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G.R. No. 143027 - Encarnacion L. Cuizon, et al. v. Mercedes C. Remoto, et al.

G.R. No. 143027 - Encarnacion L. Cuizon, et al. v. Mercedes C. Remoto, et al.

PHILIPPINE SUPREME COURT DECISIONS

SECOND DIVISION

[G.R. NO. 143027. October 11, 2005]

ENCARNACION L. CUIZON and SALVADOR CUIZON, Petitioners, v. MERCEDES C. REMOTO, LEONIDA R. MEYNARD, CELERINA R. ROSALES and REMEDIOS C. REMOTO, Respondents.

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

The parties in this case are vying for ownership of a 4,300 square meter-land located in Barangay Basilisa, Remedios T. Romualdez, Agusan del Norte.

Petitioners-spouses Encarnacion L. Cuizon and Salvador Cuizon rely on Transfer Certificate of Title (TCT) No. RT-3121 in the name of "Encarnacion L. Cuizon, married to Salvador Cuizon," issued by the Registry of Deeds of Agusan del Norte on March 15, 1984,1 pursuant to a notarized Extra-Judicial Settlement with Sale dated August 3, 1983 (1983 Extra-Judicial Settlement with Sale) executed by the heirs of Placida Tabada-Lambo (Placida), wherein they adjudicated unto themselves the one-fourth share of Placida, and, at the same time, sold said portion to their co-heir, Encarnacion L. Cuizon.2 TCT No. RT-3121 is a transfer from TCT No. RT-183 which originally covers 16 hectares in the name of Placida (married to Gervacio Lambo), Eugenio Tabada, Raymunda Tabada and Patrecia Tabada, each being one-fourth shareowner.3

On the other hand, respondents have in their favor a notarized Deed of Sale of Real Property dated September 19, 1968, (1968 Deed of Sale) involving a portion of the same property covered by TCT No. RT-183, measuring 4,300 square meters, executed by Placida in favor of Angel Remoto (Angel), husband of respondent Mercedes C. Remoto, and father of the other respondents, Leonida R. Meynard, Celerina R. Rosales and Remedios C. Remoto.4

In a Decision dated March 9, 1990 rendered by the Regional Trial Court of Butuan City (Branch 3) in Civil Case No. 2846, which is an action for reconveyance filed by respondents against petitioners on August 13, 1984, the trial court ruled in favor of respondents and ordered that the property be reconveyed to them. The dispositive portion of the decision reads:

Wherefore, judgment is rendered in favor of herein plaintiffs Mercedes Remoto and children Celerino R. Rosales, Leonida R. Meynard, Candelaria and Remedios both surnamed Remoto, and against defendant-spouses Salvador and Encarnacion Cuizon ordering the latter:

1) To immediately reconvey the lot in question to herein plaintiffs;

2) To pay the sum of Two Thousand (P2,000.00) Pesos as litigation expenses;

3) To pay the sum of Five Thousand (P5,000.00) Pesos as attorney's fees; andcralawlibrary

4) To pay the costs (sic) of suit.

Done in Chambers this 9th day of March, 1990, at Butuan City, Philippines.5

In awarding the property to respondents, the trial court made the following findings and conclusion, which the Court quotes with approval, viz.:

. . . a careful examination of the evidence on record shows that the evidence of the plaintiffs is strong, substantial convincing and worthy of belief than that of the defendants. The plaintiffs can legally claim possession and ownership of the lot in dispute covered by the one paged duly notarized but unregistered Deed of Sale of Real Property (Exh. A, Rollo, p. 45 or 89). A perusal of this document discloses that it was duly notarized and signed by vendor Placida Tabada, together with [h]usband Gervacio Lambo, and vendee Angel Remoto. Incidentally, the defendants-spouses utterly failed to prove any defect and irregularity in the exec[u]tion of this Exh. A.

It is the posture of the defendants-spouses that this "state" (sic) and unregistered deed of sale (Exh. A) "has lost its due execution and genuineness and the fact of its being a public document"; that it cannot defeat the duly registered Deed of Extrajudicial Settlement with Absolute Sale (Exh. 1-B); and that the issuance of TCT No. RT-3121 in favor of defendants-spouses (Exh. 3) conferred the latter a better right to the litigated lot under the Torrens system.

