1

EN BANC

G.R. No. L-4340     May 28, 1952

REBECCA LEVIN, Plaintiff-Appellee, vs. JOAQUIN V. BASS, ET

AL., defendants.

EUGENIO MINTU, Defendant-Appellant.

x---------------------------------------------------------x

G.R. No. L-4341     May 28, 1952

JOAQUIN V. BASS, Plaintiff-Appellee, vs. JOSE C. ROBLES, ET

AL., defendants.

REBECCA LEVIN, ET EL., intervenors.

EUGENIO MINTU, intervenor-appellant.

x---------------------------------------------------------x

G.R. No. L-4342     May 1952

JOAQUIN V. BASS, Plaintiff-Appellee, vs. EUGENIO

MINTU, Defendant-Appellant.

x---------------------------------------------------------x

G.R. No. L-4343     May 28, 1952

REBECCA LEVIN, Plaintiff-Appellee, vs. JOAQUIN V.

BASS, Defendant-Appellant.

x---------------------------------------------------------x

G.R. No. L-4344     May 28, 1952

JOAQUIN V. BASS, Plaintiff-Appellant, vs. REBECCA

LEVIN, Defendant-Appellee.

x---------------------------------------------------------x

G.R. No. L-4345     May 28, 1952

JOAQUIN V. BASS, Plaintiff-Appellant, vs. JOSE C. ROBLES and

AMINTA T. DE ROBLES, Defendants-Appellees.

x---------------------------------------------------------x

G.R. No. L-4346     May 28, 1952

JOAQUIN V. BASS, Plaintiff-Appellant, vs. AMINTA T. DE

ROBLES, Defendant-Appellee.

PADILLA, J.: chanrobles virtual law library

G. R. No. L-4340 is an action (case No. 70054 of the Court of First

Instance of Manila) for annulment of sales of, and mortgage on, a lot

and two houses erected thereon and damages brought by Rebecca

Levin against Joaquin V. Bass, Emiliano R. Eustaquio, Co Chin Leng and

Eugenio Mintu where the last named defendant is the appellant; G. R.

No. L-4343 is the same case where Joaquin V. Bass is the appellant;

G.R. No. L-4341 is an action (case No. 71549 of the same court) for

detainer brought by Joaquin V. Bass against Jose C. Robles and Aminta

T. de Robles, in which Rebecca Levin and Eugenio Mintu intervened,

and where the last named intervenor is the appellant; G.R. No. L-4345

is the same case for detainer where Joaquin V. Bass is the appellant; G.

R. No. L-4342 is an action (case No. 516 of the same court) for

annulment of sale brought by Joaquin V. Bass against Eugenio Mintu

where the latter is the appellant; G. R. No. L-4344 is an action (case

No. 71159 of the same court) for detainer of a building located at No.

328 San Rafael street brought by Joaquin V. Bass against Rebecca

Levin where the former is the appellant; and G. R. No. L-4346 is an

action (case No. 2371 of the same court) for detainer brought by

Joaquin V. Bass against Aminta T. de Robles where the former is the

appellant. The two main cases (G. R. No. L-4340 and No. L-4342)

around which others revolve all under the appellate jurisdiction of this

court.chanroblesvirtualawlibrary chanrobles virtual law library

After a joint hearing the trial court rendered judgment annulling Exhibit

A dated 5 January 1944, where it appears that, for and in consideration

of P30,000, Rebecca Levin and conveyed to Emiliano Eustaquio a lot

containing an area of 317.70 square meters and the house erected

thereon bearing No. 326 San Rafael street Manila; Exhibit B dated 30

March 1944, where it appears that, for and in consideration of P38,000,

Emiliano R. Eustaquio sold and conveyed to Joaquin V. Bass the same

lot and house; and Exhibit C dated 18 February 1944, where it appears

that, for and consideration of P65,000, Rebecca Levin sold and

conveyed to Joaquin V. Bass a lot containing an area of 1,006.80

square meters and the house erected thereon bearing No 328 San

Rafael Street Manila; to cancel transfer of certificates of title Nos.

73450 and 73451 issued in the name of Joaquin V. Bass and in lieu

thereof to issue new Torrens certificates of title in the names of

Rebecca Levin, widow, of legal age and resident of the City of Manila at

No. 328 San Rafael Street, said new certificates to bear a

2

memorandum of mortgage in favor of Co Chin Leng, entry No. 1616, as

said mortgage appears on both transfer certificate of titles Nos. 73450

and 73451 to be cancelled, and the certificate of title to be issued in

the name of Rebecca Levin, in lieu of transfer certificate of title No.

73450, to bear a memorandum of a notice of lis pendens noted on said

transfer certificate of title in connection with civil case No. 2562 of the

Court of First Instance of Manila entitled "Isabelo Martinez vs. Joaquin

V. Bass," entry No. 20955; holding that Rebecca Levin is entitled to

recover from Joaquin V. Bass," damages for losses which she may

suffer by reason of said mortgage annotation and notice of lis pendens;

dismissing the complaint of Joaquin V. Bassin civil case No. 516,

holding that the deed of sale under certain conditions executed by

Joaquin V. Bass in favor of Eugenio Munti is without force and effect as

against Rebecca Levin and ordering Joaquin V. Bass to pay Eugenio

Mintu the sum of P4,173.16, together with lawful interests thereon

from 23 October 1946, the date of the filing of the said answer in said

civil case, until paid; dismissing the complaint of Joaquin V. Bass in civil

cases Nos. 71159, 71549 and 2371 and declaring Rebecca Levin to be

entitled to the payment of rentals by Jose C. Robles and/or Aminta T.

de Robles for the use and occupation of the premises at No. 326 San

Rafael street, Manila, from 11 March 1945 until the tenants move out

of the premises and to receive from the clerk of court the sums of

money deposited by Aminta T. de Robles and/or Jose C. Robles by way

of rentals for the said property at No. 326 San Rafael street, still

remaining in his possession, the said amounts to be applied to the

rentals to be granted upon by and between them or those which may

be declared by final judgment to be the reasonable compensation for

the use of occupation of the premises; and ordering Joaquin V. Bass to

render an accounting of the sums of money he had received from the

court, or otherwise, as rentals of the house at No. 326 San Rafael

street from and after 11 March 1945, and to pay to Rebecca Levin the

balance that may result from said accounting. Costs are taxed against

Joaquin V. Bass.chanroblesvirtualawlibrary chanrobles virtual law

library

In 1943 Rebecca Levin was a widow, 65 years old and the registered

owner of a lot on which two houses stood-one bearing No. 326 and the

other No. 328 San Rafael Street, Manila-as evidenced by transfer

certificate of title No. 62680. She was illiterate and knew only how to

sign her name. At about the end of December 1943 Joaquin V. Bass

called on Rebecca Levin at her house on No. 328 San Rafael street,

Manila, and representing himself to be a real estate broker asked her

whether she would sell her lot and house at No. 326 adjoining her

residence. At that time there lived in the house of Rebecca Levin some

Japanese civilians, officers or employees of the Pacific Mining Co.,

occupying or renting two rooms, Angelita Martinez a brother, and

Meliton Villasenor, a houseboy. In addition to P50 collected by her as

monthly rental for the house at No 326, the Japanese renting the two

rooms paid her P200 monthly and supplied her with rice and other

foodstuffs without charge. Rebecca Levin told Joaquin V. Bass that she

was not selling her house at No. 326 San Rafael street. On subsequent

calls Joaquin V. Bass told Rebecca Levin that it would be to her

advantage and benefit to sell the lot and house at No. 326 San Rafael

street and with the proceeds of the sale to purchase another house. He

told her that if she would not sell the lot and house the Japanese who

had been looking for houses to occupy might deprive her thereof

without getting anything in exchange therefor. He told her further that

by selling her house, which she rented for P50 a month only, and

buying for P26,000 one on Antonio Rivera street she would gain

because the monthly rental of the latter was P140. She consented to

see the house at Antonio Rivera street and went there accompanied by

Joaquin V. Bass and Meliton Villasenor, her houseboy. Joaquin V. Bass

pointed to a building (Exhibit G) of for apartments (accessorias) not far

from the Tutuban railroad station. They were not able to see the

second story of the building because, according to Joaquin V. Bass, the

owner had gone to Pampanga. For the second time, they went to see

the building on Antonio Rivera street but they again failed to see the

second story of the building for the same reason given by Joaquin V.

Bass when they went to see it the first time. Relying upon the

representations made by Joaquin V. Bass, Rebecca Levin finally

consented to sell her house. One of the last days of December 1943 or

of the first days of January 1944, while Rebecca Levin was engaged in

conversation with Dr. Pastor L. Manlapaz and Angelita Martinez,

3

Joaquin V. Bass called on her bringing along with him certain papers.

