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G.R. No. L-48322 April 8, 1987

FELIPE DAVID and ANTONIA G. DAVID, Petitioners, vs. EULOGIO BANDIN (substituted by

his legal heirs, namely: JUANA SILVERIO, JOSE, GABRIEL, ANICETA, VIRGINIA and FELIX,

all surnamed Bandin); GREGORIO BANDIN, RAYMUNDA BANDIN, VALENTIN BRIONES,

SOFIO BRIONES and AGAPITA RAMOS. Respondents.

No. L-49712 April 8, 1987

MAGNO DE LA CRUZ, Petitioner , vs. HONORABLE COURT OF APPEALS; EULOGIO

BANDIN (substituted by his legal heirs, namely: JUANA, SILVERIO, JOSE, GABRIEL,

ANICETA, VIRGINIA and FELIX, all surnamed Bandin); GREGORIO BANDIN, RAYMUNDA

BANDIN, SOFIO BRIONES and AGAPITA RAMOS; Respondents.

No. L-49716 April 8, 1987

JUANITA MARTIN VDA. DE LUCENA MAXIMINA MARTIN VDA. DE COSME, VICTORIA

MARTIN VDA. DE OMANBAC, NEMESIO A. MARTIN, LEONORA DE LA CRUZ and

AQUILINA DE LA CRUZ, petitioners, vs. EULOGIO BANDIN (substituted by his legal heirs,

namely: JUANA, SILVERIO, JOSE, GABRIEL, ANICETA, VIRGINIA and FELIX, all surnamed

Bandin);, VALENTIN BRIONES, AGAPITA RAMOS and COURT OF APPEALS, respondents.

No. L-49687 April 8,1987

JOSE RAMIREZ and HEIRS OF AMBROCIA P. VDA. DE SOTERO RAMIREZ, petitioners, vs.

COURT OF APPEALS and EULOGIO BANDIN (substituted by his legal heirs, namely: JUANA,

SILVERIO, JOSE, GABRIEL, ANICETA, VIRGINIA and FELIX, all surnamed BANDIN);

GREGORIO BANDIN, RAYMUNDA BANDIN, VALENTIN BRIONES, SOFIO BRIONES andAGAPITA RAMOS, respondents.

YAP, J

These petitions, which were consolidated by resolution of this Court dated February 20, 1980,

stemmed from a complaint filed by the herein respondents with the Court of First Instance of Rizal

Branch VII, Pasay City, on June 14, 1963, for the recovery and partition of property. The

complaint was amended twice to reflect additional pertinent and material facts, such as transfers,

partitions, subdivisions and registration of portions of the properties involved, and to bring in other

indispensable parties to the case.

On April 12, 1975, a decision was rendered by the trial court, in favor of the plaintiffs, declaring,

however, that certain properties could no longer be reconveyed to plaintiffs since they had been

transferred to purchasers who bought them in good faith for value. Not satisfied with the decision,

both plaintiffs and defendants appealed to the Court of Appeals. The plaintiffs' appeal was

docketed as CA-G.R. No. 58647-R, while that of defendants as CA-G.R. No. 60511-R. . Both appeals

were consolidated, and a decision was rendered by the Court of Appeals on May 19, 1978, which



modified the decision of the trial court in that it nullified the transfers made to the defendants who

were declared by the trial court as purchasers in good faith.

From the decision of the Court of Appeals, an appeal was taken by the parties adversely affected

thereby to this Court. Except for petitioners in G.R. No. L-49716 who seek restoration of the status

quo ante, all other petitioners pray that the decision of the trial court be

reinstated.chanroblesvirtualawlibrary

The facts antecedent of this petition, as may be gathered from the decision, are as follows:

During their lifetime, the spouses Juan Ramos, who died on March 5, 1919, and Fortunate Calibo,

who died before 1919, were the owners of two parcels of land situated in Las Pinas, Rizal: 1) A

parcel of land situated in Barrio Talon, with an area of 39,887 square meters, under Tax

Declaration No. 9614 (Talon property for short); and 2) A parcel of land situated in Barrio Laong,

with an area of 15,993 square meters, under Tax Declaration No. 4005, although the actual area

when surveyed was 22,285 square meters (Laong property for short).chanroblesvirtualawlibrary

Both spouses died intestate, leaving as heirs two legitimate children, Candida and Victorians

Ramos, and grand-daughter, Agapita Ramos, daughter of their deceased sora Anastacio. Upon the

death of the said spouses, their daughter, Candida Ramos, assumed administration of the

properties until her death on February 16, 1955. Victorians Ramos died on December 12,1931.

Both Candida and Victoriana Ramos died intestate. Candida Ramos was survived by the following

heirs: 1) Victoria Martin-Omanbac, 2) Antonio Martin, 3) Juanita Martin Vda. de Lucena, 4)

Maximina Martin Vda. de Cosme, 5) Raymundo Martin, 6) Aquilina de la Cruz, and 7) Leonora de

la Cruz. Victoriana's heirs are her children from her two marriages, namely: 1) Eulogio Bandin, 2)

Gregorio Bandin, 3) Raymunda Bandin, 4) Valentin Briones, and 5) Sofio Briones.

The record shows that sometime in 1943, Candida Ramos prevailed upon her niece, Agapita

Ramos, and her nephew, Eulogio Bandin, to sell a portion of the Talon property to the spousesRufino 0. Miranda and Natividad Guinto. This portion was divided into three lots: Parcel 1,

containing an area of 24,363 square meters, declared under Tax Declaration No. 2996 (1948). The

spouses Rufino Miranda and Natividad Guinto subsequently sold the said lot to Narciso Velasquez

and Albino Miranda. These two later sold the same property to Velasquez Realty Company, Inc.,

which registered the property and obtained OCT No. 1756 (later cancelled and replaced by TCT

No. 165335); Parcel 2, containing an area of 752 square meters, declared under Tax Declaration No.

3358 (1949); and Parcel 3, containing an area of 516 square meters under Tax Declaration No. 3359

(1949). Parcels 2 and 3 were subsequently sold by Rufino Miranda and Natividad Guinto to Jose

Ramirez and Sotero Ramirez (survived by Ambrocia Vda. de Martin), respectively, who registered

these properties and obtained OCT Nos. 2027 and 2029 in their respective

names.chanroblesvirtualawlibrary

The remaining portion of the Talon property was extrajudicially partitioned on September 17, 1955

among the heirs of Candida Ramos, namely: Juanita Martin, Victoria Martin, Maximina M. Vda.

de Cosme, Antonio Martin and Raymundo Martin. In 1959, this property was subdivided

(Subdivision Plan PSU-173299) into seven lots and adjudicated as follows:

1) To the heirs of Raymundo Martin, namely, Juan, Antonio, Rodrigo, Norma, Bernards, Rufina

and Nieves, all surnamed Martin, and Trinidad Bunag Vda. de Martin - Lot 1, containing an area

of 774 square meters, declared under Tax Declaration No. 5588 (1960). This lot was subsequently



sold to Consolacion de la Cruz who was able to register the property in her name under OCT No.

4731 (later cancelled and replaced by TCT Nos. 227470 and 227471).chanroblesvirtualawlibrary

2) To Juanita Martin - Lot 2, containing an area of 774 square meters, declared under Tax

Declaration No. 4831, and subsequently titled in her name under OCT No. 10002, issued on

December 18, 1973.chanroblesvirtualawlibrary

3) To Leonora de la Cruz, granddaughter of Candida Ramos by her son Meliton de la Cruz by her

first husband - Lot 3, containing an area of 346 square meters, declared under Tax Declaration No.

5526 (1960) and subsequently registered under OCT No. 6102, issued on January 29,

1967.chanroblesvirtualawlibrary

4) To Antonio Martin - Lot 4, containing an area of 774 square meters, declared under Tax

Declaration No. 4833. The property was subsequently sold by the heirs of Antonio Martin to

Nemesio Martin.chanroblesvirtualawlibrary

5) To Victoria Martin - Lot 5, containing an area of 773 square meters, declared under Tax

Declaration No. 5590. This lot was later registered by Victoria, to whom OCT No. 3706 was issued

on August 22, 1963. She subsequently sold a portion of 300 square meters to Magno de la Cruz on

September 25,1963, to whom was issued TCT No. 116450.

6) To Maximina Martin - Lot 6, containing an area of 773 square meters, under Tax Declaration

No. 5591 (1960). Maximina was able to register the land and was issued OCT No. 3707 on August

22, 1963. She later sold a portion of 300 square meters to Magno de la Cruz, to whom was issued

TCT No. 116450.

7) To Aquiline de la Cruz - Lot 7, with an area of 428 square meters, declared under Tax

Declaration No. 5592 (1960). Aquilina is the granddaughter of Candida Ramos by her son Meliton

de la Cruz by her first marriage. Aquilina registered the land in her name in 1967 and was issued

OCT No. 6103.

The Laong property was sold by Candida Ramos and her children on December 19, 1943 to

Hermogenes Lucena, husband of Juanita Martin, one of the daughters of Candida. On September

23, 1959, Juanita (then widowed) sold the property to the spouses Gregorio and Mary Venturanza

for P43,236.00 of which P10,000 was paid as down payment, the balance to be paid upon the vendor

obtaining Torrens title to the land. On January 21, 1965, the Venturanzas, in a deed of sale also

signed by Juanita Martin, conveyed a portion of the property with an area of 15,000 square meters

to the spouses Felipe and Antonia David, in liquidation of the latter's investment in the joint real

estate venture which they had entered into with the Venturanzas in April 1959. Juanita Martin

Vda. de Lucena was able to register the property in her name and was issued OCT No. 8916 on July

1, 1971. The portion sold to the spouses Felipe and Antonia David is presently covered by TCT No.