This Court is not in accord to (sic) these posturings of defendants-spouses. Exhibit A, which is duly notarized, is a public document. Although it is not registered, it is still enforceable and binding not only between the parties but also their successors-in-interest.'

It is likewise [the] stance of defendants-spouses that they are purchasers in good faith and for value of the lot in question. This fact is vividly rebutted by the straight forward and credible testimonies of plaintiffs Mercedes O. Remoto and Candelaria Remoto. Both testified that it was in September, 1982, not in 1983 as defendant Salvador Cuizon wants this court to believe, when defendants-spouses went to the residence of the Remotos and learned of the existence of Exhibit A; that it was on this occasion that defendants-spouses were actually shown the document, and that they read and examined the same (Vide, tsn. December 28, 1984, 284-289; tsn. April 24, 1986, 32, 34-37).

Besides, defendants-spouses could not feign ignorance of the unrebutted fact that the plaintiffs had enjoyed continuous, open, adverse and public possession of the litigated lot in the concept of an owner for a duration of fourteen years or more, i.e., from September 19, 1968, the date of execution of Exhibit A, to the present (tsn. December 28, 1984, 283-284) or until September, 1982 when they became aware of the existence of Exhibit A. Nor could the defendants-spouses deny the unrebutted fact that they never had taken possession of the litigated lot (tsn. id., 274-275).

Despite their knowledge of the existence of the Exhibit A and of the continuous public and adverse possession for fourteen years of the lot by the plaintiffs, defendants-spouses had caused the execution of the Deed of Extrajudicial Settlement with Sale on August 3, 1983 by the Heirs of Placida Tabada-Lambo in their favor (Exh. 1-B), and the consequent issuance of TCT RT-3121 in the name of defendant Encarnacion-Cuizon (Exh. 3). Hence, defendants-spouses were buyers in bad faith. They could not pretend a lack of knowledge of plaintiffs' claim and interest in the land. They also acted in bad faith in the registration of the Deed of Extrajudicial Settlement with Sale (Exh. 1-B) and in their acquisition of TCT RT-3121 (Exh. 3).

Since defendants-spouses knew of the existence of the first deed of sale, Exhibit A, this first unregistered deed of sale prevails over the registered second deed of sale, Exhibit 1-B.

It is also stressed herein that the claim of defendants-spouses that they bought the disputed lot in 1964 on installment basis from Placida Tabada and Gervacio Lambo cannot be given credence. This claim of theirs is self-serving and an afterthought in their last attempts to bolster their defense. In the absence of a written document embodying the supposed deed of sale, the latter is unenforceable contract. This conclusion is in pursuance to sub-paragraph (e), paragraph 2 of Art. 1403 of the Civil Code.'

Furthermore, it is the submission of the defendants-spouses that Exhibit A is a simulated contract because the questioned lot was intended for donation as a barrio site. This submission of their (sic) cannot be sustained in the absence of a written deed of donation.'

In fine, this Court finds and so holds that the Deed of Sale of Real Property of September 1968 (Exh. A) can be the legal basis not only of the possession and ownership of the lot in litigation, but also for the reconveyance of the same in favor of the plaintiffs.6

On appeal by petitioners, docketed as CA-G.R. CV No. 31587, the Court of Appeals (CA) affirmed the findings and conclusion of the trial court in its Decision7 dated December 16, 1999, the dispositive portion of which reads:

WHEREFORE, foregoing premises considered, the instant appeal being devoid of any merit in fact and in law, is hereby ordered DISMISSED; and the decision appealed from hereby AFFIRMED IN TOTO.

With cost to Defendants-appellants.

