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SECOND DIVISION
[G.R. No. 132161. January 17, 2005.]
CONSOLIDATED RURAL BANK (CAGAYAN VALLEY),
INC., petitioner, vs. THE HONORABLE COURT OF
APPEALS and HEIRS OF TEODORO DELA
CRUZ, respondents.
DECISION
TINGA, J p:
Petitioner Consolidated Rural Bank, Inc. of Cagayan Valley filed the
instant Petition for Certiorari 1 under Rule 45 of the Revised Rules of
Court, seeking the review of the Decision 2 of the Court of Appeals
Twelfth Division in CA-G.R. CV No. 33662, promulgated on 27 May
1997, which reversed the judgment 3 of the lower court in favor of
petitioner; and the Resolution 4 of the Court of Appeals, promulgated
on 5 January 1998, which reiterated its Decision insofar as respondents
Heirs of Teodoro dela Cruz (the Heirs) are concerned.
From the record, the following are the established facts:
Rizal, Anselmo, Gregorio, Filomeno and Domingo, all surnamed Madrid
(hereafter the Madrid brothers), were the registered owners of Lot No.
7036-A of plan Psd-10188, Cadastral Survey 211, situated in San
Mateo, Isabela per Transfer Certificate of Title (TCT) No. T-8121 issued
by the Register of Deeds of Isabela in September 1956. 5
On 23 and 24 October 1956, Lot No. 7036-A was subdivided into
several lots under subdivision plan Psd-50390. One of the resulting
subdivision lots was Lot No. 7036-A-7 with an area of Five Thousand
Nine Hundred Fifty-Eight (5,958) square meters. 6
On 15 August 1957, Rizal Madrid sold part of his share identified as Lot
No. 7036-A-7, to Aleja Gamiao (hereafter Gamiao) and Felisa Dayag
(hereafter, Dayag) by virtue of a Deed of Sale, 7 to which his brothers
Anselmo, Gregorio, Filomeno and Domingo offered no objection as
evidenced by their Joint Affidavit dated 14 August 1957. 8 The deed of
sale was not registered with the Office of the Register of Deeds of
Isabela. However, Gamiao and Dayag declared the property for
taxation purposes in their names on March 1964 under Tax Declaration
No. 7981. 9
On 28 May 1964, Gamiao and Dayag sold the southern half of Lot No.
7036-A-7, denominated as Lot No. 7036-A-7-B, to Teodoro dela
Cruz, 10 and the northern half, identified as Lot No. 7036-A-7-A, 11 to
Restituto Hernandez. 12 Thereupon, Teodoro dela Cruz and Restituto
Hernandez took possession of and cultivated the portions of the
property respectively sold to them. 13
Later, on 28 December 1986, Restituto Hernandez donated the
northern half to his daughter, Evangeline Hernandez-del
Rosario. 14 The children of Teodoro dela Cruz continued possession of
the southern half after their father's death on 7 June 1970. ISCHET
In a Deed of Sale 15 dated 15 June 1976, the Madrid brothers
conveyed all their rights and interests over Lot No. 7036-A-7 to Pacifico
Marquez (hereafter, Marquez), which the former confirmed 16 on 28
February 1983. 17 The deed of sale was registered with the Office of
the Register of Deeds of Isabela on 2 March 1982. 18
Subsequently, Marquez subdivided Lot No. 7036-A-7 into eight (8) lots,
namely: Lot Nos. 7036-A-7-A to 7036-A-7-H, for which TCT Nos. T149375 to T-149382 were issued to him on 29 March 1984. 19 On the
same date, Marquez and his spouse, Mercedita Mariana, mortgaged
Lots Nos. 7036-A-7-A to 7036-A-7-D to the Consolidated Rural Bank,
Inc. of Cagayan Valley (hereafter, CRB) to secure a loan of One
Hundred Thousand Pesos (P100,000.00). 20These deeds of real estate
mortgage were registered with the Office of the Register of Deeds on 2
April 1984.
On 6 February 1985, Marquez mortgaged Lot No. 7036-A-7-E likewise
to the Rural Bank of Cauayan (RBC) to secure a loan of Ten Thousand
Pesos (P10,000.00). 21
As Marquez defaulted in the payment of his loan, CRB caused the
foreclosure of the mortgages in its favor and the lots were sold to it as
the highest bidder on 25 April 1986. 22
On 31 October 1985, Marquez sold Lot No. 7036-A-7-G to Romeo
Calixto (Calixto). 23
Claiming to be null and void the issuance of TCT Nos. T-149375 to T149382; the foreclosure sale of Lot Nos. 7036-A-7-A to 7036-A-7-D; the
mortgage to RBC; and the sale to Calixto, the Heirs-now respondents
herein-represented by Edronel dela Cruz, filed a case 24 for
reconveyance and damages of the southern portion of Lot No. 7036-A
(hereafter, the subject property) against Marquez, Calixto, RBC and
CRB in December 1986.
Evangeline del Rosario, the successor-in-interest of Restituto
Hernandez, filed with leave of court a Complaint in
Intervention 25 wherein she claimed the northern portion of Lot No.
7036-A-7.
In the Answer to the Amended Complaint, 26 Marquez, as defendant,
alleged that apart from being the first registrant, he was a buyer in
good faith and for value. He also argued that the sale executed by
Rizal Madrid to Gamiao and Dayag was not binding upon him, it being
unregistered. For his part, Calixto manifested that he had no interest in
the subject property as he ceased to be the owner thereof, the same
having been reacquired by defendant Marquez. 27
CRB, as defendant, and co-defendant RBC insisted that they were
mortgagees in good faith and that they had the right to rely on the
titles of Marquez which were free from any lien or encumbrance. 28
After trial, the Regional Trial Court, Branch 19 of Cauayan, Isabela
(hereafter, RTC) handed down a decision in favor of the defendants,
disposing as follows:
WHEREFORE, in view of the foregoing considerations,
judgment is hereby rendered:
1. Dismissing the amended complaint and the complaint
in intervention;
2. Declaring Pacifico V. Marquez the lawful owner of Lots
7036-A-7 now Lots 7036-A-7-A to 7036-A-7-H, inclusive,
covered by TCT Nos. T-149375 to T-149382, inclusive;
3. Declaring the mortgage of Lots 7036-A-7-A, 7036-A-7B, 7036-A-7-C and 7036-A-7-D in favor of the defendant
Consolidated Rural Bank (Cagayan Valley) and of Lot
7036-A-7-E in favor of defendant Rural Bank of Cauayan
by Pacifico V. Marquez valid; SIcCTD
4. Dismissing the counterclaim of Pacifico V. Marquez; and
5. Declaring the Heirs of Teodoro dela Cruz the lawful
owners of the lots covered by TCT Nos. T-33119, T-33220
and T-7583.
No pronouncement as to costs.
SO ORDERED. 29
In support of its decision, the RTC made the following findings:
With respect to issues numbers 1-3, the Court therefore
holds that the sale of Lot 7036-A-7 made by Rizal Madrid
to Aleja Gamiao and Felisa Dayag and the subsequent
conveyances to the plaintiffs and intervenors are all valid
and the Madrid brothers are bound by said contracts by
virtue of the confirmation made by them on August 14,
1957 (Exh. B).
Are the defendants Pacifico V. Marquez and Romeo B.
Calixto buyers in good faith and for value of Lot 7036-A7? jur2005cda
It must be borne in mind that good faith is always
presumed and he who imputes bad faith has the burden
of proving the same (Art. 527, Civil Code). The Court has
carefully scrutinized the evidence presented but finds
nothing to show that Marquez was aware of the plaintiffs'
and intervenors' claim of ownership over this lot. TCT No.
