131 Phil.

269

BENGZON, J.P., J.:

Cesario Fabricante owned 5,724,415 square meters of land designated as Lot No. 9, Plan PSU, located in Sitio Salog, Barrio
San Agustin, Municipality of Iriga, Camarines Sur, covered by Transfer Certificate of Title No. 50, decree No. 86989, issued
in his name.

To secure a loan of P150,000, Japanese currency, he mortgaged on April 18, 1944 this land, together with another lot,[1]
in favor of Felix de Villa to whom he surren-dered his duplicate certificate, and with whom it remained until it was lost.
The mortgage was for a period of four years, redeemable within two years thereafter.

On November 3, 1945, Cesario Fabricante petitioned[2] the Court of First Instance of Camarines Sur for the is-suance or a
new duplicate of Transfer Certificate of Ti-tle No. 50 upon the alleged ground that his duplicate was lost. Felix de Villa,
the mortgage creditor was not no-tified. The petition was granted on November 10, 1945, and a new duplicate certificate
of Transfer Certificate of Title No. 50, was issued to Fabricante.[3]

Several days after, on November 27, 1945, Fabricante sold the land for P10,000 to Eustaquio Palma who, on the same day,
secured in his name Transfer Certificate of Ti-tle No. 12 covering said lot.[4]

In 1946, to secure two loans of P10,000 each, Palma mortgaged the property covered by Transfer Certificate of Title No.
12 in favor of the Agricultural and Industrial Bank, which later became the Rehabilitation Finance Cor-poration and is now
the Development Bank of the Philippines (DBP). When Palma failed to pay the loan, DBP foreclosed the mortgage
extrajudicially pursuant to Act No. 3135 and, as highest bidder at the public auction held on April 17, 1951, bought the
land and possessed it by virtue of a writ of possession issued on September 26, 1951 in its favor. Later, it obtained Transfer
Certificate of Title No. 1115 covering said land.

On October 11, 1951, Palma assigned his right of re-demption to Anacleto Trinidad who, though he failed to pay, was
allowed by the DBP later to buy the land in consideration of P27,005.11 payable on installments.[5] Tri-nidad then took
possession of the land.

Meanwhile, Felix de Villa, having lost the duplicate of Transfer Certificate of Title No. 50 surrendered to him by Fabricante
and learning that the original was lost in the Register of Deeds, filed before the Court of First Instance of Camarines Sur,[6]
on June 12, 1948 a petition to reconstitute Transfer Certificate of Title No. 50, pur-suant to Republic Act No. 26, in favor
of Cesario Fabri-cante with the annotation of the mortgage in his favor as was allegedly contained in the original lost.[7]
After hearing, notice of which was served on Fabricante, the Court of First Instance ordered[8] the reconstitution, with
the annotation of the mortgage in De Villa's favor. Said reconstitution was based on the photostatic copy of the deed of
mortgage[9] in which the copy of Transfer Certifi-cate of Title No. 50 appeared.

Seven days later, the Register of Deeds moved for re-consideration and cancellation of the orders of reconsti-tution on
the ground that Transfer Certificate of Title No. 50 was found intact in the office but was already can-celled by Transfer
Certificate of Title No. 12 in the name of Eustaquio Palma who had mortgaged the same to the Agricultural and Industrial
Bank.[10] The Register of Deeds also pointed out that in Transfer Certificate of Title No. 50, was not annotated the
mortgage alleged by Felix de Villa.[11]

From the records of the hearing of the motion for reconsideration,[12] it appears that the Transfer Certificate of Title
found to be "intact" designated the land to be Lot No. 2 which certificate originated from Original Cer-tificate of Title No.
34. The title sought to be recons-tituted covered Lot No. 9 originating from Original Certi-ficate of Title No. 183. The
Court of First Instance de-nied the motion for reconsideration on February 26, 1949, ruling that Transfer Certificate of
Title No. 50 which was found to be "intact" in the Registrar's office covered Lot No. 2 and originated from Original
Certificate of Title No. 34 and was therefore different from the title certificate sought to be reconstituted, which covered
Lot No. 9 and originated from Original Certificate of Title No. 183. Thus, reconstituted Transfer Certificate of Title No. RT-
29(50) was issued in the name of Cesario Fabricante, with the mortgage in De Villa's favor annotated thereon.[13]

When Fabricante failed to redeem the land, De Villa foreclosed the mortgage[14] and bought the land in public auction as
highest bidder. He obtained a writ of possession in his favor[15] January 6, 1961 and took possession of the land three
days later from the incumbent possessor, Anacleto Trinidad. On January 30, 1961 De Villa secured Transfer Certificate of
Title No. 3347 in his name[16] and Transfer Certificate of Title No. RT-29(50) was cancelled.

