G.R. No. 47660; June 17, 1941
VISAYAN SURETY & INSURANCE CORPORATION, petitioner, vs. VICENTE VERSOZA, respondent.

FACTS

The respondent, Vicente Versoza (father), was the registered owner of four parcels of land in Paco, Manila, covered by Transfer Certificates of Title (TCT) Nos. 17261 and 17262. He delivered these certificates to his son, also named Vicente Versoza, for the purpose of pledging them with the Philippine Trust Company to obtain a loan. On December 13, 1933, the son, acting on his father’s instruction, mortgaged the lands to the Philippine Trust Company to secure a loan of P5,000. The mortgage deed was executed in the son’s name, and because he shared the same name as his father, the mortgage was inscribed on the certificates of title. In April 1934, the son asked the petitioner, Visayan Surety & Insurance Corporation, to act as his surety on a bond for P10,000, offering the same lands as counter-security. The petitioner inquired about the son’s properties, and the son mentioned the two TCTs but stated he could not mortgage them as they were already pledged to the Philippine Trust Company. The petitioner examined the existing mortgage to Philippine Trust Company, saw it was signed by “Vicente Versoza,” accepted the proposal, and executed the bond jointly with Far Eastern Surety & Insurance Co., Inc. After suffering losses on this bond, the petitioner filed Civil Case No. 52270 against the son and Lucia de Marcaida to recover P8,016.59. A final judgment was rendered in the petitioner’s favor. A writ of execution was issued, and the Sheriff levied upon and sold at public auction the lands described in TCT Nos. 17261 and 17262. Upon learning of this, the respondent father filed a third-party claim with the Sheriff. As the petitioner posted an indemnity bond, the levy and sale proceeded. To annul the Sheriff’s levy and sale and recover the lands, the respondent father filed Civil Case No. 53544 against the petitioner, Far Eastern Surety & Ins. Co., Inc., and the Sheriff. The Court of First Instance of Manila ruled in favor of the respondent father, declaring him the owner of the lands and annulling the Sheriff’s proceedings. The Court of Appeals affirmed this decision.

ISSUE

The principal issue is whether the respondent father ceased to be the registered owner of the lands covered by TCT Nos. 17261 and 17262, and consequently, whether the Sheriff’s levy and sale of those lands to the petitioner were valid and conferred absolute title upon the petitioner.

RULING

The Supreme Court denied the petition for certiorari and affirmed the decision of the Court of Appeals.
1. Ownership under the Torrens System: The respondent father remained the registered owner of the lands because the TCTs issued in his name had not been cancelled. Under the Torrens system (Act No. 496), the person in whose name a final decree or certificate of title is issued is the owner of the registered land. This title is conclusive and indefeasible and is subject only to the liens and encumbrances noted thereon or those exceptions provided by law. Since the respondent was the absolute owner of the lands and the petitioner’s claim (arising from the son’s counter-bond) was not annotated on the titles, the inevitable conclusion is that the Sheriff’s levy and sale were null and void, and the petitioner did not acquire legal title to the properties.
2. Doctrine of Estoppel Not Applicable: The petitioner argued that the respondent father was estopped from denying the transaction with his son because the TCTs showed the mortgage to Philippine Trust Company executed by the son. The Court held that estoppel could not be invoked against the respondent. He was not a party to, nor did he have any interest in, either the mortgage to Philippine Trust Company or the counter-bond transaction with the petitioner. Estoppel operates only between parties and their privies. For estoppel to apply, the representation must have been made to the party claiming it, with the purpose of influencing that party’s conduct. Here, the respondent father was a stranger to the dealings between his son and the petitioner. His act of delivering the titles to his son for the specific purpose of pledging them with the Philippine Trust Company could not be construed as a representation to the petitioner, with whom he had no dealings. Furthermore, the Court noted that the petitioner could not equitably claim estoppel because: (a) it did not rely on the lands as security in the same way, as it knew they were already mortgaged and did not require the father to mortgage them directly; and (b) a modicum of investigation would have revealed that the son’s full name (Vicente Versoza y Remolina, as signed on the counter-bond) differed from the name on the TCTs (Vicente Versoza).