G.R. No. 210845 - Spouses German vs. Spouses Santuyo

The Bautista Spouses were the registered owners of a 400‑square meter parcel of land in Barangay Balatas, Naga City, as evidenced by Transfer Certificate of Title (TCT) No. 11867.
Since 1985, Danilo and Clarita German (the German Spouses) had been in actual physical possession of the property as lessees under Soledad Salapare, the caretaker for the Mariano Spouses.
On April 22, 1986, the Bautista Spouses sold the property to the Mariano Spouses.
On the same day, the Mariano Spouses sold the property to the German Spouses on the condition that Helen Mariano would execute the Deed of Sale upon full payment. It was emphasized that although the German Spouses had fully paid, the final deed had not been executed.

On July 28, 1992, Benjamin and Editha Santuyo (the Santuyo Spouses) instituted a case for Recovery of Ownership and Damages, asserting that they and the Bautista Spouses had entered into a sale on December 27, 1991.
The Santuyo Spouses obtained registration of title under TCT No. 22931 as of April 28, 1992, even though questions arose regarding the validity of the earlier sale to the German Spouses.
Later, on January 12, 2001, the German Spouses filed a case for Declaration of Nullity of Sale, Recovery of Ownership, and Reconveyance with Damages against the Santuyo Spouses and Helen Mariano, contending that the Mariano Spouses had not completed the deed despite the full purchase price being paid.

The Regional Trial Court (RTC) of Naga City, Branch 61, in its January 30, 2009 Decision, ruled in favor of the German Spouses by:

Declaring the purported sale from the Bautista Spouses to the Santuyo Spouses as null and void.
Confirming that the German Spouses were the rightful owners of the property (TCT No. 11867) owing to their full payment and possession.
Ordering the cancellation of the Santuyo Spouses’ TCT No. 22931 and requiring the heirs of Helen Mariano to convey a deed of absolute sale to the German Spouses.

The Court of Appeals later reversed the RTC Decision in its October 29, 2012 Decision, dismissing the complaint of the German Spouses.
The German Spouses’ Motion for Reconsideration was denied by the Court of Appeals in its December 18, 2013 Resolution.

On February 18, 2014, the German Spouses filed a Petition for Review on Certiorari before the Supreme Court, challenging the CA Decisions.
They argued that:

A double sale had occurred since the Bautista Spouses had effectively sold the same property twice—first to the Mariano Spouses (1986) and then, subsequently, to the Santuyo Spouses (1991).
The Santuyo Spouses, despite having obtained the title, were not purchasers in good faith because they failed to conduct the necessary inquiries regarding the actual possession and condition of the property.
Helen Mariano’s involvement in the 1991 sale, and her familial relationship with Editha Santuyo, further undermined the claim of the Santuyo Spouses buying in good faith.

The German Spouses maintained that, given their continuous and prior actual possession (since 1985), and the circumstances surrounding the lack of deed execution after full payment, the sale to them was valid and enforceable.

Whether Article 1544 on double sales—which prioritizes a buyer in good faith who first registers the title—applies when the same property is sold twice in separate transactions.
The contention that the rule on double sales is applicable only when the same seller sells identical property to different buyers, versus the situation involving different sellers (i.e., the Bautista Spouses in the 1991 sale and the Mariano Spouses in the 1986 sale).

Whether the Santuyo Spouses acquired the property in good faith.
The requirement for a purchaser to undertake ordinary inquiry or inspection—especially when there are apparent cautionary circumstances such as the property being occupied or when the seller is not in immediate possession.
The impact of Helen Mariano’s active participation and the irregularities in documentation (e.g., the receipt and the letter of guarantee) on the credibility of the Santuyo Spouses’ claim of good faith.