Skunac Corporation vs. Sylianteng

Where two parties claim ownership of the same registered land through titles derived from different vendors, Article 1544 on double sale does not apply; the earlier title prevails, and a purchaser who ignores a memorandum of encumbrances annotated on the certificate of title relied upon is not a buyer in good faith. A notarized duplicate original of a deed of sale is admissible without accounting for the original, and a person who obtained title through falsified documents conveying property already sold by the original owner during his lifetime acquires no rights transferable to subsequent purchasers.

The dispute involves two parcels of land — Lot 1 (1,250 square meters) and Lot 2 (990 square meters) — both located in Block 2 of the Pujalte Subdivision along Wilson Street, Greenhills, San Juan City, forming part of a tract originally registered on October 29, 1945 in the name of Luis A. Pujalte under TCT No. (-78865) (-2668) -93165 ("Mother Title") of the Register of Deeds for the City of Manila. Respondents Roberto S. Sylianteng and Caesar S. Sylianteng are the sons of Emerenciana Sylianteng, who allegedly purchased the subject lots from Luis Pujalte. Petitioners Skunac Corporation and Alfonso F. Enriquez trace their titles to Romeo Pujalte, who was declared sole heir of Luis in Special Proceedings No. 3366 before the RTC of Pasig City, Branch 151, and who caused the reconstitution of the Mother Title and its cancellation in favor of TCT No. 5760-R. The competing chains of title — one from Emerenciana and one from Romeo — form the crux of the controversy, with the estate proceedings of Luis Pujalte and a criminal conviction of Romeo for use of falsified documents serving as critical backdrop.

Two parcels of land identified as Lot 1 (1,250 square meters) and Lot 2 (990 square meters), both in Block 2 of the Pujalte Subdivision along Wilson Street, Greenhills, San Juan City, form the subject of this dispute. These lots were portions of a larger tract originally registered in the name of Luis A. Pujalte on October 29, 1945 under TCT No. (-78865) (-2668) -93165, denominated the "Mother Title," of the Register of Deeds for the City of Manila.

Respondents Roberto S. Sylianteng and Caesar S. Sylianteng anchor their claim of ownership on a Deed of Absolute Sale executed in their favor by their mother, Emerenciana Sylianteng, on June 27, 1983. Emerenciana, in turn, allegedly acquired the lots from Luis Pujalte through a Deed of Sale dated June 20, 1958, as reflected in Entry No. P.E. 4023 annotated on the Mother Title, by virtue of which she was issued TCT No. 42369. When Emerenciana sold the lots to respondents, TCT No. 39488 was issued in their names. Petitioners Skunac Corporation and Alfonso F. Enriquez, on the other hand, trace their titles through Romeo Pujalte, who had been declared by the RTC of Pasig City, Branch 151 in Special Proceedings No. 3366 as the sole heir of Luis Pujalte. Romeo caused the reconstitution of the Mother Title, resulting in its cancellation and the issuance of TCT No. 5760-R in his favor. Romeo then allegedly sold the lots to petitioners in 1992, from which TCT No. 5888-R for Lot 1 was issued in the name of Skunac and TCT No. 5889-R for Lot 2 in the name of Enriquez.

Respondents contend that their transactions preceded those of petitioners and that petitioners could not be considered innocent purchasers in good faith because the titles covering the subject lots bore annotations of prior transactions in the memorandum of encumbrances. Petitioners, for their part, maintain that respondents acquired the lots under questionable circumstances, asserting that no copy of the deed of sale between Emerenciana and Luis Pujalte was on file with the Office of the Register of Deeds.

Critical to the resolution of the dispute are several antecedent facts established during the proceedings. As early as July 14, 1960, prior to Romeo's appointment as administrator of the estate of Luis, Paz L. Vda. de Pujalte, Luis's mother and then-appointed administratrix, submitted an Inventory and Appraisal to the estate court that already excluded the subject properties from the estate of Luis. A subsequent Project of Partition of the residual estate, dated March 22, 1963, likewise excluded the disputed lots. On October 11, 1993, the RTC of Pasig, acting as estate court, denied Romeo's motion for approval of the sale of the subject lots to petitioners on the ground that the properties had already been sold to respondents per a report submitted by the Register of Deeds of San Juan. Furthermore, in a separate criminal case, Romeo was convicted on November 18, 2005 of the offense of Use of Falsified Documents, his birth certificate and the marriage certificate of his supposed parents having been found falsified; he did not appeal and instead applied for probation. Romeo also filed a Verified Complaint-in-Intervention with the RTC, denying that he sold the subject lots to petitioners and claiming that the properties still formed part of the estate of Luis.

