VI. CERTIFICATE OF TITLE (Sections 39-50)

a. Salient Features of the Torrens System

i. Decree binds the land

A land registration proceeding being in rem, the decree of registration issued pursuant to the decision binds the land and quiets title thereto, and is conclusive upon and against all persons, including the government and all the branches thereof, whether mentioned by name in the application, notice or citation, or included in the general inscription “To whom it may concern.”

Del Prado vs Caballero

FACTS:

In a judgment rendered in a Cadastral Case, Judge Reyes of RTC adjudicated in favor of Spouses Antonio L. Caballero and Leonarda B. Caballero several parcels of land.

Antonio Caballero moved for the issuance of the final decree of registration for their lots. Consequently, the same court ordered the National Land Titles and Deeds Registration Administration to issue the decree of registration and the corresponding titles of the lots in favor of the Caballeros.

Respondents sold to petitioner, Carmen del Prado, Lot No. 11909 on the basis of the tax declaration covering the property. The pertinent portion of the deed of sale reads as follows:

"A parcel of land known as Cad. Lot No. 11909, bounded as follows…containing an area of 4,000 square meters, more or less

Original Certificate of Title (OCT) No. 1305, covering Lot No. 11909, was issued only on November 15, 1990, and entered in the "Registration Book" of the City of Cebu on December 19, 1990. Therein, the technical description of Lot No. 11909 states that said lot measures about 14,457 square meters, more or less.

Petitioner filed in the same cadastral proceedings a "Petition for Registration of Document Under Presidential Decree (P.D.) 1529" in order that a certificate of title be issued in her name, covering the whole Lot No. 11909. In the petition, petitioner alleged that the tenor of the instrument of sale indicated that the sale was for a lump sum or cuerpo cierto, in which case, the vendor was bound to deliver all that was included within said boundaries even when it exceeded the area specified in the contract. Respondents opposed, on the main ground that only 4,000 sq m of Lot No. 11909 was sold to petitioner. They claimed that the sale was not for a cuerpo cierto. They moved for the outright dismissal of the petition on grounds of prescription and lack of jurisdiction.

ISSUE:

WON the sale of the land was for a lump sum or not

RULING:

In sales involving real estate, the parties may choose between two types of pricing agreement: a unit price contract wherein the purchase price is determined by way of reference to a stated rate per unit area (e.g., P1,000 per square meter), or a lump sum contract which states a full purchase price for an immovable the area of which may be declared based on the estimate or where both the area and boundaries are stated (e.g., P1 million for 1,000 square meters, etc.).

In the case where the area of an immovable is stated in the contract based on an estimate, the actual area delivered may not measure up exactly with the area stated in the contract. According to Article 1542 of the Civil Code, in the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number, there shall be no increase or decrease of the price, although there be a greater or less areas or number than that stated in the contract. . .

However, the rule laid down in Article 1542 is not hard and fast and admits of an exception. A caveat is in order, however. The use of "more or less" or similar words in designating quantity covers only a reasonable excess or deficiency. A vendee of land sold in gross or with the description "more or less" with reference to its area does not thereby ipso facto take all risk of quantity in the land.

In the instant case, the deed of sale is not one of a unit price contract. The parties agreed on the purchase price of P40,000.00 for a predetermined area of 4,000 sq m, more or less, bounded on the North by Lot No. 11903, on the East by Lot No. 11908, on the South by Lot Nos. 11858 & 11912, and on the West by Lot No. 11910. In a contract of sale of land in a mass, the specific boundaries stated in the contract must control over any other statement, with respect to the area contained within its boundaries.

More importantly, we find no reversible error in the decision of the CA. Petitioner's recourse, by filing the petition for registration in the same cadastral case, was improper.

IT IS A FUNDAMENTAL PRINCIPLE IN LAND REGISTRATION THAT A CERTIFICATE OF TITLE SERVES AS EVIDENCE OF AN INDEFEASIBLE AND INCONTROVERTIBLE TITLE TO THE PROPERTY IN FAVOR OF THE PERSON WHOSE NAME APPEARS THEREIN. SUCH INDEFEASIBILITY COMMENCES AFTER ONE YEAR FROM THE DATE OF ENTRY OF THE DECREE OF REGISTRATION. INASMUCH AS THE PETITION FOR REGISTRATION OF DOCUMENT DID NOT INTERRUPT THE RUNNING OF THE PERIOD TO FILE THE APPROPRIATE PETITION FOR REVIEW AND CONSIDERING THAT THE PRESCRIBED ONE-YEAR PERIOD HAD LONG SINCE EXPIRED, THE DECREE OF REGISTRATION, AS WELL AS THE CERTIFICATE OF TITLE ISSUED IN FAVOR OF RESPONDENTS, HAD BECOME INCONTROVERTIBLE.

ii. Certificate of Title (Section 39-40)

Section 39. Preparation of decree and Certificate of Title. After the judgment directing the registration of title to land has become final, the court shall, within fifteen days from entry of judgment, issue an order directing the Commissioner to issue the corresponding decree of registration and certificate of title. The clerk of court shall send, within fifteen days from entry of judgment, certified copies of the judgment and of the order of the court directing the Commissioner to issue the corresponding decree of registration and certificate of title, and a certificate stating that the decision has not been amended, reconsidered,

nor appealed, and has become final. Thereupon, the Commissioner shall cause to be prepared the decree of registration as well as the original and duplicate of the corresponding original certificate of title. The original certificate of title shall be a true copy of the decree of registration. The decree of registration shall be signed by the Commissioner, entered and filed in the Land Registration Commission. The original of the original certificate of title shall also be signed by the Commissioner and shall be sent, together with the owner's duplicate certificate, to the Register of Deeds of the city or province where the property is situated for entry in his registration book.

Section 40. Entry of Original Certificate of Title. Upon receipt by the Register of Deeds of the original and duplicate copies of the original certificate of title the same shall be entered in his record book and shall be numbered, dated, signed and sealed by the Register of Deeds with the seal of his office. Said certificate of title shall take effect upon the date of entry thereof. The Register of Deeds shall forthwith send notice by mail to the registered owner that his owner's duplicate is ready for delivery to him upon payment of legal fees.

Under the Torrens system, a certificate of title may be an original certificate of title, which constitutes a true copy of the decree of registration, or a transfer certificate of title, issued subsequent to the original registration. The original certificate of title is the transcript of the decree of registration made by the Registration of Deeds in the registry. It accumulates in one document a precise and correct statement of the exact status of the fee simple title which an owner possess. The certificate, once issued, is the evidence of the title which the owner has. What appears on the face of the title is controlling on questions of ownership since the certificate of title is an absolute and indefeasible evidence of ownership of the property in favor of the person whose name appears therein.

A CERTIFICATE OF TITLE SERVES AS EVIDENCE OF AN INDEFEASIBLE AND INCONTROVERTIBLE TO THE PROPERTY IN FAVOR OF THE PERSON WHOSE NAME APPEARS THEREIN. Such indefeasibility commences after the lapse or expiration of one year from the date of entry of the decree of registration when all persons are considered to have constructive notice of the title to property. After the lapse of one year, title to the property can no longer be contested.

A person dealing with registered property need not go beyond, but only has to rely on, the title of his predecessor-in-interest. Since the “act of registration is the operative act to convey or affect the land insofar as third persons are concerned,” it follows that where there is nothing in the certificate of title to indicate any cloud or vice in the ownership of the property, or any encumbrance thereon, the

GUARANTEED HOMES, INC. vs VALDEZ

It is basic that a person dealing with registered property need not go beyond, but only has to rely on,

the title of his predecessor-in-interest. Since "the act of registration is the operative act to convey or

affect the land insofar as third persons are concerned,” it follows that where there is nothing in 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 farther 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. If the rule were otherwise, the efficacy and conclusiveness of the certificate of title which

the Torrens system seeks to insure would entirely be futile and nugatory. The public shall then be

denied of its foremost motivation for respecting and observing the Torrens system of registration. In

the end, the business community stands to be inconvenienced and prejudiced immeasurably.

Contrary to the assertion of respondents, OCT No. 404 was expressly cancelled by TCT No. T-8241. The

alleged non-signature by the Register of Deeds Soliman Achacoso, does not affect the validity of TCT No.

T-8241 since he signed TCT No. T- 8242 and issued both titles on the same day. There is a presumption

of regularity in the performance of official duty. The presumption is further bolstered by the fact that

TCT No. T-8241 was certified to be on file with the Registry of Deeds and registered in the name of

Cipriano. It is enough that petitioner had examined the latest certificate of title which in this case was

issued in the name of the immediate transferor, the spouses Rodolfo. THE PURCHASER IS NOT BOUND

BY THE ORIGINAL CERTIFICATE BUT ONLY BY THE CERTIFICATE OF TITLE OF THE PERSON FROM WHOM

HE HAD PURCHASED THE PROPERTY.

