G.R. No. 194846; June 19, 2013
HOSPICIO D. ROSAROSO, ANTONIO D. ROSAROSO, MANUEL D. ROSAROSO, ALGERICA D. ROSAROSO, and CLEOFE R. LABINDAO, Petitioners, vs. LUCILA LABORTE SORIA, SPOUSES HAM SOLUTAN and LAILA SOLUTAN, and MERIDIAN REALTY CORPORATION, Respondents.

FACTS

Spouses Luis Rosaroso and Honorata Duazo acquired several real properties. After Honorata’s death, Luis married Lourdes Pastor Rosaroso. Petitioners, children of Luis from his first marriage, filed an amended complaint for Declaration of Nullity of Documents with Damages. They alleged that on November 4, 1991, Luis, with Lourdes’s consent, executed a Deed of Absolute Sale (First Sale) covering several lots in their favor. Despite this, respondents Lucila (Luis’s daughter) and Laila (Lucila’s daughter) allegedly obtained a Special Power of Attorney (First SPA) from Luis on April 3, 1993, authorizing Laila to sell some of the same lots. Using another SPA (Second SPA), respondents Laila and Ham mortgaged one lot. Subsequently, on August 23, 1994, respondents made Luis sign a Deed of Absolute Sale (Second Sale) conveying three parcels of land to respondent Meridian Realty Corporation. Petitioners argued Luis was sick, infirm, and of unsound mind when the SPAs and Second Sale were executed, and that Meridian was in bad faith for not inquiring about the occupants. They prayed for damages and the nullity of the SPAs and the Second Sale.
Respondents Lucila and Laila contested the validity of the First Sale, arguing petitioners were estopped for failing to transfer titles or annotate their interests. They claimed Luis was of sound mind when he executed the documents and that he and Lourdes received the payment from Meridian, which was used for his medical expenses. Respondent Meridian argued it checked the titles with the Register of Deeds and found no annotation of the First Sale, and that Luis was aware of the conveyances. Lourdes, as a defendant, claimed the signatures on the First Sale were obtained through fraud and deceit for a loan application, with no consideration paid, and that she did not participate in the Second Sale but received payment on behalf of her bedridden husband.
The Regional Trial Court (RTC) ruled in favor of petitioners, declaring the First Sale valid and the SPAs and Second Sale null and void, and awarded damages. The Court of Appeals (CA) reversed the RTC, ruling the First Sale was void for lack of consideration, and the Second Sale was valid as the documents were notarized and enjoyed a presumption of regularity, with the First SPA still valid at the time of the Second Sale.

ISSUE

Whether the Court of Appeals erred in reversing the RTC decision, specifically in: (1) declaring the First Deed of Sale void for lack of consideration; and (2) upholding the validity of the Second Deed of Sale in favor of Meridian Realty Corporation.

RULING

The Supreme Court granted the petition, reversed the CA decision, and reinstated the RTC decision with modification regarding damages.
1. On the Validity of the First Sale: The Supreme Court held the First Sale was valid. The CA erred in declaring it void solely based on Lourdes’s testimony about lack of consideration. The Deed of Absolute Sale was a public document, duly notarized, and carried the evidentiary weight conferred upon it with respect to its due execution. It recited a consideration of Ten Pesos (P10.00) and other valuable considerations. The lack of proof of payment of the purchase price does not necessarily invalidate the contract. A contract of sale is valid even if the price has not been paid, as payment goes only to the perfection of the contract. The vendee’s non-payment is a resolutory condition that authorizes the vendor to rescind the contract, but does not automatically nullify it. Petitioners’ possession of the properties since birth constituted constructive delivery, and their failure to register the sale or annotate it on the titles did not invalidate the contract or prejudice their rights as against Luis, the vendor.
2. On the Validity of the Second Sale: The Supreme Court held the Second Sale was null and void. When Luis executed the Second Sale to Meridian, he was no longer the owner of the lots as he had already sold and delivered them to petitioners under the valid First Sale. One cannot dispose of what one does not own (nemo dat quod non habet). The notarized nature of the Second Sale does not cure this fundamental defect. While notarized documents enjoy a presumption of regularity, this presumption is rebuttable. The evidence showed Luis had already divested himself of ownership. Furthermore, Meridian could not be considered a purchaser in good faith. A purchaser of real property must exercise due diligence by inquiring into the status of the property. Meridian’s mere verification of the certificates of title with the Register of Deeds was insufficient. It should have investigated the actual possession of the properties, which were occupied by petitioners who had been in possession since birth. Failure to make such inquiry meant Meridian purchased the property at its own risk and could not be deemed a buyer in good faith.
The Court modified the RTC’s award of moral damages and attorney’s fees, deleting them for lack of basis, but affirmed the award of litigation expenses. The crossclaim of Meridian against the other respondents was dismissed.