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FIRST DIVISION On October 7, 1992, petitioner foreclosed on the property in defiance of the
notice of lis pendens and the Writ of Preliminary Injunction issued by the lower court,
EXPRESSCREDIT* FINANCING CORPORATION, G.R. No. 156033 enjoining petitioner from selling or in any manner disposing of the property without
Petitioner, permission from the court. Petitioner sold the property in a public auction where
Present: petitioner was the highest bidder. Due to the failure of the Garcia spouses to redeem
the property, petitioner thereafter executed an Affidavit of Consolidation and secured
Davide, Jr., C.J., Certificate of Title No. 69049 in its name.
(Chairman), On March 1, 1996, the Regional Trial Court rendered its Decision, stating as
Quisumbing, follows:
- versus - Ynares-Santiago, Under the foregoing circumstances, there is no need for the
Carpio, and defendant corporation to go beyond the title itself because the title is
Azcuna, JJ. in the name of defendant Garcia and it was defendant Garcia who
offered the title as collateral to the loan agreement. But nonetheless,
SPS. MORTON AND JUANITA VELASCO, Promulgated: defendant corporation went beyond the certificate of title by
Respondents. conducting an [ocular] inspection of the property. Surely, defendant
October 20, 2005 corporation could never have accepted the property as a collateral to
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x the loan of defendant spouses Garcia had there been any knowledge
of any encumbrance over the same, much more that the title thereto
DECISION had been transferred and sold. The defendant corporations failure to
QUISUMBING, J.: make further inquiry apart from the ocular inspection, concerning the
Before us is a Petition for Review on Certiorari under Rule 45 appealing rights of herein plaintiffs who were in possession of the property thru
the Decision[1] dated August 20, 2002 and the Resolution[2] dated November 12, 2002 their caretakers is not fatal because it relied on the title on the
of the Court of Appeals in CA-G.R. CV No. 56491, entitled Juanita Velasco v. Sps. property which is in the name of Garcia and it was Garcia himself
Jesus V. Garcia. The assailed Decision reversed the Decision of the Regional Trial who is the registered owner of the land and not someone else
Court of Quezon City, Branch 101, in Civil Case No. Q-90-7037, while the assailed claiming the right from Garcia.
Resolution denied petitioners Motion for Reconsideration. Clearly then, under the foregoing circumstances, defendant
The antecedent facts are as follows: [Expresscredit] Financing Corporation is an innocent purchaser and
On May 25, 1988,[3] respondents purchased on installment, from spouses is, therefore, in good faith.
Jesus and Lorelei Garcia (Garcia spouses), a house and lot in Quezon City, covered by The Court, however, recognized the rights pertaining to
Transfer Certificate of Title No. 3250 in the name of Jesus Garcia. herein plaintiffs, only said rights are subservient to that of defendant
In July 1988,[4] a Deed of Absolute Sale[5] was executed whereby the Garcia corporation. Plaintiffs, based on the evidence, both testimonial and
spouses bound themselves to deliver the title of the property purchased, free from all documentary, adduced in Court are likewise considered as innocent
liens and encumbrances within 15 days from full payment. Respondents were thereafter purchasers of the subject property. Had they registered the Deed of
informed by the Garcia spouses that since the house on the property was still under Sale executed between them and Spouses Garcia, they [would] have,
construction, the lot was still covered by the mother title and had no separate title as undoubtedly, a preferential right over the property.
yet. They promised to give the title after the construction was completed. Plaintiffs spouses [deserve] to be reimbursed of whatever
In August 1988, the keys to the property were delivered to the respondents. amount they have [spent] for the purchase of the property sold to
They moved in, applied for a telephone connection, and insured the house. When them by the Garcia spouses. Considering the predicament of herein
respondents followed up on the title, the Garcia spouses told them that since the plaintiffs, and the fact that they were the first to buy the properties,
Quezon City Hall was razed by a fire in June, the title had to be reconstituted, so their were it not for their failure to register the sale before the Registry of
separate title could not yet be delivered to them. Because the Garcia spouses would Property, defendant corporation is hereby enjoined to REIMBURSE
not deliver the title despite repeated demands, respondents went to the Register of plaintiffs of the amount spent for the purchase of the 37.50 square
Deeds in Quezon City and discovered that the Garcia spouses had mortgaged the meters of a parcel of residential land, Lot 6-B-1, Subdivision plan
property to petitioner, Expresscredit Financing Corporation, for P250,000 on June 15, PSD 342248, situated in the district of Diliman, Quezon City and
1989, or more than a year after the property was sold to them. formerly covered by TCT No. 3250 now TCT No. 69049, Registry of
On October 23, 1990, the respondents filed a case for Quieting of Title and Deeds, Quezon City, with right of recovery from co-defendants,
Specific Performance against the Garcia spouses before the court a quo, whereby they spouses Garcia.
caused registration of a notice of lis pendens on the title, attaching thereto a copy of WHEREFORE, premises above considered, the above-
their complaint stating that they have been the owners of the said property since May entitled case filed against defendant [Expresscredit] Financing
25, 1988. The Garcia spouses were subsequently declared in default for failing several Corporation is hereby ordered DISMISSED for lack of merit.
times to appear in court despite notice.
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Counterclaims filed by defendant [Expresscredit] Financing absence thereof, to the person who presents the oldest title, provided
Corporation against herein plaintiffs are likewise ordered there is good faith.
DISMISSED. An innocent purchaser for value or any equivalent phrase shall be deemed to
No pronouncement as to the costs of the suit. include, under the Torrens System, the innocent lessee, mortgagee, and other
SO ORDERED.[6] encumbrancer for value.[9]
The spouses Velasco, herein respondents, then filed an appeal before the In Bautista v. Court of Appeals,[10] we held that where the thing sold twice is an
Court of Appeals alleging that the court a quo erred in (1) not declaring Expresscredit immovable, the one who acquires it and first registers it in the Registry of Property, in
Financing Corporation as an incumbrancer in bad faith such that it did not acquire good good faith, shall be the owner.
title as against them and (2) not incorporating in the dispositive portion of the decision, Who then can be considered a purchaser in good faith?
an order to Expresscredit Financing Corporation to reimburse the money they paid. In the early case of Leung Yee v. F.L. Strong Machinery Co. and
The Court of Appeals reversed the Decision of the trial court as follows: Williamson,[11] we explained good faith in this wise:
WHEREFORE, the Decision of the lower court is One who purchases real estate with knowledge of a defect
hereby REVERSED and SET ASIDE. Accordingly: or lack of title in his vendor cannot claim that he has acquired title
1. Appellants Juanita and Morton Velasco are declared thereto in good faith as against the true owner of the land or of an
purchaser for value and in good faith with respect to the subject interest therein; and the same rule must be applied to one who has
property; knowledge of facts which should have put him upon such inquiry and
2. The Deed of Mortgage, Sheriffs Certificate of Sale, investigation as might be necessary to acquaint him with the defects
Affidavit of Consolidation in favor of appellee [Expresscredit], and the in the title of his vendor.[12]
Transfer Certificate of Title No. 69049 in the name of [Expresscredit], Good faith, or the want of it, is capable of being ascertained only from the acts
are hereby declared of no force and effect; of one claiming its presence, for it is a condition of the mind which can only be judged
3. Defendants Jesus and Lorelei Garcia are hereby by actual or fancied token or signs.[13]
ordered to pay to appellants Velasco the amount of P40,000 as moral As shown by the evidence, the property had already been sold by the Garcia
damages, P15,000 as attorneys fees; and P10,000 as litigation spouses to the respondents on May 25, 1988. The respondents immediately took
expenses. possession, applied for a telephone line, and insured the property with Pioneer
Costs against appellee. Insurance in September 1988. When the same land was mortgaged by the Garcia
SO ORDERED.[7] spouses, respondents have been, since May 25, 1988 in actual, physical, continuous
Before us, petitioner raises the following issues: and uninterrupted possession.
I. THE APPELLATE COURT COMMITTED Petitioner justifies its acquisition of the property by saying that when it was
GRAVE ERROR IN REVERSING THE DECISION OF THE mortgaged, the previous sale of the land was not annotated on the title and so its
LOWER COURT. purchase was in good faith. To fulfill the requirement of good faith, it is imperative for a
II. THE APPELLATE COURT COMMITTED GRAVE mortgagee of the land, in the possession of persons not the mortgagor, to inquire and
ABUSE OF DISCRETION AND ERROR IN HOLDING investigate into the rights or title of those in possession. It is true that a person dealing
SUPREME, AN UNREGISTERED DEED OF ABSOLUTE with the owner of registered land is not bound to go beyond the certificate of title. He
SALE OVER A REGISTERED REAL ESTATE MORTGAGE. may rely on the notices of the encumbrances on the property annotated on the
III. THE APPELLATE COURT ERRED IN VOIDING certificate of title or absence of any annotation. However, we note that the Garcia
THE SALE ON PUBLIC AUCTION AS A RESULT OF THE spouses are unlike other mortgagors. They are in the business of constructing and
EXTRA JUDICIAL PETITION FOR FORECLOSURE OF selling townhouses and are past masters in real estate transactions. Further, petitioner
MORTGAGE.[8] is in the business of extending credit to the public, including real estate loans. In both
The main issue is, Who has preferential right over the property, the these businesses, it devolves upon both, greater charge than ordinary buyers or
respondents who acquired it through prior purchase or the petitioner who acquired the encumbrancers for value, who are not in such venture. It is standard in their business,
same in a foreclosure sale as the highest bidder? as a matter of due diligence[14] required of banks and financing companies, to ascertain
Petitioner alleges that this is a clear case of a double sale. The first sale is the whether the property being offered as security for the debt has already been sold to
unregistered sale of the property covered by TCT No. 3250 by the Garcia spouses to another to prevent injury to prior innocent buyers. They also have the resources to
the respondents; the second is the sale during the foreclosure proceedings by the Ex- ascertain any encumbrances over the properties they are dealing with.
Officio Sheriff in favor of the petitioner as the winning bidder. According to respondents witness, Conchita Cotoner, on the second week of
Article 1544 of the Civil Code is the rule on double sale. It provides: June 1989, two credit investigators of petitioner visited the subject property to
... investigate concerning the occupants on the property. They were promptly informed by
Should it be immovable property, the ownership shall belong the witness, who was the caretaker of the property, that the same had been sold to
to the person acquiring it who in good faith first recorded it in the respondents by the Garcia spouses in May of 1988. Clearly, petitioner, through its
Registry of Property. agents, had been informed of the earlier sale of the subject property to the respondents.
Should there be no inscription, the ownership shall pertain to Since the Garcia spouses no longer had the right to alienate the property, no valid
the person who in good faith was first in the possession; and, in the mortgage was ever constituted on it.[15] Since the mortgage contract was void, the
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foreclosure of the property was ineffectual as well.[16] Sadly, petitioner, despite having  In a private memorandum agreement, Poncio bound to sell to Infante the lot for
knowledge of the unregistered sale still accepted the mortgage and to our mind, in bad the sum of P2,357.52, with Infante still assuming the mortgage debt of
faith, purchased the same at the foreclosure sale. P1,177.48. (Note: The full amount of mortgage debt was already paid by the
A purchaser cannot close his eyes to facts which should put a reasonable man Infantes)
upon his guard and claim that he acted in good faith under the belief that there was no  February 2, 1995: A deed of sale was executed between Poncio and Infante.
defect in the title of the vendor. His mere refusal to believe that such defect exists, or  February 8, 1995: Knowing that the sale to Infante has not been registered,
his willful closing of his eyes to the possibility of the existence of a defect in his vendors Carbonell filed an adverse claim.
title, will not make him an innocent purchaser for value, if it afterwards develops that the  February 12, 1995: The deed of sale was registered but it has an annotation of
title was in fact defective, and it appears that he had such notice of the defect as would the adverse claim of Carbonell.
have led to its discovery had he acted with that measure of precaution which may  Thereafter, Emma Infante took possession of the lot, built a house and
reasonably be required of a prudent man in a like situation. Good faith or the lack of it, introduced some improvements.
is a question of intention; but in ascertaining the intention, courts are necessarily  In June 1995, Carbonell filed a complaint praying that she be declared the lawful
controlled by the evidence as to the conduct and outward acts by which alone the owner of the land, that the subsequent sale to spouses Infante be declared null
inward motive may, with safety, be determined.[17] and void, and that Jose Poncio be ordered to execute the corresponding deed of
Indeed, where the land sold in auction sale was registered under the Torrens conveyance of said land in her favor
System, the purchaser at the execution sale acquired such rights, title and interest of  RTC ruled that the sale to spouses Infante was null and void. After re-trial, it
the judgment debtor as appearing on the certificate of title issued on the property, reversed its ruling. CA ruled in favor of Carbonell but after a MfR, it reversed its
subject to no liens, encumbrances or burdens that were not noted thereon. Petitioners ruling and ruled in favor of the Infantes.
claim that it purchased the property at an auction sale is of no moment. In this case,
particular circumstances constrain us to rule that petitioner was neither a mortgagee nor
a purchaser in good faith and as such, could not acquire good title to the property as
against the former transferee.[18] Issue: WON Carbonell has a superior right over Emma Infante. YES
WHEREFORE, the assailed Decision dated August 20, 2002 and Resolution
dated November 12, 2002 of the Court of Appeals in CA-G.R. CV No. 56491 Held:
are AFFIRMED.
SO ORDERED. Article 1544 provides that for double sale of an immovable property, the
ownership shall belong to the person who first acquired it in good faith and
Carbonell v CA (1976) recorded it in the Registry of Property
Facts: Article 1544, New Civil Code, which is decisive of this case, recites:
 Respondent Jose Poncio was the owner of the parcel of land located in Rizal. If the same thing should have been sold to different vendees, the ownership shall be
(Area – more or less 195 sq. m.) transferred to the person who may have first taken possession thereof in good faith, if it
 The said lot was subject to mortgage in favor of the Republic Savings Bank for should movable property.
the sum of P1,500.00. Should it be immovable property, the ownership shall belong to the person acquiring it
 Carbonell and respondent Emma Infante offered to buy the said lot from Poncio. who in good faith first recorded it in the Registry of Property.
 Poncio offered to sell his lot to Carbonell excluding the house on which he and Should there be no inscription, the ownership shall pertain to the person who in good
his family stayed. Carbonell accepted the offer and proposed the price of faith was first in the possession; and, in the absence thereof, to the person who
P9.50/sq. m.. presents the oldest title, provided there is good faith.
 Poncio accepted the price on the condition that from the purchase price would
come the money to be paid to the bank. The buyer must act in good faith in registering the deed of sale
 January 27, 1995: The parties executed a document in the Batanes dialect which It is essential that the buyer of realty must act in good faith in registering his deed of
is translated as: CONTRACT FOR ONE HALF LOT WHICH I (Poncio) BOUGHT sale to merit the protection of the second paragraph of said Article 1544.
FROM.
 Carbonell asked a lawyer to prepare the deed of sale and delivered the Unlike the first and third paragraphs of said Article 1544, which accord preference to the
document, together with the balance of P400, to Jose Poncio. (Note: Carbonell one who first takes possession in good faith of personal or real property, the second
already paid P200 for the mortgage debt of Poncio + obligated herself to pay the paragraph directs that ownership of immovable property should be recognized in favor
remaining installments.) of one "who in good faith first recorded" his right. Under the first and third paragraph,
 However, when she went to Poncio, the latter informed her that he could no good faith must characterize the act of anterior registration.
longer proceed with the sale as the lot was already sold to Emma Infante and
that he could not withdraw with the sale. Rule when there is inscription or not
 Poncio admitted that on January 30, 1995, Mrs. Infante improved her offer and If there is no inscription, what is decisive is prior possession in good faith. If there is
he agreed to sell the land and its improvements to her for P3,535.00. inscription, as in the case at bar, prior registration in good faith is a pre-condition to
superior title.
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P20.00/sq. m. It is therefore logical to presume that Infante was told by Poncio and
Carbonell was in good faith when she bought the lot consequently knew of the offer of Carbonell which fact likewise should have put her on
When Carbonell bought the lot from Poncio on January 27, 1955, she was the only her guard and should have compelled her to inquire from Poncio whether or not he had
buyer thereof and the title of Poncio was still in his name solely encumbered by bank already sold the property to Carbonell
mortgage duly annotated thereon. Carbonell was not aware — and she could not have
been aware — of any sale of Infante as there was no such sale to Infante then. The existence of prior sale to Carbonell was duly established
From the terms of the memorandum, it tends to show that the sale of the property in
Hence, Carbonell's prior purchase of the land was made in good faith. Her good faith favor of Carbonell is already an accomplished act. As found by the trial court, to repeat
subsisted and continued to exist when she recorded her adverse claim four (4) days the said memorandum states "that Poncio is allowed to stay in the property which he
prior to the registration of Infantes's deed of sale. had sold to the plaintiff ..., it tends to show that the sale of the property in favor of the
plaintiff is already an accomplished act..."
Carbonell’s good faith did not cease when she was informed by Poncio about the
sale to Emma Infante There was an adequate consideration or price for the sale in favor of Carbonell
After learning about the second sale, Carbonell tried to talk to the Infantes but the latter Poncio agreed to sell the same to Carbonell at P9.50 per square meter, on condition
refused. that Carbonell:
(Exact words of the SC: With an aristocratic disdain unworthy of the good breeding of a 1. should pay (a) the amount of P400.00 to Poncio and the arrears in the amount of
good Christian and good neighbor, Infante snubbed Carbonell like a leper and refused P247.26 to the bank
to see her.) 2. should assume his mortgage indebtedness.
The bank president agreed to the said sale with assumption of mortgage in favor of
So Carbonell did the next best thing to protect her right — she registered her adversed Carbonell an Carbonell accordingly paid the arrears of P247.26.
claim on February 8, 1955. Under the circumstances, this recording of her adverse
claim should be deemed to have been done in good faith and should emphasize It is evident therefore that there was ample consideration, and not merely the sum of
Infante's bad faith when she registered her deed of sale four (4) days later on February P200.00, for the sale of Poncio to Carbonell of the lot in question.
12, 1955.
The subject property was identified and described
The Infantes were in bad faith (5 indications of bad faith listed below) The court has arrived at the conclusion that there is sufficient description of the lot
Bad faith arising from previous knowledge by Infante of the prior sale to Carbonell is referred to in Exh. As none other than the parcel of lot occupied by the defendant
shown by the following facts: Poncio and where he has his improvements erected. The Identity of the parcel of land
1. Mrs. Infante refused to see Carbonell. involved herein is sufficiently established by the contents of the note Exh. 'A'.
Her refusal to talk to Carbonell could only mean that she did not want to listen to
Carbonell's story that she (Carbonell) had previously bought the lot from Poncio. G.R. No. 166913 October 5, 2007
2. Carbonell was already in possession of mortgage passbook and copy of the SPOUSES MARIANO S. TANGLAO and CORAZON M. TANGLAO, petitioners,
mortgage contract. (Not Poncio’s saving deposit passbook.) vs.
Infante naturally must have demanded from Poncio the delivery to her of his mortgage SPOUSES CORAZON S. PARUNGAO and LORENZO G. PARUNGAO (deceased),
passbook and mortgage contract so that the fact of full payment of his bank mortgage substituted by LAWRENCE S. PARUNGAO, MARY CHRISTINE PARUNGAO-
will be entered therein; and Poncio, as well as the bank, must have inevitably informed CURUTCHET, LORDBERT S. PARUNGAO, LODELBERTO S. PARUNGAO and MA.
her that said mortgage passbook could not be given to her because it was already CECILIA PARUNGAO-HERNANDEZ, respondents.
delivered to Carbonell. DECISION
3. Emma Infante did not inquire why Poncio was no longer in possession of the SANDOVAL-GUTIERREZ, J.:
mortgage passbook and why it was in Carbonell’s possession. For our resolution is the instant Petition for Review on Certiorari seeking to reverse the
The fact that Poncio was no longer in possession of his mortgage passbook and that Decision1 of the Court of Appeals (Fifteenth Division) dated January 31, 2005 in CA-
the said mortgage passbook was already in possession of Carbonell, should have G.R. SP No. 78079.
compelled Infante to inquire from Poncio why he was no longer in possession of the The facts of the case are:
mortgage passbook and from Carbonell why she was in possession of the same. In 1992, spouses Lorenzo and Corazon Parungao, respondents, purchased from Spring
4. Emma Infante registered the sale under her name after Carbonell filed an adverse Homes Subdivision (Spring Homes) Lot Nos. 1, 2, 3, and 4 with a total area of 486
claim 4 days earlier. square meters (sq. m.) at P1,350.00 per sq. m. or a total price of P656,100.00. In
Here she was again on notice of the prior sale to Carbonell. Such registration of addition, they also bought Lot Nos. 7, 8, and 9 with a total area of 457 sq. m.
adverse claim is valid and effective. at P1,550.00 per sq. m. or a total price of P708,360.00. All these lots are located at
5. Infante failed to inquire to Poncio WON he had already sold the property to Carbonell Block VI, Phase II-C, Spring Homes, Barangay Culiat, Calamba City, Laguna.
especially that it can be shown that he was aware of the offer made by Carbonell. Respondents made a down payment of P536,000.00, leaving a balance
Poncio alleged in his answer that Mrs. Infante and Mrs. Carbonell offered to buy the lot of P828,450.00, exclusive of interest.
at P15/sq. m. which offers he rejected as he believed that his lot is worth at least
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Sometime in November 1992, respondents introduced improvements on the lots IT IS SO ORDERED.


