Title
Spouses Santiago vs. Villamor
Case
G.R. No. 168499
Decision Date
Nov 26, 2012
A disputed 4.5-hectare land in Masbate, foreclosed and sold twice, led to conflicting claims. SC ruled against petitioners, citing lack of title proof and failure to investigate possessors' rights.

Case Summary (G.R. No. L-1291)

Petitioner and Respondent Positions

Petitioners: Assert title under a July 21, 1994 notarized deed of sale from the spouses Villamor, Sr., claim constructive delivery under Article 1498 of the Civil Code, and contend they are purchasers in good faith unaware of any adverse claims. Respondents (and respondent John): Assert equitable/legal title by virtue of installment payments to San Jacinto Bank (payments dated November 4, 1991; November 23, 1992; April 26, 1993; June 8, 1994) and continuous actual possession; they contend the petitioners failed to investigate the possessory facts.

Key Dates

Mortgage originally executed January 1982; San Jacinto Bank foreclosed and acquired title (final deed in its name) around 1991; respondents and Catalina entered into a purchase arrangement with the bank and made installment payments in 1991–1994; bank purportedly issued a deed of sale to Domingo Villamor, Sr. July 19, 1994; spouses Villamor, Sr. executed a deed of sale to petitioners July 21, 1994; petitioners filed quieting of title October 20, 1994 (Civil Case No. 201); respondents and Catalina filed specific performance (Civil Case No. 200) October 11, 1994; RTC ruled for petitioners May 28, 1997; Court of Appeals reversed August 10, 2004; petition for review to the Supreme Court denied (Supreme Court decision November 26, 2012).

Applicable Law

Constitutional basis: 1987 Philippine Constitution (applicable because the decision date is after 1990). Civil Code provisions central to the decision as applied by the courts include Articles 1477, 1497, 1498 (on transfer of ownership and constructive delivery) and Articles 476–477 (on quieting of title). The decision applies the preponderance-of-evidence standard for civil actions and established jurisprudence on good faith purchasers and constructive delivery.

Facts Relevant to Title and Possession

Spouses Villamor, Sr. mortgaged Lot No. 1814 to the San Jacinto Bank in 1982 for a P10,000 loan; the bank extrajudicially foreclosed and, as highest bidder, bought the land; title was registered in the bank’s name when redemption failed. The bank offered the land for sale. Respondents (and their sister Catalina) who were in possession and cultivation negotiated a P65,000 sale with the bank and paid installments totaling the agreed price across 1991–1994. The bank later purported to issue a deed of sale to Domingo Villamor, Sr. (July 19, 1994), and the spouses Villamor, Sr. executed a deed to the petitioners (July 21, 1994). The respondents continued in actual possession and asserted that their payments were on their own behalf; when petitioners sought possession, respondents resisted and litigated.

Procedural History (Two Parallel Cases)

Civil Case No. 200 (specific performance) was filed by respondents and Catalina against San Jacinto Bank for a deed of conveyance after the bank refused to deliver title despite installment payments; the RTC dismissed that case (finding bank acted in good faith in issuing a deed of repurchase to spouses Villamor, Sr.), but the Court of Appeals set aside the RTC and ordered a deed of sale to respondents and Catalina. Civil Case No. 201 (quieting of title and recovery of possession) was brought by petitioners against respondents; the RTC ruled for petitioners (May 28, 1997) on summary judgment, declaring them legal and absolute owners and ordering respondents to vacate; the Court of Appeals reversed (August 10, 2004), finding petitioners failed to prove legal or equitable title and had not been placed in possession; the CA dismissed the quieting action without prejudice to the specific performance case. The Supreme Court denied the petition for review and ordered dismissal of Civil Case No. 201.

Issue Presented

Whether the Court of Appeals erred in setting aside the RTC decision and dismissing the petitioners’ complaint for quieting of title and recovery of possession — specifically, whether petitioners established legal or equitable title, constructive delivery, and purchaser-in-good-faith status sufficient to sustain quieting of title.

Standard for Quieting of Title and Burden of Proof

Quieting of title requires proof that there is a cloud on title and that the plaintiff has legal or equitable title or interest in the property (Civil Code Articles 476–477). In civil actions, the plaintiff must establish his cause by a preponderance of evidence; failure to do so results in dismissal. Where competing claims and adverse possession or other equitable claims exist, the plaintiff bears the burden to prove an operative title sufficient to remove the cloud.

Constructive Delivery and Its Limits

The courts applied Civil Code Articles 1477, 1497 and 1498: ownership transfers upon actual or constructive delivery; delivery for corporeal things requires placement in control and possession of the vendee; for incorporeal things, execution of a public instrument is generally equivalent to delivery unless the deed shows otherwise. However, the execution of a public instrument only gives rise to a prima facie presumption of delivery. That presumption is rebuttable and is negated when the vendee fails to take actual possession of the property. Moreover, a person not in actual possession cannot transfer constructive possession merely by executing a public instrument. On the facts, petitioners were never placed in actual control or possession; respondents remained in actual possession. Consequently, constructive delivery by mere execution of the deed to petitioners did not occur.

Purchaser in Good Faith Requirement and Duty to Investigate

A purchaser in good faith is one who buys without notice of another’s right or interest and pays a fair price before notice of adverse claims. Jurisprudence applied in the decision emphasizes that when the property sold is in the possession of someone other than the vendor, a prospective buyer must inquire into the rights of the actual possessor; failure to investigate precludes a claim of good faith. Petitioners failed to show they conducted such inquiry or that they had no notice of the respondents’ possession; their unproven claim of local custom (children using parents’ property) was insufficient to discharge the burden of proof. Thus, petitioners could not be regarded as purchasers in good faith.

Interaction with the Specific Performance Case

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