Mendoza v. Spouses Garana

Innocent Purchaser in good faith and for value

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Case DigestWeek 3–4 — The Registries of Deeds and Original Registration

Mendoza v. Spouses Garana

G.R. No. 179751 · August 5, 2015 · Supreme Court — Second Division

Innocent Purchaser in good faith and for value

Gist

The relationship of the case of Herminia L. Mendoza v. Spouses Armando and Angela Garana and Far East Bank & Trust Co., Inc., G.R. No. 179751, August 5, 2015, to the assigned syllabus subtopic of Section 32 of Presidential Decree No. 1529 (Review of Decree; Grounds for Review: Innocent Purchaser in Good Faith and for Value) is DIRECT. The triggering controversy arose when the heirs of Manuel Uy Ek Liong, represented by Belen Uy, sought to register a notice of lis pendens in the primary entry book of the Register of Deeds of Lucena City on several properties, including Transfer Certificate of Title No. T-72029, but due to an oversight by the Register of Deeds, the notice of lis pendens was not annotated on the physical certificate of title before the Spouses Armando and Angela Garana purchased the property from the registered owner, Jalbuena, and subsequently mortgaged the property to Far East Bank & Trust Co., Inc. (succeeded by Bank of the Philippine Islands). The Supreme Court of the Philippines Second Division granted the Petition for Review on Certiorari filed by the Register of Deeds of Lucena City, reversing the Court of Appeals' Decision and reinstating the Regional Trial Court's Order which directed the annotation of the notice of lis pendens on the new title, Transfer Certificate of Title No. T-77739.

Core Doctrine

The Rule on Involuntary Registration Entries: The entry or notation of an involuntary instrument in the primary entry book or day book of the Register of Deeds constitutes a valid registration and operates as constructive notice to all persons dealing with the registered land from the date of such entry, even if the Register of Deeds fails to annotate the notice on the physical certificate of title due to oversight.

Facts

On October 6, 1993 the heirs of Manuel Uy Ek Liong, through Belen Uy, sought to register a notice of lis pendens with the Register of Deeds of Lucena City over TCT Nos. T-72027 to T-72033, the subject of a pending action for specific performance with damages (Civil Case No. 93-176) to compel the lot owners to sell to them. The Register of Deeds entered and recorded the notice in the primary entry book that same day.
Through the registry's own oversight, the notice was never annotated on TCT No. T-72029.
Belen Uy had also annotated a first adverse claim on that title. On October 4, 1994 that adverse claim was cancelled — by someone other than the claimant and without a court order, contrary to Section 70.
On November 7, 1994 — thirty-four days later — Spouses Armando and Angela Garana bought the land covered by TCT No. T-72029 from the registered owner Jalbuena for value; the title was cancelled and TCT No. T-77739 issued to them. They then mortgaged the property to Far East Bank & Trust Co., Inc., succeeded by the Bank of the Philippine Islands.
To repair the oversight the Register of Deeds, through OIC Herminia Mendoza, petitioned the trial court to allow annotation of the lis pendens on TCT No. T-77739. The Garanas and BPI opposed, claiming to be innocent purchaser and innocent mortgagee in good faith.
On October 10, 2000 the RTC of Lucena City, Branch 58, granted the petition and ordered the annotation. On February 14, 2007 the CA reversed in CA-G.R. CV No. 70027, holding them innocent and ruling that entry in the primary entry book alone is no notice to third persons. The Second Division decided on August 5, 2015.

Arguments of the Parties

Petitioner. The Register of Deeds argued that under Levin v. Bass, for involuntary registration — attachment, levy, execution, lis pendens — entry in the primary entry book is already valid registration and constructive notice to the whole world; that the physical annotation on the certificate is a purely ministerial duty, whose omission through oversight cannot invalidate the registration or prejudice the registering party; that the Garanas were not in good faith, having known of Belen Uy's adverse claim and waited for its cancellation on October 4, 1994 before buying on November 7, 1994 — a sequence that should have driven them to inquire; and that BPI fell short of a bank's higher diligence, since proper inquiry would have revealed the adverse claim was cancelled by an unauthorised person in violation of Section 70.

Respondents. The Garanas and BPI argued that anyone dealing with Torrens land may rely absolutely on the face of the certificate and need not go behind it; that a mere entry in the primary entry book, unaccompanied by annotation, is no constructive notice to third persons dealing in good faith; and that BPI took the mortgage with nothing on the title showing any pending litigation, so it is an innocent mortgagee.

Common Ground / Stipulations (if any). Both admitted that the lis pendens was entered in the day book on October 6, 1993 but never annotated on TCT No. T-72029, and that Belen Uy's first adverse claim was annotated and then cancelled on October 4, 1994, before the Garanas bought.

Issue

MAIN ISSUE (Notice-centered). Whether entry of a notice of lis pendens in the primary entry book is complete registration operating as constructive notice to the whole world under Section 56 in relation to Section 52, even with no annotation on the certificate, so as to bind later purchasers and mortgagees invoking the mirror doctrine.

SECONDARY ISSUES. Whether the Garanas and BPI may claim to be innocent purchaser and mortgagee in good faith despite ignoring the cancellation of an adverse claim by an unauthorised person contrary to Section 70; and whether the Register of Deeds may petition the court to annotate the notice on the later title to cure its own oversight.

ANCILLARY / INCIDENTAL ISSUES (if any). None separately resolved.

