FIRST DIVISION Said writ, however, could not be implemented because of the

[G.R. No. 114299. September 24, 1999] successive subsequent transfers of the subdivided property to buyers
TRADERS ROYAL BANK, petitioner, vs. HON. COURT OF who obtained separate titles thereto. Thus, a complaint for recovery of
APPEALS, PATRIA, RUBY ANN, MARGARITA, ROSARIO, possession/ownership dated 8 June 1985 was filed before the Quezon
CYNTHIA, LINDA JOY, all surnamed CAPAY and RAMON A. City Regional Trial Court against TRB and the subsequent transferees
GONZALES, respondents. of the property, the respondents in G.R. No. 118862 (hereinafter, “the
[G.R. No. 118862. September 24, 1999] non-bank respondents”). Plaintiffs in said case were Patria Capay, her
PATRIA, RUBY ANN, MARGARITA, ROSARIO, CYNTHIA, LINDA children by Maximo[7] who succeeded him upon his death on August
JOY, all surnamed CAPAY, and RAMON A. GONZALES,petitioners, 25, 1976, and Ramon Gonzales, counsel of the spouses in Civil Case
vs. SPS. HONORATO D. SANTOS and MARIA CRISTINA S. No. Q-10453 who became co-owner of the property to the extent of
SANTOS, SPS. CECILIO L. PE and JOSEFINA L. PE, FLORA 35% thereof as his attorney’s fees (collectively, “the Capays”). On
LARON WESCOMBE, SPS. TELESFORO P. ALFELOR II and LIZA March 27, 1991, the trial court rendered its decision, the dispositive
R. ALFELOR, SPS. DEAN RODERICK FERNANDO and LAARNI portion of which states:
MAGDAMO FERNANDO, REMEDIOS OCA, DEVELOPMENT BANK WHEREFORE, judgment is hereby rendered in favor of the plaintiffs
OF THE PHILIPPINES and TRADERS ROYAL BANK, respondents. against the defendants and ordering the Register of Deeds for Baguio
DECISION to cancel TCT No. T-36177, Books 198, Page 177 in the names of
KAPUNAN, J.: defendants Spouses Honorato D. Santos and Maria Cristina Santos; to
The present controversy has its roots in a mortgage executed by the cancel TCT No. 36707, Book 201, Page 107 in the names of defendant
spouses Maximo and Patria Capay in favor of Traders Royal Bank Spouses Cecilio Pe and Josefina L. Pe; to cancel TCT No. T-36051,
(TRB) pursuant to a loan extended by the latter to the former. The Book 198, Page 51 in the name of Flora Laron Wescombe, married to
mortgage covered several properties, including a parcel of land, the Kevin Lind Wescombe (now deceased); to cancel TCT No. T-36147,
subject of the present dispute.[1] The loan became due on January 8, Book 198, page 147 in the names of Spouses Telesforo P. Alfelor II and
1964 and the same having remained unpaid, TRB instituted extra- Liza R. Alfelor; to cancel TCT No. T-36730, Book 201, Page 130 in the
judicial foreclosure proceedings upon the mortgaged property. names of Spouses Dean Roderick Fernando and Laarni Magdamo
To prevent the property’s sale by public auction, the Capays, on Fernando; to cancel TCT No. 37437, Book 205, Page 37 in the name
September 22, 1966, filed a petition for prohibition with preliminary of Remedios Oca, and issue new ones free from all liens and
injunction (Civil Case No. Q-10453) before the Court of First Instance encumbrances, together with all the improvements therein in the
(CFI) of Rizal, alleging that the mortgage was void since they did not names of plaintiffs sharing pro indiviso as follows: 35% to Ramon A.
receive the proceeds of the loan. The trial court initially granted the Gonzales, married to Lilia Y. Gonzales, of legal age, with postal
Capays' prayer for preliminary injunction. address at 23 Sunrise Hill, New Manila, Quezon City; 37.92% to Patria
On March 17, 1967, the Capays caused to be filed in the Register of B. Capay, of legal age, widow, Filipino; 5.41% each to Ruby Ann
Deeds of Baguio City a notice of lis pendens over the disputed Capay, of legal age, Filipino, married to Pokka Vainio, Finnish citizen;
property. Said notice was entered in the Day Book, as well as in the Chona Margarita Capay, of legal age, Filipino, married to Waldo Flores;
Capays’ certificate of title. Rosario Capay, of legal age, Filipino, married to Jose Cuaycong, Jr.;
Subsequently, the injunction issued by the trial court was lifted thus Cynthia Capay, of legal age, Filipino, married to Raul Flores; Linda Joy
allowing the foreclosure sale to proceed. Foreclosure proceedings Capay, of legal age, Filipino, married to Pedro Duran, all with postal
were initiated and on October 17, 1968, the property was sold to TRB address at 37 Sampaguita St., Capitolville Subd., Bacolod City,
which was the highest bidder at the auction sale. A sheriff certificate of ordering said defendants to vacate the premises in question and
sale was issued in its name on the same day. On February 25, 1970, restoring plaintiffs thereto and for defendant Traders Royal Bank to pay
the property was consolidated in the name of TRB, the sole bidder in each of the plaintiffs moral damages in the amount
the sale. TCT No. T-6595 in the name of the Capay spouses was then ofP100,000.00, P40,000.00 in exemplary damages and P40,000.00 as
cancelled and a new one, TCT No. T-16272,[2] was entered in the attorney’s fees, all with legal interest from the filing of the complaint,
bank’s name. The notice of lis pendens, however, was not carried over with costs against defendants.
in the certificate of title issued in the name of TRB. SO ORDERED.[8]
Thereafter, the Capays filed with the CFI a supplemental complaint TRB and the non-bank respondents appealed to the Court of Appeals.
praying for the recovery of the property with damages and attorney’s In a Decision promulgated on February 24, 1994 in CA-G.R. CV No.
fees. Trial in Civil Case No. Q-10453 proceeded and, on October 3, 33920, the appellate court affirmed the decision of the trial court in
1977, the CFI rendered its decision declaring the mortgage void for toto.[9] It ruled that the non-bank respondents cannot be considered as
want of consideration. The CFI ordered, among other things, the purchasers for value and in good faith, having purchased the property
cancellation of TCT No. T-16272 in the name of TRB and the issuance subsequent to the action in Civil Case No. Q-10453 and that while the
of new certificates of title in the name of the Capay spouses. notice of lis pendens was not carried over to TRB’s certificate of title,
TRB appealed to the Court of Appeals. While the case was pending in as well as to the subsequent transferees’ titles, it was entered in the
the Court of Appeals, TRB on March 17, 1982 sold the land to Emelita Day Book which is sufficient to constitute registration and notice to all
Santiago in whose name a new certificate of title, TCT No. 33774,[3] persons of such adverse claim, citing the cases ofVillasor vs. Camon,
was issued, also, without any notice oflis pendens annotated thereon. [10] Levin vs. Bass[11] and Director of Lands vs. Reyes.[12]
Santiago in turn divided the land into six (6) lots and sold these to As regard TRB, the Court of Appeals said that the bank was in bad
Marcial Alcantara, Armando Cruz and Artemio Sanchez, who became faith when it sold the property knowing that it was under litigation and
co-owners thereof.[4]lis pendens.[5] Alcantara and his co-owners without informing the buyer of that fact.
developed the property and thereafter sold the six (6) lots to separate On April 26, 1994, TRB filed with this Court a petition for review to set
buyers who were issued separate titles, again, bearing no notice of aside the CA decision, docketed herein as G.R. No. 114299, invoking
On July 30, 1982, the Court of Appeals rendered its decision modifying the following grounds:
the decision of the trial court as to the award of damages but affirming I.
the same in all other respects. THE RESPONDENT HONORABLE COURT OF APPEALS
For having been filed out of time and for lack of merit, the petition COMMITTED GRAVE AND SERIOUS ERROR OF LAW IN
for certiorari filed by TRB before this Court[6] was denied in a PROMULGATING THE DISPUTED DECISION AND THEREBY
Resolution dated September 12,1983. TRB’s motion for DECIDED A QUESTION OF SUBSTANCE WHOLLY CONTRARY TO
reconsideration was similarly denied in a Resolution dated October 12, SETTLED JURISPRUDENCE AND TOTALLY NOT IN ACCORD WITH
1983. The Court’s September 12, 1983 Resolution having become APPLICABLE DECISION OF THIS HONORABLE SUPREME COURT.
final and executory on November 9, 1983, the trial court issued a writ II.
of execution directing the Register of Deeds of Baguio City to cancel THE RESPONDENT HONORABLE COURT OF APPEALS HAS
TCT No. T-16272 in the name of TRB, and to issue a new one in the COMMITTED SO GRAVE AND SERIOUS ERRORS OF LAW IN
name of the Capay spouses. SANCTIONING A DEPARTURE FROM THE USUAL AND ACCEPTED
COURSE OF JUDICIAL PROCEEDING AS TO CALL FOR THE B) THE LOWER COURT ERRED IN NOT HOLDING THAT
EXERCISE OF THE POWER OF REVIEW BY THIS HONORABLE DEFENDANTS ARE BOUND BY THE DECISION IN CIVIL CASE NO.
