CRUZ VS.

CA & SUZARA,
281 SCRA 491 (1997)

FACTS:

Gloria R. Cruz was the owner of Lot 10, Blk. 565, PSD-38911, with an area
of 747.7 square meters, together with the improvements thereon, situated at
22 Bituan St., Bgy. Doña Imelda, Quezon City, covered by TCT No. 242553
in her name; in 1977 she and respondent Romeo V. Suzara lived together as
husband and wife without benefit of marriage; in September 1982, solely
out of love and affection for Suzara, she executed a deed of absolute sale
over Lot 10 in favor of Suzara without any monetary consideration;
thereafter, Suzara registered the document in his favor and used the
property as collateral for a bank loan of P350,000.00; he however failed to
pay the loan so that after four (4) years the mortgage was foreclosed. She
paid the bank P40,638.88 to restructure the loan resulting in the extension
of the redemption period to two (2) years. However, without her
knowledge and before the expiration of the extended period, Suzara
redeemed the property. She tried to talk to him but he avoided her. Finally,
to protect her interest, she executed an Affidavit of Adverse Claim which
she filed with the Register the Deeds of Quezon City asserting that her sale
in favor of Suzara was null and void for lack of consideration and being
contrary to law and public policy.

Gloria R. Cruz was the owner of Lot 10, Blk. 565, PSD-38911, with an area
of 747.7 square meters, together with the improvements thereon, situated at
22 Bituan St., Bgy. Doña Imelda, Quezon City, covered by TCT No. 242553
in her name; in 1977 she and respondent Romeo V. Suzara lived together as
husband and wife without benefit of marriage; in September 1982, solely
out of love and affection for Suzara, she executed a deed of absolute sale
over Lot 10 in favor of Suzara without any monetary consideration;
thereafter, Suzara registered the document in his favor and used the
property as collateral for a bank loan of P350,000.00; he however failed to
pay the loan so that after four (4) years the mortgage was foreclosed. She
paid the bank P40,638.88 to restructure the loan resulting in the extension
of the redemption period to two (2) years. However, without her
knowledge and before the expiration of the extended period, Suzara
redeemed the property. She tried to talk to him but he avoided her. Finally,
to protect her interest, she executed an Affidavit of Adverse Claim which
she filed with the Register the Deeds of Quezon City asserting that her sale
in favor of Suzara was null and void for lack of consideration and being
contrary to law and public policy.

ISSUE:

Whether or not respondent Vizconde was an innocent purchaser for value

in good faith?

HELD:

Where innocent third persons, relying on the correctness of the certificate

of title thus issued, acquire rights over the property the court cannot
disregard such rights and order the total cancellation of the certificate.[7]
The effect of such an outright cancellation would be to impair public
confidence in the certificate of title, for everyone dealing with property
registered under the Torrens system would have to inquire in every
instance whether the title has been regularly or irregularly issued. This is
contrary to the evident purpose of the law.[8] Every person dealing with
registered land may safely rely on the correctness of the certificate of title
issued therefor and the law will in no way oblige him to go behind the
certificate to determine the condition of the property.[9] Even if a decree in
a registration proceeding is infected with nullity, still an innocent
purchaser for value relying on a Torrens title issued in pursuance thereof is
protected. A purchaser in good faith is one who buys the property of
another without notice that some other person has a right to or interest in
such property and pays a full and fair price for the same at the time of such
purchase or before he has notice of the claim of another person.

Both lower courts found that at the time respondent Suzara executed the
deed of absolute sale on 22 December 1989 in favor of respondent
Vizconde, which was acknowledged before a notary public, Suzara was the
registered owner appearing in the certificate of title. When the sale was
executed, nothing was annotated in the certificate to indicate any adverse
claim of a third person or the fact that the property was the subject of a
pending litigation. It was only on 22 January 1990, after the sale to
respondent Vizconde, that petitioner filed her adverse claim with the
Register of Deeds. Based on this factual backdrop, which we consider
binding upon this Court, there is no doubt that respondent Vizconde was a
purchaser for value in good faith and that when he bought the property he
had no knowledge that some other person had a right to or an adverse
interest in the property. As the Court of Appeals observed, Vizconde paid a
full and fair price for the property at the time of the purchase and before he
had any notice of petitioner's claim or interest in the property. For
purposes of resolving the present controversy, the allegation that there was
a second deed of sale executed solely for the purpose of evading the
penalties resulting from late payment of taxes and registration is
immaterial. The fact is, petitioner herself admits that the actual sale of the
property occurred on 22 December 1989. A contract of sale is consensual
and is perfected once agreement is reached between the parties on the
subject matter and the consideration therefor.