T-8121 covering said property, before the issuance of
Marquez' title, reveals nothing about the plaintiffs' and
intervenors' right thereto for it is an admitted fact that
the conveyances in their favor are not registered.
The Court is therefore confronted with two sales over the
same property. 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 taken
possession thereof in good faith, if it should be
movable property.
2. Declaring null and void the deed of sale dated June 15,
1976 between Pacifico V. Marquez and the Madrid
brothers covering said Lot 7036-A-7;
3. Declaring null and void the mortgage made by
defendant Pacifico V. Marquez of Lot Nos. 7036-A-7-A,
7036-A-7-B, 7036-A-7-C and 7036-A-7-D in favor of the
defendant Consolidated Rural Bank and of Lot 7036-A-7-E
in favor of defendant Rural Bank of Cauayan; and
4. Ordering Pacifico V. Marquez to reconvey Lot 7036-A-7
to the heirs of Teodoro dela Cruz and Evangeline
Hernandez-del Rosario.
No pronouncement as to costs.
SO ORDERED. 35
In upholding the claim of the Heirs, the Court of Appeals held that
Marquez failed to prove that he was a purchaser in good faith and for
value. It noted that while Marquez was the first registrant, there was no
showing that the registration of the deed of sale in his favor was
coupled with good faith. Marquez admitted having knowledge that the
subject property was "being taken" by the Heirs at the time of the
sale. 36 The Heirs were also in possession of the land at the time.
According to the Decision, these circumstances along with the subject
property's attractive location it was situated along the National
Highway and was across a gasoline station should have put Marquez
on inquiry as to its status. Instead, Marquez closed his eyes to these
matters and failed to exercise the ordinary care expected of a buyer of
real estate. 37
Anent the mortgagees RBC and CRB, the Court of Appeals found that
they merely relied on the certificates of title of the mortgaged
properties. They did not ascertain the status and condition thereof
according to standard banking practice. For failure to observe the
ordinary banking procedure, the Court of Appeals considered them to
have acted in bad faith and on that basis declared null and void the
mortgages made by Marquez in their favor. 38
Dissatisfied, CRB filed a Motion for Reconsideration 39 pointing out,
among others, that the Decision promulgated on 27 May 1997 failed to
establish good faith on the part of the Heirs. Absent proof of
possession in good faith, CRB avers, the Heirs cannot claim ownership
over the subject property.
In a Resolution 40 dated 5 January 1998, the Court of Appeals stressed
its disbelief in CRB's allegation that it did not merely rely on the
certificates of title of the properties and that it conducted credit
investigation and standard ocular inspection. But recalling that
intervenor Evangeline del Rosario had lost her standing as an
appellant, the Court of Appeals accordingly modified its
previous Decision, as follows:
WHEREFORE, the decision dated May 27, 1997, is hereby
MODIFIED to read as follows:
WHEREFORE, the decision appealed from is hereby
REVERSED and SET ASIDE insofar as plaintiffs-appellants
are concerned. Accordingly, judgment is hereby rendered
as follows:
1. Declaring the Heirs of Teodoro dela Cruz the lawful
owners of the southern half portion of Lot No. 7036-A-7;
2. Declaring null and void the deed of sale dated June 15,
1976 between Pacifico V. Marquez and the Madrid
brothers insofar as the southern half portion of Lot NO.
(sic) 7036-A-7 is concerned;
the property in its entirety for taxation purposes in their names. On the
other hand, the vendors in the other or later deed were the Madrid
brothers but at that time they were no longer the owners since they
had long before disposed of the property in favor of Gamiao and
Dayag. cAaTED
Citing Manresa, the Court of Appeals in 1936 had occasion to explain
the proper application of Article 1473 of the Old Civil Code (now Article
1544 of the New Civil Code) in the case of Carpio v. Exevea, 46 thus:
In order that tradition may be considered performed, it is
necessary that the requisites which it implies must have
been fulfilled, and one of the indispensable requisites,
according to the most exact Roman concept, is that the
conveyor had the right and the will to convey the thing.
The intention to transfer is not sufficient; it only
constitutes the will. It is, furthermore, necessary that the
conveyor could juridically perform that act; that he had
theright to do so, since a right which he did not possess
could not be vested by him in the transferee.
This is what Article 1473 has failed to express: the
necessity for the preexistence of the right on the part of
the conveyor. But even if the article does not express it, it
would be understood, in our opinion, that circumstance
constitutes one of the assumptions upon which the article
is based.
This construction is not repugnant to the text of Article
1473, and not only is it not contrary to it, but it explains
and justifies the same. (Vol. 10, 4th ed., p. 159) 47
In that case, the property was transferred to the first purchaser in 1908
by its original owner, Juan Millante. Thereafter, it was sold to plaintiff
Carpio in June 1929. Both conveyances were unregistered. On the
same date that the property was sold to the plaintiff, Juan Millante sold
the same to defendant Exevea. This time, the sale was registered in
the Registry of Deeds. But despite the fact of registration in
defendant's favor, the Court of Appeals found for the plaintiff and
refused to apply the provisions of Art. 1473 of the Old Civil Code,
reasoning that "on the date of the execution of the document, Exhibit
1, Juan Millante did not and could not have any right whatsoever to the
parcel of land in question." 48
Citing a portion of a judgment dated 24 November 1894 of the
Supreme Court of Spain, the Court of Appeals elucidated further:
Article 1473 of the Civil Code presupposes the right of the
vendor to dispose of the thing sold, and does not limit or
alter in this respect the provisions of the Mortgage Law in
force, which upholds the principle that registration does
not validate acts or contracts which are void, and that
although acts and contracts executed by persons who, in
the Registry, appear to be entitled to do so are not
invalidated once recorded, even if afterwards the right of
such vendor is annulled or resolved by virtue of a
previous unrecorded title, nevertheless this refers only to
third parties. 49
In a situation where not all the requisites are present which would
warrant the application of Art. 1544, the principle of prior tempore,
potior jure or simply "he who is first in time is preferred in
right," 50 should apply. 51 The only essential requisite of this rule is
priority in time; in other words, the only one who can invoke this is the
first vendee. Undisputedly, he is a purchaser in good faith because at
the time he bought the real property, there was still no sale to a
second vendee. 52 In the instant case, the sale to the Heirs by Gamiao
and Dayag, who first bought it from Rizal Madrid, was anterior to the
sale by the Madrid brothers to Marquez. The Heirs also had possessed
the subject property first in time. Thus, applying the principle, the
Heirs, without a scintilla of doubt, have a superior right to the subject
property.
Moreover, it is an established principle that no one can give what one
does not have nemo dat quod non habet. Accordingly, one can sell
only what one owns or is authorized to sell, and the buyer can acquire
no more than what the seller can transfer legally. 53 In this case, since
the Madrid brothers were no longer the owners of the subject property
at the time of the sale to Marquez, the latter did not acquire any right
to it.
In any event, assuming arguendo that Article 1544 applies to the
present case, the claim of Marquez still cannot prevail over the right of
the Heirs since according to the evidence he was not a purchaser and
registrant in good faith.
Following Article 1544, in the double sale of an immovable, the rules of
preference are:
(a) the first registrant in good faith;
(b) should there be no entry, the first in possession in
good faith; and aDcHIS
In the instant case, the actions of Marquez have not satisfied the
requirement of good faith from the time of the purchase of the subject
property to the time of registration. Found by the Court of Appeals,
Marquez knew at the time of the sale that the subject property was
being claimed or "taken" by the Heirs. This was a detail which could
indicate a defect in the vendor's title which he failed to inquire into.
