Republic of the Philippines
G.R. No. 142403 March 26, 2003
ALEJANDRO GABRIEL and ALFREDO GABRIEL, petitioners,
SPOUSES PABLO MABANTA and ESCOLASTICA COLOBONG, DEVELOPMENT BANK OF THE PHILIPPINES (Isabela Branch) and ZENAIDA TAN-REYES, respondents.
Born of the need to protect our land registration system from being converted into an instrument of fraud, this Court has consistently adhered to the principle that "a mere registration of title in case of double sale is not enough, good faith must concur with the registration."
In this petition for review on certiorari, Alejandro Gabriel and Alfredo Gabriel assailed the Decision1 dated March 30, 1999 of the Court of Appeals in CA-G.R. CV No. 33941 modifying the Decision2 dated April 12, 1991 of the Regional Trial Court, Branch 21, Santiago, Isabela in Civil Case No. 0399 for specific performance, reconveyance and damages with application for preliminary injunction.
The facts are as follows:
Spouses Pablo and Escolastica Mabanta were the registered owners of two lots located in Patul and Capaltitan, Santiago, Isabela, with an area of 512 and 15,000 square meters, covered by Transfer Certificates of Title (TCT) Nos. 72705 and 72707, respectively. On October 25, 1975, they mortgaged both lots with the Development Bank of the Philippines (DBP) as collateral for a loan of P14,000.00.3
Five years thereafter or on September 1, 1980, spouses Mabanta sold the lots to Susana Soriano by way of a "Deed of Sale of Parcels of Land With Assumption of Mortgage."4 Included in the Deed is an agreement that they could repurchase the lots within a period of two (2) years.
Spouses Mabanta failed to repurchase the lots. But sometime in 1984, they were able to convince Alejandro Gabriel to purchase the lots from Susana Soriano. As consideration, Alejandro delivered to Susana a 500-square meter residential lot with an actual value of P40,000.00 and paid spouses Mabanta the sum of P5,000.00. On May 15, 1984, spouses Mabanta executed a "Deed of Sale with Assumption of Mortgage"5 in favor of Alejandro. For her part, Susana executed a document entitled "Cancellation of Contract"6 whereby she transferred to Alejandro all her rights over the two lots.
Alejandro and his son Alfredo cultivated the lots. They also caused the restructuring of spouses Mabanta’s loan with the DBP.7 However, when they were ready to pay the entire loan, they found that spouses Benito and Pura Tan had paid it and that the mortgage was already cancelled.8
On August 18, 1985, Benito Tan and Alejandro Tridanio, a barangay official, approached Alejandro to refund to him the P5,000.00 he paid to spouses Mabanta. Alejandro refused because Tan was unwilling to return the former’s 500-square meter lot delivered to Susana as purchase price for the lots. Thereafter, spouses Tan tried to eject Alejandro from the lot covered by TCT No. 72707.
On September 17, 1985, Alejandro and Alfredo filed with the Regional Trial Court, Branch 21, Santiago, Isabela a complaint (involving the lot covered by TCT No. 72707) for specific performance, reconveyance and damages with an application for a preliminary injunction against spouses Mabanta, spouses Tan, the DBP and barangay officials Dominador Maylem and Alejandro Tridanio. In due time, these defendants filed their respective answers.
During the proceedings, it turned out that it was spouses Tan’s daughter, Zenaida Tan-Reyes who bought one of the lots (covered by TCT No. 72707) from spouses Mabanta on August 21, 1985. Not having been impleaded as a party-defendant, she filed an answer-in-intervention alleging that she is the registered owner of the lot covered by TCT No. 72707; that she purchased it from spouses Mabanta "in good faith and for value"; that she paid their loan with the DBP in the amounts of P17,580.88 and P16,845.17 per Official Receipts Nos. 1749539 and 1749540, respectively; that the mortgage with the DBP was cancelled and spouses Mabanta executed a "Deed of Absolute Sale"9 in her favor; and that TCT No. T-72707 was cancelled and in lieu thereof, TCT No. T-160391 was issued in her name.
On April 12, 1991, the trial court rendered its Decision sustaining the right of Alejandro and Alfredo Gabriel over the lot covered by TCT No. 72707 (now TCT No. T-160391), thus:
"WHEREFORE, in the light of the foregoing considerations judgment is hereby rendered:
1. DECLARING Exhibit "A", the deed of sale with assumption of mortgage executed by the spouses Pablo Mabanta and Escolastica Colobong (in favor of Alejandro and Alfredo Gabriel) valid and subsisting.
2. ORDERING the plaintiff Alejandro Gabriel to pay to the spouses Pablo Mabanta and Escolastica Colobong the sums of P5,000.00 plus P34,426.05 (representing the loan with the DBP which plaintiff assumed) within 30 days from receipt hereof.
3. DECLARING the deed of sale executed by the spouses Pablo Mabanta and Escolastica Colobong in favor of Zenaida Tan Reyes as null and void.
4. ORDERING the intervenor Zenaida Tan-Reyes to reconvey the land covered by T.C.T. No. T-160391 in favor of Alejandro Gabriel.
In declaring null and void the "Deed of Absolute Sale" (or second sale) of the lot covered by TCT No. 72707 between spouses Mabanta and Zenaida Tan-Reyes, the trial court ratiocinated as follows:
"But Zenaida (Tan) Reyes professes that she is a buyer in good faith and for value. In her testimony she said that the spouses Mabanta offered to sell the land to her on August 19, 1985. She was informed that the land was mortgaged in the DBP. She readily agreed to buy the land on that same day. She did not inquire further into the status of the land. She did not go and see the land first. What she did was to immediately go to the DBP the following day and paid the mortgage obligation in the amount of P16,845.17 and P17,580.88 (Exhibits "1" and "2"). The following day August 21, a deed of sale in her favor was prepared and on October 17, 1985 she secured a certificate of title (Exhibit "5"). Under the above circumstances, it cannot be said that she is a purchaser in good faith. She should have first made a thorough investigation of the status of the land. Had she inquired, she should have been informed that the land was previously sold to at least two persons Susana Soriano and Alejandro Gabriel. She should also have first visited the land she was buying. Had she done so she should have discovered that the land was being cultivated by the Gabriels who would have informed her that they already bought the land from the Mabantas. The reason why she did not do this is because she already was appraised of the status of the land by her father Benito Tan. For reasons known only to her, she decided to buy the land just the same.
x x x x x x x x x
"Zenaida Tan therefore is not a purchaser in good faith and she cannot seek refuge behind her certificate of title. True, Article 1544 of the Civil Code provides that should immovable property be sold to different vendees, the ownership shall belong to the person who in good faith first recorded it in the registry of property. Unfortunately, the registration made by Zenaida (Tan) Reyes of her deed of sale was not in good faith. For this reason in accordance with the same Article 1544, the land shall pertain to the person who in good faith was first in possession. There is no question that it is the Gabriels who are in possession of the land."
Unsatisfied, spouses Mabanta and Zenaida Tan-Reyes interposed an appeal to the Court of Appeals.
On March 30, 1999, the Court of Appeals rendered a Decision modifying the trial court’s Decision, declaring as valid the second sale of the lot covered by TCT No. 72707 between spouses Mabanta and Zenaida Tan-Reyes on the ground that a person dealing with registered land may simply rely on the correctness of the certificate of title and, in the absence of anything to engender suspicion, he is under no obligation to look beyond it. The dispositive portion of the Appellate Court’s Decision reads:
"Wherefore the appealed judgment is AFFIRMED with the following modification:
1. DECLARING Exhibit "A", the deed of sale with assumption of mortgage executed by the defendants-appellants spouses Pablo Mabanta and Escolastica Colobong over lots covered by TCT Nos. T-72705 and T-72707 valid and subsisting;
2. Ordering spouses Pablo Mabanta and Escolastica Colobong to surrender TCT No. 72705 to plaintiff-appellee Alejandro Gabriel;
3. Declaring the deed of sale executed over lot with TCT No. 72707 (now T-160391) by spouses Pablo Mabanta and Escolastica Colobong in favor of intervenor-appellant Zenaida Tan Reyes as valid;
4. Ordering plaintiffs-appellees and any all persons claiming rights under them to vacate Lot 3651-A now covered by TCT No. T-160391 and to deliver to intervenor-appellant Zenaida Tan-Reyes the possession thereof;
5. Dismissing the case against defendants-appellants Benito Tan and Purita Masa;
6. No pronouncement as to costs.
In the instant petition for review on certiorari, petitioners Alejandro and Alfredo Gabriel raise this lone issue:
WHETHER OR NOT THE COURT OF APPEALS ERRED IN DECLARING THE SECOND SALE OF THE DISPUTED LOT EXECUTED BY SPOUSES MABANTA IN FAVOR OF ZENAIDA TAN-REYES VALID UNDER ARTICLE 1544 OF THE CIVIL CODE.
Petitioners contend that respondent Reyes is not a purchaser in good faith since she bought the disputed lot with the knowledge that petitioner Alejandro is claiming it in a previous sale.
In her comment on the petition, respondent Reyes maintains that the Court of Appeals’ factual finding that she is a purchaser in good faith and for value is final and conclusive. Meeting the issue head on, she claims that there is no evidence that prior to August 21, 1985, when she purchased the lot from respondent spouses Mabanta, she had knowledge of any previous lien or encumbrance on the property.
For its part, respondent DBP avers that it acted in utmost good faith in releasing the mortgaged lots to respondent spouses Mabanta who had the loan restructured and paid the same. Also, it did not transact business with spouses Tan.
With respect to respondent spouses Mabanta, this Court’s Resolution dated June 14, 2000 requiring them to file comment on the present petition was returned unserved. Thus, in its Resolution dated January 22, 2001, this Court resolved to consider the Resolution of June 14, 2000 "deemed served" upon them.10
The petition is impressed with merit.
The issue for our resolution is whether or not respondent Zenaida Tan-Reyes acted in good faith when she purchased the subject lot and had the sale registered.
Settled is the principle that this Court is not a trier of facts. In the exercise of its power of review, the findings of fact of the Court of Appeals are conclusive and binding and consequently, it is not our function to analyze or weigh evidence all over again.11 This rule, however, is not an iron-clad rule.12 In Floro vs. Llenado,13 we enumerated the various exceptions and one which finds application to the present case is when the findings of the Court of Appeals are contrary to those of the trial court.
We start first with the applicable law.
Article 1544 of the Civil Code provides:
"ART. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first possession thereof in good faith, if it should be movable property.
"Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property.
"Should there be no inscription, the ownership shall pertain to the person who in good faith was first in possession; and, in the absence thereof; to the person who presents the oldest title, provided there is good faith."
Otherwise stated, where it is an immovable property that is the subject of a double sale, ownership shall be transferred (1) to the person acquiring it who in good faith first recorded it in the Registry of Property; (2) in default thereof, to the person who in good faith was first in possession; and (3) in default thereof, to the person who presents the oldest title, provided there is good faith.14 The requirement of the law then is two-fold: acquisition in good faith and registration in good faith.15 The rationale behind this is well-expounded in Uraca vs. Court of Appeals,16 where this Court held:
"Under the foregoing, the prior registration of the disputed property by the second buyer does not by itself confer ownership or a better right over the property. Article 1544 requires that such registration must be coupled with good faith. Jurisprudence teaches us that "(t)he governing principle is primus tempore, potior jure (first in time, stronger in right). Knowledge gained by the first buyer of the second sale cannot defeat the first buyer’s right except where the second buyer registers in good faith the second sale ahead of the first, as provided by the Civil Code. Such knowledge of the first buyer does not bar her from availing of her rights under the law, among them, to register first her purchase as against the second buyer. But in converso, knowledge gained by the second buyer of the first sale defeats his right even if he is first to register the second sale, since such knowledge taints his prior registration with bad faith. This is the price exacted by Article 1544 of the Civil Code for the second buyer being able to displace the first buyer, that before the second buyer can obtain priority over the first, he must show that he acted in good faith throughout (i.e. in ignorance of the first sale and of the first buyer’s right) – from the time of acquisition until the title is transferred to him by registration or failing registration, by delivery of possession." (Emphasis supplied)
In the case at bar, certain pieces of evidence, put together, would prove that respondent Reyes is not a buyer in good faith. The records show that on August 18, 1985, spouses Mabanta offered to her for sale the disputed lot. They told her it was mortgaged with respondent DBP and that she had to pay the loan if she wanted to buy it.17 She readily agreed to such a condition. The following day, her father Benito Tan, accompanied by barangay official Tridanio, went to petitioner Alejandro’s house offering to return to him the P5,000.00 he had paid to spouses Mabanta. Tan did not suggest to return the 500-square meter lot petitioner delivered to Susana Soriano.18 For this reason, petitioner refused Tan’s offer and even prohibited him from going to respondent DBP. We quote the following testimony of petitioner who, despite his blindness as shown by the records, testified to assert his right, thus:
Q What can you say to that statement?
A That is their mistake, sir.
Q Why do you say that is their mistake?
A Because her husband and Tridanio went at home offering to return the money but I did not accept, sir.
Q Who is this Benito Tan you are referring to?
A The husband of Pura Masa, sir.
Q What is the relationship with the intervenor Zenaida Tan?
A The daughter, sir.
Q When did Benito Tan together with Councilman Tridanio came?
A Before they went to the Development Bank of the Philippines they came at home and I prohibit them, sir.
Q How did you prohibit them?
A No, I said please I am just waiting for the Bank to inspect then I will pay my obligation.
x x x x x x x x x
Q You stated earlier that you will just pay the payments. What are those payments you are referring to?
A The payment I have given to Colobong and to the Bank, sir. They do not want to return the payment I have given to Susana Soriano and that is the beginning of our quarrel."19
We are thus convinced that respondent Reyes had knowledge that petitioner previously bought the disputed lot from respondent spouses Mabanta. Why should her father approach petitioner and offer to return to him the money he paid spouses Mabanta? Obviously, aware of the previous sale to petitioner, respondent Reyes informed her father about it. At this juncture, it is reasonable to conclude that what prompted him to go to petitioner’s house was his desire to facilitate his daughter’s acquisition of the lot, i.e., to prevent petitioner Alejandro from contesting it. He did not foresee then that petitioner would insist he has a prior right over the lot.
