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HECTOR UY VS. VIRGINIA FULE LBP v.

Barbara Sampaga Poblete

On October 1997, respondent Poblete obtained a loan worth P300k from


Generally, a buyer is not required to inquire beyond the title if the requisites of Kapantay Multi-Purpose. She mortgaged her Lot No.29 located in Buenavista,
good faith concur. However, absent one or two of the requisites, then the law Sablayan, Occidental Mindoro, under OCT No. P-12026. Kapantay, in turn,
itself puts the buyer on notice and obliges the latter to exercise a higher used OCT No. P-12026 as collateral under its Loan Account No. 97-OC-013
degree of diligence by scrutinizing the certificate of title and examining all with Land Bank-Sablayan Branch.
factual circumstances in order to determine the seller’s title and capacity to
transfer any interest in the property. After a year, Poblete instructed her son-in-law Domingo Balen to look for a
buyer for the Lot No. 29 in order to pay her loan and he referred Angelito
FACTS: Conrado Garcia (CG) owned a vast tract of land. Upon his death, his Joseph Maniego. Both parties agreed that the lot shall amount to P 900k but
heirs entered an extrajudicial settlement of his estate including the land and in order to reduce taxes they will execute a P 300k agreed price appearing in
thereafter caused its registration under their names. Meanwhile, DAR officials the Deed of Absolute Sale dated November 9, 1998. In the Deed, Poblete
issued a joint certification that said land was an “untitled” property owned by specifically described herself as a widow. Balen, then, delivered the Deed to
CG. As such, it was then included in the Operation Land Transfer program Maniego. Instead of paying the price, Maniego promised in an affidavit dated
pursuant to PD No. 27. The offices issued Emancipation Patents and Original November 19, 1998 stating that the said amount will be deposited to her
Certificate of Titles to farmer-beneficiaries like Mariano Ronda (MR). MR sold Land Bank Savings Account but he failed to do so.
his portion to Chisan Uy then Chisan Uy’s heirs, sold the said land to Hector
Uy. In 1997, the TCT of CG was cancelled and subsequently issued in the On August 1999, Maniego paid Kapantay’s Loan Account for P448,202.08 and
names of the heirs of Garcia under a new TCT. In 1998, DAR Secretary issued on subsequent year he applied for a loan worth P1M from Land Bank using
the EPs to farmer-beneficiaries like MR. However, CG’s TCT was already in the OCT No. P-12026 as a collateral with a condition that the title must be first
name of Hector Uy. Because of this, the heirs of CG filed a complaint assailing transferred on his name. On August 14, 2000, the Registry of Deeds issued
the certificates of titles issued to purchasers Chisan and Hector Uy. RTC TCT No. T-20151 in Maniego’s name pursuant to a Deed of Absolute Sale with
favored respondents. CA affirmed. SC affirmed CA. the signatures of Mrs. Poblete and her husband dated August 11, 2000 and
Maniego successfully availed the Credit Line Agreement for P1M and a Real
SUBSTANTIVE ISSUE:WON Hector Uy, who got the land from the heirs of the Estate Mortgage over TCT No. T-20151 on August 15, 2000. On November
farmer beneficiary Mariano Ronda, was an innocent purchaser for value who 2002, Land Bank filed an Application for an Extra-judicial Foreclosure against
had better rights than the heirs of Conrado Garcia over the disputed land. the said Mortgage stating that Maniego failed to pay his loan.
(NO. He did not exercise reasonable precaution by inquiring beyond the title. Poblete filed a complaint for nullification of the Deed of Sale dated August 11,
Third requisite was absent. Hence, he cannot be awarded the disputed land.) 2000 and TCT No. T-20151, Reconveyance of the Title and Damages with a
Prayer for Temporary Restraining Order and/or Issuance of Writ of
RATIO: Preliminary Injunction against Maniego, Landbank and the Register of Deeds.
There is good faith when the following conditions concur: The judgment of RTC, affirmed by the CA upon appeal, favors the plaintiff
(1) the seller is the registered owner of the land; Poblete. Hence, this petition.
(2) the latter is in possession thereof; and
(3) at the time of the sale, the buyer was not aware of any claim or ISSUE: WON the CA erred in upholding the finding of the trial court
interest of some other person in the property, or of any defect or declaring the TCT No. T-20151 as null and void.
restriction in the title of the seller or in his capacity to convey title
to the property. Held :
Absent one or two of the foregoing conditions, then the law itself puts The petition is meritorious.
the buyer on notice and obliges the latter to exercise a higher degree of
diligence by scrutinizing the certificate of title and examining all factual It is well-entrenched rule, as applied, by the CA, that a forged or fraudulent
circumstances in order to determine the seller’s title and capacity to transfer deed is a nullity and conveys no title. Moreover, where the deed of sale
any interest in the property. Under such circumstance, it was no longer states that the purchase price has been paid but in fact has never been, the
sufficient for said buyer to merely show that he had relied on the face of the deed is void ab initio for lack of consideration. Since the deed, is void, the
title; he must now also show that he had exercised reasonable precaution by title is also void. Since the land title has been declared void by final
inquiring beyond the title. Failure to exercise such degree of precaution judgment, the Real Estate Mortgage over it is also void.
makes him a buyer in bad faith.
