G.R. No. 150913 ; February 20, 2003
SPOUSES TEOFILO and SIMEONA RAYOS, and GEORGE RAYOS, petitioners, vs. DONATO REYES, SATURNINO REYES, TOMASA R. BUSTAMANTE and TORIBIA R. CAMELO, respondents.

FACTS

The dispute involves three parcels of land originally owned by spouses Francisco and Asuncion Tazal. On September 1, 1957, they sold the properties to Mamerto Reyes (respondents’ predecessor) under a deed of sale with a right to repurchase within two years. Mamerto Reyes took possession and paid taxes. The Tazals failed to repurchase within the stipulated period. However, Francisco Tazal, without first repurchasing from Reyes, sold two parcels to Blas Rayos (petitioners’ predecessor) in 1958. After the redemption period lapsed, Tazal filed a case (Civil Case No. A-245) against Mamerto Reyes, claiming the 1957 deed was an equitable mortgage and consigning ₱724.00 as payment. The trial court ruled it was a true pacto de retro sale but granted Tazal a 30-day period from finality of judgment to repurchase. This judgment became final on June 20, 1990. Meanwhile, in 1961, petitioner-spouses Teofilo and Simeona Rayos purchased the lands from Blas Rayos and Francisco Tazal while the prior case was pending.

ISSUE

Whether the petitioners acquired valid ownership over the disputed properties, thereby entitling them to possession.

RULING

No. The Supreme Court affirmed the decision in favor of the respondents, declaring them as the lawful owners. The legal logic is anchored on the nature of a pacto de retro sale and the principle that a seller cannot convey a better title than what he possesses. Upon the expiration of the redemption period in 1959 without the Tazals exercising their right, ownership was consolidated in Mamerto Reyes by operation of law. Consequently, Francisco Tazal no longer had any ownership rights to transfer to Blas Rayos or the petitioner-spouses in 1958 and 1961; those subsequent sales were void. The Court clarified that the consignation by Tazal in the earlier case did not constitute a valid repurchase, as it was made under the erroneous claim of an equitable mortgage and before the court had even authorized redemption. The 30-day redemption period granted by the court in its 1963 decision started only upon that judgment’s finality in 1990. Neither the Tazals nor the petitioners repurchased within this new period. Thus, absolute ownership remained with Mamerto Reyes and passed to his heirs, the respondents. The petitioners, as mere buyers from a seller with no title, acquired no rights and were ordered to surrender possession.