SPOUSES AQUILINO GATMAITAN & LILIA AYTON AND SPOUSES EMILIANO DEALINO AND TEODORA GATMAITAN, PETITIONERS, VS. THE COURT OF APPEALS, (FORMERLY IAC) AND SPS. DONATO PASCUAL AND RO…

This is a Petition
for Review of the Decision of the Court of Appeals in A.C.-G.R. CV No. 05688
which affirmed the decision of the trial court directing petitioner spouses Aquilino Gatmaitan and Lilia Ayton Gatmaitan to reconvey to private respondent spouses Donato
Pascual and Rosita Cristobal
one-half (1/2) of Lot No. 758 embraced in Transfer Certificate of Title
(“TCT”) No. 175077 and ordering the cancellation of the mortgage
annotation on said title.

Lot No. 758 located at Baliuag, Bulacan with an area of 623 square meters was originally
registered (Original Certificate of Title No. 12765) in the name of the
deceased spouses Lorenzo Gatmaitan and Filomena Dela Cruz, parents of
petitioner Aquilino Gatmaitan
and his sister, Emeteria Gatmaitan.  On 2 December 1952, Aquilino
and Emeteria, for and in consideration of the sum of
P300.00, executed in favor of respondents spouses Donato
Pascual and Rosita Cristobal
Pascual (Pascual spouses)
an extrajudicial partition and sale with a right to repurchase covering Lot No. 758.^[1]
Thereafter, the Pascual spouses took possession of
the property and introduced improvements thereon.

On 4 August 1956,
Aquilino and Emeteria again
executed an extrajudicial partition adjudicating this time to Aquilino and his wife petitioner Lilia Ayton
the whole of Lot No. 758.^[2]
Consequently, Original Certificate of Title No. 12765 was cancelled and in lieu
thereof, TCT No. 155759 was issued in the name of the spouses Aquilino and Lilia Gatmaitan.^[3]

Sometime in January 1970, the Gatmaitan
spouses executed in favor of the Pascual spouses an
instrument entitled “Bilihan Tuluyan Ng Lupa“^[4]
by which they absolutely conveyed to the latter spouses for a stated
consideration of P500.00, a one-half
portion of Lot No. 758 consisting of about 331.5 square meters.  While this instrument was neither notarized
nor registered, the Pascual spouses, in accordance
with the contract, continued in possession of the subject half of Lot No. 758.

Subsequently, on 17
January 1972, the Gatmaitan spouses by an
instrument entitled “Kasulatan ng Bilihan“^[5]
sold to petitioner spouses Emiliano Dealino and Teodora Gatmaitan (Dealino spouses), who
were neighbors of the Pascual spouses in Sto. Cristo, Baliuag, Bulacan,
the whole of Lot No. 758.^[6]
As a consequence of this sale,
TCT No. 155759 was cancelled and TCT No. 157176^[7]
was issued in the name of the Dealino spouses.  This second sale came to the knowledge of the
Pascual spouses sometime in November 1972.  Thus, on 8 November 1972, Donato Pascual executed an Affidavit of Adverse Claim with respect
to the one-half (1/2) portion of Lot No. 758 which had earlier been sold by the
spouses Gatmaitan to him and his wife.

On 23 November 1972,
the Dealino spouses in an instrument entitled “Kasulatan ng Bilihang Patuluyan,”^[8]
conveyed back to the Gatmaitan spouses the one-half
(1/2) portion of Lot No. 758 which the Gatmaitan
spouses had originally sold to the Pascual
spouses.  The following day, the Gatmaitan spouses executed a Deed of Real Estate Mortgage
covering this same one-half (1/2) portion in favor of the Dealino
spouses allegedly to secure an indebtedness of P1,000.00.

Hence, on 30 April 1973,
the Pascual spouses filed a complaint for reconveyance of the one-half (1/2) portion of Lot No. 758
against the spouses Aquilino and Lilia Gatmaitan and the spouses Emiliano
and Teodora Dealino.

The trial court in its decision^[9]
dated 13 June 1982 held that the
earlier sale of the one-half (1/2) portion
of Lot No. 758 to the Pascual spouses prevailed over
the later sale of the whole lot to the Dealino
spouses as the latter should be
deemed to have had constructive notice of that earlier sale of the property,
being neighbors of the Pascual spouses, the actual
possessors of one-half (1/2) of the subject Lot No. 758.  Thus, registration of the sale in their favor
by the Dealino spouses had not effectively
transferred to them the ownership of that one-half (1/2) portion of said lot.

