Professional Documents
Culture Documents
Development Bank of The Philippines, Petitioner, vs. Court of Appeals and CARLOS CAJES, Respondents
Development Bank of The Philippines, Petitioner, vs. Court of Appeals and CARLOS CAJES, Respondents
[G.R.No.129471.April28,2000]
DEVELOPMENTBANKOFTHEPHILIPPINES,petitioner,vs.COURTOFAPPEALS
andCARLOSCAJES,respondents.
DECISION
MENDOZA,J.:Misact
Thisisapetitionforcertiorariseekingtoreversethedecision[1]andresolution[2]oftheCourtof
AppealsdatedAugust30,1996andApril23,1997,respectively,declaringprivaterespondentCarlos
Cajestheownerof19.4hectaresoflandembracedinTCTNo.10101andorderingthesegregation
andreconveyanceofsaidportiontohim.
Theantecedentfactsareasfollows:
Thelandindispute,consistingof19.4hectareslocatedinSanMiguel,ProvinceofBohol,was
originallyownedbyUlpianoMumar,whoseownershipsince1917wasevidencedbyTaxDeclaration
No.3840.[3]In1950,[4]MumarsoldthelandtoprivaterespondentwhowasissuedTaxDeclarationNo.
R1475thatsameyear.[5]ThetaxdeclarationwaslatersupersededbyTaxDeclarationNos.R799
issuedin1961[6]andD2247issuedin1974.[7]Privaterespondentoccupiedandcultivatedthesaid
land,[8]plantingcassavaandcamoteincertainportionsoftheland.[9]
In1969,unknowntoprivaterespondent,JoseAlvarezsucceededinobtainingtheregistrationofa
parceloflandwithanareaof1,512,468.00squaremeters,[10]inhisnameforwhichhewasissued
OCTNo.546onJune16,1969.[11]Theparceloflandincludedthe19.4hectaresoccupiedbyprivate
respondent.Alvarezneveroccupiednorintroducedimprovementsonsaidland.[12]
In1972,AlvarezsoldthelandtothespousesGaudencioandRosarioBeduyatowhomTCTNo.
10101wasissued.[13]Thatsameyear,thespousesBeduyaobtainedaloanfrompetitioner
DevelopmentBankofthePhilippinesforP526,000.00and,assecurity,mortgagedthelandcovered
byTCTNo.10101tothebank.[14]In1978,theSAADInvestmentCorp.,andtheSAADAgro
Industries,Inc.,representedbyGaudencioBeduya,andthespousesBeduyapersonallyexecuted
anothermortgageoverthelandinfavorofpetitionertosecurealoanofP1,430,000.00.[15]Sdjad
ThespousesBeduyalaterfailedtopaytheirloans,asaresultofwhich,themortgageontheproperty
wasforeclosed.[16]IntheresultingforeclosuresaleheldonJanuary31,1985,petitionerwasthe
highestbidder.[17]AsthespousesBeduyafailedtoredeemtheproperty,petitionerconsolidatedits
ownership.[18]
Itappearsthatprivaterespondenthadalsoappliedforaloanfrompetitionerin1978,offeringhis19.4
hectarepropertyunderTaxDeclarationNo.D2247assecurityfortheloan.Aspartoftheprocessing
oftheapplication,arepresentativeofpetitioner,PattonR.Olano,inspectedthelandandappraisedits
value.
Privaterespondentsloanapplicationwaslaterapprovedbypetitioner.[19]Howeverafterreleasingthe
amountoftheloantoprivaterespondent,petitionerfoundthatthelandmortgagedbyprivate
respondentwasincludedinthelandcoveredbyTCTNo.10101inthenameofthespousesBeduya.
Petitioner,therefore,cancelledtheloananddemandedimmediatepaymentoftheamount.[20]Private
respondentpaidtheloantopetitionerforwhichtheformerwasissuedaCancellationofMortgage,
datedMarch18,1981,releasingthepropertyinquestionfromencumbrance.[21]
SometimeinAprilof1986,morethanayearaftertheforeclosuresale,areappraisaloftheproperty
coveredbyTCTNo.10101wasconductedbypetitionersrepresentatives.Itwasthendiscoveredthat
privaterespondentwasoccupyingaportionofsaidland.Privaterespondentwasinformedthat
petitionerhadbecometheownerofthelandhewasoccupying,andhewasaskedtovacatethe
property.Asprivaterespondentrefusedtodoso,[22]petitionerfiledacomplaintforrecoveryof
possessionwithdamagesagainsthim.ThecasewasassignedtoBranch1oftheRegionalTrial
Court,TagbilaranCity,[23]whichaftertrial,renderedadecision,datedAugust22,1989,declaring
petitionerthelawfulowneroftheentirelandcoveredbyTCTNo.10101onthegroundthatthedecree
ofregistrationwasbindingupontheland.[24]Thedispositiveportionofthedecisionreads:
WHEREFORE,foregoingconsidered,thecourtrendersjudgment:
1.......DeclaringplaintiffbankDevelopmentBankofthePhilippinesthetrueandlegal
ownerofthelandinquestioncoveredbyTCTNo.10101farmofGaudencioBeduya
2.......DismissingdefendantscounterclaimSppedsc
3.......Orderingdefendanttovacatefromthelandinquestiontheportionofwhichhe
claimstobelongtohimforwithoutbasisinfactandlaw
4.......Orderingdefendant,hisagentsoranypersonrepresentinghimorthosewhomay
claimsubstantialrightsonthelandtovacatetherefrom,ceaseanddesistfrom
disturbing,molestingandinterferingplaintiffspossessionofthelandinquestion,and
fromcommittinganysuchactaswouldtendtomitigate,denyordepriveplaintiffofits
ownershipandpossessionoversaidland.
