UY VS FULE
FACTS:
The dispute herein involves the parcel of land registered under
Transfer Certificate of Title (TCT) No. 30111 that was part of the
vast tract of land covered by TCT No. 1128 registered in the name
of the late Conrado Garcia derived from OCT 854 registered on
Nov. 23, 1933.
Upon the death of Conrado Garcia on November 23, 1972, his
heirs entered into an extrajudicial settlement of his estate is heirs
caused the registration on March 7, 1973 of the vast tract of land
under TCT No. RT-8922 (16498)
(DAR) engaged Geodetic Engr. Rolando A. Sales (Engr. Sales) to
conduct a survey of the disputed land, issued a joint certification
that the disputed land was an “untitled” property owned by
Conrado Garcia.
As a result, the disputed land was included in the Operation Land
Transfer (OLT) program of the DAR pursuant to Presidential
Decree No. 27.
In 1988, the DAR and the Office of the Register of Deeds of
Camarines Sur respectively issued emancipation patents (EPs)
and original certificates of title (OCTs) covering the disputed land
to the farmers-beneficiaries
farmer-beneficiary Mariano Ronda sold his portion to Chisan Uy
who then registered his title thereto. On the other hand, the heirs
of farmerbeneficiary Mariano Ronda (Isabel Ronda, et al.) sold
their land to petitioner Hector Uy for P10 million. The petitioner
registered his title thereto.
TCT No. RT-8922 (16498) was cancelled following the partition of
the property covered therein. Subsequently, TCT No. 30136 and
TCT No. 30111 were issued in the names of respondents heirs of
the late Conrado Garcia. TCT No. 30111 covered the disputed
land.
the respondents filed a complaint for cancellation of titles,
quieting of title, recovery of possession, and damages against
(public defendants) and the farmer-beneficiaries (private
defendants) alleging that they had been denied due process; and
that the titles of the defendants (who included the petitioner) in
the disputed land constituted clouds on their own title. They
prayed that the private defendants' certificates of title, including
those of their purchasers Chisan Uy and the petitioner, be
cancelled
RTC: in favor of the respondents by finding that no notice of the
inclusion of the disputed land under the operation of P.D. No. 27
had been given to them
CA:
Isabel Ronda, et al.(heirs of deceased farmer-beneficiary Mariano
S. Ronda), Catalino Alcaide, Julia Casaysayan, Chisan Uy, and the
petitioner appealed to the CA.
1) that the court a quo erred in acquiring jurisdiction over the
case; and
(2) the court a quo erred in ordering the ejectment of the
appellants, heirs of deceased spouses, Mariano S. Ronda and
Fidela Cortez-Ronda
(3) that the RTC erred in holding that the titles issued to the
tenants Spouses Alcaides and Chisan Uy were void
petitioner insisted that the RTC gravely erred in holding that he
had not been an innocent purchaser in good faith and for value
For their part, the respondents asserted that the disputed land,
being originally registered under OCT No. 854, and later on under
TCT No. 1128, and still later on under TCT No. RT-8922, and now
under TCT No. 30111, did not lose its character as registered land;
and that as registered land, the disputed land should not have
been subject of another land registration proceeding from which
the EPs and the certificates of title of the private defendants could
be derived
CLDasig 2018
ON THE INCLUSION OF THE DISPUTED LAND
The disputed land was earlier extra-judicially settled by the
plaintiffs-appellees as heirs of the original owner. The disputed
land was already titled to plaintiffs-appellees at the time that
public respondent DAR included it in the operation of PD No. 27.
The DAR's finding that the same was an "untitled" property is
belied not only by the records but, more so, by the failure of
defendants-appellants to refute plaintiffs-appellees' assertion to
the contrary.
for a valid application of PD No. 27, the procedures outlined under
PD No. 266 should have been observed, among which is the duty
of the Register of Deeds to notify the registered owner concerning
such application within a reasonable time. no such notice was
served on plaintiffs-appellees, precisely due to the erroneous
premise that the disputed land was "untitled property
no payment of just compensation was made to the registered
owners. Such failure or absence of payment violates the very law
(PD 27) from which the titles of defendants were purportedly
derived. the land transfer initiated by the DAR involving the
disputed land is not only irregular but also unlawful for having
been undertaken in violation of the law.
the Emancipation Patents and the Certificates of Titles issued as
a result of the DAR's Operation Land Transfer program over an
already registered land have no legal foundation or basis. Such
subsequent titles must be cancelled because they cast clouds on
the earlier existing, valid and uncancelled title of plaintiffs-
appellees. For
ON WON PETITIONER AND CHISAN UY WERE
PURCHASERS IN GOOD FAITH
We disagree. Even assuming arguendo that they had no notice of
any defect in their transferors' titles, and the lands sold to them
should be included in the DAR's Operation Land Transfer (OLT)
program, no valid title could have passed to them because the
transfers are void under PD 27. PD 27 explicitly provides:
xxx xxx xxx
Title to land acquired pursuant to this Decree or the Land Reform
Program of the Government shall not be transferable except by
hereditary succession or to the Government in accordance with
the provisions of this Decree, the Code of Agrarian Reforms and
other existing laws and regulations;
xxx xxx xxx (Emphasis supplied)
Based on the above-quoted provision, appellant-purchasers
Hector and Chisan Uy are clearly not the qualified transferees of
the lands sold to them.
More importantly, the policy of the State in passing PD 27 is to
emancipate the tiller of the soil from his bondage by transferring
to him the ownership of the land he tills. The prohibition against
its transfer is for the purpose of preserving the land for the sole
benefit and enjoyment of the farmer and his family.
The titles of appellant-purchasers Hector Uy and Chisan Uy are,
therefore, voided. Ownership of the lands unlawfully transferred
to them, remains with plaintiffs-appellees.
In its resolution of August 18, 2004 denying the petitioner's
motion for reconsideration, the CA, citing Baltazar v. Court of
Appeals, 22 correctly observed:
Even so, as between two persons both of whom are in good faith
and both innocent of any negligence, the law must protect and
prefer the lawful holder of registered title over the transferee of a
vendor bereft of any transmissible rights
So, Hector and Chisan Uy's transferors had no transmissible rights
because their titles were void, having emanated from an
erroneous declaration that the property is untitled, and from an
irregular or procedurally flawed implementation of the agrarian
reform law
ISSUE: WON CA erred:
(a) in failing to find that petitioner was an innocent purchaser for
value who had the better right than the respondents over the
disputed land; and
(b) in failing to find that the law applicable to the dispute was R.A.
No. 6657 (approved on June 10, 1988), not P. D. No. 27
RULING:
We affirm the decision of the CA.
We stated at the start that in determining whether or not a buyer
of property is a purchaser in good faith, he must show that he has
bought the property without notice that some other person had a
right to, or interest in, such property, and he should pay a full and
fair price for the same at the time of his purchase, or before he
had notice of the claim or interest of some other persons in the
property
In Bautista v. Silva, a buyer for value in goof faith is one when
He buys the property with the wellfounded belief that the person
from whom he receives the thing had title to the property and
capacity to convey it.
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.
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 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.
An examination of the deed of sale executed between Isabel
Ronda, et al. and the petitioner respecting the portions covered
by TCT No. 31120 and TCT No. 31121 indicates that the TCTs
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 TCT No. 31120 and TCT No. 31121
by virtue of such TCTs being not yet in existence at that time. If
at all, it was OCT No. 9852 and OCT No. 9853 that were available
at the time of the execution of the deed of sale, and such OCTs
were presumably inspected by petitioner before he signed the
deed of sale. It is notable that said OCTs categorically stated that
they were entered pursuant to an emancipation patent.
Furthermore, said OCTs plainly recited the following prohibition:
". . . it shall not be transferred except by hereditary succession or
to the Government in accordance with the provisions of
Presidential Decree No. 27, Code of Agrarian Reforms of the
Philippines and other existing laws and regulations. . . ."
The foregoing circumstances negated the third element of good
faith cited in Bautista v. Silva, i.e., that "at the time of 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."
it is not sufficient for him to insist that he relied on the face of the
certificates of title, for he must further show that he exercised
reasonable precaution by inquiring beyond the certificates of title.
Failure to exercise such degree of precaution rendered him a
buyer in bad faith.
CLDasig 2018
The petitioner was not an innocent purchaser for value; hence,
he cannot be awarded the disputed land.
In view of the result thus reached by us, it becomes superfluous
to settle the issue of which between P.D. No. 27 and Section 27
of R.A. No. 6657 should control, and whether or not the R.A. No.
6657 has repealed P.D. No. 27. Even so, the Court has expressly
clarified that R.A. No. 6657 did not repeal or supersede P.D. No.
27
LBP VS POBLETE
FACS:
Poblete) is the registered owner of a parcel of land, known as Lot
No. 29. Poblete obtained a P300,000.00 loan from (Kapantay).
Poblete mortgaged Lot No. 29 to Kapantay to guarantee payment
of the loan. Kapantay, in turn, used OCT No. P-12026 as collateral
under its Loan Account in LBP.
Poblete decided to sell Lot No. 29 to pay her loan. She instructed
her son-in-law (Balen) to look for a buyer. Balen referred
Maniego. Maniego agreed to buy Lot No. 29 for P900,000.00, but
Maniego suggested that a deed of absolute sale for P300,000.00
be executed instead to reduce the taxes. Thus, Poblete executed
the Deed of Absolute Sale. In the Deed dated 9 November 1998,
Poblete described herself as a "widow." Poblete, then, asked
Balen to deliver the Deed. Balen testified that he delivered the
Deed. However, Balen stated that he did not receive from
Maniego the agreed purchase price. Maniego told Balen that he
would pay the amount upon his return from the United States.
Poblete stated that she agreed to have the payment deposited in
her Savings Acct.
Maniego paid Kapantay's Loan Account. Maniego applied for a
loan of P1,000,000.00 with Land Bank, using OCT No. P-12026 as
collateral. Land Bank alleged that as a condition for the approval
of the loan, the title of the collateral should first be transferred to
Maniego.
pursuant to a Deed of Absolute Sale, the ROD issued Transfer
Certificate of Title (TCT) No. T-20151 in Maniego's name. Maniego
and Land Bank executed a Credit Line Agreement and a Real
Estate Mortgage. Maniego failed to pay the loan. LBP filed
application for EJF.