In this case, the deed of sale executed between the heirs of Ronda and It is essential that the mortgagor be the absolute owner of the mortgage;
the petitioner were issued only on August 17, 1998 but the deed of sale was otherwise, the mortgage is void. The doctrine ―the mortgagee in good
executed on July 31, 1998. Evidently, the petitioner entered into the deed of faith as a rule does not apply to banks which are required to observe a higher
sale without having been able to inspect the TCTs since they were still standard of diligence. A bank cannot assume that, simply because the title
inexistent. His only basis were the OCTs and such categorically stated that offered as security is on its face, free of any encumbrances or lien, it is
they were entered pursuant to an emancipation patent pursuant to relieved of the responsibility of taking further steps to verify the title and
Operation Land Transfer. It provided that it shall not be transferred except by inspect the properties to be mortgage.
hereditary succession or to the government. Hence, the third element was
negated. At the time of the sale, the buyer was already aware of any The records do not even show that Land Bank investigated and inspected the
restriction in the title of the seller or in his capacity to convey title to the actual occupants. Land Bank merely mentioned Maniego’s loan application
property. The absence of the third condition put the petitioner on notice and upon his presentation of OCT No. P-12026, which was still under the name of
obliged him to exercise a higher degree of diligence by scrutinizing the Poblete. Land Bank even ignored the fact that Kapantay previously used
certificates of title and examining all factual circumstances in order to Poblete’s title as collateral in its loan account with Land Bank.
determine the seller’s title and capacity to transfer any interest in the lots.
Furthermore, only one day after Maniego obtained TCT No. P-20151 under his
name, Land Bank and Maniego executed a Credit Line Agreement and Real
Mortgage. It appears that Maniego’s loan was already completely processed
while the collateral was still in the name of Poblete. Where said mortgagee HELD: A lawyer owes entire devotion to the interest of his client, warmth and
acted with haste in granting the mortgage loan and did not ascertain the zeal in the maintenance and defense of his rights and the exertion of his
ownership of the land being mortgaged, it cannot be considered innocent utmost learning and ability, to the end that nothing can be taken or withheld
mortgagee. from his client except in accordance with the law. He should present every
remedy or defense authorized by the law in support of his client's cause,
The pari delicto rule provides ―when two parties are equally at fault, the law regardless of his own personal views. In the full discharge of his duties to his
leaves them as they are and denies recovery by either one of them. This court client, the lawyer should not be afraid of the possibility that he may displease
adopts the decisions of RTC and CA that only Maniego is at fault. Finally, on the judge or the general public.
the issue of estoppels and laches, such question was not raised before the Judged by the actuations of said counsel in this case, he has miserably failed
trial court. It is settled that an issue which are neither alleged in the complaint in his duty to exercise his utmost learning and ability in maintaining his
nor raised during the trial cannot be raised for the time on appeal. client's cause.
It is not only a case of simple negligence as found by the appellate court, but
of reckless and gross negligence, so much so that his client was deprived of
The issue on the nullity of Maniego’s title had already been foreclosed when her property without due process of law. The Court finds that the negligence
this Court denied Maniego’s petition for review in the Resolution dated 13 of counsel in this case appears to be so gross and inexcusable. This was
July 2011, which became final and executory on 19 January 2012. It is settled compounded by the fact, that after petitioner gave said counsel another
that a decision that has acquired finality becomes immutable and unalterable chance to make up for his omissions by asking him to file a petition for
and may no longer be modified in any respect, even if the modification is annulment of the judgment in the appellate court, again counsel abandoned
meant to correct erroneous conclusions of fact or law and whether it will be the case of petitioner in that after he received a copy of the adverse
made by the court that rendered it or by the highest court of the land. This is judgment of the appellatecourt, he did not do anything to save the situation
without prejudice, however, to the right of Maniego to recover from Poblete or inform his client of the judgment. He allowed the judgment to lapse and
what he paid to Kapantay for the account of Poblete, otherwise there will be become final. Such reckless and gross negligence should not be allowed to
unjust enrichment by Poblete. bind the petitioner. Petitioner was thereby effectively deprived of her day in
court.

LEGARDA VS CA Thus, we have before Us a case where to enforce an alleged lease agreement
of the property of petitioner, private respondent went to court, and that
FACTS: Petitioner Victoria Legarda was the owner of a parcel of land and the because of the gross negligence of the counsel for the petitioner, she lost the
improvements located at 123 West Avenue, Quezon City. On January 11, case as well as the title and ownership of the property, which is worth
1985 respondent New Cathay House, Inc. filed a complaint against the millions. The mere lessee then now became the owner of the property. Its
petitioner for specific performance with preliminary injunction and damages true owner then, the petitioner, now is consigned to penury all because her
in RTC alleging that petitioner entered into a lease agreement with the lawyer appeared to have abandoned her case not once but repeatedly.
private respondent through its representative, Roberto V. Cabrera, Jr., of the
aforestated property of petitioner. Respondent drew up the written contract
and sent it to petitioner, that petitioner failed and refused to execute and GABUTAN VS. NACALABAN
sign the same despite demands of respondent. Petitioner engaged the
services of counsel to handle her case. Said counsel filed his appearance with On January 25, 1957, Godofredo Nacalaban (Godofredo) purchased an 800-
an urgent motion for extension of time to file the answer within ten (10) days square meter parcel of prime land (property) in Poblacion, Cagayan de Oro
from February 26, 1985. However, said counsel failed to file the answer City. Pursuant to the sale, Transfer Certificate of Title (TCT) No. T-
within the extended period prayed for. Counsel for private respondent filed 22597covering the property was issued in the name of Godofredo. He
an ex-parte motion to declare petitioner in default. This was granted by the thereafter built a house on it.
