LTD Batch 2 cases.docx

8/14/2019 LTD Batch 2 cases.docx

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Republic of the PhilippinesSUPREME COURT

ManilaTHIRD DIVISION

G.R. No. 81163 September 26, 1988EDUARDO S. BARANDA and ALFONSO HITALIA, petitioners,

vs.HONORABLE JUDGE TITO GUSTILO, ACTING REGISTER OF DEEDS AVITO SACLAUSO,

HONORABLE COURT OF APPEALS, and ATTY. HECTOR P. TEODOSIO, respondents.

Eduardo S. Baranda for petitioners.Rico & Associates for private respondents.

GUTIERREZ, JR., J.:Eduardo S. Baranda and Alfonso Hitalia were the petitioners in G.R. No. 64432 and the privaterespondents in G.R. No. 62042. The subject matter of these two (2) cases and the instant case is thesame a parcel of land designated as Lot No. 4517 of the Cadastral Survey of Sta. Barbara, Iloilocovered by Original Certificate of Title No. 6406.The present petition arose from the same facts and events which triggered the filing of the earlierpetitions. These facts and events are cited in our resolution dated December 29, 1983 in G.R. No.64432, as follows:

. . . This case has its origins in a petition for reconstitution of title filed with theCourt of First Instance of Iloilo involving a parcel of land known as Lot No. 4517 ofthe Sta. Barbara Cadastre covered by Original Certificate of Title No. 6406 in the

name of Romana Hitalia. Eventually, Original Certificate of Title No. 6406 wascancelled and Transfer Certificate of Title No. 106098 was issued in the names of

Alfonso Hitalia and Eduardo S. Baranda The Court issued a writ of possessionwhich Gregorio Perez, Maria P. Gotera and Susana Silao refused to honor on theground that they also have TCT No. 25772 over the same Lot No. 4517. TheCourt, after considering the private respondents' opposition and finding TCT No.25772 fraudulently acquired, ordered that the writ of possession be carried out. Amotion for reconsideration having been denied, a writ of demolition was issued onMarch 29, 1982. Perez and Gotera filed a petition for certiorari and prohibition withthe Court of Appeals. On August 6, 1982, the Court of Appeals denied the petition.Perez and Gotera filed the petition for review on certiorari denominated as G.R.No. 62042 before the Supreme Court. As earlier stated the petition was denied ina resolution dated January 7,1983. The motion for reconsideration was denied in

another resolution dated March 25, 1983, which also stated that the denial is final.This decision in G.R. No. 62042, in accordance with the entry of judgment,became final on March 25, 1983. The petitioners in the instant case G.R. No.64432--contend that the writs of possession and demolition issued in therespondent court should now be implemented; that Civil Case No. 00827 beforethe Intermediate Appellate Court was filed only to delay the implementation of thewrit; that counsel for the respondent should be held in contempt of court forengaging in a concerted but futile effort to delay the execution of the writs ofpossession and demolition and that petitioners are entitled to damages because ofprejudice caused by the filing of this petition before the Intermediate AppellateCourt. On September 26, 1983, this Court issued a Temporary Restraining Order 'to maintain the status quo, both in the Intermediate Appellate Court and in theRegional Trial Court of Iloilo. Considering that (l)there is merit in the instant petitionfor indeed the issues discussed in G.R. No. 64432 as raised in Civil Case No.

00827 before the respondent court have already been passed upon in G.R. No.62042; and (2) the Temporary Restraining Order issued by the Intermediate

Appellate Court was only intended not to render the petition moot and academicpending the Court's consideration of the issues, the Court RESOLVED to DIRECTthe respondent Intermediate Appellate Court not to take cognizance of issuesalready resolved by this Court and accordingly DISMISS the petition in Civil CaseNo. 00827. Immediate implementation of the writs of possession and demolition islikewise ordered. (pp. 107-108, Rollo G.R. No. 64432)

On May 9, 1984, the Court issued a resolution denying with finality a motion for reconsideration of theDecember 29, 1983 resolution in G.R. No. 64432. On this same date, another resolution was issued, thistime in G.R. No. 62042, referring to the Regional Trial Court of Iloilo the ex-parte motion of the private

respondents (Baranda and Hitalia) for execution of the judgment in the resolutions dated January 7,1983 and March 9, 1983. In the meantime, the then Intermediate Appellate Court issued a resolutiondated February 10, 1984, dismissing Civil Case No. 00827 which covered the same subject matter asthe Resolutions above cited pursuant to our Resolution dated December 29, 1983. The resolution datedDecember 29, 1983 in G.R. No. 64432 became final on May 20, 1984.Upon motions of the petitioners, the Regional Trial Court of Iloilo, Branch 23 presided by Judge Tito G.Gustilo issued the following order:

Submitted are the following motions filed by movants Eduardo S. Baranda andAlfonso Hitalia through counsel dated August 28, 1984:(a) Reiterating Motion for Execution of Judgment of Resolutions dated January 7,1983 and March 9, 1983 Promulgated by Honorable Supreme Court (FirstDivision) in G.R. No. 62042;(b) Motion for Execution of Judgment of Resolution dated December 29, 1983Promulgated by Honorable Supreme Court (First Division) in G.R. No. 64432;

(c) The Duties of the Register of Deeds are purely ministerial under Act 496,therefore she must register all orders, judgment, resolutions of this Court and thatof Honorable Supreme Court.Finding the said motions meritorious and there being no opposition thereto, thesame is hereby GRANTED.WHEREFORE, Transfer Certificate of Title No. T-25772 is hereby declared nulland void and Transfer Certificate of Title No. T-106098 is hereby declared validand subsisting title concerning the ownership of Eduardo S. Baranda and AlfonsoHitalia, all of Sta. Barbara Cadastre.The Acting Register of Deeds of Iloilo is further ordered to register the Subdivision

Agreement of Eduardo S. Baranda and Alfonso Hitalia as prayed for." (p. 466,Rollo--G.R. No. 64432)

The above order was set aside on October 8, 1984 upon a motion for reconsideration and manifestation

filed by the Acting Registrar of Deeds of Iloilo, Atty. Helen P. Sornito, on the ground that there was apending case before this Court, an Action for Mandamus, Prohibition, Injunction under G.R. No. 67661filed by Atty. Eduardo Baranda, against the former which remained unresolved.In view of this development, the petitioners filed in G.R. No. 62042 and G.R. No. 64432 ex-parte motionsfor issuance of an order directing the Regional Trial Court and Acting Register of Deeds to execute andimplement the judgments of this Court. They prayed that an order be issued:

1. Ordering both the Regional Trial Court of Iloilo Branch XXIII, under Hon. JudgeTito G. Gustilo and the acting Register of Deeds Helen P. Sornito to register theOrder dated September 5, 1984 of the lower court;2. To cancel No.T-25772. Likewise to cancel No.T-106098 and once cancelled toissue new certificates of title to each of Eduardo S. Baranda and Alfonso Hitalia;Plus other relief and remedies equitable under the premises. (p. 473, 64432 Rollo)

Acting on these motions, we issued on September 17,1986 a Resolution in G.R. No. 62042 and G.R.No. 64432 granting the motions as prayed for. Acting on another motion of the same nature filed by the

petitioners, we issued another Resolution dated October 8, 1986 referring the same to the CourtAdministrator for implementation by the judge below.


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In compliance with our resolutions, the Regional Trial Court of Iloilo, Branch 23 presided by Judge TitoG. Gustilo issued two (2) orders dated November 6,1986 and January 6,1987 respectively, to wit:

O R D E RThis is an Ex-parte Motion and Manifestation submitted by the movants throughcounsel on October 20, 1986; the Manifestation of Atty. Helen Sornito, Register ofDeeds of the City of Iloilo, and formerly acting register of deeds for the Province ofIloilo dated October 23, 1986 and the Manifestation of Atty. Avito S. Saclauso,

Acting Register of Deeds, Province of Iloilo dated November 5, 1986.Considering that the motion of movants Atty. Eduardo S. Baranda and Alfonso

Hitalia dated August 12, 1986 seeking the full implementation of the writ ofpossession was granted by the Honorable Supreme Court, Second Division per itsResolution dated September 17,1986, the present motion is hereby GRANTED.WHEREFORE, the Acting Register of Deeds, Province of Iloilo, is hereby orderedto register the Order of this Court dated September 5, 1984 as prayed for.xxx xxx xxxO R D E RThis is a Manifestation and Urgent Petition for the Surrender of Transfer Certificateof Title No. T-25772 submitted by the petitioners Atty. Eduardo S. Baranda and

Alfonso Hitalia on December 2, 1986, in compliance with the order of this Courtdated November 25, 1 986, a Motion for Extension of Time to File Opposition filedby Maria Provido Gotera through counsel on December 4, 1986 which wasgranted by the Court pursuant to its order dated December 15, 1986. Consideringthat no Opposition was filed within the thirty (30) days period granted by the Court

finding the petition tenable, the same is hereby GRANTED.WHEREFORE, Maria Provido Gotera is hereby ordered to surrender TransferCertificate of Title No. T-25772 to this Court within ten (10) days from the date ofthis order, after which period, Transfer Certificate of Title No. T-25772 is herebydeclared annulled and the Register of Deeds of Iloilo is ordered to issue a newCertificate of Title in lieu thereof in the name of petitioners Atty. Eduardo S.Baranda and Alfonso Hitalia, which certificate shall contain a memorandum of theannulment of the outstanding duplicate. (pp. 286-287, Rollo 64432)

On February 9, 1987, Atty. Hector Teodosio, the counsel of Gregorio Perez, private respondent in G.R.No. 64432 and petitioner in G.R. No. 62042, filed a motion for explanation in relation to the resolutiondated September 17, 1986 and manifestation asking for clarification on the following points:

a. As to the prayer of Atty. Eduardo Baranda for the cancellation of TCT T-25772,should the same be referred to the Court of Appeals (as mentioned in the

