
and did not ascertain the ownership of the land being mortgaged, as
well as the authority of the supposed agent executing the mortgage, it
cannot be considered an innocent mortgagee.39?r?l1
Since Land Bank is not a mortgagee in good faith, it is not entitled to
protection. The injunction against the foreclosure proceeding in the
present case should be made permanent. Since Lot No. 29 has not
been transferred to a third person who is an innocent purchaser for
value, ownership of the lot remains with Poblete. This is without
prejudice to the right of either party to proceed against Maniego.
On the allegation that Poblete is in pari delicto with Maniego, we find
the principle inapplicable. The pari delicto rule provides that "when two
parties are equally at fault, the law leaves them as they are and denies
recovery by either one of them."40 We adopt the factual finding of the
RTC and the CA that only Maniego is at fault.
Finally, on the issues of estoppel and laches, such were not raised
before the trial court. I fence, we cannot rule upon the same. It is
settled that an issue which was neither alleged in the complaint nor
raised during the trial cannot be raised for the tirst time on appeal, as
such a recourse would be offensive to the basic rules of t}1ir play,
justice and due process, since the opposing party would be deprived of
the opp01iunity to introduce evidence rebutting such new issue.41?r?l1
WHEREFORE, we DENY the petition. We AFFIRM the 28 September
2010 Decision and the 19 April 2011 Resolution of the Court of Appeals
in CA-Ci.R. CV No. 91666. The injunction against the foreclosure
proceeding, issued by the Regional Trial Court of San Jose, Occidental
Mindoro, Branch 46, is made permanent. Costs against Land Bank.
SO ORDERED.
 EN BANC
[G.R. No. 94457. October 16, 1997.]
VICTORIA LEGARDA, Petitioner, v. THE HONORABLE COURT OF
APPEALS, NEW CATHAY HOUSE, INC., THE HONORABLE
REGIONAL TRIAL COURT OF QUEZON CITY, BRANCH
94, Respondents.
RESOLUTION
ROMERO, J.:
For our resolution is the motion for reconsideration of the March 18,
1991, decision of the Court’s First Division, filed by private respondent
New Cathay House, Inc. (Cathay). A brief narration of facts is in order.
The parties hereto entered into a lease agreement over a certain
Quezon City property owned by petitioner Victoria Legarda. For some
reason or another, she refused to sign the contract although
respondent lessee, Cathay, made a deposit and a down payment of
rentals, prompting the latter to file before the Regional Trial Court of
Quezon City, Branch 94 a complaint 1 against the former for specific
performance with preliminary injunction and damages. The court a quo
issued the injunction. In the meantime, Legarda’s counsel, noted
lawyer Dean Antonio Coronel, requested a 10-day extension of time to
file an answer which the court granted. Atty. Coronel, however, failed
to file an answer within the extended period. His client was eventually
declared in default, Cathay was allowed to present evidence ex-parte,
and on March 25, 1985, a judgment by default was reached by the
trial court ordering Legarda to execute the lease contract in favor of,
and to pay damages to, Cathay.
On April 9, 1985, a copy of said decision was served on Atty. Coronel
but he took no action until the judgment became final and executory.
A month later, the trial court issued a writ of execution and a public
auction was held where Cathay’s manager, Roberto V. Cabrera, Jr., as
highest bidder, was awarded the property for P376,500.00 in
satisfaction of the judgment debt. Consequently, a Certificate of Sale
was issued by the sheriff on June 27, 1985. Upon failure of Legarda to
redeem her property within the one-year redemption period, a Final
Deed of Sale was issued by the sheriff on July 8, 1986, which was
registered by Cabrera with the Register of Deeds three days later.
Hence, Legarda’s Transfer Certificate of Title (TCT) No. 270814 was
cancelled with the issuance of TCT No. 350892 in the name of Cabrera.
Despite the lapse of over a year since the judgment by default became
final and executory, Atty. Coronel made no move on behalf of his
client. He did not even inform her of all these developments. When
Legarda did learn of the adverse decision, "she nevertheless did not
lose faith in her counsel" 2 and prevailed upon him to seek appropriate
relief. Thus, on October 23, 1986, he filed a petition for annulment of
judgment with prayer for the issuance of a writ of preliminary
mandatory injunction before the Court of Appeals. 3chanrobles.com :
virtual lawlibrary
On November 29, 1989, the appellate court rendered a decision
affirming the March 25, 1985, decision of the trial court, dismissing the
petition for annulment of judgment, and holding Legarda bound by the
negligence of her counsel. It considered her allegation of fraud by
Cathay to be "improbable," and added that there was "pure and simple
negligence" on the part of petitioner’s counsel who failed to file an
answer and, later, a petition for relief from judgment by default. Upon
notice of the Court of Appeals decision, Atty. Coronel again neglected
to protect his client’s interest by failing to file a motion for
reconsideration or to appeal therefrom until said decision became final
on December 21, 1989.
Sometime in March 1990, Legarda learned of the adverse decision of
the Court of Appeals dated November 29, 1989, not from Atty. Coronel
but from his secretary. She then hired a new counsel for the purpose
of elevating her case to this Court. The new lawyer filed a petition
for certiorari praying for the annulment of the decision of the trial and
appellate courts and of the sheriff’s sale, alleging, among other things,
that Legarda lost in the courts below because her previous lawyer was
grossly negligent and inefficient, whose omissions cannot possibly bind
her because this amounted to a violation of her right to due process of
law. She, therefore, asked Cathay (not Cabrera) to reconvey the
subject property to her.
On March 18, 1991, a decision 4 was rendered in this case by Mr.
Justice Gancayco, ruling, inter alia, as follows: (a) granting the
petition; (b) nullifying the trial court’s decision dated March 25, 1985,
the Court of Appeals decision dated November 29, 1989, the Sheriff’s
Certificate of Sale dated June 27, 1985, of the property in question,
and the subsequent final deed of sale covering the same property; and
(c) ordering Cathay to reconvey said property to Legarda, and the
Register of Deeds to cancel the registration of said property in the
name of Cathay (not Cabrera) and to issue a new one in Legarda’s
name.
The Court then declared that Atty. Coronel committed, not just
ordinary or simple negligence, but reckless, inexcusable and gross
negligence, which deprived his client of her property without due
process of law. His acts, or the lack of it, should not be allowed to bind
Legarda who has been "consigned to penury" because "her lawyer
appeared to have abandoned her case not once but repeatedly." Thus,
the Court ruled against tolerating "such unjust enrichment" of Cathay
at Legarda’s expense, and noted that counsel’s "lack of devotion to
duty is so gross and palpable that this Court must come to the aid of
his distraught client."cralaw virtua1aw library
Aggrieved by this development, Cathay filed the instant motion for
reconsideration, alleging, inter alia, that reconveyance is not possible
because the subject property had already been sold by its owner,
Cabrera, even prior to the promulgation of said decision.
By virtue of the Gancayco decision, Cathay was duty bound to return
the subject property to Legarda. The impossibility of this directive is
immediately apparent, for two reasons: First, Cathay neither
possessed nor owned the property so it is in no position to reconvey
the same; second, even if it did, ownership over the property had
already been validly transferred to innocent third parties at the time of
promulgation of said judgment.
There is no question that the highest bidder at the public auction was
Cathay’s manager. It has not been shown nor even alleged, however,
that Roberto Cabrera has all the time been acting for or in behalf of
Cathay. For all intents and purposes, Cabrera was simply a vendee
whose payment effectively extinguished Legarda’s liability to Cathay as
the judgment creditor. No proof was ever presented which would
reveal that the sale occurred only on paper, with Cabrera acting as a
mere conduit for Cathay. What is clear from the records is that the
auction sale was conducted regularly, that a certificate of sale and,
subsequently, a final deed of sale were issued to Cabrera which
allowed him to consolidate his ownership over the subject property,
register it and obtain a title in his own name, and sell it to Nancy Saw,
an innocent purchaser for value, at a premium price. Nothing on
record would demonstrate that Cathay was the beneficiary of the sale
between Cabrera and Saw. Cabrera himself maintained that he was
"acting in his private (as distinct from his corporate) capacity" 5 when
he participated in the bidding.
Since the decision of the Court of Appeals gained finality on December
21, 1989, the subject property has been sold and ownership thereof
transferred no less than three times, viz.: (a) from Cabrera to Nancy
Saw on March 21, 1990, four months after the decision of the Court of
Appeals became final and executory and one year before the
promulgation of the March 18, 1991, decision under reconsideration;
(b) from Nancy Saw to Lily Tanlo Sy Chua on August 7, 1990, more
than one year before the Court issued a temporary restraining order in
connection with this case; and (c) from the spouses Victor and Lily Sy
Chua to Janet Chong Luminlun on April 3, 1992. With these transfers,
Cabrera’s TCT No. 350892 gave way to Saw’s TCT No. 31672, then to
Chua’s TCT No. 31673, and finally to Luminlun’s TCT No. 99143, all
issued by the Register of Deeds of Quezon City on April 3, 1990,
August 8, 1990, and November 24, 1993, respectively.
We do not have to belabor the fact that all the successors-in-interest
of Cabrera to the subject lot were transferees for value and in good
faith, having relied as they did on the clean titled of their
predecessors. The successive owners were each armed with their own
indefeasible titles which automatically brought them under the aegis of
the Torrens System. As the Court declared in Sandoval v. Court of
Appeals, 6" (i)t is 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 title. He is charged with notice only of such
burdens and claims as are annotated on the title." 7 In the case at bar,
it is not disputed that no notice of lis pendens was ever annotated on
any of the titles of the subsequent owners. And even if there were
such a notice, it would not have created a lien over the property
because the main office of a lien is to warn prospective buyers that the
property they intend to purchase is the subject of a pending litigation.
Therefore, since the property is already in the hands of Luminlun, an
innocent purchaser for value, it can no longer be returned to its
original owner by Cabrera, much less by Cathay itself.chanrobles
virtual lawlibrary
Another point to consider, though not raised as an issue in this case, is
the fact that Cabrera was impleaded as a party-respondent only on
August 12, 1991, after the promulgation of the Gancayco decision. 8
The dispositive portion itself ordered Cathay, instead of Cabrera, to
reconvey the property to Legarda. Cabrera was never a party to this
case, either as plaintiff-appellee below or as respondent in the present
action. Neither did he ever act as Cathay’s representative. As we held
in the recent case of National Power Corporation v. NLRC, Et Al., 9"
(j)urisdiction over a party is acquired by his voluntary appearance or
submission to the court or by the coercive process issued by the court
to him, generally by service of summons." 10 In other words, until
Cabrera was impleaded as party respondent and ordered to file a
comment in the August 12, 1991, resolution, the Court never obtained
jurisdiction over him, and to command his principal to reconvey a
piece of property which used to be HIS would not only be
inappropriate but would also constitute a real deprivation of one’s
property without due process of law.
Assuming arguendo that reconveyance is possible, that Cathay and
Cabrera are one and the same and that Cabrera’s payment redounded
to the benefit of his principal, reconveyance, under the facts and
evidence obtaining in this case, would still not address the issues
raised herein.
The application of the sale price to Legarda’s judgment debt
constituted a payment which extinguished her liability to Cathay as the
party in whose favor the obligation to pay damages was established.
11 It was a payment in the sense that Cathay had to resort to a court-
supervised auction sale in order to execute the judgment. 12 With the
fulfillment of the judgment debtor’s obligation, nothing else was
required to be done.
Under the Gancayco ruling, the order of reconveyance was premised
on the alleged gross negligence of Legarda’s counsel which should not
be allowed to bind her as she was deprived of her property "without
due process of law."cralaw virtua1aw library
It is, however, basic that as long as a party was given the opportunity
to defend her interests in due course, she cannot be said to have been
denied due process of law, for this opportunity to be heard is the very
essence of due process. The chronology of events shows that the case
took its regular course in the trial and appellate courts but Legarda’s
counsel failed to act as any ordinary counsel should have acted, his
negligence every step of the way amounting to "abandonment," in the
words of the Gancayco decision. Yet, it cannot be denied that the
proceedings which led to the filing of this case were not attended by
any irregularity. The judgment by default was valid, so was the
ensuing sale at public auction. If Cabrera was adjudged highest bidder
in said auction sale, it was not through any machination on his part. All
of his actuations that led to the final registration of the title in his
name were aboveboard, untainted by any irregularity.
The fact that Cabrera is an officer of Cathay does not make him a
purchaser in bad faith. His act in representing the company was never
questioned nor disputed by Legarda. And while it is true that he won in
the bidding, it is likewise true that said bidding was conducted by the
book. There is no call to be alarmed in case an official of the company
emerges as the winning bidder since in some cases, the judgment
creditor himself personally participates in the bidding.
There is no gainsaying that Legarda is the judgment debtor here. Her
property was sold at public auction to satisfy the judgment debt. She
cannot claim that she was illegally deprived of her property because
such deprivation was done in accordance with the rules on execution
of judgments. Whether the money used to pay for said property came
from the judgment creditor or its representative is not relevant. What
is important is that it was purchased for value. Cabrera parted with
real money at the auction. In his "Sheriff’s Certificate of Sale" dated
June 27, 1985, 13 Deputy Sheriff Angelito R. Mendoza certified, inter
alia, that the "highest bidder paid to the Deputy Sheriff the said
amount of P376,500.00, the sale price of the levied property." If this
does not constitute payment, what then is it? Had there been no real
purchase and payment below, the subject property would never have
been awarded to Cabrera and registered in his name, and the
judgment debt would never have been satisfied. Thus, to require
either Cathay or Cabrera to reconvey the property would be an
unlawful intrusion into the lawful exercise of the latter’s proprietary
rights over the land in question, an act which would constitute an
actual denial of property without due process of law.
It may be true that the subject lot could have fetched a higher price
during the public auction, as Legarda claims, but the records fail to
betray any hint of a bid higher than Cabrera’s which was bypassed in
his favor. Certainly, he could not help it if his bid of P376,500.00 was
the highest. Moreover, in spite of this allegedly low selling price,
Legarda still failed to redeem her property within the one-year
redemption period. She could not feign ignorance of said sale on
account of her counsel’s failure to so inform her, because such auction
sales comply with requirements of notice and publication under the
Rules of Court. In the absence of any clear and convincing proof that
such requisites were not followed, the presumption of regularity
stands. Legarda also maintains that she was in the United States
during the redemption period, but she admits that she left the
Philippines only on July 13, 1985, or sixteen days after the auction
sale of June 27, 1985. Finally, she admits that her mother Ligaya
represented her during her absence. 14 In short, she was not totally in
the dark as to the fate of her property and she could have exercised
her right of redemption if she chose to, but she did not.
Neither Cathay nor Cabrera should be made to suffer for the gross
negligence of Legarda’s counsel. If she may be said to be "innocent"
because she was ignorant of the acts of negligence of her counsel,
with more reason are respondents truly "innocent." As between two
parties who may lose due to the negligence or incompetence of the
counsel of one, the party who was responsible for making it happen
should suffer the consequences. This reflects the basis common law
maxim, so succinctly stated by Justice J.B.L. Reyes, that." . .
(B)etween two innocent parties, the one who made it possible for the
wrong to be done should be the one to bear the resulting loss." 15 In
this case, it was not respondents, but Legarda, who misjudged and
hired the services of the lawyer who practically abandoned her case
and who continued to retain him even after his proven apathy and
negligence.
The Gancayco decision makes much of the fact that Legarda is now
"consigned to penury" and, therefore, this Court "must come to the aid
of the distraught client." It must be remembered that this Court
renders decisions, not on the basis of emotions but on its sound
judgment, applying the relevant, appropriate law. Much as it may pity
Legarda, or any losing litigant for that matter, it cannot play the role
of a "knight in shining armor" coming to the aid of someone, who
through her weakness, ignorance or misjudgment may have been
bested in a legal joust which complied with all the rules of legal
proceedings.
In Vales v. Villa, 16 this Court warned against the danger of jumping
to the aid of a litigant who commits serious error of judgment resulting
in his own loss:jgc:chanrobles.com.ph
". . . Courts operate not because one person has been defeated or
overcome by another, but because he has been defeated or overcome
illegally. Men may do foolish things, make ridiculous contracts, use
miserable judgment, and lose money by them — indeed, all they have
in the world; but not for that alone can the law intervene and restore.
There must be, in addition, a violation of law, the commission of what
the law knows as an actionable wrong, before the courts are
authorized to lay hold of the situation and remedy it."cralaw virtua1aw
library
Respondents should not be penalized for Legarda’s mistake. If the
subject property was at all sold, it was only after the decisions of the
trial and appellate courts had gained finality. These twin judgments,
which were nullified by the Gancayco decision, should be respected
and allowed to stand by this Court for having become final and
executory.chanroblesvirtuallawlibrary
"A judgment may be broadly defined as the decision or sentence of the
law given by a court or other tribunal as the result of proceedings
instituted therein." 17 It is "a judicial act which settles the issues, fixes
the rights and liabilities of the parties, and determines the proceeding,
and it is regarded as the sentence of the law pronounced by the court
on the action or question before it." 18
In the case at bar, the trial court’s judgment was based on Cathay’s
evidence after Legarda was declared in default. Damages were duly
awarded to Cathay, not whimsically, but upon proof of its entitlement
thereto. The issue of whether the plaintiff (Cathay) deserved to
recover damages because of the defendant’s (Legarda’s) refusal to
honor their lease agreement was resolved. Consequently, the right of
Cathay to be vindicated for such breach and the liability incurred by
Legarda in the process were determined.
This judgment became final when she failed to avail of remedies
available to her, such as filing a motion for reconsideration or
appealing the case. At the time, the issues raised in the complaint had
already been determined and disposed of by the trial court. 19 This is
the stage of finality which judgments must at one point or another
reach. In our jurisdiction, a judgment becomes ipso facto final when
no appeal is perfected or the reglementary period to appeal therefrom
expires. "The necessity of giving finality to judgments that are not void
is self-evident. The interests of society impose it. The opposite view
might make litigations more unendurable than the wrongs (they are)
intended to redress. It would create doubt, real or imaginary, and
controversy would constantly arise as to what the judgment or order
was. 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
instituted was to put an end to controversies." 20 When judgments of
lower courts gain finality, "they, too, become inviolable, impervious to
modification. They may, then, no longer be reviewed, or in any way
modified directly or indirectly, by a higher court, not even by the
Supreme Court." 21 In other words, once a judgment becomes final,
the only errors that may be corrected are those which are clerical. 22
From the foregoing precedents, it is readily apparent that the real
issue that must be resolved on this motion for reconsideration is the
alleged illegality of the final judgments of the trial and appellate
courts.
Void judgments may be classified into two groups: those rendered by
a court without jurisdiction to do so and those obtained by fraud or
collusion. 23 This case must be tested in light of the guidelines
governing the latter class of judgments. "In this regard, an action to
annul a judgment on the ground of fraud will not lie unless the fraud is
extrinsic or collateral and facts upon which it is based (have) not been
controverted or resolved in the case where (the) judgment was
rendered." 24 Where is the fraud in the case at bar? Was Legarda
unlawfully barred from the proceedings below? Did her counsel sell her
out to the opponent?
It must be noted that, aside from the fact that no extrinsic fraud
attended the trial and resolution of this case, the jurisdiction of the
court a quo over the parties and the subject matter was never raised
as an issue by Legarda. Such being the case, the decision of the trial
court cannot be nullified. Errors of judgment, if any, can only be
reviewed on appeal, failing which the decision becomes final and
executory, "valid and binding upon the parties in the case and their
successors in interest."25cralaw:red
would have been dismissed outright for being dilatory and appearing
as an act of desperation on the part of a vanquished litigant. The
Gancayco ruling, unfortunately, ruled otherwise.
Fortunately, we now have an opportunity to rectify a grave error of the
past.
WHEREFORE, the Motion for Reconsideration of respondent New
Cathay House, Inc. is hereby GRANTED. Consequently, the decision
dated March 18, 1991, of the Court’s First Division in VACATED and
SET ASIDE. A new judgment is hereby entered DISMISSING the
instant petition for review and AFFIRMING the November 29, 1989,
decision of the Court of Appeals in CA- G.R. No. SP-10487. Costs
against petitioner Victoria Legarda.
SO ORDERED.
Regalado, Davide, Jr., Melo, Mendoza, Francisco, Panganiban and
Torres, Jr., JJ., concur.