SUPREME COURT. Q-10453.
a) The public respondent has plainly and manifestly acted whimsically, Subsequently, G.R. No. 118862 was consolidated with G. R. No.
arbitrarily, capriciously, with grave abuse of discretion, in excess of 114299, pursuant to this Court’s Resolution dated July 3, 1996.[15]
jurisdiction tantamount to lack of jurisdiction. The consolidated cases primarily involve two issues: (1) who, as
xxx between the Capays and the non-bank respondents, has a better right
b) The public respondent erred in not finding that it was not the fault of to the disputed property, and (2) whether or not TRB is liable to the
petitioner when the notice of lis pendens was not carried over to its Capays for damages.
new title. On the first issue, we rule for the non-bank respondents.
xxx I
c) The public respondent erred in not finding that PD No. 1271 had First, when TRB purchased the property at the foreclosure sale, the
legally caused the invalidation of the Capay’s property and the notice of lis pendens that the Capays caused to be annotated on their
subsequent validation of TRB’s title over the same property was certificate of title was not carried over to the new one issued to TRB.
effective even as against the Capays.[13] Neither did the certificate of title of Emelita Santiago, who purchased
Meanwhile, the non-bank respondents moved for a reconsideration of the property from TRB, contain any such notice. When Santiago
the Court of Appeals’ decision. Convinced of the movants’ arguments, caused the property to be divided, six (6) new certificates of title were
the Court of Appeals in a Resolution promulgated on August 10, 1994 issued, none of which contained any notice of lis pendens. Santiago
granted the motion for reconsideration and dismissed the complaint as then sold the lots to Marcial Alcantara and his co-owners who next sold
against them. The dispositive portion of the resolution states: each of these to the non-bank respondents. The non-bank
ACCORDINGLY, in view of the foregoing disquisitions and finding merit respondents, therefore, could not have been aware that the property in
in the motion for reconsideration, the same is hereby GRANTED. question was the subject of litigation when they acquired their
Consequently, the decision of this Court, promulgated on February 24, respective portions of said property. There was nothing in the
1994, is hereby RECONSIDERED. The complaint filed against certificates of title of their respective predecessors-in-interest that
defendants-appellants with the court a quo is hereby ordered could have aroused their suspicion. The non-bank respondents had a
DISMISSED, and the certificate of titles originally issued to them in right to rely on what appeared on the face of the title of their respective
their individual names are hereby ordered restored and duly predecessors-in-interest, and were not bound to go beyond the same.
respected. We make no pronouncement as to costs. To hold otherwise would defeat one of the principal objects of the
SO ORDERED.[14] Torrens system of land registration, that is, to facilitate transactions
The Capays thus filed with this Court a petition for review, docketed as involving lands.
G.R. No. 118862, to set aside the resolution of the Court of Appeals The main purpose of the torrens system is to avoid possible conflicts of
raising the following errors: title to real estate and to facilitate transactions relative thereto by giving
I the public the right to rely upon the face of a Torrens certificate of title
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING and to dispense with the need of inquiring further, except when the
ITSELF BY NOW HOLDING THAT TUAZON VS. REYES, 48 PHIL. party concerned has actual knowledge of facts and circumstances that
814 AND RIVERA VS. MORAN, 48 PHIL. 836 ARE NOT APPLICABLE should impel a reasonably cautious man to make such further inquiry.
HEREOF, WHILE PINO VS. COURT OF APPEALS, 198 SCRA 436, IS Where innocent third persons, relying on the correctness of the
APPLICABLE. certificate of title thus issued, acquire rights over the property, the court
II cannot disregard such rights and order the total cancellation of the
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING certificate. The effect of such an outright cancellation would be to
ITSELF BY NOW HOLDING THAT ATUN VS. MUNOZ, 97 PHIL. 762 impair public confidence in the certificate of title, for everyone dealing
AND LAROZA VS. GUIA, 134 SCRA 34, ARE NOT APPLICABLE. with property registered under the Torrens system would have to
III inquire in every instance as to whether the title has been regularly or
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING irregularly issued by the court. Every person dealing with registered
ITSELF BY NOW HOLDING THAT LEVIN VS. BASS, 91 PHIL. 419 land may safely rely on the correctness of the certificate of title issued
VILLASOR VS. CAMON, 89 PHIL. 404 AND DIRECTOR OF LANDS therefor and the law will in no way oblige him to go beyond the
VS. REYES, 68 SCRA 73, ARE NOT APPLICABLE HEREOF. certificate to determine the condition of the property.
IV The Torrens system was adopted in this country because it was
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING believed to be the most effective measure to guarantee the integrity of
ITSELF BY NOW HOLDING THAT PETITIONERS ARE GUILTY OF land titles and to protect their indefeasibility once the claim of
LACHES. ownership is established and recognized. If a person purchases a
V piece of land on the assurance that the seller’s title thereto is valid, he
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING should not run the risk of being told later that his acquisition was
ITSELF BY NOW HOLDING THAT THERE IS NO DISTINCTION IN ineffectual after all. This would not only be unfair to him. What is
THE REGISTRATION OF VOLUNTARY INSTRUMENTS VIS-À-VIS worse is that if this were permitted, public confidence in the system
INVOLUNTARY INSTRUMENTS. would be eroded and land transactions would have to be attended by
VI complicated and not necessarily conclusive investigations and proof of
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ownership. The further consequence would be that land conflicts could
ITSELF BY NOW HOLDING THAT RESPONDENTS WHO ARE be even more numerous and complex than they are now and possibly
LAWYERS, RESPONSIBLE CITIZENS AND WELL-RESPECTED also more abrasive, if not even violent. The Government, recognizing
RESIDENTS IN THE COMMUNITY, ARE EXEMPTED FROM THE the worthy purposes of the Torrens system, should be the first to
EFFECTS OF THE CONSTRUCTIVE NOTICE ARISING FROM accept the validity of titles issued thereunder once the conditions laid
REGISTRATION. down by the law are satisfied.[16]
VII Second, the foregoing rule notwithstanding, the non-bank respondents
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING nevertheless physically inspected the properties and inquired from the
ITSELF WITH REGARDS TO TRADERS ROYAL BANK, AFTER THE Register of Deeds to ascertain the absence of any defect in the title of
LATTER HAS PERFECTED ITS APPEAL TO THE SUPREME COURT. the property they were purchasing-an exercise of diligence above that
VIII required by law.
THE COURT OF APPEALS PALPABLY ERRED IN NOT RULING ON Thus, respondent Aida Fernando Meeks, who bought Lot 5 for her son
THE COUNTER-ASSIGNMENT OF ERROR THAT: Dean, testified:
Q How did you come to live in Baguio City, particularly in Km. 2.5
San Luis, Baguio City?
A In one of my visits to my sister who has been residing here for Q What was the result of your visit to the Banaue Office?
twelve (12) years now, I got interested in buying a property here. A We found the title of this property and there was reassurance that
Q How did you come to know of this property at Asin Road where it was a clean title and we saw the mother title under the Hilario family.
you now reside? Q Mrs. Meeks, when you say Banaue, what particular place is this
A My sister, Ruth Ann Valdez, sir. Banaue?
Q When this particular property was bought by you, when was that? A It is in Banaue Street in Quezon City, sir.
A I do not remember the exact date, but it was in early 1984, sir. Q And when you saw the title to this property and the mother title,
Q At the time when you went to see the place where you now reside, what was the result of your investigation, the investigation that you
how did it look? made?
A This particular property that I bought was then a small one (1)- A We were reassured that we were purchasing a valid title, we had a
room structure, it is a two (2)-storey one (1) bedroom structure. genuine title.
Q What kind of structure with regards to material? Q When you were able to determine that you had a valid, authentic
A It is a semi-concrete structure, sir. or genuine title, what did you do?
Q And aside from this two (2)-storey one (1)-room structure, how did A That is when I finally thought of purchasing the property.[17]
the surrounding area look like at the time you visited? Telesforo Alfelor II, the purchaser of Lot 4, narrated going through a
A There were stone walls from the road and there were stone walls similar routine:
in front of the property and beside the property. Q How did you come to know of this place as Asin Road where you
Q At the time you went to see the property with your agent, rather, are presently residing?
your sister Ruth Ann Valdez, did you come to know the owner? A It was actually through Mrs. Flory Recto who is presently the
A We did because at the time we went there, Mr. Alcantara was Branch Manager of CocoBank. She informed my wife that there is a
there supervising the workers. property for sale at Asin road, and she was the one who introduced to
Q And who? us Mr. Alcantara, sir.
A Amado Cruz, sir. Q When you were informed by Mrs. Recto and when you met with
Q After you saw this property, what else did you do? Mr. Alcantara, did you see the property that was being offered for sale?
A My first concern then was am I buying a property with a clean title. A Yes, sir.
Q In regards to this concern of yours, did you find an answer to this Q When did you specifically see the property, if you can recall?
concern of yours? A I would say it is around the third quarter of 1983, sir.
A At first, I asked Mr. Alcantara and I was answered by him. Q When you went to see the place, could you please describe what
Q What was his answer? you saw at that time?
A That it was a property with a clean title, that he has shown me the A When we went there the area is still being developed by Mr.
mother title and it is a clean title. Alcantara. As a matter of fact the road leading to the property is still
Q Aside from being informed that it is a property with a clean title, not passable considering that during that time it was rainy season and
did you do anything to answer your question? it was muddy, we fell on our way going to the property and walked to
A Yes, sir. have an ocular inspection and physical check on the area, sir.
Q What did you do? xxx
A Well, the first step I did was to go to the Land Registration Office. Q What was the improvement, if any, that was in that parcel which
Q Are you referring to the City Hall of Baguio? you are going to purchase?
A Yes, the City Hall of Baguio. A During that time, the riprap of the property is already there, the
Q And what did you do in the Registry of Deeds? one-half of the riprap sir.
A We looked for the title, the original title, sir. Q Do you know who was making this improvement at the time that
Q When you say we, who was your companion? you went there?
A Mr. Alcantara and my present husband, sir. A I would understand that it was Marcial Alcantara, sir.
Q The three (3) of you? Q After you saw the place and you saw the riprap and you were in
A Yes, sir. the course of deciding to purchase this property, what else did you do?
Q What title did you see there? A First, I have to consider that the property is clean.
A We saw the title that was made up in favor of Amado Cruz, sir. Q How did you go about determining whether the title of the property
Q And what was the result of your looking up for this title in the is clean?
name of Amado Cruz? A Considering that Marcial Alcantara is a real estate broker, I went to
A We had to be reassured that it was a genuine one, so we asked his office and checked the documents he has regarding the property.
Atty. Diomampo who heads the office. We showed him a copy of that Q And what was the result of your checking as to whether the title of
title and we were also reassured by him that anything that was signed the property is clean?
by him was as good as it is. A He showed me the copy of the title and it was clean, sir.
Q Did this Atty. Diomampo reassure you that the title was good? Q Aside from going to Mr. Alcantara to check up the title of the
A He did. property, what else did you do?