Now respondent Reyes claims that she is a purchaser in good faith. This is preposterous. Good faith is something internal. Actually, it is a question of intention. In ascertaining one’s intention, this Court must rely on the evidence of one’s conduct and outward acts. From her actuations as specified above, respondent Reyes cannot be considered to be in good faith when she bought the lot.
Moreover, it bears noting that on September 16, 1985, both petitioners filed with the trial court their complaint involving the lot in question against respondents. After a month, or on October 17, 1985, respondent Reyes had the "Deed of Absolute Sale" registered with the Registry of Property. Evidently, she wanted to be the first one to effect its registration to the prejudice of petitioners who, although in possession, have not registered the same. This is another indicum of bad faith.
We have consistently held that "in cases of double sale of immovables, what finds relevance and materiality is not whether or not the second buyer was a buyer in good faith but whether or not said second buyer registers such second sale in good faith, that is, without knowledge of any defect in the title of the property sold."20 In Salvoro vs. Tanega,21 we had the occasion to rule that:
"If a vendee in a double sale registers the sale after he has acquired knowledge that there was a previous sale of the same property to a third party or that another person claims said property in a previous sale, the registration will constitute a registration in bad faith and will not confer upon him any right."
Mere registration of title is not enough, good faith must concur with the registration. To be entitled to priority, the second purchaser must not only establish prior recording of his deed, but must have acted in good faith, without knowledge of the existence of another alienation by the vendor to the other.22 In the old case of Leung Yee vs. F. L. Strong Machinery, Co. and Williamson, this Court ruled:
"One who purchases a real estate with knowledge of a defect of title in his vendor cannot claim that he has acquired title thereto in good faith as against the true owner of the land or of an interest therein; and the same rule must be applied to one who has knowledge of facts which should have put him upon such inquiry and investigation as might be necessary to acquaint him with the defects in the title of his vendor. A purchaser cannot close his eyes to facts which should put a reasonable man upon his guard, and then claim that he acted in good faith under the belief that there was no defect in the title of the vendor. His mere refusal to believe that such a defect exists, or his willful closing of his eyes to the possibility of the existence of a defect in his vendor’s title will not make him an innocent purchaser for value, if it afterwards develops that the title was in fact defective, and it appears that he had such notice of the defect as would have led to its discovery had he acted with that measure of precaution which may reasonably be required of a prudent man in a like situation. x x x "23
In fine, we hold that respondent Zenaida Tan-Reyes did not act in good faith when she bought the lot and had the sale registered.
WHEREFORE, the assailed Decision of the Court of Appeals is REVERSED and SET ASIDE. The Decision of the trial court is hereby reinstated.
Puno, (Chairman), Panganiban, Corona, and Carpio-Morales, JJ., concur.
1 Rollo, at 118-134, penned by Justice Ruben T. Reyes and concurred in by Justice Salome A. Montoya (retired) and Justice Eloy R. Bello, Jr.
2 Rollo at 59-78, penned by Judge Fe Albano Madrid.
3 Records at 46.
4 Exhibit "B", Folder of Exhibits.
5 Records at 6.
6 Exhibit "D", Folder of Exhibits.
7 TSN, August 26, 1987, at 57. See also Exhibits "E"; "E-1"; E-2" and "F", id.
8 Exhibit "3", id.
9 Rollo at 47.
10 Id. at 190.
11 Alipoon vs. Court of Appeals, G.R. No. 127523, March 22, 1999, 305 SCRA 118.
12 Borlongan vs. Madrideo, G.R. No. 120267, January 25, 2000, 323 SCRA 248.
13 G.R. No. 75723, June 2, 1995, 244 SCRA 713, citing Remalante vs. Tibe, G.R. No. L-59514, February 25, 1988,158 SCRA 138; Banaag vs. Bartolome, G.R. No. 76245, December 20, 1991, 204 SCRA 924; Tongson vs. Court of Appeals, G.R. No. 77104, November 6, 1992, 215 SCRA 426; Geronimo vs. Court of Appeals, G.R. No. 105540, July 3, 1993, 224 SCRA 494.
14 Balatbat vs. Court of Appeals, G.R. No. 109410, August 28, 1996, 261 SCRA 128, 141; Radiowealth Finance Co. vs. Palileo, G.R. No. 83432, May 20, 1991, 197 SCRA 245, 246.
15 Martinez vs. Court of Appeals, G.R. No. 123547, May 21, 2001, 358 SCRA 38.
16 G.R. No. 115158, September 5, 1997, 278 SCRA 702.
17 TSN, July 6, 1989, at 17-18.
18 TSN, December 14, 1990, at 27-30.
19 Id. at 28-29.
20 Bayoca vs. Nogales, G.R. No. 138201, September 12, 2000, 340 SCRA 154, 166; Coronel vs. Court of Appeals, G.R. No. 103577, October 7, 1996, 263 SCRA 15, 38.
21 G.R. No. L-32988, December 29, 1978, 87 SCRA 349.
22 Martinez vs. Court of Appeals, supra; Bautista vs. Court of Appeals, G.R. No. 106042, February 28, 1994, 230 SCRA 446.
23 37 Phil. 644 (1918).
Republic of the Philippines
G.R. No. 83432 May 20, 1991
RADIOWEALTH FINANCE COMPANY, petitioner,
MANUELITO S. PALILEO, respondent.
Rolando A. Calang for petitioner.
Sisenando Villaluz, Sr. for respondent.
If the same piece of land was sold to two different purchasers, to whom shall ownership belong? Article 1544 of the Civil Code provides that in case of double sale of an immovable property, ownership shall be transferred: (1) to the person acquiring it who in good faith first recorded it in the Registry of Property; (2) in default thereof, to the person who in good faith was first in possession; and (3) in default thereof, to the person who presents the oldest title, provided there is good faith. There is no ambiguity regarding the application of the law with respect to lands registered under the Torrens System. Section 51 of Presidential Decree No. 1529 (amending Section 50 of Act No. 496 clearly provides that the act of registration is the operative act to convey or affect registered lands insofar as third persons are concerned. Thus, a person dealing with registered land is not required to go behind the register to determine the condition of the property. He is only charged with notice of the burdens on the property which are noted on the face of the register or certificate of title. 1 Following this principle, this Court has time and again held that a purchaser in good faith of registered land (covered by a Torrens Title) acquires a good title as against all the transferees thereof whose right is not recorded in the registry of deeds at the time of the sale. 2
The question that has to be resolved in the instant petition is whether or not the rule provided in Article 1544 of the Civil Code as discussed above, is applicable to a parcel of unregistered land purchased at a judicial sale. To be more specific, this Court is asked to determine who, as between two buyers of unregistered land, is the rightful owner—the first buyer in a prior sale that was unrecorded, or the second buyer who purchased the land in an execution sale whose transfer was registered in the Register of Deeds.
The facts as found by the Court of Appeals are as follows:
On April 13, 1970, defendant spouses Enrique Castro and Herminia R. Castro sold to plaintiff-appellee Manuelito Palileo (private respondent herein), a parcel of unregistered coconut land situated in Candiis, Mansayaw, Mainit, Surigao del Norte. The sale is evidenced by a notarized Deed of Absolute Sale (Exh. "E"). The deed was not registered in the Registry of Property for unregistered lands in the province of Surigao del Norte. Since the execution of the deed of sale, appellee Manuelito Palileo who was then employed at Lianga Surigao del Sur, exercised acts of ownership over the land through his mother Rafaela Palileo, as administratrix or overseer. Appellee has continuously paid the real estate taxes on said land from 1971 until the present (Exhs. "C" to "C-7", inclusive).
On November 29, 1976, a judgment was rendered against defendant Enrique T. Castro, in Civil Case No. 0103145 by the then Court of First Instance of Manila, Branch XIX, to pay herein defendant-appellant Radiowealth Finance Company (petitioner herein), the sum of P22,350.35 with interest thereon at the rate of 16% per annum from November 2, 1975 until fully paid, and the further sum of P2,235.03 as attorney's fees, and to pay the costs. Upon the finality of the judgment, a writ of execution was issued. Pursuant to said writ, defendant provincial Sheriff Marietta E. Eviota, through defendant Deputy Provincial Sheriff Leopoldo Risma, levied upon and finally sold at public auction the subject land that defendant Enrique Castro had sold to appellee Manuelito Palileo on April 13,1970. A certificate of sale was executed by the Provincial Sheriff in favor of defendant- appellant Radiowealth Finance Company, being the only bidder. After the period of redemption has (sic) expired, a deed of final sale was also executed by the same Provincial Sheriff. Both the certificate of sale and the deed of final sale were registered with the Registry of Deeds. 3
Learning of what happened to the land, private respondent Manuelito Palileo filed an action for quieting of title over the same. After a trial on the merits, the court a quo rendered a decision in his favor. On appeal, the decision of the trial court was affirmed. Hence, this petition for review on certiorari.
In its petition, Radiowealth Finance Company presents the following errors:
1. THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE DEED OF ABSOLUTE SALE (EXHIBIT B) ALLEGEDLY EXECUTED BY ENRIQUE CASTRO IN FAVOR OF APPELLEE MANUELITO PALILEO, WAS SIMULATED OR FICTITIOUS.
2. THE COURT OF APPEALS ERRED IN NOT FINDING APPELLEE MANUELITO PALILEO AS ADMINISTRATOR ONLY OF THE DISPUTED PROPERTY; AND
3. THE COURT OF APPEALS ERRED IN NOT FINDING DEFENDANT-APPELLANT RADIOWEALTH FINANCE COMPANY OWNER OF THE DISPUTED PROPERTY BY REASON OF THE CERTIFICATE OF SALE AND THE DEED OF FINAL SALE WHICH WERE ALL REGISTERED IN THE REGISTER OF DEEDS, HENCE, SUPERIOR TO THAT OF THE DEED OF SALE IN POSSESSION OF MANUELITO PALILEO, FOR BEING NOT REGISTERED. 4
As regards the first and second assigned errors, suffice it to state that findings of fact of the Court of Appeals are conclusive on this Court and will not be disturbed unless there is grave abuse of discretion. The finding of the Court of Appeals that the property in question was already sold to private respondent by its previous owner before the execution sale is evidenced by a deed of sale. Said deed of sale is notarized and is presumed authentic. There is no substantive proof to support petitioner's allegation that the document is fictitious or simulated. With this in mind, We see no reason to reject the conclusion of the Court of Appeals that private respondent was not a mere administrator of the property. That he exercised acts of ownership through his mother also remains undisputed.
Going now to the third assigned error which deals with the main issue presented in the instant petition, We observe that the Court of Appeals resolved the same in favor of private respondent due to the following reason; what the Provincial Sheriff levied upon and sold to petitioner is a parcel of land that does not belong to Enrique Castro, the judgment debtor, hence the execution is contrary to the directive contained in the writ of execution which commanded that the lands and buildings belonging to Enrique Castro be sold to satisfy the execution. 5
There is no doubt that had the property in question been a registered land, this case would have been decided in favor of petitioner since it was petitioner that had its claim first recorded in the Registry of Deeds. For, as already mentioned earlier, it is the act of registration that operates to convey and affect registered land. Therefore, a bona fide purchaser of a registered land at an execution sale acquires a good title as against a prior transferee, if such transfer was unrecorded.
However, it must be stressed that this case deals with a parcel of unregistered land and a different set of rules applies. We affirm the decision of the Court of Appeals.
Under Act No. 3344, registration of instruments affecting unregistered lands is "without prejudice to a third party with a better right". The aforequoted phrase has been held by this Court to mean that the mere registration of a sale in one's favor does not give him any right over the land if the vendor was not anymore the owner of the land having previously sold the same to somebody else even if the earlier sale was unrecorded.
The case of Carumba vs. Court of Appeals 6 is a case in point. It was held therein that Article 1544 of the Civil Code has no application to land not registered under Act No. 496. Like in the case at bar, Carumba dealt with a double sale of the same unregistered land. The first sale was made by the original owners and was unrecorded while the second was an execution sale that resulted from a complaint for a sum of money filed against the said original owners. Applying Section 35, Rule 39 of the Revised Rules of Court, 7 this Court held that Article 1544 of the Civil Code cannot be invoked to benefit the purchaser at the execution sale though the latter was a buyer in good faith and even if this second sale was registered. It was explained that this is because the purchaser of unregistered land at a sheriffs execution sale only steps into the shoes of the judgment debtor, and merely acquires the latter's interest in the property sold as of the time the property was levied upon.
Applying this principle, the Court of Appeals correctly held that the execution sale of the unregistered land in favor of petitioner is of no effect because the land no longer belonged to the judgment debtor as of the time of the said execution sale.
WHEREFORE, in view of the foregoing, the decision of the Court of Appeals in CA-G.R. CV No. 10788 is hereby AFFIRMED. No costs.
Narvasa, Cruz, Griño-Aquino and Medialdea, JJ., concur.
1 William H. Anderson & Co. vs. Garcia, 64 Phil. 506 (1937).
2 Vargas vs. Tancioco, 67 Phil. 308 (1939).
3 Pages 10-11, Rollo.
4 Page 5, Rollo.
5 Page 14, Rollo; Emphasis supplied.
6 31 SCRA 558 (1970).
7 The second paragraph of this provision states that: "Upon the execution and delivery of said deed the purchaser, or redemptioner, or his assignee, shall be substituted to and acquired all the right, title, interest and claim of the judgment debtor to the property as of the time of the levy, except as against the judgment debtor in possession, in which case the substitution shall be effective as of the time of the deed. . . ." (Emphasis supplied.)
Republic of the Philippines
G.R. No. 179641 February 9, 2011
DOLORITA C. BEATINGO, Petitioner,
LILIA BU GASIS, Respondent.
D E C I S I O N
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the Court of Appeals1 (CA) Resolutions dated June 27, 20072 and August 13, 20073 in CA-G.R. CEB-CV No. 01624.
This petition stemmed from the following facts:
Petitioner Dolorita Beatingo filed a Complaint for Annulment and Cancellation of Sale, Reconveyance, Delivery of Title and Damages4 against respondent Lilia Bu Gasis before the Regional Trial Court (RTC) of Iloilo City. The case was raffled to Branch 31 and docketed as Civil Case No. 00-26171.