At this juncture, it must be pointed out that while Legarda went to the Narvasa, C.J., I dissent reserving the filing of a separate opinion.
Court of Appeals claiming precisely that the trial court’s decision was
fraudulently obtained, she grounded her petition before the Supreme
Court upon her estranged counsel’s negligence. This could only imply
that at the time she filed her petition for annulment of judgment, she
entertained no notion that Atty. Coronel was being remiss in his
duties. It was only after the appellate court’s decision had become
final and executory, a writ of execution issued, the property auctioned
off then sold to an innocent purchase for value, that she began to
protest the alleged negligence of her attorney. In most cases, this

THIRD DIVISION
G.R. Nos. 185857-58, June 29, 2016
TRIFONIA D. GABUTAN, DECEASED, HEREIN REPRESENTED BY
HER HEIRS, NAMELY: ERLINDA LLAMES, ELISA ASOK,
PRIMITIVO GABUTAN, VALENTINA YANE; BUNA D. ACTUB,
FELISIA TROCIO, CRISANTA D. UBAUB, AND TIRSO
DALONDONAN, DECEASED, HEREIN REPRESENTED BY HIS
HEIRS, NAMELY: MADELYN D. REPOSAR AND JERRY
DALONDONAN, MARY JANE GILIG, ALLAN UBAUB, AND
SPOUSES NICOLAS & EVELYN DAILO, Petitioners, v. DANTE D.
NACALABAN, HELEN N. MAANDIG, SUSAN N. SIAO, AND
CAGAYAN CAPITOL COLLEGE, Respondents.
G.R. NOS. 194314-15
DANTE D. NACALABAN, HELEN N. MAANDIG, AND SUSAN N.
SIAO, AS HEIRS OF BALDOMERA D. VDA. DE
NACALABAN, Petitioners, v. TRIFONIA D. GABUTAN, BUNA D.
ACTUB, FELISIA D. TROCIO, CRISANTA D. UBAUB, AND TIRSO
DALONDONAN, DECEASED, HEREIN REPRESENTED BY HIS
HEIRS, NAMELY: MADELYN D. REPOSAR AND JERRY
DALONDONAN, MARY JANE GILIG, ALLAN UBAUB, AND
SPOUSES NICOLAS & EVELYN DAILO, CAGAYAN CAPITOL
COLLEGE, REPRESENTED BY ITS PRESIDENT, ATTY. CASIMIRO
B. SUAREZ, JR., PRIVATE Respondent;
HON. LEONCIA R. DIMAGIBA (ASSOCIATE JUSTICE), HON. PAUL
L. HERNANDO (ASSOCIATE JUSTICE), HON. NINA G. ANTONIO-
VALENZUELA (ASSOCIATE JUSTICE), HON. EDGARDO T. LLOREN
(ASSOCIATE JUSTICE), HON. MICHAEL P. ELBINIAS
(ASSOCIATE JUSTICE), AND HON. JANE AURORA C. LANTION
(ASSOCIATE JUSTICE, ACTING CHAIRMAN), COURT OF
APPEALS, CAGAYAN DE ORO CITY (FORMER SPECIAL TWENTY-
SECOND DIVISION), PUBLICRespondents.
DECISION
JARDELEZA, J.:
Before us are consolidated petitions questioning the Court of Appeals'
(CA) Decision1 dated December 11, 2008 and Resolution2 dated
August 17, 2010 in CA-G.R. CV No. 68960-MIN and CA-G.R. SP No.
53598-MIN.3 In G.R. Nos. 185857-58, the heirs of Trifonia D. Gabutan
and Tirso Dalondonan, Buna D. Actub, Felisia Trocio and Crisanta D.
Ubaub (Gabutan, et al.) filed a partial appeal by way of a petition for
review on certiorari,4 seeking to reverse the portion of the CA Decision
declaring Cagayan Capital College (the College) as a buyer in good
faith. The other petition, G.R. Nos. 194314-15, is one
for certiorari5 filed by Dante D. Nacalaban, Helen N. Maandig, and
Susan N. Siao as heirs of Baldomera D. Vda. De Nacalaban
(Nacalaban, et al.). It seeks to annul the CA Decision and Resolution
which sustained the action for reconveyance filed by Gabutan, et al.
The Antecedents
On January 25, 1957, Godofredo Nacalaban (Godofredo) purchased an
800-square meter parcel of prime land (property) in Poblacion,
Cagayan de Oro City from Petra, Fortunata, Francisco and Dolores, all
surnamed Daamo.6 Pursuant to the sale, Transfer Certificate of Title
7
(TCT) No. T-2259 covering the property was issued in the name of
8
Godofredo. He thereafter built a house on it. chanrobleslaw
9
Godofredo died on January 7, 1974. ITe was survived by his wife,
Baldomera, and their children, Dante, Helen, and Susan. On March 19,
1979, Baldomera issued a Certification10 in favor of her mother,
Melecia. It provided, in effect, that Baldomera was allowing her mother
to build and occupy a house on the portion of the
property.11 Accordingly, the house was declared for taxation purposes.
The tax declaration12 presented in evidence showed that Melecia
owned the building on the land owned by Godofredo.13chanrobleslaw
Baldomera died on September 11, 1994.14 On July 3, 1996, her
children executed an Extrajudicial Settlement of Estate of Deceased
15
Person with Sale (Extrajudicial Settlement with Sale) where they
adjudicated unto themselves the property and sold it to the College.
On August 22, 1996, TCT No. T-2259 was cancelled and TCT No. T-
16
111846 covering the property was issued in the name of the
17
College. chanrobleslaw
Melecia died on April 20, 199718 and was survived by her children,
Trifonia, Buna, Felisia, Crisanta, and Tirso.
In a letter19 dated May 5, 1997, the College demanded Trifonia D.
Gabutan, Mary Jane Gilig, Allan Ubaub, and Evelyn Dailo, the heirs of
Melecia who were occupying the house on the property, to vacate the
20
premises. chanrobleslaw
On July 7, 1997, Gabutan, et al. filed a Complaint for Reconveyance of
Real Property, Declaration of Nullity of Contracts, Partition and
Damages with Writ of Preliminary Attachment and Injunction21 against
Nacalaban, et al. and the College. They alleged that: (1) Melecia
bought the property using her own money but Godofredo had the
Deed of Absolute Sale executed in his name instead of his mother-in-
law;22 (2) Godofredo and Baldomera were only trustees of the property
in favor of the real owner and beneficiary, Melecia;23 (3) they only
knew about the Extrajudicial Settlement with Sale upon verification
with the Registry of Deeds;24 and (4) the College was a buyer in bad
faith, being aware they were co-owners of the
property.25cralawredchanrobleslaw
In its Answer with Affirmative Defenses,26 the College claimed that it is
a buyer in good faith and for value, having "made exhaustive
investigations and verifications from all reliable sources" that Melecia
and her heirs were staying in the property by mere tolerance.27 It
alleged that: (1) in the tax declaration28 of the residential house,
Melecia admitted that the lot owner is Godofredo;29 (2) the occupancy
permit of Melecia was issued only after Godofredo issued a
certification30 to the effect that Melecia was allowed to occupy a
portion of the property;31 and (3) the Extrajudicial Settlement with
Sale was published in three consecutive issues of Mindanao Post, a
newspaper of general circulation.32chanrobleslaw
In their Answer with Counterclaim,33 Nacalaban, et al. denied the
allegations of Gabutan, et al. They claimed to have acquired the
property by intestate succession from their parents, who in their
lifetime, exercised unequivocal and absolute ownership over the
property.34 Nacalaban, et al. also set up the defenses of laches and
prescription, and asserted that the action for reconveyance was
improper because the property had already been sold to an innocent
35
purchaser for value. chanrobleslaw
On September 10, 1997, the College filed a separate Complaint for
Unlawful Detainer and Damages36with the Municipal Trial Court in
Cities (MTCC) against Trifonia, Mary Jane, Allan, Evelyn and Nicolas
Dailo (Heirs of Melecia). In their Answer with Affirmative and/or
Negative Defenses with Compulsory Counterclaim,37 the Heirs of
Melecia claimed that they own and possess the property in co-
ownership with Nacalaban, et al. and Gabutan, et al. because it was
38
purchased by Melecia, their common predecessor. They also claimed
that the house in which they reside was constructed at her
expense.39The College had prior knowledge of this co-ownership, and
hence, was a purchaser in bad faith.40 The Heirs of Melecia also raised
the defense of forum-shopping in view of the pendency of the action
41
for reconveyance. They then concluded that in view of the issues and
the value of the property, as well, the MTCC had no jurisdiction over
42
the case. chanrobleslaw
The MTCC found it had jurisdiction to hear the case and ruled in favor
of the College:43chanrobleslaw
WHEREFORE, JUDGMENT is hereby rendered ordering each of the
defendants to:
chanRoblesvirtualLawlibrarya.) Immediately vacate the property of the
plaintiff;
b.) Pay the plaintiff the monthly use compensation for the continued
use of the property at the rate of P500.00 per month from MAY 5,
1997 until the property is actually vacated;
c.) Pay the plaintiff Attorney's fees amounting to P5,000.00 per
defendant;
d.) Pay for litigation expenses at the rate of P1,000.00 per defendant.
SO ORDERED.44chanroblesvirtuallawlibrary
On appeal, the Regional Trial Court (RTC) affirmed the MTCC's
Decision46 in all respects, except that the Heirs of Melecia were given
30 days from notice to vacate the property.47 They filed a motion for
reconsideration, but it was denied.49 Thus, the Heirs of Melecia filed a
petition for review50 before the CA, docketed as CA-G.R. SP No.
53598.51chanrobleslaw
Meanwhile, in the reconveyance case, the RTC rendered a Decision52 in
favor of Gabutan, et al. The RTC found the testimonies of their
witnesses credible, in that the money of Melecia was used in buying
the property but the name of Godofredo was used when the title was
obtained because Godofredo lived in Cagayan de Oro City while
Melecia lived in Bornay, Gitagum, Misamis Oriental.53 Thus, the RTC
held that a trust was established by operation of law pursuant to
Article 1448 of the Civil Code.54 The dispositive portion of the RTC's
Decision reads:
chanRoblesvirtualLawlibrary
WHEREFORE, judgment is hereby rendered, and this Court hereby:
1. Declares that the Spouses Godofredo and Baldomera
Nacalaban held the land covered by Transfer Certificate of
Title No. T-2259 issued in the name of Godofredo Nacalaban
married to Baldomera Dalondonan issued on January 13, 1959
in trust for Melecia Vda. de Dalondonan with the Spouses as
 the trustees and Melecia Vda. de Dalondonan as the cestui
que trust;
2. Declares that upon the death of Melecia Vda. de Dalondonan
on August 20, 1997, the ownership and beneficial interest of
the foregoing Land passed to the plaintiffs and individual
defendants by operation of law as legal heirs of Melecia Vda.
de Dalondonan;
3. Nullifies the Extrajudicial Settlement of Estate of Deceased
Person with Sale executed by the individual defendants on
July 30, 1996 and known as Doc. No. 326; Page No. 67; Book
No. XX; Series of 1996 in the Notarial Register of Notary
Public Victoriano M. Jacot with respect to the Extrajudicial
settlement by the individual defendants of the land referred to
above;
4. Declares that defendant Cagayan Capitol College was a buyer
in good faith and for value of the land referred to above, and,
accordingly, declares that said defendant now owns the land;
5. Orders defendant Cagayan Capitol College to inform this Court
in writing within thirty (30) days from receipt of this decision
the amount of the purchase price of the land referred to above
bought by it from the individual defendants the amount of
which should approximate the prevailing market value of the
land at the time of the purchase;
6. Orders the individual defendants namely, Dante D. Nacalaban,
Helen N. Maandig, and Susan N. Siao, jointly and severally, to
deliver and turn over to the plaintiffs, within thirty (30) days
from receipt of this decision, plaintiffs' shares of the proceeds
of the sale of the land referred to above the amount of which
is equivalent to live-sixth (5/6) of said proceeds with the
remaining one-sixth (1/6) to be retained by the individual
defendants as their share by virtue of their being the legal
heirs of Baldomera D. Nacalaban;
SO ORDERED.55chanroblesvirtuallawlibrary
Both parties filed separate appeals from this Decision before the
CA.57 In a Resolution58 dated October 7, 2004, the CA consolidated
both appeals.
The C A rendered its Decision59 on December 11, 2008 dismissing the
consolidated appeals and affirming in toto the RTC Decisions in the
unlawful detainer case and the action for reconveyance. The CA held
that: (1) the defense of co-ownership based on an implied trust by a
defendant in an unlawful detainer case shall not divest the MTCC of
jurisdiction over the case;60 (2) the dead man's statute does not apply
because Gabutan, et al.'s counsel did not interpose any objection when
the testimony of Crisanta Ubaub was offered and Gabutan, et al.'s
counsel even examined her;61 (3) Nacalaban, et al.'s claim that
Gabutan, et al.'s witnesses are not competent to testify on matters
which took place before the death of Godofredo and Melecia is without
merit because Gabutan, et al. have not specified these witnesses and
such hearsay evidence alluded to;62 (4) the parole evidence rule does
not apply because Melecia and Nacalaban, et al. were not parties to
the Deed of Conditional Sale;63 (5) the action for reconveyance has not
yet prescribed because Gabutan, et al. are in possession of the
property;64 and (6) the College is a buyer in good faith.65chanrobleslaw
 the same parties, we issued a Resolution77 dated December 13, 2010
Nacalaban, et al. filed their motion for reconsideration of the CA consolidating them.
Decision, but it was denied in a Resolution66 dated August 17, 2010.
Hence, they filed the present petition for certiorari67 under Rule 65, The Issues

