Rosaroso v. Soria
REITERATIONFacts
The Antecedents: Spouses Luis Rosaroso and Honorata Duazo, parents of nine children, acquired several real properties. After Honorata's death, Luis married Lourdes Pastor Rosaroso. Luis, along with his children from his first marriage (petitioners), alleged that on November 4, 1991, Luis executed a Deed of Absolute Sale (First Sale) conveying certain properties to them, with the knowledge and consent of his second wife, Lourdes. Petitioners further claimed that despite this sale, Luis's daughter, Lucila R. Soria, and granddaughter, Laila S. Solutan, obtained Special Powers of Attorney (SPAs) from Luis, who was allegedly sick and infirm, to sell and mortgage these properties. Subsequently, on August 23, 1994, Luis allegedly executed a second Deed of Absolute Sale (Second Sale) conveying three parcels of land to Meridian Realty Corporation. Petitioners sought the nullification of the SPAs and the Second Sale, alleging fraud and bad faith. Procedural History: The original complaint for Declaration of Nullity of Documents with Damages was filed by Luis Rosaroso against Lucila R. Soria, Laila S. Solutan, and Meridian Realty Corporation. Following Luis's death, an amended complaint was filed by his children from the first marriage (petitioners), including Ham Solutan and Lourdes Rosaroso as defendants. The Regional Trial Court (RTC), Branch 8, Cebu City, ruled in favor of the petitioners, declaring the SPAs and the Second Sale to Meridian Realty Corporation null and void, and upholding the validity of the First Sale. Upon appeal, the Court of Appeals (CA) reversed the RTC's decision, declaring the First Sale void for lack of proven consideration and upholding the validity of the Second Sale and the SPAs, finding no sufficient evidence of fraud or bad faith. Petitioners' motion for reconsideration was denied. The Petition: This case is a petition for review on certiorari under Rule 45 of the Rules of Court, filed by the children of Luis Rosaroso from his first marriage. They assail the December 4, 2009 Decision and the November 18, 2010 Resolution of the Court of Appeals, which reversed the RTC's ruling. Petitioners argue that the CA erred in declaring the First Sale void, asserting that the RTC correctly found it valid and that the presumption of sufficient consideration was not rebutted. They also contend that Meridian Realty Corporation was a buyer in bad faith, as the properties were already in the possession of others, and that the Second Sale was null and void because Luis no longer owned the properties after the First Sale. Petitioners seek the reinstatement of the RTC's decision.
Issue(s)
Whether the Court of Appeals erred in declaring the First Deed of Absolute Sale void. Whether Meridian Realty Corporation was a buyer in good faith. Whether the Second Deed of Absolute Sale is valid.
Ruling
The Supreme Court granted the petition, reversed and set aside the Court of Appeals decision, and reinstated the Regional Trial Court decision. The Court declared the First Deed of Sale valid, found Meridian Realty Corporation not to be a buyer in good faith, and consequently declared the Second Deed of Absolute Sale null and void.
Ratio Decidendi
On the validity of the First Deed of Absolute Sale: The Court found that the respondents failed to present clear and convincing evidence to rebut the disputable presumption of sufficient consideration for the First Sale. The testimony of Lourdes, claiming no payment was made, was deemed self-serving. The Court reiterated that failure of the buyer to pay the price does not automatically render the sale void; it only creates a right to demand fulfillment or rescission. Therefore, the First Deed of Sale was deemed valid and binding. On Meridian's status as a Buyer in Good Faith: The Court held that Meridian was not a buyer in good faith. Article 1544 of the Civil Code requires both acquisition in good faith and registration in good faith for immovable property in case of double sale. The Court emphasized that when a piece of land is in the actual possession of persons other than the seller, the buyer must investigate the rights of those in possession. Meridian's agent admitted seeing houses on the lots and knowing they were occupied, yet failed to investigate the rights of the occupants. This failure to exercise due diligence, despite the visible possession by others, constituted gross negligence amounting to bad faith. Registration made in bad faith is considered no registration at all. On the validity of the Second Deed of Absolute Sale: Since the First Sale was deemed valid and Luis Rosaroso had already disposed of the properties, he no longer had the right to sell them again to Meridian. Meridian's registration of the Second Sale, having been done in bad faith, did not confer any superior right. Consequently, the Second Deed of Absolute Sale was declared null and void from the beginning.
Main Doctrine
In cases of double sale of immovable property, ownership transfers to the buyer who in good faith first recorded the sale in the Registry of Property. If there is no inscription, ownership belongs to the one who was first in possession in good faith. Crucially, good faith must concur with the registration; registration made in bad faith is as if there was no registration at all. Furthermore, a buyer who fails to investigate the rights of actual possessors of the property, despite visible indications of adverse possession, cannot claim to be a buyer in good faith.