FIRST DIVISION
|
SPS. JESUS CHING AND LEE POE TIN,
Petitioners, -
versus - SPS. ADOLFO & ARSENIA ENRILE, Respondents. |
G.R. No. 156076
Present: PUNO,
C.J., Chairperson, CARPIO MORALES*, AZCUNA, and LEONARDO-DE CASTRO, JJ. Promulgated: September 17, 2008 |
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D E C I S I O N
LEONARDO-DE
CASTRO, J.:
Assailed in the instant petition for review
on certiorari are the Decision[1] of
the Court of Appeals (CA) dated
The assailed CA decision reversed the
decision of the Regional Trial Court (RTC) of Makati City, Branch
The antecedent facts follow.
On
For reasons known only to petitioners, the conveyance
was not registered in the Register of Deeds as prescribed by Section 51 of PD
1529[4]. Instead,
on
In the meantime, petitioners peacefully and
continuously possessed the subject property.
On
August 19, 1988 ─ three years after they purchased the disputed
property, petitioners received a Notice of Levy on Attachment and Writ of Execution issued by the Regional
Trial Court (
The Notice of Levy on Attachment was
recorded at the dorsal portion of TCT No. 83618 under Entry No. 3433-2 while
the Writ of Execution was inscribed under Entry No. 3434-2. Also inscribed in
the TCT is the Certificate of Sale dated
On
On
WHEREFORE,
premises, the above-entitled petition is granted for being preponderantly
meritorious. Judgment is hereby rendered ordering:
1) The Register of Deeds of
Las Piñas, Metro Manila to cancel all the annotations of encumbrances in favor
of defendants [respondents] in Transfer Certificate of Title No. 83618 issued
by the Register of Deeds of Pasay City, Metro Manila, District IV;
2) Defendants [respondents] to
pay plaintiffs [petitioners] in the sum of P 10,000.00 as compensatory
damages by way of litigation expenses;
3) To pay to plaintiffs
[petitioners] the sum of P 10,000.00 as attorney’s fees; and,
4) To pay the cost of the
proceedings.
SO ORDERED.
In time, respondents appealed to the CA, principally
arguing that the
On
This Court, also
believes that there is truth in defendants-appellants’ assertion that while the
sale is perfected and consummated, plaintiffs-appellees failed to diligently
protect their interests by failing to register the conveyance or transaction in
the office of Register of Deeds. An
owner of a registered land is vested by law with rights and obligations and
thus exercises all attributes of ownership.
These attributes include among others the right to dispose the real
property itself. The owner of the land
may convey, mortgage, lease or otherwise deal with the same in accordance with
existing laws. He may use such forms of
deeds, mortgages, leases or other voluntary instrument as are sufficient in
law. However, as clearly provided by
Section 51 of Presidential Decree 1529, no deed, mortgage, lease or other
voluntary instrument, except a will purporting to convey or affect registered
land shall take effect as a conveyance or bind the land, until the same has
been registered in the office of the Register of Deeds. It shall operate only as a contract between
the parties and as evidence of authority to the Register of Deeds to effect
registration. The act of registration shall
be the operative act to convey or affect the land insofar as third persons are
concerned, and in all cases under this Decree, the registration shall be made
in the Office of the Register of Deeds of the province or city where the land
lies. Unless and until the subject
transaction has been filed or registered in the office of the Register of
Deeds, the transaction shall only be binding on the parties to the contract but
not on the third person. The instrument
is not thereby rendered void by failure to register. Section 51 of PD 1529 states:
Section
51. Conveyance and other dealings by
registered owner – An owner of registered land may convey, mortgage, lease,
charge or otherwise deal with the same in accordance with existing laws. He may use such forms of deeds, mortgages,
leases or other voluntary instruments as are sufficient in law. But no deed, mortgage, lease or other
voluntary instrument, except a will purporting to convey or affect registered
land shall take effect as a conveyance or bind the land, but shall operate only
as a contract between the parties and as evidence of authority to the Register
of Deeds to make registration.
The act
of registration shall be the operative act to convey or affect the land insofar
as third persons are concerned, and in all cases under this Decree, the
registration shall be made in the office of the Register of Deeds for the
province or city where the land lies.
Laying the blame on petitioners, the CA
added:
The law provides
protection to third person, who believing in good faith and relying on the
sweet representations of some evil minded persons, may be unjustifiably
inveigled to enter into a contract or transaction not knowing that the subject
real property has been encumbered or sold.
