FRANCISCO JOSE, ANTONIO, ERLINDA, JOVITA, ARACELI, DOLORES, VIRGINIA, MARTA, LEDINIA, AND ANITA, ALL SURNAMED RAMON JAO, PETITIONERS, VS. COURT OF APPEALS AND LAUREANA C. VDA. D…

This is a petition for review on certiorari seeking the
reversal of the 1) decision^[1]
dated July 14, 1988 of the respondent appellate court in CA – G.R. CV – No.
09169, affirming the decision of the Regional Trial Court of Caloocan City, which dismissed herein petitioners’
complaint for annulment of title and reconveyance of
property and spouses Pablo Bairan and Laureana C. Bairan’s
counterclaim, and 2) respondent appellate court’s resolution dated September
14, 1988, denying herein petitioners’ motion for reconsideration.

The facts of the case are as follows:

On July 30, 1956, petitioners’ predecessors-in?interest,
Pedro Ramon Jao and Catalina Jao
(hereinafter referred to as JAO), executed a deed of absolute sale selling to
spouses Zosimo H. Tan and Elizabeth O. Tan
(hereinafter referred to as TAN) four (4) hectares of property located in Novaliches, Caloocan City, for and
in consideration of P1.00 and other good and valuable consideration.  On July
31, 1956, the said deed of sale was registered with the Register of
Deeds, Caloocan
City and TCT No. 45783 was issued
in the name of the spouses TAN.^[2]

According to JAO, the four (4) hectares of land was merely loaned
to TAN to be utilized as a site of a Chinese
Temple to be returned to JAO if the
temple could not be erected in five (5) years from the date of said
transfer.  The five-year period having
elapsed without the Chinese Temple
being erected, JAO demanded from TAN the reconveyance
of the property.^[3]

It appears however that a certain Segundina
Vda. de Tiongson
fraudulently holding herself out as Elizabeth O. Tan filed a petition for the
issuance of a new owner’s duplicate of Transfer Certificate of Title No. 45783
in lieu of the one supposedly lost, successfully obtained another duplicate
copy thereof on February 7, 1964 and then on February 10, 1964 executed a false deed of absolute sale in her
favor which was inscribed at the back of TCT No. 45783 resulting in its
cancellation and the issuance of TCT No. 3559 in the name of Segundina Vda. de Tiongson.  Tiongson then offered the property for sale to the spouses Pablo and Laureana Bairan (herein referred
to as BAIRAN) who after finding
after verification with the Register of Deeds that the title of Tiongson was in order
bought the same and was issued
TCT No. 3667.

All the while that the foregoing transactions transpired, TCT
45783, allegedly lost, was in the possession of the TAN spouses.

Subsequently, three civil cases arose therefrom
as follows:

(a) Civil Case No. 190 entitled Petition for Annulment of Titles
and Revival of Former Title, filed by TAN with the Court of First Instance of Rizal against Tiongson and the
BAIRANS praying for a declaration
of nullity of TCT No. 3667 in the name
of BAIRAN and a revival of TCT No. 45783 in their (TAN’S) name.  A notice of lis
pendens was annotated at the back of TCT No.
3667.^[4]

(b) Civil Case No. 390 entitled “Annulment of Documents and/or
Reconveyance” filed by JAO, the original owner
against TAN and Tiongson, at the Court of First
Instance, praying that said defendants be ordered to transfer and reconvey to him the said property.  For unknown reasons, JAO did not include the
BAIRANS in his complaint although the BAIRANS were already the registered owner
on March 4, 1964 when their
title was issued while the complaint was filed on July 1964.

(c) Civil Case No. C-10228 filed eighteen years later by herein
petitioners (JAO’s heirs) for annulment of title and reconveyance against the BAIRANs,
with the Regional Trial
Court of Caloocan City.

