MELENCIO vs. CA

 

MELENCIO vs. CA

 

FACTS:

The subject property (30,351 sq.m) is located at Suba-basbas, Marigondon, LapuLapu City, Cebu is covered by a TCT (entire property, 30, 777sq.m) registered in the name of the late petitioner Go Kim Chuan.

The entire property was originally owned by Esteban Bonghanoy  who had only one child, Juana.

Juana Bonghanoy-Amodia is the mother of the petitioners Melencio et. al. (the Amodias).

• The entire property was brought under the operation of the Torrens System.
• However, the title thereto was lost during the Second World War.

 

1964 – Petitioners Melencion et al executed a Deed of Extra-Judicial Settlement with a Deed of Absolute Sale, conveying the subject property in favor of o respondent AZNAR Brothers Realty Company (AZNAR) for a consideration of P10,200.00.

• It was registered under Act 3344 as there was no title on file at the Register of Deeds.
• Thereafter, AZNAR made some improvements and constructed a beach house thereon.

 

1989 - petitioners executed a Deed of Extra-Judicial Settlement with Absolute Sale, conveying the subject property in favor of GO KIM CHUAN for and in consideration of P70,000.00.

• The lost title covering the subject property was reconstituted pursuant to R.A. No. 26. 
• A reconstituted title OCT was issued in the name of Esteban Bonghanoy and, subsequently, a TCT was issued in the name of Go Kim Chuan on December 1, 1989. Thereafter, Go Kim Chuan exercised control and dominion over the subject property.

 

1990 - AZNAR wrote a letter to petitioners Amodias asking the latter to withdraw and/or nullify the sale entered into between them and Go Kim Chuan.

A Notice of Adverse Claim was annotated by AZNAR on TCT.

• Because petitioners did not heed AZNAR's demand, on April 25, 1990, AZNAR filed a case against petitioners Amodias and Go Kim Chuan for ANNULMENT OF SALE AND CANCELLATION OF TCT alleging that the sale to Go Kim Chuan was an invalid second sale of the subject property which had earlier been sold to it.
• Petitioners Amodias denied that they executed the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale in favor of AZNAR, claiming that their purported signatures thereon were forged.

RTC: dismissed

The signatures of the Amodias in the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale executed in favor of AZNAR were found by the document examiner of the Philippine Constabulary (PC) Crime Laboratory to be forged, thus, the said deed did not convey anything in favor of AZNAR.

CA: reversed RTC, ruling that both the deed and the TCT are null and void.

The deed of Extra-Judicial Partition of Real Estate with Deed of Absolute Sale executed by the Amodias in favor of AZNAR was registered ahead of the Deed of Extra-Judicial Settlement with Absolute Sale in favor of Go Kim Chuan, thus, pursuant to Article 1544 of the New Civil Code, the former deed should be given preference over the latter.

ISSUES: 

1.     Did the CA misapply the doctrine in Heirs of 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.     W/N Go Kim Chuan is a registrant in good faith

 

RULING:

1. NO. CA WAS CORRECT.

Forgery cannot be presumed. It must be proved by clear, positive and convincing evidence and the burden of proof rests on the party alleging forgery. Handwriting experts are usually helpful in the examination of forged documents because of the technical procedure involved in analyzing them. But resort to these experts is not mandatory or indispensable. A finding of forgery does not depend entirely on the testimonies of handwriting experts, because the judge must conduct an independent examination independent examination of the questioned signature in order to arrive at a reasonable conclusion as to its authenticity.

 

While it is true that the original document was produced before the RTC, the finding of forgery relies wholly on the testimony of the document examiner. It falls short of the required independent examination to be conducted by the trial court judge. Other than the statement of the document examiner, the RTC decision contains no other basis to support its conclusion of the existence of forgery.

2. GO KIM CHUAN HAS THE BETTER RIGHT OVER THE SUBJECT PROPERTY.

Without doubt, we have here a case of double sale of registered land.

ART. 1544 [CIVIL CODE]. If the same thing should have 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.

The registration contemplated in this provision refers to registration under the Torrens System, which considers the act of registration as the operative act that gives validity to the transfer or creates a lien upon the land. This rule precisely applies to cases involving conflicting rights over registered property and those of innocent transferees who relied on the clean title of the properties.

In the case at bench, it is uncontroverted that the subject property was under the operation of the Torrens System even before the respective conveyances to AZNAR and Go Kim Chuan were made. AZNAR knew of this and admits this as fact. Yet, despite this knowledge, AZNAR registered the sale in its favor under Act 3344 on the contention that at the time of sale, there was no title on file. We are not persuaded by such a lame excuse.

Act 3344 provides for the system of recording of transactions or claims over unregistered real estate  without prejudice to a third party with a better right. But if the land is registered under the Land Registration Act (and therefore has a Torrens Title), and it is sold and the sale is registered not under the Land Registration Act but under Act 3344, as amended, such sale is not considered registered not considered registered, as the term is used under Art. 1544 of the New Civil Code.

In this case, since the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale in favor of AZNAR was registered under Act No. 3344 and not under Act No. 496, the said document is deemed not registered.

Rather, it was the sale in favor of Go Kim Chuan which was registered under Act No. 496.

AZNAR insists that since there was no Torrens title on le in 1964, insofar as the vendors, AZNAR, and the Register of Deeds are concerned, the subject property was unregistered at the time.

The contention is untenable. The fact that the certificate of title over the registered land is lost does not convert it into unregistered land. After all, a certificate of title is merely an evidence of ownership or title over the particular property described therein. This Court agrees with the petitioners that AZNAR should have availed itself of the legal remedy of reconstitution of the lost certificate of title, instead of registration under Act 3344.

It is unfortunate that, in the instant case, despite the sale of the subject property way back in 1964 and the existence of the remedy of reconstitution at that time, AZNAR opted to register the same under the improper registry (Act 3344) and allowed such status to lie undisturbed. From 1964 to 1989, AZNAR did not bother to have the lost title reconstituted or even have the subject property declared under its name for taxation purposes.

Vigilantibus, non dormientibus, jura subverniunt. Laws must come to the assistance of the vigilant, not of the sleepy.

 

3. YES, GO KUM CHUAN IS A REGISTRANT IN GOOD FAITH

Concededly, inscription of an adverse claim serves as a warning to third parties dealing with a piece of real property that someone claims an interest therein or that there is a right superior to that of the titled owner.

However, as pointed out by petitioners and as admitted by AZNAR, the Notice of Adverse Claim was annotated on TCT No. 20626 only on February 4, 1990, after the lost certificate of title was reconstituted and after the issuance of said TCT in the name of Go Kim Chuan on December 1, 1989.

It is, therefore, absurd to say that Go Kim Chuan should be bound by an adverse claim which was not previously annotated on the lost title or on the new one, or be shackled by a claim which he did not have any knowledge of.

Moreover, before buying the subject property, Go Kim Chuan made verifications with the Office of the City Assessor of Lapu-Lapu City and the Register of Deeds. He likewise visited the premises of the subject property and found that nobody interposed any adverse claim against the Amodias. After he decided to buy the subject property, he paid all taxes in arrears, caused the publication of the Deed of Extra-Judicial Settlement with Absolute Sale in a newspaper of general circulation, caused the reconstitution of the lost certicate of title and caused the issuance of the assailed TCT in his name. Given these antecedents, good faith on the part of Go Kim Chuan cannot be doubted.

Finally, it is worth stressing that the Torrens system was adopted in this country because it was believed to be the most effective measure to guarantee the integrity of land titles and to insure their indefeasibility once the claim of ownership is established and recognized.