Gabutan v. Nacalaban
REITERATIONFacts
1. The Antecedents: In 1957, Godofredo Nacalaban purchased an 800-square meter parcel of land, obtaining TCT No. T-2259 and building a house on it. Upon his death in 1974, he was survived by his wife, Baldomera, and their children. In 1979, Baldomera allowed her mother, Melecia, to build and occupy a house on a portion of the property. Melecia died in 1997, survived by her children, including Trifonia D. Gabutan. In 1996, Baldomera's children executed an Extrajudicial Settlement of Estate with Sale, adjudicating the property to themselves and selling it to Cagayan Capitol College, which then obtained TCT No. T-111846. In 1997, the College demanded that Melecia's heirs vacate the premises. 2. Procedural History: In response to the College's demand, Melecia's heirs (Gabutan, et al.) filed a Complaint for Reconveyance, Declaration of Nullity of Contracts, Partition and Damages, alleging an implied trust where Godofredo and Baldomera were mere trustees, and claiming the College was a buyer in bad faith. Concurrently, the College filed an Unlawful Detainer case. The Regional Trial Court (RTC) ruled in favor of Gabutan, et al. in the reconveyance case, declaring an implied trust and nullifying the sale to the College, but also finding the College to be a buyer in good faith; the RTC also ruled in favor of the College in the unlawful detainer case. Both parties appealed to the Court of Appeals (CA), which consolidated the appeals and affirmed the RTC's decisions in both cases, finding the College to be a buyer in good faith and dismissing the reconveyance claim as prescribed. The heirs of Baldomera (Nacalaban, et al.) also filed a separate petition for certiorari against the CA's decision. 3. The Petition: Two petitions were filed before the Supreme Court and subsequently consolidated. The first, G.R. Nos. 185857-58, was filed by Gabutan, et al. via a petition for review on certiorari under Rule 45, seeking to reverse the CA's decision declaring the College as a buyer in good faith, arguing that the College was not a buyer in good faith because it did not buy from the registered owner and failed to inquire about the property's occupants. The second petition, G.R. Nos. 194314-15, was filed by Nacalaban, et al. via a petition for certiorari under Rule 65, seeking to annul the CA's decision that sustained the reconveyance action, arguing that the reconveyance action had prescribed and that the property had already passed to an innocent purchaser for value.
Issue(s)
Whether the petition for certiorari of Nacalaban, et al. is the proper remedy. Whether the action for reconveyance filed by Gabutan, et al. is proper. Whether the College is a buyer in good faith.
Ruling
The petition for certiorari of Nacalaban, et al. is dismissed as it is the wrong remedy. The action for reconveyance is proper and has not prescribed. The College is declared a buyer in bad faith. The decision of the Court of Appeals is affirmed with modifications: Cagayan Capitol College is declared a buyer in bad faith; Nacalaban, et al. are ordered to return the purchase price to the College; TCT No. T-111846 in the name of the College is ordered cancelled; and the property shall be reconveyed to the Estate of Melecia Dalondonan.
Ratio Decidendi
On Issue 1: Whether the petition for certiorari of Nacalaban, et al. is the proper remedy. The Court ruled that the petition for certiorari filed by Nacalaban, et al. under Rule 65 was the wrong remedy. The CA Resolution dated August 17, 2010, which affirmed its Decision, was a final resolution disposing of the appeal. Therefore, the proper remedy was an appeal by way of a petition for review on certiorari under Rule 45. Rule 65 is a remedy of last resort, available only when there is no other plain, speedy, and adequate remedy in the ordinary course of law. Nacalaban, et al. received the CA Resolution on September 7, 2010, and had 15 days to file an appeal, but instead filed a petition for certiorari on November 5, 2010, well beyond the reglementary period for an appeal. The Court found no compelling reason to treat the Rule 65 petition as a Rule 45 petition, as it was filed out of time and did not meet the other requisites for such relaxation of the rules. On Issue 2: Whether the action for reconveyance filed by Gabutan, et al. is proper. The Court held that the action for reconveyance was proper. It found that an implied resulting trust was created between Melecia and Godofredo, as Melecia's money was used to purchase the property, but the title was placed in Godofredo's name. This was supported by testimonial evidence from Melecia's heirs, which was deemed trustworthy and consistent. The Court clarified that an implied trust can be proven by parol evidence, as provided in Article 1457 of the Civil Code, and that such evidence was sufficient in this case. The action for reconveyance is a recognized remedy to compel the transfer of property wrongfully registered to its rightful owner. Furthermore, the Court ruled that the action for reconveyance was imprescriptible because Gabutan, et al., as heirs of Melecia, were in actual possession of the property. Possession of the property by the beneficiary of the trust renders the action for reconveyance imprescriptible, as it is akin to an action to quiet title. The Court also noted that the complaint included a direct attack on the validity of the College's title, allowing for its adjudication. On Issue 3: Whether the College is a buyer in good faith. The Court ruled that the College was a buyer in bad faith. It reiterated the requisites for a buyer in good faith: the seller must be the registered owner, in possession, and the buyer must be unaware of any adverse claim or defect. The Court found that these conditions were not met. Firstly, the sellers, Nacalaban, et al., were not the registered owners; Godofredo was. When purchasing from someone other than the registered owner, a higher degree of prudence is required, necessitating an examination of all factual circumstances beyond the certificate of title. Secondly, the College was aware that other persons, the Heirs of Melecia, were in possession of the property. Despite this knowledge, the College failed to exercise a higher degree of diligence by inquiring from the occupants themselves about the nature and authority of their possession. Instead, it relied on the representations of the sellers and the documents they presented, which is insufficient to establish good faith. The Court emphasized that the burden of proving good faith rests on the buyer, and mere invocation of the legal presumption of good faith is not enough. The prior rulings in the ejectment case in favor of the College were deemed not conclusive on the issue of ownership.
Main Doctrine
An implied resulting trust is established when property is sold, and the legal title is conveyed to one person while the purchase price is paid by another for the beneficial interest of the latter. Such a trust is provable by parol evidence, provided it is trustworthy and not based on loose declarations. An action for reconveyance based on such a trust is imprescriptible if the beneficiary is in possession of the property. Furthermore, a buyer is deemed in bad faith if they purchase property from someone who is not the registered owner or if the property is occupied by others, without exercising a higher degree of diligence to investigate the seller's title and capacity to sell, and the nature of the occupants' possession.