On appeal, the then Intermediate Appellate Court
(“IAC”) on 17 April 1986^[10]
affirmed the decision of the trial court.

In the instant Petition for
Review, petitioners (the Gatmaitan spouses and
the Dealino spouses) allege that the
IAC should not have affirmed the trial court’s decision ordering reconveyance of one-half (1/2) of Lot No. 758 to the Pascual spouses since the whole property had not only been
repurchased by the Gatmaitan
spouses for P300.00 from the Pascual spouses,
but had already been validly sold to the Dealino
spouses who had registered the sale to them in the Registry of Property.  Petitioners also urge that the sale of the
one-half (1/2) portion of that lot to the Pascual
spouses was not valid for lack of consideration.

Private respondents, upon the other hand, counter that although
the deed of absolute sale executed in their favor by the Gatmaitan
spouses covering one-half (1/2) portion of Lot No. 758 was not registered, their actual possession of the property was
constructive notice to the Dealino spouses of that sale.  Thus, the registration by the Dealino spouses of the sale of the whole Lot No. 758 in
their favor, being registrants in bad faith, was legally ineffective to
transfer ownership.

The issue to be
resolved in this case is whether or not the registration of the sale of the
whole property to the second vendees Dealino spouses
had the effect of transferring to them the ownership of the whole of Lot No.
758, including the one-half (1/2) portion which had earlier been the subject of
an absolute deed of sale executed by the Gatmaitan
spouses in favor of the Pascual spouses.

It is well settled, that if immovable property is sold to two (2)
different parties, the ownership shall pertain to the person acquiring it who,
in good faith, first registered it in the Registry of Property.  This rule however, admits of an exception,
and that is where the second purchaser had knowledge of the other sale, prior
to or at the time of the sale.  In such
case, his knowledge is equivalent to registration and taints his purchase with
bad faith.^[11]
The applicable rule in this case would be that the ownership shall pertain to
the person who, in good faith, first entered into possession of the property
or, in the absence of possession, to the person who presents the oldest title,
provided there is good faith.^[12]

It appears that in 1952,
the whole of Lot No. 758 was sold by the heirs of the deceased spouses Lorenzo Gatmaitan and Filomena De la Cruz
to the Pascual spouses with the right to repurchase
within two (2) years.  The petitioner Gatmaitan spouses to whom Lot No. 758 was finally
adjudicated in 1956, however, were only able to pay to the Pascual
spouses an amount of P300.00 out of the repurchase price of P600.00.^[13]
Notwithstanding the failure to redeem the property, the Pascual
spouses did not consolidate formally the title of the property under their names.  Instead, the Gatmaitan
spouses executed in favor of the Pascual spouses a
Deed of Absolute Sale conveying to them the one-half (1/2) portion of the
subject lot.^[14]
This sale was not registered by the Pascual spouses;
however, they remained in possession
of the one-half (1/2) portion of the lot.

In the meantime, on January 1970, the Gatmaitan
spouses sold the whole of Lot No. 758 to the Dealino
spouses, neighbors of the Pascual spouses in Santo Cristo, Baliuag, Bulacan.^[15]
The Dealino spouses registered the property in their
names and were issued TCT No. 157176. 
Thus, there resulted two (2) sales with respect to the one-half (1/2)
portion which the Pascual spouses continued to
possess.

As earlier noted, the trial court found that the Dealino spouses were buyers in bad faith in respect of the
one-half (1/2) portion of Lot No. 758 earlier sold by the Gatmaitan
spouses to the Pascual spouses.  It held that the Dealino
spouses should be considered to have had constructive notice of that earlier
sale of the one-half (1/2) portion to the Pascual
spouses, since the latter were in actual possession of the property and as they
were neighbors in Sto. Cristo.  The fundamental rule is that the factual
conclusions and findings of the trial court are entitled to great weight on
appeal and should not be disturbed except for cogent and strong reasons.^[16]
Petitioners have failed to adduce any sufficient ground to set aside the
conclusions and findings of fact of the trial court which were affirmed by the
Intermediate Appellate Court.