372092.chanroblesvirtualawlibrary

From the foregoing facts as established by the evidence, the trial court held that the Talon and

Laong properties formed part of the estate of the spouses Juan Ramos and Fortunate Calibo, which

after their death devolved by right of succession upon their heirs, namely, Candida Ramos,

Victorians Ramos and Agapita Ramos, each of whom was entitled to one-third (1/3) pro-indiviso

share of the properties. The estate of the deceased spouses was never judicially or extra-judicialy

settled among their heirs, who, therefore, remained pro-indiviso co-owners of the said properties,

and upon the death of Victorians and Candida, their respective shares in turn passed to their heirs.



Accordingly, the trial court declared the plaintiffs, Agapita Ramos, and the heirs of Victorians

Ramos, entitled to two- thirds (2/3) pro-indiviso share of the Talon and Laong properties, and

ordered the defendants heirs of Candida Ramos to reconvey to plaintiffs their shares in those

properties. However, such reconveyance was no longer possible with respect to the portions which,

in the meantime, had been sold and disposed of to third parties who were purchasers in good faith

and for value.chanroblesvirtualawlibrary

The following parties were held to be purchasers in good faith. 1) defendants Rufino Miranda,

Narciso Velasquez, Albina Miranda and Velasquez Realty Co., with respect to 24,636 square meters

(Parcel 1) of the Talon property sold by Candida Ramos, Eulogio Bandin and Agapita Ramos in

1943; 2) defendants Jose Ramirez and Ambrocia Vda. de Ramirez (widow of Sotero Ramirez), with

respect to 752 square meters (Parcel 2) and 516 square meters (Parcel 3), respectively, of the Talon

property, 3) defendant Consolacion de la Cruz, with respect to 774 square meters (Lot 1 of

Subdivision Plan PSU-173299); 4) defendant Nemesio Martin, with respect to 774 square meters

(Lot 2 of Subdivision Plan); 5) defendant Magno de la Cruz, with respect to 300 square meters sold

by Victoria Martin and 300 square meters sold by Maximina Martin (portions of Lots 5 and 6 of

Subdivision Plan); 6) defendant spouses Felipe and Antonia David, with respect to 15,000 square

meters of the Laong property. Since the foregoing properties could not be reconveyed to the

plaintiffs, the defendants heirs who sold them were ordered to pay the plaintiffs two-thirds (2/3) of the present value of such properties.chanroblesvirtualawlibrary

As stated heretofore, the trial court's decision was upheld by the respondent Court of Appeals,

except with respect to the finding that third parties who bought portions of the properties from the

defendants heirs were purchasers in good faith This finding was reversed by the respondent

appellate court. In fine, the appellate court: a) nullified the sale of the Laong property by Candida

Ramos Vda. de Martin and her children in 1943 in favor of Hermogenes Lucena, the husband of

Juanita Martin, one of the daughters of Candida, as wen as an subsequent sales, transfers and

conveyances of said property, insofar as they affected the two-thirds (2/3) pro-indiviso share of

Agapita Ramos and the heirs of Victorians Ramos; b) nullified the sale of portions of the Talon

property by Candida Ramos, Eulogio Bandin and Agapita Ramos in 1943 in favor of the spouses

Rufino Miranda and Natividad Guinto, and all the subsequent transfers of said properties, insofaras the four-fifteenth (4/15) share of Gregorio Bandin, Raymundo Bandin, Sofio Briones and

Valentin Briones were affected; and c) invali dated the deed of extrajudicial partition among the

heirs of Candida Ramos over the remaining portion of the Talon property in 1955 and the

subdivision thereof into individual lots among said heirs, as well as all subsequent transfers and

conveyances of some of said lots, or portions thereof, to third parties, insofar as they affected the

two-third (2/3) pro- indiviso share pertaining to Agapita Ramos and the heirs of Victorians

Ramos.chanroblesvirtualawlibrary

From the above decision of the Court of Appeals, the petitioners have come to us on separate

petitions for review by certiorari.

G.R. No. L-49716.:

The petitioners are the heirs of Candida Ramos, led by Juanita Martin Vda. de Lucena and joined

in by her brothers and sisters who are the children of Candida by her first and second marriages.

Primarily, petitioners alleged that the Court of Appeals erred in not declaring that private

respondents' claim if any, is barred by prescription; and in annulling and ordering the cancellation

of Original Certificate of Title No. 8916 issued in the name of Juanita Martin pursuant to a decision



by the land registration court, affirmed by the Court of Appeals in CA G.R. No. 35191-R, which

had already become final and executory.

Petitioners claim in their brief, apparently referring to the Laong property only, that Juanita

Martin, widow of Hermogenes Lucena and daughter of Candida Ramos, had been in possession of

the property since 1943 to the exclusion of private respondents. The trial court, however, found that

Candida Ramos, until her death on February 15, 1955, administered the Laong property, and thatplaintiffs- appellants were given their shares of the fruits thereof, though irregular and at times

little, depending on the amount of the harvest. Under Article 494 of the new Civil Code (Article 400

of the old Civil Code), prescription generally does not run in favor of a co-heir or co-owner as long

as, he expressly or impliedly recognizes the co-ownership. While an implied or constructive trust

prescribes in ten years, the rule does not apply where a fiduciary relation exists and the trustee

recognizes the trust. 1

In the case at bar, there is no showing that the rights of the plaintiffs as co-owners were repudiated

by Candida Ramos in her lifetime; in fact, the evidence as found by the trial court show the

contrary.chanroblesvirtualawlibrary

The court a quo did not sustain the defense of laches and prescription put up by the defendants

(herein petitioners) since it was not shown that the plaintiffs were guilty of negligence or slept on

their rights. They sent a letter of demand to the heirs of Candida Ramos on April 23, 1963, and

filed their complaint against them on June 14, 1963, or within a period of approximately eight (8)

years from Candida's death.chanroblesvirtualawlibrary

In sustaining the findings of the trial court, the Court of Appeals did not commit any reversible

error.chanroblesvirtualawlibrary

Petitioners further invoke the doctrine of res judicata in that the decree of registration of the

property in the name of Juanita Martin as owner by the land registration court was affirmed by the

Court of Appeals in its decision dated July 16, 1969 in CA G.R. No. 35191-R, which had already

become final and executory. Both the respondent Court of Appeals and the trial court correctly

rejected the petitioners' contention. There can be no res judicata since private respondents were not

parties to the above case. Neither can it be claimed that the decree of registration vested ownership

in Juanita Martin. The appellate court, citing jurisprudence established by this Court, held that the

purpose of the Land Registration Act is not to create or vest title, but to confirm and register title

already vested and existing in the applicant for a title. 2

G.R. No. L-48322.:

The petitioners spouses Felipe David and Antonia G. David purchased portions of the Laong

property, consisting of 15,000 square meters, on February 21, 1965 from the spouses Gregorio and

Mary Venturanza, who, in turn, purchased the property from Juanita Martin Vda. de Lucena, onSeptember 23, 1959. At the time both purchases took place, the property in question was still an

unregistered land. The land was registered in the name of Juanita Martin only on July 1, 1971, to

whom was issued OCT No. 8916.chanroblesvirtualawlibrary

Petitioners contend that the Court of Appellee erred in holding that they are buyers in bad faith, in

ordering the cancellation of OCT No. 8916 and all subsequent transfer certificates of title derived

therefrom, and in ordering petitioners - to reconvey to respondents their two-third (2/3) pro-



indiviso share of the land and to segregate therefrom 10,000 square meters for reconveyance to

respondents.chanroblesvirtualawlibrary

In assailing the decision of the appellate court, petitioners invoke the doctrine of incontrovertibility

of the decree of registration after one year from issuance, and the doctrine of conclusiveness and

indivisibility of titles issued under the Torrens system. Petitioners might have stood on solid ground

in invoking the above doctrines if they had purchased the property from the registered owner afterthe issuance of the decree of registration and the corresponding certificate of title in his name. 3

As the record shows, petitioners bought the property when it was still unregistered land. The

defense of having purchased the property in good faith may be availed of only where registered

land is involved and the buyer had relied in good faith on the clear title of the registered owner.

One who purchases an unregistered land does so at his peril His claim of having bought the land in

good faith, i.e. without notice that some other person has a right to, or interest in, the property,

would not protect him if it turns out that the seller does not actually own the property. This is what

happened in the case at bar.

G.R.No. L-49867:

In this petition, petitioners Jose Ramirez and the heirs of Ambrocia P. Vda. de Ramirez (widow of

Sotero Ramirez), assail the decision of the respondent Court of Appeals declaring them purchasers

in bad faith and ordering them to reconvey to the plaintiffs Gregorio Bandin, Raymunda

Bandin&A Valentin Briones and Soto Briones, four-fifteenth (4/15) share pro-indiviso of the

properties they purchased from the spouses Rufino Miranda and Natividad Guinto. The land in

question, containing an area of 516 square meters, more or less, was purchased by Jose Ramirez on

June 4, 1949. Sotero Ramirez purchased his land, with an area of 752 square meters on July 9, 1948

and May 10, 1949. These parcels of land purchased by the Ramirezes were part of the portion of

the Talon property bought by the spouses Rufino and Natividad Miranda from Candida Ramos,

Eulogio Bandin and Agapita Ramos in 1943

The appellate court held that Jose Ramirez and his father Sotero Ramirez were not purchasers in

good faith, not having made diligent investigation of the true ownership of the properties they

bought, but relied merely on the tax declaration shown to them by the seller, Rufino Miranda. We

have no reason to disturb the foregoing findings of the respondent appellate court. Besides, as

mentioned earlier, the issue of good faith or bad faith of the buyer is relevant only where the

subject of the sale is registered land and the purchaser is buying the same from the registered

owner, whose title to the land is clean. In such case, the purchaser who relies on the clean title of the

registered owner is protected if he is a purchaser in good faith for value. However, this is not the

situation before us in the instant case, What petitioners bought were unregistered

lands.chanroblesvirtualawlibrary

Petitioners contend that the respondents are barred by estoppel and laches from recovering theproperty in question We have already dealt with this issue above. We find the contention without

merit.

