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BALATICO v. RODRIGUEZ

FACTS:

The case involves a dispute over a parcel of land in Cagayan. The land was originally owned by respondent Natalia Aguinaldo Vda. de Lim and was mortgaged to the Philippine National Bank (PNB). Lim failed to pay the loan and the land was foreclosed, resulting in PNB acquiring ownership. PNB later sold the land to respondent Roberta L. Rodriguez. However, petitioner's husband, Isaac Agatep, had bought the land from Lim before the foreclosure and took possession of it. Agatep's heirs, including the petitioner, continued to possess the land.

The petitioner filed a complaint for reconveyance and/or damages against the respondents. The trial court dismissed the complaint but awarded damages in favor of the petitioner against Lim. On appeal, the Court of Appeals (CA) affirmed the trial court's decision. The petitioner filed a motion for reconsideration, which was denied by the CA.

The petitioner argues that another pre-trial is not required when a complaint is amended to include another defendant. However, the Court disagrees and emphasizes the importance of pre-trial in achieving the speedy disposition of cases. The purpose of pre-trial is to simplify the issues, consider amicable settlement or alternative dispute resolution, and obtain stipulations or admissions of facts and documents. The Court holds that even if an amended complaint does not allege additional causes of action, a second pre-trial is still required if the impleaded defendant presents different defenses. In this case, the trial court correctly dismissed the amended complaint against the impleaded defendant for the petitioner's failure to file her pre-trial brief. Furthermore, the non-appearance of the plaintiff and her counsel during the pre-trial conference is a ground for dismissal under the rules. The order of dismissal can be set aside upon the discretion of the trial court.

The petitioner filed a complaint against PNB seeking the reconveyance of the land. The trial court dismissed the complaint for the petitioner's failure to prove her case, and the CA affirmed the dismissal. The petitioner argues that the CA erred in sustaining the trial court's finding that PNB was a mortgagee in good faith. The Court finds that the trial and appellate courts can make findings necessary for a just resolution of the case, even if PNB is not a party to the case. The Court also finds that PNB is an innocent mortgagee for value and that the execution of a public document constitutes sufficient delivery to PNB.

ISSUES:

  1. Whether the execution of the deed of sale in a public instrument is equivalent to delivery of the property.

  2. Whether possession or physical delivery of the property is necessary for the acquisition of ownership.

  3. Whether the subsequent sale of the property to petitioner's husband can defeat the rights of PNB as the mortgagee and subsequent purchaser at the auction sale.

  4. Whether the trial court deviated from the issues identified in the Pre-Trial Order.

  5. Whether there was wrongful registration of the property.

RULING:

  1. The mere execution of the deed of sale in a public document is deemed equivalent to the delivery of the property. This is in accordance with paragraph 1, Article 1498 of the New Civil Code. The contrary cannot be inferred from the deed unless explicitly stated.

  2. Prior physical possession or delivery is not legally required as long as there are no legal impediments preventing the buyer from gaining physical possession. The execution of the deed operates as a formal or symbolic delivery of the property, authorizing the buyer to use it as proof of ownership.

  3. The subsequent sale of the property to petitioner's husband cannot defeat the rights of PNB as the mortgagee and subsequent purchaser at the auction sale because the mortgage contract was registered and the purchaser is presumed to have notice of every fact shown by the record.

  4. The trial court did not deviate from the issues identified in the Pre-Trial Order as issues that are impliedly included therein or may be inferable therefrom by necessary implication are as much integral parts of the pre-trial order as those expressly stipulated.

  5. There was no wrongful registration of the property as the evidence on record shows that there was no wrongful registration when the property was auctioned and subsequently sold by PNB.

PRINCIPLES:

  • The execution of a deed of sale in a public instrument is equivalent to delivery of the property, unless the contrary is explicitly stated.

  • Possession or physical delivery of the property is not legally required for the acquisition of ownership. Control over the property, not possession, is the key factor.

  • A mortgage is an inseparable right in rem that adheres to the property regardless of the owner, and subsequent buyers must respect it.

  • Registration in the public registry is notice to the whole world, and every instrument affecting registered land is presumed to have been examined by the purchaser.

  • The rule of notice in relation to the registration of instruments affecting title. The purchaser is charged with notice of every fact shown by the record and is presumed to know every fact which an examination of the record would have disclosed. This presumption cannot be overcome by innocence or good faith.

  • The purpose and object of the law requiring registration would be destroyed if the presumption of knowledge of the facts shown by the record can be defeated by lack of knowledge of its contents.

  • A pre-trial order is not meant to be a detailed catalogue of each and every issue to be taken up during the trial. Issues that are impliedly included or may be inferable by necessary implication are integral parts of the pre-trial order.