Jison v. Hernaez
REITERATIONFacts
The Antecedents: Respondents initiated an action to recover sums of money with interest, claiming these amounts were liens on Hacienda Panaogao, annotated on its transfer certificate of title. Petitioners admitted liability for one sum but contested the interest and the other principal sum with its interest. The Hacienda Panaogao had been sold successively, with each sale expressly subject to the liens in question, which were duly annotated on the title. The original owner, Rosendo Hernaez, died in 1921, and the hacienda was adjudicated to his son Jose Hernaez, subject to a mortgage and an indebtedness to the other heirs (respondents). Jose Hernaez assigned the title to his mother-in-law, Eleuteria Chong Veloso, with annotations of these obligations. Subsequently, the Pacific Commercial Company levied attachment and execution on Jose Hernaez's rights, eventually acquiring them through a sheriff's sale. Another creditor, Emilio Gaston, sued to annul the transfer from Hernaez to Veloso, alleging fraud. This Court affirmed the annulment judgment. Following this, Pacific Commercial Company procured a new title subject to all annotations on Veloso's title, including the obligation to pay respondents interest on P10,701.61 at 10% per annum from February 21, 1930, and P8,383.37 with interest at 9% per annum from the same date. The sum of P8,383.37 was credited by the Talisay-Silay Milling Company as a bonus for Rosendo Hernaez's act of mortgaging the hacienda to secure the company's obligation. This amount was ordered annotated as an encumbrance in favor of the coheirs (respondents). Veloso later executed a document (exhibit D) acknowledging her inability to liquidate the P10,701.61 lien and committing to pay interest on both sums from February 21, 1930, which was annotated on the title. Procedural History: The Court of First Instance rendered judgment for the respondents, which was affirmed by the Court of Appeals. The case reached the Supreme Court via certiorari. The Petition: Petitioners sought to review the decision of the Court of Appeals, admitting liability for the principal sum of P10,701.61 but disputing the interest thereon and the entire amount of P8,383.37 with its interest.
Issue(s)
Whether the petitioners, as successors in interest, are bound by the annotations on the Torrens title concerning the liens and interests claimed by the respondents. Whether the sum of P8,383.37, representing a bonus, is rightfully due to the respondent heirs or to the owner of the hacienda as a civil fruit.
Ruling
The Supreme Court affirmed the decision of the Court of Appeals, holding that the petitioners are bound by the annotated liens and interests on the Hacienda Panaogao. The Court found that the annotations, including the obligation to pay interest, were validly constituted and recognized by successive purchasers, including the petitioners' predecessors in interest. The Court also upheld the Court of Appeals' finding that the sum of P8,383.37 was rightfully due to the respondent heirs as a bonus.
Ratio Decidendi
On the binding effect of annotations and liens: The Court held that the finding in Jison vs. Hernaez, G.R. No. 44522, that certain annotations (notice of pendency of suit, sheriff's certificates of sale) were made on December 10, 1931, is conclusive. This finding, coupled with the Court's prior upholding of Veloso's authority to encumber the hacienda with a lease on the same date, supported the conclusion that she also had the authority to encumber it via exhibit D for the payment of interest. The Court emphasized that the transfer of the hacienda from Hernaez to Veloso, though annulled for fraud of creditors, was not void ab initio. Similar to how respondent Pedro C. Hernaez was considered an innocent third person regarding the lease, the present respondents should be considered as such with respect to exhibit D, binding the hacienda for interest payments, by virtue of Section 79 of Act No. 496. Furthermore, the recognition of these encumbrances by the Pacific Commercial Company and subsequent purchasers, including the petitioners, was deemed voluntary, just, and equitable, especially since the liens were considered in fixing the purchase price and expressly recognized. The Court found no moral or equitable reason to allow petitioners to repudiate these commitments. On the sum of P8,383.37: The Court affirmed the Court of Appeals' holding that the sum of P8,383.37 was rightfully due to the respondent heirs of Rosendo Hernaez as a bonus, in compensation for Rosendo Hernaez's liberality in mortgaging the hacienda to secure the Talisay-Silay Milling Company's obligation to the Philippine National Bank. This amount was not considered a civil fruit belonging to the owner of the hacienda. This conclusion was in complete accord with the Court's prior decision in Bachrach Motor Company vs. Talisay-Silay Milling Company, 56 Phil., 117, which addressed a similar subject.
Main Doctrine
Subsequent purchasers of a property with annotated liens on its Torrens title are bound by these encumbrances, especially when these liens were expressly recognized and considered in the determination of the purchase price, and when the purchasers and their predecessors in interest, including those who acquired the property through execution sales, had knowledge of and recognized these obligations.