1. Legarda vs Saleeby, 31 Phil. 590; GR No.

8936, October 2, 1915

(Land Titles and Deeds – Purpose of the Torrens System of Registration)

Facts: A stone wall stands between the adjoining lot of Legarda and Saleeby. The said wall and
the strip of land where it stands is registered in the Torrens system under the name of Legarda in
1906. Six years after the decree of registration is released in favor of Legarda, Saleeby applied
for registration of his lot under the Torrens system in 1912, and the decree issued in favor of the
latter included the stone wall and the strip of land where it stands.

Issue: Who should be the owner of a land and its improvement which has been registered under
the name of two persons?

Held: For the issue involved, The Land Registration Act (Act 496) affords no remedy. However,
it can be construed that where two certificates purports to include the same registered land, the
holder of the earlier one continues to hold title and will prevail.

The real purpose of the Torrens system of registration, is to quiet title to land; to put a stop
forever to any question of the legality of the title, except claims which were noted at the time of
registration, in the certificate, or which may arise subsequent thereto. That being the purpose of
the law, once a title is registered the owner may rest secure, without the necessity of waiting in
the portals of the court, or sitting in the “mirador de su casa,” to avoid the possibility of losing
his land.

The law guarantees the title of the registered owner once it has entered into the Torrens system.

2. Republic v. Hon. Umali G.R. No. 80687, 10 April 1989

Facts:
1) Land in question originally purchased on installment from the government by Florentina
Bobadilla, who transferred her right thereto in favor of Martina Cenizal, et al. Tomasa and Julio
assigned their shares to Martina, Maria and Gregorio, who, in 1971, signed a joint affidavit that
they were entitled to the issuance of a certificate of title over the said land, and that they had
already paid in full.

2) Sec. of Agriculture and Natural Resources executed a deed, and thereafter a TCT. Several
transfers thereafter followed.

3) Republic filed a complaint for reversion on the ground that the original sale of the land was
tainted with fraud based on forgery, and therefore, void ab initio; claimed that Gregorio died in
1943, Maria in 1959, and could not have signed the joint affidavit.

4) Respondent claimed that they all acquired the property in good faith and for value, invoked
estoppel, laches, prescription and res judicata, others invoked no cause of action as no rights
were violated, government not a real party-in-interest because the land is already covered by
Torrens system.

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Issue:
May deception/fraud in the registration of title make the sale null and void, so as to make all
titles derived therefrom ineffectual ab initio?

Ruling:
No. The status of the defendants as innocent transferees for value was never questioned, and
such accorded them the protection of the Torrens system, thus rendering the titles obtained
indefeasible and conclusive.

In the present case, the private respondents acquired the land not by direct grant but in fact after
several transfers following the original sales thereof. They are presumed to be innocent
transferees for value.

The land now being registered under the Torrens system, the government has no more control or
jurisdiction over it; it is no longer part of the public domain.

NB:
A holder in bad faith is not entitled to the protection of the law.

If the patent and the OCT were procured by means of fraud, the land would not revert back to the
State precisely because it has become a private land. The original transfer was not null and void
ab initio but was only voidable. The land remained private as long as the title thereto had not
been voided. In such case, the nullity arises, not from fraud or deceit, but from the fact that the
land is not under the jurisdiction of the Bureau of Lands (now Land Management Bureau).

Sec. 39, Land Registration Act:

Every person receiving a certificate of title in pursuance of a decree of registration, and every
subsequent purchaser of registered land who takes/taking a certificate of title for value in good
faith shall hold the same free of all encumbrance except those noted on said certificate.

Sec. 44, P.D. 1529 – Property Registration Decree:

Every registered owner receiving a certificate of title in pursuance of a decree of registration, and
every subsequent purchaser of registered land taking a certificate of title for value and in good
faith, shall hold the same free from all encumbrances except those noted on said certificate and
any of following encumbrances which may be subsisting, and enumerated in law.

3. PINO V. CA

FACTS:
A parcel of land in Echague, Isabela was bought by spouses Juan and Rafaela Gaffud in
1924. On 1936 Juan died. The land was registered on 1938 and an OCT was issued in favor of
Rafaela and his 2 sons Raymundo and Cicero as co-owners. The lot was sold to Rafaela through
a Deed of Transfer which cancelled the OCT and in lieu thereof a TCT was issued in the name of

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Rafaela. On 1967, Rafaela sold a portion of the lot to Pascua which caused the subdivision of the
lot to Lot-A and Lot-B which was issued its corresponding TCTs. On 1970, Rafaela sold the Lot-
B to Felicisima Pino evidenced by a notarized Deed of Absolute Sale. It was registered and the
corresponding TCT was issued. On 1980 Cicero died and his wife Demetria and sons Romualdo
and Adolfo filed a complaint for nullity of sale and reconveyance against petitioner, the portion
sold to Pascua however was not questioned. During the pendency of the case Rafaela died. In
1988 the trial court held that she was not a purchaser in good faith and that the action to annul
the deed of sale has not yet prescribed (4 years). This was affirmed by CA.
ISSUE:
W/N the petitioner is a purchaser in good faith
HELD:
YES. A vendee for value has a right to rely on what appears on the face of the certificate
of title and to dispense with the need of inquiring further except when the party concerned had
actual knowledge of facts and circumstances that should impel a reasonably cautious man to
make such further inquiry. In the case at bar the TCT was in the name of Rafaela Donato alone.
The non-production of the extra-judicial statement does not prove that there was fraud
committed. The respondents should have presented it. No allegations much less any evidence
was given by the respondents.
The petitioner is therefore a purchaser in good faith. An action for reconveyance based on
constructive trust cannot reach an innocent purchaser for value. The remedy of such defrauded
party is to file an action for damages within 10 years from the issuance of the Torrens Title. The
action has already prescribed since the date from the OCT and even on the TCT was over 10
years.

4. Traders Royal Bank vs. Court of Appeals, Patria Capay, et al G.R. No. 118862, Sept. 24,
1999 (315 SCRA 190) case digest

Facts:
A parcel of land owned by the spouses Capay was mortgage to and subsequently extrajudicially
foreclosed by Traders Royal Bank (TRB). To prevent property sale in public auction, the Capays
filed a petition for preliminary injunction alleging the mortgage was void because they did not
receive the proceeds of the loan. A notice of lis pendens (suit pending) was filed before the
Register of Deeds with the notice recorded in the Day Book. Meanwhile, a foreclosure sale
proceeded with the TRB as the sole and winning bidder. The Capays title was cancelled and a
new one was entered in TRB’s name without the notice of lis pendens carried over the title. The
Capays filed recovery of the property and damages. Court rendered a decision declaring the
mortgage was void for want of consideration and thus cancelled TRB’s title and issued a new
cert. of title for the Capays.
ending its appeal before the court, TRB sold the land to Santiago who subsequently subdivided
and sold to buyers who were issued title to the land. Court ruled that the subsequent buyers
cannot be considered purchasers for value and in good faith since they purchase the land after it

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became a subject in a pending suit before the court. Although the lis pendens notice was not
carried over the titles, its recording in the Day Book constitutes registering of the land and notice
to all persons with adverse claim over the property. TRB was held to be in bad faith upon selling
the property while knowing it is pending for litigation. The Capays were issued the cert. of title
of the land in dispute while TRB is to pay damages to Capays.

Issue:
1. Who has the better right over the land in dispute?
2. Whether or not TRB is liable for damages

Ruling:
The court ruled that a Torrens title is presumed to be valid which purpose is to avoid conflicts of
title to real properties. When the subsequent buyers bought the property there was no lis pendens
annotated on the title. Every person dealing with a registered land may safely rely on the
correctness of the title and is not obliged to interpret what is beyond the face of the registered
title. Hence the court ruled that the subsequent buyers obtained the property from a clean title in
good faith and for value. On one hand, the Capays are guilty of latches. After they filed the
notice for lis pendens, the same was not annotated in the TRB title. They did not take any action
for 15 years to find out the status of the title upon knowing the foreclosure of the property. In
consideration to the declaration of the mortgage as null and void for want of consideration, the
foreclosure proceeding has no legal effect. However, in as much as the Capays remain to be the
real owner of the property it has already been passed to purchasers in good faith and for value.
Therefore, the property cannot be taken away to their prejudice. Thus, TRB is duty bound to pay
the Capays the fair market value of the property at the time they sold it to Santiago.

