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573 Phil. 384


[ G.R. No. 167098, March 28, 2008 ]




Challenged in this petition for review on certiorari under Rule 45 of the Rules of Court is the November 3, 2004 Decision [1] of the Regional Trial Court (RTC) of Santiago City, Branch 35 in Civil Case No. 35-3123. Also assailed is the February 10, 2005 Order[2] denying the motion for the reconsideration of the challenged decision.

The antecedent facts and proceedings follow.

Respondent Benjamin Monillas and his brother, Ireneo, inherited from their father a parcel of land covered by TCT No. T-53038. On May 21, 1973, respondent executed a deed of sale of his share over the property to Ireneo under the latter's representation that he would use the deed to facilitate the procurement of a loan (with the Development Bank of the Philippines) for a planned housing project on the land. Ireneo then caused the transfer of the title in his name, the property's subdivision into 308 lots, and the issuance of individual titles for the subdivided lots.[3]

In 1978, Ireneo mortgaged twenty-two (22) lots covered by TCT Nos. T-75517 to 75539, to petitioner Philippine Veterans Bank (PVB). Three years thereafter or in 1981, respondent instituted Civil Case No. 24-0047 before the RTC of Echague, Isabela, for the nullification of the 1973 deed of sale, the recovery of the property, and the payment of damages.[4]

While the case remained pending, PVB foreclosed the mortgage on June 2, 1984.[5] In the foreclosure sale, petitioner was the highest bidder.

Later, on March 21, 1985, respondent caused the annotation of notices of lis pendens relating to the said civil case on the titles of the subdivided lots. On September 29, 1988, the RTC of Echague rendered its decision in the said civil case declaring the 1973 deed as null and void, cancelling the subsequent titles issued, and ordering the payment of damages. This ruling was affirmed by the Court of Appeals on October 31, 1991 in CA-G.R. CV No. 23944. Per entry of judgment, the case attained finality on November 29, 1991.[6]

On January 27, 1999, the Sheriff's Certificate of Sale and the Affidavit of Consolidation of Ownership were annotated on TCT Nos. T-75517 to T-75539. The said titles were then cancelled and new titles, TCT Nos. T-323794 to 323816, were issued in PVB's name on June 24, 2002.[7]

On April 10, 2003, respondent sued petitioner and the Register of Deeds of Isabela before the RTC of Santiago City, Branch 35, for the cancellation of the mortgage, the invalidation of the foreclosure, and the declaration of the nullity of the titles issued in petitioner's name.[8] The case was docketed as Civil Case No. 35-3123.

After trial on the merits, the court rendered the assailed November 3, 2004 Decision[9] ruling that petitioner was bound by the outcome of Civil Case No. 24-0047 because notices of lis pendens were annotated in the properties' titles. The RTC rationalized that while the annotation of the notices succeeded the registration of the mortgage, still the effect of the notices was that PVB acquired knowledge of an impediment against its interest, and as a matter of fact, petitioner ignored the notices and slept on its rights, as it did not intervene in the said civil case.[10] The trial court proceeded to dispose of the case as follows:

WHEREFORE, in view of all the foregoing considerations, judgment is hereby rendered in favor of the plaintiff and against the defendant as follows:

1) DECLARING as null and void the mortgage contract between Ireneo Monillas, Jr. and defendant Philippine Veterans Bank (PVB) over TCT Nos. T-75517 to T-75539, inclusive;

2) DECLARING as null and void the foreclosure of the mortgage contract mentioned in the preceding paragraph over the same properties;

3) DECLARING as null and void TCT Nos. T-323794 to T-323816, inclusive, in the name of defendant Philippine Veterans Bank (PVB); and

4) ORDERING defendant Register of Deeds of Isabela (Ilagan and Santiago City Office) to cancel TCT Nos. T-323794 to T-323816, inclusive, all in the name of defendant PVB, and issue corresponding certificates of title thereto in the name of plaintiff Benjamin Monillas, upon payment of required fees.

