LAND TITLES AND DEEDS (Cases)Chapter V Subsequent Registration

Caviles Jr. v. BautistaFacts:Petitioners-appellees (Spouses Caviles, Jr.) filed a civil case against Renato Plata for recovery of sum of money. The complaint contained an application for issuance of a writ of preliminary attachment. The CFI issued the writ prayed for and on October 4, 1982 a Notice of Attachment over a piece of real estate owned by Plata covered by TCT No. S-33634.

The Notice of Attachment was entered in the Primary Entry Book (a.k.a. Day Book) on Oct. 6, 1982, but was not annotated on TCT No. S-33634 by the Register of Deeds, nor did the deputy sheriff or the Spouses Caviles, take any step to annotate the attachment on the said real estate.

Oct. 18, 1982, Plata sold the same property to herein respondents-appellants (Spouses Bautista), free, of course, from the attachment or any encumbrance. and on the same date Platas TCT No.S-33643 was cancelled and in lieu thereof TCT No. 57006 was issued in the name of Spouses Bautista. From then on, the latter appear to have taken over and resided in the property.

No action was taken by Spouses Caviles to annotate the attachmentas indeed they remained ignorant that the property had been sold and a new title issued until they obtained a favorable judgment in the Civil Case for the recovery of sum of money against Plata. They then, attempted execution of said attachment. Thus, even as Sps. Caviles were able to obtain a writ of execution on Feb. 3, 1984, the levy effected on Feb. 21, 1984, was in still in regard to the by-then-cancelled TCT No. S-33643. The Notice of Levy was entered in the Day Book on Feb. 22, 1984.

The property was sold on execution to Spouses Caviles.

The Certificate of Sale was entered in the Day Book on April 2, 1987, but when its inscription was sought to be madethe first time such idea entered SPs. Caviles mind, apparentlyit was found out that Platas certificate had been cancelled and a new one issued to Spouses Bautista. The entry was on the title of Sps. Bautista which annotation the Register of Deeds, however, refused to sign. The matter was elevated to the National Land Titles and Deeds Registration Administration and the Administrator thereof opined that the certificate of sale may be annotated on Sps. Bautistas TCT No. 57006.

The Sps. Bautista refused to surrender their owners copy of TCT No. 57006, hence, a proceeding was initiated by Sps. Caviles who invokes Sec. 107 of P.D. 1529, which speaks of an action to compel surrender of the owners duplicate of title for annotation of a voluntary instrument.

The RTC ruled in favor of Sps. Caviles and ordered Sps. Bautista to surrender their owners duplicate copy of TCT No. 57006 for inscription or annotation of the certificate of sale, and for the subsequent cancellation of said certificate of title and the issuance of a new certificate of title in favor of Sps. Caviles.

The CA reversed the ruling of the RTC and upheld the transfer certificate of title of Sps. Bautista.

Hence, this petition.

Issue: Who should acquire title to the subject property? Two conflicting rights: (1) the right of one party to acquire title to registered land from the moment of inscription of an attachment on the day book (or entry book on one hand; and (2) the right of the other party to rely on what appears on the owners duplicate certificate of title for purposes of voluntary dealings with the same parcel of land.

Ruling: It was established both by trial court and CA that Sps. Bautista on purchasing the said property from Plata, relied on the latters duplicate certificate of title, free from notice of attachment. However, the notice of attachment was entered on the primary entry book of the Register of Deeds of Pasay City. When respondents verified the original title with the Office of the Register of Deeds, they found the same unblemished by any liens or encumbrances. It appears that the then Register of Deeds had failed to annotate the notice of attachment on the original copy of the title.

Respondent spouses (Bautista) clearly had no notice of any defect, irregularity or encumbrance in the title of the property they purchased. Neither did they have any knowledge of facts or circumstances which should have put them on inquiry, requiring them to go behind the certificate of title. Respondent spouses were clearly innocent purchasers for value and in good faith at the time they acquired the subject property. Petitioners themselves admitted in their petition, "Neither can negligence be ascribed to respondents for their failure to go beyond their certificate of title. . ."

Likewise, negligence cannot be imputed to petitioners in this case. The records show that petitioners successfully obtained a writ of preliminary attachment of the subject property in Civil Case (against Plata), and the notice of attachment was then entered in the primary entry book of the Register of Deeds of Pasay City on October 6, 1982. But as earlier stated, the notice of attachment was not annotated on the original copy of the transfer certificate of title TCT No. S-33634. Petitioners later obtained a favorable judgment and purchased the subject property at the execution sale. When they sought to inscribe the certificate of sale on Plata's title covering the subject property, they discovered that the latter had been sold to respondent spouses, the new title thereto TCT No. 57006 now in their name. The notice of attachment was later inscribed on the cancelled certificate of title on November 22, 1983, but it was made to appear that it had been annotated on October 6, 1982.This belated inscription is reflected since said inscription followed the earlier entry on October 18, 1982, of the sale of the subject property to respondent spouses.The notice of attachment dated October 6, 1982, was also later annotated on TCT No. 57006.

In its Decision, the Court of Appeals stated that the petitioners did not "take any step to annotate the attachment on TCT No. S-33634" and that "No action was taken by petitioners-appellees to annotate the attachment."The respondents likewise contend that "the problem in this case would not have arisen were it not for the negligence and very long delay on the part of petitioners in annotating their attachment in the original certificate of title in the possession of the Register of Deeds."

We disagree. Petitioners paid the corresponding fees for the annotation of the notice of attachment and they had every right to presume that the register of deeds would inscribe said notice on the original title covering the subject property. The register of deeds had the duty to inscribe the notice on the original title. This was not a duty of petitioners. This Court has held that a party which delivers its notice of attachment to the register of deeds and pays the corresponding fees therefor has a right to presume that the official would perform his duty properly.In involuntary registration, such as an attachment, levy upon execution,lis pendensand the like, it has been held that entry thereof in the day book is a sufficient notice to all persons of such adverse claim. The notice should, of course, be annotated on the back of the corresponding original certificate of title, but this Court has said that this is an official duty of the register of deeds which may be presumed to have been regularly performed.

Given this parity of good faith and the absence of negligence on the part of both parties, who between them has a better right to the property in question?

Art. 1544 of the New Civil Code, provides:If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property, 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. Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith.

In the case at bar, the notice of attachment covering the subject property was annotated in the entry book of the Register of Deeds of Pasay City on October 6, 1982, while the new transfer certificate of title in the name of respondent spouses was issued on October 18, 1982, the date when Plata sold the property to said respondents. Petitioners' levy on preliminary attachment was put into effect when the property was sold on execution to petitioners, after the latter obtained a writ of execution by virtue of a favorable judgment in Civil Case No. 82-12668.

This Court has repeatedly held that in involuntary registration, such as an attachment, levy on execution,lis pendensand the like, entry thereof in the day book or entry book is a sufficient notice to all persons of such adverse claim.22Petitioners' lien of attachment was properly recorded when it was entered in the primary entry book of the Register of Deeds on October 6, 1982.

We have also consistently ruled that an auction or execution sale retroacts to the date of levy of the lien of attachment.23When the subject property was sold on execution to the petitioners, this sale retroacted to the date of inscription of petitioners' notice of attachment on October 6, 1982. The earlier registration of the petitioners' levy on preliminary attachment gave them superiority and preference in rights over the attached property as against respondents.

Accordingly, we rule that the execution sale in favor of the petitioner Caviles spouses was anterior and superior to the sale of the same property to the respondent Bautista spouses on October 18, 1982. The right of petitioners to the surrender of the owner's duplicate copy of TCT No. 57006 covering the subject property for inscription of the certificate of sale, and for the cancellation of said certificate of title and the issuance of a new title in favor of petitioners cannot be gainsaid.

Heirs of Manlapat v. Court of Appeals

Duran v. IACGood faith consists in the possessors belief that the person from whom he received the thing was the owner of the same and could convey his title. Good faith, while it is always to be presumed in the absence of proof to the contrary, requires a well-founded belief that the person from whom title was received was himself the owner of the land, with the right to convey it. There is good faith where there is an honest intention to abstain from taking any unconscientious advantage from another

Register of Deeds v. Acting register of deeds of Nueva EcijaFacts: On June 13, 1980, the Development Bank of the Philippines (hereafter, DBP) presented for registration to the Register of Deeds of Nueva Ecija, Cabanatuan City, a sheriff's certificate of sale in its favor of two parcels of land covered by Transfer Certificates of Title Nos. NT-149033 and NT-149034, both in the names of the spouses Andres Bautista and Marcelina Calison, which said institution had acquired as the highest bidder at an extrajudicial foreclosure sale.

