23. Sps. Eduardo & Josefina Domingo v.

Roces
GR No. 147468 | 9 April 2003 | Ynares-Santiago, J.
APOLINARIO | Topic: RULE 74 – Liability of distributees; How enforced?
Doctrine: Sec. 4, Rule 74 covers transfers of real property to any person, as long as the deprived heir or
creditor vindicates his rights within 2 years from the date of the settlement and distribution of estate. The
buyer of real property the title of which contain an annotation pursuant to Rule 74, Sec. 4 ROC, cannot be
considered innocent purchasers for value.

Facts:
1. Sps. Cesar and Lilia Roces were the owners of 2 contiguous parcels of land in Arayat St.,
Mandaluyong, covered by TCTs.
a. GSIS cause the annotation of an affidavit of adverse claim on the TCTs alleging that the
spouses have mortgaged the same to it.
2. GSIS wrote a letter to Cesar demanding the surrender of the owner’s duplicate of title. Roces did not
comply.
a. GSIS filed a petition with the CFI praying that the owner’s duplicates in the possession of Cesar
be declared null and void and that the ROD of Pasig be directed to issue new owner’s
duplicates to GSIS.
b. CFI granted the petition. It became final and executory. TCTs were issued in the name of GSIS.
3. 1980 – Cesar died intestate. He was survived by his widor, and their children––Cesar Roberto, Ana,
Luis, Jose Antonio, and Maria (all of whom are Respondents itcab).
4. July 1922 – Reynaldo Montinola, Lilia Roces’ nephew, executed an affidavit of self-adjudication over
the Arayat properties. He alleged that:
a. The properties were owned by the Sps. Roces, both of whom died intestate;
b. The properties were acquired during the existence of their marriage; and
c. The spouses left no heirs except Lilia’s brother, who was Montinola’s father;
d. Neither spouses had any will nor any debts; and
e. He was the sole heir of the Sps. Roces.
5. Montinola filed a petition against GSIS with the RTC, praying for the cancellation of GSIS’ TCTs.
a. During trial, GSIS failed to produce any documentary evidencing the alleged real estate
mortgage.
b. RTC decided in favor of Montinola and declared GSIS’ TCTs null and void, and ordered the
ROD of Mandaluyong to issue new owner’s duplicates of the TCT.
c. GSIS did not appeal; hence, the RTC decision became final and executory. Accordingly, ROD
issued TCTs in the name of Montinola.
6. Montinola executed a DOAS of the property in favor of petitioner Sps. Domingo. A TCT was issued in
the names of the spouses, with an annotation that: “Subject to the provision of Sec. 7, Rule 74 of
ROC with respect to the inheritance left by the deceased Sps. Roces.”
7. When Respondents learned of the sale, they filed a complaint against Montinola and Sps. Domingo
with RTC. They argued that the affidavit of self-adjudication was fraudulent because Montinola was not
an heir of the Sps. Roces, and it was not true that Lilia Roces was dead. Hence, the affidavit and the
DOAS were null and void.
a. Sps. Domingo alleged that they were buyers in good faith, and that Respondents’ action was
barred by estoppel and laches.
8. RTC rendered judgment in favor of Respondents and awarded damages.
a. Respondents appealed to CA because RTC failed to render judgment which they prayed for
[nullification of the affidavit and DOAS]
b. CA decided in favor of Respondents and declared the Affidavit of Self-Adjudication, TCTs,
and DOAS as null and void. TCTs under the names of Sps. Roces was reinstated.
9. Sps. filed a petition for review on certiorari with SC arguing that:
a. The annotation in the TCTs regarding Sec. 4, Rule 74 does not disqualify Petitioners from
being innocent purchasers;
 b. It was Respondents who made it possible for Montinola to commit fraud, hence, they should be
the one to bear the resulting damage;
c. Respondents have no interest in the property since it was previously mortgaged and foreclosed
by GSIS; and

Issue/s and Holding:

W/N the annotation in the TCT regarding Sec. 4, Rule 74 is an encumbrance that disqualifies
Petitioners from being innocent purchasers? – YES.
● It is true that one who deals with property registered under the Torrens system need not go beyond the
same, but only has to rely on the title. He is charged with notice only of such burdens and claims as are
annotated on the title.
○ HOWEVER, the principle does NOT apply when the party has actual knowledge of the facts and
circumstances that would impel a reasonably cautious man to made such inquiry, or when the
buyer has knowledge of a defect or lack of title of his vendor or of sufficient facts to induce a
reasonably prudent man to inquire into the status of the title of the property.
○ One who falls within the exception can neither be an innocent purchaser for value nor a
purchaser in good faith.
● Sec. 4, Rule 74 [see full provision below] provides that “Such bond and such real estate shall remain
charged with a liability to creditors, heirs, or other persons for the full period of two (2) years after such
distribution, notwithstanding any transfers of real estate that may have been made.”
○ [DOCTRINE] Clearly, the rule covers transfers of real property to any person, as long as
the deprived heir or creditor vindicates his rights within 2 years from the date of the
settlement and distribution of estate.
○ Contrary to petitioners’ contention, the effects of the rule are NOT limited to the heirs or original
distributees of the estate properties, but shall affect any transferee of the properties.
● David v. Malay: SC held that the buyer of real property the title of which contain an annotation
pursuant to Rule 74, Sec. 4 ROC, cannot be considered innocent purchasers for value.
● IN THIS CASE, the annotation in the TCT was sufficient notice to Petitioners of the limitation of
Montinola’s right to dispose of the property.
○ The presence of an irregularity which excites or arouses suspicion should prompt the vendee to
look beyond the TCT and investigate.
○ Purchasers of registered land are bound by the annotations found at the back of the TCT.
HENCE, Petitioners cannot be considered buyers in good faith and cannot now avoid the
consequences brought about by the application of Rule 74, Sec. 4.

Ruling: Petition is DENIED.

OTHERS [Estoppel and laches issue]

● Respondents are not guilty of estoppel and laches.
● Laches – failure or neglect, for an unreasonable and unexplained length of time, to do that which, by
exercising due diligence, could or should have been done earlier.
○ Elements of laches are: (1) conduct on the part of defendant or one under whom he claims,
giving rise to the situation complained of; (2) delay in asserting complainant's right after he had
knowledge of the defendant's conduct and after he has an opportunity to sue; (3) lack of
knowledge or notice on the part of the defendant that the complainant would assert the right on
which he bases his suit; and (4) injury or prejudice to the defendant in the event relief is
accorded to the complainant.
● OTOH, estoppel by laches arises from the negligence or omission to assert a right within a reasonable
time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to
assert it.
● ITCAB, only four months elapsed from the time respondents discovered Montinola's fraudulent acts,
sometime in May 1993, to the time they filed their complaint on September 6, 1993.
○ Delay is an indispensable requisite for a finding of estoppel by laches, but to be barred from
bringing suit on grounds of estoppel and laches, the delay must be lengthy and unreasonable.
 ○ No unreasonable delay can be attributed to respondents in this case.

Relevant Provisions
Rule 74, SEC. 4. Liability of distributees and estate. — If it shall appear at any time within two (2) years
after the settlement and distribution of an estate in accordance with the provisions of either of the first two
sections of this rule, that an heir or other person has been unduly deprived of his lawful participation in the
estate, such heir or such other person may compel the settlement of the estate in the courts in the manner
hereinafter provided for the purpose of satisfying such lawful participation. And if within the same time of two
(2) years, it shall appear that there are debts outstanding against the estate which have not been paid, or that
an heir or other person has been unduly deprived of his lawful participation payable in money, the court having
jurisdiction of the estate may, by order for that purpose, after hearing, settle the amount of such debts or lawful
participation and order how much and in what manner each distributee shall contribute in the payment thereof,
and may issue execution, if circumstances require, against the bond provided in the preceding section or
against the real estate belonging to the deceased, or both. Such bond and such real estate shall remain
charged with a liability to creditors, heirs, or other persons for the full period of two (2) years after such
distribution, notwithstanding any transfers of real estate that may have been made.