Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&view=article&id=82801:56611&catid=1580&Itemid=566
Timestamp: 2019-04-21 04:21:57+00:00

Document:
G.R. No. 189477, February 26, 2014 - HOMEOWNERS SAVINGS AND LOAN BANK, Petitioner-Appellant, v. ASUNCION P. FELONIA AND LYDIA C. DE GUZMAN, REPRESENTED BY MARIBEL FRIAS, Respondents-Appellees.; MARIE MICHELLE P. DELGADO, REGISTER OF DEEDS OF LAS PIÑAS CITY AND RHANDOLFO B. AMANSEC, IN HIS CAPACITY AS CLERK OF COURT EX-OFFICIO SHERIFF, OFFICE OF THE CLERK OF COURT, LAS PIÑAS CITY, Respondents-Defendants.
HOMEOWNERS SAVINGS AND LOAN BANK, Petitioner-Appellant, v. ASUNCION P. FELONIA AND LYDIA C. DE GUZMAN, REPRESENTED BY MARIBEL FRIAS, Respondents-Appellees.
MARIE MICHELLE P. DELGADO, REGISTER OF DEEDS OF LAS PIÑAS CITY AND RHANDOLFO B. AMANSEC, IN HIS CAPACITY AS CLERK OF COURT EX-OFFICIO SHERIFF, OFFICE OF THE CLERK OF COURT, LAS PIÑAS CITY, Respondents-Defendants.
Assailed in this Petition for Review on Certiorari is the Decision1 and Resolution2 of the Court of Appeals (CA), in CA-G.R. CV No. 87540, which affirmed with modifications, the Decision3 of the Regional Trial Court (RTC), reinstating the title of respondents Asuncion Felonia (Felonia) and Lydia de Guzman (De Guzman) and cancelling the title of Marie Michelle Delgado (Delgado).
Felonia and De Guzman were the registered owners of a parcel of land consisting of 532 square meters with a five-bedroom house, covered by Transfer of Certificate of Title (TCT) No. T-402 issued by the register of deeds of Las Piñas City.
WHEREFORE, judgment is hereby rendered directing the [Felonia and De Guzman] and the [Delgado] to execute a deed of mortgage over the property in question taking into account the payments made and the imposition of the legal interests on the principal loan.
On the other hand, the counterclaim is hereby dismissed for lack of merit.
By virtue of the RTC decision, Delgado transferred the title to her name. Hence, TCT No. T-402, registered in the names of Felonia and De Guzman, was canceled and TCT No. 44848 in the name of Delgado, was issued.
Meanwhile, on 2 June 1995, Delgado mortgaged the subject property to Homeowners Savings and Loan Bank (HSLB) using her newly registered title. Three (3) days later, or on 5 June 1995, HSLB caused the annotation of the mortgage.
Entry No. 8219/T-44848 - NOTICE OF LIS PENDENS - filed by Atty. Humberto A. Jambora, Counsel for the Plaintiff, that a case been commenced in the RTC, Branch 38, Manila, entitled ASUNCION P. FELONIA and LYDIA DE GUZMAN thru VERONICA P. BELMONTE, as Atty-in-fact (Plaintiffs) v.s. MARIE MICHELLE DELGADO defendant in Civil Case No. 91-59654 for Reformation of Instrument. Copy on file in this Registry.
On 20 November1997, HSLB foreclosed the subject property and later consolidated ownership in its favor, causing the issuance of a new title in its name, TCT No. 64668.
On 29 April 2003, Felonia and De Guzman, represented by Maribel Frias (Frias), claiming to be the absolute owners of the subject property, instituted the instant complaint against Delgado, HSLB, Register of Deeds of Las Piñas City and Rhandolfo B. Amansec before the RTC of Las Piñas City for Nullity of Mortgage and Foreclosure Sale, Annulment of Titles of Delgado and HSLB, and finally, Reconveyance of Possession and Ownership of the subject property in their favor.