Petitioner alleged that, on May 19, 1998, she bought a piece of land, denominated as Lot No. 7219 (hereafter referred to as the subject property), from Flora G. Gasis (Flora). The subject property was registered in the name of Flora’s predecessor-in-interest. The sale was evidenced by a notarized Deed of Absolute Sale. On October 18, 1999, petitioner went to the Register of Deeds to have the sale registered. She, however, failed to obtain registration as she could not produce the owner’s duplicate certificate of title. She, thus, filed a petition for the issuance of the owner’s duplicate certificate of title but was opposed by respondent, claiming that she was in possession of the Original Certificate of Title (OCT) as she purchased the subject property from Flora on January 27, 1999, as evidenced by a Deed of Sale. This prompted petitioner to file the Complaint, insisting that she is the rightful owner of the subject property. She also maintained that respondent had been keeping the OCT despite knowledge that petitioner is the rightful owner. She further accused respondent of inducing Flora to violate the contract with her, which caused her damage, prejudice, mental anguish, and serious anxiety.5
On the other hand, respondent claimed that she purchased the subject property from Flora without knowledge of the prior sale of the same subject property to petitioner, which makes her an innocent purchaser for value. Respondent denied having induced Flora to violate her contract with petitioner as she never knew the existence of the alleged first contract. Lastly, respondent declared that, upon payment of the purchase price, she immediately occupied the subject property and enjoyed its produce.
On December 29, 2005, the RTC rendered a decision,6 the dispositive portion of which reads:
WHEREFORE, on the basis of the testimonial and documentary evidence, the court finds that preponderant evidence has been established by the defendant as against the plaintiff, hence, JUDGMENT is therefore rendered in favor of the defendant.
Consequently, the complaint is DISMISSED and the defendant is hereby declared to be the lawful owner of the property in question. Further the plaintiff is hereby ordered to pay the defendant
P30,000.00 in attorney’s fees, litigation expenses of P10,000.00 and the costs of the suit.
The RTC considered the controversy as one of double sale and, in resolving the issues raised by the parties, it applied the rules laid down in Article 1544 of the Civil Code. As opposed to petitioner’s admission that she did not pay the purchase price in full and that she did not acquire possession of the subject property because of the presence of tenants on it, the court gave more weight to respondent’s evidence showing that she immediately acquired possession of the subject property and enjoyed its produce upon full payment of the purchase price. Since the two sales – that of petitioner and that of respondent – were not registered with the Registry of Property, the RTC held that whoever was in possession had the better right. Hence, it decided in favor of respondent.
Aggrieved, petitioner filed a Motion for New Trial and Reconsideration8 on the ground that she was in possession of the subject property actually and constructively. The motion, however, was denied by the RTC in an Order9 dated April 5, 2006.
Undaunted, petitioner elevated the matter to the CA via a Notice of Appeal. On December 20, 2006, the CA required petitioner to file an Appellant’s Brief within forty-five (45) days from receipt of the notice.10
However, due to pressures of work in equally important cases with other clients, counsel for petitioner requested for an extension of ninety (90) days within which to file the brief.11
In a Resolution dated March 9, 2007, the CA granted the motion. The Resolution is quoted below for easy reference:
As prayed for, the plaintiff-appellant is hereby granted the maximum extension of ninety (90) days from 19 February 2007 or until 20 May 2007, within which to file an Appellant’s Brief.12
Instead of filing the Appellant’s Brief within the extended period, petitioner twice moved for extension of time to file the brief, covering an additional period of sixty (60) days for the same reasons as those raised in the first motion for extension.13
In a Resolution14 dated June 27, 2007, the CA denied the motions for extension to file brief. Thus, for failure to file the Appellant’s Brief, the appellate court dismissed the appeal. In a Resolution15 dated August 13, 2007, the CA denied petitioner’s motion for reconsideration.
Hence, the instant petition on the following grounds:
A. THE RESPONDENT COURT OF APPEALS ERRED IN NOT REVIEWING ON THE MERITS THE APPEAL OF THE PETITIONER, CONSIDERING THAT, THE DECISION OF THE REGIONAL TRIAL COURT OF ILOILO IS SO HORENDOUSLY WRONG WHEN THE SAID COURT DECIDED IN FAVOR OF THE PRIVATE RESPONDENT, WHICH IF NOT REVIEWED, OR REVERSED, WILL CAUSE INJUSTICE TO TRIUMPH AS AGAINST WHAT IS RIGHT AND LEGAL, SACRIFICING SUBSTANTIAL JUSTICE IN FAVOR OF TECHNICALITIES, CONSIDERING THAT:
a. Petitioner was the first buyer of the property while the private respondent is only the second buyer;
b. It is petitioner who is in possession of the said property and that;
c. Private respondent was not able to have her own deed of sale registered with the Register of Deeds;
B. THE RESPONDENT COURT OF APPEALS SHOULD HAVE EXERCISED ITS DISCRETION, IN FAVOR OF SUBSTANTIAL JUSTICE, BY ADMITTING THE APPELLANT’S BRIEF OF THE PETITIONER TAKING INTO CONSIDERATION THAT PETITIONER IN GOOD FAITH HAS FILED THE NEEDED MOTIONS FOR EXTENSIONS (sic) TO FILE BRIEF, AND THE BRIEF WAS IN FACT FILED WITHIN THE PERIOD OF THE REQUESTED EXTENSIONS.16
Petitioner insists that the appeal should not have been dismissed because her failure to file the Appellant’s Brief was not deliberate and intended for delay. She claims that prior to the expiration of the 90-day extension within which to file the brief, she again asked for two more extensions. She explains that the counsel could not prepare the Appellant’s Brief because the law firm was swamped with numerous cases and election related problems which needed his attention.
We find petitioner’s arguments bereft of merit.
Section 7, Rule 44 of the Rules of Court provides:
Sec. 7. Appellant’s Brief. – It shall be the duty of the appellant to file with the court, within forty-five (45) days from receipt of the notice of the clerk that all the evidence, oral and documentary, are attached to the record, seven (7) copies of his legibly typewritten, mimeographed or printed brief, with proof of service of two (2) copies thereof upon the appellee.
In a Resolution dated December 20, 2006, the CA required petitioner to file the Appellant’s Brief. The notice was received by petitioner on January 5, 2007. However, instead of filing the required brief, petitioner requested for additional time to prepare "due to pressures of work in equally important cases, plus court appearances, preparation of memoranda, conference with other clients." The CA granted the request and specifically stated that the same was the maximum extension. This notwithstanding, instead of complying with the court’s directive, petitioner again filed two motions for extension, for a total period of sixty (60) days. This time, the CA denied the motions and eventually dismissed the appeal in accordance with Section 1(e),17 Rule 50 of the Rules of Court.
Evidently, petitioner’s counsel was negligent in failing to file the required brief not only within 45 days from receipt of the notice but also within the extended period of ninety (90) days granted by the appellate court. He, however, explains that he could not comply with the court’s directive because he had to attend to other cases that he considered more important and urgent than the instant case. Regrettably, such excuse is unacceptable.18 An attorney is bound to protect his client’s interest to the best of his ability and with utmost diligence. Failure to file brief certainly constitutes inexcusable negligence, more so if the delay results in the dismissal of the appeal.19 Every member of the Bar should always bear in mind that every case that a lawyer accepts deserves his full attention, diligence, skill, and competence, regardless of its importance, whether he accepts it for a fee or for free.20 Unfortunately, petitioner is bound by the negligence of her counsel.
The failure to file the Appellant’s Brief, though not jurisdictional, results in the abandonment of the appeal which may be the cause for its dismissal. It is true that it is not the ministerial duty of the CA to dismiss the appeal. The appellate court has the discretion to do so, and such discretion must be a sound one, to be exercised in accordance with the tenets of justice and fair play, having in mind the circumstances obtaining in each case.21
The question of whether or not to sustain the dismissal of an appeal due to petitioner’s failure to file the Appellant’s Brief had been raised before this Court in a number of cases. In some of these cases, we relaxed the Rules and allowed the belated filing of the Appellant’s Brief. In other cases, however, we applied the Rules strictly and considered the appeal abandoned, which thus resulted in its eventual dismissal. In Government of the Kingdom of Belgium v. Court of Appeals,22 we revisited the cases which we previously decided and laid down the following guidelines in confronting the issue of non-filing of the Appellant’s Brief:
(1) The general rule is for the Court of Appeals to dismiss an appeal when no appellant’s brief is filed within the reglementary period prescribed by the rules;
(2) The power conferred upon the Court of Appeals to dismiss an appeal is discretionary and directory and not ministerial or mandatory;
(3) The failure of an appellant to file his brief within the reglementary period does not have the effect of causing the automatic dismissal of the appeal;
(4) In case of late filing, the appellate court has the power to still allow the appeal; however, for the proper exercise of the court’s leniency[,] it is imperative that:
(a) the circumstances obtaining warrant the court’s liberality;
(b) that strong considerations of equity justify an exception to the procedural rule in the interest of substantial justice;
(c) no material injury has been suffered by the appellee by the delay;
(d) there is no contention that the appellee’s cause was prejudiced;
(e) at least there is no motion to dismiss filed.
(5) In case of delay, the lapse must be for a reasonable period; and
(6) Inadvertence of counsel cannot be considered as an adequate excuse as to call for the appellate court’s indulgence except:
(a) where the reckless or gross negligence of counsel deprives the client of due process of law;
(b) when application of the rule will result in outright deprivation of the client’s liberty or property; or
(c) where the interests of justice so require.
In this case, we find no reason to disturb the appellate court’s exercise of sound discretion in dismissing the appeal. We must emphasize that the right to appeal is not a natural right but a statutory privilege, and it may be exercised only in the manner and in accordance with the provisions of law.23 The Court cannot say that the issues being raised by petitioner are of such importance that would justify the appellate court to exempt her from the general rule, and give due course to her appeal despite the late filing of her Appellant’s Brief.24
Nevertheless, in our desire to put an end to the present controversy, we have carefully perused the records of this case and reached the conclusion that the decision dated December 29, 2005 of the RTC is in perfect harmony with law and jurisprudence.25
The present controversy is a clear case of double sale, where the seller sold one property to different buyers, first to petitioner and later to respondent. In determining who has a better right, the guidelines set forth in Article 1544 of the Civil Code apply. Article 1544 states:
Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith was first in possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith.
Admittedly, the two sales were not registered with the Registry of Property. Since there was no inscription, the next question is who, between petitioner and respondent, first took possession of the subject property in good faith. As aptly held by the trial court, it was respondent who took possession of the subject property and, therefore, has a better right.
Petitioner insists that, upon the execution of the public instrument (the notarized deed of sale), she already acquired possession thereof, and thus, considering that the execution thereof took place ahead of the actual possession by respondent of the subject property, she has a better right.
We do not agree.
Indeed, the execution of a public instrument shall be equivalent to the delivery of the thing that is the object of the contract. However, the Court has held that the execution of a public instrument gives rise only to a prima facie presumption of delivery. It is deemed negated by the failure of the vendee to take actual possession of the land sold.26
In this case, though the sale was evidenced by a notarized deed of sale, petitioner admitted that she refused to make full payment on the subject property and take actual possession thereof because of the presence of tenants on the subject property. Clearly, petitioner had not taken possession of the subject property or exercised acts of dominion over it despite her assertion that she was the lawful owner thereof.27lawphi1
Respondent, on the other hand, showed that she purchased the subject property without knowledge that it had been earlier sold by Flora to petitioner. She had reason to believe that there was no defect in her title since the owner’s duplicate copy of the OCT was delivered to her by the seller upon full payment of the purchase price. She then took possession of the subject property and exercised acts of ownership by collecting rentals from the tenants who were occupying it.
Hence, the RTC is correct in declaring that respondent has a better right to the subject property.
WHEREFORE, premises considered, the petition is DENIED for lack of merit. The Court of Appeals Resolutions dated June 27, 2007 and August 13, 2007 in CA-G.R. CEB-CV No. 01624 are AFFIRMED.
ANTONIO EDUARDO B. NACHURA
ANTONIO T. CARPIO
DIOSDADO M. PERALTA
ROBERTO A. ABAD
JOSE CATRAL MENDOZA
A T T E S T A T I O N
I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.
ANTONIO T. CARPIO
Chairperson, Second Division
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.
RENATO C. CORONA
1 Cebu City Station.
2 Penned by Associate Justice Isaias P. Dicdican, with Associate Justices Antonio L. Villamor and Stephen C. Cruz, concurring; rollo, pp. 125-126.
3 Id. at 214-215.
4 Id. at 48-53.
5 Id. at 72-74.
6 Penned by Judge Rene S. Hortillo; id. at 72-86.
7 Id. at 85-86.
8 Id. at 87-107.
9 Id. at 111-112.
10 Id. at 113.
11 Id. at 114-115.
12 Id. at 117.
13 Id. at 118-123.
14 Supra note 2.
15 Supra note 3.
16 Rollo, p. 21.
17 Section 1. Grounds for dismissal of appeal. – An appeal may be dismissed by the Court of Appeals, on its own motion or on that of the appellee, on the following grounds:
x x x x
(e) Failure of the appellant to serve and file the required number of copies of his brief or memorandum within the time provided by these Rules.
18 Jetri Construction Corporation v. Bank of the Philippine Islands, G.R. No. 171687, June 8, 2007, 524 SCRA 522, 530.
19 Barbuco v. Atty. Beltran, 479 Phil. 692, 696 (2004).
20 Id. at 697.
21 Government of the Kingdom of Belgium v. Court of Appeals, G.R. No. 164150, April 14, 2008, 551 SCRA 223, 241, citing Carco Motor Sales, Inc. v. Court of Appeals, No. L-44609, August 31, 1977, 78 SCRA 526.
22 Supra, at 241-242.
23 Cariño v. Espinoza, G.R. No. 166036, June 19, 2009, 590 SCRA 43, 48.
24 Government of the Kingdom of Belgium v. Court of Appeals, supra note 21, at 242.
25 See Jetri Construction Corporation v. Bank of the Philippine Islands, supra note 18, at 530.
26 Ten Forty Realty and Development Corporation v. Cruz, 457 Phil. 603, 615 (2003).
27 See San Lorenzo Development Corporation v. Court of Appeals, 490 Phil. 7 (2005).
Republic of the Philippines
G.R. No. 73651 November 27, 1987
IGNACIO CARDENTE and ANASTACIA T. CARDENTE, petitioners,
THE INTERMEDIATE APPELLATE COURT and SPOUSES RUPERTO RUBIN and PRIMITIVA C. RUBIN, respondents.