SO ORDERED.8

Petitioners filed a motion for reconsideration but the CA denied it per Resolution dated March 31, 2000.9

In the present Petition for Review , petitioners insist that they are the rightful owners of the property based on TCT No. RT-3121, and that the 1968 Deed of Sale is void, fictitious, unenforceable and has no legal effect. Petitioners also argue that: (1) the property is covered by TCT No. RT-183 issued on June 21, 1930, and every person dealing with registered land may safely rely on the correctness of the title; (2) at the time the 1968 Deed of Sale was executed, no written notice was given to all possible co-redemptioners, co-heirs, and co - owners, as provided for under Articles 1620 and 1623 of the Civil Code; (3) respondents' possession is ineffectual against a torrens title; and (4) respondents' action is barred by prescription and laches.10

The issue in this case is: who has a better right to the property in dispute?cralawlibrary

As a rule, the Court cannot review the factual findings of the trial court and the CA in a Petition for Review on Certiorari under Rule 45 of the Rules of Court.11 It should be stressed that a review by certiorari under Rule 45 is a matter of discretion. Under this mode of review, the jurisdiction of the Court is limited to reviewing only errors of law, not of fact. When supported by substantial evidence, findings of fact of the trial court as affirmed by the CA are conclusive and binding on the parties.12 This Court will not review unless there are exceptional circumstances, viz.: (a) where the conclusion is a finding grounded entirely on speculation, surmise and conjectures; (b) where the information made is manifestly mistaken; (c) where there is grave abuse of discretion; (d) where the judgment is based on a misapplication of facts, and the findings of facts of the trial court and the appellate court are contradicted by the evidence on record; and (e) when certain material facts and circumstances had been overlooked by the trial court which, if taken into account, would alter the result of the case.13 There exists no exceptional circumstance in this case that would warrant a departure from the factual findings of both the trial court and the CA.

As correctly ruled by both the trial court and the CA, the 1968 Deed of Sale executed by Placida in favor of Angel should prevail over the 1983 Extra-Judicial Settlement with Sale made by the heirs of Placida in favor of petitioners-spouses Cuizon. Prior tempore, potior jure. It simply means, "He who is first in time is preferred in right." The only essential requisite of this rule is priority in time, and the only one who can invoke this is the first vendee.14 Records bear the fact that when Placida sold her one-fourth portion of the property covered by TCT No. RT-183 in 1968, the 1983 Extra-Judicial Settlement with Sale was still inexistent, and more importantly, said portion was yet to be transferred by succession to Placida's heirs. The records also show that after Placida sold her portion to Angel, the latter immediately took possession of the same. Applying the principle of priority in time, it is clear that Angel, and consequently his heirs, the respondents herein, have a superior right to the property.

It must be noted that the sale by Placida to Angel is evidenced by a duly notarized deed of sale. Documents acknowledged before notaries public are public documents and public documents are admissible in evidence without necessity of preliminary proof as to their authenticity and due execution. They have in their favor the presumption of regularity, and to contradict the same, there must be evidence that is clear, convincing and more than merely preponderant.15 Petitioners failed to present any clear and convincing evidence to prove that the deed of sale is "void, fictitious, unenforceable and has no legal effect."

Petitioners harp on the fact that the 1968 Deed of Sale dated September 19, 1968, while notarized, was not registered or annotated on TCT No. RT-183. Petitioners must be reminded that registration is not a requirement for validity of the contract as between the parties, for the effect of registration serves chiefly to bind third persons.16 Petitioners are not third persons within the contemplation of the registration rule. The conveyance shall not be valid against any person unless registered, except (1) the grantor, (2) his heirs and devisees, and (3) third persons having actual notice or knowledge thereof. Petitioners are both related to the original owner of the property, Placida. Petitioner Encarnacion Lambo-Cuizon is an heir of Placida, while Salvador Cuizon is Encarnacion's husband. Hence, registration is not required to bind petitioners.

Furthermore, where the party has knowledge of a prior existing interest which is unregistered at the time he acquired a right to the same land, his knowledge of that prior unregistered interest has the effect of registration as to him.17 As was found by the trial court, before petitioners bought the property in 1983, they went to the Remotos' residence in 1982 and were shown a copy of the 1968 Deed of Sale. While petitioners dispute the year, saying that it was in 1983 and not 1982 when they went to the Remotos' residence, the Court abides by the trial court's finding considering that it was in the best position to assess the respective testimonies of the contending claimants.18

Petitioners rely heavily on TCT No. RT-3121 issued in their names. In the first place, the issuance of the title was made pursuant to the 1983 Extra-Judicial Settlement with Sale. At the time this document was entered into by the heirs of Placida, the latter was no longer the owner of the property, having earlier sold the same to Angel. No one can give what one does not have - - nemo dat quod non habet. Accordingly, one can sell only what one owns or is authorized to sell, and the buyer can acquire no more than what the seller can transfer legally.19 Such being the case, the heirs of Placida did not acquire any right to adjudicate the property unto them and sell it to Encarnacion.

