ALREDO vs. BORAS (G.R. No.

144225, June 17, 2003)

FACTS:
Petition for review for CAs Decision affirming the RTC
Subject land is 81, 524 square meters in Bataan
Registered owners of Subject Land (SL) are petitioner-spouses Godofredo and Carmen (GC)
Private respondents-spouses Armando and Adelia (AA) filed a complaint for specific performance against GC
before the RTC
AAs complaint: GC mortgage SL to AA for P15,000 and the buyer to pay DBP bank loan, its interest, and balance
in cash to seller
AA gave GC money to pay loan to DPB releasing mortgage and returning Original Certificate of Title to GC, AA
also paid the balance of the purchase price.
GC gave AA duplicate of Original Certificate of Title and other documents thus introducing AA as new owner
and possessor of the SL
In January 1994 AA learned that GC re-sold portions of land were being entered into and the trees cut without
their permission, the to several persons are Savellano, Matawaran, and spouses Espiritu who are now
Subsequent Buyers (SB)
On February 1994 AA filed adverse claim with Register of Deeds and discovered GC secured owners duplicate
of the copy of the Original Certificate of Title after filing petition in court for a issuance of a new copy. AA
amended their complaint to include the SD who purchased from GC subdivisions lots of the land thus also
becoming petitioners in this case
Register of Deeds issued to SB Transfer of Certificate of Title
GC and SBs (Petitioners) Answer: Petitioners argued that: a) action in unenforceable under Statues of Fraud, b)
No written instruments evidencing alleged contract of sale over the SL to AA, c) SB are buyers in good faith
The RTC rendered judgment in favor of plaintiffs-AA, stating that the Deed of Absolute Sale executed by GC to
SB is null and oid and their Transfer of Certificate of Title also null and void, and ordered GC to execute good
and valid Deed of Absolute sale stating it was a perfected sale and SB are not innocent purchasers
The CA affirmed RTCs Decision
ISSUE:
1. W/N alleged sale of SL to AA was valid and enforceable as it was entered orally and not it writing
Sub issues:
a) W/N petitioner-wife, Carmen, obtained the consent and authority of her husband, Godofredo, who is
the sole owner of the SL
b) W/N the sale was entered during the 25-year prohibitive period alienating SL without the approval of
the Secretary of Agriculture and Natural Resources
2. W/N action to enforce alleged oral contract of sale brought 24 years from its alleged perfection has been
barred by prescription and by laches.
3. W/N Deed of absolute sale and Transfer of Certificate to SB are valid.
HELD: Petition is without merit.
ISSUE 1: Validity and Enforceability of Sale: GC and AAs contract of sale was a perfected one. Perfection of a contract
happens when there is consent of both contracting parties on object certain and cause of the obligation. In this case the
object was the sale of the SL and the price certain was P15,000. The contract of sale was also consummated, as seller,
GC, delivered their obligation to the AA, placing latter in actual, physical possession and transferred ownership of the SL.
While obligation of buyer, AA, also succeeded in paying price certain to seller evidenced by receipt in March 1970 issued
by petitioner-wife
Statute of Frauds - RTC and CA correctly refused to apply the Statues of Frauds where contracts of sale of real property
be unenforceable unless contract, or some note, or memorandum of sale, is in writing and subscribed by party charged
or by agent. The receipt in March 1970 serves as a memorandum of sale which removes contract from Statue of Frauds,
such only applies to executory contracts and not to contracts either partially or totally performed. In this case, contract
was perfected and consummated and GC benefited from the contract because they paid the bank their loan and
accepted payment of balance of the price. Parties also agreed and performed their obligation through a verbal contract,
which is binding.
Sub-issues: Martial Consent - conjugal property without wifes consent merely makes the contract voidable thus valid
until ratified. In this case, G ratified sale when he introduced AA to his tenant as new owners and GG used most of the
sales proceeds to pay debt with the bank, thus said sale strengthened benefit to conjugal partnership. Article 161 of the
Civil Code states that conjugal partnership is liable for debts and obligations contracted by wife for benefit of conjugal
partnership. Even if Carmen sold land without consent of Godofredo, sale still binds conjugal partnership of spouses.
25-year prohibitive period sale of SL cannot be annulled on ground that Secretary did not approve sale which was made
25 years from issuance of homestead title. Failure to secure the approval of the Secretary does not ipso facto nullify a
sale made after the 5-year period expiration because requirement of Section 118 is merely directory or a formality.
Section 118 of the Public Land Act states that land acquired under free patent or homestead provisions shall not be
subject to encumbrances or alienation from date of approval of application and for a term of 5 years from and after date
of issuance of patent or grant. A grantee or homesteader is prohibited from alienating to private individual a land grant
within said 5 years from time patent or grant is issued. Violation of the prohibition renders sale void. But expires on fifth
year, from then on until next 20 years.
Prescription AA wrongfully filed complaint as one of specific performance. The correct relief should be reconveyance,
one that seeks to transfer property wrongfully registered by another to its rightful and legal owner. Article 1456 of the
Civil Code provides a person acquiring property through fraud becomes, by operation of law, a trustee of an implied
trust for benefit of real owner of property. In the case, the fraud creates an implied trust in favor of AA and gives right
to seek reconveyance of property from SB and such action prescribes in 10 years. The CA wrongfully ruled that issue of
prescription prescribed in 4 years from discovery of fraud, it should be that prescription period for reconveyance of
fraudulently registered real property is 10 years from date of issuance of Certificate of Title or registration of deed,
correlating Articles 1529 and 1456 of the Civil Code. In the case, SB brought lands on February 22, 1994, date of
execution of their deeds of sale, while Register of Deeds issued transfer to SB on February 24, 1994. Prescription could
not have set since case was filed before 10-year prescription. Either is action barred by laches for AA discovered the
subsequent sale on January 1994 and filed case on March 7, 1994, there was no neglect for an unreasonable time to
exercise their due diligence.
Validity of Deed of absolute sale and Transfer of Certificate SB were not buyers nor registrants in good faith. Because
under Article 1544 of the Civil Code wen ownership or title passes to buyer, the seller ceases to have any title to
transfer to any third person. If seller sells the same to another, the second buyer who has actual or constructive
knowledge of prior sale cannot be registrant in good faith. Second buyer cannot defeat first buyers title. In case a title is
issued to second buyer, first buyer may seek reconveyance of property subject to sale. Thus second buyer must act in
good faith in registering deed, which in this case, GC already sold land to AA and latter registered their adverse claim
with Register of Deeds on February 9, 1994 while GC and SB purchased their lots only on February 22, 1994 as showin in
the deeds of sale. Consequently, adverse claim registered prior to second sale charged AA with constructive notice of
defects in title of GC. Thus, AA were not buyers in good faith when they purchased lot of February 22, 1994 and were not
registrants in good faith wheN they registered their deed on February 24, 1994. Thus, SB individual titles to their
respective lands are not absolutely indefeasible. Defense of indefeasibility of Torrens Title does not extend to a
transferee who takes certificate of title with notice of flaw in his title, as in this case.
Wherefore, petition is denied and CAs decision if affirmed.