G.R. No. 106657 August 1, 1996
JUAN C. SANDOVAL, now deceased, represented by his surviving spouse, ADELAIDA M. SANDOVAL, petitioner,
vs.
HON. COURT OF APPEALS and LORENZO L. TAN, JR., respondent.
ROMERO, J.:p
Another dispute over land ownership rivets the attention of this Court even as it still grapples with similar issues involving fantastically vast tracts of land considered prime real estate in Metro Manila.
That unscrupulous elements have been sparing neither energy nor resources to divert coveted properties from their actual owners through craft and cabal with land officials concerned has not been lost on this court and has, in fact, made its task doubly difficult and complicated.
In recognition of these developments that have placed under a cloud the integrity of the once unassailable Torrens Title, spawned the proliferation of fake land titles and encouraged the mushrooming of land grabbers and squatters on legitimately-titled lands, chief Justice Andres R. Narvasa issued on July 15, this year, Administrative Circular No. 7-96 addressed to all judges of all court levels and their Clerks of Court enjoining the strict observance of Land Registration Authority (LRA) circulars on reconstitution and land registration cases.
As an agrarian country with a substantial percentage of its population engaged in agriculture and allied occupations, the Philippines is understandably concerned over the fate of large and small landholders. Since pre-Spanish times, land has been recognized as the source of economic and political power. At the time the Spaniards took over the sovereignty of the Philippines, it rewarded its loyal subjects with grants of large encomiendas whose metes and bounds were only circumscribed by the endurance of a horse running from sunup to sundown. Conversely, some of those who did not show loyalty to the Church and the Crown were persecuted and divested of their lands, most notable example being the family of the national hero, Dr. Jose Rizal.
In a mystical sense, the Filipinos draw strength and power from the soil. Not only is this attitude peculiar to the Philippines but in Greek mythology, Antaeus, son of the sea god Poseidon and the Earth goddess Gaea renewed his strength in combat with Heracles by continually touching the earth. When his opponent discovered the source of his strength, the former lifted the latter up from earth and crushed him to death. 1
In the case at bar, it appears that an impostor succeeded in selling property lawfully titled in another's name by misrepresenting himself as the latter.
The petition before us involves two issues: whether or not petitioner Juan Sandoval is a purchaser in good faith and whether or not Justice who penned the assailed decision in the Court of Appeals should have inhibited himself from taking part in the case.
The property subject of the present controversy is a parcel of land on which a five-door apartment building stands. It is covered by Transfer Certificate of Title (TCT) No. 196518 in the name of "Lorenzo L. Tan, Jr. married to Carolina Mangampo" and located at No. 88 Halcon Street, Quezon City.
Sometime in October 1984, private respondent Lorenzo L. Tan, Jr. was notified of the need to present his owner's copy of the TCT to the Registry of Deeds, Quezon City in connection with an adverse claim. Upon reaching the Office of the Register of Deeds, he explained that he was still looking for his copy of the TCT. 2 In November 1984, he discovered that the adverse claim of one Godofredo Valmeo had been annotated on his title in the Registry of Deeds. A Lorenzo L. Tan, Jr., obviously an impostor, had mortgaged the property to Valmeo on October 9, 1984 to secure a P70,000.00 obligation.
On December 6, 1984, the real Lorenzo L. Tan, Jr. herein private respondent, filed a complaint for cancellation of the annotation of mortgage and damages against Bienvenido Almeda and Godofredo Valmeo before the Regional Trial Court of Quezon City, Branch 96. 3
Sometime in April 1985, private respondent met petitioner Juan C. Sandoval who claimed to be the new owner at the site of the property. He informed the latter of the case against Bienvenido Almeda and Godofredo Valmeo. Upon further investigation, petitioner discovered that as early as September 13, 1984, someone purporting to be Lorenzo L. Tan, Jr. sold the property to Bienvenido Almeda in a Deed of Sale of Registered Land with Pacto de Retro.
Said person representing himself as Lorenzo L. Tan, Jr., with the marital consent of the alleged Carolina Mangampo Tan, also executed a Waiver in favor of Bienvenido Almeda on January 11, 1985. Consequently, TCT No. 196518 in the name of Lorenzo L. Tan, Jr. was canceled and a new one, TCT No. 326781, was issued in the name of Bienvenido Almeda.
