4/7/2017 G.R.No.

176841

RepublicofthePhilippines
SUPREMECOURT
Manila

FIRSTDIVISION

ANTHONYORDUA,DENNIS G.R.No.176841
ORDUA,andANTONITAORDUA,
Petitioners, Present:

CORONA,C.J.,Chairperson,
versus VELASCO,JR.,
LEONARDODECASTRO,
DELCASTILLO,and
EDUARDOJ.FUENTEBELLA, PEREZ,JJ.
MARCOSS.CID,BENJAMINF.
CID,BERNARDG.BANTA,and Promulgated:
ARMANDOGABRIEL,JR.,
Respondents. June29,2010
xx

DECISION


VELASCO,JR.,J.:

[1]
InthisPetitionforReview underRule45oftheRulesofCourt,AnthonyOrdua, Dennis
[2]
OrduaandAntonitaOrduaassailandseektosetasidetheDecision oftheCourtofAppeals(CA)
dated December 4, 2006 in CAG.R. CV No. 79680, as reiterated in its Resolution of March 6,
[3]
2007,whichaffirmedtheMay26,2003Decision oftheRegionalTrialCourt(RTC),Branch3in
BaguioCity,inCivilCaseNo.4984R,asuitforannulmentoftitleandreconveyancecommenced
byhereinpetitionersagainsthereinrespondents.

Centraltothecaseisaresidentiallotwithanareaof74squaremeterslocatedatFairview
Subdivision,BaguioCity,originallyregisteredinthenameofArmandoGabriel,Sr.(GabrielSr.)
[4]
underTransferCertificateofTitle(TCT)No.67181oftheRegistryofDeedsofBaguioCity.

Asgatheredfromthepetition,withitsenclosures,andthecommentsthereonoffourofthe
[5]
fiverespondents, theCourtgathersthefollowingrelevantfacts:

Sometime in 1996 or thereabouts, Gabriel Sr. sold the subject lot to petitioner Antonita
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Sometime in 1996 or thereabouts, Gabriel Sr. sold the subject lot to petitioner Antonita
Ordua(Antonita),butnoformaldeedwasexecutedtodocumentthesale.Thecontractpricewas
apparentlypayableininstallmentsasAntonitaremittedfromtimetotimeandGabrielSr.accepted
partial payments. One of the Orduas would later testify that Gabriel Sr. agreed to execute a final
[6]
deedofsaleuponfullpaymentofthepurchaseprice.

Asearlyas1979,however,Antonitaandhersons,DennisandAnthonyOrdua,werealready
occupying the subject lot on the basis of some arrangement undisclosed in the records and even
constructedtheirhousethereon.Theyalsopaidrealpropertytaxesforthehouseanddeclareditfor
[7]
taxpurposes,asevidencedbyTaxDeclarationNo.(TD)9604012111087 inwhichtheyplace
theassessedvalueofthestructureatPhP20,090.

After the death of Gabriel Sr., his son and namesake, respondent Gabriel Jr., secured TCT
[8]
No. T71499 over the subject lot and continued accepting payments from the petitioners. On
December 12, 1996, Gabriel Jr. wrote Antonita authorizing her to fence off the said lot and to
[9]
constructaroadintheadjacentlot. OnDecember13,1996,GabrielJr.acknowledgedreceiptof
[10] [11]
a PhP 40,000 payment from petitioners. Through a letter dated May 1, 1997, Gabriel Jr.
acknowledged that petitioner had so far made an aggregate payment of PhP 65,000, leaving an
outstandingbalanceofPhP60,000.AreceiptGabrielJr.issueddatedNovember24,1997reflected
aPhP10,000payment.

Despiteallthosepaymentsmadeforthesubjectlot,GabrielJr.wouldlatersellittoBernard
Banta (Bernard) obviously without the knowledge of petitioners, as later developments would
show.

AsnarratedbytheRTC,thelotconveyancefromGabrielJr.toBernardwaseffectedagainst
thefollowingbackdrop:Badlyinneedofmoney,GabrielJr.borrowedfromBernardtheamountof
PhP50,000,payableintwoweeksatafixedinterestrate,withthefurtherconditionthatthesubject
lotwouldanswerfortheloanincaseofdefault.GabrielJr.failedtopaytheloanandthisledtothe
[12]
execution of a Deed of Sale dated June 30, 1999 and the issuance later of TCT No. T
[13]
72782 forsubjectlotinthenameofBernarduponcancellationofTCTNo.71499inthename

ofGabriel,Jr.AstheRTCdecisionindicated,thereluctantBernardagreedtoacquirethelot,since
he had by then ready buyers in respondents Marcos Cid and Benjamin F. Cid (Marcos and
BenjaminortheCids).
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BenjaminortheCids).