Petitioners suggest that the portion ordered to be taken from the properties of Jose and Sotero

Ramirez should be taken instead from the shares which pertain to and are held by the heirs of

Candida Ramos. We do not find the suggestion meritorious. The respondents are entitled to their

pro- indiviso share of the property unlawfully sold by Candida Ramos, Agapita Ramos and Eulogio

Bandin to the Miranda spouses from whom the petitioners bought the parcels of land in question.



Hence, it would not be proper for the court to respondents' right to recover their pro-indiviso share

of the property only from the remaining portion still in the possession of the heirs of Candida

Ramos.

G.R. No. L-49712:

The case of Magno de la Cruz stands on different footing from the other petitions. The property

purchased by him from Victoria Martin and Maximina Martin were registered lands, covered by

Torrens title. Being a purchaser in good faith for value, Magno de la Cruz is protected by the law.

In the absence of a showing that he had actual notice of the defect in the title of the vendors or that

he is a buyer in bad faith the deed of sale in his favor and the corresponding certificate of title

issued in his name can not be nullified and cancelled. Hence, it was error for the respondent court

to invalidate the sale made by Victoria and Maximina Martin in favor of Magno de la Cruz to the

extent that it prejudiced the two-third (2/3) pro-indiviso share of respondents in the property and to

order petitioner to reconvey said share to respondents. The petition of Magno de la Cruz is

meritorious, and the decision appealed from should be modified accordingly.

WHEREFORE, in view of all the foregoing, judgment is hereby rendered:

1. Dismissing the petitions in G.R. Nos. L-48322, L-49716 and L-49687

2. Granting the petition in G.R. No. L-49712, declaring valid the deeds of sale executed by Victoria

Martin (Exh. 8-Magno de la Cruz) and Maximina Martin (Exh. 4-Magno de la Cruz) in favor of

petitioner Magno de la Cruz, as well as Transfer Certificate of Title No. 116450 issued in the latter's

name, ordering Victoria Martin and Maximina Martin to pay the respondents two-third (2/3) of the

present value of the property sold by them to Magno de la Cruz, and modifying the appealed

decision accordingly; and

3. Affirming the appealed decision, except as modified above.chanroblesvirtualawlibrary

No pronouncement as to costs. SO ORDERED.



[G.R. No. 156973. June 4, 2004]

SPOUSES TOMAS OCCEÑA and SILVINA OCCEÑA, petitioners, vs. LYDIA MORALESOBSIANA ESPONILLA, ELSA MORALES OBSIANA SALAZAR and DARFROSAOBSIANA SALAZAR ESPONILLA, respondents.

D E C I S I O N

PUNO, J.:

The case at bar involves a portion of the 1,198-square meter residential lot (lot no. 265) situatedin Sibalom, Antique, originally owned by spouses Nicolas and Irene Tordesillas under OCT No.1130. The Tordesillas spouses had three (3) children, namely: Harod, Angela and Rosario, thelatter having been survived by her two (2) children, Arnold and Lilia de la Flor.

After the death of the Tordesillas spouses, the lot was inherited by their children Harod and

Angela, and grandchildren Arnold and Lilia. In 1951, the heirs executed a Deed of Pacto de Retro Sale1[1] in favor of Alberta Morales covering the southwestern portion of the lot with

an area of 748 square meters.

Three (3) years later, in 1954, Arnold and Lilia executed a Deed of Definite Sale of Shares,

Rights, Interests and Participations2[2] over the same 748 sq. m. lot in favor of Alberta

Morales. The notarized deed also attested that the lot sold by vendors Arnold and Lilia toAlberta were their share in the estate of their deceased parents.

Alberta possessed the lot as owner, constructed a house on it and appointed a caretaker to

oversee her property. Thereafter, in July 1956, vendor Arnold de la Flor borrowed the OCT

from Alberta covering the lot. He executed an Affidavit3

[3] acknowledging receipt of the OCT intrust and undertook to return said title free from changes, modifications or cancellations.

In 1966, Arnold and Angela, nephew and daughter respectively of the Tordesillas spouses,without the knowledge of Alberta, executed a Deed of Extrajudicial Settlement4[4] declaring

the two of them as the only co-owners of the undivided 1,198 sq. m. lot no. 265, without

acknowledging their previous sale of 748 sq. m. thereof to Alberta. A number of times,thereafter, Alberta and her nieces asked Arnold for the OCT of the land but Arnold just kept on promising to return it.

1

2

3

4



In 1983, Arnold executed an Affidavit of Settlement of the Estate5[5] of Angela who died in1978 without issue, declaring himself as the sole heir of Angela and thus consolidating the titleof the entire lot in his name.

In 1985, vendee Alberta Morales died. Her nieces-heirs, Lydia, Elsa and Dafrosa, succeeded

in the ownership of the lot. Months later, as the heirs were about to leave for the United States,they asked Arnold to deliver to them the title to the land so they can register it in their name.Arnold repeatedly promised to do so but failed to deliver the title to them.

On December 4, 1986, after Alberta’s heirs left for the States, Arnold used the OCT he borrowedfrom the deceased vendee Alberta Morales, subdivided the entire lot no. 265 into three

sublots, and registered them all under his name, viz : lot no. 265-A (with TCT No. 16895), lotno. 265-B (with TCT No. 16896) and lot no. 265-C (with TCT No. 16897). He then paid the realestate taxes on the property.

On August 13, 1990, Arnold sold lot nos. 265-B & C to spouses Tomas and Sylvina Occeña,

which included the 748 sq. m. portion previously sold to Alberta Morales. A Deed of AbsoluteSale6[6] over said lots was executed to the Occeña spouses and titles were transferred to their names.

In 1993, after the death of Arnold, the three (3) nieces-heirs of Alberta Morales learned about thesecond sale of their lot to the Occeña spouses when they were notified by caretaker Abas thatthey were being ejected from the land. In 1994, the heirs filed a case7[7] for annulment of saleand cancellation of titles, with damages, against the second vendees Occeña spouses. In their complaint, they alleged that the Occeñas purchased the land in bad faith as they were aware thatthe lots sold to them had already been sold to Alberta Morales in 1954. They averred that beforethe sale, when Tomas Occeña conducted an ocular inspection of the lots, Morito Abas, the

caretaker appointed by Alberta Morales to oversee her property, warned them not to pushthrough with the sale as the land was no longer owned by vendor Arnold as the latter had previously sold the lot to Alberta Morales who had a house constructed thereon.

For their part, the Occeña spouses claimed that the OCT in the name of the original owners of the lots, the Tordesillas spouses, was cancelled after it was subdivided between Angela andArnold in 1969; that new TCTs had been issued in the latter’s names; that they were unawarethat the subject lots were already previously sold to Morales as they denied that Tomas had a talk with caretaker Abas on the matter; that as of December 4, 1987, the TCTs covering the lots werein the name of Arnold and his wife, without any adverse claim annotated thereon; that vendor Arnold represented to them that the occupants they saw on the land were squatters and that hemerely tolerated their presence; that

they did not personally investigate the alleged squatterson the land and merely relied on the representation of vendor Arnold; that sometime in1966-1967, Arnold and his co-heir Angela caused the survey of the original lot and subdivided it

5

6

7



into 3 lots, without opposition from Morales or her heirs. Thus, three (3) TCTs were issued in1969 to Arnold and Angela and, two of the lots were then sold to the Occeña spouses, againwithout objection from Alberta Morales.

The Occeña spouses alleged that they were buyers in good faith as the titles to the subject lots

were free from liens or encumbrances when they purchased them. They claimed that in 1989,Arnold offered to sell the subject lots to them. On August 13, 1990, after they verified with theAntique Registry of Deeds that Arnold’s TCTs were clean and unencumbered, Arnold signed theinstrument of sale over the subject lots in favor of the Occeñas for P100,000.00 and new titleswere issued in their names.

The Occeñas likewise set up the defenses of laches and prescription. They argue that Albertaand plaintiffs-heirs were barred from prosecuting their action as they failed to assert their rightfor forty (40) years. Firstly, they point out that vendor Arnold and Angela subdivided the entirelot in 1966 and declared themselves as the only co-owners thereof in the deed of extrajudicialsettlement. Alberta Morales failed to oppose the inclusion of her 748 sq. m. lot in the deed.

Thus, the title to the entire lot no. 256 was transferred to the names of Arnold and Angela.Secondly, preparatory to the division of the lots, vendor Arnold had the land surveyed butAlberta again failed to oppose the same. Finally, Alberta and her heirs who are claiming adverserights over the land based on the 1951 Deed of Pacto de Retro Sale and the 1954 Deed of Definite Sale of Shares failed for 40 years to annotate their adverse claims on the new titlesissued to Arnold and Angela, enabling the latter to possess a clean title and transfer them to theOcceña spouses.

After trial, the lower court rendered a decision declaring the Occeña spouses as buyers in goodfaith and ruled that the action of the heirs was time-barred.

On appeal by Alberta’s heirs, the Court of Appeals reversed the decision of the trial court. Itfound that the Occeñas purchased the land in bad faith and that the action filed by Alberta’s heirswas not barred by prescription or laches. The dispositive portion reads:

WHEREFORE, the instant appeal is hereby GRANTED. Accordingly, the assailed decision ishereby REVERSED and SET ASIDE and a new one is rendered declaring the Deed of AbsoluteSale dated August 13, 1990 executed between Arnold de la Flor in favor of defendants-appelleesnull and void and ordering the cancellation of Transfer Certificate of Title Nos. 16896, 16897, T-18241 and T-18242.