Marquez also admitted that he did not take possession of the property
and at the time he testified he did not even know who was in
possession. Thus, he testified on direct examination in the RTC as
follows:
ATTY. CALIXTO
Q Can you tell us the circumstances to your buying the
land in question?
A In 1976 the Madrid brothers confessed to me their
problems about their lots in San Mateo that they
were being taken by Teodoro dela Cruz and Atty.
Teofilo A. Leonin; that they have to pay the lawyer's
fee of P10,000.00 otherwise Atty. Leonin will
confiscate the land. So they begged me to buy their
properties, some of it. So that on June 3, 1976, they
came to Cabagan where I was and gave them
P14,000.00, I think. We have talked that they will
execute the deed of sale.
Q Why is it, doctor, that you have already this deed of
sale, Exh. 14, why did you find it necessary to have
this Deed of Confirmation of a Prior Sale, Exh. 15?
A Because as I said a while ago that the first deed of sale
was submitted to the Register of Deeds by Romeo
Badua so that I said that because when I became a
Municipal Health Officer in San Mateo, Isabela, I
true owner, nor can they be used for the perpetration of fraud; neither
do they permit one to enrich himself at the expense of others. 66
We also find that the Court of Appeals did not err in awarding the
subject property to the Heirs absent proof of good faith in their
possession of the subject property and without any showing of
possession thereof by Gamiao and Dayag.
As correctly argued by the Heirs in their Comment, 67 the requirement
of good faith in the possession of the property finds no application in
cases where there is no second sale. 68 In the case at bar, Teodoro
dela Cruz took possession of the property in 1964 long before the sale
to Marquez transpired in 1976 and a considerable length of time
eighteen (18) years in fact before the Heirs had knowledge of the
registration of said sale in 1982. As Article 526 of the Civil Code aptly
provides, "(H)e is deemed a possessor in good faith who is not aware
that there exists in his title or mode of acquisition any flaw which
invalidates it." Thus, there was no need for the appellate court to
consider the issue of good faith or bad faith with regard to Teodoro dela
Cruz's possession of the subject property.
Likewise, we are of the opinion that it is not necessary that there
should be any finding of possession by Gamiao and Dayag of the
subject property. It should be recalled that the regularity of the sale to
Gamiao and Dayag was never contested by Marquez. 69 In fact the
RTC upheld the validity of this sale, holding that the Madrid brothers
are bound by the sale by virtue of their confirmation thereof in
the Joint Affidavit dated 14 August 1957. That this was executed a day
ahead of the actual sale on 15 August 1957 does not diminish its
integrity as it was made before there was even any shadow of
controversy regarding the ownership of the subject property. CDTHSI
Moreover, as this Court declared in the case of Heirs of Simplicio
Santiago v. Heirs of Mariano E. Santiago, 70 tax declarations "are
HELD: NO.
In the case at bar, the subject property was not transferred to several
purchasers by a single vendor. In the first deed of sale, the vendors
were Gamiao and Dayag whose right to the subject property originated
from their acquisition thereof from Rizal Madrid with the conformity of
all the other Madrid brothers. On the other hand, the vendors in the
other or later deed were the Madrid brothers but at that time they were
no longer the owners since they had long before disposed of the
property in favor of Gamiao and Dayag.
In a situation where not all the requisites are present which would
warrant the application of Art. 1544, the principle of prior tempore,
potior jure or simply he who is first in time is preferred in right,
should apply. The only essential requisite of this rule is priority in
time; in other words, the only one who can invoke this is the first
vendee. Undisputedly, he is a purchaser in good faith because at the
time he bought the real property, there was still no sale to a second
vendee. In the instant case, the sale to the Heirs by Gamiao and
Dayag, who first bought it from Rizal Madrid, was anterior to the sale
by the Madrid brothers to Marquez. The Heirs also had possessed the
subject property first in time. Thus, applying the principle, the Heirs,
without a scintilla of doubt, have a superior right to the subject
property.
Moreover, it is an established principle that no one can give what one
does not havenemo dat quod non habet. Accordingly, one can sell
only what one owns or is authorized to sell, and the buyer can acquire
no more than what the seller can transfer legally.53 In this case, since
the Madrid brothers were no longer the owners of the subject property
at the time of the sale to Marquez, the latter did not acquire any right
to it.
NOTES:
DECISION
MENDOZA, J p:
This is a petition for review on certiorari of the decision, dated
September 7, 1995, and resolution, dated January 31, 1996, of the
Court of Appeals, which affirmed the decisions of the Regional Trial
Court, Branches 25 1 and 28, 2 Cabanatuan City, finding private
respondents spouses Reynaldo and Susan Veneracion owners of the
land in dispute, subject to petitioner's rights as a builder in good
faith. CHcESa
The facts are as follows:
Sometime in February 1981, private respondents Godofredo De la Paz
and his sister Manuela De la Paz, married to Maximo Hipolito, entered
into an oral contract with petitioner Rev. Fr. Dante Martinez, then
Assistant parish priest of Cabanatuan City, for the sale of Lot No. 1337A-3 at the Villa Fe Subdivision in Cabanatuan City for the sum of
P15,000.00. The lot is located along Maharlika Road near the Municipal
Hall of Cabanatuan City. At the time of the sale, the lot was still
registered in the name of Claudia De la Paz, mother of private
respondents, although the latter had already sold it to private
respondent Manuela de la Paz by virtue of a Deed of Absolute Sale
dated May 26, 1976 (Exh. N/Exh. 2-Veneracion). 3 Private respondent
Manuela subsequently registered the sale in her name on October 22,
1981 and was issued TCT No. T-40496 (Exh. 9). 4 When the land was
offered for sale to petitioner, private respondents De la Paz were
accompanied by their mother, since petitioner dealt with the De la
Pazes as a family and not individually. He was assured by them that the
lot belonged to Manuela De la Paz. It was agreed that petitioner would
give a downpayment of P3,000.00 to private respondents De la Paz and
that the balance would be payable by installment. After giving the
P3,000.00 downpayment, petitioner started the construction of a house
on the lot after securing a building permit from the City Engineer's
Office on April 23, 1981, with the written consent of the then registered
FREDDIE DELA
PAZ 10
However, private respondents De la Paz never delivered the Deed of
Sale they promised to petitioner.
In the meantime, in a Deed of Absolute Sale with Right to Repurchase
dated October 28, 1981 (Exh. 10), 11 private respondents De la Paz
sold three lots with right to repurchase the same within one year to
private respondents spouses Reynaldo and Susan Veneracion for the
sum of P150,000.00. One of the lots sold was the lot previously sold to
petitioner. 12
Reynaldo Veneracion had been a resident of Cabanatuan City since
birth. He used to pass along Maharlika Highway in going to the
Municipal Hall or in going to and from Manila. Two of the lots subject of
the sale were located along Maharlika Highway, one of which was the
lot sold earlier by the De la Pazes to petitioner. The third lot
(hereinafter referred to as the Melencio lot) was occupied by private
respondents De la Paz. Private respondents Veneracion never took
actual possession of any of these lots during the period of redemption,
but all titles to the lots were given to him. 13
Before the expiration of the one year period, private respondent
Godofredo De la Paz informed private respondent Reynaldo Veneracion
that he was selling the three lots to another person for P200,000.00.
Indeed, private respondent Veneracion received a call from a Mr.