Upon Joaquin V. Bass" suggestion Rebecca Levin followed by him

entered a room adjoining that where she, Dr. Manlapaz and Angelita

Martinez were conversing, and upon repeated representations and

assurances made by Joaquin V. Bass that the papers he brought were

just an authority to sell the house at No. 326 San Rafael street,

Rebecca Levin signed five documents and Bass took from her bag

which she placed on a small table in the room her residence certificate

and the receipt showing payment of realty tax on her property. None of

the documents Rebecca Levin signed was left to her. The following day

(6 January 1944), Joaquin V. Bass called on Rebecca Levin at her house

and handed to her P10,000 saying that it was a partial payment of the

purchase price of the lot and house at No. 326 San Rafael street which

he represented had been sold to a Japanese and asked her to give him

the Torrens title of the house and lot. Upon being informed by her that

the Torrens title of the houses and lot was in the possession of the

Agricultural and Industrial Bank, to which they were mortgage for

P2,000, Joaquin V. Bass took from her P2,000 and requested her to go

with him to the Agricultural and Industrial Bank where they paid the

mortgage debt of Isidore Reich (presumably the predecessor of the late

husband of Rebecca [Exhibit M]) and received a mortgage release and

the Torrens certificate of title No. 62680 (Exhibit K and K-1); and on

February 1944, she signed a receipt for P2,000 (Exhibits L and L-1).

Joaquin V. Bass not only took P2,000 to pay the mortgage debt to the

Agricultural and Industrial Bank (Exhibit M) but also the balance of

P8,000 telling her that he would pay it to the owner of the building on

Antonio Rivera street; that the balance of the repurchase price of her

house At No. 326 San Rafael street would be paid to her as soon as the

lot and house sold be segragated or separated from the larger lot on

which her house at No 328 San Rafael street stood; and that it was

necessary to make such subdivision to be approved by the court in

order that the sale of her house and lot not to arose any suspicion on

her part Joaquin V. Bass gave her a receipt from that partial amount

paid for the building on Antonio Rivera street signed by one Mariano

Irurin y Reyes but the amount written therein was just P6,000. The

signer of the receipt promised to deliver the deed of sale of the

building of Antonio Rivera street within 5 days from the date of

payment of P20,000, the balance of the purchase price (Exhibit H).

Being illiterate Rebecca Levin did not notice that the amount appearing

in the receipt was P6,000 instead of P8,000 which was the sum taken

from her by Joaquin V. Bass. To make her believe that she was the

owner of the building on Antonio Rivera street, Joaquin V. Bass turned

over to her the monthly rentals of the building for five months which he

claimed he had collected from the tenants of the building. Not long

after the signing by Rebecca Levin of the documents giving Joaquin V.

Bass authority to sell the house at No. 326 San Rafael street and the

pretended purchase by her through him of the building on Antonio

Rivera street, the latter called on the former at her house. He found

her sick. He told her that he had tested medicine or drug for ailments

such as the one she was suffering from and that if she would take it

she would feel immediately and completely relieved. He went down.

Immediately after his return to the house he called and told the

houseboy Meliton Villasenor to bring a glass of water where he diluted

the drug and asked Rebecca Levin to take it. The latter did not hesitate

to take it as until then she did not have the least suspicion of him who

succeeded in winning and enjoyed her trust and confidence. After

taking the medicine she become to vomit and suffer stomach pains

and her face and lips became swollen. She went for Dr. Pastor L.

Manlapaz who found that she was poisoned. After application of

antidotes she recovered from the poisoning. This incident coupled with

the failure of Joaquin V. Bass to return to her the documents she had

been asking made Rebecca Levin suspicious of him and consulted with

Dr. Pastor L. Manlapaz and Filemon Poblador, the latter when working

in the office of the President of the Republic. As Poblador was not a

lawyer he talked to attorney Esteban Nedruda who being also an

employee in the office of the President of the Republic at Malaca�ang

refused to handle the case but promised to investigate it. After

investigation Nedruda found that the lots were transferred and

registered in the name of Joaquin V. Bass and mortgaged him. Finally,

the services of attorney Cesar de Larrazabal on the property of

Rebecca Levin which were registered in the office of Register of Deeds

of Manila. It was found out that the papers signed by her on 5 January

4

1944 were a deed of sale of her house and lot at No. 326 San Rafael

street for P30,000 in favor of Emiliano R. Eustaquio acknowledge on

the same day before notary public Eliezar A. Manikan (Exhibit A) and

another deed of sale of her house and a lot No. 328 San Rafael street

for P65,000 in favor of Joaquin V. Bass dated 18 February 1944 and

acknowledge on that date before the same notary public Elizer A.

Manikan (Exhibit C); and that on 30 March 1944, for and in

consideration of P38,000, Emiliano R. Eustaquio sold to Joaquin V. Bass

the lot and the house at No. 326 San Rafael street (Exhibit B.). Prior to

the registration of these three deeds of sale, or on 24 February 1944, a

petition was filed by attorney Eliezer A. Manikan in the name of

Rebecca Levin praying for the subdivision of parcels of land into two

lots-the certificate of title to lot No. 1 containing an area of 317.7

square meters to be issued in the name of Emiliano R. Eustaquio and

the certificate of title to lot No. 2 containing an area of 1,006.80 square

meters to be issued in the name of Rebecca Levin (Exhibit I). On

February 1944, the petition was granted by the Court of First Instance

of Manila, Fourth Branch, presided over by Judge Gervasio Diaz,

(Exhibit J.) Transfer certificate of title No. 62680 in the name of

Rebecca Levin describing a parcel of land located on San Rafael street

containing an area of 1,3228.40 square meters entered on September

1941, together with a memorandum of mortgage executed in favor of

the Agricultural and Industrial Bank entered on 26 September 1939-a

memorandum noted on the previous certificate of title No. 9220-was

cancelled, and in lieu thereof Transfer certificate of title No. 71907 in

the name of Emiliano R. Eustaquio for a parcel of land containing an

area of 317.70 square meters more or less, and the house erected

thereon, and transfer certificate of title No. 71908 in the name of

Rebecca Levin for the remaining area of 1,006.80 square meters and

the house erected thereon, were issued by the Registrar of Deeds of

Manila on 27 February 1944, pursuant to the order of the court dated

22 February referred to (Exhibit J). On 11 May 1944, transfer certificate

of title No. 71908 in the name of Rebecca Levin was cancelled and in

the lieu thereof transfer certificate of title No. 73451 was issued in the

name of Joaquin V. Bass by the Registrar of Deeds of Manila; and on 10

April 1944, transfer of certificate of title No. 71907 in the name of

Emiliano R. Eustaquio was cancelled and in lieu thereof transfer

certificate of title No. 73450 was issued in the name of Joaquin V. Bass

by the Registrar of Deeds. On 8 April 1944, to secure the payment of

P70,000, together with interests thereon at 5 per cent per annum,

payable in five years, Joaquin V. Bass mortgaged to Co Chin Leng the

two lots and house selected thereon and the instrument of mortgage

was registered on 10 April 1944 on both certificates of title Nos. 73450

and 73451. On 6 July 1944, a notice of lis pendens was noted in the

back of transfer certificate of title No. 73450 in connection with civil

case No. 2562 of the Court of First Instance of Manila entitled "Isabelo

Martinez vs. Joaquin V. Bass." On October 1944, for and in

consideration of P200,000 "presenting circulating currency," Joaquin V.

Bass sold to Eugenio Mintu the lot and house at No. 328 San Rafael

street desrcibed in transfer certificate of title No. 73450, P90,000 of

which was paid on the date of the execution of the deed of sale;

P10,000, to be retained by the vendee (Eugenio Mintu) and to be paid

to the vendor (Joaquin V. Bass) after the notice of lis pendens in

connection with civil case No. 2652 of the Court First Instance of Manila

entitled "Isabelo Martinez vs. Joaquin V. Bass" shall have been

removed or cancelled; and P100,00, the balance, to be deposited by

the vendee (Eugenio Mintu) upon instructions of the vendor (Joaquin V.