This is a simple case of a double sale of an immovable property. The trial court decided 1 in favor of the first vendee although the sale was by a private document. The then Intermediate Appellate Court reversed and set aside the decision 2 of the lower court. The public respondent appellate court ruled in favor of the second buyers, who registered their deed of sale. Hence, the present petition for review by certiorari.
The facts of the case are as simple as the central issue.
Sometime in 1956, francisca Cardente, for and on behalf of her grandson, petitioner Ignacio Cardente, who was then a minor, and now married to his co-petitioner, purchased from Isidro Olanay one hectare of land.The property purchase is a part of a 9.2656-hectare parcel of land covered by Original Certificate of Title (O.C.T., for short) No. P-1380 in Palanay's name. Immediately after the purchase, the Cardentes took possession of the land and planted various crops and trees thereon. They have been in continouos possession ever since, adverse to the whole world. Unfortunately, however, the private document evidencing the sale of the one-hectare lot to petitioner Ignacio Cardente was lost and never found despite diligent efforts exerted to locate the same.
Some four years later, on August 18, 1960, Isidro Palanay sold the entire property covered by O.C.T. No. P-1380, including the one-hectare portion already sold to Cardente, this time to the private respondents, Ruperto Rubin and his wife. The deed of sale was registered and a new title, Transfer Certificate of Title (T.C.T., for short) No. 1173, was issued in favor of the Rubin spouses. Notwithstanding the second sale, or because of it, Isidro Palanay, with the written conforme of his wife, Josepha de Palanay, on December 9, 1972, executed a public document in favor of petitioner Ignacio Cardente conforming the sale to him (Cardente) in 1956 of the one hectare portion. The deed of confirmation likewise states that the subsequent vendee, respondent Ruperto Rubin, was informed by Palanay of the first sale of the one-hectare portion to Cardente.
On February 18, 1977, the house of the petitioners was burned. As a consequence thereof, they lodged a complaint for arson with the P.C. — Integrated National Police at Malaybalay, Bukidnon, against Ruperto Rubin, whom they suspected of having committed the crime. Apparently, in retaliation, on March 31, 1977, seventeen long years after their purchase, the private respondents filed a complaint with the then Court of First Instance of Bukidnon for quieting of title with damages, against the petitioners, claiming ownership over the whole property previously covered by O.C.T. No., P-1380, now registered in their names under T.C.T. No. 1173.
On July 9, 1979, the trial court dismissed the complaint of the Rubins and ordered them to "reconvey the one hectare in question to defendant (Cardente) at the expense of the latter. 3
The Rubin spouses appealed to the respondent court, which rendered the decision under review. The assailed decision decreed:
xxx xxx xxx
WHEREFORE, the decision appealed from is hereby set aside and judgment is rendered (1) declaring plaintiffs the absolute owners of subject property covered by Transfer Certificate of Title No. 1173; (2) ordering the defendants to vacate the one-hectare portion in controversy, and to restore plaintiffs in possession thereof; (3) quieting the title of plaintiffs over the one (1) hectare portion of land in controversy; and (4) ordering the defendants to pay the costs.
SO ORDERED. 4
xxx xxx xxx
Now before us, the petitioners impute bad faith on the private respondents when the latter purchased the entire property and when they subsequently registered their title thereto. By reason of such bad faith, the petitioners' claim that insofar as the controverted one-hectare parcel of land is concerned the private respondents' title thereto is null and void. 5
We agree with the petitioners. We grant the petition.
Admittedly, this case involves a double sale. While the private respondents allegedly bought from Isidro Palanay on August 18, 1960 the entire property comprising 9.2656 hectares and covered by O.C.T. No. P-1380 the petitioners, on the other hand, lay claim to one hectare thereof which they undeniably purchased from the same vendor earlier, in 1956. The conflict, therefore, falls under, and can be resolved by, Article 1544 of the Civil Code which sets the rules on double sales.
ART. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property,
Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith.
It is undisputed that the private respondents, the second vendees, registered the sale in their favor whereas the petitioners, the first buyers, did not. But mere registration of the sale is not enough. Good faith must concur with the registration. Bad faith renders the registration nothing but an exercise in futility. The law and jurisprudence are very clear on this score. 6
The heart of the problem is whether or not the private respondents acted in good faith when they registered the deed of sale dated August 18, 1960 more than six months later, on March 7, 1961. Inextricably, the inquiry must be directed on the knowledge, or lack of it, of the previous sale of the one-hectare portion on the part of the second buyers at the time of registration. The trial court found that the second vendees had such knowledge.
It is true that good faith is always presumed while bad faith must be proven by the party alleging it. 7 In this case, however, viewed in the light of the circumstances obtaining, we have no doubt that the private respondents' presumed good faith has been sufficiently overcome and their bad faith amply established.
The "Confirmation Of A Deed Of Absolute Sale of A Portion Of A Registered Agricultural Land" executed by the late Ignacio Palanay on December 9, 1972 and which was exhibited in the trial court below, admitted the sale of the one hectare portion to the petitioners sometime in 1956. The same deed likewise explicitly stated that the "fact of the previous sale, was well known and acknowledged by Mr. Ruperto Rubin (the private respondent)." 8 These recitals were further buttressed by Concepcion Salubo, a daughter of Isidro Palanay, who testified that she knew of the previous sale of the one-hectare portion to petitioner Ignacio Cardente and that private respondent Ruperto Rubin was properly informed of the said sale. 9 On this regard, no ill-motive had been attributed to the vendor Isidro Palanay and to his daughter Concepcion Salubo for testifying the way they did against the private respondents. They were disinterested persons who stood to gain nothing except, perhaps, the satisfaction of setting the record straight, or, in the words of the seller, "for the purpose of giving efficacy to the Deed of Sale I made to Ignacio Cardente which was made in a private document ... ." 10
Further, the notorious and continuous possession and full enjoyment by petitioners of the disputed one-hectare property long (four years) before the private respondents purchased the same from Palanay bolsters the petitioners' position. That possession would have been enough to arouse the suspicion of the private respondents as to the ownership of the entire area which they were about to purchase. Their failure to inquire and to investigate the basis of the petitioners' actual occupation of the land forming a substantial part of what they were buying militates against their deposited lack of knowledge of the first sale, "A purchaser cannot close his eyes to facts which should put a reasonable man upon his guard and then claim that he acted in good faith under the belief that there was no defect in The title of the vendor." 11 We have warned time and again that a buyer of real property which is in the possession of persons other than the seller must be wary and should investigate the rights of those in possession. Otherwise, without such inquiry, the buyer can hardly be regarded as a buyer, in good faith. 12
The private respondents' avowals that they had never Known of the Prior sale until the issues were joined at the trial court, for. before that, they merely tolerated the continued presence of the original occupants, Francisca and Eugenia Cardente, and Ignacio, in the premises, out of simple pity for the two old women, 13 is too pat to be believed. For if these were so, the reason why the private respondents continued to tolerate the occupation by the petitioners of the contested property even after the demise of the two old women escapes us. Rubin's allegation that this was because they were still in good terms with the petitioners 14 is too lame an excuse to deserve even a scant consideration, The private respondents' total lack of action against the actual occupants of a good portion of the land described in their torrens title can only be construed as acceptance on their part of the existence of the prior sale and then resignation to the fact that they did not own the one-hectare portion occupied by the petitioners. Present these facts, the foisted ignorance of the respondents as to the first sale is an empty pretense. Their seventeen years of inaction and silence eloquently depict a realization of lack of right.
WHEREFORE, the Decision dated November 19, 1985 and the Resolution dated January 10, 1986 of the former In intermediate Appellate Court are hereby REVERSED and SET ASIDE and the Decision dated July 9, 1979 of the Court of First Instance of Bukidnon in Civil Case No. 860, is hereby REINSTATED. Costs against the private respondents,
Yap (Chairman), Melencio-Herrera, Paras and Padilla, JJ., concur.
1 Penned be Judge Emerito C. Ocaya, Court of First Instance of Bukindnon, Malaybalay, Civil Case No. 860.
2 Justice Jose C. Campos ponente, with the concurrence of 'Justices Crisolito Pascual. Serafin E. Camilon and Desiderio P. Jurado of the Second Civil Cases Division, G.R. N. CV-66115, entitled, Rubin, et al. vs. Cardente, et al.
3 Rollo, 14-15.
4 Annex " E " of Petition, 4; Rollo, 31.
5 Petitioners' Brief/Memorandum, 1.
6 Art. 1544, 2nd par. Civil Code of the Philippines; Salvoro vs. Tanega No. L-32988, December 29, 1978, 87 SCRA 349 (1978); Caram Jr. vs. Laureta, No. L-28740, February 24, 1981, 103 SCRA 7 (1981).
7 Santiago vs. Cruz, 19 Phil. 145 (191 1); J.M. Tuason & Co., Inc. vs. Court of Appeals, No. L-41233, November 21, 1979, 94 SCRA 413 (1979): Duran vs- Intermediate Appellate Court, No. L-64159, September 10, 1985, 138 SCRA 489 (1985).
8 Annex "A" of Petition, Rollo, 10.
9 Rollo, 14.
10 Rollo, 10.
11 J.M. Tuason & Co., Inc. vs. Court of Appeals, supra.
12 Republic vs. Hon. Court of Appeals, No. L-42856, January 27, 1981, 102 SCRA 331 (1981).
13 Decision of the Court of First Instance, Annex "B" of the Petition, 3: Rollo, 14.
14 Rollo, 24.
Republic of the Philippines
G.R. No. 170405 February 2, 2010
RAYMUNDO S. DE LEON, Petitioner,
BENITA T. ONG.1 Respondent.
D E C I S I O N
On March 10, 1993, petitioner Raymundo S. de Leon sold three parcels of land2 with improvements situated in Antipolo, Rizal to respondent Benita T. Ong. As these properties were mortgaged to Real Savings and Loan Association, Incorporated (RSLAI), petitioner and respondent executed a notarized deed of absolute sale with assumption of mortgage3 stating:
x x x x x x x x x
That for and in consideration of the sum of ONE MILLION ONE HUNDRED THOUSAND PESOS (
P1.1 million), Philippine currency, the receipt whereof is hereby acknowledged from [RESPONDENT] to the entire satisfaction of [PETITIONER], said [PETITIONER] does hereby sell, transfer and convey in a manner absolute and irrevocable, unto said [RESPONDENT], his heirs and assigns that certain real estate together with the buildings and other improvements existing thereon, situated in [Barrio] Mayamot, Antipolo, Rizal under the following terms and conditions:
1. That upon full payment of [respondent] of the amount of FOUR HUNDRED FIFTEEN THOUSAND FIVE HUNDRED (
P415,000), [petitioner] shall execute and sign a deed of assumption of mortgage in favor of [respondent] without any further cost whatsoever;
2. That [respondent] shall assume payment of the outstanding loan of SIX HUNDRED EIGHTY FOUR THOUSAND FIVE HUNDRED PESOS (
P684,500) with REAL SAVINGS AND LOAN,4 Cainta, Rizal… (emphasis supplied)
x x x x x x x x x
Pursuant to this deed, respondent gave petitioner
P415,500 as partial payment. Petitioner, on the other hand, handed the keys to the properties and wrote a letter informing RSLAI of the sale and authorizing it to accept payment from respondent and release the certificates of title.
Thereafter, respondent undertook repairs and made improvements on the properties.5 Respondent likewise informed RSLAI of her agreement with petitioner for her to assume petitioner’s outstanding loan. RSLAI required her to undergo credit investigation.
Subsequently, respondent learned that petitioner again sold the same properties to one Leona Viloria after March 10, 1993 and changed the locks, rendering the keys he gave her useless. Respondent thus proceeded to RSLAI to inquire about the credit investigation. However, she was informed that petitioner had already paid the amount due and had taken back the certificates of title.
Respondent persistently contacted petitioner but her efforts proved futile.
On June 18, 1993, respondent filed a complaint for specific performance, declaration of nullity of the second sale and damages6 against petitioner and Viloria in the Regional Trial Court (RTC) of Antipolo, Rizal, Branch 74. She claimed that since petitioner had previously sold the properties to her on March 10, 1993, he no longer had the right to sell the same to Viloria. Thus, petitioner fraudulently deprived her of the properties.
Petitioner, on the other hand, insisted that respondent did not have a cause of action against him and consequently prayed for the dismissal of the complaint. He claimed that since the transaction was subject to a condition (i.e., that RSLAI approve the assumption of mortgage), they only entered into a contract to sell. Inasmuch as respondent did apply for a loan from RSLAI, the condition did not arise. Consequently, the sale was not perfected and he could freely dispose of the properties. Furthermore, he made a counter-claim for damages as respondent filed the complaint allegedly with gross and evident bad faith.
Because respondent was a licensed real estate broker, the RTC concluded that she knew that the validity of the sale was subject to a condition. The perfection of a contract of sale depended on RSLAI’s approval of the assumption of mortgage. Since RSLAI did not allow respondent to assume petitioner’s obligation, the RTC held that the sale was never perfected.
In a decision dated August 27, 1999,7 the RTC dismissed the complaint for lack of cause of action and ordered respondent to pay petitioner
P100,000 moral damages, P20,000 attorney’s fees and the cost of suit.
Aggrieved, respondent appealed to the Court of Appeals (CA),8 asserting that the court a quo erred in dismissing the complaint.
The CA found that the March 10, 2003 contract executed by the parties did not impose any condition on the sale and held that the parties entered into a contract of sale. Consequently, because petitioner no longer owned the properties when he sold them to Viloria, it declared the second sale void. Moreover, it found petitioner liable for moral and exemplary damages for fraudulently depriving respondent of the properties.
In a decision dated July 22, 2005,9 the CA upheld the sale to respondent and nullified the sale to Viloria. It likewise ordered respondent to reimburse petitioner
P715,250 (or the amount he paid to RSLAI). Petitioner, on the other hand, was ordered to deliver the certificates of titles to respondent and pay her P50,000 moral damages and P15,000 exemplary damages.
Petitioner moved for reconsideration but it was denied in a resolution dated November 11, 2005.10 Hence, this petition,11 with the sole issue being whether the parties entered into a contract of sale or a contract to sell.
Petitioner insists that he entered into a contract to sell since the validity of the transaction was subject to a suspensive condition, that is, the approval by RSLAI of respondent’s assumption of mortgage. Because RSLAI did not allow respondent to assume his (petitioner’s) obligation, the condition never materialized. Consequently, there was no sale.