consisting of a concrete perimeter fence with cyclone wires on top, a heavy steel gate, Dissatisfied with the ruling, respondents filed a petition for review with the HLURB
and two fish breeding buildings, all at a cost of P945,000.00. They also elevated the Board of Commissioners, docketed as HLURB Case No. REM-A-001211-0272.
ground level of the lots by filling them with earth and "adobe." On August 24, 2001, the HLURB Board of Commissioners rendered its Judgment
Under the terms of the Contracts to Sell signed by respondents and Spring Homes, the reversing the Arbiter’s Decision and granting the petition for review, thus:
balance of P828,450.00 was to be paid by them within one year from its execution; and WHEREFORE, premises considered, the petition for review is granted. The
that should they apply for a loan as payment for the balance, they would continue to decision of the office below is set aside and a new decision is rendered as
pay the monthly installment until their obligation is fully paid. follows:
Respondents failed to pay the installments. They also failed to secure a loan because 1. Declaring as valid and subsisting the contract to sell between complainants
Spring Homes refused to deliver to them the Transfer Certificates of Title (TCTs) and respondent Spring Homes;
covering the lots required in their application for a loan secured by a real estate 2. Directing complainants to immediately update their account and directing
mortgage. Apparently, respondents had requested Spring Homes to furnish them respondent Spring Homes to accept payment and to deliver title to
copies of the Contracts to Sell, the TCTs, receipts of real estate taxes paid, tax complainants upon full payment of the purchases price;
declarations, and the survey and vicinity plans of the lots they purchased. However, 3. Declaring as invalid the deed of absolute sale in favor of the spouses
Roy Madamba, salesman-representative of Spring Homes, gave respondents only Tanglao over the subject lots and directing the cancellation of respondent
copies of the Contracts to Sell. But respondents returned these copies to Spring Homes spouses TCTs Nos. T-268566 and T-268572 of the Registry of Deeds for
for correction of the lot numbers and the names of the vendees. Calamba, Laguna and its reversion to respondent Spring Homes;
On April 11, 1997, Spring Homes executed two separate Deeds of Absolute Sale in 4. Directing respondent Spring Homes to refund to respondent spouses
favor of spouses Mariano and Corazon Tanglao, petitioners, wherein the former sold to Tanglao all the amounts paid by the latter in connection with the sale of the
the latter two lots covered by TCT Nos. T-268566 and T-268572. Hence, the said TCTs subject lots to the latter with 12% interest reckoned from the date of the sale;
were cancelled and in lieu thereof, TCT Nos. T-393365 and T-3377723 were issued in 5. Directing respondent Spring Homes to pay administrative fine of P10,000.00
the names of petitioners. It turned out that the lots sold to them were among the lots for unsound business practice.
previously sold to respondents. SO ORDERED.
In a letter dated September 15, 1997, respondents demanded that Spring Homes The HLURB Board of Commissioners found that at the time of the sale of the two lots in
deliver to them the corrected Contracts to Sell, as well as the TCTs covering the lots question to petitioners, the contracts between respondents and Spring Homes were still
they purchased. subsisting. Moreover, the fence and existing structures erected on the premises should
Meanwhile, petitioners took possession of the two lots they bought. They forcibly have forewarned petitioners that there are adverse claimants of the two lots.
opened the steel gate as well as the doors of the buildings and entered the premises. Petitioners filed a motion for reconsideration, but this was denied by the HLURB Board
When informed of these events, respondents demanded an explanation from Spring of Commissioners in a Resolution promulgated on February 22, 2002.
Homes. Bertha Pasic, its treasurer, apologized and promised she would settle the Petitioners then filed an appeal with the Office of the President, docketed as O.P. Case
matter with petitioners. However, the controversy was not settled. No. 02-C-099. But in its Decision dated March 12, 2003, the Office of the President
On July 15, 1999, respondents filed with the Housing and Land Use Regulatory Board dismissed their appeal and affirmed the Decision of the HLURB Board of
(HLURB), Regional Office No. 1V a complaint for annulment of deed of sale and/or Commissioners.
return of investment for the seven (7) lots and costs of improvements, plus interest and Petitioners’ motion for reconsideration was also denied by the said Office in its Order
damages, docketed as HLURB Case No. R-1V6-08199-1104. Impleaded as dated June 18, 2003.
respondents were Spring Homes, Berta Pasic, Felipa Messiah, and petitioners. Eventually, petitioners filed with the Court of Appeals a petition for review under Rule 43
Despite notice, Spring Homes, Pasic, and Messiah did not file their respective answers of the 1997 Rules of Civil Procedure, as amended.
to the complaint, nor did they appear during the hearings. On January 31, 2004, the Court of Appeals rendered its Decision dismissing the
On October 3, 2000, HLURB Arbiter Gregorio L. Dean rendered a Decision, the petition, thus:
dispositive portion of which reads: WHEREFORE, premises considered, the petition for review is DENIED DUE
WHEREFORE, judgment is hereby rendered: COURSE and ordered DISMISSED. The Decision dated 12 March 2003 of the
1. Dismissing the complaint filed against respondents Felipa Messiah and Office of the President which affirmed the Decision of the HLURB Board of
Spouses Tanglao for lack of merit; Commissioners (Third Division) dated 24 August 2001 reversing the 03
2. Ordering respondent Spring Homes to pay complainants: October 2000 Decision of Housing and Land Use Arbiter Gerardo L. Dean and
a) Php536,000.00 by way of refund of payments with 12% interest the Order dated 18 June 2003 of the Office of the President denying the
per annum to commence from August 11, 1999; motion for reconsideration are hereby AFFIRMED. Costs against petitioners
b) Php935,000.00 as actual damages; and Sps. Mariano S. Tanglao and Corazon M. Tanglao.
c) Php20,000.00 as attorney’s fees.. SO ORDERED.
3. Ordering respondents Spring Homes Subdivision Co., Inc., and Bertha The Court of Appeals held that there was a perfected contract to sell between
Pasic, jointly and severally, to pay complainant the sum of Php20,000.00 as respondents and Spring Homes as early as 1992. As this contract was subsisting at the
moral damages and to pay this Board the sum of Php10,000.00 as time of the second sale, respondents have a superior right over the lots in question.
administrative fine.
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The only issue for our resolution is who between the petitioners and respondents have WHEREFORE, we DENY the petition. The Decision of the Court of Appeals (Fifteenth
the right of ownership over the two lots in controversy. Division) dated January 31, 2005 in CA-G.R. SP No. 78079 is AFFIRMED in toto.
The ownership of immovable property sold to two different persons at different times is Costs against the petitioners.
governed by Article 1544 of the Civil Code,2 which provides: SO ORDERED.
Art. 1544. If the same thing should have been sold to different vendees, the Puno, C.J., Chairperson, Corona, Azcuna, Garcia, JJ., concur.
ownership shall be transferred to the person who may have taken possession
thereof in good faith, if it should be movable property. CHENG v GENATO G.R. No. 129760. December 29, 1998
Should it be immovable property, the ownership shall belong to the person FACTS Respondent Ramon B. Genato is the owner of two parcels of land located
acquiring it who, in good faith, first recorded it in the Registry of Property. at Paradise Farms, San Jose Del Monte, Bulacan. Respondent entered a contract
Should there be no inscription, the ownership shall pertain to the person who to sell to spouses Da Jose pertaining to his property in Bulacan. The contract
in good faith was first in possession and, in the absence thereof, to the person made in public document states that the spouses shall pay the down payment
who presents the oldest title, provided there is good faith. and 30 days after verifying the authenticity of the documents, they shall pay the
In double sales of immovable property, the governing principle is prius tempore, prius remaining purchase price. The Da Jose spouses, not having finished verifying
jure (first in time, stronger in right). Thus, in Payongayong v. Court of Appeals,3 this the titles mentioned in clause 3 as aforequoted, asked for and was granted by
Court held that under Article 1544, preferential rights shall be accorded to: (1) the respondent Genato an extension of another 30 days or until November 5, 1989.
person acquiring it who in good faith first recorded it in the Registry of Property, (2) in However, according to Genato, the extension was granted on condition that a
default thereof to the person who in good faith was first in possession, and (3) in default new set of documents is made seven (7) days from October 4, 1989. This was
thereof, to the person who presents the oldest title, provided there is good faith. In all of denied by the Da Jose spouses. Pending the effectivity of the aforesaid extension
these cases, good faith is essential, being the basic premise of the preferential period, and without due notice to the Da Jose spouses, Genato executed an
rights granted to the person claiming ownership of the immovable.4 Affidavit to Annul the Contract to Sell, for the vendee has committed a breach of
In Occeña v. Esponilla,5 this Court, speaking through then Associate Justice (now Chief contract for not having complied with the obligation as provided in their Contract.
Justice) Reynato S. Puno, laid down the following rules in the application of Article Petitioner Ricardo Cheng (Cheng) went to Genatos residence and expressed
1544: (1) Knowledge by the first buyer of the second sale cannot defeat the first buyer’s interest in buying the subject properties. On that occasion, Genato showed to
rights except when the second buyer first registers in good faith the second sale; and Ricardo Cheng copies of his transfer certificates of title and the annotations at
(2) Knowledge gained by the second buyer of the first sale defeats his rights even if he the back thereof of his contract to sell with the Da Jose spouses. Genato also
is first to register, since such knowledge taints his registration with bad faith. Differently showed him the aforementioned Affidavit to Annul the Contract to Sell which has
put, the act of registration by the second buyer must be coupled with good faith, not been annotated at the back of the titles. Later on, Da Jose spouses
meaning, the registrant must have no knowledge of the defect or lack of title of his discovered about the affidavit to annul their contract. The latter were shocked at
vendor or must not have been aware of facts which should put him upon such inquiry the disclosure and protested against the rescission of their contract. After being
and investigation as might be necessary to acquaint him with the defects in the title of reminded that he (Genato) had given them (Da Jose spouses) an additional 30-
his vendor.6 day period to finish their verification of his titles, that the period was still in
Applying the foregoing doctrines, the pivotal question before us is whether petitioners, effect, and that they were willing and able to pay the balance of the agreed down
the second buyers, are purchasers in good faith. payment, later on in the day, Genato decided to continue the Contract he had
A purchaser in good faith or innocent purchaser for value is one who buys property and with them. The agreement to continue with their contract was formalized in a
pays a full and fair price for it at the time of the purchase or before any notice of some conforme letter. Respondent advised petitioner of his decision to continue his
other person’s claim on or interest in it.7 The burden of proving the status of a contract with the Da Jose spouses and completely returned to Chengs the
purchaser in good faith lies upon him who asserts that status and it is not sufficient to checks for their payments and expressed regret for his inability to consummate
invoke the ordinary presumption of good faith, that is, that everyone is presumed to his transaction with him. After having received the letter of Genato, Cheng,
have acted in good faith.8 however, returned the said check to the former. Cheng instituted a complaint for
In the instant case, the HLURB Arbiter, the HLURB Commission, the Office of the specific performance to compel Genato to execute a deed of sale to him of the
President, and the Court of Appeals found that at the time of the second sale to subject properties plus damages and prayer for preliminary attachment. In his
petitioners by Spring Homes, there were already occupantsand improvements on the complaint, Cheng averred that the P50,000.00 check he gave was a partial
two lots in question. These facts should have put petitioners on their guard. Settled is payment to the total agreed purchase price of the subject properties and
the rule that a buyer of real property in possession of persons other than the considered as an earnest money for which Genato acceded. Thus, their contract
seller must be wary and should investigate the rights of those in possession, for was already perfected. In Answer, thereto, Genato alleged that the agreement was
without such inquiry the buyer can hardly be regarded as a buyer in good faith only a simple receipt of an option-bid deposit, and never stated that it was a
and cannot have any right over the property.9 partial payment, nor is it an earnest money and that it was subject to the
As the petitioners cannot be considered buyers in good faith, they cannot rely upon the condition that the prior contract with the Da Jose spouses be first cancelled. The
indefeasibility of their TCTs in view of the doctrine that the defense of indefeasibility of a Da Jose spouses, in their Answer in Intervention,[18] asserted that they have a
torrens title does not extend to transferees who take the certificate of title in bad faith. 10 superior right to the property as first buyers. They alleged that the unilateral
Considering that respondents who, in good faith, were first in possession of the subject cancellation of the Contract to Sell was without effect and void. They also cited
lots, we rule that the ownership thereof pertains to them. Chengs bad faith as a buyer being duly informed by Genato of the existing
7

annotated Contract to Sell on the titles. HELD: The contract between Genato and On October 6, 1953, Florentino Lacatan also died, leaving as his heirs his widow
spouses Da Jose was a contract to sell which is subject to a suspensive and three children, Felipe, Rosita and Florencia Lacatan. On December 31, 1953, the
condition. Thus, there will be no contract to speak of, if the obligor failed to said children of Florentino Lacatan likewise executed a deed of sale (Exh. D) in favor of
perform the suspensive condition which enforces a juridical relation. Obviously, the same vendees over another portion of the same lot described as follows:
the foregoing jurisprudence cannot be made to apply to the situation in the North — Provincial Road (Calapan-Pinamalayan);
instant case because no default can be ascribed to the Da Jose spouses since East — Heirs of Sotero Mongo;
the 30-day extension period has not yet expired. Even assuming that the spouses South — Aniceta Lolong;
defaulted, the contract also cannot be validly rescinded because no notice was West — Heirs of Vidal Lacatan;
given to them. Thus, Cheng's contention that the Contract to Sell between Genato with an area of 2.8408 hectares.
and the Da Jose spouses was rescinded or resolved due to Genato's unilateral On March 2, 1954, by virtue of the registration of the two deeds of sale (Exhs. C
rescission finds no support in this case. The contract between Genato and Cheng and D), a new TCT No. T-4208 covering the total area of
is a contract to sell not a contract of sale. But But even assuming that it should 6.7908 hectares was issued in favor of plaintiffs-petitioners, the Paylago spouses. A
be treated as a conditional contract of sale, it did not acquire any obligatory force subsequent subdivision survey for the purpose of segregating the two aforementioned
since it was subject to a suspensive condition that the earlier contract to sell portions of land described in the deeds (Exhs. C and D) as well as in the new TCT No.
between Genato and the Da Jose spouses should first be cancelled or rescinded. T-4208, however, disclosed that a portion (one half hectare) of the total area purchased
Art.1544 should apply because for not only was the contract between herein by plaintiffs-petitioners and indicated in the sketch Exh. B at a point marked Exh. B-1
respondents first in time; it was also registered long before petitioner's intrusion was being occupied by defendant-respondent. Hence, the action to recover possession
as a second buyer (PRIMUS TEMPORE, PORTIOR JURE). (Spouses made and ownership of the said portion.
annotation on the title of Genato). Since Cheng was fully aware, or could have Vis-a-vis the foregoing undisputed facts, the trial court and the Court of Appeals
been if he had chosen to inquire, of the rights of the Da Jose spouses under the found that a portion of land in question which is described as follows:
Contract to Sell duly annotated on the transfer certificates of titles of Genato, it North — Provincial Road;
now becomes unnecessary to further elaborate in detail the fact that he is indeed East — Apolonio Lacatan;
in bad faith in entering into such agreement. South — Anselmo Lacatan;
West — Valentin Lastica;
EN BANC and with an area of one half hectare is indicated in the sketch of subdivision plan
G.R. No. L-20046 March 27, 1968 marked Exh. B-1 of Exh. B; that on November 27, 1938, the said portion of land was
ROMEO PAYLAGO and ROSARIO DIMAANDAL, petitioners, purchased by Hilario Jarabe, late husband of defendant-respondent, from one Apolonio
vs. Lacatan, which sale is evidenced by an unregistered deed of sale (Exh. 6); that
INES PASTRANA JARABE and THE HONORABLE COURT OF Apolonio Lacatan, in turn, bought the same in 1936 from Anselmo Lacatan, the original
APPEALS, respondents. registered owner in whose favor OCT No. 251 and later TCT No. T-4208 were issued;
M. de la Cruz for petitioners. that the first deed of sale, also unregistered, executed by Anselmo Lacatan in favor of
M.G. Garcia for respondents. Apolonio Lacatan was lost during the Japanese occupation; that the herein defendant-
REYES J.B.L.,: respondent has been in possession of the said portion continuously, publicly, peacefully
This is an appeal by certiorari from the decision of the Court of Appeals affirming and adversely as owner thereof from 1938 up to the present; and, that the herein
the lower court's decision in the case of Romeo Paylago, et al. vs. Ines Pastrana plaintiffs-petitioners knew, nay, admitted in a deed of lease, paragraph 3 (Exh. 4), that
Jarabe, CA-G.R. No. 25031-R, promulgated on June 6, 1962. (Civil Case No. R-709 of defendant-respondent has been in possession of the premises since 1945.
the Court of First Instance of Oriental Mindoro). After trial, the lower court held that plaintiffs-petitioners were not purchasers in
The entire lot involved in this suit was originally covered by Homestead Patent good faith and, accordingly, rendered judgment in favor of defendant-respondent,
issued on June 7, 1920 under Act No. 926 and later under OCT No. 251 of the Registry declaring the latter as owner of the land in question with the right to retain possession of
of Deeds of Mindoro, issued on June 22, 1920 in the name of Anselmo Lacatan. On the same. The decision was affirmed in toto by the Court of Appeals.
May 17, 1948, after the death of Anselmo Lacatan, TCT No. T-728 (which cancelled From the evidence adduced by the parties evolved the issue: Who has a better
OCT No. 251) was issued in the name his two sons and heirs, Vidal and Florentino right in case of double sale of real property, the registered buyer or the prior but
Lacatan. Vidal Lacatan died on August 27, 1950. unregistered purchaser?
On March 23, 1953, Vidal Lacatan's heirs, namely, Maximo, Tomas and Lucia This Court has formulated in no uncertain terms the general principle governing
Lacatan, executed a deed of sale (Exh. C) in favor of the spouses Romeo Paylago and the matter: as between two purchasers, the one who has registered the sale in his
Rosario Dimaandal, plaintiffs-petitioners herein, over a portion of the entire lot under favor, in good faith, has a preferred right over the other who has not registered his title,
TCT No. T-728, which portion is described as follows: even if the latter is in the actual possession of the immovable property (Mendiola v.
North — Provincial Road; Pacalda, 10 Phil. 705; Veguillas v. Jaucian, 25 Phil. 315; Po Sun Tun v. Price, 54 Phil.
East — Property of Romeo Paylago; 192). Indeed, the foregoing principle finds concrete bases in the pertinent provisions of
South — Property of Florentino Lacatan; the New Civil Code, Article 1544, providing that if the same immovable property should
West — Provincial Road (Nabuslot-Batingan); have been sold to different vendees, "the ownership shall belong to the person
containing an area of 3.9500 hectares. acquiring it who in good faith first recorded it in the registry of property."
8

There is no question that the sales made in favor of plaintiffs-petitioners were of precaution which may reasonably be required of a prudent man in a like
registered while the alleged sale executed in favor of defendant-respondent was not. situation.
Applying the foregoing principle of law to the instant case, it is now contended by The fundamental premise of the preferential rights established by Article 1544 of
plaintiffs-petitioners that their certificate of title must prevail over defendant-respondent, the New Civil Code is good faith (Bernas v. Bolo, 81 Phil. 16). To be entitled to the
and that the courts below correspondingly committed error in deciding the case to the priority, the second vendee must not only show prior recording of his deed of
contrary. conveyance or possession of the property sold, but must, above all, have acted in good
But there is more than meets the eye in the case at bar. While plaintiffs- faith, that is to say, without knowledge of the existence of another alienation by his
petitioners have a registered title, it cannot be denied that their acquisition and vendor to a stranger (Obras Pias v. Ignacio, 17 Phil. 45; Leung Yee v. F.L. Strong
subsequent registration were tainted with the vitiating element of bad faith. It was so Machinery Co., et al., op. cit.; Emas v. De Zuzuarregui, et al., 53 Phil. 197). Short of this
found by both the Court of First Instance and the Court of Appeals, and their finding is qualifying circumstance, the mantle of legal protection and the consequential guarantee
conclusive upon us. Thus, in Evangelista vs. Montaño, 93 Phil. 275, 279, this Court of indefeasibility of title to the registered property will not in any way shelter the
ruled: recording purchaser against known and just claims of a prior though unregistered
Both the Court of First Instance and the Court of Appeals absolved the buyer. Verily, it is now settled jurisprudence that knowledge of a prior transfer of a
defendants, having found and declared after weighing the evidence that the registered property by a subsequent purchaser makes him a purchaser in bad faith and
plaintiff, was not a purchaser in good faith. That this conclusion is a finding of his knowledge of such transfer vitiates his title acquired by virtue of the later instrument
fact and, being a finding of fact, not subject to review, is too plain to admit of of conveyance which was registered in the Registry of Deeds (Ignacio v. Chua Hong,
argument. 52 Phil. 940; Gustilo, et al. v. Maravilla, 48 Phil. 442; Ramos, et al. v. Dueno, et al., 50
Both Courts below found that petitioners knew beforehand that the parcel of land Phil. 786). The registration of the later instrument creates no right as against the first
in question was owned by defendant-respondent.1äwphï1.ñët purchaser. For the rights secured under the provisions of Article 1544 of the New Civil
In its decision the Court of Appeals declared that "plaintiffs herein were aware of Code to the one of the two purchasers of the same real estate, who has secured and
that peaceful, continuous and adverse possession of defendant since 1945, because inscribed his title thereto in the Registry of Deeds, do not accrue, as already mentioned,
this fact is admitted by said plaintiffs in a deed of lease, paragraph 3 (Exhibit 4) unless such inscription is done in good faith (Leung Yee v. F.L. Strong Machinery Co.,
covering a portion of the entire lot, and situated just across the road from the land in et al., op. cit.). To hold otherwise would reduce the Torrens system to a shield for the
question." (Dec., C. App., p. 4). commission of fraud (Gustilo, et al. v. Maravilla, op. cit.).
Considering that the boundaries of the lands that the petitioners Paylago Plaintiffs-petitioners cited the case of Bacolod-Murcia Milling Co., Inc. v. De la
purchased in 1953 and 1954 were well defined, they must have known that the portion Rama, et al., G.R. No. L-4526 September 1959, to disprove bad faith ascribed to them.
occupied by the defendant-respondent under claim of ownership and leased to them by But the citation does not fit with the facts of the present case. It is to be noted that the
the latter was included in the description. And coupled with their knowledge that second purchaser in the De la Rama case had no knowledge of the previous sale and
defendant-respondent purchased the same from Apolonio Lacatan, plaintiffs-petitioners possession of the first purchaser at the time he (second purchaser) acquired the
should have inquired and made an investigation as to the possible defects of the title of property involved therein. "(T)here is nothing in the complaint which may in any way
the Lacatan heirs over the entire lot sold to them, granting that the latter's certificate of indicate that he knew such possession and encumbrance when he bought the property
title was clear. This, they failed to do. They cannot now claim complete ignorance of from its owner." Plaintiffs-petitioners in the instant case, however, had knowledge of
defendant-respondent's claim over the property. As was well stated in one case, "a defendant-respondent's claim of ownership over the land in question long before they
purchaser who has knowledge of facts which should put him upon inquiry and purchased the same from the Lacatan heirs. They were even told, as previously
investigation as to possible defects of the title of the vendor and fails to make such intimated, that defendant-respondent bought the land from Apolonio Lacatan. Thus, it
inquiry and investigation, cannot claim that he is a purchaser in good faith and has could easily be distinguished that the second purchaser in the De la Rama case acted
acquired a valid title thereto". (Sampilo vs. Court of Appeals, 55 O.G. No. 30, p. 5772). with good faith, i.e., without knowledge of the anterior sale and claim of ownership of
To the same effect is the following doctrine laid down by the Supreme Court in the case the first vendee, whereas, plaintiffs-petitioners herein acted with manifest bad faith in
of Leung Yee v. F.L. Strong Machinery Co. & Williamson, 37 Phil. 644. Said the Court: buying the land in question, all the while knowing that defendant-respondent owns the
One who purchases real estate with knowledge of a defect or lack of title same. Such knowledge of defendant-respondent's ownership of the land is more than
in his vendor cannot claim that he has acquired title thereto in good faith, as enough to overthrow the presumption of good faith created by law in favor of plaintiffs-
against the true owner of the land or of an interest therein; and the same rule petitioners. This being the case, we cannot just close our eyes and blindly stamp our
must be applied to one who has knowledge of facts which should have put him approval on the argument of plaintiffs-petitioners that they have the better right simply
upon such inquiry and investigation as might be necessary to acquaint him because their title is registered and as such is indefeasible.
with the defects of the title of his vendor. A purchaser cannot close his eyes to Plaintiffs-petitioners also contend that the identity of the land in question has not
facts which should put a reasonable man upon his guard and then claims that been established. Again, we disagree. Evidence of record, both oral and documentary,
he acted in good faith under the belief that there was no defect in the title of unequivocally show that the said portion of land can be identified and segregated, and
the vendor. His mere refusal to believe that such defect exists, or his willful has been in fact identified and segregated (Exh. B-1), from the entire lot covered by
closing of his eyes to the possibility of the existence of a defect in his vendor's TCT No. T-4208 (Exh- A) issued in the names of plaintiffs-petitioners. The boundaries
title, will not make him an innocent purchaser for value, if it afterwards of the same have been clearly indicated as that planted by madre cacao trees. Even the
develops that the title was defective, and it appears that he had such notice of surveyor hired by plaintiffs-petitioners was able to fix the said boundaries in such a
the defect as would have led to its discovery had he acted with that measure manner as to definitely and accurately segregate the premises from the adjoining
9

property. How could plaintiffs-petitioners now argue that the land has not been identified
when the Supreme Court itself says that what really defines a piece of land is not the
area mentioned in the description but the boundaries (Sanchez v. Director of Lands, 63 We are asked again to determine who as between two successive purchasers of the
Phil. 378; Buizer v. Cabrera, etc., 81 Phil. 669; Bayot v. Director of Lands, 98 Phil. same land should be recognized as its owner. The answer is simple enough. But we
935)? Besides, the area has been also established as one-half hectare. must first, as usual, plow through some alleged complications.
Another collateral question raised by plaintiffs-petitioners is the admission by the
courts a quo of secondary evidence to establish the contents of the first unregistered The pertinent background facts are as follows:chanrob1es virtual 1aw library
deed of sale executed by Anselmo Lacatan in favor of Apolonio Lacatan when the loss
or destruction of the original document, according to them, has not been established. On March 29, 1972, the spouses Andres Diaz and Josefa Mia sold to Bruno Gundran a
Again, the findings of the Court of Appeals destroy this assertion of petitioners (Dec., p. 19-hectare parcel of land in Las Piñas, Rizal, covered by TCT No. 287416. The owner’s
5): duplicate copy of the title was turned over to Gundran. However, he did not register the
Undeniably the alleged unregistered document could no longer be Deed of Absolute Sale because he said he was advised in the Office of the Register of
examined by the parties in court, because it was lost — but its original, Deeds of Pasig of the existence of notices of lis pendens on the title.chanrobles law
however, upon, the trial court's findings which we have no reason to question library
— has been sufficiently proved as having existed.
As observed by this Supreme Court, "the destruction of the instrument may be On November 20, 1972, Gundran and the herein petitioner, Agricultural and Home
proved by any person knowing the fact. The loss may be shown by any person who Development Group, entered into a Joint Venture Agreement for the improvement and
knew the fact of its loss, or by any one who has made, in the judgment of the court, a subdivision of the land. This agreement was also not annotated on the title.
sufficient examination of the place or places where the document or papers of similar
character are kept by the person in whose custody the document lost was, and has On August 30, 1976, the spouses Andres Diaz and Josefa Mia again entered into
been unable to find it; or has made any other investigation which is sufficient to satisfy another contract of sale of the same property with Librado Cabautan, the herein
the court that the instrument is indeed lost." (Michael & Co. v. Enriquez, 33 Phil. 87). private Respondent.
And "it is not even necessary to prove its loss beyond all possibility of mistake. A
reasonable probability of its loss is sufficient, and this may be shown by a bona fide and On September 3, 1976, by virtue of an order of the Court of First Instance of Rizal, a
diligent search, fruitlessly made, for it in places where it is likely to be found." new owner’s copy of the certificate of title was issued to the Diaz spouses, who had
(Government of P.I. v. Martinez, 44 Phil. 817). And after proving the due execution and alleged the loss of their copy. On that same date, the notices of lis pendens annotated
delivery of the document, together with the fact that the same has been lost or on TCT No. 287416 were canceled and the Deed of Sale in favor of private respondent
destroyed, its contents may be proved, among others, by the recollection of witnesses Cabautan was recorded. A new TCT No. S-33850/T-172 was thereupon issued in his
(Vaguillas v. Jaucian, 25 Phil. 315). name in lieu of the canceled TCT No. 287416.
Finding that the facts and the law support the same, it is our opinion, and so hold,
that the appealed decision should be, as it is hereby affirmed. Costs against petitioners On March 14, 1977, Gundran instituted an action for reconveyance before the Court of
spouses Paylago and Dimaandal. First Instance of Pasay City * against Librado Cabautan and Josefa Mia seeking,
Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Castro, Angeles and Fernando, among others, the cancellation of TCT No. 33850/T-172 and the issuance of a new
JJ., concur. certificate of title in his name.

