Case Summary (G.R. No. 212256)
Factual Background
The dispute arose from competing claims to a parcel of land located at 820 corner Jacinto Street and Quezon Boulevard, Davao City (the subject property), originally covered by TCT No. T-112717 in the name of Rosa Elsa Serrano Jonas and later by TCT No. T-315273 in the name of Ganzon Yap, married to Haima Yap (Spouses Yap). In July 1985 Rosa Elsa executed a Special Power of Attorney (SPA) in favor of her mother, Andrea C. Serrano, authorizing sale of the property. In May 1996 Andrea’s son, Cipriano Serrano, offered the property to Spouses Benjamin and Farida Bitte (Spouses Bitte). Spouses Bitte paid an aggregate of P600,000 as advance payments in September 1996 and paid for Rosa Elsa’s round-trip airfare to attend a negotiation in October 1996. On October 10, 1996, Rosa Elsa revoked the SPA and, after a meeting with Spouses Bitte on October 11, 1996, withdrew from the transaction. Thereafter, on October 17, 1996, Spouses Bitte filed Civil Case No. 24,771-96 for specific performance with damages against Rosa Elsa, Andrea, and Cipriano.
Subsequent Conveyances, Foreclosure and Redemption
While Civil Case No. 24,771-96 was pending, Andrea executed a Deed of Absolute Sale dated February 25, 1997, purportedly selling the property to Spouses Bitte. The property had earlier been mortgaged to Mindanao Development Bank, foreclosed, and sold at public auction on December 14, 1998, as annotated on the title. On September 14, 1998 Spouses Bitte redeemed the property from the highest bidder for P1.6 million and subsequently sold it to Ganzon Yap.
Civil Case No. 24,771-96 — Proceedings in RTC Branch 13
In Civil Case No. 24,771-96, RTC-Branch 13 initially issued a Temporary Restraining Order on October 18, 1996 and a Writ of Preliminary Injunction on November 8, 1996 in favor of Spouses Bitte. During pre-trial on July 30, 1999, Spouses Bitte failed to appear and the complaint was dismissed. Subsequent withdrawals of counsel, cancellations of reception of evidence, reconsiderations, further defaults, and finally a declaration of non-suit for failure to appear at pre-trial on August 21, 2003 produced a procedural history marked by multiple defaults and ex parte reception of evidence by Rosa Elsa.
Civil Case No. 27,667-99 — Complaint by Spouses Jonas
On November 16, 1999 Spouses Jonas filed Civil Case No. 27,667-99 for annulment of the deed of absolute sale, cancellation of title, reconveyance, recovery of possession, injunction, and damages against Spouses Bitte and others. Branch 9 issued a TRO and, after hearing, a Writ of Preliminary Injunction. An amended complaint impleaded Spouses Yap after their names appeared on the title following the subsequent transfers.
Consolidation and Joint Hearing
RTC-Branch 13 reconsidered earlier dismissals and on October 4, 2001 ordered the consolidation of the two cases for joint hearing before Branch 13. Despite consolidation, Spouses Bitte repeatedly failed to appear at pre-trial and were declared in default and non-suited, enabling Rosa Elsa to present her evidence ex parte.
RTC Joint Decision
On January 18, 2007 RTC-Branch 13 rendered a Joint Decision that reiterated the dismissal of Civil Case No. 24,771-96 and, in favor of Spouses Jonas in Civil Case No. 27,667-99, directed Spouses Benjamin and Farida Bitte to pay Rosa Elsa the amount of P1,546,752.80 representing the alleged balance of the sale and to pay interest at twelve percent per annum from the date of decision until fully paid.
Court of Appeals Decision
On appeal the Court of Appeals reversed the RTC Joint Decision in material part by declaring the Deed of Absolute Sale dated February 25, 1997 null and void, directing cancellation of TCT No. T-315273 and reinstatement of TCT No. T-112717 in the name of Rosa Elsa, and ordering Spouses Yap and those in possession to vacate and surrender the property to Rosa Elsa. The CA based its ruling on three principal findings: that Andrea’s authority to sell had been revoked on October 10, 1996 and thus could not bind Rosa Elsa; that Spouses Bitte had no right to redeem the foreclosed property under Act No. 3135 and Section 27, Rule 39 because no valid conveyance from Rosa Elsa occurred; and that Ganzon Yap was not an innocent purchaser for value because circumstances should have alerted him to defects in Spouses Bitte’s title.
