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Republic of the Philippines

SUPREME COURT

Manila

SECOND DIVISION

G.R. Nos. L-48971 & 49011 January 22, 1980

PACIFICO GARCIA, petitioner-appellant,vs.BENJAMIN M. GOZON, TECLA GUTIERREZ, ROSARIO FELIX, PAULINO D. BUENAVENTURA,RAYMUNDO DIONISIO, VIRGILIO AUSTRIA and MARCEON VICENCIO, respondents-appellees;

PHILIPPINE NATIONAL BANK, petitioner-appellant,vs.COURT OF APPEALS (Third Division), CAROLINA LAPUZ- GOZON, assisted by her husbandBENJAMIN M. GOZON, TECLA GUTIERREZ, ROSARIO FELIX, PAULINO D. BUENAVENTURA,RAYMUNDO DIONISIO, VIRGILIO AUSTRIA and MARCEON VICENCIO, respondents-appellees.

Agapito Mendoza & Antonio G. Ibarra for appellant Pacifico Garcia

Laurel Law Office and Flores Ocampo, Dizon & Domingo for private appellees.

AQUINO, J.:

This case is about the issuance of two or more transfer certificates of title to different persons forthesame lots, or subdivisions thereof, due to the fact that the original title was allegedly not cancelledwhen the first transfer certificates of title were issued to replace the original title. The factual

background is as follows:

1. On August 9, 1918, a deed of sale for two parcels of land, E and G (with a total area of more thanseven hectares) of the Hacienda Maysilo, located in Malabon, Rizal and covered by OriginalCertificate of Title No. 983, was executed in favor of Ismael Lapus a bona fide occupant thereof. Thedeed was executed pursuant to an order of the Court of First Instance of Rizal in Civil Case No. 391,Negao vs. Vidal, a partition proceeding involving the said hacienda (See Bustamante vs. Tuason, 47Phil. 433, 434).

2. The deed of sale was presented for registration at two-twenty five in the afternoon of January 15,1920 and was recorded as Primary Entry No. 7710. That deed of sale itself contains the following

entries showing that it was annotated on the back of OCT NO. 983:

Presentado en este Registro a las 2:25 de la tarde del dia de hoy segun el Asiento No. 7710 de tomo 10del Libro Diario, Pasig, Rizal, Enero 15, 1920.

Register of Deeds (Exh. B-12)

Inscrito el documento que precede al dorso del certificado de Titulo Original No. 983 del Tomo A-9, deinscritor en las paginas 113 y 114 ambos del libro T-25 de registro como certificados de titulo Nos. 4910y 4911, archivado en el legajo T-#4910. Pasig, Rizal, Enero 15, 1920.:

Register of Deeds (Exh. B-1).

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However, it seemed that, contrary to the foregoing entry and the official routine or standard operatingprocedure, the deed of sale was not annotated on OCT No. 983 and that, consequently, that title wasapparently not cancelled. Why that annotation did not appear in OCT No. 983 and why there was nonotation of the cancellation of that title, as it appeared in 1962, is a mystifying circumstance in thiscase.

3. As a result of the registration of that deed of sale, Transfer Certificate of 'Title No. 4910 was issuedto Lapus for the two parcels of land, E and G, and I Transfer Certificate of Title No. 4911 was issued

for the remaining five lots covered by OCT No. 983 (which embrace an area of more than twohundred fifty-eight hectares registered in the names of more than twenty-six-co-owners). TCT Nos.4910 and 4911 contain the following entries: "Transfer from No. 983. Originally registered on the 29thday of January, in the year 1917 in Book No. A-9, page 215, of the said Province of Rizal, pursuant toa decree entered in Case No. 3850."

4. Lapus on different occasions mortgaged the two parcels of land to secure his obligations to thePhilippine National Bank, the Government and the Philippine Trust Company. He died in 1951. Thetwo parcels of land were inherited by his daughter, Carolina Lapuz-Gozon. She became theregistered owner of the two lots. She subdivided them into fifty-five lots. She sold some of thesubdivision lots to her co-respondents-appellees herein. Lapus and his successors-in-interest have

been in possession of the two parcels even before 1910 or for more than seventy years.

5. Meanwhile, in 1962, certain. alleged heirs (collectively known as the Riveras) of the late Maria dela Concepcion Vidal filed a motion in Land Registration Cases Nos. 4429 and 4496 of the Court ofFirst Instance of Rizal, alleging that they were deprived of their participation in the Hacienda Maysilocovered by OCT No. 983 and for other titles and that, since only OCT No. 983 was supposedlyunencumbered, all the land covered by that title should be adjudicated to them. The court granted themotion. It should be stressed that OCT No. 983 appears to have remained uncancellednotwithstanding the sale to Lapus of two parcels covered by it and the fact that it had been replacedby TCT Nos. 4910 and 4911.

6. On June 7, 1963, OCT No. 983 was definitely cancelled and in lieu thereof Transfer Certificate ofTitle No. 112236 was issued to the Riveras. Later, Lots 5 and 7 of the said title (corresponding toparcels E and G which were sold to Ismael Lapus in 1918 as stated earlier) were assigned byBartolome Rivera to Sergio Cruz and Pacifico Garcia and TCT Nos. 112743 and 112742 were issuedto Cruz and Garcia, respectively. Thus, two sets of transfer certificates of title for Lots E and G or 5and 7, originally covered by OCT No. 983, were issued, one to the heir of Ismael Lapus and anotherset to the successors-in-interest of the Riveras.

7. On October 22, 1964, Garcia subdivided Lot 7 (G) into Lots A and B. Garcia retained Lot A andobtained TCT No. 134958 for it. He assigned Lot B to Antonio Muoz on November 5, 1964. As aconsequence of the assignment, TCT No. 112742 was cancelled and TCT No. 134957 was issued to

Muoz. In 1965, he mortgaged Lot B to the Associated Banking Corporation to secure a loan ofP200,000.