Secondly, while the Extrajudicial Settlement of a Sole Heir and Confirmation of Sales executed by

Cipriano alone despite the existence of the other heirs of Pablo, is not binding on such other heirs,

nevertheless, it has operative effect under Section 44 of the Property Registration Decree, which

provides that:

SEC. 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:

x x x x

Even assuming arguendo that the extrajudicial settlement was a forgery, the Court still has to uphold

the title of petitioner. THE CASE LAW IS THAT ALTHOUGH GENERALLY A FORGED OR FRAUDULENT

DEED IS A NULLITY AND CONVEYS NO TITLE, THERE ARE INSTANCES WHEN SUCH A FRAUDULENT

DOCUMENT MAY BECOME THE ROOT OF A VALID TITLE. AND ONE SUCH INSTANCE IS WHERE THE

CERTIFICATE OF TITLE WAS ALREADY TRANSFERRED FROM THE NAME OF THE TRUE OWNER TO THE

FORGER, AND WHILE IT REMAINED THAT WAY, THE LAND WAS SUBSEQUENTLY SOLD TO AN

INNOCENT PURCHASER. FOR THEN, THE VENDEE HAD THE RIGHT TO RELY UPON WHAT APPEARED IN

THE CERTIFICATE.

Registration in the public registry is notice to the whole world. Every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting registered land shall be, if registered, filed or entered in the Office of the Register of Deeds of the province or city where the land to which it relates lies, be constructive notice to all persons from the time of such registering, filing or entering.

REYES vs RAVAL-REYES

While we agree with the court a quo that the disputed lots are subjects in litigation in 'Civil Case No. 3659, it appearing that respondent, as defendant therein, had presented a counterclaim for partition of the lots covered by the titles, we see no valid and plausible reason to justify, on this ground, the withholding from the registered owners, such as the petitioners-appellants herein, the custody and possession of the owners' duplicates of certificates of title.

In a decided case, this Court has already held that: THE OWNER OF THE LAND IN WHOSE FAVOR AND IN WHOSE NAME SAID LAND IS REGISTERED AND INSCRIBED IN THE CERTIFICATE OF TITLE HAS A MORE PREFERENTIAL RIGHT TO THE POSSESSION OF THE OWNER'S DUPLICATE THAN ONE WHOSE NAME DOES NOT APPEAR IN THE CERTIFICATE AND HAS YET TO ESTABLISH HIS RIGHT TO THE POSSESSION THEREOF.

It being undisputed that respondent had already availed of an independent civil action to recover his alleged co-owner's share in the disputed lots by filing a counterclaim for partition in said Civil Case No. 3659, his rights appear to be amply protected, and considering that he may also avail of, to better protect his rights thereto, the provision on notice of lis pendens under Section 24, Rule 14, of the Revised Rules of Court, for the purpose of recording the fact that the lots covered by the titles in question are litigated in said Civil Case No. 3659, we again see no justifiable reason for respondent to retain the custody of the owners' duplicates of certificates of title.

LITAM vs ESPIRITU

FURTHER STRONG PROOFS THAT THE PROPERTIES IN QUESTION ARE THE PARAPHERNAL PROPERTIES OF MARCOSA RIVERA, ARE THE VERY TORRENS TITLES COVERING SAID PROPERTIES. ALL THE SAID PROPERTIES ARE REGISTERED IN THE NAME OF 'MARCOSA RIVERA, MARRIED TO RAFAEL LITAM.' THIS CIRCUMSTANCE INDICATES THAT THE PROPERTIES IN QUESTION BELONG TO THE REGISTERED OWNER, MARCOSA RIVERA, AS HER PARAPHERNAL PROPERTIES, FOR IF THEY WERE CONJUGAL, THE TITLES COVERING THE SAME SHOULD HAVE BEEN ISSUED IN THE NAMES OF RAFAEL LITAM AND MARCOSA RIVERA. THE WORDS 'MARRIED TO RAFAEL LITAM' WRITTEN AFTER

THE NAME OF MARCOSA RIVERA, IN EACH OF THE ABOVE MENTIONED TITLES ARE MERELY DESCRIPTIVE OF THE CIVIL STATUS OF MARCOSA RIVERA, THE REGISTERED OWNER OF THE PROPERTIES COVERED BY SAID TITLES.

PHILIPPINE NATIONAL BANK vs COURT OF APPEALS

Does the presumption of conjugality of properties acquired by the spouses during coverture provided for in Article 160 of the Civil Code apply to property covered by a Torrens certificate of title in the name of the widow?

Article 160 of the Civil Code provides as follows:

"ART. 160. ALL PROPERTY OF THE MARRIAGE IS PRESUMED TO BELONG TO THE CONJUGAL PARTNERSHIP, UNLESS IT BE PROVED THAT IT PERTAINS EXCLUSIVELY TO THE HUSBAND OR TO THE WIFE."

THE PRESUMPTION APPLIES TO PROPERTY ACQUIRED DURING THE LIFETIME OF THE HUSBAND AND WIFE.

IN THIS CASE, IT APPEARS ON THE FACE OF THE TITLE THAT THE PROPERTIES WERE ACQUIRED BY DONATA MONTEMAYOR WHEN SHE WAS ALREADY A WIDOW. WHEN THE PROPERTY IS REGISTERED IN THE NAME OF A SPOUSE ONLY AND THERE IS NO SHOWING AS TO WHEN THE PROPERTY WAS ACQUIRED BY SAID SPOUSE, THIS IS AN INDICATION THAT THE PROPERTY BELONGS EXCLUSIVELY TO SAID SPOUSE. AND THIS PRESUMPTION UNDER ARTICLE 160 OF THE CIVIL CODE CANNOT PREVAIL WHEN THE TITLE IS IN THE NAME OF ONLY ONE SPOUSE AND THE RIGHTS OF INNOCENT THIRD PARTIES ARE INVOLVED.

The PNB had a reason to rely on what appears on the certificates of title of the properties mortgaged. For all legal purposes, the PNB is a mortgagee in good faith for at the time the mortgages covering said properties were constituted the PNB was not aware to any flaw of the title of the mortgagor.

AT ANY RATE, ALTHOUGH ACTIONS FOR RECOVERY OF REAL PROPERTY AND FOR PARTITION ARE REAL ACTIONS, HOWEVER, THEY ARE ACTIONS IN PERSONAM THAT BIND ONLY THE PARTICULAR INDIVIDUALS WHO ARE PARTIES THERETO. THE PNB NOT BEING A PARTY IN SAID CASES IS NOT BOUND BY THE SAID DECISIONS.

NOR DOES IT APPEAR THAT THE PNB WAS AWARE OF THE SAID DECISIONS WHEN IT EXTENDED THE ABOVE DESCRIBED MORTGAGE LOANS. INDEED, IF THE PNB KNEW OF THE CONJUGAL NATURE OF SAID PROPERTIES IT WOULD NOT HAVE APPROVED THE MORTGAGE APPLICATIONS COVERING SAID PROPERTIES OF DONATA MONTEMAYOR WITHOUT REQUIRING THE CONSENT OF ALL THE OTHER HEIRS OR CO-OWNERS THEREOF. MOREOVER, WHEN SAID PROPERTIES WERE SOLD AT PUBLIC AUCTION, THE PNB WAS A PURCHASER FOR VALUE IN GOOD FAITH SO ITS RIGHT THERETO IS BEYOND QUESTION.

REPUBLIC vs MENDOZA

A DECREE OF REGISTRATION IS CONCLUSIVE UPON ALL PERSONS, INCLUDING THE GOVERNMENT OF THE REPUBLIC AND ALL ITS BRANCHES, WHETHER OR NOT MENTIONED BY NAME IN THE APPLICATION FOR REGISTRATION OR ITS NOTICE. INDEED, TITLE TO THE LAND, ONCE REGISTERED, IS IMPRESCRIPTIBLE. NO ONE MAY ACQUIRE IT FROM THE REGISTERED OWNER BY ADVERSE, OPEN, AND NOTORIOUS POSSESSION.

THUS, TO A REGISTERED OWNER UNDER THE TORRENS SYSTEM, THE RIGHT TO RECOVER POSSESSION OF THE REGISTERED PROPERTY IS EQUALLY IMPRESCRIPTIBLE SINCE POSSESSION IS A MERE CONSEQUENCE OF OWNERSHIP.

Here, the existence and genuineness of the Mendozas' title over the property has not been disputed. While the consolidation and subdivision plan of Lots 1923 and 1925 shows that a 1,149 square meter lot had been designated to the City Government, the Republic itself admits that no new title was issued to it or to any of its subdivisions for the portion that PPS had been occupying since 1957.

THAT THE CITY GOVERNMENT OF LIPA TAX-DECLARED THE PROPERTY AND ITS IMPROVEMENTS IN ITS NAME CANNOT DEFEAT THE MENDOZAS' TITLE. This Court has allowed tax declarations to stand as proof of ownership only in the absence of a certificate of title. Otherwise, they have little evidentiary weight as proof of ownership.

