VALLEY GOLF CLUB, INC., PETITIONER, VS. HON. EMILIO SALAS, PRESIDING JUDGE, BRANCH I, CFI OF RIZAL, MAGDALENA MASANGKAY, REMEDIOS MASANGKAY, GLORIA MASANGKAY, NATIVIDAD MASANGKA…

A direct appeal on a question of law, from the Decision of the
Court of First Instance of Rizal, Branch I,
dismissing petitioner’s Complaint in Civil Case No. 18823 for quieting of title
over a parcel of land located in Antipolo, Rizal, and declaring private respondents Masangkays to be the true and lawful owners of the property.

The records disclose that Ambrosio Masangkay was the original owner of Lot No. 1353 of the
cadastral survey of Antipolo, Rizal,
the land in dispute, with an area of 27,955 square meters, more or less,
formerly covered by OCT No. 1131 of the
Registry of Deeds of Rizal, in his name. Upon his
death on November 14, 1938, the land was inherited by his daughters Magdalena, Remedios, Gloria,
Esperanza, and Natividad (SISTERS, for brevity).

The critical facts, as found by the Trial Court, follow:

1. On January 28,
1955, the Masangkay sisters executed a “Deed of
Extrajudicial Partition with Sale” over the property in favor of private
respondent Manuel VILLAMOR, married to Modesta
Garcia, in consideration of the amount of P2,500.00 to them “in hand
paid” and to their “absolute satisfaction”. The SISTERS
delivered to VILLAMOR the owner’s duplicate of OCT No. 1131.

2. The day after,
or on January 29, 1955, the
VILLAMORS executed a “Deed of Absolute Sale” covering the same parcel
of land in favor of private respondent Romeo F. ROMERO, married to Lourdes Rodriguez,
in consideration of the amount of P3,500.00, also acknowledged to have been
received by the VILLAMORS. The VILLAMORS turned over to the ROMEROS the owner’s
duplicate of OCT No. 1131 and the “Deed of Extrajudi­cial Partition with Sale”
executed by the SISTERS in favor of VILLAMOR.

It appears that ROMERO
was a realtor while VILLAMOR was an agent of ROMERO.^[1]

3.  On March 7, 1955, the ROMEROS presented to
the Re­gister of Deeds of the Province of Rizal the
Deed of Extraju­dicial Partition with Sale, the Deed of Absolute Sale in their
favor, and the owner’s duplicate copy of OCT No. 1131. OCT No. 1131 was
thereupon cancelled and in lieu thereof TCT No. 38134 was issued in the name of
the SISTERS, which in turn, was cancelled by TCT No. 38135 in the name of the
VILLAMORS, and which was also cancelled by TCT No. 38153 in the name of the
ROMEROS.

4.   (a) Sometime in October, 1960, ROMERO
negotiated with petitioner Valley
Golf Club (CLUB, for short) for the sale of the property, and on October 18, 1960, ROMERO received
from the CLUB the sum of P15,000.00 as advance payment.

(b)
On October 21, 1960, the
ROMEROS executed a Deed of Absolute Sale in favor of the CLUB in consideration
of the total amount of P69,887.50.

(c)
On October 24, 1960, the
CLUB hired a private land surveyor to relocate the property and to investigate the title. He reported
that TCT No. 38153 in the name of the ROMEROS was free from any encumbrance.

5.   On October 25, 1960, or approximately five
years after the execution of
their “Deed of Extrajudicial Partition with Sale”, Remedios Masangkay presented to
the Register of Deeds an “Affidavit of Adverse Claim” declaring that
the sale she and her sisters had executed
in favor of VILLAMOR was without consideration whatsoever; did not
express the true and real intention of the parties; and that the property had
been transferred in the name of
the ROMEROS in trust for her and her SISTERS.

6.  On october 26, 1960, the CLUB issued a check in
favor of ROMERO in the amount of P54,887.50 as full payment of the purchase
price.

7. On October 27, 1960, the SISTERS
instituted before the Court of First Instance of Rizal,
Branch VI, Civil Case No. 6365 against the VILLAMORS and the ROMEROS praying
that they be declared the absolute owners of subject property; that the sale in
favor of VILLAMOR dated January 28, 1955, and the sale by VILLAMOR in favor of
the ROMEROS on January 29, 1955 be declared null and void; and that Transfer
Certifi­cates of Title Nos. 38135 in the name of the VILLAMORS, and 38153 in
the name of the ROMEROS be cancelled.