The RTC, on November 16, 2007, ruled in favor of petitioners, declaring respondents' titles null and void and upholding petitioners' titles as valid. The CA, on August 10, 2012, reversed the RTC, sustaining respondents' chain of title and awarding damages. Petitioners' motion for reconsideration was denied on February 18, 2013, prompting the instant petition.

• Inapplicability of Double Sale: Petitioner argued that the Court of Appeals erred in applying Article 1544 of the Civil Code on double sale of registered land to the case.
• Non-Existence of Prior Sale: Petitioner maintained that respondents failed to prove the existence of a sale between Luis Pujalte and their predecessor-in-interest, Emerenciana Sylianteng, and that the duplicate/carbon original of the Deed of Sale dated June 20, 1958 was inadmissible under the best evidence rule.
• Invalidity of TCT No. 42369: Petitioner contended that TCT No. 42369, purportedly issued to Emerenciana Sylianteng by the Register of Deeds of Quezon City, should have been declared null and void.
• Valid Acquisition from Romeo Pujalte: Petitioner asserted that they were the lawful owners of the subject lots, having validly acquired the same from Romeo Pujalte, the declared sole heir of Luis Pujalte.
• Absence of Bad Faith: Petitioner argued that the award of moral and exemplary damages, attorney's fees, and costs of suit was unwarranted because they were not in bad faith in purchasing the subject lots.

• Better Right by Prior Transaction: Respondent countered that they had a better right to the lots because the transactions conveying the same to them preceded those claimed by petitioners as the source of the latter's titles.
• Petitioners Not Innocent Purchasers: Respondent asserted that petitioners could not be considered innocent purchasers in good faith and for value because they had prior notice of previous transactions as stated in the memorandum of encumbrances annotated on the titles covering the subject lots.
• Validity of Emerenciana's Acquisition: Respondent maintained that the deed of sale between Emerenciana and Luis Pujalte was duly notarized and registered, and that the duplicate original was admissible in evidence.
• Single Notarial Number for Multiple Copies: Respondent contended that the "instrument" referred to in the Revised Administrative Code provision on notarial numbering pertains to the deed or contract notarized, not to the number of copies, such that one document number is assigned regardless of the number of copies prepared.

• Applicability of Article 1544: Whether Article 1544 of the Civil Code on double sale applies where the competing sales emanated from two different vendors.
• Validity of Emerenciana's Acquisition: Whether respondents' predecessor-in-interest, Emerenciana, validly acquired the subject lots from Luis Pujalte.
• Admissibility of Duplicate Original: Whether the duplicate/carbon original of the Deed of Sale dated June 20, 1958 is admissible in evidence notwithstanding the best evidence rule.
• Validity of Petitioners' Titles: Whether petitioners validly acquired the subject lots from Romeo Pujalte, given that the lots had already been sold by Luis during his lifetime and Romeo's claim of heirship was founded on falsified documents.
• Good Faith of Petitioners: Whether petitioners were buyers in good faith and for value.
• Award of Damages: Whether the award of moral damages, exemplary damages, attorney's fees, and costs of suit to respondents was proper.

