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September 8, 2014

Spouses Santiago vs. Villamor (2012)

Facts:
  • Spouses Villamor are the parents of respondents Mancer, Carlos and Domingo Jr. (respondents) and the grandparents of respondent John Villamor.
  • In January 1982: Spouses Villamor mortgaged their 4.5-hectare coconut land in Masbate to the San Jacinto Bank as security for a P10,000.00 loan.
  • For failure to pay the loan, the property was extra-judicially foreclosed by the bank. Spouses Villamor failed to redeem the property so San Jacinto Bank obtained a final deed of sale in its favor in 1991. The San Jacinto Bank then offered the land for sale to any interested buyer.
  • The children of spouses Villamor agreed to buy the property.
  • The San Jacinto Bank agreed with the respondents and Catalina (one of the sisters of the respondents) to a P65,000.00 sale, payable in installments. 
  • Upon full payment of the children of spouses Catalina, San Jacinto bank refused to issue the deed of conveyance. Hence, they filed an action for specific performance
  • Specific performance case (RTC and CA):

o RTC ruled that the issuance of the deed of registration of San Jacinto Bank in favor of spouses Villamor was done in good faith.
o CA reversed RTC ruling saying that the children of Spouses Villamor did not act as representatives of their parents. 
  • In 1994 (Before the action for specific performance was filed), spouses Villamor sold the land to petitioner-spouses Santiago for P150k.
  • When the children of spouses VIllamor refused to vacate the land after spouses Santiago’s demand, the latter also filed an action for quieting of title.

  • Quieting of Title case (RTC and CA):

o RTC ruled that spouses Villamor were purchasers in good faith, hence they are the legal owners. RTC also said that the notarized deed of sale in their favor resulted in constructive delivery of the land. 
o CA ruled that spouses Villamor’s action for quieting of title cannot prosper for they have no legal or equitable title over the land.
  • Spouses Villamor that the deed of sale executed in their favor was equivalent to delivery of the land under Article 1498 of the CC and that they are purchasers in good faith since they had no knowledge of the supposed transaction between the San Jacinto Bank and the respondents and Catalina.
  • The children of Spouses Villamor (respondents) hold that they have a legal title to the land since they perfected the sale with the San Jacinto Bank as early as November 4, 1991, the first installment payment, and are in actual possession of the land; and that petitioners-spouses Santiago are not purchasers in good faith because they failed to show why they are not in possession of the property.


Issue: WON Spouses Santiago has a legal title over the property. NO
Relevance: If they have legal title, they can file for action for quieting of title and for reconveyance.

Held: 

The Court said that spouses Santiago failed to prove that they have any legal or equitable title over the disputed land.

Execution of the deed of sale only a prima facie presumption of delivery
Article 1477 of the Civil Code recognizes that the "ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof." 
Related to this article is Article 1497 which provides that "the thing sold shall be understood as delivered, when it is placed in the control and possession of the vendee."

"A person who does not have actual possession of the thing sold cannot transfer constructive possession by the execution and delivery of a public instrument."
With respect to incorporeal property, Article 1498 of the Civil Code lays down the general rule: the execution of a public instrument "shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred." However, the execution of a public instrument gives rise only to a prima facie presumption of delivery, which is negated by the failure of the vendee to take actual possession of the land sold. 

No constructive delivery of the land in favor of spouses Santiago
In this case, no constructive delivery of the land transpired upon the execution of the deed of sale since it was not the spouses Villamor, Sr. but the respondents who had actual possession of the land. The presumption of constructive delivery is inapplicable and must yield to the reality that the petitioners were not placed in possession and control of the land.

Spouses Santiago were not purchasers in good faith
In this case, the spouses Villamor, Sr. were not in possession of the land. The petitioners, as prospective vendees, carried the burden of investigating the rights of the respondents who were then in actual possession of the land. The petitioners cannot take refuge behind the allegation that, by custom and tradition in San Jacinto, Masbate, the children use their parents' property, since they offered no proof supporting their bare allegation. 

The burden of proving the status of a purchaser in good faith lies upon the party asserting that status and cannot be discharged by reliance on the legal presumption of good faith. The petitioners failed to discharge this burden.

Read the full text:
SPOUSES SANTIAGO vs. VILLAMOR
G.R. No. 168499 November 26, 2012 SPOUSES EROSTO SANTIAGO and NELSIE SANTIAGO, Petitioners, vs. MANCER VILLAMOR, CARLOS VILLAMOR, JOHN VILLAMOR and DOMINGO VILLAMOR, JR., Respondents

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