DBP sought annotation on the reconstituted titles of the certificate of sale subject of Entry No. 8191 on the basis of that same four-year-old entry. The Acting Register of Deeds, being in doubt of the proper action to take on the solicitation, took the matter to the Commissioner of Land Registration byconsultaraising two questions: (a) whether the certificate of sale could be registered using the old Entry No. 8191 made in 1980 notwithstanding the fact that the original copies of the reconstituted certificates of title were issued only on June 19, 1984; and (b) if the first query was answered affirmatively, whether he could sign the proposed annotation, having assumed his duties only in July 1982.

The resolution on theconsultaheld that Entry No. 8191 had been rendered "... ineffective due to the impossibility of accomplishing registration at the time the document was entered because of the non-availability of the certificate (sic) of title involved. For said certificate of sale to be admitted for registration, there is a need for it to be re-entered now that the titles have been reconstituted upon payment of new entry fees," and by-passed the second query as having been rendered moot and academic by the answer to the first.

ISSUE: WON DBP needs to register anew.

HELD: No. Current doctrine thus seems to be that entry alone produces the effect of registration, whether the transaction entered is a voluntary or an involuntary one, so long as the registrant has complied with all that is required of him for purposes of entry and annotation, and nothing more remains to be done but a duty incumbent solely on the register of deeds.

Therefore, without necessarily holding that annotation of a primary entry on the original of the certificate of title may be deferred indefinitely without prejudice to the legal effect of said entry, the Court rules that in the particular situation here obtaining, annotation of the disputed entry on the reconstituted originals of the certificates of title to which it refers is entirely proper and justified. To hold said entry "ineffective," as does the appealed resolution, amounts to declaring that it did not, and does not, protect the registrant (DBP) from claims arising, or transactions made, thereafter which are adverse to or in derogation of the rights created or conveyed by the transaction thus entered. That, surely, is a result that is neither just nor can, by any reasonable interpretation of Section 56 of PD 1529, be asserted as warranted by its terms.

Bel-Air Village Association, Inc. v. DionisioFacts:The Transfer Certificate of Title covering the subject parcel of land issued in the name ofVirgilio Dionisio, the petitionercontains an annotation to the effect that the lot owner becomes an automatic member of Bel-Air Village Association,the respondent,and must abide by such rules and regulations laid down by the Association in the interest of the sanitation, security and the general welfare of the community.

Thepetitioner questioned the collection of the dues on the following grounds:the questioned assessment is a property tax outside the corporate power of the association;the associationhas no power to compel the petitioner to pay the assessment for lack of privity of contract; the questioned assessment should not be enforced for being unreasonable, arbitrary, oppressive, confiscatory and discriminatory; the respondent association is exercising governmental powers which should not be sanctioned.

Issue: Whether or notthe association can lawfully collect dues

Ruling: The Supreme Court dismissed the petition for lack of merit.It held that the purchasers of a registered land are bound by the annotations found at the back of the certificate of title covering the subject parcel of land. The petitioners contention that he has no privity with the respondent association is not persuasive.When the petitioner voluntarily bought the subject parcel of land it was understood that he took the same free of all encumbrances except annotations at the back of the certificate of title, among them, that he automatically becomes a member of the respondent association. One of the obligations of a member is to pay certain amounts for the operation and activities of the association.

The mode of payment as well as the purposes for which the dues are intended clearly indicates that the dues are not in the concept of a property tax as claimed by the petitioner.They are shares in the common expenses for necessary services.A property tax is assessed according to the value of the property but the basis of the sharing in this case is the area of the lot.The dues are fees which a member of the respondent association is required in hiring security guards, cleaning and maintaining streets, street lights and other community projects for the benefit of all residents within the Bel-Air Village.These expenses are necessary, valid and reasonable for the particular community involved.

The limitations upon the ownership of the petitioner do not contravene provisions of laws,morals, good customs, public order or public policy.The constitutional proscription than no person can be compelled to be a member of an association against his will applies only to governmentalacts and not to private transactions like the one in question.

The petitioner cannot legally maintain that he is compelled to be a member of the association against his will because the limitation is imposed upon his ownership of property.If he does not desire to comply with the annotation or lien in question, he can at any time exercise his inviolable freedom of disposing of the property and free himself from the burden of becoming a member of the association.

L.P. Leviste & Company, Inc. v NoblejasFacts: The property involved in this case is situated in Paranaque, Rizal having a total area of approximately 1.6 hectares and is covered by the Transfer Certificate of Title No.108425 in the name of Z. Garcia Realty, Inc. (Garcia Realty, for short). The property was converted into a subdivision called the Garville Subdivision. This subdivision has blocks and certain lots and the controversy in this case centers on Lot 6, Block 4 (subsequently Lot 16, plan (LRC) Psd-56800). The following chronology will explain the controversy between the parties:

September 7, 1964 Notice oflis pendens(Entry No. 7115), presented by Melecio B. Emata, noting the pendency of Civil Case No. 2489-P of the Court of First Instance of Rizal entitled Vivencio R. de Guzman vs. Z. Garcia & Company referring specifically toLot 3, redesignated asLot 5of the new subdivision plan. The block number was not indicates. It is to be noted that thelis pendensdoes not refer toLot 6, Block 4.

April 28, 1966 Affidavit of Adverse Claim (Entry No. 55209)coveringLot 1, Block 5presented by J. Antonio Leviste, Executive Vice President of petitioner company, based on an assignment in his favor by one Leticia P. Ramos, buyer of said lot from Garcia Realty. Also to be noted is that this has no reference toLot 6, Block 4.

May 6, 1966 Affidavit of Adverse Claim (Entry No. 55804) coveringLot 6, Block 4(subsequently Lot 16, plan (LRC) Psd 56800), consisting of 510 square meters presented by respondent Maria Villanueva based on an agreement to sell in her favor executed by Garcia Realty. This is the Disputed Lot.

July 19, 1966 Attachment (Entry No. 62224) presented by petitioner Nita U. Berthelsen "affecting all rights, interests and participation of defendants Z. Garcia Realty Inc., in the property described in this certificate of title in Accordance with Notice of Attachment or Levy issued by the Provincial Sheriff of Rizal in Civil Case, No Court of First Instance of Manila, , entitled Nita U. Berthelsen versus, Garcia Realty, Inc., etc. The attachment covers the Disputed Lot.

July 25, 1966 Attachment (Entry No. 62748) presented by Leviste & Co. "affecting all rights, interests and participation of the defendant Garcia Realty, Inc., in the property described by the certificate of title, in accordance with the Notice of Attachment or Levy issued by the Provincial Sheriff of Rizal, in Civil Case No. 9269 of the Court of First Instance of Rizal entitledL P. Leviste. Inc., versus Z. Garcia Realty, Inc." This attachment also covers the Disputed Lot.

November 18, 1966 Attachment, (Entry No. 73465) "affecting all rights, interest and participation of the defendants, Z. Garcia & Co. in the property described herein, in accordance with the Notice of Attachment or Levy issued by the Provincial Sheriff of Rizal in Civil Case No. 2489-P of the Court of First Instance of Rizal, entitledVivencio R, de Guzman vs. Z. Garcia & Co. Again, the attachment covers the Disputed Lot.

May 29,1967 Garcia Realty and respondent Villanueva consummated a contract of sale over the Disputed Lot.

Respondent Villanueva sought to have the sale registered and title be issued in her favor but petitioners Leviste and Berthelsen objected alleging that they had registered adverse claims and attachments. The Register of Deeds refused to issue a new title to Villanueva without carrying over the adverse claims and attachments of petitioners to the new title. This was elevated to the Land Registration Commission which holds that the deed of sale may be registered and a new certificated of title covering Lot 16 may be issued to Maria Villanueva. The motion for reconsideration filed by petitioners was denied, hence, this appeal.Issue: WON the adverse claim and attachment of petitioners must be carried over to the new certificate of title to be issued to respondent Villanueva.Ruling: YES.The basis of respondent Villanuevas adverse claim was an agreement to sell executed in her favor by Garcia Realty. An agreement to sell is a voluntary instrument as it is a willful act of the registered owner. Section 50 of Act No.496 expressly provides that the act of registration shall be the operative act to convey and affect the land. Section 55 of the same act requires the presentation of the owners duplicate certificate of title for the registration of any deed or voluntary instrument. However, where the owner refuses to surrender the duplicate certificate for the annotation of the voluntary instrument, the grantee may file with the Register of Deeds a statement setting forth his adverse claim as provided for in Section 110 of Act No. 496.

