Martinez v. Garcia20180922-5466-17hqpjw
Martinez v. Garcia20180922-5466-17hqpjw
DECISION
PERALTA , J : p
Before us is a special civil action for certiorari under Rule 65 of the Rules of Court
to annul and set aside the Decision 1 dated August 12, 2004 and the Resolution 2 dated
November 18, 2004 of the Court of Appeals (CA) in CA-G.R. CV No. 61591, which
reversed and set aside the Decision 3 dated April 15, 1998 and Order 4 dated August
11, 1998 of the Regional Trial Court (RTC) of Pasig, Branch 267, in Special Civil Action
No. 574.
The factual antecedents are as follows:
Respondent Edilberto Brua was the registered owner of a parcel of land located
in Mandaluyong, Rizal, covered by Transfer Certi cate of Title (TCT) No. 346026 of the
Registry of Deeds of Rizal, which is the subject matter of this case. The property was
rst mortgaged to the Government Service Insurance System (GSIS), and such
mortgage was annotated at the back of TCT No. 346026 as Entry No. 91370, inscribed
on June 5, 1974. 5 On February 5, 1980, respondent Brua obtained a loan from his
brother-in-law, respondent Ernesto Garcia, in the amount of One Hundred Fifty
Thousand Pesos (P150,000.00) and, to secure the payment of said loan, respondent
Brua mortgaged the subject property to respondent Garcia, as evidenced by a Deed of
Real Estate Mortgage 6 executed in respondent Garcia's favor. Since the title to the
subject property was in the possession of the GSIS and respondent Garcia could not
register the Deed of Real Estate Mortgage, he then executed an A davit of Adverse
Claim 7 and registered it with the Registry of Deeds of Rizal on June 23, 1980 as Entry
No. 49853/T-346026, 8 which remained uncanceled up to this time. EAIaHD
On February 9, 1994, respondents Garcia and Brua led with the RTC of Pasig,
Branch 267, an Action to Quiet Title, initially against petitioner due to the
encumbrances/liens annotated on respondent Garcia's new title. They contended that
these encumbrances/liens were registered subsequent to the annotation of respondent
Garcia's adverse claim made in 1980, and prayed that these be canceled. Subsequently,
the complaint was amended to include Pilipinas Bank as an additional defendant.
Petitioner and Pilipinas Bank filed their respective Answers thereto.
Trial thereafter ensued.
On April 15, 1998, the RTC rendered its decision dismissing respondent Garcia's
action for quieting of title, the dispositive portion of which reads:
WHEREFORE, PREMISES CONSIDERED, the instant complaint is hereby
dismissed for lack of merit and judgment is hereby rendered in favor of
defendants Flor Martinez and Pilipinas Bank as against plaintiffs Ernesto Garcia
and Edilberto Brua who are further directed to pay both defendants attorney's fees
in the amount of P50,000.00 each.
In so ruling, the RTC found that the adverse claim which respondent Garcia
caused to be annotated on the previous title of the subject property, i.e., TCT No.
346026, on June 23, 1980 was predicated on his interest as a mortgagee of a loan, of
P150,000.00, which he extended to respondent Brua; that respondent Garcia's adverse
interest was merely that of a second mortgagee, as he was not yet the purchaser of the
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subject property as of said date; that when the judicial liens, i.e., Notice of Levy on
Attachment and/or Levy and Notice of Levy on Execution, were caused to be registered
by petitioner on respondent Brua's title on January 8, 1981 and July 8, 1998,
respectively, by virtue of petitioner being adjudged judgment creditor by Branch 60 of
RTC Makati, respondent Garcia's claim became inferior to that of petitioner. The RTC
said that respondent Garcia's inaction to preserve his adverse claim as a second
mortgagee, which was inscribed on June 23, 1980, and his sudden decision to redeem
and purchase the subject property from the GSIS in October 1991 — when petitioner's
Notice of Levy on Attachment and/or Levy, Notice of Levy on Execution and Certi cate
of Sale were already inscribed at the back of respondent Brua's title — showed bad
faith on the part of respondent Garcia; that respondent Brua did not even testify or
participate in the case, except when he was impleaded as a plaintiff in the case. The
RTC did not give credit to respondent Garcia's claim that he and respondent Brua had
no prior knowledge of the occurrence of a public auction and the consequent
annotation of the certi cate of sale, and found respondent Garcia to be a buyer in bad
faith of the subject property. EaHIDC
The RTC also ruled that the Notice of Levy on Execution, which was annotated on
December 8, 1981 as Entry No. 72854 on respondent Brua's title arising from Civil Case
No. 7262 entitled "Pilipinas Bank v. Edilberto Brua," was a valid levy on the subject
property in favor of Pilipinas Bank. The levy could not be canceled, as this would impair
the interest of the bank which had been decided upon by a co-equal court. The RTC
found that the sale between respondents appeared to be tainted with bad faith, which
constrained petitioner and Pilipinas Bank from engaging the services of lawyers; thus,
the award of attorney's fees in the latter's favor.