What's more, the defense of indefeasibility of the torrens title does not extend to a transferee who takes the certificate of title with notice of a flaw in his title. The principle of indefeasibility of title is unavailing where there was fraud that attended the issuance of the free patents and titles.20 As previously noted, petitioners knew of the existence of the 1968 Deed of Sale as the Remotos showed it to them in 1982, a year before the execution of the 1983 Extra-Judicial Settlement with Sale. Thus, it cannot be said that petitioners are transferees in good faith and therefore, the defense of indefeasibility of the torrens title is not applicable to them.

Likewise, petitioners cannot complain that no written notice was given to all possible redemptioners or heirs at the time of the execution of the 1968 Deed of Sale. Under the provisions of the Civil Code on Legal Redemption, it is stated:

Article 1620. A co-owner of a thing may exercise the right of redemption in case the shares of all the other co-owners or of any of them, are sold to a third person. If the price of the alienation is grossly excessive, the redemptioner shall pay only a reasonable one.

Should two or more co-owners desire to exercise the right of redemption, they may only do so in proportion to the share they may respectively have in the thing owned in common.

Art. 1623. The right of legal pre-emption or redemption shall not be exercised except within thirty days from the notice in writing by the prospective vendor, or by the vendor, as the case may be. The deed of sale shall not be recorded in the Registry of Property, unless accompanied by an affidavit of the vendor that he has given written notice thereof to all possible redemptioners.

The right of redemption of co-owners excludes that of adjoining owners.

Corollary to these, Article 1088 of the Civil Code, provides:

Art. 1088. Should any of the heirs sell his hereditary rights to a stranger before the partition, any or all of the co-heirs may be subrogated to the rights of the purchaser by reimbursing him for the price of the sale, provided they do so within the period of one month from the time they were notified in writing of the sale by the vendor.

The right of legal redemption pertains to Placida's original co-owners, namely, Eugenio Tabada, Raymunda Tabada and Patrecia Tabada, and their respective heirs,21 not to petitioners who are the heirs of Placida. Also, the written notification should come from the vendor or prospective vendor, Placida in this case, and not from any other person.22 This is so because the vendor is in the best position to know who are his co-owners that under the law must be notified of the sale. Also, the notice by the seller removes all doubts as to fact of the sale, its perfection; and its validity, the notice being a reaffirmation thereof, so that the party notified need not entertain doubt that the seller may still contest the alienation. This assurance would not exist if the buyer should give the notice.23

Even if the property has not yet been formally subdivided, still, records show that the particular portions belonging to the co-owners have already been allocated and Placida's co-owners have already been exercising proprietary rights over their respective allotments. Thus, inscribed on TCT No. RT-183 are several deeds of mortgages executed by Placida's co-owner Eugenio C. Tabada in favor of the Butuan City Rural Bank with respect to his one-fourth share, and a Deed of Sale with Right of Repurchase dated May 13, 1968 executed by the spouses Eugenio G. Tabada and Trinidad Ontong in favor of one Hernando R. Sanchez, also covering Eugenio's one-fourth portion of the property.24

The Court notes, however, that the property originally co-owned by Placida, Eugenio Tabada, Raymunda Tabada and Patrecia Tabada, covered by TCT No. RT-183, measures 16 hectares, while the 1968 Deed of Sale covers 4,300 square meters.

The right of Placida to sell her one-fourth portion of the property covered by TCT No. RT-183 is sanctioned under Article 493 of the Civil Code, to wit:

Art. 493. Each co-owner shall have the full ownership of his part and the fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when personal rights are involved. But the effect of the alienation or the mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership.

