Acacia Investment Corp. v. Spouses Go

THIRD DIVISION

[G.R. No. 206662. September 6, 2017.]

ACACIA INVESTMENT CORPORATION, petitioner,vs. SPOUSES BENJAMIN T. GO AND AMELITA PADUA-GO, respondents.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, Third Division, issued a Resolution dated September 6, 2017, which reads as follows:

"G.R. No. 206662 (ACACIA INVESTMENT CORPORATION, Petitioner, v. SPOUSES BENJAMIN T. GO and AMELITA PADUA-GO, Respondents.)— This appeal assails the decision promulgated on November 23, 2012 in CA-G.R. CV No. 94041, 1 whereby the Court of Appeals (CA) reversed the granting of the petitioner's demurrer to evidence filed in Civil Case No. B-5654 by the Regional Trial Court (RTC), Branch 25, in Biñan, Laguna, and accordingly reinstated the respondents' complaint therein and remanded the case for further proceedings as to the petitioner.

Also assailed is the resolution promulgated on March 26, 2013, 2 whereby the CA denied the petitioner's motion for reconsideration.

Antecedents

This case stemmed from the amended complaint for annulment of sale, consolidation of ownership, cancellation of the Kasunduan sa Pinagsanib na Pangangalakal and damages filed by respondents Spouses Benjamin T. Go and Amelita Padua-Go (Spouses Go) against petitioner Acacia Investment Corporation (Acacia), Spouses Ponciano and Annie Miranda (Spouses Miranda), and the Register of Deeds of Calamba, Laguna.

The amended complaint, docketed as Civil Case No. B-5654 of the RTC, alleged that the Spouses Miranda entered into a Deed of Sale with Right of Repurchase on December 10, 1999 with the Spouses Go covering their 50,000-square meter parcel of land located in Barangay Halang, General Luna, Biñan, Laguna for the consideration of P6,000,000.00, subject to the right of the Spouses Miranda to repurchase the property within 90 days from December 10, 1999, or until March 9, 2000; that the parties stipulated that because the title was still to be issued, the Spouses Miranda assured that they would deliver the title to the Spouses Go immediately upon its release; that Original Certificate of Title (OCT) SP-1 was ultimately released but the Spouses Miranda did not deliver the same to the Spouses Go; that because of the unjustified refusal of the Spouses Miranda to deliver OCT SP-1 despite repeated demands, the Spouses Go were impelled to register the Deed of Sale with Right of Repurchase in the Registry of Deeds; that to further secure their right to the property, the Spouses Go executed an affidavit of adverse claim to be annotated on OCT SP-1; that the Register of Deeds of Calamba did not annotate the affidavit of adverse claim but instead sought the opinion of the Land Registration Authority (LRA); that on October 17, 2000, the LRA ruled in favor of the Spouses Go and ordered the annotation of the affidavit of adverse claim; and that the Register of Deeds still did not comply with the LRA's ruling. cDHAES

Meanwhile, the Spouses Miranda's right to repurchase expired on March 9, 2000 without them having exercised such right.

To their surprise, the Spouses Go discovered an annotation on OCT SP-1 to the effect that the Spouses Miranda and Acacia had entered into a Kasunduan sa Pinagsanib na Pangangalakal (Kasunduan) on June 8, 1998 and a Memorandum of Agreement (MOA).

To protect their right, the Spouses Go commenced Civil Case No. 5654. They also caused the annotation of the notice of lis pendens on OCT SP-1. However, despite notification from the Register of Deeds, the Spouses Miranda did not surrender their owner's copy of the title.

On January 30, 2001, and during the pendency of Civil Case No. 5654 in the RTC, Acacia bought the property from the Spouses Miranda. On the same date, Acacia caused the annotation of the sale on OCT SP-1. On January 31, 2001, OCT SP-1 was cancelled, and in its place Transfer Certificate of Title (TCT) No. 473056 was issued in the name of Acacia free from all liens and encumbrances. Interestingly, the Spouses Go's notice of lis pendens annotated on OCT SP-1 was not carried over to Acacia's TCT No. 473056.

