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Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION

G.R. No. 107930 October 7, 1994


HEIRS OF GEORGE BOFILL, IGNACIO BOFILL, VICTORIA B. ANASTACIO,
REGINA FRANCISCA B. CHUACHINGCO, EVELYN B. SERRA, MANUELITA
B. VIZCONDE, LAGRIMAS B. DULLANO, LOURDES B. DASAL, MANUEL
BOFILL, JR., HEIRS OF PLARIDEL BOFILL, EDUARDO BOFILL, MARIA
LUISA BOFILL,petitioners,
vs.
HONORABLE COURT OF APPEALS, SPS. ENRIQUE BEGALAN and
FLORDELIZA BEGALAN, SPS. JOSE CATALAN and BERNARDITA
CATALAN, and HEIRS OF MANUEL BARREDO, namely, NORMA B.
ALEJAGA, LEONY BARREDO, MAGILYN BARREDO, MARIA BARREDO,
RAMY BARREDO, RELLY BARREDO, ENRIQUETA B. SARTORIO,
represented by VILMA BARREDO BALATAYO, respondents.
P.E. Cases, Jr. & Associates Law Offices for petitioners.
J.D. Villanueva Law Office for private respondents.

BELLOSILLO, J.:
This case arose from an action for declaration of ownership over Lot
No. 2954-A of the Panay Cadastre, situated in Bo. Linatiran, Panay, Capiz,
covered by Transfer Certificate of Title No. T-19894, filed by petitioners against
the Sps. Enrique and Flordeliza Begalan and Sps. Jose and Bernardita Catalan,
two (2) of private respondents herein. Joining their cause, the heirs of Manuel
Barredo, claiming also to be the owners of the lot in litigation, filed a complaint in
intervention against the petitioners herein, heirs of Manuel Bofill.
On 12 August 1988, the trial court rendered a decision declaring petitioners the
owners of the lot in question and entitled to the possession thereof, ordering
respondents as defendants therein to vacate the premises, and to pay petitioners

P5,000.00 as attorney's fees. The counterclaim as well as the complaint in


intervention was dismissed. 1
The rationale for the foregoing disposition of the trial court is that
. . . the claim of the plaintiff-intervenors and defendants over this
land mainly anchored on the supposed Deed of Exchange of March
8, 1994, executed between Manuel Bofill and Cornelio Barriatos,
was a mere exchange of collateral(s) from Lot 526 to Lot 2954-A for
a loan of P450.00 obtained by Manuel Bofill. The said loan having
been paid one year thereafter, said deed of exchange as collateral
for said loan was rendered without legal force and effect, hence no
entry in the title covering the lot was made regarding said loan, nor
was the title in the name of Manuel Bofill transferred to anybody else
up to the present time.
The case filed by Juana Brillo against Sotera Bofill . . . on November
17, 1975 for the registration of the Deed of Exchange of 1944 and
for the surrender of the original title was done thirty-one (31) years
after its execution, considering laches and prescription, is also
without force and effect . . . . Moreover, the order in said case has
become moot and academic upon the death of Sotera Bofill and the
surrender of RO-1456 by her heirs and the cancellation of the same
upon the execution of an
Extra-Judicial Partition by the heirs of Manuel Bofill and Sotera Bofill
and the issuance of the present Certificate of Title No. 19894 in the
name of the plaintiffs.
Respondents appealed to the Court of Appeals which on 31 August 1992
reversed and set aside the decision of the lower court. It directed the Register of
Deeds of Capiz ". . . to divide TCT No. 19894 into two titles: one in the name of
the plaintiffs without including the portion covered by Lot No. 2954-A; the other
title covering Lot No. 2954-A in the name of the heirs of Manuel Barredo (herein
intervenor-appellants), after payment of the required taxes and fees."
In this petition for review of the decision of the Court of Appeals, we reverse the
appellate court and reinstate the judgment of the court a quo.
First. The Court of Appeals erred in rejecting the findings of the trial court which
we find to be supported by the evidence on record. Specifically, it discarded the
testimonial evidence proving that the Casugot 2 involves an exchange of collaterals securing
the P450-loan of Bofill to a certain Cornelio Barriatos without citing any contrary proof nor explaining why
such factual finding should be thrown out or ignored. In the same fashion, it casually brushed aside the

factual finding of the trial court that the loan of Bofill was paid one year after the execution of
3
the Casugot thereby rendering it without further effect.

We note that this Casugot written in Hiligaynon is ambiguous as the exchange


can refer to ownership, possession, collateral, etc. It does not necessarily apply
to ownership alone as understood by the Court of Appeals. Apparently, the error
of the appellate court lies in the interpretation of the Casugot when it stated in its
decision that the document "speaks eloquently of Manuel Bofill's intention to
transfer" Lot 2954-A to Barriatos and concluded that it was an exchange of
ownership of two (2) lots. This error is not surprising as the appellate court not
only adopted the English translation of the Casugot offered by private
respondents, which was obviously tailored to suit their purpose, but also
because it omitted a material phrase stipulating that Barriatos was returning Lot
526 to Bofill. Without that phrase on the return of Lot 526 it would appear, as it
does, that Bofill donated Lot 2954-A to Barriatos which, in effect, would render
the deed of exchange an absurdity. Had the Court of Appeals been more
accurate and precise in quoting data from the records, perhaps it would have
arrived at the right conclusion.
Second. Admittedly, the Casugot clearly reflects the agreement of Bofill and
Barriatos with regard to the ownership of Lot 2954, now comprising
Lot 2954-A, which is the lot in controversy, and Lot 2954-B. Therein is their clear
and categorical covenant: "MANUEL F. BOFILL is the real and absolute owner of
two (2) parcels of land, Lot 2954 and Lot 526." This declaration is decisive in the
disposition of this case as it contains an express stipulation by the signatories
thereto on the ownership of Bofill of the lot in question binding upon them and
their successors in interest.
Private respondents attempt to crush this overwhelming evidence by giving
certain portions of the Casugot a connotation contrary to the agreement and
intention of the parties. Private respondents allege that the 1939 plan subdividing
Lot 2954 into Lot 2954-A in the name of Barriatos and Lot 2954-B in the name of
Bofill reveals the extent of ownership of the parties over
Lot 2954. But the plan reflecting this subdivision is not conclusive as to
ownership as it may refer only to the delineation of their possession. The best
proof of the ownership of Manuel Bofill is the certificate of title in his name.
Moreover, the parties to the agreement apparently did not consider the placing of
Lot 2954-A in the name of Barriatos as a transfer of ownership because when
they executed the Casugot in 1944 they still acknowledged Bofill as the real and
absolute owner of the entire Lot 2954.
Private respondents call our attention to the statement in the Casugot to the
effect that Barriatos was already in possession of Lot 2954-A before the

subdivision of the lot. This argument is based on an erroneous premise since


nowhere in the Casugot is the word "possession" or its equivalent
in Hiligaynon mentioned. It is only in the English translation proposed by
intervenors, which the Court of Appeals injudiciously adopted, where that word
appears. In any case, the exchange of lots as used in the Casugot can refer to
exchange of ownership, of possession, of collaterals, or of any other attribute of
ownership. Definitely, exchange of lands does not necessarily refer to exchange
of ownership. Besides, possession is not a definitive proof of ownership, nor is
non-possession inconsistent therewith. Hence, the claim that Barriatos was the
possessor of Lot 2954-A is not incompatible with Bofill's claim of ownership.
Private respondents next point us to the crux of the Casugot whereby Barriatos
returns his interest in Lot 526 to Bofill in exchange for Lot 2954-A. However, it is
not clear from the provision what interest was being traded by the parties.
Consequently, we are constrained to lean on the premise they themselves
established in the first part of theCasugot, i.e., that Bofill is the real and absolute
owner of Lot 526 and Lot 2954. Barriatos not being the owner of either lot, there
could not have been a transfer of ownership between them.
As regards the clause creating a right of way on Lot 2954-A in favor of Lot 2954B undisputably belonging to Bofill, private respondents argue
that Bofill would not have required such easement if he were the owner of
Lot 2954-A, the latter being considered a servient estate. This argument is
fallacious; it is non sequitur. Bofill did not lose ownership of his lot by imposing on
it a right of way in favor of another lot belonging to him. Besides, we cannot
ignore the practice in the provinces that in giving a realty for a collateral,
possession usually goes with it. At the time the Casugot was entered into
between the parties, this was a common practice. This further explains the real
transaction between them and why Bofill had to demand a right of way over his
own land, so that when possession thereof should be transferred to a third
person he could still pass through it, otherwise, he may have no ingress to or
egress from his estate.
Private respondents focus on the stipulation that if a certificate of title over Lot
2954-A would be issued to Barriatos the above-mentioned right of way would be
annotated thereon. While the signatories expressed the possibility of transferring
Lot 2954-A to Barriatos in the future, it is quite clear that the provision cited does
not forthwith effect such transfer. The records do not reveal that the transfer was
eventually carried out by the parties or their successors in interest.
Third. As regards the case filed by Juana Brillo against Sotera Bofill for the
surrender of the duplicate certificate of title, the appellate court stated
that

. . . the CFI is also convinced of the strength of Juana Brillo's claim


of ownership (which herein appellant-intervenors subsequently
acquired) based originally on the aforequoted Deed of Exchange.
The above decision does not appear to have been appealed. Thus it
is already the law of the case between therein parties and their
successors in interest. The CFI's Decision being against plaintiff's
mother is binding against the plaintiffs (see Sec. 49, Rule 39 of the
Rules of Court).
We cannot agree with this conclusion. for, it was error for the Court of Appeals to
assume that the issue of ownership over Lot 2954-A was already determined in
Special Case No. 1828 as to bar the present action for declaration of ownership.
In that case, the CFI simply directed the mother of petitioners, Sotera Vda. de
Bofill, to surrender the duplicate certificate of title over
Lot 2954 so that the Casugot and the subsequent instruments of sale covering
Lot 2954-A could be annotated thereon. Definitely, that court did not declare
Juana Brillo owner of the lot in question. The sole issue resolved by the CFI was
whether Juana Brillo was entitled to have the Casugot as well as the documents
of sale conveying the rights of Barriatos to her thereunder recorded in the
Certificate of title No. RO-1456 in the name of Manuel Bofill. The ownership of
Lot 2954-A and Lot 526 was never raised, hence, was not determined therein in
Special Case No. 1828.
Although Juana Brillo prayed for the cancellation of RO-1456 and the issuance of
a separate certificate of title in her name which would effectively divest Bofill of
his title over Lot 2954-A, this was not granted by the CFI. The CFI merely
directed the annotation of the deeds on RO-1456 apparently because there was
not enough evidence to negate the title of Bofill over Lot 2954-A. Besides, this
was not the appropriate proceeding to adjudicate the ownership of the property.
The evidence adduced by Brillo was only sufficient to compel Sotera Vda. de
Bofill to surrender certificate of title No. RO-1456. It was not adequate to settle
the issue of ownership.
The factual finding of the CFI in Special Case No. 1828 that Lot 526 was owned
by Barriatos was, to say the least, erroneous considering that the Casugot,
apparently the same document from which the CFI drew its conclusion, expressly
stipulates that Bofill was the owner of Lot 2954-A and therefore implying that
Bofill was the owner of Lot 526, respondents are assailing albeit unwittingly the
very decision in Special Case No. 1828 which they now set up as res judicata in
this case. Thus, in adopting a theory contrary to that maintained in a former
decision, a party is now precluded from raising that case as a bar to a
subsequent one. Incidentally, the error was adopted by the Court of Appeals.

We emphasize that the decision in Special Case No. 1828 could not bind
petitioners herein as they were not parties thereto. The order directing their
mother to surrender RO-1456 that was supposed to be in her possession was
only personal to her and could not bind anybody else, particularly petitioners
herein who were not parties thereto nor notified thereof.
Fourth. In reversing the trial court, the Court of Appeals also reasoned out that
. . . there is no evidence that plaintiffs religiously paid the taxes due
thereon from 1947 up to the filing of their complaint. What appears
to have been paid by the plaintiffs were only for the period from 1972
to 1987. However, the same were paid by the plaintiffs belatedly in
1986 and 1987, evidently in anticipation of this controversy. Besides,
the receipts of this period do not show whether the taxes paid were
also for Lot No. 2954-A considering that they (plaintiffs) own Lot
2954-B. Moreover, payments of realty taxes, more so if not regularly
made, are not conclusive evidence of ownership (see Ferrer-Lopez
v. CA, 150 SCRA 393).
This again is error. The issue as to who of the parties paid the property in good
faith is not really paramount in the determination of ownership considering that
generally municipal treasurers simply accept payments regardless of conflicting
claims of ownership. After all, statements in the tax receipts showing such
payment are far inferior to the recitals in the certificate of title. With
the Casugot and the certificate of title against them, private respondent miserably
failed to carry their burden to a successful conclusion.
WHEREFORE, the appealed is REVERSED and SET ASIDE and the decision of
the Regional Trial Court of Roxas City, Branch 16, in favor of petitioners in Civil
Case No. V-5374 is REITERATED and AFFIRMED.
SO ORDERED.
Cruz, Davide, Jr., Quiason and Kapunan, JJ., concur.

Republic of the Philippines


SUPREME COURT
Manila
SECOND DIVISION
G.R. Nos. L-46626-27 December 27, 1979
REPUBLIC OF THE PHILIPPINES, petitioner-appellant,
vs.
COURT OF APPEALS, A & A TORRIJOS ENGINEERING CORPORATION,
FRANCISCA S. BOMBASI, HERCULINO M. DEO, FRUCTUOSA LABORADA
and REGISTER OF DEEDS OF CALOOCAN CITY,respondents-appellees.
Office of the Solicitor General for petitioner.
Gonzalo D. David for respondents.

AQUlNO, J.:
These two cases are about the cancellation and annulment of reconstituted
Torrens titles whose originals are existing and whose reconstitution was,
therefore, uncalled for.
1. Lots Nos. 915 and 918 of the Tala Estate, with areas of more than twenty-five
and twenty-four hectares, respectively, located at Novaliches, Caloocan, now
Quezon City, are registered in the name of the Commonwealth of the Philippines,
as shown in Transfer Certificates of Title Nos. 34594 and 34596 of the Registry
of Deeds of Rizal both dated April 30, 1938.
The originals of those titles are on file in the registry of deeds in Pasig, Rizal.
They were not destroyed during the war. Even the originals of the preceding
cancelled titles for those two lots, namely, Transfer Certificates of Title Nos.
15832 and 15834 in the name of the Philippine Trust Company, are intact in the
registry of deeds.
2. The reconstitution proceeding started when Fructuosa Laborada, a widow
residing at 1665 Interior 12 Dart Street, Paco, Manila, filed in the Court of First
Instance of Rizal at Caloocan City a petition dated November, 1967 for the
reconstitution of the title covering the above-mentioned Lot No. 915. She alleged
that she was the owner of the lot and that the title covering it, the number of
which she could not specify, was "N.A." or not available (Civil Case No. C-677).

The petition was sworn to on November 16, 1967 before Manila notary Domingo
P. Aquino (48-52, Consolidated Record on Appeal).
3. On April 2, 1968, the lower court issued an order setting the petition for
hearing on June 14, 1968. The notice of hearing was published in the Official
Gazette. Copies thereof were posted in three conspicuous places in Caloocan
City and were furnished the supposed adjoining owners (53-54, Consolidated
Record on Appeal). The registers of deeds of Caloocan City and Rizal were not
served with copies of the petition and notice of hearing.
4. State Prosecutor Enrique A. Cube, as supposed counsel for the Government,
did not oppose the petition. Laborada presented her evidence before the deputy
clerk of court. Judge Serafin Salvador in his "decision" dated July 6, 1968
granted the petition.
He found that Lot No. 915 was covered by a transfer certificate of title which was
not available and which was issued to Maria Bueza who sold the lot to Laborada.
The transfer certificate of title covering the lot was allegedly destroyed during the
war. The plan and technical description for the lot were approved by the
Commissioner of Land Registration who recommended favorable action on the
petition (pp. 53-56, Consolidated Record on Appeal).
5. The lower court directed the register of deeds of Caloocan City to reconstitute
the title for Lot No. 915 in the name of Laborada. The order of reconstitution was
not appealed. It became final and executory.
6. Acting on the court's directive, the register of deeds issued to Laborada on
August 14, 1968 Transfer Certificate of Title No. (N.A.) 3-(R) Lot No. 915 was
later subdivided into seven lots, Lots Nos. 915-A to 915-G. The Acting
Commissioner of Land Registration approved the subdivision plan. The register
of deeds cancelled TCT No. (N.A.) 3-(R) and issued on October 15, 1968 seven
titles to Laborada, namely, TCT Nos. 30257 to 30263 (pp. 56-59, 61-83,
Consolidated Record on Appeal).
7. In another and later case, Civil Case No. C-763 of the lower court, one
Francisco S. Bombast, single, residing at 2021 San Marcelino Street, Malate,
Manila filed in the lower court a petition dated November 16, 1967 for the
reconstitution of the title of another lot, the aforementioned Lot No. 918.
She could not specify the number of the title. She alleged that the title was "N.A"
or not available. She claimed to be the owner of the lot and that the title covering
it was destroyed during the war. Like the first petition, the second petition was
sworn to on the same date, November 16, 1967, before Manila notary Domingo

