SECOND DIVISION

[G.R. NO. 161136 : November 16, 2006]

WILFREDO T. VAGILIDAD and LOLITA A. VAGILIDAD, Petitioners, v. GABINO VAGILIDAD, Jr. and DOROTHY VAGILIDAD, Respondents.

D E C I S I O N

PUNO, J.:

This is a Petition for Review on Certiorari of the Decision1 and Resolution2 of the Court of Appeals in CA-G.R. No. CV-68318 dated March 19, 2003 and November 13, 2003, respectively, reversing and setting aside the decision of the Regional Trial Court of Antique, Sixth Judicial Region, Branch II, in Civil Case No. 2825 dated January 26, 1999.

The facts are stated in the assailed Decision3 of the appellate court, viz.:

A parcel of land, Lot No. 1253, situated in Atabay, San Jose, Antique, measuring 4,280 square meters, was owned by Zoilo [Labiao] (hereafter ZOILO) as per Original Certificate of Title No. RO-2301 issued on March 3, 1931. Sometime in 1931, ZOILO died. Subsequently, on May 12, 1986, Loreto Labiao (hereafter LORETO), son of ZOILO, sold to Gabino Vagilidad Jr. (hereafter GABINO JR.) a portion of Lot No. 1253 (hereafter Lot 1253-B), measuring 1,604 square meters as evidenced by the Deed of Absolute Sale executed by LORETO.

In view of the death of ZOILO, his children, LORETO, Efren Labiao (hereafter EFREN) and Priscilla Espanueva (hereafter PRISCILLA) executed an Extrajudicial x x x Settlement of Estate dated January 20, 1987, adjudicating the entire Lot No. 1253, covering 4,280 square meters, to LORETO. On January 29, 1987, Transfer Certificate of Title (TCT) No. T-16693 was issued in favor of LORETO, EFREN and PRISCILLA, but on even date, TCT No. T-16693 was cancelled and TCT No. T-16694, covering the said property, was issued in the name of LORETO alone.

On July 31, 1987, GABINO JR., as petitioner, filed a Petition for the Surrender of TCT No. T-16694, covering Lot No. 1253, with the Regional Trial Court of San Jose City, Sixth Judicial Region, against LORETO, docketed as Cadastral Case No. 87-731-A. The plaintiff alleged that, being the owner of x x x Lot No. 1253-B, under TCT No. T-16694, by virtue of the sale that took place on May 12, 1986, he is entitled to ask for the surrender of the owner's copy of TCT No. T-16694 to the Register of Deeds of Antique in order to effect the transfer of title to the name of the petitioner. However, as per motion of both counsels[,] since the parties seemed to have already reached an amicable settlement without the knowledge of their counsels, the trial court issued an Order dated March 21, 1994 sending the case to the archives.

On September 21, 1988, [GABINO JR.] paid real estate taxes on the land he bought from LORETO as per Tax Declaration No. 1038 where the property was specified as Lot No. 1253-B. GABINO JR. thereafter sold the same lot to Wilfredo Vagilidad (hereafter WILFREDO) as per Deed of Absolute Sale dated December 7, 1989. On even date, Deed of Absolute Sale of a Portion of Land involving the opt-described property was also executed by LORETO in favor of WILFREDO. The aforementioned deeds, which were both executed on December 7, 1989 [and] notarized by Atty. Warloo Cardenal[,] [appear] to have been given the same entry number in his notarial books as both contained the designation "Document No. 236, Page No. 49, Book No. XI, Series of 1989[."]

Corollarily, on February 14, 1990, the sale of Lot No. 1253-B to WILFREDO was registered with the Registry of Deeds of the Province of Antique under Entry No. 180425. Consequently, TCT No. T-18023, cancelling TCT No. 16694, was issued in favor of WILFREDO pursuant to the Deed of Absolute Sale dated December 7, 1989.

On October 24, 1991, spouses WILFREDO and LOLITA obtained a loan from the Philippine National Bank (PNB for brevity) in the amount of P150,000.00 and mortgaged Lot No. 1253-B as collateral of the said loan and the transaction was inscribed at the back of TCT No. 18023 as Entry No. 186876. Subsequently, the xxx real estate mortgage was cancelled under Entry No. 191053 as per inscription dated November 17, 1992 in xxx TCT No. 18023.

Subsequently, WILFREDO obtained another loan from Development Bank of the Philippines (DBP for brevity) in the amount of P200,000.00 and mortgaged Lot No. 1253-B as collateral of the xxx loan and the transaction was inscribed at the back of TCT No. 18023 as Entry No. 196268. The said loan was paid and, consequently, the mortgage was cancelled as Entry No. 202500.

On September 29, 1995, spouses GABINO and Ma. Dorothy Vagilidad (hereafter DOROTHY), as plaintiffs, filed a Complaint for Annulment of Document, Reconveyance and Damages, with the Regional Trial Court of Antique, Sixth Judicial Region, Branch 11, against spouses WILFREDO and Lolita Vagilidad (hereafter LOLITA), docketed as Civil Case No. 2825. The plaintiffs claimed that they are the lawful owners of Lot No. 1253-B which was sold to him by LORETO in 1986. They alleged that [GABINO JR.] is a nephew of defendant WILFREDO. They likewise raised that when GABINO SR. died, defendant WILFREDO requested GABINO JR. to transfer the ownership of Lot No. 1253-B in defendant WILFREDO's name for loaning purposes with the agreement that the land will be returned when the plaintiffs need the same. They added that, pursuant to the mentioned agreement, plaintiff GABINO JR., without the knowledge and consent of his spouse, DOROTHY, executed the Deed of Sale dated December 7, 1989 in favor of defendant WILFREDO receiving nothing as payment therefor. They pointed out that after defendant WILFREDO was able to mortgage the property, plaintiffs demanded the return of the property but the defendants refused to return the same. The plaintiffs claimed that the same document is null and void for want of consideration and the same does not bind the non-consenting spouse. They likewise prayed that the defendant be ordered to pay the plaintiffs not less than P100,000.00 as actual and moral damages,P10,000.00 as attorney's fees and P5,000.00 as litigation expenses.

For their part, the defendants, on January 15, 1996, filed their Answer, denying the material allegations of the plaintiffs. Defendants claimed that they are the lawful owners of Lot No. 1253-B. They alleged that LORETO, with conformity of his wife, sold to them Lot No. 1253 on December 7, 1989 for P5,000.00 and the transaction was registered with the Register of Deeds of the Province of Antique under Entry No. 180425. They added that, subsequently, TCT No. T-18023, covering Lot No. 1253-B, was issued in favor of the defendants. Hence, they claimed that the plaintiffs be directed to pay the defendants P200,000.00 as moral damages, P50,000.00 as exemplary damages,P20,000.00 as attorney's fees and P30,000.00 for litigation expenses.4

The trial court ruled in favor of petitioners WILFREDO and LOLITA and held that LORETO did not validly convey Lot No. 1253-B to GABINO, JR. on May 12, 1986 since at that time, the heirs of ZOILO had not partitioned Lot No. 1253.5 It ruled that LORETO could only sell at that time his aliquot share in the inheritance. He could not have sold a divided part thereof designated by metes and bounds. Thus, it held that LORETO remained the owner of the subject lot when he sold it to WILFREDO on December 7, 1989. It further found that there was no proof that WILFREDO knew of the sale that took place between LORETO and GABINO, JR. on May 12, 1986. The dispositive portion of the decision states:

WHEREFORE, in view of the foregoing pronouncements and a preponderance of evidence, judgment is hereby rendered:

1. FINDING the defendants WILFREDO VAGILIDAD and LOLITA VAGILIDAD to have duly acquired ownership of Lot No. 1253-B containing an area of 1,604 square meters, more or less, situated in San Jose, Antique;

2. SUSTAINING the validity of Transfer Certificate of Title No. T-18023 covering the subject Lot No. 1253-B and issued in the name of the defendant WILFREDO VAGILIDAD, married to the defendant LOLITA VAGILIDAD;

3. DISMISSING the complaint of the plaintiffs GABINO VAGILIDAD, JR. and MA. DOROTHY VAGILIDAD, as well as the counterclaims of the defendants WILFREDO VAGILIDAD and LOLITA VAGILIDAD and of the defendants LORETO LABIAO and FRANCISCA LABIAO; andcralawlibrary

4. PRONOUNCING no cost.6

GABINO, JR. and DOROTHY filed an appeal with the Court of Appeals. The appellate court reversed and set aside the decision of the court a quo, viz.:

WHEREFORE, premises considered, the Decision dated January 26, 1999 of the Regional Trial Court of Antique, Sixth Judicial Region, Branch 11, in Civil Case No. 2825, is hereby REVERSED and SET ASIDE and a new one is entered: (1) declaring the Deed of Absolute Sale [of Portion of Land] dated December 7, 1989 executed by appellee LORETO in favor of appellee WILFREDO null and void; (2) ordering the defendants-appellees WILFREDO and LOLITA to reconvey Lot No. 1253-B to plaintiffs-appellants GABINO, JR. and DOROTHY; and (3) ordering the defendants-appellees to pay the plaintiffs-appellantsP100,000.00 as moral damages, P10,000.00 as attorney's fees and P5,000.00 as litigation expenses.7

The appellate court ruled that the sale made by LORETO in favor of GABINO, JR. on May 12, 1986 is valid. The rights of LORETO to succession are transmitted from the moment of ZOILO's death in 1931. Thus, when LORETO sold the 1,604-square meter portion of Lot No. 1253 to GABINO JR., he already had the right as co-owner to his share to Lot No. 1253, even if at that time the property had not yet been partitioned. Consequently, the sale made by LORETO in favor of WILFREDO on December 7, 1989 is void because LORETO and FRANCISCA were no longer the owners of Lot No. 1253-B as of that time. The appellate court also held WILFREDO and LOLITA liable for moral damages for falsifying the fictitious deeds of sale on December 7, 1989.

WILFREDO and LOLITA moved for reconsideration but the motion was denied in the questioned Resolution dated November 13, 2003. Hence, this Petition for Review onCertiorari raising the following errors:

I

THE HONORABLE COURT OF APPEALS ERRED IN NOT APPLYING ARTICLE 1349 AND ARTICLE 1460 OF THE NEW CIVIL CODE IN THE CASE AT BAR.

II

THE HONORABLE COURT OF APPEALS ERRED IN NOT APPLYING THE PROVISION OF ARTICLE 1544 OF THE NEW CIVIL CODE AND THE DOCTRINE OF DOUBLE SALE THAT THE BUYER WHO IS IN POSSESSION OF THE TORRENS TITLE AND HAD THE DEED OF SALE REGISTERED MUST PREVAIL.

III

THE HONORABLE COURT OF APPEALS ERRED IN NOT APPLYING ARTICLE 1391 OF THE NEW CIVIL CODE AND THE DOCTRINE THAT IN CASE OF FRAUD, ACTION FOR RECONVEYANCE MUST BE BROUGHT WITHIN FOUR (4) YEARS FROM THE DISCOVERY OF THE FRAUD.

IV

THE HONORABLE COURT OF APPEALS ERRED IN AWARDING PRIVATE RESPONDENT MORAL DAMAGES, ATTORNEY'S FEES AND LITIGATION EXPENSES.8

We deny the petition.

I

First, petitioners contend that the Deed of Absolute Sale between LORETO and GABINO, JR. does not have a determinate object. They anchor their claim on the following discrepancies: (1) the object of the Deed of Absolute Sale between LORETO and GABINO, JR. is Lot No. 1253 with an area of 1,604 square meters; (2) the object of the Deed of Absolute Sale of Portion of Land between LORETO and WILFREDO is a portionof Lot No. 1253, known as Lot No. 1253-B, also with an area of 1,604 square meters;9(3) the Deed of Absolute Sale between LORETO and GABINO, JR. shows that its object, Lot No. 1253, is not registered under the Land Registration Act nor under the Spanish Mortgage Law; and (4) the property subject of this action, Lot No. 1253-B, was taken from Lot No. 1253 containing an area of 4,280 square meters previously registered in the name of ZOILO under Original Certificate of Title (OCT) No. RO-2301.10 With these discrepancies, petitioners contend that either the Deed of Absolute Sale between LORETO and GABINO, JR. does not have a determinate object or that Lot No. 1253-B, the subject parcel, is not the object thereof. Hence, absent a determinate object, the contract is void. They rely on Articles 1349 and 1460 of the Civil Code, viz.:

Art. 1349. The object of every contract must be determinate, as to its kind. The fact that the quantity is not determinate shall not be an obstacle to the existence of the contract, provided it is possible to determine the same, without the need of a new contract between the parties.

Art. 1460. A thing is determinate when it is particularly designated or physically segregated from all others of the same class.

The requisite that a thing be determinate is satisfied if at the time the contract is entered into, the thing is capable of being made determinate without the necessity of a new or further agreement between the parties.

Petitioners err. The evidence on record shows that Lot No. 1253-B, the subject parcel, and the lot described as Lot No. 1253 in the Deed of Absolute Sale of May 12, 1986 between LORETO and GABINO, JR., are the same. In the Deed of Absolute Sale, Lot No. 1253 is described, viz.:

A parcel of land (Lot No. 1253 of the Cadastral Survey of San Jose), with the improvements thereon. Bounded on the North [by] 1254 and 1255; on the South by road; on the East by 1253 and road on the West by 1240-Angel Salazar; containing an area of 1,604 square meters more or less declared under Tax Declaration No. 4159.11

In the Deed of Absolute Sale of Portion of Land of December 7, 1989 between LORETO and WILFREDO, the subject parcel is described, viz.:

A parcel of land (Lot No. 1253. Ap-06-00271) of the Cadastral Survey of San Jose, LRC Cad. Rec. No. 936), situated at Atabay, San Jose, Antique. Bounded on the N. and E. along lines 1-2-3 by lot 1255; San Jose Cadastre; on the S. along line 3-4 by Road; on the W. along line 4-5 by Lot 1240; San Jose Cadastre; and on the N. along line 5-1 by Lot 1254, San Jose Cadastre containing an area of [Four] Thousand Two Hundred Eighty (4,280) square meters, more or less.

of which a portion of land subject of this sale is hereinbelow (sic) particularly described as follows, to wit:

A portion of Lot No. 1253-B of the Cadastral Survey of San Jose, situated at Atabay, San Jose, Antique. Bounded on the North by Lot No. 1254; South by Road; West by Lot 1253-A; and on the East by Lot No. 1253-C; containing an area of 1,604 square meters, more or less.12

The description of Lot No. 1253, the object of the Deed of Absolute Sale, as "not registered under Act No. 196[,] otherwise known as the Land Registration Act, nor under the Spanish Mortgage Law"13 is a stray description of the subject parcel. It is uncorroborated by any evidence in the records. This description solely appears on the Deed of Absolute Sale and the discrepancy was not explained by LORETO who signed the Deed of Absolute Sale as vendor. LORETO does not, in fact, deny the existence of the Deed of Absolute Sale. He merely counters that the Deed of Absolute Sale was purportedly a mortgage. However, LORETO's claim that it was one of mortgage is clearly negated by a Certification14 issued by the Bureau of Internal Revenue dated May 12, 1986. It certified that LORETO was not required to pay the capital gains tax on the transfer of Lot No. 1253 to GABINO, JR. because the property was classified as an ordinary asset.

To be sure, petitioners could have easily shown that LORETO owned properties other than Lot No. 1253 to bolster their claim that the object of the Deed of Absolute Sale was different from Lot No. 1253-B which is the object described in the Deed of Absolute Sale of Portion of Land. They did not proffer any evidence.

The trial court itself comprehensively traced the origin of Lot No. 1253-B. It clearly demonstrated that the subject parcel was originally part of the registered lot of ZOILO. It also showed how the subject parcel was eventually bounded by Lot No. 1253-A on the West and by Lot No. 1253-C on the East, as the lot would be later described in the Deed of Absolute Sale of Portion of Land.

The trial court found that ZOILO previously owned Lot No. 1253 under OCT No. RO-2301 issued on March 3, 1931. On November 14, 1986, Entry No. 167922 was inscribed in the certificate of title, per Order dated March 30, 1978 of Judge Noli Ma. Cortes of the then Court of First Instance of Antique, stating that it was a reconstituted certificate of title.15 Lot No. 1253 was subdivided by virtue of a subdivision plan dated June 19, 1987. On January 20, 1987, an Extrajudicial Settlement of Estate executed by LORETO, EFREN and PRISCILLA was entered as Entry No. 170722. The OCT of ZOILO was cancelled by TCT No. T-16693 in the names of LORETO, EFREN and PRISCILLA on January 29, 1987. TCT No. T-16693 was cancelled on the same day by TCT No. T-16694 in the name of LORETO

alone. The TCT was partially cancelled by the issuance of TCTs covering Lot Nos. 1253-A, 1253-C and 1253-D. The TCT of Lot No. 1253-B was issued in the name of WILFREDO married to LOLITA on February 15, 1990. WILFREDO's TCT No. T-18023 appears to be a transfer from LORETO's TCT No. T-16694.

II

Next, petitioners contend that the appellate court should have upheld the title of WILFREDO under Article 1544 of the Civil Code and the doctrine of double sale where the buyer who is in possession of the Torrens Title must prevail.16 First, petitioners' title was issued pursuant to the purported Deed of Absolute Sale of Portion of Land dated December 7, 1989. Second, WILFREDO did not see any encumbrance at the back of the title of the subject lot when he purchased it from LORETO on December 7, 1989. Thus, since he is not bound to go beyond the certificate of title, he has acquired the subject property in due course and in good faith.

We disagree. Article 1544 of the Civil Code states, viz.:

Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property.

Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith recorded it in the Registry of Property.

Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith.

Petitioners' reliance on Article 1544 is misplaced. While title to the property was issued in WILFREDO's name on February 15, 1990, the following circumstances show that he registered the subject parcel with evident bad faith.

First, the Deed of Absolute Sale of Portion of Land dated December 7, 1989 between LORETO and WILFREDO is tainted with blatant irregularities. It is a fact that the Deed of Absolute Sale of Portion of Land and the Deed of Absolute Sale between GABINO, JR. and WILFREDO are of even date. Both Deeds had the same object - Lot No. 1253-B. Both deeds were notarized by Atty. Warloo Cardenal and bear the same entry in his notarial register: Document No. 236, Page No. 49, Book No. XI, Series of 1989.

Second, the testimony of a disinterested witness, Febe Mabuhay, established the irregularity. Mabuhay used to work as secretary for Atty. Cardenal and co-signed as witness in both Deeds. She stated that Atty. Cardenal instructed her to prepare the two documents in the last week of November 1989. She was present when GABINO, JR. signed the Deed of Absolute Sale. She testified that after GABINO, JR. left, LORETO and his wife FRANCISCA arrived and signed the Deed of Absolute Sale of Portion of Land.17The Decision of the court a quo further states, viz.:

[Mabuhay testified that when she prepared the two documents, she] noticed the similarity of Lot No. 1253 as technically described in both documents but she did not call the attention of Atty. Warlo[o] Cardenal. [She likewise stated that Atty. Cardenal] specifically instructed her to assign the same document number to the two documents notarized on December 7, 1989.18

Third, the testimony of Atty. Ernesto Estoya, then Clerk of Court of the Regional Trial Court of Antique, supports the claim that there was bad faith in the execution of the Deed of Absolute Sale of Portion of Land. Atty. Estoya brought the notarial record of Atty. Cardenal for the year 1989 pursuant to a subpoena. He stated that he had not brought both Deeds as required in the subpoena because "Doc. No. 236; Page No. 49; Book No. XI; Series of 1989" as entered in the notarial register of Atty. Cardenal could not be found in the files. He further explained that the last document on page 48 of the notarial register of Atty. Cardenal is Document No. 235, while the first document on page 49 is Document No. 239, leaving three unexplained gaps for document numbers 236, 237 and 238. Atty. Estoya stated that he was not the one who received the 1989 notarial register of Atty. Cardenal when the latter surrendered it since he assumed office only in 1994.19

Fourth, we give credence to the testimony of GABINO, JR. that LORETO and WILFREDO had employed the scheme to deprive him and his wife of their lawful title to the subject property. The facts speak for themselves. WILFREDO knew that he could not use the Deed of Absolute Sale executed in his favor by GABINO, JR. because the latter had no title to transfer. Without a title, WILFREDO could not use the subject property as collateral for a bank loan. Hence, LORETO, who had refused to surrender the title to GABINO, JR. and in whose name the land remained registered, had to execute the Deed of Absolute Sale of Portion of Land in favor of WILFREDO. Hence, it was convenient for WILFREDO to deny the existence of the Deed of Absolute Sale of December 7, 1989 between him and GABINO, JR. But the evidence on record shows that after he was able to register the subject property in his name on February 15, 1990, WILFREDO used the title as collateral in the loans that he contracted with the Philippine National Bank on October 24, 1991 and the Development Bank of the Philippines on December 1, 1993. This supports the claim of GABINO, JR. that WILFREDO needed the lot for loaning purposes.

With these corroborating circumstances and the following irrefragable documents on record, the evidence preponderates in favor of GABINO, JR. One, he acquired Lot No.1253-B from LORETO on May 12, 198620 by virtue of the Deed of Absolute Sale. Two, the Bureau of Internal Revenue issued a Certification, also on May 12, 1986, for the exemption from the payment of capital gains tax when LORETO sold to him the subject parcel. Three, GABINO, JR. paid the real estate tax on the subject parcel in 1987. Four, he filed a Petition for the Surrender of LORETO's title on July 31, 1987 so he could transfer the title of the property in his name.

