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Prof. Joselito Guianan Chan's The Labor Code of the Philippines, Annotated Labor Standards & Social Legislation Volume I of a 3-Volume Series 2019 Edition (3rd Revised Edition)
 

 
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UNITED STATES SUPREME COURT JURISPRUDENCE
 

 
PHILIPPINE SUPREME COURT JURISPRUDENCE
 

   
September-2001 Jurisprudence                 

  • G.R. No. 137538 September 3, 2001 - OFFICE OF THE OMBUDSMAN v. HON. FRANCISCO B. IBAY

  • A.M. No. MTJ-00-1249 September 4, 2001 - PHIL. GERIATRICS FOUNDATION, ET AL. v. LYDIA QUERUBIN LAYOSA

  • A.M. No. P-00-1373 September 4, 2001 - ELIZABETH A. TIONGCO v. ROGELIO S. MOLINA, ET AL.

  • A.M. No. P-01-1501 September 4, 2001 - JOSEPHINE D. SARMIENTO v. ALBERT S. SALAMAT

  • A.M. No. P-01-1502 September 4, 2001 - CRESENCIO N. BONGALOS v. JOSE R. MONUNGOLH and VICTORIA D. JAMITO

  • A.M. No. P-99-1357 September 4, 2001 - SHERWIN M. BALOLOY v. JOSE B. FLORES

  • A.M. No. RTJ-01-1651 September 4, 2001 - PROSECUTOR LEO C. TABAO v. JUDGE FRISCO T. LILAGAN

  • G.R. No. 125359 September 4, 2001 - ROBERTO S. BENEDICTO and HECTOR T. RIVERA v. THE COURT OF APPEALS

  • G.R. No. 126859 September 4, 2001 - YOUSEF AL-GHOUL, ET AL. v. COURT OF APPEALS, ET AL.

  • G.R. No. 127181 September 4, 2001 - LAND BANK OF THE PHIL. v. COURT OF APPEALS, ET AL.

  • G.R. No. 132709 September 4, 2001 - CAMILO L. SABIO, ET AL. v. INTERNATIONAL CORPORATE BANK, ET AL.

  • G.R. No. 134490 September 4, 2001 - PEOPLE OF THE PHILIPPINES v. JOEL BRAGAT

  • G.R. Nos. 135356-58 September 4, 2001 - PEOPLE OF THE PHIL. v. MELECIO SAGARINO

  • G.R. No. 138923 September 4, 2001 - PEOPLE OF THE PHIL. v. ANITA AYOLA, ET AL.

  • A.M. No. MTJ-01-1344 September 5, 2001 - LYDIO ARCILLA, ET AL. v. LUCIO PALAYPAYON, ET AL.

  • G.R. No. 128145 September 5, 2001 - J.C. LOPEZ & ASSOCIATES v. COMMISSION ON AUDIT, ET AL.

  • G.R. No. 133886 September 5, 2001 - PEOPLE OF THE PHILIPPINES v. OSCAR PARBA

  • G.R. No. 134101 September 5, 2001 - PEOPLE OF THE PHIL. v. FELINO O. LLANITA

  • G.R. No. 136054 September 5, 2001 - SEVERINA SAN MIGUEL v. COURT OF APPEALS, ET AL.

  • G.R. No. 132714 September 6, 2001 - PEOPLE OF THE PHIL. v. RENATO LALINGJAMAN

  • G.R. Nos. 139064-66 September 6, 2001 - PEOPLE OF THE PHIL. v. ALBERTO ARCE

  • G.R. No. 140529 September 6, 2001 - JOSE P. LOPEZ v. OFFICE OF THE OMBUDSMAN, ET AL.

  • G.R. No. 141400 September 6, 2001 - PEOPLE OF THE PHIL. v. EVANGELINE GANENAS

  • Admin. Case. No. 4863 September 7, 2001 - URBAN BANK v. ATTY. MAGDALENO M. PEÑA

  • G.R. No. 114858-59 September 7, 2001 - COLUMBUS PHILIPPINES BUS CORPORATION v. NATIONAL LABOR RELATIONS COMMISSION

  • G.R. No. 126352 September 7, 2001 - GSIS v. COURT OF APPEALS, ET AL.

  • G.R. No. 127261 September 7, 2001 - VISAYAN SURETY & INSURANCE CORPORATION v. COURT OF APPEALS, ET AL.

