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G.R. No. 116426 April 12, 2000

REPUBLIC OF THE PHILIPPINES, represented by the Director of Lands, petitioner,vs.

GERARDO SODSOD, Respondent.

PARDO, J.:

What is before the Court for review via appeal by certiorari is the decision of the Court of Appeals 1 affirmingthat of the trial court 2ordering Lot No. 10367 of the Cadastral Survey of Oas, Albay to be registered and

confirmed in the names of Gerardo Sodsod and Felicidad Rellores.

The facts are as follows:

Sometime prior to July 1973, the Director of Lands filed with the Court of First Instance of Albay, Ligao

cadastral proceedings3 for the coverage under the torrens system of the lands in Oas Cadastre, Oas, Albay.

On July 19, 1973, spouses Gerardo Sodsod and Felicidad Rellores filed an answer to the petition, claimingownership of Lot No. 10367, Oas Cadastre, consisting of 52,847 square meters, located at Tablon, Oas, Albay,

by virtue of their more than thirty (30) years possession including that of their predecessor-in-interest.

During the cadastral hearings, the lot was uncontested.

The evidence showed that respondent Sodsod and his predecessor-in-interest occupied and possessed the lot inquestion in the concept of owner, openly, continuously, adversely, notoriously and exclusively since 1929, or

for more than thirty (30) years.

On July 27, 1990, the Regional Trial Court rendered decision, the dispositive portion of which reads:

WHEREFORE, Lot No. 10367 of the Cadastral Survey of Oas, Albay more particularly described in theplan and technical description thereof is hereby ordered registered and confirmed in the names of the

SPOUSES GERARDO SODSOD and FELICIANO RELLORES, Filipinos, of legal ages, and residents

of Tablon, Oas, Albay.

Once this decision becomes final, let the decree and original certificate of title be issued in their favor.

SO ORDERED.

Ligao, Albay, Philippines, July 27, 1990. 4

In due time, petitioner appealed to the Court of Appeals. 5

On July 25, 1994, the Court of Appeals promulgated its decision affirming that of the trial court. 6

Hence, this petition. 7

We deny the petition. The issue is whether respondent and his predecessor-in-interest possessed the land in

question for more than thirty years sufficient to vest in him registrable title over the same.

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The issue is factual. The factual findings of the Court of Appeals are conclusive and may not be reviewed on

appeal. 8

Nonetheless, looking into the facts of this case, we agree with the Court of Appeals that respondent has fully

complied with the requirements under Section 48 (b), C. A. No. 141 for confirmation of title over the lot in

question.Ipso jure, respondent has acquired private ownership of the land by mere possession and occupation

for more than thirty (30) years under claim of ownership.9

Since 1929 up to the filing of the cadastral case, respondent and his predecessor had been in actual, open,continuous, exclusive, peaceful and notorious possession and occupation of the lot involved in the concept of

owners.1wphi1

Hence, they have acquired private ownership of the land, and are entitled to confirmation of registrable title.

WHEREFORE, we DISMISS the appeal and AFFIRM in toto the decision of the Court of Appeals in CA - G.R. CV No. 29577.

No costs.1wphi1.nt

SO ORDERED.

Davide, Jr., C.J., Puno, Kapunan and Ynares-Santiago, JJ., concur.

G.R. No. L-77468 August 25, 1999

EDUARDO LUCENA and NATIVIDAD PARALES, petitioners,vs.

COURT OF APPEALS and RURAL BANK OF NAUJAN, INC., ROGELIO PINEDA, MARIANITO

BAJA, PATRICIA ARAJA, BRAULIO BAGUS, REYNALBO MAMBIL and RAMON GARCIA,respondents.

QUISUMBING, J.:

This is a petition for review of the Decision dated January 20, 1987 of the Court of Appeals in CA - G.R. CV

No. 65526-R entitledEduardo Lucena, et al. vs. Rural Bank of Naujan, Inc., et al. as well as its Resolutiondated February 16, 1987 denying petitioners' motion for reconsideration.1 The assailed decision reversed the

judgment of the then Court of First Instance of Oriental Mindoro in Civil Case No. R-3004, "Eduardo Lucena,

et al. vs. Rural Bank of Naujan, et al.(Reconveyance with Damages)" and dismissed herein petitioners'

complaint.2

The factual antecedents are as follows:.

Petitioners allege they are the registered owners of a parcel of land located at the barrio of Mag-asawang Tubig,

Municipality of Naujan, Oriental Mindoro, covered by Transfer Certificate of Title No. T-41512 of the Registry

of Deeds of Oriental Mindoro. On October 29, 1969, petitioner Eduardo Lucena obtained a loan from theprivate respondent Rural Bank of Naujan, Inc. in the amount of three-thousand pesos (P3,000.00) secured by a

real estate mortgage constituted on said parcel of land. On October 1, 1970, after the loan had matured,

petitioners paid to the Rural Bank of Naujan, Inc., the sum of two-thousand six pesos and ninety centavos(P2,006.90) in partial satisfaction of their debt, thereby leaving a balance of one-thousand pesos (P1,000.00) in

its favor.1wphi1.nt

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On May 7, 1974, after previous demand by the rural bank for the petitioners to settle the balance of their

matured loan went unheeded, the subject property was extrajudicially foreclosed and sold at public auctionwhere the rural bank as highest bidder acquired the property. Prior to the auction sale, notices of foreclosure

were posted in at least three conspicuous public places in the municipality where the subject property was

located, as indicated in the affidavit of posting dated May 6, 1974.3 No notices were posted in the barrio wherethe property was located, nor were any published in a newspaper of general circulation. The Certificate of Sale

dated May 7, 1974 issued by private respondent Deputy Sheriff Braulio Bagus was registered with the Registry

of Deeds of Oriental Mindoro only on January 9, 1975.4

On June 26, 1975, an affidavit of consolidation of ownership was executed by the Rural Bank of Naujanthrough its manager, private respondent Rogelio P. Pineda. The affidavit of consolidation was subsequently

registered by private respondent Reynaldo Mambil in his capacity as acting Register of Deeds on July 8, 1975,

under Entry No. 134351. Transfer Certificate of Title No. T-41512 in the name of the petitioners was thuscancelled and Transfer Certificate of Title No. T-68547 of the Registry of Deeds of Oriental Mindoro was then

issued in favor of the rural bank also on July 8, 1975. Thereafter, on July 14, 1975, a deed of sale was executed

by the rural bank through its manager whereby the subject property was sold to private respondent spousesMarianito Baja and Patricia Araja, resulting in the cancellation of TCT No. T-68547 and the subsequent

issuance of TCT No. T-68680 in the name of said respondents. Said deed of sale dated July 14, 1975 was

accepted and registered by private respondent Ramon G. Garcia, then acting Register of Deeds of Oriental

Mindoro.5

On January 12, 1977, petitioners filed a complaint for reconveyance and damages against private respondents

before the then Court of First Instance of Oriental Mindoro, to recover the subject property from private

respondents and to compel the latter to compensate them for damages and losses suffered.6 After trial, the court

a quo promulgated its decision dated September 12, 1978, ruling in sum that there was no valid foreclosure saleof the subject property. The dispositive portion thereof reads:

WHEREFORE, in view of the foregoing the Court believes and so holds that the preponderance of evidence

militates in favor of the plaintiffs and against the defendants, and the Court renders judgment, to wit:

(1) Orders the defendants Marianito Baja and Patricia Araja to reconvey the parcel of land registered intheir name under TCT No. T-68680 of the Register of Deeds of Oriental Mindoro in favor of herein

plaintiffs Eduardo Lucena and Natividad Parales, free from all liens and encumbrances, except the

remaining unpaid balance including accrued interest thereon in favor of the Rural Bank of Naujan, Inc.;

(2) Orders the Rural Bank of Naujan, Inc. and its manager Rogelio Pineda, jointly and severally, to paythe herein plaintiffs actual damages in the amount of P17,500.00 for unrealized rentals from subject

property;

(3) Orders the Rural Bank of Naujan, Inc. and its manager Rogelio Pineda, jointly and severally, to pay

herein plaintiffs moral damages in the amount of P10,000.00;

(4) Orders the Rural Bank of Naujan, Inc. and its manager Rogelio Pineda, jointly and severally, to pay

plaintiffs attorney's fees in the amount of P5,000.00, and to pay the costs of suit.

SO ORDERED.7

Not satisfied with the judgment, both petitioners and private respondents elevated the case to the Court of

Appeals. On January 20, 1987, the respondent court rendered its decision reversing and setting aside the trialcourt's judgment. It ruled in sum that (a) posting of notices in the barrio where the property is situated is not

required, as all the law requires is posting in the municipality or city where the property is located; (b) there is

no need to publish the notice of auction sale in a newspaper of general circulation, because the balance of the

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loan was only one-thousand pesos (P1,000.00); (c) personal notice of the auction sale to the petitioners was not

required; (d) the trial court was correct in holding that the date of registration of the sheriff's certificate of saleand not the date of the sale itself was the reckoning point for the start of the one-year redemption period of the

petitioners; and (e) the petitioners did not redeem their property within the one-year period from the date of

registration of the certificate of sale, and having lost their right of redemption, cannot squirm their way out oftheir predicament by asking for reconveyance of the subject property.8

Petitioners now seek recourse through this petition. They assign the following errors:

(1) ABSENCE OF POSTING OF NOTICES IN THE BARRIO OF MAGASAWANG TUBIG, WHERE THE

LAND IS LOCATED, AS REQUIRED BY REPUBLIC ACT NO. 5939, RENDERED NULL AND VOIDTHE SALE IN QUESTION.