where they allege that: (1) the action for reconveyance already
expired;68 (2) for an action for reconveyance to prosper, the property
should not have passed into the hands of another who bought the The issues for resolution are:

property in good faith and for value;69 and (3) the title of Godofredo
under TCT No. T-2259 which was issued on January 13, 1959 could chanRoblesvirtualLawlibrary

not be attacked collaterally.70chanrobleslaw

1. Whether the petition for certiorari of Nacalaban, et al. shall
prosper;
On the other hand, Gabutan, et al. filed the present petition for review
2. Whether the action for reconveyance was proper; and
on certiorari71 under Rule 45, seeking a partial appeal of the CA
3. Whether the College is a buyer in good faith.
Decision. In their petition, Gabutan, et al. allege that the College is not
a buyer in good faith because it did not buy the property from the
registered owner.72 Since Godofredo was the registered owner of the
Our Ruling
property and not Nacalaban, et al., the College should have exercised
a higher degree of prudence in establishing their capacity to sell
it.73 Further, despite knowing that other persons possessed the
I. The petition for certiorari of
property, the College did not inquire with Gabutan, et al. the nature of
Nacalaban, et al. is a wrong
their stay on the property.74 Under Section 1, paragraph 2, Rule 74 of
remedy
the Rules of Court, the publication of the Extrajudicial Settlement with
Sale was also without prejudice to claims of other persons who had no
Pursuant to Section 1, Rule 45 of the Rules of Court,78 the proper
notice or participation thereof.75 Finally, Gabutan, et al. argue that
remedy to obtain a reversal of judgment on the merits, final order or
they cannot be ejected from the property because there is no evidence
resolution is an appeal. The Resolution dated August 17, 2010 of the
to show that their stay was by mere tolerance, and that Melecia was a
CA, which affirmed its Decision dated December 11, 2008, was a final
builder in good faith.76chanrobleslaw
resolution that disposed of the appeal by Nacalaban, et al. and left
nothing more to be done by the CA in respect to the said case. Thus,
Considering that the petitions assail the same CA Decision and involve
Nacalaban, et al. should have filed an appeal in the form of a petition
for review on certiorari and not a petition for certiorari under Rule 65,
which is a special civil action.
Rule 65 is a limited form of review and is a remedy of last recourse.
This extraordinary action lies only where there is no appeal nor plain,
speedy and adequate remedy in the ordinary course of
law.79 InMalayang Manggagawa ng Stayfast Phils., Inc. v. National
80
Labor Relations Comission, we held that appeal would still be the
proper remedy from a judgment on the merits, final order or resolution
even if the error ascribed to the court rendering the judgment is its
lack of jurisdiction over the subject matter, or the exercise of power in
excess thereof, or grave abuse of discretion in the findings of fact or of
law set out in the decision, order or resolution. The existence and
availability of the right of appeal prohibits the resort
to certiorari because one of the requirements for the latter remedy is
that there should be no appeal. 81
We have always declared that a
petition for certiorari is not a substitute for an appeal where the latter
remedy is available but was lost through fault or
negligence.82chanrobleslaw
Here, Nacalaban, et al. received the assailed Resolution dated August
17, 2010 on September 7, 2010.83 Under the Rules of Court, they had
15 days or until September 22, 2010 to file an appeal before us.
Nacalaban, et al. allowed this period to lapse without doing so and,
instead, filed a petition for certiorari on November 5, 2010.84 Being the
wrong remedy, the petition of Nacalaban, et al. is, therefore,
dismissible. Although there are exceptions 85
to this general rule, none
applies in this case.
In spite of the consolidation we have ordered, we cannot treat the
petition of Nacalaban, et al. as one under Rule 45. We have the
discretion to treat a Rule 65 petition for certiorari as a Rule 45 petition
for review on certiorari if (1) the petition is filed within the
reglementary period for filing a petition for review; (2) when errors of
judgment are averred; and (3) when there is sufficient reason to
justify the relaxation of the rules.86 The first and third requisites are
absent in this case. To reiterate, the petition was filed beyond the 15-
day reglementary period of filing a petition for review on certiorari. As
will be discussed, we also find no compelling reason to relax the rules.
II. The action for reconveyance
filed by Gabutan, et al.
is proper
a. An implied resulting trust was
created between Melecia and
Godofredo
We stress at the outset that the question of existence of an implied
trust is factual, hence, ordinarily outside the purview of Rule 45.87 The
resolution of factual issues is the function of the lower courts whose
findings, when aptly supported by evidence, bind us. This is especially
true when the CA affirms the lower court's findings, as in this case.
While we, under established exceptional circumstances, had deviated
from this rule, we do not find this case to be under any of the
exceptions.88 Even if we were to disregard these established doctrinal
rules, we would still affirm the assailed CA rulings.
Article 1448 of the Civil Code provides in part that there is an implied
trust when property is sold, and the legal estate is granted to one
party but the price is paid by another for the purpose of having the
beneficial interest of the property. The former is the trustee, while the
latter is the beneficiary. The trust created here, which is also referred
89
to as a purchase money resulting trust, occurs when there is (1) an
actual payment of money, property or services, or an equivalent,
constituting valuable consideration; (2) and such consideration must
90
be furnished by the alleged beneficiary of a resulting trust. These two
elements are present here.
Gabutan, et al., through the testimonies of Felisia, Crisanta, and
Trifonia, established that Melecia's money was used in buying the
property, but its title was placed in Godofredo's name. She purchased
the property because Felisia wanted to build a pharmacy on it.91 On
one occasion in Melecia's house, and when the entire family was
present, Melecia gave Godofredo the money to purchase the
92
property. Melecia entrusted the money to Godofredo because he was
in Cagayan de Oro, and per Melecia's instruction, the deed of sale
covering the property was placed in his name.93 It was allegedly her
practice to buy properties and place them in her children's name, but it
was understood that she and her children co-own the
94
properties. chanrobleslaw
Melecia built a residential building on the property, where her daughter
95
Crisanta and some of her grandchildren resided. Godofredo also
thereafter built a house on the property. Twice, he also mortgaged the
property to secure loans. Melecia allowed him to do so because she
96
trusted him. After Godofredo's death, and when Baldomera fell ill,
there were family discussions to transfer the title in Melecia's name so
Melecia's children can divide it together with the rest of Melecia's
properties. The plans, however, always fell through.97chanrobleslaw
Both the RTC and CA found credence on these pieces of testimonial
evidence that an implied resulting trust exists. Reliance on these
testimonies will not violate the parol evidence rule, as Nacalaban, et
al. once raised. In Tong v. Go Tiat Kun,98 we ruled that since an
implied trust is neither dependent upon an express agreement nor
required to be evidenced by writing, Article 1457 of our Civil Code
authorizes the admission of parol evidence to prove their existence.
What is crucial is the intention to create a trust.99We cautioned,
however, that the parol evidence that is required to establish the
existence of an implied trust necessarily has to be trustworthy and it
cannot rest on loose, equivocal or indefinite declarations.100 The
testimonies of Felisia, Crisanta, and Trifonia satisfy these
requirements. They are consistent and agree in all material points in
reference to the circumstances behind the arrangement between
Melecia and Godofredo. We agree with the RTC when it said that this
arrangement among family members is not unusual, especially in the
1950s.101chanrobleslaw
Nacalaban, et al., on the other hand, denied the arrangement between
Melecia and Godofredo, and maintained that it was really the latter
who purchased the property from its original owners, as evidenced by
their possession of the Deed of Conditional Sale and the title being in
Godofredo's name.102 It is telling, however, that Nacalaban, et al.
failed to provide the details of the sale, specifically with regard to how
Godofredo could have been able to afford the purchase price himself,
which would have directly refuted the allegation that Melecia's money
was used in the purchase. As the RTC aptly observed, if Godofredo
really bought the property with his own money, it was surprising that
Baldomera did not transfer the title of the property to her name when
Godofredo died in 1974. Baldomera did not do so until her death in
1994 despite being pressed by her siblings to partition the property.
The RTC correctly deduced that this only meant that Baldomera
103
acknowledged that the property belongs to Melecia. chanrobleslaw
Having established the creation of an implied resulting trust, the action
for reconveyance filed by Gabutan, et al., the heirs of Melecia in whose
benefit the trust was created, is proper. An action for reconveyance is
a legal and equitable remedy granted to the rightful landowner, whose
land was wrongfully or erroneously registered in the name of another,
to compel the registered owner to transfer or reconvey the land to
104
him. It will not amount to a collateral attack on the title, contrary to
the allegation of Nacalaban, et al.105 We explained in Hortiznela v.
Tagufa:106chanrobleslaw
x x x As a matter of fact, an action for reconveyance is a recognized
remedy, an action in personam, available to a person whose property
has been wrongfully registered under the Torrens system in another's
name. In an action for reconveyance, the decree is not sought to be
set aside. It does not seek to set aside the decree but, respecting it as
incontrovertible and no longer open to review, seeks to transfer or
reconvey the land from the registered owner to the rightful owner.
Reconveyance is always available as long as the property has not
passed to an innocent third person for value.
There is no quibble that a certificate of title, like in the case at bench,
can only be questioned through a direct proceeding. The MCTC and the
CA, however, failed to take into account that in a complaint for
reconveyance, the decree of registration is respected as
incontrovertible and is not being questioned. What is being sought is
the transfer of the property wrongfully or erroneously registered in
another's name to its rightful owner or to the one with a better right.
If the registration of the land is fraudulent, the person in whose name
the land is registered holds it as a mere trustee, and the real owner is
entitled to file an action for reconveyance of the
property.107chanroblesvirtuallawlibrary
The fact that the property was already titled in Godofredo's name, and
later transferred to the College, is not a hindrance to an action for
reconveyance based on an implied trust. The title did not operate to
vest ownership upon the property in favor of the College. As held
in Naval v. Court of Appeals:108chanrobleslaw
xxx Registration of a piece of land under the Torrens System does not
create or vest title, because it 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. It cannot be used to protect a
usurper from the true owner; nor can it be used as a shield for the
commission of fraud; neither does it permit one to enrich himself at
the expense of others. 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.109
Moreover, the body of the Complaint filed by Gabutan, et al. shows
that it is not only for the reconveyance of the property but also for the
annulment of TCT No. T-111846 issued in the name of the
College.110 Gabutan, et al. questioned the validity of the sale to the
College and claimed co-ownership over the property. Thus, we can rule
on the validity of TCT No. T-111846 since the Complaint is a direct
attack on the title of the College.
b. The action for reconveyance is imprescriptible
because the plaintiffs are in possession of
the property
An action for reconveyance based on an implied or a constructive trust
prescribes 10 years from the alleged fraudulent registration or date of
issuance of the certificate of title over the property. However, an
action for reconveyance based on implied or constructive trust is
imprescriptible if the plaintiff or the person enforcing the trust is in
possession of the property. In effect, the action for reconveyance is an
action to quiet the property title, which does not prescribe.111 The
reason is that the one who is in actual possession of the land claiming
to be its owner may wait until his possession is disturbed or his title is
attacked before taking steps to vindicate his right. 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.112chanrobleslaw
The fact of actual possession of Gabutan, et al. of the property, during
the lifetime of Melecia and even after her death, is an undisputed and
established fact. The College has even filed an ejectment case against
the Heirs of Melecia for this reason.113 Thus, their complaint for
reconveyance is imprescriptible. It follows, with more reason, that
Gabutan, et al. cannot be held guilty of laches as the said doctrine,
which is one in equity, cannot be set up to resist the enforcement of
an imprescriptible legal right.114chanrobleslaw
III.The property shall be reconveyed to the estate of Melecia
The Extrajudicial Settlement with Sale executed
between Nacalaban, et al. and the College is void
Having established the creation of an implied resulting trust between
Melecia and Godofredo, the law thereby creates the obligation of the
trustee to reconvey the property and its title in favor of the true
owner.115 The true owner, Melecia, died in 1997 and was succeeded by
her children and grandchildren. The property, therefore, must be
reconveyed to her estate.
The execution of the Extrajudicial Settlement with Sale between
Godofredo's heirs and the College will not defeat the legal obligation to
reconvey the property because at the time of its execution in 1996,
Melecia was still alive. Hence, Nacalaban, et al. did not have the right
or authority to sell the property. 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.116 Nacalaban, et al. cannot find refuge in their argument that
the property was registered in their father's name and that after his
death, his rights passed to them as his legal heirs. To repeat, title to
property does not vest ownership but is a mere proof that such
property has been registered.117chanrobleslaw
The College is a buyer in bad faith
Despite the finding that the property was owned by Melecia and upon
her death, by her heirs, the lower courts still sustained the ownership
of the College of the property on the ground that it is an innocent
purchaser for value.118 The lower courts' findings are grounded on the
following: (i) Gabutan, et al.'s claim was never annotated on
Godofredo's title; (ii) the Extrajudicial Settlement with Sale was duly
published and the College was able to effect the transfer of the title in
its name; (iii) Baldomera issued a certification in favor of Melecia
allowing her to occupy a portion of the lot; and (iv) the tax declaration
showed that Melecia owned only the building on the land owned by
119
Godofredo. chanrobleslaw
The RTC reiterated the rule that the buyer of a land registered under
the Torrens System may rely upon the face of the certificate of title
and does not have to look beyond it.120 The CA, on the other hand,
held that when taken together, these facts would reasonably constitute
enough reason for the College or any buyer to conclude that the
property is free from any adverse claim, thereby making any further
investigation unnecessary. Absent any showing that the College knew
of the actual arrangement between Godofredo and Melecia, it must be
121
deemed a buyer in good faith. chanrobleslaw
Gabutan, et al. alleged that the lower courts erred in ruling that the
College is a buyer in good faith, raising the following: (1)
Nacalaban, et al. are not the registered owners of the property;
122
Godofredo is the registered owner who died on January 7, 1974;
not being the registered owners, the College, as buyer, 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
123
transferor, or in his capacity to transfer the property; and (3) the
College knew that other persons possessed the property so it should
have first established the capacity of the Nacalaban children to sell the
124
property. chanrobleslaw
Whether one is a buyer in good faith and whether due diligence and
prudence were exercised are questions of fact.125 As we have already
mentioned, only questions of law may be raised in a petition for review
on certiorari under Rule 45 of the Rules of Court. We see an exception,
however, to this general rule relative to the finding that the College is
a buyer in good faith. We hold that the RTC's finding that the College
is a buyer in good faith, which finding was upheld by the CA, was
based on an obvious misapprehension of facts and was clearly not
supported by law and jurisprudence.
In Bautista v. Silva,126 we reiterated the requisites for one to be
considered a purchaser in good faith:
chanRoblesvirtualLawlibrary
A buyer for value 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 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 persons in the property. He buys the property with the welt-
founded belief that the person from whom he receives the thing had
title to the property and capacity to convey it.
(2)
To prove good faith, a buyer of registered and titled land need only
show that he relied on the face of the title to the property. He need
not prove that he made further inquiry for he is not obliged to explore
beyond the four corners of the title. Such degree of proof of good
faith, however, is sufficient only when the following
conditions concur: first, the seller is the registered owner of
the land; second, the latter is in possession thereof; and third,
at the time of the sale, the buyer was not aware of any claim or
interest of some other person in the property, or of any defect
or restriction in the title of the seller or in his capacity to
convey title to the property.
Absent one or two of the foregoing conditions, then the law itself puts
the buyer on notice and obliges the latter to exercise a higher degree
of diligence by scrutinizing the certificate of title and examining all
factual circumstances in order to determine the seller's title and
capacity to transfer any interest in the property. Under such
circumstance, it is no longer sufficient for said buyer to merely show
that he relied on the face of the title; he must now also show that he
exercised reasonable precaution by inquiring beyond the title. Failure
to exercise such degree of precaution makes him a buyer in bad
127
faith. (Emphasis supplied.)
Thus, the College, which has the burden to prove the status of being a
purchaser in good faith, is required to prove the concurrence of the
above conditions. This onus probandi cannot be discharged by mere
invocation of the legal presumption of good faith.128 We find that the
College failed to discharge this burden.
Firstly, as correctly pointed out by Gabutan, et al., Nacalaban, et al.
are not the registered owners of the property, but Godofredo.
129
In Bautista v. Court of Appeals, we held:
chanRoblesvirtualLawlibrary
However, it is important to note that petitioners did not buy the land
from the registered owner, Dionisio Santiago. They bought it from his
heirs, Maria dcla Cruz and Jose Santiago.
Where a purchaser buys from one who is not the registered owner
himself, the law requires a higher degree of prudence even if the land
object of the transaction is registered. 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.130
Secondly, the College was aware that aside from Nacalaban, et al., the
Heirs of Melecia, were also in possession of the property. The College
cited the tax declaration which bore an annotation that Melecia owned
a residential building and Godofredo owned the lot.131 Also, apart from
filing an ejectment case against the Heirs of Melecia, the College
retained part of the purchase price for the demolition of Melecia's
building as well.132chanrobleslaw
In Occeña v. Esponilla,133 we held that petitioner-spouses were not
purchasers in good faith when they merely relied on the representation
of the seller regarding the nature of possession of the occupants of the
land:
chanRoblesvirtualLawlibrary
In the case at bar, we find that petitioner-spouses failed to prove good
faith in their purchase and registration of the land, x x x At the trial,
Tomas Occena admitted that he found houses built on the land during
its ocular inspection prior to his purchase. He relied on the
representation of vendor Arnold that these houses were owned
by squatters and that he was merely tolerating their presence
on the land. Tomas should have verified from the occupants of
the land the nature and authority of their possession instead of
merely relying on the representation of the vendor that they
were squatters, having seen for himself that the land was
occupied by persons other than the vendor who was not in
134
possession of the land at that time, x x x (Emphasis supplied.)
Although the College in its Answer alleged that it made an exhaustive
investigation and verification from all reliable sources and found that
135
the possession of Melecia and her heirs was merely tolerated,
failed to specify who or what these sources were. There is no evidence
that the College did inquire from Melecia or her heirs themselves, who
were occupying the property, the nature and authority of their
possession. It is not far-fetched to conclude, therefore, that the
College merely relied on the representations of the sellers and the
documents they presented. In this regard, the College is not a buyer in
good faith.
The "honesty of intention" which constitutes good faith implies
a freedom from knowledge of circumstances which ought to put
136
a person on inquiry. If the land purchased is in the possession of
a person other than the vendor, the purchaser must be wary and must
investigate the rights of the actual possessor.137 Without such inquiry,
the purchaser cannot be said to be in good faith and cannot have any
right over the property.138chanrobleslaw
We are aware that in the ejectment case, the MTCC and RTC ruled in
favor of the College. We emphasize, though, that the ruling on the
College's better right of possession was without prejudice to the
eventual outcome of the reconveyance case where the issue of
ownership was fully threshed out. We have held that the sole issue for
resolution in an unlawful detainer case is physical or material
possession of the property involved, independent of any claim of
ownership by any of the parties. When the defendant, however, raises
the defense of ownership in his pleadings and the question of
possession cannot be resolved without deciding the issue of ownership,
the issue of ownership shall be resolved only to determine the issue of
possession.139 Thus, the ruling on the ejectment case is not conclusive
140
as to the issue of ownership. chanrobleslaw
it
WHEREFORE, in view of the foregoing, the petition for certiorari in
G.R. Nos. 194314-14 is DENIEDand the petition for review on
certiorari in G.R. Nos. 185857-58 is GRANTED. The Decision of the
Court of Appeals dated December 11, 2008 and its Resolution dated
August 17, 2010 are AFFIRMED with the
following MODIFICATIONS:
1. Cagayan Capitol College is hereby declared a buyer in bad
faith, who has no right to possession and ownership of the
property;
2. Nacalaban, et al. are ordered to return the purchase price paid
on the property to the College, plus interest at the rate of six
percent (6%) per annum computed from July 23, 1997141
until the date of finality of this judgment. The total amount
shall thereafter earn interest at the rate of six percent (6%)
per annum from the finality of judgment until its
satisfaction;142 and
3. The Register of Deeds is ordered to cancel TCT No. T-l 11846
in the name of the College.
 4. The property should be reconveyed to the Estate of the late
Melecia Dalondonan with the institution of the proper
proceedings for its partition and titling.

SO ORDERED.

FIRST DIVISION
[G.R. No. 195825, February 27, 2013]
SPOUSES ALFONSO AND MARIA ANGELES
CUSI, Petitioners, v. LILIA V. DOMINGO, Respondent.
[G.R. NO. 195871]
Antecedents
The property in dispute was a vacant unfenced lot situated in White
Plains, Quezon City and covered by Transfer Certificate of Title (TCT)
No. N-165606 issued in the name of respondent Lilia V. Domingo by
the Registry of Deeds of Quezon City. It had an area of 658 square
meters.3 In July 1999, Domingo learned that construction activities
were being undertaken on her property without her consent. She soon
unearthed the series of anomalous transactions affecting her property.

