Dignos vs.

Court of Appeals, and Jabil

158 SCRA 378
February 1988
FACTS:
In July 1965, herein petitioners Silvestre T. Dignos and Isabela Lumungsod de Dignos
(spouses Dignos) sold their parcel of land in Opon, LapuLapu to herein private
respondent Antonio Jabil for the sum of P28,000 payable for two installments, with an
assumption of indebtedness with the First Insular Bank of Cebu in the sum of P12,000
and the next installment of P4,000 to be paid in September 1965. In November 1965, the
spouses Dignos sold the same parcel of land for P35,000 to defendants Luciano Cabigas
and Jovita L. de Cabigas (spouses Cabigas) who were then US citizens, and executed in
their favor an Absolute Deed of Sale duly registered in the Office of the Register of
Deeds.
Upon discovery of the 2nd sale of the subject land, Jabil filed the case at bar in the CFI of
Cebu which rendered its Decision in August 1975 declaring the 2nd sale to the spouses
Cabigas null and void ab initio and the 1st sale to Jabil not rescinded. The CFI of Cebu
also ordered Jabil to pay the remaining P16,000 to the spouses Dignos and to reimburse
the spouses Cabigas a reasonable amount corresponding the expenses in the construction
of hollow block fences in the said parcel of land. The spouses Dignos were also ordered
to return the P35,000 to the spouses Cabigas.
Both Jabil and the spouses Dignos appealed to the Court of Appeals, which affirmed in
July 1981 the CFI of Cebus Decision except for the part of Jabil paying the expenses of
the spouses Cabigas for building a fence. The spouses Dignos contested that the contract
between them and Jabil was merely a contract to sell and not a deed of sale.
ISSUE:
Is the contract between the parties a contract of sale or a contract to sell?
COURT RULING:
The Supreme Court affirmed the Decision of the Court of Appeals saying stated that all
the elements of a valid contract of sale are present in the document and that the spouses
Dignos had no right to sell the land in question because an actual delivery of its
possession has already been made in favor of Jabil as early as March 1965. It was also
found that the spouses Dignos never notified Jabil by notarial act that they were
rescinding the contract, and neither did they file a suit in court to rescind the sale. There
is no showing that Jabil properly authorized a certain Cipriano Amistad to tell petitioners
that he was already waiving his rights to the land in question.

Aitken v. Lao
Facts:
Chinaman (To Jan Co) erected a store bldg on a parcel of land belonging to Apolonia
Remigio, whereby agreement that half of rents were to go to her half to Jan Co. Owner of
land did not receive rents agreed upon, thus instituted action aganst Jan Co to recover
rents. Judgment rendered in favor of Remigio, execution issued and thereafter house
purchased by judgment creditor (remigio) at the sheriff's sale as such now in possession
of house and land. Defendant is administrator of estate of Remigio. Jan Co later executed
unregisted deed of sale to another Chinaman (To Cun), reserving right to repurchase but
did no exrcise such. Cun never took possession, later Cun executed unregistered deed of
sale to Aitken, who later instituted action for possession of house.
Issue: WON purchaser or claimant under prior unrecorded deed of sale has better right
Held:
Purchaser in GF at a sheriff's sale of all right, tite, intersest of a judgment dbtor in a house
is entitled to prop under Art 1473 of Civil Code as against one who claims property by
virtue of unrecorded deed of sale executed in his favor by judgment debtor prior to date
of sheriff's sale, it appearing that purchaser at the sheriff's sale secured possession and
that claimany under undrecorded deed of sale never went into possession.
Fabian et al v. Smith Bell & Co
Facts:
Emilio Boncan owner of real estate, titlr recorded in registry of prop. Sold and conveyed
same by public doc to plaintiffs, deed was never recorded with registry of property. Later,
Smith Bell & Co obtained judgment against Boncan thus levied an execution issued on
said judgment upon real estate in question which was recorded in registry as that of
Boncan's. Fabian brought action to restrain judgment creditors from selling property.
Issue: WON levy of an execution against a judgment debtor upon real estate which stands
in his name in registry of prop takes precedence on an unrecorded deed of same property
made by judgment debtor prior to levy in execution.
Held:
Levy of an execution against a judgment debtor upon real estate which stands in his name
in registry of property does not take precedence over an unrecorded deed of same
property executed by judgment debtor prior to levy of attachment. Attachment does not
change character of a debt and does not convert claim of creditor into a right to the thing
itslef, nor does it give him any preference over existing claims against attached property
that have not been recorded.
Art 1473 ov Civil Code which gives preference to that one of the two deeds which is first
recorded does not extend to attachments or executions.

Jacobus Bernhard vs PR Builders Inc

25 September 2008
Facts: Petitioner contends that the Contract to Sell between petitioner and respondent
involved a condominium unit and did not violate the Constitutional proscription against
ownership of land by aliens. He argues that the contract to sell will not transfer to the
buyer ownership of the land on which the unit is situated; thus, the buyer will not get a
transfer certificate of title but merely a Condominium Certificate of Title as evidence of
ownership; a perusal of the contract will show that what the buyer acquires is the seller's
title and rights to and interests in the unit and the common areas.
The Contract to Sell between petitioner and respondent provides as follows:
Section 3. TITLE AND OWNERSHIP OF UNIT
Upon full payment by the BUYER of the purchase price stipulated in Section 2 hereof, x
x x, the SELLER shall deliver to the BUYER the Deed of Absolute Sale conveying its
rights, interests and title to the UNIT and to the common areas appurtenant to such UNIT,
and the corresponding Condominium Certificate of Title in the SELLER's name; x x x
The Seller shall register with the proper Registry of Deeds, the Master Deed with the
Declaration of Restrictions and other documents and shall immediately comply with all
requirements of Republic Act No. 4726 (The Condominium Act) and Presidential Decree
No. 957 (Regulating the Sale of Subdivision Lots and Condominiums, Providing
Penalties for Violations Thereof). It is hereby understood that all title, rights and interest
so conveyed shall be subject to the provisions of the Condominium Act, the Master Deed
with Declaration of Restrictions, the Articles of Incorporation and By-Laws and the Rules
and Regulations of the Condominium Corporation, zoning regulations and such other
restrictions on the use of the property as annotated on the title or may be imposed by any
government agency or instrumentality having jurisdiction thereon.[4] (Emphasis
supplied)
Under Republic Act (R.A.) No. 4726, otherwise known as the Condominium Act, foreign
nationals can own Philippine real estate through the purchase of condominium units or
townhouses constituted under the Condominium principle with Condominium
Certificates of Title.
Issue: w/n the purchase of a condo unit by an alien falls under the express prohibition of
land ownership by aliens
Ruling: No. Considering that the rights and liabilities of the parties under the Contract to
Sell is covered by the Condominium Act wherein petitioner as unit owner was simply a
member of the Condominium Corporation and the land remained owned by respondent,
then the constitutional proscription against aliens owning real property does not apply to
the present case. There being no circumvention of the constitutional prohibition, the
Court's pronouncements on the invalidity of the Contract of Sale should be set aside.

AURORA ALCANTARA-DAUS, vs. Spouses HERMOSO and SOCORRO DE LEON

Facts: Respondents alleged that they are the owners of a parcel of land described as: No.
4786 of the Cadastral Survey of San Manuel situated in the Municipality of San Manuel,
Bounded on the NW., by Lot No. 4785; and on the SE., by Lot Nos. 11094 & 11096;
containing an area of Four Thousand Two Hundred Twelve (4,212) sq. m., more or less.
Covered by Original Certificate of Title No. 22134 of the Land Records of Pangasinan.
which Hermoso de Leon inherited from his father Marcelino de Leon by virtue of a Deed
of Extrajudicial Partition. Sometime in the early 1960s, respondents engaged the services
of the late Atty. Florencio Juan to take care of the documents of the properties of his
parents. Atty. Juan let them sign voluminous documents. After the death of Atty. Juan,
some documents surfaced and most revealed that their properties had been conveyed by
sale or quitclaim to Hermosos brothers and sisters, to Atty. Juan and his sisters, when in
truth and in fact, no such conveyances were ever intended by them. His signature in the
Deed of Extra-judicial Partition with Quitclaim made in favor of Rodolfo de Leon was
forged. They discovered that the land in question was sold by Rodolfo de Leon to Aurora
Alcantara. They demanded annulment of the document and reconveyance but defendants
refused. Aurora Alcantara-Daus that she bought the land in question in good faith and for
value. [She] has been in continuous, public, peaceful, open possession over the same and
has been appropriating the produce thereof without objection from anyone.
Issue: 1. Whether or not the Deed of Absolute Sale \ executed by Rodolfo de Leon over
the land in question in favor of petitioner was perfected and binding upon the parties
therein?
2. Whether or not the possession of petitioner including her predecessor-in-interest
Rodolfo de Leon over the land in question was in good faith?
Ruling: Petition has no merit.
1. A contract of sale is consensual. It is perfected by mere consent,]upon a meeting of the
minds on the offer and the acceptance thereof based on subject matter, price and terms of
payment. At this stage, the sellers ownership of the thing sold is not an element in the
perfection of the contract of sale. The contract, however, creates an obligation on the part
of the seller to transfer ownership and to deliver the subject matter of the contract. It is
during the delivery that the law requires the seller to have the right to transfer ownership
of the thing sold. In general, a perfected contract of sale cannot be challenged on the
ground of the sellers non-ownership of the thing sold at the time of the perfection of the
contract.
2. It is well-settled that no title to registered land in derogation of that of the registered
owner shall be acquired by prescription or adverse possession. Neither can prescription
be allowed against the hereditary successors of the registered owner, because they merely
step into the shoes of the decedent and are merely the continuation of the personality of
their predecessor in interest\ Consequently, since a certificate of registration covers it, the
disputed land cannot be acquired by prescription regardless of petitioners good faith.
Heirs of Arturo Reyes versus Socco-Beltran

Facts: The subject land was a part of a larger parcel of land partitioned into three extrajudicially by the heirs of Constancia Socco sometime in 1965. Respondent applied before
the DAR the purchase of the subject land stating thatthe land was adjudicated in her
favor. However, the Heirs of Reyes protested against the application claiming that
thesubject land was owned by their predecessor-in-interest evidenced by a conditional
Contract to Sell executed by thebrother of the respondent and stated therein that he was to
inherit the subject parcel of land. The director of DAR deniedthe application on the
ground that she was not the actual tiller of the land and abandoned the land for a period of
40years. On appeal to the secretary of DAR, it was reversed and found that petitioners
predecessor-in-interest was not theactual occupant of the said land. Petitioners sought
remedy from the Office of the President by appealing but the Office of the President
rendered its Decision denying petitioners appeal and affirming the DAR Secretarys
Decision.Consequently, petitioners filed an appeal before the Court of Appeals, however,
the Court of Appeals affirmed thedecision of the Office of the President.
Issue: Whether or not petitioners have a better right to the subject property over the
respondent
Held: Petitioners cannot derive title to the subject property by virtue of the Contract to
Sell. It was unmistakably statedin the Contract and made clear to both parties thereto that
the vendor, Miguel R. Socco, was not yet the owner of thesubject property and was
merely expecting to inherit the same as his share as a co-heir of Constancias estate.
It was also declared in the Contract itself that Miguel R. Soccos conveyance of the
subject to the buyer, Arturo Reyes, was aconditional sale. It is, therefore, apparent that the
sale of the subject property in favor of Arturo Reyes was conditioned upon the event that
Miguel Socco would actually inherit and become the owner of the said property. Absent
suchoccurrence, Miguel R. Socco never acquired ownership of the subject property
which he could validly transfer to Arturo Reyes. Under Article 1459 of the Civil Code on
contracts of sale, The thing must be licit and the vendor must have a right to transfer
ownership thereof at the time it is delivered. The law specifically requires that the
vendor must haveownership of the property at the time it is delivered.It was explicit in
the Contract itself that, at the time it was executed,
Miguel R. Socco was not yet the owner of the property and was only expecting to inherit
it. Hence, there was no validsale from which ownership of the subject property could
have transferred from Miguel Socco to Arturo Reyes. Withoutacquiring ownership of the
subject property, Arturo Reyes also could not have conveyed the same to his heirs, herein
petitioners.

Rudolf Leitz, Inc, vs CA

Facts:
Respondent Agapito Buriol previously owned a parcel of unregistered land situated at
Capsalay Island, Port Barton, San Vicente, Palawan. On August 15, 1986, respondent
Buriol entered into a lease agreement with Flavia Turatello and respondents Turatello and
Sani, all Italian citizens, involving one (1) hectare of respondent Buriols property. The
lease agreement was for a period of 25 years, renewable for another 25 years. The lessees
took possession of the land after paying respondent Buriol a down payment of
P10,000.00. The lease agreement, however, was reduced into writing only in January
1987. On November 17, 1986, respondent Buriol sold to petitioner Rudolf Lietz, Inc. the
same parcel of land for the amount of P30,000.00. TheDeed of Absolute Sale embodying
the agreement described the land as follows:
A parcel of land, consisting of FIVE (5) hectares, more or less, a portion of that parcel of
land declared in the name of Agapito Buriol, under Tax Declaration No. 0021, revised in
the year 1985, together with all improvements thereon, situated at the Island of Capsalay,
Barangay Port Barton, municipality of San Vicente, province of Palawan which
segregated from the whole parcel described in said tax declaration, has the following
superficial boundaries: NORTH, Sec. 01-017; and remaining property of the vendor;
EAST, by Seashore; SOUTH, 01-020; and WEST, by 01-018 (now Elizabeth Lietz)
Petitioner later discovered that respondent Buriol owned only four (4) hectares, and with
one more hectare covered by lease, only three (3) hectares were actually delivered to
petitioner. Thus, petitioner instituted on April 3, 1989 a complaint for Annulment of
Lease with Recovery of Possession with Injunction and Damages against respondents and
Flavia Turatello before the RTC. The complaint alleged that with evident bad faith and
malice, respondent Buriol sold to petitioner five (5) hectares of land when respondent
Buriol knew for a fact that he owned only four (4) hectares and managed to lease one
more hectare to Flavia Turatello and respondents Tiziana Turatello and Paola Sani. The
complaint sought the issuance of a restraining order and a writ of preliminary injunction
to prevent Flavia Turatello and respondents Turatello and Sani from introducing
improvements on the property, the annulment of the lease agreement between
respondents, and the restoration of the amount paid by petitioner in excess of the value of
the property sold to him. The trial court rendered judgment on May 27, 1992, dismissing
both petitioners complaint and respondents counterclaim for damages. Petitioner and
respondents Turatello and Sani separately appealed the RTC Decision to the Court of
Appeals, which affirmed the dismissal of petitioners complaint and awarded respondents
Turatello and Sani damages and attorneys fees.
Issue:
1. Whether or not petitioner is entitled to the delivery of the entire five hectares or its
equivalent, and
2. Whether or not damages may be awarded to either party.
Held:

Petitioner contends that it is entitled to the corresponding reduction of the purchase price
because the agreement was for the sale of five (5) hectares although respondent Buriol
owned only four (4) hectares. As in its appeal to the Court of Appeals, petitioner anchors
its argument on the second paragraph of Article 1539 of the Civil Code, The Court of
Appeals Decision, however, declared as inapplicable Article 1539 and instead ruled that
petitioner is no longer entitled to a reduction in price based on the provisions of Article
1542 of the Civil Code.
The same rule shall be applied when two or more immovables are sold for a single price;
but if, besides mentioning the boundaries, which is indispensable in every conveyance of
real estate, its area or number should be designated in the contract, the vendor shall be
bound to deliver all that is included within said boundaries, even when it exceeds the area
or number specified in the contract; and, should he not be able to do so, he shall suffer a
reduction in the price, in proportion to what is lacking in the area or number, unless the
contract is rescinded because the vendee does not accede to the failure to deliver what has
been stipulated.
Article 1539 governs a sale of immovable by the unit, that is, at a stated rate per unit area.
In a unit price contract, the statement of area of immovable is not conclusive and the
price may be reduced or increased depending on the area actually delivered. According to
Article 154 of the Civil Code, in the sale of real estate, made for a lump sum and not at
the rate of a certain sum for a unit of measure or number, there shall be no increase or
decrease of the price although there be a greater or lesser area or number than that stated
in the contract. However, the discrepancy must not be substantial. A vendee of land, when
sold in gross or with the description more or less with reference to its area, does not
thereby ipso facto take all risk of quantity in the land. The use of more or less or similar
words in designating quantity covers only a reasonable excess or deficiency.
Where both the area and the boundaries of the immovable are declared, the area covered
within the boundaries of the immovable prevails over the stated area. In cases of conflict
between areas and boundaries, it is the latter which should prevail. What really defines a
piece of ground is not the area, calculated with more or less certainty, mentioned in its
description, but the boundaries therein laid down, as enclosing the land and indicating its
limits. In a contract of sale of land in a mass, it is well established that the specific
boundaries stated in the contract must control over any statement with respect to the area
contained within its boundaries. It is not of vital consequence that a deed or contract of
sale of land should disclose the area with mathematical accuracy. It is sufficient if its
extent is objectively indicated with sufficient precision to enable one to identify it. An
error as to the superficial area is immaterial. Thus, the obligation of the vendor is to
deliver everything within the boundaries, inasmuch as it is the entirety thereof that
distinguishes the determinate object. The sale between petitioner and respondent Buriol
involving the latters property is one made for a lump sum. The Deed of Absolute Sale
shows that the parties agreed on the purchase price on a predetermined area of five
hectares within the specified boundaries and not based on a particular rate per area. In
accordance with Article 1542, there shall be no reduction in the purchase price even if the
area delivered to petitioner is less than that stated in the contract. In the instant case, the

area within the boundaries as stated in the contract shall control over the area agreed
upon in the contract.
The Court rejects petitioners contention that the propertys boundaries as stated in the
Deed of Absolute Sale are superficial and unintelligible and, therefore, cannot prevail
over the area stated in the contract. First, as pointed out by the Court of Appeals, at an
ocular inspection prior to the perfection of the contract of sale, respondent Buriol pointed
to petitioner the boundaries of the property. Hence, petitioner gained a fair estimate of the
area of the property sold to him. Second, petitioner cannot now assail the contents of the
Deed of Absolute Sale, particularly the description of the boundaries of the property,
because petitioners subscription to the Deed of Absolute Sale indicates his assent to the
correct description of the boundaries of the property.
DOUBLE SALE
Ulep v CA
G.R. No. 125254, October 11, 2005
J. Garcia
Facts:
During his lifetime, the father Valentin Ulep owned a parcel of land an area of 3,270. In
1950, the older Ulep sold the one-half (1/2) eastern portion comprising an area of 1,635
square meters, to respondent Maxima Rodico, while the remaining one-half (1/2) western
portion with the same area, to his son Atinedoro Ulep married to Beatriz Ulep, and to his
other daughter Valentina Ulep. On June 5, 1952, Transfer Certificate of Title was issued
to transferees. On June 18, 1971, Atinedoro Ulep, his wife Beatriz and sister Valentina
Ulep sold the one-half (817.5 square meters) portion of the area sold to them by their
father to their brother Samuel Ulep and his wife. The document of sale was registered
with the Office of the Registry of Deeds of Pangasinan on February 20, 1973. Later, an
area of 507.5 square meters of the western portion sold by the spouses Atinedoro Ulep
and Beatriz Ulep to respondent Warlito Paringit and his wife, who were then issued TCT
No. 12688 on September 23, 1975. Evidently, all the foregoing transactions were done
and effected without an actual ground partition or formal subdivision of the lot. In June
1977, respondent Iglesia ni Cristo (INC) begun constructing its chapel on lot 840. This
prompted Samuel Ulep and sister Rosita Ulep to make inquiries with the Office of the
Register of Deeds of Pangasinan. To their consternation, they discovered from the records
of said office that a deed of sale bearing date December 21, 1954, purportedly executed
by their brother Atinedoro Ulep his, wife Beatriz and their sister Valentina Ulep in favor
of INC over a portion of 620 square meters of the lot and that on the basis of said deed,
INC was issued TCT No. 12689 on September 23, 1975 over the portion allegedly sold to
it by the three. On March 29, 1983, in the Regional Trial Court, the spouses Samuel Ulep
and Susana Repogia-Ulep, the spouses Atinedoro Ulep and Beatriz Ulep and their sister
Valentina Ulep, filed their complaint for Quieting of Title, Reconveyance and Declaration
of Nullity of Title and Subdivision Plan with Damages. The Uleps basically alleged that
they and respondents are co-owners of the lot in the following proportions:
1,635 square meters to Maxima Rodico;
817.5 square meters to spouses Samuel Ulep and Susana Repogia-Ulep;

507.5 square meters to spouses Warlito Paringit and Encarnacion Gante;

210 square meters to spouses Atinedoro Ulep and Beatriz Ulep, and Valentina Ulep;
100 square meters to Iglesia Ni
Cristo.http://www.lawphil.net/judjuris/juri2005/oct2005/gr_125254_2005.html - fnt6
Issue: Whether or not Samuel Ulep and his wife has a better right to the lot than the
INC.
Held:
The governing principle is primus tempore, potior jure (first in time, stronger in right).
Knowledge gained by the first buyer of the second sale cannot defeat the first buyers
rights except where the second buyer registers in good faith the second sale ahead of the
first, as provided by Art. 1544 of the Civil Code. Such knowledge of the first buyer does
not bar him from availing of his rights under the law, among them to register first his
purchase as against the second buyer. In converso, knowledge gained by the second buyer
of the first sale defeats his rights even if he is first to register the second sale, since such
knowledge taints his prior registration with bad faith. This is the price exacted by the
same provision of the Civil Code for the second buyer to be able to displace the first
buyer; before the second buyer can obtain priority over the first, he must show that he
acted in good faith throughout (i.e. ignorance of the first sale and of the first buyers
rights) from the time of acquisition until the title is transferred to him by registration, or,
failing registration, by delivery of possession.
Per records, the sale of the disputed 620 square-meter portion of Lot 840 to respondent
INC was made on December 21, 1954 and registered with the Registry of Deeds of
Pangasinan on January 5, 1955. In fact, INC was issued a title over the same portion on
September 23, 1975. On the other hand, the conveyance to the spouses Samuel Ulep and
Susana Repogia-Ulep happened on January 18, 1971 and the spouses registered their
document of conveyance only on February 22,
1973.http://www.lawphil.net/judjuris/juri2005/oct2005/gr_125254_2005.html - fnt14
Clearly, not only was respondent INC the first buyer of the disputed area. It was also the
first to register the sale in its favor long before petitioners Samuels and Susanas
intrusion as second buyers. Although Samuel and Susana thereafter registered the sale
made to them, they did so only after 18 years from the time INC caused the registration
of its own document of sale.
Here, the spouses Samuel Ulep and Susana Ulep were fully aware, or could have been, if
they had chosen to inquire, of the rights of INC under the deed of sale duly annotated on
the common title of the spouses Atinedoro Ulep and Beatriz Ulep and Valentina Ulep.
Verily, the sale to INC should prevail over the sale made to spouses Samuel and Susana
because INC was the first registrant in good faith.

DOUBLE SALE
Aitken v La O.
L-11198, March 20, 1917
J. Carson
Facts:
Chinaman named To Jan Co erected a store building on a parcel of land belonging to
Apolonia Remigio, under an agreement whereby one-half of the rents were to go to her
and one-half to To Jan Co; that the owner of the land, nor having received the rents
agreed upon, instituted an action on September 21, 1908, against To Jan Co and one of
the occupants of the building to recover these rents; that judgment having been rendered
in her favor in the sum of P3,425, execution issued and thereafter the house was
purchased by the judgment creditor, Apolonia Remigio, at the sheriff's sale on February
11, 1910, had under authority of the execution; that she took possession forthwith.
October 6, 1908 To Jan Co executed an unregistered deed of sale of the house in question
to another Chinaman named To Cun, reserving therein the right to repurchase within
ninety days; that this right was never exercised. On October 22, 1912, To Cun (the second
Chinaman) executed an unregistered deed of sale of the house to the plaintiff in this
action, who, on June 9, 1915, instituted these proceedings wherein he prays a judgment
for possession of the house, and for an accounting of the rentals collected thereon since
the first days of September, 1908, alleging that his one-half share of these rentals
amounts to P2,485. The defendant in this action is the administrator of the estate of
Apolonia Remigio deceased, and as such is now in possession of the house and the land
upon which it stands.
Issue: Whether or not Aitken is the rightful owner of the house/building.
Held:
First, it must be stressed that the sale of the building to To Cun and the latter sale of same
by To Cun to the plaintiff cannot be upheld because To Jan Co, the original vendor, had
no right to sell it to To Cun after having lost the right to do so during the foreclosure of
the property, and the latter had no right to make the sale to Aitken. To Cun acquired no
right in the building; consequently he could convey nothing to the purchaser.
Second, the Civil Code provides that:
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 faith, if it
should be personal property.
Should it be real property, it shall belong to the person acquiring it who first recorded it in
the registry.
Should there be no entry, the property shall belong to the person who first took
possession of it in good faith, and, in the absence thereof, to the person who presents the
oldest title, provided there is good faith.
Granting, for the sake of argument, that the sale from To Jan Co to To Cun was a valid
and binding transaction, it is evident that the house has been sold as his property to two

different vendees, and the sale To Cun not having been recorded in the registry, the
property belongs to the estate of Apolonia Remigio, the purchaser who first took
possession in good faith.
Premiere Development Bank v. CA
GR No. 128122 March 18, 2005
Doctrine: where the certificate of title is in the name of the seller or mortgagor, the
innocent purchaser or mortgagee for value has the right to rely on what appears on the
certificate without inquiring further in the absence of anything to excite or arouse
suspicion, or except when the party concerned has actual knowledge of facts or
circumstances that should impel a reasonably cautious person to make such further
inquiry.
Facts: Two (2) different persons with exactly the same name, i.e., Vicente T. Garaygay,
each claimed exclusive ownership of Lot 23 by virtue of an owners duplicate certificate
each had possession of during the period material covering said lot. One held TCT No.
9780, supra, and the other, TCT No. 9780 (693), supra. The technical description of the
land appearing in one copy corresponds exactly with that in the other. The date "June 14,
1944" appears on the face of both copies as a common date of entry. One, however,
contained certain features, markings, and/or entries not found in the other and vice versa.
On April 17, 1979, one of the two Vicente T. Garaygays, a resident of Cebu City
(hereinafter referred to as Garaygay of Cebu), executed a deed of sale over the lot
described in and covered by his TCT No. 9780 (693) in favor of his nephew, Joselito P.
Garaygay ("Joselito", hereinafter). The sale notwithstanding, the owners duplicate
certificate remained for some time in the sellers possession.
In another transaction, the other Vicente T. Garaygay, a resident of Rizal (hereinafter
referred to as Garaygay of Rizal), sold to Liberto G. Yambao and Jesus B. Rodriguez the
same property described in TCT 9780. "YCM Compound, Angono, Rizal" is set out in
the February 11, 1986 conveying deed as the sellers residence. Buyers Yambao and
Rodriquez would later sell a portion of their undivided interests on the land to Jesus D.
Morales.
Then came the June 11, 1988 fire that gutted a portion of the Quezon City hall and
destroyed in the process the original copy of TCT No. 9780 (693) on file with the
Registry of Deeds of Quezon City. Barely a month later, a certain Engr. Hobre filed an
application, signed by Garaygay of Cebu, for the reconstitution of the burned original on
the basis of the latters owners duplicate certificate. One Engr. Felino Cortez of the Land
Registration Authority (LRA) did the follow-up on the application. After due
proceedings, the LRA issued an order of reconstitution, by virtue of which Garaygay of
Cebu acquired reconstituted TCT No. RT-1764 (9780) (693).
Meanwhile, or on May 26, 1989, the deed of sale executed by Garaygay of Cebu in favor
of his nephew Joselito was registered, paving the issuance in the latters name of TCT
No. 12183.9 Thereafter, thru the efforts of same Engr. Cortez,10 Lot 23 was subdivided
into three (3) lots, namely: Lot 23-A, Lot 23-B and Lot 23-C for which TCT Nos. 14414,

14415 and 14416, respectively,11 were issued. Joselito posthaste sold Lot 23-A to Lilian
Toundjis who, pursuant to a Contract to Sell executed on March 23, 1990,12 undertook to
pay Joselito the P.5 Million balance of the P2.5 Million purchase price once she is placed
in possession of a fenced-off property. And, for shares of stock, Joselito assigned on
February 26, 1991, the other two (2) lots, i.e., Lot 23-B and Lot 23-C to Century Realty
and Development Corporation ("Century Realty") which, after securing TCT Nos. 34390
and 34391 therefor, mortgaged13 the same to Premiere Development Bank, Inc.
("Premiere Bank") to secure a P2.5 Million loan.
Clashing claims of ownership first came to a head when, sometime in May 1990,
Liberato G. Yambao and his agents forcibly prevented Joselitos hired hands from
concrete-fencing the subject property. The police and eventually the National Bureau of
Investigation (NBI) entered into the picture.
In the meantime, Yambao, Rodriquez and Morales as pro indiviso buyers of Lot No. 23,
caused the annotation on December 17, 1990, January 16, 1991 and February 15, 1991 of
their respective adverse claims on Joselitos TCT Nos. 14414, 14415 and 14416. They
then filed with the Regional Trial Court at Quezon City suit against Joselito, Century
Realty and Premiere Bank for quieting of title and annulment of said defendants fake
titles with prayer for damages.
Issue: whether or not Toundjis be considered, as she has claimed, an innocent purchaser
for value, meaning one who buys or acquires, for valuable consideration, a piece of land
of another without notice that some other person has a right to, or interest in, such
property at the time of purchase, or before he has notice of the claim or interest of some
other persons in the property.
Held: The rule that a subsequent declaration of a title as null and void is not a ground for
nullifying the contractual right of a purchaser, mortgagee or other transferees in good
faith, with the exceptions thereto, is well-settled. Where the certificate of title is in the
name of the seller or mortgagor, the innocent purchaser or mortgagee for value has the
right to rely on what appears on the certificate without inquiring further. In the absence of
anything to excite or arouse suspicion, or except when the party concerned had actual
knowledge of facts or circumstances that should impel a reasonably cautious person to
make such further inquiry, said purchaser or mortgagee is without obligation to look
beyond the certificate and investigate the title of the seller or mortgagor. Thus, where
innocent third persons, relying on the correctness of the certificate, acquire rights over the
property as buyer or mortgagee, the subsequent declaration of nullity of title is not a
ground for nullifying the right of such buyer or mortgagee.
A study of the record shows that TCT 14414 covering Lot. 23-A that Toundjis contracted
to buy from Joselito carried an annotation that it was administratively reconstituted.
Records also indicate that Toundjis knew at the time of the sale that Joselito did not have
possession of the lot inasmuch as she agreed to pay the balance of the purchase price as
soon as the seller can fence off the property and surrender physical possession thereof to
her.
Even for these two (2) reasons alone, which should have placed Toundjis on guard
respecting Joselitos title, her claim of being a bona fide purchaser for value must fail.

