THIRD
DIVISION
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ALEJANDRO B. TY and INTERNATIONAL
REALTY CORPORATION, Petitioners, - versus
- QUEEN’S ROW SUBDIVISION, INC., NEW SAN
JOSE BUILDERS, INC., GOVERNMENT SERVICE INSURANCE SYSTEM and REGISTER OF
DEEDS OF CAVITE, Respondents. |
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G.R. No. 173158 Present:
Chairperson, CHICO-NAZARIO, VELASCO,
JR., NACHURA, and PERALTA, JJ. Promulgated: December 4, 2009 |
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CHICO-NAZARIO, J.:
This
is a Petition for Review on Certiorari
seeking the reversal of the Decision[1]
of the Court of Appeals dated
The
facts of the case are as follows:
Petitioner
Ty is the registered owner of a parcel of land situated in Molino, Bacoor,
In
1970, respondent Queen’s Row Subdivision, Inc. (QRSI) was issued TCTs No. T-54188,
No. T-54185, No. T-54186 and No. T-54187, covering exactly the same areas and
containing the same technical descriptions as those embraced in the titles of
petitioners.
On
In
October 1973, petitioners Ty and IRC instituted with the then Court of First
Instance (CFI) of Bacoor,
On
QRSI defaulted in the payment of its mortgage
indebtedness to GSIS, leading to the foreclosure of the mortgages. The properties were sold at public auction,
with GSIS emerging as the highest bidder.
On
QRSI
failed to redeem the foreclosed properties within the one-year redemption
period, allowing GSIS to consolidate its ownership thereof. TCTs No. T-230070, No. T-230071, No. T-230072
and No. T-225212 were, thus, issued in the name of GSIS.
Thereupon,
GSIS entered into a joint venture agreement with respondent New San Jose
Builders, Inc. (NSJBI) for the development of the properties. NSJBI subsequently commenced construction and
development works thereon.
On
On
7 August 1994, Ty and IRC each filed a Petition
for Declaratory Relief to Quiet Title/Remove Cloud from Real Property
against respondents with the RTC of Imus, Cavite, this time impleading all
respondents, QRSI, GSIS, NSJBI, and the Register of Deeds of Cavite. The cases were docketed as Civil Case No. BSC
94-2 and Civil Case No. 94-3. The cases
were consolidated under Branch 20 of said court.
On
Petitioners
appealed to the Court of Appeals. The
appeal was docketed as CA-G.R. CV No. 62610 and was raffled to the Seventh
Division. On
Hence,
this Petition, wherein petitioners present the following issues for our
consideration:
I.
PRIVATE RESPONDENT GSIS, BEING A FINANCIAL
INSTITUTION, IS CHARGED WITH THE DUTY TO EXERCISE MORE CARE AND PRUDENCE IN
DEALING WITH REGISTERED LANDS FOR ITS BUSINESS IS ONE AFFECTED WITH PUBLIC
INTEREST KEEPING IN TRUST MONEY BELONGING TO ITS MEMBERS AND SHOULD GUARD
AGAINST LOSSES AND, THEREFORE, CANNOT INVOKE THE PROTECTED MANTLE OF LAND
REGISTRATION STATUTE (ACT 496).
II.
THE TITLE OF PETITIONERS BEING SUPERIOR TO THAT OF
PRIVATE RESPONDENT QUEEN’S ROW, THE PRINCIPLE OF INDEFEASIBILITY OF TITLE
REMAINED UNAFFECTED AND PETITIONERS COULD NOT HAVE BEEN GUILTY OF LACHES,
ESTOPPEL, MUCH LESS PRESCRIPTION.[2]
Innocent Purchaser for Value
In
the first issue raised by petitioners, they assail the finding of the Court of
Appeals that GSIS was an innocent purchaser for value. The appellate court held:
The records clearly show that the
mortgages entered into by Queen’s Row and GSIS were already inscribed on the
former’s titles on
Verily, a buyer in good faith is one who
buys the property of another without notice that some other person has a right
to or interest in such property. He is a
buyer for value if he pays a full and fair price at the time of the purchase or
before he has notice of the claim or interest of some other person in the
property. In the instant case, the GSIS
clearly had no notice of any defect, irregularity or encumbrance in the title
of Queen’s Row when the latter mortgaged the subject property. Neither did GSIS have any knowledge of facts
and circumstances which should have put it on inquiry, requiring it to go
[beyond] the certificate of title.