Subsequently,BernardsoldtotheCidsthesubjectlotforPhP80,000.ArmedwithaDeedof
[14]
AbsoluteSaleofaRegisteredLand datedJanuary19,2000,theCidswereabletocancelTCT
[15]
No.T72782andsecureTCTNo.72783 coveringthesubjectlot.Justlikeintheimmediately
preceding transaction, the deed of sale between Bernard and the Cids had respondent Eduardo J.
Fuentebella(Eduardo)asoneoftheinstrumentalwitnesses.

MarcosandBenjamin,inturn,cededthesubjectlottoEduardothroughaDeedofAbsolute
[16]
Sale datedMay11,2000.Thus,theconsequentcancellationofTCTNo.T72782andissuance
[17]
onMay16,2000ofTCTNo.T3276 oversubjectlotinthenameofEduardo.

As successive buyers of the subject lot, Bernard, then Marcos and Benjamin, and finally
Eduardo, checked, so each claimed, the title of their respective predecessorsininterest with the
BaguioRegistryanddiscoveredsaidtitletobefreeandunencumberedatthetimeeachpurchased
the property. Furthermore, respondent Eduardo, before buying the property, was said to have
[18]
inspectedthesameandfounditunoccupiedbytheOrduas.

SometimeinMay2000,orshortlyafterhispurchaseofthesubjectlot,Eduardo,throughhis
lawyer,sentaletteraddressedtotheresidenceofGabrielJr.demandingthatallpersonsresidingon
orphysicallyoccupyingthesubjectlotvacatethepremisesorfacetheprospectofbeingejected.
[19]

Learning of Eduardos threat, petitioners went to the residence of Gabriel Jr. at No. 34
DominicanHill,BaguioCity.There,theymetGabrielJr.sestrangedwife,Teresita,whoinformed
them about her having filed an affidavitcomplaint against her husband and the Cids for
falsificationofpublicdocumentsonMarch30,2000.AccordingtoTeresita,hersignatureonthe
June 30, 1999 Gabriel Jr.Bernard deed of sale was a forgery. Teresita further informed the
petitioners of her intent to honor the aforementioned 1996 verbal agreement between Gabriel Sr.
andAntonitaandthepartialpaymentstheygaveherfatherinlawandherhusbandforthesubject
lot.

[20]
OnJuly3,2001,petitioners,joinedbyTeresita,filedaComplaint forAnnulmentofTitle,
ReconveyancewithDamagesagainsttherespondentsbeforetheRTC,docketedasCivilCaseNo.
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4984R,specificallyprayingthatTCTNo.T3276datedMay16,2000inthenameofEduardobe
annulled.Corollarytothisprayer,petitionerspleadedthatGabrielJr.stitletothelotbereinstated
andthatpetitionersbedeclaredasentitledtoacquireownershipofthesameuponpaymentofthe
remainingbalanceofthepurchasepricethereforagreeduponbyGabrielSr.andAntonita.

Whileimpleadedandservedwithsummons,GabrielJr.optednottosubmitananswer.

RulingoftheRTC

ByDecisiondatedMay26,2003,theRTCruledfortherespondents,asdefendantsa quo,
andagainstthepetitioners,asplaintiffstherein,thedispositiveportionofwhichreads:

WHEREFORE,theinstantcomplaintisherebyDISMISSEDforlackofmerit.Thefour(4)plaintiffs
areherebyorderedbythisCourttopayeachdefendant(exceptArmandoGabriel,Jr.,BenjaminF.
Cid,andEduardoJ.Fuentebellawhodidnottestifyonthesedamages),MoralDamagesofTwenty
Thousand (P20,000.00) Pesos, so that each defendant shall receive Moral Damages of Eighty
Thousand(P80,000.00)Pesoseach.Plaintiffsshallalsopayalldefendants(exceptArmandoGabriel,
Jr.,BenjaminF.Cid,andEduardoJ.Fuentebellawhodidnottestifyonthesedamages),Exemplary
Damages of Ten Thousand (P10,000.00) Pesos each so that each defendant shall receive Forty
Thousand (P40,000.00) Pesos as Exemplary Damages. Also, plaintiffs are ordered to pay each
defendant(exceptArmandoGabriel,Jr.,BenjaminF.Cid,andEduardoJ.Fuentebellawhodidnot
testify on these damages), Fifty Thousand (P50,000.00) Pesos as Attorneys Fees, jointly and
solidarily.

