G.R. No. L-26572. March 28, 1969
MORALES DEVELOPMENT COMPANY, INC., PETITIONER, VS. THE COURT OF APPEALS AND HERMENEGILDO DESEO AND SOCORRO DESEO, RESPONDENTS.  
CONCEPCION, C.J.:
D E C I S I O N
CONCEPCION, C.J.:
Petitioner, Morales Development Co., Inc. – hereafter referred to
as Morales – seeks the review on certiorari of a decision of the Court of
Appeals reversing that of the Court of First Instance of the Province
of Quezon.
Hermenegildo Deseo
and Socorro Deseo, respondents herein and plaintiffs
below, brought this action to annul a sale to Morales of lot No. 2488 of the
Cadastral Survey of Catanauan, Province of Quezon, and to secure the registration of a deed of
conveyance of said lot in their (Deseos‘) favor.
Lot No. 2488 used to belong to Enrique P. Montinola
and was covered by Transfer Certificate of Title No. T-15687 of the Register of
Deeds of said province, in his name.
Alleging that his owner’s duplicate copy of said certificate had been
lost, Montinola succeeded in securing, from the Court
above mentioned, an order for the issuance of a second owners duplicate, with
which he managed to sell the lot, on September 24, 1954, to Pio
Reyes. Upon registration of the deed of
sale to the latter, said TCT No. T-15687 was cancelled and, in lieu thereof,
TCT No. 21036, in the name of Reyes, was issued. On November
18, 1954, Lupo Abella,
married to Felisa Aguilar – hereafter referred to as
the Abellas – purchased the land from Reyes,
whereupon the deed of conveyance, executed by Reyes, was registered and the Abellas got TCT No. 21037 in their name, upon cancellation
of said TCT No. 11036. About seven (7)
months later, or on June 16, 1955,
the Abellas sold the land, for P7,000, – of which
P4,500 was then paid – to the Deseos, who immediately
took possession of the property.
It appears, however, that the first owner’s duplicate of TCT No.
T-15687 was either never lost or subsequently found by Montinola,
who, making use of it, mortgaged the lot in question, before February 21, 1956, to the Philippine
National Bank, for P700. Then, on the
date last mentioned, Montinola sold the property to
Morales, for P2,000, from which the sum due to the Bank was deducted. Upon presentation of the deed of sale in
favor of Morales, the latter was advised by the office of the Register of
Deeds of Quezon that said TCT No. T-15687 had already
been cancelled and the property sold, first, to Pio
Reyes, and, then, to the Abellas. Thereupon, Morales filed a petition for the
annulment and cancellation of the second owner’s copy of TCT No. T-15687. After due notice to Reyes and the Abellas, but not to the Deseos,
said petition was granted on March 12,
1956.
Having been unable, in view of these developments, to register
the deed of conveyance executed by the Abellas, the Deseos commenced, in the court aforementioned, the present
action against Morales, for the annulment of the subsequent sale thereto by Montinola, and the registration of said deed of conveyance
in their (Deseos‘) favor, alleging that the same
enjoys preference over the sale to Morales, the Deseos
having, prior thereto, bought lot No. 2488 in good faith and for value, and
having been first in possession of said lot, likewise, in good faith.
Upon the other hand, Morales claimed to have a better right upon
the ground that it (Morales) had bought the property in good faith and for
value, relying upon the first owner’s duplicate copy of TCT No. T-15687,
unlike the Deseos, whose predecessor in interest, Pio Reyes, had relied upon the second owner’s
duplicate, which – Morales alleged – had been secured fraudulently, and that
the sale to Reyes and that made by the latter to the Abellas
are null and void, because both sales took place under suspicious
circumstances, so that – Morales concluded – they (Reyes and the Abellas) were not purchasers in good faith and for value.
After appropriate proceedings, the court of first instance sustained
the contention of Morales and rendered judgment in its favor, which, on appeal
taken by the Deseos, was reversed by the Court of
Appeals. The dispositive
part of the latter’s decision reads:
“WHEREFORE, the judgment appealed from is hereby reversed and
another one entered in favor of the plaintiffs (Deseos)
and against the defendant (Morales) declaring said plaintiffs to be the lawful
and absolute owners of Lot No. 2488 of the Cadastral Survey of Catanauan, Quezon, covered by
Transfer Certificate of Title No. T-21037 of the Office of the Register of
Deeds of Quezon; declaring the deed of sale executed
by Enrique P. Montinola in favor of defendant
covering the same property as null and void; ordering the Register of Deeds of Quezon to register the deed of sale executed by the spouses
Lupo Abella and Felisa Aguilar in favor of the plaintiffs dated June 16,
1955, marked Exhibit A, without cost, not having prayed for in the brief for
the appellants.”
Hence, the present petition for review on certiorari by Morales,
which insists that the Court of Appeals should have upheld its (Morales’)
contention adverted to above. We,
however, find therein no merit.
