Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No.

L-23148 March 25, 1926

THE DIRECTOR OF LANDS, applicant, vs. SEYMOUR ADDISON, ET AL., claimants, SOLEDAD P. HERNANDEZ, claimant-appellee; TOMAS ANGELES, ET AL., claimants-appellants. I. P. Santos and Feria & La O for appellants. Valentina J. Alcid and Vicente Sotto for appellee. OSTRAND, J.: Omitting the features not strictly relevant to the points of law involved, the facts of the present case are briefly as follows: On February 8, 1916, a Torrens certificate of title (No. 414) to a parcel of land containing an area of nearly 61 hectares, in the barrio of Santo Nio, municipality of Concepcion, in the Province of Tarlac, was issued in favor of Juana Angeles and seventeen others as tenants in common (hereinafter referred to collectively as the "Angeles heirs," though a few of them in fact bear other surnames). The certificate of title was issued in pursuance of a decree of registration entered in land registration case No. 6540. On April 29, 1921, a deed purporting to be executed by eleven of the persons in interest in said land and to have been acknowledged before the notary public, and conveying about 47 hectares consisting of a western portion of the tract described in the certificate of title to Pedro Manuntag, the son of Juana Angeles, was presented to the register of deeds of Tarlac together with the owner's duplicate of said certificate of title No. 414. The deed contained no technical description of the land conveyed, the aforesaid certificate of title was not cancelled, and no transfer certificate of title was issued neither to the vendors nor to the vendee; in fact no attempt was made to comply with the provisions of section 57 and 58 of the Land Registration Act, the register of deeds contenting himself by noting the transaction by way of a memorandum on the original certificate of title. It has been proven beyond dispute that the deed was a forgery, at least one of the purported conveyors being dead at the time of the date of the instrument. Armed with the owner's duplicate of the original certificate of title containing the memorandum of the alleged sale to him, Pedro Manuntag proceeded to mortgage the property to Soledad P. Hernandez for the sum of P3,000. This mortgage was also noted on the owner's duplicate of the original certificate of title, the memorandum bearing the date of August 1, 1921. On July 22, 1922, the mortgage was cancelled and an absolute deed of conveyance of the property made by the same Pedro Manuntag to said Soledad P. Hernandez, the consideration stated in the deed being P3,940. The deed was presented to the register of deeds of Tarlac who repeated the error committed in connection with the deed from the Angeles heirs to Pedro Manuntag and simply entered the transaction by memorandum on the back of the original certificate of title without complying with sections 57 and 58, supra. The memorandum is dated August 1, 1921. The owner's duplicate of the original certificate of title remained in possession of Soledad P. Hernandez who, on October 4, 1923, executed a deed of sale with pacto de retro for the term of one year and in consideration of the sum of P2,000 in favor of Arturo Sanchez Mijarez. This transaction was also noted on the original certificate of title, the entry bearing the date of October 12, 1923.

In the meantime a cadastral proceeding was instituted by the Director of Lands in the municipality of Concepcion including among other lands the tract covered by certificate of title No. 414. In this cadastral proceeding the Angeles heirs appeared as claimants and as no other person at first appeared to contend with them, the court on November 17, 1921, entered a decision awarding the property to them though in some respects erroneously stating the respective shares of the coowners. After the period allowed by law for an appeal from this decision has passed, Soledad P. Hernandez appeared by her attorney and, representing that she had acquired the property now in question by purchase from Pedro Manuntag, asked that the corresponding certificate of title be issued to her in the cadastral case. This motion was denied by Judge Anacleto Diaz, then presiding over the Court of First Instance in Tarlac, on the ground that the judgment had become final. However, on July 26, 1923, the chief surveyor of the General Land Registration Office, having found certain errors in the decision in the cadastral case and having observed the memoranda aforementioned upon certificate of title No. 414, asked the court to set the cause for hearing in order that after notification to the various parties in interest, the question of ownership might be finally and definitely determined. This suggestion was opposed by Tomas Angeles in behalf of the Angeles heirs, and Soledad P. Hernandez again came forward and asked that the proper certificate be issued in her name. The judge presiding over the court (now Judge Cayetano Lukban) accepted the suggestion of the chief surveyor and, and after the parties had all been notified, proceeded to determine the controversy between the Angeles heirs and Soledad P. Hernandez. Upon hearing the court found that the document of April 21, 1921, purporting to be a deed of conveyance of the land from the Angeles heirs to Pedro Manuntag, was a forgery, but nevertheless on the authority of the decision of this court in the case of De la Cruz vs. Fabie (35 Phil., 144), decided the controversy in favor of Soledad P. Hernandez by an order dated August 27, 1924, from which the present appeal is taken. Of the various questions raised by the assignments of error only one need be answered, namely, whether the court erred in holding that Soledad P. Hernandez had acquired title to the property, notwithstanding the fact that the deed of eleven of the Angeles heirs to Pedro Manuntag had been shown to be a forgery. The principle that a forged deed is an absolute nullity and conveys no title is firmly embedded in our jurisprudence and it is clear that standing alone the need purporting to be executed by the Angeles heirs did not make Pedro Manuntag the owner of the land. But citing the case of De la Cruz vs. Fabie (35 Phil., 144), it is argued that under our Torrens registration system the act of registration is, in the language of section 50 of the Land Registration Act, "the operative Act to convey and affect the land" and that a deed of conveyance of registered land "shall operate only as a contract between the parties and as evidence of authority to the clerk of register of deeds to make registration," and it is therefore urged that the presentation of the owner's duplicate certificate and the entry thereupon of the memorandum of a transfer in fee simple to Soledad P. Hernandez, an innocent third party, constituted in itself a valid conveyance of the title to the land in question. It must be conceded that if the transfers to Pedro Manuntag and by him to Soledad P. Hernandez were duly registered, it would be difficult to differentiate the present case from that of De la Cruz vs. Fabie. But, in our opinion, the entry of a mere memorandum of a conveyance in fee simple upon the original certificate of title to the purchaser is not a sufficient registration of the conveyance of the fee. Sections 57 and 58 of the Land Registration Act prescribe how conveyances in fee registered land must be made and read as follows: SEC. 57. An owner desiring to convey in fee his registered or an any portion shall execute a deed of conveyance, which the grantor or grantee where the lands lies. The grantor's duplicate certificate shall be produced and presented at the same time. The register of deeds shall thereupon, in accordance with the rules and instructions of the court, make out in the registration book a new certificate of title to the grantee, and shall prepare and deliver to him an owner's duplicate certificate. The register of deeds shall note upon the original and duplicate certificates the date of transfer, the volume and page of the registration book where the new certificate is registered, and a reference by number to the last prior certificate. The grantor's duplicate shall be surrendered, and the word "canceled" stamped upon it. The

original certificate shall be also stamped "canceled." The deed of conveyance shall be filed and indorsed with the number and place of registration of the certificate of title of the land conveyed. SEC. 58. When a deed in fee is for a part only of the land described in a certificate of title, the register of deeds shall also enter a new certificate and issue an owner's duplicate to the grantor for the part of the land not included in the deed. In every case of transfer the new certificate or certificates shall include all the land described in the original and surrendered certificates: Provided, however, That no new certificate to a grantee of a part only of the land shall be invalid by reason of failure of the register of deeds to enter a new certificate to the grantor for the remaining unconveyed portion: And provided further, That in case the land described in a certificate of title is divided into lots, designated by numbers or letters, with measurement of all the bounds, and a plan of said has been filed with the clerk and verified pursuant to section forty-four of this Act, and a certified copy thereof is recorded in the registration book with the original certificate, when the original owner makes a deed of transfer in fee of one or more of such lots, the register of deeds may, instead of canceling such certificate and entering a new certificate to the grantor for the part of the land not included in the deed of transfer, enter on the original certificate and on the owners' duplicate certificate a memorandum of such deed of transfer, with a reference to the lots thereby conveyed as designated on such plan, and that the certificate is canceled as to such lot or lots; and every certificate with such memorandum shall be effectual for the purpose of showing the grantor's title to the remainder of the land not conveyed as if the old certificate had been canceled and a new certificate of such land had been entered; and such process may be repeated so long as there is convenient space upon the original certificate and the owner's duplicate certificate for making such memorandum of sale lots. As will be seen, the issuance of a transfer certificate of title to the purchaser is one of the essential features of a conveyance in fee by registration and in order to enjoy the full protection of the registration system, the purchaser must be a holder in good faith of such certificate. This appears clearly from section 39 of the Land Registration Act which provides that "every applicant receiving a certificate of title in pursuance of a decree of registration, and every subsequent purchaser of registered land who takes a certificate of title for value in good faith, shall hold the same free of all incumbrance except those noted on said certificate, and any of the following incumbrances which may be subsisting, namely, (enumeration of subsisting incumbrances)." In fact the register of deeds has no authority to register a conveyance in fee without the presentation of the conveyor's duplicate certificate unless he is ordered to do so by a court of competent jurisdiction (see Land Registration Act, section 55). As we have already shown, neither Pedro Manuntag nor Soledad P. Hernandez ever held a certificate of title to the land here in question and there had therefore been no sufficient legal conveyance in fee to them neither by deed nor by registration. The original certificate of title No. 414 in favor of the Angeles heirs has never cancelled and is the only certificate in existence in regard to the property. In the case of De la Cruz vs. Fabie, supra, the situation was entirely different. There the registration of the property in question was decreed in the name of Gregoria Hernandez and a duplicate original certificate of title issued to her. She returned the duplicate certificate over to her nephew, the defendant Vedasto Velasquez, who forged a deed to himself of the property and presenting the same with the duplicate certificate of title to the register of deeds obtained a transfer certificate with its corresponding duplicate in his own name. He thereafter sold the land to his codefendant Ramon Fabie to whom a transfer certificate of title was issued upon the cancellation of Velasquez' certificate. There was therefore a complete chain of registered title. The purchaser was guilty of no negligence and was justified in relying on the certificate of title held by the vendor. In the present case, on the other hand, the vendor held no certificate of title and there had therefore been no complete conveyance of the fee to him. The purchaser was charged with presumptive knowledge of the law relating to the conveyance of land by registration and, in purchasing from a person who did not exhibit the proper muniments of title, must be considered to have been guilty of negligence and is not in position to complain of his loss. We may say further that the distinction we have drawn between the two cases is not a mere technicality; if in the present case the procedure prescribed by section 58 of the Land Registration Act had been followed and

which, in accordance with paragraph 3 of section 30 of the Rules for the Uniform Administration of the Registries of Deeds, as amended by Circular No. 31 of the General Land Registration Office, dated September 28, 1921, and approved by the Secretary of Justice, would have required the presentation of a subdivision plan and through the publicity attending the necessary monumenting of the dividing lines, the forgery of deed would in all probility have been discovered before any harm could have been done. It appears to be conceded by the parties that Pedro Manuntag has legitimately acquired the interests of Juana Angeles and Silvino Angeles, amounting in all to a one-eight share in the land, which interests passed to Soledad P. Hernandez through the deed executed by Manuntag in her favor; the rest of the land is, as we have seen, still the property of the remaining Angeles heirs. It appears that Bernardino Angeles and Matias Angeles have died since certificate of title No. 414 was issued and it is possible that some of the other original coowners have suffered the same fate. The evidence before us is hardly sufficient to definitely or exactly determine the present ownership of the shares of the various original heirs, but the record indicates that Soledad P. Hernadez is the owner of a one-eight interest in the land; the estate of Bernardino Angeles of one-twelfth; Leonarda, Tomasa, Ambrosia, Tomas, and Pelagia Angeles of onetwelfth each; the estate of Matias Angeles of one-twelfth; Alberto, Florencio and Agustin Angeles of onetwenty-fourth each; Maria, Romana, and Matias Angeles 2d one-thirty-sixth each' and Clemente, Eulalia, and Aquilino Tullo of one-thirty- sixth each. The order appealed from is reversed and it is ordered that certificate of title No. 414 be cancelled and that in its stead a transfer certificate of title be issued describing the land in accordance with the cadastral survey and stating the names and shares of the various coowners as hereinabove set forth it should be found that recent changes in ownership have occurred, in which case the court below may upon motion and hearing, in accordance with section 112 of the Land Registration Act, make such modifications as the evidence before its justifies. All memoranda existing on certificate of title No. 414 will be cancelled except the one entered under document. No. 1425, evidencing the sale with the right of repurchase in favor of Arturo Sanchez, which memorandum shall, however, effect only the one-eight interest of Soledad P. Hernandez. No costs will be allowed in this instance. So ordered. Avancea, C. J., Malcolm, Villamor, Johns, Romualdez and Villa-Real, JJ., concur. G.R. No. L-41377 July 26, 1935

ANGELA BLONDEAU and FERNANDO DE LA CANTERA Y UZQUIANO, plaintiffs-appellants, vs. AGUSTIN NANO and JOSE VALLEJO, defendants-appellees. John R. McFie, Jr., for appellants. Evangelista and Santos for appellee Vallejo. No appearance for the other appellee. MALCOLM, J.: This action was brought in the Court of First Instance of Manila to foreclose a mortgage alleged to have been made by the defendants Agustin Nano and Jose Vallejo to the plaintiff Angela Blondeau, bearing date November 5, 1931, to secure the payment of the sum of P12,000, and covering property situated on Calle Georgia, Manila. Nano, purporting to represent both defendants, after filing an answer, was found in contempt of court. The other defendant Vallejo thereupon presented an amended answer in which it was alleged that his signature to the mortgage was a forgery. Following the trial, judgment was rendered against Nano but not against Vallejo. From this judgment the plaintiffs have taken an appeal.