Q After your conversation with the Register of Deeds, what did you A Well, the next thing is I requested his wife to accompany me to the
do? Bureau of Lands or rather the Registry of Deeds, sir.
A The second step we did was to confer with our lawyer, a friend Q What registry of Deeds are you referring to?
from RCBC Binondo, Manila, this is Atty. Nelson Waje. A The Registry of Deeds of Baguio City, sir.
Q What is your purpose in going to this lawyer? Q And were you able to see the Register of Deeds regarding what
A We wanted an assurance that we were getting a valid title just in you would like to know?
case we think of buying the property. A Yes, and we were given a certification regarding this particular
Q What was the result of your conference with this lawyer? area that it was clean, sir.
A He was absolutely certain that that was a valid title. Q What Certification are you referring to?
Q Mrs. Meeks, after looking at the place, going to the Register of A It is a Certification duly signed by the employee of the Registry of
Deeds, looking at the title and seeing your lawyer friend, what decision Deeds Adelina Tabangin, sir.
did you finally make regarding the property? Q Do you have a copy of that Certification?
A We wanted more reassurances, so we proceeded to Banaue, as A Yes, I have, sir.[18]
advised by that same lawyer, there is another office of the Bureau of The testimonies of Honorato Santos[19] and Josefina Pe[20] were to
Lands. I cannot recall the office but it has something to do with the same effect.
registration of the old. The non-bank respondents’ predecessor-in-interest, Marcial Alcantara,
Q What is your purpose in going to this Office in Banaue? was no less thorough:
A I wanted more reassurances that I was getting a valid title. Q And will you give a brief description of what you do?
A I normally acquire land, quite big tract of land and subdivide it into Q Could you please inform the Honorable Court if you have any
smaller lots and sold it to some interested parties. buyers in the subdivision of this property prior to your purchase?
Q Specifically, Mr. Alcantara, will you please inform the Court in what A Yes, I have.
place in Baguio have you acquired and subdivided and sold lots? Q This subdivision of this property, to what office was it brought for
A Dominican Hill, Leonila Hill, Crystal Cave and Asin Road, sir. action?
Q You mentioned Asin Road, what particular place in Asin Road are A Bureau of Lands, San Fernando, La Union, sir.
you referring? Q Now, Mr. Alcantara, at the time that you had this property
A That property I bought from Emelita Santiago, sir. subdivided by the owner, could you please inform the Court if there
Q When you say you bought it from Emelita Santiago, how did you was any claim by any other party opposing the subdivision or claiming
come to know that Emelita Santiago is disposing of the property? the property?
A Because of the father, he is the one who offered me the property, A None, sir.
sir, Armando Gabriel. Q When the Deed of Sale was executed and you said that you
Q Is he also a resident of Baguio? presented it to the Register of Deeds and after the subdivision already,
A He is from Buyagan, La Trinidad, sir. what action did the Register of Deeds have regarding the matter?
Q How did you come to know of this Armando Gabriel wanting to sell A They approved it and registered it already in six (6) titles, sir.
a property in Asin? Q In whose names?
A He approached me in the house, sir. He has acquired a title from A One (1) title under my name, Amado Cruz and Dr. Sanchez, sir.
the Traders Royal Bank. Q Initially, Mr. Alcantara, you said that you are the sole purchaser of
Q Can you inform the Honorable Court when you had this this entire area of One Thousand Five Hundred Ninety One (1,591)
conversation with Armando Gabriel on the sale of the property at Asin Square Meters. Now, you are informing this Honorable Court that one
Road? Amado Cruz and one Dr. Sanchez were also issued two (2) titles.
A Later part of March, 1983, sir. Could you explain how these titles came into their possession?
Q Now, when this Armando Gabriel informed you that he wants his A Actually, two (2) are our co-owners, sir.
property to be sold, what did you do? Q So, is it our understanding that the Deed of Sale from Emelita
A I went to the place with the agent, sir. Santiago is in favor of these two (2) Atty. Cruz and Dr. Sanchez?
Q When you say you went to the place with the agent, what place? A Yes, sir.[21]
A Kilometer 2, Asin Road, sir. Third, between two innocent persons, the one who made it possible for
Q And when you went there to see the place, did you actually go the wrong to be done should be the one to bear the resulting loss.[22]
there to see the place? The Capays filed the notice of lis pendensway back on March 17, 1967
A By walking, I parked my car a kilometer away, sir. but the same was not annotated in TRB’s title. The Capays and their
Q Is it my understanding that when you went to see the property counsel Atty. Ramon A. Gonzales knew in 1968 of the extra-judicial
there were no roads? foreclosure sale of the property to TRB and the consolidation of title in
A None, sir. the bank’s name following the lapse of the one-year period of
xxx redemption. But in the next fifteen (15) years or so, they did not bother
Q Mr. Alcantara, when you went to see this place at Asin Road last to find out the status of their title or whether the liens noted on the
week of March, 1983, will you please briefly describe how this place original certificate of title were still existing considering that the
looked like at that time? property had already been foreclosed. In the meantime, the subject
A The place was mountainous, grassy, there were cogon trees, property had undergone a series of transfers to buyers in good faith
some of the roads were eroding already, so we cannot possibly enter and for value. It was not until after the land was subdivided and
the property, sir. developed with the buyers building their houses on the other lots when
Q At the time you entered the place, was there any visible sign of the Capays suddenly appeared and questioned the occupants’ titles.
claim by anyone? At the very least, the Capays are guilty of laches. Laches has been
A None, sir. defined as the failure or neglect, for an unreasonable and unexplained
Q In terms of fence in the area? length of time, to do that which by exercising due diligence could nor
A There is no such, sir. should have been done earlier; it is negligence or omission to assert a
xxx right within a reasonable time, warranting presumption that the party
Q Aside from looking or going to the property, what else did you do entitled to it either has abandoned it or declined to assert it.[23]
to this property prior to your purchase? Verily, the principle on prescription of actions is designed to cover
A I investigated it with the Register of Deeds, sir. situations such as the case at bar, where there have been a series of
Q What is your purpose in investigating it with the Register of transfers to innocent purchasers for value. To set aside these
Deeds? transactions only to accommodate a party who has slept on his rights
A To see if the paper is clean and there are no encumbrances, sir. is anathema to good order.
Q To whom did you talk? Independently of the principle of prescription of actions working against
A To Atty. Ernesto Diomampo, sir. petitioners, the doctrine of laches may further be counted against
Q And when you went to the Registry of Deeds to investigate and them, which latter tenet finds application even to imprescriptible
check, did you have occasion to talk with Atty. Diomampo? actions. x x x.[24]
A Yes, sir. In De La Calzada-Cierras vs. Court of Appeals,[25] we held:
Q And what was the result of your talk with Atty. Diomampo? While it is true that under the law it is the act of registration of the deed
A The papers are clean except to the annotation at the back with the of conveyance that serves as the operative act to convey the land
road right of way, sir. registered under the Torrens System (Davao Grains, Inc. vs.
Q After making this investigation with the Register of Deeds and Intermediate Appellate Court, 171 SCRA 612), the petitioners cannot
talking with Atty. Diomampo, what else transpired? invoke said dictum because their action to recover Lot 4362 is barred
A We bought the property, sir. by the equitable doctrine of laches.
Q After purchasing the property from Emelita Santiago, could you The act of registering the conveyance to Rosendo was constructive
please tell the Honorable Court what you did with that deed of sale? notice to the whole world of the fact of such conveyance (Heirs of
A We registered it with the Register of Deeds for the Certificate of Maria Marasigan vs. Intermediate Appellate Court, 152 SCRA 253).
Title because at that time when we bought the property, Emelita But the petitioners’ complaint to recover the title and possession of Lot
Santiago had it subdivided into six (6) lots, sir. 4362 was filed only on July 21, 1981, twelve (12) years after the
Q Is it our understanding that prior to your purchase the property registration of the sale to Rosendo. The petitioners failed and
was subdivided into six (6) parcels? neglected for an unreasonably long time to assert their right, if any, to
A Yes, sir. the property in Rosendo’s possession.
Being guilty of laches, the Capays cannot invoke the ruling inVillasor realized that it was acting in violation of the General Bank Act. What is
vs. Camon, Levin vs. Bass and Director of Lands vs. Reyes[26] to the apparent is that TRB took advantage of the absence of the notice of lis
effect that entry of the notice of lis pendensin the day book (primary pendens at the back of their certificate of title and sold the property to
entry book) is sufficient to constitute registration and such entry is an unwary purchaser. This notwithstanding the adverse decision of the
notice to all persons of such adverse claim. Certainly, it is most trial court and the pendency of its appeal. TRB, whose timing indeed
iniquitous for the Capays who, after sleeping on their rights for fifteen smacks of bad faith, thus transferred caused the property without
years, to assert ownership over the property that has undergone the lis pendens annotated on its title to put it beyond the Capays'
several transfers made in good faith and for value and already reach. Clearly, the bank acted in a manner contrary to morals, good
subdivided into several lots with improvements introduced thereon by customs and public policy, and should be held liable for damages.[34]
their owners. Considering, however, that the mortgage in favor of TRB had been
In the same vein, the cases cited by the Capays in their first two (2) declared null and void for want of consideration and, consequently, the
assignment of errors do not help them any, as the transferees In said foreclosure proceedings did not have a valid effect, the Capays would
cases were not innocent purchasers for value and in good faith. ordinarily be entitled to the recovery of their property. Nevertheless,
In Tuazon vs. Reyes and Siochi,[27] where the land involved therein this remedy is not now available to the Capays inasmuch as title to
was sold by Petronilo David to Vicente Tuazon, it was with a deed said property has passed into the hands of third parties who acquired
containing the recital that the land was in dispute between the vendor the same in good faith and for value. Such being the case, TRB is
and Roberto Siochi. Tuazon, who was merely subrogated to the rights duty bound to pay the Capays the fair market value of the property at
of the vendor was aware of the dispute and, furthermore, David did not the time it was sold to Emelita Santiago, the transferee of TRB.
warrant the title to the same. In Rivera vs. Moran,[28] Rivera acquired WHEREFORE, the decision of the Court of Appeals dated February
interest in the land before the final decree was entered in the cadastral 24, 1994 in CA-G.R. CV No. 33920, as modified by its Resolution
proceedings. Rivera, the transferee, was aware of the pending dated August 10, 1994 is hereby AFFIRMED. In addition, Traders
litigation and, consequently, could not have been considered a Royal Bank is ordered to pay the Capays the fair market value of the
purchaser in good faith. Similarly, in Atun, et al. vs. Nunez, et al.[29] property at the time it was sold to Emelita Santiago.
and Laroza vs. Guia,[30] the buyers of the property at the time of their This Decision is without prejudice to whatever criminal, civil or
acquisition knew of the existence of the notice of lis pendens. In administrative action against the Register of Deeds and/or his
contrast to the cited cases, the non-bank respondents in the case at assistants that may be taken by the party or parties prejudiced by the
bar acquired their respective portions of the land with clean title from failure of the former to carry over the notice of lis pendens to the
their predecessors-in-interest. certificate of title in the name of TRB.