8. On the other hand, on July 17, 1964 Cruz sold to Santiago Go Lot 5 (E) covered by TCT No.112743. TCT No. 131329 was issued to Go on August 25,1964. On December 23, 1964, Gomortgaged Lot 6 to the Philippine National Bank (PNB) to secure a loan of P50,000 which was laterincreased to P60,000.

9. Muoz and Go did not pay their mortgage debts. The two banks foreclosed the mortgages. ThePNB bought the mortgaged lot at the auction sale held on May 4. 1967. The sheriff issued to it acertificate of sale dated May 19, 1967 but at that time there was already a notice of lis pendens

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annotated on the title of the mortgaged lot. TCT Nos. 212163 and 236881 for the mortgaged lots wereissued to the Associated Banking Corporation and the Philippine National Bank, respectively.

10. The Riveras and their successors-in-interest have never set foot on the disputed lots.

11. Mrs. Gozon later learned that the Riveras and their successors-in-interest had acquired the land(more than two hundred fifty-eight hectares) covered by OCT No. 983. Her lawyer and a surveyorinformed her that parcels E and G, which she inherited from her father, were identical to Lots 5 and 7

which were conveyed to Cruz and Garcia. She registered adverse claims on the titles covering Lots 5and 7. On December 27, 1965 she and the persons to whom she had transferred portions of parcelsE and G filed with the Court of First Instance of Rizal at Caloocan City against the Riveras, Cruz,Muoz, Garcia, Associated Banking Corporation, PNB and others an action to quiet title and fordamages.

12. A notice oflis pendens was annotated on January 25, 1966 on the titles of Garcia, Muoz andGo. The notice oflis pendens was annotated on the title of the PNB when the sale in its favor wasregistered on December 13, 1969.

13. The trial court in its decision of July 30, 1975 declared valid TCT Nos. 141802 to 141855 and

143512 issued to Mrs. Gozon and her co-plaintiffs. It voided TCT No. 112235 issued to the Riverasand all titles and transactions emanating therefrom insofar as those titles covered the lots embracedin plaintiffs' titles. The Riveras were ordered to pay the plaintiffs twenty thousand pesos as attorney'sfees.

14. The trial court also ordered Muoz to pay the Associated Banking Corporation, in the event thatthe bank would be evicted from the lot covered by TCT No. 212153, two hundred sixty-five thousandseventy-two pesos and fifteen centavos with twelve percent interestper annum from the date of theeviction plus ten thousand pesos as attorney's fees.

15. Santiago Go was ordered to pay the PNB, should it be evicted from the lot covered by TCT No.

236881, the sum of sixty thousand pesos plus nine percent interestper annum from the date of theeviction and six thousand pesos as attorney's fees.

16. That judgment of the trial court was affirmed by the Court of Appeals in its decision of May 25,1978. Garcia and the PNB appealed from that decision. The Associated Banking Corporation, nowthe Associated Citizens Bank, tried to appeal but it was not able to file its petition for review (L-49010).

Garcia contends that the Court of Appeals erred in not holding that his title is valid and that the titlesof Ismael Lapus and his successors-in-interest lost their right to the disputed lots due to theirnegligence or inaction.

The issue is whether the 1920title issued to Lapus and the titles derived therefrom should prevailover the 1963 title issued to the Riveras and the subsequent titles derived from it. Should Lapus' titleprevail even if it was not annotated by the register of deeds on the anterior or parent title which wasnot cancelled before 1963? It was that noncancellation which led to the issuance of the duplicativetitle to the Riveras and eventually to the execution of the controversial mortgages and foreclosuresales to the two banks.

We hold that the two appeals have no merit. The title of Lapus and the titles derived therefrom shouldbe given effect. The title of the Riveras and the titles springing from it are void.

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There can be no doubt that Lapus was an innocent purchaser for value. He validly transmitted to hissuccessors-in-interest his indefeasible title or ownership over the disputed lots or parcels of land.That title could not be nullified or defeated by the issuance forty-three Years later to other persons ofanother title over the same lots due to the failure of the register of deeds to cancel the title precedingthe title issued to Lapuz. This must be so considering that Lapus and his interest remained inpossession of the disputed successors in lots and the rival claimants never possessed the same.

"The general rule is that in the case of two certificates of title, purporting to include the same land, the

earlier in date prevail, whether the land comprised in the latter certificate be wholly, or only in part,comprised in the earlier certificate" (Hogg, Australian Torrens System 823, citing cases and cited inLegarda and Prieto vs. Saleeby, 31 Phil. 590, 595).

"Where two certificates (of title) purport to include the same land, the earlier in date prevails. ... Insuccessive registrations, where more than once certificate is issued in respect of a party estate orinterest in land, the Person claiming under the prior certificate is entitled to the estate or interest; andthat person is deemed to hold under theprior certificate who is the holder of, or whose claim isderived directly or indirectly from the person who was the holder of the earliest certificate issued inrespect thereof " (Niblack, Analysis of the Torrens System page 237, cited in Legarda and Prieto vs.Saleeby, supra, pages 595-6).

And the rule that in case of double registration the owner of the earlier certificate is the owner of theland applies to the successive vendees of the owners of such certificates . "The vendee of the earliercertificate would be the owner as against the vendee of the owner of the later certificate" (Legardaand Prieto vs. Saleeby, supra, pages 597-9).

It is settled that is this jurisdiction the maximprior est in tempore, potior est in jure (he who is first intime is preferred in right) is followed in land registration matters (La Urbana vs. Bernardo, 62 Phil.790, 806).

Appellant Garcia invokes the ruling that the mere entry of a document in the day or entry book without

noting it on the certificate of title is not a sufficient registration (Bass vs. De la Rama, 73 Phil. 682,685).