The rejection, therefore, by the Court of Appeals of such claim is correct. Likewise
acceptable is the appellate courts holding, citing Republic vs. Court of Appeals, that a
purchaser of a property cannot be in good faith where the title thereof shows that it was
reconstituted. Noted with approval, too, is the appellate courts observation that the
"contract to sell (Exh. "44") which is unregistered and not annotated at the back of the
title of the property [cannot adversely affect appellees]" for the reason that under "Sec. 51
of PD 1529 (Property Registration Act), the act of registration shall be the operative act
to convey or affect the land in so far (sic) as third parties are concerned."
Premiere Bank cannot also be accorded the status of an innocent mortgagee for value vis-vis the mortgage of the lots covered by TCT Nos. 34390 and 34391 constituted in its
favor by Century Realty.
Sigaya v. Mayuga
GR. No. 143254 August 18, 2005
Facts: Dionisia Alorsabes owned a three hectare land in Dao, Capiz, denominated as Lot
3603. In 1934, she sold a portion of the lot to Juanito Fuentes while the remainder was
inherited by her children Paz Dela Cruz, Rosela Dela Cruz, and Consorcia Arroja (an
adopted child), and a grandson, Francisco Abas, in representation of his deceased mother
Margarita Dela Cruz. These four heirs executed an Extra-Judicial Settlement with Sale
dated February 4, 1964 wherein Consorcia sold her share with an area of 6,694 square
meters to spouses Balleriano Mayuga. On April 1, 1977, Paz also sold her share to
Honorato de los Santos. Later, another document entitled Extra-Judicial Partition with
Deed of Sale dated November 2, 1972 was uncovered wherein the heirs of Dionisia
purportedly adjudicated Lot 3603 among themselves and sold their shares to Francisco.
On January 9, 1978, Francisco executed a Deed of Sale over Lot 3603 in favor of
Teodulfo Sigaya. Thus, the title over Lot 3603 was cancelled and a new one was issued
in the name of Teodulfo, predecessor-in-interest of the petitioners herein.
On October 14, 1986, the petitioners, who are the widow and children of Teodulfo, filed
Civil Case Nos. V-5325, V-5326, V-5327 and V-5328 for recovery of possession and
damages against Diomer Mayuga, Honorato de los Santos, Sps. Jose Viva and Rosela
Dela Cruz-Viva, and Renato Distor, respectively, before the Regional Trial Court (RTC)
of Roxas City, Branch 16, praying that respondents be ordered to vacate Lot 3603, and
turn over the same to petitioners; that petitioners right of ownership and possession over
the property be confirmed and that respondents be ordered to pay damages in the form of
unrealized income starting 1980, plus attorneys fees and costs.
Respondents in their answers with counterclaim averred that: the Deed of Sale executed
by Francisco in favor of Teodulfo and the title thereon are null and void for being based
on a fictitious Extra-Judicial Settlement with Sale; Rosela Dela Cruz-Viva and Paz Dela
Cruz, who are illiterates, were fraudulently made to sign as vendees in the Extra-Judicial
Settlement with Sale dated 1972, when Francisco represented that they were merely
signing as witnesses to the sale of Francisco of his share to Teodulfo. As counterclaim,
they asked for attorneys fees and damages.

Respondent Mayuga further asserted that he possesses his portion of the property by
virtue of the sale by Consorcia Arroja of her share to his parents, Sps. Balleriano Mayuga.
Respondent de los Santos meanwhile averred that Paz Dela Cruz sold her share to him in
1957. Respondents Rosela Dela Cruz-Viva and her husband Jose Viva claimed that the
portion of land occupied by them pertains to Roselas share which she inherited from
Dionisia, while respondent Renato Distor claimed that his wife inherited said property
from her father Juanito Fuentes, who in turn bought the same from Dionisia during her
lifetime.
Issue: Whether or not the rule on double sale of real property should apply in this case
since they are the first to register the sale in good faith
Held: No. Apart from the fact that Teodulfo is not a purchaser in good faith, the law on
double sales as provided in Art. 1544 of the Civil Code contemplates a situation where a
single vendor sold one and the same immovable property to two or more buyers. For the
rule to apply, it is necessary that the conveyance must have been made by a party who has
an existing right in the thing and the power to dispose it. The rule cannot be invoked
where the two different contracts of sale are made by two different persons, one of them
not being the owner of the property sold. In this case, respondents derive their right over
their respective portions either through inheritance or sale from Dionisia while
petitioners invoke their right from the sale of the land from Francisco. Clearly, the law
on double sales does not apply here.
NORKIS DISTRIBUTORS vs. CA and Nepales
FACTS:
Petitioner Norkis Distributors, Inc, is the distributor of Yamaha motorcycles in Negros
Occidental with Avelino Labajo as its Branch Manager. On September 20, 1979, private
respondent Alberto Nepales bought from the Norkis-Bacolod branch a brand new Yamaha
Wonderbike motorcycle.
The price of P7,500.00 was payable by means of a Letter of Guaranty from the
Development Bank of the Philippines (DBP), which Norkis' Branch Manager Labajo
agreed to accept. Hence, credit was extended to Nepales for the price of the motorcycle
payable by DBP upon release of his motorcycle loan. As security for the loan, Nepales
would execute a chattel mortgage on the motorcycle in favor of DBP.
On November 6, 1979, the motorcycle was registered in the Land Transportation
Commission in the name of Alberto Nepales. A registration certificate in his name was
issued by the Land Transportation Commission on November 6, 197. The registration
fees were paid by him, evidenced by an official receipt.
On January 22, 1980, the motorcycle was delivered to a certain Julian Nepales who was
allegedly the agent of Alberto Nepales but the latter denies it. The record shows that
Alberto and Julian Nepales presented the unit to DBP's Appraiser-Investigator Ernesto
Arriesta.
The motorcycle met an accident on February 3, 1980 at Binalbagan, Negros Occidental.
An investigation conducted by the DBP revealed that the unit was being driven by a
certain Zacarias Payba at the time of the accident. The unit was a total wreck and was
returned, and stored inside Norkis' warehouse.

On March 20, 1980, DBP released the proceeds of private respondent's motorcycle loan
to Norkis in the total sum of P7,500. As the price of the motorcycle later increased to
P7,828 in March, 1980, Nepales paid the difference of P328 and demanded the delivery
of the motorcycle. When Norkis could not deliver, he filed an action for specific
performance with damages against Norkis in the Regional Trial Court.
Norkis answered that the motorcycle had already been delivered to private respondent
before the accident, hence, the risk of loss or damage had to be borne by him as owner of
the unit
ISSUE:
Whether there has been a transfer of ownership to Nepales at the time it was destroyed
HELD:
In all forms of delivery, it is necessary that the act of delivery whether constructive or
actual, be coupled with the intention of delivering the thing. The act, without the
intention, is insufficient.
When the motorcycle was registered by Norkis in the name of private respondent, Norkis
did not intend yet to transfer the title or ownership to Nepales, but only to facilitate the
execution of a chattel mortgage in favor of the DBP for the release of the buyer's
motorcycle loan.
In other words, the critical factor in the different modes of effecting delivery, which gives
legal effect to the act, is the actual intention of the vendor to deliver, and its acceptance
by the vendee. Without that intention, there is no tradition

PHIL SUBURBAN DEVT CORP vs. AUDITOR GENERAL

FACTS:
The President of the Philippines, approved in principle the acquisition by the People's
Homesite and Housing Corporation (PHHC) of the unoccupied portion of the Sapang
Palay Estate in Sta. Maria, Bulacan for relocating the squatters who desire to settle north
of Manila, and of another area either in Las Pias or Paraaque, Rizal, or Bacoor, Cavite
for those who desire to settle south of Manila. The project was to be financed through the
flotation of bonds under the charter of the PHHC in the amount of P4.5 million, the same
to be absorbed by the Government Service Insurance System.
On June 10, 1960, the Board of Directors of the PHHC passed Resolution No. 700
authorizing the purchase of the unoccupied portion of the Sapang Palay Estate at P0.45
per square meter
On December 29,1960, after an exchange of communications, Petitioner Philippine
Suburban Development Corporation, as owner of the unoccupied portion of the Sapang
Palay Estate (specifically two parcels covered by TCT Nos. T-23807 and T-23808), and

the People's Homesite and Housing Corporation, entered into a contract embodied in a
public instrument entitled "Deed of Absolute Sale"
The document was not registered in the Office of the Register of Deeds until March 14,
1961, due to the fact, petitioner claims, that the PHHC could not at once advance the
money needed for registration expenses. In the meantime, the Auditor General, to whom
a copy of the contract had been submitted for approval in conformity with Executive
Order No. 290, expressed objections thereto and requested a re-examination of the
contract, in view of the fact that from 1948 to December 20, 1960, the entire hacienda
was assessed at P131,590.00, and reassessed beginning December 21, 1960 in the greatly
increased amount of P4,898,110.00. Said objections were embodied in a letter to the
President, dated January 9, 1961, but this notwithstanding, the President, through the
Executive Secretary, approved the Deed of Absolute Sale on February 1, 1961.
Prior to the signing of the deed by the parties, the PHHC acquired possession of the
property, with the consent of petitioner.
On April 12, 1961, the Provincial Treasurer of Bulacan requested the PHHC to withhold
the amount of P30,099.79 from the purchase price to be paid by it to the Philippine
Suburban Development Corporation. Said amount represented the realty tax due on the
property involved for the calendar year 1961
Petitioner, through the PHHC, paid under protest the abovementioned amount to the
Provincial Treasurer of Bulacan and thereafter, or on June 13, 1961, by letter, requested
then Secretary of Finance Dominador Aytona to order a refund of the amount so paid.
Petitioner claimed that it ceased to be the owner of the land in question upon the
execution of the Deed of Absolute Sale on December 29, 1960. Upon recommendation of
the Provincial Treasurer of Bulacan, said request was denied by the Secretary of Finance
in a letter-decision dated August 22, 1961.
ISSUE
Whether there was already a valid transfer of ownership between the parties.
HELD:
Considering the aforementioned approval and authorization by the President of the
Philippines of the specific transaction in question, the prior approval by the Auditor
General envisioned by Administrative Order would therefore, not be necessary.
Under the civil law, delivery (tradition) as a mode of transmission of ownership maybe
actual (real tradition) or constructive (constructive tradition). 2 When the sale of real
property is made in a public instrument, the execution thereof is equivalent to the
delivery of the thing object of the contract, if from the deed the contrary does not appear
or cannot clearly be inferred. 3
In other words, there is symbolic delivery of the property subject of the sale by the
execution of the public instrument, unless from the express terms of the instrument, or by
clear inference therefrom, this was not the intention of the parties. Such would be the
case, for instance, when a certain date is fixed for the purchaser to take possession of the
property subject of the conveyance, or where, in case of sale by installments, it is
stipulated that until the last installment is made, the title to the property should remain
with the vendor, or when the vendor reserves the right to use and enjoy the properties
until the gathering of the pending crops, or where the vendor has no control over the

thing sold at the moment of the sale, and, therefore, its material delivery could not have
been made.
In the case at bar, there is no question that the vendor had actually placed the vendee in
possession and control over the thing sold, even before the date of the sale. The condition
that petitioner should first register the deed of sale and secure a new title in the name of
the vendee before the latter shall pay the balance of the purchase price, did not preclude
the transmission of ownership. In the absence of an express stipulation to the contrary, the
payment of the purchase price of the good is not a condition, precedent to the transfer of
title to the buyer, but title passes by the delivery of the goods.
[G.R. No. 132161. January 17, 2005]
CONSOLIDATED RURAL BANK (CAGAYAN VALLEY), INC., petitioner, vs. THE
HONORABLE COURT OF APPEALS and HEIRS OF TEODORO DELA CRUZ,
respondents.
Facts:
Rizal, Anselmo, Gregorio, Filomeno and Domingo, all surnamed Madrid (hereafter the
Madrid brothers), were the registered owners of Lot No. 7036-A of plan Psd-10188,
Cadastral Survey 211, situated in San Mateo, Isabela. On 23 and 24 October 1956, Lot
No. 7036-A was subdivided into several lots under subdivision plan Psd- 50390. One of
the resulting subdivision lots was Lot No. 7036-A-7 with an area of Five Thousand Nine
Hundred Fifty-Eight (5,958) square meters. On 15 August 1957, Rizal Madrid sold part
of his share identified as Lot No. 7036-A-7, to Aleja Gamiao (hereafter Gamiao) and
Felisa Dayag (hereafter, Dayag) by virtue of a Deed of Sale, to which his brothers
Anselmo, Gregorio, Filomeno and Domingo offered no objection. On 28 May 1964,
Gamiao and Dayag sold the southern half of Lot No. 7036-A-7, denominated as Lot No.
7036-A-7-B, to Teodoro dela Cruz,[10] and the northern half, identified as Lot No. 7036A-7-A,[11] to Restituto Hernandez. Later, on 28 December 1986, Restituto Hernandez
donated the northern half to his daughter, Evangeline Hernandez-del Rosario.[14] The
children of Teodoro dela Cruz continued possession of the southern half after their
fathers death on 7 June 1970.
In a Deed of Sale[15] dated 15 June 1976, the Madrid brothers conveyed all their rights
and interests over Lot No. 7036-A-7 to Pacifico Marquez (hereafter, Marquez), which the
former confirmed[16] on 28 February 1983. Subsequently, Marquez subdivided Lot No.
7036-A-7 into eight (8) lots, namely: Lot Nos. 7036-A-7-A to 7036-A-7-H, for which
TCT Nos. T-149375 to T-149382 were issued to him on 29 March 1984.[19] On the same
date, Marquez and his spouse, Mercedita Mariana, mortgaged Lots Nos. 7036-A-7-A to
7036-A-7-D to the Consolidated Rural Bank, Inc. of Cagayan Valley (hereafter, CRB) to
secure a loan of One Hundred Thousand Pesos (P100,000.00).[20] These deeds of real
estate mortgage were registered with the Office of the Register of Deeds on 2 April 1984.
On 6 February 1985, Marquez mortgaged Lot No. 7036-A-7-E likewise to the Rural
Bank of Cauayan (RBC) to secure a loan of Ten Thousand Pesos (P10,000.00).[21]

