case 11-20

G.R. No. 138201

September 12, 2000

FRANCISCO BAYOCA, NONITO DICHOSO and SPOUSES PIO DICHOSO and DOLORES DICHOSO and ERWIN BAYOCA, petitioners, vs. GAUDIOSO NOGALES represented by HENRY NOGALES, respondent. 4

Note: DATES ARE IMPORTANT IN THIS CASE>>

When the Spouses Juan Canino and Brigida Domasig died intestate, before 1947, they were survived by their legitimate children, namely, Preciosa Canino, married to Emilio Deocareza, Consolacion Canino, Dolores Canino, Isidra Canino and Tomas Canino who inherited, from their father, a parcel of land, located in Prieto-Diaz, Sorsogon covered by Tax Declaration No. 9659, On December 15, 1947, Preciosa Canino executed an unnotarized "Deed of Sale of Real Property with Right of Repurchase" , Julia Deocareza. The parties covenanted, that the property described therein was unencumbered and to register the deed under Act 3344. On the basis of said deed, Tax Declaration No. 3489 was issued over the property, under the name of Julia Deocareza. On April 29, 1968, Julia Deocareza executed an unnotarized "Compromise Agreement", in the local dialect, in favor of NOGALES whereby she sold THE aforesaid property she earlier purchased. She promised, in said deed, to have her brothers, Ambrosio and Emilio Deocareza, and their families, vacate the said property. But failed. The Appellee forthwith filed a complaint, sometime in 1975, with the Regional Trial Court of Sorgoson, against Emilio Deocareza, and Julia Deocareza for "Recovery of Possession" In the interim, a cadastral survey was conducted in sorsogon. The heirs were able to subdivide the property and adjudicate the lot on their respective shares.and. From the year 1972 to 1989. Different sales were made to petitioners over the same property. As a consequence PETITIONERS were even able to obtain FREE PATENTS and tax dec. On February 7, 1983, the Regional Trial Court promulgated a Decision, in Civil Case No. 975 in favor of the NOGALES On September 8, 1992, the NOGALEZ filed a complaint against the Appellants Francisco Bayoca, Nonito Dichoso and the Spouses Pio Dichoso and Dolores Dichoso for "Accion Reinvindicatoria NOGALES in his complaint, that he purchased the said property, with an area of 21,000 square meters, from Julia Deocareza, and thus acquired ownership thereof and that the Appellants respectively purchased portions of said property, in bad faith and through

fraud, the Appellants knowing of the pendency of Civil Case No. 975, before the Regional Trial Court, involving the said property. Petitioners, however, rely on the fact that they were the first to register the sales of the different portions of the property, resulting in the issuance of new titles in their names. ISSUE: "WHETHER OR NOT THE PETITIONERS CLAIM OF OWNERSHIP BY VIRTUE OF THEIR RESPECTIVE TITLE ISSUED AND/OR REGISTRATION WILL PREVAIL OVER THAT OF RESPONDENT? HETHER OR NOT THE REGIONAL TRIAL COURT HAS JURISDICTION TO TRY THE SAME CASE WHEN THE SAME LAND SUBJECT OF THE CASE IS A PUBLIC LAND?" HELD: The petition lacks merit. There is no question from the records that respondent Nogales was the first to buy the subject property from Julia Deocareza, who in turn bought the same from the Canino brothers and sisters. Article 1544 of the Civil Code governs the preferential rights of vendees in cases of multiple sales, as follows:7 in the double sales of immovables, ownership is transferred in the order hereunder stated to (a) the first registrant in good faith; (b) the first in possession in good faith; and (c) the buyer who presents the oldest title in good faith.8 The registration of the deed, under Act 3344, constitutes constructive notice of said sale to the whole world: "Registration, however, by the first buyer under Act 3344 can have the effect of constructive notice to symbolic possession: "We are of the opinion that the possession mentioned in article 1473 (for determining who has better right when the same piece of land has been sold several times by the same vendor) includes not only the material but also the symbolic possession, which is acquired by the execution of public instrument."