In the case at bar, it does not appear that Villanueva attempted to register the agreement to sell under Section 52 of Act No.496 and that the registered owner, Garcia Realty, refused to surrender the duplicate certificate for the annotation of the said instrument. Instead, Villanueva merely filed an adverse claim based on the said agreement to sell. Considering that Section 52 of the Land Registration Act prescribes the procedure for the registration of Villanuevas interest less than an estate in fee simple on the disputed lot and there being no showing of her inability to produce the owners duplicate certificate, the remedy provided in Section 110 of Act 496, which was resorted to by Villanueva, is therefore, ineffective for the purpose of protecting her right or interest on the disputed lot. In as much as the adverse claim filed by Villanueva was not valid, the same did not have the effect of a conveyance of her right or interest on the disputed lot and could not prejudice any right that may have arisen thereafter in favor of third person. The attachments of Berthelsen, Leviste and that in Civil Case No.2489-P covering the disputed lot is superior to that acquired by Villanueva and will have to be carried over to the new title to be issued in her favor. Thus, Section of Act 496 provides that: If at the time of any transfer there appear upon the registration book encumbrances or claims adverse to the title of the registered owner, they shall be stated in the new certificate or certificates, except so far as they may be simultaneously released or discharged.

Pabalan v. SantarinFacts:On September 1, 1999, private respondent Anastaci B. Santarin filed a complaint against TRI-LITE Realty Management and Development Corporation and its officers for the annulment of transfer certificate of title and damages. In the amended complaint, dated October 26, 1999, it was alleged that private respondent Anastacia Santarin is the registered owner of the lands in question; that by forging her signature, the defendant officers of TRI-LITE made it appear that she had sold the lands (which was then undivided) to her daughter, Annielita Santarin Villaluna; that her daughter, upon the inducement by the defendant officers of TRI-LITE, executed a fictitious deed of sale thereof in favor of TRI-LITE; that TRI-LITE subdivided the land into seven lots, secured the issuance of the corresponding titles to each portion, and mortgaged them to petitioner, who, upon default of TRI-LITE in the payment of its loan, foreclosed the mortgage and purchased the properties in the foreclosure sale.

In her answer, petitioner claimed that she was an innocent purchaser for value of the seven parcels of land. The trial court treated petitioners special defense as a motion to dismiss and denied the same. Petitioner filed a special civil action for certiorari in the Court of Appeals but was dismissed again.

Issue: WON motion to dismiss is the proper action for petitioner in this case.

Ruling: NO.As a forged deed is null and void and conveys no title all the transactions subsequent to the alleged sale between private respondent and her daughter are likewise void. Consequently, if the allegations in her complaint are true, private respondent would be entitled to a judgment annulling the sale purporting to have been executed by her in favor of Annielita Santarin Villaluna as well as the latters sale of the said property to TRI-LITE, the transfer certificates of title issued to the aforesaid transferors, the mortgage executed by TRI-LITE in favor of petitioner and the foreclosure sale of the properties in question.

In this case, petitioner can seek the dismissal of the action against her but only if she proves after appropriate proceedings that she is an innocent purchaser for value. This is a matter of defense which, taking into account the fact that the properties in question thrice changed hands within the span of only one year, should be determined during the trial, and not in a motion to dismiss. Needless to say, such course of action results in no prejudice to petitioner and in face affords her sufficient opportunity to prove her claim.

Anent the other matters raised by petitioner on the propriety of canceling the annotation of lis pendens on the titles of TRI-Lite and the acquisition by the trial court of the jurisdiction over Annielita Santarin Villaluna, suffice it to say that these matters are not in issue in this review of the trial courts order of September 24, 2000. Petitioner is not the proper party to raise such question.

Gonzales vs. BersaminFacts: In Criminal Case People v. Zoilo Cruz and Rosalinda Aldeguer Cruz, and Civil Case Spouses Danilo Gonzales and Veronica Gonzales v. Zoilo Cruz and Rosalinda Aldeguer Cruz, Zoilo Cruz and Rosalinda Aldeguer Cruz were ordered to pay P600,000.00 and P3,700,000.00 respectively. To satisfy the judgments in the two cases, two (2) notices of levy were provisionally registered in the record of real property of Zoilo Cruz and Rosalinda Cruz on June 26, 1991 and October 24, 1991, respectively, since it happened at the time when there is a pending reconstitution of title to the said property. On December 3, 1991,subject property was reconstituted and a new title was issued in the name of the spouses Cruz.

On August 23, 1994 the spouses Gina Chan and Salvador Chan filed a case against the Register of Deeds of Quezon City, for Cancellation of Notice of Levy with Damages with Prayer for the Immediate Issuance of a Writ of Preliminary Mandatory Injunction.

The spouses Chan claim that since the provisional registration of the deed of sale was prior in time, the notices of levy should not have been carried over in the new title because at the time of the registration of the notices of levy, the property subject of said levy was no longer owned by spouses Cruz against whom the levy was issued. Judge Bersamin thereafter rendered a decision on October 13, 1994 ordering the Register of Deeds to cancel the annotations of the notices of levy.

Issue: Whether or not cancellation of encumbrance was proper even though there was no notice given to parties annotated in the certificate of title.

Held: No. Judge Bersamin should have ordered notice to be given to complainant and petitioner to implead complainant since it appears that she had an adverse interest annotated on the back of their certificate of title. Thus Sec. 108 of PD 1529 requires that notice [be given] to all parties in interest before the court may hear and determine the petition. Complainant was not impleaded despite the fact that she was a party-in-interest. In Southwestern University v. Laurente, 26 SCRA 52 (1968) it was held that the cancellation of the annotation of an encumbrance cannot be ordered without giving notice to the parties annotated in the certificate of title itself. It was error for respondent judge to contend that no notice was required to be given to complainant. He should have shown prudence and circumspection by requiring such notice to be given, considering that it was plain that there was an adverse party who would be affected by the grant of the petition.

Judge Bersamin is ADMONISHED to be more careful and diligent in the discharge of judicial function.

Lloyds Enterprises and Credit Corporation v. Sps. DolletonFacts: On 9 August 1990, Spouses Ferdinand and Perseveranda Dolleton, registered owners of a 166-sq m parcel of land with four-door apartment building situated in Barangay Putatan, Muntinlupa City, mortgaged the subject property to Joseph Patrick Santos (Santos) to secure a P100,000.00 loan. The loan was paid on 15 August 1994 and was annotated on the TCT.

On 15 September 1994, the TCT in the name of Spouses Dolleton was cancelled and a new TCT was issued in the name of Blesilda Gagan (Gagan) on the basis of a Deed of Absolute Sale dated 5 August 1994 whereby Sps Dolleton purportedly sold to Gagan the subject property for the sum of P120,000.00.

On 19 September 1994 and on 27 September 1994 , Lloyds Enterprises and Credit Corporation(LECC) lent to Gagan and her live-in partner Feliciano Fajardo Guevarra (Guevarra) the sum of P391,512.00 and P542,928.00 respectively. The loans were secured by a real estate mortgage on the subject property, which appears to be annotated on TCT on 1995.

Gagan and Guevarra failed to pay the second loan upon its maturity. Thus, LECC instituted extrajudicial foreclosure proceedings on the subject property. At the auction sale conducted by Sheriff-in-charge Melvin T. Bagabaldo, LECC bid of P645,000.00 was declared the highest.The property was not redeemed within the one-year period, hence, ownership was consolidated in favor of petitioner. On 29 September 1997, TCT in the name of Gagan was cancelled and TCT No. 210363 was issued in the name of petitioner.

On 7 May 1998, Sps. Dolleton filed a complaint, praying among others for the nullification of the Deed of Absolute Sale, the two real estate mortgage contracts and the extrajudicial foreclosure proceedings; the cancellation of TCT; and the restoration of TCT in the name of respondents

Issue: Whether or not the property sale to Gaga and the subsequent mortgage to LECC and foreclosure of the subject property is valid

Held: A purchaser cannot close his eyes to facts which should put a reasonable man on his guard and claim that he acted in good faith under the belief that there was no defect in the title of the vendor. The circumstance that the certificate of title covering the property offered as security was newly issued should have put petitioner on guard and prompted it to conduct an investigation surrounding the transfer of the property to defendant Gagan.

The Court explicitly declared that when the purchaser or mortgagee is a financing institution, the general rule that a purchaser or mortgagee of land is not required to look further than what appears on the face of the title does not apply.

The Court also held that LECC, who was engaged in the real estate business but failed to verify the essential facts, should bear the loss because his negligence was the primary, immediate and overriding reason that put him in his predicament.

Sps. Belo v. PNBFacts:Eduarda Belo owned an agricultural land located in Timpas, Panitan, Capiz, covered and described in Transfer Certificate of Title (TCT for brevity) No. T-7493.She leased a portion of the said tract of land to respondents spouses Marcos and Arsenia Eslabon in connection with the said spouses sugar plantation business.The lease contract was effective for a period of seven (7) years at the rental rate of Seven Thousand Pesos (P7,000.00) per year.

To finance their business venture, respondents spouses Eslabon obtained a loan from respondent Philippine National Bank (PNB for brevity) secured by a real estate mortgage on their own four (4) residential houses located in Roxas City, as well as on the agricultural land owned by Eduarda Belo.The assent of Eduarda Belo to the mortgage was acquired through a special power of attorney which she executed in favor of respondent Marcos Eslabon on June 15, 1982.