FIRST DIVISION On August 31, 1977, the petitioner, represented by Nicasio D. Sanchez, Sr., filed a
complaint in intervention with substantially the same allegations and prayers as that in
[G.R. No. 92310. September 3, 1992.] Gundran’s complaint.

AGRICULTURAL AND HOME EXTENSION DEVELOPMENT GROUP, represented In a decision dated January 12, 1987, 1 Gundran’s complaint and petitioner’s complaint
by Nicasio D. Sanchez, Sr., substituted by Milagros S. Bucu, Petitioner, v. COURT in intervention were dismissed for lack of merit. So was the private respondent’s
OF APPEALS, and LIBRADO CABAUTAN, Respondents. counterclaims, for insufficiency of evidence.

Gideon C. Bondoc for Petitioner. Upon appeal, this decision was affirmed by the respondent Court of Appeals, with the
modification that Josefa Mia was ordered to pay Gundran the sum of P90,000.00, with
Balgos & Perez for Private Respondent. legal interest from September 3, 1976, plus the costs of suit. 2

Under Article 1544 of the Civil Code of the Philippines:chanrob1es virtual 1aw library
DECISION
Art. 1544. If the same thing should have been sold to different vendees, the ownership
shall be transferred to the person who may have first taken possession thereof in good
CRUZ, J.: faith, if it should be movable property.chanrobles virtual lawlibrary
10

The issue at bar is whether private respondent Cabautan is an innocent purchaser for
Should it be immovable property, the ownership shall belong to the person acquiring it value and so entitled to the priority granted under Article 1544 of the Civil Code. The
who in good faith first recorded it in the Registry of Property. Casis case, on the other hand, involved the issues of whether or not: 1) certiorari was
the proper remedy of the petitioner: 2) the previous petition for certiorari which
Should there be no inscription, the ownership shall pertain to the person who in good originated from the quieting of title case was similar to and, hence, a bar to the petition
faith was first in the possession; and, in the absence thereof, to the person who for certiorari arising from the forcible entry case; and 3) the court a quo committed
presents the oldest title, provided there is good faith. grave abuse of discretion amounting to lack or excess of jurisdiction in issuing the order
which dissolved the restraining order issued in connection with the ejectment case. The
It is not disputed that the first sale to Gundran was not registered while the second sale Court was not called upon in that case to determine who as between the two
to Cabautan was registered. purchasers of the subject property should be preferred.

Following the above-quoted provision, the courts below were justified in according The petitioner invokes the ruling of the lower court in that case to the effect that the
preferential rights to the private respondent, who had registered the sale in his favor, as registration of the sale in favor of the second purchaser and the issuance of a new
against the petitioner’s co-venturer whose right to the same property had not been certificate of title in his favor did not in any manner vest in him any right of possession
recorded. and ownership over the subject property because the seller, by reason of their prior
sale, had already lost whatever right or interest she might have had in the property at
The petitioner claims, however, that Cabautan was a purchaser in bad faith because he the time the second sale was made.
was fully aware of the notices of lis pendens at the back of TCT No. 287416 and of the
earlier sale of the land to Gundran.chanrobles virtual lawlibrary This excerpt was included in the ponencia only as part of the narration of the
background facts and was not thereby adopted as a doctrine of the Court. It was
A purchaser in good faith is defined as "one who buys the property of another without considered only for the purpose of ascertaining if the court below had determined the
notice that some other person has a right to or interest in such property and pays a full issue of the possession of the subject property pending resolution of the question of
and fair price for the same at the time of such purchase or before he has notice of the ownership. Obviously, the Court could not have adopted that questionable ruling as it
claim or interest of some other person in the property." 3 would clearly militate against the provision of Article 1544.chanrobles.com:cralaw:red

An examination of TCT No. 287416 discloses no annotation of any sale, lien, Worthy of note at this juncture is the observation of Justice Edgardo L. Paras, to
encumbrance or adverse claim in favor of Gundran or the petitioner. Well-settled is the wit:chanrob1es virtual 1aw library
rule that when the property sold is registered under the Torrens system, registration is
the operative act to convey or affect the land insofar as third persons are concerned. 4 True, no one can sell what he does not own, but this is merely the general rule. Is Art.
Thus, a person dealing with registered land is only charged with notice of the burdens 1544 then an exception to the general rule? In a sense, yes, by reason of public
on the property which are noted on the register or certificate of title. 5 convenience (See Aitken v. Lao, 36 Phil. 510); in still another sense, it really reiterates
the general rule in that insofar as innocent third persons are concerned, the registered
While it is true that notices of lis pendens in favor of other persons were earlier owner (in the case of real property) is still the owner, with power of disposition. 7
inscribed on the title, these did not have the effect of establishing a lien or encumbrance
on the property affected. Their only purpose was to give notice to third persons and to The language of Article 1544 is clear and unequivocal. In light of its mandate and of the
the whole world that any interest they might acquire in the property pending litigation facts established in this case, we hold that ownership must be recognized in the private
would be subject to the result of the suit. respondent, who bought the property in good faith and, as an innocent purchaser for
value, duly and promptly registered the sale in his favor.
Cabautan took this risk. Significantly, three days after the execution of the deed of sale
in his favor, the notices of lis pendens were canceled by virtue of the orders of the Court WHEREFORE, the petition is DENIED and the questioned decision AFFIRMED in toto,
of First Instance of Rizal, Branch 23, dated April 1, 1974, and April 4, 1974. Cabautan with costs against the petitioner.
therefore acquired the land free of any liens or encumbrances and so could claim to be
a purchaser in good faith and for value. SO ORDERED.

The petitioner insists that it was already in possession of the disputed property when Griño-Aquino, Medialdea and Bellosillo, JJ., concur.
Cabautan purchased it and that he could not have not known of that possession. Such
knowledge should belie his claim that he was an innocent purchaser for value. Nobleza v. Nuega
However, the courts below found no evidence of the alleged possession, which we Josefina Nobleza v. Shirley Nuega
must also reject in deference to this factual finding.chanrobles virtual lawlibrary G.R. No. 193038, March 11, 2015
Villarama, Jr., J.
The petitioner’s reliance on Casis v. Court of Appeals 6 is misplaced.
11

FACTS: descendants by a former marriage, and the fruits as well as the income, if any, of such
Respondent Shirley B. Nuega (Shirley) was married to Rogelio A. Nuega (Rogelio) on property.
September 1, 1990. Upon the request of Rogelio, Shirley sent him money for the Since the subject property does not fall under any of the exclusions provided in Article
purchase of a residential lot in Marikina where they had planned to eventually build their 92, it, therefore, forms part of the absolute community property of Shirley and Rogelio.
home. The following year, or on September 13, 1989, Rogelio purchased the subject Regardless of their respective contribution to its acquisition before their marriage, and
house and lot for One Hundred Two Thousand Pesos (P102,000.00) from Rodeanna despite the fact that only Rogelio’s name appears in the TCT as owner, the property is
Realty Corporation. Shirley claims that upon her arrival in the Philippines sometime in owned jointly by the spouses Shirley and Rogelio.
1989, she settled the balance for the equity over the subject property with the developer FIRST DIVISION
through SSS8 financing. She likewise paid for the succeeding monthly amortizations.
On September 1, 1990, Shirley and Rogelio got married and lived in the subject [G.R. No. 11176. December 21, 1917. ]
property. The following year, Shirley returned to Israel for work. While overseas, she
received information that Rogelio had brought home another woman, Monica Escobar, MARCIANO RIVERA, Plaintiff-Appellant, v. ONG CHE, Defendant-Appellee.
into the family home. She also learned and was able to confirm upon her return to the
Philippines in May 1992, that Rogelio had been introducing Escobar as his wife. Ramon Salinas for Appellant.
In June 1992, Shirley filed two cases against Rogelio: one for Concubinage before the
Provincial Prosecution Office of Rizal, and another for Legal Separation and Liquidation J.C. Hixson for Appellee.
of Property before the RTC of Pasig City. In between the filing of these cases, Shirley
learned that Rogelio had the intention of selling the subject property. Shirley then DECISION
advised the interested buyers one of whom was their neighbor and petitioner Josefina
V. Nobleza (petitioner) – of the existence of the cases that she had filed against Rogelio
and cautioned them against buying the subject property until the cases are closed and STREET, J. :
terminated. Nonetheless, under a Deed of Absolute Sale dated December 29, 1992,
Rogelio sold the subject property to petitioner without Shirley’s consent in the amount of
Three Hundred Eighty Thousand Pesos (P380,000.00), including petitioner’s For some time prior the events which gave origin to this lawsuit, the house of Lichauco,
undertaking to assume the existing mortgage on the property with the National Home or Lichauco Brother had offered for sale a certain old machinery and boilers which were
Mortgage Finance Corporation and to pay the real property taxes due thereon. deposited and exposed for sale in a yard at Tanduay, in the city of Manila. The plaintiff,
ISSUE: Marciano Rivera, alleges that upon January 8, 1912, he purchased some of this old
Is the Deed of Sale null and void for lack of the consent of the wife? material for the price of P5.500, and received a receipt from Cresanto Lichauco
HELD: showing that he had become such purchaser. These things consisted, according to said
Yes. The petitioner is not a buyer in good faith. A buyer cannot claim to be an innocent receipt, of two complete steam-boilers, with chimneys; one steam motor (15 by 30
purchaser for value by merely relying on the TCT of the seller while ignoring all the inches) complete; one pair of twin rice hullers complete, and a feeding pump (donkey)
other surrounding circumstances relevant to the sale. for boilers.
The nullity of the sale made by Rogelio is not premised on proof of respondent’s
financial contribution in the purchase of the subject property. Actual contribution is not The plaintiff, however, did not take possession of the property, which remained in the
relevant in determining whether a piece of property is community property for the law same place. It further appears that upon February 9, 1912, the defendants, Ong Che,
itself defines what constitutes community property. bought from Lichauco Brothers a lot of old iron, machinery, and junk for the sum of
Article 91 of the Family Code thus provides: P1,100. This purchaser took immediate possession of the materials purchased by him.
Art. 91. Unless otherwise provided in this Chapter or in the marriage settlements, the Later, when Marciano Rivera appeared to take possession of the things of which he
community property shall consist of all the property owned by the spouses at the time of supposed himself to the purchaser, under the receipt given by Crisanto Lichauco, he
the celebration of the marriage or acquired thereafter. found that many of the accessory and auxiliary parts of the boilers, motor, and rice mill
The only exceptions from the above rule are: (1) those excluded from the absolute were wanting; and upon investigation it developed that these articles were held by the
community by the Family Code; and (2) those excluded by the marriage settlement. defendant, Ong Che, and were claimed by him as owner by virtue of the purchase
Under the first exception are properties enumerated in Article 92 of the Family Code, effected by him upon February 9, as stated above. The plaintiff thereupon instituted the
which states: present action to recover the articles in question alleging that he was the true owner
Art. 92. The following shall be excluded from the community property: thereof. At the hearing in the Court of First Instance of the city of Manila judgment was
(1) Property acquired during the marriage by gratuitous title by either spouse and the given in favor of the defendant and the plaintiff has appealed.
fruits as well as the income thereof, if any, unless it is expressly provided by the donor,
testator or grantor that they shall form part of the community property; We concur in the conclusion reached by the judge of the Court of First Instance that the
(2) Property for personal and exclusive use of either spouse; however, jewelry shall defendant, Ong Che, was a purchaser of these articles in good faith. It is furthermore
form part of the community property; uncontroverted that he acquired possession by virtue of his purchase. He, therefore,
(3) Property acquired before the marriage by either spouse who has legitimate undoubtedly has, under article 1473 of the Civil Code, a better title than the first
purchaser, who has never had possession at all. The only doubt as to the application of
12

that article to the present case arises from the fact that there is some conflict in the instance against the appellant. So ordered.
testimony upon the question as to who was the original owner. It is to be inferred from
the testimony that the house of Lichauco consists of Faustino Lichauco and Galo Arellano, C.J., Johnson, Carson, Araullo, Malcolm, and Avanceña, JJ., concur.
Lichauco, and it would seem that Crisanto Lichauco, who effected the sale of Rivera, is
not a member of that establishment. Crisanto testified that the property sold by him to CRB vs. CA and HEIRS OF DELA CRUZ
the plaintiff Rivera, including the articles which are now in dispute, was the property of G.R. No. 132161
Galo Lichauco. There is grave doubt as to correctness of this statement, however, as January 17, 2005
the same witness admits that the machinery sold by him to Rivera had been taken out FACTS: The Madrid brothers were the registered owners of Lot A situated in Isabela.
of an old mill owned by Lichauco Brothers in Dagupan; and it is not made clear that Said lot was subdivided into several lots. Rizal Madrid sold part of his share identified
Galo Lichauco had ever become its exclusive owner. Furthermore, the evidence lot A-7 to Gamiao and Dayag by virtue of a Deed of Sale, to which his brothers offered
submitted by the defendant tends to show that the things acquitted by him, including the no objection as evidenced by their Joint Affidavit .The deed of sale was not registered
articles in dispute, were bought from Faustino Lichauco as property of the house. At with the ORD of Isabela. However, Gamiao and Dayag declared the property in their
any rate we find that, under the circumstances disclosed in this case, and even names on a Tax Declaration. Gamiao and Dayag sold the subject southern half of lot to
conceding that property belong to Galo Lichauco, the house of Lichauco had authority Teodoro dela Cruz, and the northern half to Hernandez. Thereupon, Teodoro dela Cruz
to sell it. In this view the case presented is that where two different agents of the same and Hernandez took possession of and cultivated the portions of the property
owner successively negotiated sales to two different purchasers, and it is obvious that, respectively sold to them (Later Restituto Hernandez donated the northern half to his
under the article of the Civil Code cited above, the second purchaser having acquired daughter. The children of Teodoro dela Cruz continued possession of the southern half
possession first must be declared the true owner. In our view of the facts it was merely after their father’s death.) In a Deed of Sale the Madrid brothers conveyed all their rights
a case where a mistake was made by the house of Lichauco in selling something that and interests over lot A-7 to Marquez which the former confirmed. The deed of sale was
had already been sold. registered with the ORD of Isabela. Subsequently, Marquez subdivided lot A-7 into
eight (8) lots. On the same date, Marquez and his spouse, Mercedita Mariana,
Other aspects of the case are equally fatal to the contention of the plaintiff. It was mortgaged 4 lots to the Consolidated Rural Bank, Inc. of Cagayan Valley (hereafter,
incumbent upon the plaintiff to prove title in himself, as against the defendant, by a CRB) to secure a loan. These deeds of real estate mortgage were registered with the
preponderance of the evidence; and he could not recover merely upon the weakness of ORD. As Marquez defaulted in the payment of his loan, CRB caused the foreclosure of
the defendant’s title. (Belen v. Belen, 13 Phil. Rep., 202.) The court below held that the the mortgages in its favor and the lots were sold to it as the highest bidder. The Heirs-
plaintiff had failed to prove title in himself and we see the no reason for disturbing the now respondents filed a case for reconveyance and damages for the southern portion
judgment on this point. The defendant had, in his favor, the fact that he was purchaser of Lot No. 7036-A (hereafter, the subject property) against Marquez and CRB. The RTC
in good faith and had acquired lawful possession. There is a presumption arising from handed down a decision in favor of Marquez. The Heirs interposed an appeal with the
such possession that he was the owner (sec. 334 [10], Code of Civel Procedure); and CA, which upheld the claim of the Heirs. Hence, the instant CRB petition.
the mere fact, if such it be, that the property originally belonged to Galo Lichauco was ISSUE: WON Art. 1544 of the Civil Code (double sale) applicable in this case
not sufficient, without more, to defeat a title acquired by the defendant through the HELD: NO.
house of Lichauco. The petition is denied, and the decision as modified is affirmed. Like the lower court,
the appellate court resolved the present controversy by applying the rule on double sale
It should be stated that at the hearing the plaintiff himself did not appear as a witness. provided in Article 1544 of the Civil Code. They, however, arrived at different
Furthermore, no steps were taken, prior to the trial to secure the attendance of either conclusions. The RTC made CRB and the other defendants win, while the Court of
Galo Lichauco or Faustino Lichauco, both of whom would have been most material Appeals decided the case in favor of the Heirs.
witnesses for the plaintiff if his contention is correct. Article 1544 of the Civil Code reads, thus:
ART. 1544. If the same thing should have been sold to different vendees, the ownership
At the close of the trial in the court below, plaintiff’s counsel asked for a continuance in shall be transferred to the person who may have first taken possession thereof in good
order to call these witnesses. The court refused to grant a continuance for such faith, if it should be movable property. Should it be immovable property, the ownership
purpose. In this we think the court did not abuse its discretion, and its action in this shall belong to the person acquiring it who in good faith first recorded it in the Registry
respect does not constitute reversible error. The plaintiff was appraised from the nature of Property.
of the issue raised that the question to be tried was that of ownership and he should Should there be no inscription, the ownership shall pertain to the person who in good
have been ready with the witnesses to prove it. He was not entitled to a continuance on faith was first in possession; and, in the absence thereof, to the person who presents
the ground of the absence of those important witnesses unless he showed that he had the oldest title, provided there is good faith. The provision is not applicable in the
used reasonable diligence to secure their attendance. An application for a continuance present case. It contemplates a case of double or multiple sales by a single vendor. It
of cause is addressed to the sound legal discretion of the trial court, and its ruling cannot be invoked where the two different contracts of sale are made by two different
thereon will not be disturbed, unless it clearly appears that such discretion has been persons, one of them not being the owner of the property sold. And even if the sale was
abused, and that by the refusal of the continuance a party has been without his fault made by the same person, if the second sale was made when such person was no
deprived of an opportunity of making his case or defense. longer the owner of the property, because it had been acquired by the first purchaser in
full dominion, the second purchaser cannot acquire any right. In the case at bar, the
It results that the judgment of the lower court should be affirmed, with costs of this subject property was not transferred to several purchasers by a single vendor. In the
13

first deed of sale, the vendors were Gamiao and Dayag whose right to the subject C) was rendered in favor of the plaintiff and against the defendants.
property originated from their acquisition thereof from Rizal Madrid with the conformity On October 1, 1968, the ex-officio Sheriff, Justo V. Imperial, of
of all the other Madrid brothers. On the other hand, the vendors in the other or later Camarines Sur, issued a "Definite Deed of Sale (Exh. D) of the
deed were the Madrid brothers but at that time they were no longer the owners since property now in question in favor of Santiago Balbuena, which
they had long before disposed of the property in favor of Gamiao and Dayag. instrument of sale was registered before the Office of the Register of
In a situation where not all the requisites are present which would warrant the Deeds of Camarines Sur, on October 3, 1958. The aforesaid property
application of Art. 1544, the principle of prior tempore, potior jure or simply “he who is was declared for taxation purposes (Exh. 1) in the name of Santiago
first in time is preferred in right, should apply.” The only essential requisite of this rule is Balbuena in 1958.
priority in time; in other words, the only one who can invoke this is the first vendee. The Court of First instance, finding that after execution of the document Carumba had
Undisputedly, he is a purchaser in good faith because at the time he bought the real taken possession of the land, planting bananas, coffee and other vegetables thereon,
property, there was still no sale to a second vendee. In the instant case, the sale to the declared him to be the owner of the property under a consummated sale; held void the
Heirs by Gamiao and Dayag, who first bought it from Rizal Madrid, was anterior to the execution levy made by the sheriff, pursuant to a judgment against Carumba's vendor,
sale by the Madrid brothers to Marquez. The Heirs also had possessed the subject Amado Canuto; and nullified the sale in favor of the judgment creditor, Santiago
property first in time. Thus, applying the principle, the Heirs, without a scintilla of doubt, Balbuena. The Court, therefore, declared Carumba the owner of the litigated property
have a superior right to the subject property. Moreover, it is an established principle that and ordered Balbuena to pay P30.00, as damages, plus the costs.
no one can give what one does not have¾nemo dat quod non habet. Accordingly, one The Court of Appeals, without altering the findings of fact made by the court of origin,
can sell only what one owns or is authorized to sell, and the buyer can acquire no more declared that there having been a double sale of the land subject of the suit Balbuena's
than what the seller can transfer legally.53 In this case, since the Madrid brothers were title was superior to that of his adversary under Article 1544 of the Civil Code of the
no longer the owners of the subject property at the time of the sale to Marquez, the Philippines, since the execution sale had been properly registered in good faith and the
latter did not acquire any right to it. sale to Carumba was not recorded.
We disagree. While under the invoked Article 1544 registration in good faith prevails
G.R. No. L-27587 February 18, 1970 over possession in the event of a double sale by the vendor of the same piece of land
AMADO CARUMBA, petitioner, to different vendees, said article is of no application to the case at bar, even if
vs. Balbuena, the later vendee, was ignorant of the prior sale made by his judgment debtor
THE COURT OF APPEALS, SANTIAGO BALBUENA and ANGELES BOAQUIÑA as in favor of petitioner Carumba. The reason is that the purchaser of unregistered land at
Deputy Provincial Sheriff, respondents. a sheriff's execution sale only steps into the shoes of the judgment debtor, and merely
Luis N. de Leon for petitioner. acquires the latter's interest in the property sold as of the time the property was levied
Reno R. Gonzales for respondents. upon. This is specifically provided by section 35 of Rule 39 of the Revised Rules of
Court, the second paragraph of said section specifically providing that:
REYES, J.B.L., J.: Upon the execution and delivery of said (final) deed the purchaser,
Amado Carumba petitions this Supreme Court for a certiorari to review a decision of the redemptioner, or his assignee shall be substituted to and acquire all
Court of Appeals, rendered in its Case No. 36094-R, that reversed the judgment in his the right, title, interest, and claim of the judgment debtor to the
favor rendered by the Court of First Instance of Camarines Sur (Civil Case 4646). property as of the time of the levy, except as against the judgment
The factual background and history of these proceedings is thus stated by the Court of debtor in possession, in which case the substitution shall be effective
Appeals (pages 1-2): as of the time of the deed ... (Emphasis supplied)
On April 12, 1955, the spouses Amado Canuto and Nemesia Ibasco, While the time of the levy does not clearly appear, it could not have been made prior to
by virtue of a "Deed of Sale of Unregistered Land with Covenants of 15 April 1957, when the decision against the former owners of the land was rendered in
Warranty" (Exh. A), sold a parcel of land, partly residential and partly favor of Balbuena. But the deed of sale in favor of Canuto had been executed two years
coconut land with a periphery (area) of 359.09 square meters, more before, on 12 April 1955, and while only embodied in a private document, the same,
or less, located in the barrio of Santo Domingo, Iriga, Camarines Sur, coupled with the fact that the buyer (petitioner Carumba) had taken possession of the
to the spouses Amado Carumba and Benita Canuto, for the sum of unregistered land sold, sufficed to vest ownership on the said buyer. When the levy was
P350.00. The referred deed of sale was never registered in the Office made by the Sheriff, therefore, the judgment debtor no longer had dominical interest nor
of the Register of Deeds of Camarines Sur, and the Notary, Mr. any real right over the land that could pass to the purchaser at the execution
Vicente Malaya, was not then an authorized notary public in the sale.1 Hence, the latter must yield the land to petitioner Carumba. The rule is different in
place, as shown by Exh. 5. Besides, it has been expressly admitted case of lands covered by Torrens titles, where the prior sale is neither recorded nor
by appellee that he is the brother-in-law of Amado Canuto, the known to the execution purchaser prior to the levy;2 but the land here in question is
alleged vendor of the property sold to him. Amado Canuto is the older admittedly not registered under Act No. 496.
brother of the wife of the herein appellee, Amado Carumba. WHEREFORE, the decision of the Court of Appeals is reversed and that of the Court of
On January 21, 1957, a complaint (Exh. B) for a sum or money was First Instance affirmed. Costs against respondent Santiago Balbuena.
filed by Santiago Balbuena against Amado Canuto and Nemesia Concepcion, C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Fernando, Teehankee,
Ibasco before the Justice of the Peace Court of Iriga, Camarines Sur, Barredo and Villamor, JJ., concur.
known as Civil Case No. 139 and on April 15, 1967, a decision (Exh.
14