Obviously, GSIS was an innocent purchaser for value and in good faith at
the time it acquired the subject property.[3]
Petitioners
claim that since GSIS is a financial institution, it is charged with the duty to exercise
more care and prudence in dealing with registered lands. On this basis, petitioners conclude that GSIS
cannot invoke the protection of land registration statutes insofar as they
protect innocent purchasers for value.
While we agree with
petitioners that GSIS, as a financial institution, is bound to exercise more
than just ordinary diligence in the conduct of its financial dealings, we
nevertheless find no law or jurisprudence supporting petitioners’ claim that
financial institutions are not protected when they are innocent purchasers for
value. When financial institutions exercise
extraordinary diligence in determining the validity of the certificates of
title to properties being sold or mortgaged to them and still fail to find any
defect or encumbrance upon the subject properties after said inquiry, such
financial institutions should be protected like any other innocent purchaser
for value if they paid a full and fair price at the time of the purchase or
before having notice of some other person’s claim on or interest in the
property.
On this note, petitioners
insist that “GSIS was guilty of gross negligence in its failure to inquire and
investigate the status and condition of the property when it approved the loan
of private respondent Queen’s Row.”[4] This allegation has no leg to stand on. Respondents allege that GSIS ascertained to
its satisfaction the existence and authenticity of the titles of its
predecessor-in-interest, QRSI; and was, in fact, able to procure true copies of
the latter’s titles from the Registry of Deeds.[5] GSIS furthermore conducted an ocular
inspection and found that the property was not in the possession of any person
claiming an interest that was adverse to that of its predecessor-in-interest.[6] Respondents’ allegations are much more
convincing in light of the fact that NSJBI was able to enter the subject
property by virtue of its joint venture agreement with GSIS, and was able to
commence construction and development works thereon.
Petitioners
have presented absolutely no evidence to prove their allegation of fraud on the
part of QRSI and bad faith on the part of GSIS.
They want us to merely conclude the same on the ground that they were
able to secure the favorable decisions they obtained in Civil Cases No. B-44, No.
B-45, No. B-48 and No. B-49. However, as shall be discussed later, these are
already stale judgments, which cannot be executed anymore. Furthermore, these judgments were obtained ex parte, for failure of respondent
QRSI to appear at the pre-trial despite filing an Answer to the
Complaints. GSIS, on the other hand, was
never impleaded in these four Complaints for cancellation filed in October
1973, despite the fact that the mortgages in GSIS’s favor had been annotated on
the subject titles since
Petitioners
cannot expect GSIS to check the technical descriptions of each and every title
in the Registry of Deeds of Cavite in order to determine whether there is
another title to the same property.
There is no one to blame for the failure of GSIS to have notice of such
fact other than petitioners themselves.
As stated above, they did not implead GSIS in their actions for
cancellation of title despite the fact that, at the time of the filing of the
cases, the mortgages in GSIS’s favor had already been annotated on the subject
titles. Petitioners likewise neglected
to have a notice of lis pendens of
the cancellation cases annotated on the subject titles, fueling respondents’
suspicions that the former wanted their actions for cancellation to be
uncontested by GSIS, the party really interested in challenging the same.
Laches
Petitioners
challenge the ruling of the Court of Appeals finding them guilty of laches for their
failure to execute the favorable decisions they obtained in Civil Cases No.
B-44, No. B-45, No. B-48 and No. B-49, arguing that laches “cannot be raised
even as a valid defense for claiming ownership of registered land, more so, if
titles are tainted with fraud in their issuances.”[7] Their basis for this claim is the 1950 Court
of Appeals case Dela Cruz v. Dela Cruz.[8]
We
are not persuaded.
Firstly, as discussed above, while petitioners persistently
harp on their allegation of fraud in the issuance of the title of GSIS,
nevertheless, they have not presented any evidence to prove the alleged fraud
on the part of either GSIS or even QRSI.
Secondly, it must be stressed that the Decisions of this Court
are the only judicial decisions that form part of our legal system. While rulings of the Court of Appeals may
serve as precedents for lower courts, they only apply to points of law not
covered by any Supreme Court decision.[9]
Thirdly, this Court has, on several occasions, already ruled
that even a registered owner of a property may be barred from recovering
possession of the same by virtue of laches.