Respondents' motion for reconsideration was denied by the RTC on August 11,
1998.
Respondents led their appeal with the CA. However, respondent Brua failed to
le his appellant's brief; thus, his appeal was considered abandoned and dismissed.
Petitioner and Pilipinas Bank filed their respective appellees' briefs.
On August 12, 2004, the CA reversed and set aside the RTC decision, the
dispositive portion of which reads:
WHEREFORE, the appealed Decision dated April 15, 1998 is REVERSED
and SET ASIDE. Granting the instant appeal, Entry No. 72854 (Notice of Levy on
Execution in favor of Pilipinas Bank), Entry No. 2881 (Notice of Levy on Execution
in Favor of Flor Martinez) and Entry No. 3706 (Certi cate of Sale in favor of Flor
Martinez) inscribed in TCT No. 346026 and carried over to TCT No. 5204, are
hereby CANCELLED. 1 7
The CA said that a subsequent sale of property covered by a certi cate of title
cannot prevail over an adverse claim, duly sworn to and annotated on the certi cate of
title previous to the sale; that while one who buys a property from the registered owner
need not have to look behind the title, he is nevertheless bound by the liens and
encumbrances annotated thereon; and, thus, one who buys without checking the
vendor's title takes all the risks and losses consequent to such failure. The CA found
that in order to protect his interest, respondent Garcia executed an A davit of Adverse
Claim on June 23, 1980, annotated it on the title of the subject property under Entry No.
49853 and it has remained uncanceled up to this time; that such adverse claim was
registered prior to the inscription of the Certi cate of Sale in favor of petitioner under
Entry No. 3706 and Pilipinas Bank's Notice of Levy on Execution under Entry No. 72854;
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that the prior registration of respondent Garcia's adverse claim effectively gave
petitioner and Pilipinas Bank notice of the former's right to the subject property and,
thus, petitioner was deemed to have knowledge of respondent Garcia's claim and could
not be considered as a buyer in good faith at the time she purchased the subject
property in the public auction; that petitioner could not claim that she was a purchaser
in good faith, since respondent Garcia's adverse claim was entered on June 23, 1980,
eight years ahead of petitioner's Certi cate of Sale on September 2, 1988; that when
the Notice of Levy on Execution in favor of Pilipinas Bank was annotated on respondent
Brua's title, the sheriff who caused the annotation was charged with knowledge that the
property sought to be levied upon on execution was encumbered by an interest, which
was the same if not better than that of the registered owner thereof; and that such
notice of levy could not prevail over the existing adverse claim of respondent Garcia
inscribed on the title as can be deduced from Section 12, Rule 39 of the Rules of Court.
HEcTAI
The CA found that the RTC erred in concluding that respondent Garcia was a
purchaser in bad faith, since his adverse claim was entered in respondent Brua's title in
1980, and respondent Garcia could not have foretold at the time he caused such
annotation of adverse claim that petitioner would purchase the same property eight
years thereafter; and that while good faith is presumed, bad faith must be established
by competent proof by the party alleging the same; and, thus, in the absence of
respondent Garcia's bad faith, he is deemed to be a purchaser in good faith, and his
interest in the property must not be disturbed.
The CA also found that a Notice of Adverse Claim remains valid even after the
lapse of 30 days, as provided for in Sec. 70 of Presidential Decree No. (PD) 1529
pursuant to our ruling in Sajonas v. CA ; that since no petition was led by petitioner for
the cancellation of respondent Garcia's Notice of Adverse Claim, the adverse claim
subsisted and his rights over the subject property must consequently be upheld.
Petitioner's motion for reconsideration was denied by the CA in a Resolution
dated November 18, 2004.
Petitioner is now before us via a petition for certiorari under Rule 65, alleging
grave abuse of discretion amounting to lack or excess of jurisdiction committed by the
CA in issuing its assailed decision and resolution.
Petitioner contends that respondent Garcia's adverse claim is nothing but a
notice that he has an interest adverse to that of respondent Brua to the extent of
P150,000.00, which was the amount of the loan secured by a Deed of Real Estate
Mortgage executed by respondent Brua in favor of respondent Garcia; that the adverse
claim cannot be said to be superior to a nal sale conducted by the sheriff by authority
of the court pursuant to a judgment that has attained nality; that Sajonas v. CA, on
which the CA anchored its decision, differs from this case, since the adverse claim
made in the title by therein petitioner Sajonas was by virtue of a contract to sell; that
unlike in this case, respondent Garcia caused the annotation of his adverse claim as a
mortgagee of respondent Brua in the amount of P150,000.00 in 1980; and respondent
Garcia's payment of the GSIS loan in 1991, upon the request of respondent Brua, was
presumably for the reason that respondent Brua could no longer discharge the GSIS
obligation; and to avoid the foreclosure of the property by the GSIS, respondent Brua
asked Garcia to redeem it; that respondent Garcia's adverse claim in 1980 was not as a
vendee of the property like in Sajonas, but merely as a mortgagee. acCITS
In this case, petitioner received a copy of the CA Resolution denying her motion
for reconsideration on November 24, 2004; and, thus, under Rule 45, she has 15 days
from receipt of such resolution, or until December 9, 2004, to le a petition for review.