With all due deference to the findings of the trial judge, now an honored member of this court, we are inclined to the view, first, that the accessorias bearing Nos. 905A to 905F, Calle Georgia, Manila, were as indicated in the mortgage, the property of the defendant Agustin Nano, and second, that the purported signature of the defendant Vallejo to the mortgage was not a forgery. In support of the first of our statements, attention need only be invited to a series of documents, including the transfer certificate of title, showing that Vallejo was considered the owner of the land only. As to the second statement, it needs be recalled that the mortgage was executed in the home of the plaintiffs, and that of those present, the principal plaintiff Angela Blondeau and her husband Fernando de la Cantera, together with the instrumental witness Pedro Jimenez Zoboli, identified Vallejo as the person who signed the document. As against their testimony stands the alibi of Vallejo, partially corroborated by the testimony of the notary public Gregorio Bilog. It is expecting a great deal to have us believe that not only the mortgage but the power of attorney of Vallejo in favor of Nano and a series of documents were the product of the evil machinations of Nano, and that although Nano and Vallejo, members of same family, lived together, Vallejo was entirely unacquainted with the activities of Nano in dealing with their joint property. It is significant that the proper cedulas of Vallejo were presented for the accomplishment of the documents, and that if there was fraud, not one but a number of notaries public were deceived thereby. We repeat that upon its face, the mortgage appears to be regular and to have been duly executed and accepted by Vallejo on November 5, 1931. The evidence then resolves itself into a question of the execution of the mortgage by Vallejo on the one hand, and the denial of its execution on the other hand. That there was a conflict between experts as to the handwriting, one being of the opinion that the signatures of Vallejo were genuine, and the other being of the opinion that they were not genuine, is not unexpected. Under such conditions, the question is, which side produced the weightier testimony, and as hereinbefore indicated, we are of the opinion that the balance inclined in favor of the plaintiffs. But there is a narrower ground on which the defenses of the defendant-appellee must be overruled. Agustin Nano had possession of Jose Vallejo's title papers. Without those title papers handed over to Nano with the acquiescence of Vallejo, a fraud could not have been perpetrated. When Fernando de la Cantera, a member of the Philippine bar and the husband of Angela Blondeau, the principal plaintiff, searched the registration records, he found them in due form, including the power of attorney of Vallejo, in favor of Nano. If this had not been so and if thereafter the proper notation of the encumbrance could not have been made, Angela Blondeau would not have lent P12,000 to the defendant Vallejo. The Torrens system is intended for the registration of title, rather than the muniments of title. It represents a departure from the orthodox principles of property law. Under the common law, if the pretended signature of the mortgagor is a forgery, the instrument is invalid for every purpose and will pass on the title or rights to anyone, unless the spurious document is ratified and accepted by the mortgagor. The Torrens Act on the contrary permits a forged transfer, when duly entered in the registry, to become the root of a valid title in a bona fide purchaser. The act erects a safeguard against a forged transfer being registered, by the requirement that no transfer shall be registered unless the owner's certificate was produced along with the instrument of transfer. An executed transfer of registered lands placed by the registered owner thereof in the hands of another operates as a representation to a third party that the holder of the transfer is authorized to deal with the lands. (53 C.J., 1141, 1142; Act No. 496, as amended, secs. 47, 51, 55.) With respect to the conclusiveness of the Torrens title and the binding force and effect of annotations thereon even when through a forged deed the land passes into the possession of an innocent purchaser for value, the basic rule is found in the opinion delivered by Mr. Chief Justice Arellano in De la Cruz vs. Fabie ( [1916], 35 Phil., 144). The history of the case was as follows: Vedasto Velazquez was attorney in fact of Gregoria Hernandez. Gregoria Hernandez registered her title of ownership to the land in question in the property registry and was issued certificate of title No. 121. Vedasto Velazquez, being the attorney in fact of Gregoria Hernandez, had in his possession all the muniments of title of the land, including the certificate of title No. 121, and, abusing her confidence in

him, a few days after the registration of the land, forged a notarial instrument wherein he made it appear that she had sold the said land to him for the price of P8,000. Vedasto Velazquez then went to the register of deeds and applied for the registration of the land in his own name, presenting Gregoria Hernandez' certificate of title No. 121 for cancellation, and the deed of conveyance which was purported to have been made by Gregoria Hernandez in his favor in order that he might be registered as the true owner of the land. All this was done; Gregoria Hernandez' title was cancelled and certificate of title No. 43 was issued to Vedasto Velazquez. xxx xxx xxx

On May 31, 1907, Vedasto Velazquez sold the land finally and absolutely to Ramon Fabie, who presented to the register of deeds the notarial instrument executed for the purpose and was thereupon furnished with the certificate of title No. 766." On these facts, it was held that Fabie was an innocent holder of a title for value and that, under section 55 of the Land Registration Law, he was the absolute owner of the land. The decision above cited has repeatedly been reexamined by this court, one of the most recent instances being found in the case of El Hogar Filipino vs. Olviga ( [1934], 60 Phil., 17). While counsel for the appellee is undoubtedly correct in his contention that neither the case of Fabie nor the case of Olgiva nor any other case relied upon by the appellants is on all fours with the present facts, the principle on which these cases rest should here be carried forward and given application. The recent decision of the United States Supreme Court in the case of Eliason vs. Wilborn ( [1930], 281 U.S., 457), is of enlightening interest. Plaintiffs in this case, purchasers of land previously brought under the Illinois Torrens Act, delivered the certificate of title to a party under an agreement to sell, who forged a deed to himself, had a certificate issue in his name, and then conveyed to defendants who were good faith purchasers for value. Plaintiffs informed the register of the forgery after the defendants had bought, and demanded the cancellation of the deeds and certificates, and the reissue of a certificate to themselves. The register refused, and a petition was brought to compel such action. The Circuit Court for Cook County, Illinois, the Supreme Court of Illinois, and the United States Supreme Court, united in dismissing the petition. Mr. Justice Holmes, delivering the opinion of the latter court, said: . . . The statute requires the production of the outstanding certificate, as a condition to the issue of a new one. The appellants saw fit no entrust it to Napletone and they took the risk. They say that according to the construction of the act adopted the registrar's certificate would have had the same effect even if the old certificate had not been produced. But that, if correct, is no answer. Presumably the register will do his duty, and if he does he will require the old certificate to be handed in. It does not justify the omission of a precaution that probably would be sufficient, to point out that a dishonest official could get around it. There is not the slightest reason to suppose that Napletone would have got a certificate on which the Wilborns could rely, without the delivery of the old one by the appellants. As between two innocent persons, one of whom must suffer the consequence of a breach of trust, the one who made it possible by his act of confidence must bear the loss. Vargas & Maalac in their treatise on the Philippine Land Registration Law quote with approval the comment of Mr. Powell in his book on Land Registration, section 213. The question which the author propounded was: Why does the law say that the person who had no title at all and only a forged deed as a color of title should become the true owner of the land by merely continuing to occupy and enjoy the land which in fact does not belong to him, but which belongs to the victim of the forgery? His answer was: . . . that public policy, expediency, and the need of a statute of repose as to the possession of land, demand such a rule. Likewise, public policy, expediency, and the need of repose and certainty as to land titles demand that the bona fide purchaser of a certificate of title to registered land, who, though he buys

on a forged transfer, succeeds in having the land registered in his name, should nevertheless hold an unimpeachable title. There is more natural justice in recognizing his title as being valid than there is in recognizing as valid the title of one who has succeeded in ripening a forged color of title by prescription. In the first place, a forger cannot effectuate his forgery in the case of registered land by executing a transfer which can be registered, unless the owner has allowed him, in some way, to get possession of the owner's certificate. The Act has erected in favor of the owner, as a safeguard, against a forged transfer being perpetrated against him, the requirement that no voluntary transfer shall be registered unless the owner's certificate is produced along with the instrument of transfer. Therefore, if the owner has voluntarily or carelessly allowed the forger to come into possession of his owner's certificate he is to be judged according to the maxim, that when one of two innocent persons must suffer by the wrongful act of a third person the loss fall on him who put it into the power of that third person to perpetrate the wrong. Furthermore, even if the forger stole the owner's certificate, the owner is up against no greater hardship than is experienced by one whose money or negotiable paper payable to bearer is stolen and transferred by the thief to an innocent purchaser. Other incidental facts might be mentioned and other incidental legal propositions might be discussed, but in its final analysis this is a case of a mortgagee relying upon a Torrens title, and loaning money in all good faith on the basis of the title standing in the name of the mortgagors only thereafter to discover one defendant to be an alleged forger and the other defendant, if not a party to the conspiracy, at least having by his negligence or acquiescence made it possible for the fraud to transpire. Giving to the facts the most favorable interpretation for Vallejo, yet, as announced by the United States Supreme Court, the maxim is, as between two innocent persons, in this case Angela Blondeau and Jose Vallejo, one of whom must suffer the consequence of a breach of trust, the one who made it possible by his act of confidence must bear the loss, in this case Jose Vallejo. Accordingly, the four errors assigned will be sustained, the judgment reversed, and in the court of origin a new one entered sustaining plaintiff's mortgage and granting her the relief prayed for in her complaints .So ordered, without special pronouncement as to the costs in either instance. Villa-Real, Imperial, Butte, and Goddard, JJ., concur. Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-15466 February 18, 1921

FIDELITY and SURETY COMPANY OF THE PHILIPPINE ISLANDS, plaintiff-appellant, vs. PASTOR CONEGERO VDA. DE LIZARRAGA, ET AL., defendants-appellees. Ross and Lawrence for appellant. No appearance for appellees. STREET, J.: Prior to June 26, 1913, Pastora Conegero was the holder of Torrens certificate of title, No. 147, covering a parcel of land in the city of Iloilo. After the Torrens title aforesaid had been issued, a cadastral survey covering this and other land in the city of Iloilo was undertaken by the Government; and in the course of the cadastral proceedings the court found it convenient or desirable to order that the certificate of title No. 147 be cancelled and that a new certificate of title should be issued to Pastora Conegero in its stead. The explanation of this

order, though unimportant for the purposes of this decision, is said to be that the court had discovered that certificate No. 147 included, in addition to the land of which Pastora Conegero was the true owner, two strips of land which belonged to her children. At any rate, Pastora Conegero surrendered certificate No. 147, and two new certificates were issued: one to herself (No. 194), and another to her children (No. 195). The land included in certificate No. 194 may be assumed, as stated in the agreed facts, to be the same as that which had been included in the old certificate No. 147, though it is possible that the lots covered by the two certificates are not exactly the same. With certificate No. 195 we are not here concerned. The cancellation of certificate No. 147 was effected under the authority of an order of the Court of Fist Instance of Iloilo, dated July 26, 1913; and the mandate of the Chief of the General Land Registration Office, directed to the register of deeds in Iloilo, directing the change, is dated October 1, 1914. While Pastora Conegero was yet the holder of certificate No. 147, she mortgaged the land covered by it to El Hogar Filipino to secure a debt, and the encumbrance thereby created was noted on her duplicate certificate of title. On March 30, 1916, Pastora Conegero entered into an agreement with one Samuel Thomas whereby, in consideration of the sum of P1,637.49, she bargained and sold to the said Thomas the property described in title No. 147. At the time this sale was made the Torrens certificate covering the land was not produced or delivered to the purchaser in the city of Manila where the contract was made; and in fact at that time certificate No. 147, referred to in the description of the land in said contract, was non-existent, having been cancelled as already stated. Of this fact, however, the purchaser was presumably ignorant; and although he (or his attorney) was aware that the owner's certificate, No. 147, had been sent to Iloilo for use in the cadastral proceedings, the irregularity of making the contract without having the certificate in hand was considered unimportant. The description inserted in the contract was taken, it may be observed, from that in the mortgage executed by Pastora Conegero in favor of El Hogar Filipino. Soon after the contract of sale, evidenced by the deed of March 30, 1916, had been executed by Pastora Conegero in favor of Samuel Thomas, the latter's attorney sent the document to Francisco Enage, register of deeds in Iloilo, in order that the transfer might be registered and that a new certificate might in due course be issued to Samuel Thomas. To this communication, Mr. Enage replied, returning the document and informing the writer that the registration thereof could not be effected for the reason that certificate No. 147 had been cancelled and has been supplanted by certificate No. 194 in the name of Pastora Conegero, The register of deeds, however, noted in his entry book the fact that such a deed had been presented to him at 10 a.m., on April 18, 1916, and placed a memorandum to the same effect on the document itself. On October 18, 1916, Pastora Conegero mortgaged the property described in certificate No. 194 to the Fidelity and Surety Company of the Philippine Islands to secure a credit of P2,000 guaranteed by the surety company. This mortgage was registered and noted on the original certificate of title, No. 194, by the register of deeds at Iloilo on March 29, 1917. On November 2, 1917, Samuel Thomas commenced an action in the Court of First Instance of Iloilo to compel Pastora Conegero to produce certificate No. 194 for cancellation, and to secure the issuance of a new certificate of title in his name. Notice of lis pendens was filed on November 5, 1917. On November 9, 1917, Pastora Conegero executed a third mortgage, to Southworth and Goyena, to secure a note for P500. On March 22, 1918, the Fidelity and Surety Company of the Philippine Islands brought this action to foreclose its mortgage, naming Samuel Thomas and Southworth and Goyena as codefendants with Pastora Conegero. After hearing the evidence, the trial court held that the property belonged to Samuel Thomas, when the plaintiff's mortgage was registered, and limited the plaintiff's remedy to a judgment in personam against Pastora Conegero for P1,982.50. From this judgment the plaintiffs appealed.

The mortgage in favor of El Hogar Filipino was of course superior to all subsequent transfers and incumbrances; and it is equally clear that the mortgage in favor of Southworth and Goyena is inferior to that in favor of the present plaintiff, the Fidelity and Surety Company. The only question which here concerns us, therefore, is whether the deed of March 30, 1916, to Samuel Thomas is superior to the mortgage of October 18, 1916, executed in favor of the Fidelity and Surety Company. The solution of this question depends upon the effect to be conceded to the notation made on April 18, 1916, by the register of deeds of Iloilo in his entry book concerning the deed executed by Pastora Conegero in favor of Thomas. Did the entering of this memorandum in said book operate as an effective registration of the title, or transfer of title, and thereby held that it had this effect. With this conclusion we are unable to agree. Section 56 of Act No. 496 provides in part as follows: Each register of deeds shall keep an entry book in which he shall enter in the order of their reception all deeds and other voluntary instruments, and all copies of writs or other process filed with him relating to registered land. He shall note in such book the year, month, day, hour, and minute of reception of all instruments, in the order in which they are received. They shall be regarded as registered from the time so noted, and the memorandum of each instrument when made on the certificate of title to which it refers shall bear the same date. We think that, where the statute says that an instrument shall be regarded as registered from the time the annotation is made in the entry book, these word must be understood to apply to such instruments as are competent to transfer, or effect, the Torrens title and upon which a new certificate is in fact issued in due course. What is here really meant, we suppose, is that wherever registration is actually effected, and a new certificate issued, the registration is retroactive and takes effect by relation as of the date when the annotation in the entry book was made. n the light of this interpretation it is quite evident that the mere annotation of a contract relating to land covered by a Torrens title, which is not followed by registration and the emission of a new certificate, is without significance as regards its effect upon such title. To put the point another way, it might be said that the constructive registration, if such it be, which results from the notation of a document in the entry book cannot be given effect in the case where actual registration, or the actual issuance of a new certificate, is impossible. At the time the absolute deed of sale in favor of Thomas was presented to the register of deeds in Iloilo in the case before us the Torrens title upon which that deed was supposed to operate was nonexistent, having been judicially canceled with the consent of the owner. There can be no constructive registration in a situation of this kind. Under section 50 of Act No. 496, "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, but shall operate only as a contract between the parties and as evidence of authority to the clerk or register of deeds to make registration. The act of registration shall be the operative act to convey and affect the land." The steps by which registration is accomplished are fully set out in section 57 of the same Act; and by reference thereto, it will be seen that registration of the transfer of registered land depends upon several vital conditions, among which is the requirement that the grantor's duplicate certificate, upon which the title is founded, shall be produced before the register of deeds for cancellation; and that he shall also have before him the original certificate, likewise to be cancelled. This prerequisite condition was not complied with when the deed to Thomas was presented for registration. On the other hand, the conveyance of the land covered by certificate No. 194, by way of mortgage to the Fidelity and Surety Company, was effected in compliance with all legal requirements. As a consequence it must be held that the title acquired by the Fidelity and Surety Company is superior to that acquired by Samuel Thomas. It follows that the judgments appealed from must be reversed; and the cause will be remanded to the court of origin with directions to proceed to the foreclosure of the plaintiff's mortgage in the manner prescribed by law. No special pronouncement will be made as to costs of either instance. So ordered.