(2) PUBLICATION WAS A REQUISITE SINE QUA NONIN THIS CASE, BECAUSE THE AMOUNT OF

THE LOAN WAS P3,000.00; HENCE, PARAGRAPH 3, SECTION 5 OF REPUBLIC ACT NO. 720, WAS

NOT APPLICABLE, BECAUSE THE LAW DOES NOT SPEAK OF THE "BALANCE UNPAID" BUT THE"AMOUNT OF THE LOAN".

(3) THE PREMATURE AND FRAUDULENT CONSOLIDATION OF OWNERSHIP AND MALICIOUS

IMMEDIATE SALE OF THE LAND IN QUESTION IN FAVOR OF MARIANITO BAJA AND PATRICIAARAJA BEFORE THE EXPIRATION OF THE PERIOD OF REDEMPTION CLOSED THE DOOR FORLEGAL REDEMPTION; SO THAT AN ACTION FOR RECONVEYANCE, BECAME THE PROPER

REMEDY.

(4) THE AFFIDAVIT OF CONSOLIDATION OF OWNERSHIP HEREIN WAS NULL AND VOID FOR

LACK OF NOTARIZATION.9

We find that the pertinent issues to be resolved are: (1) whether or not a valid foreclosure sale of the subjectproperty was conducted and (2) whether or not reconveyance and damages is the proper remedy available to

petitioners.

With respect to the first issue, this Court has ruled that failure to comply with statutory requirements as topublication of notice of auction sale constitutes a jurisdictional defect which invalidates the sale.10 Even slight

deviations therefrom are not allowed.11 Section 5 of Republic Act No. 720 as amended by Republic Act No.

5939 provides:12

The foreclosure of mortgages covering loans granted by rural banks shall be exempt from thepublication in newspapers were the total amount of the loan, including interests due and unpaid, does not

exceed three thousand pesos. It shall be sufficient publication in such cases if the notices of foreclosure

are posted in at least three of the most conspicuous public places in the municipality and barrio were the

land mortgaged is situatedduring the period of sixty days immediately preceding the public auction.

Proof of publication as required herein shall be accomplished by affidavit of the sheriff or officerconducting the foreclosure sale and shall be attached with the records of the case: . . . . (emphasis

supplied)

In the case at bar, the affidavit of posting executed by the sheriff states that notices of the public auction sale

were posted in three (3) conspicuous public places in the municipality such as (1) the bulletin board of the

Municipal Building (2) the Public Market and (3) the Bus Station. There is no indication that notices were

posted in the barrio where the subject property lies. Clearly, there was a failure to publish the notices of auctionsale as required by law.

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InRoxas vs. Court of Appeals,13 this Court has ruled that the foreclosure and public auction sale of a parcel of

land foreclosed by a rural bank were null and void when there was failure to post notices of auction sale in thebarrio where the subject property was located. This Court finds that the same situation obtains in the case at bar.

Further still, there was a failure on the part of private respondents to publish notices of foreclosure sale in a

newspaper of general circulation. Section 5 of R.A. 720 as amended by R.A. 5939 provides that suchforeclosures are exempt from the publication requirement when the total amount of the loan including interests

due and unpaid does not exceed three-thousand pesos (P3,000.00). The law clearly refers to the total amount of

the loan along with interests and not merely the balance thereof, as stressed by the use of the word "total." At

the time of foreclosure, the total amount of petitioners' loan including interests due and unpaid was P3,006.90.Publication of notices of auction sale in a newspaper was thus necessary.

In light of private respondents' failure to comply with the statutory requirements of notice and publication, we

rule that the foreclosure and public auction sale of petitioners' property are null and void. Hence, the Rural Bankof Naujan did not acquire valid title to the property in question. This reversal of the Court of Appeals disposes

of the other errors assigned by petitioners.

Anent the second issue, the above conclusion requires a determination of whether or not petitioners are entitled

to a reconveyance of their property. If the property has not yet passed to an innocent purchaser for value, anaction for reconveyance is still available.14 It is a conditionsine qua non for an action for reconveyance to

prosper that the property should not have passed to the hands of an innocent purchaser for value.15 He isconsidered an innocent purchaser who acquired the property for a valuable consideration not knowing that thetitle of the vendor or grantor was null and void.16 Good faith or its absence must thus be established on the part

of spouses Marianito Baja and Patricia Araja at the time that they purchased the subject property from the Rural

Bank of Naujan.

Good faith, or the lack of it, is in the last analysis a question of intention; but in ascertaining the intention bywhich one is actuated on a given occasion, we are necessarily controlled by the evidence as to the conduct and

outward acts by which alone the inward motive may, with safety, be determined.17 To determine whether or not

the Baja spouses were in good faith at the time they purchased the subject property from the Rural Bank ofNaujan thus entails a review of the evidence on record.

The trial court concluded that Marianito Baja and Patricia Araja were purchasers in bad faith. The trial court

noted that when Marianito Baja verified the title of the subject property at the rural bank, he must have noticed

that the certificate of sale was registered with the Office of the Register of Deeds only on January 9, 1975, sothat he is presumed to know that the petitioners had at least one year from that date or up to January 8, 1976 to

redeem the subject property.18

It is a well-settled rule that a purchaser cannot close his eyes to facts which should put a reasonable man upon

his guard, and then claim that he acted in good faith under the belief that there was no defect in the title of thevendor. His mere refusal to believe that such defect exists, or his willful closing of his eyes to the possibility of

the existence of a defect in his vendor's title, will not make him an innocent purchaser for value, if it afterwards

develops that the title was in fact defective, and it appears that he had such notice of the defect as would haveled to its discovery had he acted with that measure of precaution which may reasonably be required of a prudent

man in a like situation.19

In the case at bar, Marianito Baja testified on cross-examination that Victor Atienza, Baja's cousin and

petitioners' tenant on the subject property, informed him of the rural bank's intention to sell the land inquestion.20 He said that from the time this information was relayed to him until the execution of the deed of sale

by the bank in favor of the Baja spouses on July 14, 1975, a period of about half a year elapsed.21 He further

stated that upon learning from Victor Atienza that the property was being sold, he immediately went to the rural

bank to verify this information, as well as ascertain if the land was titled.22 Baja also said that before the deed ofsale was executed on July 14, 1975, he made his offer to buy the property from the bank about one month

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before said date.23 On direct examination, however, Baja claimed that he verified the title to the subject property

to be in the rural bank's name before the sale was effected. 24

From the records, it appears that title to the property was issued in the rural bank's name only on July 8, 1975,

when the bank's affidavit of consolidation of ownership dated June 26, 1975 was registered with the Registry of

Deeds of Oriental Mindoro.25 Said registration was the operative act to prompt the Register of Deeds to cancel

the title in the name of petitioners and to issue a new one in the name of the rural bank. Hence, if MarianitoBaja claims to have offered to buy the property one month before July 14, 1975, or sometime in the middle of

June of that year, he must have noticed that the title was not yet in the rural bank's name. More so, he alsowould have noticed that the title was not yet in the bank's name when he verified the status of the property andthe title thereto immediately after Victor Atienza told him that the property was being sold, which, according to

him, was about half a year before July 14, 1975.

What Baja should have noticed, if we follow his own chronological estimates, was that the title was still in the

petitioners' name when he verified the status of the land in question. Thus, he must have seen that the certificateof auction sale was registered only on January 9, 1975. As the trial court has said, he is presumed by law to

know that the petitioners had one year from this date or until January 8, 1976 to redeem the subject property.

In addition, Baja was completely aware of the fact that Victor Atienza was a tenant of the petitioners. Hence, at

the time the property in question was being sold to him by the rural bank, possession thereof was with thepetitioners, exercised through their tenant Victor Atienza. In Santiago vs. Court of Appeals,26 we citedDe

Guzman, Jr. vs. Court of Appeals (156 SCRA 701 [1987]):

The failure of appellees to take the ordinary precautions which a prudent man would have taken underthe circumstances, specially in buying a piece of land in the actual, visible and public possession of

another person, other than the vendor, constitutes gross negligence amounting to bad faith.