Respondent, on the other hand, asserts that they entered into a contract of sale as petitioner already conveyed full ownership of the subject properties upon the execution of the deed.
We modify the decision of the CA.
Contract of Sale or Contract to Sell?
The RTC and the CA had conflicting interpretations of the March 10, 1993 deed. The RTC ruled that it was a contract to sell while the CA held that it was a contract of sale.
In a contract of sale, the seller conveys ownership of the property to the buyer upon the perfection of the contract. Should the buyer default in the payment of the purchase price, the seller may either sue for the collection thereof or have the contract judicially resolved and set aside. The non-payment of the price is therefore a negative resolutory condition.12
On the other hand, a contract to sell is subject to a positive suspensive condition. The buyer does not acquire ownership of the property until he fully pays the purchase price. For this reason, if the buyer defaults in the payment thereof, the seller can only sue for damages.13
The deed executed by the parties (as previously quoted) stated that petitioner sold the properties to respondent "in a manner absolute and irrevocable" for a sum of
P1.1 million.14 With regard to the manner of payment, it required respondent to pay P415,500 in cash to petitioner upon the execution of the deed, with the balance15 payable directly to RSLAI (on behalf of petitioner) within a reasonable time.16 Nothing in said instrument implied that petitioner reserved ownership of the properties until the full payment of the purchase price.17 On the contrary, the terms and conditions of the deed only affected the manner of payment, not the immediate transfer of ownership (upon the execution of the notarized contract) from petitioner as seller to respondent as buyer. Otherwise stated, the said terms and conditions pertained to the performance of the contract, not the perfection thereof nor the transfer of ownership.
Settled is the rule that the seller is obliged to transfer title over the properties and deliver the same to the buyer.18 In this regard, Article 1498 of the Civil Code19 provides that, as a rule, the execution of a notarized deed of sale is equivalent to the delivery of a thing sold.
In this instance, petitioner executed a notarized deed of absolute sale in favor of respondent. Moreover, not only did petitioner turn over the keys to the properties to respondent, he also authorized RSLAI to receive payment from respondent and release his certificates of title to her. The totality of petitioner’s acts clearly indicates that he had unqualifiedly delivered and transferred ownership of the properties to respondent. Clearly, it was a contract of sale the parties entered into.
Furthermore, even assuming arguendo that the agreement of the parties was subject to the condition that RSLAI had to approve the assumption of mortgage, the said condition was considered fulfilled as petitioner prevented its fulfillment by paying his outstanding obligation and taking back the certificates of title without even notifying respondent. In this connection, Article 1186 of the Civil Code provides:
Article 1186. The condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment.
Void Sale Or Double Sale?
Petitioner sold the same properties to two buyers, first to respondent and then to Viloria on two separate occasions.20 However, the second sale was not void for the sole reason that petitioner had previously sold the same properties to respondent. On this account, the CA erred.
This case involves a double sale as the disputed properties were sold validly on two separate occasions by the same seller to the two different buyers in good faith.
Article 1544 of the Civil Code provides:
Article 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith. (emphasis supplied)
This provision clearly states that the rules on double or multiple sales apply only to purchasers in good faith. Needless to say, it disqualifies any purchaser in bad faith.
A purchaser in good faith is one who buys the property of another without notice that some other person has a right to, or an interest in, such property and pays a full and fair price for the same at the time of such purchase, or before he has notice of some other person’s claim or interest in the property.21 The law requires, on the part of the buyer, lack of notice of a defect in the title of the seller and payment in full of the fair price at the time of the sale or prior to having notice of any defect in the seller’s title.
Was respondent a purchaser in good faith? Yes.
Respondent purchased the properties, knowing they were encumbered only by the mortgage to RSLAI. According to her agreement with petitioner, respondent had the obligation to assume the balance of petitioner’s outstanding obligation to RSLAI. Consequently, respondent informed RSLAI of the sale and of her assumption of petitioner’s obligation. However, because petitioner surreptitiously paid his outstanding obligation and took back her certificates of title, petitioner himself rendered respondent’s obligation to assume petitioner’s indebtedness to RSLAI impossible to perform.
Article 1266 of the Civil Code provides:
Article 1266. The debtor in obligations to do shall be released when the prestation become legally or physically impossible without the fault of the obligor.
Since respondent’s obligation to assume petitioner’s outstanding balance with RSLAI became impossible without her fault, she was released from the said obligation. Moreover, because petitioner himself willfully prevented the condition vis-à-vis the payment of the remainder of the purchase price, the said condition is considered fulfilled pursuant to Article 1186 of the Civil Code. For purposes, therefore, of determining whether respondent was a purchaser in good faith, she is deemed to have fully complied with the condition of the payment of the remainder of the purchase price.
Respondent was not aware of any interest in or a claim on the properties other than the mortgage to RSLAI which she undertook to assume. Moreover, Viloria bought the properties from petitioner after the latter sold them to respondent. Respondent was therefore a purchaser in good faith. Hence, the rules on double sale are applicable.
Article 1544 of the Civil Code provides that when neither buyer registered the sale of the properties with the registrar of deeds, the one who took prior possession of the properties shall be the lawful owner thereof.
In this instance, petitioner delivered the properties to respondent when he executed the notarized deed22 and handed over to respondent the keys to the properties. For this reason, respondent took actual possession and exercised control thereof by making repairs and improvements thereon. Clearly, the sale was perfected and consummated on March 10, 1993. Thus, respondent became the lawful owner of the properties.
Nonetheless, while the condition as to the payment of the balance of the purchase price was deemed fulfilled, respondent’s obligation to pay it subsisted. Otherwise, she would be unjustly enriched at the expense of petitioner.
Therefore, respondent must pay petitioner
P684,500, the amount stated in the deed. This is because the provisions, terms and conditions of the contract constitute the law between the parties. Moreover, the deed itself provided that the assumption of mortgage "was without any further cost whatsoever." Petitioner, on the other hand, must deliver the certificates of title to respondent. We likewise affirm the award of damages.
WHEREFORE, the July 22, 2005 decision and November 11, 2005 resolution of the Court of Appeals in CA-G.R. CV No. 59748 are hereby AFFIRMED with MODIFICATION insofar as respondent Benita T. Ong is ordered to pay petitioner Raymundo de Leon
P684,500 representing the balance of the purchase price as provided in their March 10, 1993 agreement.
Costs against petitioner.
RENATO C. CORONA
ANTONIO T. CARPIO
PRESBITERO J. VELASCO, JR.
ANTONIO EDUARDO B. NACHURA
DIOSDADO M. PERALTA
A T T E S T A T I O N
I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.
RENATO C. CORONA
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson’s Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.
REYNATO S. PUNO
* Per Special Order No. 818 dated January 18, 2010.
1 The Court of Appeals was impleaded as respondent but was excluded pursuant to Section 4, Rule 45 of the Rules of Court.
2 Covered by TCT Nos. 226469, 226470 and 226471 registered in the name of petitioner.
3 Rollo, pp. 55-56. There is a marked discrepancy between the total amount and the sum of the payments to be made by respondent (or
4 The records of this case revealed that petitioner’s outstanding obligation to RSLAI amounted to
P715,000 as of April 1, 1993.
5 Respondent had the properties cleaned and landscaped. She likewise had the house (built thereon) painted and repaired.
6 Docketed as Civil Case No. 93-2739.
7 Penned by Judge Francisco A. Querubin. Id., pp. 129-151.
8 Docketed as CA-G.R. CV No. 59748.
9 Penned by Associate Justice Eugenio S. Labitoria and concurred in by Associate Justices Eliezer R. delos Santos and Arturo D. Brion (now a member of this Court) of the Third Division of the Court of Appeals. Rollo, pp. 30-34.
10 Id., pp. 46-47.
11 Under Rule 45 of the Rules of Court.
12 Dijamco v. Court of Appeals. G.R. No. 113665, 7 October 2004, 440 SCRA 190, 197. See also J.B.L. Reyes, 5 Outline of Philippine Civil Law, 2-3 (1957).
14 Supra note 3.
15 Supra note 4.
16 Paragraph 2 of the deed did not prescribe a period within which respondent should settle petitioner’s obligation to RSLAI.
17 See Civil Code, Art. 1370 which provides:
Article 1370. If the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of the stipulations shall control.
If the words appear to be contrary to the evident intention of the parties, the latter shall prevail over the former.
18 Civil Code, Art. 1495 provides:
Article 1495. The vendor is bound to transfer the ownership of and deliver, as well as warrant the thing which is the object of the sale.
19 Civil Code, Art. 1498 provides:
Article 1498. When a sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed. the contrary does not appear or cannot be clearly inferred.
With regard to movable property, its delivery may also be made by the delivery of the keys of the place or depository where it is stored or kept. (emphasis supplied)
20 See Delfin v. Lagon, G.R. No. 132262, 15 September 2006, 502 SCRA 24, 31.
21 Centeno v. Spouses Viray, 440 Phil. 881, 885 (2002).
22 See Civil Code, Art. 1498.
Republic of the Philippines
G.R. No. 107653 February 5, 1996
FELIPA GARBIN, petitioner,
THE HONORABLE COURT OF APPEALS (FORMER TENTH DIVISION) and SPOUSES ANTONIO JULIAN and CASIMIRA GARBIN, respondents.
D E C I S I O N
This is a petition for review on certiorari of the decision of the Court of Appeals reversing the Regional Trial Court of Tarlac, Tarlac which had earlier dismissed the complaint for annulment of sale filed by private respondents.
The facts are the following:
Pablo Garbin and Leoncia Garbin are the parents of petitioner Felipa Garbin (Felipa) and private respondent Casimira Garbin (Casimira) married to private respondent Antonio Julian. Pablo Garbin is the original owner of Lot 12712, Camiling, Tarlac Cadastre with an area of 25,681 square meters, title thereto being evidenced by Original Certificate of Title No. 33251.
On October 31, 1955, Pablo Garbin and his wife Leoncia executed a "Deed of Absolute Sale of Real Estate" purportedly conveying to private respondent Casimira Garbin the undivided northern half of the said lot. Casimira then registered an adverse claim over the property.
On May 24, 1970, Pablo Garbin sold the entire Lot 12712, including the northern portion, to petitioner Felipa by virtue of a Deed of Sale. Consequently, Transfer Certificate of Title No. 88932 was issued in favor of Felipa. On July 29, 1974, Felipa and Pablo Garbin filed an ejectment case against private respondent spouses. In that case, the Municipal Trial Court of Camiling, Tarlac decided against private respondents. They appealed the case to the Regional Trial Court of Tarlac which affirmed the questioned decision. Private respondents then filed a petition for review with the Court of Appeals, but said petition was dismissed. They questioned the dismissal in this Court docketed as G.R. No. 59817 but the petition was denied due course.
On March 1, 1982, before judgment could become final in the ejectment case, private respondents filed a complaint for annulment of sale, partition and damages with the Regional Trial Court of Tarlac. The issue presented therein was whether or not private respondents, as the alleged first vendees in a double sale, (who annotated the same as an adverse claim on the covering title) have a superior right over petitioner, the subsequent vendee (who received a transfer certificate of title for the entire lot despite prior inscription of the adverse claim).
The RTC ruled in favor of petitioner and dismissed the complaint. Aggrieved, private respondents went to the Court of Appeals which reversed and set aside the decision of the trial court.
The appellate court said:
. . . it is Our view, and so We hold, that, at the very least, the inscription of the adverse claim of plaintiffs-appellants on vendor Pablo Garbin's OCT No. 33251 did constitute a sufficient notice to the whole world, defendant-appellee Felipa Garbin included, that the northern half of subject Lot 12712 was deeded out by the registered owner to plaintiffs-appellants. Therefore, defendant-appellee is a buyer in bad faith, with full awareness of the prior sale of the northern half of Lot 12712 to her sister Casimira Garbin, and consequently, the registration of the sale in favor of defendant-appellee did not cleanse her bad faith and the legal consequences thereof, and did not vest in her (appellee) the ownership over the northern half of Lot 12712, as against the first buyer thereof, plaintiff-appellant Casimira Garbin.
It is well-settled that in a double sale of real property, ownership thereof "shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property" (2nd paragraph, Article 1544, New Civil Code of the Philippines). Under this applicable provision of law, mere registration of the sale of real or immovable property is not enough. The good faith of the buyer registering the sale must concur. In the case of defendant-appellee she cannot be considered in good faith, within legal contemplation, and her profession of innocence or lack of knowledge of the prior sale is incredible and unworthy of belief. To be sure, the annotation of plaintiffs-appellants' adverse claim on the title of vendor Pablo Garbin made defendant-appellee fully aware of such earlier sale.
As regards the defense of prescription or laches invoked by defendant-appellee to defeat the claim of plaintiffs-appellants over the portion of land in question; We find the same equally undeserving of serious consideration. Considering that before instituting this action on March 2, 1982, plaintiffs-appellants were pre-occupied with the ejectment proceedings commenced against them by defendant-appellee on July 29, 1970; it cannot be said, then, that plaintiffs-appellants slumbered on their rights and had failed to assert their claim seasonably. As a matter of fact, even during the pendency of the ejectment case they did find time to initiate this case under consideration. Plaintiffs-appellants having been busy defending themselves in said ejectment case against them; their inability to file the present action sooner is understandable. It should be borne in mind that the running of the period of prescription is capable of interruption. And, to repeat; during the pendency of the ejectment case aforementioned; We believe that the running of the period of prescription of plaintiffs-appellants' cause of action had been interrupted.
As regards the equitable principle of laches, the attendant facts and circumstances come to the fore. Whether or not laches set in depends on the surrounding facts and circumstances. Here, We believe that plaintiffs-appellants have not faltered or failed for an unreasonable length of time to assert their claim of ownership.