trial court on March 25, 1985 and private respondent was allowed to present Godofredo died on January 7, 1974. He was survived by his wife, Baldomera,
evidence ex-parte. Thereafter, on March 25, 1985, the trial court rendered its and their children, Dante, Helen, and Susan. On March 19, 1979, Baldomera
decision. Said counsel for petitioner received a copy of the judgment but took issued a Certificationin favor of her mother, Melecia. It provided, in effect,
no steps to have the same set aside or to appeal therefrom. Thus, the that Baldomera was allowing her mother to build and occupy a house on the
judgment became final and executory. The property of petitioner was sold at portion of the property.Accordingly, the house was declared for taxation
public auction to satisfy the judgment in favor of private respondent. The purposes. The tax declaration presented in evidence showed that Melecia
property was sold to Roberto V. Cabrera, Jr., representative of private owned the building on the land owned by Godofredo.
respondent, and a certificate of sale was issued in his favor. The redemption Baldomera died on September 11, 1994.On July 3, 1996, her children
period expired after one year so a final deed of sale was issued by the sheriff executed an Extrajudicial Settlement with Salewhere they adjudicated unto
in favor of Cabrera, who in turn appears to have transferred the same to themselves the property and sold it to Cagayan Capital College. On August 22,
private respondent. 1996, TCT No. T-2259 was cancelled and TCT No. T-111846 covering the
property was issued in the name of the College.
During all the time, the petitioner was abroad. When, upon her return, she Melecia died and was survived by her children who continued living in the
learned, to her great shock, what happened to her case and property, she house, Gabutan was one of these children. College demanded that said heirs
nevertheless did not lose faith in her counsel. She still asked Atty. Coronel to vacate the premises.
take such appropriate action possible under the circumstances. As On July 7, 1997, Gabutan, et al. filed a Complaint for Reconveyance of Real
aboverelated, said counsel filed a petition for annulment of judgment and its Property, Declaration of Nullity of Contracts, Partition and Damages with Writ
amendment in the Court of Appeals. But that was all he did. After an adverse of Preliminary Attachment and Injunctionagainst Nacalaban, et al. and the
judgment was rendered against petitioner, of which counsel was duly College. They alleged that: (1) Melecia bought the property using her own
notified, said counsel did not inform the petitioner about it. He did not even money but Godofredo had the Deed of Absolute Sale executed in his name
ask for reconsideration thereof, or file a petition for review before this Court. instead of his mother-in-law;(2) Godofredo and Baldomera were only trustees
Thus, the judgment became final. It was only upon repeated telephone of the property in favor of the real owner and beneficiary, Melecia;(3) they
inquiries of petitioner that she learned from the secretary of her counsel of only knew about the Extrajudicial Settlement with Sale upon verification with
the judgment that had unfortunately become final. the Registry of Deeds;and (4) the College was a buyer in bad faith, being
aware they were co-owners of the property.
W/N the action for reconveyance is proper NOBLEZA V. NUEGA
W/N the college is a buyer in good faith
FACTS:
HELD: RESPONDENT SHIRLEY B. NUEGA (SHIRLEY) WAS MARRIED TO ROGELIO A.
NUEGA (ROGELIO) ON SEPTEMBER 1, 1990. UPON THE REQUEST OF ROGELIO,
Gabutan, et al., through the testimonies of Felisia, Crisanta, and Trifonia, SHIRLEY SENT HIM MONEY FOR THE PURCHASE OF A RESIDENTIAL LOT IN
established that Melecia's money was used in buying the property, but its MARIKINA WHERE THEY HAD PLANNED TO EVENTUALLY BUILD THEIR HOME.
title was placed in Godofredo's name. She purchased the property because THE FOLLOWING YEAR, OR ON SEPTEMBER 13, 1989, ROGELIO PURCHASED
Felisia wanted to build a pharmacy on it. On one occasion in Melecia's house, THE SUBJECT HOUSE AND LOT FOR ONE HUNDRED TWO THOUSAND PESOS
and when the entire family was present, Melecia gave Godofredo the money (P102,000.00) FROM RODEANNA REALTY CORPORATION. SHIRLEY CLAIMS
to purchase the property. Melecia entrusted the money to Godofredo THAT UPON HER ARRIVAL IN THE PHILIPPINES SOMETIME IN 1989, SHE
because he was in Cagayan de Oro, and per Melecia's instruction, the deed of SETTLED THE BALANCE FOR THE EQUITY OVER THE SUBJECT PROPERTY WITH
sale covering the property was placed in his name.It was allegedly her THE DEVELOPER THROUGH SSS8 FINANCING. SHE LIKEWISE PAID FOR THE
practice to buy properties and place them in her children's name, but it was SUCCEEDING MONTHLY AMORTIZATIONS.
understood that she and her children co-own the properties. ON SEPTEMBER 1, 1990, SHIRLEY AND ROGELIO GOT MARRIED AND LIVED IN
THE SUBJECT PROPERTY. THE FOLLOWING YEAR, SHIRLEY RETURNED TO
Melecia built a residential building on the property, where her daughter ISRAEL FOR WORK. WHILE OVERSEAS, SHE RECEIVED INFORMATION THAT
Crisanta and some of her grandchildren resided. Godofredo also thereafter ROGELIO HAD BROUGHT HOME ANOTHER WOMAN, MONICA ESCOBAR, INTO
built a house on the property. Twice, he also mortgaged the property to THE FAMILY HOME. SHE ALSO LEARNED AND WAS ABLE TO CONFIRM UPON
secure loans. Melecia allowed him to do so because she trusted him. After HER RETURN TO THE PHILIPPINES IN MAY 1992, THAT ROGELIO HAD BEEN
Godofredo's death, and when Baldomera fell ill, there were family discussions INTRODUCING ESCOBAR AS HIS WIFE.