Subsequently, Anacleto Trinidad filed a forcible en-try case against Felix de Villa[17] resulting in the issuance of a writ of
preliminary injunction by the Justice of the Peace of Iriga against De Villa and in his consequent dis-possession of the
property in favor of Anacleto Trinidad who, since March 2, 1961, repossessed the land.[18]

On January 26, 1962, Felix de Villa filed the present complaint in the Court of First Instance of Camarines Sur[19] against
Anacleto Trinidad for declaration of owner-ship, recovery of the land, and payment of P500 a day - the value of products
allegedly being received by Trinidad - as well as P10,000 worth of abaca plants alleged to have been improperly cut, and
the costs of the suit. Later, the complaint was amended to include the Development Bank of the Philippines.

In answer, Anacleto Trinidad alleged his sale[20] from DBP, which had Transfer Certificate of Title No. 1115 in its favor,
and his possession of the land by virtue there-of, since December 29, 1951, until De Villa dispossessed him of it; that De
Villa's claim is barred by estoppel and res judicata, as the issue was already decided in Special Proceeding No. 258; that
the Transfer Certificate of Title No. 3347 of De Villa was null and void. As a counterclaim he alleged the purchase price of
the land which was P27,005.11; P60,000 spent in planting abaca, P35,000 for coconuts, P2,000 for buildings, P1,500 as
settlement of squatters' claim, P1,200 for relocation, P8,000 for taxes or a total of P134,705.11; that when the plaintiff
took possession, the latter gathered P5,500 worth of abaca and coconuts and destroyed P30,000 worth of plants; that to
preserve the plants, defendants spent P50 per hectare a year for 300 hectares or P15,000 annually; that plaintiff cut
timber worth P5,944. Recovery of litigation expenses worth P5,000 and P10,000 as moral damages, were further sought.

The Development Bank of the Philippines also answered asserting its right resulting from the foreclosure of Palma's
mortgage, and claiming that the Transfer Certificate of Title No. 3347 of De Villa was void; that the claim was barred by
lathes, as plaintiff had not done anything from 1948 to 1962; that plaintiff was barred from asserting; the lot covered by
Transfer Certificate of Title No. 1115 of the DBP is the same as the lot covered by Transfer Cer-tificate of Title No. 3347
because he claimed otherwise when he petitioned for reconstitution. DBP prayed for the dis-missal of the complaint plus
P5,000 as expenses of litigation.

On January 10, 1963, Anacleto Trinidad died and the complaint was amended to substitute in his place his chil-dren as his
heirs - Romulo, Corazon, Gloria, Regina, Ma-riano and Leon. However, Romulo, Corazon, Gloria, Regina and Leon
disclaimed interest on June 29, 1963 over the land, stating that the same had been adjudicated in the extrajudicial partition
of the estate of their deceased father, to Mariano Trinidad.[21]

The Court of First Instance, in its decision of June 5, 1964, found that the mortgage in De Villa's favor had been annotated
at the back of both the original and the duplicate of Transfer Certificate of Title No. 50; that Transfer Certificate of Title
No. RT-29(50), the recons-tituted title from which De Villa derived Transfer Certi-ficate of Title No. 3347, covers Lot No. 9,
Plan PSU 1185, and originated from Original Certificate of Title No. 183, issued on January 30, 1920, while the duplicate
title issued to Fabricante on which Palma's Transfer Cer-tificate of Title No. 12 was based, as well as the Trans-fer
Certificate of Title No. 1115 of DBP, covers Lot No. 2, Plan PSU 11885, and originated from Original Certifi-cate of Title No.
34, issued on November 25, 1920; that the two title certificates were issued covering the same land and the rule is that
the earlier in date - Original Certificate of Title No. 183 - prevails; that the heirs of Trinidad acquired only whatever rights
DBP had ac-quired; that the stigma of Fabricante's bad faith exten-ded to Palma and to DBP; that there was no
prescription, for plaintiff's action was not one for recovery of title or possession but for a judicial determination of
owner-ship - as to which of them, both with valid certificates of title, really owns the land. Accordingly, it stated in the
dispositive portion:
"WHEREFORE, judgment is hereby rendered declaring the plaintiff the exclusive and absolute owner of the property
described in paragraph 2 of the amended complaint and order-ing the defendants to vacate and deliver the same to the
plaintiff, to pay to the plaintiff damages at the sum of P48,000.00 per annum re-presenting the value of the abaca fibers
de-rived from the land plus the further sum of P360,00 every two months representing the va-lue of the harvests from
coconuts, starting from the period beginning March 2, 1961 until possession of the property is restored to the plaintiff
and to pay the costs.

"The value of the useful improvements in-troduced on the land by the defendants shall be appraised and deducted from
the value of the damages to be paid."

The defendants appealed this decision to the Court of Appeals which in turn certified the case to Us on the ground that
the amount involved is more than P200,000.

