[ G.R. No. 8160. October 27, 1916 ] 35 Phil. 144
[ G.R. No. 8160. October 27, 1916 ]
MARCOS DE LA CRUZ, PLAINTIFF AND APPELLEE, VS. RAMON FABIE ET AL., DEFENDANTS AND APPELLANTS. D E C I S I O N
ARELLANO, C.J.:
On August 23,1909, Marcos de la Cruz filed a complaint against Vedasto Velazquez, in which he alleged the following facts: (1) That he is the administrator of the estate of Gregoria Hernandez, deceased; (2) that, on January 11, 1904, Gregoria Hernandez was declared by the Court of Land Registration to be the owner of a parcel of land situated at No. 364 Calle Magdalena, in the district of Binondo of this city (the other specific circumstances in connection therewith as alleged in the said complaint are herein taken for granted) and the proper certificate of title, No. 121, was issued in her favor by the register of deeds of the city of Manila; (3) that the defendant Vedasto Velazquez, being the attorney in fact of Gregoria Hernandez and having in his possession all documents and muniments of title relative to the said land, succeeded in having the register of deeds issue to him a certificate of title thereto on January 18 of the same year, by presenting a deed of sale executed in his behalf by the said Gregoria Hernandez; but that the said deed of sale was false and fraudulent and was not executed by Greogria Hernandez nor by any person authorized by her so to do, wherefore it was canceled and annulled by the judgment of December 31, 1907, rendered by the Court of First Instance of the city of Manila, as a result of the complaint filed by Gregoria Hernandez against Vedasto Velazquez"on September 25,1906, of which a notice of lis pendens was served on the register of deeds on May 8,1907; (4) that, on November 7, 1904, Vedasto Velazquez sold the said land under pacto de retro to Ramon Fabie, and in May, 1907, sold it to him outright, whereupon certificate of title No. 766 was issued to the purchaser, Ramon Fabie being thenceforth the owner of the land and Gregoria Hernandez being deprived of her ownership therein; (5) that the said land was worth P15,000 and its rental value P214. By reason of all the foregoing facts, the plaintiff prayed the court to order Vedasto Velazquez and the Insular Treasurer (the latter subsidiarily in case of nonpayment by the former) to pay him P29,422, without legal interest, and to pay the costs. These facts, it is to be supposed, were admitted by the Attorney-General in behalf of the Insular Treasurer in demurring to the complaint. The plaintiff amended paragraph four of his complaint, which was made to read as follows: That on November 7, 1904, Vedasto Velazquez sold the land to Ramon Fabie under pacto de retro, the sale becoming absolute in May, 1907, no encumbrance being noted on the certificate of title at the time of the said sale of November 7,1904; that on November 7, 1904, Ramon Fabie presented his deed of sale under pacto de retro for registration, and it was registered on the same date, November 7, 1904; and that Ramon Fabie received from the register of deeds title to the said land, through means of certificate No. 766, and since the date of the registration became, and is still, the owner of the land. The Court of First Instance of the city of Manila sustained the demurrer and granted the plaintiff five days in which to amend his complaint, but as the plaintiff would not amend it the court dismissed the complaint and the proceedings with respect to the Insular Treasurer, with the costs against the plaintiff. The plaintiff appealed and, on September 23, 1911, this court affirmed the judgment of the trial court, also with costs against the plaintiff. The latter moved for a rehearing and his motion was denied on December 4, 1915. Such was the termination of this suit (case No. 5858).[1] On October 31, 1911, Marcos de la Cruz filed a new complaint against Ramon Fabie and the register of deeds, in which he prayed the court: (1) To cancel and annul the deed of conveyance, Exhibit D; (2) to order the register of deeds to cancel the entry or registration of the documents A, C, and D and the certificates Nos. 43 and 766; and (3) to order Ramon Fabie to restore the land and to pay P17,976 for losses and damages, together with legal interest thereon and costs. The document A is the deed of sale by Gregoria Hernandez to Vedasto Velazquez. Document C is the instrument of sale under pacto de retro from Vedasto Velazquez to Ramon Fabie. Document D is the deed of final sale by Velazquez to Fabie. The history of the case is as follows: Vedasto Velazquez was the attorney in fact of Gregoria Hernandez. Gregoria Hernandez registered her title of ownership to the land in question in the property registry and was issued certificate of title No. 121. Vedasto Velazquez, being the attorney in fact of Gregoria Hernandez, had in his possession all the muniments of title of the land, including the certificate of title No. 121, and, abusing her confidence in him, a few days after the registration of the land, forged a notarial instrument wherein he made it appear that she had sold the said land to him for the price of P8,000. Vedasto Velazquez then went to the register of deeds and applied for the registration of the land in his own name, presenting Gregoria Hernandez’ certificate of title No. 121 for cancellation, and the deed of conveyance which was purported to have been made by Gregoria Hernandez in his favor in