Petitioners likewise err in their argument that the contract of sale between LORETO and GABINO, JR. is void on the ground that at the time of the sale on May 12, 1986, LORETO had a right to dispose only an aliquot part of the yet undivided property of ZOILO. The subject parcel, being an inherited property, is subject to the rules of co-ownership under the Civil Code.

Co-ownership is the right of common dominion which two or more persons have in a spiritual part of a thing, not materially or physically divided.21 Before the partition of the property held in common, no individual or co-owner can claim title to any definite portion thereof. All that the co-owner has is an ideal or abstract quota or proportionate share in the entire property.22

LORETO sold the subject property to GABINO, JR. on May 12, 1986 as a co-owner. LORETO had a right, even before the partition of the property on January 19, 1987,23 to transfer in whole or in part his undivided interest in the lot even without the consent of his co-heirs. This right is absolute in accordance with the well-settled doctrine that a co-owner has full ownership of his pro-indiviso share and has the right to alienate, assign or mortgage it, and substitute another person for its enjoyment.24 Thus, what GABINO, JR. obtained by virtue of the sale on May 12, 1986 were the same rights as the vendor

LORETO had as co-owner, in an ideal share equivalent to the consideration given under their transaction.25

LORETO sold some 1,604 square meters of Lot No. 1253 to GABINO, JR. Consequently, when LORETO purportedly sold to WILFREDO on December 7, 1989 the same portion of the lot, he was no longer the owner of Lot No. 1253-B. Based on the principle that "no one can give what he does not have,"26 LORETO could not have validly sold to WILFREDO on December 7, 1989 what he no longer had. As correctly pointed out by the appellate court, the sale made by LORETO in favor of WILFREDO is void as LORETO did not have the right to transfer the ownership of the subject property at the time of sale.

III

Petitioners contend that since the subdivision plan of Lot No. 1253 was only approved on January 19, 1987, the appellate court can not presume

that the aliquot part of LORETO was the parcel designated as Lot 1253-B.27

Petitioners err. The mere fact that LORETO sold a definite portion of the co-owned lot by metes and bounds before partition does not, per se, render the sale a nullity. We held inLopez v. Vda. De Cuaycong28 that the fact that an agreement purported to sell a concrete portion of a co-owned property does not render the sale void, for it is well-established that the binding force of a contract must be recognized as far as it is legally possible to do so.29

In the case at bar, the contract of sale between LORETO and GABINO, JR. on May 12, 1986 could be legally recognized.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

At the time of sale, LORETO had an aliquot share of one-third of the 4,280-square meter property or some 1,42630 square meters but sold some 1,604 square meters to GABINO, JR. We have ruled that if a co-owner sells more than his aliquot share in the property, the sale will affect only his share but not those of the other co-owners who did not consent to the sale.31 Be that as it may, the co-heirs of LORETO waived all their rights and interests over Lot No. 1253 in favor of LORETO in an Extrajudicial Settlement of Estate dated January 20, 1987. They declared that they have previously received their respective shares from the other estate of their parents ZOILO and PURIFICACION.32The rights of GABINO, JR. as owner over Lot No. 1253-B are thus preserved. These rights were not effectively transferred by LORETO to WILFREDO in the Deed of Absolute Sale of Portion of Land. Nor were these rights alienated from GABINO, JR. upon the issuance of the title to the subject property in the name of WILFREDO. Registration of property is not a means of acquiring ownership.33 Its alleged incontrovertibility cannot be successfully invoked by WILFREDO because certificates of title cannot be used to protect a usurper from the true owner or be used as a shield for the commission of fraud.34

IV

On the issue of prescription, petitioners contend that the appellate court failed to apply the rule that an action for reconveyance based on fraud prescribes after the lapse of four years.35 They cite Article 139136 of the Civil Code and the case of Gerona v. De Guzman.37

We disagree. This Court explained in Salvatierra v. Court of Appeals,38 viz.:

An action for reconveyance based on an implied or constructive trust must perforce prescribe in ten years and not otherwise. A long line of decisions of this Court, and of very recent vintage at that, illustrates this rule. Undoubtedly, it is now well-settled that an action for reconveyance based on an implied or constructive trust prescribes in ten years from the issuance of the Torrens title over the property. The only discordant note, it seems, is Balbin v. Medalla, which states that the prescriptive period for a reconveyance action is four years. However, this variance can be explained by the erroneous reliance on Gerona v. de Guzman. But in Gerona, the fraud was discovered on June 25, 1948, hence Section 43(3) of Act No. 190 was applied, the New Civil Code not coming into effect until August 30, 1950 xxx. It must be stressed, at this juncture, that Article 1144 and Article 1456 are new provisions. They have no counterparts in the old Civil Code or in the old Code of Civil Procedure, the latter being then resorted to as legal basis of the four-year prescriptive period for an action for reconveyance of title of real property acquired under false pretenses.39

[Thus,] under the present Civil Code, xxx just as an implied or constructive trust is an offspring of xxx Art. 1456, xxx so is the corresponding obligation to reconvey the property and the title thereto in favor of the true owner. In this context, and vis - á-vis prescription, Article 1144 of the Civil Code is applicable[, viz.:]

Art. 1144. The following actions must be brought within ten years from the time the right of action accrues:

1) Upon a written contract;

2) Upon an obligation created by law;

3) Upon a judgment.40 (emphases supplied)cralawlibrary

Thus, in the case at bar, although the TCT of WILFREDO became indefeasible after the lapse of one year from the date of registration, the attendance of fraud in its issuance created an implied trust in favor of GABINO, JR. under Article 145641 of the Civil Code. Being an implied trust, the action for reconveyance of the subject property therefore prescribes within a period of ten years from February 15, 1990. Thus, when respondents filed the instant case with the court a quo on September 26, 1995, it was well within the prescriptive period.

V

On the issue of damages, petitioners contend that the grant is erroneous and the alleged connivance between Atty. Cardenal and WILFREDO lacks basis.

We disagree. The evidence on record is clear that petitioners committed bad faith in the execution of the purported Deed of Absolute Sale of Portion of Land dated December 7, 1989 between LORETO and WILFREDO. As stated by the appellate court, viz.:

xxxx From the series of events, it can be reasonably inferred that appellees WILFREDO, LORETO and Atty. Cardenal connived in attempting to deprive appellants of Lot No. 1253-B, hence, the appellants' entitlement to moral damages. Further, it is a well-settled rule that attorney's fees are allowed to be awarded if the claimant is compelled to litigate with third persons or to incur expenses to protect his interest by reason of an unjustified act or omission of the party for whom it is sought. xxxx To protect themselves, the appellants engaged the services of counsel and incurred expenses in the course of litigation. Hence, we deem it equitable to award attorney's fees to the appellant xxx.42

IN VIEW WHEREOF, the petition is DENIED. The assailed Decision and Resolution of the Court of Appeals in CA-G.R. No. CV-68318 dated March 19, 2003 and November 13, 2003, respectively, are AFFIRMED in toto. Costs against petitioners.

SO ORDERED.

THIRD DIVISION

[G.R. NO. 170528 : August 26, 2008]

HEIRS OF JULIAN TIRO, Petitioners, v. PHILIPPINE ESTATES CORPORATION, Respondent.

D E C I S I O N

CHICO-NAZARIO, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the Decision1dated 1 July 2005, rendered by the Court of Appeals in CA-G.R. CV No. 78582, which affirmed the Decision2 dated 16 April 2002 of the Regional Trial Court (RTC), Branch 54, Lapu-Lapu City, in Civil Case No. 4824-L dismissing petitioners' complaint and declaring the respondent as the owner of the disputed property.

Petitioners Guillerma Tiro, Dominga Tiro Nunez and Maximo Tiro filed before the RTC a Complaint for Quieting of Title against respondent Philippine Estates Corporation, a corporation duly organized and existing under the laws of the Philippines. The complaint was docketed as Civil Case No. 4824-L. Petitioners alleged that they are the children of the late Julian Tiro and the authorized representatives of the Heirs of the late Pedro Tiro. Both decedents were purportedly, during their lifetime, the lawful absolute and registered owners of the disputed land as evidenced by Original Certificate of Title (OCT) No. RO-1121.3 The disputed property is herein described as follows:

A parcel of land (Lot 2914 of the Cadastral Survey of Opon, L.R.C. Record No. 1003) situated in the Barrio of Marigondon, Municipality of Opon, Province of Cebu, Island of Mactan x x x; containing an area of EIGHT THOUSAND ONE HUNDRED TWENTY (8,120) SQUARE METERS.4

Petitioners averred that they and their predecessors-in-interest had been in actual possession of the disputed land since time immemorial until they were prevented from entering the same by persons claiming to be the new owners sometime in 1995. After examining the records found in the Office of the Register of Deeds of Lapu-Lapu City, they discovered that OCT No. RO-1121 had already been cancelled as early as 1969 and that the subject property, after several other transfers, was presently registered in the name of respondent under Transfer Certificate of Title (TCT) No. 35672.5

The records in the Office of the Register of Deeds showed each transfer involving the disputed land. Petitioners learned that OCT No. RO-1121, registered in the names of Julian and Pedro Tiro, was cancelled on 10 September 1969. In its place, TCT No. 2848 was issued in favor of Spouses Julio Baba and Olimpia Mesa. The registration of the disputed property in favor of the Spouses Baba was supported

by two documents: (1) an Extrajudicial Declaration of Heir and Confirmation of Sale6dated 20 August 1969, executed by Maxima Ochea (Ochea), claiming to be the only surviving heir of Julian and Pedro Tiro, wherein she confirmed and ratified an alleged sale of the subject land made before World War II by Julian and Pedro Tiro in favor of Spouses Bibiano Amores and Isabel Digno; and (2) another document entitled "Deed of Confirmation,7 " also dated 20 August 1969, executed by the Spouses Amores, wherein they verified that they subsequently transferred the disputed property to the Spouses Baba sometime in 1947.

On 20 June 1979, TCT No. 2848 was cancelled to give way to the issuance of TCT No. 9415 in the name of Spouses Ronaldo Velayo and Leonor Manuel, after the Spouses Baba sold the disputed property to them.8 Subsequently, the same property was sold by the Spouses Velayo to Pacific Rehouse Corporation, as a consequence of which TCT No. 9415 was cancelled and TCT No. 30186 was issued in the name of the latter on 16 February 1995.9 Finally, on 25 October 1996, following the sale of the disputed land to respondent, TCT No. 30186 was cancelled and TCT No. 35672 was issued in its name.10

Petitioners averred that Ochea, who executed the document "Extrajudicial Declaration of Heir and Confirmation of Sale," which resulted in the cancellation of OCT No. RO-1121 in the name of Julian and Pedro Tiro, was not in any way related to Julian and Pedro Tiro. It was the petitioners' contention that since Ochea was not an heir of the original registered owners, she had no right to cause the transfer of the disputed property and, thus, her transfer and all subsequent transfers of said property, including that made to respondent, were invalid.11 Instead of presenting documents to evidence their relationship to the decedents Julian and Pedro Tiro, petitioners offered the testimonies of petitioners Maximo Tiro12 and his son-in-law Joveniano Diasana.13 Finally, the petitioners prayed that all the transactions emanating from the "Extrajudicial Declaration of Heirs and Confirmation of Sale," executed by Maxima Ochea, be declared void, including the transfer made in favor of the respondent; that the title which was issued in the name of respondent be cancelled; and that the property be restored and registered in the name of the petitioners.14

In its Answer dated 10 February 1998, respondent claimed that its predecessor-in-interest Pacific Rehouse Corporation acquired the subject land from the Spouses Velayo, the registered owners of the property who were also in possession of the same at the time of the sale. There was nothing in the title or any circumstances during the sale that would indicate any defect in the Spouses Velayo's title to the property. Respondent pointed out that 27 years had elapsed since the cancellation of OCT No. RO-1121 before petitioners asserted their rights over the disputed land. Moreover, petitioners' predecessors-in-interest Julian and Pedro Tiro did not question the cancellation of their title to the property during their lifetimes. Hence, respondent argued that petitioners' action for quieting of title was barred by laches and prescription.15

To support its allegations, respondent presented TCT No. 2914 in the name of the Spouses Velayo as proof that they were the registered owners of the disputed property at the time they sold it to Pacific Rehouse Corporation.16 Additionally, respondent presented a Decision17 dated 28 June 1994 in Civil Case No. R-1202, entitled Spouses Velayo v. Spouses Tiro, rendered by the Municipal Trial Court (MTC) of Lapu-Lapu City to further prove that the Spouses Velayo were also in possession of the disputed property at the time of its sale to Pacific Rehouse Corporation. Civil Case No. R-1202 was a case for Forcible Entry with Writ of Preliminary Mandatory Injunction, and in its Decision dated 28 June 1994, the MTC declared the Spouses Velayo the rightful possessors of the subject property and ordered petitioner Maximo Tiro and his co-defendant spouse to vacate the portion of the property which they forcibly entered on 7 May 1994. Respondent likewise presented the Deed of Sale18 dated 4 October 1994 executed by the Spouses Velayo in favor of Pacific Rehouse Corporation; the Deed of Transfer19 dated 23 October 1996 executed by Pacific Rehouse Corporation in favor of respondent; and various tax declarations issued

in the names of the Spouses Baba, Spouses Velayo, Pacific Rehouse Corporation, and respondent during the years that each of them claimed ownership over the disputed property.20

On 16 April 2002, the RTC issued a Decision21 in Civil Case No. 4824-L dismissing petitioners' Complaint. The trial court noted that petitioners' claims of filiation to Julian and Pedro Tiro were not supported by documents. The testimonies of petitioners' witnesses were also inconsistent as to the location of the disputed land, as well as the number of Pedro Tiro's children. The RTC stressed that even assuming that petitioners were heirs of the late Julian and Pedro Tiro, and Maxima Ochea was in no way related to them, petitioners' claims had already prescribed, considering that the Complaint was filed more than ten years since the registration of the disputed property in the name of the Spouses Baba in 1969. Petitioners' allegation that they were in continuous possession of the subject property until 1995 was also belied by the Decision dated 28 June 1994 of the MTC in Civil Case No. R-1202, ordering petitioners to vacate the disputed property, which they forcibly entered, and to restore possession to the Spouses Velayo. Lastly, the RTC ruled that respondent was an innocent purchaser for value who relied on the correctness of the certificate of title in the name of the vendor.

Petitioners filed a Notice of Appeal on 2 May 2002 questioning the 16 April 2002 Decision of the RTC. The petitioners filed with the Court of Appeals an appeal docketed as CA-G.R. CV No. 78582, questioning the decision rendered by the trial court.

However, instead of filing an Appellants' Brief as required by the Court of Appeals, petitioners filed before the Court of Appeals in CA-G.R. CV No. 78582 a Motion to Grant New Trial Pursuant to Section 1, Rule 53,22 on 8 January 2004. They attached as annexes to their motion the following documents to prove that Julian Tiro was their father: (1) Certificates of Baptism of Pastor Tiro and Dominga Tiro;23 (2) marriage contract of Dominga Tiro;24 (3) Certificate of Marriage of Guillerma Tiro;25 (4) Certification of Marriage of Pastor Tiro;26 and (5) Certificate of Baptism of Victoria Tiro.27 In a Resolution28 dated 5 August 2004, the appellate court denied the motion.

In its Decision dated 1 July 2005, the Court of Appeals likewise denied the petitioners' appeal in CA-G.R. CV No. 78582 and affirmed the RTC Decision dated 16 April 2002 in Civil Case No. 4824-L. The appellate court found that petitioners failed to prove that they were the heirs of Julian and Pedro Tiro. It also took into account the fact that during their lifetime, Julian and Pedro Tiro never questioned the transactions which affected their land. The Court of Appeals gave significant weight to the respondent's statements that it had acquired the subject property from the registered owners, supported by the registered titles that were presented in court. Thus, the Court of Appeals held that even assuming that the first few transfers turned out to be fraudulent, the transfer to respondent, a purchaser in good faith, may be the root of a valid title.29

Petitioners filed a Motion for Reconsideration dated 25 July 2005,30 which the Court of Appeals denied in a Resolution dated 28 October 2005.31

Hence, the present Petition, in which petitioners make the following assignment of errors:

I

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT THE ACT OF THE REGISTER (sic) OF DEEDS OF REGISTERING A CLEARLY VOID AND UNREGISTRABLE DOCUMENT CONFERS NO VALID TITLE ON THE PRESENTOR AND HIS SUCCESSORS-IN-INTEREST.

II

THE COURT OF APPEALS GRAVELY ERRED IN NOT APPLYING THE DOCTRINE IN SPOUSES SANTIAGO, ET AL. v. COURT OF APPEALS, ET AL., G.R. [NO.] 103959, AUGUST 21, 1997 WHEREBY IT IS HELD [THAT] "THE TORRENS SYSTEM DOES NOT CREATE OR VEST TITLE. IT ONLY CONFIRMS AND RECORDS TITLE ALREADY EXISTING AND VESTED. IT DOES NOT PROTECT A USURPER FROM THE TRUE OWNER NOR CAN IT BE A SHIELD IN THE COMMISSION OF FRAUD. WHERE ONE DOES NOT HAVE ANY RIGHTFUL CLAIM OVER A REAL PROPERTY, THE TORRENS SYSTEM OF REGISTRATION CONFIRM[S] OR RECORD[S] NOTHING.32

This Petition lacks merit.

Petitioners' main contention is, since Ochea was not even related to either Julian or Pedro Tiro, the "Declaration of Heir and Confirmation of Sale" which she executed could not have resulted in the cancellation of OCT No. RO-1121 in the names of Julian and Pedro Tiro. They further argue that since the initial transfer of the disputed land was fraudulent, therefore, all the subsequent transfers, including that made to respondent, were all invalid.

Petitioners' arguments are unfounded.

Insofar as a person who has fraudulently obtained property is concerned, the consequently fraudulent registration of the property in the name of such person would not be sufficient to vest in him or her title to the property. Certificates of title merely confirm or record title already existing and vested. The indefeasibility of the torrens title should not be used as a means to perpetrate fraud against the rightful owner of real property. Good faith must concur with registration because, otherwise, registration would be an exercise in futility.33 However, where good faith is established, as in the case of an innocent purchaser for value, a forged document may become the root of a valid title.34

A person is considered in law as an innocent purchaser for value when he buys the property of another, without notice that some other person has a right or an interest in such property, and pays a full price for the same at the time of such purchase, or before he has notice of the claims or interest of some other person in the property. A person dealing with registered land may safely rely on the correctness of the certificate of title of the vendor/transferor, and the law will in no way oblige him to go behind the certificate to determine the condition of the property. The courts cannot disregard the rights of innocent third persons, for that would impair or erode public confidence in the torrens system of land registration. Thus, a title procured by fraud or misrepresentation can still be the source of a completely legal and valid title if the same is in the hands of an innocent purchaser for value.35

In the present case, respondent was clearly an innocent purchaser for value. It purchased the disputed property from Pacific Rehouse Corporation, along with other parcels of land for a valuable consideration, i.e., shares of common stock of respondent with a value of P148,100,400.00. Pacific Rehouse Corporation, in turn, purchased the property from Spouses Velayo, also for valuable consideration in the amount of P1,461,600.00. The certificates of title of Pacific Rehouse Corporation and the Spouses Velayo were clean and appeared valid on their face, and there was nothing therein which should have put the respondent on its guard of some defect in the previous registered owners' title to the disputed property. In addition to their certificate of title, the Spouses Velayo even presented to Pacific Rehouse Corporation a copy of the MTC Decision dated 28 June 1994 in Civil Case No. R-1202 ordering petitioners to vacate the disputed property, which they forcibly entered, and to restore possession thereof

to the Spouses Velayo. The said Decision supported the Spouses Velayo's claim of title to the disputed property.

In Spouses Chu, Sr. v. Benelda Estate Development Corporation,36 this Court pronounced that it is crucial that a complaint for annulment of title must allege that the purchaser was aware of the defect in the title, so that the cause of action against him or her will be sufficient. Failure to do so, as in the case at bar, is fatal for the reason that the court cannot render a valid judgment against the purchaser who is presumed to be in good faith in acquiring said property. Failure to prove, much less impute, bad faith to said purchaser who has acquired a title in his or her favor would make it impossible for the court to render a valid judgment thereon, due to the indefeasibility and conclusiveness of his or her title.

In this case, petitioners directed all allegations of bad faith solely at Ochea. The property in question had already been the subject of five succeeding transfers to persons who were not accused of having purchased the same in bad faith. Petitioners' attempt, therefore, to have respondent's certificate of title to the disputed property annulled, must fail.

In Veloso v. Court of Appeals,37 this Court enunciated that a title issued to an innocent purchaser and for value cannot be revoked on the basis that the deed of sale was falsified, if he had no knowledge of the fraud committed. The Court also provided the person prejudiced with the following recourse:

Even granting for the sake of argument, that the petitioner's signature was falsified and consequently, the power of attorney and the deed of sale were null and void, such fact would not revoke the title subsequently issued in favor of private respondent Aglaloma. In Tenio-Obsequio v. Court of Appeals, it was held, viz:

"The right of an innocent purchaser for value must be respected and protected, even if the seller obtained his title through fraud. The remedy of the person prejudiced is to bring an action for damages against those who caused or employed the fraud, and if the latter are insolvent, an action against the Treasurer of the Philippines may be filed for recovery of damages against the Assurance Fund." (Emphasis supplied.)