That ruling was superseded by the holding in the later six cases ofLevin vs. Bass, 91 Phil. 420,where a distinction was made between voluntaryand involuntaryregistration, such as the registrationof an attachment, levy upon execution, notice of his pendens, and the like. In cases of involuntaryregistration, an entry thereof in the day book is a sufficient notice to all persons even if the owner'sduplicate certificate of title is not presented to the register of deeds.

On the other hand, according to the said cases ofLevin vs. Bass, in case ofvoluntaryregistration ofdocuments an innocent purchaser for value of registered land becomes the registered owner, and, in

contemplation of law the holder of a certificate of title, the moment he presents and files a dulynotarized and valid deed of sale and the same is entered in the day book and at the same time hesurrenders or presents the owner's duplicate certificate of title covering the land sold and pays theregistration fees, because what remains to be done lies not within his power to perform. The registerof deeds is duty bound to perform it. (See Potenciano vs. Dineros, 97 Phil. 196.)

The instant case is not Identical to the Bass cases. Here the deed of sale in favor of Lapus, whichwas judicially authorized, was entered in the entry book and a new title was issued to him.As alreadystated, and this point should be underscored, the deed of sale in favor of Lapus contains the notationthat it was annotated on the back of OCT No. 983 (presumably, the original and owner's duplicatethereof).

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But why in 1962 it appeared that no such annotation was found on the back of OCT No. 983, contraryto what was stated in the 1918 deed of sale, is a mystery that the trill court and the plaintiffs failed tounravel during the trial. Moreover, the title issued to Lapus contains the usual notation that it was atransfer from a previous title which in this case was OCT No. 983.

It should be further observed that the deed of sale in favor of Lapus and the titles issued to him andhis successors interest together with his mortgage in 1929 of the disputed lots to the PNB itself, areall a matter of public record in the registry of deeds.

As stressed in Legarda and Prieto vs. Saleeby, 31 Phil. 590, 600, "the record is notice to all the world.All persons are charged with the knowledge of what it contains. All persons dealing with the land sorecorded, or any portion of it, must be charged with notice of whatever it contains. The purchaser ischarged with notice of every fact shown by the record and is presumed to know every fact which therecord discloses.

"When a conveyance has been properly recorded, such record is constructive notice of its contentsand all interests, legal and equitable, included therein." "Under the rule of notice, it is presumed thatthe purchaser has examined every instrument of record affecting the title. Such presumption isirrefutable. He is charged with notice of every fact shown by the record and is presumed to know

every fact which an examination of the record would have disclosed" (Legarda and Prieto vs.Saleeby, supra, page 600).

As Justice Johnson says, "this presumption cannot be overcome by proof of innocence or good faith.Otherwise, the very purpose and object of the law requiring a record would be destroyed. Suchpresumption cannot be defeated by proof of want of knowledge of what the record contains any morethan one may be permitted to show that he was ignorant of the provisions of the law. The rule that allpersons must take notice of the facts which the public record contains is a rule of law. The rule mustbe absolute. Any variation would lead to endless confusion and useless litigation" (Legarda and Prietovs. Saleeby, supra, pp. 600-601).

As to the PNB's claim that it was a mortgagee and purchaser in good faith and for value, theAppellate Court held that the bank should have made an on-the-spot investigation of the lotmortgaged by Go to ascertain whether he was in possession of it or it was claimed by other persons.Its failure to do so precludes the bank from being considered as a mortgagee in good faith and forvalue (Gatioan vs. Gaffud, L-21953, March 28, 1969, 27 SCRA 706).

On the other hand, the trial court held that the PNB was not a buyer in good faith when it bought Go'slot at the auction sale because there was already a notice of his pendens annotated on his title.

In the Gatioan case, it appears that in 1935 Rufina Permison secured a Torrens title for a parcel ofland on the basis of a free patent. The land was sold to Encarnacion Gatioan and Transfer Certificate

of Title No. T-1212 was issued to her. She mortgaged the land three times to the PNB

In 1956, the spouses Sixto Gaffud and Villamora Logan were able to secure a Torrens title for thesame lotalso on the basis of a free patent. They mortgaged the land also to the PNB. The Secretaryof Agriculture and Natural Resources, on discovering that two Torrens titles were issued for the sameland, recommended the cancellation of the later title issued to the Gaffud spouses. As the PNBrefused to cancel the mortgaged executed by Gatioan, in spite of the fact that she had made fullpayment of the mortgage debt, she filed against the Gaffud spouses and the PNB an action to quiettitle.

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It was held that Gatioan's title should prevail over that of the Gaffud spouses and that the mortgageexecuted by them in favor of the PNB was void. The Gaffud spouse were ordered to pay damages toGatioan.

Since the applicable rule in the instant case is that the earlier certificate of title should be recognizedas superior and controlling there is no justification for relying on the doctrine laid down by JusticeHolmes in Eliason vs. Wilborn 281 U.S. 457, that "as between two innocent persons, one of whommust suffer the consequence of a breach of trust, the one who made it possible by his act of

confidence must bear the loss."

There was no breach of trust in this case. What is note. worthy in this case is that after it was recitedin the registered deed of sale that sale was annotated at the back of the title covering the lots sold, itturned out that the title did not contain such an annotation and that the title was not cancelled. Forthat anomaly, the purchaser, Ismael Lapus, the how" of the earlier title, was not culpable orblameworthy.

WHEREFORE, the judgment of the Court of Appeals, affirming the decision of the trial court, shouldstand. Costs against the appellants.

SO ORDERED.

Barredo (Chairman), Antonio, Concepcion, Jr. and Santos, JJ., concur.

Abad Santos, J., took no part.

Republic of the Philippines

SUPREME COURT

Manila

EN BANC

G.R. No. L-11285 May 16, 1958

VICENTE SAPTO, LAUREANA SAPTO and DORA (BAGONA), plaintiffs-appellants,vs.