Bass) with the clerk of court of Manila after return of the former from a

trip to Ilocos Norte, the deposit to be made within 30 days from the

date of the deed of sale and for the purpose of securing there release

of the mortgage in favor of Co Chin Leng, the vendor (Joaquin V. Bass)

undertaking to obtain the release of the mortgage on the property sold

and to deliver it (the mortgage release) to the vendee (Eugenio Mintu)

and the cancellation of the notice of lis pendens on or before 8 April

1945 (Exhibit 3-Mintu). To secure the fulfillment of the undertaking-the

mortgage release and cancellation of the notice oflis pendens-the

vendor (Joaquin V. Bass) assigned, transferred and conveyed by way of

liquidated damages to the vendee (Eugenio Mintu) his title, rights,

interest, participation or share in and to lot No. 2, the larger lot on

which house No. 328 San Rafael street is errected, and both parties

agreed that if the condition provided for in paragraph (d) of the deed of

sale be fulfilled, the condition in paragraph (e) thereof relative to the

5

assignment, transfer and conveyance of lot No. 2 to the vendee would

be null and void without legal effect, otherwise it would remain in full

force and effect. The following clause was inserted with initials of both

parties: "force majeure and fortuitous events exempts the vendor from

compliance thereto" (Exhibit 3-Mintu.) On 1 November 1944, Eugenio

Mintu and Jose C. Robles entered into a lease contract on the house

and lot No. 326 San Rafael street, Manila (Exhibit 1-Mintu). From

November 1944 to January 1945 Jose C. Robles paid to Eugenio Mintu

the rental of P45 a month as agreed upon (Exhibit 2-Mintu), but

beginning February the rental of the house were not paid to Mintu

because there was a dispute as to who was the owner of the house. On

3 November 1944, Eugenio Mintu deposited with the sheriff of Manila

for the account of Joaquin V. Bass the sum of P100,416.67 as full

payment of the purchase price of the property sold to him on 14

October 1944. The sum of P100,000 is the total of Bass" indebtedness

to Co Chin Leng-P70,000 secured by mortgaged and P30,000

unsecured, the sum of P416,67 represents the interest on the amount

owned to Co Chin Leng up to the time of the deposit (Exhibit 4-Mintu)

and the sum of P158.92 represents the sheriff's fees on the amount

deposited (Exhibit 5-Mintu). On November 1944, Eugenio Mintu

presented and filed with the office of Registrar of Deeds of Manila the

original of the deed of sale (Exhibit E) duly notarized and paid the sum

of P224.50: P.50 for entry in the day book; P220 for registration fees;

and P4 for the issuance of two titles (Exhibit 6-Mintu). On the same

date, together with the original deed of sale (Exhibit E) the owner's

duplicates of transfer of certificate of title Nos. 73450 and 73451 were

presented and filed with the office of Registrar of Deeds of Manila but

said documents were not among those salvaged and were presumed to

have been lost or burned according to the certification of the Registrar

of Deeds in and for the City of Manila (Exhibit 8-Mintu). On 19 January

1945, Eugenio Mintu paid to Joaquin V. Bass the sum of P10,000 in full

settlement of the purchase price of the property acquired by him on 14

October 1944 (Exhibit 7-Mintu). On 29 October 1945, a notice of lis

pendens was noted at the back of transfer certificate of title No. 70054

of the Court of First Instance of Manila entitled "Rebecca

Levin vs. Joaquin V. Bass".chanroblesvirtualawlibrary chanrobles virtual

law library

Joaquin V. Bass testifies that he acquired the lot and house at No. 328

San Rafael street from Emiliano R. Eustaquio for P38,000 and the lot

and house at No. 328 San Rafael street from Rebecca Levin for

P65,000, the first on 30 March 1944 and the second on 18 February

1944; that Rebecca Levin paid him the monthly rental of P150 for the

lot and house at No. 328 San Rafael street from March 1944 to January

1945, as shown by the stubs of the receipts issued to her (Exhibits 20-

Bass to 20-K-Bass); that Rebecca Levin refused to pay the rental for

February unless it was reduced to P100; that on 19 May 1945 he

brought against her an action for detainer which on appeal to the Court

of First Instance of Manila bears No. 71159; that after he acquired the

property at No. 326 San Rafael street from Emiliano R. Eustaquio the

latter brought him to the tenant, Rosario Vda. de Altonaga, who left the

premises to go to the Cagayan to look for her daughter; that Vicente

Tagle rented the premises signing a contract for one year but after 2 or

4 months he left the premises and his daughter Aminta T. de Robles

married to Jose C. Robles became the tenant; that in February 1945

Jose C. Robles left the premise after a quarrel he had with his wife

Aminta T. de Robles; that in April 1945 he brought against Jose C.

Robles and Aminta T. de Robles an action for detainer on which on

appeal to the Court of First Instance of Manila bears No. 71549; that on

May 1946 Aminta T. de Robles and he signed a lease contract (Exhibit

1-Bass); that he did not make Rebecca Levin sign documents

authorizing him to sell her house at No. 326 San Rafael street as

testified to by Dr. Manlapaz; that he did not show to Rebecca Levin any

house on Calle Antonio Rivera to be exchanged with or for her property

at No. 326 San Rafael street, as testified to by Dr. Manlapaz, Meliton

Villase�or and Angelita Martinez; that it is not true that Rebecca Levin

did not receive the consideration for the sale of her house at No. 328

San Rafael street; that on October 1944 he sold for P200,000 the house

and lot at No. 326 San Rafael street to Eugenio Mintu, who handed to

him P65,000 and a check for P25,000 which the bank refused to cash,

but later on Mintu told him that he had deposited funds in the bank

and so the check was honored and cashed at the bank of the Philippine

6

Islands; that all in all he was paid P90,000 and P10,000 for 16 gantas of

rice given him to Mintu; that the balance of P100,000 was never and

has not been paid to him; that he has not given possession of the

property to Eugenio Mintu the transaction not having been

consummated because of force majeure; and that he was bound to

return to Eugenio Mintu the P100,000 received by

him.chanroblesvirtualawlibrary chanrobles virtual law library

Eliezer A. Manikan, the notary public before whom the deeds of sale

sought to be annulled were acknowledged, testifies that Rebecca Levin

appeared before him and acknowledged the execution of the

documents in favor of Emiliano R. Eustaquio on 5 January 1944 and in

favor of Joaquin V. Bass on 18 February

1944.chanroblesvirtualawlibrary chanrobles virtual law library

The testimony of Rebecca Levin as to how she consented to sell her

house and lot No. 326 San Rafael street and the manner she was

induced by Joaquin V. Bass to sign papers which he represented were

mere authorization to sell is corroborated by Dr. Pastor L. Manlapuz,

Angelita Martinez and Meliton

Villasenor.chanroblesvirtualawlibrary chanrobles virtual law library

These witnesses had no interest to pervert the truth. Rebecca Levin

was not in need of money of fact she led quite a comfortable life. Only

because of the misrepresentation that she would gain by selling her

house at No. 326 San Rafael street and of the threat made by Joaquin

V. Bass that she might lose it did she finally consent to sell

it.chanroblesvirtualawlibrary chanrobles virtual law library

On the other hand, Joaquin V. Bass has a criminal record - was

convicted of estafa (Exhibit O) - and was involved ina shady deal

(Exhibit R) and found to have presented a promisory note for P5,000

and a chattel mortgage which he claimed Rebecca Levin had signed

and upon which he brought an action against her for foreclosure (civil

case No. 71481, the Court of First Instance of Manila), when in truth

and in fact, as pronounced by the trial court, they were not signed and

acknowledged by her before a notary public (Exhibit P). He succeeded

in winning the trust and confidence of Rebecca Levin, a widow, 65

years old, a foreigner in this country and without relatives. Joaquin V.

Bass claims he was employed at that time by the Manila Electric Co. as

mechanical engineer but on cross examination he had to admit that he

did not have any degree nor was he licensed by the Government of the

Philippines to practice the profession of mechanical engineer. When he

was pressed to answer the question whether he was actually employed

by the Manila Electric Co. he evaded it by saying that he was employed

by White and Co. which owned 60 per cent of the shares of the Manila

Electric Co. During the occupation of the country by the enemy he was

engaged in the buy and sell business and had no known income. It is

unbelieavable that he could acquire the house and lot of Rebecca Levin

at No. 328 San Rafael street for P65,000 and the one allegedly sold to

Emiliano R. Eustaquio at No. 326, same street, through his

machinations, for P38,000. He claims he deposited his money in the

Bank of Taiwan but in the same way that he presented his pass book

(Exhibit 7) showing his deposits in the Bank of the Philippine Islands,

he could have presented the pass book of certificate of deposit of

money he had in the Bank of Taiwan, Ltd. In fact, during the

occupation of the country by the enemy and before he mortgaged the

two houses and lots to Co Chin Leng Joaquin V. Bass had no money.

According to Exhibit 7, on 10 April 1944 only he made the first or initial

deposit of P50,000 with the Bank of the Philippine Islands. That money

must be of the P70,000 loaned to him by Co Chin Leng on April 8 1944

secured by mortgage on the houses and lots he had acquired

fraudulently from Rebecca Levin.chanroblesvirtualawlibrary chanrobles

virtual law library

Eliezer A. Manikan perverted the truth when he testified that P10,000

was paid to or received by Rebecca Levin in his office, whereas Joaquin

V. Bass testified that she received it in her house; when he testified

that on the date of the excecution of the deed of sale (Exhibit A) by

Rebecca Levin, or on 5 January 1944, the Torrens title to the property

was brought by her to his office, when in truth and in fact the title was

on that date kept by the Agricultural and Industrial Bank and taken

from it the following day when the motrgage debt was paid. Eliezer A.

