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G.R. No. 138201 September 12, 2000

FRANCISCO BAYOCA, NONITO DICHOSO and SPOUSES PIO DICHOSO andDOLORES DICHOSO and ERWIN BAYOCA, petitioners,vs.

GAUDIOSO NOGALES represented by HENRY NOGALES, respondent.4Note: DATES ARE IMPORTANT IN THIS CASE>>

When the Spouses Juan Canino and Brigida Domasig died intestate, before 1947, theywere survived by their legitimate children, namely, Preciosa Canino, married to EmilioDeocareza, Consolacion Canino, Dolores Canino, Isidra Canino and Tomas Caninowho inherited, from their father, a parcel of land, located in Prieto-Diaz, Sorsogoncovered by Tax Declaration No. 9659,

On December 15, 1947, Preciosa Canino executed an unnotarized "Deed of Sale of

Real Property with Right of Repurchase" , Julia Deocareza. The parties covenanted,that the property described therein was unencumbered and to register the deed under Act 3344. On the basis of said deed, Tax Declaration No. 3489 was issued over theproperty, under the name of Julia Deocareza.

On April 29, 1968, Julia Deocareza executed an unnotarized "Compromise Agreement",in the local dialect, in favor of NOGALES whereby she sold THE aforesaid property sheearlier purchased.

She promised, in said deed, to have her brothers, Ambrosio and Emilio Deocareza, andtheir families, vacate the said property. But failed. The Appellee forthwith filed a

complaint, sometime in 1975, with the Regional Trial Court of Sorgoson, against EmilioDeocareza, and Julia Deocareza for "Recovery of Possession"

In the interim, a cadastral survey was conducted in sorsogon. The heirs were able tosubdivide the property and adjudicate the lot on their respective shares.and. From theyear 1972 to 1989. Different sales were made to petitioners over the same property. Asa consequence PETITIONERS were even able to obtain FREE PATENTS and tax dec.

On February 7, 1983, the Regional Trial Court promulgated a Decision, in Civil CaseNo. 975 in favor of the NOGALES

On September 8, 1992, the NOGALEZ filed a complaint against the AppellantsFrancisco Bayoca, Nonito Dichoso and the Spouses Pio Dichoso and Dolores Dichosofor "Accion Reinvindicatoria

NOGALES in his complaint, that he purchased the said property, with an area of 21,000square meters, from Julia Deocareza, and thus acquired ownership thereof and that the

Appellants respectively purchased portions of said property, in bad faith and through

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fraud, the Appellants knowing of the pendency of Civil Case No. 975, before theRegional Trial Court, involving the said property.

Petitioners, however, rely on the fact that they were the first to register the sales of thedifferent portions of the property, resulting in the issuance of new titles in their names.

ISSUE: "WHETHER OR NOT THE PETITIONERS CLAIM OF OWNERSHIP BYVIRTUE OF THEIR RESPECTIVE TITLE ISSUED AND/OR REGISTRATIONWILL PREVAIL OVER THAT OF RESPONDENT?

HETHER OR NOT THE REGIONAL TRIAL COURT HAS JURISDICTION TOTRY THE SAME CASE WHEN THE SAME LAND SUBJECT OF THE CASE IS

A PUBLIC LAND?"

HELD:

The petition lacks merit.

There is no question from the records that respondent Nogales was the first to buy thesubject property from Julia Deocareza, who in turn bought the same from the Caninobrothers and sisters. Article 1544 of the Civil Code governs the preferential rights ofvendees in cases of multiple sales, as follows :7

in the double sales of immovables, ownership is transferred in the order hereunderstated to -

(a) the first registrant in good faith;

(b) the first in possession in good faith; and

(c) the buyer who presents the oldest title in good faith .8

The registration of the deed, under Act 3344, constitutes constructive notice of said saleto the whole world:

"Registration, however, by the first buyer under Act 3344 can have the effect ofconstructive notice to

symbolic possession:"We are of the opinion that the possession mentioned in article 1473 (for determiningwho has better right when the same piece of land has been sold several times by thesame vendor) includes not only the material but also the symbolic possession, which isacquired by the execution of public instrument."

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name for taxation purposes and registered the Deed of Donation on August 8, 1967 inthe Register of Deeds of Pangasinan.

