EDUARDO DE RODA, PLAINTIFF AND APPELLANT, VS. W. A. LALK AND E. MICHAEL & CO., INC., DEFENDANTS AND APPELLEES.

After
the formal pleas, plaintiff alleges that on March 6, 1920, he commenced
an action in the Court of First Instance of Cebu, known as civil case
No. 2460, in which he prayed that a certain document executed by him
and his wife, as well as a document executed by his wife, and which
refers to the sales of four parcels of land, known as lots Nos. 46, 47,
48 and 584 of the Banilad Friar Land Estate, be annulled and set aside,
the transfer certificates of title of which are Nos. 471, 472, 481 and
654. That the final decision in that case declared the deed executed by
his wife on September 20, 1916, to Mariano M. Gallegos to be null and
void, and in the same decision the court also declared void the
subsequent and successive transfers made by Mariano M. Gallegos,
Joaquin Felix Roca and other persons deriving title to said lots as
void “for a defect in the source.” That the defendant W. A. Lalk is in
possession and claims to be the owner of lots Nos. 46 and 48, transfer
certificates of title of which are Nos. 471 and 472. That the court
having declared null and void the transfer certificates of title Nos.
591 and 592 in favor of Mariano M. Gallegos, and the transfer
certificates of title Nos. 593 and 594 in the name of Joaquin Felix
Roca “for a defect in the source,” the transfer certificates of title
above-mentioned from which the defendants deraign title, must also be
void. That the defendants E. Michael & Co., Inc., and W. A. Lalk
obtained their respective titles through transactions and purchases
from persons whose titles have been declared null and void by the
court, and by reason of the final judgment in that case recognizing
plaintiff as the owner of said lots Nos. 46 and 48, it follows hat the
respective titles of the defendants are null and void. Plaintiff prays
that he be recognized as the absolute owner if lots Nos. 46 and 48, and
that the register of deeds be ordered to issue a new title in his name,
and that pending his action, the register of deeds be enjoined from
making any new transfer of title of said lots.

For answer
the defendants admit the allegations of paragraphs 1 and 4 of the
second amended complaint, and make general denial of all other
allegations, and as a special defense allege that “they were purchasers
in good faith.”

Upon such issues the case was tried and submitted on the following agreed statement of facts:

“It
is agreed by the attorneys of both parties that the transfer
certificate of title No. 472, corresponding to lot No. 46, is issued in
the name of Benita Antioquia, married to Eduardo de Roda, and the date
of said transfer certificate of title is April 12, 1916; that said
transfer certificate of title No. 472 has been cancelled and, in
substitution thereof, another new transfer certificate of title No. 591
has been issued on October 9,1916, in the name of Mariano M. Gallegos;
that said transfer certificate of title No. 591 has been cancelled and,
in lieu thereof, another new transfer certificate of title has been
issued, which is No. 593, in the name of Joaquin Felix Roca, on October
20, 1916; that this transfer certificate of title No. 593 has been
cancelled and, in lieu thereof, another new one was issued on September
16, 1920, in favor of E. Michael & Co., Inc., and the number of the
new transfer certificate of title is No. 1589; that this transfer
certificate of title No. 1589 has been cancelled and, in lieu thereof,
another new one has been issued on November 26, 1920, in favor of W. A.
Lalk, the number of the new transfer certificate of title being 1692.

“It
is also agreed by the attorneys of both parties that the original
transfer certificate of title No. 471, issued on April 12, 1916, in the
name of Benita Antioquia, married to Eduardo de Roda, and which refers
to lot No. 48, has been cancelled and, in lieu thereof, another new
certificate of title was issued, which is No. 592, issued on October
20, 1916, in the name of Mariano M. Gallegos; that this certificate of
title No. 592 has also been cancelled and, in lieu thereof, another new
one was issued, which is transfer certificate of title No. 594, issued
on October 20, 1916, in the name of Joaquin Felix Roca; that this
transfer certificate of title No. 594 has been cancelled and, in lieu
thereof, another new one, which is transfer certificate of title No.
590, was issued on September 16, 1920, in the name of E. Michael &
Co., Inc.; that this transfer certificate of title No. 590 has been
cancelled and, in lieu thereof, another new transfer certificate of
title No. 1693 was issued on November 26, 1920, in the name of W. A.
Lalk; that no notice whatever of lis pendens has ever been inscribed in the said titles up to April 9, 1924.

“Both
parties also agree that in the transfer certificates of title Nos. 1692
and 1693 appears an entry made by the register of deeds regarding lis pendens dated April 9, 1924, referring to the present case No. 4385.”

The lower court rendered judgment for the defendants, from which the
plaintiff appeals, claiming that “the trial court erred in declaring
that the defendants-appellees as purchasers in good faith have a better
right than the plaintiff, the proved owner, as demonstrated by civil
case No. 2460.”

JOHNS, J.:

It is admitted that civil case No. 2460 was filed in the Court of First Instance of Cebu on March 6, 1920, and that no lis pendens
was filed prior to April 9, 1924. It is also admitted that the
conveyances to the defendants were made on November 26, 1920, and that
all of the conveyances from which the defendants deraign title duly
noted on and appear in the registry of deeds. The defendants were not
made parties to civil case No. 2460, and there is no allegation or
proof of any fraud on their part in the making of their purchases, or
that they had any knowledge of any defect in the title. In so far as
the record shows, they purchased and acquired their title in good
faith, and for a valuable consideration.

The rule is elementary that fraud is not presumed. Ruling Case Law, volume 12, page 426, says:

“173. Presumptions and Inferences from Circumstances Distinguished.—The
statement that fraud cannot be presumed does not mean that the
presumption of fraud may not arise, and be legitimately deduced, from
circumstantial evidence, but only that it is not to be assumed of a
transaction that it is fraudulent, in the absence of proof afforded by
intrinsic evidence of unfairness in the transaction itself, or
extrinsic facts and circumstances leading to that conclusion. The
general rule, therefore, must be understood only as affirming that a
contract or conduct apparently honest and lawful must be treated as
such until it is shown to be otherwise by either positive or
circumstantial evidence. Fraud may be, and often is, proved by or
inferred from circumstances, and the circumstances proved may in some
cases raise a presumption of its existence. On the other hand it has
been held that while fraud may be proved by circumstances or presumed
from them, it cannot be demonstrated by construction, and hence must be
proved in all cases.”

For aught that
appears in the record, the defendants acquired their title in an honest
and lawful manner, and without any knowledge of the decision which was
rendered in civil case No. 2460, and under such a state of facts and in
the absence of a lis pendens, that decision was not binding upon them.

The judgment of the lower court is affirmed, with costs. So ordered.

Avanceña, C. J., Street, Malcolm, Villamor, Ostrand, Romualdez, and Villa-Real, JJ., concur.