Manikan did not tell the truth when he testified that on the date of the

execution of the deed of sale by Rebecca Levin the sum of P35,000 in

Japanese war notes, consisting of six packages of P10,000 each P10

bills and the rest of P5 bills, was counted by her, because, according to

7

Joaquin V. Bass, Rebecca Levin mortgaged her house to him for

P35,000 and later converted it into an absolute sale for P65,000

(Exhibits S and S-1). Eliezer A. Manikan did not tell the truth when he

testified that the deed of sale marked Exhibit C was executed two or

three weeks after the order of the court-referring to the order

approving the subdivisions of the parcels of land of Rebecca Levin into

two lots presented for registration on 24 February 1944-because the

deed of sale (Exhibit C) dated February 1944 was executed and

acknowledged on that date, whereas the court order approving the

subdivision and six days before its presentation for registration. On the

cross examination Joaquin V. Bass testified that the consideration for

the sale of the house and lot on No. 328 San Rafael street consisted of

payment in cash of P35,000 and the transfer to or assumption by him

of Rebecca Levin's debt for P30,000 to one Concepcion de la Rama. On

further cross-examination he testified that the purchase price agreed

upon between him and Rebecca Levin was P60,000 plus P2,800 which

was not included in the price.chanroblesvirtualawlibrary chanrobles

virtual law library

There is overwhelming evidence to support the conclusion of the trial

court that Rebecca Levin did not execute the deeds of sale Exhibit A

and Exhibit C. What she was made to believe she signed was an

authorization to sell the house at No. 326 San Rafael

street.chanroblesvirtualawlibrary chanrobles virtual law library

As to the mortgage in favor of Co Chin Leng we hold that the court

below that there is no evidence to show that the mortgage was made

in bad faith and without consideration. He must, therefore, be deemed

to be a mortgaged in good faith and for value. As to the sum consigned

by Eugenio Mintu for Joaquin V. Bass' account there is no evidence as

to the outcome of the complaint for consignation filed 3 November

1944 by Joaquin V. Bass against Co Chin Leng in the Court of First

Instance of Manila (case No.

2984).chanroblesvirtualawlibrary chanrobles virtual law library

As regards Eugenio Mintu, the evidence shows that he paid P200,000

to Joaquin V. Bass in the manner and form above stated; that the

orignal deed of sale (Exhibit E), together with the owner's duplicate

certificate of title Nos. 73450 and 73451, was presented for

registration on 8 November 1944 in the office of Registrar of Deeds of

Manila and entered in the day book-entry No. 27161, but that,

according to the certification of the registrar, the original deed of sale

and the owner's duplicate certificate of titles have not been found,

were not among the salvaged records and were, therefore, presumed

to have been lost or burned (Exhibit 8-Mintu). It also appears that the

registration free consisting of P.50, the fee for the entry in the day

book; P220, the registration fees for a sale of P200,000; and P4, the fee

for the issuance of two certificates of title were paid by Eugenio Mintu

(Exhibit 6-Mintu). On the other hand, on October 1945, a notice of lis

pendens was filed in the office of Registrar of Deeds of Manila and

noted on the backof transfer certificate of title Nos. 73450 and 73451

in connection with civil case No. 70054 of Court of First Instance of

Manila entitled "Rebecca Levin vs. Joaquin V. Bass et al." chanrobles

virtual law library

The claim of Joaquin V. Bass that the sale between him and Mintu was

conditional is devoid of merit, because the conditional part of the deed

of sale concerns the guarantee undertaken by him as vendor to obtain

the release of the mortgage of Co Chin Leng and the cancellation of

the notice of lis pendens in connection with civil case No. 2562 entitled

"Isabelo Martinez vs. Joaquin V. Bass," which release and cancellation

he promised and would secure on or before 8 April 1945. It is not a

condition which, if not fulfilled, would avoid the sale made of the lot

and house at No. 328 San Rafael street, but one which, if not

performed, would cause the vesting in the vendee (Eugenio Mintu) of

the title to the lot and house at No. 328, same street, which was given

as security for the fulfillment of the

undertaking.chanroblesvirtualawlibrary chanrobles virtual law library

We now take up the question between Eugenio Mintu and Rebecca

Levin. Under the Torrens system the act of registration is the operative

act to convey and affect the land.1 Do the entry in the day book of a

deed of sale which was presented and filed together with the owner's

duplicate certificate of title with the office of Register of Deeds and full

payment of registration fees constituted a complete act of registration

which operates to convey and affect the land? In voluntary registration

such as sale, mortgage, lease and the like, if the owner's duplicate

8

certificate be not surrendered and presented or if no payment of

registration fees be made within 15 days, entry in the day book of the

deed of sale does not operate to convey and affect the land sold.2 In

voluntary registration, such as an attachment, levy upon, execution, lis

pendens and the like entry thereof in the day book is a sufficient notice

to all persons of such adversed claim.3 Eugenio Mintu fulfilled or took

the steps he was expected to take in order to have the Registrar of

Deeds in and for the City of Manila issue to him the corresponding

transfer certificate of title on the lot and house at No. 328 San Rafael

Street sold to him by Joaquin V. Bass. The evidence shows that Eugenio

Mintu is an innocent purchaser for value. Nevertheless, the court below

held that the sale made by Bass to Mintu is as against Rebecca Levin

without force and effect because of the express provision of law which

in part says:

. . . Provided, however, That in all cases of registration procured by

fraud the owner may pursue all his legal and equitable remedies

against the parties to such fraud, without prejudice, however, to the

rights of any innocent holder for value of certificate of title; (Section

55, Act 496, as amended by Act 3322).

In other words, the sale made by Joaquin V. Bass to Eugenio Mintu is

valid as between them but not as against Rebecca Levin who could

avail herself of all her legal and equitable remedies against Joaquin V.

Bass and reach the property acquired fraudulently by the latter and

subsequently sold to Eugenio Mintu who admittedly is an innocent

purchaser for value, for the reason that the later though an innocent

purchaser for value is not a holder of a certificate of title. The

pronouncement of the court below is to the effect that an innocent

purchaser for value has no right to the property because he is not a

holder of a certificate of title to such property acquired by him for

value in good faith. It amounts to holding that for failure of the

Registrar of Deeds to amply and perform his duty an innocent

purchaser for value loses that character-he is not an "innocent holder

for value of a certificate of title." The court below has strictly and

literally construed the provision of law applicable to the case. If the

strict and literal construction of the law made by the court below be

the true and correct meaning and intent of the lawmaking body, the

act of registration-the operative act to convey and effect registered

property-would be left to the Registrar of Deeds. True, there is a

remedy available to the registrant to compel the Registrar of Deeds to

issue him the certificate of title but the step would entail expense and

cause unpleasantness. Neither violence to, nor stretching of the

meaning of, the law would be done, if we should hold that an innocent

purchaser for value of registered land becomes the registered owner

and in the contemplation of law the holders of a certificate thereof the

moment he presents and files a duly notarized and lawfull deed of sale

and the same is entered on the day book and at the same he

surrenders or presents the owner's duplicate certificate of title to the

property sold and pays the full amount of registration fees, because

what remains to be done lies within his power to perform. The

Registrar of Deeds is in duty bound to perform it. We believe that is a

reasonable and practical interpretation of the law under consideration-

a construction which would lead to no inconsistency and

injustice.chanroblesvirtualawlibrary chanrobles virtual law library

Taking into consideration all the circumstances of the case and bearing

in mind that the only objective courts must strive to attain is to do

justice, we believe that our interpretation of the law applicable to the

case at bar subserves the interests of justice. True, Rebecca Levin

loses he house and lot No. 326 San Rafael street, but "as between not

innocent persons, one of whom must suffer the consequence of a

breach of trust, the one who made it possible by his act of confidence

must bear the loss."4 chanrobles virtual law library

We hold, therefore, that Eugenio Mintu is the rightful owner of the lot

and house at No. 326 San Rafael street since 8 November 1944 and

entitled to collect the rentals due and unpaid from that date until

possession of the premises shall have been restored to him and the

balance by Joaquin V. Bass of rentals and moneys received by him

imputable to such rentals as ordered by the trial court, subject to the

registered mortgage in favor of Co Chin Leng. What has been awarded

to Rebecca Levin in the judgment appealed from, in so far as the lot

and house at No. 326 San Rafael street are concerned, is deemed

awarded to Eugenio Mintu.chanroblesvirtualawlibrary chanrobles

virtual law library

9

The rest of the judgment appealed from not inconsistent herewith, is

affirmed, with costs against Joaquin V.

Bass.chanroblesvirtualawlibrary chanrobles virtual law library

Let a copy of this decision be furnished the City Fiscal of Manila who is

directed an investigation of Joaquin V. Bass and attorney and notary

public Eliezer A. Manikan in connection with the execution and

acknowledgment of the documents, involved and the testimony given

by them in these cases and to take such action as the result of the

investigation may warrant.chanroblesvirtualawlibrary chanrobles

virtual law library

Paras, C.J., Feria, Pablo, Bengzon, Montemayor, Reyes, and Bautista

Angelo JJ., concur.