Morales maintains that the sale by Montinola
to Reyes and that later made by Reyes to the Abellas
are “suspicious”; that, consequently, Reyes and the Abellas were not purchasers in good faith and for value;
and that these two (2) premises, in turn, lead to the conclusion that both
sales are “null and void.”
This syllogism is obviously faulty. The major premise thereof is based upon the
fact that the consideration stated in the deeds of sale in favor of Reyes and
the Abellas is P100.
It is not unusual, however, in deeds of conveyance adhering to the
Anglo-Saxon practice of stating that the consideration given is the sum of
P1.00, although the actual, consideration may have been much more. Moreover, assuming that said consideration
of P1.00 is suspicious, this circumstance, alone, does not necessarily justify
the inference that Reyes and the Abellas were not
purchasers in good faith and for value.
Neither does this inference warrant the conclusion that the sales were
null and void ab initio. Indeed, bad faith and inadequacy of the
monetary consideration do not render a conveyance inexistent, for the
assignor’s liberality may be sufficient cause for a valid contract[1],
whereas fraud or bad faith may render either rescissible
or voidable, although valid until annulled, a
contract concerning an object certain, entered into with a cause and with the
consent of the contracting parties, as in the case at bar1.
What is more, the aforementioned conveyance may not be annulled, in the
case at bar, inasmuch as Reyes and the Abellas are
not parties therein.
Upon the other hand, the Deseos had
bought the land in question for value and in good faith, relying upon the
transfer certificate of title in the name of their assignors, the Abellas. The sale by
the latter to the former preceded the purchase made by Morales, by about eight
(8) months, and the Deseos took immediate possession
of the land, which was actually held by them at the time of its conveyance to
Morales by Montinola, and is in the possession of the
Deseos, up to the present. Then, again, TCT No. T-15687, in the name of Montinola, had been cancelled over a year before he
sold the property to Morales, who, in turn, was informed of this fact,
when it sought to register the deed of conveyance in its favor. It should be noted, also, that TCT No. 21037,
in the name of the Abellas, on which the Deseos had relied in buying the lot in dispute, has not
been ordered cancelled.
Since the object of this litigation is a registered land and the
two (2) buyers thereof have so far been unable to register the deeds of
conveyance in their respective favor, it follows that “the ownership”
of said lot “pertain(s)” – pursuant to Article 1544 of our Civil Code2 –
to the Deseos, as the only party who took possession
thereof in good faith.3
Morales argues that it was not enough for the Deseos
to have gone to the office of the Register of Deeds and found therein that
there were no flaws in the title of the Abellas, and
that the Deseos should have, also, ascertained why
the Abellas had paid only P1.00 to Reyes, and why the
latter had paid the same amount to Montinola. To begin with, the Deseos
did not know that said sum was the consideration paid by the Abellas to Reyes and by Reyes to Montinola. Secondly, the Deseos
were not bound to check the deeds of conveyance by Reyes to the Abellas, and by Montinola to
Reyes. Having found that the owner’s
duplicate copy of TCT No. 21037, in the name of the Abellas,
was a genuine copy of the original on file with the Office of the Register of
Deeds, the Deseos were fully justified in relying
upon said TCT No. 21037, and had no legal obligation to make further investigation.
Thirdly, were we to adopt the process of reasoning advocated by
Morales, the result would still be adverse thereto. Indeed, if it were not sufficient for the Deseos to verify in said office the genuineness of the
owner’s duplicate of TCT No. 21037, much less would Morales have been justified
in relying upon Montinola’s copy of TCT No. T-15687
in his name. In fact, had Morales, at
least, gone to the Office of the Register of Deeds – as the Deseos
did – before purchasing the property in dispute, Morales would have found out,
not only that TCT No. T-15687 had long been cancelled, but, also, that
the property had been previously sold by Montinola
to Reyes and by Reyes to the AbeIlas. In short, the negligence of Morales was the
proximate cause of the resulting wrong, and, hence, Morales should be the party
to suffer its consequences.1
WHEREFORE, the appealed decision of the Court of Appeals
should be, as it is hereby affirmed, with costs against petitioner herein,
Morales Development Company, Inc.
IT IS SO ORDERED.
Reyes, JBL, Dizon, Makalintal, Zaldivar, Sanchez, Ruiz
Castro, Fernando, Capistrano, Teehankee, and Barredo, JJ., concur.
[1]
Art. 1350, Civil Code.
1
Articles, 1318, 1355, 1381, and 1390, Civil Code.
2
” x x x 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 the possession; and, in the absence thereof, to the person who
presents the oldest title, provided there is good faith. “
3
Soriano v. Heirs of D. Magali,
62 O.G. 4786.
1
De la Cruz v. Fabie, 35 Phil. 144; Blondeau v. Nano, 61 Phil
625; De Lara v. Ayroso, 95 Phil. 185; Phil.
National Bank v. Court of Appeals, L-26001, Oct. 29, 1968.