SOORDERED.
Onappeal,theCourtofAppealsreversedandgavejudgmentforprivaterespondent,declaringhim
theownerofthe19.4hectaresoflanderroneouslyincludedinTCTNo.10101.Thedispositiveportion
oftheappellatecourtsdecisionreads:
WHEREFORE,theappealeddecisionisherebyREVERSEDANDSETASIDE.Anew
decisionisherebyrendered:
1.Dismissingthecomplaint.
2.Declaringthedisputed19.4000hectaresoflandembracedinTCT10101as
exclusivelybelongingtodefendantappellant,orderingitssegregationfromplaintiff
appelleestitleanditsreconveyancetoappellant.
Nopronouncementastocosts.
SOORDERED.[25]
PetitionermovedforareconsiderationbutitsmotionwasdeniedinaresolutiondatedApril23,1997.
[26]
Hencethispetition.
Petitionercontendsthat:
I.......THEDECISIONOFTHERESPONDENTCOURTISNOTINACCORDWITHTHE
APPLICABLEPROVISIONSOFLAW(Sections38and46ofACT496)ANDTHE
APPLICABLEDECISIONSOFTHESUPREMECOURT,PARTICULARLYINTHE
CASEOFBENINVS.TUASON,57SCRA531.
II.......THERESPONDENTCOURTOVERLOOKEDTHEISSUESABOUTTHEDBP
BEINGANINNOCENTMORTGAGEEFORVALUEOFTHELANDINQUESTIONAND
OFHAVINGPURCHASEDLATERTHESAMEDURINGAPUBLICAUCTIONSALE.
Calrsc
III.THERESPONDENTCOURTSRULINGDECLARINGDBPINESTOPPELIS
ILLOGICAL.[27]
First.PetitionerinvokestherulingofthisCourtinBeninv.Tuason[28]insupportofitsclaimthatits
predecessorininterest,JoseAlvarez,becametheownerofthelandbyvirtueofthedecreeof
registrationissuedinhisname.InBenin,threesetsofplaintiffsfiledseparatecomplaintsagainst
MarianoSeveroTuasonandJ.M.Tuason&Co.,Inc.,prayingforthecancellationofOCTNo.735
coveringtwoparcelsoflandcalledtheSta.MesaEstate,orParcel1,withanareaof8,798,617.00
squaremeters,andtheDilimanEstate,orParcel2,withanareaof15,961,246.00squaremeters.
Theyaskedthattheybedeclaredtheownersandlawfulpossessorsofsaidlands.
Beninisdistinguishedfromthiscase.Inthefirstplace,Benininvolvedvasttractsoflandswhichhad
alreadybeensubdividedandboughtbyinnocentpurchasersforvalueandingoodfaithatthetimethe
claimantsobtainedregistration.Secondly,whentheclaimantsancestorsoccupiedthelandsin
questionanddeclaredthemfortaxpurposesin1944,thelandswerealreadycoveredbythetax
declarationsinthenameofJ.M.Tuason&Co.,Inc.In1914,OCTNo.735wasissuedinthenameof
Tuasonsothat,fromthattimeon,nopossessioncoulddefeatthetitleoftheregisteredownersofthe
land.Thirdly,thevalidityofOCTNo.735hadalreadybeenrecognizedbythisCourtinseveral
cases[29]and,asaresultthereof,thetransfercertificatesoftitleacquiredbytheinnocentpurchasers
forvaluewerealsodeclaredvalid.Itwasheldthatneithercouldtheclaimantsfileanactiontoannul
thesetitlesfornotonlyhadtheseactionsprescribed,butthefactwasthattheclaimantswerealso
barredfromdoingsobylaches,havingfiledthecomplaintonlyin1955,or41yearsaftertheissuance
ofOCTNo.735toJ.M.Tuason&Co.,Inc.Thus,itwasnotsolelythedecreeofregistrationwhichwas
consideredinresolvingtheBenincase.Whatwasconsidereddecisivewasthevalidtitleorrightof
ownershipofJ.M.Tuason&Co.,Inc.andthatoftheotherinnocentpurchasersforvalueandingood
faithcomparedtothefailureoftheclaimantstoshowtheirrighttoownorpossessthequestioned
properties.Sccalr
Petitionermaintainsthatthepossessionbyprivaterespondentandhispredecessorininterestofthe
19.4hectaresoflandformorethan30yearscannotovercomethedecreeofregistrationissuedin
favorofitspredecessorininterestJoseAlvarez.Petitionerquotesthefollowingstatementinthe
Benincase:
Itfollowsalsothattheallegationofprescriptivetitleinfavorofplaintiffsdoesnotsuffice
toestablishacauseofaction.Ifsuchprescriptionwascompletedbeforetheregistration
ofthelandinfavoroftheTuasons,theresultingprescriptivetitlewascutoffand
extinguishedbythedecreeofregistration.If,onthecontrary,theprescriptionwaseither
begunorcompletedafterthedecreeofregistration,itconferrednotitlebecause,by
expressprovisionoflaw,prescriptioncannotoperateagainsttheregisteredowner(Act
496).[30]
Petitionerwouldthusinsistthat,byvirtueofthedecreeofregistration,JoseAlvarezandthose
claimingtitlefromhim(i.e.,thespousesBeduya)acquiredownershipofthe19.4hectaresofland,
despitethefactthattheyneitherpossessednoroccupiedtheselands.
