G.R. No. 158380 ; May 16, 2005
MARIQUITA MACAPAGAL, petitioner, vs. CATALINA O. REMORIN, CORAZON CALUZA-BAMRUNGCHEEP, and LAURELIA CALUZA-VALENCIANO, respondents.

FACTS

The case involves a parcel of land originally owned by Candido Caluza. Upon his death, his adopted daughter Corazon and his second wife Purificacion executed an extrajudicial settlement, adjudicating the subject lot to Corazon. Purificacion, entrusted with administration, fraudulently obtained new titles and sold the lot to Catalina Remorin. Corazon successfully litigated for reconveyance, and the title was restored to her name, albeit annotated with a mortgage in favor of Laurelia Valenciano, which Catalina had earlier constituted. To settle related cases, Corazon, Purificacion, Catalina, and Laurelia executed a Memorandum of Agreement (MOA) on March 21, 1988, wherein Corazon agreed to cede a portion of the property (Lot 25) to Purificacion, who would assume the mortgage debt to Laurelia. Purificacion died before implementation.
Subsequently, on September 9, 1988, Corazon, Catalina, and Laurelia entered into a Compromise Agreement approved by the RTC. This agreement stipulated that Corazon would sell the entire property to an “interested buyer,” and from the proceeds, Laurelia’s mortgage would be paid, and Catalina would receive a sum. Petitioner Mariquita Macapagal later emerged as that buyer, purchasing the property from Corazon and Catalina in 1989. However, prior to this sale, Corazon had already sold a segregated portion of the lot (Lot 5) to respondent Laurelia Valenciano in July 1989, who then obtained a separate title.

ISSUE

The core issue is who has a better right of ownership over Lot 5: petitioner Macapagal, who bought the entire property from Corazon and Catalina based on the 1988 MOA and 1988 Compromise Agreement, or respondent Laurelia Valenciano, who bought the specific lot from Corazon in 1989 and registered the sale first.

RULING

The Supreme Court denied Macapagal’s petition and upheld Laurelia Valenciano’s ownership. The legal logic rests on the principles of registration and good faith. The 1988 MOA was rendered inoperative by Purificacion’s death, as her personal obligation to assume the mortgage and segregate the lot could not be enforced against her heirs. The subsequent 1988 Compromise Agreement did not identify Macapagal as the buyer and merely outlined a conditional sale dependent on a future buyer’s payment. Critically, Laurelia purchased the specific Lot 5 from its registered owner, Corazon, in July 1989 and registered the sale, obtaining TCT No. 43235. Macapagal purchased the property later, in August 1989. Applying Article 1544 of the Civil Code on double sales, ownership is vested in the vendee who in good faith first records the sale in the Registry of Property. Laurelia fulfilled this requirement. Macapagal cannot be considered a buyer in good faith as she bought from persons not the registered owners at the time of her purchase, given that Laurelia’s prior sale and registration had already effectively transferred that portion. The contract between Corazon and Laurelia, even if it did not state the true consideration, was merely a relative simulation and remained valid and enforceable, not void. Therefore, Laurelia’s prior registered title prevails.