5. Casimiro Development Corp. v. Mateo G.R. No. 175485, 24 July 2011

Facts:
1) Registered parcel of land originally owned by Isaias Lara, respondents’ maternal grandfather,
which was passed on to his children.

2) The co-heirs effected the transfer of the full and exclusive ownership to Felicidad Lara-Mateo.

3) Deed of sale was executed in favor of Laura, one of Felicidad’s children, who applied for
land registration; OCT was thereafter issued.

4) Property used as collateral to secure a succession of loans, a TCT of which was eventually
issued in the name of China Bank.

5) Casimiro Development Corp. thereafter purchased the property from CB; Felicidad died
intestate.

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6) CDC brought action for unlawful detainer in the MeTC against the sons of Felicidad; the latter
claimed MeTC did not have jurisdiction; the land was classified as agricultural; has been in
continuous possession of the land.

7) MeTC ruled in favor of CDC, RTC against, CA and SC in favor CDC.

8) Respondent brought action for quieting of title, RTC favored CDC, CA against (not a buyer in
good faith).

Issue:
Is the concerned Certificate of Title in the name of Laura indefeasible and imprescriptible?

Ruling:
Yes. The property has already been placed under the Torrens system of land registration before
CDC became the registered owner by purchase from China Bank; OCT has already been issued
to attest to the fact that the person named in the certificate is the owner of the property therein
described, subject to liens and encumbrances as thereon noted or what the law warrants or
reserves. Neither the respondent nor his siblings opposed the transactions causing various
transfers, and even acknowledged the registration of the land under the name of Laura.

CDC was an innocent purchaser for value. Considering that China Bank’s TCT was clean title,
that is, it was free from any lien or encumbrance, CDC had the right to rely, when it purchased
the property, solely upon the face of the certificate of title in the name of China Bank.

NB:
If a person purchases a piece of land on the assurance that the seller’s title thereto is valid, he
should not run the risk of being told later that his acquisition was ineffectual after all, which will
not only be unfair to him as the purchaser, but will also erode public confidence in the system
and will force land transactions to be attended by complicated and not necessarily conclusive
investigations and proof of ownership.

The Torrens certificate of title is merely an evidence of ownership or title in the particular
property described therein. The issuance of the certificate of title to a particular person does not
preclude the possibility that persons not named in the certificate may be co-owners of the real
property therein described with the person named therein, or that the registered owner may be
holding the property in trust for another person.

Registration of land under the Torrens System, aside from perfecting the title and rendering it
indefeasible after the lapse of the period allowed by law, also renders the title immune from
collateral attack.

6. LABURADA vs. LAND REGISTRATION AUTHORITY G.R. No. 101387, March 11,
1998

FACTS:

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 Sps. Laburada applied for the registration of Lot 3-A which was approved by the trial
court. Upon motion of petitioners, the trial court issued an order requiring the LRA to issue the
corresponding decree of registration. However, the LRA refused. Hence, petitioners filed an
action for mandamus.
The LRA revealed that based on records, Lot 3-A which sought to be registered by Sps.
Laburada is part of Lot No. 3, over which TCT No. 6595 has already been issued. Upon the other
hand, Lot 3-B of said Lot 3 is covered by Transfer Certificate of Title No. 29337 issued in the
name of Pura Escurdia Vda. de Buenaflor, which was issued as a transfer from TCT No. 6595.
The LRA contended that to issue the corresponding decree of registration sought by the
petitioners, it would result in the duplication of titles over the same parcel of land, and thus
contravene the policy and purpose of the Torrens registration system, and destroy the integrity of
the same.

ISSUE:
Whether or not the LRA may be compelled by mandamus to issue a decree of registration
if it has evidence that the subject land may already be included in an existing Torrens certificate
of title?

HELD:
NO. It is settled that a land registration court has no jurisdiction to order the registration
of land already decreed in the name of another in an earlier land registration case. A second
decree for the same land would be null and void, since the principle behind original registration
is to register a parcel of land only once. Thus, if it is proven that the land which petitioners are
seeking to register has already been registered in 1904 and 1905, the issuance of a decree of
registration to petitioners will run counter to said principle. The issuance of a decree of
registration is part of the judicial function of courts and is not a mere ministerial act which may
be compelled through mandamus. It is not legally proper to require the LRA to issue a decree of
registration.
WHEREFORE, the petition is hereby DISMISSED but the case is REMANDED to the
court of origin in Pasig City. The LRA, on the other hand, is ORDERED to submit to the court a
quo a report determining with finality whether Lot 3-A is included in the property described in
TCT No. 6595, within sixty (60) days from notice. After receipt of such report, the land
registration court, in turn, is ordered to ACT, with deliberate and judicious speed, to settle the
issue of whether the LRA may issue the decree of registration, according to the facts and the law
as herein discussed.

7. Heirs of Lopez v. De Castro G.R. No. 112905; 3 February 2000

Facts:
1) Application for registration of the same parcel of land filed 12 years apart in different
branches of the CFI; a certificate was issued in one case while the other was still pending.

2) In 1956, Predo Lopez, et al. filed an application for registration of a parcel of land in Tagaytay
City, to which the Municipality of Silang, Cavite opposed; a portion of the land being leased by
the municipality to private persons had been its patrimonial property since 1930.

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3) Applicant claimed that part of the land was their inheritance, but was excluded in the
application for registration since it is located in Laguna; same with the part of the land in
Tagaytay which was excluded from the proceedings in the CFI of Laguna.

4) Lower court denied the motion to dismiss since the oppositor municipality had no personality
to intervene.

5) Meanwhile, the Land Registration Commission discovered that part of the land had been
decreed in favor of private respondent de Castro, the land being initially owned by one
Hermogenes Orte who sold the land to the father of de Castro in 1932. However the deed of sale
was destroyed during the Japanese occupation.

6) Heirs of Pedro Lopez filed a complaint for execution of judgment and cancellation of land
titles of the defendants, claiming that they had been unduly deprived ownership and possession
of the land due to wrongful registration by means of fraud and misrepresentation.

Issue:
Were the heirs of Pedro Lopez deprived of their ownership and possession of the contested land?

Ruling:
No. The petitioners failed to exercise the due diligence required of them as applicants for land
registration. In the same way that publication of their application for registration was supposed to
have rendered private respondents on constructive notice of such application, the publication of
notice in the land registration proceedings initiated by private respondents had the same effect of
notice upon petitioners. Petitioners were thus presumed to have been notified of the land
registration proceedings filed by private respondents, thereby providing them with the
opportunity to file an opposition thereto.

Petitioners neglected for an unreasonable and unexplained length of time to do that which, by
exercising due diligence, they could or should have done earlier. They neglected or omitted to
assert a right within a reasonable time, warranting the presumption that they either had
abandoned or declined to assert it. In short, they were guilty of laches.

NB:
A proceeding in rem, such as land registration proceedings, requires constructive seizure of the
land as against all persons, including the state, who have rights to or interests in the property.

Constructive seizure of the land for registration is effected through publication of the
application for registration and service of notice to affected parties.

In land registration proceeding, all interested parties are obliged to take care of their interests and
to zealously pursue their objective of registration on account of the rule that whoever first
acquires title to a piece of land shall prevail. The rule refers to the date of the certificate of title
and not to the date of filing of the application for registration of title.

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The doctrine of stale demands or laches is based on grounds of policy which requires, for the
peace of society, the discouragement of stale claims and is principally a question of the
inequality or unfairness of permitting a right or claim to be enforced or asserted.

An applicant for registration has but a one-year period from the issuance of the decree of
registration in favor of another applicant, within which to question the validity of the certificate
of title issued pursuant to such decree. Once the one-year period has elapsed, the title to the land
becomes indefeasible.

This does not mean however that the aggrieved party is without a remedy at law. If the property
has not yet passed to an innocent purchaser for value, an action for reconveyance is still
available. The decree becomes incontrovertible and can no longer be reviewed after one (1) year
from the date of the decree so that the only remedy of the landowner whose property has been
wrongfully or erroneously registered in another’s name is to bring an ordinary action in court for
reconveyance, which is an action in personam and is always available as long as the property
has not passed to an innocent third party for value. If the property has passed into the hands of an
innocent purchaser for value, the remedy is an action for damages.