On December 8, 1970, Miguel Queriza sold the land to petitioners spouses Gregorio deGuzman, Jr. and Corazon Quinto. The Deed of Sale was registered on December 9,

1970 and the tax declaration placed under their names.

In January, 1971, petitioners sent private respondent written notice to vacate the land inquestion, and upon refusal by the latter to do so, instituted Quieting of Title andRecovery of Possession before the then Court of First Instance of Pangasinan, FourthBranch.

After trial, the court rendered judgment on January 19, 1973, declaring petitionersowners of the land in question

On Appeal by private respondent, the Court of Appeals reversed the decision of the trial

courtISSUE: won the Petitioners have rights over the Property?

HELD:

In the case at bar, absolute ownership of the land in question was vested on privaterespondent in 1962 upon failure of Deogracias Queriza to repurchase said land. Thus,in 1967 when he allegedly donated the same to Miguel Queriza, he was no longer theowner thereof. Settled is the rule that a donor cannot lawfully convey what is not hisproperty. 11 There being no title to the property which Deogracias Queriza could convey

to Miguel Queriza, it necessarily follows that no title to the property could be conveyedby the latter to petitioners. The registration of the deeds under which they claimed tohave acquired ownership of the land in dispute was a useless ceremony. Registrationdoes not vest title. It is not a mode of acquiring ownership but is merely evidence ofsuch title over a particular property. It does not give the holder any better title than whathe actually has. Besides, petitioners' registration of their deed of sale was done in badfaith. The effect is that it is as if no registration was made at all in so far as privaterespondent is concerned. Conversely, actual knowledge of petitioners of the sale toprivate respondent amounted to registration thereof. 12

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G.R. No. L-19248 February 28, 1963

ILUMINADO HANOPOL, plaintiff-appellant,vs.PERFECTO PILAPIL, defendant-appellee.

FACTS

Appellant Hanopol claims ownership of the land by virtue of a series of purchaseseffected in 1938 by means of private instruments, executed by the former ownersTeodora, Lucia, Generosa, Sinforosa and Isabelo, all surnamed Siapo.

On the other hand, appellee Pilapil asserts title to the property on the strength of a dulynotarized deed of sale executed in his favor by the same owners on December 3, 1945,which deed of sale was registered in the Registry of Deeds of Leyte on August 20, 1948under the provisions of Act No. 3344.

HANAPOL argues that the registration of Pilapil's notarized deed of sale in 1948 under Act No. 3344 "shall be understood to be without prejudice to a third party with a betterright". He contends that since at the time the Siapos sold the land in question in 1945 toPilapil, the former were no longer the owners as they had already sold the same toappellant since 1938, the first sale to him is a better right which cannot be prejudiced bythe registration of the second sale.

ISSUE: Bet the two doc executed, who between the hanapol and pipalil has the better

rightHELD:

We do not think the quoted proviso in Act No. 3344 justifies appellant's contention. If histheory is correct, then the second paragraph of Article 1544 of the New Civil Code(formerly Article 1473 of the old Code) would have no application at all except to landsor real estate registered under the Spanish Mortgage Law or the Land Registration Act.Such a theory would thus limit the scope of that codal provision. But even if we adoptthis latter view, that is, that Article 1544 (formerly Article 1473) only applies to registeredland, still we cannot agree with the appellant that by the mere fact of his having a

previous title or deed of sale, he has acquired thereby what is referred to in Act No.3344 as the "better right" that would be unaffected by the registration of a second deedof sale under the same law. Under such theory, there would never be a case of doublesale of the same unregistered property.

It thus appears that the "better right" referred to in Act No. 3344 is much more than themere prior deed of sale in favor of the first vendee. In the Lichauco case just mentioned,it was the prescriptive right that had supervened. Or, as also suggested in that case,

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other facts and circumstances exist which, in addition to his deed of sale, the firstvendee can be said to have better right than the second purchaser.

G.R. No. L-68741 January 28, 1988

NATIONAL GRAINS AUTHORITY, plaintiff-appellee,vs.INTERMEDIATE APPELLATE COURT, MELECIO MAGCAMIT, NENA COSICO andEMELITA MAGCAMIT,defendants-appellants.