  • G.R. No. 129644 September 7, 2001 - CHINA BANKING CORP. v. COURT OF APPEALS, ET AL.

  • G.R. No. 131805 September 7, 2001 - PEOPLE OF THE PHIL. v. GREGORIO HERMOSA, ET AL.

  • G.R. No. 132064 September 7, 2001 - PEOPLE OF THE PHIL. v. ISAGANI BAYENG, ET AL.

  • G.R. No. 132320 September 7, 2001 - PEOPLE OF THE PHIL. v. CONRADO OJERIO

  • G.R. Nos. 135402-03 September 7, 2001 - PEOPLE OF THE PHIL. v. IAN GONZAGA

  • G.R. No. 136779 September 7, 2001 - PEOPLE OF THE PHIL. v. ARNEL ASUNCION

  • G.R. No. 142065 September 7, 2001 - LENIDO LUMANOG v. HON. JAIME N. SALAZAR

  • G.R. No. 142875 September 7, 2001 - EDGAR AGUSTILO v. COURT OF APPEALS, ET AL.

  • G.R. No. 144877 September 7, 2001 - DEVELOPMENT BANK OF THE PHIL. v. VERONICA AGUIRRE, ET AL.

  • A.M. No. P-01-1506 September 10, 2001 - GEORGE S. BICBIC v. DHALIA E. BORROMEO

  • G.R. Nos. 104769 & 135016 September 10, 2001 - AFP MUTUAL BENEFIT ASSO. v. COURT OF APPEALS, ET AL.

  • G.R. No. 118943 September 10, 2001 - MARIO HORNALES v. NLRC, ET AL.

  • G.R. No. 130362 September 10, 2001 - INT’L FLAVORS & FRAGRANCES (PHIL.) v. MERLIN J. ARGOS, ET AL.

  • G.R. No. 138485 September 10, 2001 - DR. v. COMMISSIONER OF INTERNAL REVENUE

  • G.R. No. 141970 September 10, 2001 - METROPOLITAN BANK v. FLORO T. ALEJO

  • G.R. No. 145588 September 10, 2001 - ESPERIDION LOPEZ, ET AL. v. COURT OF APPEALS, ET AL.

  • G.R. No. 140398 September 11, 2001 - FRANCISCO DELA MERCED, ET AL. v. GSIS, ET AL.

  • G.R. No. 121877 September 12, 2001 - PEOPLE OF THE PHIL v. ERLINDA GONZALES

  • G.R. Nos. 138431-36 September 12, 2001 - PEOPLE OF THE PHIL. v. DIOSCORA M. ARABIA, ET AL.

  • G.R. No. 140903 September 12, 2001 - HENRY SY v. COMMISSION ON SETTLEMENT OF LAND PROBLEMS, ET AL.

  • A.M. No. 00-1-4-03-SC September 13, 2001 - RE: REQUEST FOR LIVE RADIO-TV COVERAGE OF THE TRIAL IN THE SANDIGANBAYAN OF THE PLUNDER CASES AGAINST FORMER PRESIDENT JOSEPH E. ESTRADA v. JOSEPH E. ESTRADA and INTEGRATED BAR OF THE PHILIPPINES

  • A.M. No. 00-4-188-RTC September 13, 2001 - REQUEST OF MR. OSCAR T. LLAMAS FOR RE-ASSIGNMENT OSCAR T. LLAMAS v. EMMANUEL LACANDOLA AND ET. AL.

  • G.R. No. 120009 September 13, 2001 - DOLE PHILIPPINES v. NATIONAL LABOR RELATIONS COMMISSION

  • G.R. No. 122095 September 13, 2001 - PEOPLE OF THE PHILIPPINES v. DOMINGO DAWISAN

  • G.R. No. 127913 September 13, 2001 - RCBC v. METRO CONTAINER CORP.

  • G.R. No. 132354 September 13, 2001 - PEOPLE OF THE PHIL. v. DEOMEDES IGLESIA

  • G.R. Nos. 136840-42 September 13, 2001 - PEOPLE OF THE PHIL. v. ROMEO NAVARETTE

  • G.R. No. 137250-51 September 13, 2001 - PABLO MARGAREJO v. HON. ADELARDO ESCOSES

  • G.R. No. 138972-73 September 13, 2001 - PEOPLE OF THE PHIL. v. EUGENIO B. MARQUEZ, ET AL.