Thisviewismistaken.Aconsiderationofthecasesshowsthatadecreeofregistrationcutoffor
extinguishedarightacquiredbyapersonwhensuchrightreferstoalienorencumbranceontheland
nottotherightofownershipthereofwhichwasnotannotatedonthecertificateoftitleissuedthereon.
Thus,ActNo.496provides:
Sec.39.Everypersonreceivingacertificateoftitleinpursuanceofadecreeof
registration,andeverysubsequentpurchaserofregisteredlandwhotakesacertificate
oftitleforvalueingoodfaithshallholdthesamefreeofallencumbrancesexceptthose
notedonsaidcertificate,andanyofthefollowingencumbranceswhichmaybe
subsisting,namely:Calrspped
First.Liens,claims,orrightsarisingorexistingunderthelawsofConstitutionofthe
UnitedStatesorofthePhilippineIslandswhichthestatutesofthePhilippineIslands
cannotrequiretoappearofrecordintheRegistry.
Second.Taxeswithintwoyearsafterthesamebecamedueandpayable.
Third.Anypublichighway,way,privatewayestablishedbylaw,oranyGovernment
irrigationcanalorlateralthereof,wherethecertificateoftitledoesnotstatethatthe
boundariesofsuchhighway,way,orirrigationcanalorlateralthereof,havebeen
determined.
Butifthereareeasementsorotherrightsappurtenanttoaparcelofregisteredland
whichforanyreasonhavefailedtoberegistered,sucheasementsorrightsshallremain
soappurtenantnotwithstandingsuchfailure,andshallbeheldtopasswiththelanduntil
cutofforextinguishedbytheregistrationoftheservientestate,orinanyothermanner.
Hence,inCidv.Javier,[31]itwashelds:
...Consequently,evenconcedingarguendothatsuchaneasementhasbeenacquired,
ithadbeencutoffandextinguishedbytheregistrationoftheservientestateunderthe
Torrenssystemwithouttheeasementbeingannotatedonthecorrespondingcertificate
oftitle,pursuanttoSection39oftheLandRegistrationAct.
ThisprinciplewasreiteratedinPuruggananv.Paredes[32]whichalsoinvolvedaneasementoflight
andviewthatwasnotannotatedonthecertificateoftitleoftheservientestate.Scedp
Buttomakethisprincipleapplicabletoasituationwhereintitleacquiredbyapersonthrough
acquisitiveprescriptionwouldbeconsideredcutoffandextinguishedbyadecreeofregistrationwould
runcountertoestablishedjurisprudencebeforeandaftertherulinginBenin.Indeed,registrationhas
neverbeenamodeofacquiringownershipoverimmovableproperty.Asearlyas1911,inthecaseof
CityofManilav.Lack,[33]theCourtalreadyruledonthepurposeofregistrationoflands,viz.:
TheCourtofLandRegistrationwascreatedforasinglepurpose.TheActisentitled"An
ActtoprovidefortheadjudicationandregistrationoftitlestolandsinthePhilippine
Islands."ThesolepurposeoftheLegislatureinitscreationwastobringthelandtitlesof
thePhilippineIslandsunderonecomprehensiveandharmonioussystem,thecardinal
featuresofwhichareindefeasibilityoftitleandtheinterventionoftheStateasa
prerequisitetothecreationandtransferoftitlesandinterest,withtheresultantincrease
intheuseoflandasabusinessassetbyreasonofthegreatercertaintyandsecurityof
title.Itdoesnotcreateatitlenorvestone.Itsimplyconfirmsatitlealreadycreatedand
alreadyvested,renderingitforeverindefeasible...