Tecson verifying if he had the titles to the properties, as private
respondents De la Paz were offering to sell the two lots along Maharlika
Highway to him (Mr. Tecson) for P180,000.00 The offer included the lot
purchased by petitioner in February, 1981. Private respondent
Veneracion offered to purchase the same two lots from the De la Pazes
for the same amount. The offer was accepted by private respondents
De la Paz. Accordingly, on June 2, 1983, a Deed of Absolute Sale was
During the pre-trial conference, the parties agreed to have the case
decided under the Rules on Summary Procedure and defined the issues
as follows:
1. Whether or not defendant (now petitioner) may be
judicially ejected. AcSCaI
2. Whether or not the main issue in this case is
ownership.
3. Whether or not damages may be awarded. 21
On January 29, 1987, the trial court rendered its decision, pertinent
portions of which are quoted as follows:
With the foregoing findings of the Court, defendants
[petitioner Rev. Fr. Dante Martinez and his mother] are
the rightful possessors and in good faith and in concept of
owner, thus cannot be ejected from the land in question.
Since the main issue is ownership, the better remedy of
the plaintiff [herein private respondents Veneracion] is
Accion Publiciana in the Regional Trial Court, having
jurisdiction to adjudicate on ownership.
Defendants' counterclaim will not be acted upon it being
more than P20,000.00 is beyond this Court's power to
adjudge.
WHEREFORE, judgment is hereby rendered, dismissing
plaintiff's complaint and ordering plaintiff to pay
Attorney's fee of P5,000.00 and cost of suit.
SO ORDERED. 22
On March 3, 1987, private respondents Veneracion filed a notice of
appeal with the Regional Trial Court, but failed to pay the docket fee.
On June 6, 1989, or over two years after the filing of the notice of
appeal, petitioner filed a Motion for Execution of the Judgment, alleging
Meanwhile, on May 30, 1986, while the ejectment case was pending
before the Municipal Trial Court, petitioner Martinez filed a complaint
for annulment of sale with damages against the Veneracions and De la
Pazes with the Regional Trial Court, Branch 25, Cabanatuan City. On
March 5, 1990, the trial court rendered its decision finding private
respondents Veneracion owners of the land in dispute, subject to the
rights of petitioner as a builder in good faith, and ordering private
respondents De la Paz to pay petitioner the sum of P50,000.00 as
in making its findings, went beyond the issue of the case and the same
is contrary to the admissions of both appellant and appellee; (g) when
the findings of the Court of Appeals are contrary to those of the trial
court; (h) when the findings of fact are conclusions without citation of
specific evidence on which they are based; (i) when the facts set forth
in the petition as well as in the petitioner's main and reply briefs are
not disputed by the respondents; (j) when the finding of fact of the
Court of Appeals is premised on the supposed absence of evidence but
is contradicted by the evidence on record; and (k) when the Court of
Appeals manifestly overlooked certain relevant facts not disputed by
the parties and which, if properly considered, would justify a different
conclusion. 25
In this case, the Court of Appeals based its ruling that private
respondents Veneracion are the owners of the disputed lot on their
reliance on private respondent Godofredo De la Paz's assurance that
he would take care of the matter concerning petitioner's occupancy of
the disputed lot as constituting good faith. This case, however,
involves double sale and, on this matter, Art. 1544 of the Civil Code
provides that where immovable property is the subject of a double
sale, ownership shall be transferred (1) to the person acquiring it who
in good faith first recorded it to 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. 26 The
requirement of the law, where title to the property is recorded in the
Register of Deeds, is two-fold: acquisition in good faith and recording in
good faith. To be entitled to priority, the second purchaser must not
only prove prior recording of his title but that he acted in good
faith, i.e., without knowledge or notice of a prior sale to another. The
presence of good faith should be ascertained from the circumstances
surrounding the purchase of the land. 27
the purchase price; (5) when the vendor binds himself to pay the taxes
on the thing sold; (6) in any other case where it may be fairly inferred
that the real intention of the parties is that the transaction shall secure
the payment of a debt or the performance of any other
obligation. 33 In case of doubt, a contract purporting to be a sale with
right to repurchase shall be construed as an equitable mortgage. 34
In this case, the following circumstances indicate that the private
respondents intended the transaction to be an equitable mortgage and
not a contract of sale: (1) Private respondents Veneracion never took
actual possession of the three lots; (2) Private respondents De la Paz
remained in possession of the Melencio lot which was co-owned by
them and where they resided; (3) During the period between the first
sale and the second sale to private respondents Veneracion, they
never made any effort to take possession of the properties; and (4)
when the period of redemption had expired and private respondents
Veneracion were informed by the De la Pazes that they are offering the
lots for sale to another person for P200,000.00, they never objected. To
the contrary, they offered to purchase the two lots for P180,000.00
when they found that a certain Mr. Tecson was prepared to purchase it
for the same amount. Thus, it is clear from these circumstances that
both private respondents never intended the first sale to be a contract
of sale, but merely that of mortgage to secure a debt of P150,000.00.
With regard to the second sale, which is the true contract of sale
between the parties, it should be noted that this Court in several
cases, 35 has ruled that a purchaser who is aware of facts which
should put a reasonable man upon his guard cannot turn a blind eye
and later claim that he acted in good faith. Private respondent
Reynaldo himself admitted during the pre-trial conference in the MTC in
Civil Case No. 9523 (for ejectment) that petitioner was already in
possession of the property in dispute at the time the second Deed of
MARTINEZ vs CAFacts:
Private respondents Godofredo De la Paz and his sister Manuela De la Paz entered into an
oralcontract with petitioner Rev. Fr. Dante Martinez, then Assistant parish priest of Cabanatuan
City, for the sale of Lot No. 1337-A-3 at the Villa Fe Subdivision in Cabanatuan City for the
sum of P15,000.00. At the time of the sale, the lot was still registered in the name of Claudia
De la Paz,mother of private respondents, although the latter had already sold it to private
respondent Manuelade la Paz by virtue of a Deed of Absolute Sale dated. He was assured
by them that the lot belongedto Manuela De la Paz. It was agreed that petitioner would give a
downpayment of P3,000.00 toprivate respondents De la Paz and that the balance would be
payable by installment. After giving theP3,000.00
downpayment, petitioner started the construction of a house on the lot and began payingthe
real estate taxes on said property.In the meantime, in a Deed of. Absolute Sale with Right to
Repurchase, private respondents De laPaz sold three lots with right to repurchase the same
within one year to private respondents spousesReynaldo and Susan Veneracion for the sum
of P150,000.00. One of the lots sold was the lotpreviously sold to petitioner. Petitioner
discovered that the lot he was occupying with his family hadbeen sold to the spouses
Veneracion after receiving a letter from private respondent ReynaldoVeneracion claiming
ownership of the land and demanding that they vacate the property and removetheir
improvements thereon.
16
Petitioner, in turn, demanded through counsel the execution of thedeed of sale from private
respondents De la Paz and informed Reynaldo Veneracion that he was theowner of the
property as he had previously purchased the same from private respondents De la
Paz.ISSUE:Whether or not private respondents Veneracion are buyers in good faith of the lot
in dispute as tomake them the absolute owners thereof in accordance with Art. 1544 of the
Civil Code on doublesale of immovable property.HELD:No. The deed of sale executed by
private respondents Godofredo and Manuela De la Paz in favor of private respondents
spouses Reynaldo and Susan Veneracion is null and void.In this case, the Court of Appeals
based its ruling that private respondents Veneracion are theowners of the disputed lot on their
reliance on private respondent Godofredo De la Paz's assurancethat he would take care of
the matter concerning petitioner's occupancy of the disputed lot asconstituting good faith. This
case, however, involves double sale and, on this matter, Art. 1544 of theCivil Code provides
that where immovable property is the subject of a double sale, ownership shallbe transferred
(1) to the person acquiring it who in good faith first recorded it to the Registry of Property; (2) in
default thereof, to the person who in good faith was first in possession; and (3) indefault
thereof, to the person who presents the oldest title.