Mapa, C.J., Araullo, Malcolm and Villamor, JJ., concur. Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-43094 August 31, 1936

MATEO C. SANCHEZ, applicant-appellee, vs. THE DIRECTOR OF LANDS, THE DIRECTOR OF FORESTRY, MARTINA ARIZALETA, ET AL., oppositors. THE DIRECTOR OF LANDS, appellant. Office of the Solicitor-General Hilado for appellant. Leonardo Abola for appellee. LAUREL, J.: On January 9, 1932, Mateo C. Sanchez filed with the Court of First Instance of Masbate an application for the registration of three parcels of land situated in the barrio of Uson, municipality of Dimasalang, Province of Masbate, described in the plan (Exhibit A) and in the technical description (Exhibit A-1) to the application. The application was opposed by the Director of Lands on the ground that the said parcels of land are public lands and that the petitioner does not possess any title fit for registration; by the Director of Forestry on the ground that portions thereof are public forests; and by Martina Arizaleta and Jose, Isidro and Francisco Moraza who claimed lot No. 1 indicated in the plan. The oppositions filed by the last-named persons and by the Director of Forestry were later on withdrawn. On October 8, 1934, the trial court rendered a decision overruling the opposition of the Director of Lands and ordering the registration of the three parcels of land in question in favor of the conjugal partnership of Mateo C. Sanchez and Priscila Zamora subject to a right of way indicated by the red line in Exhibit 1 of the Bureau of Forestry. On December 12, 1934, the provincial fiscal of Masbate, on behalf of the Director of Lands and the Director of Forestry, filed a motion for new trial on the ground that the decision of the trial court was contrary to law and the weight of the evidence, which motion was set for hearing on December 22, 1934. On December 15, 1934, prior to the date set for the hearing of the motion for new trial, the provincial fiscal of Masbate, on behalf of the Director of Lands and the Director of Forestry, filed the bill of exceptions in this case which was approved by the trial court on January 7, 1935. It is admitted by the appellant Director of Lands that the provincial fiscal of Masbate who represented him, filed the bill of exceptions while the motion for new trial was still pending resolution by the trial court. The presentation of the bill of exceptions prior to the resolution of a motion for new trial has the effect of withdrawing such motion for new trial. (Conspecto vs. Fruto (1915], 31 Phil., 144, 147, cited with approval in Dimaliwat vs. Dimaliwat [1931], 55 Phil., 673, 679; Heirs of Advincula vs. Imperial [1932], 56 Phil., 837; Laxamana vs. Carlos [1932], 57 Phil., 722, 725, 726.) The fact that the case before us is one of registration is immaterial because the rule with reference to the order of filing the motion for new trial, exception, appeal and bill of exceptions is the same in ordinary civil actions and in registration proceedings. (Laxamana vs. Carlos, supra, citing sec. 14, Act No. 496, as amended by Act No. 1108, and Director of Lands vs. Court of First Instance of Tarlac [1928], 51 Phil., 805.) It is well-settled that in order that the evidence adduced before the trial

court may be reviewed by this court it is necessary, under section 497, subsection 2, of the Code of Civil Procedure, (a) that the excepting party file in the trial court a motion for new trial on the ground that the evidence was insufficient to justify the decision; (b) that said motion be overruled by the trial judge; and (c) that due exception be taken to the overruling of the motion. (See Lopez vs. Orozco [1908], 11 Phil., 53, 54; De la Rama vs. De la Rama [1906], 201 U. S., 303; 11 Phil., 746, 751; Lazarte vs. Nolan [1921], 42 Phil., 563, 566, citing Singayan vs. Mabborang [1908], 10 Phil., 601, Sandeliz vs. Reyes [1909], 12 Phil., 506, Buencamino vs. Soriano [1915], 29 Phil., 230, and Layda vs. Legazpi [1918], 39 Phil., 83; Granados and Granados vs. Bandelaria [1923], 45 Phil., 505, 507-509 and cases cited; Dais vs. Torres and Ibaez [1933], 57 Phil., 897, 904.) It has also been held that the motion and exception should be incorporated in the bill of exceptions (Rubert and Guamis vs. Luengo and Martinez [1907], 8 Phil., 732) and that in his brief the appellant should assign errors raising questions of fact (Granados and Granados vs. Bandelaria, supra; Dais vs. Torres and Ibaez, supra; Enriquez vs. Enriquez [1907], 8 Phil., 565, 566; Capellania de Tambobong vs. Antonio [1907], 8 Phil., 683, 684; Paterno vs. City of Manila [1910], 17 Phil., 26-29; Santiago vs. Felix [1913], 24 Phil., 378, 383, 384) and cite the pages of the record where evidence relied upon may be found. (Palarca vs. Baguisi [1918], 38 Phil., 177, 178.) We are, therefore, constrained to accept the findings of fact made by the trial judge. Even accepting, however, the facts found by the trial judge, we do not feel justified in granting to the applicant, Mateo C. Sanchez, more land than what his title calls for. The findings of fact of the lower court are contained in the following paragraph of its decision: Se ha demostrado por las pruebas del solicitante, a satisfaccion del Juzgado, que desde el ao 1886 Juan Perez de Tagle estaba en posesion de los tres lotes de terreno cuyo registro se solicita, y desde el ao 1889 hasta 1894 se han tomado los pasos por el mismo para adquirir dichos terrenos por compra del Estado, habiendo sido dichas parcelas medidas y tasadas por la Inspeccion General de Montes (exhibits B y B-1); que en 1896, dichos tres lotes de terreno, que forman una sola parcela, fueron vendidos por Juan Perez de Tagle a favor de Dolores Ramirez; que la muerte de esta, ocurrida en 1904, le heredo y le sucedio en la posesion su hija Remedios Medina, quien, a su vez, en 10 de abril de 1917 lo vendio, con consentimiento de su esposo, el testigo Antero Zafra, a favor de Jose Y. de Egurrola (Exhibit C), y este a su vez, en 10 de septiemtbre de 1921, lo traspaso en venta a favor del aqui solicitante Mateo C. Sanchez y que tanto la posesion de este asi como la de sus anteceros sobre el terreno en cuestion, ha sido siempre quieta, publica, continuada y adversa y en concepto de dueo, habiendolo dedicado desde entonces hasta ahora para pasto de ganados. It should be observed that the land found to have been occupied by Juan Perez de Tagle since 1896 is that in reference to which "se han tomado los pasos por el mismo para adquirir dichos terrenos por compra del Estado, habiendo sido dichas parcelas medidas y tasadas por la Inspeccion General de Montes (exhibits B y B-1)" Exhibit B refers to the preliminary steps of inspection and survey ordered in connection with the application of Juan Perez de Tagle for the acquisition by purchase from the Government of one parcel of land "que linda por el norte con bosques del Estado, por el sur con cogonales del Estado, por el este y este con bosques tambien del Estado." Exhibit B-1 is entitled "expediente general referente a la enajenacion en publica subasta de un terreno situado en la jurisdiccion del Pueblo de Uson (Masbate y Ticao) promovido por D. Juan Perez de Tagle" and adjudicated on May 13, 1894 to the applicant Tagle "el terreno de referenda radica en el Sitio de Bagsulan jurisdiccion de dicho pueblo y distrito dista unos veinte kilometros de la Yglesia del pueblo y fuera de la que por la principalia se considera como legua comunal, sus limites son: al norte, este, sur y oeste con terrenos del Estado cuya superficie es de Ciento treinta y una hectareas y mil trescientos metros cuadrados tasados a tres pesos cincuenta centimos la hectarea," for P458.88. Mateo C. Sanchez, however, seeks the judicial confirmation of a title to 1,107 hectares, 91 ares and 70 centares of public land. Why is there a difference of 976 hectares, 78 ares and 70 centares between the area stated in the

grant and that stated in the application? In his brief, the applicant accounts for this gross discrepancy by stating that "surveys made during the Spanish regime were inaccurate, because of lack of proper means and scientific instruments", so that, in his opinion, the area of 131 hectares and 13 ares stated in Exhibit B-1 "can not be exact." We are not inclined to hold that the area stated in Exhibit B-1 is erroneous. In accordance with the Royal Decree of June 25, 1880 (published in the Gazeta de Manila on September 8, 1880), said to have marked the beginning of modern Spanish land legislation in the Philippines (Vargas & Maalac, Philippine Land Registration Law, pp. 11-14), the "Decreto del Gobierno General de 1880" was promulgated providing, among other things, that no title could be issued without a correct survey of the land covered thereby being first made and without the corresponding plan thereof showing the correct boundaries and areas or, to use the very language of the decree, con exactitud (de) la cabida y linderos." For a better understanding of the said decree, we shall quote its pertinent provisions: Considerando que la demanda de terrenos baldios realengos y de composiciones de tierras cultivadas, aument diariamente en proporcion considerable, haciendo cada vez mss imposible que los empleados de Montes puedan desempenar elservicio de medicion y tasacion, on la brevedad conveniente. Considerando que es de sumo interes facilitar todo lo posible el establecimiento de la verdadera propiedad rural, este Gobierno General viene en decretar lo siguiente: 1. La clasificacion de los terrenos realengos que los particulares deseen adquirir por compra o composicion, se hara siempre por los empleados facultativos de Montes, los cuales previo reconocimiento si fuere necesario, o con omision del mismo si tuviese ya conocimiento detallado de la localidad en que el terreno denunciado radique, determinaran si por razones cosmologicas, hidrologicas o de aptitud para el cultivo agrario permanente, debe o no accederse a la enajenacion. 2. Los interesados presentaran un croquis del terreno levantado a su costa por un agrimensor, debiendo hacer constar en aquel con exactitud la cabida y linderos. 3. A las operaciones de medicion asistiran el gobernadorcillo o un teniente de justicia y dos principales, extendiendose un acta firmada por todos los cocurrentes en que conste la distancia del predio a la iglesia del pueblo, si el terreno esta o no baldio en todo o en parte, si contien o no arbolado maderable y de que clase, quienes son los poseedores de las roturaciones en caso de haberlas, la cabida de cada una de estas y si se han presentado o no reclamaciones antes de la operacion o durante la misma, a cuyo efecto se anunciara por bandillo, durante tres dias consecutivos, aquel en que las operaciones hayan de ejecutarse, constando dicha publicacion en el acta. 4. Los gobernadorcillos no podran negar el concurso de la comision antes indicada, a los particulares que lo soliciten quedando de lo contrario incursos en la multa que en cada caso se determine. (Berriz, Guia del Comprador de Terrenos, pp. 336-338.) (Emphasis supplied.) It is to be presumed that in the grant (Exhibit B-1) the requirements of the law above-quoted have been followed. (Sec. 334, pars. 14 and 31, Code of Civil Procedure.) The area of the land sold to Juan Perez de Tagle as stated should, therefore, be accepted as true. The applicant also cites the cases of Escudero and Marasigan Director of Lands ([1922], 44 Phil., 83) and Smith, Bell & Co. vs. Director of Lands ([1924], 50 Phil., 879, 882), as authority for the proposition that the area given is not the principal element for the identification of land. The applicant, indeed, could have cited many more cases holding that what really defines a piece of land is not the area mentioned in its description but rather the boundaries therein laid down. As stated in the case of Loyola vs. Bartolome ([1919], 39 Phil., 544, 550): "It is not of vital consequence that a deed or contract for the sale of land should declare that the area with

mathematical accuracy. It is sufficient if its extent is objectively indicated with sufficient precision to enable one to identify it; and where the boundaries given are adequate for this purpose, an error as to the superficial area is immaterial." (See also Government of the Philippine Islands vs. Franco [1926], 49 Phil., 328, 329; Prieto vs. Director of Lands [1926], 50 Phil., 971-973; Government of the Philippine Islands vs. Abaja [1928], 52 Phil., 261, 265.) But a careful review of the applicable cases will show that it is only when the boundaries given are sufficiently certain and the identity of the land clearly proved by the boundaries thus indicated that an erroneous statement concerning the area can be disregarded or ignored. Otherwise, the area stated is followed. A few illustrative cases will be given. In the case of Pamintuan vs. Insular Government ([1907], 8 Phil., 512, 515), it appears that the Spanish Government made a grant of 92 hectares and 10 ares of public land to the ancestors of the petitioner. The petitioner, however, claimed in is application 626 hectares, 38 ares and 95 centiares of land. This court said: While the proposition of law laid down by the court below may be true to the effect that natural boundaries will prevail over area, yet when the land sought to be registered is almost seven times as much as that described in the deed, the evidence as to natural boundaries must be very clear and convincing before that rule can be applied. No such evidence was given in this case, and the judgment of the court below can not stand. For a quite similar reason, in the case of Paras vs. Insular Government ([1908], 11 Phil., 378), the petitioner failed in his attempt to prove his ownership of 67 hectares of land by presenting a patent from the Spanish Government for 43 hectares, and in the case of Carrillo vs. Insular Government ([1908], 11 Phil., 379), the petitioner failed in his attempt to prove his ownership of 107 hectares of land by presenting a patent from the Spanish Government for 26 hectares. In the case of Waldroop vs. Castaeda ([1913], 25 Phil., 50, 56) it appears that the Spanish Government conveyed to Hilario Castaeda 23 hectares, 11 ares and 12 centiares of public land. This parcel of land was later on conveyed to the petitioners. Due to the absence of proof that the land which Hilario Castaeda had obtained from the Government had natural boundaries sufficient to clearly segregate it from the adjoining lands, it was held that the only land to which the petitioners were entitled was the land which Hilario Castaeda had obtained from the Spanish Government. In this case, the following doctrine was laid down by this court: In order that natural boundaries of land may be accepted for the purpose of varying the extent of the land included in a deed of conveyance, the evidence as to such natural boundaries must be clear and convincing. Such natural boundaries must be of such a character as to definitely and accurately segregate the land in question from the adjoining property. There must be no doubt left that the land included within the natural boundaries is the, same land which was intended to be sold by the deed of conveyance. (See also Sales vs. Director of Lands, 61 Phil., 759.) As already indicated above, the boundaries of the land purchased by Juan Perez de Tagle from the Spanish Government in 1894 were as follows: "Al norte, este, sur y este con terrenos del Estado." (Exhibit B-1.) Nothing can be more uncertain and indefinite! It should be observed in this connection that the Royal Decrees in force at the time of the acquisition by Juan Perez de Tagle did not recognize any grant of public land in excess of one thousand hectares. (See Valdez vs. Director of Lands, 62 Phil., 362.) The Royal Decree of November 25, 1880 provides: Considerando que la naturaleza e importancia del asunto aconsejan adopter algunas precauciones para evitar ciertos abusos de trascendencia, que al amparo de disposiciones transitoriales pudieran cometerse, y que redundarian en perjuicio del Tesoro publico y de los particulares que se dedican a cultivar y no a

