G.R. No. 120154. June 29, 1998
HEIRS OF SPOUSES BENITO GAVINO AND JUANA EUSTE REPRESENTED BY AMPARO G. PESEBRE AND BELEN G. VERCELUZ, PETITIONER VS. COURT OF APPEALS AND JUANA VDA. DE AREJOLA REPRESENTED BY F…
BELLOSILLO, J.:
proceedings which is sold without express authority of the court, which
right should prevail: those of the innocent purchasers for value in good
faith, or those of the heirs of the estate?
This petition emanates from a case for Annulment of Fraudulent Sales of Registered Property with Reconveyance and for Damages
filed in 1968 with the Court of First Instance (now Regional Trial
Court), Naga City, by Juana Vda. de Arejola, Justiniano R. Exequiel and
Dominador Aureas, as administrators of the Intestate Estate of Luis P.
Arejola, against Atty. Jacobo Briones and his spouse Natividad Olivan,
and the spouses Benito Gavino and Juana Euste.[1]
In 1976 the original records of the case were burned in a fire
which gutted the old Provincial Capitol Building housing Branch 22 of
the court.[2] The records were
eventually reconstituted although partially. Five (5) judges
successively presided over the case: Judges Delfin Vir. Sunga, Jorge S.
Imperial, Juan B. Montecillo, Ignacio S. Calleja, Jr., and Angel S.
Malaya. Several substitutions of counsel also took place. In 1977
plaintiff Juana Vda. de Arejola died. Defendants Jacobo Briones and the
Gavino spouses also died some years later.
Culled from the reconstituted records, in 1953 a parcel of land
measuring 9.3540 hectares covered by TCT No. 896 of the Registry of
Deeds of Camarines Sur and originally registered in the name of the
Rehabilitation Finance Corporation (RFC)[3] was sold by the corporation on installment basis to Luis P. Arejola under a Deed of Conditional Sale. The vendee however died on 25 September 1958 without completing his payments.[4]
Subsequently, a petition for settlement of his intestate estate was
commenced by his surviving spouse Juana Vda. de Arejola who on 11
October 1958 was appointed special administratrix and on 2 February 1959
as regular administratrix in Sp. Proc. No. R-9 (771). Atty. Jacobo
Briones was engaged as lawyer of the estate.[5]
However, the lot purchased from the RFC was not included in the
inventory of properties submitted by Juana to the intestate court,
although she reserved the right to include in the list all other
properties belonging to her husband’s estate that would come later to
her knowledge.[6]
In April 1960, after being informed that the land bought by her
deceased husband from the RFC was about to be foreclosed for non-payment
of amortizations, Juana made arrangements with the Development Bank of
the Philippines (DBP), successor in interest of RFC, to save the
property. After proper negotiations, she executed with the bank a “Revival and Re-amortization of Deed of Conditional Sale”
and signed the document in her own behalf as vendee and as
administratrix of the estate of her deceased husband. This transaction
in effect revived the conditional sale
entered into by the RFC with her husband Luis[7] with the imprimatur of the intestate court.[8]
On 3 September 1962 Juana was granted judicial authority to sell
properties of the decedent’s estate. However, with her removal as
administratrix on 3 October 1962, this authority became functus oficio.
On 14 February 1963, armed with the authority to sell earlier
granted to her by the court, without revealing however that her
appointment as adminstratrix had already been revoked, Juana sold to the
Gavino spouses the subject property by way of pacto de retro for P6,650.00.[9]
Meanwhile, upon full payment to DBP of the purchase price, a final Deed of Sale
was executed on 15 February 1963 between Juana and DBP which resulted
in the cancellation of TCT No. 896 and the issuance of TCT No. 4873 in
the name of Juana Vda. de Arejola.[10]
On 6 March 1963, despite her earlier sale of the land to the Gavino
spouses, Juana fictitiously sold the same property to the estate’s
lawyer, Atty. Jacobo Briones, so that the latter could secure a mortgage
thereon in her behalf.[11] At
any rate, the sale to Atty. Briones was registered; accordingly, TCT
No. 4873 was cancelled and TCT No. 4874 was issued in the name of Atty.
Jacobo Briones.[12]
On 22 April 1963 Juana Vda. de Arejola asked for and was given by
the Gavino spouses an additional amount of P1,000.00 and a new deed of pacto de retro
with option to buy was executed thus formalizing the earlier sale to
the spouses and indicating therein the actual purchase price of
P7,650.00. However, the certificate of title described in the contract
of sale was still TCT No. 896[13]
despite the fact that it had already been cancelled and substituted by
TCT No. 4873 in the name of Juana, and then by TCT No. 4874 in favor of
Atty. Jacobo Briones.