Venue and jurisdiction are entirely distinct matters. Jurisdiction may not be conferred by consent
or waiver upon a court which otherwise would have no jurisdiction over the subject-matter of an
action; but the venue of an action as fixed by statute may be changed by the consent of the
parties…

Venue is procedural, not jurisdictional, and hence may be waived.

8. Republic vs Herbieto

Facts:

Respondents are Herbieto brothers, Jeremias and David, who filed with the MTC a single
application for registration of two parcels of land. They claimed to be owners by virtue of its
purchase from their parents. Republic filed an opposition arguing that: (1) Respondents failed to
comply with the period of adverse possession required by law; (2) Respondents’ muniments of
title were not genuine and did not constitute competent and sufficient evidence of bona fide
acquisition of the Subject Lots; and (3) The Subject Lots were part of the public domain

MTC granted the application for registration of the parcels of land of Jeremias and David.

CA affirmed the decision of MTC holding that the subject property, being alienable since 1963
as shown by CENRO Report dated June 23, 1963, may now be the object of prescription, thus
susceptible of private ownership.

Republic appealed to the SC contending that 1) MTC had no jurisdiction since there was a
procedural defect in filing of a single application for two parcels of land; 2) Respondents failed
to establish that they and their predecessors-in-interest had been in open, continuous, and adverse
possession of the Subject Lots in the concept of owners since 12 June 1945 or earlier.

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ISSUE: W/N there is a procedural defect which resulted to MTC’s lack of jurisdiction

HELD:

YES, but not with the ground stated by the petitioner, but because respondents, failed to comply
with the publication requirements mandated by the Property Registration Decree Misjoinder of
causes of action and parties do not involve a question of jurisdiction of the court to hear and
proceed with the case. They are not even accepted grounds for dismissal thereof

PUBLICATION: MTC did not acquire jurisdiction because publication on the Freeman and the
Banat News was only done 3 months after the hearing which renders inutile the intention of the
mandatory publication. In the instant Petition, the initial hearing was held on 03 September
1999. While the Notice thereof was printed in the issue of the Official Gazette, dated 02 August
1999, and officially released on 10 August 1999, it was published in The Freeman Banat News
only on 19 December 1999, more than three months after the initial hearing. Indubitably, such
publication of the Notice, way after the date of the initial hearing, would already be worthless
and ineffective. Whoever read the Notice as it was published in The Freeman Banat News and
had a claim to the Subject Lots was deprived of due process for it was already too late for him to
appear before the MTC on the day of the initial hearing to oppose respondents’ application for
registration, and to present his claim and evidence in support of such claim

With regard to period of possession, Respondents failed to comply with the required period of
possession of the Subject Lots for the judicial confirmation or legalization of imperfect or
incomplete title. The said lots are public lands classified as alienable and disposable only on June
25, 1963 and the respondents were seeking for a confirmation of imperfect or incomplete title
through judicial legalization. Under Sec.48 of the Public Land Act, which is the ruling law in this
case, Respondents were not able to prove their continuous ownership of the land since June 12,
1945 or earlier, because said lands were only classified as alienable and disposable only on June
25, 1963

__________________________________________________________________________________________

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4. TRADERS ROYAL BANK, petitioner, vs. HON. COURT OF APPEALS PATRIA,
RUBY ANN, MARGARITA, ROSARIO, CYNTHIA, LINDA JOY, all surnamed CAPAY
and RAMON A. GONZALES, respondents. G.R. No. 114299. September 24, 1999.
Gonzalez Sinense Jimenez & Associates for Patria Capay, et al.
Francisco S. Reyes Law Office for non-bank respondents.

SYNOPSIS
On April 26, 1994, Traders Royal Bank filed with this Court a petition for review to set aside the
decision of the Court of Appeals decision holding said bank in bad faith when it sold a property
knowing that it was under litigation and without informing the buyer of said fact. Meanwhile, the
buyers of said property moved for a reconsideration of the said decision. In a resolution dated
August 10, 1994, the Court of Appeals granted the motion for reconsideration and dismissed the
complaint as against them. The complainants in the original action for recovery of
possession/ownership filed a petition for review seeking to set aside said resolution. These two
petitions for review were later consolidated.
When the subject property was subdivided, none of the six (6) new certificates of title issued
contained any notice of lis pendens. The buyers of the subdivided properties therefore could not
have been aware that the said properties were the subject of litigation. They had a right to rely on
what appeared on the face of the title of their predecessors-in-interest, and were not bound to go
beyond the same.
The individual complainants cannot invoke that entry of the notice of lis pendens in the day book
is sufficient to constitute registration. In the fifteen years following the notice of lis pendens,
they did not bother to find out the status of their title. They slept on their rights. Thus, it is most
iniquitous for them to assert ownership over the property that has undergone several transfers
made in good faith and for value and already subdivided into several lots with improvements
introduced thereon by their owners.

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However, the Traders Royal Bank took advantage of the absence of the notice of lis pendens at
the back of their certificate of title and sold the property to an unwary purchaser. Clearly the
bank acted in a manner contrary to morals, good customs and public policy, and should be held
liable for damages.
SYLLABUS
1.LAND TITLES AND DEEDS; TORRENS SYSTEM OF LAND REGISTRATION; RIGHT
OF BUYER TO RELY ON WHAT APPEARED ON FACE OF TITLE; PARTIES NOT
BOUND TO GO BEYOND SAME. — When TRB purchased the property at the foreclosure
sale, the notice of lis pendens that the Capays caused to be annotated on their certificate of title
was not carried over to the new one issued to TRB. Neither did the certificate of title of Emelita
Santiago, who purchased the property from TRB, contain any such notice. When Santiago
caused the property to be divided, six (6) new certificates of title were issued, none of which
contained any notice of lis pendens. Santiago then sold the lots to Marcial Alcantara and his co-
owners who next sold each of these to the non-bank respondents. The non-bank respondents,
therefore, could not have been aware that the property in question was the subject of litigation
when they acquired their respective portions of said property. There was nothing in the
certificates of title of their respective predecessors-in-interest that could have aroused their
suspicion. The non-bank respondents had a right to rely on what appeared on the face of the title
of their respective predecessors-in-interest, and were not bound to go beyond the same. To hold
otherwise would defeat one of the principal objects of the Torrens system of the land registration,
that is, to facilitate transactions involving lands.
2.ID.; ID.; ID.; ID.; EXERCISE OF DILIGENCE MANIFESTS IN CASE AT BAR. — The
foregoing rule notwithstanding, the non-bank respondents nevertheless physically inspected the
properties and inquired from the Register of Deeds to ascertain the absence of any defect in the
title of the property they were purchasing — an exercise of diligence above that required by law.
AaHDSI
3.REMEDIAL LAW; ACTIONS; LACHES; DEFINED. — Laches has been defined as the
failure or neglect, for an unreasonable and unexplained length of time, to do that which by
exercising due diligence could nor should have been done earlier; it is negligence or omission to
assert a right within a reasonable time, warranting presumption that the party entitled to it either
has abandoned it or declined to assert it.
4.ID.; ID.; ID.; FAILURE FOR 15 YEARS TO VERIFY STATUS OF TITLE
EXTRAJUDICIALLY FORECLOSED IN FAVOR OF BANK. — Between two innocent
persons, the one who made it possible for the wrong to be done should be the one to bear the
resulting loss. The Capays filed the notice of lis pendens way back on March 17, 1967 but the
same was not annotated in TRB's title. The Capays and their counsel Atty. Ramon A. Gonzales
knew in 1968 of the extra-judicial foreclosure sale of the property to TRB and the consolidation
of title in the bank's name following the lapse of the one-year period of redemption. But in the
next fifteen (15) years or so, they did not bother to find out the status of their title or whether the
liens noted on the original certificate of title were still existing considering that the property had
already been foreclosed. In the meantime, the subject property had undergone a series of
transfers to buyers in good faith and for value. It was not until after the land was subdivided and
developed with the buyers building their houses on the other lots when the Capays suddenly
appeared and questioned the occupants' titles. At the very least, the Capays are guilty of laches.