especular con la venta a otros, de los terrenos que se les conceden: Considerando por ultimo que deben exigirse por el Estado ciertas garantias para aceptar las mediciones y tasaciones que practiquen los agrimensores particulares en terrenos que son de su pertinencia; S. M. el Rey (q. D. g.) ha tenido a bien aprobar el decreto de ese Gobierno General de 28 de agosto ultimo con las modificiones siguientes: "1. La extension de los terrenos a los cuales se refiere dicho decreto, no podra exceder de mil hectareas para los terrenos de secano; quinientas para los de igual clase poblados de arbolado maderable, y ciento para los clasificados en el articulo 6. del mismo decreto con la frase "que a poca costa puedan hacerse de regadio"." The Royal Decree of October 26, 1881, repeats the same restriction in more vigorous terms: Es asimismo preciso, que para favorecer la division de la propiedad territorial y el fomento del cultivo intensivo y el de las producciones como el tabaco, la calla de azucar, el cafe y otros semejantes, que se atienda con mais interes a las solicitudes en demanda de pequenas extensiones de terreno para dedicarlos a los cultivos citados, que a las que no hallen en ese caso y se comprenda que no solo no han de ponerse desde luego en condiciones de produccion, sino que lo que busca es acaparar los mejores terrenos para poderse despues lucrar con su venta. En su consecuencia S. M. el Rey (q. D. g.) ha tenido a bien disponer lo siguiente: "1. Que a fin de favorecer la division de la propiedad, en las ventas de terrenos se tenga en cuenta lo prevenido en el parrafo 1. de la Real Orden de 25 de noviembre de 1880, para que no se verifique ninguna concesion que exceda de mil hectareas en terrenos de secano, de quinientas cuando esten poblados de arbolado y de ciento cuando sean tierras que a poca costa puedan hacerse de regadio." It should also be observed that the amount of permissible error in the measurement of public land was only five per cent of the total area. Royal Decree of January 19, 1883, article 27.) There is still another point which weigh heavily against the claims of the applicant. It appears that Juan Perez de Tagle contracted with the Spanish Government for the sale of the parcel of land in question at a fixed price per unit of measure or at P3.50 per hectare, to be exact. There can be no mistake as to the intention of the parties, no doubt as to the area conveyed by the Government to Tagle. And if Tagle bought 131 hectares and 13 ares of land paying the sum of P3.50 per hectare, it is not seen why the same land having been conveyed to the applicant, the latter should now be allowed to claim a bigger tract of land. This would be unfair to the State. Under the laws in force at the time the purchase by Tagle was made, lands of the public domain were sold only by unit of measure, that is to say, at a fixed price per hectare or per quion, and not in the mass (cuerpos ciertos). (See Valdez vs. Director of Lands, 62 Phil., 362.) Articles 1469 and 1470 of the Spanish Civil Code embody a rule of construction which has been followed, according to Manresa, by the Spanish Government in the sale of public lands. Article 1469, in part, provides: If a sale of real property should be made with a statement of its area, at a certain price for each unit of measure or number, the vendor shall be obliged to deliver to the vendee, if the latter should require it, all that which has been specified in the contract; but should, this not be possible, the vendee may choose between a proportional reduction in the price or the rescission of the contract, provided that in the latter case the deficiency be not less than one-tenth of the stated area of the property. And article 1470 provides: If in the case mentioned in the next preceding article the area of the realty should be greater than that specified in the contract, the vendee shall be obliged to pay the price of the excess if the greater area should not exceed one-twentieth of that specified in the contract; but it should be more than one-

twentieth, the vendee may choose between paying the greater value of the property or withdrawing from the contract. This court recognized and gave effect to the principle governing the sale of public lands in the case of Barretto vs. Director of Lands (G. R. No. 29717, promulgated December 29, 1928, not reported). In this case, the title conveying a tract of public land in the Province of Zambales to Antonio Lorenzo Barretto was described by natural boundaries as follows: "Baldios y realengos unos terrenos situados en la Provincia de Zambales, jurisdiccion del Pueblo de Cabungan, Sitio de Balintagac, lindando al sur, con el Monte de Carmen; al norte, el Rio Anonang; al este, el rincon de Balintagac y al oeste el Monte de Tictic." The are was stated to be 200 quiones and for each quion four reales were paid. This court said: Dado que, excepto el Rio Anonang al lado norte, los demas linderos consignados en este titulo no son puntos o lineas especificas por no constar claramente ni en tal documento ni en las pruebas aportadas donde empiezan determinadamente el monte del Carmen, el rincon de Balintagac o el Monte de Tictic, y teniendo en cuenta que la venta efectuada por el Gobierno espanol a favor de D. Antonio Lorenzo Barretto causante del aqui solicitante, no fue a cuerpo cierto toda vez que los linderos son inciertos sino de 200 quinones a razon de cuatro reales cada quinon, es decir, a un tanto por unidad de medida, entendemos acertada la alegacion de los abogados del apelante de que la verdadera intencion del Estado como vendedor y del referido D. Antonio Lorenzo Barretto como comprador fue transferir a este 200 quinones de terreno en aquel Sitio de Balintagac extendiendose desde el Rio Aninang hacia el sur, este u oeste. Y tal intencion, del Estado de celebrar la venta, no a cuerpo cierto, sino a un la tanto por unidad de medida y que, antes del 7 de abril de 1869 todavia daba lugar a incertidumbres en casos dudosos, quedo desde dicha fecha definitivamente reconocida por el orden del Poder Ejecutivo, la cual se refiere Manresa en el parrafo que trascribimos a continuacion: "Desde esta fecha de 7 de abril de 1869 es, por lo tanto, indudable que las ventas de bienes del Estado no se hacen a cuerpo cierto, sino a razon de un tanto por unidad de medida o numero. Por otra parte, las sentencias del Tribunal Supremo de 5 de mayo de 1870 y de 11 de febrero de 1877, y el Real Decreto sentencia de 20 de marzo de 1885, coinciden en afirmar que la doctrina de los cuerpos ciertos no pueden tener aplicacion a las ventas del bienes del Estado, sea cual fuere su fecha." (10 Manresa, Comentarios al Codigo Civil Espaol, pag. 164, Edicion de 1908.) The same principle has been embodied in several decrees. In the Royal Decree of November 27, 1880, published in the Gaceta de Manila, No. 65, of March 6, 1881, it was said, among other things: Acreditado por los mismos titulos que presenta Ramirez, que lo que verdaderamente adquirio del Estado o mejor sus causantes D. Mariano Albea y D. Felix Guianzo, se reduce solo a 2438 hectareas, poco mas o menos, es evidente que la pretension de que se le reconozca como legitimo poseedor de 16,000, a pretexto de lo que adjudicado ha de etenderse como cuerpo cierto, si se apoya en disposicion alguna positiva, ni en doctrina, ni principios atendibles bajo ningun concepto, pues la teoria de cuerpos ciertos, desechada ya en la Peninsula absolutamente, segun se declara en varias disposiciones del Gobierno, no ha regido nunca en Filipinas, ni aun cuando hubiera estado en vigor, seria aplicable a este caso dados los terminos e que se hicieron las respectivas adjudicaciones. Otro tanto puede decirse de las demis pretensiones formuladas por el recurrente Ramirez, invocando los principios de aquidad porque esta no puede ser decisiva cuando se perjudican los intereses de una de las partes; y es notorio que aqui se perjudicarian notablemente los del Estado, tolerando una usurpacion tan considerable o recibiendo como precio muchisimo menos del que realmente tienen los terrenos que al mismo Estado pertenecen. In paragraph 5 of the "Decreta del Gobierno General de 20 de agosto de 1880", hereinbefore referred to, the principle regarding the conclusiveness of area was plainly recognized:

En cualquiera epoca en que se descubra error o ocultacion en la medida del terreno, que exceda de un quinto de la cabida total, y en caso de que se averigue que no ha sido consignada en el acta la reclamacion hecha por alguna persona, o que los limites no se han expresado con exactitud, se anulara la adjudicacion y el Estado reivindicara la propiedad del terreno, cualesquiera que sean las condiciones en que se halle, sin indemnizacion alguna por las mejoras que el poseedor hubiere hecho, ni reintegro de lo satisfecho. Of the same tenor is paragraph 3 of the Royal Decree of June 22, 1882: Si entablase reclamacion sobre exceso o falta de cabida del terreno subastado y del expediente resultase que dicha falta o exceso iguala a la quinta parte de la expresada en el anuncio, sera nula la venta; quedando en el caso contrario, firme y subsistente y sin derecho a indemnicacion la Hacienda ni el comprador. Article 27, Royal Decree of January 19, 1883, provided: El error tolerable en las mediciones de baldios realengos sera el de cinco por ciento de la cabida total. Cuando exceda de dicha cantidad y no pase del quince por ciento, el miismo poseedor del terreno tendra derecho a la composicion de la parte sobrante por el precio de la tasacionque corresponda considerado como baldio; pero si el exceso fuese mayor de quince por ciento se sacara a subasta con obligacion por parte del rematante de indemnizar al poseeder el importe de las mejoras se, hara por un perito nombrado por cada parte y por un tercerto nombrado por la Administracion en caso de discordia. Cuando el error de la medicion exceda del quince por ciento, se instruira expediente para exigir a los peritos la responsabilidad que corresponda. In three recent cases involving also lands situated in the Province of Masbate, this court applied the foregoing principle governing the sale of lands of the public domain and denied the application for registration of lands in excess of those stated in the titles concerned. These are the cases of Rosado vs. Director of Lands (58 Phil., 833); Martinez vs. Director of Lands (G. R. No. 37303, promulgated January 19, 1934 [59, Phil., 958]); and Valdez vs. Director of Lands (62 Phil., 362). In the first of these cases, the title described the land as follows: "Al norte y oeste, terrenos del Estado; al este, playa, y al sur, bosque y terrenos del Estado." The area was stated to be 144 hectares, 89 ares and 76 centiares. The applicant, however, sought the registration in his favor of 966 hectares, 30 ares and 95 centiares of public pasture land. In rejecting the application, this court said: It is doubtless true that when a deed describes a tract of land by definite and ascertainable boundaries, an additional statement as to the area included is of secondary importance, because it is presumed that the parties to the deed contracted with reference to the land specifically delimited in the description. But this rule, has no application in the present case for two reasons: First, because the land is not specifically delimited by definite and ascertainable boundaries; and second, because the record shows, as above set out, that the Spanish Government and Alejandro Danao contracted with reference to a definite area, because the minimum acceptable bid was based on the area of 144 hectares, 89 ares and 70 centares. In the second case, the title described the land as bounded on the north by the Boracay River and public land; on the east by the sea; on the south, by the Bangad River and public land; and on the west, by public cogon land. The area was stated to be 80 hectares, 71 ares and 30 centiares but the applicant sought the registration of 866 hectares, 54 ares and 17 centiares of land. After quoting the rule laid down in the case of Rosado vs. Director of Lands, supra, this court said: In the case before us the price of the grant was estimated on the basis of two pesos per hectare and the price paid for 80 hectares, 71 ares and 30 centares amounted to only about P161. This does not show a right to the 866 hectares and a fraction claimed by the appellant. In the third and last case, the total area sold by the Spanish Government and purchased by the grantees in 19 titles was 2,225.9194 hectares of land. The lands were sold to the grantees at fixed price per hectare. In denying

the application for the 28,006.5959 hectares of public land, this court referred to the two cases above discussed and said: Under the Royal Decree of October 28, 1869, the decisions of the Intendencia General de Hacienda adjudicating titles to public lands were required to be published in the Gaceta de Manila of which we take judicial notice. (Director of Lands vs. Absolo, 46 Phil., 282, 307.) From these decisions as well as from the recitals in the nineteen titulos themselves, which are the origin of the claimants' title in the case before us, it appears that each of the nineteen tracts was sold to the purchaser at a fixed price per hectare, that is to say, both the government and the purchaser contracted specifically with reference to the area stated in the titulos. For each title the government was paid by the hectare for the number of hectares indicated in the title and no more. Any area granted to these applicants in excess of the percentage of permissible error would be a pure gift without consideration whatever to the State. In view of the foregoing, we conclude that the applicant, Mateo C. Sanchez, is entitled to the registration only of 131 hectares and 13 ares of the land claimed by him and to the issuance to him of a certificate of title covering this area. Judgment is accordingly modified and upon the submission of an amended and approved plan in conformity with this decision, the lower court will order the issuance of the corresponding decree of registration and confirmation of the title. No costs will be charged in this instance. So ordered. Avancea, C. J., Villa-Real, Abad Santos, Imperial, Diaz, and Recto, JJ., concur. G.R. No. L-16394 December 17, 1966

JOSE SANTA ANA, JR. and LOURDES STO. DOMINGO, petitioners, vs. ROSA HERNANDEZ, respondent. Manuel J. Serapio for petitioners.. J. T. de los Santos for respondent. REYES, J.B.L., J.: Appeal from the decision of the Court of Appeals in its Case CA-G.R. No. 20582-R, in effect reversing the decision of the Court of First Instance of Bulacan in its Civil Case No. 1036. The petitioners herein, spouses Jose Santa Ana, Jr. and Lourdes Sto. Domingo, owned a 115,850-square meter parcel of land situated in barrio Balasing, Sta. Maria, Bulacan, and covered by Transfer Certificate of Title No. T-3598. On 28 May 1954, they sold two (2) separate portions of the land for P11,000.00 to the herein respondent Rosa Hernandez. These portions were described in the deed of sale as follows: Bahaguing nasa gawing Hilagaan. Humahanga sa Hilaga, kina Maria Perez, at Aurelio Perez; sa Timugan, sa lupang kasanib; sa Silanganan, kay Mariano Flores at Emilio Ignacio; sa Kanluran, kay Cornelio Ignacio; Mayroong (12,500), m.c. humigit kumulang. Bahaguing nasa gawing Silanganan Humahanga sa Hilagaan, sa kay Rosa Hernandez; sa Silanganan, kay Domingo Hernandez at Antonio Hernandez; sa Timugan, sa Sta. Maria-Tigbi Road; at sa Kanluran, sa lupang kasanib (Jose Sta. Ana, Jr.), mayroong (26,500) metros cuadrados, humigit kumulang. After the sale (there were two other previous sales to different vendees of other portions of the land), the petitioners-spouses caused the preparation of a subdivision plan, Psd-43187, was approved on 13 January 1955 by the Director of Lands. Rosa Hernandez, however, unlike the previous vendees, did not conform to the plan and refused to execute an agreement of subdivision and partition for registration with the Register of Deeds of