Again,inthecaseofAngelesv.Samia[34]wherelandwaserroneouslyregisteredinfavorofpersons
whoneitherpossessednoroccupiedthesame,totheprejudiceoftheactualoccupant,theCourt
held:
...ThepurposeoftheLandRegistrationAct,asthiscourthashadoccasiontosostate
morethanonce,isnottocreateorvesttitle,buttoconfirmandregistertitlealready
createdandalreadyvested,andofcourse,saidoriginalcertificateoftitleNo.8995could
nothavevestedinthedefendantmoretitlethanwhatwasrightfullydueherandher
coowners.Itappearingthatsaidcertificategrantedhermuchmorethansheexpected,
naturallytotheprejudiceofanother,itisbutjustthattheerror,whichgaverisetosaid
anomaly,becorrected(CityofManilavs.Lack,19Phil.,324).Thedefendantandher
coownersknewor,atleast,cametoknowthatitwasthrougherrorthattheoriginal
certificateoftitleinquestionwasissuedbythecourtwhichheardcadastralcaseNo.11
ofBacolor,notonlyinorpriortoMarch,1933,butfromthetimesaidcertificatewas
issuedintheirfavor,thatis,fromDecember15,1921.Thisisevidencedbythefactthat,
eversince,theyremainedpassivewithoutevenattemptingtomaketheleastshowingof
ownershipoverthelandinquestionuntilafterthelapseofmorethanelevenyears.The
LandRegistrationActaswellastheCadastralActprotectsonlytheholdersofatitlein
goodfaithanddoesnotpermititsprovisionstobeusedasashieldforthecommission
offraud,orthatoneshouldenrichhimselfattheexpenseofanother(Gustilovs.
Maravilla,48Phil.,442Angelovs.DirectorofLands,49Phil.,838).Theabovestated
Actsdonotgiveanybody,whoresortstotheprovisionsthereof,abettertitlethanhe
reallyandlawfullyhas.Ifhehappenedtoobtainitbymistakeortosecure,tothe
prejudiceofhisneighbor,morelandthanhereallyowns,withorwithoutbadfaithonhis
part,thecertificateoftitle,whichmayhavebeenissuedtohimunderthecircumstances,
mayandshouldbecancelledorcorrected(LegardaandPrietovs.Saleeby,31Phil.,
590).Thisispermittedbysection112ofActNo.496,whichisapplicabletothe
CadastralActbecauseitissoprovidedexpresslybytheprovisionsofsection11ofthe
latterAct.Itcannotbeotherwisebecause,asstatedinthecaseofDomingovs.Santos,
Ongsiako,LimyCia.(55Phil.,361),errorsintheplansoflandssoughttoberegistered
intheregistryandreproducedinthecertificateoftitleissuedlater,donotannulthe
decreeofregistrationonthegroundthatitisnottheplanbutthelanditselfwhichis
registeredintheregistry.Inotherwords,iftheplanofanapplicantforregistrationor
claimantinacadastralcaseallegesthatthelandreferredtoinsaidplanis100or1,000
hectares,andthelandwhichhereallyownsanddesirestoregisterintheregistryisonly
80ares,hecannotclaimtobetheowneroftheexistingdifferenceifafterwardsheis
issuedacertificateoftitlegrantinghimsaidareaof100or1,000hectares.[35]Edpsc
Theprinciplelaiddowninthis1938caseremainstheprevailingdoctrine,itslatestapplicationbeingin
thecaseofReyesv.CourtofAppeals[36]whereinweruledthatthefactthatapartywasabletosecure
atitleinhisfavordidnotoperatetovestownershipuponheroftheproperty.
Inthepresentcase,privaterespondenthasbeeninactual,open,peacefulandcontinuous
possessionofthepropertysince1950.ThisfactwascorroboratedbythetestimonyofEleuterio
CambangaywhopersonallyknewthatUlpianoMumartransferredthelandcoveredbyTax
DeclarationNo.3840[37]infavorofprivaterespondentin1950.[38]Privaterespondentsclaimbasedon
actualoccupationofthelandisbolsteredbyTaxDeclarationNos.R1475,R799andD2247[39]
whichwereissuedinhisnamein1950,1961and1974,respectively.Togetherwithhisactual
possessionoftheland,thesetaxdeclarationsconstitutestrongevidenceofownershipoftheland
occupiedbyhim.AswesaidinthecaseofRepublicvs.CourtofAppeals:[40]
Althoughtaxdeclarationsorrealtytaxpaymentsofpropertyarenotconclusiveevidence
ofownership,nevertheless,theyaregoodindiciaofpossessionintheconceptofowner
fornooneinhisrightmindwouldbepayingtaxesforapropertythatisnotinhisactual
oratleastconstructivepossession.Theyconstituteatleastproofthattheholderhasa
claimoftitleovertheproperty.Thevoluntarydeclarationofapieceofpropertyfor
taxationpurposesmanifestsnotonlyonessincereandhonestdesiretoobtaintitletothe
propertyandannounceshisadverseclaimagainsttheStateandallotherinterested
parties,butalsotheintentiontocontributeneededrevenuestotheGovernment.Such
anactstrengthensonesbonafideclaimofacquisitionofownership.
Moreimportantly,itwasestablishedthatprivaterespondent,havingbeeninpossessionoftheland
since1950,wastheownerofthepropertywhenitwasregisteredbyJoseAlvarezin1969,his
possessiontackedtothatofhispredecessorininterest,UlpianoMumar,whichdatesbackto1917.[41]
Clearly,morethan30yearshadelapsedbeforeadecreeofregistrationwasissuedinfavorofJose
Alvarez.Thisuninterruptedadversepossessionofthelandformorethan30yearscouldonlyripen
intoownershipofthelandthroughacquisitiveprescriptionwhichisamodeofacquiringownershipand
otherrealrightsoverimmovableproperty.Prescriptionrequirespublic,peaceful,uninterruptedand
adversepossessionofthepropertyintheconceptofanownerforten(10)years,incasethe
possessionisingoodfaithandwithajusttitle.Suchprescriptioniscalledordinaryprescription,as
distinguishedfromextraordinaryprescriptionwhichrequirespossessionfor30yearsincase
possessioniswithoutjusttitleorisnotingoodfaith.[42]Edp
Incontrasttoprivaterespondent,ithasbeenshownthatneitherJoseAlvareznorthespouses
Beduyawereatanytimeinpossessionofthepropertyinquestion.Infact,despiteknowledgeby
GaudencioBeduyathatprivaterespondentoccupiedthis19.4hectaresincludedintheareacovered
byTCTNo.10101,[43]heneverinstitutedanyactiontoejectorrecoverpossessionfromthelatter.