26
The requirement of the law, where titleto the property is recorded in the Register of Deeds, is
two-fold: acquisition in good faith andrecording in good faith. To be entitled to priority, the
second purchaser must not only prove prior
DECISION
TINGA, J p:
For resolution is a petition that seeks to nullify the Decision 1 and
Resolution 2 of the Court of Appeals dated 28 April 2005 and 11
January 2006, respectively, in C.A.-G.R. CV No. 73025 which declared
respondent as having a better right over a parcel of land located in
Doljo, Panglao, Bohol.
The facts, as culled from the records, follow. aSIDCT
Sometime in July 1992, Cattleya Land, Inc. (hereinafter referred to as
respondent) asked someone to check, on its behalf, the titles of nine
(9) lots, the subject land included, which it intended to buy from the
spouses Troadio and Asuncion Tecson. Finding no defect on the titles,
respondent purchased the nine lots through a Deed of Conditional Sale
on 6 November 1992. Subsequently, on 30 August 1993, respondent
and the Tecsons executed a Deed of Absolute Sale over the same
properties. The Deed of Conditional Sale and the Deed of Absolute Sale
were registered with the Register of Deeds on 06 November 1992 and
04 October 1993, respectively. 3 The Register of Deeds, Atty. Narciso
dela Serna, refused to actually annotate the deed of sale on the titles
because of the existing notice of attachment in connection with Civil
Case No. 3399 pending before the Regional Trial Court of Bohol. 4 The
attachment was eventually cancelled by virtue of a compromise
agreement between the Tecsons and their attaching creditor which was
brokered by respondent. Titles to six (6) of the nine (9) lots were
issued, but the Register of Deeds refused to issue titles to the
remaining three (3) lots, because the titles covering the same were still
unaccounted for.
On 23 January 1995, petitioner presented for registration before the
Register of Deeds the owner's copy of the title of the subject property,
According to the trial court, respondent had recorded in good faith the
deed of sale in its favor ahead of petitioner. Moreover, based on
Asuncion's convincing and unrebutted testimony, the trial court
concluded that the purported signature of Asuncion in the deed of sale
in favor of petitioner was forged, thereby rendering the sale void. 13
Petitioner sought recourse to the Court of Appeals, arguing in the main
that the rule on double sale was applicable to the case. The appellate
court, however, dismissed her appeal, holding that there was no
double sale because the alleged sale to petitioner was null and void in
view of the forgery of Asuncion's purported signature in the deed. The
appellate court noted that petitioner failed to rebut Asuncion's
testimony despite opportunities to do so.14 Moreover, even if there
was double sale, according to the appellate court, respondent's claim
would still prevail since it was able to register the second sale in its
favor in good faith, had made inquiries before it purchased the lots,
and was informed that the titles were free from encumbrance except
the attachment on the property due to Civil Case No. 3399. 15
Petitioner sought reconsideration of the decision but the Court of
Appeals denied her motion for reconsideration for lack of merit. 16
Petitioner thus presents before this Court the following issues for
resolution:
I.
BETWEEN 2 BUYERS OF REGISTERED LAND, WHO HAS
THE BETTER RIGHT-IS IT THE FIRST BUYER WHO WAS
GIVEN THE OWNER'S DUPLICATE TCT TOGETHER WITH A
DEED OF SALE IN 1986, OR THE SECOND BUYER IN 1992
WITH ONLY A DEED OF SALE. cEDIAa
II.
purportedly sold to two different parties, the Court held that despite
the fact that one deed of sale was registered ahead of the other, Art.
1544 of the Civil Code will not apply where said deed is found to be a
forgery, the result of this being that the right of the other vendee
should prevail. cHCSDa
The trial court declared that the sale between the spouses Tecson and
petitioner is invalid, as it bears the forged signature of Asuncion. Said
finding is based on the unrebutted testimony of Asuncion and the trial
court's visual analysis and comparison of the signatures in her
Complaint-in-Intervention and the purported deed of sale. This finding
was upheld by the Court of Appeals, as it ruled that the purported sale
in petitioner's favor is null and void, taking into account Asuncion's
unrefuted deposition. In particular, the Court of Appeals noted
petitioner's failure to attend the taking of the oral deposition and to
give written interrogatories. In short, she did not take the necessary
steps to rebut Asuncion's definitive assertion.
The congruence of the wills of the spouses is essential for the valid
disposition of conjugal property. 27 Thus, under Article 166 of the Civil
Code 28 which was still in effect on 19 December 1986 when the deed
of sale was purportedly executed, the husband cannot generally
alienate or encumber any real property of the conjugal partnership
without the wife's consent. DcCITS
In this case, following Article 173 29 of the Civil Code, on 26 June 1995,
or eight and a half years (8 1/2) after the purported sale to petitioner,
Asuncion filed her Complaint-in-Intervention seeking the nullification
thereof, and while her marriage with Troadio was still subsisting. Both
the Court of Appeals and the trial court found Asuncion's signature in
the deed of sale to have been forged, and consequently, the deed of
sale void for lack of marital consent. We find no reason to disturb the
findings of the trial court and the Court of Appeals. Findings of fact of
lower courts are deemed conclusive and binding upon the Supreme
Court subject to certain exceptions, 30 none of which are present in
this case. Besides, it has long been recognized in our jurisprudence
that a forged deed is a nullity and conveys no title. 31
Petitioner argues she has a better right over the property in question,
as the holder of and the first one to present, the owner's copy of the
title for the issuance of a new TCT. The Court is not persuaded. SDIaHE
The act of registration does not validate petitioner's otherwise void
contract. Registration is a mere ministerial act by which a deed,
contract, or instrument is sought to be inscribed in the records of the
Office of the Register of Deeds and annotated at the back of the
certificate of title covering theland subject of the deed, contract, or
instrument. While it operates as a notice of the deed, contract, or
instrument to others, it does not add to its validity nor converts an
invalid instrument into a valid one as between the parties, 32 nor
amounts to a declaration by the state that the instrument is a valid
and subsisting interest in the land. 33 The registration of petitioner's
void deed is not an impediment to a declaration by the courts of its
invalidity.
Even assuming that there was double sale in this case, petitioner
would still not prevail. The pertinent portion of Art. 1544
provides: ISCHET
Art. 1544. . . . .
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.
xxx xxx xxx
clear that when she finally did, she already had constructive notice of
the deed of sale in respondent's favor. Without a doubt, respondent
had acquired a better title to the property.
Finally, anent petitioner's claim that P.D. No. 1529 applies to registered
lands or any subsequent sale thereof, while Art. 1544 of the Civil Code
applies only to immovable property not covered by the Torrens System,
suffice it to say that this quandary has already been answered by an
eminent former member of this Court, Justice Jose Vitug, who explained
that the registration contemplated under Art. 1544 has been held to
refer to registration under P.D. No. 1529, thus: EcHIAC
The registration contemplated under Art. 1544 has
been held to refer to registration under Act
496 Land Registration Act (now PD 1529) which
considers the act of registration as the operative act that
binds the land (see Mediante v. Rosabal, 1 O.G. [12]
900, Garcia v. Rosabal, 73 Phil 694). On lands covered by
the Torrens System, the purchaser acquires such rights
and interest as they appear in the certificate of title,
unaffected by any prior lien or encumbrance not noted
therein. The purchaser is not required to explore farther
than what the Torrens title, upon its face, indicates. The
only exception is where the purchaser has actual
knowledge of a flaw or defect in the title of the seller or of
such liens or encumbrances which, as to him, is
equivalent to registration (see Sec. 39, Act
496; Bernales v. IAC, G.R. 75336, 18 October
1988; Hernandez vs. Sales, 69 Phil 744; Tajonera vs.