Respondents spouses Eslabon failed to pay their loan obligation, extrajudicial foreclosure proceedings against the mortgaged properties were instituted by respondent PNB.At the auction sale on June 10, 1991, respondent PNB was the highest bidder of the foreclosed properties at Four Hundred Forty Seven Thousand Six Hundred Thirty Two Pesos (P447,632.00).

In a letter dated August 28, 1991, respondent PNB appraised Eduarda Belo of the sale at public auction of her agricultural land on June 10, 1991 as well as the registration of the Certificate of Sheriffs Sale in its favor on July 1, 1991, and the one-year period to redeem the land. Meanwhile, Eduarda Belo sold her right of redemption to petitioners spouses Enrique and Florencia Belo under a deed of absolute sale of proprietary and redemption rights.

Before the expiration of the redemption period, petitioners spouses Belo tenderedpaymentfor the redemption of the agricultural land in the amount of Four Hundred Eighty Four Thousand Four Hundred Eighty Two Pesos and Ninety Six Centavos (P484,482.96), which includes the bid price of respondent PNB, plus interest and expenses as provided under Act No. 3135.

However, respondent PNB rejected the tender of payment of petitioners spouses Belo, contending that the redemption price should be thetotal claim of the bank on the date of the auction sale and custody of property plus charges accrued and interestsamounting to Two Million Seven Hundred Seventy Nine Thousand Nine Hundred Seventy Eight and Seventy Two Centavos (P2,779,978.72). Petitioners spouses disagreed and refused to pay the said total claim of respondent PNB.

Petitioners spouses Belo filed an action in the RTC of Roxas City for declaration of nullity of mortgage, with an alternative cause of action, in the event that the accommodation mortgage be held to be valid, to compel respondent PNB to accept the redemption price tendered by petitioners spouses Belo which is based on the winning bid price of respondent PNB in the extrajudicial foreclosure in the amount of Four Hundred Forty Seven Thousand Six Hundred Thirty Two Pesos (P447,632.00) plus interest and expenses. In its Answer, respondent PNB raised its defenses. After trial on the merits, the trial court rendered its Decision granting the alternative cause of action of spouses Belo.

Respondent PNB appealed to the Court of Appeals. The appellate courts decision, while upholding the decision of the trial court on the validity of the real estate mortgage on Eduarda Belos property, the extrajudicial foreclosure and the public auction sale, modified the trial courts finding on the appropriate redemption price by ruling that the petitioners spouses Belo should pay the entire amount due to PNB under the mortgage deed at the time of the foreclosure sale plus interest, costs and expenses. Petitioners spouses Belo sought reconsideration of the said Decision but the same was denied by the appellate court; it further declared that petitioners spouses Belo are obligated to pay the total banks claim representing the redemption price for the foreclosed properties, as provided by Section 25 of P.D. No. 694. Moreover, the indivisible character of a contract of mortgage (Article 2089, Civil Code) will extend to apply in the redemption stage of the mortgage. It reiterated that Section 25 of P.D. 694 is a sanctioned deviation from the rule embodied in Rule 39, Section 30 of the Rules of Court, and is a special protection given to government lending institutions, particularly, the Philippine National Bank. (Dulay v. Carriaga, supra). Hence, the instant petition.

Issue: Whether or not the petitioners are required to pay, as redemption price, the entire claim of respondent PNB in the amount of P2,779,978.72 as of the date of the public auction sale on June 10, 1991 (assuming that the real estate mortgage contract, the foreclosure proceedings and the subsequent auction sale involving Eduarda Belos property are valid)?

Ruling:Whether or not the Special Power of Attorney (SPA for brevity), the real estate mortgage contract, the foreclosure proceedings and the subsequent auction sale involving Eduarda Belos property are valid? Yes, the real estate mortgage contract, the foreclosure proceedings and the subsequent auction sale involving Eduarda Belos property are valid. answer to the first issue in the case which is related to the aforesaid LTD-related issue

No. The petitioners are not required to pay, as redemption price, the entire claim of respondent PNB in the amount of P2,779,978.72 as of the date of the public auction sale on June 10, 1991 since petitioners are assignees of an accommodation mortgagor and not of a debtor-mortgagor.Hence, it isfair and logical to allow the petitioners to redeem only the property belonging to their assignor, Eduarda Belo.

There is no doubt that Eduarda Belo, assignor of the petitioners, is an accommodation mortgagor.The Pre-trial Order and respondent PNBs brief contain a declaration of this fact.The dispute between the parties is whether Section 25 of P.D. No. 694 applies to an accommodation mortgagor, or her assignees.The said legal provision does not make a distinction between a debtor-mortgagor and an accommodation mortgagor as it uses the broad term mortgagor.Where a word used in a statute has both a restricted and a general meaning, the general must prevail over the restrictedunless the nature of the subject matter or the context in which it is employed clearly indicates that the limited sense is intended. It is presumed that the legislature intended exceptions to its language which would avoid absurd consequences of this character. In the case at bar, the qualification to the general rule applies.The same provision of Section 25 of P.D. No. 694 provides that the mortgagor shall have the right to redeem the property by payingall claims of the Bank against him.From said provision can be deduced that the mortgagor referred to by that law is one from whom the bank has a claim in the form of outstanding or unpaid loan; he is also called a borrower or debtor-mortgagor.On the other hand, respondent PNB has no claim against accommodation mortgagor Eduarda Belo inasmuch as she only mortgaged her property to accommodate the Eslabon spouses who are the loan borrowers of the PNB.The principal contract is the contract of loan between the Eslabon spouses, as borrowers/debtors, and the PNB as lender.The accommodation real estate mortgage (which secures the loan) is only an accessory contract.It is our view and we hold that the term mortgagor in Section 25 of P.D. No. 694 pertains only to a debtor-mortgagor and not to an accommodation mortgagor.

Accommodation mortgagors as such are not in any way liable for the payment of the loan or principal obligation of the debtor/borrower.The liability of the accommodation mortgagors extends only up to the loan value of their mortgaged property and not to the entire loan itself.Hence, it is only just that they be allowed to redeem their mortgaged property by paying only the winning bid price thereof (plus interest thereon) at the public auction sale.

Sajonas v. CAFacts: On September 22, 1983, the spouses Ernesto Uychocde and Lucita Jarin agreed to sell a parcel of residential land located in Antipolo, Rizal to the spouses Alfredo Sajonas and Conchita R. Sajonas (Sajonas couple) on installment basis as evidenced by a Contract to Sell dated September 22, 1983.The property was registered in the names of the Uychocde spouses under TCT No. N-79073 of the Register of Deeds of Marikina, Rizal.On August 27, 1984, the Sajonas couple caused the annotation of an adverse claim based on the said Contract to Sell on the title of the subject property, which was inscribed as Entry No. 116017.Upon full payment of the purchase price, the Uychocdes executed a Deed of Sale involving the property in question in favor of the Sajonas couple on September 4, 1984.The deed of absolute sale was registered almost a year after, or on August 28, 1985.

It appears that Domingo Pilares (defendant-appellant) filed Civil Case No. Q-28850 for collection of sum of money against Ernesto Uychocde.On June 25, 1980, a Compromise Agreement was entered into by the parties in the said case under which Ernesto Uychocde acknowledged his monetary obligation to Domingo Pilares amounting to P27,800 and agreed to pay the same in two years from June 25, 1980. Uychocde failed to comply with his undertaking in the compromise agreement so defendant-appellant Pilares moved for the issuance of a writ of execution to enforce the decision based on the compromise agreement which the court granted in its order dated August 3, 1982.Accordingly, a writ of execution was issued on August 12, 1982 by the CFI of Quezon City where the civil case was pending. Pursuant to the order of execution dated August 3, 1982, a notice of levy on execution was issued on February 12, 1985. Defendant sheriff Roberto Garcia of Quezon City presented said notice of levy on execution before the Register of Deeds of Marikina and the same was annotated at the back of TCT No. 79073 as Entry No. 123283.

When the deed of absolute sale dated September 4, 1984 was registered on August 28, 1985, TCT No. N-79073 was cancelled and in lieu thereof, TCT No. N-109417 was issued in the name of the Sajonas couple.The notice of levy on execution annotated by defendant sheriff was carried over to the new title.On October 21, 1985, the Sajonas couple filed a Third Party Claim with the sheriff of Quezon City, hence the auction sale of the subject property did not push through as scheduled.