After hearing the Trial Court in Civil Case No. C?390
sustained the claim of JAO and rendered judgment, the dispositive
portion of which reads:

“WHEREFORE, judgment is rendered in favor of the plaintiffs
and against the defendants and hereby declares the Deed of Absolute Sale.  ‘Exhibit ’11’, as null and void and
inexistent, and order the defendants Zosimo H. Tan and Elizabeth O. Tan, to
execute a deed of reconveyance over the four (4)
hectares of land covered by TCT No. 45783 of the Register of Deeds of Caloocan City, in favor of the plaintiffs, now substituted
by their children namely, Jose Ramon Jao, Antonio
Ramon Jao, Erlinda Ramon Jao, Jovita Ramon Jao, Araceli Ramon Jao, Dolores Ramon Jao, Virginia
Ramon Jao, Marta Ramon Jao,
Ledinia Ramon Jao and Anita
Ramon Jao, without pronouncement as to costs.”^[5]

On appeal, the judgment was affirmed by the Court of Appeals in a
decision promulgated on August 27,
1976.  The Supreme Court
denied the petition for review on certiorari of said decision, which
denial became final and executory on October 7, 1977.^[6]

On September 27, 1977,
Civil Case No. C-190 was dismissed, it appearing that petitioner therein, Zosimo Tan, has no more cause of action against BAIRAN.^[7]

In the meantime, Segundina Vda. de Tiongson was prosecuted
and convicted of falsification of public document in Criminal Case No. C-566.^[8]

On September 30, 1985,
the lower court rendered judgment, in Civil Case No. C-10228 the dispositive portion of which is as follows:

“WHEREFORE, judgment is hereby rendered DISMISSING plaintiffs’
complaint with costs against the plaintiffs.

“Defendants counterclaim is likewise dismissed for lack of
merit, there being no showing that in filing this complaint plaintiffs acted in
bad faith.

“SO ORDERED.”^[9]

On appeal the Court of Appeals, on July 14, 1988, affirmed the judgment of the lower court.

The motion for reconsideration having been denied, herein
petitioners instituted the instant petition.

In the resolution of June
14, 1989, the Second Division of this Court gave due course to the petition.

Petitioners filed their memorandum on July 24, 1989;^[10]
while private respondent filed theirs on August 11, 1989.^[11]

Reduced to bare essentials, the only issue in this case is whether or not the rights or
title to the property of Tiongson, an impostor, can
be the root of a valid title for the BAIRAN spouses, allegedly innocent
purchasers for value.

It is not disputed that the BAIRANs not
only had knowledge of the decision of the trial court in Civil Case No. 390
declaring the Deed of Absolute Sale between JAO and TAN as a simulated sale and as such null
and void and inexistent and ordering the TANs to
execute a deed of reconveyance over the four (4)
hectares of land covered by TCT No. 45783 in favor of JAO, which decision had
been affirmed by both the Court of Appeals and the Supreme Court and which had
become final and executory, but the BAIRANs even judicially admitted and acknowledged that the
property in litigation belongs to the JAO family and used that fact as basis of
their “Motion to Dismiss” in Civil
Case No. C-190.  In addition, Segundina Vda. de Tiongson was prosecuted and convicted of falsification of
public document in Criminal Case No. C-566, leaving no doubt that the title of Tiongson from which the title of BAIRANs
was derived, was procured through misrepresentation, deceit and fraud.

Under similar circumstances, this Court has already ruled that
wrongly reconstituted certificates of title secured through fraud and
misrepresentation cannot be the source of legitimate rights and benefits,
unless of course the transferee of the title is in good faith.  Thus, in the case of Republic v. Court of
Appeals, it was held that:

“The existence of the two titles of the Government ipso
facto nullified the reconstitution proceedings and signified that the
evidence in the said proceedings were sham and deceitful and were filed in bad
faith.  Such humbuggery or imposture
cannot be countenanced and cannot be the source of legitimate rights and
benefits.