APOLONIO FABIANA, defendant-appellee.

Rodolfo A. Ta-Asan for appellants.

Napoleon B. Nidea for appellee.

REYES, J.B.L.,J.:

Sapto (Moro), now deceased was the registered owner of a parcel of land located in Alambre, Toril, Davao City

under Transfer Certificate of Title No. T-5701 (0-28) of the Register of Deeds of Davao City. When Sapto died,

he left his children Samuel, Constancio, and Ramon as heirs of the property in question. Ramon pre-deceasedhis two brothers, leaving no, other heirs. On June 6, 1931, Samuel and Constancio Sapto executed a deed of sale

of a portion of four hectares of the land aforementioned if favor of defendant Apolonio Fabiana, in

consideration of the amount of P245.00. The sale was duly approved by the Provincial Governor of Davao, butwas never registered. Possession of the land conveyed was, however, transferred to Fabiana and the latter has

been in the possession thereof 1931 up to the present.

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Thereafter, Constancio Sapto died without any issue, Samuel Sapto married one Dora (Bagoba) and upon his

death was survived by his widow and two children, Laureana and Vicente Sapto. On October 19, 1954, thewidow and children of Samuel Sapto filed this action in the Court of First Instance of Davao for the recovery of

the parcel of land sold by their predecessors to defendant Apolonio Fabiana in 1931. After trial, the lower court

held that although the sale between Samuel and Constancio Sapto and defendant in 1931 was never registered, itwas valid and binding upon the parties and the vendors heirs, and ordered the plaintiffs to execute the necessary

deed of conveyance in defendant's favor and its annotation in the certificate of title. From this judgment,

plaintiffs appealed to this Court.

The issue is whether the deed of sale executed by appellants' predecessors in favor of the appellee over the landin question, although never registered, is valid and binding on appellants and operated to convey title and

ownership to the appellee.

The question is not new. In a long line of cases already decided by this Court, we have consistently interpreted

sec. 50 of the Land Registration Act providing that "no deed . . . shall take effect as a conveyance or bind theland, but shall operate only as a contract between the parties and as evidence of authority to the clerk or register

of deeds to make registration" in the sense that as between the parties to a sale registration is not necessary to

make it valid and effective, for actual notice is equivalent to registration (Obras Pias vs. Devera Ignacio, 17Phil., 45; Gustilo vs. Maravilla, 48 Phil., 442; Quimson vs. Suarez, 45 Phil., 901; Winkleman vs. Veluz, 43

Phil., 609; Galasinao vs. Austria, 51 Off. Gaz. No. 6, 2874; Carillo vs. Salak, 91 Phil., 265). "The peculiar forceof a title under Act No. 492", we said in Medina vs. Imaz and Warner Barnes and Co., 27 Phil., 314 (syllabus),"is exhibited only when the purchaser has sold to innocent third parties the land described in the conveyance.

Generally speaking, as between vendor and vendee, the same rights and remedies exist in relation to land not so

registered". In Galanza vs. Nuesa, 95 Phil., 713, we held that "registration is intended to protect the buyer

against claims of third persons arising from subsequent alienations by the vendor, and is certainly not necessaryto give effect as between the parties to their deed of sale". And in the recent case of Casica vs. Villaseca, G.R.

No. L-9590, April 30, 1957, we reiterated that "the purpose of registration is merely to notify and protect the

interests of strangers to a given transaction, who may be ignorant thereof, and the non-registration of the deedevidencing said transaction does not relieve the parties thereto of their obligations thereunder".

No right of innocent third persons or subsequent transferees of the property in question is involved herein. Theproperty has remained and still is in the possession of the vendee of appellants' predecessors, herein appellee. It

is, therefore, clear that the conveyance between appellee and his vendors and valid and binding upon the latter,and is equally binding and effective against the heirs of the vendors, herein appellants. To hold otherwise would

make of the Torrens system a shield for the commission of fraud by the vendors or his heirs (Gustilo vs.

Maravilla, 48 Phil., 442), who would then be able to reconvey the same property to other persons.

Appellants cite several cases wherein we have held that under the Torrens system, registration is the operativeact that gives validity to the transfer or creates a lien upon the land. The authorities cited refer, however, to

cases involving conflicting rights over registered property and those of innocent transferees who relied on the

clean titles of the properties in question. These cases have, therefore, no bearing on the instant case, where the

appellee has always, remained in the possession of the land in question and no subsequent transfer thereof toother persons has been made either by appellants or their prodecessors-in-interest.

The appellants aver that it was error to require them to execute a deed of conveyance in favor of the plaintiff,

appellee, and argue that the latter's action to obtain it had long prescribed, twenty years having elapsed since theoriginal sale. This contention must be overruled, being predicated on the assumption that the reconveyance is

sought by way of performance of the contract of sale entered into in 1931. No enforcement of the contract is in

fact needed, since the delivery of possession of the land sold had consummated the sale and transferred title tothe purchaser, registration of the contract not being indispensable as between the parties. Actually the action for

conveyance was one to quiet title, i.e., to remove the cloud cast upon appellee's ownership by the refusal of the

appellants to recognize the sale made by their predecessors. This action accrued only when appellant, initiated

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their suit to recover the land in 1954. Furthermore, it is an established rule of American jurisprudence (made

applicable in this jurisdiction by Art. 480 of the New Civil Code) that actions to quiet title to property in thepossession of the plaintiff are imprescriptible (44 Am. Jur. p. 47; Coopervs. Rhea, 39 L. R. A. 930; Inland

Empire Land Co. vs. Grant County, 138 Wash. 439, 245 Pac. 14).