Resolution of November 27, 1985) or is it already deemed granted by implication(by virtue of the Resolution dated September 17, 1986)?b. Does the Resolution dated September 17, 1986 include not only theimplementation of the writ of possession but also the cancellation of TCT T-25772and the subdivision of Lot 4517? (p. 536, Rollo 4432)

Acting on this motion and the other motions filed by the parties, we issued a resolution dated May 25,1987 noting all these motions and stating therein:

xxx xxx xxxSince entry of judgment in G.R. No. 62042 was made on January 7, 1983 and inG.R. No. 64432 on May 30, 1984, and all that remains is the implementation of ourresolutions, this COURT RESOLVED to refer the matters concerning theexecution of the decisions to the Regional Trial Court of Iloilo City for appropriateaction and to apply disciplinary sanctions upon whoever attempts to trifle with theimplementation of the resolutions of this Court. No further motions in these cases

will be entertained by this Court. (p. 615, Rollo-64432)

In the meantime, in compliance with the Regional Trial Court's orders dated November 6, 1986 andJanuary 6, 1987, Acting Register of Deeds AvitoSaclauso annotated the order declaring TransferCertificate of Title No. T-25772 as null and void, cancelled the same and i ssued new certificates of titlesnumbers T-111560, T-111561 and T-111562 in the name of petitioners Eduardo S. Baranda and AlfonsoHitalia in lieu of Transfer Certificate of TItle No. T-106098.However, a notice of lis pendens"on account of or by reason of a separate case (Civil Case No. 15871)still pending in the Court of Appeals" was carried out and annotated in the new certificates of titles issuedto the petitioners. This was upheld by the trial court after setting aside its earlier order dated February12, 1987 ordering the cancellation of lis pendens.

This prompted the petitioners to file another motion in G.R, No. 62042 and G.R. No. 64432 to order thetrial court to reinstate its order dated February 12, 1987 directing the Acting Register of Deeds to cancelthe notice of lis pendensin the new certificates of titles.In a resolution dated August 17, 1987, we resolved to refer the said motion to the Regional Trial Court ofIloilo City, Branch 23 for appropriate action.Since respondent Judge Tito Gustilo of the Regional Trial Court of Iloilo, Branch 23 denied thepetitioners' motion to reinstate the February 12, 1987 order in another o rder dated September 17, 1987,the petitioners filed this petition for certiorari, prohibition and mandamus with preliminary injunction tocompel the respondent judge to reinstate his order dated February l2, 1987 directing the Acting Registerof Deeds to cancel the notice of lis pendensannotated in the new certificates of titles issued in the nameof the petitioners.The records show that after the Acting Register of Deeds annotated a notice of ispendens on the newcertificates of titles issued in the name of the petitioners, the petitioners filed in the reconstitution case anurgent ex-parte motion to immediately cancel notice of lis pendens annotated thereon.

In his order dated February 12, 1987, respondent Judge Gustilo granted the motion and directed theActing Register of Deeds of Iloilo to cancel the lis pendens found on Transfer Certificate of Title Nos. T-106098; T-111560; T-111561 and T-111562.Respondent Acting Register of Deeds Avito Saclauso fil ed a motion for reconsideration of the February12, 1987 order stating therein:

That the undersigned hereby asks for a reconsideration of the said order based onthe second paragraph of Section 77 of P.D. 1529, to wit:

"At any time after final j udgment in favor of the defendant orother disposition of the action such as to terminate finally allrights of the plaintiff in and to the land and/or buildingsinvolved, in any case in which a memorandum or noticeof Lis Pendenshas been registered as provided in thepreceding section, the notice of Lis Pendensshall be

deemed cancelled upon the registration of a certificate of theclerk of court in which the action or proceeding was pendingstating the manner of disposal thereof."

That the lis pendens under Entry No. 427183 was annotated on T-106098, T-111560, T-111561 and T-111562 by virtue of a case docketed as Civil Case No.15871, now pending with the Intermediate Court of Appeals, entitled, "CalixtaProvido, Ricardo Provido, Sr., Maria Provido and Perfecto Provido, Plaintiffs,versus Eduardo Baranda and Alfonso Hitalia, Respondents."That under the above-quoted provisions of P.D. 152, the cancellation of subjectNotice of Lis Pendens can only be made or deemed cancelled upon theregistration of the certificate of the Clerk of Court in which the action or proceedingwas pending, stating the manner of disposal thereof.Considering that Civil Case No. 1587, upon which the Notice of Lis Pendens wasbased is still pending with the Intermediate Court of Appeals, only the Intermediate

Court of Appeals and not this Honorable Court in a mere cadastral proceedingscan order the cancellation of the Notice of Lis Pendens. (pp. 68-69, Rollo)


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Adopting these arguments and on the ground that some if not all of the plaintiffs in Civil Case No. 15871were not privies to the case affected by the Supreme Court resolutions, respondent Judge Tito Gustiloset aside his February 12, 1987 order and granted the Acting Register of Deeds' motion forreconsideration.The issue hinges on whether or not the pendency of the appeal in Civil Case No. 15871 with the Court of

Appeals prevents the court from cancelling the notice of lis pendens in the certificates of titles of thepetitioners which were earlier declared valid and subsisting by this Court in G.R. No. 62042 and G.R.No. 64432. A corollary issue is on the nature of the duty of a Register of Deeds to annotate or annul anotice of lis pendensin a torrens certificate of title.

Civil Case No. 15871 was a complaint to seek recovery of Lot No. 4517 of Sta. Barbara Cadastre Iloilo,(the same subject matter of G.R. No 62042 and G.R. No. 64432) from petitioners Baranda and Hitaliafiled by Calixta Provido, Ricardo Provido, Maxima Provido and Perfecta Provido before the RegionalTrial Court of Iloilo, Branch 23. At the instance of Atty. Hector P. Teodosio, the Provides' counsel, anotice of is pendens was annotated on petitioners' Certificate of Title No. T-106098 covering Lot No.4517, Sta. Barbara Cadastre.

Acting on a motion to dismiss filed by the petitioners, the court issued an order dated October 24, 1984dismissing Civil Case No. 15871.The order was then appealed to the Court of Appeals. This appeal is the reason why respondent JudgeGustilo recalled the February 12, 1987 order directing the Acting Register of Deeds to cancel the noticeof lis pendens annotated on the certificates of titles of the petitioners.This petition is impressed with merit.Maria Provido Gotera was one of the petitioners in G.R. No. 62042. Although Calixta Provido, RicardoProvido, Maxima Provido and Perfecta Provido, the plaintiffs in Civil Case No. 15871 were not

impleaded as parties, it is very clear in the petition that Maria Provido was acting on behalf of theProvidos who allegedly are her co-owners in Lot No. 4517, Sta. Barbara Cadastre as shown by TransferCertificate of Title No. T-25772 issued in her name and the names of the plaintiffs in Civil Case No.15871, among others. (Annex "E" G.R. No. 62042, p. 51, Rollo) In fact, one of the issues raised bypetitioners Maria Provido Gotera and Gregoria Perez in G.R. No. 62042 was as follows:

xxx xxx xxx2. Whether or not, in the same reconstitution proceedings, respondent JudgeMidpantao L. Adil had the authority to declare as null and void the transfercertificate of title in the name of petitioner Maria Provido Gotera and her other co-owners. (p. 3, Rollo; Emphasis supplied)

It thus appears that the plaintiffs in Civil Case No. 15871 were privies to G.R. No. 62042 contrary to thetrial court's findings that they were not.G.R. No. 62042 affirmed the order of the then Court of First Instance of Iloilo in the reconstitution

proceedings declaring TCT No. 25772 in the name of Providos over Lot No. 4517, Sta. BarbaraCadastre null and void for being fraudulently obtained and declaring TCT No. 106098 over the sameparcel Lot No. 4517, Sta. Barbara Cadastre in the name of petitioners Eduardo Baranda and AlfonsoHitalia valid and subsisting.The decision in G.R. No. 62042 became final and executory on March 25,1983 long before Civil CaseNo. 15871 was filed.Under these circumstances, it is crystal clear that the Providos, private respondents herein, in filing CivilCase No. 15871 were trying to delay the full implementation of the final decisions in G.R. No. 62042 aswell as G.R. No. 64432 wherein this Court ordered immediate implementation of the writs of possessionand demolition in the reconstitution proceedings involving Lot No. 4517, Sta. Barbara Cadastre.The purpose of a notice of lis pendensis defined in the following manner:

Lis pendenshas been conceived to protect the real rights of the party causing theregistration thereof With the lis pendens duly recorded, he could rest secure thathe would not lose the property or any part of it. For, notice of lis pendens serves

as a warning to a prospective purchaser or incumbrancer that the particularproperty is in litigation; and that he should keep his hands off the same, unless of

course he intends to gamble on the results of the litigation. (Section 24, Rule 14,RuIes of Court; Jamora v. Duran, et al., 69 Phil. 3, 11; I Martin, Rules of Court, p.415, footnote 3, citing cases.) (Natanov. Esteban, 18 SCRA 481, 485-486)

The private respondents are not entitled to this protection. The facts obtaining in this case necessitatethe application of the rule enunciated in the cases of Victoriano v. Rovila (55 Phil. 1000), MunicipalCouncil of Paranaque v. Court of First Instance of Rizal(70 Phil., 363) and Sarmiento v. Ortiz (10 SCRA158), to the effect that:

We have once held that while ordinarily a notice of pendency which has been filedin a proper case, cannot be cancelled while the action is pending and

undetermined, the proper court has the discretionary power to cancel it underpeculiar circumstances, as for instance, where the evidence so far presented bythe plaintiff does not bear out the main allegations of his complaint, and where thecontinuances of the trial, for which the plaintiff is responsible, are unnecessarilydelaying the determination of the case to the prejudice of the defendant.(Victoriano v. Rovira, supra; The Municipal Council of Paranaque v. Court of FirstInstance of Rizal, supra)

The facts of this case in relation to the earlier cases brought all the way to the Supreme Court illustratehow the private respondents tried to block but unsuccessfuly the already final decisions in G.R. No.62042 and G.R. No. 64432.Parenthetically, respondent Judge Tito Gustilo abused his discretion in sustaining the respondent ActingRegister of Deeds' stand that, the notice of lis pendens in the certificates of titles of the petitioners overLot No. 4571, Barbara Cadastre cannot be cancelled on the ground of pendency of Civil Case No. 15871with the Court of Appeals. In upholding the position of the Acting Register of Deeds based on Section 77

of Presidential Decree No. 1529, he conveniently forgot the first paragraph thereof which provides:Cancellation of lis pendens. Before final judgment, a notice of lis pendens maybe cancelled upon Order of the Court after proper showing that the notice is for thepurpose of molesting the adverse party, or that it is not necessary to protect therights of the party who caused it to be registered. It may also be cancelled by theRegister of Deeds upon verified petition of the party who caused the registrationthereof.