Petitioners cite Sps. Santiago v. Court of Appeals.38 In Santiago, the plaintiff and the defendants were the parties to the void contract of sale of the disputed property. The contract was considered simulated for lack of consideration and given the fact that defendants failed to take possession of the subject property. For this reason, the Court did not hesitate to cancel the certificates of title in the defendants' names, since they were found not to be the rightful owners of the property. More importantly, the defendants were not innocent purchasers for value, since they were privy to the nullity of the contract of sale covering the property. Santiago is clearly inapplicable to the present case. Respondent herein who paid adequate consideration for the disputed land, took possession of the same, and is already the fifth transferee following the allegedly fraudulent initial transfer of the land, cannot be placed in the same position as a vendor who was a party to a simulated sale of a real property.

IN VIEW OF THE FOREGOING, the instant Petition is DENIED. The assailed Decision of the Court of Appeals in CA-G.R. CV No. 78582, promulgated on 1 July 2005, is AFFIRMED. Costs against petitioners.

SO ORDERED.

[G.R. No. 56232. June 22, 1984.]

ABELARDO CRUZ (deceased) substituted by Heirs Consuelo C. Cruz, Claro C. Cruz and Stephen C. Cruz, per Resolution, Petitioners, v. LEODEGARIA CABANA, TEOFILO LEGASPI,

ILUMINADA CABANA and THE HONORABLE COURT OF APPEALS, * respondents.

Nazareno, Azada, Sabado & Dizon, for Petitioners.

Felixberto N . Boquiren for Respondents.

SYLLABUS

1. CIVIL LAW; OBLIGATIONS AND CONTRACTS; SALES; DOUBLE SALE OF REAL PROPERTY; OWNERSHIP OF PROPERTY ACQUIRED BY VENDEE WHO FIRST REGISTERS SALE IN GOOD FAITH. — As the Court held in Carbonell v. Court of Appeals, 69 SCRA 99 (1976), "it is essential that the buyer of realty must act in good faith in registering his deed of sale to merit the protection of the second paragraph of Article 1544 of the Civil Code." As the writer stressed in his concurring opinion therein, "The governing principle here is prius tempore, potior jure (first in time, stronger in right). Knowledge gained by the first buyer of the second sale cannot defeat the first buyer’s right except only as provided by the Civil Code and that is where the second buyer first registers in good faith the second sale ahead of the first. Such knowledge of the first buyer does not bar her from availing of her rights under the law, among them to register first her purchase as against the second buyer. But in converso knowledge gained by the second buyer of the first sale defeats his rights even if he is first to register the second sale, since such knowledge taints his prior registration with bad faith. This is the price exacted by Article 1544 of the Civil Code of the second buyer being able to displace the first buyer; that before the second buyer can obtain priority over the first, he must show that he acted in good faith throughout (i.e. in ignorance of the first sale and of the first buyer’s rights) — from the time of acquisition until the title is transferred to him by registration or failing registration, by delivery of possession. The second buyer must show continuing good faith and innocence or lack of knowledge of the first sale until his contract ripens into full ownership through prior registration as provided by law."cralaw virtua1aw library

2. ID.; ID.; ID.; ID.; ID.; KNOWLEDGE OF PRIOR SALE TAINTS SECOND PURCHASER’S PRIOR REGISTRATION WITH BAD FAITH; CASE AT BAR. — When petitioner Cruz succeeded in registering the later sale in his favor, he knew and was informed of the prior sale in favor of respondents-spouses. Respondents appellate court correctly held that such "knowledge of a prior transfer of a registered property by a subsequent purchasers makes him a purchaser in bad faith and his knowledge of such transfer vitiates his title acquired by virtue of the latter instruments of conveyance with creates no right as against the first purchaser."

D E C I S I O N

TEEHANKEE, J.:

The Court affirms the questioned decision of the now defunct Court of Appeals which affirmed that of the Court of First Instance of Quezon Province, but directs that the seller, respondent Leodegaria Cabana who sold the property in question twice, first to her co-respondents Teofilo Legaspi and Iluminada Cabana and later to petitioner Abelardo Cruz (now deceased), should reimburse to petitioner’s heirs the amounts of P2,352.50, which the late petitioner Abelardo Cruz paid to the Philippine National Bank to discharge the mortgage obligation of said respondent Leodegaria Cabana in favor of said bank, and of P3,397.50, representing the amount paid by said Abelardo Cruz to her as consideration of the sale with pacto de retro of the subject property.

This is a simple case of double sale of real property. Respondent appellate court in its decision of August 13, 1980 stated the background facts and resolved the issue in favor of defendants-appellees, first buyers-respondents herein, and against plaintiff-appellant Abelardo Cruz, petitioner herein (substituted by his heirs), as follows:jgc:chanrobles.com.ph

"Defendants’ evidence shows that on October 21, 1968, defendant Leodegaria Cabaña sold the land in question to defendants-spouses Teofilio Legaspi and Iluminada Cabaña (Exh. 1). The said defendants-spouses attempted to register the deed of sale but said registration was not accomplished because they could not present the owner’s duplicate of title which was at that time in the possession of the PNB as mortgage.

"Likewise, when plaintiff tried to register the deed of sale executed by Leodegaria Cabaña on September 3, 1970, said plaintiff was informed that the owner thereof had sold the land to defendants-spouses on October 21, 1968. Plaintiff was able to register the land in his name on February 9, 1971 (Exh. A). With the admission of both parties that the land in question was sold to two persons, the main issue to be resolved in this appeal is as to who of said vendees has a better title to said land.

"There is no dispute that the land in question was sold with right of repurchase on June 1, 1965 to defendants-spouses Teofilo Legaspi and Iluminada Cabaña (Exh. 1). The said document `Bilihang Muling Mabibili’ stipulated that the land can be repurchased by the vendor within one year from December 31, 1966 (see par. 5, Exh. 1). Said land was not repurchased and in the meantime, however, said defendants-spouses took possession of the land.

"Upon request of Leodegaria Cabaña, the title of the land was lent to her in order to mortgage the property to the Philippine National Bank. Said title was, forthwith, deposited with the PNB. On October 21, 1968, defendant Leodegaria Cabaña sold the land by way of absolute sale to the defendants-spouses (Exh. 2). However, on November 29, 1968 defendant sold the same property to herein plaintiff and the latter was able to register it in his name.

"The transaction in question is governed by Article 1544 of the Civil Code. True it is that the plaintiff was able to register the sale in his name but was he in good faith in doing so?

"While the title was registered in plaintiff-appellant’s name on February 9, 1971 (Exh. A), it appears that he knew of the sale of the land to defendants-spouses Legaspi as he was informed in the Office of the Register of Deeds of Quezon. It appears that the defendants-spouses registered their document of sale on May 13, 1965 under Primary Entry No. 210113 of the Register of Deeds (Exh. 2).

"Under the foregoing circumstances, the right of ownership and title to the land must be resolved in favor of the defendants-spouses Legaspi on three counts. First, the plaintiff-appellant was not in good faith in registering the title in his name. Consistent is the jurisprudence in this jurisdiction that in order that the provisions of Article 1544 of the new Civil Code may be invoked, it is necessary that the conveyance must have been made by a party who has an existing right in the thing and the power to dispose of it (10

Manresa 170, 171). It cannot be set up by a second purchaser who comes into possession of the property that has already been acquired by the first purchaser in full dominion (Bautista v. Sison, 39 Phil. 615), this notwithstanding that the second purchaser records his title in the public registry, if the registration be done in bad faith, the philosophy underlying this rule being that the public records cannot be covered into instruments of fraud and oppression by one who secures an inscription therein in bad faith (Chupinghong v. Borreros, 7 CA Rep. 699).

"A purchaser who has knowledge of fact which would put him upon inquiry and investigation as to possible defects of the title of the vendor and fails to make such inquiry and investigation, cannot claim that he is a purchaser in good faith. Knowledge of a prior transfer of a registered property by a subsequent purchaser makes him a purchaser in bad faith and his knowledge of such transfer vitiates his title acquired by virtue of the latter instrument of conveyance which creates no right as against the first purchaser (Reylago v. Jarabe, L-20046, March 27, 1968, 22 SCRA 1247).

"In the second place, the defendants-spouses registered the deed of absolute sale ahead of plaintiff-appellant. Said spouses were not only able to obtain the title because at that time, the owner’s duplicate certificate was still with the Philippine National Bank.

"In the third place, defendants-spouses have been in possession all along of the land in question. If immovable property is sold to different vendees, the ownership shall belong to the person acquiring it who in good faith first recorded it in the registry of property; and should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession (Soriano, Et. Al. v. The Heirs of Domingo Magali, Et Al., L-15133, July 31, 1963, 8 SCRA 489). Priority of possession stands good in favor of herein defendants-spouses (Evangelista v. Abad, [CA] 36 O.G. 2913; Sanchez v. Ramos, 40 Phil. 614; Quimson v. Rosete, 87 Phil. 159)."cralaw virtua1aw library

The Court finds that in this case of double sale of real property, respondent appellate court, on the basis of the undisputed facts, correctly applied the provisions of Article 1544 of the Civil Code that

"Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property.

"Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property.

"Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith."cralaw virtua1aw library

There is no question that respondents-spouses Teofilo Legaspi and Iluminada Cabana were the first buyers, first on June 1, 1965 under a sale with right of repurchase and later on October 21, 1968 under a deed of absolute sale and that they had taken possession of the land sold to them; that petitioner was the second buyer under a deed of sale dated November 29, 1968, which to all indications, contrary to the text, was a sale with right of repurchase for ninety (90) days. 1 There is no question either that respondents Legaspi spouses were the first and the only ones to be in possession of the subject property.

Said respondents spouses were likewise the first to register the sale with right of repurchase in their favor on May 13, 1965 under Primary Entry No. 210113 of the Register of Deeds. They could not register the absolute deed of sale in their favor and obtain the corresponding transfer certificate of title because at that time the seller’s duplicate certificate was still with the bank. But there is no question, and the lower courts

so found conclusively as a matter of fact, that when petitioner Cruz succeeded in registering the later sale in his favor, he knew and he was informed of the prior sale in favor of respondents-spouses. Respondent appellate court correctly held that such "knowledge of a prior transfer of a registered property by a subsequent purchaser makes him a purchaser in bad faith and his knowledge of such transfer vitiates his title acquired by virtue of the latter instrument of conveyance which creates no right as against the first purchaser." chanroblesvirtualawlibrary

As the Court held in Carbonell v. Court of Appeals 2 "it is essential that the buyer of realty must act in good faith in registering his deed of sale to merit the protection of the second paragraph of [the above quoted] Article 1544." As the writer stressed in his concurring opinion therein," (T)he governing principle here is prius tempore, potior jure (first in time, stronger in right). Knowledge gained by the first buyer of the second sale cannot defeat the first buyer’s rights except only as provided by the Civil Code and that is where the second buyer first registers in good faith the second sale ahead of the first. Such knowledge of the first buyer does not bar her from availing of her rights under the law, among them, to register first her purchase as against the second buyer. But in converso knowledge gained by the second buyer of the first sale defeats his rights even if he is first to register the second sale, since such knowledge taints his prior registration with bad faith. This is the price exacted by Article 1544 of the Civil Code for the second buyer being able to displace the first buyer; that before the second buyer can obtain priority over the first, he must show that he acted in good faith throughout (i.e. in ignorance of the first sale and of the first buyer’s rights) — from the time of acquisition until the title is transferred to him by registration or failing registration, by delivery of possession. The second buyer must show continuing good faith and innocence or lack of knowledge of the first sale until his contract ripens into full ownership through prior registration as provided by law." chanrobles virtual lawlibrary

Petitioner’s prayer for alternative relief for reimbursement of the amount of P2,352.50 paid by him to the bank to discharge the existing mortgage on the property and of the amount of P3,397.50 representing the price of the second sale are well taken insofar as the seller Leodegaria Cabana is concerned. These amounts have been received by the said seller Leodegaria Cabana on account of a void second sale and must be duly reimbursed by her to petitioner’s heirs, but the Legaspi spouses cannot be held liable therefor since they had nothing to do with the said second sale nor did they receive any benefit therefrom. Petitioner’s claim for reimbursement of the amount of P102.58 as real estate taxes paid on the property is not well taken because the respondents Legaspi spouses had been paying the real estate taxes on the same property since June 1, 1969. 4 

ACCORDINGLY, the appealed judgment of respondent appellate court, upholding respondents-spouses Teofilo Legaspi and Iluminada Cabana as the true and rightful owners of the property in litigation and ordering the issuance of a new title with the cancellation as null and void of Title No. T-99140 obtained by petitioner Abelardo C. Cruz, is hereby affirmed in toto. In accordance with the partial grant of petitioner’s prayer for alternative relief as stated in the preceding paragraph hereof, the Court hereby orders and sentences respondent Leodegaria Cabana to reimburse and pay to petitioner’s heirs the total sum of P5,750.00.

Melencio-Herrera, Plana, Relova, Gutierrez, Jr. and De la Fuente, JJ., concur.

THIRD DIVISION

G.R. No. 113549 July 5, 1996

REPUBLIC OF THE PHILIPPINES, (Represented by the DIRECTOR OF LANDS),Petitioner, v. COURT OF APPEALS and HEIRS OF LUIS RIBAYA, namely, ANDREA

RIBAYA BUENVIAJE, LUIS RIBAYA, ANTONIA RIBAYA-CONDE, and JOHN DOE RIBAYA, all represented by ANDREA RIBAYA BUENVIAJE as Administratrix of the Estate of Luis

Ribaya, Respondents.

DAVIDE, JR., J.:

Petitioner seeks the reversal of the Resolution 1 of 24 January 1994 of the Court of Appeals in CA-G.R. CV No. 17351, which set aside its earlier decision 2 of 9 January 1991. The latter affirmed the decision 3 of 11 November 1987 of the Regional Trial Court (RTC), Branch 7, Legazpi City, in Civil Case No. 6198 which declared null and void an original certificate of title issued pursuant to a decree and a decision in a land registration case decided on 18 September 1925.

After the private respondents filed their Comment and the petitioner their Reply, we gave due course to the petition and required the parties to submit their respective memoranda.

The Court of Appeals' reversal was primarily due to its disagreement with the trial court's findings of fact. Hence, such removes this case from the general rule that factual findings of the Court of Appeals bind us in a petition for review under Rule 45 of the Rules of Court. 4 We are thus compelled to review the factual antecedents.

From the decisions of the trial court and the Court of Appeals and the pleadings of the parties, the following were established:

On the basis of the private respondents' exhibits, 5 on 9, 10, 12-16, 23, 24, 26, and 27 July 1920, a parcel of land located in the barrio of Magragondong, Municipality of Ligao, Province of Albay, was survived for the spouses Luis Ribaya and Agustina Revatoris (hereinafter the spouses Ribaya) by Telesforo Untalan, a Bureau of Lands surveyor. The parcel of land was found to comprise an area of 25,542,603 square meters. The survey plan was denominated as Plan II-13961 and allegedly approved by the Acting Director of Lands on 3 January 1922. However, as noted by the Court of Appeals in its 9 January 1991 1 decision, 6 these exhibits do not at all show the surveyor's signature. Moreover, its per Land Classification Map No. 871 of the Bureau of Forestry, the above parcel of land was considered part of the public forest and released for disposition only on 31 December 1930. 7

In 1925, the spouses Ribaya applied for registration and confirmation of title of the lot covered by Plan II-13961 before the then Court of First Instance (CFI) of Albay. The case was docketed as LRC Case No. 52, G.L.R.O. Record No. 26050. Notice of the application and hearing thereof were published in the 17 March 1925 issue of the Official Gazette, 8and in its decision of 18 September 1925, 9 the CFI granted the said application.

Sometime later, or on 18-21 November and 23-30 November 1925, a resurvey of the parcel of land covered by Plan II-13961 was conducted at the instance of the spouses Ribaya. This gave rise to Plan II-

13961-Amd., which embraced, inter alia, four different parcels of land with an aggregate area of only 10,975,022 square meters, instead of the original 25,542,603 square meters. Plan II-13961-Amd. appeared to have been approved by the Director of Lands on 26 February 1926. 10 The application was not amended to reflect the resurvey and the amended plan was not published.

On 31 July 1926, the corresponding decree of registration was issued, 11 while on 19 August 1926, Original Certificate of Title (OCT) No. 3947 covering the four lots embraced by Plan II-13961-Amd. was issued in the names of the spouses Ribaya. 12

On 11 September 1958, OCT No. 3947 was administratively reconstituted from the owner's duplicate copy thereof and the reconstituted title was denominated as OCT No. P0-10848 (3947). 13

In 1964, the heirs of Luis Ribaya (herein private respondents) received compensation from the Foreign Claims Settlement Commission of the United States for damages sustained by the land during the war. 14

In 1968, pursuant to a deed of partition executed by the private respondents herein, the land covered by OCT No. RO-10848 (3947) was subdivided per Subdivision Plan LRC Psd-96075, approved on 16 December 1968. 15 Then, OCT No. RO-10848 (3947) was cancelled and separate Transfer Certificates of Title (TCT) were issued to the private respondents. 16

In a letter dated 6 January 1977, sixty-two (62) farmers occupying the land 17 and claiming ownership thereof, requested the Director of Lands to institute an action to annul OCT No. RO-10848 (3947). 18 Finding merit in the request, herein petitioner filed a verified complaint, dated 17 August 1978, with the CFI (now Regional Trial Court) of Albay, Branch V, for the declaration of nullity of OCT No. 3947, OCT No. RO-10848 (3947), and all subsequent titles emanating from the original title, viz., TCT Nos. T-31333 to T-31358, inclusive. The case was docketed as Civil Case No. 6198.

The petitioner claimed therein that OCT No. 3947 was obtained through fraud and that the land registration court did not acquire jurisdiction over the land for lack of republication of the amended plan, neither did the spouses-applicants comply with Section 45 (],) of Act No. 2874. 19 The petitioner further alleged that at the time the petition for registration was filed, the land covered therein was forest land, and therefore, inalienable.

On 27 October 1979, the aforementioned 62 farmers filed a complaint-in-intervention and prayed that the land revert to the petitioner and their titles over the portions respectively occupied by them confirmed.

In its decision of 11 November 1987, 20 the Regional Trial Court (RTC) held for the petitioner as follows:

WHEREFORE, decision is hereby rendered as follows:

1. Declaring Original Certificate of Title No. 3947 and administratively reconstituted Original Certificate of Title No. RO-10848 (3947) as null and voidab initio and without force and effect;

2. Declaring separate Transfer Certificates of Title, to wit: T-31333, T-31334, T-31335, T-31336, T-31337, T-31338, T-31339, T-31340, T-31341, T-31342, T-31343, T-31344, T-31345, T-31346, T-31347, T-31348, T-31349, T-31350, T-31351, T-31352, T-31353, T-31354, T-31355, T-31356, T-31357 and T-31358, emanating from OCT No. 3947 and OCT No. RO-10848 (3947), all issued to the heirs of Luis Ribaya and Agustina Revatoris, as likewise null and void and without force and effect.

3. Ordering [respondents] Heirs of Luis Ribaya and Agustina Revatoris to surrender their copy of OCT No. RO-10848 (3947) as well as their separate transfer certificates of title to the Register of Deeds of Albay, who (sic) is thereafter directed or ordered to cancel the same.

4. Ordering the reversion of the land to [petitioner] Republic of the Philippines, as alienable and disposable land of the public domain.

5. And ordering the dismissal of the counterclaim.

The trial court found that at the time the spouses Ribaya filed their petition for registration, the land was already classified as alienable and disposable agricultural land; however, the then CFI, as a land registration court, did not acquire jurisdiction over the said lot due to lack of publication or republication in the Official Gazette of Plan II-13961-Amd., which was the basis of the decree of registration and OCT No. 3947. Consequently, said OCT No. 3947 and its derivative titles were void. 21 In so finding, it relied on Fewkes vs. Vasquez, 22 where it was held that any amendment or alteration in the description of the land after its publication and decree of registration was not permissible unless coupled with republication.

The trial court likewise ruled that there was no evidence that the possession of the spouses Ribaya and their predecessors-in-interests was open, continuous, and adverse under a bona fide claim of ownership for the required number of years; moreover, they failed to present any tax declarations. It then concluded that the said spouses may have occupied portions of the land at a later time, but not in the concept of bona fide owners, for mere casual cultivation and raising of cattle on the land did not constitute "possession" as contemplated by law. 23

The private respondents appealed to the Court of Appeals (CA-G.R. CV No. 17351), which, in its decision 24 of 9 January 1991, affirmed in toto the appealed decision of the trial court. The appellate court further pointed out another reason why the registration in favor of the applicants was invalid, thus:

[W]hen [the] spouses [Luis Ribaya and Agustina Revatoris] applied for registration thereof in their names said land was still part of the public forest. The land was released for public disposition only on December 31, 1930 as shown by the Land Classification Map No. 871 of the Bureau of Forestry (Exhs. K, K-5). Consequently, OCT No. 3947 as reconstituted by OCT No. RO-10848 is void ab initio.