Verily, there is absence of prior registration in good faith by petitioners of the second sale in their favor.1âwphi1 As stated in the Santiago case, registration by the first buyer under Act No. 3344 can have the effect of constructive notice to the second buyer that can defeat his right as such buyer,11 "The governing principle is prius tempore, potior jure (first in time, stronger in right). Knowledge by the first buyer of the second sale cannot defeat the first buyer’s rights except when the second buyer first registers in good faith the second sale ( It is worth mentioning that while the certificates of title in the names of Erwin Bayoca and the spouses Pio and Lourdes Dichoso are indefeasible, unassailable and binding against the whole world, including the government itself, they do not create or vest title. They merely confirm or record title already existing and vested. They cannot be used to protect a usurper from the true owner, nor can they be used as a shield for the commission of fraud; neither do they permit one to enrich himself at the expense of others.14 The Torrens System is intended to guarantee the integrity and conclusiveness of the certificate of registration but it cannot be used for the perpetration of fraud against the real owner of the registered land.15 WHEREFORE, the petition is hereby DENIED

G.R. No. L-46935 December 21, 1987 SPOUSES GREGORIO DE GUZMAN, JR. and CORAZON QUINTO petitioners, vs. HON. COURT OF APPEALS and RAYMUNDA RINGOR QUIRIMIT, respondents. Deogracias Queriza was the original owner of a parcel of unregistered residential land On July 20, 1957, he executed a Deed of Pacto de Retro sale over said land in favor of his niece, private respondent Quirmit with stipulation that the "vendor a retro may exercise the right of repurchase within 5 years from the execution of these presents and upon failure to take advantage of the right herein granted him, then this contract shall be consummated sale. 1Private respondent did not register the Deed of Pacto de Retro Sale, but took possession of the land by building her house on a portion thereof. It appears that subsequently, Deogracias Queriza mortgaged the same parcel of land to the Manaoag Rural Bank, from which it was allegedly redeemed on his behalf by his nephew Miguel Queriza on November 4, 1963. Supposedly for this reason, on April 26, 1967, Deogracias Queriza, without having exercised his right to repurchase under the Pacto de Retro Sale, executed over said parcel of land and two others, a Deed Intervivos Donation 2 in favor of Miguel Queriza, who thereafter declared the land in his

name for taxation purposes and registered the Deed of Donation on August 8, 1967 in the Register of Deeds of Pangasinan. On December 8, 1970, Miguel Queriza sold the land to petitioners spouses Gregorio de Guzman, Jr. and Corazon Quinto. The Deed of Sale was registered on December 9, 1970 and the tax declaration placed under their names. In January, 1971, petitioners sent private respondent written notice to vacate the land in question, and upon refusal by the latter to do so, instituted Quieting of Title and Recovery of Possession before the then Court of First Instance of Pangasinan, Fourth Branch. After trial, the court rendered judgment on January 19, 1973, declaring petitioners owners of the land in question On Appeal by private respondent, the Court of Appeals reversed the decision of the trial court ISSUE: won the Petitioners have rights over the Property? HELD: In the case at bar, absolute ownership of the land in question was vested on private respondent in 1962 upon failure of Deogracias Queriza to repurchase said land. Thus, in 1967 when he allegedly donated the same to Miguel Queriza, he was no longer the owner thereof. Settled is the rule that a donor cannot lawfully convey what is not his property. 11 There being no title to the property which Deogracias Queriza could convey to Miguel Queriza, it necessarily follows that no title to the property could be conveyed by the latter to petitioners. The registration of the deeds under which they claimed to have acquired ownership of the land in dispute was a useless ceremony. Registration does not vest title. It is not a mode of acquiring ownership but is merely evidence of such title over a particular property. It does not give the holder any better title than what he actually has. Besides, petitioners' registration of their deed of sale was done in bad faith. The effect is that it is as if no registration was made at all in so far as private respondent is concerned. Conversely, actual knowledge of petitioners of the sale to private respondent amounted to registration thereof. 12

G.R. No. L-19248

February 28, 1963

ILUMINADO vs. PERFECTO PILAPIL, defendant-appellee.