P. Aquino. Why it was not filed simultaneously with Laborada's petition was not
explained. (17-21, Consolidated Record on Appeal.)
8. The lower court set the second petition for hearing on January 31, 1969. As in
Laborada's petition, the notice of hearing for Bombast's petition was published in
the Official Gazette. It was posted in three conspicuous places in Caloocan City
and copies thereof were sent to the supposed adjoining owners (22,
Consolidated Record on Appeal). But no copies of the petition and notice of
hearing were served upon the registers of deeds of Caloocan City and Rizal, the
officials who would be interested in the reconstitution of the supposed lost title
and who could certify whether the original of the title was really missing.
9. Bombast's petition was assigned also to Judge Salvador. It was not opposed
by the government lawyers, Enrique A. Cube and Conrado de Leon, Judge
Salvador in his order of April 3, 1969 granted the petition.
The court found from the evidence that the allegedly missing or "not available"
title was issued to Regino Gollez who sold the land to petitioner Bombast. The
owner's duplicate of Gollez's title was supposedly destroyed during the war.
Taxes were paid for that land by Gollez and Bombast. The technical description
of the land the plan were approved by the Commissioner of Land Registration
who submitted a report recommending the reconstitution of the title (pp. 22-25,
Consolidated Record on Appeal).
10. The lower court ordered the register of deeds to reconstitute the missing title
of Lot No. 918 in the name of Bombast. Acting on that directive, the register of
deeds issued to Bombast Transfer Certificate of Title No. N.A. 4(R) dated August
27, 1969(pp. 24-27, Consolidated Record on Appeal).
11. On March 25, 1969 or five months before the issuance of the reconstituted
title, Francisca Bombast, now Identified as single (not widow) and a resident of
1665 Interior 12 Dart Street Paco, Manila, which was the same address used by
Fructuosa Laborada (Bombast used first the address 2021 San Marcelino Street)
sold Lot No. 918 to Herculano M. Deo allegedly for P249,880. Transfer
Certificate of Title No. 34146R was issued to Deo.
On October 28, 1969, Deo sold the lot to A & A Torrijos Engineering Corporation
allegedly for P250,000. Transfer Certificate of Title No. 34147-R was issued to
the corporation (pp. 10-11, 29-34, Consolidated Record on Appeal).
12. On May 25 and 26, 1970, the State filed two petitions for the cancellation and
annulment of the reconstituted titles and the titles issued subsequent thereto
(Civil Cases Nos. 1784 and 1785). Judge Salvador, who had ordered the

reconstitution of the titles and to whom the two cases for cancellation were
assigned, issued on June 5, 1970 restraining orders enjoining the register of
deeds, city engineer and Commissioner of Land Registration from accepting or
recording any transaction regarding Lots Nos. 915 and 918.
13. The respondents in the two cases, through a common lawyer, filed separate
answers containing mere denials. The Commissioner of Land Registration
filed pro forma answers wherein he interposed no objection to the issuance of the
preliminary injunction sought by the State. After a joint trial of the two cases,
respondents corporation and Laborada filed amended answers wherein they
pleaded the defense that they were purchasers in good faith and for value.
14. On June 22, 1972, Judge Salvador (who did not bother to inhibit himself)
rendered a decision in the two cases holding that the State's evidence was
insufficient to establish its ownership and possession of Lots Nos. 915 and 918
and that Laborada and A & A Torrijos Engineering Corporation were purchasers
in good faith and for value and, consequently, their titles are not cancellable and
annullable.
Judge Salvador further held that the titles, whose reconstitution he had ordered
allegedly in conformity with law, could not be attacked collaterally and, therefore,
"the reconstituted titles and their derivatives have the same validity, force and
effect as the originals before the reconstitution" (pp. 160-161, Consolidated
Record on Appeal). The State appealed.
15. The Court of Appeals, in affirming the lower court's judgment, held that the
orders of reconstitution dated July 6, 1968 and April 3, 1969 could no longer be
set aside on May 26, 1970, when the petitions for annulment and cancellation of
the reconstituted titles were filed, and that if there were irregularities in the
reconstitution, then, as between two innocent parties, the State, as the party that
made possible the reconstitution, should suffer the loss. The Court of Appeals
cited section 101 of Act 496 to support its view that a registered owner may lose
his land "by the registration of any other person as owner of such land".
The State appealed to this Court. We hold that the appeal is justified. The
Appellate Court and the trial court grievously erred in sustaining the validity of the
reconstituted titles which, although issued with judicial sanction, are no better
than spurious and forged titles.
In all candor, it should be stated that the reconstitution proceedings, Civil Cases
Nos. C-677 and C-763, were simply devices employed by petitioners Laborada
and Bombast for landgrabbing or for the usurpation and illegal appropriation of
fifty hectares of State-owned urban land with considerable value.

The crucial and decisive fact, to which no importance was attached by the lower
court and the Fifth Division of the Court of Appeals (Reyes, L.B., Domondon and
Ericta, JJ.), is that two valid and existing Torrens titles in the name of the
Commonwealth of the Philippines were needlessly reconstituted in the names of
Laborada and Bombast on the false or perjurious assumption that the two titles
were destroyed during the war.
That kind of reconstitution was a brazen and monstrous fraud foisted on the
courts of justice. It was a stultification of the judicial process. One and the same
judge (1) allowed the reconstitution and then (2) decided the two subsequent
cases for the cancellation and annulment of the wrongfully reconstituted titles.
The existence of the two titles of the Government for Lots Nos. 915 and 918 ipso
facto nullified the reconstitution proceedings and signified that the evidence in the
said proceedings as to the alleged ownership of Laborada and Bombast cannot
be given any credence. The two proceedings were sham and deceitful and were
filed in bad faith. Such humbuggery or imposture cannot be countenanced and
cannot be the source of legitimate rights and benefits.
Republic Act No. 26 provides for a special procedure for the reconstitution of
Torrens certificates of title that are missing and not fictitious titles or titles which
are existing. It is a patent absurdity to reconstitute existing certificates of title that
are on file and available in the registry of deeds. The reconstitution proceedings
in Civil Cases Nos. C-677 and C- 763 are void because they are contrary to
Republic Act No. 26 and beyond the purview of that law since the titles
reconstituted are actually subsisting in the registry of deeds and do not require
reconstitution at all. As a rule, acts executed against the provisions of mandatory
laws are void (Art. 5, Civil Code).
To sustain the validity of the reconstituted titles in these cases would be to allow
Republic Act No. 26 to be utilized as an instrument for landgrabbing (See
Republic vs. Court of Appeals, Ocampo and Anglo, L-31303-04, May 31, 1978,
83 SCRA 453, 480, per J. G.S. Santos) or to sanction fraudulent machinations
for depriving a registered owner of his land, to undermine the stability and
security of Torrens titles and to impair the Torrens system of registration. The
theory of A & A Torrijos Engineering Corporation that it was a purchaser in good
faith and for value is indefensible because the title of the lot which it purchased
unmistakably shows that such title was reconstituted. That circumstance should
have alerted its officers to make the necessary investigation in the registry of
deeds of Caloocan City and Rizal where they could have found that Lot 918 is
owned by the State.

WHEREFORE, the decisions of the Court of Appeals and the trial court are
reversed and set aside. The reconstitution proceedings in Civil Cases Nos. C677 and C-763 are declared void and are set aside. The reconstituted titles,
Transfer Certificates of Title Nos. N.A. 3-(R) and N.A. 4-(R) and Transfer
Certificates of Title Nos. 34146-R, 34147-R and 30257 to 30263 and the survey
plans and subdivision plan connected therewith are likewise declared void. The
register of deeds is directed to cancel the said titles.
The Republic of the Philippines, as the successor of the Commonwealth of the
Philippines, is hereby declared the registered owner of Lots 915 and 918 of the
Tala Estate, as shown in Transfer Certificates of Title Nos. 34594 and 34596 of
the registry of deeds of Rizal. Costs against the private respondents-appellees.
SO ORDERED.
Concepcion, Jr. and Santos, JJ., concur.
Antonio, J., took no part.

Republic of the Philippines


SUPREME COURT
Manila
EN BANC
G.R. No. L-8539 December 24, 1914
MARIA DEL CONSUELO FELISA ROXAS Y CHUIDIAN, petitioner-appellee,
vs.
RAFAEL ENRIQUEZ, ET AL., objectors-appellants.
Southworth and Faison for appellants.
D. R. Williams for appellee.

JOHNSON, J.:
It appears from the record that on the 12th day of January, 1906, the said
petitioner, Maria del Consuelo Felisa Roxas y Chuidian, presented a petition in
the Court of Land Registration for the purpose of having registered, under the
Torrens system, four parcels of land, known as Parcel A, Parcel B, Parcel C, and
Parcel D, all of which were located in the city of Manila. The only one of said
parcels to which attention need be given in the present appeal is Parcel A.
From an examination of said petition we find that parcel A was described
generally and technically.
I. General description. It is a parcel of land with the buildings erected
thereon, located in the district of Binondo of this city between Nos. 84, 90,
92, 94, and 96 Calle Escolta and the northern bank of the Pasig River;
bounded on the north by Calle Escolta for 31.08 meters, on the south by
the Pasig River for 25.19 meters, on the east by the estate of Pedro P.
Roxas for 66.48 meters, and on the west by the estate of the heirs of
Antonio Enriquez for 62.10 meters; with an area of 1,817.03 square meters
as set forth in the attached plan.
II. Technical description. The undersigned on the 26th of the present
month proceeded to survey and fix the boundaries for preparing the
topographical plan of a lot occupied by buildings of strong materials one
and two stories high belonging to Maria del Consuelo Roxas y Chuidian,
located in the district of Binondo of this city between Nos. 84, 90, 92, 94,

and 96 Calle Escolta and the northern bank of the Pasig River. The point
marked on the plan with the letter "X," located at the vertex of the angle
formed by the northeastern side of Calle Escolta and the corner of the
Pasaje de Perez was selected as the basic point, whence S. 49 40' W.,
27.75 meters is located Point A, chosen as the point of beginning for the
topographical operations, the result whereof is as follows:
1aw phil.net

| Points or | Directions in | Distances | Boundaries |


| stations. | degrees. | in meters. | |

| A to B | S. 44 30' W | 31.08 | Calle Escolta. |


| B to C | S. 46 15' E | 16.15 | Heirs of Antonio |
| C to D | S. 42 00' E | 32.75 | } Enriquez. |
| D to E | S. 40 50' E | 13.20 | |
| E to F | N. 49 45' E | 14.25 | } Pasig River. |
| F to G | N. 52 00' E | 10.94 | |
| G to H | N. 37 10' W | 24.90 | |
| H to I | N. 35 45' W | 6.56 | |
| I to J | N. 50 30' E | 1.92 | } Pedro P. Roxas. |
| J to K | N. 35 00' W | 7.60 | |
| K to A | N. 42 05' W | 25.50 | |

The lot described has an area of 1,817.03 square meters; all the points
specified are marked on the attached plan, the bearings are magnetic, and
its boundaries are: on the north, Calle Escolta; on the south, the Pasig
River; on the east, the estate of Pedro P. Roxas; and on the west, the
estate of the heirs of Antonio Enriquez.
The plan to which reference is made in the above technical description and which
accompanied the petition is as follows and is marked "Exhibit A."
{bmc 029035a.bmp}
By comparing the above technical description with the plan presented (Exhibit A),
it will be noted that the line A-B in the technical description runs S. 44, 30' W.,
and that the distance between A and B was 31.08 meters, while in the plan line
A-B runs S. 46, 30' W., a distance of 31.08 meters. Attention is called to this

difference between the technical description and the plan at this time, but its
importance to the questions presented will be discussed below.
Attached to said petition was a number of documents presented as exhibits,
showing the chain of title of the petitioner.
We find that said petition contains a statement of the names of the adjoining
owners of the land in question. The petition gives the names of said persons, as
follows:
The names, surnames, and post-office addresses of the owners of the
parcels of land conterminous with this estate are, according to my
information:
The heirs of Antonio Enriquez, whose representatives are the attorneys
Hartigan, Marple, Solignac & Gutierrez, 7 Anda, Intramuros, Manila, Pedro
P. Roxas, 154 Malacaang, San Miguel.
Upon the presentation of said petition, the plan, and the documents showing the
chain of title of the petitioner, the matter was referred to the examiner of titles of
the Court of Land Registration, who made a very careful examination of the title
of the petitioner to the land in question, and on the 5th day of March, 1906,
presented a very carefully prepared report, in which he sets out in detail the title
of the petitioner to said Parcel A, as well as the other parcels, the recommends
the registration of said Parcel A, as well as the others, in the name of the
petitioner.
Upon the issue thus presented we find that the Honorable Simplicio del Rosario,
judge, on the 23d day of March, 1906, in accordance with the provisions of
section 31 of Act No. 496, issued the following notice:
UNITED STATES OF AMERICA,
PHILIPPINE ISLANDS.
[Registration of title. Court of Land Registration.
Case No. 1895.]
To the Attorney-General of the Philippine Islands; the Municipal
Board of the city of Manila; A. Sing, Nos. 84-88; A. Burke, No. 90;
Messrs. Macke and Chandler and F. M. Sousa, these two No. 90
interior; Ramon Genato, No. 142; Tomas Serreno, No. 92; Rosendo
Comas, No. 94; Cheng Tao Sang, No. 96; Luciano Cordoba, No. 28;
Messrs. Salgado, Gordillo and Martinez, No. 32; Messrs.
Greilsammer Bros., No. 36; and Messrs. Williams & Chandler, No.

34, upstairs; these on Calle Escolta; Antonio Vy Chuico, No. 226,


and Lim Tinco, No. 200, these two on Calle Rosario; Ang Seng
Queng, Calle Nueva No. 149; and Candido Lim, Calle Jaboneros
No. 113; all these of the district of Binondo; Messrs. Hartigan, Rohde
& Gutierrez, attorneys of the heirs of Antonio Enriquez, Calle Santo
Tomas, corner of Calle Cabildo, district of Intramuros; Carmen Ayala
de Roxas, No. 154; and Maximo Cortes and Dolores Ochoa, these
two No. 330, the three on Calle Malacaang, district of San Miguel;
Francisco Saez, Plaza de Goiti No. 14, Alfonso Tiaoqui, Calle
Lacoste No. 122, and Gervasio Rosario Ventura, Calle Dulumbayan
No. 111, these three of the district of Santa Cruz; and Enrique
Somes, Calle Alix No. 140, district of Sampaloc; all of the city of
Manila, P. I., and to all whom it may concern:
Whereas an application has been presented to said court by Maria del
Consuelo Felisa Roxas y Chuidian, through her attorney in fact Antonio
Bonifas, Calle Padre Herrera No. 59, district of Tondo, city of Manila, P. I.,
to register and confirm her title in the following described land: Four
parcels of land with the improvements of strong materials thereon, situated
in the district of Binondo, Manila, P. I., more particularly bounded and
described as follows:
Parcel A. Situated on the Escolta Nos. 84-96, beginning at a pt. marked
"A" on plan, being S. 49 40' W., 27.75 m. from the W. end of the chaflan at
the S. intersection of the Escolta and Pasaje de Perez; thence S. 46 30'
W., 31.08 m. along the SE. line of the Escolta, to pt. "B"; S. 46 15' E.,
16.15 m. to pt. "C"; S. 42 E., 32.75 m. to pt. "D"; S. 40 50' E., 13.20 m. to
pt. "E"; N. 49 45' E., 14.25 m. to pt. "F"; N. 52 E., 10.94 m. to pt. "G"; N.
36 20' W., 14.20 m. to pt. "H"; N. 38 40' W., 17.16 m. to pt. "I"; N. 52 35'
E., 2.27 m. to pt. "J"; N. 38 50' W., 4.12 m. to pt. "K"; N. 53 30' E., 0.30
m. to pt. "L"; N. 40 05' W., 14 m. to pt. "M"; N. 44 W., 15.35 m. to pt. "E"
to "G" follow the NW. bank of the Pasig River.
Bounded on the NE. by property of Carmen Ayala de Roxas; SE. by the
Pasig River; SW. by property of the heirs of Antonio Enriquez and NW. by
the Escolta.
Date of survey, December 26, 1905.
You are hereby cited to appear at the Court of Land Registration to be held
at the City Hall, Calzada de las Aguadas, city of Manila, P. I., on the 25th
day of April, A. D. nineteen hundred and six, at 8 o'clock in the forenoon, to
show cause, if any you have, why the prayer of said application shall not

be granted; and unless you appear at such court at the time and place
aforesaid your default will be recorded and the said application will be
taken as confessed, and you will be forever barred from contesting said
application or any decree entered thereon.
Witness the Hon. S. del Rosario, judge of said court, this 23d day of March
in the year nineteen hundred and six.
Attest: A. K. JONES,
Clerk of said Court.
In accordance with said order of publication, the clerk of the Court of Land
Registration, on the 28th day of March, 1906, sent a copy of said order to each of
the persons mentioned therein, by registered mail. The record shows that each of
said persons received a copy of said notice, including the representative of the
heirs of Antonio Enriquez (Hartigan, Rohde & Gutierrez). The record further
shows, by the certificate of James J. Peterson, sheriff of the city of Manila, that
said notice was posted upon the land in question. The record further shows that
said notice had been published in two daily newspapers of the city of Manila. The
Manila Times and La Democracia.
On the 17th day of April, 1906, A. K. Jones, clerk of the Court of Land
Registration, made the following certificate relating to the notice and to the
publication of the notices required by section 31 of Act No. 496.
UNITED STATES OF AMERICA,
PHILIPPINE ISLANDS.
COURT OF LAND REGISTRATION.
Case No. 1895.
Maria del Consuelo Felisa Roxas y Chuidian, Applicant.
I, A. K. Jones, clerk of the Court of Land Registration of the Philippine
Islands, certify that, in compliance with the order issued by said court, a
notice referring to the application for registry No. 1895, presented by
Antonio Bonifas, as representative of Maria del Consuelo Felisa Roxas y
Chuidian, was published once only in the daily newspapers of this city, The
Manila Times on March 28, 1906, and La Democracia on the 31st of the
same month and year, in English and Spanish respectively, and notice was
served upon the Attorney-General of the Philippine Islands; the Municipal
Board of the city of Manila; A. Sing; A. Burke; Macke & Chandler; F. M.
Sousa; Ramon Genato; Tomas Serrano; Rosendo Comas; Cheng Tao

Sang; Luciano Cordoba; Salgado, Gordillo & Martinez; Greilsammer


Hermanos; Williams & Chandler; Antonio Vy Chuico; Lim Tinco; Ang Seng
Queng; Candido Lim; Hartigan, Rohde & Gutierrez; Carmen Ayala de
Roxas; Maximo Cortes and Dolores Ochoa, Francisco Saez; Alfonso
Tiaoqui; Gervasia Rosario Ventura; and Enrique Somes, a copy of said
notice in Spanish having been sent to each one on March 28, 1906, by
registered mail. And for the purposes of the necessary procedure, I issue
the present in Manila on the 17th day of April, 1906.
A. K. JONES,
Clerk of the Court.
On the 19th day of April, 1906, the record shows that Modesto Reyes, attorney
for the city of Manila (p. 131, record) presented a written statement to the court
calling its attention to the fact that there existed an "error of closure" in the plan of
said Parcel A, and asked the court to correct the error. The said attorney also
called the attention of the other plans of the other parcels of land, included in the
original petition. Our attention has not been called to any order made by the
lower court, relating to said request of the attorney of the city of Manila.
In accordance with said notice to all of the interested parties, the hearing on the
said petition was brought on for trial on the 25th day of April, 1906, at 9 o'clock a.
m., at the place mentioned in said notice. At the hearing the petitioner was
represented. No one appeared to represent the "heirs of Antonio Enriquez."
On said date (April 25, 1906, at 9 o'clock a. m.) the cause relating to said Parcel
A was brought on for trial. Mr. Antonio Bonifas appeared for the petitioner and
My. Modesto Reyes, attorney for the city of Manila, appeared for the city of
Manila. Mr. Reyes called the attention of the court again to the fact that there
existed certain errors in the measurement of some of the sides of the plan
presented by the petitioner. In view of said fact (the existence of errors) the court
ordered that said errors be corrected. So far as the record shows no correction
whatever was made in the plan of said Parcel A.
On the 21st day of July, 1906, the cause having been brought on for hearing, the
honorable Simplicio del Rosario, judge, distated the following order or judgment
in default against all persons:
UNITED STATES OF AMERICA,
PHILIPPINE ISLANDS.
COURT OF LAND REGISTRATION.
No. 1895.

