orduna v fuentebella.pdf

3/11/2015 G.R.No.176841

http://sc.judiciary.gov.ph/jurisprudence/2010/june2010/176841.htm 1/16

RepublicofthePhilippinesSUPREMECOURT

Manila

FIRSTDIVISION

ANTHONYORDUA,DENNISORDUA,andANTONITAORDUA,Petitioners,

versus

EDUARDOJ.FUENTEBELLA,MARCOSS.CID,BENJAMINF.CID,BERNARDG.BANTA,andARMANDOGABRIEL,JR.,Respondents.

G.R.No.176841Present:CORONA,C.J.,Chairperson,VELASCO,JR.,LEONARDODECASTRO,DELCASTILLO,andPEREZ,JJ.Promulgated:June29,2010

xx

DECISIONVELASCO,JR.,J.:

InthisPetitionforReview[1]

underRule45oftheRulesofCourt,AnthonyOrdua,

DennisOrdua andAntonitaOrdua assail and seek to set aside theDecision[2]

of theCourtofAppeals(CA)datedDecember4,2006inCAG.R.CVNo.79680,asreiterated

initsResolutionofMarch6,2007,whichaffirmedtheMay26,2003Decision[3]

oftheRegionalTrialCourt(RTC),Branch3inBaguioCity,inCivilCaseNo.4984R,asuitforannulment of title and reconveyance commenced by herein petitioners against hereinrespondents.

Central to thecase is a residential lotwithanareaof74 squaremeters locatedat

FairviewSubdivision,BaguioCity,originallyregisteredinthenameofArmandoGabriel,Sr. (GabrielSr.)underTransferCertificateofTitle (TCT)No.67181of theRegistryof

DeedsofBaguioCity.[4]

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Asgatheredfromthepetition,withitsenclosures,andthecommentsthereonoffour

ofthefiverespondents,[5]

theCourtgathersthefollowingrelevantfacts: Sometime in 1996 or thereabouts, Gabriel Sr. sold the subject lot to petitioner

AntonitaOrdua(Antonita),butnoformaldeedwasexecutedtodocumentthesale.Thecontract pricewas apparently payable in installments asAntonita remitted from time totimeandGabrielSr.acceptedpartialpayments.OneoftheOrduaswouldlatertestifythatGabrielSr.agreedtoexecuteafinaldeedofsaleuponfullpaymentofthepurchaseprice.[6]

Asearlyas1979,however,Antonita andher sons,Dennis andAnthonyOrdua,

werealreadyoccupying thesubject loton thebasisof somearrangementundisclosed intherecordsandevenconstructedtheirhousethereon.Theyalsopaidrealpropertytaxesforthehouseanddeclareditfortaxpurposes,asevidencedbyTaxDeclarationNo.(TD)

9604012111087[7]

inwhichtheyplacetheassessedvalueofthestructureatPhP20,090.AfterthedeathofGabrielSr.,hissonandnamesake,respondentGabrielJr.,secured

TCT No. T71499[8]

over the subject lot and continued accepting payments from thepetitioners.OnDecember12,1996,GabrielJr.wroteAntonitaauthorizinghertofenceoff

thesaidlotandtoconstructaroadintheadjacentlot.[9]

OnDecember13,1996,Gabriel

Jr. acknowledged receipt of a PhP 40,000 payment from petitioners.[10]

Through a

letter[11]

datedMay1,1997,GabrielJr.acknowledgedthatpetitionerhadsofarmadeanaggregate payment of PhP 65,000, leaving an outstanding balance of PhP 60,000. AreceiptGabrielJr.issueddatedNovember24,1997reflectedaPhP10,000payment.

Despiteallthosepaymentsmadeforthesubjectlot,GabrielJr.wouldlatersellitto

Bernard Banta (Bernard) obviously without the knowledge of petitioners, as laterdevelopmentswouldshow.

As narrated by the RTC, the lot conveyance from Gabriel Jr. to Bernard was

effected against the following backdrop:Badly in need ofmoney,Gabriel Jr. borrowedfromBernardtheamountofPhP50,000,payableintwoweeksatafixedinterestrate,withthe further condition that the subject lot would answer for the loan in case of default.

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GabrielJr.failedtopaytheloanandthisledtotheexecutionofaDeedofSale[12]

dated

June30,1999andtheissuancelaterofTCTNo.T72782[13]

forsubjectlotinthenameofBernarduponcancellationofTCTNo.71499inthenameofGabriel,Jr.AstheRTCdecision indicated, the reluctantBernard agreed to acquire the lot, sincehehadby thenreadybuyers inrespondentsMarcosCidandBenjaminF.Cid(MarcosandBenjaminortheCids).