The prevailing rule is that the right of a plaintiff to have his title to land quieted, as against one who is

asserting some adverse claim or lien thereon, is not barred while the plaintiff or his grantors remain inactual possession of the land, claiming to be owners thereof, the reason for this rule being that while the

owner in fee continues liable to an action, proceeding, or suit upon the adverse claim, he has acontinuing right to the aid of a court of equity to ascertain and determine the nature of such claim and itseffect on his title, or to assert any superior equity in his favor. He may wait until his possession is

disturbed or his title is attacked before taking steps to vindicate his right. But the rule that the statute of

limitations is not available as a defense to an action to remove a cloud from title can only be invoked bya complaint when he is in possession. One who claims property which is in the possession of another

must, it seems, invoke his remedy within the statutory period. (44 Am. Jur., p. 47)

Wherefore, the judgment appealed from is affirmed. Costs against appellants. So ordered.

Paras, C.J., Bengzon, Montemayor, Reyes, A., Bautista Angelo, Labrador, Concepcion, Endencia, and Felix,

JJ., concur.

Republic of the Philippines

SUPREME COURT

Manila

EN BANC

G.R. No. L-9197 October 22, 1914

HERMOGENA SANTOS, plaintiff-appellant,

vs.MIGUEL ROBLEDO, ET AL., defendants-appellees.

Jose Santiago for appellant.Leodegario Azarraga for appellees.

TORRES,J.:

In this action to recover possession of a parcel of land with three light-material warehouses and the

collection of unpaid rents, together with the recovery of damages to the amount of P1,200, the plaintiff appealedby a bill of exceptions from the judgment rendered on May 6, 1913, by the Honorable Charles S. Lobingier,

judge, wherein he held that the plaintiff had not established any right to the relief sought and therefore adjudged

that she take nothing by her complaint and that the first two defendants recover their costs.

On March 5, 1913, counsel for Hermogena Santos filed a complaint in the Court of First Instance of thiscity and alleged therein that on March 1, 1905, Santiago Herrera and his wife Basilia Tolentino, in an

instrument ratified before a notary, deed to the plaintiff a building lot with three warehouses, the boundaries and

area of the said land being described in the complaint; that the plaintiff entered into possession of this propertyon the date above mentioned and the same without opposition or interruption of any sort and collected the rents

therefrom until January 28, 1913; that on this date, Miguel Robledo, who was found to be a creditor of the said

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Santiago Herrera, prayed for the execution of the said judgment; that at the instigation of Robledo, the sheriff

proceeded to seize the said lot and, after the publication of notice, sold the same at public auction on the 17th ofthe following month of February; that, although the plaintiff had intervened and prayed for the recall of the writ

for the reason that the lot levied upon was her property, the sheriff, under security of the bond furnished by the

creditor Robledo, sold the said lot and Robledo himself purchased it; that the plaintiff was thus deprived of herproperty and of the rents accruing therefrom from the said 28th day of January up to the date of the complaint,

and that she had suffered considerable damage because she had missed the opportunity to sell the property for

P1,200, the price she had been offered for it. Counsel therefore prayed that judgment be rendered for the

plaintiff ordering the defendant immediately to return and deliver to her the said lot, together with theuncollected rents therefrom, and to pay an indemnity of P1,200 and the costs.

Counsel for the deputy sheriff of Manila alleged that his client had no personal interest in the subject

matter of the complaint nor in the remedies sought; that he only took part in the action brought by Robledoagainst Herrera for the purpose of executing the orders of the court; that consequently he levied on the said lot

and its three warehouses belonging to Santiago Herrera and subsequently, on February 17, 1913, sold them; that

the lot was awarded to Robledo, the only bidder, for the sum of P1,000, and that the plaintiff, by an affidavitdated February 5, claimed the said property as the owner thereof, but, by reason of the bond furnished by

Robledo, he, the deputy sheriff, proceeded to sell the property, since, it was recorded in the property registry in

the name of Santiago Herrera in August, 1901, as being free of all encumbrance and that on January 28, 1913, a

record was made of the levy thereon. Said counsel therefore prayed that the defendant be absolved from thecomplaint, with the costs against the plaintiff.

The other defendants, Robledo and Azarraga, alleged, among other things, that the plaintiff had no legal

capacity to sue and that her action was improper; that, by a judgment rendered in case No. 9874, Santiago

Herrera was ordered to pay to his creditor, Miguel Robledo, the sum of P1,170, with legal interest thereon at therate of six per cent per annum from September 24, 1912, and the costs of the suit, and that, in executing the said

judgment, the deputy sheriff of Manila, on January 28, 1913, levied upon the said lot, which was exclusively

owned by the debtor Herrera, and upon all its improvements; that the first inscription of the aforementionedproperty was recorded in the property registry in August, 1901, in the name of Santiago Herrera, wherein it

appears as being free of all charge and encumbrance; that on the 28th of the said month of January, 1913, the

writ of execution on the aforementioned land which, together with the three warehouses thereon, was sold atpublic auction and knocked down to the said Robledo on February 17, 1913, for the sum of P1,000 Philippine

currency, was recorded in the registry and the proper certificate of sale was issued to him by the sheriff; that the

new owner, Robledo, then took possession of the property in good faith and was now peaceably holding the

same; that the conveyance made to the plaintiff by Herrera and his wife Tolentino was effected by them withintent to defraud their creditors and could in no wise prevail as against the creditor Robledo, and that for this

reason, the latter had suffered losses and damages to the amount of P200. These defendants therefore prayed be

absolved from the complaint and that the said Hermogena Santos be ordered to pay them P200 as losses anddamages, and to pay the costs.

Counsel for Miguel Robledo, in a supplementary answer dated April 21, 1913, set forth that, subsequently

to his original answer, Santiago Herrera sold and conveyed to him on March 24 of the same year, through apublic instrument and for the sum of P85, Herrera's right to redeem the property in litigation within the periodof one year counting from the 17th of February, 1913, the date of the sale of the lot at public auction; and

prayed that his supplementary answer be admitted in accordance with section 105 of the Code of Civil

Procedure.

