PROPERTY REGISTRATION OVERVIEW – Whether or not the title of Petitioner can be

cancelled

FACTS:
-

a) Petitioner’s Arguments (Fudot - Lost)

-

b) Respondent’s Arguments (Cattleya Land Inc. - Win)

- Filed a case for the cancellation of the registration of the land in favor of Petitioner.
-Argued that the registration of the land and the TCT in favor of Petitioner was void because the
signature of one of the spouses, who are the original owners, in the deed of sale was forged.
They filed this because they are also buyers of the land from the spouses

ISSUE:
- Whether or not the title of Petitioner can be cancelled

RULING:
Conclusion:
- The title of Petitioner can be cancelled. The appeal is dismissed.
Rule:
- In the first place, there is no double sale to speak of. Art. 1544 of the Civil Code, 24 which
provides the rule on double sale, applies only to a situation where the same property is validly
sold to different vendees. In this case, there is only one sale to advert to, that between the
spouses Tecson and respondent.
- The congruence of the wills of the spouses is essential for the valid disposition of conjugal
property.27 Thus, under Article 166 of the Civil Code 28 which was still in effect on 19 December
1986 when the deed of sale was purportedly executed, the husband cannot generally alienate or
encumber any real property of the conjugal partnership without the wife’s consent.
- The act of registration does not validate petitioner’s otherwise void contract. Registration is a
mere ministerial act by which a deed, contract, or instrument is sought to be inscribed in the
records of the Office of the Register of Deeds and annotated at the back of the certificate of title
covering the land subject of the deed, contract, or instrument. While it operates as a notice of the
deed, contract, or instrument to others, it does not add to its validity nor converts an invalid
instrument into a valid one as between the parties,32 nor amounts to a declaration by the state that
the instrument is a valid and subsisting interest in the land. 33 The registration of petitioner’s void
deed is not an impediment to a declaration by the courts of its invalidity.
Application:
-In this case,
Conclusion:
- Thus, the title of Petitioner can be cancelled. The appeal is dismissed.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 171008               September 13, 2007

CARMELITA FUDOT, Petitioner,

vs.
CATTLEYA LAND, INC., VELASCO, JR., JJ. Respondent.

DECISION

TINGA, J.:

For resolution is a petition that seeks to nullify the Decision1 and Resolution2 of the Court of
Appeals dated 28 April 2005 and 11 January 2006, respectively, in C.A.–G.R. CV No. 73025
which declared respondent as having a better right over a parcel of land located in Doljo,
Panglao, Bohol.

The facts, as culled from the records, follow.

Sometime in July 1992, Cattleya Land, Inc. (hereinafter referred to as respondent) asked
someone to check, on its behalf, the titles of nine (9) lots, the subject land included, which it
intended to buy from the spouses Troadio and Asuncion Tecson. Finding no defect on the titles,
respondent purchased the nine lots through a Deed of Conditional Sale on 6 November 1992.
Subsequently, on 30 August 1993, respondent and the Tecsons executed a Deed of Absolute Sale
over the same properties. The Deed of Conditional Sale and the Deed of Absolute Sale were
registered with the Register of Deeds on 06 November 1992 and 04 October 1993, respectively.3
The Register of Deeds, Atty. Narciso dela Serna, refused to actually annotate the deed of sale on
the titles because of the existing notice of attachment in connection with Civil Case No. 3399
pending before the Regional Trial Court of Bohol.4 The attachment was eventually cancelled by
virtue of a compromise agreement between the Tecsons and their attaching creditor which was
brokered by respondent. Titles to six (6) of the nine (9) lots were issued, but the Register of
Deeds refused to issue titles to the remaining three (3) lots , because the titles covering the same
were still unaccounted for.

On 23 January 1995, petitioner presented for registration before the Register of Deeds the
owner’s copy of the title of the subject property, together with the deed of sale purportedly
executed by the Tecsons in favor of petitioner on 19 December 1986. On the following day,
respondent sent a letter of protest/opposition to petitioner’s application. Much to its surprise,
respondent learned that the Register of Deeds had already registered the deed of sale in favor of
petitioner and issued a new title in her name.5
On 5 May 1995, respondent filed its Complaint6 for Quieting Of Title &/Or Recovery Of
Ownership, Cancellation Of Title With Damages before the Regional Trial Court of Tagbilaran
City.7 On 26 June 1995, Asuncion filed a complaint-in-intervention, claiming that she never
signed any deed of sale covering any part of their conjugal property in favor of petitioner. She
averred that her signature in petitioner’s deed of sale was forged thus, said deed should be
declared null and void.8 She also claimed that she has discovered only recently that there was an
amorous relationship between her husband and petitioner.9

Petitioner, for her part, alleged in her answer10 that the spouses Tecson had sold to her the subject
property for P20,000.00 and delivered to her the owner’s copy of the title on 26 December 1986.
She claims that she subsequently presented the said title to the Register of Deeds but the latter
refused to register the same because the property was still under attachment.

