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ROSAROSO v. SORIA

FACTS:

The case involves a dispute over the ownership and possession of several parcels of land. The plaintiffs claimed that they are the rightful owners of the properties by virtue of a deed of sale executed in their favor. The defendants, including respondent Meridian Realty Corporation, asserted ownership based on a subsequent deed of sale and other transactions.

The trial court ruled in favor of the plaintiffs, declaring the first deed of sale in favor of the petitioners as valid and binding. It also declared the subsequent deed of sale null and void. The defendants were ordered to pay moral damages, attorney's fees, and litigation expenses to the plaintiffs.

On appeal, the Court of Appeals reversed the trial court's decision. The CA ruled that the first deed of sale was void because the petitioners failed to prove that they paid the consideration for the properties. However, the CA upheld the validity of the subsequent deed of sale based on the presumption of regularity. The CA further ruled that the revocation of the first Special Power of Attorney (SPA) did not affect the validity of the second SPA and the transactions emanating from it.

Petitioners filed a motion for reconsideration, which was denied by the CA. Hence, the present petition was filed with the Supreme Court.

The petitioners filed a petition with the Court of Appeals, identifying three errors committed by the court in a prior ruling. First, they argued that the Court of Appeals erred in declaring void the first sale executed by the late Luis Rosaroso in favor of his children from his first marriage. Second, they claimed that the Court of Appeals erred in not affirming the trial court's ruling that the Meridian Realty Corporation was a buyer in bad faith, despite finding that the first sale was genuine and complied with all legal formalities. Lastly, they contended that the Court of Appeals erred in not considering the second sale dated September 27, 1994, as null and void from the beginning, as Luis Rosaroso was no longer the owner of the lots in question since he had already disposed of them in favor of the children from his first marriage.

ISSUES:

  1. Whether the first sale executed by the late Luis Rosaroso in favor of his children of his first marriage is void.

  2. Whether Meridian Realty Corporation is a buyer in bad faith.

  3. Whether the second sale of the subject properties is null and void.

  4. Whether there was sufficient consideration in the first sale, despite non-payment of the purchase price.

  5. Whether Meridian is a buyer in good faith.

RULING:

  1. The first sale executed by Luis Rosaroso in favor of his children of his first marriage is valid. The respondents failed to present clear and convincing evidence to rebut the disputable presumption that private transactions have been fair and regular, and that there was sufficient consideration for the contract. The burden of proof was on the respondents to prove that the sale was made without a valid consideration, and they failed to do so.

  2. Yes, there was sufficient consideration in the first sale. The presumption that there was consideration will not be disturbed because the evidence presented by the buyers (Meridian) was self-serving and did not meet the clear and convincing evidence required to dispute the presumption. Even if there was no delivery of the consideration, the seller's remedy would be to rescind the sale for the buyer's failure to fulfill their obligation, not to sell the property again.

  3. No, Meridian is not a buyer in good faith. Meridian's argument that they acquired the properties in good faith and had them first registered in the Registry of Property is not persuasive. Under Article 1544 of the Civil Code, ownership of an immovable property in case of a double sale is transferred to the person who acquires it and first records it in good faith. However, the requirement of the law is two-fold: acquisition in good faith and registration in good faith. If it can be shown that the buyer was in bad faith, their registration becomes ineffective. Meridian is considered in bad faith because they failed to make necessary inquiries and investigate the rights of those in possession of the property. A buyer cannot claim to be in good faith if they failed to know or discover that the property they are buying is in adverse possession of another person.

PRINCIPLES:

  • Public documents executed with all legal formalities are entitled to a presumption of truth as to the recitals contained therein. To overthrow the certificate of a notary public that a grantor executed a certain document and acknowledged its execution before him, there must be strong, clear, and convincing evidence of the falsity of the certificate.

  • Notarial documents are entitled to full faith and credit upon their face, and must be sustained in full force and effect unless strong, complete, and conclusive proof of their nullity is presented.

  • Bare allegations, unsubstantiated by evidence, are not equivalent to proof under the Rules of Court. The burden of proof is on the party making the allegation.

  • The failure of the buyer to make payment does not automatically cause ownership to revert back to the seller. The seller's remedy would be to rescind the sale for the buyer's non-performance of their obligation. (Clara M. Balatbat v. Court Of Appeals and Spouses Jose Repuyan and Aurora Repuyan)

  • The principle of primus tempore, potior jure (first in time, stronger in right) applies in case of a double sale of immovable property. The ownership of the property is transferred to the person who acquires it and first records it in good faith. However, registration must be coupled with good faith, and a buyer who fails to make necessary inquiries and investigate the rights of those in possession of the property is considered a buyer in bad faith. (Article 1544 of the Civil Code; Spouses Sarmiento v. Court of Appeals)

  • A person who purchases real property which is in the actual possession of another should make some inquiry concerning the right of the person in possession. Failure to do so would make the purchaser a purchaser in bad faith.

  • Possession may be exercised in one's name or in the name of another. A purchaser should not rely solely on the assurances of the seller, but should conduct their own inquiry to determine the validity of the possession.