to transfer the title in Melecia's name so Melecia's children can divide it IN JUNE 1992, SHIRLEY FILED TWO CASES AGAINST ROGELIO: ONE FOR
together with the rest of Melecia's properties. The plans, however, always fell CONCUBINAGE BEFORE THE PROVINCIAL PROSECUTION OFFICE OF RIZAL,
through. AND ANOTHER FOR LEGAL SEPARATION AND LIQUIDATION OF PROPERTY
BEFORE THE RTC OF PASIG CITY. IN BETWEEN THE FILING OF THESE CASES,
Article 1448 of the Civil Code provides in part that there is an implied trust SHIRLEY LEARNED THAT ROGELIO HAD THE INTENTION OF SELLING THE
when property is sold, and the legal estate is granted to one party but the SUBJECT PROPERTY. SHIRLEY THEN ADVISED THE INTERESTED BUYERS ONE OF
price is paid by another for the purpose of having the beneficial interest of WHOM WAS THEIR NEIGHBOR AND PETITIONER JOSEFINA V. NOBLEZA
the property. The former is the trustee, while the latter is the beneficiary. The (PETITIONER) – OF THE EXISTENCE OF THE CASES THAT SHE HAD FILED
trust created here, which is also referred to as a purchase money resulting AGAINST ROGELIO AND CAUTIONED THEM AGAINST BUYING THE SUBJECT
trust, occurs when there is (1) an actual payment of money, property or PROPERTY UNTIL THE CASES ARE CLOSED AND TERMINATED. NONETHELESS,
services, or an equivalent, constituting valuable consideration; (2) and such UNDER A DEED OF ABSOLUTE SALE DATED DECEMBER 29, 1992, ROGELIO
consideration must be furnished by the alleged beneficiary of a resulting SOLD THE SUBJECT PROPERTY TO PETITIONER WITHOUT SHIRLEY’S CONSENT
trust. These two elements are present here. IN THE AMOUNT OF THREE HUNDRED EIGHTY THOUSAND PESOS
(P380,000.00), INCLUDING PETITIONER’S UNDERTAKING TO ASSUME THE
Having established the creation of an implied resulting trust, the action for EXISTING MORTGAGE ON THE PROPERTY WITH THE NATIONAL HOME
reconveyance filed by Gabutan, et al., the heirs of Melecia in whose benefit MORTGAGE FINANCE CORPORATION AND TO PAY THE REAL PROPERTY TAXES
the trust was created, is proper. An action for reconveyance is a legal and DUE THEREON.
equitable remedy granted to the rightful landowner, whose land was ISSUE:
wrongfully or erroneously registered in the name of another, to compel the IS THE DEED OF SALE NULL AND VOID FOR LACK OF THE CONSENT OF THE
registered owner to transfer or reconvey the land to him. WIFE?
HELD:
YES. THE PETITIONER IS NOT A BUYER IN GOOD FAITH. A BUYER CANNOT
College is not a buyer in good faith. To prove good faith, a buyer of registered CLAIM TO BE AN INNOCENT PURCHASER FOR VALUE BY MERELY RELYING ON
and titled land need only show that he relied on the face of the title to the THE TCT OF THE SELLER WHILE IGNORING ALL THE OTHER SURROUNDING
property. He need not prove that he made further inquiry for he is not CIRCUMSTANCES RELEVANT TO THE SALE.
obliged to explore beyond the four corners of the title. Such degree of proof THE NULLITY OF THE SALE MADE BY ROGELIO IS NOT PREMISED ON PROOF
of good faith, however, is sufficient only when the following OF RESPONDENT’S FINANCIAL CONTRIBUTION IN THE PURCHASE OF THE
conditions concur: first, the seller is the registered owner of the SUBJECT PROPERTY. ACTUAL CONTRIBUTION IS NOT RELEVANT IN
land; second, the latter is in possession thereof; and third, at the time of the DETERMINING WHETHER A PIECE OF PROPERTY IS COMMUNITY PROPERTY
sale, the buyer was not aware of any claim or interest of some other person FOR THE LAW ITSELF DEFINES WHAT CONSTITUTES COMMUNITY PROPERTY.
in the property, or of any defect or restriction in the title of the seller or in ARTICLE 91 OF THE FAMILY CODE THUS PROVIDES:
his capacity to convey title to the property. ART. 91. UNLESS OTHERWISE PROVIDED IN THIS CHAPTER OR IN THE
MARRIAGE SETTLEMENTS, THE COMMUNITY PROPERTY SHALL CONSIST OF
Thus, the College, which has the burden to prove the status of being a ALL THE PROPERTY OWNED BY THE SPOUSES AT THE TIME OF THE
purchaser in good faith, is required to prove the concurrence of the above CELEBRATION OF THE MARRIAGE OR ACQUIRED THEREAFTER.
conditions. This onus probandi cannot be discharged by mere invocation of THE ONLY EXCEPTIONS FROM THE ABOVE RULE ARE: (1) THOSE EXCLUDED
the legal presumption of good faith.We find that the College failed to FROM THE ABSOLUTE COMMUNITY BY THE FAMILY CODE; AND (2) THOSE
discharge this burden. They knew that the heirs of Melecia lived on the EXCLUDED BY THE MARRIAGE SETTLEMENT.
property yet did not conduct a proper inquiry into it.The "honesty of UNDER THE FIRST EXCEPTION ARE PROPERTIES ENUMERATED IN ARTICLE 92
intention" which constitutes good faith implies a freedom from knowledge of OF THE FAMILY CODE, WHICH STATES:
circumstances which ought to put a person on inquiry. If the land purchased
is in the possession of a person other than the vendor, the purchaser must be
wary and must investigate the rights of the actual possessor. Without such
inquiry, the purchaser cannot be said to be in good faith and cannot have any
right over the property.