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5.LAND TITLES AND DEEDS; TORRENS SYSTEM OF LAND REGISTRATION;
REGISTRY OF DEEDS; ENTRY OF NOTICE OF LIS PENDENS IN DAY BOOK OR
PRIMARY ENTRY BOOK; SUFFICIENT NOTICE TO CONSTITUTE REGISTRATION;
AVAILABLE TO PARTIES NOT GUILTY OF LACHES. — Being guilty of laches, the
Capays cannot invoke the ruling in Villasor vs. Camon, Levin vs. Bass and Director of Lands vs.
Reyes to the effect that entry of the notice of lis pendens in the day book (primary entry book) is
sufficient to constitute registration and such entry is notice to all persons of such adverse claim.
Certainly, it is most iniquitous for the Capays who, after sleeping on their rights for fifteen years,
to assert ownership over the property that has undergone several transfers made in good faith and
for value and already subdivided into several lots with improvements introduced thereon by their
owners.
6.REMEDIAL LAW; ACTIONS; ESTOPPEL; PARTY CANNOT HIDE BEHIND LAW
WHICH IT ITSELF VIOLATED. — Section 25 of the General Banking Act, provides that no
bank "shall hold the possession of any real estate under mortgage or trust, deed, or the title and
possession of any real estate purchased to secure any debt due to it, for a longer period than five
years.'' TRB, however, admits holding. onto the foreclosed property for twelve (12) years after
consolidating title in its name. The bank is, therefore, estopped from invoking banking laws and
regulations to justify its belated disposition of the property. It cannot be allowed to hide behind
the law which it itself violated.
7.ID.; ID.; LACHES; NEGATED WHERE PARTY PERSISTENTLY PURSUED CASE TO
RECOVER PROPERTY. — We do not find the Capays guilty of "inaction and negligence" as
against TRB. It may be recalled that upon the commencement of foreclosure proceedings by
TRB, the Capays filed an action for prohibition on September 22, 1966 against the TRB before
the CFI to stop the foreclosure sale. Failing in that attempt, the Capays filed a supplemental
complaint for the recovery of the property. The case reached this Court. Prescription or laches
could not have worked against the Capays because they had persistently pursued their suit
against TRB to recover their property.
8.CIVIL LAW; DAMAGES; PARTY WHICH TOOK ADVANTAGE OF ABSENCE OF
NOTICE OF LIS PENDENS LIABLE THEREFOR WHERE PROPERTY SOLD TO
UNWARY PURCHASER; CASE AT BAR. — TRB cannot feign ignorance of the existence of
the lis pendens because when the property was foreclosed by it, the notice of lis pendens was
annotated on the title. But when TCT No. T-6595 in the name of the Capay spouses was
cancelled after the foreclosure, TCT No. T-16272 which was issued in place thereof in the name
of TRB did not carry over the notice of lis pendens. On the other hand, it is difficult to believe
TRB's assertion that after holding on to the property for more than ten (10) years, it suddenly
realized that it was acting in violation of the General Bank Act. What is apparent is that TRB
took advantage of the absence of the notice of lis pendens at the back of their certificate of title
and sold the property to an unwary purchaser. This notwithstanding the adverse decision of the
trial court and the pendency of its appeal. TRB, whose timing indeed smacks of bad faith, thus
transferred caused the property without the lis pendens annotated on its title to put it beyond the
Capays' reach. Clearly, the bank acted in a manner contrary to morals, good customs and public
policy, and should be held liable for damages.
9.ID.; MORTGAGE; PROPERTY TRANSFERRED TO INNOCENT PURCHASERS FOR
VALUE; ORIGINAL OWNER ENTITLED TO PAYMENT OF FAIR MARKET VALUE OF
PROPERTY AT TIME OF SALE WHERE MORTGAGE DECLARED NULL AND VOID. —

12
Considering, however, that the mortgage in favor of TRB had been declared null and void for
want of consideration and, consequently, the foreclosure proceedings did not have a valid effect,
the Capays would ordinarily be entitled to the recovery of their property. Nevertheless, this
remedy is not now available to the Capays inasmuch as title to said property has passed into the
hands of third parties who acquired the same in good faith and for value. Such being the case,
TRB is duty bound to pay the Capays the fair market value of the property at the time it was sold
to Emelita Santiago; the transferee of TRB.

DECISION
KAPUNAN, J p:
The present controversy has its roots in a mortgage executed by the spouses Maximo and Patria
Capay in favor of Traders Royal Bank (TRB) pursuant to a loan extended by the latter to the
former. The mortgage covered several properties, including a parcel of land, the subject of the
present dispute. The loan became due on January 8, 1964 and the same having remained unpaid,
TRB instituted extra-judicial foreclosure proceedings upon the mortgaged property. cda
To prevent the property's sale by public auction, the Capays, on September 22, 1966, filed a
petition for prohibition with preliminary injunction (Civil Case No. Q-10453) before the Court of
First Instance (CFI) of Rizal, alleging that the mortgage was void since they did not receive the
proceeds of the loan. The trial court initially granted the Capay's prayer for preliminary
injunction.
On March 17, 1967, the Capays caused to be filed in the Register of Deeds of Baguio City a
notice of lis pendens over the disputed property. Said notice was entered in the Day Book, as
well as in the Capays' certificate of title.
Subsequently, the injunction issued by the trial court was lifted thus allowing the foreclosure sale
to proceed. Foreclosure proceedings were initiated and on October 17, 1968, the property was
sold to TRB which was the highest bidder at the auction sale. A sheriff certificate of sale was
issued in its name on the same day. On February 25, 1970, the property was consolidated in the
name of TRB, the sole bidder in the sale. TCT No. T-6595 in the name of the Capay spouses was
then cancelled and a new one, TCT No. T-16272, was entered in the bank's name. The notice of
lis pendens, however, was not carried over in the certificate of title issued in the name of TRB.
Thereafter, the Capays filed with the CFI a supplemental complaint praying for the recovery of
the property with damages and attorney's fees. Trial in Civil Case No. Q-10453 proceeded and,
on October 3, 1997, the CFI rendered its decision declaring the mortgage void for want of
consideration. The CFI ordered, among other things, the cancellation of TCT No. T-16272 in the
name of TRB and the issuance of new certificates of title in the name of the Capay spouses.
TRB appealed to the Court of Appeals. While the case was pending in the Court of Appeals,
TRB on March 17, 1982 sold the land to Emelita Santiago in whose name a new certificate of
title, TCT No. 33774, was issued, also, without any notice of lis pendens annotated thereon.
Santiago in turn divided the land into six (6) lots and sold these to Marcial Alcantara, Armando
Cruz and Artemio Sanchez, who became co-owners thereof. Alcantara and his co-owners
developed the property and thereafter sold the six (6) lots to separate buyers who were issued
separate titles, again, bearing no notice of lis pendens.