Court of Appeals, L-26677, 27 March 1981) (Emphasis
supplied) 37
G.R. No.
September 13, 2007
SECOND DIVISION
[G.R. No. 152627. September 16, 2005.]
SPOUSES AMANCIO and LUISA SARMIENTO and
PEDRO OGSINER, petitioners, vs. THE HON. COURT
OF
APPEALS
(Special
Former
Fifth
Division),
JOSE
F.
PUZON,
THE
HON.
EFICIO
BRANCH
155
and
REGISTER
OF
DEEDS
OF
ID.;
ID.;
GENERAL
RULE;
EXCEPTION;
PERSON
WHO
LAW;
CIVIL
PROCEDURE;
PLEADINGS;
THIRD-PARTY
complainants
(Sarmiento
spouses)
had
to
pay
the
OF
POSSESSION
CANNOT
BE
CONSIDERED
AS
There
being
direct
attack
on
the
TCT
which
was
evidence
necessary
for
complete
determination
of
the
owner of his property without due process of law. But those creating a
presumption only have been sustained as affecting a rule of evidence,
changing nothing but the burden of proof. (Turpin v. Lemon, 187 U.S.,
51.) The tax law applicable to Manila does not attempt to give any
special probative effect to the deed of the assessor and collector, and
therefore leaves the purchaser to establish the regularity of all vital
steps in the assessment and sale.
DECISION
CHICO-NAZARIO, J p:
In a case for recovery of possession based on ownership (accion
reivindicatoria),
is
the
defendant's
third-party
complaint
for
pesos
and
25/100
loan
obtained
by
the
Thereafter, Transfer
December
19,
1986,
plaintiff-appellee
filed
In its order dated June 16, 1987, the trial court denied the
motion of the Sarmiento spouses. Records show that the
said order of the trial court was set aside in a petition
for certiorari filed before this Court. Hence, the third-party
complaint was admitted. Consequently, Mr. Sison, the
Register of Deeds of Marikina filed their answer, while Mr.
Puzon filed a motion to dismiss the third-party complaint
on the grounds of misjoinder of causes of action and nonjurisdiction of the trial court over said third-party
complaint. In a motion to set for hearing its special and
affirmative defenses, the Register of Deeds of Marikina
moved for the dismissal of the third-party complaint
against them. The motion of Mr. Puzon was held in
abeyance by the trial court ratiocinating that the issues
raised in the motion still do not appear to be indubitable.
On October 20, 1988, Mr. Puzon filed his answer.
In its order dated February 22, 1989, the trial court
dismissed the third-party complaint against the Register
of Deeds of Marikina on the ground that the case may
proceed even without the Register of Deeds being
impleaded.
On April 29, 1991, the trial court issued its assailed
decision in favor of the plaintiff-appellee. A timely appeal
was filed by the Sarmiento spouses. In their manifestation
filed on July 17, 1989, the Heirs of Mr. Sison prayed for
substitution for their late father. Consequently, the Heirs
of Mr. Sison moved for new trial or reconsideration on the
ground that they were not properly represented in the
case after the death of Mr. Sison. In its order dated
November 28, 1991, the trial court granted the motion.
they
were
chargeable
with
the
knowledge
of
modified,
or
canceled
except
in
direct
title
is
questionable
because
this
documents
considering
that
it
will
and
not
proceedings,
be
procedurally
in
direct
proceeding. 6 (Emphasis
and
Marikina, Rizal, the Judge of the RTC, Branch 155, in LRC Case No. R3367 and the Register of Deeds of the then Municipality of Marikina,
Province of Rizal.
The rule on third-party complaints is found in Section 22, Rule 6 of the
1997 Rules of Court, which reads:
Sec. 22.Third, (fourth, etc.)-party complaint. A third
(fourth, etc.)-party complaint is a claim that a defending
party may, with leave of court, file against a person not a
party to the action, called the third-party defendant, for
contribution, indemnity, subrogation or any other relief, in
respect of his opponent's claim.
A third-party complaint is in the nature of an original complaint. This is
so because it is "actually independent of and separate and distinct
from the plaintiff's complaint." 10 In herein case, after leave of court
was
secured 11 to
file
third-party
complaint,
the
third-party
were
then
issued
on
the
third-party
Tire
and
Rubber
Company
of
the
Philippines
v.
such
third-party
defendant
right
for
of
the
plaintiff's
claim. The
third-party
to
appreciate
the
legal
ramifications
of
the
third-party
filed
counterclaim
against
petitioner,
Second Issue:
In their third-party complaint, as amended, the Sarmiento spouses
asserted six causes of action. The second 18 to sixth causes of action
referred to the proceedings leading to and resulting from the tax sale
held on 28 August 1982, summarized by the trial court as follows:
. . . Third Party Plaintiffs alleged that on August 28, 1982,
the Municipal Treasurer of Marikina sold at public auction,
the same property in favor of Jose F. Puzon for tax
deficiency at the price of Three Thousand Three Hundred
Eighty Four Pesos and 89/100 (P3,383.89) which is very
low considering that the area of the property is 1,060
square meters; that they were not notified of the public
auction sale and further, the requirements, such as
posting
of
notices
in
public
places,
among
other
party
defendant
in
order
to
consolidate
his
Regional
trial
Court
in
LRC
Case
No.
R-3367
The Sarmiento spouses thus prayed that: (a) the certificate of sale
executed by the Municipal Treasurer of the then Municipality of
Marikina, Rizal, in favor of Mr. Puzon be declared null and void and all
subsequent transactions therefrom declared null and void as well; (b)
the Order of the RTC in LRC Case No. R-3367, authorizing the
consolidation of ownership of and issuance of new TCT No. 102909 in
favor of Mr. Puzon, be declared null and void; (c) the Register of Deeds
be directed to cancel the Certificate of Sale and TCT No. 102909 issued
in favor of Mr. Puzon as well as TCT No. N-119631 issued in the name of
RRC and that TCT No. 370807 in the name of the Sarmiento spouses be
restored; (d) all third-party defendants be made to pay, jointly and
severally, moral and exemplary damages such amount as to be fixed
by the court as well as attorney's fees in the amount of P10,000.00;
and (e) Mr. Puzon be made to pay P500,000.00 the actual value of
the property at the time of the tax sale in the remote event that the
title of RRC is not invalidated. TDcAIH
The trial court held that the Sarmiento spouses were not entitled to the
relief sought by them as there was nothing irregular in the way the tax
sale was effected, thus:
Defendants Sarmiento aver that they were not notified of
the auction sale of the property by the Municipal
Treasurer of Marikina. However, the Court would like to
point out that during the examination of Amancio
Sarmiento, he testified that in 1969 or 1970, he started
residing at No. 13 19th Avenue, Cubao, Quezon City; that
his property was titled in 1972; that he transferred his
residence from Cubao to No. 76 Malumanay Street,
is
not
to
valid
tax
sale
under
the
Real
Property Tax
Code, 21 the law then prevailing at the time of the tax sale on 28
August 1982. 22
Section 73 of the Real Property Tax Code provides:
Sec. 73.Advertisement of sale of real property at public
auction. After the expiration of the year for which the
tax is due, the provincial or city treasurer shall advertise
the sale at public auction of the entire delinquent real
property, except real property mentioned in subsection
(a) of Section forty hereof, to satisfy all the taxes and
penalties due and the costs of sale. Such advertisement
shall be made by posting a notice for three consecutive
weeks at the main entrance of the provincial building and
of all municipal buildings in the province, or at the main
of
general
circulation
published
in
the
province or city.
