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.
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 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 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.

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:
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.

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.

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.

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

__________________________________________________________________________________________
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.
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.
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. — 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.
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.
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, 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
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 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.
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.
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?
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?
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?
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?
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 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
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 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
 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 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.