G.R. No. 106042




Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 106042 February 28, 1994 RUFINA BAUTISTA, ALFREDO JR., LUZVIMINDA, MARIZA, JOSEPHINE, ALEJANDRO and AMELITA, all surnamed VALDEZ, petitioners, vs. HON. COURT OF APPEALS, HON. MARINA L. BUZON, SPOUSES DONALD SALVADOR and CRESENCIA SALVADOR, respondents. Ricardo C. Valmonte for petitioners. Felix R. Solomon for private respondents. NOCON, J.: This is a petition for review of a decision of the Court of Appeals in the case entitled "Spouses Alfredo Valdez and Rufina Bautista v. Spouses Donald Salvador and Cresencia Salvador," (CA-G.R. CV No. 31620).1 The background facts of the case as follows: On August 10, 1983, spouses Alfredo Valdez and Rufina Bautista, herein petitioners,2 purchased a parcel of land with an area of three hundred twenty six (326) square meters located in Barrio Maysilo (now Santolan), Malabon originally registered in the name of Dionisio Santiago.3 Petitioners Valdez bought the subject property from Maria de la Cruz vda. de Santiago. The sale was effected in a deed of extrajudicial settlement with absolute sale executed in their favor.4 In this instrument, vendors Maria dela Cruz and Jose Santiago, claiming to be the widow and son respectively of Dionisio Santiago, adjudicated unto themselves, as the only heirs of the deceased,5 the latter's one half interest on the property covered by Transfer Certificate of Title No. 343919, which together with the one half share thereon of Maria dela Cruz vda. de Santiago, was sold to spouses Alfredo Valdez and Rufina Bautista for a consideration of P55,420.00. Consequently, Transfer Certificate of Title (TCT) No. 343919 was cancelled, and in lieu thereof, TCT No. 105231 was issued in the name of spouses Alfredo Valdez and Rufina Bautista.6 In a letter sent by their counsel dated February 27, 1984, petitioners demanded that herein private respondents-spouses Donald and Cresencia Salvador show proof of their right to occupy the subject premises and to vacate the same.7 After respondents failed to vacate the premises despite intervention by the barangay officials of the locality,8 petitioners filed a complaint before the Regional Trial Court of Malabon for recovery of possession of property on July 1, 1988.9 The actual possessors of the land in question, herein private respondents, represented by their attorney-in-fact Philip Salvador, claim ownership over the property after having bought the same on installments from the registered owner Dionisio Santiago. They allege that half of the property (163 sq. m.) was sold to them on December 20, 1974 for P16,300.00. 10 Payment thereon was completed on October 15, 1981.11 On October 20, 1979 the other half of the land was bought for P20,000.00, payment of which was received by Benjamina Magalong, 12 Dionisio Santiago's wife, allegedly because the latter was already too weak and sickly. On February 28, 1991 the trial court rendered judgment dismissing the complaint for lack of merit and ordering the plaintiffs spouses Alfredo Valdez to pay defendants Salvador P5,000.00 for attorney's fees and to pay the costs of the suit. 13 The trial court found that there was a double sale of the immovable in question. Applying Article 1544 of the New Civil Code, the court a quo held that as to half of the property in question, private respondents (Salvador spouses) had a preferential right as against (Valdez spouses) who were purchasers in bad faith.14 The petitioners were taken to task for failing to make inquiry concerning the rights of private respondents who were in possession of the property. In his testimony, plaintiff Alfredo Valdez stated that before he bought the property, he inquired from Maria dela Cruz about the house erected thereon and he was informed by the latter that she had allowed her relatives to build said house, with the understanding that they would vacate said property and remove their house should she need the property, and that he did not inquire from the defendants themselves why they have their house on the property nor inform them that he was buying said property (tsn, May 11, 1989, pp. 14-15). He likewise admitted that the property in question is only about one half kilometer away from his residence; that the defendants have their house on said property since 1970 and that Dionisio Santiago likewise had a house on said property where he lived with his common-law wife, Benjamina Magalong, while his legal wife, Maria dela Cruz, lives in another place in the same neighborhood, and that he did not talk to Benjamina Magalong (Ibid, pp. 7 and 10). In other words, plaintiffs merely relied on the statement of Maria dela Cruz that defendants were her relatives whom she had allowed to build a house on the property which she was offering to sell to them until such time that she needed the same, although they knew that Maria dela Cruz did not live on said property with her husband Dionisio Santiago, who resided thereon with his common-law wife Benjamina Magalong. Thus, had plaintiffs inquired from defendants themselves or from Benjamina Magalong by what right did defendants have a house on the property in question, before they bought the entire property, they could have been informed of the deed of sale executed by Dionisio Santiago in defendants' favor. As held in De Guzman, Jr. v. Court of Appeals, 156 SCRA 701, 710: The failure of appellees to take the ordinary precautions which a prudent man would have taken under the circumstances, specially in buying a piece of land in the actual, visible and public possession of another person, other than the vendor, constitutes gross negligence amounting to bad faith. In this connection, it has been held that where, as in this case, the land sold is in the possession of a person other than the vendor, the purchaser is required to go beyond the certificate of title and mae (sic) inquiries concerning the rights of the actual possessor. Failure to do so would make him a purchaser in bad faith. (Incala vs. Mendoza, CA-G.R. No. 13677-R, November 9, 1965, De Jesus vs. Revilla, CA-G.R. No. 13562-R, October 5, 1965; Marcelino vs. Manikan, CA-G.R. No. 32792-R, June 22, 1956). xxx xxx xxx One who purchases real property which is in actual possession of another should, at least make some inquiry concerning the right of those in possession. The actual possession by other than the vendor should, at least put the purchaser upon inquiry. He can scarely (sic), in the absence of such inquiry, be regarded as a bona fide purchaser as against such possessors. (Conspecto vs. Fruto, 31 Phil. 144). 15 With respect to the other half of the property (163 sq. m.) the trial court ruled that petitioners had preferential right over the land. The sale made on December 20, 1979 by Benjamina Magalong in favor of private respondents had no force and effect. . . . Not being the registered owner nor authorized by the registered owner, Benjamin Magalong had no right to sell the other half portion of the property covered by TCT No. 343919. Consequently, upon the demise of Dionisio Santiago on November 26, 1982, the latter's right over the one half portion of the property covered by TCT No. 343919 passed on to his legal heir, i.e., his wife Maria dela Cruz as appearing on the face of said certificate of title, as the other half was already sold by him to Donald Salvador, by virtue of the Deed of Absolute Sale dated December 20, 1974 (Exh. "14").16 On appeal, 17 appellants-spouses Valdez challenged the trial court's decision to award one half of the property to private respondents and claimed that they should have left the parties where they are pursuant to the doctrine of in pari delicto.18 The Court of Appeals held that these points were already raised and resolved by the court a quo. Nevertheless, the court proceeded to examine the case. Relief prayed for by appellants was denied and the decision appealed from was affirmed in toto by respondent court.19 Hence the instant petition, where the following issues are elevated: I PUBLIC RESPONDENTS MISAPPLIED ARTICLE 1544 OF THE NEW CIVIL CODE. THEIR HOLDING THAT PETITIONERS ARE IN BAD FAITH AND PRIVATE RESPONDENTS HAVE BETTER RIGHT OVER THE QUESTIONED PROPERTY IS AGAINST THE EVIDENCE AND ESTABLISHED PRINCIPLES OF LAW. II ASSUMING THAT PETITIONERS ARE IN BAD FAITH, PUBLIC RESPONDENTS ERRED WHEN THEY DID NOT LEAVE THE PARTIES WHERE THEY ARE CONSIDERING THAT PRIVATE RESPONDENTS SLEPT ON THEIR RIGHT FOR UNREASONABLE LENGTH OF TIME BY NOT REGISTERING THEIR ALLEGED DEED OF SALE. 20 The trial court already adjudged petitioners as having preferential right over one half of the subject property. 21 Hence the present controversy covers only the remaining one half of the land which the trial court adjudicated in favor of private respondents. Petitioners theorize that public respondents (the Trial Court and the Court of Appeals) erred when they held the spouses Valdez to be purchasers in bad faith. They claim to have satisfied the legal requirement that "in order (for) a purchaser of land with a Torrens Title (to) be considered a purchaser in good faith, it is enough that he examines the latest certificate of title . . ." 