HANOPOL, plaintiff-appellant,

FACTS Appellant Hanopol claims ownership of the land by virtue of a series of purchases effected in 1938 by means of private instruments, executed by the former owners Teodora, Lucia, Generosa, Sinforosa and Isabelo, all surnamed Siapo. On the other hand, appellee Pilapil asserts title to the property on the strength of a duly notarized deed of sale executed in his favor by the same owners on December 3, 1945, which deed of sale was registered in the Registry of Deeds of Leyte on August 20, 1948 under the provisions of Act No. 3344. HANAPOL argues that the registration of Pilapil's notarized deed of sale in 1948 under Act No. 3344 "shall be understood to be without prejudice to a third party with a better right". He contends that since at the time the Siapos sold the land in question in 1945 to Pilapil, the former were no longer the owners as they had already sold the same to appellant since 1938, the first sale to him is a better right which cannot be prejudiced by the registration of the second sale.

ISSUE: Bet the two doc executed, who between the hanapol and pipalil has the better right HELD: We do not think the quoted proviso in Act No. 3344 justifies appellant's contention. If his theory is correct, then the second paragraph of Article 1544 of the New Civil Code (formerly Article 1473 of the old Code) would have no application at all except to lands or real estate registered under the Spanish Mortgage Law or the Land Registration Act. Such a theory would thus limit the scope of that codal provision. But even if we adopt this latter view, that is, that Article 1544 (formerly Article 1473) only applies to registered land, still we cannot agree with the appellant that by the mere fact of his having a previous title or deed of sale, he has acquired thereby what is referred to in Act No. 3344 as the "better right" that would be unaffected by the registration of a second deed of sale under the same law. Under such theory, there would never be a case of double sale of the same unregistered property. It thus appears that the "better right" referred to in Act No. 3344 is much more than the mere prior deed of sale in favor of the first vendee. In the Lichauco case just mentioned, it was the prescriptive right that had supervened. Or, as also suggested in that case,

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

G.R. No. L-68741 January 28, 1988 NATIONAL GRAINS AUTHORITY, plaintiff-appellee, vs. INTERMEDIATE APPELLATE COURT, MELECIO MAGCAMIT, NENA COSICO and EMELITA MAGCAMIT,defendants-appellants. , the spouses Paulino Vivas and Engracia Lizards, executed two deeds of sale of the same land in favor of private respondents, namely: (a) the conditional sale with right to repurchase or which was registered under Act 3344 and (b) the deed of absolute sale or "Kasulatan ng Bilihang Tuluyan" which was not registered; (2) the condition that the Certificate of Title will be delivered to the buyers upon its issuance and upon payment of the balance (3) the land in question at the time of the execution of both sales was not yet covered by the Torrens System of registration. An Original Certificate of Title No. T-1728 covering the property in question was issued to and in the name of the spouses Vivas and Lizardo . without the knowledge of the private respondents and on April 30, 1975, said Spouses executed a Special Power of Attorney in favor of Irenea Ramirez authorizing the latter to mortgage the property with the petitioner, National Grains Authority.NGA the counsel for the NGA wrote the Provincial Sheriff in Sta. Cruz, Laguna, requesting for the extrajudicial foreclosure of the mortgage executed by Irenea Ramirez IN the public auction The petitioner was the highest and successful bidder so that a Certificate of Sale was issued On July 10, 1974, the petitioner in its capacity as attorney-in-fact of the mortgagor sold the subject real property in favor of itself. By virtue of the deed of absolute sale, TCT No. T-75171 of the Register of Deeds for the Province of Laguna was issued in the name of the petitioner on July 16, 1974. It was only in July 1974, that private

respondents learned that a title in the name of the Vivas spouses had been issued covering the property in question and that the same property had been mortgaged in favor of the petitioner. private respondents filed a that they be declared the owners of the property in question and entitled to continue in possession of the same, and if the petitioner is declared the owner of the said property, then, to order it to reconvey or transfer the ownership to them RTC Favored NAT grains.. CA REVERSED ISSUE: The main issue in this case is whether or not violation of the terms of the agreement between the spouses Vivas and Lizardo, the sellers, and private respondents, the buyers, to deliver the certificate of title to the latter, upon its issuance, constitutes a breach of trust sufficient to defeat the title and right acquired by petitioner NGA, an innocent purchaser for value. HELD: Time and time again, this Court has ruled that the proceedings for the registration of title to land under the Torrens System is an action in rem not in personam, hence, personal notice to all claimants of the res is not necessary in order that the court may have jurisdiction to deal with and dispose of the res. Neither may lack of such personal notice vitiate or invalidate the decree or title issued in a registration proceeding, for the State, as sovereign over the land situated within it, may provide for the adjudication of title in a proceeding in rem or one in the nature of or akin a to proceeding in rem which shall be binding upon all persons, known or unknown It is thus evident that respondents' right over the property was barred by res judicatawhen the decree of registration was issued to spouses Vivas and Lizards. It does not matter that they may have had some right even the right of ownership, BEFORE the grant of the Torrens Title. Thus, under Section 44 of P.D. 1529, every registered owner receiving a certificate of title in pursuance of a decree of registration, and every subsequent purchaser of registered land taking a certificate of title for value and in good faith, shall hold the same free from all encumbrances except those noted on the certificate and any of the encumbrances which may be subsisting, and enumerated in the law. Moreover, no title to registered land in derogation to that of the registered owner shall be acquired by prescription or adverse possession (Umbay vs. Alecha, 135 SCRA 427 [1985]). It does not appear that private respondents' claim falls under any of the exceptions provided for under Section 44 of P.D. 1529 which can be enforced against petitioner herein. REVERSED