order that he might be registered as the true owner of the land. All this was done; Gregoria Hernandez’ title was cancelled and certificate of title No. 43 was issued to Vedasto Velazquez. Vedasto Velazquez, on November 7, 1904, sold the land to Ramon Fabie for P5,000 under pacto de retro, in the following terms: “This sale is condition on that if, upon the termination of the period of one year from the date of the execution of the present instrument, I, the vendor, do not repurchase the property from the vendee for the price above specified, the said present conditional sale shall be converted into an absolute and unrestricted one; Provided, however, That the said period may be extended for another year, if both parties are willing.” Ramon Fabie presented this deed to the register, who entered on the back of Vedasto Velazquez’ title a memorandum of the sale under pacto de retro mentioned in the deed. On May 31, 1907, Vedasto Velazquez and absolutely to Ramon Fabie, who presented to the register of deeds the notarial instrument executed for the purpose and was thereupon furnished with the certificate of title No. 766. On September 26, 1906, Gregoria Hernandez filed a complaint against Vedasto Velazquez in the Court of First Instance of the city of Manila, and the plaintiff says that the court rendered judgment on December 31, 1907, canceling and annulling the instrument Exhibit A. This judgment was never presented in evidence in the former proceedings nor has it been shown in the present case; but, by stipulation of the parties, it is admitted that the said instrument was fraudulent, null, and void. Proof of this point is, therefore, no longer necessary. Notwithstanding that the said complaint was filed on September 26, 1906, the register of deeds was not notified of the lis pendens (Exhibit B) until May 4, 1907, although the year stipulated in Exhibit C for the exercise of the right of redemption, which Vedasto Velazquez had reserved to himself, had elapsed since November 7, 1905; from this date, November 7, 1905, the sale under right of repurchase had become converted into an absolute and final sale, pursuant to the stipulations contained in the said instrument Exhibit C. Such are the facts of the present case, the same as those of the previous one, with the difference that the first action was brought against the “assurance fund” of the Insular Treasury, while the case at bar is an action to recover the land sold by Velazquez to Fabie, since the sum for which the Insular Treasurer was sued could not be obtained. The trial court, presided over by the Honorable Judge Charles S. Lobingier, granted all the demands of the complaint. The first demand is that the instrument Exhibit D be avoided and canceled and that the execution of this instrument pe declared null and void in so far as it is claimed that it affects the plaintiff’s rights. The document Exhibit D is the deed of final sale made by Vedasto Velazquez to Ramon Fabie. Nothing is asked for with regard to Exhibit C, which is the pacto de retro previously executed by Vedasto Velazquez in behalf of this same Fabie. As may be seen, the plaintiff maintains and recognizes the entire validity of the said pacto de retro, which, ‘by force of the terms of the covenant itself, was converted into a final sale on November 7, 1905, therefore making the execution of the document Exhibit D unnecessary. In his brief in the previous case, No. 5858, the plaintiff said: “The facts show that he (Fabie) bought the property from Vedasto Velazquez on November 7, 1904, under right of repurchase, and that the sale was immediately registered. The evidence also shows that at the time of the purchase the certificate of title bore no entry of any encumbrance. Consequently, Fabie was vested with a perfect title on November 7, 1904 (see sees. 50 and 55 of Act No. 496). His title was subject to a right of repurchase which expired in May, 1907 (not so; it expired on November 7 of the year 1905, for the period stipulated was one year). ‘The validity and sufficiency of a properly executed contract of purchase and sale is not affected or weakened by the addition thereto of an agreement of pacto de retro inasmuch as the right of ownership of the thing sold, although it may be defeated, is thereby transferred to the vendee, who is substituted for the vendor. (Guillermo vs. Matienzo, 8 Phil. Rep., 368.) “Well then, supposing that a notice of lis pendens, in connection with the case of Gregoria Hernandez vs. Vedasto Velazquez, No. 4912 of the Court of First Instance, for the cancellation of the fraudulent deed of sale, had been presented to the register of deeds on May 8, 1907, what effect could it have against Fabie? (The plaintiff is talking) . The mere fact that the right to repurchase expired subsequent to that date (no; two and a half years before) in no manner affects his rights. These were acquired on November 7, 1904. Therefore the questions relative to the lis pendens and the date of the expiration of the period granted Velazquez to repurchase from Fabie, may be eliminated.” (Brief, pp. 13 and 14.) This court can not possibly affirm the judgment of the trial court in so far as it grants the first demand of the complaint, for the legal reasons contained in the preceding considerations put forward by the plaintiff himself in his said brief, to wit: (1) Because Ramon Fabie’s title is perfect, pursuant to sections 