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Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 148147 February 16, 2007

JESSIE GASATAYA, Petitioner,

vs.
EDITHA MABASA, Respondent.

DECISION

CORONA, J.:

Before us is an appeal by certiorari under Rule 45 of the 1997 Rules of Civil Procedure assailing the decision1 of the
Court of Appeals (CA) in CA-G.R. CV No. 55055 which, in turn, affirmed the decision of the Regional Trial Court
(RTC) of Lanao del Norte, Branch 7.2

The facts follow.

Respondent Editha Mabasa’s father, Buenaventura Mabasa, was granted a homestead patent on Lots 279, 272 and
972 located in Lala, Lanao del Norte. Buenaventura Mabasa mortgaged these lots to secure a loan from the
Development Bank of the Philippines (DBP). Because of his failure to pay his indebtedness, DBP foreclosed on the
lots and sold them at public auction where it emerged as the highest bidder. DBP then obtained titles to the lots: Lot
279 under TCT No. T-2247 and consolidated Lots 272 and 972 under TCT No. T-2448.

When Buenaventura Mabasa died, respondent’s siblings authorized her to negotiate with DBP for the repurchase of
the lots. DBP allowed respondent to reacquire the foreclosed properties through a deed of conditional sale for
₱25,875.3

Subsequently, respondent entered into an agreement with petitioner’s father, Sabas Gasataya, for the latter to
assume payment of her obligation to DBP. They further agreed that Sabas Gasataya would take possession of the
lots for 20 years and develop them into a fishpond. As consideration thereof, respondent received ₱10,000 cash, in
addition to the ₱25,000 that Sabas Gasataya had to pay DBP on her behalf.

Upon representation by Sabas Gasataya that respondent’s obligation to DBP had already been settled, they entered
into another agreement denominated as "Deed of Sale of Fishpond Lands with Right to Repurchase."

Eight years after the execution of the above deed of sale with right to repurchase, respondent discovered that Sabas
Gasataya had stopped paying DBP. As a result, DBP revoked her right to repurchase the subject lots. 1awphi1.net

DBP later on held a public auction of the properties where petitioner participated and bid the highest price of
₱27,200. Eventually, he acquired titles to the lots for which he was issued TCT No. T-11720 in lieu of TCT No. T-
2447 (Lot 279) and TCT No. T-11721 for TCT No. T-2448 (Lots 272 and 972).

Respondent then filed a complaint in the RTC for reconveyance of titles of lands with damages4 against petitioner
and Sabas Gasataya (Gasatayas). She claimed that the latter deliberately reneged on his commitment to pay DBP
to: (1) revoke her right to repurchase the lots under the deed of conditional sale and (2) subject the properties to

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 another public auction where petitioner could bid.

Petitioner and his father denied the allegations saying that the deed of conditional sale assumed by the latter from
respondent was rendered ineffective by DBP’s refusal to accept payments thereon.

The trial court ruled in favor of respondent finding that the Gasatayas failed to controvert her claim that they
defrauded her just so petitioner could acquire the lots at public auction.5 According to the trial court, the Gasatayas
failed to prove that DBP indeed rejected payments from Sabas Gasataya. The trial court ruled:

WHEREFORE, judgment is hereby rendered in favor of the [respondent] and against [the Gasatayas] ordering
[them] to wit:

a. Ordering [petitioner] to reconvey to [respondent] TCT. No.[T-11720] and TCT No. T-11721, both of the
Registry of Deeds for the Province of Lanao del Norte, upon tender to and receipt by [petitioner] of the
amount of ₱37,200.00 Philippine money;

b. Ordering the Registrar of Deeds for the Province of Lanao del Norte to procure and cause the transfer and
registration of the aforesaid transfer certificates of title in favor and in the name of herein [respondent] Editha
S. Mabasa;

c. Ordering [the Gasatayas] to cede, transfer and reconvey to [respondent] the physical possession and
occupancy of Lot 279, 272 and Lot 972…as covered by the aforesaid certificates of title;

d. Ordering [the Gasatayas] to pay [respondent] the sum of ₱5,000.00 for attorney’s fees; ₱5,000.00 as
litigation expenses;

e. Ordering [the Gasatayas] to pay costs of this proceeding[s].

SO ORDERED.6

Petitioner and his father appealed to the CA which affirmed the RTC’s decision and dismissed their appeal for lack
of merit. The CA declared:

The contention of [respondent] that [the Gasatayas] deliberately chose not to pay DBP as agreed, in order for them
to acquire said properties in a fraudulent and treacherous manner, was not fully controverted by [them]. [The
Gasatayas] failed to produce evidence to support their defenses.

xxx xxx xxx

Moreover, [the Gasatayas] are in possession of said land[s] by virtue of a Deed of Sale with a Right to Repurchase
and not because the DBP granted it to them…[T]o facilitate their acquisition of the land in question, [they]
deliberately defaulted in the payment of the assumed obligation to the damage and prejudice of [respondent].
Consequently, the lands in question were subjected to public bidding wherein [petitioner] participated and eventually
won…[the Gasatayas] committed a breach of trust amounting to fraud which would warrant an action for
reconveyance.7

Petitioner alone came to us via this appeal by certiorari seeking the reversal of the CA decision.

