FACTS:

The case involves two consolidated petitions regarding a parcel of land in Cagayan de Oro City. The property was initially purchased by Godofredo Nacalaban and a Transfer Certificate of Title (TCT) was issued in his name. After his death, his wife Baldomera allowed her mother to build and occupy a house on the property. Baldomera's children later sold the property to Cagayan Capital College. The College demanded that the occupants vacate the premises, leading to a complaint for reconveyance, nullity of contracts, partition, and damages filed by the heirs of Trifonia D. Gabutan against Nacalaban and the College. The College claimed to be a buyer in good faith, while Nacalaban asserted ownership by virtue of intestate succession.

Another dispute arose between the College and the heirs of Melecia Vda. de Dalondonan, who claimed co-ownership of the property with Nacalaban and Gabutan. They argued that the College had prior knowledge of this co-ownership and was therefore a purchaser in bad faith. The Municipal Trial Court in Cities (MTCC) ruled in favor of the College, and this decision was affirmed by the Regional Trial Court (RTC) and the Court of Appeals (CA). In a separate reconveyance case, the RTC declared that Nacalaban held the property in trust for Melecia and that the heirs inherited the ownership and beneficial interest upon her death. The CA dismissed consolidated appeals and affirmed the RTC decisions. The heirs then filed a petition for certiorari before the Supreme Court. Meanwhile, the College filed a separate petition seeking a partial appeal of the CA decision, claiming to be a buyer in good faith while disputing Nacalaban's capacity to sell the property.

The Supreme Court was tasked with resolving the issues of whether the certiorari petition should prosper, whether the action for reconveyance was proper, and whether the College is a buyer in good faith.

ISSUES:

1. Whether the petition for certiorari filed by Nacalaban, et al. is the proper remedy.

2. Whether the action for reconveyance filed by Gabutan, et al. is proper.

3. Whether the creation of an implied resulting trust has been established.

4. Whether the action for reconveyance filed by the heirs of Melecia is proper.

5. Whether the complaint for reconveyance filed by Gabutan, et al. is imprescriptible.

6. Whether the Extrajudicial Settlement with Sale executed between Nacalaban, et al. and the College is void.

7. Whether the property should be reconveyed to the estate of Melecia.

8. Whether the College is a buyer in good faith.

9. Whether the College is a buyer in good faith.

10. Whether the College exercised reasonable diligence in determining the seller's title and capacity to transfer the property.

11. Whether or not the College is entitled to the payment of just compensation for the expropriation of its property.

12. Whether or not the College is entitled to pay for the fair market value of its property.

13. Whether or not the College is entitled to the payment of legal interest on the just compensation awarded.

14. Whether or not the College is entitled to the cancellation of TCT No. T-111846 and the reconveyance of the property to the Estate of Melecia Dalondonan.

RULING:

1. The petition for certiorari of Nacalaban, et al. is a wrong remedy. The proper remedy to obtain a reversal of judgment on the merits, final order or resolution is an appeal. Nacalaban, et al. should have filed an appeal in the form of a petition for review on certiorari and not a petition for certiorari under Rule 65, which is a special civil action. The existence and availability of the right of appeal prohibits the resort to certiorari because one of the requirements for the latter remedy is that there should be no appeal. In this case, Nacalaban, et al. allowed the period to file an appeal to lapse without doing so and, instead, filed a petition for certiorari. The petition is dismissible.

2. The action for reconveyance filed by Gabutan, et al. is proper. An implied resulting trust was created between Melecia and Godofredo. Article 1448 of the Civil Code provides that there is an implied trust when property is sold, and the legal estate is granted to one party but the price is paid by another for the purpose of having the beneficial interest of the property. In this case, Gabutan, et al. provided evidence that Melecia's money was used to purchase the property, but the title was placed in Godofredo's name. These factual findings were affirmed by the lower courts. The existence of an implied trust is a factual issue, and the lower courts' findings are binding when supported by evidence. The action for reconveyance is therefore proper.

3. The creation of an implied resulting trust has been established. The testimonies of witnesses Felisia, Crisanta, and Trifonia are consistent and agree in all material points regarding the arrangement between Melecia and Godofredo. The arrangement among family members is not unusual, especially in the 1950s. The fact that Godofredo's siblings failed to provide details of the sale and the delay in transferring the title of the property to another person indicates that Baldomera acknowledged that the property belongs to Melecia.

