Torrens System of Land Registration Cases

Torrens System of Land Registration
Republic v. Umali, G.R No. 80687
G.R. No. 80687. April 10, 1989.*
REPUBLIC OF THE PHILIPPINES, represented by the DIRECTOR OF LANDS, petitioner, vs. HONORABLE
MARIANO M. UMALI, in his capacity as Presiding Judge, Regional Trial Court, Fourth Judicial Region,
Branch 23, Trece Martires City, REMEDIOS MICLAT, JUAN C. PULIDO, ROSALINA NAVAL, and the
REGISTER OF DEEDS OF CAVITE, respondents.
Civil Law; Land Titles; Every registered owner under the Torrens system and every subsequent purchaser
thereof for value and in good faith holds the same free from all encumbrances except those noted on
the certificate.—Thus, under Section 44 of P.D. 1529 (then Sec. 39 of the Land Reg. Act), every
registered owner receiving a certificate of title in pursuance of a decree of registration, and every
subsequent purchaser of registered land taking a certificate of title for value and in good faith, shall hold
the same free from all encumbrances except those noted on the certificate and any of the
encumbrances which may be subsisting, and enumerated in the law. Under said provision, claims and
liens of whatever character, except those mentioned by law as existing against the land prior to the
issuance of certificate of title, are cut off by such certificate if not noted thereon, and the certificate so
issued binds the whole world, including the government.
Same; Same; Same; Real purpose of the Torrens system of land registration is to quiet title to land.—The
real purpose of the Torrens system of land registration is to quiet title to land; to put a stop forever to
any question of the legality of the title, except claims which were noted at the time of registration in the
certificate, or which may arise subsequent thereto. That being the purpose of the law, it would seem
that once the title was registered, the owner might rest secure, without the necessity of waiting in the
portals of the court, or sitting in the “mirador de su casa,” to avoid the possibility of losing his land.
Same; Same; Same; Decision in Piñero v. Director of Lands not applicable to the present proceedings.—
The decision in Piñero v. Director of Lands is not applicable to the present proceeding because
_______________
* FIRST DIVISION.
648
648
SUPREME COURT REPORTS ANNOTATED
Republic vs. Umali
the lands involved in that case had not yet passed to the hands of an innocent purchaser for value. They
were still held by the Piñeros. The action for reversion was filed by the government against them as the
original transferees of the properties in question. They were the direct grantees of the free patents
issued by the government pursuant to which the corresponding certificates of title were issued under
the Torrens system. The fraud alleged by the government as a ground for the reversion sought was
imputable directly to the Piñeros, who could not plead the status of innocent purchasers for value.
Same; Same; Same; Argument that Remedios is an extension of the juridical personality of her father
and so cannot claim to be an innocent purchaser for value has no basis in fact or law.—The Solicitor
General also argues that Remedios is an extension of the juridical personality of her father and so
cannot claim to be an innocent purchaser for value because she is charged with knowledge of her
father’s deceit. Such conclusion has no basis in fact or law. Moreover, there is evidence that Remedios
did not merely inherit the land but actually purchased it for valuable consideration and without
knowledge of its original defect. The agreement to subdivide, which she presented to show that she had
acquired the land for valuable consideration, is more acceptable than the conjectures of the petitioner.
It is also consonant with the presumption of good faith.
Same; Same; Same; The land being now registered under the Torrens system is no longer part of the
public domain.—The land being now registered under the Torrens system in the names of the private
respondents, the government has no more control or jurisdiction over it. It is no longer part of the public
domain or, as the Solicitor General contends—as if it made any difference—of the Friar Lands. The
subject property ceased to be public land when OCT No. 180 was issued to Florentina Bobadilla in 1910
or at the latest from the date it was sold to the Cenizals in 1971 upon full payment of the purchase price.
As private registered land, it is governed by the provisions of the Land Registration Act, now
denominated the Pro-perty Registration Decree, which applies even to the government.
Same; Same; Same; Same; Petitioner errs in arguing that the original transfer was null and void ab initio
for the fact is that it is not so; It was only voidable.—The petitioner claims that it is not barred by the
statute of limitations because the original transfer of the land was null and void ab initio and did not give
rise to any legal right. The land therefore continued to be part of the public domain and the
649
VOL. 171, APRIL 10, 1989
649
Republic vs. Umali
action for this reversion could be filed at any time. The answer to that is the statement made by the
Court in Heirs of Tanak Pangawaran Patiwayan v. Martinez that “even if respondent Tagwalan eventually
is proven to have procured the patent and the original certificate of title by means of fraud, the land
would not revert back to the State,” precisely because it has become private land. Moreover, the
petitioner errs in arguing that the original transfer was null and void ab initio, for the fact is that it is not
so. It was only voidable. The land remained private as long as the title thereto had not been voided, but
it is too late to do that now.
PETITION to review the order of the Regional Trial Court of Trece Martires City, Br. 23.
The facts are stated in the opinion of the Court.
CRUZ, J.:
The petitioner seeks reversion of a parcel of land on the ground that the original sale thereof from the
government was tainted with fraud because based on a forgery and therefore void ab initio. The present
holders of the property claiming to be innocent purchasers for value and not privy to the alleged
forgery, contend that the action cannot lie against them.
The land in question is situated in Tanza, Cavite, and consists of 78,865 square meters.1 It was originally
purchased on installment from the government on July 1, 1910 by Florentina Bobadilla, who allegedly
transferred her rights thereto in favor of Martina, Tomasa, Gregorio and Julio, all surnamed Cenizal, in
1922.2 Tomasa and Julio assigned their shares to Martina, Maria and Gregorio.3 In 1971 these three
assignees purportedly signed a joint affidavit which was filed with the Bureau of Lands to support their
claim that they were entitled to the issuance of a certificate of title over the said land on which they said
they had already made full payment.4 On the
_____________
1 Rollo, p. 9.
2 Ibid.
3 Id.
4 Id.
650
650
Republic vs. Umali
basis of this affidavit, the Secretary of Agriculture and Natural Resources executed Deed No. V-10910
(Sale Certificate No. 1280) on September 10, 1971, in favor of the said affiants.5 Subsequently, on
October 13, 1971, TCT No. 55044 (replacing Bobadilla’s OCT No. 180) was issued by the register of deeds
of Cavite in favor of Maria Cenizal, Gregorio Cenizal, and (in lieu of Martina Cenizal) Rosalina Naval, Luz
Naval, and Enrique Naval.6
When the complaint for reversion was filed on October 10, 1985, the registered owners of the land,
following several transfers, were Remedios Miclat under TCT No. 80392, Juan C. Pulido under TCT No.
80393, and Rosalina, Luz and Enrique Naval under TCT No. 80394.7 They were named as defendants and
asked to return the property to the State on the aforestated grounds of forgery and fraud. The plaintiff
claimed that Gregorio Cenizal having died on February 25, 1943, and Maria Cenizal on January 8, 1959,
they could not have signed the joint affidavit dated August 9, 1971, on which Deed No. V-10910 (Sale
Certificate No. 1280) was based.8
In their answer, Pulido and the Navals denied any participation in the joint affidavit and said they had all
acquired the property in good faith and for value. By way of affirmative defenses, they invoked estoppel,
laches, prescription and res judicata.9 For her part, Miclat moved to dismiss the complaint, contending
that the government had no cause of action against her because there was no allegation that she had
violated the plaintiff’s right, that the government was not the real party-in-interest because the subject
land was already covered by the Torrens system, and that in any event the action was barred by
prescription or laches.10
The respondent court, in its order dated October 2, 1987,
____________
5 Id., p. 51.
6 Id., p. 35.
7 Id., pp. 45, 48.
8 Id., p. 46.
9 Id., p. 59.
10 Id., pp. 61-62.
651
VOL. 171, APRIL 10, 1989
651
Republic vs. Umali
granted the motion.11 The petitioner, contesting this order, now insists that it has a valid cause of
action and that it is not barred by either prescription or res judicata.
The Court will observe at the outset that the joint affidavit is indeed a forgery. Apart from the fact that
two of the supposed affiants were already dead at the time they were supposed to have signed the
sworn statement, even the most cursory examination of the document will show that the three
signatures affixed thereto were written by one and the same hand.12 There is no doubt about it. It is
indeed difficult to understand how such an obvious forgery could have deceived the people in the
Bureau of Lands who processed the papers of this case and made possible the fraudulent transfer of the
land.
But given such deception, would the sale itself be considered null and void from the start, as the
petitioner insists, so as to make all titles derived therefrom also ineffectual ab initio?
We agree with the contention that there is no allegation in the complaint13 filed by the petitioner that
any one of the defendants was privy to the forged joint affidavit or that they had acquired the subject
land in bad faith. Their status as innocent transferees for value was never questioned in that pleading.
Not having been disproved, that status now accords to them the protection of the Torrens System and
renders the titles obtained by them thereunder indefeasible and conclusive. The rule will not change
despite the flaw in TCT No. 55044.
Section 39 of the Land Registration Act clearly provided:
Sec. 39. Every person receiving a certificate of title in pursuance of a decree of registration, and every
subsequent purchaser of registered land who takes a certificate of title for value in good faith shall hold
the same free of all encumbrance except those noted on said certificate.
The rulings on this provision are indeed as numerous as they are consistent:
____________
11 Id., pp., 40-41.
12 Id., p. 50.
13 Id., p. 83.
652
652
Republic vs. Umali
Thus, under Section 44 of P.D. 1529 (then Sec. 39 of the Land Reg. Act), every registered owner receiving
a certificate of title in pursuance of a decree of registration, and every subsequent purchaser of
registered land taking a certificate of title for value and in good faith, shall hold the same free from all
encumbrances except those noted on the certificate and any of the encumbrances which may be
subsisting, and enumerated in the law. Under said provision, claims and liens of whatever character,
except those mentioned by law as existing against the land prior to the issuance of certificate of title, are
cut off by such certificate if not noted thereon, and the certificate so issued binds the whole world,
including the government.14
x x x
A holder in bad faith is not entitled to the protection of Sec. 39 of the Land Registration Act.15
x x x
The real purpose of the Torrens System of land registration is to quiet title to land; to put a stop forever
to any question of the legality of the title, except claims which were noted at the time of registration in
the certificate, or which may arise subsequent thereto. That being the purpose of the law, it would seem
that once the title was registered, the owner might rest secure, without the necessity of waiting in the
portals of the court, or sitting in the “mirador de su casa,” to avoid the possibility of losing his land.16
The decision in Piñero v. Director of Lands 17 is not applicable to the present proceeding because the
lands involved in that case had not yet passed to the hands of an innocent purchaser for value. They
were still held by the Piñeros. The action for reversion was filed by the government against them as the
original transferees of the properties in question. They were the direct grantees of the free patents
issued by the government pursuant to which the corresponding certificates of title were issued under
the Torrens system. The fraud alleged by the government as a ground for the reversion sought was
______________
14 National Grains Authority vs. Intermediate Appellate Court, 157 SCRA 380-381.
15 Ignacio vs. Chua Hong, 52 Phil. 940.
16 Legarda vs. Saleeby, 31 Phil. 590.
17 57 SCRA 386.
653
VOL. 171, APRIL 10, 1989
653
Republic vs. Umali

imputable directly to the Piñeros, who could not plead the status of innocent purchasers for value.
The difference between them and the private respondents is that the latter acquired the land in
question not by direct grant but in fact after several transfers following the original sale thereof to
Bobadilla in 1910. The presumption is that they are innocent transferees for value in the absence of
evidence to the contrary. The petitioner contends that it was Pedro Miclat who caused the falsification
of the joint affidavit, but that is a bare and hardly persuasive allegation, and indeed, even if true, would
still not prove any collusion between him and the private respondents. The mere fact that Remedios
Miclat was the daughter and heiress of Miclat, without more, would not necessarily visit upon her the
alleged sins of her father.
The Solicitor General also argues that Remedios is an extension of the juridical personality of her father
and so cannot claim to be an innocent purchaser for value because she is charged with knowledge of her
father’s deceit. Such conclusion has no basis in fact or law. Moreover, there is evidence that Remedios
did not merely inherit the land but actually purchased it for valuable consideration and without
knowledge of its original defect. The agreement to subdivide,18 which she presented to show that she
had acquired the land for valuable consideration, is more acceptable than the conjectures of the
petitioner. It is also consonant with the presumption of good faith.
The land being now registered under the Torrens system in the names of the private respondents, the
government has no more control or jurisdiction over it. It is no longer part of the public domain or, as
the Solicitor General contends—as if it made any difference—of the Friar Lands. The subject property
ceased to be public land when OCT No. 180 was issued to Florentina Bobadilla in 1910 or at the latest
from the date it was sold to the Cenizals in 1971 upon full payment of the purchase price. As private
registered land, it is governed by the provisions of the Land Registration Act, now denominated
____________
18 Rollo, p. 45.
654
654
Republic vs. Umali
the Property Registration Decree, which applies even to the government.
The pertinent provision of the Land Registration Act was Section 122, which read as follows:
Sec. 122. Whenever public lands in the Philippine Islands belonging to the Government of the United
States or to the Government of the Philippine Islands are alienated, granted, or conveyed to persons or
to public or private corporations, the same shall be brought forthwith under the operation of this Act
and shall become registered lands.19
This should be related to Section 12 of the Friar Lands Act, providing thus:
Sec. 12. x x x upon the payment of the final installment together with all accrued interest, the
Government will convey to such settler and occupant the said land so held by him by proper instrument
of conveyance, which shall be issued and become effective in the manner provided in section one
hundred and twenty-two (Sec. 122) of the Land Registration Act.
The petitioner claims that it is not barred by the statute of limitations because the original transfer of
the land was null and void ab initio and did not give rise to any legal right. The land therefore continued
to be part of the public domain and the action for this reversion could be filed at any time. The answer
to that is the statement made by the Court in Heirs of Tanak Pangawaran Patiwayan v. Martinez 20 that
“even if respondent Tagwalan eventually is proven to have procured the patent and the original
certificate of title by means of fraud, the land would not revert back to the State,” precisely because it
has become private land. Moreover, the petitioner errs in arguing that the original transfer was null and
void ab initio, for the fact is that it is not so. It was only voidable. The land remained private as long as
the title thereto had not been
_____________
19 Sec. 103, P.D. 1529.