RAMONA LIZA L. DE VERA, Petitioner, v. LILIA V. DOMINGO AND

On July 18, 1997, one Radelia Sy (Sy),4 representing herself as the
SPOUSES RADELIA AND ALFRED SY, Respondents.
owner of the property, petitioned the RTC for the issuance of a new
owner’s copy of Domingo’s TCT No. N-165606, appending to her
DECISION
petition a deed of absolute sale dated July 14, 1997 purportedly
executed in her favor by Domingo;5 and an affidavit of loss dated July
BERSAMIN, J.:
17, 1997,6 whereby she claimed that her bag containing the owner’s
copy of TCT No. N-165606 had been snatched from her on July 13,
Under the Torrens system of land registration, the registered owner of
1997 while she was at the SM City in North EDSA, Quezon City. The
realty cannot be deprived of her property through fraud, unless a
RTC granted Sy’s petition on August 26, 1997.7 The Registry of Deeds
transferee acquires the property as an innocent purchaser for value. A
of Quezon City then issued a new owner’s duplicate copy of TCT No. N-
transferee who acquires the property covered by a reissued owner’s
165606, which was later cancelled by virtue of the deed of absolute
copy of the certificate of title without taking the ordinary precautions
sale dated July 14, 1997, and in its stead the Registry of Deeds of
of honest persons in doing business and examining the records of the
Quezon City issued TCT No. 186142 in Sy’s name.8
proper Registry of Deeds, or who fails to pay the full market value of
the property is not considered an innocent purchaser for value.
Sy subsequently subdivided the property into two, and sold each
half by way of contract to sell to Spouses Edgardo and Ramona Liza
Under review in these consolidated appeals is the Decision
De Vera and to Spouses Alfonso and Maria Angeles Cusi. The existence
promulgated on July 16, 2010,1 whereby the Court of Appeals (CA) in
of the individual contracts to sell was annotated on the dorsal portion
CA-G.R. CV No. 90452 affirmed the revised decision rendered on
of Sy’s TCT No. 186142 as Entry No. PE-8907/N-186142,9 stating that
March 1, 2007 by the Regional Trial Court in Quezon City (RTC)
the consideration of the sale was P1,000,000.00 for each set of
against the petitioners and their seller.2
buyers, or for a total of P2,000,000.00 for the entire property that had
an actual worth of not less than P14,000,000.00. TCT No. 186142 in
the name of Sy was then cancelled by virtue of the deeds of sale
executed between Sy and Spouses De Vera, and between Sy and
10
Spouses Cusi, to whom were respectively issued TCT No. 189568 and
TCT No. 189569.11 All the while, the transactions between Sy and the
De Veras, and between Sy and the Cusis were unknown to Domingo,
12
whose TCT No. N-165606 remained in her undisturbed possession.
It turned out that the construction activities taking place on the
property that Domingo learned about were upon the initiative of the
De Veras in the exercise of their dominical and possessory rights.
Domingo commenced this action against Sy and her spouse, the De
Veras and the Cusis in the RTC, the complaint being docketed as Civil
Case No. Q-99-39312 and entitled Lilia V. Domingo v. Spouses Radelia
and Alfred Sy, Spouses Alfonso G. and Maria Angeles S. Cusi, Spouses
Edgardo M. and Ramona Liza L. De Vera, BPI Family Savings Bank and
The Register of Deeds of Quezon City, seeking the annulment or
cancellation of titles, injunction and damages. Domingo applied for the
issuance of a writ of preliminary prohibitory and mandatory injunction,
13
and a temporary restraining order (TRO). The RTC granted
Domingo’s application for the TRO enjoining the defendants from
proceeding with the construction activities on the property. The RTC
later granted her application for the writ of preliminary injunction.
Ruling of the RTC
On September 30, 2003, the RTC rendered a decision,14 disposing:
WHEREFORE, in view of all the foregoing judgment is hereby rendered:
(a) declaring the sale between Lilia V. Domingo and Radella Sy void
and of (sic) effect;
(b) declaring the Sps. Edgardo and Ramona Liza De Vera and Sps.
Alfonso and Maria Angeles Cusi to be purchasers in good faith and for
value;
(c) lifting the writ of preliminary injunction;
(d) finding defendant Radella Sy liable to the plaintiff Lilia Domingo
liable (sic) for damages, as follows:
1. Fourteen Million Pesos (P14,000,000.00) representing the value of
the property covered by TCT No. 165606 plus legal rate of interest
until fully paid;
2. One Million Pesos (P1,000,000.00) representing moral damages;
3. Five Hundred Thousand Pesos (P500,000.00) representing
exemplary damages;
4. Five Hundred Thousand Pesos (P500,000.00) representing
attorney’s fees;
5. Two Hundred Thousand Pesos (P200,000.00) representing litigation
expenses; and
6. Costs of Suit.
IT IS SO ORDERED.

Acting on the motions for reconsideration separately filed by Sy and
Domingo,15 the RTC reconsidered and set aside its September 30,
2003 decision, and allowed the presentation of rebuttal and sur-
rebuttal evidence.
16
On March 1, 2007, the RTC rendered a new decision, ruling:
WHEREFORE, in view of the foregoing, Judgment is hereby rendered:
(a) Declaring the sale between Lilia Domingo and Radelia Sy void and
of no effect;
(b) Declaring the Sps. Edgardo and Ramona Liza De Vera and Sps.
Alfonso and Maria Angeles Cusi not purchasers in good faith and for
value;
(c) TCT Nos. 189568 and 189569 are hereby cancelled and declared
Null and Void Ab Initio;
(d) Directing the Register of Deeds of Quezon City to annotate this
Order on TCT No. 189568 and 189569;
(e) TCT No. 165606 in the name of Lilia Domingo is hereby
revalidated; and,
(f) Finding defendant Radelia Sy liable to the plaintiff Lilia V. Domingo
liable (sic) for damages, as follows:
1. One Million Pesos (P1,000,000.00) representing moral damages;
2. Five Hundred Thousand Pesos (P500,000.00) representing
exemplary damages;
3. Five Hundred Thousand Pesos (P500,000.00) representing
attorney’s fees;
4. Two Hundred Thousand Pesos (P200,000.00) representing litigation
expenses; and,
5. Costs of suit.
This Decision is without prejudice to whatever civil action for recovery
and damages, the defendants Sps. De Vera and Sps. Cusi may have
against defendant Spouses Radelia and Alfred Sy.
SO ORDERED.
Ruling of the CA
On appeal, the assignment of errors each set of appellants made was
as follows:
Spouses Cusi
a) THE REGIONAL TRIAL COURT GRAVELY ERRED IN FINDING THAT
DEFENDANTS SPOUSES ALFONSO AND MARIA ANGELES CUSI ARE
NOT PURCHASERS IN GOOD FAITH AND FOR VALUE.
b) THE REGIONAL TRIAL COURT GRAVELY ERRED IN FAILING TO
RESOLVE THE ISSUE OF WHETHER OR NOT CO-DEFENDANTS
 SPOUSES RADELIA SY AND ALFRED SY ARE LIABLE FOR SPOUSES
CUSI’S CROSS-CLAIM. As stated, the CA promulgated its decision on July 16, 2010, affirming
c) THE REGIONAL TRIAL COURT ERRED IN FAILING TO AWARD the RTC with modification of the damages to be paid by the Sys to
DAMAGES AND ATTORNEY’S FEES TO DEFENDANTS SPOUSES Domingo, viz:
17
CUSI.
Spouses Sy WHEREFORE, premises considered, the instant appeal is denied.

a) THE TRIAL COURT A QUO ERRED IN HOLDING THAT THE SALE Accordingly, the Decision dated March 1, 2007 of the Regional Trial

BETWEEN LILIA DOMINGO AND RADELIA SY VOID AND OF NO Court is hereby AFFIRMED with the modification on the award of

EFFECT AND WAS PROCURRED (sic) THROUGH FRAUDULENT damages to be paid by defendants-appellants Spouses Radelia and

MEANS. Alfred Sy in favor of the plaintiff-appellee Lilia V. Domingo, to wit;

b) THAT THE HONORABLE COURT ERRED IN AWARDING ACTUAL

1. P500,000.00 by way of moral damages;
MORAL DAMAGES, EXEMPLARY DAMAGES AND ATTORNEY’S FEES
2. P200,000.00 by way of exemplary damages;
AND LITIGATION EXPENSES THE SAME BEING NULL AND VOID
3. P100,000.00 as attorney’s fees and litigation expenses.
FOR BEING CONTRARY TO LAW.
c) THAT THE SAID DECISION IS CONTRARY TO LAW AND
SO ORDERED.20
JURISPRUDENCE AND IS NOT SUPPORTED BY EVIDENCE, AS THE
SAME CONTAIN SERIOUS REVERSIBLE ERRORS WHEN THE COURT
The CA held that the sale of the property from Domingo to Sy was
A QUO DECLARED THAT TCT NOS. 189568 AND 189569
null and void and conveyed no title to the latter for being effected by
CANCELLED AND DECLARED NULL AND VOID AB INITIO.
forging the signature of Domingo; that Sy thereby acquired no right in
d) THE INSTANT ASSAILED DECISION OF THE HONORABLE COURT
the property that she could convey to the Cusis and De Veras as her
HAVE (sic) DEPRIVED DEFENDANT[S] SPOUSES SY OF THEIR
buyers; that although acknowledging that a purchaser could rely on
BASIC CONSTITUTIONAL RIGHT TO DUE PROCESS OF LAW.18
what appeared on the face of the certificate of title, the Cusis and De
Spouses De Vera
Veras did not have the status of purchasers in good faith and for value
a) THE LOWER COURT ERRED IN HOLDING THAT THE DE VERA
by reason of their being aware of Sy’s TCT No. 186142 being a
SPOUSES ARE NOT PURCHASERS IN GOOD FAITH AND NOT
reconstituted owner’s copy, thereby requiring them to conduct an
ENTITLED TO THE POSSESSION OF THE PROPERTY COVERED BY
inquiry or investigation into the status of the title of Sy in the property,
TCT NO. N-189568.
and not simply rely on the face of Sy’s TCT No. 186142; and that the
b) THE LOWER COURT ALSO ERRED IN NOT AWARDING DEFENDANT-
Cusis and De Veras were also aware of other facts that should further
APPELLANT DE VERA HER COUNTERCLAIMS AGAINST PLAINTIFF-
put them on guard, particularly the several nearly simultaneous
APPELLEE.19
transactions respecting the property, and the undervaluation of the
purchase price from P7,000,000.00/half to only P1,000,000.00/half to
enable Sy to pay a lesser capital gains tax.
21
The CA later on denied the motions for reconsideration.
Issues
Hence, this appeal via petitions for review on certiorari by the Cusis
(G.R. No. 195825) and Ramona Liza L. De Vera22 (G.R. No. 195871).
In G.R. No. 195825, the Cusis submit the following issues:23
I unanimity in findings of both the RTC and the CA on this all-important
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN
FINDING THAT TRANSFER CERTIFICATE OF TITLE NO. 186142
REGISTERED IN THE NAME OF RADELIA SY IS A RECONSTITUTED
TITLE.
II
WHETHER OR NOT THE PETITIONERS ARE BUYERS IN GOOD FAITH
AND FOR VALUE.
III
GRANTING, WITHOUT ADMITTING, THAT THE DECISION OF THE
HONORABLE COURT OF APPEALS IS CORRECT WITH RESPECT TO THE
SECOND ISSUE, WHETHER OR NOT PETITIONERS ARE ENTITLED TO
REIMBURSEMENT OF ALL THE PAYMENTS MADE BY PETITIONERS TO
THEIR CO-DEFENDANTS SPOUSES ALFRED AND RADELIA SY IN
ADDITION TO DAMAGES AND ATTORNEY’S FEES.
In G.R. No. 195871, De Vera asserts that the primordial issue is
whether or not she was an innocent purchaser for value and in good
faith.
Ruling of the Court
The petitions for review are bereft of merit.
Firstly, now beyond dispute is the nullity of the transfer of Domingo’s
property to Sy because both lower courts united in so finding. The
aspect of the case is now conclusive on the Court in view of their
consistency thereon as well as by reason of such findings being fully
supported by preponderant evidence. We consider to be significant
that the Sys no longer came to the Court for further review, thereby
rendering the judgment of the CA on the issue of nullity final and
immutable as to them.
Secondly, the Cusis and De Vera commonly contend that the CA
gravely erred in not considering them to be purchasers in good faith
and for value. They argue that Sy’s TCT No. 186142 was free of any
liens or encumbrances that could have excited their suspicion; and
that they nonetheless even went beyond the task of examining the
face of Sy’s TCT No. 186142, recounting every single detail of their
quest to ascertain the validity of Sy’s title, but did not find anything by
which to doubt her title.
The Court concurs with the finding by the CA that the Cusis and De
Vera were not purchasers for value and in good faith. The records
simply do not support their common contention in that respect.
24
Under the Torrens system of land registration, the State is required
to maintain a register of landholdings that guarantees indefeasible title
to those included in the register. The system has been instituted to
combat the problems of uncertainty, complexity and cost associated
with old title systems that depended upon proof of an unbroken chain
of title back to a good root of title. The State issues an official
certificate of title to attest to the fact that the person named is the
owner of the property described therein, subject to such liens and
encumbrances as thereon noted or what the law warrants or
reserves.25
One of the guiding tenets underlying the Torrens system is the curtain
principle, in that one does not need to go behind the certificate of title
because it contains all the information about the title of its holder. This
principle dispenses with the need of proving ownership by long
complicated documents kept by the registered owner, which may be
necessary under a private conveyancing system, and assures that all
the necessary information regarding ownership is on the certificate of
title. Consequently, the avowed objective of the Torrens system is to
obviate possible conflicts of title by giving the public the right to rely
upon the face of the Torrens certificate and, as a rule, to dispense with
the necessity of inquiring further; on the part of the registered owner,
the system gives him complete peace of mind that he would be
secured in his ownership as long as he has not voluntarily disposed of
26
any right over the covered land.
The Philippines adopted the Torrens system through Act No.
496,27 also known as the Land Registration Act, which was approved
on November 6, 1902 and took effect on February 1, 1903. In this
jurisdiction, therefore, ―a person dealing in registered land has the
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‖.28
To obtain a grasp of whether a person has actual knowledge of facts
and circumstances that would impel a reasonably cautious man to
make such inquiry, an internal matter, necessitates an analysis of
evidence of a person’s conduct.29 That renders the determination of
intent as a factual issue,30 something that the Court does not normally
involve itself in because of its not being a trier of facts. Indeed, as a
rule, the review function of the Court is limited to a review of the law
involved.
But the Court now delves into the facts relating to the issue of
innocence of the petitioners in their purchase of the property,
considering that the RTC, through its original decision, at first
regarded them to have been innocent purchasers who were not aware
of any flaw or defect in Sy’s title based on the fact that the property
had been unfenced and vacant. The RTC also regarded the petitioners’
making of reasonable verifications as their exercise of the due
diligence required of an ordinary buyer.31 The RTC later completely
turned around through another decision, however, and it was such
decision that the CA affirmed subject to the modifications of the
damages granted to Domingo.
There is no question that the petitioners exerted some effort as buyers
to determine whether the property did rightfully belong to Sy. For one,
they did not find any encumbrance, like a notice of lis pendens, being
annotated on the TCT of Sy. Nonetheless, their observance of a certain
degree of diligence within the context of the principles underlying the
Torrens system was not their only barometer under the law and
jurisprudence by which to gauge the validity of their acquisition of
title. As the purchasers of the property, they also came under the clear
obligation to purchase the property not only in good faith but also for
value.
Therein lay the problem. The petitioners were shown to have been
deficient in their vigilance as buyers of the property. It was not enough
for them to show that the property was unfenced and vacant;
otherwise, it would be too easy for any registered owner to lose her
property, including its possession, through illegal occupation. Nor was
it safe for them to simply rely on the face of Sy’s TCT No. 186142 in
view of the fact that they were aware that her TCT was derived from a
duplicate owner’s copy reissued by virtue of the loss of the original
duplicate owner’s copy. That circumstance should have already alerted
them to the need to inquire beyond the face of Sy’s TCT No. 186142.
There were other circumstances, like the almost simultaneous
transactions affecting the property within a short span of time, as well
as the gross undervaluation of the property in the deeds of sale,
ostensibly at the behest of Sy to minimize her liabilities for the capital
gains tax, that also excited suspicion, and required them to be extra-
cautious in dealing with Sy on the property.
To the Court, the CA’s treatment of Sy’s TCT No. 186142 as similar to
a reconstituted copy of a Torrens certificate of title was not
unwarranted. In doing so, the CA cited the ruling in Barstowe
Philippines Corporation v. Republic,32 where the Court, quoting from
precedents, opined that ―[t]he 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,‖ in that ―[b]oth 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;‖33and that
both were ―subsequent copies of the originals thereof,‖ a fact that a
―cursory examination of these subsequent copies would show‖ and
―put on notice of such fact [anyone dealing with such copies who is]
thus warned to be extra-careful.‖34
Verily, the Court has treated a reissued duplicate owner’s copy of a
TCT as merely a reconstituted certificate of title. In Garcia v. Court of
Appeals,35 a case with striking similarities to this one, an impostor
succeeded in tricking a court of law into granting his petition for the
issuance of a duplicate owner’s copy of the supposedly lost TCT. The
impostor then had the TCT cancelled by presenting a purported deed
of sale between him and the registered owners, both of whom had
already been dead for some time, and another TCT was then issued in
the impostor’s own name. This issuance in the impostor’s own name
was followed by the issuance of yet another TCT in favor of a third
party, supposedly the buyer of the impostor. In turn, the impostor’s
transferee (already the registered owner in his own name) mortgaged
the property to Spouses Miguel and Adela Lazaro, who then caused the
annotation of the mortgage on the TCT. All the while,
the original duplicate owner’s copy of the TCT remained in the hands
of an heir of the deceased registered owners with his co-heirs’
knowledge and consent.
The inevitable litigation ensued, and ultimately ended up with the
Court. The Lazaros, as the mortgagees, claimed good faith, and urged
the Court to find in their favor. But the Court rebuffed their urging,
holding instead that they did not deal on the property in good faith
because: (a) ―the title of the property mortgaged to the Lazaros was a
second owner’s duplicate TCT, which is, in effect a reconstituted title.
This circumstance should have alerted them to make the necessary
investigation, but they did not;‖ and (b) their argument, that ―because
the TCT of the property on which their mortgage lien was annotated
did not contain the annotation: ―Reconstituted title,‖ the treatment of
the reissued duplicate owner’s copy of the TCT as akin to a
reconstituted title did not apply, had no merit considering that: ―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. This
warning the mortgagees Lazaros did not heed, or they just ignored
36
it.‖
The fraud committed in Garcia paralleled the fraud committed here.
The registered owner of the property was Domingo, who remained in
the custody of her TCT all along; the impostor was Sy, who succeeded
in obtaining a duplicate owner’s copy; and the Cusis and the De Veras
were similarly situated as the Spouses Lazaro, the mortgagees
in Garcia. The Cusis and the De Veras did not investigate beyond the
face of Sy’s TCT No. 186142, despite the certificate derived from the
reissued duplicate owner’s copy being akin to a reconstituted TCT.
Thereby, they denied themselves the innocence and good faith they
supposedly clothed themselves with when they dealt with Sy on the
property.
The records also show that the forged deed of sale from Domingo to
Sy appeared to be executed on July 14, 1997; that the affidavit of loss
by which Sy would later on support her petition for the issuance of the
duplicate owner’s copy of Domingo’s TCT No. 165606 was executed on
July 17, 1997, the very same day in which Sy registered the affidavit
of loss in the Registry of Deeds of Quezon City; that Sy filed the
petition for the issuance of the duplicate owner’s copy of Domingo’s
TCT No. 165606; that the RTC granted her petition on August 26,
1997; and that on October 31, 1997, a real estate mortgage was
executed in favor of one Emma Turingan, with the mortgage being
annotated on TCT No. 165606 on November 10, 1997.
Being the buyers of the registered realty, the Cusis and the De Veras
were aware of the aforementioned several almost simultaneous
transactions affecting the property. Their awareness, if it was not
actual, was at least presumed, and ought to have put them on their
guard, for, as the CA pointed out, the RTC observed that ―[t]hese
almost simultaneous transactions, particularly the date of the alleged
loss of the TCT No. 165606 and the purported Deed of Sale, suffice[d]
to arouse suspicion on [the part of] any person dealing with the
subject property.‖37 Simple prudence would then have impelled them
as honest persons to make deeper inquiries to clear the suspiciousness
haunting Sy’s title. But they still went on with their respective
purchase of the property without making the deeper inquiries. In that
regard, they were not acting in good faith.
Another circumstance indicating that the Cusis and the De Veras were
not innocent purchasers for value was the gross undervaluation of the
property in the deeds of sale at the measly price of P1,000,000.00 for
each half when the true market value was then in the aggregate of at
least P14,000,000.00 for the entire property. Even if the
undervaluation was to accommodate the request of Sy to enable her to
minimize her liabilities for the capital gains tax, their acquiescence to
the fraud perpetrated against the Government, no less, still rendered
them as parties to the wrongdoing. They were not any less guilty at
all. In the ultimate analysis, their supposed passivity respecting the
arrangement to perpetrate the fraud was not even plausible, because
they knew as the buyers that they were not personally liable for the
capital gains taxes and thus had nothing to gain by their acquiescence.
There was simply no acceptable reason for them to have acquiesced to
the fraud, or for them not to have rightfully insisted on the declaration
of the full value of the realty in their deeds of sale. By letting their
respective deeds of sale reflect the grossly inadequate price, they
should suffer the consequences, including the inference of their bad
faith in transacting the sales in their favor.
De Vera particularly insists that she and her late husband did not have
any hand in the undervaluation; and that Sy, having prepared the
deed of sale, should alone be held responsible for the undervaluation
that had inured only to her benefit as the seller. However, such
insistence was rendered of no consequence herein by the fact that
neither she nor her late husband had seen fit to rectify the
undervaluation. It is notable that the De Veras were contracting
parties who appeared to have transacted with full freedom from undue
influence from Sy or anyone else.
Although the petitioners argue that the actual consideration of the sale
was nearly P7,000,000.00 for each half of the property, the Court
rejects their argument as devoid of factual basis, for they did not
adduce evidence of the actual payment of that amount to Sy.
Accordingly, the recitals of the deeds of sale were controlling on the
consideration of the sales.
Good faith is the honest intention to abstain from taking
unconscientious advantage of another. It means the ―freedom from
knowledge and circumstances which ought to put a person on
38
inquiry.‖
Given this notion of good faith, therefore, a purchaser in good faith 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 full and
fair price for the same.39 As an examination of the records shows, the
petitioners were not innocent purchasers in good faith and for
value. Their failure to investigate Sy’s title despite the nearly
simultaneous transactions on the property that ought to have put
them on inquiry manifested their awareness of the flaw in Sy’s
title. That they did not also appear to have paid the full price for their
share of the property evinced their not having paid true value.40
Resultantly, the Court affirms the lower courts, and restores to
Domingo her rights of dominion over the property.
WHEREFORE, the Court AFFIRMS the decision of the Court of
Appeals promulgated on July 16, 2010; and ORDERS the petitioners
to pay the costs of suit.