DELA MERCED VS. GSIS

 365 SCRA 1 (2001)

FACTS:

This case involves five registered parcels of land located within the
Antonio Subdivision, Pasig City – Lots 6, 7, 8, and 10 of Block 2 and Lot 8 of
Block 8 (subject properties). These lots were originally owned by, and titled
in the name of, Jose C. Zulueta , as evidenced by Transfer Certificate of
Title (TCT) No. 26105. TCT No. 26105 contains several lots, other than the
subject properties, within the Antonio Subdivision. Later, the Zulueta
spouses mortgaged several lots contained in TCT No. 26105 to the GSIS,
which eventually foreclosed on the mortgaged properties, including the
subject properties. Upon consolidation of GSIS’s ownership, TCT No. 26105
in Zulueta’s name was cancelled, and TCT No. 2355410 was issued in
GSIS’s name.

Upon learning of the foreclosure, petitioners’ predecessor, Francisco Dela

Merced (Dela Merced) filed a complaint praying for the nullity of the GSIS
foreclosure on the subject properties (Lots 6, 7, 8, and 10 of Block 2 and Lot
8 of Block 8) on the ground that he, not the Zuluetas, was the owner of
these lots at the time of the foreclosure. Dela Merced also impleaded Victor
and Milagros Manlongat, who were claiming Lot 6, Block 2 by virtue of a
sale executed by the GSIS in their daughter’s (Elizabeth Manlongat) favor.
Dela Merced argued that, due to the nullity of GSIS’s foreclosure over the
subject properties, it had no ownership right that could be transferred to
Elizabeth Manlongat.

Dela Merced caused the annotation of lis pendens on GSIS’s TCT No. 23554
on September 21, 1984 in order to protect his interests in the subject
properties. Dela Merced died in 1988 and was substituted by his heirs, the
petitioners in the instant case. After a protracted litigation, the case reached
this Court as G.R. No. 140398. On September 11, 2001, a Decision was
rendered in petitioners’ favor. The Court nullified GSIS’s foreclosure of the
subject properties because these lots were never part of its mortgage
agreement with the Zulueta spouses. Judgment was entered on April 23,
2002. A writ of execution was issued on July 24, 2003 but held in abeyance
due to some issues.
ISSUES:

1. Can GSIS still raise the issue of exemption?

2. Whether a final and executory judgment against GSIS and Manlongat
can be enforced against their successors-in-interest or holders of
derivative titles.
3. Whether an order to cancel title to a particular property includes an
order to provide technical descriptions and segregate it from its
mother title

RULING:

On the issue of GSIS’s exemption

The issue of GSIS’s alleged exemption under RA 8291 had been finally
decided against GSIS in G.R. No. 173391, when this Court denied GSIS’s
petition for review. The denial rendered the CA Decision in CA-G.R. SP
No. 87821 final and executory. GSIS’s attempt to resurrect the same issue
by interjecting the same in this proceeding is barred by the principle of
“law of the case,” which states that “determinations of questions of law
will generally be held to govern a case throughout all its subsequent
stages where such determination has already been made on a prior
appeal to a court of last resort.” The Decision in G.R. No. 173391
allowing the execution of the judgment against GSIS is the “law of the
case” and controls the proceedings below which are already in the
execution stage.

Enforcement of judgment against transferees pendente lite

“A notice of lis pendens is an announcement to the whole world that a

particular real property is in litigation, serving as a warning that one who
acquires an interest over said property does so at his own risk, or that he
gambles on the result of the litigation over the said property.”

The Court cannot accept GSIS’s theory that the dispositive portion of the
Decision in G.R. No. 140398 is enforceable only against GSIS’s title because
it does not contain the phrase “and all its derivative titles.” GSIS’s narrow
interpretation would render nugatory the principle that a final judgment
against a party is binding on his privies and successors-in-interest. We
cannot sustain this interpretation. In Cabresos v. Judge Tiro, the Court
upheld the respondent judge’s issuance of an alias writ of execution against
the successors-in-interest of the losing litigant despite the fact that these
successors-in-interest were not mentioned in the judgment and were never
parties to the case. The Court explained that an action is binding on the
privies of the litigants even if such privies are not literally parties to the
action. Their inclusion in the writ of execution does not vary or exceed the
terms of the judgment. In the same way, the inclusion of the “derivative
titles” in the writ of execution will not alter the Decision in G.R. No. 140398
ordering the cancellation of GSIS’s title.

