JUANITA PINEDA VS COURT OF APPLEAS AND TERESITA GONZALES

G.R. NO. 114172, 25 August 2003, FIRST DIVISION (Carpio, J.)

FACTS:

On January 4, 1982, Spouses Virgilio and Adorita Benitez obtained a loan of P243,000
from Juanita Pineda and Leila Sayoc and mortgaged a house and lot in their favor. The Pineda
and Sayoc did not register the mortgage but the spuoses delivered a duplicate of the TCT to
Pineda.

On November 9, 1983, the spouses sold the house to Olivia Mojica with Pineda’s
consent. On the same date, Mojica filed a petition for the issuance of a second owners duplicate
alleging that she purchased the parcel of land and the owners duplicate copy was lost. The
petition was granted by the trial court and a second owners duplicate was issued in the name of
the Spouses Benitez. Eventually, the spouses sold the lot to Mojica cancelling the old TCT and
issuing a new one in Mojica’s name.

On February 22, 1985, Mojica obtained a loan from Teresita Gonzales, executing a
promissory note and a deed of mortgage which Gonzales registered with the Register of Deeds.

Meanwhile, on May 8, 1985, Pineda and Sayoc filed a complaint to cancel the second
owners duplicate against the Spouses and Mojica. The Spouses admitted to selling the house and
lot to Mojica but denied having knowledge of the petition for the issuance of the second owners
duplicate. On the other hand, Mojica denied conspiring with the Spouses and committing fraud.
The trial court declared the second owners duplicate to be null and void. The CA affirmed the
trial court’s decision.

On December 7, 1987, Mojica defaulted in paying her obligation prompting Gonzales to

foreclose the same. When Mojica failed to redeem the property within the redemption period,
Gonzales consolidated the title to the property, executing the corresponding affidavit of
consolidation.

On motion of Pineda and Sayoc, the trial court issued a writ of execution to enforce its
judgement. However, it could not be enforced because a new TCT was registered in the
Gonzales’ name. Subsequently, the trial court reinstated the old TCT in Benitez’s name. The CA,
upon Gonzales’s appeal revered the decision and issued a permanent prohibitory injunction.

ISSUE: Whether or not Gonzales is an innocent purchaser for value making her title to the
property indefeasible and imprescriptible.
HELD:

Yes. The rule is that a mortgage annotated on a void title is valid if the mortgagee
registered the mortgage in good faith. Gonzales registered her mortgage in good faith because
she had no actual notice of the prior unregistered mortgage in favor of Pineda and Sayoc. To
bind third parties to an unregistered encumbrance, the law requires actual notice.

The nullity of TCT 13138 did not affect the validity of the title or ownership of Mojica or
Gonzales as subsequent transferees of the property. What is void is the certificate of title, not the
title or ownership itself of Mojica or Gonzales. The notice of lis pendens could not defeat
Gonzales’ rights over the property for two reasons. First, Gonzales registered in good faith her
mortgage before the notation of lis pendens, making the registration of her mortgage valid
despite the invalidity of TCT 13138. Second, since Gonzales’ mortgage was valid, the auction
sale retroacted to the date of registration of her mortgage, making the auction sale prior in time
to the notice of lis pendens. Thus, TCT 16084, issued to Gonzales as a result of the forbearance
sale is valid.

Wherefore, the petition is DENIED.

*notes in the full text