HECTOR UY VS. VIRGINIA FULE
Barbara Sampaga Poblete
Generally, a buyer is not required to inquire beyond the title if the requisites of
good faith concur. However, absent one or two of the requisites, then the law
itself puts the buyer on notice and obliges the latter to exercise a higher
degree of diligence by scrutinizing the certificate of title and examining all
factual circumstances in order to determine the seller’s title and capacity to
transfer any interest in the property.
FACTS: Conrado Garcia (CG) owned a vast tract of land. Upon his death, his
heirs entered an extrajudicial settlement of his estate including the land and
thereafter caused its registration under their names. Meanwhile, DAR officials
issued a joint certification that said land was an “untitled” property owned by
CG. As such, it was then included in the Operation Land Transfer program
pursuant to PD No. 27. The offices issued Emancipation Patents and Original
Certificate of Titles to farmer-beneficiaries like Mariano Ronda (MR). MR sold
his portion to Chisan Uy then Chisan Uy’s heirs, sold the said land to Hector
Uy. In 1997, the TCT of CG was cancelled and subsequently issued in the
names of the heirs of Garcia under a new TCT. In 1998, DAR Secretary issued
the EPs to farmer-beneficiaries like MR. However, CG’s TCT was already in the
name of Hector Uy. Because of this, the heirs of CG filed a complaint assailing
the certificates of titles issued to purchasers Chisan and Hector Uy. RTC
favored respondents. CA affirmed. SC affirmed CA.
SUBSTANTIVE ISSUE:WON Hector Uy, who got the land from the heirs of the
farmer beneficiary Mariano Ronda, was an innocent purchaser for value who
had better rights than the heirs of Conrado Garcia over the disputed land.
(NO. He did not exercise reasonable precaution by inquiring beyond the title.
Third requisite was absent. Hence, he cannot be awarded the disputed land.)
RATIO:
There is good faith when the following conditions concur:
(1) the seller is the registered owner of the land;
(2) the latter is in possession thereof; and
(3) at the time of the sale, the buyer was not aware of any claim or
interest of some other person in the property, or of any defect or
restriction in the title of the seller or in his capacity to convey title
to the property.
Absent one or two of the foregoing conditions, then the law itself puts
the buyer on notice and obliges the latter to exercise a higher degree of
diligence by scrutinizing the certificate of title and examining all factual
circumstances in order to determine the seller’s title and capacity to transfer
any interest in the property. Under such circumstance, it was no longer
sufficient for said buyer to merely show that he had relied on the face of the
title; he must now also show that he had exercised reasonable precaution by
inquiring beyond the title. Failure to exercise such degree of precaution
makes him a buyer in bad faith.
In this case, the deed of sale executed between the heirs of Ronda and
the petitioner were issued only on August 17, 1998 but the deed of sale was
executed on July 31, 1998. Evidently, the petitioner entered into the deed of
sale without having been able to inspect the TCTs since they were still
inexistent. His only basis were the OCTs and such categorically stated that
they were entered pursuant to an emancipation patent pursuant to
Operation Land Transfer. It provided that it shall not be transferred except by
hereditary succession or to the government. Hence, the third element was
negated. At the time of the sale, the buyer was already aware of any
restriction in the title of the seller or in his capacity to convey title to the
property. The absence of the third condition put the petitioner on notice and
obliged him to exercise a higher degree of diligence by scrutinizing the
certificates of title and examining all factual circumstances in order to
determine the seller’s title and capacity to transfer any interest in the lots.
LBP v.
On October 1997, respondent Poblete obtained a loan worth P300k from
Kapantay Multi-Purpose. She mortgaged her Lot No.29 located in Buenavista,
Sablayan, Occidental Mindoro, under OCT No. P-12026. Kapantay, in turn,
used OCT No. P-12026 as collateral under its Loan Account No. 97-OC-013
with Land Bank-Sablayan Branch.
After a year, Poblete instructed her son-in-law Domingo Balen to look for a
buyer for the Lot No. 29 in order to pay her loan and he referred Angelito
Joseph Maniego. Both parties agreed that the lot shall amount to P 900k but
in order to reduce taxes they will execute a P 300k agreed price appearing in
the Deed of Absolute Sale dated November 9, 1998. In the Deed, Poblete
specifically described herself as a widow. Balen, then, delivered the Deed to
Maniego. Instead of paying the price, Maniego promised in an affidavit dated
November 19, 1998 stating that the said amount will be deposited to her
Land Bank Savings Account but he failed to do so.
On August 1999, Maniego paid Kapantay’s Loan Account for P448,202.08 and
on subsequent year he applied for a loan worth P1M from Land Bank using
OCT No. P-12026 as a collateral with a condition that the title must be first
transferred on his name. On August 14, 2000, the Registry of Deeds issued
TCT No. T-20151 in Maniego’s name pursuant to a Deed of Absolute Sale with
the signatures of Mrs. Poblete and her husband dated August 11, 2000 and
Maniego successfully availed the Credit Line Agreement for P1M and a Real
Estate Mortgage over TCT No. T-20151 on August 15, 2000. On November
2002, Land Bank filed an Application for an Extra-judicial Foreclosure against
the said Mortgage stating that Maniego failed to pay his loan.
Poblete filed a complaint for nullification of the Deed of Sale dated August 11,
2000 and TCT No. T-20151, Reconveyance of the Title and Damages with a
Prayer for Temporary Restraining Order and/or Issuance of Writ of
Preliminary Injunction against Maniego, Landbank and the Register of Deeds.