Hence,itcanbeconcludedthatneitherJoseAlvareznorthespousesBeduyaeverexercisedany
rightofownershipovertheland.Thefactofregistrationintheirfavornevervestedinthemthe
ownershipofthelandindispute."IfapersonobtainsatitleundertheTorrenssystem,whichincludes
bymistakeoroversightlandwhichcannolongerberegisteredunderthesystem,hedoesnot,by
virtueofthesaidcertificatealone,becometheownerofthelandsillegallyincluded."[44]
Consideringthecircumstancespertaininginthiscase,therefore,weholdthatownershipofthe19.4
hectaresoflandpresentlyoccupiedbyprivaterespondentwasalreadyvestedinhimandthatits
inclusioninOCTNo.546and,subsequently,inTCTNo.10101,waserroneous.Accordingly,theland
inquestionmustbereconveyedinfavorofprivaterespondent,thetrueandactualownerthereof,
reconveyancebeingclearlytheproperremedyinthiscase.
"Thetrueownermaybringanactiontohavetheownershiportitletothelandjudicially
settledandtheCourtintheexerciseofitsequityjurisdiction,withoutorderingthe
cancellationoftheTorrenstitleissueduponthepatent,maydirectthedefendants,the
registeredownertoreconveytheparceloflandtotheplaintiffwhohasbeenfoundtobe
thetrueownerthereof."(Vitalvs.Amore,90Phil.955)"Thereconveyanceisjustand
properinordertoterminatetheintolerableanomalythatthepatenteesshouldhavea
torrenstitleforthelandwhichtheyandtheirpredecessorsneverpossessedwhichhas
beenpossessedbyNovointheconceptofowner."(Bustargav.Novo,129SCRA125)
[45]
Second.Generally,anactionforreconveyancebasedonanimpliedorconstructivetrust,suchasthe
instantcase,prescribesin10yearsfromthedateofissuanceofdecreeofregistration.[46]However,
thisruledoesnotapplywhentheplaintiffisinactualpossessionoftheland.Thus,ithasbeenheld:
Misedp
...[A]nactionforreconveyanceofaparceloflandbasedonimpliedorconstructive
trustprescribesintenyears,thepointofreferencebeingthedateofregistrationofthe
deedorthedateoftheissuanceofthecertificateoftitleovertheproperty,butthisrule
appliesonlywhentheplaintifforthepersonenforcingthetrustisnotinpossessionof
theproperty,sinceifapersonclaimingtobetheownerthereofisinactualpossessionof
theproperty,asthedefendantsareintheinstantcase,therighttoseekreconveyance,
whichineffectseekstoquiettitletotheproperty,doesnotprescribe.Thereasonforthis
isthatonewhoisinactualpossessionofapieceoflandclaimingtobetheowner
thereofmaywaituntilhispossessionisdisturbedorhistitleisattackedbeforetaking
stepstovindicatehisright,thereasonfortherulebeing,thathisundisturbedpossession
giveshimacontinuingrighttoseektheaidofacourtofequitytoascertainand
determinethenatureoftheadverseclaimofathirdpartyanditseffectonhisowntitle,
whichrightcanbeclaimedonlybyonewhoisinpossession.[47]
Havingbeenthesoleoccupantofthelandinquestion,privaterespondentmayseekreconveyanceof
hispropertydespitethelapseofmorethan10years.
NoristhereanyobstacletothedeterminationofthevalidityofTCTNo.10101.Itistruethatthe
indefeasibilityoftorrenstitlescannotbecollaterallyattacked.Intheinstantcase,theoriginal
complaintisforrecoveryofpossessionfiledbypetitioneragainstprivaterespondent,notanoriginal
actionfiledbythelattertoquestionthevalidityofTCTNo.10101onwhichpetitionerbasesitsright.
Toruleontheissueofvalidityinacaseforrecoveryofpossessionistantamounttoacollateralattack.
However,itshouldnotbeoverlookedthatprivaterespondentfiledacounterclaimagainstpetitioner,
claimingownershipoverthelandandseekingdamages.Hence,wecouldruleonthequestionofthe
validityofTCTNo.10101forthecounterclaimcanbeconsideredadirectattackonthesame."A
counterclaimisconsideredacomplaint,onlythistime,itistheoriginaldefendantwhobecomesthe
plaintiff....Itstandsonthesamefootingandistobetestedbythesamerulesasifitwerean
independentaction."[48]Inananalogouscase,[49]weruledonthevalidityofacertificateoftitledespite
thefactthattheoriginalactioninstitutedbeforethelowercourtwasacaseforrecoveryofpossession.