It is the duty of the buyer or vendee to register the transaction before
the Register of Deeds of the province or city where the property lies. The registration is intended to inform any
minded individual that the property has been subjected to a prior transaction
and that entering into any further contract involving the same property shall
be at his own risk. In the event that
any third person was bona fide
tricked to enter into any transaction involving the same property because the
transferee or vendee failed to register the same as required by law, the
latter’s interests should be subordinated to that of the third party. Axiomatic is the rule in this jurisdiction
that when loss or damage was caused to two individuals who both acted in good
faith but one is negligent, the loss or damage shall fall upon the one who
acted negligently.
Citing a myriad of jurisprudence[6],
the CA declared that respondents, as attaching creditors who registered the
order of attachment and the sale of the property to them as the highest bidders,
acquired a valid title to the disputed property as against petitioners who had
previously bought the same property from the registered owner but failed to
register their deed of sale.
The CA further
declared respondents as purchasers in good faith. On the premise that petitioners’
filing of the Affidavit of Adverse Claim was procedurally flawed and that the
annotated adverse claim had already prescribed on December 20, 1986 after the
lapse of 30 days from its registration which was November 20, 1986, the CA ruled that it cannot be
considered sufficient notice to third person like the respondents who were not
aware of the sale of the disputed lot to petitioners prior to the levy on
attachment.
As stated at the threshold hereof, the CA,
in its decision[7] of
WHEREFORE, in view of the foregoing, the Decision
dated
The Register of
Deeds of Las Piñas, Metro Manila is hereby mandated not to cancel any
annotations of encumbrances in favor of defendants-appellants in Transfer
Certificate of Title No. 83618 issued by the Register of Deeds of Pasay City,
Metro Manila, Dist. IV.
Who among the
parties has a preferential right over the disputed property.
SO
ORDERED.
Their motion for reconsideration having been denied
by the CA in its challenged Resolution of
WITH
DUE RESPECT, THE COURT A QUO G
a.
When it held that the levy on attachment LATER annotated shall prevail
over the Adverse Claim EARLIER annotated at the back of the title by the mere
lapse of 30 days and even without any petition in court for its cancellation;
b.
When it did not dismiss the appeal considering that the question raised
were questions of law and NO question of fact.[8]
The petition is impressed with merit.
At the outset, the Court finds that the CA
committed reversible error when it ruled that the annotated adverse claim had already prescribed by the
mere lapse of 30 days from its registration. The issue is no longer of first impression. In the 1996 case of Sajonas v. Court of Appeals,[9] we
explained that a notice of adverse claim remains valid even after the lapse of
the 30-day period provided by Section 70 of PD 1529. Section 70 provides:
Whoever claims any part
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 this Decree for registering the same, make a statement in writing,
setting forth fully his alleged right or interest, and how or under whom
acquired, a reference to the number 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 a
place at which all notices may be served upon him. This statement shall be entitled to
registration as an adverse claim on the certificate of title. The adverse claim shall be effective for a
period of thirty days from the date of registration. After the lapse of said period, the
annotation of adverse claim may be cancelled upon filing of a verified petition
therefor by the party in interest.
Provided, however that after cancellation, no second adverse claim based
on the same ground shall be registered by the same claimant.
In
the same case, we held that for as long as there is yet no petition for its
cancellation, the notice of adverse claim remains subsisting: Thus:
At first blush, the
provision in question would seem to restrict the effectivity of the adverse
claim to thirty days. But the above
provision cannot and should not be treated separately, but should be read in
relation to the sentence following, which reads:
After the lapse of said
period, the annotation of the adverse claim may be cancelled upon filing of a
verified petition therefor by the party in interest.
If the rationale of the
law was for the adverse claim to ipso facto lose force and effect after the
lapse of thirty days, then it would not have been necessary to include the
foregoing caveat to clarify and complete the rule. For then, no adverse claim need be cancelled.
If it has been automatically terminated by mere lapse of time, the law would
not have required the party in interest to do a useless act.[10]
In
a petition for cancellation of adverse claim, a hearing must first be
conducted. The hearing will afford the parties an opportunity to prove the
propriety or impropriety of the adverse claim.[11]
Now, as we see it, the recourse will either rise or
fall on the decisive question of whether or not respondents were purchasers in
good faith when they acquired
the disputed lot despite the annotated adverse claim on their title.
We rule and so hold that they were not.
The Court has invariably ruled that in case of
conflict between a vendee and an attaching creditor, an attaching creditor who
registers the order of attachment and the sale of the property to him as the
highest bidder acquires a valid title to the property as against a vendee who
had previously bought the same property from the same owner but who failed to
register his deed of sale. This is
because registration is the operative act that binds or affects the land
insofar as third persons are concerned. It
is upon registration that there is notice to the whole world. But where a party has knowledge of a prior
existing interest, as here, which is unregistered at the time he acquired a
right to the same land, his knowledge of that prior unregistered interest has
the effect of registration as to him.[12]
Knowledge of an unregistered sale is
equivalent to registration.[13]
The general rule is that a person dealing with
registered land is not required to go behind the register to determine the
condition of the property. In that case,
such person is charged with notice of the burden on the property which is noted
on the face of the register or certificate of title.[14]
Article 1544 of the Civil Code governs
in cases of double sale. It provides:
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.
