G.r. No. 156076 September 17, 2008 Ching Vs Enrile

G.R. No. 156076 September 17, 2008 CHING vs ENRILE

FACTS: The Spouse Ching purchased from a certain Raymunda La Fuente a 370-square meter lot located at Barrio Tungtong, Las Piñas, covered by TCT No. 83618. La Fuente delivered to the spouses a duly notarized Deed of Absolute Sale with the Owner’s Duplicate Certificate of Title. The spouses then took physical possession of the property. However, the conveyance was no registered by the spouses in the ROD as prescribed by Section 51 of PD 1529. Instead, the spouses executed an Affidavit of Adverse Claim which was recorded and annotated at the back of TCT No. 83618 reflected in the Memorandum of Encumbrances under Entry No. 86-62262. In the meantime, the spouses continued to peacefully and continuously possess the property. Three years after they purchased the property, the Ching spouses received a Notice of Levy on Attachment and Writ of Execution issued by the RTC of Pasig in favor of the Enrile spouses. This notice was recorded at the dorsal portion of TCT No. 83618 under Entry No. 3433-2, while the Writ of Execution was inscribed under Entry No. 3434-2. Also inscribed in the TCT is the Certificate of Sale dated January 26, 1989 covering the disputed property in favor of the Enrile spouses. The Ching spouses then filed a Petition to Remove Cloud on or Quiet Title to Real Property asserting ownership of the disputed property. The RTC rendered judgment in their favor upholding their superior right over the property in view of the registration of the Affidavit of Adverse Claim prior to the Certificate of Sale annotated in favor of the Enrile spouses. The Enrile spouses appealed to the CA, arguing that the RTC committed an error in ruling that the Ching spouses had a better right over the property; alleging that mere registration of the adverse claim of the Chings on the prior conveyance of the property made by La Fuente to them, being a voluntary dealing with a registered land, was insufficient. They further argued that the Chings should have registered the Deed of Absolute Sale with the ROD pursuant to Sec. 51 of PD 1529 in order to protect their interest over the property and not merely register an adverse claim under Section 70 of the same law. The Enrile spouses further insisted that the annotated Adverse Claim of the petitioners had already expired and thus, does not offer the Ching spouses any protection when they acquired the property through execution sale afterwards. Although the CA viewed the prior sale of the lot to the Chings as perfected and consummated, it nonetheless reversed the RTC’s decision and upheld the Enrile spouses’ preferential right over the property. CA ruled in favor of the Enriles on the ground that the Chings failed to diligently protect their interests by failing to register the conveyance or transaction in the office of Register of Deeds; and that the Enriles as attaching creditors who registered the order of attachment and the sale of the property to them as the highest bidders, acquired a valid title to the disputed property as against petitioners who had previously bought the same property from the registered owner but failed to register their deed of sale. It further ruled that the Affidavit of Adverse Claim cannot be considered sufficient notice to third person like the Enriles who were not aware of the sale of the disputed lot to petitioners prior to the levy on attachment.

ISSUE: Can the Enrile spouses be considered as buyers in good faith when they acquired the disputed lot despite the annotated adverse claim on their title? HELD: No, the Enrile spouses cannot be considered as buyers in good faith. The general rule is that a person dealing with registered land is not required to go behind the register to determine the condition of the property. However, when a person dealing with such land has knowledge of a prior existing interest which is unregistered at the time he acquired a right to the same land, his knowledge of that prior unregistered interest has the effect of registration to him as knowledge of an unregistered sale is equivalent to registration. The Enriles were aware of the Ching’s adverse claim on the property which was annotated on the back of the TCT and that they were in possession of the property. In fact, they even petitioned the RTC of Pasig to send a Notice of Levy on Attachment and Writ of Execution to the Ching Spouses. These Hence, the Enrile spouses cannot be considered as buyers in good faith as these facts should have pushed them to ascertain if the property being offered to them has not been sold to somebody else. As aptly observed by the RTC, regardless of the non-registration of the Deed of Absolute Sale to petitioners, nor the 30-day effectivity of the adverse claim under Section 70 of PD 1529, respondents were constructively notified of petitioners’ prior purchase of the disputed property.