Ruling

On the MAIN ISSUE: YES — entry in the day book is valid registration and constructive notice to the entire world from the date of entry. For involuntary instruments the entry is the operative act that binds the land and third persons under Section 56 with Section 52; the later physical annotation is a mere ministerial duty, and the registry's failure to perform it cannot invalidate the registration or prejudice the registering party. The lis pendens therefore bound the Garanas and BPI. On good faith: NO — the Garanas knew of Belen Uy's adverse claim and waited for its cancellation on October 4, 1994 before buying on November 7, 1994, which should have compelled them to look beyond the four corners of the title; and BPI failed the higher diligence owed by banks, which would have revealed that the adverse claim was cancelled by an unauthorised person in violation of Section 70. Both are therefore barred from invoking indefeasibility. On the petition: YES — the Register of Deeds was properly allowed to annotate the notice on TCT No. T-77739, so that the physical title matches the registration already valid on the primary entry book. The dispositive portion reads verbatim: "WHEREFORE, premises considered, we hereby GRANT the present petition and REVERSE the Court of Appeals' decision dated February 14, 2007, and resolution dated September 11, 2007, in CA-G.R. CV No. 70027. The Register of Deeds of Lucena City is hereby ordered to annotate the notice of lis pendens registered by the heirs of Manuel Uy Ek Liong on Transfer Certificate Title No. T-77739, registered under the names of the Spouses Armando T. Garana and Angela I. Garana. Costs against the respondents. SO ORDERED."

Ratio

The law fixes registration at the moment of entry. An instrument is regarded as registered from the time of notation in the day book, and that entry is itself notice — a rule that would be meaningless if the registrant's rights turned on a clerk's later act.
Ministerial duties bind the officer, not the public's rights. One who has done everything the law asks of him cannot be defeated by the registry's own omission.
The mirror doctrine is conditioned on good faith. A buyer who knows of facts that would arouse suspicion in a reasonable person may not shut his eyes; waiting out an adverse claim and buying weeks after its cancellation is precisely such a fact.
A bank's business is impressed with public interest. It cannot assume a title clean on its face relieves it of verifying the title and inspecting the property, and here inspection of the register itself would have shown the irregular cancellation.
The Court reminded every Register of Deeds and registry employee to observe prudence and conscientiousness, the integrity of the Torrens system resting in part on the people who administer it.

Doctrine

Doctrines / Rules / Principles Laid Down.

Entry of an involuntary instrument in the primary entry book is valid registration and constructive notice to all from the date of entry, even where the Register of Deeds never annotates it on the certificate.
A bank cannot be a mortgagee in good faith where it ignores glaring irregularities on the title, such as the unauthorised cancellation of an adverse claim contrary to Section 70.
And the defence of indefeasibility is unavailable to purchasers or mortgagees who disregarded facts calling for inquiry beyond the four corners of the title.

Distinctions / Limitations / Qualifications.

Reliance on a clean certificate protects only those who act in good faith and without notice; a buyer with actual knowledge of facts that would impel a reasonably cautious person to inquire is put on notice and must investigate behind the title.

Topic/Subtopic Integration (Mandatory).

DIRECT: the Court fixed the outer limit of good-faith protection under the registration provisions — the system shields innocent third persons but cannot cover negligence, bad faith, or deliberate disregard of a registered notice.
Holding day-book entry sufficient preserves the prior litigant's rights, and confirms the registry's power to make the physical title conform to the official register.

Separate Opinions

None. The Second Division decided unanimously, with no separate concurring or dissenting opinion recorded.

Full Digest — Recitation Format

Facts

On October 6, 1993: The heirs of Manuel Uy Ek Liong, represented by Belen Uy, sought the registration of a notice of lis pendens with the Register of Deeds of Lucena City to bind the properties covered by Transfer Certificate of Title Nos. T-72027, T-72028, T-72029, T-72030, T-72031, T-72032, and T-72033.
On October 6, 1993: The properties were the subject of a pending action for specific performance with damages, docketed as Civil Case No. 93-176 before the trial court, filed by the heirs of Manuel Uy Ek Liong against the owners of the lots to compel the owners to sell the properties to the heirs of Manuel Uy Ek Liong.
On October 6, 1993: The Register of Deeds of Lucena City entered and recorded the notice of lis pendens in the primary entry book or day book of the registry of deeds.
Sometime after October 6, 1993: Due to an oversight by the Register of Deeds of Lucena City, the notice of lis pendens was not annotated on the physical certificate of title of Transfer Certificate of Title No. T-72029.
Prior to November 7, 1994: Belen Uy annotated a first adverse claim on Transfer Certificate of Title No. T-72029.
On October 4, 1994: The first adverse claim annotated by Belen Uy was cancelled on Transfer Certificate of Title No. T-72029.
On October 4, 1994: The cancellation of the adverse claim of Belen Uy was performed by a different person other than the claimant Belen Uy, and without a court order, which was an irregularity in violation of Section 70 of Presidential Decree No. 1529.
On November 7, 1994: The Spouses Armando and Angela Garana purchased the land covered by Transfer Certificate of Title No. T-72029 from the registered owner, Jalbuena, for a valuable consideration.
Sometime thereafter: Pursuant to the purchase, Transfer Certificate of Title No. T-72029 was cancelled, and Transfer Certificate of Title No. T-77739 was issued in the names of the Spouses Armando and Angela Garana.
Sometime thereafter: The Spouses Armando and Angela Garana mortgaged the property covered by Transfer Certificate of Title No. T-77739 to Far East Bank & Trust Co., Inc. (succeeded by Bank of the Philippine Islands) to secure a loan.
Sometime thereafter: To remedy the oversight of failing to annotate the notice of lis pendens on the physical title, the Register of Deeds of Lucena City, represented by petitioner Herminia Mendoza (as OIC of the Register of Deeds), filed a petition with the trial court to allow the Register of Deeds to annotate the notice of lis pendens on the Spouses Armando and Angela Garana's title, Transfer Certificate of Title No. T-77739.
Sometime thereafter: The Spouses Armando and Angela Garana and Bank of the Philippine Islands opposed the petition of the Register of Deeds, claiming that the Spouses Armando and Angela Garana were innocent purchasers in good faith and BPI was an innocent mortgagee in good faith.
On October 10, 2000: The Regional Trial Court of Lucena City, Branch 58, issued an Order granting the petition of the Register of Deeds and directing the annotation of the notice of lis pendens on Transfer Certificate of Title No. T-77739.
Sometime thereafter: The Spouses Armando and Angela Garana and Bank of the Philippine Islands appealed the Order of the Regional Trial Court to the Court of Appeals.
On February 14, 2007: The Court of Appeals rendered a Decision in CA-G.R. CV No. 70027, reversing the Regional Trial Court and annulling the October 10, 2000 Order, on the ground that the Spouses Armando and Angela Garana and Bank of the Philippine Islands were innocent purchasers and mortgagees in good faith, and that the notice of lis pendens in the primary entry book did not operate as notice to third persons.
Sometime thereafter: The Register of Deeds of Lucena City elevated the case to the Supreme Court of the Philippines via a Petition for Review on Certiorari under Rule 45.
On August 5, 2015: The Supreme Court of the Philippines Second Division promulgated the Decision reversing the Court of Appeals and reinstating the Regional Trial Court's Order.