It is well-settled that lands of the public domain classified as forest or timber lands, are incapable of registration in the names of private persons and their inclusion in a title nullifies the title (Director of Lands vs. Reyes, 68 SCRA 177 and cases cited therein.) 25

In refuting the claim of the private respondents that publication of the amended survey plan was unnecessary in light of the decision of this Court in Benin vs. Tuazon, 26 the Court of Appeals held that the facts in Benin were different. In Benin, an approved survey plan was submitted before the property was decreed for registration, while in the present case:

[T]he land was decreed for registration on September 18, 1925 while its survey was performed sometime in November and December 1925. The amended survey plan (plan II-13961-Amd.) thereof was approved by the Director of Lands on February 26, 1926. In other words, the survey plan (plan II-13961-Amd.) of the land in the instant case was approved when the land was already decreed for registration. . . . 27

There was then, the Court of Appeals concluded, a violation of Sections 23 and 26 of Act No. 496. 28

The private respondents seasonably moved for a reconsideration of this decision.

In its resolution 29 of 24 January 1994, the Court of Appeals granted the motion for reconsideration and set aside its decision of 9 January 1991, reversed that of the trial court of 11 November 1987, and dismissed the complaint and the complaint-in-intervention in Civil Case No. 6198 of Branch 7 of the RTC of Legazpi City. In overturning its previous decision, the Court of Appeals ruled that OCT No. 3947 "is conclusive upon and against all persons, including the Government and all its branches (Sec. 38, Act No. 496) as to all matters contained therein (Sec. 47, Act No. 496). One (1) year after its transcription which is the date of its effectivity (Sec. 42, Act No. 496), said certificate of title became incontrovertible (Sec. 38, Act No. 496)." 30

It further applied the presumption of regularity in the grant of the land applied for by the spouses Ribaya, and even extended said presumption to their compliance with all conditions required by law, in particular, their "open, continuous, exclusive and notorious possession and occupation of the land under a bona fide claim of ownership since July 26, 1894." It thus burdened the Republic "to prove otherwise." 31

It likewise ruled that the failure of the spouses Ribaya to present tax receipts was not fatal, and that although they actually lived in Gas, Albay, such did not negate the character of their possession for "[p]ossession in the eyes of the law does not mean that a men has to have his feet on every square meter of ground before he can be said that he is in possession." 32

The Court of Appeals also rejected the application of the Fewkes case and applied, instead, the decision in Benin, where this Court held that republication could be dispensed with in an amendment in the application or in the survey plan, where such amendment consisted of the exclusion of a portion covered by the original application and the original survey plan as published. Accordingly, the land registration court retained its jurisdiction.

Finally, the Court of Appeals withdrew its earlier finding that the land in question still formed part of the public forest at the time of the application for registration. It asserted, instead, that there was insufficient basis to conclude that a parcel of land only became open to disposition on the basis of the date of approval of the land classification map, because such approval may have been made later by authority of a prior executive declaration. 33

Unsatisfied, the petitioner filed the instant petition and asserts that: (1) the indefeasibility of title does not lie against the State in an action for reversion of land; (2) the spouses-applicants failed to prove possession of the land for the period required by law, and the evidence shows that their possession was not open, continuous, exclusive, and notorious under a bona fide claim of ownership; (3) the amended survey plan was not published; (4) the land covered by OCT No. 3947 was then part of the forest land, hence, inalienable; and (5) the accuracy of the land survey was doubtful. 34

In their Comment, the private respondents allege that the petition merely raises factual matters and argue that OCT No. 3947 is absolutely incontestable, considering that the land was no longer part of the public forest when it was decreed in favor of their parents. They further contend, invoking Benin, that the issue of republication is inapplicable since the publication of the original survey plan was already had in compliance with law. Moreover, possession of the land by their parents, the spouses-applicants, was duly proven, i.e., donations of portions thereof in favor of the government and the compensation they received from the Foreign Claims Settlement Commission of the United States for damages sustained by the land during the war sufficiently proved that they were the legitimate owners of the land. Finally, the original survey plan could no longer be questioned by the petitioner. 35

As the Court sees it, only two relevant issues need be resolved, to wit:

1. Whether the Republic of the Philippines is barred by prescription to bring the action for annulment of OCT No. 3947 and all its derivative certificates of title; and

2. Whether the land registration court acquired jurisdiction over the four parcels of land subject of the amended survey plan (Plan II-13961-Amd.) and covered by the decree issued on 31 July 1926 by the General Land Registration Office pursuant to the decision of the said court of 18 September 1925.

As to the first issue, we find that the Court of Appeals erred in holding that OCT No. 3947 was, to repeat:

[C]onclusive upon and against all persons, including the Government and all its branches (Sec. 38, Act No. 496) as to all matters contained therein (Sec. 47, Act No. 496). One (1) year after its transcription which is the date of its effectivity (Sec. 42, Act No. 496), said certificate of title became incontrovertible (Sec. 38, Act No. 496). 36

First, the one-year period provided for in Section 38 of Act No. 496 merely refers to a petition for review and is reckoned from the entry of the decree. In the second place, there are other remedies available to an aggrieved party after the said one-year period,e.g., reconveyance, covered by Section 65 of Act No. 496 which, inter alia, provides that "in all cases of registration procured by fraud, the owner may pursue all his legal and equitable remedies against the parties to such fraud, without prejudice, however, to the rights of any innocent holder for value of a certificate of title." 37 Likewise, an action for damages is sanctioned in cases where the property has been transferred to an innocent purchaser for value, which may be filed within four years from discovery of the fraud. 38Recourse may also be had against the Assurance Fund. 39

Finally, prescription never lies against the State for the reversion of property which is part of the public forest or of a forest reservation which was registered in favor of any party. Then too, public land registered under the Land Registration Act may be recovered by the State at any time. In Republic vs. Animas, 40 we ruled:

Public land fraudulently included in patents or certificates of title may be recovered or reverted to the state in accordance with Section 101 of the Public Land Act. Prescription does not lie against the state in such cases for the Statute of Limitations does not run against the state. The right of reversion or reconveyance to the state is not barred by prescription.

We therefore hold that since the land applied for by the spouses Ribaya was part of the public forest and released only on 31 December 1930, 41 the land registration court acquired no jurisdiction over the land, which was not yet alienable and disposable. Hence, the State's action to annul the certificates of title issued thereunder and for the reversion of the land is not barred by prescription.

Anent the second issue, we hold that the land registration court in LRC Case No. 52, G.L.R.O. Record No. 26050 never acquired jurisdiction over the land covered by either the original plan (Plan II-13961) or the amended plan (Plan II-13961-Amd.) for lack of sufficient publication of the first and total want of publication of the second.

As found by both the trial court in Civil Case No. 6198 and the Court of Appeals, the notice of the hearing of application of the spouses Ribaya for the registration of the land covered by the original plan was published in the 17 March 1925 issue of the Official Gazette. In short, there was only one publication thereof. Section 31 of Act No. 496, the governing law then, required two publications. Hence, the decision of 18 September 1925 of the land registration court was void for want of the required publications. The requirement of dual publication is one of the essential bases of the jurisdiction of the registration court; 42 it is a jurisdictional requisite. 43 Land registration is a proceedingin rem and

jurisdiction in rem cannot be acquired unless there be constructive seizure of the land through publication and service of notice. 44

Worse, the decision of 18 September 1925 was entirely based on an alleged original survey plan. The fact remains, however, that in November of that year that original plan was amended (Plan II-13961-Amd.) and the amended plan was not published at all. There is no evidence that the court amended its decision to conform to the amended plan, neither is there a showing that the parties even attempted publication thereof. However, the decree that was subsequently issued was based on the amended plan insofar as the four lots were concerned.

A decree of registration is required to recite the description of the land. 45 On the basis of the decree, OCT No. 3947 was issued. It follows then that the land registration court may have attended its decision to conform to the amended plan for the four lots which ultimately found their way into the decree issued by the General Land Registration Office, and finally, into OCT No. 3947. Whether it did so or not and the General Land Registration Office merely adjusted the decree to conform to the amended plan, such aims were fatally flawed due to the absence of publication of the amended plan. As such, the land registration court acquired no jurisdiction over the land embraced by the amended plan.

The Court of Appeals in its challenged resolution of 24 January 1994 and the private respondents, however, maintain that the publication of the amended plan was unnecessary under our pronouncements in Benin vs. Tuazon. 46 This case reiterates our rulings in Philippine Manufacturing Co. v. Imperial, 47 Juan and Chuongco vs. Ortiz, 48Bank of the Philippine Islands vs. Acuna, 49 Lichauco vs. Herederos de Corpus, 50 andDirector of Lands vs. Benitez, 51 that only where the original survey plan is amended during the registration proceedings, by the addition of land not previously included in the original plan, should publication be made in order to confer jurisdiction on the court to order the registration of the area added after the publication of the original plan. Conversely, if the amendment does not involve an addition, but on the contrary, areduction of the original area that was published, no new publication is required.

Reliance on Benin and its predecessors is misplaced. In the first place, the amendment of the original survey plan for the land applied for by the spouses Ribaya was made after the land registration court rendered its decision. It follows then that a re-opening of the case was indispensable; however, no such re-opening appears to have been done therein. Second, as earlier shown, the land registration court acquired no jurisdiction over the land covered by the original plan because of insufficient publication in the Official Gazette. Third, it has not been sufficiently shown that the four parcels of land covered by OCT No. 3947, which are based on the amended plan, are but a small part of the same land covered by the original survey plan. This conclusion is thoroughly discussed below.

In the 24 January 1994 resolution of the Court of Appeals, it found the original areas covered by Plan II-13961 to be 25,542,603 square meters and the four parcels of land embraced in the amended plan, Plan II-13961-Amd., to be in the aggregate of 10,975,022 square meters. Thus:

In the case at bar, in 1925, the spouses Ribaya sought for a judicial confirmation of imperfect or incomplete title of the land described as follows:

Parcel of Land (plan II-13961) containing an area of 25,542,603 square meters, with the buildings and improvements thereon, situated in the Barrio Magragondong, Municipality of Ligao, Province of Albay, P.I. . . . (Emphasis supplied).

Said 25,542,603 square meter land was surveyed on July 9, 10, 12-16, 23, 24, 26 and 27, 1920 by Telesforo Untalan, a surveyor of the Bureau of Lands which survey was approved by the Acting Director of Lands on January 3, 1922. (Exh. 6).

The notice of application and hearing of the land as aforedescribed, was published in the March 17, 1925 issue of the Official Gazette (Exhs. J and J-1).

The land registration court issued a decision in favor of the spouses Ribaya on September 18, 1925 but for a smaller parcel of land than the 25,542,603 square meters are applied for. On November 23 and 30, 1925, said smaller parcel of land was surveyed by Land Surveyor Wenceslao Manuel, and was approved by the Director of Lands on February 26, 1926 as Plan II-13961-Amd. (Exh. H and series).

Plan II-13961-Amd. embraced 4 parcels of land in the aggregate area of 10,975,022 square meters separately described as follows:

1. A parcel of land (Lot No. 1 Plan II-13961-Amd.), containing an area of 3,318,454 square meters, more or less;

2. A parcel of land (Lot No. 2 Plan II-13961-Amd.), containing an area of 1,575,195 square meters, more or less;

3. A parcel of land (Lot No. 3 Plan II-13961-Amd.), containing an area of 4,844,205 square meters, more or less;

4. A parcel of land (Lot No. 4 Plan II-13961-Amd.), containing an area of 1,237,368 square meters, more or less. 52

This was also its finding in its earlier decision of 9 January 1991. 53

In their Comment of 30 May 1994, the private respondents do not, for obvious reasons, dispute such finding and so they not only quoted it therein, 54 they also explicitly assert that:

The undisputed facts are that the original plan of the land applied for which was published in the Official Gazette contained an area of 25,542,603 square meters. The land actually embraced in the decree of registration contained only10,975,022 square meters. 55 (emphasis supplied).

In hectares, the 25,542,603 square meters means Two Thousand Five Hundred and Fifty Four Hectares, two ares, and six hundred and three centares (2,554 has., 2 ares, and 603 centares); and the 10,975,022 square meters means one thousand and ninety seven hectares, five ares, and twenty-two centares (1,097 has., 5 ares, and 22 centares).

However, the trial court is somewhat confused as to the area of the land covered by Plan II-13961, as well as that covered by the amended plan (Plan II-13961-Amd.). Thus:

[A]nd on March 7, 1978 Land Investigator Selecio San Felipe wrote the Director of Lands that the report of the ocular inspection and investigation conducted on May 14, 15 and 16, 1977 was true and correct, . . . that Plan II-13961-Amd., Sheet no. 1, surveyed for Luis Ribaya, with an area of 489.3649 hectares, located at Magragondong, Ligao, Albay, was surveyed on November 18-21, December 8-9, 1925 by Private Land Surveyor Wenceslao Manuel, and was approved by the Director of Lands on February 26,

1926 (Exhibits G, G-1 and G-2 for plaintiff and Exhibits GG, GG-1 and GG-2 for Intervenors); that Plan II-13961-Amd., Sheet no. 2, surveyed for Luis Ribaya, with an area of 608.1373 hectares, located at Magragondong, Ligao, Albay, was surveyed on November 23-30, 1925 by Private Land Surveyor Wenceslao Manuel, and was approved by the Director of Lands on February 26, 1926 (Exhibits H, H-1 and H-2 for plaintiff and Exhibits HH, HH-1 and HH-2 for intervenors); . . . that Original Certificate of Title No. RO-10848 (3947) covers 4 parcels of land, to wit: Lot No. 1, plan II-13961-Amd.), containing an area of 3,318.454 square meters more or less, Lot No. 2, plan II-13961-Amd.), containing an area of1,575.195 square meters more or less, Lot No. 3, plan II-13961-Amd.), containing an area of 4,844.005 square meters more or less, and Lot No. 4, plan II-13961-Amd.), containing an area of 1,237.368 square meters more or less, with a total of 10,975.022 square meters more or less; . . . that plan II-13961 of property as surveyed for Luis Ribaya, situated in the barrio of Magragondong, Municipality of Ligao, province of Albay, containing an area of25,542.603 square meters, was surveyed on July 9, 10, 12-16, 23, 24, 26 and 27, 1920 in accordance with Section 45 of Act 2874 by Telesforo Untalan, a surveyor of the Bureau of Lands, and the said plan was approved by the Acting Director of Lands on January 3, 1922 (Exhibits 6 and 6-A). . . . 56 (emphasis supplied)

Note that instead of a comma (,) before the last three digits in the areas of the four lots covered by the amended plan, as well as the areas embraced in the original plan, the trial court placed a period (.). The change from a comma to a period is of vital significance. For, translated into hectares, the 25,542.603 square meters would be onlyTwo (2) hectares, five (5) ares, and five hundred and forty-two (542) centares; and the aggregate of 10,975.022 square meters for the four lots embraced in Plan II-13961-Amd. would be one (1) hectare and nine hundred seventy-five (975) centares.

Indeed, the disagreement between the Court of Appeals and the trial court as to the land area of the original survey plan (Plan II-13961), i.e., whether it was 25,542,603square meters, (twenty-five million, five hundred and forty-two thousand and six hundred three square meters) as found by the former, or 25,542.603 square meters (twenty-five thousand, five hundred forty-two point six hundred and three square meters) as found by the latter, only shows the unreliability of the original plan sought to be established through Exhibits "6" and "6-A." The Court of Appeals itself so found it to be in its decision of 9 January 1991 because these exhibits did not show that the survey plan was signed by the surveyor. Thus:

Although the trial court said so (decision, p. 4) its basis, which is (original) plan II-13961 (Exhs. 6, 6-A), did not indubitably establish the same. In the first place, said original plan (plan II-13961) does not bear the signature of the surveyor thereof, thereof casting doubt on its genuiness and due execution. . . . 57 (emphasis supplied).

Such doubt gains strength if we consider that if indeed the area embraced therein was that found by the Court of Appeals, i.e., 25,542,603 square meters - with a comma before the last three digits - it would have been physically impossible to finish the survey thereof in only eleven days (9, 10, 12-16, 23, 24, 26, and 27 July 1920). Plainly, the present-day sophisticated survey instruments were not then available. Furthermore, the trial court indicated in its findings of fact that in addition to the four lots covered by OCT No. 3947, there were other large tracts covered by the amended survey plan (Plan II-13961-Amd.), viz.:

[T]hat Plan II-13961-Amd., Sheet no. 1, surveyed for Luis Ribaya, with an area of 489.3649 hectares, located at Magragondong, Ligao, Albay, . . . (Exhibits G, G-1 and G-2 for plaintiff and Exhibits GG, GG-1 and GG-2 for Intervenors); thatPlan II-13961 Amd., Sheet no. 2, surveyed for Luis Ribaya, with an area of608.1373 hectares, located at Magragondong, Ligao, Albay, . . . (Exhibits H, H-1 and H-2 for plaintiff and Exhibits HH, HH-1 and HH-2 for intervenors); 58(emphasis supplied)

The disagreement between the trial court and the Court of Appeals cannot be definitely resolved because no reliable copy of the original Plan II-13961 was presented. Exhibits "6" and "6-A" are a machine copy of the blueprint of the said Plan, which is not the best evidence under Section 3, Rule 130 of the Rules of Court. They are, at most, secondary evidence, which are inadmissible for failure of the offeror to prove any of the exceptions provided therein and to establish the conditions for their admissibility. Even if they are admitted, they have no probative value.

Clearly then, there is absence of factual basis to conclude that the four parcels of land included in OCT No. 3947 are but a part of the land covered by the original plan (Plan II-13961).

WHEREFORE, the petition is GRANTED. The challenged resolution of 24 January 1994 of the respondent Court of Appeals in CA-G.R. CV No. 17351 is SET ASIDE, while its decision therein of 9 January 1991 affirming in toto that of Branch 7 of the Regional Trial Court of Legaspi City of 11 November 1987 in Civil Case No. 6198 is REINSTATED and AFFIRMED.

Costs against the private respondents.

SO ORDERED.

FIRST DIVISION

[G.R. No. L-5246. September 16, 1910. ]

MANUELA GREY ALBA ET AL., Petitioners-Appellants, v. ANACLETO R. DE LA CRUZ, objector-appellee. 

Ramon Salinas, for Appellants. 

Aniceto G. Reyes, for Appellee. 

SYLLABUS

1. REGISTRATION OF LAND; NOTICE TO DEFENDANTS BY DUE PUBLICATION. — In the original proceedings for the registration of land under Act No. 496, the appellee herein was made a party defendant by publication, but was not personally served with notice: Held, That the decree of the Court of

Land Registration is conclusive against him as well as all the world. 

2. ID.; NATURE AND EFFECT OF PROCEEDINGS "IN REM;" DUE PROCESS OF LAW. — The proceedings for the registration of land, under Act No. 496, are in rem, and not in personam. A

proceeding in rem, dealing with a tangible res, may be instituted and carried to judgment without personal service upon the claimants within the State or notice by name to those outside of it. Jurisdiction is secured

by the power of the court over the res. Such a proceeding would be impossible were this not so, for it would hardly do to make a distinction between the constitutional rights of claimants who were known and those who were not known to the plaintiff, when the proceeding is to bar all. (Tyler v. Judges, 175 Mass.,

71; see also People v. Simon, 176 Ill., 165; Pennoyer v. Neff, 95 U. S. 714; The Mary, 9 Cranch, 126; Mankin v. Chandler, 2 Brock (U. S. Circuit), 125; Brown v. Levee Commission, 50 Miss., 468; 2

Freeman, Judgments, 4th ed., secs. 605, 611.) 

3. ID.; PROCEEDINGS "IN REM" AND "IN PERSONAM," DISTINGUISHED. — if the technical object of the suit is to establish a claim against some particular person, with a judgment which generally,

in theory at least, binds his body, or to bar some individual claim or objection, so that only certain persons are entitled to be heard in defense, the action is in personam, although it may concern the right to or

possession of a tangible thing. If, on the other hand, the object is to bar indifferently all who might be minded to make an objection of any sort against the right sought to be established, and if anyone in the world has right to be heard on the strength of alleging facts which, if true, show an inconsistent interest,

the proceeding is in rem. (Tyler v. Judges, 175 Mass., 71.) 

4. ID.; FRAUD; SECTION 38, LAND REGISTRATION ACT; REOPENING, AND MODIFICATION OF DECREES. — By fraud is meant actual fraud, dishonesty of some sort. This meaning should be given to the word "fraud" in section is not sufficient to authorize the Court of Land Registration to reopen a case

and modify its decree. Specific acts intended to deprive and deprive another of his right, or to in some manner injure him, must be alleged and proved. 

5. ID.; ID.; ID. — The question whether any particular transaction shows fraud within the meaning of the word as used in section 38 of the Land Registration Act, will, in each case, be a question of fact.

