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G.R. No. 171008 - Carmelit A. Fudot v. Cattleya Land, Inc.

G.R. No. 171008 - Carmelit A. Fudot v. Cattleya Land, Inc.

PHILIPPINE SUPREME COURT DECISIONS

SECOND DIVISION

[G.R. NO. 171008 : September 13, 2007]

CARMELITA FUDOT, Petitioner, v. CATTLEYA LAND, INC., VELASCO, JR., JJ. Respondent.

D E C I S I O N

TINGA, J.:

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

The facts, as culled from the records, follow.

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

On 23 January 1995, petitioner presented for registration before the Register of Deeds the owner's copy of the title of the subject property, together with the deed of sale purportedly executed by the Tecsons in favor of petitioner on 19 December 1986. On the following day, respondent sent a letter of protest/opposition to petitioner's application. Much to its surprise, respondent learned that the Register of Deeds had already registered the deed of sale in favor of petitioner and issued a new title in her name.5

On 5 May 1995, respondent filed its Complaint6 for Quieting Of Title &/Or Recovery Of Ownership, Cancellation Of Title With Damages before the Regional Trial Court of Tagbilaran City.7 On 26 June 1995, Asuncion filed a complaint-in-intervention, claiming that she never signed any deed of sale covering any part of their conjugal property in favor of petitioner. She averred that her signature in petitioner's deed of sale was forged thus, said deed should be declared null and void.8 She also claimed that she has discovered only recently that there was an amorous relationship between her husband and petitioner.9

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

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

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

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

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

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

I.

BETWEEN 2 BUYERS OF REGISTERED LAND, WHO HAS THE BETTER RIGHT-IS IT THE FIRST BUYER WHO WAS GIVEN THE OWNER'S DUPLICATE TCT TOGETHER WITH A DEED OF SALE IN 1986, OR THE SECOND BUYER IN 1992 WITH ONLY A DEED OF SALE.

II.

IS A BUYER OF REGISTERED LAND WHO DID NOT DEMAND OR REQUIRE THE DELIVERY OF THE OWNER'S DUPLICATE TCT A BUYER IN GOOD FAITH.

III.

II. IN SUBSEQUENT REGISTRATION OF REGISTERED LANDS, AS BY SALE, WHICH LAW SHALL GOVERN, ARTICLE 1455 OF CIVIL CODE OR P.D. 1529 OR TORRENS SYSTEM.17

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

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

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

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

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

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

The petition is bereft of merit.

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

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

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

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

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

In this case, following Article 17329 of the Civil Code, on 26 June 1995, or eight and a half years (8 ') after the purported sale to petitioner, Asuncion filed her Complaint-in-Intervention seeking the nullification thereof, and while her marriage with Troadio was still subsisting. Both the Court of Appeals and the trial court found Asuncion's signature in the deed of sale to have been forged, and consequently, the deed of sale void for lack of marital consent. We find no reason to disturb the findings of the trial court and the Court of Appeals. Findings of fact of lower courts are deemed conclusive and binding upon the Supreme Court subject to certain exceptions,30 none of which are present in this case. Besides, it has long been recognized in our jurisprudence that a forged deed is a nullity and conveys no title.31

Petitioner argues she has a better right over the property in question, as the holder of and the first one to present, the owner's copy of the title for the issuance of a new TCT. The Court is not persuaded.

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

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

Art. 1544. x x x.

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

x x x x.

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

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

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

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

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

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

It has been held that between two transactions concerning the same parcel of land, the registered transaction prevails over the earlier unregistered right. The act of registration operates to convey and affect the registered land so that a bona fide purchaser of such land acquires good title as against a prior transferee, if such prior transfer was unrecorded.36 As found by the courts a quo, respondent was able to register its purchase ahead of petitioner. It will be recalled that respondent was able to register its Deed of Conditional Sale with the Register of Deeds as early as 6 November 1992, and its Deed of Absolute Sale on 14 October 1993. On the other hand, petitioner was able to present for registration her deed of sale and owner's copy of the title only on 23 January 1995, or almost nine years after the purported sale. Why it took petitioner nine (9) years to present the deed and the owner's copy, she had no credible explanation; but it is clear that when she finally did, she already had constructive notice of the deed of sale in respondent's favor. Without a doubt, respondent had acquired a better title to the property.ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

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

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

WHEREFORE, the petition is DENIED. The assailed decision and resolution of the Court of Appeals are affirmed. Costs against petitioner.