DBT MAR-BAY vs CARAAN

A Complaint for "Quieting of Title with Cancellation of TCT No. 200519 and all Titles derived thereat

A.

THE RTC FAILED TO CONSIDER THAT THE ACTION FILED BEFORE IT WAS NOT SIMPLY FOR RECONVEYANCE BUT AN ACTION FOR QUIETING OF TITLE WHICH IS IMPRESCRIPTIBLE.

VERILY, AN ACTION FOR RECONVEYANCE CAN BE BARRED BY PRESCRIPTION. When an action for reconveyance is based on fraud, it must be filed within four (4) years from discovery of the fraud, and such discovery is deemed to have taken place from the issuance of the original certificate of title. On the other hand, an action for reconveyance based on an implied or constructive trust prescribes in ten (10) years from the date of the issuance of the original certificate of title or transfer certificate of title.

The rule is that the registration of an instrument in the Office of the RD constitutes constructive notice to the whole world and therefore the discovery of the fraud is deemed to have taken place at the time of registration.

HOWEVER, THE PRESCRIPTIVE PERIOD APPLIES ONLY IF THERE IS AN ACTUAL NEED TO RECONVEY THE PROPERTY AS WHEN THE PLAINTIFF IS NOT IN POSSESSION OF THE PROPERTY. IF THE PLAINTIFF, AS THE REAL OWNER OF THE PROPERTY ALSO REMAINS IN POSSESSION OF THE PROPERTY, THE PRESCRIPTIVE PERIOD TO RECOVER TITLE AND POSSESSION OF THE PROPERTY DOES NOT RUN AGAINST HIM. IN SUCH A CASE, AN ACTION FOR RECONVEYANCE, IF NONETHELESS FILED, WOULD BE IN THE NATURE OF A SUIT FOR QUIETING OF TITLE, AN ACTION THAT IS IMPRESCRIPTIBLE.

THE REASON FOR THIS IS THAT ONE WHO IS IN ACTUAL POSSESSION OF A PIECE OF LAND CLAIMING TO BE THE OWNER THEREOF MAY WAIT UNTIL HIS POSSESSION IS DISTURBED OR HIS TITLE IS 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 DETERMINE THE NATURE OF THE ADVERSE CLAIM OF A THIRD PARTY AND ITS EFFECT ON HIS OWN TITLE, WHICH RIGHT CAN BE CLAIMED ONLY BY ONE WHO IS IN POSSESSION.

B.

IT IS A WELL-ENTRENCHED RULE IN THIS JURISDICTION THAT NO TITLE TO REGISTERED LAND IN DEROGATION OF THE RIGHTS OF THE REGISTERED OWNER SHALL BE ACQUIRED BY PRESCRIPTION OR ADVERSE POSSESSION.

PRESCRIPTION IS UNAVAILING NOT ONLY AGAINST THE REGISTERED OWNER BUT ALSO AGAINST HIS HEREDITARY SUCCESSORS. POSSESSION IS A MERE CONSEQUENCE OF OWNERSHIP WHERE LAND HAS BEEN REGISTERED UNDER THE TORRENS SYSTEM, THE EFFICACY AND INTEGRITY OF WHICH MUST BE PROTECTED. PRESCRIPTION IS RIGHTLY REGARDED AS A STATUTE OF REPOSE WHOSE OBJECTIVE IS TO SUPPRESS FRAUDULENT AND STALE CLAIMS FROM SPRINGING UP AT GREAT DISTANCES OF TIME AND SURPRISING THE PARTIES OR THEIR REPRESENTATIVES WHEN THE FACTS HAVE BECOME OBSCURE FROM THE LAPSE OF TIME OR THE DEFECTIVE MEMORY OR DEATH OR REMOVAL OF WITNESSES.

CARAAN vs CA

Answer with Counterclaim

A CERTIFICATE OF TITLE SERVES AS EVIDENCE OF AN INDEFEASIBLE TITLE TO THE PROPERTY IN FAVOR OF THE PERSON WHOSE NAME APPEARS THEREIN."

PRIVATE RESPONDENTS having presented TCT No. RT-71061, which is the reconstituted title of TCT No. 214949, they HAVE THUS PROVEN THEIR ALLEGATION OF OWNERSHIP OVER THE SUBJECT PROPERTY. THE BURDEN OF PROOF THEN SHIFTED TO PETITIONERS WHO MUST ESTABLISH BY PREPONDERANCE OF EVIDENCE THEIR ALLEGATION THAT THEY HAVE A BETTER RIGHT OVER THE SUBJECT PROPERTY.

IT SHOULD BE BORNE IN MIND, HOWEVER, THAT SECTION 48, PRESIDENTIAL DECREE NO. 1529 (P.D. NO. 1529), PROVIDES THAT "A CERTIFICATE OF TITLE SHALL NOT BE SUBJECT TO COLLATERAL ATTACK. IT CANNOT BE ALTERED, MODIFIED, OR CANCELLED EXCEPT IN A DIRECT PROCEEDING IN ACCORDANCE WITH LAW."

Petitioners' defense takes the form of a collateral attack on private respondents' certificate of title.

When is an action an attack on a title?

It is when the object of the action or proceeding is to nullify the title, and thus challenge the judgment pursuant to which the title was decreed. The attack is direct when the object of an

action or proceeding is to annul or set aside such judgment, or enjoin its enforcement. On the other hand, THE ATTACK IS INDIRECT OR COLLATERAL WHEN, IN AN ACTION TO OBTAIN A DIFFERENT RELIEF, AN ATTACK ON THE JUDGMENT IS NEVERTHELESS MADE AS AN INCIDENT THEREOF.

In the present case, the attack on the title is definitely merely collateral as the relief being sought by private respondents in their action was recovery of possession. The attack on the validity of private respondents' certificate of title was merely raised as a defense in petitioners' Answer filed with the trial court.

LEYSON vs BONTUYAN

NEMO DAT QUOD NON HABET

COUNTERCLAIM

A.

WHILE SECTION 47 OF ACT NO. 496 PROVIDES THAT A CERTIFICATE OF TITLE SHALL NOT BE SUBJECT TO COLLATERAL ATTACK.

THE RULE IS THAT AN ACTION IS AN ATTACK ON A TITLE IF ITS OBJECT IS TO NULLIFY THE SAME, AND THUS CHALLENGE THE PROCEEDING PURSUANT TO WHICH THE TITLE WAS DECREED.

THE ATTACK IS CONSIDERED DIRECT WHEN THE OBJECT OF AN ACTION IS TO ANNUL OR SET ASIDE SUCH PROCEEDING, OR ENJOIN ITS ENFORCEMENT.

ON THE OTHER HAND, AN ATTACK IS INDIRECT OR COLLATERAL WHEN, IN AN ACTION TO OBTAIN A DIFFERENT RELIEF, AN ATTACK ON THE PROCEEDING IS NEVERTHELESS MADE AS AN INCIDENT THEREOF. SUCH ACTION TO ATTACK A CERTIFICATE OF TITLE MAY BE AN ORIGINAL ACTION OR A COUNTERCLAIM IN WHICH A CERTIFICATE OF TITLE IS ASSAILED AS VOID.

A COUNTERCLAIM IS CONSIDERED A NEW SUIT IN WHICH THE DEFENDANT IS THE PLAINTIFF AND THE PLAINTIFF IN THE COMPLAINT BECOMES THE DEFENDANT. IT STANDS ON THE SAME FOOTING AND IS TO BE TESTED BY THE SAME RULES AS IF IT WERE AN INDEPENDENT ACTION. FURTHERMORE, SINCE ALL THE ESSENTIAL FACTS OF THE CASE FOR THE DETERMINATION OF THE TITLE'S VALIDITY ARE NOW BEFORE THE COURT, TO REQUIRE THE PARTY TO INSTITUTE CANCELLATION PROCEEDINGS WOULD BE POINTLESSLY CIRCUITOUS AND AGAINST THE BEST INTEREST OF JUSTICE.

B.

Case law has it that an action for reconveyance prescribes in ten years, the point of reference being the date of registration of the deed or the date of issuance of the certificate of title over the property. In an action for reconveyance, the decree of registration is highly regarded as incontrovertible. What is sought instead is the transfer of the property or its title, which has been wrongfully or erroneously registered in another person's name, to its rightful or legal owner, or to one who has a better right.

HOWEVER, IN A SERIES OF CASES, THIS COURT DECLARED THAT AN ACTION FOR RECONVEYANCE BASED ON FRAUD IS IMPRESCRIPTIBLE WHERE THE PLAINTIFF IS IN POSSESSION OF THE PROPERTY SUBJECT OF THE ACTS.