As Marquez defaulted in the payment of his loan, CRB caused the foreclosure of the
mortgages in its favor and the lots were sold to it as the highest bidder on 25 April 1986.
[22]
On 31 October 1985, Marquez sold Lot No. 7036-A-7-G to Romeo Calixto (Calixto).[23]
Claiming to be null and void the issuance of TCT Nos. T-149375 to T-149382; the
foreclosure sale of Lot Nos. 7036-A-7-A to 7036-A-7-D; the mortgage to RBC; and the
sale to Calixto, the Heirsnow respondents hereinrepresented by Edronel dela Cruz, filed a
case[24] for reconveyance and damages the southern portion of Lot No. 7036-A
(hereafter, the subject property) against Marquez, Calixto, RBC and CRB in December
1986. Marquez, as defendant, alleged that apart from being the first registrant, he was a
buyer in good faith and for value. He also argued that the sale executed by Rizal Madrid
to Gamiao and Dayag was not binding upon him, it being unregistered. For his part,
Calixto manifested that he had no interest in the subject property as he ceased to be the
owner thereof, the same having been reacquired by defendant Marque. CRB, as
defendant, and co-defendant RBC insisted that they were mortgagees in good faith and
that they had the right to rely on the titles of Marquez which were free from any lien or
encumbrance.
Petitioner CRB, in essence, alleges that the Court of Appeals committed serious error of
law in upholding the Heirs ownership claim over the subject property considering that
there was no finding that they acted in good faith in taking possession thereof nor was
there proof that the first buyers, Gamiao and Dayag, ever took possession of the subject
property. CRB also makes issue of the fact that the sale to Gamiao and Dayag was
confirmed a day ahead of the actual sale, clearly evincing bad faith, it adds. Further, CRB
asserts Marquezs right over the property being its registered owner.
Issue: Won the Heirs of Teodoro dela Cruz have a better title than CRB?
HELD:
Article 1544 is not applicable in the present case. It contemplates a case of double or
multiple sales by a single vendor. More specifically, it covers a situation where a single
vendor sold one and the same immovable property to two or more buyers.
In a situation where not all the requisites are present which would warrant the application
of Art. 1544, the principle of prior tempore, potior jure or simply he who is first in time
is preferred in right,[50] should apply.[51] The only essential requisite of this rule is
priority in time; in other words, the only one who can invoke this is the first vendee.
Undisputedly, he is a purchaser in good faith because at the time he bought the real
property, there was still no sale to a second vendee.[52] In the instant case, the sale to the
Heirs by Gamiao and Dayag, who first bought it from Rizal Madrid, was anterior to the
sale by the Madrid brothers to Marquez. The Heirs also had possessed the subject
property first in time. Thus, applying the principle, the Heirs, without a scintilla of doubt,
have a superior right to the subject property.
Moreover, it is an established principle that no one can give what one does not
havenemo dat quod non habet. Accordingly, one can sell only what one owns or is
authorized to sell, and the buyer can acquire no more than what the seller can transfer

legally.[53] In this case, since the Madrid brothers were no longer the owners of the
subject property at the time of the sale to Marquez, the latter did not acquire any right to
it.
In any event, assuming arguendo that Article 1544 applies to the present case, the claim
of Marquez still cannot prevail over the right of the Heirs since according to the evidence
he was not a purchaser and registrant in good faith.
Following Article 1544, in the double sale of an immovable, the rules of preference are:
(a) the first registrant in good faith; (b) should there be no entry, the first in possession in
good faith; and (c) in the absence thereof, the buyer who presents the oldest title in good
faith. [54]
Prior registration of the subject property does not by itself confer ownership or a better
right over the property. Article 1544 requires that before the second buyer can obtain
priority over the first, he must show that he acted in good faith throughout (i.e., in
ignorance of the first sale and of the first buyers rights)from the time of acquisition
until the title is transferred to him by registration or failing registration, by delivery of
possession.[55]
In the instant case, the actions of Marquez have not satisfied the requirement of good
faith from the time of the purchase of the subject property to the time of registration.
Found by the Court of Appeals, Marquez knew at the time of the sale that the subject
property was being claimed or taken by the Heirs. This was a detail which could
indicate a defect in the vendors title which he failed to inquire into. Marquez also
admitted that he did not take possession of the property and at the time he testified he did
not even know who was in possession.
One who purchases real property which is in actual possession of others should, at least,
make some inquiry concerning the rights of those in possession. The actual possession
by people other than the vendor should, at least, put the purchaser upon inquiry. He can
scarcely, in the absence of such inquiry, be regarded as a bona fidepurchaser as against
such possessions.[58] The rule of caveat emptor requires the purchaser to be aware of the
supposed title of the vendor and one who buys without checking the vendors title takes
all the risks and losses consequent to such failure.[59]
WHEREFORE, the Petition is DENIED.
Heirs of Jesus Mascunana v. CA
Facts:
Masunana bought a parcel of land from the Wuthrich siblings. Part of which Mascunana,
he later sold to Sumilhig. The contract price is 4,690 with 3,690 as down payment. Their
agreement says, That the balance of ONE THOUSAND PESOS (P1,000.00) shall be paid
by the VENDEE unto the VENDOR as soon as the above-portions of Lot 124 shall have
been surveyed in the name of the VENDEE and all papers pertinent and necessary to the
issuance of a separate Certificate of Title in the name of the VENDEE shall have been
prepared. Sumilhig later sold the same lot to Layumas. Years after, Layumas wrote to the

heirs of Mascunana offering to pay the 1,000 balance of the purchase price of the
property. The addressee, however, refused to receive the mail matter. Heirs Mascunana
then filed a complaint for recovery of possession against Barte.
Issue:
Whether or not the contract of alienation of the subject lot in favor of Sumilhig was a
contract to sell or a contract of sale.
Held:
It is a contract of sale. Article 1458 of the New Civil Code provides: By the contract of
sale, one of the contracting parties obligates himself to transfer the ownership of and to
deliver a determinate thing, and the other to pay therefor a price certain in money or its
equivalent. A contract of sale may be absolute or conditional. Thus, there are three
essential elements of sale,. consent or meeting of the minds, that is, consent to transfer
ownership in exchange for the price, determinate subject matter; and Price certain in
money or its equivalent. In this case, there was a meeting of the minds between the
vendor and the vendee, when the vendor undertook to deliver and transfer ownership over
the property covered by the deed of absolute sale to the vendee for the price of P4,690.00
of which P3,690.00 was paid by the vendee to the vendor as down payment. The vendor
undertook to have the property sold, surveyed and segregated and a separate title therefor
issued in the name of the vendee, upon which the latter would be obliged to pay the
balance of P1,000.00. There was no stipulation in the deed that the title to the property
remained with the vendor, or that the right to unilaterally resolve the contract upon the
buyers failure to pay within a fixed period was given to such vendor. Patently, the
contract executed by the parties is a deed of sale and not a contract to sell.
Salinas vs Faustino
Facts: Respondent Bienvenido S. Faustino by a Deed of Absolute Sale dated June 27,
1962, purchased from his several co-heirs, including his first cousins Benjamin Salinas
and herein petitioner Dolores Salinas, their respective shares to a parcel of land in the
name of their grandmother Carmen Labitan, located in Subic, Zambales. On March 15,
1982, respondent Faustino, joined by his wife, filed before the then Court of First
Instance of Zambales a complaint for recovery of possession with damages against
petitioner. Respondent spouses further alleged that they allowed petitioner and co-heirs to
occupy and build a house on a portion of the land on the condition that they would
voluntarily and immediately remove the house and vacate that portion of the land should
the respondents need the land. When they asked petitioner and her co-heir-occupants to
remove the house and restore the possession of the immediately-described portion of the
land, they refused, hence, the filing of the complaint. Petitioner claimed that she is the
owner of that portion of the land and alleges that her signature in the June 27, 1962 Deed
of Sale is forged. The RTC found petitioner's claim of forgery unsupported. It
nevertheless dismissed the complaint. The boundaries of the land indicated in the Deed of
Sale are different from that of which is claimed by the respondents. Even the tax
declaration submitted by the plaintiff indicates different boundaries with that of the land
indicated in the Deed of Sale.
ISSUE: Whether or not a description of a lot area can be used as evidence for purchase
and ownership of the lot.

RULING: Ina contract of sale of land in a mass, the specific boundaries stated in the
contract must control over any statement with respect to the area contained within its
boundaries. Thus, it is the boundaries indicated in a deed of absolute sale, and not the
area in sq. m. mentioned therein 300.375 sq.m. in the Deed of Sale in respondents favor
that control in the determination of which portion of the land a vendee acquires. In
concluding that Faustino acquired via the June 27, 1962 Deed of Sale the total land area
of 753 sq. m., the Court of Appeals subtracted from the total land area of 1,381 sq. m.
reflected in Exh. A, which is Plan of Lot 3, Block 5-k, Psd-8268, as prepared for
Benjamin R. Salinas containing an area of 1,381 sq. m. and which was prepared on
February 10, 1960 by a private land surveyor, the 628 sq. m. area of the lot claimed by
Salinas as reflected in Tax Declaration No. 1017 in her name. As will be shown shortly,
however, the basis of the appellate courts conclusion is erroneous. As the immediately
preceding paragraph reflects, the Plan of Lot 3, Bk 5-K, Psd-82 was prepared for Spouses
Faustino and Salinas first cousin co-heir Benjamin Salinas on February 10, 1960. Why
the appellate court, after excluding the 628 sq. m. lot covered by a Tax Declaration in the
name of petitioner from the 1,381 sq. m. lot surveyed for Benjamin P. Salinas in 1960,
concluded that what was sold via the 1962 Deed of Sale to respondent Faustino was the
remaining 753 sq. m., despite the clear provision of said Deed of Sale that what was
conveyed was 300.375 sq. m., escapes comprehension. It defies logic, given that
respondents base their claim of ownership of the questioned 628 sq. m. occupied by
Salinas on that June 27, 1962 Deed of Sale covering a 300.375 sq. m. lot. The Court of
Appeals thus doubly erred in concluding that 1) what was sold to respondents via the
June 27, 1962 Deed of Sale was the 1,381 sq. m. parcel of land reflected in the Plan-Exh.
A prepared in 1960 for Benjamin Salinas, and 2) Salinas occupied 628 sq. m. portion
thereof, hence, Spouses Faustino own the remaining 753 sq. m.
De Leon vs. Benita T. Ong
GR No. 170405, Feb. 2, 2010
Absolute and Conditional Sales
Facts: On March 10, 1993, Raymundo S. De Leon (petitioner) sold 3 parcels of land to
Benita T. Ong (respondent). The said properties were mortgaged to a financial institution;
Real Savings & Loan Association Inc. (RSLAI). The parties then executed a notarized
deed of absolute sale with assumption of mortgage. As indicated in the deed of mortgage,
the parties stipulated that the petitioner (de leon) shall execute a deed of assumption of
mortgage in favor of Ong (respondent) after full payment of the P415,000. They also
agreed that the respondent (Ong) shall assume the mortgage. The respondent then
subsequently gave petitioner P415,000 as partial payment. On the other hand, de leon
handed the keys to Ong and de leon wrote a letter to inform RSLAI that the mortgage
will be assumed by Ong. Thereafter, the respondent took repairs and made improvements
in the properties. Subsequently, respondent learned that the same properties were sold to
a certain Viloria after March 10, 1993 and changed the locks, rendering the keys given to
her useless. Respondent proceeded to RSLAI but she was informed that the mortgage has
been fully paid and that the titles have been given to the said person. Respondent then
filed a complaint for specific performance and declaration of nullity of the second sale

and damages. The petitioner contended that respondent does not have a cause of action
against him because the sale wassubject to a condition which requires the approval of
RSLAI of the mortgage. Petitioner reiterated that they only entered into a contract to sell.
The RTC dismissed the case. On appeal, the CA upheld the sale to respondent and
nullified the sale to Viloria. Petitioner moved for reconsideration to the SC.
Issue: Whether the parties entered into a contract of sale or a contract to sell.
Held: In a contract of sale, the seller conveys ownership of the property to the buyer upon
the perfection of the contract. The non-payment of the price is a negative resolutory
condition. Contract to sell is subject to a positive suspensive condition. The buyer does
not acquire ownership of the property until he fully pays the purchase price. In the
present case, the deed executed by the parties did not show that the owner intends to
reserve ownership of the properties. The terms and conditions affected only the manner
of payment and not the immediate transfer of ownership. It was clear that the owner
intended a sale because he unqualifiedly delivered and transferred ownership of the
properties to the respondent.
G.R. No. L-43059 October 11, 1979
SAMPAGUITA PICTURES, INC., plaintiff-appellant,
vs.
JALWINDOR MANUFACTURERS, INC., defendant-appellee.
FACTS:
Plaintiff-appellant Sampaguita Pictures, Inc, is the owner of the Sampaguita Pictures
Building located at the corner of General Araneta and General Roxas Streets, Cubao,
Quezon City. The roofdeck of the building and all existing improvements thereon were
leased by Sampaguita to Capitol "300" Inc., and it was agreed, among other things, that
the premises shall be used by Capitol for social purposes exclusively for its members and
guests; that all permanent improvements made by the lessee on the leased premises shall
belong to the lessor without any obligation on the part of the lessor to reimburse the
lessee for the sum spent for said improvements; that the improvements made by lessee
have been considered as part of the consideration of the monthly rental and said
improvements belong to the lessor; that any remodelling, alterations and/or addition to
the premises shall be at the expense of the lessee and such improvements belong to the
lessor, without any obligation to reimburse the lessee of any sum spent for said
improvements.
Capitol "300" purchased on credit from defendant-appellee Jalwindor Manufacturers, Inc.
(hereinafter referred to as Jalwindor) glass and wooden jalousies which were delivered
and installed in the leased premises by Jalwindor replacing the existing windows.
Jalwindor filed with action for collection of a sum of money with a petition for
preliminary attachment against Capitol for its failure to pay its purchases. The parties
submitted to the trial court a Compromise Agreement wherein Capitol acknowledged its
indebtedness to Jalwindor wherein all the materials purchased by Capitol will be
considered as security for such undertaking. Capitol likewise failed to comply with the
terms of the Compromise Agreement. Subsequently, the Sheriff of Quezon City made
levy on the glass and wooden jalousies in question. Sampaguita filed a third party claim

