GR 200765; (August, 2016) (Digest)
G.R. No. 200765 , August 8, 2016
DESIDERIO RANARA, JR., Petitioner, vs. ZACARIAS DE LOS ANGELES, JR., Respondent
FACTS
In October 1989, Leonor Parada obtained a ₱60,000.00 loan from Zacarias de los Angeles, Sr. (using funds from his son, respondent Zacarias de los Angeles, Jr.) to finance her migration to Canada. As security, Parada executed a Deed of Sale with Right to Repurchase over an agricultural land (later covered by OCT No. 10020 in her name), with the respondent taking possession and farming the land as payment for loan interest. Parada later gave the owner’s duplicate certificate of title to Zacarias, Sr. and made partial payments toward the loan. In 2001, the respondent sold the land to petitioner Desiderio Ranara, Jr. for ₱300,000.00, executing two sale documents (one reflecting the actual price and another for ₱130,000.00 for tax purposes). Parada, upon learning of the sale, filed a complaint for reformation of instrument, consignation, and recovery of possession against both parties, claiming the transaction was an equitable mortgage. The petitioner, in his answer, claimed to be an innocent purchaser for value and sought reimbursement from the respondent for the purchase price and improvements (including irrigation facilities and land conversion) if the case was decided in Parada’s favor. The Regional Trial Court (RTC) ruled the contract was an equitable mortgage under Article 1602(6) of the Civil Code and denied the petitioner’s claims for reimbursement, finding him a buyer in bad faith. The Court of Appeals (CA) affirmed the RTC’s decision, holding the petitioner was not entitled to reimbursement for useful expenses under Article 546 of the Civil Code due to bad faith and lack of substantiated receipts for improvements.
ISSUE
Whether the petitioner is entitled to reimbursement from the respondent for the purchase price and improvements made on the land.
RULING
No. The Supreme Court denied the petition, affirming the CA and RTC decisions. The Court upheld the factual findings of the lower courts that the petitioner was a purchaser in bad faith, as he failed to investigate the respondent’s title despite the land being registered in Parada’s name and the respondent being merely in possession. As a buyer in bad faith, the petitioner is not entitled to reimbursement for useful expenses under Article 546 of the Civil Code. The Court also rejected the petitioner’s argument that the doctrine of in pari delicto (both parties equally at fault) applied, noting that this doctrine pertains to contracts with illegal causes under Articles 1411 and 1412 of the Civil Code, which were not present here. The petitioner’s claims for reimbursement were thus properly denied.