, the spouses Paulino Vivas and Engracia Lizards, executed two deeds of sale of thesame land in favor of private respondents, namely: (a) the conditional sale with right torepurchase or which was registered under Act 3344 and (b) the deed of absolute sale or"Kasulatan ng Bilihang Tuluyan" which was not registered; (2) the condition that theCertificate of Title will be delivered to the buyers upon its issuance and upon payment ofthe balance (3) the land in question at the time of the execution of both sales was notyet covered by the Torrens System of registration.

An Original Certificate of Title No. T-1728 covering the property in question was issuedto and in the name of the spouses Vivas and Lizardo .

without the knowledge of the private respondents and on April 30, 1975, said Spousesexecuted a Special Power of Attorney in favor of Irenea Ramirez authorizing the latter tomortgage the property with the petitioner, National Grains Authority.NGA

the counsel for the NGA wrote the Provincial Sheriff in Sta. Cruz, Laguna, requesting forthe extrajudicial foreclosure of the mortgage executed by Irenea Ramirez

IN the public auction The petitioner was the highest and successful bidder so that aCertificate of Sale was issued

On July 10, 1974, the petitioner in its capacity as attorney-in-fact of the mortgagor soldthe subject real property in favor of itself. By virtue of the deed of absolute sale, TCTNo. T-75171 of the Register of Deeds for the Province of Laguna was issued in thename of the petitioner on July 16, 1974. It was only in July 1974, that private

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respondents learned that a title in the name of the Vivas spouses had been issuedcovering the property in question and that the same property had been mortgaged infavor of the petitioner.

private respondents filed a that they be declared the owners of the property in question

and entitled to continue in possession of the same, and if the petitioner is declared theowner of the said property, then, to order it to reconvey or transfer the ownership tothem

RTC Favored NAT grains.. CA REVERSED

ISSUE:

The main issue in this case is whether or not violation of the terms of the agreementbetween the spouses Vivas and Lizardo, the sellers, and private respondents, thebuyers, to deliver the certificate of title to the latter, upon its issuance, constitutes a

breach of trust sufficient to defeat the title and right acquired by petitioner NGA, aninnocent purchaser for value.

HELD:

Time and time again, this Court has ruled that the proceedings for the registration of titleto land under the Torrens System is an action in rem not in personam , hence, personalnotice to all claimants of the res is not necessary in order that the court may have

jurisdiction to deal with and dispose of the res . Neither may lack of such personal noticevitiate or invalidate the decree or title issued in a registration proceeding, for the State,as sovereign over the land situated within it, may provide for the adjudication of title in a

proceeding in rem or one in the nature of or akin a to proceeding in rem which shall bebinding upon all persons, known or unknown It is thus evident that respondents' rightover the property was barred by res judicata when the decree of registration was issuedto spouses Vivas and Lizards. It does not matter that they may have had some righteven the right of ownership, BEFORE the grant of the Torrens Title.

Thus, under Section 44 of P.D. 1529, every registered owner receiving a certificate oftitle in pursuance of a decree of registration, and every subsequent purchaser ofregistered land taking a certificate of title for value and in good faith, shall hold the samefree from all encumbrances except those noted on the certificate and any of theencumbrances which may be subsisting, and enumerated in the law. Moreover, no title

to registered land in derogation to that of the registered owner shall be acquired byprescription or adverse possession (Umbay vs. Alecha, 135 SCRA 427 [1985]).

It does not appear that private respondents' claim falls under any of the exceptionsprovided for under Section 44 of P.D. 1529 which can be enforced against petitionerherein. REVERSED

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G.R. No. 115548 March 5, 1996

STATE INVESTMENT HOUSE INC., petitioner,vs.COURT OF APPEALS, ET AL., respondents.

on October 15, 1969, Contract to Sell No. 36 was executed by the Spouses Canuto andMa. Aranzazu Oreta, and the Solid Homes, Inc. (SOLID), involving a parcel of land.

`On November 4, 1976, SOLID executed several real estate mortgage contracts in favorof State Investment Homes, ( sic ) Inc. (STATE) over its subdivided parcels of land, oneof which is the subject lot covered by Transfer Certificate of Title No. 209642.