• Applicability of Article 1544: No. Article 1544 does not apply because the subject lots were sold to petitioners and respondents by two different vendors — Emerenciana and Romeo Pujalte — not by the same seller, which is a requisite for the provision's application.
• Validity of Emerenciana's Acquisition: Yes. Emerenciana's acquisition of the subject lots from Luis was valid and lawful, the deed of sale having been duly notarized and registered, with the notarization carrying the presumption of regularity that petitioners failed to overcome.
• Admissibility of Duplicate Original: Yes. The best evidence rule is inapplicable because the issue was the authenticity and due execution of the deed, not its contents; a signed carbon copy or duplicate executed at the same time as the original is a duplicate original admissible without accounting for the non-production of the original.
• Validity of Petitioners' Titles: No. Romeo never became owner of the subject lots because the properties had already been sold by Luis during his lifetime and were excluded from his estate, and Romeo's claim of heirship was proven spurious by his conviction for use of falsified documents; any unauthorized disposition of property under administration is null and void, and title does not pass to purchasers.
• Good Faith of Petitioners: No. Petitioners were not buyers in good faith because the title they relied on (TCT No. 5760-R in Romeo's name) bore Entry No. P.E. 4023, which apprised them that the lots had already been sold to Emerenciana, and they failed to conduct further investigation.
• Award of Damages: Yes. Respondents were entitled to moral damages (₱500,000.00), exemplary damages (₱500,000.00), and attorney's fees (₱250,000.00), petitioners having acted in bad faith and respondents having been compelled to litigate to protect their rights.

• Applicability of Article 1544: The requisites for Article 1544 to apply include that the two or more sales transactions must each have been bought from the very same seller. In the present case, the subject lots were sold to petitioners by Romeo Pujalte and to respondents by Emerenciana Sylianteng — two different vendors. Because this requisite is absent, Article 1544 has no application. The CA's and RTC's reliance on the double sale provision was therefore misplaced.

• Validity of Emerenciana's Acquisition: Petitioners assailed the authenticity and due execution of the deed of sale between Luis and Emerenciana dated June 20, 1958. However, the deed was notarized, converting it into a public document entitled to the presumption of regularity. A certified copy of page 26 of the notarial register, issued by the Records Management and Archives Office of Manila, confirmed that the sale was regularly notarized. Petitioners failed to present clear, convincing, and more than merely preponderant evidence to overcome this presumption. The deed was also registered, as evidenced by official receipts issued to that effect. The annotation of Entry No. P.E. 4023 on the Mother Title — which the parties stipulated was a faithful reproduction of the original — further confirmed the sale and the issuance of TCT No. 42369 in Emerenciana's name. The presumption that official duty has been regularly performed, under Section 3(m), Rule 131 of the Rules of Court, was not contradicted by petitioners.

• Admissibility of Duplicate Original: The best evidence rule under Section 3, Rule 130 applies only when the content of a document is the subject of inquiry. Where the issue is whether the document was actually executed, exists, or on circumstances surrounding its execution, the best evidence rule does not apply and testimonial evidence is admissible. In this case, the issue was authenticity and due execution, not contents. Moreover, a signed carbon copy or duplicate of a document executed at the same time as the original is a duplicate original, admissible without accounting for the non-production of the original. Section 4(b), Rule 130 provides that when a document is in two or more copies executed at or about the same time with identical contents, all such copies are equally regarded as originals. Petitioners' argument that only one copy was prepared because only one notarial document number appeared was rejected: the "instrument" referred to in the Revised Administrative Code provision is the deed or contract notarized, not each individual copy, so one number is assigned regardless of the number of copies. Evidence showed at least two copies were prepared — one submitted for registration and one retained by Emerenciana.

• Validity of Petitioners' Titles: Romeo never acquired ownership of the subject lots for two independent reasons. First, the lots were already sold by Luis during his lifetime and thus did not form part of his estate upon death. As early as July 14, 1960, the administratrix of Luis's estate, Paz L. Vda. de Pujalte, excluded the subject properties from the Inventory and Appraisal, and again from the Project of Partition dated March 22, 1963. The estate court, in its October 11, 1993 Order, denied Romeo's motion for approval of the sale to petitioners because the lots had already been sold to respondents. Any unauthorized disposition of property under administration is null and void, and title does not pass to purchasers. Second, Romeo was proven not to be Luis's heir: in a criminal case for use of falsified documents, his birth certificate and the marriage certificate of his supposed parents were found falsified, and he was convicted on November 18, 2005. He did not appeal and applied for probation. Applying the principle nemo dat quod non habet, Romeo could not transfer any right to the subject lots, and petitioners, who stepped into his shoes, acquired no rights either. Romeo's own Verified Complaint-in-Intervention denying that he sold the lots to petitioners further undermined petitioners' position. Even assuming both parties bought in good faith, respondents' title would still prevail because when two certificates of title are issued to different persons covering the same land, the earlier in date must prevail.

