LTD Justice Agcaoili Review Outline 2013

UPDATES IN PROPERTY REGISTRATION, MORTGAGES, CONDOMINIUMS AND RELATED PROCEEDINGS (June 2013) (Based on Agcaoili, “Property Registration Decree and Related Laws (Land Titles and Deeds)”, 2011 ed., and “Reviewer in Property Registration 1 (With Sample MCQs and Suggested Answers) Justice Oswaldo D. Agcaoili2 REGALIAN DOCTRINE Under the Regalian doctrine, all lands of whatever classification and other natural resources not otherwise appearing to be clearly within private ownership are presumed to belong to the State which is the source of any asserted right to ownership of land. 3 Accordingly, public lands not shown to have been reclassified or released as alienable agricultural land or alienated to a private person by the State remain part of the inalienable public domain.4 Property of the public domain is beyond the commerce of man and not susceptible of private appropriation and acquisitive prescription. Occupation thereof in the concept of owner no matter how long cannot ripen into ownership and be registered as a title.5

1

Published by Rex Book Store. See also: “Law on Natural Resources,” and “Reviewer in Property Registration and Related Laws (with MCQs and Suggested Answers). 2 Justice Oswaldo D. Agcaoili finished law at the University of Sto. Tomas. He obtained a degree in Management at the Asian Institute of Management. A former Chief of Legislative and Research Section, Bureau of Lands, he was appointed Solicitor in the Office of the Solicitor General in 1975, and Assistant Solicitor General in 1984. In 1995, he was appointed Associate Justice of the Court of Appeals. He was Chairman of the 13th Division upon his retirement from the Court. Court. Justice Agcaoili is a full-time Professor of the Philippine Judicial Academy (PHILJA) and Professorial Lecturer of the UP Institute for the Administration of Justice (UP-IAJ) and other MCLE providers. He is a duly accredited Appellate Court Mediator (ACM). A delegate/participant in several international conferences, he wrote a paper entitled “Environmental Protection: The Convergence of Law and Policy” which he read during the 20th Biennial Conference on the Law of the World held in Dublin, Ireland in October 2001. Described by Chief Justice Reynato S. Puno as “isa sa mga eksperto sa mga karapatan sa lupa (one of our experts on land rights),” Justice Agcaoili is the author of three books: “Property Registration Decree and Related Laws (Land Titles and Deeds),” with a Foreword by Chief Justgice Reynato S. Puno, “Law on Natural Resources and Environmental Law Developments,” with a Foreword by Justic Adolfo S. Azcuna, Chancellor of the Philippine Judicial Academy, and “Reviewer in Property Registration and Related Proceedings.” (Tel.: 922-0232, 552-9636, 0920-9506384; E-mail: [email protected]) Justice Agcaoili is married to the former Consuelo Guerrero Jose with whom he has three children, Mario, Cynthia and Wendy now all residing with their families in the US. 3 Secretary of the DENR v. Yap, GR No. 172775, Oct. , 2008; Arbias v. Republic, GR No. 173808, Sept. 17, 2008; Alcantara v. DENR, GR No. 161881, July 31, 2008; Buenaventura v. Republic, GR No. 166865, March 2, 2007;Republic v. Candy Maker, Inc., GR No. 163766, June 22, 2006; Pagkatipunan v. Court of Appeals, GR No. 129862, March 21, 2002; Valiao v. Republic, GR No. 170757, Nov. 28, 2011. 4 Republic v. Tri-Plus Corporation, G.R. No. 150000, September 26, 2006, 503 SCRA 91, 101-102. 5 Republic v. Candy Maker, Inc., G.R. No. 163766, June 22, 2006, 492 SCRA 272, 291.

2 The 1987 Constitution, like the 1935 and 1973 Constitutions,6 embodies the principle of State ownership of lands and all other natural resources as provided in Section 2, Art. XII, to wit: “All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated.”

ANCESTRAL DOMAINS AND ANCESTRAL LANDS In Cruz v. Secretary of Environment and Natural Resources,7  petitioners challenged the constitutionality of RA No. 8371, otherwise known as the Indigenous Peoples Rights Act of 1997 (IPRA), on the ground that it amounts to an unlawful deprivation of the State’s ownership over lands of the public domain and all other natural resources therein, by recognizing the right of ownership of Indigenous Cultural Communities or Indigenous Peoples (ICCs/IPs) to their ancestral domains and ancestral lands on the basis of native title. After due deliberation on the petition, the Supreme Court voted as follows: seven (7) Justices voted to dismiss the petition while seven (7) others voted to grant the petition. As the votes were equally divided (7 to 7) and the necessary majority was not obtained, the case was redeliberated upon. However, after redeliberation, the voting remained the same. Accordingly, pursuant to Section 7, Rule 56 of the Rules of Court, the petition was dismissed, and the validity of the law, deemed upheld. Justice Kapunan, voting to dismiss the petition, stated that the Regalian theory does not negate native title to lands held in private ownership since time immemorial, adverting to the landmark case of Cariño v. Insular Government,8  where the United States Supreme Court, through Justice Holmes, declared: “It might, perhaps, be proper and sufficient to say that when, as far back as testimony or memory goes, the land has been held by individuals under a claim of private ownership, it will be presumed to have been held in the same way from before the Spanish conquest, and never to have been public land.”

The rights of ICCs/IPs may be acquired in two modes: (a) by native title over both ancestral lands and domains; or (b) by Torrens title under the Public Land Act and Property Registration Decree with respect to ancestral lands only. THE TORRENS SYSTEM OF REGISTRATION 6

Saad Agro-Industries, Inc. v. Republic, GR No. 152570, Sept. 27, 2006. Supra. 8 212 U.S., 449; 53 Law Ed., 594. 7

3 The Government has adopted the Torrens system due to its being 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, 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 further consequence will be that land conflicts can be even 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. 9 The Government is required under the Torrens system of registration to issue an official certificate of title to attest to the fact that the person named in the certificate is the owner of the property therein described, subject to such liens and encumbrances as thereon noted or what the law warrants or reserves. 10 The objective is to obviate possible conflicts of title by giving the public the right to rely upon the face of the Torrens certificate and to dispense, as a rule, with the necessity of inquiring further. The Torrens system gives the registered owner complete peace of mind, in order that he will be secured in his ownership as long as he has not voluntarily disposed of any right over the covered land.11 PURPOSE OF REGISTRATION The real purpose of the Torrens system of registration, as expressed in Legarda v. Saleeby,12  a 1915 decision, 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. The Torrens system aims to decree land titles that shall be final, irrevocable, and indisputable,13  and to relieve the land of the burden of known as well as unknown claims.14 However, the Torrens system does not furnish a shield for fraud,15 nor permit one to enrich himself at the expense of others,16 otherwise its acceptability is impaired.17 9

Casimiro Development Corporation v. Mateo, GR No. 175485, July 27, 2011Tenio-Obsequio v. Court of Appeals, G.R. No. 107967, March 1, 1997, 230 SCRA 550. 10 Republic v. Guerrero, G.R. No. 133168, March 28, 2006, 485 SCRA 424; citing Noblejas, Land Titles and Deeds, 1986 ed., p. 32. 11 Republic v. Court of Appeals, G.R. Nos. L-46626-27, December 27, 1979, 94 SCRA 865, 874. 12 GR No. 8936, Oct. 2, 1915, 31 Phil. 590, 31 Phil. 590; see also Ching v. Court of Appeals, GR No. 59731, Jan. 11, 1990, 181 SCRA 9; National Grains Authority v. Intermediate Appellate Court, GR No. L68741, Jan. 28, 1988, 157 SCRA 388. 13 Government of the Philippine Islands v. Abural, GR No. 14167, Aug. 14, 1919, 39 Phil. 996. 14 SM Prime Holdings, Inc. v. Madayag, supra. 15 Rodriguez v. Lim, GR No. 135817, Nov. 30, 2006, 459 SCRA 412; Manlapat v. Court of Appeals, GR No. 125585, June 8, 2005. 16 Ibid. 17 Ermac v. Ermac, GR No. 149679, May 30, 2003, 403 SCRA 291.

4 REGISTRATION NOT A MODE OF ACQUIRING OWNERSHIP Registration is not a mode of acquiring ownership but is merely a procedure to establish evidence of title over realty. 18  It is a means of confirming the fact of its existence with notice to the world at large. A certificate of title is not a source of right. It merely confirms or records a title already existing and vested. 19 The mere possession thereof does not make one the true owner of the property. 20 Mere issuance of the certificate of title in the name of any person does not foreclose the possibility that the real property may be under co-ownership with persons not named in the certificate or that the registrant may only be a trustee or that other parties may have acquired interest subsequent to the issuance of the certificate of title. Registration is not the equivalent of title, but is only the best evidence thereof.21 DISTINCTION BETWEEN “TITLE” AND “CERTIFICATE OF TITLE” Title may be defined briefly as that which constitutes a just cause of exclusive possession, or which is the foundation of ownership of property. Certificate of title, on the other hand, is a mere evidence of ownership; it is not the title to the land itself.22 CONSTRUCTIVE NOTICE UPON REGISTRATION Registration in a public registry works as constructive notice to the whole world. Section 51 of Act No. 496, as amended by Section 52 of Presidential Decree No. 1529, provides: SECTION 52. Constructive notice upon registration. — Every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting registered land shall, if registered, filed or entered in the Office of the Register of Deeds for the province or city where the land to which it relates lies, be constructive notice to all persons from the time of such registering, filing, or entering.

REGISTRATION OF LANDS: GOVERNING LAW PD No. 1529 (Property Registration Decree) issued on June 11, 1978 covers both ordinary and cadastral registration proceedings, and supersedes Act No. 496 (Land 18

Solid State Multi-Products Corporation v. Court of Appeals, GR No. 83383, May 6, 1991, 196 SCRA 630; Vagilidad v. Vagilidad, GR No. 161136, Nov. 16, 2006, 507 SCRA 94. 19 Tiro v. Phil Estates Corporation, GR No. 170528, Aug. 26, 2008 563 SCRA 309. 20 Borromeo v. Descallar, supra. 21 Duque-Rosario v. Banco Filipino Savings and Mortgage Bank, GR No. 140528, Dec. 7, 2011. 22 Castillo v. Escutin, GR No. 171056, March 13, 2009, 581 SCRA 258.

5 Registration Act) which took effect on February 1, 1903. Act No. 2259, or the Cadastral Act, governs cadastral proceedings. Section 48(b), CA No. 141 (Public Land Act) governs the procedure for the judicial confirmation of imperfect of incomplete titles over public lands. JURISDICTION Regional Trial Courts have plenary jurisdiction over land registration proceedings and over all petitions filed after original registration of titles. 23 The registration court may now hear both contentious and non-contentious cases.24 But first level courts may be delegated by the Supreme Court to hear and decide cadastral and land registration cases (a) covering lots without controversy or opposition, or (b) contested lots where the value does not exceed P100,000.00.25 Appeal is taken to the Court of Appeals. All petitions or motions after original registration shall be filed and entitled in the original case in which the decree of registration was entered.26 Section 19 of BP Blg. 129 confers jurisdiction on the RTC over “all civil actions which involve the title to or possession of, real property or any interest therein x x x.” The Court of Appeals, or the LRA for that matter, has no jurisdiction to cancel a certificate of title.27 REGISTRATION UNDER PD 1529 IS A PROCEEDING IN REM A land registration is a proceeding in rem and jurisdiction in rem cannot be acquired unless there be constructive seizure of the land through publication and service of notice.28 CLASSIFICATION OF LANDS Lands of the public domain are classified into (1) agricultural, (2) forest or timber, (3) mineral lands, and (4) national parks. With the exception of agricultural lands, all other natural resources shall not be alienated.29 Sec. 48(b) of CA 141, as amended, applies exclusively to alienable and disposable public agricultural land. Possession of inalienable public lands, no matter how long, cannot ripen into private ownership.

23

Sec. 2, PD No. 1529. Averia v. Caguioa, GR No. L-65129, Dec. 29, 1986, 146 SCRA 459. 25 Sec. 34 BP Blg. 129, as amended by RA 7691. See also SC Circular No. 6-93, dated November 15, 1995. 26 Sec. 8, PD No. 1529; Office of the Court Administrator v. Matas, Adm. Mater RTJ-92-836, Aug. 2, 1995, 247 SCRA 9. 27 Manotok v. Barque, GR No. 162335, Dec. 18, 2008. 28 Republic v. Court of Appeals and Ribaya, GR No. 113549, July 5, 1996, 258 SCRA 223. 29 Secs. 2 and 3, Art. XII, Constitution. 24

6 “SEC. 9. For the purpose of their administration and disposition, the lands of the public domain alienable or open to disposition shall be classified, according to the use or purposes to which such lands are destined, as follows: (a)

Agricultural;

(b)

Residential, commercial, industrial, or for similar productive purposes;

(c)

Educational, charitable, or other similar purposes; and

(d) Reservations for town-sites and for public and quasi-public uses.” (CA No. 141 or the Public Land Act).