This Court cannot understand how respondent Judge Gustilo could have been misled by the respondentActing Register of Deeds on this matter when in fact he was the same Judge who issued the orderdismissing Civil Case No. 15871 prompting the private respondents to appeal said order dated October10, 1984 to the Court of Appeals. The records of the main case are still with the court below but basedon the order, it can be safely assumed that the various pleadings filed by the parties subsequent to themotion to dismiss filed by the petitioners (the defendants therein) touched on the issue of the validity of

TCT No. 25772 in the name of the Providos over Lot Number 4571, Sta. Barbara Cadastre in the light ofthe final decisions in G.R. No. 62042 and G.R. No. 64432.The next question to be determined is on the nature of the duty of the Register of Deeds to annotateand/or cancel the notice of lis pendensin a torrens certificate of title.Section 10, Presidential Decree No. 1529 states that "It shall be the duty of the Register of Deeds toimmediately register an instrument presented for registration dealing with real or personal property whichcomplies with all the requisites for registration. ... . If the instrument is not registrable, he shall forthwithdeny registration thereof and inform the presentor of such denial in writing, stating the ground or reasonstherefore, and advising him of his right to appeal by consulta in accordance with Section 117 of thisDecree."Section 117 provides that "When the Register of Deeds is in doubt with regard to the proper step to betaken or memoranda to be made in pursuance of any deed, mortgage or other instrument presented tohim for registration or where any party in interest does not agree with the action taken by the Register ofDeeds with reference to any such instrument, the question shall be submitted to the Commission of Land

Registration by the Register of Deeds, or by the party in interest thru the Register of Deeds. ... ."


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The elementary rule in statutory construction is that when the words and phrases of the statute are clearand unequivocal, their meaning must be determined from the language employed and the statute mustbe taken to mean exactly what it says. (Aparri v. Court of Appeals, 127 SCRA 231; Insular Bank of Asiaand America Employees' Union [IBAAEU] v. Inciong, 132 SCRA 663) The statute concerning thefunction of the Register of Deeds to register instruments in a torrens certificate of title is clear and leavesno room for construction. According to Webster's Third International Dictionary of the English Language the word shall means "ought to, must, ...obligation used to express a command or exhortation, usedin laws, regulations or directives to express what is mandatory." Hence, the function of a Register ofDeeds with reference to the registration of deeds encumbrances, instruments and the like is ministerial

in nature. The respondent Acting Register of Deeds did not have any legal standing to file a motion forreconsideration of the respondent Judge's Order directing him to cancel the notice oflispendensannotated in the certificates of titles of the petitioners over the subject parcel of land. In case ofdoubt as to the proper step to be taken in pursuance of any deed ... or other instrumentpresented tohim, he should have asked the opinion of the Commissioner of Land Registration now, the Administratorof the National Land Title and Deeds Registration Administration in accordance with Section 117 ofPresidential Decree No. 1529.In the ultimate analysis, however, the responsibility for the delays in the full implementation of thisCourt's already final resolutions in G.R. No. 62042 and G.R. No. 64432 which includes the cancellationof the notice of lis pendensannotated in the certificates of titles of the petitioners over Lot No. 4517 of theSta. Barbara Cadastre falls on the respondent Judge. He should never have allowed himself to becomepart of dilatory tactics, giving as excuse the wrong impression that Civil Case No. 15871 filed by theprivate respondents involves another set of parties claiming Lot No. 4517 under their own TorrensCertificate of Title.

WHEREFORE, the instant petition is GRANTED. The February 12, 1987 order of the Regional TrialCourt of Iloilo, Branch 23 is REINSTATED. All subsequent orders issued by the trial court which annulledthe February 12, 1987 order are SET ASIDE. Costs against the private respondents.SO ORDERED.


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ManilaSECOND DIVISION

G.R. No. 129760 December 29, 1998RICARDO CHENG, petitioner,

vs.RAMON B. GENATO and ERNESTO R. DA JOSE & SOCORRO DA JOSE,respondents.

MARTINEZ, J.:This petition for review on certiorari seeks to annul and set aside the Decision of the Court of Appeals(CA) 1dated July 7, 1997 in CA-G.R. No. CV No. 44706 entitled "Ricardo Cheng, plaintiff-appellee vs.Ramon B. Genato, defendant-appellant, Ernesto R. Da Jose & Socorro B. Da Jose, Intervenors-

Appellants" which reversed the ruling of the Regional Trial Court, Branch 96 of Quezon City datedJanuary 18, 1994. The dispositive portion of the CA Decision reads:

WHEREFORE, based on the foregoing, appealed decision i s hereby REVERSEDand SET ASIDE and judgment is rendered ordering;1. The dismissal of the complaint;2. The cancellation of the annotations of the defendant-appellant's Affidavit to

Annul Contract to Sell and plaintiff-appellee's Notice of Adverse Claim in thesubject TCT's, namely, TCT No. T-76.196 (M) and TCT No. T-76.197 (M);3. Payment by the intervenors-appellants of the remaining balance of the purchase

price pursuant to their agreement with the defendant-appellant to suspendencashment of the t hree post-dated checks issued since 1989.4. Ordering the execution by the defendant-appellant Genato of the Deed of

Absolute Sale over the subject two lots covered by TCT No. T-76.196 (M) andTCT No. T-76.197 (M) in favor of intervenors-appellants Spouses Da Jose;5. The return by defendant-appellant Genato of the P50,000.00 paid to him by theplaintiff-appellee Cheng, and6. Payment by plaintiff-appellee Cheng of moral damages to herein intervenors-appellants Da Jose of P100,000.00, exemplary damages of P50,000.00, attorney'sfees of P50,000.00, and costs of suit; and to defendant-appellant, of P100,000.00in exemplary damages, P50,000.00 in attorney's fees. The amounts payable to thedefendant-appellant may be compensated by plaintiff appellee with the amountordered under the immediately foregoing paragraph which defendant-appellant

has to pay the plaintiff-appellee.SO ORDERED. 2The antecedents of the case are as follows:Respondent Ramon B. Genato (Genato) is the owner of two parcels of land located at Paradise Farms,San Jose del Monte, Bulacan covered by TCT No. T-76.196 (M) 3and TCT No. T-76.197 (M) 4with anaggregate area of 35,821square meters, more or less.On September 6, 1989, respondent Genato entered into an agreement with respondent-spousesErnesto R. Da Jose and Socorro B. Da Jose (Da Jose spouses) over the above-mentioned two parcelsof land. The agreement culminated in the execution of a contract to sell for which the purchase price wasP80.00 per square meter. The contract was in a public instrument and was duly annotated at the back ofthe two certificates of title on the same day. Clauses 1and 3 thereof provide:

1. That the purchase price shall be EIGHTY (P80.00) PESOS, Philippine Currencyper square meter, of which the amount of FIFTY THOUSAND (P50,000.00)PESOS shall be paid by the VENDEE to the VENDOR as partial down payment at

the time of execution of this Contract to Sell.xxx xxx xxx

3. That the VENDEE, Thirty (30) DAYS after the execution of this contract, andonly after having satisfactorily verified and confirmed the truth and authenticity ofdocuments, and that no restrictions, limitations, and developments imposed onand/or affecting the property subject of this contract shall be detrimental to hisinterest, the VENDEE shall pay to the VENDOR, NINE HUNDRED FIFTYTHOUSAND (P950,00.00) PESOS. Philippine Currency, representing the fullpayment of the agreed Down Payment, after which complete possession of theproperty shall be given to the VENDEE to enable him to prepare the premises andany development therein.