TheCourtreasonedthatsinceallthefactsofthecasearebeforeit,todirectthepartytoinstitute
cancellationproceedingswouldbeneedlesslycircuitousandwouldunnecessarilydelaythe
terminationofthecontroversywhichhasalreadydraggedonfor20years.
Third.Petitionernonethelesscontendsthatanactionforreconveyancedoesnotlieagainstit,
becauseitisaninnocentpurchaserforvalueintheforeclosuresaleheldin1985.
Thiscontentionhasnomerit.Sec.38ofActNo.496,theLandRegistrationAct,provides:Misoedp
Ifthecourtafterhearingfindsthattheapplicantoradverseclaimanthastitleasstatedin
hisapplicationoradverseclaimandproperforregistration,adecreeofconfirmationand
registrationshallbeentered.Everydecreeofregistrationshallbindtheland,andquiet
titlethereto,subjectonlytotheexceptionsstatedinthefollowingsection.Itshallbe
conclusiveuponandagainstallpersons,includingtheInsularGovernmentandallthe
branchesthereof,whethermentionedbynameintheapplication,notice,orcitation,or
includedinthegeneraldescription"Toallwhomitmayconcern."Suchdecreeshallnot
beopenedbyreasonoftheabsence,infancy,orotherdisabilityofanypersonaffected
thereby,norbyanyproceedinginanycourtforreversingjudgmentsordecreessubject,
however,totherightofanypersondeprivedoflandorofanyestateorinteresttherein
bydecreeofregistrationobtainedbyfraudtofileinthecompetentCourtofFirstInstance
apetitionforreviewwithinoneyearafterentryofthedecree,providednoinnocent
purchaserforvaluehasacquiredaninterest.Upontheexpirationofsaidtermofone
year,everydecreeorcertificateoftitleissuedinaccordancewiththissectionshallbe
incontrovertible.Ifthereisanysuchpurchaser,thedecreeofregistrationshallnotbe
opened,butshallremaininfullforceandeffectforever,subjectonlytotherightof
appealhereinbeforeprovided:Provided,however,Thatnodecreeorcertificateoftitle
issuedtopersonsnotpartiestotheappealshallbecancelledorannulled.Butany
personaggrievedbysuchdecreeinanycasemaypursuehisremedybyactionfor
damagesagainsttheapplicantoranyotherpersonforfraudinprocuringthedecree.
Wheneverthephrase"innocentpurchaserforvalue"oranequivalentphraseoccursin
thisAct,itshallbedeemedtoincludeaninnocentlessee,mortgagee,orother
encumbrancerforvalue.(AsamendedbySec.3,Act3621andSec.1,ActNo.3630.)
Edpmis
Succinctlyput,38providesthatacertificateoftitleisconclusiveandbindinguponthewholeworld.
Consequently,abuyerneednotlookbehindthecertificateoftitleinordertodeterminewhoisthe
actualowneroftheland.However,thisissubjecttotherightofapersondeprivedoflandthrough
fraudtobringanactionforreconveyance,providedthatitdoesnotprejudicetherightsofaninnocent
purchaserforvalueandingoodfaith."Itisaconditionsinequanonforanactionforreconveyanceto
prosperthatthepropertyshouldnothavepassedtothehandsofaninnocentpurchaserforvalue."[50]
Thesameruleappliestomortgagees,likepetitioner.Thus,weheld:
Wherethecertificateoftitleisinthenameofthemortgagorwhenthelandismortgaged,
theinnocentmortgageeforvaluehastherighttorelyonwhatappearsonthecertificate
oftitle.Intheabsenceofanythingtoexcitesuspicion,saidmortgageeisunderno
obligationtolookbeyondthecertificateandinvestigatethetitleofthemortgagor
appearingonthefaceofsaidcertificate.AlthoughArticle2085oftheCivilCode
providesthatabsoluteownershipofthemortgagedpropertybythemortgagoris
essential,thesubsequentdeclarationofatitleasnullandvoidisnotagroundfor
nullifyingthemortgagerightofamortgageeingoodfaith.[51]
Theevidencebeforeus,however,indicatesthatpetitionerisnotamortgageeingoodfaith.Tobe
sure,aninnocentmortgageeisnotexpectedtoconductanexhaustiveinvestigationonthehistoryof
themortgagorstitle.Nonetheless,especiallyinthecaseofabankinginstitution,amortgageemust
exerciseduediligencebeforeenteringintosaidcontract.Judicialnoticeistakenofthestandard
practiceforbanks,beforeapprovingaloan,tosendrepresentativestothepremisesoftheland
offeredascollateralandtoinvestigatewhoaretherealownersthereof.Banks,theirbusinessbeing
impressedwithpublicinterest,areexpectedtoexercisemorecareandprudencethanprivate
individualsintheirdealings,eventhoseinvolvingregisteredlands.[52]Jjsc
Inthiscase,petitionersrepresentative,PattonR.Olano,admittedthathecametoknowofthe
propertyforthefirsttimein1979whenheinspectedittodeterminewhethertheportionoccupiedby
privaterespondentandmortgagedbythelattertopetitionerwasincludedinTCTNo.10101.This
meansthatwhenthelandwasmortgagedbythespousesBeduyain1972,noinvestigationhadbeen
madebypetitioner.Itisclear,therefore,thatpetitionerfailedtoexerciseduecareanddiligencein
establishingtheconditionofthelandasregardsitsactualownersandpossessorsbeforeitentered
intothemortgagecontractin1972withtheBeduyas.Haditdoneso,itwouldnothavefailedto
discoverthatprivaterespondentwasoccupyingthedisputedportionof19.4hectares.Forthisreason,
petitionercannotbeconsideredaninnocentpurchaserforvaluewhenitboughtthelandcoveredby
TCTNo.10101in1985attheforeclosuresale.