With respect to the southern half of Lot 12712; plaintiffs-appellants' stance is also meritorious. When the wife of Pablo Garbin died, her estate was transmitted by operation of the law on intestate succession to plaintiff-appellant Casimira Garbin, defendant-appellee Felipa-Garbin, and surviving spouse Pablo Garbin. So, when Pablo Garbin executed the deed of sale in favor of defendant-appellee, he could only convey to the latter his undivided share therein, which was 4/6 of the southern portion of Lot 12712 because as hereinabove pointed out, the northern half of the said lot was effectively conveyed to plaintiffs-appellants, so that he could only dispose of 4/6 of the southern portion. Plaintiff-appellant Casimira Garbin inherited 1/6, and the remaining 1/6 of the southern portion went to defendant-appellee as her inheritance from their mother. Therefore, plaintiffs-appellants own 7/12 of Lot 12712 while defendant-appellee owns 5/12; the northern half being equivalent to 6/12, and out of the other 6/12, Pablo Garbin conveyed 4/12 to appellee Felipa Garbin, who inherited 1/12 in her own right. Plaintiff-appellant Casimira Garbin also inherited 1/12 which portion added to what appellants bought from Pablo Garbin, made appellant's area 7/12 of Lot 12712.
WHEREFORE, the decision appealed from is hereby SET ASIDE; the sale by Pablo Garbin to defendant-appellee Felipa Garbin of the entire Lot 12712, Camiling, Tarlac Cadastre (Exh. "B") is hereby declared null and void and without force and effect, and the resulting TCT No. T-88932 of the latter (Exh. "C") is ordered canceled; plaintiffs-appellants are adjudged the owners pro-indiviso of seven-twelfth (7/12), including the northern half, of the said lot, with defendant-appellee as the owner of the remaining five-twelfth (5/12) southern portion thereof.
To avoid multiplicity of suits; the plaintiffs-appellants and defendant-appellee are hereby given thirty (30) days from finality of this disposition, to submit to the trial court of origin a scheme of partition for subject lot on the basis of their undivided co-ownership of seven-twelfth (7/12) and five-twelfth (5/12), respectively; otherwise, pursuant to Rule 69, Revised Rules of Court, the lower court shall by order appoint not more than three (3) competent and disinterested commissioners to effect the partition in accordance herewith. Costs against defendant-appellee.
Petitioner, before this Court, now questions the appellate court's decision stating that:
1. No evidence has been presented by private respondents to prove the validity of the "Deed of Absolute Sale of Real Estate" executed in their favor by Pablo Garbin.
2. The annotation on the title of the adverse claim is not sufficient to prove validity of the said claim.
3. Pablo Garbin himself repudiated the alleged sale to private respondent spouses in testimony before the trial court in the ejectment case, denying knowledge of the sale of subject property to them.
4. Pablo Garbin solely owned the subject lot, as shown by the Original Certificate of Title, and thus the property could not be considered conjugal.
5. Private respondents' cause of action had already prescribed.
We find the petition meritorious.
The central issue to be resolved here is: does the registration of the said adverse claim by private respondents prevail over the title of petitioner which was registered subsequent to the adverse claim?
Considering the circumstances peculiar to the present case, we must rule in the negative.
Sec. 110 of Act No. 496 (otherwise known as the Land Registration Act) states:
whoever claims any right or interest in registered land adverse to the registered owner, arising subsequent to the date of the original registration, may, if no other provision is made in the Land Registration Act for registering the same, make a statement in writing setting forth fully his alleged right or interest, and how or under whom acquired, and a reference to the volume and page of the certificate of title of the registered owner, and a description of the land in which the right or interest is claimed. The statement shall be signed and sworn to, and shall state the adverse claimant's residence, and designate a place at which all notices may be served upon him. This statement shall be entitled to registration as an adverse claim, and the court, upon a petition of any party in interest, shall grant a speedy hearing upon the question of the validity of such adverse claim and shall enter such decree therein as justice and equity may require. If the claim is adjudged to be invalid, the registration shall be canceled. If in any case the court after notice and hearing finds that a claim thus registered was frivolous or vexatious, it may tax the adverse claimant double or treble costs in its discretion. (Emphasis supplied)
The purpose of the annotation of an adverse claim is to protect the interest of a person over a piece of real property where the registration of such interest or right is not otherwise provided for by the Land Registration Act, and serve as a notice and warning to third parties dealing with said property that someone is claiming an interest on the same or a better right than the registered owner.1
It is undisputed that the adverse claim of private respondents was registered pursuant to Sec. 110 of Act No. 496, the same having been accomplished by the filing of a sworn statement with the Register of Deeds of the province where the property was located. However, what was registered was merely the adverse claim and not the Deed of Sale, which supposedly conveyed the northern half portion of the subject property. Therefore, there is still need to resolve the validity of the adverse claim in separate proceedings, as there is an absence of registration of the actual conveyance of the portion of land herein claimed by private respondents.
From the provisions of the law, it is clear that mere registration of an adverse claim does not make such claim valid, nor is it permanent in character. More importantly, such registration does not confer instant title of ownership since judicial determination on the issue of the ownership is still necessary.2
Regarding the alleged Deed of Sale by Pablo Garbin in favor of private respondents, the trial court correctly observed:
On the assumption that the deed in favor of the plaintiffs was presented for registration as claimed, it should, however, be underscored that the entry in the day book is but a preliminary step of registration, the actual annotation of the memorandum or the issuance of a new certificate of title being the final step to accomplish registration.
In Pilapil v. CA,3 we said:
To affect the land sold, the presentation of the Deed of Sale and its entry in the day book must be done with the surrender of the owner's duplicate of the certificate of title.
Considering further that Pablo Garbin himself denied the sale of the subject property, it is evident that the sale never transpired.
In view of the above, the entry in the day book automatically loses force and effect. Thus, it is the Deed of Sale that petitioner registered in her favor and the Transfer Certificate of Title subsequently obtained over the property, which has a superior right thereon.
As regards the issue of the ownership by Pablo Garbin of the property, the Original Certificate of Title clearly states that he is the sole owner thereof. There is no basis, therefore, for the ruling of the appellate court that said property is conjugal in character and also for its computation of the shares that Pablo Garbin could dispose of when he executed the Deed of Sale on May 24, 1970 to Felipa.
Lastly, on the issue of prescription, we agree with the trial court which found that the action for annulment of sale had already prescribed.
. . . the title of the defendant must be upheld for failure or the neglect of the plaintiffs for an unreasonable and unexplained length of time of more than fifteen (15) years since they registered their adverse claim, or for a period of more than three (3) decades since the execution of the deed of sale in their favor upon which their adverse claim is based, to do that which, by exercising diligence, could or should have been done earlier. For it is this negligence or omission to assert a right within reasonable time that is construed that plaintiffs had abandoned their right to claim ownership under the deed of sale, or declined to assert it. Thus, when a person slept in his rights for 28 years from the time of the transaction, before filing the action amounts to laches which cannot be excused even by ignorance resulting from unexcusable negligence (Vda. de Lima vs. Tiu, 52 SCRA 516 .
Private respondents, having waited for 36 long years before filing an action to annul the sale to Felipa in the trial court we hold that this constitutes laches.
The unexplained interval of 29 years that the plaintiffs allowed to elapse before making any claim or instituting action constitutes laches that places them in estoppel to question the validity of the probate court's order and of the sale executed in pursuant thereof.4
WHEREFORE, the decision of the Court of Appeals is hereby SET ASIDE and that of the Regional Trial Court REINSTATED. Private respondents' complaint for annulment of sale is hereby DISMISSED.
Regalado, Puno and Mendoza, JJ., concur.
1 Ty Sin Tei v. Lee Dy Piao, 103 Phil. 858.
Republic of the Philippines
G.R. No. 123935 December 14, 2001
LEONCIO and ENRIQUETA, both surnamed BARRERA, petitioners,
COURT OF APPEALS and ROSENDO C. PALABASAN, respondents.
In this petition for certiorari,1 petitioners seek to annul the decision of the Court of Appeals2 affirming the decision of the Regional Trial Court,3 Makati, Branch 66, as well as its resolution4 denying reconsideration thereof.
Azalia Salome (Salome) owned a house and lot located at No. 2641 Bonifacio St., Bangkal, Makati City, covered by Transfer Certificate of Title No. 61772. Salome mortgaged the property to Country Bankers Insurance and Surety Company to secure a P10,000.00 loan.
On July 1, 1966, Salome sold the property to Rosendo C. Palabasan.5 Transfer Certificate of Title No. 61772 was cancelled and a new one, Transfer Certificate of Title No. 167387,6 was issued in the name of Rosendo C. Palabasan and Bella S. Palabasan.
On April 19, 1989, Leoncio and Enriqueta Barrera (spouses Barrera) filed with the Regional Trial Court, Makati City, Branch 138, a complaint7 against Palabasan for reconveyance with damages. They alleged that they had been in possession of the property since 1962 by virtue of a Deed of Sale with Assumption of Mortgage which was not notarized; that Salome executed a notarized Deed of Sale with Assumption of Mortgage in their favor on March 31, 1966; that, pursuant to this notarized deed, they settled Salome's obligations with the Country Bankers Insurance and Surety Company; that they tried to redeem the property but were not able to do so because Palabasan had done so and the title to the property was released to Palabasan; that in 1970, they signed a blank document which was supposed to become Palabasan's authority to sell the land for them; that in 1975, they were surprised to learn that the blank document which they had signed turned out to be a contract of lease wherein they were the lessees and Palabasan was the lessor of the property; and that Palabasan registered the property in his name and was able to secure Transfer Certificate of Title No. 167387.
In his answer to the complaint, Palabasan asserted that he bought the property from Salome on June 30, 1966, after he had paid the obligation of Salome with Country Bankers Insurance and Surety Company; that he had been issued Transfer Certificate of Title No. 167387 in his name after he had the deed of sale registered; that the spouses Barrera were in possession of the property as lessees of Salome; and that a contract of lease was executed by and between the spouses Barrera and Palabasan in 1970. Consequently, he claimed that the spouses Barrera had no legal right to claim reconveyance of the property in question.1âwphi1.nêt
On February 23, 1993, after trial, the lower court rendered a decision8 declaring Palabasan to have validly acquired title to the property in question. The trial court, ruling that the case is one of double sale of an immovable, applied the second paragraph of Article 15449 of the Civil Code.
In time, the spouses Barrera appealed10 the decision to the Court of Appeals.11
On October 25, 1995, the Court of Appeals promulgated a decision affirming in toto the decision of the trial court. The appellate court, however, found Article 1544 of the Civil Code inapplicable to the case as there was no sale between the spouses Barrera and Salome because Salome's testimony given in a previous case12 to this effect was stricken off the record since she died prior to cross-examination; the testimony of Cenon Mateo, the common-law husband of Salome showed that he was not aware of the transaction entered into on March 31, 1966; and counsel for spouses Barrera admitted that the sale transaction in 1962 did not materialize as the property was mortgaged to Country Bankers Insurance and Surety Company.
On December 4, 1995, the spouses Barrera filed a motion for reconsideration13 of the decision; however, on February 21, 1996, the Court of Appeals denied the same.14
Hence, this petition.15
The issues raised are: whether respondent Palabasan is the owner of the property in question; and whether there was double sale of an immovable property covered by Article 1544 of the Civil Code.
The Court's Ruling
The petition is without merit.
An action for reconveyance of a property is the sole remedy of a landowner whose property has been wrongfully or erroneously registered in another's name after one year from the date of the decree so long as the property has not passed to an innocent purchaser for value.16 The action does not seek to reopen the registration proceedings and set aside the decree of registration but only purports to show that the person who secured the registration of the property in controversy is not the real owner thereof.17 Fraud may be a ground for reconveyance. For an action for reconveyance based on fraud to prosper, the party seeking reconveyance must prove by clear and convincing evidence his title to the property and the fact of fraud.18
It must be stressed that mere allegations of fraud are not enough. Intentional acts to deceive and deprive another of his right, or in some manner, injure him, must be specifically alleged and proved.19 The burden of proof rests on petitioners; this, the petitioners failed to do.
Petitioners offered no proof that there was misrepresentation or concealment in the registration of the deed that led to the issuance of Transfer Certificate of Title No. 167387. With the presumption of regularity in the performance of official functions, the claim of petitioners that the issuance of Transfer Certificate of Title No. 167387 was tainted with fraud must fail.
As to proof of title to the property, respondent Palabasan offered the following: Transfer Certificate of Title No. 167387,20 Tax Declaration No. 03251,21 the Deed of Absolute Sale22 dated June 30, 1966, executed by Salome in favor of respondent Palabasan, the Contract of Lease,23 with respondent Palabasan as the lessor and petitioner Leoncio Barrera as the lessee, and the decision for the court of First Instance, Pasig, Branch XIX in Civil Case No. 38608,24 finding respondent Palabasan to be the lawful owner of the property covered by Transfer Certificate of Title No. 167387.
On the other hand, petitioner spouses Barrera only have the Deed of Absolute Sale with Assumption of Real Estate Mortgage25 evidencing a transaction which occurred in 1962, a Deed of Sale with Assumption of Mortgage26 dated March 31, 1966 and the testimonies of Cenon Mateo27 and petitioner Leoncio Barrera.28 The spouses Barrera attempted to offer in evidence the transcript of stenographic notes taken of the testimony of Salome in Civil Case No. 14009.29 Respondent objected to the offer which opposition the trial court sustained.30
We find respondent Palabasan to be the owner of the property.
The decision of the then Court of First Instance, Pasig, Branch XIX in Civil Case No. 38608, promulgated on September 4, 198131 and reinstated on August 10, 1990,32 finding respondent Palabasan to be the lawful owner of the property covered by Transfer Certificate of Title No. 167387 may not be invoked in this case since said decision had become stale.33
Article 1144 (3) of the Civil Code provides that an action upon a judgment must be brought within ten years from the time the right of action accrues.
On the other hand, Section 6, Rule 39, Revised Rules of Court, states:
"A final and executory judgment or order may be executed on motion within five (5) years from the date of its entry. After the lapse of such time, and before it is barred by the statute of limitations, a judgment may be enforced by motion within five (5) years from the date of its entry and thereafter by action before it is barred by the statute of limitations."
The rule is that the court could issue a writ of execution by motion within five (5) years from finality of the decision.34 A writ of execution issued after the expiration of that period is null and void.35 There is a need for the interested party to file an independent action for revival of judgment. The judgment may be enforced after the lapse of this period and before the same is barred by the statute of limitations, by instituting an ordinary civil actions.36 "The reason is that after the lapse of the five-year period, the judgment is reduced to a mere right of action, which judgment must be enforced, as all other ordinary actions, by the institution of a complaint in the regular form. Such action must be filed within ten (10) years from the date the judgment became final."37
The decision having become stale, "any action to enforce or revive it has prescribed."38
This notwithstanding, the greater weight of evidence lies in favor of respondent Palabasan's claim of ownership over the land. Surely, Transfer Certificate of Title No. 167387 and Tax Declaration No. 03251 which respondent Palabasan offered in evidence is more convincing than petitioners' evidence.
