Facts:

The case, titled "The Bachrach Motor Co., Inc. vs. Ethel M. Kane, as Administratrix of the Estate of the Deceased William Kane," was decided by the Philippine Supreme Court on May 29, 1935, under G.R. No. 41820. The proceedings originated from a prior case (No. 5153) decided on September 19, 1932, by the Court of First Instance of Rizal, where the plaintiff in that instance, the Bachrach Motor Co., Inc., suffered a judgment in favor of William Kane regarding the property in question.

In this current action, the Bachrach Motor Co., Inc. sought recovery of a property that it claimed exclusively belonged to it. After having initially lost in the previous ejectment case, the Bachrach Motor Co. now claimed ownership of the property, which had undergone several transactions. The defendant, Ethel M. Kane, argued her entitlement based on a contract of sale executed by Geo. C. Sellner in favor of her deceased husband, William Kane. The narrative included evidence of their posse

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Facts:

Procedural Background

• The case is a sequel to case No. 5153 decided on September 19, 1932 by the Court of First Instance of Rizal.
• In the earlier ejectment case, the judgment was adverse to the plaintiff (Bachrach Motor Co., Inc.) who had also been the plaintiff in the present case.
• The lower court in the ejectment case had absolved the defendant William Kane of liability, thereby dismissing part of the complaint.

Nature of the Present Action

• The present action is for the recovery of property which is identical to that involved in the prior ejectment case.
• The plaintiff hence alleges exclusive ownership of the property described in the complaint.
• The lower court rendered a judgment declaring the plaintiff as the owner of the property with all its improvements.
• The judgment further ordered the defendant, Ethel M. Kane (administratrix of the estate of the deceased William Kane), to deliver possession of said property to the plaintiff.
• Additionally, the defendant was ordered to pay damages computed as a monthly rental of P250, commencing from May 6, 1932, plus costs.

Evidence and Documents Presented

• The chain of title and registration history:
• Originally covered by Transfer Certificate of Title No. 17467 issued in the name of Ruby Holstein (or Harnett).
• Sold to Carlos L. Zamora, who subsequently obtained Transfer Certificate of Title No. 19483 after cancellation of the former.
• Carlos L. Zamora then sold the property to Mary McDonald Bachrach on or about September 11, 1931, who later obtained Transfer Certificate of Title No. 20618.
• The property was finally transferred to the plaintiff, Bachrach Motor Co., Inc., as evidenced by Transfer Certificate of Title No. 22066 issued on June 27, 1932.
• The contested sale and mortgage transaction:
• A contract of sale (designated Exhibit E) executed by George C. Sellner in favor of the deceased William Kane, purportedly evidencing the sale price and partial payments.
• Testimonies and exhibits (Exhibits H and I) were submitted to prove that the transaction between Sellner and Mrs. Bachrach was an absolute sale, not merely an equitable or mortgage agreement.
• The defendant asserts that the instrument (Exhibit E) is merely a receipt and a promise, not a valid deed of sale, and emphasizes its unregistered status.
• Notice and Possession:
• The defendant testified that she and the deceased Kane took possession based on the contract of sale with Sellner.
• It was noted that E.M. Bachrach, husband of Mary McDonald Bachrach and manager of the plaintiff corporation, had informed the parties of a supposed sale after Mary McDonald Bachrach had acquired the property.
• Despite such notice, the plaintiff acquired a Torrens title (Exhibit B), which is central to its claim of ownership.

Defendant’s Arguments and Alleged Errors

• The appellate defendant raised six specific errors in the lower court’s judgment:
• Failure to declare the fundamental facts as res judicata.
• Reversal of the finding regarding the fictitious nature of the transaction between George C. Sellner and Carlos Zamora.
• Error in not determining that the transaction evidenced an equitable mortgage.
• Error in failing to find that Mrs. Bachrach had actual notice of a sale contract (Exhibit E) between Sellner and William Kane when extending a loan.
• Error in determining that the transfer of the property by Mrs. Bachrach to the plaintiff was valid despite being without consideration.
• Error in ordering possession delivery and the imposition of a monthly rental of P250 from May 6, 1932, particularly before the judgment was final.
• In a subsequent motion for reconsideration, the appellant raised additional points:
• Alleging that Carlos Zamora was not the true owner but merely a fictitious titleholder, with Sellner as the real owner.
• Objecting to the ruling on the transaction being an absolute sale (overruling the equitable mortgage argument).
• Claiming entitlement to a lien on the property amounting to P8,000.