Subsequently,BernardsoldtotheCidsthesubjectlotforPhP80,000.Armedwitha

DeedofAbsoluteSaleof aRegisteredLand[14]

dated January19, 2000, theCidswere

abletocancelTCTNo.T72782andsecureTCTNo.72783[15]

coveringthesubjectlot.Justlikeintheimmediatelyprecedingtransaction,thedeedofsalebetweenBernardandthe Cids had respondent Eduardo J. Fuentebella (Eduardo) as one of the instrumentalwitnesses.

MarcosandBenjamin,inturn,cededthesubjectlottoEduardothroughaDeedof

AbsoluteSale[16]

datedMay11,2000.Thus,theconsequentcancellationofTCTNo.T

72782andissuanceonMay16,2000ofTCTNo.T3276[17]

oversubjectlotinthenameofEduardo.

As successivebuyers of the subject lot,Bernard, thenMarcos andBenjamin, and

finally Eduardo, checked, so each claimed, the title of their respective predecessorsininterestwiththeBaguioRegistryanddiscoveredsaidtitletobefreeandunencumberedatthetimeeachpurchasedtheproperty.Furthermore,respondentEduardo,beforebuyingthe

property,wassaidtohaveinspectedthesameandfounditunoccupiedbytheOrduas.[18]

Sometime inMay2000, or shortly after his purchase of the subject lot,Eduardo,

throughhislawyer,sentaletteraddressedtotheresidenceofGabrielJr.demandingthatallpersonsresidingonorphysicallyoccupyingthesubjectlotvacatethepremisesorface

theprospectofbeingejected.[19]

LearningofEduardosthreat,petitionerswenttotheresidenceofGabrielJr.atNo.

34DominicanHill,BaguioCity. There, theymetGabriel Jr.sestrangedwife,Teresita,

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whoinformedthemaboutherhavingfiledanaffidavitcomplaintagainstherhusbandandtheCidsforfalsificationofpublicdocumentsonMarch30,2000.AccordingtoTeresita,hersignatureontheJune30,1999GabrielJr.Bernarddeedofsalewasaforgery.Teresitafurther informed the petitioners of her intent to honor the aforementioned 1996 verbalagreementbetweenGabrielSr.andAntonitaandthepartialpaymentstheygaveherfatherinlawandherhusbandforthesubjectlot.

On July 3, 2001, petitioners, joined by Teresita, filed a Complaint[20]

forAnnulmentofTitle,ReconveyancewithDamagesagainsttherespondentsbeforetheRTC,docketedasCivilCaseNo.4984R,specificallyprayingthatTCTNo.T3276datedMay16,2000inthenameofEduardobeannulled.Corollarytothisprayer,petitionerspleadedthatGabrielJr.stitletothelotbereinstatedandthatpetitionersbedeclaredasentitledtoacquire ownership of the same upon payment of the remaining balance of the purchasepricethereforagreeduponbyGabrielSr.andAntonita.

While impleaded and served with summons, Gabriel Jr. opted not to submit an

answer.

RulingoftheRTCByDecisiondatedMay26,2003,theRTCruledfortherespondents,asdefendants

aquo, andagainst thepetitioners,asplaintiffs therein, thedispositiveportionofwhichreads:

WHEREFORE,theinstantcomplaintisherebyDISMISSEDforlackofmerit.Thefour(4)plaintiffsareherebyorderedbythisCourttopayeachdefendant(exceptArmandoGabriel, Jr., Benjamin F. Cid, and Eduardo J. Fuentebella who did not testify on thesedamages), Moral Damages of Twenty Thousand (P20,000.00) Pesos, so that eachdefendant shall receive Moral Damages of Eighty Thousand (P80,000.00) Pesos each.Plaintiffsshallalsopayalldefendants(exceptArmandoGabriel,Jr.,BenjaminF.Cid,andEduardoJ.Fuentebellawhodidnottestifyonthesedamages),ExemplaryDamagesofTenThousand (P10,000.00)Pesos each so that each defendant shall receive FortyThousand(P40,000.00) Pesos as Exemplary Damages. Also, plaintiffs are ordered to pay eachdefendant(exceptArmandoGabriel,Jr.,BenjaminF.Cid,andEduardoJ.Fuentebellawhodidnottestifyonthesedamages),FiftyThousand(P50,000.00)PesosasAttorneysFees,jointlyandsolidarily.