Acacia countered in Civil Case No. 5654 that the Spouses Go had no cause of action because it had the prior right to the property by virtue of the Kasunduan and the MOA having been executed prior to the purchase by the Spouses Go — that is, the Kasunduan was executed on June 8, 1998 while the Deed of Sale with Right of Repurchase in favor of Spouses Go was entered into only on December 10, 1999; that the subsequent sale to the Spouses Go was null and void because the Spouses Miranda were no longer the owners of the property at the time of the sale, and thus had no more authority to transfer or convey the property; and that the Spouses Go acted in bad faith by entering into the sale with the Spouses Miranda despite knowing that the latter had already entered into the Kasunduan and MOA with Acacia.

After the Spouses Go rested their case, Acacia filed the demurrer to evidence insisting that the Spouses Go had not proved their cause of action. 3

Ruling of the RTC

On April 11, 2009, the RTC granted the demurrer to evidence and dismissed the case insofar as Acacia was concerned. 4 It opined that the evidence adduced by the Spouses Go was insufficient to prove their cause of action; and that based on the evidence presented, Acacia had been the first to register its right over the property, and thus had the superior right by virtue of its right having been registered first. It disposed:

WHEREFORE, premises considered, for failure of the plaintiffs to prove their cause/s of action by preponderance of evidence, the DEMURRER TO EVIDENCE filed by defendant Acacia Investment Corporation is GRANTED and the counter-claim of the latter are ordered DISMISSED. On the other hand, based on the evidence adduced by the plaintiffs which is still unrebutted, this Court finds no cogent reason to grant the Demurrer in favor of co-defendants namely: Sps. Ponciano and Annie Miranda and Vicente. 5

The Spouses Go appealed the order of April 11, 2009. 6

It is noted that on December 13, 2010, the RTC rendered judgment declaring Acacia not liable to the Spouses Go, and absolving the Register of Deeds of Calamba, Laguna from damages. It ruled, however, that the Spouses Miranda were liable to the Spouses Go, for even though the Deed of Sale with Right of Repurchase had been executed prior to the sale between the Spouses Miranda and Acacia, the sale between the Spouses Go and the Spouses Miranda had not been registered or annotated on the title; and that the Spouses Miranda should pay to the Spouses Go the amount of P6,000,000.00, representing the amount the former had received from the latter, with interest from the time of demand until fully paid; P200,000.00 as moral damages; and attorney's fees of P200,000.00 plus P2,000.00 per appearance in court. 7

Ruling of the CA

On appeal, the Spouses Go assigned the following reversible errors to the RTC, namely:

I.

ARTICLE 1544 WAS GROSSLY MISAPPLIED BY THE TRIAL COURT. THE DEED OF SALE WITH RIGHT TO REPURCHASE EXECUTED IN FAVOR OF PLAINTIFFS-APPELLANTS IS MORE SUPERIOR THAN THE DEED OF SALE IN FAVOR OF DEFENDANT-APPELLEE ACACIA INVESTMENT CORPORATION.

A.

PLAINTIFFS-APPELLANTS' DEED OF SALE WAS EXECUTED ON DECEMBER 10, 1999, WHILE THAT OF DEFENDANT-APPELLEE'S WAS EXECUTED ON JANUARY 21, 2001.

B.

THE SALE IN FAVOR OF PLAINTIFFS-APPELLANTS ON DECEMBER 10, 1999, AND THE SALE IN FAVOR OF DEFENDANT-APPELLEE'S ON JANUARY 21, 2001 ARE THE ONLY DISPOSITIONS INVOLVED WHEN APPLYING ARTICLE 1544 OF THE NEW CIVIL CODE.

II.

CONTRARY TO THE TRIAL COURT'S FINDINGS, THE FACTS INDUBITABLY SHOW DEFENDANT-APPELLEE'S PALPABLE FLAGRANT BAD FAITH. ASEcHI

A.

DEFENDANT-APPELLEE, BEING THE SECOND BUYER OF THE PROPERTY, HAD NOTICE OF THE EARLIER SALE IN FAVOR OF PLAINTIFFS-APPELLANTS WHEN IT ENTERED INTO A DEED OF SALE ON JANUARY 21, 2001.

B.