20 142 SCRA 252.
655
VOL. 171, APRIL 10, 1989
655
Republic vs. Umali
voided, but it is too late to do that now. As the Court has held in Ramirez vs. Court of Appeals.21
A certificate of title fraudulently secured is not null and void ab initio, unless the fraud consisted in
misrepresenting that the land is part of the public domain, although it is not. In such case the nullity
arises, not from the fraud or deceit, but from the fact that the land is not under the jurisdiction of the
Bureau of Lands. Inasmuch as the land involved in the present case does not belong to such category,
OCT No. 282-A would be merely voidable or reviewable (Vda. de Cuaycong vs. Vda. de Sengbengco, 110
Phil. 113): (1) upon proof of actual fraud; (2) although valid and effective, until annulled or reviewed in a
direct proceeding therefor (Legarda vs. Saleeby, 31 Phil. 590), not collaterally (Soroñgon vs. Makalintal,
80 Phil. 259, 262; Director of Lands vs. Gan Tan, 89 Phil. 184; Henderson vs. Garrido, 90 Phil. 624, 630;
Samonte vs. Sambilon, 107 Phil. 198, 200); (3) within the statutory period therefor (Sec. 38, Act 496;
Velasco vs. Gochuico, 33 Phil. 363; Delos Reyes vs. Paterno, 34 Phil. 420; Snyder vs. Provincial Fiscal, 42
Phil. 761, 764; Reyes vs. Borbon, 50 Phil. 791; Clemente vs. Lukban, 53 Phil. 931; Sugayan vs. Solis, 56
Phil. 276, 279; Heirs of Lichauco vs. Director of Lands, 70 Phil. 69); (4) after which, the title would be
conclusive against the whole world, including the Government (Legarda vs. Saleeby, 31 Phil. 590, 596;
Central Capiz vs. Ramirez, 40 Phil. 883; J. M. Tuason vs. Santiago, 99 Phil. 615).
And as we declared in Municipality of Hagonoy vs. Secretary of Agriculture and Natural Resources:22
x x x. Once a patent is registered and the corresponding certificate of title is issued, the land ceases to be
part of public domain and becomes private property over which the director of Lands has neither
control nor jurisdiction. A public land patent, when registered in the corresponding Register of Deeds, is
a veritable Torrens Title, and becomes as indefeasible as Torrens Title upon the expiration of one (1)
year from the date of issuance thereof. Said title is, like one issued pursuant to a judicial decree, subject
to review within one (1) year from the date of the issuance of the patent. Beyond said period, the
____________
21 30 SCRA 301.
22 73 SCRA 507.
656
656
Republic vs. Umali
action for the annulment of the certificate of title issued upon the land grant can no longer be
entertained. (Emphasis supplied).
It is worth observing here that in two earlier cases, the private respondents were challenged by the heirs
of Matilde Cenizal Arguson but both were dismissed and the titles of the registered owners were
confirmed by the trial court.23 This decision was later sustained by this Court.24 While this is not to say
that the present petition is barred by res judicata, as the government was not a party in these cases, it
does suggest that the issue it wants to rake up now has long been settled. It should not be the subject of
further judicial inquiry, especially at this late hour. Litigation must stop at some point instead of dragging
on interminably.
The Torrens system was adopted in this country because it was believed to be the most effective
measure to guarantee the integrity of land titles and to protect their indefeasibility once the claim of
ownership is established and recognized. If a person purchases a piece of land on the assurance that the
seller’s title thereto is valid, he should not run the risk of being told later that his acquisition was
ineffectual after all. This would not only be unfair to him. What is worse is that if this were permitted,
public confidence in the system would be eroded and land transactions would have to be attended by
complicated and not necessarily conclusive investigations and proof of ownership. The further
consequence would be that land conflicts could be even more numerous and complex than they are
now and possibly also more abrasive if not even violent. The government, recognizing the worthy
purposes of the Torrens system, should be the first to accept the validity of titles issued thereunder
once the conditions laid down by the law are satisfied. As in this case.
We find that the private respondents are transferees in good faith and for value of the subject property
and that the original acquisition thereof, although fraudulent, did not affect their own titles. These are
valid against the whole world, including
_____________
23 Rollo, p. 10.
24 Ibid.
657
VOL. 171, APRIL 10, 1989
657
National Economic Protectionism Association vs. Ongpin
the government.
ACCORDINGLY, the petition is DENIED, without any pronouncement as to costs. It is so ordered.
Narvasa, Gancayco, Griño-Aquino and Medialdea, JJ., concur.
Petition denied.
Notes.—Once a court issues a decree of registration the affected land no longer forms part of public
lands, and of its issuance was tainted by extrinsic fraud of applicant the court may re-open proceedings
and order issuance of title to defrauded party. (Ramirez vs. Court of Appeals, 144 SCRA 292.)
Torrens system is not a means for land acquisition, but only for registration of title over land. (Bautista
vs. Court of Appeals, 131 SCRA 532.)
——o0o——
© Copyright 2020 Central Book Supply, Inc Republic vs. Umali, 171 SCRA 647, G.R. No. 80687 April 10,
1989
Traders Royal Bank vs. Court of Appeals
G.R. No. 114299. September 24, 1999.*
TRADERS ROYAL BANK, petitioner, vs. HON. COURT OF APPEALS, PATRIA, RUBY ANN, MARGARITA,
ROSARIO, CYNTHIA, LINDA JOY, all surnamed CAPAY and RAMON A. GONZALES, respondents.
G.R. No. 118862. September 24, 1999.*
PATRIA, RUBY ANN, MARGARITA, ROSARIO, CYNTHIA, LINDA JOY, all surnamed CAPAY, and RAMON A.
GONZALES, petitioners, vs. SPS. HONORATO D. SANTOS and MARIA CRISTINA S. SANTOS, SPS. CECILIO L.
PE and JOSEFINA L. PE, FLORA LARON WESCOMBE, SPS. TELESFORO P. ALFELOR II and LIZA R. ALFELOR,
SPS. DEAN RODERICK FERNANDO and LAARNI MAGDAMO FERNANDO, REMEDIOS OCA, DEVELOPMENT
BANK OF THE PHILIPPINES and TRADERS ROYAL BANK, respondents.
Land Registration; Torrens System; The main purpose of the Torrens system is to avoid possible conflicts
of title to real estate and to facilitate transactions relative thereto by giving the public the right to rely
upon the face of a Torrens certificate of title and to dispense with the need of inquiring further, except
when the party concerned has actual knowledge of facts and circumstances that should impel a
reasonably cautious man to make such further inquiry.—When TRB purchased the property at the
foreclosure sale, the notice of lis pendens that the Capays caused to be annotated on their certificate of
title was not carried over to the new one issued to TRB. Neither did the certificate of title of Emelita
Santiago, who purchased the property from TRB, contain any such notice. When Santiago caused the
property to be divided, six (6) new certificates of title were issued, none of which contained any notice
of lis pendens. Santiago then sold the lots to Marcial Alcantara and his co-owners who next sold each of
these to the non-bank respondents. The non-bank respondents, therefore, could not have been aware
that the property in question
______________
* FIRST DIVISION.
191
VOL. 315, SEPTEMBER 24, 1999
191
was the subject of litigation when they acquired their respective portions of said property. There was
nothing in the certificates of title of their respective predecessors-in-interest that could have aroused
their suspicion. The non-bank respondents had a right to rely on what appeared on the face of the title
of their respective predecessors-in-interest, and were not bound to go beyond the same. To hold
otherwise would defeat one of the principal objects of the Torrens system of land registration, that is, to
facilitate transactions involving lands. The main purpose of the Torrens system is to avoid possible
conflicts of title to real estate and to facilitate transactions relative thereto by giving the public the right
to rely upon the face of a Torrens certificate of title and to dispense with the need of inquiring further,
except when the party concerned has actual knowledge of facts and circumstances that should impel a
reasonably cautious man to make such further inquiry. Where innocent third persons, relying on the
correctness of the certificate of title thus issued, acquire rights over the property, the court cannot
disregard such rights and order the total cancellation of the certificate. The effect of such an outright
cancellation would be to impair public confidence in the certificate of title, for everyone dealing with
property registered under the Torrens system would have to inquire in every instance as to whether the
title has been regularly or irregularly issued by the court. Every person dealing with registered land may
safely rely on the correctness of the certificate of title issued therefor and the law will in no way oblige
him to go beyond the certificate to determine the condition of the property.
Same; Same; The Torrens system was adopted in this country because it was believed to be the most
effective measure to guarantee the integrity of land titles and to protect their indefeasibility once the
claim of ownership is established and recognized.—The Torrens system was adopted in this country
because it was believed to be the most effective measure to guarantee the integrity of land titles and to
protect their indefeasibility once the claim of ownership is established and recognized. If a person
purchases a piece of land on the assurance that the seller’s title thereto is valid, he should not run the
risk of being told later that his acquisition was ineffectual after all. This would not only be unfair to him.
What is worse is that if this were permitted, public confidence in the system would be eroded and land
transactions would have to be attended by complicated and not necessarily conclusive investigations
and proof of ownership. The further consequence would be that land conflicts
192
192
could be even more numerous and complex than they are now and possibly also more abrasive, if not
even violent. The Government, recognizing the worthy purposes of the Torrens system, should be the
first to accept the validity of titles issued thereunder once the conditions laid down by the law are
satisfied.
Same; Same; Between two innocent persons, the one who made it possible for the wrong to be done
should be the one to bear the resulting loss.—Between two innocent persons, the one who made it
possible for the wrong to be done should be the one to bear the resulting loss. The Capays filed the
notice of lis pendens way back on March 17, 1967 but the same was not annotated in TRB’s title. The
Capays and their counsel Atty. Ramon A. Gonzales knew in 1968 of the extra-judicial foreclosure sale of
the property to TRB and the consolidation of title in the bank’s name following the lapse of the one-year
period of redemption. But in the next fifteen (15) years or so, they did not bother to find out the status
of their title or whether the liens noted on the original certificate of title were still existing considering
that the property had already been foreclosed. In the meantime, the subject property had undergone a
series of transfers to buyers in good faith and for value. It was not until after the land was subdivided
and developed with the buyers building their houses on the other lots when the Capays suddenly
appeared and questioned the occupants’ titles. At the very least, the Capays are guilty of laches. Laches
has been defined as the failure or neglect, for an unreasonable and unexplained length of time, to do
that which by exercising due diligence could nor should have been done earlier; it is negligence or
omission to assert a right within a reasonable time, warranting presumption that the party entitled to it
either has abandoned it or declined to assert it.
Same; Same; Banks and Banking; Estoppel; The bank is estopped from invoking banking laws and
regulations to justify its belated disposition of the property. It cannot be allowed to hide behind the law
which it itself violated.—Section 25 of the General Banking Act, provides that no bank “shall hold the
possession of any real estate under mortgage or trust, deed, or the title and possession of any real
estate purchased to secure any debt due to it, for a longer period than five years.” TRB, however, admits
holding on to the foreclosed property for twelve (12) years after consolidating title in its name. The bank
is, therefore, estopped from invoking banking laws and regulations to justify its belated disposition of
the property.
193
193
It cannot be allowed to hide behind the law which it itself violated. TRB cannot feign ignorance of the
existence of the lis pendens because when the property was foreclosed by it, the notice of lis pendens
was annotated on the title. But when TCT No. T-6595 in the name of the Capay spouses was cancelled
after the foreclosure, TCT No. T-16272 which was issued in place thereof in the name of TRB did not
carry over the notice of lis pendens.
PETITIONS for review on certiorari of a decision of the Court of Appeals.
Ramon A. Gonzales and Gonzalez, Sinense, Jimenez & Associates for Patria Capay, et al.
Francisco S. Reyes Law Office for non-bank respondents.
KAPUNAN, J.:
The present controversy has its roots in a mortgage executed by the spouses Maximo and Patria Capay
in favor of Traders Royal Bank (TRB) pursuant to a loan extended by the latter to the former. The
mortgage covered several properties, including a parcel of land, the subject of the present dispute.1 The
loan became due on January 8, 1964 and the same having
______________
1 Said piece of land had been registered in the name of the Capay spouses since December 14, 1959
under TCT No. T-6595 (Exh. “J”), and is more accurately described as follows: A parcel of land (Lot 27-A-
2-A of the subdivision plan [LRC] Psd-24029, being a portion of Lot 27-A-2, described on plan LRC Psd-
23299, LRC [GLRO] Record No.-Civ. Res. 211), situated in the Res. Sec. ‘L,’ Baguio City, Island of Luzon.
Bounded on the SE., points 3 to 4, by Lot 27-C, (LRC) Psd-10738; on the SW., points 4 to 5, by Lot 27-C
(LRC) Psd-10738, and points 5 to 1 by Lot 27-A-2-B of the Subdivision plan; and on the NW., and NE.,
points 1 to 3, by Lot 27-A-2-B of the subdivision plan. x x x containing an area of ONE THOUSAND FIVE
HUNDRED AND NINETY ONE (1,591) SQUARE METERS, more or less.
194
194
remained unpaid, TRB instituted extra-judicial foreclosure proceedings upon the mortgaged property.
To prevent the property’s sale by public auction, the Capays, on September 22, 1966, filed a petition for
prohibition with preliminary injunction (Civil Case No. Q-10453) before the Court of First Instance (CFI)
of Rizal, alleging that the mortgage was void since they did not receive the proceeds of the loan. The
trial court initially granted the Capay’s prayer for preliminary injunction.
On March 17, 1967, the Capays caused to be filed in the Register of Deeds of Baguio City a notice of lis
pendens over the disputed property. Said notice was entered in the Day Book, as well as in the Capays’
certificate of title.
Subsequently, the injunction issued by the trial court was lifted thus allowing the foreclosure sale to
proceed. Foreclosure proceedings were initiated and on October 17, 1968, the property was sold to TRB
which was the highest bidder at the auction sale. A sheriff certificate of sale was issued in its name on
the same day. On February 25, 1970, the property was consolidated in the name of TRB, the sole bidder
in the sale. TCT No. T-6595 in the name of the Capay spouses was then cancelled and a new one, TCT
No. T-16272,2 was entered in the bank’s name. The notice of lis pendens, however, was not carried over
in the certificate of title issued in the name of TRB.
Thereafter, the Capays filed with the CFI a supplemental complaint praying for the recovery of the
property with damages and attorney’s fees. Trial in Civil Case No. Q-10453 proceeded and, on October 3,
1977, the CFI rendered its decision declaring the mortgage void for want of consideration. The CFI
ordered, among other things, the cancellation of TCT No. T-16272 in the name of TRB and the issuance
of new certificates of title in the name of the Capay spouses.
TRB appealed to the Court of Appeals. While the case was pending in the Court of Appeals, TRB on
March 17, 1982 sold
____________________________
2 Exhibit “K.”
195
195
the land to Emelita Santiago in whose name a new certificate of title, TCT No. 33774,3 was issued, also,
without any notice of lis pendens annotated thereon. Santiago in turn divided the land into six (6) lots
and sold these to Marcial Alcantara, Armando Cruz and Artemio Sanchez, who became co-owners
thereof.4 Alcantara and his co-owners developed the property and thereafter sold the six (6) lots to
separate buyers who were issued separate titles, again, bearing no notice of lis pendens.5
On July 30, 1982, the Court of Appeals rendered its decision modifying the decision of the trial court as
to the award of damages but affirming the same in all other respects.
For having been filed out of time and for lack of merit, the petition for certiorari filed by TRB before this
Court6 was denied in a Resolution dated September 12, 1983. TRB’s motion for reconsideration was
similarly denied in a Resolution dated October 12, 1983. The Court’s September 12, 1983 Resolution
having become final and executory on November 9,
______________
3 Exhibit “L.”
4 TSN, March 29, 1989, p. 12.
5 Lot 27-A-2-A-1 with an area of 225 sq. meters was sold to Honorato Santos, who was issued TCT No. T-
36177 (Exhibit “M”). The Santoses later mortgaged said lot to the Development Bank of the Philippines.
Lot 27-A-2-A-2 with an area of 290 sq. meters was sold to Cecilio Pe, who was issued TCT No. 36707
(Exhibit “N”).
Lot 27-A-2-A-3 with an area of 330 sq. meters was sold to Flora Laron Escumbre, who was issued TCT No.
T-36051 (Exhibit “O”).
Lot 27-A-2-A-4 with an area of 280 sq. meters was sold to Telesforo Alfelor II who was issued TCT No. T-
36147 (Exhibit “P”). The Alfelors later mortgaged the same to the Development Bank of the Philippines.
TCT No. T-36730 (Exhibit “Q”) covering Lot 27-A-2-A-5 with an area of 235 sq. meters was issued to Dean
Roderick Fernando. Lot 27-A-2-A-6 with an area of 231 sq. meters was sold to Remedios Oca TCT No. T-
37437 (Exhibit “R”) was issued to the latter.
6 G.R. No. 62744.
196
196
1983, the trial court issued a writ of execution directing the Register of Deeds of Baguio City to cancel
TCT No. T-16272 in the name of TRB, and to issue a new one in the name of the Capay spouses.
Said writ, however, could not be implemented because of the successive subsequent transfers of the
subdivided property to buyers who obtained separate titles thereto. Thus, a complaint for recovery of
possession/ownership dated 8 June 1985 was filed before the Quezon City Regional Trial Court against
TRB and the subsequent transferees of the property, the respondents in G.R. No. 118862 (hereinafter,
“the non-bank respondents”). Plaintiffs in said case were Patria Capay, her children by Maximo7 who
succeeded him upon his death on August 25, 1976, and Ramon Gonzales, counsel of the spouses in Civil
Case No. Q-10453 who became co-owner of the property to the extent of 35% thereof as his attorney’s
fees (collectively, “the Capays”). On March 27, 1991, the trial court rendered its decision, the dispositive
portion of which states:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs against the defendants and ordering
the Register of Deeds for Baguio to cancel TCT No. T-36177, Books 198, Page 177 in the names of
defendants Spouses Honorato D. Santos and Maria Cristina Santos; to cancel TCT No. 36707, Book 201,
Page 107 in the names of defendant Spouses Cecilio Pe and Josefina L. Pe; to cancel TCT No. T-36051,
Book 198, Page 51 in the name of Flora Laron Wescombe, married to Kevin Lind Wescombe (now
deceased); to cancel TCT No. T-36147, Book 198, page 147 in the names of Spouses Telesforo P. Alfelor II
and Liza R. Alfelor; to cancel TCT No. T-36730, Book 201, Page 130 in the names of Spouses Dean
Roderick Fernando and Laarni Magdamo Fernando; to cancel TCT No. 37437, Book 205, Page 37 in the
name of Remedios Oca, and issue new ones free from all liens and encumbrances, together with all the
improvements therein in the names of plaintiffs sharing pro indiviso as follows: 35% to Ramon A.
Gonzales, married to Lilia Y. Gonzales, of legal age, with postal address at 23 Sunrise Hill, New Manila,
Quezon City; 37.92% to Patria B. Capay, of legal age, widow, Fili-
______________
7 Namely, Ruby Ann, Margarita, Rosario, Cynthia, Linda Joy, all surnamed Capay.
197
197
pino; 5.41% each to Ruby Ann Capay, of legal age, Filipino, married to Pokka Vainio, Finnish citizen;
Chona Margarita Capay, of legal age, Filipino, married to Waldo Flores; Rosario Capay, of legal age,
Filipino, married to Jose Cuaycong, Jr.; Cynthia Capay, of legal age, Filipino, married to Raul Flores; Linda
Joy Capay, of legal age, Filipino, married to Pedro Duran, all with postal address at 37 Sampaguita St.,
Capitolville Subd., Bacolod City, ordering said defendants to vacate the premises in question and
restoring plaintiffs thereto and for defendant Traders Royal Bank to pay each of the plaintiffs moral
damages in the amount of P100,000.00, P40,000.00 in exemplary damages and P40,000.00 as attorney’s
fees, all with legal interest from the filing of the complaint, with costs against defendants.
SO ORDERED.8
TRB and the non-bank respondents appealed to the Court of Appeals. In a Decision promulgated on
February 24, 1994 in CA-G.R. CV No. 33920, the appellate court affirmed the decision of the trial court in
toto.9 It ruled that the non-bank respondents cannot be considered as purchasers for value and in good
faith, having purchased the property subsequent to the action in Civil Case No. Q-10453 and that while
the notice of lis pendens was not carried over to TRB’s certificate of title, as well as to the subsequent
transferees’ titles, it was entered in the Day Book which is sufficient to constitute registration and notice
to all persons of such adverse claim, citing the cases of Villasor vs. Camon,10 Levin vs. Bass11 and
Director of Lands vs. Reyes.12
As regard TRB, the Court of Appeals said that the bank was in bad faith when it sold the property
knowing that it was under litigation and without informing the buyer of that fact.
______________
8 Branch 74, presided by Judge Leonardo M. Rivera.
9 Rollo, G.R. No. 118862, pp. 49-57.