Arguments of the Parties

Petitioner (Herminia L. Mendoza, in the capacity of Herminia L. Mendoza as OIC of the Register of Deeds of Lucena City).

Registration is Complete Upon Entry in the Day Book: The petitioner argues that under the established ruling in Levin v. Bass, in cases of involuntary registration (such as an attachment, levy, execution, and a notice of lis pendens), the entry or notation of the instrument in the primary entry book or day book of the Register of Deeds is already sufficient to constitute a valid registration. The recording in the primary entry book operates as constructive notice of the adverse claim to the entire world, including the Spouses Armando and Angela Garana and Bank of the Philippine Islands.
Physical Annotation is a Ministerial Duty: The petitioner contends that the physical annotation of the registered notice of lis pendens on the face of the certificate of title is a purely ministerial duty of the Register of Deeds, and the subsequent failure or omission of the Register of Deeds to perform this ministerial task due to an oversight cannot invalidate the registration or prejudice the rights of the registering party.
Absence of Good Faith on the Part of the Purchasers: The petitioner asserts that the Spouses Armando and Angela Garana were not innocent purchasers in good faith because the Spouses Armando and Angela Garana had actual knowledge of the first adverse claim of Belen Uy on Transfer Certificate of Title No. T-72029. The Spouses Armando and Angela Garana waited for the cancellation of this adverse claim on October 4, 1994, and shortly thereafter on November 7, 1994, purchased the property, which circumstances should have put the Spouses Armando and Angela Garana on inquiry beyond the four corners of the title.
Negligence of the Mortgagee Bank: The petitioner argues that Bank of the Philippine Islands failed to exercise the higher degree of diligence, care, and prudence expected of a banking institution. If the bank had conducted proper due diligence, the bank would have discovered that Belen Uy's adverse claim was cancelled by an unauthorized different person, in clear violation of Section 70 of Presidential Decree No. 1529.

Respondents (Spouses Armando and Angela Garana and Bank of the Philippine Islands).

Absolute Right to Rely on a Clean Title: The respondents argue that because the land is registered under the Torrens System, any person dealing with the property has the absolute right to safely rely on the correctness and face of the certificate of title issued by the Register of Deeds. The Spouses Armando and Angela Garana contend that reliance on the clean title of Jalbuena should protect the status of the Spouses Armando and Angela Garana as innocent purchasers for value, and the Spouses Armando and Angela Garana should not be obliged to go behind the certificate of title to determine the condition of the property.
LRA Entry Without Annotation Does Not Bind Third Persons: The respondents contend that a mere recording or entry of a notice of lis pendens in the Register of Deeds' primary entry book, without the corresponding physical annotation on the certificate of title, cannot operate as constructive notice to third persons who deal with the registered land in good faith.
No Notice of Pending Litigation to the Bank: Bank of the Philippine Islands (formerly Far East Bank & Trust Co., Inc.) maintains that when the land was mortgaged to the bank, there was no indication or annotation on the certificate of title showing that the property was the subject of a pending litigation, thereby entitling the bank to the full protection accorded to an innocent mortgagee in good faith.

Common Ground.

Fact of Non-Annotation: Both the petitioner and the respondents admit that the Register of Deeds of Lucena City did not physically annotate the notice of lis pendens on the owner's duplicate or the original copy of Transfer Certificate of Title No. T-72029, despite the notice having been entered in the day book on October 6, 1993.
Existence and Cancellation of the Adverse Claim of Belen Uy: Both parties acknowledge that Belen Uy's first adverse claim was annotated on the title and was cancelled on October 4, 1994, prior to the purchase by the Spouses Armando and Angela Garana.

Issue

MAIN ISSUE.

Whether the entry or notation of a notice of lis pendens (an involuntary instrument) in the primary entry book or day book of the Register of Deeds constitutes a valid and complete registration that operates as constructive notice to the whole world under Section 56 in relation to Section 52 of Presidential Decree No. 1529, even in the complete absence of a physical annotation on the certificate of title, so as to bind subsequent purchasers and mortgagees who claim protection under the mirror doctrine and Section 32 of Presidential Decree No. 1529.

SECONDARY ISSUES.

Whether the Spouses Armando and Angela Garana and Bank of the Philippine Islands can validly claim the status of innocent purchasers and mortgagees in good faith and for value under Section 32 of Presidential Decree No. 1529, despite ignoring glaring irregularities on the certificate of title, such as the cancellation of an adverse claim by an unauthorized person in violation of Section 70 of Presidential Decree No. 1529.
Whether the Register of Deeds of Lucena City has the legal authority and personality to petition the trial court to allow the annotation of the notice of lis pendens on the subsequent title, Transfer Certificate of Title No. T-77739, to correct the Register of Deeds' own administrative oversight.

