ATKINS, KROLL & COMPANY, INC., PLAINTIFF AND APPELLANT, VS. SANTIAGO DOMINGO, DEFENDANT AND APPELLEE.

STREET, J.:

This action was instituted in the Court of First Instance of Zamboanga by
Atkins, Kroll & Company, Inc., against Santiago Domingo, for the purpose of
enforcing recognition of its alleged right of ownership over lot No.
thirty-eight (38) of the cadastral plan of the Zamboanga townsite,
expediente No. 7880, and to recover possession of the same from the
defendant, and at the same time to secure a partition of lots Nos. 36 and 55 in
the same plan, according to the proportional interests pertaining to the
plaintiff and defendant as joint owners thereof. Upon hearing the cause the
trial court entered a judgment recognizing the rights of the plaintiff as tenant
in common with the defendant in respect to the land in all of said lots to the
full extent claimed by the plaintiff and made an appropriate order for a
division thereof, but the court at the same time held that the buildings on lots
Nos. 36 and 38 are of the exclusive ownership of the defendant, Santiago
Domingo, and that before the plaintiff can obtain possession of said buildings
the defendant is entitled to be reimbursed for their value, which the court
fixed at ?18,000, in accordance with article 361 of the Civil Code. At the same
time the court denied the right of the plaintiff to recover any part of the
rents received by the defendant for said houses, though it recognized the
obligation of the defendant to reimburse the plaintiff for the defendant’s share
of the taxes paid by the plaintiff on all of the properties. From this judgment
the plaintiff appealed, and under its assignments of error so much of the
decision is called in question as relates to the title to the buildings on lots
Nos. 36 and 38 and to the right of the plaintiff to an accounting for rents
which have been collected exclusively by the defendant on all of the lots.

The appeal is concerned principally with the question of the title to the
improvements on lots Nos. 36 and 38, as distinguished from the title to
the land, and the manner in which this question arises can be most readily
exhibited in brief history of the registered title.

On June 24, 1912, the Court of Land Registration, sitting
in the Province of Zamboanga, adjudicated the three lots already mentioned, Nos.
36, 38, and 55, to Buenaventura Domingo. No mention was made in the decision of
the improvements on said lots, but when the corresponding decrees of
registration were issued on October 4, thereafter, the words “with all the
improvements existing thereon” were inserted, as is the common practice in cases
where the improvements have not been expressly declared by the court to belong
to some other person than the owner of the land. The same phrase
appeared in the respective certificates of title covering the lots, with the
result that according to the Torrens certificates Buenaventura Domingo was the
owner not only of each of said lots but also of the improvements existing
thereon.

Buenaventura Domingo died intestate on October 21, 1912, leaving a widow and
a number of children and grandchildren as heirs. One of his sons, namely,
Santiago Domingo, the defendant in this case, qualified on October 29, 1914, as
administrator of his estate. Another son, named Leon Domingo, died on August 21,
1913, and Santiago Domingo likewise qualified as administrator of Leon’s estate.
In the course of the administration of the estate of Buenaventura Domingo, the
defendant, as his administrator, submitted a project of partition to the court,
in which lots Nos. 36, 38, and 55 are mentioned as properties pertaining to the
decedent. In this project no mention was made of improvements on any of said
lots with the exception of a small house of strong materials on lot No. 38, the
title to which is not in question and may be dismissed from consideration. On
August 8, 1918, the court duly approved the project of partition. No objection
to this action appears to have been made by any person interested in the
estate.

The share of Santiago Domingo in his father’s estate, so far as affects lots
Nos. 36 and 55, has remained undisturbed and said interest is still vested in
him. It is different with lot No. 38, for on February 17,1922, the said Santiago
Domingo sold his entire interest in lot No. 38, “with all the improvements
existing thereon,” by contract of sale with pacto de retro to one Ong
Kong. The interest thus sold was subject to repurchase within the period of one
year, but redemption was never effected; and on February 17, 1923, the property
was duly consolidated in Ong Kong. On February 19, 1923, Ong Kong sold his
entire interest in the lot and improvements’ thereon to the present plaintiff,
Atkins, Kroll & Co.

The shares pertaining to the other heirs in lots Nos. 36, 38, and 55 suffered
a number of mutations as to ownership; but in the end, through various
transactions, the authenticity, legality, and good faith of which are not
questioned either in the pleadings or in the proof, all of said interests came
to rest in the plaintiff, Atkins, Kroll & Co. Each step in all of these
mutations of title was accompanied by the corresponding proper changes in the
Torrens certificates of title until the changes culminated in certificates of
title Nos. 3433, 3843, 3435, showing the present ownership of the lots and
improvements. From these certificates it appears that the plaintiff, Atkins,
Kroll & Co. is the owner of three-fourths of lot No. 36, with the
improvements thereon; of the whole of lot No. 38, with the improvements thereon;
and of three-fourths of lot No. 55, excluding the improvements.

It appears that the defendant, Santiago Domingo, is now in possession of said
property and has at all times been in possession since the plaintiff acquired
its interest therein, and he has during the same period exclusively enjoyed the
use of all the lots, with the income derived from the buildings thereon. This
circumstance, coupled with his refusal to admit the plaintiffs claim as coowner,
resulted, as already stated, in the institution of the present action by the
plaintiff, for the purpose of recovering possession of lot No. 38 and to secure
a partition of lots Nos. 36 and 55, with an accounting for the plaintiff’s
proper proportion of the profits. This brings n.s to consider the origin and
nature of the defendant’s claiui to the exclusive ownership of the buildings on
lots Nos. 36 and 38.

In this connection it appears that the buildings referred to were erected in
the latter months of the year 1912 and first half of 1913, and the defendant
asserts that they were built by him with his own money and with the consent of
his father. Upon this circumstance in connection with article 361 and related
provisions’ of the Civil Code, the defendant bases his claim to the exclusive
ownership of said buildings.