G.R. No. 115548 March 5, 1996 STATE INVESTMENT vs. COURT OF APPEALS, ET AL., respondents.

HOUSE

INC., petitioner,

on October 15, 1969, Contract to Sell No. 36 was executed by the Spouses Canuto and Ma. Aranzazu Oreta, and the Solid Homes, Inc. (SOLID), involving a parcel of land. `On November 4, 1976, SOLID executed several real estate mortgage contracts in favor of State Investment Homes, (sic) Inc. (STATE) over its subdivided parcels of land, one of which is the subject lot covered by Transfer Certificate of Title No. 209642. For Failure of SOLID to comply with its mortgage obligations contract, STATE extrajudicially foreclosed the mortgaged properties . On August 15, 1988, the spouses filed a complaint before the Housing and Land Use Regulatory Board, HLRB, against the developer SOLID and STATE for failure on the part of SOLID "to execute the necessary absolute deed of sale as well as to deliver title to said property . . . in violation of the contract to sell . . In its Answer, SOLID, by way of alternative defense, alleged that the obligations under the Contract to Sell has become so difficult . . . On May 23, 1989, the Office of Appeals, Adjudication and Legal Affairs (OAALA) rendered a decision the decretal portion of which reads: 1. Ordering respondent, State Investment House, Inc. to execute a Deed of Conveyance of Lot 1, Block 8, in Capital Park Homes Subdivision in favor of Petitioner filed with the Supreme Court this petition for review of decision of the Office of the President . In a decision dated May 19, 1994, respondent court sustained the judgment of the Office of the President. ISSUE: WHETHER or not the office of the president erred in not applying the settled rule that persons dealing with property covered by torrens certificate of title are not required to go beyond what appears on the face of the title. HELD:

petitioner asserts that a purchaser or mortgagee of land/s covered under the Torrens System "is not required to do more than rely upon the certificate of title [for] it is enough that the (purchaser or mortgagee] examines the pertinent certificate of title [without] need [of] look[ing] beyond such title." 6 As a general rule, where there is nothing in the certificate of title to indicate any cloud or vice in the ownership of the property, or any encumbrance thereon, the 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. This rule, however, admits of an exception as where the purchaser or mortgagee, has knowledge of a defect or lack of title in his vendor, or that he was aware of sufficient facts to induce a reasonably prudent man to inquire into the status of the title of the property in litigation. 7 In this case, petitioner was well aware that it was dealing with SOLID, a business entity engaged in the business of selling subdivision lots. In fact, the OAALA found that at the time the lot was mortgaged, respondent State Investment House Inc., [now petitioner] had been aware of the lot's location and that the said lot formed part of Capital Park/Homes Subdivision." 8 ACCORDINGLY AFFIRMED.

G.R. No. 127941 January 28, 1999 BIBLIA TOLEDO-BANAGA and JOVITA TAN, petitioners, vs. COURT OF APPEALS and CANDELARIO DAMALERIO, respondents.