On 18 July 1963 Atty. Briones mortgaged the property to PNB for P4,000.00,[14] and a month later, the amount was increased by P700.00.[15]
On 15 October 1963 Atty. Briones sold the property to the Gavino
spouses. The latter alleged that they were constrained to buy the land
because of their apprehension that they might lose their earlier
investment of P7,650.00 on the same land under the sale by Juana in
their favor on 22 April 1963. As a consequence, TCT No. 4874 was
cancelled and TCT No. 5244 was issued in the name of Benito Gavino
married to Juana Euste.[16]
On 12 January 1968 Juana Vda. de Arejola together with the other
judicial administrators of the estate of Luis P. Arejola, namely,
Justiniano Exequiel and Dominador Aureas, manifesting that all of the
foregoing sales executed by Juana were done without judicial authority
to sell through the manipulations of Atty. Briones who acted for his own
benefit, filed the instant case against him, his wife and the Gavino
spouses.
On 31 March 1969, during the pendency of the case, one Sulpicio
Lovendino filed a complaint-in-intervention alleging that on 25 February
1969 the property was sold to him by the Gavino spouses for P15,000.00
and that by virtue thereof TCT No. 5244 was cancelled and TCT No. 10503
was issued in his name.[17]
After Lovendino died his heirs manifested that they were not
interested in substituting him because the lot had already been sold to a
certain Gerardo Pesebre in 1971.[18]
Be that as it may, it is undisputed that the property is now in the
hands of Amparo Gavino Pesebre and Belen Gavino Verceluz, daughters of
the spouses Benito Gavino and Juana Euste.
On the basis of the antecedent facts a decision was rendered by the
trial court on 29 August 1991 declaring the sales of the land to
defendant spouses Benito Gavino and Juana Euste valid and lawful. It
ordered that in the final distribution of the intestate estate of Luis
P. Arejola the subject property be excluded from the estate chargeable
however against Juana Vda. de Arejola’s share, interest and
participation therein, and that the Gavino spouses be granted attorney’s
fees of P5,000.00.[19]
The plaintiffs (now private respondents) appealed to the Court of
Appeals asserting in the main that the sale of the property by Juana
Vda. de Arejola and Atty. Jacobo Briones to the Gavino spouses was
invalid and unlawful so that the property must be included in the final
distribution of the intestate estate of Luis P. Arejola.[20]
Respondent appellate court upheld the validity of the sale to the
Gavinos but only insofar as the individual share of Juana Vda. de
Arejola was concerned.[21]
Consequently, the two (2) daughters of Benito Gavino, namely, Amparo G.
Pesebre and Belen G. Verceluz, then already the registered owners of the
property, were ordered to convey the remaining undivided portion
thereof to the estate of Luis P. Arejola, retaining in their name only
the undivided portion equivalent to the share of his widow Juana. It
also directed the estate of Luis P. Arejola to refund to the Gavino
spouses a proportionate share of the amount of P7,650.00 which they paid
to Juana for the land. The appellate court denied the claim for damages
and deleted the award of attorney’s fees.
Petitioners now pray for the adjudication of the entire lot to
them, Juana Vda. de Arejola being the sole owner of the property as
evidenced by the transfer certificates of title shown to them and,
consequently, had full authority to sell or otherwise dispose of it.
They also ask that since they simply relied on the information contained
in the certificates of title they should be declared innocent
purchasers for value and in good faith.[22]
Respondents, on the other hand, claim that the entire lot should be
considered part of the estate of Luis P. Arejola because the sale by
Juana Vda. de Arejola to the Gavinos was invalid considering that the
property was in custodia legis and could not be disposed of
without the imprimatur of the intestate court. They suggest that Juana
was a victim of the malicious machinations of the estate’s counsel,
Atty. Jacobo Briones.[23]
We do not agree with the finding of the Court of Appeals nor of the
Regional Trial Court that the contested parcel of land belonged
entirely to Luis P. Arejola, ergo, formed part of his estate. In the proceedings before the trial court, plaintiffs presented the Deed of Conditional Sale executed by the RFC describing vendee Luis P. Arejola as married to Juana Arejola,
ineluctably showing that he acquired his right over the land during his
marriage to Juana. This being the case, the land is presumed to be
conjugal, hence, Art. 160[24] of the New Civil Code will have to be applied, i.e., all
property of the marriage is presumed to belong to the conjugal
partnership unless it be proved that it pertains exclusively to the
husband or to the wife. Although this presumption is rebuttable, it
can only be overcome by strong, clear and convincing evidence of
exclusive ownership of one of the spouses. In the case at bar, the
quantum of proof demanded by law has not been satisfied. For nowhere in
the exhibits presented by both parties, documentary or testimonial, has
it been demonstrated that the land in question was inherited by Luis nor
acquired by him with his own capital or exclusive funds. The
presumption not having been overthrown, the conclusion is that the
contested land is conjugal property.