alleging that it is the owner of said materials and not Capitol, Jalwindor however, filed an
indemnity bond in favor of the Sheriff and the items were sold at public auction on
August 30, 1965 with Jalwindor as the highest bidder for P6,000.00.
Sampaguita filed with the Court of First Instance of Rizal, Branch IV of Quezon City, an
action to nullify the Sheriff's Sale and for the issuance of a writ of preliminary injunction
against Jalwindor from detaching the glass and wooden jalousies.
ISSUE:
Whether or not transfer of ownership to Capitol 300 was made upon the delivery of the
items in question.
HELD:
When the glass and wooden jalousies in question were delivered and installed in the
leased premises, Capitol became the owner thereof. Ownership is not transferred by
perfection of the contract but by delivery, either actual or constructive. This is true even if
the purchase has been made on credit, as in the case at bar. Payment of the purchase price
is not essential to the transfer of ownership as long as the property sold has been
delivered. Ownership is acquired from the moment the thing sold was delivered to
vendee, as when it is placed in his control and possession. (Arts. 1477, 1496 and 1497,
Civil Code of the Phil.) Capitol entered into a lease Contract with Sampaguita in 1964,
and the latter became the owner of the items in question by virtue of the agreement in
said contract "that all permanent improvements made by lessee shall belong to the lessor
and that said improvements have been considered as part of the monthly rentals." When
levy or said items was made on July 31, 1965, Capitol, the judgment debtor, was no
longer the owner thereof. The items in question were illegally levied upon since they do
not belong to the judgemnt debtor. Since the items already belong to Sampaguita and not
to Capitol, the judgment debtor, the levy and auction sale are, accordingly, null and void.
Toyota Shaw Inc. vs. Court of Appeals, and Sosa
244 SCRA 320
May 1995
FACTS:
Luna L. Sosa and his son, Gilbert, went to purchase a yellow Toyota Lite Ace from the
Toyota office at Shaw Boulevard, Pasig (petitioner Toyota) on June 14, 1989 where they
met Popong Bernardo who was a sales representative of said branch. Sosa emphasized
that he needed the car not later than June 17, 1989 because he, his family, and a
balikbayan guest would be using it on June 18 to go home to Marinduque where he will
celebrate his birthday on June 19. Bernardo assured Sosa that a unit would be ready for
pick up on June 17 at 10:00 in the morning, and signed the "Agreements Between Mr.
Sosa &Popong Bernardo of Toyota Shaw, Inc., a document which did not mention
anything about the full purchase price and the manner the installments were to be paid.
Sosa and Gilbert delivered the down payment of P100,000.00 on June 15, 1989 and
Bernardo accomplished a printed Vehicle Sales Proposal (VSP) No. 928 which showed
Sosas full name and home address, that payment is by "installment," to be financed by
"B.A.," and that the "BALANCE TO BE FINANCED" is "P274,137.00", but the spaces
provided for "Delivery Terms" were not filled-up.

When June 17 came, however, petitioner Toyota did not deliver the Lite Ace. Hence, Sosa
asked that his down payment be refunded and petitioner Toyota issued also on June 17 a
Far East Bank check for the full amount of P100,000.00, the receipt of which was shown
by a check voucher of Toyota, which Sosa signed with the reservation, "without prejudice
to our future claims for damages." Petitioner Toyota contended that the B.A. Finance
disapproved Sosas the credit financing application and further alleged that a particular
unit had already been reserved and earmarked for Sosa but could not be released due to
the uncertainty of payment of the balance of the purchase price. Toyota then gave Sosa
the option to purchase the unit by paying the full purchase price in cash but Sosa refused.
The trial court found that there was a valid perfected contract of sale between Sosa and
Toyota which bound the latter to deliver the vehicle and that Toyota acted in bad faith in
selling to another the unit already reserved for Sosa, and the Court of Appeals affirmed
the said decision.
ISSUE:
Was there a perfected contract of sale between respondent Sosa and petitioner Toyota?
COURT RULING:
The Supreme Court granted Toyotas petition and dismissed Sosas complaint for
damages because the document entitled Agreements Between Mr. Sosa &Popong
Bernardo of Toyota Shaw, Inc., was not a perfected contract of sale, but merely an
agreement between Mr. Sosa and Bernardo as private individuals and not between Mr.
Sosa and Toyota as parties to a contract.
There was no indication in the said document of any obligation on the part of Toyota to
transfer ownership of a determinate thing to Sosa and neither was there a correlative
obligation on the part of the latter to pay therefor a price certain. The provision on the
downpayment of P100,000.00 made no specific reference to a sale of a vehicle. If it was
intended for a contract of sale, it could only refer to a sale on installment basis, as VSP
No.928 executed on June 15, 1989 confirmed. The VSP also created no demandable right
in favor of Sosa for the delivery of the vehicle to him, and its non-delivery did not cause
any legally indemnifiable injury.

SPS. ALFREDO R. EDRADA and ROSELLA L. EDRADA vs. CARMENCITA

RAMOS, SPS. EDUARDO RAMOS
Facts:
Respondent
spouses Eduardo and Carmencita Ramos (respondents) are the owners of two (2) fishing
vessels, the "Lady Lalaine" and the "Lady Theresa." On 1 April 1996, respondents and
petitioners executed an untitled handwritten document which lies at the center of the
present controversy.
Upon the
signing of the document, petitioners delivered to respondents four (4) postdated Far East
Bank and Trust Company (FEBTC) checks payable to cash drawn by petitioner Rosella
Edrada, in various amounts totaling One Hundred Forty Thousand Pesos (P140,000.00).
The first three (3) checks were honored upon presentment to the drawee bank while the
fourth check for One Hundred Thousand Pesos (P100,000.00) was dishonored because of
a "stop payment" order.
On 3 June 1996, respondents filed an action against petitioners for specific performance
with damages before the RTC, praying that petitioners be obliged to execute the
necessary deed of sale of the two fishing vessels and to pay the balance of the purchase
price. In their Complaint,7 respondents alleged that petitioners contracted to buy the two
fishing vessels for the agreed purchase price of Nine Hundred Thousand Pesos
(P900,000.00), as evidenced by the above-quoted document, which according to them
evinced a contract to buy. However, despite delivery of said vessels and repeated oral
demands, petitioners failed to pay the balance, so respondents further averred.
Belying the allegations of respondents, in their Answer with Counterclaim,8petitioners
averred that the document sued upon merely embodies an agreement brought about by
the loans they extended to respondents. According to petitioners, respondents allowed
them to manage or administer the fishing vessels as a business on the understanding that
should they find the business profitable, the vessels would be sold to them for Nine
Hundred Thousand Pesos (P900,000.00). But petitioners "decided to call it quits" after
spending a hefty sum for the repair and maintenance of the vessels which were already in
dilapidated condition.
Issue:
Whether or
not there is a perfected contract of sale.
Held:
An
examination of the document reveals that there is no perfected contract of sale. The
agreement may confirm the receipt by respondents of the two vessels and their purchase
price. However, there is no equivocal agreement to transfer ownership of the vessel, but a
mere commitment that "documents pertaining to the sale and agreement of payments
[are] to follow." Evidently, the document or documents which would formalize the
transfer of ownership and contain the terms of payment of the purchase price, or the
period when such would become due and demandable, have yet to be executed. But no
such document was executed and no such terms were stipulated upon. The fact that there

is a stated total purchase price should not lead to the conclusion that a contract of sale had
been perfected.
A contract is perfected when there is concurrence of the wills of the contracting parties
with respect to the object and the cause of the contract. In this case, the agreement merely
acknowledges that a purchase price had been agreed on by the parties. There was no
mutual promise to buy on the part of petitioners and to sell on the part of respondents.
Again, the aforestated proviso in the agreement that documents pertaining to the sale and
agreement of payments between the parties will follow clearly manifests lack of
agreement between the parties as to the terms of the contract to sell, particularly the
object and cause of the contract.
The agreement in question does not create any obligatory force either for the transfer of
title of the vessels, or the rendition of payments as part of the purchase price. At most,
this agreement bares only their intention to enter into either a contract to sell or a contract
of sale.
Doctrine:
Before a
valid and binding contract of sale can exist, the manner of payment of the purchase price
must first be established, as such stands as essential to the validity of the sale. After all,
such agreement on the terms of payment is integral to the element of a price certain, such
that a disagreement on the manner of payment is tantamount to a failure to agree on the
price.
De Leon v Ong
Facts:
On March 10, 1993, petitioner Raymundo S. de Leon sold three parcels of land
with improvements situated in Antipolo, Rizal to respondent Benita T. Ong. As these
properties were mortgaged to Real Savings and Loan Association, Incorporated (RSLAI),
petitioner and respondent executed a notarized deed of absolute sale with assumption of
mortgage. Pursuant to this deed, respondent gave petitioner P415,500 as partial payment.
Petitioner, on the other hand, handed the keys to the properties and wrote a letter
informing RSLAI of the sale and authorizing it to accept payment from respondent and
release the certificates of title.
Subsequently, respondent learned that petitioner again sold the same properties to one
Leona Viloria after March 10, 1993 and changed the locks, rendering the keys he gave
her useless. Respondent thus proceeded to RSLAI to inquire about the credit
investigation. However, she was informed that petitioner had already paid the amount due
and had taken back the certificates of title.
On June 18, 1993, respondent filed a complaint for specific performance, declaration of
nullity of the second sale and damages against petitioner and Viloria, claiming that since
petitioner had previously sold the properties to her on March 10, 1993, he no longer had
the right to sell the same to Viloria. Thus, petitioner fraudulently deprived her of the
properties. Petitioner, on the other hand, claimed that since the transaction was subject to

a condition (i.e., that RSLAI approve the assumption of mortgage), they only entered into
a contract to sell. Inasmuch as respondent did apply for a loan from RSLAI, the condition
did not arise. Consequently, the sale was not perfected and he could freely dispose of the
properties.
Issue: Whether the parties entered into a contract of sale or a contract to sell.
Whether or
not there is double sale.
SALE. In a contract of sale, the seller conveys ownership of the property to the buyer
upon the perfection of the contract. Should the buyer default in the payment of the
purchase price, the seller may either sue for the collection thereof or have the contract
judicially resolved and set aside. The non-payment of the price is therefore a negative
resolutory condition. Whereas, a contract to sell is subject to a positive suspensive
condition. The buyer does not acquire ownership of the property until he fully pays the
purchase price. For this reason, if the buyer defaults in the payment thereof, the seller can
only sue for damages.
The deed executed by the parties stated that petitioner sold the properties to
respondent in a manner absolute and irrevocable for a sum of P1.1 million.[14]
Nothing in said instrument implied that petitioner reserved ownership of the properties
until the full payment of the purchase price.[17] The said terms and conditions pertained
to the performance of the contract, not the perfection thereof nor the transfer of
ownership.
Settled is the rule that the seller is obliged to transfer title over the properties and
deliver the same to the buyer.[18] In this regard, Article 1498 of the Civil Code[19]
provides that, as a rule, the execution of a notarized deed of sale is equivalent to the
delivery of a thing sold.
In this instance, petitioner executed a notarized deed of absolute sale in favor of
respondent. Moreover, not only did petitioner turn over the keys to the properties to
respondent, he also authorized RSLAI to receive payment from respondent and release
his certificates of title to her. The totality of petitioners acts clearly indicates that he had
unqualifiedly delivered and transferred ownership of the properties to respondent.
Clearly, it was a contract of sale the parties entered into.
Furthermore, the said condition was considered fulfilled as petitioner prevented its
fulfillment by paying his outstanding obligation and taking back the certificates of title
without even notifying respondent. Article 1186. The condition shall be deemed fulfilled
when the obligor voluntarily prevents its fulfillment.
VOID SALE OR DOUBLE SALE?
DOUBLE SALE as the disputed properties were sold validly on two separate occasions
by the same seller to the two different buyers in good faith.

Article 1544 of the Civil Code provides:

Article 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
faith, if it should be movable property.
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.
Should there be no inscription, the ownership shall pertain to the person who in
good faith was first in the possession; and, in the absence thereof, to the person who
presents the oldest title, provided there is good faith. (emphasis supplied)
This provision clearly states that the rules on double or multiple sales apply only to
purchasers in good faith. Needless to say, it disqualifies any purchaser in bad faith.
Respondent was not aware of any interest in or a claim on the properties other than the
mortgage to RSLAI which she undertook to assume. Moreover, Viloria bought the
properties from petitioner after the latter sold them to respondent. Respondent was
therefore a purchaser in good faith. Hence, the rules on double sale are applicable.
In this instance, petitioner delivered the properties to respondent when he executed the
notarized deed[22] and handed over to respondent the keys to the properties. For this
reason, respondent took actual possession and exercised control thereof by making
repairs and improvements thereon. Clearly, the sale was perfected and consummated on
March 10, 1993. Thus, respondent became the lawful owner of the properties.
Caram v Laureta
FACTS:
On June 10, 1945, Marcos Mata conveyed a large tract of agricultural land covered in
favor of Claro Laureta. The deed of absolute sale in favor of the plaintiff was not
registered because it was not acknowledged before a notary public or any other
authorized officer. At the time the sale was executed, there was no authorized officer
before whom the sale could be acknowledged inasmuch as the civil government in
Tagum, Davao was not as yet organized. However, the defendant Marcos Mata delivered
to Laureta the peaceful and lawful possession of the premises of the land together with
the pertinent papers thereof. Since June 10, 1945, the plaintiff Laureta had been and is
still in continuous, adverse and notorious occupation of said land, without being
molested, disturbed or stopped by any of the defendants or their representatives.
The same land was sold by Marcos Mata to defendant Fermin Z. Caram, Jr. The deed of
sale in favor of Caram was acknowledged. On May 22, 1947, Marcos Mata filed with the
Court of First Instance of Davao a petition for the issuance of a new Owner's Duplicate of
Original Certificate alleging as ground therefor the loss of said title in the evacuation

place of defendant Mata. The second sale between Marcos Mata and Fermin Caram, Jr.
was registered with the Register of Deeds and was issued in favor of Fermin Caram Jr. 5
On August 29, 1959, the defendants Marcos Mata and Codidi Mata filed their answer
alleging that he signed the same as he was subjected to duress, threat and intimidation for
the plaintiff was the commanding officer of the 10th division USFIP operating in the
unoccupied areas of Northern Davao
The petitioner assails the finding of the trial court that the second sale of the property was
made through his representatives, Pedro Irespe and Atty. Abelardo Aportadera. He argues
that Pedro Irespe was acting merely as a broker or intermediary with the specific task and
duty to pay Marcos Mata the sum of P1,000.00 for the latter's property and to see to it
that the requisite deed of sale covering the purchase was properly executed by Marcos
Mata; that the Identity of the property to be bought and the price of the purchase had
already been agreed upon by the parties; and that the other alleged representative, Atty.
Aportadera, merely acted as a notary public in the execution of the deed of sale.
ISSUE: Whether or not Caram is bound by the acts of his agents.
Whose is
the land?
Yes. The facts of record show that Mata, the vendor, and Caram, the second vendee had
never met. During the trial, Marcos Mata testified that he knows Atty. Aportadera but did
not know Caram. 12 Thus, the sale of the property could have only been through Caram's
representatives, Irespe and Aportadera.
Even if Irespe and Aportadera did not have actual knowledge of the first sale, still their
actions have not satisfied the requirement of good faith. Bad faith is not based solely on
the fact that a vendee had knowledge of the defect or lack of title of his vendor. One who
purchases real estate with knowledge of a defect or lack of title in his vendor cannot
claim that he has acquired title thereto in good faith.
In the instant case, Irespe and Aportadera had knowledge of circumstances which ought
to have put them an inquiry. Both of them knew that Mata's certificate of title together
with other papers pertaining to the land was taken by soldiers under the command of Col.
Claro L. Laureta. 16 Added to this is the fact that at the time of the second sale Laureta
was already in possession of the land. Irespe and Aportadera should have investigated the
nature of Laureta's possession. If they failed to exercise the ordinary care expected of a
buyer of real estate they must suffer the consequences. The rule of caveat emptor requires
the purchaser to be aware of the supposed title of the vendor and one who buys without
checking the vendor's title takes all the risks and losses consequent to such failure. 17
There is no doubt then that Irespe and Aportadera, acting as agents of Caram, purchased
the property of Mata in bad faith. Applying the principle of agency, Caram as principal,
should also be deemed to have acted in bad faith.
The first sale in favor of Laureta prevails over the sale in favor of Caram.
Article 1544 of the New Civil Code provides that:
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
faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it
who in good faith first recordered it in the Registry of Property.

Should there be no inscription, the ownership shag pertain to the person who in good
faith was first in the possession; and, in the absence thereof, to the person who presents
the oldest title, provided there is good faith. (1473)
Since Caram was a registrant in bad faith, the situation is as if there was no registration at
all. 19
The question to be determined now is, who was first in possession in good faith? A
possessor in good faith is one who is not aware that there exists in his title or mode of
acquisition any flaw which invalidates it. 20 Laureta was first in possession of the
property. He is also a possessor in good faith. It is true that Mata had alleged that the deed
of sale in favor of Laureta was procured by force. 21 Such defect, however, was cured
when, after the lapse of four years from the time the intimidation ceased, Marcos Mata
lost both his rights to file an action for annulment or to set up nullity of the contract as a
defense in an action to enforce the same.
Anent the fourth error assigned, the petitioner's conclusion that the second deed of sale, is
a voidable contract is not correct. A more important reason why Laureta's action could
not have prescribed is that the second contract of sale, having been registered in bad faith,
is null and void. Article 1410 of the Civil Code of the Philippines provides that any action
or defense for the declaration of the inexistence of a contract does not prescribe.
The fact that the second contract is not considered void under Article 1409 and that
Article 1544 does not declare void a deed of sale registered in bad faith does not mean
that said contract is not void. Article 1544 specifically provides who shall be the owner in
case of a double sale of an immovable property. To give full effect to this provision, the
status of the two contracts must be declared valid so that one vendee may contract must
be declared void to cut off all rights which may arise from said contract. Otherwise,
Article 1544 win be meaningless.
Sanchez vs Ramos
No. 13442 December 20, 1919
Plaintiff and appellant: Narcisa Sanchez
Defendant and appelle: Roque Ramos
Avancena, J.
Facts:
Ciriaco Fernandez owned a piece of land. On July 1, 1910 Fernandez
sold it to the spouses Marcelino Gomez and Narcisa Sanchez under a pacto
de retro for the period of one year. This sale was executed in a public
instrument. The spouses never took material possession of it. Period of
repurchase lapsed without Fernandez using it. On July 3, 1912, Fernandez
again sold the same land, by means of a private document to Roque Ramos
who immediately took material possession thereof. The trial court applied Art.
1473 of the Civil Code and declared preferable the sale executed to Roque
Ramos and absolved him from the complaint.
Issue:
Whether or not the sale executed to Roque Ramos is indeed preferable.
Held:

No, the sale executed to Roque Ramos is not preferable. The Court held
that preference must be made in favor of the vendee who first took
possession (par. 3 of Art 1473). The Court first explained that execution of a
public instrument is equivalent to delivery of the realty sold and its
possession by the vendee. Under these conditions the sale is considered
consummated and completely transfers to the vendee all of the vendors
rights of ownership including his real right over the things. The vendee by
virtue of this sale has acquired everything and nothing, absolutely nothing, is
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. xxx this means that after
the sale of a realty by means of a public instrument, the vendor, who resells
it to another, does not transmit anything to the second vendee and if the
latter, by virtue of this second sale, takes material possession of the thing, he
does it as mere detainer, and it would be unjust to protect this detention
against the rights to the thing lawfully acquired by the first vendee.
It does not matter that the spouses never took material possession of
the said land for the possession mentioned in Art. 1473 (for determining who
has a better right when the same piece of land has been sold several times
by the same vendor) includes not only the material but also the symbolic
possession, which is acquired by the execution of a public instrument. In
the instant case, the sale to the spouses was executed in a public instrument.
Plaintiff was the first to take possession of the land, and consequently
the sale execute to him is preferable.
Art 1473. 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 faith,if it should be personal property.
Should it be real property, it shall belong to the purchases who first
recorded it in the registry of deeds.
Should it not be recorded, the property shall belong to the person
who first took possession, to the person who presents the oldest title,
provided there is good faith.

Gabriel vs Mabanta
G.R. No. 142403
March 26, 2003
Petitioners: Alejandro Gabriel and Alfredo Gabriel
Respondents: Spouses Pablo Mabanta and Escolastica Colobong, Development Bank of
the Phils (DBP)&
Zenaida Tan-Reyes
Sandoval-Gutierrez, J.
Facts:
Spouses Mabanta were the registered owners of 2 lots located in Isabela with an
area of 512 sq. m (TCT No. 72705) and 15, 000 sq. m (TCT 72707). Spouses mortgaged
both lands with DBP as collateral for a loan of 14,000. September 1, 1980, the spouses

sold the lots to Susana Soriano by way of a Deed of Sale of Parcels of Land With
Assumption of Mortgage; this includes an agreement that the spouses can repurchase the
lots within 2 years. The spouses were not able to repurchase the lots, but in 1984 the
spouses were able to convince Alejandro Gabriel to purchase the land from Susana
Soriano. As consideration, Alejandro delivered to Susana a 500 sq. m. residential lot
(actual value of 40,000) and paid the spouses 5, 000. May 15, 1984, Spouses executed a
Deed of Sale with Assumption of Mortgage in favor of Alejandro while Susana
executed Cancellation of Contract. Alejandro then together with his son, Alfredo
cultivated the lots and restructured the spouses loan with DBP. However, when they were
about to pay the entire loan, they found that Benito and Pura Tan had paid it and the
mortage was already cancelled. August 15, 1985, Benito Tan together with a barangay
official tried to refund Alejandro the 5,000 he paid to the spouses. Alejandro refused
because Tan is unwilling to return the 500 sq. m. lot. Spouses Tan tried to eject Alejandro
from the 15, 000 sq. m. lot (TCT 72707). September 16, 1985, Alejandro and his son
filed with the RTC a complaint for specific performance, reconveyance and damages with
preliminary injunctions against respondents. (the land in question here is TCT 72707 or
the 15,000 sq m lot).
Additional facts discovered in the RTC:
-Zenaida Tan-Reyes (Tans daughter) is the one who bought the land from the spouses on
August 21, 1985. Zenaida contended the following:
-she is the registered owner of the lot (TCT 72707)
-purchased it in good faith and for value
-she paid the loan thats why the spuses executed Deed of Absolute Sale in her
favor
(TCT 72707 was cancelled TCT No. T-160391 was issued in her name)
Rulings:

RTC upheld Alejandro and his son

o
Declared the Deed of Absolute Sale (second sale) between spouses and Zenaida
NULL and VOID
o
Ground: Zenaida is not a buyer in good faith (Reason: Zenaida should have
investigated the land first before purchasing it)

CA affirmed but modified RTCs decision

o
Declared second sale valid (Reason: one dealing with registered land can just rely
on the correctness of certificate of title)
Issue:
Whether or not Zenaida Tan-Reyes acted in good faith when she purchased the
subject lot and had the sale registered.
Held
No, Zenaida Tan-Reyes did not act in good faith when she purchased and
registered the lot. Good faith is something internal. It is a question of intention. In
ascertaining ones intention, the Court must rely on the evidence of ones conduct and

outward acts. In Zenaidas case, the following will show that she is not a buyer in good
faith:
-Why should her father approach Alejandro and offer to return the money? the
Court concluded that what propted his father to do this is his desire to facilitate his
daughters acquisition of the lot and to prevent Alejandro from contesting it. (Nauna yung
pag approach ni father kay Alejandro kesa dun sa pagbayad sa loan and pag purchase ng
land)
-petitioners filed the complaint on September 16, 1985, after a month Zenaida had
the Deed of Absolute Sale registered with the Registry of Property
Art. 1544 has two fold requirements: acquisition in good faith and registration in good
faith. Mere registration of title is not enough, good faith must concure with registration.
To be entitled priority, the second purchaser must not only establish prior recording of his
deed, but must have acted in good faith, without knowledge of the existence of another
alienation by the vendor to the vendee.
LAO VS. GENATO
No. L-56451 June 19, 1985
Ponente: Cuevas, J.
FACTS:
Spouses Juan and Candelaria Lao were promisees in a Mutual Agreement of
Promise to Sell executed between them and Sotero Dionisio III, the son of the heir and
administrator of the intestate estate of deceased Rosenda Abuton, Sotero Dionisio Jr. The
Laos were promised by Dionisio III a commercial property belonging to such estate.
On June 25,1980, Dionisio Jr. filed with the Probate Court a Motion for Authority
to Sell which the said court granted. Thereafter, he sold to his son Dionisio III the subject
property for P75,000. The latter then sold the same property in favor of a certain William
Go for P80,000. Subsequently, the title was transferred to Go. On August 27, 1980,
Florida Nuqui (another heir of the estate), filed a motion for Annulment of the Deeds of
Absolute Sale on the ground that the sale and subsequent transfer of title of the property
were grossly inadequate. According to Nuqui, the market value of the property is
P400,000.
On February 6, 1981, the Laos filed a Manifestation wherein they alleged that
Dionisio Jr., without revealing that the property had already been sold to Go, entered into
a Mutual Agreement of Promise to Sell to the former for P220,000 (the Laos even offered
to pay for the property for P300,000). They further alleged that they paid the earnest
money with a check worth P70,000 in favor of Dionisio III. Moreover, the Laos
contended that the agreement regarding the balance will only be paid upon the production
of the TCT and the execution of the final Deed of Sale.
Because of the conflict, all the parties, except the Lao spouses and Dionisio III,
entered an Amicable Settlement. The Lao spouses filed an opposition but despite such
opposition, respondent Judge Genato approved the Amicable Settlement.

ISSUE:
Whether or not the sale between the administrator and his son valid.
HELD:
NO. A sale made by an administrator of decedents property which is fictitious
and illegal cannot be made lawful by the assent thereto of the heirs and approval by the
trial court of the compromise settlement, being prejudicial to creditors and to
government.
The price was grossly low. Dionisio III had no income whatsoever. On top of that,
not a single centavo of the P75,000 was ever accounted for nor reported to the Probate
Court. Dionisio Jr. was only compelled to admit that the actual consideration for the sale
made by him was P200,000 and not for P80,000 (This happened in the amicable
settlement).
In addition, the offer by the Laos of P300,000 for the purchase of the property is
more beneficial and advantageous. No satisfactory and convincing reason appeared given
the rejection and non-acceptance of said offer, thus giving rise to a well-grounded
suspicion that a collusion of some sort exists between the administrator and the heirs to
defraud the creditors and the government.

FORNILDA VS. BR. 164, RTC IVTH JUDICIAL REGION, PASIG

No. L-72306 October 5, 1988
Ponente: Melencio-Herrera
FACTS:
Julio Catolos (deceased) formerly owned 6 parcels of Land in Rizal. His estate
was subject of a settlement where the legal heirs including Alfonso Fornilda were
represented by Atty. Sergio Amonoy. A Project of Partition was filed in the Intestate
Court whereby the cotroverted parcels were adjudicated to Fornilda and a certain
Asuncion Pasamba. The Court approved the Project of Partition. Thereafter, the estate
was declared closed and terminated after estate and inheritance taxes had been paid, the
claims against the estate settled, and all the parties adjudicated.
Fornilda and Pasamba then executed a contract of mortgage wherein they
mortgaged the controverted parcels to Atty. Amonoy as security for payment of his
Attorneys fees in the aforementioned proceedings in the amount of P27,600. In 1969,
both Fornilda and Pasamba died. Petitioners are some of Fornildas heirs
Since the mortgage indebtedness was not paid, Atty. Amonoy instituted
foreclosure proceedings. In 1973, the controverted parcels were foreclosed. An auction
sale was then held where Amonoy was the only bidder for P23,760. The sale was
confirmed by the trial court. To satisfy the deficiency, another sale was conducted, again,

Amonoy was the only bidder for P12,137.50. A year after, an action for annulment was
filed. The trial court dismissed the action.
ISSUE:
Whether or not the acquisition of Atty. Amonoy of the controverted parcels of
land from petitioners valid.
HELD:
NO. Under Art. 1491. A lawyer is prohibited from acquiring either by purchase or
assignment of the property or rights involved which are object of the litigation in which
they intervene by virtue of their profession. The rationale advanced for the prohibition is
that public policy disallows the transactions in view of the fiduciary relationship
involved.
The fact that the properties were first mortgaged and only subsequently acquired
in an auction sale will not remove it from the scope of prohibition.
Director of Lands v. Ababa
February 27, 1979
FACTS: The adverse claimant Atty. Alberto Fernandez was retained as counsel
of Maximo Abarquez in a case for annulment of contract of sale with right of
repurchase and for the recovery of land subject matter of this case. Being a
pauper, Abarquez executed a document agreeing to pay a contingent fee of of
whatever he might recover as compensation for his lawyer. When the original
case has been resolved, Abarquez was unable to comply with his obligation to
deliver with Fernandez portion of said parcels of land. The latter took steps to
protect his claim by filing a motion to annotate his attorneys lien and by notifying
prospective buyers of his claim. The motion was granted. Petitioners now argue
that a contract of contingent fee violates Article 1491 of the Civil Code.
ISSUE: WON the contract of contingent fee as basis of the interest of Atty.
Fernandez is prohibited under Art. 1491.
HELD: NO. The contention is unmeritorious. Article 1491 prohibits only the sale
of or assignment between lawyer and his client of property which is the subject of
litigation. For the prohibition to operate, the sale or assignment must take place
during the pendency of the litigation involving the property. Further, a contract of
contingent fee is not covered by Art. 1491 because transfer or assignment of
property in litigation takes effect only after the finality of favorable judgment.
Here, the attorneys fee is contingent upon the success of the appeal.