ILLUSTRATIVE CASE: CLASSIFICATION OF BORACAY ISLAND The case of Secretary of the Department of Environment and Natural Resources v. Yap illustrates the classification by Presidential fiat of Boracay Island in the Municipality of Malay, Aklan. On May 22, 2006, during the pendency of the case, President Arroyo issued Proclamation No. 1064 classifying Boracay Island into 400 hectares of reserved forest land (protection purposes) and 628.96 hectares of agricultural land (alienable and disposable). 30

Under PD No. 705, or Revised Forestry Code, all unclassified lands are considered public forest. PD No. 705, however, respects titles already existing prior to its effectivity. NON-REGISTRABLE PROPERTIES Property is either of public dominion or of private ownership.31  The following things are property of public dominion: (1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores, roadsteads and others of similar character; (2) Those which belong to the State, without being for public use, and are intended for some public service or for the development of the national wealth.32  The following properties are outside the commerce of men and may not be disposed of or registered: lands for public use or public service, forest lands, mineral, foreshore lands, swamplands, mangrove lands, watershed, rivers and creeks, seashore, reclaimed and public reservation. 30

Supra. Art. 419, Civil Code. 32 Art. 420, ibid. 31

7 Properties of public dominion are not only exempt from real estate tax, they are exempt from sale at public auction. But portions of the properties leased to taxable entities are not only subject to real estate tax, they can also be sold at public auction to satisfy the tax delinquency. 33 In Laurel v. Garcia,34  the executive department attempted to sell the Roppongi property in Tokyo, Japan, which was acquired by the Philippine government for use as the Chancery of the Philippine Embassy. Although the Chancery had transferred to another location thirteen years earlier, the Court ruled that, under Article 422 of the Civil Code, property of public dominion retains such character until formally declared otherwise. Foreshore lands, or that part of the land adjacent to the sea which is alternately covered and left dry by the ordinary flow of the tides, belong to the State.35 They can only be disposed of under a foreshore lease or revocable permit application filed with the Lands Management Bureau. In the case of Republic v. Court of Appeals and Republic Real Estate Corporation,36  the Court held that foreshore lands are lands of public dominion intended for public use. So too are lands reclaimed by the government by dredging, filling, or other means. In Chavez v. Public Estates Authority,37  Justice Carpio gives an enlightening historical background of foreshore and reclaimed lands and the development of the law governing such lands. In Republic v. Court of Appeals and Morato,38 the Court held that when the sea moved towards the estate and the tide invaded it, the invaded property became foreshore land and passed to the realm of the public domain. Only when actually reclaimed from the sea can submerged areas be classified as public agricultural lands, which under the Constitution are the only natural resources that the State may alienate. Once reclaimed and transformed into public agricultural lands, the government may then officially classify these lands as alienable or disposable lands open to disposition. Thereafter, the government may declare these lands no longer needed for public service. Only then can these reclaimed lands be considered alienable or disposable lands of the public domain and within the commerce of man.39 Forest and mineral lands are public lands not subject to private ownership. Subsequent release of forest lands as A and D lands does not validate the grant.40 33

City of Pasig v. Republic, GR No. 185023, Aug. 24, 2011 GR No. 92013, July 25, 1990, 17 SCRA 797. 35 Republic v. Court of Appeals, 299 SCRA 199. 36 Supra. 37 Supra. 38 GR No. 100709, Nov. 14, 1997, 281 SCRA 639. 39 Chavez v. Public Estates Authority, supra. 40 Ituralde v. Falcasantos, 301 SCRA 293; Reyes v. Court of Appeals, 295 SCRA 296. 34

8

“A forested area classified as forest land of the public domain does not lose such classification simply because loggers or settlers may have stripped it of its forest cover. Parcels of land classified as forest land may actually be covered with grass or planted to crops by kaingin cultivators or other farmers. ‘Forest lands’ do not have to be on mountains or in out of the way places. Swampy areas covered by mangrove trees, nipa palms, and other trees growing in brackish or sea water may also be classified as forest land. The classification is descriptive of its legal nature or status and does not have to be descriptive of what the land actually looks like. Unless and until the land classified as ‘forest’ is released in an official proclamation to that effect so that it may form part of the disposable agricultural lands of the public domain, the rules on confirmation of imperfect title do not apply.” 41 Minerals found in public or even private land belong to the State.42 In a resolution dated December 1, 2004, the Supreme Court in La Bugal-B’laan Association v. Ramos43  held that all mineral resources are owned by the State and their exploration, development and utilization must always be subject to the full control and supervision of the State. In Republic v. Court of Appeals and De la Rosa,44  Justice Cruz said that the Regalian doctrine reserves to the State all natural wealth that may be found in the bowels of the earth even if the land where the discovery is made be private. Thus, if a person is the owner of agricultural land in which minerals are discovered, his ownership of such land does not give him the right to extract or utilize the said minerals without the permission of the State to which such minerals belong. Land inside a military or naval reservation cannot be registered. 45 the Calumpang Point Naval Reservation, can not be subject to occupation, entry or settlement. The government, through the Bases Conversion Development Authority (BCDA), has title and ownership over Fort Bonifacio. To segregate portions of the public domain as a military reservation, all that is needed is a presidential proclamation to that effect. In Republic v. Southside Homeowners Association, Inc.,46 it was held that a military reservation, like the FBMR, or a part thereof is not open to private appropriation or disposition and, therefore, not registrable, unless it is in the meantime reclassified and declared as disposable and alienable public land. And until a given parcel of land is released from its classification as part of the military reservation zone and reclassified by law or by presidential proclamation as disposable and alienable, its status as part of a military reservation remains, even if incidentally it is devoted for a purpose other than as a military camp or for defense.

41

Amunategui v. Director of Forestry, GR No. L-27873, Nov. 29, 1983, 126 SCRA 69. Republic v. Court of Appeals and Dela Rosa, 160 SCRA 228. 43 GR No. 127882, Dec. 1, 2004, 445 SCRA 1. 44 GR No. L-43938, April 15, 1980, 160 SCRA 228. 45 Republic v. Southside Homeowners Association, Inc. GR No. 156951, Sept. 2, 2006. 46 GR No. 156951, Sept. 22, 2006. 42

9 Navigable rivers cannot be appropriated and registered,47 and so are lakes,48 watersheds49 and mangrove swamps.50 WHO MAY APPLY FOR REGISTRATION Under Section 14, PD No. 1529, the following may apply for registration: (1)

Those who by themselves or their predecessors-in-interest have been in open, continuous, exclusive and notorious possession and occupation of alienable and disposable lands of the public domain under a bona fide claim of ownership since June 12, 1945, or earlier.

(2)

Those who have acquired ownership of private lands by prescription under the provisions of existing laws.

(3)

Those who have acquired ownership of private lands or abandoned river beds by right of accession or acquired under existing laws;

(4)

Those who have acquired ownership of land in any other manner provided for by law.

Under Section 48(b) of CA No. 141 (Public Land Act), it is provided as follows: Those who by themselves or through their predecessors-in-interest have been in the open, continuous, exclusive and notorious possession and occupation of alienable and disposable land of the public domain, under a bona fide claim of acquisition of ownership, since June 12, 1945 or prior thereto may apply for the confirmation of imperfect or incomplete title.

NO SUBSTANTIAL DIFFERENCE BETWEEN SEC. 14(1), PD No. 1529 and SEC. 48(b), CA NO. 141 There is no substantial difference between Sec. 14(1) of PD No. 1529 and Sec. 48(b) of CA No. 141. In both, the applicant must show that (1) the land is alienable and disposable (A and D) public agricultural land; and (2) he has been in open, continuous exclusive and notorious possession thereof under a bona fide claim of ownership since June 12, 1945, or prior thereto.51 Both refer to original registration proceedings, are against the whole world, and the decree of registration for both is conclusive and final.

47

Republic v. Sioson, 9 SCRA 533. Pelbel Manufacturing Corporation v. Court of Appeals, GR No. 141325, July 31, 2006; Republic v. Court of Appeals and Del Rio, 131 SCRA 532. 49 Sta. Rosa Development Corporation v. Court of Appeals, 367 SCRA 175. 50 Sec. 4, RA No. 8550. 51 Republic v. San Lorenzo Development Corporation, GR No. 170724, Jan. 29, 2007; Reyes v. Republic, GR No. 141924, Jan. 23, 2007; Republic v. Manna Properties, GR No. 146527, Jan. 31, 2005, 450 SCRA 247.. 48

10 REQUIREMENTS FOR REGISTRATION UNDER SEC. 14(1), PRD IN RELATION TO SEC. 48(B), PLA. Section 14 (1) of the Property Registration Decree has three requisites for registration of title: (a) that the property in question is alienable and disposable land of the public domain; (b) that the applicants by themselves or through their predecessors-ininterest have been in open, continuous, exclusive and notorious possession and occupation; and (c) that such possession is under a bona fide claim of ownership since June 12, 1945 or earlier.52 Possession should be in the concept of an owner, public, peaceful, uninterrupted and adverse. Possession is open when it is patent, visible, apparent, notorious and not clandestine. It is continuous when uninterrupted, unbroken and not intermittent or occasional; exclusive when the adverse possessor can show exclusive dominion over the land and an appropriation of it to his own use and benefit; and notorious when it is so conspicuous that it is generally known and talked of by the public or the people in the neighborhood.53 In Malabanan v. Court of Appeals,54 the Court en banc reiterated the rule in Republic v. Court of Appeals and Naguit55 that “since Section 48(b) (in relation to Section 14[1]) merely requires possession since 12 June 1945 and does not require that the lands should have been alienable and disposable during the entire period of possession, the possessor is entitled to secure judicial confirmation of his title thereto as soon as it is declared alienable and disposable, subject to the timeframe imposed by Section 47 of the Public Land Act.”56 Originally, Section 48(b) of CA No. 141 provided for the possession and occupation of lands of the public domain since July 26, 1984. This was superseded by RA No. 1942 which provided for a simple 30-year prescriptive period of occupation by an applicant for judicial confirmation of an imperfect title. The law, however, has been amended by PD No. 1073, approved on January 25, 1977, which now requires possession since June 12, 1945 or prior thereto.57

52

Valiao v. Republic, GR No. 170757, Nov. 28, 2011; Victoria v. Republic, GR No. 179673, June 8, 2011; Republic of the Philippines v. Court of Appeals, 489 Phil. 405, 413 (2005). 53 Republic v. East Silverlane Realty Development Corporation, GR No. 186961, Feb. 20, 2012, citing. Heirs of Marcelina Arzadon-Crisologo v. Rañon, G.R. No. 171068, Sept. 5, 2007, 532 SCRA 391. 54 GR No. 179987, April 29, 2009. 55 448 SCRA 442. 56 Emphasis supplied. 57 Tan v. Republic, GR No. 177797, Dec. 4, 2008; Secretary of the Department of Environment and Natural Resources v. Yap, GR No. 173775, Oct. 8, 2008; Republic v. Sarmiento, GR No. 169397, March 13, 2007; Republic v. Herbieto, GR No. 156117, 26 May 26, 2005, 459 SCRA 183; Republic v. Doldol, 295 SCRA 359. See also RA No. 6940, dated March 28, 1990.

11 ONLY FILIPINO CITIZENS MAY ACQUIRE LANDS OF THE PUBLIC DOMAIN On the basis of their capacity “to acquire or hold lands of the public domain,” the following may acquire private lands: (1) Filipino citizens; (2) Filipino corporations and association as defined in Section 2, Article XII of the Constitution; and, by exception, (3) Aliens but only be hereditary succession; and (4) A natural-born citizen of the Philippines who has lost his citizenship can both “acquire” or “hold” lands of the public domain, the limitation being up to a maximum of 5,000 square meters if urban land, or 3 hectares if rural land.58 Private land may be transferred only to individuals or entities “qualified to acquire or hold lands of the public domain.” Only Filipino citizens or corporations at least 60% of the capital of which is owned by Filipinos are qualified to acquire or hold lands of the public domain. The fundamental law explicitly prohibits non-Filipinos from acquiring or holding title to private lands, except only by way of legal succession or if the acquisition was made by a former natural-born citizen.59 Aliens, however, may lease private lands.60 The constitutional ban against foreigners applies only to ownership of Philippine land and not to the improvements built thereon. Land cannot sold to an alien and is allowed to recover the money spent for the purchase thereof. The provision on unjust enrichment does not apply if the action is proscribed by the Constitution.61 CAPACITY TO ACQUIRE LAND IS DETERMINED AT THE TIME OF ITS ACQUISITION, NOT REGISTRATION The time to determine whether a person acquiring land is qualified is the time the right to own it is acquired. Thus, a naturalized Canadian citizen who, while still a natural-born Filipino, acquired land from a vendor who had already complied with the requirements of registration prior to the purchase, can validly register his title to the land even if at the time of the filing of his application he was already an alien. 62 He already had a vested right to the land. 58

Bernas, The 1987 Constitution, A Reviewer Primer, 2000 ed., 515; Sec. 8, Art. XII, Constitution; RA No. 7042, as amended by RA No. 8179. 59 Borromeo v. Descallar, GR No. 159310, Feb. 24, 2009. 60 Ong Ching Po v. Court of Appeals, 239 SCRA 341; Krivenko v. Register of Deeds, 79 Phil. 461; Philippine Bank of Commerce v. Lui She, 21 SCRA 52. 61

Beumer v. Amores, GR No. 195670, Dec. 3, 2012, citing cases.

62

Republic v. Court of Appeals and Lapiña, 235 SCRA 567.

12 ACQUISITION OF PRIVATE LAND BY PRESCRIPTION In Republic v. East Silverlane Realty Development Corporation,63 Section 14(2) must be considered in relation to the rule on prescription under the Civil Code as a mode of acquiring ownership of patrimonial property. Possession and occupation of an alienable and disposable public land for the periods provided under the Civil Code do not automatically convert said property into private property or release it from the public domain. There must be an express declaration that the property is no longer intended for public service or development of national wealth. Without such express declaration, the property, even if classified as alienable or disposable, remains property of the State, and thus, may not be acquired by prescription. And only when the property has become patrimonial can the prescriptive period for the acquisition of property of the public dominion begin to run.64 Such declaration shall be in the form of a law duly enacted by Congress or a Presidential Proclamation in cases where the President is duly authorized by law.65 The period of possession preceding the classification of the property as patrimonial cannot be considered in determining the completion of the prescriptive period.66 Under ordinary acquisitive prescription, a person acquires ownership of a patrimonial property through possession for at least ten (10) years, in good faith and with just title. Under extraordinary acquisitive prescription, a person’s uninterrupted adverse possession of patrimonial property for at least thirty (30) years, regardless of good faith or just title, ripens into ownership.67 Open, continuous and exclusive possession of land classified as A and D land for at least thirty years segregates the land from the public domain and ipso jure converts the same to private property. 68 The conversion works to summon in operation Sec. 14(2) of the Property Registration Decree which authorizes the acquisition of private lands through ordinary prescription of ten years or extraordinary prescription of thirty years. 69 (Note: In the case of Heirs of Marcelina Azardon-Crisologo v. Rañon, 70 the Court ruled that a mere Notice of Adverse Claim did not constitute an effective interruption of possession. In the case of Heirs of Bienvenido and Araceli Tanyag v. Gabriel, 71 which also cited the Rañon Case, the Court stated that the acts of declaring again the property for tax purposes and obtaining a Torrens certificate of title in one's 63 64 65 66 67

GR No. 186961, Feb. 20, 2012. Malabanan v. Court of Appeals, GR No. 179987, April 29, 2009.

Republic v. Espinosa, GR No. 171514, July 18, 2012 Republic v. East Silverlane Realty Development Corporation, supra.