For Failure of SOLID to comply with its mortgage obligations contract, STATEextrajudicially foreclosed the mortgaged properties .

On August 15, 1988, the spouses filed a complaint before the Housing and Land UseRegulatory Board, HLRB, against the developer SOLID and STATE for failure on thepart of SOLID "to executethe necessary absolute deed of sale as well as to deliver title to said property . . . inviolation of the contract to sell . .

In its Answer, SOLID, by way of alternative defense, alleged that the obligations under

the Contract to Sell has become so difficult . . .On May 23, 1989, the Office of Appeals, Adjudication and Legal Affairs (OAALA)rendered a decision the decretal portion of which reads:

1. Ordering respondent, State Investment House, Inc. to execute a Deed ofConveyance of Lot 1, Block 8, in Capital Park Homes Subdivision in favor of

Petitioner filed with the Supreme Court this petition for review of decision of the Office ofthe President .

In a decision dated May 19, 1994, respondent court sustained the judgment of theOffice of the President.

ISSUE: WHETHER or not the office of the president erred in not applying the settledrule that persons dealing with property covered by torrens certificate of title are notrequired to go beyond what appears on the face of the title.

HELD:

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petitioner asserts that a purchaser or mortgagee of land/s covered under the TorrensSystem "is not required to do more than rely upon the certificate of title [for] it is enoughthat the (purchaser or mortgagee] examines the pertinent certificate of title [without]need [of] look[ing] beyond such title." 6

As a general rule, where there is nothing in the certificate of title to indicate any cloud orvice in the ownership of the property, or any encumbrance thereon, the purchaser is notrequired to explore further than what the Torrens Title upon its face indicates in questfor any hidden defect or inchoate right that may subsequently defeat his right thereto.This rule, however, admits of an exception as where the purchaser or mortgagee, hasknowledge of a defect or lack of title in his vendor, or that he was aware of sufficientfacts to induce a reasonably prudent man to inquire into the status of the title of theproperty in litigation. 7 In this case, petitioner was well aware that it was dealing withSOLID, a business entity engaged in the business of selling subdivision lots. In fact, theOAALA found that at the time the lot was mortgaged, respondent State InvestmentHouse Inc., [now petitioner] had been aware of the lot's location and that the said lot

formed part of Capital Park/Homes Subdivision." 8

ACCORDINGLY AFFIRMED.

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G.R. No. 127941 January 28, 1999

BIBLIA TOLEDO-BANAGA and JOVITA TAN, petitioners,vs.COURT OF APPEALS and CANDELARIO DAMALERIO, respondents.

On June 11, 1992 petitioner Banaga tried to redeem the property by depositing with thetrial court the amount of redemption which was financed by her co-petitioner Tan.Candelario opposed the redemption arguing that it was made beyond the time given toher by the court in the earlier case However, the lower court issued an order on August7, 1992 upholding the redemption and ordered the Register of Deeds to cancel privaterespondent's Certificates of Title and issue new titles in the name of petitionerBanaga . candelario On January 11, 1993, private respondent caused the annotation ofsaid petition as another notice of lis pendens on the Certificates of Title.

Candelario, filed a petition for certiorari with the CA.. On January 11, 1993, privaterespondent caused the annotation of said petition as another notice of lis pendens onthe Certificates of Title. Three days later, the CA issued a temporary restraining order toenjoin the execution of the August 7, 1992 and January 4, 1993 orders.

Meanwhile, on January 7, 1993, petitioner Banaga sold the subject property to petitionerTan with the deed of absolute sale mentioning candelario certificate of title which wasnot yet cancelled. Notwithstanding the notice of lis pendens , petitioner Tan subdivided

the property in question under a subdivision plan, which she made not in her name butin the name of candelario. Petitioner Tan asked the Register of Deeds to issue newtitles in her name. On March 24, 1993, such titles were issued in petitioner Tan's namebut it still carried the annotations of the two notices of lis pendens .

HOWEVER, the petition for certiorari with the CA it favored candelario as, absoluteowner of the subject property.

That decision became final and executory 8 Upon motion of private respondent, the trialcourt issued a writ of execution ordering the Register of Deeds to reinstate theCertificates of Title in the name candelario.