ART. 92. THE FOLLOWING SHALL BE EXCLUDED FROM THE COMMUNITY Held: No. One of the guiding tenets underlying the Torrens system is the
PROPERTY: curtain principle, in that one does not need to go behind the certificate of
(1) PROPERTY ACQUIRED DURING THE MARRIAGE BY GRATUITOUS TITLE BY title because it contains all the information about the title of its holder. This
EITHER SPOUSE AND THE FRUITS AS WELL AS THE INCOME THEREOF, IF ANY, principle dispenses with the need of proving ownership by long complicated
UNLESS IT IS EXPRESSLY PROVIDED BY THE DONOR, TESTATOR OR GRANTOR documents kept by the registered owner, which may be necessary under a
THAT THEY SHALL FORM PART OF THE COMMUNITY PROPERTY; private conveyancing system, and assures that all the necessary information
(2) PROPERTY FOR PERSONAL AND EXCLUSIVE USE OF EITHER SPOUSE; regarding ownership is on the certificate of title. Consequently, the avowed
HOWEVER, JEWELRY SHALL FORM PART OF THE COMMUNITY PROPERTY; objective of the Torrens system is to obviate possible conflicts of title by
(3) PROPERTY ACQUIRED BEFORE THE MARRIAGE BY EITHER SPOUSE WHO giving the public the right to rely upon the face of the Torrens certificate and,
HAS LEGITIMATE DESCENDANTS BY A FORMER MARRIAGE, AND THE FRUITS as a rule, to dispense with the necessity of inquiring further; on the part of
AS WELL AS THE INCOME, IF ANY, OF SUCH PROPERTY. the registered owner, the system gives him complete peace of mind that he
SINCE THE SUBJECT PROPERTY DOES NOT FALL UNDER ANY OF THE would be secured in his ownership as long as he has not voluntarily disposed
EXCLUSIONS PROVIDED IN ARTICLE 92, IT, THEREFORE, FORMS PART OF THE of any right over the covered land.
ABSOLUTE COMMUNITY PROPERTY OF SHIRLEY AND ROGELIO. REGARDLESS
OF THEIR RESPECTIVE CONTRIBUTION TO ITS ACQUISITION BEFORE THEIR The Philippines adopted the Torrens system through Act No. 496, also known
MARRIAGE, AND DESPITE THE FACT THAT ONLY ROGELIO’S NAME APPEARS IN as the Land Registration Act, which was approved on November 6, 1902 and
THE TCT AS OWNER, THE PROPERTY IS OWNED JOINTLY BY THE SPOUSES took effect on February 1, 1903. In this jurisdiction, therefore, “a person
SHIRLEY AND ROGELIO. dealing in registered land has the right to rely on the Torrens certificate of
title and to dispense with the need of inquiring further, except when the
Spouses Cusi vs Domingo party has actual knowledge of facts and circumstances that would impel a
reasonably cautious man to make such inquiry”.

Facts: The property in dispute was a vacant unfenced lot situated in White The records also show that the forged deed of sale from Domingo to Sy
Plains, Quezon City and covered by Transfer Certificate of Title (TCT) No. N- appeared to be executed on July 14, 1997; that the affidavit of loss by which
165606 issued in the name of respondent Lilia V. Domingo by the Registry of Sy would later on support her petition for the issuance of the duplicate
Deeds of Quezon City. It had an area of 658 square meters. In July 1999, owner’s copy of Domingo’s TCT No. 165606 was executed on July 17, 1997,
Domingo learned that construction activities were being undertaken on her the very same day in which Sy registered the affidavit of loss in the Registry of
property without her consent. She soon unearthed the series of anomalous Deeds of Quezon City; that Sy filed the petition for the issuance of the
transactions affecting her property. On July 18, 1997, one Radelia Sy (Sy), duplicate owner’s copy of Domingo’s TCT No. 165606; that the RTC granted
representing herself as the owner of the property, petitioned the RTC for the her petition on August 26, 1997; and that on October 31, 1997, a real estate
issuance of a new owner’s copy of Domingo’s TCT No. N-165606, appending mortgage was executed in favor of one Emma Turingan, with the mortgage
to her petition a deed of absolute sale dated July 14, 1997 purportedly being annotated on TCT No. 165606 on November 10, 1997.