[21]
Costofsuitagainsttheplaintiffs.


Onthemain,theRTCpredicateditsdismissalactiononthebasisofthefollowinggroundsand/or
premises:


1.Eduardowasapurchaseringoodfaithand,hence,mayavailhimselfoftheprovisionof
[22]
Article1544 oftheCivilCode,whichprovidesthatincaseofdoublesale,thepartyingood
faithwhoisabletoregisterthepropertyhasbetterrightovertheproperty

[23] [24]
2.UnderArts.1356 and1358 oftheCode,conveyanceofrealpropertymustbein
theproperform,elseitisunenforceable

3.Theverbalsalehadnoadequateconsiderationand
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4.PetitionersrightofactiontoassailEduardostitleprescribesinoneyearfromdateofthe
issuanceofsuchtitleandtheoneyearperiodhasalreadylapsed.

Fromtheabovedecision,onlypetitionersappealedtotheCA,theirappealdocketedasCA
G.R.CVNo.79680.

TheCARuling

OnDecember4,2006,theappellatecourtrenderedtheassailedDecisionaffirmingtheRTC
decision.Thefalloreads:
WHEREFORE, premises considered, the instant appeal is hereby DISMISSED and the 26
May2003DecisionoftheRegionalTrialCourt,Branch3ofBaguioCityinCivilCaseNo.4989Ris
herebyAFFIRMED.

[25]
SOORDERED.


Hence,theinstantpetitiononthesubmissionthattheappellatecourtcommittedreversibleerrorof
law:

1.xxxWHENITHELDTHATTHESALEOFTHESUBJECTLOTBYARMANDO
GABRIEL,SR.ANDRESPONDENTARMANDOGABRIEL,JR.TOTHEPETITIONERS
ISUNENFORCEABLE.

2. xxx IN NOT FINDING THAT THE SALE OF THE SUBJECT LOT BY
RESPONDENTARMANDOGABRIEL,JR.TORESPONDENTBERNARDBANTAAND
ITS SUBSEQUENT SALE BY THE LATTER TO HIS CORESPONDENTS ARE NULL
ANDVOID.

3. xxx IN NOT FINDING THAT THE RESPONDENTS ARE BUYERS IN BAD
FAITH

4. xxx IN FINDING THAT THE SALE OF THE SUBJECT LOT BETWEEN
GABRIEL,SR.ANDRESPONDENTGABRIEL,JR.ANDTHEPETITIONERSHASNO
ADEQUATECONSIDERATION.

5.xxxINRULINGTHATTHEINSTANTACTIONHADALREADYPRESCRIBED.

6. xxx IN FINDING THAT THE PLAINTIFFSAPPELLANTS ARE LIABLE FOR

[26]
MORALANDEXEMPLARYDAMAGESANDATTORNEYSFEES.


TheCourtsRuling

Thecoreissuestenderedinthisappealmaybereducedtofourandformulatedasfollows,to
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Thecoreissuestenderedinthisappealmaybereducedtofourandformulatedasfollows,to
wit:first,whetherornotthesaleofthesubjectlotbyGabrielSr.toAntonitaisunenforceableunder
theStatuteofFraudssecond,whetherornotsuchsalehasadequateconsiderationthird, whether
theinstantactionhasalreadyprescribedand,fourth,whetherornotrespondentsarepurchasersin
goodfaith.
Thepetitionismeritorious.

StatuteofFraudsInapplicable
toPartiallyExecutedContracts


ItisundisputedthatGabrielSr.,duringhislifetime,soldthesubjectpropertytoAntonita,the
purchasepricepayableoninstallmentbasis.GabrielSr.appearedtohavebeenarecipientofsome
partial payments. After his death, his son duly recognized the sale by accepting payments and
issuing what may be considered as receipts therefor. Gabriel Jr., 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, testified as to the fact of sale and of payments
received.