On October 4, 1989, the Da Jose spouses, not having finished verifying the titles mentioned in clause 3as aforequoted, asked for and was granted by respondent Genato an extension of another 30 days oruntil November 5, 1989. However, according to Genato, the extension was granted on condition that anew set of documents is made seven (7) days from October 4, 1989. 6This was denied by the Da Josespouses.Pending the effectivity of the aforesaid extension period, and without due notice to the Da Jose spouses,Genato executed an Affidavit to Annul the Contract to Sell, 7 on October 13, 1989. Moreover, noannotation of the said affidavit at the back of his titles was made right away. The affidavit contained, interalia, the following paragraphs;

xxx xxx xxxThat it was agreed between the parties that the agreed downpayment ofP950,000.00 shall be paid thirty (30) days after the execution of the Contract, thatis on or before October 6, 1989;The supposed VENDEES failed to pay the said full downpayment even up to this

writing, a breach of contract;That this affidavit is being executed to Annul the aforesaid Contract to Sell for thevendee having committed a breach of contract for not having complied with theobligation as provided in the Contract to Sell; 8

On October 24, 1989, herein petitioner Ricardo Cheng (Cheng) went to Genato's residence andexpressed interest in buying the subject properties. On that occasion, Genato showed to Ricardo Chengcopies of his transfer certificates of title and the annotations at the back thereof of his contract to sell withthe Da Jose spouses. Genato also showed him the aforementioned Affidavit to Annul the Contract toSell which has not been annotated at the back of the titles.Despite these, Cheng went ahead and issued a check for P50,000.00 upon the assurance by Genatothat the previous contract with the Da Jose spouses will be annulled for which Genato issued ahandwritten receipt (Exh. "D"), written in this wise:

10/24/89

Received from Ricardo Chengthe Sum of Fifty Thousand Only (P50.000-)as partial for T-76196 (M)T-76197 (M) area 35.821 Sq.m.Paradise Farm, Gaya-Gaya, San Jose Del MonteP70/m2 Bulacanplus C. G. T. etc.Check # 470393 (SGD.) Ramon B. Genato10/24/89 9

On October 25, 1989, Genato deposited Cheng's check. On the same day, Cheng called up Genatoreminding him to register the affidavit to annul the contract to sell. 10The following day, or on October 26, 1989, acting on Cheng's request, Genato caused the registration ofthe Affidavit to Annul the Contract to Sell in the Registry of Deeds, Meycauayan, Bulacan as primaryentry No. 262702. 11

While the Da Jose spouses were at the Office of the Registry of Deeds of Meycauayan, Bulacan onOctober 27, 1989, they met Genato by coincidence. It was only then that the Da Jose spouses


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discovered about the affidavit to annul their contract. The latter were shocked at the disclosure andprotested against the rescission of their contract. After being reminded that he (Genato) had given them(Da Jose spouses) an additional 30-day period to finish their verification of his titles, that the period wasstill in effect, and that they were willing and able to pay the balance of the agreed down payment, lateron in the day, Genato decided to continue the Contract he had with them. The agreement to continuewith their contract was formalized in a conforme letter dated October 27, 1989.Thereafter, Ramon Genato advised Ricardo Cheng of his decision to continue his contract with the DaJose spouses and the return of Cheng's P50,000.00 check. Consequently, on October 30, 1989,Cheng's lawyer sent a letter 12to Genato demanding compliance with their agreement to sell theproperty to him stating that the contract to sell between him and Genato was already perfected andthreatening legal action.On November 2, 1989, Genato sent a letter 13to Cheng (Exh. "6") enclosing a BPI Cashier's Check forP50,000.00 and expressed regret for his inability to "consummate his transaction" with him. After havingreceived the letter of Genato on November 4, 1989, Cheng, however, returned the said check to theformer via RCPI telegram 14dated November 6, 1989, reiterating that "our contract to sell your propertyhad already been perfected."Meanwhile, also on November 2, 1989, Cheng executed an affidavit of adverse claim 15and had itannotated on the subject TCT's.On the same day, consistent with the decision of Genato and the Da Jose spouses to continue with theirContract to Sell of September 6, 1989, the Da Jose spouses paid Genato the complete down payment ofP950,000.00 and delivered to him three (3) postdated checks (all dated May 6, 1990, the stipulated duedate) in the total amount of P1,865,680.00 to cover full payment of the balance of the agreed purchaseprice. However, due to the filing of the pendency of this case, the three (3) postdated checks have not

been encashed.On December 8, 1989, Cheng instituted a complaint 16for specific performance to compel Genato toexecute a deed of sale to him of the subject properties plus damages and prayer for preliminaryattachment. In his complaint, Cheng averred that the P50,000.00 check he gave was a partial paymentto the total agreed purchase price of the subject properties and considered as an earnest money forwhich Genato acceded. Thus, their contract was already perfected.In Answer 17 thereto, Genato alleged that the agreement was only a simple receipt of an option-biddeposit, and never stated that it was a partial payment, nor is it an earnest money and that it was subjectto condition that the prior contract with the Da Jose spouses be first cancelled.The Da Jose spouses, in their Answer in Intervention, 18asserted that they have a superior right to theproperty as first buyers. They alleged that the unilateral cancellation of the Contract to Sell was withouteffect and void. They also cited Cheng's bad faith as a buyer being duly informed by Genato of theexisting annotated Contract to Sell on the titles.

After trial on the merits, the lower court ruled that the receipt issued by Genato to Cheng unerringlymeant a sale and not just a priority or an option to buy. It cannot be true that the transaction wassubjected to some condition or reservation, like the priority in favor of the Da Jose spouses as first buyerbecause, if it were otherwise, the receipt would have provided such material condition or reservation,especially as it was Genato himself who had made the receipt in his own hand. It also opined that therewas a valid rescission of the Contract to Sell by virtue of the Affidavit to Annul the Contract to Sell. Timewas of the essence in the execution of the agreement between Genato and Cheng, under thiscircumstance demand, extrajudicial or judicial, is not necessary. It falls under the exception to the ruleprovided in Article 1169 19of the Civil Code. The right of Genato to unilaterally rescind the contract issaid to be under Article 1191 20of the Civil Code. Additionally, after reference was made to thesubstance of the agreement between Genato and the Da Jose spouses, the lower court also concludedthat Cheng should be preferred over the intervenors-Da Jose spouses in the purchase of the subjectproperties. Thus, on January 18, 1994 the trial court rendered its decision the decretal portion of whichreads:

WHEREFORE, judgment is hereby rendered:

1. Declaring the contract to sell dated September 6, 1989 executed betweendefendant Ramon Genato, as vendor, and intervenors Spouses Ernesto andSocorro Da Jose, as vendees, resolved and rescinded in accordance with Art.1191, Civil Code, by virtue of defendant's affidavit to annul contract to sell datedOctober 13, 1989 and as the consequence of intervenors' failure to execute withinseven (7) days from October 4, 1989 another contract to sell pursuant to theirmutual agreement with defendant;2. Ordering defendant to return to the intervenors the sum of P1,000,000.00, plusinterest at the legal rate from November 2, 1989 until full payment;3. Directing defendant to return to the intervenors the three (3) postdated checksimmediately upon finality of this judgment;4. Commanding defendant to execute with and in favor of the plaintiff RicardoCheng, as vendee, a deed of conveyance and sale of the real propertiesdescribed and covered in Transfer Certificates of Title No. T-76-196 (M) and T-76.197 (M) of the Registry of Deeds of Bulacan, Meycauayan Branch, at the rateof P70.000/square meter, less the amount of P50,000.00 alreaddy paid todefendant, which is considered as part of the purchase price, with the plaintiffbeing liable for payment of the capital gains taxes and other expenses of thetransfer pursuant to the agreement to sell dated October 24, 1989; and5 Ordering defendant to pay the plaintiff and the intervenors as follows:

a/ P50,000.00, as nominal damages,to plaintiff;b/ P50,000.00, as nominal damages,

to intervenors;c/ P20,000.00, as and for attorney'sfees, to plaintiff;d/ P20,000.00, as and for attorney'sfees, to intervenors; ande/ Cost of the suit.

xxx xxx xxxNot satisfied with the aforesaid decision, herein respondents Ramon Genato and Da Jose spousesappealed to the court a quowhich reversed such judgment and ruled that the prior contract to sell infavor of the Da Jose spouses was not validly rescinded; that the subsequent contract to sell betweenGenato and Cheng, embodied in the handwritten receipt, was without force and effect due to the failureto rescind the prior contract; and that Cheng should pay damages to the respondents herein being foundto be in bad faith.

Hence this petition.21

This petition for review, assails the Court of Appeals' Decision on the following grounds: (1) that the DaJose spouses' Contract to Sell has been validly rescinded or resolved; (2) that Ricardo Cheng's owncontract with Genato was not just a contract to sell but one of conditional contract of sale which gave himbetter rights, thus precluding the application of the rule on double sales under Article 1544, Civil Code;and (3) that, in any case, it was error to hold him l iable for damages.The petition must be denied for failure to show that the Court of Appeals committed a reversible errorwhich would warrant a contrary ruling.No reversible error can be ascribed to the ruling of the Court of Appeals that there was no valid andeffective rescission or resolution of the Da Jose spouses Contract to Sell, contrary to petitioner'scontentions and the trial court's erroneous ruling.In a Contract to Sell, the payment of the purchase price is a positive suspensive condition, the failure ofwhich is not a breach, casual or serious, but a situation that prevents the obligation of the vendor toconvey title from acquiring an obligatory force.22It is one where the happening of the event gives rise to

an obligation. Thus, for its non-fulfillment there will be no contract to speak of, the obligor having failed toperform the suspensive condition which enforces a juridical relation. In fact with this ci rcumstance, there