50 and 55 of Act No. 496; (2) because the ownership of every purchaser, even though it be subject to a right to redeem and be defeasible by the covenant, originates from the consummation of the contract or from the time of the delivery to him of the thing purchased, and the pacto de retro does not affect the ownership of the thing sold more than to either reconvey it to the vendor or to consolidate it in the purchaser, once the condition has been fulfilled or extinguished, as decided by this Supreme Court in the case cited by the plaintiff and in many other decisions which now constitute settled doctrines; (3) because a notice of lis pendens registered on May 8, 1907, cannot affect a sale consummated since November 7, 1904, and which had become irrevocable and absolute since the same date of the following years 1905, and, as the plaintiff himself very properly insists, all questions regarding the effect of such a notice should be eliminated; and (4) because the document Exhibit D is one of supererogation or merely corroborative; it confers no other right, and has no other signification than a confirmation of what is implied by that which is explicit in accordance with the formalities of the register. So that, although the document Exhibit D were declared to be null and void in order to deprive of its effects the absolute sale therein stipulated, the land would not for that reason cease to belong to Fabie, for the reasons stated by the plaintiff himself, that is, because the document Exhibit C, which is a perfect title of ownership, in accordance with law and the cases cited, remains in force. The inscription of ownership made in the registry in behalf of Gregoria Hernandez had disappeared, having been substituted by the entry in the name of Vedasto Velazquez; and as the registry showed the latter to be the owner of the land, Fabie was enabled to arrange with him to purchase it. It having been proven that Fabie’s ownership was and is perfect and absolute and that he is entitled to possess, as he does possess, the land in question, it is indisputable that Gregoria Hernandez had lost her property, and so it would appear that she was entitled to the indemnity she sought to recover in the previous suit, case No. 5858. But that indemnity was denied her by both the trial court and this court, principally for the reason of her negligence. Section 101 of Act No. 496 provides that any person who without negligence on his part is wrongfully deprived of any land or any interest therein, by the registration of any other person as the owner of such land, may bring an action against the Insular Treasurer. Fabie was registered as the owner, it is true, but Gregoria Hernandez had not proven that he was enabled to obtain the inscription without negligence on her part. The lower court states the facts of the case in the following terms: “It is alleged in the complaint and admitted in the stipulation that Velazquez, on January 18, 1904, succeeded in registering in his own name the part of the property belonging to the deceased (Gregoria Hernandez) that is the subject matter of these proceedings by exhibiting for the purpose a forged document (Exhibit A). On November 7,1904, Velazquez executed the document Exhibit C in favor of the defendant Fabie, who in turn presented it to the register of deeds and obtained the registration in his name. This document contains a clause of pacto de retro, valid for one year, which subsequently expired on November 7, 1905. The fraud committed by Velazquez having been discovered in the meanwhile (that is, between November 7, 1904, and November 7, 1905), the deceased, on September 21, 1906, brought an action to have the said document annulled and on May 8, 1907, a notification of lis pendens was filed in the office of the register.” In the former proceedings the Attorney-General, in behalf of the Insular Treasurer, demurred to the complaint filed for the purpose of recovering indemnity, alleging that the complaint itself showed that if Gregoria Hernandez suffered any loss or damage whatsoever, it was due to her negligence and to the deceit and faithlessness of her agent and attorney in fact Vedasto Velazquez to whom she had confided her certificate of title, and that such loss and dam age did not result from having brought the land under the provisions of the Land Registration Act, from its being registered by any other person, from any omission, mistake, or legal act unduly performed by the clerk or register, deputy or substitute of the register, in the discharge of their official duties. For this reason the lower court sustained the demurrer, and principally for this same reason we affirmed the judgment of the lower tribunal. Although case No. 5858, the record of which is attached as evidence to these proceedings, is terminated, we desire to say that, for the reasons which will be given later on in connection with this case, the reason for sustaining the demurrer and for finally denying permission to bring an action against the assurance fund, to wit, Gregoria Hernandez’ negligence, is solidly founded on good authority and on facts, though these latter only appear in the present case. because the former proceedings went no farther than the demurrer and the plaintiff refused to amend his complaint. The plaintiff himself testified in these proceedings that Gregoria Hernandez, while still living, commissioned Adriano Buenaventura