Sps. Occeña v. Esponilla  1985: Alberta died.
Her nieces (her only heirs) succeeded in the
Possession | June 4, 2004 | Puno, J.
Nature of Case: Appeal
SUMMARY: The Tordesillas spouses owned a 1,198 sqm lot in Antique. Their
heirs sold a 798 sqm portion of this lot to Alberta Morales. Later, Arnold de la
Flor (a grandchild and one of the heirs of the Tordesillas spouses) sold the
same portion to the Occeña spouses. Alberta’s nieces (her heirs, and the
respondents in this appeal) filed an action to annul the sale to the Occeña
spouses, alleging that the spouses were buyers in bad faith. The Occeña
spouses claimed that Alberta’s nieces were barred by prescription and laches.
The CA ruled for Alberta’s nieces; hence, this appeal.
DOCTRINE: Prescription does not apply when the person seeking annulment
of title or reconveyance is in possession of the lot because the action partakes
of a suit to quiet title, which is imprescriptible.
FACTS:
 A 1,198 sqm lot in Sibalom, Antique was owned by the Tordesillas
spouses. They had 3 children: Harod, Angela, and Rosario.
 When the Tordesillas spouses died, Harod and Angela, along with
Rosario’s children Arnold and Lilia (Rosario had died by then) inherited ISSUE/S & RATIO:
the lot.
o 1951: They executed a Deed of Pacto de Retro Sale in favor of
Alberta Morales over the southwestern portion of the lot, which
had an area of 748 sqm.
 1954: Arnold and Lilia executed a Deed of Definite Sale of Shares,
Rights, Interests, and Participations over the same 748-sqm portion in
favor of Alberta Morales.
 Alberta possessed the lot as owner, constructed a house on it, and
appointed a caretaker to oversee the property.
 1956: Arnold borrowed the OCT covering the lot from Alberta. He
executed an affidavit acknowledging receipt of the OCT in trust.
 1966: Arnold and Angela, without the knowledge of Alberta, executed
a Deed of Extrajudicial Settlement declaring the two of them as the
only co-owners of the entire 1,198 sqm lot, without acknowledging the
sale of the 748-sqm portion to Alberta.
 1983: Arnold executed an Affidavit of Settlement of the Estate of
Angela, declaring himself as the sole heir of Angela (who died in
1978). Thus, the title of the entire lot was consolidated in his name.
ownership of the 748-sqm lot. They kept asking Arnold to deliver the
title covering the lot, but the latter failed.
 1986: Arnold used the OCT he borrowed from Alberta in 1956,
subdividing the 1,198 sqm lot into 3 lots and paying taxes on the
property.
 1990: Arnold sold 2 of the 3 subdivided lots (which included the 748
sqm portion he had sold to Alberta) to the Occeña spouses, Tomas and
Sylvina. A Deed of Absolute Sale was executed in their favor, and titles
transferred to their names.
 1993: Arnold died. Alberta’s nieces found out about the sale to the
Occeña spouses once they were notified that they were being ejected.
 Alberta’s nieces filed a case for annulment of sale with cancellation of
titles, with damages, against the Occeña spouses.
 Occeña spouses claimed they were in good faith when they bought the
lots, as the titles were free from encumbrances when they bought
them. They also claimed the defenses of laches and prescription
(Alberta and the nieces having failed to assert their right for 40 years).
 The lower court ruled for the Occeña spouses as they were buyers in
good faith. This was reversed by the CA, who ruled in favoe of
Alberta’s nieces-heirs.
1. WON the Occeña spouses were purchasers in good faith – No.
o The instant petition is a case of double sale of immovable
property. According to Art. 1544, NCC, the ownership of an
immovable sold to different vendees shall belong:
 To the person acquiring it who in good faith first
recorded it in the Registry of Property;
 Should there be no inscription, ownership shall belong
to the person who in good faith was first in possession;
 If none, the person who presents the oldest title in good
faith.
o Here, the Occeña spouses failed to prove good faith in their
purchase.
 A purchaser in good faith and for value is one who buys
property without notice that some other person has a
right to or interest in such property and pays its fair
price before he has notice of the adverse claims and
interest of another person in the same property.
  During trial, the Occeña spouses admitted that they saw RULING: Petition dismissed.
houses built on the subject lot when they inspected it.
They said they relied on the representation of Arnold
that these were owned by squatters.
 The Occeña spouses should have verified from the
occupants of the land the nature and authority of their
possession instead of merely relying on the
representation of the vendor that they were squatters,
having seen for himself that the land was occupied by
persons other than the vendor who was not in
possession of the land at that time.
 The settled rule is that a buyer of real property in
the possession of persons other than the seller
must be wary and should investigate the rights of
those in possession. Without such inquiry, the buyer
can hardly be regarded as a buyer in good faith and
cannot have any right over the property.

2. WON the action of Alberta’s nieces for annulment is barred by laches

and prescription – No.
o Laches cannot be used to defeat justice or perpetuate fraud
and injustice.
o Prescription does not apply when the person seeking
annulment of title or reconveyance is in possession of
the lot because the action partakes of a suit to quiet
title which is imprescriptible.
 In this case, Alberta had actual possession of the land
when she had a house built thereon and had appointed
a caretaker to oversee her property.
 Alberta’s undisturbed possession of the land for a period
of fifty 50 long years gave her and her heirs a
continuing right to seek the aid of a court of equity to
determine the nature of the claim of ownership of
petitioner-spouses.
o The general rule is that registration under the Torrens system
is the operative act which gives validity to the transfer of title
on the land.
 However, it does not create or vest title especially
where a party has actual knowledge of the claimants
actual, open and notorious possession of the property at
the time of his registration.