Cancellation of title

The order contained in the Decision in G.R. No. 140398 is for the RD to
cancel GSIS’s titles over Lot 10, Block 2 and Lot 8, Block 8, inter alia.
Whether these titles are individual or contained in a mother title is of no
consequence. The RD has to cause their cancellation. If the cancellation can
only be carried out by requiring GSIS or the Bureau of Lands to provide the
necessary information, then they can be compelled to do so. Otherwise, the
Court’s decision would be rendered inefficacious, and GSIS would retain
ostensible ownership over the lots by the simple expedience that they are
included in a mother title, instead of individual titles. That result is
manifestly contrary to the Court’s ruling and would subvert the very
purpose of bringing this case for a complete resolution.

When a judgment calls for the issuance of a new title in favor of the
winning party (as in the instant case), it logically follows that the judgment
also requires the losing party to surrender its title for cancellation. It is the
only sensible way by which the decision may be enforced. To this end,
petitioners can obtain a court order requiring the registered owner to
surrender the same and directing the entry of a new certificate of title in
petitioners’ favor. The trial court should have granted petitioners’ motion
for supplemental writ of execution as it had authority to issue the
necessary orders to aid the execution of the final judgment.
 TOMAS VS TOMAS
98 SCRA 280 (1980)

FACTS:

Plaintiff spouses, Florentino S. Tomas and Francisca Cariño, are the owners
of a parcel of land located in Malasian, Santiago, Isabela (now Saguday,
Nueva Vizcaya) since 1929, which they obtained through a homestead
patent with Original Certificate of Title. Through fraud and
misrepresentation, one Eusebia Tomas succeeded in having the said OCT
cancelled, and obtained another in her name, now TCT-360 Nueva Vizcaya,
with which she obtained a loan from the Philippine National Bank branch
in Santiago, Isabela, as a security, mortgaging the land with the bank for
the loan of P2,500.00. Florentino Tomas discovered the fraudulent acts of
Eusebia Tomas when he himself applied for a loan from the Philippine
National Bank, and offered as a collateral the same land already mortgaged
by Eusebia Tomas to the bank.

In the action plaintiffs filed on April 14, 1964 to declare TCT-350, Nueva
Vizcaya, null and void, against Eusebia Tomas, it was found by the court
(Court of First Instance of Nueva Vizcaya) that Eusebia Tomas succeeded
in having plaintiffs’ OCT No. I-4620 (Isabela)1 cancelled and having TCT
No. 8779 (Isabela)2 issued in her name, by executing a deed of extra-judicial
settlement3 in which she made it appear that she is the lone heir of the
registered owner, Florentino Tomas, to whom she was not even known
before, and who was at the time very much alive. She then petitioned for
the issuance of another owner’s duplicate of OCT No. I-4620, alleging loss
of said owner’s duplicate. On Order of the court (Court of First Instance of
Isabela) where the petition was filed, a new owner’s duplicate was issued
to Eusebia Tomas as the petitioner. Upon the registration of the deed of
extra-judicial settlement (Exhibit “J”), OCT No. I-4620 was cancelled, and
TCT No. 8779, now TCT-350 Nueva Vizcaya was issued in the name of
Eusebia Tomas on March 14, 1957.

In the same action, the Philippine National Bank was made a co-defendant
as the mortgagee of the land, the plaintiffs alleging that the mortgage is
null and void, the mortgagor not being the owner of the property
mortgaged. After trial in which Eusebia Tomas never appeared to present
any evidence, the court a quo  rendered judgment declaring the CTC of
Eusebia Tomas null and void as well as declaring the mortgage in favor of
the Philippine National Bank without force and effect against the plaintiffs

ISSUE:
a. Whether the mortgage of the land in favor of the appellant bank is valid
or not as against appellees.

b. Whether the appellant is a mortgagee in good faith and for value, for if it
is, and without anything to excite suspension as it claims, it is protected in
the same way as a purchaser in good faith and for value is protected under
Section 39 of Act 496, otherwise known as the Land Registration Act.