13
On July 30, 1982, the Court of Appeals rendered its decision modifying the decision of the trial
court as to the award of damages but affirming the same in all other respects.
For having been filed out of time and for lack of merit, the petition for certiorari filed by TRB
before this Court was denied in a Resolution dated September 12, 1983. TRB's motion for
reconsideration was similarly denied in a Resolution dated October 12, 1983. The Court's
September 12, 1983 Resolution having become final and executory on November 9, 1983, the
trial court issued a writ of execution directing the Register of Deeds of Baguio City to cancel
TCT No. T-16272 in the name of TRB, and to issue a new one in the name of the Capay spouses.
Said writ, however, could not be implemented because of the successive subsequent transfers of
the subdivided property to buyers who obtained separate titles thereto. Thus, a complaint for
recovery of possession/ownership dated 8 June 1985 was filed before the Quezon City Regional
Trial Court against TRB and the subsequent transferees of the property, the respondents in G.R.
No. 118862 (hereinafter, "the non-bank respondents"). Plaintiffs in said case were Patria Capay,
her children by Maximo who succeeded him upon his death on August 25, 1976, and Ramon
Gonzales, counsel of the spouses in Civil Case No. Q-10453 who became co-owner of the
property to the extent of 35% thereof as his attorney's fees (collectively, "the Capays"). On
March 27, 1991, the trial court rendered its decision, the dispositive portion of which states:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs against
the defendants and ordering the Register of Deeds for Baguio to cancel TCT
No. T-36177, Books 198, Page 177 in the names of defendants Spouses
Honorato D. Santos and Maria Cristina Santos; to cancel TCT No. 36707, Book
201, Page 107 in the names of defendant Spouses Cecilio Pe and Josefina L. Pe;
to cancel TCT No. T-36051, Book 198, Page 51 in the name of Flora Laron
Wescombe, married to Kevin Lind Wescombe (now deceased); to cancel TCT
No. T-36147, Book 198, page 147 in the names of Spouses Telesforo P. Alfelor
II and Liza R. Alfelor; to cancel TCT No. T-36730, Book 201, Page 130 in the
names of Spouses Dean Roderick Fernando and Laarni Magdamo Fernando; to
cancel TCT No. 37437, Book 205, Page 37 in the name of Remedios Oca, and
issue new ones free from all liens and encumbrances, together with all the
improvements therein in the names of plaintiffs sharing pro indiviso as follows:
35% to Ramon A. Gonzales, married to Lilia Y. Gonzales, of legal age, with
postal address at 23 Sunrise Hill, New Manila, Quezon City; 37.92% to Patria
B. Capay, of legal age, widow, Filipino; 5.41% each to Ruby Ann Capay, of
legal age, Filipino, married to Pokka Vainio, Finnish citizen; Chona Margarita
Capay, of legal age, Filipino, married to Waldo Flores; Rosario Capay, of legal
age, Filipino, married to Jose Cuaycong, Jr., Cynthia Capay, of legal age,
Filipino, married to Raul Flores; Linda Joy Capay, of legal age, Filipino,
married to Pedro Duran, all with postal address at 37 Sampaguita St.,
Capitolville Subd., Bacolod City, ordering said defendants to vacate the
premises in question and restoring plaintiffs thereto and for defendant Traders
Royal Bank to pay each of the plaintiffs moral damages in the amount of
P100,000.00, P40,000.00 in exemplary damages and P40,000.00 as attorney's
fees, all with legal interest from the filing of the complaint, with costs against
defendants. Cdpr
SO ORDERED.

14
TRB and the non-bank respondents appealed to the Court of Appeals. In a Decision promulgated
on February 24, 1994 in CA-G.R. CV No. 33920, the appellate court affirmed the decision of the
trial court in toto. It ruled that the non-bank respondents cannot be considered as purchasers for
value and in good faith, having purchased the property subsequent to the action in Civil Case No.
Q-10453 and that while the notice of lis pendens was not carried over to TRB's certificate of
title, as well as to the subsequent transferees' titles, it was entered in the Day Book which is
sufficient to constitute registration and notice to all persons of such adverse claim, citing the case
of Villasor vs. Camon, Levin vs. Bass and Director of Lands vs. Reyes.
As regard TRB, the Court of Appeals said that the bank was in bad faith when it sold the
property knowing that it was under litigation and without informing the buyer of that fact.
On April 26, 1994, TRB filed with this Court a petition for review to set aside the CA decision,
docketed herein as G.R. No. 114299, invoking the following grounds:
I.
THE RESPONDENT HONORABLE COURT OF APPEALS COMMITTED
GRAVE AND SERIOUS ERROR OF LAW IN PROMULGATING THE
DISPUTED DECISION AND THEREBY DECIDED A QUESTION OF
SUBSTANCE WHOLLY CONTRARY TO SETTLED JURISPRUDENCE
AND TOTALLY NOT IN ACCORD WITH APPLICABLE DECISION OF
THIS HONORABLE SUPREME COURT.
II.
THE RESPONDENT HONORABLE COURT OF APPEALS HAS
COMMITTED SO GRAVE AND SERIOUS ERRORS OF LAW IN
SANCTIONING A DEPARTURE FROM THE USUAL AND ACCEPTED
COURSE OF JUDICIAL PROCEEDING AS TO CALL FOR THE EXERCISE
OF THE POWER OF REVIEW BY THIS HONORABLE SUPREME COURT.
a)The public respondent has plainly and manifestly acted whimsically,
arbitrarily, capriciously, with grave abuse of discretion, in excess of jurisdiction
tantamount to lack of jurisdiction.
xxx xxx xxx
b)The public respondent erred in not finding that it was not the fault of
petitioner when the notice of lis pendens was not carried over to its new title.
xxx xxx xxx
c)The public respondent erred in not finding that PD No. 1271 had legally
caused the invalidation of the Capay’s property and the subsequent validation of
TRB's title over the same property was effective even as against the Capays.
Meanwhile, the non-bank respondents moved for a reconsideration of the Court of Appeals'
decision. Convinced of the movants' arguments, the Court of Appeals in a Resolution
promulgated on August 10, 1994 granted the motion for reconsideration and dismissed the
complaint as against them. The dispositive portion of the resolution states:
ACCORDINGLY, in view of the foregoing disquisitions and finding merit in
the motion for reconsideration, the same is hereby GRANTED. Consequently,

15
 the decision of this Court, promulgated on February 24, 1994, is hereby
RECONSIDERED. The complaint filed against defendants-appellants with the
court a quo is hereby ordered DISMISSED, and the certificate of titles
originally issued to them in their individual names are hereby ordered restored
and duly respected. We make no pronouncement as to costs.
SO ORDERED.
The Capays thus filed with this Court a petition for review, docketed as G.R. No. 118862, to set
aside the resolution of the Court of Appeals raising the following errors:
I
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF
BY NOW HOLDING THAT TUAZON VS. REYES, 48 PHIL. 814 AND
RIVERA VS. MORAN, 48 PHIL. 836 ARE NOT APPLICABLE HEREOF,
WHILE PINO VS. COURT OF APPEALS, 198 SCRA 436, IS APPLICABLE.

II
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF
BY NOW HOLDING THAT ATUN VS. MUÑOZ, 97 PHIL. 762 AND
LAROZA VS. GUIA, 134 SCRA 34, ARE NOT APPLICABLE.
III
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF
BY NOW HOLDING THAT LEVIN VS. BASS, 91 PHIL. 419 VILLASOR
VS. CAMON, 89 PHIL. 404 AND DIRECTOR OF LANDS VS. REYES, 68
SCRA 73, ARE NOT APPLICABLE HEREOF.
IV
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF
BY NOW HOLDING THAT PETITIONERS ARE GUILTY OF LACHES.
V
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF
BY NOW HOLDING THAT THERE IS NO DISTINCTION IN THE
REGISTRATION OF VOLUNTARY INSTRUMENTS VIS-A-VIS
INVOLUNTARY INSTRUMENTS.
VI
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF
BY NOW HOLDING THAT RESPONDENTS WHO ARE LAWYERS,
RESPONSIBLE CITIZENS AND WELL-RESPECTED RESIDENTS IN THE
COMMUNITY, ARE EXEMPTED FROM THE EFFECTS OF THE
CONSTRUCTIVE NOTICE ARISING FROM REGISTRATION.
VII