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can be no rescission of an obligation that is still non-existent, the suspensive condition not havingoccurred as yet.23Emphasis should be made that the breach contemplated in Article 1191 of the NewCivil Code is the obligor's failure to comply with an obligation already extant, not a failure of a conditionto render binding that obligation.24Obviously, the foregoing jurisprudence cannot be made to apply to the situation in the instant casebecause no default can be ascribed to the Da Jose spouses since the 30-day extension period has notyet expired. The Da Jose spouses' contention that no further condition was agreed when they weregranted the 30-days extension period from October 7, 1989 in connection with clause 3 of their contractto sell dated September 6, 1989 should be upheld for the following reason, to wit;firstly, If this were nottrue, Genato could not have been persuaded to continue his contract with them and later on agree toaccept the full settlement of the purchase price knowing fully well that he himself imposed such sine quanoncondition in order for the extension to be valid; secondly, Genato could have immediately annotatedhis affidavit to annul the contract to sell on his title when it was executed on October 13, 1989 and notonly on October 26, 1989 after Cheng reminded him of the annotation; thirdly, Genato could have sent atleast a notice of such fact, there being no stipulation authorizing him for automatic rescission, so as tofinally clear the encumbrance on his titles and make it available to other would be buyers. It likewisesettles the holding of the trial court that Genato "needed money urgently."Even assuming in gratia argumentithat the Da Jose spouses defaulted, as claimed by Genato, in theirContract to Sell, the execution by Genato of the affidavit to annul the contract is not even called for. Forwith or without the aforesaid affidavit their non-payment to complete the full downpayment of thepurchase price ipso factoavoids their contract to sell, i t being subjected to a suspensive condition. Whena contract is subject to a suspensive condition, its birth or effectivity can take place only i f and when theevent which constitutes the condition happens or is fulfilled.25If the suspensive condition does not take

place, the parties would stand as if the conditional obligation had neverexisted. 26Nevertheless, this being so Genato is not relieved from the giving of a notice, verbal or written, to the DaJose spouses for his decision to rescind their contract. In many cases, 27 even though we upheld thevalidity of a stipulation in a contract to sell authorizing automatic rescission for a violation of its terms andconditions, at least a written notice must be sent to the defaulter informing him of the same. The act of aparty in treating a contract as cancelled should be made known to the other. 28For such act is alwaysprovisional. It is always subject to scrutiny and review by the courts in case the alleged defaulter bringsthe matter to the proper courts. In University of the Philippines vs. De Los Angeles,29this Court stressedand we quote:

In other words, the party who deems the contract violated may consider it resolvedor rescinded, and act accordingly, without previous court action, but it proceeds atits own risk. For it is only the final judgment of the corresponding court that will

conclusively and finally settle whether the action taken was or was not correct inlaw. But the law definitely does not require that the contracting party who believesitself injured must first file suit and wait for a judgment before taking extrajudicialsteps to protect its interest. Otherwise, the party injured by the other's breach willhave to passively sit and watch its damages accumulate during the pendency ofthe suit until the final judgment of rescission is rendered when the law itselfrequires that he should exercise due diligence to minimize its own damages (CivilCode, Article 2203).

This rule validates, both in equity and justice, contracts such as the one at bat, in order to avoid andprevent the defaulting party from assuming the offer as still in effect due to the obligee's tolerance forsuch non-fulfillment. Resultantly, litigations of this sort shall be prevented and the relations amongwould-be parties may be preserved. Thus, Ricardo Cheng's contention that the Contract to Sell betweenGenato and the Da Jose spouses was rescinded or resolved due to Genato's unilateral rescission findsno support in this case.

Anent the issue on the nature of the agreement between Cheng and Genato, the records of this case arereplete with admissions30that Cheng believed it to be one of a Contract to Sell and not one of

Conditional Contract of Sale which he, in a transparent turn-around, now pleads in this Petition. Thisambivalent stance of Cheng is even noted by the appellate court, thus:

At the outset, this Court notes that plaintiff-appellee was inconsistent incharacterizing the contract he allegedly entered into. In his complaint. 31Chengalleged that the P50,000.00 down payment was earnest money. And next, histestimony32was offered to prove that the transaction between him and Genato onOctober 24, 1989 was actually a perfected contract to sell.33

Settled is the rule that an issue which was not raised during the trial in the court below cannot be raisedfor the first time on appeal.34Issues of fact and arguments not adequately brought to the attention of thetrial court need not be and ordinarily will not be considered by a reviewing court as they cannot be raisedfor the first time on appeal.35In fact, both courts below correctly held that the receipt which was theresult of their agreement, is a contract to sell. This was, in fact Cheng's contention in his pleadingsbefore said courts. This patent twist only operates against Cheng's posture which is indicative of theweakness of his claim.But even if we are to assume that the receipt, Exh. "D," is to be treated as a conditional contract of sale,it did not acquire any obligatory force since it was subject to suspensive condition that the earliercontract to sell between Genato and the Da Jose spouses should first be cancelled or rescinded acondition never met, as Genato, to his credit, upon realizing his error, redeemed himself by respectingand maintaining his earlier contract with the Da Jose spouses. In fact, a careful reading of the receipt,Exh. "D," alone would not even show that a conditional contract of sale has been entered by Genato andCheng. When the requisites of a valid contract of sale are lacking in said receipt, therefore the "sale" isneither valid or enfoceable.36To support his now new theory that the transaction was a conditional contract of sale, petitioner invokes

the case of Coronel vs. Court of Appeals37as the law that should govern their Petition. We do not agree.Apparently, the factual milieu in Coronel is not on all fours with those in the case at bar.In Coronel, this Court found that the petitioners therein clearly intended to transfer title to the buyerwhich petitioner themselves admitted in their pleading. The agreement of the parties therein wasdefinitively outlined in the "Receipt of Down Payment" both as to property, the purchase price, thedelivery of the seller of the property and the manner of the transfer of title subject to the specificcondition that upon the transfer in their names of the subject property the Coronels will execute the deedof absolute sale.Whereas, in the instant case, even by a careful perusal of the receipt, Exh. "D," alone such kind ofcircumstances cannot be ascertained without however resorting to the exceptions of the Rule on ParolEvidence.To our mind, the trial court and the appellate court correctly held that the agreement between Genatoand Cheng is a contract to sell, which was, in fact, petitioner connection in his pleadings before the said

courts. Consequently, both to mind, which read:Art. 1544. If the same thing should have been sold to different vendees, theownership shall be transferred to the person who may have first taken possessionthereof in good faith, if i t should be movable property.Should it be immovable property, the ownership shall belong to the personacquiring it who in good faith first recorded it in the Registry of Property.Should there be no inscription, the ownership shall pertain to the person who ingood faith was first in possession; and in the absence thereof, to the person whopresents he oldest title, provided there is good faith.

However, a meticulous reading of the aforequoted provision shows that said law is not apropos to theinstant case. This provision connotes that the following circumstances must concur:

(a) The two (or more) sales transactions in issue must pertain to exactly the samesubject matter, and must be valid sales transactions.(b) The two (or more) buyers at odds over the rightful ownership of the subject

matter must each represent conflicting interests; and


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(c) The two (or more) buyers at odds over the rightful ownership of the subjectmatter must each have bought from the very same seller.

These situations obviously are lacking in a contract to sell for neither a transfer of ownership nor a salestransaction has been consummated. The contract to be binding upon the obligee or the vendor dependsupon the fulfillment or non-fulfillment of an event.Notwithstanding this contrary finding with the appellate court, we are of the view that the governingprinciple of Article 1544, Civil Code, should apply in this situation. Jurisprudence 38teaches us that thegoverning principle is PRIMUS TEMPORE, PORTIOR JURE (first in time, stronger in right). For not onlywas the contract between herein respondents first in time; it was also registered long before petitioner'sintrusion as a second buyer. This principle only applies when the special rules provided in the aforcitedarticle of the Civil Code do not apply or fit the specific circumstances mandated under said law or by

jurisprudence interpreting the article.The rule exacted by Article 1544 of the Civil Code for the second buyer to be able to displace the firstbuyer are:(1) that the second buyer must show that he acted in good faith (i.e. in ignorance of the first sale and ofthe first buyer's rights) from the time of acquisition until title is transferred to him by registration or failingregistration, by delivery of possession;39(2) the second buyer must show continuing good faith and innocence or lack of knowledge of the firstsale until his contract ripens into full ownership through prior registration as provided by law.40Thus, in the case at bar, the knowledge gained by the Da Jose spouses, as first buyers, of the newagreement between Cheng and Genato will not defeat their rights as first buyers except where Cheng,as second buyer, registers or annotates his transaction or agreement on the title of the subjectproperties in good faith ahead of the Da Jose spouses. Moreover, although the Da Jose spouses, as first

buyers, knew of the second transaction it will not bar them from availing of their rights granted by law,among them, to register first their agreement as against the second buyer.In contrast, knowledge gained by Cheng of the first transaction between the Da Jose spouses andGenato defeats his rights even if he is first to register the second transaction, since such knowledgetaints his prior registration with bad faith."Registration", as defined by Soler and Castillo, means any entry made in the books of the registry,including both registration in its ordinary and strict sense, and cancellation, annotation, and evenmarginal notes.41In its strict acceptation, it is the entry made in the registry which records solemnly andpermanently the right of ownership and other real rights.42We have ruled43before that when a Deed ofSale is inscribed in the registry of property on the original document itself, what was done with respect tosaid entries or annotations and marginal notes amounted to a registration of the sale. In this light, wesee no reason why we should not give priority in right the annotation made by the Da Jose spouses withrespect to their Contract to Sell dated September 6, 1989.Moreover, registration alone in such cases without good faith is not sufficient. Good faith must concurwith registration for such prior right to be enforceable. In the instant case, the annotation made by the DaJose spouses on the titles of Genato of their "Contract To Sell" more than satisfies this requirement.Whereas in the case of Genato's agreement with Cheng such is unavailing. For even before the receipt,Exh. "D," was issued to Cheng information of such pre-existing agreement has been brought to hisknowledge which did not deter him from pursuing his agreement with Genato. We give credence to thefactual finding of the appellate court that "Cheng himself admitted that it was he who sought Genato inorder to inquire about the property and offered to buy the same.44And since Cheng was fully aware, orcould have been if he had chosen to inquire, of the rights of the Da Jose spouses under the Contract toSell duly annotated on the transfer certificates of titles of Genato, it now becomes unnecessary to furtherelaborate in detail the fact that he is indeed in bad faith in entering into such agreement. As we haveheld in Leung Yee vs. F.L. Strong Machinery Co.:45