SO ORDERED.
 THIRD DIVISION
G.R. No. 192669, April 21, 2014
RAUL SABERON, JOAN F. SABERON AND JACQUELINE
SABERON, Petitioners, v. OSCAR VENTANILLA, JR., AND CARMEN
GLORIA D. VENTANILLA, Respondents.
RESOLUTION
MENDOZA, J.:
In the earlier cases, Manila Remnant Co., Inc. (MRCI) was the
petitioner, being the owner of several parcels of land situated in
Quezon City, constituting the subdivision known as Capitol Homes
Subdivision Nos. I and II. On July 25, 1972, MRCI entered into a
contract with A.U. Valencia & Co. Inc. (AUVC)entitled ―Confirmation of
Land Development and Sales Contract,‖ whereby for a consideration,
including sales commission and management fee, the latter was to
develop the aforesaid subdivision with authority to manage the sales
thereof; execute contracts to sell to lot buyers; and issue official
receipts. At that time, the president of AUVC, was Artemio U.
Valencia (Valencia).

For resolution of the Court is a motion for reconsideration of the

On March 3, 1970, MRCI and AUVC executed two (2) contracts to sell
Court’s January 19, 2011 Resolution1which denied the petition of Raul
covering Lots 1 and 2 of Block 17, in favor of Oscar C. Ventanilla, Jr.
F. Saberon, Jr., Joan F. Saberon and Jacqueline F.
and Carmen Gloria D. Ventanilla (Ventanillas), for the combined
Saberon (Saberons). In effect, it affirmed the March 12, 2010
contract price of P66,571.00 payable monthly for ten (10) years. The
Decision2 and the June 18, 2010 Resolution3 of the Court of
Ventanillas paid the down payment as stipulated in the two (2)
Appeals (CA) in CA–G.R. CV No. 85520, holding that the June 21,
contracts.
2005 Decision of the Regional Trial Court, Branch 80, Quezon City
(RTC) in Civil Case No. 96–26486, was correct in, among others,
On March 13, 1970, Valencia, holding out himself as president of
ordering the cancellation of Transfer Certificate of Title (TCT) Nos.
MRCI, and without the knowledge of the Ventanillas, resold the same
55396 and 55397 in the name of the Saberons and Samuel
property to Carlos Crisostomo (Crisostomo), without any
Marquez (Marquez).
consideration. Valencia transmitted the fictitious contract with
Crisostomo to MRCI while he kept the contracts to sell with the
This case is an offshoot of two (2) cases involving the same property,
Ventanillas in his private office files. All the amounts paid by the latter
docketed as G.R. No. 82978 and G.R. No. 107282, which had been
were deposited in Valencia’s bank account and remitted to MRCI as
decided by the Court with finality on November 22, 1990 and March
payments of Crisostomo. The Ventanillas continued to pay the monthly
16, 1994, respectively.
installment.

