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CECILIA AMODIA VDA. DE MELENCION v. CA

FACTS:

The subject property is a 30,351 square meter parcel of land which was originally owned by Esteban Bonghanoy. The title to the property was lost during the Second World War. In 1964, the Amodias allegedly executed a Deed of Absolute Sale, conveying the property to respondent AZNAR for P10,200.00. In 1989, the Amodias executed another Deed of Absolute Sale, this time conveying the property to Go Kim Chuan for P70,000.00. A reconstituted title and derivative title were issued in the name of Go Kim Chuan. AZNAR filed a case to annul the sale to Go Kim Chuan. The RTC ruled in favor of Go Kim Chuan but the CA reversed the decision.

The Heirs of Go Kim Chuan claim that they are the rightful owners of the property and that the registration under Act 3344 has no legal effect since the land was already registered under Act 496. They further argue that the provision of Article 1544 of the New Civil Code, which pertains to double sales, does not apply in their case as they purchased the land in good faith without knowledge of any adverse claims. They also dispute the findings of the document examiner regarding the alleged forgery of the Deed of Sale.

AZNAR argues that the Petition should be dismissed due to incomplete verification and certification of non-forum shopping. The Heirs of Go Kim Chuan counter that the petitioner who signed the documents is a legitimate child and heir of the late Go Kim Chuan and has personal knowledge of the facts alleged in the Petition.

Petitioners later filed a motion to amend the petition to correct the designation of parties, replacing the original petitioners with the Heirs of Go Kim Chuan. AZNAR opposed the amendment, stating that the names of the original petitioners were deleted without their consent. The Heirs of Go Kim Chuan claim that they had no choice but to file the case on their own as the original petitioners could not be located.

The Court gave due course to the Petition and both parties were required to submit their memoranda. Petitioners reiterate their arguments regarding the registration under Act 3344 and assert that the Notice of Adverse Claim of AZNAR was annotated on the title only after the execution of the Deed of Sale in favor of Go Kim Chuan. They also argue that the doctrine laid down in the case of Heirs of Severa Gregorio v. CA is not applicable to their case.

In the dispute between AZNAR and Go Kim Chuan, AZNAR presented the original copy of the Deed of Sale executed by the Amodias in favor of AZNAR. Go Kim Chuan claimed to have bought the property in good faith and had no prior knowledge of the sale to AZNAR. AZNAR argued that Go Kim Chuan should have been aware of the sale since it was registered under Act 3344. Go Kim Chuan, however, argued that he had to wait for the reconstitution of the lost title and could not be held responsible for any ignorance of the sale in favor of AZNAR.

ISSUES:

  1. Did the CA misapply the doctrine in Heirs of Severa Gregorio v. CA in ruling that the RTC committed an error in appreciating the testimony of an expert witness as to the forgery of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale?

  2. Who between Go Kim Chuan and AZNAR has the better right over the subject property?

  3. Whether forgery was proved by clear, positive and convincing evidence and if the burden of proof rests on the party alleging forgery.

  4. Whether the sale to Go Kim Chuan was valid and should be upheld under Article 1544 of the New Civil Code.

  5. Whether Go Kim Chuan was a registrant in good faith.

  6. Whether the prior registration of the sale in favor of AZNAR under Act 3344 can defeat Go Kim Chuan's claim of good faith.

RULING:

  1. The CA did not misapply the doctrine in Heirs of Severa Gregorio v. CA. The RTC committed an error in appreciating the testimony of an expert witness as to the forgery of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale.

  2. The Court did not explicitly rule on the second issue in this specific part of the case digest.

  3. The Court resolved the first issue in favor of Go Kim Chuan. Forgery cannot be presumed and must be proved by clear, positive and convincing evidence. While handwriting experts may be helpful in analyzing forged documents, resort to these experts is not mandatory or indispensable. In this case, the trial court's finding of forgery relied solely on the testimony of the document examiner, without conducting an independent examination of the questioned signature. Therefore, the finding of forgery is insufficient and cannot be upheld without other basis.

  4. The Court ruled in favor of Go Kim Chuan regarding the validity of the sale. The case involves a double sale of registered land, and under Article 1544 of the New Civil Code, ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property. If it is immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property. In this case, Go Kim Chuan registered the sale under the proper registry, while the sale in favor of AZNAR was registered under an improper registry. Therefore, the ownership of the property should belong to Go Kim Chuan.

  5. Go Kim Chuan was a registrant in good faith. The Court found that Go Kim Chuan made verifications with the Office of the City Assessor and the Register of Deeds, visited the premises of the subject property, and found no adverse claim against the Amodias. He also paid taxes in arrears, published the Deed of Extra-Judicial Settlement with Absolute Sale, reconstituted the lost certificate of title, and caused the issuance of a new certificate of title in his name. Given these circumstances, the Court concluded that Go Kim Chuan acted in good faith.

  6. The prior registration of the sale in favor of AZNAR under Act 3344 cannot defeat Go Kim Chuan's claim of good faith. The Court clarified that the registration under Act 3344 in Santiago v. Court of Appeals pertained to a different situation where the property was not registered under the Torrens system. In this case, the subject property was registered under the Torrens system, and therefore, registration under Act 3344 cannot serve as constructive notice to restrain the rights of a subsequent buyer.

PRINCIPLES:

  • Forgery must be proved by clear, positive and convincing evidence, and the burden of proof rests on the party alleging forgery.

  • Handwriting experts may be helpful in examining forged documents, but their testimony is not mandatory or indispensable.

  • The judge must conduct an independent examination of the questioned signature to arrive at a reasonable conclusion as to its authenticity.

  • In cases of double sale of registered land, ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it is movable property, and to the person who acquired it in good faith and first recorded it in the Registry of Property, if it is immovable property.

  • Registration under the Torrens System is necessary to bind the property and give validity to the transfer or create a lien. Registration under an improper registry does not constitute valid registration.

  • The loss of a certificate of title does not convert the land into unregistered land. The legal remedy is reconstitution of the lost certificate of title.

  • Mere registration of title is not enough to establish priority status. Good faith must accompany the registration.

  • To enjoy priority status, a second purchaser must be in good faith and register the sale without knowledge of any defect in the title.

  • An adverse claim must be previously annotated on the lost title or new title to bind a subsequent buyer.

  • Constructive notice through registration under Act 3344 does not apply if the property is registered under the Torrens system.

  • The Torrens system guarantees the integrity and indefeasibility of land titles once the claim of ownership is established and recognized.