The notice, publication, and announcement by crier shall
state the amount of the taxes, penalties and costs of sale;
the date, hour, and place of sale, the name of the
taxpayer against whom the tax was assessed; and the
kind or nature of property and, if land, its approximate
areas, lot number, and location stating the street and
block number, district or barrio, municipality and the
province or city where the property to be sold is situated.
Copy of the notice shall forthwith be sent either by
registered mail or by messenger, or through the
barrio captain, to the delinquent taxpayer, at his
address as shown in the tax rolls or property tax
record cards of the municipality or city where the
property is located, or at his residence, if known to
said treasurer or barrio captain: Provided, however,
That a return of the proof of service under oath shall be
filed by the person making the service with the provincial
or city treasurer concerned. (Emphasis supplied)
We cannot overemphasize that strict adherence to the statutes
governing tax sales is imperative not only for the protection of the
taxpayers, but also to allay any possible suspicion of collusion between
the buyer and the public officials called upon to enforce the
laws. 23 Notice of sale to the delinquent land owners and to the public
in general is an essential and indispensable requirement of law, the
non-fulfillment of which vitiates the sale. 24 Thus, the holding of a tax
sale despite the absence of the requisite notice is tantamount to a
violation
of
delinquent
taxpayer's
substantial
right
to
due
had no personal knowledge of the tax sale and the proceedings leading
thereto as she became Municipal Treasurer only in 1989. 30
Notwithstanding Ms. Cabalquinto's lack of personal knowledge, her
testimony that per records in her possession no notice was actually
sent to the Sarmiento spouses is sufficient proof of the lack of such
notice in the absence of contrary proof coming from the purchaser in
the tax sale, Mr. Puzon, and from his eventual buyer, herein private
respondent RRC. Be it noted that under Section 73 of the Real
Property Tax Code,it is required that a return of the proof of service to
the registered owner be made under oath and filed by the person
making the service with the provincial or city treasurer concerned. This
implies that as far as tax sales are concerned, there can be no
presumption of the regularity of any administrative action; hence the
registered owner/delinquent taxpayer does not have the burden of
proof to show that, indeed, he was not personally notified of the sale
thru registered mail. EcDTIH
There can be no presumption of the regularity of any administrative
action which results in depriving a taxpayer of his property through a
tax sale. 31 This is an exception to the rule that administrative
proceedings are presumed to be regular. 32 This doctrine can be
traced to the 1908 case of Valencia v. Jimenez and Fuster 33 where
this Court held:
The American law does not create a presumption of the
regularity of any administrative action which results in
depriving a citizen or taxpayer of his property, but, on the
contrary, the due process of law to be followed in tax
proceedings must be established by proof and the
general rule is that the purchaser of a tax title is bound to
take upon himself the burden of showing the regularity of
all proceedings leading up to the sale. The difficulty of
supplying such proof has frequently lead to efforts on the
the
regularity
of
all
vital
steps
in
the
Nevertheless,
no
substantial
variance
exists
between
Commonwealth Act No. 470 and the Real Property Tax Code,which took
effect on 01 June 1974, concerning the required procedure in the
conduct of public auction sale involving real properties with tax
delinquencies. 35
In its narration of the facts, the trial court acknowledged that RRC
through its President, Roberto Siy, and through its representative,
Lorenzo Tabilog conducted an ocular inspection of the subject land
and found therein that its actual occupant, Pedro Ogsiner, had a house
erected thereon and that such occupant was the overseer for the
Sarmiento
spouses
who
claimed
ownership
over
the
subject
land. 40 Armed with this knowledge, RRC did only one thing: it offered
Pedro Ogsiner P2,000.00 to vacate the subject property. 41 Relying on
the fact that the TCT in Mr. Puzon's name was free of liens and
encumbrances and that Mr. Puzon would take care of the "squatters,"
RRC did not investigate whatever claim Pedro Ogsiner and the
Sarmiento spouses had over the subject land.
From the foregoing undisputed facts, the trial court held:
There is no doubt that when the plaintiff Rodeanna Realty
Corporation purchased the property, there was a title in
the name of Jose Puzon, thus, making them a purchaser
(sic) in good faith and for value. Said buyers relied on the
owners (sic) title which is free and clear of all liens and
encumbrances.
xxx xxx xxx
After a careful evaluation of the facts of this case, the
Court believes that plaintiff is entitled to the relief sought
for. As enunciated in the case ofCarmelita E. Reyes vs.
Intermediate
Appellate
Court,
Gregorio
Galang
and
of
plaintiff-appellee's
ownership
over
the
visible
and
public possession
of
another
the
certificate
of
title
to
ma[k]e
inquiries
as
against
such
possessors. 48 (Emphasis
supplied)
Prescinding from the foregoing, the fact that private respondent RRC
did not investigate the Sarmiento spouses' claim over the subject land
despite its knowledge that Pedro Ogsiner, as their overseer, was in
actual possession thereof means that it was not an innocent purchaser
for value upon said land.Article 524 of the Civil Code directs that
possession may be exercised in one's name or in that of another. In
herein case, Pedro Ogsiner had informed RRC that he was occupying
the subject land on behalf of the Sarmiento spouses. Being a
corporation engaged in the business of buying and selling real
estate,49 it was gross negligence on its part to merely rely on Mr.
Puzon's assurance that the occupants of the property were mere
squatters considering the invaluable information it acquired from Pedro
Ogsiner and considering further that it had the means and the
opportunity to investigate for itself the accuracy of such information.
Third Issue:
As it is the Sarmiento spouses, as exercised by their overseer Pedro
Ogsiner, who have the right of possession over the subject property,
they cannot be made to pay rent to private respondent RRC.
WHEREFORE, premises considered, the Decision of the Court of
Appeals dated 27 November 2001 and its Resolution dated 08 March
2002 are REVERSED and SET ASIDE. The public auction sale conducted
on 28 August 1982 is declared VOID for lack of notice to the registered
owners Amancio and Luisa Sarmiento. Transfer Certificate of Title No.
N-119631 of the Registry of Deeds of what was then the Municipality of
Marikina, Province of Rizal, in the name of Rodeanna Realty
Corporation is hereby ANNULLED. The Register of Deeds of Marikina
City, Metro Manila, is ordered to cancel TCT No. N-119631 and to issue,
in lieu thereof, a new title in the name of spouses Amancio and Luisa
Sarmiento. Costs against private respondent RRC.
SO ORDERED.
Puno, Austria-Martinez, Callejo, Sr. and Tinga, JJ., concur.
Footnotes
reconsideration was denied on 22 July 1987 (Records, pp. 5455, 65). The Sarmiento spouses then elevated the denial to the
Court of Appeals via a Petition for Certiorari. The Fourteenth
Division of the appellate court, composed of Associate Justices
Fidel P. Purisima, Emeterio C. Cui and Jesus M. Elbinias, set
aside the trial court's orders and ordered, instead, the
admission of the Sarmiento spouses' third-party complaint
(Records, pp. 166-170).