D E C I S I O N

TRENT, J. :

These petitioners, Manuela, Jose, Juan, and Francisco, surnamed Grey y Alba, are the only heirs of Dona Seguna Alba Clemente and Honorato Grey, deceased. Remedios Grey y Alba, a sister of the petitioners, was married on the 21st day of march, 1903, to Vicente Reyes and died on the 13th of July, 1905, without leaving any heirs except her husband. The four petitioners, as coowners, sought to have registered the following-described property:jgc:chanrobles.com.ph

"A parcel of land situated in the barrio of Talampas, municipality of Baliuag, Province of Bulacan, upon which are situated three houses and one camarin of light material, having a superficial area of 52 hectares, 51 ares, and 22 centares; bounded on the north by the highway (calzada) of Talampas and the lands of Rita Ruiz Mateo; on the east by the lands of the said Rita Ruiz Mateo, Hermenegildo Prado, Policarpo de Jesus, and a stream called Sapang Buslut; on the south by the same stream and the lands of the capellania; and on the west by the stream called Sapang Buslut, and the lands of Vicente de la Cruz, Jose Camacho and Domingo Ruiz Mateo."cralaw virtua1aw library

This parcel of agricultural land is used for the raising of rice and sugar cane and is assessed at $1,000 United States currency. The petition, which was filed on the 18th of December, 1906, was accompanied by a plan and technical description of the above-described parcel of land. 

After hearing the proofs presented, the court entered, on the 12th of February, 1908, a decree in accordance with the provisions of paragraph 6 of section 54 of Act No. 926, directing that the land described in the petition be registered in the names of the four petitioners, as coowners, subject to the usufructuary right of Vicente Reyes, widower of Remedios Grey. 

On the 16th of June, 1908, Anacleto Ratilla de la Cruz filed a motion in the Court of Land Registration

asking for a revision of the case, including the decision, upon the ground that he is the absolute owner of the two parcels of land which are described in said motion, and which, according to his allegations, are included in the lands decreed to the petitioners. He alleged that the decree of February 12, 1908, was obtained maliciously and fraudulently by the petitioners, thereby depriving him of said two parcels of land. He further alleged that he was the absolute owner of the two parcels of land, having inherited them from his father, Baldomero R. de la Cruz, who had a state grant for the same. He therefore asked, under the provisions of section 38 of the Land Registration Act (No. 496), a revision of the case, and that the said decree be modified so as to exclude the two parcels of land described in said motion. The Land Court upon this motion reopened the case, and after hearing the additional evidence presented by both parties, rendered, on the 23d of November, 1908, its decision modifying the former decree b y excluding from the same the two parcels of land claimed by Anacleto Ratilla de la Cruz. From this decision and judgment the petitioners appealed and now insist, first, that the trial court erred in reopening the case and modifying its decree dated the 12th of February, 1908, for the reason that said decree was not obtained by means of fraud; and, second, that the court erred in holding that the two parcels of land described in the appellee’s motion are not their property. 

It was agreed by counsel that the two small parcels now in dispute from a part of the land described in the petition and were included in the decree of February 12, 1908, and that the petitioners are the owners of the remainder of the land described in the said decree. 

The petitioners inherited this land from their parents, who acquired the same, including the two small parcels in question, by purchase, as is evidenced by a public document dated the 26th of November, 1864, duly executed before Francisco Iriarte, alcalde mayor and judge of the Court of First Instance of the Province of Bulacan. 

Baldomero R. de la Cruz, father of the appellee, obtained in March, 1895, a state grant for several parcels of land, including the two parcels in question. This grant was duly inscribed in the old register of property in Bulacan on the 6th of April of the same year. 

It is admitted that at the time the appellants presented their petition in this case the appellee was occupying the two parcels of land no in question. It is also admitted that the name of the appellee does not appear in the said petition as an occupant of the said two parcels. The petitioners insist that the appellee was occupying these parcels as their tenant and for this reason they did not include his name in their petition, as an occupant, while the appellee contends that he was occupying the said parcels as the absolute owner under the state grant by inheritance. 

The court below held that the failure on the part of the petitioners to include the name of the appellee in their petition, as an occupant of these two parcels of land, was a violation of section 21 of Act No. 496, and that this constituted fraud within the meaning of section 38 of said Land Registration Act. The trial court further held that the grant from the state should prevail over the public document of purchase of 1864. 

The mother of the petitioners died on November 15, 1881; their father died prior to that time. Manuela, the oldest of the petitioners, was about six years of age when their mother died. So these children were minors when the father of the appellee obtained the state grant. 

On the 13th of June, 1882, Jose Grey, uncle and representative of the petitioners, who were then minors, rented the land owned by the petitioners’ deceased parents to one Irineo Jose for a period of three years. On the 23d of March, 1895, the said Jose Grey, as the representative of the petitioners, rented the same land for a period of six years to Baldomero R. de la Cruz, father of the appellee. This rental contract was duly executed in writing. This land was cultivated during these six years by Baldomero R. de la Cruz and

his children, one of whom is the appellee. On the 14th of December, 1905, Jose Grey, for himself and the other petitioners, rented the same land to Estanislao R. de la Cruz on entering into this rental contract with Jose Grey did so for himself and his brothers, one of whom is the appellee. While the appellee admits that his father and brother entered into these rental contracts and did, in fact, cultivate the petitioners’ land, nevertheless he insists that the two small parcels in question were not included in these contracts. In the rental contract between the uncle of the petitioners and the father of the appellee the land is not described. In the rental contract between Jose Grey, one of the petitioners, and Estanislao R. de la Cruz, brother of the appellee, the two small parcels of land in question are included, according to the description given therein. This was found to be true by the court below, but the said court held that as this contract was made by Estanislao R. de la Cruz it was not binding upon Anacleto R. de la Cruz, the appellee. 

The two small parcels of land in question were purchased and sale of that year. The same two parcels of land are included in the state grant issued in favor of Baldomero Ratilla de la Cruz in 1895. This grant was obtained after the death of the petitioners’ parents and while they were minors. So it is clear that the petitioners honestly believed that the appellee was occupying the said parcels as their lessee at the time they presented their application for registration. They did not act in bad faith, nor with any fraudulent intent, when they omitted to include in their application the name of the appellee as one of the occupants of the land. They believed that it was not necessary nor required that they include in their application the names of their tenants. Under these circumstances, did the court below commit an error in re-opening this case in June, 1908, after its decree had been entered in February of the same year?

The application for registration is to be in writing, signed and sworn to by the applicant, or by some person duly authorized in his behalf. It is to contain an accurate description of the land. It shall contain the name in full and the address of the applicant, and also the names and addressed of all occupants of land and of all adjoining owners, if known; and, if not known, it shall state what search has been made to find them. In the form of notice given by statute, which shall be sworn to, the applicant is required to state and set forth clearly all mortgages or encumbrances affecting said land, if any, the rights and interests, legal or equitable, in the possession, remainder, reversion, or expectancy of all persons, with their names in full, together with their place of residence and post-office addressed. Upon receipt of the application the clerk shall cause notice of the filing to be published twice in the Official Gazette. This published notice shall be directed to all persons appearing to have an interest in the land sought to be registered and to the adjoining owners, and also "to all whom it may concern." In addition to the notice in the Official Gazette the Land Court shall, within seven days after said publication, cause a copy of the notice, in Spanish, to be mailed by the clerk to every person named in the application whose address is known; to cause a duly attested copy of the notice, in Spanish, to be posted in a conspicuous place on every parcel of land included in the application, and in a conspicuous place on the chief municipal building of the town in which the land is situated. The court may also cause other or further notice of the application to be given in such manner and to such persons as it may deem proper. The certificate of the clerk that he has served the notice as directed by the court by publication or mailing shall be conclusive proof of such service. Within the time allowed in the notices, if no person appears and answers, the court may at once, upon motion of the applicant, no reason to the contrary appearing, order a general default. By the description in the punished notice "to all whom it may concern," and by express provision of law "all the world are made parties defendant and shall be concluded by the default and order." If the court, after hearing, finds that the applicant has title, as stated in his application, a decree of registration shall be entered. 

"Every decree of registration shall bind the land and quiet title thereto, subject only to the exceptions stated in the following section. It shall be conclusive upon and against all persons, including the Insular Government, and all the branches thereof, whether mentioned by name in the application, notice, or citation, or included in the general description ’to all whom it may concern.’ Such decree shall not be opened by reason of the absence, infancy, or other disability of any person affected thereby, nor by any proceedings in any court for reversing judgments or decrees; subject, however, to the right of any person

deprived of land or of any estate or interest therein by decree of registration obtained by fraud to file in the Court of Land Registration a petition for review within one year . . ." (Sec. 38 of Act No. 496.) 

The appellee is not included in any of the exceptions named in section 38 referred to above. 

It will be seen that the applicant is required to mention not only the outstanding interest which he admits but also all claims of interest, though denied by him. By express provision of law all the world are made parties defendant by the description in the notice "to all whom it may concern."cralaw virtua1aw library

Although the appellee, occupying the two small parcels of land in question under the circumstances as we have set forth, was not served with notice, he was made a party defendant by publication; and the entering of a decree on the 12th of February, 1908, must be held to be conclusive against all persons, including the appellee, whether his (appellee’s) name is mentioned in the application, notice, or citation. 

The said decree of February 12, 1908, should not have been opened on account of the absence, infancy, or other disability of any person affected thereby, and could have been opened only on the ground that the said decree had been obtained by fraud. That decree was not obtained by fraud on the part of the applicants, inasmuch as they honestly believed that the appellee was occupying these two small parcels of land as their tenant. One of the petitioners went upon the premises with the surveyor when the original plan was made. 

Proof of constructive fraud is not sufficient to authorize the Court of Land Registration to reopen a case and modify its decree. Specific, intentional acts to deceive and deprive another of his right, or in some manner injure him, must be alleged and proved; that is, there must be actual or positive fraud as distinguished from constructive fraud. 

The question as to the meaning of the word "fraud" in the Australian statutes had been frequently raised. Two distinctions have been noted by the Australian courts; the first is the distinction between the meaning of the word "fraud" in the sections relating to the conclusive effect of certificates of title, and its meaning in the sections relating to the protection of bona fide purchasers from registered proprietors. The second is the distinction between "legal," "equitable," or "constructive" fraud, and "actual" or "moral" fraud. In none of the groups of the sections of the Australian statutes relating to the conclusive effect of certificates of title, and in which fraud is referred to, is there any express indication of the meaning of "fraud," with the sole exception of that of the South Australian group. (Hogg on Australian Torrens Systems, p. 834.) 

"With regard to decisions on the sections relating to the conclusive effect of certificates of title, it has been held in some cases that the ’fraud’ there mentioned means actual or moral fraud, not merely constructive or legal fraud. In other cases ’fraud’ has been said to include constructive, legal, and every kind of fraud. In other cases, again, knowledge of other persons’ rights, and the deliberate acquisition of registered title in the face of such knowledge, has been held to be ’fraud’ which rendered voidable the certificates of title so obtained; and voluntary ignorance is, for this purpose, the same is knowledge. But in none of these three classes of cases was there absent the element of intention to deprive another of just rights, which constitutes the essential characteristics of actual — as distinguished from legal — fraud." (id., p. 835, and cases cited in notes Nos. 85, 86, 87, 88, and 89 at bottom of pages 835 and 836.) 

By "fraud’ is meant actual fraud — dishonesty of some sort. (Judgment of Privy Council in Assets Co. v. Mere Roihi, and Assets Co. v. Panapa Waihopi, decided in March, 1905, cited by Hogg in his Supplementary Addendum to his work on Australian Torrens System, (supra.) The same meaning should be given to the "fraud’ used in section 38 of our statutes (Act No. 496). 

The question as to whether any particular transaction shows fraud, within the meaning of the word as

used in our statutes, will in each case be a question of fact. We will not attempt to say what acts would constitute this kind of fraud in other cases. This must be determined from the facts and circumstances in each particular case. The only question we are called upon to determine, and have determined, is whether or not, under the facts and circumstances in this case, the petitioners did obtain the decree of February 12, 1908, by means of fraud. 

It might be urged that the appellee has been deprived of his property without due process of law, in violation of section 5 of the Act of Congress of July, 1, 1902, known as the "Philippine Bill," which provides "that no law shall be enacted in the said Islands which shall deprive any person of life, liberty, or property without due process of law."cralaw virtua1aw library

The Land Registration Act requires that all occupants be named in the petition and given notice by registered mail. This did not do the appellee any good, as he was not notified; but he was made a party defendant, as we have said, by means of the publication "to all whom it may concern." If this section of the Act is to be upheld this must be declared to be due process of law. 

Before examining the validity of this part of the Act it might be well to note the history and purposes of what is known as the "Torrens Land Registration System." This system was introduced in south Australia by Sir Robert Torrens in 1857 and was there worked out in its practicable form. 

The main principle of registration is to make registered titles indefeasible. As we have said, upon the presentation in the Court of Land Registration of an application for the registration of the title to lands, under this system, the theory of the law is that all occupants, adjoining owners, adverse claimants, and other interested persons are notified of the proceedings, and have a right to appear in opposition to such application. In other words, the proceeding is against the whole world. This system was evidently considered by the Legislature to be a public project when it passed Act No. 496. The interest of the community at large was considered to be preferred to that of private individuals. 

"At the close of this nineteenth century, all civilized nations are coming to registration of title to land, because immovable property is becoming more and more a matter of commercial dealing, and there can be no trade without security." (Dumas’s Lectures, p. 233)

"The registered proprietor will no longer have reasons to fear that he may be evicted because his vendor had, unknown to him, already sold the land to a third person. . . . The registered proprietor may feel himself protected against any defect in his vendor’s title." (Id., p. 21.) 

"The following summary of benefits of the system of registration of titles, made by Sir Robert Torrens, has been fully justified in its use:jgc:chanrobles.com.ph

"First. It has substituted security for insecurity. 

"Second. It has reduced the cost of conveyances from pounds to shillings, and the time occupied from months to days. 

"Third. It has exchanged brevity and clearness for obscurity and verbiage. 

"Fourth. It has so simplified ordinary dealings that he who has mastered the ’three R’s’ can transact his own conveyancing. 

"Fifth. It affords protection against fraud. 

"Sixth. It has restored to their just value many estates., held under good holding titles, but depreciated in consequence of some blur or technical defect, and has barred the reoccurrence of any similar faults." (Sheldon on Land Registration, pp. 75, 76.) 

"The boldest effort to grapple with the problem of simplification of title to land was made by Mr. (afterwards Sir Robert) Torrens, a layman, in South Australia in 1857. . . In the Torrens system title by registration takes the place of ’title by deeds’ of the system under the ’general’ law. A sale of land, for example, is effected by a registered transfer, upon which a certificate of title is issued. The certificate is guaranteed by statute, and, with certain exceptions, constitutes indefeasible title to the land mentioned therein. Under the old system the same sale would be effected by a conveyance, depending for its validity, apart from intrinsic flaws, on the correctness of a long series of prior deeds, wills, etc., . . . The object of the Torrens system, then, is to do away with the delay, uncertainty, and expense of the old conveyancing system." (Duffy & Eagleson on The Transfer of land Act, 1890, pp. 2, 3, 5, 7.) 

"By ’Torrens’ systems generally are meant those systems of registration of transactions with interest in land whose declared object . . . is, under governmental authority, to establish and certify to the ownership of an absolute and indefeasible title to realty, and to simplify its transfer." (Hogg on Australian Torrens System, supra, pp. 1, 2.) 

Compensation for errors from assurance funds is provided in all countries in which the Torrens system has been enacted. Cases of error no doubt will always occur. The percentage of errors, as compared with the number of registered dealings in Australia, is very small. In New South Wales there were, in 1889, 209,894 registered dealings, the average risk of error being only 2 1/2 cents for each dealing. In Queensland the risk of error was only 1 1/2 cents, the number of registered dealings being 233,309. In Tasmania and in Western Australia not a cent was paid for compensation for errors during the whole time of operation, (Dumas’s Lectures, supra, p. 96.) This system has been adopted in various countries of the civilized world, including some of the States of the American Union, and practical experience has demonstrated that it has been successful as a public project. 

The validity of some of the provisions of the statutes adopting the Torrens system has been the subject of judicial decision in the courts of the United States. (People v. Chase, 165 Ill., 527; State v. Guilbert, 56 Ohio St., 575; People v. Simon, 176 Ill., 165; Tyler v. Judges, 175 Mass., 71.) 

Act No. 496 of the Philippine Commission, known as the "Land Registration Act," was copied substantially from the Massachusetts law of 1898. 

The Illinois and Massachusetts statutes were upheld by the supreme courts of those States. 

"it is not enough to show a procedure to be unconstitutional to say that we never heard of it before." (Tyler v. Judges, supra; Hurtado v. California, 110 U. S., 516.) 

"Looked at either from the point of view of history or of the necessary requirements of justice, a proceeding in rem dealing with a tangible res may be instituted and carried to judgment without personal service upon claimants within the State or notice by name to those outside of it, and not encounter any provision of either constitution. Jurisdiction is secured by the power of the court over the res. As we have said, such a proceeding would be impossible, were this not so, for it hardly would do to make a distinction between the constitutional rights of claimants who were known and those who were not known to the plaintiff, when the proceeding is to bar all." (Tyler v. Judges, supra.) 

This same doctrine is annunciated in Pennoyer v. Neff (95 U. S., 714); The Mary (9 Cranch, 126); Mankin v. Chandler (2 Brock., 125); Brown v. Levee Commission (50 Miss., 468); 2 Freeman,

Judgments, 4th ed., secs. 606, 611. 

"If the technical object of the suit is to establish a claim against some particular person, with a judgment which generally, in theory at least, binds his body, or to bar some individual claim or objection, so that only certain persons are entitled to be heard in defense, the action is in personam, although it may concern the right to or possession of a tangible thing. If, on the other hand, the object is to bar indifferently all who might be minded to make an objection of any sort against the right sought to be established, and if anyone in the world has a right to be heard on the strength of alleging facts which, if true, show an inconsistent interest, the proceeding is in rem." (Tyler v. Judges, supra.) 

In the case of Hamilton v. Brown (161 U. S., 256) a judgment of escheat was held conclusive upon persons notified by advertisement to all persons interested. In this jurisdiction, by the provisions of the Code of Civil Proceedings given is by general notice to all persons interested. 

The supreme court of Massachusetts, in the case of Tyler v. Judges (supra), did not rest its judgment as to the conclusive effect of the decree upon the ground that the State had absolute power to determine the persons to whom a man’s property shall go at his death, but upon the characteristics of a proceeding in rem. So we conclude that the proceedings had in the case at bar, under all the facts and circumstances, especially the absolute lack on the part of the petitioners of any dishonest intent to deprive the appellee of any right, or in any way injure him, constitute due process of law. 

As to whether or not the appellee can successfully maintain an action under the provisions of sections 101 and 102 of the Land Registration Act (secs. 2365, 2366, Compilation) we do not decide. 

For these reasons we are of the opinion, and so hold, that the judgment appealed from should be, and the same is hereby reversed and judgment entered in favor of the petitioners in conformity with the decree of the lower court of February 12, 1908, without special ruling as to costs. It is so ordered.

Arellano, C.J., Torres, Johnson, and Moreland, JJ., concur.

SECOND DIVISION

[G.R. No. L-46439. April 24, 1984.]

ANDREA M. MOSCOSO, Petitioner, v. COURT OF APPEALS and MAXIMINA L. MORON,Respondents.

Jesus B. Velasco for Petitioner.

Custodio P. Cañete for Private Respondent.

SYLLABUS

1. REMEDIAL LAW; EVIDENCE; FINDINGS OF FACT OF THE APPELLATE COURT SUPPORTED BY SUBSTANTIAL EVIDENCE MAY NOT BE REVIEWED ON APPEAL BY CERTIORARI; CASE AT BAR. — It is the well-established rule that findings of fact of the Court of Appeals may not be reviewed by the Supreme Court in an appeal by certiorari where such findings are ably supported by substantial evidence on record, the same being binding, final and conclusive (Spouses Dalida v. CA, 117 SCRA 480). Hence, the finding of the appellate court that the power of attorney, was not materially altered before the same was presented to the court below; that it is "more likely that a mistake was committed in the preparation thereof; that the person who typed the document had to make a slight erasure and correction in typing correctly the word "daughter" and that the power of attorney, as corrected, was then given to Pascual Monge and Maximina L. Moron for their signature. As such, the correction cannot be considered a deliberate alteration or falsification as depicted by appellant", is a finding of fact which cannot be disturbed. We agree with the court that said power of attorney is an authentic writing wherein the father, Pascual Monge, voluntarily recognized Maximina L. Moron as his daughter, and since Pascual Monge had the legal capacity to contract marriage at the time of the conception, Maximina is a natural child, entitled to share in the inheritance of the property in question.

2. ID.; JURISDICTION OF COURTS; COURT OF FIRST INSTANCE SITTING AS LAND REGISTRATION COURT, CAN PASS UPON ISSUE OF FILIATION. — Petitioner’s contention that the Court of First Instance, acting as a land registration court, has no jurisdiction to pass upon the issue whether the oppositor is the acknowledged natural child of Pascual Monge, is untenable. We have a number of cases that answer petitioner’s position (citing the ruling in Florentino v. Encarnacion, L-27697, Sept. 30, 1977, 79 SCRA 193, 204-205). In addition, considerations of speedy justice and avoidance of multiplicity of suits impel Us to hold and rule that under the facts of the case at bar, the trial court, acting as a land registration court, may adjudicate the land sought to be registered to either or both of the applicant and oppositor, in whole or in part, based on evidence submitted to the court showing that the party has proper title for registration. (Section 37, Act 496.)