8.  On the same date, October 27, 1960, at 7:45 A.M., counsel for the SISTERS caused to be
annotated on TCT No. 38153 in the name of the ROMEROS a Notice of Lis Pendens.

9.  In the afternoon of October 27, 1960, the
Corporate Secretary of the CLUB presented for registration with the Registry of
Deeds the Deed of Sale, dated October 21, 1960, in its favor, together with TCT
No. 38153 in the name of the ROMEROS, but upon discovering the adverse claim
and the notice of lis pendens
annotated thereon, withdrew the documents and returned them to the General
Manager.

10.   On September 10, 1962, the Court of First
Instance rendered its Decision in Civil Case No. 6365 declaring as null and
void, for being simulated and without consideration, the sale executed by the
SISTERS in favor of VILLAMOR as well as the sale by the latter to ROMERO, and
required the ROMEROS to execute a deed of reconveyance
of the property to the SIS­TERS, and the Register of Deeds to cancel TCT No.
38153 in the name of the ROMEROS and to issue
a new title in the name of the SISTERS.

The ROMEROS appealed to the Court of Appeals, which was docketed
as CA-G.R. No. 32119-R.

11.   During the pendency
of the appeal, the CLUB presented to the Register of Deeds of Rizal, on December 4, 1963, the Deed of Sale in its favor
and the owner’s duplicate copy of TCT No.
38153 in the name of the ROMEROS as a consequence of which said title
was cancelled and TCT No. 118406 was issued in lieu thereof in the CLUB’s name. Said title carried over the annotations of the
adverse claim and the notice of lis pendens.

12.   On May 7, 1970,
the then Court of Appeals affirmed the Decision
in Civil Case No. 6365, and on August
27, 1970, this Court denied the Petition for the review of that
judgment.

13.   (a) On January 22, 1974, the CLUB filed Civil Case No. 18823 against the SISTERS, the VILLAMORS and the ROMEROS before
the Court of First Instance of Rizal, Branch I, for
quieting of title, praying that the Register of Deeds of Rizal
be ordered to cancel the annotations on its TCT No. 118406.

The SISTERS claimed in their Answer that the case was barred by
the final judgment rendered in Civil
Case No. 6365 and that the CLUB had acted in bad faith with knowledge of
the flaws in the VILLAMOR and ROMERO titles.

The ROMEROS, in turn, contended that they are not proper
parties-in-interest and that the action against them had long prescribed.

The VILLAMORS were
declared in default.

(b) On October 23, 1978,
the Trial Court rendered judgment in Civil Case No. 18823 holding that the CLUB’s Com­plaint was barred by the final decision in Civil
Case No. 6365 and declaring the SISTERS the true and lawful owners of subject
property.

The records disclose that
taxes on the property were paid by ROMERO up to 1960 and 1961, and by the CLUB for the years 1962 to 1967.

After several extensions
granted, the CLUB presented an instant petition on July 8,
1980 assailing the
aforesaid Decision. We gave due course, but for the CLUB’s failure to file a Brief,
we dismissed the Petition. The dismissal was reconsidered, however, upon the CLUB’s motion.
The CLUB presented its Brief, but private respondents
failed to do so.

Petitioner has submitted:

“I

“The lower Court
erred in not holding that the sale over Lot No. 1353 made by the spouses Romeo
F. Romero and Lourdes G. Rodriguez is a valid sale which binds the Masangkay sis­ters because the Romero spouses mere­ly acted
as their agents conformably with the decision of the Rizal
CFI in Civil Case No. 6365 and which is now the ‘law of the case’.

“II

“The lower Court
erred in holding that the sale over Lot No. 1353 made by the spouses Romeo F.
Romero and Lourdes G. Rodriguez is their personal act and not as agents of the Masangkay sisters and in not holding that the sale took
place on Oct. 18, 1960 when earnest money was paid by petitioner and therefore
the sale was entered into prior to the annotation of the affidavit of adverse
claim and of the notice of lis pendens.

“III

“The lower Court
erred in not applying the principle of equity that when one of two innocent
parties must suffer damage, the one whose negli­gence enabled a third party to
per­petrate the wrong shall suffer the damage.

“IV.