However, petitioner did not le a petition for review; instead, she led a petition for
certiorari under Rule 65 on January 24, 2005. 2 0 Hence, the CA decision and resolution
have already attained finality, and petitioner has lost her right to appeal.DHIaTS
Petitioner contends that the adverse claim of respondent Garcia inscribed on the
title of the subject property is but a notice that the latter has an interest adverse to
respondent Brua's title, to the extent of P150,000.00 secured by a real estate
mortgage, and such adverse claim cannot be considered superior to that of a nal sale
conducted by the sheriff by virtue of a court judgment that has attained finality.
Sec. 12, Rule 39 of the Rules of Court provides:
SECTION 12. Effect of levy on execution as to third persons. — The
levy on execution shall create a lien in favor of the judgment obligee over the
right, title and interest of the judgment obligor in such property at the time of the
levy, subject to liens and encumbrances then existing.
Clearly, the levy does not make the judgment creditor the owner of the property
levied upon. He merely obtains a lien. 3 2 Such levy on execution is subject and
subordinate to all valid claims and liens existing against the property at the time the
execution lien attached, such as real estate mortgages. 3 3
Respondent Garcia's adverse claim, which refers to the deed of mortgage
executed by respondent Brua in his favor, was annotated on respondent Brua's title
registered with the Registry of Deeds of Rizal on June 23, 1980 as Entry No. 49853. The
adverse claim was already existing when the Notice of Levy on Execution, as well as the
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Certi cate of Sale in favor of petitioner, was inscribed on July 11, 1988 and September
2, 1988, respectively; and, hence, the adverse claim is su cient to constitute
constructive notice to petitioner regarding the subject property. When petitioner
registered her Notice of Levy on Execution on the title of the subject property, she was
charged with the knowledge that the subject property sought to be levied upon on
execution was encumbered by an interest the same as or better than that of the
registered owner thereof. 3 4 Thus, no grave abuse of discretion was committed by the
CA when it held that the notice of levy and subsequent sale of the subject property
could not prevail over respondent Garcia's existing adverse claim inscribed on
respondent Brua's certificate of title.
The annotation of an adverse claim is a measure designed to protect the interest
of a person over a piece of real property, where the registration of such interest or right
is not otherwise provided for by the Land Registration Act or Act No. 496 (now P.D. No.
1529 or the Property Registration Decree), and serves a warning to third parties dealing
with said property that someone is claiming an interest on the same or a better right
than that of the registered owner thereof. 3 5AaHDSI
WHEREFORE , the petition is DISMISSED . The Decision dated August 12, 2004
and Resolution dated November 18, 2004 of the Court of Appeals in CA-G.R. CV No.
61591 are AFFIRMED .
SO ORDERED.
Corona, Carpio, * Velasco, Jr., and Nachura, JJ., concur.
Footnotes
1. Penned by Associate Justice Vicente S.E. Veloso, with Justices Roberto A. Barrios and
Amelita G. Tolentino, concurring; rollo, pp. 22-35.
2. Id. at 37-38.
3. Id. at 39-46; per Judge Florito S. Macalino.
4. Id. at 47-48.
5. Exhibit "B-1," records, Garcia, p. 213.
6. Exhibit "C," id. at 215.
22. International Exchange Bank v. Court of Appeals, G.R. No. 165403, February 27, 2006,
483 SCRA 373, 381.
23. Abedes v. Court of Appeals, G.R. No. 174373, October 15, 2007, 536 SCRA 268, 282.
24. Heirs of Lourdes Potenciano Padilla v. Court of Appeals, G.R. No. 147205, March 10,
2004, 425 SCRA 236, 242; Jan Dec Construction v. Court of Appeals, G.R. No. 146818,
February 6, 2006, 481 SCRA 556, 564.
25. Id.
26. Duremdes v. Duremdes, G.R. No. 138256, November 12, 2003, 415 SCRA 684.
27. International Exchange Bank v. Court of Appeals, supra.
28. Id.
29. Jan Dec Construction v. Court of Appeals, supra.
30. Buntag v. Paña, G.R. No. 145564, March 24, 2006, 485 SCRA 302, 306.
31. Id.
32. Paras, RULES OF COURT, Third Edition, Vol. 1, 804 (1990).
33. Francisco, REVISED RULES OF COURT IN THE PHILIPPINES, Vol. II, 711 (1966).
34. Sajonas v. Court of Appeals, G.R. No. 102377, July 5, 1996, 258 SCRA 79, 98: Diaz-
Duarte v. Ong, G.R. No. 130352, November 3, 1998, 298 SCRA 389.
35. Sajonas v. Court of Appeals, id. at 89.
36. Diaz-Duarte v. Ong, supra at 397.
37. TSN, October 15, 1996, p. 8.
38. Supra note 34.