Bulacan; and she, likewise, refused to vacate the areas that she had occupied. Instead, she caused the preparation of a different subdivision plan, which was approved by the Director of Lands on 24 February 1955. This plan, Psd-42844, tallied with the areas that the defendant, Rosa Hernandez, had actually occupied. On 28 February 1955, herein petitioners-spouses filed suit against respondent Rosa Hernandez in the Court of First Instance of Bulacan, claiming that said defendant was occupying an excess of 17,000 square meters in area of what she had bought from them. Defendant Rosa Hernandez, on the other hand, claimed that the alleged excess, was part of the areas that she bought. The trial court observed: The only question, therefore, to be determined by the Court is whether or not the plaintiffs had sold two portions without clear boundaries but with exact areas (12,500 sq. m. and 26,000 sq. m.) at the rate of P.29 per square meter or, as defendant Rosa Hernandez claimed, two portions, the areas of which were not definite but which were well defined on the land and with definite boundaries and sold for the lump sum of P11,000.00. Finding for the plaintiffs, the said court ordered the defendant, among other things, to vacate "the excess portions actually occupied by her and to confine her occupation only to Lots 4-a and 4-b as shown in the plan, Exhibit E, of the plaintiffs . . .," referring to Psd-43187. Not satisfied with the judgment, defendant Hernandez appealed to the Court of Appeals. The Court of Appeals dismissed the complaint and declared Rosa Hernandez the owner of lots 4-a and 4-b in her plan, Psd-42844, upon the following findings: The contract between appellees and appellant (Exhibit D) provided for the sale of two separate portions of the same land for the single consideration of P11,000.00. Appellee Jose Santa Ana, Jr. said the transaction was by a unit of measure or per square meter, and that although the actual total purchase price of the two parcels of land was P11,300.00 at P0.29 per square meter the parties agreed to the sale at the reduced price of P11,000.00. The appellant denied this claim of appellees. Gonzalo V. Ignacio, the notarial officer before the contract of sale was executed, failed to corroborate Sta. Ana upon this point. Upon the contrary, Ignacio testified that appellant complained to him and the appellees to the effect that the areas stated in the contract were less than the actual areas of the parcels of land being sold and here we quote the notarial officer's own words: "That the area stated in the document will not be the one to prevail but the one to prevail is the boundary of the land which you already know." (p. 74, Innocencio). Sta. Ana is the nephew of the appellant, and the former's assurance probably appeased the latter against insisting in the correction of the areas stated in the contract of sale. Two witnesses testified for the appellant. Jesus Policarpio divulged that the same parcels of land involved in this case were previously offered to him by the appellees for the single purchase price of P12,000.00. Julio Hernandez stated that his sister, the herein appellant, had offered P10,000.00 as against the appellees' price of P12,000.00, and that he was able to persuade the parties to meet halfway on the price. Furthermore the previous conveyances made by the appellees for other portions of the same property (Exhibits B and C) are also for lump sums. The difference in area of 17,000 square meters is about one-half of the total area of the two parcels of land stated in the document, but not for this alone may we infer gross mistake on the part of appellees. The appellees admit the lands in question were separated from the rest of their property by a long and

continuous "pilapil" or dike, and there is convincing proof to show that the bigger lot (Lot 4-a) was wholly tenanted for appellees by Ciriaco Nicolas and Santiago Castillo and the smaller lot (Lot 4-b) was wholly tenanted for said appellees by Gregorio Gatchalian. These facts support the theory that the two parcels of land sold to the appellant were identified by the conspicuous boundaries and the extent or area each tenant used to till for the vendors. Again, appellees should not be heard to complain about the deficiency in the area because as registered owners and possessors of the entire land since 1949 they can rightly be presumed to have acquired a good estimate of the value and areas of the portions they subsequently sold. The Court of Appeals concluded by applying to the case Article 1542 of the new 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 greater or less area or number than that stated in the contract. The same rule shall be applied when two or more immovables are sold for a single price; but if, besides mentioning the boundaries, which is indispensable in every conveyance of real estate, its area or number should be designated in the contract, the vendor shall be bound to deliver all that is included within said boundaries, even when it exceeds the area or number specified in the contract; and, should he not be able to do so, he shall suffer a reduction in the price, in proportion to what is lacking in the area or number, unless the contract is rescinded because the vendee does not accede to the failure to deliver what has been stipulated. and declared Rosa Hernandez the owner of the whole of lots 4-a and 4-b of her own subdivision Plan Psd42844, notwithstanding their increased area as compared to that specified in the deed of sale. In turn, the Sta. Ana spouses appealed to this Court, assigning the following errors: The Court of Appeals committed a grave error of law when it departed from the accepted and usual course of judicial proceedings, by disturbing the findings of fact of the trial court, made upon conflicting testimonies of the witnesses for the plaintiffs, now in the petitioners, and the defendant, now the respondent, Rosa Hernandez. The Court of Appeals committed a grave error of law when it held that the deed of sale, Exhibit D, was for a lump sum, despite the fact that the boundaries given therein were not sufficiently certain and the boundaries indicated did not clearly identify the land, thereby erroneously deciding a question of substance in a way not in accord with law and the applicable decisions of this Honorable Court. On the face of the foregoing assignments of error and the petitioners' discussions thereabout, their position can be summarized as follows: that the Court of Appeals erred in substituting its own findings of fact for that of the trial court's, without strong and cogent reasons for the substitution, contrary to the rule that appellate courts shall not disturb the findings of fact of trial courts in the absence of such strong and cogent reasons; and that Article 1542 of the Civil Code of the Philippines does not apply, allegedly because the boundaries, as shown in the deed of sale, are not definite. In the first assignment of error, the petitioner spouses complain against the failure of the Court of Appeals to accept the findings of fact made by the Court of First Instance. The credibility of witnesses and the weighing of conflicting evidence are matters within the exclusive authority of the Court of Appeals, and it is not necessarily bound by the conclusions of the trial court. Both the Judiciary Act (R.A. 296, section 29) and the Rules of Court (Rule 45, section 2) only allow a review of decisions of the Court of Appeals on questions of law; and numerous decisions of this Court have invariably and repeatedly held that findings of fact by the Court of Appeals are conclusive and not reviewable by the Supreme Court (Galang vs. Court of Appeals, L-17248, 29

January 1962; Fonacier vs. Court of Appeals, 96 Phil. 418, 421; and cases therein cited; Onglengco vs. Ozaeta, 70 Phil. 43; Nazareno vs. Magwagi, 71 Phil. 101). Barring, therefore, a showing that the findings complained of are totally devoid of support in the record, or that they are so glaringly erroneous as to constitute serious abuse of discretion, such findings must stand, for this Court is not expected or required to examine and contrast the oral and documentary evidence submitted by the parties. As pointed out by former Chief Justice Moran in his Comments on the Rules of Court (1963 Ed., Vol. 2, p. 412), the law creating the Court of Appeals was intended mainly to take away from the Supreme Court the work of examining the evidence, and confine its task for the determination of questions which do not call for the reading and study of transcripts containing the testimony of witnesses. The first assignment of error must, therefore, be overruled. We now turn to the second. Despite the incontestable fact that the deed of sale in favor of Rosa Hernandez recites a price in a lump sum (P11,000.00) for both lots (Annex "C", Complaint, Rec. on App., p. 21), appellants insist that the recited area should be taken as controlling. They combat the application of Article 1542 of the Civil Code, on the ground that the boundaries given in the deed are indefinite. They point out that the southern boundary of the small parcel is merely given as "lupang kasanib" and that the same occurs with the western boundary of the bigger lot, which is recited as "lupang kasanib (Jose Sta. Ana, Jr.)". The Court of Appeals, however, found as a fact that the two parcels of land sold to appellant (i.e., appellee herein, Rosa Hernandez) were identified by the conspicuous boundaries. (Emphasis supplied) consisting in a long and continuous pilapil or dike that separated the lands in question from the rest of the property. On the basis of such findings, that can not be questioned at this stage, for reasons already shown, it is unquestionable that the sale made was of a definite and identified tract, a corpus certum, that obligated the vendors to deliver to the buyer all the land within the boundaries, irrespective of whether its real area should be greater or smaller than what is recited in the deed (Goyena vs. Tambunting, 1 Phil. 490; Teran vs. Villanueva, 56 Phil. 677; Azarraga vs. Gay, 52 Phil. 599; Mondragon vs. Santos, 87 Phil. 471). And this is particularly true where, as in the case now before this Court, the area given is qualified to be approximate only ("humigit kumulang", i.e., more or less Rec. on App., p. 22). To hold the buyer to no more than the area recited on the deed, it must be made clear therein that the sale was made by unit of measure at a definite price for each unit. If the defendant intended to buy by the meter be should have so stated in the contract (Goyena vs. Tambunting, supra). The ruling of the Supreme Court of Spain, in construing Article 1471 of the Spanish Civil Code (copied verbatim in our Article 1542) is highly persuasive that as between the absence of a recital of a given price per unit of measurement, and the specification of the total area sold, the former must prevail and determines the applicability of the norms concerning sales for a lump sum. La venta a cuerpo cierto indudablemente se verifica cuando en el contrato no solo no es precisado el precio singular por unidad de medida, sino que tampoco son indicadas los dimensiones globales bales del inmueble, pero tambien se verifica cuando aun ng habiendo sido indicado un precio singular por unidad de medida, sin embargo es especificada la dimension total del inmueble, en cuyo ultimo caso entre los dos indices en contraste, constituido uno por la falta de un precio singular por unidad de medida, y otro por la concrecion de las dimensiones globales del unmueble, la Ley da prevalencia al mero y presume que aquella individualizacion no habia tenido para las partes valor esencial, que solo constituia una superabundancia, y no significa que las partes hayan convenido aquel precio global solo en cuanto el inmueble tuviese efectivamente aquellas dimensiones totales, siendo de estimar que esta es

una presuncion absoluta, contra la cual ni el comprador ni el vendedor pueden articular prueba contraria. Por tanto, ni el comprador ni el vendedor pueden pretender una disminucicion o, respectivamente un suplemento de precio, cuando las dimensiones globales del unmueble resulten despues mayores o menores de las indicadas en el contrato, aunque aduzcan que solo en tanto han convenido el aquel precio en cuanto creian que las dimensiones de la cosa fueran las precisadas en el contrato. (Tribunal Supreme de Espaa, Sent. de 26 Junio 1956; Rep. Jurisp. Aranzadi, 2.729) (Emphasis supplied) The Civil Code's rule as to sales "a cuerpo cierto" was not modified by Act 496, section 58, prohibiting the issuance of a certificate of title to a grantee of part of a registered tract until a subdivision plan and technical description are duly approved by the Director of Lands, and authorizing only the entry of a memorandum on the grantor's certificate of title in default of such plan. The latter provision is purely a procedural directive to Registers of Deeds that does not attempt to govern the rights of vendor and vendee inter se, that remain controlled by the Civil Code of the Philippines. It does not even bar the registration of the contract itself to bind the land. WHEREFORE, the decision of the Court of Appeals, in its case No. 20582-R, is hereby affirmed. Costs against the appellants, Jose Santa Ana, Jr. and Lourdes Sto. Domingo. Concepcion, C.J., Barrera, Dizon, Regala, Makalintal, Bengzon, J.P., Zaldivar and Sanchez, JJ., concur. Castro, J., took no part. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. L-33794 May 31, 1982 MANILA ELECTRIC COMPANY, petitioner, vs. COURT OF APPEALS and PEDRO J. VELASCO, respondents.

MELENCIO-HERRERA, J.: In this Petition for the review of a Decision of the Court of Appeals, 1 judgment may be rendered on the basis of the following enumeration of facts: 1. On February 12, 1948, respondent Pedro J. Velasco (VELASCO, for short) purchased three (3) lots from the People's Homesite and Housing Corporation (PHHC, for short), located at the corner of the then South D and South 6 Streets of Quezon City. 2. The Deed of Sale, among others, provided that:
(b) The properties herein sold and any other construction that shall be made thereon shall be used exclusively for residential purposes and no business, industry or factory of whatever kind or nature shall be allowed or permitted within the premises.

xxx xxx xxx (c) The vendor ... shall have the right to enter the premises ... for the purpose of ... installing electric ... lines or any other utility for the community. xxx xxx xxx II. This sale is made under the following terms and conditions the violation of any of which shall entitle the Vendor to rescind this contract and seek the cancellation of the title issued as a result hereof and to repossess the property and dispose of the same as if there had been no previous sale thereof, and said terms and conditions shall likewise be annotated on the certificate or title concerned and considered a burden to the property. xxx xxx xxx III. The terms, burdens, conditions, limitations, incumbrances and restrictions herein contained shall be binding upon the heirs, executors, administrators, successors and assigns of the respective parties hereto and any reference to the Vendor or Vendee herein shall be understood to include their respective heirs, executors, administrators, successors and assigns.

The foregoing conditions were substantially, but not word for word, annotated on the title issued to VELASCO. 3. On January 31, 1952, VELASCO sold two of the aforesaid three lots (the PROPERTY, for short) to petitioner Manila Electric Company (MERALCO, for short), which is the public service company furnishing electric current to the Manila area, including Quezon City. 4. The following year, MERALCO established a substation within the PROPERTY, the construction of which "was started in September, 1953 and was finished the following November". 2 5. On November 29, 1954, VELASCO wrote a letter to MERALCO stating, inter-alia:
In mild spirit, the time has come when the undersigned is compelled to call your attention to a previously anticipated would-be effect of your electric sub-station, in order to avoid possible bad effects and "repercussions and complications" which might be too late to remedy. xxx xxx xxx The undersigned with his family tried to tolerate for a while, but the severe noise without let up, plus the electrification of the ground, especially that in which the artesian well of the undersigned is located, made life of the whole family unbearable, in a residential district which, by your sub-station, was illegally converted into dangerous factory-like site. (Exhibit "J")

6. The following year, on February 1, 1955, VELASCO filed a complaint in Civil Case No. Q-1355 of the Court of First Instance of Rizal (the NUISANCE CASE, for short) praying that MERALCO be ordered "to remove and abate the nuisances herein complained against," with damages. The trial Court dismissed the complaint but, on appeal to this Court, the dismissal was set aside and, on August 6, 1971, MERALCO was "ordered to either transfer its sub-station at South D and South 6 Streets, Diliman, Quezon City, or take appropriate measures to reduce its noise at the property line between the defendant company's compound and that of the plaintiff-appellant to an average of forty (40) to fifty 50 decibels within 90 days from finality of this decision;" 3 7. In the meanwhile, on November 23, 1957, VELASCO had instituted a complaint in Civil Case No Q-2716 of the Court of First Instance of Rizal (the CANCELLATION CASE, for short) for the rescission of the sale of the PROPERTY to MERALCO and to collect rentals for the use and

occupation of the PROPERTY while in the latter's possession. The complaint was dismissed by the trial Court on the ground that the NUISANCE CASE and the CANCELLATION CASE had split VELASCO'S cause of action such that the CANCELLATION CASE was precluded from being instituted. On appeal to the Court of Appeals, the judgment of the trial Court was reversed on the finding that no cause of action was split, considering that abatement of nuisance was distinct and separate from rescission of the contract of sale in favor of ME RALCO Upon the recited facts, we have resolved to set aside the decision of the Appellate Tribunal, and to dismiss the complaint in the CANCELLATION CASE. The factors relied upon are: THE RIGHT OF ACTION.- The contract of sale between PHHC and VELASCO provided that only constructions exclusively for "residential purposes" shall be built on the PROPERTY. That requirement, naturally, was binding on VELASCO himself, as it is also binding on MERALCO as his assignee. Be that as it may, that contract implies that it is PHHC itself which has the right of action against any assignee of VELASCO. Cancellation of the title to the PROPERTY would be by virtue of the condition imposed in the PHHC- VELASCO contract, and not by virtue of the contract between VELASCO and MERALCO. The exact relevant wording of the contract between PHHC and VELASCO was as follows: ... the violation of any of which (inclusive of the "residential purposes" restriction) shall entitle the vendor (PHHC) to rescind this contract and seek the cancellation of the title issued as a result hereof and to repossess the property. It will be seen that if the PROPERTY were used by VELASCO himself not for "residential purposes", PHHC can rescind "this contract", which is the contract between PHHC and VELASCO, and PHHC can "seek the cancellation of the title" issued as a result "of this contract". The PROPERTY' having been transferred to MERALCO, PHHC cannot rescind the contract between VELASCO and MERALCO because PHHC was not a party to that VELASCO-MERALCO contract. PHHC's redress would be to directly "seek cancellation of the title" of MERALCO, and to repossess the PROPERTY. Considering that redress for the use of the PROPERTY for non-residential purposes is the cancellation of the title and repossession by PHHC, it should be clear that the right of action based on violation of the restriction has to be with PHHC and not with VELASCO. If title to the PROPERTY is cancelled, and PHHC repossesses, no damage will be suffered by VELASCO who had already sold and had received the value thereof. The damage will be borne solely by MERALCO. Hence, it cannot be that VELASCO can have a right of action against MERALCO for violation of the restriction. RESIDENTIAL PURPOSES.As the Court understands it, PHHC's requirement in regards to "residential purposes" has not been made particularly in reference to the three lots sold to VELASCO, but it relates to the entirety of a bigger parcel of land subdivided for sale to the public by PHHC. the term "residential purposes", therefore, should be given a meaning viewed from the standpoint of PHHC, and not from that of VELASCO. From the PHHC, or community, point of view, the construction of an electric sub-station by the local electric public service company within the subdivision can be deemed encompassed within "residential purposes" for the simple reason that residences are expected to be furnished with electrical connection. If there is no electric current because of the lack of a sub- station, the residences within the entire subdivision area could be valueless for residential purposes. The need for public services in residential areas is even recognized in the PHHC Deed of Sale in favor of VELASCO which provides that "the vendor ... shall have the right ... to enter the premises ...