  • G.R. No. 140512 September 13, 2001 - PEOPLE OF THE PHIL. v. PETER PELERAS, ET AL.

  • G.R. No. 142043 September 13, 2001 - PEOPLE OF THE PHIL. v. NELSON BITUON

  • G.R. No. 142430 September 13, 2001 - PEOPLE OF THE PHIL. v. RONNIE QUINICIO, ET AL.

  • G.R. No. 142444 September 13, 2001 - OFELIA D. ARTUZ v. COURT OF APPEALS, ET AL.

  • G.R. No. 142649 September 13, 2001 - ANTONIO C. SAN LUIS v. COURT OF APPEALS

  • G.R. No. 143702 September 13, 2001 - PEOPLE OF THE PHIL. v. ZALDY MENDOZA

  • G.R. No. 129212 September 14, 2001 - PEOPLE OF THE PHILIPPINES v. MARIO LACUESTA, ET AL.

  • A.M. No. RTJ-00-1575 September 17, 2001 - ISAGANI RIZON v. JUDGE OSCAR E. ZERNA

  • A.M. No. RTJ 99-1498 September 17, 2001 - VICENTE P. LIM v. JUDGE JACINTA B. TAMBAGO, ET AL.

  • G.R. No. 111584 September 17, 2001 - PRODUCERS BANK OF THE PHILIPPINES v. COURT OF APPEALS and SPOUSES SALVADOR Y. CHUA and EMILIA U. CHUA

  • G.R. No. 135644 September 17, 2001 - GOVERNMENT SERVICE INSURANCE SYSTEM v. SPOUSES GONZALO and MATILDE LABUNG-DEANG

  • G.R. No. 135912 September 17, 2001 - ODIN SECURITY AGENCY v. SANDIGANBAYAN, ET AL.

  • G.R. No. 138219 September 17, 2001 - GERARDO V. TAMBAOAN, ET AL. v. COURT OF APPEALS, ET AL.

  • G.R. Nos. 138943-44 September 17, 2001 - PEOPLE OF THE PHIL. v. HENRY ALMAZAN

  • G.R. No. 141209 September 17, 2001 - ANTONIA HUFANA, ET AL. v. WILLIAM ONG GENATO

  • A. C. No. 5043 September 19, 2001 - ABEDIN L. OSOP v. ATTY. V. EMMANUEL C. FONTANILLA

  • G.R. No. 135936 September 19, 2001 - THE PEOPLE OF THE PHILIPPINES v. GUALBERTO MIRADOR alias "GOLING"

  • G.R. No. 144400 September 19, 2001 - DOMINGO O. IGNACIO v. COCA-COLA BOTTLERS PHILS.

  • A.M. No. MTJ-01-1369 September 20, 2001 - GUILLERMA D. CABAÑERO v. JUDGE ANTONIO K. CAÑON

  • A.M. No. MTJ-01-1371 September 20, 2001 - ATTY. NESCITO C. HILARIO v. JUDGE ROMEO A. QUILANTANG

  • A.M. No. RTJ-99-1472 September 20, 2001 - SPOUSES HERMINIO, ET Al. v. HON. DEMETRIO D. CALIMAG

  • A.M. No. P-01-1483 September 20, 2001 - EDNA FE F. AQUINO v. ISABELO LAVADIA

  • G.R. No. 116938 September 20, 2001 - LEONILA GARCIA-RUEDA v. REMEDIOS A. AMOR, ET AL.

  • G.R. No. 127405 September 20, 2001 - MARJORIE TOCAO and WILLIAM T. BELO v. COURT OF APPEALS and NENITA A. ANAY

  • G.R. No. 130399 September 20, 2001 - PUBLIC UTILITIES DEPARTMENT v. HON. TEOFISTO T. GUINGONA

  • G.R. Nos. 135068-72 September 20, 2001 - PEOPLE OF THE PHIL. v. MAXIMO RAMOS

  • G.R. No. 137674 September 20, 2001 - WILLIAM GO KIM HUY v. SANTIAGO GO KIM HUY, ET AL.

