Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No.

L-26572 March 28, 1969

MORALES DEVELOPMENT COMPAN , !NC., petitioner, vs. T"E COURT O# APPEALS a$% "ERMENEG!LDO DESEO a$% SOCORRO DESEO respondents. Alberto R. de Joya for petitioner. Francisco Mendioro for respondents. CONCEPC!ON, C.J.: Petitioner, Morales Development Co., Inc, hereafter referred to as Morales see!s the revie" on certiorari of a decision of the Court of Appeals reversin# that of the Court of $irst Instance of the Province of %ue&on. 'ermene#ildo Deseo and (ocorro Deseo, respondents herein and plaintiffs belo", brou#ht this action to annul a sale to Morales of lot No. )*++ of the Cadastral (urve, of Catanauan, Province of %ue&on, and to secure the re#istration of a deed of conve,ance of said lot in their -Deseos./ favor. 0ot No. )*++ used to belon# to Enri1ue P. Montinola and "as covered b, 2ransfer Certificate of 2itle No. 23456+7 of the Re#ister of Deeds of said province, in his name. Alle#in# that his o"ner.s duplicate cop, of said certificate had been lost, Montinola succeeded in securin#, from the Court above mentioned, an order for the issuance of a second o"ner.s duplicate, "ith "hich he mana#ed to sell the lot, on (eptember )*, 485*, to Pio Re,es. 9pon re#istration of the deed of sale to the latter, said 2C2 No. 23456+7 "as cancelled and, in lieu thereof, 2C2 No. )4:;6, in the name of Re,es, "as issued on November 4+, 485*, 0upo Abella, married to $elisa A#uilar hereafter referred to as the Abellas purchased the land from Re,es, "hereupon the deed of conve,ance, e<ecuted b, Re,es, "as re#istered and the Abellas #ot 2C2 No. )4:;7 in their name, upon cancellation of said 2C2 No. )4:;6. About seven -7/ months later, or on =une 46, 4855, the Abellas sold the land, for P7,:::, of "hich P*,5:: "as then paid to the Deseos, "ho immediatel, too! possession of the propert,. It appears, ho"ever, that the first o"ner.s duplicate of 2C2 No. 23456+7 "as either never lost or subse1uentl, found b, Montinola, "ho, ma!in# use of it, mort#a#ed C, the lot in 1uestion, before $ebruar, )4, 4856, to the Philippine National Ban!, for P7::. 2hen, on the date last mentioned, Montinola sold the propert, to Morales, for P),:::, from "hich the sum due to the Ban! "as deducted. 9pon presentation of the deed of sale in favor of Morales, the latter "as advised b, the office of the Re#ister of Deeds of %ue&on that said 2C2 No. 23456+7 had alread, been cancelled and the propert, sold, first, to Pio Re,es, and, then, to the Abellas. 2hereupon, Morales filed a petition for the annulment and cancellation of the second o"ner.s cop, of 2C2 No. 23456+7. After due notice to Re,es and the Abellas, but not to the Deseos, said petition "as #ranted on March 4), 4856. 'avin# been unable, in vie" of these developments, to re#ister the deed of conve,ance e<ecuted b, the Abellas, the Deseos commenced, in the court aforementioned, the present action a#ainst Morales, for the annulment of the subse1uent sale thereto b, Montinola, and the re#istration of said deed of conve,ance in their -Deseos/ favor, alle#in# that the same en>o,s preference over the sale to Morales, the Deseos havin#, prior thereto, bou#ht lot No. )*++ in #ood faith and for value, and havin# been first in possession of said lot, li!e"ise, in #ood faith. 9pon the other hand, Morales claimed to have a better ri#ht upon the #round that it -Morales/ had bou#ht the propert, in #ood faith and for value, rel,in# upon the first o"ner.s duplicate cop, of 2C2 No. 23456+7, unli!e the Deseos, "hose predecessor in interest, Pio Re,es, had relied upon the second o"ner.s duplicate, "hich Morales alle#ed had been secured fraudulentl,, and that the sale to Re,es and that made b, the latter to the Abellas are null and void, because both sales too! place under suspicious circumstances, so that Morales concluded the, -Re,es and the Abellas/ "ere not purchasers in #ood faith and for value. After appropriate proceedin#s, the court of first instance sustained the contention of Morales and rendered >ud#ment in its favor, "hich, on appeal ta!en b, the Deseos, "as reversed b, the Court of Appeals. 2he dispositive part of the latter.s decision reads? @'ERE$ARE, the >ud#ment appealed from is hereb, reversed and another one entered in favor of the plaintiffs -Deseos/ and a#ainst the defendant -Morales/ declarin# said plaintiffs to be the la"ful and absolute o"ners of 0ot No. )*+8 of the Cadastral (urve, of Catanauan, %ue&on, covered b, 2ransfer Certificate of 2itle No. 23)4:;7 of the Affice of the Re#ister of Deeds of %ue&onB declarin# the deed of sale e<ecuted b, Enri1ue P. Montinola in favor of defendant coverin# the same propert, as null and voidB orderin# the Re#ister of Deeds of %ue&on to re#ister the deed of sale e<ecuted b, the spouses 0upo Abella and $elisa A#uilar in favor of the plaintiffs dated =une 46, 4855, mar!ed E<hibit A, "ithout cost, not havin# pra,ed for in the brief for the appellants. 'ence, the present petition for revie" on certiorari b, Morales, "hich insists that the Court of Appeals should have upheld its -Morales./ contention adverted to above. @e, ho"ever, find therein no merit. Morales maintains that the sale b, Montinola to Re,es and that later made b, Re,es to the Abellas are CsuspiciousCB that, conse1uentl,, Re,es and the Abellas "ere not purchasers in #ood faith and for valueB and that these t"o -)/ premises, in turn, lead to the conclusion that both sales are Cnull and void.C