On March 29, 1985, Bienvenido Almeda sold the subject property to petitioner Juan C. Sandoval for P230,000.00. TCT No. 326781 was canceled and TCT No. 329487 was issued in favor of Juan C. Sandoval on April 18, 1985.
Private respondent's original complaint was accordingly amended in August 1985 to implead petitioner Juan C. Sandoval and to add the following as causes of action: the nullification of the deed of sale with pacto de retro, the waiver and the cancellation of TCT Nos. 326781 and 329487 in the Quezon City Registry of Deeds. Private respondent alleged that petitioner had prior knowledge of legal flaws which tainted Bienvenido Almeda's title.
It was only on January 16, 1986 that private respondent caused the annotation of a notice of lis pendens on TCT No. 329487. 4
Petitioner, as defendant below, countered that he was a purchaser in good faith and for valuable consideration. He bought the property through real estate brokers whom he contacted after seeing the property advertised in the March 3, 1985 issue of the Manila Bulletin. After guarantees were given by the brokers and his lawyer's go-signal to purchase the property, petitioner negotiated with Bienvenido Almeda. The price, reduced to P230,000, was paid in two installments. As earlier noted, Bienvenido Almeda executed a Deed of Sale in favor of petitioner and a new TCT was issued in the latter's name.
The trial court ruled in favor of private respondent Tan, Jr. The dispositive portion of the lower court's decision dated February 22, 1991 reads:
Wherefore, judgment is hereby rendered:
1. Declaring plaintiffs Lorenzo L. Tan, Jr. and Carolina Mangampo Tan as the absolute and exclusive owners of the property known as and situated at No. 88 Halcon Street, Quezon City, Metro Manila, originally registered in their names under TCT No. 196518 of the Register of Deeds of Quezon City, together with its improvements;
2. Declaring as null and void and of no legal effect the deed of real estate mortgage (Exch. A) dated October 9, 1984 in favor of defendant Godofredo Valmeo; the deed of sale of registered land with pacto de retro (Exh. B) dated September 13, 1984 in favor of Bienvenido Almeda; and the waiver (Exh. C) dated January 11, 1985 in favor of Bienvenido Almeda;
3. Commanding defendant Juan C. Sandoval to reconvey to the plaintiffs the property described under TCT 329487 of the Register of Deeds of Quezon City and the improvements thereon within fifteen (15) days from finality of this decision;
4. Directing defendant Bienvenido Almeda to pay to defendant Juan C. Sandoval the amount of P230,000.00 plus interest of twelve percent (12%) per annum from the filing of the Crossclaim until full payment; and
5. Ordering the defendants to pay to the plaintiffs the sum of P50,000.00 as nominal damages, P15,000.00 as and for attorney's fees; and the costs of suit.
SO ORDERED. 5
Only Juan C. Sandoval, herein petitioner, appealed the aforequoted adverse decision. Respondent Court of Appeals reduced appellant's sixteen assignment of errors to two basic issues: the validity of the Deed of Real Estate Mortgage executed on October 9, 1984 in favor of Godofredo Valmeo and the Deed of Sale of Registered Land with Pacto de Retro dated September 13, 1984 in favor of Bienvenido Almeda and whether or not Juan C. Sandoval is a purchaser in good faith.
The Court of Appeals, in its decision rendered on May 26, 1992, 6 affirmed the trial court's findings modifying only the award for damages and attorney's fees. 7 Respondent court confirmed the invalidity of the aforementioned documents and held that the circumstances outlined by the trial court should have so aroused petitioner's suspicion as to impel him to conduct further inquiry into his vendor's tittle.
Hence, this petition for review where Juan C. Sandoval prays for the reversal of the Court of Appeals decision. Two issues are presented for resolution. First, petitioner contends that he was denied due process when the ponente of the decision in the Court of Appeals, Justice Luis Victor, did not inhibit himself from the case inasmuch as he was, for a time, the presiding judge in the court a quo trying the case. Second, petitioner maintains that he is an innocent purchaser for value who should not be held accountable for the fraud committed against private respondent Tan, Jr.