“The lower Court
erred in not order­ing the spouses Romeo F. Romero and Lourdes G. Rodriguez to
refund to petitioner the sum of P69,887.50 received by them as consideration
for Lot No. 1353.”

The first two errors need no longer be discussed. As held by the Trial Court, the CLUB’s complaint is barred by the final decision in Civil Case No. 6365 declaring the SISTERS the true and lawful owners
of subject property. That Decision binds the land because of the annotations of
the adverse claim and of the lis pendens. The
CLUB can no longer contend that the first and second
sales were valid after they had been nullified in a judgment that had become
final and executory.

The principle of equity
that “when one of two (2) inno­cent persons must suffer by the wrongful
act of a third person, the loss must be borne by the one whose negligence was
the proximate cause of the loss or who put it into the power of the third
person to perpetrate the wrong”, can neither tilt the balance
in the CLUB’s favor. The advance payment of
P15,000.00 by the CLUB on October 18, 1960 to ROMERO, and the additional
payment by the CLUB of P54,887.50 as full pay­ment of the purchase price on
October 26, 1960, also to ROMERO, cannot be held to be the dates of sale such
as to precede the annotation of the adverse claim by the SISTERS on October 25,
1960 and the lis pendens
on October 27, 1960. It is basic that
it is the act of registration of the sale that is the operative act to convey
and affect the land.^[2] That regis­tration was not effected by the
CLUB until December 4, 1963, or three (3) years after it had made full
payment to ROMERO. It attempted to present its documents to the Register of Deeds on October 27, 1960 but it withdrew the same that very after­noon
after discovering the encumbrances on the title. And even if the CLUB had
succeeded in so registering, it would still have been posterior to
the annotations of the
encumbrances.

The “Yu vs. Hon. Reynaldo P. Honrado“^[3] and “PNB vs. Court of Appeals”^[4] cases,
cited by the CLUB, which applied the principle of equity, are not invocable in the case at bar because neither one of those
cases referred to the sale of real property.

As matters stand, therefore, in view of the prior anno­tations of
the adverse claim and lis pendens,
the CLUB must be legally held to have
been aware of the flaws in the title. By virtue of the lis pendens,
its acquisition of the property was subject to whatever judgment was to be rendered in Civil Case No. 6365. The
CLUB was aware of the pendency of that case even in
the Trial Court but it did nothing to protect its interests so that the case eventually attained finality. What is more, the CLUB knew of the
encumbrances on October 27, 1960 but it took no steps to stop payment of the
check it had issued to ROMERO just the day before on October 26, 1960; nor did it proceed against the SISTERS and ROMERO until fourteen (14) years later when it filed this suit for
quieting of title. The CLUB’s cause of action lies,
not against the SISTERS, to whom the property had been adjudged by final judg­ment
in Civil Case No. 6365, but against ROMERO who was found to have had no right
to dispose of the land. The judgment in Civil Case No. 6365 in the SISTERS’
favor had long become final and executory.

Accordingly, the ROMEROS must be held liable to the CLUB for the
amount of P69,887.50, which they had received as consideration for Lot No.
1353, which they did not own and could not
dispose of. Their contention that they are not parties-in-interest in
this instant case and that the cause of action against them has long prescribed
is without merit. As held by the Trial Court, they were the parties who had executed the sale to
the CLUB, and the present action is not one for annulment of contract but for
quieting of title. Besides, the CLUB’s action
for-reimbursement of the price paid accrued only after the failure of the CLUB’s action to quiet title. Also, the principle against
unjust enrichment applies in their case.

WHEREFORE, the judgment dismissing the complaint is hereby
affirmed. The spouses Romeo F. Romero and Lourdes G. Rodriguez shall, within thirty
(30) days from notice, refund to petitioner Valley Golf Club, the amount of
P69,887.50 re­ceived by them as consideration for Lot No. 1353, with interest
at the legal rate from January 22, 1974, the date of the filing by petitioner
of the Complaint in Civil Case No. 18823, until fully paid.

Costs against petitioner.

SO ORDERED.

Teehankee, (Chairman), Plana, Relova, and Gutierrez, Jr., JJ., concur.

^[1]
Decision, Civil Case No. 6365, p. 1.

^[2]
Sec. 50, Land Registration Act.

^[3]
99 SCRA 273, 279

^[4]
25 SCRA 693