16
 THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF
WITH REGARDS TO TRADERS ROYAL BANK, AFTER THE LATTER
HAS PERFECTED ITS APPEAL TO THE SUPREME COURT.
VIII
THE COURT OF APPEALS PALPABLY ERRED IN NOT RULING ON THE
COUNTER-ASSIGNMENT OF ERROR THAT:
B)THE LOWER COURT ERRED IN NOT HOLDING THAT
DEFENDANTS ARE BOUND BY THE DECISION IN CIVIL CASE
NO. Q-10453.
Subsequently, G.R. No. 118862 was consolidated with G.R. No. 114299, pursuant to this Court's
Resolution dated July 3, 1996.
The consolidated cases primarily involve two issues: (1) who, as between the Capays and the
non-bank respondents, has a better right to the disputed property, and (2) whether or not TRB is
liable to the Capays for damages.
On the first issue, we rule for the non-bank respondents.
I
First, when TRB purchased the property at the foreclosure sale, the notice of lis pendens that the
Capays caused to be annotated on their certificate of title was not carried over to the new one
issued to TRB. Neither did the certificate of title of Emelita Santiago, who purchased the
property from TRB, contain any such notice. When Santiago caused the property to be divided,
six (6) new certificates of title were issued, none of which contained any notice of lis pendens.
Santiago then sold the lots to Marcial Alcantara and his co-owners who next sold each of these to
the non-bank respondents. The non-bank respondents, therefore, could not have been aware that
the property in question was the subject of litigation when they acquired their respective portions
of said property. There was nothing in the certificates of title of their respective predecessors-in-
interest that could have aroused their suspicion. The non-bank respondents had a right to rely on
what appeared on the face of the title of their respective predecessors-in-interest, and were not
bound to go beyond the same. To hold otherwise would defeat one of the principal objects of the
Torrens system of land registration, that is, to facilitate transactions involving lands. cdll
The main purpose of the Torrens system is to avoid possible conflicts of title to
real estate and to facilitate transactions relative thereto by giving the public the
right to rely upon the face of a Torrens certificate of title and to dispense with
the need of inquiring further, except when the party concerned has actual
knowledge of facts and circumstances that should impel a reasonably cautious
man to make such further inquiry. Where innocent third persons, relying on the
correctness of the certificate of title thus issued, acquire rights over the property,
the court cannot disregard such rights and order the total cancellation of the
certificate. The effect of such an outright cancellation would be to impair public
confidence in the certificate of title, for everyone dealing with property
registered under the Torrens system would have to inquire in every instance as
to whether the title has been regularly or irregularly issued by the court. Every
person dealing with registered land may safely rely on the correctness of the

17
 certificate of title issued therefor and the law will in no way oblige him to go
beyond the certificate to determine the condition of the property.
The Torrens system was adopted in this country because it was believed to be
the most effective measure to guarantee the integrity of land titles and to protect
their indefensibility once the claim of ownership is established and recognized.
If a person purchases a piece of land on the assurance that the seller's title
thereto is valid, he should not run the risk of being told later that his acquisition
was ineffectual after all. This would not only be unfair to him. What is worse is
that if this were permitted, public confidence in the system would be eroded and
land transactions would have to be attended by complicated and not necessarily
conclusive investigations and proof of ownership. The further consequence
would be that land conflicts could be even more numerous and complex than
they are now and possibly also more abrasive, if not even violent. The
Government, recognizing the worthy purposes of the Torrens system, should be
the first to accept the validity of titles issued thereunder once the conditions laid
down by the law are satisfied.
Second, the foregoing rule notwithstanding, the non-bank respondents nevertheless physically
inspected the properties and inquired from the Register of Deeds to ascertain the absence of any
defect in the title of the property they were purchasing — an exercise of diligence above that
required by law.
Thus, respondent Aida Fernando Meeks, who bought Lot 5 for her son Dean, testified:
QHow did you come to live in Baguio City, particularly in Km. 2.5 San Luis,
Baguio City?
AIn one of my visits to my sister who has been residing here for twelve (12)
years now, I got interested in buying a property here.
QHow did you come to know of this property at Asin Road where you now
reside?
AMy sister, Ruth Ann Valdez, sir.
QWhen this particular property was bought by you, when was that?
AI do not remember the exact date, but it was in early 1984, sir.
QAt the time when you went to see the place where you now reside, how did it
look?
AThis particular property that I bought was then a small one (1)-room structure,
it is a two (2)-storey one (1) bedroom structure.
QWhat kind of structure with regards to material?
AIt is a semi-concrete structure, sir.
QAnd aside from this two (2)-storey one (1)-room structure, how did the
surrounding area look like at the time you visited?
AThere were stone walls from the road and there were stone walls in front of
the property and beside the property.

18
QAt the time you went to see the property with your agent, rather, your sister
Ruth Ann Valdez, did you come to know the owner?
AWe did because at the time we went there, Mr. Alcantara was there
supervising the workers.
QAnd who?
AAmado Cruz, sir.
QAfter you saw this property, what else did you do?
AMy first concern then was am I buying a property with a clean title.
QIn regards to this concern of yours, did you find an answer to this concern of
yours?
AAt first, I asked Mr. Alcantara and I was answered by him.
QWhat was his answer?
AThat it was a property with a clean title, that he has shown me the mother title
and it is a clean title.
QAside from being informed that it is a property with a clean title, did you do
anything to answer your question?
AYes, sir.
QWhat did you do?
AWell, the first step I did was to go to the Land Registration Office.
QAre you referring to the City Hall of Baguio?
AYes, the City Hall of Baguio.
QAnd what did you do in the Registry of Deeds?
AWe looked for the title, the original title, sir.
QWhen you say we, who was your companion?
AMr. Alcantara and my present husband, sir.
QThe three (3) of you?
AYes, sir.
QWhat title did you see there?
AWe saw the title that was made up in favor of Amado Cruz, sir.
QAnd what was the result of your looking up for this title in the name of Amado
Cruz?
AWe had to be reassured that it was a genuine one, so we asked Atty.
Diomampo who heads the office. We showed him a copy of that title
and we were also reassured by him that anything that was signed by him
was as good as it is.

19
 QDid this Atty. Diomampo reassure you that the title was good?
AHe did.
QAfter your conversation with the Register of Deeds, what did you do?
AThe second step we did was to confer with our lawyer, a friend from RCBC
Binondo, Manila, this is Atty. Nelson Waje.
QWhat is your purpose in going to this lawyer?
AWe wanted an assurance that we were getting a valid title just in case we think
of buying the property.
QWhat was the result of your conference with this lawyer?
AHe was absolutely certain that that was a valid title.
QMrs. Meeks, after looking at the place, going to the Register of Deeds, looking
at the title and seeing your lawyer friend, what decision did you finally
make regarding the property?
AWe wanted more reassurances, so we proceeded to Banaue, as advised by that
same lawyer, there is another office of the Bureau of Lands. I cannot
recall the office but it has something to do with registration of the old.
QWhat is your purpose in going to this Office in Banaue?
AI wanted more reassurances that I was getting a valid title.
QWhat was the result of your visit to the Banaue Office?
AWe found the title of this property and there was reassurance that it was a
clean title and we saw the mother title under the Hilario family.
QMrs. Meeks, when you say Banaue, what particular place is this Banaue?
AIt is in Banaue Street in Quezon City, sir.
QAnd when you saw the title to this property and the mother title, what was the
result of your investigation, the investigation that you made?
AWe were reassured that we were purchasing a valid title, we had a genuine
title.
QWhen you were able to determine that you had a valid, authentic or genuine
title, what did you do?
AThat is when I finally thought of purchasing the property. 17

Telesforo Alfelor II, the purchaser of Lot 4, narrated going through a similar routine:
QHow did you come to know of this place as Asin Road where you are
presently residing?

20
 AIt was actually through Mrs. Flory Recto who is presently the Branch Manager
of CocoBank. She informed my wife that there is a property for sale at
Asin road, and she was the one who introduced to us Mr. Alcantara, sir.
QWhen you were informed by Mrs. Recto and when you met with Mr.
Alcantara, did you see the property that was being offered for sale?
AYes, sir.
QWhen did you specifically see the property, if you can recall?
AI would say it is around the third quarter of 1983, sir.
QWhen you went to see the place, could you please describe what you saw at
that time?
AWhen we went there the area is still being developed by Mr. Alcantara. As a
matter of fact the road leading to the property is still not passable
considering that during that time it was rainy season and it was muddy,
we fell on our way going to the property and walked to have an ocular
inspection and physical check on the area, sir. LLjur
xxx xxx xxx
QWhat was the improvement, if any, that was in that parcel which you are
going to purchase?
ADuring that time, the riprap of the property is already there, the one-half of the
riprap sir.
QDo you know who was making this improvement at the time that you went
there?
AI would understand that it was Marcial Alcantara, sir.
QAfter you saw the place and you saw the riprap and you were in the course of
deciding to purchase this property, what else did you do?
AFirst, I have to consider that the property is clean.
QHow did you go about determining whether the title of the property is clean?
AConsidering that Marcial Alcantara is a real estate broker, I went to his office
and checked the documents he has regarding the property.
QAnd what was the result of your checking as to whether the title of the
property is clean?
AHe showed me the copy of the title and it was clean, sir.
QAside from going to Mr. Alcantara to check up the title of the property, what
else did you do?
AWell, the next thing is I requested his wife to accompany me to the Bureau of
Lands or rather the Registry of Deeds, sir.
QWhat registry of Deeds are you referring to?