executed in her favor by Domingo; and an affidavit of loss dated July 17,
1997, whereby she claimed that her bag containing the owner’s copy of TCT Being the buyers of the registered realty, the Cusi’s and the De Vera’s were
No. N-165606 had been snatched from her on July 13, 1997 while she was at aware of the aforementioned several almost simultaneous transactions
the SM City in North EDSA, Quezon City. The RTC granted Sy’s petition on affecting the property. Their awareness, if it was not actual, was at least
August 26, 1997. The Registry of Deeds of Quezon City then issued a new presumed, and ought to have put them on their guard, for, as the CA pointed
owner’s duplicate copy of TCT No. N-165606, which was later cancelled by out, the RTC observed that “[t]hese almost simultaneous transactions,
virtue of the deed of absolute sale dated July 14, 1997, and in its stead the particularly the date of the alleged loss of the TCT No. 165606 and the
Registry of Deeds of Quezon City issued TCT No. 186142 in Sy’s name. Sy purported Deed of Sale, suffice[d] to arouse suspicion on [the part of] any
subsequently subdivided the property into two, and sold each half by way of person dealing with the subject property.” Simple prudence would then have
contract to sell to Spouses Edgardo and Ramona Liza De Vera and to Spouses impelled them as honest persons to make deeper inquiries to clear the
Alfonso and Maria Angeles Cusi. The existence of the individual contracts to suspiciousness haunting Sy’s title. But they still went on with their respective
sell was annotated on the dorsal portion of Sy’s TCT No. 186142 as Entry No. purchase of the property without making the deeper inquiries. In that regard,
PE8907/N-186142, stating that the consideration of the sale was they were not acting in good faith.
P1,000,000.00 for each set of buyers, or for a total of P2,000,000.00 for the
entire property that had an actual worth of not less than P14,000,000.00. TCT Another circumstance indicating that the Cusis and the De Veras were not
No. 186142 in the name of Sy was then cancelled by virtue of the deeds of innocent purchasers for value was the gross undervaluation of the property in
sale executed between Sy and Spouses De Vera, and between Sy and Spouses the deeds of sale at the measly price of P1,000,000.00 for each half when the
Cusi, to whom were respectively issued TCT No. 189568 and TCT No. 189569. true market value was then in the aggregate of at least P14,000,000.00 for
All the while, the transactions between Sy and the De Vera’s, and between Sy the entire property. Even if the undervaluation was to accommodate the
and the Cusi’s were unknown to Domingo, whose TCT No. N-165606 request of Sy to enable her to minimize her liabilities for the capital gains tax,
remained in her undisturbed possession. It turned out that the construction their acquiescence to the fraud perpetrated against the Government, no less,
activities taking place on the property that Domingo learned about were upon still rendered them as parties to the wrongdoing. They were not any less
the initiative of the De Veras in the exercise of their dominical and possessory guilty at all. In the ultimate analysis, their supposed passivity respecting the
rights. Domingo commenced this action against Sy and her spouse, the De arrangement to perpetrate the fraud was not even plausible, because they
Vera’s and the Cusi’s in the RTC, the complaint being docketed as Civil Case knew as the buyers that they were not personally liable for the capital gains
No. Q-99-39312 and entitled Lilia V. Domingo v. Spouses Radelia and Alfred taxes and thus had nothing to gain by their acquiescence. There was simply
Sy, Spouses Alfonso G. and Maria Angeles S. Cusi, Spouses Edgardo M. and no acceptable reason for them to have acquiesced to the fraud, or for them
Ramona Liza L. De Vera, BPI Family Savings Bank and The Register of Deeds of not to have rightfully insisted on the declaration of the full value of the realty
Quezon City, seeking the annulment or cancellation of titles, injunction and in their deeds of sale. By letting their respective deeds of sale reflect the
damages. grossly inadequate price, they should suffer the consequences, including the
inference of their bad faith in transacting the sales in their favor.
Issue: Whether or not the petitioners are considered purchasers in good faith
and for value thus protected for their rights over the subject land.
SABERON vs. VENTANILLA, JR. entry book), on one hand; and the right of the Saberons to rely on what
appears on the certificate of title for purposes of voluntary dealings with the
Facts: same parcel of land, on the other.
On March 3, 1970, Manila Remnant Co., Inc. (MRCI) and A.U. Valencia & Co. The Saberons could not be said to have authored the entanglement they
Inc. (AUVC) executed two (2) contracts to sell in favor of Oscar C. Ventanilla, found themselves in. No fault can be attributed to them for relying on the
Jr. and Carmen Gloria D. Ventanilla (Ventanillas). MRCI resold the same face of the title presented by Marquez. In ultimately ruling for the
property to Carlos Crisostomo (Crisostomo). Ventanillas, the courts a quo focused on the superiority of their notice of levy
Aggrieved, the Ventanillas commenced an action for specific performance, and the constructive notice against the whole world which it had produced
annulment of deeds and damages against MRCI, AUVC, and Crisostomo with and which effectively bound third persons including the Saberons.
the Court of First Instance. The CFI Quezon City rendered a decision in favor This complex situation could have been avoided if it were not for the failure
of the Ventanillas. The CA sustained the CFI Quezon City’s decision in toto. of ROD Cleofe to carry over the notice of levy to Marquez’s title, serving as a
The Ventanillas moved for the issuance of a writ of execution. The writ was senior encumbrance that might have dissuaded the Saberons from purchasing
issued and served upon MRCI. the properties.
