G.R. No. 148147 . February 16, 2007.
Jessie Gasataya, Petitioner, vs. Editha Mabasa, Respondent.

FACTS

Respondent Editha Mabasa’s father, Buenaventura Mabasa, was the original homestead patentee of three lots. After a mortgage foreclosure, the Development Bank of the Philippines (DBP) acquired the titles. Respondent, authorized by her siblings, negotiated with DBP and secured a right to repurchase the properties via a deed of conditional sale. She then entered into an agreement with petitioner’s father, Sabas Gasataya, whereby he would assume her payment obligation to DBP, develop the lots into a fishpond, and hold possession for 20 years. Respondent received cash consideration, and a subsequent “Deed of Sale with Right to Repurchase” was executed.
Eight years later, respondent discovered Sabas had stopped paying DBP, leading DBP to revoke her repurchase right. The lots were subsequently sold at a public auction where petitioner, Jessie Gasataya, was the highest bidder and obtained new titles. Respondent filed a complaint for reconveyance with damages against the Gasatayas, alleging they deliberately defaulted on the DBP payments to engineer the foreclosure and auction, enabling petitioner to acquire the titles fraudulently.

ISSUE

Whether petitioner Jessie Gasataya can be compelled to reconvey the titles to the subject lots to respondent Editha Mabasa.

RULING

Yes, the Supreme Court affirmed the Court of Appeals’ decision ordering reconveyance. The legal logic rests on the principle that an action for reconveyance is available not only to the legal owner but also to one who has a better right than the person under whose name the property was registered. While respondent was not the legal owner at the time of the auction, she possessed a superior equitable right stemming from the DBP-granted right to repurchase, which would have remained viable had the Gasatayas not defrauded her.
The trial court and the CA’s factual findings, which bind the Supreme Court absent compelling contrary evidence, established that petitioner and his father deliberately defaulted on the DBP payments to facilitate the auction and petitioner’s acquisition. This constituted fraud, a clear ground for reconveyance. Petitioner cannot claim to be an innocent purchaser for value because he had knowledge of and participated in the scheme to deprive respondent of her right. Furthermore, the Court emphasized the policy under the Public Land Act to preserve homesteads for the homesteader’s family, lending support to respondent’s effort to recover the property originally granted by homestead patent.