Separate Opinions chanrobles virtual law library

TUASON, J., concurring: chanrobles virtual law library

Crime and fraud can not serviced as the root of a valid title

notwithstanding the good faith of the purchase for value. This rule is

qualified by the condition that the rightfull owner was not guilty for any

negligence contributing to or facilitating the commission of the crime

or fraud. Subject to this qualification, the doctrine that, as between two

innocent parties, the one who made the crime or fraud possible must

bear the loss, should be applied. From the facts of this case, it appears

that Rebecca Levin was not free from blame for the issuance of a

certificate of title in the names of Bass. With these circumstances in

mind, I concur in the foregoing decision.

Endnotes:

1 Section 50, Act 496.chanroblesvirtualawlibrary chanrobles virtual law

library

2 Sections 55 and 56, Act 496.chanroblesvirtualawlibrary chanrobles

virtual law library

3 Villasor vs. Camon et al., 89 Phil.,

404.chanroblesvirtualawlibrary chanrobles virtual law library

4 Eliason vs. Wilborn (1930), 281 U.S 457, 461; Blondeau et

al. vs. Nano et al., (1935), 61, Phil. 625, 530.

Republic of the Philippines SUPREME COURT Manila

SECOND DIVISION

G.R. No. 107967 March 1, 1994

CONSORCIA TENIO-OBSEQUIO, ORLANDO OBSEQUIO, and

MANUEL, REGINA, TUNAY and MELITON, all surnamed

OBSEQUIO, Petitioners, vs. COURT OF APPEALS, EUFRONIO

ALIMPOOS, and PONCIANA ALIMPOOSRespondents.

REGALADO, J.: chanrobles virtual law library

This petition for review on certiorari seeks to annul and set aside the

decision of the Court of Appeals in CA-G.R. CV No. 22990, dated July 9,

1992, which reversed the judgment of the trial court, as well as its

resolution of November 6, 1992 denying the motion for reconsideration

of its aforesaid decision.chanroblesvirtualawlibrary chanrobles virtual

law library

The subject matter of the present petition is a parcel of land,

designated as Lot No. 846, Pls-225 located at Andanan, Baguyan,

Agusan del Sur. This lot was previously covered by Original Certificate

of Title No. P-1181 registered in the name of herein respondent

Eufronio Alimpoos and which he acquired through a homestead

application. 1The said land is now registered in the name of herein

petitioner, Consorcia Tenio-Obsequio, as evidence by Transfer

Certificate of Title No. T-1421. 2

On September 10, 1986, private respondents filed a complaint in the

court a quo against herein petitioners Consorcia Tenio and her

husband, Orlando Obsequio, and the heirs of Eduardo Deguro for

recovery of possession and ownership, alleging that sometime in 1964,

they mortgaged the land to Eduardo Deguro for P10,000.00; that to

guaranty the loan they delivered to the latter the original certificate of

title to the land; that in the meantime, they continued to cultivate the

same and, at the end of the harvest season, they gave two-thirds (2/3)

of the harvest to Eduardo Deguro; that on June 25, 1965, Eduardo

Deguro and his wife, without the knowledge and consent of herein

private respondents, prepared a document of sale and through

misrepresentation and other manipulations made it appear that private

10

respondents sold the land to

them.chanroblesvirtualawlibrary chanrobles virtual law library

This deed of sale was annotated at the back of the said certificate of

title as Entry No. 16007. By virtue thereof, Original Certificate of Title

No. P-1181 in the name of Eufronio Alimpoos was cancelled and

Transfer Certificate of Title No. T-1360 was correspondingly issued in

favor of Eduardo Deguro. After the death of Eduardo Deguro, his heirs

sold the land to Consorcia Tenio-Obsequio. On September 22, 1970,

Transfer Certificate of Title No. T-1421 was issued in her name. It was

allegedly only in 1982, when Eufronio Alimpoos received a Certificate

of Agricultural Leasehold of his land from the Department of Agrarian

Reform (DAR), that he learned that the land was already titled in the

name of another.chanroblesvirtualawlibrary chanrobles virtual law

library

In their answer, the heirs of Eduardo Deguro claimed that respondent

Alimpoos spouses sold the land to their late parents on June 25, 1965

for a consideration of P10,000.00, as evidenced by the deed of

absolute sale; that as a result thereof, Transfer Certificate of Title No.

T-1360 was issued in favor of their parents, that on April 23, 1970,

after the death of their parents, they sold the said land to Consorcia

Tenio-Obsequio; that on September 22, 1970, a new Transfer

Certificate of Title No. 1421 was issued in the name of the latter.

Consorcia Tenio-Obsequio, on the other hand, maintains that she

purchased the land in question from the heirs of Deguro in good faith,

for valuable consideration and without knowledge of any flaw or defect

whatsoever.chanroblesvirtualawlibrary chanrobles virtual law library

The trial court, giving credence to the evidence presented by herein

petitioners, defendants therein, ruled in their favor and rendered

judgment disposing as follows:

1) dismissing the herein complaint;

2) declaring defendant Consorcia Tenio Obsequio as the true and

absolute owner of the land in litis;

3) ordering plaintiffs to pay P10,000.00 by way of moral damages;

4) ordering plaintiffs to pay P10,000.00 by way of exemplary damages;

5) ordering plaintiffs to pay the expenses of litigation in the amount of

P5,000.00;

6) ordering plaintiffs to pay (a)ttorney's fees in the amount of

P5,000.00; and

7) to pay the costs.

In like manner, the money deposited in the Municipal Treasurer's Office

of Bayugan in the amounts of P2,724.95 covered by Official Receipt No.

0442623 dated September 7, 1988 and P1,658.10 covered by Official

Receipt No. 5497715 dated September 14, 1988, as well as the sum of

P3,927.00 deposited in Court pursuant to the Court's Orders of January

16, 1987 and March 13, 1987, consisting of the proceeds from the sale

of the harvest taken from the area involved, is awarded to defendant

Consorcia Tenio Obsequio, is owner thereof after deducting the

necessary expenses and Clerk of Court (s) commission

fee. 3 chanrobles virtual law library

On appeal, respondent Court of Appeals reversed the decision of the

lower court and rendered judgment:

1) Declaring the plaintiff Eufronio Alimpoos as the true and legal owner

of the property subject of this case; chanrobles virtual law library

2) Declaring null and void the Deed of Absolute Sale marked as Annex

"C" or exhibit "D" and ordering the cancellation of TCT Nos.

T-1360 and T-1421 in the names of Eduardo Deguro and Consorcia

Tenio Obsequio, respectively; chanrobles virtual law library

3) Ordering the heirs of Eduardo Deguro and Laureana Rabuya,

namely, Gonzalo Deguro, Manuel Deguro, Tunay Deguro and Regina

Deguro to reconvey the said property to the plaintiffs: chanrobles

virtual law library

4) Ordering the Register of Deeds to cancel the annotation of the Deed

of Absolute Sale at the back of TCT P-1181 in favor of Consorcia Tenio

Obsequio and to clear said TCT of all encumbrances executed by

Eduardo Deguro and/or his heirs.chanroblesvirtualawlibrary chanrobles

virtual law library

In addition, the defendants are ordered to pay the plaintiffs, jointly and

severally, the sum of P50,000.00 bay way of moral damages;

P30,000.00 by way of compensatory damages and P5,000.00 by way of

attorney's fees and costs of litigation. 4 chanrobles virtual law library

11

Petitioners then filed a motion for reconsideration of the said decision

which was denied by the Court of Appeals in its resolution dated

November 6, 1992, 5 hence the instant recourse by

petitioners.chanroblesvirtualawlibrary chanrobles virtual law library

After a careful review of the records of this case and the legal

consideration applicable to the proven facts thereof, we find the

petition at bar to be meritorious. Reconveyance of the land in question

to the original owner is not in

order.chanroblesvirtualawlibrary chanrobles virtual law library

Herein respondent Alimpoos, as the original owner of the said land, is

assailing the title of petitioner on the ground that their original

certificate of title over the said land was cancelled by virtue of a forged

deed of absolute sale.chanroblesvirtualawlibrarychanrobles virtual law

library

Under Section 55 the Land Registration Act, as amended by Section 53

of Presidential Decree No. 1529, an original owner, of registered land

may seek the annulment of a transfer thereof on the ground of fraud.

