GR 75342; (March, 1990) (Digest)
G.R. No. 75342 March 15, 1990
SPOUSES CELEDONIO MANZANILLA and DOLORES FUERTE, and INES CARPIO, petitioners, vs. HON. COURT OF APPEALS and JUSTINA CAMPO, respondents.
FACTS
In 1963, petitioners-spouses Celedonio and Dolores Manzanilla sold on installment an undivided one-half portion of their mortgaged house and lot to spouses Magdaleno and Justina Campo. The Campo spouses took possession. The property was subsequently foreclosed by the mortgagee, GSIS, in 1965 and sold at public auction. Before the redemption period expired, the Manzanillas executed a Deed of Absolute Sale for the same half-portion in favor of the Campos in 1966. The Manzanillas did not redeem, so title consolidated in GSIS. In 1969, the Manzanillas reacquired the entire property from GSIS, obtaining a new title in 1973. They then mortgaged it to a bank and later sold it to petitioner Ines Carpio.
ISSUE
The main issue is whether the Manzanillas are under a legal duty to reconvey the undivided half-portion to Justina Campo based on an implied trust, and whether Ines Carpio is a buyer in good faith.
RULING
The Supreme Court REVERSED the Court of Appeals. There is no implied trust obligating the Manzanillas to reconvey the property to Campo. An implied trust under Article 1456 of the Civil Code arises when property is acquired through mistake or fraud. Here, the Manzanillas’ reacquisition from GSIS was a new, independent transaction. The prior sale to Campo was effectively extinguished by the foreclosure, as the Campo spouses, who were aware of the mortgage, assumed the risk of loss. Their failure to protect their interest by paying the debt or redeeming the property themselves precludes a finding of fraud by the Manzanillas. The subsequent sale was a lawful exercise of ownership.
Regarding Ines Carpio, she is a purchaser in good faith and for value. She bought the property from the Manzanillas, who were the registered owners under a clean Torrens title (TCT No. 188293) with no annotation of Campo’s adverse claim at the time of sale. Carpio had no legal duty to look beyond the face of the title. Her failure to inspect the premises, which were occupied by Campo, does not constitute bad faith, as the law does not require such investigation when the title is clean. Therefore, her rights as an innocent purchaser must be protected. The petition was granted, and the complaint for quieting of title was dismissed.