But the Register of Deeds refused to comply with the writ of execution alleging that theCertificates of Title issued to petitioner Tan must first be surrendered.

Aggrieved, private respondent again elevated the case to the CA via a petitionfor certiorari and mandamus 11 the CA rendered a decision granting the petition.

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Upon denial by the CA of their motion for reconsideration, petitioners filed the instantpetition for certiorari and mandamus .

IssueL WON that petitioner Tan is a buyer in good faith despite the notice of lis pendensannotated?

It is settled that a party dealing with a registered land need not go beyond the Certificateof Title to determine the true owner thereof so as to guard or protect her interest. Shehas only to look and rely on the entries in the Certificate of Title. By looking at the title,however, petitioner Tan cannot feigned ignorance that the property is registered inprivate respondent's name and not in the name of the person selling to her. Such factalone should have at least prompted, if not impelled her to investigate deeper into thetitle of her seller petitioner Banaga, more so when such effort would not haveentailed additional hardship, and would have been quite easy, as the titles still carriedthe two notices of lis pendens .

By virtue of such notices, petitioner Tan is bound by the outcome of the litigation subjectof the lis pendens . As a transferee pendente lite, she stands exactly in. the shoes of thetransferor and must respect any judgment or decree which may be rendered for oragainst the transferor. Her interest is subject to the incident or results of the pendingsuit, and her Certificates of Title will, in that respect, afford her no special protection. 26

To repeat, at the time of the sale, the person from whom petitioner Tan bought theproperty is neither the registered owner nor was the former authorized by the latter tosell the same. She knew she was not dealing with the registered owner or arepresentative of the latter. One who buys property with full knowledge of the flaws anddefects in the title of his vendor is enough proof of his bad faith 27 and cannot claim that

he acquired title in good faith as against the owner or of an interest therein.

WHEREFORE, premises considered, the petition is hereby DENIED

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.R. No. L-22486 March 20, 1968

TEODORO ALMIROL, petitioner-appellant,

vs.THE REGISTER OF DEEDS OF AGUSAN, respondent-appellee.

-

Inst

1.

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M a j o

c o n c l u s i

questiot o

d e s t r a t i o n s t l l o wa s nece sequenc ati wed

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G.R. Nos. L-48971 & 49011 January 22, 1980

PACIFICO GARCIA, petitioner-appellant,vs.BENJAMIN M. GOZON, TECLA GUTIERREZ, ROSARIO FELIX, PAULINO D.BUENAVENTURA, RAYMUNDO DIONISIO, VIRGILIO AUSTRIA and MARCEONVICENCIO, respondents-appellees;

PHILIPPINE NATIONAL BANK, petitioner-appellant,vs.COURT OF APPEALS (Third Division), CAROLINA LAPUZ- GOZON, assisted by herhusband BENJAMIN M. GOZON, TECLA GUTIERREZ, ROSARIO FELIX, PAULINO D.BUENAVENTURA, RAYMUNDO DIONISIO, VIRGILIO AUSTRIA and MARCEON

VICENCIO, respondents-appellees. AQUINO, J.:

1. On August 9, 1918, a deed of sale for two parcels of land, 5 and 7 covered byOriginal Certificate of Title No. 983, was executed in favor of Ismael Lapus a bonafide occupant thereof.

2. The deed of sale was presented for registration . However, the deed of sale was notannotated on OCT No. 983 and that, consequently, that title was apparently notcancelled.

3. As a result of the registration of that deed of sale, Transfer Certificate of 'Title No.4910 was issued to Lapus for the two parcels of land, 5 and 7,

4. Lapus died in 1951. The two parcels of land were inherited by his daughter, Gozon..SHE SOLD SOME OF THE SUBDIVISION LOTS TO HER CO-RESPONDENTS-

APPELLEES HEREIN.

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(Turning point) Meanwhile, in 1962 , certain. alleged heirs (collectively known as theRiveras) of the late Maria de la Concepcion Vidal filed a motion in Land Registrationalleging that they were deprived of their participation of the land covered by OCT No.983 .