On 31 October 2001, the trial court rendered its decision:11 (i) quieting the title or ownership of
the subject land in favor of respondent; (ii) declaring the deed of sale between petitioner and
spouses Tecson invalid; (iii) ordering the registration of the subject land in favor of respondent;
(iv) dismissing respondent’s claim for damages against the Register of Deeds for insufficiency of
evidence; (v) dismissing Asuncion’s claim for damages against petitioner for lack of factual
basis; and (vi) dismissing petitioner’s counterclaim for lack of the required preponderance of
evidence.12

According to the trial court, respondent had recorded in good faith the deed of sale in its favor
ahead of petitioner. Moreover, based on Asuncion’s convincing and unrebutted testimony, the
trial court concluded that the purported signature of Asuncion in the deed of sale in favor of
petitioner was forged, thereby rendering the sale void.13

Petitioner sought recourse to the Court of Appeals, arguing in the main that the rule on double
sale was applicable to the case. The appellate court, however, dismissed her appeal, holding that
there was no double sale because the alleged sale to petitioner was null and void in view of the
forgery of Asuncion’s purported signature in the deed. The appellate court noted that petitioner
failed to rebut Asuncion’s testimony despite opportunities to do so.14 Moreover, even if there was
double sale, according to the appellate court, respondent’s claim would still prevail since it was
able to register the second sale in its favor in good faith, had made inquiries before it purchased
the lots, and was informed that the titles were free from encumbrance except the attachment on
the property due to Civil Case No. 3399.15

Petitioner sought reconsideration of the decision but the Court of Appeals denied her motion for
reconsideration for lack of merit.16

Petitioner thus presents before this Court the following issues for resolution:

I.

BETWEEN 2 BUYERS OF REGISTERED LAND, WHO HAS THE BETTER RIGHT-IS IT

THE FIRST BUYER WHO WAS GIVEN THE OWNER’S DUPLICATE TCT TOGETHER
WITH A DEED OF SALE IN 1986, OR THE SECOND BUYER IN 1992 WITH ONLY A
DEED OF SALE.

II.

IS A BUYER OF REGISTERED LAND WHO DID NOT DEMAND OR REQUIRE THE

DELIVERY OF THE OWNER’S DUPLICATE TCT A BUYER IN GOOD FAITH.

III.

II. IN SUBSEQUENT REGISTRATION OF REGISTERED LANDS, AS BY SALE, WHICH

LAW SHALL GOVERN, ARTICLE 1455 OF CIVIL CODE OR P.D. 1529 OR TORRENS
SYSTEM.17

Petitioner avers that she was the first buyer in good faith and even had in her possession the
owner’s copy of the title so much so that she was able to register the deed of sale in her favor and
caused the issuance of a new title in her name. She argues that the presentation and surrender of
the deed of sale and the owner’s copy carried with it the "conclusive authority of Asuncion
Tecson" which cannot be overturned by the latter’s oral deposition.18

Petitioner claims that respondent did not demand nor require delivery of the owner’s duplicate
title from the spouses Tecson, neither did it investigate the circumstances surrounding the
absence of the title. These indicate respondent’s knowledge of a defect in the title of the spouses
and, thus, petitioner concludes that respondent was not a buyer in good faith.19

Finally, petitioner insists that the applicable law in this case is P.D. No. 1529, a special law
dealing precisely with the registration of registered lands or any subsequent sale thereof, and not
Article 1544 of the Civil Code which deals with immovable property not covered by the Torrens
System.20

Respondent points out, on one hand, that petitioner’s first two issues which present an inquiry on
who has a better right or which one is a buyer in good faith, are questions of fact not proper in a
petition for review. The third issue, on the other hand, is ostensibly a question of law which had
been unsuccessfully raised below.21