One who purchases real estate with knowledge of a defect . . . of title in his vendorcannot claim that he has acquired title thereto in good faith as against . . . . an

interest therein; and the same rule must be applied to one who has knowledge offacts which should have put him upon such inquiry and investigation as might be

necessary to acquaint him with the defects in the title of his vendor. A purchasercannot close his eyes to facts which should put a reasonable man upon his guard,and then claim that he acted in good faith under the belief that there was no defectin the title of the vendor. His mere refusal to believe that such defect exists, or hiswillful closing of his eyes to the possibility of the existence of a defect in hisvendor's title, will not make him an innocent purchaser for value, if it afterwardsdevelops that the title was in fact defective, and it appears that he had such noticeof the defect as would have led to its discovery had he acted with that measure ofprecaution which may reasonably be required of a prudent man in a like situation.Good faith, or lack of it, is in its last analysis a question of intention; but inascertaining the intention by which one is actuated on a given occasion, we arenecessarily controlled by the evidence as to the conduct and outward acts bywhich alone the inward motive may with safety, be determined. So it is that "thehonesty of intention," "the honest lawful intent," which constitutes good faithimplies a "freedom from knowledge and circumstances which ought to put aperson on inquiry," and so it is that proof of such knowledge overcomes thepresumption of good faith in which the courts always indulge in the absence of theproof to the contrary. "Good faith, or the want of it, is not a visible, tangible factthat can be seen or touched, but rather a state or condition of mind which can onlybe judge of by actual or fancied tokens or signs." (Wilder vs. Gilman, 55 Vt. 504,505; Cf. Cardenas vs. Miller, 108 Cal., 250; Breaux-Renoudet, Cypress LumberCo. vs. Shadel, 52 La. Ann., 2094-2098; Pinkerton Bros. Co. vs. Bromely, 119Mich., 8, 10, 17.) (Emphasis ours)

Damages were awarded by the appellate court on the basis of its finding that petitioner "was in bad faithwhen he filed the suit for specific performance knowing fully well that his agreement with Genato did notpush through.46Such bad faith, coupled with his wrongful interference with the contractual relationsbetween Genato and the Da Jose spouses, which culminated in his filing of the present suit and therebycreating what the counsel for the respondents describes as "a prolonged and economically unhealthygridlock47on both the land itself and the respondents' rights provides ample basis for the damagesawarded. Based on these overwhelming evidence of bad faith on the part of herein petitioner RicardoCheng, we find that the award of damages made by the appellate court is in order.WHEREFORE, premises considered, the i nstant petition for review is DENIED and the assailed decisionis hereby AFFIRMED EN TOTO.SO ORDERED.


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SECOND DIVISIONG.R. No. L-79787 June 29, 1989

APOLONIO EGAO AND BEATRIZ EGAO, Petitioners, vs. THE HONORABLE COURT OF APPEALS(NINTH DIVISION), SEVERO DIGNOS AND SEVERO BONTILAO,Respondents.

Eliud J. Pailagao for petitioners.chanrobles virtual law libraryGuerrero A. Adaza for private respondents.

PADILLA, J.:This is a land dispute which culminated in the filing by private respondents Severo Dignos and SeveroBontilao of a verified complaint for Quieting of Title and/or Recovery of Possession and Ownershipbefore the RTC of Manolo Fortich, Bukidnon, *against petitioners Apolonio and BeatrizEgao.chanroblesvirtualawlibrary chanrobles virtual l aw libraryPrivate respondents' complaint alleged that they are the legitimate owners and possessors of two (2)parcels of land situated at Lonocan, Manolo Fortich, Bukidnon, per deed of absolute sale dated 21December 1979 which, among others, recited thus:WHEREAS, the abovementioned Parcels of land Lot No. 662 is covered by Original Certificate of TitleNo. P-3559 Free Patent No. 298112 registered in the name of APOLONIO EGAO married to BeatrizMenosa and Lot No. 661 is covered by Original Certificate of Title No. P-3558 Free Patent No. 303249registered in the name of RAULITA CONEJOS married to Pedro Conejos, all transcribed in theRegistration Book in the Register of Deeds for the Province of Bukidnon; chanrobles virtual law li braryWHEREAS, Lot No. 662 has been transferred in ownership from BEATRIZ MENOSA EGAO, married to

Apolonio Egao in favor of ROBERTO N. MARFORI per Deed of Absolute Sale executed before TommyC. Pacana, Notary Public of Cagayan de Oro City entered in his Notarial Registry under Doc. No. 75;Page No. 15; Book V Series of 1965; and Lot No. 661 likewise has been transferred in ownership from

RAULITA R. CONEJOS in favor of ROBERTO N. MARFORI per Deed of Absolute Sale executed beforeTommy C. Pacana, Notary Public of Cagayan de Oro City, dated June 3, 1965, entered in his NotarialRegistry under Doc. No. 20; Page 4; Book V; Series of 1965.chanroblesvirtualawlibrary chanroblesvirtual law libraryWHEREAS, the VENDEES herein is [sic] aware of the fact that the Certificate of Title over theabovementioned parcels of land have not yet been transferred in favor of ROBERTO N. MARFORIexcept for the tax declarations but that the VENDOR herein is in actual, physical, continuous,uninterrupted, and adverse possession of the above described parcels of land free from all liens andencumbrances whatsoever; 1chanrobles virtual law library

Allegedly, upon purchase of Lot No. 662 from Roberto Marfori, improvements were introduced and taxespaid by private respondents. Sometime in June 1983, herein petitioners allegedly occupied illegallyportions of the land. 2chanrobles virtual law libraryPetitioners' answer to the complaint asserted that Apolonio Egao is the registered owner of the parcel ofland known as Lot No. 662, Pls 854 with an area of 3,451 sq. meters evidenced by OCT No. P-3559issued by the Register of Deeds of Bukidnon pursuant to Free Patent No. 298112 dated 12 August 1965;that he (Apolonio Egao) and his family have been in actual, physical, adverse, open and continuouspossession thereof even before the issuance to him of the free patent; that the land has never been soldby reason of the prohibition against alienation under Commonwealth Act No. 141 (Public Land Law); andthat the instant case was the fourth in a series filed against the Egaos and is part of respondents'scheme to grab said parcel of l and from the petitioners.chanroblesvirtualawlibrary chanrobles virtual lawlibraryJudge Felicidario M. Batoy ruled in favor of the Egaos, herein petitioners (defendants in the court a quo),ordering respondent Severo Bontilao (plaintiff in the court a quo) to immediately deliver to the Egaos theowner's duplicate copy of Original Certificate of Title No. P-3559. Said trial judge held:In the instant case, granting arguendo, that defendants executed the 2 documents in favor of Marfori(Exhs. A & B) after the filing of the application for free patent but before the issuance of the latter, withoutthe approval of the Director of Lands, upon issuance of Free Patent No. 29811 2 on August 12, 1965,

the said deeds of sale (Exhs. A & B) were ipso facto cancelled or superseded by said free patent.Moreover, it appears from the evidence that defendants never vacated or abandoned their possession of

Lot No. 662 as they have continuously lived on said lot since 1950, a fact admitted by the plaintiffsthemselves. And as long as Original Certificate of Title No. P-3559 remains in the name of defendant

Apolonio Egao, married to Beatriz Menoza Egao, this is the ultimate and best evidence of title granted bythe government which must be honored and respected by the courts. In a nutshell, the plaintiffsmiserably failed to present or show any title to Lot No. 662, PLS-854 which should be quieted or freedfrom any cloud of doubt as prayed for in their complaint and they further failed to show that they areentitled to the ownership and possession to Lot No. 662, PLS-854. 3Private respondents went to the Court of Appeals in CA-G.R. No. 09539. Setting aside the RTCdecision, the appellate court **held, in part, thus-That the land is titled in the name of defendant Apolonio Egao is not in question. The main point i n issueis whether defendants could validly sell the land to Marfori who in turn transferred ownership thereof tothe plaintiff. 4Marfori and Egao were both held by the Court of Appeals in pari delictofor violating the five (5) yearrestriction under Sec. 118, Commonwealth Act No. 141 as amended by Act No. 496 againstencumbrance or alienation of lands acquired under a free patent or homestead; hence, they cannot,according to the appellate court, seek affirmative relief, but respondents on the other hand weredeclared innocent purchasers for value who obtained the owner's duplicate copy of the OCT (still in thename of the Egaos) from Marfori who transferred to them (respondents) physical possession of theproperty. Finally, the Court of Appeals held:WHEREFORE, the decision appealed from is hereby SET ASIDE and a new one is rendered:1. Declaring the plaintiffs as the absolute owners of the land known as Lot No. 662, Pls-854 of the LandRegistry of Bukidnon; chanrobles virtual law library2. Ordering the Register of Deeds of Bukidnon to effect the cancellation of Original Certificate of Title No.