Poblete filed a Complaint for Nullification of the Deed, of TCT
20151, and Reconveyance of Title, Named defendants were
Maniego, Land Bank, the Register of Deeds of Occidental Mindoro
and Elsa Z. Aguirre in her capacity as Acting Clerk of Court.
Poblete alleged that despite her demands on Maniego, she did not
receive the consideration of P900,000.00, that w/o her knowledge
Maniego used the Deed to acquire the OCT 12026 from Kapantay.
Poblete claimed that the Deed dated 11 August 2000 bearing her
and her deceased husband's, Primo Poblete, supposed signatures
was a forgery as their signatures were forged. As proof of the
forgery, Poblete presented the Death Certificate. Accordingly,
Poblete also filed a case for estafa through falsification of public
document against Maniego and sought injunction of the
impending foreclosure proceeding.
Land Bank claimed that it is a mortgagee in good faith and it
observed due diligence prior to approving the loan by verifying
Maniego's title with the Office of the Register of Deeds
RTC: IN FAVOR OF POBLETE
RTC ruled that the sale between Poblete and Maniego was a
nullity
Maniego failed to pay the consideration
the signatures of Poblete and her deceased husband were proven
to be forgeries
Land Bank was not a mortgagee in good faith because it failed to
exercise the diligence required of banking institutions
CA: AFFIRMED
ISSUE: WON CA ERRED IN UPHOLDING THE FINDING OF THE
TRIAL COURT DECLARING TCT NO. T-20151 AS NULL AND VOID.
THE COURT OF APPEALS MISCONSTRUED AND
MISAPPRECIATED THE EVIDENCE AND THE LAW IN NOT
FINDING TCT NO. T20151 REGISTERED IN THE NAME OF
ANGELITO JOSEPH MANIEGO AS VALID
HELD:
We do not find merit in the petition
both the RTC and the CA found that the signatures of Poblete and
her deceased husband in the Deed dated 11 August 2000 were
forged by Maniego. Maniego did not pay the consideration for the
sale.
a forged or fraudulent deed is a nullity and conveys no title. 17
Moreover, where the deed of sale states that the purchase price
has been paid but in fact has never been paid, the deed of sale is
void ab initiofor lack of consideration. 18 Since the Deed dated 11
August 2000 is void, the corresponding TCT No. T-20151 issued
pursuant to the same deed is likewise void.
In Ereña v. Querrer-Kauffman, when the instrument presented for
registration is forged, even if accompanied by the owner's
duplicate certificate of title, the registered owner does not thereby
lose his title, and neither does the mortgagee acquire any right or
title to the property. In such a case, the mortgagee under the
forged instrument is not a mortgagee protected by law.
Since TCT No. T-20151 has been declared void by final judgment,
the Real Estate Mortgage constituted over it is also void. In a real
estate mortgage contract, it is essential that the mortgagor be the
absolute owner of the property to be mortgaged; otherwise, the
mortgage is void
Land Bank insists that it is a mortgagee in good faith since it
verified Maniego's title, did a credit investigation, and inspected
Lot No. 29
There is indeed a situation where, despite the fact that the
mortgagor is not the owner of the mortgaged property, his title
being fraudulent, the mortgage contract and any foreclosure sale
arising therefrom are given effect by reason of public policy. This
is the doctrine of "the mortgagee in good faith" based on the rule
that buyers or mortgagees dealing with property covered by a
Torrens Certificate of Title are not required to go beyond what
appears on the face of the title. 27 However, it has been
consistently held that this rule does not apply to banks, which are
required to observe a higher standard of diligence. 28 A bank
whose business is impressed with public interest is expected to
exercise more care and prudence in its dealings than a private
individual, even in cases involving registered lands. 29 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 mortgaged
Good faith, or the lack of it, is a question of intention. In
ascertaining intention, courts are necessarily controlled by the
evidence as to the conduct and outward acts by which alone the
inward motive may, with safety, be determined
Based on the evidence, Land Bank processed 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. 33 In Bank of Commerce v. San
Pablo, Jr., 34 we held that when "the person applying for the loan
is other than the registered owner of the real property being
mortgaged, [such fact] should have already raised a red flag and
which should have induced the Bank . . . to make inquiries into
and confirm . . . [the] authority to mortgage . . . . A person who
deliberately ignores a significant fact that could create suspicion
in an otherwise reasonable person is not an innocent purchaser
for value
The records do not even show that Land Bank investigated and
inspected the property to ascertain its actual occupants. Land
Bank merely mentioned that it inspected Lot No. 29 to appraise
the value of the property. We take judicial notice of the standard
practice of banks, before approving a loan, to send
representatives to the premises of the land offered as collateral
to investigate its real owners.
CLDasig 2018
Land Bank claims that it conditioned the approval of the loan upon
the transfer of title to Maniego, but admits processing the loan
based on Maniego's assurances that title would soon be his. 37
Thus, only one day after Maniego obtained TCT No. T-20151
under his name, Land Bank and Maniego executed a Credit Line
Agreement and a Real Estate Mortgage. Because of Land Bank's
haste in granting the loan, it appears that Maniego's loan was
already completely processed while the collateral was still in the
name of Poblete.
Where the mortgagee acted with haste in granting the mortgage
loan and did not ascertain the ownership of the land being
mortgaged, as well as the authority of the supposed agent
executing the mortgage, it cannot be considered an innocent
mortgagee.
Since Land Bank is not a mortgagee in good faith, it is not entitled
to protection. Since Lot No. 29 has not been transferred to a third
person who is an innocent purchaser for value, ownership of the
lot remains with Poblete
OTHERS:
On the allegation that Poblete is in pari delicto with Maniego, we
find the principle inapplicable. The pari delicto rule provides that
"when two parties are equally at fault, the law leaves them as
they are and denies recovery by either one of them." 40 We adopt
the factual finding of the RTC and the CA that only Maniego is at
fault.
on the issues of estoppel and laches, such were not raised before
the trial court. Hence, we cannot rule upon the same. It is settled
that an issue which was neither alleged in the complaint nor raised
during the trial cannot be raised for the first time on appeal, as
such a recourse would be offensive to the basic rules of fair play,
justice and due process, since the opposing party would be
deprived of the opportunity to introduce evidence rebutting such
new issue
LEGARDA VS CA
FACTS:
Petitioner Victoria Legarda was the owner of a parcel of land and
the improvements. On January 11, 1985 respondent New Cathay
House, Inc. led a complaint against the petitioner for speci c
performance alleging, among others, that petitioner entered into
a lease agreement with the private respondent through its
representative, Roberto V. Cabrera, Jr. for a period of ve (5)
years; that the rental is P25,000.00 per month with 5% escalation
per year; that on November 23, 1984, private respondent
deposited the amount of P72,000.00 with petitioner as down
payment of rentals; respondent drew up the written contract and
sent it to petitioner; petitioner failed and refused to execute and
sign the same despite demands; espondent suffered damages
due to the delay in the renovation and opening of its restaurant
business
Petitioner engaged the services of counsel to handle her case.
Said counsel led his appearance with an urgent motion for
extension of time to le the answer. However, said counsel failed
to le the answer within the extended period prayed for. Counsel
for private respondent led an ex-parte motion to declare
petitioner in default. This was granted by the trial court
TRIAL COURT: AGAINST LEGARDA
Copy of said decision was duly served on counsel for the petitioner
but he did not take any action. Thus, the judgment became nal
and executory. At public auction, the sheriff sold the aforestated
property of petitioner to Roberto Cabrera Jr. The sheriff issued a
certi cate of sale dated June 8, 1985 covering the said property.
5 After the one-year redemption period expired without the
petitioner redeeming the property, ownership was consolidated in
the name of Roberto V. Cabrera, Jr. The sheriff issued a nal deed
of sale on July 8, 1986 in his favor. Cabrera registered the same
in the of ce of the Register of Deeds
Upon learning of this unfortunate turn of events, petitioner
prevailed upon her counsel, to seek the appropriate relief. On
November 6, 1986 said counsel led in the Court of Appeals a
petition for annulment of judgment calling attention to the unjust
enrichment of private respondent in securing the transfer in its
name of the property valued at P2.5 million without justi cation;
that when the complaint was led in court by private respondent
against the petitioner, the parties came to an agreement to settle
their differences, the private respondent assuring petitioner that
the complaint it led shall be withdrawn so petitioner advised her
lawyer that there was no longer any need to le an answer to the
complaint; that on February 22, 1985, private respondent
nevertheless led an ex-parte motion to declare the petitioner in
default; that petitioner was deprived of the right to present her
defense through false pretenses; that the documentary evidence
presented by private respondent, which served as the basis of the
decision, is falsi ed and tampered with; the fact that the property
worth P2 million was sold at public auction at a shockingly and
questionably low price of P376,500.00 is by itself a sufficient basis
for annulling the sale for being grossly inadequate to shock the
conscience and understanding of men, giving rise to a
presumption of fraud.
appellate court nevertheless dismissed the petition for annulment
of judgment with costs against the petitioner. It was only in March
1990 when the secretary of counsel for petitioner informed the
latter of the adverse decision against her only after persistent
telephone inquiries of the petitioner. etitioner secured the services
of another lawyer who led this petition for certiorari under Rule
65 wherein it prayed that the judgment of RTC be annulled, as
the same are attributable to the gross negligence and inef ciency
of petitioner's counsel, whose blunder cannot bind the petitioner
who was deprived of due process thereby
ISSUE: WON IT CAN BE ANNULLED DUE TO GROSS NEGLIGENCE
OF PETITIONERS COUNSEL
HELD: YES
Petitioner's counsel is a well-known practicing lawyer and dean of
a law school. It is to be expected that he would extend the highest
quality of service as a lawyer to the petitioner. Unfortunately,
counsel appears to have abandoned the cause of petitioner. After
agreeing to defend the petitioner in the civil case, counsel did
nothing more than enter his appearance and seek for an extension
of time to le the answer.