In this connection, it has been held that were, as in this case, the land sold is in the possession of a

person other than the vendor, the purchaser is required to go beyond the certificate of title and ma[k]einquiries concerning the rights of the actual possessor. (Incala vs. Mendoza, CA-G.R. No. 13677-R,

November 9, 1965; De Jesus vs. Revilla, CA-G.R. No. 13562-R, October 5, 1965; Martelino vs.Manikan, CA-G.R. No. 32792-R, June 22, 1956)

x x x x x x x x x

One who purchases real property which is in the actual possession of another should, at least make someinquiry concerning the right of those in possession. The actual possession by other than the vendor

should, at least put the purchaser upon inquiry. He can scarcely, in the absence of such inquiry, be

regarded as a bona fide purchaser as against such possessors" (Conspecto vs. Fruto, 31 Phil. 144)."

x x x x x x x x x

Marianito Baja testified on cross-examination that he was working for about half a year in another area about a

hundred meters away from the subject property before the same was offered to him for sale.27 Her thus had

visual notice that petitioners' tenant Victor Atienza was working on the land in question. He also learned fromAtienza that petitioner Eduardo Lucena was the landlord of the former.28 In fact, prior to the date that he

acquired the property, Baja instructed Atienza to inform said petitioner that the rural bank was selling the

property to him.29 Baja, however, never communicated directly with petitioner Eduardo Lucena, nor did he

receive any response coming from said petitioner.30 He did learn, however, that Lucena scolded Victor Atienzawhen the latter went to see him, indicating that he was aware of said petitioner's aversion to the sale of the

property by the rural bank.31

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All things considered, Marianito Baja did not make any reasonable inquiry regarding the status of the land in

question, despite being aware that the property was still in the possession of the petitioners. He did not evenmake any effort to communicate directly with petitioner Eduardo Lucena. All he did was to instruct Victor

Atienza to inform Lucena of the proposed sale of the property. He did not instruct Atienza, however, to make

inquiries concerning the status of the property. Furthermore, Baja's claim that he saw that title to the propertywas in the name of the rural bank prior to the sale is not credible. Granting arguendo that the title was in the

name of the rural bank when he first saw it, he nonetheless had notice that the possession of the property was

with persons other than the vendors thereof. It was thus incumbent upon him to look beyond the title to the

subject property and make the necessary inquiries. This he neglected to do.

When the Baja spouses purchased the subject property from the rural bank on July 14, 1975, they did so well

within the one-year redemption period of petitioners. In doing so, not only did said respondents have notice of a

defect in the title of the rural bank over the subject property, but by purchasing the latter, they also closed thedoor on the petitioners' right to redeem it. Accordingly, we adopt the finding of the lower court that said

respondents purchased the subject property in bad faith. We rule that petitioners are entitled to a reconveyance

of the property as it has not yet passed to an innocent purchaser for value.

In their petition, petitioners also pray that this Court render a decision pursuant to their prayers as appellants inthe Court of Appeals. Essentially, petitioners implored the respondent court to raise the amount of damages

awarded them by the trial court and to find private respondents Braulio Bagus, Reynaldo Mambil and RamonGarcia liable for damages as well. Petitioners also asked for the inclusion of exemplary damages and litigationfees in the award.

We find that there is no substantial reason to modify the trial court's award of damages. There is no convincing

proof to support petitioners' allegations that private respondents Braulio Bagus, Reynaldo Mambil and Ramon

Garcia performed their duties as Deputy Provincial Sheriff and Registers of Deeds with unlawful intent and inbad faith. Furthermore, petitioners' allegations as to the amount of unrealized rentals due them as actual

damages are mere assertions unsupported by factual evidence. In determining actual damages, the court cannot

rely on mere assertions, speculations, conjectures or guesswork but must depend on competent proof and on thebest evidence obtainable regarding the actual amount of loss.32

There is also no sound basis for increasing the award of moral damages. The well-entrenched rule is that the

grant of moral damages depends upon the discretion of the court based on the circumstances of each case.33 We

find that the trial court exercised its sound discretion in awarding actual and moral damages as it did to thepetitioners, as well as in not granting the exemplary damages for lack of sufficient basis.

WHEREFORE, the petition is hereby GRANTED. The decision of the Court of Appeals dated January 20, 1987

is hereby SET ASIDE; and the decision of the CFI of Oriental Mindoro dated September 12, 1978, is hereby

REINSTATED and AFFIRMED.1wphi1.nt

Costs against private respondents.

SO ORDERED.

G.R. No. 126875 August 26, 1999

HEIRS OF MARIANO, JUAN, TARCELA and JOSEFA, all surnamed BRUSAS, petitioners,

vs.

COURT OF APPEALS and HEIRS OF SPOUSES INES BRUSAS and CLETO REBOSA, respondents.

BELLOSILLO, J.:

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This is a bitter dispute spanning more than two (2) decades of protracted legal entanglements and deep-seated

enmity among the protagonists, even descending to their children, each claiming ownership over a 19-hectareland located in San Francisco, Baao, Camarines Sur. In view of the prolonged litigation, the original parties

have since died and are now substituted by their heirs.

Petitioners, heirs of Juan, Mariano, Tarcela and Josefa, all surnamed Brusas, claimed that the disputed property,

formerly a public land, was part of the 33-hectare land in the actual physical possession of their grandfatherSixto Brusas since 1924, having inherited the same from their great grandfather Pedro Brusas. Sometime in

1946 Sixto Brusas caused the property to be surveyed in the name of his five (5) children, namely, Juan, Ines,Mariano, Tarcela and Josefa. The survey was approved as Psu-116520.1 As indicated in the survey plan theproperty was traversed by the Barit River, and the eastern portion thereof with an aggregate area of 19.8992

hectares was denominated as Lots 1 and 2, while the western portion measuring 13.2439 hectares was

designated as Lots 3 and 4. In the same year, the property was subdivided among the five (5) children of SixtoBrusas. The partition was made lengthwise so that each heir would have access to the river and, as was the

custom of the place, the distribution was made according to their age: the southernmost lot was assigned to Juan

being the eldest, followed successively by Ines, Mariano, Tarcela and Josefa.2 All of them purportedly tookimmediate possession of their respective shares.1wphi1.nt

On 17 July 1968 Ines Brusas applied for and was granted a free patent over Lots 1 and 2 of Psu-116520 with an

aggregate area of 19.8992 hectares for which OCT No. 23356 was issued in her name. Thus, when MarianoBrusas and Josefa Brusas filed their sworn statements of landholdings in 1973 they supposedly discovered thattheir properties were already titled in the name of their sister Ines. The discovery triggered a controversy among

the Brusas siblings and earnest efforts to settle the conflict before the barangay officials, the local police and the

PC Provincial Commander proved futile.

Private respondents, heirs of Ines Brusas and Cleto Rebosa, denied on the other hand that Lots 1 and 2 wereowned and possessed by their grandfather Sixto Brusas during his lifetime. They asserted that Ines Brusas was

the absolute owner having entered the property as early as 1924. Since then Ines Brusas and her husband Cleto

Rebosa were clearing the land on their own by cutting down trees and removing their roots it being a forestedarea. In 1957 Ines Brusas applied for a free patent which was approved and the corresponding certificate of title

issued in 1967.

Sometime in 1974 Ines Brusas filed a complaint for recovery of six (6) hectares of land alleging that her

brothers and sisters forcibly entered and deprived her of that portion of the property.3 Juan, Josefa, Mariano andTarcela countered by instituting in the same court an action for reconveyance imputing fraud, misrepresentation

and bad faith to Ines Brusas in using a forged affidavit to obtain title over Lots 1 and 2 despite full knowledge

that she owned only 1/5 portion thereof.4

After the cases were consolidated trial dragged on for nineteen (19) years. The lower court finally rendered itsdecision in 1993 dismissing the complaint filed by Ines Brusas, declaring Lots 1 and 2 as the pro-indiviso

property of the Brusas siblings, and ordering Ines Brusas to reconvey to her brothers and sisters their respective

shares in the disputed property.

On appeal, however, the Court of Appeals in its Decision of 16 July 1996 reversed and set aside the decision ofthe trial court thus

WHEREFORE . . . . the appealed decision is REVERSED and SET ASIDE and another judgment is hereby

rendered as follows:

1. In Civil Case No. IR-1058, ordering defendants and/or their successors-in-interest to vacate the landdescribed in paragraph 4 of the complaint and/or to deliver possession thereof to plaintiffs or their

successors-in-interest;

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2. Dismissing the complaint for reconveyance and damages in Civil Case No. IR-1059.

The Court of Appeals ratiocinated

Apart from the self-serving and bare allegations of appellees, no competent evidence was adduced tosubstantiate their claim of fraud on the part of Ines Brusas in her application for a free patent over the

land in dispute. They submitted specimens of their signatures to the NBI office at Naga City for

examination but failed to submit to the court the result thereof. Such failure indicates either that they did

not pursue their request for examination or that, if they did, the result thereof is adverse to their cause.

It is significant to note that aside from the supposedly falsified affidavit, Exhibit 4, another affidavit was

executed by Ines, together with Tarcela, Juan and Josefa, all surnamed Brusas, renouncing their rights to

Lots 3 and 4 in favor of Mariano Brusas (Exhibit 11). Both appear to have been notarized by the sameNotary Public on April 22, 1960. The existence of the two affidavits, Exhibits 4 and 11, strongly

suggests that the Brusas recognized Ines Brusas as the sole claimant of Lots 1 and 2 and Mariano

Brusas, the sole claimant of lots 3 and 4.

