HERMINIA L. MENDOZA, IN HER CAPACITY AS OIC OF THE REGISTER OF DEEDS OF LUCENA CITY, PETITIONER, VS. SPOUSES ARMANDO AND ANGELA GARANA AND FAR EAST BANK & TRUST CO., INC., RESPO…

Mendoza versus Garana

The Case

This is a petition for review on certiorari brought by Herminia Mendoza, in her capacity as Officer in Charge of the Register of Deeds of Lucena City, against the spouses Armando and Angela Garana and the Far East Bank and Trust Company, now the Bank of the Philippine Islands. The Register of Deeds asks the Supreme Court to reverse the Court of Appeals, which had annulled a trial court order directing the annotation of a notice of lis pendens on the spouses' Torrens title. The case matters because it fixes a rule every reviewee must carry: for involuntary instruments such as a notice of lis pendens, entry in the primary entry book or day book of the Register of Deeds is itself a valid registration and constructive notice to the whole world, even without annotation on the certificate of title.

Procedural History

The Register of Deeds of Lucena City filed a petition with the Regional Trial Court of Lucena City, Branch 58, asking that it be allowed to annotate the notice of lis pendens of the heirs of Manuel Uy Ek Liong on the new title issued to the spouses Garana. The spouses Garana and the bank opposed, claiming they were innocent purchasers for value and that the annotation was too late. The trial court ruled for the Register of Deeds and ordered the annotation.

The spouses Garana and the bank appealed to the Court of Appeals. The Court of Appeals granted the appeal, holding that persons dealing with Torrens land may rely on the face of the certificate of title, that the spouses Garana were innocent purchasers for value, and that entry in the primary entry book did not operate as notice to third persons. The Register of Deeds then came to the Supreme Court by petition for review on certiorari.

Facts

On October 6, 1993, the heirs of Manuel Uy Ek Liong, through Belen Uy, sought to register a notice of lis pendens over several titles, including TCT No. T-72029 registered in the name of Leovina Jalbuena. The notice was to bind the properties subject of a pending action for specific performance. On the same date, after fees were paid, the notice was entered as Entry No. 56142 in the primary entry book of the Register of Deeds. The registrar wrote the owners to surrender their owner's duplicate titles for annotation, but Jalbuena did not surrender hers, and the original of her title was missing from the vault. The notice was annotated on all the affected titles except TCT No. T-72029.

Unknown to the parties, the original of TCT No. T-72029 was in the custody of a clerk at the Register of Deeds who processed another transaction and forgot to annotate the notice of lis pendens. Earlier, on August 16, 1993, Belen Uy had caused the annotation of an adverse claim on the titles; that adverse claim was cancelled on October 4, 1994, through an affidavit executed by one Bienaflor C. Umali. The spouses Garana, who had inquired about the land and knew of the adverse claim, bought it from Jalbuena on November 7, 1994, shortly after the cancellation. A new title, TCT No. T-77739, was issued in their names, and because the notice of lis pendens did not appear on the cancelled title, it was not carried over. The spouses later mortgaged the property to the bank.

When the heirs learned of the sale and the clean new title, they asked the Register of Deeds to annotate the notice. To remedy its oversight, the Register of Deeds filed the petition that led to this case.

Issues

• Whether or not the entry of a notice of lis pendens in the primary entry book or day book of the Register of Deeds serves as notice to third persons of the claim against the registered land, even without annotation on the certificate of title.
• Whether or not the spouses Garana and the bank were innocent purchasers for value who may rely on the clean face of the Torrens title.

Applicable Provisions

Section 52 of Presidential Decree No. 1529, the Property Registration Decree, provides:

Every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or entry 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.

This is the core provision: it makes entry in the registry constructive notice from the moment of entry, which is exactly what the heirs of Manuel Uy did.

Section 53 of the same Decree provides:

No voluntary instrument shall be registered by the Register of Deeds, unless the owner's duplicate certificate is presented with such instrument, except in cases expressly provided for in this Decree or upon order of the court, for cause shown.

This shows that the owner's duplicate is required only for voluntary instruments, not for involuntary ones like a notice of lis pendens.

Section 56 of the same Decree provides:

Each Register of Deeds shall keep a primary entry book in which, upon payment of the entry fee, he shall enter, in the order of their reception, all instruments including copies of writs and processes filed with him relating to registered land. He shall, as a preliminary process in registration, note in such book the date, hour and minute of reception of all instruments, in the order in which they were received. They shall be regarded as registered from the time so noted, and the memorandum of each instrument, when made on the certificate of title to which it refers, shall bear the same date.

This is the textual basis for the rule that instruments are deemed registered from the time of entry in the primary entry book.

Ruling

On the first issue, the Court granted the petition and held that entry in the primary entry book is a valid registration. Tracing the rule to Villasor versus Camon and Levin versus Bass under the old Land Registration Act, and carrying it into the Property Registration Decree, the Court distinguished voluntary from involuntary instruments. For voluntary instruments, the owner's duplicate must be presented; for involuntary instruments such as an attachment, a lien, or a notice of lis pendens, the law does not require presentation or annotation, and mere recording in the primary entry book binds the land and affects third persons. The Court quoted its earlier ruling in Caviles versus Bautista:

Petitioners paid the corresponding fees for the annotation of the notice of attachment and they had every right to presume that the register of deeds would inscribe said notice on the original title covering the subject property. The register of deeds had the duty to inscribe the notice on the original title. This was not a duty of petitioners. This Court has held that a party which delivers its notice of attachment to the register of deeds and pays the corresponding fees therefor has a right to presume that the official would perform his duty properly.

On the second issue, the Court held that the spouses Garana and the bank were not innocent purchasers for value. The spouses knew of Belen Uy's adverse claim, and the cancellation of that claim by a different person, Bienaflor C. Umali, should have aroused suspicion and prompted inquiry beyond the certificate of title. The bank, as a banking institution, was expected to exercise a higher degree of diligence and should have noticed the irregular cancellation. The Court therefore refused to let them hide behind the indefeasibility of the Torrens title.

Doctrine

For involuntary instruments, entry in the primary entry book or day book of the Register of Deeds is deemed registration and constitutes constructive notice to all persons from the date of entry, under Section 56 in relation to Section 52 of the Property Registration Decree. The duty to annotate on the certificate of title rests on the Register of Deeds, not on the registrant, who may presume that the official will perform his duty. A buyer who ignores circumstances that excite suspicion, such as the cancellation of an adverse claim by a person other than the claimant, cannot claim the status of an innocent purchaser for value.

Disposition

The Supreme Court granted the petition, reversed the Court of Appeals, and ordered the Register of Deeds of Lucena City to annotate the notice of lis pendens of the heirs of Manuel Uy Ek Liong on TCT No. T-77739, with costs against the respondents.

Remember This

Memorize this line: for involuntary instruments, entry in the primary entry book is registration and notice to the whole world. Examiners use this case to test the voluntary versus involuntary registration distinction and the limits of the innocent purchaser for value doctrine.