Rosaroso v. Meridian Realty Corporation, G.R. No. 194846 Facts

57. Rosaroso v. Meridian Realty Corporation, G.R. No.
194846
Facts:
Spouses Luis Rosaroso (Luis) and Honorata Duazo (Honorata) acquired several real properties in Daan
Bantayan, Cebu City, including the subject properties. The couple had nine (9) children. On April 25,
1952, Honorata died. Later on, Luis married Lourdes Pastor Rosaroso (Lourdes).
A complaint for Declaration of Nullity of Documents with Damages was filed by Luis’s children against
Lucila R. Soria (Lucila), Laila S. Solutan (Laila), and Meridian Realty Corporation (Meridian). It was alleged
by the petitioners that Luis, with the full knowledge and consent of his second wife, Lourdes, executed a
Deed of Absolute Sale of some of the properties in their favor. Petitioners also alleged that a second sale
took place when the respondents through unscrupulous means, made Luis sign a Deed of Absolute Sale
conveying to Meridian three (3) parcels of residential land.
They further alleged that Meridian was in bad faith when it did not make any inquiry as to who were the
occupants and owners of said lots; and that had Meridian only investigated, it would have been
informed as to the true status of the subject properties and would have desisted in pursuing their
acquisition.
On their part, respondents Lucila and Laila contested the First Sale in favor of petitioners. They
submitted that even assuming that it was valid, petitioners were estopped from questioning the Second
Sale in favor of Meridian because they failed not only in effecting the necessary transfer of the title, but
also in annotating their interests on the titles of the questioned properties. Respondent Meridian, in its
answer as to petitioners’ contention that Meridian acted in bad faith when it did not endeavor to make
some inquiries as to the status of the properties in question, it countered that before purchasing the
properties, it checked the titles of the said lots with the Register of Deeds of Cebu and discovered
therein that the First Sale purportedly executed in favor of the plaintiffs was not registered with the said
Register of Deeds.
RTC ruled in favor of petitioners. On appeal, the CA reversed and set aside the RTC decision.
Issues:
1. Whether or not the first sale executed by Luis Rosaroso in favor of his children of his first marriage is
void? No.
2. Whether or not the Meridian Realty Corporation a buyer in bad faith? Yes.
Held:
1. The First Deed Of Sale Was Valid. The CA decision relied heavily on the account of Lourdes who
testified that the children of Luis approached him and convinced him to sign the deed of sale, explaining
that it was necessary for a loan application, but they did not pay the purchase price for the subject
properties. This testimony, however, is self-serving and would not amount to a clear and convincing
evidence required by law to dispute the said presumption. Granting that there was no delivery of the
consideration, the seller would have no right to sell again what he no longer owned. His remedy would
be to rescind the sale for failure on the part of the buyer to perform his part of their obligation pursuant
to Article 1191 of the New Civil Code. In the case of Clara M. Balatbat v. Court Of Appeals and Spouses
Jose Repuyan and Aurora Repuyan, it was written:
The failure of the buyer to make good the price does not, in law, cause the ownership to revest to the
seller unless the bilateral contract of sale is first rescinded or resolved pursuant to Article 1191 of the
New Civil Code. Non-payment only creates a right to demand the fulfillment of the obligation or to
rescind the contract. [Emphases supplied]
2. The fact that Meridian had them first registered will not help its cause. In case of double sale, Article
1544 of the Civil Code provides that ownership of an immovable property which is the subject of a
double sale shall be transferred: (1) to the person acquiring it who in good faith first recorded it in the
Registry of Property; (2) in default thereof, to the person who in good faith was first in possession; and
(3) in default thereof, to the person who presents the oldest title, provided there is good faith. The
requirement of the law then is two-fold: acquisition in good faith and registration in good faith. Good
faith must concur with the registration. If it would be shown that a buyer was in bad faith, the alleged
registration they have made amounted to no registration at all.
When a piece of land is in the actual possession of persons other than the seller, the buyer must be wary
and should investigate the rights of those in possession. Without making such inquiry, one cannot claim
that he is a buyer in good faith. When a man proposes to buy or deal with realty, his duty is to read the
public manuscript, that is, to look and see who is there upon it and what his rights are. A want of caution
and diligence, which an honest man of ordinary prudence is accustomed to exercise in making
purchases, is in contemplation of law, a want of good faith. The buyer who has failed to know or
discover that the land sold to him is in adverse possession of another is a buyer in bad faith. If the
registration is done in bad faith, it is as if there is no registration at all, and the buyer who has first taken
possession of the property in good faith shall be preferred.

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