PAGADUAN VS. OCUMA G. R. No. 176308 May 8, 2009 I.

FACTS Pagaduans are the heirs of Agaton Pagaduan who bought the subject land to Antonio Cereso who purchased the latter to Nicolas Cleto, the original owner. The first dispositions where the Pagaduans were involved was not registered, as a result, there was no new certificates of title issued in their names. After Nicolas death, his widow Ruperta Asuncion sold the same land to Eugenia Reyes which resulted in the issuance of TCT No. T-1221 in latters name in lieu of TCT No. T-1220 of Ruperta. Then, Eugenia executed a unilateral Deed of Sale with Agaton Pagaduan and Sps. Ocuma. At first, Eugenia sold the northern portion to Sps.Ocuma and the southern portion to Pagaduan; however, Eugenia executed another Deed of Sale, this time including the southern portion in Sps. Ocumas favor. For this reason, Pagaduans instituted a complaint for reconveyance of the southern portion before the RTC who rendered judgment in their favor. Thus, Sps. Ocuma appealed to the CA which reversed and set aside the decision of the RTC on the ground that implied trust was created in favor of Pagaduan but there is no showing of possession hence, prescription had set in precluding Pagaduans recovery of the disputed portion. Consequently, the case was then elevated to the SC thru a petition for review on certiorari assailing double sale. II. ISSUE Whether or not the Pagaduans were the rightful owner of the disputed portion of the land even though the Sps. Ocuma had it first registered. III. HELD Yes, Pagaduans were the rightful owners. Sps. Ocuma had prior knowledge of the sale of the questioned portion to Agaton Pagaduan as the same Deed of Sale that conveyed the northern portion to them, conveyed the southern portion to Agaton Pagaduan. Thus, the subsequent issuance of the TCT of Sps. Ocuma, to the extent that it affects Pagaduans portion, conferred no better right than the registration which was the source of the authority to issue the said title. Knowledge gained by the Sps. Ocuma of the first sale defeats their rights even if they were first to register the second sale. Knowledge of the first sale blackens this prior registration with bad faith. Therefore, because the registration of the Sps. Ocuma was in bad faith, it amounted to no

registration at all. Besides, Pagaduans are the rightful owner for having established that their successor-in-interest Agaton Pagaduan had purchased the property from Eugenia Reyes and in fact took possession of said property. Action to recover the land brought by the Pagaduans does not prescribe even if it was filed a little over 27 years after the title was registered in bad faith by Sps. Ocuma.