The certificate of title issued is an absolute and indefeasible evidence of ownership of the property in favor of the person whose name appears therein. It is binding and conclusive upon the whole world.39
Anent the question of whether this case is one of double sale, suffice it to say that there is no sufficient proof on the sale between Salome and petitioners. There is no double sale that would warrant the application of Article 1544 of the Civil Code.
As mentioned at the outset, the evidence petitioners adduced to prove the sale was the notarized deed executed on March 31, 1966. However, a perusal of the deed would show that the sale is conditioned on the payment by the petitioners of Salome's obligation with the Country Bankers Insurance and Surety Company under the contract of mortgage.
Petitioners submitted no evidence to show that they complied with the condition given. Hence, there was no consummation of the contract which would transfer ownership of the property to the petitioners. All that they presented was the self-serving testimony of petitioner Leoncio Barrera40 to the effect that the obligations were paid by them. Notable is Cenon Mateo's testimony that he has no knowledge of any transaction entered into by Salome on March 31, 1966.41
Likewise, there is no sufficient evidence to show that the earlier transaction in 1962 ever materialized. The testimony of Salome in Civil Case No. 14009 confirming the existence of this transaction is inadmissible for lack of cross-examination. Likewise, the Deed of Absolute Sale with Assumption of Real Estate Mortgage42 not having been notarized, its genuineness and due execution will have to be proven. In this case, the petitioners only presented the testimony of petitioner Leoncio Barrera and Cenon Mateo, which are, again, self-serving assertions if not corroborated by any other evidence. Notable is the counsel of petitioners own admission that "the said transaction however did not in any way materialize for the reason that the property, subject of the transaction was mortgaged to Country Bankers and Surety Company."43
The only sale that materialized in this case was the sale by Salome to respondent Palabasan that was evidenced by a deed of absolute sale that enabled respondent Palabasan to redeem the property from Country Bankers Insurance and Surety Company and consequently to secure Transfer Certificate of Title No. 167387 in his favor over the same property.1âwphi1.nêt
WHEREFORE, the Court DENIES the petition and AFFIRMS the decision of the Court of Appeals in CA-G.R. CV No. 40909 and its resolution denying reconsideration.
Davide, Jr., Kapunan, Ynares-Santiago, JJ., concur.
Puno, J., on official leave.
1 Under Rule 65 of the Revised Rules of Court.
2 In CA-G.R. CV No. 40909 promulgated on October 25, 1995, Petition, Annex "A", Rollo, pp. 39-52, Eugenio S. Labitoria, J., ponente, Cancio S. Garcia and Portia Aliño Hormachuelos, JJ., concurring.
3 In Civil Case No. 89-3713, promulgated on February 23, 1993, Petition, Annex "E", Rollo, pp. 6471, Judge Eriberto U. Rosario, Jr., presiding.
4 Dated February 21, 1996. Petition, Annex "B", Rollo, p. 53.
5 Hereafter, Palabasan.
6 Exhibit "I", Folder of Exhibits, p. 17.
7 Docketed as Civil Case No. 89-3713. Petition, Annex "C", Rollo, pp. 54-59.
8 Petition, Annex "E", pp. 64-71.
9 Article 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property.
Should there by no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof; to the person who presents the oldest title, provided there is good faith.
10 Notice of Appeal, Original Record, Civil Case No. 89-3713, p. 133.
11 Docketed as CA-G.R. CV No. 40909.
12 Civil Case No. 14009. This was a case for ejectment filed by Palabasan on August 2, 1975 against the spouses Barrera in the Municipal Court of Makati City. This was dismissed for lack of jurisdiction as issues of ownership were raised therein.
13 Petition, Annex "F", Rollo, pp. 72-77.
14 Petition, Annex "B", Rollo, p. 54.
15 Petition, Rollo, pp. 14-37. On July 16, 1997, we gave due course to the petition (Rollo, p. 97).
16 Abejaron v. Nabasa, G.R. No. 84831, June 20, 2001, citing Director of Lands v. Register of Deeds or Rizal, 92 Phil. 826 (1953).
17 Ibid., supra, Note 16, citing Rodriguez v. Toreno, 79 SCRA 356, 361-362 (1977).
18 Ibid., suora Note 16, citing Heirs of Mariano, Juan, Tarcela and Josefa Brusas v. Court of Appeals, 372 Phil. 47 (1999).
19 Heirs of Mariano, Juan, Tarcela and Josefa Brusas v. Court of Appeals, supra, Note 18, at p. 58.
20 Exhibit "1", Folder of Exhibits, p. 17.
21 Exhibit "3", Folder of Exhibits, p. 27.
22 Exhibit "2", Folder of Exhibits, pp. 28-29.
23 Exhibit "6", Folder of Exhibits, pp. 22-23.
24 Exhibits "4" and "5", Folder of Exhibits, pp. 24-25. Civil Casse 38608 was an action for unlawful detainer with prayer for damages and preliminary attachment filed by Palabasan against Leoncio Barrera.
25 Exhibit "A", Folder of Exhibits, pp. 3-4.
26 Exhibit "B", Folder of Exhibits, pp. 5-6.
27 T.S.N., Civil Case No. 89-3713, April 2, 1992.
28 T.S.N., Civil Case No 89-3713, February 6 and 11, 1992.
29 This was an ejectment case filed in the Municipal Court of Makati by Rosendo Palabasan against Leoncio Barrera. The case was, however, dismissed for lack of jurisdiction as issues of ownership were raised therein.
30 T.S.N., Civil Case No. 89-3713, February 11, 1992, pp. 31-38.
31 Exhibit "4", Folder of Exhibits, pp. 25-26, Judge Santiago Rañada, Jr., presiding.
32 Exhibit "5", Folder of Exhibits, p. 24, Judge Jose T. Hernandez, presiding.
33 Terry v. people, 314 SCRA 669, 674 (1999).
34 Ibid. Supra Note 33, citing Rule 39, Section 6, 1964 Revised Rules of Court; Villaruel v. Court of Appeals, 172 SCRA 305, 313 (1989); Republic v. Court of Appeals, 137 SCRA 220, 227 (1985).
35 Ibid., supra, Note 33, 2 Moran, Comments on the Rules of Court, 1979 ed., p. 270, citing Arambulo v. CFI Laguna, 53 Phil. 302 (1929).
36 Ibid., supra, Note 33, citing Republic v. Court of Appeals, 137 SCRA 220, 227 (1985); Prudence Realty and Development Corporation v. Appeals, 231 SCRA 379 (1994); Camacho v. Court of Appeals, 351 Phil. 108 (1998); Salientes v. Intermediate Appellate Court, 316 Phil. 197 (1995); Gonzales v. Court of Appeals, 212 SCRA 595 (1992).
37 Ibid., supra, Note 33, citing 2 Moran, Comments on the Rules of Court, 1979 ed., pp. 266-267, citing Caiña v. Court of Appeals, 239 SCRA 252 (1994); Continental Bank v. Tiongco, 94 SCRA 715, 718 91979); Luzon Surety Co. v. IAC, 151 SCRA 652 91987); PNB v. Deloso, 143 Phil. 224 (1970).
38 Republic v. Atlas Farms, Inc., G.R. No. 141975, November 20, 2000, citing Article 1144, Civil Code; Lizardo, Sr. v. Mantano, 332 SCRA 163 (2000); Estonina v. Southern Marketing Corporation, 167 SCRA 605 (1988).
39 Heirs of Vecilao v. Court of Appeals, 351 Phil. 815, 823 (1998).
40 T.S.N., Civil Case No. 89-3713, February 6, 1992, p. 12.
41 T.S.N. Civil Case No. 89-3713, April 2, 1992, pp. 13 and 19-20
42 Exhibit "A", Folder of Exhibits, pp. 3-4.
43 T.S.N., Civil Case No. 89-3713, February 6, 1992, p. 4.
Republic of the Philippines
G.R. No. 165831 February 23, 2007
SPS. COL. PEDRO L. LUMBRES and REBECCA ROARING, Petitioners,
SPS. PEDRO B. TABLADA, JR. and ZENAIDA N. TABLADA, Respondents.
D E C I S I O N
Assailed and sought to be set aside in this petition for review under Rule 45 of the Rules of Court are the following issuances of the Court of Appeals (CA) in CA-G.R. SP No. 82617, to wit:
1. Decision1 dated August 31, 2004 reversing and setting aside the appealed Order of the Regional Trial Court (RTC) of Calamba City, Branch 37, and reinstating an earlier decision of the Municipal Trial Court in Cities (MTCC), Calamba City, which dismissed the petitioners' complaint for ejectment against the herein respondents; and
2. Resolution2 dated October 27, 2004 denying the petitioners' motion for reconsideration.
From the facts on record, it appears that this is a case of double sale of a lot covered by Transfer Certificate of Title (TCT) No. 473055 with an area of 105 square meters, more particularly identified as Lot 8, Block 3 of the Spring Homes Subdivision, Brgy. Bucal, Calamba City. Both parties to the case present Deeds of Absolute Sale for the same lot from the same seller, Spring Homes Subdivision Company, Inc. (Spring Homes, hereafter).
Reviewed, the records disclose that on January 9, 1995, Spring Homes, former owner of the parcel of land in dispute, entered into a pro forma Contract to Sell3 with the respondent spouses. The prepared typewritten contract, with the blank spaces therein merely filled up, contains the designation of the parcel sold, the price per square meter and the stipulation as to payment, to wit:
1. That the SELLER, for and in consideration of the payments and other terms and conditions hereinafter to be designated, has offered to sell and the BUYER has agreed to buy certain parcel of land more particularly described as follows:
2. That in consideration of the foregoing agreement, the BUYER obligates himself to pay to the SELLER the sum of FOUR HUNDRED NINE THOUSAND FIVE HUNDRED PESOS (P409,500), Philippine Currency, payable as follows:
a) As downpayment, the amount of THIRTY NINE THOUSAND FOUR HUNDRED PESOS (P39,400),
b) The amount of TWO HUNDRED THIRTY THOUSAND PESOS (P230,000). To be paid on or before upon the release of Pag-Ibig Loan.
c) The SEVENTY THOUSAND ONE HUNDRED (P70,100) to be paid upon the signing of this contract. Balance of SEVENTY THOUSAND (P70,000) by monthly installments of ELEVEN THOUSAND SIX HUNDRED SIXTY SIX & 70 Cents PESOS (11,666.70) to start on the 30th day of January, 1995 until said balance is fully paid subject to interest at the rate of ___ percent ( ) per annum on the balance outstanding or the prevailing bank interest rate whichever is higher.
xxx xxx xxx
On January 16, 1996, after having been paid the sum total of
P179,500.00, which the respondents claim to be the full purchase price of the subject lot, Spring Homes executed a Deed of Absolute Sale4 in favor of the respondents. In the deed, Lot 8, Block 3 was already made to appear as covered by TCT No. T-284037. Respondents’ accumulated payments totaling P179,500.00 consisted of the following: P39,400.00 by way of downpayment; P70,100.00 paid on signing of the contract; and P70,000.00 paid in monthly installments of P11,666.70 each. All such payments are evidenced by receipts of the corresponding transactions. Because the anticipated Pag-Ibig loan failed to materialize, the P230,000.00, which, under the Contract to Sell, was supposed to be paid upon release of the loan, was left unpaid.
Respondents later declared the subject lot for taxation purposes under Tax Declaration No. 019-1342 and paid the corresponding real property taxes thereon. Using their own funds, they caused the construction thereon of a residential house, which they presently occupy, the costs of which amounted to
P356,516.50. On June 9, 1996, a Certificate of Occupancy was issued to them by the Office of the Building Official and the house was declared in their names.
With the execution of the aforesaid Deed of Absolute Sale, the respondent spouses sent a demand letter dated May 4, 1996 to Spring Homes for the transfer and release to them of the original or owner's copy of TCT No. T-284037. The acting president/chairperson of Spring Homes, Bertha L. Pasic, promised to deliver the said title and even apologized for the delay. However, to their great dismay, the spouses subsequently learned that TCT No. T-284037 was canceled and a new one issued to the petitioners. On account thereof, the respondent spouses filed with the RTC of Calamba City a civil suit against the petitioners, Spring Homes and the Register of Deeds of Calamba City for nullification of title, reconveyance and damages, docketed as Civil Case No. 3117-2001-C.
It appears, however, that after the filing of Civil Case No. 3117-2001-C, the petitioners filed a civil case before the RTC of Calamba City, Laguna, Branch 37, against Spring Homes, docketed as Civil Case No. 2194-95-C. On November 17, 1996, the petitioners filed with the Register of Deeds of Calamba City a Notice of Lis Pendens over all the properties registered in the name of the said corporation, including Lot 8, Block 3 covered by TCT No. T-284037. On September 3, 1997, the RTC issued an order attaching all of Spring Homes properties, including Lot 8, Block 3. Premiere Development Bank subsequently intervened in Civil Case No. 2194-95-C because all said properties had been mortgaged to it.
On September 21, 1999, the petitioner spouses entered into a Compromise Agreement in Civil Case No. 2194-95-C with Spring Homes and Premiere Development Bank, which was approved by the RTC, Branch 37, on October 28, 1999. In that Compromise Agreement, both Spring Homes and Premiere Development Bank recognized the rights and interests of the petitioner spouses over the parcels of land covered by twenty (20) titles and containing an aggregate area of 2,499 square meters. The subject property (Lot 8, Block 3) was among the properties covered by the aforementioned compromise agreement that were judicially assigned, transferred and conveyed to the petitioners.
Meanwhile, due to the respondents’ alleged failure to pay the
P230,000.00 unpaid balance as per the Contract to Sell earlier adverted to despite demands, the subject lot was sold by Spring Homes to the petitioners, again by way of a Deed of Absolute Sale executed on December 22, 2000 for and in consideration of the sum of P157,500.00. The mortgage on the lot was released by Premiere Development Bank on January 20, 2001. Subsequently, on January 30, 2001, TCT No. T-473055 covering the subject lot was issued in petitioners' favor.