There is likewise a presumption of regularity in the performance of official duty. There is no showingthat the grant of a free patent in favor of Ines Brusas was predicated solely on the affidavit of waiver,

Exhibit 4, or that without it her application would not have been given due course.

It must be borne in mind, in this regard, that the land in dispute was originally a public land. The

occupation and cultivation thereof by Sixto Brusas, the father of Ines, Tarcela, Josefa, Juan and MarianoBrusas, did not make it a part of his hereditary estate. If he had complied with all the legal requirements

for the grant of a free patent, he could have filed the corresponding application therefor. But he did not.

Hence, he could not have transmitted ownership thereof to his heirs upon his death (citing Naval v.Jonsay, 50 O.G. 4792)

Their motion for reconsideration having been denied by the Court of Appeals in its Resolution of 30 September

1996, petitioners now come to us through this petition for review.

The pivotal issues to be resolved are: first, who are the rightful owners of the disputed property is it the heirsof Mariano, Juan, Josefa and Tarcela Brusas, whose claim of ownership is evidenced by a survey and

subdivision plan; or, is it the heirs of spouses Ines Brusas and Cleto Rebosa, whose claim of ownership flows

from an original certificate of title in the name of their parents, and covering the litigated property? Andsecond,

was there fraud on the part of Ines Brusas in causing the registration of the disputed land under her name thusentitling petitioners to the reconveyance of their shares therein?

It is a fundamental principle in land registration that the certificate of title serves as evidence of an indefeasible

and incontrovertible title to the property in favor of the person whose name appears therein. A title once

registered under the Torrens System cannot be defeated even by adverse, open and notorious possession; neither

can it be defeated by prescription. It is notice to the whole world and as such all persons are bound by it and noone can plead ignorance of the registration.5

The real purpose of the Torrens System of land registration is to quiet title to land and stop forever any questionas to its legality. Once a title is registered the owner may rest secure without the necessity of waiting in the

portals of the court, or sitting on the mirador de su casa, to avoid the possibility of losing his land.6 Indeed,

titles over lands under the Torrens system should be given stability for on it greatly depends the stability of the

country's economy.Interest reipublicae ut sit finis litium.

This does not mean, however, that the landowner whose property has been wrongfully or erroneously registered

in another's name is without remedy in law. When a person obtains a certificate of title to a land belonging to

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another and he has full knowledge of the rights of the true owner, he is considered guilty of fraud. He may then

be compelled to transfer the land to the defrauded owner so long as the property has not passed to the hands ofan innocent purchaser for value.7

In the instant case, the litigated property is still registered in the name of Ines Brusas, so that insofar as

procedure is concerned, petitioners were correct in availing of the remedy of reconveyance. However, an action

for reconveyance presupposes the existence of a defrauded party who is the lawful owner of the disputedproperty. It is thus essential for petitioners to prove by clear and convincing evidence their title to the property,

and the fact of fraud committed by Ines Brusas in registering their property in her name, which they miserablyfailed to do.

Primarily, the survey and subdivision plan submitted in evidence by petitioners are inferior proofs of ownership

and cannot prevail against the original certificate of title in the name of Ines Brusas who remains and is

recognized as the registered owner of the disputed property.

The survey of the land in the name of the five (5) children of Sixto Brusas is only an indication that each has aninterest over the property, but it does not define the nature and extent of those interests, nor the particular

portions of the property to which those interests appertain. The subdivision plan, on the other hand, is of

doubtful evidentiary value and can hardly be the basis of a claim of ownership. A careful examination thereof

shows that it is nothing but a sketch of the land purportedly prepared by a private land surveyor. It is notapparent therein when and where the partition was made, or who caused the property to be subdivided. Worse,

this document was not even signed by any of the parties to the supposed partition to show their conformity

thereto, nor acknowledged in writing by any of them or their heirs.

Even petitioners' tax declarations and tax receipts are unavailing. It is well-settled that they are not conclusive

evidence of ownership or of the right to possess land, in the absence of any other strong evidence to support

them.8 The fact that the disputed property may have been declared for taxation purposes in the names of the

brothers and sisters of Ines Brusas does not necessarily prove their ownership thereof. The tax receipts and taxdeclarations are merely indicia of a claim of ownership.

What perhaps militates heavily against petitioners is the Affidavit (of waiver) marked Exh. "4" executedsometime in 1960 by Mariano, Tarcela, Juan and Josefa, whereby they relinquished, ceded and transferred to

Ines Brusas their rights and interests over the controversial property, and recognized her as the absolute ownerthereof, thus

WE, MARIANO BRUSAS, JUAN BRUSAS, TARCELA BRUSAS and JOSEFA BRUSAS, all of legal

age, married except the last who is a widow, residence (sic) and with postal address at Baao, CamarinesSur, after having been duly sworn to according to law, state the following, to wit

That we are the brothers and sisters of Ines Brusas, applicant of Free Patent Application No. 10-4375

covering Lots 1 and 2, Psu-116520, situated in Baao, Camarines Sur;

That by virtue of this instrument, we relinquish, cede and transfer whatever rights and interests we might

have over Lots 1 and 2, Psu-116520 in favor of our sister, Ines Brusas;

That we do not have any opposition to Ines Brusas acquiring title to said Lots 1 and 2, Psu-116520 by

virtue of her Free Patent Application No. 10-4375;

That we recognize our sister, Ines Brusas as the legal and absolute owner of Lots 1 and 2, Psu-116520 as

covered by her Free Patent Application No. 10-4375;

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WHEREFORE, we sign this instrument of our own will and voluntary act and after the same has been

translated in our own native dialect and understood fully its contents, this April 20, 1960 at Naga City.

(SGD) MARIANO BRUSAS (SGD) JUAN BRUSAS

(SGD) TARCELA BRUSAS (SGD) JOSEFA BRUSAS

On the basis of the foregoing reasons alone the instant case should immediately be dismissed. Having failed to

show any valid title to the land involved petitioners are not the proper parties who can rightfully claim to havebeen fraudulently deprived thereof. Nonetheless, for the satisfaction of all and sundry, we shall proceed torefute their accusation of fraud.

First, Ines Brusas allegedly misrepresented in her application for free patent that she was the only claimant of

the disputed property, without disclosing that her other brothers and sisters were claiming portions that

supposedly belonged to them. It is worthy to emphasize, to the point of being repetitious, that Juan, Tarcela,Mariano and Josefa executed an affidavit of waiver recognizing Ines Brusas as the legal and absolute owner of

Lots 1 and 2, and manifesting that they have no opposition to Ines Brusas' acquiring certificates of title over

those lots. It was on the basis of this affidavit of waiver that Ines stated in her application for free patent that shewas the sole claimant of Lots 1 and 2. Certainly this is not fraud. At any rate, it appears from the records that

Juan, Tarcela, Mariano and Josefa were notified of the application for free patent of Ines Brusas and dulyafforded the opportunity to object to the registration and to substantiate their claims, which they failed to do.Hence their opposition was accordingly disregarded and Ines Brusas' application was given due course. 9

Petitioners cannot thus feign ignorance of the registration. Moreover, it is significant that petitioners never

contested the order of the Bureau of Lands disregarding their claims, i.e., by filing a motion for reconsideration,or an appeal, for that purpose. This could only mean that they either agreed with the order or decided to

abandon their claims.

Petitioners next assailed the genuineness of Exh. "4" asserting that the signatures therein were forged. However,

no evidence was adduced by them to substantiate their allegation. It appears that they submitted for examinationby the NBI eighteen (18) specimen signatures of Juan, Tarcela, Mariano and Josefa. Unfortunately, no standard

signature could be found for the year 1960 when Exh. "4" was executed.10 Petitioners admitted that they wereunable to produce what was required by the NBI, hence, they "just had to give up."11

Furthermore, there was another Affidavit (Exh. "11") signed in the same year by the Brusases, Ines included,recognizing Mariano Brusas as the sole claimant of Lots 3 and 4 and waiving their interests therein in his favor.

This fact all the more confirms that the affidavit of waiver in favor of Ines Brusas was authentic. As correctly

observed by the appellate court

It is significant to note that aside from the supposedly falsified affidavit, Exhibit 4, another affidavit,was executed by Ines, together with Tarcela, Juan and Josefa, all surnamed Brusas, renouncing their

rights to Lots 3 and 4 in favor of Mariano Brusas (Exhibit 11). Both appear to have been notarized by

the same Notary Public on April 22, 1960. The existence of the two affidavits, Exhibits 4 and 11,strongly suggests that the Brusas[es] recognized Ines Brusas as the sole claimant of Lots 1 and 2 and

Mariano Brusas, the sole claimant of Lots 3 and 4.12

It is not for private respondents to deny forgery. The burden of proof that the affidavit of waiver is indeed

spurious rests on petitioners. Yet, significantly, even as they insist on forgery they never really took seriousefforts in establishing such allegation by preponderant evidence. It must be stressed that mere allegations of

fraud are not enough. Intentional acts to deceive and deprive another of his right, or in some manner injure him,

must be specifically alleged and proved.