The fact that the Pascual spouses were
in possession of the subject property, ought to have put the Dealino spouses on inquiry. 
Before consenting to the sale to themselves, they should have
investigated the basis of the possession of the Pascual
spouses.  Since the Dealino
spouses failed to exercise the ordinary care expected from a buyer of real
property, they must suffer the consequence of their negligence.^[17]
The decision of the IAC should be upheld.

It is the contention of the Gatmaitan
spouses that the second sale should prevail over the earlier one considering
that they had repurchased the property for P300.00 from the Pascual
spouses before selling the same to the Dealino
spouses.

It appears that the receipt^[18]
issued by the Pascual spouses which the Gatmaitan spouses presented in evidence, stated that the
repurchase price was not P300.00 as alleged by the Gatmaitan
spouses, but P600.00 since the consideration was P500.00 plus the expenses for
the preparation of the document amounting to P100.00.  Thus, the P300.00 paid by the Gatmaitan spouses to the Pascual
spouses was only a partial payment of the whole repurchase price.  Having only repaid the amount of P300.00
instead of P600.00, as agreed upon, the Gatmaitan
spouses were without any right to repossess the whole of Lot No. 758.  This being the case, the sale to the Dealino spouses was valid only insofar as the other half
portion is concerned.

The subsequent document executed by the Gatmaitan
spouses in favor of the Pascual spouses sometime in
January 1970, confirms beyond doubt the intention of the former to repurchase
not the whole lot but only half of it. 
The “Bilihang Tuluyan ng Lupa,”
by which the Gatmaitan spouses conveyed in absolute
sale a one-half (1/2) portion of the lot to the Pascual
spouses, in effect confirmed and “consolidated”, as it were, the title of the Pascual spouses over the other one-half (1/2)
portion.

It is the position of the Gatmaitan
spouses that the aforementioned “Bilihang  Tuluyan
ng Lupa” is not
valid for lack of consideration.  There
is, however, the presumption that an instrument sets out the true agreement of
the parties thereto and that it was executed for valuable consideration.^[19]
The Gatmaitan spouses failed to present any evidence
showing that this instrument was later on disregarded by both
parties.  Mere allegation is not
evidence; the presumption of the validity of the “Bilihang
Tuluyan ng Lupa” was not overturned.

WHEREFORE, premises
considered, the Petition for Review is hereby DENIED for lack of merit and the Decision of the Intermediate
Appellate Court dated 17 April 1986
is hereby AFFIRMED.  No pronouncement as to costs.

SO ORDERED.

Fernan, C.J., (Chairman), Gutierrez,
Jr., Bidin, and
Davide, Jr., JJ., concur.

^[1]
Exhibit “A,” Original Record, p. 155.

^[2]
Exhibit “B,” Original Record, pp. 156-158.

^[3]
Original Record, p. 34; Exhibit “D,” Original Record, p. 160.

^[4]
Exhibit “C,” Original Record, p. 159.

^[5]
Original Record, p. 160.

^[6]
Petition, p. 2; Rollo, p. 7.

^[7]
Exhibit “E,” Original Record, pp. 161-162.

^[8]
Exhibit “5,” Original Record, p.
60.

^[9]
Original Record, pp. 33-47.

^[10]
Rollo, pp. 64-69.

^[11]
Gustilo v.
Maravilla, 48 Phil. 442 (1925); La Urbana v.
Bernardo, 62 Phil. 790 (1936).

^[12]
Article 1544, Civil Code.

^[13]
Exhibit “I,” Record, pp. 0054.

^[14]
Intermediate Appellate Court Decision, p. 4; Rollo,
p. 67.

^[15]
Petition, p. 2; Rollo, p. 7.

^[16]
Baliwag
Transit, Inc. vs. Court of Appeals, 147 SCRA 82 (1987); People vs.
Pimentel, 147 SCRA 25 (1987).

^[17]
Caram, Jr.
v. Laureta, 103 SCRA 1 (1981).

^[18]
Original Record, pp. 45-46; Court of First Instance Decision, pp. 13-14.

^[19]
Section 5 (R), Rule 131, Rules of Court; Article 1370, Civil
Code of the Philippines.