After a hearing of the case and the evidence submitted by both parties, the court rendered the judgment

aforementioned.

The question raised in the claim made by the plaintiff, Hermogena Santos, is whether or not the levy and

sale of the lot and improvements in dispute, effected on petition of the creditor, Miguel Robledo, can prevail

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against the right of ownership she acquired by virtue of the gift made in her favor by the spouses Santiago

Herrera and Basilia Tolentino.

If the said lot and its improvements actually belonged to Hermogena Santos, and not to the debtor,

Santiago Herrera, then it is unquestionable that the land could not be levied upon for the payment of a debt of

the latter that in no wise concerned Hermogena Santos, as the latter was not a debtor of Miguel Robledo on

February 17, 1913, for the sum of P1,000 Philippine currency, was recorded in the registry and the propercertificate of sale was issued to him by the sheriff; that the new owner, Robledo, then took possession of the

property in good faith and was now peaceably holding the same; that the conveyance made to the plaintiff byHerrera and his wife Tolentino was effected by them with intent to defraud their creditors and could in no wiseprevail as against the creditor Robledo, and that for this reason, the latter had suffered losses and damages to the

amount of P200. These defendants therefore prayed that the plaintiff's petition be denied; that the said

Hermogena Santos be ordered to pay them P200 as losses and damages, and to pay the costs.

Counsel for Miguel Robledo, in a supplementary answer dated April 21, 1913, set forth that, subsequentlyto his original answer, Santiago Herrera sold and conveyed to him on March 24 of the same year, through a

public instrument and for the sum of P85, Herrera's right to redeem the property in litigation within the period

of one year counting from the 17th of February, 1913, the date of the sale of the lot at public auction; andprayed that his supplementary answer be admitted in accordance with section 105 of the Code of Civil

Procedure.

After a hearing of the case and the evidence submitted by both parties, the court rendered the judgment

aforementioned.

The question raised in the claim made by the plaintiff Hermogena Santos, is whether or not levy and sale

of the lot and improvements in dispute, effected on petition of the creditor, Miguel Robledo, can prevail against

the right of ownership she acquired by virtue of the gift made in her favor by the spouses Santiago Herrera and

Basilia Tolentino.

If the said lot and its improvements actually belonged to Hermogena Santos, and not to the debtor,

Santiago Herrera, then it is unquestionable that the land could not be levied upon for the payment of a debt ofthe latter that in no wise concerned Hermogena Santos, as the latter was not a debtor of Miguel Robledo.

The property acquired by the plaintiff in the said land is derived from the gift made to her by SantiagoHerrera and his wife Basilia Tolentino in an instrument ratified before the notary Eugenio de Lara on March 1,

1905 (Exhibit A). In this instrument, after reciting that the contracting parties had mutually agreed to live

separately and to divide the conjugal partnership property therein inventoried and appraised at P2,494, the saidspouses state, in paragraph 3, that they convey to the girl Hermogena Santos the said lot with its warehouse,

item No. 4 of the inventory, with the express condition that the proceeds or rents derived from the lot and

warehouse so conveyed should be collected by the wife Basilia Tolentino as long as she lived. It was also

provided therein, among other things, that the value of the lot and its warehouse should be deducted from the

total value of the conjugal property which was to be divided between the two spouses and which amounted toP2,200, a sum that divided equally, would amount to P1,100 each.

According to article 618 of the Civil Code, a gift is an act of liberality by which a person disposes

gratuitously of a thing in favor of another, who accepts it. Herrera and his wife Tolentino freely and gratuitouslydisposed of the said lot and its improvements in favor of the plaintiff; but it does not appear, however, that the

latter accepted the gift in the manner provided by law.

Article 633 of the same code prescribes:

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In order that a gift of real property may be valid it shall be made in a public instrument, stating

therein in detail the property bestowed as a gift and the amount of the charges, which the donee mustsatisfy.

The acceptance may be made in the same instrument bestowing the gift or in a different one; but it

shall produce no effect if no made during the life of the donor.

If made in a different instrument the acceptance shall be communicated to the donor in an

authentic manner, and this proceeding shall be recorded in both instruments.

The said instrument (p. 21 of the record) sets out the conveyance of the lot by th the donor to the donee,

but the acceptance of that gift by the plaintiff Santos does not appear therein and the record reveals no other

instrument that evidences such acceptance and notifies the donors thereof in an authentic manner. Therefore, theprovisions of the law not having been complied with, the gift was invalid and could have no effect whatever, for

the Civil Code prescribes, in article 629, that a gift does not bind the donor nor produce any effect until it has

been formally accepted by the donee in accordance with law. Because of this essential defect, the gift was notperfected and the donee could not acquire any real and positive right in the warehouse (land) and its

improvements.

So important is the donee's acceptance with the notice to the donors of his acceptance in order that thelatter may have full force and effect, that when the instrument which has been drawn up is recorded in theregistry of property, the document that evidences the acceptance if this has not been made in the deed of gift

should also be recorded. And in one or both documents, as the case may be, the notification of the

acceptance as formally made the donor or donors should be duly set forth. These requisites, definitelyprescribed at law, have not been complied with, and no proof that they have appears in the record.1awphi1.net

Neither does it appear that Exhibit A, the instrument conveying the gift, was recorded in the property

registry, an essential requisite of article 23 in connection with article 2 of the Mortgage Law to make it effective

against third persons, but still supposing it were there recorded, even improperly, it could not produce any legaleffect, inasmuch as it does not show the donee's acceptance and the proper notification thereof to the donors.

Therefore, with these defects, even if the said instrument of gift had been recorded, it could not in any waylegally affect Robledo's rights.

So, the gift in question, as specified in Exhibit A an instrument that was executed for other purposes, towit, conjugal separation and division of conjugal property between the parties, could not transmit to the donee

any positive and effective right in the lot in litigation, to the prejudice of the donors' creditor.