12.See Order of the trial court dated 25 January 1988 (Records, p.
121).
13.Ibid.
14.Third-Party defendant Carlos Moran Sison answered on 24 March
1988 (Records, pp. 137-146). Third-Party Register of Deeds of
Marikina filed its Answer on 06 May 1988 (Records, pp. 157160). Defendant Puzon filed his "Answer with Counterclaim" on
20 October 1988 (Records, pp. 214-218) while he filed his
supplemental answer to the amended third-party complaint on
26 July 1989 (Rollo, pp. 146-147). RRC likewise filed its Answer
to the third-party complaint (Rollo, pp. 148-149).
15.Supra, note 10.
16.G.R. No. 129471, 28 April 2000, 331 SCRA 267, 286-287 (citing A.
Francisco Realty and Development Corp. v. Court of Appeals,
G.R. No. 125055, 30 October 1998, 298 SCRA 349, 358). See
also Heirs of Simplicio Santiago v. Heirs of Mariano Santiago,
G.R. No. 151440, 17 June 2003, 404 SCRA 193, 203-204.
17.Id. at 287 (citing Mendoza v. Court of Appeals, No. L-62089, 09
March 1988, 158 SCRA 508, 512-514). The instant controversy,
on the other hand, is approaching its 19th anniversary, the
complaint for recovery of possession having been filed before
the RTC on 19 December 1986.
18.The first cause of action does not have direct bearing on the
present petition as the same was made against Mr. Sison, the
mortgagee who was able to foreclose the subject property and
who had his right annotated on the title which was then still in
the name of the Sarmiento spouses. It will be recalled that Mr.
Sison failed to consolidate his title to the property despite nonredemption by the Sarmiento spouses. When the title to the
property was transferred to Mr. Puzon, the highest bidder in the
tax sale, the TCT no longer carried Mr. Sison's annotation. The
trial court ruled in favor of RRC, the plaintiff in the case for
recovery of possession and against the Sarmiento spouses and
Mr. Sison. The heirs of Sison, after having been substituted for
their late father, seasonably filed a motion for new trial which
motion was granted. After trial, however, the trial court
dismissed the claim of Mr. Sison, as represented by his heirs,
that he is the beneficial owner of the subject property. The trial
court denied the motion for reconsideration of the heirs of Sison
who then timely appealed to the Court of Appeals. The Court of
Appeals, however, affirmed the ruling of the trial court. It does
not appear from the records of the case that the heirs of
Sison appealed the Court of Appeals decision to this
Court. Before this Court, when required to comment to the
instant petition filed by the Sarmiento spouses, the heirs of
Sison, namely George (Rollo, p. 218), Luis (Rollo, p. 221) and
Margarita (Rollo, pp. 227, 230), manifested that they will not
file any comment and that they are willing to comply with the
petition. Ricardo Sison, another heir, manifested that he had no
objection to the instant petition (Rollo, p. 260).
19.Rollo, pp. 52-53.
20.Rollo, pp. 66-68.
the sale, describing the property sold, stating the name of the
purchaser and setting out the exact amount of all taxes, fees,
charges,
and
related
surcharges,
interests,
or
remedies
provided
for
in
this
Title,
including
the
THIRD DIVISION
[G.R. No. 171460. July 27, 2007.]
LILLIAN N. MERCADO, CYNTHIA M. FEKARIS, and
JULIAN
MERCADO,
JR.,
represented
by
their
DECISION
CHICO-NAZARIO, J p:
Before this Court is a Petition for Review on Certiorari under Rule 45 of
the Revised Rules of Court, filed by petitioners Lillian N. Mercado,
Cynthia M. Fekaris and Julian Mercado, Jr., represented by their
Attorney-In-Fact, Alfredo M. Perez, seeking to reverse and set aside the
Decision 1 of the Court of Appeals dated 12 October 2005, and its
Resolution 2 dated 15 February 2006 in CA-G.R. CV No. 82636. The
Court of Appeals, in its assailed Decision and Resolution, reversed the
Decision 3 of the Regional Trial Court (RTC) of Quezon City, Branch 220
dated 23 September 2003, declaring the deeds of real estate mortgage
constituted on TCT No. RT-18206 (106338) null and void. The
dispositive portion of the assailed Court of Appeals Decision thus
reads:
WHEREFORE, the appealed decision is REVERSED and
SET ASIDE, and a new judgment is hereby entered
dismissing the [petitioners] complaint. 4
Petitioners are heirs of Perla N. Mercado (Perla). Perla, during her
lifetime, owned several pieces of real property situated in different
provinces of the Philippines.
Respondent, on the other hand, is a banking institution duly authorized
as such under the Philippine laws.
On 28 May 1992, Perla executed a Special Power of Attorney (SPA) in
favor of her husband, Julian D. Mercado (Julian) over several pieces of
real property registered under her name, authorizing the latter to
perform the following acts:
Square
Meters,
Meters,
T-46810
T-53140
177
3,953
Square
Meters, T-21403 263 Square Meters, T46807 39 Square Meters of the Registry of
Deeds of Oriental Mindoro;
b) Susana Heights, Muntinlupa covered by Transfer
Certificates of Title Nos. T-108954 600
Square
Meters
and RT-106338
805
property
covered
by TCT
No.
RT-106338 registered
with
(b)
thereof, TCT
No.
RT-106338 registered
with
No.
T-106338 was
actually
registered
with
the Registry of Deeds of Quezon City and not before the Registry
of Deeds of Pasig (now Makati). Respondent explained that the
discrepancy in the designation of the Registry of Deeds in the SPA was
merely an error that must not prevail over the clear intention of Perla
to include the subject property in the said SPA. In sum, the property
referred to in the SPA Perla executed in favor of Julian as covered
by TCT No. 106338 of the Registry of Deeds of Pasig (now
Makati) and the subject property in the case at bar, covered by RT18206 (106338) of the Registry of Deeds of Quezon City, are one
and the same. CaAIES
On 23 September 2003, the RTC rendered a Decision declaring the REM
constituted over the subject property null and void, for Julian was not
authorized by the terms of the SPA to mortgage the same. The court a
quo likewise ordered that the foreclosure proceedings and the auction
sale conducted pursuant to the void REM, be nullified. The dispositive
portion of the Decision reads:
under
Entry
Nos.
PE-4543/RT-18206
and
OR
NOT
THE
RESPONDENT
WAS
MORTGAGEE-IN-GOOD FAITH.
For a mortgage to be valid, Article 2085 of the Civil Code enumerates
the following essential requisites:
Art. 2085. The following requisites are essential to the
contracts of pledge and mortgage:
(1) That they be constituted to secure the fulfillment of a
principal obligation; aIAEcD
(2) That the pledgor or mortgagor be the absolute owner
of the thing pledged or mortgaged;
may
secure
the
latter
by
pledging
or
abstract
justice
nor
the
rule
on
liberal
Every
conveyance,
mortgage,
lease,
lien,
attachment,
order,
entry affecting
judgment, instrument or
registered
land
shall,
if
to
all
persons
from
the
time
of
with
defendant
Bank
was
effected
on
factual
circumstances
necessary
for
[one]
to
entering
into
mortgage
contract.
The
requires
high
standards
of
integrity
and
the
subject
property
covered
by TCT
No.
RT-18206
No.
RT-18206
null
and
void
but
UNENFORCEABLE. No costs.
SO ORDERED.
||| (Mercado v. Allied Banking Corp., G.R. No. 171460, [July 27, 2007],
555 PHIL 411-430)