Antecedent Facts
Thereafter, MRCI terminated its business relationship with AUVC on
account of irregularities discovered in its collection and
remittances. Consequently, Valencia was removed as president by the
Board of Directors of MRCI. He then stopped transmitting the
Ventanillas’ monthly installments which at that time, already
amounted to P17,925.40 for Lot 1 and P18,141.95 for Lot 2 (appearing
in MRCI’s records as credited under the name of Crisostomo).
On June 8, 1973, AUVC sued MRCI to impugn the abrogation of their
agency agreement before the Court of First Instance, Branch 19,
Manila (CFI Manila), which eventually ordered all lot buyers to deposit
their monthly amortizations with the court. On July 17, 1973, AUVC
informed the Ventanillas that it was still authorized by the trial court to
collect the monthly amortizations and requested them to continue
remitting their payment, with the assurance that said payments would
be deposited later in court.
For AUVC’s failure to forward its collections to the trial court as
ordered, MRCI caused the publication of a notice cancelling the
contracts to sell of some lot buyers including those of Crisostomo in
whose name the payments of the Ventanillas had been credited.
It was not until March 1978 when the Ventanillas discovered Valencia’s
deception. Believing that they had already remitted the total amount
of P73,122.35 for the two lots, the Ventanillas offered to pay the
balance to MRCI. To their shock, their names as lot buyers did not
appear in MRCI’s records. Instead, MRCI showed them a copy of the
contract to sell signed by Valencia, in favor of Crisostomo. MRCI
refused the Ventanillas’ offer to pay for the remainder of the contract
price.
Aggrieved, the Ventanillas commenced an action for specific
performance, annulment of deeds and damages against MRCI, AUVC,
and Crisostomo with the Court of First Instance, Branch 17–B, Quezon
City (CFI Quezon City) docketed as Civil Case No. 26411, where
Crisostomo was declared in default for his failure to file an answer.
On November 17, 1980, the CFI Quezon City rendered a decision
declaring the contracts to sell in favor of the Ventanillas as valid and
subsisting, and annulling the contract to sell in favor of Crisostomo. It
ordered the MRCI to execute an absolute deed of sale in favor
of the Ventanillas, free from all liens and encumbrances.
Damages and attorney’s fees in the total amount of P210,000.00 were
also awarded to the Ventanillas for which the MRCI, AUVC, and
Crisostomo were held solidarily liable. The CFI Quezon City ruled
further that if for any reason the transfer of the lots could not be
effected, MRCI, AUVC and Crisostomo would be solidarily liable to the
Ventanillas for the reimbursement of the sum of P73,122.35,
representing the amount they paid for the two (2) lots, and the legal
interest thereon from March 1970, plus the decreed damages and
attorney’s fees. Valencia was also held liable to MRCI for moral and
exemplary damages and attorney’s fees.
On separate appeals filed by AUVC and MRCI, the CA sustained the CFI
Quezon City’s decision in toto.
The 1990 Case
MRCI then filed before this Court a petition for certiorari docketed as
G.R. No. 82978, to review the decision of the CA upholding the
solidary liability of MRCI, AUVC and Crisostomo for the payment of
moral and exemplary damages and attorney’s fees to the Ventanillas.
On November 22, 1990, this Court affirmed the decision of the CA and
declared the judgment of the CFI Quezon City immediately executory.
Encouraged by the seeming triumph of their cause, the Ventanillas
moved for the issuance of a writ of execution in Civil Case No. 26411.
The writ was issued on May 3, 1991, and served upon MRCI on May 9,
1991. A notice of levy was annotated in the titles of MRCI on
May 31, 1991.
In a manifestation and motion, however, MRCI alleged that the subject
properties could not longer be delivered to the Ventanillas because
they had already been sold to Samuel Marquez (Marquez) on February
7, 1990, while its petition was pending before this Court. Nevertheless,
MRCI offered to reimburse the amount paid by the Ventanillas,
including legal interest plus damages. MRCI also prayed that its tender
of payment be accepted and that all garnishments on their accounts
lifted.
The Ventanillas accepted the amount of P210,000.00 as damages and
attorney’s fees but rejected the reimbursement offered by MRCI in lieu
of the execution of the absolute deed of sale. They contended that the
alleged sale to Marquez was void, fraudulent, and in contempt of court
and that no claim of ownership over the properties in question had
ever been made by Marquez.
On July 19, 1991, the CFI Quezon City ordered that the garnishment
made by the Sheriff upon the bank account of MRCI could be lifted
only upon the deposit to the Court of the amount of P500,000.00 in
cash.
MRCI then moved for reconsideration praying that it be ordered to
reimburse the Ventanillas in the amount of P263,074.10 and that the
garnishment of its bank deposit be lifted. This plea was denied twice
by the trial court prompting MRCI to file another petition
for certiorari with the CA, which ruled that the contract to sell in favor
of Marquez did not constitute a legal impediment to the immediate
execution of the judgment. Furthermore, it held that the cash bond
fixed by the trial court for the lifting of the garnishment was fair and
reasonable because the value of the lot in question had considerably
increased.
The 1994 Case
From the CA, the case was elevated to this Court as G.R. No. 107282
where MRCI argued that the sale of the properties to Marquez was
valid because at the time of the sale, the issue of the validity of the
sale to the Ventanillas had not yet been resolved. Further, there was
no specific injunction against it re–selling the property. As a buyer in
good faith, Marquez had a right to rely on the recitals in the certificate
of title. The subject matter of the controversy having been passed to
an innocent purchaser for value, the execution of the absolute deed of
sale in favor of the Ventanillas could not be ordered by the trial court.
The Ventanillas countered that the validity of the sale to them had
already been established even while the previous petition was still
awaiting resolution. The petition only questioned the solidary liability
of MRCI to the Ventanillas. Hence, the portion of the decision ordering
MRCI to execute an absolute deed of sale in their favor had already
become final and executory when MRCI failed to appeal it to the Court.
Thus, an order enjoining MRCI from reselling the property in litigation
was unnecessary. Besides, the unusual lack of interest, on the part of
Marquez, to protect and assert his right over the disputed property
was, to the Ventanillas, a clear indication that the alleged sale to him
was merely a ploy of MRCI to evade the execution of the absolute
deed of sale in their favor.
On March 16, 1994, the Court settled the controversy in this
wise:chanRoblesvirtualLawlibrary
The validity of the contract to sell in favor of the Ventanilla spouses is
not disputed by the parties. Even in the previous petition, the
recognition of that contract was not assigned as error of either the trial
court or appellate court. The fact that the MRCI did not question the
legality of the award for damages to the Ventanillas also shows that it
even then already acknowledged the validity of the contract to sell in
favor of the private respondents.
On top of all this, there are other circumstances that cast suspicion on
the validity, not to say the very existence, of the contract with
Marquez.
First, the contract to sell in favor of Marquez was entered into after the
lapse of almost ten years from the rendition of the judgment of the
trial court upholding the sale to the Ventanillas.
Second, the petitioner did not invoke the contract with Marquez during
the hearing on the motion for the issuance of the writ of execution
filed by the private respondents. It disclosed the contract only after
the writ of execution had been served upon it.
Third, in its manifestation and motion dated December 21, 1990, the
petitioner said it was ready to deliver the titles to the Ventanillas
provided that their counterclaims against private respondents were
paid or offset first. There was no mention of the contract to sell with
Marquez on February 7, 1990.
Fourth, Marquez has not intervened in any of these proceedings to
assert and protect his rights to the subject property as an alleged
purchaser in good faith.
At any rate, even if it be assumed that the contract to sell in
favor of Marquez is valid, it cannot prevail over the final and
executory judgment ordering MRCI to execute an absolute
deed of sale in favor of the Ventanillas. No less importantly, the
records do not show that Marquez has already paid the supposed
balance amounting to ?616,000.00 of the original price of over
P800,000.00. (Emphasis supplied)
As it turned out, the execution of the judgment in favor of the
Ventanillas was yet far from fruition. Samuel Cleofe, Register of Deeds
for Quezon City (ROD Cleofe) revealed to them, that on March 11,
1992, MRCI registered a deed of absolute sale to Marquez who
eventually sold the same property to the Saberons, which conveyance
was registered in July 1992. ROD Cleofe opined that a judicial order for
the cancellation of the titles in the name of the Saberons was essential
before he complied with the writ of execution in Civil Case No. 26411.
Apparently, the notice of levy, through inadvertence, was not carried
over to the title issued to Marquez, the same being a junior
encumbrance which was entered after the contract to sell to Marquez
had already been annotated.
Civil Case No. Q–96–26486
Once again, the Ventanillas were constrained to go to court to seek the
annulment of the deed of sale executed between MRCI and Marquez as
well as the deed of sale between Marquez and the Saberons, as the
fruits of void conveyances. The case was docketed as Civil Case No.
Q–96–26486 with the Regional Trial Court, Branch 80, Quezon City
(RTC).
During the trial, all the defendants, including Edgar Krohn
Jr. (Krohn) as President of MRCI, and Bede
Tabalingcos (Tabalingcos) as its legal counsel, filed their respective
answers, except Marquez who was declared in default.
On June 21, 2005, the RTC rendered its decision, the dispositive
portion of which reads:chanRoblesvirtualLawlibrary
Wherefore, premises considered, judgment is hereby rendered in
favour of plaintiffs, the spouses Oscar and Carmen Ventanilla, and
against defendants MRCI, Krohn, Tabalingcos, Marquez and Saberon,
as follows:chanRoblesvirtualLawlibrary
(1) Declaring the Transfer Certificated of Title Nos. 55396 and 55397
in the name of Samuel Marquez, and Transfer Certificates of Title Nos.
63140 and 63141 in the names of Raul, Jr., Joan and Jacqueline
Saberon as null and void;
(2) Ordering defendant MRCI to receive payment of the balance of the
purchase price to be paid by the plaintiffs and to execute a Deed of
Absolute Sale in favour of the plaintiffs, and in case of failure thereof,
ordering plaintiffs to consign the amount with this Court;
(3) Ordering the Register of Deeds to cancel the titles in the name of
Marquez and the Saberons, and to issue new certificates of title in the
name of the spouses Ventanillas upon registration of the Deed of
Absolute Sale in favour of the plaintiffs or proof of their consignment;
(4) Ordering defendant MRCI, Krohn, Tabalingcos and Marquez to pay
plaintiffs, jointly and severally, the sums of:
a. P100,000.00, as moral damages; and
b. P50,000.00, as attorney’s fees.
(5) Ordering defendant MRCI, Krohn, Tabalingcos and Marquez to pay
defendants Saberon, jointly and severally, the sum of P7,118,155.88
representing the value of the properties in dispute and the value of the
improvements introduced by defendants Saberon; and
(6) Ordering the defendants to pay the costs of the suit.
Defendants’ counterclaims are hereby dismissed for lack of merit.
Separate appeals were instituted by MRCI and Tabalingcos, on one
hand, and the Saberons, on the other. The former contended that no
fraudulent act could be attributed to them for the sale of the property
to the title of Marquez, considering that ROD Cleofe was the one who
inadvertently omitted the carrying over of the notice of levy to
Marquez who consequently secured a clean title to the lot. MRCI
Tabalingcos further claimed that the sale to Marquez was effected
while the previous case was still pending, at a time when they had
every liberty to believe in the legality of their position.
Meanwhile, the Saberons relied on one central argument—that they
were purchasers in good faith, having relied on the correctness of the
certificates of title covering the lots in question; and therefore, holders
of a valid and indefeasible title.
In the assailed decision, the CA made its conclusion hinged on the
following findings:chanRoblesvirtualLawlibrary
When MRCI executed a Contract to Sell in favor of Marquez in
February 1990, it was in the throes of an appeal from the Decision in
Civil Case No. 26411 where its very first Contracts to Sell to the
Ventanillas were upheld over those of Crisostomo. The Marquez
Contract to Sell was in fact the third in a row, and registered a year
later, on May 21, 1991, appears as the first recorded entry in MRCI’s
titles. The notice of levy in Civil Case No. 26411 came ten days later,
on May 31, 1991. Then, in February 1992, MRCI executed a deed of
absolute sale to Marquez and when the new titles were issued in
Marquez’ name, the notice of levy was not carried over. A few months
later, these titles were cancelled by virtue of a deed of sale to the
Saberons and, on the same day, TCT 63140 and 63141 were issued
clean to them.
According to the CA, the arguments espoused by MRCI and
Tabalingcos were untenable. The said parties were found guilty of bad
faith for selling the lots to Marquez at a time when litigation as to the
validity of the first sale to the Ventanillas was still pending. In other
words, MRCI was sufficiently aware of the Court decision confirming its
failure to supervise and control the affairs of its authorized agent,
AUVC, which led to the explicit pronouncement that the first sale to
the Ventanillas was valid. This should have served as a warning to
MRCI that it could no longer deal with the property in deference to the
Court’s ruling and affirmation of the trial court’s order to execute the
deed of sale in favor of the Ventanillas. Obviously, MRCI took no heed
of this caveat. The titles had been transferred yet again to the
Saberons, who claimed to be purchasers in good faith. Unfortunately,
there was an exception to the general rule. The CA cited AFP Mutual
4
Benefit Association Inc. v. Santiago, where the Court ruled that with
respect to involuntary liens, an entry of a notice of levy and
attachment in the primary entry or day book of the Registry of Deeds
was considered as sufficient notice to all persons that the land was
already subject to attachment. Resultantly, attachment was duly
perfected and bound the land.
The Present Petition
Aggrieved by this CA ruling, the Saberons filed the present petition.
They claimed that in 1992, a certain Tiks Bautista offered the lots to
Raul Saberon, who, after being given photocopies of the titles to the
land, inquired with the Registry of Deeds for Quezon City (ROD–QC) to
verify the authenticity of the same. He found no encumbrances or
annotations on the said titles, other than restrictions for construction
and negotiation. As agreed upon, he paid Marquez the amount of Two
Million One Hundred Thousand Pesos (P2,100,000.00) as purchase
price for the lots. Upon payment of the real property taxes, a
certification was issued by the Office of the City Treasurer for the
purpose of transferring the title over the property.
Thereafter, Marquez executed the Deed of Absolute Sale in favor of the
Saberons. The ROD–QC then issued TCT Nos. 63140 and 63141 in
their names.
Unknown to the Saberons, the former owner of the properties had
entered into contracts to sell with the Ventanillas, way back in 1970. It
was only upon receipt of the summons in the case filed by the
Ventanillas with the RTC that they learned of the present controversy.
With the RTC and the CA rulings against their title over the properties,
the Saberons now come to the Court with their vehement insistence
that they were purchasers in good faith and for value. Before
purchasing the lots, they exercised due diligence and found no
encumbrance or annotations on the titles. At the same time, the
Ventanillas also failed to rebut the presumption of their good faith as
there was no showing that they confederated with MRCI and its
officers to deprive the Ventanillas of their right over the subject
properties.
According to the Saberons, the CA likewise erred in ruling that there
was no constructive notice of the levy made upon the subject lands.
They claimed that the appellate court could not solely rely on AFP
5
Mutual Benefit Association Inc. v. Santiago. Instead, they urged the
Court to interpret Sections 52 and 42 of Presidential Decree (P.D.) No.
1529 which cover the effects of registration and the manner thereof;
and to examine Section 54 which shows that, in addition to the filing of
the instrument creating, transferring or claiming interest in registered
land less than ownership, a brief memorandum of such shall be made
by the Register of Deeds on the certificate of title and signed by him.
Hence, the ruling in AFP, that an entry of a notice of levy and
attachment in the primary entry or day book of the Registry of Deeds