3. ID.; ID.; ISSUE OF WHETHER COURT OF FIRST INSTANCE SHOULD RESOLVE PARTICULAR MATTER IN THE EXERCISE OF ITS GENERAL OR ITS LIMITED JURISDICTION AS A LAND REGISTRATION COURT IS A PROCEDURAL QUESTION; CASE AT BAR. — In any event, as the Supreme Court said in Nicanor T. Santos v. Rosa Ganayo, L-31854, Sept. 9, 1972, 116 SCRA 431, "Whether a particular matter should be resolved by the Court of First Instance in the exercise of its general jurisdiction or of its limited jurisdiction as a special court (Probate, Land Registration, etc.) is in reality not a jurisdictional question. It is in essence a procedural question involving a mode of practice which may be waived." In meeting the issue raised by the oppositor as to her status as an acknowledged natural child as a result of her voluntary recognition appearing in Exhibit "2", the oppositor

(now the petitioner herein) had waived the procedural question and she may not be allowed to raise the same in the present petition.

4. CIVIL LAW; LAND REGISTRATION; PROCEEDINGS ARE IN REM; PERSONAL NOTICE TO ALL CLAIMANTS NOT NECESSARY. — The proceedings for the registration of title to land under the Torrens system is an action in rem, not in personam, hence, personal notice to all claimants of the res is not necessary to give the court jurisdiction to deal with and dispose of the res, and neither may lack of such personal notice vitiate or invalidate the decree or title issued in a registration proceeding, for the State, as sovereign over the land situated within it, may provide for the adjudication of title in a proceeding in rem or in the nature of a proceeding in rem, which shall be binding upon all persons, known or unknown.

5. ID.; FAMILY RELATIONS; PATERNITY AND FILIATION; RECOGNITION OF NATURAL CHILDREN; RETROACTIVE APPLICATION OF ARTICLE 278 OF THE CIVIL CODE; CASE AT BAR. — We have affirmed the ruling of the appellate court that Exhibit "2" which is the power of attorney is an authentic writing wherein the father, Pascual Monge, voluntarily recognized Maximina L. Moron as his daughter, applying the provisions of Article 278, New Civil Code, which provides that recognition shall be made in the record of birth, a will, a statement before a court of record, or in any authentic writing. We apply Article 278, New Civil Code retroactively to the case of Maximina L. Moron although she was born before the effectivity of the New Civil Code in view of the provisions of Article 2260 of the New Civil Code, which states that the voluntary recognition of a natural child shall take place according to this Code, even if the child was born before the effectivity of this body of laws.

6. ID.; ID.; ID.; ID.; REASON. — The reason for giving retroactive effect to Article 2260 is indicated in the Report of the Code Commission, page 169, thus: "The liberalized mode of recognition is in harmony with the aim of the proposed code to do justice to illegitimate children. Hence, its retroactive effect." (See Civil Code Annotated by Padilla, Vol. VII, 1975 Ed., p. 709).

AQUINO, J., concurring:chanrob1es virtual 1aw library

1. CIVIL LAW; PERSONS AND FAMILY RELATIONS; FILIATION; RECOGNITION OF NATURAL CHILDREN; POWER OF ATTORNEY, AN AUTHENTIC WRITING TO EFFECT RECOGNITION. — Only Maxima Lanuncia Moron can be considered Pascual’s acknowledged natural child because of the power of attorney which he had executed in 1945 in her favor. it is a "documento publico" within the meaning of Article 131 of the old Code. Pascual M. Monge’s estate is governed by Articles 840 and 942 of the old Civil Code under which each acknowledged natural child is entitled to one-half portion pertaining to each of the legitimate children who have not received any betterment.

D E C I S I O N

GUERRERO, J.:

Petition for review on certiorari of the decision of the defunct Court of Appeals 1 (now the Intermediate Appellate Court) in C.A.-G.R. No. 52187-B entitled "Application for Land Registration Under Act No. 496 — Andrea M. Moscoso, applicant-appellant versus Maximina L. Moron, Et Al., oppositors-appellees" which affirmed the judgment of the Court of First Instance of Tacloban City in Land Registration Case No. N-134.

Sometime on March 22, 1966, petitioner applied for land registration of a 1,147 square meters residential lot situated in the poblacion of the municipality of Palo, province of Leyte, bounded and described in Survey Plan Psu-54699 of the then General Land Registration Office as verified and approved under date June 16, 1927. Her application substantially stated that petitioner is the owner in fee simple of the land and improvements thereon as her acquisition by inheritance from her father, the late Pascual Monge y Vigera who died on June 9, 1950, and that the same parcel of land is her share in a partial partition of estate she and her brothers and sisters executed on May 22, 1964 at Palo, Leyte (Exhibit "K"); that she and her predecessors in interest have been in continuous, public, actual and adverse possession of the land applied for since time immemorial until the present; that at the last assessment for taxation, said lot was assessed in her name under Tax Declaration No. 28260 dated May 24, 1964 (Exhibit "H") and that the taxes are fully paid up to the current year; that to the best of her knowledge and belief, there is no incumbrance or any kind whatsoever affecting said land nor any other person having interest therein, legal or equitable, in possession, remainder, reversion or expectancy; and that the land is now being rented by lessees of the applicant, namely, Angel Encenares, Olanda Bribe, Timoteo Noblejas, Felisa Adre, Celestina Solana, Baltazar Collado, all of Palo, Leyte.

After due publication of the Notice of Initial Hearing of the petition in the Official Gazette, Vol. 62, Nos. 46 and 47, issues dated November 14 and 21, 1966 (Exhibit "C"), only the Highway District Engineer of Leyte as public oppositors, and Concordia Lanuncia, Flaviano L. Marchadesch, Jr., and herein private respondent Maximina L. Moron as private oppositors appeared for the initial hearing before the trial court.

The trial court summarily dismissed the opposition of the Highway District Engineer who merely sought to secure a reservation for a road right-of-way in favor of the national government in view of petitioner’s willingness to annotate the same on the certificate of title which might issue. The opposition of the private parties thus remained.

The written opposition substantially allege that they, including one Mrs. Apolonia L. Marchadesch who died in 1963 and survived by her only issue, oppositor Flaviano L. Marchadesch, are the illegitimate children of the late Zenona Lanuncia and the recognized natural children of the late Pascual Monge who died in 1950 and father of applicant Andrea M. Moscoso; that the late Zenona Lanuncia, from the age of three, became a protegee of the late spouses, Saturnino Monge and Isidra Vigera Monge, legitimate parents of Pascual Monge and Juan Monge, now deceased; that Isidra Vigera Monge was the original owner of the parcel of land applied for; that Isidra Monge, long before she died on April 15, 1915, and after Pascual Monge legally got married to the mother of the applicant and brother and sisters, and in order to provide a home and subsistence to the oppositors, their sister and mother, all of which are girls, effected a verbal partition of her lands with her sons, Pascual, Juan and with the herein oppositor, who were already at their teens, which, by virtue of said partition, the land herein applied for registration passed to the hands of the oppositors for their home; that the oppositors have no knowledge that this parcel of land forms part of the inheritance of the applicant and of a partial partition among the applicant and her brother and sisters; that the oppositors have, if not legal, an equitable title to the land as judged from the circumstances surrounding the oppositors’ case; they deny the allegation that applicant and her predecessors in interest have been in continuous, public, actual and adverse possession of the land from time immemorial, the truth being that the oppositors exercised exclusive dominion over the land and are in actual and continuous possession over it from time immemorial to the present and that should the verbal partition effected before the death of Isidra Vigera Monge in 1915 being insufficient to pass title to the oppositor, then by virtue of acquisitive prescription caused by the open, continuous, uninterrupted, peaceful and adverse possession in favor of oppositors, they are entitled to the land invoking the benefits of Chapter VIII of Commonwealth Act No. 141. 2 

Upon the termination of the hearing on the merits, the Hon. Jesus N. Borromeo, then Presiding Judge of

the CFI, Tacloban City, rendered his decision dated December 22, 1971, directing that the title over the land should not be registered exclusively in the name of the applicant since "it has been overwhelmingly established by them (the private oppositors) that they and their sister Apolonia, who died in 1963, are the children of Zenona Lanuncia and Pascual Monge resulting from the relations between the two prior to the marriage of the latter with Guadalupe Oliver, mother of herein petitioner and her brothers, Elpidio, Salvador, Remedios, Ruperto, and Abelardo (deceased), all surnamed Monge." 3 Hence, the judgment decreed:jgc:chanrobles.com.ph

"IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered ordering the registration of title over the parcel of land situated in the poblacion of the municipality of Palo, Province of Leyte, as described in the Plan Psu-54699, Exhibit "E", and the technical description Exhibit "F", in the name of the co-ownership of: (1) Andrea M. Moscoso, Filipino citizen, of legal age, married to Salvador Moscoso, with postal address at Bugasong, Antique for three-fourth (3/4) share; (2) Concordia Lanuncia, Filipino citizen, of legal age, single, and a resident of Palo, Leyte, for one-twelfth (1/12) share; (3) Maximina L. Moron, Filipino citizen, of legal age, married, and a resident of Palo, Leyte, for (1/12) share; and, (4) Flaviano L. Marchadesch, Jr., son of the late Apolonia L. Marchadesch, for one-twelfth (1/12) share, subject to a reservation of a road right-of-way in favor of the Government of the Republic of the Philippines.

After this judgment shall have become final, let the corresponding decree of registration be issued.

SO ORDERED." 4 

The trial court ruled that the verbal donation made by Isidra Vigera Vda. de Monge in favor of Zenona Lanuncia and the latter’s daughters by Pascual Monge because they are of weaker sex, was ineffectual to transmit title of ownership over the land in question and that their adverse claim of ownership even under extraordinary prescription of over thirty years could not favor them because such claim is disputable due to their failure to declare the property for tax purposes in their name after the death of Isidra Monge.

The trial court, however, gave significant weight to the carbon copy of a power of attorney executed and signed by the late Pascual Monge on February 11, 1945 (Exhibit "2", "2-A" to "2-C) in favor of Maximina L. Moron, wherein he stated that Maximina is his daughter and appointed her as his Attorney-in-Fact to transact with the United States Armed Forces in the Philippines in his behalf for the collection of rentals and other war damage claims due and payable to him. The court ruled that the power of attorney was an authentic writing wherein Maximina Lanuncia was voluntarily recognized as the daughter of Pascual Monge. As found by the trial court thus,

"Precisely, it would appear that, in his power of attorney executed on February 11, 1945 in favor of Maximina L. Moron, Exhibit "2", Pascual Monge stated that Maximina is his daughter. The contention of petitioner that said power of attorney was fraudulently altered in order to insert therein the words `my daughter . . .’ does not seem to be well-taken because, from an examination of the document, the Court does not notice concrete indications of alteration having been made in order to suit the ends of the herein oppositors.

"Thus, the Court is of the view that the late Pascual Monge, who had no impediment to marry Zenona Lanuncia when Maximina was conceived (Art. 119, Old Civil Code; Art. 269, New Civil Code) had voluntarily recognized Maximina Lanuncia Moron as his child when in his power of attorney executed on February 11, 1945, he mentioned her as his daughter . . .’ 5 

Petitioner assailed the Court’s decision in his motion for reconsideration, contending that the disposition of the estate should be governed by the Old Civil Code (Spanish Civil Code of 1889) since he died on

June 9, 1950 while the New Civil Code took effect only on August, 1950; that assuming that the New Civil Code applies in the case at bar, the power of attorney (Exhibit "2") is not an authentic document to support voluntary recognition because the words "my daughter" reveals a clear sign of erasure and is a product of falsification as presented in the rebuttal testimony of her brother Elpidio Monge and that said document is not even a public document because it was merely acknowledged by the Municipal Mayor of Palo, Leyte who had no authority to authenticate writings as public documents which could be done only by a notary public.

Acting upon the aforesaid motion for reconsideration, the Court modified its decision in the Order dated May 25, 1972 with the following dispositive portion:jgc:chanrobles.com.ph

"IN VIEW OF THE FOREGOING, the judgment of December 22, 1971 is hereby amended in the sense that the Court hereby orders the registration of title over the parcel of land situated in the poblacion of the municipality of Palo, Province of Leyte, as described in the Plan Psu-54699, Exhibit "E", and the technical description Exhibit "F" in the name of the co-ownership of (1) Andrea M. Moscoso, Filipino citizen, of legal age, married to Salvador Moscoso, with postal address at Bugasong, Antique, for 13/14 share; and (2) Maximina L. Moron for 1/14 share, subject to the reservation of a road right-of-way in favor of the government of the Philippines.

After this judgment shall have become final, let the corresponding decree of registration be issued.

SO ORDERED."cralaw virtua1aw library

Not satisfied with the amended judgment, petitioner elevated the case to the defunct Court of Appeals which affirmed the judgment of the lower court. Hence, the instant petition before Us.

Petitioner assigns practically the same errors allegedly committed by the trial court which were presented before the respondent Court of Appeals, to wit:chanrob1es virtual 1aw library

I The lower court erred in holding that Pascual Monge voluntarily recognized Maximina Lanuncia Moron as his natural child by virtue of the power of attorney (Exhibit "2") executed by him in favor of the latter.

II. The lower court erred in holding that said power of attorney (Exhibit "2") is not materially altered when in fact it was erased to suit the ends of the oppositors.

III. The lower court erred in appreciating said power of attorney (Exhibit "2") as a public document.

IV. The lower court erred in making judicial pronouncements that Maximina Lanuncia Moron as the acknowledged natural child of Pascual Monge conferring upon her legal right to inherit from the whole estate of the late Pascual Monge who died on June 9, 1950 when her claim over the land subject of this land registration proceeding is that it was given to their mother Zenona Lanuncia by Isidra Vigera and for their long continuous possession acquired the same by acquisitive prescription.

V. The lower court erred in making judicial pronouncement of recognition without a formal complaint, hearing on the merit and neither has Maximina Lanuncia Moron the status of a continuous possession of a natural child.

VI. The lower court erred in ordering the registration of the land applied for registration in favor of the applicant, Andrea M. Moscoso, only 13/14 share and to oppositor Maximina Lanuncia Moron 1/14 share in co-ownership.

The principal or decisive issue to be resolved herein is whether or not oppositor-appellee Maximina L. Moron had been acknowledged by her illegitimate father, Pascual Monge (now deceased) in view of which, as held by the trial court and affirmed by the respondent appellate court, being an acknowledged natural daughter, she would be entitled to 1/14 share in the land in question as her inheritance. In resolving this issue, We are guided and must comply with the well-established rule that findings of fact of the Court of Appeals may not be reviewed by the Supreme Court in an appeal by certiorari where such findings are ably supported by substantial evidence on record, the same being binding, final and conclusive. 6 

Hence, the finding of the appellate court that the power of attorney, Exhibit "2", was not materially altered before the same was presented to the court below; that it is "more likely that a mistake was committed in the preparation thereof; that the person who typed the document had to make a slight erasure and correction in typing correctly the word "daughter" and that the power of attorney, as corrected, was then given to Pascual Monge and Maximina L. Moron for their signature. As such, the correction cannot be considered a deliberate alteration or falsification as depicted by appellant", is a finding of fact which cannot be disturbed. We agree with the court that said power of attorney is an authentic writing wherein the father, Pascual Monge, voluntarily recognized Maximina L. Moron as his daughter, and since Pascual Monge had the legal capacity to contract marriage at the time of the conception, Maximina is a natural child, entitled to share in the inheritance of the property in question.

It may be so as argued by the petitioner that where the findings of the Court of Appeals are contrary to those of the trial court, a minute scrutiny by the Supreme Court is in order and resort to the duly proven evidence becomes necessary, citing Gonzales v. CA, G.R. No. 37453, May 25, 1979, 90 SCRA 183 and cases cited therein. We have in fact noted that the trial court found no alteration in the power of attorney, Exhibit "2", when it ruled that "from an examination of the document, the court does not notice concrete indication of alteration having been made therein in order to suit the ends of the herein oppositor." (Decision, pp. 21-22, Record on Appeal), whereas respondent appellate court held that" (w)e find it more likely that a mistake was committed in the preparation of the power of attorney that the person who typed the document had to make a slight erasure and correction in typing correctly the word "daughter" and that the power of attorney, as corrected was then given to Pascual Monge and Maximina L. Moron for their signature. As such, correction cannot be considered a deliberate falsification, as depicted by appellant." (CA Decision, p. 8)

We have indeed scrutinized minutely the documentary evidence in question, Exhibit "2", as We have ordered the elevation of the original records before Us. We affirm the holding of the appellate court that "What clearly appears to be the case, upon clear examination, is that there is no erasure of the portion whereon "my" was typed. If, really, such 14-letter word was erased and in lieu thereof the word "daughter" was typed or superimposed, the erasure would be very noticeable and visible as the word "daughter", which is shorter by six letters, cannot fully cover the space occupied by "administratrix." This could be easily seen by the naked eye when the document, as in the instant case, was executed more than 25 years ago and has turned yellow with age. But this is not the case." There is no inconsistency between the two findings of the trial and appellate courts. Both support the authenticity of the document in ruling that there was no deliberate falsification, which We uphold.

Petitioner’s contention that the Court of First Instance, acting as a land registration court, has no jurisdiction to pass upon the issue whether the oppositor is the acknowledged natural child of Pascual Monge, is untenable. We have a number of cases that answer petitioner’s position. Thus, in the case of Florentino v. Encarnacion, G.R. No. L-27697, Sept. 30, 1977, 79 SCRA 193, 204-205, We ruled:jgc:chanrobles.com.ph

"Petitioner-appellants’ third assignment of error is not well-taken. Firstly, the otherwise rigid rule that the

jurisdiction of the Land Registration Court, being special and limited in character and proceedings thereon summary in nature, does not extend to cases involving issues properly litigable in other independent suits or ordinary civil actions, has time and again been relaxed in special and exceptional circumstances. (See Government of P.I. v. Serafica, 61 Phil. 93 (1934); Caoibes v. Sison, 102 Phil. 19 (1957); Luna v. Santos, 102 Phil. 588 (1957); Cruz v. Tan, 93 Phil. 348 (1953); Gurbax Singh Pabla and Co. v. Reyes, 92 Phil. 117 (1952)). From these cases, it may be gleaned and gathered that the peculiarity of the exceptions is based not alone on the fact that the Land Registration Courts are likewise the same Courts of First Instance, but also the following premises: (1) Mutual consent of the parties or their acquiescence in submitting the aforesaid issues for the determination by the court in the registration proceedings; (2) Full opportunity given to the parties in the presentation of their respective sides of the issues and of the evidence in support thereto; (3) Consideration by the court that the evidence already of record is sufficient and adequate for rendering a decision upon these issues. (Aglipay v. De Los Reyes, L-12776, March 23, 1960) . . ."cralaw virtua1aw library

Upon a scrutiny of the proceedings in the trial court, We find that petitioner filed a Motion for New Trial and/or Reconsideration wherein she assailed the ruling of the trial court that based upon Exhibit "2", the power of attorney, the oppositor was an acknowledged natural child of the late Pascual Monge and entitled to a portion of the land subject of the land registration proceedings. She claimed that the document was not authentic and not a public document. In effect, petitioner acquiesced in submitting the issue as to the status of the oppositor as an acknowledged natural child entitled to successional rights and had the full opportunity to dispute the authenticity of the document in question as in fact, applicant’s brother, Elpidio Monge, gave rebuttal testimony to support petitioner’s theory that the document was a product of a falsification, which the trial court did not believe. Moreover, the court considered and deemed the evidence already of record sufficient and adequate for rendering a decision upon the issue thus raised. In doing so, We find no abuse of discretion committed by the trial court.

In addition, considerations of speedy justice and avoidance of multiplicity of suits impel Us to hold and rule that under the facts of the case at bar, the trial court, acting as a land registration court, may adjudicate the land sought to be registered to either or both of the applicant and oppositor, in whole or in part, based on evidence submitted to the court showing that the party has proper title for registration. (Section 37, Act 496.)

In any event, as the Supreme Court said in Nicanor T. Santos v. Rosa Ganayo, L-31854, Sept. 9, 1972, 116 SCRA 431, "Whether a particular matter should be resolved by the Court of First Instance in the exercise of its general jurisdiction or of its limited jurisdiction as a special court (Probate, Land Registration, etc.) is in reality not a jurisdictional question. It is in essence a procedural question involving a mode of practice which may be waived." In meeting the issue raised by the oppositor as to her status as an acknowledged natural child as a result of her voluntary recognition appearing in Exhibit "2", the oppositor (now the petitioner herein) had waived the procedural question and she may not be allowed to raise the same in the present petition.chanroblesvirtualawlibrary

The proceedings for the registration of title to land under the Torrens system is an action in rem, not in personam, hence, personal notice to all claimants of the res is not necessary to give the court jurisdiction to deal with and dispose of the res, and neither may lack of such personal notice vitiate or invalidate the decree or title issued in a registration proceeding, for the State, as sovereign over the land situated within it, may provide for the adjudication of title in a proceeding in rem or in the nature of a proceeding in rem, which shall be binding upon all persons, known or unknown. (City of Manila v. Lack Et. Al., 19 Phil. 324, 337; Roxas v. Enriquez, 29 Phil. 31; Director of Lands v. Roman Catholic Archbishop of Manila, 41 Phil. 120; Aguilar v. Caogdan, 105 Phil. 661).