  • G.R. No. 139410 September 20, 2001 - PEOPLE OF THE PHILIPPINES v. SILVERIO AGUERO

  • G.R. No. 140898 September 20, 2001 - THE PEOPLE OF THE PHILIPPINES v. JOSE ISHIKAWA AMBA

  • A.M. No. P-99-1289 September 21, 2001 - JUDGE NAPOLEON S. DIAMANTE v. ANTHONY A. ALAMBRA

  • G.R. Nos. 119609-10 September 21, 2001 - PCGG v. HONORABLE SANDIGANBAYAN (Third Division), ET AL.

  • G.R. No. 128876 September 21, 2001 - PEOPLE OF THE PHILIPPINES v. MANOLITO FELIZAR y CAPULI

  • G.R. No. 132384 September 21, 2001 - PEOPLE OF THE PHILIPPINES v. MARLON GADIA

  • G.R. No. 134596 September 21, 2001 - RAYMUND ARDONIO v. THE PEOPLE OF THE PHILIPPINES

  • G.R. No. 142889 September 21, 2001 - EXECUTIVE LABOR ARBITER RICARDO N. OLAIREZ v. OMBUDSMAN ANIANO A. DESIERTO

  • G.R. No. 145416 September 21, 2001 - GOLDEN HORIZON REALTY CORPORATION v. SY CHUAN

  • A.M. No. 99-6-79-MTC September 24, 2001 - REPORT ON THE JUDICIAL AUDIT CONDUCTED IN THE MUNICIPAL TRIAL COURT

  • A.M. No. P-01-1512 September 24, 2001 - TERESITA H. ZIPAGAN v. JOVENCIO N. TATTAO

  • G.R. Nos. 132442-44 September 24, 2001 - PEOPLE OF THE PHILIPPINES v. BERNARDINO ARANZADO

  • G.R. Nos. 135524-25 September 24, 2001 - PEOPLE OF THE PHILIPPINES v. MANOLITO AGUSTIN

  • G.R. No. 141897 September 24, 2001 - METRO CONSTRUCTION v. CHATHAM PROPERTIES

  • G.R. No. 144404 September 24, 2001 - PEOPLE OF THE PHILIPPINES v. LEODEGARIO BASCUGUIN Y AGQUIZ

  • G.R. Nos. 127759-60 September 25, 2001 - PEOPLE OF THE PHIL. v. PO3 NOEL FELICIANO

  • G.R. Nos. 134527-28 September 25, 2001 - PEOPLE OF THE PHILIPPINES v. SERAPIO REY alias APIONG

  • G.R. Nos. 136867-68 September 25, 2001 - PEOPLE OF THE PHILIPPINES v. RODRIGO GALVEZ y JEREZ

  • G.R. No. 137612 September 25, 2001 - PEOPLE OF THE PHILIPPINES v. FRANCISCO ANTINERO BERIARMENTE

  • A.C. No. 4497 September 26, 2001 - MR. and MRS. VENUSTIANO G. SABURNIDO v. ATTY. FLORANTE E. MADROÑO

  • A.C. No. 4990 September 26, 2001 - ELENA ZARATE-BUSTAMANTE and LEONORA SAVET CATABIAN v. ATTY. FLORENTINO G. LIBATIQUE

  • G.R. No. 122824 September 26, 2001 - AURORA F. IGNACIO v. VALERIANO BASILIO,

  • G.R. No. 123058 September 26, 2001 - PEOPLE OF THE PHIL. v. ALFREDO NAPUD, JR.

  • G.R. No. 129107 September 26, 2001 - ALFONSO L. IRINGAN v. HON. COURT OF APPEALS , ET AL.

  • G.R. Nos. 129530-31 September 26, 2001 - PEOPLE OF THE PHILIPPINES v. WILFREDO OLARTE

  • G.R. Nos. 138308-10 September 26, 2001 - THE PEOPLE OF THE PHILIPPINES v. PABLO SANTOS

  • G.R. No. 142564 September 26, 2001 - PEOPLE OF THE PHILIPPINES v. HILGEM NERIO y GIGANTO

  • G.R. Nos. 143108-09 September 26, 2001 - REPUBLIC OF THE PHILIPPINES. v. COURT OF APPEALS

  • Adm. Case. No. 5505 September 27, 2001 - SEVERINO RAMOS v. ATTY. ELLIS JACOBA and ATTY. OLIVIA VELASCO JACOBA

  • G.R. No. 131864-65 September 27, 2001 - PEOPLE OF THE PHILIPPINES v. SHERJOHN ARONDAIN and JOSE PRECIOSO

  • G.R. Nos. 134963-64 September 27, 2001 - ALFREDO LONG and FELIX ALMERIA v. LYDIA BASA