However, such a remedy is without prejudice to the rights of any

innocent holder for value with a certificate of title.- chanrobles virtual

law library

A purchaser in good faith and for value is one who buys the property of

another, without notice that some other person has a right to or

interest in such property, and pays a full and fair price for the same at

the time of such purchase or before he has notice of the claim or

interest of some other person in the property 6 In consonance with this

accepted legal definition, petitioner Consorcia Tenio-Obsequio is a

purchaser in good faith. There is no showing whatsoever nor even an

allegation that herein petitioner had any participation, voluntarily or

otherwise, in the alleged forgery.chanroblesvirtualawlibrary chanrobles

virtual law library

Nor can we charge said petitioner with negligence since, at the time of

the sale to her, the land was already registered in the name of Eduardo

Deguro 7and the tax declaration was also issued in the latter's

name. 8It was also clearly indicated at the back of the original

certificate of title that Eduardo Deguro acquired ownership over the

said land by virtue of the deed of sale executed in his favor. 9In fact, it

is not disputed that one of his heirs was actually residing

therein. 10There is no annotation, defect or flaw in the title that would

have aroused any suspicion as to its authenticity. Such being the case,

petitioner has the right to rely on what appears on the face of the

certificate of title.chanroblesvirtualawlibrary chanrobles virtual law

library

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. 11Where 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 property. 12

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 indefeasibility 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

12

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. 13

Moreover, there is no reason to doubt the authenticity of the deed of

sale which constituted the basis for the issuance of the transfer

certificate of title in the name of Eduardo Deguro, considering that not

only was the contract notarized but that it was also approved by the

Secretary of Agriculture and Natural Resources in compliance with

Section 118 of the Public Land Act. 14

There is no indubitable, legal and convincing reason for nullifying the

deed of sale. Herein private respondents have not presented any

cogent, complete and convincing proof to override the evidentiary

value of the duly notarized deed of sale. A notarial document is

evidence of the facts in the clear unequivocal manner therein

expressed. It has in its favor the presumption of regularity. To

contradict all these, there must be evidence that is clear, convincing

and more than merely preponderant. 15

The fact alone that the signature of private respondent Eufronio

Alimpoos appearing on the deed of sale of Deguro differs in certain

points from his signature appearing in the "Kasabutan sa Prenda" is not

enough to warrant the conclusion that the signature in said deed of

sale is not genuine. The records show that the signatures of private

respondent Eufronio Alimpoos in one of the cash advance

receipts 16and in the notice of the trial court's order dated March 4,

1988 17are similar to the signature appearing in the deed of sale. It is,

therefore, not improbable that, as claimed by herein petitioners,

private respondent could have deliberately and purposely altered their

signatures on the mortgage contract to thereafter make it appear that

a discrepancy actually exists.chanroblesvirtualawlibrary chanrobles

virtual law library

Forgery cannot be presumed; it must be proved by clear, positive and

convincing evidence. Those who make the allegation of forgery have

the burden of providing it since a mere allegation is not

evidence. 18Private respondents in this case ruefully failed to

substantiate with sufficient evidence their claim that their signatures

appearing on the deed of sale were

forged.chanroblesvirtualawlibrary chanrobles virtual law library

At any rate, there are several reasons to doubt the authenticity of the

"Kasabutan sa Prenda." Firstly, it has not been sufficiently explained

why, although it should normally be with the mortgagee, the original

mortgage contract remained in the possession of the mortgagor and it

was only after the death of the alleged mortgagee that the same was

presented, which was more than twenty years from the date of its

alleged execution. Secondly, the consideration of P10,000.00 for a

mortgage in 1964 of a piece of rural land consisting of only 81,882

square meters, with the mortgagee paying the taxes thereon, is too

high or excessive, considering that the same piece of land was

coetaneously mortgaged with the Development Bank of the Philippine

for only P1,900.00. 19Thirdly, the texture of the paper on which it was

written and the clarity of the writing show that the document,

supposedly executed on July 25, 1964, is of recent vintage and could

not be more than twenty years old, even as of this late date. 20

Yet, even on the implausible assumption, ex gratia argumenti, that the

deed of sale in favor of Eduardo Deguro was forged and is, therefore,

null and void, such fact cannot be successfully invoked to invalidate

the title subsequently issued to herein petitioner who, as earlier stated,

is an innocent purchaser for value and in good

faith.chanroblesvirtualawlibrary chanrobles virtual law library

It has been consistently ruled that a forged deed can legally be the

root of a valid title when an innocent purchaser for value

intervenes. 21A deed of sale executed by an impostor without the

authority of the owner of the land sold is a nullity, and registration will

not validate what otherwise is an invalid document. However, where

the certificate of title was already transferred from the name of the

true owner to the forger and, while it remained that way, the land was

subsequently sold to an innocent purchaser, the vendee had the right

to rely upon what appeared in the certificate and, in the absence of

anything to excite suspicion, was under no obligation to look beyond

the certificate and investigate the title of the vendor appearing on the

face of said certificate. 22

13

The Torrens Act, in order to prevent a forged transfer from being

registered, erects a safeguard by requiring that no transfer shall be

registered unless the owner's certificate of title is produced along with

the instrument of transfer. However, an executed document of transfer

of registered land placed by the registered owner thereof in the hands

of another operates as a representation to a third party that the holder

of the document of transfer is authorized to deal with the land. 23In

the case at bar, it was even private respondents who made the

allegation that they further delivered their certificate of title to Eduardo

Deguro, allegedly to secure the loan extended to them. Consequently,

petitioner cannot be faulted and, as a matter of fact, she is vested with

the right to rely on the title of Eduardo

Deguro.chanroblesvirtualawlibrary chanrobles virtual law library

Furthermore, it was the very act of the respondent Alimpoos spouses in

entrusting their certificate of title to Eduardo Deguro that made it

possible for the commission of the alleged fraud, if indeed there was

such a fraudulent conduct as imputed to the latter. Hence, the rule of

law and justice that should apply in this case is that as between two

innocent persons, one of whom must suffer the consequences of a

breach of trust, the one who made it possible by his act of confidence

must bear the loss. 24

The right of the innocent purchaser for value must be respected and

protected, even if the seller obtained his title through fraud. The

remedy of the person prejudiced is to bring an action for damages

against those who caused or employed the fraud, and if the latter are

insolvent, an action against the Treasurer of the Philippines may be

filed for recovery of damages against the Assurance Fund. 25

It is also significant and worth noting that herein respondents filed the

instant complaint only after twenty-two years from the execution of the

supposedly forged deed of absolute sale, and after sixteen years from

the date the title was transferred in the name of herein petitioner. An

action for reconveyance is a legal remedy granted to a landowner

whose property has been wrongfully or erroneously registered in

another's name, but then the action must be filed within ten years

from the issuance of the title since such issuance operates as a

constructive notice. 26

WHEREFORE, the decision and resolution of respondent court now

under review are hereby REVERSED and the decision of the court a

quo is accordingly REINSTATED.chanroblesvirtualawlibrary chanrobles

virtual law library

SO ORDERED.

Narvasa, C.J., Padilla, Nocon and Puno, JJ. concur.

Endnotes:

1 Original Record, 5.chanrobles virtual law library

2 Ibid., 95.chanrobles virtual law library

3 Decision of the Regional Trial of Bayugan, Agusan, del Sur, in Civil

Case No. 45, per Judge Zenaida P. Placer; Original Record, 265-

277.chanrobles virtual law library

4 Annex D; Rollo, 36-41; penned by Justice Jose C. Campos, Jr., with

Justices Celso L. Magsino and Salome A. Montoya,

concurring.chanrobles virtual law library

5 Rollo, 50-51.chanrobles virtual law library

6 De Santos vs. Intermediate Appellate Court, et al., G.R. No. L-69591,

January 25, 1988, 157 SCRA 295; Co, et al. vs. Court of Appeals, et al.,

G.R. No. 93687, May 6, 1991, 196 SCRA 705; Casupit, et al. vs. Court of

Appeals, et al., G.R. No. 96829, December 9, 1991, 204 SCRA

684.chanrobles virtual law library

7 Original Record, 49-50.chanrobles virtual law library

8 Ibid., 100-101.chanrobles virtual law library

9 Ibid., 6; Entry No. 16007.chanrobles virtual law library

10 TSN, March 4, 1988, 22; May 2, 1988, 13.chanrobles virtual law

library

11 Gonzales vs. Intermediate Appellate Court, et al., G.R. No. L-69622,

January 29, 1988, 157 SCRA 587; Rural Bank of Sariaya, Inc. vs. Yacon

et al., G.R. No. 78011, July 5, 1989, 175 SCRA 62; Fernandez, et al. vs.

