Facts:

The case revolves around Faustina Acosta and her children, who prior to June 3, 1916, owned three parcels of land located in Bayambang, Pangasinan, with a mortgage of P5,000 in favor of the Government Agricultural Bank. On the aforementioned date, Faustina Acosta and her children executed a deed of sale to convey the land to Father Justo Claudio. While the deed indicated a consideration of P30,000, the actual consideration was suspected to be around P10,000 based on promissory notes and evidence suggesting the real intention was to facilitate easier resale of the property by Father Claudio. Post-sale, Faustina Acosta continued to possess the land.

Father Claudio eventually registered the property in his name under the Torrens system and transferred it successively through Esteban I. Vasquez to Macario Marco, then to Feliciano Gomez and Gregorio Ocampo, and finally to Teodoro Y. Gomez, who sold it to Benita Austria, all involving various purported sales that raised suspicions of

Facts:

Prior to June 3, 1916, Faustina Acosta, the widow of Domingo Holanday, and her children owned, as co-owners, three parcels of land in Bayambang, Pangasinan, which was encumbered by a mortgage with the Government Agricultural Bank. On that date, without receiving any payment, Faustina Acosta and her children executed a deed purporting to sell the land to Father Justo Claudio for a stated consideration of P30,000 (though the real value may have been only P10,000), intending to facilitate a subsequent sale. Following this, the property—already registered under the Torrens system—changed hands through a series of transfers: Father Claudio obtained a new title in his name and sold the land to Esteban I. Vasquez for P31,000; Vasquez sold it to Macario Marco for the same price; and then it was sold to Feliciano Gomez and Gregorio Ocampo for P10,000. Later, Feliciano Gomez sold it to Teodoro Y. Gomez for P6,000, who in turn transferred it to Benita Austria for P25,000. In all these transactions proper notations were made on the title. The chain of sales and transfers bears the hallmarks of simulated transactions designed to defraud the rightful owners, as indicated by glaring inconsistencies like the difference in sale prices and the presence of close personal relationships among the parties. Over time, despite the multiple transfers, Faustina Acosta continued to be recognized by the courts as the rightful possessor, though her control over the land was undermined by the fraudulent chain of transfers. To protect her interests, Faustina Acosta eventually initiated a suit against Teodoro Y. Gomez and Benita Austria—the last transferees—to reclaim possession of the land. The lower courts, which had seen numerous related legal proceedings, initially ruled in favour of Acosta and her children, declaring them the rightful and absolute owners while ordering the cancellation of notations made on the original certificate of title. Additionally, large sums had been ordered as damages against the defendants, though these amounts and the evidence supporting them later came under critical scrutiny.

Issue:

1. Whether the chain of transfers—specifically, whether the inclusion of the defendants’ predecessors in interest is necessary—affects the proper resolution of the case, given that the prior proceedings had already disposed of matters as to rights up to Father Claudio’s involvement.
2. Whether the subsequent transferees, including Teodoro Y. Gomez and ultimately Benita Austria, qualify as innocent purchasers for value or whether their transactions are tainted by fraud and simulated dealings, thereby precluding their right to retain the property.
3. A subsidiary issue regarding the claim filed by Faustina Acosta before the commissioners on the estate of Father Claudio for a specific amount, including whether the nature of that claim constitutes a ratification of the simulated transfers.
4. Whether the extraordinary annual damage award imposed against the defendants, as well as the counter-award in favor of Teodoro Y. Gomez, is substantiated by sufficient and credible evidence.

Ruling:

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Ratio:

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Doctrine:

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