22 Further, they maintain that they inquired from the vendors Maria dela Cruz vda. de Santiago and Jose Santiago, concerning the rights of private respondents who were in possession of the property. 23 The trial court held that plaintiffs spouses Valdez (herein petitioners) should have inquired from defendants spouses Salvador themselves or from Benjamina Magalong. 24 This requirement, petitioners argue, is unreasonable and pointless. Firstly, because it exacts more than what the law requires from a buyer of land covered by a Torrens Title. Secondly, although the private respondents were given the opportunities to present their claim or ownership, the latter repeatedly failed to support their claim of over the property. 25 Thirdly, to inquire from Benjamina Magalong would be futile for she had no right to stay on the property, proof of which is her subsequent eviction.26 We are not persuaded. Before us is a case registered land which had been sold to two different persons. The first sale was made by the registered owner Dionisio Santiago in favor of private respondents (spouses Salvador) on December 20, 1974. 27 It was never registered although private respondents have been in uniterrupted possession since 1970 up to the present, first as lessees and later on as owners. The second sale was made by Dionisio Santiago's heirs, Maria dela Cruz vda. de Santiago and Jose Santiago, in favor of petitioners on August 10, 1983, nearly a year after the former's death. It was recorded and TCT No. 106251 was issued in the name of petitioners. Article 1544 of the New Civil Code provides: If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property. Should it be 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, the ownership shall pertain to the person who in good faith was first in possession; and in the absence thereof, to the person who presents the oldest title, provided there is good faith. Where the thing sold twice is an immovable, the one who acquires it and first records it in the Registry of Property, both made in good faith, 28 shall be deemed the owner. The requirement of the law then, is two-fold: acquisition in good faith and registration in good faith. Mere registration of title is not enough, good faith must concur with the registration.29 To be entitled to priority, the second purchaser must not only establish prior recording of his deed but must have acted in good faith, without knowledge of the existence of another alienation by the vendor to another. 30 Who then is a purchaser in good faith? In the early case of Leung Yee v. F.L. Strong Machinery Co. and Williamson, 31 we explained the matter in this wise: One who purchases real estate with knowledge of a defect or lack of title in his vendor cannot claim that he has acquired title thereto in good faith as against the true owner of the land or of an interest therein; and the same rule must be applied to one has knowledge of facts which should have put him upon such inquiry and investigation as might be necessary to acquaint him with the defects in title of his vendor. . . . Good faith, or the lack of it, is in its last analysis a question of intention; but in ascertaining the intention by which one is actuated in a given occasion, we are necessarily controlled by the evidence as to the conduct and outward acts by which alone the inward motive may, with safety be determined. So it is that "honesty of intention," "the honest lawful intent," which constitutes good faith implies a "freedom from knowledge and circumstances which ought to put a person on inquiry." and so it is that proof of such knowledge overcomes the presumption of good faith in which the courts always indulge in the absence of proof to the contrary. "Good faith, or the want of it, is not a visible, tangible fact that can be seen or touched, but rather a state or condition of mind which can only be judged of by actual or fancied tokens or signs. (Wilder vs. Gilman, 55 Vt., 505; Cf. Cardenas vs. Miller, 108 Cal., 250 Breaux-Renoudet, Cypress Lumber Co. vs. Shadel, 52 La. Ann., 2094-2098; Pinkerton Bros. Co. vs. Bromley, 119 Mich., 8 10, 17.) And more succintly in Cui and Joven v. Henson 32, we said: A purchaser in good faith is one who buys property of another, without notice that some other person has a right to, or interest in, such property and pays a full and fair price for the same, at the time of such purchase, or before he has notice of the claim or interest of some other person in the property. Good faith consists in an honest intention to abstain from taking any unconscientious advantage of another. Good faith is an opposite of fraud and of bad faith, and its non existence must be established by competent proof. Being a question of intention, good faith or the lack of it can only be ascertained from the circumstances surrounding the purchases of the land. We shall now analyze whether or not petitioners bought the land in good faith. According to the trial court, petitioners should have inquired from the actual possessors, including private respondents, "by what right did they have for having a house on the property, before purchasing the entire property" and not merely from the vendors. 