As regards the first issue on the inhibition of Justice Luis Victor, we examine the objective norms set forth by the Court.
Rule 137 of the Revised Rules of Court, Section 1 reads:
Sec. 1. Disqualification of judges. — No judge or judicial officer shall sit in any case in which he, or his wife or child, is pecuniarily interested as heir, legatee, creditor or otherwise, or in which he is related to either party within the sixth degree of consanguinity or affinity, or to counsel within the fourth degree, computed according to the rules of the civil law, or in which he has been executor, administrator, guardian, trustee or counsel, or in which he has presided in any inferior court when his ruling or decision is the subject of review, without the written consent of all parties in interest, signed by them and entered upon the record.
A judge may, in the exercise of his sound discretion, disqualify himself from sitting in a case, for just or valid reasons other than those mentioned above. (Emphasis supplied.)
The Code of Judicial Conduct, which was promulgated on September 5, 1989 and made effective October 20, 1989, spells out in Rule 3.12 the disqualifications of a judge:
Rule 3.12. — A judge should take no part in a proceeding where the judge's impartiality might reasonably be questioned. These cases include, among others, proceedings where:
(a) the judge has personal knowledge of disputed evidentiary facts concerning the proceeding;
(b) the judge served as executor, administrator, guardian, trustee or lawyer in the case or matters in controversy, or a former associate of the judge served as counsel during their association, or the judge or lawyer was a material witness therein;
(c) the judge's ruling in a lower court is the subject of review;
(d) the judge is related by consanguinity or affinity to a party litigant within the sixth degree or to counsel within the fourth degree;
(e) the judge knows that the judge's spouse or child has a financial interest, as heir, legatee, creditor, fiduciary or otherwise, in the subject matter in controversy or in a party to the proceeding, or any other interest that could be substantially affected by the outcome of the proceeding.
In every instance the judge shall indicate the legal reason for inhibition.
The Canons of Judicial Ethics 8 provides us with more general guidelines:
3. Avoidance of appearance of impropriety A judge's official conduct should be free from the appearance of impropriety, and his personal behavior, not only upon the bench and in the performance of judicial duties, but also in his every day life, should be beyond reproach.
xxx xxx xxx
31. A summary of judicial obligations
A judge's conduct should be above reproach and in the discharge of his judicial duties he should be conscientious, studious, thorough, courteous, patient, punctual, just, impartial, fearless of public clamour, and regardless of private influenced should administer justice according to law and should deal with the patronage of the position as a public trust; and he should not allow outside matters or his private interests to interfere with the prompt and proper performance of his office.
From the foregoing legal principles, we find no basis for Justice Victor to inhibit himself from deciding the case. To be sure, as trial court judge, he presided partly over the case below, heard part of plaintiff's evidence and ruled on motions. 9 The decision itself, however, was penned by another judge, the Honorable Lucas Bersamin, who took over as presiding judge when then Judge Luis Victor was promoted. Upon elevation to the Court of Appeals, the case was assigned to Justice Victor as ponente.
The principle that approximates the situation obtaining herein is the disqualification of a judge from deciding a case where his "ruling in a lower court is the subject of review" or "in which he has presided in any inferior court when his ruling or decision is the subject of review." Granted that Justice Victor presided partly over the case in the court a quo, his was not the pen that finally rendered the decision therein. Hence, he cannot be said to have been placed in as position where he had to review his own decision as judge in the trial court. Accordingly, he was not legally bound to inhibit himself from the case.
Nevertheless, Justice Victor should have been more prudent and circumspect and declined to take on the case, owing to his earlier involvement in the case. The Court has held that a judge should not handle a case in which he might be perceived, rightly or wrongly, to be susceptible to bias and
partiality, 10 which axiom is intended to preserve and promote public confidence in the integrity and respect for the judiciary. 11 While he is not legally required to decline from taking part in the case, it is our considered view that his active participation in the case below constitutes a "just or valid reason," under Section 1 of Rule 137 for him to voluntarily inhibit himself from the case.
The second and more substantial question in the instant petition is whether or not Juan Sandoval, herein petitioner, is a purchaser n good faith or an innocent purchaser for value.