On June 11, 1992 petitioner Banaga tried to redeem the property by depositing with the trial court the amount of redemption which was financed by her co-petitioner Tan. Candelario opposed the redemption arguing that it was made beyond the time given to her by the court in the earlier case However, the lower court issued an order on August 7, 1992 upholding the redemption and ordered the Register of Deeds to cancel private respondent's Certificates of Title and issue new titles in the name of petitioner Banaga . candelario On January 11, 1993, private respondent caused the annotation of said petition as another notice of lis pendens on the Certificates of Title. Candelario, filed a petition for certiorariwith the CA.. On January 11, 1993, private respondent caused the annotation of said petition as another notice of lis pendens on the Certificates of Title. Three days later, the CA issued a temporary restraining order to enjoin the execution of the August 7, 1992 and January 4, 1993 orders.

Meanwhile, on January 7, 1993, petitioner Banaga sold the subject property to petitioner Tan with the deed of absolute sale mentioning candelario certificate of title which was not yet cancelled. Notwithstanding the notice of lis pendens, petitioner Tan subdivided the property in question under a subdivision plan, which she made not in her name but in the name of candelario. Petitioner Tan asked the Register of Deeds to issue new titles in her name. On March 24, 1993, such titles were issued in petitioner Tan's name but it still carried the annotations of the two notices of lis pendens. HOWEVER, the petition for certiorari with the CA it favored candelario as, absolute owner of the subject property. That decision became final and executory 8 Upon motion of private respondent, the trial court issued a writ of execution ordering the Register of Deeds to reinstate the Certificates of Title in the name candelario. But the Register of Deeds refused to comply with the writ of execution alleging that the Certificates of Title issued to petitioner Tan must first be surrendered. Aggrieved, private respondent again elevated the case to the CA via a petition for certiorari and mandamus 11 the CA rendered a decision granting the petition.

Upon denial by the CA of their motion for reconsideration, petitioners filed the instant petition for certiorari andmandamus. IssueL WON that petitioner Tan is a buyer in good faith despite the notice of lis pendens annotated? It is settled that a party dealing with a registered land need not go beyond the Certificate of Title to determine the true owner thereof so as to guard or protect her interest. She has only to look and rely on the entries in the Certificate of Title. By looking at the title, however, petitioner Tan cannot feigned ignorance that the property is registered in private respondent's name and not in the name of the person selling to her. Such fact alone should have at least prompted, if not impelled her to investigate deeper into the title of her seller — petitioner Banaga, more so when such effort would not have entailed additional hardship, and would have been quite easy, as the titles still carried the two notices of lis pendens. By virtue of such notices, petitioner Tan is bound by the outcome of the litigation subject of the lis pendens. As a transferee pendente lite, she stands exactly in. the shoes of the transferor and must respect any judgment or decree which may be rendered for or against the transferor. Her interest is subject to the incident or results of the pending suit, and her Certificates of Title will, in that respect, afford her no special protection. 26 To repeat, at the time of the sale, the person from whom petitioner Tan bought the property is neither the registered owner nor was the former authorized by the latter to sell the same. She knew she was not dealing with the registered owner or a representative of the latter. One who buys property with full knowledge of the flaws and defects in the title of his vendor is enough proof of his bad faith 27 and cannot claim that he acquired title in good faith as against the owner or of an interest therein. WHEREFORE, premises considered, the petition is hereby DENIED

.R. No. L-22486

March 20, 1968

TEODORO ALMIROL, petitioner-appellant, vs. THE REGISTER OF DEEDS OF AGUSAN, respondent-appellee.

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G.R. Nos. L-48971 & 49011 January 22, 1980 PACIFICO GARCIA, petitioner-appellant, vs. BENJAMIN M. GOZON, TECLA GUTIERREZ, ROSARIO FELIX, PAULINO D. BUENAVENTURA, RAYMUNDO DIONISIO, VIRGILIO AUSTRIA and MARCEON VICENCIO, respondents-appellees; PHILIPPINE NATIONAL BANK, petitioner-appellant, vs. COURT OF APPEALS (Third Division), CAROLINA LAPUZ- GOZON, assisted by her husband BENJAMIN M. GOZON, TECLA GUTIERREZ, ROSARIO FELIX, PAULINO D. BUENAVENTURA, RAYMUNDO DIONISIO, VIRGILIO AUSTRIA and MARCEON VICENCIO, respondents-appellees. AQUINO, J.: 1. On August 9, 1918, a deed of sale for two parcels of land, 5 and 7 covered by Original Certificate of Title No. 983, was executed in favor of Ismael Lapus a bona fide occupant thereof. 2. The deed of sale was presented for registration . However, the deed of sale was not annotated on OCT No. 983 and that, consequently, that title was apparently not cancelled. 3. As a result of the registration of that deed of sale, Transfer Certificate of 'Title No. 4910 was issued to Lapus for the two parcels of land, 5 and 7, 4. Lapus died in 1951. The two parcels of land were inherited by his daughter, Gozon. .SHE SOLD SOME OF THE SUBDIVISION LOTS TO HER CO-RESPONDENTSAPPELLEES HEREIN.

