**Gardner vs. Court of Appeals: A Saga of Successive Property Transfers**
### Facts:
The case originated from a complex series of real property transfers involving two parcels of agricultural land in Calamba, Laguna, owned by Ruby H. Gardner and her husband, Frank Gardner, Jr., Americans. On November 27, 1961, the Gardners entered into an agreement with Ariosto C. Santos and his wife for the subdivision of the property, involving an absolute deed of sale, a subdivision joint venture agreement, and a supplemental agreement but maintained the arrangement to be one of trust for cash advances from Santos to the Gardners. Subsequently, titles were transferred to Santos, who unknown to the Gardners, transferred the property further to the Cuenca spouses. The Gardners discovered these transfers and filed adverse claims. Despite these, transfers continued down to Deogracias R. Natividad and Juanita A. Sanchez (the Natividads), and then to the Bautistas, with each new title carrying the Gardners’ adverse claim. Over the years, through these transactions, the Gardners remained in possession of the land.
Litigation initiated on July 8, 1969, by the Gardners sought to declare all transfers null and void for being simulated and fictitious. The trial court sided with the Gardners, a decision later upheld by the Court of Appeals. However, after a series of reconsiderations and appeals, the Court of Appeals reversed its decision, favoring the Natividads, leading to the Supreme Court’s review.
### Issues:
1. Whether the Court of Appeals had jurisdiction to reconsider and reverse its decision after it had become final and executory.
2. Whether the series of property transfers were valid or void for lack of consideration and simulation.
3. The effect and implication of the adverse claim annotated in the titles through the series of transfers.
4. The determination of good faith in successive purchasers of the property.
### Court’s Decision:
The Supreme Court reinstated the original decision of the Court of Appeals, which affirmed the trial court’s judgment in favor of the Gardners, declaring all property transfers null and void for being simulated and fictitious. The Court held that:
1. The Court of Appeals lost jurisdiction when its decision became final, making later reversals improper.
2. The initial transfer to the Santoses and all subsequent transfers were void for lack of real consideration, with the arrangements made to conceal ownership and for protection from creditors or to secure loans, rather than genuine sales.
3. The presence of the adverse claim in the titles provided notice to subsequent purchasers of a potential flaw or claim against the property, affecting the presumption of good faith.
4. The buyers in subsequent transfers could not be considered purchasers in good faith as the adverse claim, a notice of an existing better right, was annotated in the titles prior to their purchase.
### Doctrine:
The presence of an annotated adverse claim serves as a warning to subsequent purchasers about existing claims or interests in the property that could affect their rights as buyers in good faith. A sale transaction declared void for lack of consideration and being simulated does not produce any legal effect, rendering all subsequent transfers based on it equally void.
### Class Notes:
– **Adverse Claim**: An annotation in the title serving as notice of a third party’s claim over the property which affects the presumption of good faith in subsequent transactions.
– **Simulation of Contracts**: A declaration of a nonexistent contract or the concealment of a true contract, rendering it void ab initio.
– **Good Faith in Purchases**: Presumed in buyers unless an adverse claim or flaw in the title is known or should have been known to them.
### Historical Background:
This case unfolded against the backdrop of property development and speculation in the Philippines during the 1960s and 1970s. It emphasizes the critical importance of conducting due diligence in property transactions, the implications of annotated adverse claims on titles, and the legal consequences of simulated contracts.
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