A finding that petitioner is a purchaser in good faith will inevitably be followed by a declaration that, as such, he is the rightful owner of the property in question. For even granting, as held by both the trial and respondent appellate courts, that the deed of sale from the fake Lorenzo L. Tan, Jr. to Bienvenido Almeda is a forged instrument which, being a nullity, conveys no title, 12 still a forged deed can be the basis of a valid title. The Court has held that a fraudulent or forged document of sale may give rise to a valid title if the certificate of title of has already been transferred from the name of the true owner to the same indicated by the forger and while it remained as such, the land was subsequently sold to an innocent purchaser. 13 Unquestionably, the vendee had the right to rely upon the certificate of title. 14
It is settled doctrine that one who deals with property registered under the Torrens system need not go beyond the same, but only has to rely on the title. 15 He is charged with notice only of such burdens and claims as are annotated on the title. 16
The aforesaid principle admits of an unchallenged exception: 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 17 or when the purchaser has knowledge of a defect or the lack of title in his vendor or of sufficient facts to induce a reasonably prudent man to inquire into the status of the title of the property in litigation. 18 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. 19 One who falls within the exception can neither be denominated an innocent purchaser for value nor a purchaser in good faith; and hence does not merit the protection of the law.
Section 44 of Presidential Decree No. 1529, 20 in support of the aforementioned principles, provide:
Sec. 44. Statutory liens affecting title. — Every registered owner receiving a certificate of title in pursuance of a decree of registration, and every subsequent purchaser of registered land taking a certificate of title for value and in good faith, shall hold the same free from all encumbrances except those noted on said certificate and any of the following encumbrances which may be subsisting, namely:
First. Liens, claims or rights arising or existing under the laws and Constitution of the Philippines which are not by law required to appear of record in the Registry of Deeds in order to be valid against subsequent purchasers or encumbrances of record.
Second. Unpaid real estate taxes levied and assessed within two years immediately preceding the acquisition of any right over the land by an innocent purchaser for value, without prejudice to the right of the government to collect taxes payable before that period from the delinquent taxpayer alone.
Third. Any public highway or private way established or recognized by law, or any government irrigation canal or lateral thereof, if the certificate of title does not estate that the boundaries of such highway or irrigation canal or lateral thereof have been determined.
Fourth. Any disposition of the property or limitation on the use thereof by virtue of, or pursuant to, Presidential Decree No. 27 or any other law or regulations on agrarian reform.
A purchaser in good faith is one who buys property of another, without notice that some other person has a right to, or interest in, such property and pays a full and fair price for the same, at the time of such purchase, or before he has notice of the claim or interest of some other persons in the property. 21 He buys the property with the belief that the person from whom he receives the thing was the owner and could convey title to the property. 22 A purchaser cannot close his eyes to facts which should put a reasonable man on his guard and still claim he acted in good faith. 23
The Court, after an exhaustive examination and review of the evidence on record, affirms the trial and appellate courts' findings that the petitioner is not a purchaser in good faith.
Respondent Court of Appeals rejected petitioner's claim of being a purchaser in good faith and adopted the trial court's explanation to the effect that:
Even if Sandoval acquired the property after it was advertised for sale in the Bulletin issue of March 3, 1985, the Court strongly doubts his claim of good faith. There are circumstances extant in the records of the case which belie Sandoval's defense. In the first place, it was testified to by Viterbo Cahilig of the Office of the Register of Deeds of Quezon City (tsn, Jan. 15, 1987) that there were two copies of TCT No. 196518 in the Register of Deeds, only one of which could be genuine. This apparently came about following the loss of the owner's copy of said TCT from its usual place of safekeeping by plaintiff Tan when a forged copy was made. One copy was used to inveigle Valmeo while the other was used by the mysterious Almeda. The two copies of the TCT soon found their way to the Registry of Deeds. By the time that the sale to Sandoval was being negotiated, therefore, the two copies of TCT No. 196518 were already in the files of the Register of Deeds. Since Sandoval's lawyer apparently made a verification at the Register of Deeds, it was inevitable for him to come across the two copies. Sandoval was thus aware in fact of the irregularity attending TCT No. 196518 and its derivative certificates.