Id. Buenaventura v. Republic, GR No. 166865, March 2, 2007; Republic v. Court of Appeals, 235 SCRA 56; See Arts. 1127 and 1134, Civil Code. 69 Lincoma Multi-Purpose Cooperative v. Republic, GR No. 167652, July 10, 2007. 70 G.R. No. 171068, September 5, 2007, 532 SCRA 391. 71 Heirs of Bienvenido and Araceli Tanyag v. Gabriel, G.R. No. 175763, April 11, 2012. citing Heirs of Marcelina Azardon-Crisologo v. Rañon, G.R. No. 171068, September 5, 2007, 532 SCRA 391, 406-407. 68

13 name cannot defeat another's right of ownership acquired through acquisitive prescription. In the same vein, a protest filed before an administrative agency and even the decision resulting from it cannot effectively toll the running of the period of acquisitive prescription. Only in cases filed before the courts may judicial summons be issued and, thus, interrupt possession.72) ACQUISITION OF PRIVATE LAND BY RIGHT OF ACCESSION OR ACCRETION Under Article 420, paragraph 173 and Article 502, paragraph 174 of the Civil Code, rivers and their natural beds are property of public dominion. River beds which are abandoned through the natural change in the course of the waters ipso facto belong to the owners whose lands are occupied by the new course in proportion to the area lost.75 However, the owners of the lands adjoining the old bed shall have the right to acquire the same by paying the value thereof, which value shall not exceed the value of the area occupied by the new bed. By law, accretion — the gradual and imperceptible deposit made through the effects of the current of the water — belongs to the owner of the land adjacent to the banks of rivers where it forms.76 The drying up of the river is not accretion. Hence, the dried-up river bed belongs to the State as property of public dominion, not to the riparian owner, unless a law vests the ownership in some other person.77 In Celestial v. Cachopero,78 it was held that a dried-up creek bed is property of public dominion.79 Article 457 of the Civil Code requires that the deposit be gradual and imperceptible; that it be made through the effects of the current of the water; and that the land where accretion takes place is adjacent to the banks of rivers.80 However, the accretion does not automatically become registered land just because the lot which receives such accretion is covered by a Torrens title. There must be a separate action for the registration thereof.81

72

Virtucio v. Alegarbes, GR No. 187451, Aug. 29, 2012.

73

Art. 420. The following things are property of public dominion: 1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores, roadsteads, and others of similar character; . . . . 74 Art. 502. The following are of public dominion: 1) Rivers and their natural beds; . . . . 75 Art. 461, Civil Code. 76 Art. 457, id. 77 78

Republic v. Santos, GR No. 160453, Nov. 12, 2012.

459 Phil. 903 (2003). See also Fernando v. Acuna, GR No. 161030, Sept. 14, 2011. 80 Fernando v. Acuna, GR No. 161030, Sept. 14, 2011. 81 Grande v. Court of Appeals, 5 SCRA 524. 79

14 Alluvial formation along the seashore is part of the public domain and is not open to acquisition by adverse possession, unless subsequently declared as no longer needed for coast guard service, for public use or for special industries.82 PRIVATE CORPORATIONS DISQUALIFIED FROM ACQUIRING PUBLIC LANDS A private corporation may not hold alienable lands of the public domain except by lease not to exceed 1,000 hectares.83 The rule does not apply where at the time the corporation acquired the land, the same was already private land as when it was possessed by its predecessor in the manner and for such length of time as to entitle the latter to registration.84 If the predecessors-in-interest of the corporation have been in possession of the land in question since June 12, 1945, or earlier, then it may rightfully apply for confirmation of title to the land.85 In Director of Lands v. Intermediate Appellate Court and Acme,86  it was held that a private corporation may apply for judicial confirmation of the land without need of a separate confirmation proceeding for its predecessors-ininterest first.87 PUBLICATION, MAILING AND POSTING Within five days from the filing of the application for registration, the court shall issue an order setting the date and hour of initial hearing which shall not be earlier than 45 days nor later than 90 days from date of the order.88 The public is given notice of the initial hearing by (a) publication once in the Official Gazette and once in a newspaper of general circulation; (b) mailing of the notice to persons named in the application for registration and also to relevant government officials, and (c) posting of the notice on a conspicuous place on the land itself and on the bulletin board of the city or municipality where the land is situated.89 Publication in the OG shall be sufficient to confer jurisdiction.90 However, publication of the notice in a newspaper of general circulation remains an indispensable requirement consistent with procedural due process. 91

82

Ignacio v. Director of Lands, 108 Phil. 335. Sec. 3, Art. XII, Constitution. 84 Republic v. Intermediate Appellate Court and ACME, 146 SCRA 509. 85 Republic v. Iglesia ni Cristo, GR No. 180067, June 30, 2009, 591 SCRA 438. 86 GR No. 73002, Dec. 29, 1986, 230 Phil. 590. 87 Republic v. Manna Properties, Inc., supra. 88 Sec. 23, PD No. 1529. 89 Id. 90 Sec. 24, PD No. 1529. 91 Roxas v. Court of Appeals, 63 SCRA 302; Director of Lands v. Court of Appeals and Abistado, 27 SCRA 276. 83

15 If amendment of the application is made to include additional area, a new publication of the amended application must be made, but not when the amendment consists in the exclusion of a portion form the area originally applied for. 92 OPPOSITION Any person, whether named in the notice or not, may appear and file and opposition, based on right of dominion or some other real right, to the application for registration.93 The absence of opposition does not justify outright registration. Since the presumption is that all lands belong to the State, the applicant has the burden of proving his imperfect right or fee simple title to the land applied for. 94 The failure of the government to file an opposition, despite receipt of notice, does not deprive it of its right to appeal a decision adjudicating the land as private property. 95 PROOF AS TO THE IDENTITY OF THE LAND As required by Section 17 of PD No. 1529, the application for registration must be accompanied by a survey plan of the land duly approved by the Director of Lands (now Regional Technical Director, Lands Management Bureau), together with the applicant’s muniments of title. No plan or survey may be admitted in land registration proceedings until approved by the Director of Lands. In Director of Lands v. Reyes,96  the Supreme Court declared that the submission of the tracing cloth plan is a statutory requirement of mandatory character. But in Director of Lands v. Court of Appeals and Iglesia ni Cristo,97  the Court considered the submission of a white print copy of the plan as sufficient to identify the land. The Court was more categorical in Director of Lands v. Intermediate Appellate Court and Espartinez98  when it stated that “the presentation of the tracing cloth plan required x x x may now be dispensed with where there is a survey plan the correctness of which had not been overcome by clear, strong and convincing evidence.” PROOF OF CLASSIFICATION OF LAND AS “A AND D” The following may be considered sufficient to establish the classification of land as alienable and disposable land for purposes of original registration: 1. 92

Certification of the Bureau of Forest Development that the land has been

Benin v. Tuason, 57 SCRA 531. Sec. 27 PD No. 1529. 94 Director of Lands v. Agustin, 42 Phil. 227. 95 Regalado v. Republic, GR No. 168155, Feb. 15, 2007. 96 GR No.L-27594, Nov. 28, 1975, 68 SCRA 177. 97 GR No. L-56613, March 14, 1988, 158 SCRA 586. 98 GR No. 70825, March 11, 1991, 195 SCRA 98. 93

16 released as alienable and disposable land. 2. Land Classification Map showing that the land lies within the alienable and disposable portion of the public domain. 3. Executive proclamation withdrawing from a reservation a specific area and declaring the same open for entry, sale or other mode of disposition. 4. Legislative act or executive proclamation reserving a portion of the public domain for public or quasi-public use, which amounts to a transfer of ownership to the grantee. 5. The report of a land inspector of the Bureau of Lands that the subject land was found inside an “agricultural zone” and is suitable for rice cultivation “is binding on the courts inasmuch as it is the exclusive prerogative of the Executive Department of the Government to classify public lands. The classification is descriptive of its legal nature or status and does not have to be descriptive of what the land actually looks like.” 99 6. A certification by the CENRO of the DENR stating that the land subject of an application is found to be within the alienable and disposable site per a land classification project map is sufficient evidence to show the real character of the land subject of the application.100 7. The Certification by DENR Regional Technical Director that “Lot 249 had been verified as belonging to the alienable and disposable area as early as July 18, 1925,” as annotated on the subdivision plan, constitutes substantial compliance with the legal requirement.101 In Republic v. T.A.N. Properties, Inc.,102 the Court held that the applicant shall submit a (a) CENRO or PENRO certification that the land is A and D, and (b) copy of the original classification approved by the DENR Secretary and certified as true by the legal custodian thereof. But in DENR Memorandum No. 564, dated Nov. 15, 2012, it was clarified that the issuance of the certification and the certified copy of the approved LC Map to prove that the area applied for is indeed classified as A and D is “within the competence and jurisdiction” of the CENRO where the area is below 0.50 has., or the PENRO where it is 99

Republic v. De Porkan, GR No. L-66866, June 18, 1987, it is not enough for the Provincial Environment and Natural Resources Officer (PENRO) or Community Environment and Natural Resources Officer (CENRO) to certify that a land is alienable and disposable. The applicant for land registration must prove th 151 SCRA 88. 100 Llanes v. Republic, GR No. 177947, Nov. 27, 2008, 572 SCRA 258, citing Republic v. Candy Maker, Inc., GR No. 163766, June 22, 2006, 492 SCRA 272. 101 Republic v. Serrano, GR No. 183063, Feb. 24, 2010. 102 GR No. 154953, June 26, 2008, 613 SCRA 537. See also Republic v. Bantigue, GR No. 162322, March 14, 2012; Republic v. Dela Paz, GR No. 171631, Nov. 5, 2010; Mercado v. Valley Mountain Mines Exploration, Inc., GR No. 141019, Nov. 23, 2011; Victoria v. Republic, GR No. 179673, June 8, 2011.

17 more than 0.50 has. In Llanes v. Republic,103 the Court allowed consideration of a CENRO Certification though it was only presented during appeal to the CA to avoid a patent unfairness. In Victoria v. Republic,104 the subject property was covered by a cadastral survey of Taguig conducted by the government. The Court held: “Such surveys are carried out precisely to encourage landowners and help them get titles to the lands covered by such survey. It does not make sense to raise an objection after such a survey that the lands covered by it are inalienable land of the public domain, like a public forest. This is the City of Taguig in the middle of the metropolis.” That there are building structures, residential houses and even government buildings existing and standing on the area does not prove that the land is no longer considered and classified as forest land.105 EVIDENCE OF POSSESSION Under Section 48(b) of CA No. 141 and Section 14(1) of PD No. 1529, the reckoning point of possession is June 12, 1945.106 It is only necessary that the land is already classified as A and D land at the time of the filing of the application for registration.107 Possession must be open, continuous, exclusive and notorious under a bona fide claim of ownership since June 12, 1945 or earlier.108 Acts of a possessory character by virtue of a license or mere tolerance on the part of the real owner are not sufficient.109 Mere casual cultivation of land, the raising of cattle or grazing of livestock without substantial enclosures or other permanent improvements do not constitute exclusive and notorious possession under claim of ownership110 TAX DECLARATIONS AND TAX RECEIPTS Tax declarations and payment of taxes are not conclusive proof of ownership but have strong probative value when accompanied by proof of actual possession or supported by other effective proof.111 Declaring land for taxation purposes and visiting it every once in a while do not constitutes acts of possession. 112 Tax declarations are not 103

G.R. No. 177947, November 27, 2008, 572 SCRA 258, 268-269. GR No. 179673, June 8, 2011. 105 Chang v. Republic, GR No. 171726, Feb. 23, 2011. 106 Del Rosario-Igtiben v. Republic, GR No. 158449, Oct. 22, 2004, 441 SCRA 188.. 107 Malabanan v. Republic, GR No. 179987, April 29, 2009, 587 SCRA 172. 108 Sec. 14(1), PD No. 1529; Sec. 48(b), CA No. 141, as amended; Tan v. Republic, GR No. 177797, Dec. 4, 2008; Republic v. Herbieto, GR No. 156117, 26 May 2005, 459 SCRA 183 109 Seminary of San Carlos v. Municipality of Cebu, GR No. L-4641, March 13, 1911, 19 Phil.32. 110 Municipality of Santiago v. Court of Appeals, 120 SCRA 734; Director of lands v. Reyes, 68 SCRA 177. 111 Tan v. Republic, GR No. 177797, Dec. 4, 2008; Municipality of Santiago v. Court of Appeals, id. 112 Director of Lands v. Intermediate Appellate Court, 209 SCRA 214. 104

18 evidence of the right of possession unless supported by the other effective proof. But they constitute proof that the holder has claim of the title over the property. 113 Payment of taxes is on an annual basis. Delayed declaration of property for tax purposes negates a claim of continuous, exclusive, and uninterrupted possession in the concept of owner.114 Hence, payment in one a lump sum to cover all past taxes is “irregular” and affects the validity of the applicant’s claim of ownership. 115 But mere failure of the owner to pay taxes does not warrant a conclusion that there was abandonment of the property.116 SPANISH TITLES NO LONGER VALID PROOF OF OWNERSHIP Spanish titles are no longer admissible as proof of ownership. The so-called Titulo de Propriedad No. 4136 is inexistent.117 In a case, TCT No. 451423-A was traced back to Titulo de Propriedad No. 4136, which, in the Intestate Estate of the late Don Mariano San Pedro y Esteban v. Court of Appeals, was already declared null and void, and from which no rights could therefore be derived.118 JUDGMENT; DECREE OF REGISTRATION Within 15 days from entry of judgment, the court shall issue an order directing the Land Registration Authority (LRA) to issue a decree of registration and certificate of title.119 There is no period within which to issue the decree.120 While the judgment becomes final 15 days from receipt of notice of the judgment (as to the government, period of appeal shall be reckoned from receipt of the decision by the Solicitor General who represents the government in all registration proceedings), 121 the court nevertheless retains jurisdiction over the case until after the expiration of one year from the issuance of the decree of registration;122 hence, the case may still be reopened and the decision set aside when granted.123 Execution pending appeal is not applicable in a land registration proceeding and the certificate of title thereby issued is null and void. A Torrens title issued on the basis of 113

Municipality of Antipolo v. Zapanta, 133 SCRA 820; Masagana v. Argamora, 109 SCRA 53; Director of lands v. Reyes, 68 SCRA 177. 114 Regalado v. Republic, GR No. 168155, Feb. 15, 2007. 115 Republic v. Tayag, 131 SCRA 140. 116 Reyes v. Sierra, 93 SCRA 472. 117 PD No. 892, dated Aug. 16, 1976; Santiago v. SBMA, GR No. 156888, Nov. 20, 2006; Quezon Province v. Marte, GR No. 139274, Oct. 23, 2001; Intestate Estate of Don Mariano San Pedro v. Court of Appeals, 265 SCRA 733; Director of Land v. Rivas, 141 SCRA 329. 118 De la Rosa v. Valdez, GR No. 159101, July 27, 2011. 119 Sec. 30, PD No. 1529) 120 121

Del Rosario v. Limcaoco, GR No. 177392, Nov. 26, 2012.