Application of Maria del Consuelo Felisa Roxas y Chuidian for


registration of the real estate described herein,
vs.
The Attorney-General of the Philippine Islands; the Municipal Board
of the city of Manila; A. Sing; A. Burke: Macke & Chandler; F. M.
Sousa; Ramon Geneto; Tomas Serrano; Rosendo Comas; Cheng
Tao Sang; Luciano Cordoba; Salgado, Gordillo & Martinez;
Greilsammer Hermanos; Williams & Chandler; Antonio Vy Chuico;
Lim Tinco; And Seng Queng; Candido Lim; Hartigan, Rohde &
Gutierrez; Carmen Ayala de Roxas; Maximo Cortes and Dolores
Ochoa; Francisco Saez; Alfonso Tiaoqui; Gervasia Rosario Ventura;
and Enrique Somes; and whomsoever it may concern, defendants.
The present case having been duly tried, and
Whereas, the clerk of this court caused to be published once only a notice
in due from referring to the application mentioned, in two newspapers of
general circulation, one printed in the English language and another in the
Spanish language, to wit, The Manila Times of this city, and La
Democracia of the same city; and 119 days have elapsed since publication
of said notice was effected;
Whereas, said clerk caused to be sent by registered mail, within seven
days after the publication of the said notice, a copy thereof in the Spanish
language to each one of the persons named in the application or who
appeared to be concerned therein;
Whereas, the sheriff of Manila posted in a conspicuous place on each of
the parcels of land included in the application a certified copy of the notice
in Spanish, and also in a conspicuous place in the principal municipal
building of the city of Manila, before the fourteen days preceding that set
for the termination of the period fixed;
Whereas, all of the persons cited as defendants have failed to appear to
impugn the application, within the period fixed by the law;
This court orders a declaration of default against all the defendants and
other persons who may be concerned in opposing the application, which is
granted.

Given by the Honorable S. del Rosario, judge of the said Court of Land
Registration, in Manila, this 21st day of July, 1906.
Attest: A. K. JONES,
Clerk of the Court.
Later the Honorable Simplicio del Rosario dictated the following order, decreeing
that said parcel of land, A, be registered as the absolute property of Maria del
Consuelo Felisa Roxas Y Chuidian. Said decree was as follows:
Having tried case No. 1895, this court decrees that Maria del Consuelo
Felisa Roxas y Chuidian, of Manila, Philippine Islands, applicant, spinster,
is the absolute owner of the real property, which is adjudicated to her,
located in the city of Manila, the description whereof is hereinafter set forth:
A parcel of land, situated at Nos. 84 to 96 Calle Escolta, district of
Binondo; bounded on the NE. by the property of Carmen Ayala de Roxas;
on the SE. by the Pasig River; on the SW. by the property of the heirs of
Antonio Enriquez; and on the NW. by Calle Escolta.
Beginning at a point marked A on the plan, which point is 27.75 m. S., 49
40' W. from the extreme W. of the angle situated at the intersection S. of
Calle Escolta and Passage de Perez; and from said point A., S., 46 30'
W., 31.08 m. to point B; thence S., 46 15' E., 16.15 m. to point C; thence
S., 42 E., 32.75 m. to point D; thence S., 40 50' E., 13.20 m. to point E.;
thence N., 49 45' E., 14.25 m. to point F; thence N., 52 E., 10.94 m. to
point G; thence N., 36 20' W., 14.20 m. to point H; thence N., 38 40' W.,
17.16 m. to point I; thence N., 52 35' E., 2.27 m. to point J; thence N., 38
50' W., 4.12 m. to point K; thence N., 53 30' E., 0.30 m. to point L; thence
N., 40 05' W., 14 m. to point M; thence N., 44 W., 15.35 m. to point of
beginning; having an area of 1,817.03 square meters.
All the points named are marked on the plan; the bearings are magnetic;
date of survey, December 26, 1905.
Wherefore this court orders that the said real property be registered in
accordance with the provisions of the Land Registration Act in the name of
the aforesaid Maria del Consuelo Felisa Roxas y Chuidian, subject
however to any of the encumbrances set forth in section 39 of said Act that
may be in force and effect.

Given by the Honorable S. del Rosario, judge of the said Court of Land
Registration, in Manila, this twenty-first day of July, nineteen hundred and
six, at eight o'clock and ten minutes ante meridian.
Attest:
[SEAL.] (Sgd.) A. K. Jones,
Clerk of the Court.
A copy of this decree was sent to the register of deeds of Manila,
September 25, 1906.
On the 21st day of July, 1906, the court issued the certificate of title known as
No. 742, and delivered to the petitioner the owner's duplicate, and the property
became registered under the Torrens system, in the name of the petitioner.
After the registration of said Parcel A in the name of the petitioner, on the 21st
day of July, 1906, nothing further seems to have been done in the Court of Land
Registration until on or about the 19th day of December, 1911, nearly five years
and a half after said land had been registered, when we find that the assistant
attorney of the city of Manila filed the following petition:
UNITED STATES OF AMERICA,
PHILIPPINE ISLANDS.
COURT OF LAND REGISTRATION.
Case No. 1895.
Roxas y Cuyugan, applicant.
MOTION.
The city of Manila, through its undersigned attorney, comes now into the
court and respectfully represents;
I. That the plan of the property with which the present case deals is
affected by an error of closure greater than 1/1500;
II. That the city of Manila is interested in the correction of said error as it
has to expropriate a portion of said land for use as a public street;
Therefore, the petitioner prays the court to order a new survey of said
property described in the plan filed in this case.
Manila, P. I., December 18, 1911.

It is not clear whether said petition refers to the incorrections in the plan of Parcel
A or to the incorrections in the plans of the other parcels of land (B, C, and D),
which were included in the petition of the petitioner.
On the 23d date of December, 1911, the honorable Charles H. Smith, judge of
the Court of Land Registration, referred the petition of the city of Manila to the
chief surveyor of the court. On the 27th day of December, 1911, the said
surveyor reported to the court that there existed "errors of closure in said plans."
On the 5th day of January, 1912, the judge of the Court of Land Registration
ordered the chief surveyor to prepare new plans, in accordance with section 4 of
Act No. 1875, and directed that notice be given to the adjoining owners.
On the 28th day of February, 1912, the original petitioner, Maria del Consuelo
Felisa Roxas y Chuidian, presented a petition for the correction of the certificate
issued to her on the 21st day of July, 1906, so as to include the buildings upon
the lands included in her petition. Said petition was as follows:
UNITED STATES OF AMERICA,
PHILIPPINE ISLANDS.
COURT OF LAND REGISTRATION:
Case No. 1895.
Maria del Consuelo Felisa Roxas y Chuidian, applicant.
Comes now the applicant into the Honorable Court of Land Registration
and represents:
1. That on January 10, 1906, Don Antonio Bonifas, in the name and
representation of the applicant, sought the legalization of property title to
four estates, among them the following:
(a) A parcel of land with the buildings erected thereon, located at Nos. 84
to 96 Calle Escolta, district of Binondo.
(b) Another parcel of land with the buildings erected thereon located at
Nos. 28 to 36 Calle Escolta, district of Binondo.
(c) Another parcel of land with the buildings erected thereon, located at No.
149 Calle Nueva, corner of Callejon Carvajal, district of Binondo.
2. That the other estate mentioned in the said application refers to a parcel
of land, with the buildings erected thereon, located at Nos. 222 to 230

Calle Rosario, district of Binondo, which buildings were totally destroyed by


the fire that occurred on the 2d of November of the year just past, and it
cannot therefore be included in the purpose of the present application.
3. That in the said application it is stated that the land of the estate
designated by the letter (a) was assessed at 65,072 dollars and 50 cents
United States currency, and the buildings at 18,500 dollars United States
currency; that the land of the estate designated by the letter (b) was
assessed at 55,020 dollars and 50 cents, United States currency, and the
buildings at 15,000 dollars, United States currency; and the land of the
estate designated by the letter (c) was assessed at 5,658 dollars Unites
States currency, and the buildings at 5,000 dollars United States currency.
4. That both in the property titles to the said estates and in the plans and
technical descriptions thereof which accompany said application and are
annexed to the above-entitled case, it appears that on the parcels of land
which form part of the estates under consideration there are erected
buildings, consisting of two houses of strong materials, one behind the
other, in the estate designated by the letter (a); a house of stone and
masonry in that designated by the letter (b); and another house of stone
and masonry in that designated by the letter (c).
5. That in the record of the register of deeds, in the registration entries
referring to the said estates, it appears that they consist of the parcels of
land and the buildings stated.
6. That in the notice to the Attorney-General, the Municipal Board, the
tenants, and owners conterminous with the estates referred to therein, the
buildings erected on them are likewise mentioned.
7. That by decree of June 21, 1906, adjudication and registration of the
estates were ordered in applicant's favor in the terms set forth in the
application; but in the certificate of the decree or resolution under
consideration, issued by the clerk of the court, the description of the parcel
of land corresponding to each estate was given, but the respective building
on each was omitted, and in this form were issued the certificates of title,
Nos. 472, 764, and 743, which accompany this application.
8. That on January 12, September 21, October 9 and 22, 1906, the legal
representative of the applicant guaranteed by deposit, as assurance fund,
the rights of issuance of title and one-tenth of 1 per cent of the assessed
valuation, the sum of P943.70 Philippine currency, the receipts and
vouchers wherefore do not accompany this application because the

applicant destroyed them in the belief that there was no need to exhibit
them, but averring that the amounts paid for those purposes are credited in
the accounting division of the Court of Land Registration and the office of
the register of deeds, as has been ascertained by a person delegated
therefor by the applicant.
9. That when applicant attempted to alienate one of the estates mentioned
she observed the omission in the corresponding certificate of title of the
building existing thereon, the same as in the certificates of title
corresponding to the other two estates; and as it is to be supposed that
said omission is due solely to a simple clerical error, which nevertheless
greatly affects the applicant's right, she appeals to your honorable court
with the request that you order the correction of said omission, especially
as there at present exist on the said parcels of land, without modification or
alteration, the same buildings that existed when legalization of title thereto
was applied for and which appear in the titles of acquisition annexed to the
above-entitled case, reference whereto has been made in the third
paragraph.
10. That for greater assurance and for the purpose of proving that the said
estates consist not only in the parcel of land or lot but also in the building
erected on each, the applicant attaches hereto the assessment or
property-tax receipts for each of the said estates, wherein are stated the
two points mentioned.
11. That in view of what has been set forth and explained, the applicant
prays the honorable court to decree, after the necessary legal
proceedings, correction of the omission referred to by ordering the free
issuance of a new certificate of title to each of the said estates, wherein
record be made of the building erected on each, consisting of those
enumerated in the third paragraph of this application.
Manila, February 28, 1912.
MARIA DEL CONSUELO FELISA ROXAS Y CHUIDIAN.
On the 9th of April, 1912, the Masonic Temple Association of Manila sent a
communication to Honorable Charles H. Smith, judge of the Court of Land
Registration, accompanied by a contract, showing that on the 20th day of March,
1912, Maria del Consuelo Felisa Roxas y Chuidian had sold all her rights, title,
and interest in said Parcel A,including the buildings thereon, to the said Masonic
Temple Association of Manila. Said Masonic Temple Association of Manila

requested the judge of the Land Court to attach said contract to the record in the
case and issue a new certificate to it.
On the 19th day of April, 1912, a new plan of said Parcel A, prepared by Mr. B.
W. Hay, surveyor of the Bureau of Lands, was presented, in accordance with the
order of the court of the 23d of December, 1911. Said new plan was made for the
purpose of correcting the errors in closure in the original plan presented by the
petitioner on the 10th day of January, 1906. Said new plan is as follows (see
page 48):
After the presentation of said new or corrected plan, the motions:
(a) That of the city of Manila to have corrected the error of closure in the original
plan;
(b) That of Maria del Consuelo Felisa Roxas y Chuidian, to have included in her
certificate of title the buildings located upon the lands registered in accordance
with her original petition; and
(c) That of the Masonic Temple Association of Manila, to have a certificate issued
to it in accordance with its contract of purchase of said lands from Maria del
Consuelo

{bmc 029048.bmp}

Felisa Roxas y Chuidian after notice had been given to all the interested
parties, were set down for hearing. For one reason or another, the hearings on
said motion were transferred from one date to another from the 22d of April,
1912, until the 24th of August, 1912. During said various hearings, in addition to
the appointment of a commission to view the premises, certain proof was taken
upon the question of the correctness of the original plan presented by the
petitioner, in January, 1906. During said hearings the heirs of Don Antonio
Enriquez appeared and apparently made some objection to the granting of said
motions. They presented no written statement in which their specific objections
appear. The nearest approach to a definite and specific statement of their
objections appears in the argument of their counsel at the close of said several
hearings, in which it appears that their objections to the correction of the original
plan and certificate and the issuance of a new certificate to the Masonic Temple

Association of Manila was based upon the ground that they claimed
easements or servitudes in the land in the question.
After hearing all of the parties, the Honorable Charles H. Smith, judge of the
Court of Land Registration, and his associates, the Honorable James A. Ostrand
and the Honorable Norberto Romualdez, auxiliary judges of said court, sitting in
banc, on the 24th day of August, 1912, by a unanimous decision, granted the
motions of the city of Manila, of Maria del Consuelo Felisa Roxas y Chuidian, and
of the Masonic Temple Association of Manila.
On the 10th day of September, 1912, the attorneys for the objectors presented a
motion for new trial, basing it upon the ground that the conclusions of the lower
court were manifestly contrary to the proof. After a due consideration of said
motion for a new trial and after hearing the respective parties, the Court of Land
Registration, sitting in banc, composed of Charles H. Smith, James A. Ostrand,
and Norberto Romualdez, denied said motion, and the case was appealed to this
court. In this court the respondents presented the following assignments of error:
1. That the court below erred in holding that the proceedings of the Court
of Land Registration were valid in entering judgment in favor of the plaintiff
and appellee, confirming the title to lot 4, which is in controversy in this
suit.
2. That the judgment of the lower court is contrary to law.
3. That the judgment of the court below is against the manifest weight of
the evidence.
After a careful examination of the argument of the appellants in support of each
of said assignments of error, we are of the opinion that they may be discussed
together.
In the argument of the appellants in support of their assignments of error, there is
but little argument against the decision of the court rendered on the 24th of
August, 1912. Practically the whole argument of the appellants is based upon the
ground that the original certificate (No. 742, issued July 21, 1906) is absolutely
void, for the reason that "the appellants had no notice of the pendency of the
original action to confirm the title of said property." Appellants now admit that a
notice of the pendency of the original action was sent to attorneys Hartigan,
Rohde & (Marple?) Gutierrez. Appellants now allege that it affirmatively appears
that neither this firm nor any of its members represented the defendants and
appellants in that action. The record shows, as we have pointed out above, that
the original petition showed that Hartigan, Rohde & Gutierrez were

the representatives of the heirs of Don Antonio Enriquez, and that notice was
duly sent to them. We have searched the record now in vain to find the slightest
denial of the fact that they were the representatives of said heirs, even though
one of said attorneys represented them, or at least some of them, in the present
proceedings. So far as the record shows there is not even a suggestion found in
the various hearings and proceedings taken and had under the above motions,
that said attorneys were not the representation of the heirs of Don Antonio
Enriquez at the time of the original proceedings. Neither does the record show
any attempt on their part to deny the fact that they received the notices given in
the original action. The appellants assert in their argument that "personal notice
was absolutely necessary in order to justify the court below in rendering a decree
in favor of the plaintiff and appellee, in the first instance" (the original
proceeding). The appellants, by that argument, attempt to show, not that the
judgment of the 24th of August, 1912, was invalid, but that the original certificate
(No. 742) was void, because they had not been served with personal notice. This
brings us to the question whether or not personal notice to all of the persons
interested in an action for the registration of real property under the Torrens
system, is an absolute prerequisite to the validity of said registration. It will be
remembered that we noted above that personal notice of the pendency of the
original petition had been given and that a publication of the same had been
made in accordance with the provisions of sections 31 and 32 of Act No. 496.
After the expiration of the period during which notice must be given, the original
cause was set down for hearing. The record also shows that the clerk of the Land
Court made a certificate showing that that notice had been issued and published
in accordance with the law. Section 32 provides, in part, that said "certificate of
the clerk that he had served the notice as directed by the court, by publishing or
mailing, shall be filed in the case before the return day, and shall be conclusive
proof of such service."
On the day set for the hearing of said original petition, no one appeared to
oppose the granting of the prayer which it contained. Section 35 of Act No. 496
provides: "If no person appears and answer within the time allowed, the court
may at once, upon motion of the applicant, no reason to the contrary appearing,
order a general default to be recorded and the application ( petition) be taken for
confessed. By the description in the notice. "To all whom it may concern," all the
world are made parties defendant and shall be concluded by the default and
order. The court shall not be bound by the report of the examiner of titles, but
may require other and further proof."
The provisions of section 35 seem to be directly contrary to the contention of the
appellants. It seems to directly contradict the requirements of personal notice as
an absolute prerequisite to the granting of a valid title under the Torrens system.