No other pronouncements.


Petitioner's Motion for Reconsideration[12] was later denied by the trial court in the likewise challenged February 10, 2005 Order.[13]

Frustrated at these developments, petitioner filed before the Court the instant petition for review on certiorari on the following grounds:


  1. It denied Philippine Veterans Bank the status of the mortgagee in good faith despite the undisputed fact that defendant did not know of any infirmity whatsoever in the titles when they were mortgaged.

  2. It in effect gave a notice of lis pendens a retroactive effect contrary to the provision of the Rules of Court that lis pendens only effects (sic) subsequent dealings.

  3. It in effect made petitioner bound by a decision it was not a party (sic).[14]

Whether the prior registered mortgage and the already concluded foreclosure proceedings should prevail over the subsequent annotation of the notices of lis pendens on the lot titles, is the central question to be addressed by the Court in this case.

The petition is meritorious.

On the procedural issue raised, we declare that the instant petition, contrary to respondent's contention, is the correct remedy to question the challenged issuances.

Under the Rules of Court, a party may directly appeal to this Court from a decision of the trial court only on pure questions of law.[15] A question of law lies, on one hand, when the doubt or difference arises as to what the law is on a certain set of facts; on the other hand, a question of fact exists when the doubt or difference arises as to the truth or falsehood of the alleged facts.[16] Here, the facts are not disputed; the controversy merely relates to the correct application of the law or jurisprudence to the undisputed facts.

On the merits of the petition, the Court rules that the prior registered mortgage of PVB and the foreclosure proceedings already conducted prevail over respondent's subsequent annotation of the notices of lis pendens on the titles to the property. Settled in this jurisdiction is the doctrine that a prior registration of a lien creates a preference;[17] hence, the subsequent annotation of an adverse claim cannot defeat the rights of the mortgagee, or the purchaser at the auction sale whose rights were derived from a prior mortgage validly registered. A contrary rule will make a prior registration of a mortgage or any lien nugatory or meaningless.[18] It may not be amiss to point out, at this juncture, that the doctrine applies with greater force in this case considering that the annotation of the notice of lis pendens was made not only after the registration of the mortgage, but also, and much later, after the conclusion of the foreclosure sale. Furthermore, the mortgagee itself, PVB, is the purchaser of the subject properties in the foreclosure sale.

The Court also notes that PVB is an innocent mortgagee for value. When the lots were mortgaged to it by Ireneo, the titles thereto were in the latter's name, and they showed neither vice nor infirmity.[19] In accepting the mortgage, petitioner was not required to make any further investigation of the titles to the properties being given as security,[20] and could rely entirely on what is stated in the aforesaid titles.[21] The public interest in upholding the indefeasibility of a certificate of title, as evidence of the lawful ownership of the land or of any encumbrance thereon, protects a buyer or mortgagee who, in good faith, relied upon what appears on the face of the certificate of title.[22]

PVB cannot even be considered to have slept on its rights when it only registered the Sheriff's certificate of sale after the lapse of almost 15 years, because, as already discussed, it registered its prior mortgage and had already foreclosed on the same. Petitioner, therefore, had every reason to expect that its rights were amply protected. And the mortgagor was even benefited by this late registration of the Sheriff's Sale, because then, he would still have a chance to redeem the property. Laches, being a doctrine in equity, cannot be invoked to resist the enforcement of a legal right.[23] Furthermore, oft-repeated is the rule that the foreclosure sale retroacts to the date of the registration of the mortgage.[24] Thus, it no longer matters that the annotation of the sheriff's certificate of sale and the affidavit of consolidation of ownership was made subsequent to the annotation of the notice of lis pendens.

WHEREFORE, premises considered, the petition for review on certiorari is GRANTED. The November 3, 2004 Decision and the February 10, 2005 Order of the RTC of Santiago City, Branch 35, in Civil Case No. 35-3123, are hereby REVERSED AND SET ASIDE, and another judgment is hereby rendered DISMISSING the complaint for lack of merit.


