Agricultural & Home Extension Development Group v. Court of Appeals

G.R. No. 92310, 3 September 1992, 213 SCRA 563

FACTS:

The spouses Andres Diaz and Josefa Mia sold to Gundran, a 19-hectare parcel of land in Las Piñas, Rizal. The owner’s duplicate copy of the title was turned over to Gundran. However, he did not register the Deed of Absolute Sale because he said he was advised in the Office of the Register of Deeds of Pasig of the existence of notices of lis pendens on the title. On November 1972, Gundran and the petitioner, Agricultural and Home Development Group, entered into a Joint Venture Agreement for the improvement and subdivision of the land. This agreement was also not annotated on the title.

On August 30, 1976, the spouses again entered into another contract of sale of the same property with private Respondent, Cabautan and by virtue of an order of the RTC of Rizal, a new owner’s copy of the certificate of title was issued to the Diaz spouses, who had alleged the loss of their copy. On that same date, the notices of lis pendens annotated were canceled and the Deed of Sale in favor of private respondent Cabautan was recorded. Gundran instituted an action for reconveyance against Cabautan and Josefa Mia seeking, among others, the cancellation of title and the issuance of a new certificate of title in his name. The petitioner, represented by Sanchez, Sr., filed a complaint in intervention with substantially the same allegations and prayers as that in Gundran’s complaint, dismissed for lack of merit.

ISSUE:

Is Article 1544 of the Civil Code applicable?

RULING:

Yes. It is not disputed that the first sale to Gundran was not registered while the second sale to Cabautan was registered. Following Article 1544 of the Civil Code, the courts were justified in according preferential rights to the private respondent, who had registered the sale in his favor, as against the petitioner’s co-venturer whose right to the same property had not been recorded.

Well-settled is the rule that when the property sold is registered under the Torrens system, registration is the operative act to convey or affect the land insofar as third persons are concerned. Thus, a person dealing with registered land is only charged with notice of the burdens on the property which are noted on the register or certificate of title.

While it is true that notices of lis pendens in favor of other persons were earlier inscribed on the title, these did not have the effect of establishing a lien or encumbrance on the property affected. Their only purpose was to give notice to third persons and to the whole world that any interest they might acquire in the property pending litigation would be subject to the result of the suit.

The language of Article 1544 is clear and unequivocal. In light of its mandate and of the facts established in this case, we hold that ownership must be recognized in the private respondent, who bought the property in good faith and, as an innocent purchaser for value, duly and promptly registered the sale in his favor.

PURCHASER IN GOOD FAITH; DEFINED. — A purchaser in good faith is defined as “one who buys the property of another without notice that some other person has a right to or interest in such property and pays a full and fair price for the same at the time of such purchase or before he has notice of the claim or interest of some other person in the property.”

*Case digest by Nikki P. Ebillo, JD-4, Andres Bonifacio Law School, SY 2019-2020

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