Costofsuitagainsttheplaintiffs.[21]

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Onthemain,theRTCpredicateditsdismissalactiononthebasisofthefollowinggroundsand/orpremises:

1. Eduardo was a purchaser in good faith and, hence, may avail himself of the

provisionofArticle1544[22]

oftheCivilCode,whichprovidesthatincaseofdoublesale,the party in good faith who is able to register the property has better right over theproperty

2. Under Arts. 1356[23]

and 1358[24]

of the Code, conveyance of real propertymustbeintheproperform,elseitisunenforceable

3.Theverbalsalehadnoadequateconsiderationand4.Petitioners rightof action toassailEduardos titleprescribes inoneyear from

dateoftheissuanceofsuchtitleandtheoneyearperiodhasalreadylapsed.Fromtheabovedecision,onlypetitionersappealedtotheCA,theirappealdocketed

asCAG.R.CVNo.79680.

TheCARulingOnDecember4,2006,theappellatecourtrenderedtheassailedDecisionaffirming

theRTCdecision.Thefalloreads:WHEREFORE,premisesconsidered,theinstantappealisherebyDISMISSEDand

the26May2003DecisionoftheRegionalTrialCourt,Branch3ofBaguioCityinCivilCaseNo.4989RisherebyAFFIRMED.

SOORDERED.[25]

Hence, the instantpetitionon thesubmission that theappellatecourtcommittedreversibleerroroflaw:

1.xxxWHENITHELDTHATTHESALEOFTHESUBJECTLOTBY

ARMANDOGABRIEL,SR.ANDRESPONDENTARMANDOGABRIEL, JR.TOTHEPETITIONERSISUNENFORCEABLE.

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2.xxxINNOTFINDINGTHATTHESALEOFTHESUBJECTLOTBYRESPONDENTARMANDOGABRIEL,JR.TORESPONDENTBERNARDBANTA AND ITS SUBSEQUENT SALE BY THE LATTER TO HIS CORESPONDENTSARENULLANDVOID.

3.xxxINNOTFINDINGTHATTHERESPONDENTSAREBUYERS

INBADFAITH4. xxx IN FINDING THAT THE SALE OF THE SUBJECT LOT

BETWEEN GABRIEL, SR. AND RESPONDENT GABRIEL, JR. AND THEPETITIONERSHASNOADEQUATECONSIDERATION.

5.xxxINRULINGTHATTHEINSTANTACTIONHADALREADY

PRESCRIBED.6. xxx IN FINDINGTHATTHE PLAINTIFFSAPPELLANTSARE

LIABLEFORMORALANDEXEMPLARYDAMAGESANDATTORNEYS

FEES.[26]

TheCourtsRulingThecore issues tendered in thisappealmaybe reduced to fourand formulatedas

follows,towit:first,whetherornotthesaleofthesubjectlotbyGabrielSr.toAntonitaisunenforceableundertheStatuteofFraudssecond,whetherornotsuchsalehasadequateconsiderationthird,whethertheinstantactionhasalreadyprescribedand,fourth,whetherornotrespondentsarepurchasersingoodfaith.

Thepetitionismeritorious.

StatuteofFraudsInapplicabletoPartiallyExecutedContracts

It is undisputed that Gabriel Sr., during his lifetime, sold the subject property to

Antonita, thepurchasepricepayableon installmentbasis. GabrielSr. appeared tohavebeenarecipientofsomepartialpayments.Afterhisdeath,hissondulyrecognizedthesalebyacceptingpaymentsand issuingwhatmaybeconsideredas receipts therefor.GabrielJr., in a gesture virtually acknowledging the petitioners dominion of the property,authorized them to construct a fence around it. And no less than his wife, Teresita,testifiedastothefactofsaleandofpaymentsreceived.

Pursuanttosuchsale,Antonitaandhertwosonsestablishedtheirresidenceonthe

lot,occupyingthehousetheyearlierconstructedthereon.Theylaterdeclaredtheproperty

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for tax purposes, as evidenced by the issuance of TD 9604012111087 in their orAntonitas name, and paid the real estates due thereon, obviously as sign that they areoccupyingthelotintheconceptofowners.

Giventheforegoingperspective,EduardosassertioninhisAnswer thatpersons

appeared in the property[27]

only after he initiated ejectment proceedings[28]

isclearlybaseless.Ifindeedpetitionersenteredandtookpossessionofthepropertyafterhe(Eduardo) instituted the ejectment suit, how could they explain the fact that he sent ademandlettertovacatesometimeinMay2000?