was sufficient notice to all persons that the land was already subject to
such attachment, would be rendered as a superfluity in light of the
mandatory character of the said provision.
The Saberons further pointed that the claim of the Ventanillas over the
subject properties never ripened into ownership as they failed to
consign the balance on the purchase price stipulated on the contracts
to sell, thus preventing the obligatory force of the contract from taking
effect.
On October 4, 2010, the Court required the Ventanillas to file their
comment to the petition.6 On January 19, 2011, the Court resolved to
deny the Saberons’ petition for failure to sufficiently show any
reversible error in the assailed judgment by the CA.7 In its June 15,
2011 Resolution,8 the Court required the Ventanillas to comment on
the motion for reconsideration filed by the Saberons.
Resolution of the Court
At first glance, it would seem that the case involves convoluted issues
brought about by the number of times the Ventanillas were impelled
by circumstances to seek judicial action. Nonetheless, the antecedents
would readily reveal that the essential facts are not disputed: 1) that
the subject properties have indeed been the objects of various
transfers effected by MRCI leading to the current controversy between
the Saberons and the Ventanillas; and 2) that prior to the sale to the
Saberons, a notice of levy as an encumbrance was already in
existence.
Sections 51 and 52 of P.D. No. 1529 explain the purpose and effects of
registering both voluntary and involuntary instruments, to
wit:chanRoblesvirtualLawlibrary
Section 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, leases 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.
Section 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.
These provisions encapsulate the rule that documents, like the
certificates of title do not effect a conveyance of or encumbrances on a
parcel of land. Registration is the operative act that conveys ownership
or affects the land insofar as third persons are concerned. By virtue of
registration, a constructive notice to the whole world of such voluntary
or involuntary instrument or court writ or processes, is thereby
created.
The question of utmost relevance to this case, then, is this: whether or
not the registration of the notice of levy had produced constructive
notice that would bind third persons despite the failure of the ROD–QC
to annotate the same in the certificates of title?
In answering these questions, the Court is beckoned to rule on two
conflicting rights over the subject properties: the right of the
Ventanillas to acquire the title to the registered land from the moment
of inscription of the notice of levy on the day book (or entry book), on
one hand; and the right of the Saberons to rely on what appears on
the certificate of title for purposes of voluntary dealings with the same
parcel of land, on the other.
The Saberons maintain that they had no notice of any defect,
irregularity or encumbrance in the titles of the property they
purchased. In its decision, however, the RTC pointed out that their
suspicion should have been aroused by the circumstance that
Marquez, who was not engaged in the buy–and–sell business and had
the property for only a few months, would offer the same for sale.
Although the RTC found that the Saberons may not be considered as
innocent purchasers for value because of this circumstance, it,
nonetheless, ruled that they, who might well be unwilling victims of
the fraudulent scheme employed by MRCI and Marquez, were entitled
to actual and compensatory damages.
To this latter finding, the Court agrees. The Saberons could not be said
to have authored the entanglement they found themselves in. No fault
can be attributed to them for relying on the face of the title presented
by Marquez. This is bolstered by the fact that the RTC decision shows
no categorical finding that the Saberons’ purchase of the lots from
Marquez was tainted with bad faith. That the Saberons should have
harbored doubts against Marquez is too high a standard to impose on
a buyer of titled land. This is in consonance to the rule that the one
who deals with property registered under the Torrens system is
charged with notice only of such burdens and claims as are annotated
9
on the title. ―All persons dealing with property covered by Torrens
certificate of title are not required to explore further than what the
Torrens title upon its face indicates in quest for any hidden defect or
10
inchoate right that may subsequently defeat his right thereto.‖ These
rules remain as essential features of the Torrens system. The present
case does not entail a modification or overturning of these principles.
Be that as it may, no fault can likewise be imputed to the Ventanillas.
In ultimately ruling for the Ventanillas, the courts a quo focused on the
superiority of their notice of levy and the constructive notice against
the whole world which it had produced and which effectively bound
third persons including the Saberons.
It has already been established in the two previous cases decided by
the Court that the contracts to sell executed in favor of the Ventanillas
are valid and subsisting. Clearly, it has been acknowledged, even by
MRCI, as can be seen in the latter’s own choice to only question their
solidary liability in the 1990 case and its failure to assign the same as
an error in the 1994 case. In the same vein, the issue on Marquez’s
title had already been passed upon and settled in the 1994 case. That
he purchased the lots prior to the annotation of the notice of levy in
MRCI’s title was of no moment. In fact, the Court explicitly declared
that MRCI’s transaction with Marquez ―cannot prevail over the final
and executory judgment ordering MRCI to execute an absolute deed of
sale in favor of the Ventanillas.‖
These favorable findings prompted the Ventanillas to register the
notice of levy on the properties. The records show that on the strength
of a final and executory decision by the Court, they successfully
obtained a writ of execution from the RTC and a notice of levy was
then entered, albeit on the primary entry book only. The contract to
sell to Marquez was registered on May 21, 1991, while the notice of
levy was issued ten (10) days later, or on May 31, 1991. In February
1992, MRCI executed the Deed of Sale with Marquez, under whose
name the clean titles, sans the notice of levy, were issued. A year
later, or on March 11, 1992, MRCI registered the deed of sale to
Marquez who later sold the same property to the Saberons.
This complex situation could have been avoided if it were not for the
failure of ROD Cleofe to carry over the notice of levy to Marquez’s title,
serving as a senior encumbrance that might have dissuaded the
Saberons from purchasing the properties.
The Court agrees with the position of the RTC in rejecting ROD Cleofe’s
theory.
Distinctions between a contract to sell and a contract of sale are well–
established in jurisprudence. In a contract of sale, the title to the
property passes to the vendee upon the delivery of the thing sold; in a
contract to sell, ownership is, by agreement, reserved in the vendor
and is not to pass to the vendee until full payment of the purchase
price. Otherwise stated, in a contract of sale, the vendor loses
ownership over the property and cannot recover it until and unless the
contract is resolved or rescinded; whereas, in a contract to sell, title is
retained by the vendor until full payment of the price. In the latter
contract, payment of the price is a positive suspensive condition,
failure of which is not a breach but an event that prevents the
obligation of the vendor to convey title from becoming effective.11
It is undeniable, therefore, that no title was transferred to Marquez
upon the annotation of the contract to sell on MRCI’s title. As correctly
found by the trial court, the contract to sell cannot be substituted by
the Deed of Absolute Sale as a ―mere conclusion‖ of the previous
contract since the owners of the properties under the two instruments
12
are different. Considering that the deed of sale in favor of Marquez
was of later registration, the notice of levy should have been carried
over to the title as a senior encumbrance.
Corollary to this is the rule that a levy of a judgment debtor creates a
lien, which nothing can subsequently destroy except the very
13
dissolution of the attachment of the levy itself. Prior registration of
the lien creates a preference, since the act of registration is the
14
operative act to convey and affect the land. Jurisprudence dictates
that the said lien continues until the debt is paid, or the sale is had
under an execution issued on the judgment or until the judgment is
satisfied, or the attachment is discharged or vacated in the same
manner provided by law. Under no law, not even P.D. No. 1529, is it
stated that an attachment shall be discharged upon sale of the
property other than under execution.15
Additionally, Section 59 of P.D. No. 1529 provides that, ―[i]f, at the
time of the transfer, subsisting encumbrances or annotations appear in
the registration book, they shall be carried over and stated in the new
certificate or certificates, except so far as they may be simultaneously
released or discharged.‖ This provision undoubtedly speaks of the
ministerial duty on the part of the Register of Deeds to carry over
existing encumbrances to the certificates of title.
From the foregoing, ROD Cleofe’s theory that a deed of sale, as a mere
conclusion of a contract to sell, turns into a senior encumbrance which
may surpass a notice of levy, has no leg to stand on. It was, in fact,
properly rejected by the courts a quo. Verily, the controversy at hand
arose not from the Ventanillas’ fault, but from ROD Cleofe’s misplaced
understanding of his duty under the law.
Surely, the Ventanillas had every right to presume that the Register of
Deeds would carry over the notice of levy to subsequent titles covering
the subject properties. The notice was registered precisely to bind the
properties and to serve as caution to third persons who might
potentially deal with the property under the custody of the law. In DBP
v. Acting Register of Deeds of Nueva Ecija,16 the Court ruled that entry
alone produced the effect of registration, whether the transaction
entered was a voluntary or involuntary one, so long as the registrant
had complied with all that was required of him for purposes of entry
and annotation, and nothing more remained to be done but a duty
incumbent solely on the Register of Deeds.
While the Court is not unmindful that a buyer is charged with notice
only of such burdens and claims as are annotated on the title, the RTC
and the CA are both correct in applying the rule as to the effects of
involuntary registration. In cases of voluntary registration of
documents, an innocent purchaser for value of registered land
becomes the registered owner, and, in contemplation of law the holder
of a certificate of title, the moment he presents and files a duly
notarized and valid deed of sale and the same is entered in the day
book and at the same time he surrenders or presents the owner’s
duplicate certificate of title covering the land sold and pays the
registration fees, because what remains to be done lies not within his
power to perform. The Register of Deeds is duty bound to perform
17
it. In cases of involuntary registration, an entry thereof in the day
book is a sufficient notice to all persons even if the owner’s duplicate
certificate of title is not presented to the register of deeds. Therefore,
in the registration of an attachment, levy upon execution, notice of lis
pendens, and the like, the entry thereof in the day book is a sufficient
notice to all persons of such adverse claim.18
This rule was reiterated in the more recent case of Armed Forces and
Police Mutual Benefit Association, Inc., v. Santiago,19 as relied upon by
the CA. In AFP, the Notice of Levy was presented for registration in the
Registry of Deeds of Pasig City. The Notice was entered in the Primary
Entry Book, but was not annotated on the TCT because the original
copy of the said title on file in the Registry of Deeds was not available
at that time. Six (6) days after the presentation of the Notice of Levy,
the Deed of Absolute Sale involving the same parcel of land was
presented for registration and likewise entered. The deed of sale was
examined by the same employee who examined the notice of levy, but
she failed to notice that the title subject of the sale was the same title
which was the subject of the notice of levy earlier presented. Unaware
of the previous presentation of the notice of levy, the Register of
Deeds issued a certificate of title in the name of the vendee on the
basis of the deed of sale. The Register of Deeds in AFP immediately
requested the vendee to surrender the documents in light of the
mistake discovered so that he could take appropriate rectification or
correction. Settling the issue on whether the notice of levy could be
annotated in the certificate of title, the Court ruled in the affirmative
on the ground that the preference created by the levy on attachment
was not diminished by the subsequent registration of the prior sale.
Superiority and preference in rights were given to the registration of
the levy on attachment; although the notice of attachment had not
been noted on the certificate of title, its notation in the book of entry
of the Register of Deeds produced all the effects which the law gave to
its registration or inscription, to wit:chanRoblesvirtualLawlibrary
…Under the rule of notice, it is presumed that the purchaser has
examined every instrument of record affecting the title. Such
presumption is irrebuttable. He is charged with notice of every fact
shown by the record and is presumed to know every fact shown by the
record and 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. For these reasons, a declaration from
the court that respondent was in bad faith is not necessary in order
that the notice of levy on attachment may be annotated on TCT No.
PT–94912.
The fact that the notice of levy on attachment was not annotated on
the original title on file in the Registry of Deeds, which resulted in its
non–annotation on the title TCT No. PT–94912, should not prejudice
petitioner. As long as the requisites required by law in order to effect
attachment are complied with and the appropriate fees duly paid,
attachment is duly perfected. The attachment already binds the land.
This is because what remains to be done lies not within the petitioner’s
power to perform but is a duty incumbent solely on the Register of
Deeds. (Emphasis supplied)
In the case at bench, the notice of levy covering the subject property
was annotated in the entry book of the ROD QC prior to the issuance
of a TCT in the name of the Saberons. Clearly, the Ventanillas’ levy
was placed on record prior to the sale. This shows the superiority and
preference in rights of the Ventanillas over the property as against the
Saberons. In AFP, the Court upheld the registration of the levy on
attachment in the primary entry book as a senior encumbrance despite
the mistake of the ROD, the Court must, a fortiori, sustain the notice
of levy registered by the Ventanillas notwithstanding the nonfeasance
of ROD Cleofe. Again, the prevailing rule is that there is effective
registration once the registrant has fulfilled all that is needed of him
for purposes of entry and annotation, so that what is left to be
accomplished lies solely on the Register of Deeds.20
Suffice it to say, no bad faith can be ascribed to the parties alike.
Nevertheless, the equal footing of the parties necessarily tilts in favor
of the superiority of the Ventanillas’ notice of levy, as discussed.
The Court also sees no reason to dwell in the contention that the rights
or interests of the Ventanillas in the subject properties never ripened
into ownership. It bears stressing that the previous decisions discussed
herein already sealed the validity of the contract to sell issued to the
Ventanillas decades ago. As found by the RTC, it was MRCI’s obstinate
refusal to accept their tender of payment, not to mention the devious
transfer of the property, which caused the decade–long delay of the
execution of the deed of sale in their favor. This is a finding that the
Court, which is not a trier of facts, will have to respect.
In the same vein, the attribution of laches against the Ventanillas is
flawed. Their failure to learn about the structures being built on the
subject lands and the payment of real property taxes by the Saberons
is not sufficient justification to withhold the declaration of their
ownership over it. Against a different factual milieu, laches may be
said to have set it but not so in this case. While the Ventanillas may
have been unaware that improvements were being erected over the
lots, this obliviousness can, by no means, be treated as a lack of
vigilance on their part. It bears stressing that the Ventanillas are now
of advanced age and retired as university professors. Considering the
length of litigation which they had to endure in order to assert their
right over the property which they have painstakingly paid for decades
ago, to hold now that they have been remiss in the protection of their
rights would be the height of impropriety, if not injustice. To exact
from them an obligation to visit the land in litigation every so often,
lest they be held to have slept on their rights, is iniquitous and
unreasonable. All told, the Ventanillas remain as innocent victims of
deception.

