RODRIGUEZ vs. CA

 

SPOUSES FRANCISCO and BERNARDINA RODRIGUEZ, petitioners, vs. HON. COURT OF APPEALS, SPOUSES CHRISTOPHER and MA. ANGELICA BARRAMEDA, and SPOUSES ANTONIO and MARIDEL CALINGO, respondents.

G.R. No. 142687 | July 20, 2006

FACTS:

Respondent Spouses Calingo were the registered owners of a house and lot located in Parañaque, Metro Manila mortgage with DBP but mortgage was subsequently absorbed by the Home Mutual Development Fund (HMDF) or Pag-IBIG. On April 27, 1992 – Respondent Spouses Calingo and Respondent Spouses Barrameda entered into a contract of sale for the said property with assumption of mortgage—not registered with the ROD.

On May 29, 1992, respondents Barrameda filed with the Register of Deeds of Parañaque an affidavit of adverse claim on the property. The adverse claim was inscribed at the back of the certificate of title as Entry No. 3439.

On July 13, 1992, a notice of levy with attachment on real property by virtue of a writ of execution was annotated at the back of the certificate of title of the property in question. The writ of execution was issued by Judge Salvador Abad Santos, Regional Trial Court of Makati, Branch 65 in connection with Civil Case No. 88-2159 involving a claim by herein petitioners, Spouses Francisco and Bernardina Rodriguez, against respondents Calingo. Judge Abad Santos issued the writ in favor of petitioners Rodriguez

On August 21, 1992, respondents Barrameda remitted to respondents Calingo the amount of P364,992.07 to complete the payment of the agreed purchase price. Respondents Calingo acknowledged receipt of said amount and waived all their rights to the property in favor of the Barrameda spouses. They also guaranteed that the property was clear and free from any liens and encumbrances, except the real estate mortgage assumed by respondents Barrameda

On December 2, 1992, respondents Barrameda filed with the Regional Trial Court of Makati a petition for quieting of title with prayer for preliminary injunction. The petition prayed, among others, that the execution sale of the property be enjoined, the notice of levy and attachment inscribed on the certificate of title be cancelled, and that respondents Barrameda be declared the lawful and sole owners of the property in question.

The trial court ruled in favor of herein petitioners and dismissed respondents Barrameda’s petition for quieting of title. It ruled that the annotation of respondents Barrameda’s adverse claim at the back of the certificate of title was insufficient to establish their claim over the property. It said that respondents Barrameda, as buyers of the property, should have registered the title in their names. Furthermore, respondents Barrameda’s adverse claim had lost its efficacy after the lapse of thirty days in accordance with the provisions of the Land Registration Act. The trial court also found that there was collusion between respondents Barrameda and respondents Calingo to transfer the property to defraud third parties who may have a claim against the Calingos.

The Court of Appeals, however, reversed the decision of the trial court. Citing the ruling in Sajonas v. Court of Appeals, the appellate court held that respondents Barrameda’s adverse claim inscribed on the certificate of title was still effective at the time the property was levied on execution.

Petitioners essentially argue that the remedy of a petition for quieting of title was not available to respondents Barrameda as they did not have a valid title to the property in question; that the affidavit of adverse claim inscribed by respondents Barrameda at the back of the certificate of title was not sufficient to establish their claim to the property; and there was collusion between respondents Barrameda and respondents Calingo.

ISSUE: Whether or not respondent Barrameda’s adverse claim on the property should prevail over the levy on execution issued by another court in satisfaction of a judgment against respondents Calingo.

RULING

No, respondent Barrameda’s adverse claim on the property should not prevail over the levy on execution issued by another court in satisfaction of a judgment against respondents Calingo.

Respondents anchor their claim on the property on the deed of sale with assumption of mortgage executed by them and respondents Calingo on April 27, 1992. The Property Registration Decree requires that such document be registered with the Register of Deeds in order to be binding on third persons. Section 51 of PD 1529 provides:

Section. 51. Conveyance and other dealings by registered owner. An owner of registered land may convey, mortgage, lease, charge or otherwise deal with the same in accordance with existing laws. He may use such forms of deeds, mortgages, leases or other voluntary instruments as are sufficient in law. But no deed, mortgage, lease, or other voluntary instrument, except a will purporting to convey or affect registered land shall take effect as a conveyance or bind the land, but shall operate only as a contract between the parties and as evidence of authority to the Register of Deeds to make registration.

The act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned, and in all cases under this Decree, the registration shall be made in the office of the Register of Deeds for the province or city where the land lies.

It is admitted in this case that the deed of sale with assumption of mortgage was not registered, but instead, respondents Barrameda filed an affidavit of adverse claim with the Register of Deeds. The question now is whether the adverse claim is sufficient to bind third parties such as herein petitioners.

In the case at bar, the reason given for the non-registration of the deed of sale with assumption of mortgage was that the owner’s duplicate copy of the certificate of title was in the possession of HMDF. It was not shown, however, that either respondents Barrameda or respondents Calingo exerted any effort to retrieve the owner’s duplicate copy from the HMDF for the purpose of registering the deed of sale with assumption of mortgage. In fact, the parties did not even seek to obtain the consent of, much less inform, the HMDF of the sale of the property. Respondents Calingo, as party to the contract of mortgage, are charged with the knowledge of such provision and are bound to comply therewith.

Apparently, there was haste in disposing the property that respondents Calingo informed HMDF of the sale only on October 2, 1992 when they served a copy of their letter to said office regarding the transfer of the property to respondents Barrameda. There was no reason for the parties’ failure to seek the approval of the HMDF to the sale as it appears from the letter of respondent Angelica Paez-Barrameda to HMDF that they were ready to pay in full the balance of the loan plus interest. What is more suspect is that the judgment against respondents Calingo ordering them to pay the petitioners the sum of P1,159,355.90 was rendered on January 28, 1992, before the sale of the property on April 27, 1992. We also find it unsettling that respondents Barrameda, without any reservation or inquiry, readily remitted to respondents Calingo the full payment for the property on August 21, 1992 despite knowledge of the levy on execution over the property in July of the same year. Any prudent buyer of real property, before parting with his money, is expected to first ensure that the title to the property he is about to purchase is clear and free from any liabilities and that the sellers have the proper authority to deal on the property.

Again, we stress that the annotation of an adverse claim is a measure designed to protect the interest of a person over a piece of property where the registration of such interest or right is not otherwise provided for by the law on registration of real property.

The deed of sale with assumption of mortgage executed by respondents Calingo and Barrameda is a registrable instrument. In order to bind third parties, it must be registered with the Office of the Register of Deeds. It was not shown in this case that there was justifiable reason why the deed could not be registered. Hence, the remedy of adverse claim cannot substitute for registration.

IN VIEW WHEREOF, the petition is GRANTED. The assailed decision and resolution of the Court of Appeals are SET ASIDE and the decision of the Regional Trial Court, Makati in Civil Case No. 92-3524 is REINSTATED. No cost.