FIRST DIVISION.
.
SPOUSES EDUARDO
ARENAS
DOMINGOAND
JOSEFINA CHAVEZ
DOMINGO,
Petitioners,
G.R.
No.
147468
April 9, 2003
-versus-
LILIA
MONTINOLA
ROCES,
CESAR ROBERTO M. ROCES,ANA INES MAGDALENA
ROCES TOLENTINO,LUIS MIGUEL M.
ROCES,
JOSE ANTONIO M. ROCESAND MARIA VIDA
PRESENTACION
ROCES,
Respondents. |
D E C I S I O N
YNARES-SANTIAGO,
J.:
This is a petition for
review on certiorari of the
decision of the Court of Appeals dated
November
22, 2000 in CA-G.R. CV No. 62473,[1]
as well as the resolution dated March 15, 2001, denying petitioners’
Motion
for Reconsideration.[2]chanrobles virtuallaw libraryred
The facts are not in
dispute.cralaw:red
The spouses Cesar and
Lilia Roces were the owners of two contiguous parcels of land located
on
Arayat Street, Mandaluyong, covered by Transfer Certificates of Title
Nos.
57217 and 57218.[3]
On November 13, 1962, the Government Service Insurance System (GSIS)
caused
the annotation of an affidavit of adverse claim on the titles alleging
that the spouses have mortgaged the same to it.[4]chanrobles virtuallaw libraryred
Subsequently, GSIS wrote
a letter to Cesar Roces demanding the surrender of the owner’s
duplicates
of titles. When Roces failed to comply, GSIS filed a petition
with
the then Court of First Instance of Rizal, docketed as Civil Case No.
R-1359,
praying that the owner’s duplicates in Roces’ possession be declared
null
and void and that the Register of Deeds of Pasig be directed to issue
new
owner’s duplicates to GSIS.[5]
On September 5, 1977, the Court of First Instance issued an order
granting
the petition.[6]
The order became final and executory, and TCT Nos. 57217 (11663) and
57218
(11664) were issued in the name of GSIS.[7]chanrobles virtuallaw libraryred
Cesar Roces died intestate
on January 26, 1980.[8]
He was survived by his widow, Lilia Roces, and their children: Cesar
Roberto
Roces, Ana Ines Magdalena Roces Tolentino, Luis Miguel M. Roces, Jose
Antonio
Roces and Maria Vida Presentacion Roces, all of whom are the
respondents
in this case.
chanrobles virtuallaw libraryred
On July 22, 1992,
Reynaldo
L. Montinola, a nephew of Lilia Roces, executed an affidavit of
self-adjudication
over the Arayat properties. He alleged that the properties were
owned
by the spouses Cesar and Lilia Roces, both of whom died intestate, on
September
13, 1987 and June 27, 1989, respectively; that the properties were
acquired
during the existence of their marriage; that the spouses left no heirs
except the brother of Lilia Roces, who was his father; that neither of
the spouses left any will nor any debts; and that he was the sole heir
of the Roces spouses.[9]chanrobles virtuallaw libraryred
On January 5, 1993,
Montinola filed a petition against GSIS with the Regional Trial Court
of
Pasig, docketed as Civil Case No. R-4743, praying for the cancellation
of TCT Nos. 57217 (11663) and 57218 (11664).[10]
During the trial, GSIS failed to produce any document evidencing the
alleged
real estate mortgage by Roces of the properties. Hence, the trial
court rendered judgment in favor of Montinola, declaring the owner’s
duplicates
of TCT No. 57217 (11663) and 57218 (11664) as null and void and
ordering
the Registry of Deeds of Mandaluyong to issue new owner’s duplicates of
the said titles.[11]chanrobles virtuallaw libraryred
GSIS did not appeal
the aforesaid judgment; thus, the same became final and
executory.
Accordingly, the Registry of Deeds of Mandaluyong issued TCT No. 7299
in
the name of Montinola in lieu of TCT No. 57218 (11664).[12]chanrobles virtuallaw libraryred
Sometime in July 1993,
Montinola executed a deed of absolute sale of the property covered by
TCT
No. 7299 in favor of petitioner spouses Eduardo and Josefina Domingo.[13]
Thereafter, TCT No. 7673 was issued in the names of petitioners.chanrobles virtuallaw libraryred
Both TCT Nos. 7299 and
7673 contained the following annotation:
Subject to the provision
of Section 4, Rule 74 of the Rules of Court with respect to the
inheritance
left by the deceased SPS. CESAR ROCES & LILIA MONTINOLA.[14]chanrobles virtuallaw libraryred
When respondents learned
of the sale of the property to petitioners, they filed a complaint
against
Montinola and petitioners with the Regional Trial Court of Pasig.