Ruling

MAIN ISSUE: YES. The Supreme Court of the Philippines ruled that the entry of a notice of lis pendens in the primary entry book or day book of the Register of Deeds constitutes a valid registration and operates as constructive notice of the pending litigation to the entire world from the date of such entry. The Supreme Court held that in cases of involuntary registration, such as a notice of lis pendens, the entry or notation of the instrument in the primary entry book is the operative act of registration that binds the land and third persons under Section 56 in relation to Section 52 of Presidential Decree No. 1529. The subsequent physical annotation of the notice of lis pendens on the certificate of title is a mere ministerial duty of the Register of Deeds, and any failure or omission to perform this duty due to administrative oversight cannot invalidate the registration or prejudice the registered right of the registering party. Therefore, the notice of lis pendens is legally binding on all persons dealing with the subject land, including the Spouses Armando and Angela Garana and Bank of the Philippine Islands.

SECONDARY ISSUE NO. 1: NO. The Supreme Court of the Philippines held that the Spouses Armando and Angela Garana and Bank of the Philippine Islands cannot claim the status of innocent purchasers and mortgagees in good faith and for value. The Supreme Court held that the Spouses Armando and Angela Garana did not act in good faith because the Spouses Armando and Angela Garana had prior knowledge of Belen Uy's adverse claim on the title, and the Spouses Armando and Angela Garana waited for the cancellation of this adverse claim on October 4, 1994, before purchasing the property from Jalbuena on November 7, 1994. This should have compelled the Spouses Armando and Angela Garana to check beyond the four corners of the title. Likewise, Bank of the Philippine Islands failed to exercise the higher degree of diligence, care, and prudence expected of a banking institution, as the bank should have noticed that Belen Uy's adverse claim was cancelled by an unauthorized different person, in clear violation of Section 70 of Presidential Decree No. 1529. Consequently, both the Spouses Armando and Angela Garana and Bank of the Philippine Islands are barred from raising the defense of the doctrine of indefeasibility of Torrens titles.

SECONDARY ISSUE NO. 2: YES. The Supreme Court of the Philippines upheld the petition filed by the Register of Deeds of Lucena City to correct the administrative oversight. The Supreme Court affirmed the Regional Trial Court's Order directing the Register of Deeds to annotate the notice of lis pendens on the Spouses Armando and Angela Garana's title, Transfer Certificate of Title No. T-77739, in order to make the physical title consistent with the valid registration already recorded in the primary entry book.

Dispositive portion (verbatim). The final dispositive portion of the Supreme Court of the Philippines in G.R. No. 179751, dated August 5, 2015, is quoted verbatim as follows:

"WHEREFORE, premises considered, we hereby GRANT the present petition and REVERSE the Court of Appeals' decision dated February 14, 2007, and resolution dated September 11, 2007, in CA-G.R. CV No. 70027.

The Register of Deeds of Lucena City is hereby ordered to annotate the notice of lis pendens registered by the heirs of Manuel Uy Ek Liong on Transfer Certificate Title No. T-77739, registered under the names of the Spouses Armando T. Garana and Angela I. Garana. Costs against the respondents.

SO ORDERED."

Ratio

The Primary Entry Book as the Operative Act of Registration: Under Section 56 in relation to Section 52 of Presidential Decree No. 1529, the entry of an involuntary instrument (like a notice of lis pendens) in the primary entry book or day book of the Register of Deeds is the operative act of registration. The law declares that the instrument shall be regarded as registered from the time of such entry, and such entry constitutes constructive notice to the entire world from the date of notation. The physical annotation of the notice of lis pendens on the face of the certificate of title is a mere ministerial duty of the Register of Deeds, and the subsequent failure or omission of the Register of Deeds to perform this ministerial task due to an oversight cannot invalidate the registration or prejudice the registered right of the registering party.
The Subjective Limit of the Mirror Doctrine: The mirror doctrine, which allows a person to rely solely on the face of a clean Torrens certificate of title, is not an absolute rule and applies only to those who deal with registered land in good faith. A subsequent purchaser or mortgagee who has actual knowledge of facts and circumstances that would arouse suspicion in an otherwise reasonable person cannot close the eyes to such facts and claim good faith. The Spouses Armando and Angela Garana's knowledge of the adverse claim of Belen Uy, and the Spouses Armando and Angela Garana's deliberate wait for the cancellation of the adverse claim before purchasing the land, negated the claim of good faith.
The Stricter Diligence Standard for Banks: Under Section 32 of Presidential Decree No. 1529, a mortgagee bank is held to a higher and more stringent standard of diligence, care, and prudence than ordinary individuals, as the business of banking is deeply impressed with public interest. A bank cannot assume that, simply because the title offered as security is on the face of the title free of any encumbrances, the bank is relieved of the responsibility to verify the title and inspect the properties. BPI should have discovered that Belen Uy's adverse claim was cancelled by an unauthorized different person, in clear violation of Section 70 of Presidential Decree No. 1529.
Prudence and Conscientiousness of Registrars: The Supreme Court reminded all Registers of Deeds, as well as all officers and employees of the registry, to strictly and faithfully observe prudence and conscientiousness in the performance of official duties, as the integrity of the Torrens System is partly dependent on the men and women whose primary function is to ensure the strict application of registration laws.

Doctrine

Doctrines / Rules / Principles Laid Down.

The Rule on Involuntary Registration Entries: The entry or notation of an involuntary instrument in the primary entry book or day book of the Register of Deeds constitutes a valid registration and operates as constructive notice to all persons dealing with the registered land from the date of such entry, even if the Register of Deeds fails to annotate the notice on the physical certificate of title due to oversight.
The Rule on Bank Diligence: As banking institutions are expected to observe a higher degree of diligence, care, and prudence than ordinary individuals, a bank cannot claim the status of a mortgagee in good faith if the bank ignores glaring irregularities on the certificate of title, such as the unauthorized cancellation of an adverse claim by a different person in violation of Section 70 of Presidential Decree No. 1529.
The Rule on the Limit of the Indefeasibility Defense: The defense of the doctrine of indefeasibility of Torrens titles cannot be raised by subsequent purchasers or mortgagees who did not act in good faith and who disregarded glaring facts and circumstances that should have prompted such subsequent purchasers or mortgagees to inquire beyond the four corners of the title.

Distinctions / Limitations / Qualifications.