On January 10, 1986, the Sajonas couple demanded the cancellation of the notice of levy on execution upon defendant-appellant Pilares, through a letter to their lawyer, Atty. Melchor Flores.Despite said demand, defendant-appellant Pilares refused to cause the cancellation of said annotation.Thus, plaintiffs-appellees filed this complaint in the RTC of Rizal against Pilares (the judgment creditor of the Uychocdes). Pilares filed his answer with compulsory counterclaim seeking moral and exemplary damages as well as raising special and affirmative defenses. Both parties attended the pre-trial proceedings then trial on the merits ensued. The RTC ruled in favor of the Sajonas couple, and ordered the cancellation of the Notice of Levy from TCT No. N-109417. Pilares appealed to the CA which reversed RTCs decision, and upheld the annotation of the levy on execution on the certificate of title. Hence, this petition to the SC by Sajonas couple. Pilares filed his comment; both parties were then ordered to file their respective memoranda which they complied.

Issues: 1) The lower court erred in holding that the rule on the 30-day period for adverse claim under section 70 of P.D. No. 1529 is absolute inasmuch as it failed to read or construe the provision in its entirety and to reconcile the apparent inconsistency within the provision in order to give effect to it as a whole.a. Was the adverse claim inscribed in the Transfer Certificate of Title No. N-109417 still in force when private respondent caused the notice of levy on execution to be registered and annotated in the said title, considering that more than thirty days had already lapsed since it was annotated?2) The lower court erred in interpreting section 70 of P.D. No. 1529 in such wise on the ground that it violates petitioners substantial right to due process.3) Are petitioners buyers in good faith of the subject property?

Ruling:Yes. The lower court erred in holding that the rule on the 30-day period for adverse claim under section 70 of P.D. No. 1529 is absolute inasmuch as it failed to read or construe the provision in its entirety and to reconcile the apparent inconsistency within the provision in order to give effect to it as a whole.

Yes. The adverse claim inscribed in the Transfer Certificate of Title No. N-109417 was still in force when private respondent caused the notice of levy on execution to be registered and annotated in the said title, considering that more than thirty days had already lapsed since it was annotated.

The annotation of an adverse claim is a measure designed to protect the interest of a person over a piece of real property where the registration of such interest or right is not otherwise provided for by the Land Registration Act or Act 496 (now P.D. 1529 or the Property Registration Decree), and serves a warning to third parties dealing with said property that someone is claiming an interest on the same or a better right than that of the registered owner thereof.Such notice is registered by filing a sworn statement with the Register of Deeds of the province where the property is located, setting forth the basis of the claimed right together with other dates pertinent thereto.

The registration of an adverse claim is expressly recognized under Section 70 of P.D. No. 1529.

Section 51. Conveyance and other dealings by the 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, leases 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 in so far as third persons are concerned, and in all cases under the Decree, the registration shall be made in the office of the Register of Deeds for the province or city where the land lies.(Italics supplied by the lower court.)

Under the Torrens system, registration is the operative act which gives validity to the transfer or creates a lien upon the land.A person dealing with registered land is not required to go behind the register to determine the condition of the property.He is only charged with notice of the burdens on the property which are noted on the face of the register or certificate of title.

Although we have relied on the foregoing rule, in many cases coming before us, the same, however, does not fit in the case at bar.While it is the act of registration which is the operative act which conveys or affects the land insofar as third persons are concerned, it is likewise true, that the subsequent sale of property covered by a Certificate of Title cannot prevail over an adverse claim, duly sworn to and annotated on the certificate of title previous to the sale. While it is true that under the provisions of the Property Registration Decree, deeds of conveyance of property registered under the system, or any interest therein only take effect as a conveyance to bind the land upon its registration, and that a purchaser is not required to explore further than what the Torrens title, upon its face, indicates in quest for any hidden defect or inchoate right that may subsequently defeat his right thereto, nonetheless, this rule is not absolute.Thus, one who buys from the registered owner need not have to look behind the certificate of title, he is, nevertheless, bound by the liens and encumbrances annotated thereon. One who buys without checking the vendors title takes all the risks and losses consequent to such failure.

The question may be posed, was the adverse claim inscribed in the Transfer Certificate of Title No. N-109417 still in force when private respondent caused the notice of levy on execution to be registered and annotated in the said title, considering that more than thirty days had already lapsed since it was annotated?This is a decisive factor in the resolution of this instant case.

For a definitive answer to this query, we refer to the law itself.Section 110 of Act 496 or the Land Registration Act reads:

Sec. 110. Whoever claims any part or interest in registered lands adverse to the registered owner, arising subsequent to the date of the original registration, may, if no other provision is made in this Act for registering the same, make a statement in writing setting forth fully his alleged right or interest, and how or under whom acquired, and a reference to the volume and page of the certificate of title of the registered owner, and a description of the land in which the right or interest is claimed.

The statement shall be signed and sworn to, and shall state the adverse claimants residence, and designate a place at which all notices may be served upon him.The statement shall be entitled to registration as an adverse claim, and the court, upon a petition of any party in interest, shall grant a speedy hearing upon the question of the validity of such adverse claim and shall enter such decree therein as justice and equity may require.If the claim is adjudged to be invalid, the registration shall be cancelled.If in any case, the court after notice and hearing shall find that a claim thus registered was frivolous or vexatious, it may tax the adverse claimant double or treble the costs in its discretion.

The validity of the above-mentioned rules on adverse claims has to be reexamined in the light of the changes introduced by P.D. 1529, which provides:

Sec. 70 Adverse Claim- Whoever claims any part or interest in registered land adverse to the registered owner, arising subsequent to the date of the original registration, may, if no other provision is made in this decree for registering the same, make a statement in writing setting forth fully his alleged right or interest, and how or under whom acquired, a reference to the number of certificate of title of the registered owner, the name of the registered owner, and a description of the land in which the right or interest is claimed.

The statement shall be signed and sworn to, and shall state the adverse claimants residence, and a place at which all notices may be served upon him.This statement shall be entitled to registration as an adverse claim on the certificate of title.The adverse claim shall be effective for a period of thirty days from the date of registration. After the lapse of said period, the annotation of adverse claim may be cancelled upon filing of a verifiedpetition therefor by the party in interest:Provided, however, that after cancellation, no second adverse claim based on the same ground shall be registered by the same claimant.

Before the lapse of thirty days aforesaid, any party in interest may file a petition in the Court of First Instance where the land is situated for the cancellation of the adverse claim, and the court shall grant a speedy hearing upon the question of the validity of such adverse claim, and shall render judgment as may be just and equitable.If the adverse claim is adjudged to be invalid, the registration thereof shall be ordered cancelled.If, in any case, the court, after notice and hearing shall find that the adverse claim thus registered was frivolous, it may fine the claimant in an amount not less than one thousand pesos, nor more than five thousand pesos, in its discretion.Before the lapse of thirty days, the claimant may withdraw his adverse claim by filing with the Register of Deeds a sworn petition to that effect. (Italics ours)

In construing the law aforesaid, care should be taken that every part thereof be given effect and a construction that could render a provision inoperative should be avoided, and inconsistent provisions should be reconciled whenever possible as parts of a harmonious whole. For taken in solitude, a word or phrase might easily convey a meaning quite different from the one actually intended and evident when a word or phrase is considered with those with which it is associated. In ascertaining the period of effectivity of an inscription of adverse claim, we must read the law in its entirety.Sentence three, paragraph two of Section 70 of P.D. 1529 provides:

The adverse claim shall be effective for a period of thirty days from the date of registration.

At first blush, the provision in question would seem to restrict the effectivity of the adverse claim to thirty days.But the above provision cannot and should not be treated separately, but should be read in relation to the sentence following, which reads:

After the lapse of said period, the annotation of adverse claimmay be cancelledupon filing of a verified petition therefor by the party in interest.

If the rationale of the law was for the adverse claim toipso factolose force and effect after the lapse of thirty days, then it would not have been necessary to include the foregoing caveat to clarify and complete the rule.For then, no adverse claim need be cancelled.If it has been automatically terminated by mere lapse of time, the law would not have required the party in interest to do a useless act.

A statutes clauses and phrases must not be taken separately, but in its relation to the statutes totality.Each statute must, in fact, be construed as to harmonize it with the pre-existing body of laws.Unless clearly repugnant, provisions of statutes must be reconciled.The printed pages of the published Act, its history, origin, and its purposes may be examined by the courts in their construction. An eminent authority on the subject matter states the rule candidly:

A statute is passed as a whole and not in parts or sections, and is animated by one general purpose and intent.Consequently, each part or section should be construed in connection with every other part or section so as to produce a harmonious whole.It is not proper to confine its intention to the one section construed.It is always an unsafe way of construing a statute or contract to divide it by a process of etymological dissection, into separate words, and then apply to each, thus separated from the context, some particular meaning to be attached to any word or phrase usually to be ascertained from the context.

Construing the provision as a whole would reconcile the apparent inconsistency between the portions of the law such that the provision on cancellation of adverse claim by verified petition would serve to qualify the provision on the effectivity period.The law, taken together, simply means that the cancellation of the adverse claim is still necessary to render it ineffective, otherwise, the inscription will remain annotated and shall continue as a lien upon the property.For if the adverse claim has already ceased to be effective upon the lapse of said period, its cancellation is no longer necessary and the process of cancellation would be a useless ceremony.