to attend to a certain matter connected with her property titles, and that this was in 1904; that Gregoria Hernandez said that Vedasto Velazquez had not delivered to her the documents pertaining to her land, and she made this statement to the plaintiff when her mental faculties were as yet unimpaired; and when the plaintiff was asked whether Vedasto Velazquez used to go to Gregoria Hernandez’ house very often, he replied that he did, sometimes in the morning, at others in the afternoon, and again during the siesta hour (record, pp. 57-58). Adriano Buenaventura corroborated the references to him made in the testimony just above mentioned, and stated that Vedasto Velazquez was the person who handled Gregoria Hernandez’ documents; that the land in question was the only parcel that she possessed and that it was used for building purposes and for raising forage grass; that Vedasto Velazquez lived in the same house with Gregoria Hernandez, who had neither husband nor children and was 60 years old; that when the witness made a demand upon Vedasto Velazquez, the latter told him “that he (Velazquez) would present the document on such and such a day, and that he would deliver, if not the money, the document;” and that the person who intervened was Aniceto Reyes as administrator. From this testimony of the plaintiff’s own witnesses it is to be seen that Gregoria Hernandez, even as far back as 1904, called upon Vedasto Velazquez to deliver to her the certificate of title, and that Vedasto Velazquez was already speaking of delivering money to Hernandez, and if not money, the document; that Hernandez since 1904 interested herself in the matter of her documents and in the only piece of land she possessed, the rental of which, as set forth in the plaintiff’s first complaint, was P214 per month, or, as he stipulated with Fabie in this second complaint, only P66 per month, but whether it was P214 or P66, Hernandez was too much in absolute need of this income for her support not to have been anxious about t and about her land. Nevertheless, until September, 1906, she had not commenced any judicial proceedings in respect to the said land, the alleged fraudulent sale of which by Vedasto Velazquez in November, 1904, she tried to annul, as it was annulled by the court on December 31, 1907. James Edward Hogg, the author of a work deemed by the trial judge to be authoritative, entitled “Australian Torrens System,” says on page 448 thereof: “In some cases damages are recoverable, or are only recoverable under certain conditions. 1. * * * 2. * * * 3. No damages are recoverable from the ‘assurance fund’ if the loss has been caused or contributed to by the owner’s negligence. 4. With some exceptions, damages are not recoverable from the ‘assurance fund for loss occasioned by breaches of trust.’ " The Attorney-General did not err when he wrote in his brief in the preceding case: “To hold that the principal may recover damages from the assurance fund on account of such a fraudulent act as that charged to Vedasto Velazquez in this case would be equivalent to throwing open the door to fraud, to the great advantage of the registered landowner and his agent and to the ruin and rapid disappearance of the assurance fund, and the general funds of the Insular Treasury would become liable for the claims for indemnity in cases where none such was due. This course would in time wreck the Insular Treasury and enrich designing scoundrels.” (Brief, p. 16.) The appellant in said case No. 5858 observed that abuse of confidence is the same as robbery. The agent’s abuse of confidence is not comparable to a robbery. If Vedasto Velazquez had forced the safe in which Gregoria Hernandez kept her certificate of title, had removed the certificate therefrom and with it had performed all the other acts imputed to him, no negligence whatever could have been charged to Gregoria Hernandez, because the robbery would have been an unforeseen and fortuitous event; and no one can be held liable for fortuitous happenings; but abuse of confidence is not a fortuitous event, unforeseen and unavoidable, rather should it be foreseen and avoided; it is a willful and deliberate act on the part of the person who commits the abuse, perhaps because of the indolence and negligence of the person wronged as where a checkbook is received from the bank and the owner leaves it in the possession of a person because he reposes confidence in such person, if the latter should draw a check against the bank the owner of the money cannot excuse himself from liability, because he stands convicted of negligence or failure to exercise due care in safeguarding his documents of credit. This negligence, in the beginning, was the reason for the ruling on the demurrer, upon the sole facts set up in the complaint in the preceding cause and recited in the first part of this decision. In the present case, the same plaintiff has offered evidence of facts which show something more than negligence, to wit, the giving of an opportunity for the abuse of confidence charged against Vedasto Velazquez. From the testimony adduced by his witnesses, we agree with the finding of the lower court at the end of the judgment, to wit, that in the meanwhile, or between 1904 and 1905, Gregoria Hernandez because aware of the fraud committed by Vedasto Velazquez, but notwithstanding that fact she allowed two years to pass before bringing charges in