HELD:

a. The SC find no error in the holding of the court a quo  that the mortgage
executed by Eusebia Tomas, appellant’s co-defendant in favor of said
appellant bank over the land in question which the former never owned, I
[sic] without effect as against appellees herein

b. The SC find more weight and vigor in a doctrine which recognizes a

better right for the innocent original registered owner who obtained his
certificate of title through perfectly legal and regular proceedings, than one
who obtains his certificate from a totally void one, as to prevail over
judicial pronouncements to the effect that one dealing with a registered
land, such as a purchaser, is under no obligation to look beyond the
certificate of title of the vendor, for in the latter case, good faith has yet to
be established by the vendee or transferee, being the most essential
condition, coupled with valuable consideration, to entitle him to respect for
his newly acquired title even as against the holder of an earlier and
perfectly valid title. There might be circumstances apparent on the face of
the certificate of title which could excite suspicion as to prompt inquiry,
such as when the transfer is not by virtue of a voluntary act of the original
registered owner, as in the instant case, where it was by means of a self-
executed deed of extra-judicial settlement, a fact which should be noted on
the face of Eusebia Tomas’ certificate of title. Failing to make such inquiry
would hardly be consistent with any pretense of good faith, which the
appellant bank invokes to claim the right to be protected as a mortgagee,
and for the reversal of the judgment rendered against it by the lower court.
 EGEO VS CA
174 SCRA 484

FACTS:

The respondents filed a motion for quieting the title and recovery of
possession and ownership against the petitioners. Apparently, they claim
they are the owners of the parcel of land by virtue of the deed of sale they
entered into with Roberto Marfori to whom the petitioners allegedly sold
their land to. The Egaos acquired their land title by virtue of a free patent
and transferred their ownership in favor of Marfori by virtue of a deed of
sale. However, the Certificate of Title was not transferred in Marfori’s
favor. Upon purchase of the land from Marfori, the respondents introduced
improvements thereon and paid taxes for the property. However, the
petitioners illegally occupied portions of the land. Petitioner answers that
they are the true owner of the land by virtue of the Certificate of Title
issued by the Register of Deeds pursuant to their Free Patent. The lower
court ruled in favor of Egao. Upon appeal, the CA reversed the decision of
the lower court on grounds that the main issue should be whether Egao
can validly sell the land to Marfori who subsequently transferred the
ownership to the respondents. The CA holds both Egao and Marfori to be
in pari delicto for violating the 5-year restriction provided by
Commonwealth 141 against encumbrance and alienation of public lands
acquired thru free patent or homestead patent. They cannot therefore
obtain affirmative relief. It also declares the respondents as innocent
purchasers for value who the obtained the duplicate of the OCT still in the
name of the Egaos from Marfori and ownership was transferred to them by
physical possession of the property. It thus promulgated judgment holding
the respondents the absolute owners of the land in dispute, to cancel the
OCT of the petitioner and its transfer thereof to the respondents and to
surrender peaceful possession of the land to the respondents.

ISSUE:

Whether or not the petitioners validly transferred their ownership to

Marfori to resolve the rights of the respondents over the land in dispute?

RULING:

The SC holds that based on the adduced evidence, the Egaos sold the lot to
Marfori within the 5-year restriction period provided by law on Free Patent
based on the Deed of Sale entered into by the parties. Although the
petitioners denied the validity of the Deed of Sale the court held that it was
notarized and a notarial document has in its favor the presumption of
regularity. When the land was sold to the respondents, they know that the
OCT is still registered under the name of the petitioners. Thus, they are not
considered to be innocent purchaser as contrary to the ruling of the CA.
Where a purchaser neglects to make the necessary inquiries and closes his
eyes to facts which should put a reasonable man on his guard as to the
possibility of the existence of a defect in his vendor's title, and relying on
the belief that there was no defect in the title of the vendor, purchases the
property without making any further investigation, he cannot claim that he
is a purchaser in good faith for value. A private individual cannot bring an
action for reversion or any action which would have an effect of canceling a
free patent and the certificate of title issued on the basis thereof since the
land covered will form part again of the public domain. Sec. 124 of the
Public Land Act provides that deeds of sale of patented lands, perfected
within the prohibited five (5) year period are null and void thus the Egaos
have no title to pass to Marfori and nobody can dispose that which does
not belong to him. The respondents are not innocent purchasers for value
with no standing to question the rights of the petitioners over the land and
to file an action to quiet the title. The petitioners remained to be the
registered owners and entitled to remain in physical possession of the
disputed property. Respondents are ordered to deliver the OCT to the
petitioners without prejudice to an action for reversion of the land to be
instituted by the Solicitor General for the State.

