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, obtained a new title in 1973, and later sold it to petitioner Ines Carpio, who assumed an existing mortgage. Private respondent Justina Campo, now a widow, filed a complaint for quieting of title in 1979.
ISSUE
The main issue is whether the Manzanillas are under a legal duty to reconvey the undivided one-half portion of the property to Justina Campo under an implied trust, and whether Ines Carpio is a buyer in good faith.
RULING
The Supreme Court REVERSED the Court of Appeals. It held no implied trust arose in favor of Justina Campo. The 1966 Deed of Absolute Sale was executed when the Manzanillas had already lost their ownership due to the foreclosure; they had only a right of redemption. The sale was therefore a nullity for involving a property they did not own. Consequently, the subsequent reacquisition of the property from GSIS granted the Manzanillas a new and complete title, free from any trust obligation to the Campos. The Court found no fraud, as the Campos, aware of the mortgage, assumed the risk of foreclosure. Their remedy was against the Manzanillas for breach of contract, not for reconveyance based on trust.
Regarding Ines Carpio, the Court ruled she was a purchaser in good faith and for value. At the time of her purchase, the Manzanillas’ certificate of title was clean, with no lien or encumbrance annotated except the mortgage she assumed. She was not legally required to look beyond the face of the title. Campo’s adverse claim, annotated only after Carpio’s purchase, did not affect her good faith status. The Court also noted private respondent’s action was barred by laches, having waited thirteen years from the Manzanillas’ reacquisition to assert her claim.