Withtheforegoingfactualantecedents,thequestiontoberesolvediswhetherornot

theStatuteofFraudsbarstheenforcementoftheverbalsalecontractbetweenGabrielSr.andAntonita.

The CA, just as the RTC, ruled that the contract is unenforceable for noncompliancewiththeStatuteofFrauds.

We disagree for several reasons. Foremost of these is that the Statute of Frauds

expressed in Article 1403, par. (2),[29]

of the Civil Code applies only to executorycontracts,i.e.,thosewherenoperformancehasyetbeenmade.Statedabitdifferently,thelegalconsequenceofnoncompliancewiththeStatutedoesnotcomeintoplaywherethe

contractinquestioniscompleted,executed,orpartiallyconsummated.[30]

The Statute of Frauds, in context, provides that a contract for the sale of real

propertyorof an interest therein shallbeunenforceableunless the saleor somenoteormemorandum thereof is inwriting and subscribed by the party or his agent. However,where the verbal contract of sale has been partially executed through the partialpayments made by one party duly received by the vendor, as in the present case, thecontractistakenoutofthescopeoftheStatute.

The purpose of the Statute is to prevent fraud and perjury in the enforcement of

obligations depending for their evidence on the unassisted memory of witnesses, byrequiring certain enumerated contracts and transactions to be evidenced by a writing

signed by the party to be charged.[31]

The Statute requires certain contracts to beevidencedbysomenoteormemoranduminordertobeenforceable.ThetermStatute

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of Frauds is descriptive of statutes that require certain classes of contracts to be inwriting.TheStatutedoesnotdeprivethepartiesoftherighttocontractwithrespecttothemattersthereininvolved,butmerelyregulatestheformalitiesofthecontractnecessaryto

renderitenforceable.[32]

Since contracts are generally obligatory in whatever form they may have been

entered into, provided all the essential requisites for their validity are present,[33]

theStatute simplyprovides themethodbywhich the contracts enumerated inArt. 1403 (2)maybeprovedbutdoesnotdeclaretheminvalidbecausetheyarenotreducedtowriting.In fine, the form required under the Statute is for convenience or evidentiary purposesonly.

There can be no serious argument about the partial execution of the sale in

question.Therecordsshowthatpetitionershad,onseparateoccasions,givenGabrielSr.andGabrielJr.sumsofmoneyaspartialpaymentsofthepurchaseprice.Thesepaymentswere duly receipted byGabriel Jr. To recall, in his letter ofMay 1, 1997,Gabriel, Jr.acknowledgedhavingreceivedtheaggregatepaymentofPhP65,000frompetitionerswiththebalanceofPhP60,000stillremainingunpaid.Butontopofthepartialpaymentsthusmade, possession of the subject of the sale had been transferred to Antonita as buyer.Owingthustoitspartialexecution,thesubjectsaleisnolongerwithinthepurviewoftheStatuteofFrauds.

Lestitbeoverlooked,acontractthatinfringestheStatuteofFraudsisratifiedbythe

acceptanceofbenefitsunderthecontract.[34]

Evidently,Gabriel,Jr.,ashisfatherearlier,hadbenefitedfromthepartialpaymentsmadebythepetitioners.Thus,neitherGabrielJr.nor theotherrespondentssuccessivepurchasersofsubject lotscouldplausiblysetuptheStatuteofFrauds to thwartpetitionersefforts towardsestablishing their lawful rightoverthesubjectlotandremovinganycloudintheirtitle.Asitwere,petitionersneedonlytopaytheoutstandingbalanceofthepurchasepriceandthatwouldcompletetheexecutionoftheoralsale.

TherewasAdequateConsideration

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Withoutdirectlysayingso,thetrialcourtheldthatthepetitionerscannotsueupontheoralsalesinceinitsownwords:xxxformorethanadecade,[petitioners]havenotpaid in full Armando Gabriel, Sr. or his estate, so that the sale transaction betweenArmandoGabrielSr.and[petitioners][has]noadequateconsideration.