Furthermore, on March 1, 1905, when the said instrument was executed, Santiago Herrera had owed

Miguel Robledo, from March 12, 1903, the sum of P1,170, with interest at the rate of 6 per cent per annum. Forthe collection of this debt the creditor had to bring suit against the debtor. As the record does not show that the

donors had reserved sufficient funds or property to satisfy the debt, nor that they possessed property other than

the lot given away by them, we must conclude that the conveyance or gift made to the plaintiff by the spousesHerrera and Tolentino was for the purpose of defrauding the creditor, Miguel Robledo, by preventing him from

collecting his credit.

Article 643 of the Civil Code prescribes:

Should there be no stipulation as to the payment of debts, the donee shall be liable for them only if

the gift has been made to defraud creditors.

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The gift shall always be presumed as having been made to defraud creditors when, at the time of

bestowing it, the donor has not reserved to himself property sufficient to pay the debts contracted priorthereto.

Although some boats, a fishing device with nets, a light-material warehouse erected on another's land, and

the lot in litigation, are listed in the inventory contained in the said instrument, the fact is that when demand was

made upon the debtor for the payment of his debt to Robledo, he was unable to pay it, and the said lot waslevied upon and afterwards sold at public auction in satisfaction thereof.

The indebtedness was contracted by Santiago Herrera in 1903, during his marriage and before he and his

wife gave the said lot away; consequently, its payment is a charge against the conjugal partnership. (Civil Code,art. 1408.)

Santiago Herrera was the lawful and absolute owner of the lot in litigation and his ownership is shown to

have been recorded in the property registry of Manila, Tondo section, first inscription, No. 1340, in August,

1901. The entry discloses that the property was then free of all charge and encumbrance and that, on January 281913, a note was therein made of the writ of execution issued against the said lot and warehouses, issued in the

proceeding instituted by the creditor Robledo against the debtor Herrera, the unquestionable owner of the

property levied upon. Moreover, the right of the judgment debtor to redeem the lot in litigation was purchased

by the creditor Robledo for P85 on February 17, 1913, the date of the sale of the land at public auction.

The appellant alleges that as she was a minor, her mother, Gregoria Tolentino, appeared before the notary

to accept the said gift in the name of the appellant, and that since the execution of the instrument making such

bestowal her mother has been in possession of the donated land and has been collecting the rents from thetenants occupying it.

This allegation is unfounded and cannot be sustained. The instrument Exhibit A does not show that the

plaintiff's mother appeared or that she accepted the said gift in the name of the plaintiff. Her verbal acceptance,

if made, would not be sufficient, since the law requires that the acceptance shall be in writing either in aseparate public instrument or in the instrument whereby the gift is made, requirement which do not appear to

have been fulfilled in the present case. Neither is it true that the plaintiff was in possession and collected therents of the lot in question from the tenants who were occupying it.

The strangest and most peculiar feature of this case is the testimony given by Santiago Herrera himself,the husband of Basilia Tolentino, these two being the donors. This witness stated under oath of the instrument

Exhibit A, although he had not read this document, because he did not know how to read and was only able to

write his own name thereon; that at the time the instrument was executed, the notary Lara merely told him thatthe paper he was about to sign referred to the conjugal separation, and that Lara did not tell him that a gift of the

lot was therein made to Hermogena Santos; that, according to the terms of the separation agreed upon between

himself and his wife, he conveyed to the latter his fishing tackle and was to keep the real estate for himself; that

the said tackle was then worth P300 and the lot P500; that, upon his separating from his wife on account of her

infidelity, he received no money from her, and denied having received any sum whatever from the hands ofEugenio de Lara; that he did not remember having signed the instrument relative to the appointment of the

property, the payment to him of P500 and the gift of the lot; that he identified his signature at page 24 of therecord, but not that on page 25; that a daughter of his had by his wife was still living and that it was the latter

who collected the rents of the said lot. The certificate of baptism of the girl Catalina, the daughter of the said

spouses, was exhibited at the trial (Exhibit 3, p. 40 of the record).

This testimony and the contents of the said instrument, if we except from this latter the agreementsrelating to the conjugal separation and the division of the partnership property, give rise to the presumption that

this instrument with regard to all else therein contained was framed by the direction of the woman Basilia

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Tolentino without the knowledge or consent of her husband, Santiago Herrera, especially with respect to the gift

of the lot, the subject matter of the claim presented by the donee.lawphil.net

However, leaving aside these circumstantial details which cast doubt upon a large part of the said

instrument, and restricting ourselves to the matter of the gift of the lot in litigation, it is unquestionable that this

gift is null and void in itself and can produce no effect whatever, since it fails to comply with the requirements

of article 633 of the Civil Code, and because the said gift was made without proper consideration and for thepurpose of defrauding the defendant creditor, whom it is to be presumed the donors intended seriously to

prejudice when bestowing the property upon the plaintiff (arts. 643 and 1297, Civil Code). This intended injuryto the defendant would be iniquitously consummated, should the plaintiff obtain a decision contrary to thejudgment appealed from, which, moreover, is in accordance with the law and the merits of the case.

Therefore, in consideration of the foregoing reasons whereby the errors assigned to the lower court have

been refuted, the said judgment should be and is hereby affirmed, and the defendants are absolved from the

plaintiff, with the costs against the appellant.

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

Republic of the Philippines

SUPREME COURTManila

EN BANC

G.R. No. L-803 August 27, 1948

JOSE P. SANDEJAS, plaintiff-appellant,

vs.

ZACARIAS C. ROBLES, ELENA C. VDA. DE ROBLES and ROSARIO Y. SINGSON, defendants-appellees.

Benjamin H. Tirol, Corazon C. Miraflores and Orlando M. Jesena for appellant.