The Court deems it significant to note that the amount of
P7,118,115.88 awarded to the Saberons by the RTC is to be satisfied
by MRCI, Krohn, Tabalingcos, and Marquez, who have not been
impleaded as parties to the present petition, thus, rendering the said
award final and executory. The said amount, however, is separate
21
and distinct from those provided under Article 448 in relation to
Article 54622
of the Civil Code. In the petition, the Saberons invoked
the said provisions, claiming that they are entitled to reimbursement
of all the expenses incurred in the introduction of improvements on the
subject lands amounting to P23,058,822.79.
The Court finds the Saberons to be builders in good faith.
No less than the court a quo observed that ―no actual evidence that
the Saberons connived with the MRCI and Marquez to have the titles
registered in their names to the prejudice of the (Ventanillas)‖ and
that what was obvious was that ―the Saberons dealt with clean
certificates of titles.‖ Also quite telling on this point is the finding that
MRCI, Krohn, Tabalingcos, and Marquez are liable to the Saberons.
The RTC reasoned out in the following
wise:chanRoblesvirtualLawlibrary
This Court is not convinced, however that defendants Saberon took
part in the fraudulent scheme employed by the other defendants
against the plaintiffs. Although they may not be considered as innocent
purchasers for value shown in the discussion above, this Court is not
ready to conclude that the Saberons joined the other defendants in
their efforts to frustrate plaintiffs’ rights over the disputed properties.
On the contrary, they may be considered victims of the same
fraudulent employed by defendants MRCI and Marquez, and thus can
rightfully claim damages from the same.23
Consequently, Article 448 in relation to Article 546 of the Civil Code
will apply. The provisions respectively
read:chanRoblesvirtualLawlibrary
Article 448. The owner of the land on which anything has been built,
sow 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 Article 546 and 548, 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 and if its value is considerably more than that of the building
or trees. In such case, he shall pay reasonable rent, if the owner of
the land does not choose to appropriate the building or trees after
proper indemnity. The parties shall agree upon the terms of the lease
and in case disagreement, the court shall fix the terms thereof.
Article 546. Necessary expenses shall be refunded to every possessor;
but only the possessor in good faith may retain the thing until he has
been reimbursed therefore.
Useful expenses shall be refunded only to the possessor in good faith
with the same right of retention, the person who has defeated him in
the possession having the option of refunding the amount of the
expenses or of paying the increase in value which the thing may have
acquired by reason thereof.
Thus, the two options available to the Ventanillas: 1) they may
exercise the right to appropriate after payment of indemnity
representing the value of the improvements introduced and the
necessary and useful expenses defrayed on the subject lots; or 2) they
may forego payment of the said indemnity and instead, oblige the
Saberons to pay the price of the land.

Should the Ventanillas elect to appropriate the improvements, the trial

court is ordered to determine the value of the improvements and the
necessary and useful expenses after hearing and reception of
evidence. Should the Ventanillas, however, pursue the option to
oblige the Saberons to pay the ―price of the land,‖ the trial court is
ordered to determine said price to be paid to the Ventanillas.

WHEREFORE, the Motion for Reconsideration is PARTIALLY

GRANTED. The appealed March 12, 2010 Decision and the June 18,
2010 Resolution of the Court of Appeals in CA–G.R. CV No. 85520
are AFFIRMED with modification in that the Ventanillas are given a
period of sixty (60) days from finality of this Resolution to decide
whether to pay the Saberons the value of the improvements and the
necessary and useful expenses defrayed on the 2 lots or to oblige the
Saberons to pay them the ―price‖ of said lots. Depending on the
option exercised by the Ventanillas, the case is hereby remanded to
the court of origin for further proceedings as to the determination of
reimbursement due to the petitioners or of the ―price‖ of the subject
lots due to the Ventanillas.

SO ORDERED.
ñr?bl?š