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The affidavit of waiver in favor of Ines, being a public document duly acknowledged before a notary public,

under his hand and seal, with his certificate thereto attached, is prima facie evidence of the facts stated therein.13

Petitioners cannot impugn its validity by mere self-serving allegations. There must be evidence of the clearest

and most satisfactory character. Correlatively, in granting the application of Ines Brusas for free patent, the

Bureau of Lands enjoyed the presumption of regularity in the performance of its official duties. Thispresumption has not been rebutted by petitioners as there was likewise no evidence of any anomaly or

irregularity in the proceedings which led to the registration of the land.

Finally, as we are not trier of facts, we generally rely upon and are bound by the conclusions of the lowercourts, which are better equipped and have better opportunity to assess the evidence first-hand, including thetestimony of witnesses. We have consistently adhered to the rule that findings of the Court of Appeals are final

and conclusive, and cannot ordinarily be reviewed by this Court as long as they are based on substantial

evidence. Among the exceptions to this rule are: (a) when the conclusion is grounded entirely on speculations,surmises or conjectures; (b) when the inference made is manifestly mistaken, absurd or impossible; (c) where

there is grave abuse of discretion; (d) when the judgment is based on a misapprehension of facts; (e) when the

findings of facts are conflicting; and, (f) when the Court of Appeals, in making its findings, goes beyond theissues of the case and the same is contrary to the admissions of both the appellant and appellee. We emphasize

that none of these exceptions is present in this case.

WHEREFORE, the petition is DENIED. The 16 July 1996 Decision of the Court of Appeals orderingpetitioners to vacate the disputed property and restore respondents in possession thereof, as well as its 30September 1996 Resolution denying reconsideration, is AFFIRMED. Costs against petitioners.1wphi1.nt

SO ORDERED.

Mendoza, Quisumbing and Buena, JJ., concur.

G.R. No. L-56483 May 29, 1984

SOSTENES CAMPILLO, petitioner,

vs.HON. COURT OF APPEALS and ZENAIDA DIAZ VDA. DE SANTOS, in her capacity asAdministratrix of the Intestate Estate of the late SIMPLICIO S. SANTOS, respondents.

Rosendo J. Tansinsin for petitioner.

Buenaventura Evangelista for private respondent.

DE CASTRO, J.:

In this petition for review on certiorari of the decision of the defunct Court of Appeals in CA-G.R. No.62842-R issued on March 9, 1981, the only issue is whether who has a better right or title to theherein disputed two (2) parcels of land Simplicio Santos who earlier purchased them in a privatesale but failed to register his sale, or petitioner Sostenes Campillo who subsequently purchased themat an execution sale and obtained a certificate of title.

The pertinent undisputed facts, may be summarized as follows: On February 27, 1961, Tomas deVera and his wife Felisa Serafico sold two (2) parcels of land located in Tondo, Manila, designated asLots 1 and 2 of the consolidation and subdivision plan (LRC) Pcs. 888 and segregated from TransferCertificate of Title No. 37277 under Transfer Certificate of Title No. 63559, to Simplicio Santos, now

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deceased and is represented by his administratrix, Zenaida Diaz Vda. de Santos, the herein privaterespondent. Said sale was however never presented for registration in the office of the Registry ofDeeds of Manila nor noted in the title covering the property.

On January 27, 1962, petitioner Sostenes Campillo obtained a judgment for a sum of money againstTomas de Vera in Civil Case No. 49060 of the Court of First Instance of Manila. That judgmentbecame final and executory, and petitioner obtained an order for the issuance of a writ of execution.The writ was issued on April 4, 1962 and pursuant thereto, the City Sheriff levied on three (3) parcels

of land covered by TCT No. 63559 in the name of Tomas de Vera, including the two (2) parcels ofland which the latter previously sold to Simplicio Santos.

On June 26, 1962, notice of the sale of said lots was issued by the Sheriff and published in the "DailyRecord" and La Nueva Era."

On July 25, 1962, the three parcels of land were sold at public auction for P17,550.81 in favor ofpetitioner who was issued the corresponding certificate of sale. After the lapse of one year, the CitySheriff executed the final deed of sale in favor of petitioner over the three (3) parcels of land leviedand sold on execution. On February 4, 1964, TCT No. 63559 was cancelled and in lieu thereof, TCTNo. 73969 was issued by the Registry of Deeds of Manila in the name of petitioner Sostenes

Campillo. Upon petition by the latter, the Registry of Deeds cancelled TCT No. 73969 and issued inhell thereof TCT Nos. 74019 and 74020 over the disputed Lots 1 and 2, respectively.

Claiming to be the owner of the two parcels of land by reason of the previous sale to him by Tomasde Vera, Simplicio Santos filed an action to annul the levy, notice of sale, sale at public auction andfinal deed of sale of Lots 1 and 2 in favor of petitioner Campillo, with damages. In resisting thecomplaint, the herein petitioner as one of the defendants below, alleged that he is an innocentpurchaser for value and that the supposed previous sale could not be preferred over the levy and saleat public action because it was not registered.

After due trial, the lower court rendered judgment sustaining the validity of the levy and sale at public

auction primarily because at the time of the levy and sale, the disputed properties were still registeredin the name of the judgment debtor, Tomas de Vera. Besides, the trial court ruled, the sale toSimplicio Santos which was not registered nor noted in the title of the subject lots, cannot bind thirdpersons.

On appeal at the instance of the herein private respondent, the respondent appellate court modifiedthe decision of the lower court, as follows:

WHEREFORE, the judgment of the trial court is hereby modified as follows:

(1) The dismissal of the amended complaint as against defendant Sostenes Campillo only and orderingthe plaintiff to pay the costs of suit are set aside;

(2) Declaring the levy, sheriff's sale and sheriff's certificate in favor of defendant Sostenes Campillo nulland void and of no effect;

(3) Declaring plaintiff Simplicio Santos, now his estate, to be the owner of the two parcels of land underlitigation and embraced in Transfer Certificate of Title No. 63559; and

(4) Ordering the Register of Deeds of Manila to cancel Transfer Certificate of Title Nos. 74019 and 74020in the name of defendant Sostenes Campillo and to issue the proper certificate of title in the name of theestate of Simplicio Santos.

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The rest of the judgment appealed from is hereby affirmed. (p. 45, Rollo)

Rationalizing its stand, the appellate court said that the subject lots could not be legally levied upon tosatisfy the judgment debt of the de Veras in favor of petitioner because at the time of the executionsale, the judgment debtor, having previously sold said properties, was no longer the owner thereof;that since the judgment debtor had no more right to or interest on the said properties, then thepurchaser at the auction sale acquires nothing considering that a judgment creditor only acquires theIdentical interest possessed by the judgment debtor in the property which is the subject of the auction

sale, and he takes the property subject to all existing equities to which the property would have beensubject in the hands of the debtor; and, while it may be true that Simplicio Santos did not record orregister the sale of the disputed lots, the levy on execution does not take precedence over theunrecorded deed of sale to the same property made by the judgment debtor anterior to the said levysince the judgment creditor is not a third party within the meaning of the law and could not thereforebe considered as purchaser for value in good faith.

After a conscientious review and scrutiny of the records of this case as well as existing legislationsand jurisprudence on the matter, We are constrained to reverse the judgment of the respondentappellate court and rule in favor of the herein petitioner.

It is settled in this jurisdiction that a sale of real estate, whether made as a result of a privatetransaction or of a foreclosure or execution sale, becomes legally effective against third persons onlyfrom the date of its registration. 1 Consequently, and considering that the properties subject matterhereof were actually attached and levied upon at a time when said properties stood in the officialrecords of the Registry of Deeds as still owned by and registered in the name of the judgment debtor,Tomas de Vera, the attachment, levy and subsequent sale of said properties are proper and legal.The net result is that the execution sale made in favor of the herein petitioner transferred to him allthe rights, interest and participation of the judgment debtor in the aforestated properties as actuallyappearing in the certificate of title, unaffected by any transfer or encumbrance not so recordedtherein.

Section 51, PD No. 1529, otherwise known as the Property Registration Decree, provides as follows:

Section 51. Conveyance and other dealings by registered owner. An owner of registered land mayconvey, mortgage, lease, charge or otherwise deal with the same in accordance with existing laws. Hemay use such forms of deeds, mortgages, leases or other voluntary instruments as are sufficient in law.But no deed, mortgage, lease or other voluntary instrument, except a will purporting to convey or affectregistered land shall take effect as a conveyance or bind the land, but shall operate only as a contractbetween the parties and as evidence of authority to the Register of Deeds to make registration.