THE PARAMOUNT REASON FOR THIS EXCEPTION IS BASED ON THE THEORY THAT REGISTRATION PROCEEDINGS COULD NOT BE USED AS A SHIELD FOR FRAUD. MOREOVER, TO HOLD OTHERWISE WOULD BE TO PUT PREMIUM ON LAND-GRABBING AND TRANSGRESSING THE BROADER PRINCIPLE IN HUMAN RELATIONS THAT NO PERSON SHALL UNJUSTLY ENRICH HIMSELF AT THE EXPENSE OF ANOTHER.

OÑO vs LIM

IS AN ACTION FOR QUIETING OF TITLE CONSTITUTE A COLLATERAL ATTACK IN VIOLATION OF SECTION 48 OF PD 1529

An action or proceeding is deemed an attack on a title when its objective is to nullify the title, thereby challenging the judgment pursuant to which the title was decreed. The attack is direct when the objective is to annul or set aside such judgment, or enjoin its enforcement. On the other hand, the attack is indirect or collateral when, in an action to obtain a different relief, an attack on the judgment is nevertheless made as an incident thereof.

Quieting of title is a common law remedy for the removal of any cloud, doubt, or uncertainty affecting title to real property. Whenever there is a cloud on title to real property or any interest in real property by reason of any instrument, record, claim, encumbrance, or proceeding that is apparently valid or effective, but is, in truth and in fact, invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, an action may be brought to remove such cloud or to quiet the title.

In such action, the competent court is tasked to determine the respective rights of the complainant and the other claimants, not only to place things in their proper places, and to make the claimant, who has no rights to said immovable, respect and not disturb the one so entitled, but also for the benefit of both, so that whoever has the right will see every cloud of doubt over the property dissipated, and he can thereafter fearlessly introduce the improvements he may desire, as well as use, and even abuse the property as he deems fit.

THE AVERMENTS READILY SHOW THAT THE ACTION WAS NEITHER A DIRECT NOR A COLLATERAL ATTACK ON OCT NO. RO-9969-(O-20449), FOR LIM WAS ASSERTING ONLY THAT THE EXISTING TITLE REGISTERED IN THE NAME OF THE PETITIONERS' PREDECESSORS HAD BECOME INOPERATIVE DUE TO THE CONVEYANCE IN FAVOR OF LIM'S MOTHER, AND RESULTANTLY SHOULD BE CANCELLED.

LIM DID NOT THEREBY ASSAIL THE VALIDITY OF OCT NO. RO-9969-(O-20449), OR CHALLENGE THE JUDGMENT BY WHICH THE TITLE OF THE LOT INVOLVED HAD BEEN DECREED. IN OTHER WORDS, THE ACTION SOUGHT THE REMOVAL OF A CLOUD FROM LIM'S TITLE, AND THE CONFIRMATION OF LIM'S OWNERSHIP OVER THE DISPUTED PROPERTY AS THE SUCCESSOR-IN-INTEREST OF LUISA.

FERNANDEZ vs COURT OF APPEALS

Section 50 of Act No. 496 (now Sec. 51 of P.D. 1529), provides that the registration of the deed is the operative act to bind or affect the land insofar as third persons are concerned.

But WHERE THE PARTY HAS KNOWLEDGE OF A PRIOR EXISTING INTEREST WHICH IS UNREGISTERED AT THE TIME HE ACQUIRED A RIGHT TO THE SAME LAND, HIS KNOWLEDGE OF THAT PRIOR UNREGISTERED INTEREST HAS THE EFFECT OF REGISTRATION AS TO HIM. The torrens system cannot be used as a shield for the commission of fraud.

As far as private respondent Zenaida Angeles and her husband Justiniano are concerned, the non-registration of the affidavit admitting their sale of a portion of 110 square meters of the subject land to petitioners cannot be invoked as a defense because (K)NOWLEDGE OF AN UNREGISTERED SALE IS EQUIVALENT TO REGISTRATION.

In fact the Spouses Fernandez executed an affidavit of acknowledgment.

ABRIGO vs DE VEYRA

BETWEEN TWO BUYERS OF THE SAME IMMOVABLE PROPERTY REGISTERED UNDER THE TORRENS SYSTEM, THE LAW GIVES OWNERSHIP PRIORITY TO (1) THE FIRST REGISTRANT IN GOOD FAITH; (2) THEN, THE FIRST POSSESSOR IN GOOD FAITH; AND (3) FINALLY, THE BUYER WHO IN GOOD FAITH PRESENTS THE OLDEST TITLE. THIS PROVISION, HOWEVER, DOES NOT APPLY IF THE PROPERTY IS NOT REGISTERED UNDER THE TORRENS SYSTEM.

Otherwise stated, the law provides that a double sale of immovables transfers ownership to (1) the first registrant in good faith; (2) then, the first possessor in good faith; and (3) finally, the buyer who in good faith presents the oldest title.

This principle is in full accord with Section 51 of PD 1529 which provides that no deed, mortgage, lease or other voluntary instrument -- except a will -- purporting to convey or affect registered land shall take effect as a conveyance or bind the land until its registration.

THUS, IF THE SALE IS NOT REGISTERED, IT IS BINDING ONLY BETWEEN THE SELLER AND THE BUYER BUT IT DOES NOT AFFECT INNOCENT THIRD PERSONS.

In the instant case, both Petitioners Abrigo and respondent registered the sale of the property. Since neither petitioners nor their predecessors (Tigno-Salazar and Cave-Go) knew that the property was covered by the Torrens system, they registered their respective sales under Act 3344.

For her part, respondent registered the transaction under the Torrens system because, during the sale, Villafania had presented the transfer certificate of title (TCT) covering the property.

It is undisputed that Villafania had been issued a free patent registered as Original Certificate of Title (OCT) No. P-30522. The OCT was later cancelled by Transfer Certificate of Title (TCT) No. 212598, also in Villafania’s name.

As a consequence of the sale, TCT No. 212598 was subsequently cancelled and TCT No. 22515 thereafter issued to respondent.

Soriano v. Heirs of Magali held that REGISTRATION MUST BE DONE IN THE PROPER REGISTRY IN ORDER TO BIND THE LAND. SINCE THE PROPERTY IN DISPUTE IN THE PRESENT CASE WAS ALREADY REGISTERED UNDER THE TORRENS SYSTEM, PETITIONERS’ REGISTRATION OF THE SALE UNDER ACT 3344 WAS NOT EFFECTIVE FOR PURPOSES OF ARTICLE 1544 OF THE CIVIL CODE.

PETITIONERS CANNOT VALIDLY ARGUE THAT THEY WERE FRAUDULENTLY MISLED INTO BELIEVING THAT THE PROPERTY WAS UNREGISTERED. A TORRENS TITLE, ONCE REGISTERED, SERVES AS A NOTICE TO THE WHOLE WORLD. ALL PERSONS MUST TAKE NOTICE, AND NO ONE CAN PLEAD IGNORANCE OF THE REGISTRATION.

Under the foregoing, the prior registration of the disputed property by the second buyer does not by itself confer ownership or a better right over the property. Article 1544 requires that such registration must be coupled with good faith.

Knowledge gained by the first buyer of the second sale cannot defeat the first buyer’s rights except where the second buyer registers in good faith the second sale ahead of the first, as provided by the Civil Code. Such knowledge of the first buyer does not bar her from availing of her rights under the law, among them, to register first her purchase as against the second buyer. But in converso, knowledge gained by the second buyer of the first sale defeats his rights even if he is first to register the second sale, since such knowledge taints his prior registration with bad faith. This is the price exacted by Article 1544 of the Civil Code for the second buyer being able to displace the first buyer; that before the second buyer can obtain priority over the first, he must show that he acted in good faith throughout (i.e. in ignorance of the first sale and of the first buyer’s rights) ---- from the time of acquisition until the title is transferred to him by registration, or failing registration, by delivery of possession.’” (Italics supplied)

Equally important, under Section 44 of PD 1529, every registered owner receiving a certificate of title pursuant to a decree of registration, and every subsequent purchaser of registered land taking such certificate for value and in good faith shall hold the same free from all encumbrances, except those noted and enumerated in the certificate. Thus, a person dealing with registered land is not required to go behind the registry to determine the condition of the property, since such condition is noted on the face of the register or certificate of title. Following this principle, this Court has consistently held as regards registered land that a purchaser in good faith acquires a good title as against all the transferees thereof whose rights are not recorded in the Registry of Deeds at the time of the sale.

THE REGISTRATION CONTEMPLATED UNDER ART. 1544 HAS BEEN HELD TO REFER TO REGISTRATION UNDER ACT 496 LAND REGISTRATION ACT (NOW PD 1529) WHICH CONSIDERS THE ACT OF REGISTRATION AS THE OPERATIVE ACT THAT BINDS THE LAND. ON LANDS COVERED BY THE TORRENS SYSTEM, THE PURCHASER ACQUIRES SUCH RIGHTS AND INTEREST AS THEY APPEAR IN THE CERTIFICATE OF TITLE, UNAFFECTED BY ANY PRIOR LIEN OR ENCUMBRANCE NOT NOTED THEREIN.

