The Supreme Court denied the appeal of the National Housing Authority (NHA) and upheld the ruling that Ricardo, as representative of the heirs of Leona, held equitable title over a disputed parcel of land. The Court found that the NHA was not a buyer in good faith and that the conveyance to the NHA was void.
The Case
Top Service sold a portion of land to Leona, which prompted the transfer of registration under Leona's name via TCT No. 276081 on January 30, 1970. Notwithstanding the previous sale, Top Service succeeded in registering the same property in its name under TCT No. 65254 on January 30, 1998. It subsequently conveyed the disputed land to the NHA, which caused the issuance of TCT No. 65961 on March 31, 1998.
The NHA housing beneficiaries, Morico Serdoncillo, Nerissa Wagas, Bernard Ramos, Carding Ramos, Ronald Camposano, Josereno Puebie, Sr., Thelma Inigo, Shirley Celaso, Miling Ramos, and others (Serdoncillo et al.) occupied the land and paid their amortizations to East Christian Homeowners' Association Inc.
When Leona died in 2000 and left the subject realty to her heirs, they discovered that Serdoncillo et al. were on the property. Ricardo, as representative of the heirs, demanded that Serdoncillo et al. vacate, but they refused, citing TCT No. 65961 as proof of ownership. This prompted Ricardo to file a complaint for quieting of title and the cancellation of TCT No. 65961.
Ricardo asserted that since there was a double sale, ownership of the disputed property was transferred to Leona, being the first registrant. The NHA countered that the certificate of title presented by Top Service had no indication of a prior sale, and that it required Top Service to submit three certificates of title immediately preceding TCT No. 65254, making it a purchaser in good faith.
The Regional Trial Court (RTC) ruled in favor of Ricardo. It held that where there are two certificates of title issued to different persons covering the same land, the earlier in date must prevail. Since Leona's title was earlier in date, her title, TCT No. 276081, must be upheld, while TCT No. 65961 should be cancelled.
Upon appeal, the Court of Appeals (CA) ruled in favor of Ricardo but deleted the monetary awards. It clarified that no double sale occurred because the subsequent conveyance to the NHA was void, as Top Service was no longer the owner of the land. The CA also ruled that the NHA was not a buyer in good faith because it failed to carefully examine TCT No. 115640 (31352-A), which contained an annotation that the realty was already sold to Leona.
The Issue
Did the CA err in cancelling the title of the NHA on account of double sale?
The Ruling
The Court denied the appeal. It held that Top Service sold the disputed realty to Leona in 1970, and then sold the same parcel of land to the NHA in 1998. At the time the second sale took place, Top Service had already divested itself of ownership and could no longer validly transfer the property, notwithstanding its possession of a second title (TCT No. 65254). The Court stated that one can sell only what he owns or is authorized to sell.
The Court ruled: "ACCORDINGLY, the Appeal by Certiorari is DENIED."
By the Numbers
- TCT No. 276081 — registered under Leona's name on January 30, 1970
- TCT No. 65254 — registered by Top Service on January 30, 1998
- TCT No. 65961 — issued to the NHA on March 31, 1998
- TCT No. 115640 (31352-A) — contained the annotation of the earlier sale to Leona
- PHP 200,000.00 — attorney's fees originally ordered by the RTC
- Date of instrument — Jan. 17, 1970; Date of inscription — Jan. 30, 1970 at 3:55 p.m.
The Court's Reasoning
The Court explained that for an action for quieting of title to prosper, the plaintiff must have a legal or equitable title or interest in the subject property, and the deed, claim, encumbrance, or proceeding casting doubt over the title must be proven invalid, void, or inoperative. Ricardo proved he was the heir of Leona, in whose name TCT No. 276081 was registered, and TCT No. 65961 cast doubt on the title since the sale transaction was void.
On the issue of good faith, the Court found the third condition of an innocent purchaser for value absent. Although the NHA contended it verified the legality of Top Service's TCT No. 65254 through a three-title traceback, it failed to carefully review TCT No. 115640 (31352-A), which carried an annotation reflecting the earlier sale to Leona. As the government agency mandated to acquire private lands for housing development and resettlement, the NHA is held to a higher standard of diligence, which it failed to meet.
On damages, the Court held that Ricardo neither sufficiently established bad faith on the part of the NHA nor adduced evidence under Article 2208 of the Civil Code to warrant the award of attorney's fees. The CA therefore did not err in deleting the awards for damages and attorney's fees for lack of substantiation.
Source: Supreme Court decision in G.R. No. 279318.
This report summarizes a public Supreme Court decision and is not legal advice.