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RAUL SABERON v. OSCAR VENTANILLA

FACTS:

The case involves a dispute over a property in Quezon City known as Capitol Homes Subdivision Nos. I and II. Manila Remnant Co., Inc. (MRCI) owned the property and entered into a contract with A.U. Valencia & Co. Inc. (AUVC) for the development and sales of the subdivision. The president of AUVC, Artemio U. Valencia (Valencia), resold the property to Carlos Crisostomo without the knowledge of the original buyers, Oscar C. Ventanilla, Jr. and Carmen Gloria D. Ventanilla (Ventanillas). The Ventanillas continued to pay the monthly installments for the property, unaware of the resale. When MRCI terminated its relationship with AUVC, the Ventanillas discovered the deception and filed a case against MRCI, AUVC, and Crisostomo for specific performance, annulment of deeds, and damages. The Court of First Instance, Branch 17-B, Quezon City (CFI Quezon City), ruled in favor of the Ventanillas and ordered MRCI to execute a deed of sale in their favor. The Court of Appeals (CA) affirmed the decision. MRCI then appealed to the Supreme Court in G.R. No. 82978, which affirmed the decision of the CA.

In November 1990, the Supreme Court affirmed the decision of the Court of Appeals and declared the judgment of the Court of First Instance of Quezon City immediately executory. The Ventanilla spouses then moved for the issuance of a writ of execution in Civil Case No. 26411. The writ was issued on May 3, 1991, and served on MRCI on May 9, 1991. A notice of levy was also annotated in the titles of MRCI on May 31, 1991.

However, MRCI claimed that they could no longer deliver the subject properties to the Ventanillas because they had already been sold to Samuel Marquez on February 7, 1990. MRCI offered to reimburse the Ventanillas for the amount paid but the Ventanillas rejected the offer, arguing that the sale to Marquez was void, fraudulent, and in contempt of court.

The Court of First Instance of Quezon City ordered that the garnishment on MRCI's bank account could only be lifted if the amount of P500,000.00 in cash was deposited with the court.

MRCI filed a motion for reconsideration, which was denied twice by the trial court. They then filed a petition for certiorari with the Court of Appeals, which ruled that the contract to sell in favor of Marquez did not prevent the immediate execution of the judgment and that the cash bond fixed by the trial court was fair and reasonable.

The case was elevated to the Supreme Court, where MRCI argued that the sale to Marquez was valid but the Ventanillas countered that the sale to them had already been established and the portion of the decision ordering MRCI to execute an absolute deed of sale in their favor had become final and executory.

The Supreme Court recognized the validity of the contract to sell in favor of the Ventanillas and found circumstances casting suspicion on the validity of the contract with Marquez. It also noted that Marquez did not intervene in the proceedings to assert his alleged rights as a purchaser in good faith. It ruled that even if the contract with Marquez was valid, it could not prevail over the final and executory judgment ordering MRCI to execute an absolute deed of sale in favor of the Ventanillas. Additionally, there was no evidence that Marquez had paid the supposed balance of the original price. The Supreme Court concluded that the sale to Marquez was void and recognized the Ventanillas as the rightful owners of the property.

ISSUES:

  1. Whether the Saberons are purchasers in good faith and for value.

  2. Whether the registration of the notice of levy had produced constructive notice that would bind third persons despite the failure of the ROD-QC to annotate the same in the certificates of title.

  3. Whether the Saberons can be considered innocent purchasers for value.

  4. Whether the Ventanillas' notice of levy effectively bound third persons, including the Saberons.

  5. Whether the failure to carry over the notice of levy to Marquez's title was a valid ground to invalidate the sale to the Saberons.

  6. Whether the notice of levy on attachment creates a lien that continues until the debt is paid or the attachment is discharged or vacated.

  7. Whether the Register of Deeds has a duty to carry over the notice of levy to subsequent titles.

  8. Whether a buyer is charged with notice of burdens and claims only if they are annotated on the title.

  9. Whether the notice of levy on attachment must be annotated on the title in order to be valid and effective.

  10. Whether the rights or interests of the Ventanillas in the subject properties have ripened into ownership.

  11. Whether laches can be attributed to the Ventanillas.

    • Whether the Ventanillas have the right to appropriate the improvements on the subject lots after payment of indemnity or to oblige the Saberons to pay the price of the land.
    • What is the proper course of action if the Ventanillas elect to appropriate the improvements or oblige the Saberons to pay the price of the land.

RULING:

  1. The Court ruled that the Saberons are not purchasers in good faith and for value. They failed to exercise due diligence in verifying the authenticity of the titles and the existence of encumbrances or annotations. The Ventanillas also did not conspire with MRCI to deprive the Ventanillas of their right over the properties.