The judgment of RTC, affirmed by the CA upon appeal, favors the plaintiff
Poblete. Hence, this petition.
ISSUE: WON the CA erred in upholding the finding of the trial court
declaring the TCT No. T-20151 as null and void.
Held :
The petition is meritorious.
It is well-entrenched rule, as applied, by the CA, that a forged or fraudulent
deed is a nullity and conveys no title. Moreover, where the deed of sale
states that the purchase price has been paid but in fact has never been, the
deed is void ab initio for lack of consideration. Since the deed, is void, the
title is also void. Since the land title has been declared void by final
judgment, the Real Estate Mortgage over it is also void.
It is essential that the mortgagor be the absolute owner of the mortgage;
otherwise, the mortgage is void. The doctrine ―the mortgagee in good
faith as a rule does not apply to banks which are required to observe a higher
standard of diligence. A bank cannot assume that, simply because the title
offered as security is on its face, free of any encumbrances or lien, it is
relieved of the responsibility of taking further steps to verify the title and
inspect the properties to be mortgage.
The records do not even show that Land Bank investigated and inspected the
actual occupants. Land Bank merely mentioned Maniego’s loan application
upon his presentation of OCT No. P-12026, which was still under the name of
Poblete. Land Bank even ignored the fact that Kapantay previously used
Poblete’s title as collateral in its loan account with Land Bank.
Furthermore, only one day after Maniego obtained TCT No. P-20151 under his
name, Land Bank and Maniego executed a Credit Line Agreement and Real
Mortgage. It appears that Maniego’s loan was already completely processed
while the collateral was still in the name of Poblete. Where said mortgagee
acted with haste in granting the mortgage loan and did not ascertain the
ownership of the land being mortgaged, it cannot be considered innocent
mortgagee.
The pari delicto rule provides ―when two parties are equally at fault, the law
leaves them as they are and denies recovery by either one of them. This court
adopts the decisions of RTC and CA that only Maniego is at fault. Finally, on
the issue of estoppels and laches, such question was not raised before the
trial court. It is settled that an issue which are neither alleged in the complaint
nor raised during the trial cannot be raised for the time on appeal.
The issue on the nullity of Maniego’s title had already been foreclosed when
this Court denied Maniego’s petition for review in the Resolution dated 13
July 2011, which became final and executory on 19 January 2012. It is settled
that a decision that has acquired finality becomes immutable and unalterable
and may no longer be modified in any respect, even if the modification is
meant to correct erroneous conclusions of fact or law and whether it will be
made by the court that rendered it or by the highest court of the land. This is
without prejudice, however, to the right of Maniego to recover from Poblete
what he paid to Kapantay for the account of Poblete, otherwise there will be
unjust enrichment by Poblete.
LEGARDA VS CA
FACTS: Petitioner Victoria Legarda was the owner of a parcel of land and the
improvements located at 123 West Avenue, Quezon City. On January 11,
1985 respondent New Cathay House, Inc. filed a complaint against the
petitioner for specific performance with preliminary injunction and damages
in RTC alleging that petitioner entered into a lease agreement with the
private respondent through its representative, Roberto V. Cabrera, Jr., of the
aforestated property of petitioner. Respondent drew up the written contract
and sent it to petitioner, that petitioner failed and refused to execute and
sign the same despite demands of respondent. Petitioner engaged the
services of counsel to handle her case. Said counsel filed his appearance with
an urgent motion for extension of time to file the answer within ten (10) days
from February 26, 1985. However, said counsel failed to file the answer
within the extended period prayed for. Counsel for private respondent filed
an ex-parte motion to declare petitioner in default. This was granted by the
trial court on March 25, 1985 and private respondent was allowed to present
evidence ex-parte. Thereafter, on March 25, 1985, the trial court rendered its
decision. Said counsel for petitioner received a copy of the judgment but took
no steps to have the same set aside or to appeal therefrom. Thus, the
judgment became final and executory. The property of petitioner was sold at
public auction to satisfy the judgment in favor of private respondent. The
property was sold to Roberto V. Cabrera, Jr., representative of private
respondent, and a certificate of sale was issued in his favor. The redemption
period expired after one year so a final deed of sale was issued by the sheriff
in favor of Cabrera, who in turn appears to have transferred the same to
private respondent.
During all the time, the petitioner was abroad. When, upon her return, she
learned, to her great shock, what happened to her case and property, she
nevertheless did not lose faith in her counsel. She still asked Atty. Coronel to
take such appropriate action possible under the circumstances. As
aboverelated, said counsel filed a petition for annulment of judgment and its
amendment in the Court of Appeals. But that was all he did. After an adverse
judgment was rendered against petitioner, of which counsel was duly
notified, said counsel did not inform the petitioner about it. He did not even
ask for reconsideration thereof, or file a petition for review before this Court.
Thus, the judgment became final. It was only upon repeated telephone
inquiries of petitioner that she learned from the secretary of her counsel of
the judgment that had unfortunately become final.
HELD: A lawyer owes entire devotion to the interest of his client, warmth and
zeal in the maintenance and defense of his rights and the exertion of his
utmost learning and ability, to the end that nothing can be taken or withheld
from his client except in accordance with the law. He should present every
remedy or defense authorized by the law in support of his client's cause,
regardless of his own personal views. In the full discharge of his duties to his
client, the lawyer should not be afraid of the possibility that he may displease
the judge or the general public.
Judged by the actuations of said counsel in this case, he has miserably failed
in his duty to exercise his utmost learning and ability in maintaining his
client's cause.
