FELIX DE VILLA, PLAINTIFF-APPELLEE, VS. ANACLETO TRINIDAD, ETC., ET AL., DEFENDANTS, DEVELOPMENT BANK OF THE PHI­LIPPINES AND MARIANO S. TRINIDAD, DEFENDANTS-APPELLANTS.

De Villa versus Trinidad

The Case

This is a case about two certificates of title covering the same parcel of land, and which of the two holders must yield. Felix de Villa sued Anacleto Trinidad, and later the Development Bank of the Philippines, for declaration of ownership, recovery of the land, and damages, after Trinidad took possession of the property on the strength of a title traced to a later registration. The case matters because it fixes the rule that where two certificates of title are issued to different persons over the same land, the earlier in date prevails, and the purchaser under the later certificate must seek redress from his own vendor rather than disturb the holder of the first.

Procedural History

The case began in the Court of First Instance of Camarines Sur, where Felix de Villa filed a complaint against Anacleto Trinidad for declaration of ownership, recovery of the land, and damages. The complaint was later amended to include the Development Bank of the Philippines. After Trinidad died, his heirs were substituted, and all but Mariano Trinidad disclaimed any interest, the land having been adjudicated to him in the extrajudicial partition of the estate. The trial court rendered judgment in favor of De Villa, declaring him the exclusive and absolute owner, ordering the defendants to vacate and deliver the land, and awarding damages. The defendants appealed to the Court of Appeals, which certified the case to the Supreme Court because the amount involved exceeded two hundred thousand pesos. The Supreme Court decided the case in March 1968.

Facts

Cesario Fabricante owned a large parcel of land in Iriga, Camarines Sur, covered by Transfer Certificate of Title No. 50, originating from Original Certificate of Title No. 183, registered on January 30, 1920. To secure a loan, he mortgaged the land in favor of Felix de Villa and surrendered to him the duplicate certificate, which later was lost. On November 3, 1945, Fabricante petitioned for a new duplicate on the ground that his copy was lost, without notifying De Villa, the mortgage creditor. The petition was granted, and a new duplicate was issued to him. Days later, on November 27, 1945, Fabricante sold the land to Eustaquio Palma, who obtained Transfer Certificate of Title No. 12 in his name.

In 1946, Palma mortgaged the property to the Agricultural and Industrial Bank, later the Rehabilitation Finance Corporation and now the Development Bank of the Philippines, to secure two loans. When Palma failed to pay, the bank foreclosed extrajudicially under Act No. 3135, bought the land at the public auction in April 1951, and obtained a writ of possession. Palma later assigned his right of redemption to Anacleto Trinidad, who was allowed by the bank to buy the land on installments and then took possession.

Meanwhile, De Villa, having lost the duplicate surrendered to him, petitioned in June 1948 for the reconstitution of Transfer Certificate of Title No. 50 in Fabricante's name, with the mortgage in his favor annotated. The trial court granted the reconstitution. The Register of Deeds moved for reconsideration, claiming that a certificate numbered 50 was intact in his office but already cancelled by Palma's title. The court denied the motion, finding that the intact certificate covered a different lot and originated from a different original certificate. When Fabricante failed to redeem, De Villa foreclosed, bought the land at public auction, obtained a writ of possession in January 1961, and secured Transfer Certificate of Title No. 3347 in his name. Trinidad then filed a forcible entry case and, by writ of preliminary injunction, repossessed the land in March 1961. De Villa filed this action in January 1962.

Issues

• Whether or not De Villa or Trinidad is the owner of the land, where two certificates of title were issued over the same land under different original certificates of title.
• Whether or not De Villa is barred by estoppel and by laches from asserting his claim.
• Whether or not the award of damages in favor of De Villa was proper, and from what date it should be reckoned.

Applicable Provisions

The decision rests on the rule on conflicting certificates of title, which the Court states as a rule of jurisprudence rather than as a codal text. The governing principle is expressed in the decision itself:

Where two certificates of title are issued to different persons covering the same land in whole or in part, the earlier in date must prevail as between original parties and in case of successive registrations where more than one certificate is issued over the land, the person holding under the prior certificate is entitled to the land as against the person who rely on the second certificate.

This rule directly resolves the conflict, because De Villa traces his title to a registration earlier in date than Trinidad's.

The Court also refers to the extrajudicial foreclosure under Act No. 3135, which clothed the bank, and later Trinidad, with whatever rights the mortgagor Palma had. That circumstance bears on the case because the successors of the later certificate acquire no better right than their vendor.

Ruling

On the first issue, the Court held that De Villa is the owner. The two certificates describe the same land of 5,724,415 square meters, surveyed on the same dates, but De Villa's title originates from Original Certificate of Title No. 183, registered on January 30, 1920, while Trinidad's originates from Original Certificate of Title No. 34, registered on November 25, 1920. The Court applied its settled rule:

The purchaser from the owner of the later certificate and his successors, should resort to his vendor for redress, rather than molest the holder of the first certificate and his successors who should be permitted to rest secure in their title.

Since the earlier original certificate was registered on January 30, 1920, De Villa's claim prevails. The Court added that equity supports this result, because De Villa's title was never tainted with fraud, unlike the titles of Palma and the bank, which traced to Fabricante's misrepresentation in obtaining a new duplicate.

On the second issue, the Court held that De Villa is not barred by estoppel or laches. Having secured his title after the public auction, his rights were protected, and upon dispossession he had every right to seek redress in court. He possessed the land from January 1961 until March 1961, and filed suit in January 1962, within a reasonable time. These facts do not show that he slept on his rights.

On the third issue, the Court modified the damages. Trinidad's repossession in March 1961 was pursuant to a court order legally obtained and cannot be deemed in bad faith, and his possession before that time was in good faith. Damages should therefore be reckoned only from the filing of the complaint in January 1962, when the defendants could be positively adjudged in bad faith. The amounts awarded, not being questioned, were sustained, but they must be offset against the value of necessary and useful improvements and expenses incurred by Trinidad, to be determined in supplementary proceedings in aid of execution.

Doctrine

Where two certificates of title are issued to different persons covering the same land in whole or in part, the earlier in date must prevail as between the original parties. In successive registrations, the person holding under the prior certificate is entitled to the land as against the person who relies on the second certificate. The purchaser from the owner of the later certificate and his successors must resort to their vendor for redress rather than molest the holder of the first certificate, who should be permitted to rest secure in his title. A possessor acting under a court order legally obtained is not in bad faith, and damages may be awarded against him only from the time he could be positively adjudged in bad faith, which is the filing of the action.

Disposition

The Supreme Court affirmed the judgment of the trial court in all respects except that the damages recoverable by De Villa from Trinidad were made to run only from the filing of the complaint in January 1962, with supplementary proceedings ordered to appraise the improvements reimbursable to Trinidad and to offset the two amounts.

Remember This

Memorize the line: where two certificates of title cover the same land, the earlier in date prevails, and the holder of the later certificate must go after his own vendor. Examiners use this case to test the rule on conflicting titles and the good faith of a possessor acting under a court order.