The instant case cropped up when, asserting their ownership of the subject lot on the basis of TCT No. T-473055, the petitioners demanded of the respondents to vacate said lot and to pay them the rentals due thereon. Their demands having come to naught, the petitioner spouses then filed in the MTCC, Calamba City, a complaint for ejectment on October 2, 2001 against respondent Tabladas and all persons claiming rights under them. The complaint was docketed in the MTCC as Civil Case No. 4335-01.
In a decision5 dated May 28, 2002, the MTCC dismissed the petitioners' ejectment complaint, its basis being the rule on double sale set out in Article 1544 of the Civil Code. Finding that the petitioners’ registration of their title over the subject lot was done in bad faith, that court ruled for the respondents.
Aggrieved, the petitioners appealed to the RTC. In an Order6 dated October 16, 2003, the RTC reversed and set aside the MTCC decision and ordered the respondent spouses to vacate Lot 8, Block 3, to surrender the possession thereof to the petitioners and to pay the latter reasonable rentals from the time of judicial demands until the premises is surrendered to them.
While conceding that there is a double sale in this case, the RTC, in its aforementioned Order, refused to apply the provisions of Article 1544 of the Civil Code in settling the issue of possession. Instead, it went to the extent of determining the validity and due execution of the separate Deeds of Absolute Sale executed by Spring Homes in favor of the herein contending parties.
In holding that the petitioners have superior right on the subject lot over the respondents, the RTC declared that there was no valid deed of absolute sale executed in favor of the respondents for the following reasons:
1. Even if there was a perfected Contract to Sell between respondents and Spring Homes, the former failed to pay the full purchase price in installments that gave Spring Homes the right to cancel the contract; and
2. The execution of the Deed of Absolute Sale in favor of the respondents on January 16, 1996 is not a transfer of ownership but merely to use it as a collateral for a loan of P230,000.00 from the Pag-Ibig Fund which, incidentally, did not materialize.
Applying the provisions of Articles 1350, 1352 and 1409 of the Civil Code, the RTC deemed the Deed of Absolute Sale in favor of the respondents void ab initio for want of valid consideration. With their motion for reconsideration having been denied by the RTC in its subsequent Order of February 12, 2004, the respondent spouses then went to the CA on a petition for review in CA-G.R. SP No. 82617.1awphi1.net
In the herein assailed decision7 dated August 31, 2004, the CA granted the respondents' petition, thereby reversing the assailed Orders of the RTC and reinstating the earlier decision of the MTCC. Their motion for reconsideration having been denied by the CA in its equally assailed Resolution8 of October 27, 2004, petitioners are now before us via the instant recourse raising the following issues:
1. Whether the CA committed reversible error or grave abuse of discretion when it found the purchase price of the contested lot to be P157,500.00 instead of the stipulated price of P409,500.00 in the Contract to Sell dated January 9, 1995 despite the fact that the existence and validity of said contract was never put in issue;
2. Whether the CA committed reversible error or grave abuse of discretion when it did not find that the sale of the subject lot to the respondents was void due to lack of consideration since it was merely used by the respondents to obtain a loan of P230,000.00 from the PAG-IBIG Fund and despite the fact that said lot was already mortgaged by Spring Homes to the Premiere Development Bank since January 21, 1993 for P4,800,000.00;
3. Whether the CA committed reversible error or grave abuse of discretion when it ruled that the petitioners acquired the lot in question in bad faith despite the judicial assignment of rights and interests to them over the lot in question in RTC Civil Case No. 2194-95-C, and their having had it titled in their names with the Register of Deeds;
4. Whether the CA committed a reversible error or grave abuse of discretion when it did not find the respondents to be bad faith builders and possessors of the property in question; and
5. Whether the CA committed reversible error or grave abuse of discretion when it manifestly misapprehended the relevant facts.
Before proceeding with a discussion of the issues laid out above, it must be stressed that the present case is one for ejectment. As such, our judgment hereon is effective only with respect to possession. It does not bind the title or affect the ownership of the lot in question. Such judgment shall not bar an action between the same parties respecting the title to said property.9 The only issue for resolution is who, as between the petitioners and the respondents, is entitled to the physical or material possession of the property involved, independent of their respective claims of ownership thereof.10
When acting as an ejectment court, the Metropolitan, Municipal and Circuit Trial Courts' jurisdiction is limited to the determination of the issue on possession de facto and not possession de jure.11 By way of exception, however, if the issue of possession depends on the resolution of the issue of ownership, which is sufficiently alleged in the complaint, as here, the MTCC may resolve the issue of ownership although the resulting judgment would be conclusive only with respect to possession but not to the ownership of the property.12
In claiming their right of possession over the subject lot, petitioners made much of the judicially approved Compromise Agreement in Civil Case No. 2194-95-C, wherein Spring Homes’ rights and interests over the said lot under its Contract to Sell with the respondents were effectively assigned to them. Petitioners argue that out of the whole
P409,500.00 purchase price under the respondents Contract to Sell with Spring Homes, the respondents were able to pay only P179,500.00, leaving a balance of P230,000.00.
Upon scrutiny, however, the CA astutely observed that despite there being no question that the total land area of the subject lot is 105 square meters, the Contract to Sell executed and entered into by Spring Homes and the respondent spouses states:
3. That the SELLER, for and in consideration of the payments and other terms and conditions hereinafter to be designated, has offered to sell and the BUYER has agreed to buy certain parcel of land more particularly described as follows:
Total Selling Price
The two deeds of absolute sale as well as the respondents’ Tax Declaration No. 019-1342 uniformly show that the land area of the property covered by TCT No. T-284037 is 105 square meters. The parties never contested its actual land area.
However, while there is only one parcel of land being sold, which is Lot 8, Blk. 3, paragraph "1" above of the Contract to Sell speaks of two (2) land areas, namely, "105" and "42," and two (2) prices per square meter, to wit: "
P1,500" and " P6,000." As correctly observed by the CA:
In does not require much imagination to understand why figures "3," "8," "105" and "
P1,500" appear in the paragraph "1" of the Contract to Sell. Certainly "3" stands for "Blk. No.," "8" stands for "Lot No.," "105" stands for the land area and " P1,500" stands for the price per square meter. However, this Court is perplexed as regards figures "42" and "6,000" as they are not accompanied by any "Blk. No." and/or "Lot No." In other words, while there is only one parcel of land being sold, paragraph "1" of the Contract to Sell contains two land areas and two prices per square meter. There is no reason for the inclusion of land area in the computation when it was established beyond cavil that the total area being sold is only 105 square meters. Likewise, there is no explanation why there is another rate for the additional 42 square meters, which was pegged at P6,000 per square meter, while that of 105 square meters was only P1,500.00.
The CA could only think of one possible explanation: the Contract to Sell refers only to a single lot with a total land area of 105 square meters. The 42 square meters mentioned in the same contract and therein computed at the rate of
P6,000 per square meter refer to the cost of the house which would be constructed by the respondents on the subject lot through a Pag-Ibig loan. The land area of the house to be constructed was pegged at 42 square meters because of the following restrictions in the Contract to Sell:
9. The lot(s) subject matter of this contract are subject to the following restrictions:
a) Any building which may be constructed at anytime in said lot(s) must be strong x x x. Said building must not be constructed at a distance of less than (2) meters from any boundaries of the lot(s).
b) The total area to be voted to buildings or structures shall not exceed eighty percent (80%) of the total area of the lot(s).
Looking at the above-quoted portion of the Contract to Sell, the CA found merit in the respondents' contention that the total selling price of
P409,500 includes not only the price of the lot but also the cost of the house that would be constructed thereon. We are inclined to agree. The CA went on to say:
It could be argued that the contract to sell never mentions the construction of any house or building on the subject property. Had it been the intention of the parties that the total selling price would include the amount of the house that would be taken from a loan to be obtained from Pag-Ibig, they could have specified so. However, one should not lose sight of the fact that the contract to sell is an accomplished form. [Respondents,] trusting Spring Homes, could not be expected to demand that another contract duly reflective of their agreements be utilized instead of the accomplished form. The terms and conditions of the contract may not contemplate the inclusion of the cost of the house in the total selling price, but the entries typewritten thereon sufficiently reveal the intentions of the parties.
The position of the [respondents] finds support in the documents and subsequent actuations of Bertha Pasic, the representative of Spring Homes. [Respondents] undeniably proved that they spent their own hard-earned money to construct a house thereon after their Pag-Ibig loan did not materialize. It is highly unjust for the [respondents] to pay for the amount of the house when the loan did not materialize due to the failure of Spring Homes to deliver the owner's duplicate copy of TCT No. T-284037.
xxx xxx xxx
If the total selling price was indeed P409,500.00, as [petitioners] would like to poster, said amount should have appeared as the consideration in the deed of absolute sale dated January 15, 1996. However, only P157,500.00 was stated. The amount stated in the Deed of Absolute Sale dated January 15, 1996 was not only a portion of the selling price, because the Deed of Sale dated December 22, 2000 also reflected P157,500.00 as consideration. It is not shown that [petitioners] likewise applied for a loan with Pag-Ibig. The reasonable inference is that the consistent amount stated in the two Deeds of Absolute Sale was the true selling price as it perfectly jibed with the computation in the Contract to Sell. [Emphasis supplied] (Words in brackets ours).
We find the CA's reasoning to be sound. At any rate, the execution of the January 16, 1996 Deed of Absolute Sale in favor of the respondents effectively rendered the previous Contract to Sell ineffective and canceled. Furthermore, we find no merit in petitioners' contention that the first sale to the respondents was void for want of consideration. As the CA pointed out in its assailed decision:
Other than the [petitioners'] self-serving assertion that the Deeds of Absolute Sale was executed solely for the purpose of obtaining a Pag-Ibig loan, no other concrete evidence was tendered to justify the execution of the deed of absolute sale. They failed to overcome the clear and convincing evidence of the [respondents] that as early as July 5, 1995 the latter had already paid the total amount of P179,500.00, much bigger than the actual purchase price for the subject land. (Words in brackets ours.)
Having stated that the Deed of Absolute Sale executed in favor of the respondent spouses is valid and with sufficient consideration, the MTCC correctly applied the provisions of Article 1544 of the Civil Code. Article 1544 reads:
Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property.
Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession, and, in the absence thereof, to the person who presents the oldest title, provided there is good faith. [Emphasis provided]
Notwithstanding the fact that the petitioners, as the second buyer, registered their Deed of Absolute Sale, in contrast to the Deed of Sale of the respondents which was not registered at all precisely because of Spring Homes’ failure to deliver the owner’s copy of TCT No. T-284037, the respondents’ right could not be deemed defeated as the petitioners are in bad faith. Petitioners cannot claim good faith since at the time of the execution of the Compromise Agreement in Civil Case No. 2194-95-C, they were indisputably and reasonably informed that the subject lot was previously sold to the respondents. In fact, they were already aware that the respondents had constructed a house thereon and are presently in possession of the same.
Knowledge gained by the second buyer of the first sale defeats his rights even if he is the first to register the second sale because such knowledge taints his prior registration with bad faith. For the second buyer to displace the first, he must show that he acted in good faith throughout (i.e. in ignorance of the first sale and of the first buyer's rights) from the time of acquisition until the title is transferred to him by registration.13
Consequently, the respondents are the buyers entitled to the physical possession of the subject lot since the prevailing doctrine is that as between the buyer who is in possession of a Torrens title but who has acquired it in bad faith and the first buyer who failed to have his title recorded in the Registry of Property, the first buyer must prevail.14
Hence, there was nothing to cede or transfer to the petitioners when the Compromise Agreement in Civil Case No. 2194-95-C was entered into on October 28, 1999 insofar as the subject lot is concerned as it was already sold to and fully paid for by the respondents as early as January 16, 1996 when the Absolute Deed of Sale was executed in their favor by Spring Homes. More so that Spring Homes has no more to sell to the petitioners when it executed in the latter’s favor the second deed of absolute sale on December 22, 2000.
One last note, regardless of the actual condition of the title to the property, the party in peaceful, quiet possession thereof shall not be ejected therefrom. Thus, a party who can prove prior possession can recover such possession even against the owner himself. Whatever may be the character of the defendant's prior possession, whether it be legal or illegal, since he had in his favor priority in time, he has the security that entitles him to remain on the property until he is lawfully ejected therefrom by a person having a better right by accion publciana or accion reivindicatoria.15
The respondents are the current occupants of the subject lot. They had constructed their residential house thereon and are living there at present. The action for ejectment was fashioned to provide a speedy, albeit temporary, remedy to the dispossessed party while the issue of lawful possession or de jure possession is pending or about to be filed. The remedy of ejectment ought to maintain the status quo and prevent the party-litigants from further aggravating the situation and causing further damage.
WHEREFORE, the instant petition is DENIED and the assailed decision and resolution of the CA are AFFIRMED.
Costs against the petitioners.
CANCIO C. GARCIA
REYNATO S. PUNO
RENATO C. CORONA
(ON OFFICIAL LEAVE)
ADOLFO S. AZCUNA
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.
REYNATO S. PUNO
1 Penned by Associate Justice Remedios Salazar-Fernando, with Associate Justices Romeo A. Brawner (ret.) and Rosmari D. Carandag, concurring; Rollo, pp. 340-350.
2 Id. at 376.
3 Id. at 146-149.
4 Id. at 108-109.
5 Id. at 181-185.
6 Id. at 244-249.
7 Supra note 1.
8 Supra note 2.
9 Feliciano v. Court of Appeals, et al., G.R. No. 123293, March 5, 1998, 287 SCRA 61.
10 Gener v. De Leon, G.R. No. 130730, October 19, 2001, 367 SCRA 631.
11 Paz v. Reyes, G.R. No. 127439, March 9, 2000, 327 SCRA 605.
12 Tala Realty Services Corporation v. Banco Filipino Savings and Mortgage Bank, G.R. No. 129887, February 17, 2000, 325 SCRA 768.
13 Uraca, et al. v. Court of Appeals, et al., G.R. No. 115158, September 5, 1997, 278 SCRA 702.
14 Cruz v. Cabana, 129 SCRA 656, 663, June 22, 1984.
15 Reyes v. Sta. Maria, G.R. No. L-33213, June 29, 1979, 91 SCRA 164; Francisco Realty and Development Corp. v. Court of Appeals, G.R. No. 125055, October 30, 1998, 298 SCRA 349.