Under the above doctrine, petitioner’s assailment that `(t)he judicial pronouncement (referring to the

holding that the oppositor Maximina L. Moron is the acknowledged natural child of Pascual Monge) which will become conclusive and far-reaching and in effect binds the other heirs of Pascual Monge consisting of the brothers and sisters as well as the nephews and nieces of the petitioner who are not parties in this proceedings," is untenable.

Earlier, We have affirmed the ruling of the appellate court that Exhibit "2" which is the power of attorney is an authentic writing wherein the father, Pascual Monge, voluntarily recognized Maximina L. Moron as his daughter, applying the provisions of Article 278, New Civil Code, which provides that recognition shall be made in the record of birth, a will, a statement before a court of record, or in any authentic writing. We apply Article 278, New Civil Code retroactively to the case of Maximina L. Moron although she was born before the effectivity of the New Civil Code in view of the provisions of Article 2260 of the New Civil Code, which states:jgc:chanrobles.com.ph

"Art. 2260. The voluntary recognition of a natural child shall take place according to this Code, even if the child was born before the effectivity of this body of laws."cralaw virtua1aw library

The reason for giving retroactive effect to Article 2260 is indicated in the Report of the Code Commission, page 169, thus: "The liberalized mode of recognition is in harmony with the aim of the proposed code to do justice to illegitimate children. Hence, its retroactive effect." (See Civil Code Annotated by Padilla, Vol. VII, 1975 Ed., p. 709)

In Caridad Cruz Vda. de Sy-Quia v. Court of Appeals and Jose Pedro Reynaldo Sy-Quia, G.R. No. 62283, Nov. 25, 1983, the Supreme Court squarely held:jgc:chanrobles.com.ph

". . . Article 2260 of (the Civil Code of the Philippines) provides that `the voluntary recognition of a natural child shall take place according to this Code, even if the child was born before the effectivity of this body of laws’ or before August 30, 1950. Hence, Article 278 may be given retroactive effect (p. 169, Report of the Code Commission, 7 Padilla, Civil Code, 1975 Ed., p. 709)."cralaw virtua1aw library

Under the Spanish Civil Code of 1889, an acknowledged natural child is entitled to . . . "3. To receive the hereditary portion determined by this Code." (Article 134). This hereditary portion is fixed under Article 840 which states:jgc:chanrobles.com.ph

"Art. 840. When the testator leaves legitimate children or descendants, and also natural children, legally acknowledged, each of the latter shall be entitled to one-half of the portion pertaining to each of the legitimate children who have not received any betterment, provided that it may be included within the freely disposable portion, from which it must be taken, after the burial and funeral expenses have been paid."cralaw virtua1aw library

The same share which is one-half of the legitime of each of the legitimate children or descendants is given to each of the acknowledged natural children under Article 895 of the New Civil Code, which reads:jgc:chanrobles.com.ph

"Art. 895. The legitime of each of the acknowledged natural children and each of the natural children by legal fiction shall consist of one-half of the legitime of each of the legitimate children or descendants."cralaw virtua1aw library

The final adjudication made by the trial court in its Order dated May 25, 1975 (affirmed by the Court of Appeals) directed the registration of the land in question in the name of the co-ownership of petitioner Andrea M. Moscoso for 13/14 share and Maximina L. Moron, the oppositor, for 1/14 share in view of the court’s realization that no documentary evidence was presented to prove that the other oppositors,

Concordia Lanuncia and Apolonia Lanuncia (deceased) and mother of oppositor Flaviano Marchadesch, Jr. were acknowledged by Pascual Monge. In the interest of justice, We must modify the above sharing in order to give the legal share of the oppositor as an acknowledged natural child.

Since there are six (6) legitimate children including the petitioner Andrea M. Moscoso who had previously acquired the shares of her five (5) co-heirs, and one (1) acknowledged natural child, the oppositor Maximina L. Moron, herein private respondent who is entitled to one-half (1/2) the share of each of the legitimate children (Article 840, Spanish Civil Code; Article 895, New Civil Code), the proper sharing should be 12/13 to Andrea M. Moscoso and 1/13 to Maximina L. Moron.chanrobles virtualawlibrary chanrobles.com:chanrobles.com.ph

WHEREFORE, IN VIEW OF THE FOREGOING, the decision appealed from is hereby MODIFIED in the sense that the adjudication of the land subject of the land registration proceedings shall be in the co-ownership of petitioner-applicant Andrea M. Moscoso for 12/13 share and to oppositor private respondent Maximina L. Moron for 1/13 share. In all other aspects, the decision appealed from is hereby AFFIRMED. Costs against petitioner.

SO ORDERED.

Makasiar, Concepcion, Jr., De Castro and Escolin, JJ., concur.

Abad Santos, J., took no part.

THIRD DIVISION

[G.R. NO. 148846 : September 25, 2007]

CECILIA AMODIA VDA. DE MELENCION, VENERANDA AMODIA, FELIPE AMODIA, EUTIQUIO AMODIA and GO KIM CHUAN, Petitioners, v. HONORABLE COURT OF

APPEALS and AZNAR BROTHERS REALTY COMPANY, Respondents.

D E C I S I O N

NACHURA, J.:

Before this Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Civil Procedure seeking the reversal of the Court of Appeals (CA) Decision2 dated March 30, 2001 and praying that the Decision3 of the Regional Trial Court (RTC) of Lapu-Lapu City, dated February 18, 1993, be upheld.

The Facts

The subject property is a 30,351 square meter parcel of land (subject property) particularly denominated as Lot No. 3368, located at Suba-basbas, Marigondon, Lapu-Lapu City, Cebu, and part of a total area of 30,777 square meters covered by Transfer Certificate of Title (TCT) No. 206264(entire property) in the name of the late petitioner Go Kim Chuan (Go Kim Chuan).5

The entire property was originally owned by Esteban Bonghanoy6 who had only one child, Juana Bonghanoy-Amodia,7 mother of the late Leoncia Amodia and petitioners Cecilia Amodia Vda. de Melencion, Veneranda Amodia, Felipe Amodia, and Eutiquio Amodia8 (the Amodias). The entire property was brought under the operation of the Torrens System.9 However, the title thereto was lost during the Second World War.

On July 10, 1964, the Amodias allegedly executed an Extra-Judicial Partition of Real Estate with Deed of Absolute Sale10 whereby they extra-judicially settled the estate of Esteban Bonghanoy and conveyed the subject property to respondent Aznar Brothers Realty Company (AZNAR) for a consideration of P10,200.00. On August 10, 1964, the said Extra-Judicial Partition of Real Estate with Deed of Absolute Sale was registered under Act 334411 as there was no title on file at the Register of Deeds of Lapu-Lapu

City (Register of Deeds). Thereafter, AZNAR made some improvements and constructed a beach house thereon.

On February 18, 1989, petitioners Cecilia Amodia Vda. de Melencion, Veneranda Amodia, Felipe Amodia and Eutiquio Amodia12 (petitioners Amodias) executed a Deed of Extra-Judicial Settlement with Absolute Sale,13 conveying the subject property in favor of Go Kim Chuan for and in consideration of P70,000.00. The lost title covering the subject property was reconstituted pursuant to Republic Act (RA) No. 26.14 A reconstituted title particularly designated as Original Certificate of Title (OCT) No. RO-2899 was issued in the name of Esteban Bonghanoy15 and, subsequently, a derivative title (TCT No. 20626) was issued in the name of Go Kim Chuan on December 1, 1989. Thereafter, Go Kim Chuan exercised control and dominion over the subject property in an adverse and continuous manner and in the concept of an owner.

On February 14, 1990, AZNAR wrote a letter16 to petitioners Amodias asking the latter to withdraw and/or nullify the sale entered into between them and Go Kim Chuan. On the same date, a Notice of Adverse Claim17 was annotated by AZNAR on TCT No. 20626. Because petitioners did not heed AZNAR's demand, on April 25, 1990, AZNAR filed a case against petitioners Amodias and Go Kim Chuan for Annulment of Sale and Cancellation of TCT No. 2062618 alleging that the sale to Go Kim Chuan was an invalid second sale of the subject property which had earlier been sold to it. Petitioners Amodias denied that they executed the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale in favor of AZNAR, claiming that their purported signatures thereon were forged.19 Trial on the merits ensued.

The RTC's Decision

On February 18, 1993, the RTC dismissed AZNAR's complaint and declared Go Kim Chuan as the real owner of the subject property. The RTC ratiocinated that the signatures of the Amodias in the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale executed in favor of AZNAR were found by the document examiner of the Philippine Constabulary (PC) Crime Laboratory to be forged, thus, the said deed did not convey anything in favor of AZNAR. Moreover, the subject property had been brought under the Land Registration Act; hence, all transactions involving the same should have complied with the said law. Finally, the RTC held that AZNAR failed to show that Go Kim Chuan acquired the subject property in bad faith.

Aggrieved, AZNAR appealed the RTC Decision to the CA.20

The CA's Decision

On March 30, 2001, the CA rendered a Decision holding that the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale executed by the Amodias in favor of AZNAR was registered ahead of the Deed of Extra-Judicial Settlement with Absolute Sale in favor of Go Kim Chuan, thus, pursuant to Article 1544 of the New Civil Code, the former deed should be given preference over the latter; that AZNAR's adverse claim was annotated earlier than the execution of the Deed of Extra-Judicial Settlement with Absolute Sale in favor of Go Kim Chuan; hence, the latter should have respected said adverse claim and should have made inquiries as to possible defects that may exist in the title over the subject property; and that in the absence of a final determination by a court of proper jurisdiction on the alleged forged signatures of the Amodias in the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale, the finding of the document examiner was insufficient for the RTC to rule in favor of the petitioners.

The CA disposed of the case in this wise:

WHEREFORE, premises considered, the assailed decision dated February 18, 1993 of the Regional Trial Court of Lapu-Lapu City, Branch 27, in Civil Case No. 2254-L is hereby REVERSED and SET ASIDE and a new one is hereby entered as follows:

(1) Declaring plaintiff-appellant Aznar Brothers Realty Company as the real owner of the land in question;

(2) Declaring both the Deed of Extra-judicial Settlement with Absolute Sale dated February 1, 1989 executed by Felipe Amodia, Cecilia Amodia, Veneranda A. Ibag and Eustaquio Amodia in favor of Go Kim Chuan and the Transfer Certificate of Title No. 20626 in the name of Go Kim Chuan as NULL AND VOID;

(3) Ordering Go Kim Chuan to deliver to the aforesaid plaintiff-appellant the possession of the land in question and to execute a registrable deed of conveyance of the subject property to the said plaintiff-appellant.

No costs.

SO ORDERED.21

Petitioners filed a Motion for Reconsideration22 which the CA denied in its Resolution23 dated June 5, 2001.

Hence, this Petition based on the following grounds:

I

Lot 3368 was already a registered land under Act 496, thus, the registration by respondent of the Deed of Sale in 1964 under Act 3344 produces no legal effect whatsoever;

II

Even assuming arguendo that the lot in question was duly registered under Act 3344 as an unregistered land, it is without prejudice to better rights and the provision of Article 1544 of the New Civil Code would be inapplicable;

III

The Honorable Court of Appeals erred in holding that an adverse claim was already existing at the time the subject land was sold to petitioner Go Kim Chuan; on the contrary, the latter had purchased the said land in good faith and for value, without notice of any fact that would reasonably impel a closer inquiry as to the possibility of a defect in the vendor's title; and

IV

The Court of Appeals has misapplied the case of Heirs of Severa Gregorio v. CA, 300 SCRA 565, cited in support of its ruling that the court a quo committed error in appreciating the testimony of an expert witness as to the forgery of the first Deed of Sale.24

In its Comment25 dated September 18, 2001, AZNAR argued, among others, that the Petition is dismissible because the Verification and Certification of Non-forum Shopping were not signed by all the petitioners, invoking this Court's Decision in the case of Loquias v. Office of the Ombudsman,26and that the same were signed only by one April Socorro Go, daughter of the late Go Kim Chuan, who did not even appear to be authorized to file the instant case in behalf of the other petitioners.

In their Reply27 dated October 22, 2001, petitioners contended that April Socorro Go is one of the legitimate children and an heir of the late Go Kim Chuan and, as such, she has personal knowledge of the truth of the facts alleged in the Petition. Petitioners submitted that they substantially complied with the Rules of Court by attaching the required Verification and Certification of Non-Forum Shopping and since the same are required simply to facilitate and promote the orderly administration of justice, compliance therewith should not be imposed with absolute literalness.

On December 19, 2001, petitioners, through counsel, filed a Motion28 for Leave to Admit Amended Petition29 for Review on Certiorari (Amended Petition). Petitioners manifested that they were seeking to correct a defect in the designation of parties and prayed that the Heirs of Go Kim Chuan, namely, Estrella S. Go, Sonia Beth Go-Reynes, Daryl Go, and April Socorro Go be impleaded as petitioners instead of the earlier designated petitioners, Cecilia Amodia Vda. de Melencion, Veneranda Amodia, Felipe Amodia, Eutiquio Amodia, and Go Kim Chuan. Counsel for petitioners admitted that he inadvertently included the petitioners Amodias in the initial Petition for Review on Certiorari (Original Petition), as they were parties before the RTC and CA. The counsel also manifested that he was only representing the Heirs of Go Kim Chuan in this case. Lastly, he claimed that other than the substitution of the original petitioners, both the Original Petition and Amended Petition uniformly raised the same issues and should be given due course in the greater interest of justice and that the instant Motion was not interposed for delay.

Per directive of the Court,30 AZNAR filed its Comment31 on the said motion wherein AZNAR manifested that it had no serious objection to the admission of the Amended Petition if the same was intended merely to implead the Heirs of Go Kim Chuan as petitioners. However, AZNAR interposed strong opposition to the Amended Petition's admission since the names of the petitioners Amodias were deleted without their written consent.

In their Reply,32 the Heirs of Go Kim Chuan, through counsel, claimed that petitioners Amodias were excluded from the Amended Petition because they can no longer be located despite diligent efforts exerted by counsel. The counsel claims that after the rendition of the assailed CA Decision, he sent several letters to petitioners Amodias but they did not reply; hence, the Heirs of Go Kim Chuan, left with no choice, filed the instant case before this Court on their own.

The Court issued a Resolution33 dated September 16, 2002 giving due course to the Petition and requiring the parties to submit their respective Memoranda.

In their Memorandum,34 petitioners Heirs of Go Kim Chuan reiterate the same issues raised in the Original Petition and the Amended Petition. They argue that Act 3344 only refers to transactions affecting lands or interests therein not previously registered under the Spanish Mortgage Law or under the Torrens system; that if AZNAR could not have registered the sale in 1964 under Act 496 because the title over the subject property was lost, AZNAR should have availed itself of the remedy of reconstitution; that registration under Act 3344 is without legal effect and could not operate as constructive notice to petitioners and third persons, hence, may not be used as basis for the application of Art. 1544 of the New Civil Code; that the Notice of Adverse Claim of AZNAR was annotated on TCT No. 20626 only on February 14, 1990 after the execution of the Deed of Extra-Judicial Settlement with Absolute Sale in favor of Go Kim Chuan on February 18, 1989, hence, the CA erred when it held that Go Kim Chuan was not a buyer in good faith for supposedly having knowledge of such adverse claim; and that the doctrine laid down in Heirs of Severa Gregorio v. CA35 is inapplicable since it referred to a case wherein the original copy of the document under review was not produced in evidence while in the instant case, the original copy of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale executed by the Amodias in favor of AZNAR was presented before the trial court judge.

On the other hand, in its Memorandum,36 AZNAR maintains that the Original Petition is dismissible because the Verification and Certification of Non-Forum Shopping thereof were not signed by all the petitioners. AZNAR further claims that the Amended Petition was filed in order to cure a fatal defect which should not be countenanced by this Court. AZNAR also contends that Go Kim Chuan was a buyer in bad faith as he had prior constructive notice that the subject property was sold to AZNAR because the sale was registered with the Register of Deeds under Act 3344; that the 1964 sale was registered under Act 3344 because the subject property was not actually covered by a Torrens title at the time; that there was no other mode of registration except under Act 3344; that Go Kim Chuan had to wait for the reconstitution of the lost title, hence, it could not be said that he examined any certificate of title and could feign ignorance of the sale in favor of AZNAR; that the second sale did not transfer the subject property to Go Kim Chuan since it was no longer within the vendors' power to convey; that with respect to the issue of forgery, the finding of the document examiner is not conclusive; and that such issue was belied by petitioner Veneranda Amodia herself when she declared that the negotiated sale in 1964 between AZNAR and the Amodias was not consummated because the latter did not receive the full consideration for the subject property.

Before resolving the main issues raised, the Court shall first deal with an apparent procedural lapse in this case.

Counsel for petitioners filed a Motion for Leave to Admit Amended Petition for Review on Certiorari in order to implead the Heirs of the late Go Kim Chuan as the new petitioners and to delete the names of petitioners Amodias because they could no longer be located. Said petitioners sought the relaxation of the rules so that in the interest of justice, the case can be decided on the merits. AZNAR opposes the Amended Petition because it was allegedly filed to cure a fatal defect in the original petition ─ non-compliance with the rules on Verification and Certification of Non-Forum Shopping.

In this regard, the case of Iglesia ni Cristo v. Ponferrada37 is instructive, viz.:

The purpose of verification is simply to secure an assurance that the allegations of the petition (or complaint) have been made in good faith; or are true and correct, not merely speculative. This requirement is simply a condition affecting the form of pleadings, and noncompliance therewith does not

necessarily render it fatally defective. Indeed, verification is only a formal, not a jurisdictional requirement.

The issue in the present case is not the lack of verification but the sufficiency of one executed by only one of plaintiffs. This Court held in Ateneo de Naga University v. Manalo, that the verification requirement is deemed substantially complied with when, as in the present case, only one of the heirs-plaintiffs, who has sufficient knowledge and belief to swear to the truth of the allegations in the petition (complaint), signed the verification attached to it. Such verification is deemed sufficient assurance that the matters alleged in the petition have been made in good faith or are true and correct, not merely speculative.

The same liberality should likewise be applied to the certification against forum shopping. The general rule is that the certification must be signed by all plaintiffs in a case and the signature of only one of them is insufficient. However, the Court has also stressed in a number of cases that the rules on forum shopping were designed to promote and facilitate the orderly administration of justice and thus should not be interpreted with such absolute literalness as to subvert its own ultimate and legitimate objective. The rule of substantial compliance may be availed of with respect to the contents of the certification. This is because the requirement

of strict compliance with the provisions merely underscores its mandatory

nature in that the certification cannot be altogether dispensed with or its requirements completely disregarded.

Thus, we held in Iglesia ni Cristo that the commonality of interest is material and crucial to relaxation of the Rules.

In the case at bench, the petitioners in the Amended Petition are Heirs of the late Go Kim Chuan. They represent their predecessor-in-interest in whose favor a title was issued covering the subject property and said title is sought to be canceled by AZNAR. Clearly, there is presence of the commonality of interest referred to in Iglesia ni Cristo. Under the circumstances, the rules may be reasonably and liberally construed to avoid a patent denial of substantial justice, because it cannot be denied that the ends of justice are better served when cases are determined on the merits - after all parties are given full opportunity to ventilate their causes and defenses - rather than on technicality or some procedural imperfections.38

The Issues

We now proceed to the merits of the case. From the issues raised, there are ultimately two questions that require resolution:

First, did the CA misapply the doctrine in Heirs of Severa Gregorio v. CA in ruling that the RTC committed an error in appreciating the testimony of an expert witness as to the forgery of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale?cra lawlibrary

Second, who between Go Kim Chuan and AZNAR has the better right over the subject property?cra lawlibrary

We resolve the first question in the negative.

Forgery cannot be presumed. It must be proved by clear, positive and convincing evidence and the burden of proof rests on the party alleging forgery. Handwriting experts are usually helpful in the examination of forged documents because of the technical procedure involved in analyzing them. But 1resort to these experts is not mandatory or indispensable. A finding of forgery does not depend entirely on the testimonies of handwriting experts, because the judge must conduct an independent examination of the questioned signature in order to arrive at a reasonable conclusion as to its authenticity.39

The RTC's finding with respect to the issue of forgery reads:

After a thorough study of the pleadings and evidence of the parties, the court finds that preponderance of evidence heavily tilts in favor of the defendants. The document relied upon by the plaintiff in its claim of ownership over the land in question, the extrajudicial partition and sale, has been found by the document examiner of the PC Crime Laboratory to be a forgery. Being a forgery, said document conveyed nothing in favor of the plaintiff. Hence, plaintiff's claim of ownership over the same has no more leg to stand on. x x x40

While it is true that the original document was produced before the RTC, the finding of forgery relies wholly on the testimony of the document examiner. It falls short of the required independent examination to be conducted by the trial court judge. Other than the statement of the document examiner, the RTC decision contains no other basis to support its conclusion of the existence of forgery. Accordingly, the CA was correct in rejecting the RTC's finding and in applying the doctrine laid down in the case of Heirs of Severa Gregorio v. CA.