However, MRCI alleged that the subject properties could not longer be It is undeniable, therefore, that no title was transferred to Marquez upon the
delivered to the Ventanillas because they had already been sold to Samuel annotation of the contract to sell on MRCI’s title. As correctly found by the
Marquez (Marquez) trial court, the contract to sell cannot be substituted by the Deed of Absolute
The case was elevated to this Court where MRCI argued that the sale of the Sale as a "mere conclusion" of the previous contract since the owners of the
properties to Marquez was valid because at the time of the sale, the issue of properties under the two instruments are different. Considering that the
the validity of the sale to the Ventanillas had not yet been resolved. Further, deed of sale in favor of Marquez was of later registration, the notice of levy
there was no specific injunction against it re-selling the property. As a buyer should have been carried over to the title as a senior encumbrance.
in good faith, Marquez had a right to rely on the recitals in the certificate of The fact that the notice of levy on attachment was not annotated on the
title. The subject matter of the controversy having been passed to an original title on file in the Registry of Deeds, which resulted in its non-
innocent purchaser for value, the execution of the absolute deed of sale in annotation on the title TCT No. PT-94912, should not prejudice petitioner. As
favor of the Ventanillas could not be ordered by the trial court. Yet the court long as the requisites required by law in order to effect attachment are
ruled in favor of the Vetanillas. As it turned out, the execution of the complied with and the appropriate fees duly paid, attachment is duly
judgment in favor of the Ventanillas was yet far from fruition. Samuel Cleofe, perfected. The attachment already binds the land. This is because what
Register of Deeds for Quezon City (ROD Cleofe) revealed to them, that on remains to be done lies not within the petitioner’s power to perform but is a
March 11, 1992, MRCI registered a deed of absolute sale to Marquez who duty incumbent solely on the Register of Deeds.
eventually sold the same property to the Saberons, which conveyance was In the case at bench, the notice of levy covering the subject property was
registered in July 1992. ROD Cleofe opined that a judicial order for the annotated in the entry book of the ROD QC prior to the issuance of a TCT in
cancellation of the titles in the name of the Saberons was essential before he the name of the Saberons. Clearly, the Ventanillas’ levy was placed on record
complied with the writ of execution in Civil Case No. 26411. Apparently, the prior to the sale. This shows the superiority and preference in rights of the
notice of levy, through inadvertence, was not carried over to the title issued Ventanillas over the property as against the Saberons.
to Marquez, the same being a junior encumbrance which was entered after
the contract to sell to Marquez had already been annotated.
Once again, the Ventanillas were constrained to go to court to seek the BPI vs Sanchez
annulment of the deed of sale executed between MRCI and Marquez as well
as the deed of sale between Marquez and the Saberons, as the fruits of void Facts:
conveyances. RTC ruled in favor of the Ventanillas The Sanchezes entered into an agreement with Garcia (doing business in the
Meanwhile, the Saberons filed a case in the CA relying on one central name of TSEI) to sell for P 1.850 million their parcel of land, with an earnest
argument—that they were purchasers in good faith, having relied on the money of 50k. They agreed that Garcia shall pay the purchase price in cash
correctness of the certificates of title covering the lots in question; and once the property is vacated. The Sanchezes entrusted to Garcia the owner’s
therefore, holders of a valid and indefeasible title. CA ruled in favor of the copy of TCT because it was agreed that he shall take care of all the
Ventanillas. The Saberons filed the present petition. documentations necessary for the transaction.
Unknown to the Saberons, the former owner of the properties had entered Immediately after the property was vacated, Garcia took possession and
into contracts to sell with the Ventanillas, way back in 1970. It was only upon began constructing townhouses thereon without the Sanchezes’ knowledge
receipt of the summons in the case filed by the Ventanillas with the RTC that and consent. While these developments were ongoing, Garcia failed to pay
they learned of the present controversy. the purchase price. Subsequently, the Sanchezes were given six checks
With the RTC and the CA rulings against their title over the properties, the representing the amount of the purchase price. Four of these checks were
Saberons now come to the Court with their vehement insistence that they postdated, thus further delaying their overdue payment. To properly
were purchasers in good faith and for value. Before purchasing the lots, they document the check payments, they made an agreement stipulating that if
exercised due diligence and found no encumbrance or annotations on the one of the checks were dishonored, the Sanchezes may rescind the contract.
titles. At the same time, the Ventanillas also failed to rebut the presumption The last two checks were dishonored, so the Sanchezes rescinded the
of their good faith as there was no showing that they confederated with MRCI contract and demanded from Garcia the return of the TCT. However, Garcia
and its officers to deprive the Ventanillas of their right over the subject refused to return the documents and vacate the property.
properties. Meanwhile, the Sanchezes found out that Garcia/TSEI were selling
According to the Saberons, the CA likewise erred in ruling that there was no townhouses situated in the property. So they informed the HLURB, the City
constructive notice of the levy made upon the subject lands. Building Official and the RD in Quezon City, of the illegal constructions being
made thereon. The HLURB issued a Cease and Decease Order enjoining Garcia
Issue: / TSEI from further developing and selling the townhouses. Such orders were
Whether or not there was constructive notice of levy as an encumbrance left unheeded. In fact, Garcia were already able to sell many of the units to
prior to the sale to the Saberons. different individuals and entities, and even mortgaged the property.
Consequently, the Sanchezes filed before the RTC a complaint for rescission,
Ruling: restitution and damages with TRO.
the Court is beckoned to rule on two conflicting rights over the subject The purchasers and mortgagee who are the intervenors in this case were
properties: the right of the Ventanillas to acquire the title to the registered found by the court to be in bad faith. On the other hand, the Sanchezes were
land from the moment of inscription of the notice of levy on the day book (or held to be in good faith and not negligent.
