FIRST DIVISION
[G.R. No. 221206. June 16, 2021.]
MARIANO BALADIA y ESPLAGO and MARIETTA BALADIA-DADOR, petitioners,vs. ROSALIND DICHOSO BERSABE, joined by her husband, ALBERTO G. BERSABE, JR., respondents.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, First Division, issued a Resolution dated June 16, 2021which reads as follows:
"G.R. No. 221206 (MARIANO BALADIA y ESPLAGO and MARIETTA BALADIA-DADOR, petitioners, v. ROSALIND DICHOSO BERSABE, joined by her husband, ALBERTO G. BERSABE, JR., respondents). — Before the Court is a petition for review on certiorari1 seeking to nullify the Court of Appeals' (CA) February 13, 2015 Decision, 2 as well as its October 27, 2015 Resolution, 3 in CA-G.R. CV No. 99671, which affirmed with modification the September 5, 2012 Decision 4 of the Regional Trial Court (RTC) of Iriga City, Branch 34, in Civil Case No. IR-3129.
Facts
The spouses Rosalind Dichoso Bersabe and Alberto G. Bersabe, Jr. (respondents) filed a complaint for Nullity of Sale, Cancellation of Certificate of Title and damages before the RTC of Iriga City, against Mariano Baladia and Marietta Baladia Dador (petitioners), Julieta Baladia (Julieta), Rosa Baladia Jaucian (Rosa), and spouses Ruben and Niña Cañeso (spouses Cañeso). The complaint alleged that respondents and Julieta were plaintiffs and defendant, respectively, in Civil Case No. 1047 for Sum of Money before the Municipal Trial Court (MTC) of Nabua-Bato, Nabua, Camarines Sur, which was decided in favor of respondents. Julieta was ordered to pay respondents the amount of P75,625.00. The decision attained finality and respondents moved for execution of judgment. The MTC granted the motion and issued a writ of execution to satisfy the final judgment in the case. Thereafter, the sheriff issued a notice of levy on the real property designated as Cadastral Lot No. 2177, Pls-1053-D and a notice of public auction for the sale of the property. The public auction proceeded as scheduled with Rosalind being the highest bidder for the subject property. 5
On February 12, 1998, a Provisional Certificate of Sale was issued in favor of respondents. On October 16, 1998, during the effectivity of the redemption period, petitioners, together with Julieta and Rosa, sold the property to spouses Cañeso. On March 23, 1999, Julieta failed to redeem the property and a Definite Certificate of Sale was executed in favor of respondents. However, when respondents tried to transfer the title of the property in their name, they discovered that the same had been sold to spouses Cañeso, who were able to obtain a Free Patent Certificate of Title. 6
On the other hand, petitioners averred that the property designated as Cadastral Lot No. 2177, was previously owned by spouses Luis and Simeona Baladia, who executed sometime in October 1987 four separate Deeds of Absolute in favor of their children, petitioners, spouses Sebastian and Julieta, and Rosa (the heirs of Baladia). As co-owners of the property, the heirs of Baladia sold the same to spouses Cañeso as evidenced by a Deed of Absolute Sale dated September 28, 1998. Petitioners claimed that they were not aware that Julieta mortgaged the property to Rosalind and that the latter obtained a favorable decision. They further contended that the sheriff should not have sold the property as the title thereto was still in the name of Simeona Baladia. 7
Meanwhile, spouses Cañeso claimed that before purchasing the property, they exerted earnest efforts to determine its real owner. The Office of the Municipal Assessor of Nabua, Camarines Sur and the Office of the Provincial Assessor confirmed that the property was registered in Simeona Baladia's name. On October 16, 1998, the heirs of Simeona Baladia sold the property to them and executed a Deed of Extrajudicial Settlement of Estate with Sale. The spouses Cañeso immediately took possession of the property and transferred the title to their name. They paid the estate taxes and capital gains tax, and caused the publication of the Extrajudicial Settlement of Estate. They then applied for a Free Patent before the Community of Environment and Natural Resources Office of Iriga City, and obtained Original Certificate of Title No. 19063. They asserted that they are innocent purchasers for value. 8
In a Decision dated September 5, 2012, the RTC of Iriga City ruled in favor of respondents as follows:
FOR ALL THE FOREGOING CONSIDERATION, judgment is hereby rendered:
1. Declaring the extrajudicial settlement of estate with sale executed by defendants Baladia in favor of their co-defendant Cañeso to be null and void and without any legal effect. Consequently, the Certificate of Title Katibayan ng Orihinal na Titulo Blg. 19063 in the name of Ruben L. Cañeso with the Register of Deeds of Camarines Sur is hereby ordered cancelled for being likewise null and void.
