Agricultural and Home Extension Development Group vs. CA

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  Agricultural and Home Extension Development Group vs. CA [G.R. No. 92310. September 3, 1992.]First Division, Cruz (J): 3 concurringFacts: On 29 March 1972, the spouses Andres Diaz and Josefa Mia sold to Bruno Gundran a 19-hectare parcel of land in Las Piñas, Rizal, covered by TCT 287416. The owner  s duplicate copy of the title was turned over to Gundran. However, he did not register the Deed of Absolute Sale because he said he was advised in the Office of the Register of Deeds of Pasig of the existence of notices of lis pendens on the title. On 20 November 1972, Gundran and Agricultural and Home Development Group (AHDG) entered into a Joint Venture Agreement for the improvement and subdivision of the land. This agreement was also not annotated on the title. On 30 August 1976, the spouses Andres Diaz and Josefa Mia again entered into another contract 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 title 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 Pasay City * against Librado Cabautan and Josefa Mia seeking, among others, the cancellation 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. (later substituted by Milagros S. Bucu), filed a complaint in intervention with substantially the same allegations and prayers as that in Gundran  s complaint. In a decision dated 12 January 1987, Gundran  s complaint and petitioner  s complaint in intervention were dismissed for lack of merit. So was Cabautan  s counterclaims, for insufficiency of evidence.Upon appeal, this decision was affirmed by the Court of Appeals, with the modification that Josefa Mia was ordered to pay Gundran the sum of P90,000.00, with legal interest from 3 September 1976, plus the costs of suit.The Supreme Court denied the petition and affirmed in toto the questioned decision; with costs against AHDG.Article 1544Under Article 1544 of the Civil Code of the Philippines, it is provided that  If the same thing shouldhave been sold to different vendees, the ownership shall be transferred to the person 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 to 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 person 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 registerThe first sale to Gundran was not registered while the second sale to Cabautan was 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 property had not been recorded.Purchaser in good faith  A purchaser in good faith is defined as  one who buys the property of another without notice thatsome other person has a right to or interest in such property and pays a full and fair price for the same at the time of such purchase or before he has notice of 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, encumbrance or adverse claim in favor of Gundran or AHDC.4. Registered property under Torrens system; Person charge with notice of burdens noted on the register of titleWhen the property sold is registered under the Torrens system, registration is the operative act to convey or affect the land insofar as third persons are concerned. 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 title.5. Notices of lis pendes not a lien or encumbrance, merely notice of litigation of property subject to the result of the suitNotices of lis pendens in favor of other persons were earlier inscribed on the title did not have the effect of establishing a lien or encumbrance on the property affected. Their only purpose was to give notice to third persons and to the whole world that any interest they might acquire in the property pending litigation would be subject to the result of the suit.Cabautan a purchaser in good faith and for valueCabautan took the risk of acquiring the property even in the light of notice of lis pendens inscribed inthe 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 the CFI Rizal, Branch 23, dated 1 and 4 April 1974. Cabautan therefore acquired the land free of any liens or encumbrances and so could claim to be a purchaser in good faith and for value.No evidence of alleged possession by AHDGAHDG insists that it was already in possession of the disputed property when Cabautan purchased itand that he could not have not known of that possession. Such knowledge should belie 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 issuesThe issue in the present case is whether Cabautan is an innocent purchaser for value and so entitled tothe priority granted under Article 1544 of the Civil Code. The Casis case, on the other hand, involved the issues of whether or not: 1) certiorari was the proper remedy of the petitioner: 2) the previous petition for certiorari which srcinated from the quieting of title case was similar to and, hence, a bar to the petition for certiorari arising from the forcible entry case; and 3) the court a quo committed grave abuse of discretion amounting to lack or excess of jurisdiction in issuing the order which dissolved the restraining order issued in connection 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 doctrine by the Supreme CourtAHDG invokes the ruling of the lower court in that case to the effect that the registration of the sale in favor of the second purchaser and the issuance of a new 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 reason 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 included in the ponencia only as part of the narration of the background facts and 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 ownership. Obviously, the Court could not have adopted that questionable ruling as it would clearly militate against the provision of Article 1544.10. No one can sell what he does not own; Article 1544 either an exception to the general rule or a reiteration of the general rule insofar as innocent third parties are concernedJustice 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 rule? In a sense, yes, by reason of public convenience (See Aitken v. Lao, 36 Phil. 510); in still another sense, it really reiterates the general rule in that insofar as innocent third persons are concerned, the registered owner (in the case of real property) is still the owner, with power of disposition.Language of Article 1544 clear; Cabautan deemed ownerThe language of Article 1544 is clear and unequivocal. In light of its mandate and of the factsestablished in the present case, Ownership must be recognized in the private respondent, who bought the property in good faith and, as an innocent purchaser for value, duly and promptly registered the sale in his favor.
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