(Turning point) Meanwhile, in 1962, certain. alleged heirs (collectively known as the Riveras) of the late Maria de la Concepcion Vidal filed a motion in Land Registration alleging that they were deprived of their participation of the land covered by OCT No. 983 . . On June 7, 1963, OCT No. 983 was definitely cancelled and in lieu thereof Transfer Certificate of Title No. 112236 was issued to the Riveras. Later, to parcels 5 and 7 were assigned by Bartolome Rivera to Sergio Cruz and Pacifico Garcia. THEN FROM THEN ON, DIFFERENT TCT WERE ISSUED AS A RESULT OF ASSIGNMENT AND MORTGAGED FROM CRUZ TO GO TO PNB. ON THE OTHER SIDE, FROM GARCIA TO MUNOZ TO PNB. Mrs. Gozon later learned that the Riveras and their successors-in-interest had acquired the land covered by OCT No. 983. She registered adverse claims on the titles covering Lots 5 and 7 others an action to quiet title The trial court in its decision of July 30, 1975 declared valid TCT Nos. 141802 to 141855 and 143512 issued to Mrs. Gozon and her co-plaintiffs. That judgment of the trial court was affirmed by the Court of Appeals Issue: The issue is whether the 1920 title issued to Lapus and the titles derived therefrom should prevail over the 1963 title issued to the Riveras and the subsequent titles derived from it. Should Lapus' title prevail even if it was not annotated by the register of deeds on the anterior or parent title which was not cancelled before 1963?.

HELD: The title of Lapus and the titles derived therefrom should be given effect. The title of the Riveras and the titles springing from it are void. There can be no doubt that Lapus was an innocent purchaser for value. He validly transmitted to his successors-in-interest his indefeasible title or ownership over the disputed lots or parcels of land. That title could not be nullified or defeated by the issuance forty-three Years later to other persons of another title over the same lots due to the failure of the register of deeds to cancel the title preceding the title issued to Lapuz. This must be so considering that Lapus and his interest remained in possession of the disputed successors in lots and the rival claimants never possessed the same. "The general rule is that in the case of two certificates of title, purporting to include the same land, the earlier in date prevail, whether the land comprised in the latter certificate be wholly, or only in part, comprised in the earlier certificate

"Where two certificates (of title) purport to include the same land, the earlier in date prevails. ... In successive registrations, where more than once certificate is issued in respect of a party estate or interest in land, the Person claiming under the prior certificate is entitled to the estate or interest; and that person is deemed to hold under theprior certificate who is the holder of, or whose claim is derived directly or indirectly from the person who was the holder of the earliest certificate issued in respect And the rule that in case of double registration the owner of the earlier certificate is the owner of the land applies to the successive vendees of the owners of such certificates. "The vendee of the earlier certificate would be the owner as against the vendee of the owner of the later certificate" IAs stressed in Legarda and Prieto vs. Saleeby, 31 Phil. 590, 600, "the record is notice to all the world. All persons are charged with the knowledge of what it contains. All persons dealing with the land so recorded, or any portion of it, must be charged with notice of whatever it contains. The purchaser is charged with notice of every fact shown by the record and is presumed to know every fact which the record discloses. As to the PNB's claim that it was a mortgagee and purchaser in good faith and for value, the Appellate Court held that the bank should have made an on-the-spot investigation of the lot mortgaged by Go to ascertain whether he was in possession of it or it was claimed by other persons. Its failure to do so precludes the bank from being considered as a mortgagee in good faith and for value WHEREFORE, AFFIRMED:

G.R. No. L-69622 January 29, 1988 LILIA Y. GONZALES, Petitioner, vs. INTERMEDIATE APPELLATE COURT and RURAL BANK OF PAVIA, INC., Respondents.