2. Declaring plaintiffs Spouses Rosalind and Alberto Bersabe as lawful owner-possessor of Lot No. 2177 situated at Sta. Lucia, Baras, Nabua, Camarines Sur consisting of 6,150 square meters, more or less.
3. Ordering the defendants Baladia to refund and/or return the amount of Php30,000.00 to Spouses Cañeso representing the purchase price paid by them with legal interest at 12% per annum starting from the filing of this case on February 4, 2003 until fully paid.
4. For the defendants Baladia to jointly and severally pay their co-defendant Spouses Cañeso the amount of Php50,000.00 as moral damages and another Php50,000.00 as exemplary damages and to pay the cost of the suit.
SO ORDERED. 9
Not satisfied, all the parties appealed to the CA.
On February 13, 2015, the CA promulgated a Decision, 10 the dispositive portion of which reads as follows:
WHEREFORE, premises foregoing, the respective appeals filed by defendants-appellants Mariano Baladia and Marietta Baladia-Dador and the Spouses Ruben and Niña Cañeso are DENIED. On the other hand, the appeal filed by the Spouses Rosalind Dichoso Bersabe and Alberto Bersabe is GRANTED. Consequently, the Decision of Branch 34, Regional Trial Court of Iriga City dated September 5, 2012 is hereby AFFIRMED with the following modifications:
1. The heirs of Baladia is ordered to return to the Spouses Ruben and Niña Cañeso the amount of Thirty Thousand Pesos (P30,000.00) representing the purchase price of the subject property with twelve percent (12%) interest reckoned from April 15, 2002, the date of the extrajudicial demand, until June 30, 2013. Thereafter, legal interest of six percent (6%) shall be imposed on the amount until it is fully paid. Further, an additional six percent (6%) interest shall be imposed on the amount from the time of the finality of this decision until said amount is fully paid.
2. The award of moral damages in favor of Spouses Ruben and Niña Cañeso is ordered deleted.
3. The heirs of Baladia are ordered to pay the Spouses Alberto and Rosalind Dichoso Bersabe, moral damages in the amount of Fifty Thousand Pesos (P50,000.00), exemplary damages in the amount of Thirty Thousand Pesos (P30,000.00), and attorney's fees in the amount of Twenty Thousand Pesos (P20,000.00).
SO ORDERED. 11
Hence, this petition for review on certiorari.
Essentially, the issue is whether the CA erred in affirming the RTC in ruling that the subject property belongs to respondents.
Our Ruling
The petition has no merit.
The present case involves what in legal contemplation was a double sale. Article 1544 of the Civil Code provides:
Art. 1544. 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.
Otherwise stated, ownership of an immovable property which is the subject of a double sale shall be transferred: (1) to the person acquiring it who in good faith first recorded it in the Registry of Property; (2) in default thereof, to the person who in good faith was first in possession; and (3) in default thereof, to the person who presents the oldest title, provided there is good faith. 12 There is no ambiguity in the application of this law with respect to lands registered under the Torrens system.