It should be noted that the law employs the phrase may be cancelled, which obviously indicates, as inherent in its decision making power, that the court may or may not order the cancellation of an adverse claim, notwithstanding such provision limiting the effectivity of an adverse claim for thirty days from the date of registration.The court cannot be bound by such period as it would be inconsistent with the very authority vested in it.A fortiori, the limitation on the period of effectivity is immaterial in determining the validity or invalidity of an adverse claim which is the principal issue to be decided in the court hearing.It will therefore depend upon the evidence at a proper hearing for the court to determine whether it will order the cancellation of the adverse claim or not.

To interpret the effectivity period of the adverse claim as absolute and without qualification limited to thirty days defeats the very purpose for which the statute provides for the remedy of an inscription of adverse claim, as the annotation of an adverse claim is a measure designed to protect the interest of a person over a piece of real property where the registration of such interest or right is not otherwise provided for by the Land Registration Act or Act 496 (now P.D. 1529 or the Property Registration Decree), and serves as a warning to third parties dealing with said property that someone is claiming an interest or the same or a better right than the registered owner thereof.

In sum, the disputed inscription of adverse claim on the Transfer Certificate of Title No. N-79073 was still in effect on February 12, 1985 when Quezon City Sheriff Roberto Garcia annotated the notice of levy on execution thereto.Consequently, he is charged with knowledge that the property sought to be levied upon on execution was encumbered by an interest the same as or better than that of the registered owner thereof.Such notice of levy cannot prevail over the existing adverse claim inscribed on the certificate of title in favor of the petitioners.This can be deduced from the pertinent provision of the Rules of Court, to wit:

Section 16. Effect of levy on execution as to third persons- The levy on execution shall create a lien in favor of the judgment creditor over the right, title and interest of the judgment debtor in such property at the time of the levy,subject to liensorencumbrances then existing. (Italics supplied)

To hold otherwise would be to deprive petitioners of their property, who waited a long time to complete payments on their property, convinced that their interest was amply protected by the inscribed adverse claim.

2. Yes. The lower court erred in interpreting section 70 of P.D. No. 1529 in such wise on the ground that it violates petitioners substantial right to due process.

In such wise: The appellate court relied on the rule of statutory construction that Section 70 is specific and unambiguous and hence, needs no interpretation nor construction. Perforce, the appellate court stated, the provision was clear enough to warrant immediate enforcement, and no interpretation was needed to give it force and effect.Afortiori, an adverse claim shall be effective only for a period of thirty (30) days from the date of its registration, after which it shall be without force and effect.

The reason why the law provides for a hearing where the validity of the adverse claim is to be threshed out is to afford the adverse claimant an opportunity to be heard, providing a venue where the propriety of his claimed interest can be established or revoked, all for the purpose of determining at last the existence of any encumbrance on the title arising from such adverse claim.This is in line with the provision immediately following:

Provided, however, that after cancellation, no second adverse claim shall be registered by the same claimant.

Should the adverse claimant fail to sustain his interest in the property, the adverse claimant will be precluded from registering a second adverse claim based on the same ground.

It was held that validity or efficaciousness of the claim may only be determined by the Court upon petition by an interested party, in which event, the Court shall order the immediate hearing thereof and make the proper adjudication as justice and equity may warrant.And it is only when such claim is found unmeritorious that the registration of the adverse claim may be cancelled, thereby protecting the interest of the adverse claimant and giving notice and warning to third parties.

Hence, the CA is incorrect in its interpretation of Sec. 70 of P.D. 1529 on the ground that it violates petitioners substantial right to due process.

3) Yes. Petitioners are buyers in good faith of the subject property.

As pointedly observed by the appellate court, there is no question that plaintiffs-appellees were not aware of the pending case filed by Pilares against Uychocde at the time of the sale of the property by the latter in their favor. This was clearly elicited from the testimony of Conchita Sajonas, wife of plaintiff, during cross-examination on April 21, 1988.

A purchaser in good faith and for value is one who buys property of another without notice that some other person has a right to or interest in such property and pays a full and fair price for the same, at the time of such purchase, or before he has notice of the claims or interest of some other person in the property.Good faith consists in an honest intention to abstain from taking any unconscientious advantage of another. Thus, the claim of the private respondent that the sale executed by the spouses was made in fraud of creditors has no basis in fact, there being no evidence that the petitioners had any knowledge or notice of the debt of the Uychocdes in favor of the private respondents, nor of any claim by the latter over the Uychocdes properties or that the same was involved in any litigation between said spouses and the private respondent.While it may be stated that good faith is presumed, conversely, bad faith must be established by competent proof by the party alleging the same.Sanssuch proof, the petitioners are deemed to be purchasers in good faith, and their interest in the subject property must not be disturbed.

At any rate, the Land Registration Act (Property Registration Decree) guarantees to every purchaser of registered land in good faith that they can take and hold the same free from any and all prior claims, liens and encumbrances except those set forth on the Certificate of Title and those expressly mentioned in the ACT as having been preserved against it.Otherwise, the efficacy of the conclusiveness of the Certificate of Title which the Torrens system seeks to insure would be futile and nugatory.

Diaz-Duarte v. OngThe Register of Deeds cannot unilaterally cancel the adverse claim. There must be a court hearing for the purposeSantos v. Ganayo

Viewmaster v. Maulit

People v. RTC of Manila

Tanchoco v. AquinoFACTS:Lot 314 was a conjugal property of the deceased Maximo Viola and his deceased wife Juana Viola. The whole lot was titled in the name of their son, respondent Rafael Viola way back in 1937.

On April 6, 1964, Rafael Viola sold the undivided one-half (1/2) portion of Lot 314 to Petitioners Pastor, Macario and Agripino Tanchoco for the sum of P50,000.00 this portion was subsequently designated as Lot 314-B-2-A in the name of said petitioners.

Then, onJune5,1965, Rafael sold six-seventh (6/7) of the undivided one-half (1/2) portion to the other petitioners Inocencia, Liberata and Trinidad Tanchoco for the sum of P42,000.00

In a Civil Case filed before the CIF of Nueva Ecija, the court ruled in favor of the plaintiffs Vicenta T. Vda. de Lajom and Jose T. Lajom, over the undivided one-half of lot 314 described under TCT No. 11682.

A subsequent order was issued by the CIF, rdering the cancellation of all annotations with respect to the undivided one-half (1/2) of lot 314 described under Transfer Certificate of Title No. 11682 after the notice of lis pendens at the back of the said title was annotated.

The annotation of lis pendens on said TCT reads as follows: Entry No. 19553/T-14707; Kind Lis pendensin favor of Donato Lajom; Conditions-1/2 of the properties described in this title is the object of a complaint filed in Civil Case No. 8077 of the C.F.I. of N.E.; Date of instrument Dec. 16, 1949; Date of Inscription Jan. 11, 1950 at 2:00 p.m.

The Court of Appeals affirmed the questioned orders, dismissing the instant petition for certiorari as the land in question was subject of the notice of lis pendens and that the petitioners were purchasers in bad faith.

ISSUES: WON petitioners are purchasers in good faith despite the existing notice of lis pendens.

HELD:It is clear that the sales of the portion of Lot 314 by Viola in favor of petitioners were both made after the Decision of the Court of First Instance and the Decision of this court affirming the same had already became final and executory, in which Decision it was held that the share of the respondent Lajoms was only one-seventh (1/7) of the share of the deceased Maximo Viola in the said properties.

The share of respondents Lajoms was not included in the sale in favor of the petitioners.

1/2 portion of Lot 314

The portion pertained to was the share of the deceased wife of Maximo Viola which was not involved in the aforementioned Civil Case. In the annotation of lis pendens it is stated that the said case involves "1/2 of the properties described in the title."

In spite of the fact that this 1/2 portion is not involved in the case and is not covered by the notice of lis pendens, still the respondent court caused the cancellation of the titles in the name of petitioners and caused the registration of the said 1/2 portion in the name of respondent Rafael Viola.

To order the cancellation of the said title of the petitioners and to cause the registration of the same again in the name of respondent Rafael Viola who had already sold this portion for valuable considerations to the petitioners is highly irregular and ridiculous.

The same can be said of the sale of the 6/7 of the other one-half portion of Lot 314. This portion also lawfully belonged to the vendor Rafael Viola and did not include the 1/7 of 1/2 of Lot 314 which was adjudicated to the respondents Lajoms in the final decision.

The petitioners were already the registered owners of all but 1/7 of Lot 314 at the time private respondents entered into the compromise agreement in Civil Case No. 8077.

The possession of the said property was delivered to the petitioners and they have exercised all the rights of ownership over the same.