Secondly, the Court finds to be unconvincing and improbable Sandoval's testimony that he actually met with Almeda at the latter's residence in Mandaluyong, Metro Manila prior to the execution of the deed of sale, in light of the fact that such deed of sale, Exhibit D, contained the erroneous address of Almeda, i.e., 776 S. Street, Mandaluyong, Metro Manila (Exh. D-1 and D-1-A). The explanation of the error, that such detail had been merely phoned in, is unacceptable. Having just come from Almeda's alleged residence to talk about a transaction as important and memorable as the purchase of realty for substantial consideration, it was not likely that Sandoval could have been mistaken about the street where his vendor allegedly resided.
Thirdly, equivocations were obviously committed by Sandoval in his testimony, which, taken together, tender to render improbable Sandoval's claim of good faith. Testifying on August 7, 1987, Sandoval claimed to have met Almeda to talk about the price (tsn, pp. 6-7); yet, in his cross-examination by plaintiff on September 11, 1987, Sandoval admitted that he had never really met Almeda in person (p. 4); a few minutes later on, on redirect examination, Sandoval clarified that he had also met Almeda in the property (Sept. 11, 1987, p. 13), only to vary this testimony on re-cross examination by stating that he did see Almeda in the apartment but was not able to talk to him (ibid, p. 15). The lack of consistency in Sandoval's enumeration and recollection of his alleged meetings with Almeda warrants disbelief in and inspires doubt of Sandoval's claim.
Fourthly, Sandoval could have unavoidably noticed the several but varying addresses of Almeda which were suspicious, to say the least. It was expected of him to have thereby been alerted to the questionability of Almeda's title on the property. As such, he is now to be deeded to have had actual notice of the defects in Almeda's title, which is antithetical to his pretended good faith.
And, lastly, the certification appearing on the deed of sale (Exh. D) that the property was not tenanted was plainly untrue. The making of the untruthful certification, the contrary to which was something well-known to Almeda and Sandoval, betrayed an awareness on their part of flaws in the transaction. As parties interested in the transaction, they should not have permitted such falsehood to taint the instrument.
The conclusion has become inexorable that Sandoval had actual knowledge of plaintiff's ownership of the property in question. Sandoval, however, must be paid back by Almeda the sum of P230,000.00. 24
It has been well-settled that absent any circumstance requiring the overturning of the factual conclusions made by the trial court, particularly if affirmed by the Court of Appeals, this court necessarily upholds said findings of fact. None of the exceptions to the affirmation of factual findings, as previously noted in Chua Tiong Tay v. Honorable Court of Appeals, 25 is present in the case at bar. Moreover, a study of the case records reveals that the factual conclusions of the court a quo are firmly grounded on the evidence presented during the trial.
On balance, the Court is of the view that petitioner is not a purchaser in good faith since he should have been aware of his vendor's fraudulent or forged title. Accordingly, he is ordered to reconvey subject property with its improvements to private respondent who was deprived of his property through subterfuge and without any fault on his part. Whatever damage and injury has resulted will have to be borne by petitioner and his co-defendants below, Bienvenido Almeda and Godofredo Valmeo.
WHEREFORE, the instant petition for review is hereby DENIED. The decision of the Court of Appeals in "Lorenzo L. Tan, Jr. v. Bienvenido Almeda," (CA G.R. CV No. 33265) is AFFIRMED.
SO ORDERED.
Regalado, Puno, Mendoza and Torres, Jr., JJ., concur.
Footnotes
1 1 ENCYCLOPEDIA BRITANNICA, 438 (1992).
2 TSN, April 25, 1986, p. 4.
3 "Lorenzo L. Tan, Jr. v. Bienvenido Almeda, et al." Civil Case No. Q-43464.
