Bachrach Motor Co. v. Kane
REITERATIONFacts
The Antecedents: The plaintiff, Bachrach Motor Co., Inc., filed an action for recovery of property, alleging exclusive ownership. This property was the subject of a prior ejectment case (Case No. 5153) where the defendant's predecessor, William Kane, was absolved. The defendant, Ethel M. Kane, as administratrix of William Kane's estate, claimed ownership based on a contract of sale (Exhibit E) with Geo. C. Sellner, alleging that the plaintiff had notice of this contract and was not a bona fide purchaser. The plaintiff, Bachrach Motor Co., Inc., held Torrens Title No. 22066 for the property. Procedural History: The lower court ruled in favor of the plaintiff, declaring it the owner of the property and ordering the defendant to pay damages of P250 monthly from May 6, 1932. The defendant appealed, raising six alleged errors. The Petition: The defendant-appellant argued that the case was res judicata, that the trial court erred in reversing its finding that the sale to Carlos Zamora and subsequent transfer to Mrs. Bachrach were fictitious, that the transaction was an equitable mortgage, that the plaintiff had notice of the contract with William Kane, that the transfer to Bachrach Motor Co., Inc. was without consideration, and that the plaintiff was erroneously declared owner.
Issue(s)
Whether the prior ejectment case constitutes res judicata. Whether the trial court erred in reversing its finding regarding the fictitious nature of the sale to Carlos Zamora and subsequent transfer to Mrs. Bachrach. Whether the transaction between Mr. Sellner and Mrs. Bachrach constituted an equitable mortgage. Whether the plaintiff had actual notice of the contract between Sellner and William Kane. Whether the transfer of the property by Mrs. Bachrach to Bachrach Motor Co., Inc. was without consideration and fictitious. Whether the plaintiff is the owner of the property and entitled to damages.
Ruling
The appealed decision is affirmed, except as to the damages, which are fixed at P60 per month from May 6, 1932. The right to bring proper action against George C. Sellner is reserved to the appellant. Costs are assessed against the appellant.
Ratio Decidendi
On Whether the prior ejectment case constitutes res judicata: The defense of res judicata is unfounded. Section 87 of Act No. 190 explicitly provides that a judgment in an unlawful entry and detainer (ejectment) case shall not bar an action in the Court of First Instance between the same parties respecting title to the land. This exception to the general rule of res judicata is applicable here, as the prior case was for ejectment, while the present case concerns the ownership and recovery of the property. Previous rulings in Peñalosa vs. Tuason, De Jesus vs. Manzano, and Banatao vs. Dabbay and Tuliao reiterate that judgments in forcible entry and detainer actions do not produce the effect of res judicata in subsequent actions for recovery of possession or title. On Whether the trial court erred in reversing its finding regarding the fictitious nature of the sale to Carlos Zamora and subsequent transfer to Mrs. Bachrach: The second alleged error is without merit. Courts possess the inherent power to amend their orders and decisions within the statutory period to conform to law and avoid injustice, either upon motion or motu proprio. The lower court's act of setting aside its previous order was a proper exercise of this power, allowing for a more just and legally sound resolution of the case. On Whether the transaction between Mr. Sellner and Mrs. Bachrach constituted an equitable mortgage: The third alleged error is also without merit. The trial court's finding that the transaction was an absolute sale is supported by the testimony of Mrs. Bachrach, who categorically affirmed it as such, and by the deed of sale (Exhibit H), which conclusively proves the nature of the transaction. Sellner's testimony suggesting it was a mortgage was outweighed by the documentary evidence and Mrs. Bachrach's testimony. On Whether the plaintiff had actual notice of the contract between Sellner and William Kane: The fourth alleged error is without merit, as the reasons for this are sufficiently explained in the appealed decision. The core of the issue lies in whether notice, if given, could overcome the registered title. The Court found that the plaintiff's Torrens title was paramount. On Whether the transfer of the property by Mrs. Bachrach to Bachrach Motor Co., Inc. was without consideration and fictitious: The fifth alleged error is without merit. Evidence on record shows that Mrs. Bachrach was credited with the value of the property upon its transfer to Bachrach Motor Co., Inc., where her husband served as president. This indicates a valid consideration for the transfer, negating the claim that it was fictitious or without consideration. On Whether the plaintiff is the owner of the property and entitled to damages: The plaintiff is the owner of the property. The Torrens Title system is designed to finally determine land titles, and the plaintiff holds Torrens Title No. 22066. To impugn this title, fraud must be shown, which was neither alleged nor proven. The contract (Exhibit E) relied upon by the defendant, executed by Geo. C. Sellner who was not the registered owner, is a private and unregistered document that creates no property right. It cannot affect the plaintiff's registered title. The defense of res judicata is inapplicable. While the plaintiff is the owner, the monthly damages (rent) were reduced from P250 to P60, as testified by two witnesses who affirmed this as the reasonable monthly rent.
Main Doctrine
A private and unregistered document, executed by a person who is not the registered owner, cannot create property rights in real property and cannot affect a duly registered Torrens Title. The defense of res judicata is not applicable to ejectment cases when the subsequent action involves title to the land.