  2. The Court ruled that the registration of the notice of levy did produce constructive notice that would bind third persons, regardless of the failure to annotate it in the certificates of title.

  3. The Saberons could not be considered innocent purchasers for value because they should have been suspicious of the circumstances surrounding the sale of the property.

  4. The notice of levy of the Ventanillas effectively bound third persons, including the Saberons, as it was registered and produced constructive notice against the whole world.

  5. The failure to carry over the notice of levy to Marquez's title was a valid ground to invalidate the sale to the Saberons.

  6. Yes, the notice of levy on attachment creates a lien that continues until the debt is paid or the attachment is discharged or vacated. The notice of levy creates a preference, and its prior registration conveys and affects the land. It is not stated in any law that an attachment shall be discharged upon the sale of the property other than under execution.

  7. Yes, the Register of Deeds has a duty to carry over the notice of levy to subsequent titles. Section 59 of Presidential Decree No. 1529 provides that existing encumbrances or annotations shall be carried over and stated in the new certificate of title, unless they are simultaneously released or discharged.

  8. No, a buyer is not only charged with notice of burdens and claims annotated on the title. In cases of involuntary registration, such as attachment, levy upon execution, or notice of lis pendens, the entry of these in the day book of the Register of Deeds is sufficient notice to all persons, even if the owner's duplicate certificate of title is not presented. Therefore, the Ventanillas, as innocent purchasers for value, had the right to presume that the notice of levy would be carried over to subsequent titles.

  9. The notice of levy on attachment does not need to be annotated on the title in order to be valid and effective. Once the requisites required by law for attachment are complied with and the appropriate fees duly paid, the attachment is duly perfected and binds the land.

  10. The rights or interests of the Ventanillas in the subject properties have ripened into ownership. The court has already upheld the validity of the contract to sell issued to the Ventanillas and found that it was the obstinate refusal of the other party to accept their payment that caused the delay in executing the deed of sale.

  11. Laches cannot be attributed to the Ventanillas. Their failure to learn about the structures being built on the subject lands and the payment of real property taxes by the Saberons is not sufficient justification to withhold their declaration of ownership. Considering the length of litigation they had to endure and their advanced age, it would be unjust to hold that they were remiss in protecting their rights.

  12. The Ventanillas have the right to either appropriate the improvements after payment of indemnity or to oblige the Saberons to pay the price of the land. The court ordered the trial court to determine the value of the improvements and the necessary and useful expenses if the Ventanillas elect to appropriate the improvements. If the Ventanillas choose to oblige the Saberons to pay the price of the land, the trial court is ordered to determine the said price to be paid to the Ventanillas.

PRINCIPLES:

  • Registration is the operative act that conveys ownership or affects the land insofar as third persons are concerned. (Section 51 of P.D. No. 1529)

  • Documents, like certificates of title, do not effect a conveyance of or encumbrances on a parcel of land. Registration is necessary to create constructive notice to the whole world. (Section 52 of P.D. No. 1529)

  • One who deals with property registered under the Torrens system is charged with notice only of such burdens and claims as are annotated on the title.

  • A contract to sell and a contract of sale have distinct features and legal effects.

  • A notice of levy creates a lien which cannot be destroyed except by dissolution of the attachment.

  • The notice of levy on attachment creates a lien that continues until the debt is paid or the attachment is discharged or vacated. Prior registration of the lien creates a preference.

  • The Register of Deeds has a ministerial duty to carry over existing encumbrances or annotations to new certificates of title, unless they are simultaneously released or discharged.

  • In cases of involuntary registrations, such as attachment, the entry thereof in the day book of the Register of Deeds is sufficient notice to all persons, even without annotation on the certificate of title.

  • The notice of levy on attachment does not need to be annotated on the title as long as the requisites required by law for attachment are complied with. (Rule on Attachment, Section 13)

  • The rights or interests of a party in a property can ripen into ownership if the necessary conditions for sale or transfer have been fulfilled. (Article 1458, Civil Code)

  • Laches may only apply if there is unreasonable delay that prejudiced the other party. Mere unawareness of certain circumstances does not constitute lack of vigilance. (Republic v. Bancom, Inc., 711 Phil. 313, 2000)

  • Article 546 of the Civil Code provides that necessary and useful expenses incurred by a possessor in good faith shall be refunded to him but only the possessor in good faith may retain the thing until he has been reimbursed.

  • The owner of the land shall have the right to appropriate the improvements introduced by the builder or planter after payment of indemnity provided in Article 546 and 548 or to oblige the builder or planter to pay the price of the land. The builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In such case, the builder or planter shall pay reasonable rent if the owner does not choose to appropriate the building or trees after proper indemnity.

  • The court may determine the terms of the lease agreement if the parties fail to agree upon them.