Sec. 1 (e), PD No. 478; Republic v. Sayo, 191 SCRA 71. Gomez v. Court of Appeals, 168 SCRA 503. 123 Cayanan v. De los Santos, 21CRA 1348. 122

19 a judgment that is not final is a nullity, as it is violative of the explicit provisions of the Property Registration Decree which requires that a decree shall be issued only after the decision adjudicating the title becomes final and executory, and it is on the basis of said decree that the Register of Deeds concerned issues the corresponding certificate of title.124 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. 125 In Director of Lands v. Court of Appeals,126 the Court held that a judicial declaration that a parcel of land is public, does not preclude even the same applicant from subsequently seeking a judicial confirmation of his title to the same land, provided he thereafter complies with the provisions of Section 48 127 of Commonwealth Act No. 141, as amended, and as long as said public lands remain alienable and disposable.128 WRIT OF POSSESSION The writ may be issued not only against the person defeated in the registration case but also against any one adversely occupying the land during the proceedings up to the issuance of the decree.129 The writ does not lie against a person who entered the land after the issuance of the decree and who was not a party in the case. He can only be proceeded against in a separate action for ejectment or reivindicatory action.130 The writ is imprescriptible. A writ of demolition is but a compliment of the writ of possession 131 and may be issued by a special order of the court. Mandamus is a proper remedy to compel the issuance of a writ of possession.132 124

Top Management Programs Corp. v. Fajardo, GR No.150462, June 15, 2011, citing cases. Mercado v. Valley Mountain Mines Exploration, Inc., GR No. 141019, Nov. 23, 2011, citing Laburada v. Land Registration Authority, G.R. No. 101387, March 11, 1998, 287 SCRA 333, 343-344, citing Metropolitan Waterworks and Sewerage Systems v. Court of Appeals, G.R. No. 103558, November 17, 1992, 215 SCRA 783, 788. 126 G.R. No. 45828, June 1, 1992, 209 SCRA 457, 463, citing Director of Lands v. Court of Appeals, No. L-47847, July 31, 1981, 106 SCRA 426, 433. 127 Sec. 48. The following described citizens of the Philippines, occupying lands of the public domain or claiming to own any such land or an interest therein, but whose titles have not been perfected or completed, may apply to the Court of First Instance of the province where the land is located for confirmation of their claims and the issuance of a certificate of title therefor, under the Land Registration Act, to wit: xxx xxx xxx (b) Those who by themselves or through their predecessors-in-interest have been in open, continuous, exclusive, and notorious possession and occupation of agricultural lands of the public domain, under a bona fide claim of acquisition of ownership, since June 12, 1945, or earlier, immediately preceding the filing of the application for confirmation of title, except when prevented by war or force majeure. These shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to a certificate of title under the provisions of this chapter. (Emphasis supplied). 128 Valiao v. Republic, GR No. 170757, Nov. 28, 2011 129 Vencilao v. Vano, 182 SCRA 491. 130 Bernas v. Nuevo, 127 SCRA 399. 131 Gawaran v. Intermediate Appellate Court, 162 SCRA 154; Lucero v. Leot, 25 SCRA 687. 132 Edralin v. Philippine Veterans Bank, GR No. 168523, March 9, 2011. 125

20 JURISDICTION: REAL ACTIONS Section 1, 14 Rule 14 of the 1997 Rules of Civil Procedure provides that actions affecting title to or possession of real property or an interest therein (real actions) shall be commenced and tried in the proper court that has territorial jurisdiction over the area where the real property or any part thereof is situated. An action for reconveyance or to remove a cloud on one's title involves the title to, or possession of, real property, or any interest therein, hence, exclusive original jurisdiction over such action pertains to the RTC, unless the assessed value of the property does not exceed P20,000.00 (or P50,000.00 in Metro Manila), in which instance the MTC having territorial jurisdiction would have exclusive original jurisdiction. Determinative of which regular court had jurisdiction would be the allegations of the complaint (on the assessed value of the property) and the principal relief thereby sought.133 Actions for cancellation of title and reversion belong to the class of cases that "involve the title to, or possession of, real property, or any interest therein" and where the assessed value of the property exceeds P20,000.00, fall under the jurisdiction of the RTC.134 When the dispossession or unlawful deprivation has lasted more than one year, one may avail himself of accion publiciana to determine the better right of possession, or possession de jure, of realty independently of title. On the other hand, accion reivindicatoria is an action to recover ownership which necessarily includes recovery of possession. While an accion reivindicatoria is not barred by a judgment in an ejectment case, such judgment constitutes a bar to the institution of the accion publiciana. 135 REMEDIES CONSEQUENT TO FRAUDULENT OR IRREGULAR REGISTRATION The aggrieved party has a number of remedies to question the validity of the decision. These include the remedies of new trial or reconsideration under Rule 37 of the Rules of Court, relief from judgment under Rule 38, or appeal to the Court of Appeals or Supreme Court pursuant to Section 33, PD No. 1529. Under the property Registration Decree, the remedies consequent to fraudulent or irregular registration are: review of decree under Section 32; reconveyance under Secs. 53 and 96; damages under Sec. 32; claim against the Assurance Fund under Sec. 95; reversion under Sec. 101, CA No. 141; cancellation of title; quieting of title; annulment 133

Reterta v. Mores, GR No. 159941, Aug. 17, 2011, citing Heirs of Generoso Sebe v. Heirs of Veronico Sevilla, G.R. No. 174497, October 12, 2009, 603 SCRA 395, 400. 134 Republic v. Roman Catholic Archbishop, GR No. 192975, Nov. 12, 2012; Santos v. CA, 214 SCRA 162. 135 Viray v. Usi, GR No. 192486, Nov. 21, 2012 , citing cases.

21 of judgment under Rule 47; and criminal prosecution under the Revised Penal Code and other special laws.

 Petition for review of decree. (Sec. 32, PD No. 1529) In Eland Philippines, Inc. v. Garcia,136 the Supreme Court, citing Agcaoili, “Property Registration Decree and Related Laws (Land Titles and Deeds)”, stressed that courts may reopen proceedings already closed by final decision or decree when an application for review is filed by the party aggrieved within one year from the issuance of the decree of registration. However, the basis of the aggrieved party must be anchored solely on actual fraud. It has been ruled that the petition may be filed at any time after the rendition of the court’s decision and before the expiration of one year from the entry of the final decree of registration for, as noted in Rivera v. Moran,137  there can be no possible reason for requiring the complaining party to wait until the final decree is entered before urging his claim of fraud. The rule on the incontrovertibility and indefeasibility of a Torrens title after one year from entry of the decree of registration is equally applicable to titles acquired through homestead or free patents.138 It has been held that the date of issuance of the patent corresponds to the date of the issuance of the decree in ordinary registration cases. Under the Torrens system of registration, the Torrens becomes indefeasible and incontrovertible one year from the issuance of the final decree and is generally conclusive evidence of the ownership.139 The rule on the inconvertibility and indefeasibility of a Torrens title after one year from entry of the decree of registration is equally applicable to title acquired through homestead or free patents.140 Only extrinsic or collateral, as distinguished form intrinsic, fraud is a ground for annulling a judgment. To avail of a petition for review, the following requisites must be satisfied: (a) the petitioner must have an estate or interest in the land; (b) he must show actual fraud in the procurement of the decree of registration; (c) the petition must be filed within one (1) year from the issuance of the decree by the Land Registration Authority; and (d) the property has not yet passed to an innocent purchaser for value.141 Extrinsic fraud refers to any fraudulent act of the successful party in a litigation which is committed outside the trial of a case against the defeated party, or his agents, attorneys or witnesses, whereby said defeated party is prevented from presenting fully and fairly his side of the case. On the other hand, intrinsic fraud refers to acts of a party 136

GR No. 173289, Feb. 17, 2010, per Justice Peralta. GR No. 24568, March 2, 1926, 48 Phil. 836. 138 Iglesia ni Cristo v. CFI of Nueva Ecija, GR No. L-35273, July 25, 1983, 208 Phil. 441. 139 Calalang v. Register of Deeds, 231 SCRA 88 (1992) 140 Iglesia ni Cristo v. CFI of Nueva Ecija, GR No. L-35273, July 25, 1983, 208 Phil. 441. 141 Walstrom v. Mapa, GR No. 38387, Jan. 29, 1990, 181 SCRA 431. 137

22 in a litigation during the trial, such as the use of forged instruments or perjured testimony, which did not affect the presentation of the case, but did prevent a fair and just determination of the case. Relief is granted to a party deprived of his interest in land where the fraud consists in the following acts: (a) Deliberate misrepresentation that the lots are not contested when in fact they are; (b) Applying for and obtaining adjudication and registration in the name of a coowner of land which he knows had not been alloted to him in the partition; (c) Intentionally concealing facts, and conniving with the land inspector to include in the survey plan the bed of a navigable stream; (d) Willfully misrepresenting that there are no other claims; (e) Deliberately failing to notify the party entitled to notice; (f) Inducing a claimant not to oppose the application for registration; (g) Misrepresentation by the applicant about the identity of the lot to the true owner causing the latter to withdraw his opposition.142  (h) Failure of the applicant to disclose in her application for registration the vital facts that her husband’s previous application for a revocable permit and to purchase the lands in question from the Bureau of Lands had been rejected, because the lands were already reserved as a site for school purposes; (i) Deliberate falsehood that the lands were allegedly inherited by the applicant from her parents, which misled the Bureau of Lands into not filling the opposition and thus effectively depriving the Republic of its day in court.143 In all these examples, the overriding consideration is that the fraudulent scheme of the prevailing litigant prevented a party from having his day in court or from presenting his case. The fraud, therefore, is one that affects and goes into the jurisdiction of the court. In Cruz v. Navarro,144  it was held that the intentional omission by the respondent to properly inform the court a quo that there were persons (the petitioners) in actual possession and cultivation of the parcels in question, with the result that the court as well as the Land Registration Authority were denied of their authority to require the sending 142

Libudan v. Palma Gil, GR No. L-21164, May 17, 1972, 45 SCRA 17. Republic v. Lozada, GR No. L-43852, May 31, 1979, 90 SCRA 502. 144 GR No. L-27644, Nov. 29, 1973, 54 SCRA 109. 143

23 of specific individual notices of the pendency of the application in accordance with Sections 23 and 24 of the Property Registration Decree, constitutes actual fraud.

 Reconveyance. (Sec. 96 PD No. 1529) An action for reconveyance is a legal and equitable remedy granted to the rightful landowner, whose land was wrongfully or erroneously registered in the name of another, to compel the registered owner to transfer or reconvey the land to him.145 An action for reconveyance is an action in personam available to a person whose property has been wrongfully registered under the Torrens system in another's name. It is filed as an ordinary action in the ordinary courts of justice and not with the land registration court. A notice of lis pendens may be annotated on the certificate of title immediately upon the institution of the action in court.146 As held in Medizabel v. Apao,147 the essence of an action for reconveyance is that the certificate of title is respected as incontrovertible. What is sought is the transfer of the property, in this case its title, which has been wrongfully or erroneously registered in another person's name, to its rightful owner or to one with a better right. The mere issuance of the certificate of title in the name of any person does not foreclose the possibility that the real property may be under co-ownership with persons not named in the certificate or that the registrant may only be a trustee or that other parties may have acquired interest subsequent to the issuance of the certificate of title.148 Reconveyance does not aim to reopen proceedings but only to transfer or reconvey the land from registered owner to the rightful owner.149 Reconveyance is available in case of registration of property procured by fraud thereby creating a constructive trust between the parties.150 To warrant a reconveyance of the land, the following requisites must concur: (a) the action must be brought in the name of a person claiming ownership or dominical right over the land registered in the name of the defendant; (b) the registration of the land in the name of the defendant was procured through fraud or other illegal means; (c) the property has not yet passed to an innocent purchaser for value; and 145 146

Leoveras v. Valdez, GR No. 169985, June 15, 2011.

Muñoz v. Yabut, GR No. 142676, June 6, 2011, citing cases. 147 G.R. No. 143185, February 20, 2006, 482 SCRA 587, 608. See also Fernando v. Acuna, GR No. 161030, Sept. 14, 2011 148 Pineda v. Court of Appeals. 456 Phil. 732, 748 (2003), citing Lee Tek Sheng v. Court of Appeals, 354 Phil. 556, 561-562 (1998). 149 Bautista-Borja v. Bautista, GR No. 136197, Dec. 10, 2008; Daclag v. Macahilig, GR No. 159578, July 28, 2008; Esconde v. Barlongay, 152 SCRA 603; Rodriguez v. Toreno, 79 SCRA 356. 150 Huang v. Court of Appeals, GR No. 198525, September 13, 1994.

24

(d) the action is filed after the certificate of title had already become final and incontrovertible but within four years from the discovery of the fraud, 151 or not later than 10 years in the case of an implied trust.152 A petition for review and action for reconveyance are no longer available if the property has already been transferred to an innocent purchaser for value. Article 434 of the Civil Code provides that to successfully maintain an action to recover the ownership of a real property, the person who claims a better right to it must prove two (2) things: first, the identity of the land claimed; and second, his title thereto. 153 There is no special ground for an action for reconveyance, for it is enough that the aggrieved party asserts a legal claim in the property superior to the claim of the registered owner, and that the property has not yet passed to the hands of an innocent purchaser for value.154 ACTION FOR RECONVEYANCE MAY BE BARRED BY PRESCRIPTION (1) (2) (3) (4)

Action based on fraud - four years Action based on implied trust - ten years Action based on a void contract – imprescriptible Action to quiet title where plaintiff is in possession – imprescriptible

An action for reconveyance based on implied or constructive trust prescribes in ten (10) years from the issuance of the Torrens title over the property, or the instrument affecting the same is inscribed in accordance with law, inasmuch as it is what binds the land and operates constructive notice to the world. Repudiation of said trust is not a condition precedent to the running of the prescriptive period. 155 The 10-year prescriptive period applies only when the reconveyance is based on fraud which makes a contract voidable (and that the aggrieved party is not in possession of the land whose title is to be actually reconveyed). It does not apply to an action to nullify a contract which is void ab initio. Article 1410 of the Civil Code categorically 151

Balbin v. Medalla, GR No. L-46410, Oct. 30, 1981, 108 SCRA 666, which held that: “An action for reconveyance of real property resulting from fraud may be barred by the statute of limitations, which requires that the action shall be filed within four (4) years from the discovery of the fraud.” 152 New Regent Sources, Inc. v. Tanjuatco, GR No. 168800, April 16, 2009, 585 SCRA 329, citing Walstrom v. Mapa, GR No. 38387, Jan. 29, 1990, 181 SCRA 431; Kionisala v. Dacut, GR No. 147379, Feb. 27, 2002, 378 SCRA 206. 153 Fierro v. Seguiran, GR No. 152141, Aug. 8, 2011, citing Hutchinson v. Buscas, 498 Phil. 257, 262 (2005). 154 Reterta v. Mores, GR No. 159941, Aug. 17, 2011; Heirs of Valeriano S. Concha, Sr. v. Lumocso, G.R. No. 158121, December 12, 2007, 540 SCRA 1, 13-14. 155 Cabacungan v. Laigo, GR No. 175073, Aug. 15, 2011Spouses Abrigo v. De Vera, 476 Phil. 641, 653 (2004).