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 circumstance
Said counsel led 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 noti ed, said counsel did not inform the
petitioner about it
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.
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. 13 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 disagrees and nds 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 le
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 appellate court,
CLDasig 2018
he did not do anything to save the situation or inform his client of
the judgment
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 appear to have abandoned her case not once but
repeatedly.
The Court cannot allow such a grave injustice to prevail. It cannot
tolerate such unjust enrichment of the private respondent at the
expense of the petitioner. The situation is aggravated by the fact
that said counsel is a well-known practicing lawyer and the dean
of a law school as the Court at the beginning of this discourse
observed
HEREFORE, the petition is GRANTED and the questioned decision
of the Regional Trial Court and the subsequent nal deed of sale
covering the same property, are all hereby declared null and void.
Private respondent New Cathay House, Inc. is directed to
reconvey said property to the petitioner, and the Register of
Deeds is ordered to cancel the registration of said property in the
name of private respondent and to issue a new one in the name
of petitioner.
GABUTAN VS NACALABAN
FACTS:
Godofredo purchased prop from Petra, Fortunata, Francisco and
Dolores, all surnamed Daamo. 6 Pursuant to the sale, TCT 2259
was issued in the name fo Godofredo. He built a house therein.
Godofredo died. He was survived by his wife, Baldomera, and
their children. baldomera issued a Certi cation 10 in 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. House was declared to tax purposes. Tax dec
showed that melecio owned the building.
Baldomera died, her children executed Extrajudicial Settlement
with Sale) where they adjudicated unto themselves the property
and sold it to the College. TCT No. T-111846 16 covering the
property was issued in the name of the College. TCT No. T-111846
16 covering the property was issued in the name of the College
Melecia died, survive by her children (petitioners). The college
demanded he heirs of Melecia who were occupying the house on
the property, to vacate the premises
Gabutan, et al. led a Complaint for Reconveyance of Real
Property, Declaration of Nullity of Contracts, Partition and
Damages with Writ of Preliminary Attachment and Injunction 21
against Nacalaban, et al. and the College
(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 bene ciary, Melecia;
(3) they only knew about the Extrajudicial Settlement with Sale
upon veri cation with the Registry of Deeds;
(4) the College was a buyer in bad faith, being aware they were
co-owners of the property
the College claimed that it is a buyer in good faith and for value,
having "made exhaustive investigations and veri cations from all
reliable sources" that Melecia and her heirs were staying in the
property by mere tolerance. 27 It alleged that: (1) in the tax
declaration 28 of the residential house, Melecia admitted that the
lot owner is Godofredo; 29 (2) the occupancy permit of Melecia
was issued only after Godofredo issued a certi cation 30 to the
effect that Melecia was allowed to occupy a portion of the
property; 31 and (3) the Extrajudicial Settlement with Sale was
published in three consecutive issues
33 Nacalaban, et al. denied the allegations of Gabutan, et al. They
claimed to have acquired the property by intestate succession
from their parents, who in their lifetime, exercised unequivocal
and absolute ownership over the property. 34 Nacalaban, et al.
also set up the defenses of laches and prescription, and asserted
that the action for reconveyance was improper because the
property had already been sold to an innocent purchaser for value
the Heirs of Melecia claimed that they own and possess the
property in co-ownership with Nacalaban, et al. and Gabutan, et
al. because it was purchased by Melecia, their common
predecessor. The Heirs of Melecia also raised the defense of
forum-shopping in view of the pendency of the action for
reconveyance
MTCC: IN FAVOR OF COLLEGE
RTC: SAME
Heirs of Melecia filed a petition for review 50 before the CA
meanwhile, in the reconveyance case, the RTC rendered a
Decision 52 in favor of Gabutan, et al. The RTC found the
testimonies of their witnesses credible, in that the money of
Melecia was used in buying the property but the name of
Godofredo was used when the title was obtained because
Godofredo lived in Cagayan de Oro City while Melecia lived in
Bornay, Gitagum, Misamis Oriental. 53 Thus, the RTC held that a
trust was established by operation of law pursuant to Article 1448
of the Civil Code
CA: SAME
5) the action for reconveyance has not yet prescribed because
Gabutan, et al. are in possession of the property; 64 and (6) the
College is a buyer in good faith
Nacalaban, et al. led their motion for reconsideration of the CA
Decision, but it was denied in a Resolution 66 dated August 17,
2010. Hence, they led the present petition for certiorari 67 under
Rule 65, where they allege that: (1) the action for reconveyance
already expired; 68 (2) for an action for reconveyance to prosper,
the property should not have passed into the hands of another
who bought the property in good faith and for value; 69 and (3)
the title of Godofredo under TCT No. T-2259 which was issued on
January 13, 1959 could not be attacked collaterally
On the other hand, Gabutan, et al. filed the present petition for
review on certiorari under Rule 45, seeking a partial appeal of the
CA Decision. In their petition, Gabutan, et al. allege that the
College is not a buyer in good faith because it did not buy the
property from the registered owner. 72 Since Godofredo was the
registered owner of the property and not Nacalaban, et al., the
College should have exercised a higher degree of prudence in
establishing their capacity to sell it. 73 Further, despite knowing
that other persons possessed the property, the College did not
inquire with Gabutan, et al. the nature of their stay on the
property
Finally, Gabutan, et al. argue that they cannot be ejected from
the property because there is no evidence to show that their stay
was by mere tolerance, and that Melecia was a builder in good
faith
ISSUES:
1. Whether the petition for certiorari of Nacalaban, et al.
shall prosper;
2. Whether the action for reconveyance was proper; and
3. Whether the College is a buyer in good faith.
HELD:
1. The petition for certiorari of Nacalaban, et al. is a wrong
remedy
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Pursuant to Section 1, Rule 45 of the Rules of Court, 78 the proper
remedy to obtain a reversal of judgment on the merits, nal order
or resolution is an appeal. The Resolution dated August 17, 2010
of the CA, which af rmed its Decision dated December 11, 2008,
was a nal resolution that disposed of the appeal by Nacalaban,
et al. and left nothing more to be done by the CA in respect to
the said case. Thus, Nacalaban, et al. should have led an appeal
in the form of a petition for review on certiorari and not a petition
for certiorari under Rule 65, which is a special civil action.
Rule 65 is a limited form of review and is a remedy of last
recourse. This extraordinary action lies only where there is no
appeal nor plain, speedy and adequate remedy in the ordinary
course of law The existence and availability of the right of appeal
prohibits the resort to certiorari because one of the requirements
for the latter remedy is that there should be no appeal. 81 We
have always declared that a petition for certiorari is not a
substitute for an appeal where the latter remedy is available but
was lost through fault or negligence. 82
Here, Nacalaban, et al. received the assailed Resolution dated
August 17, 2010 on September 7, 2010. 83 Under the Rules of
Court, they had 15 days or until September 22, 2010 to le an
appeal before us. Nacalaban, et al. allowed this period to lapse
without doing so and, instead, led a petition for certiorari on
November 5, 2010. 84 Being the wrong remedy, the petition of
Nacalaban, et al. is, therefore, dismissible. Although there are
exceptions 85 to this general rule, none applies in this case.
2. The action for reconveyance filed by Gabutan, et al. is
proper
An implied resulting trust was created between Melecia
and Godofredo
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
bene cial interest of the property. 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 bene ciary of a
resulting trust. 90 These two elements are present here.
GABUTAN 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. 91 On one occasion in Melecia's house, and when
the entire family was present, Melecia gave Godofredo the money
to purchase the property. 92 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. 93 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. 95
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. 96 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.
Both the RTC and CA found credence on these pieces of
testimonial evidence that an implied resulting trust exists. In Tong
v. Go Tiat Kun, 98 we ruled that since an implied trust is neither
dependent upon an express agreement nor required to be
evidenced by writing, Article 1457 of our Civil Code authorizes the
admission of parol evidence to prove their existence We
cautioned, however, that the parol evidence that is required to
establish the existence of an implied trust necessarily has to be
trustworthy and it cannot rest on loose, equivocal or indefinite
declarations. 100 The testimonies of Felisia, Crisanta, and Trifonia
satisfy these requirements. They are consistent and agree in all
material points in reference to the circumstances behind the
arrangement
Nacalaban, et al., on the other hand, denied the arrangement. It
is telling, however, that Nacalaban, et al. failed to provide the
details of the sale, speci cally with regard to how Godofredo could
have been able to afford the purchase price himself, which would
have directly refuted the allegation that Melecia's money was used
in the purchase.
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. 104 It
will not amount to a collateral attack on the title, contrary to the
allegation of Nacalaban, et al
We explained in Hortizuela v. Tagufa: 106 . . . “As a matter of
fact, an action for reconveyance is a recognized remedy, an action
in personam, available to a person whose property has been
wrongfully registered under the Torrens system in another's
name. In an action for reconveyance, the decree is not sought to
be set aside. It does not seek to set aside the decree but,
respecting it as incontrovertible and no longer open to review,
seeks to transfer or reconvey the land from the registered owner
to the rightful owner. Reconveyance is always available as long
as the property has not passed to an innocent third person for
value.
XXX
If the registration of the land is fraudulent, the person in whose
name the land is registered holds it as a mere trustee, and the
real owner is entitled to le an action for reconveyance of the
property. 107 The fact that the property was already titled in
Godofredo's name, and later”
transferred to the College, is not a hindrance to an action for
reconveyance based on an implied trust. The title did not operate
to vest ownership upon the property in favor of the College.
The action for reconveyance is imprescriptible because the
plaintiffs are in possession of the property
An action for reconveyance based on an implied or a constructive
trust prescribes 10 years from the alleged fraudulent registration
or date of issuance of the certi cate of title over the property.
