A.D. GUERRERO, PHILIPPINE NATIONAL BANK AND SHERIFF OF QUEZON CITY, PETITIONERS, VS. MERCEDES P. JUNTILLA AND COURT OF APPEALS, RESPONDENTS.

This petition for certiorari seeks to annul and set aside the
decision of the respondent Court of Appeals which upheld the denial by the
trial court of the petitioners’ motion to dismiss on the grounds that the said
trial court has jurisdiction over the case below, that the private respondent
has a cause
of action against the petitioners and that the same has not prescribed and is
not barred by res judicata.

The facts are stated in
the questioned decision of the appellate court, to wit:

“On February 6, 1957,
a decision was rendered by the Court of First Instance of Manila in Civil Case
No. 30159, entitled ‘Philippine National Bank v. Mindanao Deep Development and Alipio Juntilla’, ordering the
defendants therein to pay the plaintiff the sum of P12,125.10,
as of December 16, 1955,
plus interest (Annex 1 of Annex B, Petition).

“On May 11, 1957,
the court issued an order authorizing the issuance of a writ of execution (Annex 2 of Annex B, Petition).

“On May 14, 1957,
a notice of levy of attachment was annotated at the back of Transfer Certificate
of Title No. 30589 covering the property located at No.
111 West Riverside St., San Francisco del Monte, Quezon City, and registered in the
name of Alipio M. Juntilla,
married to Mercy P. Juntilla (Annex 3 of Annex B,
Petition).

“On April 21, 1958,
the property was sold by the Sheriff of Quezon City
at public auction to the Philippine National Bank for the amount of P7,000.00 and the corresponding certificate of sale was issued
to said buyer on February 23, 1959 (Annex 4 of Annex
B, Petition).

“On January 16, 1965, the court issued an order directing the
Register of Deeds of Quezon City to cancel TCT No.
30589 and to issue, in lieu thereof, a
new title in the name of the
Philippine National Bank, and directing the Sheriff of Quezon
City to deliver possession of the property covered by said title to the
Philippine National Bank (Annex 5 of Annex B, Petition).

“On April 10, 1965,
the court, acting upon a motion
for reconsideration filed by the
defendants, issued an order reiterating its order of January 16,
1965 (Annex 6 of Annex B, Petition). 
A motion for reconsideration of said order was denied in an order issued
on May 8, 1965
(Annex 7 of Annex B, Petition).  The
second motion for reconsideration was
also denied in an order issued on May 22, 1965 (Annex 8
of Annex B, Petition).

“On May 14, 1968, the court, after disallowing the appeal
intended to be taken by the defendants from the above-mentioned orders (Annexes
9 to 12 of Annex B, Petition), issued an order authorizing the issuance of an
alias writ of execution commanding the Sheriff of Quezon
City to eject from the property covered by TCT No. 97906 in the name of the
Philippine National Bank not only the defendant Alipio
Juntilla but all persons claiming under him (Annex 13
of Annex B, Petition).

“In his return dated June 5, 1968, the Sheriff of Quezon City certified, among other things, ‘that on May 23,
1968, copy of the alias writ was served upon the defendants – MINDANAO DEEP
DEVELOPMENT COMPANY INCORPORATED and ALIPIO JUNTILLA, both at No. 111 West Riverside Street,
Quezon City, by leaving said copies in the hands of
Gilda Cortes, living in the same house with sufficient discretion to receive
such kind of process and who acknowledged receipt thereof; that on the same
date, said defendant was given ten (10) days within which to vacate the
premises in question voluntarily’; that on June 3, 1968, he revisited the
subject matter of the writ and found out that said defendants were still
occupying the premises in question and still refused to vacate the same; and on
June 4, 1968, he ejected the said defendants and delivered possession of TCT
No. 97906 of the Register of Deeds of Quezon City, to
the Philippine National Bank – thru the authorized representative, Mr. Florencio R. Tandoc (Annex 17 of
Annex B, Petition).