QUINIANO VS CA
39 SCRA 221 (1971)

FACTS:

The original owners of the disputed parcels located in Pangasinan were the
spouses Fabiano Sarmiento and Tomasa de Guzman who, on October 13,
1894, obtained a "titulo real de composicion gratuita" covering the
same.4 The spouses had two children. The first was Jose, who in his lifetime
was married to respondent Luisa Barbosa, with whom he had as issues the
other respondents Maria, Agueda, Petra and Rufina, all surnamed
Sarmiento.5 The other was Joaquina, the mother of the principal petitioner,
Marta Quinano.6 In 1932, there was an extra-judicial partition adjudicating
such lots to Jose.7 This notwithstanding, Marta Quinano filed an
application for a free patent in 1941 in order to acquire the same. 8 She was
successful, a free patent being granted her on November 12 of that year,
thereafter registered on November 26 as a result of which an original
certificate of title was issued to her. 9 The evidence is clear, according to
respondent Court of Appeals that private respondents were unaware of her
machinations. 10 She was likewise able to take possession during the early
part of the Japanese Occupation. 11 It was not until "some sort of peace and
order had been restored", to quote from the appealed decision, that in
November, 1943 a complaint for reconveyance with damages was filed
with private respondents as plaintiffs wherein they specifically set forth the
circumstances under which a free patent was obtained by Quinano without
their knowledge. Thereafter they learned that on the 2nd of December,
1946, she had sold Lots 6 and 8 as well as three-fourths of Lot 5 to a certain
Felix Capito and on December 7, 1946, she sold the remaining one-fourth of
Lot 5 to Antero Sanchez, with the former in turn having transferred his
rights to now petitioner Celedonio Fermin without such vendees, however,
obtaining any certificate of title in their names. The complaint was then
amended on March 2, 1948 to include the other vendees as defendants.

ISSUE:

Whether or not reconveyance is proper?

HELD:

Petitioners, as announced at the outset, cannot hope to succeed. On the

facts as found, the law was correctly applied.

1. The controlling legal norm was set forth in succinct language by Justice
Tuason in a 1953 decision, Director of Lands v. Register of Deeds of
Rizal. 15 Thus: "The sole remedy of the land owner whose property has been
wrongfully or erroneously registered in another's name is, after one year
from the date of the decree, not to set aside the decree, as was done in the
instant case, but, respecting the decree as incontrovertible and no longer
open to review, to bring an ordinary action in the ordinary court of justice
for reconveyance or, if the property has passed into the hands of an
innocent purchaser for value, for damages." 16 Such a doctrine goes back to
the 1919 landmark decision of Cabanos v. Register of Deeds of Laguna. 17 If it
were otherwise the institution of registration would, to quote from Justice
Torres, serve "as a protecting mantle to cover and shelter bad faith ...." 18 In
the language of the then Justice, later Chief Justice, Bengzon,: "A different
view would encourage fraud and permit one person unjustly to enrich
himself at the expense of another." 19 It would indeed be a signal failing of
any legal system if under the circumstances disclosed, the aggrieved party
is considered as having lost his right to a property to which he is entitled. It
is one thing to protect an innocent third party; it is entirely a different
matter, and one devoid of justification, if deceit would be rewarded by
allowing the perpetrator to enjoy the fruits of his nefarious deed. As clearly
revealed by the undeviating line of decisions coming from this Court, such
an undesirable eventuality is precisely sought to be guarded against. So it
has been before; so it should continue to be.

The brief for petitioners would seek to escape from the unmistakable sense
of our past decisions. It sought to justify what was done by Marta
Quiniano. Obviously; such effort was in vain. It is contended in its first
assignment of error that the defense of prescription would lie. The patent
was obtained in 1941; the complaint was filed in 1943, barely two years
after. An ordinary action based on fraud should be filed within four
years. 20 Where the action is one for reconveyance based on constructive
trust, a ten-year period is allowed. 21 The same lack of merit is clearly
discernible insofar as the next seven errors alleged to be committed in the
disposition of the claim of petitioner Marta Quiniano. The second and the
third alleged errors concerning the appraisal of certain documentary
exhibits are essentially factual and need not be inquired into. So it is with
the sixth and the seventh assigned errors to the effect that the lands in
question had already been adjudicated to private respondents when the
free patent was applied for and that they were moreover in possession as
found by the Court. The fourth and the fifth alleged errors dealt with the
effect of the issuance of the free patent and would assert contrary to the
decisions referred to that thereby Marta Quiñiano could no longer be
compelled to reconvey. The eighth alleged error, discussed in one
paragraph, was merely a consequence of the preceding ones. It would
insist contrary to what had been established that petitioner Quiniano did
not obtain her free patent and title through fraud.