However, an action for reconveyance based on implied or
constructive trust is imprescriptible if the plaintiff or the person
enforcing the trust is in possession of the property. In effect, the
action for reconveyance is an action to quiet the property title,
which does not prescribe. 111 The reason is that the one who is
in actual possession of the land claiming to be its owner may wait
until his possession is disturbed or his title is attacked before
taking steps to vindicate his right
actual possession of Gabutan, et al. of the property, during the
lifetime of Melecia and even after her death, is an undisputed and
established fact. The College has even led an ejectment case
against the Heirs of Melecia for this reason. 113 Thus, their
complaint for reconveyance is imprescriptible. Gabutan, et al.
cannot be held guilty of laches as the said doctrine, which is one
in equity, cannot be set up to resist the enforcement of an
imprescriptible legal right.
3. College was in BAD FAITH
We hold that the RTC's nding that the College is a buyer in good
faith, which nding was upheld by the CA, was based on an
obvious misapprehension of facts and was clearly not supported
by law and jurisprudence.
SDHTEC I n Bautista v. Silva, 126 we reiterated the requisites:
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
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concurrence of the above conditions. Court held that college failed
to discharge this burden
Firstly, as correctly pointed out by Gabutan, et al., Nacalaban, et
al. are not the registered owners of the property, but Godofredo
Secondly, the College was aware that aside from Nacalaban, et
al., the Heirs of Melecia, were also in possession of the property.
The College cited the tax declaration which bore an annotation
that Melecia owned a residential building and Godofredo owned
the lot. 131 Also, apart from ling an ejectment case against the
Heirs of Melecia, the College retained part of the purchase price
for the demolition of Melecia's building as well
Although the College in its Answer alleged that it made an
exhaustive investigation and veri cation from all reliable sources
and found that the possession of Melecia and her heirs was merely
tolerated, 135 it failed to specify who or what these sources were.
There is no evidence that the College did inquire from Melecia or
her heirs themselves, who were occupying the property, the
nature and authority of their possession. It is not far-fetched to
conclude, therefore, that the College merely relied on the
representations of the sellers and the documents they presented
Comments:
We are aware that in the ejectment case, the MTCC and RTC ruled
in favor of the College. We emphasize, though, that the ruling on
the College's better right of possession was without prejudice to
the eventual outcome of the reconveyance case where the issue
of ownership was fully threshed out
When the defendant, however, raises the defense of ownership
in his pleadings and the question of possession cannot be resolved
without deciding the issue of ownership, the issue of ownership
shall be resolved only to determine the issue of possession. 139
Thus, the ruling on the ejectment case is not conclusive as to the
issue of ownership.
NOBLEZA VS NUEGA
FACTS:
Shirley was married to Rogelio. Sometime in 1988 when the
parties were still engaged, Shirley was working as a domestic
helper in Israel. Upon the request of Rogelio, Shirley sent him
money 5 for the purchase of a residential lot in Marikina where
they had planned to eventually build their home. Rogelio was then
also working abroad as a seaman. The following year, Rogelio
purchased the subject house and lot from Rodeanna Relaty Corp.
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 SSS 8 financing. She likewise
paid for the succeeding monthly amortizations. A TCT was issued
by the ROD in the name of Rogelio.
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 confirmed that Rogelio had been introducing Escobar as his
wife
Shirley filed Concubinage and for Legal Spearation and Liquidation
of Property.
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, Rogelio sold the subject property
to petitioner without Shirley's consent, 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.
RTC: GRANTED LEGAL SEP AND DISSOLUTION AND
LIQUIDATION OF REGIME OF ABSOLUTE COMMUNITY
Shirley instituted a Complaint 15 for Rescission of Sale and
Recovery of Property against petitioner and Rogelio
TRIAL COURT: IN FAVOR OF SHIRLEY
ISSUE: WON THE HONORABLE COURT OF APPEALS ERRED
WHEN IT AFFIRMED THE DECISION OF THE REGIONAL TRIAL
COURT BY SUSTAINING THE FINDING THAT PETITIONER WAS
NOT A PURCHASER IN GOOD FAITH.
HELD: PETITIONER WAS NOT A BUYER IN GOOD FAITH
An innocent purchaser for value is one who buys the property of
another, without notice that some other person has a right or
interest in the property, for which a full and fair price is paid by
the buyer at the time of the purchase or before receipt of any
notice of claims or interest of some other person in the property.
19 It is the party who claims to be an innocent purchaser for value
who has the burden of proving such assertion, and it is not
enough to invoke the ordinary presumption of good faith
the presumption is that first and foremost, the "buyer in good
faith" must have shown prudence and due diligence in the
exercise of his/her rights. It presupposes that the buyer did
everything that an ordinary person would do for the protection
and defense of his/her rights and interests
The prudence required of a buyer in good faith is "not that of a
person with training in law, but rather that of an average man
who 'weighs facts and circumstances without resorting to the
calibration of our technical rules of evidence of which his
knowledge is nil.'" 21
such prudence can be shown by making an ocular inspection of
the property, checking the title/ownership with the proper
Register of Deeds alongside the payment of taxes therefor, or
inquiring into the minutiae such as the parameters or lot area, the
type of ownership, and the capacity of the seller to dispose of the
property, which capacity necessarily includes an inquiry into the
civil status of the seller to ensure that if married, marital consent
is secured when necessary
Petitioner argues, among others, that since she has examined the
TCT over the subject property and found the property to have
been registered under the name of seller Rogelio alone, she is an
innocent purchaser for value and "she is not required to go
beyond the face of the title in verifying the status of the subject
property at the time of the consummation of the sale and at the
date of the sale.
We disagree with petitioner. 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 TCT of the subject property states that its sole owner is the
seller Rogelio himself who was therein also described as "single”
First, petitioner's sister Hilda Bautista, at the time of the sale, was
residing near Rogelio and Shirley's house — the subject property
— in Ladislao Diwa Village, Marikina City. Had petitioner been
more prudent as a buyer, she could have easily checked if Rogelio
had the capacity to dispose of the subject property. Had petitioner
been more vigilant, she could have inquired with such facility —
considering that her sister lived in the same Ladislao Diwa Village
where the property is located — if there was any person other
than Rogelio who had any right or interest in the subject property.
To be sure, respondent even testified that she had warned their
neighbors at Ladislao Diwa Village — including petitioner's sister
— not to engage in any deal with Rogelio relative to the purchase
of the subject property because of the cases she had filed against
Rogelio
It puzzles the Court that while petitioner has repeatedly claimed
that Rogelio is "single" under TCT No. 171963 and Tax Declaration
Nos. D-01204723 and D-012-04724, his civil status as seller was
not stated in the Deed of Absolute Sale — further creating a cloud
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on the claim of petitioner that she is an innocent purchaser for
value.
COMMENTS:
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.
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.
As held in Quiao v. Quiao: 34 When a couple enters into a regime
of absolute community, the
husband and the wife becomes joint owners of all the properties
of the marriage. Whatever property each spouse brings into the
marriage, and those acquired during the marriage (except those
excluded under Article 92 of the Family Code) form the common
mass of the couple's properties. And when the couple's marriage
or community is dissolved, that common mass is divided between
the spouses, or their respective heirs, equally or in the proportion
the parties have established, irrespective of the value each one
may have originally owned.
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
Rogelio, on his own and without the consent of herein respondent
as his spouse, sold the subject property via a Deed of Absolute
Sale dated December 29, 1992 — or during the subsistence of a
valid contract of marriage. Under Article 96 of Executive Order No.
209, otherwise known as The Family Code of the Philippines, the
said disposition of a communal property is void, viz.:
Art. 96. The administration and enjoyment of the
community property shall belong to both spouses jointly
In the event that one spouse is incapacitated or
otherwise unable to participate in the administration of
the common properties, the other spouse may assume
sole powers of administration. These powers do not
include the powers of disposition or encumbrance
without the authority of the court or the written consent
of the other spouse. In the absence of such authority or
consent, the disposition or encumbrance shall be void.
It is clear under the foregoing provision of the Family Code that
Rogelio could not sell the subject property without the written
consent of respondent or the authority of the court. Without such
consent or authority, the entire sale is void.
Shirley could not be held accountable to petitioner for the
reimbursement of her payment for the purchase of the subject
property. Under Article 94 of the Family Code, the absolute
community of property shall only be "liable for . . . [d]ebts and
obligations contracted by either spouse without the consent of the
other to the extent that the family may have been benefited . . .
." As correctly stated by the appellate court, there being no
evidence on record that the amount received by Rogelio
redounded to the benefit of the family, respondent cannot be
made to reimburse any amount to petitioner.
CUSI VS DOMINGO
FACTS:
The property in dispute was a vacant unfenced lot in the name of
respondent Lilia V. Domingo. 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
(Sy), 4 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; 5 and an affidavit of loss dated July 17, 1997,
6 whereby she claimed that her bag containing the owner's copy
of TCT No. N-165606 had been snatched from her. RTC granted
Sy’s petition.
7 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,
annotated on the dorsal portion of Sy’s TCT
TCT No. 186142 in the name of Sy was then cancelled by virtue
of the deeds of sale. All the while, the transactions between Sy
and the De Veras, and between Sy and the Cusis 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 seeking the annulment or
cancellation of titles, injunction, and damages
RTC: THE SALE BETWEEN DOMINGO AND SY IS VOID, CUSI ARE
PURCHASERS IN GOOD FAITH
LATER RTC RECONSIDERED: TCT OF DOMINGO IS REVALIDATED
CA: CA held that the sale of the property from Domingo to Sy was
null and void that Sy thereby acquired no right in the property
that she could convey to the Cusis and De Veras as her buyers
THAT Cusis and De Veras did not have the status of purchasers
in good faith and for value by reason of their being aware of Sy's
TCT No. 186142 being a reconstituted owner's copy, thereby
requiring them to conduct an inquiry or investigation
THAT the Cusis and De Veras were also aware of other facts that
should further put them on guard
ISSUES:
1. WHETHER OR NOT THE HONORABLE COURT OF
APPEALS ERRED IN FINDING THAT TRANSFER
CERTIFICATE OF TITLE NO. 186142 REGISTERED IN
THE NAME OF RADELIA SY IS A RECONSTITUTED TITLE
2. WHETHER OR NOT THE PETITIONERS ARE BUYERS IN
GOOD FAITH AND FOR VALUE
3. WHETHER OR NOT PETITIONERS ARE ENTITLED TO
REIMBURSEMENT OF ALL THE PAYMENTS MADE BY
PETITIONERS TO THEIR CO-DEFENDANTS SPOUSES
ALFRED AND RADELIA SY IN ADDITION TO DAMAGES
AND ATTORNEY'S FEES
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HELD:
Firstly, now beyond dispute is the nullity of the transfer of
Domingo's property to Sy because both lower courts united in so
finding. We consider to be significant that the Sys no longer came
to the Court for further review, thereby rendering the judgment
of the CA on the issue of nullity final and immutable as to them.