EN BANC We would be inclined to hold that appellant has the better right because, as We have
G.R. No. L-18497 May 31, 1965 consistently held, in case of conveyance of registered real estate, the registration of the
DAGUPAN TRADING COMPANY, petitioner, deed of sale is the operative act that gives validity to the transfer. This would be fatal to
vs. appellee's claim, the deeds of sale executed in his favor by the Maron's not having
RUSTICO MACAM, respondent. been registered, while the levy in execution and the provisional certificate of sale as
Angel Sanchez for petitioner. well as the final deed of sale in favor of appellant were registered. Consequently, this
Manuel L. Fernandez for respondent. registered conveyance must prevail although posterior to the one executed in favor of
DIZON, J.: appellee, and appellant must be deemed to have acquired such right, title and interest
Appeal taken by the Dagupan Trading Company from the decision of the Court of as appeared on the certificate of title issued in favor of Sammy Maron, subject to no
Appeals affirming the one rendered by the Court of First Instance of Pangasinan in Civil lien, encumbrance or burden not noted thereon. (Anderson & Co. vs. Garcia, 64 Phil.
Case No. 13772, dismissing its complaint. 506; Reynes, et al. vs. Barrera, et al., 68 Phil. 656; Banco Nacional, etc. vs. Camus, 70
On September 4, 1958, appellant commenced the action mentioned above against Phil. 289)
appellee Rustico Macam, praying that it be declared owner of one-eighth portion of the The present case, however, does not fall within either, situation. Here the sale in favor
land described in paragraph 2 of the complaint; that a partition of the whole property be of appellee was executed before the land subject-matter thereof was registered, while
made; that appellee be ordered to pay it the amount of P500.00 a year as damages the conflicting sale in favor of appellant was executed after the same property had been
from 1958 until said portion is delivered, plus attorney's fees and costs. registered. We cannot, therefore, decide the case in the light of whatever adjudicated
Answering the complaint, appellee alleged, in the main, that Sammy Maron's share in cases there are covering the two situations mentioned in the preceding paragraph. It is
the property described in the complaint, as well as that of all his co-heirs, had been our considered view that what should determine the issue are the provisions of the last
acquired by purchase by appellee since June 19 and September 21, 1955, before the paragraph of Section 35, Rule 39 of the Rules of Court, to the effect that upon the
issuance of the original certificate of title in their name; that at the time the levy in execution and delivery of the final certificate of sale in favor of the purchaser of land
execution was made on Sammy Maron's share therein, the latter had no longer any sold in an execution sale, such purchaser "shall be substituted to and acquire all the
right or interest in said property; that appellant and its predecessor in interest were right, title, interest and claim of the judgment debtor to the property as of the time of the
cognizant of the facts already mentioned; that since the sales made in his favor, he had levy." Now We ask: What was the interest and claim of Sammy Maron on the one-
enjoyed uninterrupted possession of the property and introduced considerable eighth portion of the property inherited by him and his co-heirs, at the time of the levy?
improvements thereon. Appellee likewise sought to recover damages by way of The answer must necessarily be that he had none, because for a considerable time
counterclaim. prior to the levy, his interest had already been conveyed to appellee, "fully and
After trial upon the issue thus joined, the court rendered judgment dismissing the retrievably — as the Court of Appeals held. Consequently, subsequent levy made on
complaint, which, on appeal, was affirmed by the Court of Appeals. the property for the purpose of satisfying the judgment rendered against Sammy Maron
The facts of the case are not disputed. in favor of the Manila Trading Company was void and of no effect (Buson vs. Licuaco,
In the year 1955, Sammy Maron and his seven brothers and sisters were pro-indiviso 13 Phil. 357-358; Landig vs. U.S. Commercial Company, G.R. No. L-3597, July 31,
owners of a parcel of unregistered land located in barrio Parayao, Municipality of 1951). Needless to say, the unregistered sale and the consequent conveyance of title
Binmaley, Pangasinan. While their application for registration of said land under Act No. and ownership in favor of appellee could not have been cancelled and rendered of no
496 was pending, they executed, on June 19 and September 21, 1955, two deeds of effect upon the subsequent issuance of the Torrens title over the entire parcel of land.
sale conveying the property to appellee, who thereafter took possession thereof and We cannot, therefore, but agree with the following statement contained in the appealed
proceeded to introduce substantial improvements therein. One month later, that is, on decision:
October 14, 1955, Original Certificate of Title No. 6942 covering the land was issued in ... . Separate and apart from this however, we believe that in the inevitable
the name of the Maron's, free from all liens and encumbrances. conflict between a right of ownership already fixed and established under the
On August 4, 1956, by virtue of a final judgment rendered in Civil Case No. 42215 of Civil Law and/or the Spanish Mortgage Law — which cannot be affected by
the Municipal Court of Manila against Sammy Maron in favor of the Manila Trading and any subsequent levy or attachment or execution — and a new law or system
Supply Company, levy was made upon whatever interest he had in the aforementioned which would make possible the overthrowing of such ownership on admittedly
property, and thereafter said interest was sold at public auction to the judgment creditor. artificial and technical grounds, the former must be upheld and
The corresponding notice of levy, certificate of sale and the Sheriff's certificate of final applied.1äwphï1.ñët
sale in favor of the Manila Trading and Supply Co. — because nobody exercised the But to the above considerations must be added the important circumstance that, as
right of redemptions — were duly registered. On March 1, 1958, the latter sold all its already stated before, upon the execution of the deed of sale in his favor by Sammy
rights and title to the property to appellant. Maron, appellee took possession of the land conveyed as owner thereof, and
The question before Us now is: Who has the better right as between appellant Dagupan introduced considerable improvements thereon. To deprive him now of the same by
Trading Company, on the one hand, and appellee Rustico Macam, on the other, to the sheer force of technicality would be against both justice and equity.
one-eighth share of Sammy Maron in the property mentioned heretofore? IN VIEW OF ALL THE FOREGOING, the decision appealed from is affirmed, with
If the property covered by the conflicting sales were unregistered land, Macam would costs.
undoubtedly have the better right in view of the fact that his claim is based on a prior Bengzon, C.J., Bautista Angelo, Barrera, Regala, Makalintal, Bengzon, J.P., and
sale coupled with public, exclusive and continuous possession thereof as owner. On the Zaldivar, JJ., concur.
other hand, were the land involved in the conflicting transactions duly registered land,
15

Siapos, and there was not even a claim that he had knowledge of said litigation. He
G.R. No. L-19248 February 28, 1963 cannot, therefore, be bound by such judgment in view of the provision of paragraph (b),
ILUMINADO HANOPOL, plaintiff-appellant, Section 44 of Rule 39 of the Rules of Court which speaks of the effect of judgment as
vs. follows:
PERFECTO PILAPIL, defendant-appellee. ... the judgment so ordered is, in respect to the matter directly adjudged,
Jesus P. Narvios for plaintiff-appellant. conclusive between the parties and their successors in interest by title
Estacion & Paltriquerra for defendant-appellee. subsequent to commencement of the action or special proceeding, litigating for
BARRERA, J.: the same thing and under the same title and in the same capacity. (Emphasis
This is a case of double sale of the same parcel of unregistered land decided by the supplied)
Court of First Instance of Leyte (Civil Case No. 21) in favor of defendant-appellee Since Pilapil was not a party to the action and is not a successor-in-interest by title
Perfecto Pilapil, originally appealed by plaintiff-appellant Iluminado Hanopol to the Court subsequent to the commencement of the action, having acquired his title in 1945 and
of Appeals, but later certified to this Court for proper adjudication, the issues involved the action filed in 1948, the decision in said case cannot be binding on him.
being exclusively of law. Appellant argues under the second issue raised by him that the registration of Pilapil's
Appellant Hanopol claims ownership of the land by virtue of a series of purchases notarized deed of sale in 1948 under Act No. 3344 "shall be understood to be without
effected in 1938 by means of private instruments, executed by the former owners prejudice to a third party with a better right". He contends that since at the time the
Teodora, Lucia, Generosa, Sinforosa and Isabelo, all surnamed Siapo. Additionally, he Siapos sold the land in question in 1945 to Pilapil, the former were no longer the
invokes in his favor a decision rendered by the Court of First Instance of Leyte (in Civil owners as they had already sold the same to appellant since 1938, the first sale to him
Case No. 412) on a complaint he filed on June 16, 1948, against the same vendors, is a better right which cannot be prejudiced by the registration of the second sale.
who, according to his own averments, took possession of the said property in We do not think the quoted proviso in Act No. 3344 justifies appellant's contention. If his
December, 1945 through fraud, threat and intimidation, pretending falsely to be the theory is correct, then the second paragraph of Article 1544 of the New Civil Code
owners thereof and ejecting the tenants of Hanopol thereon, and since then had (formerly Article 1473 of the old Code) would have no application at all except to lands
continued to possess the land. Decision declaring him the exclusive owner of the land or real estate registered under the Spanish Mortgage Law or the Land Registration Act.
in question and ordering therein defendants to deliver possession thereof was rendered Such a theory would thus limit the scope of that codal provision. But even if we adopt
on September 21, 1958. this latter view, that is, that Article 1544 (formerly Article 1473) only applies to registered
On the other hand, appellee Pilapil asserts title to the property on the strength of a duly land, still we cannot agree with the appellant that by the mere fact of his having a
notarized deed of sale executed in his favor by the same owners on December 3, 1945, previous title or deed of sale, he has acquired thereby what is referred to in Act No.
which deed of sale was registered in the Registry of Deeds of Leyte on August 20, 1948 3344 as the "better right" that would be unaffected by the registration of a second deed
under the provisions of Act No. 3344. of sale under the same law. Under such theory, there would never be a case of double
Wherefore, the parties respectfully pray that the foregoing stipulation of facts be sale of the same unregistered property.
admitted and approved by this Honorable Court, without prejudice to the parties An example of what could be a better right that is protected against the inscription of a
adducing other evidence to prove their case not covered by this stipulation of subsequent sale is given in the case of Lichauco v. Berenguer (39 Phil. 643). The facts
facts. 1äwphï1.ñët in that case are succinctly stated in the syllabus thereof as follows:
The case was submitted for decision without any testimonial evidence, both parties ....— In 1882 B sold to S a piece of land. After the sale B continued in the
relying exclusively on their documentary evidence consisting, on the part of Hanopol, of possession of the land in the capacity of lessee of S through payment of rent,
the private instruments alluded to and a copy of the decision in the reivindicatory case, and continued as such until his death when he was substituted by the
and on the part of Pilapil, the notarized deed of sale in his favor bearing annotation of administrator of his property. In 1889 B sold again the same piece of land to L
its registration under Act No. 3344. As thus submitted, the trial court rendered the who leased it to B himself under certain conditions. Both sales were executed
decision adverted to at the beginning of this opinion, mainly upon the authority of the in a public instrument, the one executed in favor of L being registered only in
second paragraph of Article 15441 of the New Civil Code, which is a reproduction of 1907. Thus, S and L acquired possession of the land through the same vendor
Article 1473 of the old Civil Code, the law in force at the time the transaction in this case upon the latter's ceasing to be the owner and becoming the lessee of said S
took place. and L, respectively. HELD: (1) That, with reference to the time prior to 1907,
Appellant Hanopol in his appeal from the decision of the trial court presents two the preference should be in favor of the purchaser who first took possession of
questions of law; firstly, whether or not the judgment in the former case No. 412 against the land, because this possession, according to the law in force prior to the
the vendors Siapos is binding upon the defendant-appellee as their successor-in- promulgation of the Civil Code, constituted the consummation of the contract,
interest; and secondly, whether or not the registration of the second deed of sale in and also because afterwards the Civil Code expressly establishes that
favor of appellee Pilapil affects his right as the first vendee. possession in such cases transfers the ownership of the thing sold. (2) That,
Under the first assignment of error, the appellant contends that inasmuch as appellee when a person buys a piece of land and, instead of taking possession of it,
claims to be the successor-in-interest of the vendors, he is bound by the judgment leases it to the vendor, possession by the latter after the sale is possession by
rendered against the latter. This contention is without merit, because it appears from the vendee, and such possession, in case of a double sale, determines the
the documentary evidence that appellee Pilapil derived his right to the land from the preference in favor of the one who first took possession of it, in the absence of
sale to him of the said property on December 3, 1945, long before the filing of the inscription, in accordance with the provision of article 1473 of the Civil Code,
complaint against the vendors in 1948. He was not made a party in the case against the
16

notwithstanding the material and personal possession by the second vendee. mean that the previous sale in favor of Tigno-Salazar and Cave-Go shall remain valid
(Bautista vs. Sioson, 39 Phil. Rep., 615) and binding and the plaintiff shall voluntarily vacate the premises without need of any
.... Because L had to receive his possession from B who was a mere lessee of demand. Villafania failed to buy back the house and lot, so the [vendees] declared the
S and as such had no possession to give, inasmuch as his possession was lot in their name
not for himself but in representation of S, it follows that L never possessed the The RTC rendered the assailed Decision awarding the properties to Spouses Abrigo as
land.. well as damages. Moreover, Villafania was ordered to pay [petitioners and private
.... The effect which the law gives to the inscription of a sale against the respondent] damages and attorney’s fees.
efficacy of the sale which was not registered is not extended to other titles Not contented with the assailed Decision, both parties [appealed to the CA].
which the other vendee was able to acquire independently as, in this case, the In its original Decision, the CA held that a void title could not give rise to a valid one and
title by prescription. hence dismissed the appeal of Private Respondent de Vera.Since Villafania had
It thus appears that the "better right" referred to in Act No. 3344 is much more than the already transferred ownership to Rosenda Tigno-Salazar and Rosita Cave-Go, the
mere prior deed of sale in favor of the first vendee. In the Lichauco case just mentioned, subsequent sale to De Vera was deemed void.The CA also dismissed the appeal of
it was the prescriptive right that had supervened. Or, as also suggested in that case, Petitioner-Spouses Abrigo and found no sufficient basis to award them moral and
other facts and circumstances exist which, in addition to his deed of sale, the first exemplary damages and attorney’s fees.
vendee can be said to have better right than the second purchaser. On reconsideration found Respondent De Vera to be a purchaser in good faith and for
In the case at bar, there appears to be no clear evidence of Hanopol's possession of value. The appellate court ruled that she had relied in good faith on the Torrens title of
the land in controversy. In fact, in his complaint against the vendors, Hanopol alleged her vendor and must thus be protected.
that the Siapos took possession of the same land under claim of ownership in 1945 and Hence, this Petition.9
continued and were in such possession at the time of the filing of the complaint against ISSUE: Who between petitioner-spouses and respondent has a better right to the
them in 1948. Consequently, since the Siapos were in actual occupancy of the property property.
under claim of ownership, when they sold the said land to appellee Pilapil on December HELD: DE VERA
3, 1945, such possession was transmitted to the latter, at least constructively, with the The petition is denied, and the assailed decision affirmed.The present case involves
execution of the notarial deed of sale, if not actually and physically as claimed by Pilapil what in legal contemplation was a double sale. Gloria Villafania first sold the disputed
in his answer filed in the present case. Thus, even on this score, Hanopol cannot have property to Tigno-Salazar and Cave-Go, from whom petitioners, in turn, derived their
a better right than appellee Pilapil who, according to the trial court, "was not shown to right. Subsequently a second sale was executed by Villafania with Respondent de Vera.
be a purchaser in bad faith". Article 1544 of the Civil Code states the law on double sale thus:
WHEREFORE, finding no error in the decision appealed from, the same is hereby “Art. 1544. If the same thing should have been sold to different vendees, the ownership
affirmed, with costs against the appellant. So ordered. shall be transferred to the person who may have first taken possession thereof in good
Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Paredes, Dizon, faith, if it should be movable property.
Regala and Makalintal, JJ., concur. “Should it be immovable property, the ownership shall belong to the person acquiring it
who in good faith first recorded it in the Registry of Property.
Spouses ABRIGO vs. DE VERA “Should there be no inscription, the ownership shall pertain to the person who in good
G.R. No. 154409 faith was first in the possession; and, in the absence thereof, to the person who
June 21, 2004 presents the oldest title, provided there is good faith.”
FACTS: Villafania sold a house and lot located Pangasinan and Tigno-Salazar and There is no ambiguity in the application of this law with respect to lands registered
Cave-Go covered by a tax declaration. ‘Unknown, however to Tigno-Salazar and a under the Torrens system.
Cave-Go, Villafania obtained a free patent over the parcel of land involved.The said free In the instant case, both Petitioners Abrigo and respondent registered the sale of the
patent was later on cancelled by a TCT. property. Since neither petitioners nor their predecessors (Tigno-Salazar and Cave-Go)
‘On Oct 16, 1997, Tigno-Salazar and Cave-Go, sold the house and lot to the Spouses knew that the property was covered by the Torrens system, they registered their
Abrigo. respective sales under Act 3344 For her part, respondent registered the transaction
‘On Oct 23, 1997, Villafania sold the same house and lot to de Vera. De Vera registered under the Torrens system because, during the sale, Villafania had presented the
the sale and as a consequence a TCT was issued in her name. transfer certificate of title (TCT) covering the property.
De Vera filed an action for Forcible Entry and Damages against Spouses Abrigo Soriano v. Heirs of Magali23 held that registration must be done in the proper
before the MTC. registry in order to bind the land. Since the property in dispute in the present case was
Spouses Abrigo filed a case with the RTC for the annulment of documents, injunction, already registered under the Torrens system, petitioners’ registration of the sale under
preliminary injunction, restraining order and damages Villafania. Act 3344 was not effective for purposes of Article 1544 of the Civil Code.
The parties submitted a Motion for Dismissal in view of their agreement in the instant More recently, in Naawan Community Rural Bank v. Court of Appeals,24 the Court
(RTC) case that neither of them can physically take possession of the property in upheld the right of a party who had registered the sale of land under the Property
question until the instant case is terminated. Hence the ejectment case was dismissed. Registration Decree, as opposed to another who had registered a deed of final
The RTC rendered judgment approving the Compromise Agreement submitted by the conveyance under Act 3344. In that case, the “priority in time” principle was not
parties. In the said Decision, Villafania was given one year from the date of the applied, because the land was already covered by the Torrens system at the time the
Compromise Agreement to buy back the house and lot, and failure to do so would conveyance was registered under Act 3344. For the same reason, inasmuch as the
17