33 They claim that such a requirement is unreasonable and that their inquiry with the vendors is sufficient to make them buyers in good faith. It is true that petitioners examined the certificate of title of Dionisio Santiago before they bought the lot and found it clean and without annotation of any encumbrance. And it is equally true that a person dealing with the owner of registered land is not bound to go beyond the certificate of title as he is charged with notice of burdens on the property which are noted on the face of the register or on the certificate of title. 34 However, it is important to note that petitioners did not buy the land from the registered owner, Dionisio Santiago. They bought it from his heirs, Maria dela Cruz and Jose Santiago. Where a purchaser buys from one who is not the registered owner himself, the law requires a higher degree of prudence even if the land object of the transaction is registered. One who buys from one who is not the registered owner is expected to examine not only the certificate of title but all factual circumstances necessary for him to determine if there are any flaws in the title of the transferor, or in his capacity to transfer the land. 35 The trial court correctly cited our pronouncement that "(o)ne who purchases real property which is in the actual possession of others should at least, make some inquiry concerning the rights of those in possession. The actual possession by others (sic) than the vendor should, at least, put the purchaser upon inquiry. He can scarcely, in the absence of such inquiry, be regarded as a bona fide purchaser as against such possessors." 36 In order to fulfill of good faith, it is imperative for a purchaser of land which is possessed by persons not the vendor to inquire and investigate into the rights or title of those in possession. The absence of such inquiry will remove them from the realm of bona fide acquisition. Although petitioners made inquiry regarding the rights of private respondents to possess the subject property, this case involves certain peculiarities which lead us to affirm the respondent trial and appellate courts finding that petitioners are not purchasers in good faith. While petitioners claim to have so inquired, they did so from the vendors who were not the registered owner. As we have seen from jurisprudence previously cited, buying land from one not the registered owner should have put the buyer on guard concerning facts which would acquaint him with defects in the title or capacity to transfer of the vendor. 37 In addition, petitioners admit that they reside only half a kilometer away from the property in question. This fact greatly facilitates such inquiry from the actual possessors and not only from the vendors. Furthermore, petitioner's husband Alfredo Valdez (plaintiff in the lower court) knew that private respondents have a house on the property in question which they have been occupying since 1970. 38 At the very least, they would have been apprised of the reputation of private respondents' possession since they are neighbors residing in the same locale. As aptly put by the respondent: 39 As records bear it out, appellant had knowledge of circumstances which ought to have put them on an inquiry but they did not. Such failure to exercise ordinary care expected of real estate buyers necessarily means bearing the consequences of their own acts. . . . . Regarding private respondents' failure to present evidence of their claim of title despite several opportunities to do so, the trial court adequately accounted for the same. If found that private respondent Cresencia Salvador was not a proper party in the barangay conciliation proceedings and that Donald Salvador was abroad at the time. Hence, her failure to present such evidence does not militate against private respondents' inculpability.40 Next, petitioners argue that the land in question has not been properly