They argued that the affidavit of self-adjudication was fraudulent
because
Montinola was not an heir of the Roces spouses and it was not true that
Lilia Roces was dead. Therefore, the affidavit of
self-adjudication,
as well as the deed of absolute sale, TCT No. 7299, and TCT No. 7673,
all
covering the subject property, were null and void.[15]chanrobles virtuallaw libraryred
In their answer, petitioners
alleged that they were buyers in good faith and that their action was
barred
by estoppel and laches.[16]
chanrobles virtuallaw libraryred
After trial, the court
a quo rendered judgment in favor of respondents, the dispositive
portion
of which reads:
chanrobles virtuallaw libraryred
WHEREFORE, judgment
is hereby rendered in favor of the plaintiffs against the defendant
Reynaldo
L. Montinola who is hereby ordered to pay to the plaintiffs the
following
sums:chanrobles virtuallaw libraryred
a)
P1,200,000.00 as actual damages, with interest thereon at the legal
rate
of six (6) per centum per annum until fully paid;
b)
Moral damages in the sum of P100,000.00;
c)
Exemplary damages in the sum of P50,000.00;
d)
Attorney’s fees in the reasonable amount of P30,000.00; and costs.cralaw:red
The counterclaim of
defendant spouses Eduardo and Josefina Domingo is dismissed and the
complaint
against the Register of Deeds is likewise dismissed without costs.chanrobles virtuallaw libraryred
SO ORDERED.[17]
Respondents appealed
to the Court of Appeals, reiterating the reliefs prayed for in their
complaint
below.[18]
On November 22, 2000, the Court of Appeals rendered the assailed
Decision,
the decretal portion of which reads:chanrobles virtuallaw libraryred
IN THE LIGHT OF ALL
THE FOREGOING, the appeal is GRANTED. The Decision of the Court a
quo appealed from is SET ASIDE AND REVERSED. Another Decision is
hereby rendered in favor of the Appellants as follows:chanrobles virtuallaw libraryred
1.
The "Affidavit of Self-Adjudication" (Exhibit "G"), Transfer
Certificate
of Title No. 7299 (Exhibits "N" and "22", Domingo), the "Deed of
Absolute
Sale" (Exhibit "20") and Transfer Certificate of Title No. 7673
(Exhibit
"21") are hereby declared null and void.chanrobles virtuallaw libraryred
2.
Transfer Certificate of Title No. 57218 (11664), under the names of
Cesar
P. Roces and Lilia Montinola, is hereby reinstated.cralaw:red
3.
The Appellees are hereby ordered to pay, jointly and severally, to the
Appellants the amount of P50,000.00 as and by way of attorney’s fees.cralaw:red
4.
Appellants’ claims for actual, moral and exemplary damages are
dismissed.cralaw:red
5.
The Appellee Reynaldo Montinola is hereby ordered to pay to the
Appellees
Spouses Domingo the amount of P1,800,000.00, with interest thereon at
the
rate of 12% per annum from the date of the Decision of this Court until
the said amount is paid in full by the said Appellee, the other
cross-claims
of the Appellees, inter se, are dismissed.chanrobles virtuallaw libraryred
SO ORDERED.[19]
Petitioners filed a
Motion for Reconsideration,[20]
which was denied in a Resolution dated March 15, 2000.[21]
Hence this petition, raising the following errors:
1.
THE COURT OF APPEALS
ERRED IN HOLDING THAT THE ANNOTATION IN THE TITLE REGARDING SEC. 4,
RULE
74 IS AN ENCUMBRANCE WHICH DISQUALIFIES PETITIONERS FROM BEING INNOCENT
PURCHASERS FOR VALUE;chanrobles virtuallaw libraryred
2.
THE COURT OF APPEALS
ERRED IN NOT HOLDING THAT IT WAS RESPONDENTS WHO MADE IT POSSIBLE FOR
REYNALDO
MONTINOLA TO PERPETUATE THE FRAUD AND, THEREFORE, THEY SHOULD BE THE
ONE
TO BEAR RESULTING DAMAGE;chanrobles virtuallaw libraryred
3.
THE COURT OF APPEALS
ERRED IN NOT HOLDING THAT RESPONDENTS HAVE NO EXISTING INTEREST IN THE
PROPERTY SINCE IT WAS PREVIOUSLY MORTGAGED AND FORECLOSED BY THE
G.S.I.S.;
ANDchanrobles virtuallaw libraryred
4.