Pursuant to such sale, Antonita and her two sons established their residence on the lot,
occupying the house they earlier constructed thereon. They later declared the property for tax
purposes, as evidenced by the issuance of TD 9604012111087 in their or Antonitas name, and
paidtherealestatesduethereon,obviouslyassignthattheyareoccupyingthelotintheconceptof
owners.

Giventheforegoingperspective,EduardosassertioninhisAnswerthatpersonsappearedin
[27] [28]
the property only after he initiated ejectment proceedings is clearly baseless. If indeed
petitionersenteredandtookpossessionofthepropertyafterhe(Eduardo)institutedtheejectment
suit,howcouldtheyexplainthefactthathesentademandlettertovacatesometimeinMay2000?

With the foregoing factual antecedents, the question to be resolved is whether or not the
StatuteofFraudsbarstheenforcementoftheverbalsalecontractbetweenGabrielSr.andAntonita.
TheCA,justastheRTC,ruledthatthecontractisunenforceablefornoncompliancewith
theStatuteofFrauds.

Wedisagreeforseveralreasons.ForemostoftheseisthattheStatuteofFraudsexpressedin
[29]
Article1403,par.(2), oftheCivilCodeappliesonlytoexecutorycontracts,i.e.,thosewhereno
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[29] G.R.No.176841
Article1403,par.(2), oftheCivilCodeappliesonlytoexecutorycontracts,i.e.,thosewhereno
performancehasyetbeenmade.Statedabitdifferently,thelegalconsequenceofnoncompliance
withtheStatutedoesnotcomeintoplaywherethecontractinquestioniscompleted,executed,or
[30]
partiallyconsummated.

TheStatuteofFrauds,incontext,providesthatacontractforthesaleofrealpropertyorof
aninterestthereinshallbeunenforceableunlessthesaleorsomenoteormemorandumthereofisin
writing and subscribed by the party or his agent. However, where the verbal contract of sale has
beenpartially executed through the partial payments made by one party duly received by the
vendor,asinthepresentcase,thecontractistakenoutofthescopeoftheStatute.

ThepurposeoftheStatuteistopreventfraudandperjuryintheenforcementofobligations
depending for their evidence on the unassisted memory of witnesses, by requiring certain
enumerated contracts and transactions to be evidenced by a writing signed by the party to be
[31]
charged. TheStatuterequirescertaincontractstobeevidencedbysomenoteormemorandum
in order to be enforceable. The term Statute of Frauds is descriptive of statutes that require
certainclassesofcontractstobeinwriting.TheStatutedoesnotdeprivethepartiesoftherightto
contract with respect to the matters therein involved, but merely regulates the formalities of the
[32]
contractnecessarytorenderitenforceable.

Sincecontractsaregenerallyobligatoryinwhateverformtheymayhavebeenenteredinto,
[33]
providedalltheessentialrequisitesfortheirvalidityarepresent, theStatutesimplyprovidesthe
method by which the contracts enumerated inArt. 1403 (2) may be proved but does not declare
theminvalidbecausetheyarenotreducedtowriting.Infine,theformrequiredundertheStatuteis
forconvenienceorevidentiarypurposesonly.

There can be no serious argument about the partial execution of the sale in question. The
recordsshowthatpetitionershad,onseparateoccasions,givenGabrielSr.andGabrielJr.sumsof
moneyaspartialpaymentsofthepurchaseprice.ThesepaymentsweredulyreceiptedbyGabriel
Jr.Torecall,inhisletterofMay1,1997,Gabriel,Jr.acknowledgedhavingreceivedtheaggregate
paymentofPhP65,000frompetitionerswiththebalanceofPhP60,000stillremainingunpaid.But
ontopofthepartialpaymentsthusmade,possessionofthesubjectofthesalehadbeentransferred
to Antonita as buyer. Owing thus to its partial execution, the subject sale is no longer within the
purviewoftheStatuteofFrauds.
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Lest it be overlooked, a contract that infringes the Statute of Frauds is ratified by the
[34]
acceptance of benefits under the contract. Evidently, Gabriel, Jr., as his father earlier, had
benefitedfromthepartialpaymentsmadebythepetitioners.Thus,neitherGabrielJr.northeother
respondentssuccessive purchasers of subject lotscould plausibly set up the Statute of Frauds to
thwartpetitionerseffortstowardsestablishingtheirlawfulrightoverthesubjectlotandremoving
any cloud in their title. As it were, petitioners need only to pay the outstanding balance of the
purchasepriceandthatwouldcompletetheexecutionoftheoralsale.