2his s,llo#ism is obviousl, fault,. 2he ma>or premise thereof is based upon the fact that the consideration stated in the deeds of sale in favor of Re,es and the Abellas is P4.::. It is not unusual, ho"ever, in deeds of conve,ance adherin# to the An#lo3(a<on practice of statin# that the consideration #iven is the sum of P4.::, althou#h the actual consideration ma, have been much more. Moreover, assumin# that said consideration of P4.:: is suspicious, this circumstance, alone, does not necessaril, >ustif, the inference that Re,es and the Abellas "ere not purchasers in #ood faith and for value. Neither does this inference "arrant the conclusion that the sales "ere null and void ab initio. Indeed, bad faith and inade1uac, of the monetar, consideration do not render a conve,ance ine<istent, for the assi#nor.s liberalit, ma, be sufficient cause for a valid contract 4 , "hereas fraud or bad faith ma, render either rescissible or voidable althou#h valid until annulled, a contract concernin# an ob>ect certain, entered into "ith a cause and "ith the consent of the contractin# parties, as in the case at bar. ) @hat is more, the aforementioned conve,ance ma, not be annulled, in the case at bar, inasmuch as Re,es and the Abellas are not parties therein. 9pon the other hand, the Deseos had bou#ht the land in 1uestion for value and in #ood faith, rel,in# upon the transfer certificate of title in the name of their assi#nors, the Abellas. 2he sale b, the latter to the former preceded the purchase made b, Morales, b, about ei#ht -+/ months, and the Deseos too! immediate possession of the land, "hich "as actuall, held b, them at the time of its conve,ance to Morales b, Montinola, and is in the possession of the Deseos, up to the present. 2hen, a#ain 2C2 No. 23456+7, in the name of Montinola, had been cancelled over a ,ear before he sold the propert, to Morales, "ho, in turn, was informed of this fact, "hat it sou#ht to re#ister the deed of conve,ance in its favor. It should be noted, also, that 2C2 No. )4:;7, in the name of the Abellas, on "hich the Deseos had relied in bu,in# the lot in dispute, has not been ordered cancelled. lawphi1.et (ince the ob>ect of this liti#ation is a re#istered land and the t"o -)/ bu,ers thereof have so far been unable to re#ister the deeds of conve,ance in their respective favor, it follo"s that Cthe o"nershipC of said lot Cpertain-s/C pursuant to Article 45** of our Civil Code ; to the Deseos, as the onl, part, "ho too! possession thereof in #ood faith. * Morales ar#ues that it "as not enou#h for the Deseos to have #one to the office of the Re#ister of Deeds and found therein that there "ere no fla"s in the title of the Abellas, and that the Deseos should have, also, ascertained "h, the Abellas had paid onl, P4.:: to Re,es, and "h, the latter had paid the same amount to Montinola. 2o be#in "ith, the Deseos did not !no" that said sum "as the consideration paid b, the Abellas to Re,es and b, Re,es to Montinola. (econdl,, the Deseos "ere not bound to chec! the deeds of conve,ance b, Re,es to the Abellas, and b, Montinola to Re,es. 'avin# found that the o"ner.s duplicate cop, of 2C2 No. )4:;7, in the name of the Abellas, "as a #enuine cop, of the ori#inal on file "ith the Affice of the Re#ister of Deeds, the Deseos "ere full, >ustified in rel,in# upon said 2C2 No. )4:;7, and had no le#al obli#ation to ma!e farther investi#ation. 2hirdl,, "ere "e to adopt the process of reasonin# advocated b, Morales, the result "ould still be adverse thereto. Indeed, if it "ere not sufficient for the Deseos to verif, in said office the #enuineness of the o"ner.s duplicate of 2C2 No. )4:;7, much less "ould Morales have been >ustified in rel,in# upon Montinola.s cop, of 2C2 No, 23456+7 in his name. In fact, had Morales, at least #one to the Affice of the Re#ister of Deeds as the Deseos did before purchasin# the propert, in dispute, Morales "ould have found out, not onl, that 2C2 No. 23456+7 had lon# been cancelled, but, also, that the propert, had been previously sold b, Montinola to Re,es and b, Re,es to the Abellas. In short, the ne#li#ence of Morales "as the pro<imate cause of the resultin# "ron#, and, hence, Morales should be the part, to suffer its conse1uences. 5 @'ERE$ARE, the appealed decision of the Court of Appeals should be, as it is hereb, affirmed, "ith costs a#ainst petitioner herein, Morales Development Compan,, Inc. It is so ordered. Reyes, J.B. ., !i"on, Ma#alintal, $aldivar, %anche", &astro, Fernando, &apistrano, 'eehan#ee and Barredo, JJ., concur. #oo&$o&'(
4

Art. 4;5:, Civil Code. Articles 4;4+, 4;55, 4;+4, and 4;8:, Civil Code.

C... If the same thin# should have been sold to different vendees, the o"nership shall be transferred to the person "ho ma, have first ta!en possession thereof in #ood faith, if it should be movable propert,. C(hould it be immovable propert,, the o"nership shall belon# to the person ac1uirin# it "ho in #ood faith first recorded it in the Re#istr, of Propert,. C(hould there be no inscription, the o"nership shall pertain to the person "ho in #ood faith "as first in the possessionB and, in the absence thereof, to the person "ho presents the oldest title, provided there is #ood faith.C
*

(oriano v. 'eirs of D. Ma#ali 6) A.D. *7+6.

De la Cru& v. $abie, ;5 Phil. 4**B Blondeau v. Nano, 64 Phil. 6)5B 0ara v. A,roso, 85 Phil. 4+5B Phil. National Ban! v. Court of Appeals, 03)6::4, Act. )8, 486+.