10 89 Phil. 404 (1951).
11 91 Phil. 419 (1952).
12 68 SCRA 177 (1975).
198
198
On April 26, 1994, TRB filed with this Court a petition for review to set aside the CA decision, docketed
herein as G.R. No. 114299, invoking the following grounds:
I.
THE RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE AND SERIOUS ERROR OF LAW
IN PROMULGATING THE DISPUTED DECISION AND THEREBY DECIDED A QUESTION OF SUBSTANCE
WHOLLY CONTRARY TO SETTLED JURISPRUDENCE AND TOTALLY NOT IN ACCORD WITH APPLICABLE
DECISION OF THIS HONORABLE SUPREME COURT.
II.
THE RESPONDENT HONORABLE COURT OF APPEALS HAS COMMITTED SO GRAVE AND SERIOUS ERRORS
OF LAW IN SANCTIONING A DEPARTURE FROM THE USUAL AND ACCEPTED COURSE OF JUDICIAL
PROCEEDING AS TO CALL FOR THE EXERCISE OF THE POWER OF REVIEW BY THIS HONORABLE SUPREME
COURT.
a)The public respondent has plainly and manifestly acted whimsically, arbitrarily, capriciously, with
grave abuse of discretion, in excess of jurisdiction tantamount to lack of jurisdiction.
xxx
b)The public respondent erred in not finding that it was not the fault of petitioner when the notice of lis
pendens was not carried over to its new title.
xxx
c)The public respondent erred in not finding that PD No. 1271 had legally caused the invalidation of the
Capay’s property and the subsequent validation of TRB’s title over the same property was effective even
as against the Capays.13
Meanwhile, the non-bank respondents moved for a reconsideration of the Court of Appeals’ decision.
Convinced of the
______________
13 Rollo, G.R. No. 114299, pp. 14-17.
199
199
movants’ arguments, the Court of Appeals in a Resolution promulgated on August 10, 1994 granted the
motion for reconsideration and dismissed the complaint as against them. The dispositive portion of the
resolution states:
ACCORDINGLY, in view of the foregoing disquisitions and finding merit in the motion for reconsideration,
the same is hereby GRANTED. Consequently, the decision of this Court, promulgated on February 24,
1994, is hereby RECONSIDERED. The complaint filed against defendants-appellants with the court a quo
is hereby ordered DISMISSED, and the certificate of titles originally issued to them in their individual
names are hereby ordered restored and duly respected. We make no pronouncement as to costs.
SO ORDERED.14
The Capays thus filed with this Court a petition for review, docketed as G.R. No. 118862, to set aside the
resolution of the Court of Appeals raising the following errors:
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW HOLDING THAT TUAZON VS.
REYES, 48 PHIL. 814 AND RIVERA VS. MORAN, 48 PHIL. 836 ARE NOT APPLICABLE HEREOF, WHILE PINO
VS. COURT OF APPEALS, 198 SCRA 436, IS APPLICABLE.
II
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW HOLDING THAT ATUN VS.
NUÑEZ, 97 PHIL. 762 AND LAROZA VS. GUIA, 134 SCRA 341, ARE NOT APPLICABLE.
III
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW HOLDING THAT LEVIN VS.
BASS, 91 PHIL. 419 VILLASOR VS. CAMON, 89 PHIL. 404 AND DIRECTOR OF LANDS VS. REYES, 68 SCRA
177, ARE NOT APPLICABLE HEREOF.
______________
14 Rollo, G.R. No. 118862, p. 63.

200
200
IV
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW HOLDING THAT PETITIONERS
ARE GUILTY OF LACHES.
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW HOLDING THAT THERE IS NO
DISTINCTION IN THE REGISTRATION OF VOLUNTARY INSTRUMENTS VIS-À-VIS INVOLUNTARY
INSTRUMENTS.
VI
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW HOLDING THAT RESPONDENTS
WHO ARE LAWYERS, RESPONSIBLE CITIZENS AND WELL-RESPECTED RESIDENTS IN THE COMMUNITY,
ARE EXEMPTED FROM THE EFFECTS OF THE CONSTRUCTIVE NOTICE ARISING FROM REGISTRATION.
VII
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF WITH REGARDS TO TRADERS ROYAL
BANK, AFTER THE LATTER HAS PERFECTED ITS APPEAL TO THE SUPREME COURT.
VIII
THE COURT OF APPEALS PALPABLY ERRED IN NOT RULING ON THE COUNTER-ASSIGNMENT OF ERROR
THAT:
B)THE LOWER COURT ERRED IN NOT HOLDING THAT DEFENDANTS ARE BOUND BY THE DECISION IN
CIVIL CASE NO. Q-10453.
Subsequently, G.R. No. 118862 was consolidated with G.R. No. 114299, pursuant to this Court’s
Resolution dated July 3, 1996.15
______________
15 Id., at 240.
201
201
The consolidated cases primarily involve two issues: (1) who, as between the Capays and the non-bank
respondents, has a better right to the disputed property, and (2) whether or not TRB is liable to the
Capays for damages.
On the first issue, we rule for the non-bank respondents.
First, when TRB purchased the property at the foreclosure sale, the notice of lis pendens that the Capays
caused to be annotated on their certificate of title was not carried over to the new one issued to TRB.
Neither did the certificate of title of Emelita Santiago, who purchased the property from TRB, contain
any such notice. When Santiago caused the property to be divided, six (6) new certificates of title were
issued, none of which contained any notice of lis pendens. Santiago then sold the lots to Marcial
Alcantara and his co-owners who next sold each of these to the non-bank respondents. The non-bank
respondents, therefore, could not have been aware that the property in question was the subject of
litigation when they acquired their respective portions of said property. There was nothing in the
certificates of title of their respective predecessors-in-interest that could have aroused their suspicion.
The non-bank respondents had a right to rely on what appeared on the face of the title of their
respective predecessors-in-interest, and were not bound to go beyond the same. To hold otherwise
would defeat one of the principal objects of the Torrens system of land registration, that is, to facilitate
transactions involving lands.
The main purpose of the Torrens system is to avoid possible conflicts of title to real estate and to
facilitate transactions relative thereto by giving the public the right to rely upon the face of a Torrens
certificate of title and to dispense with the need of inquiring further, except when the party concerned
has actual knowledge of facts and circumstances that should impel a reasonably cautious man to make
such further inquiry. Where innocent third persons, relying on the correctness of the certificate of title
thus issued, acquire rights over the property, the court cannot disregard such
202
202
rights and order the total cancellation of the certificate. The effect of such an outright cancellation
would be to impair public confidence in the certificate of title, for everyone dealing with property
registered under the Torrens system would have to inquire in every instance as to whether the title has
been regularly or irregularly issued by the court. Every person dealing with registered land may safely
rely on the correctness of the certificate of title issued therefor and the law will in no way oblige him to
go beyond the certificate to determine the condition of the property.
The Torrens system was adopted in this country because it was believed to be the most effective
measure to guarantee the integrity of land titles and to protect their indefeasibility once the claim of
ownership is established and recognized. If a person purchases a piece of land on the assurance that the
seller’s title thereto is valid, he should not run the risk of being told later that his acquisition was
ineffectual after all. This would not only be unfair to him. What is worse is that if this were permitted,
public confidence in the system would be eroded and land transactions would have to be attended by
complicated and not necessarily conclusive investigations and proof of ownership. The further
consequence would be that land conflicts could be even more numerous and complex than they are
now and possibly also more abrasive, if not even violent. The Government, recognizing the worthy
purposes of the Torrens system, should be the first to accept the validity of titles issued thereunder
once the conditions laid down by the law are satisfied.16
Second, the foregoing rule notwithstanding, the non-bank respondents nevertheless physically
inspected the properties and inquired from the Register of Deeds to ascertain the absence of any defect
in the title of the property they were purchasing—an exercise of diligence above that required by law.
Thus, respondent Aida Fernando Meeks, who bought Lot 5 for her son Dean, testified:
How did you come to live in Baguio City, particularly in Km. 2.5 San Luis, Baguio City?
______________
16 Tenio-Obsequio vs. Court of Appeals, 230 SCRA 550 (1994).
203
203
A
In one of my visits to my sister who has been residing here for twelve (12) years now, I got interested in
buying a property here.
How did you come to know of this property at Asin Road where you now reside?
My sister, Ruth Ann Valdez, sir.
When this particular property was bought by you, when was that?
I do not remember the exact date, but it was in early 1984, sir.
At the time when you went to see the place where you now reside, how did it look?
This particular property that I bought was then a small one (1)-room structure, it is a two (2)-storey one
(1) bedroom structure.
Q
What kind of structure with regards to material?
It is a semi-concrete structure, sir.
And aside from this two (2)-storey one (1)-room structure, how did the surrounding area look like at the
time you visited?
There were stone walls from the road and there were stone walls in front of the property and beside the
property.
At the time you went to see the property with your agent, rather, your sister Ruth Ann Valdez, did you
come to know the owner?
We did because at the time we went there, Mr. Alcantara was there supervising the workers.
And who?
A
Amado Cruz, sir.
After you saw this property, what else did you do?
My first concern then was am I buying a property with a clean title.
In regards to this concern of yours, did you find an ans wer to this concern of yours?
At first, I asked Mr. Alcantara and I was answered by him.
204
204
Q
What was his answer?
That it was a property with a clean title, that he has shown me the mother title and it is a clean title.
Aside from being informed that it is a property with a clean title, did you do anything to answer your
question?
Yes, sir.
What did you do?
Well, the first step I did was to go to the Land Registration Office.
Are you referring to the City Hall of Baguio?
A
Yes, the City Hall of Baguio.
And what did you do in the Registry of Deeds?
We looked for the title, the original title, sir.
When you say we, who was your companion?
Mr. Alcantara and my present husband, sir.
The three (3) of you?
Yes, sir.
Q
What title did you see there?
We saw the title that was made up in favor of Amado Cruz, sir.
And what was the result of your looking up for this title in the name of Amado Cruz?
We had to be reassured that it was a genuine one, so we asked Atty. Diomampo who heads the office.
We showed him a copy of that title and we were also reassured by him that anything that was signed by
him was as good as it is.
Did this Atty. Diomampo reassure you that the title was good?
He did.
After your conversation with the Register of Deeds, what did you do?
A
The second step we did was to confer with our lawyer, a friend from RCBC Binondo, Manila, this is Atty.
Nelson Waje.
What is your purpose in going to this lawyer?
205
205
We wanted an assurance that we were getting a valid title just in case we think of buying the property.
What was the result of your conference with this lawyer?
He was absolutely certain that that was a valid title.
Q
Mrs. Meeks, after looking at the place, going to the Register of Deeds, looking at the title and seeing
your lawyer friend, what decision did you finally make regarding the property?
We wanted more reassurances, so we proceeded to Banaue, as advised by that same lawyer, there is
another office of the Bureau of Lands. I cannot recall the office but it has something to do with
registration of the old.
What is your purpose in going to his Office in Banaue?
I wanted more reassurances that I was getting a valid title.
What was the result of your visit to the Banaue Office?
We found the title of this property and there was reassurance that it was a clean title and we saw the
mother title under the Hilario family.
Mrs. Meeks, when you say Banaue, what particular place is this Banaue?
A
It is in Banaue Street in Quezon City, sir.
And when you saw the title to this property and the mother title, what was the result of your
investigation, the investigation that you made?
We were reassured that we were purchasing a valid title, we had a genuine title.
When you were able to determine that you had a valid, authentic or genuine title, what did you do?
That is when I finally thought of purchasing the property.17
Telesforo Alfelor II, the purchaser of Lot 4, narrated going through a similar routine:
______________
17 TSN, March 29, 1989, pp. 22-26.
206
206
How did you come to know of this place as Asin Road where you are presently residing?
It was actually through Mrs. Flory Recto who is presently the Branch Manager of CocoBank. She
informed my wife that there is a property for sale at Asin Road, and she was the one who introduced to
us Mr. Alcantara, sir.
When you were informed by Mrs. Recto and when you met with Mr. Alcantara, did you see the property
that was being offered for sale?
Yes, sir.
When did you specifically see the property, if you can recall?
A
I would say it is around the third quarter of 1983, sir.
When you went to see the place, could you please describe what you saw at that time?
When we went there the area is still being developed by Mr. Alcantara. As a matter of fact the road
leading to the property is still not passable considering that during that time it was rainy season and it
was muddy, we fell on our way going to the property and walked to have an ocular inspection and
physical check on the area, sir.
xxx
What was the improvement, if any, that was in that parcel which you are going to purchase?
During that time, the riprap of the property is already there, the one-half of the riprap sir.
Do you know who was making this improvement at the time that you went there?
A
I would understand that it was Marcial Alcantara, sir.
After you saw the place and you saw the riprap and you were in the course of deciding to purchase this
property, what else did you do?
First, I have to consider that the property is clean.
How did you go about determining whether the title of the property is clean?
Considering that Marcial Alcantara is a real estate broker, I went to his office and checked the
documents he has regarding the property.
207
207
And what was the result of your checking as to whether the title of the property is clean?
He showed me the copy of the title and it was clean, sir.
Aside from going to Mr. Alcantara to check up the title of the property, what else did you do?
Well, the next thing is I requested his wife to accompany me to the Bureau of Lands or rather the
Registry of Deeds, sir.
What registry of Deeds are you referring to?
The Registry of Deeds of Baguio City, sir.
Q
And were you able to see the Register of Deeds regarding what you would like to know?
Yes, and we were given a certification regarding this particular area that it was clean, sir.
What Certification are you referring to?
It is a Certification duly signed by the employee of the Registry of Deeds Adelina Tabangin, sir.
Do you have a copy of that Certification?
Yes, I have, sir.18
The testimonies of Honorato Santos19 and Josefina Pe20 were to the same effect.
The non-bank respondents’ predecessor-in-interest, Marcial Alcantara, was no less thorough:
And will you give a brief description of what you do?