The Good Faith Exception to the Mirror Doctrine: The protection accorded to subsequent purchasers who rely on a clean Torrens title is available only if the purchasers acted in good faith and without notice of any adverse claims or irregularities. If the purchasers have actual knowledge of facts and circumstances that would impel a reasonably cautious person to make further inquiry, such purchasers are placed on notice and have a duty to investigate beyond the certificate of title.

Topic/Subtopic Integration (Mandatory).

Classification of Relationship: DIRECT.
Integration: The case of Mendoza v. Spouses Garana is a direct and controlling authority on Section 32 of Presidential Decree No. 1529 because the case establishes the precise limits of the good-faith protection granted to subsequent purchasers and mortgagees. The decision clarifies that while the Torrens system protects innocent third persons who rely on a clean certificate of title, this protection cannot be invoked to shield negligence, bad faith, or the deliberate disregard of registered notices and title irregularities. By ruling that the entry of an involuntary instrument in the primary entry book is sufficient to constitute constructive notice to the entire world, the Supreme Court of the Philippines preserved the rights of prior litigants while ensuring that procedural due process remains an absolute limit on subsequent land transactions. This reinforces the foundational purpose of the Torrens system, which is to protect validly registered ownership and interests from fraudulent collateral transfers, while ensuring that the Register of Deeds has the authority to correct the administrative oversights of the Register of Deeds to make the physical title conform to the official register.

Separate Opinions

NOT APPLICABLE / NOT IN RECORD. (The Decision was rendered unanimously by the Second Division of the Supreme Court of the Philippines, and no separate concurring or dissenting opinions are recorded in the text of the decision).

Cited Laws & Provisions

Every statute, rule, and issuance the decision turns on — the text as written, and the work it does in this case.

Special Law

Section 56, P.D. No. 1529

Primary Entry Book; fees; certified copies

Presidential Decree No. 1529 (Property Registration Decree, 1978)

Each Register of Deeds shall keep a primary entry book in which, upon payment of the entry fee, he shall enter, in the order of their reception, all instruments including copies of writs and processes filed with him relating to registered land. He shall, as a preliminary process in registration, note in such book the date, hour and minute of reception of all instruments, in the order in which they were received. They shall be regarded as registered from the time so noted, and the memorandum of each instrument, when made on the certificate of title to which it refers, shall bear the same date: Provided, that the national government as well as the provincial and city governments shall be exempt from the payment of such fees in advance in order to be entitled to entry and registration.

Every deed or other instrument, whether voluntary or involuntary, so filed with the Register of Deeds shall be numbered and indexed and endorsed with a reference to the proper certificate of title. All records and papers relative to registered land in the office of the Register of Deeds shall be open to the public in the same manner as court records, subject to such reasonable regulations as the Register of Deeds, under the direction of the Commissioner of Land Registration, may prescribe.

All deeds and voluntary instruments shall be presented with their respective copies and shall be attested and sealed by the Register of Deeds, endorsed with the file number, and copies may be delivered to the person presenting them.

Certified copies of all instruments filed and registered may also be obtained from the Register of Deeds upon payment of the prescribed fees.

(A) CONVEYANCES AND TRANSFERS

Why it is cited here

The primary entry book — the day book — and why an entry in it is enough for an involuntary instrument.

Section 56 requires the Register of Deeds to keep a primary entry book in which every instrument is entered in the order of its filing, with the year, month, day, hour and minute of presentation noted; and it provides that instruments are regarded as registered from the moment so noted.

For a voluntary dealing — a sale, a mortgage — more is normally needed, because the registrant controls the papers and must also surrender the owner's duplicate under Section 53.

An involuntary instrument is different in exactly that respect. An attachment, a levy, a notice of lis pendens, an adverse claim is registered against the owner's wishes, and the owner will not hand over his duplicate to help. If entry required his cooperation, no involuntary instrument could ever be registered.

Hence the rule: notation in the primary entry book or day book constitutes valid registration of an involuntary instrument, and its effects run from that moment.

The practical warning for a purchaser: the certificate is not the whole register. A recent entry may be in the day book and not yet annotated on the title, so a search that stops at the certificate can miss an attachment registered that morning.

Special Law

Section 52, P.D. No. 1529

Constructive notice upon registration

Presidential Decree No. 1529 (Property Registration Decree, 1978)

Every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting registered land shall, if registered, filed or entered in the office of the Register of Deeds for the province or city where the land to which it relates lies, be constructive notice to all persons from the time of such registering, filing or entering.

Why it is cited here

Why the moment of entry matters so much.

"Every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting registered land shall, if registered, filed or entered … be constructive notice to all persons from the time of such registering, filing or entering."

Read the verbs — "registered, filed or entered" — and the phrase "from the time of." The section fixes constructive notice to the act of entry rather than to any later annotation, which is precisely what makes the day-book rule work.

The list is also expressly wide enough to cover involuntary dealings: attachment, order, judgment all appear in it.

Source: Mendoza v. Spouses Garana, G.R. No. 179751, August 5, 2015

Cited laws & provisions

Section 56, P.D. No. 1529

Special Law

Primary Entry Book; fees; certified copies

Presidential Decree No. 1529 (Property Registration Decree, 1978)

Certified copies of all instruments filed and registered may also be obtained from the Register of Deeds upon payment of the prescribed fees.

(A) CONVEYANCES AND TRANSFERS

Why it is cited here

The primary entry book — the day book — and why an entry in it is enough for an involuntary instrument.

For a voluntary dealing — a sale, a mortgage — more is normally needed, because the registrant controls the papers and must also surrender the owner's duplicate under Section 53.

Hence the rule: notation in the primary entry book or day book constitutes valid registration of an involuntary instrument, and its effects run from that moment.

Full entry below ↓

Section 52, P.D. No. 1529

Special Law

Constructive notice upon registration

Presidential Decree No. 1529 (Property Registration Decree, 1978)

Why it is cited here

Why the moment of entry matters so much.