The same idea is further confirmed by the provisions of section 38 of said Act No.
496. Said section 38 provides that: "Every decree of registration shall bind the
land and quite the title thereto, subject only to the exceptions stated in the
following section. It shall be conclusive upon and against all persons, including
the Insular Government, and all the branches thereof, whether mentioned by
name in the application, notice or citations, or included in the general description
'To all whom it may concern.'"
There is a further and very strong intimation in the law that personal notice is not
absolutely a prerequisite to the validity of title under the Torrens system. Section
32 (Act No. 496) provides that: "The court shall, so far as it deems it possible,
require proof of actual notice to all the adjoining owners and to all persons who
appear to have an interest in or claim to the land included in the application." It
will be noted also that the petitioner in registration cases is not by law required to
give any notice to any person. The law requires the clerk of the court to give the
notices. (Sections 31 and 32 of Act No. 496.) It is true that "the court may also
cause other or further notice of the application to be given in such a manner and
to such persons as it may deem proper." Thus it is seen that the applicant is by
express provision of law relieved from any obligation whatsoever to give motive
to any person of the pendency of his application to have his land registered
under the Torrens system. That being true, upon what theory may the applicant
be subjected to harassment or delay or additional expense, because some
person claims that he did not receive actual personal notice? Section 101 and
102 (Act No. 496) seem to contain a remedy for persons who have suffered
damages for the failure on the part of court officials to comply with the law.
(Noble State Bank vs.Haskell, 219 U. S., 104.) His remedy is not to have the
registration and certificate annulled, unless he comes within the provisions of
section 38, and even then he is without a remedy against the applicant unless he
can show, within a period of one year after the decree of registration and the
granting of the certificate, at he has been "deprived of land or any estate or
interest therein," by fraud, and not even then, if an "innocent purchaser for the
value has acquired and interest." In the present case five years and a half had
transpired and negotiations for the sale of the land to an innocent purchaser had
been terminated. There is not intimation that the petitioner is guilty of fraud, in the
slightes degree.
While the Torrens Land Law is a law of modern times, is has been adopted in
many States and its provisions have been attacked at almost every point. The
requirements relating to notices has been a fruitful source of litigation. The
constitutionality of the law has been attacked many times, because of the
provision of said law relating to notices. This is not the first time that the question
has been presented to this court. The same question was presented to this court
in the case of Grey Alba vs. De la Cruz (17 Phil. Rep., 49). In that case the

registered title was attacked upon the ground that fraud existed, simply because
personal notice had not been given. The existence of fraud was predicated upon
the failure of actual personal notice. In passing upon that question, this court,
speaking through Mr. Justice Trent, said (quoting from the syllabus):
In original proceedings for the registration of land under Act No. 496, the
appellee herein was made a party- defendant by publication, but was not
personally served with notice: Held, That the decree of the Court of Land
Registration is conclusive against his as well as all the world.
The proceedings for the registration of land, under Act No. 496, are in
rem and not in personam. A proceeding in rem, dealing with a tangible res,
may be instituted and carried to judgment without personal service upon
the claimants within the state or notice by name to those outside of it.
Jurisdiction is secured by the power of the court over the res. Such a
proceeding would be impossible were this not so, for it would hardly do to
make a distinction between the constitutional rights of claimants who were
known and those who were not known to the plaintiff, when the proceeding
is to bar all. (Tyler vs. Judges, 175 Mass., 71.)
In the present case there is not the slightest intimation that the original applicant
(Maria del Consuelo Felisa Roxas y Chuidan) was guilty of fraud. The record
shows that she named all the persons who might have an interest in the
registration of her land, in her petition. The applicant is not charged even with
negligence. The record shows that she did all the law required her to do.
In discussing the Torrens Land Law we must keep in mind that its primary
purpose is the registration of the title which the applicant or petitioner has and to
relieve his land of unknown liens or claims, just or unjust, against it. The Torrens
system of land registration is a system for the registration of title to land only, and
not a system established for the acquisition of land. It is not intended that lands
may be acquired by said system of registration. It is intended only that the title,
which the petitioner has, shall be registered and thereby cleared of all liens and
burdens of whatsoever character, except those which shall be noted in the order
of registration and in the certificate issued.
If there exists known and just claims against the title of the applicant, he gains
nothing in effect by his registration, except in the simplicity of subsequent transfer
of his title. The registration either relieves the land of all known as well as
unknown claims, absolutely, or it compels the claimants to come into court and to
make there a record, so that thereafter there may be no uncertainly concerning
either the character or the extent of such claims.

The requirement that personal notice shall be a prerequisite to the validity of


registration would absolutely prohibit the foreclosure of unknown claims, for the
reason that personal notice could never be given to "unknown claimants." The
great difficulty in land titles arises from the existence of possible unknown
claimants. Known claimants can be dealt with. They furnish no valid impediment,
in fact, to the transfer of titles.
Courts have held that in actions in rem personal notice to owners of a res is not
necessary to give the courts jurisdiction to deal with and to dispose of the res.
(Grey Alba vs. De la Cruz, 17 Phil. Rep., 49; Tyler vs. Judges, 175 Mass., 71;
American Land Company vs. Zeis, 219 U.S., 47.) This rule was first established
in admiralty proceedings. It was established out of the very necessities of the
case. The owner of a ship, for instance, lived in London. His ship was found in
the most distant ports of the earth. Its operation necessarily required supplies,
such as men, coal, and food. The very nature of its business necessitated the
making of contracts. The continuance of its voyage depended upon its capacity
to make contracts and to get credit. It might also, perchance, cause damage to
other craft, in like conditions. To be able to secure all such necessities, to satisfy
all possible obligations, to continue its voyage and its business on the high seas,
merchants and courts came to regard the "ship" as a person, with whom or with
which they were dealing, and not its real owner. Consequently there came into
existence this action in rem. For the purpose of carrying into effect the broader
purposes of the Torrens land law, it has been universally considered that the
action should be considered as one in rem. Mr. Justice Holmes, then of the
Supreme Court of the State of Massachusetts, and now a member of the
Supreme Court of the United State, in the case of Tyler vs. Judges (175 Mass.,
71), in discussing this question, said:
Looked at either from the point of view of history or of the necessary
requirements of justice, a proceeding in rem, dealing with a tangible res,
may be instituted and carried to judgment without personal service upon
claimants within the State or notice by name to those outside of it, and not
encounter any provision of either constitution (of the State of
Massachusetts or the United States). Jurisdiction is secured by the power
of the court over the res. As we have said, such a proceeding would be
impossible were this not so, for it hardly would dot to make a distinction
between the constitutional rights of claimants who were known and those
who were not known to the plaintiff, when the proceeding is to bar all.
(Pennoyer vs. Neff, 95 U.S., 714, 727; The Mary, 9 Cranch 126, 144.)
There are many classes of cases where men may be deprived of their property
and of their rights, without personal notice of the proceedings in which that may
occur. For instance, in attachment cases, notice or service upon the defendant

may be had by publication. (Pennoyer vs. Neff, 95 U.S., 714, 727.) So also in
divorce proceedings, as well as the rights of claimants against estates of
deceased persons, personal notice is not a prerequisite. Notice by publication
may be had. Also unknown claimants or owners may be brought into court
without personal notice in an action for the condemnation of private property for
public use. There exists a multitude of cases in which personal service is not
necessary and service by publication is sufficient.
The law, even before the Torrens Law, provided means by which title to land
might be quited "by notice by publication to all persons." (Hamilton vs. Brown,
101 U.S., 256, 274; Huling vs. Kaw Valley, etc., Co., 130 U.S., 559, 564;
Parker vs. Overman, 18 Howard (N.Y.) 137; American Land Company vs. Zeiss,
219 U.S., 47; Arndt vs.Griggs, 134 U.S., 316; Perkins vs. Wakeman, 86 Cal.,
580.)
Even before the Torrens Law was adopted, the states had the power and right to
provide a procedure for the adjudication of title to real estate. The state had
control over real property within its limits. The conditions of ownership of real
estate in a state, whether the owner be a stranger or a citizen, are subject to its
rules, concerning the holding, transfer, liability to obligations, private or public,
and the models of establishing title thereto; and for the purpose of determining
these question, it (the state) may provide any reasonable rules or procedure.
(Clark vs.Smith, 13 Peters, 195; Barker vs. Harvey, 181 U.S., 481;
Mitchell vs. Furman, 180 U.S., 402; Botiller vs.Domingues, 130 U.S., 238;
Moore vs. Steinbach, 127 U.S., 70; Arndt vs. Griggs, 134 U.S., 316; American
Land Company vs. Zeiss, 219 U.S., 47.)
The state possesses not only the power to determine how title to real estate may
be acquired and proved, but it is also within its legislative competency to
establish the method of procedure. (American Land Co. vs. Zeiss, 219 U.S., 47;
Bertrand vs. Taylor, 87 Ill., 235; Title, Document, etc., Company vs. Kerrigan,
150 Cal., 208, 305; Perkins vs.Wakeham, 86 Cal., 580.)
The estate, as sovereign over the lands situated within it, may provide for the
adjudication of title in a proceeding in rem, or in the nature of a proceeding in
rem, which shall be binding upon all persons known and unknown.
(State vs.McGlynn, 20 Cal., 233; 81 Am. Dec., 118; Perkins vs. Wakeham, 86
Cal., 580; 21 Am.t. Rep., 67; McLaughlin vs.McCrory, 55 Ark., 442; 29 Am. St.
Rep., 56; People's National Bank vs. Cleveland, 117 Ga., 908; People vs. Simon,
176 Ill., 165; 68 Am. St. Rep., 175; Quarl vs. Abbett, 102 Ind., 233; 52 Am. Rep.,
662; Ruppin vs. McLaughlin, 122 Iowa, 343; Young vs. Upshur, 42 La. An., 362;
21 Am. St. Rep., 381; Tyler vs. Judges, 175 Mass., 71; 51 L.R.A., 571; 57 L.R.A.,

297; Rohrer vs. Ader, 124 Mo., 24; Sandiford vs. Town of Hempstead, 90 N.Y.
Supp., 76, 79, 97; Arndt vs. Griggs, 134 U.S., 316.)
If the state can provide for substituted service for the purpose of quieting title to
real estate against an unknown resident, it may provide a reasonable method for
securing substituted services against residents. The power of the state to provide
methods of quieting title should not be limited to known persons. In order to make
such a law valuable and effective to its fullest extent, it is necessary that it be
made to operate on all interest and persons known or unknown.
Mr. Justice Holmes, in the case of Tyler vs. Judges (175 Mass., 71) in discussing
this question, said: "If it (the procedure) does not satisfy the Constitution, a
judicial proceeding to clear titles against all the world hardly is possible, for the
very meaning of such a proceeding is to get rid of unknown as well as known
claims indeed certainly against the unknown may be said to be its chief end
and unknown claims cannot be dealt with by personal service upon the claimant."
Mr. Chief Justice White of the Supreme Court of the United States, in the case of
the American Land Company vs.Zeiss (219 U. S., 47) said: "To argue that the
provisions of the statute are repugnant to the due process clause (of the
Constitution) because a case may be conceived where rights in and to property
would be adversely affected without notice being actually conveyed by the
proceedings is in effect to deny the power of the state to deal with the subject.
The criterion is not the possibility of conceivable injury, but the just and
reasonable character of the requirements, having reference to the subject with
which the statute deals."
The court of appeals of the State of New York, in the case of In re Empire City
Bank (18 N.Y., 199, 215) in speaking of the right of the state to prescribe in
suitable cases for substituted service, said: "Various prudential regulations are
made with respect to these remedies by it may possibly happen, notwithstanding
all these precautions, that a citizen who owes nothing, and has done none of the
acts mentioned in the statutes, may be deprived of his estate without any actual
knowledge of the process by which it has been taken from him. If we hold, as we
must, in order to sustain this legislation, that the Constitution does not positively
require personal notice in order to constitute a legal proceedings due process of
law, it then belongs to the legislature to determine in the particular instance
whether the case calls for this kind of exceptional legislation, and what manner of
constructive notice shall be sufficient to reasonably apprise the party proceeded
against of the Legal steps which are taken against him. (American Land
Company vs. Zeiss, 219 U.S., 47; Title, Document, etc., Company vs. Kerrigan,
150 Cal., 289.)"

The only case cited by the appellants in support of their argument, is the case of
the American Land Company vs.Zeiss (219 U.S., 47). In view of the facts and the
decisions of the different courts which are cited in that case, it is difficult to
understand how it is authority in support of the contention of the appellants here.
The facts in that case are as follows:
Zeiss, on the 22d of August, 1906, commenced an action in the superior court of
the country San Francisco, alleging in substance that on the 18th and 19th days
of April, 1906, a material part of the public records contained in the office of the
county recorder of the city and county of San Francisco was destroyed by fire;
that on the 18th day of April, 1906, and at the time of the filing of the complaint,
he was the owner and in the actual and peaceable possession of the parcels of
land in controversy: that his estate, title, interest in and to said parcels of land,
and each of them, was that of owner in fee simple, absolute, free from all
encumbrances, liens, defect, claims or demands of any kind or nature
whatsoever. Under these facts the plaintiff, Zeiss, prayed that the be adjudged to
be the owner of and entitled to the possession of said parcels of land, and each
of them, was that of owner in fee simple, absolute, free from all encumbrance,
liens, defects, claims or demands of any kind or nature whatsoever. Under these
facts the plaintiff, Zeiss, prated that he be adjudged to be the owner of and
entitled to the possession of said described parcels of land in fee simple, and that
no one else had any estate, rights, title, interest or claim in or to the same, or any
part thereof, either legal or equitable, present or future, vested or contingent.
Upon the presentation of the petition by Zeisss, a summons was issued and
notice of the pendency of the action was published in certain newspaper, as was
required by law. Notice was also posted upon the property, as required by the
statute. No one having appeared and opposed the granting of the petition of the
complaint, or claimed any interest in or lien upon the property described in the
complaint, a default was ordered against all persons, and on the 19th days of
December, 1906, a decree was entered in favor of Zeiss, adjudging that he was
the owner in fee simple, absolute, and entitled to the possession of the land
described in the complaint and that no other person had any right title, interest, or
estate in and to the same, or any part thereof, either legal or equitable, present or
future, vested or contingent.
Nothing else seems to have transpired after said decree was issued in favor of
Zeiss, until the 26th day of May, 1908, or one year and five months after the
entry of the decree of the superior court, in the city and county of San Francisco.
On that date (the 26th of May, 1908) an action was brought in the United States
Circuit Court for the Northern District of California, in which the plaintiffs claimed
title to the parcels of land, as owners in fee simple, absolute, which had
theretofore been decreed to Zeiss. The plaintiff alleged that the decree issued by

the superior court of the city and county of San Francisco was void and of no
force and effect and was made and maintained without due process of law,
and that said superior court, in said action and proceedings never had any
jurisdiction over the persons holding the title during such proceedings, and that
said court did not have or obtain jurisdiction to divest the right, title, interest or
estate of plaintiff . The complaint alleged that "Zeiss had no right whatever in said
parcels of land, other than his rights of possession and occupation." The bill
further alleged that the plaintiffs had been at all times citizens and residents of
California, not seeking to evade, but ready to accept service of summons and
easily reached for that purpose; that, notwithstanding that fact, no service was
made upon them nor did they in any way receive notice of the pendency of the
action (Zeiss vs. All persons claiming any interest in or lien upon the real property
herein described); nor did they gain any knowledge of existence of the decree
until more than a year after its entry. To the complaint the defendant, Zeiss,
demurred.
Upon the issue thus presented, the Circuit Court of Appeals for the Ninth District
certified the question involved to the Supreme Court of the United States. The
Supreme Court of the United States, after a careful analysis of the facts and of
the law, in a very lengthy and instructive opinion (219 U. S., 47), decided each of
the question submitted by the Circuit Court of Appeals against the contention of
the plaintiff and returned the cause to the court below.
The original action by Zeiss was brought to quiet the title to two parcels of land
for the purpose of registrating his title to the same under an act of the legislature
of the State of California, entitled "An act to provide for the establishment and
quieting of title to real property in case of loss or destruction of public records."
Said law is known as the McEnerney Law. It was intended by said act to provide
a method whereby owners in possession of real estate, where records had been
destroyed to such an extent as to make it impossible to trace a record title, might
secure a degree in the court which would furnish public, authenticated evidence
of title. The special occasion for the law was the fact that practically all of the
public records of title in several counties in the State of California had recently
theretofore been destroyed as the result of an earthquake and fire. Said law
provided that whenever the public records in the office of the county recorded
had been, or shall hereafter be lost or destroyed, in whole or in any material part,
by flood, fire, or earthquake, any person who claims an estate of inheritance or
have title in, and who had by himself or his tenants, or other persons holding
under him, in actual and peaceable possession any real property in said county,
may bring and maintain an action in rem, against all the world, in the superior
court for the county in which said real property is situate, to establish his title,
and to determine all adverse claims thereto.

