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Spouses Amancio and Luisa Sarmiento and Pedro Ogsiner vs Court of Appeals, et al.

G.R. No. 152627

September 16, 2005

Topic : Preference in case of sale of real property (Art. 1544)

Statement of Facts :

In this case the subject matter is a parcel of land situated in Marikina, registered in the name of Rodeanna Realty Corporation. This
parcel of land was previously owned by Sps. Sarmiento, and Pedro Ogsiner was their overseer. The subject land was mortgaged by Sps.
Sarmiento to Carlos Moran Sison as a security for a 65,370.25 loan. Upon failure of Sps. Sarmiento to pay the loan, Mr. Sison initiated extra-
judicial foreclosure sale. The land purchased by Mr. Jose Puzon in an auction sale, for non-payment of taxes. No redemption made by Sps.
Sarmiento, a final bill of sale was issued in Mr. Puzon’s favor. The TCT was then issued in the name of Mr. Puzon.

On Aug. 16, 1986 the parcel of land was sold to Rodeanna Realty Corporation. Mr. Puzon assured plaintiff that he will take care of
the squatters in the subject property by filing an ejectment case against them; however he failed to comply with this promise.

Plaintiff-appellee filed a complaint against Sps. Sarmiento and Pedro Ogsiner, who refused to vacate the premises. Plaintiff alleged
that Sps. Sarmiento lost their rights over the property when the certificate of sale was executed in favor Mr. Sison for their failure to pay their

The trial court ordered defendants, Pedro Ogsiner to vacate the premises and surrender peaceful possession within 15 days, Sps.
Sarmiento to pay the cost of the suit. Defendant’s third-party complaint was dismissed.

The CA affirmed the RTC’s decision.

Issue: Whether or not plaintiff-appellee, Rodeanna Realty Corporation was a purchaser in good faith

The Sarmiento spouses alleged that the plaintiff-appellee was not a purchaser in good faith, since RRC were knowledgeable of the
occupancy of Pedro Ogsiner in behalf of Sps. Sarmiento.


No. The Supreme Court found out that RRC had conducted an ocular inspection of the subject land and discovered that it had an
occupant, Pedro Ogsiner, the overseer of Sps. Sarmiento, who claimed ownership over the land. Armed with this knowledge, RRC offered
Ogsiner to vacate the land. RRC relied on the TCT of Mr. Puzon that it was free of liens and encumbrances and that Mr. Puzon would take care
of the squatters. RRC did not investigate whatever claim Ogsiner and Sps. Sarmiento had over the property.

Ordinarily, any person dealing with registered land may safely rely on the correctness of the certificate of title issued therefor and
the law will in no way oblige him to go behind the certificate to determine the condition of the property. Thus, the general rule is that a
purchaser may be considered a purchaser in good faith when he has examined the latest certificate of title. An exception to this rule is when
there exist important facts that would create suspicion in an otherwise reasonable man to go beyond the present title and to investigate those
that preceded it.

The Supreme Court ruled that plaintiff-appellee was a purchaser in bad faith. Their failure to take ordinary precautions in buying the
piece of land, which was in fact in the possession of another other than the vendor, constituted gross negligence on their part which amounted
to bad faith. Since RRC did not investigate the claim of Sps. Sarmiento over the property despite its knowledge that Pedro Ogsinder was in
actual possession, means that it was not an innocent purchaser for value. Being a corporation engaged in the business of buying and selling
real estate, it was gross negligence on its part to mere rely on Mr. Puzon’s assurance that the occupants on the property were merely squatters,
considering their discovery that Pedro Ogsiner was occupying the lot in favor of Sps. Sarmiento.
Mercado vs Allied Bank
G.R. No. 171460

Topic: Real rights over immovable property (mortgage, SPA), and reliance on certificate of title (Art. 1878, 2085)

Statement of facts :

Perla N. Mercado owned several pieces of real property. On May 28, 1992, Perla executed a Special Power of Attorney in favor of
her husband Julian D. Mercado. On the said SPA, it authorized her husband Julian to “act in my behalf, to sell, to alienate, mortgage, lease and
deal otherwise over the different parcels of land..” on RT-106338, 805 sq. meters of the Registry of Deeds of Pasig, among others.

On the strength of the SPA, Julian obtained a loan from the Allied bank in the amount of P3M, secured by the real estate mortgage
constituted on TCT no. RT-18206 (106338), registered with the Registry of Deeds of Quezon City, on December 12, 1996. A second loan was
obtained using the same property as collateral on February 5, 1997. However, it was discovered that there was no property, TCT no. RT-18206
(106338), registered with the Registry of Deeds of Quezon City, on the SPA.

Julian defaulted in the payment of the loan, thus Allied Bank initiated extra-judicial foreclosure proceedings over the property, and
was subsequently sold at public auction. Petioners initiated an action for the annulment of the REM over the property on the ground that the
same was not covered by the SPA, and that at the time the loan obligation were contracted, the SPA had no longer any force and effect since it
was previously revoked by Perla on March 10, 1993. Petioners allege that the REM constituted by Julian was null and void since he had no
authority to do so.