court. And it is not too much to assert that the conveyance made by Vedasto Velazquez was for a consideration agreed upon between himself and Gregoria Hernandez; otherwise there is no explanation of why, when demand was made upon Vedasto Velazquez for the documents, he should have replied that on such and such a day he would deliver, if not the money, the document. Of what money could he have spoken that should take the place of the document demanded of him? The money which both of them expected in exchange for the document in case the land was sold. Negligence is apparent, it being proven that Gregoria Hernandez had not lost sight of Vedasto Velazquez because he frequented her house in the morning, in the afternoon and at the siesta hour, as one witness testified, or because, according to another witness, he lived in the same house as she did. And though the negligence be comparable to a theft, it is certain that, as prescribed in section 55 of Act No. 496, “in case of the loss or theft of an owner’s duplicate certificate, notice shall be sent by the owner or by some one in his behalf to the register of deeds of the province in which the land lies as soon as the loss or theft is discovered.” Up to this date neither Gregoria Hernandez nor the plaintiff has furnished the required notice to the register of deeds of this city. Even considering the denial of the right of action against the assurance fund from the point of view of the registration of the other owner in the registry, the defendant in the case at bar, the action for recovery of possession here brought is improper. There is no reason for ordering the register of deeds to cancel the registration A, C, and D, as requested in the second prayer of the complaint. In the first place, the first inscription made in the name of Gregoria Hernandez would not be revived by canceling these others. At the commencement of his decision the trial judge says that the purpose of these proceedings is to obtain the cancellation of a registration of title in order to have the register substitute other documents in place of the one to be canceled and to recover possession of a piece of property, together with the value of its use and occupation. This court has not found that any petition had been made to have other documents substituted in place of those to be canceled. The second prayer of the complaint reads literally as follows: “That the defendant register of deeds be ordered to cancel the entry or registration of the documents A, C, and D, and to cancel and annul the certificates Nos. 43 and 766.” Had Gregoria Hernandez, in due season, complied with her duty to notify the register of deeds of the loss of her certificate No. 121 and had then petitioned the court to cancel the registration of the document A, and had the court decreed the same and ordered the register of deeds to cancel all registrations subsequent to the original one made in the name of Gregoria Hernandez, he would have proceeded in entire conformity with law. “In all cases of registration procured by fraud,” says the law, “the owner may pursue all his legal and equitable remedies against the parties to such fraud. * * * After the transcription of the decree of registration on the original application, any subsequent registration under this Act procured by the presentation of a forged duplicate certificate, or of a forged deed or other instrument, shall be null and void.” Any person other than Gregoria Hernandez would have exercised all her rights of action against the perpetrator of the fraud, Vedasto Velazquez; he would have brought proceedings for the abuse of confidence and for the recovery of the certificate of title No. 121; he would have prosecuted the author for the forgery of the instrument Exhibit A; in civil proceedings he would have sought to annul the fraudulent sale contained in instrument Exhibit A; he would have prayed for all the things above mentioned with regard to the cancellation of the registration of the document A and the reentry of the original registration in her name, petitions which she has not made even now in this complaint, filed seven years afterwards and which therefore could not be and certainly were not granted by the court. The lower court made only the following pronouncement: “It is decreed and ordered that the documents marked A, C, and D and the certificates numbered 43 and 766 be canceled and annulled, and that the register of deeds be instructed to record in his registry the said annulment and registration.” Nothing is said in the judgment about substituting any documents in place of those canceled. As far as the public is concerned, the original registration disappeared the very moment it was substituted by the registration of the transfer Exhibit A, which up to the present time stands unchallenged in the registry. It remained in the registry only as an antecedent or key to the title of the land in question. It was necessary to institute proceedings for the abuse of confidence, first, in order to recover the certificate of title No. 121, as in a case of theft, and in order to be able to demand its reentry as a consequence of the reentry of the original registration; second, in order to preclude all idea of connivance between the owner and the thief and avert the suspicion that the loss or theft was feigned and agreed upon, especially as the owner and the thief were, prior to all of these