DELIA TATAD-CAINGLET ASSISTED BY HER HUSBAND BERT CAINGLET, SPS. LORENZO AND DARIA CAMPANILLA, SPS. FLORENCIO AND SALUD BANLUTA, SPS. ALBERTO SAJULAN AND ESTRELLITA SAJULAN, AND…

Tatad-Cainglet versus Binamira

The Case

This is a petition for review of the decision of the Court of Appeals affirming the joint judgment of the Regional Trial Court of Tagbilaran City in two consolidated civil cases. The petitioners are Delia Tatad-Cainglet, assisted by her husband Bert Cainglet, the spouses Lorenzo and Daria Campanilla, the spouses Florencio and Salud Banluta, the spouses Alberto and Estrellita Sajulan, the heirs of Felisa Partosa Dinsay, and Manuel Caragan. They sued the spouses Boler and Shirley Binamira, and in the second case also the Rizal Commercial Banking Corporation, to annul an extrajudicial settlement with deed of absolute sale and the certificates of title issued pursuant to it, to quiet title, and to recover damages. The case matters because it tests the strength of the Torrens title against earlier unregistered buyers, and it teaches when a purchaser may be considered in good faith.

Procedural History

The petitioners first filed a complaint for a land dispute before the barangay. After the parties failed to settle amicably, a certification to file action was issued. The petitioners then filed a complaint for annulment of the extrajudicial settlement with deed of absolute sale, quieting of title, damages, and preliminary injunction before the Regional Trial Court of Tagbilaran City, docketed as Civil Case Number 6403. A second complaint for annulment of the extrajudicial settlement, reconveyance, quieting of title, annulment of the real estate mortgage, and damages was filed by Josefina Jacinto and the spouses Abraham and Evelyn Chiu against the Binamira spouses and the Rizal Commercial Banking Corporation, docketed as Civil Case Number 6633. The trial court ordered a joint trial of the two cases. In a joint judgment dated 1 April 2009, the trial court dismissed both complaints and ordered the plaintiffs to pay moral damages, litigation expenses, and attorney's fees. The petitioners appealed to the Court of Appeals, which affirmed the trial court. The case then reached the Supreme Court by petition for review.

Facts

Lot Number 6745, formerly Lot Number 775-D, located in Tagbilaran City, was originally covered by Original Certificate of Title Number D-54 in the names of the heirs of Hilarion Caragan, namely Bonifacia, Vicente, and Januaria. Long before that title was issued, however, Restituto Caragan, with the consent of his wife, sold several portions of the lot to different buyers. On 23 April 1979, he and his co-heirs sold a portion to the Sajulan spouses. On 6 November 1979, he sold another portion to the Banluta spouses. On 29 February 1980, he sold a portion to Margarito Tatad, survived by his wife Delia. On 6 September 1980, he sold a portion to Felisa Partosa Dinsay. On 1 December 1981, he sold another portion to the Campanilla spouses. In the second case, portions were also sold to Josefina Maputol and to the Chiu spouses.

On 14 April 1992, the heirs of Hilarion Caragan executed an extrajudicial settlement of estate among heirs with simultaneous sale, conveying the entire Lot Number 6745 to the Binamira spouses for 45,000 pesos. Pursuant to this deed, Original Certificate of Title Number D-54 was issued, and later Transfer Certificate of Title Number T-40483 was issued in the names of the Binamira spouses. The Binamiras subdivided the lot into eleven lots and obtained separate certificates of title for each.

The petitioners claimed that the Binamira spouses knew of their prior purchases because Atty. Boler Binamira had been shown their deeds of sale before he bought the entire property. The Binamiras, for their part, relied on the Torrens title, which bore no adverse claims, notice of lis pendens, or encumbrances when it was transferred to them. The trial court ruled in favor of the Binamiras, and the Court of Appeals affirmed.

Issues

• Whether or not the respondent spouses are innocent purchasers for value.
• Whether or not the petitioners are guilty of negligence and laches.
• Whether or not the award of moral damages and attorney's fees in favor of the respondents is proper.

Applicable Provisions

Article 1544 of the New Civil Code provides:

If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property. Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property. Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith.

This provision governs the conflict between the earlier unregistered buyers and the later buyer who registered the sale first.

Section 31 of Presidential Decree Number 1529, the Property Registration Decree, provides:

A decree of registration shall bind the land, and quiet title thereto, subject only to the exceptions stated in the following section. It shall be conclusive upon and against all persons, including the National Government and all branches thereof, whether mentioned by name in the application, notice, or citation, or included in the general description "to all whom it may concern." Such decree shall not be opened by reason of the absence, infancy, or other disability of any person affected thereby, nor by any proceeding in any court for reversing judgments or decrees; subject, however, to the right of any person deprived of land or of any estate or interest therein by decree of registration obtained by fraud to file in the competent Court of First Instance a petition for review within one year after entry of the decree, provided no innocent purchaser for value has acquired an interest.

This provision makes the decree of registration binding on the whole world and protects the title of an innocent purchaser for value.

Ruling

On the first issue, the Court held that the respondent spouses are innocent purchasers for value. The Court reasoned that the Torrens title in the name of the heirs of Hilarion Caragan was issued on 25 May 1995, and that no adverse claims, notice of lis pendens, or encumbrances were registered or annotated on the title when it was transferred to the respondents. In the absence of anything to excite suspicion, a purchaser is not obliged to go beyond the certificate of title. The Court applied the rule that a land registration proceeding is in rem, so the decree of registration is binding upon and conclusive against all persons, including the government and its branches, whether or not they were personally notified. The Court also held that a Torrens title cannot be collaterally attacked, and that the proper recourse of the petitioners is against the heirs of Hilarion Caragan for selling the property to the respondents after the sales had already been made to them.

On the second issue, the Court held that the petitioners are guilty of negligence and laches, and are now estopped from resorting to these actions. The Court noted that the title registered in the name of the heirs of Hilarion Caragan had become indefeasible after one year from the issuance of the original certificate of title, and that any action against the title by third parties at that point had prescribed and could no longer be maintained.

On the third issue, the Court held that the award of moral damages and attorney's fees in favor of the respondents is proper, because the petitioners' actions were tainted with malice and evident bad faith, and because the inclusion of the bank as a co-defendant resulted in the untimely foreclosure of the collaterals, causing undue prejudice to the respondents.

Doctrine

A purchaser of registered land is not required to go beyond the Torrens title. Where the certificate of title contains no adverse claim, notice of lis pendens, or encumbrance, the purchaser is deemed to be a buyer in good faith and for value. Under Article 1544 of the New Civil Code, where the same immovable property is sold to different vendees, ownership belongs to the person who in good faith first recorded the sale in the Registry of Property. A decree of registration is binding upon and conclusive against all persons, and a Torrens title cannot be collaterally attacked. The remedy of a party deprived of land by a decree of registration obtained by fraud is a petition for review filed within one year after entry of the decree, provided no innocent purchaser for value has acquired an interest.

Disposition

The Court denied the petition and affirmed the decision of the Court of Appeals, with costs against the petitioners.

Remember This

The single line worth memorizing is that a purchaser of registered land need not go beyond the Torrens title, and that a decree of registration binds the whole world. Examiners like to use this case to test the rule on double sale under Article 1544 and the doctrine of innocent purchaser for value.