SARSOSA VDA. DE BARSOBIA and PACITA W. VALLAR v VICTORIANO T.

CUENCO

April 16, 1982

FACTS: For review is the decision of CA declaring Victoriano T. Cuenco (now the
respondent) as the absolute owner of a coconut land in question. The lot in
controversy is a one-half portion (on the northern side) of two adjoining parcels of
coconut land located at Barrio Mancapagao, Sagay, Camiguin, Misamis Oriental
(now Camiguin province), with an area of 29,150 square meters, more or less.
The entire land was owned previously by a certain Leocadia Balisado, who had
sold it to the spouses Patricio Barsobia (now deceased) and Epifania Sarsosa,
Filipino citizens. On September 5, 1936, Epifania Sarsosa then a widow, sold the
land in controversy to a Chinese, Ong King Po, for the sum of P1,050.00 .Ong
King Po took actual possession and enjoyed the fruits thereof. On August 5,
1961, Ong King Po sold the litigated property to Victoriano T. Cuenco
(respondent herein), a naturalized Filipino, for the sum of P5,000.00. On March
6, 1962, Epifania "usurped" the controverted property, and on July 26, 1962,
Epifania (through her only daughter and child, Emeteria Barsobia), sold a onehalf (1/2) portion of the land in question to Pacita W. Vallar, the other petitioner
herein .On September 19, 1962, respondent filed a Forcible Entry case against
Epifania before the Municipal Court of Sagay, Camiguin. The case was dismissed
for lack of jurisdiction since, as the laws then stood, the question of possession
could not be properly determined without first settling that of ownership. On
December 27, 1966, respondent instituted before the Court of First Instance of
Misamis Oriental a Complaint for recovery of possession and ownership of the
litigated land, against Epifania and Pacita Vallar
ISSUE: Whether or not Victoriano Cuenco, a naturalized Filipino is the rightful
owner of the land after buying it from Ong King Po, a Chinese.
HELD: YES. The SC declared that the sale by Epifania to Ong King Po was void
as it is against public policy under the 1935 Constitution and that Cuenco was the
rightful owner as Epifania is also barred by laches.

GUZMAN, BOCALING & CO. vs. BONNEVIE

Facts:
Respondents Raoul and Christopher Bonnievie were lessees of a parcel of land with two
buildings constructed thereon belonging to the intestate estate of Jose Reynoo. The
contact of lease contained the ff stipulation: in case the lessor desires or decides to sell
the leased property, the lessees shall be given a first priority to purchase the same, all
things and considerations being equal. On Nov 1976, administratix Afria Valdez de
Reynoso notified respondents by registered mail that she is selling the premises for 600k
less a mortgage of 100k, giving them 30 days from receipt to exercise their right of first
priority, otherwise, they should vacate the property not later than March 1977. On Jan
1977, she sent another letter to respondents notifying them that she already sold the
property since respondents failed to buy the same. Upon receipt of this letter, respondents

informed Reynoso that neither of them received her letter dated Nov 1976; that they had
advised her agent to inform them officially should she decide to sell the property so
negotiations could be initiated; and that they were constrained to refuse (her) request for
the termination of the lease. On March 1977, the property was formally sold to petitioner
Guzman, Bocaling&Corp for 400k with 137,500 paid as downpayment and the balance to
be paid when respondents vacate the premises. Administratix Reynoso filed a complaint
for ejectment against respondents when the latter refused to vacate the premises after the
formers demand. A Compromise Agreement was made which provided that respondents
will voluntarily leave the premises not later than 1979. However, respondents failed to
comply with the agreement. A motion for execution of the judgment by compromise was
granted. Respondents filed a motion to set aside said decision but it was denied. While
the ejectment case was pending in the City court, respondents filed an action for
annulment of sale between Reynoso and petitioner GBC and the cancellation of the
transfer of certificate of title. They also required Reynoso to sell the property to them
under the same terms and conditions agreed upon in the Contract of Sale. The City Court
ruled that the respondents must vacate the premises and deliver possession of the
property to the petitioner as well as pay the rent due to them. Upon appeal to the CFI
Manila, it affirmed the said ejection case with modification and granted respondents
petition to cancel the Deed of Sale executed between Africa and the petitioner and
ordered her to sell the property to respondent. CA affirmed the said decision.
Issue:
WON CA erred in ruling that the grant of first priority to purchase the subject properties
by the Reynoso needed no authority from the probate court; holding that the Contract of
Sale was not voidable but rescissible; and in considering petitioner as buyer in bad faith
ordering Reynoso to execute the deed of sale in favor of respondents.
Held:
The Court held that respondent court was correct that it was not necessary to secure the
approval by the probate court of the Contract of Lease because it did not involve an
alienation of real property of the estate nor did the term of the lease exceed one year so as
to make it fall underArticle 1878(8) of the Civil Code.
The Court also agreed with the respondent court that the Contract of Sale was not
voidable but rescissible. Under Article 1380 to 1381 (3) of the Civil Code, a contract
otherwise valid may nonetheless be subsequently rescinded by reason of injury to third
persons, like creditors. The status of creditors could be validly accorded the Bonnevies
for they had substantial interests that were prejudiced by the sale of the subject property
to the petitioner without recognizing their right of first priority under the Contract of
Lease. Rescission is a remedy granted by law to the contracting parties and even to third
persons, to secure reparation for damages caused to them by a contract, even if this
should be valid, by means of the restoration of things to their condition at the moment
prior to the celebration of said contract. Petitioner is not considered a third party in
relation to the Contract of Sale. Petitioner was not a buyer in good faith because it was
aware of the lease in favor of the Bonnevies, as it had notice of the lease of the property
by the Bonnevies.

AMANCIO vs. CA
Facts:
The Sarmiento spouses mortgaged their parcel of land in Marikina to Carlos Sision as
security for a loan obtained by them. Upon failure to pay the loan, Sision initiated the
extra-judicial foreclosure sale of the mortgaged property and it was foreclosed through
the Office of the Sheriff of Rizal, which issued a certificate of sale in favor of Sison. Jose
Puzon purchased the same property in an auction sale conducted by the Municipal
Treasurer of Marikina for non-payment of taxes. A Transfer Certificate of Title was
issued in the name of Puzon. Puzon later sold the property in to herein plaintiff-appellee
Rodeanna Realty Corportion (RRC). Plaintiff-appellee filed a complaint for recovery of
possession with damages against the Sarmiento spouses and Pedro Ogsiner, the
Sarmiento spouses caretaker of the subject property who refused to vacate the premises.
The Sarmiento spouses filed a motion for leave to file a third-party complaint against
Sision, the Provincial Sheriff of Pasig, Puzon, the Judge of RTC of Branch 155 in LRC
Case No. R-3367 and the Register of Deeds of Marikina. The trial court issued its
assailed decision in favor of the plaintiff-appellee and ordered defendant Pedro Ogsiner
and all persons claiming rights under him to vacate the premises and surrender peaceful
possession to the plaintiff within fifteen (15) days from receipt of this order. Sarmiento
spouses appeal was dismissed by the CA.
ISSUE:
WON RRC has a better right to possess the contested real property.
HELD:
For failure of the purchaser in the tax sale, Puzon, to prove that notice of the tax sale was
sent to the Sarmiento spouses, such sale is null and void. The title of the buyer therein
(Mr. Puzon) was also null and void.
The general rule is that a purchaser may be considered a purchaser in good faith when he
has examined the latest certificate of title. An exception to this rule is when there exist
important facts that would create suspicion in an otherwise reasonable man to go beyond
the present title and to investigate those that preceded it. The failure of RRC to take the
ordinary precautions which a prudent man would have taken under the circumstances,
specially in buying a piece of land in the actual, visible and public possession of another
person, other than the vendor, constitutes gross negligence amounting to bad faith.The
fact that private respondent RRC did not investigate the Sarmiento spouses claim over
the subject land despite its knowledge that Pedro Ogsiner, as their overseer, was in actual
possession thereof means that it was not an innocent purchaser for value upon said land.
Article 524 of the Civil Code directs that possession may be exercised in ones name or in
that of another. In herein case, Pedro Ogsiner had informed RRC that he was occupying
the subject land on behalf of the Sarmiento spouses. Being a corporation engaged in the
business of buying and selling real estate, it was gross negligence on its part to merely
rely on Mr. Puzons assurance that the occupants of the property were mere squatters
considering the invaluable information it acquired from Pedro Ogsiner and considering

further that it had the means and the opportunity to investigate for itself the accuracy of
such information.
The Court held that the public auction sale conducted was VOID for lack of notice to the
registered owners Amancio and Luisa Sarmiento. Transfer Certificate of Title in the
name of RRC was annulled. The Registry of deeds of Marikina was ordered to issue, in
lieu thereof, a new title in the name of spouses Amancio and Luisa Sarmiento.
G.R. NO. L-36731: GODINEZ V. FONG PAK LUEN
Facts:
The plaintiffs filed a case to recover a parcel of land sold by their father Jose Godinez to
defendant Fong Pak Luen. Said defendant executed a power of attorney in favour of his
co-defendant Kwan Pun Ming, who conveyed and sold the above described parcel of land
to co-defendant Trinidad S. Navata. The latter is aware of and with full knowledge that
Fong Pak Luen is a Chinese citizen as well as Kwan Pun Ming, who under the law are
prohibited and disqualified to acquire real property; that Fong Pak Luen has not acquired
any title or interest in said parcel of land as purported contract of sale executed by Jose
Godinez alone was contrary to law and considered non-existent.
The defendant filed her answer that the complaint does not state a cause of action since it
appears from the allegation that the property is registered in the name of Jose Godinez so
that as his sole property he may dispose of the same; that the cause of action has been
barred by the statute of limitations as the alleged document of sale executed by Jose
Godinez on November 27, 1941, conveyed the property to defendant Fong Pak Luen as a
result of which a title was issued to said defendant; that under Article 1144(1) of the Civil
Code, an action based upon a written contract must be brought within 10 years from the
time the right of action accrues; that the right of action accrued on November 27, 1941
but the complaint was filed only on September 30, 1966, beyond the 10-year period
provided by law.
The trial court issued an order dismissing the complaint. A motion for reconsideration
was filed by plaintiffs but was denied.
Issue:
Whether or not the sale was null and void ab initio since it violates applicable provisions
of the Constitution and the Civil Code.
Ruling:
No.
Prescription may never be invoked to defend that which the Constitution prohibits.
However, we see no necessity from the facts of this case to pass upon the nature of the
contract of sale executed by Jose Godinez and Fong Pak Luen whether void ab initio,
illegal per se, or merely prohibited. It is enough to stress that insofar as the vendee is
concerned, prescription is unavailing. But neither can the vendor or his heirs rely on an
argument based on imprescriptibility because the land sold in 1941 is now in the hands of
a Filipino citizen against whom the constitutional prescription was never intended to
apply.

As earlier mentioned, Fong Pak Luen, the disqualified alien vendee later sold the same
property to Navata, a Filipino citizen qualified to acquire real property. Navata, as a
naturalized citizen, was constitutionally qualified to own the subject property.
G.R. NO. L-17043: NATIVIDAD HERRERA V. LUY KIM GUAN
Facts:
Herein plaintiff is the legitimate heir of Luis Herrera. Luis Herrera, now deceased, owned
three parcels of land. Before leaving for China in 1931 or early part of 1932, Luis Herrera
executed a deed of General Power of Attorney which authorized defendant Luy Kim
Guan to administer and sell the aforementioned parcels of land. He died on an unknown
date.
On the dates of July 23, 1937, August 4, 1937, and September 11, 1939, the three parcels
of land were respectfully sold to different individuals through the attorney-in-fact of Luis
Herrera Luy Kim Guan. Herein plaintiff assails the assumption that Luis Herrera died
on 1936 and so herein defendant Luy Kim Guan had no right to sell the parcels of land
because Luis Herrera had died prior to the transactions thus extinguishing their agentprincipal relationship. Thus according to the plaintiff, the transactions should be null and
void.
Issue:
Whether or not the transactions should be null and void since they were made without
any authority
Held:
No.
The Court held that even granting argument that Luis Herrera did die in 1936, plaintiffs
presented no proof and there is no indication in the record, that the age Luy Kim Guan
was aware of the death of his prince at the time he sold the property. The death of the
principal does not render the act of an agent unenforceable, where the latter had no
knowledge of such extinguishment the agency.
SAN LORENZO DEVELOPMENT CORPORATION, petitioner,
vs.
COURT OF APPEALS, PABLO S. BABASANTA, SPS. MIGUEL LU and
PACITA ZAVALLA LU, respondents
G.R. No. 124242 January 21, 2005
FACTS
On 20 August 1986, the Spouses Lu purportedly sold two parcels of land to respondent
Pablo Babasanta, for the price of fifteen pesos (P15.00) per square meter. Babasanta
made a downpayment of (P50,000.00) as evidenced by a memorandum receipt issued by
Pacita Lu of the same date.
Babasanta wrote a letter to Pacita Lu to demand the execution of a final deed of sale in
his favor so that he could effect full payment of the purchase price. In response, Pacita Lu