II SO ORDERED.
We come now to TRB’s liability towards the Capays. Davide, Jr., C.J., (Chairman), Puno, Pardo, and Ynares-Santiago, JJ.,
The Bank unconvincingly tries to wash its hands off the present concur.
controversy, and attempts to shift the blame on the Capays, thus:
xxx Republic of the Philippines
23. The petitioner Bank, during all the time that it was holding the title SUPREME COURT
for over fourteen (14) years that there was no legal impediment for it to Manila
sell said property, Central Bank regulations require that real properties SECOND DIVISION
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 G.R. No. 108926 July 12, 1996
of Lis Pendens to the new title of the petitioner Bank should not be REPUBLIC OF THE PHILIPPINES, petitioner,
absorbed by the latter considering that in all good faith, it was not vs.
aware of the existence of said annotation during all the time that said COURT OF APPEALS and HEIRS OF DEMOCRITO O.
title was in its possession for almost fourteen (14) years before the PLAZA , respondents.
property was sold to Emelita G. Santiago xxx.[31]
TRB concludes that “(t)he inaction and negligence of private TORRES, JR., J.:p
respondents, allowing ownership to pass for almost 15 years constitute Petitioner implores this Court review and set aside the
prescription of action and/or laches.”[32] decision 1 February 8, 1993 of the Court of Appeals in CA-G.R. CV No.
Section 25 of the General Banking Act,[33] provides that no bank “shall 34950 which affirmed the decision of June 14, 1991 of the Regional
hold the possession of any real estate under mortgage or trust, deed, Trial Court of Makati in LRC Case No. M-99 confirming respondent
or the title and possession of any real estate purchased to secure any Democrito O. Plaza's title over Rel. Plan 1059, which is the relocation
debt due to it, for a longer period than five years.” TRB, however, plan of Psu-97886.
admits holding on to the foreclosed property for twelve (12) years after After the filing of private respondent's Comment, this Court, in its
consolidating title in its name. The bank is, therefore, estopped from resolution of May 24, 1993, gave due course to the petition and
invoking banking laws and regulations to justify its belated disposition required the parties to submit their respective Memoranda. The
of the property. It cannot be allowed to hide behind the law which it petitioner filed its Memorandum on June 29, 1993 while private
itself violated. respondent filed his Memorandum on July 6, 1993.
TRB cannot feign ignorance of the existence of the lis The factual background is summarized in the Decision 2 of the Court of
pendensbecause when the property was foreclosed by it, the notice Appeals as follows:
oflis pendens was annotated on the title. But when TCT No. T-6595 in According to petitioner-appellee, the subject property situated at
the name of the Capay spouses was cancelled after the foreclosure, Liwanag, Talon (formerly Pamplona), Las Pinas, Rizal, now Metro
TCT No. T-16272 which was issued in place thereof in the name of Manila, having an area of 45,295 sq. m., was first owned by Santos de
TRB did not carry over the notice of lis pendens. la Cruz who declared the same in his name under Tax Declaration
We do not find the Capays guilty of “inaction and negligence” as Nos. 3932 for the year 1913; 3933 for 1917; and 6905, for 1921 (Exhs.
against TRB. It may be recalled that upon the commencement of 2-B, 2-C and 2-D, Exh. K for petitioner-appellee, pp. 514-516, Record).
foreclosure proceedings by TRB, the Capays filed an action for Subsequently, the subject property was successively bought or
prohibition on September 22, 1966 against the TRB before the CFI to acquired by Pedro Cristobal, Regino Gervacio, Diego Calugdan and
stop the foreclosure sale. Failing in that attempt, the Capays filed a Gil Alhambra. To evidence their respective acquisition of the property in
supplemental complaint for the recovery of the property. The case question, Tax Declaration Nos. 7937, for the year 1923; 8463, for 1927;
reached this Court. Prescription or laches could not have worked 9467, for 1934; and 2708 (year not available) were presented. 3 After
against the Capays because they had persistently pursued their suit Gil Alhambra died, his heirs extra-judicially partitioned the subject
against TRB to recover their property. property and declared it in their names under Tax Declaration Nos.
On the other hand, it is difficult to believe TRB’s assertion that after 5595 and 5596 for the year 1960. 4 On 5 July 1966, they executed a
holding on to the property for more than ten (10) years, it suddenly "Deed of Sale With Mortgage" deeding the subject property to
petitioner-appellee for P231,340.00 payable in three (3) installments, (e) Phase II Laong Plaza Settlers Association, Inc. It filed a motion to
the payment of which was secured by a mortgage on the property. intervene in the case but the motion does not appear to have been
Upon receipt of the full payment, they executed a "Release of acted upon by the lower court. 15
Mortgage" on 1 August 1968. 5 After the sale, petitioner-appellee took On 13 March 1990, the Community Environment and Natural
possession of the subject property and paid the taxes due thereon for Resources Office, West Sector (CENRO-WEST) of the Department of
the years 1966 up to 1986, and in 1985 declared it in his name under Environment and Natural Resources requested the lower court to
Tax Declaration Nos. B-013-01392 and B-013-01391. 6 He appointed furnish it photocopies of the records of the petition as the property in
Mauricio Plaza and Jesus Magcanlas as the administrator and question was the subject of a request for a Presidential Proclamation
caretaker thereof, respectively. Due to losses, the property in question reserving the land in question for Slum Improvement and Resettlement
was cultivated only for a while. Five (5) years according to Mauricio Site (SIR) of the National Housing Authority. 16
Plaza, and from 1966, up to 1978 according to Jesus Magcanlas. 7 On 22 June 1990, upon order of the lower court, an ocular inspection
On 14 November 1986, petitioner-appellee filed a petition, which was was conducted on the subject property by the court-appointed
amended on 17 July 1987, for the registration and confirmation of his commissioner who submitted his report on 2 July 1990. 17
title over the subject property alleging among others, that: On 3 January 1991 Proclamation No. 679 was issued by the President
1. by virtue of the deed of sale, he is the owner thereof; of the Republic of the Philippines withdrawing the subject property from
2. he and his predecessors-in-interest have been in open, continuous, sale or settlement and reserve (the same) for slum improvement and
exclusive and notorious possession and occupation of the property sites and services program under the administration and disposition of
prior to, and since 12 June 1945; the National Housing Authority in coordination with the National Capital
3. other than himself, there is no other person occupying, or having Region, Department of Environment and Natural Resources subject to
any interest over the property; and, actual survey and private rights if any there be, . . . The National
4. there are no tenants or agricultural lessees thereon. 8 Housing Authority was authorized to develop, administer and dispose
On 24 February 1988, oppositor-appellant, the Republic of the of the area in accordance with LOI 555, as amended (by LOI Nos. 686
Philippines (Republic, for brevity), filed its opposition maintaining, and 1283), and LOI 557. 18
among others, that: (1) petitioner-appellee and his predecessors-in- On 31 May 1991 petitioner-appellee filed his memorandum. 19 The
interest have not been in open, continuous, exclusive and notorious oppositors did not. Nevertheless, among them, only the Republic and
possession and occupation of the land in question since 12 June 1945 the Heirs of Santos de la Cruz formally offered their evidence. 20
or prior thereto; (2) the muniment of title and tax declarations as well On 14 June 1991 the lower court rendered the judgment referred to
as tax payments relied upon do not constitute sufficient evidence of earlier.
a bona fide acquisition of the land by petitioner-appellee and of his On 8 July 1991, from among the oppositors, only the Republic filed a
open, continuous possession and occupation thereof in the concept of notice of appeal which was approved on 10 July 1991. 21 By reason of
owner since 12 June 1945, or prior thereto, and (3) the subject the approval thereof, the motion filed on 23 July 1991 by the Heirs of
property pertains to the public domain and is not subject to private Hermogenes Rodriguez for the reconsideration of the judgment was
appropriation. 9 denied on 1 August
On 9 March 1988, after the compliance of the jurisdiction requirements 1991. 22
was proved and, on motion, the lower court issued its order of general On February 8, 1993, the Court of Appeals rendered a decision
default. 10 affirming the trial court's judgment.
Aside from the Republic, there were others who opposed the petition Hence, this petition filed by he Republic of the Philippines alleging that:
and filed their opposition thereto prior to, or were allowed to submit THE DECISION OF THE COURT OF APPEALS AFFIRMING THE
their opposition despite, and after, the issuance of the order of general DECISION OF THE REGIONAL TRIAL COURT GRANTING PRIVATE
default. They are: RESPONDENT'S APPLICATION FOR REGISTRATION, IS NOT
(a) Arsenio Medina who withdraw his opposition on 29 May 1989; 11 SUPPORTED BY AND IS CONTRARY TO LAW, THE EVIDENCE AND
(b) Emilio, Leopoldo and Abraham, all surnamed Borbon; Heirs of EXISTING JURISPRUDENCE.