. On June 7, 1963, OCT No. 983 was definitely cancelled and in lieu thereof TransferCertificate of Title No. 112236 was issued to the Riveras. Later, to parcels 5 and 7 wereassigned by Bartolome Rivera to Sergio Cruz and Pacifico Garcia. THEN FROM THENON, DIFFERENT TCT WERE ISSUED AS A RESULT OF ASSIGNMENT ANDMORTGAGED FROM CRUZ TO GO TO PNB. ON THE OTHER SIDE, FROM GARCIATO MUNOZ TO PNB.

Mrs. Gozon later learned that the Riveras and their successors-in-interest had acquiredthe land covered by OCT No. 983. She registered adverse claims on the titles coveringLots 5 and 7 others an action to quiet title

The trial court in its decision of July 30, 1975 declared valid TCT Nos. 141802 to141855 and 143512 issued to Mrs. Gozon and her co-plaintiffs.

That judgment of the trial court was affirmed by the Court of Appeals

Issue:

The issue is whether the 1920 title issued to Lapus and the titles derived therefromshould prevail over the 1963 title issued to the Riveras and the subsequent titles derivedfrom it. Should Lapus' title prevail even if it was not annotated by the register of deedson the anterior or parent title which was not cancelled before 1963?.

HELD:

The title of Lapus and the titles derived therefrom should be given effect. The title of theRiveras and the titles springing from it are void.

There can be no doubt that Lapus was an innocent purchaser for value. He validlytransmitted to his successors-in-interest his indefeasible title or ownership over thedisputed lots or parcels of land. That title could not be nullified or defeated by the

issuance forty-three Years later to other persons of another title over the same lots dueto the failure of the register of deeds to cancel the title preceding the title issued toLapuz. This must be so considering that Lapus and his interest remained in possessionof the disputed successors in lots and the rival claimants never possessed the same.

"The general rule is that in the case of two certificates of title, purporting to include thesame land, the earlier in date prevail, whether the land comprised in the latter certificatebe wholly, or only in part, comprised in the earlier certificate

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"Where two certificates (of title) purport to include the same land, the earlier in dateprevails. ... In successive registrations, where more than once certificate is issued inrespect of a party estate or interest in land, the Person claiming under the priorcertificate is entitled to the estate or interest; and that person is deemed to hold underthe prior certificate who is the holder of, or whose claim is derived directly or indirectly

from the person who was the holder of the earliest certificate issued in respect

And the rule that in case of double registration the owner of the earlier certificate is theowner of the land applies to the successive vendees of the owners of such certificates ."The vendee of the earlier certificate would be the owner as against the vendee of theowner of the later certificate"

IAs stressed in Legarda and Prieto vs. Saleeby , 31 Phil. 590, 600, "the record is noticeto all the world. All persons are charged with the knowledge of what it contains. Allpersons dealing with the land so recorded, or any portion of it, must be charged withnotice of whatever it contains. The purchaser is charged with notice of every fact shown

by the record and is presumed to know every fact which the record discloses. As to the PNB's claim that it was a mortgagee and purchaser in good faith and for value,the Appellate Court held that the bank should have made an on-the-spot investigation ofthe lot mortgaged by Go to ascertain whether he was in possession of it or it wasclaimed by other persons. Its failure to do so precludes the bank from being consideredas a mortgagee in good faith and for value

WHEREFORE, AFFIRMED:

G.R. No. L-69622 January 29, 1988

LILIA Y. GONZALES, Petitioner , vs. INTERMEDIATE APPELLATE COURT andRURAL BANK OF PAVIA, INC., Respondents .

FACTS:On April 17, 1969, the spouses Gaudioso Panzo and Hortencia Buensuceso bought thelLot No. 2161 from the latter's parents who were the original owners of the lot.thespouses Panzo filed a petition in the Court reconstitution of the original certificate oftitle. TCT No. T-64807 was issued to them.

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The said spouses then mortgaged the property to respondent Rural Bank . Upon theirfailure to pay the account, respondent bank foreclosed the mortgage on August 11,1973 and the bank was the highest bidder.

On April 18, 1974, GONZALES, as judicial co-administratrix of the Intestate Estate of

the late Matias Yusay brought an action, against the spouses Panzo and therespondent Rural Bank seeking the annulment and cancellation of the title in the nameof the Panzos and the issuance of a new title in favor of Yusay.