The CA explained that had the subject property been covered by the Torrens System of registration, it would have ruled in favor of the spouses Cañeso, who were first to have it registered in their names. Article 1544 of the Civil Code provides that ownership of an immovable sold to different vendees pertains to the one who, in good faith, first registers it in the registry of property. However, this applies only to double sale of registered lands. The registration contemplated under this provision has been held to refer to registration under the Torrens System, which considers the act of registration as the operative act that binds the land. Article 1544 of the Civil Code has no application to land not registered under Torrens System. 13
A similar situation to the case at bar was presented to this Court in Carumba v. CA, et al.14 That case also involved the double sale of a parcel of unregistered land. The first sale was an unregistered private sale; while the second sale was made after execution and levy on a judgment against the landowner. The Court, speaking through the great civilist Justice Jose B.L. Reyes, ruled:
The Court of First Instance, finding that after execution of the document Carumba had taken possession of the land, planting bananas, coffee and other vegetables thereon, declared him to be the owner of the property under a consummated sale; held void the execution levy made by the sheriff, pursuant to a judgment against Carumba's vendor, Amado Canuto; and nullified the sale in favor of the judgment creditor, Santiago Balbuena. The Court, therefore, declared Carumba the owner of the litigated property and ordered Balbuena to pay P30.00, as damages, plus the costs.
The Court of Appeals, without altering the findings of fact made by the court of origin, declared that there having been a double sale of the land subject of the suit Balbuena's title was superior to that of his adversary under Article 1544 of the Civil Code of the Philippines, since the execution sale had been properly registered in good faith and the sale to Carumba was not recorded.
We disagree. While under the invoked Article 1544 registration in good faith prevails over possession in the event of a double sale by the vendor of the same piece of land to different vendees, said article is of no application to the case at bar, even if Balbuena, the later vendee, was ignorant of the prior sale made by his judgment debtor in favor of petitioner Carumba. The reason is that the purchaser of unregistered land at a sheriff's execution sale only steps into the shoes of the judgment debtor, and merely acquires the latter's interest in the property sold as of the time the property was levied upon. This is specifically provided by Section 35 of Rule 39 of the Revised Rules of Court, the second paragraph of said section specifically providing that:
Upon the execution and delivery of said (final) deed the purchaser, redemptioner, or his assignee shall be substituted to and acquire all the right, title, interest, and claim of the judgment debtor to the property as of the time of the levy, except as against the judgment debtor in possession, in which case the substitution shall be effective as of the time of the deed . . . (Emphasis supplied)
While the time of the levy does not clearly appear, it could not have been made prior to 15 April 1957, when the decision against the former owners of the land was rendered in favor of Balbuena. But the deed of sale in favor of Canuto had been executed two years before, on 12 April 1955, and while only embodied in a private document, the same, coupled with the fact that the buyer (petitioner Carumba) had taken possession of the unregistered land sold, sufficed to vest ownership on the said buyer. When the levy was made by the Sheriff, therefore, the judgment debtor no longer had dominical interest nor any real right over the land that could pass to the purchaser at the execution sale. Hence, the latter must yield the land to petitioner Carumba. The rule is different in case of lands covered by Torrens titles, where the prior sale is neither recorded nor known to the execution purchaser prior to the levy; but the land here in question is admittedly not registered under Act No. 496. 15
In the case at bar, it was the execution sale which preceded the private sale. Nevertheless, it was likewise established that: 1) the notice of levy and the auction sale in favor of the spouses Bersabe took place before the sale to the spouses Cañeso; 16 2) the redemption period lapsed without redemption by the Baladias; and 3) upon the lapse of the redemption period, a Definite Certificate of Sale and a writ of possession were issued in favor of the spouses Bersabe. Thus, following Rule 39, Section 33 of the Rules of Court as applied in Carumba, when the Definite Certificate of Sale was issued to the spouses Bersabe, they acquire[d] all the rights, titles, interests, and claims of the Baladias to the property as of the time of the levy. Since the levy preceded the sale to the spouses Cañeso, the subsequent sale to them cannot be given effect in view of the failure of their predecessors-in-interest, i.e., the Baladias, to exercise the right of redemption. Stated differently, the supervening sale to the spouses Cañeso which was made after the levy and during the redemption period, cannot defeat the earlier sale to the spouses Bersabe, which was confirmed and perfected after the lapse of the redemption period without redemption by the Baladias, who were still the absolute owners of the property at the time of the levy.