4. The action for reconveyance filed by the heirs of Melecia is proper. An action for reconveyance is a legal and equitable remedy granted to the rightful landowner whose land was wrongfully or erroneously registered in the name of another. Reconveyance is always available as long as the property has not passed to an innocent third person for value. The title in Godofredo's name and later transferred to the College does not hinder an action for reconveyance based on an implied trust. The title does not vest ownership, and if the registration of the land is fraudulent, the person in whose name the land is registered is considered a mere trustee, and the real owner is entitled to file an action for reconveyance.

5. The complaint for reconveyance filed by Gabutan, et al. is imprescriptible.

6. The Extrajudicial Settlement with Sale executed between Nacalaban, et al. and the College is void.

7. The property should be reconveyed to the estate of Melecia.

8. The College is not a buyer in good faith.

9. The College is not a buyer in good faith. The Court held that the College failed to prove the concurrence of the conditions required to establish good faith. Firstly, the College bought the property from someone who is not the registered owner. Secondly, the College was aware that there were other individuals in possession of the property aside from the sellers. The College failed to inquire about the nature and authority of the possession of these individuals.

10. The College did not exercise reasonable diligence in determining the seller's title and capacity to transfer the property. The Court emphasized that when the land being purchased is in the possession of a person other than the vendor, the buyer must investigate the rights of the actual possessor. The College merely relied on the representations of the sellers without conducting a thorough investigation.

11. Yes, the College is entitled to the payment of just compensation for the expropriation of its property.

12. Yes, the College is entitled to payment for the fair market value of its property.

13. Yes, the College is entitled to the payment of legal interest on the just compensation awarded.

14. Yes, the College is entitled to the cancellation of TCT No. T-111846 and the reconveyance of the property to the Estate of Melecia Dalondonan.

PRINCIPLES:

• The proper remedy to obtain a reversal of judgment on the merits, final order or resolution is an appeal. A petition for certiorari is not a substitute for an appeal where the latter remedy is available but was lost through fault or negligence.

• Rule 65 is a limited form of review and is a remedy of last recourse. It lies only where there is no appeal nor plain, speedy and adequate remedy in the ordinary course of law.

• The existence and availability of the right of appeal prohibits the resort to certiorari because one of the requirements for the latter remedy is that there should be no appeal.

• An implied trust is created when property is sold, and the legal estate is granted to one party but the price is paid by another for the purpose of having the beneficial interest of the property.

• The creation of an implied resulting trust may be proven through parol evidence as long as it is trustworthy.

• An action for reconveyance is a recognized remedy available to a rightful landowner whose property is wrongfully registered in the name of another.

• The registration of a piece of land under the Torrens System does not create or vest title but serves as evidence of ownership or title.

• An action for reconveyance is imprescriptible if the plaintiff or person enforcing the trust is in possession of the property. The action to quiet property title does not prescribe as long as the possessor's possession is undisturbed or his title is not attacked.

• A person in possession of a property has a continuing right to seek the aid of a court to determine the nature of adverse claims and their effect on his own title. Laches cannot be set up to resist the enforcement of an imprescriptible legal right.

• When an implied resulting trust is established, the trustee has an obligation to reconvey the property to the true owner upon the latter's death.

• The execution of a settlement or sale of a property by someone who is not the registered owner or authorized to sell it is void.

• A buyer of registered land is considered in good faith if the seller is the registered owner, in possession of the property, and the buyer was not aware of any claim or interest by others or any defect in the seller's title or capacity to convey. However, this presumption of good faith is not applicable if any of the conditions are absent.

• A purchaser who buys from one who is not the registered owner is required to exercise a higher degree of prudence and must examine all factual circumstances to determine any flaws in the title of the transferor or in his capacity to transfer the land.

• The buyer is not in good faith if he is aware of other individuals in possession of the property and fails to inquire about the nature and authority of their possession.

• The buyer must exercise reasonable diligence in determining the seller's title and capacity to transfer the property. Mere reliance on the representations of the seller is not sufficient to establish good faith.

• The expropriation of private property requires the payment of just compensation.

• Just compensation should be the fair market value of the property at the time of its taking.

• Legal interest on just compensation accrues from the finality of the judgment until its satisfaction.

• The Register of Deeds has the authority to cancel the title and reconvey the property to the rightful owner.