TherewasAdequateConsideration

Withoutdirectlysayingso,thetrialcourtheldthatthepetitionerscannotsueupontheoral
sale since in its own words: x x x for more than a decade, [petitioners] have not paid in full
ArmandoGabriel,Sr.orhisestate,sothatthesaletransactionbetweenArmandoGabrielSr.and
[petitioners][has]noadequateconsideration.

The trial courts posture, with which the CA effectively concurred, is patently flawed. For
starters,theyequatedincompletepaymentofthepurchasepricewithinadequacyofpriceorwhat
passesaslesion,whenbotharedifferentcivillawconceptswithdifferinglegalconsequences,the
firstbeingagroundtorescindanotherwisevalidandenforceablecontract.Perceivedinadequacyof
price,ontheotherhand,isnotasufficientgroundforsettingasideasalefreelyenteredinto,save
[35]
perhapswhentheinadequacyisshockingtotheconscience.

TheCourttobesuretakesstockofthefactthatthecontractingpartiestothe1995or1996
saleagreedtoapurchasepriceofPhP125,000payableoninstallments.Buttheoriginallotowner,
GabrielSr.,diedbeforefullpaymentcanbeeffected.Nevertheless,petitionerscontinuedremitting
paymentstoGabriel,Jr.,whosoldthesubjectlottoBernardonJune30,1999.Gabriel,Jr.,asmay
benoted,partedwiththepropertyonlyforPhP50,000.Ontheotherhand,BernardsolditforPhP
80,000toMarcosandBenjamin.Fromtheforegoingpricefigures,whatisabundantlyclearisthat
whatAntonitaagreedtopayGabriel,Sr.,albeitininstallment,wasverymuchmorethanwhathis
son, for the same lot, received from his buyer and the latters buyer later. The Court, therefore,
cannotseeitswayclearastohowtheRTCarrivedatitssimplisticconclusionaboutthetransaction
betweenGabrielSr.andAntonitabeingwithoutadequateconsideration.

TheIssuesofPrescriptionandtheBona
FidesoftheRespondentsasPurchasers

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Consideringtheinterrelationofthesetwoissues,wewilldiscussthemjointly.

Therecanbenoquibblingaboutthefraudulentnatureoftheconveyanceofthesubjectlot
effectedbyGabrielJr.infavorofBernard.Itisunderstandablethatafterhisfathersdeath,Gabriel
Jr.inheritedsubjectlotandforwhichhewasissuedTCTNo.No.T71499.SincetheGabrielSr.
Antonita sales transaction called for payment of the contract price in installments, it is also
understandablewhythetitletothepropertyremainedwiththeGabriels.Andafterthedemiseofhis
father, Gabriel Jr. received payments from the Orduas and even authorized them to enclose the
subject lot with a fence. In sum, Gabriel Jr. knew fully well about the sale and is bound by the
contractaspredecessorininterestofGabrielSr.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 which prescription has set in
againstpetitionersactionforannulmentoftitleandreconveyance.

The RTC and necessarily the CA found the purchaserrespondents thesis on prescription
correct stating in this regard that Eduardos TCT No. T3276 was issued on May 16, 2000 while
petitionersfiledtheircomplaintforannulmentonlyonJuly3,2001.Tothecourtsbelow,theone
yearprescriptiveperiodtoassailtheissuanceofacertificateoftitlehadalreadyelapsed.

Wearenotpersuaded.

The basic complaint, as couched, ultimately seeks the reconveyance of a fraudulently
registered piece of residential land. Having possession of the subject lot, petitioners right to the
reconveyance thereof, and the annulment of the covering title, has not prescribed or is not time

barred. This is so for an action for annulment of title or reconveyance based on fraud is
[36]
imprescriptiblewherethesuitorisinpossessionofthepropertysubjectoftheacts, theaction
[37]
partakingasitdoesofasuitforquietingoftitlewhichisimprescriptible. Suchisthecasein
thisinstance.Petitionershavepossessionofsubjectlotsasownershavingpurchasedthesamefrom
Gabriel,Sr.subjectonlytothefullpaymentoftheagreedprice.