• Good Faith of Petitioners: A person dealing with registered land is charged with notice of the burdens and claims annotated on the title. The Torrens Certificate of Title (TCT No. 5760-R) in Romeo's name, which petitioners relied upon, contained Entry No. P.E. 4023, which informed them that the lots had already been sold to Emerenciana. This entry should have alerted petitioners and prodded further investigation. Instead, they proceeded with the purchase and executed deeds of sale that were disallowed by the estate court. Petitioners therefore acted in bad faith.

• Award of Damages: Respondents satisfactorily established their claim for moral damages, having endured suffering from Romeo's bad faith in using falsified documents and from petitioners' stubborn insistence in buying the properties despite knowledge of the defect in Romeo's title. The CA's reduction to ₱500,000.00 for both respondents was deemed sufficient. Exemplary damages were properly imposed by way of example or correction for the public good, serving as a deterrent against socially deleterious actions, with the CA correctly reducing the amount to ₱500,000.00. Attorney's fees were warranted under Article 2208 of the Civil Code, exemplary damages having been awarded and respondents having been compelled to litigate to protect their rights.

• Nemo dat quod non habet — No one can give what one does not have. One can sell only what one owns or is authorized to sell, and the buyer can acquire no more right than what the seller can legally transfer. The Court applied this principle to hold that Romeo Pujalte, who was not an heir of Luis and who never owned the subject lots, could not validly convey them to petitioners.

• Presumption of Regularity of Notarized Documents — A notarized instrument is admissible in evidence without further proof of due execution, is conclusive as to the truthfulness of its contents, and enjoys the presumption of regularity. To assail its authenticity and due execution, the evidence must be clear, convincing, and more than merely preponderant. Petitioners failed to present such evidence to overturn the notarized deed of sale between Luis and Emerenciana.

• Best Evidence Rule — Exception for Authenticity and Due Execution — The best evidence rule applies only when the content of a document is the subject of inquiry. Where the issue is whether the document was actually executed, exists, or on circumstances surrounding its execution, the rule does not apply and testimonial evidence and substitutionary evidence are admissible without accounting for the original.

• Duplicate Original Doctrine — A signed carbon copy or duplicate of a document executed at the same time as the original is a duplicate original and may be introduced in evidence without accounting for the non-production of the original. Under Section 4(b), Rule 130, when a document is in two or more copies executed at or about the same time with identical contents, all such copies are equally regarded as originals.

• Notice from Annotations on Torrens Title — While a person dealing with registered land need not go beyond the title, such person is charged with notice of the burdens and claims annotated thereon. A buyer who ignores a memorandum of encumbrances indicating a prior sale cannot claim good faith.

• Priority of Titles in Successive Registrations — When two certificates of title are issued to different persons covering the same land, the earlier in date must prevail. In successive registrations, the person holding a prior certificate is entitled to the land as against a person who relies on a subsequent certificate.

• Unauthorized Disposition of Property Under Administration — Any unauthorized disposition of property under administration is null and void, and title does not pass to the purchasers. Romeo's sale of the subject lots — which were not part of Luis's estate — to petitioners was void for lack of authority.

• "Obviously, said provision has no application in cases where the sales involved were initiated not by just one but two vendors." — This passage articulates the Court's ruling that Article 1544 on double sale requires that the competing buyers purchased from the same seller, a requisite absent where the sales emanated from two different vendors.

• "It is a well-settled principle that no one can give what one does not have, nemo dat quod non habet. One can sell only what one owns or is authorized to sell, and the buyer can acquire no more right than what the seller can transfer legally." — This is the canonical formulation of the nemo dat principle as applied to invalidate the transfer from Romeo to petitioners, and is frequently cited in subsequent property law jurisprudence.

• "It is true that a person dealing with registered land need not go beyond the title. However, it is equally true that such person is charged with notice of the burdens and claims which are annotated on the title." — This passage defines the scope of a buyer's duty of inquiry under the Torrens system, establishing that annotations on the title constitute constructive notice that defeats a claim of good faith.