An “innocent purchaser for value”
or any equivalent phrase shall be deemed to include, under the Torrens System,
the innocent lessee, mortgagee, and other encumbrancer for value.[15]
In Bautista v. Court of Appeals,[16]
we held that where the thing sold twice is an immovable, the one who acquires
it and first registers it in the Registry of Property, in good faith, shall be
the owner.
Who then can
be considered a purchaser in good faith?
In the early
case of Leung Yee v. F.L. Strong Machinery Co. and Williamson,[17]
the Court explained good faith in this wise:
One who purchases
real estate with knowledge of a defect or lack 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.[18]
Good faith, or the want of it, is
capable of being ascertained only from the acts of one claiming its presence,
for it is a condition of the mind which can only be judged by actual or fancied
token or signs.[19]
It is beyond dispute that the
property in question had already been sold by La Fuente to petitioners on
The law does not require a person
dealing with the owner of registered land to go beyond the certificate of title
as he may rely on the notices of the encumbrances on the property annotated on
the certificate of title or absence of any annotation. Here, petitioners’
adverse claim is annotated at the back of the title coupled with the fact that
they are in possession of the disputed property. To us, these circumstances
should have put respondents on guard and required them to ascertain the
property being offered to them has already been sold to another to prevent
injury to prior innocent buyers. A person who deliberately ignores a significant
fact which would create suspicion in an otherwise reasonable man is not an
innocent purchaser for value. It is a well-settled rule that 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.[20]
As aptly observed by the
xxx
In derogation to defendants claim that they have a better right over the
questioned property superior over that of the plaintiffs, the Court has only to
carefully examine the face of TCT No. 83618 and its dorsal part on Memorandum
of Encumbrances for entries and inscriptions in their chronological order of
dates of annotation of documents in the Office of the Register of Deeds. On the title itself it is readily perceived
and palpable that Entry No. 86-62262/T-
Hence, the particular
circumstances of this case constrain us to rule that respondents were not purchasers
in good faith and, as such, could not acquire good title to the property as
against the former transferee.
WHEREFORE, the petition is
GRANTED. The decision of the Court of Appeals promulgated on August 29,
No costs.
SO ORDERED.
TERESITA J. LEONARDO-DE
CASTRO
Associate
Justice
WE CONCUR:
REYNATO
S. PUNO
Chief Justice
Chairperson
|
RENATO C. CORONA Associate Justice |
CONCHITA CARPIO MORALES Associate Justice |
ADOLFO S. AZC
Associate Justice
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
Chief Justice
[1] Penned by Associate Justice Remedios A. Salazar-Fernando, with Associate Justices Romeo J. Callejo, Sr. (now retired Supreme Court Associate Justice) and Danilo B. Pine (ret.), concurring; rollo, pp. 7-21.
[2]
[3]
[4] The Property Registration Decree.
[5] Rollo, p. 41.
[6] Worcester v. Ocampo, 34 Phil. 646 (1916); Laxamana v. Carlos, 57 Phil. 722 (1932); Anderson v. Garcia, 64 Phil. 506 (1937); Vargas v. Francisco, 67 Phil. 308 (1939); Reynes v. Barrera, 68 Phil. 656 (1939).
[7] Supra note 1.
[8]
[9] G.R. No 102377,
[10]
[11] Rolando Y. Tan v.
The Court of Appeals, G.R. No. 135038,
[12] Ruiz, Sr. v. Court of Appeals, G.R. No. 121298, July 31, 2001, 362 SCRA 40, 50, citing Egao v. Court of Appeals, G.R. No. 79787, June 29, 1989, 174 SCRA 484.
[13] Winkleman v. Veluz, 43 Phil. 604, 608 (1922).
[14] Navotas Industrial Corporation v. German D. Cruz, et al., G.R. No. 159212, September 12, 2005, 469 SCRA 530, 553.
[15] Express
Credit Financing Corporation v. Sps.
Morton and Juanita Velasco, G.R. No. 156033,
[16] G.R. No. 106042,
[17] No. 11658, 37 Phil. 644, 651 (1918).
[18]
[19]
[20] Amancio Sarmiento v. CA,
Rodeanna Realty Corporation, et al., G.R. No. 152627, September 16, 2005, 470 SCRA 99, 123.
.
[21] Rollo, pp. 61-62.