registration of the sale to Respondent De Vera under the Torrens system was done in is transferred to him by registration, or failing registration, by delivery of
good faith, this sale must be upheld over the sale registered under Act 3344 to possession.’”34 (Italics supplied)
Petitioner-Spouses Abrigo. Equally important, under Section 44 of PD 1529, every registered owner receiving a
NOTES: certificate of title pursuant to a decree of registration, and every subsequent purchaser
1. The principle in Article 1544 of the Civil Code is in full accord with Section 51 of of registered land taking such certificate for value and in good faith shall hold the same
PD 1529 which provides that: free from all encumbrances, except those noted and enumerated in the certificate.
no deed, mortgage, lease or other voluntary instrument — except a will — purporting to Thus, a person dealing with registered land is not required to go behind the registry to
convey or affect registered land shall take effect as a conveyance or bind the land until determine the condition of the property, since such condition is noted on the face of the
its registration. Thus, if the sale is not registered, it is binding only between the seller register or certificate of title.Following this principle, this Court has consistently held as
and the buyer but it does not affect innocent third persons. regards registered land that a purchaser in good faith acquires a good title as against all
2. Radiowealth Finance Co. v. Palileo25 explained the difference in the rules of the transferees thereof whose rights are not recorded in the Registry of Deeds at the
registration under Act 3344 and those under the Torrens system in this wise: time of the sale.
“Under Act No. 3344, registration of instruments affecting unregistered lands is ‘without
prejudice to a third party with a better right.’ The aforequoted phrase has been held by SECOND DIVISION
this Court to mean that the mere registration of a sale in one’s favor does not give him G.R. No. 181359 August 5, 2013
any right over the land if the vendor was not anymore the owner of the land having SPOUSES CLEMENCIO C. SABITSANA, JR. and MA. ROSARIO M.
previously sold the same to somebody else even if the earlier sale was unrecorded. SABITSANA, Petitioners,
“The case of Carumba vs. Court of Appeals is a case in point. It was held therein that vs.
Article 1544 of the Civil Code has no application to land not registered under Act No. JUANITO F. MUERTEGUI, represented by his Attorney-in-Fact DOMINGO A.
496. Like in the case at bar, Carumba dealt with a double sale of the same unregistered MUERTEGUI, JR., Respondent.
land. The first sale was made by the original owners and was unrecorded while the DECISION
second was an execution sale that resulted from a complaint for a sum of money filed DEL CASTILLO, J.:
against the said original owners. Applying [Section 33], Rule 39 of the Revised Rules of A lawyer may not, for his own personal interest and benefit, gamble on his client's word,
Court, this Court held that Article 1544 of the Civil Code cannot be invoked to benefit believing it at one time and disbelieving it the next. He owes his client his undivided
the purchaser at the execution sale though the latter was a buyer in good faith and even loyalty.
if this second sale was registered. It was explained that this is because the purchaser of Assailed in this Petition for Review on Certiorari1 are the January 25, 2007 Decision2 of
unregistered land at a sheriff’s execution sale only steps into the shoes of the judgment the Court of Appeals (CA) which denied the appeal in CA-G.R. CV No. 79250, and its
debtor, and merely acquires the latter’s interest in the property sold as of the time the January 11, 2008 Resolution3 denying petitioner’s Motion for Reconsideration.4
property was levied upon. Factual Antecedents
“Applying this principle, x x x the execution sale of unregistered land in favor of On September 2, 1981, Alberto Garcia (Garcia) executed an unnotarized Deed of
petitioner is of no effect because the land no longer belonged to the judgment debtor as Sale5 in favor of respondent Juanito Muertegui 6 (Juanito) over a 7,500-square meter
of the time of the said execution sale. parcel of unregistered land (the lot) located in Dalutan Island, Talahid, Almeira, Biliran,
3. Good-Faith Requirement Leyte del Norte covered by Tax Declaration (TD) No. 1996 issued in 1985 in Garcia’s
We have consistently held that Article 1544 requires the second buyer to acquire the name.7
immovable in good faith and to register it in good faith. Mere registration of title is not Juanito’s father Domingo Muertegui, Sr. (Domingo Sr.) and brother Domingo Jr. took
enough; good faith must concur with the registration.We explained the rationale actual possession of the lot and planted thereon coconut and ipil-ipil trees. They also
in Uraca v. Court of Appeals, which we quote: paid the real property taxes on the lot for the years 1980 up to 1998.
“Under the foregoing, the prior registration of the disputed property by the second buyer On October 17, 1991, Garcia sold the lot to the Muertegui family lawyer, petitioner Atty.
does not by itself confer ownership or a better right over the property. Article 1544 Clemencio C. Sabitsana, Jr. (Atty. Sabitsana), through a notarized deed of absolute
requires that such registration must be coupled with good faith. Jurisprudence teaches sale.8 The sale was registered with the Register of Deeds on February 6, 1992. 9 TD No.
us that ‘(t)he governing principle is primus tempore, potior jure (first in time, stronger in 1996 was cancelled and a new one, TD No. 5327,10 was issued in Atty. Sabitsana’s
right). Knowledge gained by the first buyer of the second sale cannot defeat the name. Although Domingo Jr. and Sr. paid the real estate taxes, Atty. Sabitsana also
first buyer’s rights except where the second buyer registers in good faith the second paid real property taxes in 1992, 1993, and 1999. In 1996, he introduced concrete
sale ahead of the first, as provided by the Civil Code. Such knowledge of the first buyer improvements on the property, which shortly thereafter were destroyed by a typhoon.
does not bar her from availing of her rights under the law, among them, to When Domingo Sr. passed away, his heirs applied for registration and coverage of the
register firsther purchase as against the second buyer. But in converso, knowledge lot under the Public Land Act or Commonwealth Act No. 141. Atty. Sabitsana, in a
gained by the second buyer of the first sale defeats his rights even if he is first to letter11 dated August 24, 1998 addressed to the Department of Environment and
register the second sale, since such knowledge taints his prior registration with bad Natural Resources’ CENRO/PENRO office in Naval, Biliran, opposed the application,
faith. This is the price exacted by Article 1544 of the Civil Code for the second buyer claiming that he was the true owner of the lot. He asked that the application for
being able to displace the first buyer; that before the second buyer can obtain priority registration be held in abeyance until the issue of conflicting ownership has been
over the first, he must show that he acted in good faith throughout (i.e. in ignorance of resolved.
the first sale and of the first buyer’s rights) —- from the time of acquisition until the title
18

On April 11, 2000, Juanito, through his attorney-in-fact Domingo Jr., filed Civil Case No. The trial court held that petitioners are not buyers in good faith. Petitioner Atty.
B-109712 for quieting of title and preliminary injunction, against herein petitioners Atty. Sabitsana was the Muertegui family’s lawyer, and was informed beforehand by Carmen
Sabitsana and his wife, Rosario, claiming that they bought the lot in bad faith and are that her family had purchased the lot; thus, he knew of the sale to Juanito. After
exercising acts of possession and ownership over the same, which acts thus constitute conducting an investigation, he found out that the sale was not registered. With this
a cloud over his title. The Complaint13 prayed, among others, that the Sabitsana Deed information in mind, Atty. Sabitsana went on to purchase the same lot and raced to
of Sale, the August 24, 1998 letter, and TD No. 5327 be declared null and void and of register the sale ahead of the Muerteguis, expecting that his purchase and prior
no effect; that petitioners be ordered to respect and recognize Juanito’s title over the lot; registration would prevail over that of his clients, the Muerteguis. Applying Article 1544
and that moral and exemplary damages, attorney’s fees, and litigation expenses be of the Civil Code,17 the trial court declared that even though petitioners were first to
awarded to him. register their sale, the same was not done in good faith. And because petitioners’
In their Answer with Counterclaim,14 petitioners asserted mainly that the sale to Juanito registration was not in good faith, preference should be given to the sale in favor of
is null and void absent the marital consent of Garcia’s wife, Soledad Corto (Soledad); Juanito, as he was the first to take possession of the lot in good faith, and the sale to
that they acquired the property in good faith and for value; and that the Complaint is petitioners must be declared null and void for it casts a cloud upon the Muertegui title.
barred by prescription and laches. They likewise insisted that the Regional Trial Court Petitioners filed a Motion for Reconsideration 18 but the trial court denied19 the same.
(RTC) of Naval, Biliran did not have jurisdiction over the case, which involved title to or Ruling of the Court of Appeals
interest in a parcel of land the assessed value of which is merely ₱1,230.00. Petitioners appealed to the CA20 asserting that the sale to Juanito was null and void for
The evidence and testimonies of the respondent’s witnesses during trial reveal that lack of marital consent; that the sale to them is valid; that the lower court erred in
petitioner Atty. Sabitsana was the Muertegui family’s lawyer at the time Garcia sold the applying Article 1544 of the Civil Code; that the Complaint should have been barred by
lot to Juanito, and that as such, he was consulted by the family before the sale was prescription, laches and estoppel; that respondent had no cause of action; that
executed; that after the sale to Juanito, Domingo Sr. entered into actual, public, adverse respondent was not entitled to an award of attorney’s fees and litigation expenses; and
and continuous possession of the lot, and planted the same to coconut and ipil-ipil; and that they should be the ones awarded attorney’s fees and litigation expenses.
that after Domingo Sr.’s death, his wife Caseldita, succeeded him in the possession and The CA, through its questioned January 25, 2007 Decision,21 denied the appeal and
exercise of rights over the lot. affirmed the trial court’s Decision in toto. It held that even though the lot admittedly was
On the other hand, Atty. Sabitsana testified that before purchasing the lot, he was told conjugal property, the absence of Soledad’s signature and consent to the deed did not
by a member of the Muertegui family, Carmen Muertegui Davies (Carmen), that the render the sale to Juanito absolutely null and void, but merely voidable. Since Garcia
Muertegui family had bought the lot, but she could not show the document of sale; that and his wife were married prior to the effectivity of the Family Code, Article 173 of the
he then conducted an investigation with the offices of the municipal and provincial Civil Code22should apply; and under the said provision, the disposition of conjugal
assessors; that he failed to find any document, record, or other proof of the sale by property without the wife’s consent is not void, but merely voidable. In the absence of a
Garcia to Juanito, and instead discovered that the lot was still in the name of Garcia; decree annulling the deed of sale in favor of Juanito, the same remains valid.
that given the foregoing revelations, he concluded that the Muerteguis were merely The CA added that the fact that the Deed of Sale in favor of Juanito was not notarized
bluffing, and that they probably did not want him to buy the property because they were could not affect its validity. As against the notarized deed of sale in favor of petitioners,
interested in buying it for themselves considering that it was adjacent to a lot which they the CA held that the sale in favor of Juanito still prevails. Applying Article 1544 of the
owned; that he then proceeded to purchase the lot from Garcia; that after purchasing Civil Code, the CA said that the determining factor is petitioners’ good faith, or the lack
the lot, he wrote Caseldita in October 1991 to inform her of the sale; that he then took of it. It held that even though petitioners were first to register the sale in their favor, they
possession of the lot and gathered ipil-ipil for firewood and harvested coconuts and did not do so in good faith, for they already knew beforehand of Garcia’s prior sale to
calamansi from the lot; and that he constructed a rip-rap on the property sometime in Juanito. By virtue of Atty. Sabitsana’s professional and confidential relationship with the
1996 and 1997. Muertegui family, petitioners came to know about the prior sale to the Muerteguis and
Ruling of the Regional Trial Court the latter’s possession of the lot, and yet they pushed through with the second sale. Far
On October 28, 2002, the trial court issued its Decision 15 which decrees as follows: from acting in good faith, petitioner Atty. Sabitsana used his legal knowledge to take
WHEREFORE, in view of the foregoing considerations, this Court finds in favor of the advantage of his clients by registering his purchase ahead of them.
plaintiff and against the defendants, hereby declaring the Deed of Sale dated 2 Finally, the CA declared that Juanito, as the rightful owner of the lot, possessed the
September 1981 as valid and preferred while the Deed of Absolute Sale dated 17 requisite cause of action to institute the suit for quieting of title and obtain judgment in
October 1991 and Tax Declaration No. 5327 in the name of Atty. Clemencio C. his favor, and is entitled as well to an award for attorney’s fees and litigation expenses,
Sabitsana, Jr. are VOID and of no legal effect. which the trial court correctly held to be just and equitable under the circumstances.
The Provincial Assessor and the Municipal Assessor of Naval are directed to cancel The dispositive portion of the CA Decision reads:
Tax Declaration No. 5327 as void and done in bad faith. WHEREFORE, premises considered, the instant appeal is DENIED and the Decision
Further, Atty. Clemencio C. Sabitsana, Jr. is ordered to pay plaintiff Juanito Muertigui, dated October 28, 2002 of the Regional Trial Court, 8th Judicial Region, Branch 16,
represented by his attorney-in-fact Domingo Muertigui, Jr. the amounts of: Naval, Biliran, is hereby AFFIRMED. Costs against defendants-appellants.
a) ₱30,000.00 as attorney’s fees; SO ORDERED.23
b) ₱10,000.00 as litigation expenses; and EN BANC
c) Costs. G.R. No. L-13442 December 20, 1919
SO ORDERED.16
19

NARCISA SANCHEZ, plaintiff-appellant, to the vendee all of the vendor's rights of ownership including his real right over the
vs. thing. The vendee by virtue of this sale has acquired everything and nothing, absolutely
ROQUE RAMOS, defendant-appellee. nothing, is left to the vendor. From this moment the vendor is a stranger to the thing
Irureta Goyena and Recto for appellant. sold like any other who has never been its owner. As the thing is considered delivered,
Sisenando Palarca for appellee. the vendor has no longer the obligation of even delivering it. If he continues taking
AVANCEÑA, J.: material possession of it, it is simply on account of vendee's tolerance and, in this
This is an action for the recovery of a piece of land described in the second paragraph sense, his possession is vendor's possession. And if the latter should have to ask him
of the complaint. This land is in the defendant's possession and formerly belonged to for the delivery of this material possession; it would not be by virtue of the sale,
Ciriaco Fernandez. On July 1, 1910, Ciriaco Fernandez sold it to the spouses Marcelino because this has been already consummated and has produced all its effects, but by
Gomez and Narcisa Sanchez under pacto de retro for the period of one year. This also virtue of the vendee's ownership, in the same way as said vendee could require of
was executed in a public instrument. Marcelino Gomez and Narcisa Sanchez never another person although same were not the vendor. This means that after the sale of a
took material possession of the land. The period for repurchase elapsed without the realty by means of a public instrument, the vendor, who resells it to another, does not
vendor making use of it. On July 3, 1912, Ciriaco Fernandez again sold the same land, transmit anything to the second vendee and if the latter, by virtue of this second sale,
by means of a private document, to Roque Ramos who immediately took material takes material possession of the thing, he does it as mere detainer, and it would be
possession thereof. By applying article 1473 of the Civil Code, the trial court declared unjust to protect this detention against the rights to the thing lawfully acquired by the
preferable the sale executed to the defendant and absolved him from the complaint. first vendee.
By the same article applied by the lower court, we are of the opinion that the sale We are of the opinion that the possession mentioned in article 1473 (for determining
executed to the plaintiff must be declared preferable. This article provides: who has better right when the same piece of land has been sold several times by the
ART. 1473. If the same thing should have been sold to different vendees, the same vendor) includes not only the material but also the symbolic possession, which is
ownership shall be transferred to the person who may have first taken acquired by the execution of a public instrument.
possession thereof in good faith, if it should be personal property. From the foregoing it follows that the plaintiff was the first to take possession of the
Should it be real property, it shall belong to the purchaser who first recorded it land, and consequently the sale executed to him is preferable.
in the registry of deeds. Wherefore, the judgment appealed from is hereby reversed; the plaintiff is declared
Should it not be recorded, the property shall belong to the person who first owner of the land in question; and the defendant is ordered to deliver the possession of
took possession of it in good faith, or, in default of possession, to the person the land to the plaintiff. No special findings as to costs. So ordered.
who presents the oldest title, provided there is good faith. Arellano, C.J., Torres, Johnson, Araullo and Malcolm, JJ., concur.
Not one of the documents of sale in this case having been recorded, preference must EN BANC
be decided in favor of the vendee who first took possession.lawphi1.net
To what kind of possession does this article refer? Possession is acquired by the [G.R. No. L-2397. August 9, 1950.]
material occupancy of the thing or right possessed, or by the fact that the latter is
subjected to the action of our will, or by the appropriate acts and legal formalities TOMASA QUIMSON and MARCOS SANTOS, Petitioners, v. FRANCISCO
established for acquiring possession (art. 438, Civil Code.). By a simple reasoning, it ROSETE, Respondent.
appears that, because the law does not mention to which of these kinds of possession
the article refers, it must be understood that it refers to all of these kinds. The Marcelino Lontok, for Petitioners.
proposition that this article, according to its letter, refers to the material possession and
excludes the symbolic does not seem to be founded upon a solid ground. It is said that Ignacio Mangosing, for Respondent.
the law, in the gradation of the causes of preference between several sales, fixes, first,
possession and then the date of the title and, as a public instrument is a title, it is
claimed that the inference is that the law has deliberately intended to place the symbolic DECISION
possession, which the execution of the public document implies after the material
possession. This argument, however, would only be forceful if the title, mentioned by
this article, includes public instruments, and this would only be true if public instruments TUASON, J.:
are not included in the idea of possession spoken of in said article. In other words, the
strength of the argument rests in that this possession is precisely the material and does
not include the symbolic. Consequently, the argument is deficient for it is begging the This is an appeal by certiorari from a decision of the Court of Appeals reversing the
same question, because if this possession includes the symbolic, which is acquired by judgment of the Court of First Instance of Zambales. The case involves a dispute over a
the execution of a public instrument, it should be understood that the title, mentioned by parcel of land sold to two different persons.
the law as the next cause of preference, does not include public instruments.
Furthermore, our interpretation of this article 1473 is more in consonance with the The facts as found by the Court of Appeals are these:jgc:chanrobles.com.ph
principles of justice. The execution of a public instrument is equivalent to the delivery of
the realty sold (art. 1462, Civil Code) and its possession by the vendee (art. 438). "Esta finca pertenecia originariamente al hoy difunto Dionisio Quimson, quien, en 7 de
Under these conditions the sale is considered consummated and completely transfers junio de 1932, otorgo la escritura Exhibit A de traspaso de la misma a favor de su hija
20

Tomasa Quimson, pero continuo en su posesion y goce. La vendio a los esposos this condition such execution by the vendor is per se a formal or symbolical conveyance
Magno Agustin y Paulina Manzano en 3 de meyo de 1935, con pacto de recomprar of the property sold, that is, the vendor in the instrument itself authorizes the purchaser
dentro del plazo de seis años; y dos años escasos despues, en 5 de abril de 1937, la to use the title of ownership as proof that the latter is thenceforth the owner of the
volvio a vender a Francisco Rosete, tambien con pacto de retro por el termino de cinco property."cralaw virtua1aw library
años, despues de haber verificado su recompra de Agustin y Manzano, con dinero que
le habia facilitado Rosete, otorgandose a este efecto la escritura de venta Exhibit 1. More decisive of the case at bar, being almost on all fours with it, is the case of
Desde entonces Rosete es el que esta en su posesion y disfrute, de una manera Sanchez v. Ramos (40 Phil., 614). There, it appeared that one Fernandez sold a piece
pacifica y quieta, aun despues de la muerte de Dionisio Quimson, ocurrida en 6 de of land to Marcelino Gomez and Narcisa Sanchez under pacto de retro in a public
junio de 1939, hasta el enero de 1943, en que Tomasa Quimson acudio al Juez de Paz instrument. The purchasers neither recorded their deed in the registry of property nor
de San Marcelino, Zambales, para que este interviniera en un arreglo con Rosete sobre ever took material possession of the land. Later, Fernandez sold the same property by
dicha finca, cuyo fracaso motivo una carrera hacia Iba, la capital de Zambales, para means of a private document to Ramos who immediately entered upon the possession
ganar la prioridad del registro e inscripcion de las escrituras de venta Exhibits A y 1 que of it. It was held that, according to article 1473 of the Civil Code, Gomez and Sanchez
Dionisio Quimson otorgara a favor de Tomasa Quimson y Francisco Rosete, were the first in possession and, consequently, that the sale in their favor was superior.
respectivamente, carrera que aquella gano por haber llegado a la meta una hora antes, Says the court, through Mr. Justice Avanceña, later chief justice:jgc:chanrobles.com.ph
a las 9:30 a. m. del 17 de febrero de 1943, en tanto que este la alcanzo a las 10:30 a.
m. de ese mismo dia."cralaw virtua1aw library "To what kind of possession does this article (1473) refer? Possession is acquired by
the material occupancy of the thing or right possessed, or by the fact that the latter is
Two questions are raised: (1) What were the effects of the registration of plaintiff’s subjected to the action of our will, or by the appropriate acts and legal formalities
document? and (2) Who was prior in possession? The Court of Appeals’ answer to the established for acquiring possession (art. 438, Civil Code). By a simple reasoning, it
first question is, None, and to the second, the defendant or second purchaser. appears that, because the law does not mention to which of these kinds of possession
the article refers, it must be understood that it refers to all of these kinds. The
We do not deem it necessary to pass upon the first issue in the light of the view we take proposition that this article, according to its letter, refers to the material possession and
of the last, to which we will address ourselves presently. excludes the symbolic does not seem to be founded upon a solid ground. It is said that
the law, in the gradation of the causes of preference between several sales, fixes, first,
Articles 1462 and 1473 of the Civil Code provide:jgc:chanrobles.com.ph possession and then the date of the title and, as a public instrument is a title, it is
claimed that the inference is that the law has deliberately intended to place the symbolic
"ART. 1462. The thing sold shall be deemed delivered, when it is placed in the control possession, which the execution of the public document implies, after the material
and possession of the vendee. possession. This argument, however, would only be forceful if the title, mentioned by
this article, includes public instruments, and this would only be true if public instruments
"When the sale is made by means of a public instrument, the execution thereof shall be are not included in the idea of possession spoken of in said article. In other words, the
equivalent to the delivery of the thing which is the object of the contract, if from the said strength of the argument rests in that this possession is precisely the material and does
instrument the contrary does not appear or may not be clearly inferred. not include the symbolic. Consequently, the argument is deficient for it is begging the
same question, because if this possession includes the symbolic, which is acquired by
"ART. 1473. If the same thing should have been sold to different vendees, the the execution of a public instrument, it should be understood that the title, mentioned by
ownership shall be transferred to the person who may have first taken possession the law as the next cause of preference, does not include public instruments.
thereof in good faith, if it should be movable property.
"Furthermore, our interpretation of this article 1473 is more in consonance with the
"Should it be immovable property, the ownership shall belong to the person acquiring it principles of justice. The execution of a public instrument is equivalent to the delivery of
who first recorded it in the registry. the realty sold (art.1462, Civil Code) and its possession by the vendee (art. 438). Under
these conditions the sale is considered consummated and completely transfers to the
"Should there be no inscription, the ownership shall belong to the person who in good vendee all of the vendor’s rights of ownership including his real right over the thing. The
faith was first in the possession; and, in the absence of this, to the person who presents vendee by virtue of this sale has acquired everything and nothing, absolutely nothing, is
the oldest title, provided there is good faith."cralaw virtua1aw library left to the vendor. From this moment the vendor is a stranger to the thing sold like any
other who has never been its owner. As the thing is considered delivered, the vendor
In the case of Buencamino v. Viceo (13 Phil., 97), Mr. Justice Willard, speaking for the has no longer the obligation of even delivering it. If he continues taking material
court and citing article 1462 says: "Upon a sale of real estate the execution of a notarial possession of it, is simply on account of vendee’s tolerance and, in this sense, his
document of sale is a sufficient delivery of the property sold."cralaw virtua1aw library possession is vendor’s possession. And if the latter should have to ask him for the
delivery of this material possession, it would not be by virtue of the sale, because this
In the case of Florendo v. Foz (20 Phil., 388), the court, through Mr. Chief Justice has been already consummated and has produced all its effects, but by virtue of the
Arellano, rules that "When the sale is made by means of a public instrument, the vendee’s ownership, in the same way as said vendee could require of another person
execution thereof is tantamount to conveyance of the subject matter, unless the although same were not the vendor. This means that after the sale of a realty by means
contrary clearly follows or be deduced from such instrument itself, and in the absence of of a public instrument, the vendor, who resells it to another, does not transmit anything
21