The petitioners have acquired real rights over the said property and cannot now be deprived of their rights therein without due notice to them and without affording them the opportunity to be heard in a proper action or suit brought for the purpose.

To deprive them of their aid property of their rights therein without the required notice and without affording them the opportunity to be heard as what happened in this case, is a clear violation of the constitutional guaranty that no person shall be deprived of his property without due process of law.

Yared v. Ilarde

Romero v. CAFACTS:Romero and her siblings executed a letter-contract to sell with private respondent Orden. In said contract, private respondent proposed to purchase from Romero and her siblings a property located at Denver cor. New York Sts., Cubao, Quezon for the total amount of P17M. The contract stipulated that private respondent shall pay petitioner the amount of P7M upon the execution of the deed of absolute sale, the balance of P10M not later than December 19, 1996 and that private respondent shall shoulder the expenses to evict the squatters on the property. When private respondent failed to pay the down payment, petitioner Corona told him that she was rescinding the contract to sell. Private respondent then filed a complaint for specific performance and damages against petitioners before the Regional Trial Court alleging that he has complied with his obligation to evict the squatters on the property and is entitled to demand from petitioners the performance of their obligation under the contract. Simultaneous with the filing of the complaint, private respondent caused the annotation of a notice of lis pendens Limsico, Jr. and Santos, subsequent buyers of the subject property sold by petitioner Corona and her siblings, filed a motion for leave to intervene and filed a motion for the cancellation of lis pendens which the RTC granted in its Resolution. The RTC reasoned that the inscription is not necessary to protect the alleged right of the plaintiff over the subject property. The plaintiff is not entitled to the inscription of the notice on TCT in the name of the defendants and others because he does not have any actionable right over the subject property there being no deed of sale executed. Therefore said notice should be cancelled.

Respondent filed a petition for certiorari before the CA seeking the nullification of the resolutions of the RTC and asked for the re-annotation of the notice of lis pendens on the TCT. The CA granted the portions of which read:

First, the general rule is that a notice of lis pendens cannot be cancelled while the action is pending and undetermined except in cases expressly provided by statute. Section 77, P.D. 1529 (Property Registration Decree) In the instant case, there was not even a hearing upon which could be predicated a "proper showing" that any of the grounds provided by law exists.

Second, as shown in the above cited provisions, there are only two grounds for the court to order the cancellation of a notice of lis pendens during the pendency of an action, and they are: (1) if the annotation was for the purpose of molesting the title of the adverse party, or (2) when the annotation is not necessary to protect the title of the party who caused it to be recorded. While the parties are locked up in legal battle and until it becomes convincingly shown that either of the two grounds exists, the court should not allow the cancellation.

Third, the Doctrine of Lis Pendens is founded upon reasons of public policy and necessity, the purpose of which is 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. In the case at bench, the judgment is even defective, in that the same does not specify who among the private respondents whether the defendants-vendors or intervenors-vendeesshould file a bond.

Fourth, if there was indeed an agreement to sell between the petitioner and the private respondents- then the said parties are bound by the provisions of Article 1475 of the Civil Code, to wit:

ART. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price.

In any case, a notation of lis pendens does not create a non-existent right or lien. It serves merely as a warning to a person who purchases or contracts on the subject property that he does so at his peril and subject to the result of the pending litigation. It is not even required that the applying party must prove his right or interest over the property sought to be annotated. Thus, it was legally erroneous for the respondent court to order the cancellation of the notice.

ISSUE: Whether or not the CA committed grave abuse of discretion in ordering the re-annotation of the lis pendens

HELD: We rule in the negative.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 final 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. Its notice is an announcement to the whole world that a particular property is in litigation and serves as a warning that one who acquires an interest over said property does so at his own risk or that he gambles on the result of the litigation over said property.

The filing of a notice of lis pendens has a two-fold effect: (1) to keep the subject matter of the litigation within the power of the court until the entry of the final judgment to prevent the defeat of the final judgment by successive alienations; and (2) to bind a purchaser, bona fide or not, of the land subject of the litigation to the judgment or decree that the court will promulgate subsequently.

Petitioners contend that: the notice of lis pendens is not necessary in this case since the complaint does not pray for an express award of ownership or possession; what is involved in this case is a contract to sell and not a contract of sale, thus, no title has passed to private respondent yet which needs to be protected by a notice of lis pendens; by ordering the re-annotation of the notice of lis pendens, when private respondent did not even assert a claim of possession or title over the subject property, the CA went against the doctrine in Villanueva vs. Court of Appeals, where this Court held that the applicant must, in the complaint or answer filed in the subject litigation, assert a claim of possession or title over the subject property in order to give due course to his application; the CA, in concluding that there was no hearing before the annotation was cancelled, overlooked the fact that the motion for cancellation was set for hearing on November 12, 1997, that private respondent was duly notified but failed to appear, and that he was able to file his opposition to the motion to cancel lis pendens which the RTC considered before promulgating its Resolution

Private respondent, on the other hand, contends that: the court a quo cancelled the notice of lis pendens even before it has been apprised of all the relevant facts of the case; the CA was correct in ruling that while the parties are locked in legal battle and until it becomes manifest that the grounds set forth in Sec. 77, P.D. No. 1529 exist, the trial court should not allow the cancellation of the lis pendens; the RTC ruling in this case is proscribed by the case of Tan vs. Lantin which held that the law does not authorize a judge to cancel lis pendens pending litigation, upon the mere filing of a bond; the danger sought to be prevented by the Tan ruling

In their Reply, petitioners reiterate their arguments and cited AFP Mutual Benefit Association, Inc. vs. Court of Appeals where it was held that a notice of lis pendens may be annotated only where there is an action or proceeding in court which affects title to or possession of real property. They further maintain that the requirement of prior hearing was sufficiently complied with in this case and petitioners did not act in bad faith when she sold the subject property pending the outcome of this case since there was no outstanding injunction or restraining order which would have prevented her from doing so.We disagree with petitioners claim that lis pendens is not proper since private respondent has no title over the property neither did he pray specifically in his complaint for the ownership or possession thereof. The complaint for specific performance and damages filed by private respondent specifically prayed that petitioners, as defendants thereat, be bound by the terms and conditions of their letter-contract. By praying thus, private respondent in effect asks the court to order petitioners to fulfill their promise to sell the property covered by tct and amount of P17M. While private respondent did not explicitly state that he was running after the ownership of the property, a simple reading of the complaint would show that such was his intent. This is sufficient for purposes of annotating lis pendens. There is nothing in the rules which requires a party seeking annotation of lis pendens to show that the land belongs to him. There is no requirement that the party applying for the annotation must prove his right or interest over the property sought to be annotated. Thus, we have held that even on the basis of an unregistered deed of sale, a notice of lis pendens may be annotated on the title. Said annotation cannot be considered as a collateral attack against the certificate of title based on the principle that the registration of a notice of lis pendens does not produce a legal effect similar to a lien. The rules merely require that an affirmative relief be claimed since a notation of lis pendens neither affects the merits of a case nor creates a right or a lien. It only protects the applicants rights which will be determined during trial.

In fine, petitioners failed to show that the CA committed grave abuse of discretion in ordering the re-annotation of the notice of lis pendens..AFP Mutual Benefit Association, Inc. v. CAFACTS:Investco, Inc. was the owner of six (6) parcels of raw land, located in Quezon City and Marikina (Metro Manila, now a City), registered under titles in the names of its predecessors-in-interests, Angela Perez-Staley and Antonio Perez, Jr. Investco, Inc. agreed to sell the six (6) parcels of land to Solid Homes for P10,211,075.00, payable in instalments with stipulation that the parties further agreed that Solid Homes would evict the squatters in the property or obtain a waiver from them, that it would cause the original titles to be cancelled and new ones issued in the name of Investco, Inc. and that Investco, Inc. would contribute one-half of the expenses in clearing the property of occupants, in an amount not exceeding P350,000.00. However, after paying the amount corresponding to the downpayment, and the amount of P4,084,430.00 representing the first four (4) semi-annual installments and a portion of the fifth installment, Solid Homes made no further payment to Investco, Inc. Angela Perez-Staley and Antonio Perez, Jr. filed with the Court of First an action for specific performance and damages against Solid Homes. Solid Homes filed with the trial court an answer to Investco, Inc.'s complaint alleging that the purchase price under the contract was "not yet due" and that the former, in fact, exceeded the installment payments due thereon. Solid Homes prayed for dismissal of Investco, Inc.'s complaint, Solid Homes filed with the Register of Deeds of Marikina a notice of lis pendens requesting that the same be annotated on the titles in Investco, Inc.'s name. However, the notice of lis pendens was not actually annotated on the titles in the name of Investco, Inc.

the trial court rendered judgment in favor of Investco, Inc. ordering Solid Homes to pay plaintiffs

the trial court ordered the original record transmitted to the appellate court in view of Solid Homes' filing of a notice of appeal.