21
 AThe Registry of Deeds of Baguio City, sir.
QAnd were you able to see the Register of Deeds regarding what you would
like to know?
AYes, and we were given a certification regarding this particular area that it was
clean, sir.
QWhat Certification are you referring to?
AIt is a Certification duly signed by the employee of the Registry of Deeds
Adelina Tabangin, sir.
QDo you have a copy of that Certification?
AYes, I have, sir. 18
The testimonies of Honorato Santos 19 and Josefina Pe 20 were to the same effect.
The non-bank respondents' predecessor-in-interest, Marcial Alcantara, was no less thorough:
QAnd will you give a brief description of what you do?
AI normally acquire land, quite big tract of land and subdivide it into smaller
lots and sold it to some interested parties.
QSpecifically, Mr. Alcantara, will you please inform the Court in what place in
Baguio have you acquired and subdivided and sold lots?
ADominican Hill, Leonila Hill, Crystal Cave and Asin Road, sir.
QYou mentioned Asin Road, what particular place in Asin Road are you
referring?
AThat property I bought from Emelita Santiago, sir.
QWhen you say you bought it from Emelita Santiago, how did you come to
know that Emelita Santiago is disposing of the property?
ABecause of the father, he is the one who offered me the property, sir, Armando
Gabriel.
QIs he also a resident of Baguio?
AHe is from Buyagan, La Trinidad, sir.
QHow did you come to know of this Armando Gabriel wanting to sell a
property in Asin?
AHe approached me in the house, sir. He has acquired a title from the Traders
Royal Bank.
QCan you inform the Honorable Court when you had this conversation with
Armando Gabriel on the sale of the property at Asin Road?
ALater part of March, 1983, sir.
QNow, when this Armando Gabriel informed you that he wants his property to
be sold, what did you do?

22
 AI went to the place with the agent, sir.
QWhen you say you went to the place with the agent, what place?
AKilometer 2, Asin Road, sir.
QAnd when you went there to see the place, did you actually go there to see the
place?
ABy walking, I parked my car a kilometer away, sir.
QIs it my understanding that when you went to see the property there were no
roads?
ANone, sir.
xxx xxx xxx
QMr. Alcantara, when you went to see this place at Asin Road last week of
March, 1983, will you please briefly describe how this place looked like
at that time?
AThe place was mountainous, grassy, there were cogon trees, some of the roads
were eroding already, so we cannot possibly enter the property, sir.
QAt the time you entered the place, was there any visible sign of claim by
anyone?
ANone, sir.
QIn terms of fence in the area?
AThere is no such, sir.
xxx xxx xxx
QAside from looking or going to the property, what else did you do to this
property prior to your purchase?
AI investigated it with the Register of Deeds, sir.
QWhat is your purpose in investigating it with the Register of Deeds?
ATo see if the paper is clean and there are no encumbrances, sir.
QTo whom did you talk?
ATo Atty. Ernesto Diomampo, sir.
QAnd when you went to the Registry of Deeds to investigate and check, did you
have occasion to talk with Atty. Diomampo?
AYes, sir.
QAnd what was the result of your talk with Atty. Diomampo?
AThe papers are clean except to the annotation at the back with the road right of
way, sir.
QAfter making this investigation with the Register of Deeds and talking with
Atty. Diomampo, what else transpired?

23
 AWe bought the property, sir.
QAfter purchasing the property from Emelita Santiago, could you please tell the
Honorable Court what you did with that deed of sale?
AWe registered it with the Register of Deeds for the Certificate of Title because
at that time when we bought the property, Emelita Santiago had it
subdivided into six (6) lots, sir.
QIs it our understanding that prior to your purchase the property was subdivided
into six (6) parcels?
AYes, sir.
QCould you please inform the Honorable Court if you have any buyers in the
subdivision of this property prior to your purchase?
AYes, I have.
QThis subdivision of this property, to what office was it brought for action?
ABureau of Lands, San Fernando, La Union, sir.
QNow, Mr. Alcantara, at the time that you had this property subdivided by the
owner, could you please inform the Court if there was any claim by any
other party opposing the subdivision or claiming the property?
ANone, sir.
QWhen the Deed of Sale was executed and you said that you presented it to the
Register of Deeds and after the subdivision already, what action did the
Register of Deeds have regarding the matter?
AThey approved it and registered it already in six (6) titles, sir.
QIn whose names?
AOne (1) title under my name, Amado Cruz and Dr. Sanchez, sir.
QInitially, Mr. Alcantara, you said that you are the sole purchaser of this entire area of One
Thousand Five Hundred Ninety One (1,591) Square Meters. Now, you are informing this
Honorable Court that FACTS:
The decision of the CA affirming in toto the decision of the RTC of Echague, Isabela is now
being assailed in the instant petition for certiorari.

Lot 6 was acquired by the spouses Juan Gaffud and Rafaela Donato. Juan Gaffud died in
1936. On Jan. 11, 1938, Lot 6 was originally registered (OTC No. 4340) in the Registration
Book of the Office of the RD in the names of Rafaela, Raymundo and Cicero Gaffud (sons of
spouses) as co-owners, . The said lot was sold to Rafaela Donato through a Deed of Transfer
which cancelled OTC NO. 4340 and in lieu thereof a TCT was issued in the name of Rafaela
alone.

On Feb. 1967, Rafaela sold a portion of Lot 6 in favor in Fortunato Pascua. The aforesaid

24
sale caused the subdivision of the said lot into Lot-6-A and Lot-6-B. Upon registration of said
sale in favor of Pascua, TCT No. T-32683 was issued in the name of Rafaela Donato on March
2, 1967 covering the land designated as Lot 6-B.

On Jun. 10, 1970, Rafaela Donato sold to petitioner Felicisima Pino said Lot-6-B as
evidenced by the Deed of Absolute Sale which was duly notarized. Rafaela undertook to register
said Deed with the RD of Isabela and on July 13, 1970, the sale was inscribed therein and a TCT
was issued in the name of Felicisima Pino.

On Sept. 1980, Cicero Gaffud died survived by his wife Demetrian and sons Romulo and
Adolfo, private respondents herein.

On March 9, 1982, private respondents filed a complaint for nullity of sale and
reconveyance against petitioner — Felicisima Pino. (During the pendency of the case before the
trial court, Rafaela Donato, who was not a party to the case, died on November her 26, 1982.)

The RTC ruled and this was sustained by respondent CA that petitioner Pino is not a
purchaser in good faith, so (a) the Deed of Absolute Sale made by Rafaela in favor of Pino null
and void insofar as the shares of Cicero and Raymundo are concerned, (b) cancellation of TCT
No. 49380 in the name of Pino and (c) reconvey one-half of Lot-6-B to plaintiffs withing 10
days.

ISSUE:

1. WON Felicisima Pino is a purchaser in good faith

2. WON the filing of an action for reconveyance has already prescribed
HELD:

1. The rule applicable to this controversy is well-settled. 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 certificate of title. In the absence of anything to excite or arouse suspicion, said
vendee is under no obligation to look beyond the certificate and investigate the title of the vendor
appearing on the face of said certificate.

In the case at bar, the evidence on record discloses that when petitioner purchased the
subject property on June 10, 1970, the title was in the name of her vendor Rafaela Donato alone.

There was no allegation, and much less any evidence, that the transfer of the subject
property from the original owners (Rafaela, Cicero and Raymundo) to Rafaela Donato was
fraudulent.