Andres Reyes; Maximo Lopez; and, Marilou Castanares who prayed Petitioner argues that he burden rests on the applicant to show by
that the lower court direct petitioner-appellee to see to it that their convincing evidence that he has a registrable title over the property
respective property, which adjoins the land in question, are not sought to be titled, which the latter failed to do.
included in the petition;12 According to petitioner, aside from mere tax declarations all of which
(c) the Heirs of Santos de la Cruz and the Kadakilaan Estate. Upon are of recent vintage, private respondent has not established actual
their respective motion, the order of default was set aside as to them possession of the property in question in the manner required by law
and they were allowed to file their opposition. (Section 14, P.D. 1529) and settled jurisprudence on the matter. Thus,
The Heirs of Santos de la Cruz argue that: (1) their predecessor-in- no evidence was adduced that private respondent cultivated much
interest, Santos de la Cruz, is the "primitive owner" of the subject lot; less, fenced the subject property if only to prove actual possession.
and, (2) he, his heirs, and upon their tolerance, some other persons The actual fencing of the property was done only starting 1988 when
have been in open, peaceful, notorious and continuous possession of the actual occupants were forcibly ejected and driven out from their
the land in question since time immemorial until the present. respective abodes and that its witnesses namely: Elascio Domitita,
The Kadakilaan Estate contends that: (1) by reason of its Titulo de Manuel Dolom, Bernadette Aguinaldo and Virginia Franco, who were
Propiedad de Terrenos of 1891 Royal Decree 01-4, with approved all actual residents of the questioned area, categorically testified on
plans registered under the Torrens System in compliance with, and as this score, summarized as follows:
a consequence of, P.D. 872, it is the owner of the subject property; 1. In their long stay in the area, the longest staying occupant being
and, (2) petitioner-appellee or his predecessors-in-interest have not Domitita who had been in the premises for more than thirty (30) years
been in open, continuous, exclusive and notorious possession and nobody ever claimed ownership over the subject property;
occupation of the land in question since 12 June 1945 or earlier. 13 2. It was only in 1988 that they learned that private respondent had
(d) the Heirs of Hermogenes Rodriguez. They allege, among others, filed a petition to have the property titled in his name;
that by reason of a Titulo de Propiedad de Terrenos of 1891; Royal 3. Private respondent had not introduced any improvement nor was
Decree No. 01-4, Protocol of 1891; Decree No. 659, approved Plan of there a caretaker assigned by him to look after the property; and,
the Bureau of Lands No. 12298 dated 10 September 1963, their 4. Aside from them, there were about 200 more families residing in the
predecessor-in-interest is the owner of the subject property. Despite area but through force, intimidation and illegal demolitions, were driven
(sic) that their motion to lift order of default as to them and admit their out by private respondent from the premises.
opposition, which motion was opposed by petitioner-appellee, does not We are not persuaded. On this point, the respondent Court correctly
appear to have been found that:
acted upon by the lower court, they were able to present one (1) Proof that petitioner-appellee and his predecessors-in-interest have
witness; 14 and, acquired and have been in open, continuous, exclusive and notorious
possession of the subject property for a period of 30 years under
a bona fide claim of ownership are the tax declarations of petitioner- Petitioner also alleges that the land in question had been withdrawn
appellee's predecessors-in-interest, the deed of sale, tax payment from the alienable portion of the public domain pursuant to Presidential
receipts and petitioner-appellee's tax declarations. The evidence on Proclamation No. 679 entitled "Reserving for Slum Improvement and
record reveals that: (1) the predecessors-in-interest of petitioner- Resettlement (SIR) Sites and Services of the National Housing
appellee have been declaring the property in question in their names in Authority, A Certain Parcel of Land of the Public Domain Situated in the
the years 1923, 1927, 1934 and 1960; and, (2) in 1966, petitioner- Municipality of Las Pinas, Metro Manila," which was issued on January
appellee purchased the same from the Heirs of Gil Alhambra and since 7, 1991 or almost 6 months prior to the issuance of the trial court's
then paid the taxes due thereon and declared the property in his name decision.
in 1985. The Court of Appeals opined that "the issuance of the proclamation did
xxx xxx xxx not have any effect on the subject property as the proclamation only
. . . Considering the dates of the tax declarations and the realty tax withdrew it from sale or settlement and reserved the same for slum
payments, they can hardly be said to be of recent vintage indicating improvement and sites and services program, but subject to actual
petitioner-appellee's pretended possession of the property. On the survey and existing private rights. The proclamation did not prohibit the
contrary, they are wrong evidence of possession in the concept of registration of title of one who claims, and proves, to be the owner
owner by petitioner-appellee and his predecessors-in-interest. thereof." We agree. At any rate, registration does not vest title. It is
Moreover, the realty tax payment receipts show that petitioner-appellee merely evidence of such title. 29 Our land Registration laws do not give
has been very religious in paying the taxes due on the property. This is the holder any better title than what he actually has. When the
indicative of his honest belief that he is the owner of the subject conditions set by law are complied with, the possessor of the land, by
property. We are, therefore, of the opinion that petitioner-appellee has operation of law, acquires a right to a grant, a government grant,
proved that he and his predecessors-in-interest have been in open, without the necessity of a certificate of title being issued. The Torrens
continuous, exclusive and notorious possession of the subject property system was not established as a means for the acquisition of title to
in the concept of owner for a period of 30 years since 12 June 1945 private land, as it merely confirms, but does not confer ownership. 30
and earlier. By operation of law, the property in question has become Of the particular relevance is the finding of the respondent Court of
private property. 23 Appeals to the effect that —
Contrary to the representations of the Republic, petitioner-appellee had We have found that petitioner-appellee has proven his claim of
introduced some improvements on the subject property from the time ownership over the subject property. As provided in the proclamation
he purchased it. His witnesses testified that petitioner-appellee itself, his ownership of the subject property must be respected and he
developed the subject property into a ricefield and planted it with rice, cannot be barred from having the land titled in his name. This does not
but only for about five years because the return on investment was not contravene or negate the intention of the proclamation. Besides, its
enough to sustain the continued operation of the riceland. Though not implementing Letters of Instruction recognize that there may be lands
in the category of permanent structures, the preparation of the land declared included in the Slum Improvement Resettlement (SIR)
into a ricefield and planting it with rice are considered "improvements" program that are privately owned. Paragraph 10 of LOI No. 555
thereon. 24 provides that if the land declared to be included in the SIR program is
Although tax declarations or realty tax payments of property are not privately owned, the concerned local government, upon the approval
conclusive evidence of ownership, nevertheless, they are by the National Housing Authority of its project plan, shall acquire the
good indicia of possession in the concept of owner for no one in his property through expropriation. In LOI No. 686 paragraph 3, it is
right mind would be paying taxes for a property that is not in his actual mandated that the NHA, upon request of the local government,
or at least constructive expropriate or otherwise acquire land for the SIR program.
possession. 25 They constitute at least proof that the holder has a claim Proclamation No. 679 is, therefore, not a valid justification to deny the
of title over the property. The voluntary declaration of a piece of petition.
property for taxation purposes manifests not only one's sincere and . . . At the time the Proclamation was issued, the controversy over the
honest desire to obtain title to the property and announces his adverse subject property was sub-judice. The conflicting rights over it had been
claim against the State and all other interested parties, but also the presented to the court for resolution. That jurisdiction could not be
intention to contribute needed revenues to the Government. Such an removed from it by subsequent legislation. The President must have
act strengthens one's bona fideclaim of acquisition of ownership. 26 been aware of this. Hence, the inclusion of the cautionary clause
Neither do we find merit in the assertions of petitioner's witnesses "subject to existing private rights." 31
Elascio Domitita, Manuel Dolom, Bernadette Aguinaldo and Virginia Over time, Courts have recognized with almost pedantic adherence
Franco. As properly stated by the public respondent, that what is inconvenient or contrary to reason is not allowed in law
. . . Their alleged possession is not based on any right. Neither do they — Quod est inconveniens, aut contra rationem non permissum est in
claim to have title or interest over the subject property. As a matter of lege. Undoubtedly, reason and law find respondent entitled to rights of
fact, they did not bother to oppose the petition. The most that can be ownership over the disputed property.
said of their alleged possession is that it was only with the tolerance of ACCORDINGLY, the assailed decision dated February 8, 1993 is
rightful owners of the property — plaintiff-appellee and his hereby AFFIRMED and the instant petition is hereby DISMISSED.
predecessors-in-interest, hence, is no bar to the granting of the SO ORDERED.
petition. We do not see why we should accept the bare assertions of Regalado, Romero, Puno and Mendoza, JJ., concur.
the alleged occupants at their face value as against the claim of Footnotes
ownership of plaintiff-appellee backed up by legal documents, tax Republic of the Philippines
declarations, and tax receipts. 27 SUPREME COURT
Well-settled and oft-repeated is the rule that findings of facts of the Manila
Court of Appeals are final and conclusive on the Supreme Court FIRST DIVISION
except: 1.) when the conclusion is a finding grounded entirely on G.R. No. 130768 March 21, 2002
speculation, surmises and conjectures; 2.) when the inference made is CRISANTO L. FRANCISCO, petitioners,
manifestly mistaken, absurd or impossible; 3.) when there is a grave vs.
abuse of discretion; 4.) when the judgment is based on a THE COURT OF APPEALS and REGINO B. RELOVA,
misapprehension of facts; 5.) when the findings of facts are conflicting; JR., respondents.
6.) when the Court of Appeals, in making its findings, went beyond the YNARES-SANTIAGO, J.:
issues of the case and the same is contrary to the admissions of both Before us is a petition for review of the decision1 dated June 11, 1997
appellant and appellee; 7.) when the findings of the Court of Appeals of the Court of Appeals in CA-G.R. CV No. 50104, affirming the
are contrary to those of the trial court; and 8.) when the findings of fact decision2 dated January 25, 1995 of the Regional Trial Court of
are conclusions without citation of specific evidence on which they are Antipolo, Rizal, Branch 73, in Land Registration Case No. 91-1016,
based. 28 LRA Record No. N-62367.
Concededly, none of the above exceptions obtains in the case at bar.