The trial courts posture, with which the CA effectively concurred, is patently

flawed. For starters, they equated incomplete payment of the purchase price withinadequacyofpriceorwhatpassesas lesion,whenbotharedifferentcivil lawconceptswithdiffering legalconsequences, the firstbeingaground to rescindanotherwisevalidand enforceable contract. Perceived inadequacy of price, on the other hand, is not asufficient ground for setting aside a sale freely entered into, save perhaps when the

inadequacyisshockingtotheconscience.[35]

TheCourttobesuretakesstockofthefactthatthecontractingpartiestothe1995or

1996 sale agreed to apurchasepriceofPhP125,000payable on installments. But theoriginal lot owner, Gabriel Sr., died before full payment can be effected.Nevertheless,petitioners continued remitting payments to Gabriel, Jr., who sold the subject lot toBernardonJune30,1999.Gabriel,Jr.,asmaybenoted,partedwiththepropertyonlyforPhP50,000.Ontheotherhand,BernardsolditforPhP80,000toMarcosandBenjamin.Fromtheforegoingpricefigures,whatisabundantlyclearisthatwhatAntonitaagreedtopayGabriel,Sr.,albeitininstallment,wasverymuchmorethanwhathisson,forthesamelot,receivedfromhisbuyerandthelattersbuyerlater.TheCourt,therefore,cannotseeitswayclearastohowtheRTCarrivedatitssimplisticconclusionaboutthetransactionbetweenGabrielSr.andAntonitabeingwithoutadequateconsideration.

TheIssuesofPrescriptionandtheBonaFidesoftheRespondentsasPurchasers

Consideringtheinterrelationofthesetwoissues,wewilldiscussthemjointly.There can be no quibbling about the fraudulent nature of the conveyance of the

subject loteffectedbyGabriel Jr. in favorofBernard. It isunderstandable thatafterhisfathersdeath,GabrielJr.inheritedsubjectlotandforwhichhewasissuedTCTNo.No.T71499. Since the Gabriel Sr. Antonita sales transaction called for payment of thecontract price in installments, it is also understandable why the title to the property

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remained with the Gabriels. And after the demise of his father, Gabriel Jr. receivedpayments from theOrduas and even authorized them to enclose the subject lotwith afence.Insum,GabrielJr.knewfullywellaboutthesaleandisboundbythecontractaspredecessorininterestofGabrielSr.overthepropertythussold.

Yet, the other respondents (purchasers of subject lot) still maintain that they are

innocent purchasers for value whose rights are protected by law and besides whichprescriptionhassetinagainstpetitionersactionforannulmentoftitleandreconveyance.

The RTC and necessarily the CA found the purchaserrespondents thesis on

prescriptioncorrectstating in thisregard thatEduardosTCTNo.T3276was issuedonMay16,2000whilepetitionersfiledtheircomplaintforannulmentonlyonJuly3,2001.Tothecourtsbelow,theoneyearprescriptiveperiodtoassailtheissuanceofacertificateoftitlehadalreadyelapsed.

Wearenotpersuaded.The basic complaint, as couched, ultimately seeks the reconveyance of a

fraudulently registered piece of residential land. Having possession of the subject lot,petitionersrighttothereconveyancethereof,andtheannulmentofthecoveringtitle,hasnot prescribed or is not timebarred. This is so for an action for annulment of title orreconveyance based on fraud is imprescriptiblewhere the suitor is in possession of the

propertysubjectoftheacts,[36]

theactionpartakingasitdoesofasuitforquietingoftitle

whichisimprescriptible.[37]

Suchisthecaseinthisinstance.PetitionershavepossessionofsubjectlotsasownershavingpurchasedthesamefromGabriel,Sr.subjectonlytothefullpaymentoftheagreedprice.

Theprescriptiveperiodforthereconveyanceoffraudulentlyregisteredrealproperty

is10years,reckonedfromthedateoftheissuanceofthecertificateoftitle,iftheplaintiff

isnotinpossession,butimprescriptibleifheisinpossessionoftheproperty.[38]

Thus,onewhois inactualpossessionofapieceoflandclaimingtobetheownerthereofmaywaituntilhispossessionisdisturbedorhistitleisattackedbeforetakingstepstovindicate

hisright.[39]

Asitis,petitionersactionforreconveyanceisimprescriptible.

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This brings us to the question of whether or not the respondentpurchasers, i.e.,

Bernard,MarcosandBenjamin,andEduardo,have thestatusof innocentpurchasers forvalue,aswasthethrustofthetrialcourtsdisquisitionanddisposition.

