MENDOZA vs. GARANA

  

HERMINIA L. MENDOZA, in her capacity as OIC of the Register of Deeds of Lucena City, petitionersvs. SPOUSES ARMANDO and ANGELA GARANA and FAR EAST BANK & TRUST CO., INC., respondents

G.R. No. 179751 |  August 5, 2015.

 

FACTS

On October 6, 1993, the heirs of Manuel Uy Ek Liong (heirs of Manuel Uy), represented by Belen Uy, sought the registration of a notice of lis pendens with the Register of Deeds of Lucena City (RD Lucena)which were the subject of an action for specific performance with damages (Civil Case No. 93-176) that the heirs of Manuel Uy filed, to compel the owners to sell these properties to them.

Atty. Alberto P. Marquez (Atty. Marquez), then registrar of RD Lucena, also wrote a letter to the properties' respective owners, asking them to surrender their owner's duplicate copies of the titles so the annotation of the notice of lis pendens could be made.  RD Lucena annotated the notice of lis pendens on all the affected titles except for TCT No. T-72029 (subject land), whose original at that time was missing from RD Lucena's vault. As it turned out, the original of the subject TCT was in the custody of one Carmelina Rodriguez (Rodriguez), a clerk at RD Lucena who totally forgot the annotation of the notice of lis pendens of the heirs of Manuel Uy.

The Spouses Garana started inquiries about Jalbuena's land for a possible purchase. They found out that it was then the subject of Belen Uy's adverse claim annotated on August 16, 1993. When they subsequently learned that this annotation had been cancelled by Bienaflor C. Umali on October 4, 1994, the Spouses Garana immediately proceeded to buy the land from Jalbuena on November 7, 1994.

Since the October 6, 1993 notice of lis pendens of the heirs of Manuel Uy did not appear in the cancelled title, it was also not reflected in the new title of the Spouses Garana. Subsequently, the Spouses Garana mortgaged the subject property with respondent Far East Bank and Trust Company (now Bank of the Philippine Islands or BPI) as security for their loan.

The heirs of Manuel Uy notified RD Lucena of this procedural lapse and asked for the annotation of the notice of lis pendens on the Spouses Garana's new title. petitionerfiled a petition with the trial court to allow RD Lucena to annotate the notice of lis pendens on the Spouses Garana's new title.

The Spouses Garana argued that their reliance on the clean title of TCT No. T-72029 should not diminish their status as innocent purchasers for value.

 The trial court ruled in favor of RD Lucena and ordered the annotation of the notice of lis pendens on the Spouses Garana's new title.  The CA ruled that the Spouses Garana were innocent purchasers for value. The subject land is registered under the Torrens System. On this basis, any person dealing with it must be able to safely rely on the correctness of the certificate of title that the RD Lucena issued.

ISSUE: Whether or not the entry of a notice of lis pendens in the primary entry book or day book of the Register of Deeds serves as notice to third persons of the existence of such claim against a registered land.

RULING

Yes, the entry of a notice of lis pendens in the primary entry book or day book of the Register of Deeds serves as notice to third persons of the existence of such claim against a registered land.

The facts of this case are not new. In the past, the Court has already addressed the issue of the recognition of an encumbrance not annotated on the certificate of title but recorded in the Register of Deeds' primary entry book or day book.  Our rulings trace their roots from the 1951 case of Villasor v. Camon, which was subsequently reiterated in the 1952 case of Levin v. Bass.  In Villasor, the Court analyzed the provisions of Act No. 496 and had occasion to distinguish the registration requirements of a voluntary instrument from an involuntary instrument. The Court noted that in the registration of a voluntary instrument such as a sale, a mortgage, or a lease, the owner's production of his duplicate certificate of title is necessary before registration. Since the instrument sought to be registered is the willful act of the owner, he is expected to produce all the necessary documents that will facilitate its registration.

On the other hand, an involuntary instrument such as an attachment, a lien, a notice of lis pendens, and the like, are adverse to the claims of the registered owner. Thus, he cannot be expected to provide all the necessary documents such as his owner's duplicate copy of the title.  For this reason, the law does not require the presentation as well as the annotation of the involuntary instrument on the owner's duplicate title, or even on the original title. The mere recording of the involuntary instrument in the primary entry book is sufficient to bind the registered land and affect third persons dealing with it.

 Following these pronouncements, the Court subsequently reiterated in Levin, that in involuntary registration, the entry of the instrument in the primary entry book or day book already serves as adequate notice to all persons of another person's or entity's adverse claim over a registered land.

Villasor and Levin were decided under Act No. 496. From these provisions, one can conclude that an instrument, once noted or entered in the primary entry book or day book of the Register of Deeds, is already deemed registered from the date of such entry. Such registration, entry or filing already amounts to notice to all persons dealing with the registered land from the time of registration, entry or filing. However, Section 55 of this law provides for an additional requirement in the registration of voluntary instruments. In voluntary registration, mere entry in the primary book or day book is not enough. The registered owner must present not only the instrument sought to be registered, but also his owner's duplicate copy for a complete registration to take place.

In Caviles, the Court acknowledged that bad faith could not be imputed on the buyers of a land whose certificate of title did not contain an annotation of someone else's notice of attachment. In the same manner, the persons who caused the registration of the notice of attachment should not be held negligent for not checking if the Register of Deeds actually performed its obligation to annotate the instrument on the title. The duty to annotate rests with the Register of Deeds and not with the registrant.

The Court thus upheld in this case the better right of the registrant of the notice of attachment despite its non-annotation on the title, since in involuntary instruments, entry in the primary entry book or day book is deemed registration.

The Court consistently ruled that entry or notation of an involuntary instrument in the primary entry book or day book amounts to a valid registration. In accordance with Section 56 in relation to Section 52 of PD No. 1529, such registration constitutes notice to all persons dealing with the registered land from the date of entry or notation.

The mere fact that a different person (Bienaflor C. Umali) sought the cancellation of Belen Uy's adverse claim on Jalbuena's property should have triggered the Spouses Garana's suspicion regarding the real condition of the land. More importantly, before buying the property, the Spouses Garana already knew of Belen Uy's annotation of an adverse claim

These circumstances dispute the Spouses Garana's assertion that they were totally unaware of any claim that the heirs of Manuel Uy had over the subject land. Their failure to do so negated their claim that they were innocent purchasers for value.  The same is true with BPI which should have exercised a higher degree of diligence. If BPI had conducted proper due diligence, it would have discovered that Belen Uy's adverse claim was cancelled by a different person. As a banking institution, BPI is expected to exert a higher degree of diligence, care, and prudence than ordinary individuals in handling its real estate transactions.  The recording of the notice of lis pendens in RD Lucena's primary entry book amounted to a valid registration; thus notice was thereby served to all persons, including the Spouses Garana and BPI.

 

WHEREFORE, premises considered, we hereby GRANT the present petition and REVERSE the Court of Appeals' decision dated February 14, 2007, and resolution dated September 11, 2007, in CA-G.R. CV No. 70027.