The act of registration shall be the operative act to convey or affect the land insofar as third persons areconcerned, and in all cases under this Decree, the registration shall be made in the office of the Registerof Deeds for the province or city where the land lies. (Italics for emphasis)

As succinctly stated in the case ofPhilippine National Bank vs. Court of Appeals, 98 SCRA 207:

Whatever might have been generally or unqualifiedly stated in the cases heretofore decided by this Court,We hold that under the Torrens System registration is the operative act that gives validity to the transferor creates a hen upon the land. A person dealing with registered land is not required to go behind theregister to determine the condition of the property. He is only charged with notice of the burdens on theproperty which are noted on the face of the register or the certificate of title. To require him to do more isto defeat one of the primary objects of the Torrens system.A bona fide purchaser for value of such

property at an auction sale acquires good title as against a prior transferee of same property if suchtransfer was unrecorded at the time of the auction sale. (Italics for emphasis)

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The case ofLeyson vs. Tanada,2 invoked by the private respondent is not in point. In that case, anotice oflis pendens was inscribed at the back of the certificate of title of the land subject thereinbefore it was sold at public auction. Necessarily, the purchaser at public auction is bound by theoutcome of the pending case referred to therein. Since it turned out that the judgment debtor ismerely a co-owner of the property sold at public auction, then the puchaser thereat is not entitled tothe entirety of the land. As the Court held: "The interest acquired by a purchaser in an execution saleis limited to that which is possessed by the debtor. If there is more than one person owning propertyin common and an execution against one only is levied thereon, the sale effected by the Sheriff under

such execution operates exclusively upon the interest of the execution debtor, without being in anywise prejudicial to the interest of the other owners. The result in such case merely is that one newowner in common is substituted for the owner whose interest is alienated by process of law."

While it may be true as stated in the aforesaid case of Leyson vs. Tanada, that purchasers atexecution sales should bear in mind that the rule ofcaveat emptorapplies to such sales, that thesheriff does not warrant the title to real property sold by him as sheriff, and that it is not incumbent onhim to place the purchaser in possession of such property, still the rule applies that a person dealingwith registered land is not required to go behind the register to determine the condition of the propertyand he is merely charged with notice of the burdens on the property which are noted on the face ofthe register or the certificate of title. Hence, the petitioner herein, as the purchaser in the execution

sale of the registered land in suit, acquires such right and interest as appears in the certificate of titleunaffected by prior lien or encumbrances not noted therein. This must be so in order to preserve theefficacy and conclusiveness of the certificate of title which is sanctified under our Torrens system ofland registration.

WHEREFORE, the questioned decision of the respondent appellate court is hereby reversed and setaside, and the judgment of the lower court is reinstated. Without pronouncement as to costs.

SO ORDERED.

Guerrero, J., concur.

Escolin, J., concurs in the result.

Concepcion Jr., J., is on leave.

G.R. No. L-6122 May 31, 1954

AURELIA DE LARA and RUFINO S. DE GUZMAN, plaintiffs-appellants,

vs.

JACINTO AYROSO, defendant-appellant.

Lauro Esteban for appellants.Alfonso G. Espinosa for appellee.

REYES, J.:

This is an action for foreclosure of mortgage.

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From the stipulation of facts and the additional evidence submitted at the hearing the lower court found and it is

not disputed that the spouses Jacinto Ayroso and Manuela Lacanilao were the registered owners of a parcel ofland, situated in the municipality of Cabanatuan, Nueva Ecija, their title thereto being evidenced by Transfer

Certificate No. 4203 of the land records of that province. The land had an area of a little over 3 1/2 hectares, but

according to an annotation on the back of the certificate a large portion of that area a little less than 3hectares-had already been alienated, sold to the Pilgrim Holiness Church in 1940. The certificate was kept in

Jacinto Ayroso's trunk in his house in the poblacion of Cabanatuan, but somehow his daughter, Juliana Ayroso,

managed to get possession of it without his knowledge and consent and gave it to a man whose name does not

appear in the record. With the certificate in his possession and representing himself to be Jacinto Ayroso, thisman was able to obtain from the plaintiff spouses the sum of P2,000, which he agreed to pay back in three

months and as security therefor constituted a mortgage on Jacinto Ayroso's interest in the land covered by the

certificate, signing the deed of mortgage with the latter's name. At that time, April 19, 1949, Jacinto Ayroso wasalready a widower, his wife having died on the 31st of the preceding month. Neither Jacinto Ayroso nor the

man who impersonated him was personally known to the plaintiffs, though the latter believed in good faith that

the two were one and the same person, the impostor being then accompanied by Ayroso's daughter Julianawhom they knew personally and who also signed as a witness to the mortgage deed. The mortgage was later

registered in the office of the Register of Deeds of Nueva Ecija and annotated on the back of the certificate of

title. Jacinto Ayroso never authorized anyone to mortgage the land and received no part of the mortgage loan.

Upon the foregoing facts, the trial court rendered judgment declaring the mortgage invalid, ordering theRegister of Deeds of Nueva Ecija to cancel the corresponding annotation on Transfer Certificate of Title No.

4203 and dismissing the complaint with costs. From this judgment an appeal has been taken directly to this

court, and the question for determination is whether the said mortgage may be enforced by plaintiffs against thedefendant Jacinto Ayroso.

There can be no question that the mortgage under consideration is a nullity, the same having been executed by

an impostor without the authority of the owner of the interest mortgaged. Its registration under the Land

Registration Law lends it no validity because, according to the last proviso to the second paragraph of section55 of that law, registration procured by the presentation of a forged deed is null and void.

Plaintiffs, however, allege that they are innocent holders for value of a Torrens certificate of title, and on theauthority of Eliason vs. Wilborn (281 U. S., 457), De la Cruz vs. Fabie (35 Phil., 144), and Blondeau et al. vs.

Nano andVallejo (61 Phil., 625), invoke the protection accordedto such holders. But an examination of thosecases willshow that they have no application to the one before us.

In the case first cited, Eliason vs. Wilborn, the appellants, owners of registered land, delivered the certificate of

title to a party under an agreement to sell and the said party forged a deed to himself, had the certificate issued

in his name and then conveyed it to others, who were good faith purchasers for value. Upholding the lastconveyance, the U. S. Supreme Court said: "The appellants saw fit to entrust it (the certificate) to Napletone and

they took the risk ... . As between two innocent persons, one of whom must suffer the consequences of a breach

of trust, the one who made it possible by his act of confidence must bear the loss."

In the second case, De la Cruz vs. Fabie, the attorney-in-fact of the owner of registered land, having been

entrusted with the title to said property, abused the confidence thus reposed upon him, forged a deed in his

favor, had anew title issued to himself and then conveyed it to another, who thereafter was issued a new

certificate of title. This court held the purchaser to be the absolute owner of the land as an innocent holder of atitle for value under section 55 of Act No. 496.

It will be noted that in both of the above cases the certificate of title was already in the name of the forger when

the land was sold to an innocent purchaser. In such case the vendee had the right to rely on what appeared in the

certificate and, in the absence of anything to excite suspicion, was under no obligation to look beyond thecertificate and investigate the title of the vendor appearing on the face of said certificate to be the registered

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owner. It should also be noted that in both cases fraud was made possible by the owner's act in entrusting the

certificate of title to another. And this should be emphasized because it is what impelled this court to apply inthose cases the principle of equity that "as between two innocent persons, one of whom must suffer the

consequences of a breach of trust, the one who made it possible by his act of confidence must bear the loss."

In the present case the title was still in the name of the real owner when the land was mortgaged to the plaintiffs

by the impostor. And it is obvious that plaintiffs were defrauded not because they relied upon what appeared ina Torrens certificate of title there was nothing wrong with the certificate but because they believed the

words of the impostor when he told them that he was the person named as owner in the certificate. As thelearned trial judge says in his decision, it was not incumbent upon plaintiffs to inquire into the ownership of theproperty and go beyond what was stated on the face of the certificate of title, but it was their duty to ascertain

the identity of the man with whom they were dealing, as well as his legal authority to convey, if they did not

want to be imposed upon. That duty devolves upon all persons buying property of any kind, and one whoneglects it does so at his peril. It should be added that the appellee has not entrusted the certificate of title to

anybody, an element essential to the application of the principle of equity abovecited. It is thus clear that the

circumstances which impelled this court, in the cases cited to extend protection to the innocent holders for valueof the Torrens certificates, at the expense of the owner of the registered property, are not present in the case at

bar.

Nor could the third case cited, Blondeau et al. vs. Nano and Vallejo, serve as a good precedent for the one nowbefore us. That case, it is true, was also for foreclosure of mortgage, and the defense set up by the registeredowner was also forgery. But it should be noted that in that case this court found as a fact that the mortgage had

not been forgedand in addition there was the circumstance that the registered owner had by his negligence or

acquiescence, if not actual connivance, made it possible for the fraud to be committed. It is thus obvious that the

case called for the application of the same principle of equity already mentioned, and the decision rendered bythis court was in line with the two previous cases. But that decision does not fit the facts of the present case,

where the mortgage is admittedly a forgery and the registered owner has not been shown to have been negligent

or in connivance with the forger. The contention that it was negligence on appellee's part to leave the Torrenstitle in his trunk in his house in the poblacion when most of the time he was in the farm, was we think well

answered by the trial court when it said:

. . . it was not shown that the defendant has acted with negligence in keeping the certificate of title in his

trunk in his own house. That his daughter was able to steal it or take it from the trunk without hisknowledge and consent and was able to make use of it for a fraudulent purpose, (it) does not necessarily

follow that he was negligent. It is in keeping with ordinary prudence in common Filipino homes for the

owners thereof to keep their valuables in their trunks. It would be too much to expect of him that heshould carry said certificate with him to wherever he goes.