The law further provides that an action shall be commenced by the filing of a
verified complaint, in which he shall name the defendants as "all persons
claiming any interest in or lien upon the real property herein described, or any
part thereof." He was required to give in his complaint a particular description of
the property. The law provided that upon the filing of the complaint, a summons
or notice was required to be issued, containing the names of the court and the
country in which the action was brought, the name of the plaintiff, and a particular
description of the property involved, which notice was directed to "all persons
claiming any interest in or lien upon the real property herein described, or any
part thereof," as defendants.
The law further provided that said summons or notice should be published in a
newspaper of general circulation in the county where the action was brought, at
least once a week for a period of two months.
The law further provided that personal notice should be given to any person
claiming an interest in the property or a lien thereon adverse to the plaintiff.
The said law further provided that upon the publication and posting of the
summons and its service upon and mailing to the person, if any, upon whom it is
herein directed to be specially served, the court shall have full and complete
jurisdiction over the plaintiff and said property and of the person and every one
claiming any estate, right, title, or interest in or to or lien upon said property, or
any part thereof, and shall be deemed to have obtained the possession and
control of said property, for the purpose of the action, and shall have full and
complete jurisdiction to render judgment therein, which is provided for in the law.
In the case of the American Land Company vs. Zeiss, cited and relied upon by
the appellants, the validity of said law was attacked and the legality of the title
granted to Zeiss was impugned for the reason that the law was unconstitutional
and void, and because the plaintiff had not received actual notice of the
application to Zeiss to have his title quieted, under said law. The Supreme Court
of the United States (219 U.S., 47) held, as has been above indicated, that the
law was constitutional and that a compliance with the requirements of the notice
provided for in said law was sufficient to give the court jurisdiction over the res
and to enter a valid decree. There seems to be but little in the decision in the
case of the American Land Company vs. Zeiss to support the contention of the
appellants.
Considering that the Legislature of the Philippine Islands had full power to adopt
the procedure provided for in Act No. 496, for the registration of the title of lands;
and

Considering that the court in the original action followed strictly the procedure
adopted by said law; and
Considering that there is no claim of fraud, actual or constructive, upon the part
of any of the parties connected with said action, we are forced to the conclusion
that the appellants here are not now entitled to have that judgment or decree of
registration and certificate amended or set aside.
There remains another question, however, which the appellants have not
discussed and which we deem of importance. It is the question of the right of the
Land Court to correct an error of closure in a plan or of a statement contained in
a certificate. A plan is prepared and is presented with the petition for the
registration of a parcel of land. No opponents appear. No opposition is presented
to the registration. All the steps in the procedure required by law have been
taken. The land is registered. It is then discovered for the first time that by reason
of a wrong direction given to one of the lines in the plan, said plan will not close
that if a wall were built upon the lines of the plan, one of the four corners of the
wall would not meter. We believe that an error of the character may be corrected
by the court, provided that such correction does not include land not included in
the original petition. Upon the question whether the amended plan (p.252,
record) included more or different lands than were included in the original
petition, we find the following statements made by one of the judges who ordered
said plan amended. The statements is:
At this stage of the proceedings and on his particular point nothing further
is incumbent upon the court than to determine the property as it was
adjudicated in this case.
Therein no new portion was either added or subtracted, and this court finds
that such should be the holding on this particular point.
We have a further statement made by one of the judges, the Honorable Charles
H. Smith, relating to the same question, in an answer presented by him to a
petition for a writ of prohibition, presented by some the appellants herein, to the
Supreme Court. That petition for a writ of prohibition involved practically the
same question presented by the appellants here now. Upon the question whether
or not additional lands had been included in the new plan (p.252, record), Judge
Smith, in answering for himself and his associates (Ostrand and Romualdez)
said:
Respondents deny that a new dividing line between the premises in
question (premises of the plaintiff and appellant) was determined and
established by an order of the court issued at the conclusion of said

proceedings, but, on the contrary, respondents charge the truth to be that


the dividing line between said properties was not changed but simply
approved and so indicated upon the record title. For instance, the line
between said properties beginning on the south side of the Escolta is
exactly at the same point indicated in the original description and approved
by the court; in other words, the premises in question of the said Maria del
Consuelo Felisa Roxas y Chuidian have not been enlarged; the boundary
lines thereof have not been changed; the real descriptions of the properties
have been left undisturbed; the adjoining land owned by the petitioners is
undiminished, except possibly as to alleged easements claimed to have
been created by the projection of some of the roots of the petitioners'
building over the aforesaid registered property of the said Roxas. That
matter is settled clearly by the provisions of the last paragraph of section
39 of Act No. 496."
We called attention above to the fact that the petitioner alleged that the line A-B
of her property ran S., 44 30' W., a distance of 31.08 meters, while the plan
accompanying said petition (see Exhibit A, page 35, ante) made said line to run
S., 46 30' W., a distance of 31.08 meters An examination of the certificate
issued to the petitioner (see page 39,ante) also states that the line A-B runs S.,
46 30' W., for a distance of 31.08 meters. The record contains no application why
the original plan (see Exhibit A, page 35, ante) did not conform to the description
of the land given in the petition. That error, in our judgment, seems to have
constituted the real difficulty with the closure of the plan. Under said conditions
we are of the opinion that the Land Court is entirely justified in ordering the plan
corrected for the purposes above indicated.
There is still another question involved in the case, which the appellants have not
discussed, and that is the right of Maria del Consuelo Felisa Roxas y Chuidian to
have her original certificate of registration corrected, for the purpose of showing
that she was the owner of the buildings located upon the parcel of land in
question. It will be remembered that in her petition presented January 12, 1906,
she alleged that she was the owner of the parcel of land in question, together
with the buildings thereon. No opposition was presented. No objection was made
to the registration of the land as described in her petition. The record shows no
reason why the buildings should have been omitted in the certificate of
registration. The omission must have been an errors. on the part of the clerk. We
find that Act No. 496 contains an express provision for the correction of such
errors. Section 112 provides that the registered owner may, at any time, apply by
petition to have corrected any "error, omission, or mistake made in entering a
certificate, or any memorandum thereon, or on any duplicate certificate." We
think the petition presented by Miss Roxas for the correction of such original
certificate was entirely within her right under the law. It might be claimed, and we

believe that the proposition is sustained by law, that the registration of a parcel of
land, unless the record contains something to the contrary, necessarily includes
the buildings and edifices located thereon, even though they are not mentioned.
Without relying upon that proposition of law, however, and in view of the petition
of the plaintiff, it is hereby ordered that the original certificate be amended so as
to include not only the land described in the original petition, but the buildings
located thereon as well.
With reference to the petition of the Masonic Temple Association of Manila, the
record contains no sufficient reasons for not granting the same.
Therefore, and in view of all of the foregoing, we are of the opinion that the
judgment of the court below should be and it is hereby affirmed, with costs.
Arellano, C.J., Torres, Carson, Trent, and Araullo, JJ., concur.

Republic of the Philippines


SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-68741 January 28, 1988
NATIONAL GRAINS AUTHORITY, plaintiff-appellee,
vs.
INTERMEDIATE APPELLATE COURT, MELECIO MAGCAMIT, NENA COSICO and
EMELITA MAGCAMIT,defendants-appellants.

PARAS, J.:
This is a petition for review of the decision of the then Intermediate Appellate Court

* (now Court
of Appeals) dated January 31, 1984, reversing the decision of the Court of First Instance of Laguna and San Pablo City, 8th Judicial District,
Branch III, and of the resolution dated August 28, 1984 denying the motion for reconsideration filed thereof.

The undisputed facts of this case as found by the Trial Court and the Intermediate Appellate
Court are as follows:
On December 2,1971, the spouses Paulino Vivas and Engracia Lizards, as owners of a
parcel of land situated in Bo. San Francisco, Victoria, Laguna, comprising more or less
105,710 square meters, sold for P30,000.00 said property in favor of spouses Melencio
Magcamit and Nena Cosico, and Amelita Magcamit (herein private respondents) as
evidenced by "Kasulatan Ng Bilihang Mabiling Muli." This sale with right to repurchase was
recorded in the Office of the Register of Deeds of Laguna on December 6,1971 under Act
No. 3344. On January 31,1972 the sale was made absolute by the spouses Vivas and
Lizardo in favor of the private respondents for the sum of P90,000.00; P50,000.00 of which
was paid upon the execution of the instrument, entitled "Kasulatan Ng Bilihan Tuluyan,"
after being credited with the P30,000.00 consideration of the "Kasulatan Ng Mabibiling
Muli," and the balance of P40,000.00 was to be paid the moment that the certificate of title
is issued. From the execution of said Kasulatan, private respondent have remained in
peaceful, adverse and open possession of subject property.
On February 26, 1975, an Original Certificate of Title No. T-1728 covering the property in
question was issued to and in the name of the spouses Vivas and Lizardo without the
knowledge of the private respondents and on April 30, 1975, said Spouses executed a
Special Power of Attorney in favor of Irenea Ramirez authorizing the latter to mortgage the
property with the petitioner, National Grains Authority.
On May 2, 1974, the counsel for the petitioner wrote the Provincial Sheriff in Sta. Cruz,
Laguna, requesting for the extrajudicial foreclosure of the mortgage executed by Irenea
Ramirez on May 18, 1975, covering, among others, the property involved in this case
covered by OCT No. T-1728, for unpaid indebtedness in the amount of P63,948.80 in favor
of the petitioner.

On May 31, 1974, the Provincial Sheriff caused the issuance of the notice of sale of the
property in question, scheduling the public auction sale on June 28, 1974. The petitioner
was the highest and successful bidder so that a Certificate of Sale was issued in its favor on
the same date by the Provincial Sheriff.
On July 10, 1974, the petitioner in its capacity as attorney-in-fact of the mortgagor sold the
subject real property in favor of itself. By virtue of the deed of absolute sale, TCT No. T75171 of the Register of Deeds for the Province of Laguna was issued in the name of the
petitioner on July 16, 1974. It was only in July 1974, that private respondents learned that a
title in the name of the Vivas spouses had been issued covering the property in question
and that the same property had been mortgaged in favor of the petitioner. Private
respondent Nena Magcamit offered to pay the petitioner NGA the amount of P40,000.00
which is the balance of the amount due the Vivas spouses under the terms of the absolute
deed of sale but the petitioner refused to accept the payment. On July 31, 1974, counsel for
private respondents made a formal demand on the spouses Vivas and Lizardo to comply
with their obligation under the terms of the absolute deed of sale; and soon after reiterated
to the NGA, the offer to pay the balance of P40,000.00 due under the absolute deed of sale.
On August 13, 1974 petitioner in its reply informed counsel of private respondents that
petitioner is now the owner of the property in question and has no intention of disposing of
the same.
The private respondents, who as previously stated, are in possession of subject property
were asked by petitioner to vacate it but the former refused. Petitioner filed a suit for
ejectment against private respondents in the Municipal Court of Victoria, Laguna, but the
case was dismissed.
On June 4, 1975, private respondents filed a complaint before the then Court of First
Instance of Laguna and San Pablo City, Branch III, San Pablo City, against the petitioner
and the spouses Vivas and Lizardo, praying, among others, that they be declared the
owners of the property in question and entitled to continue in possession of the same, and if
the petitioner is declared the owner of the said property, then, to order it to reconvey or
transfer the ownership to them under such terms and conditions as the court may find just,
fair and equitable under the premises. (Record on Appeal, pp. 2-11).
In its answer to the complaint, the petitioner (defendant therein) maintained that it was
never a privy to any transaction between the private respondents (plaintiffs therein) and the
spouses Paulino Vivas and Engracia Lizardo that it is a purchaser in good faith and for
value of the property formerly covered by OCT No. 1728; and that the title is now
indefeasible, hence, private respondents' cause of action has' already prescribed. (Record
on Appeal, pp. 16-22).
After due hearing, the trial court ** rendered its decision on March 17, 1981, in favor of the petitioner, the dispositive portion
of said judgment reading as follows:

WHEREFORE, judgment is hereby rendered as follows:


(1) declaring defendant National Grains Authority the lawful owner of the
property in question by virtue of its indefeasible title to the same;

(2) ordering plaintiffs to turn over possession of the land to defendant


National Grains Authority;
(3) ordering defendants-spouses Paulino Vivas and Engracia Lizardo to pay
plaintiffs the sum of P56,000.00 representing the amount paid pursuant to the
Kasulatan Ng Bilihang Tuluyan marked Exhibit "3", with legal interest thereon
from January 31, 1972 until the amount is paid, to pay an additional amount
of P5,000.00 for and as attorney's fees, an additional amount of Pl0,000.00
as moral damages, another amount of P5,000.00 by way of exemplary
damages and to pay the costs of this suit. (Rollo, P. 35).
The private respondents interposed an appeal from the decision of the trial court to the
Intermediate Appellate Court.
After proper proceedings, the appellate court rendered its decision on January 31, 1984,
reversing and setting aside the decision of the trial court as follows:
WHEREFORE, the decision of the lower court is hereby reversed and set
aside and another one is rendered ordering the National Grains Authority to
execute a deed of reconveyance sufficient in law for purposes of registration
and cancellation of transfer Certificate of Title No. T-75171 and the issuance
of another title in the names of plaintiff-appellants, and ordering defendantsappellees Paulino Vivas and Engracia Lizardo to pay the National Grains
Authority the sum of P78,375.00 (Exh. 3) within thirty (30) days from the
receipts of the writ of execution. No damages and costs. (Rollo, p. 19).
The petitioner filed a motion for reconsideration of the said decision but the same was
denied. (Rollo, p. 26).
Hence, this petition.
In the resolution of May 20, 1985, the petition was given due course and the parties were
required to submit simultaneous memoranda (Rollo, p. 128). The memorandum for the
petitioner was filed on July 3, 1985 (Rollo, p. 129) while the memorandum for the private
respondents was filed on August 26, 1985 1 Rollo p. 192).
The main issue in this case is whether or not violation of the terms of the agreement
between the spouses Vivas and Lizardo, the sellers, and private respondents, the buyers, to
deliver the certificate of title to the latter, upon its issuance, constitutes a breach of trust
sufficient to defeat the title and right acquired by petitioner NGA, an innocent purchaser for
value.
It is undisputed that: (1) there are two deeds of sale of the same land in favor of private
respondents, namely: (a) the conditional sale with right to repurchase or the 'Kasulatan Ng
Bilihang Mabibiling Muli" which was registered under Act 3344 and (b) the deed of absolute
sale or "Kasulatan ng Bilihang Tuluyan" which was not registered; (2) the condition that the
Certificate of Title will be delivered to the buyers upon its issuance and upon payment of the
balance of P40,000.00 is contained in the deed of absolute sale; and (3) the land in

question at the time of the execution of both sales was not yet covered by the Torrens
System of registration.
It is axiomatic, that while the registration of the conditional sale with right of repurchase may
be binding on third persons, it is by provision of law "understood to be without prejudice to
third party who has better right" (Section 194 of the Administrative Code, as amended by
Act No. 3344). In this case, it will be noted that the third party NGA, is a registered owner
under the Torrens System and has obviously a better right than private respondents and
that the deed of absolute sale with the suspensive condition is not registered and is
necessarily binding only on the spouses Vivas and Lizardo and private respondents.
In their complaint at the Regional Trial Court, private respondents prayed among others, for
two alternative reliefs, such as: (a) to be declared the owners of the property in question or
(b) to order the declared owner to reconvey or transfer the ownership of the property in their
favor.
Private respondents claim a better right to the property in question by virtue of the
Conditional Sale, later changed to a deed of Absolute Sale which although unregistered
under the Torrens System allegedly transferred to them the ownership and the possession
of the property in question. In fact, they argue that they have been and are still in
possession of the same openly, continuously, publicly under a claim of ownership adverse
to all other claims since the purchase on December 2, 1971 (Rollo, p. 165). It is stressed
that not until the month of July, 1974 did the plaintiff learn that a title had been issued
covering the property in question (Rollo, p. 15).
Time and time again, this Court has ruled that the proceedings for the registration of title to
land under the Torrens System is an action in rem not in personam, hence, personal notice
to all claimants of the res is not necessary in order that the court may have jurisdiction to
deal with and dispose of the res. Neither may lack of such personal notice vitiate or
invalidate the decree or title issued in a registration proceeding, for the State, as sovereign
over the land situated within it, may provide for the adjudication of title in a proceeding in
rem or one in the nature of or akin a to proceeding in rem which shall be binding upon all
persons, known or unknown (Moscoso vs. Court of appeals, 128 SCRA 719 [1984], citing:
City of Manila vs. Lack, et al., 19 Phil. 324, 337; Roxas vs. Enriquez, 29 Phil. 31; Director of
Lands vs. Roman Catholic Archbishop of Manila, 41 Phil. 120; Aguilar vs. Caogdan, 105
Phil. 661). It is thus evident that respondents' right over the property was barred by res
judicata when the decree of registration was issued to spouses Vivas and Lizards. It does
not matter that they may have had some right even the right of ownership, BEFORE the
grant of the Torrens Title.
Thus, under Section 44 of P.D. 1529, every registered owner receiving a certificate of title in
pursuance of a decree of registration, and every subsequent purchaser of registered land
taking a certificate of title for value and in good faith, shall hold the same free from all
encumbrances except those noted on the certificate and any of the encumbrances which
may be subsisting, and enumerated in the law. Under said provision, claims and liens of
whatever character, except those mentioned by law as existing, against the land prior to the
issuance of certificate of title, are cut off by such certificate if not noted thereon, and the
certificate so issued binds the whole world, including the government (Aldecoa and Co. vs.

Warner Barns & Co., 30 Phil. 209 [1915]; Snyder vs. Fiscal of Cebu and Avila, 42 Phil. 766
[1922]). Under said ruling, if the purchaser is the only party who appears in the deeds and
the registration of titles in the property registry, no one except such purchaser may be
deemed by law to be the owner of the properties in question (Ibid). Moreover, no title to
registered land in derogation to that of the registered owner shall be acquired by
prescription or adverse possession (Umbay vs. Alecha, 135 SCRA 427 [1985]).
It does not appear that private respondents' claim falls under any of the exceptions provided
for under Section 44 of P.D. 1529 which can be enforced against petitioner herein.
Thus, it has been invariably restated by this Court, that "The real purpose of the Torrens
System is to quiet title to land and to stop forever any question as to its legality. "Once a title
is registered, the owner may rest secure, without the necessity of waiting in the portals of
the court, or sitting on the "mirador su casato," avoid the possibility of losing his land." "An
indirect or collateral attack on a Torrens Title is not allowed (Dominga vs. Santos, 55 Phil.
361; Singian vs. Manila Railroad, 62 Phil. 467)."
The only exception to this rule is where a person obtains a certificate of title to a land
belonging to another and he has full knowledge of the rights of the true owner. He is then
considered as guilty of fraud and he may be compelled to transfer the land to the defrauded
owner so long as the property has not passed to the hands of an innocent purchaser for
value (Angeles vs. Sania, 66 Phil. 444 [1938], emphasis supplied).
It will be noted that the spouses Vivas and Lizardo never committed any fraud in procuring
the registration of the property in question. On the contrary, their application for registration
which resulted in the issuance of OCT No. 1728 was with complete knowledge and implied
authority of private respondents who retained a portion of the consideration until the
issuance to said spouses of a certificate of title applied for under the Torrens Act and the
corresponding delivery of said title to them. The question therefore, is not about the validity
of OCT No. 1728 but in the breach of contract between private respondents and the Vivas
spouses. Petitioner NGA was never a privy to this transaction. Neither was it shown that it
had any knowledge at the time of the execution of the mortgage, of the existence of the
suspensive condition in the deed of absolute sale much less of its violation. Nothing
appeared to excite suspicion. The Special Power of Attorney was regular on its face; the
OCT was in the name of the mortgagor and the NGA was the highest bidder in the public
auction. Unquestionably, therefore, the NGA is an innocent purchaser for value, first as an
innocent mortgagee under Section 32 of P.D. 1529 and later as innocent purchaser for
value in the public auction sale.
Private respondents claim that NGA did not even field any representative to the land which
was not even in the possession of the supposed mortgagors, nor present any witness to
prove its allegations in the ANSWER nor submit its DEED OF MORTGAGE to show its
being a mortgages in good faith and for value (Rollo, p. 110).
Such contention is, however, untenable. Well settled is the rule that all persons dealing with
property covered by a torrens certificate of title are not required to go beyond what appears
on the face of the title. When there is nothing on the certificate of title to indicate any cloud
or vice in the ownership of the property, or any encumbrance thereon, the purchaser is not

required to explore further than what the torrens title upon its face indicates in quest for any
hidden defect or inchoate right that may subsequently defeat his right thereto (Centeno vs.
Court of Appeals, 139 SCRA 545 [1985]).
More specifically, the Court has ruled that a bank is not required before accepting a
mortgage to make an investigation of the title of the property being given as security (Phil.
National Cooperative Bank vs. Carandang Villalon, 139 SCRA 570 [1985]), and where
innocent third persons like mortgagee relying on the certificate of title acquire rights over the
property, their rights cannot be disregarded (Duran vs. IAC, 138 SCRA 489 [1985]).
Under the circumstances, the Regional Trial Court could not have erred in ruling that
plaintiffs (private respondents herein) complaint insofar as it prays that they be declared
owners of the land in question can not prosper in view of the doctrine of indefeasibility of
title under the Torrens System, because it is an established principle that a petition for
review of the decree of registration will not prosper even if filed within one year from the
entry of the decree if the title has passed into the hands of an innocent purchaser for value
(Pres. Decree No. 1529, Sec. 32). The setting aside of the decree of registration issued in
land registration proceedings is operative only between the parties to the fraud and the
parties defrauded and their privies, but not against acquirers in good faith and for value and
the successors in interest of the latter; as to them the decree shall remain in full force and
effect forever (Domingo vs. The Mayon Realty Corp. et al., 102 Phil. 32 [19571). Assuming,
therefore, that there was fraud committed by the sellers against the buyers in the instant
case, petitioner NGA who was not privy therein cannot be made to suffer the consequences
thereof As correctly declared by the trial court, the National Grains Authority is the lawful
owner of the property in question by virtue of its indefeasible title.
As to private respondents' alternative prayer that the declared owner be ordered to
reconvey or transfer the ownership of the property in their favor, it is clear that there is
absolutely no reason why petitioner, an innocent purchaser for value, should reconvey the
land to the private respondents.
PREMISES CONSIDERED, the decision of the Court of Appeals is REVERSED and SET
ASIDE, and the decision of the Court of First Instance of Laguna and San Pablo City, now
Regional Trial Court, is REINSTATED.
SO ORDERED.
Teehankee, C.J., Narvasa, Cruz and Gancayco, JJ., concur.