wrote a letter to Babasanta wherein she reminded Babasanta that when the balance of the
purchase price became due, he requested for a reduction of the price and when she
refused, Babasanta backed out of the sale
herein petitioner San Lorenzo Development Corporation (SLDC) filed a Motion for
Intervention. SLDC alleged that it had legal interest in the subject matter under litigation
because on 3 May 1989, the two parcels of land involved had been sold to it in a Deed of
Absolute Sale with Mortgage. It alleged that it was a buyer in good faith and for value
and therefore it had a better right over the property in litigation
Respondent Babasanta, however, argued that SLDC could not have acquired ownership
of the property because it failed to comply with the requirement of registration of the sale
in good faith. He emphasized that at the time SLDC registered the sale in its favor on 30
June 1990, there was already a notice of lis pendens annotated on the titles of the
property made as early as 2 June 1989. Hence, petitioners registration of the sale did not
confer upon it any right.
ISSUE:
Did the registration of the sale after the annotation of the notice of lis pendens obliterate
the effects of delivery and possession in good faith which admittedly had occurred prior
to SLDCs knowledge of the
transaction in favor of Babasanta?
HELD:NO
It must be stressed that as early as 11 February 1989, the Spouses Lu executed the
Option to Buy in favor of SLDC upon receiving P316,160.00 as option money from
SLDC. After SLDC had paid more than one half of the agreed purchase price, the
Spouses Lu subsequently executed on 3 May 1989 a Deed of Absolute Sale in favor or
SLDC. At the time both deeds were executed, SLDC had no knowledge of the prior
transaction of the Spouses Lu with Babasanta. Simply stated, from the time of execution
of the first deed up to the moment of transfer and delivery of possession of the lands to
SLDC, it had acted in good faith and the subsequent annotation of lis pendens has no
effect at all on the consummated sale between SLDC and the Spouses Lu.
A purchaser in good faith is one who buys property of another without notice that some
other person has a right to, or interest in, such property and pays a full and fair price for
the same at the time of such purchase, or before he has notice of the claim or interest of
some other person in the property.
We rule that SLDC qualifies as a buyer in good faith since there is no evidence extant in
the records that it had knowledge of the prior transaction in favor of Babasanta. At the
time of the sale of the property to SLDC, the vendors were still the registered owners of
the property and were in fact in possession of the lands.
In assailing knowledge of the transaction between him and the Spouses Lu, Babasanta
apparently relies on the principle of constructive notice incorporated in Section 52 of the
Property Registration Decree (P.D. No. 1529) which reads, thus:
Sec. 52. Constructive notice upon registration. Every conveyance,
mortgage, lease, lien, attachment, order, judgment, instrument or entry
affecting registered land shall, if registered, filed, or entered in the office of
the Register of Deeds for the province or city where the land to which it

relates lies, be constructive notice to all persons from the time of such
registering, filing, or entering.
However, the constructive notice operates as such by the express
wording of Section 52 from the time of the registration of the
notice of lis pendens which in this case was effected only on 2
June 1989, at which time the sale in favor of SLDC had long been
consummated insofar as the obligation of the Spouses Lu to
transfer ownership over the property to SLDC is concerned.
Rev Fr. Dante Martinez Vs. CA, Veneracion Spouses and Dela Paz Family
Facts:
Private respondents Dela Paz sold Lot No. 1337-A-3 located in Cabanatuan City to Rev.
Fr. Martinez with promise to deliver the Deed of Sale afterwards. Petitioner started
constructing a house in the same lot. Consequently, the same lot was sold to respondent
spouses Veneracion with a right to repurchase. Petitioner discovered that the lot he was
occupying with his family was sold to Veneracion through a demand letter stating that
they need to vacate the property.
Issue: Who has a right to the property?
Held:
This case, however, involves double sale and, on this matter, Art. 1544 of the Civil Code
provides that where immovable property is the subject of a double sale, ownership shall
be transferred (1) to the person acquiring it who in good faith first recorded it to the
Registry of Property; (2) in default thereof, to the person who in good faith was first in
possession; and (3) in default thereof, to the person who presents the oldest title. The
requirement of the law, where title to the property is recorded in the Register of Deeds, is
two-fold: acquisition in good faith and recording in good faith. To be entitled to priority,
the second purchaser must not only prove prior recording of his title but that he acted in
good faith, i.e., without knowledge or notice of a prior sale to another. The presence of
good faith should be ascertained from the circumstances surrounding the purchase of the
land.
Veneracion already knew that a house was 100% constructed in the said lot upon
inspection before entering the Deed of Absolute Sale with the Dela Pazes.
With regard to the second sale, which is the true contract of sale between the parties, it
should be noted that this Court in several cases, has ruled that a purchaser who is aware
of facts which should put a reasonable man upon his guard cannot turn a blind eye and
later claim that he acted in good faith. Private respondent Reynaldo himself admitted
during the pre-trial conference in the MTC in Civil Case No. 9523 (for ejectment) that
petitioner was already in possession of the property in dispute at the time the second
Deed of Sale was executed on June 1, 1983 and registered on March 4, 1984. He,
therefore, knew that there were already occupants on the property as early as 1981. The
fact that there are persons, other than the vendors, in actual possession of the disputed lot
should have put private respondents on inquiry as to the nature of petitioner's right over

the property. But he never talked to petitioner to verify the nature of his right. He merely
relied on the assurance of private respondent Godofredo De la Paz, who was not even the
owner of the lot in question, that he would take care of the matter. This does not meet the
standard of good faith.
Therefore, Rev. Fr. Martinez is the true owner of the lot.

Fudot vs. Cattleya Land, Inc., GR 171008, 13 September 2007

In interpreting [Art. 1544], the Court declared that the governing principle is primus
tempore, potior jure (first in time, stronger in right). Knowledge gained by the first buyer
of the second sale cannot defeat the first buyers rights, except where the second buyer
registers in good faith the second sale ahead of the first as provided by the aforequoted
provision of the Civil Code. Such knowledge of the first buyer does not bar him
from availing of his rights under the law, among them to register first his purchase as
against the second buyer. However, knowledge gained by the second buyer of the first
sale defeats his rights even if he is first to register the second sale, since such knowledge
taints his prior registration with bad faith. It is thus essential, to merit the protection of
Art. 1544, second paragraph, that the second realty buyer must act in good faith in
registering his deed of sale.
Sorry guys eto lang nahanap ko na digest for this case. yung Martinez binasa ko talaga
yun. Super no time to read this Cattleya case kasi crim pro ko today I cant attend
Sales as well. Sana hindi matawag to. Kundi patayin nyo ko. Sorry talaga -NAVA

DY, JR. vs. CA (1991)

Facts:
Wilfredo Dy purchased a truck and a farm tractor through financing extended by Libra
Finance Investment Corp. Both truck and tractor were mortgaged to Libra as security for
the loan. Perfecto DY, his brother, wanted to buy the tractor. Perfecto then wrote a letter
to Libra for him to purchase such and assume the mortgage. Libra approved the request.
And Wilfredo executed a deed of absolute sale. The tractor was withheld by Libra
because of Wilfredos failure to pay amortizations. Despite offer of Perfecto to pay the
full amount, it could not be effected because Libra insisted also for the payment of the
truck. A check was then issued to Libra to settle the full amount. A civil case of Wilfredo
was also pending in Cebu to recover a sum of money. The provincial sheriff was able to
seize and levy on the tractor. The tractor was sold at the pubic auction where Gelac

trading was the lone bidder. Gelac later sold it Antonio Gonzales. When the check was
cleared, it was only then Perfecto learned about the purchase of Gelac. He filed then an
action to recover the tractor against Gelac with the RTC of Cebu.
Issue: Whether or not there was a valid sale to Perfecto
Held: There was a valid sale to Perfecto Dy. Mortgagor who gave the property as security
under a chattel mortgage did not part with the ownership over the same. He had the right
to sell it although he was under obligation to secure the written consent of the mortgagee.
And even if no consent was obtained form the mortgagee, the validity of the sale would
still be effected. Court sees no reason why Wilfredo cannot sell the subject tractor. The
consent of Libra was even obtained in this case. The sale between the brothers was valid
and binding even to the mortgagee. Art. 1496 states that the ownership of the thing sold
is acquired by the vendee from the moment it is delivered to him in any of the ways in
1497 to 1501. In this case, actual delivery cannot be made. However, there was
constructive delivery already upon the execution of the public instrument and upon the
consent and agreement of the parties. While it is true that Wilfredo was not in actual
possession and control of the subject tractor, his right of ownership was not divested from
his default. Neither could it be said that Libra was the owner because the mortgagee can
not become the owner or convert and appropriate himself the property mortgaged. When
a third person purchases the mortgaged property, he automatically steps into the shoes of
the original mortgagor. The payment of the check was actually intended to extinguish the
mortgage obligation so that the tractor could be released to the petitioner. The sale of the
subject tractor was already consummated when it was levied upon the by the sheriff.
Gelac even knew of the transfer of the property to Perfecto when it received summons.
Even with that, they still continued to sell the subject tractor to Antonio.

Paragas vs. Heirs of Dominador Balacano (2005)

FACTS:
Gregorio and Lorenza Balacano owned Lots 1175-E and 117-F. Spouses Balacano had 3
children, namely Domingo, Catalino, and Alfredo. Lorenza died during Dec. 11, 1991,
while Gregorio died on July 28, 1996. Prior to Gregorios death, he was admitted in
Veterans General Hospital in Nueva Vizcaya, and later transferred to Veterans Memorial
Hospital in QC, until he died. It was alleged that Gregorio, barely a week prior to his
death, sold the 2 lots to spouses Rudy and Corazon Paragas. The said sale appeared in a
deed of absolute sale notarized by Atty. De Guzman. The spouses Paragas then sold a
portion of one of the lots to Catalino. Domingos children filed a complaint for the
annulment of the sale against Catalino and the spouses Paragas Spouses Paragas moved
to dismiss the complaint. The Regional Trial Court declared the deed of sale null and
void, and the lots were CP properties. Grounds: 1. Gregorio was ill 2. Deed of sale was
improperly notarized. 3. Atty. De Guzman explanations regarding the erroneous entries
on the actual place and date of execution of the deed of sale were justifications for a lie.
(He testified that the deed was only a confirmation of a previous agreement bet.

Gregorio and Paragas). 4. Rudy Paragas refused or failed to testify about the signing of
the deed of sale.
ISSUE: Whether or not the Deed of Sale is null and void.
HELD: The deed of sale is null and void. Gregorio, died due to complications caused by
cirrhosis of the liver, had been fighting the said disease for a month. Due to his condition,
there are serious doubts at to whether he could read, or fully understood the contents of
the deed of sale. There are no conclusive evidence that show that the evidence of the deed
were sufficiently explained to Gregorio before he affixed his signature. Art. 24 of the
NCC provides that in all contractual, property or other relations, when one of the parties
is at a disadvantage on account of his moral dependence, ignorance, indigence, mental
weakness, tender age or other handicap, the courts must be vigilant for his protection.
INDUSTRIAL TEXTILE MANUFACTURING COMPANY OF THE PHILIPPINES,
INC., Petitioner, vs. LPJ ENTERPRISES, INC., Respondent.
FACTS: Respondent LPJ Enterprises, Inc. had a contract to supply 300,000 bags of
cement per year to Atlas Consolidated Mining and Development Corporation (Atlas for
short), a member of the Soriano Group of Companies. The cement was delivered packed
in kraft paper bags. Sometime in October, 1970, Cesar Campos, a Vice-President of
petitioner Industrial Textile Manufacturing Company of the Philippines (or Itemcop, for
brevity), asked Lauro Panganiban, Jr., President of respondent corporation, if he would
like to cooperate in an experiment to develop plastic cement bags. Panganiban agreed
because Itemcop is a sister corporation of Atlas, respondent's major client. A few weeks
later, Panganiban accompanied Paulino Ugarte, another Vice-President of Itemcop, to the
factory of respondent's supplier, Luzon Cement Corporation in Norzagaray, Bulacan, to
test fifty (50) pieces of plastic cement bags. The experiment, however, was unsuccessful.
Cement dust oozed out under pressure through the small holes of the woven plastic bags
and the loading platform was filled with dust. The second batch of plastic bags subjected
to trial was likewise a failure. Although the weaving of the plastic bags was already
tightened, cement dust still spilled through the gaps. Finally, with three hundred (300)
"improved bags", the seepage was substantially reduced. Ugarte then asked Panganiban
to send 180 bags of cement to Atlas via commercial shipping. Campos, Ugarte, and two
other officials of petitioner company followed the 180 bags to the plant of Atlas in Cebu
where they professed satisfaction at the performance of their own plastic bags. Campos
sent Panganiban a letter proclaiming dramatic results in the experiment. Consequently,
Panganiban agreed to use the plastic cement bags. Four purchase orders were thereafter
issued.
Petitioner delivered the orders consecutively on January 12, February 17, March 19, and
April 17, 1971. Respondent, on the other hand, remitted the amounts of P1,640.00,
P2,480.00. and P13,230.00 on March 31, April 31, and May 3, 1971 respectively, thereby
leaving a balance of P84,123.80. No other payments were made, thus prompting A.
Soriano y Cia of petitioner's Legal Department to send demand letters to respondent
corporation. Reiterations thereof were later sent by petitioner's counsel. A collection suit
was filed on April 11, 1973 when the demands remained unheeded.

At the trial on the merits, respondent admitted its liability for the 53,800 polypropylene
lime bags covered by the first purchase order. With respect to the second, third, and
fourth purchase orders, respondent, however, denied full responsibility therefor.
Respondent said that it will pay, as it did pay for, only the 15,000 plastic bags it actually
used in packing cement. As for the remaining 47,000 bags, the workers of Luzon Cement
strongly objected to the use thereof due to the serious health hazards posed by the
continued seepage of cement dust.
The trial court rendered its decision sentencing the defendant to pay the sum of
P84,123.80 with l2% interest per annum from May, 1971 plus 15% of the total obligation
as attorney's fees, and the costs. Respondent corporation's appeal was upheld by the
appellate court when it reversed the trial court's decision and dismissed the case with
costs against petitioner.
ISSUE: whether or not respondent may be held liable for the 47,000 plastic bags which
were not actually used for packing cement as originally intended.
HELD: The conditions which allegedly govern the transaction according to respondent
may not be considered. The trial court correctly observed that such conditions should
have been distinctly specified in the purchase orders and respondent's failure to do so is
fatal to its cause. The Court found that Article 1502 of the Civil Code, invoked by both
parties herein, has no application at all to this case. The provision in the Uniform Sales
Act and the Uniform Commercial Code from which Article 1502 was taken, clearly
requires an express written agreement to make a sales contract either a "sale or return" or
a "sale on approval". Parol or extrinsic testimony could not be admitted for the purpose of
showing that an invoice or bill of sale that was complete in every aspect and purporting to
embody a sale without condition or restriction constituted a contract of sale or return. If
the purchaser desired to incorporate a stipulation securing to him the right of return, he
should have done so at the time the contract was made. On the other hand, the buyer
cannot accept part and reject the rest of the goods since this falls outside the normal intent
of the parties in the "on approval" situation.
Therefore, the transaction between respondent and petitioner constituted an absolute sale.
Accordingly, respondent is liable for the plastic bags delivered to it by petitioner.