The purchaser is not required to explore farther than what the Torrens title, upon its face, indicates. The only exception is where the purchaser has actual knowledge of a flaw or defect in the title of the seller or of such liens or encumbrances which, as to him, is equivalent to registration.

SAN LORENZO DEVELOPMENT CORPORATION

THE LAW SPEAKS NOT ONLY OF ONE CRITERION. THE FIRST CRITERION IS PRIORITY OF ENTRY IN THE REGISTRY OF PROPERTY; THERE BEING NO PRIORITY OF SUCH ENTRY, THE SECOND IS PRIORITY OF POSSESSION; AND, IN THE ABSENCE OF THE TWO PRIORITIES, THE THIRD PRIORITY IS OF THE DATE OF TITLE, WITH GOOD FAITH AS THE COMMON CRITICAL ELEMENT. SINCE SLDC ACQUIRED POSSESSION OF THE PROPERTY IN GOOD FAITH IN CONTRAST TO BABASANTA, WHO NEITHER REGISTERED NOR POSSESSED THE PROPERTY AT ANY TIME, SLDC’S RIGHT IS DEFINITELY SUPERIOR TO THAT OF BABASANTA’S.

BABASANTA ONLY CAUSED THE ANNOTATION OF NOTICE OF LIS PENDENDS

CALALANG vs REGISTER OF DEEDS

CRUZ vs CABANA

Said respondents spouses were likewise the first to register the sale with right of repurchase in their favor on May 13, 1965 under Primary Entry No. 210113 of the Register of Deeds. They could not register the absolute deed of sale in their favor and obtain the corresponding transfer certificate of title because at that time the seller's duplicate certificate was still with the bank. But there is no question, and the lower courts so found conclusively as a matter of fact, that when petitioner Cruz succeeded in registering the later sale in his favor, he knew and he was informed of the prior sale in favor of respondents-spouses.

Respondent appellate court correctly held that such "KNOWLEDGE OF A PRIOR TRANSFER OF A REGISTERED PROPERTY BY A SUBSEQUENT PURCHASER MAKES HIM A PURCHASER IN BAD FAITH AND HIS KNOWLEDGE OF SUCH TRANSFER VITIATES HIS TITLE ACQUIRED BY VIRTUE OF THE LATTER INSTRUMENT OF CONVEYANCE WHICH CREATES NO RIGHT AS AGAINST THE FIRST PURCHASER."

JOAQUIN vs MADRID

WHEN THE INSTRUMENT PRESENTED IS FORGED, EVEN IF ACCOMPANIED BY THE OWNER'S DUPLICATE CERTIFICATE OF TITLE, THE REGISTERED OWNER DOES NOT THEREBY LOSE HIS TITLE, AND NEITHER DOES THE ASSIGNEE IN THE FORGED DEED ACQUIRE ANY RIGHT OR TITLE TO THE PROPERTY.

THE INNOCENT PURCHASER FOR VALUE PROTECTED BY LAW IS ONE WHO PURCHASES A TITLED LAND BY VIRTUE OF A DEED EXECUTED BY THE REGISTERED OWNER HIMSELF, NOT BY A FORGED DEED, AS THE LAW EXPRESSLY STATES.

MONUZ vs YABUT

IT HAS LONG BEEN INGRAINED IN OUR JURISPRUDENCE THAT A VOID TITLE MAY BECOME THE ROOT OF A VALID TITLE IF THE DERIVATIVE TITLE WAS OBTAINED IN GOOD FAITH AND FOR VALUE. FOLLOWING THE PRINCIPLE OF INDEFEASIBILITY OF A TITLE, EVERY PERSON DEALING WITH REGISTERED LANDS MAY SAFELY RELY ON THE CORRECTNESS OF THE CERTIFICATE OF TITLE OF THE VENDOR/TRANSFEROR, AND HE IS NOT REQUIRED TO GO BEYOND THE CERTIFICATE AND INQUIRE INTO THE CIRCUMSTANCES CULMINATING IN THE VENDOR’S ACQUISITION OF THE PROPERTY. THE RIGHTS OF INNOCENT THIRD PERSONS WHO RELIED ON THE CORRECTNESS OF THE CERTIFICATE OF TITLE AND ACQUIRED RIGHTS OVER THE PROPERTY COVERED THEREBY CANNOT BE DISREGARDED AND THE COURTS CANNOT ORDER THE CANCELLATION OF SUCH CERTIFICATE FOR THAT WOULD IMPAIR OR ERODE PUBLIC CONFIDENCE IN THE SYSTEM OF LAND REGISTRATION.

DURAN vs IAC

While it is true that under Art. 2085 of the Civil Code, it is essential that the mortgagor be the absolute owner of the property mortgaged, and while as between the daughter and the mother, it was the daughter who still owned the lots, STILL insofar as innocent third persons are concerned the owner was already the mother (Fe S. Duran) inasmuch as she had already become the registered owner (Transfer Certificates of Title Nos. 2418 and 2419).

The mortgagee had the right to rely upon what appeared in the certificate of title, and did not have to inquire further. If the rule were otherwise, the efficacy and conclusiveness of Torrens Certificate of Titles would be futile and nugatory. Thus the rule is simple: the fraudulent and forged document of sale may become the root of a valid title if the certificate has already been transferred from the name of the true owner to the name indicated by the forger (See De la Cruz v. Fable, 35 Phil. 144; Blondeau et al. v. Nano et al., 61 Phil. 625; Fule et al. v. Legare et al., 7 SCRA 351; see also Sec. 55 of Act No. 496, the Land Registration Act).

The fact that at the time of the foreclosure sale proceedings (1970-72) the mortgagees may have already known of the plaintiffs' claim is immaterial. What is important is that at the time the mortgage was executed, the mortgagees in good faith actually believed Fe S. Duran to be the owner, as evidenced by the registration of the property in the name of said Fe S. Duran.

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."

LAGROSA vs PANGILINAN

Petitioner Lagrosa's right to possess the subject property is clearly inferior to or inexistent in relation to Evelyn Arizapa Banua.

As correctly held by the lower courts, the "Deed of Real Estate Mortgage" executed by Julio Arizapa is null and void, the property mortgaged by Julio Arizapa being then owned by the City of Manila under Transfer Certificate of Title No. 91120.

For a person to validly constitute a valid mortgage on real estate, he must be the absolute owner thereof as required by Article 2085 of the Civil Code of the Philippines.

RURAL BANK of STA. IGNACIA vs DIMATULAC

In the present case, petitioner herein derived its title from the Valentin and Razon spouses, after an extrajudicial foreclosure sale. Under the law which permits a successor- in-interest to redeem the property sold on execution, the term "successor-in-interest" includes one to whom the debtor has transferred his statutory right of redemption; one to whom the debtor has conveyed his interest in the property for the purpose of redemption; or one who succeeds to the interest of the debtor by operation of law.

Petitioner acquired its title while CA-G.R. CV No. 14909 was pending before the Court of Appeals. To acquire title, the successor-in-interest must do so subsequent to the commencement of the action, and not before such commencement. Having derived little from the Spouses Valentin and Razon, whose title was nullified by the final and executory decision of the Court of Appeals in CA-G.R. CV No. 14909, the petitioner cannot escape the effect of the appellate court's judgment in said case. The rural bank as purchaser at an auction sale does not have a better right to said property than their predecessors-in-interest, namely the Valentin and Razon couple.

THE RULE THAT PERSONS DEALING WITH REGISTERED LANDS CAN RELY SOLELY ON THE CERTIFICATE OF TITLE DOES NOT APPLY TO BANKS. THE DEGREE OF DILIGENCE REQUIRED OF BANKS IS MORE THAN THAT OF A GOOD FATHER OF A FAMILY; IN KEEPING WITH THEIR RESPONSIBILITY TO EXERCISE THE NECESSARY CARE AND PRUDENCE IN DEALING EVEN WITH A REGISTERED OR TITLED PROPERTY.

THE BUSINESS OF A BANK IS AFFECTED WITH PUBLIC INTEREST, holding in trust the money of the depositors, which the bank should guard against loss due to negligence or bad faith. For this reason, the bank is not allowed to rely merely on the protective mantle of the land registration law, which is normally accorded only to purchasers or mortgagees for value and in good faith.

GONZALES vs IAC

The mortgage was duly constituted and registered with the Register of Deeds on May 28, 1971. The ejectment case which was filed by petitioner against the said spouses which petitioner claims should have put the respondent bank on its guard was annotated at the back of the subject title only on March 29, 1973. There was therefore nothing on the face of the title of the Panzos which would arouse the suspicion of the respondent bank. The certificate of title was in the name of the mortgagors when the land was mortgaged by them to respondent bank.

We agree with the trial court that the respondent Bank was not negligent in failing to consult a lawyer. The loan application of the Panzos was subjected to the rigid requirements of the bank. There was a physical inspection of the property. The loan application passed thru the scrutiny of the Credit Committee, the members of which are also the Directors of the Bank. The mortgage was then duly registered with the Register of Deeds.