to the second vendee and if the latter, by virtue of this second sale, takes material sham, executed with the sole purpose of enabling the senior Cruzado to mortgage the
possession of the thing, he does it as mere detainer, and it would be unjust to protect property and become procurador. And with reference to the failure of the second
this detention against the rights to the thing lawfully acquired by the first vendee. vendee, Escaler, to register his purchase, the court disregarded the omission as well as
the entry of the first sale in the registry because that entry was made by the plaintiff,
"We are of the opinion that the possession mentioned in article 1473 (for determining son and heir of the first supposed vendee, more than a score years after the alleged
who has better right when the same piece of land has been sold several times by the transaction, when the plaintiff "was no longer or had any right therein (in the land),
vendor) includes not only the material but also the symbolic possession, which is because it already belonged to the defendant Escaler, its lawful owner." When Escaler,
acquired by the execution of a public instrument."cralaw virtua1aw library the second purchaser was sued, he had become the owner of the land by prescription.
The defendant’s possession in the present case fell far short of having ripened into title
The Supreme Court of Spain and Mr. Manresa are of the same opinion. On pp. 157, by prescription when the plaintiff commenced her action.
158, Vol. X, of his treatise on the Spanish Civil Code, Manresa
comments:jgc:chanrobles.com.ph For the reasons above stated, we are constrained to set aside the decision of the Court
of Appeals. Because the Appellate Court found for the defendant, it made no findings
"II. Observacion comun a la venta de muebles y a la de inmuebles. — Hemos on damages for the latter’s use of the property in controversy. Not being authorized in
interpretado el precepto de articulo 1.473, en sus parrafos 1. ° y 3. °, en el sentido mas this appeal to examine the evidence, we have to accept the trial court’s appraisal of the
racional, aunque no tal vez en el mas adecuado a las palabras que se emplean. Las damages. Judge Llanes assessed the damages of P180 for the occupation of the land
palabras tomar posesion, y primero en la posesion, las hemos considerado como for the agricultural years 1943-44, 1944-45 and 1945-46, and P60 a year thereafter until
equivalentes a la de la tradicion real o fingida a que se refieren los articulos 1.462 al the possession of the property was restituted to the plaintiffs.
1.464, porque si la posesion material del objeto puede otorgar preferencia en
cuestiones de posesion, y asi lo reconoce el articulo 445, no debe darla nunca en Let judgment be entered in accordance with the tenor of this decision, with costs
cuestiones de propiedad, y de la propiedad habla expresamente el articulo 1.473. Asi, against the defendant.
en nuestra opinion, robustecida por la doctrina qne rectamente se deriva de la
sentencia de 24 de Noviembre de 1894, vendida una finca a A. en escritura publica, Moran, C.J., Ozaeta, Pablo, Bengzon and Montemayor, JJ., concur.
despues a B., aunque se incaute materialmente este del inmueble, la propiedad
pertenece a A., primero en la tradicion, con arreglo al articulo 1.462, puesto que a partir SECOND DIVISION
del otorgamiento de la escritura que envuelve la entrega de la cosa, al vendedor G.R. No. 179641 February 9, 2011
carecia ya de la facultad de disponer de ella."cralaw virtua1aw library DOLORITA C. BEATINGO, Petitioner,
vs.
The statement of Sr. Manresa which is said to sustain the theory of the Court of LILIA BU GASIS, Respondent.
Appeals, expresses, as we understand that statement, the literal meaning of article DECISION
1473, for the decision of November 24, 1894 reflects, according to the learned author, NACHURA, J.:
the intention of the lawmaker and is in conformity with the principles of justice. Now, This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing
under both the Spanish and the Philippine rules of interpretation, the spirit, the intent, of the Court of Appeals1 (CA) Resolutions dated June 27, 20072 and August 13, 20073 in
the law prevails over its letter. CA-G.R. CEB-CV No. 01624.
This petition stemmed from the following facts:
Counsel for defendant denies that the land was sold to plaintiff Tomasa Quimson or that Petitioner Dolorita Beatingo filed a Complaint for Annulment and Cancellation of Sale,
the Court of Appeals so found. All that the latter court declared, he says, was that a Reconveyance, Delivery of Title and Damages4 against respondent Lilia Bu Gasis
deed of sale of the land was executed by the original owner on June 7, 1932. before the Regional Trial Court (RTC) of Iloilo City. The case was raffled to Branch 31
and docketed as Civil Case No. 00-26171.
The finding that a deed of conveyance was made by Dionisio Quimson in favor of his Petitioner alleged that, on May 19, 1998, she bought a piece of land, denominated as
daughter could have no other meaning, in the absence of any qualifying statement, than Lot No. 7219 (hereafter referred to as the subject property), from Flora G. Gasis (Flora).
that the land was sold by the father to his daughter. Furthermore this was the trial The subject property was registered in the name of Flora’s predecessor-in-interest. The
court’s explicit finding which was not reversed by the Court of Appeals and stands as sale was evidenced by a notarized Deed of Absolute Sale. On October 18, 1999,
the fact of the case. Looking into the document itself, Exhibit A states categorically that petitioner went to the Register of Deeds to have the sale registered. She, however,
the vendor received from the vendee the consideration of sale, P250, and failed to obtain registration as she could not produce the owner’s duplicate certificate of
acknowledged before the notary public having executed the instrument of his own free title. She, thus, filed a petition for the issuance of the owner’s duplicate certificate of title
will. but was opposed by respondent, claiming that she was in possession of the Original
Certificate of Title (OCT) as she purchased the subject property from Flora on January
The expression in this court’s decision in the case of Cruzado v. Escaler (34 Phil., 17), 27, 1999, as evidenced by a Deed of Sale. This prompted petitioner to file the
cited by the Court of Appeals, apparently to the effect that physical possession by the Complaint, insisting that she is the rightful owner of the subject property. She also
purchaser is essential to the consummation of a sale of real estate, is at best obiter maintained that respondent had been keeping the OCT despite knowledge that
dictum; for the court distinctly found that the sale to plaintiff Cruzado’s father was a petitioner is the rightful owner. She further accused respondent of inducing Flora to
22

violate the contract with her, which caused her damage, prejudice, mental anguish, and THAT, THE DECISION OF THE REGIONAL TRIAL COURT OF ILOILO IS SO
serious anxiety.5 HORENDOUSLY WRONG WHEN THE SAID COURT DECIDED IN FAVOR
On the other hand, respondent claimed that she purchased the subject property from OF THE PRIVATE RESPONDENT, WHICH IF NOT REVIEWED, OR
Flora without knowledge of the prior sale of the same subject property to petitioner, REVERSED, WILL CAUSE INJUSTICE TO TRIUMPH AS AGAINST WHAT IS
which makes her an innocent purchaser for value. Respondent denied having induced RIGHT AND LEGAL, SACRIFICING SUBSTANTIAL JUSTICE IN FAVOR OF
Flora to violate her contract with petitioner as she never knew the existence of the TECHNICALITIES, CONSIDERING THAT:
alleged first contract. Lastly, respondent declared that, upon payment of the purchase a. Petitioner was the first buyer of the property while the private
price, she immediately occupied the subject property and enjoyed its produce. respondent is only the second buyer;
On December 29, 2005, the RTC rendered a decision,6 the dispositive portion of which b. It is petitioner who is in possession of the said property and that;
reads: c. Private respondent was not able to have her own deed of sale
WHEREFORE, on the basis of the testimonial and documentary evidence, the court registered with the Register of Deeds;
finds that preponderant evidence has been established by the defendant as against the B. THE RESPONDENT COURT OF APPEALS SHOULD HAVE EXERCISED
plaintiff, hence, JUDGMENT is therefore rendered in favor of the defendant. ITS DISCRETION, IN FAVOR OF SUBSTANTIAL JUSTICE, BY ADMITTING
Consequently, the complaint is DISMISSED and the defendant is hereby declared to be THE APPELLANT’S BRIEF OF THE PETITIONER TAKING INTO
the lawful owner of the property in question. Further the plaintiff is hereby ordered to CONSIDERATION THAT PETITIONER IN GOOD FAITH HAS FILED THE
pay the defendant ₱30,000.00 in attorney’s fees, litigation expenses of ₱10,000.00 and NEEDED MOTIONS FOR EXTENSIONS (sic) TO FILE BRIEF, AND THE
the costs of the suit. BRIEF WAS IN FACT FILED WITHIN THE PERIOD OF THE REQUESTED
SO ORDERED.7 EXTENSIONS.16
The RTC considered the controversy as one of double sale and, in resolving the issues Petitioner insists that the appeal should not have been dismissed because her failure to
raised by the parties, it applied the rules laid down in Article 1544 of the Civil Code. As file the Appellant’s Brief was not deliberate and intended for delay. She claims that prior
opposed to petitioner’s admission that she did not pay the purchase price in full and that to the expiration of the 90-day extension within which to file the brief, she again asked
she did not acquire possession of the subject property because of the presence of for two more extensions. She explains that the counsel could not prepare the
tenants on it, the court gave more weight to respondent’s evidence showing that she Appellant’s Brief because the law firm was swamped with numerous cases and election
immediately acquired possession of the subject property and enjoyed its produce upon related problems which needed his attention.
full payment of the purchase price. Since the two sales – that of petitioner and that of We find petitioner’s arguments bereft of merit.
respondent – were not registered with the Registry of Property, the RTC held that Section 7, Rule 44 of the Rules of Court provides:
whoever was in possession had the better right. Hence, it decided in favor of Sec. 7. Appellant’s Brief. – It shall be the duty of the appellant to file with the court,
respondent. within forty-five (45) days from receipt of the notice of the clerk that all the evidence,
Aggrieved, petitioner filed a Motion for New Trial and Reconsideration 8 on the ground oral and documentary, are attached to the record, seven (7) copies of his legibly
that she was in possession of the subject property actually and constructively. The typewritten, mimeographed or printed brief, with proof of service of two (2) copies
motion, however, was denied by the RTC in an Order9 dated April 5, 2006. thereof upon the appellee.
Undaunted, petitioner elevated the matter to the CA via a Notice of Appeal. On In a Resolution dated December 20, 2006, the CA required petitioner to file the
December 20, 2006, the CA required petitioner to file an Appellant’s Brief within forty- Appellant’s Brief. The notice was received by petitioner on January 5, 2007. However,
five (45) days from receipt of the notice.10 instead of filing the required brief, petitioner requested for additional time to prepare
However, due to pressures of work in equally important cases with other clients, "due to pressures of work in equally important cases, plus court appearances,
counsel for petitioner requested for an extension of ninety (90) days within which to file preparation of memoranda, conference with other clients." The CA granted the request
the brief.11 and specifically stated that the same was the maximum extension. This
In a Resolution dated March 9, 2007, the CA granted the motion. The Resolution is notwithstanding, instead of complying with the court’s directive, petitioner again filed
quoted below for easy reference: two motions for extension, for a total period of sixty (60) days. This time, the CA denied
As prayed for, the plaintiff-appellant is hereby granted the maximum extension of ninety the motions and eventually dismissed the appeal in accordance with Section
(90) days from 19 February 2007 or until 20 May 2007, within which to file an 1(e),17 Rule 50 of the Rules of Court.
Appellant’s Brief.12 Evidently, petitioner’s counsel was negligent in failing to file the required brief not only
Instead of filing the Appellant’s Brief within the extended period, petitioner twice moved within 45 days from receipt of the notice but also within the extended period of ninety
for extension of time to file the brief, covering an additional period of sixty (60) days for (90) days granted by the appellate court. He, however, explains that he could not
the same reasons as those raised in the first motion for extension.13 comply with the court’s directive because he had to attend to other cases that he
In a Resolution14 dated June 27, 2007, the CA denied the motions for extension to file considered more important and urgent than the instant case. Regrettably, such excuse
brief. Thus, for failure to file the Appellant’s Brief, the appellate court dismissed the is unacceptable.18 An attorney is bound to protect his client’s interest to the best of his
appeal. In a Resolution15 dated August 13, 2007, the CA denied petitioner’s motion for ability and with utmost diligence. Failure to file brief certainly constitutes inexcusable
reconsideration. negligence, more so if the delay results in the dismissal of the appeal. 19 Every member
Hence, the instant petition on the following grounds: of the Bar should always bear in mind that every case that a lawyer accepts deserves
A. THE RESPONDENT COURT OF APPEALS ERRED IN NOT REVIEWING his full attention, diligence, skill, and competence, regardless of its importance, whether
ON THE MERITS THE APPEAL OF THE PETITIONER, CONSIDERING
23

he accepts it for a fee or for free.20Unfortunately, petitioner is bound by the negligence who has a better right, the guidelines set forth in Article 1544 of the Civil Code apply.
of her counsel. Article 1544 states:
The failure to file the Appellant’s Brief, though not jurisdictional, results in the Art. 1544. If the same thing should have been sold to different vendees, the ownership
abandonment of the appeal which may be the cause for its dismissal. It is true that it is shall be transferred to the person who may have first taken possession thereof in good
not the ministerial duty of the CA to dismiss the appeal. The appellate court has the faith, if it should be movable property.
discretion to do so, and such discretion must be a sound one, to be exercised in Should it be immovable property, the ownership shall belong to the person acquiring it
accordance with the tenets of justice and fair play, having in mind the circumstances who in good faith first recorded it in the Registry of Property.
obtaining in each case.21 Should there be no inscription, the ownership shall pertain to the person who in good
The question of whether or not to sustain the dismissal of an appeal due to petitioner’s faith was first in possession; and, in the absence thereof, to the person who presents
failure to file the Appellant’s Brief had been raised before this Court in a number of the oldest title, provided there is good faith.
cases. In some of these cases, we relaxed the Rules and allowed the belated filing of Admittedly, the two sales were not registered with the Registry of Property. Since there
the Appellant’s Brief. In other cases, however, we applied the Rules strictly and was no inscription, the next question is who, between petitioner and respondent, first
considered the appeal abandoned, which thus resulted in its eventual dismissal. In took possession of the subject property in good faith. As aptly held by the trial court, it
Government of the Kingdom of Belgium v. Court of Appeals, 22 we revisited the cases was respondent who took possession of the subject property and, therefore, has a
which we previously decided and laid down the following guidelines in confronting the better right.
issue of non-filing of the Appellant’s Brief: Petitioner insists that, upon the execution of the public instrument (the notarized deed of
(1) The general rule is for the Court of Appeals to dismiss an appeal when no sale), she already acquired possession thereof, and thus, considering that the
appellant’s brief is filed within the reglementary period prescribed by the rules; execution thereof took place ahead of the actual possession by respondent of the
(2) The power conferred upon the Court of Appeals to dismiss an appeal is subject property, she has a better right.
discretionary and directory and not ministerial or mandatory; We do not agree.
(3) The failure of an appellant to file his brief within the reglementary period Indeed, the execution of a public instrument shall be equivalent to the delivery of the
does not have the effect of causing the automatic dismissal of the appeal; thing that is the object of the contract. However, the Court has held that the execution of
(4) In case of late filing, the appellate court has the power to still allow the a public instrument gives rise only to a prima facie presumption of delivery. It is deemed
appeal; however, for the proper exercise of the court’s leniency[,] it is negated by the failure of the vendee to take actual possession of the land sold. 26
imperative that: In this case, though the sale was evidenced by a notarized deed of sale, petitioner
(a) the circumstances obtaining warrant the court’s liberality; admitted that she refused to make full payment on the subject property and take actual
(b) that strong considerations of equity justify an exception to the possession thereof because of the presence of tenants on the subject property. Clearly,
procedural rule in the interest of substantial justice; petitioner had not taken possession of the subject property or exercised acts of
(c) no material injury has been suffered by the appellee by the delay; dominion over it despite her assertion that she was the lawful owner thereof. 27lawphi1
(d) there is no contention that the appellee’s cause was prejudiced; Respondent, on the other hand, showed that she purchased the subject property
(e) at least there is no motion to dismiss filed. without knowledge that it had been earlier sold by Flora to petitioner. She had reason to
(5) In case of delay, the lapse must be for a reasonable period; and believe that there was no defect in her title since the owner’s duplicate copy of the OCT
(6) Inadvertence of counsel cannot be considered as an adequate excuse as was delivered to her by the seller upon full payment of the purchase price. She then
to call for the appellate court’s indulgence except: took possession of the subject property and exercised acts of ownership by collecting
(a) where the reckless or gross negligence of counsel deprives the rentals from the tenants who were occupying it.
client of due process of law; Hence, the RTC is correct in declaring that respondent has a better right to the subject
(b) when application of the rule will result in outright deprivation of the property.
client’s liberty or property; or WHEREFORE, premises considered, the petition is DENIED for lack of merit. The
(c) where the interests of justice so require. Court of Appeals Resolutions dated June 27, 2007 and August 13, 2007 in CA-G.R.
In this case, we find no reason to disturb the appellate court’s exercise of sound CEB-CV No. 01624 are AFFIRMED.
discretion in dismissing the appeal. We must emphasize that the right to appeal is not a SO ORDERED.
natural right but a statutory privilege, and it may be exercised only in the manner and in SECOND DIVISION
accordance with the provisions of law.23 The Court cannot say that the issues being
raised by petitioner are of such importance that would justify the appellate court to THE ROMAN CATHOLIC CHURCH, G.R. No. 174118
exempt her from the general rule, and give due course to her appeal despite the late represented by the Archbishop of Caceres,
filing of her Appellant’s Brief.24 Petitioner, Present:
Nevertheless, in our desire to put an end to the present controversy, we have carefully
perused the records of this case and reached the conclusion that the decision dated CARPIO, J., Chairperson,
December 29, 2005 of the RTC is in perfect harmony with law and jurisprudence. 25 BRION,
The present controversy is a clear case of double sale, where the seller sold one PEREZ,
property to different buyers, first to petitioner and later to respondent. In determining - versus - SERENO, and
REYES, JJ.
24

4. Pante expressly manifested and represented to the Church that he had been
Promulgated: actually occupying the lot he offered to buy.[8]
April 11, 2012
In a decision dated July 30, 1999,[9] the RTC ruled in favor of the Church,
REGINO PANTE, finding that the Churchs consent to the sale was secured through Pantes
Respondent. misrepresentation that he was an occupant of the 32-square meter lot. Contrary to his
claim, Pante was only using the lot as a passageway; the Churchs policy, however, was
x--------------------------------------------------------------------------------------------------------------x to sell its lots only to those who actually occupy and reside thereon. As the Churchs
consent was secured through its mistaken belief that Pante was a qualified occupant,
DECISION the RTC annulled the contract between the Church and Pante, pursuant to Article 1390
of the Civil Code.[10]
BRION, J.:
The RTC further noted that full payment of the purchase price was made only on
Through a petition for review on certiorari,[1] the petitioner Roman Catholic Church September 23, 1995, when Pante consigned the balance of P10,905.00 with the RTC,
(Church) seeks to set aside the May 18, 2006 decision[2] and the August 11, 2006 after the Church refused to accept the tendered amount. It considered the three-year
resolution[3] of the Court of Appeals (CA) in CA-G.R.-CV No. 65069. The CA reversed delay in completing the payment fatal to Pantes claim over the subject lot; it ruled that if
the July 30, 1999 decision[4] of the Regional Trial Court (RTC) of Naga City, Branch 24, Pante had been prompt in paying the price, then the Church would have been estopped
in Civil Case No. 94-3286. from selling the lot to the spouses Rubi. In light of Pantes delay and his admission that
the subject lot had been actually occupied by the spouses Rubis predecessors, the
THE FACTUAL ANTECEDENTS RTC upheld the sale in favor of the spouses Rubi.

The Church, represented by the Archbishop of Caceres, owned a 32-square Pante appealed the RTCs decision with the CA. In a decision dated May 18,
meter lot that measured 2x16 meters located in Barangay Dinaga, Canaman, 2006,[11] the CA granted Pantes appeal and reversed the RTCs ruling. The CA
Camarines Sur.[5] On September 25, 1992, the Church contracted with respondent characterized the contract between Pante and the Church as a contract of sale, since
Regino Pante for the sale of the lot (thru a Contract to Sell and to Buy[6]) on the the Church made no express reservation of ownership until full payment of the price is
belief that the latter was an actual occupant of the lot. The contract between them fixed made. In fact, the contract gave the Church the right to repurchase in case Pante fails
the purchase price at P11,200.00, with the initial P1,120.00 payable as down payment, to pay the installments within the grace period provided; the CA ruled that the right to
and the remaining balance payable in three years or until September 25, 1995. repurchase is unnecessary if ownership has not already been transferred to the buyer.

On June 28, 1994, the Church sold in favor of the spouses Nestor and Fidela Rubi Even assuming that the contract had been a contract to sell, the CA declared
(spouses Rubi) a 215-square meter lot that included the lot previously sold to that Pante fulfilled the condition precedent when he consigned the balance within the
Pante.The spouses Rubi asserted their ownership by erecting a concrete fence over the three-year period allowed under the parties agreement; upon full payment, Pante fully
lot sold to Pante, effectively blocking Pante and his familys access from their family complied with the terms of his contract with the Church.
home to the municipal road. As no settlement could be reached between the parties,
Pante instituted with the RTC an action to annul the sale between the Church and the After recognizing the validity of the sale to Pante and noting the subsequent
spouses Rubi, insofar as it included the lot previously sold to him. [7] sale to the spouses Rubi, the CA proceeded to apply the rules on double sales in Article
1544 of the Civil Code:
The Church filed its answer with a counterclaim, seeking the annulment of its contract
with Pante. The Church alleged that its consent to the contract was obtained by Article 1544. If the same thing should have been sold to different
fraud when Pante, in bad faith, misrepresented that he had been an actual occupant of vendees, the ownership shall be transferred to the person who may
the lot sold to him, when in truth, he was merely using the 32-square meter lot as a have first taken possession thereof in good faith, if it should be
passageway from his house to the town proper. It contended that it was its policy to sell movable property.
its lots only to actual occupants. Since the spouses Rubi and their predecessors-in-
interest have long been occupying the 215-square meter lot that included the 32-square Should it be immovable property, the ownership shall belong to the
meter lot sold to Pante, the Church claimed that the spouses Rubi were the rightful person acquiring it who in good faith first recorded it in the Registry of
buyers. Property.
During pre-trial, the following admissions and stipulations of facts were made: Should there be no inscription, the ownership shall pertain to
the person who in good faith was first in the possession; and, in
1. The lot claimed by Pante is a strip of land measuring only 2x16 meters; the absence thereof, to the person who presents the oldest title,
2. The lot had been sold by the Church to Pante on September 25, 1992; provided there is good faith. [Emphasis ours.]
3. The lot was included in the sale to the spouses Rubi by the Church; and
25

Since neither of the two sales was registered, the CA upheld the full effectiveness of the voidable.[15] However, not every mistake renders a contract voidable. The Civil Code
sale in favor of Pante who first possessed the lot by using it as a passageway since clarifies the nature of mistake that vitiates consent:
1963.
Article 1331. In order that mistake may invalidate consent, it
The Church filed the present petition for review on certiorari under Rule 45 of the Rules should refer to the substance of the thing which is the object of the
of Court to contest the CAs ruling. contract, or to those conditions which have principally moved one or
both parties to enter into the contract.
THE PETITION
Mistake as to the identity or qualifications of one of the
The Church contends that the sale of the lot to Pante is voidable under Article 1390 of parties will vitiate consent only when such identity or
the Civil Code, which states: qualifications have been the principal cause of the contract.

Article 1390. The following contracts are voidable or A simple mistake of account shall give rise to its correction.
annullable, even though there may have been no damage to the [Emphasis ours.]
contracting parties:
For mistake as to the qualification of one of the parties to vitiate consent, two requisites
(1) Those where one of the parties is incapable of giving must concur:
consent to a contract; 1. the mistake must be either with regard to the identity or with regard to the
(2) Those where the consent is vitiated by mistake, qualification of one of the contracting parties; and
violence, intimidation, undue influence or fraud. 2. the identity or qualification must have been the principal consideration for the
celebration of the contract.[16]
These contracts are binding, unless they are annulled by a
proper action in court. They are susceptible of ratification. [Emphasis In the present case, the Church contends that its consent to sell the lot was given on
ours.] the mistaken impression arising from Pantes fraudulent misrepresentation that he had
been the actual occupant of the lot. Willful misrepresentation existed because of its
It points out that, during trial, Pante already admitted knowing that the spouses Rubi policy to sell its lands only to their actual occupants or residents. Thus, it considers the
have been residing on the lot. Despite this knowledge, Pante misrepresented himself as buyers actual occupancy or residence over the subject lot a qualification necessary to
an occupant because he knew of the Churchs policy to sell lands only to occupants or induce it to sell the lot.
residents thereof. It thus claims that Pantes misrepresentation effectively vitiated its
consent to the sale; hence, the contract should be nullified. Whether the facts, established during trial, support this contention shall
determine if the contract between the Church and Pante should be annulled. In the
For the Church, the presence of fraud and misrepresentation that would suffice process of weighing the evidentiary value of these established facts, the courts should
to annul the sale is the primary issue that the tribunals below should have consider both the parties objectives and the subjective aspects of the transaction,
resolved. Instead, the CA opted to characterize the contract between the Church and specifically, the parties circumstances their condition, relationship, and other attributes
Pante, considered it as a contract of sale, and, after such characterization, proceeded and their conduct at the time of and subsequent to the contract. These considerations
to resolve the case in Pantes favor. The Church objects to this approach, on the will show what influence the alleged error exerted on the parties and their intelligent,
principal argument that there could not have been a contract at all considering that its free, and voluntary consent to the contract.[17]
consent had been vitiated.
Contrary to the Churchs contention, the actual occupancy or residency of a
THE COURTS RULING buyer over the land does not appear to be a necessary qualification that the Church
requires before it could sell its land. Had this been indeed its policy, then neither Pante
The Court resolves to deny the petition. nor the spouses Rubi would qualify as buyers of the 32-square meter lot, as none of
them actually occupied or resided on the lot. We note in this regard that the lot was only
No misrepresentation existed vitiating the a 2x16-meter strip of rural land used as a passageway from Pantes house to the
sellers consent and invalidating the contract municipal road.
We find well-taken Pantes argument that, given the size of the lot, it could
Consent is an essential requisite of contracts[12] as it pertains to the meeting of serve no other purpose than as a mere passageway; it is unthinkable to consider that a
the offer and the acceptance upon the thing and the cause which constitute the 2x16-meter strip of land could be mistaken as anyones residence. In fact, the spouses
contract.[13] To create a valid contract, the meeting of the minds must be free, voluntary, Rubi were in possession of the adjacent lot, but they never asserted possession over
willful and with a reasonable understanding of the various obligations the parties the 2x16-meter lot when the 1994 sale was made in their favor; it was only then that
assumed for themselves.[14] Where consent, however, is given through mistake, they constructed the concrete fence blocking the passageway.
violence, intimidation, undue influence, or fraud, the contract is deemed
26

We find it unlikely that Pante could successfully misrepresent himself as the actual
occupant of the lot; this was a fact that the Church (which has a parish chapel in the Article 1544. If the same thing should have been sold to
same barangay where the lot was located) could easily verify had it conducted an different vendees, the ownership shall be transferred to the person
ocular inspection of its own property. The surrounding circumstances actually indicate who may have first taken possession thereof in good faith, if it should
that the Church was aware that Pante was using the lot merely as a passageway. be movable property.

