Title
Spouses Anselmo and Priscilla Bulaong vs. Veronica Gonzales
Case
G.R. No. 156318
Decision Date
Sep 5, 2011
Bulaongs sought to nullify titles in Gonzales's name following a mortgage. The SC reversed CA's ruling, asserting no valid execution sale occurred as property interest was unproven, thus reinstating RTC's decision.
petitioner
respondent
mortgage

Case Summary (G.R. No. 156318)

Factual Background

The case concerned two parcels of land. One parcel, with an area of 237 square meters and originally covered by TCT No. T-249639, was registered in the name of Fortunato E. Limpo and his spouse Bertha Limpo. A second parcel, with an area of 86 square meters and originally covered by TCT No. T-249641, was registered in the names of Pacifica E. Limpo (married to Nicanor C. Sincionco) and Fortunato E. Limpo (married to Bertha Limpo). These properties were mortgaged by Regina Christi Limpo—the daughter of Fortunato and Bertha Limpo—upon authority of her father, to secure a loan of P4,300,000.00, evidenced by a Deed of Mortgage dated January 13, 1993.

The Bulaongs alleged that prior to executing the mortgage, Regina delivered the owners’ duplicate certificates of title, and that Atty. Elenita Corpus, then Register of Deeds, assured them that the properties were free from liens or encumbrances. The Bulaongs further alleged that after the mortgage, when they returned to register and annotate it, they learned that the Register of Deeds’ copies of the titles had been destroyed in the March 7, 1987 fire. They were advised to reconstitute the titles. They were also assured that the mortgage would be protected since a copy of the deed of mortgage had already been provided for annotation.

Reconstituted titles were issued on February 4, 1993: TCT No. RT-29488 replaced TCT No. T-249639, and TCT No. RT-22489 replaced TCT No. T-249641. New titles were subsequently issued on February 24, 1993 following the extrajudicial settlement of Regina’s parents’ estate. TCT No. RT-29488 was cancelled and replaced by TCT No. T-30395, with Regina appearing as registered owner; TCT No. RT-22489 was cancelled and replaced by TCT No. T-30396, registered in the names of Pacifica Limpo and Regina Limpo as heirs.

When the Bulaongs obtained these new titles, they discovered annotations in Regina’s new titles, including Entry No. 7808, a Notice of Levy on Execution in favor of Veronica Gonzales, referencing writs issued from criminal cases for estafa against Regina and others, with a date of instrument of January 4, 1993 and a date of inscription stated as January 4, 1993 at 11:50 a.m. They noted that Entry No. 7808 appeared in the titles despite the earlier mortgage entries appearing as Entry No. 5484 related to their mortgage.

Genesis of the Levy and the Competing Claims

Veronica Gonzales had filed a criminal case for estafa against Regina. On October 28, 1991, the RTC rendered a decision acquitting Regina but ordering her to pay actual damages of P275,000.00. A writ of execution issued on December 29, 1992 led to the recording of the notice of levy in the Primary Entry Book on January 4, 1993. However, the notice was not annotated on the titles at that time because the properties were still registered under Regina’s parents’ names. The levy, as later reflected in the titles, was premised on Regina’s purported interest derived from an alleged Deed of Absolute Sale dated November 5, 1991, allegedly transferring the parents’ interest to Regina. The records showed that Regina never registered this sale with the Register of Deeds.

To satisfy Regina’s judgment debt, the properties were sold at public auction on June 8, 1993 to Veronica, as the only bidder, for P640,354.14. The certificate of sale was annotated on the titles on June 8, 1993 and, upon expiration of the redemption period on June 20, 1994, Veronica’s titles were consolidated. A final deed of sale was issued and annotated on June 24, 1994 as Entry No. 40425 on TCT Nos. T-30395 and T-30396.

In parallel, the Bulaongs had foreclosed their mortgage. The sheriff conducted the foreclosure auction on August 22, 1994, where the Bulaongs were the highest bidders, purchasing the properties for P4,300,000.00. They paid capital gains tax (P215,000.00) and documentary stamp tax (P64,500.00) to enable transfer in their names. Their certificate of sale was inscribed on August 23, 1994 as Entry No. 46739 on TCT Nos. T-30395 and T-30396.

RTC Action on Veronica’s Owner’s Copies and the Mandamus Proceeding

Veronica later filed a petition for surrender of the owners’ copies of TCT Nos. T-30395 and T-30396 with the RTC of Malolos, docketed as LRC Case No. P-292. On December 16, 1994, the RTC granted the petition and ordered Regina to surrender the owners’ copies. It directed that if Regina failed to comply, the Register of Deeds should cancel the existing titles and issue new ones in Veronica’s name. The Register of Deeds cancelled TCT Nos. T-30395 and T-30396 and issued TCT No. T-62002 in Veronica’s name and TCT No. T-62003 in the names of Veronica and Pacifica Limpo. The new titles were described as “clean,” without annotations, liens, or encumbrances.