SO ORDERED. 8[8]

Hence this appeal where petitioner-spouses Occeña raise the following issues:

I

WHETHER OR NOT A VERBAL INFORMATION COULD BE MADE TO PREVAIL

OVER A CLEAN CERTIFICATE OF TITLE OF A REGISTERED LAND WHICH IS

8



FREE OF ANY LIEN OR ENCUMBRANCE ANNOTATED ON ITS CERTIFICATE OF

TITLE OR ANY ADVERSE CLAIM RECORDED WITH THE REGISTER OF DEEDS.

II

WHETHER OR NOT A BUYER OF A REGISTERED LAND IS OBLIGATED TOMAKE INQUIRIES OF ANY POSSIBLE DEFECT OR ADVERSE CLAIM AFFECTING

ITS OWNERSHIP WHICH DOES NOT APPEAR ON THE CERTIFICATE OF TITLE.

III

WHETHER OR NOT THE PERIOD OF MORE THAN FORTY (40) YEARS WITHOUT

POSITIVE ACTION TAKEN BY RESPONDENTS, AS WELL AS BY ALBERTA

MORALES, TO PROTECT THEIR INTEREST CAN BE CONSIDERED LACHES AND

THUS THEIR PRESENT ACTION HAS PRESCRIBED.

On the first two issues, petitioner-spouses claim that they were purchasers of the land in goodfaith as the law does not obligate them to go beyond a clean certificate of title to determine thecondition of the property. They argue that a person dealing with registered land is only chargedwith notice of the burden on the property annotated on the title. When there is nothing on thetitle 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 the title in quest of any hidden defect or inchoate right that may subsequently defeat his right thereto. They claim they had every right to purchase the land despite the verbal warning made by caretaker Abas as the information wasmere hearsay and cannot prevail over the title of the land which was free from any encumbrance.

Their arguments do not persuade.

The petition at bar presents a case of double sale of an immovable property. Article 1544 of the New Civil Code provides that in case an immovable property is sold to different vendees, theownership shall belong: (1) to the person acquiring it who in good faith first recorded it in theRegistry of Property; (2) should there be no inscription, the ownership shall pertain to the

person who in good faith was first in possession; and, (3) in the absence thereof, to the personwho presents the oldest title, provided there is good faith.

In all cases, good faith is essential. It is the basic premise of the preferential rights granted to theone claiming ownership over an immovable.9[9] What is material is whether the second buyer firstregisters the second sale in good faith, i.e., without knowledge of any defect in the title of the

property sold.10[10]

The defense of indefeasibility of a Torrens title does not extend to a transfereewho takes the certificate of title in bad faith, with notice of a flaw.11[11]

9

10

11



The governing principle of prius tempore, potior jure (first in time, stronger in right) enunciatedunder Art. 1544 has been clarified, thus:

x x x Knowledge by the first buyer of the second sale cannot defeat the first buyer’s rightsexcept when the second buyer first registers in good faith the second sale (Olivares vs. Gonzales,

159 SCRA 33). Conversely, knowledge gained by the second buyer of the first sale defeatshis rights even if he is first to register, since such knowledge taints his registration with bad

faith (see also Astorga vs. Court of Appeals, G.R. No. 58530, 26 December 1984). In Cruz vs.

Cabaña (G.R. No. 56232, 22 June 1984, 129 SCRA 656), it was held that it is essential, to

merit the protection of Art. 1544, second paragraph, that the second realty buyer must act

in good faith in registering his deed of sale (citing Carbonell vs. Court of Appeals, 69 SCRA99 and Crisostomo vs. CA, G.R. No. 95843, 02 September 1992).12[12]

In the case at bar, we find that petitioner-spouses failed to prove good faith in their purchase andregistration of the land. A purchaser in good faith and for value is one who buys propertywithout notice that some other person has a right to or interest in such property and pays its fair

price before he has notice of the adverse claims and interest of another person in the same property. So it is that the “honesty of intention” which constitutes good faith implies a freedom

from knowledge of circumstances which ought to put a person on inquiry. At the trial,Tomas Occeña admitted that he found houses built on the land during its ocular inspection prior to his purchase. He relied on the representation of vendor Arnold that these houses were owned by squatters and that he was merely tolerating their presence on the land. Tomas should haveverified from the occupants of the land the nature and authority of their possession instead of merely relying on the representation of the vendor that they were squatters, having seen for himself that the land was occupied by persons other than the vendor who was not in possessionof the land at that time. The settled rule is that a buyer of real property in the possession of

persons other than the seller must be wary and should investigate the rights of those in

possession. Without such inquiry, the buyer can hardly be regarded as a buyer in goodfaith and cannot have any right over the property.13[13] A purchaser cannot simply close hiseyes to facts which should put a reasonable man on his guard and then claim that he acted ingood faith under the belief that there was no defect in the title of his vendor.14[14] His mere refusalto believe that such defect exists or his willful closing of his eyes to the possibility of theexistence of a defect in his vendor’s title will not make him an innocent purchaser for value if itlater develops that the title was in fact defective, and it appears that he would have notice of thedefect had he acted with that measure of precaution which may reasonably be required of a prudent man in a similar situation.

Indeed, the general rule is that one who deals with property registered under the Torrens systemneed 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. However, this principle does not applywhen the party has actual knowledge of facts and circumstances that would impel a reasonably

12

13

14



cautious man to make such inquiry or when the purchaser has knowledge of a defect or the lack of title in his vendor or of sufficient facts to induce a reasonably prudent man to inquire into thestatus of the title of the property in litigation. One who falls within the exception can neither bedenominated an innocent purchaser for value nor a purchaser in good faith .15[15]

The evidence of the private respondents show that when Tomas Occeña conducted an ocular inspection of the land prior to the second sale, Abas, the caretaker of the house which AlbertaMorales built on the land, personally informed Tomas that the lot had been previously sold bythe same vendor Arnold to Alberta Morales. With this information, the Occeñas were obliged tolook beyond the title of their vendor and make further inquiries from the occupants of the land asto their authority and right to possess it. However, despite this information about a prior sale, theOcceñas proceeded with the purchase in haste. They did not inquire from Abas how they couldget in touch with the heirs or representatives of Alberta to verify the ownership of the land. Neither do the records reveal that they exerted effort to examine the documents pertaining to thefirst sale. Having discovered that the land they intended to buy was occupied by a person other than the vendor not in actual possession thereof, it was incumbent upon the petitioners to verify

the extent of the occupant’s possessory rights.16

[16] The Occeñas did nothing and chose to ignoreand disbelieve Abas’ statement.

On the third issue, we hold that the action to annul title filed by respondents-heirs is not barred by laches and prescription. Firstly, laches is a creation of equity and its application is controlled by equitable considerations. Laches cannot be used to defeat justice or perpetuate fraud andinjustice. Neither should its application be used to prevent the rightful owners of a property fromrecovering what has been fraudulently registered in the name of another. 17[17] Secondly,

prescription does not apply when the person seeking annulment of title or reconveyance is in possession of the lot because the action partakes of a suit to quiet title which is imprescriptible.18

[18] In this case, Morales had actual possession of the land when she had a house built thereon

and had appointed a caretaker to oversee her property. Her undisturbed possession of the landfor a period of fifty (50) long years gave her and her heirs a continuing right to seek the aid of acourt of equity to determine the nature of the claim of ownership of petitioner-spouses.19[19] Asheld by this Court in Faja vs. Court of Appeals:20[20]

x x x There is settled jurisprudence that one who is in actual possession of a piece of land

claiming to be owner thereof may wait until his possession is disturbed or his title attacked

before taking steps to vindicate his right, the reason for the rule being, that his undisturbed

possession gives him a continuing right to seek the aid of a court of equity to ascertain and

15

16

17

18

19

20



determine the nature of the adverse claim and its effect on his own title, which right can beclaimed only by one who is in possession. x x x The right to quiet title to the property, seek itsreconveyance and annul any certificate of title covering it accrued only from the time the

one in possession was made aware of a claim adverse to his own, and it is only then that the

statutory period of prescription commences to run against such possessor.

In the case at bar, Morales’ caretaker became aware of the second sale to petitioner-spouses onlyin 1991 when he received from the latter a notice to vacate the land. Respondents-heirs did notsleep on their rights for in 1994, they filed their action to annul petitioners’ title over the land. Itlikewise bears to stress that when vendor Arnold reacquired title to the subject property bymeans of fraud and concealment after he has sold it to Alberta Morales, a constructive trust wascreated in favor of Morales and her heirs. As the defrauded parties who were in actual possession of the property, an action of the respondents-heirs to enforce the trust and recover the property cannot prescribe. They may vindicate their right over the property regardless of thelapse of time.21[21] Hence, the rule that registration of the property has the effect of constructivenotice to the whole world cannot be availed of by petitioners and the defense of prescription

cannot be successfully raised against respondents.In sum, the general rule is that registration under the Torrens system is the operative act whichgives validity to the transfer of title on the land. However, it does not create or vest titleespecially where a party has actual knowledge of the claimant’s actual, open and notorious possession of the property at the time of his registration.22[22] A buyer in bad faith has no rightover the land. As petitioner-spouses failed to register the subject land in good faith, ownershipof the land pertains to respondent-heirs who first possessed it in good faith.

IN VIEW WHEREOF, the petition is DISMISSED. No costs.

SO ORDERED.

G.R. No. L-34500 March 18, 1988

MOISES OLIVARES and JUANITA T. OLIVARES, petitioners-appellants,vs.THE HONORABLE CARLOS V. GONZALES as Judge of the Court of First Instance

21

22



of Iloilo (Branch VI), respondent and JACINTO TUVILLA, CEFERINO TUVILLA, andJUAN TUMABINI, respondents-appellees.

Mario Guarina III for petitioners-appellants.

Enrique Arguelles for respondents-appellees.

MELENCIO-HERRERA, J.:

The Disputed Property is a piece of unregistered land located at Tigbauan, IloiloIdentified as Assessor's Lot No. 343. It was previously owned by respondents-appelleesJacinto Tuvilla and Ceferino Tuvilla (the Tuvillas, for short) both of Tigbauan, Iloilo.