events, principal and agent. The interest which Gregoria Hernandez had in clearing up the situation and prosecuting the case was far greater than that of the public in exacting its vengeance. It is not known how the plaintiff came to hold and still holds in his possession certificate No. 121. Vedasto Velazquez has not been held to account for the results of his wrongful act. Its effects have fallen on third persons: In the first proceedings that third person was the Insular Treasurer; in these second proceedings. the third person is the purchaser Ramon Fabie. In the second place, the lower court has not set forth in his judgment any positive ground for despoiling the defendant of his property for the purpose of returning it to the plaintiff as the representative of Gregoria Hernandez. He explicitly states that the defendant is the rightful owner of the land: the law protects Fabie because he purchased from the owner previously registered; but selecting a paragraph from the previous decision of the Supreme Court in the previous case No. 5858, he puts it forward as a reason for deciding to the contrary, because our decision was a contrary one in that case and although it was only on a demurrer, yet all the legal points thus decided are as binding as though they had been settled in a final judgment. This Supreme Court made no finding whatever in that decision with respect to the defendant Ramon Fabie, nor had it anything to decide, because Fabie was not a party to the proceedings and the proceedings had not reached the stage where a decision could be rendered on the merits, inasmuch as they had been brought before us merely on the demurrer to the complaint. It is true that this court stated in that decision that if Gregoria Hernandez had not been negligent (this part was suppressed by the trial judge in his citation) she could have cancelled inscription A and Velazquez’ certificate of title No. 43 and, consequently, Fabie’s inscription C, not the letter’s certificate of title which had not yet been issued and which, as shown in these second proceedings, was not issued until after the inscription of D was made. It does not appear that there was any error on this point. At first this question was considered in the light of the provisions of the Mortgage Law of Cuba and the Philippines and afterwards according to those of Act No. 496, in agreement with Act No. 190. The Mortgage Law of Cuba and the Philippines was applied, because the appellant in that suit, the plaintiff herein, subjected to the provisions of that law the following question. He said: “Now we come to a stage of the proceedings similar to that discussed in the case of Merchant vs. Lafuente (5 Phil. Rep., 638), a suit that was decided in accordance with the said Mortgage Law. This is very clear and cannot be denied, for in accordance with the said Mortgage Law no error whatever was committed by this court in that pronouncement. Article 34 of the said law positively says: ‘Notwithstanding the statements contained in the preceding article, the instruments or contracts executed or covenanted by a person who, according to the registry, has a right thereto, shall not be invalidated by third persons, after they have once been recorded (as happens with respect to Fabie) although later the right of the person executing them (let us call him Velazquez) is annulled or determined by virtue of a prior deed not recorded, or for reasons which do not clearly appear from the registry.’
“Only by virtue of a recorded instrument (like that of Hernandez) may another later instrument (Fabie’s) also recorded, be invalidated to the prejudice of third persons, with the exceptions mentioned in article 389 (which has nothing to do with the case).”
In accordance with Act No. 496, the plaintiff, after having secured a judgment annulling the spurious sale made by Velazquez and ordering the cancellation of the inscription A, should have complied with the provision of section 81 of the said Act, that is to say, he should have requested the registration of the said judgment. The clerk of the court would then have issued a certified copy thereof addressed to the register of the province where the property is situated, and the latter would have entered upon the proper certificate of title a memorandum to this effect, that is, upon Vedasto Velazquez’ certificate of title No. 43, whereon a memorandum had been made of the inscription G in Fabie’s behalf, and he would have recorded another memorandum in witness of the annulment of the fraudulent sale and the cancellation of the said spurious certificate of title in favor cf Velazquez. Nothing of all this was done. According to section 55 of the same Act, “after the transcription of the decree of registration on the original application, any subsequent registration under this Act procured by the presentation of a forged duplicate certificate, or of a forged deed or other instrument, shall be null and void.” Quaere: Is the inscription A, made in the name of Vedasto Velazquez, null and void on account of its being fraudulent and is his certificate No. 43 null and void? Is the inscription C made in the name of Fabie, which appears on the back of this certificate, also null and void? No, if it is shown that Fabie was an innocent holder, because the same section of the Act just above cited provides: “That in all cases of registration procured by fraud the owner may pursue