Facts:

The case at hand involves the petitioners, Juan Balbuena and Teodulfo Retuya, who filed a case against the respondents, Leona Aparicio Sabay, Doroteo Sabay, Severino Sabay, Desdichado Sabay, Leonarda Sabay, Virgilio Sabay, and Napoleon Sabay, over ownership and recovery of three parcels of agricultural land situated in Barrio Kaduldolan Manga, Tuburan, Cebu. This dispute began on March 11, 1972, when the petitioners claimed ownership based on a tax declaration and alleged that these lands were originally owned by Leoncia Sabay, who had lost them through an execution sale in which they participated. The petitioners asserted that they took possession of the land after a Definite Deed of Sale was issued by the Provincial Sheriff of Cebu. They claimed that they were subsequently unfairly dispossessed by the respondents, who evidently exercised possession through intimidation and threats.

On the contrary, the respondents, heirs of David Sabay, refuted the petitioners' claims, as

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Facts:

Background of the Case

• The dispute involved the ownership and recovery of possession of three parcels of agricultural land in Barrio Kaduldolan Manga, Tuburan, Cebu.
• Petitioners, Juan Balbuena and Teodulfo Retuya, filed a complaint on March 11, 1972, seeking to recover these lands with damages.
• The petitioners alleged that the lands originally belonged to Leoncia Sabay, from whom they acquired the property via an execution sale.
• Respondents, comprising Leona Aparicio Sabay, Doroteo Sabay, Severino Sabay, Desdichado Sabay, Leonarda Sabay, Virgilio Sabay, and Napoleon Sabay (heirs of David Sabay), countered the petitioners’ claim.

Procedural History and Litigation Developments

• The Regional Trial Court (RTC), Branch 9, Cebu City, ruled in favor of the petitioners based on their acquisition by execution sale and their status as purchasers in good faith.
• The respondents, in their answer, disputed the petitioners’ possession and asserted that David Sabay had acquired the lands earlier through purchase from Leoncia Sabay.
• A third-party complaint was admitted against the ex-officio Provincial Sheriff of Cebu and the sureties, Tomas Figueroa and Lucrecia Tabotabo, which further complicated the chain of title.

Evidence Presented by the Parties

• Petitioners’ Evidence:
• Documentary evidence establishing the execution sale and possession acquired through the Sheriff's Definite Deed of Sale.
• Argument that their purchase was made in good faith, relying on the presumed validity of the sheriff’s deed.
• Respondents’ Evidence:
• A document of sale dated June 14, 1947, between Leoncia Sabay and David Sabay, which described one of the litigated lots and included a condition involving reimbursement if Leoncia lost a pending case.
• A deed of sale dated December 31, 1950, containing a pacto de retro clause that provided Leoncia with a right of repurchase within four years.
• Admission that one of the parcels was covered by a Torrens certificate of title, necessitating an amendment in their answer to include information relating to the title of the property.

Decisions at the Lower Courts

• Regional Trial Court (RTC):
• Held that the petitioners, as purchasers in good faith, acquired rights superior to those of the respondents based on the sheriff’s deed.
• Applied the presumption that when no apparent cloud or encumbrance is visible on the certificate of title, further inquiry is unnecessary.
• Cited cases (e.g., Lanci v. Yangco) to support that a purchaser’s rights are determined by the state of the title at acquisition.
• Court of Appeals (CA):
• Reversed the RTC decision by emphasizing that the Torrens titles were not in the name of Leoncia but in the names of previous registered owners (Felix Aves, Enrique Reroma, and Hacienda Laurel).
• Held that the protection of a good faith purchaser applies only when buying directly from a registered owner.
• Concluded that the petitioners, by purchasing from a non-registered owner, failed to exercise due diligence and thus acquired only the identical interest held by the judgment debtor at the time of sale.

Contentions Raised in the Petition for Review

• Petitioners claimed that the CA gravely abused its discretion:
• First, by holding that their declaration as purchasers in good faith had no factual or legal basis.
• Second, by disregarding the respondents’ admission that a condition for reimbursement was agreed upon in the deed of sale.
• Petitioners argued that these conditions indicated bad faith on the part of David Sabay and should affect the determination of superior title.

Issue:

Whether the CA gravely abused its discretion in reversing the RTC’s declaration of petitioners as purchasers in good faith by:

• Overlooking the established application of Torrens doctrine and the inherent presumption of good faith in the absence of visible defects on the title.
• Failing to consider that the petitioners’ examination of the land’s documents should have revealed the title was still held in the names of previous registered owners, not from the judgment debtor directly.

• Whether the CA erred in holding that the respondents’ rights—derived from an earlier unregistered sale by David Sabay, including the conditions of reimbursement and repurchase—are superior to those of the petitioners who acquired an interest at an execution sale.

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Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)