Austria-Martinez, Tinga, Chico-Nazario, and Reyes., JJ., concur.

* In lieu of Associate Justice Consuelo Ynares-Santiago, per Special Order No. 497, dated March 14, 2008.

[1] Rollo, pp. 49-59.

[2] Id. at 71.

[3] Id. at 105.

[4] Id.

[5] Id. at 106.

[6] Id.

[7] Id.

[8] Id. at 127.

[9] Supra note 1.

[10] Rollo, pp. 53-58.

[11] Id. at 58-59.

[12] Id. at 60-65

[13] Supra note 2.

[14] Rollo, pp. 14-15.

[15] See RULES OF COURT, Rule 45, Sec. 1; see Mendoza v. Salinas, G.R. No. 152827,February 6, 2007, 514 SCRA 414, 418-419, in which the Court ruled that direct resort to the Supreme Court (from a decision of the trial court) may be had when the issue involves a pure question of law. Rule 45, Section 1 of the Rules of Court authorizes such procedure. The principle of hierarchy of courts further finds no application because the remedy availed of is a petition for review on certiorari under Rule 45, not a petition for certiorari under Rule 65.

[16] Cebu Women's Club v. Hon. De la Victoria, 384 Phil. 264, 269 (2000); see Mendoza v. Salinas , supra note 15, in which the Court further ruled that a question of law exists when the doubt or controversy concerns the correct application of law or jurisprudence to a certain set of facts; or when the issue does not call for an examination of the probative value of the evidence presented, the truth or falsehood of facts being admitted. A question of fact exists when the doubt or difference arises as to the truth or falsehood of facts or when the query invites calibration of the whole evidence considering mainly the credibility of the witnesses, the existence and relevancy of specific surrounding circumstances, as well as their relation to each other and to the whole, and the probability of the situation.

[17] Lavides v. Pre, 419 Phil. 665, 672 (2001).

[18] See Pineda v. Court of Appeals, 456 Phil. 732, 751-752 (2003); see also Gonzales v. Intermediate Appellate Court, No. L-69622, January 29, 1988, 157 SCRA 587, 598 and Bank of the Philippine Islands, v. Noblejas, 105 Phil. 418, 424 (1959), in which the Court ruled that any subsequent lien or encumbrance annotated at the back of the certificates of title can not in any way prejudice the mortgage previously registered, and the lots subject thereto pass to the purchaser at the public auction sale free from any lien or encumbrance; otherwise, the value of the mortgage can be easily destroyed by a subsequent record of an adverse claim, for no one will purchase at a foreclosure sale if bound by the posterior claim; but see Rehabilitation Finance Corp. v. Morales, 101 Phil. 171 (1957), in which the Court held that, while the notice of lis pendens cannot affect the mortgagee's right as such because the same was annotated subsequent
to the mortgage, yet the said notice affects its right as purchaser because notice of
lis pendens
simply means that a certain property is involved in a litigation and serves as a notice to the whole world that one who buys the same does so at his own risk.

[19] In Duran v. Intermediate Appellate Court, No. L-64159, September 10, 1985, 138 SCRA 489, 494, the Court, citing prior cases, stated that good faith requires a well-founded belief that the person from whom title was received was himself the owner of the land, with the right to convey it.

[20] See Planters Development Bank v. Court of Appeals, G.R. No. 96357, May 29, 1991, 197 SCRA 698, 702; Mallorca v. Deocampo, 143 Phil. 17, 20 (1970).

[21] La Urbana v. Bernardo, 62 Phil. 790, 800 (1936).

[22] Cavite Development Bank v. Spouses Lim, 381 Phil. 355, 368 (2000).

[23] Abad v. Guimba, G.R. No. 157002, July 29, 2005, 465 SCRA 356, 371.

[24] Bank of the Philippine Islands, v. Noblejas, supra note 18; Gonzales v. Intermediate Appellate Court, supra note 18.

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