2. Insofar as petitioner Celedonio Fermin, who acquired the rights of a

previous vendee, petitioner Felix Capito, from petitioner Quiniano the
appealed decision did not consider him an innocent purchaser for value. It
is undisputed that neither the first vendee, Capito, nor petitioner Fermin
took the trouble of securing certificates of title in their names. 22 Necessarily
then, in the light of our applicable decisions, on respondent Court could
not consider them as innocent purchasers for value.

So it was held in Mirasol v. Gerochi, 23 decided in 1953. Thus: "Antonio

Mirasol is in a different predicament. He bought the property from
Natividad Escarrilla, who in turn acquired it from Salvador Solano. The
different deeds of conveyance were merely annotated on the original and
duplicate certificates of title which appear in the name of the previous
owners. Neither Solano, nor Escarrilla nor Mirasol ever secured from the
Register of Deeds transfer of a new certificate of title in their names. In
other words, the only picture Mirasol presents before us is that of a
purchaser of registered land from a person who did not have any certificate
of title in his name, his only evidence being the deed of sale in his favor,
and its annotation on the certificate of title which still appears in the name
of the previous owners, most of whom had already died. He is not
therefore a 'subsequent purchaser of registered land who takes a certificate
of title for value and in good faith' and who is protected against any
encumbrance except those noted on said certificate, as provided for in
Section 39 of Act No. 496." 24 The Mirasol ruling was reiterated in Revilla v.
Galindez, 25 decided seven years later, in the words; "Where a person buys
land not from the registered owner but from one whose right to the land
has been merely annotated on the certificate of title, and such purchaser
merely had his deed of sale annotated on the certificate of title, he is not
considered a 'subsequent purchaser of registered land who takes certificate
of title for value and in good faith and who is protected against any
encumbrance except those noted on said certificate'.
 BERNALES VS. IAC
166 SCRA 519 (1988)

FACTS:

Henry Siagan is the father of both Elpidio Siagan whose mother is Cagaoay
Camiling and Augusto Siagan whose mother is Dagaoan Sawadan.
Augusto Siagan has a son named Constante Siagan, one of the petitioners
in this case. Both sons of Henry Siagan and their successors-in-interest are
the contending parties in this case, claiming ownership of the land in
question. Cagaoay Camiling died in December, 1939; Henry Siagan in 1943,
Dagaoan Sawadan in September, 1965 and Augusto Siagan on October
4,1975.
Petitioners claim that Dagaoan Sawadan acquired ownership over subject
land by means of continuous, adverse and peaceful possession thereof
since time immemorial or since 1908; that she brought said property to the
marriage in 1908 and in 1918 Henry Siagan, as administrator declared Lot
1494 under T.D. 2872, later redeclared in 1921 as T.D. 5481. Henry Siagan
died in 1943 and in 1948 Dagaoan Sawadan declared Lot 1494 under T.D.
4187 (Petition, Rollo, p. 19).

Dagaoan Sawadan died in 1965. Augusto Siagan inherited Lot 1494 but his
son Constante alleging in a Deed of Absolute Sale dated February 16, 1967
that he inherited the same from his late grandmother, sold the lot in
question to the Pasimio spouses and registered said instrument under Act
3344 (Record on Appeal, p. 56). The Pasimio spouses in turn sold the same
lot to the Roman Catholic Bishop of Bangued, Inc. who bought the same for
the sole purpose of disposing the same at cost to the actual occupants-
tenants thereon in the furtherance of the Land Reform Program of the
government (Record on Appeal, p. 46) and had it registered under Act 3344
(Record on Appeal, p. 58). Said tenants are now the petitioners herein.

Petitioners allege that they have been in possession and have tilled Lot
1494 as tenants of Dagaoan Sawadan from 1949 to 1965 and thereafter they
occupied and tilled the same lot from 1965 to date. The Roman Catholic
Bishop of Bangued in confirmation thereof, stated in his complaint dated
June 3, 1976, that said petitioners tilled the aforesaid parcel of land from
1968 to the present, openly, publicly, adversely and continuously in the
concept of owners (Record on Appeal, p. 47; Joint Decision, Record on
Appeal, p. 202).