THE COURT OF APPEALS
ERRED IN HOLDING PETITIONERS LIABLE TO RESPONDENTS FOR ATTORNEY’S FEES,
THEREBY ADDING MORE INJURY TO THEIR
MISFORTUNE.[22]chanrobles virtuallaw libraryred
The petition lacks merit.
chanrobles virtuallaw libraryred
It is true that one
who deals with property registered under the Torrens system need not go
beyond the same, but only has to rely on the title. He is charged
with notice only of such burdens and claims as are annotated on the
title.
However, this principle does not apply when the party has actual
knowledge
of facts and circumstances that would impel a reasonably cautious man
to
make such inquiry or when the purchaser has knowledge of a defect or
the
lack of title in his vendor or of sufficient facts to induce a
reasonably
prudent man to inquire into the status of the title of the property in
litigation. One who falls within the exception can neither be
denominated
an innocent purchaser for value nor a purchaser in good faith.[23]chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
As stated above, the
titles, namely, TCT Nos. 7299 and 7673, contained annotations which
made
reference to the provisions of Rule 74, Section 4 of the Rules of
Court,
viz:chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
SEC. 4. Liability
of distributees and estate. - If it shall appear at any
time
within two (2) years after the settlement and distribution of an estate
in accordance with the provisions of either of the first two sections
of
this rule, that an heir or other person has been unduly deprived of his
lawful participation in the estate, such heir or such other person may
compel the settlement of the estate in the courts in the manner
hereinafter
provided for the purpose of satisfying such lawful participation. And
if
within the same time of two (2) years, it shall appear that there are
debts
outstanding against the estate which have not been paid, or that an
heir
or other person has been unduly deprived of his lawful participation
payable
in money, the court having jurisdiction of the estate may, by order for
that purpose, after hearing, settle the amount of such debts or lawful
participation and order how much and in what manner each distributee
shall
contribute in the payment thereof, and may issue execution, if
circumstances
require, against the bond provided in the preceding section or against
the real estate belonging to the deceased, or both. Such bond and
such real estate shall remain charged with a liability to creditors,
heirs,
or other persons for the full period of two (2) years after such
distribution,
notwithstanding any transfers of real estate that may have been made.[24]chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
The foregoing rule
clearly covers transfers of real property to any person, as long as the
deprived heir or creditor vindicates his rights within two years from
the
date of the settlement and distribution of estate. Contrary to
petitioners’
contention, the effects of this provision are not limited to the heirs
or original distributees of the estate properties, but shall affect any
transferee of the properties.chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
In David v. Malay,[25]
it was held that the buyer of real property the title of which contain
an annotation pursuant to Rule 74, Section 4 of the Rules of Court
cannot
be considered innocent purchasers for value. In the same vein,
the
annotation at the back of TCT No. 7299 in this case referring to Rule
74,
Section 4 of the Rules of Court was sufficient notice to petitioners of
the limitation on Montinola’s right to dispose of the property.
The
presence of an irregularity which excites or arouses suspicion should
prompt
the vendee to look beyond the certificate and investigate the title of
the vendor appearing on the face thereof.[26]
Purchasers of registered land are bound by the annotations found at the
back of the certificate of title.[27]chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
Hence, petitioners
cannot be considered buyers in good faith and cannot now avoid the
consequences
brought about by the application of Rule 74, Section 4 of the Rules of
Court.chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
Petitioner’s claim
that respondents were guilty of laches and estoppel is likewise
untenable.
Laches is the failure or neglect, for an unreasonable and unexplained
length
of time, to do that which, by exercising due diligence, could or should
have been done earlier. The essential elements of laches are: (1)
conduct on the part of defendant or one under whom he claims, giving
rise
to the situation complained of; (2) delay in asserting complainant’s
right
after he had knowledge of the defendant’s conduct and after he has an
opportunity
to sue; (3) lack of knowledge or notice on the part of the defendant
that
the complainant would assert the right on which he bases his suit; and
(4) injury or prejudice to the defendant in the event relief is
accorded
to the complainant.[28]
chanrobles virtuallaw libraryred
On the other hand,
estoppel by laches arises from the negligence or omission to assert a
right
within a reasonable time, warranting a presumption that the party
entitled
to assert it either has abandoned it or declined to assert it.[29]chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
In the case at bar,
only four months elapsed from the time respondents discovered
Montinola’s
fraudulent acts, sometime in May 1993, to the time they filed their
complaint
on September 6, 1993. This relatively short span of time can
hardly
be called unreasonable, especially considering that respondents used
this
period of time to investigate the transfers of the property.[30]
Delay is an indispensable requisite for a finding of estoppel by
laches,
but to be barred from bringing suit on grounds of estoppel and laches,
the delay must be lengthy and unreasonable.[31]
No unreasonable delay can be attributed to respondents in this case.
chanrobles virtuallaw libraryred
WHEREFORE, in view
of the foregoing, the instant petition for review is DENIED. The
decision and resolution of the Court of Appeals in CA-G.R. No. CV No.