Republic of the Philippines


SUPREME COURT
Manila
EN BANC
G.R. No. L-16257

January 31, 1963

CAPITOL SUBDIVISION, INC., plaintiff-appellant,


vs.
PROVINCE OF NEGROS OCCIDENTAL, defendant-appellee.
San Juan, Africa & Benedicto for plaintiff-appellant.
Eduardo P. Arboleda and Jesus S. Rodriguez for defendant-appellee.
CONCEPCION, J.:
Plaintiff, Capitol Subdivision, Inc., seeks to recover from defendant, the Province
of Negros Occidental, the possession of Lot 378 of the cadastral survey of
Bacolod, Negros Occidental, and a reasonable compensation for the use and
occupation of said lot by the defendant from November 8, 1935, in addition to
attorney's fees and costs. On June 28, 1951, the Court of First Instance of
Negros Occidental rendered judgment for the plaintiff. On appeal taken by the
defendant, this judgment was, however, set aside by the Supreme Court (see
G.R. No. L-6204, decided on July 31, 1956), which, likewise, ordered the case
remanded to the lower court "for further trial", after which another decision was
rendered by said court of first instance dismissing plaintiff's complaint and
ordering plaintiff to execute a deed conveying Lot 378 to the defendant. The case
is, once again, before us, this time on appeal by the plaintiff, the subject matter of
litigation being worth more than P200,000, exclusive of interest and costs.
The main facts are not in dispute. Said Lot 378 is part of Hacienda Mandalagan,
consisting of Lots 378, 405, 407, 410, 1205, 1452 and 1641 of the
aforementioned cadastral survey, with an aggregate area of over 502 hectares,
originally registered in the name of Agustin Amenabar and Pilar Amenabar. Lot
378 has an area of 22,783 sq. meters, more or less, and was covered by Original
Certificate of Title No. 1776 (Exhibit 4), issued on August 25, 1916, in the name
of the Amenabars. On November 30, 1920, the latter sold the aforementioned
hacienda to Jose Benares (also referred to in some documents as Jose Benares
Montelibano) for the sum of P300,000, payable installments, as set forth in the
deed of sale, Exhibit 21. On February 8, 1924, said Original Certificate of Title
No. 1776 was cancelled and Jose Benares obtained, in lieu thereof, Transfer
Certificate of Title No. 6295 in his name. Meanwhile, or on March 12, 1921, the

Hacienda, including Lot 378, had been mortgaged by Jose Benares to the
Bacolod-Murcia Milling Co. for the sum of P27,991.74 (Exhibit Y-2). On
December 6, 1926, Jose Benares again mortgaged the Hacienda, including said
Lot 378, on the Philippine National Bank, subject to the first mortgage held by the
Bacolod-Murcia Milling Co. (Exhibit Y-1). These transactions were duly recorded
in the office of the Register of Deeds of Negros Occidental and annotated on the
corresponding certificate of title, including said Transfer Certificate of Title No.
6295, covering Lot 378.
The mortgage in favor of the Bank was subsequently foreclosed, in pursuance of
a decision of the Court of First Instance of Negros Occidental dated September
29, 1931 (Exhibit U-1), and the Bank acquired the Hacienda, including Lot 378,
as purchaser at the foreclosure sale. Accordingly, said Transfer Certificate of
Title No. 6295 was cancelled and, in its stead, transfer Certificate of Title No.
17166 0151 which, owing to its subsequent loss, had to be reconstituted as
Transfer Certificate of Title No. RT-1371 in the name of the Bank, was issued
on March 14, 1934 (Exhibit P). Soon, later, or on November 8, 1935, the Bank
agreed to sell the Hacienda to Carlos P. Benares, son of Jose Banares, for the
sum of P400,000, payable in annual installments, subject to the condition that,
until full payment thereof, title would remain in the Bank (Exhibit R). Thereafter,
Carlos P. Benares transferred his rights, under this contract with the Bank, to
plaintiff herein, which completed the payment of the installments due to the Bank
in 1949. Hence, on September 29, 1949, the Bank executed the corresponding
deed of absolute sale to the plaintiff (Exhibit Q) and Transfer Certificate of Title
No. 1798, covering 378 was issued, in lieu of Transfer Certificate of Title No.
17166 (or reconstituted Transfer Certificate of Title RT-1371), in plaintiff's name
(Exhibit O).
Wherefore, the parties respectfully pray that the foregoing stipulation of facts be
admitted and approved by this Honorable Court, without prejudice to the parties
adducing other evidence to prove their case not covered by this stipulation of
facts.
1w ph1.t

At this juncture, it should be noted that, despite the acquisition of the Hacienda in
1934 by the Bank, the latter did not take possession of the property for Jose
Benares claimed to be entitled to retain it under an alleged right of lease. For this
reason, the deed of promise to sell, executed by the Bank in favor of Carlos P.
Benares, contained acaveat emptor stipulation. When, upon the execution of the
deed of absolute sale (Exhibit Q) by the Bank, on September 29, 1949, plaintiff
took steps to take possession the Hacienda, it was discovered that Lot 378 was
the land occupied by the Provincial Hospital of Negros Occidental. Immediately,
thereafter, or on October 4, 1949, plaintiff made representations with the proper
officials to clarify the status of said occupation and, not being satisfied with the

explanations given by said officials, it brought the present action on June 10,
1950.
In its answer dated June 24, 1950, defendant maintained that it had acquired Lot
378 in the year; 1924-1925, through expropriation proceedings; that immediately
after the commencement of said proceedings in 1924, it took possession of said
lot and began the construction thereon of the provincial hospital, which was
completed in 1926; that since then it had occupied said lot publicly, adversely,
notoriously and continuously as owner thereof; that, "for some reason or other
and for cause beyond comprehension of the defendant title thereto was never
transferred in the name of said defendant"; that said lot had been placed in
defendant's name for assessment purposes under Tax Declaration No. 16269
(dated December 31, 1937); and that plaintiff had acted in bad faith in purchasing
said lot from the Bank in 1935, for plaintiff knew then that the provincial hospital
was where it is up to the present, and did not declare said lot in its name for
assessment purposes until 1950, aside from the fact that Alfredo Montelibano,
the controlling stockholder, president and general manager of plaintiff
corporation, was the first City Mayor of Bacolod which contributed to the support,
operation and maintenance of said hospital. In an amended answer, dated
November 8, 1950, defendant alleged, also, that the aforementioned
expropriation case was "amicably settled as between the parties herein, in the
sense that the ... Province of Negros Occidental would pay ... and did in fact pay
to Jose Benares the assessed value of Lot 378 ... and whatever consideration
pertaining to said lot in excess of its assessed value which was paid by the
Province would be donated and was in fact donated by said ... Jose Benares in
favor of the Province purposely for hospital site".
The main question for determination in this case is whether or not defendant
herein had acquired Lot 378 in the aforementioned expropriation proceedings.
This decision appealed from in effect decided this question in the affirmative and
declared that plaintiff merely holds it in trust for the defendant, in view of which it
ordered the former to convey said lot to the latter. This conclusion is predicated,
substantially, upon the following premises, namely that case No. 3041 of the
Court of First Instance of Negros Occidental for the expropriation of the hospital
site of said province, was actually commenced on January 26, 1924; that, among
the lands sought to be expropriated in said case was Lot 377 of the
aforementioned cadastral survey, belonging to one Anacleta Agsam, who sold it,
on July 10, 1926, to the defendant (Exhibit BB), in whose favor the corresponding
transfer certificate of title (Exhibit BB-2) was issued on July 12, 1926; that,
according the testimony of Jose Benares, the expropriation of Lot 378 was
settled amicably upon payment to him of the sum of P12,000; and that
defendant's failure to secure the corresponding transfer certificate of title to Lot

378 was due to "the mistaken notion or belief that said lot forms part of Lot No.
405-B" in the plan (Exhibit X.).
The testimony of Jose Benares does not deserve, however, full faith and
credence, because:
1. Jose Benares appears to be strongly biased and prejudiced against the
plaintiff and its president, for the former believes that the latter had
"manipulated" to exclude him from plaintiff corporation, and there have
been four (4) litigations between Jose Benares and plaintiff, all of which
have been finally decided against the former;
2. The testimony of Jose Benares is extremely contradictory. Thus: (a) he
testified to having been paid P12,000 by the Government, although, at the
rate of P1,000 a hectare at which, he would have us believe, he agreed to
sell Lot 378; he should have received less than P3,000 for its 22,783 sq.
meters; (b) he claimed to have received said sum of P12,000.00 "in the
year 1924 or 1925", about "2 or 3 days" after the Government had taken
possession of the land, and to have sent the money next day to Pilar
Amenabar, but the latter acknowledged to have received the said sum of
P12,000 on November 7, 1928;
3. Said testimony was contradicted by that of defendant's witness Jose
Marco, former deputy clerk of court of Negros Occidental, for: (a) Jose
Benares asserted that there was a written compromise agreement
between him and the Government, whereas Marco averred that agreement
was merely oral; and (b) Marco stated that Benares had agreed to accept,
as compensation for Lot 378, the assessed value thereof, which was P430,
and to donate to the Government the difference between this sum and the
true value of the property, but Benares affirmed that he was first offered
P300 per hectare, which he rejected, and that he later demanded P1,000 a
hectare, which the Government agreed to pay, although, subsequently, he
said that Rafael Alunan and Mariano Yulo had prevailed upon him to
accept P1,000 per hectare;
4. Jose Benares was, also, contradicted by defendant's witness Ildefonso
Coscolluela, the provincial treasurer of Negros Occidental at the time of
the expropriation, who positively assured the Court that the expropriation
case "was not yet terminated" and that "negotiations were still pending" for
the acquisition of Lot 378 by the Government when he retired from the
service in 1934.

Upon the other hand, several circumstances strongly indicate that no


compromise agreement for the acquisition of the land by the Government had
been reached and that the expropriation had not been consummated. For
instance:
1. The only entries in the docket relative to the expropriation case refer to
its filing and the publication in the newspaper of the corresponding notices
(Exhibit 1);.
2. The registration of the deed of sale of Lot 377 by Anacleta Agsam to the
Government, followed by the cancellation of the certificate of title in her
name and the issuance, in lieu thereof, of another title in the name of the
Province, when contrasted with the absence of a similar deed of
assignment and of a transfer certificate title in favor of the Province as
regards Lot 378, strongly suggest that no such assignment or agreement
with respect to Lot 378 had been made or reached;.
3. The property was mortgaged to the Bacolod-Murcia Milling Co. since
March 12, 1921, and this mortgage, duly registered and annotated, inter
alia, on Transfer Certificate of Title No. 1776, in the name of Jose Benares,
was not cancelled until September 28, 1935. Moreover, Lot 378 could not
have been expropriated without the intervention of the Milling Co. Yet, the
latter was not made a party in the expropriation proceedings;
4. On December 26, 1926, Jose Benares constituted second mortgage in
favor of the Bank, which would not have accepted the mortgage had Lot
378 not belonged then to the mortgagor. Neither could said lot have been
expropriated subsequently thereto without the Bank's knowledge and
participation. What is more, in the deed executed by the Bank, on
November 8, 1935 (Exhibit R), promising to sell the Hacienda Mandalagan
to Carlos Benares, it was explicitly stated that portions of Lots 405, 407
and 410, forming part of said Hacienda and designated as Lots 405-A,
407-A; 407-B and 410-A, had been expropriated by the Provincial
Government of Negros Occidental, thus indicating, by necessary
implication, that Lot 378 had not been expropriated.
The decision appealed from says:
... It is evident that there were no further proceedings in connection with
the expropriation case and the chances are that the case was dismissed.
The Court had to examine carefully and minutely every single piece of
evidence adduced by both parties in order to arrive at the correct solution
of the mystery. The Court believes that the failure of the government to

secure the corresponding transfer of title to Lot 378 lies in the mistaken
notion or belief that said lot forms a part of Lot 405-B. This conclusion was
arrived at after examining closely the plan, Exhibit X. The plan shows that
while all the subdivided lots were properly identified by lot numbers, that
particular portion at the lower corner of the plan encircled with red pencil,
marked Exhibit X-1, is not labelled with the corresponding lot number and
that portion is precisely lot No. 378, now in question, where the hospital
building was constructed. This plan was prepared for the government on
May 12, 1927 by public land surveyor, Mr. Formento, embracing lots
covering over 22 hectares for the Capitol and hospital sites. The fact that
this particular portion was not labelled with the corresponding lot number
might have misled the authorities to believe that it formed a part of lot 405B, which adjoins it, although separated by the creek. This lack of
reasonable explanation why the government failed to secure the
corresponding certificate of title to lot 378, when there is sufficient proof
that Jose Benares was paid and he executed the deed of sale in favor of
the government.
Although said decision appears to have been prepared with the
conscientiousness and moral courage that account for the well earned reputation
and prestige of the Philippine judiciary, we find ourselves unable to concur in the
foregoing view. To begin with, there is no evidence, and defendant has not even
tried to prove, that the expropriation case had ever been dismissed insofar as Lot
378 is concerned. Hence, the lower court merely speculated about the "chances
that the (expropriation) case was dismissed." By the way, the contrary was
intimated by defendant's witness, Ildefonso Coscolluela, for he testified that the
expropriation case was still pending in 1934, when he ceased to be the provincial
treasurer, and the record before us suggests that since the Province took
possession of the land in 1924 or 1925 and completed the construction of the
hospital in 1926, there were no further proceedings in said case..
With respect to the plan, Exhibit X, there is, likewise, no evidence whatsoever
that the authorities had been "misled ... to believe" that the portion at the lower
corner of said plan which was enclosed, during the trial, within a circle in red
pencil, and marked as Exhibit X-1 formed part of Lot 405-B, which had been
expropriated by the Province of Negros Occidental. In fact, said portion, Exhibit
X-1, is not part of the land covered by the plan Exhibit X. A close examination of
the latter shows that the boundaries of said portion are not delimited on the plan.
More important still, on the right hand side of Exhibit X, the following appears in
bold letters: "Subdivision & Consolidation PLAN of Lots Nos. 400, 401, 403,405,
406, 407 and 410 Bacolod Cadastre as surveyed for the Provincial Government
of Bacolod, Negros Occidental (Capitol site)". The absence of Lot 378 from said
enumeration and the explicit statement in Exhibit X to the effect that it refers to

the "Capitol Site", negates the possibility of its being mistaken by any body, much
less by government engineers, as including the hospital site, and, hence, said Lot
378. Lastly, the very evidence for the defendant herein, specially the assessor's
field sheets and declarations of real property for tax purposes (Exhibits 9, 10, 11,
12 and 13) show that the Government had always regarded Lot 378, not Lot 405,
as part of the Provincial Hospital Site. In any event, said possibility of mistake, if
any, which would be remote, cannot suffice to warrant in the face of
documentary evidence to the contrary the conclusion that Lot 378 has already
been acquired by the Government.
How about the P12,000 received by Jose Benares from the Government and
applied by him to the payment of his debt to Pilar Amenabar? Said amount could
not possibly be the price of Lot 378, for, at the rate of P1,000 a hectare allegedly
agreed therefor, its price could not have exceeded P3,000.00. In this connection,
it should be noted that, aside from the expropriation proceedings for the hospital
site, another expropriation case for the Capitol site, affecting another property of
Jose Benares, appears to have been instituted in the Court of First Instance of
Negros Occidental. Jose Benares may have mistaken the payment for his land
included in the Capitol site, as one intended for Lot 378, which was affected by
the hospital site. And this possibility may amount to a probability when we
consider that he erroneously believed that there had been only one expropriation
case, instead of two cases, against him, and that Lot 378, was not included in the
mortgage constituted by him in favor of the Philippine National Bank. Evidently,
he did not have, at least, an accurate recollection of the events or transactions
affecting his properties, and, hence, his testimony may not be relied upon.
Thus, the evidence on record is far from sufficient to establish the alleged
acquisition by the defendant of Lot 378, which must be held, therefore, to be the
exclusive property of plaintiff herein.
The lower court entertained no doubts about the veracity of the testimony of
plaintiff's president to the effect that he did not know until 1949 that the land on
which the Provincial Hospital Building stands is Lot 378. Yet, it held that plaintiff
was "not a purchaser in good faith for having constructive knowledge of
defendant's possession of the property at the time it was bought by the plaintiff",
because Carlos P. Benares whose right to buy the Hacienda Mandalagan
from the Bank was acquired by plaintiff "is a part owner of the Capitol
Subdivision and holds a responsible position therein"; because the hospital was
already constructed in Lot 378 since 1926 and the lot was declared in the name
of the Government" and "when plaintiff bought the lot in 1935 the purchaser
should have inquired as to its location and improvement"; because "it took the
plaintiff 14 years to sleep over the supposed rights to take possession of lot No.
378"; and because "of the overwhelming fact that lot No. 378 was erroneously or