X                   X                      X

“To sustain the validity of the reconstituted titles would be
to allow Republic Act No. 26 to be utilized as an instrument for land grabbing
(see Republic v. Court of Appeals, Ocampo and Anglo,
L-­31303-04, May 31, 1978, 83 SCRA 453, 480 per J.G.S. Santos) or to sanction
fraudulent machinations for depriving a
registered owner of his land to
undermine the stability and security of Torrens titles and to impair, the
Torrens system of registration.

“The theory of A & A Torrijos
Engineering Corporation that it was a purchaser in good faith and for value is
indefensible because the title of the lot which
it purchased unmistakably shows that such title was reconstituted.  That circumstance should have alerted its officers to make the necessary investigation in the registry of Deeds of Caloocan City and Rizal where
they could have found that Lot 918 is
owned by the State.”^[12]

The case at bar involves the issuance of a new owners’s duplicate through court proceedings equally sham
and deceitful which under the same principle cannot be the source of legitimate
rights and benefits.

A new owner’s duplicate certificate of title issued under these
circumstances indicates that it was issued in lieu of a lost one and should
have alerted the BAIRANs to take precautions in the
examination of the records in the Registry where they could easily discover
among others:  that the Order for the Issuance
of a New Owner’s Duplicate Copy of TCT No. 45783 was dated February 7, 1964; on
February 8, 1964 a Deed of Sale in favor of Tiongson
for a measly sum of five thousand pesos (P5,000) was executed on February 8,
1964; the certificate was already in the
name of Tiongson on February 10, 1964 and on
March 4, 1964, the title was transferred to BAIRANs,
all in less than the 30-day period from notice or Order to the Register of
Deeds before a lost owner’s duplicate copy could be reissued.^[13]
As they obviously did not, they cannot now claim to be in good faith.

Neither can they claim prescription which is unavailing not only against the registered owner but also
equally against the latter’s hereditary successors^[14]
more specially in this case where private respondents themselves admitted that
subject land belong to JAO, nor can they take advantage of the non-cancellation
of their title TCT No. 3667 for it has been settled by this Court, that where
the reconstituted certificates of titles had been secured through fraud and
misrepresentation and the lower court has not annulled the owner’s duplicate
certificate issued in compliance with the Order of Reconstitution, the holder
thereof is regarded as a mere trustee of the rightful owners, with the
obligation to give and convey to the latter their respective shares.^[15]

PREMISES CONSIDERED, the assailed decisions of the
Court of Appeals and the Trial Court are REVERSED and SET ASIDE, the
proceedings for the issuance of a New Owner’s duplicate are declared VOID and
are SET ASIDE and the questioned TCT No. 3559 of Tiongson
and TCT No. 3667 of the BAIRANs, are likewise
declared VOID and the Register of Deeds of Caloocan
City is ordered to CANCEL
aforesaid titles.

SO ORDERED.

Melencio-Herrera, (Chairman),
Padilla, Sarmiento,
and Regalado, JJ., concur.

^[1]
Penned by Associate Justice Ricardo L. Pronove, Jr.,
concurred in by Associate Justices Floreliana Castro-Bartolome and Bonifacio A. Cacdac, Jr.

^[2]
Rollo, pp. 42-43

^[3]
Ibid., p. 43

^[4]
Ibid., p. 44

^[5]
Ibid., pp. 44-45

^[6]
Ibid., p. 45

^[7]
Ibid., pp. 45-46

^[8]
Ibid., p. 46

^[9]
Ibid., p. 151

^[10]
Ibid., p. 212

^[11]
Ibid., p. 245

^[12]
94 SCRA 872-873 [1979]

^[13]
Secs. 109 and 110 of P.D. 1529 (Rollo, pp. 24-25)

^[14]
Bailon-Casilao v. Court of Appeals, 160 SCRA
738 (1988)

^[15]
Anonuevo v. Anonuevo,
21 SCRA 1324 (1967)