Sometime in 1955, the Tuvillas executed a "Deed of Sale with Right to Repurchase" in

favor of respondent-appellee Juan Tumabini over the Disputed Property inconsideration of the sum of P1,350.00. The document was duly acknowledged before aNotary Public but was not recorded in the Registry of Property.

Sometime in 1959, the Tuvillas executed a "Deed of Sale with Pacto de Retro" over theDisputed Property in favor of petitioners- appellants, Moises Olivares and Juanita T.Olivares (the Olivareses, for short). This document was acknowledged before a NotaryPublic and registered with the Registry of Deeds. In 1966, the Tuvillas also executed infavor of the Olivareses a "Deed of Absolute Sale" covering the Disputed Property.Petitioners-appellants have been in possession of the Disputed Property since 1959.

On October 11, 1967, respondent-appellee, Juan Tumabini filed Civil Case No. 7410before Branch I of the then Court of First Instance of Iloilo against the Tuvillas for theconsolidation of ownership over the Disputed Property by reason of the alleged failureof the Tuvillas to redeem the property from Tumabini (hereinafter referred to as theConsolidation Case). The Olivareses, however, were not included as parties to the saidcase.

During the pre-trial of the Consolidation Case, counsel for the parties agreed to consider the pacto de retro sale as one of equitable mortgage. Thus, the Trial Court rendered

judgment in favor of Tumabini in the amount of P 1,350.00, pursuant to which, the Courtsubsequently issued a Writ of Execution on October 23, 1968.

On November 23, 1968, the Olivareses instituted Civil Case No. 7777 before Branch VIof the former Court of First Instance of Iloilo, for Quieting of Title, against the Tuvillas,Juan Tumabini the Provincial Sheriff and Pyramid Surety (hereinafter, the Quieting of Title Case). The said Court issued a Restraining Order to stop the sale in theConsolidation Case (No. 7410) pending in Branch 1, but the said order was lifted onFebruary 6, 1969.



Subsequently, the Consolidation Case (No. 7410), the Disputed Property was sold atpublic auction and a Writ of Possession was issued in Tumabinis favor. However, thetenant of the Olivareses refused to surrender possession, prompting a citation for contempt. Action thereon was deferred, however, pending termination of Civil Case No.7777.

On July 7, 1970, in the Quieting of Title Case (No. 7777), the Trial Court issued anOrder dismissing said case, as follows:

Acting upon the motion for dismissal of this case filed by Atty. Enrique Arguelles, counselfor the defendants, it appearing that the instant action has been filed since November 23,1968 and up to this time plaintiffs failed to exert effort to have the defendants summoned,for failure to prosecute and lack of interest on the part of the plaintiffs for suchunreasonable length of time, as prayed, let this case be dismissed

No reconsideration was sought nor any appeal taken by the Olivareses.

On July 14, 1971, the same case was refiled, also in Branch VI, docketed as Civil CaseNo. 8698 (the Refiled Case) which, however, was dismissed by the Court on September 6, 1971 "it appearing that Civil Case No. 7777 previously filed and dismissed by theCourt embraces the same subject matter and the same party litigants as the case atbar."

On September 20, 1971, the Court denied the Motion for Reconsideration filed by theOlivareses. Hence, this appeal by certiorari.

The question posed is whether the dismissal of the Quieting of Title Case (No. 7777)"for failure to prosecute" barred the institution of a subsequent suit, Civil Case No. 8698,

by the same plaintiff against the same defendants on the same cause of action. Section3, Rule 17 of the Rules of Court specifically provides:

Sec. 3. Failure to prosecute. — If plaintiff fails to appear at the time of the trial, or toprosecute his action for an unreasonable length of time, or to comply with these rules or any order of the court, the action may be dismissed upon motion of the defendant or upon the court's own motion. This dismissal shall have the effect of an adjudication uponthe merits, unless otherwise provided by the court.

Procedurally speaking, therefore, since the dismissal by the Trial Court was unqualified,it had the effect of an adjudication upon the merits.

However, the equities of the case are with the Olivareses. The first sale with pacto deretro by the Tuvillas to Tumabini was unregistered; in contrast, the sale in favor of theOlivareses was duly recorded. The Consolidation Case (Case No. 7410) instituted byTumabini against the Tuvillas for consolidation of his ownership did not include theOlivareses as parties defendants even though they were then in possession of theDisputed Property. Justice and equity demand, therefore, that their side be heard in theRefiled Case (No. 8698). Then, too, the contempt incident and the matter of the Writ of



Possession in the Consolidation Case (No. 7410) were left unresolved pending theoutcome of the Quieting of Title Case (No. 7777).

In other words, it would be more in keeping with substantial justice if the controversybetween the parties to be resolved on the merits rather than on a procedural technicality

in the light of the express mandate of the Rules that they be "liberally construed in order to promote their object and to assist the parties in obtaining just, speedy andinexpensive determination of every action and proceeding." The dismissal of actions isbased on sound judicial discretion and such discretion "must be exercised wisely andprudently never capriciously, with a view to substantial justice." For having failed tomeet that standard it will have to be held that respondent Judge acted with grave abuseof discretion (see Tandoc vs. Tensuan, I, 50835, October 30, 1979, 93 SCRA 880).

WHEREFORE, the questioned Order of dismissal, dated September 6, 1971, in CivilCase No. 8698, is hereby SET ASIDE and the said case REMANDED for prompthearing and determination on the merits. This Decision shag be immediately executory

upon promulgation. No costs.

SO ORDERED.

Yap (Chairman), Paras, Padilla and Sarmiento, JJ., concur.

The Lawphil Project - Arellano Law Foundation

G.R. No. L-28740 February 24, 1981



FERMIN Z. CARAM, JR., petitioner,vs.CLARO L. LAURETA, respondent.

FERNANDEZ, J.:

This is a petition for certiorari to review the decision of the Court of Appeals promulgated on January 29,1968 in CA-G. R. NO. 35721-R entitled "Claro L. Laureta, plaintiff-appellee versus Marcos Mata, CodidiMata and Fermin Caram, Jr., defendants- appellants; Tampino (Mansaca), et al. Intervenors-appellants,"affirming the decision of the Court of First Instance of Davao in Civil Case No. 3083. 1

On June 25, 1959, Claro L. Laureta filed in the Court of First Instance of Davao an action for nullity,recovery of ownership and/or reconveyance with damages and attorney's fees against Marcos Mata,Codidi Mata, Fermin Z. Caram, Jr. and the Register of Deeds of Davao City. 2

On June 10, 1945, Marcos Mata conveyed a large tract of agricultural land covered by OriginalCertificate of Title No. 3019 in favor of Claro Laureta, plaintiff, the respondent herein. The deed of absolute sale in favor of the plaintiff was not registered because it was not acknowledged before a notary public or any other authorized officer. At the time the sale was executed, there was no authorized officer before whom the sale could be acknowledged inasmuch as the civil government in Tagum, Davao was notas yet organized. However, the defendant Marcos Mata delivered to Laureta the peaceful and lawful possession of the premises of the land together with the pertinent papers thereof such as the Owner'sDuplicate Original Certificate of Title No. 3019, sketch plan, tax declaration, tax receipts and other papersrelated thereto. 3 Since June 10, 1945, the plaintiff Laureta had been and is stin in continuous, adverse andnotorious occupation of said land, without being molested, disturbed or stopped by any of the defendantsor their representatives. In fact, Laureta had been paying realty taxes due thereon and had introducedimprovements worth not less than P20,000.00 at the time of the filing of the complaint. 4

On May 5, 1947, the same land covered by Original Certificate of Title No. 3019 was sold by MarcosMata to defendant Fermin Z. Caram, Jr., petitioner herein. The deed of sale in favor of Caram wasacknowledged before Atty. Abelardo Aportadera. On May 22, 1947, Marcos Mata, through Attys.Abelardo Aportadera and Gumercindo Arcilla, filed with the Court of First Instance of Davao a petitionfor the issuance of a new Owner's Duplicate of Original Certificate of Title No. 3019, alleging as groundtherefor the loss of said title in the evacuation place of defendant Marcos Mata in Magugpo, Tagum,Davao. On June 5, 1947, the Court of First Instance of Davao issued an order directing the Register of Deeds of Davao to issue a new Owner's Duplicate Certificate of Title No. 3019 in favor of Marcos Mataand declaring the lost title as null and void. On December 9, 1947, the second sale between Marcos Mataand Fermin Caram, Jr. was registered with the Register of Deeds. On the same date, Transfer Certificateof Title No. 140 was issued in favor of Fermin Caram Jr. 5

On August 29, 1959, the defendants Marcos Mata and Codidi Mata filed their answer with counterclaim

admitting the existence of a private absolute deed of sale of his only property in favor of Claro L. Laureta but alleging that he signed the same as he was subjected to duress, threat and intimidation for the plaintiff was the commanding officer of the 10th division USFIP operating in the unoccupied areas of NorthernDavao with its headquarters at Project No. 7 (Km. 60, Davao Agusan Highways), in the Municipality of Tagum, Province of Davao; that Laureta's words and requests were laws; that although the defendantMata did not like to sell his property or sign the document without even understanding the same, he wasordered to accept P650.00 Mindanao Emergency notes; and that due to his fear of harm or danger thatwill happen to him or to his family, if he refused he had no other alternative but to sign the document. 6



The defendants Marcos Mata and Codidi Mata also admit the existence of a record in the Registry of Deeds regarding a document allegedly signed by him in favor of his co-defendant Fermin Caram, Jr. butdenies that he ever signed the document for he knew before hand that he had signed a deed of sale infavor of the plaintiff and that the plaintiff was in possession of the certificate of title; that if ever histhumb mark appeared in the document purportedly alienating the property to Fermin Caram, did hisconsent was obtained through fraud and misrepresentation for the defendant Mata is illiterate and ignorant

and did not know what he was signing; and that he did not receive a consideration for the said sale. 7