On October 2, 1991, respondent Regino G. Relova filed a petition3 with Subsequently, petitioner filed a Petition for Reopening and Review13 of
the trial court for the registration of two parcels of land described as the decree of registration pursuant to Article 32 of P.D. 1529 and a
Lots Nos. 1834 and 1832, Cad-688-D of the Cainta-Taytay Cadastre, Supplemental Petition and Reply.14 He reiterated the grounds alleged
situated in Barangay San Juan, Taytay, Rizal. He alleged that he has in his motion to quash the writ of possession and further alleged that
been in open, continuous, exclusive and notorious possession of the respondent failed to republish the notice of initial hearing containing
said parcels of land since 1958 and, therefore, has acquired the same the corrections in the technical description of Lot 1832 made by the
by prescription. Bureau of Land Management; that respondent falsely and fraudulently
The Republic of the Philippines, through the Office of the Solicitor testified that the disputed lot was part of the land purchased by his
General, registered its written opposition to the petition.4 predecessor, Francisco Santana, from Maximo Cruz; that it is not true
At the initial hearing of the petition on February 28, 1992, nobody that respondent’s possession was undisturbed; that respondent
appeared to oppose the petition. After respondent Relova presented declared the land for taxation purposes only in March 1991; that
evidence to establish the jurisdictional facts, the trial court ordered that petitioner’s claim of ownership over the disputed land was annotated
a general default be entered against the whole world except the on the said tax declaration; and that even respondent’s predecessor-
Republic of the Philippines. The trial court designated a hearing in-interest and other adjacent lot owners recognized petitioner as the
commissioner to receive evidence ex-parte in support of the petition.5 owner of the dispute land.
During the course of the proceedings, the Land Registration Authority In its order dated February 27, 1995, the trial court ruled as follows:
(LRA) submitted its report6 stating that discrepancies were found after It appears that the Decree of Registration in the above-entitled case
plotting the plans pertaining to the land applied for. Thus, the LRA with No. N-205474 was issued on February 28, 1994 while oppositor’s
recommended that the appropriate government agencies be ordered to "Petition for Reopening and Review" and "Supplemental Petition" were
submit their reports to determine whether the land or any portion filed on March 2, 1994 and on August 9, 1994, respectively. It appears
thereof are covered by land patents are within the forest zone. also, that the applicant has not yet transferred the subject land to an
After the reception of evidence before the trial commissioner, and innocent purchaser for value, hence the court is of the considered view
based on its report,7 the trial court rendered its decision, the dispositive that the oppositor may avail himself of the remedy provided under
portion of which reads: article 32 of PD 1529 otherwise known as the Property Registration
WHEREFORE, premises considered, the Court hereby confirms the Decree which grants to "any person, including the government and the
title of herein petitioner Regino B. Relova, Jr. to the parcels Lot No. branches thereof, deprived of land or of any estate or interest therein
1834 Cad-688-D covered by Plan Ap-04-006273 and Lot No. 1832 by such adjudication or confirmation of title obtained by actual fraud, to
Cad-688-D covered by Plan Ap-006183 situated in Barangay San file in the proper Regional Trial Court a petition for reopening and
Juan, Municipality of Taytay, Province of Rizal containing an area of review of the decree of registration not later than one year from and
three hundred thirty nine (339) square meters and seventeen thousand after the date of entry of such decree of registration, but in no case
four hundred nine (17,409) square meters respectively and orders their shall such petition be entertained by the court where an innocent
registration in the name of herein applicant Regino B. Relova, Jr. who purchaser for value has acquired the land or an interest thereon,
is married to Lourdes S. Guino with all the rights and privileges whose rights may be prejudiced…"
appertaining thereto. The allegations of the oppositor as to the actual fraud allegedly
Let an order for issuance of a Decree be issued upon finality of this committed by the applicant in the latter’s application for registration of
decision and payment of taxes and fees due on the subject parcels of title of lot 1832 necessarily requires proof which can only be adduced
land. in a proper hearing or trial. Corollary, thereto, is the requirement of the
SO ORDERED.8 law for the oppositor, to prove his real or dominical right over the lot in
Subsequently, the LRA filed with the trial court a Supplementary question.
Report, submitting the corrected technical boundaries of the technical In view thereof, the Motion for Leave to File and Admission of
descriptions for Lots 1832 and 1834. The report further states: Supplemental Petition is hereby GRANTED.
WHEREFORE, the foregoing report is respectfully submitted to the The above-entitled case is therefore, re-opened insofar as Lot 1832 is
Honorable Court for its information and guidance with the concerned.
recommendation that (a) the corrected technical description of lot In the meantime, the execution of the writ of possession issued in the
1832, Cad 688-D, Cainta-Taytay Cadastre (Annex J) be approved and above-entitled case is hereby held in abeyance insofar as lot 1832 is
(b) the applicant be ordered to publish in the Official Gazette the concerned, pending resolution of the petition for review of herein
corrected technical description of Lot 1834, Cad 688-D, Cainta-Taytay oppositor.
Cadastre (Annex K), and thereafter, an order be issued approving the Let this case be set for reception of evidence for oppositor Crisanto
said technical description to be utilized in the issuance of the Francisco on April 6, 1995 at 9:00 A.M.
corresponding decree of registration pursuant to the decision dated SO ORDERED.15
January 25, 1993 and Order for the issuance of the Decree dated April Upon a motion for reconsideration of respondent,16 the trial court
1, 1993.9 reversed its previous order, to wit:
On October 28, 1993, the trial court issued the following Order: Wherefore, premises considered, the court therefore reconsiders its
Considering the Report of the Land Registration Authority (LRA) dated order of February 27, 1995 and hereby reiterates its decision in this
September 20, 1993 as well as the "Urgent Ex-Parte Motion" of the case for the registration of lots applied for by the applicants.
applicant through counsel, the court hereby approves the corrected The court also approves the motion for issuance of the writ of
technical description of Lot 1832, Cad-688-D, Cainta Taytay Cadastre. possession as prayed for by the applicants and hereby orders the
Moreover, the recommendation that the corrected technical description issuance of said writ.
of lot 1834, Cad-688-D Cainta-Taytay Cadastre be published in the SO ORDERED.17
Official Gazette is hereby DENIED for the reason that the correction Petitioner filed a motion for reconsideration,18 arguing that he was
(amendment) does not appear to be substantial inasmuch as the denied due process of law when he was deprived the opportunity to
boundaries affected are both owned by the applicant in the above- prove the allegation of fraud committed by the applicant in securing a
entitled case.1âwphi1.nêt decree of registration on the land in dispute. The motion for
SO ORDERED.10 reconsideration was, however, denied.19
Upon motion of respondent Relova, the trial court ordered the issuance Petitioner appealed to the Court of Appeals, where the same was
of a writ of possession on December 7, 1993.11 docketed as CA-G.R. CV No. 50104. On June 11, 1997, the Court of
On January 14, 1994, petitioner Crisanto L. Francisco entered his Appeals affirmed the order of the trial court denying the petition for
appearance as oppositor and filed a Motion to Quash Writ of reopening and review of the decree of registration.20 Petitioner’s motion
Possession.12 He alleged that he has been in actual possession of Lot for reconsideration was denied on September 16, 1997.21
1832; that no notice of the motion for writ of possession was furnished Hence, this petition raising the following issues:
to him; and that the land registration court has no authority to issue a Whether a court can refuse to receive evidence on allegations of fraud,
writ of possession. in a petition for review of an application for registration, committed by
the applicant in his application and in the proceedings, legally sufficient respondent’s application contained an erroneous technical description
to nullify and set aside such decision approving registration and the of Lot 1832, which was later corrected; that application with the
decree and certificate of title subsequently issued, and then reiterate corrected technical description was not republished; that respondent
its original decision and decree without trying and resolving if the falsely represented that Lot 1832 was part of the land which his
alleged frauds were committed or not? predecessors-in-interest, Francisco Santana, purchased from Maximo
Whether such refusal to hear and receive evidence on the petition for Cruz, but the same was omitted in the original registration proceeding
review is a denial of due process that renders the court’s orders, in LRC Case No. N-2710 of the Court of First Instance of Pasig, Rizal,
decisions and proceedings void and annullable for lack, excess, or Branch VI; and that it is petitioner, by himself and through his
abuse of jurisdiction? predecessors-in-interest, who has been in actual possession and use
Whether an appellate court that affirms such void decision and orders of said Lot 1832 as owner, openly, continuously and exclusively, for
of the trial court and refuse to remand below the appealed case for trial more than fifty years before the filing of respondent’s application.
on the merits, equally commits a violation of due process and acts Furthermore, petitioner alleged that respondent is guilty of fraud in
without, in excess or with abuse of jurisdiction? making it appear in Tax Declaration No. 04-13781, which was obtained
Whether lack of jurisdiction on the part of the trial court for applicant’s only in March 1991, that he paid the arrears for the past ten years.
failure to prove jurisdictional requirement of publication in a newspaper Petitioner also argues that the notation "Ownership of this property is
of general circulation of the application and date of initial hearing, also claimed by CRISANTO L. FRANCISCO," is inscribed on the tax
because the evidence or affidavit of publication presented as proof declaration. Thus, respondent undeniably had notice of petitioner’s
thereof is a falsified one and, therefore, null and void, can be raised in claim of ownership and possession of said Lot 1832 long before he
any stage of the proceedings, and cause the dismissal of the actually declared it for taxation and applied for registration. Other
application or the nullification or setting aside of the decision granting documents also prove petitioner’s prior right and possession, namely,
registration for lack of jurisdiction? the tax receipts for 1936 and 1937 both in the name of Miguel
The core issue in this appeal is whether or not petitioner was denied Francisco, petitioner’s grandfather and predecessor-in-interest, Tax
due process when the trial court denied the petition for the reopening Declaration No. 13296 (1945-1974), Tax Declaration No. 03-2348
and review of the decree of registration, thereby depriving petitioner of (1980-1984), and Tax Declaration No. 03-3127 (1985 to date), all of
the opportunity to substantiate the allegations of fraud. which indicate petitioner’s possession of Lot 1832 as owner thereof.23
In reversing its earlier order granting the petition to reopen, the trial The foregoing are serious allegations which should have necessitated
court ruled: a reopening of the application if only to ensure that the claims of
The issue to be resolved in the instant motion for reconsideration is respondent of acquisitive prescription were valid. This was done by the
whether or not there was fraud committed by the applicant in this case. trial court in its order dated February 27, 1995 granting the reopening
To the mind of the court there is no fraud committed. It should be noted of the case, wherein it stated that "the allegations of the oppositor as to
that the Report of the LRA that was submitted to the court states that the actual fraud allegedly committed by the applicant in the latter’s
there are some corrections in the technical descriptions of the property application for registration of title of lot 1832 necessarily requires proof
but the area of the property has remained the same as applied for. which can only be adduced in a proper hearing or trial."24Subsequently,
That is why this court in its order dated October 28, 1993 granted the however, it reversed its order and denied the petition to reopen and
motion of counsel for the applicant to approve the technical corrections review the decree of registration, thereby depriving petitioner the
for the reason that the correction without need for the republication opportunity to substantiate his allegations and protect his claims over
amendment does not appear to be substantial. It should be noted also the property. In this regard, the trial court’s act was reversible error and
that the order of the Land Registration Authority recommended the an unwarranted deviation from both substantive and procedural norms.