P-3559 in the name of Apolonio Egao and in lieu thereof, another one be issued in the names ofplaintiffs, after payment of the proper fees; chanrobles virtual l aw library3. Ordering the defendants to surrender peaceful possession of the land to plaintiffs and to desist fromfurther disturbing the possession over the land of plaintiffs; chanrobles virtual law library4. Ordering the defendants to pay the costs.SO ORDERED. 5chanrobles virtual law libraryPetitioners turn to this Court for relief, assailing the appellate court for allegedly committing grave abuseof discretion amounting to lack of jurisdiction in holding that:a. Petitioners sold Lot 662 to Roberto Marfori; chanrobles virtual law libraryb. It was only in 1983 when Petitioners wrested possession over the land from privaterespondents; chanrobles virtual law libraryc. Petitioners never denied the sales made in favor of Marfori, in their answer; chanrobles virtual lawlibraryd. Private Respondents are "innocent purchasers for value. 6and/or for allegedly deciding questions of substance not in accordance with law and/or applicabledecisions of this Court.chanroblesvirtualawlibrary chanrobles virtual law libraryWithout giving due course to the petition, the Court required respondents to comment. 7After comment,the Court resolved to require petitioners to file a reply, which they did. Respondents filed a rejoinder.Considering the allegations, issues and arguments adduced, the Court resolved to give due course tothe petition. Upon submission by the parties of their respective memorandum, the petition was submittedfor decision. 8chanrobles virtual law libraryValidity of the Deeds of Sale executed between Marfori (as purchaser) and the petitioners (as sellers) isthe main issue to be resolved, in determining respondents' right over the disputed land, the respondentsbeing the transferees of Marfori.chanroblesvirtualawlibrary chanrobles virtual law libraryIt is undisputed that Free Patent No. 298112 was issued to petitioner Apolonio Egao over Lot No. 662 on12 August, 1965. Sec. 118 of Commonwealth Act No. 141, as amended, prohibits the alienation orencumbrance, within a period of five (5) years from the date of issuance of the patent, of lands acquired

under free patent or homestead. Assuming, arguendo, the authenticity of the Deeds of Sale executed bythe Egaos in favor of Marfori over portions of Lot No. 662 (the land in question), dated 7 May 1964, 14


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January and 6 October 1965, it clearly appears that all deeds were executed within the prohibited periodof five (5) years. As correctly found by the appellate court-Section 124 of the Public Land Act provided [sic] that any acquisition, conveyance, abenation, transfer orother contract made or executed inviolation of any of the provisions of Sections 118,121,120,122 and123 of this Act shall be unlawful, null and void from its execution and shall produce the effect of annullingand cancelling the grant, title, patent or permit originally issued, recognized or confirmed, actually orprescriptively, and cause the reversion of the property and its improvements to the state. 9chanroblesvirtual law libraryPetitioners deny the authenticity and due execution of the notarized deeds of sale in favor of Marfori,asserting continued ownership over the land by virtue of a Torrens Certificate of Title issued in theirname. While the Court is not satisfied with respondents' explanation of their failure to present thenotaries public (who were residents of a neighboring province) to affirm their participation in thepreparation of the Deeds, the Court also finds as insufficient the mere denials by petitioners as to dueexecution and authenticity of said Deeds of Sale. A notarial document is evidence of the facts in clearunequivocal mariner therein expressed. It has in its favor the presumption of regularity To contradict allthese there must be evidence that is clear, convincing and more than merely preponderant. 10Thequestion of authenticity being one of fact, the Court will not disturb the conclusions of the Court of

Appeals on the matter.chanroblesvirtualawlibrary chanrobles virtual law libraryOriginal Certificate of Title No. P-3559 over the land in dispute was issued on 1 March 1966, a fewmonths after the execution by the Egaos of the last Deed of Sale in favor of Marfori. 11The OCT isregistered in the name of the Egaos, herein petitioners.chanroblesvirtualawlibrary chanrobles virtual lawlibrary

A Torrens title, once registered, cannot be defeated, even by adverse open and notorious possession. A

registered title under the Torrens system cannot be defeated by prescription. The title, once registered,is notice to the world. All persons must take notice. No one can plead ignorance of theregistration. 12chanrobles virtual law libraryContrary to the appellate court's conclusion, respondents are not innocent purchasers for value. 13An"innocent purchaser for value" is deemed, under the Torrens system, to include an innocent lessee,mortgagee or other encumbrancer for value. 14Where a purchaser neglects to make the necessaryinquiries and closes his eyes to facts which should put a reasonable man on his guard as to thepossibility of the existence of a defect in his vendor's title, and relying on the belief that there was nodefect in the title of the vendor, purchases the property without making any further investigation, hecannot claim that he is a purchaser in good faith for value. 15chanrobles virtual law libraryFurthermore, a private individual may not bring an action for reversion or any action which would havethe effect of cancelling a free patent and the corresponding certificate of title issued on the basis thereof,with the result that the land covered thereby will again form part of the public domain, as only theSolicitor General or the officer acting in his stead may do so. 16chanrobles virtual law libraryThe rule ofpari delicto non oritur actio (where two persons are equally at fault neither party may beentitled to relief under the law), admits of exceptions and does not apply to an inexistent contract, suchas, a sale void ab initiounder the Public Land Act, when its enforcement or application runs counter tothe public policy of preserving the grantee's right to the land under the homestead law. 17chanroblesvirtual law librarySec. 51, par. 2 of the Property Registration Decree (PD 1529), formerly Sec. 50 of the Land Registration

Act (Act No. 496) expressly provides that the registration of the Deed i s the operative act that binds oraffects the land insofar as third persons are concerned. The law requires a higher degree of prudencefrom one who buys from a person who is not the registered owner, when the land object of thetransaction is registered land. While one who buys from the registered owner need not look behind thecertificate of title, one who buys from another who is notthe registered owner is expected to examine notonly the certificate of title but all factual circumstances necessary for him to determine if there are anyflaws in the title of the transferor, or in his capacity to transfer the land. Failing to exercise caution of any

kind whatsoever is tantamount to bad faith.18chanrobles virtual law library

Deeds of sale of patented lands, perfected within the prohibited five (5) year period are null and void(Sec. 124, Public Land Act). No title passed from the Egaos to Marfori which could be validly transferredto herein respondents Bontilao and Dignos. Nemo dat quod non habet (nobody can dispose of thatwhich does not belong to him). 19chanrobles virtual law libraryWhile the government has not taken steps to assert its title, by reversion, to a homestead sold inviolation of the Public Land Act, the vendor or his heirs is better entitled to the possession of the said,the vendee being in no better situation than any intruder.20chanrobles virtual law library

Accordingly, respondents who are not innocent purchasers for value have no standing to questionpetitioners' right to the land and to fil e an action for quieting of title.chanroblesvirtualawlibrary chanroblesvirtual law libraryWHEREFORE, the appealed decision of the Court of Appeals in CA G.R. CV No. 09539 is REVERSEDand SET ASIDE. Meanwhile, petitioners as registered owners are entitled to remain in physicalpossession of the disputed property. Respondents are ordered to deliver the owner's duplicate copy ofthe OCT (No. P-3559) to petitioners, without prejudice to an action for reversion of the land, which maybe instituted by the Solicitor General for the State.chanroblesvirtualawlibrary chanrobles virtual lawlibraryLet a copy of this decision be furnished the Solicitor General.chanroblesvirtualawlibrary chanroblesvirtual law librarySO ORDERED.


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ManilaSECOND DIVISION

G.R. Nos. L-48971 & 49011 January 22, 1980PACIFICO GARCIA, petitioner-appellant,

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

PHILIPPINE NATIONAL BANK, petitioner-appellant,vs.

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

Agapito Mendoza & Antonio G. Ibarra for appellant Pacifico GarciaLaurel Law Office and Flores Ocampo, Dizon & Domingo for private appellees.

AQUINO, J.:This case is about the issuance of two or more transfer certificates of title to different persons for thesame lots, or subdivisions thereof, due to the fact that the original title was allegedly not cancelled whenthe first transfer certificates of title were issued to replace the original title. The factual background is asfollows:1. On August 9, 1918, a deed of sale for two parcels of land, E and G (with a total area of more than

seven hectares) of the Hacienda Maysilo, located in Malabon, Rizal and covered by Original Certificateof Title No. 983, was executed in favor of Ismael Lapus a bona fide occupant thereof. The deed wasexecuted pursuant to an order of the Court of First Instance of Rizal in Civil Case No. 391, Negao vs.Vidal, a partition proceeding involving the said hacienda (See Bustamante vs. Tuason, 47 Phil. 433,434).2. The deed of sale was presented for registration at two-twenty five in the afternoon of January 15,1920 and was recorded as Primary Entry No. 7710. That deed of sale itself contains the followingentries showing that it was annotated on the back of OCT NO. 983:

Presentado en este Registro a las 2:25 de la tarde del dia de hoy segun el AsientoNo. 7710 de tomo 10 del Libro Diario, Pasig, Rizal, Enero 15, 1920.

Register of Deeds (Exh. B-12)Inscrito el documento que precede al dorso del certificado de Titulo Original No.983 del Tomo A-9, de inscritor en las paginas 113 y 114 ambos del libro T-25 deregistro como certificados de titulo Nos. 4910 y 4911, archivado en el legajo T-#4910. Pasig, Rizal, Enero 15, 1920.:

Register of Deeds (Exh. B-1).However, it seemed that, contrary to the foregoing entry and the official routine or standard operatingprocedure, the deed of sale was not annotated on OCT No. 983 and that, consequently, that title wasapparently not cancelled. Why that annotation did not appear in OCT No. 983 and why there was nonotation of the cancellation of that title, as it appeared in 1962, is a mystifying ci rcumstance in this case.3. As a result of the registration of that deed of sale, Transfer Certificate of 'Title No. 4910 was issued toLapus for the two parcels of land, E and G, and I Transfer Certificate of Title No. 4911 was issued for theremaining five lots covered by OCT No. 983 (which embrace an area of more than two hundred fifty-eight hectares registered in the names of more than twenty-six-co-owners). TCT Nos. 4910 and 4911contain the following entries: "Transfer from No. 983. Originally registered on the 29th day of January, inthe year 1917 in Book No. A-9, page 215, of the said Province of Rizal, pursuant to a decree entered inCase No. 3850."