A
I normally acquire land, quite big tract of land and subdivide it into smaller lots and sold it to some
interested parties.
Specifically, Mr. Alcantara, will you please inform the Court in what place in Baguio have you acquired
and subdivided and sold lots?
Dominican Hill, Leonila Hill, Crystal Cave and Asin Road, sir.
______________
18 TSN, March 30, 1989, pp. 3-4, 6-7.
19 Id., at 22-23.
20 TSN, June 1, 1989, pp. 4-5.
208
208

You mentioned Asin Road, what particular place in Asin Road are you referring?
That property I bought from Emelita Santiago, sir.
When you say you bought it from Emelita Santiago, how did you come to know that Emelita Santiago is
disposing of the property?
Because of the father, he is the one who offered me the property, sir, Armando Gabriel.
Is he also a resident of Baguio?
He is from Buyagan, La Trinidad, sir.
Q
How did you come to know of this Armando Gabriel wanting to sell a property in Asin?
He approached me in the house, sir. He has acquired a title from the Traders Royal Bank.
Can you inform the Honorable Court when you had this conversation with Armando Gabriel on the sale
of the property at Asin Road?
Later part of March, 1983, sir.
Now, when this Armando Gabriel informed you that he wants his property to be sold, what did you do?
I went to the place with the agent, sir.
When you say you went to the place with the agent, what place?
A
Kilometer 2, Asin Road, sir.
And when you went there to see the place, did you actually go there to see the place?
By walking, I parked my car a kilometer away, sir.
Is it my understanding that when you went to see the property there were no roads?
None, sir.
xxx
Mr. Alcantara, when you went to see this place at Asin Road last week of March, 1983, will you please
briefly describe how this place looked like at that time?
A
The place was mountainous, grassy, there were cogon trees, some of the roads were eroding already, so
we cannot possibly enter the property, sir.
209
209
At the time you entered the place, was there any visible sign of claim by anyone?
None, sir.
In terms of fence in the area?
There is no such, sir.

xxx
Aside from looking or going to the property, what else did you do to this property prior to your
purchase?
I investigated it with the Register of Deeds, sir.
What is your purpose in investigating it with the Register of Deeds?
To see if the paper is clean and there are no encumbrances, sir.
To whom did you talk?
To Atty. Ernesto Diomampo, sir.
Q
And when you went to the Registry of Deeds to investigate and check, did you have occasion to talk with
Atty. Diomampo?
Yes, sir.
And what was the result of your talk with Atty. Diomampo?
The papers are clean except to the annotation at the back with the road right of way, sir.
After making this investigation with the Register of Deeds and talking with Atty. Diomampo, what else
transpired?
We bought the property, sir.
After purchasing the property from Emelita Santiago, could you please tell the Honorable Court what
you did with that deed of sale?
A
We registered it with the Register of Deeds for the Certificate of Title because at that time when we
bought the property, Emelita Santiago had it subdivided into six (6) lots, sir.
Is it our understanding that prior to your purchase the property was subdivided into six (6) parcels?
Yes, sir.
210
210
Could you please inform the Honorable Court if you have any buyers in the subdivision of this property
prior to your purchase?
Yes, I have.
Q
This subdivision of this property, to what office was it brought for action?
Bureau of Lands, San Fernando, La Union, sir.
Now, Mr. Alcantara, at the time that you had this property subdivided by the owner, could you please
inform the Court if there was any claim by any other party opposing the subdivision or claiming the
property?
None, sir.
When the Deed of Sale was executed and you said that you presented it to the Register of Deeds and
after the subdivision already, what action did the Register of Deeds have regarding the matter?
They approved it and registered it already in six (6) titles, sir.
In whose names?
A
One (1) title under my name, Amado Cruz and Dr. Sanchez, sir.
Initially, Mr. Alcantara, you said that you are the sole purchaser of this entire area of One Thousand Five
Hundred Ninety One (1,591) Square Meters. Now, you are informing this Honorable Court that one
Amado Cruz and one Dr. Sanchez were also issued two (2) titles. Could you explain how these titles
came into their possession?
Actually, two (2) are our co-owners, sir.
So, is it our understanding that the Deed of Sale from Emelita Santiago is in favor of these two (2) Atty.
Cruz and Dr. Sanchez?
Yes, sir.21
Third, between two innocent persons, the one who made it possible for the wrong to be done should be
the one to bear the
211
211
resulting loss.22 The Capays filed the notice of lis pendens way back on March 17, 1967 but the same
was not annotated in TRB’s title. The Capays and their counsel Atty. Ramon A. Gonzales knew in 1968 of
the extra-judicial foreclosure sale of the property to TRB and the consolidation of title in the bank’s
name following the lapse of the one-year period of redemption. But in the next fifteen (15) years or so,
they did not bother to find out the status of their title or whether the liens noted on the original
certificate of title were still existing considering that the property had already been foreclosed. In the
meantime, the subject property had undergone a series of transfers to buyers in good faith and for
value. It was not until after the land was subdivided and developed with the buyers building their houses
on the other lots when the Capays suddenly appeared and questioned the occupants’ titles. At the very
least, the Capays are guilty of laches. Laches has been defined as the failure or neglect, for an
unreasonable and unexplained length of time, to do that which by exercising due diligence could nor
should have been done earlier; it is negligence or omission to assert a right within a reasonable time,
warranting presumption that the party entitled to it either has abandoned it or declined to assert it.23
Verily, the principle on prescription of actions is designed to cover situations such as the case at bar,
where there have been a series of transfers to innocent purchasers for value. To set aside these
transactions only to accommodate a party who has slept on his right is anathema to good order.
Independently of the principle of prescription of actions working against petitioners, the doctrine of
laches may further be counted against them, which latter tenet finds application even to imprescriptible
actions. x x x.24
______________
22 Bacaltos Coal Mines vs. Court of Appeals, 245 SCRA 460 (1995).
23 Republic vs. Sandiganbayan, 255 SCRA 438 (1996); Catholic Bishops of Balanga vs. Court of Appeals,
264 SCRA 181 (1996).
24 Buenaventura vs. Court of Appeals, 216 SCRA 819 (1992).
212
212
In De La Calzada-Cierras vs. Court of Appeals,25 we held:
While it is true that under the law it is the act of registration of the deed of conveyance that serves as
the operative act to convey the land registered under the Torrens System (Davao Grains, Inc. vs.
Intermediate Appellate Court, 171 SCRA 612), the petitioners cannot invoke said dictum because their
action to recover Lot 4362 is barred by the equitable doctrine of laches.
The act of registering the conveyance to Rosendo was constructive notice to the whole world of the fact
of such conveyance (Heirs of Maria Marasigan vs. Intermediate Appellate Court, 152 SCRA 253).
But the petitioners’ complaint to recover the title and possession of Lot 4362 was filed only on July 21,
1981, twelve (12) years after the registration of the sale to Rosendo. The petitioners failed and
neglected for an unreasonably long time to assert their right, if any, to the property in Rosendo’s
possession.
Being guilty of laches, the Capays cannot invoke the ruling in Villasor vs. Camon, Levin vs. Bass and
Director of Lands vs. Reyes26 to the effect that entry of the notice of lis pendens in the day book
(primary entry book) is sufficient to constitute registration and such entry is notice to all persons of such
adverse claim. Certainly, it is most iniquitous for the Capays who, after sleeping on their rights for fifteen
years, to assert ownership over the property that has undergone several transfers made in good faith
and for value and already subdivided into several lots with improvements introduced thereon by their
owners.
In the same vein, the cases cited by the Capays in their first two (2) assignment of errors do not help
them any, as the transferees in said cases were not innocent purchasers for value and in good faith. In
Tuazon vs. Reyes and Siochi,27 where the land involved therein was sold by Petronilo David to Vicente
Tuazon, it was with a deed containing the recital that the land was in dispute between the vendor and
Roberto
______________
25 212 SCRA 390 (1992).
26 See Notes 10, 11, and 12.
27 48 Phil. 844 (1926).
213
213
Siochi. Tuazon, who was merely subrogated to the rights of the vendor was aware of the dispute and,
furthermore, David did not warrant the title to the same. In Rivera vs. Moran,28 Rivera acquired interest
in the land before the final decree was entered in the cadastral proceedings. Rivera, the transferee, was
aware of the pending litigation and, consequently, could not have been considered a purchaser in good
faith. Similarly, in Atun, et al. vs. Nuñez, et al.29 and Laroza vs. Guia,30 the buyers of the property at the
time of their acquisition knew of the existence of the notice of lis pendens. In contrast to the cited cases,
the non-bank respondents in the case at bar acquired their respective portions of the land with clean
title from their predecessors-in-interest.
II
We come now to TRB’s liability towards the Capays.

The Bank unconvincingly tries to wash its hands off the present controversy, and attempts to shift the
blame on the Capays, thus:
xxx
23. The petitioner Bank, during all the time that it was holding the title for over fourteen (14) years that
there was no legal impediment for it to sell said property, Central Bank regulations require that real
properties of banks should not be held for more than five (5) years;
24. The fault of the Register of Deeds in not carrying over the Notice of Lis Pendens to the new title of
the petitioner Bank should not be absorbed by the latter considering that in all good faith, it was not
aware of the existence of said annotation during all the time that said title was in its possession for
almost fourteen (14) years before the property was sold to Emelita G. Santiago x x x.31
______________
28 48 Phil. 836 (1926).
29 97 Phil. 762 (1955).
30 134 SCRA 341 (1985).
31 Rollo, G.R. No. 114299, p. 75.
214
214

TRB concludes that “(t)he inaction and negligence of private respondents, allowing ownership to pass
for almost 15 years constitute prescription of action and/or laches.”32
Section 25 of the General Banking Act,33 provides that no bank “shall hold the possession of any real
estate under mortgage or trust, deed, or the title and possession of any real estate purchased to secure
any debt due to it, for a longer period than five years.” TRB, however, admits holding on to the
foreclosed property for twelve (12) years after consolidating title in its name. The bank is therefore,
estopped from invoking banking laws and regulations to justify its belated disposition of the property. It
cannot be allowed to hide behind the law which it itself violated.
TRB cannot feign ignorance of the existence of the lis pendens because when the property was
foreclosed by it, the notice of lis pendens was annotated on the title. But when TCT No. T-6595 in the
name of the Capay spouses was cancelled after the foreclosure, TCT No. T-16272 which was issued in
place thereof in the name of TRB did not carry over the notice of lis pendens.
We do not find the Capays guilty of “inaction and negligence” as against TRB. It may be recalled that
upon the commencement of foreclosure proceedings by TRB, the Capays filed an action for prohibition
on September 22, 1966 against the TRB before the CFI to stop the foreclosure sale. Failing in that
attempt, the Capays filed a supplemental complaint for the recovery of the property. The case reached
this Court. Prescription or laches could not have worked against the Capays because they had
persistently pursued their suit against TRB to recover their property.
On the other hand, it is difficult to believe TRB’s assertion that after holding on to the property for more
than ten (10) years, it suddenly realized that it was acting in violation of the General Bank Act. What is
apparent is that TRB took advantage of the absence of the notice of lis pendens at the
______________
32 Ibid.
33 Republic Act No. 337, as amended.