  • G.R. No. 137676 September 27, 2001 - PEOPLE OF THE PHILIPPINES v. ATTY. ROBERTO DIONISIO

  • G.R. No. 144035 September 27, 2001 - PEOPLE OF THE PHIL. v. VICENTE M. BASQUEZ

  • A.M. No. P-00-1391 September 28, 2001 - LIBRADA D. TORRES v. NELSON C. CABESUELA

  • G.R. No. 122425 September 28, 2001 - FLORDELIZA H. CABUHAT v. THE HONORABLE COURT OF APPEALS

  • G.R. No. 124535 September 28, 2001 - THE RURAL BANK OF LIPA CITY, ET AL. v. HONORABLE COURT OF APPEALS, ET AL.

  • G.R. No. 125154 September 28, 2001 - DIGNA VERGEL v. COURT OF APPEALS and DOROTEA-TAMISIN GONZALES

  • G.R. No. 125442 September 28, 2001 - PEOPLE OF THE PHILIPPINES v. FERNANDO ARELLANO y ROBLES

  • G.R. No. 127232 September 28, 2001 - GOLDENROD v. HONORABLE COURT OF APPEALS and PATHFINDER HOLDINGS (PHILIPPINES)

  • G.R. No. 127241 September 28, 2001 - LA CONSOLACION COLLEGE, ET AL. v. NLRC , ET AL.

  • G.R. No. 134128 September 28, 2001 - PEOPLE OF THE PHILIPPINES v. GERARDO DE LAS ERAS y ZAFRA

  • G.R. No. 134928 September 28, 2001 - PEOPLE OF THE PHILIPPINES v. FILOMENO BARNUEVO. ET AL.

  • G.R. Nos. 140789-92 September 28, 2001 - THE PEOPLE OF THE PHILIPPINES v. ALIPIO CARBONELL and DIONISIO CARBONELL

  • G.R. No. 145371 September 28, 2001 - PEOPLE OF THE PHILIPPINES v. BEN AQUINO and ROMEO AQUINO

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    G.R. No. 122425   September 28, 2001 - FLORDELIZA H. CABUHAT v. THE HONORABLE COURT OF APPEALS

     
    PHILIPPINE SUPREME COURT DECISIONS

    FIRST DIVISION

    [G.R. No. 122425. September 28, 2001.]

    FLORDELIZA H. CABUHAT, Petitioner, v. THE HONORABLE COURT OF APPEALS SPECIAL FIFTH DIVISION, and MERCEDES H. AREDE, Respondents.

    D E C I S I O N


    YNARES-SANTIAGO, J.:


    Before this Court is a petition for review on certiorari of the Decision of the Court of Appeals in CA-G.R. CV No. 32910 dated January 9, 1995, disposing as follows:chanrob1es virtual 1aw library

    WHEREFORE, in view of the foregoing, the instant appeal is hereby GRANTED. The portion of the lower court’s decision upholding appellee’s mortgage lien is hereby REVERSED and SET ASIDE.

    SO ORDERED. 1

    The undisputed facts as found by the respondent Court of Appeals:chanrob1es virtual 1aw library

    Mary Ann Arede was barely three days old when appellant Mercedes Arede informally adopted her as the latter’s own daughter. In December, 1972, appellant purchased a parcel of land situated in Bagbag, Ligtong, Rosario, Cavite comprising an area of 1,313 square meters. The said land was registered by appellant in Mary Ann Arede’s name and the corresponding title was issued by the Register of Deeds of Cavite on December 9, 1972 as Transfer Certificate of Title No. T-56225. According to appellant, the said title was always in her possession which she kept in a locked drawer in her residence.

    Upon reaching the age of majority and unknown to appellant, Mary Ann Arede obtained a reconstituted owner’s duplicate of TCT No. T-56225 (Exhibit "D") thru the use of a falsified court order (Exhibit "B") supposedly issued by the Regional Trial Court of Cavite, Branch 17, on December 16, 1988, whereby the court purportedly directed the Register of Deeds of Cavite to issue another owner’s duplicate copy of TCT No. T-56225, which Mary Ann Arede claimed to have lost. Using this reconstituted title, Mary Ann Arede mortgaged the land to the Rural Bank of Noveleta, Cavite on February 28, 1989. Upon release of the mortgage, the land was again mortgaged by Mary Ann Arede on May 16, 1990, this time to appellee Flordeliza Cabuhat for the amount of P300,000.00, which mortgage was registered by appellee on the following day at the Register of Deeds of Cavite.