Issues Presented to the Supreme Court
The petition raised procedural and substantive issues, including whether the CA erred by allowing respondents’ brief in violation of Section 7, Rule 44, Rules of Court; whether the revocation of the SPA is enforceable against third persons despite lack of registration; whether the CA’s finding of invalidity of the deed of sale was supported by strong and conclusive evidence; whether the CA disregarded the legal effects of the foreclosure sale; and whether the CA correctly found Ganzon Yap not to be an innocent purchaser consistent with the doctrine of indefeasibility of title.
Petitioners’ Contentions
Petitioners argued that the Deed of Absolute Sale was valid because the revocation of the SPA was not registered in the Register of Deeds and thus Andrea’s authority subsisted. They contended that Spouses Bitte lawfully redeemed the foreclosed property pursuant to Act No. 3135 and Section 27, Rule 39. They further asserted that Spouses Yap were purchasers in good faith and for value, relying on the certificate of title which bore no annotation that would have alerted them to any defect.
Respondents’ Contentions
Respondents emphasized that Spouses Bitte had been declared in default by the RTC and thus lacked the standing to pursue relief. They maintained that the SPA had been validly revoked and that Andrea’s subsequent sale was unenforceable. Respondents further contended that Spouses Yap were not innocent purchasers because the title remained in Rosa Elsa’s name at the time of the transaction and circumstances required further inquiry of the buyers.
The Court’s Procedural Rulings
The Supreme Court rejected respondents’ contention that Spouses Bitte lost personality to appeal by virtue of default. The Court recalled the settled rule that a party declared in default retains appellate remedies where the judgment is excessive, different in kind from the prayer, unsupported by evidence, or contrary to law. The Court also observed that the issues raised in the petition were primarily factual and acknowledged the general rule of deference to factual findings of the Court of Appeals, but found sufficient legal and factual bases to review the CA’s conclusions.
The Court’s Findings on Deed Authenticity and Notarization
The Court agreed with the CA that the genuineness and due execution of the February 25, 1997 Deed of Absolute Sale were not established. The National Archives, Regional Archives Division, Davao City, certified that no copy of the subject deed was on file and that the document entries for that date corresponded to a different instrument. The Court explained that a public document rests on due notarization; absent valid notarization the instrument is a private document subject to proof under Section 20, Rule 132. Because Spouses Bitte were in default and failed to discharge the burden of proving authenticity, the presumption of regularity did not attach and the deed could be treated as non-existent.
The Court’s Application of the Doctrine of Apparent Authority
The Court considered and rejected petitioners’ reliance on the doctrine of apparent authority and on Section 52 of the Property Registration Decree as shielding them from a revocation not entered in the Registry. The Court reiterated that revocation becomes operative as to the agent when made known to the agent and that apparent authority protects third parties who reasonably rely on the appearance of authority until they receive notice of its termination. The Court found that Spouses Bitte directly negotiated with Rosa Elsa on October 11, 1996, after she had revoked the SPA on October 10, 1996. That direct negotiation constituted implied or constructive notice of revocation under Article 1924. Spouses Bitte had information sufficient to require inquiry; yet they later dealt with Andrea. The Court applied the doctrine that apparent authority ends when it is no longer reasonable to believe that the agent retains actual authority.
Application of Article 1317 and Article 1403(1) of the Civil Code
The Court held that contracts entered by one who has no authority or who has acted beyond powers are unenforceable unless ratified by the principal before revocation, citing Article 1317 and Article 1403(1) of the Civil Code. Because the sale was executed after the revocation and absent ratification by Rosa Elsa, the transaction was unenforceable against her. Consequently, Spouses Bitte acquired no better title than Andrea possessed, which was none.