215
215
back of their certificate of title and sold the property to an unwary purchaser. This notwithstanding the
adverse decision of the trial court and the pendency of its appeal. TRB, whose timing indeed smacks of
bad faith, thus transferred caused the property without the lis pendens annotated on its title to put it
beyond the Capay’s reach. Clearly, the bank acted in a manner contrary to morals, good customs and
public policy, and should be held liable for damages.34
Considering, however, that the mortgage in favor of TRB had been declared null and void for want of
consideration and, consequently, the foreclosure proceedings did not have a valid effect, the Capays
would ordinarily be entitled to the recovery of their property. Nevertheless, this remedy is not now
available to the Capays inasmuch as title to said property has passed into the hands of third parties who
acquired the same in good faith and for value. Such being the case, TRB is duty bound to pay the Capays
the fair market value of the property at the time it was sold to Emelita Santiago, the transferee of TRB.
WHEREFORE, the decision of the Court of Appeals dated February 24, 1994 in CA-G.R. CV No. 33920, as
modified by its Resolution dated August 10, 1994 is hereby AFFIRMED. In addition, Traders Royal Bank is
ordered to pay the Capays the fair market value of the property at the time it was sold to Emelita
Santiago.
This Decision is without prejudice to whatever criminal, civil or administrative action against the Register
of Deeds and/or his assistants that may be taken by the party or parties prejudiced by the failure of the
former to carry over the notice of lis pendens to the certificate of title in the name of TRB.
SO ORDERED.
Davide, Jr. (C.J.), Puno, Pardo and Ynares-Santiago, JJ., concur.

______________
34 Article 21, Civil Code.
216
216
People vs. Bragas
Reviewed decision affirmed.
Note.—One who deals with property registered under the Torrens system need not go beyond the
same, but only has to rely on the title. He is charged with notice only of such burdens and claims as are
annotated on the title. (Legarda vs. Court of Appeals, 280 SCRA 642 [1997])
——o0o——
© Copyright 2020 Central Bo Traders Royal Bank vs. Court of Appeals, 315 SCRA 190, G.R. No. 114299,
G.R. No. 118862 September 24, 1999
434
Pino vs. Court of Appeals
G.R. No. 94114. June 19, 1991.*
FELICISIMA PINO, petitioner, vs. COURT OF APPEALS, DEMETRIA GAFFUD, ROMUALDO GAFFUD, ADOLFO
GAFFUD & RAYMUNDO GAFFUD, respondents.
Land Registration; Sale; Where the certificate of title is in the name of the vendor when the land is sold,
the vendee for value has the right to rely on what appears on the certificate of title.––The rule
applicable to this controversy is well-settled. Where the certificate of title is in the name of the vendor
when the land is sold, the vendee for value has the right to rely on what appears on the certificate of
title. In the absence of anything to excite or arouse suspicion, said vendee is under no obligation to look
beyond the certificate and investigate the title of the vendor appearing on the face of said certificate.
Same; Same; Same; Where innocent third persons relying on the correctness of the certificate thus
issued, acquire rights over the prop-
_______________
* SECOND DIVISION.
435
VOL. 198, JUNE 19, 1991
435
erty, the court cannot disregard such rights.––“The main purpose of the Torrens’ System is to avoid
possible conflicts of title to real estate and to facilitate transactions relative thereto by giving the public
the right to rely upon the face of a Torrens Certificate of Title and to dispense with the need of inquiring
further, except when the party concerned had actual knowledge of facts and circumstances that should
impel a reasonably cautious man to make such further inquiry. (Pascua v. Capuyoc, 77 SCRA 78) Thus,
where innocent third persons relying on the correctness of the certificate thus issued, acquire rights
over the property, the court cannot disregard such rights.”
Same; Same; Same; Evidence in the case at bar discloses that when petitioner purchased the subject
property on June 10, 1970, the title thereto was in the name of her vendor Rafaela Donato alone.––In
the case at bar, the evidence on record discloses that when petitioner purchased the subject property
on June 10, 1970, the title thereto (TCT No. T-32683) was in the name of her vendor Rafaela Donato
alone.
Same; Same; Same; Rule that all persons dealing with property covered by torrens certificate of title are
not required to go beyond what appears on the face of the title well settled.––“x x x Well settled is the
rule that all persons dealing with property covered by torrens certificate of title are not required to go
beyond what appears on the face of the title. When there is nothing on the certificate of title to indicate
any cloud or vice in the ownership of the property, or any encumbrance thereon, the purchaser is not
required to explore further than what the torrens title upon its face indicates in quest for any hidden
defect or inchoate right that may subsequently defeat his right thereto.
Same; Same; Same; Prescription; Remedy of the defrauded party is to bring an action for damages
against those who caused the fraud or were instrumental in depriving him of the property; Action
prescribes in ten years from issuance of the Torrens Title over the property.––If an action for
reconveyance based on constructive trust cannot reach an innocent purchaser for value, the remedy of
the defrauded party is to bring an action for damages against those who caused the fraud or were
instrumental in depriving him of the property. And it is now well-settled that such action prescribes in
ten years from the issuance of the Torrens Title over the property.
Same; Same; Same; Same; Same; The action has already prescribed because it was filed fifteen (15)
years after the issuance of TCT No. T-32683.––Transfer Certificate of Title No. T-32683 was issued in
436
436
the name of Rafaela Donato on March 2, 1967. The present action for reconveyance was filed only on
March 9, 1982. Clearly then, the action has already prescribed because it was filed fifteen (15) years
after the issuance of TCT No. T-32683. Even if the period were to be reckoned from the registration of
the deed of absolute sale in favor of petitioner on July 13, 1970, which is also the date of the issuance of
Transfer Certificate of Title No. T-49380 in the name of petitioner, the action of private respondents had
already prescribed because a period of eleven (11) years, seven (7) months and twenty-six (26) days has
elapsed from July 13, 1970 to March 9, 1982.
PETITION for certiorari to review the decision of the Court of Appeals.
Ramon A. Barcelona for petitioner.
Eligio A. Labog for private respondents.
PARAS, J.:
The decision of respondent Court of Appeals in CA-G.R. CV No. 21457 which affirmed in toto, the
decision of the Regional Trial Court of Echague, Isabela, Branch 24 in Civil Case No. 24-0190, the
dispositive portion of which latter decision reads:
“WHEREFORE, premises considered, judgment is hereby rendered:

“1.Declaring the Deed of Absolute Sale made by Rafaela Donato Vda. de Gaffud in favor of the
defendant on June 10, 1970 over Lot 6-B of the subdivision plan (LRC) Psd-68395 being a portion of Lot 6
of the Echague Cadastre LRC Cad. Rec. No. 1063, containing an area of 11,095 square meters, more or
less, null and void insofar as the shares of Cicero Gaffud and Raymundo Gaffud are concerned, which is
one-half-thereof, or approximately 5,547.5 square meters, more or less;
“2.Ordering the cancellation of TCT No. 49380 in the name of the defendant;
“3.Ordering the defendant to reconvey one-half of the property subject of this proceeding to the
plaintiffs within ten (10) days from finality of this Decision, failing which the same shall be done at the
cost of the defendant by the Clerk of Court and such act, when so done, shall have like effect as if done
by her;
“4.Ordering the defendant to pay the plaintiffs P5,000.00 by way of attorney’s fees.
437
VOL. 198, JUNE 19, 1991
437
“No costs.
“SO ORDERED.” (pp. 20-21, Rollo)
is now being assailed in the instant petition for Certiorari upon the ground––
THAT RESPONDENT COURT OF APPEALS COMMITTED A GRAVE ABUSE OF DISCRETION, AMOUNTING TO

LACK OF JURISDICTION––
WHEN IT ERRED IN CONCLUDING THAT THE PETITIONER IS NOT AN INNOCENT PURCHASER OF THE
SUBJECT PROPERTY;
II
WHEN IT ERRED IN CONCLUDING THAT PRESCRIPTION WOULD NOT LIE TO BAR PRIVATE RESPONDENTS’
ACTION; and
III
WHEN IT ERRED IN NOT DECLARING AS VALID THE TRANSFER OF THE SUBJECT PROPERTY FROM THE
ORIGINAL REGISTERED OWNERS TO RAFAELA DONATO;
The pertinent background facts as found by the trial court and adopted by the respondent Court of
Appeals in its now assailed decision are the following:
The property subject of the controversy is a parcel of land situated in Echague, Isabela, identified as Lot
6-B of the Subdivision Plan (LRC) Psd-68395, being a portion of Lot 6 containing an area of 11,095 square
meters, more or less.
Lot 6 has an area of 12,799 square meters, more or less. It was acquired in 1924 by the spouses Juan
Gaffud and Rafaela Donato. Juan Gaffud died in 1936. On January 11, 1938, Lot 6 was originally
registered in the Registration Book of the Office of the Register of Deeds of Isabela, under Original
Certificate of Title No. 4340 pursuant to Decree No. 650247 issued under L.R.C. Cadastral Record No.
1063 in the names of Rafaela
438
438

Donato, Raymundo Gaffud and Cicero Gaffud (Raymundo and Cicero are the sons of the spouses) as co-
owners thereof in fee simple subject to such of the incumbrances mentioned in Section 39 of said act
and to Section 4, Rule 74, Rules of Court. The said lot was sold to Rafaela Donato through a Deed of
Transfer which cancelled O.C.T. No. 4340 and in lieu thereof T.C.T. No. T-30407 was issued in the name
of Rafaela Donato.
On February 25, 1967, Rafaela Donato sold a portion of said Lot 6, consisting of 1,704 sq. m., more or
less in favor of Fortunato Pascua. The aforesaid sale caused the subdivision of the said Lot 6 into Lot 6-A
containing an area of 1,704 sq. m., more or less, and Lot 6-B containing an area of 11,095 sq. m., more
or less, under Subdivision Plan (LRC) Psd-68395.
Upon registration of said sale in favor of Fortunato Pascua, Transfer Certificate of Title No. T-30407 was
cancelled, and in lieu thereof, Transfer Certificate of Title No. T-32683 was issued in the name of Rafaela
Donato on March 2, 1967 covering the land designated as Lot 6-B of the subdivision Plan (LRC) Psd-
68395, being a portion of Lot 6 of the Echague Cadastre, LRC Cad. Rec. No. 1063, containing an area of
11,095 sq.m., more or less, which is the subject land. (RTC Decision dated November 15, 1988, p. 310
Record).
On June 10, 1970 Rafaela Donato sold to petitioner Felicisima Pino said Lot 6-B in consideration of
P10,000.00 as evidenced by the Deed of Absolute Sale she executed in favor of petitioner Felicisima Pino
which was notarized by her lawyer, Atty. Concepcion Tagudin (Exh. 1).
Rafaela Donato undertook to register the Deed of Absolute Sale with the Register of Deeds of Isabela
and on July 13, 1970 the sale was inscribed therein under Entry No. 9286 and Transfer Certificate of Title
No. T-49380 was issued in the name of Felicisima Pino.
On September 30, 1980, Cicero Gaffud died survived by his wife Demetria Gaffud and sons Romualdo
Gaffud and Adolfo Gaffud who are the private respondents herein.
On March 9, 1982, private respondents filed a complaint for nullity of sale and reconveyance against
petitioner___Felicisima Pino. Incidentally, the sale of the other portion (Lot A) of the same lot to
Fortunato Pascua is not assailed by private respondents.
439
VOL. 198, JUNE 19, 1991
439
During the pendency of the case before the trial court, Rafaela Donato (who was not a party to the case)
died on November 26, 1982.
On November 5, 1988, the trial court rendered its decision (the dispositive portion of which was earlier
quoted in this decision) which was affirmed on appeal by the Court of Appeals, in its now assailed
decision, the pertinent portion of which reads:
“The defense of an innocent purchaser for value would be of no help to appellant in the absence of the
document on extrajudicial partition indicating that the conjugal property has been adjudicated to
Rafaela Donato Vda. de Gaffud and which would be the source of her authority in transferring the
subject property to defendant. The sensible thing to do by any prudent person is to examine not only
the certificate of title of said property but also all the factual circumstances necessary for him to
determine if there are any flaw in vendor’s capacity to transfer the land.
“Nor would prescription of action lie. An ordinary action for reconveyance based on fraud prescribes in
four (4) years (Lanera v. Lopos, 106 Phil. 70). Appellant was a party to the alleged fraudulent transfer of
the subject property, consequently, appellees have four (4) years to file an action to annul the deed of
sale from the discovery of the fraudulent act. In the case at bar, appellees learned about the fraud on
July 6, 1981 when they received a letter from the appellant (Exhibit D). The filing, therefore, of the
complaint on March 9, 1982 (p. 1. Rec.) was within the prescriptive period.” (pp. 62-63, Rollo)
In elevating the judgment of the respondent Court of Appeals to Us for review petitioner prays that the
appealed decision be reversed and another one entered declaring as valid (1) the sale of the subject
property executed on June 10, 1970 in favor of petitioner Felicisima Pino by Rafaela Donato Vda. de
Gaffud and (2) the Transfer Certificate of Title No. T-49380 issued in the name of petitioner by the
Register of Deeds of Isabela on July 13, 1970 upon the grounds––
“(a)that private respondents has (sic) no cause of action against petitioner because she is an innocent
purchaser for value of the subject property;
“(b)that the action of private respondents was already barred by prescription when it was filed; and
440
440
“(c)that the transfer of the subject property from the original registered owners to Rafaela Donato was
valid.” (pp. 61-62, Rollo)
The rule applicable to this controversy is well-settled. Where the certificate of title is in the name of the
vendor when the land is sold, the vendee for value has the right to rely on what appears on the
certificate of title. In the absence of anything to excite or arouse suspicion, said vendee is under no
obligation to look beyond the certificate and investigate the title of the vendor appearing on the face of
said certificate. The rationale for the rule is stated thus:
“The main purpose of the Torrens’ System is to avoid possible conflicts of title to real estate and to
facilitate transactions relative thereto by giving the public the right to rely upon the face of a Torrens
Certificate of Title and to dispense with the need of inquiring further, except when the party concerned
had actual knowledge of facts and circumstances that should impel a reasonably cautious man to make
such further inquiry. (Pascua v. Capuyoc, 77 SCRA 78) Thus, where innocent third persons relying on the
correctness of the certificate thus issued, acquire rights over the property, the court cannot disregard
such rights.” (Director of Land v. Abache, et al., 73 Phil. 606)
In the case at bar, the evidence on record discloses that when petitioner purchased the subject property
on June 10, 1970, the title thereto (TCT No. T-32683) was in the name of her vendor Rafaela Donato
alone. The said TCT No. T-32683 was shown to petitioner which shows on its face the following:
“is registered in accordance with the provisions of the Land Registration Act in the name of––
“RAFAELA DONATO, Filipino, of legal age, widow and with residence and postal address at Centro,
Echague, Isabela, Philippines as owner thereof in fee simple, subject to such of the encumbrances
mentioned in Section 39 of said Act as may be subsisting, and to Section 4, Rule 74, of the Rules of
Court.” (Ex. A, p. 169, Record)
The lien imposed by Section 4, Rule 74, Rules of Court appears as cancelled on April 8, 1969 under the
following entry:
“Entry No. 2090––D-340; P-75;
Petition for cancellation of Sec. 4 Rule 74 of the Rules of Court executed by Rafaela D.
441
VOL. 198, JUNE 19, 1991
441
B-4; S-1969 R.M. Angubong, Notary Public
Vda. de Gaffud. Hence, by virtue of which the lien appearing on the face of this title is now cancelled.
Date of Instrument___March 11, 1969
Date of Inscription___April 2, 1969
Time: 12:30 p.m.
(Sgd.) ANASTACIO J. PASCUA