RURAL BANK OF OROQUIETA

GUIDELINES

After the execution of a real estate mortgage, the mortgagor has an equity of redemption exercisable within the period stipulated in the mortgage deed.

In case of judicial foreclosure, that EQUITY OF REDEMPTION SUBSISTS AFTER THE SALE AND BEFORE IT IS CONFIRMED BY THE COURT.

However, in case of a judicial foreclosure of a mortgage in favor of a banking institution, section 78 of the General Banking law grants the mortgagor a right of redemption which may be exercised within one year from the sale.

Under section 3, Rule 68 of the Rules of Court, IT IS THE CONFIRMATION BY THE COURT OF THE AUCTION SALE THAT WOULD DIVEST THE SERRANO SPOUSES OF THEIR RIGHTS TO THE MORTGAGED LOT AND THAT WOULD VEST SUCH RIGHTS IN THE BANK AS PURCHASER AT THE AUCTION SALE.

The clause "subject to such rights of redemption as may be allowed by law", found in the last part of section 3, has not application to this case because the mortgagor did not exercise his right of redemption under section 78 of the General Banking Law.

What applies to this case is the settled rule that "a foreclosure sale is not complete until it is confirmed, and before said confirmation, the court retains control of the proceedings by exercising a sound discretion in regard to it, either granting or withholding confirmation as the rights and interests of the parties and the ends of justice may require." (Salazar vs. Torres, 108 Phil. 209, 214-5).

"In order that a foreclosure sale may be validly confirmed by the court, it is necessary that a hearing be given the interested parties, at which they may have an opportunity to show cause why the sale should not be confirmed." (Raymundo vs. Sunico, 25 Phil. 365).

"The acceptance of a bid at the foreclosure sale confers no title on the purchaser. Until the sale has been validly confirmed by the court, he is nothing more than a preferred bidder. Title vests only when the sale has been validly confirmed by the court." (Raymundo vs. Sunico, 25 Phil. 365).

The confirmation retroacts to the date of the sale (Villar vs. Javier de Paderanga, 97 Phil. 604, citing Binalbagan Estate, Inc. vs. Gatuslao, 74 Phil. 128).

A hearing should be held for the confirmation of the sale. The mortgagor should be notified of the hearing. Lack of notice vitiates the confirmation of the sale. The mortgagor may still redeem the mortgaged lot after the rendition of the order confirming the sale which is void for lack of hearing and notice to the mortgagor. (Grimalt vs. Velasquez and Sy Quio, 36 Phil. 936; Raymundo vs. Sunico, 25 Phil. 365).

Notice and hearing of a motion for confirmation of sale are essential to the validity of the order of confirmation, not only to enable the interested parties to resist the motion but also to inform them of the time when their right of redemption is cut off (Tinglao vs. Botones, 90 Phil. 275, 279).

An order of confirmation, void for lack of notice and hearing, may be set aside anytime (Tinglao vs. Botones, supra).

It is equally settled that after the foreclosure but before its confirmation, the court may grant the judgment debtor or mortgagor an opportunity to pay the proceeds of the sale and thus refrain from confirming it (Anderson and De Mesa vs. Reyes and Gutierrez Saenz, 54 Phil. 944, citing Grimalt vs. Velasquez and Sy Quio, 36 Phil. 936 and La Urbana vs. Belando, 54 Phil. 930). LexLib

 

If after the foreclosure sale and before the confirmation thereof, the mortgagee, as purchaser at the auction sale, sold the mortgaged property to another person, that subsequent sale does not render the foreclosure sale more effective. That subsequent sale does not prevent the trial court from granting the mortgagor a period within which to redeem the mortgaged lot by paying the judgment debt and the expenses of the sale and costs (Anderson and De Mesa vs. Reyes and Gutierrez Saenz, 54 Phil. 944).

"Whatever may have been the old rule by all of the modern authorities, it is the policy of the courts to assist rather than to defeat the right of redemption" (De Castro vs. Olondriz and Escudero, 50 Phil. 725, 732).

After the confirmation of the sale, made after hearing and with due notice to the mortgagor, the latter cannot redeem anymore the mortgaged lot (unless the mortgagee is a banking institution) (Piano vs. Cayanong, 117 Phil. 415).

It is after the confirmation of the sale that the mortgagor loses all interest in the mortgaged property (Clemente vs. H. E. Heacock Co., 106 Phil. 1163; Clemente vs. Court of Appeals, 109 Phil. 798; Clemente vs. H.E. Heacock Co., L-23212, May 18, 1967, 20 SCRA 115).

In the instant case, where the foreclosure sale has not yet been confirmed but the statutory one-year period for redemption expired and the mortgaged lot was sold by

the mortgagee (as the only bidder at the auction sale) to a third person, the trial court should give the purchaser a chance to be heard before requiring the mortgagee-bank to accept the redemption price tendered by the mortgagors.

SPS. BORROMEO vs CA

IN THIS CASE, PETITIONERS' RIGHTS TO THEIR PROPERTY IS RESTRICTED BY THE REM THEY EXECUTED OVER IT. UPON THEIR DEFAULT ON THE MORTGAGE DEBT, THE RIGHT TO FORECLOSE THE PROPERTY WOULD BE VESTED UPON THE CREDITOR-MORTGAGEE. NEVERTHELESS, THE RIGHT OF FORECLOSURE CANNOT BE EXERCISED AGAINST THE PETITIONERS BY ANY PERSON OTHER THAN THE CREDITOR-MORTGAGEE OR ITS ASSIGNS.

AN EXTRAJUDICIAL FORECLOSURE INSTITUTED BY A THIRD PARTY TO THE LOAN AGREEMENT AND THE REM WOULD, THEREFORE, BE A VIOLATION OF PETITIONERS' RIGHTS OVER THEIR PROPERTY.

It is clear that under Article 1311 of the Civil Code, contracts take effect only between the parties who execute them. Where there is no privity of contract, there is likewise no obligation or liability to speak about.

LANDRITO vs COURT OF APPEALS

In a long line of cases, this Court has consistently ruled that the one-year redemption period should be counted not from the date of foreclosure sale, but from the time the certificate of sale is registered with the Register of Deeds. Here, it is not disputed that the sheriff's certificate of sale was registered on 29 October 1993.

And under Article 13 of the New Civil Code, a year is understood to have three hundred sixty-five (365) days each. Thus, excluding the first day and counting from 30 October 1993 (under paragraph 3 of Article 13 of the New Civil Code), and bearing in mind that 1994 was a leap year, petitioners had only until 29 October 1994, the 365th day after registration of the sheriff's certificate of sale on 29 October 1993, within which to redeem the foreclosed property in accordance with law. And since 29 October 1994 fell on a Saturday, petitioners had until the following working day, 31 October 1994, within which to exercise their right of redemption.

From the foregoing, it is clear as day that even the complaint filed by the petitioners with the trial court on 09 November 1994 was instituted beyond the 1-year redemption period. In fact, petitioners no less acknowledged that their complaint for annulment of extrajudicial foreclosure and auction sale was filed about eleven (11) days after the redemption period had already expired on 29 October 1994. They merely harp on the alleged increase in the redemption price of the mortgaged property as the reason for their failure to redeem the same. However, and as already pointed out herein, they chose not, despite notice, to appear during the foreclosure proceedings.

Of course, petitioners presently insist that they requested for and were granted an extension of time within which to redeem their property, relying on a handwritten note allegedly written by Mrs. San

Diego's husband on petitioners' statement of account, indicating therein the date 11 November 1994 as the last day to pay their outstanding account in full. Even assuming, in gratia argumenti, that they were indeed granted such an extension, the hard reality, however, is that at no time at all did petitioners make a valid offer to redeem coupled with a tender of the redemption price.

YULIENCO vs COURT OF APPEALS

Petitioners assail the jurisdiction of the Quezon City RTC in taking cognizance of the present case on the ground that there is a pending case in the Makati RTC for injunction, reformation, and damages impugning the validity of the promissory notes and mortgage contracts used as basis for the foreclosure sale. They likewise lament that the grant of the writ and the displacement of petitioners from their residence on the basis of fraud smacks of deprivation of property without due process of law.

Petitioners' contention cannot stand judicial muster. Act 3135, otherwise known as "An Act to Regulate the Sale of Property under Special Powers Inserted in or Annexed to Real Estate Mortgages," mandates that jurisdiction over a petition for a writ of possession lies in the court of the province, city, or municipality where the property subject thereof is situated.

Since the land subject of the controversy is located in Quezon City, the city's RTC should rightly take cognizance of the case, to the exclusion of other courts.

Neither can this Court consider the pendency of Special Civil Case No. 93-2521 before Branch 61 of the Makati RTC a procedural obstacle. Said action for injunction, reformation, and damages does not raise an issue that constitutes a prejudicial question in relation to the present case.