The prescriptive period for the reconveyance of fraudulently registered real property is 10
years, reckoned from the date of the issuance of the certificate of title, if the plaintiff is not in
[38]
possession,butimprescriptibleifheisinpossessionoftheproperty. Thus,onewhoisinactual
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possession,butimprescriptibleifheisinpossessionoftheproperty. Thus,onewhoisinactual
possession of a piece of land claiming to be the owner thereof may wait until his possession is
[39]
disturbedorhistitleisattackedbeforetakingstepstovindicatehisright. As it is, petitioners
actionforreconveyanceisimprescriptible.



This brings us to the question of whether or not the respondentpurchasers, i.e., Bernard,
MarcosandBenjamin,andEduardo,havethestatusofinnocentpurchasersforvalue,aswasthe
thrustofthetrialcourtsdisquisitionanddisposition.

WeareunabletoagreewiththeRTC.

Itisthecommondefenseoftherespondentpurchasersthattheyeachcheckedthetitleofthe
subjectlotwhenitwashisturntoacquirethesameandfounditclean,meaningwithoutannotation
ofanyencumbranceoradversethirdpartyinterest.Anditisuponthispostulatethateachclaimsto
be an innocent purchaser for value, or one who buys the property of another without notice that
someotherpersonhasarighttoorinterestinit,andwhopaysthereforafullandfairpriceatthe
[40]
timeofthepurchaseorbeforereceivingsuchnotice.

ThegeneralruleisthatonedealingwithaparceloflandregisteredundertheTorrensSystem
maysafelyrelyonthecorrectnessofthecertificateoftitleissuedthereforandisnotobligedtogo
[41]
beyondthecertificate. Where,inotherwords,thecertificateoftitleisinthenameoftheseller,
the innocent purchaser for value has the right to rely on what appears on the certificate, as he is
charged with notice only of burdens or claims on the res as noted in the certificate. Another
formulationoftheruleisthat(a)intheabsenceofanythingtoarousesuspicionor(b)exceptwhere
thepartyhasactualknowledgeoffactsandcircumstancesthatwouldimpelareasonablycautious
mantomakesuchinquiryor(c)whenthepurchaserhasknowledgeofadefectoftitleinhisvendor
orofsufficientfactstoinduceareasonablyprudentmantoinquireintothestatusofthetitleofthe
[42]
property, saidpurchaseriswithoutobligationtolookbeyondthecertificateandinvestigatethe
titleoftheseller.
Eduardo and, for that matter, Bernard and Marcos and Benjamin, can hardly claim to be
innocentpurchasersforvalueorpurchasersingoodfaith.Foreachkneworwasatleastexpectedto
knowthatsomebodyelseotherthanGabriel,Jr.hasarightorinterestoverthelot.Thisisborneby
thefactthattheinitialseller,GabrielJr.,wasnotinpossessionofsubjectproperty.Withrespectto
MarcosandBenjamin,theyknewasbuyersthatBernard,theseller,wasnotalsoinpossessionof
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thesameproperty.ThesamegoeswithEduardo,asbuyer,withrespecttoMarcosandBenjamin.

Basicistherulethatabuyerofapieceoflandwhichisintheactualpossessionofpersons
other than the seller must be wary and should investigate the rights of those in possession.
Otherwise,withoutsuchinquiry,thebuyercanhardlyberegardedasabuyeringoodfaith.Whena
manproposestobuyordealwithrealty,hisdutyistoreadthepublicmanuscript,i.e.,tolookand
seewhoisthereuponitandwhathisrightsare.Awantofcautionanddiligencewhichanhonest
man of ordinary prudence is accustomed to exercise in making purchases is, in contemplation of
law,awantofgoodfaith.Thebuyerwhohasfailedtoknowordiscoverthatthelandsoldtohimis
[43]
inadversepossessionofanotherisabuyerinbadfaith.

Wherethelandsoldisinthepossessionofapersonotherthanthevendor,thepurchasermust
gobeyondthecertificatesoftitleandmakeinquiriesconcerningtherightsoftheactualpossessor.
[44]
And where, as in the instant case, Gabriel Jr. and the subsequent vendors were not in
possessionoftheproperty,theprospectivevendeesareobligedtoinvestigatetherightsoftheone
inpossession.Evidently,Bernard,MarcosandBenjamin,andEduardodidnotinvestigatetherights
overthesubjectlotofthepetitionerswho,duringtheperiodmaterialtothiscase,wereinactual
possession thereof. Bernard, et al. are, thus, not purchasers in good faith and, as such, cannot be
[45]
accorded the protection extended by the law to such purchasers. Moreover, not being
purchasersingoodfaith,theirhavingregisteredthesale,willnot,asagainstthepetitioners,carry
thedayforanyofthemunderArt.1544oftheCivilCodeprescribingrulesonpreferenceincaseof
[46]
double sales of immovable property. Occea v. Esponilla laid down the following rules in the