The sale to Angel affects only Placida's pro indiviso share in the property, and Angel gets only what corresponds to Placida's share in the partition of the property owned in common. Since a co-owner is entitled to sell his undivided share, a sale of the entire property by one co-owner without the consent of the other co-owners is not null and void; only the rights of the co-owner/seller are transferred, thereby making the buyer a co-owner of the property.25

Given the foregoing, the portion sold by Placida and bought by Angel under the 1968 Deed of Sale should only pertain to one-fourth of Placida's share in the 16-hectare property, or 4,000 square meters.

Lastly, prescription and laches do not apply in this case. To begin with, respondents have been in actual and continuous possession of the property since Angel first bought it in 1968. If a person claiming to be the owner thereof is in actual possession of the property, the right to seek reconveyance, which in effect seeks to quiet title to the property, does not prescribe. The reason for this is that one who is in actual possession of a piece of land claiming to be the owner thereof may wait until his possession is disturbed or his title is attacked before taking steps to vindicate his right, the reason for the rule being, that his undisturbed possession gives him a continuing right to seek the aid of a court of equity to ascertain and determine the nature of the adverse claim of a third party and its effect on his own title, which right can be claimed only by one who is in possession.26

Neither can respondents be held guilty of laches. On the contrary, it was respondents' vigilance in protecting their right over the property that gave rise to the present case. Their action for reconveyance was filed only after one year and ten days from the execution of the 1983 Extra-Judicial Settlement with Sale, one year and three days after its registration, and four months and twenty-eight days after the issuance of TCT No. RT-3121. Obviously, laches has not yet set in.

WHEREFORE, the petition is DISMISSED. The Court of Appeals Decision dated December 16, 1999 together with its Resolution dated March 31, 2000 in CA-G.R. CV No. 31587 is AFFIRMED.

SO ORDERED.

Puno, Tinga, and Chico-Nazario, JJ., concur.
Callejo, Sr., J., on leave.

Endnotes:


1 Exhibit "D," Folder of Exhibits, back of p. 8.

2 Exhibit "13," Folder of Exhibits, pp. 44-46.

3 Exhibit "C," Folder of Exhibits, back of p. 5.

4 Annex "A," Original Records, p. 305.

5 Original Records, p. 653.

6 Id., pp. 648-653.

7 Penned by Associate Justice Jose L. Sabio, Jr., with Associate Justices Ramon A. Barcelona and Demetrio G. Demetria, concurring.

8 CA Rollo, pp. 180-181.

9 Id., p. 197.

10 Rollo, pp. 31-35.

11 Philippine National Bank v. Heirs of Militar, G.R. No. 164801, August 18, 2005.

12 Agas v. Sabico, G.R. No. 156447, April 26, 2005.

13 Martinez v. Court of Appeals, G.R. No. 131673, September 10, 2004, 438 SCRA 130, 149.

14 Consolidated Rural Bank (Cagayan Valley), Inc. v. Court of Appeals, G.R. No. 132161, January 17, 2005.

15 Ruiz, Sr. v. Court of Appeals, G.R. No. 121298, July 31, 2001, 362 SCRA 40, 52.

16 Heirs of Manlapat v. Court of Appeals, G.R. No. 125585, June 8, 2005.

17 Ibid.

18 Spouses Paragas v. Balacano, G.R. No. 168220, August 31, 2005.

19 Consolidated Rural Bank (Cagayan Valley), Inc. case, supra.

20 Vda. De Cabrera v. Court of Appeals, G.R. No. 108547, February 3, 1997, 267 SCRA 338, 353.

21 Fernandez v. Tarun, G.R. No. 143868, November 14, 2002, 391 SCRA 653.

22 De Ape v. Court of Appeals, G.R. No. 133638, April 15, 2005.

23 Ibid.

24 Original Records, back of p. 49, p. 50 and back of p. 50.

25 Aguirre v. Court of Appeals, G.R. No. 122249, January 29, 2004, 421 SCRA 310, 324.

26 Cabrera v. Court of Appeals, G.R. No. 108547, February 3, 1997, 267 SCRA 339, 354.

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