“Thereafter, the Philippine National Bank transferred the
physical possession of the property to A.D. Guerrero who bought the same on January 8, 1968, under the terms of
the Deed of Promise to Sell executed by and between
them on February 23, 1968.

“On June 6, 1968,
the herein private respondent Mercedes P. Juntilla,
wife of Alipino Juntilla
(one of the defendants in Civil Case No. 30159 of the Court of First Instance
of Manila), filed a complaint
before the Court of First Instance of Rizal, Quezon City Branch, where it was docketed as Civil Case No.
12160 (Annex A, Petition), seeking the nullification of the sale of the
property at No. 111 West Riverside St., San Francisco del Monte, Quezon City, and the issuance of a writ of preliminary injunction directed against the Philippine
National Bank and all persons claiming under it and the Sheriff of Quezon City to restore her in possession of the property
and to refrain from further acts of dispossession against her.  She alleged that the obligations incurred by
the defendants in favor of the plaintiff, as found in Civil Case No. 30159 of the Court of First Instance
of Manila, were corporate and not conjugal in nature so that her undivided one
half (1/2) of the property in question cannot be made to answer therefore.  She also alleged that she had been in
possession of the property for sometime before June 4, 1968, in her own right by virtue of a judgment
rendered by the Juvenile Court of Manila in Civil Case No. B-00503 for the
dissolution of the conjugal partnership recognizing her sole ownership over
said property and a lease
agreement entered into in open court, in actual possession over the said party
under her legal right and by her instructions.

“On June 11, 1968,
petitioner A.D. Guerrero filed a motion to intervene.  He and the petitioner, Philippine National
Bank, filed an opposition to the
issuance of a writ of preliminary mandatory injunction (Annex B, Petition).

“On July 1, 1968,
the respondent Judge issued an order granting private respondent’s prayer for
preliminary mandatory injunction upon the filing of a bond of P5,000.00.  At the same
time, petitioner Guerrero’s intervention was also granted (Annex D, Petition).

“On July 10, 1968, petitioners A.D. Guerrero and the Sheriff
of Quezon City filed a motion for reconsideration of
the order of July 1, 1968, granting the injunction (Annex E, Petition). 
At the hearing of said motion on July 13, 1968, the respondent Judge declined to reconsider
and, instead, directed petitioner A.D. Guerrero to file a counter-bond in the sum of P10,000.00.  Said bond was filed on the same day (p. 7,
par. 8, Petition).

On July 15, 1968,
petitioner A.D. Guerrero filed a motion adopting the joint motion to dismiss
filed on July 1, 1968 by
petitioners Philippine National Bank and Sheriff
of Quezon City (Annex F, Petition).

“On August 7, 1968,
as directed by the court, the Philippine National Bank posted a counter-bond in the sum of P20,000.00
thereby lifting the writ of preliminary injunction issued earlier (p. 8, par. 10, Petition).

“On February 22, 1969,
the respondent Judge issued an order denying the petitioners’ joint motion to
dismiss (Annex H, Petition).

“On May 14, 1969,
the petitioners filed a joint motion for reconsideration of the order of February 22, 1969
(Annex I, Petition), but the same was denied by the respondent Judge in an
order dated October 22, 1969
(Annex J, Petition).  (Rollo, pp. 21-26)

On appeal, the appellate
court dismissed the petitioners’ petition on the grounds that the trial court
has jurisdiction over the subject matter of the case below considering that
what is being sought therein specifically is not the nullification of the
decision in Civil Case No. 30159, but the nullification of the auction sale of
the property in dispute which the private respondent claims to be conjugal in
nature and, as such, could not
be held liable for a corporate obligation without her knowledge and consent;
that therefore, there is also no res judicata; that the said private respondent had a valid
cause of action and that the respondent’s action has not prescribed since the
latter filed the action only on June 16, 1968 and even if the counting of the
four-year prescriptive period be reckoned from the cancellation of her title,
still said respondent’s right to recover possession has not yet prescribed.