The RTC rendered a decision declaring that the REM was null and void for Julian was not authorized by the terms of the SPA to
mortgage the property.

Respondent appealed the decision to the Court of Appeals. The CA reversed the RTC decision and upheld the validity of the REM.
The appellate court declared that Perla intended the property to be included in the SPA, and that her revocation not contained in a public
instrument could not bind third persons.

Issue: Whether or not mortgage was valid, and if respondent Allied Bank was a mortgagee in good faith.


No, the mortgage was unenforceable.

The Supreme Court declared that the mortgage was not valid since the SPA executed in favor of Julian did not include the property,
TCT no. RT-18206 (106338), registered with the Registry of Deeds of Quezon City. Respondent bank’s contention that the property actually
mortgaged and the property mentioned in the SPA were the same, but the SC was not convinced. In the examination of the SPA, the Court
declared that the subject property was not among those enumerated therein, and that the SPA should be strictly construed and pursued. The
SPA could only grant powers to those specified therein. The Court was not convinced that the subject property mortgaged to Allied Bank and
the property specified in the SPA were the same. The Court declared that respondent bank is no ordinary mortgagee; it should exercise greater
care and prudence in its dealings. Considering that the property mortgaged by Julian was not his and there were additional doubts or suspicions
as to the real identity of the same, the respondent bank should have proceeded with utmost caution. The Court declared that the real estate
mortgaged constituted over the subject property was unenforceable and not null & void. Since Julian entered the mortgage in behalf of Perla,
without authority it was unenforceable and could not be enforced without the ratification of Perla since she had already revoked the SPA. The
petition was granted; the real estate mortgage was declared unenforceable and the foreclosure proceedings were declared null and void.
Spouses Noel and Julie Abrigo vs Romana De Vera
GR No.

Topic: Double sale; Preference in case of sale of real property (Art. 1544)

Statement of Facts:

On May 22, 1993, Gloria Villafania sold a house & lot located at Banaoang, Mangaldan, Pangasinan to Rosenda Tigno-Salazar &
Rosita Cave-Go/ The said sale became a subject of a suit for annulment of documents between the vendor and the vendees. The court rendered
judgment, approving the compromise agreement submitted by the parties. Gloria was given a year to buy back the house and lot, failure to do
so would mean that the previous sale shall remain valid. Gloria failed to buy back the house & lot, so the vendees declared the lot in their
name. Unknown to Rosenda & Rosita, Gloria obtained a free patent over the land, and said patent was later cancelled by TCT 212598. On
October 16, 1997, Rosenda & Rosita sold the house & lot to petitioners Sps. Abrigo. On October 23, 1997, Gloria sold the same house & lot to
Romana de Vera. Romana registered the sale and as a consequence, TCT no. 22515 was issued in her name.

An ejectment case was filed in the Municipal Trial Court of Pangasinan, which was then dismissed. A case was filed with the RTC for
the annulment of documents, injunction, restraining order, and damages against Romana and Gloria. The RTC ruled in favor of Sps. Abrigo.
Hence respondent appealed to the CA. The CA on March 21, 2002, ruled in favor of Romana de Vera; declaring her as a purchaser in good faith
and for value. The appellate court ruled that she relied in good faith on the Torrens title of her vendor.

Issue: Who between the petitioner-spouses and respondent has a better right to the property


The Supreme Court declared that the petition of Sps. Abrigo was bereft of merit.

Art. 1544 of the Civil Code states that in the case that the same thing is sold to different vendees, with regards to immovable
property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property. Should there be no
inscription, ownership shall pertain to the person who in good faith was first in the possession; and in the absence thereof, to the person who
presents the oldest title, provided there is good faith. In the instant case, Sps. Abrigo and respondent registered the sale of the property.
Petitioners registered under Act 3344, since they did not know the property was covered by the Torrens system; while respondent registered
under the Torrens system, since Gloria Villafania presented the TCT covering the property. De Vera contended that her registration under the
Torrens system should prevail over that of the petitioners.

The SC agrees with respondent. Since it is undisputed that a free patent registered as OCT no. P-30522. The OCT was later cancelled
by TCT No. 212598 also in Villafanias name. Because of the sale to De Vera, TCT No. 212598 was cancelled and TCT No. 22515 was issued to De
Vera. Petitioners cannot validly argue that they were fraudulently misled into believing that the property was unregistered. A Torrens title, once
registered serves as a notice to the whole world. All persons must take notice, and no one can plead ignorance of the registration.

The Supreme Court found that De Vera was an innocent purchaser for value. Since Villafania was the registered owner, and there was nothing
in the certificate of title and in the circumstances of the sale which warrant De Vera to look beyond the title. She ascertained and verified that Commented [91]:
the vendor was the sole owner and in possession of the property by examining her vendors title in the ROD and actually going to the premises.
There was no evidence to show that she knew or had the slightest notice that the same was under litigation. Spouses Abrigo oppose that De
Vera should have been more vigilant prior to the sale. That had she inspected the property, she would have found petitioners to be in
possession. The argument was contradicted , when spouses admitted that the parents and sister of Villafania were the actual occupants. Thus
good faith on respondent part stands.