Secondly, the Cusis and De Vera commonly contend that the CA
gravely erred in not considering them to be purchasers in good
faith and for value. They argue that Sy's TCT No. 186142 was free
of any liens or encumbrances that could have excited their
suspicion; and that they nonetheless even went beyond the task
of examining the face of Sy's TCT No. 186142, recounting every
single detail of their quest to ascertain the validity of Sy's title, but
did not find anything by which to doubt her title.
The Court concurs with the finding by the CA that the Cusis and
De Vera were not purchasers for value and in good faith. The
records simply do not support their common contention in that
respect.
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
"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
There is no question that the petitioners exerted some effort as
buyers to determine whether the property did rightfully belong to
Sy. For one, they did not find any encumbrance. Nonetheless,
their observance of a certain degree of diligence within the
context of the principles underlying the Torrens system was not
their only barometer under the law and jurisprudence by which to
gauge the validity of their acquisition of title. As the purchasers of
the property, they also came under the clear obligation to
purchase the property not only in good faith but also for value.
Therein lay the problem. The petitioners were shown to have been
deficient in their vigilance as buyers of the property. It was not
enough for them to show that the property was unfenced and
vacant; otherwise, it would be too easy for any registered owner
to lose her property, including its possession, through illegal
occupation. Nor was it safe for them to simply rely on the face of
Sy's TCT No. 186142 in view of the fact that they were aware that
her TCT was derived from a duplicate owner's copy reissued by
virtue of the loss of the original duplicate owner's copy. That
circumstance should have already alerted them to the need to
inquire beyond the face of Sy's TCT in Barstowe Philippines
Corporation v. Republic, where the Court, quoting from
precedents, opined that "[t]he nature of a reconstituted Transfer
Certificate of Title of registered land is similar to that of a second
Owner's Duplicate Transfer Certificate of Title," in that "[b]oth are
issued, after the proper proceedings, on the representation of the
registered owner that the original of the said TCT or the original
of the Owner's Duplicate TCT, respectively, was lost and could not
be located or found despite diligent efforts exerted for that
purpose;" 33 and that both were "subsequent copies of the
originals thereof," a fact that a "cursory examination of these
subsequent copies would show" and "put on notice of such fact
[anyone dealing with such copies who is] thus warned to be extra-
careful”
The Cusis and the De Veras did not investigate beyond the face
of Sy's TCT No. 186142, despite the certificate derived from the
reissued duplicate owner's copy being akin to a reconstituted TCT.
Thereby, they denied themselves the innocence and good faith
they supposedly clothed themselves with when they dealt with Sy
on the property.
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 was executed on July 17, 1997, the very same day in which
Sy registered the affidavit of loss in the Registry; that Sy filed
petition for the issuance of the duplicate owner's copy of
Domingo’s TCT; that a REM was executed in favor of Emma
Turingan which was annotate on the TCT of Domingo
[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." 37 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 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. 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. 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.
petitioners were not innocent purchasers in good faith and for
value. Their failure to investigate Sy's title despite the nearly
simultaneous transactions on the property that ought to have put
them on inquiry manifested their awareness of the flaw in Sy's
title. That they did not also appear to have paid the full price for
their share of the property evinced their not having paid true value
SABERON VS VENTANILLA
FACTS:
In the earlier cases, Manila Remnant Co., Inc. (MRCI) was the
petitioner, being the owner of several parcels of land situated in
Quezon City, constituting the subdivision known as Capitol Homes
Subdivision Nos. I and II. On July 25, 1972, MRCI entered into a
contract with A.U. Valencia & Co. Inc. (AUVC) entitled "Con
rmation of Land Development and Sales Contract," whereby for a
consideration, including sales commission and management fee,
the latter was to develop the aforesaid subdivision with authority
to manage the sales thereof; execute contracts to sell to lot
buyers; and issue o cial receipts. At that time, the president of
AUVC, was Artemio U. Valencia (Valencia)
RCI and AUVC executed two (2) contracts to sell covering Lots 1
and 2 of Block 17, in favor of Ventanillas. The Ventanillas paid the
DP.
Valencia resold the same property to (Crisostomo), without any
consideration. Valencia transmitted the ctitious contract with
Crisostomo to MRCI while he kept the contracts to sell with the
Ventanillas in his private o ce les. All the amounts paid by the
latter were deposited in Valencia's bank account and remitted to
MRCI as payments of Crisostomo. The Ventanillas continued to
pay the monthly installment.
Thereafter, MRCI terminated its business relationship with AUVC
on account of irregularities discovered in its collection and
remittances. Consequently, Valencia was removed as president by
the Board of Directors of MRCI. He then stopped transmitting the
Ventanillas' monthly installments which at that time.
AUVC sued MRCI to impugn the abrogation of their agency
agreement which eventually ordered all lot buyers to deposit their
monthly amortizations with the court. AUVC informed the
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Ventanillas that it was still authorized by the trial court to collect
the monthly amortizations and requested them to continue
remitting.
MRCI caused the publication of a notice cancelling the contracts
to sell of some lot buyers including those of Crisostomo in whose
name the payments of the Ventanillas had been credited.
Believing that they had already remitted the total amount of
P73,122.35 for the two lots, the Ventanillas offered to pay the
balance to MRCI. To their shock, their names as lot buyers did not
appear in MRCI's records. MRCI refused the Ventanillas' offer to
pay for the remainder of the contract price.
Ventanillas commenced an action for speci c performance,
annulment of deeds and damages
CFI Quezon City rendered a decision declaring the contracts to
sell in favor of the Ventanillas as valid and subsisting, and
annulling the contract to sell in favor of Crisostomo. It ordered
the MRCI to execute an absolute deed of sale in favor of the
Ventanillas, free from all liens and encumbrances.
The 1990 Case
MRCI then led before this Court a petition for certiorari docketed
as G.R. No. 82978, to review the decision of the CA upholding the
solidary liability of MRCI, AUVC and Crisostomo for the payment
of moral and exemplary damages and attorney's fees to the
Ventanillas.
this Court a rmed the decision of the CA and declared the
judgment of the CFI Quezon City immediately executory.
Ventanillas moved for the issuance of writ of execution. notice of
levy was annotated in the titles of MRCI on May 31, 1991.
MRCI alleged that the subject properties
could no longer be delivered to the Ventanillas because they had
already been sold to Samuel Marquez (Marquez) on February 7,
1990, while its petition was pending before this Court.
Nevertheless, MRCI offered to reimburse the amount paid by the
Ventanillas, including legal interest plus damages. MRCI also
prayed that its tender of payment be accepted and that all
garnishments on their accounts lifted.
The Ventanillas rejected the reimbursement offered by MRCI in
lieu of the execution of the absolute deed of sale. They contended
that the alleged sale to Marquez was void, fraudulent, and in
contempt of court
MRCI then moved for reconsideration praying that it be ordered
to reimburse the Ventanillas in the amount of P263,074.10 and
that the garnishment of its bank deposit be lifted. Plea was denied
twice. CA ruled that the contract to sell in favor of Marquez did
not constitute a legal impediment to the immediate execution of
the judgment.
The 1994 Case
From the CA, the case was elevated to this Court as G.R. No.
107282 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 speci c injunction against it re-
selling the property. As a buyer in good faith, Marquez had a right
to rely on the recitals in the certi cate of title
The Ventanillas countered that the validity of the sale to them had
already been established even while the previous petition was still
awaiting resolution. The petition only questioned the solidary
liability of MRCI to the Ventanillas. Hence, the portion of the
decision ordering MRCI to execute an absolute deed of sale in
their favor had already become nal and executory when MRCI
failed to appeal it to the Court. Thus, an order enjoining MRCI
from reselling the property in litigation was unnecessary
On March 16, 1994, the Court settled the controversy in this wise:
First, the contract to sell in favor of Marquez was entered into
after the lapse of almost ten years from the rendition of the
judgment
Second, the petitioner did not invoke the contract with Marquez
during the hearing on the motion for the issuance of the writ of
execution
Third, in its manifestation and motion dated December 21, 1990,
the petitioner said it was ready to deliver the titles to the
Ventanillas provided that their counterclaims against private
respondents were paid or offset rst. There was no mention of
the contract to sell with Marquez on February 7, 1990.
Fourth, Marquez has not intervened in any of these proceedings
to assert and protect his rights to the subject property as an
alleged purchaser in good faith.
At any rate, even if it be assumed that the contract to sell in favor
of Marquez is valid, it cannot prevail over the nal and executory
judgment ordering MRCI to execute an absolute deed of sale in
favor of the Ventanillas.
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
Separate appeals were instituted by MRCI and Tabalingcos, on
one hand, and the Saberons, on the other. The former contended
that no fraudulent act could be attributed to them for the sale of
the property to the title of Marquez, considering that ROD Cleofe
was the one who inadvertently omitted the carrying over of the
notice of levy to Marquez who consequently secured a clean title
to the lot. MRCI Tabalingcos further claimed that the sale to
Marquez was effected while the previous case was still pending,
at a time when they had every liberty to believe in the legality of
their position. Meanwhile, the Saberons relied on one central
argument — that they were purchasers in good faith, having relied
on the correctness of the certi cates of title
CA:
According to the CA, the arguments espoused by MRCI and
Tabalingcos were untenable. The said parties were found guilty
of bad faith for selling the lots to Marquez at a time when litigation
as to the validity of the rst sale to the Ventanillas was still
pending. In other words, MRCI was su ciently aware of the Court
decision
the explicit pronouncement that the rst sale to the Ventanillas
was valid. This should have served as a warning to MRCI that it
could no longer deal with the property in deference to the Court's
ruling and a rmation of the trial court's order to execute the deed
of sale in favor of the Ventanillas
CA cited AFP Mutual Bene t Association, Inc. v. Santiago,
4 where the Court ruled that with respect to involuntary
liens, an entry of a notice of levy and attachment in the
primary entry or day book of the Registry of Deeds was
considered as su cient notice to all persons that the land
was already subject to attachment. Resultantly,
attachment was duly perfected and bound the land.