Before us, petitioner contests the CA decision affirming the trial court’s order to reconvey his titles on the disputed
lots to respondent who, according to him, is not the owner thereof.

We affirm the CA.

Reconveyance is available not only to the legal owner of a property but also to the person with a better right than the
person under whose name said property was erroneously registered.8 While respondent is not the legal owner of
the disputed lots, she has a better right than petitioner to the contested lots on the following grounds: first, the deed
of conditional sale executed by DBP vested on her the right to repurchase the lots and second, her right to
repurchase them would have subsisted had they (the Gasatayas) not defrauded her.

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 The trial court’s findings, as affirmed by the CA, that petitioner and his father deceived respondent to acquire the
disputed lots bind us. Well-settled is the rule that factual conclusions of the trial court deserve respect and become
irrefutable especially when affirmed by the CA.9 Absent any evidence that the CA overlooked salient matters that
could justify a reversal of the outcome of this case, we decline to disturb such factual conclusions.

Petitioner, however, insists that respondent had no right to the disputed lots since the conditional sale agreement
where such right was based had long been cancelled by DBP. According to petitioner, a void and inexistent deed
cannot override his right as registered owner of the lots.

We disagree.

Petitioner cannot discredit the deed of conditional sale just so he can to keep his titles to the lots. Petitioner should
be reminded that DBP revoked respondent’s right to repurchase the lots under said deed because of the deceitful
maneuverings that he and his father employed. If we were to sustain petitioner’s argument, then we would, in effect,
reward him for his misdeed.

Neither can this Court uphold petitioner’s contention that his titles are unsullied on the mere fact that he purchased
the properties at public auction. Fraud overthrows the presumption that the public sale was attended with regularity.
The public sale did not vest petitioner with any valid title to the properties since it was but the consequence of his
and his father’s fraudulent schemes.

The registration of the properties in petitioner’s name did not obliterate the fact that fraud preceded and facilitated
such registration. Actual or positive fraud proceeds from an intentional deception practiced by means of
misrepresentation of material facts,10 which in this case was the conscious representation by petitioner’s father
(Sabas Gasataya) that respondent’s obligation to DBP had already been settled. It is fraud to knowingly omit or
conceal a fact, upon which benefit is obtained, to the prejudice of another.11 Consequently, fraud is a ground for
reconveyance.12

Moreover, the law only protects an innocent purchaser for value and not one who has knowledge of and
participation in the employment of fraud. An innocent purchaser for value is one who buys the property of another
without notice that some other person has a right to or interest in that same property, and who pays a full and fair
price at the time of the purchase or before receiving any notice of another person’s claim.13 Obviously, petitioner
was not an innocent purchaser for value.

As a final point, the Court takes significant note of the fact that respondent’s father originally acquired the subject
lots through homestead grant. Commonwealth Act 141 (Public Land Act) aims to confine and preserve to the
homesteader and his kin the homestead lots. We, therefore, agree with the CA’s disquisition that courts should "lend
a stout shoulder to help keep a homestead in the homesteader’s family" for the stern reality cannot be belied that
"homesteaders and their families are generally in the lower stratum of life" and most likely, when they alienate the
homestead, it is "out of dire necessity."14 According to the CA, desperation does not allow much of a choice, hence
homesteaders and their kin should be given every opportunity to repurchase their homestead.

WHEREFORE, the assailed decision of the Court of Appeals in CA-G.R. CV No. 55055 is hereby AFFIRMED.

Costs against petitioner.

SO ORDERED.

RENATO C. CORONA
Associate Justice

WE CONCUR:

REYNATO S. PUNO
Chief Justice
Chairperson

ANGELINA SANDOVAL-GUTIERREZ ADOLFO S. AZCUNA

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 Associate Justice Asscociate Justice

CANCIO C. GARCIA
Associate Justice
CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above decision had been
reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

REYNATO S. PUNO
Chief Justice

Footnotes

1 Penned by Associate Justice Ramon Mabutas, Jr. (now retried) and concurred in by Associate Justices
Roberto A. Barrios and Edgardo P. Cruz of the Fifteenth Division of the Court of Appeals; rollo, pp. 33-42.

2 Decided by Judge Oscar E. Zerna, id., pp. 43-52.

3 "Exhibit C," id., p. 68.

4 Civil Case No. 07-111, id., pp. 60-67.

5 Id., p. 51.

6 Supra note 2.

7 CA Decision, rollo, pp. 33-42.

8 De Guzman v. Court of Appeals, G.R. No. 120004, 27 December 2002, 394 SCRA 302; Aguila v. Court of
Appeals, No. L-48335, 15 April 1998, 160 SCRA 352.

9 Pleyto v. Lomboy, G.R. No. 148737, 16 June 2004, 432 SCRA 329.

10 Mayor v. Belen, G.R. No. 151035, 3 June 2004, 430 SCRA 561; Heirs of Manuel Roxas v. Court of
Appeals, 337 Phil. 41 (1997).

11 Id.

12 Abejaron v. Nabasa, 411 Phil. 552 (2001).

13 Domingo v. Reed, G.R. No. 157201, 9 December 2005, 477 SCRA 227.

14 Supra.

The Lawphil Project - Arellano Law Foundation

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