As defendant, HSLB asserted that Felonia and De Guzman are barred from laches as they had slept on their rights to timely annotate, by way of Notice of Lis Pendens, the pendency of the Reformation case. HSLB also claimed that it should not be bound by the decisions of the CA in the Reformation and Consolidation cases because it was not a party therein. Finally, HSLB asserted that it was a mortgagee in good faith because the mortgage between Delgado and HSLB was annotated on the title on 5 June 1995, whereas the Notice of Lis Pendens was annotated only on 14 September 1995.
Notably, HSLB does not question the affirmance by the CA of the trial court’s ruling that TCT No. 44848, the certificate of title of its mortgagor-vendor, and TCT No. 64668, the certificate of title that was secured by virtue of the Sheriff’s sale in its favor, should be cancelled “as null and void” and that TCT No. T-402 in the name of Felonia and De Guzman should be reinstated.
Proceeding from the ruling of the CA that it is a mortgagee in good faith, HSLB argues that a denial of its prayer would run counter to jurisprudence giving protection to a mortgagee in good faith by reason of public policy.
We cannot grant the prayer of petitioner. The priorly registered mortgage lien of HSLB is now worthless.
There is, however, a situation where, despite the fact that the mortgagor is not the owner of the mortgaged property, his title being fraudulent, the mortgage contract and any foreclosure sale arising there from are given effect by reason of public policy. This is the doctrine of “the mortgagee in good faith” based on the rule that all persons dealing with property covered by the Torrens Certificates of Title, as buyers or mortgagees, are not required to go beyond what appears on the face of the title. The public interest in upholding indefeasibility of a certificate of title, as evidence of lawful ownership of the land or of any encumbrance thereon, protects a buyer or mortgagee who, in good faith, relied upon what appears on the face of the certificate of title.
The prevailing jurisprudence is that a mortgagee has a right to rely in good faith on the certificate of title of the mortgagor of the property given as security and in the absence of any sign that might arouse suspicion, has no obligation to undertake further investigation. Hence, even if the mortgagor is not the rightful owner of, or does not have a valid title to, the mortgaged property, the mortgagee or transferee in good faith is nonetheless entitled to protection.
However, the rights of the parties to the present case are defined not by the determination of whether or not HSLB is a mortgagee in good faith, but of whether or not HSLB is a purchaser in good faith. And, HSLB is not such a purchaser.
Although it is a recognized principle that a person dealing on a registered land need not go beyond its certificate of title, it is also a firmly settled rule that where there are circumstances which would put a party on guard and prompt him to investigate or inspect the property being sold to him, such as the presence of occupants/tenants thereon, it is of course, expected from the purchaser of a valued piece of land to inquire first into the status or nature of possession of the occupants, i.e., whether or not the occupants possess the land en concepto de dueño, in the concept of the owner. As is the common practice in the real estate industry, an ocular inspection of the premises involved is a safeguard a cautious and prudent purchaser usually takes. Should he find out that the land he intends to buy is occupied by anybody else other than the seller who, as in this case, is not in actual possession, it would then be incumbent upon the purchaser to verify the extent of the occupant’s possessory rights. The failure of a prospective buyer to take such precautionary steps would mean negligence on his part and would thereby preclude him from claiming or invoking the rights of a purchaser in good faith.
Lis pendens is a Latin term which literally means, “a pending suit or a pending litigation” while a notice of lis pendens is an announcement to the whole world that a real property is in litigation, serving as a warning that anyone who acquires an interest over the property does so at his/her own risk, or that he/she gambles on the result of the litigation over the property.22 It is a warning to prospective buyers to take precautions and investigate the pending litigation.
The purpose of a notice of lis pendens is to protect the rights of the registrant while the case is pending resolution or decision. With the notice of lis pendens duly recorded and remaining uncancelled, the registrant could rest secure that he/she will not lose the property or any part thereof during litigation.
(2) That the pledgor or mortagagor be the absolute owner of the thing pledged or mortgaged.