It is not only a case of simple negligence as found by the appellate court, but
of reckless and gross negligence, so much so that his client was deprived of
her property without due process of law. The Court finds that the negligence
of counsel in this case appears to be so gross and inexcusable. This was
compounded by the fact, that after petitioner gave said counsel another
chance to make up for his omissions by asking him to file a petition for
annulment of the judgment in the appellate court, again counsel abandoned
the case of petitioner in that after he received a copy of the adverse
judgment of the appellatecourt, he did not do anything to save the situation
or inform his client of the judgment. He allowed the judgment to lapse and
become final. Such reckless and gross negligence should not be allowed to
bind the petitioner. Petitioner was thereby effectively deprived of her day in
court.
Thus, we have before Us a case where to enforce an alleged lease agreement
of the property of petitioner, private respondent went to court, and that
because of the gross negligence of the counsel for the petitioner, she lost the
case as well as the title and ownership of the property, which is worth
millions. The mere lessee then now became the owner of the property. Its
true owner then, the petitioner, now is consigned to penury all because her
lawyer appeared to have abandoned her case not once but repeatedly.
GABUTAN VS. NACALABAN
On January 25, 1957, Godofredo Nacalaban (Godofredo) purchased an 800-
square meter parcel of prime land (property) in Poblacion, Cagayan de Oro
City. Pursuant to the sale, Transfer Certificate of Title (TCT) No. T-
22597covering the property was issued in the name of Godofredo. He
thereafter built a house on it.
Godofredo died on January 7, 1974. He was survived by his wife, Baldomera,
and their children, Dante, Helen, and Susan. On March 19, 1979, Baldomera
issued a Certificationin favor of her mother, Melecia. It provided, in effect,
that Baldomera was allowing her mother to build and occupy a house on the
portion of the property.Accordingly, the house was declared for taxation
purposes. The tax declaration presented in evidence showed that Melecia
owned the building on the land owned by Godofredo.
Baldomera died on September 11, 1994.On July 3, 1996, her children
executed an Extrajudicial Settlement with Salewhere they adjudicated unto
themselves the property and sold it to Cagayan Capital College. On August 22,
1996, TCT No. T-2259 was cancelled and TCT No. T-111846 covering the
property was issued in the name of the College.
Melecia died and was survived by her children who continued living in the
house, Gabutan was one of these children. College demanded that said heirs
vacate the premises.
On July 7, 1997, Gabutan, et al. filed a Complaint for Reconveyance of Real
Property, Declaration of Nullity of Contracts, Partition and Damages with Writ
of Preliminary Attachment and Injunctionagainst Nacalaban, et al. and the
College. They alleged that: (1) Melecia bought the property using her own
money but Godofredo had the Deed of Absolute Sale executed in his name
instead of his mother-in-law;(2) Godofredo and Baldomera were only trustees
of the property in favor of the real owner and beneficiary, Melecia;(3) they
only knew about the Extrajudicial Settlement with Sale upon verification with
the Registry of Deeds;and (4) the College was a buyer in bad faith, being
aware they were co-owners of the property.
W/N the action for reconveyance is proper
W/N the college is a buyer in good faith
HELD:
Gabutan, et al., through the testimonies of Felisia, Crisanta, and Trifonia,
established that Melecia's money was used in buying the property, but its
title was placed in Godofredo's name. She purchased the property because
Felisia wanted to build a pharmacy on it. On one occasion in Melecia's house,
and when the entire family was present, Melecia gave Godofredo the money
to purchase the property. Melecia entrusted the money to Godofredo
because he was in Cagayan de Oro, and per Melecia's instruction, the deed of
sale covering the property was placed in his name.It was allegedly her
practice to buy properties and place them in her children's name, but it was
understood that she and her children co-own the properties.
Melecia built a residential building on the property, where her daughter
Crisanta and some of her grandchildren resided. Godofredo also thereafter
built a house on the property. Twice, he also mortgaged the property to
secure loans. Melecia allowed him to do so because she trusted him. After
Godofredo's death, and when Baldomera fell ill, there were family discussions
to transfer the title in Melecia's name so Melecia's children can divide it
together with the rest of Melecia's properties. The plans, however, always fell
through.
Article 1448 of the Civil Code provides in part that there is an implied trust
when property is sold, and the legal estate is granted to one party but the
price is paid by another for the purpose of having the beneficial interest of
the property. The former is the trustee, while the latter is the beneficiary. The
trust created here, which is also referred to as a purchase money resulting
trust, occurs when there is (1) an actual payment of money, property or
services, or an equivalent, constituting valuable consideration; (2) and such
consideration must be furnished by the alleged beneficiary of a resulting
trust. These two elements are present here.
Having established the creation of an implied resulting trust, the action for
reconveyance filed by Gabutan, et al., the heirs of Melecia in whose benefit
the trust was created, is proper. An action for reconveyance is a legal and
equitable remedy granted to the rightful landowner, whose land was
wrongfully or erroneously registered in the name of another, to compel the
registered owner to transfer or reconvey the land to him.
College is not a buyer in good faith. To prove good faith, a buyer of registered
and titled land need only show that he relied on the face of the title to the
property. He need not prove that he made further inquiry for he is not
obliged to explore beyond the four corners of the title. Such degree of proof
of good faith, however, is sufficient only when the following
conditions concur: first, the seller is the registered owner of the
land; second, the latter is in possession thereof; and third, at the time of the
sale, the buyer was not aware of any claim or interest of some other person
in the property, or of any defect or restriction in the title of the seller or in
his capacity to convey title to the property.
