G.R. No. 147788 - EDILBERTO CRUZ AND SIMPLICIO CRUZ, VS. BANCOM FINANCE CORPORATION (NOW UNION BANK OF THE PHILIPPINES).D E C I S I O N - Supreme Court E-Library

Ruling

WHEREFORE, upon the premises, the assailed Decision is REVERSED and SET ASIDE . A new one is rendered declaring BANCOMs right to the subject land as a purchaser in good faith and for value, and ordering the cancellation of the Notice of Lis Pendens on TCT No. 248262-Bulacan. Without pronouncement as to costs. [2] The Facts The factual antecedents of the case are summarized by the Court of Appeals thus: Brothers Rev. Fr. Edilberto Cruz and Simplicio Cruz, plaintiffs herein, were the registered owners of a 339,335 square meter or 33.9335 hectare parcel of agricultural land together with improvements located in Barangay Pulang Yantoc, Angat, Bulacan covered by TCT No. 19587. Sometime in May 1978, defendant Norma Sulit, after being introduced by Candelaria Sanchez to Fr. Cruz, offered to purchase the land. Plaintiffs asking price for the land was P700,000.00, but Norma only had P25,000.00 which Fr. Cruz accepted as earnest money with the agreement that titles would be transferred to Norma upon payment of the balance of P675,000.00. Norma failed to pay the balance and proposed [to] Fr. Cruz to transfer the property to her but the latter refused, obviously because he had no reason to trust Norma. But capitalizing on the close relationship of Candelaria Sanchez with the plaintiffs, Norma succeeded in having the plaintiffs execute a document of sale of the land in favor of Candelaria who would then obtain a bank loan in her name using the plaintiffs land as collateral. On the same day, Candelaria executed another Deed of Absolute Sale over the land in favor of Norma. In both documents, it appeared that the consideration for the sale of the land was only P150,000.00. Pursuant to the sale, Norma was able to effect the transfer of the title to the land in her name under TCT No. T-248262. Evidence shows that aside from the P150,000.00, Candelaria undertook to pay the plaintiffs the amount of P655,000.00 representing the balance of the actual price of the land. In a Special Agreement dated September 1, 1978, Norma assumed Candelarias obligation, stipulating to pay the plaintiffs the said amount within six months on pain of fine or penalty in case of non-fulfillment. Unknown to the plaintiffs, Norma managed to obtain a loan from Bancom in the amount of P569,000.00 secured by a mortgage over the land now titled in her name. On account of Normas failure to pay the amount stipulated in the Special Agreement and her subsequent disappearance from her usual address, plaintiffs were prompted to file the herein complaint for the reconveyance of the land. Norma filed an Answer on February 11, 1980 but failed to appear in court and was eventually declared in default. On May 20, 1980, Bancom filed a motion for leave to intervene which was granted by the trial court. In its Answer in Intervention, Bancom claimed priority as mortgagee in good faith; and that its contract of mortgage with Norma had been executed before the annotation of plaintiffs interest in the