Indeed,twocircumstancesnegatepetitionersclaimthatitwasaninnocentpurchaserforvaluewhen
itboughtthelandinquestion,includingtheportionoccupiedbyprivaterespondent:(1)petitionerwas
alreadyinformedbyGaudencioBeduyathatprivaterespondentoccupiedaportionoftheproperty
coveredbyTCTNo.10101and(2)petitionersrepresentativeconductedaninvestigationofthe
propertyin1979toascertainwhetherthelandmortgagedbyprivaterespondentwasincludedinTCT
No.10101.Inotherwords,petitionerwasalreadyawarethatapersonotherthantheregisteredowner
wasinactualpossessionofthelandwhenitboughtthesameattheforeclosuresale.Apersonwho
deliberatelyignoresasignificantfactwhichwouldcreatesuspicioninanotherwisereasonablemanis
notaninnocentpurchaserforvalue."Itisawellsettledrulethatapurchasercannotclosehiseyesto
factswhichshouldputareasonablemanuponhisguard,andthenclaimthatheactedingoodfaith
underthebeliefthattherewasnodefectinthetitleofthevendor."[53]
Petitionerdeliberatelydisregardedboththefactthatprivaterespondentalreadyoccupiedtheproperty
andthathewasclaimingownershipoverthesame.Itcannotfeignignoranceofprivaterespondents
claimtothelandsincethelattermortgagedthesamelandtopetitionerassecurityfortheloanhe
contractedin1978onthestrengthofthetaxdeclarationsissuedunderhisname.Insteadofinquiring
intoprivaterespondentsoccupationovertheland,petitionersimplyproceededwiththeforeclosure
sale,pretendingthatnodoubtssurroundtheownershipofthelandcoveredbyTCTNo.10101.
Consideringthesecircumstances,petitionercannotbedeemedaninnocentmortgagee/purchaserfor
value.Asweruled:Scjj
"Thefailureofappelleestotaketheordinaryprecautionswhichaprudentmanwould
havetakenunderthecircumstances,speciallyinbuyingapieceoflandintheactual,
visibleandpublicpossessionofanotherperson,otherthanthevendor,constitutesgross
negligenceamountingtobadfaith.
Inthisconnection,ithasbeenheldthatwhere,asinthiscase,thelandsoldisinthe
possessionofapersonotherthanthevendor,thepurchaserisrequiredtogobeyond
thecertificatesoftitleandma[k]einquiriesconcerningtherightsoftheactualpossessor.
(Citationsomitted.)
....
Onewhopurchasesrealpropertywhichisintheactualpossessionofanothershould,at
least,makesomeinquiryconcerningtherightofthoseinpossession.Theactual
possessionbyotherthanthevendorshould,atleastputthepurchaseruponinquiry.He
canscarcely,intheabsenceofsuchinquiry,beregardedasabonafidepurchaseras
againstsuchpossessors."[54]
Fourth.Fromtheforegoing,wefindthattheresolutionoftheissueofestoppelwillnotaffectthe
outcomeofthiscase.Petitionerclaimsthatthefactthatitapprovedaloaninfavorofprivate
respondentandexecutedamortgagecontractcoveringthe19.4hectarescoveredbytaxdeclarations
issuedunderprivaterespondentsnamedoesnotmeanthatitisestoppedfromquestioningthelatters
title.Petitioneraccusesprivaterespondentofhavingmademisrepresentationswhichledittobelieve
inhisvalidtitleandownership.
Theclaimhasnobasis.Privaterespondentmadenomisrepresentationwithregardtotheland
occupiedbyhimasheisactuallytherealownerthereof.Moreover,whenprivaterespondententered
intoamortgagecontractwithpetitioner,hisclaimofownershipwassupportednotonlybythetax
declarationsbutalsobyacertificationoftheClerkofCourtoftheCourtofFirstInstanceofBoholthat
nocivil,landregistrationorcadastralcasehasbeenfiledorinstitutedbeforethecourtaffectingthe
validityofTaxDeclarationNo.D2247coveringthelandlocatedinBugang,SanMiguel,Boholand
declaredinthenameofCarlosCajes.[55]Thesedocumentswererelieduponbyprivaterespondentin
supportofhisclaimofownership.Wecannotconsiderthesubmissionofthesedocumentsas
misrepresentationsbyprivaterespondentastotheactualownershipoftheland.Rather,private
respondentbelievedingoodfaithandwithgoodreasonthathewastheownerofthe19.4hectares
occupiedbyhim.Sjcj
Astothequestionofestoppel,wedonotfindpetitionertobeestoppedfromquestioningprivate
respondentstitle."Estoppelinpaisariseswhenone,byhisacts,representationsoradmission,orby
hisownsilencewhenheoughttospeakout,intentionallyorthroughculpablenegligence,induces
anothertobelievecertainfactstoexistandsuchotherrightfullyreliesandactsonsuchbelief,sothat
hewillbeprejudicediftheformerispermittedtodenytheexistenceofsuchfacts."[56]Inthecaseat
bar,uponlearningthatthelandoccupiedbyprivaterespondentwasalsocoveredbyTCTNo.10101,
petitionerimmediatelydemandedfullpaymentoftheloanandthereaftercancelledthemortgage
contract,afactthatisadmittedbyprivaterespondenthimself.[57]Indeed,nothinginrecordindicates
thatpetitionerimpliedlyacquiescedtothevalidityofprivaterespondentstitlewhenitfoundoutthat
thelatterwasoccupyingaportionofthelandcoveredbyTCTNo.10101.