Issue 1: W/N rescission of the contract was barred by the subsequent Later, the Zulueta spouses mortgaged several lots contained in TCT No. 26105
transfer of the property to the GSIS, which eventually foreclosed on the mortgaged properties,
including the subject properties. Upon consolidation of GSISs ownership, TCT
No. Under Article 1191 of the Civil Code, rescission is available to a party in a No. 26105 in Zuluetas name was cancelled, and TCT No. 23554 was issued in
reciprocal obligation where one party fails to comply with it. As an exception GSISs name.
to this rule, Article 1385 provides that rescission shall not take place if the
subject matter of the prior agreement is already in the hands of a third party Upon learning of the foreclosure, petitioners predecessor, Francisco Dela
who did not act in bad faith. Merced (Dela Merced), later on substituted by his heirs, filed a complaint
Here, the failure of Garcia/TSEI to pay the consideration for the sale of the praying for the nullity of the GSIS foreclosure on the subject properties (Lots
property entitled the Sanchezes to rescind the Agreement. And in view of the 6, 7, 8, and 10 of Block 2 and Lot 8 of Block 8) on the ground that he, not the
finding that the intervenors acted in bad faith in purchasing the property from Zuluetas, was the owner of these lots at the time of the foreclosure. Dela
Garcia, the subsequent transfer in their favor did not and cannot bar Merced also impleaded Victor and Milagros Manlongat, who were claiming
rescission. Lot 6, Block 2 by virtue of a sale executed by the GSIS in their daughters
(Elizabeth Manlongat) favor. Dela Merced argued that, due to the nullity of
Issue 2: W/N Article 449 – 450 of the Civil Code is applicable to the GSISs foreclosure over the subject properties, it had no ownership right that
Sanchezes could be transferred to Elizabeth Manlongat.

Yes. Bad faith on the part of the purchasers leads to the application of Art ISSUES:
449-450.
Consequently, the Sanchezes have the following options: (1) acquire the Whether or not the foreclosure proceeding conducted by GSIS is null and
property with the townhouses and other buildings and improvements void, including the consolidation of ownership thereof by the GSIS, and the
that may be thereon without indemnifying TSEI or the intervenors; (2) sale of the lots to defendant Manlongat spouses
demand from TSEI or the intervenors to demolish what has been built on
the property at the expense of TSEI or the intervenors; or (3) ask the HELD:
intervenors to pay the price of the land.
As such, the Sanchezes must choose from among these options within 30 Petitioners Merced aver that when the Zuluetas mortgaged their properties
days from finality of the decision. Should the Sanchezes opt to ask from the to GSIS on October 15, 1957, they were no longer the owners of the lots
intervenors the value of the land, the case shall be remanded to the RTC for subject of this litigation, the same having been sold to Francisco dela Merced
the sole purpose of determining the fair market value of the lot at the time by virtue of the contract to sell executed on September 3, 1957. Hence, the
the same were taken from the Sanchezes. If the Sanchezes decide to mortgage was void from its inception and GSIS, as mortgagee, acquired no
appropriate the townhouses, other structures and improvements as their better right notwithstanding the registration of the mortgage. Petitioners also
own pursuant to Art 449, then the intervenors-purchasers shall be ordered to argued that GSIS was a mortgagee in bad faith as it had been negligent in
vacate said premises within a reasonable time from notice of the finality of ascertaining and investigating the condition of the subject lots mortgaged to
the decision by the Sanchezes. They have a right to recover their investment it as well as the rights of petitioners who were already in possession thereof
in the townhouses from Garcia and TSEI. If the Sanchezes do not want to at the time of mortgage. Furthermore, petitioners cite the judicial admission
make use of the townhouses and improvements on the subject lot, then the of respondent GSIS in its answer before the trial court, wherein it recognized
purchasers can be ordered to demolish said townhouses or if they don’t the rights of ownership of Francisco dela Merced over Lot 8, Block 8 and of
demolish the same within a reasonable time, then it can be demolished at Eva Mendoza dela Merced over Lot 10, Block 2 of TCT 26105.
their expense. On the 3rd option, if the Sanchezes do not want to appropriate
the townhouses or have the same demolished, then they can ask that the The foreclosure sale of Lot Nos. 6, 7, 8 and 10 of Block 2 and Lot 8 of Block 8
townhouse purchasers pay to them the fair market value of the respective of the property originally covered by TCT 26105, and the subsequent
areas allotted to their respective townhouses subject of their deeds of certificates of titles issued to GSIS as well as TCT No. PT-94007 in the name of
sale. ## Elizabeth Manlongat, are declared NULL AND VOID.

Relevant Provisions
Builders in Bad Faith
Article 449. He who builds, plants or sows in bad faith on the land of
another, loses what is built, planted or sown without right to indemnity.
Article 450. The owner of the land on which anything has been built, planted
or sown in bad faith may demand the demolition of the work, or that the
planting or sowing be removed, in order to replace things in their former
condition at the expense of the person who built, planted or sowed; or he
may compel the builder or planter to pay the price of the land, and the
sower the proper rent.

Dela Merced v. GSIS

FACTS:

This case involves five registered parcels of land located within the Antonio
Subdivision, Pasig City Lots 6, 7, 8, and 10 of Block 2 and Lot 8 of Block 8
(subject properties). These lots were originally owned by, and titled in the
name of, Jose C. Zulueta (Zulueta), as evidenced by Transfer Certificate of
Title (TCT) No. 26105 which contains several lots other than the subject
properties within the Antonio Subdivision.