It is this conjugal nature of the property that vested in Juana
Vda. de Arejola, as surviving co-owner, the right to agree to a revival
of the conditional sale. This should explain why the Deed of Revival and Re-amortization of Conditional Sale
was signed by her not only as administratrix of her husband’s estate
but also in her own behalf. There should be no doubt that the property
in question is not entirely owned by the estate of Luis for what
rightfully belongs to it is only one-half, the other half being Juana’s
share as conjugal partner. It must be recalled that when Juana and the
DBP (formerly RFC) agreed on reviving the conditional sale, Juana was
still the administratrix of the intestate estate. Thus, where an
executor or administrator receives by virtue of his representative
capacity property to which the decedent became entitled after his death,
he holds such property as asset of the estate and is liable therefor in
his representative capacity.[25] He cannot acquire by purchase, even by public auction, the property of the estate under his administration.[26] Consequently,
with regard to the portionof land held by Juana for the estate of her
late husband in her capacity as administratrix, she had no right to
acquire ownership over it and have the entire lot titled in her name
alone.
After the DBP had been fully paid the purchase price of the
property Juana Vda. de Arejola ceased to be the administratrix of the
estate. As a result, if that portion of the land pertaining to the share
of Luis in the conjugal partnership had been held by Juana beyond the
period of her judicial administration she only did so in trust for the
estate.[27] But this trust was
breached when after the land had been fully paid for, Juana
deliberately caused the issuance of a new certificate of title in her
name as sole owner thereby depriving the estate of Luis P. Arejola of its rightful share therein.
Private respondents insist that the sale of the land by Juana Vda.
de Arejola to the Gavino spouses was illegal and invalid because her
lawyer, Atty. Jacobo Briones, manipulated her into selling the property.
This is difficult to accept. The evidence on record shows that while
Juana may have been improperly and improvidently advised by her lawyer
on the matter, the ultimate decision was still hers. It was with full
knowledge and consent that she entered into the sale transaction with
the Gavinos.
The claim of respondents that the invalidity of the sale is
aggravated by the absence of judicial imprimatur cannot be sustained. If
the sale was without judicial approval, it could only be attributable
to Juana’s own fault because she knew very well that she was no longer
administratrix of the estate and therefore could not be empowered by the
intestate court to sell the property. And yet, despite this knowledge,
she proceeded with the sale. Justice and reason therefore dictate that
she, not the Gavinos, should suffer the consequences of her foolhardy
act. Apropos to this, we quote the findings of the Regional Trial Court[28]–
x x x x the vendee Gavino acted in good faith when he purchased
the subject property from one who Gavino knows to be an heir and
entitled to a share of the land under administration, of course subject
to the final distribution of the estate x x x x
and the findings of the Court of Appeals[29]–
x x x x When they purchased the same from Juana R. vda. de
Arejola, they were made to believe that she had court authority to sell.
They cannot be faulted for not knowing that the said authority had
already lapsed. When they purchased the same property from Atty. Jocobo
Briones, to protect their investment as aforesaid, they relied on the
certificate of title in his name. Hence, it cannot be said that they
were purchasers in bad faith.
The above factual findings of the courts below that the Gavinos
were innocent purchasers for value cannot be disturbed. It is axiomatic
that findings of fact of the trial court are entitled to great respect
and carry more weight when affirmed by the Court of Appeals.[30]
Insofar as the contract of sale executed by Atty. Briones in favor
of the Gavinos is concerned, the Court of Appeals also ruled that the
vendee spouses could not be considered in bad faith for they simply
relied on the vendor’s Torrens title. In so concluding, the appellate
court considered three (3) varying situational accounts:
First, the Gavinos claimed that they employed adequate
safeguards in verifying the real owner of the land by checking with the
PNB and the Register of Deeds. Benito Gavino recounted that Juana Vda.
de Arejola always came up with what appeared to him to be an alibi why
she could not turn over to him the documents covering the land in
litigation.[31] In the first
week of August 1963 Atty. Briones went to their house and asked them if
it was true that they bought the land from Juana by way of pacto de retro.