The list is also expressly wide enough to cover involuntary dealings: attachment, order, judgment all appear in it.

Full entry below ↓

Facts

On October 6, 1993 the heirs of Manuel Uy Ek Liong, through Belen Uy, sought to register a notice of lis pendens with the Register of Deeds of Lucena City over TCT Nos. T-72027 to T-72033, the subject of a pending action for specific performance with damages (Civil Case No. 93-176) to compel the lot owners to sell to them. The Register of Deeds entered and recorded the notice in the primary entry book that same day.
Through the registry's own oversight, the notice was never annotated on TCT No. T-72029.
Belen Uy had also annotated a first adverse claim on that title. On October 4, 1994 that adverse claim was cancelled — by someone other than the claimant and without a court order, contrary to Section 70.
On November 7, 1994 — thirty-four days later — Spouses Armando and Angela Garana bought the land covered by TCT No. T-72029 from the registered owner Jalbuena for value; the title was cancelled and TCT No. T-77739 issued to them. They then mortgaged the property to Far East Bank & Trust Co., Inc., succeeded by the Bank of the Philippine Islands.
To repair the oversight the Register of Deeds, through OIC Herminia Mendoza, petitioned the trial court to allow annotation of the lis pendens on TCT No. T-77739. The Garanas and BPI opposed, claiming to be innocent purchaser and innocent mortgagee in good faith.
On October 10, 2000 the RTC of Lucena City, Branch 58, granted the petition and ordered the annotation. On February 14, 2007 the CA reversed in CA-G.R. CV No. 70027, holding them innocent and ruling that entry in the primary entry book alone is no notice to third persons. The Second Division decided on August 5, 2015.

Arguments of the Parties

Issue

ANCILLARY / INCIDENTAL ISSUES (if any). None separately resolved.

Ruling

Ratio

The law fixes registration at the moment of entry. An instrument is regarded as registered from the time of notation in the day book, and that entry is itself notice — a rule that would be meaningless if the registrant's rights turned on a clerk's later act.
Ministerial duties bind the officer, not the public's rights. One who has done everything the law asks of him cannot be defeated by the registry's own omission.
The mirror doctrine is conditioned on good faith. A buyer who knows of facts that would arouse suspicion in a reasonable person may not shut his eyes; waiting out an adverse claim and buying weeks after its cancellation is precisely such a fact.
A bank's business is impressed with public interest. It cannot assume a title clean on its face relieves it of verifying the title and inspecting the property, and here inspection of the register itself would have shown the irregular cancellation.
The Court reminded every Register of Deeds and registry employee to observe prudence and conscientiousness, the integrity of the Torrens system resting in part on the people who administer it.

Doctrine

Doctrines / Rules / Principles Laid Down.

Entry of an involuntary instrument in the primary entry book is valid registration and constructive notice to all from the date of entry, even where the Register of Deeds never annotates it on the certificate.
A bank cannot be a mortgagee in good faith where it ignores glaring irregularities on the title, such as the unauthorised cancellation of an adverse claim contrary to Section 70.
And the defence of indefeasibility is unavailable to purchasers or mortgagees who disregarded facts calling for inquiry beyond the four corners of the title.

Distinctions / Limitations / Qualifications.

Reliance on a clean certificate protects only those who act in good faith and without notice; a buyer with actual knowledge of facts that would impel a reasonably cautious person to inquire is put on notice and must investigate behind the title.

Topic/Subtopic Integration (Mandatory).

DIRECT: the Court fixed the outer limit of good-faith protection under the registration provisions — the system shields innocent third persons but cannot cover negligence, bad faith, or deliberate disregard of a registered notice.
Holding day-book entry sufficient preserves the prior litigant's rights, and confirms the registry's power to make the physical title conform to the official register.

Separate Opinions

None. The Second Division decided unanimously, with no separate concurring or dissenting opinion recorded.

Full Digest — Recitation Format

Facts

On October 6, 1993: The heirs of Manuel Uy Ek Liong, represented by Belen Uy, sought the registration of a notice of lis pendens with the Register of Deeds of Lucena City to bind the properties covered by Transfer Certificate of Title Nos. T-72027, T-72028, T-72029, T-72030, T-72031, T-72032, and T-72033.
On October 6, 1993: The properties were the subject of a pending action for specific performance with damages, docketed as Civil Case No. 93-176 before the trial court, filed by the heirs of Manuel Uy Ek Liong against the owners of the lots to compel the owners to sell the properties to the heirs of Manuel Uy Ek Liong.
On October 6, 1993: The Register of Deeds of Lucena City entered and recorded the notice of lis pendens in the primary entry book or day book of the registry of deeds.
Sometime after October 6, 1993: Due to an oversight by the Register of Deeds of Lucena City, the notice of lis pendens was not annotated on the physical certificate of title of Transfer Certificate of Title No. T-72029.
Prior to November 7, 1994: Belen Uy annotated a first adverse claim on Transfer Certificate of Title No. T-72029.
On October 4, 1994: The first adverse claim annotated by Belen Uy was cancelled on Transfer Certificate of Title No. T-72029.
On October 4, 1994: The cancellation of the adverse claim of Belen Uy was performed by a different person other than the claimant Belen Uy, and without a court order, which was an irregularity in violation of Section 70 of Presidential Decree No. 1529.
On November 7, 1994: The Spouses Armando and Angela Garana purchased the land covered by Transfer Certificate of Title No. T-72029 from the registered owner, Jalbuena, for a valuable consideration.
Sometime thereafter: Pursuant to the purchase, Transfer Certificate of Title No. T-72029 was cancelled, and Transfer Certificate of Title No. T-77739 was issued in the names of the Spouses Armando and Angela Garana.
Sometime thereafter: The Spouses Armando and Angela Garana mortgaged the property covered by Transfer Certificate of Title No. T-77739 to Far East Bank & Trust Co., Inc. (succeeded by Bank of the Philippine Islands) to secure a loan.
Sometime thereafter: To remedy the oversight of failing to annotate the notice of lis pendens on the physical title, the Register of Deeds of Lucena City, represented by petitioner Herminia Mendoza (as OIC of the Register of Deeds), filed a petition with the trial court to allow the Register of Deeds to annotate the notice of lis pendens on the Spouses Armando and Angela Garana's title, Transfer Certificate of Title No. T-77739.
Sometime thereafter: The Spouses Armando and Angela Garana and Bank of the Philippine Islands opposed the petition of the Register of Deeds, claiming that the Spouses Armando and Angela Garana were innocent purchasers in good faith and BPI was an innocent mortgagee in good faith.
On October 10, 2000: The Regional Trial Court of Lucena City, Branch 58, issued an Order granting the petition of the Register of Deeds and directing the annotation of the notice of lis pendens on Transfer Certificate of Title No. T-77739.
Sometime thereafter: The Spouses Armando and Angela Garana and Bank of the Philippine Islands appealed the Order of the Regional Trial Court to the Court of Appeals.
On February 14, 2007: The Court of Appeals rendered a Decision in CA-G.R. CV No. 70027, reversing the Regional Trial Court and annulling the October 10, 2000 Order, on the ground that the Spouses Armando and Angela Garana and Bank of the Philippine Islands were innocent purchasers and mortgagees in good faith, and that the notice of lis pendens in the primary entry book did not operate as notice to third persons.
Sometime thereafter: The Register of Deeds of Lucena City elevated the case to the Supreme Court of the Philippines via a Petition for Review on Certiorari under Rule 45.
On August 5, 2015: The Supreme Court of the Philippines Second Division promulgated the Decision reversing the Court of Appeals and reinstating the Regional Trial Court's Order.