The defendant Fermin Caram Jr. filed his answer on October 23, 1959 alleging that he has no knowledgeor information about the previous encumbrances, transactions, and alienations in favor of plaintiff untilthe filing of the complaints. 8

The trial court rendered a decision dated February 29, 1964, the dispositive portion of which reads: 9

1. Declaring that the deed of sale, Exhibit A, executed by Marcos Mata in favor of ClaroL. Laureta stands and prevails over the deed of sale, Exhibit F, in favor of Fermin Caram,Jr.;

2. Declaring as null and void the deed of sale Exhibit F, in favor of Fermin Caram, Jr.;

3. Directing Marcos Mata to acknowledge the deed of sale, Exhibit A, in favor of ClaroL. Laureta;

4. Directing Claro L. Laureta to secure the approval of the Secretary of Agriculture and Natural Resources on the deed, Exhibit A, after Marcos Mata shall have acknowledgedthe same before a notary public;

5. Directing Claro L. Laureta to surrender to the Register of Deeds for the City andProvince of Davao the Owner's Duplicate of Original Certificate of Title No. 3019 and

the latter to cancel the same;

6. Ordering the Register of Deeds for the City and Province of Davao to cancel Transfer Certificate of Title No. T-140 in the name of Fermin Caram, Jr.;

7. Directing the Register of Deeds for the City and Province of Davao to issue a title infavor of Claro L. Laureta, Filipino, resident of Quezon City, upon presentation of thedeed executed by Marcos Mata in his favor, Exhibit A, duly acknowledged by him andapproved by the Secretary of Agriculture and Natural Resources, and

8. Dismissing the counterclaim and cross claim of Marcos Mata and Codidi Mata, thecounterclaim of Caram, Jr., the answer in intervention, counterclaim and cross-claim of

the Mansacas.

The Court makes no pronouncement as to costs.

SO ORDERED.

The defendants appealed from the judgment to the Court of Appeals. 10 The appeal was docketed as CA-G.R. NO. 35721- R.



The Court of Appeals promulgated its decision on January 29, 1968 affirming the judgment of the trialcourt.

In his brief, the petitioner assigns the following errors: 11

I

THE RESPONDENT COURT OF APPEALS ERRED IN CONCLUDING THATIRESPE AND APORTADERA WERE ATTORNEYS-IN-FACT OF PETITIONER CARAM FOR THE PURPOSE OF BUYING THE PROPERTY IN QUESTION.

II

THE RESPONDENT COURT OF APPEALS ERRED IN CONCLUDING THAT THEEVIDENCE ADDUCED IN THE TRIAL COURT CONSTITUTE LEGAL EVIDENCEOF FRAUD ON THE PART OF IRESPE AND APORTADERA AT TRIBUTABLE TOPETITIONER.

III

THE RESPONDENT COURT OF APPEALS COMMITTED GRAVE ERROR OFLAW IN HOLDING THAT KNOWLEDGE OF IRESPE AND APORTADERA OF APRIOR UNREGISTERED SALE OF A TITLED PROPERTY ATTRIBUTABLE TOPETITIONER AND EQUIVALENT IN LAW OF REGISTRATION OF SAID SALE.

IV

THE RESPONDENT COURT OF APPEALS ERRED IN NOT HOLDING THAT ANACTION FOR RECONVEYANCE ON THE GROUND OF FRAUD PRESCRIBES

WITHIN FOUR (4) YEARS.

The petitioner assails the finding of the trial court that the second sale of the property was made throughhis representatives, Pedro Irespe and Atty. Abelardo Aportadera. He argues that Pedro Irespe was actingmerely as a broker or intermediary with the specific task and duty to pay Marcos Mata the sum of P1,000.00 for the latter's property and to see to it that the requisite deed of sale covering the purchase was properly executed by Marcos Mata; that the Identity of the property to be bought and the price of the purchase had already been agreed upon by the parties; and that the other alleged representative, Atty.Aportadera, merely acted as a notary public in the execution of the deed of sale.

The contention of the petitioner has no merit. The facts of record show that Mata, the vendor, and Caram,the second vendee had never met. During the trial, Marcos Mata testified that he knows Atty. Aportadera

but did not know Caram. 12 Thus, the sale of the property could have only been through Caram'srepresentatives, Irespe and Aportadera. The petitioner, in his answer, admitted that Atty. Aportadera actedas his notary public and attorney-in-fact at the same time in the purchase of the property. 13

The petitioner contends that he cannot be considered to have acted in bad faith because there is no direct proof showing that Irespe and Aportadera, his alleged agents, had knowledge of the first sale to Laureta.This contention is also without merit.



The Court of Appeals, in affirming the decision of the trial court, said: 14

The trial court, in holding that appellant Caram. Jr. was not a purchaser in good faith, atthe time he bought the same property from appellant Mata, on May 5, 1947, entirelydiscredited the testimony of Aportadera. Thus it stated in its decision:

The testimony of Atty. Aportadera quoted elsewhere in this decision is hollow. There isevery reason to believe that Irespe and he had known of the sale of the property inquestion to Laureta on the day Mata and Irespe, accompanied by Leaning Mansaca, wentto the office of Atty. Aportadera for the sale of the same property to Caram, Jr.,represented by Irespe as attorney-in-fact. Ining Mansaca was with the two — Irespe andMata — to engage the services 6f Atty. Aportadera in the annulment of the sale of hisland to Laureta. When Leaning Mansaca narrated to Atty. Aportadera the circumstancesunder which his property had been sold to Laureta, he must have included in the narrationthe sale of the land of Mata, for the two properties had been sold on the same occassionand under the same circumstances. Even as early as immediately after liberation, Irespe,who was the witness in most of the cases filed by Atty. Aportadera in his capacity asProvincial Fiscal of Davao against Laureta, must have known of the purchases of lands

made by Laureta when he was regimental commander, one of which was the sale made by Mata. It was not a mere coincidence that Irespe was made guardian ad litem of Leaning Mansaca, at the suggestion of Atty. Aportadera and attorney-in-fact of Caram,Jr.

The Court cannot help being convinced that Irespe, attorney-in-fact of Caram, Jr. hadknowledge of the prior existing transaction, Exhibit A, between Mata and Laureta over the land, subject matter of this litigation, when the deed, Exhibit F, was executed by Matain favor of Caram, Jr. And this knowledge has the effect of registration as to Caram, Jr.RA pp. 123-124)

We agree with His Honor's conclusion on this particular point, on two grounds — thefirst, the same concerns matters affecting the credibility of a witness of which thefindings of the trial court command great weight, and second, the same is borne out bythe testimony of Atty. Aportadera himself. (t.s.n., pp. 187-190, 213-215, Restauro).

Even if Irespe and Aportadera did not have actual knowledge of the first sale, still their actions have notsatisfied the requirement of good faith. Bad faith is not based solely on the fact that a vendee hadknowledge of the defect or lack of title of his vendor. In the case of Leung Yee vs. F. L. StrongMachinery Co. and Williamson, this Court held: 15

One who purchases real estate with knowledge of a defect or lack of title in his vendor can not claim that he has acquired title thereto in good faith, as against the true owner of

the land or of an interest therein, and the same rule must be applied to one who hasknowledge of facts which should have put him upon such inquiry and investigation asmight be necessary to acquaint him with the defects in the title of his vendor.

In the instant case, Irespe and Aportadera had knowledge of circumstances which ought to have put theman inquiry. Both of them knew that Mata's certificate of title together with other papers pertaining to theland was taken by soldiers under the command of Col. Claro L. Laureta. 16 Added to this is the fact that atthe time of the second sale Laureta was already in possession of the land. Irespe and Aportadera shouldhave investigated the nature of Laureta's possession. If they failed to exercise the ordinary care expected



of a buyer of real estate they must suffer the consequences. The rule of caveat emptor requires the purchaser to be aware of the supposed title of the vendor and one who buys without checking the vendor'stitle takes all the risks and losses consequent to such failure. 17

The principle that a person dealing with the owner of the registered land is not bound to go behind thecertificate and inquire into transactions the existence of which is not there intimated 18 should not apply in

this case. It was of common knowledge that at the time the soldiers of Laureta took the documents fromMata, the civil government of Tagum was not yet established and that there were no officials to ratifycontracts of sale and make them registerable. Obviously, Aportadera and Irespe knew that even if Mata previously had sold t he Disputed such sale could not have been registered.

There is no doubt then that Irespe and Aportadera, acting as agents of Caram, purchased the property of Mata in bad faith. Applying the principle of agency, Caram as principal, should also be deemed to haveacted in bad faith.

Article 1544 of the New Civil Code provides that:

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

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

Should there be no inscription, the ownership shag pertain to the person who in goodfaith was first in the possession; and, in the absence thereof, to the person who presentsthe oldest title, provided there is good faith. (1473)

Since Caram was a registrant in bad faith, the situation is as if there was no registration at all. 19

The question to be determined now is, who was first in possession in good faith? A possessor in goodfaith is one who is not aware that there exists in his title or mode of acquisition any flaw whichinvalidates it. 20 Laureta was first in possession of the property. He is also a possessor in good faith. It istrue that Mata had alleged that the deed of sale in favor of Laureta was procured by force. 21 Such defect,however, was cured when, after the lapse of four years from the time the intimidation ceased, MarcosMata lost both his rights to file an action for annulment or to set up nullity of the contract as a defense inan action to enforce the same.

Anent the fourth error assigned, the petitioner contends that the second deed of sale, Exhibit "F", is avoidable contract. Being a voidable contract, the action for annulment of the same on the ground of fraudmust be brought within four (4) years from the discovery of the fraud. In the case at bar, Laureta is

deemed to have discovered that the land in question has been sold to Caram to his prejudice on December 9, 1947, when the Deed of Sale, Exhibit "F" was recorded and entered in the Original Certificate of Title by the Register of Deeds and a new Certificate of Title No. 140 was issued in the name of Caram.Therefore, when the present case was filed on June 29, 1959, plaintiff's cause of action had long prescribed.

