G.R. No. 200009 - Spring Homes Subdivision Co., Inc. vs. Spouses Tablada, Jr.

Petitioners Spouses Pedro L. Lumbres and Rebecca T. Roaring (Spouses Lumbres) entered into a Joint Venture Agreement on October 12, 1992 with Spring Homes Subdivision Co., Inc. (Spring Homes) for the development of parcels of land totaling 28,378 square meters; titles of these lands were transferred to Spring Homes for convenience.
On January 9, 1995, Spring Homes executed a Contract to Sell with respondents Spouses Pedro Tablada, Jr. and Zenaida Tablada (Spouses Tablada) for a particular lot (Lot No. 8, Block 3) covered by TCT No. T-284037.
The Spouses Lumbres filed a complaint in March 1995 against Spring Homes for breach of the Joint Venture Agreement.

The Spouses Tablada, unaware of the pending complaint, began constructing a house on the subject lot and secured a Certificate of Occupancy.
On January 16, 1996, Spring Homes executed a Deed of Absolute Sale to the Spouses Tablada, who paid P179,500, exceeding the P157,500 indicated as purchase price in the Deed. However, the title remained with Spring Homes due to failure to cancel and reissue.
The lot was discovered to be mortgaged for a P4 million loan with Premiere Development Bank; extrajudicial foreclosure proceedings were initiated due to unpaid loan.

On October 28, 1999, the Spouses Lumbres and Spring Homes entered into a Compromise Agreement approved by the RTC, transferring the disputed lot and others to the Spouses Lumbres and granting them authority to collect receivables and cancel sales upon default. Premiere Development Bank was included in the Agreement.
The Spouses Lumbres began collecting deficiency payments from lot buyers, including demand letters to the Spouses Tablada for an alleged balance of P230,000. Upon non-payment, they cancelled the Contract to Sell and executed a Deed of Absolute Sale over the lot to themselves on December 22, 2000. A new title, TCT No. T-473055, was issued in their names.

In June 2001, the Spouses Tablada filed a complaint for nullification of title, reconveyance, and damages against Spring Homes and the Spouses Lumbres, seeking to nullify the second sale and validate the first.
Summons was not properly served on Spring Homes as it was reportedly defunct; Spouses Lumbres moved to dismiss the case citing non-compliance with conciliatory proceedings and lack of jurisdiction, which RTC denied.
The Spouses Lumbres filed a separate ejectment case against the Spouses Tablada, initially dismissed but later reversed by RTC, reinstated by CA and affirmed by this Court on possession grounds only.
The RTC dismissed the nullification case for lack of jurisdiction over Spring Homes, an indispensable party, citing failure to serve summons and corporate dissolution.
The CA reversed the RTC, ruling that Spring Homes was not indispensable since the title was already issued to Spouses Lumbres, and proceeded to the merits, finding the first sale to the Spouses Tablada valid and that Spouses Lumbres acted in bad faith when registering the title.

RTC lacked jurisdiction due to non-joinder of Spring Homes as indispensable party.
The Spouses Tablada were not purchasers in good faith, failing to pay balance purchase price.
The first Deed of Absolute Sale was void as mere loan security, and therefore the second sale was valid and rightful.

The Spouses Tablada claim the contract price discrepancy was explained by the cost of house construction (42 sq. m. at P6,000/sq.m) separate from land (105 sq. m. at P1,500/sq.m.), and that house was constructed with their own funds.

Whether Spring Homes Subdivision Co., Inc. is an indispensable party in the suit for nullification of title and reconveyance.
Whether the Spouses Tablada are purchasers in good faith of the subject property under the first Deed of Absolute Sale executed with Spring Homes.
Whether the second Deed of Absolute Sale executed by Spring Homes in favor of the Spouses Lumbres should prevail over the first sale to the Spouses Tablada.
Whether the failure to pay alleged outstanding balance by the Spouses Tablada prejudices their claim of ownership and good faith.
Proper application of the doctrine on double sale of immovable property, particularly the requirements of prior registration and good faith possession.