inadvertently included by the deeds of sale (Exhibits Q & R) executed by the


Philippine National Bank in favor of the plaintiff subdivision and that same lot was
occupied by the defendant government for the provincial hospital for the last 34
years, as owner thereof".
As above stated, however, and the lower court conceded, plaintiff's president did
not know until 1949 that lot 378 was the very land occupied by the provincial
hospital. Moreover, there is a total absence of evidence that this fact was known
to Carlos P. Benares before 1949. Neither may such knowledge be deduced
from the circumstances that he is a son of its former owner, Jose Benares,
for even the latter appears not to be well-posted on the status of his properties.
Indeed, Jose Benares did not apparently know that there were two (2)
expropriation proceedings effecting said properties: that the P12,000 received by
him from the Government was not meant for Lot 378; and that this lot was one of
the properties mortgaged by him to the Bank.
"Upon the other hand, the main purpose of the Torrens System is to avoid
possible conflicts of title in and to real estate, and to facilitate transactions
relative thereto giving the public the right to rely upon the face of Torrens
certificate of title and to dispense with the of inquiring further, except when the
party concerned has actual knowledge of facts and circumstances that should
impel a reasonably cautious man to make such further inquiry (Tiburcio vs.
PHHC, L-13479, October 31, 1959; Revilla vs. Galindez, G.R. No. L-19940,
March 30, 1960; Manacop, Jr. vs. Cansino, G.R. No. L-13791, February 27,
1961). In the case at bar plaintiff had no such actual knowledge, it being an
established fact that he was not aware until 1949 that the land on which the
provincial hospital stood was Lot 378. Furthermore, since the year 1921, or
before the expropriation case for the hospital site had begun, said lot was
mortgaged to the Bacolod-Murcia Milling Co., and the mortgage, duly registered,
as well as annotated on the corresponding certificate of title, was not cancelled
until September 28, 1935. Prior to this date, or on December 26, 1926, Lot 378
was subjected to a second mortgage in favor of the Bank, which acquired title
thereto, thru foreclosure proceedings, in 1934. When the Bank agreed on
November 8, 1935, to sell the property to Carlos P. Benares and the latter,
subsequently conveyed his rights to plaintiff herein, as well as when the bank
executed the deed of absolute sale in plaintiff's favor on September 20, 1949, the
title to the property was in the name of the Bank. Considering that sugar centrals
as well as banks are known to have an array of experienced and competent
lawyers, it cannot be said that plaintiff was not justified in assuming that said
institutions had scrutinized the background of Lot 378 and were satisfied that the
same belonged to the mortgagor when said mortgages were constituted, and to
the Bank when said deed of sale was executed. In short, we find that plaintiff
herein is a purchaser in good faith and for value..

As regards the compensation that, as such, it may collect from the defendant, we
are of the opinion, and so hold, that, since the latter's right to expropriate Lot 378
is not contested, and is seemingly conceded, the plaintiff may demand what is
due by reason of the expropriation of said lot. In short, plaintiff is entitled to
recover from the defendant the fair and full equivalent to Lot 378, as of the time
when possession thereof was actually taken by the defendant, plus
consequential damages including attorney's fees from which consequential
damages the consequential benefits, if any, should be deducted, with interests,
at the legal rate, on the aggregate sum due to the plaintiff, from and after the
date of said actual taking. The case should be remanded, therefore, to the lower
court for the reception of evidence on the date of said actual taking and the
amount of compensation collectible from the defendant, and the rendition,
thereafter, of the corresponding decision thereon..
WHEREFORE, the decision appealed from is hereby reversed and the records
remanded to the lower court for further proceedings, as above stated, with costs
against the defendant. It is so ordered..
Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Reyes, J.B.L., Barrera,
Paredes, Dizon and Regala, JJ., concur.
Makalintal, J., took no part.

[G.R. No. 114299. September 24, 1999]

TRADERS ROYAL BANK, petitioner, vs. HON. COURT OF APPEALS,


PATRIA, RUBY ANN, MARGARITA, ROSARIO, CYNTHIA, LINDA
JOY, all surnamed CAPAY and RAMON A. GONZALES, respondents.

[G.R. No. 118862. September 24, 1999]

PATRIA, RUBY ANN, MARGARITA, ROSARIO, CYNTHIA, LINDA JOY,


all surnamed CAPAY, and RAMON A. GONZALES, petitioners, vs.
SPS. HONORATO D. SANTOS and MARIA CRISTINA S. SANTOS,
SPS. CECILIO L. PE and JOSEFINA L. PE, FLORA LARON
WESCOMBE, SPS. TELESFORO P. ALFELOR II and LIZA R.
ALFELOR, SPS. DEAN RODERICK FERNANDO and LAARNI
MAGDAMO FERNANDO, REMEDIOS OCA, DEVELOPMENT
BANK OF THE PHILIPPINES and TRADERS ROYAL
BANK, respondents.
DECISION
KAPUNAN, J.:

The present controversy has its roots in a mortgage executed by the spouses Maximo and
Patria Capay in favor of Traders Royal Bank (TRB) pursuant to a loan extended by the latter to
the former. The mortgage covered several properties, including a parcel of land, the subject of
the present dispute.[1] The loan became due on January 8, 1964 and the same having remained
unpaid, TRB instituted extra-judicial foreclosure proceedings upon the mortgaged property.
To prevent the propertys sale by public auction, the Capays, on September 22, 1966, filed a
petition for prohibition with preliminary injunction (Civil Case No. Q-10453) before the Court of
First Instance (CFI) of Rizal, alleging that the mortgage was void since they did not receive the
proceeds of the loan. The trial court initially granted the Capays' prayer for preliminary
injunction.
On March 17, 1967, the Capays caused to be filed in the Register of Deeds of Baguio City a
notice of lis pendens over the disputed property. Said notice was entered in the Day Book, as
well as in the Capays certificate of title.
Subsequently, the injunction issued by the trial court was lifted thus allowing the foreclosure
sale to proceed. Foreclosure proceedings were initiated and on October 17, 1968, the property
was sold to TRB which was the highest bidder at the auction sale. A sheriff certificate of sale

was issued in its name on the same day. On February 25, 1970, the property was consolidated in
the name of TRB, the sole bidder in the sale. TCT No. T-6595 in the name of the Capay spouses
was then cancelled and a new one, TCT No. T-16272,[2] was entered in the banks name. The
notice of lis pendens, however, was not carried over in the certificate of title issued in the name
of TRB.
Thereafter, the Capays filed with the CFI a supplemental complaint praying for the recovery
of the property with damages and attorneys fees. Trial in Civil Case No. Q-10453 proceeded
and, on October 3, 1977, the CFI rendered its decision declaring the mortgage void for want of
consideration. The CFI ordered, among other things, the cancellation of TCT No. T-16272 in the
name of TRB and the issuance of new certificates of title in the name of the Capay spouses.
TRB appealed to the Court of Appeals. While the case was pending in the Court of Appeals,
TRB on March 17, 1982 sold the land to Emelita Santiago in whose name a new certificate of
title, TCT No. 33774,[3] was issued, also, without any notice of lis pendens annotated
thereon. Santiago in turn divided the land into six (6) lots and sold these to Marcial Alcantara,
Armando Cruz and Artemio Sanchez, who became co-owners thereof.[4]Alcantara and his coowners developed the property and thereafter sold the six (6) lots to separate buyers who were
issued separate titles, again, bearing no notice of lis pendens.[5]
On July 30, 1982, the Court of Appeals rendered its decision modifying the decision of the
trial court as to the award of damages but affirming the same in all other respects.
For having been filed out of time and for lack of merit, the petition for certiorari filed by
TRB before this Court[6] was denied in a Resolution dated September 12,1983. TRBs motion for
reconsideration was similarly denied in a Resolution dated October 12, 1983. The Courts
September 12, 1983 Resolution having become final and executory on November 9, 1983, the
trial court issued a writ of execution directing the Register of Deeds of Baguio City to cancel
TCT No. T-16272 in the name of TRB, and to issue a new one in the name of the Capay spouses.
Said writ, however, could not be implemented because of the successive subsequent
transfers of the subdivided property to buyers who obtained separate titles thereto. Thus, a
complaint for recovery of possession/ownership dated 8 June 1985 was filed before the Quezon
City Regional Trial Court against TRB and the subsequent transferees of the property, the
respondents in G.R. No. 118862 (hereinafter, the non-bank respondents). Plaintiffs in said
case were Patria Capay, her children by Maximo[7] who succeeded him upon his death on August
25, 1976, and Ramon Gonzales, counsel of the spouses in Civil Case No. Q-10453 who became
co-owner of the property to the extent of 35% thereof as his attorneys fees (collectively, the
Capays). On March 27, 1991, the trial court rendered its decision, the dispositive portion of
which states:

WHEREFORE, judgment is hereby rendered in favor of the plaintiffs against the


defendants and ordering the Register of Deeds for Baguio to cancel TCT No. T36177, Books 198, Page 177 in the names of defendants Spouses Honorato D. Santos
and Maria Cristina Santos; to cancel TCT No. 36707, Book 201, Page 107 in the
names of defendant Spouses Cecilio Pe and Josefina L. Pe; to cancel TCT No. T36051, Book 198, Page 51 in the name of Flora Laron Wescombe, married to Kevin
Lind Wescombe (now deceased); to cancel TCT No. T-36147, Book 198, page 147 in

the names of Spouses Telesforo P. Alfelor II and Liza R. Alfelor; to cancel TCT No.
T-36730, Book 201, Page 130 in the names of Spouses Dean Roderick Fernando and
Laarni Magdamo Fernando; to cancel TCT No. 37437, Book 205, Page 37 in the
name of Remedios Oca, and issue new ones free from all liens and encumbrances,
together with all the improvements therein in the names of plaintiffs sharing pro
indiviso as follows: 35% to Ramon A. Gonzales, married to Lilia Y. Gonzales, of
legal age, with postal address at 23 Sunrise Hill, New Manila, Quezon City; 37.92%
to Patria B. Capay, of legal age, widow, Filipino; 5.41% each to Ruby Ann Capay, of
legal age, Filipino, married to Pokka Vainio, Finnish citizen; Chona Margarita Capay,
of legal age, Filipino, married to Waldo Flores; Rosario Capay, of legal age, Filipino,
married to Jose Cuaycong, Jr.; Cynthia Capay, of legal age, Filipino, married to Raul
Flores; Linda Joy Capay, of legal age, Filipino, married to Pedro Duran, all with
postal address at 37 Sampaguita St., Capitolville Subd., Bacolod City, ordering said
defendants to vacate the premises in question and restoring plaintiffs thereto and for
defendant Traders Royal Bank to pay each of the plaintiffs moral damages in the
amount of P100,000.00, P40,000.00 in exemplary damages and P40,000.00 as
attorneys fees, all with legal interest from the filing of the complaint, with costs
against defendants.
SO ORDERED.[8]
TRB and the non-bank respondents appealed to the Court of Appeals. In a Decision
promulgated on February 24, 1994 in CA-G.R. CV No. 33920, the appellate court affirmed the
decision of the trial court in toto.[9] It ruled that the non-bank respondents cannot be considered as
purchasers for value and in good faith, having purchased the property subsequent to the action in
Civil Case No. Q-10453 and that while the notice of lis pendens was not carried over to TRBs
certificate of title, as well as to the subsequent transferees titles, it was entered in the Day Book
which is sufficient to constitute registration and notice to all persons of such adverse claim,
citing the cases of Villasor vs. Camon,[10] Levin vs. Bass[11] and Director of Lands vs. Reyes.[12]
As regard TRB, the Court of Appeals said that the bank was in bad faith when it sold the
property knowing that it was under litigation and without informing the buyer of that fact.
On April 26, 1994, TRB filed with this Court a petition for review to set aside the CA
decision, docketed herein as G.R. No. 114299, invoking the following grounds:
I.

THE RESPONDENT HONORABLE COURT OF APPEALS COMMITTED


GRAVE AND SERIOUS ERROR OF LAW IN PROMULGATING THE
DISPUTED DECISION AND THEREBY DECIDED A QUESTION OF
SUBSTANCE WHOLLY CONTRARY TO SETTLED JURISPRUDENCE AND
TOTALLY NOT IN ACCORD WITH APPLICABLE DECISION OF THIS
HONORABLE SUPREME COURT.

II.

THE RESPONDENT HONORABLE COURT OF APPEALS HAS COMMITTED


SO GRAVE AND SERIOUS ERRORS OF LAW IN SANCTIONING A
DEPARTURE FROM THE USUAL AND ACCEPTED COURSE OF JUDICIAL
PROCEEDING AS TO CALL FOR THE EXERCISE OF THE POWER OF
REVIEW BY THIS HONORABLE SUPREME COURT.
a) The public respondent has plainly and manifestly acted whimsically, arbitrarily,
capriciously, with grave abuse of discretion, in excess of jurisdiction tantamount to
lack of jurisdiction.
xxx

b) The public respondent erred in not finding that it was not the fault of petitioner
when the notice of lis pendens was not carried over to its new title.
xxx

c) The public respondent erred in not finding that PD No. 1271 had legally caused the
invalidation of the Capays property and the subsequent validation of TRBs title over
the same property was effective even as against the Capays.[13]
Meanwhile, the non-bank respondents moved for a reconsideration of the Court of Appeals
decision. Convinced of the movants arguments, the Court of Appeals in a Resolution
promulgated on August 10, 1994 granted the motion for reconsideration and dismissed the
complaint as against them. The dispositive portion of the resolution states:

ACCORDINGLY, in view of the foregoing disquisitions and finding merit in the


motion for reconsideration, the same is hereby GRANTED. Consequently, the
decision of this Court, promulgated on February 24, 1994, is hereby
RECONSIDERED. The complaint filed against defendants-appellants with the
court a quo is hereby ordered DISMISSED, and the certificate of titles originally
issued to them in their individual names are hereby ordered restored and duly
respected. We make no pronouncement as to costs.
SO ORDERED.[14]
The Capays thus filed with this Court a petition for review, docketed as G.R. No. 118862, to
set aside the resolution of the Court of Appeals raising the following errors:
I

THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY


NOW HOLDING THAT TUAZON VS. REYES, 48 PHIL. 814 AND RIVERA VS.
MORAN, 48 PHIL. 836 ARE NOT APPLICABLE HEREOF, WHILE PINO VS.
COURT OF APPEALS, 198 SCRA 436, IS APPLICABLE.
II

THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY


NOW HOLDING THAT ATUN VS. MUNOZ, 97 PHIL. 762 AND LAROZA VS.
GUIA, 134 SCRA 34, ARE NOT APPLICABLE.
III

THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY


NOW HOLDING THAT LEVIN VS. BASS, 91 PHIL. 419 VILLASOR VS.
CAMON, 89 PHIL. 404 AND DIRECTOR OF LANDS VS. REYES, 68 SCRA 73,
ARE NOT APPLICABLE HEREOF.
IV

THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY


NOW HOLDING THAT PETITIONERS ARE GUILTY OF LACHES.
V

THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY


NOW HOLDING THAT THERE IS NO DISTINCTION IN THE REGISTRATION
OF VOLUNTARY INSTRUMENTS VIS--VIS INVOLUNTARY
INSTRUMENTS.
VI

THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY


NOW HOLDING THAT RESPONDENTS WHO ARE LAWYERS, RESPONSIBLE
CITIZENS AND WELL-RESPECTED RESIDENTS IN THE COMMUNITY, ARE
EXEMPTED FROM THE EFFECTS OF THE CONSTRUCTIVE NOTICE
ARISING FROM REGISTRATION.
VII

THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF WITH


REGARDS TO TRADERS ROYAL BANK, AFTER THE LATTER HAS
PERFECTED ITS APPEAL TO THE SUPREME COURT.

VIII

THE COURT OF APPEALS PALPABLY ERRED IN NOT RULING ON THE


COUNTER-ASSIGNMENT OF ERROR THAT:
B) THE LOWER COURT ERRED IN NOT HOLDING THAT DEFENDANTS ARE
BOUND BY THE DECISION IN CIVIL CASE NO. Q-10453.
Subsequently, G.R. No. 118862 was consolidated with G. R. No. 114299, pursuant to this
Courts Resolution dated July 3, 1996.[15]
The consolidated cases primarily involve two issues: (1) who, as between the Capays and
the non-bank respondents, has a better right to the disputed property, and (2) whether or not TRB
is liable to the Capays for damages.
On the first issue, we rule for the non-bank respondents.
I

First, when TRB purchased the property at the foreclosure sale, the notice of lis pendens that
the Capays caused to be annotated on their certificate of title was not carried over to the new one
issued to TRB. Neither did the certificate of title of Emelita Santiago, who purchased the
property from TRB, contain any such notice. When Santiago caused the property to be divided,
six (6) new certificates of title were issued, none of which contained any notice of lis
pendens. Santiago then sold the lots to Marcial Alcantara and his co-owners who next sold each
of these to the non-bank respondents. The non-bank respondents, therefore, could not have been
aware that the property in question was the subject of litigation when they acquired their
respective portions of said property. There was nothing in the certificates of title of their
respective predecessors-in-interest that could have aroused their suspicion. The non-bank
respondents had a right to rely on what appeared on the face of the title of their respective
predecessors-in-interest, and were not bound to go beyond the same. To hold otherwise would
defeat one of the principal objects of the Torrens system of land registration, that is, to facilitate
transactions involving lands.

