G.R. No. 135038; November 16, 2001
ROLANDO Y. TAN, petitioner, vs. THE COURT OF APPEALS, THE HEIRS OF JOSE L. ATEGA, FRANCISCO B. AALA, HAYDEN B. LUZON and LEONCIO PADERES, respondents.

FACTS

Pedro Torrevillas and Lorenzo Atega were co-owners of Lot No. 436-A. During reconstitution proceedings, they agreed to divide the lot, with Atega owning the northern portion (Lot 436-A-1). Lorenzo Atega subsequently sold portions of his share to Faustino Fortun and Eduardo Amper, who then sold their combined 828-square meter interest to Ismael Elloso. Torrevillas later executed a Deed of Quitclaim recognizing Elloso’s rights, which was annotated on the reconstituted title (OCT No. RO-99) issued in Torrevillas’s name. Petitioner Rolando Tan later acquired this 828-square meter portion from Elloso’s estate.
Respondents Francisco Aala, Hayden Luzon, and Leoncio Paderes derived their claims from subsequent sales by Lorenzo Atega or his heirs of portions of the same lot. TCTs were later issued in the name of Lorenzo Atega covering Lot 436-A-2, but these titles did not annotate Elloso’s claim. Tan filed complaints for accion publiciana and quieting of title. The trial court ruled in Tan’s favor, declaring him the absolute owner and ordering reconveyance. The Court of Appeals reversed, holding that Tan failed to prove his ownership.

ISSUE

Whether petitioner Rolando Tan has a better right of ownership over the disputed 828-square meter portion of land.

RULING

Yes. The Supreme Court reinstated the trial court’s decision, except as to respondent Aala. The Court applied the principle that a purchaser of registered land with a notice of lien or encumbrance acquires the property subject to that interest. The Deed of Quitclaim executed by Torrevillas in favor of Ismael Elloso was duly annotated on the original certificate of title. This annotation constituted constructive notice to the whole world of Elloso’s existing claim. Therefore, when respondents Aala, Luzon, and Paderes (or their predecessors) acquired their titles, they were charged with knowledge of this prior encumbrance. Their titles, being later in time, are subject to Tan’s superior right derived from Elloso.
However, regarding respondent Aala, the evidence showed an overlapping claim where a 100-square meter portion of his titled property fell within Tan’s 828-square meter lot. The Court found that Aala was a purchaser in good faith for value. Consequently, the remedy was not outright reconveyance from Aala to Tan. Instead, the case was remanded to the trial court to effect a partition, segregating the 100 square meters from Tan’s lot to Aala. The Heirs of Jose Atega, as successors of Lorenzo Atega who caused the double sale, were ordered to pay Tan the fair market value of that 100-square meter portion.