Sumaya v. Intermediate Appellate Court
REITERATIONFacts
The Antecedents: Raul Balantakbo inherited properties from his father and maternal grandmother. Upon Raul's death intestate and without issue, his mother, Consuelo Joaquin, became his sole heir. Consuelo executed an Affidavit of Self-Adjudication, claiming sole heirship and listing the properties inherited by Raul from his ascendants. Consuelo later sold these properties to petitioners. The certificates of title did not contain any annotation of a reservable character. Upon Consuelo's death, the brothers and children of deceased brothers of Raul (private respondents) filed suits to recover the properties, claiming they were subject to reserva troncal. Procedural History: The Court of First Instance (now Regional Trial Court) consolidated the cases and rendered a joint decision in favor of the private respondents, ordering the reconveyance of the properties and accounting for their produce. The Intermediate Appellate Court (now Court of Appeals) affirmed this decision in toto. A motion for reconsideration was denied. The Petition: Petitioners seek review of the appellate court's decision, assigning errors concerning their status as innocent purchasers for value, the necessity of annotating the reservable interest, prescription of the cause of action, and the award of damages.
Issue(s)
Whether petitioners were innocent purchasers for value and in good faith. Whether it was necessary to annotate the reservable interest of the reservees in the properties. Whether the cause of action of the private respondents had prescribed. Whether the award of damages was proper.
Ruling
The petition is DENIED. The questioned decision of the Intermediate Appellate Court is AFFIRMED, with a modification regarding the necessity to annotate the reservable character of a property subject of reserva troncal.
Ratio Decidendi
On the issue of innocent purchasers for value: The Court held that petitioners were not innocent purchasers for value. While the certificates of title were free from encumbrances at the time of sale, Consuelo's Affidavit of Self-Adjudication, which clearly stated the source of Raul's inheritance and thus indicated the reservable nature of the properties, was registered with the Registry of Deeds. Registration of this affidavit served as constructive notice to the whole world, pursuant to Section 52 of the Property Registration Decree. The presumption that a purchaser has examined every instrument of record affecting the title is irrebuttable. Furthermore, in the deed of sale for one of the properties, Consuelo explicitly mentioned the source of Raul's inheritance, providing actual notice. The Court also noted that the petitioners and their successors were family corporations and long-time acquaintances, suggesting prior knowledge. On the necessity of annotating the reservable character: The Court agreed with the appellate court that the cause of action did not prescribe, but modified the ruling on the necessity of annotation. While the registration of the affidavit of self-adjudication provided constructive notice, the Court emphasized that for the protection of the reservees against innocent third persons, the annotation of the reservable character on the certificate of title is crucial. The failure of the Register of Deeds to annotate does not absolve the reservor, but it is essential for the reservees' protection. The Court cited jurisprudence stating that the reservable character can be lost to innocent purchasers for value if not properly annotated. On the prescription of the cause of action: The Court ruled that the cause of action of the reservees did not prescribe. The prescriptive period for recovery of the reserved property begins not upon the death of the propositus (Raul), but upon the death of the reservor (Consuelo), as it is only upon the reservor's death that the reservees acquire full ownership. Consuelo died on June 3, 1968, and the action was filed on March 4, 1970, less than two years later. This falls well within the ten-year prescriptive period under the old Code of Civil Procedure or the thirty years under Article 1141 of the New Civil Code. On the award of damages: The Court found the award of litigation expenses and attorney's fees proper under Article 2208(2) of the New Civil Code, as the private respondents were compelled to file suit to recover their rightful property.
Main Doctrine
The registration of an affidavit of self-adjudication which states the source of inherited properties is sufficient notice of their reservable character, even if not annotated on the certificate of title, and failure to annotate does not prejudice third persons if the registration of the limitation is not effected. The cause of action for recovery of property subject to reserva troncal accrues upon the death of the reservor, not the propositus.