WeareunabletoagreewiththeRTC.It is thecommondefenseof the respondentpurchasers that theyeachchecked the

titleofthesubjectlotwhenitwashisturntoacquirethesameandfounditclean,meaningwithoutannotationofanyencumbranceoradversethirdpartyinterest.Anditisuponthispostulate that each claims to be an innocent purchaser for value, or one who buys thepropertyofanotherwithoutnotice thatsomeotherpersonhasa right toor interest in it,andwhopaysthereforafullandfairpriceatthetimeofthepurchaseorbeforereceiving

suchnotice.[40]

The general rule is that one dealing with a parcel of land registered under the

TorrensSystemmaysafelyrelyonthecorrectnessofthecertificateoftitleissuedtherefor

andisnotobligedtogobeyondthecertificate.[41]

Where,inotherwords,thecertificateoftitleisinthenameoftheseller,theinnocentpurchaserforvaluehastherighttorelyonwhatappearsonthecertificate,asheischargedwithnoticeonlyofburdensorclaimsontheresasnotedinthecertificate.Anotherformulationoftheruleisthat(a)intheabsenceofanythingtoarousesuspicionor(b)exceptwherethepartyhasactualknowledgeoffactsandcircumstancesthatwouldimpelareasonablycautiousmantomakesuchinquiryor(c)whenthepurchaserhasknowledgeofadefectoftitleinhisvendororofsufficientfactsto

induceareasonablyprudentmantoinquireintothestatusofthetitleoftheproperty,[42]

saidpurchaseriswithoutobligationtolookbeyondthecertificateandinvestigatethetitleoftheseller.

Eduardoand,forthatmatter,BernardandMarcosandBenjamin,canhardlyclaimtobeinnocentpurchasersforvalueorpurchasersingoodfaith.Foreachkneworwasatleast expected toknow that somebodyelseother thanGabriel, Jr.hasa rightor interestover the lot. This is borne by the fact that the initial seller, Gabriel Jr., was not inpossessionofsubjectproperty.WithrespecttoMarcosandBenjamin,theyknewasbuyersthatBernard, theseller,wasnotalso inpossessionof thesameproperty.Thesamegoes

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withEduardo,asbuyer,withrespecttoMarcosandBenjamin.Basicistherulethatabuyerofapieceoflandwhichisintheactualpossessionof

persons other than the sellermust bewary and should investigate the rights of those inpossession.Otherwise,withoutsuchinquiry,thebuyercanhardlyberegardedasabuyerin good faith.When aman proposes to buy or dealwith realty, his duty is to read thepublicmanuscript, i.e., to lookand seewho is thereupon it andwhathis rights are. Awantofcautionanddiligencewhichanhonestmanofordinaryprudenceisaccustomedtoexerciseinmakingpurchasesis,incontemplationoflaw,awantofgoodfaith.Thebuyerwhohasfailed toknowordiscover that the landsold tohimis inadversepossessionof

anotherisabuyerinbadfaith.[43]

Where the land sold is in the possession of a person other than the vendor, the

purchasermustgobeyondthecertificatesoftitleandmakeinquiriesconcerningtherights

of the actual possessor.[44]

And where, as in the instant case, Gabriel Jr. and thesubsequent vendorswere not in possession of the property, the prospective vendees areobligedtoinvestigatetherightsoftheoneinpossession.Evidently,Bernard,MarcosandBenjamin,andEduardodidnotinvestigatetherightsoverthesubjectlotofthepetitionerswho,duringtheperiodmaterialtothiscase,wereinactualpossessionthereof.Bernard,etal.are,thus,notpurchasersingoodfaithand,assuch,cannotbeaccordedtheprotection

extendedbythelawtosuchpurchasers.[45]

Moreover,notbeingpurchasersingoodfaith,theirhavingregisteredthesale,willnot,asagainstthepetitioners,carrythedayforanyofthemunderArt.1544oftheCivilCodeprescribingrulesonpreferenceincaseofdouble

salesofimmovableproperty.Occeav.Esponilla[46]

laiddownthefollowingrulesintheapplicationofArt.1544:(1)knowledgebythefirstbuyerofthesecondsalecannotdefeatthefirstbuyersrightsexceptwhenthesecondbuyerfirstregisteringoodfaiththesecondsaleand(2)knowledgegainedbythesecondbuyerofthefirstsaledefeatshisrightsevenifheisfirsttoregister,sincesuchknowledgetaintshisregistrationwithbadfaith.

Upon the facts obtaining in this case, the act of registration by any of the three

respondentpurchaserswasnotcoupledwithgoodfaith.Attheminimum,eachwasawareorisatleastpresumedtobeawareoffactswhichshouldputhimuponsuchinquiryandinvestigation asmight be necessary to acquaint himwith the defects in the title of hisvendor.

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Theawardbythelowercourtsofdamagesandattorneysfeestosomeoftheherein

respondents was predicated on the filing by the original plaintiffs of what the RTCcharacterizedasanunwarrantedsuit.Thebasisoftheaward,needlesstostress,nolongerobtainsand,hence,thesameissetaside.