all his legal and equitable remedies against the parties to such fraud, without prejudice to the rights of any innocent holder for value of a certificate of title.” The defect was that it was not alleged in the first complaint (transcribed in the first part of this decision) as it was agreed upon in these second proceedings, that Fabie was an innocent holder of a certificate of title for value and, consequently, in the demurrer no other fact could be understood as admitted than that affirmed and in the manner in which it was affirmed in the complaint. Question: By the mere allegation made by the plaintiff in his complaint and accepted by the defendant in the demurrer, that Vedasto Velazquez, the notorious and convicted forger, had sold the land to Ramon Fabie, can it be concluded that no one other than Fabie should be considered to be the owner of the land as being an innocent purchaser? Is not a judicial finding as to the ownership of the land necessary, in order to know who is really vested with the ownership? Is the affirmation of one of the parties sufficient to resolve so difficult, serious and important a problem? This court understood and understands, in agreement with the Attorney-General (p. 12 of his brief), that it does not devolve upon the plaintiff and his attorney to decide whether Ramon Fabie is or is not an innocent purchaser for value and without knowledge of the alleged fraud or participation therein; and in the amended complaint there is, no sufficient allegation of fact to show that Ramon Fabie is an innocent purchaser for value and that he had no knowledge of the fraud said to have been committed by Vedasto Velazquez. The simple allegation contained in the complaint that Fabie is a registered purchaser is not the same as that of his being a registered innocent purchaser. The fact of the sale and the fact of the registration are not sufficient to allow the understanding that it was also admitted in the demurrer that he was an innocent purchaser. There is no law or doctrine that authorizes such an interpretation. The plaintiff must set forth in his complaint all the facts that necessarily conduce toward the result sought by his action. The action was for the purpose of recovering from the assurance fund indemnity for the damage suffered by the plaintiff in losing the ownership of his land as a result of the registration obtained by an innocent holder for value (purchase). It is a necessary requirement of the law that the registered property shall have been conveyed to an innocent holder for value who shall also have registered his acquisition. Necessarily the complaint must show these facts as they are required by the law. Will it be understood as an indisputable fact, as res judicata, that Fabie was an innocent purchaser merely because the fact of the purchase and the fact of the registration were alleged in the complaint? A person who, like Vedasto Velazquez, knew how to forge a deed of sale in his own behalf might very easily make it appear that the property was sold to a third party—without the knowledge of the said third and afterwards have the purchase registered in the name of the third party so as to enable the swindler to obtain from the assurance fund P29,420 for a piece of land worth only P5,000. We do not say that this actually happened, but that it could have happened and we leave the persons who have taken part in this affair their good name and reputation intact. If in the opinion of the courts the possibility should exist, it is sufficient to preclude interpretations and presumptions. It is not enough to allege in the complaint the fact of the sale and the fact of the registration in order that it may be understood to be admitted, in the demurrer that the purchaser was presumably innocent. He might not have been innocent. If the proceedings had gone forward after the allowance of the demurrer it might perhaps be a question as to whose duty it was to prove that he was or was not an innocent purchaser, but at all events it cannot but be shown to the Insular Treasurer that the thing is irremediable, that the plaintiff’s ownership has been lost as to her, because an innocent third person holds the land and his ownership has been finally and irrevocably entered in the registry; “in other words,” says the Attorney-General in his brief (p. 30), “in order that the court may be informed by the allegations of the complaint whether the said Ramon Fabie is an innocent purchaser for value and has acquired the title to said property without notice of fraud or forgery or any incumbrance, the court is entitled to require the plaintiff to plead all the material facts in connection with the alleged transfer and registration of title and on the trial in proof of his allegations to present in evidence a certified copy of the certificate of title or owner’s duplicate alleged to have been issued to said Ramon Fabie, together with the notations or indorsements on the back of said certificate of title * * * and the plaintiff must show the court the reason, if any there be, why the plaintiff did not in due time pursue his legal and equitable remedies against the parties to the alleged fraud.” Elsewhere in his brief, on page 28 thereof, he also says the following: “It does not appear why Gregoria Hernandez did not file suit for the annulment of the fraudulent sale by Vedasto Velazquez until September 25, 1906, nor does it