On the other hand, private respondents maintain that Lot 1494 was
originally owned by Henry Siagan who died intestate in May 1943, that as
early as 1958 the ownership of said lot was already the subject of litigation
under Civil Case No. 90-R703 in the Court of First Instance of Abra with
Elpidio Siagan as plaintiff and Dagaoan Sawadan and Augusto Siagan as
defendants, the said land being a part of the estate of Henry Siagan as
claimed by Elpidio Siagan; that while said case was pending hearing,
Elpidio Siagan filed in the same court, a petition for Administration
Proceedings entitled "In the Matter of the Intestate Estate of Henry Siagan,
deceased, Elpidio Siagan, petitioner, Augusto Siagan, Administrator,
Special Proceedings (Record on Appeal, pp. 118-119); that on August
14,1967, about two years after the death of Dagaoan Sawadan and more or
less six months after Constante Siagan sold Lot 1494 to the Pasimio
spouses, Elpidio Siagan and Augusto Siagan mutually recognized and
accepted each other as the only heirs entitled to inherit the estate of Henry
Siagan and filed a Joint Motion to Terminate Special Proceedings No. 407
(Record on Appeal, pp. 82-83) and on the same date executed the
"Memorandum of Agreement" which contains several stipulations among
which are: That Augusto Siagan and Elpidio Siagan mutually recognized
and agreed that they are the only legal heirs of Henry Siagan entitled to
inherit the properties left by the latter; that Augusto Siagan renounced,
quit-claimed, waived, ceded and conveyed any interest and right he had
over three lots among which is Lot No. 1494 in favor of Elpidio Siagan,
while the latter in turn quit-claimed, waived, ceded and conveyed any
interest and right he had over 14 other parcels of land of the decedent in
favor of Augusto Siagan in exchange for said Lot 1494 (Record on Appeal,
pp. 86-87). Independently of said Memorandum of Agreement, Augusto
Siagan also executed a Sworn Statement dated August 23, 1967 (Record on
Appeal, pp. 87-89) and a Deed of Extra-Judicial Adjudication of Real Estate
and Quit Claim dated September 21, 1967 (Record on Appeal, pp. 59-60)
showing by these documents that he adjudicated the property in question
unto himself and assigned, transferred and conveyed all his rights and
interest therein in favor of Elpidio Siagan (Decision, AC-G.R. CV Nos.
00141-42-R, Rollo, p. 19).

Elpidio Siagan applied in September, 1967 for Free Patent over said Lot
1494 and on April 22, 1968, Free Patent No. 392197 was issued.
Subsequently, Original Certificate of Title No. P-392 covering said lot, was
issued in the name of Elpidio Siagan.

On May 5, 1973, or after the lapse of five (5) years, Elpidio Siagan sold Lot
1494 to the spouses Alfonso Cadiam and qqqOgnay Cullawit, by virtue to
which OCT No. P-392 was cancelled and in lieu thereof, TCT No. T-338 was
issued in the name of the Cadiam spouses.

Following their purchase, said spouses took possession of the land, fenced
it and planted it with rice but herein petitioners on August 5. 1974, forcibly
dispossessed them therefrom, uprooting the plants of said couple who then
brought a criminal complaint for theft of rice plants against the petitioners.
This led to the referral of the criminal charge to the Court of Agrarian
Relations but because petitioners claimed ownership in their answer before
the CAR, spouses Cadiam and Ognay Cullawit filed Civil Case No. 891 for
recovery of ownership of the same lot, in the CFI of Abra against said
petitioners.

In turn, Constante Siagan and his co-petitioners instituted Civil Case No.
976 for the "Annulment and Cancellation of Certificate of Title, Declaration
of Ownership and Damages and Reconveyance" claiming that OCT No. P-
392 covering the suit was fraudulently secured (Decision, AC-G.R. CV Nos.
00141-42-R, Rollo, pp. 18-20). The parties, the subject-matter and issues
involved being practically Identical and directly inter-related, by
agreement of the parties and their opposing counsel, a joint trial was held
(Joint Decision, Record on Appeal, p. 202).

ISSUE:

Who has a better title over Lot No. 1494, the spouses Alfonso Cadiam and
Ognay Cullawit or Ernesto Bernales and his co-plaintiffs?

RULING:

It has been established beyond dispute that Elpidio and Augusto Siagan
mutually recognizing each other as the only heirs of Henry Siagan filed a
Joint Motion to Terminate Special Proceedings No. 407 and executed the
"Memorandum of Agreement" which stipulated among other things that
Augusto Siagan renounced, quit-claimed, waived, ceded and conveyed any
interest and right he had over three lots which include Lot No. 1494 in
exchange of fourteen (14) other parcels of land of the decedent which
Elpidio Siagan quit-claimed, waived, ceded and conveyed in favor of
Augusto Siagan. Independently of said Memorandum of Agreement,
Augusto Siagan also executed a Sworn Statement and a Deed of Extra-
Judicial Adjudication of Real Estate and Quit Claim, to the effect that
Augusto Siagan adjudicated the property in question unto himself and
assigned, transferred and conveyed all his rights and interests therein in
favor of Elpidio Siagan. Otherwise stated, Elpidio Siagan stepped into the
shoes of Augusto Siagan.
Petitioners claim that respondent Elpidio Siagan, using his knowledge of
law, unduly took advantage of Augusto Siagan and induced the latter to
enter into said Memorandum of Agreement.