The main purpose of the torrens system is to avoid possible conflicts of title to real
estate and to facilitate transactions relative thereto by giving the public the right to
rely upon the face of a Torrens certificate of title and to dispense with the need of
inquiring further, except when the party concerned has actual knowledge of facts and
circumstances that should impel a reasonably cautious man to make such further
inquiry. Where innocent third persons, relying on the correctness of the certificate of
title thus issued, acquire rights over the property, the court cannot disregard such
rights and order the total cancellation of the certificate. The effect of such an outright
cancellation would be to impair public confidence in the certificate of title, for
everyone dealing with property registered under the Torrens system would have to
inquire in every instance as to whether the title has been regularly or irregularly issued
by the court. Every person dealing with registered land may safely rely on the

correctness of the certificate of title issued therefor and the law will in no way oblige
him to go beyond the certificate to determine the condition of the property.
The Torrens system was adopted in this country because it was believed to be the
most effective measure to guarantee the integrity of land titles and to protect their
indefeasibility once the claim of ownership is established and recognized. If a person
purchases a piece of land on the assurance that the sellers title thereto is valid, he
should not run the risk of being told later that his acquisition was ineffectual after
all. This would not only be unfair to him. What is worse is that if this were
permitted, public confidence in the system would be eroded and land transactions
would have to be attended by complicated and not necessarily conclusive
investigations and proof of ownership. The further consequence would be that land
conflicts could be even more numerous and complex than they are now and possibly
also more abrasive, if not even violent. The Government, recognizing the worthy
purposes of the Torrens system, should be the first to accept the validity of titles
issued thereunder once the conditions laid down by the law are satisfied.[16]
Second, the foregoing rule notwithstanding, the non-bank respondents nevertheless
physically inspected the properties and inquired from the Register of Deeds to ascertain the
absence of any defect in the title of the property they were purchasing-an exercise of diligence
above that required by law.
Thus, respondent Aida Fernando Meeks, who bought Lot 5 for her son Dean, testified:
Q

How did you come to live in Baguio City, particularly in Km. 2.5 San Luis, Baguio City?

In one of my visits to my sister who has been residing here for twelve (12) years now, I got
interested in buying a property here.

How did you come to know of this property at Asin Road where you now reside?

My sister, Ruth Ann Valdez, sir.

When this particular property was bought by you, when was that?

I do not remember the exact date, but it was in early 1984, sir.

At the time when you went to see the place where you now reside, how did it look?

This particular property that I bought was then a small one (1)-room structure, it is a two (2)storey one (1) bedroom structure.

What kind of structure with regards to material?

It is a semi-concrete structure, sir.

And aside from this two (2)-storey one (1)-room structure, how did the surrounding area look like
at the time you visited?

There were stone walls from the road and there were stone walls in front of the property and
beside the property.

At the time you went to see the property with your agent, rather, your sister Ruth Ann Valdez, did
you come to know the owner?

We did because at the time we went there, Mr. Alcantara was there supervising the workers.

And who?

Amado Cruz, sir.

After you saw this property, what else did you do?

My first concern then was am I buying a property with a clean title.

In regards to this concern of yours, did you find an answer to this concern of yours?

At first, I asked Mr. Alcantara and I was answered by him.

What was his answer?

That it was a property with a clean title, that he has shown me the mother title and it is a clean
title.

Aside from being informed that it is a property with a clean title, did you do anything to answer
your question?

Yes, sir.

What did you do?

Well, the first step I did was to go to the Land Registration Office.

Are you referring to the City Hall of Baguio?

Yes, the City Hall of Baguio.

And what did you do in the Registry of Deeds?

We looked for the title, the original title, sir.

When you say we, who was your companion?

Mr. Alcantara and my present husband, sir.

The three (3) of you?

Yes, sir.

What title did you see there?

We saw the title that was made up in favor of Amado Cruz, sir.

And what was the result of your looking up for this title in the name of Amado Cruz?

We had to be reassured that it was a genuine one, so we asked Atty. Diomampo who heads the
office. We showed him a copy of that title and we were also reassured by him that anything that
was signed by him was as good as it is.

Did this Atty. Diomampo reassure you that the title was good?

He did.

After your conversation with the Register of Deeds, what did you do?

The second step we did was to confer with our lawyer, a friend from RCBC Binondo, Manila,
this is Atty. Nelson Waje.

What is your purpose in going to this lawyer?

We wanted an assurance that we were getting a valid title just in case we think of buying the
property.

What was the result of your conference with this lawyer?

He was absolutely certain that that was a valid title.

Mrs. Meeks, after looking at the place, going to the Register of Deeds, looking at the title and
seeing your lawyer friend, what decision did you finally make regarding the property?

We wanted more reassurances, so we proceeded to Banaue, as advised by that same lawyer, there
is another office of the Bureau of Lands. I cannot recall the office but it has something to do with
registration of the old.

What is your purpose in going to this Office in Banaue?

I wanted more reassurances that I was getting a valid title.

What was the result of your visit to the Banaue Office?

We found the title of this property and there was reassurance that it was a clean title and we saw
the mother title under the Hilario family.

Mrs. Meeks, when you say Banaue, what particular place is this Banaue?

It is in Banaue Street in Quezon City, sir.

And when you saw the title to this property and the mother title, what was the result of your
investigation, the investigation that you made?

We were reassured that we were purchasing a valid title, we had a genuine title.

When you were able to determine that you had a valid, authentic or genuine title, what did you
do?

That is when I finally thought of purchasing the property.[17]

Telesforo Alfelor II, the purchaser of Lot 4, narrated going through a similar routine:
Q

How did you come to know of this place as Asin Road where you are presently residing?

It was actually through Mrs. Flory Recto who is presently the Branch Manager of
CocoBank. She informed my wife that there is a property for sale at Asin road, and she was the
one who introduced to us Mr. Alcantara, sir.

When you were informed by Mrs. Recto and when you met with Mr. Alcantara, did you see the
property that was being offered for sale?

Yes, sir.

When did you specifically see the property, if you can recall?

I would say it is around the third quarter of 1983, sir.

When you went to see the place, could you please describe what you saw at that time?

When we went there the area is still being developed by Mr. Alcantara. As a matter of fact the
road leading to the property is still not passable considering that during that time it was rainy
season and it was muddy, we fell on our way going to the property and walked to have an ocular
inspection and physical check on the area, sir.

xxx
Q

What was the improvement, if any, that was in that parcel which you are going to purchase?

During that time, the riprap of the property is already there, the one-half of the riprap sir.

Do you know who was making this improvement at the time that you went there?

I would understand that it was Marcial Alcantara, sir.

After you saw the place and you saw the riprap and you were in the course of deciding to
purchase this property, what else did you do?

First, I have to consider that the property is clean.

How did you go about determining whether the title of the property is clean?

Considering that Marcial Alcantara is a real estate broker, I went to his office and checked the
documents he has regarding the property.

And what was the result of your checking as to whether the title of the property is clean?

He showed me the copy of the title and it was clean, sir.

Aside from going to Mr. Alcantara to check up the title of the property, what else did you do?

Well, the next thing is I requested his wife to accompany me to the Bureau of Lands or rather the
Registry of Deeds, sir.

What registry of Deeds are you referring to?

The Registry of Deeds of Baguio City, sir.

And were you able to see the Register of Deeds regarding what you would like to know?

Yes, and we were given a certification regarding this particular area that it was clean, sir.

What Certification are you referring to?

It is a Certification duly signed by the employee of the Registry of Deeds Adelina Tabangin, sir.

Do you have a copy of that Certification?

Yes, I have, sir.[18]

The testimonies of Honorato Santos[19] and Josefina Pe[20] were to the same effect.
The non-bank respondents predecessor-in-interest, Marcial Alcantara, was no less
thorough:
Q

And will you give a brief description of what you do?

I normally acquire land, quite big tract of land and subdivide it into smaller lots and sold it to
some interested parties.

Specifically, Mr. Alcantara, will you please inform the Court in what place in Baguio have you
acquired and subdivided and sold lots?

Dominican Hill, Leonila Hill, Crystal Cave and Asin Road, sir.

You mentioned Asin Road, what particular place in Asin Road are you referring?

That property I bought from Emelita Santiago, sir.

When you say you bought it from Emelita Santiago, how did you come to know that Emelita
Santiago is disposing of the property?

Because of the father, he is the one who offered me the property, sir, Armando Gabriel.

Is he also a resident of Baguio?

He is from Buyagan, La Trinidad, sir.

How did you come to know of this Armando Gabriel wanting to sell a property in Asin?

He approached me in the house, sir. He has acquired a title from the Traders Royal Bank.

Can you inform the Honorable Court when you had this conversation with Armando Gabriel on
the sale of the property at Asin Road?

Later part of March, 1983, sir.

Now, when this Armando Gabriel informed you that he wants his property to be sold, what did
you do?

I went to the place with the agent, sir.

When you say you went to the place with the agent, what place?

Kilometer 2, Asin Road, sir.

And when you went there to see the place, did you actually go there to see the place?

By walking, I parked my car a kilometer away, sir.

Is it my understanding that when you went to see the property there were no roads?

None, sir.

xxx
Q

Mr. Alcantara, when you went to see this place at Asin Road last week of March, 1983, will you
please briefly describe how this place looked like at that time?

The place was mountainous, grassy, there were cogon trees, some of the roads were eroding
already, so we cannot possibly enter the property, sir.

At the time you entered the place, was there any visible sign of claim by anyone?

None, sir.

In terms of fence in the area?

There is no such, sir.

xxx
Q

Aside from looking or going to the property, what else did you do to this property prior to your
purchase?

I investigated it with the Register of Deeds, sir.

What is your purpose in investigating it with the Register of Deeds?

To see if the paper is clean and there are no encumbrances, sir.

To whom did you talk?

To Atty. Ernesto Diomampo, sir.

And when you went to the Registry of Deeds to investigate and check, did you have occasion to
talk with Atty. Diomampo?

Yes, sir.

And what was the result of your talk with Atty. Diomampo?

The papers are clean except to the annotation at the back with the road right of way, sir.

After making this investigation with the Register of Deeds and talking with Atty. Diomampo,
what else transpired?

We bought the property, sir.

After purchasing the property from Emelita Santiago, could you please tell the Honorable Court
what you did with that deed of sale?

We registered it with the Register of Deeds for the Certificate of Title because at that time when
we bought the property, Emelita Santiago had it subdivided into six (6) lots, sir.

Is it our understanding that prior to your purchase the property was subdivided into six (6)
parcels?

Yes, sir.

Could you please inform the Honorable Court if you have any buyers in the subdivision of this
property prior to your purchase?

Yes, I have.

This subdivision of this property, to what office was it brought for action?

Bureau of Lands, San Fernando, La Union, sir.

Now, Mr. Alcantara, at the time that you had this property subdivided by the owner, could you
please inform the Court if there was any claim by any other party opposing the subdivision or
claiming the property?

None, sir.

When the Deed of Sale was executed and you said that you presented it to the Register of Deeds
and after the subdivision already, what action did the Register of Deeds have regarding the
matter?

They approved it and registered it already in six (6) titles, sir.

In whose names?

One (1) title under my name, Amado Cruz and Dr. Sanchez, sir.

Initially, Mr. Alcantara, you said that you are the sole purchaser of this entire area of One
Thousand Five Hundred Ninety One (1,591) Square Meters. Now, you are informing this

Honorable Court that one Amado Cruz and one Dr. Sanchez were also issued two (2)
titles. Could you explain how these titles came into their possession?
A

Actually, two (2) are our co-owners, sir.

So, is it our understanding that the Deed of Sale from Emelita Santiago is in favor of these two
(2) Atty. Cruz and Dr. Sanchez?

Yes, sir.[21]

Third, between two innocent persons, the one who made it possible for the wrong to be done
should be the one to bear the resulting loss.[22] The Capays filed the notice of lis pendens way
back on March 17, 1967 but the same was not annotated in TRBs title. The Capays and their
counsel Atty. Ramon A. Gonzales knew in 1968 of the extra-judicial foreclosure sale of the
property to TRB and the consolidation of title in the banks name following the lapse of the oneyear period of redemption. But in the next fifteen (15) years or so, they did not bother to find out
the status of their title or whether the liens noted on the original certificate of title were still
existing considering that the property had already been foreclosed. In the meantime, the subject
property had undergone a series of transfers to buyers in good faith and for value. It was not
until after the land was subdivided and developed with the buyers building their houses on the
other lots when the Capays suddenly appeared and questioned the occupants titles. At the very
least, the Capays are guilty of laches. Laches has been defined as the failure or neglect, for an
unreasonable and unexplained length of time, to do that which by exercising due diligence could
nor should have been done earlier; it is negligence or omission to assert a right within a
reasonable time, warranting presumption that the party entitled to it either has abandoned it or
declined to assert it.[23]

Verily, the principle on prescription of actions is designed to cover situations such as


the case at bar, where there have been a series of transfers to innocent purchasers for
value. To set aside these transactions only to accommodate a party who has slept on
his rights is anathema to good order.
Independently of the principle of prescription of actions working against petitioners,
the doctrine of laches may further be counted against them, which latter tenet finds
application even to imprescriptible actions. x x x.[24]
In De La Calzada-Cierras vs. Court of Appeals,[25] we held:

While it is true that under the law it is the act of registration of the deed of conveyance
that serves as the operative act to convey the land registered under the Torrens System
(Davao Grains, Inc. vs. Intermediate Appellate Court, 171 SCRA 612), the petitioners
cannot invoke said dictum because their action to recover Lot 4362 is barred by the
equitable doctrine of laches.
The act of registering the conveyance to Rosendo was constructive notice to the whole
world of the fact of such conveyance (Heirs of Maria Marasigan vs. Intermediate
Appellate Court, 152 SCRA 253).

But the petitioners complaint to recover the title and possession of Lot 4362 was filed
only on July 21, 1981, twelve (12) years after the registration of the sale to
Rosendo. The petitioners failed and neglected for an unreasonably long time to assert
their right, if any, to the property in Rosendos possession.
Being guilty of laches, the Capays cannot invoke the ruling in Villasor vs. Camon, Levin vs.
Bass and Director of Lands vs. Reyes[26] to the effect that entry of the notice of lis pendens in the
day book (primary entry book) is sufficient to constitute registration and such entry is notice to
all persons of such adverse claim. Certainly, it is most iniquitous for the Capays who, after
sleeping on their rights for fifteen years, to assert ownership over the property that has undergone
several transfers made in good faith and for value and already subdivided into several lots with
improvements introduced thereon by their owners.
In the same vein, the cases cited by the Capays in their first two (2) assignment of errors do
not help them any, as the transferees In said cases were not innocent purchasers for value and in
good faith. In Tuazon vs. Reyes and Siochi,[27] where the land involved therein was sold by
Petronilo David to Vicente Tuazon, it was with a deed containing the recital that the land was in
dispute between the vendor and Roberto Siochi. Tuazon, who was merely subrogated to the
rights of the vendor was aware of the dispute and, furthermore, David did not warrant the title to
the same. In Rivera vs. Moran,[28]Rivera acquired interest in the land before the final decree was
entered in the cadastral proceedings. Rivera, the transferee, was aware of the pending litigation
and, consequently, could not have been considered a purchaser in good faith. Similarly, in Atun,
et al. vs. Nunez, et al.[29] and Laroza vs. Guia,[30] the buyers of the property at the time of their
acquisition knew of the existence of the notice of lis pendens. In contrast to the cited cases, the
non-bank respondents in the case at bar acquired their respective portions of the land with clean
title from their predecessors-in-interest.
II

We come now to TRBs liability towards the Capays.


The Bank unconvincingly tries to wash its hands off the present controversy, and attempts to
shift the blame on the Capays, thus:
xxx

23. The petitioner Bank, during all the time that it was holding the title for over
fourteen (14) years that there was no legal impediment for it to sell said property,
Central Bank regulations require that real properties of banks should not be held for
more than five (5) years;
24. The fault of the Register of Deeds in not carrying over the Notice of Lis
Pendens to the new title of the petitioner Bank should not be absorbed by the latter
considering that in all good faith, it was not aware of the existence of said annotation
during all the time that said title was in its possession for almost fourteen (14) years
before the property was sold to Emelita G. Santiago xxx.[31]

TRB concludes that (t)he inaction and negligence of private respondents, allowing
ownership to pass for almost 15 years constitute prescription of action and/or laches.[32]
Section 25 of the General Banking Act,[33] provides that no bank shall hold the possession
of any real estate under mortgage or trust, deed, or the title and possession of any real estate
purchased to secure any debt due to it, for a longer period than five years. TRB, however,
admits holding on to the foreclosed property for twelve (12) years after consolidating title in its
name. The bank is, therefore, estopped from invoking banking laws and regulations to justify its
belated disposition of the property. It cannot be allowed to hide behind the law which it itself
violated.
TRB cannot feign ignorance of the existence of the lis pendens because when the property
was foreclosed by it, the notice of lis pendens was annotated on the title. But when TCT No. T6595 in the name of the Capay spouses was cancelled after the foreclosure, TCT No. T-16272
which was issued in place thereof in the name of TRB did not carry over the notice of lis
pendens.
We do not find the Capays guilty of inaction and negligence as against TRB. It may be
recalled that upon the commencement of foreclosure proceedings by TRB, the Capays filed an
action for prohibition on September 22, 1966 against the TRB before the CFI to stop the
foreclosure sale. Failing in that attempt, the Capays filed a supplemental complaint for the
recovery of the property. The case reached this Court. Prescription or laches could not have
worked against the Capays because they had persistently pursued their suit against TRB to
recover their property.
On the other hand, it is difficult to believe TRBs assertion that after holding on to the
property for more than ten (10) years, it suddenly realized that it was acting in violation of the
General Bank Act. What is apparent is that TRB took advantage of the absence of the notice
of lis pendens at the back of their certificate of title and sold the property to an unwary
purchaser. This notwithstanding the adverse decision of the trial court and the pendency of its
appeal. TRB, whose timing indeed smacks of bad faith, thus transferred caused the property
without the lis pendens annotated on its title to put it beyond the Capays' reach. Clearly, the
bank acted in a manner contrary to morals, good customs and public policy, and should be held
liable for damages.[34]
Considering, however, that the mortgage in favor of TRB had been declared null and void
for want of consideration and, consequently, the foreclosure proceedings did not have a valid
effect, the Capays would ordinarily be entitled to the recovery of their property. Nevertheless,
this remedy is not now available to the Capays inasmuch as title to said property has passed into
the hands of third parties who acquired the same in good faith and for value. Such being the
case, TRB is duty bound to pay the Capays the fair market value of the property at the time it
was sold to Emelita Santiago, the transferee of TRB.
WHEREFORE, the decision of the Court of Appeals dated February 24, 1994 in CA-G.R.
CV No. 33920, as modified by its Resolution dated August 10, 1994 is hereby AFFIRMED. In
addition, Traders Royal Bank is ordered to pay the Capays the fair market value of the property
at the time it was sold to Emelita Santiago.
This Decision is without prejudice to whatever criminal, civil or administrative action
against the Register of Deeds and/or his assistants that may be taken by the party or parties

prejudiced by the failure of the former to carry over the notice of lis pendens to the certificate of
title in the name of TRB.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, Pardo, and Ynares-Santiago, JJ., concur.

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