Redemption Right under Act No. 3135 and Rule 39
Given that Spouses Bitte acquired no interest in the property, the Court held they lacked the legal personality to redeem the foreclosed property under Act No. 3135 and Section 27, Rule 39. The statutes enumerate the persons authorized to redeem, such as the judgment obligor, his successors in interest, and certain creditors; Spouses Bitte did not fall within those categories.
Purchaser in Good Faith Analysis Regarding Spouses Yap
The Court found that Spouses Yap failed to prove they were purchasers in good faith and for value. The burden of proving that status rests on the asserting party. At the time of their acquisition the certificate of title remained in Rosa Elsa’s name. T
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Case Syllabus (G.R. No. 212256)
Parties and Procedural Posture
- Farida Yap Bitte and the Heirs of Benjamin D. Bitte were the petitioners who sought review by certiorari under Rule 45, Rules of Court from the decision of the Court of Appeals.
- Spouses Fred and Rosa Elsa Serrano Jonas were the respondents and appellants in the Court of Appeals proceedings below.
- The Regional Trial Court, Branch 13, Davao City, rendered a Joint Decision dated January 18, 2007 favoring Spouses Jonas and directing Spouses Bitte to pay P1,546,752.80 as balance for the subject property.
- The Court of Appeals reversed the RTC by Decision dated September 26, 2013, declared the deed of sale dated February 25, 1997 null and void, cancelled TCT No. T-315273, and ordered reinstatement of TCT No. T-112717 in the name of Rosa Elsa S. Serrano.
- The Court of Appeals denied reconsideration on February 26, 2014, and the Supreme Court issued a decision denying the petition on December 9, 2015.
Key Factual Allegations
- Rosa Elsa Serrano Jonas executed a Special Power of Attorney dated July 19, 1985 appointing her mother, Andrea C. Serrano, to sell the subject property.
- Spouses Bitte made advance payments of P200,000 on September 3, 1996 and P400,000 on September 10, 1996 to Cipriano Serrano as part of negotiations for purchase of the property.
- Spouses Bitte paid for Rosa Elsa's round-trip ticket to enable her return from Australia and met with her on October 11, 1996 for negotiations.
- Rosa Elsa executed a Deed of Revocation of the SPA dated October 10, 1996 and later withdrew from the transaction.
- Andrea executed a Deed of Absolute Sale dated February 25, 1997 in favor of Spouses Bitte, and the subject property was later foreclosed and sold at public auction on December 14, 1998.
- Spouses Bitte redeemed the property on September 14, 1998 for P1.6 million from the highest bidder and subsequently sold the property to Ganzon Yap, married to Haima Yap.
Procedural History
- Spouses Bitte filed Civil Case No. 24,771-96 on October 17, 1996 for specific performance with damages, which was later dismissed after defaults in pre-trial.
- Spouses Jonas filed Civil Case No. 27,667-99 on November 16, 1999 for annulment of deed of absolute sale, cancellation of TCT and recovery of possession, which led to TRO and WPI.
- The two cases were consolidated by order dated October 4, 2001 and were jointly heard before RTC-Branch 13 after administrative coordination.
- RTC-Branch 13 rendered a Joint Decision on January 18, 2007 reiterating dismissal of Civil Case No. 24,771-96 and directing Spouses Bitte to pay Rosa Elsa P1,546,752.80.
- The Court of Appeals reversed the RTC on September 26, 2013, declared the Deed of Absolute Sale dated February 25, 1997 null and void, cancelled TCT No. T-315273, and ordered reinstatement of TCT No. T-112717.
- The Supreme Court denied the petition for review on certiorari and thus left the Court of Appeals' disposition undisturbed.
Issues Presented
- Whether the Court of Appeals departed from accepted judicial procedure when it allowed an appellee brief filed in alleged violation of Section 7, Rule 44, Rules of Court.
- Whether the Court of Appeals erred in finding the revocation of the SPA enforceable against third persons despite alleged lack of basis.
- Whether the Court of Appeals correctly found the Deed of Absolute Sale invalid and supported that finding with strong and conclusive evidence.
- Whether the Court of Appeals disregarded the legal effects of the foreclosure sale in ruling on the rights of Spouses Bitte.
- Whether Ganzon Yap was an innocent purchaser for value consistent with the principle of indefeasibility of title.