DEFENDANT-APPELLEE, BEING SECOND BUYER, HAD NOTICE OF THE PENDING LITIGATION INVOLVING THE PROPERTY WHEN IT ENTERED INTO A DEED OF SALE ON JANUARY 21, 2001. 8

On November 23, 2012, the CA reversed and set aside the order dated April 11, 2009 issued by the RTC, 9 holding and disposing thusly:

While it is true that defendant-appellee Acacia was the first to register the subject property even though they contracted the sale much later than that of the plaintiffs-appellants Spouses, it is essential that said registration must be done in good faith. Needless to state that concomitant with the registration of the sale is the good faith of the buyer. So what needs to be inquired into is whether there was good faith on the part of defendant-appellee when it purchased and registered the subject property.

From the circumstances obtaining, this Court is inclined to subscribe with the plaintiffs-appellants' argument that defendant-appellee Acacia cannot, by any stretch of imagination be considered a purchaser in good faith.

Well-settled is the doctrine that a person dealing with registered land has a right to rely on the Torrens Certificate of Title and to dispense with the need of inquiring further except when the party has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make such inquiry or when the purchaser has knowledge of a defect or the lack of title in his vendor or status of the title of the property in litigation (Camper Realty Corp. vs. Pajo-Reyes, 632 SCRA 400, 408 [2010], cited case omitted). The presence of anything which excites or arouses suspicion should then prompt the vendee to look beyond the certificate and investigate the title of the vendor appearing on the face of said certificate (ibid.).

Herein defendant-appellee Acacia cannot be said to be unaware of the flaw and defect on the title of defendants Spouses Miranda. It bears to recall that at the time defendant-appellee Acacia executed the Contract of Sale with defendants Spouses Miranda on January 30, 2001, there was already a Complaint filed by plaintiffs-appellants spouses Go on March 16, 2000, where they sought consolidation of ownership over the subject property in their name. In the said Complaint, no less than defendant-appellee Acacia was impleaded as party defendant. Whether the case filed by plaintiffs-appellants spouses Go is meritorious or not, it becomes the bounden duty of defendant-appellee Acacia to inquire on the status of the subject lot under litigation before proceeding to purchase it. If it were cautious enough, it would have discovered that a prior sale transaction over the disputed lot was earlier executed on December 10, 1999 and that another person was claiming right over it.

It likewise appears from the records that few days after the filing of the Complaint or on March 20, 2000, plaintiffs-appellants Spouses Go also caused a Notice of Lis Pendens to be annotated in the title. As characterized by the Supreme Court:

"A notice of lis pendens is an announcement to the whole world that a particular real property is in litigation, serving as a warning that one who acquires interest over said property does so at his own risk, or that he gambles on the result of the litigation over the said property. The filing of a notice of lis pendens charges all strangers with notice of the particular litigation referred to therein and, therefore, any right they may thereafter acquire over the property is subject to the eventuality of the suit. Such announcement is founded upon public policy and necessity, the purpose of which is to keep the properties in litigation within the power of the court until the litigation is terminated and to prevent the defeat of the judgment or decree by subsequent alienation" (Lu vs. Lu Ym, 595 SCRA 79, 91-92 [2009]).

Again, at the time the disputed property covered by OCT SP-1 was sold for the second time to defendant-appellee Acacia on January 30, 2001, there was a notice of lis pendens already annotated on the title, thereby negating any ounce of good faith on the part of defendant-appellee as the new purchaser thereof.

Defendant-appellee Acacia argued that even prior to the execution of the Deed of Sale between plaintiffs-appellants Spouses Go and defendants spouses Miranda, it had already entered into a "Kasunduan sa Pinagsanib na Pangangalakal" with the latter and caused the same to be annotated in the title on June 8, 1998. Defendant-appellee Acacia also made mention of the Memorandum of Agreement (MOA) it executed with defendants Spouses Miranda where the former signified its intention and willingness to buy the subject property. Thus, defendant-appellee Acacia maintained that it was plaintiffs-appellants Spouses Go who were in bad faith when they subsequently entered into a Deed of Sale with defendants Spouses Miranda despite the existence of the annotation on the title and the MOA it executed with defendants spouses Miranda.