Arguments of the Parties

Petitioner (Herminia L. Mendoza, in the capacity of Herminia L. Mendoza as OIC of the Register of Deeds of Lucena City).

Registration is Complete Upon Entry in the Day Book: The petitioner argues that under the established ruling in Levin v. Bass, in cases of involuntary registration (such as an attachment, levy, execution, and a notice of lis pendens), the entry or notation of the instrument in the primary entry book or day book of the Register of Deeds is already sufficient to constitute a valid registration. The recording in the primary entry book operates as constructive notice of the adverse claim to the entire world, including the Spouses Armando and Angela Garana and Bank of the Philippine Islands.
Physical Annotation is a Ministerial Duty: The petitioner contends that the physical annotation of the registered notice of lis pendens on the face of the certificate of title is a purely ministerial duty of the Register of Deeds, and the subsequent failure or omission of the Register of Deeds to perform this ministerial task due to an oversight cannot invalidate the registration or prejudice the rights of the registering party.
Absence of Good Faith on the Part of the Purchasers: The petitioner asserts that the Spouses Armando and Angela Garana were not innocent purchasers in good faith because the Spouses Armando and Angela Garana had actual knowledge of the first adverse claim of Belen Uy on Transfer Certificate of Title No. T-72029. The Spouses Armando and Angela Garana waited for the cancellation of this adverse claim on October 4, 1994, and shortly thereafter on November 7, 1994, purchased the property, which circumstances should have put the Spouses Armando and Angela Garana on inquiry beyond the four corners of the title.
Negligence of the Mortgagee Bank: The petitioner argues that Bank of the Philippine Islands failed to exercise the higher degree of diligence, care, and prudence expected of a banking institution. If the bank had conducted proper due diligence, the bank would have discovered that Belen Uy's adverse claim was cancelled by an unauthorized different person, in clear violation of Section 70 of Presidential Decree No. 1529.

Respondents (Spouses Armando and Angela Garana and Bank of the Philippine Islands).

Absolute Right to Rely on a Clean Title: The respondents argue that because the land is registered under the Torrens System, any person dealing with the property has the absolute right to safely rely on the correctness and face of the certificate of title issued by the Register of Deeds. The Spouses Armando and Angela Garana contend that reliance on the clean title of Jalbuena should protect the status of the Spouses Armando and Angela Garana as innocent purchasers for value, and the Spouses Armando and Angela Garana should not be obliged to go behind the certificate of title to determine the condition of the property.
LRA Entry Without Annotation Does Not Bind Third Persons: The respondents contend that a mere recording or entry of a notice of lis pendens in the Register of Deeds' primary entry book, without the corresponding physical annotation on the certificate of title, cannot operate as constructive notice to third persons who deal with the registered land in good faith.
No Notice of Pending Litigation to the Bank: Bank of the Philippine Islands (formerly Far East Bank & Trust Co., Inc.) maintains that when the land was mortgaged to the bank, there was no indication or annotation on the certificate of title showing that the property was the subject of a pending litigation, thereby entitling the bank to the full protection accorded to an innocent mortgagee in good faith.

Common Ground.

Fact of Non-Annotation: Both the petitioner and the respondents admit that the Register of Deeds of Lucena City did not physically annotate the notice of lis pendens on the owner's duplicate or the original copy of Transfer Certificate of Title No. T-72029, despite the notice having been entered in the day book on October 6, 1993.
Existence and Cancellation of the Adverse Claim of Belen Uy: Both parties acknowledge that Belen Uy's first adverse claim was annotated on the title and was cancelled on October 4, 1994, prior to the purchase by the Spouses Armando and Angela Garana.

Issue

MAIN ISSUE.

Whether the entry or notation of a notice of lis pendens (an involuntary instrument) in the primary entry book or day book of the Register of Deeds constitutes a valid and complete registration that operates as constructive notice to the whole world under Section 56 in relation to Section 52 of Presidential Decree No. 1529, even in the complete absence of a physical annotation on the certificate of title, so as to bind subsequent purchasers and mortgagees who claim protection under the mirror doctrine and Section 32 of Presidential Decree No. 1529.

SECONDARY ISSUES.