In this present case, the petitioners principally contend that
the private respondent’s action below had already prescribed because the
four-year period should be reckoned from the registration of the petitioner
bank’s certificate of sale in 1959. 
Considering that the same covered the whole property, the respondent,
therefore, had constructive notice of such sale.  Furthermore, they argue that the private
respondent was also placed on notice when the levy and attachment was annotated
at the back of the title on May 14, 1957, and, as a matter of fact, the
respondent even signed the agreement to postpone the sale, she, being the treasurer of Mindanao Deep
Development Co., but that the respondent failed to assert whatever right she
had on the property and neither did she file any third-party claim or an action
to recover her conjugal share.  In
addition, the petitioners state that the amended decision of the then Juvenile
and Domestic Relations Court (JDRC) awarding the property to the respondent was
only rendered in 1968, long
after the petitioner bank had registered its interest in 1959 and obtained
title in 1965.  The petitioners,
therefore, maintain that their motion to dismiss filed below should have been
granted on the ground that the respondent’s
action had already prescribed.

We agree.

The records will bear out the fact that when the property in
dispute was levied upon, the private respondent
knew about it because she was the treasurer of the Mindanao Deep Development
Co., and as such, she even signed the agreement to postpone the sale.  If she had any interest in the property, she
should have asserted the same during that time; and since the petitioner Bank was able to obtain a certificate of sale and registered it in 1959, the
private respondent is deemed to have constructive notice of the same as early
as 1959.

Thus, in the case of Heirs
of Maria Marasigan v. Intermediate
Appellate Court, (152 SCRA 253, 259-260 [1987]), we ruled:

“There is a clear
showing that although the late Maria Marasigan
acquired the property in question from the Bazars
pursuant to a deed of absolute sale on December 18, 1974 or a little over four months before the filing of
Civil Case No. 97479, the transaction became effective as against third persons
only on July 5, 1977 when it was registered with the Registry of Deeds of
Manila.  It is the act of registration
which creates constructive notice to the whole world.  Section 51 of Act 496, as amended by Section
52 of the Property Registration Decree (P.D. 1529) provides:

“Sec. 52.  Constructive notice upon
registration. – Every conveyance x
x x affecting
registered land shall, if registered, filed or entered in the office of the
Register of Deeds for the province or city where the land to which it relates
lies, be constructive notice to all
persons from the time of such registering, filing or entering.”

The private respondent,
therefore, should have opposed the petitioner Bank’s registration of
certificate of sale of the whole property if indeed she claims that
one-half of the said property belongs to her.

Furthermore, the respondent, was unable to prove fraud or any
irregularity in the issuance of the title.  Hence, she did not make any move at that
time.  It, thus, follows that she cannot
also avail of the action for reconveyance which must
be filed within four (4) years from the discovery of fraud.  The only fact that respondent asserts is that the property is conjugal and what was
levied upon was only her husband’s share and not hers, and, therefore, the sale
was void in so far as her share was concerned which is, one half of the
property.  But aside from doing nothing
within the prescriptive period stated above, the private respondent did
not present any evidence that the property was conjugal.  She was able to present only the decision of the
JDRC in 1968, three years after the Bank had obtained title to the
property.  Thus, since the respondent
failed to present any evidence during the levy and sale of the property that
the same was acquired during her marriage with her husband, the
judgment-debtor, the presumption that the levied property was conjugal cannot
apply since the title of the property was in the name of her husband and only
described him as “married to” the respondent.  In Moises Jocson v. Hon. Court of Appeals,
et al., (G.R. No. 55322, February 16, 1989), we ruled:

“It is thus clear that before Moises
Jocson may validly invoke the presumption under
Article 160 he must first present proof that the disputed properties were
acquired during the marriage of Emilio Jocson and Alejandra Poblete.  The certificate of title,
however, upon which petitioner rests his
claim is insufficient.  The fact that the properties were registered
in the name of ‘Emilio Jocson, married to Alejandra Poblete’ is no proof that the properties were acquired
during the spouses’ coverture.  Acquisition of title and registration thereof
are two different acts.  It is well
settled that registration does not confer title but merely confirms one already
existing (See Torela v. Torela,
supra.).  It may be that the
properties under dispute were acquired by Emilio Jocson
when he was still a bachelor but were registered only after his marriage to Alejandra Poblete, which explains
why he was described in the certificates of title as married to the latter.