It must be stressed that the "Kasunduan sa Pinagsanib na Pangangalakal" is not considered a sale transaction within the purview of Article 1544 of the New Civil Code pertaining to double sales. There was no mention from the records that said "Kasunduan" between defendant-appellee and defendants spouses Miranda, intends to dispose of the property nor transfer its title from one to another. As correctly pointed out by plaintiffs-appellants Go, the "Kasunduan sa Pinagsanib na Pangangalakal" is nothing more than a "joint venture." Common Law definition of the term "joint venture" states that it is an organization formed for the execution of a single transaction, and is thus of a temporary nature (Philex Mining Corporation vs. Commissioner of Internal Revenue, 551 SCRA 428, 439 [2008]; cited case omitted). Logically, if the said Kasunduan, intends to transfer ownership of the subject property from Spouses Miranda to defendant-appellee Acacia, there would be no need to subsequently execute the questioned deed of sale in defendant-appellee Acacia's favor. Neither can defendant-appellee Acacia use the MOA to substantiate its alleged superior right over the property. Then again, the MOA merely contains defendant-appellee Acacia's intention and willingness to buy the property from defendants spouses Miranda, but there is yet no perfected nor consummated sale that took place between them. In other words, the "kasunduan" earlier annotated at the back of the title cannot be considered as more superior to the Deed of Sale with Right of Repurchase executed between plaintiffs-appellants Go and defendants Spouses Miranda, as to defeat the rights of the former over the subject property. ITAaHc

With the foregoing circumstances, it is in accordance with justice and fairplay to bring the instant case again for trial on the merits where both parties will be given ample opportunity to be heard and to prove their respective claims — with plaintiffs-appellants Spouses Go establishing their case and defendant-appellee Acacia reiterating its defense.

WHEREFORE, the instant appeal is GRANTED. The questioned Order dated April 11, 2009 of the Regional Trial Court of Biñan, Laguna, Branch 25, in Civil Case No. B-5654 is SET ASIDE. Accordingly, the complaint against defendant-appellee Acacia Investment Corporation is REINSTATED. Let the records of the case be remanded to the RTC a quo to continue the trial of the case as to defendant-appellee Acacia Investment Corporation.

SO ORDERED.10

Issues

Disagreeing with the outcome, Acacia now submits that the CA committed a reversible error in remanding the case to the RTC to allow the parties to present their evidence, contending that contrary to the findings of the CA, the Spouses Go lacked a cause of action.

To be resolved, therefore, are: (1) whether or not the Spouses Go had sufficiently proven their cause of action; (2) who is the rightful owner of the disputed property between Acacia and the Spouses Go; and (3) whether the case should still be remanded to the trial court for further proceedings.

Ruling of the Court

The appeal lacks merit.

Acacia claims that it was the rightful owner of the property for two reasons, namely: (1) it was the first purchaser as evidenced by the Kasunduan and MOA; and (2) the sale in its favor was registered first. On the other hand, the Spouses Go vigorously assert preference in their favor because the first registration by Acacia was tainted with bad faith.

Presented herein are conflicting claims of ownership over the same property — a classic instance of double sale. In case of the double sale of immovables, Article 1544 of the Civil Code dictates that the ownership shall belong to: "(1) the first registrant in good faith; (2) then, the first possessor in good faith; and (3) finally, the buyer who in good faith presents the oldest title." 11 Conformably with the law, the rightful owners of the property are the Spouses Go.

Although the Kasunduan and MOA were entered into prior to the execution of the Deed of Sale with Right of Repurchase between the Spouses Go and the Spouses Miranda, neither the Kasunduan nor the MOA was within the purview of a sale of property. A review reveals that the Kasunduan was envisioned to establish the joint venture between the Spouses Miranda and Acacia regarding the property, and was not intended to transfer or convey the same. The CA astutely noted the common law understanding of the term joint venture as an "organization formed for the execution of a single transaction, and is thus of a temporary nature." 12 Such is the meaning that squarely applied to the Kasunduan. Indeed, had the Kasunduan been intended to convey the property to Acacia, then the subsequent execution of the deed of sale in Acacia's favor would have been superfluous. The same thing can be said of the MOA, which contained nothing to support Acacia's supposedly superior right in the property. The MOA was but an instrument to express Acacia's intent and willingness to acquire the property. Without any sale being thereby perfected, Acacia could not claim any right to be preferred over the right existing in favor of the Spouses Go.

Although Acacia registered the sale in its favor ahead of the registration by the Spouses Go, mere registration was not enough. We have to stress that good faith must concur with the registration. 13 The CA was correct to have insisted so. Article 1544 of the Civil Code mandates that the second buyer, before it can obtain priority over the first, must show that it acted in good faith throughout (i.e., it was in ignorance of the first sale and of the first buyer's right) from the time of acquisition until the title is transferred to it by registration or, in default of registration, by delivery of possession. 14 In other words, the second buyer, to be considered in good faith, must have no knowledge of any infirmity or defect in the title of the vendor or status of the title of the property in litigation.