The Present
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Petition Aggrieved by this CA ruling, the Saberons led the present
petition. They claimed that in 1992, a certain Tiks Bautista offered
the lots to Raul Saberon, who, after being given photocopies of
the titles to the land, inquired with the Registry of Deeds for
Quezon City (ROD-QC) to verify the authenticity of the same. He
found no encumbrances or annotations on the said titles, other
than restrictions for construction and negotiation. As agreed
upon, he paid Marquez the amount of Two Million One Hundred
Thousand Pesos (P2,100,000.00)
Marquez executed the Deed of Absolute Sale in favor of the
Saberons.
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 led
by the Ventanillas with the RTC that they learned of the present
controversy.
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 o cers to deprive the Ventanillas of their right over
the subject properties.
The Saberons further pointed that the claim of the Ventanillas
over the subject properties never ripened into ownership as they
failed to consign the balance on the purchase price
Resolution of the Court
At rst glance, it would seem that the case involves convoluted
issues brought about by the number of times the Ventanillas were
impelled by circumstances to seek judicial action. Nonetheless,
the antecedents would readily reveal that the essential facts are
not disputed: 1) that the subject properties have indeed been the
objects of various transfers effected by MRCI leading to the
current controversy between the Saberons and the Ventanillas;
and 2) that prior to the sale to the Saberons, a notice of levy as
an encumbrance was already in existence.
ISSUE: whether or not the registration of the notice of levy had
produced constructive notice that would bind third persons
despite the failure of the ROD-QC to annotate the same in the
certi cates of title?
HELD:
RTC pointed out that their suspicion should have been aroused by
the circumstance that Marquez, who was not engaged in the buy-
and-sell business and had the property for only a few months,
would offer the same for sale. Although the RTC found that the
Saberons may not be considered as innocent purchasers for value
because of this circumstance, it, nonetheless, ruled that they, who
might well be unwilling victims of the fraudulent scheme
employed by MRCI and Marquez, were entitled to actual and
compensatory damages
To this latter nding, the Court agrees. 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. This is bolstered by
the fact that the RTC decision shows no categorical nding that
the Saberons' purchase of the lots from Marquez was tainted with
bad faith.
Be that as it may, no fault can likewise be imputed to the
Ventanillas. 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. It has already been
established in the two previous cases decided by the Court that
the contracts to sell executed in favor of the Ventanillas are valid
and subsisting
In fact, the Court explicitly declared that MRCI's transaction with
Marquez "cannot prevail over the nal and executory judgment
ordering MRCI to execute an absolute deed of sale in favor of the
Ventanillas."
These favorable ndings prompted the Ventanillas to register the
notice of levy on the properties
The contract to sell to Marquez was registered on May 21, 1991,
while the notice of levy was issued ten (10) days later, or on May
31, 1991. In February 1992, MRCI executed the Deed of Sale with
Marquez, under whose name the clean titles, sans the notice of
levy, were issued. A year later, or on March 11, 1992, MRCI
registered the deed of sale to Marquez who later sold the same
property to 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
The Court agrees with the position of the RTC in rejecting ROD
Cleofe's theor
In a contract of sale, the title to the property passes to the vendee
upon the delivery of the thing sold; in a contract to sell, ownership
is, by agreement, reserved in the vendor and is not to pass to the
vendee until full payment of the purchase pric
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. 12
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.
Prior registration of the lien creates a preference, since the act of
registration is the operative act to convey and affect the land. 14
Jurisprudence dictates that the said lien continues until the debt
is paid, or the sale is had under an execution issued on the
judgment or until the judgment is satis ed
Section 59 of P.D. No. 1529 provides that, "[i]f, at the time of the
transfer, subsisting encumbrances or annotations appear in the
registration book, they shall be carried over and stated in the new
certi cate or certi cates, except so far as they may be
simultaneously released or discharged." This provision
undoubtedly speaks of the ministerial duty on the part of the
Register of Deeds to carry over existing encumbrances to the
certificates of title.
From the foregoing, ROD Cleofe's theory that a deed of sale, as a
mere conclusion of a contract to sell, turns into a senior
encumbrance which may surpass a notice of levy, has no leg to
stand on
The notice was registered precisely to bind the properties and to
serve as caution to third persons who might potentially deal with
the property under the custody of the law. In DBP v. Acting
Register of Deeds of Nueva Ecija, 16 the Court ruled that entry
alone produced the effect of registration, whether the transaction
entered was a voluntary or involuntary one, so long as the
registrant had complied with all that was required of him for
purposes of entry and annotation, and nothing more remained to
be done
In cases of involuntary registration, an entry thereof in the day
book is a su cient notice to all persons even if the owner's
duplicate certi cate of title is not presented to the register of
deeds. Therefore, in the registration of an attachment, levy upon
execution, notice of lis pendens, and the like, the entry thereof in
the day book is a su cient notice to all persons of such adverse
claim.
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
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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
Su ce it to say, no bad faith can be ascribed to the parties alike.
Nevertheless, the equal footing of the parties necessarily tilts in
favor of the superiority of the Ventanillas' notice of levy, as
discussed
the attribution of laches against the Ventanillas is awed. Their
failure to learn about the structures being built on the subject
lands and the payment of real property taxes by the Saberons is
not su cient justi cation to withhold the declaration of their
ownership over it. While the Ventanillas may have been unaware
that improvements were being erected over the lots, this
obliviousness can, by no means, be treated as a lack of vigilance
on their part. It bears stressing that the Ventanillas are now of
advanced age and retired as university professors. Considering
the length of litigation which they had to endure in order to assert
their right to hold now that they have been remiss in the
protection of their rights would be the height of impropriety, if not
injustice. To exact from them an obligation to visit the land in
litigation every so often, lest they be held to have slept on their
rights, is iniquitous and unreasonable. All told, the Ventanillas
remain as innocent victims of deception
COMMENTS:
The said amount, however, is separate and distinct from those
provided under Article 448 21 in relation to Article 546 22 of the
Civil Code.
The Court finds the Saberons to be builders in good faith.
"no actual evidence that the Saberons connived with the MRCI
and Marquez to have the titles registered in their names to the
prejudice of the (Ventanillas)" and that what was obvious was that
"the Saberons dealt with clean certi cates of titles.
Consequently, Article 448 in relation to Article 546 of the Civil
Code will apply
Thus, the two options available to the Ventanillas: 1) they may
exercise the right to appropriate after payment of indemnity
representing the value of the improvements introduced and the
necessary and useful expenses defrayed on the subject lots; or 2)
they may forego payment of the said indemnity and instead,
oblige the Saberons to pay the price of the land
BPI VS SANCHEZ
FACTS:
HOME BANKERS SAVINGS VS CA
FACTS:
Each of private respondents entered into separate contracts to
sell with TransAmerican) through the latter's Owner/General
Manager, Engr. Jesus Garcia, involving certain portions of land
Respondent Arevalo – Unit 5; fully paid
Resp Alfredo Lim – Unit 1; fully paid
Resp Francis Uy – Unit 6; P800,000.00 payable in installments and
had allegedly made a total payment of P581,507.41. He ordered
to stop the payment of all [postdated] checks on the ground of
non-completion of his unit and had later learned of the foreclosure
of the property;
Resp Soriano Jr & Lilian Soriano – Unit 3; P1,600,000.00 and had
allegedly made a payment of P669,960.00. They had stopped
paying because of non-completion of the project and had later
learned of the foreclosure of the property
Resp Alfredo Lim & Santos Lim – Unit 7; fully paid; Santos Lim
subsequently sold and assigned his share of the property to
private respondent Felisa Chi Lim

It is stipulated in their respective contracts that their individual
townhouses will be fully completed. upon their full payment of the
purchase price. However, despite repeated demands,
Garcia/TransAmerican failed to comply with their undertakings
Engr. Garcia and his wife Lorelie Garcia obtained from petitioner
Home Bankers Savings and Trust Company (formerly Home
Savings Bank and Trust Company) a loan in the amount of
P4,000,000.00 and without the prior approval of the HLURB), the
spouses mortgaged eight lots as collateral. Petitioner registered
its mortgage on these titles without any other encumbrance or
lien annotated therein. The proceeds of the loan were intended
for the development of the lots into an eight-unit townhouse
project. However, ve out of these eight titles turned out to be
private respondents' townhouses subject of the contracts to sell
with Garcia/TransAmerican.
When the loan became due, Garcia failed to pay petitioner
instituted an extrajudicial foreclosure, was the highest bidder, and
was issued a certificate of sale in its favor. the sheriff's certi cate
of sale was registered and annotated on the titles of the subject
lots in the Register of Deeds
private respondents led a complaint against
Garcia/TransAmerican as seller/developer of the property and
petitioner, as indispensable party, for non-delivery of titles and
non-completion of the subdivision project. 10 They prayed for the
completion of the units, annulment of the mortgage and for
petitioner to compute individual loan values of amortizing
respondents and to accept payments from them and damage
TRIAL COURT:
MORTGAGE BETWEEN RESPONDENT AND HOME BANKERS IS
UNENFORCEABLE AGAINST ALL COMPLAINANTS; Ordering the
Register of Deeds of Quezon City to cancel the annotations of the
mortgage indebtedness between respondents Engr. Jesus Garcia
and Home Bankers; Ordering, likewise the Register of Deeds of
Quezon City to cancel the annotation of the Certi cate of Sale in
favor of the respondent Home Bankers, without prejudice to its
right to require respondent Engr. Jesus Garcia/TransAmerican to
constitute new collaterals in lieu of the said titles sufficient in value
to cover the mortgage obligation
Petitioner led an appeal with the Board of Commissioners of the
HLURB which dismissed the same. Petitioner then elevated the
case to the O ce of the President which rendered a decision
dismissing the same.
