G.R. No. 192669 - Saberon vs. Ventanilla, Jr.

Case Summary (G.R. No. 192669)

Factual Background

The land at issue formed part of Capitol Homes Subdivision Nos. I and II owned by Manila Remnant Co., Inc. (MRCI) and developed under an agency agreement with A.U. Valencia & Co., Inc. (AUVC). The Ventanillas entered into contracts to sell for two lots in 1970 and paid monthly installments. Unbeknownst to them, Artemio U. Valencia, AUVC’s president, resold the lots to a third party, Carlos Crisostomo, and misapplied the Ventanillas’ payments. MRCI later discovered AUVC’s irregularities, terminated the agency, and removed Valencia.

Early Litigation and Trial Relief

The Ventanillas filed Civil Case No. 26411 and the Court of First Instance, Quezon City, rendered judgment on November 17, 1980 declaring the contracts in favor of the Ventanillas valid and annulling the contract to sell in favor of Crisostomo. The court ordered MRCI to execute absolute deeds of sale in favor of the Ventanillas, awarded P210,000.00 in damages and attorney’s fees, and provided alternative relief for reimbursement plus interest if transfer could not be effected. The appellate court affirmed and this Court sustained the judgment in G.R. No. 82978 on November 22, 1990.

Post‑judgment Events and Competing Transactions

After the judgment became executory and a writ of execution issued, MRCI registered a contract to sell and later a deed of sale to Samuel Marquez in 1990–1992. Due to inadvertent errors at the Registry of Deeds for Quezon City, a notice of levy entered in the primary entry book on May 31, 1991 was not annotated on subsequent certificates of title issued in the names of Marquez and, later, the Saberons when Marquez sold the lots to them in 1992. The Saberons relied on the clean titles, paid P2,100,000.00 to Marquez, and completed improvements.

The 1994 Supreme Court Ruling

In G.R. No. 107282, this Court resolved that the contract to sell in favor of the Ventanillas had been recognized and was not assailed on appeal, and that MRCI’s later sale to Marquez could not prevail over the final and executory judgment ordering MRCI to execute an absolute deed of sale to the Ventanillas. The Court noted suspicious circumstances surrounding the Marquez transaction, including delay, non‑intervention by Marquez in earlier proceedings, and lack of proof of payment of the alleged balance.

The RTC Case Q‑96‑26486 and Its Judgment

The Ventanillas later instituted Civil Case No. Q‑96‑26486 seeking annulment of the conveyances to Marquez and the Saberons. On June 21, 2005 the RTC declared the Transfer Certificates of Title in the names of Marquez and the Saberons null and void; ordered MRCI to receive payment of the balance and execute deeds of sale to the Ventanillas or allow consignment; ordered cancellation of the titles and issuance of new titles to the Ventanillas upon compliance; awarded moral damages of P100,000.00 and attorney’s fees of P50,000.00 against MRCI and others; and ordered MRCI and co‑defendants to pay P7,118,155.88 to the Saberons for the value of the properties and the improvements introduced by them.

Court of Appeals Disposition

On appeal, the Court of Appeals affirmed the RTC’s findings that MRCI and its officers acted in bad faith by selling the lots to Marquez while litigation over the Ventanillas’ rights was pending, that the notice of levy created constructive notice when entered in the primary entry book, and that the subsequent issuance of clean titles did not defeat the levy. The CA therefore upheld the cancellation of the Saberons’ titles and the other reliefs ordered by the RTC.

Petitioners’ Contentions Before the Supreme Court

The Saberons argued that they were purchasers in good faith and for value who had exercised due diligence by inquiring at the Registry of Deeds and obtaining clean certificates of title. They contended that the absence of annotation on the face of the titles relieved them of notice and that the CA erred in relying exclusively on AFP Mutual Benefit Association, Inc. v. Santiago. They also maintained that the Ventanillas’ rights had not ripened into ownership because they failed to consign the balance due under the contracts to sell.

Issues Presented to the Supreme Court

The Court framed the central issue as whether the registration of the notice of levy in the primary entry book produced constructive notice binding third persons despite the failure of the Register of Deeds to annotate the levy on the certificates of title, and consequently whether the Ventanillas’ levy had priority over the Saberons’ clean titles.

Supreme Court Ruling and Disposition

The Court affirmed the decisions of the Court of Appeals and the RTC with modification. The Court held that the entry of the notice of levy in the Registry of Deeds’ primary entry book was constructive notice to the world and created a lien that had priority over subsequent voluntary registrations and titles. The Court ruled that the failure of the Register of Deeds to carry over the levy to subsequent certificates of title did not defeat the superior right of the Ventanillas. The petition for certiorari by the Saberons was denied except that the Court granted the Ventanillas sixty days from finality of the resolution to elect whether to pay the Saberons the value of improvements and necessary and useful expenses or to oblige the Saberons to pay the price of the lots, and remanded the case to the RTC for determination of amounts depending on the Ventanillas’ election.