WHEREFORE, the petition is herebyGRANTED. The appealed December 4,

2006DecisionandtheMarch6,2007ResolutionoftheCourtofAppealsinCAG.R.CVNo.79680affirmingtheMay26,2003DecisionoftheRegionalTrialCourt,Branch3inBaguioCityareherebyREVERSEDandSETASIDE.Accordingly,petitionerAntonitaOrdua ishereby recognized tohave the rightofownershipover subject lot coveredbyTCTNo.T3276oftheBaguioRegistryregisteredinthenameofEduardoJ.Fuentebella.TheRegisterofDeedsofBaguioCity isherebyORDERED tocancelsaidTCTNo.T3276 and to issue a new one in the name of Armando Gabriel, Jr. with the properannotation of the conditional sale of the lot covered by said title in favor of AntonitaOrduasubjecttothepaymentofthePhP50,000outstandingbalance.UponfullpaymentofthepurchasepricebyAntonitaOrdua,ArmandoGabriel,Jr.isORDEREDtoexecuteaDeed ofAbsolute Sale for the transfer of title of subject lot to the name ofAntonitaOrdua,withinthree(3)daysfromreceiptofsaidpayment.

Nopronouncementastocosts.SOORDERED.

PRESBITEROJ.VELASCO,JR.AssociateJustice

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WECONCUR:

RENATOC.CORONAChiefJusticeChairperson

TERESITAJ.LEONARDODECASTROMARIANOC.DELCASTILLOAssociateJusticeAssociateJustice

JOSEPORTUGALPEREZAssociateJustice

CERTIFICATIONPursuanttoSection13,ArticleVIIIoftheConstitution,IcertifythattheconclusionsintheaboveDecisionhadbeenreachedinconsultationbeforethecasewasassignedtothewriteroftheopinionoftheCourtsDivision.RENATOC.CORONAChiefJustice

[1]Rollo,pp.924,datedApril21,2007.

[2]Id.at2535.PennedbyAssociateJusticeArturoG.TayagandconcurredinbyAssociateJusticesRemediosA.

SalazarFernandoandNoelG.Tijam.

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[3]Id.at3849.PennedbyPresidingJudgeFernandoVilPamintuan.

[4]Exh.D.

[5]RespondentGabriel,Jr.didnotfilehiscomment.

[6]

RTCDecision,p.5,Rollo,p.42.[7]

Exh.A.[8]

Records,p.221.

[9]

Exh.H[10]

Exh.G.[11]

Exh.E.[12]

Exh.J.Records,p.223.AlsoExh.1.[13]

Exh.K.[14]

Records,p.226.[15]

Exh.M.[16]

Records,p.230.Exh.N.[17]

Id.at232.[18]

Rollo,p.40[19]

Id.at39.[20]

Id.at5661.[21]

Supranote3at4849.[22]

Art.1544.Ifthesamethingshouldhavebeensoldtodifferentvendees,theownershipshallbetransferredtothepersonwhomayhavefirsttakenpossessionthereofingoodfaith,ifitshouldbemovableproperty.

Should it be immovable property, the ownership shall belong to the person acquiring itwho in good faith firstrecordeditintheRegistryofProperty.

Should there be no inscription, the ownership shall pertain to the person who in good faith was first in thepossessionand,intheabsencethereof,tothepersonwhopresentstheoldesttitle,providedthereisgoodfaith.

[23]Art.1356.Contractsshallbeobligatory,inwhateverformtheymayhavebeenenteredinto,providedallthe

essentialrequisitesfortheirvalidityarepresent.However,whenthelawrequiresthatacontractbeinsomeforminorderthatitmaybevalidorenforceable,orthatacontracttobeprovedinacertainway,thatrequirementisabsoluteandindispensable.Insuchcases,therightofthepartiesstatedinthefollowingarticlecannotbeexercised.

[24]Art.1358.Thefollowingmustappearinapublicdocument:

(1)Actsandcontractswhichhavefortheirobjectthecreation,transmission,modificationorextinguishmentofrealrightsover immovablepropertysalesof realpropertyorofan interest thereinaregovernedbyArticles1403,No.2,and1405

xxxx(4)Thecessionofactionsorrightsproceedingfromanactappearinginapublicdocument.AllothercontractswheretheamountinvolvedexceedsFivehundredpesosmustappearinwritingevenaprivate

one.Butsalesofgoods,chattelsorthingsinactionaregovernedbyArticles1403,No.2and1405.[25]



Rollo,p.40.[28]

Id.

