**Santiago v. Villamor: A Legal Battle Over Property Ownership and Good Faith in Purchase**
### Facts:
The case originated from a dispute over a 4.5-hectare coconut land in Sta. Rosa, San Jacinto, Masbate, known as Lot No. 1814. The land was initially mortgaged to the Rural Bank of San Jacinto (Masbate), Inc. by Domingo Villamor, Sr. and Trinidad Gutierrez Villamor due to a P10,000.00 loan. Upon failure to repay, the bank foreclosed the property and subsequently became its owner after purchasing it at the public auction.
The respondents, being in possession of the land, aimed to purchase it from the bank and made payments totaling P65,000.00 from 1991 to 1994. However, when the bank refused to issue a deed of conveyance, respondents filed a complaint for specific performance with damages (Civil Case No. 200), which the RTC dismissed but was later overturned by the CA, affirming the respondents’ purchase.
Parallelly, the bank sold the land to Domingo Villamor, Sr., who then sold it to petitioners Spouses Santiago on July 21, 1994. Spouses Santiago sought to quiet title and recover possession (Civil Case No. 201), claiming good faith in their purchase despite respondents’ continued possession and cultivation of the land.
The RTC ruled in favor of the Santiagos, but the CA overturned this decision, concluding the Santiagos failed to prove their legal or equitable title, partly because the property was never in their actual possession and also considering the pending specific performance case.
### Issues:
1. Whether the CA erred in setting aside the RTC’s decision favoring the Santiagos in the quieting of title and recovery of possession case.
2. Whether the execution of a public deed of sale constitutes delivery and transfer of ownership in favor of the Santiagos.
3. Whether the Santiagos could be considered purchasers in good faith, unaware of the respondents’ claims and actual possession of the land.
### Court’s Decision:
The Supreme Court (SC) denied the petition, upheld the CA’s decision, and dismissed the quieting of title and recovery of possession case filed by the Santiagos. The SC determined that the execution of the deed of sale did not equate to the delivery of the property, as actual possession never transferred to the Santiagos. The Court also found that the Santiagos could not claim to be purchasers in good faith since they did not investigate why the respondents were in possession of the land.
### Doctrine:
The SC reiterated principles pertaining to the transfer of ownership and the presumption of good faith in purchases. It underscored that the execution of a public instrument is only prima facie proof of delivery, negated when actual possession contradicts this presumption. Additionally, the court highlighted the obligation of a buyer to verify the occupant’s rights when purchasing property in actual possession of another.
### Class Notes:
– **Ownership Transfer**: Ownership is transferred upon actual or constructive delivery (Civil Code, Art. 1477). The execution of a public deed is prima facie evidence of delivery but does not constitute constructive delivery if the buyer does not take actual possession (Civil Code, Arts. 1497, 1498).
– **Purchaser in Good Faith**: A purchaser in good faith buys property without notice of any adverse claim and pays a fair price before having notice of any such claims (Civil Code). The presence of occupants other than the seller imposes a duty on the purchaser to inquire into such occupants’ rights.
### Historical Background:
This case reflects the complexities of property transactions in the Philippines, where issues of actual possession, good faith in purchase, and the legal formalities of transferring ownership frequently intertwine. It underscores the essential diligence required in buying properties and the legal implications of transactions that may initially appear straightforward.
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