Thus, the College, which has the burden to prove the status of being a
purchaser in good faith, is required to prove the concurrence of the above
conditions. This onus probandi cannot be discharged by mere invocation of
the legal presumption of good faith.We find that the College failed to
discharge this burden. They knew that the heirs of Melecia lived on the
property yet did not conduct a proper inquiry into it.The "honesty of
intention" which constitutes good faith implies a freedom from knowledge of
circumstances which ought to put a person on inquiry. If the land purchased
is in the possession of a person other than the vendor, the purchaser must be
wary and must investigate the rights of the actual possessor. Without such
inquiry, the purchaser cannot be said to be in good faith and cannot have any
right over the property.
NOBLEZA V. NUEGA
FACTS:
RESPONDENT SHIRLEY B. NUEGA (SHIRLEY) WAS MARRIED TO ROGELIO A.
NUEGA (ROGELIO) ON SEPTEMBER 1, 1990. UPON THE REQUEST OF ROGELIO,
SHIRLEY SENT HIM MONEY FOR THE PURCHASE OF A RESIDENTIAL LOT IN
MARIKINA WHERE THEY HAD PLANNED TO EVENTUALLY BUILD THEIR HOME.
THE FOLLOWING YEAR, OR ON SEPTEMBER 13, 1989, ROGELIO PURCHASED
THE SUBJECT HOUSE AND LOT FOR ONE HUNDRED TWO THOUSAND PESOS
(P102,000.00) FROM RODEANNA REALTY CORPORATION. SHIRLEY CLAIMS
THAT UPON HER ARRIVAL IN THE PHILIPPINES SOMETIME IN 1989, SHE
SETTLED THE BALANCE FOR THE EQUITY OVER THE SUBJECT PROPERTY WITH
THE DEVELOPER THROUGH SSS8 FINANCING. SHE LIKEWISE PAID FOR THE
SUCCEEDING MONTHLY AMORTIZATIONS.
ON SEPTEMBER 1, 1990, SHIRLEY AND ROGELIO GOT MARRIED AND LIVED IN
THE SUBJECT PROPERTY. THE FOLLOWING YEAR, SHIRLEY RETURNED TO
ISRAEL FOR WORK. WHILE OVERSEAS, SHE RECEIVED INFORMATION THAT
ROGELIO HAD BROUGHT HOME ANOTHER WOMAN, MONICA ESCOBAR, INTO
THE FAMILY HOME. SHE ALSO LEARNED AND WAS ABLE TO CONFIRM UPON
HER RETURN TO THE PHILIPPINES IN MAY 1992, THAT ROGELIO HAD BEEN
INTRODUCING ESCOBAR AS HIS WIFE.
IN JUNE 1992, SHIRLEY FILED TWO CASES AGAINST ROGELIO: ONE FOR
CONCUBINAGE BEFORE THE PROVINCIAL PROSECUTION OFFICE OF RIZAL,
AND ANOTHER FOR LEGAL SEPARATION AND LIQUIDATION OF PROPERTY
BEFORE THE RTC OF PASIG CITY. IN BETWEEN THE FILING OF THESE CASES,
SHIRLEY LEARNED THAT ROGELIO HAD THE INTENTION OF SELLING THE
SUBJECT PROPERTY. SHIRLEY THEN ADVISED THE INTERESTED BUYERS ONE OF
WHOM WAS THEIR NEIGHBOR AND PETITIONER JOSEFINA V. NOBLEZA
(PETITIONER) – OF THE EXISTENCE OF THE CASES THAT SHE HAD FILED
AGAINST ROGELIO AND CAUTIONED THEM AGAINST BUYING THE SUBJECT
PROPERTY UNTIL THE CASES ARE CLOSED AND TERMINATED. NONETHELESS,
UNDER A DEED OF ABSOLUTE SALE DATED DECEMBER 29, 1992, ROGELIO
SOLD THE SUBJECT PROPERTY TO PETITIONER WITHOUT SHIRLEY’S CONSENT
IN THE AMOUNT OF THREE HUNDRED EIGHTY THOUSAND PESOS
(P380,000.00), INCLUDING PETITIONER’S UNDERTAKING TO ASSUME THE
EXISTING MORTGAGE ON THE PROPERTY WITH THE NATIONAL HOME
MORTGAGE FINANCE CORPORATION AND TO PAY THE REAL PROPERTY TAXES
DUE THEREON.
ISSUE:
IS THE DEED OF SALE NULL AND VOID FOR LACK OF THE CONSENT OF THE
WIFE?
HELD:
YES. THE PETITIONER IS NOT A BUYER IN GOOD FAITH. A BUYER CANNOT
CLAIM TO BE AN INNOCENT PURCHASER FOR VALUE BY MERELY RELYING ON
THE TCT OF THE SELLER WHILE IGNORING ALL THE OTHER SURROUNDING
CIRCUMSTANCES RELEVANT TO THE SALE.
THE NULLITY OF THE SALE MADE BY ROGELIO IS NOT PREMISED ON PROOF
OF RESPONDENT’S FINANCIAL CONTRIBUTION IN THE PURCHASE OF THE
SUBJECT PROPERTY. ACTUAL CONTRIBUTION IS NOT RELEVANT IN
DETERMINING WHETHER A PIECE OF PROPERTY IS COMMUNITY PROPERTY
FOR THE LAW ITSELF DEFINES WHAT CONSTITUTES COMMUNITY PROPERTY.
