Saberon v. Ventanilla
REITERATIONFacts
The Antecedents: Manila Remnant Co., Inc. (MRCI) entered into a contract with A.U. Valencia & Co. Inc. (AUVC) for the development and sale of subdivision lots. On March 3, 1970, MRCI executed two contracts to sell for Lots 1 and 2, Block 17, in favor of Oscar C. Ventanilla, Jr. and Carmen Gloria D. Ventanilla (Ventanillas). Artemio U. Valencia, president of AUVC, without the Ventanillas' knowledge, resold the same property to Carlos Crisostomo without consideration on March 13, 1970. Valencia remitted the Ventanillas' payments to MRCI as if they were Crisostomo's payments. MRCI terminated its contract with AUVC due to irregularities. Valencia stopped remitting payments. The Ventanillas discovered the deception in March 1978 and offered to pay the balance to MRCI, but MRCI refused, showing the contract with Crisostomo. The Ventanillas filed a case for specific performance against MRCI, AUVC, and Crisostomo. Procedural History: The Regional Trial Court (RTC) declared the contracts to sell in favor of the Ventanillas valid, annulled the contract with Crisostomo, and ordered MRCI to execute a deed of sale. MRCI, AUVC, and Crisostomo were held solidarily liable for damages. The Court of Appeals (CA) affirmed the RTC decision. MRCI filed a petition with the Supreme Court (G.R. No. 82978), which affirmed the CA decision on November 22, 1990. MRCI claimed the properties were sold to Samuel Marquez on February 7, 1990, while its petition was pending. The Ventanillas rejected MRCI's offer to reimburse and insisted on execution of the deed of sale. The RTC ordered garnishment of MRCI's bank account unless a cash bond was deposited. The CA ruled that the sale to Marquez did not impede execution. MRCI elevated the case to the Supreme Court (G.R. No. 107282), arguing the sale to Marquez was valid. On March 16, 1994, the Supreme Court ruled that the contract to sell with Marquez could not prevail over the final and executory judgment ordering MRCI to execute a deed of sale in favor of the Ventanillas, noting suspicions about the Marquez contract. Subsequently, MRCI registered a deed of absolute sale to Marquez on March 11, 1992, who then sold the property to the Saberons, with the conveyance registered in July 1992. The Ventanillas filed another case (Civil Case No. Q-96-26486) seeking annulment of the deeds of sale to Marquez and the Saberons. The RTC declared the titles in the names of Marquez and the Saberons null and void, ordered MRCI to execute a deed of sale to the Ventanillas, and awarded damages. The CA affirmed the RTC decision. The Saberons filed a motion for reconsideration with the Supreme Court, which is the subject of the present resolution. The Petition: The Saberons filed a motion for reconsideration of the Supreme Court's January 19, 2011 Resolution, which denied their petition. They argued they were purchasers in good faith, having relied on clean certificates of title and exercised due diligence. They also contended that the Ventanillas' claim never ripened into ownership due to failure to consign the balance of the purchase price. They questioned the CA's reliance on AFP Mutual Benefit Association Inc. v. Santiago and argued for the interpretation of P.D. No. 1529 regarding registration.
Issue(s)
Whether the registration of the notice of levy produced constructive notice to third persons despite the failure of the Register of Deeds to annotate it on the certificate of title. Whether the Saberons were purchasers in good faith and for value. Whether the Ventanillas' rights ripened into ownership despite the delay in the execution of the deed of sale. Whether the Saberons are entitled to reimbursement for improvements made on the property under Article 448 of the Civil Code.
Ruling
The Motion for Reconsideration is PARTIALLY GRANTED. The appealed March 12, 2010 Decision and the June 18, 2010 Resolution of the Court of Appeals in CA-G.R. CV No. 85520 are AFFIRMED with modification. The Ventanillas are given a period of sixty (60) days from finality of this Resolution to decide whether to pay the Saberons the value of the improvements and the necessary and useful expenses defrayed on the 2 lots or to oblige the Saberons to pay them the "price" of said lots. Depending on the option exercised by the Ventanillas, the case is remanded to the court of origin for further proceedings.
Ratio Decidendi
On the effect of the notice of levy and constructive notice: The Court reiterated that registration is the operative act that conveys or affects the land concerning third persons. Section 52 of P.D. No. 1529 provides that any instrument affecting registered land, if registered, filed, or entered in the office of the Register of Deeds, constitutes constructive notice to all persons from the time of such registering, filing, or entering. The crucial question was whether the registration of the notice of levy in the primary entry book produced constructive notice despite the Register of Deeds' failure to annotate it on the certificate of title. The Court held that the entry in the day book is sufficient notice to all persons, even if the owner's duplicate certificate of title is not presented. This principle was reinforced by the ruling in AFP Mutual Benefit Association Inc. v. Santiago, where the Court upheld the registration of a levy on attachment in the primary entry book as a senior encumbrance, despite the Register of Deeds' mistake. The Court emphasized that the registrant fulfills all requirements for entry and annotation, and any subsequent action is the sole duty of the Register of Deeds. Therefore, the Ventanillas' notice of levy, having been registered in the entry book prior to the issuance of the title in the Saberons' name, established their superior right. On the Saberons as purchasers in good faith: While the RTC found that the Saberons may not have been innocent purchasers for value due to the suspicious circumstances of their purchase from Marquez, the Court agreed with the RTC that no fault could be attributed to them for relying on the face of the title presented by Marquez. The Court reiterated the rule that one who deals with property registered under the Torrens system is charged only with notice of burdens and claims annotated on the title. The Saberons exercised due diligence by inquiring with the Registry of Deeds and finding no encumbrances. The Court found no categorical finding that the Saberons' purchase was tainted with bad faith. Therefore, while they might not be considered innocent purchasers for value in the strictest sense, they were not authors of the entanglement and were victims of the fraudulent scheme, entitling them to damages from MRCI and Marquez. On the Ventanillas' rights ripening into ownership: The Court affirmed that previous decisions had already sealed the validity of the contracts to sell issued to the Ventanillas decades ago. MRCI's obstinate refusal to accept their tender of payment and the devious transfer of the property caused the delay in the execution of the deed of sale. The Court found no reason to dwell on the contention that the Ventanillas' rights never ripened into ownership, as the validity of their contract to sell was already established. The Court also found the attribution of laches against the Ventanillas to be flawed, considering their advanced age, the length of litigation, and the fact that they were victims of deception. The failure to learn about improvements or tax payments by the Saberons did not constitute a lack of vigilance. On the Saberons' entitlement to reimbursement for improvements: The Court found the Saberons to be builders in good faith, as observed by the RTC, which found no evidence of connivance with MRCI and Marquez to frustrate the Ventanillas' rights. The RTC noted that the Saberons dealt with clean certificates of title and were victims of the fraudulent scheme. Consequently, Article 448 in relation to Article 546 of the Civil Code applies. The Ventanillas have two options: either appropriate the improvements after payment of indemnity or oblige the Saberons to pay the price of the land. The case was remanded to the trial court to determine the value of improvements or the price of the land, depending on the Ventanillas' choice.
Main Doctrine
The entry of a notice of levy in the primary entry book of the Registry of Deeds constitutes constructive notice to all persons, including third parties, even if it is not annotated on the certificate of title, thereby establishing a superior right over subsequent transferees.