On the other hand the considerations underlying the decision in the case ofCh. Veloso and Rosales vs. La

Urbana and Del Mar(58 Phil., 681), cited by the appelle, would seem to be applicable to the present case. In

the case cited, the plaintiff Veloso, owner of certain parcels of registered land, brought action to annul certain

mortgages constituted thereon by her brother-in-law, the defendant Del Mar, using two powers of attorneypurportedly executed for that purpose by plaintiff and her husband Rosales, but which were in reality forged,

the forgery having been committed by Del Mar himself. How Del Mar obtained possession of the certificate oftitle the report does not show, but the mortgages were duly registered and noted on the certificates of title. In

holding the mortgages void, this court said:

. . . Inasmuch as Del Mar is not the registered owner of the mortgaged properties and inasmuch as the

appellant was fully aware of the fact that it was dealing with him on the strength of the alleged powersof attorney purporting to have been conferred upon him by the plaintiff, it was his duty to ascertain the

genuineness of said instruments and not rely absolutely and exclusively upon the fact that the said

powers of attorney appeared to have been registered. In view of its failure to proceed in this manner, it

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acted negligently and should suffer the consequences and damages resulting from such transactions. (P.

683.)

Appellants, however, contend that the doctrine laid down in that case has already been overruled by the

Blondeau case,supra. This is not so, and to show that it is still good jurisprudence, this court quotes it with

approval in Lopez vs. Seva et al. (69 Phil., 311), a case decided after the Blondeau decision.

We are with the learned trial judge in applying to the present case the principle underlying the decision in the

Veloso case, which, as His Honor well says, "is fair and just because it stands for the security and stability ofproperty rights under any system of laws, including the Torrens system," affording protection against the

dangerous tendency of unprincipled individuals "to enrich themselves at the expense of others thru illegal orseemingly lawful operations." And as His Honor also says, "as between an interpretation and application of the

law which serves as an effective weapon to curb such dangerous tendency or that which technically may aid or

foment it, the choice is clear and unavoidable." For, as repeatedly stated by this court, although the underlying

purpose of the Land Registration Law is to impart stability and conclusiveness to transactions that have beenplaced within its operations, still that law does not permit its provisions to be used as a shield for the

commission of fraud.

In view of the foregoing, the judgment appealed from is affirmed, with costs against the appellants.

Paras, C.J., Pablo, Bengzon, Montemayor, Jugo, Bautista Angelo, Labrador and Concepcion, JJ., concur.

G.R. No. L-13953 July 26, 1960

MONS. CARLOS INQUIMBOY, plaintiff-appellant,

vs.

MARIA CONCEPCION PAEZ VDA. DE CRUZ, defendant-appellee.

Mamerto N. Makapagal for appellant.Conrado T. Reyes for appellee.

GUTIERREZ DAVID, J.:

This appeal brings up for the review of the decision of the Court of First Instance of Nueva Ecija dismissing

plaintiff's complaint.

The facts are: Plaintiff's Carlos Inquimboy was the registered owner of the disputed land located in Bongabon,Nueva Ecija, as per T.C.T. No. 15600, Register of Deeds of Nueva Ecija (Annex B). On October 31, 1941, he

sold the land, together with another parcel described in T.C.T. No. 15599, for the sum of P4,000.00 to Cenon

Albea, who after making the down payment, promised to pay the balance in two installments, that is, P500.00 inmay, 1942 (Annex C). On two other registered parcels, to Pedro Cruz (Annex D). This deed of sale was

presented for registration on January 3, 1944. As to the two other piece of land, registration was duly had, butwith respect to the disputed land, registration was refused because the land was still in the Inquimboy's name,

Albea not having registered his deed of sale. On February 18, 1944, the sale in Albea not having registered hisdeed of sale. On February 18, 1944, the sale in Albea's favor was registered, Inquimboy's title was cancelled

and in lieu thereof T.C.T. No. 20142 was issued to Albea (Annex E).

On February 23, 1944, Inquimboy filed against Albea in the Court of First Instance of Nueva Ecija a complaint

alleging, inter alia, that Albea failed to pay him on November 15, 1941, the sum of P2,500.00 and in May,1942, the sum of P500.00 stipulated in the contract between them and therefore prayed that the contract of sale

be rescinded, and that Albea be ordered to returned to him T.C.T. Nos. 15599 and 15600 (Civil Case No. 93-J).

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On May 26, 1944, T.C.T. No. 20142 in Albea's name was cancelled and in lieu thereof T.C.T. No. 20584 was

issued to Pedro Cruz.

The civil case which Inquimboy had filed against Albea was passed upon by the lower court, then by the Court

of Appeals and finally by this Court, which in a decision rendered in May 19, 1950 (89 Phil., 1601; 47 Off. Gaz

[12] 131) ordered Albea to reconvey and deliver to Inquimboy the properties litigated therein (one of which is

now in litigation), unless within thirty days after final judgment he should pay the balance of the purchase priceand P500.00 as liquidated damages and attorney's fees (Annex A).

On October 11, 1957, Inquimboy instituted in the Court of First Instance of Nueva Ecija the present action

against Maria Concepcion Paez Vda. de Cruz, surviving spouse of the now deceased Pedro Cruz, seekingannulment of T.C.T. No. 20584 and issuance of a new one in his name. The parties admitted the case in

stipulation of facts, which, together with the annexes thereto, disclosed the above-narrated facts. The lower

court dismissed the complaint.

Reversal of the lower court's decision is sought by plaintiff on three grounds, namely, (1) Pedro Cruz was not abuyer in good faith; (2) Cruz was bound by this Court's decision in G. R. No. L-1601; and (3) appellant is not

guilty of laches in asserting his right.

Contrary to appellant's principal contention, Pedro Cruz was a buyer in good faith.

It is true that we have several decisions wherein we enunciated the general rule that one who buys from a person

who is not the registered owner is not a purchaser in good faith (Veloso and Rosales vs. La Urbana and DelMar, 58 Phil., 681 ; Mari vs. Bonilla, 83 Phil., 137; 46 Off. Gaz., 4258; Mirasol vs. Gerochi, 93 Phil., 480; De

Lara and De Guzman vs. Ayroso, 95 Phil., 185; 50 Off. Gaz., [10] 4838; Revilla and Fajardo vs. Galindez, 107

Phil., 480). But in deciding the question of good faith , the legal environment of each case must be considered.In all the instances where the above rule was followed, it should be noted that the buyer never dealt with the

registered owner, yet the certificate of title was transferred from the registered owner directly to the buyer a

fact which should have made the buyer investigate the right of his transferor was not and never became theregistered owner of the litigated land. Herein, the sale in favor of Cruz was executed by Albea on December 20,

1943, when the land February 18, 1944, appellant's certificate of title was cancelled and another issued toAlbea. And May 26, 1944, Albea's title was cancelled and in lieu thereof T.C.T. No. 20584 was issued to Cruz.

Hence, while Albea may not have been a registered owner at the time he executed the deed of sale of favor ofCruz, he nevertheless subsequently acquired valid title in his own name which title he later transferred to Cruz.

When a person who is not the owner of a thing sells and delivers it, and later the seller acquires title thereto,

such tittle passes by operation of law to the buyer(Article 1434, New Civil Code).

A purchaser in good faith is one who buys property of another without notice that some other person has a right

to, or interest in such property and prays in full and fair price for the same, at the time of such purchase, and

before he has notice of the claim or interest of some other person in the property (Cui and Joven vs. Henson, 51

Phil., 612). This definition fits Pedro Cruz. At the time he brought the property from Albea, he did not have

knowledge, actual or imputable, of the right of another person on the property. His transferor, Albea, had in hispossession the proper deed of conveyance executed by appellant in his favor, as well as appellant's certificate of

title. So as between appellant and Albea, the land already belonged to the latter (Section 50, Act 496). And theregistration of the land in Albea's name effectively operated to convey it to him. Albea's title was clean there

was no lien or encumbrance annotated thereon. Of course, Albea's title was cancelled and another issue to Cruz

only on May 26, 1944, while as early as February 23, 1944, appellant had already instituted a suit against Albeafor recovery of the land. But since appellant never filed a notice oflis pendens, Cruz could not have known of

the pending action, and consequently cannot be bound by the result thereof (Section 79, Act 496).

Having found that Cruz' purchase of the land was characterized by good faith, we deem it unnecessary to take

up the other points raised by appellant.

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Wherefore, the appealed decision is hereby affirmed with costs against appellant.

Paras, C. J., Bengzon, Montemayor, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Endencia, andBarrera, JJ., concur.

G.R. No. L-47662 September 30, 1942

JOAQUIN V. BASS, plaintiff-appellant,

vs.ESTEBAN DE LA RAMA and HIJOS DE I. DE LA RAMA, defendants-appellees.

Sotto & Sotto for appellant.

Herras & Concepcion for appellees.