The basic issue in the former is whether the promissory note and mortgage agreement executed between petitioners and private respondent ACC are valid. In the latter case, the issue is whether respondent, armed with a TCT in its name, is entitled to a writ of possession. Clearly, the two cases can proceed separately and take their own direction independently of each other. SDTIHA

In the present case, petitioners cannot anchor their case on the purported interest they have, as owners, over the land and the improvements thereon. They have been stripped of their rights over the property when, as mortgagors, they failed to redeem it after foreclosure took place. A mortgagor has only one year after registration of sale with the Register of Deeds within which to redeem the foreclosed real estate. After that one-year period, he loses all his interests over it.

WELL ESTABLISHED IS THE RULE THAT AFTER THE CONSOLIDATION OF TITLE IN THE BUYER'S NAME, FOR FAILURE OF THE MORTGAGOR TO REDEEM, THE WRIT OF POSSESSION BECOMES A MATTER OF RIGHT. ITS ISSUANCE TO A PURCHASER IN AN EXTRAJUDICIAL FORECLOSURE IS MERELY A MINISTERIAL FUNCTION. THE WRIT OF POSSESSION ISSUES AS A MATTER OF COURSE UPON THE FILING OF THE PROPER MOTION AND THE APPROVAL OF THE CORRESPONDING BOND. THE JUDGE ISSUING THE WRIT FOLLOWING THESE EXPRESS PROVISIONS OF LAW NEITHER EXERCISES HIS OFFICIAL DISCRETION NOR JUDGMENT. AS SUCH, THE COURT GRANTING THE WRIT CANNOT BE CHARGED WITH HAVING ACTED WITHOUT JURISDICTION OR WITH GRAVE ABUSE OF DISCRETION.

If only to stress the writ's ministerial character, we have, in a case more recent than Cometa, disallowed injunction prohibiting its issuance, just as we have held that its issuance may not be stayed by a pending action for annulment of mortgage or the foreclosure itself.

GUIDED BY THE FOREGOING PRINCIPLES, UNTIL THE FORECLOSURE SALE OF THE PROPERTY IN QUESTION IS ANNULLED BY A COURT OF COMPETENT JURISDICTION, PETITIONERS ARE BEREFT OF VALID TITLE AND RIGHT TO PREVENT THE ISSUANCE OF A WRIT OF POSSESSION TO RESPONDENT CORPORATION. UNTIL THEN, IT IS THE TRIAL COURT'S MINISTERIAL FUNCTION TO GRANT THE POSSESSORY WRIT TO SAID CORPORATION.

DE VERA vs AGLORO

Section 6 of Act No. 3135 provides that the mortgagor or his successor-in-interest may redeem the foreclosed property within one (1) year from the registration of the sale with the Register of Deeds.

Under Section 7 of the law, if the mortgagor fails to redeem the property, the buyer at public auction may file, with the RTC in the province or place where the property or portion thereof is located, an ex parte motion for the issuance of a writ of possession within one (1) year from the registration of the Sheriff's Certificate of Sale, and the court shall grant the said motion upon the petitioner's posting a bond in an amount equivalent to the use of the property for a period of twelve (12) months.

ON THE STRENGTH OF THE WRIT OF POSSESSION, THE SHERIFF IS DUTY-BOUND TO PLACE THE BUYER AT PUBLIC AUCTION IN ACTUAL POSSESSION OF THE FORECLOSED PROPERTY. AFTER THE ONE-YEAR PERIOD, THE MORTGAGOR LOSES ALL INTEREST OVER IT. THE PURCHASER, WHO HAS A RIGHT TO POSSESSION THAT EXTENDS AFTER THE EXPIRATION OF THE REDEMPTION PERIOD, BECOMES THE ABSOLUTE OWNER OF THE PROPERTY WHEN NO REDEMPTION IS MADE.

The purchaser can demand possession at any time following the consolidation of ownership in his name and the issuance to him of a new transfer certificate of title.

AFTER THE CONSOLIDATION OF TITLE IN THE BUYER'S NAME FOR FAILURE OF THE MORTGAGOR TO REDEEM THE PROPERTY, THE WRIT OF POSSESSION BECOMES A MATTER OF RIGHT. ITS ISSUANCE TO A PURCHASER IN AN EXTRAJUDICIAL FORECLOSURE SALE IS MERELY A MINISTERIAL FUNCTION.

In the present case, the petitioners-mortgagors failed to redeem the property within one (1) year from the registration of the Sheriff's Certificate of Sale with the Register of Deeds. The respondent, being the purchaser of the property at public auction, thus, had the right to file an ex parte motion for the issuance of a writ of possession; and considering that it was its ministerial duty to do so, the trial court had to grant the motion and to thereafter issue the writ of possession.

PHILIPPINE NATIONAL BANK vs IAC

It is undisputed that private respondent is a subsequent lien holder whose rights over the mortgaged property are inferior to that of petitioner as a mortgagee. Being a subsequent lien holder, private respondent acquires only the right of redemption vested in the mortgagor, and his rights are strictly subordinate to the superior lien of the anterior mortgagee. After the foreclosure sale, the remedy of the second mortgagee is limited to the right to redeem by paying off the debt secured by the first mortgage.

THE RULE IS THAT UPON A PROPER FORECLOSURE OF A PRIOR MORTGAGE, ALL LIENS SUBORDINATE TO THE MORTGAGE ARE LIKEWISE FORECLOSED, AND THE PURCHASER AT PUBLIC AUCTION HELD PURSUANT THERETO ACQUIRES TITLE FREE FROM THE SUBORDINATE LIENS. ORDINARILY, THEREAFTER THE REGISTER OF DEEDS IS AUTHORIZED TO ISSUE THE NEW TITLES WITHOUT CARRYING OVER THE ANNOTATION OF SUBORDINATE LIENS. IN A CASE WITH SIMILAR FEATURES, WE HAD EARLIER HELD THAT THE FAILURE OF THE SUBSEQUENT ATTACHING CREDITOR TO REDEEM, WITHIN THE TIME ALLOWED BY SECTION 6 OF ACT 3135, THE LAND WHICH WAS SOLD EXTRAJUDICIALLY TO SATISFY THE FIRST MORTGAGE, GIVES THE PURCHASER A PERFECT RIGHT TO SECURE THE CANCELLATION OF THE ANNOTATION OF SAID CREDITOR'S ATTACHMENT LIEN ON THE CERTIFICATES OF TITLE OF SAID LAND.

There being obviously no contractual stipulation therefor, personal notice is not necessary and what governs is the general rule in Section 3 of Act 3135, as amended, which directs the posting of notices of the sale in at least three (3) public places of the municipality where the property is situated, and the publication thereof in a newspaper of general circulation in said municipality.

CAVEAT EMPTOR- 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’s title takes all the risks and losses consequent to such failure.

GOLDEN HAVENS vs FILINVEST

Here, Filinvest was on notice that GHM had caused to be annotated on TCT 67462 RT-1, the mother title, as early as August 4, 1989 a notice of adverse claim covering Lot 6. This notwithstanding, Filinvest still proceeded to buy Lots 1, 2, 6, and 12 on September 10, November 18, and December 29, 1989.HCa

Filinvest of course contends that, although the title carried a notice of adverse claim, that notice was only with respect to seller Yap's interest in Lot 6 and it did not affect Lots 1, 2, 12, and the remaining interests in Lot 6. The Court disagrees.

THE ANNOTATION OF AN ADVERSE CLAIM IS INTENDED TO PROTECT THE CLAIMANT'S INTEREST IN THE PROPERTY. THE NOTICE IS A WARNING TO THIRD PARTIES DEALING WITH THE PROPERTY THAT SOMEONE CLAIMS AN INTEREST IN IT OR ASSERTS A BETTER RIGHT THAN THE REGISTERED OWNER. SUCH NOTICE CONSTITUTES, BY OPERATION OF LAW, NOTICE TO THE WHOLE WORLD. Here, although the notice of adverse claim pertained to only one lot and Filinvest wanted to acquire interest in some other lots under the same title, the notice served as warning to it that one of the owners was engaged in double selling.

PADILLA vs PHILS. PRODUCERS COOPERATIVE

Petitioner is correct in assailing as improper respondent's filing of a mere motion for the cancellation of the old TCTs and the issuance of new ones as a result of petitioner's refusal to surrender his owner's duplicate TCTs.

Indeed, this called for a separate cadastral action initiated via petition.

Section 107 of PD 1529, formerly Section 111 of Act 496, provides:

Sec. 107.Surrender of withheld duplicate certificates. — Where it is necessary to issue a new certificate of title pursuant to any involuntary instrument which divests the title of the registered owner against his consent or where a voluntary instrument cannot be registered by reason of the refusal or failure of the holder to surrender the owner's duplicate certificate of title, the party in interest may

file a petition in court to compel the surrender of the same to the Register of Deeds. The court, after hearing, may order the registered owner or any person withholding the duplicate certificate to surrender the same, and direct the entry of a new certificate or memorandum upon such surrender. If the person withholding the duplicate certificate is not amenable to the process of the court, or if for any reason the outstanding owner's duplicate certificate cannot be delivered, the court may order the annulment of the same as well as the issuance of a new certificate of title in lieu thereof. Such new certificate and all duplicates thereof shall contain a memorandum of the annulment of the outstanding duplicate.