25 states that an action for the declaration of the inexistence of a contract does not prescribe.156 But prescription does not run against the plaintiff in actual possession of the disputed land because such plaintiff has a right to wait until his possession is disturbed or his title is questioned before initiating an action to vindicate his right. 157 LACHES MAY BAR RECOVERY Where a court of equity finds that the position of the parties has to change that equitable relief cannot be afforded without doing injustice, or that the intervening rights of third persons may be destroyed or seriously impaired, it will not exert its equitable powers in order to save one from the consequences of his own neglect. 158  This is the basic principle of laches which may bar recovery for one’s neglect or inaction.  Cancellation of title Fraud and misrepresentation, as grounds for cancellation of patent and annulment of title, should never be presumed, but must be proved by clear and convincing evidence, mere preponderance of evidence not being adequate. Fraud is a question of fact which must be proved.159

 Action for damages. (Sec. 32, PD No. 1529) This action may be filed against applicant or person responsible for the fraud where reconveyance is no longer possible as when the land has been transferred to an innocent purchaser for value.160

 Action for compensation from the Assurance Fund. (Sec. 95, PD No. 1529) The requisites for recovery are: (a) a person sustains loss or damage, or is deprived by any estate or interest in land; (b) on account of the bringing of land under the Torrens system; (c) through fraud, error, omission, mistake or misdescription in the certificate of entry in the registration book; (d) without negligence on his part, and (e) is barred from bringing an action for recovery of the land.161

 Reversion. (Sec. 101, CA No. 141)

156

Abalols v.Dimakuta, GR No. 164693, March 23, 2011. Yared v. Tiongco, GR No. 161360, Oct. 19, 2011. 158 Lucas v. Gamponia, GR No. L-9335, Oct. 31, 1956, 100 Phil. 277. 159 Sampaco v. Lantud, GR No. 163551, July 18, 2011 160 Ching v. Court of Appeals, 181 SCRA 9) 161 Sec. 95, PD No. 1529. 157

26 The action is instituted by the government, through the Solicitor General, in all cases where lands of public domain are held in violation of the Constitution162 or were fraudulently obtained.163

 Annulment of Judgment. (Rule 47, Rules of Court) A petition for annulment by the Court of Appeals of judgments or final orders of Regional Trial Court for which the ordinary remedies of new trial, appeal, etc. are no longer available must be based on (a) extrinsic fraud, (b) lack of jurisdiction 164 and (c) lack of due process.165 A petition for annulment of judgment based on extrinsic fraud must be filed within four (4) years from its discovery; and if based on lack of jurisdiction, before it is barred by laches or estoppel.166 Lack of jurisdiction as a ground for annulment of judgment refers to either lack of jurisdiction over the person of the defending party or over the subject matter of the claim.167 Where the questioned judgment is annulled, either on the ground of extrinsic fraud or lack of jurisdiction, the same shall be set aside and considered void. 168 Annulment of judgment is a remedy in law independent of the case where the judgment sought to be annulled was rendered. Consequently, an action for annulment of judgment may be availed of even if the judgment to be annulled had already been fully executed or implemented.169 In Yujuico v. Republic,170 the Court ruled that the action of the government for reversion on the ground that the land was part of the Manila Bay was improperly filed with the RTC as the action should have been filed with the Court of Appeals pursuant to Rule 47 of the Rules of Court governing annulment of judgments of RTCs. Final judgments of quasi-judicial tribunals or administrative bodies are not susceptible to petitions for annulment under Rule 47.171 PURCHASER IN GOOD FAITH Section 32 of PD No. 1529 provides that “in no case shall such (petition for review) be entertained by the court where an innocent purchaser for value has acquired the land or an interest therein, whose rights may be prejudiced.” 162

Sec. 35, Chapter XII, Title III, EO No. 292. Hermosilla v. Remoquillo, GR No. 167320, Jan. 30, 2007. 164 Rule 47. Rules of Court. 165 Diona v. Balangue, GR No. 173559, Jan. 7, 2013. 166 Section 3, id.; Galicia v. Manliquez, GR No. 155785, April 13, 2007. 163

167 168

Alcazar v. Arante, GR No. 177042, Dec. 10, 2012.

RULES OF COURT, Rule 47, Sec. 7; Bulawan v. Aquende, GR No. 182819, June 22, 2011. Bulawan v. Aquende, supra. 170 GR No. 168861, Oct. 26, 2007, citing Agcaoili, “Property Registration Decree and Related Laws.” 171 Fraginal v. Parañal, GR No. 150207, Feb. 23, 2007, 516 SCVRA 530. 169

27 An innocent purchaser for value is one who buys the property of another without notice that some other person has a right to or interest in it, and who pays a full and fair price at the time of the purchase or before receiving any notice of another person’s claim.172 A person dealing with registered property need not go beyond, but only has to rely on, the title. He is charged with notice only of such burdens and claims which are annotated on the title, for registration is the operative act that binds the property. 173  But a purchaser can not close his eyes to facts which should put a reasonable man on his guard and still claim that he acted in good faith.174 The rule of caveat emptor requires the purchaser to be aware of the supposed title of the vendor and one who buys without checking the vendor’s title takes all the risks and losses consequent to such failure. Article 1544 of the Civil Code provides that, as regards immovable property, ownership shall belong to the person acquiring it who in good faith first recorded the sale in the Registry of Property. In Cruz v. Bancom Finance Corporation, the adverse claim and the notice of lis pendens were annotated on the title on October 30, 1979 and December 10, 1979, respectively; the real estate mortgage over the subject property was registered by respondent only on March 14, 1980. The Court stated that the prior registration of a lien created a preference. Even a subsequent registration of the prior mortgage will not diminish this preference, which retroacts to the date of the annotation of the notice of lis pendens and the adverse claim. The maxim prior est in tempore, potior est in jure (he who is first in time is preferred in right) is followed in land registration.175 Thus, it has been held in a case that Mahinay’s notice of lis pendens having been registered ahead of Sorensen's real estate mortgage, the notice of lis pendens takes precedence over the real estate mortgage. The claim of Sorensen that the owner's copy of TCT No. 117531 does not contain any adverse annotation at the time the owners transacted with her is of no moment. Being in the nature of involuntary registration, the annotation of the notice of lis pendens on the original copy of TCT No. 117531 on file with the Registry of Deeds is sufficient to bind third parties. It affects the whole world even if the owner's copy does not contain the same annotation.176 The phrase “innocent purchaser for value” in Section 32 of the Property 172

Rosales v. Burgos, GR No. 143573, Jan. 30, 2009, 577 SCRA 264. Unchuan v. Court of Appeals, GR No. 78775, May 31, 1988, 161 SCRA 710. 174 Yared v. Tiongco, supra. 175 Garcia v. Court of Appeals, 184 Phil. 358, 365 (1980) citing Bass v. De la Rama, 73 Phil. 682, 685 (1942). 176 Mahinay v. Gako, GR No. 15338, Nov. 28, 2011, citing Yu v. Court of Appeals, 321 Phil. 897, 901-903 (1995). 173

28 Registration Decree includes an innocent lessee, mortgagee, or other encumbrancer for value.177 But unlike private individuals, banks are expected to exercise greater care and prudence in their dealings, including those involving registered lands. A banking institution is expected to exercise due diligence before entering into a mortgage contract.178 In St. Dominic Corporation v. Intermediate Appellate Court,179 the Court, held that where a Torrens title was issued as a result of regular land registration proceedings and was in the name of the mortgagor when given as a security for a bank loan, the subsequent declaration of said title as null and void is not a ground for nullifying the mortgage rights of the bank which had acted in good faith. In Mahinay v. Gako,180 the Court ruled that when a mortgagee relies upon what appears on the face of a Torrens title and lends money in all good faith on the basis of the title in the name of the mortgagor, only thereafter to learn that the latter's title was defective, being thus an innocent mortgagee for value, his or her right or lien upon the land mortgaged must be respected and protected.181 In Blanco v. Esquierdo,182 it was held that the right or lien of an innocent mortgagee for value upon the land mortgaged must be respected and protected, even if the mortgagor obtained his title thereto thru fraud. In this case, upon a complaint filed by the legal heirs of Maximiano, the trial court ordered the cancellation of TCT No. T-6582 for having been secured through fraud, and also the cancellation of DBP’s mortgage. The only question is whether the bank is an innocent purchaser for value. The Court answered in the affirmative. The bank was not a party to the fraud. The certificate of title was in the name of Fructuosa at the time of the mortgage. Hence, the bank had the right to rely on what appeared in the certificate and was under no obligation to look beyond the certificate and investigate. The remedy of the persons prejudiced is to bring an action for damages against those who caused the fraud, and if the latter are insolvent, an action may be filed for recovery of damages against the Assurance Fund. RULE ON DOUBLE SALE OF IMMOVABLE PROPERTY Article 1544 of the Civil Code reads: “ART. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property. 177

Crisostomo v. Court of Appeals, supra. PNB v. Jumanoy, GR No. 169901, Aug. 3, 2011. 179 GR No. 70623, June 30, 1987, 151 SCRA 577. 180 Supra. 181 Id., citing Penullar v. Philippine National Bank, 205 Phil. 127, 135-136 (1983), citing Director of Lands v. Abache, 73 Phil. 606 (1942) and Blanco v. Esquierdo, 110 Phil. 494 (1960). 182 GR No. L-15182,Dec. 29, 1960, 110 Phil. 494. 178

29 Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property. Should there be no inscription, the ownership shall pertain to the person who in good faith was first in possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith.’’ Between two buyers of the same immovable property registered under the Torrens system, the law gives ownership priority to: (a) the first registrant in good faith; (b) then, the first possessor in good faith; and (c) finally, the buyer who in good faith presents the oldest title. This provision, however, does not apply if the property is not registered under the Torrens system.183 Based on this provision, the overriding consideration to determine ownership of an immovable property is the good or bad faith not of the seller, but of the buyer; specifically, to determine who first registered the sale with the Registry of Property (Registry of Deeds) in good faith.184 As against the registered owners and the holder of an unregistered deed of sale, it is the former who has a better right to possess.185 In Remalante v. Tibe,186 the Court ruled that the civil law provision on double sale is not applicable where there is only one valid sale, the previous sale having been found to be fraudulent. Likewise, in Espiritu and Espiritu v. Valerio,187 where the same parcel of land was purportedly sold to two different parties, the Court held that despite the fact that one deed of sale was registered ahead of the other, Art. 1544 of the Civil Code will not apply where said deed is found to be a forgery, the result of this being that the right of the other vendee should prevail.188 The rule that where two certificates purport to include the same land, the earlier in date prevails, is valid only absent any anomaly or irregularity tainting the process of registration.189 On the other hand, while the execution of a public instrument shall be equivalent to the delivery of the object of the contract, it only gives rise to a prima facie presumption of delivery. It is deemed negated by the failure of the vendee to take actual possession of the land sold.190 Moreover, it is an established principle that no one can give what one does not have — nemo dat quod non habet. Accordingly, one can sell only what one owns or is authorized to sell, and the buyer can acquire no more than what the seller can transfer legally. In a number of cases, an action for reconveyance has been treated as an action to quiet title.191

183

Abrigo v. De Vera, GR No. 154409, June 21, 2004, 432 SCRA 544. Cabigas v. Limbaco, GR No. 175291, July 27, 2011 185 Catindig v. De Meneses, GR No. 165851, Feb.2, 2011. 186 GR No. L-59514, February 25, 1988, 158 SCRA 138. 187 GR No. L-18018, Dec 26, 1963, 119 Phil. 69. 188 Fudot v. Cattleya Land, Inc., GR No. 171008, Sept. 13, 2007, 533 SCRA 350. 189 Mathay v. Court of Appeals, GR No. 15788, Sept. 17, 1988, 295 SCRA 556. 190 Beatingo v. Gasis, GR No. 179641, Feb. 9, 2011. 191 Ney v. Quijano, GR No. 178609, Aug. 4, 2010, and cases cited therein. 184

30 PRESUMPTION OF CONJUGAL OWNERSHIP In Dewara v. Lamela,192 the subject property was acquired by spouses Elenita and Eduardo during their marriage, before the enactment of the Family Code. The issue is whether the property is the paraphernal/exclusive property of Elenita or the conjugal property of spouses Elenita and Eduardo, and whether the same may be subject to levy and execution sale to answer for the civil liability adjudged against Eduardo in a criminal case for serious physical injuries. Held: All property of the marriage is presumed to belong to the conjugal partnership, unless it be proved that it pertains exclusively to the husband or to the wife.193 Registration in the name of the husband or the wife alone does not destroy this presumption.194 The separation-in-fact between the husband and the wife without judicial approval shall not affect the conjugal partnership. The lot retains its conjugal nature. 195 23 Moreover, the presumption of conjugal ownership applies even when the manner in which the property was acquired does not appear. The use of the conjugal funds is not an essential requirement for the presumption to arise. However, it does not necessarily follow that it may automatically be levied upon in an execution to answer for debts, obligations, fines, or indemnities of one of the spouses. Before debts and obligations may be charged against the conjugal partnership, it must be shown that the same were contracted for, or the debts and obligations should have redounded to, the benefit of the conjugal partnership. Fines and pecuniary indemnities imposed upon the husband or the wife, as a rule, may not be charged to the partnership. However, if the spouse who is bound should have no exclusive property or if the property should be insufficient, the fines and indemnities may be enforced upon the partnership assets only after the responsibilities enumerated in Article 161 of the Civil Code have been covered.

In Ros v. PNB,196 the subject property was acquired in 1968 during Ros and Aguete's marriage. Ros mortgaged the property in 1974. Is the debt chargeable to the conjugal partnership? Held: The husband cannot alienate or encumber any conjugal real property without the consent, express or implied, of the wife. Should the husband do so, then the contract is voidable.197 Article 173 of the Civil Code allows Aguete to question Ros' encumbrance of the subject property. However, the same article does not guarantee that the courts will declare the annulment of the contract. Annulment will be declared only upon a finding that the wife did not give her consent. In the present case, we follow the conclusion of the appellate court and rule that Aguete gave her consent to Ros' encumbrance of the subject property. Debts contracted by the husband for and in the exercise of the industry or profession by which he contributes to the support of the family cannot be deemed to be his exclusive and private debts. For this reason, we rule that Ros' loan from PNB 192

GR No. 179010, April 11, 2011. CIVIL CODE, Art. 160; Villanueva v. Chiong, G.R. No. 159889, June 5, 2008, 554 SCRA 197, 203. 194 Bucoy v. Paulino, et al., 131 Phil. 790, 800 (1968). 195 CIVIL CODE, Art. 178; Villanueva v. Chiong, supra, at 202. 196 GR No. 170166, April 6, 2011. 197 Vera-Cruz v. Calderon, G.R. No. 160748, 14 July 2004, 434 SCRA 534 citing Heirs of Ignacia AguilarReyes v. Spouses Mijares, G.R. No. 143826, 28 August 2000, 410 SCRA 97. 193

31 redounded to the benefit of the conjugal partnership. Hence, the debt is chargeable to the conjugal partnership.

