LAW ON SALES | NAAWAN COMMUNITY RURAL BANK, INC. VS. COURT OF APPEALS, 395 SCRA 43, JANUARY 13, 2003
NAAWAN COMMUNITY RURAL BANK, INC. VS. COURT OF
APPEALS,
395 SCRA 43, JANUARY 13, 2003
TOPIC/DOCTRINE
A party dealing with a registered land need not go beyond
the Certificate of Title to determine the true owner thereof so as to guard or
protect her interest. She has only to look and rely on the entries in the
Certificate of Title. (Toledo-Banaga vs. Court of Appeals, 302 SCRA 331 [1999])
FACTS
On April 30, 1988, a certain Guillermo Comayas offered to
sell to private respondent-spouses Alfredo and Annabelle Lumo, a house and lot
measuring 340 square meters located at Pinikitan, Camaman-an, Cagayan de Oro
City.
Before private respondents bought the subject property from
Guillermo Comayas, inquiries were made with the Registry of Deeds and the
Bureau of Lands regarding the status of the vendor’s title. No liens or
encumbrances were found to have been annotated on the certificate of title.
Neither were private respondents aware of any adverse claim or lien on the
property other than the adverse claim of a certain Geneva Galupo to whom
Guillermo Comayas had mortgaged the subject property. But, as already
mentioned, the claim of Galupo was eventually settled and the adverse claim
previously annotated on the title cancelled.
On June 9, 1988, the deed of absolute sale was registered
and inscribed on TCT No. T-41499 and, on even date, TCT No. T-50134 was issued
in favor of private respondents.
After obtaining their TCT, private respondents requested
the issuance of a new tax declaration certificate in their names. However, they
were surprised to learn from the City Assessor’s Office that the property was
also declared for tax purposes in the name of petitioner Naawan Community Rural
Bank, Inc. Apparently, on February 7, 1983, Guillermo Comayas obtained a
P15,000 loan from a certain Sergio A. Balibay using the subject property as
security. For failure to pay, For failure of Comayas to pay, the real estate
mortgage was foreclosed and the subject property sold at a public auction to
the mortgagee, herein petitioner Bank.
Alarmed by the prospect of being ejected from their home,
private respondents filed an action for quieting of title The RTC rendered a decision declaring private
respondents as purchasers for value and in good faith, and consequently
declaring them as the absolute owners and possessors of the subject house and
lot. Court of Appeals affirmed the trial court’s decision.
ISSUE
Did private respondents exercise the required diligence in
ascertaining the legal condition of the title to the subject property so as to
be considered as innocent purchasers for value and in good faith?
RULING
Yes.
The court held that where a person claims to have superior
proprietary rights over another on the ground that he derived his title from a
sheriff’s sale registered in the Registry of Property, Article 1473 (now
Article 1544) of the Civil Code will apply only if said execution sale of real
estate is registered under Act 496. The rights created by the above-stated
statute of course do not and cannot accrue under an inscription in bad faith.
Mere registration of title in case of double sale is not enough; good faith
must concur with the registration. A party dealing with a registered land need
not go beyond the Certificate of Title to determine the true owner thereof so
as to guard or protect her interest. She has only to look and rely on the
entries in the Certificate of Title. (Toledo-Banaga vs. Court of Appeals, 302
SCRA 331 [1999])