Reyes v. De Leon28 cited the case of Philippine National Bank v. Rocha29 where it was pronounced that “a mortgage of real property executed by one who is not an owner thereof at the time of the execution of the mortgage is without legal existence.” Such that, according to DBP v. Prudential Bank,30 there being no valid mortgage, there could also be no valid foreclosure or valid auction sale.
Insofar as the HSLB is concerned, there is no longer any public interest in upholding the indefeasibility of the certificate of title of its mortgagor, Delgado. Such title has been nullified in a decision that had become final and executory. Its own title, derived from the foreclosure of Delgado’s mortgage in its favor, has likewise been nullified in the very same decision that restored the certificate of title in respondents’ name. There is absolutely no reason that can support the prayer of HSLB to have its mortgage lien carried over and into the restored certificate of title of respondents.
WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals in CA-G.R. CV No. 87540 is AFFIRMED.
Carpio,*(Chairperson), Del Castillo, Perlas-Bernabe, and Leonen,**JJ., concur.
* Per Special Order No. 1644 dated 26 February 2014.
** Per Special Order No. 1636 dated 17 February 2014.
1 CA rollo, pp. 87-98; Penned by Associate Justice Apolinario D. Bruselas, Jr., with Associate Justices Bienvenido L. Reyes (now a member of this Court) and Mariflor P. Punzalan Castillo concurring.
3Rollo, pp. 170-177; Penned by Presiding Judge Lorna Navarro Domingo.
8Rollo, p. 17; LRC Case No. M-3302, RTC-Las Piñas City, Branch 275.
10Felonia, et al. v. Hon. Alfredo R. Enriquez, et al., CA-G.R. SP No. 43711, Court of Appeals, Eight Division.
15 CA rollo, p. 98.
17 G.R. No. 167848, 27 April 2007, 522 SCRA 713, 726 citing Cavite Development Bank v. Spouses Lim, 381 Phil. 355, 368 (2000) as cited in Ereña v. Querrer-Kauffman, G.R. No. 165853, 22 June 2006, 492 SCRA 298, 319.
18 335 Phil. 643, 655 (1997).
19 See Sigaya v. Mayuga, 504 Phil. 600, 613 (2005); San Lorenzo Development Corp v. CA, 490 Phil. 7, 24 (2005); Occeña v. Esponilla, G.R. No. 156973, 4 June 2004, 431 SCRA 116, 124; Sps. Castro v. Miat, 445 Phil. 282, 298 (2003); AFP Mutual Benefit Association, Inc. v. CA, G.R. No. 104769 (consolidated with Solid Homes, Inc. v. Investco, Inc., G.R. No. 135016), 417 Phil. 250, 256 (2001); Republic of the Philippines v. CA, 365 Phil. 522, 529 (1999) and Sandoval v. CA, 329 Phil. 48, 62 (1996).
20 356 Phil. 870, 892 (1998).
22People v. RTC of Manila, 258-A Phil. 68, 75 (1989) citing Baranda, et al. v. Gustilo, 248 Phil. 205 (1988); Tanchoco v. Judge Aquino, 238 Phil. 1 (1987); Marasigan v. Intermediate Appellate Court, 236 Phil. 274 (1987); St. Dominic Corporation v. Intermediate Appellate Court, 222 Phil. 540 (1985); Constantino v. Espiritu, 150-A Phil. 953 (1972); Jose v. Cayetano, 149 Phil. 451 (1971); Nataño, et al. v. Esteban, et al., 124 Phil. 1067 (1966); See also Rehabilitation Finance Corporation v. Morales, 101 Phil. 171 (1957), and Jamora v. Duran, 69 Phil. 3 (1939).
23Laroza v. Guia, G.R. No. L-45252, 31 January 1985, 134 SCRA 341, 345.
27Reyes v. De Leon, 126 Phil. 710, 716 (1967).
29 55 Phil. 497 (1930).
30 512 Phil. 267, 278 (2005) citing Cruz v. Bancom Finance Corporation, 429 Phil. 225 (2002).

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