appear why Gregoria Hernandez or her agent did not file the lis pendens with the register of deeds under section 79, Act No. 496, immediately upon filing her suit in September 26, 1906, instead of waiting until May, 1907. There is no allegation of facts giving any reason why Gregoria Hernandez did not take steps between January 18, 1904, and November 7, 1904, the date of the alleged sale with pacto de retro, to have said false and fraudulent deed and the certificate of title issued thereunder declared null and void, as the law says they are.” As Velazquez perpetrated a crime in order to appear in the registry as the owner of the land; as the fraudulent sale appearing in the deed Exhibit A was declared to be null and void in 1907 and, as the certificate of title No. 43 was canceled in consequence of the annulment of the registration A, naturally a doubt arose as to whether Vedasto Velazquez, who was not the lawful owner of the land, could convey any right of ownership whatever to Ramon Fabie in the land acquired by the latter; and a still greater doubt whether, after the cancellation of Velazquez’ certificate of title, on the back of which was noted the sale under pacto de retro made to Fabie, the memorandum still continued in effect. The natural consequence of the judicial declaration of the annulment of the sale of the land and of the certificate of title obtained by Velazquez was the filing of another suit to compel Velazquez to restore the possession of the land to Gregoria Hernandez or to her agent and for the cancellation of the inscription A and the certificate of title No. 43, Ramon Fabie being included in the proceedings, because of his being the present possessor and because the cancellation of the certificate of title containing a memorandum of his pacto de retro purchase title might affect him. Gregoria Hernandez or her agent in the complaint simply states the fact of Vedasto Velazquez conveying the land to Ramon Fabie by sale under pacto de retro. Ramon Fabie can demur to the complaint of Gregoria Hernandez or her agent, alleging that the facts set forth therein do not constitute a right of action, because the plaintiff must presume that he is an innocent holder of a certificate of title for value, and, under section 55 of Act No. 496, he can not be sued by reason of such acquisition. It is certain that in reply the plaintiff would allege that in his complaint he is not obliged to presume anything, that he has only to affirm actual facts in support of his right of action. If no presumption may be allowed in the complaint with respect to the facts alleged therein, why must presumption be allowed in the admissions of the demurrer? Necessarily discussion would inevitably fall upon the principal fact in the case, to wit, whether Ramon Fabie is an innocent holder of a certificate of title for value and the court would finally decide whether he is or is not, in order to determine the propriety or impropriety of the action for recovery of possession. The Insular Treasurer would necessarily have to have before him a final judgment declaring Fabie to be an innocent holder for value in order to consider the property lost to one person by reason of the registration of another as the owner thereof. Without this, there is no court that can order that an owner be indemnified out of the “assurance fund.” In these proceedings it has only been shown, by virtue of a stipulation of facts, that Ramon Fabie is an innocent holder of a certificate of title for value; consequently, in conformity with the oft-cited section 55 of Act No. 496, he is the absolute owner of the land mentioned in the complaint, and the action for recovery of possession, improperly brought against him, can in no wise prosper. It is improper to cancel the registrations A, C, and D. The last two, C and D, the deeds of sale under pacto de retro and the final and absolute deed of sale executed by Vedasto Velazquez, for the reason that they are perfectly legal; and the registration A, that of the, sale forged by Vedasto Velazquez in his favor, because, according to section 38 of Act No. 496, in .case there be an innocent purchaser for value, the decree of registration fraudulently obtained shall not be opened, but shall remain in full force and effect forever, subject only to the right of appeal. This is the registration to which Ramon Fabie found no objection whatsoever and upon which the certificate No. 43 showing his repurchase was issued. In turn the defendant asks for the cancellation of the notice of lis pendens made on the certificate of title No. 766 issued as a result of the absolute sale. This petition should be allowed, because it was shown by the plaintiff himself that such notice was absolutely valueless. It is improper to tax the costs against Fabie jointly with Velazquez, or in any other manner, because Velazquez was not made a party defendant, and because Fabie is entirely in the right. The judgment appealed from is reversed in so far as it decrees the cancellation of the documents A, C, and D and the certificates Nos. 43 and 766, directs the register to record the said cancellation and orders the possession of the land to be adjudicated to the plaintiff, with the costs against Fabie and Velazquez; and the judgment is affirmed in so far as it denies the prayer for damages and the payment of rentals. No special finding as to costs. So ordered. Johnson, J., concurs.