Besides their failure to adduce evidence to support their contention, the

same is negated by the fact that said memorandum and accompanying
documents which have been duly and lawfully executed, are notarized
documents, made pursuant to Augusto and Elpidio Siagan's amicable
settlement of their court litigation. No less important is the fact that said
memorandum and adjudication and quitclaim of the lot in question for a
made follow a valuable consideration, that is in exchange for whatever
rights and interests Elpidio may have over fourteen (14) parcels of land
which he ceded, quit-claimed and transferred to Augusto Siagan.

Under the circumstances, the Court of Appeals correctly observed that

whether Lot 1494 descended from Henry Siagan as claimed by private
respondents or from Dagaoan Sawadan, the mother of Augusto Siagan as
claimed by the petitioners, it is undeniable that Augusto Siagan had
already quit-claimed, ceded and conveyed whatever rights or interest he
had over said lot in favor of Elpidio Siagan.

Because of such waiver and quit claim, Elpidio Siagan became the sole
claimant of Lot 1494. He applied for and was granted Free Patent No.
391197 and Original Certificate of Title No.P-392 for said lot. After the lapse
of five years from and after the issuance of said patent and title, Elpidio
Siagan sold said lot to the spouses Alfonso Cadiam and Ognay Cullawit in
whose favor Transfer Certificate of Title No. T-338 was issued by the
Register of Deeds of Abra.

In the case at bar, the Free Patent was granted to Elpidio Siagan, the very
person who as successor-in-interest of Augusto Siagan with a claim of
continuous and adverse possession in the concept of owner since time
immemorial or since 1908 through the latter's predecessors-in-interest, is
entitled to subject land. An Original Certificate of Title was issued in favor
of Elpidio Siagan. As held by this Court, once a homestead patent granted
in accordance with the Public Land Act is registered under the Torrens
System, the certificate of title issued in virtue of said patent has the force
and effect of a Torrens Title under the Land Registration Act. Corollary
thereto, the Director of Patents, being a public officer, has in his favor the
presumption of regularity in issuing the questioned homestead patent
(Iglesia ni Cristo vs. Hon. Judge, CFI of Nueva Ecija, Br. I, 123 SCRA 517
[1983]).

As aforestated, the Cadiam spouses to whom a Transfer Certificate of Title

was issued after the purchase of the lot from Elpidio Siagan for a valuable
consideration as stated in the Deed and who had no knowledge of any flaw
or defect of the title at the time of the purchase, are evidently as ruled by
the Court of Appeals, innocent purchasers for value and above all
considerations, are entitled to the protection of the law.

In contrast, petitioners allegedly acquired subject property by virtue of the

sale made by Constante Siagan six months before the execution of the
Memorandum of Agreement and the other documents above-mentioned.
Constante Siagan, claiming to have inherited Lot 14194 from his
grandmother, sold said lot to the Pasimio spouses, who later sold the same
to the Roman Catholic Bishop of Bangued, Inc. and the latter in turn sold
the same to the petitioners. But the authority of Constante Siagan to sell
said lot was wanting. The ownership and possession of Dagaoan Sawadan
over Lot 1494 were transmitted through hereditary succession to Augusto
Siagan, her son, and not to Constante Siagan, her grandson. Constante
cannot claim to have inherited the same in 1967 because his father Augusto
Siagan who entered into the amicable settlement and quit claim with
Elpidio Siagan was still living and he died only in October, 1975. Much less
is there any document showing that said property was transmitted or
ceded to him either by Dagaoan Sawadan or Augusto Siagan. Thus, the
sale made by non-owner Constante Siagan and all subsequent sales made
thereunder, are null and void.

It is true that the Pasimio spouses and the Roman Catholic Bishop of
Bangued, Inc. claimed to have registered their sales under Act 3344 but it is
specifically provided under said law that such registration shall be
"understood to be without prejudice to a third party who has a better right.
(Section 194 of the Administrative Code, as amended by Act 3344).

In the case at bar, the Cadiam spouses who were found by the Court of
Appeals as innocent purchasers for value with a Transfer Certificate of
Title under the Torrens System in their names, have evidently a better right
than herein petitioners.