W. E. Greenbaum and Luis G. Hofilena for appellee Rosario Y. Singson.

M. F. Zamora and Jose C. Robles for appellee Zacarias C. Robles and Elena C. Vda. de Robles.

FERIA,J.:

This is an appeal from an order of the Court of First Instance of Iloilo dismissing the plaintiff's action upon

motion of the defendant on the ground that it is barred by prior judgment.

The pertinent facts alleged in the complaint to which a motion to dismiss on the ground that the cause of action

is barred by a prior judgment is filed, are those relating to the cause of action and the parties, because if they arethe same as the cause of action and the parties in the prior judgment, or though the parties are different they

represent the same interest, and the court rendering the prior judgment had jurisdiction over the subject matter

and the parties, the subsequent action is barred by the prior judgment and should be dismissed.

In the present appeal, there is no question that the parties in the present and prior action are the same orrepresent the same interest, and that the cause of action in both are the same, that is, the performance or non-

performance of the terms and conditions of a contract of sale for the enforcement or resolution thereof. They

only question to be determined is whether the Court which has rendered the former judgment had jurisdictionover the subject matter and the parties.

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The appellants contend that the lower erred in upholding the validity of the judgment of the Court of First

Instance of Iloilo during the Japanese occupation, because: (1) "The said court had no jurisdiction to try civilcase No. 21, much less to render the decision in question on October 2, 1944;" and (2) "That granting for the

sake of argument that the puppet Court of First Instance of Iloilo had jurisdiction, yet such decision was

rendered after having deprived plaintiff of his day in court and is therefore in violation of the due process clauseof the Constitution.

As to the first question, the appellants do not question the ruling of this Supreme Court on the validity of the

judgments rendered by the courts established in these Islands during the Japanese occupation laid down in CoKim Cham vs. Valdez Tan Keh,1 Off. Gaz., 779; but they contend that, as the three parcels of land involved orsold in the contract of the sale resolved by the prior judgment were located in the Municipality of Passi,

Province of Iloilo, and "the puppet Republic of the Philippines since the middle of the month of September,

1944, could no longer assert its authority over the major portion of the territory of Iloilo including theMunicipality of Passi," then under the possession and control of the Panay guerrilla forces, the Court of First

Instance of Iloilo which rendered the prior judgment had no jurisdiction over the res or the property because the

action was quasi in rem, and therefore the said judgment is null and void.

This contention is premised on the wrong assumption that the action for the resolution of a contract of sale of areal property is an action quasi in rem. The action instituted by the appellees to resolve the contract of sale of

said parcels of land, is in personam and not quasi in rem.

This Court quoted with approval in Grey Alba vs. Dela Cruz, 17 Phil., 61-62, the following definition of an

action in personam:

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 barindifferently 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 vs. Judges,supra.).

According to American Jurisprudence, Vol. I page 435, "An action in personam has for its object a judgmentagainst the person, as distinguished from a judgment against property, to determine its status. Whether a

proceeding is in rem orin personam is determined by its nature and purpose, and by these only. A proceeding

in personam is a proceeding to enforce personal rights and obligations brought against the person and based onjurisdiction of the person, although it may involve his right to, or the exercise of ownership of, specific

property, or seek to compel him to control or dispose of it in accordance with the mandate of the court.

In the case ofBanco Espanol-Filipino vs. Palanca, 37 Phil., 921, we held that "The action quasi in rem differs

from the true action in rem in the circumstances that in the former an individual is named as defendant, and the

purpose of the proceeding is to subject his interest therein to the obligation or lien burdening the property. Allproceedings having for their sole object the sale or other disposition of the property of the defendant, whether

by attachment, foreclosure, or other form of remedy, are in a general way thus designated. The judgmententered in these proceedings is conclusive only between the parties.

With respect to the second question, from the prior judgment marked as Exhibit A of the motion to dismiss, it

appears that the appellants had submitted themselves to the jurisdiction of the Court of First Instance of Iloilo

by filing their answers to the complaint through their Atty. Benjamin H. Tirol, the same attorney who representsthem now; that they were notified of the date set for the hearing of the action, but when the case was called for

trial on September 29, 1944, their attorney asked and obtained permission from the court to withdraw his

appearance as attorney for the appellants stating as ground therefor that it was difficult to communicate with his

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clients, who went to Arevalo, a suburb of and distant of about six or seven kilometers from the Iloilo City,

capital of the Province of Iloilo; that to give the appellants opportunity to be heard, the hearing was postponedand set on the afternoon of the same date; and that as they did not appear on the afternoon the case was heard

and judgment was rendered on October 2, 1944, declaring the resolution of the contract between the parties and

ordering the appellees to return to the appellants the sum of P5,723.60, received by the former from the latter aspayment on account of the sum of P35,000 agreed upon as purchase price.

And, according to the allegations in appellants' complaint, on October 25, 1944, the appellants filed a motion

for reconsideration which was denied by the court, and when they tried to appeal from the decision the courtdenied the appeal on November 23, 1944, and declared the judgement final and executory; and, on November29, the appellants filed a motion for reconsideration of the order denying the appeal, and up to the filing of the

complaint in the present case no resolution of the motion has been received by the appellants.

In view of the foregoing facts set forth in the decision Exhibit A and not contradicted or denied by the

appellants, which show that the absence from the trial of the appellants was due to their own fault, appellants'contention that they were deprived of their day in court is untenable. The appeal is therefore dismissed. So

ordered.

Paras, Pablo, Bengzon, Briones, Padilla and Tuason, JJ., concur.

Separate Opinions

PERFECTO,J., dissenting:

We dissent:

We are of the opinion that the appealed decision should be reversed and the lower court ordered to proceed with

the case and render decision on the merits.

This stand is based on the reasons stated in our opinion in Co Kim Cham vs. Valdez Tan Keh,141 Off. Gaz., 779.