Gonzales alleged, petitioner alleged among other things: that the subject property wasfirst mortgaged to Yusay on April 30, 1929 by panzos parents; that Gonzales,have beenin possession of the property thru their tenant Elias Daguino,

As to the bank, Gonzales alleged that, Rural Bank was not a mortgagee in good faith fornot having taken the necessary precaution before accepting the subject property ascollateral for the loan granted the defendants-

spouses.chanroblesvirtualawlibrarychanrobles virtual law libraryRural Bank set up the defense of good faith alleging that the certificate of title in thenames of the spouses Panzo was free from any lien and that the rigid requirements forloan applications had been duly deserved by the Bank.

law libra

Issue:

whether or not the respondent bank was an innocent mortgagee and subsequent buyer

for value in good faith of the property.chanroblesvirtualawlibrary chanrobles virtual lawlibrary

HELD:When the certificate of title in the name of the Panzo spouses was submitted toprivate respondent bank for purposes of their loan application, it was free from any lienand encumbrance. The mortgage was duly constituted and registered with the Registerof Deeds on May 28,1971. The certificate of title was in the name of the mortgagorswhen the land was mortgaged by them to respondent bank. Such being the case, saidrespondent bank, As mortgagee, had the right to rely on what appeared on thecertificate of title and, in the absence of anything to excite suspicion, was under noobligation to look beyond the certificate and investigate the title of the mortgagor

appearing on the face of said certificate.9

chanrobles virtual law libraryThe well-known rule in this jurisdiction is that a person dealing with a registered landhas a light to rely upon the face of the torrens certificate of title and to dispense with theneed of inquiring her except when the party concerned has actual knowledge of factsand circumstances that would impel a reasonably cautious man to make inquiry. 14 Ithas also been held that a bank is not required, before accepting a mortgage, to make

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an investigation of the title of the property being given as security. 15 chanrobles virtuallaw library

ul registration in his name. 34 chanrobles virtual law library

WHEREFORE, denied

[G.R. No. 114172. August 25, 2003]

JUANITA P. PINEDA, assisted by her husband, CRISPIN PINEDA, and LILIASAYOC, petitioners , vs . COURT OF APPEALS and TERESITA A. GONZALES,assisted by her husband, FRANCISCO G. GONZALES, respondents .

FACTS:

On 4 January 1982, (Spouses Benitez) mortgaged a house and lot (Property)Title No. T- 8361 (TCT 8361) in favor (Pineda) (Sayoc). .[5] Pineda and Sayoc didnot register the mortgage with the Register of Deeds. The Spouses Benitez deliveredthe owners duplicate of TCT 8361 to Pineda.

On 9 November 1983, with the consent of Pineda, Benitez sold the house , [6] whichwas part of the Property, (Mojica). On the same date, Mojica filed a petition for theissuance of a second owners duplicate of TCT 8361 alleging that she purchased aparcel of land [7] and the owners duplicate copy of TCT No. T -8361 was lost. [8]

. The Register of Deeds of Cavite City issued the second owners duplicate of TCT8361 in the name of the Spouses Benitez. ALTHOUGH SUCH TCT WAS NOT REALLYLOS T

On 12 December 1983, the Spouses Benitez sold the lo t[9] covered by TCT 8361 toMojica. The Register of Deeds cancelled TCT 8361 and issued Transfer Certificate ofTitle No. T- 13138 (TCT 13138) in the name of Mojica.

On 22 February 1985, Mojica obtained a loan from (Gonzales). Mojica executed adeed of mortgage over the Property in favor of Gonzales. GONZALES REGISTEREDTHIS DEED OF MORTGAGE WITH THE REGISTER OF DEEDS OF CAVITE CITYWHO ANNOTATED THE MORTGAGE ON TCT 13138 AS ENTRY NO. 33209.

Meanwhile, on 8 May 1985, Pineda and Sayoc filed a complaint in Cour t[10] ,

against the Spouses Benitez and Mojic for the cancellation of the second ownersduplicate of TCT 8361

During the pendency of the case, Pineda caused the annotation on 18 August 1986of a notice of lis pendens on the original of TCT 8361 with the Register of Deeds.

the trial court renders judgment declaring the second owners duplicate of TCT No.T-8361 of the land records of Cavite as null and void

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Meanwhile, On 7 December 1987, Mojica defaulted in paying her obligation toGonzales. Hence, Gonzales extrajudicially foreclosed the mortgage.