[29]Art.1403.Thefollowingcontractsareunenforceable,unlesstheyareratified:

xxx

(2)Those that do not complywith the Statute ofFrauds as set forth in this number. In the following cases an

3/11/2015 G.R.No.176841


agreementhereaftermade shallbeunenforceablebyaction,unless the same,or somenoteormemorandum thereof,be inwriting, and subscribed by the party charged, or by his agent evidence, therefore, of the agreement cannot be receivedwithoutthewriting,orasecondaryevidenceofitscontents:

xxxx

(e)Anagreementfortheleasingforalongerperiodthanoneyear,orforthesaleofrealpropertyorofaninteresttherein

xxx

[30]Arrogantev.Deliarte,G.R.No.152132,July24,2007,528SCRA63,74,citingAveriav.Averia,G.R.No.

141877,August13,2004,436SCRA459,466.[31]

AsiaProductionsCo.,Inc.v.Pao,G.R.No.51058,January27,1992,205SCRA458,465,citingC.J.S.513Shoemakerv.LaTondea,68Phil.24(1939).

[32]RosencorDevelopmentCorporationv.CourtofAppeals,G.R.No.140479,March8,2001,354SCRA119,

127.[33]

Art.1356,CivilCode.[34]

Article1405,CivilCode,whichstates:ContractsinfringingtheStatuteofFrauds,referredtoinNo.2ofArticle1403,areratifiedbythefailuretoobjectto

thepresentationoforalevidencetoprovethesame,orbytheacceptanceofbenefitsunderthem.[35]

4Paras,CIVILCODEOFTHEPHILIPPINESANNOTATED723(13thed.,1995).[36]

Llemosv.Llemos,G.R.No.150162,January26,2007,513SCRA128,134citingOcceav.Esponilla,G.R.No.156973,June4,2004,431SCRA116,126andDelfinv.Billones,G.R.No.146550,March17,2006,485SCRA38,4748.

[37]Occeav.Esponilla,G.R.No.156973,June4,2004,431SCRA116.

[38]HeirsofSalvadorHermosillav.Remoquillo,G.R.No.167320,January30,2007,513SCRA403,408409.

[39]Id.at409citingArleguiv.CourtofAppeals,G.R.No.126437,March6,2002,378SCRA322,324.

[40]Potencianov.Reynoso,G.R.No.140707,April22,2003,401SCRA391,401402citingTsai v.Court of

Appeals,G.R.No.120109,October2,2001,366SCRA324.[41]

Republicv.Mendoza,Sr.,G.R.Nos.153726&154014,March28,2007,519SCRA203,231.[42]

Sandovalv.CourtofAppeals,G.R.No.106657,August1,1996,260SCRA283,295.[43]

Embradov.CourtofAppeals,G.R.No.51457,June27,1994,233SCRA335,347citingJ.M.Tuason&Co.,Inc.v.CourtofAppeals,No.L41233,November21,1979,94SCRA413,422423andAngelo v.Pacheco, 56Phil. 70(1931).

[44]HeirsofTrinidadDeLeonVda.deRoxasv.CourtofAppeals,G.R.No.138660,February5,2004,422SCRA

101,117citingDevelopmentBankofthePhilippinesv.CourtofAppeals,G.R.No.129471,April28,2000,331SCRA267.

[45]Sec.32ofPresidentialDecreeNo.1529,whichprovides:

Section32.ReviewofdecreeofregistrationInnocentpurchaserforvalue.Thedecreeofregistrationshallnotbereopenedorrevisedbyreasonofabsence,minority,orotherdisabilityofanypersonadverselyaffectedthereby,norbyanyproceedinginanycourtforreversingjudgments,subject,however,totherightofanyperson,xxxdeprivedoflandorofanyestateorinterestthereinbysuchadjudicationorconfirmationoftitleobtainedbyactualfraud,tofileintheproper[RTC]apetitionforreopeningandreviewofthedecreeofregistrationnotlaterthanoneyearfromandafterthedateoftheentryofsuchdecreeofregistration,but innocaseshallsuchpetitionbeentertainedbythecourtwhereaninnocentpurchaserforvaluehasacquiredthelandoraninteresttherein,whoserightsmaybeprejudiced.WheneverthephraseinnocentpurchaserforvalueoranequivalentphraseoccursinthisDecree,itshallbedeemedtoincludeaninnocentlessee,mortgagee,orotherencumbranceforvalue.

Upon the expirationof saidperiodof oneyear, the decreeof registration and the certificate of title issued shallbecomeincontrovertible.Anypersonaggrievedbysuchdecreeofregistrationinanycasemaypursuehisremedybyactionfordamagesagainsttheapplicantoranyotherpersonsresponsibleforthefraud.

[46]Supranote37.

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