GR 142403; (March, 2003) (Digest)
G.R. No. 142403 ; March 26, 2003
ALEJANDRO GABRIEL and ALFREDO GABRIEL, petitioners, vs. SPOUSES PABLO MABANTA and ESCOLASTICA COLOBONG, DEVELOPMENT BANK OF THE PHILIPPINES (Isabela Branch) and ZENAIDA TAN-REYES, respondents.
FACTS
Spouses Mabanta mortgaged two lots to DBP. In 1980, they sold the lots to Susana Soriano under a pacto de retro sale but failed to repurchase. In 1984, the Mabantas convinced petitioner Alejandro Gabriel to purchase the lots from Soriano. Alejandro gave Soriano a lot valued at P40,000 and paid the Mabantas P5,000. The Mabantas executed a Deed of Sale with Assumption of Mortgage in favor of Alejandro, and Soriano executed a Cancellation of Contract transferring her rights to him. Alejandro and his son Alfredo cultivated the land and restructured the DBP loan.
Subsequently, it was discovered that the DBP loan had been paid and the mortgage cancelled by spouses Benito and Pura Tan. Their daughter, respondent Zenaida Tan-Reyes, had purchased one of the lots from the Mabantas on August 21, 1985, paid off the mortgage, and secured a new title (TCT No. T-160391) in her name. The Gabriels filed a complaint for specific performance and reconveyance.
ISSUE
Whether respondent Zenaida Tan-Reyes is a purchaser in good faith whose registered title should prevail over the unregistered prior sale to petitioner Alejandro Gabriel.
RULING
No. The Supreme Court reversed the Court of Appeals and reinstated the trial court’s decision, declaring the sale to Tan-Reyes void and ordering reconveyance to Alejandro Gabriel. In a double sale scenario under Article 1544 of the Civil Code, registration must be coupled with good faith to confer superior title. Good faith requires the buyer to exercise the diligence of a prudent man in investigating the title and condition of the property.
The Court found Tan-Reyes lacking in good faith. Her testimony revealed she bought the lot immediately after it was offered on August 19, 1985, without first inspecting the land or inquiring into its status beyond the known mortgage. Had she exercised due diligence, such as visiting the property, she would have found it being cultivated by the Gabriels, who would have informed her of their prior claim. The Court held that her failure to investigate, despite knowledge of facts that should have prompted inquiry, constituted willful ignorance. She cannot be considered an innocent purchaser for value as she deliberately closed her eyes to the possibility of a prior sale. Therefore, her subsequent registration does not defeat the Gabriels’ prior rights.