4. Lapus on different occasions mortgaged the two parcels of land to secure his obligations to thePhilippine National Bank, the Government and the Philippine Trust Company. He died in 1951. The two

parcels of land were inherited by his daughter, Carolina Lapuz-Gozon. She became the registered ownerof the two lots. She subdivided them into fifty-five lots. She sold some of the subdivision lots to her co-respondents-appellees herein. Lapus and his successors-in-interest have been in possession of the twoparcels even before 1910 or for more than seventy years.5. Meanwhile, in 1962, certain. alleged heirs (collectively known as the Riveras) of the late Maria de laConcepcion Vidal filed a motion in Land Registration Cases Nos. 4429 and 4496 of the Court of FirstInstance of Rizal, alleging that they were deprived of their participation in the Hacienda Maysilo coveredby OCT No. 983 and for other titles and that, since only OCT No. 983 was supposedly unencumbered,all the land covered by that title should be adjudicated to them. The court granted the motion. It shouldbe stressed that OCT No. 983 appears to have remained uncancelled notwithstanding the sale to Lapusof two parcels covered by it and the fact that it had been replaced by TCT Nos. 4910 and 4911.6. On June 7, 1963, OCT No. 983 was definitely cancelled and in lieu thereof Transfer Certificate of TitleNo. 112236 was issued to the Riveras. Later, Lots 5 and 7 of the said title (corresponding to parcels Eand G which were sold to Ismael Lapus in 1918 as stated earlier) were assigned by Bartolome Rivera toSergio Cruz and Pacifico Garcia and TCT Nos. 112743 and 112742 were issued to Cruz and Garcia,respectively. Thus, two sets of transfer certificates of title for Lots E and G or 5 and 7, originally coveredby OCT No. 983, were issued, one to the heir of Ismael Lapus and another set to the successors-in-interest of the Riveras.7. On October 22, 1964, Garcia subdivided Lot 7 (G) into Lots A and B. Garcia retained Lot A andobtained TCT No. 134958 for it. He assigned Lot B to Antonio Muoz on November 5, 1964. As aconsequence of the assignment, TCT No. 112742 was cancelled and TCT No. 134957 was issued toMuoz. In 1965, he mortgaged Lot B to the Associated Banking Corporation to secure a loan ofP200,000.

8. On the other hand, on July 17, 1964 Cruz sold to Santiago Go Lot 5 (E) covered by TCT No. 112743.TCT No. 131329 was issued to Go on August 25,1964. On December 23, 1964, Go mortgaged Lot 6 tothe Philippine National Bank (PNB) to secure a l oan of P50,000 which was later increased to P60,000.9. Muoz and Go did not pay their mortgage debts. The two banks foreclosed the mortgages. The PNBbought the mortgaged lot at the auction sale held on May 4. 1967. The sheriff issued to it a certificate ofsale dated May 19, 1967 but at that time there was already a notice of lis pendens annotated on the titleof the mortgaged lot. TCT Nos. 212163 and 236881 for the mortgaged lots were issued to the

Associated Banking Corporation and the Philippine National Bank, respectively.10. The Riveras and their successors-in-interest have never set foot on the disputed lots.11. Mrs. Gozon later learned that the Riveras and their successors-in-interest had acquired the land(more than two hundred fifty-eight hectares) covered by OCT No. 983. Her lawyer and a surveyorinformed her that parcels E and G, which she inherited from her father, were identical to Lots 5 and 7which were conveyed to Cruz and Garcia. She registered adverse claims on the titles covering Lots 5and 7. On December 27, 1965 she and the persons to whom she had transferred portions of parcels Eand G filed with the Court of First Instance of Rizal at Caloocan City against the Riveras, Cruz, Muoz,Garcia, Associated Banking Corporation, PNB and others an action to quiet title and for damages.12. A notice of lis pendens was annotated on January 25, 1966 on the titles of Garcia, Muoz and Go.The notice of lis pendens was annotated on the title of the PNB when the sale in its favor was registeredon December 13, 1969.13. The trial court in its decision of Jul y 30, 1975 declared valid TCT Nos. 141802 to 141855 and 143512issued to Mrs. Gozon and her co-plaintiffs. It voided TCT No. 112235 issued to the Riveras and all titlesand transactions emanating therefrom insofar as those titles covered the lots embraced in plaintiffs'titles. The Riveras were ordered to pay the plaintiffs twenty thousand pesos as attorney's fees.14. The trial court also ordered Muoz to pay the Associated Banking Corporation, in the event that thebank would be evicted from the lot covered by TCT No. 212153, two hundred sixty-five thousandseventy-two pesos and fifteen centavos with twelve percent interestper annum from the date of theeviction plus ten thousand pesos as attorney's fees.


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15. Santiago Go was ordered to pay the PNB, should it be evicted from the lot covered by TCT No.236881, the sum of sixty thousand pesos plus nine percent interestper annum from the date of theeviction and six thousand pesos as attorney's fees.16. That judgment of the trial court was affirmed by the Court of Appeals in its decision of May 25, 1978.Garcia and the PNB appealed from that decision. The Associated Banking Corporation, now the

Associated Citizens Bank, tried to appeal but it was not able to file its petition for review (L-49010).Garcia contends that the Court of Appeals erred in not holding that his title is valid and that the titles ofIsmael Lapus and his successors-in-interest lost their right to the disputed lots due to their negligence orinaction.The issue is whether the 1920title issued to Lapus and the titles derived therefrom should prevail overthe 1963title issued to the Riveras and the subsequent titles derived from it. Should Lapus' title prevaileven if it was not annotated by the register of deeds on the anterior or parent title which was notcancelled before 1963? It was that noncancellation which led to the issuance of the duplicative title to theRiveras and eventually to the execution of the controversial mortgages and foreclosure sales to the twobanks.We hold that the two appeals have no merit. The title of Lapus and the titles derived therefrom should begiven effect. The title of the Riveras and the titles springing from it are void.There can be no doubt that Lapus was an innocent purchaser for value. He validly transmitted to hissuccessors-in-interest his indefeasible title or ownership over the disputed lots or parcels of land. Thattitle could not be nullified or defeated by the issuance forty-three Years later to other persons of anothertitle over the same lots due to the failure of the register of deeds to cancel the title preceding the titleissued to Lapuz. This must be so considering that Lapus and his interest remained in possession of thedisputed successors in lots and the rival claimants never possessed the same.

"The general rule is that in the case of two certificates of title, purporting to include the same land, theearlier in date prevail, whether the land comprised in the latter certificate be wholly, or only in part,comprised in the earlier certificate" (Hogg, Australian Torrens System 823, citing cases and cited inLegarda and Prieto vs. Saleeby, 31 Phil. 590, 595)."Where two certificates (of title) purport to include the same land, the earlier in date prevails. ... Insuccessive registrations, where more than once certificate is issued in respect of a party estate orinterest in land, the Person claiming under the prior certificate is entitled to the estate or interest; andthat person is deemed to hold under theprior certificate who is the holder of, or whose claim is deriveddirectly or indirectly from the person who was the holder of the earliest certificate issued in respectthereof " (Niblack, Analysis of the Torrens System page 237, cited in Legarda and Prieto vs.Saleeby, supra, pages 595-6).

And the rule that in case of double registration the owner of the earlier certificate is the owner of theland applies to the successive vendees of the owners of such certificates . "The vendee of the earliercertificate would be the owner as against the vendee of the owner of the later certificate" (Legarda andPrieto vs. Saleeby, supra, pages 597-9).It is settled that is this jurisdiction the maximprior est in tempore, potior est in jure (he who is first in timeis preferred in right) is followed in land registration matters (La Urbana vs. Bernardo, 62 Phil. 790, 806).

Appellant Garcia invokes the ruling that the mere entry of a document in the day or entry book withoutnoting it on the certificate of title is not a sufficient registration (Bass vs. De la Rama, 73 Phil. 682, 685).That ruling was superseded by the holding in the later six cases of Levin vs. Bass, 91 Phil. 420, where adistinction was made between voluntary and involuntary registration, such as the registration of anattachment, levy upon execution, notice of his pendens, and the like. In cases of involuntary registration,an entry thereof in the day book is a sufficient notice to all persons even if the owner's duplicatecertificate of title is not presented to the register of deeds.On the other hand, according to the said cases of Levin vs. Bass, in case of voluntary registration ofdocuments an innocent purchaser for value of registered land becomes the registered owner, and, incontemplation of law the holder of a certificate of title, the moment he presents and files a duly notarized

and valid deed of sale and the same is entered in the day book and at the same time he surrenders orpresents the owner's duplicate certificate of title covering the land sold and pays the registration fees,

because what remains to be done lies not within his power to perform. The register of deeds is dutybound to perform it. (See Potenciano vs. Dineros, 97 Phil. 196.)The instant case is not Identical to the Bass cases. Here the deed of sale in favor of Lapus, which was

judicially authorized, was entered in the entry book and a new title was issued to him.As already stated,and this point should be underscored, the deed of sale in favor of Lapus contains the notation that it wasannotated on the back of OCT No. 983 (presumably, the original and owner's duplicate thereof).But why in 1962 it appeared that no such annotation was found on the back of OCT No. 983, contrary towhat was stated in the 1918 deed of sale, is a mystery that the trill court and the plaintiffs failed tounravel during the trial. Moreover, the title issued to Lapus contains the usual notation that it was atransfer from a previous title which in this case was OCT No. 983.It should be further observed that the deed of sale in favor of Lapus and the titles issued to him and hissuccessors interest together with his mortgage in 1929 of the disputed lots to the PNB itself, are all amatter of public record in the registry of deeds.

As stressed in Legarda and Prieto vs. Saleeby, 31 Phil. 590, 600, "the record is notice to all the world. Allpersons are charged with the knowledge of what it contains. All persons dealing with the land sorecorded, or any portion of it, must be charged with notice of whatever it contains. The purchaser ischarged with notice of every fact shown by the record and is presumed to know every fact which therecord discloses."When a conveyance has been properly recorded, such record is constructive notice of its contents andall interests, legal and equitable, included therein." "Under the rule of notice, it is presumed that thepurchaser has examined every instrument of record affecting the title. Such presumption is irrefutable.He is charged with notice of every fact shown by the record and is presumed to know every fact whichan examination of the record would have disclosed" (Legarda and Prieto vs. Saleeby, supra, page 600).

As Justice Johnson says, "this presumption cannot be overcome by proof of innocence or good faith.Otherwise, the very purpose and object of the law requiring a record would be destroyed. Suchpresumption cannot be defeated by

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