The petitioner's conclusion that the second deed of sale, "Exhibit F", is a voidable contract is not correct. In order that fraud can be a ground for the annulment of a contract, it must be employed prior to or simultaneous to the, consent or creation of the contract. The fraud or dolo causante must be that which



determines or is the essential cause of the contract. Dolo causante as a ground for the annulment of contract is specifically described in Article 1338 of the New Civil Code of the Philippines as "insidiouswords or machinations of one of the contracting parties" which induced the other to enter into a contract,and "without them, he would not have agreed to".

The second deed of sale in favor of Caram is not a voidable contract. No evidence whatsoever was shown

that through insidious words or machinations, the representatives of Caram, Irespe and Aportadera hadinduced Mata to enter into the contract.

Since the second deed of sale is not a voidable contract, Article 1391, Civil Code of the Philippines which provides that the action for annulment shall be brought within four (4) years from the time of thediscovery of fraud does not apply. Moreover, Laureta has been in continuous possession of the land sincehe bought it in June 1945.

A more important reason why Laureta's action could not have prescribed is that the second contract of sale, having been registered in bad faith, is null and void. Article 1410 of the Civil Code of thePhilippines provides that any action or defense for the declaration of the inexistence of a contract does not prescribe.

In a Memorandum of Authorities 22 submitted to this Court on March 13, 1978, the petitioner insists thatthe action of Laureta against Caram has prescribed because the second contract of sale is not void under Article 1409 23 of the Civil Code of the Philippines which enumerates the kinds of contracts which areconsidered void. Moreover, Article 1544 of the New Civil Code of the Philippines does not declare void asecond sale of immovable registered in bad faith.

The fact that the second contract is not considered void under Article 1409 and that Article 1544 does notdeclare void a deed of sale registered in bad faith does not mean that said contract is not void. Article1544 specifically provides who shall be the owner in case of a double sale of an immovable property. Togive full effect to this provision, the status of the two contracts must be declared valid so that one vendeemay contract must be declared void to cut off all rights which may arise from said contract. Otherwise,Article 1544 win be meaningless.

The first sale in favor of Laureta prevails over the sale in favor of Caram.

WHEREFORE, the petition is hereby denied and the decision of the Court of Appeals sought to bereviewed is affirmed, without pronouncement as to costs.

SO ORDERED.

G.R. No. 85082 February 25, 1991

SPOUSES PASTOR VALDEZ and VIRGINIA VALDEZ, petitioners,vs.HONORABLE COURT OF APPEALS AND FELICIDAD VIERNES, FRANCISCO ANTE, AND

ANTONIO ANTE, respondents.



This is a case of double sale of real property where both vendees registered the sales with the Register of Deeds and each produced their respective owner's duplicate copy of the certificate of title to the property.

Spouses Francisco Ante and Manuela Ante were the registered owners of a parcel of land located at 20thAvenue, Murphy, Quezon City, with an area of approximately 625.70 square meters as evidenced byTransfer Certificate of Title (TCT) No. 141582 issued by the Register of Deeds of Quezon City. Said

spouses executed a special power of attorney in favor of their son, Antonio Ante, a lawyer, authorizinghim to execute any document conveying by way of mortgage or sale a portion or the whole of said property, to receive payment and dispose of the same as he may deem fit and proper under the premises. 1

Antonio Ante offered to sell the lot to Eliseo Viernes, who was occupying the same with the permissionof Ante. Viernes, however, turned down the offer as he did not have money. Antonio Ante then toldViernes that he will instead sell the property to Pastor Valdez and Virginia Valdez. 2

Antonio Ante had the said lot subdivided into Lot A with an area of 280 square meters and Lot B with anarea or 345.70 square meters, each lot having its corresponding technical description.

On June 15, 1980, Antonio Ante, as attorney in fact, executed a deed of sale of Lot A in favor of spousesPastor Valdez and Virginia Valdez, for and in consideration of the amount of P112,000.00 3

On February 12, 1987, in the same capacity, Antonio Ante sold to said Valdez spouses, Lot B for theamount of P138,000.00. 4

The Valdez spouses demanded from Antonio Ante the delivery of the owner's duplicate copy of TCT No.141582 covering said two (2) lots. Ante promised them that he will deliver the title to them in a few days.

In the meanwhile petitioners started fencing the whole lot with cement hollow blocks in the presence of spouses Eliseo and Felicidad Viernes. Except for the gate, it took them two weeks to finish fencing thewhole lot. On said occasion the Viernes spouses were informed by the Valdez spouses that they were

fencing the same as they purchased the land from Antonio Ante.

As Ante failed to deliver the owner's duplicate certificate of title demanded by the Valdez spouses, thelatter filed their affidavit of adverse claim over the subject lot with the Register of Deeds of Quezon Cityon September 6, 1982 as the vendees of the property. 5

Upon inquiries made, the Valdez spouses learned that Antonio Ante had delivered the owner's duplicatecertificate of title as a collateral to one Dr. Camilo Garma of Purdue Street., Cubao Quezon City to securehis rentals in arrears in the amount of P9,000.00. On September 13, 1983, upon the prodding of theValdez spouses, Antonio Ante wrote to Dr. & Mrs. Garma to request them to entrust the owner's duplicatecopy of the title of the questioned lot to the Valdez spouses with the assurance that Ante will pay hisindebtedness to them. 6 The Garma spouses turned over to the Valdez spouses the said owner's duplicate

certificate of title after said Valdez spouses paid for the obligation of Antonio Ante to the Garma spouses.

The Valdez spouses then proceeded to register the two deeds of sale dated June 15, 1980 and February12, 1981 7 with the Register of Deeds of Quezon City by presenting the owner's duplicate copy of thetitle. They were, however, informed that the said owner's duplicate certificate of title had been declarednull and void per order of Judge Tutaan dated November 10, 1982. They also found out that spousesFrancisco and Manuela Ante earlier filed a petition for the issuance of a new owner's duplicate certificateof title and to declare null and void the lost owner's duplicate certificate of title.



The Valdez spouses also discovered that the Register of Deeds cancelled TCT No. 141582 and in lieuthereof issued TCT No. 293889 in the name of Felicidad Viernes on the basis of a deed of assignment of the same property dated February 17, 1982 executed by Antonio Ante in her favor.

When Virginia Valdez inquired from Antonio Ante why he executed the said deed of assignment when hehad previously sold the same lot to them, Ante replied that they could sue him in court.

Thus, the Valdezes filed their adverse claim over the lot covered by TCT No. 293889 in the name of Felicidad Viernes. They filed the complaint in Barangay office of San Roque, Quezon City againstFelicidad Viernes but as no amicable settlement was reached, the Valdezes filed a complaint in theRegional Trial Court of Quezon City seeking among others, that the order dated November 10, 1982 of the Court of First Instance of Quezon City authorizing the issuance of a new owner's duplicate certificateof title in the name of Francisca Ante be declared null any void; that the deed of assignment datedFebruary 17, 1982 executed by Antonio Ante in favor of Felicidad Viernes be cancelled and revoked; thatTCT No. 293889 in the name of Felicidad Viernes in the Register of Deeds of Quezon City be cancelledand declared null and void; that the Register of Deeds of Quezon City be ordered to reinstate, revalidateand give full force and effect to the owner's duplicate copy of TCT No. 141582 in the name of spousesFrancisco and Manuela Ante and declare petitioners as the true and lawful owners of the property;

ordering respondents Viernes and all persons claiming right under them to vacate the property, and to paydamages and costs to petitioners.

After trial on the merits before which the Antes were declared in default, a decision was rendered by thetrial court on April 9, 1986, the dispositive part of which reads as follows:

WHEREFORE, the complaint is dismissed as against defendants Vierneses, anddefendants Antes are hereby ordered to pay to plaintiff, as prayed for in their complaint,as follows:

Defendant Antes are hereby ordered to pay actual damages in the amount of P250,000.00to plaintiffs.

Defendants Antes are hereby ordered to pay moral and exemplary damages in the amountof P15,000.00 and exemplary damages in the amount of P5,000.00.

Defendants Antes, are hereby ordered to pay P5,000.00 for attorney's fees.

SO ORDERED. 8

Not satisfied therewith the Valdezes interposed an appeal therefrom to the Court of Appeals wherein indue course a decision was rendered on September 12, 1988, affirming in toto the appealed decision, withcosts against the appellants.

Hence this petition for review on certiorari filed by the Valdezes wherein the following issues are raised:

1. Whether the Order dated November 10, 1983 declaring as null and void the Owner'scopy of Transfer Certificate of Title No. 141582 and ordering the issuance of a newOwner's copy of said title should be set aside having been secured fraudulently and in badfaith by Francisco Ante and Antonio Ante who had already sold the property to thespouses Pastor and Virginia Valdez and who knew fully well that the said Owner's copyof said title has never been lost.



2. As between plaintiff-spouses Pastor and Virginia Valdez, petitioners in this case anddefendant Felicidad Viernes, one of the private respondents, who is entitled to the subjectlot?

3. Who is entitled to damages? 9

The petition is impressed with merit.

Article 1544 of the Civil Code provides as follows:

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

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

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

From the aforesaid provision of the law, it is clear that if movable property is sold to different vendees,the ownership shall be transferred to the person who may have first taken possession thereof in goodfaith. However, should the subject of the sale be immovable property, the ownership shall vest in the person acquiring it who in good faith first recorded it in the registry of property. Should none of thevendees inscribe the sale in the Registry of Property, then the ownership of the subject real property shall pertain to the person who in good faith was first in possession; and, in the absence thereof, to the personwho presents the oldest title, provided there is good faith.