Relevant Statutory and Doctrinal Basis Cited

• The principles of the Torrens Title system:
• Emphasize that once a title is registered and no incumbrances are noted, it is deemed conclusive, absolute, and indefeasible.
• Require demonstration of fraud to impugn a title, for which the plaintiff has not been found at fault.
• The application of Section 87 of Act No. 190, which provides that judgments in unlawful entry and detainer actions do not bar subsequent actions regarding title.
• Reliance on established cases such as Peiialosa vs. Tuason, De Jesus vs. Manaano, and Banatao vs. Dabbay and Tuliao, noting that judgments in forcible entry cases do not preclude suits for recovery of possession.
• The incorporation of principles of estoppel and the conclusiveness of registered documents versus unregistered private instruments.

Issue:

General Ownership and Possession

• Whether the plaintiff is the rightful owner of the property given the unregistered contract of sale (Exhibit E) and the subsequent chain of transfers.
• Whether the possession acquired by the defendant based on the contract with Sellner establishes any superior right over the registered title in favor of the plaintiff.

Validity and Effect of the Prior Ejectment Judgment

• Whether the prior ejectment case (case No. 5153) and its adjudicated facts invoke res judicata to bar the present claim.
• Whether the doctrine of res judicata applies in the context of the different causes of action (ejectment versus recovery of possession and title).

Evaluation of the Transaction between Sellner and Mrs. Bachrach

• Whether the transaction evidenced by Exhibits H and E constituted an absolute sale or merely an equitable mortgage.
• Whether Mrs. Bachrach had actual notice of the prior contract between Sellner and William Kane when extending the loan to Sellner.
• Whether the transfer of the property by Mrs. Bachrach to the plaintiff was executed with sufficient consideration or was fictitious.

Calculation and Basis for Damages

• Whether the awarded monthly rental of P250 is supported by compelling evidence, or if the reasonable value of the property’s actual rent (e.g., P60) should apply.
• Whether the damages should be classified and computed as rent rather than compensation based on the alleged stipulations in the private contract.

Additional Claims Raised in the Motion for Reconsideration

• Whether Carlos Zamora can be deemed a fictitious titleholder with Sellner as the true owner of the property.
• Whether the evidence supports a lien claim against the property amounting to P8,000 by the appellant.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Torrens Title System and Conclusiveness of Registration

• The central tenet of the Torrens system is that once land is registered and no incumbrances are noted, the title is deemed perfect, absolute, and indefeasible.

• Any attempt to undermine the registered title by unregistered private instruments (such as Exhibit E) is legally untenable.

Doctrine of Res Judicata and Its Exceptions

• The general rule of res judicata is applied only to those issues that have been directly and conclusively adjudicated between the same parties in prior actions.
• Section 87 of Act No. 190 expressly provides that judgments in unlawful entry and detainer cases do not bar subsequent actions concerning title; hence, the ejectment case does not preclude the recovery action.

Evidentiary Weight of Documentary versus Oral Evidence

• The court held that registered documents (transfer certificates of title and the deed of sale evidenced by Exhibit H) possess conclusive proof of title.
• Oral evidence, including testimonies by Sellner and Zamora intended to characterize the transaction as a mere mortgage, could not overcome the effect of duly registered documents.

Estoppel and Reliance in Transactions

• The doctrine of estoppel was applied to prevent parties from contradicting earlier representations that led others to act to their detriment.
• Since Mary McDonald Bachrach acted on the apparent authority and understanding induced

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