ARTICLE 91 OF THE FAMILY CODE THUS PROVIDES:
ART. 91. UNLESS OTHERWISE PROVIDED IN THIS CHAPTER OR IN THE
MARRIAGE SETTLEMENTS, THE COMMUNITY PROPERTY SHALL CONSIST OF
ALL THE PROPERTY OWNED BY THE SPOUSES AT THE TIME OF THE
CELEBRATION OF THE MARRIAGE OR ACQUIRED THEREAFTER.
THE ONLY EXCEPTIONS FROM THE ABOVE RULE ARE: (1) THOSE EXCLUDED
FROM THE ABSOLUTE COMMUNITY BY THE FAMILY CODE; AND (2) THOSE
EXCLUDED BY THE MARRIAGE SETTLEMENT.
UNDER THE FIRST EXCEPTION ARE PROPERTIES ENUMERATED IN ARTICLE 92
OF THE FAMILY CODE, WHICH STATES:
ART. 92. THE FOLLOWING SHALL BE EXCLUDED FROM THE COMMUNITY
PROPERTY:
(1) PROPERTY ACQUIRED DURING THE MARRIAGE BY GRATUITOUS TITLE BY
EITHER SPOUSE AND THE FRUITS AS WELL AS THE INCOME THEREOF, IF ANY,
UNLESS IT IS EXPRESSLY PROVIDED BY THE DONOR, TESTATOR OR GRANTOR
THAT THEY SHALL FORM PART OF THE COMMUNITY PROPERTY;
(2) PROPERTY FOR PERSONAL AND EXCLUSIVE USE OF EITHER SPOUSE;
HOWEVER, JEWELRY SHALL FORM PART OF THE COMMUNITY PROPERTY;
(3) PROPERTY ACQUIRED BEFORE THE MARRIAGE BY EITHER SPOUSE WHO
HAS LEGITIMATE DESCENDANTS BY A FORMER MARRIAGE, AND THE FRUITS
AS WELL AS THE INCOME, IF ANY, OF SUCH PROPERTY.
SINCE THE SUBJECT PROPERTY DOES NOT FALL UNDER ANY OF THE
EXCLUSIONS PROVIDED IN ARTICLE 92, IT, THEREFORE, FORMS PART OF THE
ABSOLUTE COMMUNITY PROPERTY OF SHIRLEY AND ROGELIO. REGARDLESS
OF THEIR RESPECTIVE CONTRIBUTION TO ITS ACQUISITION BEFORE THEIR
MARRIAGE, AND DESPITE THE FACT THAT ONLY ROGELIO’S NAME APPEARS IN
THE TCT AS OWNER, THE PROPERTY IS OWNED JOINTLY BY THE SPOUSES
SHIRLEY AND ROGELIO.
Spouses Cusi vs Domingo
Facts: The property in dispute was a vacant unfenced lot situated in White
Plains, Quezon City and covered by Transfer Certificate of Title (TCT) No. N-
165606 issued in the name of respondent Lilia V. Domingo by the Registry of
Deeds of Quezon City. It had an area of 658 square meters. In July 1999,
Domingo learned that construction activities were being undertaken on her
property without her consent. She soon unearthed the series of anomalous
transactions affecting her property. On July 18, 1997, one Radelia Sy (Sy),
representing herself as the owner of the property, petitioned the RTC for the
issuance of a new owner’s copy of Domingo’s TCT No. N-165606, appending
to her petition a deed of absolute sale dated July 14, 1997 purportedly
executed in her favor by Domingo; and an affidavit of loss dated July 17,
1997, whereby she claimed that her bag containing the owner’s copy of TCT
No. N-165606 had been snatched from her on July 13, 1997 while she was at
the SM City in North EDSA, Quezon City. The RTC granted Sy’s petition on
August 26, 1997. The Registry of Deeds of Quezon City then issued a new
owner’s duplicate copy of TCT No. N-165606, which was later cancelled by
virtue of the deed of absolute sale dated July 14, 1997, and in its stead the
Registry of Deeds of Quezon City issued TCT No. 186142 in Sy’s name. Sy
subsequently subdivided the property into two, and sold each half by way of
contract to sell to Spouses Edgardo and Ramona Liza De Vera and to Spouses
Alfonso and Maria Angeles Cusi. The existence of the individual contracts to
sell was annotated on the dorsal portion of Sy’s TCT No. 186142 as Entry No.
PE8907/N-186142, stating that the consideration of the sale was
P1,000,000.00 for each set of buyers, or for a total of P2,000,000.00 for the
entire property that had an actual worth of not less than P14,000,000.00. TCT
No. 186142 in the name of Sy was then cancelled by virtue of the deeds of
sale executed between Sy and Spouses De Vera, and between Sy and Spouses
Cusi, to whom were respectively issued TCT No. 189568 and TCT No. 189569.
All the while, the transactions between Sy and the De Vera’s, and between Sy
and the Cusi’s were unknown to Domingo, whose TCT No. N-165606
remained in her undisturbed possession. It turned out that the construction
activities taking place on the property that Domingo learned about were upon
the initiative of the De Veras in the exercise of their dominical and possessory
rights. Domingo commenced this action against Sy and her spouse, the De
Vera’s and the Cusi’s in the RTC, the complaint being docketed as Civil Case
No. Q-99-39312 and entitled Lilia V. Domingo v. Spouses Radelia and Alfred
Sy, Spouses Alfonso G. and Maria Angeles S. Cusi, Spouses Edgardo M. and
Ramona Liza L. De Vera, BPI Family Savings Bank and The Register of Deeds of
Quezon City, seeking the annulment or cancellation of titles, injunction and
damages.