62473
are AFFIRMED in toto.chanrobles virtuallaw libraryred
SO ORDERED.chanrobles virtuallaw libraryred
Davide, Jr., C.J.,
(Chairman), Vitug, Carpio, and Azcuna, JJ., concur.chanrobles virtuallaw libraryred
____________________________
Endnotes:
[1]
CA Rollo, pp. 228-229.chanrobles virtuallaw libraryred
[2]
Id., p. 254.chanrobles virtuallaw libraryred
[3]
Exhibits "7-M" and "7-N."chanrobles virtuallaw libraryred
[4]
Exhibit "7-0."chanrobles virtuallaw libraryred
[5]
Exhibit "7-C."chanrobles virtuallaw libraryred
[6]
Exhibit "7-Y."chanrobles virtuallaw libraryred
[7]
Exhibit "10" (Domingo) and "11" (Domingo).
[8]
Exhibit "B."chanrobles virtuallaw libraryred
[9]
Exhibit "G."chanrobles virtuallaw libraryred
[10]
Exhibit "17."chanrobles virtuallaw libraryred
[11]
Exhibit "18."chanrobles virtuallaw libraryred
[12]
Exhibit "N," "22" (Domingo).chanrobles virtuallaw libraryred
[13]
Exhibit "21" (Domingo).chanrobles virtuallaw libraryred
[14]
Exhibits "N-4" & "O-4".chanrobles virtuallaw libraryred
[15]
CA Rollo, pp. 211-212.chanrobles virtuallaw libraryred
[16]
Id., p. 212.chanrobles virtuallaw libraryred
[17]
Records, pp. 545-546; penned by Judge Ramon R. Buenaventura.
[18]
Id., p. 247.chanrobles virtuallaw libraryred
[19]
CA Rollo, pp. 228-229 (emphasis in the original). Penned by
Associate
Justice Romeo J. Callejo, Sr. (now a member of this Court); concurred
in
by Associate Justices Mercedes Gozo-Dadole and Juan Q. Enriquez, Jr.chanrobles virtuallaw libraryred
[20]
Id., p. 230.chanrobles virtuallaw libraryred
[21]
Id., p. 254.chanrobles virtuallaw libraryred
[22]
Rollo, p. 20.chanrobles virtuallaw libraryred
[23]
Sandoval v. Court of Appeals, 329 Phil. 48 (1996); citations omitted.
[24]
Rules of Court, Rule 74, Sec. 4 (italics ours).chanrobles virtuallaw libraryred
[25]
G.R. No. 132644, 19 November 1999.chanrobles virtuallaw libraryred
[26]
Id., citing Pino v. Court of Appeals, G.R. No. 94114, 19 June 1991, 198
SCRA 434 and Centeno v. CA, G.R. No. 40105, 11 November 1985, 139 SCRA
545, citing Anderson v. Garcia, 64 Phil. 506 (1937) and Fule v. Legare,
117 Phil. 367 (1963).chanrobles virtuallaw libraryred
[27]
Vazquez v. Court of Appeals, G.R. No. 83759, 12 July 1991, 199 SCRA
102,
citing Bel Air Village Association, Inc. v. Dionisio, G.R. No. 38354,
30
June 1989, 174 SCRA 589, citing Tanchoco v. Aquino, G.R. No. 30670, 15
September 1987, 154 SCRA 1 and Constantino v. Espiritu, 150-A Phil. 953
(1972).chanrobles virtuallaw libraryred
[28]
Philippine Bank of Communications v. Court of Appeals, G.R. No. 109803,
20 April 1998, 289 SCRA 178.chanrobles virtuallaw libraryred
[29]
Philippine National Construction Corporation v. National Labor
Relations
Commission, 366 Phil. 678 (1999), citing Tijam v. Sibonghanoy, 131
Phil.
556 (1968) and Medija v. Patcho, 210 Phil. 509 (1983).chanrobles virtuallaw libraryred
[30]
Rollo, p. 85.chanrobles virtuallaw libraryred
[31]
Pio Barreto Realty Development Corporation v. Court of Appeals, G.R.
No.
132362, 28 June 2001, 360 SCRA 127, citing R. Agpalo, Trademark Law
&
Practice in the Philippines, (1990), 32, citing La Insular V. Jao Oge,
47 Phil. 75 (1924); La Insular v. Yu So, 45 Phil. 398 (1923).chanrobles virtuallaw libraryred |