identified and described in evidence for private respondents [viz. Exhibits 14 & 14-A (Deed of Sale dated December 20, 1974) do not describe which portion of land they refer; receipts of payment executed by Dionisio Santiago vary with respect to their subject lots; the deed of sale was executed December 1974 when payment was only completed on October 15, 1981; private respondents' evidence does not show that the land has been fully paid for because a number of Exhibits (16-A; 16-E; 16-M; 16-DD; 16-EE; and 16-GG) are no evidence of payments. They are incompetent and hearsay for not being properly identified.]41 We are satisfied with the analysis and decision of the trial court regarding this matter Apart from petitioners' tenuous allegations, the identity of the subject property cannot be seriously doubted. It held: The circumstances that the Deed of Absolute Sale dated December 20, 1974, covering one half portion of the property stated that the consideration of P16,300.00 was received by Dionisio Santiago from defendant Donald Salvador (Exh. "14"), whereas said amount was actually paid in installment for a period of almost seven (7) years, as shown by the receipts therefor (Exhs. "16"; and "16-A", to "16-TT"), does not affect the validity of the transaction. As explained by Philip Salvador, after the deed of sale was executed, Dionisio Santiago wanted a full payment of the consideration but since he and Donald Salvador did not have money, they agreed to have the consideration paid in installment and that the copy of said deed of sale was given to him and Donald Salvador by Dionisio Santiago only upon full payment of the consideration of P16,300.00 (tsn September 21, 1990, pp. 6-7). Moreover, defendant Donald Salvador started paying the realty taxes on the property owned by Dionisio Santiago beginning with the year 1975-76 (Exhs. "8", "9", "11", "12" and "13"). In their Memorandum, plaintiffs pointed out the property allegedly sold by Dionisio Santiago to defendant Donald Salvador was not properly identified as the deed of sale refers to one half portion of Lot 14-B situated at Maysilo St., Municipality of Malabon, whereas TCT No. 343919 covering said property states that it is situated in Barrio Maysilo, Municipality of Malabon and there is a wide difference between street and barrio. No significance can be attributed to such circumstances. The deed of sale expressly mentioned that the one half portion of the property (Lot 14-B) sold to Donald Salvador by Dionisio Santiago is covered by TCT No. 343919. In fact plaintiffs (herein petitioners) tax declaration covering the property in question, attached as Annex "B" to their Complaint, also states that the property is located at Maysilo Street. And as alleged in paragraph 3 of the Complaint, Barangay Maysilo is now called Santulan. 42 Lastly, petitioners advance the theory that, even assuming petitioners to be purchasers in bad faith, public respondents should have left the parties where they are since both are at fault. Private respondents are equally to blame for failing to register the alleged sale from the time they possessed the Deed of Absolute Sale (October 15, 1981) to the time petitioners purchased the property (August 10, 1983), an unreasonable period of one year and ten months. It is because of this omission that the present controversy arose, hence private respondents should be held responsible and the parties held to be in pari delicto. 43 The circumstances between the parties cannot qualify as being in pari delicto for they are not similarly situated. The trial court already held worthy of credence private respondents' testimony that they were not able to register said deed of sale after they had paid the last installment to Dionisio Santiago because the latter could no longer locate his copy of the transfer certificate of title. 44 We respect the findings of the trial court on this factual matter, it being a better judge of the witness's demeanor at the time he is called to the stand. We also do not find private respondents equally blameworthy for failing to register during the period of time cited above by petitioners. The uninterrupted possession of the property may have fostered complacency but their omission to register within this period cannot constitute a situation of in pari delicto. WHEREFORE, the instant petition is DISMISSED. SO ORDERED. Narvasa, C.J., Padilla, Regalado and Puno, JJ., concur. #Footnotes 1 Penned by Justice Segundino G. Chua and concurred in by Justices Jose A.R. Melo and Artemio D. Luna; Rollo, pp. 31-43. 