TORRENS SYSTEM Principle –
G.R. No. 176043; January 15, 2014 (2D) SPOUSES BERNADETTE and RODULFO VILBAR vs. ANGELITO vs. ANGELITO L. OPINION FACTS
This is the case of conflicting claims over two parcels of land in a subdivision more particularly designated as Lots 20 and 21. The first claimant here is the Spouses Vilbar who bought said lots under contracts to sell with the subdivision developer Dulos Realty and Development Corporation (or Dulos Realty for Brevity) sometime in July 1979. Spouses Vilbar took possession of Lot 20 (B) in the concept of owners and exercised acts of ownership (or occupied the same), with the permission of Dulos Realty after making an advance payment thereon. Later on, in 1981 Spouses Vilbar also took possession of Lot 21 and obtained tax declarations thereon in their name and paid its realty taxes. Subsequently, they mortgaged Lot 21 to a bank and used the proceeds of the loan to pay in full the purchase price of Lot 20 Upon full payment of the purchase price for Lot 20, Dulos Realty executed a duly notarized “Deed of Absolute Sale” in favor of the spouses and delivered to them the owner’s duplicate copy of the TCT (No. S-39849). However, they were not able to register and transfer the title in their name because the developer allegedly failed to have the lot formally subdivided despite its commitment to do so, until its President, Juan B. Dulos (Juan), died without the subdivision being accomplished. But eventually she was able to obtain title (TCT No. 36777) although she only presented the contract to sell. But it turned out that said lots were among those levied upon by (a certain) Gorospe, Sr., the former Board Chairman and CEO of Dulos Realty by virtue of a Court judgment he obtained for recovery of benefits, privileges and various allowances that said developer failed to pay him as Chairman. These lots were sold at public auction with Gorospe emerging as highest bidder for which TCT Nos. 44797 (Lot 20) and 44796 (Lot 21) were issued in his name. Subsequently, he mortgaged said lots to herein respondent, Opinion, and when Gorospe defaulted in paying Opinion the obligation secured by said mortgage, the lots were awarded to him at an Extra-Judicial Foreclosure Sale. When the Sps. Vilbar learned about such titles, they filed a complaint in the Regional Trial Court against Opinion claiming the latter is a buyer in bad faith because Gorospe’s titles from which Opinion derived the titles were acquired in bad faith. The spouses pointed out that as an officer of Dulos Realty, Gorospe should have known that the subject lots were already sold to them. To prove the spouses’ claim, they presented (1) the copies of the contracts to sell on the two lots; (2) the Deed of Absolute Sale over Lot 20; (3) the Real Estate Mortgage Agreement with the bank over Lot 21; (4) original Official Receipts issued by SLR for installment payments of the purchase price of the lots; (5) owner’s duplicate copy of TCT No. 36777 in her name; and, (6) tax declarations and receipts. On one hand, respondent Opinion alleged that he is a buyer in good faith because before entering into the mortgage agreement with Gorospe, he had verified with the Registry of Deeds
that there were no annotations or encumbrances registered in the titles of Lots 20 and 21. Further, he was assured by Gorospe that the spouses were merely tenants of the lots and not the owners.
RTC ruled in favor of Opinion declaring him to have better right over Lots 20 and 21. “Deed of Absolute Sale” over Lot 20 was never annotated in the transfer cert of title. TCTs in the hands of respondent were the ones which cancelled the titles of Dulos Realty over the lots and not the TCT presented by the spouses Vilbar. Issuance of TCT No. 36777 (TCT respecting LOT 21) was questionable because there was no proof that the purchase price was already paid since only the “Contract to Sell” was available. Registry of Deeds of Pasay itself certified that the TCT respecting Lot 21 is presumed not to be validly issued. Herein petitioners only had an inchoate right over the property, said the RTC. This decision was affirmed by the Court of Appeals (CA).
ISSUE: Were the RTC and CA correct? HELD: YES. The evidence proves that respondent Opinion lawfully acquired his title over the lots. Gorospe, Sr. cannot be considered to be in bad faith because he was not the one who executed and signed the Deed of Absolute Sale in favor of petitioners. Bad faith cannot be presumed and there was no clear and convincing proof that Gorospe had knowledge of such transaction. A review of the documents presented by the Spouses in support of their claim of ownership, the SC reached a conclusion same with that of as that of the RTC. With regard to Lot 20, spouses Vilbar brag of a Deed of Absolute Sale executed by Dulos Rea lty in their favor and aver that they have the owner’s copy of TCT No. S-39849 and are presently enjoying actual possession of said property. However, these are not sufficient proofs of ownership. For some unknown reasons, the spouses Vilbar did not cause the transfer of the certificate title in their name, or at the very least, annotate or register such sale in the original title in the name of Dulos Realty. This, sadly, proved fatal to their cause. Time and time again, this Court has ruled that "(1) a certificate of title serves as evidence of an indefeasible and incontrovertible title to the property in favor of the person whose name appears therein." Having no certificate of title issued in their names, spouses Vilbar have no indefeasible and incontrovertible title over Lot 20 to support their claim. Further, it is an established rule that (2) "registration is the operative act which gives validity to the transfer or creates a lien upon the land." (3) "Any buyer or mortgagee of realty covered by a Torrens certificate of title x x x is charged with notice only of such burdens and claims as are annotated on the title." Failing to annotate the deed for the eventual transfer of title over Lot 20 in their names, the spouses Vilbar cannot claim a greater right over Opinion, who acquired the property with clean title in good faith and registered the same in his name by going through the legally required procedure. Petition denied; Decision of the CA affirming the ruling of the RTC affirmed.