The above view is supported by the sketch plan, [18] attached to the contract Should it be immovable property, the ownership shall belong
executed by the Church and Pante, which clearly labeled the 2x16-meter lot as a to the person acquiring it who in good faith first recorded it in the
RIGHT OF WAY; below these words was written the name of Mr. Regino Pante. Asked Registry of Property.
during cross-examination where the sketch plan came from, Pante answered that it was
from the Archbishops Palace; neither the Church nor the spouses Rubi contradicted this Should there be no inscription, the ownership shall
statement.[19] pertain to the person who in good faith was first in the
possession; and, in the absence thereof, to the person who
The records further reveal that the sales of the Churchs lots were made after a presents the oldest title, provided there is good faith. [Emphasis
series of conferences with the occupants of the lots.[20] The then parish priest of ours.]
Canaman, Fr. Marcaida, was apparently aware that Pante was not an actual occupant,
but nonetheless, he allowed the sale of the lot to Pante, subject to the approval of the As neither Pante nor the spouses Rubi registered the sale in their favor, the question
Archdioceses Oeconomous. Relying on Fr. Marcaidas recommendation and finding now is who, between the two, was first in possession of the property in good faith.
nothing objectionable, Fr. Ragay (the Archdioceses Oeconomous) approved the sale to
Pante. Jurisprudence has interpreted possession in Article 1544 of the Civil Code to
mean both actual physical delivery and constructive delivery.[23] Under either mode of
The above facts, in our view, establish that there could not have been a delivery, the facts show that Pante was the first to acquire possession of the lot.
deliberate, willful, or fraudulent act committed by Pante that misled the Church
into giving its consent to the sale of the subject lot in his favor. That Pante was Actual delivery of a thing sold occurs when it is placed under the control and
not an actual occupant of the lot he purchased was a fact that the Church either ignored possession of the vendee.[24] Pante claimed that he had been using the lot as a
or waived as a requirement. In any case, the Church was by no means led to believe or passageway, with the Churchs permission, since 1963. After purchasing the lot in 1992,
do so by Pantes act; there had been no vitiation of the Churchs consent to the sale he continued using it as a passageway until he was prevented by the spouses Rubis
of the lot to Pante. concrete fence over the lot in 1994. Pantes use of the lot as a passageway after the
1992 sale in his favor was a clear assertion of his right of ownership that preceded the
From another perspective, any finding of bad faith, if one is to be made, should spouses Rubis claim of ownership.
be imputed to the Church. Without securing a court ruling on the validity of its contract
with Pante, the Church sold the subject property to the spouses Rubi. Article 1390 of Pante also stated that he had placed electric connections and water pipes on
the Civil Code declares that voidable contracts are binding, unless annulled by a proper the lot, even before he purchased it in 1992, and the existence of these connections
court action. From the time the sale to Pante was made and up until it sold the subject and pipes was known to the spouses Rubi.[25] Thus, any assertion of possession over
property to the spouses Rubi, the Church made no move to reject the contract with the lot by the spouses Rubi (e.g., the construction of a concrete fence) would be
Pante; it did not even return the down payment he paid. The Churchs bad faith in selling considered as made in bad faith because works had already existed on the lot
the lot to Rubi without annulling its contract with Pante negates its claim for damages. indicating possession by another. [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
In the absence of any vitiation of consent, the contract between the Church possession. Without such inquiry, the buyer can hardly be regarded as a buyer in good
and Pante stands valid and existing. Any delay by Pante in paying the full price could faith and cannot have any right over the property." [26]
not nullify the contract, since (as correctly observed by the CA) it was a contract of
sale. By its terms, the contract did not provide a stipulation that the Church retained Delivery of a thing sold may also be made constructively. Article 1498 of the
ownership until full payment of the price.[21] The right to repurchase given to the Church Civil Code states that:
in case Pante fails to pay within the grace period provided[22]would have been
unnecessary had ownership not already passed to Pante. Article 1498. When the sale is made through a public
instrument, the execution thereof shall be equivalent to the
delivery of the thing which is the object of the contract, if from
the deed the contrary does not appear or cannot clearly be inferred.
The rule on double sales
Under this provision, the sale in favor of Pante would have to be upheld since the
The sale of the lot to Pante and later to the spouses Rubi resulted in a double contract executed between the Church and Pante was duly notarized, converting the
sale that called for the application of the rules in Article 1544 of the Civil Code: deed into a public instrument.[27] In Navera v. Court of Appeals,[28] the Court ruled that:
27

and that on the strength of another SPA7 by Luis, dated July 21, 1993 (Second SPA),
[A]fter the sale of a realty by means of a public instrument, the respondents Laila and Ham mortgaged Lot No. 19 to Vital Lending Investors, Inc. for
vendor, who resells it to another, does not transmit anything to the and in consideration of the amount of ₱150,000.00 with the concurrence of Lourdes. 8
second vendee, and if the latter, by virtue of this second sale, takes Petitioners further averred that a second sale took place on August 23, 1994, when the
material possession of the thing, he does it as mere detainer, and it respondents made Luis sign the Deed of Absolute Sale 9 conveying to Meridian three (3)
would be unjust to protect this detention against the rights of the thing parcels of residential land for ₱960,500.00 (Second Sale); that Meridian was in bad
lawfully acquired by the first vendee. faith when it did not make any inquiry as to who were the occupants and owners of said
Thus, under either mode of delivery, Pante acquired prior possession of the lot. lots; and that if Meridian had only investigated, it would have been informed as to the
true status of the subject properties and would have desisted in pursuing their
WHEREFORE, we DENY the petition for review on certiorari, and AFFIRM the acquisition.
decision of the Court of Appeals dated May 18, 2006, and its resolution dated August Petitioners, thus, prayed that they be awarded moral damages, exemplary damages,
11, 2006, issued in CA-G.R.-CV No. 65069. Costs against the Roman Catholic Church. attorney’s fees, actual damages, and litigation expenses and that the two SPAs and the
deed of sale in favor of Meridian be declared null and void ab initio.10
SO ORDERED. On their part, respondents Lucila and Laila contested the First Sale in favor of
G.R. No. 194846 June 19, 2013 petitioners. They submitted that even assuming that it was valid, petitioners were
*HOSPICIO D. ROSAROSO, ANTONIO D. ROSAROSO, MANUEL D. ROSAROSO, estopped from questioning the Second Sale in favor of Meridian because they failed not
ALGERICA D. ROSAROSO, and CLEOFE R. LABINDAO, Petitioners, only in effecting the necessary transfer of the title, but also in annotating their interests
vs. on the titles of the questioned properties. With respect to the assailed SPAs and the
LUCILA LABORTE SORIA, SPOUSES HAM SOLUTAN and **LAILA SOLUTAN, and deed of absolute sale executed by Luis, they claimed that the documents were valid
MERIDIAN REALTY CORPORATION, Respondents. because he was conscious and of sound mind and body when he executed them. In
DECISION fact, it was Luis together with his wife who received the check payment issued by
MENDOZA, J.: Meridian where a big part of it was used to foot his hospital and medical expenses. 11
This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing Respondent Meridian, in its Answer with Compulsory Counterclaim, averred that Luis
the December 4, 2009 Decision1 of the Court of Appeals (CA). in CA G.R. CV No. was fully aware of the conveyances he made. In fact, Sophia Sanchez (Sanchez), Vice-
00351, which reversed and set aside the July 30, 2004 Decision 2 of the Regional Trial President of the corporation, personally witnessed Luis affix his thumb mark on the
Court, Branch 8, 7th Judicial Region, Cebu City (RTC), in Civil Case No. CEB-16957, deed of sale in its favor. As to petitioners’ contention that Meridian acted in bad faith
an action for declaration of nullity of documents. when it did not endeavor to make some inquiries as to the status of the properties in
The Facts question, it countered that before purchasing the properties, it checked the titles of the
Spouses Luis Rosaroso (Luis) and Honorata Duazo (Honorata) acquired several real said lots with the Register of Deeds of Cebu and discovered therein that the First Sale
properties in Daan Bantayan, Cebu City, including the subject properties. The couple purportedly executed in favor of the plaintiffs was not registered with the said Register
had nine (9) children namely: Hospicio, Arturo, Florita, Lucila, Eduardo, Manuel, Cleofe, of Deeds. Finally, it argued that the suit against it was filed in bad faith.12
Antonio, and Angelica. On April 25, 1952, Honorata died. Later on, Luis married On her part, Lourdes posited that her signature as well as that of Luis appearing on the
Lourdes Pastor Rosaroso (Lourdes). deed of sale in favor of petitioners, was obtained through fraud, deceit and trickery. She
On January 16, 1995, a complaint for Declaration of Nullity of Documents with explained that they signed the prepared deed out of pity because petitioners told them
Damages was filed by Luis, as one of the plaintiffs, against his daughter, Lucila R. Soria that it was necessary for a loan application. In fact, there was no consideration involved
(Lucila); Lucila’s daughter, Laila S. Solutan (Laila); and Meridian Realty Corporation in the First Sale. With respect to the Second Sale, she never encouraged the same and
(Meridian). Due to Luis’ untimely death, however, an amended complaint was filed on neither did she participate in it. It was purely her husband’s own volition that the Second
January 6, 1996, with the spouse of Laila, Ham Solutan (Ham); and Luis’ second wife, Sale materialized. She, however, affirmed that she received Meridian’s payment on
Lourdes, included as defendants.3 behalf of her husband who was then bedridden.13
In the Amended Complaint, it was alleged by petitioners Hospicio D. Rosaroso, Antonio RTC Ruling
D. Rosaroso (Antonio), Angelica D. Rosaroso (Angelica), and Cleofe R. Labindao After the case was submitted for decision, the RTC ruled in favor of petitioners. It held
(petitioners) that on November 4, 1991, Luis, with the full knowledge and consent of his that when Luis executed the second deed of sale in favor of Meridian, he was no longer
second wife, Lourdes, executed the Deed of Absolute Sale4 (First Sale) covering the the owner of Lot Nos. 19, 22 and 23 as he had already sold them to his children by his
properties with Transfer Certificate of Title (TCT) No. 31852 (Lot No. 8); TCT. No. first marriage. In fact, the subject properties had already been delivered to the vendees
11155 (Lot 19); TCT No. 10885 (Lot No. 22); TCT No. 10886 (Lot No. 23); and Lot Nos. who had been living there since birth and so had been in actual possession of the said
5665 and 7967, all located at Daanbantayan, Cebu, in their favor. 5 properties. The trial court stated that although the deed of sale was not registered, this
They also alleged that, despite the fact that the said properties had already been sold to fact was not prejudicial to their interest. It was of the view that the actual registration of
them, respondent Laila, in conspiracy with her mother, Lucila, obtained the Special the deed of sale was not necessary to render a contract valid and effective because
Power of Attorney (SPA),6 dated April 3, 1993, from Luis (First SPA); that Luis was then where the vendor delivered the possession of the parcel of land to the vendee and no
sick, infirm, blind, and of unsound mind; that Lucila and Laila accomplished this by superior rights of third persons had intervened, the efficacy of said deed was not
affixing Luis’ thumb mark on the SPA which purportedly authorized Laila to sell and destroyed. In other words, Luis lost his right to dispose of the said properties to
convey, among others, Lot Nos. 8, 22 and 23, which had already been sold to them; Meridian from the time he executed the first deed of sale in favor of petitioners. The
28

same held true with his alleged sale of Lot 8 to Lucila Soria. 14 Specifically, the Second Sale, he should have revoked not only the First SPA but also the Second SPA.
dispositive portion of the RTC decision reads: The latter being valid, all transactions emanating from it, particularly the mortgage of Lot
IN VIEW OF THE FOREGOING, the Court finds that a preponderance of evidence 19, its subsequent redemption and its second sale, were valid. 20 Thus, the CA disposed
exists in favor of the plaintiffs and against the defendants. Judgment is hereby in this wise:
rendered: WHEREFORE, the appeal is hereby GRANTED. The Decision dated 30 July 2004 is
a. Declaring that the Special Power of Attorney, Exhibit "K," for the plaintiffs hereby REVERSED AND SET ASIDE, and in its stead a new decision is hereby
and Exhibit "3" for the defendants null and void including all transactions rendered:
subsequent thereto and all proceedings arising therefrom; 1. DECLARING the Special Power of Attorney, dated 21 July 1993, as valid;
b. Declaring the Deed of Sale marked as Exhibit "E" valid and binding; 2. DECLARING the Special Power of Attorney, dated 03 April 1993, as valid
c. Declaring the Deed of Absolute Sale of Three (3) Parcels of Residential up to the time of its revocation on 24 November 1994;
Land marked as Exhibit "F" null and void from the beginning; 3. DECLARING the Deed of Absolute sale, dated 04 November 1991, as
d. Declaring the Deed of Sale, Exhibit "16" (Solutan) or Exhibit "FF," null and ineffective and without any force and effect;
void from the beginning; 4. DECLARING the Deed of Absolute Sale of Three (3) Parcels of Residential
e. Declaring the vendees named in the Deed of Sale marked as Exhibit "E" to Land, dated 23 August 1994, valid and binding from the very beginning;
be the lawful, exclusive and absolute owners and possessors of Lots Nos. 8, 5. DECLARING the Deed of Absolute Sale, dated 27 September 1994, also
19, 22, and 23; valid and binding from the very beginning;
f. Ordering the defendants to pay jointly and severally each plaintiff 6. ORDERING the substituted plaintiffs to pay jointly and severally the
₱50,000.00 as moral damages; and defendant-appellant Meridian Realty Corporation the sum of Php100,000.00
g. Ordering the defendants to pay plaintiffs ₱50,000.00 as attorney’s fees; and as moral damages, Php100,000.00 as attorney’s fee and Php100,000.00 as
₱20,000.00 as litigation expenses. litigation expenses; and
The crossclaim made by defendant Meridian Realty Corporation against defendants 7. ORDERING the substituted plaintiffs to pay jointly and severally the
Soria and Solutan is ordered dismissed for lack of sufficient evidentiary basis. defendant-appellants Leila Solutan et al., the sum of Php50,000.00 as moral
SO ORDERED."15 damages.
Ruling of the Court of Appeals SO ORDERED.21
On appeal, the CA reversed and set aside the RTC decision. The CA ruled that the first Petitioners filed a motion for reconsideration, but it was denied in the CA
deed of sale in favor of petitioners was void because they failed to prove that they Resolution,22 dated November 18, 2010. Consequently, they filed the present petition
indeed tendered a consideration for the four (4) parcels of land. It relied on the with the following ASSIGNMENT OF ERRORS
testimony of Lourdes that petitioners did not pay her husband. The price or I.
consideration for the sale was simulated to make it appear that payment had been THE HONORABLE COURT OF APPEALS (19TH DIVISION) GRAVELY ERRED
tendered when in fact no payment was made at all.16 WHEN IT DECLARED AS VOID THE FIRST SALE EXECUTED BY THE LATE LUIS
With respect to the validity of the Second Sale, the CA stated that it was valid because ROSAROSO IN FAVOR OF HIS CHILDREN OF HIS FIRST MARRIAGE.
the documents were notarized and, as such, they enjoyed the presumption of regularity. II.
Although petitioners alleged that Luis was manipulated into signing the SPAs, the CA THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT SUSTAINING
opined that evidence was wanting in this regard. Dr. Arlene Letigio Pesquira, the AND AFFIRMING THE RULING OF THE TRIAL COURT DECLARING THE MERIDIAN
attending physician of Luis, testified that while the latter was physically infirmed, he was REALTY CORPORATION A BUYER IN BAD FAITH, DESPITE THE TRIAL COURT’S
of sound mind when he executed the first SPA.17 FINDINGS THAT THE DEED OF SALE (First Sale), IS GENUINE AND HAD FULLY
With regard to petitioners’ assertion that the First SPA was revoked by Luis when he COMPLIED WITH ALL THE LEGAL FORMALITIES.
executed the affidavit, dated November 24, 1994, the CA ruled that the Second Sale III.
remained valid. The Second Sale was transacted on August 23, 1994, before the First THE HONORABLE COURT OF APPEALS FURTHER ERRED IN NOT HOLDING THE
SPA was revoked. In other words, when the Second Sale was consummated, the First SALE (DATED 27 SEPTEMBER 1994), NULL AND VOID FROM THE VERY
SPA was still valid and subsisting. Thus, "Meridian had all the reasons to rely on the BEGINNING SINCE LUIS ROSAROSO ON NOVEMBER 4, 1991 WAS NO LONGER
said SPA during the time of its validity until the time of its actual filing with the Register THE OWNER OF LOTS 8, 19, 22 AND 23 AS HE HAD EARLIER DISPOSED SAID
of Deeds considering that constructive notice of the revocation of the SPA only came LOTS IN FAVOR OF THE CHILDREN OF HIS (LUIS ROSAROSO) FIRST
into effect upon the filing of the Adverse Claim and the aforementioned Letters MARRIAGE.23
addressed to the Register of Deeds on 17 December 1994 and 25 November 1994, Petitioners argue that the second deed of sale was null and void because Luis could not
respectively, informing the Register of Deeds of the revocation of the first have validly transferred the ownership of the subject properties to Meridian, he being no
SPA."18 Moreover, the CA observed that the affidavit revoking the first SPA was also longer the owner after selling them to his children. No less than Atty. William Boco, the
revoked by Luis on December 12, 1994.19 lawyer who notarized the first deed of sale, appeared and testified in court that the said
Furthermore, although Luis revoked the First SPA, he did not revoke the Second SPA deed was the one he notarized and that Luis and his second wife, Lourdes, signed the
which authorized respondent Laila to sell, convey and mortgage, among others, the same before him. He also identified the signatures of the subscribing witnesses.24 Thus,
property covered by TCT T-11155 (Lot No. 19). The CA opined that had it been the they invoke the finding of the RTC which wrote:
intention of Luis to discredit the
29

In the case of Heirs of Joaquin Teves, Ricardo Teves versus Court of Appeals, et al., properties.32 This testimony, however, is self-serving and would not amount to a clear
G.R. No. 109963, October 13, 1999, the Supreme Court held that a public document and convincing evidence required by law to dispute the said presumption. As such, the
executed [with] all the legal formalities is entitled to a presumption of truth as to the presumption that there was sufficient consideration will not be disturbed.
recitals contained therein. In order to overthrow a certificate of a notary public to the Granting that there was no delivery of the consideration, the seller would have no right
effect that a grantor executed a certain document and acknowledged the fact of its to sell again what he no longer owned. His remedy would be to rescind the sale for
execution before him, mere preponderance of evidence will not suffice. Rather, the failure on the part of the buyer to perform his part of their obligation pursuant to Article
evidence must (be) so clear, strong and convincing as to exclude all reasonable dispute 1191 of the New Civil Code. In the case of Clara M. Balatbat v. Court Of Appeals and
as to the falsity of the certificate. When the evidence is conflicting, the certificate will be Spouses Jose Repuyan and Aurora Repuyan,33 it was written:
upheld x x x . The failure of the buyer to make good the price does not, in law, cause the ownership to
A notarial document is by law entitled to full faith and credit upon its face. (Ramirez vs. revest to the seller unless the bilateral contract of sale is first rescinded or resolved
Ner, 21 SCRA 207). As such it … must be sustained in full force and effect so long as pursuant to Article 1191 of the New Civil Code. Non-payment only creates a right to
he who impugns it shall not have presented strong, complete and conclusive proof of its demand the fulfillment of the obligation or to rescind the contract. [Emphases supplied]
falsity or nullity on account of some flaw or defect provided against by law (Robinson Meridian is Not a
vs. Villafuerte, 18 Phil. 171, 189-190).25 Buyer in Good Faith
Furthermore, petitioners aver that it was erroneous for the CA to say that the records of Respondents Meridian and Lucila argue that, granting that the First Sale was valid, the
the case were bereft of evidence that they paid the price of the lots sold to them. In fact, properties belong to them as they acquired these in good faith and had them first
a perusal of the records would reveal that during the cross-examination of Antonio recorded in the Registry of Property, as they were unaware of the First Sale.34
Rosaroso, when asked if there was a monetary consideration, he testified that they Again, the Court is not persuaded.
indeed paid their father and their payment helped him sustain his daily needs.26 The fact that Meridian had them first registered will not help its cause. In case of double
Petitioners also assert that Meridian was a buyer in bad faith because when its sale, Article 1544 of the Civil Code provides:
representative visited the site, she did not make the necessary inquiries. The fact that ART. 1544. If the same thing should have been sold to different vendees, the ownership
there were already houses on the said lots should have put Meridian on its guard and, shall be transferred to the person who may have first possession thereof in good faith, if
for said reason, should have made inquiries as to who owned those houses and what it should be movable property.
their rights were over the same.27 Should it be immovable property, the ownership shall belong to the person acquiring it
Meridian’s assertion that the Second Sale was registered in the Register of Deeds was who in good faith first recorded it in the Registry of Property.
a falsity. The subject titles, namely: TCT No. 11155 for Lot 19, TCT No. 10885 for Lot Should there be no inscription, the ownership shall pertain to the person who in good
22, and TCT No. 10886 for Lot 23 were free from any annotation of the alleged sale. 28 faith was first in possession; and, in the absence thereof; to the person who presents
After an assiduous assessment of the records, the Court finds for the petitioners. the oldest title, provided there is good faith.
The First Deed Of Sale Was Valid Otherwise stated, ownership of an immovable property which is the subject of a double
The fact that the first deed of sale was executed, conveying the subject properties in sale shall be transferred: (1) to the person acquiring it who in good faith first recorded it
favor of petitioners, was never contested by the respondents. What they vehemently in the Registry of Property; (2) in default thereof, to the person who in good faith was
insist, though, is that the said sale was simulated because the purported sale was made first in possession; and (3) in default thereof, to the person who presents the oldest title,
without a valid consideration. provided there is good faith. The requirement of the law then is two-fold: acquisition in
Under Section 3, Rule 131 of the Rules of Court, the following are disputable good faith and registration in good faith. Good faith must concur with the registration. If
presumptions: (1) private transactions have been fair and regular; (2) the ordinary it would be shown that a buyer was in bad faith, the alleged registration they have made
course of business has been followed; and (3) there was sufficient consideration for a amounted to no registration at all.
contract.29 These presumptions operate against an adversary who has not introduced The principle of primus tempore, potior jure (first in time, stronger in right) gains greater
proof to rebut them. They create the necessity of presenting evidence to rebut the prima significance in case of a double sale of immovable property. When the thing sold twice
facie case they created, and which, if no proof to the contrary is presented and offered, is an immovable, the one who acquires it and first records it in the Registry of Property,
will prevail. The burden of proof remains where it is but, by the presumption, the one both made in good faith, shall be deemed the owner. Verily, the act of registration must
who has that burden is relieved for the time being from introducing evidence in support be coupled with good faith— that is, the registrant must have no knowledge of the
of the averment, because the presumption stands in the place of evidence unless defect or lack of title of his vendor or must not have been aware of facts which should
rebutted.30 have put him upon such inquiry and investigation as might be necessary to acquaint
In this case, the respondents failed to trounce the said presumption. Aside from their him with the defects in the title of his vendor.)35 [Emphases and underlining supplied]
bare allegation that the sale was made without a consideration, they failed to supply When a piece of land is in the actual possession of persons other than the seller, the
clear and convincing evidence to back up this claim. It is elementary in procedural law buyer must be wary and should investigate the rights of those in possession. Without
that bare allegations, unsubstantiated by evidence, are not equivalent to proof under making such inquiry, one cannot claim that he is a buyer in good faith. When a man
the Rules of Court.31 proposes to buy or deal with realty, his duty is to read the public manuscript, that is, to
The CA decision ran counter to this established rule regarding disputable presumption. look and see who is there upon it and what his rights are. A want of caution and
It relied heavily on the account of Lourdes who testified that the children of Luis diligence, which an honest man of ordinary prudence is accustomed to exercise in
approached him and convinced him to sign the deed of sale, explaining that it was making purchases, is in contemplation of law, a want of good faith. The buyer who has
necessary for a loan application, but they did not pay the purchase price for the subject failed to know or discover that the land sold to him is in adverse possession of another
30