    It appeared however that prior to the second mortgage on May 16, 1990, the subject lot was sold by Mary Ann Arede to appellant Mercedes Arede in consideration of the sum of P100,000.00 as evidenced by a Deed of Sale dated January 17, 1990 (Annex E, Record, p. 17). Unfortunately, this sale was not registered by Appellant.

    Hence, upon knowledge of the mortgage to appellee Cabuhat, appellant was prompted to commence the instant suit for annulment of title.

    Upon her failure to file answer within the reglementary period, defendant Mary Ann Arede was declared in default. Thereafter, trial ensued and judgment was rendered by the lower court on April 26, 1991, ordering as follows:jgc:chanrobles.com.ph

    "WHEREFORE, the Court hereby decrees that:chanrob1es virtual 1aw library

    1) the owner’s duplicate copy of T.C.T. No. T-56225, with Serial No. 004470 of the Register of Deeds of the Province of Cavite, is null and void and, accordingly, the Register of Deeds is directed to cancel the same from their files and the owner’s duplicate copy thereof with Serial No. SN2033078 is hereby revived;

    2) the mortgage lien in favor of defendant Flordeliza H. Cabuhat is valid and binding;

    3) defendant Mary Ann Arede is ordered to pay plaintiff Mercedes Arede the following amounts:chanrob1es virtual 1aw library

    a) the sum of FIFTY THOUSAND (P50,000.00) PESOS as moral damages;

    b) the sum of FIFTEEN THOUSAND (P15,000.00) PESOS, plus P500.00 per appearance of counsel, as attorney’s fees; and

    c) TWO THOUSAND (P2,000.00) PESOS as litigation expenses.

    Cost against defendant Mary Ann Arede.

    SO ORDERED. 2

    Mercedes appealed to the Court of Appeals, seeking a reversal of the portion of the above-quoted decision upholding the mortgage lien in Flordeliza’s favor. Mercedes argued that mortgage lien was invalid because: (1) the registration was procured through the presentation of a forged owner’s duplicate certificate of title, in violation of Section 53 of Presidential Decree 1529; and (2) the mortgage constituted when Mary Ann was no longer the absolute owner of the subject property contravened Article 2085 of the New Civil Code.

    While the appeal was pending, Mercedes passed away, leaving no legal representative or heirs qualified to take her place. Nevertheless, the Court of Appeals proceeded to resolve the case without substituting the appellant, it appearing that no prejudice would be caused to the parties.

    On January 9, 1995, the Court of Appeals rendered judgment granting the late Mercedes’ appeal, reversing and setting aside the trial court’s decision upholding the mortgage lien in favor of Flordeliza.

    Hence, this petition for review.

    Petitioner contends that the Court of Appeals committed grave abuse of discretion when it disregarded the priority of registered rights over real property. She also assails the appellate court’s conclusion that the real estate mortgage in her favor is null and void.

    After a careful and thorough disquisition of the established facts and issues raised in the instant controversy, we find merit in this petition.

    The Court of Appeals, in reversing the decision of the trial court, relied solely on the provisions of Article 2085 of the New Civil Code, which states, in part, that for a mortgage to be valid, the persons constituting the pledge or mortgage should have the free disposal of their property, and in the absence thereof, they should be legally authorized for the purpose. It also cited the 1954 case of Parqui v. PNB, 3 wherein the mortgage was declared null and void since the registration thereof was procured by the presentation of a forged deed.

    However, it is well-settled that even if the procurement of a certificate of title was tainted with fraud and misrepresentation, such defective title may be the source of a completely legal and valid title in the hands of an innocent purchaser for value. 4 Thus:chanrob1es virtual 1aw library

    Where innocent third persons, relying on the correctness of the certificate of title thus issued, acquire rights over the property the court cannot disregard such rights and order the total cancellation of the certificate. The effect of such an outright cancellation would be to impair public confidence in the certificate of title, for everyone dealing with property registered under the Torrens system would have to inquire in every instance whether the title has been regularly or irregularly issued. This is contrary to the evident purpose of the law. Every person dealing with registered land may safely rely on the correctness of the certificate of title issued therefor and the law will in no way oblige him to go behind the certificate to determine the condition of the property. 5