Respondent maintains that there is no room to speak of petitioner as a buyer in good faith since
she was never a buyer in the first place, as her claim is based on a null and void deed of sale, so
the court a quo found. Respondent also asserts that its status as a buyer in good faith was
established and confirmed in the proceedings before the two courts below.22

Lastly, respondent argues that P.D. No. 1529 finds no application in the instant case. The
"production of the owner’s duplicate certificate x x x being conclusive authority from the
registered owner" is only true as between the registration applicant and the register of deeds
concerned, but never to third parties. Such conclusive authority, respondent adds, is "only for the
Register of Deeds to enter a new certificate or to make a memorandum of registration in
accordance with such instrument." It cannot cure the fatal defect that the instrument from which
such registration was effected is null and void ab initio, respondent concludes.23

RULING

The petition is bereft of merit.

Petitioner’s arguments, which rest on the assumption that there was a double sale, must fail.

In the first place, there is no double sale to speak of. Art. 1544 of the Civil Code,24 which
provides the rule on double sale, applies only to a situation where the same property is validly
sold to different vendees. In this case, there is only one sale to advert to, that between the
spouses Tecson and respondent.

In Remalante v. Tibe,25 this Court ruled that the Civil Law provision on double sale is not
applicable where there is only one valid sale, the previous sale having been found to be
fraudulent. Likewise, in Espiritu and Apostol v. Valerio,26 where the same parcel of land was
purportedly sold to two different parties, the Court held that despite the fact that one deed of sale
was registered ahead of the other, Art. 1544 of the Civil Code will not apply where said deed is
found to be a forgery, the result of this being that the right of the other vendee should prevail.

The trial court declared that the sale between the spouses Tecson and petitioner is invalid, as it
bears the forged signature of Asuncion. Said finding is based on the unrebutted testimony of
Asuncion and the trial court’s visual analysis and comparison of the signatures in her Complaint-
in-Intervention and the purported deed of sale. This finding was upheld by the Court of Appeals,
as it ruled that the purported sale in petitioner’s favor is null and void, taking into account
Asuncion’s unrefuted deposition. In particular, the Court of Appeals noted petitioner’s failure to
attend the taking of the oral deposition and to give written interrogatories. In short, she did not
take the necessary steps to rebut Asuncion’s definitive assertion.

The congruence of the wills of the spouses is essential for the valid disposition of conjugal
property.27 Thus, under Article 166 of the Civil Code28 which was still in effect on 19 December
1986 when the deed of sale was purportedly executed, the husband cannot generally alienate or
encumber any real property of the conjugal partnership without the wife’s consent.

In this case, following Article 17329 of the Civil Code, on 26 June 1995, or eight and a half years
(8 ½) after the purported sale to petitioner, Asuncion filed her Complaint-in-Intervention seeking
the nullification thereof, and while her marriage with Troadio was still subsisting. Both the Court
of Appeals and the trial court found Asuncion’s signature in the deed of sale to have been forged,
and consequently, the deed of sale void for lack of marital consent. We find no reason to disturb
the findings of the trial court and the Court of Appeals. Findings of fact of lower courts are
deemed conclusive and binding upon the Supreme Court subject to certain exceptions,30 none of
which are present in this case. Besides, it has long been recognized in our jurisprudence that a
forged deed is a nullity and conveys no title.31
Petitioner argues she has a better right over the property in question, as the holder of and the first
one to present, the owner’s copy of the title for the issuance of a new TCT. The Court is not
persuaded.

The act of registration does not validate petitioner’s otherwise void contract. Registration is a
mere ministerial act by which a deed, contract, or instrument is sought to be inscribed in the
records of the Office of the Register of Deeds and annotated at the back of the certificate of title
covering the land subject of the deed, contract, or instrument. While it operates as a notice of the
deed, contract, or instrument to others, it does not add to its validity nor converts an invalid
instrument into a valid one as between the parties,32 nor amounts to a declaration by the state that
the instrument is a valid and subsisting interest in the land.33 The registration of petitioner’s void
deed is not an impediment to a declaration by the courts of its invalidity.

Even assuming that there was double sale in this case, petitioner would still not prevail. The
pertinent portion of Art. 1544 provides:

Art. 1544. x x x.

Should it be immovable property, the ownership shall belong to the person acquiring it who in
good faith first recorded it in the Registry of Property.

x x x x.

