Agricultural and Home Extension Development Group vs. CA [G.R. No. 92310.

Septem
ber 3, 1992.]
First Division, Cruz (J): 3 concurring
Facts: On 29 March 1972, the spouses Andres Diaz and Josefa Mia sold to Bruno Gu
ndran a 19-hectare parcel of land in Las Pias, Rizal, covered by TCT 287416. The
owner s duplicate copy of the title was turned over to Gundran. However, he did no
t register the Deed of Absolute Sale because he said he was advised in the Offic
e of the Register of Deeds of Pasig of the existence of notices of lis pendens o
n the title. On 20 November 1972, Gundran and Agricultural and Home Development
Group (AHDG) entered into a Joint Venture Agreement for the improvement and subd
ivision of the land. This agreement was also not annotated on the title. On 30 A
ugust 1976, the spouses Andres Diaz and Josefa Mia again entered into another co
ntract of sale of the same property with Librado Cabautan. On 3 September 1976,
by virtue of an order of the CFI Rizal, a new owner s copy of the certificate of t
itle was issued to the Diaz spouses, who had alleged the loss of their copy. On
that same date, the notices of lis pendens annotated on TCT 287416 were canceled
and the Deed of Sale in favor of Cabautan was recorded. A new TCT S-33850/T-172
was thereupon issued in his name in lieu of the canceled TCT 287416.
On 14 March 1977, Gundran instituted an action for reconveyance before the CFI P
asay City * against Librado Cabautan and Josefa Mia seeking, among others, the c
ancellation of TCT 33850/T-172 and the issuance of a new certificate of title in
his name. On 31 August 1977, AHDG, represented by Nicasio D. Sanchez, Sr. (late
r substituted by Milagros S. Bucu), filed a complaint in intervention with subst
antially the same allegations and prayers as that in Gundran s complaint. In a dec
ision dated 12 January 1987, Gundran s complaint and petitioner s complaint in inter
vention were dismissed for lack of merit. So was Cabautan s counterclaims, for ins
ufficiency of evidence.
Upon appeal, this decision was affirmed by the Court of Appeals, with the modifi
cation that Josefa Mia was ordered to pay Gundran the sum of P90,000.00, with le
gal interest from 3 September 1976, plus the costs of suit.
The Supreme Court denied the petition and affirmed in toto the questioned decisi
on; with costs against AHDG.
Article 1544
Under Article 1544 of the Civil Code of the Philippines, it is provided that If t
he same thing should
have been sold to different vendees, the ownership shall be transferred to the p
erson who may have first taken possession thereof in good faith, if it should be
movable property. Should it be immovable property, the ownership shall belong t
o the person acquiring it who in good faith first recorded it in the Registry of
Property. Should there be no inscription, the ownership shall pertain to the pe
rson who in good faith was first in the possession; and, in the absence thereof,
to the person who presents the oldest title, provided there is good faith.
Preferential right of first to register
The first sale to Gundran was not registered while the second sale to Cabautan w
as registered. Preferential rights are accorded to Cabautan, who had registered
the sale in his favor, as against AHDG s co-venturer whose right to the same prope
rty had not been recorded.
Purchaser in good faith
A purchaser in good faith is defined as one who buys the property of another with
out notice that
some other person has a right to or interest in such property and pays a full an
d fair price for the same at the time of such purchase or before he has notice o
f the claim or interest of some other person in the property. In the present case
, an examination of TCT 287416 discloses no annotation of any sale, lien, encumb
rance or adverse claim in favor of Gundran or AHDC.
4. Registered property under Torrens system; Person charge with notice of burden
s noted on the register of title
When the property sold is registered under the Torrens system, registration is t
he operative act to convey or affect the land insofar as third persons are conce
rned. Thus, a person dealing with registered land is only charged with notice of
the burdens on the property which are noted on the register or certificate of t
itle.
5. Notices of lis pendes not a lien or encumbrance, merely notice of litigation
of property subject to the result of the suit
Notices of lis pendens in favor of other persons were earlier inscribed on the t
itle did not have the effect of establishing a lien or encumbrance on the proper
ty affected. Their only purpose was to give notice to third persons and to the w
hole world that any interest they might acquire in the property pending litigati
on would be subject to the result of the suit.
Cabautan a purchaser in good faith and for value
Cabautan took the risk of acquiring the property even in the light of notice of
lis pendens inscribed in
the title. Significantly, three days after the execution of the deed of sale in
his favor, the notices of lis pendens were canceled by virtue of the orders of t
he CFI Rizal, Branch 23, dated 1 and 4 April 1974. Cabautan therefore acquired t
he land free of any liens or encumbrances and so could claim to be a purchaser i
n good faith and for value.
No evidence of alleged possession by AHDG
AHDG insists that it was already in possession of the disputed property when Cab
autan purchased it
and that he could not have not known of that possession. Such knowledge should b
elie his claim that he was an innocent purchaser for value. However, the courts
below found no evidence of the alleged possession, which the Supreme Court must
also reject in deference to this factual finding.
Casis vs. CA not applicable; Different issues
The issue in the present case is whether Cabautan is an innocent purchaser for v
alue and so entitled to
the priority granted under Article 1544 of the Civil Code. The Casis case, on th
e other hand, involved the issues of whether or not: 1) certiorari was the prope
r remedy of the petitioner: 2) the previous petition for certiorari which origin
ated from the quieting of title case was similar to and, hence, a bar to the pet
ition for certiorari arising from the forcible entry case; and 3) the court a qu
o committed grave abuse of discretion amounting to lack or excess of jurisdictio
n in issuing the order which dissolved the restraining order issued in connectio
n with the ejectment case. The Court was not called upon in that case to determi
ne who as between the two purchasers of the subject property should be preferred
.
9. Excerpt used by AHDG a narration of background facts and not adopted as a doc
trine by the Supreme Court
AHDG invokes the ruling of the lower court in that case to the effect that the r
egistration of the sale in favor of the second purchaser and the issuance of a n
ew certificate of title in his favor did not in any manner vest in him any right
of possession and ownership over the subject property because the seller, by re
ason of their prior sale, had already lost whatever right or interest she might
have had in the property at the time the second sale was made. The excerpt was i
ncluded in the ponencia only as part of the narration of the background facts an
d was not thereby adopted as a doctrine of the Court. It was considered only for
the purpose of ascertaining if the court below had determined the issue of the
possession of the subject property pending resolution of the question of ownersh
ip. Obviously, the Court could not have adopted that questionable ruling as it w
ould clearly militate against the provision of Article 1544.
10. No one can sell what he does not own; Article 1544 either an exception to th
e general rule or a reiteration of the general rule insofar as innocent third pa
rties are concerned
Justice Edgardo L. Paras observed that No one can sell what he does not own, but
this is merely the general rule. Is Art. 1544 then an exception to the general r
ule? In a sense, yes, by reason of public convenience (See Aitken v. Lao, 36 Phi
l. 510); in still another sense, it really reiterates the general rule in that i
nsofar as innocent third persons are concerned, the registered owner (in the cas
e of real property) is still the owner, with power of disposition.
Language of Article 1544 clear; Cabautan deemed owner
The language of Article 1544 is clear and unequivocal. In light of its mandate a
nd of the facts
established in the present case, Ownership must be recognized in the private res
pondent, who bought the property in good faith and, as an innocent purchaser for
value, duly and promptly registered the sale in his favor.