However,forreasonsaforestated,weupholdprivaterespondentsownershipof19.4hectares
occupiedbyhim.Asanecessaryconsequencethereof,suchportionoflandincludedinTCTNo.
10101mustbesegregatedandreconveyedinhisfavor.
WHEREFORE,thedecisionoftheCourtofAppealsisAFFIRMEDintoto.
SOORDERED.Supreme
Bellosillo,(Chairman),Quisumbing,Buena,andDeLeon,Jr.,JJ.,concur.
[1] PerJusticeRubenT.ReyesandconcurredinbyJusticesFidelP.Purisima(nowAssociateJusticeoftheSupremeCourt)and
ConradoM.Vasquez,Jr.
[2] PerJusticeRubenT.ReyesandconcurredinbyJusticesRomeoA.BrawnerandConradoM.Vasquez,Jr.
[3] Exh.4.
[4] TSN,p.8,Jan.19,1989.
[5] Exh.4.
[6] Exh.2.
[7] Exh.3.
[8] TSN,p.7,April6,1989.
[9] Exh.C.
[10] TSN,p.28,Oct.7,1988.
[11] TSN,p.5,April6,1989Exh.A.
[12] TSN,p.6,April6,1989.
[13] Exh.A.
[14] Exh.A2.
[15] Exh.A3.
[16] TSN,p.6,Oct.7,1988.
[17] Exh.B.
[18] TSN,p.7,Oct.7,1988.
[19] Id.,pp.911.
[20] BrieffortheAppellant,p.3CARollo,p.22.
[21] Exh.5.
[22] TSN,pp.1718,Oct.7,1988.
[23] Records,pp.13.
[24] Decision,pp.23Records,pp.6970.
[25] CADecision,p.11Rollo,p.51.
[26] Rollo,p.59.
[27] Id.,p.8.
[28] 57SCRA531(1974)
[29] BankofthePhilippineIslandsv.Acua,59Phil.183(1933)Alcantarav.Tuason,92Phil.796(1953)Santiagov.J.M.Tuason&
Co.,Inc.,110Phil.16(1960)
[30] Beninv.Tuason,supraat597,citingSantiagov.J.M.Tuason&Co.,Inc,supra.
[31] 108Phil.850,853(1960).(Emphasisadded)
[32] 161Phil.91(1976)
[33] 19Phil.324,328(1911)
[34] 66Phil.444(1938)
[35] Supraat448450.
[36] G.R.No.127608,Sept.30,1999.SeealsoSantiagov.CourtofAppeals,278SCRA(1997)
[37] Exh.4.
[38] TSN,pp.2526,January19,1999.
[39] Exh.4Exh.2Exh.3.
[40] 328Phil.238,248(1996)
[41] Exh.4.
[42] Gesmundov.CourtofAppeals,G.R.No.119870,Dec.23,1999.
[43] TSN,p.9,Oct.7,1988.
[44] Avilav.Tapucar,201SCRA148,155(1991)
[45] Linazav.IntermediateAppellateCourt,182SCRA855,860861(1990)
[46] Ramosv.CourtofAppeals,302SCRA589(1999)
[47] Vda.DeCabrerav.CourtofAppeals,335SCRA19,32(1997)HeirsofJoseOlvigav.CourtofAppeals,227SCRA330(1993)
[48] A.FranciscoRealtyandDevelopmentCorp.v.CourtofAppeals,298SCRA349,358(1998)
[49] Mendozav.CourtofAppeals,158SCRA508(1988)
[50] Lucenav.CourtofAppeals,G.R.No.L77468,Aug.25,1999.
[51] RuralBankofSariaya,Inc.v.Yacon,175SCRA62(1989)
[52] CaviteDevelopmentBankv.Lim,G.R.No.13169,Feb.1,2000citingTomasv.Tomas,98SCRA280(1980)
[53] Lucenav.CourtofAppeals,supracitingSantiagov.CourtofAppeals,247SCRA336(1995)
[54] Ibid.
[55] Exh.8.
[56] IbaanRuralBank,Inc.v.CourtofAppeals,G.R.No.123817,Dec.17,1999.
[57] BrieffortheAppellant,p.3CARollo,p.22.