is a buyer in bad faith.36 In the case of Spouses Sarmiento v. Court of Appeals,37 it was saw that there were houses on it but she did not have any interest of the houses
written: because her interest was on the lots; that Luis Rosaroso said that the houses belonged
Verily, every person dealing with registered land may safely rely on the correctness of to him; that he owns the property and that he will sell the same because he is very
the certificate of title issued therefor and the law will in no way oblige him to go behind sickly and he wanted to buy medicines; that she requested someone to check the
the certificate to determine the condition of the property. Thus, the general rule is that a records of the lots in the Register of Deeds; that one of the titles was mortgaged and
purchaser may be considered a purchaser in good faith when he has examined the she told them to redeem the mortgage because the corporation will buy the property;
latest certificate of title. An exception to this rule is when there exist important facts that that the registered owner of the lots was Luis Rosaroso; that in more or less three
would create suspicion in an otherwise reasonable man to go beyond the present title months, the encumbrance was cancelled and she told the prospective sellers to
and to investigate those that preceded it. Thus, it has been said that a person who prepare the deed of sale; that there were no encumbrances or liens in the title; that
deliberately ignores a significant fact which would create suspicion in an otherwise when the deed of absolute sale was prepared it was signed by the vendor Luis
reasonable man is not an innocent purchaser for value. A purchaser cannot close his Rosaroso in their house in Opra x x x.39 (Underscoring supplied)
eyes to facts which should put a reasonable man upon his guard, and then claim that From the above testimony, it is clear that Meridian, through its agent, knew that the
he acted in good faith under the belief that there was no defect in the title of the vendor. subject properties were in possession of persons other than the seller. Instead of
As we have held: investigating the rights and interests of the persons occupying the said lots, however, it
The failure of appellees to take the ordinary precautions which a prudent man would chose to just believe that Luis still owned them. Simply, Meridian Realty failed to
have taken under the circumstances, specially in buying a piece of land in the actual, exercise the due diligence required by law of purchasers in acquiring a piece of land in
visible and public possession of another person, other than the vendor, constitutes the possession of person or persons other than the seller.
gross negligence amounting to bad faith. In this regard, great weight is accorded to the findings of fact of the RTC. Basic is the
In this connection, it has been held that where, as in this case, the land sold is in the rule that the trial court is in a better position to examine real evidence as well as to
possession of a person other than the vendor, the purchaser is required to go beyond observe the demeanor of witnesses who testify in the case.40
the certificate of title to make inquiries concerning the rights of the actual possessor. WHEREFORE, the petition is GRANTED. The December 4, 2009 Decision and the
Failure to do so would make him a purchaser in bad faith. (Citations omitted). November 18, 201 0 Resolution of the Court of Appeals, in CA-G.R. CV No. 00351, are
One who purchases real property which is in the actual possession of another should, REVERSED and SET ASIDE. The July 30, 2004 Decision of the Regional Trial Court,
at least make some inquiry concerning the right of those in possession. The actual Branch 8, 7th Judicial Region, Cebu City, in Civil Case No. CEB-16957, is hereby
possession by other than the vendor should, at least put the purchaser upon inquiry. He REINSTATED.
can scarely, in the absence of such inquiry, be regarded as a bona fide purchaser as SO ORDERED.
against such possessors. (Emphases supplied) EN BANC
Prescinding from the foregoing, the fact that private respondent RRC did not investigate G.R. No. L-2412 April 11, 1906
the Sarmiento spouses' claim over the subject land despite its knowledge that Pedro PEDRO ROMAN, plaintiff-appellant,
Ogsiner, as their overseer, was in actual possession thereof means that it was not an vs.
innocent purchaser for value upon said land. Article 524 of the Civil Code directs that ANDRES GRIMALT, defendant-appellee.
possession may be exercised in one's name or in that of another. In herein case, Pedro Alberto Barretto, for appellant.
Ogsiner had informed RRC that he was occupying the subject land on behalf of the Chicote, Miranda and Sierra, for appellee.
Sarmiento spouses. Being a corporation engaged in the business of buying and selling TORRES, J.:
real estate, it was gross negligence on its part to merely rely on Mr. Puzon's assurance On July 2, 1904, counsel for Pedro Roman filed a complaint in the Court of First
that the occupants of the property were mere squatters considering the invaluable Instance of this city against Andres Grimalt, praying that judgment be entered in his
information it acquired from Pedro Ogsiner and considering further that it had the favor and against the defendant (1) for the purchase price of the schooner Santa
means and the opportunity to investigate for itself the accuracy of such information. Marina, to wit, 1,500 pesos or its equivalent in Philippine currency, payable by
[Emphases supplied] installments in the manner stipulated; (2) for legal interest on the installments due on
In another case, it was held that if a vendee in a double sale registers the sale after he the dates set forth in the complaint; (3) for costs of proceedings; and (4) for such other
has acquired knowledge of a previous sale, the registration constitutes a registration in and further remedy as might be considered just and equitable.
bad faith and does not confer upon him any right. If the registration is done in bad faith, On October 24 of the same year the court made an order sustaining the demurer filed
it is as if there is no registration at all, and the buyer who has first taken possession of by defendant to the complaint and allowing plaintiff ten days within which to amend his
the property in good faith shall be preferred.38 complaint. To this order the plaintiff duly excepted.
In the case at bench, the fact that the subject properties were already in the possession Counsel for plaintiff on November 5 amended his complaint and alleged that between
of persons other than Luis was never disputed. Sanchez, representative and witness for the 13th and the 23rd day of June, 1904, both parties, through one Fernando Agustin
Meridian, even testified as follows: Pastor, verbally agreed upon the sale of the said schooner; that the defendant in a letter
x x x; that she together with the two agents, defendant Laila Solutan and Corazon Lua, dated June 23 had agreed to purchase the said schooner and of offered to pay therefor
the president of Meridian Realty Corporation, went immediately to site of the lots; that in three installment of 500 pesos each, to wit, on July 15, September 15, and November
the agents brought with them the three titles of the lots and Laila Solutan brought with 15, adding in his letter that if the plaintiff accepted the plan of payment suggested by
her a special power of attorney executed by Luis B. Rosaroso in her favor but she went him the sale would become effective on the following day; that plaintiff on or about the
instead directly to Luis Rosaroso to be sure; that the lots were pointed to them and she 24th of the same month had notified the defendant through Agustin Pastor that he
31

accepted the plan of payment suggested by him and that from that date the vessel was unable to do so on account of failure on the part of the owner to show proper title to the
at his disposal, and offered to deliver the same at once to defendant if he so desired; vessel and thus enable them to draw up the contract of sale.
that the contract having been closed and the vessel being ready for delivery to the The vessel was sunk in the bay on the afternoon of the 25th of June, 1904, during a
purchaser, it was sunk about 3 o'clock p. m., June 25, in the harbor of Manila and is a severe storm and before the owner had complied with the condition exacted by the
total loss, as a result of a severe storm; and that on the 30th of the same month proposed purchaser, to wit, the production of the proper papers showing that the
demand was made upon the defendant for the payment of the purchase price of the plaintiff was in fact the owner of the vessel in question.
vessel in the manner stipulated and defendant failed to pay. Plaintiff finally prayed that The defendant was under no obligation to pay the price of the vessel, the purchase of
judgment be rendered in accordance with the prayer of his previous complaint. which had not been concluded. The conversations had between the parties and the
Defendant in his answer asked that the complaint be dismissed with costs to the letter written by defendant to plaintiff did not establish a contract sufficient in itself to
plaintiff, alleging that on or about June 13 both parties met in a public establishment of create reciprocal rights between the parties.
this city and the plaintiff personally proposed to the defendant the sale of the said It follows, therefore, that article 1452 of the Civil Code relative to the injury or benefit of
vessel, the plaintiff stating that the vessel belonged to him and that it was then in a sea the thing sold after a contract has been perfected and articles 1096 and 1182 of the
worthy condition; that defendant accepted the offer of sale on condition that the title same code relative to the obligation to deliver a specified thing and the extinction of
papers were found to be satisfactory, also that the vessel was in a seaworthy condition; such obligation when the thing is either lost or destroyed, are not applicable to the case
that both parties then called on Calixto Reyes, a notary public, who, after examining the at bar.
documents, informed them that they were insufficient to show the ownership of the The first paragraph of article 1460 of the Civil Code and section 335 of the Code of Civil
vessel and to transfer title thereto; that plaintiff then promised to perfect his title and Procedure are not applicable. These provisions contemplate the existence of a
about June 23 called on defendant to close the sale, and the defendant believing that perfected contract which can not, however, be enforced on account of the entire loss of
plaintiff had perfected his title, wrote to him on the 23d of June and set the following day the thing or made the basis of an action in court through failure to conform to the
for the execution of the contract, but, upon being informed that plaintiff had done requisites provided by law.
nothing to perfect his title, he insisted that he would buy the vessel only when the title The judgment of the court below is affirmed and the complaint is dismissed with costs
papers were perfected and the vessel duly inspected. against the plaintiff. After the expiration of twenty days from the date hereof let
Defendant also denied the other allegations of the complaint inconsistent with his own judgment be entered in accordance herewith and ten days thereafter let the case be
allegations and further denied the statement contained in paragraph 4 of the complaint remanded to the Court of First Instance for proper action. So ordered.
to the effect that the contract was completed as to the vessel; that the purchase price Arellano, C.J., Mapa, Johnson, Carson and Willard, JJ., concur.
and method of payment had been agreed upon; that the vessel was ready for delivery SECOND DIVISION
to the purchaser and that an attempt had been made to deliver the same, but admitted, G.R. No. 91029 February 7, 1991
however, the allegations contained in the last part of the said paragraph. NORKIS DISTRIBUTORS, INC., petitioner,
The court below found that the parties had not arrived at a definite understanding. We vs.
think that this finding is supported by the evidence introduced at the trial. THE COURT OF APPEALS & ALBERTO NEPALES, respondents.
A sale shall be considered perfected and binding as between vendor and vendee when Jose D. Palma for petitioner.
they have agreed as to the thing which is the object of the contract and as to the price, Public Attorney's Office for private respondent.
even though neither has been actually delivered. (Art. 1450 of the Civil Code.)
Ownership is not considered transmitted until the property is actually delivered and the
purchaser has taken possession of the value and paid the price agreed upon, in which GRIÑO-AQUINO, J.:
case the sale is considered perfected. Subject of this petition for review is the decision of the Court of Appeals (Seventeenth
When the sale is made by means of a public instrument the execution thereof shall be Division) in CA-G.R. No. 09149, affirming with modification the judgment of the
equivalent to the delivery of the thing which is the object of the contract. (Art. 1462 of Regional Trial Court, Sixth (6th) Judicial Region, Branch LVI. Himamaylan, Negros
the Civil Code.) Occidental, in Civil Case No. 1272, which was private respondent Alberto Nepales'
Pedro Roman, the owner, and Andres Grimalt, the purchaser, had been for several action for specific performance of a contract of sale with damages against petitioner
days negotiating for the purchase of the schooner Santa Marina — from the 13th to the Norkis Distributors, Inc.
23d of June, 1904. They agreed upon the sale of the vessel for the sum of 1,500 pesos, The facts borne out by the record are as follows:
payable in three installments, provided the title papers to the vessel were in proper Petitioner Norkis Distributors, Inc. (Norkis for brevity), is the distributor of Yamaha
form. It is so stated in the letter written by the purchaser to the owner on the 23rd of motorcycles in Negros Occidental with office in Bacolod City with Avelin\
June. o Labajo as its Branch Manager. On September 20, 1979, private respondent Alberto
The sale of the schooner was not perfected and the purchaser did not consent to the Nepales bought from the Norkis-Bacolod branch a brand new Yamaha Wonderbike
execution of the deed of transfer for the reason that the title of the vessel was in the motorcycle Model YL2DX with Engine No. L2-329401K Frame No. NL2-0329401, Color
name of one Paulina Giron and not in the name of Pedro Roman, the alleged owner. Maroon, then displayed in the Norkis showroom. The price of P7,500.00 was payable
Roman promised, however, to perfect his title to the vessel, but he failed to do so. The by means of a Letter of Guaranty from the Development Bank of the Philippines (DBP),
papers presented by him did not show that he was the owner of the vessel. Kabankalan Branch, which Norkis' Branch Manager Labajo agreed to accept. Hence,
If no contract of sale was actually executed by the parties the loss of the vessel must be credit was extended to Nepales for the price of the motorcycle payable by DBP upon
borne by its owner and not by a party who only intended to purchase it and who was release of his motorcycle loan. As security for the loan, Nepales would execute a
32

chattel mortgage on the motorcycle in favor of DBP. Branch Manager Labajo issued . . . After the contract of sale has been perfected (Art. 1475) and even before
Norkis Sales Invoice No. 0120 (Exh.1) showing that the contract of sale of the delivery, that is, even before the ownership is transferred to the vendee, the
motorcycle had been perfected. Nepales signed the sales invoice to signify his risk of loss is shifted from the vendor to the vendee. Under Art. 1262, the
conformity with the terms of the sale. In the meantime, however, the motorcycle obligation of the vendor to deliver a determinate thing becomes extinguished if
remained in Norkis' possession. the thing is lost by fortuitous event (Art. 1174), that is, without the fault or fraud
On November 6, 1979, the motorcycle was registered in the Land Transportation of the vendor and before he has incurred in delay (Art. 11 65, par. 3). If the
Commission in the name of Alberto Nepales. A registration certificate (Exh. 2) in his thing sold is generic, the loss or destruction does not extinguish the obligation
name was issued by the Land Transportation Commission on November 6, 1979 (Exh. (Art. 1263). A thing is determinate when it is particularly designated or
2-b). The registration fees were paid by him, evidenced by an official receipt, Exhibit 3. physically segregated from all others of the same class (Art. 1460). Thus, the
On January 22, 1980, the motorcycle was delivered to a certain Julian Nepales who vendor becomes released from his obligation to deliver the determinate thing
was allegedly the agent of Alberto Nepales but the latter denies it (p. 15, t.s.n., August sold while the vendee's obligation to pay the price subsists. If the vendee had
2, 1984). The record shows that Alberto and Julian Nepales presented the unit to DBP's paid the price in advance the vendor may retain the same. The legal effect,
Appraiser-Investigator Ernesto Arriesta at the DBP offices in Kabankalan, Negros therefore, is that the vendee assumes the risk of loss by fortuitous event (Art.
Occidental Branch (p. 12, Rollo). The motorcycle met an accident on February 3, 1980 1262) after the perfection of the contract to the time of delivery. (Civil Code of
at Binalbagan, Negros Occidental. An investigation conducted by the DBP revealed that the Philippines, Ambrosio Padilla, Vol. 5,1987 Ed., p. 87.)
the unit was being driven by a certain Zacarias Payba at the time of the accident (p. Norkis concedes that there was no "actual" delivery of the vehicle. However, it insists
33, Rollo). The unit was a total wreck (p. 36, t.s.n., August 2,1984; p. 13, Rollo), was that there was constructive delivery of the unit upon: (1) the issuance of the Sales
returned, and stored inside Norkis' warehouse. Invoice No. 0120 (Exh. 1) in the name of the private respondent and the affixing of his
On March 20, 1980, DBP released the proceeds of private respondent's motorcycle signature thereon; (2) the registration of the vehicle on November 6, 1979 with the Land
loan to Norkis in the total sum of P7,500. As the price of the motorcycle later increased Transportation Commission in private respondent's name (Exh. 2); and (3) the issuance
to P7,828 in March, 1980, Nepales paid the difference of P328 (p. 13, Rollo) and of official receipt (Exh. 3) for payment of registration fees (p. 33, Rollo).
demanded the delivery of the motorcycle. When Norkis could not deliver, he filed an That argument is not well taken. As pointed out by the private respondent, the issuance
action for specific performance with damages against Norkis in the Regional Trial Court of a sales invoice does not prove transfer of ownership of the thing sold to the buyer. An
of Himamaylan, Negros Occidental, Sixth (6th) Judicial Region, Branch LVI, where it invoice is nothing more than a detailed statement of the nature, quantity and cost of the
was docketed as Civil Case No. 1272. He alleged that Norkis failed to deliver the thing sold and has been considered not a bill of sale (Am. Jur. 2nd Ed., Vol. 67, p. 378).
motorcycle which he purchased, thereby causing him damages. In all forms of delivery, it is necessary that the act of delivery whether constructive or
Norkis answered that the motorcycle had already been delivered to private respondent actual, be coupled with the intention of delivering the thing. The act, without the
before the accident, hence, the risk of loss or damage had to be borne by him as owner intention, is insufficient (De Leon, Comments and Cases on Sales, 1978
of the unit. Ed., citing Manresa, p. 94).
After trial on the merits, the lower court rendered a decision dated August 27, 1985 When the motorcycle was registered by Norkis in the name of private respondent,
ruling in favor of private respondent (p. 28, Rollo.) thus: Norkis did not intend yet to transfer the title or ownership to Nepales, but only to
WHEREFORE, judgment is rendered in favor of the plaintiff and against the facilitate the execution of a chattel mortgage in favor of the DBP for the release of the
defendants. The defendants are ordered to pay solidarity to the plaintiff the buyer's motorcycle loan. The Letter of Guarantee (Exh. 5) issued by the DBP, reveals
present value of the motorcycle which was totally destroyed, plus interest that the execution in its favor of a chattel mortgage over the purchased vehicle is a pre-
equivalent to what the Kabankalan Sub-Branch of the Development Bank of requisite for the approval of the buyer's loan. If Norkis would not accede to that
the Philippines will have to charge the plaintiff on fits account, plus P50.00 per arrangement, DBP would not approve private respondent's loan application and,
day from February 3, 1980 until full payment of the said present value of the consequently, there would be no sale.
motorcycle, plus P1,000.00 as exemplary damages, and costs of the litigation. In other words, the critical factor in the different modes of effecting delivery, which gives
In lieu of paying the present value of the motorcycle, the defendants can legal effect to the act, is the actual intention of the vendor to deliver, and its acceptance
deliver to the plaintiff a brand-new motorcycle of the same brand, kind, and by the vendee. Without that intention, there is no tradition (Abuan vs. Garcia, 14 SCRA
quality as the one which was totally destroyed in their possession last 759).
February 3, 1980. (pp. 28-29, Rollo.) In the case of Addison vs. Felix and Tioco (38 Phil. 404, 408), this Court held:
On appeal, the Court of appeals affirmed the appealed judgment on August 21, 1989, The Code imposes upon the vendor the obligation to deliver the thing sold.
but deleted the award of damages "in the amount of Fifty (P50.00) Pesos a day from The thing is considered to be delivered when it is "placed in the hands and
February 3, 1980 until payment of the present value of the damaged vehicle" possession of the vendee." (Civil Code, Art. 1462). It is true that the same
(p35, Rollo). The Court of Appeals denied Norkis' motion for reconsideration. Hence, article declares that the execution of a public instrument is equivalent to the
this Petition for Review. delivery of the thing which is the object of the contract, but, in order that this
The principal issue in this case is who should bear the loss of the motorcycle. The symbolic delivery may produce the effect of tradition, it is necessary that the
answer to this question would depend on whether there had already been a transfer of vendor shall have had such control over the thing sold that, at the moment of
ownership of the motorcycle to private respondent at the time it was destroyed. the sale, its material delivery could have been made. It is not enough to confer
Norkis' theory is that: upon the purchaser the ownership and the right of possession. The thing sold
must be placed in his control. When there is no impediment whatever to
33

prevent the thing sold passing into the tenancy of the purchaser by the sole
will of the vendor, symbolic delivery through the execution of a public
instrument is sufficient. But if notwithstanding the execution of the instrument,
the purchaser cannot have the enjoyment and material tenancy of the thing
and make use of it himself or through another in his name, because such
tenancy and enjoyment are opposed by the interposition of another will, then
fiction yields to reality-the delivery has riot been effects .(Emphasis supplied.)
The Court of Appeals correctly ruled that the purpose of the execution of the sales
invoice dated September 20, 1979 (Exh. B) and the registration of the vehicle in the
name of plaintiff-appellee (private respondent) with the Land Registration Commission
(Exhibit C) was not to transfer to Nepales the ownership and dominion over the
motorcycle, but only to comply with the requirements of the Development Bank of the
Philippines for processing private respondent's motorcycle loan. On March 20, 1980,
before private respondent's loan was released and before he even paid Norkis, the
motorcycle had already figured in an accident while driven by one Zacarias Payba.
Payba was not shown by Norkis to be a representative or relative of private respondent.
The latter's supposed relative, who allegedly took possession of the vehicle from Norkis
did not explain how Payba got hold of the vehicle on February 3, 1980. Norkis' claim
that Julian Nepales was acting as Alberto's agent when he allegedly took delivery of the
motorcycle (p. 20, Appellants' Brief), is controverted by the latter. Alberto denied having
authorized Julian Nepales to get the motorcycle from Norkis Distributors or to enter into
any transaction with Norkis relative to said motorcycle. (p. 5, t.s.n., February 6, 1985).
This circumstances more than amply rebut the disputable presumption of delivery upon
which Norkis anchors its defense to Nepales' action (pp. 33-34, Rollo).
Article 1496 of the Civil Code which provides that "in the absence of an express
assumption of risk by the buyer, the things sold remain at seller's risk until the
ownership thereof is transferred to the buyer," is applicable to this case, for there was
neither an actual nor constructive delivery of the thing sold, hence, the risk of loss
should be borne by the seller, Norkis, which was still the owner and possessor of the
motorcycle when it was wrecked. This is in accordance with the well-known doctrine
of res perit domino.
WHEREFORE, finding no reversible error in the decision of the Court of Appeals in CA-
G.R. No. 09149, we deny the petition for review and hereby affirm the appealed
decision, with costs against the petitioner.
SO ORDERED.
Narvasa, Cruz, Gancayco and Medialdea, JJ., concur.

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