ANASTACIO J. PASCUA
Deputy Register of Deeds V”
(Italics supplied) (p. 15, Rollo)
Petitioner was advised by her lawyers that she could proceed to buy the property because the same was
registered in the name of the vendor. Thus, on pp. 13 & 14 of the Transcript of Stenographic Notes of
the hearing of December 12, 1986, petitioner testified as follows:
Atty. Mallabo:
Before you brought this property madam witness, were you shown a copy of the title of Rafaela Donato
vda. de Gaffud on the property?
Yes, sir, she showed me the title. And I saw that the title was in her name.
When the offer was made to you and the title was shown to you, do you remember if you have done
anything?
Yes, sir, before I bought the property, I showed the documents she bought to me to our lawyer,
Custodio Villalva and Concepcion Tagudin.
Q
Why did you show them the title Madam witness?
To be sure that the title does not have any encumbrance and because I do not know anything about
legal matters.
What did they advise you?
Yes, Okey, I can proceed in buying the property, the title was registered in her name, it was her personal
property. (pp. 15-16, Rollo)
In the case of Maguiling v. Umadhay, (33 SCRA 99, 103) this Court held:
“However, while the Umadhay spouses cannot rely on the title, the same not being in the name of their
grantor, respondent Crisanta
442
442

S. Gumban stands on a different footing altogether. At the time she purchased the land the title thereto
was already in the name of her vendors (T.C.T. 15522). She had the right to rely on what appeared on
the face of said title. There is nothing in the record to indicate that she knew of any unregistered claims
to or equities in the land pertaining to other persons, such as that of herein petitioner, or of any other
circumstances which should put her on guard and cause her to inquire behind the certificate. According
to the Court of Appeals she took all the necessary precautions to ascertain the true ownership of the
property, having engaged the services of a lawyer for the specific purpose and, it was only after said
counsel had assured her that everything was in order did she make the final arrangements to purchase
the property. The appellate court’s conclusion that respondent Crisanta S. Gumban was a purchaser in
good faith and for value is correct, and the title she has thereof acquired is good and indefeasible.”
Petitioner paid the sum of P10,000.00 in consideration of the sale which is fair and reasonable
considering that in 1967 Fortunato Pascua paid the sum of P390.00 for the portion of the land consisting
of 1,704 square meters. (Exhs. 1 and 5)
The court a quo, however, ruled and this was sustained by respondent Court of Appeals that petitioner
was not an innocent purchaser.
“The defense of an innocent purchaser for value could be of no help to appellant in the absence of the
document on extra-judicial partition indicating that the conjugal property has been adjudicated to
Rafaela Donato Vda. de Gaffud and which would be the source of her authority in transferring the
subject property to defendant. The sensible thing to do by any prudent person is to examine not only
the certificate of title of said property but also all the factual circumstances necessary for him to
determine if there are any flaws in vendor’s capacity to transfer the land.” (p. 10, Rollo)
We do not find any evidence in the record that would sustain such a finding. The extra-judicial partition
adverted to in said ruling was executed by the heirs of Juan Gaffud prior to, and as the basis for, the
issuance of the Original Certificate of Title No. 4340 in the names of the heirs of Juan Gaffud, as testified
to by witness Demetria Gaffud in this wise:
443
VOL. 198, JUNE 19, 1991
443
Were you able to read the title that was kept by your brother in law?
Yes, sir.
Who was the registered owner?
Rafaela Donato, Raymundo Gaffud and Cicero Gaffud, co-owner.
In other words, the title you read appears that the owners were Raymundo, Cicero and Rafaela?
Yes, sir.
Q
Do you know what a title is?
Yes, it is thick.
You said that the property was bought by Juan Gaffud and Rafaela Gaffud, how come that there is no
name Juan Gaffud in the title?
Because he was already dead when I got married.
Do you have a knowledge how the title come to have the name of Raymundo, Rafaela and Cicero?
Yes, sir. (p. 66, Rollo)
The extra-judicial settlement, upon which was based the lien imposed by Section 4, Rule 74, Rules of
Court, was executed after the death of Juan Gaffud in 1936 but before the issuance of the original title
on January 11, 1938 so that the title would be issued in the names of the heirs of Juan Gaffud, namely:
Rafaela Donato, Raymundo Gaffud and Cicero Gaffud.
This conclusion is supported (a) by the fact that the subject property was registered only on January 11,
1938, which is around two (2) years after the death of Juan Gaffud in 1936, and therefore the title could
not have been issued in the name of Juan Gaffud; (b) by the fact that the lien imposed by Section 4, Rule
74, Rules of Court was inscribed on the face of the title itself and was not entered on the Memorandum
of Encumbrances as were done with the mortgages and their releases which were inscribed under their
Entry Numbers on the page for Memorandum of Encumbrances and (c) by the fact that the Original
Certificate of Title was issued in the names of the heirs of Juan Gaffud.
The extra-judicial settlement, therefore, has no bearing on whether or not there was fraud in the
transfer of the subject property to Rafaela Donato.
On the other hand, it was a Deed of Transfer which transferred the subject property from the original
owners to Rafaela
444
444
Donato as stated in Exhibit 3 which is the petition to cancel the conditions imposed by Section 4, Rule
74, Rules of Court, to wit:
“That since the time of the execution of the Deed of Transfer from the original owners to herein
petitioner in 1967, and also since the time of the registration of the said transfer at Register of Deeds of
Isabela___last March 2, 1967,___more than two (2) years have already elapsed;
“That from the time of the Deed of Transfer and within the period of two years thereafter, NO CLAIM
WHATSOEVER has been filed against the herein petitioner with respect to the property thus sold to her.”
(p. 67, Rollo)
Even granting that the extra-judicial settlement was the document which transferred the subject
property from the original owners to Rafaela Donato the non-production thereof (private respondents
should have presented it, not petitioner) does not prove that there was fraud committed in its execution
and neither does it prove that petitioner was a party thereto. There was no allegation, and much less
any evidence, that the transfer of the subject property from the original owners to Rafaela Donato was
fraudulent.
What private respondents allege as fraudulent was the extrajudicial settlement of the estate of Juan
Gaffud. But it has been shown that this settlement was not the basis of the transfer of the subject
property to Rafaela Donato, petitioner’s vendor.
That petitioner is an innocent purchaser for value is within the scope of established jurisprudence.
“The decision of the lower court would set at naught the settled doctrine that the holder of a certificate
of title who acquired the property covered by the title in good faith and for value can rest assured that
his title is perfect and incontrovertible.” (Benin v. Tuason, 57 SCRA 531, 581)
xxxxx
“Guided by previous decisions of this Court, good faith consists in the possessor’s belief that the person
from whom he received the thing was the owner of the same and could convey his title (Ariola v. Gomez
dela Serna, 14 Phil. 627). Good faith, while it is always presumed in the absence of proof to the contrary,
requires a well-founded belief that the person from whom title was received by himself the owner of
the land, with the right to convey it (Santiago v. Cruz, 19 Phil. 148).
445
VOL. 198, JUNE 19, 1991
445
There is good faith where there is an honest intention to abstain from taking any unconscientious
advantage from another (Fule v. Legare, 7 SCRA 351). Otherwise stated, good faith is the opposite of
fraud and it refers to the state of mind which is manifested by the acts of the individual concerned. In
the case at bar, private respondents (petitioner in this case), in good faith relied on the certificate of title
in the name of Fe S. Duran (Rafaela Donato in this case) and x x x ‘even on the supposition that the sale
was void, the general rules that the direct result of a previous illegal contract cannot be valid (on the
theory that the spring cannot rise higher than its source) cannot apply here for We are confronted with
the functionings of the Torrens System of Registration. The doctrine to follow is simple enough: a
fraudulent or forged document of sale may become the ROOT of a valid title if the certificate of title has
already been transferred from the name of the true owner to the name of the forger or the name
indicated by the forger.’ ” (Duran v. Intermediate Appellate Court, 138 SCRA 489, 494).
xxxxx
“Thus, where innocent third persons relying on the correctness of the certificate of title issued, acquire
rights over the property, the court cannot disregard such rights and order the total cancellation of the
certificate for that would impair public confidence in the certificate of title; otherwise everyone dealing
with property registered under the torrens system would have to inquire in every instance as to
whether the title had been regularly or irregularly issued by the court. Indeed, this is contrary to the
evident purpose of the law. Every person dealing with registered land may safely rely on the correctness
of the certificate of title issued therefor and the law will in no way oblige him to go behind the certificate
to determine the condition of the property. Stated differently, an innocent purchaser for value relying
on a torrens title issued is protected. x x x” (Duran v. Intermediate Appellate Court, 138 SCRA 489, 494-
495). (pp. 68-70, Rollo)
In the case of Centeno v. Court of Appeals (139 SCRA 545, 555) the same rule was observed by this Court
when it ruled___
“x x x Well settled is the rule that all persons dealing with property covered by torrens certificate of title
are not required to go beyond what appears on the face of the title. When there is nothing on the
certificate of title to indicate any cloud or vice in the ownership of the property, or any encumbrance
thereon, the purchaser is not required to explore further than what the torrens title upon its face
indicates in quest for any hidden defect or inchoate right that may
446
446

subsequently defeat his right thereto. (William Anderson v. Garcia, 64 Phil., 506; Fule v. Legare, 7 SCRA
351).” (p. 71, Rollo)
Petitioner being an innocent purchaser for value, private respondents will have no cause of action
against her. “The issue alone that petitioner is a purchaser in good faith and for value sufficiently
constitutes a bar to the complaint of private respondents x x x.” (Medina v. Chanco, 117 SCRA 201, 205).
If an action for reconveyance based on constructive trust cannot reach an innocent purchaser for value,
the remedy of the defrauded party is to bring an action for damages against those who caused the fraud
or were instrumental in depriving him of the property. And it is now well-settled that such action
prescribes in ten years from the issuance of the Torrens Title over the property. (Armerol v.
Bagumbaran, 154 SCRA 396, 407; Caro v. Court of Appeals, 180 SCRA 401, 407; Walstron v. Mapa, Jr.,
181 SCRA 431, 442).
Transfer Certificate of Title No. T-32683 was issued in the name of Rafaela Donato on March 2, 1967.
The present action for reconveyance was filed only on March 9, 1982. Clearly then, the action has
already prescribed because it was filed fifteen (15) years after the issuance of TCT No. T-32683. Even if
the period were to be reckoned from the registration of the deed of absolute sale in favor of petitioner
on July 13, 1970, which is also the date of the issuance of Transfer Certificate of Title No. T-49380 in the
name of petitioner, the action of private respondents had already prescribed because a period of eleven
(11) years, seven (7) months and twenty-six (26) days has elapsed from July 13, 1970 to March 9, 1982.
WHEREFORE, the petition is GRANTED; the assailed decision of the Court of Appeals is REVERSED and
SET ASIDE and another one rendered dismissing Civil Case No. Br. V-756, of the Regional Trial Court,
Branch 24, Echague, Isabela.
SO ORDERED.
Melencio-Herrera (Chairman), Padilla and Regalado, JJ., concur.
Sarmiento, J., On leave.

Petition granted, judgment reversed and set aside.
447
VOL. 198, JUNE 19, 1991
447
Marcayda vs. Civil Service Commission
Note.––Presumption that the transferee of registered land is not aware of any defect in the title of the
property he purchased, established. (A.D. Guerrero vs. Juntilla, 173 SCRA 572.)
–––––o0o––––––
© Copyright 2020 Pino vs. Court of Appeals, 198 SCRA 434, G.R. No. 94114 June 19, 1991
G.R. No. 175485. July 27, 2011.*
CASIMIRO DEVELOPMENT CORPORATION, petitioner, vs. RENATO L. MATEO, respondent.
Land Registration; Land Titles; Torrens System; The Torrens system gives the registered owner complete
peace of mind, in order that he will be secured in his ownership as long as he has not voluntarily
disposed of any right over the covered land.—There is no doubt that the land in question, although once
a part of the public domain, has already been placed under the Torrens system of land registration. The
Government is required under the Torrens system of registration to issue an official certificate of title to
attest to the fact that the person named in the certificate is the owner of the property
_______________
** Associate Justice Teresita J. Leonardo-De Castro is designated as Acting Member of the Second
Division as per Special Order No. 1006 dated 10 June 2011.
*** Associate Justice Diosdado M. Peralta is designated as Acting Member of the Second Division as per
Special Order No. 1040 dated 6 July 2011.
* FIRST DIVISION.
677
VOL. 654, JULY 27, 2011
677
Casimiro Development Corporation vs. Mateo
therein described, subject to such liens and encumbrances as thereon noted or what the law warrants
or reserves. The objective is to obviate possible conflicts of title by giving the public the right to rely
upon the face of the Torrens certificate and to dispense, as a rule, with the necessity of inquiring
further. The Torrens system gives the registered owner complete peace of mind, in order that he will be
secured in his ownership as long as he has not voluntarily disposed of any right over the covered land.
Same; Same; Same; Registration under the Torrens system, not being a mode of acquiring ownership,
does not create or vest title; The Torrens certificate of title is merely an evidence of ownership or title in
the particular property described therein.—Registration under the Torrens system, not being a mode of
acquiring ownership, does not create or vest title. The Torrens certificate of title is merely an evidence
of ownership or title in the particular property described therein. In that sense, the issuance of the
certificate of title to a particular person does not preclude the possibility that persons not named in the
certificate may be co-owners of the real property therein described with the person named therein, or
that the registered owner may be holding the property in trust for another person.
Same; Same; Same; Registration of land under the Torrens System, aside from perfecting the title and
rendering it indefeasible after the lapse of the period allowed by law, also renders the title immune from
collateral attack.—Moreover, the respondent’s suit is exposed as being, in reality, a collateral attack on
the title in the name of Laura, and for that reason should not prosper. Registration of land under the
Torrens System, aside from perfecting the title and rendering it indefeasible after the lapse of the period
allowed by law, also renders the title immune from collateral attack. A collateral attack occurs when, in
another action to obtain a different relief and as an incident of the present action, an attack is made
against the judgment granting the title. This manner of attack is to be distinguished from a direct attack
against a judgment granting the title, through an action whose main objective is to annul, set aside, or
enjoin the enforcement of such judgment if not yet implemented, or to seek recovery if the property
titled under the judgment had been disposed of.
678
678
Same; Same; Same; One who deals with property registered under the Torrens system need not go
beyond the certificate of title, but only has to rely on the certificate of title.—One who deals with
property registered under the Torrens system need not go beyond the certificate of title, but only has to
rely on the certificate of title. He is charged with notice only of such burdens and claims as are
annotated on the title. The pertinent law on the matter of burdens and claims is Section 44 of the
Property Registration Decree.
Same; Same; Same; The presence of anything that excites or arouses suspicion should then prompt the
vendee to look beyond the certificate and to investigate the title of the vendor appearing on the face of
said certificate.—The vendee’s notice of a defect or flaw in the title of the vendor, in order for it to
amount to bad faith, should encompass facts and circumstances that would impel a reasonably cautious
person to make further inquiry into the vendor’s title, or facts and circumstances that would induce a
reasonably prudent man to inquire into the status of the title of the property in litigation. In other
words, the presence of anything that excites or arouses suspicion should then prompt the vendee to
look beyond the certificate and to investigate the title of the vendor appearing on the face of said
certificate.
PETITION for review on certiorari of a decision of the Court of Appeals.
Ponce Enrile, Reyes & Manalastas for petitioner.
Benitez, Legaspi, Barcelo, Rafael & Salamera (BELARUS LAW) Law Offices for respondent Heirs.
BERSAMIN, J.:
The focus of this appeal is the faith that should be accorded to the Torrens title that the seller holds at
the time of the sale.
679
VOL. 654, JULY 27, 2011
679
In its decision promulgated on August 31, 2006,1 the Court of Appeals (CA) declared that the
respondent and his three brothers were the rightful owners of the land in litis, and directed the Office of
the Register of Deeds of Las Piñas City to cancel the transfer certificate of title (TCT) registered under the
name of petitioner Casimiro Development Corporation (CDC) and to issue in its place another TCT in
favor of the respondent and his three brothers. Thereby, the CA reversed the judgment of the Regional
Trial Court (RTC) rendered on May 9, 2000 (dismissing the respondent’s complaint for quieting of title
and reconveyance upon a finding that CDC had been a buyer in good faith of the land in litis and that the
respondent’s suit had already been time-barred).
Aggrieved, CDC brought its petition for review on certiorari.
Antecedents
The subject of this case is a registered parcel of land (property) with an area of 6,693 square meters,
more or less, located in Barrio Pulang Lupa, Las Piñas City, that was originally owned by Isaias Lara,2 the
respondent’s maternal grandfather. Upon the death of Isaias Lara in 1930, the property passed on to his
children, namely: Miguela, Perfecta and Felicidad, and a grandson, Rosauro (son of Perfecta who had
predeceased Isaias in 1920). In 1962, the co-heirs effected the transfer of the full and exclusive
ownership to Felicidad (whose married surname was Lara-Mateo) under an agreement denominated as
Pagaayos Na Gawa Sa Labas Ng Hukuman.
Felicidad Lara-Mateo had five children, namely: Laura, respondent Renato, Cesar, Candido, Jr. and
Leonardo. With the
_______________
1 Rollo, pp. 55-76; penned by Associate Justice Arturo G. Tayag, with Associate Justice Remedios A.
Salazar-Fernando and Associate Justice Noel G. Tijam, concurring.
2 Spelled in the complaint of the respondent as Isayas.
680
680