“Contrary to petitioner’s position, the certificates of title
show, on their face, that the properties were exclusively Emilio Jocson’s, the registered owner.  This is so because the words ‘married to’ preceding ‘Alejandra Poblete‘ are merely descriptive of the civil status of
Emilio Jocson (Litam v.
Rivera, 100 Phil. 354; Stuart v. Yatco, No. L-16467, April 27, 1962, 4 SCRA 1143; Magallon
v. Montejo, G.R. No. 73733, December 16, 1986, 146 SCRA 282).  In
other words, the import from the certificates of title is that Emilio Jocson is the owner of the properties, the same having been
registered in his name alone, and that he is married to Alejandra
Poblete.

“We are not unmindful that in numerous cases We consistently held that registration of the property in
the name of only one spouse does not negate the possibility of it being
conjugal (See Bucoy v. Paulino,
No. L-25775, April 26, 1968, 23 SCRA 248).  But this ruling is not inconsistent with the
above pronouncement for in those cases there was proof that the properties,
though registered in the name of only one spouse, were indeed conjugal
properties, or that they have been acquired during the marriage of the spouses,
and therefore, presumed conjugal, without the adverse party having presented
proof to rebut the presumption (See Mendoza v. Reyes, No. L-31618,
August 17,
1983, 124 SCRA 154).”

As stated earlier, the
private respondent should have presented proof that the property was conjugal or at least should be presumed to be so.

Lastly, at the time of
the filing of the action below by the respondent, the title of the property was
already transferred to a third person, petitioner Guerrero, who relied solely
on the clean title of the
Bank, and thus, may be said to be an innocent purchaser for value even assuming
that there was a defect in the title of
the property he acquired.  The private
respondent, therefore, is not only barred by prescription but also by the
acquisition of such third party as the
latter had every right to rely merely on the correctness of the title.  In the case of Bonifacio Lopez, et al. v.
Hon. Court of Appeals, et al., (G.R. No.
L-49739, January 30, 1989), we said:

“Under the established principles of land registration law,
the presumption is that the transferee of registered land is not aware of any defect in the title of the property he purchased.  (See Tajonera
v. Court of Appeals, 103 SCRA 467 [1981]).  Moreover, the person dealing with registered
land may safely rely on the correctness of its certificate of title and the law
will in no way oblige him to go behind
the certificate to determine the condition of the property.  (Director of Lands v. Abache, et al., 73 Phil. 606, 1942).

x x x                             x x x                             x x x

“If we are to accept the respondents’ contentions, a buyer of registered land would have
to look beyond the title for any unregistered co-owner, any earlier buyer who
failed to register his purchase, all possible actual
owners who used the registered buyer as a
dummy, and so many other defects or vices of the title, ad infinitum.  The ruling of the respondent court is contrary to the reasons behind the indefeasibility
of a Torrens Title.”

We, therefore, hold that the respondent Court of Appeals erred in
sustaining the trial court’s denial of the motion to dismiss by herein petitioners for the reasons already stated
above.

WHEREFORE, the petition is hereby GRANTED and the decision and resolution of the Court
of Appeals dated July 23, 1970 and January 27, 1971, respectively, are ANNULLED
and SET ASIDE.  A new one is entered
ordering the DISMISSAL of Civil Case No. Q-12160 before the then Court of First Instance of Rizal, Quezon City Branch.

SO ORDERED.

Feliciano, Bidin, and Cortes, JJ., concur.

Fernan, C.J., (Chairman), no part.