• "When two certificates of title are issued to different persons covering the same land in whole or in part, the earlier in date must prevail, and, in case of successive registrations where more than one certificate is issued over the land, the person holding a prior certificate is entitled to the land as against a person who relies on a subsequent certificate." — This states the rule on priority of titles under the Torrens system, applied to uphold respondents' earlier title over petitioners' subsequent one.

• Cano Vda. de Viray vs. Usi, G.R. No. 192486, November 21, 2012 — Cited for the four requisites that must concur for Article 1544 to apply, including the requirement that the competing buyers must have bought from the same seller. Followed in holding that Article 1544 was inapplicable.

• Mactan-Cebu International Airport Authority vs. Tirol, 606 Phil. 641 (2009) — Cited for the same requisites of Article 1544 and for the principle that the provision has no application where sales were initiated by two different vendors. Followed.

• Gaw vs. Chua, 574 Phil. 640 (2008) — Cited for the rule that the best evidence rule applies only when the content of a document is the subject of inquiry, and that where the issue is authenticity or due execution, testimonial evidence is admissible. Followed.

• Vallarta vs. Court of Appeals, 256 Phil. 596 (1988) — Cited for the doctrine that a signed carbon copy or duplicate of a document executed at the same time as the original is a duplicate original admissible without accounting for the non-production of the original. Followed.

• Manongsong vs. Estimo, 452 Phil. 862 (2003) — Cited for the rule on burden of proof and preponderance of evidence in civil cases, and for the standard of evidence required to assail a notarized document. Followed.

• Lee vs. Regional Trial Court of Quezon City, Branch 85, 467 Phil. 997 (2004) — Cited for the principle that any unauthorized disposition of property under administration is null and void and title does not pass to purchasers. Followed.

• Sanchez vs. Quinio, 502 Phil. 40 (2005) — Cited for the rule that when two certificates of title are issued to different persons covering the same land, the earlier in date must prevail. Followed.

• Casimiro Development Corporation vs. Mateo, G.R. No. 175485, July 27, 2011 — Cited for the principle that a person dealing with registered land is charged with notice of burdens and claims annotated on the title. Followed.

• Article 1544, Civil Code — Governs double sale of the same property. The Court held it inapplicable because the competing sales emanated from two different vendors (Emerenciana and Romeo), not the same seller, failing the fourth requisite.

• Section 3, Rule 130, Rules of Court — Embodies the best evidence rule, providing that no evidence shall be admissible other than the original when the subject of inquiry is the contents of a document. Held inapplicable because the issue was authenticity and due execution, not contents.

• Section 4(b), Rule 130, Rules of Court — Provides that when a document is in two or more copies executed at or about the same time with identical contents, all such copies are equally regarded as originals. Applied to uphold the admissibility of the duplicate original of the 1958 deed of sale.

• Section 3(m), Rule 131, Rules of Court — Establishes the disputable presumption that official duty has been regularly performed. Applied to uphold the regularity of the entry made by the Acting Register of Deeds of San Juan annotating the sale on the Mother Title.

• Section 246, Article V, Title IV, Chapter II, Revised Administrative Code — Requires a notary to give each instrument a number corresponding to the notarial register. Interpreted to mean that the "instrument" is the deed or contract notarized, not each individual copy, so one number is assigned regardless of the number of copies prepared.

• Article 2208, Civil Code — Authorizes the recovery of attorney's fees when exemplary damages are awarded, when the defendant's act or omission has compelled the plaintiff to litigate with third persons, or when the court deems it just and equitable. Applied to sustain the award of attorney's fees to respondents.

• Article 2229, Civil Code — Defines exemplary damages as imposed by way of example or correction for the public good, in addition to moral, temperate, liquidated, or compensatory damages. Applied to sustain the award of exemplary damages.

Presbitero J. Velasco, Jr. (Chairperson, Third Division), Roberto A. Abad, Jose Catral Mendoza, and Marvic Mario Victor F. Leonen concurred in the decision. No separate concurring opinions were written.