ISSUES:
1. WON THE HLURB HAS JURISDICTION TO NULLIFY OR
DECLARE UNENFORCEABLE THE REAL ESTATE
MORTGAGE VALIDLY CONSTITUTED BY THE OWNER.
2. ASSUMING ARGUENDO THAT THE HLURB HAS
JURISDICTION, RESPONDENT COURT MANIFESTLY
ERRED IN FINDING THE REAL ESTATE MORTGAGE IN
FAVOR OF HOME AS INVALID AND UNENFORCEABLE
AGAINST RESPONDENTS
3. IN THE EVENT THAT THE DECISION OF THE
RESPONDENT COURT FINDING THE REAL ESTATE
MORTGAGE IN FAVOR OF HOME AS INVALID AND
UNENFORCEABLE AGAINST RESPONDENTS IS UPHELD,
THE UNREGISTERED CONTRACTS TO SELL IN FAVOR
OF RESPONDENTS SHOULD ALSO BE HELD VALID ONLY
AS TO THE PARTIES THERETO BUT UNENFORCEABLE
AGAINST PETITIONER
PETITIONER’S CONTTN:
Petitioner claims that HLURB has no power to declare the
mortgage contract over real property executed between a real
estate developer and petitioner, a banking institution, void or
unenforceable, as it is properly within the jurisdiction of the
Regional Trial Court. being a mortgagee of the subject lots and a
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purchaser in good faith, it is not a project owner, developer, or
dealer contemplated under P.D. No. 1344, the law which
expanded the jurisdiction of the NHA; and that since there is no
sellerbuyer relationship existing between it and private
respondents, HLURB has no jurisdiction to rule on the validity of
the mortgage and to annul foreclosure proceedings
HELD:
CA did not err in affirming the decision of the Office of the
President that HLURB has jurisdiction to declare invalid the
mortgage contract executed between Garcia/TransAmerican and
petitioner over the subject lots insofar as private respondents are
concerned.
In Union Bank of the Philippines vs. HLURB, we squarely ruled on
the question of HLURB's jurisdiction to hear and decide a
condominium buyer's complaint for: (a) annulment of a real estate
mortgage constituted by the project owner without the consent
of the buyer and without the prior written approval of the NHA;
(b) annulment of the foreclosure sale; and (c) annulment of the
condominium certi cate of title that was issued to the highest
bidder at the foreclosure sale, thus:
P.D. No. 957, otherwise known as "The Subdivision and
Condominium Buyer's Protective Decree:
Sec. 3. NATIONAL HOUSING AUTHORITY. — The National
Housing Authority shall have exclusive jurisdiction to regulate the
real estate trade and business
P.D. No. 1344 of April 2, 1978 expanded the jurisdiction of the
National Housing Authority to include the following:
A. Unsound real estate business practices; ETISAc
B. Claims involving refund and any other claims filed by
subdivision lot or condominium unit buyer against the project
owner, developer, dealer, broker or salesman; and
C. Cases involving specific performance of contractual and
statutory obligations filed by buyers of subdivision lot or
condominium unit against the owner, developer, broker or
salesman
We hold that the jurisdiction of the HLURB to regulate the real
estate trade is broad enough to include jurisdiction over
complaints for speci c performance of the sale, or annulment of
the mortgage, of a condominium unit, with damages
Petitioner avers that the Union Bank ruling is not applicable in its
case, since it had no knowledge of any buyer of the subject lots
at the time the mortgage was constituted; that there was no
construction in the subject lots at the time petitioner accepted the
same as collateral; that the title to the subject property was still
in the process of being reconstituted and the loan was in fact
meant for the development of the subject lots into an eight-unit
townhouse project.
We are not persuaded.
Contrary to petitioner's claim that there were no buyers of the
subject lots at the time of the constitution of the mortgage,
records show that private respondents Arevalo, Uy, Alfredo Lim
and Santos Lim had entered into contracts to sell with
Garcia/TransAmerican as early as 1988
the subject lots are, as early as 1988, subdivision lots which as de
ned under Section 2(e) of P.D. No. 957 to mean any of the lots,
whether residential, commercial, industrial, or recreational in a
subdivision project 20 are entitled to the protection of P.D. No.
957.
Under Section 18 of P.D. No. 957, it is provided that no mortgage
on any unit or lot shall be made by the owner or developer without
prior written approval of the authority. Such approval shall not be
granted unless it is shown that the proceeds of the mortgage loan
shall be used for the development of the condominium or
subdivision project and effective measures have been provided to
ensure such utilization. As in the Union Bank, the mortgage was
constituted on the subject lots in favor of petitioner without the
prior written approval from the HLURB, thus HLURB has
jurisdiction to rule on the validity of the mortgage.
Since the lot was mortgaged in violation of Section 18 of P.D. No.
957, HLURB has jurisdiction to declare the mortgage void insofar
as private respondents are concerned and to annul the foreclosure
sale. In Far East Bank and Trust Co. vs. Marquez, 21 we held that
Section 18 of P.D. No. 957 is a prohibitory law, and acts
committed contrary to it are void
Since the mortgage is void, HLURB's orders of the cancellation of
the sheriff's certi cate of sale, release of the mortgaged lots and
delivery of the corresponding titles to respondents who had fully
paid the purchase price of the units are but the necessary
consequences of the invalidity of the mortgage for the protection
of private respondents.
Anent the second issue, petitioner contends that since the titles
on their face were free from any claims, liens and encumbrances
at the time of the mortgage, it is not obliged under the law to go
beyond the certi cates of title registered under the Torrens
system and had every reason to rely on the correctness and
validity of those titles.
We are not convinced.
In this case, petitioner knew that the loan it was extending to
Garcia/TransAmerican was for the purpose of the development of
the eight-unit townhouses. Petitioner's insistence that prior to the
approval of the loan, it undertook a thorough check on the
property and found the titles free from liens and encumbrances
would not su ce. It was incumbent upon petitioner to inquire into
the status of the lots which includes veri cation on whether Garcia
had secured the authority from the HLURB to mortgage the
subject lots. Petitioner failed to do so.
The conversion of the status of petitioner from mortgagee to
buyer-owner will not lessen the importance of such knowledge.
24 Neither will the conversion set aside the consequence of its
negligence as a mortgagee
Judicial notice can be taken of the uniform practice of banks to
investigate, examine and assess the real estate offered as security
for the application of a loan. We cannot overemphasize the fact
that the Bank cannot barefacedly argue that simply because the
title or titles offered as security were clean of any encumbrances
or lien, that it was thereby relieved of taking any other step to
verify the over-reaching implications should the subdivision be
auctioned on foreclosure
As to the third issue, petitioner contends that private respondents
were negligent in failing to register their contracts to sell in
accordance with Section 17 of P.D. No. 957; that private
respondents' unregistered contracts to sell are binding only on
them and Garcia/TransAmerican but not on petitioner which had
no actual or constructive notice of the sale at the time the
mortgage was constituted.
We disagree.
Section 17 of P.D. No. 957 28 provides that the seller shall register
the contracts to sell with the Register of Deeds of Quezon City.
Thus, it is Garcia's responsibility as seller to register the contracts
and petitioner should not blame private respondents for not doing
so
The last paragraph of Section 18 of P.D. No. 957 provides that
respondents who have not yet paid in full have the option to pay
their installment for the lot directly to the mortgagee (petitioner)
who is required to apply such payments to the corresponding
mortgage indebtedness secured by the particular lot or unit being
paid for, with a view to enabling said buyer to obtain title over the
lot or unit promptly after full payment thereof. Thus, petitioner is
obliged to accept the payment of remaining unpaid amortizations,
without prejudice to petitioner bank's seeking relief against the
subdivision developed
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it must be stated that Garcia/TransAmerican is not an
indispensable party since a nal determination on the validity of
the mortgage over the subject lots can be rendered against
petitioner. Thus, the absence of Garcia/TransAmerican did not
hamper the OAALA from resolving the dispute between private
respondents and petitioner.
I n China Bank vs. Oliver, 30 we held that the mortgagor, who
allegedly misrepresented herself to be Mercedes M. Oliver, the
registered owner of TCT No. S50195, is not an indispensable party
in a case led by a person claiming to be the true registered
owner, for annulment of mortgage and cancellation of title against
the mortgagee, China Bank. We found therein that even without
the mortgagor, the true Mercedes Oliver can prove in her
complaint that she is the real person referred in the title
In the present case, private respondents, in their complaint,
alleged that the
mortgage was constituted without the prior written approval of
the HLURB which is in violation of Section 18 of P.D. No. 957.
Petitioner's admission that it granted and released the loan
without notifying the HLURB because of its belief that it was not
necessary to do so, is fatal to petitioner's defense. As a
consequence thereof, the mortgage constituted in favor of
petitioner can be declared invalid as against private respondents
even without the presence of Garcia/TransAmerican
DELA MERCED VS GSIS
FACTS:
This case involves ve registered parcels of land, These lots were
originally owned by, and titled in the name Zulueta
Later, the Zulueta spouses mortgaged several lots which
eventually foreclosed on the mortgaged properties, including the
subject properties. TCT No. 23554 10 was issued in GSIS's name.