When they confirmed that they did, Atty. Briones told them that he was
already the owner and, if they wanted, they could check with PNB and the
Register of Deeds to ascertain who the real owner was.[32]
Upon verification with PNB, the Gavinos learned that the property
was mortgaged with the bank to secure a loan of P4,700.00 in the name of
the registered owner, Atty. Jacobo Briones. The spouses also learned
from the Register of Deeds that the land was indeed registered in the
name of Atty. Briones. Benito Gavino then approached Juana Vda. de
Arejola and asked her why the property that was already sold to them by
way of pacto de retro was also sold to Atty. Briones, but the
latter simply assured him that she would take care of the matter
including the P7,650.00 which the Gavinos gave her in consideration of
the sale.[33]
In October of 1963 Atty. Briones approached the Gavinos and told
them that he wanted to sell the land. Petitioner Gavino went to his
lawyer, a certain Atty. Catimbang, and explained the matter to him.
Atty. Catimbang told him that the papers appeared to be in order so
petitioners could buy the property if they had the money. Upon this
advice, the Gavinos bought the property. The parties agreed on the
purchase price of P14,350.00 with Gavino imposing the condition that the
mortgage indebtedness of P4,700.00 be deducted from the consideration.[34]
Second, Atty. Briones alleged that Atty. Catimbang, then
representing the Gavinos, informed him that the property mortgaged by
him with the PNB was also sold to the Gavinos.[35]
Thereafter, Atty. Briones went to see Juana Vda. de Arejola and
recommended to her that to avoid an estafa suit the sale should be
consolidated in the name of the Gavinos provided the latter assumed the
mortgage indebtedness, to which the widow agreed. For purposes of
convenience, Atty. Briones was designated as vendor instead of Juana
because at this point the latter no longer had the personality to sell.[36]
Third, Juana Vda. de Arejola claimed that she was a victim
of the manipulative designs of Atty. Briones and the Gavino spouses.
But her acts and omissions adequately supported by evidence demonstrate
that she had a hand in the transactions that transpired. It seems
reasonable therefore to infer that the sale by Juana to Atty. Briones
was only simulated in order for the latter to mortgage the same with the
PNB for Juana’s own benefit after she had sold the property by pacto de retro to the Gavinos.
We are convinced, more than ever, that all the problems over the
land were caused by Atty. Jacobo Briones and the widow, Juana Vda. de
Arejola, whom Atty. Briones described as “always strapped for cash and
living beyond her means.”[37] As admitted by him in his testimony, this was not the first time that he entered into shady deals with and for the widow.[38]
In determining whether the Gavinos were purchasers in good faith, we call to mind the edict in Fule v. de Legare[39]–
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 of the same at the time of such
purchase, or before he has notice of the claim or interest of some other
persons in the property. Good faith consists in an honest intention to abstain from taking any unconscientious advantage of another (italics supplied).
When the Gavinos learned that after all Atty. Briones’ predecessor
in interest was Juana Vda. de Arejola, a person known to be an heir of
her late husband Luis P. Arejola and a logical transferee of the
property, the Gavinos could not have sensed any foul play. In fact,
despite such knowledge, they checked with Juana herself who confirmed
having sold the land to Atty. Briones. The transfer certificate of title
covering the land was in the name of Atty. Briones. The tax
declarations were in the name of Juana Vda. de Arejola and, later, in
the name of Atty. Jacobo Briones.[40]
The records with PNB and the Register of Deeds, as already adverted to,
confirmed that Atty. Briones was the registered owner of the land. The
Gavinos also sought the advice of Atty. Catimbang who found all the
papers to be in order and consequently advised them to buy the land.
Under the circumstances, it cannot be said that the Gavinos did not
exert efforts to ascertain the legality and fairness of the transaction
they entered into. According to the Court of Appeals, citing Macquiling v. Umadhay,[41]
x x x ‘she took all the necessary precautions to ascertain the
true ownership of the property having engaged the services of a lawyer
for the specific purpose, and it was only after said counsel had assured
her that everything was in order did she make the final arrangements to
purchase the property.’ The appellate court’s conclusion that
respondent x x x was a purchaser in good faith and for value is correct,
and the title she has thereby acquired is good and indefeasible.