agreement of the entire Lara-Mateo family, a deed of sale covering the property was executed in favor
of Laura, who, in 1967, applied for land registration. After the application was granted, Original
Certificate of Title (OCT) No. 6386 was issued in Laura’s sole name.
In due course, the property now covered by OCT No. 6386 was used as collateral to secure a succession
of loans. The first loan was obtained from Bacoor Rural Bank (Bacoor Bank). To repay the loan to Bacoor
Bank and secure the release of the mortgage, Laura borrowed funds from Parmenas Perez (Perez), who,
however, required that the title be meanwhile transferred to his name. Thus, OCT No. 6386 was
cancelled and Transfer Certificate of Title (TCT) No. 438959 was issued in the name of Perez.
Subsequently, Laura recovered the property by repaying the obligation with the proceeds of another
loan obtained from Rodolfo Pe (Pe), resulting in the cancellation of TCT No. 438595, and in the issuance
of TCT No. S-91595 in Laura’s name. She later executed a deed of sale in favor of Pe, leading to the
issuance of TCT No. S-91738 in the name of Pe, who in turn constituted a mortgage on the property in
favor of China Banking Corporation (China Bank) as security for a loan. In the end, China Bank foreclosed
the mortgage, and consolidated its ownership of the property in 1985 after Pe failed to redeem. Thus,
TCT No. (99527) T-11749-A was issued in the name of China Bank.
In 1988, CDC and China Bank negotiated and eventually came to terms on the purchase of the property,
with China Bank executing a deed of conditional sale for the purpose. On March 4, 1993, CDC and China
Bank executed a deed of absolute sale over the property. Resultantly, on March 29, 1993, CDC was
issued TCT No. T-34640 in its own name.
In the meanwhile, on February 28, 1991, Felicidad died intestate.
On June 6, 1991, CDC brought an action for unlawful detainer in the Metropolitan Trial Court (MeTC) in
Las Piñas City against the respondent’s siblings, namely: Cesar, Can-
681
VOL. 654, JULY 27, 2011
681
dido, Jr., and Leonardo, and the other occupants of the property. Therein, the defendants maintained
that the MeTC did not have jurisdiction over the action because the land was classified as agricultural;
that the jurisdiction belonged to the Department of Agrarian Reform Adjudication Board (DARAB); that
they had been in continuous and open possession of the land even before World War II and had
presumed themselves entitled to a government grant of the land; and that CDC’s title was invalid,
considering that the land had been registered before its being declared alienable.3
On October 19, 1992, the MeTC ruled in favor of CDC, viz.:
“The Court, after careful consideration of the facts and the laws applicable to this case[,] hereby
resolves:
1. On the issue of jurisdiction.
The defendants alleged that the land in question is an agricultural land by presenting a Tax Declaration
Certificate classifying the land as “FISHPOND.” The classification of the land in a tax declaration
certificate as a “fishpond” merely refers to the use of the land in question for the purpose of real
property taxation. This alone would not be sufficient to bring the land in question under the operation of
the Comprehensive Agrarian Reform Law.
2. On the issue of open and adverse possession by the defendants.
It should be noted that the subject land is covered by a Transfer Certificate of Title in the name of
plaintiffs’ predecessor-in-interest China Banking Corporation. Certificates of Title under the Torrens
System is indefeasible and imprescriptible. As between two persons claiming possession, one having a
[T]orrens title and the other has none, the former has a better right.
3. On the issue of the nullity of the Certificate of Title.
The defense of the defendants that the subject property was a forest land when the same was originally
registered in 1967 and hence, the registration is void[,] is not for this Court to decide[,] for
_______________
3 Mateo v. Court of Appeals, G.R. No. 128392, April 29, 2005, 457 SCRA 549, 551.
682
682
lack of jurisdiction. The certificate of title over the property must be respected by this Court until it has
been nullified by a competent Court.
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff[,] ordering the
defendants
1. [sic] and all persons claiming right[s] under it to vacate the subject premises located at Pulang Lupa
I, Las Piñas, Metro Manila and surrender the possession of the same to herein plaintiff;
2. to pay the plaintiff reasonable compensation for the use and occupation of the subject premises
hereby fixed at (P100.00) one hundred pesos a month starting November 22, 1990 (the time when the
demand letter to vacate was given) until defendants actually vacate the property;
No pronouncement as to costs and attorney’s fees.
SO ORDERED.”4
The decision of the MeTC was assailed in the RTC via petition for certiorari and prohibition. The RTC
resolved against CDC, and held that the MeTC had acted without jurisdiction because the land, being a
fishpond, was agricultural; hence, the dispute was within the exclusive jurisdiction of the DARAB
pursuant to Republic Act No. 6657 (Comprehensive Agrarian Reform Law of 1988).5
CDC appealed to the CA, which, on January 25, 1996, found in favor of CDC, declaring that the MeTC had
jurisdiction. As a result, the CA reinstated the decision of the MeTC.6
On appeal (G.R. No. 128392), the Court affirmed the CA’s decision in favor of CDC, ruling thusly:
“WHEREFORE, the petition is DENIED and the Court of Appeals’ Decision and Resolution in CA-G.R. SP
No. 34039, dated January 25, 1996 and February 21, 1997 respectively, are AFFIRMED. No costs.
_______________
4 Id., pp. 551-552.
5 Id., pp. 552-553.
6 Id., pp. 555-558.
683
VOL. 654, JULY 27, 2011
683
SO ORDERED.”7
The decision in G.R. No. 128392 became final.
Nonetheless, on June 29, 1994, the respondent brought an action for quieting of title, reconveyance of
four-fifths of the land, and damages against CDC and Laura in the RTC in Las Piñas City entitled Renato L.
Mateo v. Casimiro Development Corporation and Laura Mateo de Castro. In paragraph 4 of his
complaint, he stated that he was “bringing this action to quiet title on behalf of himself and of his three
(3) brothers—Cesar, Leonardo, and Candido, Jr., all surnamed MATEO—in his capacity as one of the co-
owners of a parcel of land situated at Barrio Pulang Lupa, Municipality of Las Piñas, Metro Manila.”
On May 9, 2001, the RTC held in favor of CDC, disposing:
“WHEREFORE, and by strong preponderance of evidence, judgment is hereby rendered in favor of the
defendant Casimiro Development Corporation and against the plaintiff Renato L. Mateo by (1)
Dismissing the complaint, and upholding the validity and indefeasibility of Transfer Certificate of Title
No. T-34640 in the name of Casimiro Development Corporation; (2) Ordering the plaintiff Renato Mateo
to pay defendant Casimiro Development Corporation the sum of [a] P200,000.00 as compensatory
damages; [b] P200,000.00 as attorney’s fees; and [c] to pay the costs.
SO ORDERED.”8
On appeal (C.A.-G.R. CV No. 71696), the CA promulgated its decision on August 31, 2006, reversing the
RTC and declaring CDC to be not a buyer in good faith due to its being charged with notice of the defects
and flaws of the title at the time it acquired the property from China Bank, and decreeing:
_______________
7 Id., pp. 560-561.
8 Rollo, p. 89.
684
684
“WHEREFORE, the Decision dated May 9, 2001 of Branch 225, Regional Trial Court, Las Piñas City in Civil
Case No. 94-2045 is hereby REVERSED and SET ASIDE and a new one rendered:
(1) Declaring appellant Renato Mateo and his brothers and co-owners Cesar, Candido, Jr., and
Leonardo, all surnamed Mateo as well as his sister, Laura Mateo de Castro as the rightful owners of the
parcel of land, subject of this case; and
(2) Ordering the Register of Deeds of Las Piñas City, Metro-Manila to cancel Transfer Certificate of
Title No. T-34640 under the name of appellee Casimiro Development Corporation, and that a new one
be issued in favor of the appellant and his co-heirs and siblings, mentioned above as co-owners pro
indiviso of the said parcel.
(3) No pronouncement as to cost.
SO ORDERED.”9
The CA denied CDC’s motion for reconsideration.
Hence, this appeal, in which CDC urges that the CA committed serious errors of law,10 as follows:
(A) xxx in failing to rule that the decree of registration over the Subject Property is incontrovertible
and no longer open to review or attack after the lapse of one (1) year from entry of such decree of
registration in favor of Laura Mateo de Castro.
(B) xxx in failing to rule that the present action is likewise barred by res judicata.
(C) xxx in failing to rule that the instant action for quieting of title and reconveyance under PD No.
1529 cannot prosper because the Subject Property had already been conveyed and transferred to third
parties who claimed adverse title for themselves.
(D) xxx in failing to rule that the action of respondent for “quieting of title, reconveyance and
damages” is barred by laches.
_______________
9 Id., p. 75.
10 Id., pp. 23-24.
685
VOL. 654, JULY 27, 2011
685
(E) xxx in ruling that the Subject Property must be reconveyed to respondent because petitioner
Casimiro Development Corporation is not a “purchaser in good faith.”
CDC argues that it was a buyer in good faith; and that the CA did not rule on matters that fortified its
title in the property, namely: (a) the incontrovertibility of the title of Laura; (b) the action being barred
by laches and res judicata; and (c) the property having been conveyed to third parties who had then
claimed adverse title.
The respondent counters that CDC acquired the property from China Bank in bad faith, because it had
actual knowledge of the possession of the property by the respondent and his siblings; that CDC did not
actually accept delivery of the possession of the property from China Bank; and that CDC ignored the
failure of China Bank to warrant its title.
Ruling
We grant the petition.
1.
Indefeasibility of title in
the name of Laura
As basis for recovering the possession of the property, the respondent has assailed the title of Laura.
We cannot sustain the respondent.
There is no doubt that the land in question, although once a part of the public domain, has already been
placed under the Torrens system of land registration. The Government is required under the Torrens
system of registration to issue an official certificate of title to attest to the fact that the person named in
the certificate is the owner of the property therein described, subject to such liens and encumbrances as
thereon
686
686
noted or what the law warrants or reserves.11 The objective is to obviate possible conflicts of title by
giving the public the right to rely upon the face of the Torrens certificate and to dispense, as a rule, with
the necessity of inquiring further. The Torrens system gives the registered owner complete peace of
mind, in order that he will be secured in his ownership as long as he has not voluntarily disposed of any
right over the covered land.12
The Government has adopted the Torrens system due to its being the most effective measure to
guarantee the integrity of land titles and to protect their indefeasibility once the claim of ownership is
established and recognized. If a person purchases a piece of land on the assurance that the seller’s title
thereto is valid, he should not run the risk of being told later that his acquisition was ineffectual after all,
which will not only be unfair to him as the purchaser, but will also erode public confidence in the system
and will force land transactions to be attended by complicated and not necessarily conclusive
investigations and proof of ownership. The further consequence will be that land conflicts can be even
more abrasive, if not even violent. The Government, recognizing the worthy purposes of the Torrens
system, should be the first to accept the validity of titles issued thereunder once the conditions laid
down by the law are satisfied.13
Yet, registration under the Torrens system, not being a mode of acquiring ownership, does not create or
vest title.14 The Torrens certificate of title is merely an evidence of owner-
_______________
11 Republic v. Guerrero, G.R. No. 133168, March 28, 2006, 485 SCRA 424; citing Noblejas, Land Titles
and Deeds, 1986 ed., p. 32.
12 Republic v. Court of Appeals, G.R. Nos. L-46626-27, December 27, 1979, 94 SCRA 865, 874.
13 Tenio-Obsequio v. Court of Appeals, G.R. No. 107967, March 1, 1997, 230 SCRA 550.
14 Heirs of Teodoro Dela Cruz v. Court of Appeals, G.R. No. 117384, October 21, 1998, 298 SCRA 172,
180.
687
VOL. 654, JULY 27, 2011

