PADILLA vs. PHILIPPINE PRODUCERS' COOPERATIVE MARKETING ASSOCIATION

  

ESTANISLAO PADILLA, JR., petitioner, vs. PHILIPPINE PRODUCERS' COOPERATIVE MARKETING ASSOCIATION, INC., respondent.

G.R. No. 141256 | July 15, 2005

 

FACTS

Sps Padilla are registered owners of 3 properties covered by TCTs situated in Bago City. Phil Producers Cooperative Marketing Association, Inc., (Coop) is a marketing coop which had a money claim against Sps. Padilla. Coop filed a case against Padillas for the collection of the sum of money. Despite receiving summons on May 8, 1987, Padilla opted not to file an answer. Padilla was declared in default. Decision was rendered in favor of Coop. Petitioner was furnished a copy of this decision by mail on November 29, 1989 but, because of his failure to claim it, the copy was returned. On May 31, 1990, the Court issued a writ of execution. On June 4, 1990, the three lots were levied by virtue of that writ.  When Padilla failed to exercise his right of redemption within the 12-month period allowed by law, the court, on motion of Coop, ordered the issuance of a writ of possession for the sheriff to cause the delivery of the physical possession of the properties in favor of the Coop.

On May 17, 1995, Coop filed a motion to direct the RD to issue new titles over the properties in its name, alleging that the RD of Bago City would not issue new titles Coop’s name unless the owner's copies were first surrendered to him. Coop Countered that such surrender was impossible because this was an involuntary sale and the owner's copies were with Padilla.

The trial court granted the motion. Padilla appealed to CA. CA affirmed the decision of the trial court.

Padilla argued that Coop’s motion for the RD to cancel the existing certificates of title and issue new ones in its name was in fact a real action and that the motion was procedurally infirm because respondent did not furnish him a copy. Under Section 6 of Rule 39 of the 1997 Rules of Civil Procedure, the execution of the judgment was barred by prescription, given that the motion was filed more than 5 years after the writ of execution was issued on March 23, 1990. Coop failed to follow the correct procedure for the cancellation of a certificate of title and the issuance of a new one, which is contained in Section 107 of PD 1529.

ISSUES:

1.       Whether or not Coop’s right to have the new titles issued in its name is already barred by prescription

2.       Whether or not the motion in question is the proper remedy for cancelling Padilla’s certificate of title and new ones issued in its name

RULING:

1. No, COOP’S right to have the new titles issued in its name is not barred by prescription.

In Heirs of Blancaflor vs. Court of Appeals, it is settled that execution is enforced by the fact of levy and sale. The result of such execution sale vested immediately the right over the title in the purchaser subject only to the judgment debtor's right to repurchase. The right acquired by the purchaser at an execution sale is inchoate and does not become absolute until after the expiration of the redemption period without the right of redemption having been exercised. But inchoate though it be, it is like any other right, entitled to protection and must be respected until extinguished by redemption. In this cited case, Blancaflor was not able to redeem his property after the expiration of the redemption period, which was 12 months after the entry or annotation of the certificate of sale made on the back of TCT No. 14749. Consequently, he had been, divested of all his rights to the property.  In addition, Padilla himself admits his failure to redeem the properties within the one-year period by adopting the facts stated in the Court of Appeals' decision. There is thus no doubt he had been divested of his ownership of the contested lots.

The fact of levy and sale constitutes execution, and not the action for the issuance of a new title. Here, because the levy and sale of the properties took place in June and July of 1990, respectively, or less than a year after the decision became final and executory, the respondent clearly exercised its rights in timely fashion.

2.  No, the motion in question is not the proper remedy for cancelling Padilla’s certificate of title and new ones issued in its name.

Padilla is correct in assailing as improper Coop’s filing of a mere motion for the cancellation of the old TCTs and the issuance of new ones as a result of Padilla’s refusal to surrender his owner's duplicate TCTs. Indeed, this called for a separate cadastral action initiated via petition. Section 107 of PD 1529, formerly Section 111 of Act 496, provides:

Section 107. Surrender of withheld duplicate certificates. — Where it is necessary to issue a new certificate of title pursuant to any involuntary instrument which divests the title of the registered owner against his consent or where a voluntary instrument cannot be registered by reason of the refusal or failure of the holder to surrender the owner's duplicate certificate of title, the party in interest may file a petition in court to compel the surrender of the same to the Register of Deeds. The court, after hearing, may order the registered owner or any person withholding the duplicate certificate to surrender the same, and direct the entry of a new certificate or memorandum upon such surrender. If the person withholding the duplicate certificate is not amenable to the process of the court, or if for any reason the outstanding owner's duplicate certificate cannot be delivered, the court may order the annulment of the same as well as the issuance of a new certificate of title in lieu thereof. Such new certificate and all duplicates thereof shall contain a memorandum of the annulment of the outstanding duplicate.

Coop alleges that it resorted to filing the contested motion because it could not obtain new certificates of title, considering that Padilla refused to surrender his owner's duplicate TCTs. This is incorrect. The proper course of action was to file a petition in court, rather than merely move, for the issuance of new titles.

Section 78 of Act 496 reads: Upon the expiration of the time, if any allowed by law for redemption after registered land has been sold on any execution, or taken or sold for the enforcement of any lien of any description, the person claiming under the execution or under any deed or other instrument made in the course of the proceedings to levy such execution or enforce any lien, may petition the court for the entry of a new certificate to him, and the application may be granted: Provided, however, That every new certificate entered under this section shall contain a memorandum of the nature of the proceeding on which it is based: Provided, further, That at any time prior to the entry of a new certificate the registered owner may pursue all his lawful remedies to impeach or annul proceedings under execution or to enforce liens of any description. 


Section 75 of PD 1529 provides: Application for new certificate upon expiration of redemption period. — Upon the expiration of the time, if any, allowed by law for redemption after the registered land has been sold on execution, or taken or sold for the enforcement of a lien of any description, except a mortgage lien, the purchaser at such sale or anyone claiming under him may petition the court for the entry of a new certificate to him. Before the entry of a new certificate of title, the registered owner may pursue all legal and equitable remedies to impeach or annul such proceedings. 


It is clear that PD 1529 provides the solution to Coops quandary. The reasons behind the law make a lot of sense; it provides due process to a registered landowner (in this case the petitioner) and prevents the fraudulent or mistaken conveyance of land, the value of which may exceed the judgment obligation. While we certainly will not condone any attempt by Padilla to frustrate the ends of justice — the only way to describe his refusal to surrender his owner's duplicates of the certificates of title despite the final and executory judgment against him — Coop cannot simply disregard proper procedure for the issuance to it of new certificates of title. There was a law on the matter and respondent should have followed it.  In any event, Coop can still file the proper petition with the cadastral court for the issuance of new titles in its name.

 

WHEREFORE, the instant petition is hereby GRANTED. The decision of the Court of Appeals in CA-G.R. CV No. 53085 is hereby REVERSED. The order of the Regional Trial Court of Bacolod City ordering the Register of Deeds of Bago City to issue new certificates of title in favor of respondent is ANULLED.