FORGED DEED MAY BE THE ROOT OF A VALID TITLE Generally, a forged or fraudulent deed is a nullity and conveys no title.198 But a fraudulent or forged document of sale may become the root of a valid title if the certificate of title has already been transferred from the name of the true owner to the name of the forger or the name indicated by the forger, and while it remained that way, the land was subsequently sold to an innocent purchaser.199 CERTIFICATE OF TITLE A certificate of title is conclusive of ownership. It enjoys the presumption of validity. Registration does not vest title: It is not a mode of acquiring ownership. 200 It does not give any person any better title than what he lawfully has. 201 Registration is merely a system of registration of titles to lands.202 A certificate of title is an indefeasible title and is conclusive as to the ownership of the registrant,203 the identity of the land,204 and its location.205As against the registered owners and the holder of an unregistered deed of sale, it is the former who has a better right to possess. 206 While certificates of title are indefeasible, unassailable and binding against the whole world, including the government itself, they do not create or vest title. They merely confirm or record title already existing and vested. They cannot be used to protect a usurper from the true owner, nor can they be used as a shield for the commission of fraud; neither do they permit one to enrich himself at the expense of other.207 If two certificates of title purport to include the same land, whether wholly or partly, the better approach is to trace the original certificates from which the certificates of title were derived. Should there be only one common original certificate of title, the

198

Sec. 53, PD No. 1529. Muñoz v. Yabut, GR No. 142676, June 6, 2011; Solivel v. Francisco, GR No. 51450, Feb. 10, 1989, 170 SCRA 218; Duran v. Intermediate Appellate Court, GR No. L-64159, Sept. 10, 1985, 138 SCRA 489; Director of Lands v. Addison, GR No. 23148, March 25, 1926, 49 Phil. 19. 200 Dela Cruz v. Court of Appeals, 298 SCRA 172; Cabrera v. Court of Appeals, 267 SCRA 339; Avila v. Tapucar, 201 SCRA 148. 201 Legarda v. Saleeby, 31 Phil. 590. Duque-Rosario v. Banco Filipino Savings and Mortgage Bank, GR No. 140528, Dec. 7, 2011. 202 Garcia v. Court of Appeals, 312 SCRA 180; Republic v. Court of Appeals, 301 SCRA 366. 203 Tan v. Bantegui, GR No. 154027, Oct. 24, 2005. 204 Demasiado v. Velasco, 71 SCRA 105. 205 Odsigue v. Court of Appeals, 233 SCRA 626. 206 Catindig v. De Meneses, GR No. 165851, Feb.2, 2011. 207 Sta. Lucia Realty v. City of Pasig, GR No. 166838, June 15, 2011, citing De Pedro v. Romasan Development Corporation, 492 Phil. 643 (2005). 199

32 transfer certificate issued on an earlier date along the line must prevail, absent any anomaly or irregularity tainting the process of registration. 208 An original certificate of title issued by virtue of administrative proceeding is as indefeasible as a certificate of title issued under judicial proceedings. However, the indefeasibility of title does not attach to titles secured by fraud and misrepresentation. 209 One who deals with property registered under the Torrens system need not go beyond the certificate of title, but only has to rely on the certificate of title. 210 He is charged with notice only of such burdens and claims as are annotated on the title.211 CONVEYANCE AND OTHER DEALINGS BY REGISTERED OWNER The general rule in dealing with registered land is set forth in Section 51 of P.D. No. 1529: Section 51. Conveyance and other dealings by registered owner. — An owner of registered land may convey, mortgage, lease, charge or otherwise deal with the same in accordance with existing laws. He may use such forms of deeds, mortgages, leases or other voluntary instruments as are sufficient in law. But no deed, mortgage, lease, or other voluntary instrument, except a will purporting to convey or affect registered land shall take effect as a conveyance or bind the land, but shall operate only as a contract between the parties and as evidence of authority to the Register of Deeds to make registration. The act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned, and in all cases under this Decree, the registration shall be made in the office of the Register of Deeds for the province or city where the land lies.

No voluntary instrument shall be registered by the Register of Deeds, unless the owner's duplicate certificate is presented with such instrument, except in cases expressly provided for in the law (PD 1529) or upon order of the court, for cause shown.212

208

Top Management Programs Corp. v. Fajardo, GR No.150462, June 15, 2011, citing Degollacion v. Register of Deeds of Cavite, G.R. No. 161433, August 29, 2006, 500 SCRA 108, 115 and Mathay v. Court of Appeals, G.R. No. 115788, September 17, 1998, 295 SCRA 556. 209 Sampaco v. Lantud, GR No. 163551, July 18, 2011. 210 Sec. 44, PD 1529; Casimiro Development Corporation v. Mateo, GR No. 175485, July 27, 2011; Sandoval v. Court of Appeals, G.R. No. 106657, August 1, 1996, 260 SCRA 283; Santos v. Court of Appeals, G.R. No. 90380, September 13, 1990, 189 SCRA 550; Unchuan v. Court of Appeals, G.R. No. L78775, May 31, 1988, 161 SCRA 710; Bailon-Casilao v. Court of Appeals, G.R. No. L-78178, April 15, 1988, 160 SCRA 738; Director of Lands v. Abad, 61 Phil. 479, 487 (1935); Quimson v. Suarez, 45 Phil. 901, 906 (1924). 211 Agricultural and Home Extension Development Group v. Court of Appeals, G.R. No. 92310, September 3, 1992, 213 SCRA 563; Unchuan v. Court of Appeals, supra. 212 Sec. 53, PD 1529.

33 From the standpoint of third parties, a property registered under the Torrens system remains, for all legal purposes, the property of the person in whose name it is registered, notwithstanding the execution of any deed of conveyance, unless the corresponding deed is registered.213 Simply put, if a sale is not registered, it is binding only between the seller and the buyer, but it does not affect innocent third persons. 214 DISTINCTION BETWEEN VOLUNTARY AND INVOLUNTARY REGISTRATION As a rule, the order of entries in the Primary Entry Book determines the priority in registration.215 In voluntary registration, such as a sale, mortgage, lease and the like, if the owner's duplicate certificate be not surrendered and presented or if no payment of registration fees be made within fifteen (15) days, entry in the day book of the deed of sale does not operate to convey and affect the land sold. In involuntary 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 adverse claim.216 AMENDMENT OR ALTERATION OF CERTIFICATES The proceeding for the amendment and alteration of a certificate of title under Section 108 of P.D. No. 1529 is applicable in seven instances or situations, namely: (a) when registered interests of any description, whether vested, contingent, expectant, or inchoate, have terminated and ceased; (b) when new interests have arisen or been created which do not appear upon the certificate; (c) when any error, omission or mistake was made in entering a certificate or any memorandum thereon or on any duplicate certificate; (d) when the name of any person on the certificate has been changed; (e) when the registered owner has been married, or, registered as married, the marriage has been terminated and no right or interest of heirs or creditors will thereby be affected; (f) when a corporation, which owned registered land and has been dissolved, has not conveyed the same within three years after its dissolution; and (g) when there is reasonable ground for the amendment or alteration of title.217 While Section 108, among other things, authorizes a person in interest to ask the court for any erasure, alteration, or amendment of a certificate of title or of any memorandum appearing therein, the prevailing rule is that proceedings thereunder are summary in nature, contemplating corrections or insertions of mistakes which are only clerical but certainly not controversial issues.218 Relief under the said legal provision can 213

Narciso Peña, supra note 38, at 189. Bulaong v. Gonzales, GR No. 156318, Sept. 5, 2011. 215 Id. 216 Bulaong v Gonzales, supra. 217 Paz v. Republic, GR No. 157367, Nov. 23, 2011. 218 Heirs of Miguel Franco v. CA, 463 Phil. 417, 431-432 (2003). 214

34 only be granted if there is unanimity among the parties, or that there is no adverse claim or serious objection on the part of any party in interest.219 The court has no authority to reopen the judgment or decree of registration, and that nothing shall be done or ordered by the court which shall impair the title or other interest of a purchaser holding a certificate for value in good faith, or his heirs and assigns without his or their written consent.220 REGISTERED LAND NOT SUBJECT TO PRESCRIPTION No title to registered land in derogation of the title of the registered owner shall be acquired by prescription or adverse possession.221 Thus, the right to recover possession of registered land is imprescriptible because possession is a mere consequence of ownership.222 Prescription is unavailing not only against the titled owner but also against his heirs.223 But ownership may be lost through laches224 which is failure or neglect to assert a right for an unreasonable length of time.225 CERTIFICATE NOT SUBJECT TO COLLATERAL ATTACK A certificate of title is not subject to collateral attack. It cannot be altered, modified, or cancelled except in a direct proceeding. 226 Thus, in a complaint for recovery of possession, defendant cannot raise in the action the validity of plaintiff’s title. 227 There must be a direct attack on the title via a separate action; but a direct attack may be made in a counterclaim or third-party complaint.228 What cannot be collaterally attacked is the certificate of title and not the title itself. The certificate referred to is that document issued by the Register of Deeds known as the TCT. In contrast, the title referred to by law means ownership which is, more often than not, represented by that document.230 The prohibition against collateral 229

219

Philippine Veterans Bank v. Valenzuela, GR No. 163530, March 9, 2011;Tagaytay-Taal Tourist Development Corporation v. CA, 339 Phil. 377, 389 (1997). 220 Id. 221 Sec. 47, PD No. 1529. 222 Fernando v. Acuna, GR No. 161030, Sept. 14, 2011, citing Umbay v. Alecha, 220 Phil. 103, 107 (1985). 223 Barcelona v. Barcelona, 100 Phil. 251; Guinoo v. Court of Appeals, 97 Phil. 235. 224 Fernando v. Acuna, supra, citing cases. See also Lucas v. Gamponia, 100 Phil. 277. 225 Cabrera v. Court of Appeals, 267 SCRA 339. 226 Sec. 48, PD No. 1529; Tapuroc v. Loquellano, GR No. 152007, Jan. 22, 2007. 227 Gaiterio v. Almeria, GR No. 181812, June 8, 2011; Ybañez v. Intermediate Appellate Court, 194 SCRA 743. 228 Leyson v. Bontuyan, GR No. 156357, Feb. 18, 2005; Sampaco v. Lantud, GR No. 163551, July 18, 2011. 229 Lee Tek Sheng v. Court of Appeals, G.R. No. 115402, July 15, 1998, 292 SCRA 544, 547. 230 Lacbayan v. Samoy, GR No. 165427, March 21, 2011.

35 attack does not apply to spurious or non-existent titles, since such titles do not enjoy indefeasibility.231 REPLACEMENT OF LOST OR DESTROYED CERTIFICATE Section 109, PD No. 1529, governs the procedure for the replacement of a lost or destroyed owner’s duplicate certificate of title. Where the owner’s duplicate copy is not in fact lost or destroyed, a petition for the purpose is unwarranted as the court has no jurisdiction over the petition.232 RECONSTITUTION OF LOST OR DESTROYED CERTIFICATE The reconstitution of a certificate of title denotes restoration in the original form and condition of a lost or destroyed instrument attesting the title of a person to a piece of land. The purpose of the reconstitution of title is to have, after observing the procedures prescribed by law, the title reproduced in exactly the same way it has been when the loss or destruction occurred.233 The lost or destroyed document referred to is the one that is in the custody of the Register of Deeds. When reconstitution is ordered, this document is replaced with a new one — the reconstituted title — that basically reproduces the original. After the reconstitution, the owner is issued a duplicate copy of the reconstituted title.234 Reconstitution denotes restoration of the certificate of title allegedly lost or destroyed in its original form and conditions: it does not pass upon the question of ownership.235 For an order of reconstitution to issue, the following elements must be present: (1) the certificate of title has been lost or destroyed; (2) the petitioner is the registered owner or has an interest therein; and (3) the certificate of title is in force at the time it was lost or destroyed. 236 Reconstitution is governed by RA No. 26 in relation to Section 110 of PD No. 1529. Administrative reconstitution is also governed by RA No, 26, as amended by RA No. 6732, dated July 17, 1989. Section 12 of R.A. No. 26 describes the requirements for a petition for reconstitution while Section 13 prescribes the requirements for a notice of

231 232

(Oliveros v. San Miguel Corporation, GR No. 173531, Feb. 1, 2012.

Camitan vs. Court of Appeals, GR No. 128099, Dec. 20, 2006. Republic v. Tuastumban, G.R. No. 173210, April 24, 2009, 586 SCRA 600, 614. 234 Republic v. Vergel de Dios, GR No. 170459, Feb. 9, 2011. 235 Republic v. Santua, GR No. 155703, Sept. 8, 2008; Layos v. Fil-Estate Golf and Development Corporation, GR No. 150470, Aug. 6, 2008; Pinote vs. Dulay, 187 SCRA 12. 236 Layos v. Fil-Estate Golf and Development Corporation, GR No. 150470, Aug. 6, 2008. 233

36 hearing of the petition. Non-compliance with the requirements deprives the court of jurisdiction over the petition for reconstitution.237 The requirements of Sections 2 and 3, RA No. 26 are almost identical. The enumerated requirements are documents from official sources which recognize the ownership of the owner and his predecessors-in-interest. The phrase “any other document” in paragraph (f) of Sections 2 and 3 refers to documents similar to those enumerated.238 As held in Castillo v. Republic,239 liberal construction of the Rules of Court does not apply to land registration cases.240 Indeed, to further underscore the mandatory character of these jurisdictional requirements, the Rules of Court do not apply to land registration cases.241 In all cases where the authority of the courts to proceed is conferred by a statute, and when the manner of obtaining jurisdiction is prescribed by a statute, the mode of proceeding is mandatory, and must be strictly complied with, or the proceeding will be utterly void.242 Courts have no jurisdiction over petitions for reconstitution of allegedly lost or destroyed titles over lands that are already covered by duly issued subsisting titles in the names of their duly registered owners.243 The absence of opposition from government agencies is of no controlling significance because the State cannot be estopped by the omission, mistake or error of its officials or agents, hence, the Republic is not barred from assailing the decision granting the petition for reconstitution if the same has no merit.244 ADVERSE CLAIM An adverse claim is registered by filing with the Register of Deeds a sworn petition starting the basis of the right claimed.245 The duty of the Register of Deeds to record the same on the title of ministerial.246 The notice of adverse claim is to apprise third person that there is controversy over the ownership of the land, such that any transaction regarding the land is subject to the outcome of the dispute. 247 The annotation of an adverse claim over registered land under Section 70 of Presidential Decree 1529 248 237

Castillo v. Republic, GR No. 182980, June 22, 2011. Republic v. Lagramada, GR No. 150741, June 12, 2008; Republic v. Santua, supra.; 239 Supra. 240 Section 6, Rule 1 of the 1997 Rules of Civil Procedure. 241 Section 4, Rule 1 of the 1997 Rules of Civil Procedure. 242 Caltex Filipino Managers & Supervisors Ass'n. v. CIR, 131 Phil. 1022, 1030 (1968). 243 Manotok v. Barque, GR No. 162335, Dec. 18, 2008. 238

244 245

Republic v. Lorenzo, GR No. 172338, Dec. 10, 2012.