Upon learning of the foreclosure, petitioners' predecessor, (Dela
Merced) led a complaint 12 praying for the nullity of the GSIS
foreclosure on the subject properties 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, 13 who were claiming Lot 6, Block 2 by virtue of a sale
executed by the GSIS in their daughter's (Elizabeth Manlongat)
favor
Dela Merced caused the annotation of lis pendens 15 on GSIS's
TCT. Dela Merced died in 1988 and was substituted by his heirs
a Decision 16 was rendered in petitioners' favor. The Court nulli
ed GSIS's foreclosure
petitioners led a Motion for Execution
GSIS opposed the motion for execution, citing as basis GSIS Act
of 1997. The said provision allegedly exempts GSIS funds and
properties from attachment, garnishment, execution, levy and
other court processes.
trial court granted petitioners' motion for execution; but held in
abeyance the execution of the award of attorney's fees, pending
clari cation before the higher courts of the issue of GSIS's
exemption
Eventually, GSIS led with the Court of Appeals (CA) a petition for
certiorari and prohibition against the trial court's implementation
of the writ of execution
CA dismissed GSIS's petition and held that execution may be
enforced against it:
It must be considered that the properties are not the properties
of petitioner GSIS. Decision on Sept 11, 2001 declared inter alia
that the certi cates of title issued to petitioner GSIS pertaining to
Lot Nos. 6, 7, 8, and 10 of Block 2 and Lot 8 of Block 8 are null
and void
[P]etitioner GSIS has no interest over the subject properties and
. . . had never validly acquired ownership thereof

the execution of the subject properties is proper for to assert
otherwise, would be depriving private respondents dela Merced
and Paredes of their properties without due process of law as it
had been clearly established on record that they really owned the
subject properties. to uphold petitioner GSIS' theory would
inevitably lead to a disastrous consequence and lend imprimatur
to deprivation of property without due process of law
After the resolution of the issue of GSIS's exemption, petitioners
encountered more problems with the execution. According to the
RD of Pasig City, Policarpio Espenesin, he could not enforce the
Decision in G.R. No. 140398 as worded
because GSIS no longer had title over these two lots. GSIS had
already conveyed these lots in 1985 and 1988 to Diogenes
Bartolome (Lot 8) and Antonio Dimaguila [Dimaguila] (Lot 7),
respectively. While both titles contain notices of lis pendens
carried over from GSIS's title, 38 the RD claimed that the writ of
execution must rst be modi ed to include the cancellation of
derivative titles of the GSIS title.
The RD also found dif culty in implementing the order to cancel
GSIS's titles over Lot 10 of Block 2 and Lot 8 of Block 8 because
no such individual titles exist in his records. The RD posited that
these two lots must still be included in GSIS's "mother" title. he
RD opined that he cannot cancel GSIS's mother title, even if it
contains Lot 10 of Block 2 and Lot 8 of Block 8 because it would
affect other lots that might still be included therein.
The RD further lamented that assuming he could cancel GSIS's
mother title with respect to Lot 10 of Block 2 and Lot 8 of Block
8, there is still no way that he could issue new titles over these
lots in petitioners' name. This is because his of ce has no
information regarding the technical descriptions for these two
lots. The RD thus suggested that the parties provide him with
these relevant information before he can proceed.
petitioners led before the trial court a Motion for Supplemental
Writ of Execution. cancel the titles over Lots 7 and 8 of Block 2 in
GSIS's name or in the name of other subsequent transferees; and
directing the GSIS and the Bureau of Lands to supply the RD with
the technical descriptions.
GSIS opposed.
GSIS CONTTN:
GSIS argues that petitioners' motion was properly denied because
it seeks to modify a nal and executory Decision. The September
11, 2001 Decision in G.R. No. 140398 only ordered the
cancellation of GSIS's titles over the subject properties. It did not
order the cancellation of all derivative titles of GSIS's transferees;
nor did it order the GSIS to perform acts such as providing the RD
with the technical descriptions for Lot 10, Block 2 and Lot 8, Block
8 that Dimaguila's and Victorino's titles, or any other title over the
Further, GSIS argues that the inclusion of "derivative titles” would
deprive the holders of these derivative titles their day in court.
GSIS opines that the holders of the derivative titles are not bound
by the judgment against GSIS because these holders are
strangers to the action between GSIS and petitioner
PETITIONER’S CONTTN:
Petitioners counter that the September 11, 2001 Decision can
be enforced against GSIS's transferees pendente lite because
these transferees were given notice of the pendency of the case
by virtue of the notice of lis pendens that had been inscribed on
GSIS's TCT. In fact, this notice was carried over to their respective
titles. Moreover, the conveyance of these lots transpired during
the pendency of the case.
As transferees pendente lite, Dimaguila's and Victorino's titles are
proper subjects of writs of execution even if they were not actual
parties to the case
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petitioners argue that GSIS can be compelled to provide the RD
with their respective technical descriptions. This power is granted
to the courts under Section 10, Rule 39 of the Rules of Court
As regards GSIS's alleged exemption, petitioners posit that the
GSIS can no longer raise the issue of exemption from execution
given that the CA had already rendered its Decision on that
question
ISSUES:
1. Can GSIS still raise the issue of exemption?
2. Whether a nal and executory judgment against GSIS
and Manlongat can be enforced against their successors-
in-interest or holders of derivative titles
3. Whether an order to cancel title to a particular property
includes an order to provide technical descriptions and
segregate it from its mother title
HELD:
1. The issue of GSIS's alleged exemption under RA 8291
had been nally decided against GSIS in G.R. No.
173391, when this Court denied GSIS's petition for
review. 49 The Decision in G.R. No. 173391 allowing the
execution of the judgment against GSIS is the "law of
the case" and controls the proceedings below which are
already in the execution stage.
2. "A notice of lis pendens is an announcement to the whole
world that a particular real property is in litigation,
serving as a warning that one who acquires an interest
over said property does so at his own risk
Once a notice of lis pendens has been duly registered, any
cancellation or issuance of the title of the land involved as well as
any subsequent transaction affecting the same, would have to be
subject to the outcome of the litigation
It is not disputed that petitioners caused the annotation of lis
pendens on TCT No. 23554, which covers Lots 7 and 8 of Block 2
as early as Sept 21, 1984. TCT No. 23554 was cancelled with
respect to Lots 7 and 8 of Block 2 and new individual titles were
issued to Victorino and Dimaguila. Both titles had the notice of lis
pendens which was carried over from TCT No. 23554. Ineluctably,
both Victorino and Dimaguila had notice of the litigation involving
GSIS's ownership over the subject properties, and were bound by
the outcome of the litigation
The existence of these entries on Dimaguila's and Victorino's titles
bars any defense of good faith 54 against petitioners and
effectively makes Dimaguila and Victorino mere privies of GSIS
and subject to whatever rights GSIS might have in the subject
properties, which (as it turns out) is none at all. Given the legal
maxim that a spring cannot rise higher than its source, it follows
subject properties that are derived from TCT No. 23554 of the
GSIS, are likewise null and void
Lis pendens, which literally means pending suit, refers to the
jurisdiction, power or control which a court acquires over property
involved in a suit, pending the continuance of the action, and until
nal judgment. Founded upon public policy and necessity, lis
pendens is intended to keep the properties in litigation within the
power of the court until the litigation is terminated, and to prevent
the defeat of the judgment or decree by subsequent alienation. .
..
The ling of a notice of lis pendens has a twofold effect: (1) to
keep the subject matter of the litigation within the power of the
court until the entry of the nal judgment to prevent the defeat
of the nal judgment by successive alienations; and (2) to bind a
purchaser, bona de or not, of the land subject of the litigation to
the judgment or decree that the court will promulgate
subsequently.
The Court cannot accept GSIS's theory that the dispositive portion
of the Decision in G.R. No. 140398 is enforceable only against
GSIS's title because it does not contain the phrase "and all its
derivative titles." GSIS's narrow interpretation would render
nugatory the principle that a nal judgment against a party is
binding on his privies and successors-in-interest.

In Cabresos v. Judge Tiro, the Court upheld the respondent

judge's issuance of an alias writ of execution against the
successors-in-interest of the losing litigant despite the fact that
these successors-in-interest were not mentioned in the judgment
and were never parties to the case. The Court explained that an
action is binding on the privies of the litigants even if such privies
are not literally parties to the action. Their inclusion in the writ of
execution does not vary or exceed the terms of the judgment.

3. The RD has to cause their cancellation. If the

cancellation can only be carried out by requiring GSIS or
the Bureau of Lands to provide the necessary
information, then they can be compelled to do so.
Otherwise, the Court's decision would be rendered inef
cacious, and GSIS would retain ostensible ownership
over the lots by the simple expedience that they are
included in a mother title, instead of individual titles.
That result is manifestly contrary to the Court's ruling
and would subvert the very purpose of bringing this case
for a complete resolution.

in Republic Surety and Insurance Co., Inc. v. Intermediate

Appellate Court. 62 In that case, the Court declared that Republic
Mines had no right to the property involved but during the
execution, the RD refused to cancel the TCT in Republic Mine's
name on the ground that the dispositive portion of the trial court's
Decision did not order the RD to cancel the title and to revive the
old title in favor of the victorious party. The Court held that the
missing "order to cancel and revive" should be deemed implied:

What is involved here is not what is ordinarily regarded as a

clerical error. what is involved here is not a correction of an
erroneous judgment or dispositive portion of a judgment. What
we believe is involved here is what might be described as a logical
follow-through of something set forth both in the body of the
decision and in the dispositive portion thereof: the annulment of
the Deed of Sale with Assumption of Mortgage. The dispositive
portion of the decision itself declares the nullity ab initio of the
simulated Deed of Sale with Assumption of Mortgage and
instructed the petitioners and all persons claiming under them to
vacate the subject premises
Substantial justice cannot be served if the petitioner Republic
Mines, having absolutely no right, legal or equitable, to the
property involved, its claim thereto being based upon a
transaction which was not only simulated but also immoral and
unconscionable, should be allowed to retain the Transfer Certi
cate of Title in its name. It cannot be an adequate remedy for the
respondent-spouses to have to start once more in the Court of
First Instance, to ask that court to clarify its own judgment, a
process which could be prolonged by the ling of petitions for
review in the Court of Appeals and eventually in this Court once
more. public policy demands that we cut this knot here and now
When a judgment calls for the issuance of a new title in favor of
the winning party (as in the instant case), it logically follows that
the judgment also requires the losing party to surrender its title
for cancellation. It is the only sensible way by which the decision
may be enforced. To this end, petitioners can obtain a court order
requiring the registered owner to surrender the same and
directing the entry of a new certi cate of title in petitioners' favor.
65 The trial court should have granted petitioners' motion for
supplemental writ of execution as it had authority to issue the
necessary orders to aid the execution of the final judgment

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