2 During trial, Alfredo Valdez died. He was substituted by his heirs Alfredo Jr., Luzviminda, Mariza, Josephine, Alejandro and Amelita, all surnamed Valdez. 3 Lot 14B consisting of 326 sq. m. situated in Barrio Maysilo, Municipality of Malabon; covered by Transfer Certificate of Title No. 343919 of the Register of Deeds for the Province of Rizal, in the name of Dionisio Santiago, married to Maria dela Cruz; Exhibit "15", Records, p. 127. 4 "Kasulatan ng Partihang Labas sa Hukuman at Bilihang Patuluyan ng Lupa"; Exhibit "A"; Records, p. 8. 5 Dionisio Santiago died November 26, 1982. 6 November 30, 1983; Exhibit "B"; Records, p. 5. 7 Exhibit "C"; Records, p. 10. 8 Katibayan Upang Makadulog sa Hukuman"; Exhibit "D"; Records, p. 11. 9 Civil Case No. 1111-MN; RTC Malabon, Branch 170; Hon. Marina L. Buzon, presiding. 10 Deed of Absolute Sale dated December 20, 1974; Exhibit "14"; Records, p. 126. 11 Trial Court Decision, p. 3; Rollo, p. 22. 12 Receipt signed by Benjamina Magalong, dated October 20, 1979; Exhibit "17"; Records, p. 178. 13 Decision of the Trial Court; Rollo, pp. 25-30. 14 Ibid. p. 6; Rollo, p. 25. 15 Ibid, pp. 7-8; Rollo, pp. 26-27. 16 Ibid. pp. 9-10; Rollo, pp. 28-29. 17 CA-G.R. CV No. 31620. 18 Appellant's Brief, pp. 5-6, Rollo, pp. 21-22. Decision of the Court of Appeals, p. 7; Rollo, p. 37. 19 Decision of the Court of Appeals dated June 17, 1992; Rollo, p. 37. 20 Petition, p. 9; Rollo, p. 10. 21 The sale effected by Benjamina Magalong on December 20, 1979 was held to be invalid. See p. 10 of the decision of the trial court; Rollo, p. 29. 22 Citing Hernandez v. Katigbak vda. de Salas, 69 Phil. 744; Flores et al. v. Plasino, G.R. No. L-5727, Feb. 12, 1954; Revilla, et al. v. Galindez, G.R. No. L-9940; March 30, 1960; Petition, p. 10. Rollo, p. 11. cf. Decision of the Trial Court, first paragraph, p. 7; Rollo, p. 26. 23 . . . At the time he bought the property, he was told by Maria dela Cruz that defendants were allowed by Dionisio Santiago to build their house on the property in question because they were relatives, with the understanding that defendants would vacate said property in case the same would be needed by the owner." (Decision of the Trial Court, p. 3); Petition, p. 10; Rollo, p. 11. 24 "Thus had plaintiffs inquired from defendants themselves or from Benjamina Magalong by what right defendants have a house on the property in question, before they bought the entire property, they could have been informed of the deed of sale executed by Dionisio Santiago in defendant's favor."; Ibid, p. 7; Petition, p. 11; Rollo, p. 12. 25 Petitioner's counsel wrote a letter private respondents spouses Salvador informing them that the petitioners had purchased the land and demanding that they vacate the land. Private respondents likewise did not claim they had purchased the land in three conciliation meetings before the barangay. Petition, p. 11; Rollo, p. 12. 26 Exhibit "J"; Ibid., p. 12; Rollo, p. 13. 27 Exhibit "14", Records, p. 126. 28 Nuguid v. CA, 171 SCRA 213 (1989); Vda. de Jomoc v. CA, 200 SCRA 74 (1991); Gatmaitan v. CA, 200 SCRA 37 (1992); Bucad v. CA, 216 SCRA 422 (1992); Abarquez v. CA, 213 SCRA 414 (1992). 29 Bergado v. CA, 173 SCRA 497, 505 (1989) citing Arcenas v. Del Rosario, 67 Phil. 238. 30 A. Baviera, SALES (1981 Edition), p. 72 citing Paylago v. Jarabe, G.R. No. 20046, March 27, 1968, 22 SCRA 1247 (1968) citing the cases of Bernas v. Bolo, G.R. No. CA-650, May 14, 1948, 81 Phil. 16 (1948), Obras Pias v. Ignacio, 17 Phil. 45 (1910), Emas v. De Zuzuaregui, 53 Phil. 197 (1929); Ignacio v. Santos Chua Hong, 52 Phil. 940 (1929); Gustilo v. Maravilla, 48 Phil. 442 (1925); Ramos v. Dueño, 50 Phil. 786 (1927). 31 37 SCRA 644, 651 (1918). 32 51 SCRA 606, 612 (1928); Also Agricultural and Home Extension Development Group v. CA, 213 SCRA 516 (1992). 33 Trial Court Decision, p. 7; Rollo, p. 26. 34 Revilla and Fajardo v. Galindez, 107 Phil. 484 (1960) citing Quimson v. Suarez, 47 Phil. 901 and Anderson and Co. v Garcia, 64 Phil. 506; Also Pino v. CA, 198 SCRA 434 (1991); Lopez v. CA, 169 SCRA 271 (1989); Lu v. IAC, 169 SCRA 595 (1989). 35 Revilla v. Galindez, supra. at p. 485. 36 Conspecto v. Fruto, 31 Phil. 144, 149 (1915) 37 Supra, note 34. 38 Decision of the Trial Court, p. 3; Rollo, p. 22. 39 Decision of the Court of Appeals, p. 12; Rollo, p.42. 40 Decision of the Trial Court, p. 10; Rollo, p. 29. 41 Petition, pp. 13-15; Rollo, pp. 14-16. 42 Decision of the Trial Court, p. 9; Rollo, p. 28. 43 Ibid., pp. 15-17; Rollo; pp. 16-18. 44 Ibid., p. 4; Rollo, p. 23. The Lawphil Project - Arellano Law Foundation