CASE DIGEST: Spouses Vilbar vs. Opinion

G.R. NO. 176043 : JANUARY 15, 2014




Spouses Vilbar claimed that on July 10, 1979, they and Dulos Realty and Development Corporation (Dulos Realty) entered into a Contract to Sell involving two (2) lots, LOT 20-b and LOT 20-A. Sometime in August 1979, spouses Vilbar took possession of Lot 20-B in the concept of owners and exercised acts of ownership thereon with the permission of Dulos Realty after making some advance payment.

Upon full payment of the purchase price for Lot 20, or on June 1, 1981, Dulos Realty executed a duly notarized Deed of Absolute Sale in favour of the spouses Vilbar and their co-purchases Elena. Dulos Realty also surrendered and delivered the owners duplicate copy covering Lot 20 to them.

However, spouses Vilbar and Elena were not able to register and transfer the title in their names because Dulos Realty allegedly failed to have the lot formally subdivided despite its commitment to do so, until Juan Dulos (Juan) died without the subdivision being accomplished.

Spouses Vilbar and Dulos Realty also executed a Contract to Sell covering Lot 21. To pay for the balance of the purchase price, spouses Vilbar obtained a housing loan from the Development Bank of the Philippines (DBP) secured by a real estate mortgage over the said lot. Dulos Realty facilitated the approval of the loan, the proceeds of which were immediately paid to it as full payment of the purchase price.

In 1991, the spouses Vilbar were able to pay the loan in full and DBP issued the requisite Cancellation of Mortgage. The spouses Vilbar have been in actual, open and peaceful possession of Lot 21 and occupy the same as absolute owners since 1981.

In contrast, Opinion claimed that he legally acquired Lots 20 and 21 through extra-judicial foreclosure of mortgage constituted over the said properties by Gorospes. They defaulted in payment, prompting Opinion to file a petition for Extra-Judicial Foreclosure of Real Estate Mortgage. Subsequently, the subject properties were sold at a public auction where Opinion emerged as the highest bidder. A Certificate of Sale was issued in his favour on December 18,1995 and annotated on the TCTs of the properties. The Gorospes failed to redeem the properties within the reglementary period resulting in the eventual cancellation of their titles. Thus, the issuance of the titles to Opinion.

February 13, 1997, Opinion filed a Petition for Issuance of a Writ of Possession against the Gorospes. Branch 253initially issued a Writ of Possession and spouses Vilbar and Elena were served with a notice to vacate the premises. However, the writ was quashed when spouses Vilbar filed an urgent motion for the quashal of the writ and presented their title to Lot 21, while Elena presented the Deed of Absolute Sale executed by Dulos Realty covering Lot 20. Consequently, Opinion filed a Complaint for Accion Reinvindicatoria with Damagesdocketed as Civil Case No. 98-0302 and raffled to Branch 255 of the RTC of Las Pis City for him to be declared as the lawful owner and possessor of the subject properties and for his titles to be declared as authentic. He likewise prayed for the cancellation of the titles of spouses Vilbar and Elena.

The RTC rendered its decision in favour of Opinion declaring that he lawfully acquired the disputed properties and that his titles are valid, the sources of which having been duly established.

The CA agreed with the trial courts ruling that Opinion validly acquired title over Lots 20 and 21 through a valid mortgage, extrajudicial foreclosure and eventual consolidation proceedings instituted over the said properties.

ISSUE: Whether or not the CA seriously erred in finding that the respondent Opinion has a better title and/or has preference over the subject properties identified as Lots 20 and 21.

HELD: The CA was correct.

Civil law: Ownership and Possession

Court recognizes the settled rule that levy on attachment, duly registered, takes preference over a prior unregistered sale. This result is a necessary consequence of the fact that the properties involved were duly covered by the Torrens system which works under the fundamental principle that registration is the operative act which gives validity to the transfer or creates a lien upon the land.

For some unknown reasons, the spouses Vilbar did not cause the transfer of the certificate title in their name, or at the very least, annotate or register such sale in the original title in the name of Dulos Realty. This, sadly, proved fatal to their cause. Time and time again, this Court has ruled that a certificate of title serves as evidence of an indefeasible and incontrovertible title to the property in favor of the person whose name appears therein. Having no certificate of title issued in their names, spouses Vilbar have no indefeasible and incontrovertible title over Lot 20 to support their claim. Further, it is an established rule that registration isthe operative act which gives validity to the transfer or creates a lien upon the land.

The spouses Vilbar do not even know if a Deed of Absolute Sale over Lot 21 was executed in their favor. As the evidence extant on record stands, only a Contract to Sell which is legally insufficient to serve as basis forthe transfer of title over the property is available. At most, it affords spouses Vilbar an inchoate right over the property. Absent that important deed of conveyance over Lot 21 executed between Dulos Realty and the spouses Vilbar, TCT No. 36777 issued in the name of Bernadette Vilbar cannot be deemed to have been issued in accordance with the processes required by law.

Simply, the spouses Vilbar were not able to present material evidence to prove that TCT of Lot 21 was issued in accordance with the land registration rules.

Petition for review on certiorari is DENIED.