applicationofArt.1544:(1)knowledgebythefirstbuyerofthesecondsalecannotdefeatthefirst
buyers rights except when the second buyer first register in good faith the second sale and (2)
knowledge gained by the second buyer of the first sale defeats his rights even if he is first to
register,sincesuchknowledgetaintshisregistrationwithbadfaith.

Uponthefactsobtaininginthiscase,theactofregistrationbyanyofthethreerespondent
purchasers was not coupled with good faith. At the minimum, each was aware or is at least
presumedtobeawareoffactswhichshouldputhimuponsuchinquiryandinvestigationasmight
benecessarytoacquainthimwiththedefectsinthetitleofhisvendor.

The award by the lower courts of damages and attorneys fees to some of the herein
respondentswaspredicatedonthefilingbytheoriginalplaintiffsofwhattheRTCcharacterizedas
anunwarrantedsuit.Thebasisoftheaward,needlesstostress,nolongerobtainsand,hence,the
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anunwarrantedsuit.Thebasisoftheaward,needlesstostress,nolongerobtainsand,hence,the
sameissetaside.

WHEREFORE, the petition is hereby GRANTED. The appealed December 4, 2006
Decision and the March 6, 2007 Resolution of the Court of Appeals in CAG.R. CV No. 79680
affirming the May 26, 2003 Decision of the Regional Trial Court, Branch 3 in Baguio City are
hereby REVERSED and SET ASIDE. Accordingly, petitioner Antonita Ordua is hereby
recognized to have the right of ownership over subject lot covered by TCT No. T3276 of the
BaguioRegistryregisteredinthenameofEduardoJ.Fuentebella.TheRegisterofDeedsofBaguio
CityisherebyORDEREDtocancelsaidTCTNo.T3276andtoissueanewoneinthenameof
ArmandoGabriel,Jr.withtheproperannotationoftheconditionalsaleofthelotcoveredbysaid
title in favor of Antonita Ordua subject to the payment of the PhP 50,000 outstanding balance.
UponfullpaymentofthepurchasepricebyAntonitaOrdua,ArmandoGabriel,Jr.isORDEREDto
execute a Deed of Absolute Sale for the transfer of title of subject lot to the name of Antonita
Ordua,withinthree(3)daysfromreceiptofsaidpayment.

Nopronouncementastocosts.

SOORDERED.



PRESBITEROJ.VELASCO,JR.
AssociateJustice















WECONCUR:



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RENATOC.CORONA
ChiefJustice
Chairperson




TERESITAJ.LEONARDODECASTROMARIANOC.DELCASTILLO
AssociateJusticeAssociateJustice




JOSEPORTUGALPEREZ
AssociateJustice





CERTIFICATION


PursuanttoSection13,ArticleVIIIoftheConstitution,Icertifythattheconclusionsintheabove
Decisionhadbeenreachedinconsultationbeforethecasewasassignedtothewriteroftheopinion
oftheCourtsDivision.

RENATOC.CORONA
ChiefJustice

[1]
Rollo,pp.924,datedApril21,2007.
[2]
Id. at 2535. Penned by Associate JusticeArturo G. Tayag and concurred in by Associate Justices Remedios A. Salazar
FernandoandNoelG.Tijam.
[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
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[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,theownershipshallbetransferredtothepersonwho
mayhavefirsttakenpossessionthereofingoodfaith,ifitshouldbemovableproperty.
Shoulditbeimmovableproperty,theownershipshallbelongtothepersonacquiringitwhoingoodfaithfirstrecordeditinthe
RegistryofProperty.
Shouldtherebenoinscription,theownershipshallpertaintothepersonwhoingoodfaithwasfirstinthepossessionand,inthe
absencethereof,tothepersonwhopresentstheoldesttitle,providedthereisgoodfaith.
[23]
Art. 1356. Contracts shall be obligatory, in whatever form they may have been entered into, provided all the essential
requisitesfortheirvalidityarepresent.However,whenthelawrequiresthatacontractbeinsomeforminorderthatitmaybevalidor
enforceable,orthatacontracttobeprovedinacertainway,thatrequirementisabsoluteandindispensable.Insuchcases,therightofthe
partiesstatedinthefollowingarticlecannotbeexercised.
[24]
Art.1358.Thefollowingmustappearinapublicdocument:
(1)Actsandcontractswhichhavefortheirobjectthecreation,transmission,modificationorextinguishmentofrealrightsover
immovablepropertysalesofrealpropertyorofaninterestthereinaregovernedbyArticles1403,No.2,and1405
xxxx
(4)Thecessionofactionsorrightsproceedingfromanactappearinginapublicdocument.