corrected technical description of Lot 1832 Cad-688-D Cainta-Taytay In the early case of Minlay v. Sandoval,25 we held:
Cadastre be approved and the applicant be ordered to publish in the Perhaps the trial judge had reasons to doubt the veracity of the
Official Gazette the corrected technical description of Lot 1834 Cad- supposed fraudulent acts, attributed to respondents. This doubt,
688-D Cainta-Taytay Cadastre. Thereafter, an order be issued however, should not have been made the basis of dismissal, because
approving the said technical description to be utilized in the issuance of if a court doubts the veracity of the allegations in the petition, the best
the corresponding decree of registration. So it is clear that with respect thing it could do would have been to deny the motion to dismiss and
to Lot 1832, which is the subject matter of the opposition in this case, proceed with hearing on the merits, of the petition.
the LRA merely stated that the corrected technical description of Lot A person deprived of land or any estate or interest therein by
1832 be approved. This court approved the said corrected technical adjudication or confirmation of title obtained by actual fraud may seek
description of Lot 1832 as recommended by LRA. There is therefore the reopening and review of a decree of registration. The Torrens
no fraud upon a review by the court of the motion for reconsideration System is intended to guarantee the integrity and conclusiveness of
and the opposition thereto as well as taking into account the oral the certificate of registration but it cannot be used for the perpetuation
arguments of both counsels for the applicant and the oppositor on the of fraud against the real owner of the registered land.26
matter of a legal fraud committed in this case. The court merely WHEREFORE, in view of the foregoing, the petition is GRANTED. The
complied with the recommendation of the LRA for the approval of the decision of the Court of Appeals dated June 11, 1997
corrected technical description of Lot 1832. The court did not order to is REVERSED and SET ASIDE. The Regional Trial Court of Antipolo,
republish in the Official Gazette the corrected technical description Rizal, Branch 73 is ordered to reopen Land Registration Case No. 91-
therein as it is not substantial for the area of the land still remains the 1016 and afford petitioner and respondent full opportunity to
same. substantiate their respective claims.1âwphi1.nêt
Wherefore, premises considered, the court therefore reconsiders its SO ORDERED.
order of February 27, 1995 and hereby reiterates its decision in this Davide, Jr., CJ., and Kapunan, J., concur.
case for the registration of lots applied for by the applicants. Puno, J., on official leave.
The court also approves the motion for issuance of the writ of
possession as prayed for by the applicants and hereby orders the
issuance of said writ.22 SUPREME COURT
A careful scrutiny of the assailed order reveals that the trial court did Manila
not entirely consider the allegations of fraud or falsity in the petition to THIRD DIVISION
reopen and review the decree of registration. The trial court only G.R. No. 147072 May 7, 2002
resolved the issue of republication of the corrected technical FRANCISCO H. LU, petitioner,
description of Lot 1832 and found that the area of the property was the vs.
same as that applied for. It summarily dismissed the petition to review Spouses ORLANDO and ROSITA MANIPON, respondents.
the decree of registration. PANGANIBAN, J.:
In the petition to reopen and review the decree of registration, The registration of a sale of real estate will not protect a buyer in bad
petitioner alleged that the first publication of the hearing of faith, for the law cannot be used as a shield for fraud. On the other
hand, the preferential right of a first registrant in a double sale is 5582-B-7-D and covered by Transfer Certificate of Title No. 171497
always qualified by good faith. after paying the sum of P13,051.50 plus legal interest to the herein
The Case [petitioner] anytime after the finality of this decision.
Before us is a Petition for Review on Certiorari challenging the October "2). The third-party defendant, Juan Peralta, is ordered to refund to the
25, 2000 Decision and the February 9, 2001 Resolution of the Court of defendants Manipons the amount of P18,000.00 paid by the latter to
Appeals1 (CA) in CA-GR CV No. 55149. The assailed Decision him;
disposed as follows: "3). x x x no pronouncement as to damages in favor [of] or against
"WHEREFORE, premises considered, the appealed Decision is hereby either of the parties."5
AFFIRMED with MODIFICATION in the sense that [petitioner] is Ruling of the Court of Appeals
directed to convey Lot 5582-B-7-D covered by TCT No. 171497 to The CA affirmed the Decision of the trial court with the modification that
[respondent] Rosita C. Manipon without being entitled to any payment respondents would no longer be required to pay petitioner the value of
from the latter."2 the disputed portion in a "forced sale." The appellate court said that
The assailed Resolution denied the Motion for Reconsideration.3 petitioner knew that Lot 5582-B-7-D had already been sold by Juan
The Facts Peralta to respondents before the mother lot was mortgaged,
The facts of the case are summarized in the assailed Decision as foreclosed and eventually purchased. He bought the entire property
follows: from the foreclosing bank, because he feared that he might lose what
"On May 9, 1981, Juan Peralta executed a [D]eed of [S]ale by he had earlier bought in 1981 – a 350 square meter lot which also
installment in favor of spouses Orlando and Rosita Manipon [herein formed part of the mother lot.
respondents]. Therein, Juan Peralta agreed to sell by installment to the Hence, this Petition.6
said spouses 350 square meters of the 2,078 square-meter lot he The Issues
owned, covered by Transfer Certificate of Title (TCT) No. 137911 and In his Memorandum,7 petitioner raises the following issues:
located at Barrio Dilan, Urdaneta, Pangasinan. The said [D]eed was "1. Who between petitioner and respondents have a better right of
not registered with the Registry of Deeds. ownership over the lot in question, Lot 5582-B-7-D, with an area of 339
"On June 10, 1981, Juan Peralta mortgaged the aforesaid lot to Thrift square meters?
Savings and Loan Association, Inc. (TSLAI). He however failed to pay "2. Whether respondents' claim over the lot can rise [above that of]
the loan he obtained for which the mortgage was constituted and so their predecessor in interest Juan Peralta[.]
the same was judicially foreclosed and sold to TSLAI for P62,789.18 "3. Whether respondents are under estoppel to question petitioner's
which was the highest bidder. The latter in turn sold the same on July ownership over the lot in question[.]
15, 1988 in the amount of P80,000.00 to the [petitioner]. Thereafter, on "4. Whether petitioner was in bad faith in the acquisition of the lot in
August 30, 1989, [petitioner] caused the subdivision of the said lot into question[.]
five (5) lots, one of which is Lot 5582-B-7-D, with an area of 339 "5. And even assuming without admitting that petitioner is under
square meters covering the lot which was earlier sold by installment to obligation to convey the lot in question in favor of respondents,
[respondents]. The said lot is now covered by TCT No. 171497. In the whether the consideration of the lot be paid by respondent is
interim, or on July 30, 1983, Juan Peralta executed a [D]eed of [S]ale P2,000.00 per square meter[.]"8
in favor of [respondents] after the couple paid a total amount of These issues can be summed up into three questions: (1) who has a
P8,000.00 for the subject lot. The aforesaid [D]eed was however also better right to the disputed property? (2) was petitioner a purchaser in
not registered.1âwphi1.nêt bad faith? and (3) what should be the purchase price of the disputed
"On January 22, 1990, [petitioner] through counsel wrote the lot?
[respondents] regarding the presence of the latter's house, which was This Court's Ruling
also being occupied by them, on the lot in question. Efforts were The Petition is partly meritorious.
apparently made by both parties to settle the brewing dispute but to First Issue:
[no] avail. Hence, on February 26, 1990, [petitioner] filed the present Better Right to the Disputed Lot
action alleging therein that he is the owner of the lot in question Petitioner claims to have a better right to the disputed portion of the
including that which was being occupied by [respondents. Petitioner] real property. First, although respondents had bought it first, he was
further claims that his ownership was confirmed by the Regional Trial the first to register his purchase of the mother lot. Second,
Court of Urdaneta, Pangasinan, Branch 49, in Civil Case No. U-4399. respondents' ownership follows that of their vendor who mortgaged to
He also averred that for reasons unknown to him, [respondents] were the bank his title to the mother lot and failed to redeem it.
claiming ownership of Lot 5582-B-7-D and have constructed a house Petitioner avers that, although respondents purchased the disputed lot
thereon on January 22, 1990. by installment on May 9, 1981 and fully paid for it on May 30, 1983,
"In the Answer filed by [respondents], they claim that [petitioner] is a they failed to register their sale with the Registry of Deeds. In the
buyer in bad faith because even before he bought the 2,078 square- meantime, on June 18, 1981, Juan Peralta mortgaged the mother lot –
meter lot, he knew for a fact that they already bought Lot 5582-B-7-D including the disputed portion – to the Thrift Savings and Loan
from the original owner of the said lot and have been residing therein Association, Inc. (TSLAI). The mortgage was foreclosed and the
since 1981. [Respondents] also asserted that [petitioner] had property sold on July 10, 1988. Petitioner, on the other hand, bought
knowledge of their claim over the said property because when the the whole lot from the bank for P80,000 on July 15, 1988 and
whole lot was foreclosed they shared the same problem as [petitioner] registered it in his name on September 23, 1988.
also bought a lot with the 2,078 square-meter lot of Juan Peralta. Third, petitioner claims that from the time respondents fully paid for the
"Trial ensued and thereafter, the trial court rendered the questioned lot until they received a Notice to Vacate, they did not do anything to
judgment. x x x."4 (Citations omitted) perfect their title thereto; hence, they are now estopped from
Ruling of the Trial Court questioning his ownership of it.