SO ORDERED.

Endnotes:


1 Rollo, pp. 22-32. Penned by Associate Justice Sesinando E. Villon, with Associate Justices Arsenio J. Magpale and Enrico A. Lanzanas, concurring.

2 Id. at 35.

3 Id. at 48-49. Vide Entry No. 83422 and Entry No. 87549, respectively of the Register of Deeds of Bohol.

4 Tantrade Corporation v. Troadio Tecson, et al.

5 Rollo, pp. 51-52.

6 Id. at 47-55.

7 Docketed as Civil Case No. 5781, Cattleya Land, Inc. v. Carmelita Fudot and Atty. Narciso dela Serna. The case was eventually raffled to Branch 4, 7th Judicial Region, Tagbilaran City.

8 Rollo, pp. 60-61. Asuncion Tecson's testimony was made through oral deposition; records, pp. 497-510.

9 Records, Vol. 1, pp. 66-68; Complaint-in-Intervention; id. at 66.

10 Volume 1, pp. 35-41; Answer with Counter Claim and Motion to Dismiss, Records.

11 Rollo, pp. 57-64.

12 Id. at 64.

13 Id. at 62-63.

14 Id. at 22-32, 28-29; CA Decision dated 28 April 2005.

15 Rollo, p. 30.

16 Supra note 2; Resolution dated 11 January 2006.

17 Rollo, p. 12.

18 Id. at 14.

19 Id. at 15-16.

20 Id. at 12-17.

21 Id. at 67.

22 Id. at 70-71.

23 Id. at 72-73.

24 Civil Code, Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property.

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.

25 No. L-59514, 25 February 1988, 158 SCRA 138.

26 119 Phil. 69 (1963).

27 Abalos v. Macatangay, G.R. No. 155043, 30 September 2004, 439 SCRA 649, 661.

28 Article 166. Unless the wife has been declared a non compos mentis or a spendthrift, or is under civil interdiction or is confined in a leprosarium, the husband cannot alienate or encumber any real property of the conjugal partnership without the wife's consent. If she refuses unreasonably to give her consent, the court may compel her to grant the same.

This article shall not apply to property acquired by the conjugal partnership before the effective date of this Code.

29 Art. 173. The wife may, during the marriage and within ten years from the transaction questioned, ask the courts for the annulment of any contract of the husband entered into without her consent, when such consent is required, or any act or contract of the husband which tends to defraud her or impair her interest in the conjugal partnership property. Should the wife fail to exercise this right, she or her heirs after the dissolution of the marriage, may demand the value of property fraudulently alienated by the husband.

30 The exceptions are: when the findings are grounded on speculation, surmises or conjectures; when the inference made is manifestly mistaken, absurd or impossible; when there is grave abuse of discretion in the appreciation of facts; when the factual findings of the trial and appellate courts are conflicting; when the Court of Appeals, in making its findings, has gone beyond the issues of the case and such findings are contrary to the admissions of both appellant and appellee; when the judgment of the appellate court is premised on a misapprehension of facts or when it has failed to notice certain relevant facts which, if properly considered, will justify a different conclusion; when the findings of fact are conclusions without citation of specific evidence upon which they are based; and when findings of fact of the Court of Appeals are premised on the absence of evidence but are contradicted by the evidence on record. Solid Homes, Inc. v. Court of Appeals, 341 Phil. 261, 275 (1997).

31 Salomon v. Intermediate Appellate Court, G.R. No. 70263, 14 May 1990, 185 SCRA 352.

32 Pascua v. Court of Appeals, 401 Phil. 350, 367 (2000).

33 Agricultural Credit Cooperative Assn. of Hinigaran v. Yusay, et al., 107 Phil 791 (1960).

34 Ulep v. Court of Appeals, G.R. No. 125254, 11 October 2005, 472 SCRA 241, 253 citing Uraca v. Court of Appeals, 278 SCRA 702 (1997).

35 Coronel, et al. v. Court of Appeals, 331 Phil. 294, 321-322 (1996) citing Vitug, Compendium of Civil Law and Jurisprudence, 1993 Ed., p. 604.

36 Macadangdang v. Martinez, G.R. No. 158682, 31 January 2005, 450 SCRA 363, 368.

37 Vitug, Compendium of Civil Law and Jurisprudence (1993), p. 604, cited in Abrigo v. De Vera, G.R. No. 154409, 21 June 2004, 432 SCRA 544, 557.

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