2. TCT No. T-32683 was issued in the name of Rafaela Donato on March 2, 1967. The

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present action for reconveyance was filed only on March 9, 1982. Clearly then, the action has
already prescribed because it was filed fifteen (15) years after the issuance of TCT No. T-32683

If an action for reconveyance based on constructive trust cannot reach an innocent

purchaser for value, the remedy of the defrauded party is to bring an action for damages against
those who caused the fraud or were instrumental in depriving him of the property. And it is now
well-settled that such action prescribes in ten years from the issuance of the Torrens Title over
the property. (Armerol v. Bagumbaran, 154 SCRA 396, 407; Caro v. Court of Appeals, 180
SCRA 401, 407; Walstron v. Mapa, Jr., 181 SCRA 431, 442).

one Amado Cruz and one Dr. Sanchez were also issued two (2) titles. Could you
explain how these titles came into their possession?
AActually, two (2) are our co-owners, sir.
QSo, is it our understanding that the Deed of Sale from Emelita Santiago is in
favor of these two (2) Atty. Cruz and Dr. Sanchez?
AYes, sir. 21
Third, between two innocent persons, the one who made it possible for the wrong to be done
should be the one to bear the resulting loss. The Capays filed the notice of lis pendens way back
on March 17, 1967 but the same was not annotated in TRB's title. The Capays and their counsel
Atty. Ramon A. Gonzales knew in 1968 of the extra-judicial foreclosure sale of the property to
TRB and the consolidation of title in the bank's name following the lapse of the one-year period
of redemption. But in the next fifteen (15) years or so, they did not bother to find out the status of
their title or whether the liens noted on the original certificate of title were still existing
considering that the property had already been foreclosed. In the meantime, the subject property
had undergone a series of transfers to buyers in good faith and for value. It was not until after the
land was subdivided and developed with the buyers building their houses on the other lots when
the Capays suddenly appeared and questioned the occupants' titles. At the very least, the Capays
are guilty of laches. Laches has been defined as the failure or neglect, for an unreasonable and
unexplained length of time, to do that which by exercising due diligence could nor should have
been done earlier; it is negligence or omission to assert a right within a reasonable time,
warranting presumption that the party entitled to it either has abandoned it or declined to assert
it.
Verily, the principle on prescription of actions is designed to cover situations
such as the case at bar, where there have been a series of transfers to innocent
purchasers for value. To set aside these transactions only to accommodate a
party who has slept on his rights is anathema to good order. cdrep
Independently of the principle of prescription of actions working against
petitioners, the doctrine of laches may further be counted against them, which
latter tenet finds application even to imprescriptible actions.
In De La Calzada-Cierras vs. Court of Appeals, we held:
While it is true that under the law it is the act of registration of the deed of
conveyance that serves as the operative act to convey the land registered under
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 the Torrens System (Davao Grains, Inc. vs. Intermediate Appellate Court, 171
SCRA 612), the petitioners cannot invoke said dictum because their action to
recover Lot 4362 is barred by the equitable doctrine of laches.

The act of registering the conveyance to Rosendo was constructive notice to the
whole world of the fact of such conveyance (Heirs of Maria Marasigan vs.
Intermediate Appellate Court, 152 SCRA 253).
But the petitioners' complaint to recover the title and possession of Lot 4362
was filed only on July 21, 1981, twelve (12) years after the registration of the
sale to Rosendo. The petitioners failed and neglected for an unreasonably long
time to assert their right, if any, to the property in Rosendo's possession.
Being guilty of laches, the Capays cannot invoke the ruling in Villasor vs. Camon, Levin vs. Bass
and Director of Lands vs. Reyes to the effect that entry of the notice of lis pendens in the day
book (primary entry book) is sufficient to constitute registration and such entry is notice to all
persons of such adverse claim. Certainly, it is most iniquitous for the Capays who, after sleeping
on their rights for fifteen years, to assert ownership over the property that has undergone several
transfers made in good faith and for value and already subdivided into several lots with
improvements introduced thereon by their owners.
In the same vein, the cases cited by the Capays in their first two (2) assignment of errors do not
help them any, as the transferees in said cases were not innocent purchasers for value and in
good faith. In Tuazon vs. Reyes and Siochi, where the land involved therein was sold by
Petronilo David to Vicente Tuazon, it was with a deed containing the recital that the land was in
dispute between the vendor and Roberto Siochi. Tuazon, who was merely subrogated to the
rights of the vendor was aware of the dispute and, furthermore, David did not warrant the title to
the same. In Rivera vs. Moran, Rivera acquired interest in the land before the final decree was
entered in the cadastral proceedings. Rivera, the transferee, was aware of the pending litigation
and, consequently, could not have been considered a purchaser in good faith. Similarly, in Atun,
et al. vs. Nunez, et al. and Laroza vs. Guia, the buyers of the property at the time of their
acquisition knew of the existence of the notice of lis pendens. In contrast to the cited cases, the
non-bank respondents in the case at bar acquired their respective portions of the land with clean
title from their predecessors-in-interest.
II
We come now to TRB's liability towards the Capays.
The Bank unconvincingly tries to wash its hands off the present controversy, and attempts to
shift the blame on the Capays, thus:
xxx xxx xxx
23.The petitioner Bank, during all the time that it was holding the title for over
fourteen (14) years that there was no legal impediment for it to sell said
property, Central Bank regulations require that real properties of banks should
not be held for more than five (5) years;
24.The fault of the Register of Deeds in not carrying over the Notice of Lis
Pendens to the new title of the petitioner Bank should not be absorbed by the

27
 latter considering that in all good faith, it was not aware of the existence of said
annotation during all the time that said title was in its possession for almost
fourteen (14) years before the property was sold to Emelita G. Santiago .
TRB concludes that "(t)he inaction and negligence of private respondents, allowing ownership to
pass for almost 15 years constitute prescription of action and/or laches." 32
Section 25 of the General Banking Act, provides that no bank "shall hold the possession of any
real estate under mortgage or trust, deed, or the title and possession of any real estate purchased
to secure any debt due to it, for a longer period than five years." TRB, however, admits holding
on to the foreclosed property for twelve (12) years after consolidating title in its name. The bank
is, therefore, estopped from invoking banking laws and regulations to justify its belated
disposition of the property. It cannot be allowed to hide behind the law which it itself violated.
TRB cannot feign ignorance of the existence of the lis pendens because when the property was
foreclosed by it, the notice of lis pendens was annotated on the title. But when TCT No. T-6595
in the name of the Capay spouses was cancelled after the foreclosure, TCT No. T-16272 which
was issued in place thereof in the name of TRB did not carry over the notice of lis pendens.
We do not find the Capays guilty of "inaction and negligence" as against TRB. It may be recalled
that upon the commencement of foreclosure proceedings by TRB, the Capays filed an action for
prohibition on September 22, 1966 against the TRB before the CFI to stop the foreclosure sale.
Failing in that attempt, the Capays filed a supplemental complaint for the recovery of the
property. The case reached this Court. Prescription or laches could not have worked against the
Capays because they had persistently pursued their suit against TRB to recover their property.
On the other hand, it is difficult to believe TRB's assertion that after holding on to the property
for more than ten (10) years, it suddenly realized that it was acting in violation of the General
Bank Act. What is apparent is that TRB took advantage of the absence of the notice of lis
pendens at the back of their certificate of title and sold the property to an unwary purchaser. This
notwithstanding the adverse decision of the trial court and the pendency of its appeal. TRB,
whose timing indeed smacks of bad faith, thus transferred caused the property without the lis
pendens annotated on its title to put it beyond the Capay's reach. Clearly, the bank acted in a
manner contrary to morals, good customs and public policy, and should be held liable for
damages.
Considering, however, that the mortgage in favor of TRB had been declared null and void for
want of consideration and, consequently, the foreclosure proceedings did not have a valid effect,
the Capays would ordinarily be entitled to the recovery of their property. Nevertheless, this
remedy is not now available to the Capays inasmuch as title to said property has passed into the
hands of third parties who acquired the same in good faith and for value. Such being the case,
TRB is duty bound to pay the Capays the fair market value of the property at the time it was sold
to Emelita Santiago, the transferee of TRB.
WHEREFORE, the decision of the Court of Appeals dated February 24, 1994 in CA-G.R. CV
No. 33920, as modified by its Resolution dated August 10, 1994 is hereby AFFIRMED. In
addition, Traders Royal Bank is ordered to pay the Capays the fair market value of the property
at the time it was sold to Emelita Santiago.
This Decision is without prejudice to whatever criminal, civil or administrative action against the
Register of Deeds and/or his assistants that may be taken by the party or parties prejudiced by the

28
failure of the former to carry over the notice of lis pendens to the certificate of title in the name
of TRB.
SO ORDERED.
Davide, Jr., C.J., Puno, Pardo and Santiago, JJ., concur.

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