OZAETA, J.:

Pedro Ferrer was the owner of an undivided one-fourth of a parcel of land of 5,047,014 square meters situated

in the municipality of Escalante, Province of Occidental Negros, under transfer certificate of title No. 2112. OnJuly 16, 1920, he conveyed his interest our participation in said land to Hijos de I. de la Rama by way of

mortgage to secure the payment of P12,500 with interest thereon at 12 per cent per annum. The mortgage wasduly recorded in the office of the register of deeds and annotated on the certificate of title on July 27, 1920.

On December 18, 1923, the provincial sheriff of Occidental Negros, at the instance of the herein plaintiffJoaquin V. Bass, levied execution on the one-fourth interest of Pedro Ferrer in the said land by virtue of a writ

of execution issued by the Court of First Instance of Manila in civil case No. 19816, entitled "Joaquin V. Bass

vs.. Pedro Ferrer." Notice of the levy was presented to the office of the register of deeds and entered in the daybook on December 18, 1923, but was not annotated on the certificate of title. Pursuant to that levy, the

provincial sheriff advertised and sold at public auction the said one-fourth interest of Pedro Ferrer in the land

above mentioned, adjudicating it to the judgment creditor Joaquin V. Bass for the sum of P4,811,35, which wasthe amount of the judgment plus interest, costs, and expenses of the sale. The certificate of sale was presented to

the office of the register of deeds and entered in the day book on April 9, 1924; but, like the notice of levy, itwas not annotated on the corresponding certificate of title. It does not appear that the sheriff ever issued a finaldeed of sale in favor of Joaquin V. Bass after the lapse of one year. Neither does it appear whether or not the

execution debtor Pedro Ferrer exercised the right of redemption within said statutory period.

In or before 1924 Juliana Fuentebella Vda. de Ferrer, Pedro Ferrer, and Francisco Ferrer instituted civil case

No. 2911 in the Court of First Instance of Occidental Negros against the Negros Coal Co., Ltd., Esteban de laRama, and Hijos de I. de la Rama; and by way of cross-complaint filed in said case on July 30, 1924, the

defendant Hijos de I. de la Rama foreclosed the mortgage executed by Pedro Ferrer as well as those executed

separately by his co-owners Juliana Fuentebella and Francisco Ferrer on the land described in transfer

certificate of title No. 2112. By virtue of the judgment obtained in said case by Hijos de I. de la Rama against

Pedro Ferrer and his co-owners, the provincial sheriff advertised and sold at public auction on January 5, 1929,the land described in transfer certificate of title No. 2112, adjudicating it to the judgment creditor Hijos de I. de

la Rama for the sum of P50,000. Upon presentation of the certificate of sale to the register of deeds ofOccidental Negros, the latter, on January 7, 1929, cancelled transfer certificate of title No. 2112 in the name of

Juliana Fuentebella, Francisco Ferrer, and Pedro Ferrer and issued transfer certificate of title No. 11411 in the

name of Hijos de I. de la Rama. Subsequently the sheriff's sale was confirmed by the court in an order datedJuly 27, 1929.

On the last-mentioned certificate of title are noted the following are subsisting encumbrances on the land in

question: (1) A mortgage of P400,000 in favor of the Philippine National Bank, recorded October 24, 1935; (2)

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another mortgage in favor of the Philippine National Bank to secure credit of P1,000,000 to P2,000,000,

recorded February 25, 1938; and (3) notice oflis pendens by the plaintiff in this case, recorded April 21, 1939.

The present action was instituted in or about April, 1939, by Joaquin V. Bass against Esteban de la Rama and

Hijos de I. de la Rama to obtain judgment ordering the defendants "to deliver the land in question to the plaintiff

and to pay to the latter damages in the sum of P1,220,700" claimed to be the value of the sugar realized from

the produce of one-fourth of the said land during the time it has been in the possession of the defendants. Thatamount has been reduced in the prayer of appellant's brief to P353,365.98.

The theory of the plaintiff, as may be gathered from his complaint, is that by virtue of the certificate of sale

issued in his favor by the sheriff on February 15, 1924, which was entered in the day book of the register ofdeeds on April 9 of the same year, he became the absolute owner of one-fourth of the land described in transfer

certificate of title No. 2112, equivalent to 127.9271 hectares, but that "the defendants illegally and in bad faith

and without the consent of the plaintiff appropriated and took possession of the whole land described in said

certificate of title from January 5, 1929, up to the present time, including the one-fourth of the same which isthe exclusive property of the plaintiff."

The defendants set up the following special defenses: (1) That the defendant Hijos de I. de la Rama acquired a

valid title to the land in question thru the foreclosure of its mortgages thereon and the subsequent issuance to it

of transfer certificate of title No. 11411; (2) that the plaintiff has no right or interest in the land in question, for,if he ever had it, he transferred such right and interest in the land in question, for if he ever had it, he transferred

such right and interest to Gaspar Oliver, who in turn sold it to Alejandro Gamboa, and the latter in turn donated

it to his brother Antonio Gamboa; and (3) that the plaintiff has lost whatever right and interest he may have hadin said land by extinctive prescription.

The trial court dismissed plaintiff's complaint on the ground that whatever right he might have acquired by

virtue of the sheriff's sale have been lost thru his failure to redeem Pedro Ferrer's mortgage in favor of Hijos de

I. de la Rama before it was foreclosed. Plaintiff appealed.

Appellant acquired Pedro Ferrer's interest and participation in the land in question thru the sheriff's sale of

February 15, 1924, subject to the right of redemption of the execution debtor or his redemptioner within oneyear and to the mortgage of P12,500, with interest at 12 per cent annum, in favor of Hijos de I. de la Rama. In

order to establish his claim of absolute ownership of one-fourth of the land in question, it was incumbent uponappellant to establish that the title thereof had been consolidated in him. That he could show only by proving (a)

that Pedro Ferrer had failed to exercise the right of redemption and (b) that he and (appellant) had satisfied the

pre-existing mortgage in favor of Hijos de I. de La Rama. But that he did not even attempt to do.

Thus we find that the equity of right acquired by the plaintiff in the land in question did not mature into

ownership. Does that equity still subsist? In order to determine that question it is necessary to pass upon

defendants' special defense.

1. Anent the first special defense, appellant assigns as error the failure of the trial to hold that appellees shouldhave made him a party in the foreclosure proceeding. It is intimated that by virtue of the sheriffs's sale of

February 15, 1924, appellant became a junior encumbrancer and as such have been impleaded as cross-

defendant in the cross-complaint of foreclosure of mortgage interposed by Hijos de I. de la Rama in case No.

2911, as required by section 255 of act No. 190. In this connection the trial court held that the levy on executionand the subsequent sale at public auction in favor of appellant, not having been noted on the certificate of title,

could not serve as notice to the whole world of appellant's equity in the land in question; in other words, they

were not binding against appellees. That holding of the trial court is also assigned as error by appellant.

In Government of the Philippine Islands vs.. Aballe ([1934], 60 Phil., 986), this Court interpreting sections 51

and 56 of Act No. 496, held that the notation of a writ of attachment in the entry book of the register of deeds is

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effective although no corresponding notation is made on the certificate of title. That doctrine was followed in

Director of Lands vs.. Abad([1935], 61 Phil., 479). In the last mentioned case, Levy Hermanos, Inc., attachedthe right, title, and interest of one Crecenciano M. Torres in a parcel of registered land situated in Bacolod,

Occidental Negros. The notice of attachment was presented to the register of deeds on January 14, 1931, and

noted in the entry book but not on the certificate of title. On August 14, 1931, Crecenciano M. Torresmortgaged the said parcel of land to La Urbana, which registered the mortgage and caused it to be noted on the

certificate of title. On April 9, 1932, the register of deeds discovered his failure, through oversight, to annotate

the attachment on the certificate of title, and petitioned the court for authority to do so and for an order to La

Urbana surrender the said certificate of title. That motion was denied, but subsequently Levy Hermanos, Inc.,renewed it after having bought the property at public auction, and the court granted the motion and ordered the

annotation of the attachment with precedence over La Urbana's mortgage. Following the decision in the Aballe

case, this Court affirmed that order declaring:

When Levy Hermanos, Inc., delivered its notice of attachment to the register of deeds of Occidental

Negros and paid the corresponding fees, it had a right to presume that official would perform his duty

property. When its attachment was entered upon the entry book it was duly registered according tosection 56.

However, the Court also observed that when La Urbana presented its mortgage for registration, it had a right to

rely upon the presumption that the official duty of the register of deeds of Occidental Negros, as set forthsection 72 of Act No. 496, had been regularly performed. Continuing, the Court said:

... A person who in good faith acquires any right or title to land registered under the provisions of ActNo. 496 would not need to go behind the certificate of title if the register of deeds of the province in

which such land is situated performs his legal duty. If a certificate of title cannot be taken at its face

value the owner of land registered under the Torrens system will be greatly handicapped in making salesthereof or borrowing money thereon. For instance, in the present case La Urbana would have had to

examine over 29,000 day book entries before making the loan to Crecenciano M. Torres if it had been

obliged to go behind the transfer certificate of title No. 13126.

Quoting from Quimson vs.. Suarez(45 Phil., 901, 906 ), the Court further said:

One of the principal features of the Torrens System of registration is that all incumbrances on the land orspecial estates