The main points at issue for Our consideration is the ownership of the land, the presence of lanes or es-toppel and the
propriety of the award of damages by the lower court.

Upon a misrepresentation, Cesario Fabricante was able to obtain a duplicate certificate. The order[22] grant-ing such
certificate expressly stated that the original of the title was still kept in the office of the Register of Deeds and ordered the
issuance of a new duplicate co-vering the land as described in the petition. Unfortunate-ly, the new duplicate issued is
not in the records. How-ever, its contents may be known from Transfer Certificate of Title No. 12 issued in favor of
Eustaquio Palma which was based on Fabricante's newly-issued duplicate certifi-cate. Transfer Certificate of Title No. 12
covers and describes 5,724,415 square meters of land, designated as Lot No. 2, Plan PSU 11885 surveyed on October 29
to Novem-ber 11, 1917 and is indicated to originate from Original Certificate of Title No. 34, Decree No. 89686, registered
on November 25, 1920. Upon the other hand, the reconsti-tuted Transfer Certificate of Title RT-29(50) on which Transfer
Certificate of Title No. 3347 was based, also describes the same 5,724,415 square meters of land but designated it as Lot
No. 9, Plan PSU 11885 surveyed also on October 29 to November 11, 1917, but said certificate is shown to originate from
Original Certificate of Title No. 183, Decree No. 89686, registered on January 30, 1920. While it is possible that a mistake
could have been made with regard to the lot numbers, it is unlikely that a mis-take as to origin of the titles and their dates
of regis-tration could also have been made. This is undoubtedly a case where two certificates of title were issued over
the same land in the name of different persons who were both in good faith in their acquisition. There having been two
titles, it is understandable that the original upon which Fabricante's newly-issued duplicate certificate was based did not
contain the mortgage annotation in favor of De Villa.

We have laid the rule that 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 re-gistrations 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. 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.[23] Consequently, since Original Certificate of Title No. 183 was registered on
January 30, 1920, De Villa's claim which is based on said title should prevail, as against Trinidad's whose ori-ginal title was
registered on November 25, 1920. And from the point of equity, this is the proper solution, consider-ing that unlike the
titles of Palma and the DBP De Villa's title was never tainted with fraud.

When, as a result of the sale at public auction, Fe-lix de Villa was able to secure Transfer Certificate of Title No. 3347 in his
name, his rights were already pro-tected and he had the right to feel secure in them. Upon his dispossession by Anacleto
Trinidad, he had all the right to come to the courts to seek redress and We do not see any reason why he should be
estopped from doing so. Nor has his right of action been barred by lathes. He possessed the land from January 9, 1961
until Trinidad ob-tained possession on March 2, 1961. Within a reasonable time thereafter, on January 26, 1962, De Villa
filed the present case for determination of ownership with damages. These facts do not show that De Villa slept on his
rights.

With regard to appellants' claim that the lower court erred in holding that the mortgage was properly annotated and
registered, suffice it to say that the matter is one of fact over which We find no strong reason for reversing the lower court
which gave credence to De Villa's testimo-ny to that effect.

The facts and circumstances, however, do not call for assessment of damages against appellants until after the filing of
the present suit on January 26, 1962 for only then could they be positively adjudged in bad faith in view of their knowledge
that there was an adverse clai-mant to the land.

Trinidad's repossession of the land on March 2, 1961 cannot be deemed in bad faith as it was pursuant to a court order
legally obtained, and as his possession before that time was in good faith.

Appellant does not question the specific amounts of the damages awarded in De Villa's favor and the same, at any rate, is
borne out by the records. Said damages, however should be offset against the value of whatever neces-sary and useful
expenses and improvements were made or in-curred by Trinidad with respect to the land, provided that in the case of
useful expenses or improvements these were made or incurred prior to the filing of the present action. Such reimbursable
amount due to Trinidad must, therefore, first be determined before the aforesaid award of damages in De Villa's favor
can be executed. And its determina-tion shall be by way of supplementary proceedings in aid of execution in the lower
court.

WHEREFORE, with the modification that the damages re-coverable by De Villa against Trinidad should date from and after
the filing of the complaint on January 26, 1962 until the property is restored to the plaintiff, the judgment appealed from
is hereby affirmed in all other respects; and, accordingly, prior to the payment of the damages in De Villa's favor,
supplementary proceedings In aid of execution are hereby ordered to he forthwith by the court a quo, to appraise and
determine the value f improvements and expenses reimbursable to Trinidad, and thereafter to offset the two amounts
respectively due to the parties to the extent that one covers the other. No costs.

SO ORDERED.

Reyes, Acting C.J., Dizon, Makalintal, Zaldivar, Sanchez, Ruiz Castro, Angeles, and Fernando, JJ., concur.