155. Centeno v.

Court of Appeals, 139 SCRA 545 (1985)

Facts:
Lot 4, Block 11, involved in the 'Contract of Sale' (ANNEX 'B') executed by Pedro
M, Cruz in favor of plaintiff Nestor Centeno, was the subject of an earlier 'Contract of Sale'
executed by said Pedro M. Cruz in favor of Conrado P. Uy on May 26. 1969.

Subsequently, said Conrado P. Uy, for consideration paid to him by plaintiff Nestor
Centeno, assigned and transferred rights and interests on said Lot 4, Block 11 to the said
plaintiff, with the conformity of Pedro M, Cruz. Thus Pedro M. Cruz executed the Contract
of Sale in favor of plaintiff Nestor Centeno.

From February 1972 up to the present, plaintiffs have not paid the installments
specified under the 'Contract of Sale either to the spouses Pedro M, Cruz and Rosalina
Villar, or to the defendants. Plaintiffs have not made any tender of payment of the said
installments as they fell due to the spouses Pedro M. Cruz and Rosalina Villar or to the
defendants after consolidation of ownership of the foreclosed property in favor of the
defendants. Neither have the plaintiffs made consignation of the said installments as they
fell due with the court of proper jurisdiction, also after consolidation of ownership of said
property in favor of the defendants.

CFI: Court renders judgment directing defendants to respect, recognize and abide by
the terms and conditions of the K of sale and for the plaintiffs to continue the payments
of the installment due thereunder; For the defendants to credit plaintiffs for all the
installment payments heretofore made by them on their respective lots and for defendants
to pay plaintiffs the sum of P2,000.00 byway of attorney's fees. The rest of the prayer for
damages is denied for lack of sufficient basis.

CA: Revesed the said judgment and dismissed the plaintiffs’ complaint. held that the
disclosure by the spouses Cruz to the Victorias of their intention to subdivide the property
into residential lots was merely simple talk on preliminaries attendant to a contract of
sale, and its non-compliance does not affect the rights and obligations embodied in their
contract; that the statement made by Cruz spouses that they were the attorney in fact of
Victorias was not at all binding upon Victoria, as it was expressly stated in paragraph 6
of the Stipulation of Facts that the Cruz spouses were never been appointed as such; that
when the spouses Cruz and the Victorias formally executed a deed of sale with mortgage
on March 1 1,1970, the contracts of sale in favor of the lot buyers were not mentioned in
the said deed considering that the contracts of sale were made prior to the execution of
the said deed, hence, the lot buyers could not compel the Victorias to recognize their
contracts with the spouses Cruz; that there is no stipulation and evidence that the lot
buyers upon the execution of the con-tracts in their favor took possession, openly and
publicly of the property in question so as to give notice to the Victorias of their prior rights;
that the separate titles issued on each lot were all in the name of Cruz with the mortgage
in favor of the Victorias annotated, but no notation was made as to the interests of the lot
buyers; that there is no evidence on record to show that the Victorias were in estoppel;
that there is no stipulation that any of the money paid by the lot buyers to the spouses
Cruz had been illegally appropriated by the Victorias and that the spouses Victoria were
clearly mortgagees with real right to foreclose the same when their mortgage credit was
not paid on time.

SC: We find no merit in the present appeal. The property in question was originally owned
by the Victories. On July 10,1969, they executed in favor of the spouses Pedro M. Cruz
and Rosalina Villar a contract to sell said property, which at that time was still
unregistered and was covered by Tax Declaration No. 5685, Under said agreement, it was
stipulated that while possession of the property shag be considered delivered to the buyers
Pedro M. Cruz and Rosalina Villar, the ownership thereof shall remain with the Victorias
until the downpayment of P70,000.00 shag have been paid, in which event the necessary
deed of transfer of ownership of the property will be executed together with a first
mortgage on the property in favor of the Victorias to secure payment of the balance of the
purchase price. On March 11, 1970, said deed of transfer with first mortgage on the
property was executed between the Victorias and Pedro M. Cruz and Rosalina Villar.
Thereafter the Cruzes registered the property and were issued Original Certificate of Title
No. 8626 with the mortgage constituted on the property in favor of the Victorias annotated
thereon.
156. Egao vs. Court of Appeals, 174 SCRA 484 (1989)

Facts: The respondents filed a motion for quieting the title

andrecovery of possession and ownership against the petitioners. Apparently, they claim
they are the owners of the parcel of land by virtue of the deed of sale they entered into
with Roberto Marfori to whom the petitioners allegedly sold their land to. The Egaos
acquired their land title by virtue of a free patent and transferred their ownership in favor
of Marfori by virtue of a deed of sale. However, the Certificate of Title was not transferred
in Marfori’s favor. Upon purchase of the land from Marfori, the respondents introduced
improvements thereon and paid taxes for the property. However, the petitioners illegally
occupied portions of the land. Petitioner answers that they are the true owner of the land
by virtue of the Certificate of Title issued by the Register of Deeds pursuant to their Free
Patent. The lower court ruled in favor of Egao. Upon appeal, the CA reversed the decision
of the lower court on grounds that the main issue should be whether Egao can validly sell
the land to Marfori who subsequently transferred the ownership to the respondents. The
CA holds both Egao and Marfori to be in pari delicto for violating the 5-year restriction
provided by Commonwealth 141 against encumbrance
and alienation of public lands acquired thru free patent or homestead patent. They
cannot therefore obtain affirmative relief. It also declares the respondents as innocent
purchasers for value who the obtained the duplicate of the OCT still in the name of the
Egaos from Marfori and ownership was transferred to them by physical possession of the
property. It thus promulgated judgment holding the respondents the absolute owners of
the land in dispute, to cancel the OCT of the petitioner and its transfer thereof to the
respondents and to surrender peaceful possession of the land to the respondents.
Issue: Whether or not the petitioners validly transferred their ownership to Marfori to
resolve the rights of the respondents over the land in dispute?
Ruling: The SC holds that based on the adduced evidence, the Egaos sold the lot to
Marfori within the 5-year restriction period provided by law on Free Patent based on the
Deed of Sale entered into by the parties. Although the petitioners denied the validity of
the Deed of Sale the court held that it was notarized and a notarial document has in its
favor the presumption of regularity. When the land was sold to the respondents, they
know that the OCT is still registered under the name of the petitioners. Thus, they are
not considered to be innocent purchaser as contrary to the ruling of the CA. Where a
purchaser neglects to make the necessary inquiries, and closes his eyes to facts which
should puta reasonable man on his guard as to the possibility of the existence of a defect
in his vendor's title, and relying on the belief that there was no defect in the title of the
vendor, purchases the property without making any further investigation, he cannot claim
that he is a purchaser in good faith for value. A private individual cannot bring an action
for reversion or any actionwhich would have an effect of canceling a free patent andthe
certificate of title issued on the basis thereof since the land covered will form part again
of the public domain. Sec. 124 of the Public Land Act provides that deeds of sale of
patented lands, perfected within the prohibited five (5) year period are null and void thus
the Egaos have no title to pass to Marfori and nobody can dispose that which does not
belong to him. The respondents are not innocent purchasers for value with no standing
to question the rights of the petitioners over the land and to file an action to quiet the
title. The petitioners remained to be the registered owners and entitled to remain in
physical possession of the disputed property. Respondents are ordered to deliver the OCT
to the petitioners without prejudice to an action for reversion of the land to be instituted
by the Solicitor General for the State.