Considering that the property was unregistered at the time it was sold, either to the spouses Bersabe or to the spouses Cañeso, the applicable law is Act No. 3344, which provides for the registration of all instruments on land neither covered by the Spanish Mortgage Law nor the Torrens System. Under Act No. 3344, registration of instruments affecting unregistered lands is without prejudice to a third party with a better right. The aforequoted phrase has been held by this Court to mean that the mere registration of a sale in one's favor does not give him any right over the land if the vendor was not anymore the owner of the land having previously sold the same to somebody else even if the earlier sale was unrecorded. 17 The rights vested in the spouses Bersabe by the execution sale and the confirmation thereof constitute a better right which is protected by Act No. 3344.
We held in Spouses Rayos v. Reyes18 that: "[T]he issue of good faith or bad faith of the buyer is relevant only where the subject of the sale is registered land and the purchaser is buying the same from the registered owner whose title to the land is clean x x x in such case the purchaser who relies on the clean title of the registered owner is protected if he is a purchaser in good faith for value." Since the properties in question are unregistered lands, petitioners as subsequent buyers thereof did so at their peril. Their claim of having bought the land in good faith, i.e., without notice that some other person has a right to or interest in the property, would not protect them if it turns out, as it actually did in this case, that their seller did not own the property at the time of the sale. 19
In the present case, at the time the heirs of Baladia sold the property to the spouses Cañeso, the same had already been sold to respondents through an execution sale to pay for the obligation of Julieta. While the buyer of a real property in an execution sale only acquires ownership thereof after the lapse of the redemption period without any redemption having taken place, 20 our foregoing discussion clearly demonstrates that such execution sales create a better right to unregistered land that is protected by Act No. 3344 against subsequent sales made to defeat such right.
Moreover, the spouses Cañeso failed to substantiate that they are entitled to moral damages. Hence, the CA deleted the grant of moral damages in their favor. On the other hand, records reveal that the heirs of Baladia fraudulently sold the property to spouses Cañeso. Petitioners were well aware that the subject property had already been conveyed to Julieta and Sebastian, having signed as witnesses to the deed of sale executed between Simeona and Julieta. The CA likewise found it highly suspicious that the property was sold to spouses Cañeso during the effectivity of the redemption period. The heirs of Baladia must have known about the prior sale of the subject property to respondents. For fear of losing her property, Rosalind suffered sleepless nights and serious anxiety. Thus, the CA ruled that respondents are entitled to their claim for moral and exemplary damages, as well as attorney's fees.
Finally, in accordance with our ruling in Nacar v. Gallery Frames, 21 the CA correctly imposed legal interest of twelve percent (12%) per annum representing the purchase price of the property reckoned from the time of judicial demand on April 15, 2002 until June 30, 2013, and thereafter, legal interest of six percent (6%) per annum until the amount shall have been fully paid.
WHEREFORE, the Decision of the Court of Appeals dated February 13, 2015, as well as the Resolution dated October 27, 2015, in CA-G.R. CV No. 99671, are hereby AFFIRMED.
SO ORDERED."
By authority of the Court:
(SGD.) LIBRADA C. BUENADivision Clerk of Court
By:
MARIA TERESA B. SIBULODeputy Division Clerk of Court
Footnotes
1.Rollo, pp. 11-29.
2.Id. at 36-51; penned by Associate Justice Maria Elisa Sempio Diy, with Associate Justices Ramon M. Bato, Jr. and Manuel M. Barrios, concurring.
3.Id. at 54-57.
4.Id. at 185-197; rendered by Presiding Judge Manuel M. Rosales.
5.Id. at 185-186.
6.Id.
7.Id. at 186.
8.Id.
9.Id. at 196-197.
10.Id. at 36-52.
11.Id. at 51.
12.Spouses Abrigo v. De Vera, 476 Phil. 641, 645 (2004), citing Rosaroso, et al. v. Soria, et al., 711 Phil. 644, 658 (2013).
13.Naval v. Court of Appeals, 518 Phil. 271, 280 (2006).
14. 142 Phil. 537 (1970).
15.Id. at 539-540.
16.Rollo, p. 187.
17.Radiowealth Finance Co. v. Palileo, 274 Phil. 516, 521 (1991).
18. 446 Phil. 32 (2003).
19.Id. at 50.
20. RULES OF COURT, Rule 39, Section 33.
21. 716 Phil. 267 (2013).