Thus, in Heirs of Panganiban v.
Dayrit,[10] this
Court discussed several cases wherein the principle of laches was applied
against the registered owner:
In our jurisdiction, it is an enshrined
rule that even a registered owner of
property may be barred from recovering possession of property by virtue of
laches. Thus, in the case of Lola v. Court of Appeals, this Court
held that petitioners acquired title to the land owned by respondent by virtue
of the equitable principles of laches due to respondent’s failure to assert her
claims and ownership for thirty-two (32) years. In Miguel v. Catalino, this Court said that appellant’s passivity and
inaction for more than thirty-four (34) years (1928-1962) justifies the
defendant-appellee in setting up the equitable defense of laches in his behalf.
Likewise, in the case of Mejia de Lucas v. Gamponia, we stated
that while the defendant may not be considered as having acquired title by
virtue of his and his predecessor’s long continued possession for thirty-seven
(37) years, the original owner’s right to recover possession of the property
and the title thereto from the defendant has, by the latter’s long period of
possession and by patentee’s inaction and neglect, been converted into a stale
demand.
Laches
is the failure or neglect, for an unreasonable and unexplained length of time,
to do that which by exerting due diligence could or should have been done
earlier.[11] The law serves those who are vigilant and
diligent, and not those who sleep when the law requires them to act.[12]
The
Court of Appeals based its finding of laches on the fact that petitioners Ty
and IRC failed to move for the execution of the favorable ex parte judgments, which they obtained on
Section 6. Execution by motion or by independent action. – 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
action. The revived judgment may also 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
statute of limitations referred to in the above section is found in Article
1144 of the Civil Code, which provides:
Art. 1144.
The following actions must be brought within ten years from the time the right
of action accrues:
(1) Upon a
written contract;
(2) Upon an
obligation created by law;
(3) Upon a
judgment.
While
indeed, the above provisions on extinctive prescription cannot be the basis for
depriving a registered owner of its title to a property, they nevertheless
prohibit petitioners from enforcing the ex
parte judgment in their favor, which can likewise be the basis of a
pronouncement of laches. In Villegas v. Court of Appeals,[13]
we held that:
But even if Fortune had validly acquired
the subject property, it would still be barred from asserting title because of
laches. The failure or neglect, for an
unreasonable length of time to do that which by exercising due diligence could
or should have been done earlier constitutes laches. It is negligence or
omission to assert a right within a reasonable time, warranting a presumption
that the party entitled to assert it has either abandoned it or declined to
assert it. While it is by express provision of law that no title to registered
land in derogation of that of the registered owner shall be acquired by
prescription or adverse possession, it is likewise an enshrined rule that even
a registered owner may be barred from recovering possession of property by
virtue of laches. (Emphasis supplied.)
Petitioners’
neglect in asserting their rights is likewise manifested in their failure to implead
GSIS in the four Complaints for cancellation, which they filed in October 1973,
despite the fact that the mortgages in the GSIS’s favor had been annotated on
the subject titles since
WHEREFORE, the
instant Petition is DENIED. The Decision of the Court of Appeals dated
SO ORDERED.
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MINITA V. CHICO-NAZARIOAssociate Justice |
Associate Justice
Chairperson
PRESBITERO J. VELASCO, JR.
Associate Justice |
ANTONIO
EDUARDO B. NACHURA Associate Justice |
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DIOSDADO M. PERALTAAssociate Justice |
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ATTESTATION
I attest that the conclusions in the above Decision
were reached in consultation before the case was assigned to the writer of the
opinion of the Court’s Division.
RENATO C.
CORONA
Associate Justice
Chairperson,
Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII
of the Constitution, and the Division Chairperson’s Attestation, it is hereby
certified that the conclusions in the above Decision were 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
[2] Rollo, pp. 526-527.
[3]
[4] Petitioners’ Memorandum; id. at 531.
[5]
[6]
[7]
[8] CA-G.R. No. 18060-R,
[9] Government Service Insurance System v.
[10] G.R. No. 151235,
[11] La Campana Food Products v. Court of Appeals, G.R. No. 88246, 4 June 1993, 223 SCRA 151, 157-158.
[12] Marcelino
v. Court of Appeals, G.R No. 94422,
[13] 403 Phil. 791, 800-801 (2001).