for the purpose of ... installing water pipes, gas, electric and telephone lines or any other utility for the community where the property herein involved is located" It may further be pointed out that, in respect of Quezon City as a municipal corporation, the PROPERTY was within a residential district. Notwithstanding, the authorities of Quezon City granted a permit for the construction of the sub-station, thereby conceding that a sub-station is not necessarily non-residential. CONTRACTUAL ESTOPPEL.- Even if the requirement for "residential purposes" were a condition imposed by VELASCO himself in the contract of sale between VELASCO and MERALCO, the former can no longer cancel the contract on the alleged violation of the condition. When MERALCO erected the sub-station in September, 1953, VELASCO did not object to its construction as such. In his letter, Exhibit "M", dated September 26, 1953, VELASCO merey asked for "technical assurance that your electric sub-station is not dangerous to neighbors nor would that be a nuisance". It could not be that he did not then realize that the sub-station was not a residence. He must have viewed it as for "residential purposes". According to Exhibit "J", VELASCO's letter of September 29, 1954, or one year after the sub-station had been established, he "with his family tried to tolerate (it) for a while". Actually, what was ultimately objected to by VELASCO was the noise of the sub-station; but there was no original and timely objection to the establishment itself of the sub-station as being not for residential purposes. If there had been no noise whatsoever from the sub-station, no controversy would have arisen. Contracts should be given effect as the parties construe it. "Acts done by the parties to a contract in the course of its performance are admissible in evidence upon the question of its meaning as being their own contemporaneous interpretation of , its terms". 4 Thus, VELASCO should be held as estopped from seeking cancellation of his sale of the PROPERTY to MERALCO because the substation, while it was built, was considered by VELASCO as not violative of the requirement for "residential purposes". Estoppel against VELASCO has set in. COLLATERAL ESTOPPEL BY JUDGEMENT-MERALCO had pleaded before the trial Court that the filing of the NUISANCE CASE "has barred the filing of the complaint in this" CANCELLATION CASE. The trial Judge dismissed the Complaint on the ground that the NUISANCE CASE and the CANCELLATION CASE had split a single cause of action and that the CANCELLATION CASE being the later proceeding was improperly instituted. We agree with the Appellate Tribunal that there was no split of a single cause of action, because the cause of action for abatement of nuisance is different from a cause of action for cancellation of contract. However, it does not mean that a judicial proceeding cannot be barred by a previous case involving another cause of action. The principle applicable would be estoppel by judgment or, more specifically, "collateral estoppel by judgment". That procedural matter is treated in 46 Am Jur 2d. pp. 563-566 as follows: 5
Although there are some cases that confine the term "res judicata" to that aspect of the doctrine which precludes the relitigation of the same cause of action the term, in its literal meaning of a "matter adjudged", is broad enough to include, in addition, the other aspect of the doctrine, which precludes the relitigation of the same facts or issues in a subsequent action on a different cause of action, and the term "res judicata" is, indeed, so used in numerous cases. In this respect, it has been declared that if a party is barred from relitigating a matter, it can make little difference to him by what name the lethal doctrine is called. On the other hand, the confusion and looseness of thought resulting from the absence of distinctive terms to describe each aspect of the doctrine has been well pointed out. The term "estoppel" has frequently been used in connection with the doctrine of res judicata, not only with respect to the relitigation of particular issues in a subsequent action on a different cause of action, but also with respect to the relitigation of the same cause of action. In some cases, the term "estoppel by judgment" has been used to described the effect of a judgment to preclude relitigation of the same cause of action, and the phrase, "estoppel by verdict", to describe the effect of the former proceeding to

preclude further litigation of the particular facts on which the jury necessarily made findings in the former action. The decisions have not, however, been uniform in this respect, and in some opinions the term 'estoppel by judgment' has been used to describe the rule precluding the litigation of particular issues in a subsequent action on a different cause of action. Sometimes, the term "estoppel by record" is so used. The more recent tendency is to describe the latter aspect of the doctrine of res judicata as a "collateral estoppel" or a "collateral estoppel by judgment", as distinguished from the "direct estoppel by judgment" where the earlier and later causes of action are Identical. 6

More and more, the tendency of procedural law is to obviate multiplicity of suit such that if an issue has been resolved in one cause of action, it cannot be relitigated in a subsequent case filed on a different cause of action. In Hoag v. New Jersey, 2L Ed. 2d., 913-919, the following was said by the United States Supreme Court:
A common statement of the rule of collateral estoppel is that "where a question of fact essential to the judgment is actually litigated and determined by a valid and final judgment, the determination is conclusive between the parties in a subsequent action on a different cause of action". Restatement, Judgments, #68(l). As an aspect of the broader doctrine of res judicata, collateral estoppel is designed to eliminate the expense, vexation, waste, and possible inconsistent results of duplicatory litigation. See Developments in the Law Res Judicata, 65 Hary L Rev. 818, 820. (Emphasis supplied)

In a previous case, this Court has similarly stated: The basis of the judgment was the stipulation of facts submitted by the parties and their agreement fixing the liability of the defendant therein for rentals and the manner in which the same was to be paid by him. It was a final judgment on the merits, and said judgment, under the express provisions of section 44, paragraph (b) of Rule 39 of the Rules of Court, is conclusive between the parties, not only as to the question on which the parties made stipulation but also as to any other possible issue which the parties could have raised in the case. The fact that the defendant in that action, plaintiff-appellant in this, did not raise that issue in the previous case is no reason for allowing him to raise the same issue in the action he has instituted to annul the said judgment.The principle of res judicata applicable is what is known as estoppel by judgment and in the language of Mr. Justice Field in the case of Cromwell vs. Sac Country, 94 U.S., 351, cited in Pealoza vs. Tuason, 22 Phil., 303, It is a finality as to the claim or demand in controversy, concluding parties and those in privity with them, not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose. 7 When VELASCO instituted the NUISANCE CASE, he conceded, which he is now estopped to deny, that MERALCO had the right to establish the sub-station within the PROPERTY without violation of the restriction to "residential purposes". What he subsequently alleged, after the sub-station had become operative, was that the sub-station, because of the generated noise, had become a nuisance which should be abated. Although the propriety of the establishment of the sub-station was not a controverted matter in the NUISANCE CASE, it was a tacit admission on the part of VELASCO, which can form part of an estoppel within the NUISANCE CASE. It would not be good law to allow him now to take the position, even if he had the right of action, that the construction of the sub-station violated the restriction provided for by PHHC. If the present standpoint of VELASCO should be upheld, then the procedurally wrong result would be that, after this Court had decided that the sub-station can remain within the PROPERTY with reduction of the noise, the Appellate Tribunal, a subordinate tribunal, can subsequently nullify the decision of this Court and order the removal of the sub-station from the PROPERTY. WHEREFORE, considering the foregoing legal considerations, the Decision and Resolution of respondent Court of Appeals in its CA-G.R. No. 30488-R are reversed, and the Complaint filed in the case at bar is ordered dismissed.

Without costs. SO ORDERED. Teehankee (Chairman), Makasiar, Plana, Relova and Gutierrez, Jr., JJ., concur. Vasquez, J., took no part. G.R. No. L-11284 October 13, 1917

SIMEON BLAS, plaintiff-appellant, vs. VICENTE DE LA CRUZ and MARIANO MELENDRES, as sheriff of Rizal, defendants-appellees. J. Bernales for appellants. No appearance for appellees.

JOHNSON, J.: The purpose of the present action was to obtain an injunction against the defendants to prevent them from destroying certain buildings and improvements upon a certain piece or parcel of land particular described in paragraph 2 of the complaint. The present action had it original in the following facts: That sometime prior to the commencement of the present action (March 20, 1911) an action was commenced in the Court of Land Registration by the defendant Vicente de la Cruz for the registration under the torrens system of several pieces or parcels of land particularly described in paragraph 1 of that complaint; that to the registration of said parcel of land the present plaintiff, Simeon Blas, on the 14th day of June, 1912, presented his opposition, alleging that he was the owner of a portion of the lands described in the petition of the plaintiff; that a hearing was had in the Court of Land registration; that portion of the land claimed by Simeon Blas was excluded from the lands included in the petition of the plaintiff Vicente de la Cruz; that from that decision Vicente de la Cruz appealed to the Supreme Court where, after due hearing and consideration, the decision of the lower court was modified on the 16th day of March, 1915, 1 and that portion which was claimed by Simeon Blas was ordered to be registered in the name of Vicente de la Cruz; that a final judgment was rendered in the cause and the case was returned to the lower court upon the 19 day of April, 1915; that the land involved in the present action is the same land which was brought into question in the decision of the Supreme Court above referred to. To the petition of the plaintiff in the present action the defendants demurred. Upon a consideration of the demurrer the Honorable Jose C. Abreu, judge, sustained the demurrer and dissolved the temporary injunction theretofore granted and gave the plaintiff an opportunity to amend his petition. Instead of amending his petition he excepted to the order of the lower court sustaining the demurrer and appealed to this court. Without discussing the assignments of error in detail, and after an examination of the arguments presented by the appellants in support of the same, we find that the following question is presented for solution; Does the decree ordering the registration of land under the Torrens system include the buildings and improvements thereon when they have not been expressly excluded in said decree? In other words, A presents a petition for the registration of a part of said parcel. This opposition is overruled and all of the parcel of land is decreed to be registered in the name of A. May B thereafter, not having made any claim to said improvements during the proceedings for the registration, claim said building and improvements as his property and remove the same or prevent the owner of the land under said decree from removing or destroying the same?

The general purpose of the Torrens system is to forever foreclose litigation concerning the title to land. Every decree of registration shall bind the land, and quiet title thereto, subject only to the exceptions stated by the law. The decree of registration shall be conclusive upon and against all persons, unless fraud is proved within a period of one year after said decree is rendered (section 38 of Act No. 496). Section 39 of said Act (No. 496), as amended by Act No. 2011, makes certain exceptions to the rule just stated. Section 39, as amended, provides that, "every applicant receiving a certificate of title in pursuance of a decree of registration . . . shall hold the same free of all incumbrance except those noted on said certificate, and any of the following incumbrances which may be subsisting, namely: First. Liens, claims, or rights arising or existing under the laws or Constitution of the United States or of the Philippines Islands which the statutes of the Philippine Islands can not require to appear of record in the registry. Second. Taxes within two years after the same have become due and payable. Third. Any public highway, way, private way established by law, or any Government irrigation canal or lateral therefor, where the certificate of title does not state that the boundaries of such highway, way, or irrigation canal or lateral thereof, have been determined. 1awphil.net But if there are easements or other rights appurtenant to a parcel of registered land which for any reason have failed to be registered, such easements or rights shall remain so appurtenant notwithstanding such failure, and shall be held to pass with the land until cut off or extinguished by the registration of the servient estate, or in any other manner. Does the claim of the plaintiff come within any of the exceptions mentioned in said section 39? Certainly the contention of the appellant does not come within the provisions of the second and third exceptions quoted above in said section 39. Neither is there any claim made that his right arises or exists under the laws of the Constitution of the United States. If his claim falls under any of the provisions of said section 39 it must be that part of the same which provides for "liens, claims or rights arising or existing under the laws of the Philippine Islands which the statutes of the Philippine Islands cannot require to appear of record in the registry." The appellant urges that such claims are provided for under article 453 of the Civil Code. Said article 453 guarantees to the possessor of real estate, when it is proved that he has occupied the same in good faith, the benefits of the improvements which he made thereon during his occupation. Does said article permit the objector, in an action for the registration of the land occupied by him, when he has failed to make a claim to the improvement during the litigation, to claim said improvements after a certificate of registration is issued, without his having raised that question during the litigation? If the objector may, during the pendency of the litigation for the registration of the land, remain silent as to certain rights, interests or claims existing in or upon the land, and then later, by a separate action, have such interest litigated, then the purpose of the Torrens system, to wit, to forever foreclose litigation with reference to the title to said land, will be defeated. Without attempting at this time to define the character of the "liens, claims, or rights arising or existing under the laws of the Philippine Islands which the statutes of the Philippine Islands cannot require to appear of record in the registry Islands cannot require to appear of record in the registry," we are of the opinion that buildings and improvements upon land are not included in that exception, and that, unless the objector, during the pendency of the litigation for the registration of land makes claims to improvements of the character of those in the present action, and does have them excluded from the decree of registration, they will be included as a part and parcel and appurtenances to the land; and that the objector will not be permitted, in a separate action subsequently brought, to question the right of such improvements. If he may, then the certificate of registration does not guarantee to the owner of the land the quiet and peaceable enjoyment of his title which the Torrens system was adopted to secure.

For the foregoing reasons, we are of the opinion and so hold that, inasmuch as the plaintiff herein did not, during the pendency of the litigation for the registration of the lands in question, have excluded therefrom and have noted upon the certificate of title his alleged rights and interests in the improvements mentioned herein and noted upon the certificate of title issued, he thereby lost his right to such improvements; and therefore, the judgment of the lower court is hereby affirmed. And it is hereby ordered and decreed that a judgment in accordance herein be entered and that the cause be remanded to the lower court, with instruction to enter a final judgment in accordance with this decree, unless the plaintiff within a period of five days from the receipt of the notice of the same amend his original petition. It is so ordered with costs. Arellano, C.J., Carson, Araullo, Street and Malcolm, JJ., concur. G.R. No. 158682 January 31, 2005

SPOUSES BIENVENIDO R. MACADANGDANG and VIRGINIA C. MACADANGDANG, petitioners vs. SPOUSES RAMON MARTINEZ and GLORIA F. MARTINEZ, respondents. DECISION CORONA, J.: Petitioners, spouses Bienvenido and Virginia Macadangdang (Macadangdang spouses), assail the October 25, 2001 decision1 of the Court of Appeals in CA-G.R. CV No. 32018, modifying the November 13, 1990 decision2 of Branch 149 of the Makati Regional Trial Court in Civil Case No. 88-796. The present controversy involves a house and lot in Lot 6, Block 22-A, Phase 5-A, Parkhomes Subdivision, Tunasan, Muntinlupa, Metro Manila, covered by TCT No. 146553 in the name of Emma A. Omalin. On December 20, 1986, the Macadangdang spouses offered to buy the subject property from Omalin for P380,000 on installment basis. On the same date, the Macadangdang spouses made a downpayment of P5,000 through the broker, Sto. Nino Realty Services, Inc. On January 3, 1987, they paid another P175,000. Thereafter, Omalin executed a deed of sale with mortgage dated January 5, 1987. The deed provided for the payment of the balance of P200,000 in three installments. The Macadangdang spouses took possession of the house and lot on January 18, 1987. On April 22, 1987, they paid P60,000 and on October 1, 1987, another P30,000. After the Macadangdangs had paid a total of P270,000, the parties agreed that the balance of P110,000 was to be paid upon delivery of the TCT. On January 29, 1988, Omalin executed a deed of absolute sale in favor of the Macadangdang spouses. However, the latter did not pay the P110,000 balance because Omalin failed to deliver the TCT. It turned out that the property was mortgaged to private respondent spouses Ramon and Gloria Martinez (Martinez spouses). It appears that on March 5, 1987, a certain Atty. Paterno Santos, a broker, offered to mortgage the subject property to the Martinez spouses for P200,000. Atty. Santos was in possession of a "clean" TCT No. 146553 and a fire insurance policy covering said property. The spouses Martinez accepted the mortgage with interest at 36% p.a. and duly recorded it at the Registry of Deeds of Makati. The proper annotation was made at the back of the title.

