G.R. No. 150388 . March 13, 2009.
NATIONAL INVESTMENT AND DEVELOPMENT CORPORATION, Petitioner, vs. SPOUSES FRANCISCO AND BASILISA BAUTISTA, Respondents.

FACTS

Spouses Francisco and Basilisa Bautista owned several lots, including a 6,368-square-meter lot covered by TCT No. 35034. On July 26, 1963, they sold a portion (822 sq. m.) of this lot to Araceli Wijangco Vda. de Del Rosario. Due to error, the new title, TCT No. 70813, was issued in the names of both Spouses Bautista and Del Rosario covering the entire 6,368 sq. m. Del Rosario later mortgaged the lots she purchased to Philippine Commercial and Industrial Bank (PCIB), but the mortgage erroneously encumbered the entire 6,368 sq. m. Del Rosario defaulted, and PCIB foreclosed. On May 4, 1966, PCIB assigned its rights to the National Investment and Development Corporation (NIDC).
Meanwhile, because Del Rosario failed to complete payment, the Spouses Bautista filed an action for rescission of the sale. On January 25, 1965, the Court of First Instance (CFI) ordered the rescission and return of the lots to the Spouses Bautista, subject to PCIB’s mortgage rights. This decision became final. Consequently, TCT No. 70813 was cancelled and replaced by TCT No. 139925 in the Spouses Bautista’s name.
On June 10, 1969, the Spouses Bautista obtained a loan from Banco Filipino, mortgaging the same lots. They defaulted, and Banco Filipino foreclosed. At the October 22, 1971 auction, Banco Filipino was the highest bidder. On October 27, 1972, NIDC redeemed the properties from Banco Filipino for ₱431,473.25, including the entire 6,368-sq.-m. lot, and secured TCT No. 186147 in its name.
The Spouses Bautista attempted to buy back the lots from NIDC but failed to agree on the price. On September 12, 1979, they filed a complaint for reconveyance and damages against Banco Filipino and NIDC, claiming NIDC had no right to the 5,546-sq.-m. portion (the remainder after the 822 sq. m. sold to Del Rosario) and that its delivery by Banco Filipino was a mistake. They offered to reimburse NIDC a proportionate amount.
The Regional Trial Court (RTC) dismissed the complaint against Banco Filipino but ordered NIDC to reconvey the 5,546 sq. m. to the Spouses Bautista upon reimbursement of ₱431,470.66 plus interest. The Court of Appeals affirmed the RTC decision. NIDC appealed to the Supreme Court.

ISSUE

Whether the Court of Appeals erred in affirming the RTC decision ordering NIDC to reconvey the 5,546-sq.-meter portion of the lot to the Spouses Bautista.

RULING

The Supreme Court DENIED the petition and AFFIRMED the Court of Appeals decision. The Court held that NIDC’s right over the property was limited to the 822-sq.-meter portion pertaining to its assignor, PCIB. NIDC, by redeeming the entire property from Banco Filipino, did not acquire a better right than what PCIB originally had. PCIB’s mortgage and subsequent foreclosure sale only covered Del Rosario’s 822-sq.-meter share. The Spouses Bautista remained the owners of the 5,546-sq.-meter portion, as the rescission of the sale to Del Rosario effectively restored their ownership, subject only to PCIB’s mortgage on the 822 sq. m. Therefore, NIDC was obligated to reconvey the 5,546 sq. m. to the Spouses Bautista upon reimbursement of the proportionate redemption price paid for that portion. The Court also ruled that the action was not barred by prescription or laches, as the Spouses Bautista’s ownership was never transferred and they had consistently asserted their claim.