In the meantime, Investco, Inc. offered to sell the property to AFP Mutual Benefit Association, Inc. For P24,000,000.00, payable in installments. Investco, Inc. furnished AFP MBAI with certified true copies of the titles covering the Marikina property.

Moreover, AFP MBAI, through its Real Estate Committee, made an ocular inspection of the property. AFP MBAI confirmed the presence of squatter shanties numbering about twenty (20) to thirty (30). Except for a foot path used by the squatters, there was no development on the property.

After determining that the Investco property was suitable for the housing project of the Armed Forces of the Philippines and that the titles covering the same were "clean" and "genuine," AFP MBAI agreed to purchase the same from Investco, Inc. for the price of P24,000,000.00, payable in installments for a period of one (1) year.

Among other terms, Investco, Inc. warranted to AFP MBAI that "it has good and valid title over the properties subject of (the) sale and (that it) shall hold (AFP MBAI) free from any adverse claim of whatever nature and from liens and encumbrances of third parties".

AFP MBAI completed its payments of the purchase price.

the Register of Deeds of Marikina issued Transfer Certificates of Title. The titles issued were "clean" and contained no annotation of any lien, encumbrance, or adverse claim by a third party.

Solid Homes commenced action before the Regional Trial Court, Marikina, against the Register of Deeds, AFP MBAI and Investco, Inc. for "annotation of lis pendens and damages" with temporary restraining order and preliminary injunction

In due time, AFP MBAI and Investco, Inc. filed with the trial court an answer to the complaint, the trial court rendered decision ordering defendant Register of Deeds for (sic) Marikina to annotate the Notice of Lis Pendens, Declaring defendant AFP MBAI as a buyer in bad faith

Aggrieved thereby, AFP MBAI appealed the decision to the Court of Appeals. Court of Appeals rendered decision which denied the motion. Hence, this petition.

ISSUE: Whether or not Solid Homes is entitled to the annotation of its notice of lis pendens on the titles of Investco, Inc. and AFP Mutual Benefit Association, Inc.

HELD:The doctrine of lis pendens is inapplicable to this case. The Register of Deeds of Marikina correctly denied the annotation of the notice of lis pendens on the titles of Investco, Inc. and the AFP MBAI. The Register of Deed's obligation to annotate the notice of lis pendens is one that arises from law. Hence, the action is actually one for mandamus to compel the performance of a clear legal duty. There is no such action as one for "annotation of lis pendens," as Solid Homes sought in its complaint. A notice of lis pendens is not and can not be sought as a principal action for relief. "The notice is but an incident to an action, an extra-judicial one to be sure. It does not affect the merits thereof. It is intended merely to constructively advise, or warn, all people who deal with the property that they so deal with it at their own risk, and whatever rights they may acquire in the property in any voluntary transaction are subject to the results of the action, and may well be inferior and subordinate to those which may be finally determined and laid down therein." The notice of lis pendens that real property is involved in an action is ordinarily recorded without the intervention of the court where the action is pending. As a settled rule, notice of lis pendens may be annotated only where there is an action or proceeding in court which affects title to or possession of real property.

Under Presidential Decree No. 1529, known as the "Property Registration Decree of 1978", the Register of Deeds may deny registration of the notice of lis pendens, which denial may be appealed by the applicant en consulta (Section 10, paragraph 2) to the Commissioner of Land Registration. 25 Section 117 of P.D. No. 1529 provides:

When the Register of Deeds is in doubt with regard to the proper step to be taken or memorandum to be made in pursuance of any deed, mortgage or other instrument present to him for registration, or where any party in interest does not agree with the action taken by the Register of Deeds with reference to any such instrument, the question shall be submitted to the Commissioner of Land Registration by the Register of Deeds, or by the party in interest thru the Register of Deeds.

Here, the Register of Deeds of Marikina denied the annotation of the notice of lis pendens on the ground that the complaint was for collection of a sum of money and did not involve the titles to or possession of the subject property. If Solid Homes did not agree with the denial of the Register of Deeds, it could appeal the same en consulta to the Commissioner of Land Registration. The resolution of the Commissioner may then be appealed to the Court of Appeals, which has exclusive jurisdiction to decide the same, "within the period and in the manner provided in Republic Act No. 5434."

In its questioned decision, the Court of Appeals held that the action filed by Investco, Inc. against Solid Homes "is not exclusively for payment of the unpaid installments on the purchase price of the subject properties and damages, but also one for rescission of the contract to sell and to buy the subject properties executed by defendant Investco, Inc. in favor of (Solid Homes) which necessarily involves delivery of possession and ownership of the same."

We do not agree. This ruling conflicts with the final decision of the Supreme Court on the case. What is more, in determining the nature of plaintiffs (Investco, Inc.) action and defendant Solid Homes' counterclaim thereto, the Court of Appeals went beyond the allegations in the complaint and ventured into speculation and conjecture. There is nothing in Investco's that even remotely suggests that Investco, Inc. has rescinded the contract, or that it sought the rescission of the sale as an alternative remedy. Specific performance and rescission are alternative remedies which a party may not avail himself of at the same time.

The nature of an action is determined by the allegations of the complaint.

"Good faith is always presumed, and upon him who alleges bad faith on the part of a possessor rests the burden of proof." 38 Here, Solid Homes alleged that Investco, Inc. and AFP MBAI "confederated with each other in entering into the aforementioned sale in order to deprive herein plaintiff (Solid Homes) of its rights over subject properties under the Contract to Sell and to Buy. . ." However, Solid Homes adduced no evidence to prove such allegation of bad faith.

Gonzales v. Ordonez-BenitezFACTS: Rodolfo P. Gonzalez had four children in his marriage with Carmen Rojas. After Carmen died. Rodolfo married Dr. Luz Dizon and they had two children. On November 11, 1974 Rodolfo P. Gonzalez and his second wife executed an "Agreement for Dissolution of Conjugal Partnership and for Establishment of Separation of Property," for the declared purpose of avoiding "confusion and/or differences among the two sets of heirs (of said Rodolfo Gonzalez) in the settlement of the estates of the said spouses in case of death." They then filed a petition for approval of their agreement, entitled "In the Matter of the Voluntary Dissolution of Conjugal Partnership,". Rodolfo's children by his first marriage moved for, and were granted leave, to intervene in the case.

On March 4, 1975 Salvador R. Gonzalez, the eldest of the four children of the first marriage, instituted in the same Court proceedings to place under guardianship the property of his father Rodolfo P. Gonzalez, grounded on the latter's alleged incapacity "to manage and direct his financial and ownership status" resulting from the deterioration of his mental faculties on account of illness and advanced age. The petition further averred that prejudice would be caused to the children of the first marriage. Rodolfo P. Gonzalez and his wife drew up a contract for the sale of two parcels of land in favor of Helen Grace Silvestre and Rica Marie re. It appears however that the mortgagee banks were not willing to accede to the assumption by the vendees of the spouses' mortgage obligations. What the vendor spouses did, on July 16, 1975, was to cause annotation of the sales as adverse claims on the corresponding certificates of title.

Salvador R. Gonzalez himself caused notices of lis pendens to be annotated sometime in September, 1975 on the spouses' titles not only over the two lots, but also over other property in the name of Gonzalez Spouses and the Spouses Trinidad de la Pea and Aurea Dizon de la Pea, and in the name of Luz Dizon-Gonzalez, married to Rodolfo P. Gonzalez, and denominated "paraphernal property." His requests for annotation were based on the pendency of the guardianship proceeding involving the property of Rodolfo P. Gonzales.

Rodolfo P. Gonzalez filed a petition for cancellation of said notices of lis pendens. He argued that:1) the petition for guardianship, ostensible basis of the notices of lis pendens, did "not involve title to or possession of any of the properties of Rodolfo P. Gonzalez" since he had "no exclusive property of his own and whatever assets he has are held in conjugal partnership with his wife, Dra. Luz Dizon-Gonzalez," and hence, said notices could not be justified by either the Torrens Act or the Rules of Court;2) the property covered by TCT No. 6802 and 6803 had already been sold for value in good faith to purchasers who had earlier registered adverse claims thereto; 3) the annotations of the notices of lis pendens had been made merely to harass and molest the Gonzalez Spouses who had thereby been prevented from dealing with their properties, causing them irreparable injury, "especially considering that Dr. Luz Dizon-Gonzalez is engaged in the buying and selling of real estate as a major means of . . . livelihood ;"4) Diaz v. Perez (103 Phil. 1023) involved substantially different facts, 8 and could not be invoked as authority to justify the annotation of the notices of lis pendens in question, the "more analogous situation" being that in Garcia v. Vasquez, 32 SCRA 489 (1970) in which the following pronouncement had been made, viz.:. . . In short, the issue in controversy there (in the case relied upon as basis for the notice of lis pendens) is simply the fitness or unfitness of said speci