    Just as an innocent purchaser for value may rely on what appears in the certificate of title, a mortgagee has the right to rely on what appears in the title presented to him, and in the absence of anything to excite suspicion, he is under no obligation to look beyond the certificate and investigate the title of the mortgagor appearing on the face of the said certificate. 6

    Furthermore, it is a well-entrenched legal principle that when an innocent mortgagee who relies upon the correctness of a certificate of title consequently acquires rights over the mortgaged property, the courts cannot disregard such rights. 7

    Article 2085 of the Civil Code, which requires that the mortgagor must have free disposal of the property, or at least have legal authority to do so, admits of exceptions. In quite a number of instances, this Court has ruled that the said provision does not apply where the property involved is registered under the Torrens System. 8 Only recently, this Court declared:chanrob1es virtual 1aw library

    The Torrens system was adopted in this country because it was believed to be 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. This would not only be unfair to him. What is worse is that if this were permitted, public confidence in the system would be eroded and land transactions would have to be attended by complicated and not necessarily conclusive investigations and proof of ownership. The further consequence would be that land conflicts could be even more numerous and complex than they are now and possibly also 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

    Setting aside the general rule and applying instead the exception is not without legal or statutory basis. In the case of Medina v. Chanco, 10 we held:chanrob1es virtual 1aw library

    It is very clear from Section 55 of the Land Registration Act that although an original owner of a registered land may seek the annulment of a transfer thereof on the ground of fraud, such a remedy, however, is "without prejudice to the rights of any innocent holder for value" of the certificate of title. (Emphasis ours)

    Then in Penullar v. PNB, 11 this Court resolved a similar issue ruling that Section 38 of the Land Registration Act places an innocent mortgagee for value under the mantle of protection accorded to innocent purchasers for value.

    Furthermore, Section 39 of Act No. 496 provides that every person receiving a certificate of title in pursuance of a decree of registration, and every subsequent purchaser (or mortgagee) of registered land who takes a certificate of title for value in good faith, shall hold the same free of all encumbrance except those noted on said certificate. 12 In Sunshine Finance and Investment Corp. v. IAC, 13 we held:chanrob1es virtual 1aw library

    The court does not intend to disregard the long line of its decisions holding that "where innocent third persons, relying on the correctness of the certificate of title thus issued, acquire rights over the property, the court cannot disregard such rights and order the total cancellation of the certificate." It is true that the effect of such cancellation would be to impair public confidence in the certificate of title, for everyone dealing with property registered under the Torrens System would have to inquire in every instance as to whether the title has been regularly or irregularly issued. This is contrary to the evident purpose of Act 496, Sec. 39, as "innocent purchasers for value" or any innocent lessee, mortgagee or other encumbrances for value. A mortgagee has the right to rely on what appears in the certificate of title, and in the absence of anything to excite suspicion, is under no obligation to look beyond the certificate and investigate the title of the mortgagor appearing on the face of the certificate. (Emphasis ours)

    On the basis of these statutory provisions, this Court has uniformly held that when a mortgagee relies upon what appears on the face of a Torrens title and loans 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, even if the mortgagor obtained her title thereto through fraud. 14

    In the case at bar, there is no doubt that petitioner was an innocent mortgagee for value. When Mary Ann mortgaged the subject property, she presented to petitioner Flordeliza an owner’s duplicate certificate of title that had been issued by the Register of Deeds. The title was neither forged nor fake. Petitioner had every right to rely on the said title which showed on its face that Mary Ann was the registered owner. There was no reason to suspect that Mary Ann’s ownership was defective. Besides, even if there had been a cloud of doubt, Flordeliza would have found upon verification with the Register of Deeds that Mary Ann was the titled owner and that the original title on file with the said office was free from any lien or encumbrance, and that no adverse claim of ownership was annotated thereon.