From September 1987 to March 9, 1988, Omalin paid the monthly interest of P6,000 but failed to pay the subsequent interest from April 1988 to October 1989 amounting to P114,000. The Macadangdang spouses filed a criminal case for estafa against Omalin and a combined action for specific performance, annulment of contract and damages against the spouses Martinez and Omalin. After trial, the Makati RTC rendered a decision in favor of the Macadangdang spouses: WHEREFORE, in view of the foregoing, judgment is rendered as follows: 1. The defendants Emma A. Omalin, Ramon Martinez and Gloria Martinez are hereby ordered to deliver to the plaintiffs the owners duplicate copy of TCT No. 146553, free from the encumbrance under Entry No. 30110 of the Register of Deeds of Makati, upon plaintiffs payment of the balance of P100.000. 2. The defendant Emma A. Omalin is hereby ordered to pay plaintiffs the amount of P30,000 as moral damages and P20,000 as attorneys fees and costs of suit.3 On appeal, however, the appellate court modified the decision of the Makati RTC: Considering that defendant Omalin remains to be the owner of the property despite the existence of a valid mortgage, she has the right to sell it. Hence, we rule that the sale in favor of plaintiffs-appellee is likewise valid, subject to the right of defendants-appellants to foreclose the property for failure of defendant Omalin to pay her indebtedness. xxx xxx xxx WHEREFORE, the appealed decision is MODIFIED. A new one is hereby entered: 1. Declaring defendants-appellants Ramon and Gloria Martinez as mortgagees in good faith. 2. Declaring the deed of sale with mortgage in favor of plaintiffs-appellees Bienvenido and Virginia Macadangdang as valid and ordering them to pay defendant Omalin the balance of the price in the sum of P110,000. 3. Ordering defendants-appellants to deliver the owners duplicate copy of TCT No. 146553 to plaintiffs-appellees, subject to the existing encumbrance and the right of defendants-appellants to foreclose the property should defendant Omalin fail to pay her obligation. 4. Ordering defendant Emma A. Omalin to pay plaintiffs-appellees the amount of P30,000 as moral damages and P20,000 as attorneys fees and costs of suit. The Macadangdang spouses are now before the Court with the following assignments of error: FIRST ASSIGNED ERROR THE COURT OF APPEALS "DECISION" OPENLY DISREGARDED AND OVERTURNED EXISTING JURISPRUDENCE INVOLVING SIMILAR FACTS. SECOND ASSIGNED ERROR

UNLESS REVERSED AND/OR MODIFIED, THE COURT OF APPEALS DECISION, IF EVENTUALLY IMPLEMENTED, MIGHT GIVE RISE TO ABSURD RESULTS. THIRD ASSIGNED ERROR THE COURT OF APPEALS GRAVELY ERRED IN REVERSING THE TRIAL COURTS DECISION DATED NOVEMBER 13, 1990.4 The petition lacks merit. The subject matter of the instant petition involves registered land. Unlike the case of unregistered land, in which an earlier instrument, be it sale or mortgage, prevails over a latter one, and the registration of any one of them is immaterial,5 with respect to registered land, the rule is different. Between two transactions concerning the same parcel of land, the registered transaction prevails over the earlier unregistered right.6 The act of registration operates to convey and affect the registered land so that a bonafide purchaser of such land acquires good title as against a prior transferee, if such prior transfer was unrecorded.7 Sections 51 and 52 of PD 1529, otherwise known as the Property Registration Decree, are pertinent: Sec. 51. Conveyance and other dealings by registered owner. An owner of registered land may convey, mortgage, lease, charge or otherwise deal with the same in accordance with existing laws. He may use such forms of deeds, mortgages, lease or other voluntary instruments as are sufficient in law. But no deed, mortgage, lease or other voluntary instrument, except a will purporting to convey or affect registered land shall take effect as a conveyance or bind the land, but shall operate only as a contract between the parties and as evidence of authority to the Register of Deeds to make Registration. The act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned, and in all cases under this Decree, the registration shall be made in the office of the Register of Deeds for the province or city where the land lies. Sec. 52. Constructive notice upon registration. Every conveyance, mortgage, lease, lien attachment, order, judgment, instrument or entry affecting registered land shall, if registered, filed or entered in the office of the Register of Deeds for 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. It is clear from the foregoing that the registration of the deed is the effectual act which binds the land insofar as third persons are concerned. Prior registration of a lien creates a preference as the act of registration is the operative act that conveys and affects the land.8 Considering that the prior sale of the subject property to the Macadangdang spouses was not registered, it was the registered mortgage to the spouses Martinez that was valid and effective. For sure, it was binding on Omalin and, for that matter, even on the Macadangdang spouses, the parties to the prior sale. The rule on prior registration is subject only to one exception, that is, when a party has knowledge of a prior existing interest which is unregistered at the time he acquires a right to the same land, his knowledge of that prior unregistered interest has the effect of registration as to him.9 The Martinez spouses claimed they had never met the Macadangdang spouses and were unaware that Omalin had already sold the property to them. Hence, the appellate court declared the Martinez spouses as mortgagees in good faith and innocent mortgagees for value. An innocent mortgagee for value is akin to an innocent purchaser for value. The phrase "innocent purchaser for value" is deemed to include an innocent lessee, mortgagee or other (beneficiary of an) encumbrance for value.10

An innocent purchaser for value is one who buys the property of another without notice that some other person has a right to or interest in such property and pays a full and fair price for the same at the time of such purchase or before he has notice of the claim of another person.11 As a general rule, where the certificate of title is in the name of the vendor when the land is sold, the vendee for value has the right to rely on what appears on the face of the title and is not obligated to look beyond what appears on the face of the certificate of title of the vendor. As an exception, the vendee is required to make the necessary inquiries if there is anything in the certificate of title which raises any cloud or vice in the ownership of the property.12 Otherwise, his mere refusal to believe that such defect exists, or his willful disregard of the possibility of the existence of a defect in his vendors title will not make him an innocent purchaser for value if it afterwards develops that the title is in fact defective, and it appears that he had such notice of the defect as would have led to its discovery had he acted with that measure of precaution which may reasonably be required of a prudent man in a like situation.13 Nothing on record shows that the title of Omalin, the mortgagor, was flawed when it was presented to the spouses Martinez. Their reliance on the title was therefore reasonable and correct. They were in no way obliged to go beyond the TCT to determine the legal condition of the property since there was nothing that should have aroused their suspicion about any defect or problem about the title. Where innocent third persons rely on the lack of defect of a certificate of title and acquire rights over the property, the Court cannot disregard such rights. Otherwise, public confidence in the certificate of title and ultimately, in the entire Torrens system will be impaired, for every one dealing with registered property will have to inquire at every instance whether the title has been regularly or irregularly issued.14 On this note, being innocent registered mortgagees for value, the Martinez spouses acquired a superior right over the property. Accordingly, we find no reversible error by the appellate court in upholding the existing encumbrance over the subject property acquired by the Macadangdang spouses, in declaring the spouses Martinez as mortgagees in good faith and in recognizing their right to foreclose on the mortgage should Omalin fail to pay her obligation. The assailed decision of the appellate court is neither absurd nor unjust. The registered mortgage contract of the Martinez spouses has given them the superior right, not as owners but only as mortgagees. Consequently, they are entitled to be paid the amounts due them under the real estate mortgage registered in their favor. In the event Omalin, as mortgagor, fails to pay the mortgage obligation or, should any party, for that matter, who may have an interest in the mortgaged property like the petitioners herein fail to redeem it from the mortgagees, the latter, as declared by the Court of Appeals, may enforce their rights against the property by foreclosing on the mortgage, regardless of who its owner may be, considering that the registered mortgage attaches to the property. WHEREFORE, the instant petition is hereby DENIED and the October 25, 2001 decision of the Court of Appeals in CA-G.R. CV No. 32018 is AFFIRMED. Costs against petitioners. SO ORDERED. Panganiban, (Chairman), Sandoval-Gutierrez, Carpio-Morales and Garcia, JJ., concur. G.R. No. L-45252 January 31, 1985 TIMOTEO LAROZA and CONCHITA URI, plaintiffs-appellants, vs. DONALDO GUIA, defendant-appellee.

RELOVA, J.: Action to quiet title filed by appellants Timoteo Laroza and Conchita Uri in the then Court of First Instance of Laguna and San Pablo City versus appellee Donaldo Guia over a parcel of land described as follows:
Isang (1) lagay na lupang tirikan at niyugan na natatayo sa Nayon ng San Francisco, Lunsod ng San Pablo; may luwang na 200 metrong parisukat humigit kumulang ang tirikan at 2210 na metrong parisukat, humigit kumulang ang niyugan. May tanim na 46 puno ng niyog at 29 puno ng lanzones na pawang nabunga. Ang kabalantay sa SE-Remedios Bautista; sa SW Provincial Road; sa SW at SE-Maria Umali at sa NW Buenaventura Guia Ito ay hinahalagahan ng Pamahalaan ng P730.00 para sa taong kasalukuyan at ito ay mayroong Katibayan sa pagmamay-ari Blg. 31068. Ang mga hangganan nito ay may palatandaang buhay na madre-cacao. (pp. 4-5, Record on Appeal)

Appellants, in their complaint, alleged that they bought the above-described property in good faith and for valuable considerations from Francisco Guia on June 30, 1973, after they had seen the documents of ownership of said Francisco Guia which consisted of the following:
(a) Deed of Extra-Judicial Partition executed before Notary Public Alfonso Farcon of San Pablo City dated August 5, 1961. Copy of which is hereto attached as Annex "B;" (b) Deed of Absolute Sale executed by Manuel Guia in favor of Francisco Guia, Buenaventura Guia and Felimon Guia, dated March 5, 1940 executed before Notary Public Enrique Estrellado of San Pablo City, and duly registered with the Register of Deeds of Sta. Cruz, Laguna on March 8, 1940, copy of which is hereto attached as Annex "C;" (c) Deed of Donation Inter Vivos executed by Cayetana Garcia dated March 5, 1940 executed before Notary Public Enrique Estrellado of San Pablo City, copy of which is hereto attached as Annex "D" (P. 6, Record on Appeal);

that they were in continuous possession of the said property from the time they acquired the same from Francisco Guia until appellee, "through the commissioners appointed by this Honorable Court in Civil Case No. SP-488, namely: Aproniano Mls. Magsino, Clerk of Court; Rogaciano Borja, Deputy Clerk of Court; Atty. Ricardo Fabros, then represented by Mr. Armadilla; and, Engr. Danilo Dichoso, the surveyor, intruded upon the said peaceful possession by attempting to survey the abovedescribed property and to partition the same by virtue of a decision of this Honorable Court dated December 29, 1966 in Civil Case No. SP-488; that the attempt of herein defendant to survey and partition the above-described property beclouds the title of herein plaintiffs for which reason, they were constrained to institute the present action with the assistance of counsel at the agreed amount of P5,000.00 and were compelled to incur litigation expenses of not less than P500.00." (p. 7, Record on Appeal) Appellee, through counsel, filed a motion to dismiss the complaint alleging, among others, "that the land subject matter of the complaint has already been the subject of a final and executory judgment in Civil Case No. SP-488, hence, plaintiffs (appellants) have no cause of action, or if there be any, the same is barred by a prior judgment." (p. 39, Record on Appeal) Appellants opposed the motion to dismiss maintaining that the complaint states a sufficient cause of action and prayed that the motion to dismiss be denied. The lower court, on October 30, 1974, issued an order dismissing appellants' complaint saying that:

The motion to dismiss is well taken. It is beyond debate or question that the land over which plaintiffs seek herein to quiet title has already been declared the property of defendant by the final and executory judgment of this Court in SP-488, which was affirmed by the Court of Appeals and a further attempt to challenge the adjudication by certiorari was thrown out perfunctorily by the Supreme Court. There is no room for doubt or for controversy that all the requisite elements of res judicata or bar by prior judgment are present here. Plaintiffs are the supposed purchasers of the property from Francisco Guia, defendant in SP-488. Needless to say, a judgment against a party binds his successors in interest. A sale or similar transmission of right does not disturb the Identity of party for purposes of res judicata. In this regard, for further enlightenment on the issues generated by this dismissal motion, the Court hereby refers to its order of March 22, 1971 in SP-488. Contrary to plaintiffs contention, the ground of res judicata raised by defendant is indubitable and patent from paragraphs 4 and 5 of the complaint. (pp. 77-78, Record on Appeal)

Appellants went to the then Court of Appeals alleging that the lower court erred (1) in holding that the instant case is already barred by a previous judgment; (2) in dismissing the complaint without a hearing which although preliminary should be conducted as ordinary hearings; and, (3) in holding that the ground of res judicata raised by appellee is indubitable and patent from paragraphs 4 and 5 of the complaint. (pp. 1-2, Brief for the Appellants) The appellate court forwarded the records of the case to Us because "no factual issue is involved" and "the issues raised in the instant case are purely legal questions which are beyond the jurisdiction of the Court to determine." (p. 5, CA Resolution) There is no merit in this appeal. Records show that long before appellants had acquired subject property, a notice of lis pendens (Civil Case No. SP 488) had already been registered with the Office of the Register of Deeds of San Pablo City affecting the property. Lis pendens is a notice of pending litigation; a warning to the whole world that one who buys the property so annotated does so at his own risk (Rehabilitation Finance Corporation vs. Morales, 101 Phil. 175). Notwithstanding, appellants bought the land from Francisco Guia, defendant in Civil Case No. SP 488. Having purchased the property with notice of lis pendens, appellants took the risk of losing it in case the decision in the said civil case, as what actually happened, is adverse to their predecessor-in-interest, Francisco Guia Time and again, We have decreed that the filing of a notice of lis pendens charges all strangers with a notice of the particular litigation referred to therein and, therefore, any right they may thereafter acquired on the property is subject to the eventuality of the suit. The doctrine of lis pendens is founded upon reason of public policy and necessity, the purpose of which is to keep the subject matter of the litigation within the power of the Court until the judgment or decree shall have been entered; otherwise, by successive alienation's pending the litigation, its judgment or decree shall be rendered abortive and impossible of execution. On this score alone, appellants case would necessarily fall. In their first assigned error appellants argue that there is no res judicata because there is no Identity of causes of action since the case at bar is an action to quiet title, whereas, Civil Case No. SP-488 is one of filiation and partition. In National Bank vs. Barreto, 52 Phil. 818, We held that "a judgment for the plaintiff sweeps away every defense that should have been raised against the action, and this for the purpose of every subsequent suit, whether founded upon the same or a different cause." in Civil Case No. SP-488, appellee Donaldo Guia maintained that he is a co-owner of that parcel of land, including the land in question, which was later adjudicated to him as his share in the inheritance from the late Cayetana Garcia; whereas, Francisco Guia, appellants' predecessor-in interest, alleged that he is the sole owner of the property. Thus, both parties claim ownership over the same property appellee Donaldo Guia, by virtue of a final judgment rendered in Civil Case No. SP-488, and appellants Timoteo Laroza and Conchita Uri, by virtue of the sale executed by Francisco Guia, who

lost in said civil case. In both cases, the question boils down to ownership of the land. Thus, there is Identity of causes of action. Anent the second assigned error, records reveal that a hearing on appellee's motion to dismiss appellants' complaint was conducted on August 12, 1974. There is, therefore, no basis for appellants to say that a hearing was never held in the case. Finally, appellants claim that the lower court erred in declaring that res judicata is indubitable and patent from the face of the complaint itself, without the appellee pleading the same as an affirmative defense. From a cursory reading of the pleadings, extant in the records of the case, We find that in his motion to dismiss, appellee had thoroughly discussed the issue of res judicata and, coupled by the fact that it was the same court which heard and decided Civil Case No. SP 488, the trial court can rightfully rule on said issue. ACCORDINGLY, for lack of merit, the appeal is hereby DISMISSED. SO ORDERED. Teehankee (Chairman), Melencio-Herrera, Plana, Gutierrez, Jr. and De la Fuente, JJ., concur. Alampay, J., took no part. G.R. No. L-69303 July 23, 1987