Legal Basis and Reasoning

The Court anchored its ruling on P.D. No. 1529, emphasizing Sections 51 and 52 that make registration the operative act affecting third persons and that registration creates constructive notice. The Court relied on Section 56 and jurisprudence, particularly AFP v. Santiago, holding that entry in the day book sufficed for registration of involuntary liens and produced all effects of registration even if notation on the certificate of title was omitted. The Court rejected the Register of Deeds’ theory that a later deed of sale could supersede an earlier levy, reiterated that a levy creates a lien which continues until satisfaction or discharge, and invoked Section 59’s ministerial duty to carry over encumbrances. The Court also respected prior final determinations establishing the Ventanillas’ contracts to sell and concluded that MRCI’s sales to Marquez could not prevail.

Application of Civil Code Remedies for Improvements

The Court treated the Saberons as builders in good faith and applied Article 448 in relation to Article 546 of the Civil Code. It recognized the Ventanillas’ election between appropriating the imp

Case Syllabus (G.R. No. 192669)

Parties and Procedural Posture

Raul F. Saberon, Jr., Joan F. Saberon and Jacqueline Saberon filed a petition assailing the Court of Appeals decision in CA-G.R. CV No. 85520 after the Regional Trial Court, Branch 80, Quezon City rendered judgment in Civil Case No. Q-96-26486.
Oscar Ventanilla, Jr. and Carmen Gloria D. Ventanilla are the plaintiffs in the underlying actions who sought cancellation of titles issued to Samuel Marquez and to the Saberons and recovery of the lots subject of prior contracts to sell.
The petition questioned the CA’s affirmation of the RTC decision ordering cancellation of Transfer Certificates of Title Nos. 55396 and 55397 in Marquez’s name and TCT Nos. 63140 and 63141 in the name of the Saberons.
The case arose from antecedent cases decided by the Court in G.R. No. 82978 and G.R. No. 107282 which the Court resolved in 1990 and 1994 respectively and which affirmed the Ventanillas’ contractual rights.
The Court entertained a motion for reconsideration of its January 19, 2011 Resolution denying the Saberons petition and rendered the present Resolution on April 21, 2014.

Key Factual Allegations

Manila Remnant Co., Inc. (MRCI) contracted with A.U. Valencia & Co., Inc. (AUVC) for subdivision development and sales, and AUVC’s president Artemio U. Valencia collected payments from the Ventanillas and purportedly resold the lots to Carlos Crisostomo without the Ventanillas’ knowledge.
The Ventanillas paid substantial monthly amortizations from 1970 onward, which AUVC deposited into Valencia’s account and which MRCI’s records showed as credited to Crisostomo.
MRCI later terminated AUVC, removed Valencia, and AUVC sued MRCI, prompting an order for lot buyers to deposit monthly amortizations with the trial court.
The Ventanillas discovered Valencia’s deception in March 1978, sued, and obtained a judgment declaring their contracts to sell valid and ordering MRCI to execute absolute deeds of sale and awarding damages and attorney’s fees.
Subsequent dealings included a registered contract to sell and deed of absolute sale to Samuel Marquez, and later transfers from Marquez to the Saberons, with registry entries issuing TCTs in favor of Marquez and then in favor of the Saberons.

Prior Litigations and Judgments

The CFI Quezon City in Civil Case No. 26411 declared the Ventanillas’ contracts valid, annulled the Crisostomo contract, ordered MRCI to execute absolute deeds of sale, and awarded P210,000.00 in damages and attorney’s fees.
The Court of Appeals affirmed the trial court’s judgment on appeal, and this Court in G.R. No. 82978 affirmed that ruling on November 22, 1990, declaring the judgment immediately executory.
After issuance of writ of execution and annotation of a notice of levy, MRCI alleged it had already sold the lots to Marquez and offered reimbursement in lieu of conveyance, which the Ventanillas rejected.
In G.R. No. 107282 the Court on March 16, 1994 reiterated that MRCI’s transaction with Marquez could not prevail over the final and executory judgment ordering conveyance to the Ventanillas and noted suspicious circumstances surrounding the Marquez transaction.

Trial Court Ruling (Civil Case No. Q-96-26486)

The RTC on June 21, 2005 declared TCT Nos. 55396 and 55397 in the name of Samuel Marquez, and TCT Nos. 63140 and 63141 in the names of the Saberons, null and void.
The RTC ordered MRCI to receive payment of the balance and execute an absolute deed of sale in favor of the Ventanillas or permitted consignment with the Court in case of MRCI’s failure.
The RTC ordered the Register of Deeds to cancel the titles in the name of Marquez and the Saberons and to issue new certificates of title in the names of the Ventanillas upon registration of the Deed of Absolute Sale or proof of consignment.
The RTC awarded P100,000.00 in moral damages and P50,000.00 in attorneys’ fees against MRCI, Krohn, Tabalingcos and Marquez, jointly and severally, and ordered those defendants to pay the Saberons P7,118,155.88 representing value of the properties and improvements.

Court of Appeals Ruling

The CA affirmed the RTC and concluded that MRCI and its officers acted in bad faith by selling the lots to Marquez while litigation as to the Ventanillas’ rights remained pending.
The CA relied on the doctrine that an entry of a notice of levy in the primary entry book produces constructive not