    Petitioner’s reliance on the clean title of Mary Ann was reinforced by the fact that the latter had previously mortgaged the same property to a bank which accepted the property as collateral on the strength of the same owner’s duplicate copy of the title presented by Mary Ann. Certainly, petitioner Flordeliza cannot be expected or obliged to inquire whether the said owner’s duplicate copy presented to her was regularly or irregularly issued, when by its very appearance there was no reason to doubt its validity. Where there is nothing in the certificate of title that would indicate any cloud or vice in the ownership of the property, or any encumbrance thereon, the mortgagee is not required to explore further than what the certificate of title on its face indicates in search of any hidden defect or inchoate right that may thereafter defeat her right thereto. 15

    In fact, respondent never questioned petitioner Flordeliza’s good faith in accepting the subject property as security for the loan and in having the mortgage registered and annotated on the title. Neither was there an allegation that the petitioner was a party or even privy to Mary Ann’s alleged fraudulent acts to secure another owner’s duplicate copy. There is, therefore, no reason to doubt petitioner’s good faith in entering into the mortgage transaction with Mary Ann.

    The record shows that petitioner loaned the amount of P300,000.00 to Mary Ann, proving that not only was she an innocent mortgagee for value, but also one who in good faith relied on the clean title of Mary Ann. In accepting such a mortgage, petitioner was not required to make further investigation of the title presented to her to bind the property being given as security for the loan. 16

    In fine, the prevailing jurisprudence is that a mortgagee has a right to rely in good faith on the certificate of title of the mortgagor of the property given as security and in the absence of any sign that might arouse suspicion, has no obligation to undertake further investigation. 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. 17

    We are not unmindful of the fact that both petitioner and respondent are innocent parties who have been forced to litigate due to the duplicitous acts of Mary Ann, who has not even bothered to make an appearance or participate throughout the litigation of this case. Nevertheless, there is an equitable maxim that between two innocent persons, the one who made it possible for the wrong to be done should be the one to bear the resulting loss. 18 It cannot be denied that Mercedes, in her failure or neglect to register the sale in her favor made it possible for Mary Ann to mortgage the subject property to the petitioner. Having failed to properly safeguard her own rights, she cannot ask the courts to come to her rescue, when to do so would be at the expense of an innocent mortgagee in good faith. The law and jurisprudence dictate that petitioner’s right as a registered mortgagee in good faith and for value is better deserving of protection.

    Clearly, then, the Court of Appeals erred in invalidating petitioner’s mortgage lien over the subject property.

    WHEREFORE, in view of the foregoing, the instant petition for review on certiorari is GRANTED. The Decision of the Court of Appeals in CA-G.R. CV No. 32910 is SET ASIDE, and the Decision of the Regional Trial Court of Cavite City, Branch 16, in Civil Case No. N-5386 is REINSTATED in all aspects.

    No pronouncement as to costs.

    SO ORDERED.

    Davide, Jr., C.J., Puno, Kapunan, and Pardo, JJ., concur.

    Endnotes:



    1. Court of Appeals Decision, p. 4 Rollo, p. 51.

    2. RTC Decision, Records, pp. 103-110.

    3. 96 Phil. 157, 161 (1954).

    4. Republic v. Court of Appeals, 306 SCRA 81, 88 [1999].

    5. Republic v. Court of Appeals, supra, pp. 88-89.

    6. Duran v. IAC, 138 SCRA 489, 495 [1985].

    7. Hemedes v. Court of Appeals, 316 SCRA 347. 373 (1999).

    8. Duran v. IAC, supra.

    9. Traders Royal Bank v. Court of Appeals, 315 SCRA 190, 202 (1999), citing Tenio-Obsequio v. Court of Appeals, 230 SCRA 550, 557 (1994).

    10. 117 SCRA 201, 205 (1982).

    11. 120 SCRA 171, 180 (1983), citing Blanco, Et. Al. v. Esquierdo, Et Al., 110 Phil. 606 (1961).

    12. Director of Lands v. Abache, 73 Phil. 606 (1941-42).

    13. 203 SCRA 210, 215-216 (1991).

    14 Penullar v. PNB, supra, PNB v. Court of Appeals, 187 SCRA 735, 742 (1990).

    15. State Investment House, Inc. v. Court of Appeals, 254 SCRA 368, 373 (1996).

    16. Planters Development Bank v. Court of Appeals, 197 SCRA 698, 702 (1991).

    17. Cebu International Finance Corp. v. Court of Appeals, 268 SCRA 178, 189 (1997).

    18. Bacaltos Coal Mines v. Court of Appeals, 245 SCRA 460, 475 (1995); Traders Royal Bank v. Court of Appeals, supra, pp. 210-211.

    G.R. No. 122425   September 28, 2001 - FLORDELIZA H. CABUHAT v. THE HONORABLE COURT OF APPEALS


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