There is no doubt that Acacia was not a purchaser in good faith. When Acacia bought the property on January 30, 2001, the Spouses Go's notice of lis pendens was already annotated on OCT SP-1. This notice of lis pendens was by virtue of pendency of Civil Case No. B-5654, a case in which Acacia had been precisely impleaded as a party-defendant. Yet, Acacia still proceeded with the sale and registered the same. Such sale and registration were ineffectual as to the Spouses Go because of Acacia's being a purchaser in bad faith in such circumstances.

Nonetheless, the CA's disposition to still remand the case to the court of origin for further proceedings, specifically to receive Acacia's evidence, was procedurally unwarranted in view of Section 1, Rule 33 of the Rules of Court, which provides:

Section 1. Demurrer to evidence. — After the plaintiff has completed the presentation of his evidence, the defendant may move for dismissal on the ground that upon the facts and the law the plaintiff has shown no right to relief. If his motion is denied, he shall have the right to present evidence. If the motion is granted but on appeal the order of dismissal is reversed he shall be deemed to have waived the right to present evidence. (1a, R35)

Under the rule, Acacia was expressly deemed to have waived its right to present evidence in Civil Case No. B-5654 upon the reversal on appeal of the granting of its demurrer to evidence. Such waiver has removed the need for the remand to the court of origin.

WHEREFORE, the Court:

(1) DENIES the petition for review on certiorari;

(2) AFFIRMS the decision promulgated on November 23, 2012 subject to the MODIFICATION that: (a) the Kasunduan sa Pinagsanib na Pangangalakal and Memorandum of Agreement entered into between Acacia Investment Corporation and the Spouses Ponciano and Annie Miranda are DECLARED VOID AND INEFFECTUAL in relation to the property described and covered by Original Certificate of Title No. SP-1 of the Registry of Deeds of Calamba, Laguna in the name of Spouses Ponciano and Annie Miranda; and (b) the Deed of Sale with Right of Repurchase entered into on December 10, 1999 by and between Spouses Ponciano and Annie Miranda and Spouses Benjamin T. Go and Amelita Padua-Go is DECLARED VALID AND EFFECTIVE; CHTAIc

(3) DIRECTS the Register of Deeds of Calamba, Laguna: (a)TO CANCEL Transfer Certificate of Title No. 473056 in the name of petitioner Acacia Investment Corporation; (b)TO REINSTATE Original Certificate of Title No. SP-1 in the name of Spouses Ponciano and Annie Miranda; and (c)TO REGISTER the Deed of Sale with Right of Repurchase entered into on December 10, 1999 by and between Spouses Ponciano and Annie Miranda, as vendors, and Spouses Benjamin T. Go and Amelita Padua-Go, as vendees, in relation to the property registered and covered by Original Certificate of Title No. SP-1, subject to the payment by Spouses Benjamin T. Go and Amelita Padua-Go of the fees required by law; and

(4) ORDERS the petitioner to pay the costs of suit.

SO ORDERED."

Very truly yours,

(SGD.) WILFREDO V. LAPITANDivision Clerk of Court

 

Footnotes

1.Rollo, pp. 29-44; penned by Associate Justice Jose C. Reyes, Jr., with Associate Justice Mario V. Lopez and Associate Justice Socorro B. Inting concurring.

2.Id. at 46.

3.Id. at 30-32.

4. CA Rollo, pp. 112-122; penned by Judge Teodoro N. Solis.

5.Id. at 122.

6. Records, pp. 112-113.

7.Rollo, pp. 34-35.

8. CA rollo, pp. 75-77.

9.Supra note 1.

10.Id. at 40-44.

11.Abrigo v. De Vera, G.R. No. 154409, June 21, 2004, 432 SCRA 544, 551.

12.Supra note 1, at 43 (citing Philex Mining Corporation v. Commissioner of Internal Revenue, G.R. No. 148187, April 16, 2008, 551 SCRA 428, 439).

13.Cardente v. Intermediate Appellate Court, No. L-73651, November 27, 1987, 155 SCRA 685, 689.

14. Article 1544, Civil Code.