Sec. 70, PD No. 1529. Sajonas v. Court of Appeals, 258 SCRA 79. 247 Ching v. Enrile, GR No. 156076, Sept. 17, 2008; Arrazola v. Bernas, 86 SCRA 279; Duque-Rosario v. Banco Filipino Savings and Mortgage Bank, GR No. 140528, Dec. 7, 2011. 248 Section 70 of Presidential Decree 1529 provides: Section 70. Adverse claim. — Whoever claims any part or interest in registered land adverse to the registered owner, arising subsequent to the date of the original registration, may, if no other provision is 246

37 requires a claim on the title of the disputed land. The existence of an easement of subjacent and lateral support need not be annotated at the back of the title of the servient estate.249 An adverse claim is not ipso facto cancelled upon the lapse of the thirty days from its registration. There must be a petition for the purpose to afford the adverse claimant an opportunity to be heard.250 Parties with liens annotated on the certificate of title are entitled to notice in an action for cancellation of their liens.251 NOTICE OF LIS PENDENS A notice of lis pendens is an announcement to the whole world that a particular real property is in litigation, serving as a warning that one who acquires an interest over said property does so at his own risk, or that he gambles on the result of the litigation over the said property.252 The title obtained by the transferee pendente lite affords him no special protection; he cannot invoke the rights of a purchaser in good faith and cannot acquire better rights than those of his predecessor-in-interest.253 Thus, one who buys land where there is a pending notice of lis pendens cannot invoke the right of a purchaser in good faith; neither can he have acquired better rights than those of his predecessor in interest.254 made in this Decree for registering the same, make a statement in writing setting forth fully his alleged right or interest, and how or under whom acquired, a reference to the number of the certificate of title of the registered owner, the name of the registered owner, and a description of the land in which the right or interest is claimed. The statement shall be signed and sworn to, and shall state the adverse claimant's residence, and a place at which all notices may be served upon him. This statement shall be entitled to registration as an adverse claim on the certificate of title. The adverse claim shall be effective for a period of thirty days from the date of registration. After the lapse of said period, the annotation of adverse claim may be canceled upon filing of a verified petition therefor by the party in interest: Provided, however, that after cancellation, no second adverse claim based on the same ground shall be registered by the same claimant. Before the lapse of thirty days aforesaid, any party in interest may file a petition in the Court of First Instance where the land is situated for the cancellation of the adverse claim, and the court shall grant a speedy hearing upon the question of the validity of such adverse claim, and shall render judgment as may be just and equitable. If the adverse claim is adjudged to be invalid, the registration thereof shall be ordered canceled. If, in any case, the court, after notice and hearing, shall find that the adverse claim thus registered was frivolous, it may fine the claimant in an amount not less than one thousand pesos nor more than five thousand pesos, in its discretion. Before the lapse of thirty days, the claimant may withdraw his adverse claim by filing with the Register of Deeds a sworn petition to that effect. 249 Castro v. Monsod, GR No. 183719, Feb. 2, 2011. 250 Sajonas vs. Court of Appeals, supra; see also Duque-Rosario v. Banco Filipino Savings and Mortgage Bank, GR No. 140528, Dec. 7, 2011 251 252

Crisologo v. Omelio, GR No. A.M. No. RTJ-12-2321, Oct. 3, 2012.

Dela Merced v. GSIS, GR No. 167140, Nov. 23, 2011. Yu v. Court of Appeals, 321 Phil. 897, 901-902 (1995). 254 Yu v. Court of Appeals, G.R. No. 109078, December 25, 1995, 251 SCRA 509, 513-514, citing Constantino v. Espiritu, No. L-23268, June 30, 1972, 45 SCRA 557, 563 and Tanchoco v. Aquino, No. L30670, September 15, 1987, 154 SCRA 1, 15; see Philippine National Bank v. Court of Appeals, No. L34404, June 25, 1980, 98 SCRA 207, 232. 253

38

A notice of lis pendens should contain (1) a statement of the institution of the action or proceeding; (2) the court where the same is pending; (3) the date of its institution; (4) a reference to the number of the certificate of title; and (5) an adequate description of the land affected and its registered owner. 255 The notice is not a lien or encumbrance on the property, but simply a notice to prospective buyers or to those dealing with the property that it is under litigation.256 The litigation must involve the title to, or the use or occupation of, a specific property. It does not apply where the object of the suit is money judgment, or proceedings for the probate of will or administration of the estate of a deceased person, levy on execution or preliminary attachments. 257 A notice of lis pendens subjects the interest of the transferee to the results of the pending suit. CONSULTA It is the ministerial duty of the Register of Deeds to register documents presented to him for registration. (Sec. 10, PD No. 1529). If the Register of Deeds is in doubt as to the registrability of the document, the remedy is to elevate the matter to the LRA via en consulta. The same procedure may be availed of by the interested party. 258 Appeal from the LRA decision may be taken to the Court of Appeals. 259 MORTGAGES AND LEASES The requisites of a mortgage are: (a) it is constituted to secure the fulfillment of a principal obligation; (b) the mortgagor is the absolute owner of the property, and (c) the mortgagor has the free disposal thereof. Under Article 2085 of the Civil Code, one of the essential requisites of the contract of mortgage is that the mortgagor should be the absolute owner of the property to be mortgaged; otherwise, the mortgage is considered null and void. However, an exception to this rule is the doctrine of "mortgagee in good faith." Under this doctrine, even if the mortgagor is not the owner of the mortgaged property, the mortgage contract and any foreclosure sale arising therefrom are given effect by reason of public policy. This principle is based on the rule that all persons dealing with property covered by a Torrens certificate of title, as buyers or mortgagees, are not required to go beyond what appears on the face of the title. This is the same rule that underlies the principle of "innocent purchasers for value." Hence, even if the mortgagor is not the rightful owner of, or does not have a valid title to, the mortgaged property, the mortgagee in good faith is, nonetheless, entitled to protection.260

255

Sec. 76, PD No. 1529. Republic v. Ravelo, GR No. 165114, Aug. 6, 2008. 257 Biglang-awa vs. Constantino, 109 Phil. 168. 258 Almirol vs. Register of Deeds of Agusan, 22 SCRA 1152. 259 Calalang vs. Register of Deeds of Quezon City, 231 SCRA 88. 260 Duque-Rosario v. Banco Filipino Savings and Mortgage Bank, GR No. 140528, Dec. 7, 2011. 256

39 A mortgage lien is a right in rem which follows the property – whoever its owner may be. If the mortgagor sells the property, the buyer must respect the mortgage, if registered, or if he knows of its existence.261 The phrase “innocent purchaser for value” includes an innocent lessee, mortgagee or other encumbrancer for value. 262 The subsequent nullification of the mortgagor’s title will not nullify the mortgage. 263 HIGHER STANDARD OF CARE REQUIRED OF BANKING OR FINANCIAL INSTITUTIONS The general rule that a mortgagee need not look beyond the title does not apply to banks and other financial institutions as greater care and due diligence is required of them.264 Imbued with public interest, they "are expected to be more cautious than ordinary individuals."265 In a case,266 the Court adjudged that unlike private individuals, a bank is expected to exercise greater care and prudence in its dealings, including those involving registered lands. A banking institution is expected to exercise due diligence before entering into a mortgage contract. The ascertainment of the status or condition of a property offered to it as security for a loan must be a standard and indispensable part of its operations.267 FORECLOSURE OF MORTAGE When the principal obligation becomes due and the debtor fails to perform his obligation, the creditor may foreclose on the mortgage for the purpose of alienating the (mortgaged) property to satisfy his credit.268 The procedure for extrajudicial foreclosure of real estate mortgage is governed by Act No. 3135, as amended by Act No. 4118. The purchaser at the public auction sale of an extrajudicially foreclosed real property may seek possession thereof in accordance with Section 7 of said Act.269 Unlike in an ordinary sale, inadequacy of the price at a forced sale is immaterial and does not nullify the sale. It is also not required that the bid should at least be equal to the market value of the foreclosed property or the outstanding obligation of the mortgage debtor.270 If "the proceeds of the sale are insufficient to cover the debt in an extrajudicial 261

Ligon v. Court of Appeals, 244 SCRA 693. Unchuan v. Court of Appeals, 161 SCRA 710. 263 Gonzales v. Intermediate Appellate Court, 157 SCRA 587; Blanco v. Esquierdo, 110 Phil. 494; Penullar v. Philippine National Bank, 120 SCRA 171. 264 Metropolitan Bank and Trust Co., v. Pascual, G.R. No. 163744, February 29, 2008, 547 SCRA 246, 261. 265 Alano v. Planter’s Development Bank, GR No. 171628, June 13, 2011. Philippine National Bank v. Corpuz, G.R. No. 180945, February 12, 2010, 612 SCRA 493, 496; Gonzales v. Intermediate Appellate Court, 157 SCRA 187. 266 Cruz v. Bancom Finance Corporation, 429 Phil. 225, 239 (2002). 267 Duque-Rosario v. Banco Filipino Savings and Mortgage Bank, supra. 268 Development Bank of the Philippines v. Doyon, GR No. 167238, March 25, 2009. 269 China Banking Corporation v. Lozada, GR No. 164919, July 4, 2008. 270 BPI Family Savings Bank, Inc. v. Avenido, GR No. 175816, Dec. 7, 2011. 262

40 foreclosure of mortgage, the mortgagee is entitled to claim the deficiency from the debtor.271 Where the mortgagee is a banking institution, the determination of the redemption price for the foreclosed property is governed by Section 78 of the General Banking Act. There must be an unequivocal tender of payment for the full amount of the repurchase price.272 The only instance when this rule may be construed liberally, i.e., allow the non-simultaneous tender of payment, is if a judicial action is instituted by the redemptioner.273 GUIDELINES ON FORECLOSURE A.M. No. 99-10-05-0, February 20, 2007 The resolution embodies the additional guidelines intended to aid courts in foreclosure proceedings, specifically limiting the instances, and citing the conditions, when a writ against foreclosure of a mortgage may be issued, to wit: (1) No temporary restraining order or writ of preliminary injunction against the extrajudicial foreclosure of real estate mortgage shall be issued on the allegation that the loan secured by the mortgage has been paid or is not delinquent unless the application is verified and supported by evidence of payment. (2) No temporary restraining order or writ of preliminary injunction against the extrajudicial foreclosure of real estate mortgage shall be issued on the allegation that the interest on the loan is unconscionable, unless the debtor pays the mortgagee at least twelve percent per annum interest on the principal obligation as stated in the application for foreclosure sale, which shall be updated monthly while the case is pending. (3) Where a writ of preliminary injunction has been issued against a foreclosure of mortgage, the disposition of the case shall be speedily resolved. To this end, the court concerned shall submit to the Supreme Court, through the Office of the Court Administrator, quarterly reports on the progress of the cases involving ten million pesos and above. (4) All requirements and restrictions prescribed for the issuance of a temporary restraining order/writ of preliminary injunction, such as the posting of a bond, which shall be equal to the amount of the outstanding debt, and the time limitation for its effectivity, shall apply as well to a status quo order.

REDEMPTION AND CONSOLIDATION OF OWNERSHIP

271

Id. Allied Banking Corporation v. Mateo, GR No. 167420, June 5, 2009; Quisumbing v. PNB, GR No. 178242, Jan. 20, 2009. 273 Quisumbing v. PNB, supra. 272

41 If the foreclosed property is registered, the mortgagor has one year within which to redeem the property from and after registration of sale with the Register of Deeds.274 After the expiration of the period of redemption, the purchaser at the foreclosure sale or anyone claiming under him may petition the court for the entry of a new certificate to him. But before the entry of a new certificate of title, the registered owner may pursue all legal and equitable remedies to impeach or annul such proceedings. 275 The rule on redemption is liberally construed in favor of the original owner of the property. The policy of the law is to aid rather than to defeat him in the exercise of his right of redemption. The general rule in redemption is that it is not sufficient that a person offering to redeem manifests his desire to do so. The statement of intention must be accompanied by an actual and simultaneous tender of payment. The redemption price should either be fully offered in legal tender or else validly consigned in court. 276 Upon the expiration of the redemption period of one year from the registration of the sale, the right of the purchaser to the possession of the foreclosed property becomes absolute.277 He is entitled to possession following the consolidation of ownership in his name.278 The writ of possession becomes a matter of right and its issuance to a purchaser in an extrajudicial foreclosure is merely a ministerial function.279 The trial court has no discretion on this matter."280 May persons to whom several mortgaged lands were transferred without the knowledge and consent of the creditor redeem only several parcels if all the lands were sold together for a single price at the foreclosure sale? In several early cases decided by the Court, the right of the mortgagor or redemptioner to redeem one or some of the foreclosed properties was recognized.281 ISSUANCE OF WRIT OF POSSESSION MINISTERIAL Under Sec. 7 of Act No. 3135, a writ of possession may be issued either (a) within the one-year period, upon the filing of a bond, or (b) after the lapse of the redemption period, without need of a bond.282 The proceeding for the issuance of the writ is ex parte and is ministerial duty of 274

Union Bank of the Philippines v. Court of Appeals, 370 Phil. 837, 847 (1999); BPI Family Savings Bank, Inc. v. Avenido, GR No. 175816, Dec. 7, 2011. 275 Sec. 75, PD 1529; Reyes v. Tang Soat Ing, GR No. 185620, Dec. 14, 2011 276 Duque-Rosario v. Banco Filipino Savings and Mortgage Bank, GR No. 140528, Dec. 7, 2011. 277 Philippine National Bank v. Gotesco, GR No. 183211, June 5, 2009. 278 Edralin v. Philippine Veterans Bank, GR No. 168523, March 9, 2011; Bank of the Philippine Islands v. Tarampi, GR No. 174988, Dec. 10, 2008. 279 Duque-Rosario v. Banco Filipino Savings and Mortgage Bank, supra. 280 Metropolitan Bank and Trust Co. v. Bance, G.R. No. 167280, April 30, 2008, 553 SCRA 507, 515-516. Emphasis supplied. 281 Yap v. Dy, GR No. 171868, July 27, 2011. 282 Philippine National Bank v. Sanao Marketing Corporation, 465 SCRA 287.