687
ship or title in the particular property described therein.15 In that sense, the issuance of the certificate
of title to a particular person does not preclude the possibility that persons not named in the certificate
may be co-owners of the real property therein described with the person named therein, or that the
registered owner may be holding the property in trust for another person.16
Nonetheless, it is essential that title registered under the Torrens system becomes indefeasible and
incontrovertible.17
The land in question has been covered by a Torrens certificate of title (OCT No. 6386 in the name of
Laura, and its derivative certificates) before CDC became the registered owner by purchase from China
Bank. In all that time, neither the respondent nor his siblings opposed the transactions causing the
various transfers. In fact, the respondent admitted in his complaint that the registration of the land in
the name of Laura alone had been with the knowledge and upon the agreement of the entire Lara-
Mateo family. It is unthinkable, therefore, that the respondent, fully aware of the exclusive registration
in her sister Laura’s name, allowed more than 20 years to pass before asserting his claim of ownership
for the first time through this case in mid-1994. Making it worse for him is that he did so only after CDC
had commenced the ejectment case against his own siblings.
_______________
15 Development Bank of the Philippines v. Court of Appeals, G.R. No. 129471, April 28, 2000, 331 SCRA
267; Garcia v. Court of Appeals, G.R. No. 133140, August 10, 1999, 312 SCRA 180, 190; Rosario v. Court
of Appeals, G.R. No. 127005, July 19, 1999, 310 SCRA 464; Republic of the Philippines v. Court of
Appeals, G.R. No. 11611, January 21, 1999, 301 SCRA 366; Strait Times, Inc. v. Court of Appeals, G.R. No.
126673, August 28, 1998, 294 SCRA 714, 726.
16 Heirs of Clemente Ermac v. Heirs of Vicente Ermac, G.R. No. 149679, May 30, 2003, 403 SCRA 291,
298; citing Lee Tek Sheng v. Court of Appeals, G.R. 115402, July 15, 1998, 292 SCRA 544, 548.
17 Natalia Realty Corporation v. Vallez, G.R. Nos. 78290-94, May 23, 1989, 173 SCRA 534, 542.
688
688
Worthy of mention is that Candido, Jr., Leonardo, and Cesar’s defense in the ejectment case brought by
CDC against them was not predicated on a claim of their ownership of the property, but on their being
agricultural lessees or tenants of CDC. Even that defense was ultimately rejected by this Court by
observing in G.R. No. 128392 as follows:
“With regard to the first element, the petitioners have tried to prove that they are tenants or
agricultural lessees of the respondent corporation, CDC, by showing that the land was originally owned
by their grandfather, Isaias Lara, who gave them permission to work the land, and that CDC is merely a
successor-in-interest of their grandfather. It must be noted that the petitioners failed to adequately
prove their grandfather’s ownership of the land. They merely showed six tax declarations. It has been
held by this Court that, as against a transfer certificate of title, tax declarations or receipts are not
adequate proofs of ownership. Granting arguendo that the land was really owned by the petitioners’
grandfather, petitioners did not even attempt to show how the land went from the patrimony of their
grandfather to that of CDC. Furthermore, petitioners did not prove, but relied on mere allegation, that
they indeed had an agreement with their grandfather to use the land.
As for the third element, there is apparently no consent between the parties. Petitioners were unable to
show any proof of consent from CDC to work the land. For the sake of argument, if petitioners were able
to prove that their grandfather owned the land, they nonetheless failed to show any proof of consent
from their grandfather to work the land. Since the third element was not proven, the fourth element
cannot be present since there can be no purpose to a relationship to which the parties have not
consented.”18
The respondent’s attack against the title of CDC is likewise anchored on his assertion that the only
purpose for having OCT No. 6386 issued in the sole name of Laura was for Laura to hold the title in trust
for their mother. This assertion cannot stand, however, inasmuch as Laura’s title had long ago become
indefeasible.
_______________
18 Mateo v. Court of Appeals, supra note 3, p. 560.
689
VOL. 654, JULY 27, 2011
689
Moreover, the respondent’s suit is exposed as being, in reality, a collateral attack on the title in the
name of Laura, and for that reason should not prosper. Registration of land under the Torrens System,
aside from perfecting the title and rendering it indefeasible after the lapse of the period allowed by law,
also renders the title immune from collateral attack.19 A collateral attack occurs when, in another action
to obtain a different relief and as an incident of the present action, an attack is made against the
judgment granting the title. This manner of attack is to be distinguished from a direct attack against a
judgment granting the title, through an action whose main objective is to annul, set aside, or enjoin the
enforcement of such judgment if not yet implemented, or to seek recovery if the property titled under
the judgment had been disposed of.20
2.
CDC was an innocent purchaser for value
The CA found that CDC acquired the property in bad faith because CDC had knowledge of defects in the
title of China Bank, including the adverse possession of the respondent’s siblings and the supposed
failure of China Bank to warrant its title by inserting an as-is, where-is clause in its contract of sale with
CDC.
The CA plainly erred in so finding against CDC.

To start with, one who deals with property registered under the Torrens system need not go beyond the
certificate of title, but only has to rely on the certificate of title.21 He is
_______________
19 Madrid v. Mapoy, G.R. No. 150887, August 14, 2009, 596 SCRA 14, 26.
20 Madrid v. Mapoy, supra.
21 Sandoval v. Court of Appeals, G.R. No. 106657, August 1, 1996, 260 SCRA 283; Santos v. Court of
Appeals, G.R. No. 90380, September 13, 1990, 189 SCRA 550; Unchuan v. Court of Appeals, G.R. No. L-
78775, May 31, 1988, 161 SCRA 710; Bailon-Casilao v.
690
690
charged with notice only of such burdens and claims as are annotated on the title.22 The pertinent law
on the matter of burdens and claims is Section 44 of the Property Registration Decree,23 which
provides:
“Section 44. Statutory liens affecting title.—Every registered owner receiving a certificate of title in

pursuance of a decree of registration, and every subsequent purchaser of registered land taking a
certificate of title for value and in good faith, shall hold the same free from all encumbrances except
those noted on said certificate and any of the following encumbrances which may be subsisting, namely:
First. Liens, claims or rights arising or existing under the laws and Constitution of the Philippines which
are not by law required to appear of record in the Registry of Deeds in order to be valid against
subsequent purchasers or encumbrances of record.
Second. Unpaid real estate taxes levied and assessed within two years immediately preceding the
acquisition of any right over the land by an innocent purchaser for value, without prejudice to the right
of the government to collect taxes payable before that period from the delinquent taxpayer alone.
Third. Any public highway or private way established or recognized by law, or any government
irrigation canal or lateral thereof, if the certificate of title does not state that the boundaries of such
highway or irrigation canal or lateral thereof have been determined.
Fourth. Any disposition of the property or limitation on the use thereof by virtue of, or pursuant to,
Presidential Decree No. 27 or any other law or regulations on agrarian reform.”
_______________
Court of Appeals, G.R. No. L-78178, April 15, 1988, 160 SCRA 738; Director of Lands v. Abad, 61 Phil. 479,
487 (1935); Quimson v. Suarez, 45 Phil. 901, 906 (1924).
22 Agricultural and Home Extension Development Group v. Court of Appeals, G.R. No. 92310, September
3, 1992, 213 SCRA 563; Unchuan v. Court of Appeals, supra.
23 Presidential Decree No. 1529 entitled Amending and Codifying the Laws Relative to Registration of
Property and for Other Purposes.
691
VOL. 654, JULY 27, 2011
691
In short, considering that China Bank’s TCT No. 99527 was a clean title, that is, it was free from any lien
or encumbrance, CDC had the right to rely, when it purchased the property, solely upon the face of the
certificate of title in the name of China Bank.24
The CA’s ascribing of bad faith to CDC based on its knowledge of the adverse possession of the
respondent’s siblings at the time it acquired the property from China Bank was absolutely unfounded
and unwarranted. That possession did not translate to an adverse claim of ownership that should have
put CDC on actual notice of a defect or flaw in the China Bank’s title, for the respondent’s siblings
themselves, far from asserting ownership in their own right, even characterized their possession only as
that of mere agricultural tenants. Under no law was possession grounded on tenancy a status that might
create a defect or inflict a flaw in the title of the owner. Consequently, due to his own admission in his
complaint that the respondent’s own possession was not any different from that of his siblings, there
was really nothing—factually or legally speaking—that ought to have alerted CDC or, for that matter,
China Bank and its predecessors-in-interest, about any defect or flaw in the title.
The vendee’s notice of a defect or flaw in the title of the vendor, in order for it to amount to bad faith,
should encompass facts and circumstances that would impel a reasonably cautious person to make
further inquiry into the vendor’s title,25 or facts and circumstances that would induce a reasonably
prudent man to inquire into the status of the title of the property in litigation.26 In other words, the
presence of
_______________
24 Seno v. Mangubat, G.R. No. L-44339, December 2, 1987, 156 SCRA 113, 128.
25 Santos v. Court of Appeals, supra, note 21; Gonzales v. Intermediate Appellate Court, G.R. No. L-
69622, January 29, 1988, 157 SCRA 587.
26 State Investment House, Inc. v. Court of Appeals, G.R. No. 115548, March 5, 1996, 254 SCRA 368;
Capitol Subdivision v. Prov-
692
692
anything that excites or arouses suspicion should then prompt the vendee to look beyond the certificate
and to investigate the title of the vendor appearing on the face of said certificate.27
And, secondly, the CA grossly erred in construing the as-is, where-is clause contained in the deed of sale
between CDC (as vendee) and China Bank (as vendor) as proof or manifestation of any bad faith on the
part of CDC. On the contrary, the as-is, where-is clause did not affect the title of China Bank because it
related only to the physical condition of the property upon its purchase by CDC. The clause only placed
on CDC the burden of having the occupants removed from the property. In a sale made on an as-is,
where-is basis, the buyer agrees to take possession of the things sold “in the condition where they are
found and from the place where they are located,” because the phrase as-is, where-is pertains solely “to
the physical condition of the thing sold, not to its legal situation” and is “merely descriptive of the state
of the thing sold” without altering the seller’s responsibility to deliver the property sold to the buyer.28
_______________
ince of Negros Occidental, G.R. No. L-16257, January 31, 1963, 7 SCRA 60, 70, Mañacop, Jr. v. Cansino,
G.R. No. L-13971, February 27, 1961, 1 SCRA 572, Leung Yee v. F.L. Strong Machinery Co. & Williamson,
37 Phil. 644 (1918), Philippine National Bank v. Court of Appeals, G.R. No. L-57757, August 31, 1987, 153
SCRA 435, 442; Gonzales v. Intermediate Appellate Court, G.R. No. 69622, January 29, 1988, 157 SCRA
587, 595.
27 Sandoval v. Court of Appeals, supra, note 21; Pino v. Court of Appeals, G.R. No. 94114, June 19, 1991,
198 SCRA 434; Centeno v. Court of Appeals, G.R. No. L-40105, November 11, 1985, 139 SCRA 545, 555;
Fule v. Legare, G.R. No. L-17951, February 28, 1963, 7 SCRA 351; William H. Anderson and Co., v. Garcia,
64 Phil. 506 (1937).
28 Asset Privatization Trust v. T.J. Enterprises, G.R. No. 167195, May 8, 2009, 587 SCRA 481, 487-488;
National Development Company v. Madrigal Wan Hai Lines Corporation, G.R. No. 148332, September
30, 2003, 412 SCRA 375, 387.
693
VOL. 654, JULY 27, 2011
693
What the foregoing circumstances ineluctably indicate is that CDC, having paid the full and fair price of
the land, was an innocent purchaser for value, for, according to Sandoval v. Court of Appeals:29
“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 pays a full and fair price for the same, at the time of such
purchase, or before he has notice of the claim or interest of some other persons in the property. He
buys the property with the belief that the person from whom he receives the thing was the owner and
could convey title to the property. A purchaser cannot close his eyes to facts which should put a
reasonable man on his guard and still claim he acted in good faith.”
WHEREFORE, we grant the petition for review on certiorari; set aside the decision of the Court of
Appeals in CA-GR. CV No. 71696; dismiss the complaint in Civil Case No. 94-2045; and declare Transfer
Certificate of Title No. T-34640 in the name of Casimiro Development Corporation valid and subsisting.
The respondent shall pay the costs of suit.
SO ORDERED.
Corona (C.J., Chairperson), Leonardo-De Castro, Del Castillo and Villarama, Jr., JJ., concur.
Petition granted, judgment set aside.

Note.—A title issued to an innocent purchaser and for value cannot be revoked on the basis that the
deed of sale was falsified, if he had no knowledge of the fraud committed. (Heirs of Julian Tiro vs.
Philippine Estates Corporation, 563 SCRA 309 [2008])
——o0o——
_______________
29 Supra, note 21, pp. 296-297.
© Copyright 2020 Central Book S Casimiro Development Corporation vs. Mateo, 654 SCRA 676, G.R. No.
175485 July 27, 2011

Torrens System of Land Registration Cases

Uploaded by

Copyright:

Available Formats

Torrens System of Land Registration Cases

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Torrens System of Land Registration Cases

Uploaded by

Copyright:

Available Formats

Torrens System of Land Registration

Republic v. Umali, G.R No. 80687

G.R. No. 80687. April 10, 1989.*

SUPREME COURT REPORTS ANNOTATED

Republic vs. Umali

VOL. 171, APRIL 10, 1989

Republic vs. Umali

The facts are stated in the opinion of the Court.

SUPREME COURT REPORTS ANNOTATED

Republic vs. Umali

The respondent court, in its order dated October 2, 1987,

7 Id., pp. 45, 48.

10 Id., pp. 61-62.

Republic vs. Umali

Section 39 of the Land Registration Act clearly provided:

11 Id., pp., 40-41.

SUPREME COURT REPORTS ANNOTATED

Republic vs. Umali

15 Ignacio vs. Chua Hong, 52 Phil. 940.

16 Legarda vs. Saleeby, 31 Phil. 590.

VOL. 171, APRIL 10, 1989

Republic vs. Umali

Republic vs. Umali

the Property Registration Decree, which applies even to the government.

19 Sec. 103, P.D. 1529.

VOL. 171, APRIL 10, 1989

Republic vs. Umali

SUPREME COURT REPORTS ANNOTATED

Republic vs. Umali

VOL. 171, APRIL 10, 1989

National Economic Protectionism Association vs. Ongpin

ACCORDINGLY, the petition is DENIED, without any pronouncement as to costs. It is so ordered.

Narvasa, Gancayco, Griño-Aquino and Medialdea, JJ., concur.

G.R. No. 114299. September 24, 1999.*

G.R. No. 118862. September 24, 1999.*

Traders Royal Bank vs. Court of Appeals

SUPREME COURT REPORTS ANNOTATED

Traders Royal Bank vs. Court of Appeals

Traders Royal Bank vs. Court of Appeals

PETITIONS for review on certiorari of a decision of the Court of Appeals.

The facts are stated in the opinion of the Court.

Francisco S. Reyes Law Office for non-bank respondents.

SUPREME COURT REPORTS ANNOTATED

Traders Royal Bank vs. Court of Appeals

VOL. 315, SEPTEMBER 24, 1999

Traders Royal Bank vs. Court of Appeals

4 TSN, March 29, 1989, p. 12.

6 G.R. No. 62744.

Traders Royal Bank vs. Court of Appeals

Traders Royal Bank vs. Court of Appeals

8 Branch 74, presided by Judge Leonardo M. Rivera.

9 Rollo, G.R. No. 118862, pp. 49-57.

11 91 Phil. 419 (1952).

12 68 SCRA 177 (1975).

SUPREME COURT REPORTS ANNOTATED

Traders Royal Bank vs. Court of Appeals

13 Rollo, G.R. No. 114299, pp. 14-17.

VOL. 315, SEPTEMBER 24, 1999