HEIRS OF MARIA MARASIGAN, namely, Teofilo, Isabel, Maximina, Anicia, and Francisco, all surnamed Marasigan, petitioners, vs. THE INTERMEDIATE APPELLATE COURT and MARIA MARRON, respondents. GUTIERREZ, JR., J.: Who has a better right to the property in question, the party who bought it with a notice of lis pendens annotated at the back of her title or the party in whose favor the notice of lis pendens was made? The appellate court answered this question in favor of the party who had the notice annotated and who won the litigation over the property. We affirm. The disputed property in this case is a residential lot (Lot No. 2-A) covered by Transfer Certificate of Title No. 100612 issued by the Register of Deeds of the City of Manila in the name of one Fe Springael-Bazar, married to Felicisimo Bazar. The pertinent facts as disclosed by the record are as follows: On April 24, 1975, Civil Case No. 97479 entitled "Maria Marron v. Felicisimo Bazar and Fe S. Bazaar" was filed before the then Court of First Instance of Manila, Branch XIII. The action sought to compel defendants Bazar to execute a registrable Deed of Absolute Sale of their lot covered by T.C.T. No. 100612 in favor of Maria Marron. On January 27, 1976, while Civil Case No. 97479 was still pending, the private respondent caused the annotation of a notice of lis pendens at the back of T.C.T. No. 100612. On February 24, 1976, judgment was rendered in Civil Case No. 97479. The dispositive portion reads:

WHEREFORE, the Court hereby renders judgment in favor of the plaintiff and against the defendants as follows: a) Ordering the defendants Fe Springael Bazar and Felicisimo Bazar as vendors (1) to execute in favor of the plaintiff Maria Marron as vendee a Deed of Absolute Sale in a public instrument over the residential lot covered by Transfer Certificate of Title No. 100612 issued by the Registry of Deeds of the City of Manila to and in the name of Fe S. Bazar, married to Felicisimo Bazaar; and (2) to deliver to plaintiff sufficient copies of such deed of sale, together with the Owner's copy of said Transfer Certificate of Title No. 100612, in order that the plaintiff can register the Deed of Absolute Sale with the Registry of Deeds of the City of Manila and secure a transfer certificate of title for the land in her name. b) Ordering the defendants to pay to the plaintiff the sum of P500.00 Philippine Currency, as and for attorney's fees; and c) Ordering the defendants to pay the costs of the suit. (Rollo, p. 15). The above judgment became final and executory so Maria Marron filed a motion for execution which was granted. A writ of execution was issued by the court on July 12, 1976. The spouses Bazar, however, refused to surrender their title to the property in question and to execute the required deed of sale in Marron's favor. On November 29, 1978, the lower court finally ordered the Clerk of Court to execute the deed of sale in behalf of the erring spouses. When the said deed was presented to the Register of Deeds of Manila for registration, the Deputy Clerk of Court was advised to secure a court order in order that the new title issued in the name of herein petitioner Maria Marasigan could be cancelled. It appears that on December 18, 1974, a deed of absolute sale of Lot 2-A covered by T.C.T. No. 100612 was executed by Fe S. Bazar in favor of Maria Marasigan for and in consideration of the sum of Fifteen Thousand Pesos (P15,000.00). However, it was only on July 5, 1977 that said deed was registered with the Registry of Deeds of Manila. Consequently, T.C.T. No. 100612 was cancelled and a new title was issued in Maria Marasigan's name. When the Register of Deeds of Manila issued Transfer Certificate of Title No. 126056 naming Maria Marasigan as the new owner of Lot 2-A, the notice of lis pendens caused to be annotated by Marron on the Bazar's title was carried over on the said new title. Meanwhile, on May 26, 1977, the Bazaars filed a petition for relief from the judgment dated February 24, 1976 in Civil Case No. 97479. While their petition was still pending, they moved to set aside the said judgment on June 22, 1979 on the ground of lack of jurisdiction over their persons. On the other hand, on February 24, 1979, Marron instituted L.R.C. Case No. 7680 captioned "Maria Marron v. Maria Marasigan" which prayed for a court order requiring the Register of Deeds of Manila to register the deed of sale executed by the Deputy Clerk of Court in behalf of the Bazaars pursuant to the order dated November 29, 1978 of the Court of First Instance, Manila, Branch XIII. L.R.C. Case No. 7680 was tried by the Court of First Instance of Manila, Branch IV acting as a land registration court. Said case was dismissed for the following reason: ... This court acting as a Land Registration Court, with limited and special jurisdiction cannot act on this petition under summary proceedings but (sic) should be ventilated before a court of general jurisdiction Branch XIII, which issued the aforesaid Order dated November 29, 1978, the said petition is hereby dismissed for lack of jurisdiction without prejudice on the part of the petitioner to institute the appropriate civil action before the proper court. ... (Annex "A," p. 4, Rollo, p. 138) On September 6, 1979, Marron filed another case docketed as Civil Case No. 126378 to have Marasigan's TCT 126056 cancelled conformably to the procedure outlined in the decision of the above land registration court. On July 30, 1980, the parties submitted said case for decision.

On February 18, 1982, the Court of First Instance of Manila, Branch IV to which Civil Case No. 126378 was assigned dismissed Marron's complaint for being premature since the decision rendered by the CFI, Branch XIII in Civil Case No. 97479 had not yet become final and executory considering that it was still the subject of a petition for relief from judgment. On appeal, the Intermediate Appellate Court, on August 7, 1984, ruled that Marron is entitled to the property under litigation by virtue of the notice of lis pendens annotated at the back of Maria Marasigan's title. The appellate court further ruled that the decision in Civil Case No. 97479 had become final and executory because the petition for relief from judgment of the spouses Bazar was filed out of time. The dispositive portion of the appellate court's decision reads: WHEREFORE, the appealed decision is hereby REVERSED and another one entered (a) Ordering the Register of Deeds of Manila to cancel T.C.T. No. 126056 in the name of Maria Marasigan and issue another in the name of Maria Marron by virtue of the Deed of Sale executed by the Branch Clerk of Court of Branch XIII; (b) Ordering the said Register of Deeds, during the pendency of this case, to refrain from registering any deed of sale pertaining to T.C.T. No. 126056 in the name of Maria Marasigan other than that of the herein plaintiff; and (c) Ordering the defendant Maria Marasigan to pay attorney's fees in the amount of P10,000.00. (IAC, Decision. Rollo, pp. 17-18). Maria Marasigan who died in the course of the proceedings is now represented by her heirs in the instant petition which assigns the following errors: I THAT THE INTERMEDIATE APPELLATE COURT FAILED TO APPREHEND THAT THE RIGHT OF ACTION OF RESPONDENT MARIA MARRON (AS PLAINTIFF) IN CIVIL CASE NO. 97479 HAD PRESCRIBED AND SHE INCURRED IN LACHES. II THAT THE INTERMEDIATE APPELLATE COURT FAILED TO APPREHEND THAT RESPONDENT ABANDONED OR WAIVED HER PROPERTY RIGHTS AND EFFECTS TO/OF THE DECISION IN CIVIL CASE NO. 97479, WHEN SHE FILED CIVIL CASES NO. 7680 AND 126378, DURING ITS EFFECTIVITY. III THAT THE INTERMEDIATE APPELLATE COURT ERRED IN CONCLUDING THAT THE DECISION IN CIVIL CASE NO. 97479 HAS BECOME FINAL AND EXECUTORY. IV THAT THE INTERMEDIATE APPELLATE COURT FAILED TO APPREHEND THE LACK OF JURISDICTION OF THE TRIAL COURT IN CIVIL CASES NO. 7680 AND 126378 OVER THE PERSONS OF PETITIONERS.

V THAT THE INTERMEDIATE APPELLATE COURT ERRED IN CONSIDERING THAT THE TRIAL COURT IN CIVIL CASE NO. 97479 HAS JURISDICTION OVER THE PERSONS OF DEFENDANTS SPOUSES FELICISIMO BAZAAR AND FE S. BAZAAR. VI THAT THE INTERMEDIATE APPELLATE COURT FAILED TO APPREHEND THAT THE DEED OF ABSOLUTE SALE EXECUTED BY THE DEPUTY CLERK OF COURT, WAS NOT LEGAL AND VALID AND WITHOUT PROOF AND EFFECT. (Brief for the appellant, pp. 1 and 2) We find no merit in the present petition. There is a clear showing that although the late Maria Marasigan acquired the property in question from the Bazaars pursuant to a deed of absolute sale on December 18, 1974 or a little over four months before the filing of Civil Case No. 97479, the transaction became effective as against third persons only on July 5, 1977 when it was registered with the Registry of Deeds of Manila. It is the act of registration which creates constructive notice to the whole world. Section 51 of Act 496, as amended by Section 52 of the Property Registration Decree (P.D. 1529) provides: Sec. 52. Constructive notice upon registration. Every conveyance ... affecting registered land shall, if registered, filed or entered in the office of the Register of Deeds for 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. Moreover, there is no question that when the late Maria Marasigan was issued her transfer certificate of title to the subject property (T.C.T. No. 126056), the Registrar of Deeds of Manila then carried over to the new title the notice of lis pendens which the private respondent had caused to be annotated at the back of the Bazar's title. In case of subsequent sales or transfers, the Registrar of Deeds is duty bound to carry over the notice of lis pendens on all titles to be issued. Otherwise, if he cancels any notice of lis pendens in violation of his duty, he may be held civilly and even criminally liable for any prejudice caused to innocent third persons (The Director of Lands, et al. v. Reyes, 68 SCRA 177). A notice of lis pendens means that a certain property is involved in a litigation and serves as notice to the whole world that one who buys the same does it at his own risk (Rehabilitation Finance Corporation v. Morales, 101 Phil. 171). It was also a clear notice to Maria Marasigan that there was a court case affecting her rights to the property she had purchased.1avvphi1 As earlier stated it was only on July 5, 1977 that the sale between Maria Marasigan and the Bazaars became effective as against third persons. The registration of the deed of sale over the subject property was definitely subsequent to the annotation made on January 27, 1976. Consequently, Marasigan was bound by the outcome of the litigation against her vendors or transferors. (See Rivera v. Tirona, et al., 109 Phil. 505). We reiterate the established rule that: ... the filing of a notice of lis pendens charges all strangers with a notice of the particular litigation referred to therein and, therefore, any right they may thereafter acquire on the property is subject to the eventuality of the suit. The doctrine of lis pendens is founded upon reason of public policy and necessity, the purpose of which is to keep the subject matter of the litigation within the power of the Court until the judgment or decree shall have been entered; otherwise, by successive alienations pending

the litigation, its judgment or decree shall be rendered abortive and impossible of execution. ... (Laroza v. Guia, 134 SCRA 34 1) The late Marasigan's transferors did not interpose any appeal from the adverse judgment dated February 24, 1976 in Civil Case No. 97479. The 30-day period under the old rule (Rule 41, section 3 of the Revised Rules of court now amended by Batas Pambansa Bilang 129, section 39) within which the Bazaars may have taken an appeal started to run from May 12, 1976 when they were served with a copy of the said decision. On June 11, 1976, the February 24, 1976 decision in Civil Case No. 97479 became final and executory. At this point after the finality of the said decision, the Bazaars no longer had the right to alienate the property subject of the litigation. Any transaction effective during the period of litigation is subject to the risks implicit in the notice of lis pendens and to the eventual outcome of the litigation. Moreover, we agree with the finding of the appellate court that the petition for relief from judgment by the Bazaars dated May 26, 1977 was filed beyond the two periods provided in Section 3 Rule 38 of the Revised Rules of Court. There may have been some errors in the computations but the petition itself was out of time. Rule 38, Section 3 of said Rules provides, in part, that: Sec. 3. Time for filing petition. ... A petition provided for in either of the preceding sections of this rule must be verified, filed within sixty (60) days after the petitioner learns of the judgment, order or other proceeding to be set aside, and not more than six (6) months after such judgment or order was entered or such proceeding was taken. ... The 60-day period must be reckoned from May 12, 1976 when the Bazaars were served with a copy of the assailed decision. Therefore, the 60-day period expired on July 11, 1976. It was only after 379 days or more than 12 months after they learned of the judgment that the Bazaars filed their petition for relief from said judgment. (See Domingo v. Dela Cruz, 23 SCRA 1121) The appellate court computed the 6-month period from the date of the judgment was rendered. Rule 38 states that the counting should commence from the entry of the judgment or order. (See Dirige v. Biranya, 17 SCRA 840). A judgment is entered only after its finality and Civil Case No. 97479 became final on June 11, 1976. Since the records do not bear the exact date the questioned judgment was entered, the 6-month period can be counted for purposes of our decision from July 12, 1976 when the writ of execution of the final judgment was issued. The phrase "or other proceeding" in Section 3 of Rule 38 includes a writ of execution (Aquino v. Blanco, 79 Phil. 647). The 6-month period from July 12, 1976 lapsed on January 8, 1977. A period of ten (10) months had already lapsed when the Bazaars filed their petition for relief from judgment on May 26, 1977. Obviously, the petitioners cannot now question the effects of the final and executory judgment in Civil Case No. 97479. In the words of Laroza v. Guia (supra) they cannot render the final judgment abortive and impossible of execution. The deed of sale executed by the Deputy Clerk of Court on behalf of the Bazar spouses pursuant to the court's judgment was valid and binding. The petitioners cannot also raise before us the issues of prescription or laches and lack of jurisdiction over the persons of the Bazar spouses in Civil Case No. 97479. This cannot be done in this petition which stems from Civil Case No. 126378 in the trial court and AC-G.R. No. 00183 in the appellate court. The Bazaars were the proper parties who ought to have raised them as defenses either in a motion to dismiss or in their answer. Since they did not do so, the same were deemed waived. (See Rule 9, section 2 of the Revised Rules of Court; MD Transit & Taxi Co., Inc. v. Estrella, 113 SCRA 378; Torreda v. Boncaros, 69 SCRA 247; Visayan Electric Co., Inc. v. Commissioner of Internal Revenue, 39 SCRA 43; Republic v. Mambulao Lumber Company, 6 SCRA 858). WHEREFORE, in view of all the foregoing, the petition is hereby DISMISSED for lack of merit. The appellate court's decision is AFFIRMED. SO ORDERED.