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

Belen Consing Lazaro owned a parcel of land (Lot 11-E) with an area of 5,333 square meters in the District of Arevalo, Iloilo City, covered by TCT No. T-51250.
Lazaro sold various portions of the lot to several buyers, which later involved disputes over subdividing and partitioning the land.

On March 13, 1979, Lazaro contracted to sell a 400 sq. m. portion of Lot 11-E to Daisy Teresa Cortel Magallanes for P22,000.00, payable over two years.
Upon full payment, on July 21, 1980, Lazaro executed a “Deed of Definite Sale” in favor of Magallanes.
Subsequent to the sale, Magallanes took possession by having the lot fenced, filling it with soil, and constructing a nipa hut.
A “Partition Agreement” dated July 14, 1980, assigned an 800 sq. m. portion (Lot 11-E-8) to Magallanes and another buyer (Mario Gonzales), with each acquiring a 400 sq. m. interest.

Lazaro’s refusal to surrender the mother title (TCT No. T-51250) led to disputes among the buyers.
Magallanes and other buyers filed an adverse claim with the Register of Deeds on April 29, 1981.
Magallanes further secured her interest by filing a motion to surrender title in a cadastral case, resulting in the annotation of a notice of lis pendens on October 22, 1981.
On November 23, 1981, Lazaro sold Lot 11-E-8 (the portion assigned to Magallanes and Mario Gonzales) to Lynn Lazaro and her husband Rogelio Natividad (Spouses Natividad), whereupon a new title (TCT No. T-58606) was issued.
Spouses Natividad later subdivided Lot 11-E-8 into Lot 11-E-8-A and Lot 11-E-8-B, each of 400 sq. m.

On July 3, 1986, petitioner Ramy Pudadera (later married to Zenaida Pudadera) bought Lot 11-E-8-A from Spouses Natividad via a “Deed of Sale” for P25,000.00, and a new title (TCT No. 72734) was issued in petitioner Ramy’s name.
Before the sale, a notice of lis pendens was annotated on TCT No. T-58606 due to Magallanes’ civil action against Spouses Natividad, which was canceled only on July 7, 1986—four days after the sale.
Magallanes, having constructed permanent structures and taking physical possession of the lot, maintained her claim despite the subsequent sales.

In a forcible entry case filed on April 20, 1990 by the petitioners against Magallanes, the Municipal Trial Court in Iloilo City dismissed the action on July 17, 1991, noting Magallanes’ prior possession and actions on the property.
Petitioners later filed an action for Recovery of Ownership, Quieting of Title, and Damages against Magallanes (and subsequently, her heirs after her death), alleging that they were the rightful owners of Lot 11-E-8-A as evidenced by TCT No. 72734.
In her answer, Magallanes asserted that she was the absolute lawful owner of Lot 11-E-8-A and maintained actual possession since March 11, 1979.

The Regional Trial Court ruled in favor of respondents (Magallanes’ heirs and related parties), declaring them as the rightful owners of Lot 11-E-8-A and ordering petitioners to execute a deed of reconveyance along with payment of attorney’s fees and costs.
The Court of Appeals (CA) affirmed the trial court decision on June 6, 2005, dismissing petitioners’ contentions, particularly highlighting the lack of good faith on the part of petitioners who purchased the property with notice of a pending litigation (the lis pendens).

Whether petitioners, in acquiring the property with prior notice of the notice of lis pendens and other circumstances (like the existing fence and structures), can be considered buyers in good faith.
Whether petitioners’ failure to investigate the status of the title despite apparent warning signs (e.g., the fence and evidence of prior possession) negates the presumption of their good faith.

Whether Magallanes’ claim over Lot 11-E-8-A (through the deed of sale and physical possession) is distinct from any argument positing that petitioners are asserting rights over a different lot.
Whether the CA erred in not considering the evidence which allegedly showed Magallanes was claiming a different lot (Lot 11-E-8-B) than that registered in petitioners’ name (Lot 11-E-8-A).

Whether petitioners qualify as innocent purchasers for value and in good faith, due to the formality of registration and the cancellation of the lis pendens prior to finalizing their sale.

Whether the trial court erred in awarding attorney’s fees against petitioners, considering the overall circumstances and evidence of bad faith on the part of the petitioners.