However, we resolve the second question in favor of Go Kim Chuan.

Without doubt, we have here a case of double sale of registered land. Apropos is Article 1544 of the New Civil Code which provides:

ART. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property.

Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property.

Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith.

We have already ruled that the registration contemplated in this provision refers to registration under the Torrens System, which considers the act of registration as the operative act41 that gives validity to the transfer or creates a lien upon the land.42 This rule precisely applies to cases involving conflicting rights over registered property and those of innocent transferees who relied on the clean title of the properties.43 Thus, we held that registration must be done in the proper registry in order to bind the same.44

In the case at bench, it is uncontroverted that the subject property was under the operation of the Torrens System even before the respective conveyances to AZNAR and Go Kim Chuan were made. AZNAR knew of this, and admits this as fact. Yet, despite this knowledge, AZNAR registered the sale in its favor

under Act 3344 on the contention that at the time of sale, there was no title on file. We are not persuaded by such a lame excuse.

Act 3344 provides for the system of recording of transactions or claims over unregistered real estate45 without prejudice to a third party with a better right.46 But if the land is registered under the Land Registration Act (and therefore has a Torrens Title), and it is sold and the sale is registered not under the Land Registration Act but under Act 3344, as amended, such sale is not considered registered, as the term is used under Art. 1544 of the New Civil Code.47

In this case, since the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale in favor of AZNAR was registered under Act No. 3344 and not under Act No. 496, the said document is deemed not registered.48 Rather, it was the sale in favor of Go Kim Chuan which was registered under Act No. 496.

AZNAR insists that since there was no Torrens title on file in 1964, insofar as the vendors, AZNAR, and the Register of Deeds are concerned, the subject property was unregistered at the time. The contention is untenable. The fact that the certificate of title over the registered land is lost does not convert it into unregistered land. After all, a certificate of title is merely an evidence of ownership or title over the particular property described therein.49 This Court agrees with the petitioners that AZNAR should have availed itself of the legal remedy of reconstitution of the lost certificate of title, instead of registration under Act 3344. We note that in Aznar Brothers Realty Company v. Aying,50AZNAR, beset with the similar problem of a lost certificate of title over a registered land, sought the reconstitution thereof. It is unfortunate that, in the instant case, despite the sale of the subject property way back in 1964 and the existence of the remedy of reconstitution at that time, AZNAR opted to register the same under the improper registry (Act 3344) and allowed such status to lie undisturbed. From 1964 to 1989, AZNAR did not bother to have the lost title reconstituted or even have the subject property declared under its name for taxation purposes. Vigilantibus, non dormientibus, jura subveniunt. Laws must come to the assistance of the vigilant, not of the sleepy.51

Although it is obvious that Go Kim Chuan registered the sale in his favor under Act 496 while AZNAR did not, we still cannot make an outright award of the subject property to the petitioners solely on that basis. For the law is clear: mere registration of title is not enough. Good faith must accompany the registration.

Thus, to be able to enjoy priority status, the second purchaser must be in good faith, i.e., he must have no knowledge of the previous alienation of the property by the vendor to another. Notably, what is important for this purpose is not whether the second buyer is a buyer in good faith, but whether he registers the second sale in good faith, meaning, he does so without knowledge of any defect in the title over the property sold.52

To fully resolve the second question, therefore, it is imperative that we determine whether Go Kim Chuan was a registrant in good faith.

The CA found that AZNAR registered its Notice of Adverse Claim ahead of the Deed of Extra-Judicial Settlement with Absolute Sale in favor of Go Kim Chuan. Because of this, the CA declared that Go Kim Chuan was not a buyer in good faith, because he should have respected such adverse claim or, at least, inquired into the validity thereof.

We do not agree.

While factual issues are not within the province of this Court, as it is not a trier of facts and is not required to examine the oral and documentary evidence de novo, this Court has the authority to review and, in proper cases, reverse the factual findings of lower courts in the following instances: (a) when the findings of fact of the trial court are in conflict with those of the appellate court; (b) when the judgment of the appellate court is based on a misapprehension of facts; and, (c) when the appellate court manifestly overlooked certain relevant facts which, if properly considered, would justify a different conclusion.53

The instant case falls squarely within the foregoing exceptions.

Concededly, inscription of an adverse claim serves as a warning to third parties dealing with a piece of real property that someone claims an interest therein or that there is a right superior to that of the titled owner.54 However, as pointed out by petitioners and as admitted by AZNAR, the Notice of Adverse Claim was annotated on TCT No. 20626 only on February 4, 1990, after the lost certificate of title was reconstituted and after the issuance of said TCT in the name of Go Kim Chuan on December 1, 1989. It is, therefore, absurd to say that Go Kim Chuan should be bound by

an adverse claim which was not previously annotated on the lost title or on the new one, or be shackled by a claim which he did not have any knowledge of.ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

Citing Santiago v. Court of Appeals,55 AZNAR contends that even if the adverse claim was annotated on TCT No. 20626 only on February 4, 1990, the prior registration of the sale in its favor under Act 3344 served as constructive notice to Go Kim Chuan and thus negates the latter's claim of good faith, since the Court held in that case, "Registration, however, by the first buyer under Act 3344 can have the effect of constructive notice to the second buyer that can defeat his right as such buyer in good faith."

AZNAR's reliance on Santiago is misplaced. In Santiago, the first buyers registered the sale under the Torrens System, as can be inferred from the issuance of the TCT in their names. There was no registration under Act 3344. Conversely, in the instant case, AZNAR registered the sale in its favor under Act 3344 despite its full knowledge that the subject property is under the operation of the Torrens System. To repeat, there can be no constructive notice to the second buyer through registration under Act 3344 if the property is registered under the Torrens system.56

Moreover, before buying the subject property, Go Kim Chuan made verifications with the Office of the City Assessor of Lapu-Lapu City and the Register of Deeds. He likewise visited the premises of the subject property and found that nobody interposed any adverse claim against the Amodias. After he decided to buy the subject property, he paid all taxes in arrears, caused the publication of the Deed of Extra-Judicial Settlement with Absolute Sale in a newspaper of general circulation, caused the reconstitution of the lost certificate of title and caused the issuance of the assailed TCT in his name.57 Given these antecedents, good faith on the part of Go Kim Chuan cannot be doubted.

We also note that AZNAR's complaint for cancellation of title contains no allegation that the (second) purchaser was aware of defects in his title. In the absence of such an allegation and proof of bad faith, it would be grossly inappropriate for this Court to render judgment against the purchaser who had already acquired title not only because of lack of evidence, but also because of the indefeasibility and conclusiveness of such title.58

Finally, it is worth stressing that the Torrens system was adopted in this country because it was believed to be the most effective measure to guarantee the integrity of land titles and to insure their indefeasibility once the claim of ownership is established and recognized. If a person purchases a piece of land on the assurance that the seller's title thereto is valid, he should not run the risk of losing his acquisition. If this

were permitted, public confidence in the system would be eroded and land transactions would have to be attended by complicated and not necessarily conclusive investigations and proof of ownership.59

WHEREFORE, the instant Petition for Review is GRANTED. The Decision of the Court of Appeals in CA-G.R. CV No. 51814 is REVERSED and SET ASIDE. The Decision of the Regional Trial Court of Lapu-Lapu City, Branch 27, in Civil Case No. 2254-L, is REINSTATED. No costs.

SO ORDERED.

SECOND DIVISION

[G.R. NO. 171571 : March 24, 2008]

REPUBLIC OF THE PHILIPPINES, Represented by MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY (MCIAA), Petitioner, v. HEIRS OF FRANCISCA DIGNOS-SORONO, namely: TEODORO SORONO, LUCIO SORONO, JR., ARSENIO T. SORONO, RODULFO S. OLIVAR, ALFONSA T. SORONO, CONSTANCIO S. LUMONGSOD, EULALIA S. LIMPANGOG, and FLORENCIA S. BAGUIO; HEIRS OF JUAN L. AMISTOSO,1 namely: MARIO L. AMISTOSO, LYN-LYN AMISTOSO, ALLAN L. AMISTOSO, RAQUEL S. AMISTOSO, EUFRONIO S. AMISTOSO, JR., and ROGELIO S. AMISTOSO; HEIRS OF BRIGILDA D. AMISTOSO, namely: VICTOR A. YAGONG, HEDELIZA A. YAGONG, and CIRIACA A. YAGONG; HEIRS OF PASTOR DIGNOS; HEIRS OF ISABEL DIGNOS, namely: DR. NAPOLEON A. AMORES, VICENTE A. BASMAYOR, DOMINGO A. BASMAYOR, and LYDIA A. BASMAYOR; HEIRS OF DONATA DIGNOS, namely: TRINIDAD D. FUENTES, NICASIA D. FUENTES, and IRINEO D. FUENTES; HEIRS OF SEGUNDA DIGNOS, namely: HONORATA D. CORTES and BENIGNO D. CORTES; HEIRS OF GREGORIA DIGNOS, namely: RITA D. FUENTES and JOSE D. FUENTES; HEIRS OF DOMINGO FUENTES, namely: CIRILA P. DIGNOS and BASILIO P. DIGNOS; and HEIR OF ISABELO DIGNOS, namely: TERESITA R. DIGNOS,2Respondents.

D E C I S I O N

CARPIO MORALES, J.:

Assailed via Petition for Review on Certiorari is the April 23, 2005 decision of the Court of Appeals3affirming that of the Regional Trial Court (RTC) of Lapu-lapu City, Branch 54.4

Lot Nos. 2296 and 2316 of the Cadastral Survey of Opon, Lapu-lapu City were adjudicated on December 7, 1929 by the then Court of First Instance of Cebu in favor of the following in four equal shares:

a) Francisca Dignos, married to Blas Sorono - ' share in the two lots;

b) Tito Dignos, married to Candida Torrebillas - ' share in the two lots;

c) Isabel Dignos, married to Fabiano Amores; Donata Dignos, married to Estanislao Fuentes; 

Segunda Dignos, married to Demetrio Cortes; Gregoria Dignos, married to Severo Fuentes; Domingo Dignos, married to Venturada Potot; and Isabelo Dignos, married to Petronilla Gamallo - ' share in the two lots; and

d) Silveria Amistuoso, married to Melecio Tumulak; Mario Amistuoso, married to Rufina Tampus; Juan Amistuoso, married to Narcisa Cosef; Brigilda Amistuoso, married to Casimiro Yagong; and Pastor Amistuoso, widower - ' share in the two lots.5

It appears that the two lots were not partitioned by the adjudicatees.

It appears further that the heirs of Tito Dignos, who, as reflected above, was awarded - share in the two lots, sold for P2,565.59 the entire two lots to the then Civil Aeronautics Administration (CAA) via a public instrument entitled "Extrajudicial Settlement and Sale" executed on October 11, 1957, without the knowledge of respondents whose predecessors-in-interest were the adjudicatees of the rest of the - portion of the two lots.6

In 1996, CAA's successor-in-interest, the Mactan Cebu International Airport Authority (MCIAA), erected a security fence traversing Lot No. 2316 and relocated a number of families, who had built their dwellings within the airport perimeter, to a portion of said lot to enhance airport security in line with the standards set by the International Civil Aviation Organization and the Federal Aviation Authority.

MCIAA later caused the issuance in its name of Tax Declaration No. 00548 covering Lot No. 2296 and Tax Declaration No. 00568 covering Lot No. 2316.

Respondents soon asked the agents of MCIAA to cease giving third persons permission to occupy the lots but the same was ignored.chanrobles virtual law library

Respondents thereupon filed on January 8, 1996 a Complaint for Quieting of Title, Legal Redemption with Prayer for a Writ of Preliminary Injunction against MCIAA before the RTC of Lapu-lapu City,7alleging that the existence of the tax declarations "would cast a cloud on their valid and existing titles" to the lots. They alleged that "corresponding original certificates of title in favor of the decreed owners were . . . issued but the same could no longer be found and located, and in all probability, were lost during the Second World War."8 (This claim was not specifically denied by petitioner in its Answer with Counterclaim.)9

Respondents further alleged that neither they nor their predecessors-in-interests sold, alienated or disposed of their shares in the lots of which they have been in continuous peaceful possession.

Respondents furthermore alleged that neither petitioner nor its predecessor-in-interest had given them any written notice of its acquisition of the - share of Tito Dignos.

Respondents thus prayed as follows:

1) Upon the filing of this complaint, that a restraining order be issued enjoining the defendant   and any of its officers, agents, employees, and any third person acting on their behest, to desist from occupying their

portions   of Lots 2296 and 2316, Opon Cadastre, and upon due notice and hearing, to issue the corresponding writ of preliminary injunction for the same purpose;

2) To declare the tax declarations   of the defendant or any of its predecessors-in-interests covering Lots 2296 and 2316, Opon Cadastre, to be null and void:

3) To grant unto the plaintiffs the right of preemption   in the sale of the one-fourth share of Tito Dignos in the above-mentioned parcels of land under the provisions of Articles 1620 and 1623 of the Civil Code;

4) To order the defendant to reimburse plaintiffs the sum of   P 10,000.00 acceptance fee, the sums of   P 1,000.00 per appearance fee, the sum of   P 10,000.00   for costs of litigation;

5) To order the defendant to pay the plaintiffs the sum of P100,000.00 for moral damages.

Plaintiffs further pray for such orders as may be just and equitable under the premises.10(Underscoring supplied)cralawlibrary

Republic of the Philippines, represented by the MCIAA (hereafter petitioner), in its Answer with Counterclaim,11 maintained that from the time the lots were sold to its predecessor-in-interest CAA, it has been in open, continuous, exclusive, and notorious possession thereof; through acquisitive prescription, it had acquired valid title to the lots since it was a purchaser in good faith and for value; and assuming arguendo that it did not have just title, it had, by possession for over 30 years, acquired ownership thereof by extraordinary prescription.

At all events, petitioner contended that respondents' action was barred by estoppel and laches.

The trial court found for respondents. It held that respondents and their predecessors-in-interest were in peaceful and continuous possession of their shares in the lots, and were disturbed of such possession only in 1996 when petitioner put up the security fence that traversed Lot No. 2316 and relocated families that had built their houses within the airport perimeter to a portion of said lot.

On petitioner's claim that it had acquired ownership by extraordinary prescription, the trial court brushed it aside on the ground that registered lands cannot be the subject of acquisitive prescription.

Neither, held the trial court, had respondents' action prescribed, as actions for quieting of title cannot prescribe if the plaintiffs are in possession of the property in question, as in the case of herein respondents.

On petitioner's defense of laches, the trial court also brushed the same aside in light of its finding that respondents, who have long been in possession of the lots, came to know of the sale only in 1996. The trial court added that respondents could not be charged with constructive notice of the 1957 Extrajudicial Settlement and Sale of the lots to CAA as it was erroneously registered under Act No. 3344,12 the law governing recording of instruments or deeds relating to real estate which are not registered under the Torrens system. The subject lots being registered, the trial court found, the registration of the deed should have been made under Act No. 496,13 the applicable law in 1957. In fine, the trial court held that the registration of the deed under Act No. 3344 did not operate as constructive notice to the whole world.14

Concluding, the trial court held that the questioned sale was valid only with respect to Tito Dignos' - share of the lots, and that the sale thereof was subject to the right of legal redemption by respondents following Article 1088 of the Civil Code, reading:

Should any of the heirs sell his hereditary rights to a stranger before partition, any or all of the co-heirs may be subrogated to the rights of the purchaser by reimbursing him for the price of the sale, provided they do so within the period of one month from the time they were notified in writing of the sale by the vendor.

In light of its finding that the heirs of Tito Dignos did not give notice of the sale to respondents, the trial court held that the period for legal redemption had not yet lapsed; and the redemption price should be - of the purchase price paid by the CAA for the two lots.

The trial court thus disposed:

WHEREFORE, all premises considered, the Court rules in favor of plaintiffs and hence renders judgment:

a) Declaring Tax Declarations Nos. 00915 and 00935, as well as all other tax declarations covering Lot 2296 and Lot 2316 under the names of the Civil Aeronautics Administration, the Bureau of Air Transportation and the defendant Mactan Cebu International Airport Authority, as null and void and directing the City Assessor of Lapu-Lapu City to cancel them;

b) Declaring the Extrajudicial Settlement and Sale affecting Lot 2296 and Lot 2316 (Exhibit "H" for plaintiffs) as void and ineffective as regards the three-fourth[s] (3/4) shares of plaintiffs in both lots and declaring the herein plaintiffs as owners of such three fourth[s] shares and;

c) Ordering the defendant to resell to plaintiffs for a total price of Six Hundred forty Pesos (P640.00) the one-fourth (1/4) shares in Lot 2296 and Lot 2316 it had purchased from the heirs of the late Tito Dignos in 1957;

No pronouncement as to costs.

SO ORDERED.15

As priorly stated, the Court of Appeals affirmed the trial court's decision.

Hence, the present Petition for Review on Certiorari which proffers the following

GROUNDS FOR ALLOWANCE OF THE PETITION

THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE TRIAL COURT'S DECISION WHEN RESPONDENTS NO LONGER HAVE ANY RIGHT TO RECOVER LOTS 2296 AND 2316 DUE TO THE PRIOR SALE THEREOF TO THE REPUBLIC AND UPON THE EQUITABLE GROUNDS OF ESTOPPEL AND LACHES.16

The petition fails.

Article 493 of the Civil Code provides:

Each co-owner shall have the full ownership of his partand of the fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when personal rights are involved. But the effect of the alienation of the mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership.

Apropos is the following pertinent portion of this Court's decision in Bailon-Casilao v. CA:

As early as 1923, this Court has ruled that even if a co-owner sells the whole property as his, the sale will affect only his own share but not those of the other co-owners who did not consent to the sale [Punsalan v. Boon Liat, 44 Phil. 320 (1923)]. This is because under the aforementioned codal provision, the sale or other disposition affects only his undivided share and the transferee gets only what would correspond to his grantor in the partition of the thing owned in common. [Ramirez v. Bautista, 14 Phil. 528 (1909)]. Consequently, by virtue of the sales made by Rosalia and Gaudencio Bailon which are valid with respect to their proportionate shares, and the subsequent transfers which culminated in the sale to private respondent Celestino Afable, the said Afable thereby became a co-owner of the disputed parcel of land as correctly held by the lower court since the sales produced the effect of substituting the buyers in the enjoyment thereof [Mainit v. Bandoy, 14 Phil. 730 (1910)].

From the foregoing, it may be deduced that since a co-owner is entitled to sell his undivided share, a sale of the entire property by one co-owner without the consent of the other co-owners is not null and void. However, only the rights of the co-owner-seller are transferred, thereby making the buyer a co-owner of the property.17 (Emphasis and underscoring supplied)cralawlibrary

Petitioner's predecessor-in-interest CAA thus acquired only the rights pertaining to the sellers-heirs of Tito Dignos, which is only - undivided share of the two lots.

Petitioner's insistence that it acquired the property through acquisitive prescription, if not ordinary, then extraordinary, does not lie. The trial court's discrediting thereof is well taken. It bears emphasis at this juncture that in the Extrajudicial Settlement and Sale forged by CAA and Tito Dignos' heirs in 1957, the following material portions thereof validate the claim of respondents that the two lots were registered:

x    x    x

4. That since the Original Transfer Certificate of Title of the above-mentioned property/ies has/have been lost and/or destroyed, or since the said lot/s is/are covered by Cadastral Case No. 19, and a decree issued on March 19, 1930, bearing Decree No./s 474824 & 474825, and the VENDEE hereby binds itself to reconstitute said title/s at its own expense and that the HEIRS-VENDORS, their heirs, successors and assigns bind themselves to help in the reconstitution of title so that the said lot/s may be registered in the name of the VENDEE in accordance with law[.]18

x    x    x

The trial court's discrediting of petitioner's invocation of laches and prescription of action is well-taken too.

As for petitioner's argument that the redemption price should be - of the prevailing market value, not of the actual purchase price, since, so it claims, "(1) they received just compensation for the property at the time it was purchased by the Government; and, (2) the property, due to improvements introduced by

petitioner in its vicinity, is now worth several hundreds of millions of pesos,"19 the law is not on its side. Thus, Article 1088 of the Civil Code provides:

Should any of the heirs sell his hereditary rights to a stranger before the partition, any or all of the co-heirs may be subrogated to the rights of the purchaser by reimbursing him for the price of the sale, provided they do so within the period of one month from the time they were notified in writingof the sale by the vendor. (Emphasis and underscoring supplied)cralawlibrary

The Court may take judicial notice of the increase in value of the lots. As mentioned earlier, however, the heirs of Tito Dignos did not notify respondents about the sale. At any rate, since the Extrajudicial Settlement and Sale stipulates, thus:

That the HEIRS-VENDORS, their heirs, assigns and successors, undertake and agree to warrant and defend the possession and ownership of the property/ies herein sold against any and all just claims of all persons whomsoever   and should the VENDEE be disturbed in its possession, to prosecute and defend the same in the Courts of Justice20 (Emphasis and underscoring supplied),

petitioner is not without any remedy. This decision is, therefore, without prejudice to petitioner's right to seek redress against the vendors-heirs of Tito Dignos and their successors-in-interest.

WHEREFORE, the petition is, in light of the foregoing disquisition, DENIED.

SO ORDERED.