Resolving now the core issue, we hold that the rights of innocent
purchasers for value should prevail. Even assuming that the sale by
Atty. Briones to the Gavinos was void – being based on a fictitious
transfer from Juana to Atty. Briones – as the former did not own the
property in its entirety when sold, the general rule that the direct result of a previous void contract cannot be valid,
is inapplicable in this case as it will directly contravene the Torrens
system of registration. Where innocent third persons, relying on the
correctness of the certificate of title thus issued, acquire rights over
the property, the court cannot disregard such rights and order the
cancellation of the certificate.[42]
The effect of such outright cancellation will be to impair public
confidence in the certificate of title. The sanctity of the Torrens
system must be preserved; otherwise, everyone dealing with the property
registered under the system will have to inquire in every instance as to
whether the title had been regularly or irregularly issued, contrary to
the evident purpose of the law. Every person dealing with the
registered land may safely rely on the correctness of the certificate of
title issued therefor and the law will in no way oblige him to go
behind the certificate to determine the condition of the property.[43]
The Court can do no less. The philosophy of the Torrens system must
be upheld. The present registered owners of the land cannot be
disturbed in their ownership and possession thereof and be ordered to
return the property for inclusion in the final settlement of the
intestate estate of Luis P. Arejola. It is for this reason that we
cannot entirely affirm the decision of the Court of Appeals. This is not
to say however that Juana Vda. de Arejola is not liable to the estate
for willfully causing the transfer to her of the sole ownership of the
entire land including that pertaining to the share of her husband in
their conjugal partnership of gains.
WHEREFORE, the petition is GRANTED and the
assailed decision of the Court of Appeals awarding to petitioners only a
portion of the disputed property as well as its Resolution denying
reconsideration thereof is SET ASIDE. Accordingly, the Decision of the
Regional Trial Court of Naga City awarding the entire property of 9.3540
hectares originally covered by TCT No. 896 to the petitioners;
declaring valid, lawful and binding the sale of subject parcel of land
to the late Luis P. Arejola and Juana Vda. de Arejola and later to
petitioner Benito Gavino married to Juana Euste; ordering the exclusion
thereof in the final distribution of the estate of Luis P. Arejola in
Sp. Proc. No. R-9 (771) but chargeable against respondent Juana Vda. de
Arejola’s share, interest and participation in the estate; and, granting
to petitioners P5,000.00 as attorney’s fees, is REINSTATED and
AFFIRMED. No costs.
SO ORDERED.
Davide, Jr. (Chairman), Vitug, Panganiban, and Quisumbing, JJ., concur.
[1] Annex “A,” Complaint; Original Records, p. 3-B.
[2] Petition for Reconstitution; id., p. 3.
[3] See Note 1.
[4] Ibid.
[5] Ibid.
[6] Ibid.
[7] Exh. “MM,” Revival and Re-amortization of Deed of Conditional Sale; id., p. 434.
[8] Exh. “MM-4;” ibid.
[9] Exh. “1-Gavino;” id., p. 371.
[10] Exh. “12-Gavino;” id., p. 386.
[11] See Note 1.
[12] Exh. “6-Gavino;” Original Records, p. 385.
[13] Exh. “3-Gavino;” id, p. 373.
[14] Exh. “4-A-Gavino;” id., p. 377.
[15] Exh. “4-C-Gavino;” id., p. 379.
[16] Exh. “7-Gavino;” id., p. 389.
[17] Id., pp. 20-22.
[18] Manifestation, id., p. 325.
[19] Decision penned by Judge Angel S. Malaya, RTC-Br. 22, Naga City; Rollo, p. 38.
[20] Briefs for Plaintiff-Appellants, CA Rollo, pp. 36-52.
[21] Decision penned by Justice Hector L. Hofilena, concurred in by Justices Gloria C. Paras and Salome A. Montoya; Rollo, p. 29.
[22] Petition; id., p. 12.
[23] Comment; id., p. 71.
[24] Prior to the effectivity of the Family Code.
[25] 33 CJS 1083.
[26] Art. 1491, New Civil Code.
[27] See Noel v. CA, G.R. Nos. 59550 and 60636, 11 January 1995, 240 SCRA 78.
[28] See Note 19
[29] See Note 21.
[30] Go Ong v. CA, G.R. No. 75884, 24 September 1987, 154 SCRA 220, 275.
[31] TSN, 18 October 1988, p. 9.
[32] Id., p. 10.
[33] Id., p. 11.
[34] Id., p. 13.
[35] TSN, 11 January 1973, p. 43.
[36] Id., pp. 49-50.
[37] TSN, 11 January 1973, pp. 58-59, 66-68.
[38] Id., pp. 4-5, 21-29.
[39] No. L-17951, 28 February 1963, 7 SCRA 351, 356.
[40] Exhs. “8-Gavino” and “8-A-Gavino,” Original Records, pp. 385-386.
[41] No. L-25147, 29 May 1970, 33 SCRA 99, 103.
[42] Peña, Peña and Peña, Registration of Land Titles and Deeds, 1988 Rev. Ed., p. 143, citing Sec. 39, Act 496.
[43] See Note 37.