We note that this claim’ was first put forth by the defendant in what he
called an explanatory report submitted to the court in the administration of the
estate of Buenaventura Domingo on February 1, 1919. In that writing the
defendant asked that the buildings on lots Nos. 36 and 38 be segregated from the
mass of the property left by hip father and that he himself be declared to be
the exclusive owner of the buildings. This move was opposed by Zoila Domingo, a
daughter and sole heir of Leon Domingo. In the end the court, upon July 19,
1922, entered a resolution ignoring the defendant’s claim and ordering that the
project of partition be carried into effect. If it be true, as the defendant
claims, that the houses referred to were built with his money, it must strike
one as remarkably strange that he should have waited for nearly seven years, or
until February 1, 1919, before formulating his claim or taking any step whatever
to protect his title to said buildings.

But assuming, as we may, that the buildings in question were in fact
constructed by the defendant with his own money, and with the consent of his
father as owner of the land, it is clear that the defendant’s right to
the buildings in controversy has been lost, except in so far as he is owner of
an undivided one-fourth interest by inheritance; and the interests of the two
parties to this litigation in the properties in question must be taken to be
exactly as they are stated in the existing certificates of title. This results
from the fact that the plaintiff is a purchaser for value who has acquired the
interests shown on the existing Torrens certificates upon the faith of the
registered title, and the defendant is in no position to arrest the effect of
these documents.

But it is insisted that the plaintiff has been affected with the notice of
the defendant’s right by the filing of a lis pendens. This requires a
few words of explanation. Going back to August 18, 1920, we find that on said
date the defendant filed with the register of deeds a notice of its pendens,
setting forth his claim of ownership as to the improvements in question, and
referring to the controversy planted in his explanatory report in the
administration proceedings. Notice of said Its pendens was noted on the back of
the corresponding certificates of title. Upon the date stated the plaintiff had
already acquired a mortgage upon the interest of Zoila Domingo in the estate of
her grandfather, Buenaventura Domingo; and by the foreclosure of that mortgage
all of her interest in lots Nos. 36 and 38 became vested in the plaintiff as
purchaser. The remaining interests acquired by the plaintiff in the same
properties appear to have been acquired by it after the notice of Us pendens was
filed.

As will be seen, the filing of the Its pendens was intended to affect third
persons with notice of the claim which the defendant had asserted in his
explanatory report in the proceedings over the estate of Buenaventura Domingo.
But it will be remembered that the efforts of the defendant to get his claim
recognized in those proceedings completely failed of effect For this reason the
Us pendens must be considered to have lost its efficacy. The effect of notice by
lis pendens is, of course, to charge the stranger with notice of the
particular litigation referred to in the notice, and, if the notice is
effective, the stranger who acquires the property affected by the lis
pendens takes subject to the eventuality of the litigation. But.when the
adverse right fails in such litigation, the lis pendens becomes
innocuous.

It should be noted that the defendant, supposing his claim to have been made
in good faith, might have protected it, at any time before the property had
passed into the hands of a third person, by a proceeding under section 112 of
Act No. 496. Said section declares that any person may at any time apply by
petition to the court, where “new interests have arisen or been created which do
not appear upon the certificate,” and procure such interests to be noted. Such a
petition must be filed and entitled in the original case in which the decree of
registration was entered. (Sec. 112, par. 2, Act No. 496.)

In Bias vs. De la Cruz and Melendres (37 Phil., 1), this court held that the
registration of land in the name of a particular person vests in him
not only the title to the land but also the title to the improvements
thereon, unless special reservation is noted with respect to the improvements.
In that case the improvements which became the subject of controversy had been
placed on the land before it was registered and the decree of
registration was res judicata as to the improvements. In the case
before us the buildings which are the subject of controversy were placed on the
land after the decree of registration. This circumstance made a
proceeding under section 112 of Act No. 496 all the more necessary in order to
protect the new interest thus created. So far as registered land is
concerned, the ~ight recognized in article 361 and related provisions of the
Civil Code is subject to the contingency that it shall be noted in the
registered title before the property passes into the hand of a purchaser for
value.

The considerations so far adduced apply alike to the improvements on lots
Nos. 36 and 38, but there is another circumstance which is fatal to the
defendant’s claim to any of the improvements on lot No. 38. Thfs is found in the
fact that he sold his interest in said lot, including the improvements, to Ong
Kong, the plaintiff’s predecessor in interest. It is evident that the defendant
is estopped by his own deed from claiming any interest in the buildings an this
lot, whatever might have been the law governing his claim to the buildings on
the other lot.

From what has been said it is evident that the trial court was in error in
declaring the defendant to be the owner of the buildings on lots Nos. 36 and 38
and in failing to require the defendant to account; and in order to clarify the
situation we declare: (1) That the ownership of the lots Nos. 36, 38, and 55, is
as stated in the Torrens certificates of title Nos. 3433, 3843, and 3435
(Exhibits A, B, and C of the plaintiff); (2) that the plaintiff is entitled to
possession of lot No. 38 and that partition must be made of lots Nos. 36 and 55
in the manner provided by law; (3) the plaintiff is further entitled to recover
of the defendant such portion of the taxes on said properties as corresponds to
the interest of the defendant and which shall have been paid by the plaintiff;
(4) the plaintiff shall also recover of the defendant such portion of the rents
of said properties as correspond to the interests of the plaintiff since its
acquisition of the same.

The judgment will be reversed and the cause remanded for further proceedings
in conformity with this opinion, without express pronouncement as to costs. So
ordered.

Johnson, Malcolm, Avanceña, Villamor, Ostrand, and Romualdez,
JJ., concur.