Court of Appeals, et al., G.R. No. 83141, September 21, 1990, 189

SCRA 780.chanrobles virtual law library

12 Director of Lands vs. Abache, et al., 73 Phil., 606 (1942); Lopez, et

al. vs. Court of Appeals, et al., G.R. No. L-49739, January 20, 1989, 169

SCRA 271.chanrobles virtual law library

14

13 Republic, et al. vs. Umali, et al., G.R. No. 80687, April 10, 1989, 171

SCRA 647.chanrobles virtual law library

14 Original Record, 6-8; Entry No. 16008, Memorandum of

Encumbrances, OCT No. P-1181.chanrobles virtual law library

15 Yturralde vs. Azurin, et al., G.R. No. L-22158, May 30, 1969, 28

SCRA 407; Cabrera vs. Villanueva, et al., G.R. No. 75069, April 15,

1988, 160 SCRA 672; Almendra, et al. vs. Intermediate Appellate Court,

et al., G.R. No. 75111, November 21, 1991, 204 SCRA 142.chanrobles

virtual law library

16 Exhibit 9; Original Record, 124.chanrobles virtual law library

17 Original Record, 83.chanrobles virtual law library

18 Melleza vs. Philippine National Bank, G.R. No. 83103, October 19,

1988, Third Division, Minute Resolution; et al., G.R. No. 77029, August

30, 1990, 189 SCRA 201.chanrobles virtual law library

19 Original Record, 5-A; Entry No. 4445, Memorandum of

Encumbrances, OTC No. P-1181.chanrobles virtual law library

20 Original Record, 46.chanrobles virtual law library

21 Mallorca, et al. vs. De Ocampo, et al., G.R. No. L-26852, March 25,

1970, 32 SCRA 48; Torres vs. Court of Appeals et al., G.R. No. 63046,

June 21, 1990, 186 SCRA 672; Philippine National Bank vs. Court of

Appeals, et al., G.R. No. 43972, July 24, 1990, 187 SCRA

735.chanrobles virtual law library

22 De Lara, et al. vs. Ayroso, 95 Phil. 185 (1954); Duran, et al. vs.

Intermediate Appellate Court, et al., G.R. No. 64159, September 10,

1985, 138 SCRA 489.chanrobles virtual law library

23 Blondeau, et al. v. Nano, et al., 6 Phil. 625 (1935), citing 53 C.J.

1141; Act No. 496 as amended, Secs. 47, 51, 55.chanrobles virtual law

library

24 De Lara vs. Ayroso, supra,; Manila Surety & Fidely Co. vs. Luna 107,

Phil. 281 (1960).chanrobles virtual law library

25 Blanco et al. vs. Esquierdo, et al., 110 Phil. 494 (1960); torres vs.

Court of Appeals, et al., supra.; Philippine National Bank vs. Court of

Appeals, et al., supra.chanrobles virtual law library

26 Pajarillo, et al. vs. Intermediate Appellate Court, et al., G.R. No.

72908, August 11, 1989, 176 SCRA 340; Tomas, et al. vs. Court of

Appeals, et al., G.R. No. 79328, May 21, 1990, 185 SCRA 627.

EN BANC

G.R. No. L-3970           October 29, 1952

GURBAX SINGH PABLA & CO., GURBAX SINGH PABLA, BELA

SINGH PABLA, OJAGAR SINGH, DHARAM SINGH, TALOK SINGH

and CIPRIANO TAN ENG KIAT, petitioners-appellees,

vs. HERMOGENES REYES and TEODORA TANTOCO, respondents-

appellants.

LABRADOR, J.: chanrobles virtual law library

This is an appeal prosecuted by the respondents-appellants against an

order of the Court of First Instance of Manila dated November 29, 1949,

compelling them to surrender owner's duplicates of Transfer

Certificates of Title Nos. 8071 and 8072, so that the contract of lease

entered into between petitioners-appellees and the owner of the land

covered by said certificates of title be annotated thereon. John Tan

Chin Eng is the owner of the land covered by the above-mentioned

certificates of title, and on July 23, 1948, he entered into a contract

(Exhibit A) with the petitioner-appellees, under the terms of which

petitioners-appellees were to construct thereon a three-story building

of concrete and of strong materials valued at from P80,000 to P90,000.

The contract also provided that the building shall become the exclusive

property of the owner of the land, but that the petitioner-appellees

were to occupy, hold, or possess it as lessees for a period of three

years and six months from its completion, without paying any rentals

therefor, the sum spent in the construction being considered as the

rentals; that after the above period of three years and six months

petitioners-appellees were to continue occupying the said building for

another two years at a monthly rental of P2,000. This contract of lease

was filed and registered in the office of the Register of Deeds of Manila

on August 10, 1948, under Primary Entry No. 3352, Volume 15. At the

time that the contract was entered into there was an existing

mortgage over the land in favor of Jose Calvo and Carlos Calvo for the

sum of P110,000. This mortgage in favor of the Calvos was cancelled,

and a new mortgage was executed by the owner in favor of

respondents-appellants herein, Honorable Hermogenes Reyes and his

spouse Teodora Tantoco, dated March 8, 1949, which was registered

on the same date in the office of the Register of Deeds of Manila under

15

Primary Entry No. 5014. On May 14, 1949, the original contract of

lease, Exhibit A, was amended by Exh. C, by virtue of which the period

under which the lessees were to hold any occupy the property without

rentals was extended to seven years and four months, and the rental

for the additional two years thereafter reduced to P1,148. This

amended contract of lease, Exhibit C, was also registered in the office

of the Register of Deeds of Manila under Primary Entry No. 5014,

Volume 16, on May 20, 1949.chanroblesvirtualawlibrary chanrobles

virtual law library

On May 25, 1949, counsel for petitioners-appellees wrote respondents-

appellants requesting them to allow him to take the certificates of title

to the office of the Register of Deeds of Manila for the annotation of the

contracts of lease entered into by the owner with them (Exhibit D), and

on May 27, 1949, the son of respondents-appellants acknowledged

receipt of the said letter but informed counsel for the petitioner-

appellees that the request could not be granted without the written

consent of the owner of the certificates of title (Exhibit E). On June 16,

1949, respondents-appellants' son wrote the owner of the land (Exhibit

M) demanding the payment of the overdue interest on the mortgage

with the following statement:

. . . For this reason, I wish to request that you come over to my office

before 12:00 noon to pay the said interest before we can deliver your

Transfer Certificate of Title to Atty. Manuel P. Calanog who will take

charge of registering the lease contract between Mr. Singh Pabla and

your goodself.

On June 3, 1949, the petitioners-appellees filed a motion in the Court of

First Instance of Manila praying that an order issue to the owner for the

delivery of the owner's duplicates of transfer certificates of title Nos.

8071 and 8072 to the petitioners in order that the Register of Deeds of

Manila may be able to make the annotation thereon of the contract of

lease, Exhibit A, and its amendment, Exhibit C. Against this petition

Hermogenes Reyes and Teodora Tantoco filed an opposition, alleging

that they had no knowledge whatsoever of the contract of lease,

Exhibit A, or of its amendments, Exhibit C, and that the execution of

the amendment, Exhibit C, violated the express provision of the

mortgage, to the effect that the owner could not sell, assign, or

encumber the mortgaged premises without the written consent of the

mortgages. It is to be noted that with respect to the original contract of

lease, Exhibit A, no allegation is made in the opposition of the

respondents-appellants that they were not aware of the existence of

the contract, Exhibit A, their only allegation being that the only

annotation on the certificates of title at the time they entered into the

contract of mortgage was the mortgage in favor of Jose Calvo and

Carlos Calvo. It is also to be noted that respondents-appellants do not

deny an express allegation of paragraph 13 of the amended petition to

the effect that notice was given to the public by a big sign board

placed on the premises while the building was under construction that

petitioners-appellees are the owners of the building. The amended

petition further states, without denial on the part of the respondents-

appellants, that as early as October 9, 1948, the Register of Deeds of

Manila had demanded in writing from the owner of the land the

submission of his duplicate certificates of title Nos. 8071 and 8072 in

order that the lease executed by him in favor of the petitioners-

appellees may be given due course. At the hearing of the motion no

oral evidence was submitted; only documentary evidence was

presented.chanroblesvirtualawlibrary chanrobles virtual law library

Thereafter the Court of First Instance of Manila issued the order

already mentioned above, directing respondents to surrender the

certificates of title to the Register of Deeds of Manila in order that

petitioners-appellees' contract of lease may be noted thereon. It

expressly found that respondents-appellants had knowledge of the

lease contract, Exhibit A, but that respondents' deed of mortgage of

March 8, 1949, has priority over petitioner's amended contract of

lease, Exhibit C. As regards the (supposed) prohibition contained in the

contract of mortgage, the court held that the prohibition gives a right

of foreclosure; in other words, that in spite of the prohibition the

amended contract of lease, Exhibit C, may not be considered as null

and void.chanroblesvirtualawlibrary chanrobles virtual law library

In this court on appeal claim is made on behalf of the respondents-

appellants that the court a quo erred in holding that respondents-

appellants had knowledge of the contract of lease, Exhibit A; that it

erred in holding that Tirso T. Reyes is the attorney-in-fact of the

16

respondents-appellants; that it erred in ordering the registration of the

contract of lease, Exhibit A; and that it erred in not holding that the

registration of the contracts, Exhibits A and C, will prejudice the rights

and interest of respondents-

appellants.chanroblesvirtualawlibrary chanrobles virtual law library

It should be noted that all that the petitioners demand or pray for is

the surrender of the titles to the Register of Deeds so that their

contracts of lease, Exhibits A and C, may be noted thereon. The only

issue, therefore, is whether petitioners have a right to have said deeds

registered. It is not denied that the contracts have been executed by

the registered owner of the land, or that they have been lawfully

executed, or that they have all the qualities of registerable documents.