The trial court ruled that petitioner was not a buyer in good faith We are not convinced. In estoppel, a person who by deed or conduct
despite the fact that he was able to register his ownership of the induces another to act in a particular manner is barred from adopting
disputed lot. He admitted knowing that respondents had constructed a an inconsistent position, attitude or course of conduct that thereby
house on the disputed lot in 1984, even before he purchased the causes loss or injury to another.9 This equitable principle will not apply
property from the loan association in 1990. Indeed, he waited more to respondents, because they exercised dominion over the property by
than ten (10) years before contesting respondents' occupation and occupying and building their house on it. On the other hand, it was
possession of the land. The RTC disposed as follows: petitioner who, despite having knowledge of the existence of
"WHEREFORE, IN THE LIGHT OF THE FOREGOING, the Court respondents' house on the disputed portion, bought the whole lot.
renders judgment as follows: Before acquiring the mother lot from the bank, he knew of respondents'
"1). The [petitioner] is hereby ordered to convey to the herein claim of ownership and occupation. He cannot now pretend to be an
[respondent] Rosita Manipon, (defendant Orlando Manipon is already innocent buyer in good faith.
dead) the lot consisting of 339 square meters denominated as Lot
Registration is not the equivalent of title.10 Under the Torrens system, All told, the right of a buyer to rely upon the face of the title certificate
registration only gives validity to the transfer or creates a lien upon the and to dispense with the need of inquiring further is upheld only when
land.11 It was not established as a means of acquiring title to private the party concerned had no actual knowledge of facts and
land because it merely confirms, but does not confer, circumstances that should impel a reasonably cautious man to conduct
ownership.12 Moreover, the RTC and the CA have correctly ruled that further inquiry.18
the preferential right of the first registrant of a real property in a case of Second Issue:
double sale is always qualified bygood faith under Article 154413 of the Bad Faith
Civil Code.14 A holder in bad faith of a certificate of title is not entitled to Petitioner denies being a purchaser in bad faith. He alleges that the
the protection of the law, for the law cannot be used as a shield for only reason he spoke to the respondents before he bought the
fraud.15 foreclosed land was to invite them to share in the purchase price, but
"When the registration of a sale is not made in good faith, a party they turned him down. This, he argues, was not an indication of bad
cannot base his preference of title thereon, because the law will not faith.
protect anything done in bad faith. Bad faith renders the registration Petitioner's contention is untenable. He might have had good intentions
futile. Thus, if a vendee registers the sale in his favor after he has at heart, but it is not the intention that makes one an innocent buyer. A
acquired knowledge that there was a previous sale of the same purchaser in good faith or an innocent purchaser for value is one who
property to a third party, or that another person claims said property buys property and pays a full and fair price for it, at the time of the
under a previous sale, or that the property is in the possession of one purchase or before any notice of some other person's claim on or
who is not a vendor, or that there were flaws and defects in the interest in it.19 One cannot close one's eyes to facts that should put a
vendor's title, or that this was in dispute, the registration will constitute reasonable person on guard and still claim to have acted in good faith.
x x x bad faith, and will not confer upon him any preferential right. The As aptly explained by Vitug:
situation will be the same as if there had been no registration, and the "The governing principle is prius tempore, potior jure (first in time,
vendee who first took possession of the real property in good faith shall stronger in right). Knowledge by the first buyer of the second sale
be preferred."16 cannot defeat the first buyer's rights except when the second buyer
Equally important, under Section 44 of the Property Registration first registers in good faith the second sale (Olivares vs. Gonzales, 159
Decree (Presidential Decree No. 1529), every registered owner SCRA 33.) Conversely, knowledge gained by the second buyer of the
receiving a certificate of title in pursuance of a decree of registration first sale defeats his rights even if he is first to register, since such
and every subsequent purchaser of registered land taking such knowledge taints his registration with bad faith (see also Astorga vs.
certificate for value and in good faith shall hold the same free from all Court of Appeals, G.R. No. 58530, 26 December 1984). InCruz vs.
encumbrances, except those noted on the certificate and enumerated Cabaña (G.R. No. 56232, 22 June 1984; 129 SCRA 656), it was held
therein. Petitioner is evidently not a subsequent purchaser in good that it is essential, to merit the protection of Art. 1544, second
faith. Therefore, between the parties, respondents have a better right paragraph, that the second realty buyer must act in good faith in
to the property based on the concurring factual findings of both the trial registering his deed of sale (citing Carbonell vs. Court of Appeals, 69
and the appellate courts. We quote with approval the following ruling of SCRA 99, Crisostomo vs. CA, G.R. 95843, 02 September
the CA: 1992).1âwphi1.nêt
"x x x We are persuaded that [petitioner] knew of the fact that Lot "The registration contemplated under Art. 1544 has been held to refer
5582-B-7-D was sold by Juan Peralta to [respondents] before Lot to registration under Act 496 Land Registration Act (now PD 1529)
5582-B-7, the mother lot of Lot 5582-B-7-D, was mortgaged, which considers the act of registration as the operative act that binds
foreclosed, sold and [its ownership] transferred x x x to him. In fact, the land (see Mediante vs. Rosabal, 1 O.G. [12] 900, Garcia vs.
[w]e are convinced that the main reason why [petitioner] bought the Rosabal, 73 Phil 694). On lands covered by the Torrens System, the
entire lot from the TSLAI was hi fear of losing the 350 square meter-lot purchaser acquires such rights and interest as they appear in the
he bought sometime in 1981 which also forms part of Lot 5582-B-7. certificate of title, unaffected by any prior lien or encumbrance not
Having been aware of the 'defects' in the title of TSLAI as far as Lot noted therein. The purchaser is not required to explore farther than
5582-B-7-D is concerned, he cannot now claim to be a purchaser in what the Torrens title, upon its face, indicates. The only exception is
good faith and for value even if he traces his ownership [to] TSLAI where the purchaser has actual knowledge of a flaw or defect in the
which [w]e believe was a purchaser in good faith – the latter not being title of the seller or of such liens or encumbrances which, as to him, is
aware of the sale that transpired between the [respondents] and Juan equivalent to registration (see Sec. 39, Act 496; Bernales vs. IAC, G.R.
Peralta before Lot 5582-B-7 was sold to it in a public auction. 75336, 18 October 1988;Hernandez vs. Sales, 69 Phil 744; Tajonera
"One who purchases real estate with knowledge of a defect or lack of vs. Court of Appeals, L-26677, 27 March 1981)."20
title in his vendor cannot claim that he has acquired title thereto in By his own allegations, petitioner admits he was not a purchaser in
good faith as against the true owner of the land or an interest therein. good faith. A buyer of real property which is in the possession of
Thus, even assuming arguendo that [petitioner] was not aware of the another must be wary and investigate the rights of the latter.
sale between Juan Peralta and the [respondents], still he cannot be Otherwise, without such inquiry, the buyer cannot be said to be in good
considered as a purchaser in good faith because he had personal faith.21
knowledge of [respondents'] occupation of the lot in question. This fact Basic is the rule that the factual findings of the appellate court are
alone should have put him on guard before buying the land. But as he given great weight, even finality, when they affirm those of the trial
admitted during the trial, he was not interested in the [respondents'] court,22 unless they fall under the exceptions enumerated in Fuentes v.
reason for occupying the said lot[;] all that he was interested in was to Court of Appeals.23 Petitioner has not shown that this case falls under
buy the entire lot. This 'devil-may-care' attitude of [petitioner] has any of those exceptions; hence, we find no cogent reason to depart
placed him where he is now. Consequently, he cannot be entitled to from this general rule.
the relief he is seeking before this [c]ourt. Third Issue:
"True, the purchaser of a registered land is not required to go behind Proper Purchase Price
the title to determine the condition of the property. However, a Petitioner protests respondents' exception from paying him P13,051.50
purchaser cannot close his eyes to facts which should put a with legal interest for the conveyance of the disputed portion. Instead,
reasonable man upon his guard and then claim that he acted in good he pleads that this Court modify the price to P2,000 per square meter.
faith under the belief that there was no defect in the title of the vendor. We are not persuaded. While neither party appealed the issue of the
His mere refusal to believe that such defect exists, or his willful closing purchase price, petitioner did question the conveyance of Lot 5582-B-
of his eyes to the possibility of the existence of a defect in his vendor's 7-D to respondents upon payment of the said price. Hence, the
title, will not make him an innocent purchaser for value, if it afterwards payment was also effectively put in issue. It is well-settled that
develops that the title was in fact defective, and it appears that he had appellate courts have ample authority to rule on matters not specifically
such notice of the defect as would have led to its discovery had he assigned as errors in an appeal, if these are indispensable or
acted with that measure of precaution which may reasonably be necessary to the just resolution of the pleaded issues.24
required of a prudent man in a like situation."17
However, the CA modification exempting respondents from paying
petitioner is flawed, because the RTC had ordered Juan Peralta to
refund the P18,000 paid to him by petitioner as the purchase price of
the disputed lot. Thus, the trial court correctly ordered (1) respondents
to pay petitioner 13,051.5025 plus legal interest for Lot 5582-B-7-D and
(2) the third-party defendant Peralta to refund to respondents
the P18,000 they had paid for the lot. The CA ruling would unjustly
enrich respondents, who would receive double compensation. In short,
the RTC ruling should have been affirmed in its entirety.1âwphi1.nêt
WHEREFORE, the Petition is PARTLY GRANTED. The assailed
Decision and Resolution are AFFIRMED without
the MODIFICATION ordered by the CA. No pronouncement as to
costs.
SO ORDERED.
Melo, Vitug, Sandoval-Gutierrez, and Carpio, JJ., concur.