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

The said spouses then mortgaged the property to respondent Rural Bank . Upon their failure to pay the account, respondent bank foreclosed the mortgage on August 11, 1973 and the bank was the highest bidder. On April 18, 1974, GONZALES, as judicial co-administratrix of the Intestate Estate of the late Matias Yusay brought an action, against the spouses Panzo and the respondent Rural Bank seeking the annulment and cancellation of the title in the name of the Panzos and the issuance of a new title in favor of Yusay. Gonzales alleged, petitioner alleged among other things: that the subject property was first mortgaged to Yusay on April 30, 1929 by panzos parents; that Gonzales,have been in possession of the property thru their tenant Elias Daguino, As to the bank, Gonzales alleged that, Rural Bank was not a mortgagee in good faith for not having taken the necessary precaution before accepting the subject property as collateral for the loan granted the defendantsspouses.chanroblesvirtualawlibrarychanrobles virtual law library Rural Bank set up the defense of good faith alleging that the certificate of title in the names of the spouses Panzo was free from any lien and that the rigid requirements for loan applications had been duly deserved by the Bank. law libra Issue: whether or not the respondent bank was an innocent mortgagee and subsequent buyer for value in good faith of the property.chanroblesvirtualawlibrary chanrobles virtual law library HELD:When the certificate of title in the name of the Panzo spouses was submitted to private respondent bank for purposes of their loan application, it was free from any lien and encumbrance. The mortgage was duly constituted and registered with the Register of Deeds on May 28,1971. The certificate of title was in the name of the mortgagors when the land was mortgaged by them to respondent bank. Such being the case, said respondent bank, As mortgagee, had the right to rely on what appeared on the certificate of title and, in the absence of anything to excite suspicion, was under no obligation to look beyond the certificate and investigate the title of the mortgagor appearing on the face of said certificate. 9chanrobles virtual law library The well-known rule in this jurisdiction is that a person dealing with a registered land has a light to rely upon the face of the torrens certificate of title and to dispense with the need of inquiring her except when the party concerned has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make inquiry. 14 It has also been held that a bank is not required, before accepting a mortgage, to make

an investigation of the title of the property being given as security. law library

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ul registration in his name. 34 chanrobles virtual law library WHEREFORE, denied [G.R. No. 114172. August 25, 2003] JUANITA P. PINEDA, assisted by her husband, CRISPIN PINEDA, and LILIA SAYOC, petitioners, vs. COURT OF APPEALS and TERESITA A. GONZALES, assisted by her husband, FRANCISCO G. GONZALES,respondents. FACTS:

On 4 January 1982, (“Spouses Benitez”) mortgaged a house and lot (“Property”) Title No. T-8361 (“TCT 8361”) in favor (“Pineda”) (“Sayoc”). .[5] Pineda and Sayoc did not register the mortgage with the Register of Deeds. The Spouses Benitez delivered the owner’s duplicate of TCT 8361 to Pineda. On 9 November 1983, with the consent of Pineda, Benitez sold the house, [6] which was part of the Property, (“Mojica”). On the same date, Mojica filed a petition for the issuance of a second owner’s duplicate of TCT 8361 alleging that she “purchased a parcel of land”[7] and the “owner’s duplicate copy of TCT No. T-8361 was lost.”[8] . The Register of Deeds of Cavite City issued the second owner’s duplicate of TCT 8361 in the name of the Spouses Benitez. ALTHOUGH SUCH TCT WAS NOT REALLY LOST… On 12 December 1983, the Spouses Benitez sold the lot [9] covered by TCT 8361 to Mojica. The Register of Deeds cancelled TCT 8361 and issued Transfer Certificate of Title No. T-13138 (“TCT 13138”) in the name of Mojica. On 22 February 1985, Mojica obtained a loan from (“Gonzales”). Mojica executed a deed of mortgage over the Property in favor of Gonzales. GONZALES REGISTERED THIS DEED OF MORTGAGE WITH THE REGISTER OF DEEDS OF CAVITE CITY WHO ANNOTATED THE MORTGAGE ON TCT 13138 AS ENTRY NO. 33209. Meanwhile, on 8 May 1985, Pineda and Sayoc filed a complaint in Court[10] , against the Spouses Benitez and Mojic for the cancellation of the second owner’s duplicate of TCT 8361 During the pendency of the case, Pineda caused the annotation on 18 August 1986 of a notice of lis pendens on the original of TCT 8361 with the Register of Deeds. the trial court renders judgment declaring the second owner’s duplicate of TCT No. T-8361 of the land records of Cavite as null and void