Issue: Whether or not the petitioners are considered purchasers in good faith
and for value thus protected for their rights over the subject land.
Held: No. One of the guiding tenets underlying the Torrens system is the
curtain principle, in that one does not need to go behind the certificate of
title because it contains all the information about the title of its holder. This
principle dispenses with the need of proving ownership by long complicated
documents kept by the registered owner, which may be necessary under a
private conveyancing system, and assures that all the necessary information
regarding ownership is on the certificate of title. Consequently, the avowed
objective of the Torrens system is to obviate possible conflicts of title by
giving the public the right to rely upon the face of the Torrens certificate and,
as a rule, to dispense with the necessity of inquiring further; on the part of
the registered owner, the system gives him complete peace of mind that he
would be secured in his ownership as long as he has not voluntarily disposed
of any right over the covered land.
The Philippines adopted the Torrens system through Act No. 496, also known
as the Land Registration Act, which was approved on November 6, 1902 and
took effect on February 1, 1903. In this jurisdiction, therefore, “a person
dealing in registered land has the right to rely on the Torrens certificate of
title and to dispense with the need of inquiring further, except when the
party has actual knowledge of facts and circumstances that would impel a
reasonably cautious man to make such inquiry”.
The records also show that the forged deed of sale from Domingo to Sy
appeared to be executed on July 14, 1997; that the affidavit of loss by which
Sy would later on support her petition for the issuance of the duplicate
owner’s copy of Domingo’s TCT No. 165606 was executed on July 17, 1997,
the very same day in which Sy registered the affidavit of loss in the Registry of
Deeds of Quezon City; that Sy filed the petition for the issuance of the
duplicate owner’s copy of Domingo’s TCT No. 165606; that the RTC granted
her petition on August 26, 1997; and that on October 31, 1997, a real estate
mortgage was executed in favor of one Emma Turingan, with the mortgage
being annotated on TCT No. 165606 on November 10, 1997.
Being the buyers of the registered realty, the Cusi’s and the De Vera’s were
aware of the aforementioned several almost simultaneous transactions
affecting the property. Their awareness, if it was not actual, was at least
presumed, and ought to have put them on their guard, for, as the CA pointed
out, the RTC observed that “[t]hese almost simultaneous transactions,
particularly the date of the alleged loss of the TCT No. 165606 and the
purported Deed of Sale, suffice[d] to arouse suspicion on [the part of] any
person dealing with the subject property.” Simple prudence would then have
impelled them as honest persons to make deeper inquiries to clear the
suspiciousness haunting Sy’s title. But they still went on with their respective
purchase of the property without making the deeper inquiries. In that regard,
they were not acting in good faith.
Another circumstance indicating that the Cusis and the De Veras were not
innocent purchasers for value was the gross undervaluation of the property in
the deeds of sale at the measly price of P1,000,000.00 for each half when the
true market value was then in the aggregate of at least P14,000,000.00 for
the entire property. Even if the undervaluation was to accommodate the
request of Sy to enable her to minimize her liabilities for the capital gains tax,
their acquiescence to the fraud perpetrated against the Government, no less,
still rendered them as parties to the wrongdoing. They were not any less
guilty at all. In the ultimate analysis, their supposed passivity respecting the
arrangement to perpetrate the fraud was not even plausible, because they
knew as the buyers that they were not personally liable for the capital gains
taxes and thus had nothing to gain by their acquiescence. There was simply
no acceptable reason for them to have acquiesced to the fraud, or for them
not to have rightfully insisted on the declaration of the full value of the realty
in their deeds of sale. By letting their respective deeds of sale reflect the
grossly inadequate price, they should suffer the consequences, including the
inference of their bad faith in transacting the sales in their favor.
SABERON vs. VENTANILLA, JR.
Facts:
On March 3, 1970, Manila Remnant Co., Inc. (MRCI) and A.U. Valencia & Co.
Inc. (AUVC) executed two (2) contracts to sell in favor of Oscar C. Ventanilla,
Jr. and Carmen Gloria D. Ventanilla (Ventanillas). MRCI resold the same
property to Carlos Crisostomo (Crisostomo).
Aggrieved, the Ventanillas commenced an action for specific performance,
annulment of deeds and damages against MRCI, AUVC, and Crisostomo with
the Court of First Instance. The CFI Quezon City rendered a decision in favor
of the Ventanillas. The CA sustained the CFI Quezon City’s decision in toto.
The Ventanillas moved for the issuance of a writ of execution. The writ was
issued and served upon MRCI.
However, MRCI alleged that the subject properties could not longer be
delivered to the Ventanillas because they had already been sold to Samuel
Marquez (Marquez)
The case was elevated to this Court where MRCI argued that the sale of the
properties to Marquez was valid because at the time of the sale, the issue of
the validity of the sale to the Ventanillas had not yet been resolved. Further,
there was no specific injunction against it re-selling the property. As a buyer
in good faith, Marquez had a right to rely on the recitals in the certificate of
title. The subject matter of the controversy having been passed to an
innocent purchaser for value, the execution of the absolute deed of sale in
favor of the Ventanillas could not be ordered by the trial court. Yet the court
ruled in favor of the Vetanillas. As it turned out, the execution of the
judgment in favor of the Ventanillas was yet far from fruition. Samuel Cleofe,
Register of Deeds for Quezon City (ROD Cleofe) revealed to them, that on
March 11, 1992, MRCI registered a deed of absolute sale to Marquez who
eventually sold the same property to the Saberons, which conveyance was
registered in July 1992. ROD Cleofe opined that a judicial order for the
cancellation of the titles in the name of the Saberons was essential before he
complied with the writ of execution in Civil Case No. 26411. Apparently, the
notice of levy, through inadvertence, was not carried over to the title issued
to Marquez, the same being a junior encumbrance which was entered after
the contract to sell to Marquez had already been annotated.
