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G.R. No. L-75342. March 15, 1990

FACTS: In 1963, spouses Celedonio and Dolores Manzanilla (spouses Manzanilla) sold on installment an
undivided one-half portion of their residential house and lot. At the time of the sale, the said property was
mortgaged to the Government Service Insurance System (GSIS), which fact was known to the vendees, spouses
Magdaleno and Justina Campo. The Campo spouses took possession of the premises upon payment of the first
installment on April 17, 1963 and up to the present. Some payments were made to petitioners while some were
made directly to GSIS.

On May 17, 1965, the GSIS filed its application to foreclose the mortgage on the property for failure of the
Manzanilla spouses to pay their monthly amortizations. The property was sold at public auction where GSIS
was the highest bidder.

Two months before the expiration of the period to redeem or on August 31, 1966, the Manzanilla spouses
executed a Deed of Absolute Sale of the undivided one half portion of their property in favor of the Campo
spouses. Upon the expiration of the period to redeem without the Manzanilla spouses exercising their right of
redemption, title to the property was consolidated in favor of the GSIS and a new title Issued in its name.
The Manzanilla spouses made representations and succeeded in re-acquiring the property from the GSIS then
they mortgaged the property to the Biñan Rural Bank. Petitioner Ines Carpio purchased the property from the
Manzanilla spouses and agreed to assume the mortgage in favor of Biñan Rural Bank.

On November 12, 1973, private respondent Justina Campo registered her adverse claim over the said lot.On
October 3, 1977, petitioner Carpio filed an ejectment case against private respondent Justina Campo. On July
31, 1979, private respondent Justina Campo (already a widow) filed a complaint for quieting of title against the
Manzanilla spouses and Ines Carpio praying among others, for the issuance to her of a certificate of title over
the undivided onehalf portion of the property. The trial court rendered its decision in favor of Campo. The
decision was appealed by petitioners to the Court of Appeals; however it only affirmed the decision of the trial
court. Petitioners’ Motion for reconsideration was denied.

ISSUE: Whether or not petitioners are under any legal duty to reconvey the undivided one-half portion of the
property to private respondent Justina Campo.

RULING: In view of the failure of either the Manzanilla spouses or the Campo spouses to redeem the property
from GSIS, title to the property was consolidated in the name of GSIS. The new title cancelled the old title in the
name of the Manzanilla spouses. GSIS at this point had a clean title free from any lien in favor of any person
including that of the Campo spouses.

If it were true that petitioners deliberately allowed the loan to lapse and the mortgage to be foreclosed, we do
not see how these circumstances can be utilized by them to their advantage. There was no guarantee that
petitioners would be able to redeem the property in the event the mortgage thereon was foreclosed as in fact
they failed to redeem because they had no money. On the other hand, had they opted to eventually exercise
their right of redemption after foreclosure, they would be under a legal duty to convey one-half portion thereof
sold to the Campo spouses because by then, title to the property would still be in their name. Either way,
petitioners were bound to lose either the entire property in case of failure to redeem or the one-half portion
thereof sold to private respondent in the case of redemption. Further, should not petitioners let the period of
redemption lapse without exercising the right of redemption, as what happened in this case, there was no
guarantee that the same could be re-acquired by them from GSIS nor would GSIS be under any legal duty to
resell the property to them.
There may be a moral duty on the part of petitioners to convey the one-half portion of the property previously
sold to private respondents. However, they are under no legal obligation to do so. Hence, the action to quiet
title filed by private respondent must fail.