42 the court,283 unless a third party is actually holding the property adversely to the judgment debtor,284 or where the bid price is unjustifiably higher than the real amount of the obligation.285 The issuance of the writ may not be stayed by a pending action for annulment of the mortgage or the foreclosure itself, without prejudice, of course, to the eventual outcome of the pending annulment case.286 The order of the RTC granting the petition for a writ of possession is final which can only be questioned on appeal.287 PUBLIC LAND ACT; GENERAL PRINCIPLES 

Regalian doctrine – all lands and all other natural resources are owned by the State



No public land can be acquired by private persons without any grant, express or implied from the government. It is indispensable that there be a showing of a title from the State.



Only those lands shall be declared open to disposition or concession which have been officially delimited and classified and, when practicable, surveyed, and which have not been reserved for public or quasi-public uses, nor appropriated by the government, nor in any manner become private property.



Land remains unclassified land until it is released therefrom and rendered open to disposition.



The classification of public lands is a function of the executive branch of government.



For purposes of their administration and disposition, lands of the public domain which are alienable or open to disposition may be further classified as: (a) agricultural, (b) residential, commercial, industrial, or for similar productive purposes, (c) educational, charitable, or other similar purposes, and (d) reservations for townsites and for public and quasi-public uses.

MODES OF DISPOSITION 1. For homestead settlement;

283

Sueno v. Land Bank of the Philippines, GR No. 174711, Sept. 17, 2008. Glapuno v. Gapultos, 132 SCRA 429; China Banking Corporation v. Lozada, supra. 285 Sulit v. Court of Appeals, 268 SCRA 441. 286 .Bank of the Philippine Islands v. Tarampi, GR No. 174988, Dec. 10, 2008. 287 San Fernando Rural Bank, Inc. v. Pampanga Omnibus Development Corporation, GR No. 168088, April 4, 2007. 284

43 2. By sale; 3. By lease 4. By confirmation of imperfect or incomplete title (a) (b)

By judicial legalization By administrative legalization (free patent)

 Homestead - any citizen of the Philippines over the age of eighteen years, or the head of a family, may enter a homestead of not exceeding twelve hectares of agricultural land of the public domain. The applicant must have cultivated and improved at least one-fifth of the land continuously since the approval of the application and resided for at least one year in the municipality in which the land is located.  When a homesteader has complied with all the terms and conditions which entitle him to a patent for a tract of public land, he acquires a vested interest therein, and is to be regarded as the equitable owner thereof.  The execution and delivery of the patent, after the right to a particular parcel of land has become complete, are the mere ministerial acts of the officer charged with that duty.  Free patent - Any natural-born citizen of the Philippines who is not the owner of more than 12 hectares and who, for at least 30 years, has continuously occupied and cultivated, by himself or through his predecessors-in-interest a tract of agricultural public land, and who shall have paid the real estate tax thereon shall be entitled to have a free patent issued to him for such tract of land not to exceed twelve 12 hectares.

 RA No. 10023, dated March 9, 2010, authorizes issuance of free patent titles to zoned residential lands. Residence requirement: 10 years. Requirements:

 Survey plan and technical description  Affidavit of two 2 persons who are residents of the barangay that the applicant has actually resided on, and actually possessed and occupied, the land applied for, under a bona fide claim of ownership, for at least 10 years, and has complied with the other requirements prescribed by the Act.  Sales patent - Any citizen of the Philippines of lawful age or the head of a family may purchase any tract of public agricultural land not to exceed twelve hectares which shall be sold thru sealed bidding. The land shall be awarded to the highest bidder, but the applicant may equal the highest bid.

44 

The purchaser shall have not less than one-fifth of the land cultivated within five years from the date of the award, and pays the full purchase price.

 Direct sale - RA No. 730 permits the direct sale of public lands for residential purposes to qualified applicants. 

The applicant must: (a) be a Filipino citizen of legal age; (b) not the owner of a home lot in the municipality or city in which he resides; (c) have established in good faith his residence on a parcel of public land which is not needed for public service; and (d) have constructed his house and actually resided therein.

TITLE INDEFEASIBLE 

A certificate of title issued pursuant to a public land patent partakes of the nature of a certificate of title issued through judicial proceeding. It becomes incontrovertible upon the expiration of one year from the date of the order for issuance of the patent, hence, prescription cannot operate against the registered owner.



If the land covered by a free patent was a private land, the Director of Lands has no jurisdiction over it. Such free patent and the subsequent certificate of title issued pursuant thereto are a nullity. 288 The aggrieved party may initiate an action for cancellation of such title.289

CONTINUING AUTHORITY TO INVESTIGATE 

But the Regional Director has continuing authority to conduct an investigation to determine whether or not fraud attended the issuance of the patent.



The Solicitor General may bring an action for cancellation of title obtained through fraud and for the reversion of the land to the State.



Action is not barred by prescription.

PROHIBITED ALIENATIONS

288 289



Homestead - may not be sold or encumbered within 5 years from the issuance of the patent, and for a term of 20 years thereafter without the consent of the DENR Secretary.



Land covered by a Free paent – may not be sold within 5 years from the issuance of the patent.

Agne v. Director of Lands, G.R. Nos. 40399 & 72255, February 6, 1990, 181 SCRA 793, 803. Pabaus v. Yutiamco, GR No. 164356, July 27, 2011

45



Prohibition against alienation is mandatory.

Policy of the law: 

To conserve the land which a grantee has acquired under the Public Land Act for him and his heirs as a reward for his labor in cleaning and cultivating it



To give the patentee a place where to live with his family so he may become a happy citizen and useful member of society

EFFECT OF A VOID CONVEYANCE 

It shall produce the effect of annulling and cancelling the title and cause the reversion of the property and improvements to the State. REPURCHASE 

Every conveyance of land acquired under the free patent or homestead provisions, when proper, shall be subject to repurchase by the applicant, his widow, or legal heirs, within a period of five years from the date of the conveyance.



The five-year period of redemption of homestead sold at extrajudicial foreclosure runs after the expiration of the one-year period of repurchase allowed in an extrajudicial foreclosure.



Query: Where the patentee sold the land during the prohibited period, may he recover the property from the vendee? Yes, consistent the with the fundamental policy to afford the patentee a piece of land for his home and cultivation. (Binayug v. Ugaddan, GR No. 181623, Dec. 5, 2012)

SUBDIVISION AND CONDOMINIUM BUYER’S DECREE (PD 957) 

Subdivision project - a registered parcel of land registered partitioned for residential purposes into individual lots and offered to the public for sale, in cash or in installment terms. It shall include all residential, commercial, industrial and recreational areas as well as open spaces and other community and public areas in the project.



Condominium unit - a part of the condominium project intended for any type of independent use or ownership, including one or more rooms or spaces located in one or more floors (or part of parts of floors) in a building or buildings and such accessories as may be appended thereto.



Developer - the person who develops or improves the subdivision project or condominium project for and in behalf of the owner thereof.

46

JURISDICTION OF THE HLURB 

Unsound real estate business practices;



Claims involving refund and any other claims filed by subdivision lot condominium unit buyer against the project owner, developer, dealer, broker or salesman; and



Cases involving specific performance of contractual and statutory obligations filed by buyers of subdivision lot or condominium unit against the owner, developer, dealer, broker or salesman.



HLURB has jurisdiction over cases for collection of unpaid installments and claims for damages. No jurisdiction over cases filed by subdivision owners or developers against lot or unit buyers

 

Court, not HLURB, has jurisdiction over issues involving ownership or possession of property.

SUMMARY OF CASES WHERE HLURB HAS JURISDICTION 

For a determination of the rights of the parties under a contract to sell a subdivision lot;



For the delivery of title against the subdivision owner;



For the refund of reservation fees for the purchase of a subdivision lot;



For specific performance filed by a lot buyer against the seller of a subdivision lot;



For the annulment of the mortgage constituted by the project owner without the buyer’s consent, the mortgage foreclosure sale, and the condominium certificate of title issued to the highest bidder at the said foreclosure sale;



For the collection of the balance of the unpaid purchase price of a subdivision lot filed by the developer of a subdivision against the lot buyer; and



For incidental claims for damages.

LICENSE TO SELL

47 

The owner or dealer must have a license to sell the project within two weeks from the registration of such project.



However, the absence of a license to sell the subdivision lots does not render the sale thereof void. The absence of the license to sell only subjects the condominium developer and its officers civilly and criminally liable.

EXEMPT TRANSACTIONS 

Sale of a subdivision lot resulting from the partition of land among co-owners and co-heirs.



Sale or transfer of a subdivision lot by the original purchaser and any subsequent sale of the same lot. Sale of a subdivision lot or a condominium unit by or for the account of a mortgagee in the ordinary course of business when necessary to liquidate a bona fide debt.



FOREIGNERS MAY PURCHASE

 Under RA No. 4726, foreign nationals can own Philippine real estate through the purchase of condominium units or townhouses up to not more than 40% of the total and outstanding capital stock of a Filipino-owned or controlled corporation.

 The land is owned by the condominium corporation and the unit owner is simply a member in this condominium corporation. DEALERS AND BROKERS 

No real estate dealer, broker or salesman shall engage in the business of selling subdivision lots or condominium units unless he has registered himself with the Board.



Applicant must be of good repute and has complied with the applicable rules of the Authority

REGISTRATION 

All contracts to sell, deeds of sale and other similar instruments relative to the sale or conveyance of the subdivision lots and condominium units, whether or not the purchase price is paid in full, shall be registered in the Office of the Register of Deeds of the province or city where the property is situated.

MORTGAGES

48 

No mortgage on any unit or lot shall be made by the owner or developer without prior written approval of the Board. Such approval shall not be granted unless it is shown that the proceeds of the mortgage loan shall be used for the development of the condominium or subdivision project and effective measures have been provided to ensure such utilization.



The mortgage of a subdivision lot or a condominium unit is void if executed by a property developer without the prior written approval of the HLURB. That an encumbrance has been constituted over an entire property, of which the subject lot or unit is merely a part, does not affect the invalidity of the lien over the specific portion at issue. The fact that the lot had no separate TCT did not make it less of a "subdivision lot" entitled to the protection of PD 957. 290



“The circumstance that DBP and ADC executed the mortgage contract prior to the selling of the subdivided portions of the property to Capulong is immaterial considering that when DBP granted the loan to ADC, it already knew that the loan was to be used for realty development. DBP should have considered that it was dealing with a property subject of a real estate development project. x x x DBP cannot be deemed to be an innocent mortgagee.” 291



The essence of the government's socialized housing program is to preserve the beneficiary's ownerships for a reasonable length of time, at least within five years from the time he acquired it free from any encumbrance.292

ADVERTISEMENTS 

Advertisements by the owner or developer must not mislead or deceive the public.



A subdivision owner was held in breach when it failed to deliver a “closed-circuit TV monitor through which residents from their apartments can see their guests” as advertised. (BPI v. ALS Management, GR No. 151821, April 14, 2004)

TIME OF COMPLETION 

Petitioner may be held liable in damages for any delay in the construction.



A request for extension of time to complete development of a subdivision or condominium project may be granted only where non-completion of the project is caused by fortuitous events or legal ordersand with written notice to lot or unit buyers.

DESISTANCE OR NON-PAYMENT OF AMORTIZATIONS 290

Far East Bank and Trust Co, v, Marquez, GR No. 147964, April 14, 2004. DBP v. Capulong, GR No. 181790, Jan. 30, 2009. 292 Lalicon v. NHA, GR No. 185440, July 13, 2011. 291

49



Buyer need not give prior notice before desisting from further paying amortizations.



Buyer may not be ousted for non-payment due to the failure of the subdivision owner to put up the required improvements.



Failure to develop a subdivision may justify non-payment of amortizations by a lot buyer.



Failure of seller to deliver the condominium unit entitles buyer to cancel contract.

THE MACEDA LAW 

Buyer is entitled to the following rights in case he defaults in the payment of succeeding installments: 

Grace Period –– to pay, without additional interest, the unpaid installments due within the total grace period earned by him which is fixed at the rate of one month grace period for every year of installment payments made: Provided, That this right shall be exercised by the buyer only once in every five years of the life of the contract and its extensions, if any; and



Refund of “Cash Surrender Value” — if the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to fifty percent of the total payments made and, after five years of installments, an additional five percent every year but not to exceed ninety per cent of the total payments made; Provided, That the actual cancellation of the contract shall take place after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer.

ISSUANCE OF TITLE 

The owner or developer shall deliver the title of the lot or unit to the buyer upon full payment of the lot or unit.



Even with a valid mortgage over the lot, the seller is still bound to redeem said mortgage without any cost to the buyer apart from the balance of the purchase price and registration fees.

ROADS, ALLEYS, OPEN SPACES

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The owner as developer of a subdivision shall provide adequate roads, alleys and sidewalks, and for subdivision projects one hectare or more, reserve 30% of the gross area for open space exclusively for parks, playgrounds and recreational use.



These areas shall be non-alienable public lands, and non-buildable.



The roads, alleys, sidewalks and playgrounds shall be donated by the owner or developer to the city or municipality and it shall be mandatory for the local government to accept; provided, however, that the parks and playgrounds may be donated to the Homeowners Association of the project with the consent of the city or municipality concerned.

VISITORIAL POWERS 

The Board, through its duly authorized representative may, at any time, make an examination into the business affairs, administration, and condition of any person, corporation, partnership, cooperative, or association engaged in the business of selling subdivision lots and condominium units.



It may deputize the Philippine Constabulary or any law enforcement agency in the execution of its final orders, rulings or decisions.

TAKEOVER DEVELOPMENT

 The Board may take over or cause the development and completion of the subdivision or condominium project at the expenses of the owner or developer who has refused or failed to develop or complete the development of the project.

 It may demand, collect and receive from the buyers the installment payments due on the lots for the development of the subdivision. ADMINISTRATIVE FINES 

The Board may prescribe and impose fines not exceeding ten thousand pesos for violations of the provisions of the Decree or of any rule or regulation thereunder. Fines shall be payable to the Board and enforceable through writs of execution in accordance with the provisions of the Rules of Court.



HLURB is without jurisdiction to determine criminal liability.

JUSTICE OSWALDO D. AGCAOILI Philippine Judicial Academy Supreme Court 552-9636, 922-0232, 0920-9506384 Email: [email protected]

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Reference: AGCAOILI, “Property Registration Decree and Related Laws (Land Titles and Deeds)” 2011 ed., (with a foreword by Chief justice Reynato S. Puno), cited by the Supreme Court as “one of the recognized textbooks on property registration” in Eland Philippines Inc. v. Garcia, GR No. 173289, Feb. 17, 2010. See also: Agcaoili, “Law on Natural Resources and Environmental Law Developments” (with a Foreword by Juastice Adolfo S. Azcuna, Chancellor, Philippine Judicial Academy, Supreme Court), and “Reviewer in Property Registration and Related Laws (With Sample MCQs and Suggested Answers) – Published by REX Book Store, Inc.