Once again, the Ventanillas were constrained to go to court to seek the
annulment of the deed of sale executed between MRCI and Marquez as well
as the deed of sale between Marquez and the Saberons, as the fruits of void
conveyances. RTC ruled in favor of the Ventanillas
Meanwhile, the Saberons filed a case in the CA relying on one central
argument—that they were purchasers in good faith, having relied on the
correctness of the certificates of title covering the lots in question; and
therefore, holders of a valid and indefeasible title. CA ruled in favor of the
Ventanillas. The Saberons filed the present petition.
Unknown to the Saberons, the former owner of the properties had entered
into contracts to sell with the Ventanillas, way back in 1970. It was only upon
receipt of the summons in the case filed by the Ventanillas with the RTC that
they learned of the present controversy.
With the RTC and the CA rulings against their title over the properties, the
Saberons now come to the Court with their vehement insistence that they
were purchasers in good faith and for value. Before purchasing the lots, they
exercised due diligence and found no encumbrance or annotations on the
titles. At the same time, the Ventanillas also failed to rebut the presumption
of their good faith as there was no showing that they confederated with MRCI
and its officers to deprive the Ventanillas of their right over the subject
properties.
According to the Saberons, the CA likewise erred in ruling that there was no
constructive notice of the levy made upon the subject lands.
Issue:
Whether or not there was constructive notice of levy as an encumbrance
prior to the sale to the Saberons.
Ruling:
the Court is beckoned to rule on two conflicting rights over the subject
properties: the right of the Ventanillas to acquire the title to the registered
land from the moment of inscription of the notice of levy on the day book (or
entry book), on one hand; and the right of the Saberons to rely on what
appears on the certificate of title for purposes of voluntary dealings with the
same parcel of land, on the other.
The Saberons could not be said to have authored the entanglement they
found themselves in. No fault can be attributed to them for relying on the
face of the title presented by Marquez. In ultimately ruling for the
Ventanillas, the courts a quo focused on the superiority of their notice of levy
and the constructive notice against the whole world which it had produced
and which effectively bound third persons including the Saberons.
This complex situation could have been avoided if it were not for the failure
of ROD Cleofe to carry over the notice of levy to Marquez’s title, serving as a
senior encumbrance that might have dissuaded the Saberons from purchasing
the properties.
It is undeniable, therefore, that no title was transferred to Marquez upon the
annotation of the contract to sell on MRCI’s title. As correctly found by the
trial court, the contract to sell cannot be substituted by the Deed of Absolute
Sale as a "mere conclusion" of the previous contract since the owners of the
properties under the two instruments are different. Considering that the
deed of sale in favor of Marquez was of later registration, the notice of levy
should have been carried over to the title as a senior encumbrance.
The fact that the notice of levy on attachment was not annotated on the
original title on file in the Registry of Deeds, which resulted in its non-
annotation on the title TCT No. PT-94912, should not prejudice petitioner. As
long as the requisites required by law in order to effect attachment are
complied with and the appropriate fees duly paid, attachment is duly
perfected. The attachment already binds the land. This is because what
remains to be done lies not within the petitioner’s power to perform but is a
duty incumbent solely on the Register of Deeds.
In the case at bench, the notice of levy covering the subject property was
annotated in the entry book of the ROD QC prior to the issuance of a TCT in
the name of the Saberons. Clearly, the Ventanillas’ levy was placed on record
prior to the sale. This shows the superiority and preference in rights of the
Ventanillas over the property as against the Saberons.
BPI vs Sanchez
Facts:
The Sanchezes entered into an agreement with Garcia (doing business in the
name of TSEI) to sell for P 1.850 million their parcel of land, with an earnest
money of 50k. They agreed that Garcia shall pay the purchase price in cash
once the property is vacated. The Sanchezes entrusted to Garcia the owner’s
copy of TCT because it was agreed that he shall take care of all the
documentations necessary for the transaction.
Immediately after the property was vacated, Garcia took possession and
began constructing townhouses thereon without the Sanchezes’ knowledge
and consent. While these developments were ongoing, Garcia failed to pay
the purchase price. Subsequently, the Sanchezes were given six checks
representing the amount of the purchase price. Four of these checks were
postdated, thus further delaying their overdue payment. To properly
document the check payments, they made an agreement stipulating that if
one of the checks were dishonored, the Sanchezes may rescind the contract.
The last two checks were dishonored, so the Sanchezes rescinded the
contract and demanded from Garcia the return of the TCT. However, Garcia
refused to return the documents and vacate the property.
Meanwhile, the Sanchezes found out that Garcia/TSEI were selling
townhouses situated in the property. So they informed the HLURB, the City
Building Official and the RD in Quezon City, of the illegal constructions being
made thereon. The HLURB issued a Cease and Decease Order enjoining Garcia
/ TSEI from further developing and selling the townhouses. Such orders were
left unheeded. In fact, Garcia were already able to sell many of the units to
different individuals and entities, and even mortgaged the property.
Consequently, the Sanchezes filed before the RTC a complaint for rescission,
restitution and damages with TRO.
The purchasers and mortgagee who are the intervenors in this case were
found by the court to be in bad faith. On the other hand, the Sanchezes were
held to be in good faith and not negligent.