4 Exhibit I; cited in Rollo, p. 36.
5 Decision penned by Judge Lucas P. Bersamin, Rollo, pp. 32-44.
6 Penned by Justice Luis L. Victor and concurred in by Justices Jainal D. Rasul and Pacita Canizares-Nye.
7 Nominal damages were reduced to P20,000.00 and attorney's fees reduced to P10,000.00. Rollo, pp. 18-29.
8 Administrative Order No. 162, of the Department of Justice, dated August 1, 1946.
9 As presiding judge, he denied petitioner's (defendant below) motion for summary judgment; Records, p. 48.
10 Urbanes, Jr. v. CA, G.R. No. 112884, August 30, 1994, 236 SCRA 72.
11 Pico v. Combong, Jr., A.M. No. RTC-91-764, November 6, 1992, 215 SCRA 421; Pimentel v. Salonga, G.R. No. 7934, September 18, 1969.
12 Fule v. Legare, G.R. No. L-17951, February 28, 1963, 7 SCRA 351, citing Director of Lands v. Addison, 49 Phil. 19.
13 Tenio-Obsequio v. CA, G.R. No. 107967, March 1, 1994, 230 SCRA 550; Duran v. IAC, G.R. No. L-64159, September 10, 1985, 138 SCRA 489, 494 citing De la Cruz v. Fabie, 35 Phil. 144, Blondeau v. Nano, 61 Phil. 625, Fule v. Legare, supra, and Sec. 55, Act 496, Land Registration Act; Tiongco v. De la Merced, 58 SCRA 89, 92, G.R. No. L-244426, July 25, 1974.
14 Fule v. Legare, supra. citing Inquimboy v. Cruz, G.R. No. L-13953, July 28, 1960.
15 Santos v. CA, G.R. No. 90380, September 13, 1990, 189 SCRA 550; Unchuan v. CA, G.R. No. L-78775, May 31, 1988, 161 SCRA 710; Bailon-Casilao v. CA. G.R. No. L-78178, April 15, 1988, 160 SCRA 738; Director of Lands v. Abad, 61 Phil. 479, 487 citing Quimson v. Suarez, 45 Phil. 901, 906.
16 Unchuan v. CA. supra.; Agricultural and Home Extension Development Group v. CA, G.R. No. 92310, September 3, 1992, 213 SCRA 563.
17 Santos v. CA, supra, and Bailon-Casilao v. CA, supra., citing Gonzales v. IAC, G.R. No. 69622, January 29, 1988.
18 State Investment House Inc. v. CA, G.R. No. 115548, March 5, 1996, citing Capitol Subdivision v. Province of Negros Occidental, 7 SCRA 60, 70, Manacop, Jr. v. Cangino, 1 SCRA 572, Leung Yee v. E.L. Strong Machinery Co. & Williamson, 37 Phil. 644, PNB v. CA, 153 SCRA 453, 442 and Gonzales v. IAC, 157 SCRA 587, 595.
19 Pino v. CA, 198 SCRA 434, G.R. No. 94114, June 19, 1991; Centeno v. CA, 139 SCRA 545, 555, G.R. No. L40105, November 11, 1985 citing Anderson v. Garcia, 64 Phil. 506 and Fule v. Legare, supra.
20 Amending and codifying the laws Relative to Registration of Property and for other Purposes.
21 Agricultural and Home Extension Development Corporation v. CA, supra.; Santos v. CA, supra.; Fule v. Legare, supra.; De Santos v. IAC, 157 SCRA 295, 301-302.
22 Duran v. IAC, G.R. No. L-64159, September 10, 1985, citing Arriola v. Gomez dela Serna, 14 Phil. 627.
23 Embrado v. CA, G.R. No. 51457, June 27, 1994, 233 SCRA 335.
24 Rollo, pp. 42-43.
25 G.R. No. 112130, March 31, 1995, 243 SCRA 183, 186 citing Verendia v. CA, 217 SCRA 417 and Geronimo v. CA, 224 SCRA 494: "Among the exceptional circumstances where a reassessment of facts found by the lower courts is allowed are when the conclusion is a finding grounded entirely on speculation, surmises of conjectures; when the inference made is manifestly absurd, mistaken or impossible; when there is grave abuse of discretion n the appreciation of facts; when the judgment is premised on a misapprehension of facts; when the findings of fact are conflicting; and when the Court of Appeals, in making its findings, went beyond the issues of the case and the same are contrary to the admission of both appellant and appellee."
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