Board of Liquidators and Panay Development Co., Inc. v. Roxas
REITERATIONFacts
The Antecedents: Petitioner Panay Development Co., Inc. (PDCI) is the registered owner of Lot No. 3247, acquired by assignment from Maria Roxas Lisao in exchange for her shares in PDCI. This lot was subsequently mortgaged by PDCI to the National Food Products Corporation (NFPC) as security for loans. The NFPC was later abolished, and its affairs were handled by the Board of Liquidators (Board). PDCI and the Board entered into a settlement agreement regarding the mortgage obligation. Respondent Jose Roxas occupied Lot No. 3247, claiming he acquired it legally and had been in possession for over ten years, asserting PDCI's title was lost due to laches and prescription. Procedural History: The Regional Trial Court (RTC) ruled in favor of PDCI, declaring it the legal owner and entitled to possession, ordering respondent Jose Roxas and others to vacate. The Court of Appeals (CA) reversed the RTC decision, finding PDCI to have registered the property in bad faith. A motion for reconsideration was denied. The Petition: Petitioners sought certiorari from the Supreme Court, assailing the CA's decision and resolution.
Issue(s)
Whether the Deed of Transfer and Assignment in Trust effectively transferred Lot No. 3247 to PDCI, which was subsequently mortgaged to NFPC. Whether PDCI was a registrant in bad faith concerning TCT No. T-12651, given notice of Jose Roxas's claim and the existence of a quitclaim deed and donation. Whether the CA erred in entertaining the issue of possession raised by the respondent, and whether prescription and laches apply. Whether the CA erred in reversing the RTC decision when the title to Lot No. 3247 indubitably belongs to PDCI, and the validity of the alleged verbal sale under the statute of frauds.
Ruling
The Supreme Court set aside the decision of the Court of Appeals and reinstated the judgment of the lower court, declaring petitioner Panay Development Company, Inc. the true owner of Lot No. 3247 and entitled to its possession and usufruct, including all improvements thereon. Respondent Jose Roxas was ordered to vacate and turn over possession of the property to PDCI.
Ratio Decidendi
On the issue of ownership and transfer of Lot No. 3247: The Court held that PDCI is the absolute owner of Lot No. 3247, having acquired it by valid assignment from Maria Roxas Lisao in consideration for her shares of stock. Any subsequent disposition by Maria Roxas Lisao, such as a quitclaim deed and donation, is of no legal effect because she no longer had any right or title to convey. The assignment was not a mere trust but a transfer of the entire property for shares, and this was duly registered and annotated on the original certificate of title, serving as notice to the world. The subsequent mortgage to NFPC was also valid, as NFPC was a mortgagee in good faith. On the issue of PDCI's alleged bad faith registration: The Court found that the CA erred in considering PDCI a registrant in bad faith. The assignment of the property to PDCI was duly registered and annotated on the original certificate of title, leading to the issuance of a Transfer Certificate of Title in PDCI's name. This registration constitutes notice to the entire world, including respondent Jose Roxas. The quitclaim, deed, and donation executed by Maria Roxas Lisao in 1952 were null and void as she had no longer owned the property, and the document was not registered. Therefore, PDCI's registration was not in bad faith. On the issue of the CA entertaining possession, prescription, and laches: While the petition primarily concerns ownership, the Court implicitly addressed the issue of possession by reinstating the RTC's order for respondent to vacate. The Court found that respondent Roxas had no legal basis for his claim of ownership and possession, rendering his occupation illegal. The Court also ruled that PDCI's registered title over the property cannot be lost by prescription or laches, even if respondent Jose Roxas had been in actual possession for more than ten years. The registered title serves as constructive notice, and the claim of prescription or laches is unavailing against a registered owner, especially when the adverse possessor was aware of the prior assignment and registration. On the issue of the CA reversing the RTC decision and the statute of frauds: The Court found that the CA erred in reversing the RTC decision, as the title to Lot No. 3247 belongs to PDCI. The Court also noted that the alleged verbal sale of the land by the donees (brothers and sisters of Maria Roxas Lisao) in favor of respondent Jose Roxas is null and void. This is not only because they had no title to convey but also because the sale of land, being verbal, is unenforceable under the statute of frauds and inadmissible in evidence when timely objected to. Thus, it does not constitute a valid sale.
Main Doctrine
A subsequent disposition of a property by a former owner, after the property has been validly assigned to another entity in consideration of shares of stock, is of no legal effect. The registered title of the owner cannot be lost by prescription or laches due to the adverse possession of another, especially when the possessor was aware of the prior assignment.