In interpreting this provision, the Court declared that the governing principle is primus tempore,
potior jure (first in time, stronger in right). Knowledge gained by the first buyer of the second
sale cannot defeat the first buyer’s rights, except where the second buyer registers in good faith
the second sale ahead of the first as provided by the aforequoted provision of the Civil Code.
Such knowledge of the first buyer does not bar him from availing of his rights under the law,
among them to register first his purchase as against the second buyer. However, knowledge
gained by the second buyer of the first sale defeats his rights even if he is first to register the
second sale, since such knowledge taints his prior registration with bad faith.34 It is thus essential,
to merit the protection of Art. 1544, second paragraph, that the second realty buyer must act in
good faith in registering his deed of sale.35

We agree with the trial court and the Court of Appeals that respondent was a buyer in good faith,
having purchased the nine (9) lots, including the subject lot, without any notice of a previous
sale, but only a notice of attachment relative to a pending civil case. In fact, in its desire to finally
have the title to the properties transferred in its name, it persuaded the parties in the said case to
settle the same so that the notice of attachment could be cancelled.

Relevant to the discussion are the following provisions of P.D. No. 1529:

Sec. 51. Conveyance and other dealings by registered owner.— An owner of registered land may
convey, mortgage, lease, charge or otherwise deal with the same in accordance with existing
laws. He may use such forms of deeds, mortgages, lease or other voluntary instruments as are
sufficient in law. But no deed, mortgage, lease or other voluntary instrument, except a will
purporting to convey or affect registered land shall take effect as a conveyance or bind the land,
but shall operate only as a contract between the parties and as evidence of authority to the
Register of Deeds to make Registration.

The act of registration shall be the operative act to convey or affect the land insofar as third
persons are concerned, and in all cases under this Decree, the registration shall be made in the
office of the Register of Deeds for the province or city where the land lies. (Emphasis supplied)

Sec. 52. Constructive notice upon registration.—Every conveyance, mortgage, lease, lien
attachment, order, judgment, instrument or entry affecting registered land shall, if registered,
filed or entered in the office of the Register of Deeds for the province or city where the land to
which it relates lies, be constructive notice to all persons from the time of such registering, filing
or entering.

It has been held that between two transactions concerning the same parcel of land, the registered
transaction prevails over the earlier unregistered right. The act of registration operates to convey
and affect the registered land so that a bona fide purchaser of such land acquires good title as
against a prior transferee, if such prior transfer was unrecorded.36 As found by the courts a quo,
respondent was able to register its purchase ahead of petitioner. It will be recalled that
respondent was able to register its Deed of Conditional Sale with the Register of Deeds as early
as 6 November 1992, and its Deed of Absolute Sale on 14 October 1993. On the other hand,
petitioner was able to present for registration her deed of sale and owner’s copy of the title only
on 23 January 1995, or almost nine years after the purported sale. Why it took petitioner nine (9)
years to present the deed and the owner’s copy, she had no credible explanation; but it is clear
that when she finally did, she already had constructive notice of the deed of sale in respondent’s
favor. Without a doubt, respondent had acquired a better title to the property.1âwphi1

Finally, anent petitioner’s claim that P.D. No. 1529 applies to registered lands or any subsequent
sale thereof, while Art. 1544 of the Civil Code applies only to immovable property not covered
by the Torrens System, suffice it to say that this quandary has already been answered by an
eminent former member of this Court, Justice Jose Vitug, who explained that the registration
contemplated under Art. 1544 has been held to refer to registration under P.D. No. 1529, thus:

The registration contemplated under Art. 1544 has been held to refer to registration under Act
496 Land Registration Act (now PD 1529) which considers the act of registration as the
operative act that binds the land (see Mediante v. Rosabal, 1 O.G. [12] 900, Garcia v. Rosabal,
73 Phil 694). On lands covered by the Torrens System, the purchaser acquires such rights and
interest as they appear in the certificate of title, unaffected by any prior lien or encumbrance not
noted therein. The purchaser is not required to explore farther than what the Torrens title, upon
its face, indicates. The only exception is where the purchaser has actual knowledge of a flaw or
defect in the title of the seller or of such liens or encumbrances which, as to him, is equivalent to
registration (see Sec. 39, Act 496; Bernales v. IAC, G.R. 75336, 18 October 1988; Hernandez vs.
Sales, 69 Phil 744; Tajonera s. Court of Appeals, L-26677, 27 March 1981) (Emphasis
supplied)37
WHEREFORE, the petition is DENIED. The assailed decision and resolution of the Court of
Appeals are affirmed. Costs against petitioner.

SO ORDERED.