Meanwhile, On 7 December 1987, Mojica defaulted in paying her obligation to Gonzales. Hence, Gonzales extrajudicially foreclosed the mortgage. For failure of Mojica to redeem the Property, Gonzales consolidated the title to the Property. On 29 March 1989, Gonzales executed the corresponding Affidavit of Consolidation. On 30 March 1989, the Register of Deeds of Cavite City cancelled TCT 13138, which was in Mojica’s name, and issued Transfer Certificate of Title No. T-16084 (“TCT 16084”) in the name of Gonzales. TCT 16084 contained Entry No. 35520, the notice of lis pendens dated 18 August 1986 in relation to Civil Case No. 4654.[13] Consequently, on 6 December 1991, Pineda and Sayoc filed a motion with the trial court for the issuance of an order requiring Gonzales to surrender the owner’s duplicate of TCT 16084 to the Register of Deeds of Cavite City. The trial court ordered the reinstatement of TCT 8361 in the name of the Spouses Benitez. Gonzales filed with the Court of Appeals a petition for the issuance of a writ of prohibitory injunction CA FAVORED GONZALES> ISSUE:

The Issue 1.

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

We deny the petition.

HELD: for digest purposes The nullity of TCT 13138 did not affect the validity of the title or ownership of Mojica or Gonzales as subsequent transferees of the Property. What is void is the transfer certificate of title, not the title or ownership itself of Mojica or Gonzales. The notice of lis pendens could not defeat Gonzales’ rights over the Property for two reasons. First, Gonzales registered in good faith her mortgage before the notation of the lis pendens,making the registration of her mortgage valid despite the invalidity of TCT 13138. Second, since Gonzales’ mortgage was valid, the auction sale retroacted to the date of registration of her mortgage, making the auction sale prior in time to the notice of lis pendens. Thus, TCT 16084, issued to Gonzales as a result of the foreclosure sale, is valid. WHEREFORE, the petition is DENIED.

Principle/CONCEPT laid down in this case.. Gonzales’ Title.. The nullity of TCT 13138 did not automatically carry with it the nullity of the annotation of Gonzales’ mortgage. The rule is that a mortgage annotated on a void title is valid if the mortgagee registered the mortgage in good faith.[25] In Blanco v. Esquierdo,[26] Being thus an innocent mortgagee for value, its right or lien upon the land mortgaged must be respected and protected, even if the mortgagor obtained her title thereto thru fraud. Thus, the annotation of Gonzales’ mortgage on TCT 13138 was valid and operated to bind the Property and the world, despite the invalidity of TCT 13138. Gonzales registered her mortgage in good faith. Gonzales had no actual notice of the prior unregistered mortgage in favor of Pineda and Sayoc. To bind third parties to an unregistered encumbrance, the law requires actual notice.[27] The fact that Mojica, who sold the Property to Gonzales, had actual notice of the unregistered mortgage did not constitute actual notice to Gonzales, absent proof that Gonzales herself had actual notice of the prior mortgage. Thus, Gonzales acquired her rights as a mortgagee in good faith. When Gonzales purchased the Property at the auction sale, Pineda and Sayoc had already annotated the lis pendens on the original of TCT 8361, which remained valid. However, the mortgage of Gonzales was validly registered prior to the notation of the lis pendens. The subsequent annotation of the lis pendens could not defeat the rights of the mortgagee or the purchaser at the auction sale who derived their rights under a prior mortgage validly registered. The settled rule is that the auction sale retroacts to the date of the registration of the mortgage, [28] putting the auction sale beyond the reach of any intervening lis pendens, sale or attachment A contrary rule would make a prior registration of a mortgage or any lien meaningless.[30] The prior registered mortgage of Gonzales prevails over the subsequent notice of lis pendens, even if the auction sale took place after the notation of the lis pendens. Consequently, TCT 16084, issued to Gonzales after she presented the sheriff’s certificate of sale and her affidavit of consolidation, is valid.