For failure of Mojica to redeem the Property, Gonzales consolidated the title to theProperty. On 29 March 1989, Gonzales executed the corresponding Affidavit ofConsolidation.

On 30 March 1989, the Register of Deeds of Cavite City cancelled TCT 13138,which was in Mojicas name, and issued Transfer Certificate of Title No. T -16084 (TCT16084) in the name of Gonzales. TCT 16084 contained Entry No. 35520, the noticeof lis pendens dated 18 August 1986 in relation to Civil Case No. 4654 .[13]

Consequently, on 6 December 1991, Pineda and Sayoc filed a motion with the trialcourt for the issuance of an order requiring Gonzales to surrender the owners duplicateof TCT 16084 to the Register of Deeds of Cavite City.

The trial court ordered the reinstatement of TCT 8361 in the name of the SpousesBenitez.

Gonzales filed with the Court of Appeals a petition for the issuance of a writ ofprohibitory injunction CA FAVORED GONZALES>

ISSUE:

The Issue

1. Whether a notice of lis pendens binds a subsequent purchaser of theproperty to the outcome of the pending case.

We deny the petition.

HELD: for digest purposes

The nullity of TCT 13138 did not affect the validity of the title or ownership of Mojicaor Gonzales as subsequent transferees of the Property. What is void is the transfercertificate of title, not the title or ownership itself of Mojica or Gonzales. The notice of lis

pendens could not defeat Gonzales rights over the Property for two reasons. First,Gonzales registered in good faith her mortgage before the notation of the lis

pendens, making the registration of her mortgage valid despite the invalidity of TCT13138. Second, since Gonzales mortgage was valid, the auction sale retroacted to thedate of registration of her mortgage, making the auction sale prior in time to the noticeof lis pendens . Thus, TCT 16084, issued to Gonzales as a result of the foreclosuresale, is valid.

WHEREFORE, the petition is DENIED.

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Principle/CONCEPT laid down in this case..

Gonzales Title ..

The nullity of TCT 13138 did not automatically carry with it the nullity of theannotation of Gonzales mortgage. The rule is that a mortgage annotated on a void titleis valid if the mortgagee registered the mortgage in good faith . [25] In Blanco v.Esquierdo ,[26]

Being thus an innocent mortgagee for value, its right or lien upon the land mortgagedmust be respected and protected, even if the mortgagor obtained her title thereto thrufraud.

Thus, the annotation of Gonzales mortgage on TCT 13138 was valid and operated tobind the Property and the world, despite the invalidity of TCT 13138.

Gonzales registered her mortgage in good faith. Gonzales had no actual notice ofthe prior unregistered mortgage in favor of Pineda and Sayoc. To bind third parties to anunregistered encumbrance, the law requires actual notice . [27] The fact that Mojica, whosold the Property to Gonzales, had actual notice of the unregistered mortgage did notconstitute actual notice to Gonzales, absent proof that Gonzales herself had actualnotice of the prior mortgage. Thus, Gonzales acquired her rights as a mortgagee ingood faith.

When Gonzales purchased the Property at the auction sale, Pineda and Sayoc hadalready annotated the lis pendens on the original of TCT 8361, which remainedvalid. However, the mortgage of Gonzales was validly registered prior to the notation ofthe lis pendens. The subsequent annotation of the lis pendens could not defeat therights of the mortgagee or the purchaser at the auction sale who derived their rightsunder a prior mortgage validly registered. The settled rule is that the auction saleretroacts to the date of the registration of the mortgage , [28] putting the auction salebeyond the reach of any intervening lis pendens, sale or attachment

A contrary rule would make a prior registration of a mortgage or any lienmeaningless .[30] The prior registered mortgage of Gonzales prevails over thesubsequent notice of lis pendens , even if the auction sale took place after the notationof the lis pendens . Consequently, TCT 16084, issued to Gonzales after she presentedthe sheriffs certificate of sale and her affidavit of consolidation, is valid.

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