AllothercontractswheretheamountinvolvedexceedsFivehundredpesosmustappearinwritingevenaprivateone.Butsales
ofgoods,chattelsorthingsinactionaregovernedbyArticles1403,No.2and1405.
[25]
Supranote2at3435.
[26]
Supranote1at1415.
[27]
Rollo,p.40.
[28]
Id.
[29]
Art.1403.Thefollowingcontractsareunenforceable,unlesstheyareratified:
xxx
(2)ThosethatdonotcomplywiththeStatuteofFraudsassetforthinthisnumber.Inthefollowingcasesanagreementhereafter
madeshallbeunenforceablebyaction,unlessthesame,orsomenoteormemorandumthereof,beinwriting,andsubscribedbytheparty
charged,orbyhisagentevidence,therefore,oftheagreementcannotbereceivedwithoutthewriting,orasecondaryevidenceofits
contents:
xxxx
(e)Anagreementfortheleasingforalongerperiodthanoneyear,orforthesaleofrealpropertyorofaninteresttherein
xxx
[30]
Arrogantev.Deliarte,G.R.No.152132,July24,2007,528SCRA63,74,citingAveriav.Averia,G.R.No.141877,August
13,2004,436SCRA459,466.
[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.
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4/7/2017 G.R.No.176841
[32]
RosencorDevelopmentCorporationv.CourtofAppeals,G.R.No.140479,March8,2001,354SCRA119,127.
[33]
Art.1356,CivilCode.
[34]
Article1405,CivilCode,whichstates:
Contracts infringing the Statute of Frauds, referred to in No. 2 of Article 1403, are ratified by the failure to object to the
presentationoforalevidencetoprovethesame,orbytheacceptanceofbenefitsunderthem.
[35]
4Paras,CIVILCODEOFTHEPHILIPPINESANNOTATED723(13th ed.,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,April22,2003,401SCRA391,401402citingTsaiv.CourtofAppeals,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.Court
ofAppeals,No.L41233,November21,1979,94SCRA413,422423andAngelov.Pacheco,56Phil.70(1931).
[44]
HeirsofTrinidadDeLeonVda.deRoxasv.CourtofAppeals,G.R.No.138660,February5,2004,422SCRA101,117
citingDevelopmentBankofthePhilippinesv.CourtofAppeals,G.R.No.129471,April28,2000,331SCRA267.
[45]
Sec.32ofPresidentialDecreeNo.1529,whichprovides:
Section32.ReviewofdecreeofregistrationInnocentpurchaserforvalue.Thedecreeofregistrationshallnotbereopenedor
revisedbyreasonofabsence,minority,orotherdisabilityofanypersonadverselyaffectedthereby,norbyanyproceedinginanycourtfor
reversing judgments, subject, however, to the right of any person, x x x deprived of land or of any estate or interest therein by such
adjudicationorconfirmationoftitleobtainedbyactualfraud,tofileintheproper[RTC]apetitionforreopeningandreviewofthedecree
ofregistrationnotlaterthanoneyearfromandafterthedateoftheentryofsuchdecreeofregistration,butinnocaseshallsuchpetition
be entertained by the court where an innocent purchaser for value has acquired the land or an interest therein, whose rights may be

prejudiced.WheneverthephraseinnocentpurchaserforvalueoranequivalentphraseoccursinthisDecree,itshallbedeemedtoinclude
aninnocentlessee,mortgagee,orotherencumbranceforvalue.
Upon the expiration of said period of one year, the decree of registration and the certificate of title issued shall become
incontrovertible.Anypersonaggrievedbysuchdecreeofregistrationinanycasemaypursuehisremedybyactionfordamagesagainst
theapplicantoranyotherpersonsresponsibleforthefraud.
[46]
Supranote37.

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