G.R. No. 170073 - Spouses Pudadera vs. Magallanes

Juan Salva, who died intestate around 1945, was the registered owner of a 154,344-square meter parcel of land (Lot H-5865) in Nabaccayan (formerly Calaoagan), Gattaran, Cagayan, as evidenced by Original Certificate of Title (OCT) No. P-283 issued on June 22, 1925.
The property comprised several lots, including Lot 2006, which had an area of 12,092 square meters.

On May 30, 1969, Angela Cudal—claiming to be Juan Salva’s granddaughter and sole heir—executed an Affidavit of Adjudication and Sale. Through this instrument, she adjudicated the entire estate extrajudicially and sold:

On July 8, 1975, Visitacion Pancho, also claiming heritage from Juan Salva, executed a Confirmation of Ownership, renouncing her rights over the 10,214-square meter portion of Lot 2006 (later denominated as Lot 12) in favor of Jose Say.
Jose Say registered the Confirmation of Ownership in the Registry of Deeds of Cagayan, leading to a partial cancellation of OCT No. P-283. Subsequently, he secured Transfer Certificate of Title (TCT) No. T-30896.
Later on September 29, 1975, Jose conveyed his interest in Lot 12 through a Deed of Absolute Sale to La Vilma Realty Co., Inc. which resulted in the issuance of TCT No. T-31041.
On February 3, 2001, La Vilma Realty executed another Deed of Absolute Sale transferring Lot 12 to Marcelino Suguitan, Jr., who, along with Mercedes J. Suguitan, became the registered owners under TCT No. T-125624.
Additionally, Marcelino acquired a rice mill located on the eastern portion of Lot 12 via a separate transaction with a third party, Agcaoili.

Respondents (Marcelino and Mercedes Suguitan) faced a forcible entry complaint—filed by them against Libertad Cudal (and John Does)—which was eventually dismissed by both the Municipal Trial Court (MTC) and the Regional Trial Court (RTC).
On August 21, 2007, the heirs of Isabelo, Sr. and Antonio (petitioners) filed a Complaint for Quieting of Title, Annulment of Instruments and Documents, and Cancellation of Certificate of Titles against the respondents and La Vilma Realty before the RTC of Aparri, Cagayan.
Petitioners contended that the issuance of TCT No. T-125624 in Marcelino’s name adversely affected their rightful claim over Lot 12, alleging that:

Visitacion’s Confirmation of Ownership was invalid because Angela’s sale had already transferred rights to Isabelo, Sr. and Antonio.
Visitacion was disqualified as an heir due to her involvement in falsification.

The RTC ruled in favor of the petitioners, nullifying several instruments (the Confirmation of Ownership, subsequent Deeds of Absolute Sale, and TCT No. T-30896), and divided Lot 12 among the heirs, except for the portion occupied by the rice mill which was upheld in favor of the respondents.
Respondents and La Vilma Realty appealed the RTC decision before the Court of Appeals (CA) under Rule 41 of the Rules of Court.

Respondents were buyers in good faith as they were deemed to have exercised due diligence by verifying the title, inspecting the property, and consulting with Libertad and an attorney.
The unregistered nature of Angela’s Affidavit diminished its effect against subsequently registered interests.
The petitioners were guilty of laches for failing to promptly secure or register their claim.

A Motion for Reconsideration by petitioners was denied by the CA.
Petitioners then elevated the case through a Petition for Review on Certiorari under Rule 45, arguing:

Respondents were not bona fide purchasers due to their awareness of petitioners’ possession and claims on Lot 12.
The Confirmation of Ownership should not prevail over Angela’s earlier Affidavit of Adjudication and Sale.
Laches should not bar their action given the circumstances under which they discovered respondents’ registration.

Whether the respondents (Marcelino and Mercedes Suguitan) acquired Lot 12 as buyers in good faith and for value.

Did respondents exercise the requisite degree of due diligence in verifying the title and ownership of Lot 12 given that the petitioners were in actual possession?
Was reliance on La Vilma Realty’s registered title, without further inquiry into petitioners’ claims, sufficient to establish bona fides?

Whether Visitacion’s Confirmation of Ownership, which forms the basis of the respondents’ title transfer, prevails over Angela’s Affidavit of Adjudication and Sale.

Which instrument should be determinative in establishing a superior right over Lot 12?
What impact does the registration—or lack thereof—have on the competing claims?

Whether the petitioners’ delay in instituting the action (and failure to register their interest) constitutes laches that bar their claim.

Is the delay equitable given that petitioners were in actual possession and only acted when confronted with the respondents’ TCT registration?
Does the nature of the delay affect the outcome independently of prescription?