Issue 1: W/N rescission of the contract was barred by the subsequent
transfer of the property
No. Under Article 1191 of the Civil Code, rescission is available to a party in a
reciprocal obligation where one party fails to comply with it. As an exception
to this rule, Article 1385 provides that rescission shall not take place if the
subject matter of the prior agreement is already in the hands of a third party
who did not act in bad faith.
Here, the failure of Garcia/TSEI to pay the consideration for the sale of the
property entitled the Sanchezes to rescind the Agreement. And in view of the
finding that the intervenors acted in bad faith in purchasing the property from
Garcia, the subsequent transfer in their favor did not and cannot bar
rescission.
Issue 2: W/N Article 449 – 450 of the Civil Code is applicable to the
Sanchezes
Yes. Bad faith on the part of the purchasers leads to the application of Art
449-450.
Consequently, the Sanchezes have the following options: (1) acquire the
property with the townhouses and other buildings and improvements
that may be thereon without indemnifying TSEI or the intervenors; (2)
demand from TSEI or the intervenors to demolish what has been built on
the property at the expense of TSEI or the intervenors; or (3) ask the
intervenors to pay the price of the land.
As such, the Sanchezes must choose from among these options within 30
days from finality of the decision. Should the Sanchezes opt to ask from the
intervenors the value of the land, the case shall be remanded to the RTC for
the sole purpose of determining the fair market value of the lot at the time
the same were taken from the Sanchezes. If the Sanchezes decide to
appropriate the townhouses, other structures and improvements as their
own pursuant to Art 449, then the intervenors-purchasers shall be ordered to
vacate said premises within a reasonable time from notice of the finality of
the decision by the Sanchezes. They have a right to recover their investment
in the townhouses from Garcia and TSEI. If the Sanchezes do not want to
make use of the townhouses and improvements on the subject lot, then the
purchasers can be ordered to demolish said townhouses or if they don’t
demolish the same within a reasonable time, then it can be demolished at
their expense. On the 3rd option, if the Sanchezes do not want to appropriate
the townhouses or have the same demolished, then they can ask that the
townhouse purchasers pay to them the fair market value of the respective
areas allotted to their respective townhouses subject of their deeds of
sale. ##
Relevant Provisions
Builders in Bad Faith
Article 449. He who builds, plants or sows in bad faith on the land of
another, loses what is built, planted or sown without right to indemnity.
Article 450. The owner of the land on which anything has been built, planted
or sown in bad faith may demand the demolition of the work, or that the
planting or sowing be removed, in order to replace things in their former
condition at the expense of the person who built, planted or sowed; or he
may compel the builder or planter to pay the price of the land, and the
sower the proper rent.
Dela Merced v. GSIS
FACTS:
This case involves five registered parcels of land located within the Antonio
Subdivision, Pasig City Lots 6, 7, 8, and 10 of Block 2 and Lot 8 of Block 8
(subject properties). These lots were originally owned by, and titled in the
name of, Jose C. Zulueta (Zulueta), as evidenced by Transfer Certificate of
Title (TCT) No. 26105 which contains several lots other than the subject
properties within the Antonio Subdivision.
Later, the Zulueta spouses mortgaged several lots contained in TCT No. 26105
to the GSIS, which eventually foreclosed on the mortgaged properties,
including the subject properties. Upon consolidation of GSISs ownership, TCT
No. 26105 in Zuluetas name was cancelled, and TCT No. 23554 was issued in
GSISs name.
Upon learning of the foreclosure, petitioners predecessor, Francisco Dela
Merced (Dela Merced), later on substituted by his heirs, filed a complaint
praying for the nullity of the GSIS foreclosure on the subject properties (Lots
6, 7, 8, and 10 of Block 2 and Lot 8 of Block 8) on the ground that he, not the
Zuluetas, was the owner of these lots at the time of the foreclosure. Dela
Merced also impleaded Victor and Milagros Manlongat, who were claiming
Lot 6, Block 2 by virtue of a sale executed by the GSIS in their daughters
(Elizabeth Manlongat) favor. Dela Merced argued that, due to the nullity of
GSISs foreclosure over the subject properties, it had no ownership right that
could be transferred to Elizabeth Manlongat.
ISSUES:
Whether or not the foreclosure proceeding conducted by GSIS is null and
void, including the consolidation of ownership thereof by the GSIS, and the
sale of the lots to defendant Manlongat spouses
HELD:
Petitioners Merced aver that when the Zuluetas mortgaged their properties
to GSIS on October 15, 1957, they were no longer the owners of the lots
subject of this litigation, the same having been sold to Francisco dela Merced
by virtue of the contract to sell executed on September 3, 1957. Hence, the
mortgage was void from its inception and GSIS, as mortgagee, acquired no
better right notwithstanding the registration of the mortgage. Petitioners also
argued that GSIS was a mortgagee in bad faith as it had been negligent in
ascertaining and investigating the condition of the subject lots mortgaged to
it as well as the rights of petitioners who were already in possession thereof
at the time of mortgage. Furthermore, petitioners cite the judicial admission
of respondent GSIS in its answer before the trial court, wherein it recognized
the rights of ownership of Francisco dela Merced over Lot 8, Block 8 and of
Eva Mendoza dela Merced over Lot 10, Block 2 of TCT 26105.
The foreclosure sale of Lot Nos. 6, 7, 8 and 10 of Block 2 and Lot 8 of Block 8
of the property originally covered by TCT 26105, and the subsequent
certificates of titles issued to GSIS as well as TCT No. PT-94007 in the name of
Elizabeth Manlongat, are declared NULL AND VOID.