G.R. No. 181359; August 5, 2013
SPOUSES CLEMENCIO C. SABITSANA, JR. and MA. ROSARIO M. SABITSANA, Petitioners, vs. JUANITO F. MUERTEGUI, represented by his Attorney-in-Fact DOMINGO A. MUERTEGUI, JR., Respondent.

FACTS

On September 2, 1981, Alberto Garcia executed an unnotarized Deed of Sale in favor of respondent Juanito Muertegui over an unregistered parcel of land. Juanito’s father and brother took possession, planted trees, and paid real property taxes from 1980 to 1998. At the time of the sale, petitioner Atty. Clemencio C. Sabitsana, Jr. was the Muertegui family’s lawyer and was consulted about the transaction. On October 17, 1991, Garcia sold the same lot to Atty. Sabitsana through a notarized deed of absolute sale, which was registered on February 6, 1992. A new tax declaration was issued in Atty. Sabitsana’s name. Atty. Sabitsana paid real property taxes in 1992, 1993, and 1999 and introduced concrete improvements in 1996. Before his purchase, Atty. Sabitsana was informed by a Muertegui family member, Carmen Muertegui Davies, that the family had bought the lot, but she could not show the document. Atty. Sabitsana investigated and found no record of the sale to Juanito, concluding the Muerteguis were “bluffing.” He then proceeded to buy the lot from Garcia. When the Muertegui heirs later applied for registration of the lot, Atty. Sabitsana opposed the application. Juanito, through his attorney-in-fact, filed a complaint for quieting of title against the Sabitsanas, claiming they bought in bad faith. The petitioners argued the sale to Juanito was void for lack of marital consent from Garcia’s wife, that they were buyers in good faith, and that the complaint was barred by prescription and laches.

ISSUE

The primary issue is whether the sale of the lot to petitioner Atty. Sabitsana is valid and prevails over the prior unnotarized sale to respondent Juanito Muertegui, considering Atty. Sabitsana’s knowledge of the prior sale and his role as the Muertegui family’s lawyer.

RULING

The Supreme Court denied the petition and affirmed the decisions of the lower courts, ruling in favor of respondent Juanito Muertegui. The Court held that the sale to Juanito, though unnotarized and lacking the wife’s marital consent, was valid. The absence of the wife’s consent rendered the sale merely voidable, not void, and it was never annulled. The determining factor under Article 1544 of the Civil Code was the good faith of the second buyer. The Court found that petitioner Atty. Sabitsana was not a purchaser in good faith. As the Muertegui family’s lawyer, he had prior knowledge of the sale to Juanito. His subsequent investigation and registration of his own deed constituted bad faith, as he used his legal knowledge to take advantage of his clients. The Court emphasized that a lawyer owes undivided loyalty to his client and cannot act adversely to the client’s interest. Therefore, the prior sale to Juanito, who first took possession in good faith, was preferred. The Deed of Absolute Sale and Tax Declaration in Atty. Sabitsana’s name were declared void. The awards for attorney’s fees and litigation expenses in favor of Juanito were upheld.