 

Respondent alleges that it resorted to filing the contested motion because it could not obtain new certificates of title, considering that petitioner refused to surrender his owner's duplicate TCTs.

THE PROPER COURSE OF ACTION WAS TO FILE A PETITION IN COURT, RATHER THAN MERELY MOVE, FOR THE ISSUANCE OF NEW TITLES. This was the procedure followed in Blancaflor by Sarmiento Trading which was in more or less the same situation as the respondent in this case:

Petitioners' reliance on prescription and laches is unavailing in this instance. It was proper for Sarmiento Trading Corporation to file a petition with the Court of First Instance of Iloilo, acting as a cadastral court, for the cancellation of TCT No. 14749 in the name of Gaudencio Blancaflor and the issuance of another in its name. This is a procedure provided for under Section 78 of Act No. 496 and Section 75 of PD No. 1529. . .

Section 78 of Act 496 reads:

Sec. 78.Upon the expiration of the time, if any allowed by law for redemption after registered land has been sold on any execution, or taken or sold for the enforcement of any lien of any description, the person claiming under the execution or under any deed or other instrument made in the course of the proceedings to levy such execution or enforce any lien, may petition the court for the entry of a new certificate to him, and the application may be granted: Provided, however, That every new certificate entered under this section shall contain a memorandum of the nature of the proceeding on which it is based: Provided, further, That at any time prior to the entry of a new certificate the registered owner may pursue all his lawful remedies to impeach or annul proceedings under execution or to enforce liens of any description.

Section 75 of PD 1529 provides:

Sec. 75.Application for new certificate upon expiration of redemption period. — UPON THE EXPIRATION OF THE TIME, IF ANY, ALLOWED BY LAW FOR REDEMPTION AFTER THE REGISTERED LAND HAS BEEN SOLD ON EXECUTION, OR TAKEN OR SOLD FOR THE ENFORCEMENT OF A LIEN OF ANY DESCRIPTION, EXCEPT A MORTGAGE LIEN, THE PURCHASER AT SUCH SALE OR ANYONE CLAIMING UNDER HIM MAY PETITION THE COURT FOR THE ENTRY OF A NEW CERTIFICATE TO HIM.

Before the entry of a new certificate of title, the registered owner may pursue all legal and equitable remedies to impeach or annul such proceedings.

VIEWMASTER vs MAULIT

The respondent Register of Deeds of Las Piñas denied the request for annotation of the Notice of Lis Pendens on the following grounds:

1. the request for annotation and the complaint [do] not contain an adequate description of the subject property;

2. petitioner's action only has an incidental effect on the property in question.

The Court did not confine the availability of lis pendens to cases involving the title to or possession or real property. Thus, it held:

"According to Section 24, Rule 14 of the Rules of Court and Section 76 of Presidential Decree No. 1529, a notice of lis pendens in the following cases, viz.:

a) An action to recover possession of real estate;

b) An action to quite title thereto;

c) An action to remove clouds thereon;

d) An action for partition; and

e) Any other proceedings of any kind in Court directly affecting the title to the land or the use or occupation thereof or the buildings thereon."

ST. MARY’S vs RD of MAKATI

Considering that the dismissal of private respondent's Complaint by the RTC was appealed to the Court of Appeals, which Complaint refers to the properties covered by TCTs No. 175209, No. 220977, and No. 220978 that bear the annotations of lis pendens, and such properties therefore are irrefragably still the subject matter of litigation, the appellate court rightly saw the need for giving notice to the public of such a fact. The necessity becomes even more compelling considering that petitioner SMWSI had already entered into transactions with third parties involving the subject properties.

DE LA MERCED

A TRANSFEREE PENDENTE LITE OF REGISTERED LAND, WHOSE TITLE BEARS A NOTICE OF A PENDING LITIGATION INVOLVING HIS TRANSFEROR'S TITLE TO THE SAID LAND, IS BOUND BY THE OUTCOME OF THE LITIGATION, WHETHER IT BE FOR OR AGAINST HIS TRANSFEROR.

Given this principle, the modification of the final decision against the transferor in order to include the transferee pendente lite does not violate the doctrine of immutability of final judgments. His inclusion does not add to or change the judgment; it is only a legal consequence of the established doctrine that a final judgment binds the privy of a litigating party.

It is not disputed that petitioners caused the annotation of lis pendens on TCT No. 23554, which covers Lots 7 and 8 of Block 2, as early as September 21, 1984. 52 On July 29, 1985 and August 24, 1998, TCT No. 23554 was cancelled with respect to Lots 7 and 8 of Block 2 and new individual titles were issued to Victorino and Dimaguila. Both titles had the notice of lis pendens which was carried over from TCT No. 23554. Ineluctably, both Victorino and Dimaguila had notice of the litigation involving GSIS's ownership over the subject properties, and were bound by the outcome of the litigation.

WHEN A TRANSFEREE PENDENTE LITE TAKES PROPERTY WITH NOTICE OF LIS PENDENS, SUCH TRANSFEREE UNDERTAKES TO RESPECT THE OUTCOME OF THE LITIGATION. As held in Selph v. Vda. de Aguilar, 53 an order to cancel the transferor's title may be enforced against his transferee, whose title is expressly subject to the outcome of the litigation by the fact of the annotation of lis pendens.

The existence of these entries on Dimaguila's and Victorino's titles bars any defense of good faith 54 against petitioners and effectively makes Dimaguila and Victorino mere privies of GSIS and subject to whatever rights GSIS might have in the subject properties, which (as it turns out) is none at all. What Dimaguila and Victorino possess are derivative titles of the GSIS's title over Lots 7 and 8 of Block 2, which this Court has finally adjudicated to be null and void. Given the legal maxim that a spring cannot rise higher than its source, it follows that Dimaguila's and Victorino's titles, or any other title over the subject properties that are derived from TCT No. 23554 of the GSIS, are likewise null and void. As explained by this Court in another case, the title obtained by the transferee pendente lite affords him no special protection; he cannot invoke the rights of a purchaser in good faith and cannot acquire better rights than those of his predecessor-in-interest. 55

Admittedly, during the pendency of the case, respondents timely registered a notice of lis pendens to warn the whole world that the property was the subject of a pending litigation.

Lis pendens, which literally means pending suit, refers to the jurisdiction, power or control which a court acquires over property involved in a suit, pending the continuance of the action, and until final judgment. Founded upon public policy and necessity, lis pendens is intended to keep the properties in litigation within the power of the court until the litigation is terminated, and to prevent the defeat of the judgment or decree by subsequent alienation. . . . cAHIaE

The filing of a notice of lis pendens has a twofold effect: (1) to keep the subject matter of the litigation within the power of the court until the entry of the final judgment to prevent the defeat of the final judgment by successive alienations; and (2) to bind a purchaser, bona fide or not, of the land subject of the litigation to the judgment or decree that the court will promulgate subsequently.

This registration, therefore, gives the court clear authority to cancel the title of the spouses Vaca, since the sale of the subject property was made after the notice of lis pendens

TORRES vs CA

Moreover, even if We grant Mota the status of an innocent mortgagee, the doctrine relied upon by the appellate court that a forged instrument may become the root of a valid title, cannot be applied where the owner still holds a valid and existing certificate of title covering the same interest in a realty.

The doctrine would apply rather when, as in the case the forger thru insidious means obtains the owner's duplicate certificate of title, converts it in his name, and subsequently sells or otherwise encumbers it to an innocent holder for value, for in such a case the new certificate is binding upon the owner.

But if the owner holds a valid and existing certificate of title, his would be indefeasible as against the whole world, and not that of the innocent holder's. "Prior tempore potior jure"

The doctrine is that:

"The claim of indefeasibility of the petitioner's title under the Torrens land title system would be correct if previous valid title to the same parcel of land did not exist. The respondent had a valid title . . . It never parted with it; it never handed or delivered to anyone its owner's duplicate of the transfer certificate of title, it could not be charged with negligence in the keeping of its duplicate certificate of title or with any act which could have brought about the issuance of another certificate upon which a purchaser in good faith and for value could rely. If the petitioner's contention as to indefeasibility of his title should be upheld, then registered owners without the least fault on their part could be divested of their title and deprived of their property. Such disastrous results which would shake and destroy the stability of land titles had not been foreseen by those who had endowed with indefeasibility land titles issued under the Torres system. Veronica Bareza perpetrated the fraud by making false representations in her

petition and the title issued to her being the product of fraud could not vest in her valid and legal title to the parcel of land in litigation. As she had no title to the parcel of land, in the same way that a thief does not own or have title to the stolen goods, she could not transmit title which she did not have nor possess.