The Bulaongs then filed a petition for mandamus before the RTC of Bulacan against the incumbent Register of Deeds, Ramon Sampana, and Veronica. They prayed that the RTC order Sampana to cancel TCT Nos. T-62002 and T-62003 and issue new titles in their names. They also sought moral and exemplary damages, and attorney’s fees. On July 30, 1999, the RTC ruled for the Bulaongs. It ordered cancellation of the Veronica titles and required the issuance of new titles in favor of the Bulaongs, but conditioned the issuance on reimbursement of Veronica’s judgment lien of P275,000.00 plus interest. The RTC also awarded P50,000.00 in attorney’s fees to the Bulaongs.

The RTC reasoned that allowing Veronica to levy on properties allegedly worth at least P5,000,000.00 to satisfy a judgment of P275,000.00 would amount to gross unjust enrichment.

Proceedings Before the Court of Appeals

Both parties appealed to the CA under CA-G.R. SP No. 55423. On July 31, 2002, the CA reversed and set aside the RTC decision. The CA held the Notice of Levy on Execution valid, reasoning that it created a lien in favor of the judgment creditor. It further held that when the Bulaongs received the owners’ copies of TCT Nos. T-30395 and T-30396, the notice had already been annotated, which should have put them on guard. The CA concluded that as mortgagees, the Bulaongs had the option to redeem the properties during the redemption period, and that their failure to redeem rendered the consolidation of titles in Veronica’s name proper.

The Issues Raised by Petitioners

The Bulaongs filed the present petition for review on certiorari raising these issues: (a) whether Entry No. 7808 was valid; (b) whether Veronica had a superior right over the properties; and (c) assuming the notice of levy earlier annotated in Veronica’s favor was valid, whether there was a valid foreclosure sale.

Threshold Procedural Ruling on Review of Facts

The Court recognized that petitions for review on certiorari under Rule 45 ordinarily raise only questions of law. It noted, however, that exceptions exist, particularly where the CA’s judgment is based on misapprehension of facts or where inferences made by lower courts were manifestly mistaken. The Court held that the core issue of who had a better right over the properties required careful evaluation of evidence, especially given the Bulaongs’ allegations that fraud attended the annotation of Entry No. 7808. It therefore proceeded to review the case on the basis that the exceptional circumstances justified factual review. The Court also explained that the improper caption of the mandamus petition did not control, because the cause of action is determined by the allegations in the complaint rather than the designation of the pleading.

Redemption Was Not the Proper Remedy for the Bulaongs

The Court disagreed with the CA’s view that the Bulaongs forfeited their position by failing to redeem. The Court explained that redemption would have been inconsistent with the Bulaongs’ consistent claim that the levy and execution sale were null and void. It invoked the reasoning in Cometa v. Intermediate Appellate Court, where the Court held that redemption would constitute implied admission of the regularity of the sale and would estop a party from later impugning its validity. Thus, the Court held that redemption was not the proper remedy for the Bulaongs given the posture of their challenge.

Entry No. 7808 Was Not Automatically Fraudulent; The Levy Was Properly Noticed in the Primary Entry Book

The Court then addressed the Bulaongs’ challenge to the validity of Entry No. 7808, which they asserted was fraudulent. They pointed to suspicious circumstances: that Entry No. 7808 appeared after the mortgage entry despite its higher entry number but earlier volume placement, and that the levy purportedly had a date of presentation prior to the mortgage date while its inscription on the titles appeared after the mortgage.

The Court did not disregard the suspicious features. It held, however, that the discrepancies were explained by the registry process. The records showed that on January 4, 1993, Veronica went to the Registry of Bulacan to register the notice. The Register of Deeds placed it in the Primary Entry Book, but did not immediately annotate it on the newly reconstituted titles due to a registrability question that required consultation with the Land Registration Authority on January 25, 1993, with a response only on February 10, 1993. Because reconstituted titles were issued on February 4, 1993, annotation could only be reflected when new titles were issued on February 24, 1993. The Court held that the apparent numbering and inscription date discrepancies were governed by Section 56 of P.D. No. 1529, which provides that instruments are entered in the Primary Entry Book according to the order of reception and that they are regarded as registered from the time so noted.

Accordingly, the Court held that the late annotation did not diminish the notice’s effectivity. It relied on jurisprudence holding that entry of the notice of levy in the Primary Entry Book, even without immediate annotation on the certificates of title, already suffices as notice to third persons. The Cour

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