Whether the Spouses Armando and Angela Garana and Bank of the Philippine Islands can validly claim the status of innocent purchasers and mortgagees in good faith and for value under Section 32 of Presidential Decree No. 1529, despite ignoring glaring irregularities on the certificate of title, such as the cancellation of an adverse claim by an unauthorized person in violation of Section 70 of Presidential Decree No. 1529.
Whether the Register of Deeds of Lucena City has the legal authority and personality to petition the trial court to allow the annotation of the notice of lis pendens on the subsequent title, Transfer Certificate of Title No. T-77739, to correct the Register of Deeds' own administrative oversight.

Ruling

Dispositive portion (verbatim). The final dispositive portion of the Supreme Court of the Philippines in G.R. No. 179751, dated August 5, 2015, is quoted verbatim as follows:

"WHEREFORE, premises considered, we hereby GRANT the present petition and REVERSE the Court of Appeals' decision dated February 14, 2007, and resolution dated September 11, 2007, in CA-G.R. CV No. 70027.

The Register of Deeds of Lucena City is hereby ordered to annotate the notice of lis pendens registered by the heirs of Manuel Uy Ek Liong on Transfer Certificate Title No. T-77739, registered under the names of the Spouses Armando T. Garana and Angela I. Garana. Costs against the respondents.

SO ORDERED."

Ratio

The Primary Entry Book as the Operative Act of Registration: Under Section 56 in relation to Section 52 of Presidential Decree No. 1529, the entry of an involuntary instrument (like a notice of lis pendens) in the primary entry book or day book of the Register of Deeds is the operative act of registration. The law declares that the instrument shall be regarded as registered from the time of such entry, and such entry constitutes constructive notice to the entire world from the date of notation. The physical annotation of the notice of lis pendens on the face of the certificate of title is a mere ministerial duty of the Register of Deeds, and the subsequent failure or omission of the Register of Deeds to perform this ministerial task due to an oversight cannot invalidate the registration or prejudice the registered right of the registering party.
The Subjective Limit of the Mirror Doctrine: The mirror doctrine, which allows a person to rely solely on the face of a clean Torrens certificate of title, is not an absolute rule and applies only to those who deal with registered land in good faith. A subsequent purchaser or mortgagee who has actual knowledge of facts and circumstances that would arouse suspicion in an otherwise reasonable person cannot close the eyes to such facts and claim good faith. The Spouses Armando and Angela Garana's knowledge of the adverse claim of Belen Uy, and the Spouses Armando and Angela Garana's deliberate wait for the cancellation of the adverse claim before purchasing the land, negated the claim of good faith.
The Stricter Diligence Standard for Banks: Under Section 32 of Presidential Decree No. 1529, a mortgagee bank is held to a higher and more stringent standard of diligence, care, and prudence than ordinary individuals, as the business of banking is deeply impressed with public interest. A bank cannot assume that, simply because the title offered as security is on the face of the title free of any encumbrances, the bank is relieved of the responsibility to verify the title and inspect the properties. BPI should have discovered that Belen Uy's adverse claim was cancelled by an unauthorized different person, in clear violation of Section 70 of Presidential Decree No. 1529.
Prudence and Conscientiousness of Registrars: The Supreme Court reminded all Registers of Deeds, as well as all officers and employees of the registry, to strictly and faithfully observe prudence and conscientiousness in the performance of official duties, as the integrity of the Torrens System is partly dependent on the men and women whose primary function is to ensure the strict application of registration laws.

Doctrine

Doctrines / Rules / Principles Laid Down.

The Rule on Involuntary Registration Entries: The entry or notation of an involuntary instrument in the primary entry book or day book of the Register of Deeds constitutes a valid registration and operates as constructive notice to all persons dealing with the registered land from the date of such entry, even if the Register of Deeds fails to annotate the notice on the physical certificate of title due to oversight.
The Rule on Bank Diligence: As banking institutions are expected to observe a higher degree of diligence, care, and prudence than ordinary individuals, a bank cannot claim the status of a mortgagee in good faith if the bank ignores glaring irregularities on the certificate of title, such as the unauthorized cancellation of an adverse claim by a different person in violation of Section 70 of Presidential Decree No. 1529.
The Rule on the Limit of the Indefeasibility Defense: The defense of the doctrine of indefeasibility of Torrens titles cannot be raised by subsequent purchasers or mortgagees who did not act in good faith and who disregarded glaring facts and circumstances that should have prompted such subsequent purchasers or mortgagees to inquire beyond the four corners of the title.

Distinctions / Limitations / Qualifications.

The Good Faith Exception to the Mirror Doctrine: The protection accorded to subsequent purchasers who rely on a clean Torrens title is available only if the purchasers acted in good faith and without notice of any adverse claims or irregularities. If the purchasers have actual knowledge of facts and circumstances that would impel a reasonably cautious person to make further inquiry, such purchasers are placed on notice and have a duty to investigate beyond the certificate of title.

Topic/Subtopic Integration (Mandatory).

Classification of Relationship: DIRECT.
Integration: The case of Mendoza v. Spouses Garana is a direct and controlling authority on Section 32 of Presidential Decree No. 1529 because the case establishes the precise limits of the good-faith protection granted to subsequent purchasers and mortgagees. The decision clarifies that while the Torrens system protects innocent third persons who rely on a clean certificate of title, this protection cannot be invoked to shield negligence, bad faith, or the deliberate disregard of registered notices and title irregularities. By ruling that the entry of an involuntary instrument in the primary entry book is sufficient to constitute constructive notice to the entire world, the Supreme Court of the Philippines preserved the rights of prior litigants while ensuring that procedural due process remains an absolute limit on subsequent land transactions. This reinforces the foundational purpose of the Torrens system, which is to protect validly registered ownership and interests from fraudulent collateral transfers, while ensuring that the Register of Deeds has the authority to correct the administrative oversights of the Register of Deeds to make the physical title conform to the official register.

Separate Opinions

NOT APPLICABLE / NOT IN RECORD. (The Decision was rendered unanimously by the Second Division of the Supreme Court of the Philippines, and no separate concurring or dissenting opinions are recorded in the text of the decision).