In this case, Lot A of the subject property was sold to the petitioners by Antonio Ante, as attorney-in-fact,on June 15, 1980, while Lot B was sold by the same attorney-in-fact to petitioners on February 12, 1981.10 Since the owner's copy of TCT No. 141582 was not delivered in due time to the petitioners by AntonioAnte despite his promise to deliver the same in a few days, petitioners registered their notice of adverseclaim over the said property on September 6, 1982 with the Register of Deeds of Quezon City wherein itwas duly annotated as follows:

PE-3004/T-141582 — Affidavit of Adverse Claim —

Filed under sworn statement of Pastor Valdez & Virginia C. Valdez claiming that theyare the vendees of the property described herein, but the title was not delivered (Doc.253, Page 51, Bk. I of the Not. Pub. of Q. City, Prudencio W. Valido)

Date of Instrument — August 19, 1982

Date of Inscription — Sept. 6, 1982 11

However, earlier, that is on February 17, 1982, a Deed of Assignment of the same property was executed by Antonio Ante in favor of respondent Felicidad Viernes. 12 Ante filed a petition for the issuance of another owner's duplicate copy of TCT No. 141582 with the then Court of First Instance of Quezon City



on the ground that the owner's duplicate copy had been lost. The petition was granted in an order dated November 10, 1983 declaring null and void the lost owner's duplicate copy of the title and ordering theissuance of a new owner's duplicate copy of the title in favor of the Antes. Said owner's duplicate copywas delivered by Ante to respondent Viernes who thereafter together with the Deed of Assignment presented the same to the Register of Deeds of Quezon City for registration on November 11, 1982. Thus,on the basis thereof, TCT No. 141582 was cancelled and TCT No. 293889 was issued in the name of

respondent Felicidad Viernes.

Petitioners again filed an adverse claim this time on the property covered by TCT No. 293889 in the nameof respondent Viernes.

From the foregoing set of facts there can be no question that the sale of the subject lot to petitioners wasmade long before the execution of the Deed of Assignment of said lot to respondent Viernes and that petitioners annotated their adverse claim as vendees of the property as early as September 6, 1982 withthe Register of Deeds of Quezon City. On the other hand the deed of Assignment in favor of Viernes of the said lot was registered with the Register of Deeds of Quezon City only on November 11, 1982whereby a new title was issued in the name of Viernes as above stated.

The rule is clear that a prior right is accorded to the vendee who first recorded his right in good faith over an immovable property. 13 In this case, the petitioners acquired subject lot in good faith and for valuableconsideration from the Antes and as such owners petitioners fenced the property taking possessionthereof. Thus, when petitioners annotated their adverse claim in the Register of Deeds of Quezon Citythey thereby established a superior right to the property in question as against respondent Viernes. 14

On the other hand, respondent Viernes cannot claim good faith in the purchase of the subject lot and thesubsequent registration of the Deed of Assignment in her favor. Even before the petitioners purchased thelot from the Antes respondent Viernes' husband was first given the option to purchase the same byAntonio Ante but he declined because he had no money and so he was informed that it would be sold to petitioners. After petitioners purchased the lot they immediately fenced the same with the knowledge andwithout objection of respondent Viernes and her husband and they were informed by the petitioners abouttheir purchase of the same. Moreover, when petitioners annotated their adverse claim as vendees of the property with the Register of Deeds of Quezon City, it was effectively a notice to the whole worldincluding respondent Viernes.

Respondent Ante obviously in collusion with respondent Viernes sold the same property to Viernes whichwas earlier sold to petitioners, by virtue of a subsequent Deed of Assignment. It was fraudulently made toappear that the owner's duplicate copy of TCT No. 141582 was lost through a petition filed with the trialcourt to nullify the said owner's duplicate copy and for the issuance of another owner's duplicate copy.

Unfortunately, such fraud was unmasked as early as July 14, 1981 when respondent Francisco Ante, inCivil Case No. 29617, filed an urgent motion for the issuance of a subpoena and subpoena duces tecum to

require Paz Garma of 8 Purdue Street, Cubao, Quezon City to produce before the court on July 16, 1981at 2:00 o'clock p.m. at the scheduled pre-trial of the case, the owner's duplicate copy of TCT No. 141582issued by the Register of Deeds in the name of the Antes as the same was entrusted to Paz Garma as arealtor for the proposed sale of the property which did not materialize. 15 Respondent Viernes admitted inher answer dated January 7, 1984 that she knew of the filing in court of said urgent motion and that the branch clerk of court issued the corresponding subpoena. 16 Thus, respondent Ante, as well as respondentViernes, knew that the owner's duplicate copy of certificate of title No. 141582 was never lost,consequently the filing of the petition in court for the issuance of a new one was attended with fraud andgross misrepresentation.



As a matter of fact, as hereinabove discussed, upon the urging of petitioners, respondent Antonio Antewrote to the Garma spouses to entrust the TCT to petitioners on September 30, 1983 17 and when petitioners paid the standing account of Ante to the Garmas said owner's duplicate copy was delivered bythe Garmas to the petitioners. The bad faith of respondents Viernes and Ante is obvious.

Further, even while the notice of adverse claim of September 6, 1982 filed by the petitioners on TCT No.

141582 in the Register of Deeds was still existing and had not been cancelled, on November 11, 1982 theRegister of Deeds nevertheless cancelled said TCT and issued a new title in favor of respondent Viernes.The annotation was not even carried over nor was it ordered cancelled under the new title issued torespondent Viernes. The Register of Deeds and/or his subordinates apparently yielded to the fraudulentdesign of respondents Viernes and Ante.

An examination of the decision of the trial court dated April 9, 1986 shows that there are no findings of facts to serve as basis for its conclusions. 18 Section 14, Article VIII of the Constitution mandates asfollows:

No decision shall be rendered by any court without expressing therein clearly and

distinctly the facts and the law on which it is based .

No petition for review or motion for reconsideration of a decision shall be refused duecourse or denied without stating the legal basis therefor. (Emphasis supplied.)

Section 1, Rule 36 of the Rules of Court also provides clearly as follows:

Sec. 1. Rendition of judgments. — All judgments determining the merits of cases shall bein writing personally and directly prepared by the judge, stating clearly and distinctly thefacts and the law on which it is based, signed by him, and filed with the clerk of the court.(Emphasis supplied.)

That is the reason why this Court, through Administrative Circular No. 1 dated January 28, 1988,reminded all judges "to make complete findings of facts in their decisions, and scrutinize closely the legalaspects of the case in the light of the evidence presented. They should avoid the tendency to generalizeand form conclusions without detailing the facts from which such conclusions are deduced ."

Of course, when a petition for review or motion for reconsideration of a decision of the court is denieddue course, or is otherwise denied, it is not necessary that such findings of facts be made. However, thedenial must state the legal basis thereof.

In the present case, the three-paged decision of the trial court contained in the first two pages a statementof the allegations of the pleadings of the parties and enumerates the witnesses presented and the exhibitsmarked during the trial. Thereafter, the trial court arrived at the following conclusion:

After considering the evidence on record, this Court finds that plaintiff have failed to prove their case as against defendant Felicidad Viernes, but proved their case againstdefaulted defendants Antes. The Court finds that there is no sufficient proof of knowledge or bad faith on the part of defendant Vierneses, and on the basis of existing jurisprudence, a third person who in good faith purchases and registers a property cannot be deprived of his title as against plaintiff who had previously purchased same property but failed to register the same. 19



This is not what is contemplated under the Constitution and the Rules as a clear and distinct statement of the facts on the basis of which the decision is rendered. The foregoing one paragraph statement constitutea mere conclusion of facts and of law arrived at by the trial court without stating the facts which serve asthe basis thereof. Indeed the conclusion of fact therein that petitioners had not registered the sale to themis traversed by the records which show on the contrary, petitioners earlier registered the sale to them. Thecourt statement in the decision that a party has proven his case while the other has not, is not the findings

of facts contemplated by the Constitution and the rules to be clearly and distinctly stated.

Unfortunately, the appellate court overlooked this fatal defect in the appealed decision. It merely adoptedthe alleged findings of facts of the trial court. Although it made some findings on how the deed of assignment in favor of respondent Viernes came about, it is far from complete and is hardly a substantialcompliance with the mandate aforestated.

As it is now, this Court has before it a challenged decision that failed to state clearly and distinctly thefacts on which it is predicated. This Court has said again and again that it is not a trier of facts and that itrelies, on the factual findings of the lower court and the appellate court which are conclusive. But as it is,in this case, the Court has to wade through the records and make its own findings of facts, rather thanfurther delay the disposition of the case by remanding the records for further proceedings.

Hence, the appealed decision should be struck down.

WHEREFORE, the petition is GRANTED. The appealed decision of the appellate court dated September 12, 1988 is hereby SET ASIDE and another judgment is hereby rendered declaring the order of the trialcourt dated November 10, 1982 null and void and reinstating the owner's duplicate copy of TCT No.141582 in the possession of the petitioners; declaring the petitioners to have the superior right to the property in question and to be the true and lawful owners of the same; directing the Register of Deeds of Quezon City to cancel TCT No. 293889 in the name of respondent Felicidad Viernes and to issue a newtitle in favor of petitioners spouses Pastor and Virginia Valdez upon the presentation of the owner'sduplicate copy of TCT No. 141582; directing respondent Felicidad Viernes and other persons claimingrights under her residing in the premises of the land in question to vacate the same immediately and toremove whatever improvement she has placed in the premises; and ordering private respondents to jointlyand severally pay the petitioners the amounts of P15,000.00 as moral damages, P5,000.00 exemplarydamages, and P20,000.00 as attorney's fees. The docket fees for the amount of damages and attorney'sfees awarded to the petitioners, if not yet duly paid, shall constitute a prior lien in favor of thegovernment, before the satisfaction of the judgment in favor of the petitioners. Costs against privaterespondents.

SO ORDERED.

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