Indeed, the owner is agreeable to the registration. The objections

interposed by respondents, who are mortgagees merely, that they had

no knowledge of the contract of lease, or that their mortgage has

priority, or that they will be prejudiced, are beside the

issue.chanroblesvirtualawlibrary chanrobles virtual law library

The purpose of registering an instrument is to give notice thereof to all

persons (section 51, Act No. 496); it is not intended by the proceedings

for registration to seek to destroy or otherwise affect already

registered rights over the land, subsisting or existing at the time of the

registration. The rights of these parties, who have registered their

rights, are not put in issue when an instrument is subsequently

presented for registration; nor are its effects on other instruments

previously registered put in issue by the procedure of registration.

Thus, the objections raised by respondents-appellants that they had no

knowledge of the contract of lease, Exhibit A, before the property was

mortgaged to them, or that the same violates their contract of

mortgage with the owner of the land - these are not passed upon by

the order for the registration of petitioners-appellees' contract of lease.

The objections, as well as the relative rights of all parties who have

registered their deeds, shall be decided in the proper suit or

proceeding when the opportune occasion arises; but they are not now

in issue, nor may they be adjudicated upon, simply because

petitioners-appellees have applied for the registration of their contract

of lease.chanroblesvirtualawlibrary chanrobles virtual law library

The impropriety and inconvenience of proceeding to determine

completely and in advance all the possible consequences of a

document, upon all parties affected thereby, in the proceeding for its

registration becomes apparent when, as in this case, important and

complicated questions of fact and of law were presented by the

respondents-appellants about their alleged lack of knowledge of the

contracts of lease and the invalidity thereof. The court a quo passed

upon vital issues of fact upon the motion and the opposition thereto,

and upon the documents, letters, and receipts presented, without any

other evidence than the above. Yet the question of knowledge is

mainly a question of fact and requires inquiry into many and

complicated circumstances, which can not be satisfactorily shown

except by testimony.chanroblesvirtualawlibrary chanrobles virtual law

library

On the other hand, the supposed invalidity of the contracts of lease is

no valid objection to their registration, because invalidity is no proof of

their non-existence or a valid excuse for denying their registration. The

law on registration does not require that only valid instruments shall be

registered. How can parties affected thereby be supposed to know

their invalidity before they become aware, actually or constructively, of

their existence or of their provisions? If the purpose of registration is

merely to give notice, then questions regarding the effect or invalidity

of instruments are expected to be decided after, not before,

registration. It must follow as a necessary consequence that

registration must first be allowed, and validity or effect litigated

afterwards.chanroblesvirtualawlibrary chanrobles virtual law library

The foregoing, however, must not be understood as an absolute and

invariable rule of procedure, for parties may, by mutual consent,

submit issues for determination at the time of the proceeding to

register a document. But the court should only proceed therewith

(determination of the issues) upon giving all the parties concerned

sufficient opportunity to present their respective sides and the

evidence in support thereof, and that if this can not be done, the

determination of the issues should be reserved in a subsequent

proceeding and the registration of the document

ordered.chanroblesvirtualawlibrary chanrobles virtual law library

17

In accordance with the above opinion, we find that the issues raised by

respondents-appellants, namely, that the contracts of lease, Exhibits A

and C, are invalid because they violate the contracts of mortgage

executed in favor of the owner of the land, that Tirso T. Reyes is not

the attorney-in-fact of the respondents-appellants, and that the

respondents-appellants had no knowledge of the execution of the

contract of lease, Exhibits A and C - these issues were not properly

investigated because respondents-appellants did not have the

opportunity to present evidence thereon and did not even present copy

of their mortgage at the hearing, and the trial court decided the

questions without full and complete investigation. The ruling of the trial

court on the above issues should, therefore, be set aside and their

determination reserved in a proper

proceeding.chanroblesvirtualawlibrary chanrobles virtual law library

Wherefore, the opposition to the motion for the surrender of the

certificates of title to the Register of Deeds of Manila is overruled, and

the order appealed from, in so far as it orders the surrender of the

certificates of title for the registration of the contracts of lease, is

hereby affirmed, but the other rulings are reversed, and the other

issues raised by respondents-appellants reserved for determination in

a proper proceeding. With costs against the respondents-

appellants.chanroblesvirtualawlibrary chanrobles virtual law library

Paras, C. J., Bengzon, Padilla, Montemayor and Jugo, JJ., concur.

PABLO, J., dissenting: chanrobles virtual law library

Los opositores Hermogenes Reyes y Teodora Tantoco son acreedores

hipotecarios de los lotes con certificados de transferencia de titulo Nos.

8071 y 8072 y, en virtud de una clausula de dicha hipoteca, el dueno

no puede vender, trasparar o gravar dichos lotes hipotecados sin el

consentimiento por escrito de los acreedores. El dueno, por tanto, no

podia legalmente arrendar dichas fincas a los hoy mocionantes sin

dicho consentimiento. Si, en contravencion de dicho contrato, el dueno

los arrendo a los mocionantes, dicho arrendamiento no debe ser

anotado, en proteccion de los arrendatarios que no obraron de buena

fe, en los certificados de transferencia de titulo Nos. 8071 y 8072. La

inscripcion en la Oficina del Registrador de Titulos de la hipoteca era

una notificacion a todo el mundo de que el propietario no podia gravar,

arrendar, etc., los lotes, sin consentimiento de los acreedores

hipotecarios.chanroblesvirtualawlibrary chanrobles virtual law library

Si los mocionantes hubieran obrado con la prudencia ordinaria de ver

el titulo de dichos lotes en la Oficina del Registrador de Titulos, habrian

descubierto que el dueno no podia arrendarlos sin el consentimiento

de los acreedores hipotecarios. Es evidente que los mocionantes

quieren subsanar la falta de precaucion con que debian haber obrado

antes de arrendar los lotes, en perjuicio de los acreedores

hipotecarios.chanroblesvirtualawlibrary chanrobles virtual law library

Ordenar la anotacion del arrendamiento es proteger a los arrendatarios

que no obraron de acuerdo con las disposiciones legales y conculcar

los derechos legitimos de los acreedores, debidamente

inscritos.chanroblesvirtualawlibrary chanrobles virtual law library

El articulo 51 de la Ley No. 496 tiene aplicacion a los casos en que, sin

intervencion de la otra parte o sin su conocimiento, el interesado

consigue inscribir escritura de traspaso, hipoteca, arrendamiento,

embargo, etc. an la Oficina del Registrador de Titulos. En tales casos,

la inscripcion surtira el efecto de notificacion a todos los que puedan

tener reclamacion, y no en camos, como el presente, en que los

acreedores ya se oponen abiertamente a la anotacion pedida, despues

de notificados de la presentacion de la mocion. Cuando hay una

oposicion que alega violacion de un derecho substancial, lo que

procede es no ordenar la inscripcion sino hacer que las partes

presenten todas las pruebas en apoyo de su respectiva alegacion, o

que litiguen en el tribunal correspondiente, suspendiento toda accion

sobre la mocion en que se pide la presentacion al registrador del

duplicado del certificado de transferencia de titulo para la

anotacion.chanroblesvirtualawlibrary chanrobles virtual law library

Siguiendo la teoria de la mayoria, la notificacion a los interesados

solamente comenzara a tener lugar despues que se haya inscrito el

arrendamiento impugnado por orden de este Tribunal, y que desde esa

fecha pueden iniciar los pleitos que las partes quieran suscitar. Me

parece que eso es ceremonia innecessaria para este caso particular.

Los acreedores ya han planteado su oposicion a la anotacion. Su

objecion esta fundada en los terminos precisos del contrato de

18

hipoteca; parte de las pruebas ya se han presentado; lo que procede,

en mi opinion, es devolver el expediente al juzgado de origen dando a

las partes oportunidad de presentar todas sus pruebas y despues

decidir si cabe o no la anotacion. Es hacer perder el tiempo a las partes

interesadas y a los juzgados obligarles a litigar despues que este

Tribunal haya ordenado la anotacion de dicho arrendamiento, y en el

caso de que se decidiese que los mocionantes no tienen derecho a

anotar la escritura de arrendamiento, entonces se habra de ordenar la

cancelacion de la anotacion ya ordenada por este Tribunal. Habra

algun juzgado inferior que se atreva a ordenar la cancelacion de una

anotacion ordenada por este Tribunal? Y para que fueron notificados

los acreedores de la vista de la mocion si, despues de todo, sin oir sus

pruebas, se ordena tal anotacion? Eso es contrario al espiritu que

informa nuestro sistema de legislacion: de proporcionar a las partes

justa, pronta y no costosa administracion de

justicia.chanroblesvirtualawlibrary chanrobles virtual law library

Voto por la revocacion de la orden apelada y que se devuela el

expediente para ulterior tramitacion, como tengo indicado.